Exhibit 4.1
WARRANT AGREEMENT ("Agreement"), dated as of December 31, 2008 by
and between AIR INDUSTRIES GROUP INC., a Delaware corporation (the "Company"),
and TAGLICH BROTHERS, INC. ("Warrantholder").
In consideration of the mutual terms, conditions, representations,
warranties and agreements herein set forth, and for other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties hereto hereby agree as follows:
Section 1. Issuance of Warrants.
The Company hereby issues and grants to Warrantholder 137,138
warrants ("Warrants") to purchase shares of Series B Convertible Preferred Stock
of the Company (the "Preferred Stock"). Each Warrant shall entitle the holder,
subject to the satisfaction of the conditions to exercise set forth in Section 7
of this Agreement, to purchase on or after the date hereof until December 31,
2015 (the "Warrant Expiration Date") one share of Preferred Stock (the shares of
Preferred Stock issuable upon exercise of the Warrants being collectively
referred to herein as the "Warrant Shares") at an exercise price of $0.01 per
Warrant Share (the "Exercise Price"). The shares of Preferred Stock issuable
upon exercise of the Warrants shall have the terms, preferences, rights and be
subject to the limitations set forth in the Certificate of Designation
previously filed with the Office of the Secretary of State of Delaware. The
number of Warrant Shares issuable on exercise of each Warrant and the Exercise
Price are all subject to adjustment pursuant to Section 8 of this Agreement.
Section 2. Form of Warrant Certificates.
Promptly after the execution and delivery of this Agreement by the
parties hereto, the Company shall cause to be executed and delivered to
Warrantholder one or more certificates evidencing the Warrants (the "Warrant
Certificates"). Each Warrant Certificate delivered hereunder shall be
substantially in the form set forth in Exhibit A attached hereto and may have
such letters, numbers or other identification marks and legends, summaries or
endorsements printed thereon as the Company may deem appropriate and that are
not inconsistent with the terms of this Agreement or as may be required by
applicable law, rule or regulation. Each Warrant Certificate shall be dated the
date of execution by the Company.
Section 3. Execution of Warrant Certificates.
Each Warrant Certificate delivered hereunder shall be signed on
behalf of the Company by its President or Chief Executive Officer and by its
Secretary or an Assistant Secretary. Each such signature may be in the form of a
facsimile thereof and may be imprinted or otherwise reproduced on the Warrant
Certificates.
If any officer of the Company who signed any Warrant Certificate
ceases to be an officer of the Company before the Warrant Certificate so signed
shall have been delivered by the Company, such Warrant Certificate nevertheless
may be delivered as though such person had not ceased to be such officer of the
Company.
Section 4. Registration.
Warrant Certificates shall be issued in registered form only. The
Company will keep or cause to be kept books for registration of ownership and
transfer of each Warrant Certificate issued pursuant to this Agreement. Each
Warrant Certificate issued pursuant to this Agreement shall be numbered by the
Company and shall be registered by the Company in the name of the holder thereof
(initially the Warrantholder). The Company may deem and treat the registered
holder of any Warrant Certificate as the absolute owner thereof (notwithstanding
any notation of ownership or other writing thereon made by anyone) for the
purpose of any exercise thereof and for all other purposes, and the Company
shall not be affected by any notice to the contrary.
Section 5. Restrictions on Transfer.
No Warrant may be sold, pledged, hypothecated, assigned, conveyed,
transferred or otherwise disposed of (each a "transfer") unless (i) the transfer
complies with all applicable securities laws and (ii) the transferee agrees in
writing to be bound by the terms of this Agreement and executes and delivers to
the Company any documents and instruments requested by the Company, including
without limitation, an opinion of counsel satisfactory to the Company, that such
transfer does not violate any applicable federal or state securities laws.
Section 6. Mutilated or Missing Warrant Certificates.
