Document:

Unassociated Document

 

Amendment of Registration Rights Agreement

 

This Agreement amends the Registration Rights Agreement described below insofar as necessary for the Investor whose name appears below to become a party to such Agreement with respect to the Registrable Securities, as defined below, underlying the Notes acquired by the Investor.

 

R E C I T A L S:

 

In connection with the private placement of its Series A Convertible Preferred Stock completed in May and June 2016, Air Industries Group (the “Company”) and the purchasers of the shares of Series A Convertible Preferred Stock (the “Series A Preferred Stock”) sold in the offering entered into a Registration Rights Agreement dated May 26, 2016 (the “Registration Rights Agreement”).  The Investor has acquired one of the Company’s 12% Subordinated Convertible Notes due December 31, 2017 (the “Notes”) sold pursuant to a Private Placement Memorandum dated August  4 , 2016.    The Investor and the Company are entering into this Agreement to amend the Registration Rights Agreement in the following respects:

 

	
  

	
1.

	
The shares of Series A Preferred Stock or Common Stock of the Company acquired upon conversion of the Notes in accordance with the terms of the Notes and the shares of Common Stock acquired upon conversion of the Series A Preferred Stock in accordance with the terms of the Certificate of Designation authorizing the issuance of the Series A Preferred Stock, and any shares of Series A Preferred Stock issued in lieu of payment of cash dividends thereon, shall be included as “Registrable Securities” as defined in the Registration Rights Agreement and shall be included in any Registration Statement filed pursuant to the Registration Rights Agreement.

 

	
  

	
2.

	
By executing this amendment, the undersigned becomes a party to the Registration Rights Agreement, as hereby amended, subject to the obligations thereunder.

 

	
  

	
3.

	
This amendment may be executed in counterparts, all of which taken together shall constitute one amendment to the Registration Rights Agreement.

 

IN WITNESS WHEREOF, the undersigned have executed this Amendment to the Registration Rights Agreement as of August __, 2016.

 

	
INVESTOR:

 

If an individual: _____________________

                            Name:

 

If an entity:

Name of Entity:   __________________

                              

By: __________________

   Name:

   Title

 

	
AIR INDUSTRIES GROUP

 

 

 

 

By: ____________________

       Daniel R. Godin

       President and CEOBLOW
& DRIVE INTERLOCK CORPORATION

 

 

 

SECURITIES
PURCHASE AGREEMENT

 

 

 

    	 

    	 

    

 

SECURITIES
PURCHASE AGREEMENT

 

This
Securities Purchase Agreement (this “Agreement”) is made and entered into effective as of the 30th day of March, 2016
(the “Effective Date”) by and between Blow & Drive Interlock Corporation, a Delaware corporation (the “Company”),
and Dr. Oren Azulay, an individual (the “Purchaser”). The Company and Purchaser shall each be referred to as a “Party”
and collectively as the “Parties.”

 

AGREEMENT

 

1.
PURCHASE OF SECURITIES: On the Closing Date (as hereinafter defined), subject to the terms and conditions set forth in
this Agreement, the Purchaser hereby agrees to purchase, and the Company hereby agrees to sell, a $50,000 principal amount non-convertible
promissory note, in the form attached hereto as Exhibit B (the “Note”), and Fifty Thousand (50,000) shares
of the Company’s common stock, restricted in accordance with Rule 144 (the “Shares”), in exchange for Fifty
Thousand Dollars ($50,000) (the “Purchase Price”). Together the Note and the Shares will be referred herein as the
“Securities.”

 

2.
CLOSING AND DELIVERY:

 

a)
Upon the terms and subject to the conditions set forth herein, the consummation of the purchase and sale of the Securities (the
“Closing”) shall be held simultaneous with the execution of this Agreement, or at such other time mutually agreed
upon between the constituent Parties (the “Closing Date”). The Closing shall take place at the offices of counsel
for the Company set forth in Section 6 hereof, or by the exchange of documents and instruments by mail, courier, facsimile and
wire transfer to the extent mutually acceptable to the Parties hereto.

