UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 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): December 31, 2019
Air T, Inc.
(Exact Name of Registrant as Specified in Charter) 
 
 
 
 
 
 
Delaware
 
001-35476
 
52-1206400
(State or Other Jurisdiction
of Incorporation)
 
(Commission
File Number)
 
(I.R.S. Employer
Identification No.)
 
 

5930 Balsom Ridge Road
_____________Denver, North Carolina 28037__________
(Address of Principal Executive Offices, and Zip Code)

________________(828) 464-8741__________________
Registrant’s Telephone Number, Including Area Code

_____________________ Not applicable______________________
(Former Name or Former Address, if Changed Since Last Report)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Common Stock
AIRT
NASDAQ Global Market
Alpha Income Preferred Securities (also referred to as 8% Cumulative Capital Securities) (“AIP”)
AIRTP
NASDAQ Global Market
Warrant to purchase AIP
AIRTW
NASDAQ Global Market
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 communication 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 communication pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
¨
Pre-commencement communication pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐




Item 1.01    Entry into a Material Definitive Agreement

To the extent responsive, the information included in Items 2.01 and 2.03 is incorporated herein by reference.

Item 2.01    Completion of Acquisition or Disposition of Assets

On January 6, 2020, Trust Agreement (Aircraft MSN 30241), a trust controlled by Contrail Aviation Leasing, LLC (“Contrail”), a wholly-owned subsidiary of Contrail Aviation Support, LLC (“CAS”), a 79%-owned subsidiary Air T, Inc. (the “Company”), completed a sale for cash of one engine, model CFM56-7B22 with serial number 889728 (the “Engine”), in connection with the termination of an engine lease agreement (the “Lease”). The total transaction value exceeded $5,000,000.*
The sale as discussed above continues Contrail’s business of purchasing aircraft and/or aircraft engines for the purpose of leasing or disassembling them and selling them for parts.
The foregoing summary of the terms of the transaction document does not purport to be complete and is qualified in its entirety by reference to the document which is filed as Exhibit 10.7 hereto and is incorporated by reference herein.
*Portions of the transaction exhibit have been omitted for confidential treatment.
Item 2.03        Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant

On December 31, 2019, the Company and Minnesota Bank & Trust, a Minnesota state banking corporation (“MBT”), entered into that certain Amendment No. 2 to Amended and Restated Credit Agreement (the “Second Amendment”). The Second Amendment provides for a separate revolving line of credit for $10,000,000. In connection with the Second Amendment, the Company entered into that certain Supplemental Revolving Credit Note in the principal amount of $10,000,000 to MBT (the “Note”). The Note has a maturity date of June 30, 2020, with a fluctuating annual rate of interest equal to the greater of (a) the sum of (i) the LIBOR Rate, and as the same may adjust monthly, plus (ii) 1.25%; or (b) 3.00%; provided, that, upon the occurrence and during the continuance of any Event of Default as defined therein, the rate of interest hereunder shall be increased by 3.00% above the rate of interest that would otherwise be in effect thereunder. The loan is secured by a pledge of a continuing security interest in the demand deposit cash collateral accounts of Air T OZ 1, LLC, Air T OZ 2, LLC, and Air T OZ 3, LLC, each a Minnesota limited liability company and a subsidiary of the Company, with an aggregate account cash balance of $10,000,000 under the sole control by MBT. Twelve of the Company’s subsidiaries continue to, jointly and severally, guaranty the full and prompt payment and performance of all debts and obligations of the Company to MBT.

The foregoing summary of the terms of the financing documents does not purport to be complete and is qualified in its entirety by reference to the documents which are filed as Exhibits 10.1, 10.2, 10.3, 10.4, 10.5, and 10.6 respectively hereto and are incorporated by reference herein.

Item 9.01    Financial Statements and Exhibits

10.1

10.2
10.3




10.4
10.5
10.6
10.7
SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Date: January 7, 2020

AIR T, INC.

By: /s/ Brian Ochocki          
Brian Ochocki, Chief Financial Officer


18487641v3






AMENDMENT NO. 2 TO AMENDED AND RESTATED CREDIT AGREEMENT


This AMENDMENT NO. 2 TO AMENDED AND RESTATED CREDIT AGREEMENT dated as of December 31, 2019 (the “Amendment”), between Air T, Inc., a Delaware corporation (the “Borrower”), and Minnesota Bank & Trust, a Minnesota state banking corporation (the “Lender”).

RECITALS:

A.    The Borrower and the Lender are parties to that certain Amended and Restated Credit Agreement dated as of March 28, 2019, as amended by that certain Amendment No. 1 to Amended and Restated Credit Agreement dated as of September 24, 2019 (the “Original Agreement”).

B.    The Borrower has requested that the Lender amend the Original Agreement to, among other things, provide a separate revolving line of credit in the maximum amount of up to $10,000,000, to be secured by, inter alia, the pledge of depository accounts with an aggregate cash balance of $10,000,000, for the purposes of providing liquidity to Borrower’s wholly-owned Subsidiaries, OZ1, OZ2 and OZ3 (as hereinafter defined).
C.    Subject to the terms and conditions of this Amendment, the Lender will agree to the foregoing request of the Borrower.

NOW, THEREFORE, the parties agree as follows:

1.Defined Terms. All capitalized terms used in this Amendment shall, except where the context otherwise requires, have the meanings set forth in the Original Agreement as amended hereby.
2.    Amendments. The Original Agreement is hereby amended as follows:
(a)    The definitions of the terms “Commitment”, “Loan”, “Loan Documents”, “Maturity Date” appearing in Section 1.01 of the Original Agreement are hereby amended in their respective entireties to read as follows:
“    ‘Commitment(s)’ means the Supplemental Revolving Credit Commitment and the Revolving Credit Commitment.

‘Loan’ means any Revolving Credit Loan, any Supplemental Revolving Credit Loan or any Term Loan, as the context may require, and “Loans” means either Revolving Credit Loans, Supplemental Revolving Credit Loans or Term Loans, as the context may require.


5421946_5.docx    


‘Loan Documents’ means, collectively, this Agreement, the Security Agreement, the Guaranty, the Collateral Account Agreements, the Supplemental Revolving Credit Note, the Revolving Credit Note, the Supplemental Revolving Credit Note, the Term Notes, the North Carolina Assignment, the North Carolina Deed of Trust, each Hedge Agreement and all other agreements, documents, certificates and instruments executed and delivered to the Lender by any Loan Party or by any Pledgor Party in connection therewith

‘Maturity Date’ means, the earlier of: (a) the date on which the Loans become due and payable under Section 8.02 upon the occurrence of an Event of Default; or (b) (i) the Revolving Credit Termination Date for the Revolving Credit Loans; (ii) the Supplemental Revolving Credit Termination Date for the Supplemental Revolving Credit Loans; or (iii) January 1, 2028 for Term Loan A, Term Loan B and Term Loan D.

(b)    Section 1.01 of the Original Agreement is hereby further amended by inserting the following new definitions of the terms “Collateral Account”, “OZ1”, “OZ2”, “OZ3”, “Pledged Funds”, “Pledgor Party(ies)”, “Second Amendment”, “Second Amendment Effective Date”, “Supplemental Revolving Credit Commitment”, “Supplemental Revolving Credit Commitment Fee”, “Supplemental Revolving Credit Commitment Period”, “Supplemental Revolving Credit Loans”, “Supplemental Revolving Credit Note”, “Supplemental Revolving Credit Termination Date” in the appropriate alphabetical order:
“    ‘Collateral Account(s)’ means non-interest bearing depository collateral accounts maintained with, held in the name of, and subject to the exclusive dominion and control of, Lender for the purpose of holding assets as security for, and for application by Lender (to the extent available) to the payment of the unpaid balance of the Obligations.
‘OZ1’ means Air T OZ 1, LLC, a Minnesota limited liability company.
‘OZ2’ means Air T OZ 2, LLC, a Minnesota limited liability company.
‘OZ3’ means Air T OZ 3, LLC, a Minnesota limited liability company.
‘Pledged Funds’ means, at any date of determination, the aggregate amount of cash on deposit in the Collateral Accounts.
‘Pledgor Party(ies)’ means, individually or collectively, as the case may be, OZ1, OZ2 and OZ3.
‘Second Amendment’ means that certain Amendment No. 2 to Amended and Restated Credit Agreement dated as of December 31, 2019.”
‘Second Amendment Effective Date’ means the ‘Effective Date’ as such term is defined in the Second Amendment.

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‘Supplemental Revolving Credit Commitment’ means the obligation of the Lender to make Supplemental Revolving Credit Loans in an aggregate principal amount not to exceed $10,000,000, as the same may be changed from time to time pursuant to the terms hereof.
‘Supplemental Revolving Credit Commitment Fee’ has the meaning set forth in Section 2.11A.
‘Supplemental Revolving Credit Commitment Period’  means the period from and including the Second Amendment Effective Date to the Supplemental Revolving Credit Termination Date.
‘Supplemental Revolving Credit Loans’ means any Supplemental Revolving Credit loan made by the Lender under Section 2.04A.
‘Supplemental Revolving Credit Note’ means the promissory note of the Borrower described in Section 2.06(e), as such promissory note may be amended, modified or supplemented from time to time, and such term shall include any substitutions for, or renewals of, such promissory note.
‘Supplemental Revolving Credit Termination Date’ means the earliest to occur of (a) June 30, 2020, (b) the date the Supplemental Revolving Credit Commitment is reduced to zero pursuant to Section 2.05A, and (c) the termination of the Supplemental Revolving Credit Commitment pursuant to Section 8.02.
(c)    The Original Agreement is hereby amended by inserting a new Section 2.03A, immediately after Section 2.03, to read as follows:
“    2.03A    Supplemental Revolving Credit Commitment.

(a)    Subject to the terms and conditions of this Agreement, the Lender agrees to make Supplemental Revolving Credit Loans to the Borrower from time to time during the Supplemental Revolving Credit Commitment Period in an aggregate principal amount at any one time outstanding not to exceed the lesser of (i) the Supplemental Revolving Credit Commitment, or (ii) the aggregate amount of Pledged Funds. During the Supplemental Revolving Credit Commitment Period the Borrower may use the Supplemental Revolving Credit Commitment by borrowing, prepaying the Supplemental Revolving Credit Loans in whole or in part, and re-borrowing, all in accordance with the terms and conditions hereof.

