Item 1.01 Entry into a Material Definitive Agreement
OnFebruary 15, 2022 ,Contrail Aviation Support, LLC ("CAS"), a 79%-owned subsidiaryAir T, Inc. (the "Company") completed the acquisition of two (2) CFM56-5B3/SP engines. The engines were the first and second engines of eight (8) engines to be purchased pursuant to the purchase agreement datedJanuary 19, 2022 reported inAir T, Inc's Current Report on Form 8-K datedJanuary 24, 2022 . The transaction value for the purchase of the two engines exceeded$5,000,000 . The purchase continues Contrail's business of purchasing aircraft and/or aircraft engines for the purpose of leasing or disassembling them and selling them for parts. CAS obtained the funds necessary to fund the acquisition of the eight (8) engines to be purchased pursuant to theJanuary 19, 2022 purchase agreement fromOld National Bank . OnFebruary 18, 2022 ,CAS andOld National Bank entered into Supplement #9 to the Master Loan Agreement datedJune 24, 2019 and Term Note H. Term Note H is a multiple advance term loan in the principal amount of$14,875,000 . The loan bears a variable interest rate at theWall Street Journal prime rate plus 0.75% and requires 18 monthly payments of interest until the loan maturity date ofAugust 18, 2023 . Principal reduction payments are due monthly in an amount equal to 100% of the amount of the gross sales proceeds collected that are derived from any of the engines or any component sold during the prior month. The loan is secured by a first lien on the engines acquired and to be acquired with the loan proceeds and may be prepaid without penalty. The loan includes a quarterly rolling cash flow coverage ratio covenant and a tangible net worth covenant. The foregoing summary of the terms of the purchase transaction documents does not purport to be complete and is qualified in its entirety by reference to the documents which are filed as Exhibit 10.1 and Exhibit 10.2 hereto and are incorporated by reference herein. The above discussion regarding theOld National Bank financing is qualified in its entirety by reference to Supplement #9 to Master Loan Agreement, Term Loan H and Form of Security Agreement filed as Exhibits 10.3, 10.4 and 10.5 filed herewith, which are incorporated herein by reference.
Item 2.01. Completion of Acquisition or Disposition of Assets.
To the extent required by Item 2.01 of Form 8-K, the information contained in Item 1.01 of this Current Report on Form 8-K is incorporated by reference into this Item 2.01.
Item 2.03. Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.
To the extent required by Item 2.03 of Form 8-K, the information contained in Item 1.01 of this Current Report on Form 8-K is incorporated by reference into this Item 2.03.
Item 9.01 Financial Statements and Exhibits
10.1 Bill of Sale and Acceptance Certificate, datedFebruary 15, 2022 with respect to Engine CFM56-5B3/2P Serial number 779962. 10.2 Bill of Sale and Acceptance Certificate, datedFebruary 15, 2022 with respect to Engine CFM56-5B3/2P Serial number 779923. 10.3 Supplement #9 to Master Loan Agreement datedJune 24, 2019 by and between CAS andOld National Bank datedFebruary 18, 2022 , without exhibits. Promissory Note Term Note H in the principal amount of$14,875,000 from CAS to 10.4Old National Bank datedFebruary 18, 2022 . Form of Security Agreement from CAS toOld National Bank datedFebruary 18 , 10.5 2022.
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