 

b)
At the Closing:

 

(i)
The Company and the Purchaser shall execute this Agreement, and the Company will execute the Note, which shall serve as evidence
of ownership of the Note and the Shares, free from restrictions on transfer except as set forth in this Agreement and federal
and state securities laws.

 

(ii)
The Purchaser shall deliver to the Company the Purchase Price.

 

3.
REPRESENTATIONS, WARRANTIES AND AGREEMENTS BY PURCHASER: The Purchaser hereby represents, warrants and agrees as follows:

 

a)
Purchase for Own Account. Purchaser represents that he is acquiring the Securities solely for his own account and beneficial
interest for investment and not for sale or with a view to distribution of the Securities or any part thereof, has no present
intention of selling (in connection with a distribution or otherwise), granting any participation in, or otherwise distributing
the same, and does not presently have reason to anticipate a change in such intention.

 

    	Page 1 of 8

    	 

    

 

b)
Ability to Bear Economic Risk. Purchaser acknowledges that an investment in the Securities involves a high degree of risk,
and represents that he is able, without materially impairing his financial condition, to hold the Securities for an indefinite
period of time and to suffer a complete loss of his investment.

 

c)
Access to Information. The Purchaser acknowledges that the Purchaser has been furnished with such financial and other information
concerning the Company, the directors and officers of the Company, and the business and proposed business of the Company as the
Purchaser considers necessary in connection with the Purchaser’s investment in the Securities, and is aware the Company
makes quarterly filings with the Securities and Exchange Commission viewable on the EDGAR system. As a result, the Purchaser is
thoroughly familiar with the proposed business, operations, properties and financial condition of the Company and has discussed
with officers of the Company any questions the Purchaser may have had with respect thereto. The Purchaser understands:

 

(i)
The risks involved in this investment, including the speculative nature of the investment;

 

(ii)
The financial hazards involved in this investment, including the risk of losing the Purchaser’s entire investment;

 

(iii)
The lack of liquidity and restrictions on transfers of the Securities; and

 

(iv)
The tax consequences of this investment.

 

The
Purchaser has consulted with the Purchaser’s own legal, accounting, tax, investment and other advisers with respect to the
tax treatment of an investment by the Purchaser in the Securities and the merits and risks of an investment in the Securities.

 

d)
Securities Part of Private Placement. The Purchaser has been advised that the Securities have not been registered under
the Securities Act of 1933, as amended (the “Act”), or qualified under the securities law of any state, on the ground,
among others, that no distribution or public offering of the Securities is to be effected and the Securities will be issued by
the Company in connection with a transaction that does not involve any public offering within the meaning of section 4(a)(2) of
the Act and/or Regulation D as promulgated by the Securities and Exchange Commission under the Act, and under any applicable state
blue sky authority. The Purchaser understands that the Company is relying in part on the Purchaser’s representations as
set forth herein for purposes of claiming such exemptions and that the basis for such exemptions may not be present if, notwithstanding
the Purchaser’s representations, the Purchaser has in mind merely acquiring the Securities for resale on the occurrence
or nonoccurrence of some predetermined event. The Purchaser has no such intention.

 

e)
Purchaser Not Affiliated with Company. The Purchaser, either alone or with the Purchaser’s professional advisers
(i) are unaffiliated with, have no equity interest in, and are not compensated by, the Company or any affiliate or selling agent
of the Company, directly or indirectly (other than as set forth in the Investor Questionnaire attached hereto as Exhibit A);
(ii) has such knowledge and experience in financial and business matters that the Purchaser is capable of evaluating the merits
and risks of an investment in the Securities; and (iii) has the capacity to protect the Purchaser’s own interests in connection
with the Purchaser’s proposed investment in the Securities.

 

    	Page 2 of 8

    	 

    

 

f)
Further Limitations on Disposition. Purchaser further acknowledges that the Securities are restricted securities under
Rule 144 of the Act, and, therefore, if the Company, in its sole discretion, chooses to issue any certificates reflecting the
ownership interest in the Securities, those certificates will contain a restrictive legend substantially similar to the following:

 

THESE
SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”). THEY MAY NOT BE SOLD,
OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THE SECURITIES UNDER THE
ACT OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.