If any Warrant Certificate is mutilated, lost, stolen or destroyed,
the Company shall issue, upon surrender and cancellation of any mutilated
Warrant Certificate, or in lieu of and substitution for any lost, stolen or
destroyed Warrant Certificate, a new Warrant Certificate of like tenor and
representing an equal number of Warrants. In the case of a lost, stolen or
destroyed Warrant Certificate, a new Warrant Certificate shall be issued by the
Company only upon the Company's receipt of reasonably satisfactory evidence of
such loss, theft or destruction and, if requested, an indemnity or bond
reasonably satisfactory to the Company.
Section 7. Exercise of Warrants.
A. Exercise. Subject to the terms and conditions set forth in this
Section 7, Warrants may be exercised, in whole or in part (but not as to any
fractional part of a Warrant), at any time or from time to time after the date
hereof until on or prior to the Warrant Expiration Date.
In order to exercise any Warrant, Warrantholder shall deliver to the
Company at its office referred to in Section 16 the following: (i) a written
notice in the form of the Election to Purchase appearing at the end of the form
of Warrant Certificate attached as Exhibit A hereto of such Warrantholder's
election to exercise the Warrants, which notice shall specify the number of such
Warrantholder's Warrants being exercised; (ii) the Warrant Certificate or
Warrant Certificates evidencing the Warrants being exercised; and (iii) payment
of the aggregate Exercise Price.
All rights of Warrantholder with respect to any Warrant that has not
been exercised on or prior to the Warrant Expiration Date shall immediately
cease and such Warrants shall be automatically cancelled and void.
1. B. Payment of Exercise Price. Payment of the Exercise Price with
respect to Warrants being exercised hereunder shall be by the payment to the
Company, in cash, by check or wire transfer, of an amount equal to the Exercise
Price multiplied by the number of Warrants then being exercised. The Warrants
also may be exercised at such time by means of a "cashless exercise" in which
the Holder shall be entitled to receive a certificate for the number of Warrant
Shares equal to the quotient obtained by dividing [(A-B) (X)] by (A), where:
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(A) = the Fair Market Value of a Warrant Share as of the
date of exercise of the Warrants then being exercised;
(B) = the Exercise Price of this Warrant, as adjusted; and
(X) = the number of Warrant Shares issuable upon exercise
of the Warrant Certificates surrendered for exercise
in accordance with the terms of this Warrant Agreement
by means of a cash exercise rather than a cashless
exercise.
C. Delivery of Warrant Shares. Upon receipt of the items referred to
in Section 7A, subject to any withholding that may be required by law and the
payment by the Warrantholder of any transfer taxes due if the warrant Shares are
to be registered in a name other than that of Warrantholder, the Company shall,
as promptly as practicable, execute and deliver or cause to be executed and
delivered, to or upon the written order of Warrantholder, and in the name of
Warrantholder or Warrantholder's designee, a stock certificate or stock
certificates representing the number of Warrant Shares to be issued on exercise
of the Warrant(s). The certificates issued to Warrantholder or its designee
shall bear any restrictive legend required under applicable law, rule or
regulation. A Warrant shall be deemed to have been exercised and such stock
certificate or stock certificates shall be deemed to have been issued, and such
holder or any other Person so designated to be named therein shall be deemed to
have become a holder of record of such shares for all purposes, as of the date
that such notice, together with payment of the aggregate Exercise Price and the
Warrant Certificate or Warrant Certificates evidencing the Warrants to be
exercised, is received by the Company as aforesaid. If the Warrants evidenced by
any Warrant Certificate are exercised in part, the Company shall, at the time of
delivery of the stock certificates, deliver to the holder thereof a new Warrant
Certificate evidencing the Warrants that were not exercised or surrendered,
which shall in all respects (other than as to the number of Warrants evidenced
thereby) be identical to the Warrant Certificate being exercised. Any Warrant
Certificates surrendered upon exercise of Warrants shall be canceled by the
Company.
