Air T Inc.

10/22/2024 | Press release | Distributed by Public on 10/22/2024 14:51

Material Agreement Form 8 K

Item 1.01 Entry into a Material Definitive Agreement
As disclosed by Air T, Inc., a Delaware corporation (the "Company") in a Current Report on Form 8-K filed on February 26, 2024 (the "February 8-K"), the Company, along with its wholly owned subsidiary AAM 24-1, LLC, a Minnesota limited liability company (the "Issuer"), previously entered into a Note Purchase Agreement (the "Original NPA") with Honeywell Common Investment Fund and Honeywell International Inc. Master Retirement Trust (each, an "Investor" and together, the "Investors") on February 22, 2024. Pursuant to the Original NPA, the Issuer had issued and sold 8.5% senior secured notes in the aggregate principal amount of $15,000,000 to the Investors (the transaction, the "Original Financing").
On October 16, 2024, the Company, along with the Issuer, entered into a Second Note Purchase Agreement (the "Second NPA") with the Investors pursuant to which the terms and conditions of the Original Financing were amended and restated, and the Issuer agreed to issue and sell 8.5% senior secured notes in the aggregate principal amount of $30,000,000 to the Investors (collectively, the "Notes"; and the transaction, the "Supplemental Financing"). For purposes of clarity and the avoidance of doubt, this aggregate principal amount of $30,000,000 includes the principal amount of $15,000,000 from the Original Financing, such that the aggregate indebtedness of the Issuer in favor of the Investors is now $30,000,000.
The Notes bear an annual interest at a rate of 8.5% which is computed on the basis of a 30/360-day year and actual days elapsed and is payable semi-annually in arrears, pursuant to the terms of the Notes. The maturity date of the Notes is March 1, 2031. The Notes contain standard and customary events of default including, but not limited to, failure to make payments when due under the Note, failure to comply with certain covenants contained in the Note, or bankruptcy or insolvency of, or certain monetary judgments against the Issuer or the Company.
The Issuer may prepay all or a portion of the outstanding principal and accrued but unpaid interest at any time, provided that (i) if the Issuer prepays all or any portion of the Notes within one year from the Issue Date, the Issuer is required to pay the Investors a prepayment premium equal to two percent (2.0%) of the amount being prepaid, and (ii) if the Issuer prepays all or any portion of the Notes after the first anniversary of the Issue Date but on or prior to the second anniversary of the Issue Date, the Issuer is required to pay the Investors a prepayment premium equal to one percent (1.0%) of the amount being prepaid. If the Issuer elects to prepay a portion of the outstanding principal and accrued but unpaid interest, then in no event can such prepayment be for an amount less than $1,000,000.
The various equity interests that were assigned by the Company to the Issuer on or about the closing date of the Original Financing, as disclosed by the Company in the February 8-K, continue to serve as collateral for the repayment of the Notes in connection with the Supplemental Financing. Similarly, all of the issued and outstanding capital stock of the Issuer owned by the Company, and the 160,000 shares of Alpha Income Trust Preferred Securities, $25.00 par value, of Air T Funding, a statutory trust fund under Delaware law ("Air T Funding"), then held by the Issuer, also continue to serve as collateral for the repayment of the Notes. Separately, and in addition to the foregoing, 160,000 newly-issued shares of Alpha Income Trust Preferred Securities, $25.00 par value, of Air T Funding, held by the Issuer are now pledged to the Investors, in connection with the closing of the Supplemental Financing.
The foregoing description of the Second NPA, the Notes and the Supplemental Financing generally, does not purport to be complete and is qualified in its entirety by reference to the complete text of the (i) Second NPA, a copy of which is attached hereto as Exhibit 10.1, and (ii) the form of Note, a copy of which is attached hereto as Exhibit 10.2, both of which are incorporated herein by reference.