UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant |X|
Filed by a Party other than the Registrant |_|
Check the appropriate box:
|_| Confidential, for use of the Commission Only (as permitted by Rule
14a-6(e)(2))
|X| Preliminary Proxy Statement
|_| Definitive Proxy Statement
|_| Definitive Additional Materials
|_| Soliciting Material Pursuant to ss.240.14a-12
AIR INDUSTRIES GROUP, INC.
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(Name of Registrant as Specified in its Charter)
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(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
No fee required.
Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11 (set forth the amount on which the filing fee is
calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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Fee paid previously with preliminary materials.
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Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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AIR INDUSTRIES GROUP, INC.
Notice of Special Meeting of Stockholders
To Be Held On Thursday, April 3, 2008 at 10:00 A.M.
TO THE STOCKHOLDERS OF AIR INDUSTRIES GROUP, INC.:
NOTICE IS HEREBY GIVEN that a Special Meeting of Stockholders of Air
Industries Group. Inc., a Delaware corporation (the "Company"), will be held at
the offices of Eaton & Van Winkle LLP, Three Park Avenue, 16th floor, New York,
NY 10016, on Thursday, April 3, 2008 at 10:00 A.M., Eastern Time, for the
following purposes:
1. To grant to our Board of Directors discretionary authority to
amend our certificate of incorporation, as amended, to effect
a reverse split of our common stock at a ratio within the
range from one-for-ten to one-for-thirty at anytime prior to
December 31, 2008, with the ratio and timing to be selected
and implemented by the Board in its sole discretion, if at
all; and
2. To approve an amendment to our certificate of incorporation,
as amended, that would increase the number of our authorized
shares of common stock, $0.001 par value, from 120,055,746
shares to 250,000,000 shares.
The Board has fixed the close of business on Monday, February 4, 2008 as
the record date for the determination of the stockholders entitled to notice of
and to vote at this meeting and at any adjournment or postponements thereof.
By Order of the Board of Directors
/s/ Dario Peragallo
Dario Peragallo, Corporate Secretary
Dated: New York, New York
February __, 2008
IMPORTANT:
Whether or not you expect to attend in person, please complete, sign, date and
return the enclosed Proxy at your earliest convenience. This will ensure the
presence of a quorum at the meeting. Promptly signing, dating and returning the
Proxy will save the Company the expense and extra work of additional
solicitation. An addressed envelope for which no postage is required has been
enclosed for that purpose. Sending in your Proxy will not prevent you from
voting your stock at the meeting if you desire to do so, as your Proxy is
revocable at your option. If your stock is held through a broker, bank or a
nominee and you wish to vote at the meeting, you will need to obtain a proxy
form from your broker, bank or a nominee and present it at the meeting.
AIR INDUSTRIES GROUP, INC.
PROXY STATEMENT
FOR SPECIAL MEETING OF STOCKHOLDERS
To Be Held on Thursday, April 3, 2008
This Proxy Statement is furnished to the stockholders of Air Industries
Group, Inc. in connection with the solicitation by our Board of Directors of
proxies to be used at a Special Meeting of Stockholders to be held at the
offices of Easton & Van Winkle LLP, Three Park Avenue, 16th floor, New York, NY
10016, on Thursday, April 3, 2008 at 10:00 A.M., Eastern Time, and at any
adjournments thereof (the "Special Meeting"). The approximate date on which this
Proxy Statement and the accompanying proxy will be mailed to stockholders is
February __, 2008. The Company's executive offices are located at 1479 North
Clinton Avenue, Bay Shore, New York 11706, and our telephone number is (631)
968-5000.
INFORMATION ABOUT THE MEETING
Reasons for the Meeting
We require additional shares of common stock to finance our growth. As of
February 4, 2008, our authorized capital stock consisted of 120,055,746 shares
of common stock and 8,003,716 shares of preferred stock, including 2,000,000
shares of series B convertible preferred stock. As of that date, we had
outstanding 69,262,227 shares of common stock and 845,554 shares of series B
convertible preferred stock. The outstanding shares of series B convertible
preferred stock are convertible into 30,439,944 shares of common stock at a
conversion price of $0.276 per share. In addition, as of February 4, 2008, we
had outstanding options and warrants to purchase an additional 15,775,735 shares
of common stock. Consequently, we have only 4,577,840 authorized but unissued
shares of common stock available for issuance by the Board in connection with
financings, acquisitions of other companies, stock dividends, employee benefit
programs or other corporate purposes.
Since October 1, 2007, the market price of our common stock, which is
quoted on the OTC Bulletin Board (symbol: AIRI.OB), has ranged from $0.215 to
$0.35, and the closing price on January 24, 2008, was $0.217. To qualify our
shares of common stock for investment by certain institutional investors whose
governing instruments prohibit them from purchasing shares of companies quoted
on the OTC Bulletin Board and to attract interest from businesses that may be
suitable candidates for future acquisitions, our Board of Directors has proposed
a plan intended to increase the per share market price of a share of our common
stock to a level sufficient to qualify for a listing on a national stock
exchange, and possibly to qualify as a "marginable security," to provide our
stockholders with greater liquidity. Our Board has called a special meeting of
stockholders at which stockholders will consider and be asked to approve a
proposal that would authorize the Board to implement a reverse stock split of
our common stock within a specified range of exchange ratios at a date, not
later than December 31, 2008, which as discussed below under Proposal 1, may
enable us to obtain a listing on a national securities exchange for our common
stock.
Our Board of Directors believes that our company and our stockholders
would benefit from having our shares of common stock listed on a national
securities exchange, particularly since
o certain institutional investors are precluded by their internal
policies from purchasing low-priced-stocks or shares traded on the
OTC Bulletin Board,
o an exchange listing would provide a broader market for our common
stock and would facilitate the use of our common stock in financings
and other transactions,
o the SEC has adopted an amendment to its rules and registration forms
to make it easier and less expensive for companies whose common
stock is listed and traded on a national securities exchange to
register its securities in connection with public financings on an
abbreviated form which permits the incorporation by reference of
reports, proxy statements and other documents filed under the
Exchange Act subsequent to, as well as prior to, the date upon which
the registration statement is declared effective by the SEC
Although a reverse stock split would reduce the total number of shares
owned by our existing stockholders, their proportionate equity interest in our
company would not be effected by the reverse stock split. However, we cannot
assure you that if and when implemented, the market price of a share of our
common stock will increase proportionately with the exchange ratio selected by
our Board, or that the resulting market price will be sufficient to obtain a
listing on a national securities exchange, or to qualify as a "marginable
security." The vote of holders of a majority of the shares of common stock and
our series B preferred stock, voting together as a single class, is required to
approve the proposal to effect a reverse stock split of our common stock.