D. Fair Market Value. For purposes of determining the number of
Warrant Shares issuable upon exercise of Warrants in accordance with the
preceding Subsection C, the Fair Market Value of the Warrant Shares shall mean
as of the date of exercise (the "Determination Date"): (i) if the Warrant Shares
are traded on an exchange or are quoted on the National Association of
Securities Dealers, Inc. automated quotation ("NASDAQ") National Market System,
the average of the closing or last sale price, respectively, of the Warrant
Shares as reported for the ten (10) trading days immediately preceding the
Determination Date; (ii) if the Warrant Shares are not traded on an exchange or
on the NASDAQ National Market System but are traded in the over-the-counter
market, then the average of the mean of the closing bid and asked prices for a
share of such stock reported for the ten (10) trading days immediately preceding
the Determination Date; and (iii) if the Warrant Shares are not publicly traded,
then as determined in good faith by the disinterested members of the Company's
Board of Directors as being the price per share which the Company could
reasonably obtain from a willing buyer (who is not an employee or director) for
authorized but unissued shares of Warrant Shares.
Section 8. Adjustment of Number of Warrant Shares Issuable Upon Exercise of a
Warrant and Adjustment of Exercise Price.
A. Adjustment for Stock Splits, Stock Dividends, Recapitalizations.
The number of Warrant Shares issuable upon exercise of each Warrant and the
Exercise Price shall each be proportionately adjusted to reflect any stock
dividend, stock split, reverse stock split, recapitalization or the like
affecting the number of outstanding shares of Preferred Stock that occurs after
the date hereof.
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B. Adjustments for Reorganization, Consolidation, Merger. If after
the date hereof, the Company (or any other entity, the stock or other securities
of which are at the time receivable on the exercise of the Warrants),
consolidates with or merges into another entity or conveys all or substantially
all of its assets to another entity, then, in each such case, Warrantholder,
upon any permitted exercise of a Warrant (as provided in Section 7), at any time
after the consummation of such reorganization, consolidation, merger or
conveyance, shall be entitled to receive, in lieu of the stock or other
securities and property receivable upon the exercise of the Warrant prior to
such consummation, the stock or other securities or property to which such
Warrantholder would have been entitled upon the consummation of such
reorganization, consolidation, merger or conveyance if such Warrantholder had
exercised the Warrant immediately prior thereto, subject to such further
adjustments as may be required as a result of the occurrence after such
consolidation or merger of the events described in this Section 8. The successor
or purchasing entity in any such reorganization, consolidation, merger or
conveyance (if other than the Company) shall duly execute and deliver to
Warrantholder a written acknowledgment of such entity's obligations under the
Warrants and this Agreement.
Section 9. Reservation of Shares.
The Company shall at all times reserve and keep available, free from
preemptive rights, out of the aggregate of its authorized but unissued Preferred
Stock, or its authorized and issued Preferred Stock held in its treasury, the
aggregate number of the Warrant Shares deliverable upon the exercise of all
outstanding Warrants, for the purpose of enabling it to satisfy any obligation
to issue the Warrant Shares upon the due and punctual exercise of the Warrants,
through the Warrant Expiration Date.
Section 10. No Impairment.
The Company shall not, by amendment of its certificate of
incorporation or bylaws, or through reorganization, consolidation, merger,
dissolution, issuance or sale of securities, sale of assets or any other
voluntary action, willfully avoid or seek to avoid the observance or performance
of any of the terms of the Warrants or this Agreement, and shall at all times in
good faith assist in the carrying out of all such terms and in the taking of all
such actions as may be necessary or appropriate in order to protect the rights
of Warrantholder under the Warrants and this Agreement against wrongful
impairment. Without limiting the generality of the foregoing, the Company: (i)
shall not set or increase the par value of any Warrant Shares above the amount
payable therefor upon exercise, and (ii) shall take all actions that are
necessary or appropriate in order that the Company may validly and legally issue
fully paid and nonassessable Warrant Shares upon the exercise of the Warrants.
Section 11. Representations and Warranties of Warrantholder.
Warrantholder represents and warrants to the Company that, on the
date hereof and on the date the Warrantholder exercises the Warrant pursuant to
the terms of this Agreement:
(i) Warrantholder is an "accredited investor", as such term is
defined in Rule 501(a) of Regulation D promulgated under the Securities Act.
(ii) Warrantholder understands that the Warrants and the Warrant
Shares have not been registered under the Securities Act and acknowledges that
the Warrants and the Warrant Shares must be held indefinitely unless they are
subsequently registered under the Securities Act or an exemption from such
registration becomes available.
