WAIVER AND SEVENTH AMENDMENT TO LOAN AND SECURITY AGREEMENT

Exhibit 10.1

[Execution]

WAIVER AND SEVENTH AMENDMENT TO

This WAIVER AND SEVENTH Amendment TO LOAN AND SECURITY AGREEMENT (the “Amendment”), is dated May 31, 2024, and is made by and among (a) AIR INDUSTRIES MACHINING, CORP., a New York corporation (“AIM”), NASSAU TOOL WORKS, INC., a New York corporation (“NTW”), THE STERLING ENGINEERING CORPORATION, a Connecticut corporation (“Engineering”, and together with AIM and NTW, collectively the “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, the “Guarantor”) and XXXXXXX BANK, NATIONAL ASSOCIATION, a national banking association (successor by merger to Sterling National Bank), (together with its successors and permitted assigns, the “Lender”).

Recitals

Pursuant to that certain Loan and Security Agreement, dated as of December 31, 2019 (the “Loan Agreement”) by and among Borrower, Guarantor, the other Credit Parties thereto, and Lender, Xxxxxx has agreed to make certain financial accommodations available to Borrower from time to time pursuant to the terms and conditions thereof (capitalized terms used herein and not otherwise defined herein shall have the meanings assigned to such terms in the Loan Agreement, as amended hereby).

The Credit Parties have acknowledged that the Fixed Charge Coverage Ratio of Parent and its consolidated Subsidiaries for the Fiscal Quarter ending March 31, 2024 was less than the ratio permitted by Section 9.14(a) of the Loan Agreement, resulting in an Event of Default under Section 10.1(c)(i) of the Loan Agreement (the “Existing Event of Default”).

The Credit Parties have requested that Lender agree to (a) waive the Existing Event of Default and (b) make certain amendments to the Loan Agreement.

NOW, THEREFORE, in consideration of the premises contained herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound hereby, agree as follows:

1. Limited Waiver of Existing Event of Default.

(a) Borrower hereby acknowledges, confirms and agrees that (i) the Existing Event of Default has occurred and is continuing; (ii) the Existing Event of Default constitutes an Event of Default under the Loan Agreement and the other Loan Documents; and (iii) in the absence of this Amendment and at all times during the period commencing on the earliest date on which the Existing Event of Default occurred through the Seventh Amendment Effective Date (as defined below), the occurrence of the Existing Event of Default entitles Lender to exercise its rights and remedies under the Loan Documents, applicable law and otherwise.

(b) Subject to the limitations and other terms and conditions set forth in this Amendment, Lender hereby waives the Existing Event of Default. Notwithstanding the foregoing, Xxxxxx has not waived and is not by this Amendment waiving, and has no present intention of waiving, any Event of Default which may have occurred prior to the Seventh Amendment Effective Date, or may be continuing on the Seventh Amendment Effective Date or any Event of Default which may occur after the Seventh Amendment Effective Date, other than the Existing Event of Default to the extent set forth herein, whether the same or similar to any Existing Event of Default or otherwise. Lender hereby reserves the right, in its sole discretion, to exercise any or all of its rights and remedies arising under the Loan Documents, applicable law or otherwise, as a result of any Event of Default, other than the Existing Event of Default, which may have occurred prior to the Seventh Amendment Effective Date, or are continuing on the Seventh Amendment Effective Date, or any Events of Default which may occur after the Seventh Amendment Effective Date, whether the same, similar, or related to the Existing Event of Default.

2. Amendments to Loan Agreement. As of the effective date of this Amendment, the Loan Agreement is amended as follows:

(a) Section 1.1. Section 1.1 of the Loan Agreement is hereby amended by the amendment and restatement of each of the following definitions, to read in their entirety as follows

“Additional Term Loan Amount” means $1,000,000.

“Availability Block” means $500,000 commencing on the Seventh Amendment Effective Date, continuing until the occurrence of a Covenant Trigger Event.

“Borrowing Base” means, as of any day of determination, an amount equal to the difference between:

(a) the sum of (i) eighty-five percent (85%) of the Net Amount of Eligible Accounts other than Eligible Canadian Accounts, plus (ii) the lesser of (1) eighty-five percent (85%) of the Net Amount of Eligible Canadian Accounts, or (2) $500,000, plus (iii) the lesser of (1) fifty percent (50%) of the Net Amount of Eligible Government Accounts, or (2) $500,000, plus (iv) the lesser of (1) eighty-five percent (85%) of the Net Amount of Eligible Inventory, (2) fifty percent (50%) of the lower of cost or market value of Eligible Inventory and (3) the Inventory Sublimit, minus

(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; minus

provided, however, that Xxxxxx shall have the continuing right to reduce the percentages specified in clauses (a)(i), (ii) and (iii) of this definition by one percentage point or fraction of a percentage point for every percentage point or fraction of a percentage point of dilution of Accounts over five percent.