 

Without
in any way limiting the representations set forth above, Purchaser further agrees not to make any disposition of all or any portion
of the Securities unless and until:

 

(i)
There is then in effect a Registration Statement under the Act covering such proposed disposition and such disposition is made
in accordance with such Registration Statement; or

 

(ii)
Purchaser shall have obtained the consent of the Company and notified the Company of the proposed disposition and shall have furnished
the Company with a detailed statement of the circumstances surrounding the proposed disposition, and if reasonably requested by
the Company, Purchaser shall have furnished the Company with an opinion of counsel, reasonably satisfactory to the Company, that
such disposition will not require registration under the Act or any applicable state securities laws.

 

Notwithstanding
the provisions of subparagraphs (i) and (ii) above, no such registration statement or opinion of counsel shall be necessary for
a transfer by such Purchaser to a partner (or retired partner) of Purchaser, or transfers by gift, will or intestate succession
to any spouse or lineal descendants or ancestors, if all transferees agree in writing to be subject to the terms hereof to the
same extent as if they were Purchasers hereunder as long as the consent of the Company is obtained.

 

    	Page 3 of 8

    	 

    

 

g)
Accredited Investor Status (Please check one). Purchaser

 

_____
is

 

_____
is not

 

an
“accredited investor” as such term is defined in Rule 501 under the Act because Purchaser either:

 

(i)
has a net worth of at least $1,000,000 (for purposes of this question, Purchaser may include spouse’s net worth and
may include the fair market value of home furnishings and automobiles, but must exclude from the calculation the value of Purchaser’s
primary residence and the related amount of any indebtedness on primary residence up to the fair market value of the primary residence
(any indebtedness that exceeds the fair market value of the primary residence must be deducted from net worth calculation)), or

 

(ii)
had an individual income of more than $200,000 in each of the two most recent calendar years, and reasonably expects to have an
individual income in excess of $200,000 in the current calendar year; or along with Purchaser’s spouse had joint income
in excess of $300,000 in each of the two most recent calendar years, and reasonably expects to have a joint income in excess of
$300,000 in the current calendar year.

 

For
purposes of this Agreement, “individual income” means “adjusted gross income” as reported for Federal
income tax purposes, exclusive of any income attributable to a spouse or to property owned by a spouse, and increased by the following
amounts: (i) the amount of any interest income received which is tax-exempt under Section 103 of the Internal Revenue Code of
1986, as amended, (the “Code”), (ii) the amount of losses claimed as a limited partner in a limited partnership (as
reported on Schedule E of form 1040), (iii) any deduction claimed for depletion under Section 611 et seq. of the Code and (iv)
any amount by which income from long-term capital gains has been reduced in arriving at adjusted gross income pursuant to the
provisions of Sections 1202 of the Internal Revenue Code as it was in effect prior to enactment of the Tax Reform Act of 1986.

 

For
purposes of this Agreement, “joint income” means, “adjusted gross income,” as reported for Federal income
tax purposes, including any income attributable to a spouse or to property owned by a spouse, and increased by the following amounts:
(i) the amount of any interest income received which is tax-exempt under Section 103 of the Internal Revenue Code of 1986, as
amended (the “Code”), (ii) the amount of losses claimed as a limited partner in a limited partnership (as reported
on Schedule E of Form 1040), (iii) any deduction claimed for depletion under Section 611 et seq. of the Code and (iv) any amount
by which income from long-term capital gains has been reduced in arriving at adjusted gross income pursuant to the provisions
of Section 1202 of the Internal Revenue Code as it was in effect prior to enactment of the Tax Reform Act of 1986.

 

    	Page 4 of 8

    	 

    

 

For
the purposes of this Agreement, “net worth” means (except as otherwise specifically defined) the excess of total assets
at fair market value, including home and personal property, over total liabilities, including mortgages and income taxes on unrealized
appreciation of assets.

 

h)
Purchaser Qualifications.

 

The
Purchaser is an individual over 21 years of age.

