Document:

Document

Exhibit 10.13

EXECUTION VERSION

FIRST AMENDMENT TO AGREEMENT OF PURCHASE AND SALE
(Sale of Membership Interests in the Owners of Hotel Portfolios Consisting of One Hundred Ninety-Seven (197) Hotel Properties)
This FIRST AMENDMENT TO AGREEMENT OF PURCHASE AND SALE (this “Amendment”), is made and effective as of October 9, 2020 (the “Effective Date”), between CBM SELLER, INNKEEPERS SELLER, K-PARTNERS SELLER, MIAMI SELLER, NEP SELLER, and THL SELLER (each, a “Selling Entity” and collectively, “Seller”), and SILVERPLATE CAPITAL PARTNERS LLC, a Delaware limited liability company (“Buyer”, Buyer and Seller are sometimes referred to in this Amendment, each, individually, as a “Party” and, collectively, as the “Parties”).
RECITALS:
A.Seller and Buyer entered into that certain Agreement of Purchase and Sale, dated as of September 22, 2020 (the “Original PSA”), pursuant to which, among other things, Seller agreed to sell to Buyer, and Buyer agreed to purchase from Seller, the Membership Interests listed on Schedule 1 attached thereto (the “Property”), as more particularly described in the Original PSA.
B.The Parties now wish to amend the Original PSA as more particularly set forth herein.
C.The Original PSA, as modified by this Amendment, shall be referred to herein collectively as the “Purchase Agreement”.
NOW, THEREFORE, in consideration of the foregoing recitals (which are incorporated into the operative provisions of this Amendment by this reference), the mutual promises, obligations and agreements contained herein, and other good and valuable consideration, the receipt, adequacy, and sufficiency of which are hereby acknowledged, the Parties hereto, intending to be legally bound, do hereby agree as follows:
1.Amendments.
(a)The last sentence of Section 3.1(c) of the Original PSA is hereby deleted and replaced in its entirety with the following: “If any Loan Documents shall require a pay down of any portion of the Existing Loans prior to the Closing or the funding of a reserve other than from cash flow from the Individual Hotels, no Party shall be obligated to contribute such funds except that Seller or its Affiliate shall be obligated to contribute no less than the sum of One Million Seven Hundred Thousand and No/100 Dollars ($1,700,000.00) from funds in the Excluded Accounts and Amount with respect to the CBM Hotel Portfolio as described on Schedule 3.1(c) attached hereto whether or not the Pending Loan Modification for the CBM Loan is consummated prior to the Closing, and if any such amount is not contributed by Seller prior to the Closing, Seller shall have the right, in its sole discretion, to (x) give to Buyer a credit against the Purchase Price in the amount not so contributed or (y) fund the amount not so contributed to a non-restricted account that satisfies one of the following as selected by Buyer: (1) an account in the name of Buyer, (2) an Acquired Account designated by Buyer or (3) a new account set up by Seller in the name of a Target Entity or Target Subsidiary as designated by Buyer.  Notwithstanding the immediately preceding sentence and anything herein to the contrary, on October 7, 2020, Seller or its Affiliate made a payment equal to no less than the sum of 

