Document:

Exhibit
10.1

 

Amendment
to Convertible note PURCHASE AGREEMENT

 

This
Amendment, dated May 26, 2017 (this “Amendment”) amends the Convertible Note Purchase Agreement dated
as of January 27, 2017 (the “Agreement”) among American Power Group Corporation, a Delaware corporation
(the “Company”), and the purchasers identified in the Agreement (each, a “Purchaser”
and collectively the “Purchasers”). Capitalized terms used in this Amendment without definition shall
have the respective meanings assigned to them in the Agreement.

 

WHEREAS,
pursuant to the Agreement, the Company issued Notes in the aggregate principal amount of $2,605,000;

 

WHEREAS,
the principal amount of the Notes, together with all accrued and unpaid interest thereon, will automatically convert into share
of Series E Preferred Stock upon the filing of the Certificate of Designation with the Secretary of State of Delaware;

 

WHEREAS,
the Company is required to file the Certificate of Designation and the Certificate of Amendment with the Secretary of State of
Delaware within two Business Days after receiving stockholder approval thereof;

 

WHEREAS,
the parties desire to amend the Agreement to extend the date by which the Company must file the Certificate of Designation with
the Secretary of State of Delaware; and

 

WHEREAS,
the Agreement may be amended with the written consent of the Company and the Purchasers holding 67% of the Notes then outstanding;

 

NOW,
THEREFORE, IN CONSIDERATION of the mutual covenants contained in this Amendment, and for other good and valuable consideration
the receipt and adequacy of which are hereby acknowledged, the Company and each Purchaser agree as follows:

 

1. Amendment
to Section 4.14 of the Agreement. The last sentence of Section 4.14 of the Agreement is hereby amended to read in its entirety
as follows:

 

“The
Company shall file the Certificate of Amendment with the Secretary of State of Delaware within two Business Days after receiving
stockholder approval thereof as contemplated by the Proxy Statement, and the Company shall file the Certificate of Designation
with the Secretary of State of Delaware within two Business Days after receiving written notice from the Purchasers holding 67%
of the Notes then outstanding requesting the Company to file said Certificate of Designation.” 

 

    	 	 	 

    	 	 	 

    

 

2. Interpretation.
This Amendment together with the Agreement and the other Transaction Documents constitute the full and entire understanding and
agreement among the parties with respect to the subject matter hereof, and supersede any prior or contemporaneous oral or written
discussions as to the subject matter hereof. Except as expressly amended by this Amendment, the terms of the Agreement and the
Transaction Documents shall remain in full force and effect hereafter.

 

3. Governing
Law. All questions concerning the construction, validity, enforcement and interpretation of this Amendment shall be governed
by and construed and enforced in accordance with the internal laws of the State of New York, without regard to the principles
of conflicts of law thereof.

 

4. Execution.
This Amendment may be executed in two or more counterparts, all of which when taken together shall be considered one and the same
agreement and shall become effective when counterparts have been signed the Company and by Purchasers holding 67% of the Notes
now outstanding, it being understood that the parties need not sign the same counterpart. In the event that any signature is delivered
by facsimile transmission or by e-mail delivery of a “.pdf” format data file, such signature shall create a valid
and binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as
if such facsimile or “.pdf” signature page were an original thereof.

 

(Signature
Pages Follow)

 

    	 	 2	 

    	 	 	 

    

 

IN
WITNESS WHEREOF, the parties hereto have caused this Amendment dated as of May 26, 2017 to be duly executed by their respective
authorized signatories as of such date.

 

	American
    Power Group Corporation 	 	Address
    for Notice:
	 	 	 	 
	By:	/s/
    Charles E. Coppa	 	As
    set forth on the Company’s 
	Name: 	Charles
    E. Coppa	 	signature
    page to the Agreement
	Title:
    	Chief
    Financial Officer	 	 

 

[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK.

SIGNATURE
PAGES FOR PURCHASERS FOLLOW.]

 

    	 	 3	 

    	 	 	 

    

 

[PURCHASER
SIGNATURE PAGES TO AMENDMENT TO

AMERICAN
POWER GROUP CORPORATION

CONVERTIBLE
NOTE PURCHASE AGREEMENT]

 

IN
WITNESS WHEREOF, the parties hereto have caused this Amendment dated as of May 26, 2017 to be duly executed by their respective
authorized signatories as of such date.