“Covenant Trigger Event” means the Borrower has maintained a Fixed Charge Coverage Ratio, calculated on a trailing twelve month basis, of not less than 1.25 to 1.00 for the quarter ending June 30, 2025, as certified in writing to Lender by a Responsible Officer of Borrower Representative in a Compliance Certificate, including reasonable calculations of such compliance.

“EBITDA” means, with respect to a Person for any period, an amount equal to (a) consolidated net earnings (or loss) from continuing operations, for such period minus (b) extraordinary gains for such period plus (c) Interest Expense (whether paid or accrued), income taxes, depreciation and amortization for such period plus (d) Approved Add Backs for such period, plus (e) for the first four Fiscal Quarters after the Agreement Date only, beginning with the Fiscal Quarter ending March 31, 2020 and ending with the Fiscal Quarter ending December 31, 2020, closing costs for this Agreement and the transactions contemplated hereby in an aggregate amount not to exceed $150,000, in each case determined for such Person and its Subsidiaries on a consolidated basis in accordance with GAAP.

“Seventh Amendment Effective Date” means May 31, 2024

“Term Loan Commitment” means $ 5,700,000.

(b) Section 2.1(b)(i). Section 2.1(b)(i) of the Loan Agreement is hereby amended and restated in its entirety as follows:

(i) Subject to the terms and provisions of this Agreement, (a) Lender has made term loans to Borrowers for the purpose of financing Eligible Equipment upon the satisfaction of all conditions precedent to the initial funding hereunder in accordance with Sections 6.1 and 6.3 in an amount equal to the Initial Term Loan Amount (the “Initial Term Loan Advance”) and (b) on the Seventh Amendment Effective Date, Lender agrees to make an additional term loan to Borrowers for the purpose of financing Eligible Equipment once all conditions precedent to the additional term loan funding hereunder have been met in accordance with Sections 6.2 and 6.3 (such date, the “Additional Term Loan Funding Date”) in an amount equal to the Additional Term Loan Amount (the “Additional Term Loan Advance”; together with the Initial Term Loan Advance, collectively, the “Term Loan Advances” or “Term Loans” and each a “Term Loan Advance” or a “Term Loan”). Amounts paid on the Term Loan may not be re-borrowed. The Term Loan shall not (and no portion of the Term Loan shall) be evidenced by a note unless requested by Xxxxxx, in which case the Term Loan shall be evidenced by a note executed by Borrowers in favor of Xxxxxx (as amended, supplemented, restated or otherwise modified, the “Term Note”) in form and substance satisfactory to Lender.

(a) The principal of the Term Loan shall be payable to Lender in equal monthly installments on each Installment Payment Date occurring after the Seventh Amendment Effective Date in an amount equal to $67,857.15 (plus interest payable pursuant to Section 4.1).

(d) Section 9.14. Section 9.14 of the Loan Agreement is hereby amended and restated in its entirety as follows:

(a) The Fixed Charge Coverage Ratio for Parent and its consolidated Subsidiaries for any Fiscal Quarter of Parent, determined as of the last day of such Fiscal Quarter, shall not be less than (i) 1.05 to 1.00 for the Fiscal Quarter Ending March 31, 2025 and (ii) 1.25 to 1.00 for all other Fiscal Quarters.

(b) The aggregate amount of Capital Expenditures by Parent and its consolidated Subsidiaries in any Fiscal Year shall not exceed $2,500,000.

(c) The EBITDA for Parent and its consolidated Subsidiaries for any Fiscal Quarter of Parent, determined as of the last day of such Fiscal Quarter, shall not be less than (i) $740,000 for the Fiscal Quarter Ending June 30, 2024,on a rolling six month basis, (ii) $1,500,000 for the Fiscal Quarter Ending September 30, 2024, on a rolling nine month basis and (iii) $2,800,000 for the Fiscal Quarter Ending December 31, 2024, on a rolling twelve month basis, in each case on such date of determination.