(b)    The Borrower shall repay all outstanding Supplemental Revolving Credit Loans on the Supplemental Revolving Credit Termination Date.

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(d)    The Original Agreement is hereby amended by inserting a new Section 2.04A, immediately after Section 2.04, to read as follows:
“    Section 2.04A    Procedures for Supplemental Revolving Credit Borrowing. The Borrower shall either (a) submit a draw request to the Lender in writing or telephonically; or (b) use the Lender’s electronic banking systems to request each proposed borrowing in accordance with the requirements of such systems as may be in effect from time to time. Each such notice shall be effective upon receipt by the Lender, shall be irrevocable, and shall specify the date and amount of borrowing requested. At the request of the Lender, a telephonic request must be confirmed in writing by the Borrower within three (3) Business Days after such request So long as (a) all conditions precedent set forth in Article IV with respect to such borrowing have been satisfied, and (b) the aggregate outstanding balance of Supplemental Revolving Credit Loans at such time does not exceed the lesser of (i) the Supplemental Revolving Credit Commitment, or (ii) the aggregate amount of Pledged Funds, after giving effect to such Supplemental Revolving Credit Loan, the Lender shall provide immediately available funds to the Borrower in the amount of such requested borrowing on the requested borrowing date by depositing such funds into depository account number 161010277, maintained by the Borrower with the Lender. Each such borrowing shall be on a Business Day.”

(e)    The Original Agreement is hereby amended by inserting a new Section 2.05A, immediately after Section 2.05, to read as follows:
“    Section 2.05A    Termination or Reduction of Revolving Credit Commitment.

Upon not less than three Business Days’ notice to the Lender, the Borrower shall have the right to terminate the Supplemental Revolving Credit Commitment or, from time to time, to reduce the aggregate amount of the Supplemental Revolving Credit Commitment; provided, that no such termination or reduction of Supplemental Revolving Credit Commitment shall be permitted if, after giving effect thereto and to any prepayments of the Supplemental Revolving Credit Loans made on the effective date thereof, the outstanding principal balance of Supplemental Revolving Credit Loans would exceed the aggregate amount of Pledged Funds. Any such partial reduction shall be in an amount equal to $500,000, or a whole multiple thereof, and shall reduce permanently the Supplemental Revolving Credit Commitment then in effect.”


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(f)    Section 2.06 of the Original Agreement is hereby amended by redesignating existing Section 2.06(e) as Section 2.06(f), redesignating existing Section 2.06(f) as Section 2.06(g), and by inserting a new Section 2.06(e) to read as follows:
“    (e)    Supplemental Revolving Note. The Supplemental Revolving Credit Loans made by the Lender shall be evidenced by an Supplemental Revolving Credit Note in the initial amount of the Supplemental Revolving Credit Commitment. The Supplemental Revolving Credit Loans and the Supplemental Revolving Credit Note shall mature and be payable at Maturity of the Supplemental Revolving Credit Loans. The Lender shall enter in its records the amount of each of its Supplemental Revolving Credit Loans, the rate of interest borne on such Supplemental Revolving Credit Loans, and the payments of the Supplemental Revolving Credit Loans received by the Lender, and such records shall be conclusive evidence of the subject matter thereof, absent manifest error.”

(g)    Section 2.07 of the Original Agreement is hereby amended by inserting a new Section 2.07(iii) to read as follows:
“    (iii)    Supplemental Revolving Credit Loans. The Borrower shall have the right, by giving written notice to the Lender by not later than 3:00 p.m. (Minneapolis time) on the Business Day of such payment, to voluntarily prepay the Supplemental Revolving Credit Loans in whole or in part at any time without premium or penalty.”

(h)    Section 2.08 of the Original Agreement is hereby amended by inserting a new Section 2.08(c) to read as follows:
“    (c)    Supplemental Revolving Credit Loans. If, at any time, the aggregate outstanding principal balance of Supplemental Revolving Credit Loans exceeds the lesser of (i) the Supplemental Revolving Credit Commitment or (ii) the aggregate amount of Pledged Funds, then the Borrower shall immediately prepay the Supplemental Revolving Credit Loans by the amount of such excess together with interest on the amount prepaid.”

(i)    Section 2.10 of the Original Agreement is hereby amended by inserting a new Section 2.10(c) to read as follows:
“    (b)    Supplemental Revolving Credit Loans. The Borrower agrees to pay interest on the outstanding principal amount of the Supplemental Revolving Credit Loans at the rates and at the times specified in the Supplemental Revolving Credit Note.”


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(j)    The Original Agreement is hereby amended by inserting a new Section 2.11A, immediately after Section 2.11, to read as follows:
“    Section 2.11A    Supplemental Revolving Credit Commitment Fee. The Borrower shall pay to the Lender a fee (the “Supplemental Revolving Credit Commitment Fee”) in an amount determined by applying a rate of eleven hundredths of one percent (0.11%) per annum to the average daily excess of the Supplemental Revolving Credit Commitment over the outstanding principal balance of the Supplemental Revolving Credit Loans. Such Supplemental Revolving Credit Commitment Fee shall be payable to the Lender in arrears on the last day of each calendar month, commencing January 31, 2020, and on the Supplemental Revolving Credit Termination Date.”

(k)    Section 3.02(b) of the Original Agreement is hereby amended by inserting the phrase “or any Supplemental Revolving Credit Commitment” immediately after the reference therein to “any Revolving Credit Commitment”.
(l)    Section 6.09 of the Original Agreement is hereby amended in its entirety to read as follows:
“    Section 6.09    Use of Proceeds. Use the proceeds of the Loans (a) to finance the acquisition of assets by the Borrower and the Domestic Subsidiaries in the ordinary course of business, including the purchase of inventory and equipment, (b) to finance Capital Expenditures of the Borrower and of its Domestic Subsidiaries, and (c) for general corporate purposes of the Borrower, in each case to the extent not prohibited under any Requirement of Law or the Loan Documents. Notwithstanding the foregoing, proceeds of the Supplemental Revolving Credit Loans shall be used solely to provide liquidity to the Pledgor Parties.

(m)    The preambles to Articles VI and VII of the Original Agreement are hereby amended by inserting the phrase “or any Supplemental Revolving Credit Commitment” immediately after each reference therein to the Revolving Credit Commitment.
(n)    Articles VI, VII and VIII are generally amended to include references to the Pledgor Parties when referencing the Loan Parties (e.g, Section 8.01(h) is amended to read “any Loan Party or any Pledgor Party contests in any manner the validity or enforceability of any provision of any Loan Document”).
(o)    Section 8.01(h)(iii) of the Original Agreement is hereby amended by substituting “Supplemental Revolving Credit Commitment” for the occurrence therein of “Term Loan Commitment”.

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(p)    Section 8.01 of the Original Agreement is hereby amended by deleting the occurrence of “or” at the end of Section 8.01(j), redesignating existing Section 8.01(k) as Section 8.01(m) and by inserting new Sections 8.01(k) and 8.01(l) to read as follows:
“    (k)    any Collateral Account ceases for any reason to be valid, binding and in full force and effect or for any reason the Lender ceases to a first and only priority Lien in any Pledged Funds;

(l)     any Pledgor Party contests in any manner the validity or enforceability of any provision of any Collateral Account Agreement; or”

(q)    Schedule 5.17 to the Original Agreement is hereby amended in its entirety to conform with the form of Schedule 5.17 (Amended 12/2019) attached to this Amendment.
3.    Conditions to Effectiveness. This Amendment shall become effective on the date (the “Effective Date”) when, and only when, the Lender shall have received:
(a)    this Amendment, duly executed by a Responsible Officer of Borrower;
(b)    a promissory note (the “Supplemental Revolving Credit Note”), in the form attached as Exhibit A to this Amendment, duly executed by Borrower;
(c)    a certificate of the secretary of Borrower in the form provided by the Bank, appropriately completed and duly executed by Borrower’s secretary;
(d)    payment of a non-refundable amendment fee in the amount of $15,000, in immediately available funds;
(e)    an Acknowledgment and Agreement, in the form provided by the Lender, duly executed by each Guarantor;
(f)    a certification of formation, certified by the Secretary of State of the state of Minnesota, for each of (i) Air T OZ 1, LLC, a Minnesota limited liability company (“OZ 1), (ii) Air T OZ 2, LLC, a Minnesota limited liability company (“OZ 2”), and Air T OZ 3, LLC, a Minnesota limited liability company (“OZ 3”; and together with OZ 1 and OZ 2 being collectively referred to herein as the “Pledgor Parties” and individually as a “Pledgor Party”);
(g)    a copy of the limited liability company agreement of each Pledgor Party;
(h)    resolutions of the managers of each Pledgor Party authorizing the execution and delivery of each Loan Document to which such Pledgor Party is or is to be a party;
(i)    a certification that the names and signatures of the officers of each Pledgor Party authorized to sign each Loan Document to which such Pledgor Party is or is to be a party are true and correct;

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(j)    separate Collateral Account Agreement documents, each in the form provided by Lender and duly executed by the respective Pledgor Parties;
(k)    results of a recent lien searches in each of the jurisdictions where each Pledgor Party is organized and its assets are located, and such searches reveal no Liens on any of the assets of the Pledgor Parties;
(l)    the Pledgor Parties shall have deposited not less than an aggregate amount of $10,000,000 in the Collateral Accounts;
(m)    a letter agreement, in the form provided by Lender, duly executed by the Borrower and each Pledgor Party confirming the termination of that certain Credit Agreement dated December 31, 2019, by and among the Pledgor Parties as the “Borrowers”, the Borrower as “Parent” and the Lender; and
(n)    such other documents as the Lender may reasonably request.
4.    Representations and Warranties. To induce the Lender to enter into this Amendment, the Borrower represents and warrants to the Lender as follows:
(a)    The execution, delivery and performance by the Borrower of this Amendment, the Supplemental Revolving Credit Note, and any other Loan Document to which the Borrower is a party have been duly authorized by all necessary corporate action, do not require any approval or consent of, or any registration, qualification or filing with, any government agency or authority or any approval or consent of any other person (including, without limitation, any shareholder), do not and will not conflict with, result in any violation of or constitute any default under, any provision of the Borrower’s articles of incorporation or bylaws, any agreement binding on or applicable to the Borrower or any of its property, or any law or governmental regulation or court decree or order, binding upon or applicable to the Borrower or of any of its property and will not result in the creation or imposition of any security interest or other lien or encumbrance in or on any of its property pursuant to the provisions of any agreement applicable to the Borrower or any of its property;
(b)    The representations and warranties contained in the Original Agreement are true and correct as of the date hereof as though made on that date except: (i) to the extent that such representations and warranties relate solely to an earlier date; and (ii) that the representations and warranties set forth in Section 5.04 of the Original Agreement to the audited annual financial statements and internally-prepared interim financial statements of the Borrower shall be deemed to be a reference to the audited financial statements and interim financial statements, as the case may be, of the Borrower most recently delivered to the Lender pursuant to Section 6.01(a) or 6.01(b) of the Original Agreement;
(c)    No events have taken place and no circumstances exist at the date hereof which would give the Borrower the right to assert a defense, offset or counterclaim to any claim by the Lender for payment of the Obligations;