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(iii) Warrantholder is acquiring the Warrants for
Warrantholder's own account for investment and not with a view to, or for sale
in connection with, any distribution thereof.
Section 12. No Rights or Liabilities as Stockholder.
No holder, as such, of any Warrant Certificate shall be entitled to
vote, receive dividends or be deemed the holder of Preferred Stock which may at
any time be issuable on the exercise of the Warrants represented thereby for any
purpose whatever, nor shall anything contained herein or in any Warrant
Certificate be construed to confer upon the holder of any Warrant Certificate,
as such, any of the rights of a stockholder of the Company or any right to vote
for the election of directors or upon any matter submitted to stockholders at
any meeting thereof, or to give or withhold consent to any corporate action
(whether upon any recapitalization, issuance of stock, reclassification of
stock, change of par value or change of stock to no par value, consolidation,
merger, conveyance or otherwise), or to receive notice of meetings or other
actions affecting stockholders or to receive dividend or subscription rights, or
otherwise, until such Warrant Certificate shall have been exercised in
accordance with the provisions hereof and the receipt and collection of the
Exercise Price and any other amounts payable upon such exercise by the Company.
No provision hereof, in the absence of affirmative action by Warrantholder to
purchase Warrant Shares shall give rise to any liability of such holder for the
Exercise Price or as a stockholder of the Company, whether such liability is
asserted by the Company or by creditors of the Company.
Section 13. Right of First Refusal.
(a) The first time the Warrantholder receives a bona fide offer to
purchase Shares (as defined in this Section) which it intends to accept, the
Company shall have the right, but not the obligation, to purchase all but not
less than all of the Warrants Shares or the securities issuable upon conversion
of the Warrant Shares (the "Conversion Shares," and together with the Warrant
Shares, the "Shares"), as the case may be, to be sold from a Warrantholder at
the formula price set forth in subsection (b) below. For purposes hereof, a bona
fide sale is a sale of the entire right title and interest to the Shares at a
price reasonably approximating the then fair market value thereof, but shall not
include any sale to Taglich Brothers, Inc. ("Taglich") or an affiliate (as
defined in rule 405 promulgated under the Securities Act of 1933, as amended) of
Taglich or the Warrantholder. The Warrantholder shall give the Company written
notice of any proposed sale of Shares (the "Notice of Sale") not less than 10
days prior to the consummation of that sale (the "Scheduled Sale Date"), which
notice shall identify the proposed purchaser, the total and per Share purchase
price, the Scheduled Sale Date and other material terms of the proposed sale,
and shall be accompanied by a copy of the offer to purchase. The Shares which
are the subject of a Notice of Sale shall be referred to as the "Offered
Shares." The Company shall have 8 days from the receipt of the Notice of Sale to
notify the Warrantholder of its intention to exercise its right of first refusal
with respect to the proposed sale and must consummate the purchase of the
Offered Shares by the Scheduled Sale Date. The Company shall be deemed to have
declined to exercise its right of first refusal if the Company does not deliver
a timely Notice of Sale to the Holder or if the Notice of Sale is delivered to
the Warrantholder on a timely basis, the Company fails to consummate the sale by
the Scheduled Sale Date. If the first time the Warrantholder proposes to sell
Shares it is proposing to sell less than all of the Shares held by it, the
Company shall have a right of first refusal as provided herein when the
Warrantholder proposes to sell the balance of the Shares.