Since the proposal authorizing our Board to implement a reverse stock
split, if approved by our stockholders, may not be effected until later in 2008,
if at all, our Board has requested that our stockholders approve a proposed
amendment to our certificate of incorporation, as amended, to increase the
number of authorized shares of our common stock from 120,055,746 shares to
250,000,000 shares so that we will have available sufficient shares to finance
the growth of our business. If both proposals are approved by our stockholders,
the number of authorized shares of common stock would be reduced to 125,000,000
shares upon implementation of the reverse stock split. If stockholders do not
1
approve the reverse stock split or the proposal to increase our authorized
shares of common stock to 250,000,000, we will not have sufficient shares
available to continue our acquisition program, which will adversely affect our
ability to expand our operations.
Record Date and Quorum
Our voting securities consist of our series B convertible preferred stock
and our common stock. All stockholders of record of our series B convertible
preferred stock or common stock at the close of business on February 4, 2008 are
entitled to vote at the Special Meeting. Holders of our series B convertible
preferred stock and holders of our common stock on that date will vote together
as a single class on all of the matters described above. Each share of common
stock will be entitled to one vote and each share of series B convertible
preferred stock will be entitled to 36 votes, representing that number of votes
that the holder would have if that share had been converted into common stock on
February 4, 2008.
As of the close of business on February 4, 2008, we had outstanding
69,262,227 shares of common stock and 845,554 shares of series B convertible
preferred stock. The total number of votes that may be cast at the Special
Meeting is 99,702,171, representing the total number of shares of common stock
that we would have outstanding on February 4, 2008 if all of those shares of
series B convertible preferred stock had been converted into common stock on
that date. Shares of common stock and series B convertible preferred stock
represented by each properly executed, unrevoked proxy received in time for the
Special Meeting will be voted as specified. A quorum will be present at the
Special Meeting if the shares of common stock and series B convertible preferred
stock outstanding on February 4, 2008, representing a majority of the total
number of votes entitled to be voted, are present at the Special Meeting in
person or by proxy.
If you are the beneficial owner, but not the record owner, of our series B
convertible preferred stock or common stock, you will receive instructions about
voting from the bank, broker or other nominee that is the stockholder of record
of your shares. Contact your bank, broker or other nominee directly if you have
questions.
Voting of Proxies
Unless otherwise directed in the enclosed proxy, the persons acting as
proxies pursuant to the enclosed proxy will vote the shares represented by the
proxy for: (i) approval of the grant to our Board of discretionary authority to
amend our certificate of incorporation, as amended at any time prior to December
31, 2008 to effect a reverse stock split of our common stock at a ratio within
the range from one-for-ten to one-for-thirty, and (ii) approval of an amendment
to our certificate of incorporation, as amended, increasing the number of shares
of common stock to 250,000,000.
Voting Requirements
All votes will be tabulated by the inspector of election appointed for the
Special Meeting, who will separately tabulate affirmative and negative votes,
abstentions and broker non-votes. Under our bylaws (the "Bylaws") and the
Delaware General Corporation Law, or "DGCL", (1) shares represented by proxies
that reflect abstentions or "broker non-votes" ( i.e ., shares held by a broker
or nominee that are represented at the meeting, but with respect to which such
broker or nominee is not empowered to vote on a particular proposal) will be
counted as shares that are present and entitled to vote for purposes of
determining the presence of a quorum; and (2) with respect to the proposed
amendments to our certificate of incorporation, proxies that reflect abstentions
or non-votes will be treated as not voted and will have the same effect as votes
against those proposals.
The affirmative vote of a majority of the aggregate number of votes
represented by the shares of common stock and series B convertible preferred
stock, voting as a single class, entitled to vote at the Special Meeting is
required to approve the amendments (or potential amendment) to our certificate
of incorporation (i) granting the Board discretionary authority to effectuate a
reverse stock split and (ii) increasing the number of authorized shares of
common stock.
Revocability of Proxy
A proxy may be revoked by the stockholder giving the proxy at any time
before it is voted by delivering written notice to our Corporate Secretary at or
prior to the meeting, and a prior proxy is automatically revoked by a
stockholder giving a subsequent proxy or attending and voting at the meeting.
Attendance at the meeting in and of itself does not revoke a prior proxy.
Expenses of Solicitation
We will bear the entire cost of this proxy solicitation, including the
cost of preparing, printing and mailing this Proxy Statement, the proxy and any
additional soliciting materials sent by us to stockholders. In addition, we may
reimburse brokerage firms and other persons representing beneficial owners of
shares for reasonable expenses incurred by them in forwarding proxy soliciting
materials to such beneficial owners. Proxies may also be solicited by certain of
our directors, officers and employees, without additional compensation,
personally or by telephone.
2
Securities Ownership
The following table sets forth information known to us regarding
beneficial ownership of our series B convertible preferred stock and our common
stock as of February 4, 2008 by (i) each person known by us to own beneficially
more than 5% of the outstanding shares of each of those classes, (ii) each of
our directors, nominees for director, and executive officers, and (iii) all of
our officers and directors as a group. Except as otherwise indicated, we
believe, based on information provided by each of the individuals named in the
table below, that such individuals have sole investment and voting power with
respect to such shares, subject to community property laws, where applicable.
As of February 4, 2008, we had outstanding 845,554 shares of our series B
convertible preferred stock and 69,262,227 shares of our common stock. Each
share of series B convertible preferred stock is convertible into 36 whole
shares of our common stock. If all outstanding shares of series B convertible
preferred stock had been converted at the close of business on February 4, 2008,
we would have had outstanding 99,702,171 shares of common stock. Except as
stated in the table, the address of the holder is c/o our company, 1479 North
Clinton Avenue, Bay Shore, New York 11706.
Number of Shares Percent of Class
Name Series B Preferred Common* Series B Preferred Common*
------------------ ------- ------------------ -------
Owner of More than 5% of Class
Hillson Partners LP(2)
Hillson Private Partners II, LLLP(1) 137,200 4,939200 16.23% 6.67%
110 N. Washington Street, Suite 401
Rockville, MD 20850
Michael A. Gales -- 4,090,799(2) -- 5.83%
333 East 66th Street
New York, NY 10022
George Elkins -- 3,615,340 5.23%
Carole Tate -- 3,615,340 5.23%
Directors and Executive Officers
James A. Brown 225 970,702(3) * 1.40%
Louis A. Giusto -- 4,124,538(4) -- 5.90%
Peter D. Rettaliata -- 1,468,139(5) -- 2.11%
Dario Peragallo 225 1,476,239(6) * 2.12%
Seymour G. Siegel 225 174,766(3) * **
Ira A. Hunt, Jr -- 875,763(3)(7) * 1.27%
David J. Buonanno 225 51,433(8) **
All directors and officers 900 9,095,581(3)(4)(5)(6)(7)(8)* 12.79%
as a group (7 persons)
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* Assumes the conversion of the shares of series B convertible preferred
stock owned by the stockholder listed in the table, but not by any other
holder.