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(d)    The Original Agreement, as amended by this Amendment, the Supplemental Revolving Credit Note, and each other Loan Document to which the Borrower is a party are the legal, valid and binding obligations of the Borrower and are enforceable in accordance with their respective terms, subject only to bankruptcy, insolvency, reorganization, moratorium or similar laws, rulings or decisions at the time in effect affecting the enforceability of rights of creditors generally and to general equitable principles which may limit the right to obtain equitable remedies; and
(e)    Before and after giving effect to this Amendment, there does not exist any Default or Event of Default.
5.    Release. The Borrower hereby releases and forever discharges the Lender and its successors, assigns, directors, officers, agents, employees and participants from any and all actions, causes of action, suits, proceedings, debts, sums of money, covenants, contracts, controversies, claims and demands, at law or in equity, which the Borrower ever had or now has against the Lender or its successors, assigns, directors, officers, agents, employees or participants by virtue of the Lender’s relationship to the Borrower in connection with the Loan Documents and the transactions related thereto
6.    Reference to and Effect on the Loan Documents.
(a)    From and after the date of this Amendment, each reference in the Original Agreement to “this Agreement”, “hereunder”, “hereof”, “herein” or words of like import referring to the Original Agreement, and each reference to the “Credit Agreement”, the “Credit Agreement”, “thereunder”, “thereof”, “therein” or words of like import referring to the Original Agreement in any other Loan Document shall mean and be a reference to the Original Agreement as amended hereby; and except as specifically set forth above, the Original Agreement remains in full force and effect and is hereby ratified and confirmed.
(b)    The execution, delivery and effectiveness of this Amendment shall not, except as expressly provided herein, operate as a waiver of any right, power or remedy of the Lender under the Agreement or any other Loan Document, nor constitute a waiver of any provision of the Agreement or any such other Loan Document.
7.    Costs, Expenses and Taxes. The Borrower agrees to pay on demand all costs and expenses of the Lender in connection with the preparation, reproduction, execution and delivery of this Amendment and the other documents to be delivered hereunder or thereunder, including their reasonable attorneys’ fees and legal expenses. In addition, the Borrower shall pay any and all stamp and other taxes and fees payable or determined to be payable in connection with the execution and delivery, filing or recording of this Amendment and the other instruments and documents to be delivered hereunder and agrees to save the Lender harmless from and against any and all liabilities with respect to, or resulting from, any delay in the Borrower’s paying or omission to pay, such taxes or fees.
8.    Governing Law. THE VALIDITY, CONSTRUCTION AND ENFORCEABILITY OF THIS AMENDMENT SHALL BE GOVERNED BY THE INTERNAL LAWS OF THE STATE

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OF MINNESOTA, WITHOUT GIVING EFFECT TO CONFLICT OF LAWS PRINCIPLES THEREOF.
9.    Headings. Section headings in this Amendment are included herein for convenience of reference only and shall not constitute a part of this Amendment for any other purpose.
10.    Counterparts. This Amendment may be executed in counterparts and by separate parties in separate counterparts, each of which shall be an original and all of which taken together shall constitute one and the same document. Receipt by telecopy, pdf file or other electronic means of any executed signature page to this Amendment shall constitute effective delivery of such signature page.
11.    Recitals. The Recitals hereto are incorporated herein by reference and constitute a part of this Amendment.
[SIGNATURE PAGE FOLLOWS]

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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed as of the date first above.

AIR T, INC.

By:                        
Name:                        
Its:                        




MINNESOTA BANK & TRUST

By:_________________________________
Name:    Eric P. Gundersen
Title:     Senior Vice President






















[signature page Amendment No. 2 to Amended and Restated Credit Agreement]





Exhibit A

Form of Supplemental Revolving Credit Note

[see attached\






Schedule 5.17
(Amended 12/2019)

Subsidiaries; Equity Interests

18509173v1







SUPPLEMENTAL REVOLVING CREDIT NOTE


U.S. $10,000,000.00    Dated as of December 31, 2019
Minnetonka, Minnesota



FOR VALUE RECEIVED, on the Supplemental Revolving Credit Termination Date (as defined in the Credit Agreement hereinafter defined) the undersigned, AIR T, INC., a Delaware corporation (the “Borrower”), promises to pay to the order of MINNESOTA BANK & TRUST, a Minnesota state banking corporation (the “Lender”), the principal sum of TEN MILLION AND NO/100THS DOLLARS (U.S. $10,000,000.00) or, if less, the aggregate unpaid principal amount of all Supplemental Revolving Credit Loans (as hereinafter defined) made by the Lender to the Borrower pursuant to the Credit Agreement.

Interest. The Borrower promises to pay interest (computed on the basis of the number of days elapsed in a year of 360 days) on the unpaid principal amount hereof from the date hereof until such principal amount is paid in full at a fluctuating annual rate of interest equal to the greater of (a) the sum of (i) the LIBOR Rate, as in effect on the date hereof and as the same may adjust monthly, plus (ii) 1.25%; or (b) 3.00%; provided, that, notwithstanding anything to the contrary contained herein, upon the occurrence and during the continuance of any Event of Default, the rate of interest hereunder shall be increased by 3.00% above the rate of interest that would otherwise be in effect hereunder (such increased rate of interest being, the “Default Rate”). The interest rate shall automatically adjust on the first Business Day of each month in the event there has been any change in the LIBOR Rate. As used herein, “LIBOR Rate” means the “London Interbank Offered Rates (LIBOR)” for one month as published in the “Money Rates” column of The Wall Street Journal on the first Business Day of each month (or, if The Wall Street Journal ceases to publish a rate so designated, any similar successor rate as the Lender shall in good faith designate). Interest accrued during each calendar month shall be due and payable on the first day of the following calendar month, with the first such interest payment due on February 1, 2020 for the period commencing on the date hereof and ending on January 31, 2020. Interest shall also be payable at maturity and interest accrued after maturity shall be payable on demand. If any payment to be made by the Borrower hereunder shall become due on a day other than a Business Day, such payment shall be made on the next succeeding Business Day. Borrower understands that Lender may make loans based on other rates as well. NOTICE: under no circumstances will the interest rate on this Note be more than the maximum rate allowed by applicable law.

Payments. Both principal and interest are payable in lawful money of the United States of America to the Lender at 9800 Bren Road East, Suite 200, Minnetonka, MN 55343 (or other location specified by the Lender) in immediately available funds. By its execution of this Note, the Borrower authorizes the Lender to charge from time to time against any of Borrower’s depository accounts maintained with the Lender any such payments when due and the Lender will use its reasonable efforts to notify the Borrower of such charges.


5439022_2.docx    
SUPPLEMENTAL REVOLVING CREDIT NOTE
Page 2


U.S. $10,000,000.00                             December 31, 2019





Prepayment; Minimum Interest Charge. In any event, even upon full prepayment of this Note, Borrower understands that Lender is entitled to a minimum interest charge of $10.00. Other than Borrower’s obligations to pay any minimum interest charge, Borrower may pay without penalty all or a portion of the amount earlier than it is due. Early payments will not, unless agreed to by Lender in writing, relieve Borrower of Borrower’s obligation to continue to make payments of accrued unpaid interest. Rather, early payment will reduce the principal balance due. Borrower agrees not to send Lender payments marked “paid in full”, “without recourse”, or similar language. If Borrower sends such a payment, Lender may accept it without losing any of Lender’s rights under this Note, and Borrower will remain obligated to pay any further amount owed to Lender. All written communications concerning disputed amounts, including any check or other payment instrument that indicates that the payment constitutes “payment in full” of the amount owed or that is tendered with other conditions or limitations or as full satisfaction of a disputed amount must be mailed or delivered to: Minnesota Bank & Trust, 9800 Bren Road East, Suite 200, Minnetonka, MN 55343.

Late Charge. If a payment due hereunder is not made within seven days after the date when due, Borrower shall pay to Lender a late payment charge of 5% of the amount of the overdue payment to compensate Lender for a portion of the cost related to handling the overdue payment.

Interest After Default. Upon the occurrence of an Event of Default, including failure to pay upon final maturity, the interest rate on this Note shall be increased by adding an additional 3.000 percentage point margin (“Default Rate Margin”). The Default Rate Margin shall also apply to each succeeding interest rate change that would have applied had there been no default. However, in no event will the interest rate exceed the maximum interest rate limitations under applicable law.

Credit Agreement. This Note is the Supplemental Revolving Credit Note referred to in, and is entitled to the benefits of, the Amended and Restated Credit Agreement dated as of March 28, 2019 (as amended to date, and as it may be further modified, supplemented or restated from time to time being the “Credit Agreement”; capitalized terms not otherwise defined herein being used herein as therein defined) between the Borrower and the Lender. The Credit Agreement, among other things, (i) provides for the making of Supplemental Revolving Credit Loans (the “Supplemental Revolving Credit Loans”) by the Lender to the Borrower from time to time in an aggregate amount not to exceed at any time outstanding the dollar amount first above mentioned, the indebtedness of the Borrower resulting from each such Supplemental Revolving Credit Loan being evidenced by this Note; (ii) contains provisions for acceleration of the maturity hereof upon the happening of certain stated events prior to the maturity hereof upon the terms and conditions therein specified; and (iii) contains provisions for the mandatory prepayment hereof upon certain conditions.