(b) The per share purchase price of Offered Shares to be paid by the
Company upon exercise of the Company's right of first refusal set forth in
subsection (a) above shall be an amount equal to the excess of (i) the per Share
purchase price set forth in the Notice of Sale over (ii) $2.99 (the "Hurdle
Price"), provided that if the per share purchase price set forth in the Notice
of Sale is equal to or less than the Hurdle Price, upon exercise of its right of
first refusal the Company shall have the right to redeem all of the Offered
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Shares for an aggregate consideration of $10.00 and further provided that upon
adjustment of the Warrant Shares as provided in Section 8 (subject to such
successive further adjustments as may be required as a result of the adjustment
of the securities issuable upon exercise of the Warrant Shares) or Conversion of
the Warrant Shares (subject to such successive further adjustments as may be
required as a result of the conversion of the securities issuable upon
conversion of the Warrant Shares) in accordance with the terms thereof, the
Hurdle Price shall be allocated pro-rata amongst the securities issuable upon
such adjustment or conversion. [Note - the $2.99 is a placeholder. The number is
intended to equal the fair market value of the Class B as determined for
purposes of allocating the purchase price received for subscriptions in
September 2008 less 1 cent. I am waiting for Xxxxx to come back to get the
number]
For example, if the per Share price offered to a Warrantholder for
Offered Shares (then comprised of Class B Preferred Stock) was $10.00, the price
payable by the Company upon exercise of the right of first refusal would be
$7.01 and if the per Share price offered to a Warrantholder for Offered Shares
(then comprised of Class B Preferred Stock) was $7.01 or less, the Company could
redeem the Offered Shares for an aggregate of $10.00.
If a Warrantholder proposes to sell any Shares on an exchange or
over-the-counter, then, for purposes of determining the per share price at which
the Company may redeem the Offered Shares, the Fair Market Value of the Shares
(determined in accordance with Section 7 D) as of the date of the Notice of Sale
shall be substituted for the price which might have been offered by a third
party and set forth in the Notice of Sale.
(c) The Warrantholder understands and acknowledges that the
certificate(s) evidencing the Warrant Shares and the Conversion Shares shall be
endorsed with a legend which refers to the Company's right of first refusal set
forth in this Section.
Section 14. Definitions.
Unless the context otherwise requires, the terms defined in this
Section 14, whenever used in this Agreement shall have the respective meanings
hereinafter specified and words in the singular or in the plural shall each
include the singular and the plural and the use of any gender shall include all
genders.
"Business Day" shall mean any day on which banking institutions are
generally open for business in New-York.
"Certificate of Designation" shall mean the Certificate of
Designation filed by the Company with the Office of the Secretary Of State of
Delaware.
"Conversion Shares" shall mean the shares of common stock of the
Company issuable upon conversion of the Preferred Stock.
"Exercise Price" shall be the price per Warrant Share at which
Warrantholder is entitled to purchase Warrant Shares upon exercise of any
Warrant determined in accordance with Section 7 and subject to adjustment as
provided in this Agreement.
"Person" shall mean any corporation, association, partnership,
limited liability company, joint venture, trust, organization, business,
individual, government or political subdivision thereof or governmental body.
"Preferred Stock" means the Series B Convertible Preferred Stock of
the Company.
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"Securities Act" shall mean the Securities Act of 1933, as amended,
or any similar federal statute as at the time in effect, and any reference to a
particular section of such Act shall include a reference to the comparable
section, if any, of such successor federal statute.
"Warrant Shares" shall mean the shares of Preferred Stock issuable
upon exercise of the Warrants represented by the Warrant certificates issued
hereunder.
Section 15. Notices.
All notices, consents, requests, waivers or other communications
required or permitted under this Agreement (each a "Notice") shall be in writing
and shall be sufficiently given (a) if hand delivered, (b) if sent by nationally
recognized overnight courier, or (c) if sent by registered or certified mail,
postage prepaid, return receipt requested, addressed as follows:
if to the Company:
Air Industries Group, Inc.
0000 Xxxxxxx Xxxxxx
Xxx Xxxxx, Xxx Xxxx 00000
Fax: 000-000-0000
Attention: Chief Accounting Officer
With a copy to:
Xxxxx & Xxx Xxxxxx, LLP
Three Park Avenue, 16th floor
Xxx Xxxx, Xxx Xxxx 00000
Fax: 000-000-0000
Attention: Xxxxxxx X. XxXxxx, Esq.
if to Warrantholder:
Taglich Brothers, Inc.
000 Xxxxxxxxx Xxxxxx, 00xx xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Fax: 0-000-000-0000 or 000-000-0000
Attention: Xxxxxxx Xx
or such other address as shall be furnished by any of the parties hereto in a
Notice. Any Notice shall be deemed given upon receipt.