** Less than 1%
(1) The general partner of Hillson Partners LP and Hillson Private Partners
II, LLLP is Daniel H. Abramowitz, who has the sole power to vote and
dispose of the shares.
(2) Includes 1,000,000 shares we may issue to Mr. Gales upon exercise of
options granted under his employment agreement that pursuant to his
separation agreement are exercisable until March 16, 2008.
(3) Includes, in each case, 66,666 shares we may issue to Messrs. Brown, Hunt
and Siegel upon exercise of the vested portion of the 100,000 options
granted to each of them on February 13, 2007.
(4) Includes 720,000 shares we may issue to Mr. Giusto upon exercise of the
vested portion of the 1,200,000 options granted to him under his
employment agreement.
(5) Includes 450,000 shares we may issue to Mr. Rettaliata upon exercise of
the vested portion of the 1,200,000 options granted to him under his
employment agreement.
(6) Includes 450,000 shares we may issue to Mr. Peragallo upon exercise of
vested portion of the 1,200,000 options granted to him under his
employment agreement.
(7) Includes 709,097 shares owned by Mr. Hunt's spouse.
(8) Includes 33,333 shares we may issue to Mr. Buonanno upon exercise of the
vested portion of the 100,000 options granted to him on August 29, 2007.
3
PROPOSAL 1
(Item 1 on the Proxy Card)
TO GRANT TO OUR BOARD DISCRETIONARY AUTHORITY TO AMEND
OUR CERTIFICATE OF INCORPORATION TO EFFECT A REVERSE STOCK SPLIT OF
OUR COMMON STOCK AT A RATIO WITHIN THE RANGE FROM ONE-FOR-TEN TO
ONE-FOR-THIRTY AT ANY TIME PRIOR TO DECEMBER 31, 2008.
Background
On December 3, 2007, our Board, unanimously adopted a resolution seeking
stockholder approval to grant the Board the discretionary authority to amend our
certificate of incorporation to effect a reverse split of our common stock at a
ratio within the range from one-for ten to one-for-thirty at any time it
determines prior to December 31, 2008. A copy of the proposed amendment is
attached hereto as Appendix I. Stockholder approval of this proposal would also
give the Board authority to decline to implement a reverse stock split prior to
such date. The ratio of the reverse stock split that the Board approved and
deemed advisable and for which it is seeking stockholder approval is in the
range from one-for-ten to one-for-thirty with the exact ratio to be established
within this range by the Board in its sole discretion and publicly announced at
the time it elects to effect a split, if any. The ratio that the Board will seek
to establish will reflect the price at which our common stock needs to trade to
satisfy the initial listing requirements of the exchange upon which we apply for
a listing.
If our stockholders approve the reverse stock split proposal and the Board
decides to implement the reverse stock split, we will file the proposed
amendment with the Secretary of State of the State of Delaware (as described
below) which will effect a reverse split of the shares of our common stock then
issued and outstanding at the specific ratio determined by the Board and
publicly announced. If the reverse stock split is implemented, the number of
authorized shares of common stock would increase from 120,055,746 to
125,000,000, but the par value of the common stock would remain unchanged at
0.001 per share. Except for any changes as a result of the treatment of
fractional shares, each stockholder will hold the same percentage of our common
stock outstanding immediately following the reverse stock split as such
stockholder did immediately prior to the split.
Reasons for This Proposal
The Board of Directors approved the amendment to effect a reverse stock
split because (i) it believes that our company and our stockholders would
benefit from having our shares of common stock listed on a national securities
exchange such as the Nasdaq Capital Market or the American Stock Exchange,
particularly since certain institutional investors are precluded by their
internal policies from purchasing low-priced-stocks or shares traded on the OTC
Bulletin Board, (ii) the reverse stock split would increase the number of
authorized but unissued shares of our common stock which will be available for
issuance in future financings and other transactions, as well as an incentive to
attract and retain individuals as part of our growth strategy, and (iii) if the
market price of a share of our common stock following the implementation of the
reverse split is at least $5.00, our common stock will be a "margin security"
allowing purchasers of our common stock to borrow up to 50% of the market value
of the shares they own.
Exchange Listing. Our common stock is currently quoted on the
Over-the-Counter Bulletin Board, electronic quotation system under the symbol
"AIRI.OB" and is trading below $1.00 per share. The Board of Directors believes
that a listing on an exchange would provide a broader market for our common
stock and would facilitate the use of our common stock in financings and other
transactions. The Board of Directors approved the reverse stock split proposal
partly as a means, if necessary, of increasing the share price of our common
stock above the minimum bid price requirement for a listing on an exchange.
Currently, the minimum bid price requirement for listing is $4.00 on the Nasdaq
Capital Market and $3.00 per share on the American Stock Exchange.
Potential Increased Investor Interest. The Board believes that the current
low per share market price of the common stock has had a negative effect on the
marketability of our existing shares. The Board believes there are several
reasons for these effects. First, certain institutional investors have internal
policies preventing the purchase of low-priced stocks. Also, a variety of
policies and practices of broker-dealers discourage individual brokers within
those firms from dealing in low-priced stocks or shares listed on the OTC
Bulletin Board. Second, because the brokers' commissions on low-priced stocks
generally represent a higher percentage of the stock price than commissions on
higher priced stocks, the current share price of the common stock can result in
individual stockholders paying transaction costs (commissions, markups or
markdowns) which are a higher percentage of their total share value than would
be the case if the share price of the common stock were substantially higher.
This factor is also believed to limit the willingness of some institutions to
purchase our common stock. The Board anticipates that a reverse stock split will
result in a higher bid price for the common stock, which may help to alleviate
some of these problems. The Board also believes that the decrease in the number
of shares of common stock outstanding as a consequence of a reverse stock split,
and the anticipated increase in the price of the common stock, could generate
interest in the common stock and possibly promote greater liquidity for our
stockholders. However, any increase in the market price of the common stock
resulting from the reverse stock split may be proportionately less than the
decrease in the number of outstanding shares, effectively reducing our market
capitalization. In addition, because the Delaware Annual Franchise Tax is based
on authorized capital, we believe that a reverse stock split may reduce the
amount of this tax.
4
Increase in Number of Authorized but Unissued Shares. If the proposal to
authorize our Board to effect a reverse split on the terms discussed above is
approved by our stockholders, the number of authorized shares of common stock
would be increased from 120,055,746 shares to 125,000,000 shares. The adoption
and implementation of the reverse stock split would not effect the number of
authorized shares of preferred stock which would remain at 8,003,716 shares.
Based on shares outstanding as of February 4, 2008, in the event of a reverse
stock split at a 1:10, or 1:30 ratio, the number of shares of our common stock
issued and outstanding would be reduced from 69,262,227 shares to approximately
6,926,222 shares or 2,308,740 shares, respectively. Therefore, as a result of
the reverse stock split the number of authorized but unissued shares of our
common stock would increase by up to approximately 71,897,741 shares.
