SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (date of earliest event reported):
August 24, 2007
AIR INDUSTRIES GROUP, INC.
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(Exact Name of Registrant as Specified in its Charter)
Delaware 000-29245 20-4458244
State of Commission IRS Employer
Incorporation File Number I.D. Number
1479 North Clinton Avenue, Bay Shore, NY 11706
Address of principal executive offices
Registrant's telephone number: (631) 968-5000
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(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):
|_| Written communications pursuant to Rule 425 under the Securities Act (17
CFR 230.425)
|_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
|_| Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
|_| Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
Introduction.
On August 24, 2007, Air Industries Group, Inc., a Delaware corporation
("we" or the "Company"), purchased (the "Welding Metallurgy Acquisition")
through a wholly-owned indirect subsidiary all of the issued and outstanding
capital stock of Welding Metallurgy, Inc. ("Welding Metallurgy"), pursuant to
that certain Stock Purchase Agreement, dated as of March 9, 2007, by and among
the Company, as purchaser thereunder, and each of John Gantt and Lugenia Gantt,
the shareholders of Welding Metallurgy and sellers thereunder (the "Sellers"),
as amended by Amendment No.1 thereto dated as of August 2, 2007 (the "Stock
Purchase Agreement"). A more detailed description of the Welding Metallurgy
Acquisition is set forth below under the heading "Item 2.01--Completion of
Acquisition or Disposition of Assets."
In consideration for the Welding Metallurgy stock, we paid the Sellers
$6,050,000, in a combination of cash and by our issuance to the Sellers of a
promissory note and restricted shares of our common stock. The cash portion of
the purchase price was provided by the proceeds of a term loan of $4,500,000
under a Loan and Security Agreement dated as of August 24, 2007 by and among our
wholly-owned subsidiaries, Air Industries Machining, Corp. ("AIM"), Sigma
Metals, Inc.("Sigma") and Welding Metallurgy, and Steel City Capital Funding LLC
(the SCCF Loan Agreement").
Also in connection with the acquisition, Welding Metallurgy entered into
a consulting agreement with John Gantt.
Item 1.01 Entry into a Material Definitive Agreement.
Loan and Security Agreement with Steel City Funding LLC
In connection with the Welding Metallurgy Acquisition, AIM, Sigma and
Welding Metallurgy entered into the SCCF Loan Agreement, under which they
borrowed $4,500,000 in connection with the Welding Metallurgy Acquisition. The
indebtedness under the SCCF Loan Agreement is junior and subordinate to the
indebtedness under our Revolving Credit, Term Loan and Security Agreement dated
as of November 30, 2005 ( the "PNC Bank Credit Facility") with the financial
institutions named therein (the "Lenders") and PNC Bank N.A., as agent for the
Lenders, as amended. We also entered into the Fourth Amendment to the PNC Bank
Credit Facility, dated as of August 24, 2007, which adds Welding Metallurgy as a
borrower under the PNC Bank Credit Facility and us as a guarantor of the
obligations under the PNC Bank Credit Facility.
Private Debt Financing -- Promissory Note
In partial consideration of the purchase of the Welding Metallurgy capital
stock, we issued to the Sellers a 7% promissory note in the principal amount of
$2,000,000 due August 31, 2011.
Consulting Agreement
Also in connection with the Welding Metallurgy Acquisition, Welding
Metallurgy entered into a consulting agreement under which John Gantt, one of
the Sellers and the former president of Welding Metallurgy, has agreed to serve
as a consultant with respect to the ongoing operations of Welding Metallurgy.
The agreement is for an initial term of three months, and will be extended
automatically for an additional three months, unless terminated by either party
and provides compensation to Mr. Gantt of $30,000 per month.
Item 2.01 Completion of Acquisition or Disposition of Assets.
On August 24, 2007 (the "Closing Date"), pursuant to the Stock Purchase
Agreement, we closed (the "Closing") the Welding Metallurgy Acquisition, by
which we acquired through a wholly-owned indirect subsidiary all of the issued
and outstanding capital stock of Welding Metallurgy. At Closing we paid the
Sellers $3,500,000 in cash, and issued to Sellers a promissory note in the
principal amount of $2,000,000 which bears no interest until August 24, 2008,
and thereafter bears interest at the rate of 7% per annum, together with
2,035,529 restricted shares of our common stock, having a value of $550,000. To
secure payment of the indebtedness under the promissory note, AIM and Sigma
pledged to the Sellers, and granted the Sellers a security interest in, all of
the outstanding shares of Welding Metallurgy, subject to the prior rights of
Steel City Capital Funding LLC. We have agreed to register for resale under the
Securities Act the shares of our common stock issued to the Sellers, at the
request of the Sellers, in connection with certain registration statements we
may file in the future. One half of the shares of our common stock issued to the
Sellers have been deposited in escrow to secure the indemnity obligations of
Sellers under the Stock Purchase Agreement for a period of eighteen months from
the Closing Date. Under the terms of the Stock Purchase Agreement, the Sellers
have agreed that they will not, for a period of five years from the Closing
Date, engage in a business which competes with ours, solicit or interfere with
our business relationships with our customers, or employ, solicit or otherwise
persuade any of our employees to discontinue or alter his or her relationship
with us.
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an
Off-Balance Sheet Arrangement of a Registrant.