Security Agreement. This Note is secured by, among other things, funds on deposit in depository accounts maintained with Lender by the Pledgor Parties subject to the terms of Collateral Account Agreements respectively executed by the Pledgor Parties in favor of Lender.

Waiver of Presentment and Demand for Payment; Etc. Borrower and any endorsers or guarantors hereof severally waive presentment and demand for payment, notice of intent to accelerate maturity, protest or notice of protest and non‑payment, bringing of suit and diligence in taking any action to collect any sums owing hereunder or in proceeding against any of the rights and properties securing


SUPPLEMENTAL REVOLVING CREDIT NOTE
Page 3


U.S. $10,000,000.00                             December 31, 2019





payment hereunder, and expressly agree that this Note, or any payment hereunder, may be extended from time to time, and consent to the acceptance of further security or the release of any security for this Note, all without in any way affecting the liability of Borrower and any endorsers or guarantors hereof. No extension of time for the payment of this Note, or any installment thereof, made by agreement by Lender with any Person now or hereafter liable for the payment of this Note, shall affect the original liability under this Note of the undersigned, even if the undersigned is not a party to such agreement.

Event of Default. Any “Event of Default” (as defined in the Credit Agreement) shall constitute an Event of Default under this Note. Upon the occurrence of an Event of Default, in addition to any other rights or remedies Lender may have at law or in equity or under the Credit Agreement or under any other Loan Document, Lender may, at its option, without notice to Borrower, declare immediately due and payable the entire unpaid principal sum hereof, together with all accrued and unpaid interest thereon plus any other sums owing at the time of such Event of Default pursuant to this Note, the Security Agreement or any other Loan Document. The failure to exercise the foregoing or any other options shall not constitute a waiver of the right to exercise the same or any other option at any subsequent time in respect of the same event or any other event. The acceptance by the holder of any payment hereunder which is less than payment in full of all amounts due and payable at the time of such payment shall not constitute a waiver of the right to exercise any of the foregoing options at that time or at any subsequent time.

Expense Reimbursement. Borrower agrees to pay all expenses for the preparation of this Note, as set forth in the Credit Agreement, including exhibits, and any amendments to this Note as may from time to time hereafter be required, and the reasonable attorneys’ fees and legal expenses of counsel for Lender from time to time incurred in connection with the preparation and execution of this Note and any document relevant to this Note, any amendments hereto or thereto, and the consideration of legal questions relevant hereto and thereto. Borrower agrees to reimburse Lender upon demand for all reasonable out-of-pocket expenses (including attorneys’ fees and legal expenses) in connection with Lender’s enforcement of the obligations of the Borrower hereunder or under the Security Agreement or any other collateral document, whether or not suit is commenced including, without limitation, attorneys’ fees and legal expenses in connection with any appeal of a lower court’s order or judgment. The obligations of the Borrower under this paragraph shall survive any termination of the Credit Agreement, this Note, the Security Agreement, and any other Loan Document.

Successors and Assigns. This Note shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and assigns except that Borrower may not assign or transfer its rights hereunder without the prior written consent of Lender, which consent may be withheld in Lender’s sole discretion. In connection with the actual or prospective sale by the Lender of any interest or participation in the loan obligation evidenced by this Note, Borrower hereby authorizes the Lender to furnish any information concerning the Borrower or any of its affiliates, however acquired, to any Person or entity.

Usury. Borrower and Lender agree that no payment of interest or other consideration made or agreed to be made by Borrower to Lender pursuant to this Note shall, at any time, be in excess of


SUPPLEMENTAL REVOLVING CREDIT NOTE
Page 4


U.S. $10,000,000.00                             December 31, 2019





the maximum rate of interest permissible by law. In the event such payments of interest or other consideration provided for in this Note shall result in an effective rate of interest which, for any period of time, is in excess of the limit of the usury or any other law applicable to the loan evidenced hereby, all sums in excess of those lawfully collectible as interest for the period in question shall, without further agreement or notice between or by any party hereto, be applied to the unpaid principal balance and not to the payment of interest; if a surplus remains after full payment of principal and lawful interest, the surplus shall be remitted by Lender to Borrower, and Borrower hereby agrees to accept such remittance. This provision shall control every other obligation of the Borrower and Lender relating to this Note.

Business Purpose Loan. The Loan is a business loan. Borrower hereby represents that this loan is for commercial use and not for personal, family or household purposes. The Borrower agrees that the Loan evidenced by this Note is an exempted transaction under the Truth In Lending Act, 15 U.S.C., §1601, et seq.

Governing Law. THE VALIDITY, CONSTRUCTION AND ENFORCEABILITY OF THIS NOTE SHALL BE GOVERNED BY THE INTERNAL LAWS OF THE STATE OF MINNESOTA, WITHOUT GIVING EFFECT TO CONFLICT OF LAWS PRINCIPLES THEREOF.

WAIVER OF DEFENSES. OTHER THAN CLAIMS BASED UPON THE FAILURE OF THE LENDER TO ACT IN A COMMERCIALLY REASONABLE MANNER, THE BORROWER WAIVES EVERY PRESENT AND FUTURE DEFENSE (OTHER THAN THE DEFENSE OF PAYMENT IN FULL), CAUSE OF ACTION, COUNTERCLAIM OR SETOFF WHICH THE BORROWER MAY NOW HAVE OR HEREAFTER MAY HAVE TO ANY ACTION BY THE LENDER IN ENFORCING THIS NOTE OR ANY OF THE LOAN DOCUMENTS. THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE LENDER GRANTING ANY FINANCIAL ACCOMMODATION TO THE BORROWER.

Waiver of Right to Jury Trial; Venue. BORROWER WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY ACTION RELATING TO OR ARISING FROM THIS NOTE. AT THE OPTION OF LENDER, THIS NOTE MAY BE ENFORCED IN ANY UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MINNESOTA OR THE STATE COURT SITTING IN HENNEPIN OR RAMSEY COUNTY, MINNESOTA. BORROWER CONSENTS TO THE JURISDICTION AND VENUE OF ANY SUCH COURT AND WAIVES ANY ARGUMENT THAT VENUE IN SUCH FORUMS IS NOT PROPER OR CONVENIENT. IN THE EVENT AN ACTION IS COMMENCED IN ANOTHER JURISDICTION OR VENUE UNDER ANY TORT OR CONTRACT THEORY ARISING DIRECTLY OR INDIRECTLY FROM THE RELATIONSHIP CREATED BY THIS NOTE, LENDER, AT ITS OPTION, SHALL BE ENTITLED TO HAVE THE CASE TRANSFERRED TO ONE OF THE JURISDICTIONS AND VENUES ABOVE DESCRIBED, OR IF SUCH TRANSFER CANNOT BE ACCOMPLISHED UNDER APPLICABLE LAW, TO HAVE SUCH CASE DISMISSED WITHOUT PREJUDICE.

[signature page follows]



SUPPLEMENTAL REVOLVING CREDIT NOTE
Page 5


U.S. $10,000,000.00          Minnetonka, Minnesota




IN WITNESS WHEREOF, the Borrower has caused this Supplemental Revolving Credit Note to be signed by its duly authorized officer in favor of Minnesota Bank & Trust and to be dated as of the date set forth above.


AIR T, INC., a Delaware corporation

By:                        
Name:                        
Its:                        


18509149v1





COLLATERAL ACCOUNT AGREEMENT

THIS COLLATERAL ACCOUNT AGREEMENT is made as of December 31, 2019 (the “Agreement”), by and between AIR T OZ 1, LLC, a Minnesota limited liability company (together with its successors and assigns “Grantor”), and MINNESOTA BANK & TRUST, Minnesota banking corporation (together with its successors and assigns, the “Secured Party”).

WITNESSETH

A.    Air T, Inc., a Delaware corporation (the “Borrower”), and the Secured Party are parties to that certain Amended and Restated Credit Agreement dated as of March 28, 2019, as amended by that certain Amendment No. 1 to Amended and Restated Credit Agreement dated as of September 24, 2019 (as so amended, the “Original Credit Agreement”).

B.    The Borrower has requested that the Secured Party amend the Credit Agreement to, among other things, provide for a separate revolving line of credit in the maximum amount of up to $10,000,000, for the purpose of providing liquidity to Grantor and its Affiliates, AIR T OZ 2, LLC, a Minnesota limited liability company, and AIR T OZ 3, LLC, a Minnesota limited liability company.

C.    The Secured Party has agreed to such request of the Borrower, pursuant to and subject to the terms and conditions of, that certain Amendment No. 2 to Amended and Restated Credit Agreement dated as of even date herewith (the “Second Credit Agreement Amendment”; the Original Credit Agreement, as amended by the Second Credit Agreement Amendment being, the “Credit Agreement”).

D.    As a condition precedent to the effectiveness of the Second Credit Agreement Amendment, Secured Party has required that, among other things, Grantor execute and deliver this Agreement.

E.    Grantor has determined that the execution, delivery and performance of this Agreement are in its best business and pecuniary interest.

NOW THEREFORE, in consideration of the foregoing and for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as set forth below:

1.    Defined Terms. Capitalized terms used herein and not otherwise defined shall have the meaning ascribed to such terms in the Credit Agreement.

2.    Cash Collateral Account. Grantor has established a demand deposit account bearing Account Number 9161006887 (the “Cash Collateral Account”) with the Secured Party. All deposits into the Cash Collateral Account are hereinafter referred to as the “Funds”. The Funds shall be held, applied to the Obligations and released by the Secured Party in accordance with the terms and conditions of this Agreement.

5422735_2.docx    



3.    Security Interest. In order to secure Grantor’s repayment of the Obligations and the performance of all covenants and conditions required on the part of Grantor to be observed or performed hereunder or under the Credit Agreement or any other Loan Document, Grantor hereby pledges to and grants to the Secured Party a continuing security interest in the Funds and in the Cash Collateral Account. Until applied to the Obligations or released as provided below, the Funds and the Cash Collateral Account shall constitute security for the Obligations. Pursuant to this Agreement, Grantor has granted to the Secured Party a direct security interest in the Funds and the Cash Collateral Account and such Funds and the Cash Collateral Account are not claimed merely as proceeds of other collateral.