Section 16. Supplements, Amendments and Waivers.
This Agreement may be supplemented or amended only by a subsequent
writing signed by the Company and the Warrantholder (or their successors or
permitted assigns), and any provision hereof may be waived only by a written
instrument signed by the party charged therewith.
Section 17. Successors and Assigns.
Except as otherwise provided herein, the provisions of this
Agreement shall be binding upon and inure to the benefit of and be enforceable
by the successors and permitted assigns of the parties hereto. Warrants issued
under this Agreement may be assigned by Warrantholder only to the extent such
assignment satisfies the restrictions on transfer set forth in this Agreement;
any attempted assignment of Warrants in violation of the terms hereof shall be
void ab initio.
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Section 18. Termination.
This Agreement (other than Sections 11, 13 and Sections 15 through
26, inclusive, and all related definitions, all of which shall survive such
termination) shall terminate on the earlier of (i) the Warrant Expiration Date
and (ii) the date on which all Warrants have been exercised.
Section 19. Governing Law; Jurisdiction.
A. Governing Law. This Agreement and each Warrant Certificate issued
hereunder shall be governed by and construed in accordance with the laws of the
State of Delaware .
B. Submission to Jurisdiction. Each party to this Agreement hereby
irrevocably and unconditionally submits, for itself and its property, to the
jurisdiction of the pertinent courts in the State of New York, County of New
York and any appellate court from any thereof, in respect of actions brought
against it as a defendant, in any action, suit or proceeding arising out of or
relating to this Agreement or the Warrant Certificates and Warrants to be issued
pursuant hereto, or for recognition or enforcement of any judgment, and each of
the parties hereto hereby irrevocably and unconditionally agrees that all claims
in respect of any such action, suit or proceeding may be heard and determined in
such courts. Each of the parties hereto agrees that a final judgment in any such
action, suit or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.
C. Venue. Each party hereto irrevocably and unconditionally waives,
to the fullest extent it may legally and effectively do so, any objection which
it may now or hereafter have to the laying of venue of any action, suit or
proceeding arising out of or relating to this Agreement, or the Warrant
Certificates and Warrants to be issued pursuant hereto, in any court referred to
in this Subsection B. Each of the parties hereby irrevocably waives, to the
fullest extent permitted by law, the defense of an inconvenient forum to the
maintenance of such action, suit proceeding in any such court and waives any
other right to which it may be entitled on account of its place of residence or
domicile.
Section 20. Third Party Beneficiaries.
Each party intends that this Agreement shall not benefit or create
any right or cause of action in or on behalf of any Person other than the
parties hereto and their successors and permitted assigns.
Section 21. Headings
The headings in this Agreement are for convenience only and shall
not affect the construction or interpretation of this Agreement.
Section 22. Entire Agreement.
This Agreement, together with the Warrant Certificates and Exhibits,
constitutes the entire agreement and understanding between the parties hereto
with respect to the subject matter hereof and shall supersede any prior
agreements and understandings between the parties hereto with respect to such
subject matter.
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Section 23. Expenses.
Each of the parties hereto shall pay its own expenses and costs
incurred or to be incurred in negotiating, closing and carrying out this
Agreement and in consummating the transactions contemplated herein, except as
otherwise expressly provided for herein.
Section 24. Neutral Construction.
The parties to this Agreement agree that this Agreement was
negotiated fairly between them at arm's length and that the final terms of this
Agreement are the product of the parties' negotiations. Each party represents
and warrants that it has sought and received legal counsel of its own choosing
with regard to the contents of this Agreement and the rights and obligations
affected hereby. The parties agree that this Agreement shall be deemed to have
been jointly and equally drafting by them, and that the provisions of this
Agreement therefore should not be construed against a party or parties on the
grounds that such party or parties drafted or was more responsible for the
drafting of any such provision(s).
Section 25. Representations and Warranties.