Thirteen Million Nine Hundred Thousand and No/100 Dollars ($13,900,000.00) with respect to the Innkeepers Hotel Portfolio (the “INK Current Payment”), as follows: (i) an amount equal to Nine Million Five Hundred Thousand ($9,500,000.00) was funded using cash from sources other than the Acquired Accounts (including from funds in the Excluded Accounts and Amount), and (ii) an amount equal to Four Million Four Hundred Thousand and No/100 Dollars ($4,400,000.00) was funded using funds in the Acquired Accounts, in each case, subject to the terms hereof.  With respect to the INK Current Payment, (x) the portion funded using funds in the Acquired Accounts pursuant to clause (ii) above shall in no event constitute Leakage and (y) Seller shall receive a credit at the Closing in the amount of One Million One Hundred Fifty Thousand and No/100 Dollars ($1,150,000.00).  Seller and its Affiliates shall use the INK Current Payment solely for the payment of deferred interest, operating shortfalls, interest shortfalls, working capital replenishment, and loan fees and expenses for the Innkeepers Hotel Portfolio (the “Permitted Uses”).  In addition, Seller or its Affiliate shall have the right, but not the obligation, to contribute up to an additional Nine Million Three Hundred Thousand and No/100 Dollars ($9,300,000.00), at any time and from time to time prior to the Closing Date, to be funded using cash from sources other than the Acquired Accounts (including from funds in the Excluded Accounts and Amount) (each, an “INK Future Contribution”), subject to the terms hereof.  With respect to INK Future Contributions, (x) Seller shall receive an additional credit at the Closing equal to fifty percent (50%) of the aggregate amount of INK Future Contributions, (y) Seller and its Affiliates shall use the INK Future Contributions solely for the Permitted Uses, and (z) the amount on deposit in the Acquired Accounts for the Innkeepers Hotel Portfolio shall be at least equal to Four Million Five Hundred Thousand and No/100 Dollars ($4,500,000.00) (the “Minimum INK Working Capital Amount”) at the Closing.  If Seller or its Affiliate expend any portion of the INK Current Payment or any INK Future Contribution in any manner other than for the Permitted Uses, then the portion of the INK Current Payment or such INK Future Contribution so expended shall be deemed “Leakage” for all purposes hereof.  In addition, if the amount on deposit in the Acquired Accounts for the Innkeepers Hotel Portfolio at the Closing shall be less than the Minimum INK Working Capital Amount, then the amount of such shortfall shall be deemed “Leakage” for all purposes hereof.  For the avoidance of doubt, notwithstanding anything to the contrary set forth on Schedule 3.1(c) attached hereto, it shall not constitute a material difference that is subject to Buyer’s approval under this Section 3.1(c) if any Pending Loan Modification for the Innkeepers Loan does not include a requirement of Seller or its Affiliate to contribute Seven Million Two Hundred Thousand and No/100 Dollars ($7,200,000.00) with respect to the Innkeepers Hotel Portfolio.”
(b)The last sentence of the definition of “Leakage” in the Original PSA is hereby deleted and replaced in its entirety with the following: “For the avoidance of doubt, the term “Leakage” shall exclude any payments using cash or other amounts (i) in the Excluded Accounts and Amount, (ii) in the Acquired Accounts and made to third parties (or reimbursed to any Affiliate of Seller who made any such payment to a third party on behalf of the Target Entity or Target Subsidiary making such reimbursement, but only so long as such payment by such Affiliate is or was made in the ordinary course of business consistent with past practice) in the ordinary course of business relating to the Individual Hotels or the operation thereof (including, but not limited to, payments for franchise fees or taxes, occupancy taxes, attorneys’ fees, and audit fees) so long as the same are not prohibited by the terms of any Loan Documents, (iii) in 
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the Acquired Accounts for (x) amounts (including attorneys’ fees) relating to, or payable in connection with, any modification of any Existing Loan (including any Pending Loan Modification) (but excluding any payments in connection with any Pending Loan Modification that are required to be made using cash from other sources or from funds in the Excluded Accounts and Amount pursuant to the terms of this Agreement), and (y) amounts described in clause (ii) of the definition of “INK Current Payment” relating to the Innkeepers Hotel Portfolio, and (iv) to the extent permitted under the applicable Loan Documents, in the Acquired Accounts for quarterly payments of reimbursable amounts to its joint venture partner in the Innkeepers Hotel Portfolio or an Affiliate thereof (“Asset Manager”) relating to the Innkeepers Hotel Portfolio, the K-Partners Hotel Portfolio and/or the NEP Hotel Portfolio during the period between the Effective Date and the Closing Date in the ordinary course of business consistent with past practice in an amount not to exceed Six Hundred Thousand and No/100 Dollars ($600,000.00) per quarter (prorated for any partial quarters).
2.Miscellaneous.
(a)Capitalized terms used and not otherwise defined in this Amendment shall have the respective meanings given to such terms in the Original PSA.  Section references in this Amendment shall refer to such sections in the Original PSA unless specifically noted as referring to another agreement.
(b)This Amendment may be executed in any number of counterparts with the same effect as if all signing parties had signed the same document.  All counterparts when executed and delivered shall be construed together and constitute the same instrument.  Counterparts may be delivered electronically.  The exchange of copies of this Amendment, any amendments hereto, any signature pages required hereunder or any other documents required or contemplated hereunder by facsimile or Portable Document Format (“PDF”) transmission shall constitute effective execution and delivery of same as to the Parties thereto and may be used in lieu of the original documents for all purposes.  Signatures transmitted by facsimile or PDF shall be deemed to be original signatures for all purposes.
(c)THIS AMENDMENT WILL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, EXCEPT AS TO REAL PROPERTY MATTERS DIRECTLY RELATED TO A SINGLE INDIVIDUAL HOTEL, WHICH MATTERS SHALL BE GOVERNED BY THE LAWS OF THE STATE IN WHICH THE RESPECTIVE REAL PROPERTY OF SUCH HOTEL IS LOCATED, EXCLUDING ANY CONFLICT-OF-LAWS RULE OR PRINCIPLE THAT MIGHT REFER THE GOVERNANCE OR THE CONSTRUCTION OF THIS AMENDMENT TO THE LAW OF ANOTHER JURISDICTION.
(d)Each Party hereby represents that its undersigned representatives are duly authorized to execute this Amendment.
(e)No person who is not a signatory to this Amendment shall be permitted to rely upon or otherwise enforce any provision contained in this Amendment on the grounds that such person is a third party beneficiary of this Amendment.
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(f)Except as expressly amended by this Amendment, the Original PSA remains unmodified and in full force and effect.
(g)References herein and in the Original PSA and any instrument or document delivered pursuant to the Original PSA to “the Agreement” or “this Agreement” shall mean the Original PSA, as modified by this Amendment, which shall constitute the entire agreement among the Parties pertaining to the subject matter hereof and shall supersede all prior agreements, understandings, negotiations and discussions, whether oral or written, of the Parties.  Except as modified by this Amendment, the Original PSA is hereby ratified and confirmed in all respects.  Nothing herein shall be held to alter, vary or otherwise affect the terms, conditions and provisions of the Original PSA, other than as contemplated herein.
(h)All Section, clause or paragraph references shall, unless the context expressly requires otherwise, be to sections, clauses or paragraphs of this Amendment.  The terms “hereto,” “herein,” “hereof,” “hereunder” and words of similar import refer to this Amendment generally, unless otherwise specifically provided.  The term “including” shall mean “including, without limitation,” except where the context otherwise requires.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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37836301.10