(e) Form of Compliance Certificate. Exhibit A to the Form of Compliance Certificate attached to the Loan Agreement is amended and restated in its entirety by the Exhibit A to Compliance Certificate attached to this Amendment as Exhibit A.

3. No Other Changes. Except as explicitly amended by this Amendment, all of the terms and conditions of the Loan Agreement shall remain in full force and effect and shall apply to any Loan made thereunder.

4. Amendment Fee. In consideration of Xxxxxx’s agreement to enter into this Amendment, Borrower shall pay to Lender a non-refundable amendment fee in an amount equal to $20,000 which amendment fee has been fully earned as of the effective date of this Amendment, and which shall be payable at the execution and delivery of this Amendment.

5. Conditions Precedent. This Amendment shall be effective on the date (such date, the “Seventh Amendment Effective Date”) that each of the following conditions have been satisfied, in form and substance satisfactory to Lender:

(a) Xxxxxx shall have received a fully executed copy of this Amendment;

(b) Lender shall have received a copy of the resolutions or equivalent action, in form and substance reasonably satisfactory to Lender, of the Board of Directors or equivalent authorizing body of Borrower authorizing, as applicable, the execution, delivery of this Amendment and the performance of this Amendment, certified by the Secretary, an Assistant Secretary or other authorized representatives of Borrower as of the Seventh Amendment Effective Date, which certificate shall state that the resolutions or other action hereby certified have not been amended, modified (except as any later such resolution or other action may modify any earlier such resolution or other action), revoked or rescinded and are in full force and effect;

(d) Lender shall have received the amendment fee set forth in Section 4 above and Borrower shall have paid or cause to be paid all fees and expenses required to be paid in accordance with this Amendment.

6. Representations and Warranties. Borrower hereby represents and warrants to Lender as follows:

(a) Xxxxxxxx has all requisite power and authority to execute this Amendment and any other agreements or instruments required hereunder and to perform all of its obligations hereunder, and this Amendment and all such other agreements and instruments have been duly executed and delivered by Borrower and constitute the legal, valid and binding obligation of Borrower, enforceable in accordance with its terms.

(b) The execution, delivery and performance by Borrower of this Amendment and any other agreements or instruments required hereunder have been duly authorized by all necessary corporate action and do not (i) require any authorization, consent or approval by any governmental department, commission, board, bureau, agency or instrumentality, domestic or foreign, (ii) violate any provision of any law, rule or regulation or of any order, writ, injunction or decree presently in effect, having applicability to Borrower, or the certificate of formation, articles of incorporation, operating agreement, or by-laws of Borrower, or (iii) result in a breach of or constitute a default under any indenture or loan or credit agreement or any other agreement, lease or instrument to which Borrower is a party or by which it or its properties may be bound or affected.

(c) All of the representations and warranties contained in the Loan Agreement are correct on and as of the date hereof as though made on and as of such date, except to the extent that such representations and warranties relate solely to an earlier date.

(d) After giving effect to this Amendment and the transactions contemplated hereby, no Default or Event of Default has occurred and is continuing.

7. References. All references in the Loan Agreement to “this Agreement” shall be deemed to refer to the Loan Agreement as amended hereby; and any and all references in the Loan Documents to the Loan Agreement shall be deemed to refer to the Loan Agreement as amended hereby.

8. No Waiver. Except as set forth in Section 1 of this Amendment, the execution of this Amendment and the acceptance of all other agreements and instruments related hereto shall not be deemed to be a waiver of any Default or Event of Default under the Loan Agreement or a waiver of any breach, default or event of default under any Loan Document or other document held by Lender, whether or not known to Lender and whether or not existing on the date of this Amendment.

9. Release. Borrower hereby absolutely and unconditionally releases and forever discharges Lender, and any and all participants, parent corporations, subsidiary corporations, affiliated corporations, insurers, indemnitors, successors and assigns thereof, together with all of the present and former directors, officers, agents and employees of any of the foregoing, from any and all claims, demands or causes of action of any kind, nature or description, whether arising in law or equity or upon contract or tort or under any state or federal law or otherwise, Borrower has had, now has or has made claim to have against any such person for or by reason of any act, omission, matter, cause or thing whatsoever relating to any Loan Document arising from the beginning of time to and including the date of this Amendment, whether such claims, demands and causes of action are matured or unmatured or known or unknown.