 

i)
Purchaser Authorization. The Purchaser, if not an individual, is empowered and duly authorized to enter into this Agreement
under any governing document, partnership agreement, trust instrument, pension plan, charter, certificate of incorporation, bylaw
provision or the like; this Agreement constitutes a valid and binding agreement of the Purchaser enforceable against the Purchaser
in accordance with its terms; and the person signing this Agreement on behalf of the Purchaser is empowered and duly authorized
to do so by the governing document or trust instrument, pension plan, charter, certificate of incorporation, bylaw provision,
board of directors or stockholder resolution, or the like.

 

j)
No Backup Withholding. The Social Security Number or taxpayer identification shown in this Agreement (or provided to the
Company separately) is correct, and the Purchaser is not subject to backup withholding because (i) the Purchaser has not been
notified that he or she is subject to backup withholding as a result of a failure to report all interest and dividends or (ii)
the Internal Revenue Service has notified the Purchaser that he or she is no longer subject to backup withholding.

 

k)
Investor Questionnaire. The Purchaser has accurately completed the Investor Questionnaire attached hereto as Exhibit
A and incorporated by reference herein.

 

4.
REPRESENTATIONS, WARRANTIES AND AGREEMENTS BY COMPANY: The Company hereby represents, warrants and agrees as follows:

 

a)
Authority of Company. The Company has all requisite authority to execute and deliver this Agreement and to carry out and
perform its obligations under the terms of this Agreement.

 

b)
Authorization. All actions on the part of the Company necessary for the authorization, execution, delivery and performance
of this Agreement by the Company and the performance of the Company’s obligations hereunder has been taken or will be taken
prior to the issuance of the Securities. This Agreement, when executed and delivered by the Company, shall constitute valid and
binding obligations of the Company enforceable in accordance with their terms, subject to laws of general application relating
to bankruptcy, insolvency, the relief of debtors and, with respect to rights to indemnity, subject to federal and state securities
laws. The issuance of the Securities will be validly issued, fully paid and nonassessable, will not violate any preemptive rights,
rights of first refusal, or any other rights granted by the Company, and will be issued in compliance with all applicable federal
and state securities laws, and will be free of any liens or encumbrances, other than any liens or encumbrances created by or imposed
upon the Purchaser through no action of the Company; provided, however, that the Securities may be subject to restrictions on
transfer under state and/or federal securities laws as set forth herein or as otherwise required by such laws at the time the
transfer is proposed.

 

    	Page 5 of 8

    	 

    

 

c)
Governmental Consents. All consents, approvals, orders, or authorizations of, or registrations, qualifications, designations,
declarations, or filings with, any governmental authority required on the part of the Company in connection with the valid execution
and delivery of this Agreement, the offer, sale or issuance of the Securities, or the consummation of any other transaction contemplated
hereby shall have been obtained, except for notices required or permitted to be filed with certain state and federal securities
commissions, which notices will be filed on a timely basis.

 

5.
INDEMNIFICATION: The Purchaser hereby agrees to indemnify and defend the Company and its officers and directors and hold
them harmless from and against any and all liability, damage, cost or expense incurred on account of or arising out of:

 

(a)
Any breach of or inaccuracy in the Purchaser’s representations, warranties or agreements herein;

 

(b)
Any disposition of any Securities contrary to any of the Purchaser’s representations, warranties or agreements herein;

 

(c)
Any action, suit or proceeding based on (i) a claim that any of Purchaser’s representations, warranties or agreements herein
were inaccurate or misleading or otherwise cause for obtaining damages or redress from the Company or any director or officer
of the Company under the Act, or (ii) any disposition of any Securities under Section 5.(b) herein.

 

6.
MISCELLANEOUS:

 

a)
Binding Agreement. The terms and conditions of this Agreement shall inure to the benefit of and be binding upon the respective
successors and assigns of the Parties. Nothing in this Agreement, expressed or implied, is intended to confer upon any third party
any rights, remedies, obligations, or liabilities under or by reason of this Agreement, except as expressly provided in this Agreement.

 

b)
Governing Law; Venue. This Agreement shall be governed by and construed under the laws of the State of California as applied
to agreements among California residents, made and to be performed entirely within the State of California. The Parties agree
that any action brought to enforce the terms of this Agreement will be brought in the appropriate federal or state court having
jurisdiction over Los Angeles County, California, United States of America.