 

Name
of Purchaser: Associated Private Equity

 

Signature
of Authorized Signatory of Purchaser: /s/ Neil K. Braverman

 

Name
of Authorized Signatory: _______________________________________________

 

Title
of Authorized Signatory: ________________________________________________

 

Email
Address of Authorized Signatory:________________________________________

 

Facsimile
Number of Authorized Signatory: _____________________________________

 

Address
for Notice of Purchaser:

 

_________________________

_________________________

_________________________

_________________________

Fax:
_____________________

 

    	 	 4	 

    	 	 	 

    

 

[PURCHASER
SIGNATURE PAGES TO AMENDMENT TO

AMERICAN
POWER GROUP CORPORATION

CONVERTIBLE
NOTE PURCHASE AGREEMENT]

 

IN
WITNESS WHEREOF, the parties hereto have caused this Amendment dated as of May 26, 2017 to be duly executed by their respective
authorized signatories as of such date.

 

Name
of Purchaser: Arrow, LLC

 

Signature
of Authorized Signatory of Purchaser: /s/ Matthew Van Steenwyk

 

Name
of Authorized Signatory: _______________________________________________

 

Title
of Authorized Signatory: ________________________________________________

 

Email
Address of Authorized Signatory:________________________________________

 

Facsimile
Number of Authorized Signatory: _____________________________________

 

Address
for Notice of Purchaser:

 

_________________________

_________________________

_________________________

_________________________

Fax:
_____________________

 

    	 	 5EXECUTION ORIGINAL

 

FIFTEENTH AMENDMENT TO AMENDED AND RESTATED

REVOLVING CREDIT, TERM LOAN AND SECURITY AGREEMENT

 

THIS
FIFTEENTH AMENDMENT TO AMENDED AND RESTATED REVOLVING CREDIT, TERM LOAN AND SECURITY AGREEMENT (this “Agreement”) is
entered into June 19, 2017 by and among AIR INDUSTRIES MACHINING, CORP. (as successor by merger with Gales Industries Acquisition
Corp., Inc.) (“Air”), a corporation organized under the laws of the State of New York, WELDING METALLURGY, INC. (as
successor by merger with WMS Merger Corp.) (“WM”), a corporation organized under the laws of the State of New York,
NASSAU TOOL WORKS, INC. (formerly known as NTW Operating Inc.) (“Nassau”), a corporation organized under the laws of
the State of New York, WOODBINE PRODUCTS, INC. (“WP”), a corporation organized under the laws of the State of New York,
EUR-PAC CORPORATION (“Eur-Pac”), a corporation organized under the laws of the State of Connecticut, ELECTRONIC CONNECTION
CORPORATION (“ECC”), a corporation organized under the laws of the State of Connecticut, and THE STERLING ENGINEERING
CORPORATION (“STERLING”), a corporation organized under the laws of the State of Connecticut, (“Sterling,”
and collectively with Air, WM, Nassau, WP, EUR-PAC and ECC, the “Borrower”), a corporation organized under the laws
of the State of New York, AIR INDUSTRIES GROUP (as successor by merger with Air Industries Group, Inc. f/k/a Gales Industries Incorporated,
a Delaware corporation)(“AIR GROUP”) a corporation organized under the laws of the State of Nevada and AIR REALTY GROUP,
LLC (“REALTY,” and collectively with AIR GROUP and with the Borrower, the “Obligor”), a limited liability
company organized under the laws of the State of Connecticut, and PNC BANK, NATIONAL ASSOCIATION (“PNC”), the various
financial institutions named therein or which hereafter become a party thereto, (together with PNC, collectively, “Lenders”)
and PNC as agent for Lenders (in such capacity, “Agent”).