IN WITNESS WHEREOF, Buyer and Seller have caused this Amendment to be executed and delivered by their duly authorized representatives as of the Effective Date written above.

SELLER:
CBM SELLER:

CMP I OWNER-T, LLC, 
a Delaware limited liability company

By: CMP I Holdings-T, LLC, 
                               a Delaware limited liability company,
                               its sole member

By: __/s/ Donna Hansen___________________
     Name:  Donna Hansen
      Title:  Vice President

CMP I CAM2-T, LLC, 
a Delaware limited liability company

By: CMP I Holdings-T, LLC, 
                               a Delaware limited liability company,
                               its sole member

By: __/s/ Donna Hansen___________________
     Name:  Donna Hansen
      Title:  Vice President

[Signatures continue on following page]

[Signature Page to First Amendment to Agreement of Purchase and Sale]

INNKEEPERS SELLER:

GRAND PRIX MEZZ BORROWER FIXED LLC,
a Delaware limited liability company

                        By:  INK Acquisition LLC,
                                  a Delaware limited liability company,
                                its sole member
    
                        By:  Platform Member-T, LLC, 
        a Delaware limited liability company,
                                its member

By: __/s/ Donna Hansen___________________
     Name:  Donna Hansen
      Title:  Vice President

INK ACQUISITION LLC, 
a Delaware limited liability company

By:  Platform Member-T, LLC, 
        a Delaware limited liability company,
                                its member

By: __/s/ Donna Hansen___________________
     Name:  Donna Hansen
      Title:  Vice President

INK ACQUISITION III LLC, 
a Delaware limited liability company

By:  Platform Member Holdings-T CAM2, LLC, 
        a Delaware limited liability company,
                                its member

By: __/s/ Donna Hansen___________________
     Name:  Donna Hansen
      Title:  Vice President

[Signatures continue on following page]

K-PARTNERS SELLER:

CASTLEBLACK OWNER HOLDINGS, LLC, 
a Delaware limited liability company

By:  Castleblack Holdings-T, LLC, 
        a Delaware limited liability company,
                                its managing member

By: __/s/ Donna Hansen___________________
     Name:  Donna Hansen
      Title:  Vice President

CASTLEBLACK OPERATOR HOLDINGS, LLC,
a Delaware limited liability company

By:  Castleblack-T CAM2, LLC, 
        a Delaware limited liability company,
                                its managing member

By: __/s/ Donna Hansen___________________
     Name:  Donna Hansen
      Title:  Vice President

[Signatures continue on following page]

[Signature Page to Agreement of Purchase and Sale]

MIAMI SELLER:

MC OWNER MB1-T, LLC, 
a Delaware limited liability company

By:  MC Holdings-T, LLC, 
        a Delaware limited liability company,
                                its sole member

By: __/s/ Donna Hansen___________________
     Name:  Donna Hansen
      Title:  Vice President

MC OPS MB1-T, LLC, 
a Delaware limited liability company

By:  MC CAM2-T, LLC, 
        a Delaware limited liability company,
                                its sole member

By: __/s/ Donna Hansen___________________
     Name:  Donna Hansen
      Title:  Vice President

[Signatures continue on following page]

NEP SELLER:

NEP OWNER MB2-T, LLC, 
a Delaware limited liability company

By:  NEP Owner-T, LLC, 
        a Delaware limited liability company,
                                its sole member

By: __/s/ Donna Hansen___________________
     Name:  Donna Hansen
      Title:  Vice President

NEP OPS MB2-T, LLC, 
a Delaware limited liability company

By:  NEP CAM2-T, LLC, 
        a Delaware limited liability company,
                                its sole member

By: __/s/ Donna Hansen___________________
     Name:  Donna Hansen
      Title:  Vice President

[Signatures continue on following page]

THL SELLER:

CNI THL PROPCO HOLDINGS, LLC, 
a Delaware limited liability company

By:  CFI RE Holdco, LLC, 
        a Delaware limited liability company,
                                its sole member

By: __/s/ Donna Hansen___________________
     Name:  Donna Hansen
      Title:  Vice President

CNI THL OPCO HOLDINGS, LLC, 
a Delaware limited liability company

By:  CC RE Holdco Corporation LLC, 
        a Delaware limited liability company,
                                its sole member

By: __/s/ Donna Hansen___________________
     Name:  Donna Hansen
      Title:  Vice President

[Signatures continue on following page]

BUYER:
SILVERPLATE CAPITAL PARTNERS LLC,
a Delaware limited liability company

By:    _/s/ Paul R. Womble_____________________
Name:  Paul R. Womble
Title:  Authorized Signatory

[End of signatures]
[Signature Page to First Amendment to Agreement of Purchase and Sale]Exhibit
10.4

 

FIRST
AMENDMENT TO LOAN AND SECURITY AGREEMENT

 

THIS
FIRST AMENDMENT TO LOAN AND SECURITY AGREEMENT (this “Amendment”) executed as of November 6, 2020, is by and
among (a) AIR INDUSTRIES MACHINING, CORP., a New York corporation (“AIM”), NASSAU TOOL WORKS, INC., a New York
corporation (“NTW”), and THE STERLING ENGINEERING CORPORATION, a Connecticut corporation (“Engineering”,
and together with AIM and NTW, collectively the “Borrowers” and each a “Borrower”), (b)
AIR INDUSTRIES GROUP, a Nevada corporation (together with its successors and permitted assigns, “Parent”),
and AIR REALTY GROUP, LLC, a Connecticut limited liability company (“Realty”, and together with Parent, collectively
the “Guarantors” and each a “Guarantor”; Borrowers and Guarantors are referred to herein
collectively as the “Credit Parties” and each as a “Credit Party”), and (c) STERLING
NATIONAL BANK, a national banking association (together with its successors and permitted assigns, the “Lender”).

 

W
I T N E S S E T H:

 

WHEREAS,
the Credit Parties and the Lender entered into that certain Loan and Security Agreement dated as of December 31, 2019 (the “Original
Loan Agreement”, and as amended hereby, the “Loan Agreement”), for the purposes and consideration
therein expressed, pursuant to which the Lender became obligated to make Loans to Borrowers as therein provided; and

 

WHEREAS,
the Credit Parties and the Lender desire to amend the Original Loan Agreement as provided herein.

 

NOW,
THEREFORE, in consideration of the premises and the mutual covenants and agreements contained herein and in the Original Loan
Agreement, in consideration of the Loans which may hereafter be made by the Lender to Borrowers, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto do hereby agree as follows:

 

Article
I

Definitions and References

 

Section
1.1 Terms Defined in the Original Loan Agreement. Unless the context otherwise requires or unless otherwise expressly
defined herein, the terms defined in the Loan Agreement shall have the same meanings whenever used in this
Amendment.

 

Article
II

Amendment to Original Loan Agreement

 

Section
2.1 Term Loan Commitment. The amount “$3,800,000” appearing in the definition of “Term Loan Commitment”
set forth in Section 1.1 of the Original Loan Agreement is hereby amended to read “$5,700,000”.

 

Section
2.2 Term Loan Commitment Period. The date “March 30, 2020” appearing in the definition of “Term Loan
Commitment Period” set forth in Section 1.1 of the Original Loan Agreement is hereby amended to read “the First Amendment
Closing Date”.

 

Section
2.3 Maturity Date. The definition of “Maturity Date” set forth in Section 1.1 of the Original Loan Agreement
is hereby amended to read in its entirety as follows:

 

“Maturity
Date” means December 30, 2022.

 

    First Amendment to Loan and Security Agreement (Air Industries) - Page 1

     

    

 

Section
2.4 Judgment Reserve. Effective as of the date hereof, clause (b) of the definition of “Borrowing Base”
set forth in Section 1.1. of the Original Loan Agreement is hereby amended to read as follows:

 

(b) the
Judgment Reserve and the aggregate amount of any and all other reserves implemented by Lender pursuant to Section 2.1,
in each case determined as of such day;

 

Section
2.5 New Definitions. Section 1.1 of the Original Loan Agreement is hereby amended to add the following definitions thereto,
which definitions shall appear in proper alphabetical order and shall read in their respective entireties as follows:

 

“First
Amendment” means the First Amendment to Loan and Security Agreement dated as of the First Amendment Closing Date, among
the parties hereto.

 

“First
Amendment Closing Date” means November 6, 2020.