 

c)
Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but
all of which together shall constitute one and the same instrument.

 

d)
Titles and Subtitles. The titles and subtitles used in this Agreement are used for convenience only and are not to be considered
in construing or interpreting this Agreement.

 

    	Page 6 of 8

    	 

    

 

e)
Notices. All notices required or permitted hereunder shall be in writing and shall be deemed effectively given: (a) upon
personal delivery to the Party to be notified, (b) when sent by confirmed facsimile if sent during normal business hours of the
recipient, if not, then on the next business day, or (c) one (1) day after deposit with a nationally recognized overnight courier,
specifying next day delivery, with written verification of receipt. All communications shall be sent as follows:

 

	 	If
    to the Company:	Blow
    & Drive Interlock Corporation
	 	 	1080
    La Cienega Boulevard
	 	 	Suite
    304
	 	 	Los
    Angeles, California 90035
	 	 	Attn.
    Laurence Wainer, CEO
	 	 	Facsimile
    (___) ________________
	 	 	 
	 	with
    a copy to:	Law
    Offices of Craig V. Butler
	 	 	300
    Spectrum Center Drive, Suite 300
	 	 	Irvine,
    CA 92618
	 	 	Attn:
    Craig V. Butler, Esq.
	 	 	Facsimile
    (949) 209-2545
	 	 	 
	 	If
    to Purchaser:	Dr.
    Oren Azulay
	 	 	1110
    Glenville #206
	 	 	Los
    Angeles, CA 90035
	 	 	Facsimile
    (___) ________________
	 	 	 
	 	with
    a copy to:	Email

 

or
at such other address as the Company or Purchaser may designate by ten (10) days advance written notice to the other Party hereto.

 

f)
Modification; Waiver. No modification or waiver of any provision of this Agreement or consent to departure therefrom shall
be effective unless in writing and approved by the Company and the Purchaser.

 

g)
Entire Agreement; Successors. This Agreement and the Exhibits hereto constitute the full and entire understanding and agreement
between the Parties with regard to the subjects hereof and no Party shall be liable or bound to the other Party in any manner
by any representations, warranties, covenants and agreements except as specifically set forth herein. The representations, warranties
and agreements contained in this Agreement shall be binding on the Purchaser’s successors, assigns, heirs and legal representatives
and shall inure to the benefit of the respective successors and assigns of the Company and its directors and officers.

 

h)
Expenses. Each Party shall pay their own expenses in connection with this Agreement. In addition, should either Party commence
any action, suit or proceeding to enforce this Agreement or any term or provision hereof, then in addition to any other damages
or awards that may be granted to the prevailing Party, the prevailing Party shall be entitled to have and recover from the other
Party such prevailing Party’s reasonable attorneys’ fees and costs incurred in connection therewith.

 

 i) Currency. All currency is expressed in U.S. dollars.

 

    	Page 7 of 8

    	 

    

 

In
Witness Whereof, the Parties have executed
this Securities Purchase Agreement as of the date first written above.

 

	“Company”	 	“Purchaser”
	 	 	 
	Blow
    & Drive Interlock Corporation,	 	Dr.
    Oren Azulay
	a
    Delaware corporation	 	an
    individual
	 	 	 
		 	 	 
	By: 	Laurence
    Wainer	 	Dr.
    Oren Azulay
	Its:	President	 	 

 

    	Page 8 of 8

    	 

    

 

Exhibit
A

 

Investor
Questionnaire

(to
be completed by each Purchaser)

 

	Name:	 	 	SSN
    or FEIN:	 

 

	Home
    Phone:	 	 	Email:	 
	 	 	 	 	 
	Work
    Phone:	 	 	 	 

 

	1.	a.
    State of Residence:	 
	 	b.
    For how long?	 

	 	c.
    Do you maintain a residence in any other state?	 