The Company hereby represents and warrants to the Warrantholder
that:
(a) the Company has all requisite corporate power and authority to
(i) execute and deliver this Agreement and (ii) issue and sell the Preferred
Stock upon the exercise of the Warrant Certificates and carry out provisions of
this Agreement. All corporate action on the part of the Company necessary for
the authorization, execution and delivery of this Agreement, the performance of
all obligations of the Company hereunder, and the authorization (or reservation
for issuance), sale and issuance of the Preferred Stock upon the exercise of the
Warrant Certificates to be sold hereunder has been taken or will be taken prior
to the date hereof;
(b) this Agreement constitutes a valid and legally binding
obligation of the Company, enforceable in accordance with its terms, except (i)
as limited by applicable bankruptcy, insolvency, reorganization, moratorium and
other laws relating to application affecting enforcement of creditor's rights
generally and (ii) as limited by laws relating to the availability of specific
performance, injunctive relief of other equitable remedies;
(c) the Preferred Stock issuable upon the exercise of the Warrant
Certificates that is being purchased hereunder, when issued, sold and delivered
in accordance with the terms of this Agreement for the consideration expressed
herein, will be duly and validly issued and fully paid and will be free of
restrictions on transfer, other than restrictions on transfer under applicable
state and federal securities laws;
(d) subject in part to the truth and accuracy of Warrantholder's
representations set forth in Section 11 of this Agreement, the offer, sale and
issuance of the Preferred Stock issuable upon the exercise of the Warrant
Certificates as contemplated by this Agreement are exempt from the registration
requirements of the Securities Act; and
(e) the execution, delivery and performance of this Agreement and
the consummation of the transactions contemplated hereby will not result in any
such violation, or be in conflict with or constitute, with or without the
passage of time and giving of notice, either a default under any such provision
or an event that results in creation of any lien, charge or encumbrance upon any
assets of the Company or the suspension, revocation, impairment, forfeiture or
nonremoval of any material permit, license, authorization or approval applicable
to the Company, its business or operations or any of its assets or properties.
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Section 26. Counterparts.
This Agreement may be executed in counterparts and in facsimile and
each such counterpart shall for all purposes be deemed to be an original, and
all such counterparts shall together constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the day and year first above written.
TAGLICH BROTHERS, INC. AIR INDUSTRIES GROUP, INC.
By:__________________ By:_____________________________________
Name: Name: Xxxxx X. Xxxxxxxxxx
Title: Title: President and Chief Executive
Officer
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EXHIBIT A
NONE OF THIS SECURITY, THE SECURITIES INTO WHICH THIS SECURITY IS EXERCISABLE OR
THE SECURITIES INTO WHICH THOSE SECURITIES ARE CONVERTIBLE HAVE BEEN REGISTERED
WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY
STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED
OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION
NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN
ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION
OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE
REASONABLY ACCEPTABLE TO AIR INDUSTRIES GROUP, INC. (THE "COMPANY"). THIS
SECURITY AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS SECURITY OR
CONVERSION OF THOSE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE
MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE, THE SECURITIES INTO WHICH THIS
SECURITY IS EXERCISABLE AND THE SECURITIES INTO WHICH THOSE SECURITIES ARE
CONVERTIBLE ARE SUBJECT TO THE TERMS AND CONDITIONS OF, AND MAY ONLY BE
TRANSFERRED IN ACCORDANCE WITH, A WARRANT AGREEMENT BETWEEN THE COMPANY AND
TAGLICH BROTHERS, INC. DATED AS OF DECEMBER 31, 2008, INCLUDING A RIGHT OF FIRST
REFUSAL IN FAVOR OF THE COMPANY. COPIES OF SUCH AGREEMENT MAY BE OBTAINED UPON
WRITTEN REQUEST TO THE COMPANY.
FORM OF
WARRANT CERTIFICATE
AIR INDUSTRIES GROUP, INC.