 

“Judgment
Reserve” means a reserve in the initial amount of $20,000; provided that (a) if Borrower provides to Lender evidence
satisfactory to Lender that the judgment in favor of MSC Industrial Supply Co. in the amount of $28,203.62 has been paid and satisfied
in full and any and all related liens have been released, the amount of the Judgment Reserve shall be reduced to $6,403; (b) if
the Borrower provides to Lender evidence satisfactory to Lender that the judgment in favor of Perillos Bros. and Petro Inc. in
the amount of $12,807.26 has been paid and satisfied in full and any and all related liens have been released, the amount of the
Judgment Reserve shall be reduced to $14,102; and (c) if Borrower provides to Lender evidence satisfactory to Lender that both
such judgments have been paid and satisfied in full and all related liens have been released, the amount of the Judgment Reserve
shall be reduced to $0.00.

 

Section
2.6 Applicable Term Loan Advance Amount. The word “refinance” appearing in the definition of “Applicable
Term Loan Advance Amount” set forth in Section 1.1 of the Original Loan Agreement is hereby amended to read “finance
or refinance”.

 

Section
2.7 Term Loan. The word “refinancing” appearing in the second sentence of Section 2.1(b) of the Original
Loan Agreement is hereby amended to read “financing or refinancing”.

 

Section
2.8 Commitment Fee. Section 3.2(a) of the Original Loan Agreement is hereby amended to add the following sentence to
the end thereof, which sentence shall read in its entirety as follows:

 

In
consideration of the increase of the Term Loan Commitment and other amendments provided in the First Amendment, Borrowers agree
to pay to the Lender a fee in the amount of $20,000, which amount shall be payable on the First Amendment Closing Date.

 

Section
2.9 Mandatory Payments. The amount “$45,238” appearing in Section 4.3(a) of the Original Loan Agreement
is hereby amended to read “$67,679”.

 

Section
2.10 Post-Closing Requirements. Section 8.20 of the Original Loan Agreement is hereby amended as follows:

 

(a) The
date “February 15, 2020” appearing in subsection (a) is hereby amended to read “November 30, 2020”;

 

    First Amendment to Loan and Security Agreement (Air Industries) - Page 2

     

    

 

(b) The
date “September 30, 2020” appearing in subsection (b) is hereby amended to read “November 30, 2020”;

 

(c) Subsections
(c) is hereby deleted; and

 

(d) Subsections
(d), (e) and (f) are hereby amended to read as follows:

 

(d) On
or before December 31, 2020, a UCC amendment in form and substance satisfactory to Lender, amending that certain UCC financing
statement naming Engineering as debtor and MUFG Union Bank, N.A. as secured party, filed with the Connecticut Department of State
(the “Connecticut Filing Office”), shall be authorized for filing by MUFG Union Bank, N.A. and filed in the
Connecticut Filing Office; and in the event such UCC amendment is not so authorized and filed on or before such date, any and
all Accounts owing to any Borrower by General Electric Company or any of its affiliates shall not be included as Eligible Accounts
at any time after such date.

 

(e) Within
thirty (30) days after the First Amendment Closing Date, Credit Parties shall (i) cause each of Signature Financial, Wells Fargo
Equipment Finance, HVB Equipment Capital and BFG Corporation to terminate any and all UCC financing statements in favor of such
creditors or (ii) cause an authorized representative of each such creditor to authorize Lender or its designee to file termination
statements for such UCC financing statements.

 

(f) Within
thirty (30) days after the First Amendment Closing Date, Credit Parties shall deliver to Lender (a) evidence satisfactory to Lender
that Credit Parties have obtained contents coverage for Connecticut building 2 and an endorsement, in form and substance satisfactory
to Lender, related to the property insurance for such building 2 which names Lender as lender loss payee with respect to such
insurance, and (b) an endorsement, in form and substance satisfactory to Lender, which names Lender as additional insured with
respect to liability insurance for all non-Connecticut locations of Credit Parties.

 

Section
2.11 Use of Proceeds. Clause (c) of Section 9.3 of the Original Loan Agreement is hereby amended to read as follows:

 

(c)
on the Agreement Date and thereafter, (i) for working capital in the ordinary course of Borrowers’ business, and (ii) with
regard to proceeds of the Term Loan, to finance or refinance Eligible Equipment on the First Amendment Closing Date.

 

Section
2.12 Schedules. Schedule 1.2 of the Original Loan Agreement is hereby amended to read in its entirety as set forth on
Schedule 1.2 hereto, and Schedule 7.21 of the Original Loan Agreement is hereby amended to read in its entirety as set forth on
Schedule 7.21 hereto.