 

	2.		In which
state(s) do you

 

	 	a.
    File state income tax returns:	 

	 	b.
    Vote:	 

	 	c.
    Hold current driver’s license:	 
	 	d.
    Maintain a house or apartment:	 

 

	3.	What
    is your present age? ___________.
	 	What
    is your date of birth? ______________________

 

4.
Is your net worth in excess of $1,000,000? (For purposes of this question, you may include your spouse’s net worth and may
include the fair market value of your home furnishings and automobiles, but excluding from the calculation the value of your primary
residence and the related amount of any indebtedness on primary residence up to the fair market value of the primary residence
(any indebtedness that exceeds the fair market value of the primary residence must be deducted from your net worth)).

 

Yes
[  ] No [  ]

 

5.
Was your individual gross income during each of the past two years in excess of $200,000?

 

Yes
[  ] No [  ]

 

6.
If your answer to question 5 was yes, do you reasonably anticipate that your gross income for the current year will be in excess
of $200,000?

 

Yes
[  ] No [  ]

 

    	A-1

    	 

    

 

7.
Was your joint gross income with your spouse in excess of $300,000 in each of the last two years?

 

Yes
[  ] No [  ]

 

8.
If your answer to question 7 was yes, do you reasonably anticipate that your joint gross income with your spouse for the current
year will be in excess of $300,000?

 

Yes
[  ] No [  ]

 

9.
Does this investment exceed twenty percent (20%) of your net worth? (For purposes of this question, you may include your spouse’s
net worth and may include the fair market value of your home furnishings and automobiles, but excluding from the calculation the
value of your primary residence and the related amount of any indebtedness on primary residence up to the fair market value of
the primary residence (any indebtedness that exceeds the fair market value of the primary residence must be deducted from your
net worth)).

 

Yes
[  ] No [  ]

 

10.
Does this investment exceed ten percent (10%) of your net worth? (For purposes of this question, you may include your spouse’s
net worth and may include the fair market value of your home furnishings and automobiles, but excluding from the calculation the
value of your primary residence and the related amount of any indebtedness on primary residence up to the fair market value of
the primary residence (any indebtedness that exceeds the fair market value of the primary residence must be deducted from your
net worth))

 

Yes
[  ] No [  ]

 

	11.	Your estimated gross income for 2016 is:
	 	Less
    than $75,000	 	 
	 	$75,000
    - $200,000	 	 
	 	Over
    $200,000	 	 
	 	 	 	 
	12.	Your gross income for 2015 was:
	 	Less
    than $75,000	 	 
	 	$75,000
    - $200,000	 	 
	 	Over
    $200,000	 	 
	 	 	 	 
	13.	Your gross income for 2014 was:
	 	Less
    than $75,000	 	 
	 	$75,000
    - $200,000	 	 
	 	Over
    $200,000	 	 
	 	 	 	 
	14.	Current estimated Net Worth (exclusive of home, automobiles):
	 	Less
    than $150,000	 	 
	 	$150,000
    - $250,000	 	 
	 	Over
    $250,000		 

 

    	A-2

    	 

    

 

15.
Investment Experience:

 

(A)
Please indicate the frequency of your investment in securities that are registered and transferred on one or more of the major
United States securities exchanges: Often _____ Occasionally _____ Seldom _____ Never _____.

 

(B)
Please indicate the frequency of your investment in securities which are purchased, sold or transferred in private transactions:
Often _____ Occasionally _____ Seldom _____ Never _____

 

(C)
If your answer to (A) or (B) above was Seldom or Never, please provide your qualifications in evaluating the merits and risks
of this investment?

 

	 
	 

 

16.
Describe below any business or personal relationship you have with any affiliates of the officers or directors of the Company
or any of its affiliates, subsidiaries or business entities in conjunction with this purchase of Securities in the Company, including
a statement of the name of the individual(s)and the length of time you have know such individual(s).

 

	 
	 

 

17.
Have you participated in any prior investments or other business transactions with the Company or its officers, directors, employees,
agents or any of its affiliates?

 

Yes
[  ] No [  ] – If yes, please describe:

 

	 
	 

 

18.
Do you currently have an equity interest in the Company?

 

Yes
[  ] No [  ] – If yes, please describe:

 

	 
	 

 

    	A-3

    	 

    

 

Exhibit
B

 

Note

 

    	B-4

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