If the reverse split is implemented, the additional authorized shares of
common stock will be available for issuance at such times and for such purposes
as the Board may deem advisable without further action by our stockholders,
except as may be required by applicable laws or regulations. For example, the
additional authorized shares of common stock will be available for issuance by
the Board in connection with financings, acquisitions of other companies, stock
dividends, employee benefit programs or other corporate purposes. Except for the
shares of common stock issuable in connection with the conversion of our series
B convertible preferred stock (including shares we may issue in lieu of cash
dividends), outstanding warrants and options, shares reserved for issuance under
the 2005 Stock Incentive Plan, and shares we may issue to finance the previously
disclosed acquisition of H.S.M Machine Works, Inc., H.S.M. Machine Works, Inc,
Blair Accumulators, Inc.and Blair Industries, Inc. (collectively, the "Blair
Companies") and in connection with acquisitions under consideration but as to
which we have not entered into any letters of intent, agreements in principle or
definitive agreements at this time, we do not have any plans or commitments to
issue additional shares of common stock. We believe that we have sufficient
authorized, but unissued shares of common stock available to complete the
acquisition of the Blair Companies and for any financing related thereto
currently contemplated. The Board does not intend to issue any shares of common
stock, or securities convertible into, or exchangeable or exercisable for shares
of common stock, except on terms or for reasons which the Board deems to be in
the best interests of our company and our stockholders.
Other than as set forth above, the Board of Directors does not have any
other plan or intention to issue the additional shares of authorized but
unissued common stock that would become available as a result of the proposed
reverse split.
For the above reasons, the Board believes that providing discretionary
authority to the Board to implement the reverse stock split is in our best
interests and those of our stockholders. However, we cannot assure you that the
reverse stock split will be implemented or, if implemented, will have the
desired consequences. Specifically, we cannot assure you that, after the reverse
stock split, the market price of the common stock will not be less than the
market price before the proposed reverse stock split.
The Board believes that stockholder approval of an exchange ratio range
(rather than an exact exchange ratio) provides the Board with maximum
flexibility to achieve the purposes of the reverse stock split. If the
stockholders approve the reverse stock split proposal, the reverse stock split
will be effected, if at all, only upon a determination by the Board that the
reverse stock split is in our best interests and those of our stockholders at
that time. In connection with any determination to effect a reverse stock split,
the Board will set the timing for the reverse stock split and select the
specific ratio within the range, and in selecting the exchange ratio, will
consider the exchange ratio which will have the least impact in reducing the
number of shares of existing owners consistent with the objectives of obtaining
a listing on a national securities exchange and satisfying the $5.00 minimum
price required for qualifying the common stock as a "marginable security." These
determinations will be made by the Board with the intent to create the greatest
marketability of our common stock based on prevailing market conditions at that
time. If the proposal is approved, no further action on the part of stockholders
will be required to either implement or abandon the reverse stock split. If the
Board does not implement a reverse stock split prior to December 31, 2008, the
authority granted in this proposal to implement a reverse stock split on these
terms will terminate. The Board reserves its right to elect not to proceed with
the reverse stock split if it determines, in its sole discretion, that the split
is no longer in our best interests and those of our stockholders.
Certain Risks Associated With the Reverse Stock Split
We cannot assure you that the total market capitalization of our common stock
after the proposed reverse stock split will be equal to or greater than the
total market capitalization before the proposed reverse stock split or that the
per share market price of our common stock following the reverse stock split
will either exceed or remain higher than the current per share market price.
We cannot assure you that the market price per new share of common stock
(the "New Shares") after the reverse stock split will rise or remain constant in
proportion to the reduction in the number of old shares of common stock (the
"Old Shares") outstanding before the reverse stock split. For example, based on
the closing market price of our common stock on January 24, 2008 of $0.217 per
share, if the Board decided to implement the reverse stock split and selects a
reverse stock split ratio of one-for-ten, we cannot assure you that the
post-split market price of our common stock would be $2.17 per share.
Alternatively, if the Board decided to implement the reverse stock split and
selects a reverse stock split ratio of one-for-thirty we cannot assure you that
the post-split market price of our common stock would be $6.51 per share.
Accordingly, the total market capitalization of our common stock after the
proposed reverse stock split may be lower than the total market capitalization
before the proposed reverse stock split and, in the future, the market price of
our common stock following the reverse stock split may not exceed or remain
higher than the market price prior to the proposed reverse stock split. In many
cases, the total market capitalization of a company following a reverse stock
split is lower than the total market capitalization before the reverse stock
split.
5
A decline in the market price for our common stock after the reverse stock split
may result in a greater percentage decline than would occur in the absence of a
reverse stock split, and the liquidity of our common stock could be adversely
affected following a reverse stock split.
The market price of our common stock will be based on our performance and
other factors, some of which are unrelated to the number of shares outstanding.
If the reverse stock split is effected and the market price of our common stock
declines, the percentage decline as an absolute number and as a percentage of
our overall market capitalization may be greater than would occur in the absence
of a reverse stock split. In many cases, both the total market capitalization
and the market price of a share of a company's common stock following a reverse
stock split are lower than they were before the reverse stock split.
Furthermore, the liquidity of our common stock could be adversely affected by
the reduced number of shares that would be outstanding after the reverse stock
split.
Principal Effects of the Reverse Stock Split
Corporate Matters. If approved and effected, the reverse stock split
would have the following effects:
o depending on the exact reverse stock split
ratio selected by the Board, between ten and
thirty Old Shares owned by a stockholder would
be exchanged for one (1) New Share;
o the number of shares of Common Stock issued and
outstanding will be reduced proportionately
based on the reverse stock split ratio selected
by the Board;
o based on the reverse stock split ratio selected
by the Board, proportionate adjustments will be
made to the per share exercise price and the
number of shares issuable upon the exercise of
all outstanding options and warrants entitling
the holders thereof to purchase shares of our
common stock, which will result in
approximately the same aggregate price being
required to be paid for such options or
warrants upon exercise of such options or
warrants immediately preceding the reverse
stock split; and
o the number of shares reserved for issuance
under our existing stock option plan will be
reduced proportionately based on the reverse
stock split ratio selected by the Board.
If approved and effected, the reverse stock split will be effected
simultaneously for all common stock and the ratio will be the same for all
common stock. The reverse stock split will affect all of our stockholders
uniformly and will not affect any stockholder's percentage ownership interests
in us, except to the extent that the reverse stock split results in any of our
stockholders owning a fractional share. As described below, stockholders holding
fractional shares will be entitled to cash payments in lieu of such fractional
shares. Such cash payments will reduce the number of post-split stockholders to
the extent there are stockholders presently holding fewer than up to three
shares, depending on the ratio for the reverse stock split selected by the
Board. This, however, is not the purpose for which we are effecting the reverse
stock split. Common stock issued pursuant to the reverse stock split will remain
fully paid and non-assessable. We will continue to be subject to the periodic
reporting requirements of the Exchange Act.