4.    Application of Funds. The Cash Collateral Account shall be under the sole dominion and control of Secured Party. Funds deposited in the Cash Collateral Account shall be applied to the Obligations as and when such Funds become available funds (subject to the Secured Party’s funds availability policy) upon the earliest to occur of (a) the occurrence of an Event of Default; or (b) the Maturity Date.

5.    Investments. The Cash Collateral Account shall be a demand deposit account maintained with the Secured Party.

6.    No Rights to Funds. Except for Secured Party’s rights under Section 4 of this Agreement, no Person, including, without limitation, Grantor shall have any right to withdraw any of the Funds held in the Cash Collateral Account, without the prior written consent of Secured Party and (b) unless previously applied by the Secured Party pursuant to Section 4 hereof, the Secured Party shall pay any Funds remaining in the Cash Collateral Account to Grantor or to whomever may be legally entitled thereto upon the indefeasible payment in full of all Obligations in cash following the termination of Secured Party’s obligation to extend credit to Grantor.

7.    No Liens. Grantor agrees that it will not (a) sell or otherwise dispose of any interest in the Cash Collateral Account or any Funds held therein, or (b) create or permit to exist any lien, security interest or other charge or encumbrance upon or with respect to the Cash Collateral Account or any Funds held therein except in favor of the Secured Party.

8.    Care of Account. The Secured Party shall exercise reasonable care in the custody and preservation of any Funds held in the Cash Collateral Account and shall be deemed to have exercised such care if such Funds are accorded treatment substantially equivalent to that which the Secured Party accords to its own property, it being understood that the Secured Party shall not have any responsibility for taking any necessary steps to preserve rights against any parties with respect to any such Funds.

9.    Remedies Cumulative. No right or remedy conferred upon or reserved to the Secured Party under this Agreement is intended to be exclusive of any other right or remedy, and each and every such right and remedy shall be cumulative and concurrent and may be enforced separately, successively or together, and may be exercised from time to time as often as may be deemed necessary by the Secured Party.

2



10.    Indemnification. Grantor hereby agrees to indemnify Secured Party against all liability arising in connection with or on account of the Cash Collateral Account or on account of this Agreement, except for any such liabilities arising solely on account of Secured Party’s gross negligence or willful misconduct.

11.    Deposit Agreements. The terms and conditions of this Agreement are in addition to any deposit account agreements and other related agreements that Grantor has with Secured Party, including without limitation all agreements concerning banking products and services, treasury management documentation, account booklets containing the terms and conditions of the Cash Collateral Account, signature cards, fee schedules, disclosures, specification sheets and change of terms notices (collectively, the "Deposit Agreements"). The provisions of this Agreement shall supersede the provisions of the Deposit Agreements only to the extent the provisions herein are inconsistent with the Deposit Agreements, and in all other respects, the Deposit Agreements shall remain in full force and effect. All items deposited into the Deposit Account shall be processed according to the provisions of the Deposit Agreements, as amended by this Agreement.

12.    Miscellaneous.

(a)
Except as otherwise expressly provided herein, in any instance where the consent or approval of the Secured Party is required or may be given or where any determination, judgment or decision is to be rendered by the Secured Party under this Agreement, such approval and consent shall be given or withheld in the Secured Party’s sole and absolute discretion.

(b)
All notices hereunder shall be given in accordance with the provisions of the Credit Agreement.

(c)
This Agreement shall be binding upon Grantor and its successors and assigns and shall inure to the benefit of the Secured Party and its successors and assigns. Grantor shall not assign any of its rights or obligations under this Agreement without the prior written consent of the Secured Party.

(d)
This Agreement is intended solely for the benefit of the Secured Party, and no third party shall have any right or interest in this Agreement, nor any right to enforce this Agreement against any party hereto.

(e)
This Agreement may not be modified, amended, waived, extended, changed, discharged or terminated orally or by any act or failure to act on the part of Grantor or the Secured Party, but only by an agreement in writing signed by the party against whom the enforcement of any modification, amendment, waiver, extension, change, discharge or termination is sought.


3


(f)
If any provision of this Agreement shall conflict with any provisions of the other Credit Agreement or any Loan Document regarding the Cash Collateral Account or the Funds, the provisions most favorable to the Secured Party shall control.

(g)
If any term, covenant or condition of this Agreement is held to be invalid, illegal or unenforceable in any respect, this Agreement shall be construed without such provision.

(h)
THE VALIDITY, CONSTRUCTION AND ENFORCEABILITY OF THIS AGREEMENT SHALL BE GOVERNED BY THE INTERNAL LAWS OF THE STATE OF MINNESOTA, WITHOUT GIVING EFFECT TO CONFLICT OF LAWS PRINCIPLES THEREOF. THE PARTIES AGREE THAT MINNESOTA IS THE "SECURED PARTY’S JURISDICTION" FOR PURPOSES OF THE UNIFORM COMMERCIAL CODE.

(i)
Section headings in this Agreement are included herein for convenience of reference only and shall not constitute a part of this Agreement for any other purpose.

(j)
EACH OF THE GRANTOR AND THE SECURED PARTY HEREBY WAIVES ANY RIGHT WHICH SUCH PERSON MAY HAVE TO A TRIAL BY JURY IN ANY ACTION RELATING TO THIS AGREEMENT.

(k)
AT THE OPTION OF THE SECURED PARTY, THIS AGREEMENT MAY BE ENFORCED IN ANY FEDERAL COURT OR STATE COURT SITTING IN MINNEAPOLIS OR ST. PAUL, MINNESOTA; GRANTOR CONSENTS TO THE JURISDICTION AND VENUE OF ANY SUCH COURT AND WAIVE ANY ARGUMENT THAT JURISDICTION IS NOT PROPER AND THAT VENUE IN SUCH FORUMS IS NOT CONVENIENT. IN THE EVENT AN ACTION IS COMMENCED IN ANOTHER JURISDICTION OR VENUE UNDER ANY TORT OR CONTRACT THEORY ARISING DIRECTLY OR INDIRECTLY FROM THE RELATIONSHIP CREATED BY THIS AGREEMENT, SECURED PARTY, AT ITS OPTION, SHALL BE ENTITLED TO HAVE THE CASE TRANSFERRED TO ONE OF THE JURISDICTIONS AND VENUES ABOVE DESCRIBED, OR IF SUCH TRANSFER CANNOT BE ACCOMPLISHED UNDER APPLICABLE LAW, TO HAVE SUCH CASE DISMISSED WITHOUT PREJUDICE.

(l)
The recitals to this Agreement are incorporated into and constitute an integral part of this Agreement.

(m)
Secured Party’s right to withdraw and apply amounts in the Cash Collateral Account shall be in addition to all other rights and remedies provided to the Secured Party under the Credit Agreement and the other Loan Documents and at law or in equity.

(n)
Grantor and the Secured Party agree that: (i) the Secured Party has “control” over the Cash Collateral Account within the meaning of Section 9-104 of the Uniform

4


Commercial Code enacted in the State of Minnesota (the “UCC”); and (ii) pursuant to Section 9-314(b) of the UCC, the Secured Party’s security interest in the Cash Collateral Account is perfected by control.

(o)
To facilitate execution, this document may be executed in as many counterparts as may be convenient or required. It shall not be necessary that the signature of, or on behalf of, each party, or that the signature of all persons required to bind any party to, appear on each counterpart. All counterparts shall collectively constitute a single document. It shall not be necessary in making proof of this document to produce or account for more than a single counterpart containing the respective signatures of, or on behalf of, each of the parties hereto. Any signature page to any counterpart may be detached from such counterpart without impairing the legal effect of the signatures thereon and thereafter attached to another counterpart identical thereto except having attached to it additional signature pages. Receipt by telecopy, pdf file or other electronic means of any executed signature page to this Agreement shall constitute effective delivery of such signature page.

[signature page follows]


5


IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their respective officers thereunto duly authorized as of the date first written above.

MINNESOTA BANK & TRUST, a Minnesota state banking corporation

By: _____________________________________
Name: Eric P. Gundersen
Its:     Vice President

Address for Notices:
9800 Bren Road East, Suite 200
Minnetonka, MN 55343
Attention: Mr. Eric P. Gundersen, SVP

With a copy to (which shall not constitute notice or service of process):

Fabyanske, Westra, Hart & Thomson, P.A
333 South Seventh Street, Suite 2600
Attention: Frederick H. Ladner, Esq.

AIR T OZ 1, LLC, a Minnesota limited liability company

By:                         
Name:                     
Its:                         

Address for Notices:
AIR T OZ 1, LLC
5930 Balsom Ridge Road
Denver, North Carolina 28037
Attention: Mark Jundt, Esq.

With a copy to (which shall not constitute notice or service of process):

Winthrop & Weinstine, P.A.
225 S. 6th Street
Minneapolis, MN 55402
Attention: Phil Coltan, Esq.




[Collateral Account Agreement Signature Page]


18509202v1


7


COLLATERAL ACCOUNT AGREEMENT

THIS COLLATERAL ACCOUNT AGREEMENT is made as of December 31, 2019 (the “Agreement”), by and between AIR T OZ 2, LLC, a Minnesota limited liability company (together with its successors and assigns “Grantor”), and MINNESOTA BANK & TRUST, Minnesota banking corporation (together with its successors and assigns, the “Secured Party”).

WITNESSETH

A.    Air T, Inc., a Delaware corporation (the “Borrower”), and the Secured Party are parties to that certain Amended and Restated Credit Agreement dated as of March 28, 2019, as amended by that certain Amendment No. 1 to Amended and Restated Credit Agreement dated as of September 24, 2019 (as so amended, the “Original Credit Agreement”).

B.    The Borrower has requested that the Secured Party amend the Credit Agreement to, among other things, provide for a separate revolving line of credit in the maximum amount of up to $10,000,000, for the purpose of providing liquidity to Grantor and its Affiliates, AIR T OZ 1, LLC, a Minnesota limited liability company, and AIR T OZ 3, LLC, a Minnesota limited liability company.

C.    The Secured Party has agreed to such request of the Borrower, pursuant to and subject to the terms and conditions of, that certain Amendment No. 2 to Amended and Restated Credit Agreement dated as of even date herewith (the “Second Credit Agreement Amendment”; the Original Credit Agreement, as amended by the Second Credit Agreement Amendment being, the “Credit Agreement”).