 

Article
III

Conditions of Effectiveness

 

Section
3.1 Effective Date. This Amendment shall become effective as of the date hereof once the following conditions precedent
have been satisfied in full:

 

(a) Lender
shall have received, at Lender’s office, a duly executed counterpart of this Amendment by each Credit Party;

 

    First Amendment to Loan and Security Agreement (Air Industries) - Page 3

     

    

 

(b) Lender
shall have received a payoff letter executed by each provider of any and all financing to be paid off with proceeds of a Term
Loan Advance, in each case in form and substance acceptable to Lender;

 

(c) Lender
shall have received a Borrowing Notice, meeting the requirements set forth in Section 2.2(a), for any Term Loan Advance
to be made on the First Amendment Closing Date;

 

(d) Lender
shall have received (A) a copy of the organizational documents of each Credit Party and all amendments thereto and  a copy
of the bylaws or similar governing document of each Credit Party and all amendments thereto, or in each case a certification that
such organizational documents or bylaws have not been amended, modified or terminated since the Agreement Date and are in full
force and effect as of the First Amendment Closing Date, (B) certification of the name, signature and incumbency of all officers
of such Person who are authorized to execute this Amendment and any other Loan Document or, with respect to Borrower Representative,
request Loans and (C) a copy of authorizing resolutions approving the transactions contemplated by this Amendment, and authorizing
and directing an officer or officers of such Person to sign and deliver this Amendment and all other Loan Documents to be executed
by it in connection with this Amendment, duly adopted by such Person’s board of directors or similar governing body, all
accompanied by a certificate from a secretary or a Responsible Officer of such Person dated as of the First Amendment Closing
Date to the effect that each such item is true and complete and in full force and effect as of the First Amendment Closing Date;

 

(e) Lender
shall have received payment of the fee in the amount of $20,000 payable on the First Amendment Closing Date in accordance with
Section 3.2(a) of the Loan Agreement, in immediately available funds on or before the date hereof;

 

(f) Borrowers
shall have paid all reasonable out-of-pocket expenses of Lender, including reasonable fees and expenses billed to date of Lender’s
outside legal counsel incurred in connection with the preparation, negotiation, execution and delivery of this Amendment and the
transactions contemplated hereby;

 

(g) After
giving effect to this Amendment, all representations and warranties in the Loan Agreement and the other Loan Documents shall be
true and correct in all material respects on and as of the date hereof, as though such representations and warranties are made
on and as of such date (except to the extent any such representations and warranties relate solely to an earlier date); and

 

(h) After
giving effect to this Amendment, no Default or Event of Default shall have occurred and be continuing.

 

Article
IV

Representations and Warranties

 

Section
4.1 Representations and Warranties of Credit Parties. In order to induce the Lender to enter into this Amendment, Credit
Parties represent and warrant to the Lender that:

 

(a) The
representations and warranties contained in Article VII of the Original Loan Agreement are true and correct in all material respects
at and as of the time of the effectiveness hereof; provided, however, (i) the foregoing materiality qualifier shall
not apply to those representations and warranties that, by their terms, are already so qualified, and (ii) those representations
and warranties containing a reference to a particular date shall continue to be qualified by reference to such date;

 

    First Amendment to Loan and Security Agreement (Air Industries) - Page 4

     

    

 

(b) Each
Credit Party is duly authorized to execute and deliver this Amendment, each Credit Party is and will continue to be duly authorized
to perform its obligations under the Loan Agreement and each Borrower is and will continue to be duly authorized to borrow Loans
under the Loan Agreement. Each Credit Party has duly taken all corporate or limited liability company action necessary to authorize
the execution and delivery of this Amendment and to authorize the performance of the obligations of such Credit Party hereunder;

 

(c) The
execution and delivery by each Credit Party of this Amendment, the performance by each Credit Party of its obligations hereunder
and the consummation of the transactions contemplated hereby do not and will not conflict with any provision of law, statute, rule
or regulation or of the organizational documents of any Credit Party, or of any material agreement, judgment, license, order or
permit applicable to or binding upon any Credit Party, or result in the creation of any lien, charge or encumbrance upon any assets
or properties of any Credit Party;

 

(d) Except
for those which have been duly obtained, no consent, approval, authorization or order of any court or governmental authority or
third party is required in connection with the execution and delivery by each Credit Party of this Amendment or to consummate the
transactions contemplated hereby;

 

(e) When
duly executed and delivered, this Amendment will be a legal and binding instrument and agreement of each Credit Party, enforceable
in accordance with its terms, except as limited by bankruptcy, insolvency and similar laws applying to creditors’ rights
generally and by principles of equity applying to creditors’ rights generally; and

 

(f) After
giving effect to this Amendment, no Default or Event of Default exists under the Loan Agreement or any of the other Loan Documents.