Fractional Shares. No scrip or fractional certificates will be issued in
connection with the reverse stock split, if effected. Stockholders who otherwise
would be entitled to receive fractional shares because they hold a number of Old
Shares not evenly divisible by the ratio selected by the Board for the reverse
stock split will be entitled, upon surrender of certificate(s) representing such
shares, to a cash payment in lieu thereof. The cash payment will equal the
product obtained by multiplying (a) the fraction to which the stockholder would
otherwise be entitled by (b) the per share closing sales price of common stock
on the day immediately prior to the effective time of the reverse stock split,
as reported on the OTCBB. The ownership of a fractional interest will not give
the holder thereof any voting, dividend or other rights except to receive
payment there for as described herein.
Stockholders should be aware that, under the escheat laws of the various
jurisdictions where stockholders reside, where we are domiciled and where the
funds will be deposited, sums due for fractional interests that are not timely
claimed after the effective time may be required to be paid to the designated
agent for each such jurisdiction. Thereafter, stockholders otherwise entitled to
receive such funds may have to seek to obtain them directly from the State to
which they were paid.
If approved and effected, the reverse stock split will result in some
stockholders owning "odd lots" of less than 100 shares of common stock.
Brokerage commissions and other costs of transactions in odd lots are generally
somewhat higher than the costs of transactions in "round lots" of even multiples
of 100 shares.
Authorized Shares. As of February 4, 2008, our authorized common stock was
120,055,746 shares and upon the effectiveness of the reverse stock split, the
number of authorized shares of common stock will be 125,000,000.
Accounting Matters. The reverse stock split will not affect the par value
of our common stock. As a result, as of the effective time of the reverse stock
split, the stated capital on our balance sheet attributable to our common stock
will be reduced proportionately based on the reverse stock split ratio selected
by the Board, and the additional paid-in capital account will be credited with
the amount by which the stated capital is reduced. The per share net income or
loss and net book value of our common stock will be restated because we will
have less shares of common stock outstanding.
6
Potential Anti-Takeover Effect. Although the increased proportion of
unissued authorized shares to issued shares could, under certain circumstances,
have an anti-takeover effect (for example, by permitting issuances that would
dilute the stock ownership of a person seeking to effect a change in the
composition of our Board or contemplating a tender offer or other transaction
for the combination of us with another company), the reverse stock split
proposal is not being proposed in response to any effort of which we are aware
to accumulate our shares of common stock or obtain control of us, nor is it part
of a plan by management to recommend a series of similar amendments to our Board
and stockholders. Other than the reverse stock split proposal, the Board does
not currently contemplate recommending the adoption of any other amendments to
our certificate of incorporation that could be construed to affect the ability
of third parties to take over or change the control of us.
Procedure for Effecting Reverse Stock Split and Exchange of Stock Certificates
If the stockholders approve the proposal to authorize the Board to
implement the reverse stock split and the Board decides to implement the reverse
stock split on or prior to December 31, 2008, we will file an amendment
substantially in the form set forth on Appendix I with the Secretary of State of
the State of Delaware. The text of the amendment may be modified to include such
changes as may be required by the office of the Secretary of State of the State
of Delaware and as the Board deems necessary and advisable to effect the reverse
stock split, including the insertion of the effective time and the applicable
reverse stock split ratio determined by the Board. The reverse stock split will
become effective at the time specified in the amendment. Beginning at the
effective time, each certificate representing Old Shares will be deemed for all
corporate purposes to evidence ownership of New Shares.
As soon as practicable after the effective time, stockholders will be
notified that the reverse stock split has been effected. We expect that our
transfer agent will act as exchange agent for purposes of implementing the
exchange of stock certificates. Holders of Old Shares will be asked to surrender
to the exchange agent certificates representing Old Shares in exchange for
certificates representing New Shares in accordance with the procedures to be set
forth in the letter of transmittal we send to our stockholders. No new
certificates will be issued to a stockholder until such stockholder has
surrendered such stockholder's outstanding certificate(s), together with the
properly completed and executed letter of transmittal, to the exchange agent.
Any Old Shares submitted for transfer, whether pursuant to a sale, other
disposition or otherwise, will automatically be exchanged for New Shares.
STOCKHOLDERS SHOULD NOT DESTROY ANY STOCK CERTIFICATE(S) AND SHOULD NOT SUBMIT
ANY CERTIFICATE(S) UNTIL REQUESTED TO DO SO.
No Dissenters' Rights
Under the DGCL, stockholders are not entitled to dissenters' rights with
respect to the reverse stock split, and we will not independently provide
stockholders with any such right.
Federal Income Tax Consequences of the Reverse Stock Split
The following is a summary of certain material federal income tax
consequences of the reverse stock split, does not purport to be a complete
discussion of all of the possible federal income tax consequences of the reverse
stock split and is included for general information only. Further, it does not
address any state, local or foreign income or other tax consequences. Also, it
does not address the tax consequences to holders that are subject to special tax
rules, such as banks, insurance companies, regulated investment companies,
personal holding companies, foreign entities, nonresident alien individuals,
broker-dealers and tax-exempt entities. The discussion is based on the
provisions of the United States federal income tax law as of the date hereof,
which is subject to change retroactively as well as prospectively. This summary
also assumes that the Old Shares were, and the New Shares will be, held as a
"capital asset," as defined in the Internal Revenue Code of 1986, as amended and
in effect from time to time, or any superseding federal revenue statute (i.e.,
generally, property held for investment). The tax treatment of a stockholder may
vary depending upon the particular facts and circumstances of such stockholder.
Each stockholder is urged to consult with such stockholder's own tax advisor
with respect to the tax consequences of the reverse stock split.
Other than the cash payments for fractional shares discussed below, no
gain or loss should be recognized by a stockholder upon such stockholder's
exchange of Old Shares for New Shares pursuant to the reverse stock split. The
aggregate tax basis of the New Shares received in the reverse stock split
(including any fraction of a New Share deemed to have been received) will be the
same as the stockholder's aggregate tax basis in the Old Shares exchanged there
for. In general, stockholders who receive cash in exchange for their fractional
share interests in the New Shares as a result of the reverse stock split will
recognize gain or loss based on their adjusted basis in the fractional share
interests redeemed. The stockholder's holding period for the New Shares will
include the period during which the stockholder held the Old Shares surrendered
in the reverse stock split.
Our view regarding the tax consequences of the reverse stock split is not
binding on the Internal Revenue Service or the courts. ACCORDINGLY, EACH
STOCKHOLDER SHOULD CONSULT WITH HIS OR HER OWN TAX ADVISOR WITH RESPECT TO ALL
OF THE POTENTIAL TAX CONSEQUENCES TO HIM OR HER OF THE REVERSE STOCK SPLIT.