D.    As a condition precedent to the effectiveness of the Second Credit Agreement Amendment, Secured Party has required that, among other things, Grantor execute and deliver this Agreement.

E.    Grantor has determined that the execution, delivery and performance of this Agreement are in its best business and pecuniary interest.

NOW THEREFORE, in consideration of the foregoing and for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as set forth below:

1.    Defined Terms. Capitalized terms used herein and not otherwise defined shall have the meaning ascribed to such terms in the Credit Agreement.

2.    Cash Collateral Account. Grantor has established a demand deposit account bearing Account Number 9161006940 (the “Cash Collateral Account”) with the Secured Party. All deposits into the Cash Collateral Account are hereinafter referred to as the “Funds”. The Funds shall be held, applied to the Obligations and released by the Secured Party in accordance with the terms and conditions of this Agreement.

5439443_1.docx    



3.    Security Interest. In order to secure Grantor’s repayment of the Obligations and the performance of all covenants and conditions required on the part of Grantor to be observed or performed hereunder or under the Credit Agreement or any other Loan Document, Grantor hereby pledges to and grants to the Secured Party a continuing security interest in the Funds and in the Cash Collateral Account. Until applied to the Obligations or released as provided below, the Funds and the Cash Collateral Account shall constitute security for the Obligations. Pursuant to this Agreement, Grantor has granted to the Secured Party a direct security interest in the Funds and the Cash Collateral Account and such Funds and the Cash Collateral Account are not claimed merely as proceeds of other collateral.

4.    Application of Funds. The Cash Collateral Account shall be under the sole dominion and control of Secured Party. Funds deposited in the Cash Collateral Account shall be applied to the Obligations as and when such Funds become available funds (subject to the Secured Party’s funds availability policy) upon the earliest to occur of (a) the occurrence of an Event of Default; or (b) the Maturity Date.

5.    Investments. The Cash Collateral Account shall be a demand deposit account maintained with the Secured Party.

6.    No Rights to Funds. Except for Secured Party’s rights under Section 4 of this Agreement, no Person, including, without limitation, Grantor shall have any right to withdraw any of the Funds held in the Cash Collateral Account, without the prior written consent of Secured Party and (b) unless previously applied by the Secured Party pursuant to Section 4 hereof, the Secured Party shall pay any Funds remaining in the Cash Collateral Account to Grantor or to whomever may be legally entitled thereto upon the indefeasible payment in full of all Obligations in cash following the termination of Secured Party’s obligation to extend credit to Grantor.

7.    No Liens. Grantor agrees that it will not (a) sell or otherwise dispose of any interest in the Cash Collateral Account or any Funds held therein, or (b) create or permit to exist any lien, security interest or other charge or encumbrance upon or with respect to the Cash Collateral Account or any Funds held therein except in favor of the Secured Party.

8.    Care of Account. The Secured Party shall exercise reasonable care in the custody and preservation of any Funds held in the Cash Collateral Account and shall be deemed to have exercised such care if such Funds are accorded treatment substantially equivalent to that which the Secured Party accords to its own property, it being understood that the Secured Party shall not have any responsibility for taking any necessary steps to preserve rights against any parties with respect to any such Funds.

9.    Remedies Cumulative. No right or remedy conferred upon or reserved to the Secured Party under this Agreement is intended to be exclusive of any other right or remedy, and each and every such right and remedy shall be cumulative and concurrent and may be enforced separately, successively or together, and may be exercised from time to time as often as may be deemed necessary by the Secured Party.

2



10.    Indemnification. Grantor hereby agrees to indemnify Secured Party against all liability arising in connection with or on account of the Cash Collateral Account or on account of this Agreement, except for any such liabilities arising solely on account of Secured Party’s gross negligence or willful misconduct.

11.    Deposit Agreements. The terms and conditions of this Agreement are in addition to any deposit account agreements and other related agreements that Grantor has with Secured Party, including without limitation all agreements concerning banking products and services, treasury management documentation, account booklets containing the terms and conditions of the Cash Collateral Account, signature cards, fee schedules, disclosures, specification sheets and change of terms notices (collectively, the "Deposit Agreements"). The provisions of this Agreement shall supersede the provisions of the Deposit Agreements only to the extent the provisions herein are inconsistent with the Deposit Agreements, and in all other respects, the Deposit Agreements shall remain in full force and effect. All items deposited into the Deposit Account shall be processed according to the provisions of the Deposit Agreements, as amended by this Agreement.

12.    Miscellaneous.

(a)
Except as otherwise expressly provided herein, in any instance where the consent or approval of the Secured Party is required or may be given or where any determination, judgment or decision is to be rendered by the Secured Party under this Agreement, such approval and consent shall be given or withheld in the Secured Party’s sole and absolute discretion.

(b)
All notices hereunder shall be given in accordance with the provisions of the Credit Agreement.

(c)
This Agreement shall be binding upon Grantor and its successors and assigns and shall inure to the benefit of the Secured Party and its successors and assigns. Grantor shall not assign any of its rights or obligations under this Agreement without the prior written consent of the Secured Party.

(d)
This Agreement is intended solely for the benefit of the Secured Party, and no third party shall have any right or interest in this Agreement, nor any right to enforce this Agreement against any party hereto.

(e)
This Agreement may not be modified, amended, waived, extended, changed, discharged or terminated orally or by any act or failure to act on the part of Grantor or the Secured Party, but only by an agreement in writing signed by the party against whom the enforcement of any modification, amendment, waiver, extension, change, discharge or termination is sought.


3


(f)
If any provision of this Agreement shall conflict with any provisions of the other Credit Agreement or any Loan Document regarding the Cash Collateral Account or the Funds, the provisions most favorable to the Secured Party shall control.

(g)
If any term, covenant or condition of this Agreement is held to be invalid, illegal or unenforceable in any respect, this Agreement shall be construed without such provision.

(h)
THE VALIDITY, CONSTRUCTION AND ENFORCEABILITY OF THIS AGREEMENT SHALL BE GOVERNED BY THE INTERNAL LAWS OF THE STATE OF MINNESOTA, WITHOUT GIVING EFFECT TO CONFLICT OF LAWS PRINCIPLES THEREOF. THE PARTIES AGREE THAT MINNESOTA IS THE "SECURED PARTY’S JURISDICTION" FOR PURPOSES OF THE UNIFORM COMMERCIAL CODE.

(i)
Section headings in this Agreement are included herein for convenience of reference only and shall not constitute a part of this Agreement for any other purpose.

(j)
EACH OF THE GRANTOR AND THE SECURED PARTY HEREBY WAIVES ANY RIGHT WHICH SUCH PERSON MAY HAVE TO A TRIAL BY JURY IN ANY ACTION RELATING TO THIS AGREEMENT.

(k)
AT THE OPTION OF THE SECURED PARTY, THIS AGREEMENT MAY BE ENFORCED IN ANY FEDERAL COURT OR STATE COURT SITTING IN MINNEAPOLIS OR ST. PAUL, MINNESOTA; GRANTOR CONSENTS TO THE JURISDICTION AND VENUE OF ANY SUCH COURT AND WAIVE ANY ARGUMENT THAT JURISDICTION IS NOT PROPER AND THAT VENUE IN SUCH FORUMS IS NOT CONVENIENT. IN THE EVENT AN ACTION IS COMMENCED IN ANOTHER JURISDICTION OR VENUE UNDER ANY TORT OR CONTRACT THEORY ARISING DIRECTLY OR INDIRECTLY FROM THE RELATIONSHIP CREATED BY THIS AGREEMENT, SECURED PARTY, AT ITS OPTION, SHALL BE ENTITLED TO HAVE THE CASE TRANSFERRED TO ONE OF THE JURISDICTIONS AND VENUES ABOVE DESCRIBED, OR IF SUCH TRANSFER CANNOT BE ACCOMPLISHED UNDER APPLICABLE LAW, TO HAVE SUCH CASE DISMISSED WITHOUT PREJUDICE.

(l)
The recitals to this Agreement are incorporated into and constitute an integral part of this Agreement.

(m)
Secured Party’s right to withdraw and apply amounts in the Cash Collateral Account shall be in addition to all other rights and remedies provided to the Secured Party under the Credit Agreement and the other Loan Documents and at law or in equity.

(n)
Grantor and the Secured Party agree that: (i) the Secured Party has “control” over the Cash Collateral Account within the meaning of Section 9-104 of the Uniform

4


Commercial Code enacted in the State of Minnesota (the “UCC”); and (ii) pursuant to Section 9-314(b) of the UCC, the Secured Party’s security interest in the Cash Collateral Account is perfected by control.

(o)
To facilitate execution, this document may be executed in as many counterparts as may be convenient or required. It shall not be necessary that the signature of, or on behalf of, each party, or that the signature of all persons required to bind any party to, appear on each counterpart. All counterparts shall collectively constitute a single document. It shall not be necessary in making proof of this document to produce or account for more than a single counterpart containing the respective signatures of, or on behalf of, each of the parties hereto. Any signature page to any counterpart may be detached from such counterpart without impairing the legal effect of the signatures thereon and thereafter attached to another counterpart identical thereto except having attached to it additional signature pages. Receipt by telecopy, pdf file or other electronic means of any executed signature page to this Agreement shall constitute effective delivery of such signature page.

[signature page follows]


5


IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their respective officers thereunto duly authorized as of the date first written above.

MINNESOTA BANK & TRUST, a Minnesota state banking corporation

By: _____________________________________
Name: Eric P. Gundersen
Its:     Vice President

Address for Notices:
9800 Bren Road East, Suite 200
Minnetonka, MN 55343
Attention: Mr. Eric P. Gundersen, SVP

With a copy to (which shall not constitute notice or service of process):

Fabyanske, Westra, Hart & Thomson, P.A
333 South Seventh Street, Suite 2600
Attention: Frederick H. Ladner, Esq.

AIR T OZ 2, LLC, a Minnesota limited liability company

By:                         
Name:                     
Its:                         

Address for Notices:
AIR T OZ 2, LLC
5930 Balsom Ridge Road
Denver, North Carolina 28037
Attention: Mark Jundt, Esq.