SERIES B CONVERTIBLE PREFERRED STOCK PURCHASE WARRANT
NO. PB-_____ _______ WARRANTS
This Warrant Certificate certifies that Taglich Brothers, Inc. is
the registered holder of ________ Warrants (the "Warrantholder") to purchase
shares (the "Warrant Shares") of Series B Convertible Preferred Stock of Air
Industries Group, Inc. (the "Company"). Each Warrant entitles the holder,
subject to the satisfaction of the conditions to exercise set forth in Section 7
of the Warrant Agreement referred to below, to purchase from the Company at any
time after the date hereof until December 31, 2013(the "Warrant Expiration
Date") one Warrant Share at the Exercise Price set forth in the Warrant
Agreement. The number of Warrant Shares for which each Warrant is exercisable
and the Exercise Price are subject to adjustment as provided in the Warrant
Agreement.
A-1
The Warrants evidenced by this Warrant Certificate are part of a
duly authorized issue of Warrants to purchase Warrant Shares and are issued
pursuant to a Warrant Agreement, dated as of December 31, 2008 (the "Warrant
Agreement"), between the Company and Taglich Brothers, Inc., which Warrant
Agreement is hereby incorporated by reference in and made a part of this
instrument and is hereby referred to for a description of the rights, limitation
of rights, obligations, duties and immunities thereunder of the Company and
Warrantholder.
Warrantholder may exercise Warrants by surrendering this Warrant
Certificate, with the Election to Purchase attached hereto properly completed
and executed, together with payment of the aggregate Exercise Price, at the
offices of the Company specified in Section 15 of the Warrant Agreement. If upon
any exercise of Warrants evidenced hereby the number of Warrants exercised shall
be less than the total number of Warrants evidenced hereby, there shall be
issued to the holder hereof or its assignee a new Warrant Certificate evidencing
the number of Warrants not exercised.
This Warrant Certificate, when surrendered at the offices of the
Company specified in Section 15 of the Warrant Agreement, by the registered
holder thereof in person, by legal representative or by attorney duly authorized
in writing, may be exchanged, in the manner and subject to the limitations
provided in the Warrant Agreement, for one or more other Warrant Certificates of
like tenor evidencing in the aggregate a like number of Warrants.
WITNESS the signatures of the duly authorized officers of the
Company.
Dated: ________, 20__ AIR INDUSTRIES GROUP, INC.
By:________________________
Name:
Title:
A-2
NOTICE OF EXERCISE
To: Air Industries Group, Inc.
(1) The undersigned hereby elects to purchase ________ Warrant
Shares of Air Industries group, Inc. pursuant to the terms of the attached
Warrant (only if exercised in full), and tenders herewith payment of the
exercise price in full, together with all applicable transfer taxes, if any.
(2) Payment shall take the form of (check applicable box):
[ ] in lawful money of the United States; or
[ ] the cancellation of such number of Warrant Shares as is
necessary, in accordance with the formula set forth in Section
7B of the Warrant Agreement, to exercise this Warrant with
respect to the maximum number of Warrant Shares purchasable
pursuant to the cashless exercise procedure set forth in Section
7B of the Warrant Agreement.
(3) Please issue a certificate or certificates representing said
Warrant Shares in the name of the undersigned or in such other name as is
specified below:
_______________________________
The Warrant Shares shall be delivered to the following:
_______________________________
_______________________________
_______________________________
(4) Accredited Investor. The undersigned is an "accredited investor"
as defined in Regulation D promulgated under the Securities Act of 1933, as
amended.
[PURCHASER]
By: ______________________________
Name:
Title:
Dated: ___________________________
ASSIGNMENT FORM
(To assign the foregoing warrant, execute
this form and supply required information.
Do not use this form to exercise the warrant.)
FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced thereby
are hereby assigned to
_______________________________________________ whose address is
_______________________________________________________________.
_______________________________________________________________
Dated: ______________, _______
Holder's Signature: _____________________________
Holder's Address: _____________________________
_____________________________
Signature Guaranteed: ___________________________________________
NOTE: The signature to this Assignment Form must correspond with the name as it
appears on the face of the Warrant, without alteration or enlargement or any
change whatsoever, and must be guaranteed by a bank or trust company. Officers
of corporations and those acting in a fiduciary or other representative capacity
should file proper evidence of authority to assign the foregoing Warrant.