The Board Unanimously Recommends a Vote FOR Granting our Board Discretionary
Authority to Amend our Certificate of Incorporation to Effect a Reverse Stock
Split of our Common Stock at a Ratio Within the Range from One-For-Ten To
One-For-Thirty at any Time Prior to December 31, 2008.
7
PROPOSAL 2
(Item 2 on the Proxy Card)
APPROVAL OF AN AMENDMENT TO OUR CERTIFICATE OF INCORPORATION TO INCREASE
THE NUMBER OF AUTHORIZED SHARES OF OUR COMMON STOCK
Background
On December 3, 2007, our Board unanimously approved, and recommended that
our stockholders approve, an amendment to our certificate of incorporation to
increase the number of authorized shares of common stock to 250,000,000.
Currently, we are authorized to issue 120,055,746 shares of common stock. If
this proposal and the proposal authorizing our Board to effect a reverse stock
split of our common stock is approved by stockholders, the number of authorized
shares of common stock would be reduced to 125,000,000 shares upon
implementation of the reverse stock split. If stockholders do not approve the
proposal to increase our authorized shares of common stock to 250,000,000, we
will not have sufficient shares available to continue our acquisition program,
which will adversely affect our ability to expand our operations
Our Board has declared advisable the proposed amendment to our certificate
of incorporation because the Board considers it in the best interests of our
company to have available a sufficient number of shares of common stock to
provide the Board with flexibility to engage in financing and other transactions
involving the issuance of additional shares of common stock and to provide for
employee and director stock-based compensation, all of which are critical to our
growth.
As of February 4, 2008, our authorized capital stock consisted of
120,055,746 shares of common stock and 8,003,716 shares of preferred stock,
including 2,000,000 shares of series B convertible preferred stock. As of that
date, we had outstanding 69,262,227 shares of common stock and 845,554 shares of
series B convertible preferred stock. The outstanding shares of series B
convertible preferred stock are convertible into 30,439,944 shares of common
stock at a conversion price of $0.276 per share. In addition, as of February 4,
2008, we had outstanding warrants and options to purchase an additional
15,775,735 shares of common stock. Consequently, we have only 4,577,840
authorized but unissued shares of common stock available for issuance by the
Board in connection with financings, acquisitions of other companies, stock
dividends, employee benefit programs or other corporate purposes.
Consequences of Approval of Increase in Authorized Common Stock
If approved, the additional authorized shares of common stock will be
available for issuance at such times and for such purposes as the Board may deem
advisable without further action by our stockholders, except as may be required
by applicable laws or regulations. For example, the additional authorized shares
of common stock will be available for issuance by the Board in connection with
financings, acquisitions of other companies, stock dividends, employee benefit
programs or other corporate purposes. Except for the shares of common stock
issuable in connection with the conversion of our series B convertible preferred
stock ( including shares we may issue in lieu of cash dividends), outstanding
warrants and options, shares reserved for issuance under the 2005 Stock
Incentive Plan, and shares of a newly authorized series of convertible preferred
stock we will issue if we complete the previously disclosed acquisition of the
Blair Companies and the shares of common stock issuable upon conversion of that
series of preferred stock, shares we may issue to finance that acquisition and
in connection with acquisitions under consideration but as to which we have not
entered into any letters of intent, agreements in principle or definitive
agreements at this time, we do not have any plans or commitments to issue
capital stock. The Board does not intend to issue any stock except on terms or
for reasons which the Board deems to be in the best interests of our company and
our stockholders. Because the holders of our common stock do not have preemptive
rights, the issuance of additional shares of common stock (other than on a
pro-rata basis to all current stockholders such as pursuant to a stock dividend)
would have the effect of reducing our existing stockholders' proportionate
interests.
The Board has the authority, without action by our stockholders, to
designate and issue preferred stock in one or more series and to designate
certain rights, preferences and restrictions of each series, any or all of which
may be greater than the rights of the common stock. It is not possible to state
the actual effect of the issuance of any preferred stock upon the rights of
holders of our common stock until the Board determines the specific rights of
the holders of such preferred stock. The effects might include restricting
dividends on the common stock, diluting the voting power of the common stock,
impairing the liquidation rights of our common stock and delaying or preventing
a change in control of our company without further action by our stockholders.
Any future issuance of our common stock will be subject to the rights of holders
of outstanding shares of preferred stock that we may issue in the future.
Subject to applicable laws or regulations, preferred stock may be designated and
issued from time to time without action by our stockholders to such persons and
for such consideration and on such terms as the Board determines.
Anti-Takeover Effects
Although the proposal to increase the authorized capital stock may be
construed as having an anti-takeover effect, because authorized and unissued
common stock could be issued for the purpose of discouraging an attempt by
another person to take control of our company, neither our management nor our
Board views this proposal as an anti-takeover mechanism. In addition, this
proposal is not part of any plan by us to recommend a series of anti-takeover
amendments to the certificate of incorporation, and we do not currently
contemplate recommending the adoption of other amendments to our certificate of
incorporation that could be construed to affect the ability of third parties to
take over or change control of our company.
8
Certificate of Amendment
If the stockholders approve the proposal to increase our authorized shares
of common stock, we will cause a certificate of amendment to our certificate of
incorporation to be filed with the Delaware Secretary of State as attached
hereto in Appendix II. Upon the effectiveness of the proposed amendment, Article
Fourth of our certificate of incorporation would be amended in its entirety to
read as follows:
"FOURTH: The total number of shares of all classes of stock which the
Corporation shall have authority to issue is 258,003,716 shares,
consisting of 250,000,000 shares of common stock, $.001 par value per
share (the "Common Stock"), and 8,003,716 shares of preferred stock, $.001
par value per share (the "Preferred Stock")."
The Board Recommends a Vote FOR the Proposal to Amend our Certificate of
Incorporation to Increase the Number of Authorized Shares of Common Stock and
Proxies that are Signed and Returned will be so Voted, unless Otherwise
Instructed.
ADDITIONAL INFORMATION
Householding
The SEC's rules permit companies and intermediaries such as brokers to
satisfy delivery requirements for proxy statements and annual reports with
respect to two or more stockholders sharing the same address by delivering a
single proxy statement and annual report addressed to those stockholders. This
process, which is commonly referred to as "householding,"' potentially provides
extra convenience for stockholders and cost savings for companies. Some brokers
household proxy materials and annual reports, delivering a single proxy
statement and annual report to multiple stockholders sharing an address,
although each stockholder will receive a separate proxy card. Once you have
received notice from your broker that they will be householding materials to
your address, householding will continue until you are notified otherwise or
until you revoke your consent. If at any time you no longer wish to participate
in householding and would prefer to receive a separate Proxy Statement and
annual report, please notify your broker. If you would like to receive a
separate copy of this year's Proxy Statement or Annual Report, please address
your request for delivery of this Proxy Statement and/or annual report to Air
Industries Group, Inc., 1479 North Clinton Avenue, Bay Shore, New York 11706.