In connection with the Welding Metallurgy Acquisition, AIM, Sigma and
Welding Metallurgy borrowed $4,500,000 under the SCCF Loan Agreement. Borrowings
under the SCCF Loan Agreement bear interest generally at a rate of 6% over the
base commercial lending rate of PNC Bank as publicly announced to be in effect
from time to time, except under certain circumstances. To secure the payment of
the indebtedness under the SCCF Loan Agreement, AIM, Sigma and Welding
Metallurgy each granted Steel City Capital Funding LLC a security interest in
all its assets, which security interest is junior and subordinate to the
security interest granted to the Lenders under the PNC Bank Credit Facility. The
indebtedness under the SCCF Loan Agreement is junior and subordinate to the
indebtedness under the PNC Bank Credit Facility and is payable on August 24,
2010, or earlier upon the termination of the PNC Bank Credit Facility,
acceleration following the occurrence of an Event of Default (as defined) or
certain other circumstances. On the Closing Date, we also entered into the
Fourth Amendment to the PNC Bank Credit Facility, dated as of August 24, 2007,
which adds Welding Metallurgy as a borrower under that credit facility and us as
a guarantor of the obligations thereunder. To secure payment of the indebtedness
under the SCCF Loan Agreement, AIM and Sigma pledged all of the outstanding
shares of Welding Metallurgy to Steel City Capital Funding LLC. We also issued a
promissory note to the Sellers in the principal amount of $2,000,000 due August
31, 2011.
Item 3.02 Unregistered Sale of Equity Securities.
The information required by this Item 3.02 is set forth above under the
heading "Item 2.01-- Completion of Acquisition or Disposition of Assets" and in
this Item 3.02. The issuance and sale of the promissory note and shares of our
common stock to the Sellers in consideration of the purchase of all the
outstanding shares of Welding Metallurgy were exempt from the registration
requirements of the Securities Act pursuant to Section 4(2) of the Securities
Act and Regulation D promulgated thereunder.
Item 9.01 Financial Statements and Exhibits.
Financial Statements.
(a) Financial Statements of business acquired. To be filed by amendment
not later than 71 days after the date of the filing of this Current Report.
(b) Pro forma financial information. To be filed by amendment not later
than 71 days after the date of the filing of this Current Report.
Exhibits.
Exhibit No. Description
10.1 7% Promissory Note of Registrant in the principal amount of
$2,000,000 in favor of John and Lugenia Gantt.
10.2 Consulting Agreement by and among Welding Metallurgy, Inc., Gantt
Associates Ltd. and John Gantt, dated as of August 24, 2007.
10.3 Escrow Agreement dated as of August 24, 2007 by and among the
Registrant, John and Lugenia Gantt and Eaton & Van Winkle LLP, as
escrow agent.
10.4 Registration Rights Agreement dated as of August 24, 2007 by and
among the Registrant and John and Lugenia Gantt.
10.5 Fourth Amendment to the Revolving Credit, Term Loan and Security
Agreement dated as of November 30, 2005 with the financial
institutions named therein (the "Lenders") and PNC Bank N.A., as
agent for the Lenders, as amended, dated as of August 24, 2007.
10.6 Loan and Security Agreement dated as of August 24, 2007 among Air
Industries Machining, Corp., Sigma Metals, Inc., Welding
Metallurgy, Inc. and Steel City Capital Funding LLC.
10.7 Pledge Agreement dated as of August 24, 2007 by and among Air
Industries Machining, Corp. and Sigma Metals, Inc., as pledgors,
and Steel City Capital Funding LLC., as pledgee.
10.8 Pledge Agreement dated as of August 24, 2007 by and among Air
Industries Machining, Corp. and Sigma Metals, Inc., as pledgors,
and John and Lugenia Gantt, as pledgees.
10.9 Pledge Agreement dated as of August 24, 2007 by and between Air
Industries Group, Inc., as pledgor, and Steel City Capital
Funding LLC, as pledgee.
10.10 Guarantor Suretyship Agreement dated as of August 24, 2007
between the Registrant and Steel City Capital Funding LLC.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Dated: August 28, 2007
AIR INDUSTRIES GROUP, INC.
By: /s/ Peter Rettaliata
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Peter Rettaliata
Chief Executive Officer
Exhibit Index
Exhibit No. Description
10.1 7% Promissory Note of Registrant in the principal amount of
$2,000,000 in favor of John and Lugenia Gantt.
10.2 Consulting Agreement by and among Welding Metallurgy, Inc., Gantt
Associates Ltd. and John Gantt, dated as of August 24, 2007.
10.3 Escrow Agreement dated as of August 24, 2007 by and among the
Registrant, John and Lugenia Gantt and Eaton & Van Winkle LLP, as
escrow agent.
10.4 Registration Rights Agreement dated as of August 24, 2007 by and
among the Registrant and John and Lugenia Gantt.
10.5 Fourth Amendment to the Revolving Credit, Term Loan and Security
Agreement dated as of November 30, 2005 with the financial
institutions named therein (the "Lenders") and PNC Bank N.A., as
agent for the Lenders, as amended, dated as of August 24, 2007.
10.6 Loan and Security Agreement dated as of August 24, 2007 among Air
Industries Machining, Corp., Sigma Metals, Inc., Welding
Metallurgy, Inc. and Steel City Capital Funding LLC.
10.7 Pledge Agreement dated as of August 24, 2007 by and among Air
Industries Machining, Corp. and Sigma Metals, Inc., as pledgors,
and Steel City Capital Funding LLC., as pledgee.
10.8 Pledge Agreement dated as of August 24, 2007 by and among Air
Industries Machining, Corp. and Sigma Metals, Inc., as pledgors,
and John and Lugenia Gantt, as pledgees.
10.9 Pledge Agreement dated as of August 24, 2007 by and between Air
Industries Group, Inc., as pledgor, and Steel City Capital
Funding LLC, as pledgee.
10.10 Guarantor Suretyship Agreement dated as of August 24, 2007
between the Registrant and Steel City Capital Funding LLC.