 

Article
V

Miscellaneous

 

Section 5.1 Ratification
of Agreement. The Original Loan Agreement as hereby amended is hereby ratified and confirmed in all respects. Any reference
to the Loan Agreement in any Loan Document shall be deemed to refer to the Original Loan Agreement, as amended by this Amendment.
The execution, delivery and effectiveness of this Amendment shall not operate as a waiver of any right, power or remedy of Lender
under the Loan Agreement or any other Loan Document nor constitute a waiver of any provision of the Loan Agreement or any other
Loan Document. The Credit Parties ratify and confirm that all guaranties, assurances and Liens granted, conveyed or assigned to
Lender under the Loan Documents (as they may have been renewed, extended and amended) are not released, reduced or otherwise adversely
affected by this Amendment and continue to guarantee, assure and secure the full payment and performance of the present and future
Obligations and agree to perform such acts and duly authorize, execute, acknowledge, deliver, file and record such additional documents
and certificates as Lender may reasonably request in order to create, perfect, preserve and protect those guaranties, assurances
and Liens.

 

Section 5.2 Survival
of Agreements. All representations, warranties, covenants and agreements of Credit Parties herein shall survive the execution
and delivery of this Amendment and the performance hereof, and shall further survive until all of the Obligations are paid in full.
All statements and agreements contained in any certificate or instrument delivered by Borrowers or any other Credit Party hereunder
or under the Loan Agreement to Lender shall be deemed to constitute representations and warranties by, or agreements and covenants
of, such Person(s) under this Amendment and under the Loan Agreement.

 

    First Amendment to Loan and Security Agreement (Air Industries) - Page 5

     

    

 

Section 5.3 Loan
Document. This Amendment is a Loan Document, and all provisions in the Loan Agreement pertaining to Loan Documents apply hereto.

 

Section 5.4 Governing
Law. THIS AMENDMENT HAS BEEN EXECUTED OR COMPLETED AND/OR IS TO BE PERFORMED IN NEW YORK, AND IT AND ALL TRANSACTIONS HEREUNDER
OR PURSUANT HERETO SHALL BE GOVERNED AS TO INTERPRETATION, VALIDITY, EFFECT, RIGHTS, DUTIES AND REMEDIES OF THE PARTIES THEREUNDER
AND IN ALL OTHER RESPECTS BY THE LAWS OF NEW YORK, WITHOUT GIVING EFFECT TO THE CONFLICTS OF LAWS PRINCIPLES THEREOF, BUT INCLUDING
SECTIONS 5-1401 AND 5-1402 OF THE GENERAL OBLIGATIONS LAW.

 

Section 5.5 Counterparts;
Fax; Final Agreement. This Amendment may be separately executed in counterparts and by the different parties hereto in separate
counterparts, each of which when so executed and taken together shall be deemed to constitute one and the same Amendment. This
Amendment may be duly executed and delivered by facsimile, electronic mail or other electronic transmission.

 

Section 5.6 Release.
Each Credit Party, on behalf of itself and, as applicable, such Credit Party’s predecessors, successors, successors-in-interest,
partners, members, shareholders, managers, directors, officers, heirs, beneficiaries, agents and assigns (each, a “Releasing
Person” and collectively, the “Releasing Persons”): (i) does hereby forever RELEASE, ACQUIT, REMISE
and FOREVER DISCHARGE Lender and its Affiliates, Equity Interest owners, present and former officers, directors, stockholders,
members, managers, employees, attorneys, agents and other representatives, and the respective predecessors, successors, successors-in-interest,
assigns, heirs, and representatives of each of the foregoing (each, a “Releasee” and collectively, the “Releasees”)
from any and all actions, causes of action, counterclaims, suits, debts, dues, sums of money, accounts, reckonings, bonds, bills,
covenants, contracts, controversies, agreements, promises, variances, trespasses, damages, judgments, extents, executions, rights,
claims, demands, liabilities, losses, rights to reimbursement, subrogation, indemnification or other payment, costs or expenses,
and reasonable attorneys’ fees, whether in law or in equity, of any nature whatsoever, known or unknown, suspected or unsuspected,
fixed or contingent, and whether representing a past, present or future obligation of the Releasees, or any of them, that any of
the Releasing Persons ever had from the beginning of time, may have or hereafter can, may or shall have against the Releasees,
or any of them, which have arisen or accrued prior to or as of the date of this Amendment, in each case to the extent in any way
relating to or arising out of or in connection with: (a) any of the Obligations or the Loan Documents; (b) any of the transactions
consummated under any of the Loan Documents; (c) the making of any Loan or the use of the proceeds thereof; (d) the Collateral;
(e) the exercise by Lender of any right or remedy under or with respect to the Loan Documents, the Obligations, or the Collateral;
(f) the conduct of the relationship between or among the Lender and any one or more of the Credit Parties (or any one or more of
them); (g) fraud, dominion, control, alter ego, instrumentality, misrepresentation, NEGLIGENT MISREPRESENTATION, duress,
coercion, undue influence, interference, NEGLIGENCE OR GROSS NEGLIGENCE, business interruption or lost profits, slander,
libel or damage to reputation; (h) estoppel, promissory estoppel or waiver; (i) usury or penalty or damages therefor, from any
advances or loans, or from the contracting for, charging, taking, reserving, collecting or receiving interest in excess of the
highest lawful rate; (j) intentional or negligent infliction of mental distress, tortious interference with contractual relations,
tortious interference with governance or prospective business advantage, or mistake; (k) any act, failure to act, event, omission,
transfer, payment or transaction occurring on or prior to the date of this Amendment; (l) any fee, penalty or payment charged or
paid under or in connection with the Loan Documents or this Amendment; or (m) the negotiation of this Amendment and any Loan Documents
(each a “Claim” and collectively, “Claims”) and (ii) does hereby agree and covenant not to
assert or prosecute against any or all of the Releasees any Claims.