Available Information
We file annual, quarterly and periodic reports, proxy statements and other
information with the SEC. These filings are available to the public on the
Internet at the SEC's web site, http://www.sec.gov. The SEC's web site contains
reports, proxy statements and other information regarding issuers, like us, that
file these reports, statements and other documents electronically with the SEC.
You can also read and copy any document we file with the SEC at the SEC's Public
Reference Room at 100 F Street, N.E., Washington, D.C. 20549. You may also
obtain copies of the documents at prescribed rates by writing to the SEC's
Public Reference Section at that address. Please call the SEC at 1-800-SEC-0330
for further information regarding the operation of the Public Reference Room.
EVERY STOCKHOLDER, WHETHER OR NOT HE OR SHE EXPECTS TO ATTEND THE ANNUAL
MEETING IN PERSON, IS URGED TO EXECUTE THE PROXY AND RETURN IT PROMPTLY IN THE
ENCLOSED BUSINESS REPLY ENVELOPE.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Dario Peragallo
Dario Peragallo, Corporate Secretary
Dated: February _2008,
New York, NY
9
APPENDIX I (REVERSE SPLIT CERTIFICATE AMENDMENT)
CERTIFICATE OF AMENDMENT
OF CERTIFICATE OF INCORPORATION OF
AIR INDUSTRIES GROUP, INC.
(Pursuant to Section 242 of
the Delaware General Corporation Law)
Air Industries Group, Inc. (the "Corporation"), a corporation organized
and existing under and by virtue of the Delaware General Corporation Law (the
"DGCL"), does hereby certify that:
1. The name of the Corporation is Air Industries Group, Inc.
2. The Board of Directors of the Corporation at a meeting duly called duly
adopted resolutions setting forth an amendment to the Corporation's
Certificate of Incorporation, as amended (the "Certificate of
Incorporation"'), declaring such amendment to be advisable, amending
Article FOURTH (i) so that the first sentence thereof in its entirety
reads as follows:
"FOURTH: The total number of shares of each class that the corporation
shall have the authority to issue is 133,003,716 shares, consisting of:
(a) 125,000,000 shares of common shares (the "Common Shares"), par
value $.001 per share; and (b) 8,003,716 shares of preferred shares
(the "Preferred Shares"), par value $.001 per share."
and (ii) by inserting the following paragraph at the end of Section A
thereof: so that the issued shares of the Corporation's Common Stock on
the date hereof shall be combined into a smaller number of shares of
Common Stock in the ratio of one new share for each __ old shares
immediately upon the filing of this Certificate of Amendment.
"3. Reverse Split. Effective upon the filing of this Certificate of
Amendment of Certificate of Incorporation with the Secretary of State of
the State of Delaware (the "Effective Time"), the shares of the
Corporation's Common Stock issued and outstanding immediately prior to the
Effective Time (the "Old Common Stock"), will be automatically
reclassified as and co combined into shares of Common Stock (the "New
Common Stock") such that each ten to thirty shares of Old Common Stock
shall be reclassified as and combined into one share of New Common Stock,
the exact ratio within the ten-to-thirty range to be determined by the
board of directors of the Corporation prior to the Effective Time and
publicly announced by the Corporation. Notwithstanding the previous
sentence, no fractional shares of New Common Stock shall be issued to the
holders of record of Old Common Stock in connection with the foregoing
reclassification of shares of Old Common Stock. In lieu thereof, upon
surrender after the Effective Time of a certificate that formerly
represented shares of Old Common Stock that were issued and outstanding
immediately prior to the Effective Time , any person who otherwise would
be entitled to receive a fractional share of New Common Stock as a result
of the reclassification, following the Effect Time, shall be entitled to
receive a cash payment equal to the fraction to which such holder would
otherwise be entitled to receive multiplied by the closing price of a
share of New Common Stock on the OTC Bulletin Board immediately following
the Effective Time. Each stock certificate that, immediately prior to the
Effective Time represented shares of Old Common Stock shall, from and
after the Effective Time, automatically and without the necessity of
presenting the same for exchange, represent that number of whole shares of
New Common Stock into which the shares of Old Common Stock represented by
such certificate shall have been reclassified (as well as the right to
receive cash in lieu of any fractional shares of New Common Stock as set
forth above); provided, however, that each holder of record of a
certificate that represented shares of Old Common Stock shall receive,
upon surrender of such certificate, a new certificate representing the
number of whole shares of New Common Stock into which the shares of Old
Common Stock represented by such certificate shall have been reclassified
as set forth above."
3. That this.Certificate of Amendment was duly adopted in accordance with the
provisions of Section 242 of the DGCL.
4. This Certificate of Amendment shall become effective upon the filing
hereof in the Office of the Secretary of State of the State of Delaware.
Executed on this day of , 2008 .
Air Industries Group, Inc.
By:
I-1
APPENDIX II (CERTIFICATE AMENDMENT)
CERTIFICATE OF AMENDMENT
OF CERTIFICATE OF INCORPORATION OF
AIR INDUSTRIES GROUP, INC.
(Pursuant to Section 242 of
the Delaware General Corporation Law)
Air Industries Group, Inc. (the "Corporation "), a corporation organized
and existing under and by virtue of the Delaware General Corporation Law (the
"DGCL "), does hereby certify that:
1. The Board of Directors of the Corporation at a meeting duly
called unanimously duly adopted resolutions setting forth a
proposed amendment (the "Amendment") to the Certificate of
Incorporation of the Corporation, as amended (the "Certificate
of Incorporation"), declaring the Amendment advisability to
its stockholders, and directing that the Amendment be
considered at the 2008 special meeting of the stockholders of
the Corporation followed by a majority vote in favor of the
Amendment by the stockholders at such special meeting. The
Amendment provides that the first sentence of Article Fourth
of the Certificate of Incorporation be amended in its entirety
to read as follows:
"FOURTH: The total number of shares of all classes of stock
which the Corporation shall have authority to issue is 258,
003,716 shares, consisting of 250,000,000 shares of common
stock, $.001 par value per share (the "Common Stock"), and
8,003,716 shares of preferred stock, $.001 par value per share
(the "Preferred Stock")."
2. That the Amendment herein certified has been duly adopted in
accordance with the provisions of Section 242 of the DGCL.
3. This Certificate of Amendment shall become effective upon the
filing hereof in the Office of the Secretary of State of the
State of Delaware.
Executed on this day of , 2008.
Air Industries Group, Inc.
By:
Peter D. Rettaliata
President and Chief Executive Officer
I-2
AIR INDUSTRIES GROUP, INC.