 

RECITALS

 

WHEREAS, Obligor and
PNC entered into a certain Amended and Restated Revolving Credit, Term Loan and Security Agreement dated June 27, 2013 (which has
been, is being and may be further amended, replaced, restated, modified and/or extended, the “Loan Agreement”);

 

WHEREAS, AIR GROUP
has filed a registration statement on Form S-1, as amended (the “Registration Statement”), with the Securities and
Exchange Commission (the “SEC”) for an underwritten public offering of shares of common stock, which provides gross
cash proceeds of up to approximately $13,000,000, plus an over-allotment option (the “Offering”);

 

WHEREAS, AIR GROUP
intends to apply the net cash proceeds of the Offering to, among other things, the following uses, as more fully described in the
Registration Statement and related prospectus: (i) redeem shares of AIR GROUP’s Series A Convertible Preferred Stock, $0.0001
par value (the “Series A Preferred Stock”) issued in lieu of cash dividends at a redemption price of $10.00 per share,
the stated value of a shares of Series A Preferred Stock; (ii) redeem AIR GROUP’s Subordinated Convertible Notes due May
12, 2018 in the aggregate principal amount of $4,158,624 as of the date hereof (the “May 2018 Notes”), and (iii) pay
approximately $4,000,000 of outstanding trade payables, and approximately $510,000 in principal, plus accrued interest, as of the
date hereof, on promissory notes issued in March 2017 to Michael N. Taglich and Robert F. Taglich, directors and principal stockholders
of AIR GROUP; and

 

    1 

    

    

 

EXECUTION ORIGINAL

  

WHEREAS, Obligor has
requested modifications to the terms of the Loan Agreement as set forth in this Agreement.

 

Now, therefore, in
consideration of PNC’s continued extension of credit and the agreements contained herein, the parties agree as follows:

 

AGREEMENT

 

		1)	ACKNOWLEDGMENT OF BALANCE. Obligor acknowledges that the most recent statement of account
sent to Obligor with respect to the Obligations is correct.

 

		2)	MODIFICATIONS. The Loan Agreement be and hereby is modified as follows:

 

		(a)	A new definition is hereby added to Section 1.2 of the Loan Agreement to read as follows:

 

“Fifteenth Amendment
Closing Date” shall mean June 19, 2017.

 

		(b)	Subsections 6.5(a) and 6.5(b) of the Loan Agreement are hereby deleted in their entirety and replaced
with new Subsections 6.5(a) and 6.5(b) to read as follows:

 

(a) Fixed
Charge Coverage Ratio. Maintain at all times a Fixed Charge Coverage Ratio, tested quarterly on a consolidated basis beginning
September 30, 2017 as follows: (i) 1.00 to 1.00 for the quarter ending September 30, 2017, tested based upon the prior three (3)
months, (ii) 1.05 to 1.00 for the quarter ending December 31, 2017, tested based upon the prior six (6) months and (iii) 1.05 to
1.00 for the quarter ending March 31, 2018, tested based upon the prior nine (9) months.

 

(b) Minimum
EBITDA. Maintain EBITDA of not less than $345,000 for the period ending June 30, 2017.

 

		3)	GUARANTOR’S RATIFICATION. (A) AIR GROUP hereby reaffirms its continuing obligations
under the terms of that certain Guaranty and Suretyship Agreement dated August 24, 2007 executed by Air Industries Group, Inc.
f/k/a Gales Industries Incorporated, a Delaware corporation, and (B) Air Realty Group, LLC, a Connecticut limited liability company,
hereby reaffirms its continuing obligations under the terms of that certain Continuing Unlimited Guaranty dated March 9, 2015 (collectively,
the “Guaranty”), and acknowledge that (i) they have read this Agreement, (ii) the Obligations under the Loan Agreement
are secured by the Guaranty, and (iii) they make such reaffirmation with full knowledge of the terms thereof.

 

		4)	REPAYMENT OF OUTSTANDING EXCESS ADVANCES. Borrower and Agent recognize that as of the Fifteenth
Amendment Closing Date, there are outstanding excess advances as defined by Subsection 2.8 of the Loan Agreement (“Excess
Advances”) in the amount of $2,244,071.19, and Borrower hereby agrees that such Excess Advances shall be reduced as follows:

 

(i)       by
the sum of $25,000.00 to be paid on each Monday during the period May 22, 2017 through July 10, 2017; and

 

(ii)       by
the sum of $100,000.00 to be paid on each Monday thereafter, and continuing until such Excess Advances have been repaid in full.

 

So long as Excess Advances remain
outstanding, interest with respect to all such outstanding Excess Advances shall be charged at an interest rate at all times equal
to the Revolving Interest Rate.