 

THIS AMENDMENT AND
THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS,
OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.

 

THERE ARE NO UNWRITTEN
ORAL AGREEMENTS BETWEEN THE PARTIES.

 

[The
remainder of this page is intentionally left blank.]

 

    First Amendment to Loan and Security Agreement (Air Industries) - Page 6

     

    

 

IN WITNESS WHEREOF,
this Amendment is executed as of the date first above written.

 

	 	AIR INDUSTRIES MACHINING,
    CORP., as a Borrower
	 	 
	 	By: 	/s/ Michael Recca
	 	Name: 	Michael
Recca
	 	Title:	 Chief Financial Officer
	 	 
	 	NASSAU TOOL WORKS, INC., as a Borrower
	 	 
	 	By: 	/s/ Michael Recca
	 	Name:	Michael
Recca
	 	Title: 	Chief Financial Officer
	 	 
	 	THE STERLING ENGINEERING CORPORATION, as a Borrower
	 	 
	 	By: 	/s/ Michael Recca
	 	Name: 	Michael
Recca
	 	Title:	 Chief Financial Officer
	 	 
	 	AIR INDUSTRIES GROUP, as a Guarantor and a Credit
    Party
	 	 
	 	By: 	/s/ Michael Recca
	 	Name:	Michael Recca
	 	Title: 	Chief Financial Officer
	 	 
	 	AIR REALTY GROUP, LLC, as a Guarantor and a
    Credit Party
	 	 
	 	By: 	/s/ Michael Recca
	 	Name: 	Michael
Recca
	 	Title: 	Chief Financial Officer
	 	 
	 	STERLING NATIONAL BANK, as Lender
	 	 
	 	By: 	/s/ Mark Long
	 	 	Mark Long
	 	 	Senior Vice President

 

    First Amendment to Loan and Security Agreement (Air Industries) - Signature Page

     

    

 

SCHEDULE
1.2

 

Term Loan Primary Collateral

 

See the list annexed
hereto which was derived from the Appraisal Report dated October 26, 2020, prepared by Tiger Group and provided to Lender.

 

    First Amendment to Loan and Security Agreement (Air Industries) - Schedule 1.2

     

    

 

SCHEDULE
7.21

 

Debt

 

	Original Lessor	 	Account Number	 	 	Principle 
Balance as of 11-30-19	 	 	Payoff 
Amount	 	 	Monthly 
Payment	 	 	Appraisal 
Valuation	 	 	Last Payment Date	 	Description
	NMHG Financial	 	 	        	 	 	$	10,500.21	 	 	 	       	 	 	$	409.42	 	 	 	         	 	 	2-1-22	 	Yale Forklift
	HVB Equipment Capital LLC*	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Leaf Capital Funding, LLC	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Copiers

 

* This lease has been paid off

 

The following two Supplier Agreements will remain
in place after closing:

 

Air Machining -

 

Citibank, N.A. – as described
in UCC Filing Number 201901160022494, Citibank claims an interest in receivables due from Sikorsky and United Technologies to the
extent those receivables are purchased by Citibank.

 

Sterling Engineering –

 

Citibank
Europe PLC - as described in UCC Filing Number 0003096251, Citibank claims an interest in receivables due from GKN to the extent
those receivables are purchased by Citibank Europe.

 

The following UCC filing and related obligations
will remain in place after closing:

 

As described in UCC Filing Number
2013025063-0, Taglich Brothers, Inc., as agent for purchasers, claims an interest in payments due to Parent from Meyer Tool, Inc.

 

The following Supplier Agreement will remain
in place after closing on the First Amendment:

 

MUFG – Receivable Purchase
Agreement dated July 16, 2020, between The Sterling Engineering Corporation and MUFG Union Bank, N. A., as described in UCC Filing
Number 0003395898, pursuant to which MUFG claims an interest in receivables due from General Electric Company or a subsidiary or
affiliate of GE to the extent those receivables are purchased by MUFG.

 

The following State Tax Lien will remain
in place after closing on the First Amendment:

 

Lien for $100 in favor of the New York State Commissioner
of Taxation- Index No. EO45968238W0013

 

 

First
Amendment to Loan and Security Agreement (Air Industries) – Schedule 7.21

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