10. Costs and Expenses. Borrower hereby reaffirms its agreement under the Loan Agreement to pay or reimburse Lender on demand for all costs and expenses incurred by Lender in connection with the Loan Documents, including without limitation all reasonable fees and disbursements of legal counsel. Without limiting the generality of the foregoing, Xxxxxxxx specifically agrees to pay all fees and disbursements of counsel to Lender for the services performed by such counsel in connection with the preparation of this Amendment and the documents and instruments incidental hereto. Xxxxxxxx hereby agrees that Lender may, at any time or from time to time in its sole discretion and without further authorization by Xxxxxxxx, make a loan to the Borrower under the Loan Agreement, or apply the proceeds of any loan, for the purpose of paying any such fees, disbursements, and costs and expenses.

11. Counterparts. This Amendment may be executed by means of (a) an electronic signature that complies with the federal Electronic Signatures in Global and National Commerce Act, state enactments of the Uniform Electronic Transactions Act, or any other relevant and applicable electronic signatures law; (b) an original manual signature; or (c) a faxed, scanned, or photocopied manual signature. Each electronic signature or faxed, scanned, or photocopied manual signature shall for all purposes have the same validity, legal effect, and admissibility in evidence as an original manual signature. This Amendment may be executed in any number of counterparts, each of which shall be deemed to be an original, but such counterparts shall, together, constitute only one instrument. Delivery of an executed counterpart of a signature page of this Amendment will be as effective as delivery of a manually executed counterpart of the Agreement.

12. Headings. Section Headings are for convenience of reference only, and are not part of, and are not to be taken into consideration in interpreting this Amendment.

13. Governing Law. The rights and obligations hereunder of each of the parties hereto shall be governed by and interpreted and determined in accordance with the laws of the State of New York.

[Signature pages follow]

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed as of the date first written above.

BORROWER:

	AIR INDUSTRIES MACHINING, CORP.

	By:	/s/ Xxxxx Xxxxxxxx
	Name	Xxxxx Xxxxxxxx
	Title:	Chief Financial Officer

	NASSAU TOOL WORKS, INC.

	By:	/s/ Xxxxx Xxxxxxxx
	Name	Xxxxx Xxxxxxxx
	Title:	Chief Financial Officer

	THE STERLING ENGINEERING CORPORATION

	By:	/s/ Xxxxx Xxxxxxxx
	Name	Xxxxx Xxxxxxxx
	Title:	Chief Financial Officer

GUARANTOR:

	AIR INDUSTRIES GROUP,
	as parent

	By:	/s/ Xxxxx Xxxxxxxx
	Name	Xxxxx Xxxxxxxx
	Title:	Chief Financial Officer

	AIR REALTY GROUP, LLC

	By:	/s/ Xxxxx Xxxxxxxx
	Name	Xxxxx Xxxxxxxx
	Title:	Chief Financial Officer

[Signature Page to Seventh Amendment to Loan and Security Agreement (Air Industries)]

	XXXXXXX BANK, NATIONAL ASSOCIATION,
	as Lender

	By:	/s/ Xxxxxx Xxxxxxx
	Name:	Xxxxxx Xxxxxxx
	Title:	Managing Director

[Signature Page to Seventh Amendment to Loan and Security Agreement (Air Industries)]

EXHIBIT A TO

COMPLIANCE CERTIFICATE

(Detailed calculation of each financial covenant)

9.14(a) The Fixed Charge Coverage Ratio for Parent and its consolidated Subsidiaries for any Fiscal Quarter of Parent, determined as of the last day of such Fiscal Quarter, shall not be less than 1.05 to 1.00 for the Fiscal Quarter Ending March 31, 2025 and (ii) 1.25 to 1.00 for all other Fiscal Quarters.

Insert detailed calculation or N/A if not Quarter-end

9.14(b) The aggregate amount of Capital Expenditures by Parent and its consolidated Subsidiaries in any Fiscal Year shall not exceed $2,500,000.

Insert detailed calculation or N/A if not Quarter-end

9.14(c) The EBITDA for Parent and its consolidated Subsidiaries for any Fiscal Quarter of Parent, determined as of the last day of such Fiscal Quarter, shall not be less than (i) $740,000 for the Fiscal Quarter Ending June 30, 2024, (ii) $1,500,000 for the Fiscal Quarter Ending September 30, 2023, and (iii) $2,800,000 for the Fiscal Quarter Ending December 31, 2025.

Insert detailed calculation or N/A if not Quarter-end

[Exhibit A]

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WAIVER AND SEVENTH AMENDMENT TO LOAN AND SECURITY AGREEMENT

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