With a copy to (which shall not constitute notice or service of process):

Winthrop & Weinstine, P.A.
225 S. 6th Street
Minneapolis, MN 55402
Attention: Phil Coltan, Esq.




[Collateral Account Agreement Signature Page]


18509229v1


7


COLLATERAL ACCOUNT AGREEMENT

THIS COLLATERAL ACCOUNT AGREEMENT is made as of December 31, 2019 (the “Agreement”), by and between AIR T OZ 3, LLC, a Minnesota limited liability company (together with its successors and assigns “Grantor”), and MINNESOTA BANK & TRUST, Minnesota banking corporation (together with its successors and assigns, the “Secured Party”).

WITNESSETH

A.    Air T, Inc., a Delaware corporation (the “Borrower”), and the Secured Party are parties to that certain Amended and Restated Credit Agreement dated as of March 28, 2019, as amended by that certain Amendment No. 1 to Amended and Restated Credit Agreement dated as of September 24, 2019 (as so amended, the “Original Credit Agreement”).

B.    The Borrower has requested that the Secured Party amend the Credit Agreement to, among other things, provide for a separate revolving line of credit in the maximum amount of up to $10,000,000, for the purpose of providing liquidity to Grantor and its Affiliates, AIR T OZ 1, LLC, a Minnesota limited liability company, and AIR T OZ 2, LLC, a Minnesota limited liability company.

C.    The Secured Party has agreed to such request of the Borrower, pursuant to and subject to the terms and conditions of, that certain Amendment No. 2 to Amended and Restated Credit Agreement dated as of even date herewith (the “Second Credit Agreement Amendment”; the Original Credit Agreement, as amended by the Second Credit Agreement Amendment being, the “Credit Agreement”).

D.    As a condition precedent to the effectiveness of the Second Credit Agreement Amendment, Secured Party has required that, among other things, Grantor execute and deliver this Agreement.

E.    Grantor has determined that the execution, delivery and performance of this Agreement are in its best business and pecuniary interest.

NOW THEREFORE, in consideration of the foregoing and for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as set forth below:

1.    Defined Terms. Capitalized terms used herein and not otherwise defined shall have the meaning ascribed to such terms in the Credit Agreement.

2.    Cash Collateral Account. Grantor has established a demand deposit account bearing Account Number 9161006939 (the “Cash Collateral Account”) with the Secured Party. All deposits into the Cash Collateral Account are hereinafter referred to as the “Funds”. The Funds shall be held, applied to the Obligations and released by the Secured Party in accordance with the terms and conditions of this Agreement.

5439454_1.docx    



3.    Security Interest. In order to secure Grantor’s repayment of the Obligations and the performance of all covenants and conditions required on the part of Grantor to be observed or performed hereunder or under the Credit Agreement or any other Loan Document, Grantor hereby pledges to and grants to the Secured Party a continuing security interest in the Funds and in the Cash Collateral Account. Until applied to the Obligations or released as provided below, the Funds and the Cash Collateral Account shall constitute security for the Obligations. Pursuant to this Agreement, Grantor has granted to the Secured Party a direct security interest in the Funds and the Cash Collateral Account and such Funds and the Cash Collateral Account are not claimed merely as proceeds of other collateral.

4.    Application of Funds. The Cash Collateral Account shall be under the sole dominion and control of Secured Party. Funds deposited in the Cash Collateral Account shall be applied to the Obligations as and when such Funds become available funds (subject to the Secured Party’s funds availability policy) upon the earliest to occur of (a) the occurrence of an Event of Default; or (b) the Maturity Date.

5.    Investments. The Cash Collateral Account shall be a demand deposit account maintained with the Secured Party.

6.    No Rights to Funds. Except for Secured Party’s rights under Section 4 of this Agreement, no Person, including, without limitation, Grantor shall have any right to withdraw any of the Funds held in the Cash Collateral Account, without the prior written consent of Secured Party and (b) unless previously applied by the Secured Party pursuant to Section 4 hereof, the Secured Party shall pay any Funds remaining in the Cash Collateral Account to Grantor or to whomever may be legally entitled thereto upon the indefeasible payment in full of all Obligations in cash following the termination of Secured Party’s obligation to extend credit to Grantor.

7.    No Liens. Grantor agrees that it will not (a) sell or otherwise dispose of any interest in the Cash Collateral Account or any Funds held therein, or (b) create or permit to exist any lien, security interest or other charge or encumbrance upon or with respect to the Cash Collateral Account or any Funds held therein except in favor of the Secured Party.

8.    Care of Account. The Secured Party shall exercise reasonable care in the custody and preservation of any Funds held in the Cash Collateral Account and shall be deemed to have exercised such care if such Funds are accorded treatment substantially equivalent to that which the Secured Party accords to its own property, it being understood that the Secured Party shall not have any responsibility for taking any necessary steps to preserve rights against any parties with respect to any such Funds.

9.    Remedies Cumulative. No right or remedy conferred upon or reserved to the Secured Party under this Agreement is intended to be exclusive of any other right or remedy, and each and every such right and remedy shall be cumulative and concurrent and may be enforced separately, successively or together, and may be exercised from time to time as often as may be deemed necessary by the Secured Party.

2



10.    Indemnification. Grantor hereby agrees to indemnify Secured Party against all liability arising in connection with or on account of the Cash Collateral Account or on account of this Agreement, except for any such liabilities arising solely on account of Secured Party’s gross negligence or willful misconduct.

11.    Deposit Agreements. The terms and conditions of this Agreement are in addition to any deposit account agreements and other related agreements that Grantor has with Secured Party, including without limitation all agreements concerning banking products and services, treasury management documentation, account booklets containing the terms and conditions of the Cash Collateral Account, signature cards, fee schedules, disclosures, specification sheets and change of terms notices (collectively, the "Deposit Agreements"). The provisions of this Agreement shall supersede the provisions of the Deposit Agreements only to the extent the provisions herein are inconsistent with the Deposit Agreements, and in all other respects, the Deposit Agreements shall remain in full force and effect. All items deposited into the Deposit Account shall be processed according to the provisions of the Deposit Agreements, as amended by this Agreement.

12.    Miscellaneous.

(a)
Except as otherwise expressly provided herein, in any instance where the consent or approval of the Secured Party is required or may be given or where any determination, judgment or decision is to be rendered by the Secured Party under this Agreement, such approval and consent shall be given or withheld in the Secured Party’s sole and absolute discretion.

(b)
All notices hereunder shall be given in accordance with the provisions of the Credit Agreement.

(c)
This Agreement shall be binding upon Grantor and its successors and assigns and shall inure to the benefit of the Secured Party and its successors and assigns. Grantor shall not assign any of its rights or obligations under this Agreement without the prior written consent of the Secured Party.

(d)
This Agreement is intended solely for the benefit of the Secured Party, and no third party shall have any right or interest in this Agreement, nor any right to enforce this Agreement against any party hereto.

(e)
This Agreement may not be modified, amended, waived, extended, changed, discharged or terminated orally or by any act or failure to act on the part of Grantor or the Secured Party, but only by an agreement in writing signed by the party against whom the enforcement of any modification, amendment, waiver, extension, change, discharge or termination is sought.


3


(f)
If any provision of this Agreement shall conflict with any provisions of the other Credit Agreement or any Loan Document regarding the Cash Collateral Account or the Funds, the provisions most favorable to the Secured Party shall control.

(g)
If any term, covenant or condition of this Agreement is held to be invalid, illegal or unenforceable in any respect, this Agreement shall be construed without such provision.

(h)
THE VALIDITY, CONSTRUCTION AND ENFORCEABILITY OF THIS AGREEMENT SHALL BE GOVERNED BY THE INTERNAL LAWS OF THE STATE OF MINNESOTA, WITHOUT GIVING EFFECT TO CONFLICT OF LAWS PRINCIPLES THEREOF. THE PARTIES AGREE THAT MINNESOTA IS THE "SECURED PARTY’S JURISDICTION" FOR PURPOSES OF THE UNIFORM COMMERCIAL CODE.

(i)
Section headings in this Agreement are included herein for convenience of reference only and shall not constitute a part of this Agreement for any other purpose.

(j)
EACH OF THE GRANTOR AND THE SECURED PARTY HEREBY WAIVES ANY RIGHT WHICH SUCH PERSON MAY HAVE TO A TRIAL BY JURY IN ANY ACTION RELATING TO THIS AGREEMENT.

(k)
AT THE OPTION OF THE SECURED PARTY, THIS AGREEMENT MAY BE ENFORCED IN ANY FEDERAL COURT OR STATE COURT SITTING IN MINNEAPOLIS OR ST. PAUL, MINNESOTA; GRANTOR CONSENTS TO THE JURISDICTION AND VENUE OF ANY SUCH COURT AND WAIVE ANY ARGUMENT THAT JURISDICTION IS NOT PROPER AND THAT VENUE IN SUCH FORUMS IS NOT CONVENIENT. IN THE EVENT AN ACTION IS COMMENCED IN ANOTHER JURISDICTION OR VENUE UNDER ANY TORT OR CONTRACT THEORY ARISING DIRECTLY OR INDIRECTLY FROM THE RELATIONSHIP CREATED BY THIS AGREEMENT, SECURED PARTY, AT ITS OPTION, SHALL BE ENTITLED TO HAVE THE CASE TRANSFERRED TO ONE OF THE JURISDICTIONS AND VENUES ABOVE DESCRIBED, OR IF SUCH TRANSFER CANNOT BE ACCOMPLISHED UNDER APPLICABLE LAW, TO HAVE SUCH CASE DISMISSED WITHOUT PREJUDICE.

(l)
The recitals to this Agreement are incorporated into and constitute an integral part of this Agreement.

(m)
Secured Party’s right to withdraw and apply amounts in the Cash Collateral Account shall be in addition to all other rights and remedies provided to the Secured Party under the Credit Agreement and the other Loan Documents and at law or in equity.

(n)
Grantor and the Secured Party agree that: (i) the Secured Party has “control” over the Cash Collateral Account within the meaning of Section 9-104 of the Uniform

4


Commercial Code enacted in the State of Minnesota (the “UCC”); and (ii) pursuant to Section 9-314(b) of the UCC, the Secured Party’s security interest in the Cash Collateral Account is perfected by control.