 

    2 

    

    

 

EXECUTION ORIGINAL

 

		5)	WAIVER OF DEFAULT. Agent, on behalf of the Lenders, hereby waives Borrower’s failure
to comply with (i) Subsection 6.5(b), the Minimum EBITDA covenant, for the periods ending December 31, 2016 and March 31, 2017
and (ii) Subsection 7.6, the Capital Expenditures covenant, for the period ending December 31, 2016. Such waiver is solely for
such periods and does not extend to any other default which might exist now or in the future.

 

		6)	TESTING PERIODS FOR FIXED CHARGE COVERAGE RATIO. Agent, on behalf of the Lenders, hereby
agrees that Borrower was not required to maintain a Fixed Charge Coverage Ratio for, and confirms that no testing was required
relative to, Section 6.5(a), the Fixed Charge Coverage Ratio, for the periods ending June 30, 2016, December 31, 2016 and March
31, 2017. In addition, the Agent, on behalf of the Lenders, further confirms that no testing will be conducted relative to Section
6.5(a), the Fixed Charge Coverage Ratio, for the period ending June 30, 2017.

 

		7)	CONSENT TO OFFERING AND THE USE OF PROCEEDS THEREOF. Agent, on behalf of the Lenders, hereby
consents to the Offering and the application of the net proceeds thereof to the uses described in the third Recital of this Agreement,
notwithstanding anything to the contrary in the Loan Agreement.

 

		8)	CONSENT TO MERGER. Agent, on behalf of the Lenders, hereby consents to the merger of Miller
Stuart Inc. with, and into WM.

 

		9)	ACKNOWLEDGMENTS. Borrower acknowledges and represents that:

 

(A) the Loan
Agreement and Other Documents, as amended hereby, are in full force and effect without any defense, claim, counterclaim, right
or claim of set-off;

 

(B)  to
the best of its knowledge, no default by the Agent or Lenders in the performance of their duties under the Loan Agreement or the
Other Documents has occurred;

 

(C)  all
representations and warranties of the Borrower contained herein, in the Loan Agreement and in the Other Documents are true and
correct in all material respects as of this date, except for any representation or warranty that specifically refers to an earlier
date;

 

(D) Borrower
has taken all necessary action to authorize the execution and delivery of this Agreement; and

 

(E) 
this Agreement is a modification of an existing obligation and is not a novation.

 

		10)	PRECONDITIONS. As preconditions to the effectiveness of any of the modifications, consents,
or waivers contained herein, the Borrower agrees to:

 

(A) provide
the Agent with this Agreement, properly executed;

 

(B) 
pay to Agent an Amendment Fee in the amount of $50,000 on the Fifteenth Amendment Closing Date;

 

(C) 
provide the Agent with Secretary’s Certificates and Resolutions of the Obligor approving the transaction;

 

(D) provide
Agent with a copy of the filed Certificate of Merger relative to the merger of Miller Stuart Inc. into WM;

 

(E) 
pay all legal fees incurred by the Agent in entering into this Agreement to Wilentz, Goldman & Spitzer; and

 

(F) 
pay all other fees and costs incurred by the Lenders in entering into this Agreement.

 

    3 

    

    

 

EXECUTION ORIGINAL

  

		11)	MISCELLANEOUS. This Agreement shall be construed in accordance with and governed by the
laws of the State of New York, without reference to that state’s conflicts of law principles. This Agreement, the Loan Agreement
and the Other Documents constitute the sole agreement of the parties with respect to the subject matter thereof and supersede all
oral negotiations and prior writings with respect to the subject matter thereof. No amendment of this Agreement, and no waiver
of any one or more of the provisions hereof shall be effective unless set forth in writing and signed by the parties hereto. The
illegality, unenforceability or inconsistency of any provision of this Agreement shall not in any way affect or impair the legality,
enforceability or consistency of the remaining provisions of this Agreement, the Loan Agreement or the Other Documents. This Agreement,
the Loan Agreement and the Other Documents are intended to be consistent. However, in the event of any inconsistencies among this
Agreement, the Loan Agreement and/or any of the Other Documents, the terms of this Agreement, then the Loan Agreement, shall control.
This Agreement may be executed in any number of counterparts and by the different parties on separate counterparts. Each such counterpart
shall be deemed an original, but all such counterparts shall together constitute one and the same agreement.