P R O X Y
FOR HOLDERS OF COMMON STOCK
FOR SPECIAL MEETING OF THE STOCKHOLDERS
THURSDAY, APRIL 3, 2008
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Peter D. Rettaliata and Louis A. Giusto,
and each of them, with full power of substitution, as proxies to vote the shares
which the undersigned is entitled to vote at the Special Meeting of the
Stockholders of Air Industries Group, Inc. to be held at the offices of Eaton &
Van Winkle LLP, Three Park Avenue, 16th floor, New York, NY, on Thursday, April
3, 2008 at 10:00 A.M., Eastern Time and at any adjournments thereof, hereby
revoking any proxies heretofore given, to vote all shares of common stock of Air
Industries Group, Inc. held or owned by the undersigned as indicated on the
proposals as more fully set forth in this Proxy Statement, and in their
discretion upon such other matters as may come before the meeting.
Please mark "X" your votes as indicated:
1. To grant to our board of directors discretionary authority to FOR AGAINST ABSTAIN
amend our certificate of incorporation to effect a reverse stock |_| |_| |_|
split of our common stock at a ratio within the range from
one-for ten to one-for thirty at any time prior to
December 31, 2008.
2. To approve an amendment to our certificate of incorporation that FOR AGAINST ABSTAIN
would increase the number of shares of our authorized shares of |_| |_| |_|
common stock to 250,000,000.
(Continued, and to be signed, on the Reverse Side)
FOLD HERE
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
THIS PROXY WHEN PROPERLY SIGNED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL
BE VOTED FOR PROPOSALS 1 AND 2.
The undersigned hereby acknowledges receipt of the Notice of, and Proxy
Statement for, the aforesaid Special Meeting.
Dated: __________________________________________ , 2008
________________________________________________________
Signature of Stockholder
________________________________________________________
Signature of Stockholder
NOTE: When shares are held by joint tenants, both should
sign. When signing as attorney, executor, administrator,
trustee, or guardian, please give full title as such. If
a corporation, please sign in full corporate name by
President or other authorized officer. If a partnership,
please sign in partnership name by an authorized person.
IMPORTANT - PLEASE FILL IN, SIGN AND RETURN PROMPTLY
USING THE ENCLOSED ENVELOPE.
AIR INDUSTRIES GROUP, INC.
P R O X Y
FOR HOLDERS OF SERIES B PREFERRED STOCK
FOR SPECIAL MEETING OF THE STOCKHOLDERS
THURSDAY, APRIL 3, 2008
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Peter D. Rettaliata and Louis A. Giusto,
and each of them, with full power of substitution, as proxies to vote the shares
which the undersigned is entitled to vote at the Special Meeting of the
Stockholders of Air Industries Group, Inc. to be held at the offices of Eaton &
Van Winkle LLP, Three Park Avenue, 16th floor, New York, NY, on Thursday, April
3, 2008 at 10:00 A.M., Eastern Time and at any adjournments thereof, hereby
revoking any proxies heretofore given, to vote all shares of series B
convertible preferred stock of Air Industries Group, Inc. held or owned by the
undersigned as indicated on the proposals as more fully set forth in this Proxy
Statement, and in their discretion upon such other matters as may come before
the meeting.
Please mark "X" your votes as indicated:
1. To grant to our board of directors discretionary authority to FOR AGAINST ABSTAIN
amend our certificate of incorporation to effect a reverse |_| |_| |_|
stock split of our common stock at a ratio within the range
from one-for ten to one-for-thirty at any time prior to
December 31, 2008.
2. To approve an amendment to our certificate of incorporation FOR AGAINST ABSTAIN
that would increase the number of shares of our authorized |_| |_| |_|
shares of common stock to 250,000,000..
(Continued, and to be signed, on the Reverse Side)
FOLD HERE
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
THIS PROXY WHEN PROPERLY SIGNED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL
BE VOTED FOR PROPOSALS 1 AND 2.
The undersigned hereby acknowledges receipt of the Notice of, and Proxy
Statement for, the aforesaid Special Meeting.
Dated: __________________________________________ , 2008
________________________________________________________
Signature of Stockholder
________________________________________________________
Signature of Stockholder
NOTE: When shares are held by joint tenants, both should
sign. When signing as attorney, executor, administrator,
trustee, or guardian, please give full title as such. If
a corporation, please sign in full corporate name by
President or other authorized officer. If a partnership,
please sign in partnership name by an authorized person.
IMPORTANT - PLEASE FILL IN, SIGN AND RETURN PROMPTLY
USING THE ENCLOSED ENVELOPE.
EATON & VAN WINKLE LLP
3 Park Avenue
New York, NY 10016
January 28, 2008
Securities and Exchange Commission
Division of Corporation Finance
Washington, D.C. 20549
Attention: Max Webb, Assistant Director
Re. Air Industries Group, Inc.
Revised Preliminary Schedule 14A
File No. 000-29245
Ladies and Gentlemen:
On behalf of Air Industries Group, Inc., a Delaware corporation (the
"Company"), I am submitting a revised preliminary Schedule 14A in connection
with the Company's Special Meeting of Stockholders scheduled for April 2008.
At the Special Meeting, stockholders will vote upon a proposal to
authorize the Board of Directors to effect a reverse stock split of the
Company's common stock within a specified range of rates at such time as it
deems appropriate, if at all, before the end of 2008 (the "Reverse Stock Split
Amendment"), and an amendment to increase the authorized common stock of the
Company.
On or about January 9, 2008, Hsiao-yun Peng issued the following comment
telephonically with respect to the preliminary proxy statement filed on January
7, 2008: "Please revise the preliminary proxy statement to comply with Items 11,
13 and 14."
The Company does not believe that Items 11, 13 and 14 are applicable. The
Company has advised us that it has sufficient authorized, but unissued shares of
common stock available to complete the previously reported acquisition of the
Blair Companies referred to in the preliminary proxy statement and for any
financing related thereto currently contemplated, and has included a statement
to that effect in the revised preliminary proxy statement as part of the
discussion relating to Proposal 1 under the caption "Reasons for this Proposal -
Increase in Number of Authorized but Unissued Shares" (see the second
paragraph). The principals representing the Blair Companies have advised the
Company that they are willing to amend the documentation relating to the
acquisition to eliminate the convertible preferred stock as part of the
consideration for the sale of their shares of the Blair Companies and to
negotiate substitute terms which do not require the issuance of shares of the
Company's common stock. The proposals received and currently under review by the
Company for financing the acquisition of the Blair Companies do not require the
issuance of shares, or derivative securities, that would result in the issuance
of shares of common stock in excess of that number of authorized but unissued
shares available under the Company's certificate of incorporation, as amended.
Furthermore, although as stated in that paragraph, the additional authorized
shares of common stock will be available for issuance by the Board, among other
things, for financings and acquisitions of other companies, as of this date the
Company has not entered into any letters of intent, agreements in principle or
definitive agreements with respect to any financings or other acquisitions.
Please direct your comments, if any, or questions concerning this filing
to me at (212) 561-3604, or in my absence to Mark Orenstein at (212) 561-3638,
or fax them to (212) 779-9928, 9930 or 9931.
Very truly yours,
/s/ Vincent J. McGill
Cc: Hsiao-yun Peng