(o)
To facilitate execution, this document may be executed in as many counterparts as may be convenient or required. It shall not be necessary that the signature of, or on behalf of, each party, or that the signature of all persons required to bind any party to, appear on each counterpart. All counterparts shall collectively constitute a single document. It shall not be necessary in making proof of this document to produce or account for more than a single counterpart containing the respective signatures of, or on behalf of, each of the parties hereto. Any signature page to any counterpart may be detached from such counterpart without impairing the legal effect of the signatures thereon and thereafter attached to another counterpart identical thereto except having attached to it additional signature pages. Receipt by telecopy, pdf file or other electronic means of any executed signature page to this Agreement shall constitute effective delivery of such signature page.

[signature page follows]


5


IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their respective officers thereunto duly authorized as of the date first written above.

MINNESOTA BANK & TRUST, a Minnesota state banking corporation

By: _____________________________________
Name: Eric P. Gundersen
Its:     Vice President

Address for Notices:
9800 Bren Road East, Suite 200
Minnetonka, MN 55343
Attention: Mr. Eric P. Gundersen, SVP

With a copy to (which shall not constitute notice or service of process):

Fabyanske, Westra, Hart & Thomson, P.A
333 South Seventh Street, Suite 2600
Attention: Frederick H. Ladner, Esq.

AIR T OZ 3, LLC, a Minnesota limited liability company

By:                         
Name:                     
Its:                         

Address for Notices:
AIR T OZ 3, LLC
5930 Balsom Ridge Road
Denver, North Carolina 28037
Attention: Mark Jundt, Esq.

With a copy to (which shall not constitute notice or service of process):

Winthrop & Weinstine, P.A.
225 S. 6th Street
Minneapolis, MN 55402
Attention: Phil Coltan, Esq.




[Collateral Account Agreement Signature Page]


18509256v1


7


ACKNOWLEDGMENT AND AGREEMENT


Each of the undersigned has (a) guaranteed the payment and performance of all obligations of AIR T, INC., a Delaware corporation (the “Borrower”), to MINNESOTA BANK & TRUST, a Minnesota state banking corporation (the “Lender”), pursuant to the terms of an Amended and Restated Guaranty dated as of March 28, 2019 (the “Guaranty”) jointly and severally made by the undersigned in favor of the Lender, which obligations include, without limitation, all “Obligations” (as defined in the Original Agreement described below) of the Borrower to the Lender pursuant to that certain Amended and Restated Credit Agreement dated as of March 28, 2019 (such Credit Agreement, as amended to date, being the “Original Agreement”), between the Borrower and the Lender, and (b) granted a first priority security interest in its assets to the Lender as collateral for such Obligations pursuant to the terms of that certain Amended and Restated Security Agreement dated as of March 28, 2019 (the “Security Agreement”)

Each of the undersigned acknowledges that it has received a copy of the proposed Amendment No. 2 to Amended and Restated Credit Agreement dated to be effective as of December 31, 2019 (the “Amendment”) amending the Original Agreement and pursuant to which the Lender has agreed to provide Borrower with a separate “Supplemental Revolving Credit Commitment” in the amount of up to $10,000,000. Each of the undersigned (a) confirms that each of the Guaranty and the Security Agreement remains in full force and effect, (b) agrees and acknowledges that the Amendment shall not in any way impair or limit the rights of the Lender under the Guaranty or under the Security Agreement, and (c) hereby acknowledges and agrees that (i) pursuant to the Guaranty, the Guarantors jointly and severally guaranty the payment and performance of all Obligations of the Borrower to the Lender, including, without limitation, all Loans (including, without limitation, the Supplemental Revolving Credit Loans) now or hereafter made by the Lender under the Original Agreement as amended by the Credit Agreement, and (ii) pursuant to the Security Agreement each of the undersigned continues to grant a security interest to the Lender in the “Collateral” covered thereby to secure all Obligations of the Borrower to the Lender, including, without limitation, all Loans now or hereafter made by the Lender under the Original Agreement as amended by the Credit Agreement..

Each of the undersigned agrees that each reference to the “Credit Agreement”, the “Loan Agreement”, “therein”, “thereof”, “thereby” or words of similar effect referring to the Credit Agreement in any Loan Document to which such undersigned is a party shall mean and be a reference to the Original Agreement, as amended by the Amendment.

Each of the undersigned: (a) represents and warrants to the Lender that no events have taken place and no circumstances exist at the date hereof which would give such undersigned the right to assert a defense, offset or counterclaim to any claim by the Lender for payment of the obligations guaranteed by such undersigned or for the enforcement of the Guaranty; and (b) hereby releases and forever discharges the Lender and its successors, assigns, directors, officers, agents, employees and participants from any and all actions, causes of action, suits, proceedings, debts, sums of money, covenants, contracts, controversies, claims and demands, at law or in equity, which such undersigned ever had or now has against the Lender or its successors, assigns, directors, officers, agents,


5439038_2.docx    




employees or participants by virtue of their relationship to Borrower or any of the undersigned in connection with the Loan Documents and the transactions related thereto.

Nothing in this Acknowledgment and Agreement requires the Lender to obtain the consent of any of the undersigned to any future amendment, modification or waiver to the Original Agreement, as amended by the Amendment, or any other Loan Document to which such undersigned is a party except as expressly required by the terms of the Loan Documents to which such undersigned is a party.

This Acknowledgment and Agreement may be executed in counterparts and by separate parties in separate counterparts, each of which shall be an original and all of which taken together shall constitute one and the same document. The delivery of a facsimile, pdf or other digital copy of an executed counterpart of this Amendment and Agreement shall be deemed to be valid execution and delivery of this Amendment and Agreement.

[SIGNATURE PAGES FOLLOW]




Dated to be effective as of December 31, 2019.


AIRCO, LLC

By:                    
Name: _________________________
Title: _________________________


CSA AIR, INC.

By:                    
Name: _________________________
Title: _________________________


GLOBAL GROUND SUPPORT, INC.


By:                    
Name: _________________________
Title: _________________________

JET YARD, LLC


By: Stratus Aero Partners, LLC
Its: Sole Member

By:                    
Name: _________________________
Title: _________________________


[Guarantor Acknowledgment and Agreement Signature Page]




MOUNTAIN AIR CARGO, INC.

By:                    
Name: _________________________
Title: _________________________


STRATUS AERO PARTNERS, LLC

By:                    
Name: _________________________
Title: _________________________


AIR T GLOBAL LEASING, LLC

By:                    
Name: _________________________
Title: _________________________


AIRCO SERVICES, LLC

By:                    
Name: _________________________
Title: _________________________


SPACE AGE INSURANCE COMPANY

By:                    
Name: _________________________
Title: _________________________


WORTHINGTON ACQUISITION, LLC, a North Carolina limited liability company

By:                    
Name:                     
Its:                     


[Guarantor Acknowledgment and Agreement Signature Page]




WORTHINGTON AVIATION, LLC, a North Carolina limited liability company

By:                    
Name:                     
Its:                     

WORTHINGTON MRO, LLC, a North Carolina limited liability company

By:                    
Name:                     
Its:                     



18509306v1


[Guarantor Acknowledgment and Agreement Signature Page]


BILL OF SALE (ESN 889728)
KNOW ALL MEN BY THESE PRESENTS that WELLS FARGO TRUST COMPANY, NATIONAL ASSOCIATION, not in its individual capacity but solely as owner trustee ("Seller") and CONTRAIL AVIATION LEASING, LLC, a Wisconsin limited liability company ("Owner Participant"), in consideration of value received, the receipt of which is hereby acknowledged, do hereby grant, sell, transfer and deliver to SUN COUNTRY, INC. d/b/a SUN COUNTRY AIRLINES ("Buyer"), all of their right, title and interest in and to the following (collectively, the "Equipment"):
(a)    one (1) CFM International, Inc. model CFM56-7B22 (described on the International Registry as a CFM model CFM56-7B) aircraft engine bearing manufacturer's serial number 889728 in fully QEC’d configuration (including but not limited to, inlet cowl, exhaust nozzle, hydraulic pump and integrated drive generator) as defined by the B737 Powerplant Buildup Manual (Boeing Document D633A106) (collectively, the "Engine"); and
(b)    all Parts and all equipment, accessories and parts belonging to, installed in or appurtenant to the Engine, together with the Engine Documentation and one (1) new DAE Industries CFM56-7 engine stand, part number 3227B, serial number M333720-2;
TO HAVE AND TO HOLD said Equipment unto Buyer forever.
Seller and Owner Participant hereby, jointly and severally, warrant to Buyer that they are the owner of full, legal and beneficial title to the Equipment, that there is hereby conveyed to Buyer, on the date hereof, good and marketable title to, and all of Seller's and Owner Participant's right, title and interest in and to, the Equipment, and free and clear of all Liens created by or through the Seller or Owner Participant but subject to and with the benefit of the Lease and any Liens permitted thereunder (or which are otherwise the responsibility of Buyer, as lessee under the Lease).
This Bill of Sale is made and delivered pursuant to the provisions of that certain Engine Lease Agreement, dated as of November 22, 2019, between Seller and Buyer (the "Lease"). The transfer location is Minneapolis-St. Paul International Airport (MSP) and the time of delivery of this Bill of Sale is 10:38 am (Local Time) on this sixth day of January, 2020 (the “Transfer Date”). The terms "Engine Documentation", "Liens" and "Parts" shall have the same meanings in this Bill of Sale as in the Lease.
Except as otherwise expressly provided in the Lease and this Bill of Sale, the Equipment is sold and transfer of title to Buyer shall be on an "AS IS, WHERE IS" and "WITH ALL FAULTS" basis.
This Bill of Sale and any non-contractual matters arising out of or in connection with this Bill of Sale are governed by and shall be construed in accordance with the laws of the State of New York without regard to principles of conflict of law (other than Section 5-1401 of the General Obligations Law of New York).





IN WITNESS WHEREOF, Seller and Owner Participant have caused this Bill of Sale to be duly executed and delivered on the Transfer Date set forth above.
  
WELLS FARGO TRUST COMPANY,
NATIONAL ASSOCIATION, not in its
individual capacity but solely as
owner trustee

By:                
Name:                 
Title:                 

CONTRAIL AVIATION LEASING, LLC

By:                
Name:                 
Title:                 


18514640v1