 

		12)	DEFINITIONS. The terms used herein and not otherwise defined or modified herein shall have
the meanings ascribed to them in the Loan Agreement. The terms used herein and not otherwise defined or modified herein or defined
in the Loan Agreement shall have the meanings ascribed to them by the Uniform Commercial Code as enacted in State of New York.

 

(SIGNATURES ON NEXT
PAGE)

 

    4 

    

    

 

EXECUTION ORIGINAL

  

IN WITNESS WHEREOF,
the undersigned have signed and sealed this Agreement the day and year above written.

 

	ATTEST:	AIR INDUSTRIES MACHINING, CORP.
	 	 
	By:  /s/ MICHAEL
    RECCA	By: /s/ PETER D. RETTALIATA 
	      Name:   MICHAEL RECCA	      Name:  PETER D. RETTALIATA
	      Title:    Chief Financial Officer	      Title:    President
	 	 
	 	 
	ATTEST:	WELDING METALLURGY, INC.  (as 
	 	successor by merger with WMS Merger Corp.)
	 	 
	By: /s/ MICHAEL RECCA	By: /s/ PETER D. RETTALIATA
	      Name:  MICHAEL RECCA	      Name: PETER D. RETTALIATA 
	      Title:    Chief Financial Officer	      Title:    President
	 	 
	 	 
	ATTEST:	NASSAU TOOL WORKS, INC.
	 	(formerly known as NTW Operating Inc.)
	 	 
	By: /s/ MICHAEL
    RECCA	By: /s/ PETER D. RETTALIATA
	      Name:  MICHAEL RECCA	      Name:  PETER D. RETTALIATA
	      Title:   Chief Financial Officer	      Title:    President

 

(SIGNATURES CONTINUED ON NEXT PAGE)

 

    5 

    

    

 

EXECUTION ORIGINAL

 

	ATTEST:	AIR INDUSTRIES GROUP
	 	 
	By: /s/MICHAEL RECCA	By: /s/ PETER D. RETTALIATA
	      Name:  MICHAEL RECCA	      Name:  PETER D. RETTALIATA
	      Title:   Chief Financial Officer	      Title:    President
	 	 
	 	 
	ATTEST:	WOODBINE PRODUCTS, INC.
	 	 
	By: /s/MICHAEL RECCA	By: /s/ PETER D. RETTALIATA
	      Name:   MICHAEL RECCA	      Name:  PETER D. RETTALIATA      
	      Title:     Chief Financial Officer	      Title:    President
	 	 
	 	 
	ATTEST:	EUR-PAC CORPORATION
	 	 
	By: /s/MICHAEL RECCA	By: /s/ PETER D. RETTALIATA
	      Name:   MICHAEL RECCA	      Name:  PETER D. RETTALIATA
	      Title:     Chief Financial Officer	      Title:    President
	 	 
	 	 
	ATTEST:	ELECTRONIC CONNECTION CORPORATION
	 	 
	By: /s/MICHAEL RECCA	By: /s/ PETER D. RETTALIATA
	      Name:  MICHAEL RECCA	      Name:  PETER D. RETTALIATA
	      Title:    Chief Financial Officer	      Title:    President

 

(SIGNATURES CONTINUED ON NEXT PAGE)

 

    6 

    

    

 

EXECUTION ORIGINAL

 

	ATTEST:	THE STERLING ENGINEERING CORPORATION
	 	 
	By: /s/ MICHAEL RECCA	By: /s/ PETER D. RETTALIATA
	      Name:   MICHAEL RECCA	      Name:  PETER D. RETTALIATA
	      Title:     Chief Financial Officer	      Title:    President
	 	 
	ATTEST:	AIR REALTY GROUP, LLC
	 	 
	 	 
	By: /s/ MICHAEL RECCA	By: /s/ PETER D. RETTALIATA
	      Name:  MICHAEL RECCA	      Name:  PETER D. RETTALIATA
	      Title:    Chief Financial Officer	      Title:    President

 

(SIGNATURES CONTINUED ON NEXT PAGE)

 

    7 

    

    

 

EXECUTION ORIGINAL

 

	 	PNC BANK, NATIONAL ASSOCIATION
	 	Lender and as Agent
	 	 
	 	By: /s/ VICTOR ALARCON
	 	      Name:  VICTOR ALARCON
	 	      Title:     SeniorVice President

 

 

8

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00272-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00272-of-00352.parquet"}]]