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): September 25, 2020
Air T, Inc.
(Exact Name of Registrant as Specified in Charter)
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Delaware
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001-35476
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52-1206400
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(State or Other Jurisdiction
of Incorporation)
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(Commission
File Number)
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(I.R.S. Employer
Identification No.)
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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)
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):
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Written communication pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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Pre-commencement communication pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
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Pre-commencement communication pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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Securities registered pursuant to Section 12(b) of the Act:
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Title of each class
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Trading Symbol(s)
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Name of each exchange on which registered
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Common Stock
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AIRT
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NASDAQ Global Market
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Alpha Income Preferred Securities (also referred to as 8% Cumulative Capital Securities) (“AIP”)
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AIRTP
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NASDAQ Global Market
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Warrant to purchase AIP
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AIRTW
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NASDAQ Global Market
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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 Item 2.03 is incorporated herein by reference.
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant
On September 25, 2020, Contrail Aviation Support, LLC (“CAS”), a 79%-owned subsidiary Air T, Inc. (the “Company”) entered into a Third Amendment to Supplement #2 to Master Loan Agreement dated June 24, 2019 with ONB (as amended, restated, supplemented or otherwise modified from time to time, including, but not limited to, by Supplements thereto)(the “Third Amendment”). The material changes within the Third Amendment are: (a) to extend the date for compliance with the resting period provisions of Section 2.4(b) to September 5, 2021; and (b) to extend the date for compliance with the required quarterly cash flow coverage ratio covenant in Section 4.1 such that CAS shall commence compliance with the covenant commencing on March 31, 2022 and on the last day of each fiscal quarter thereafter.
In addition, the Third Amendment adds an event of default to the Master Loan Agreement if CAS does not enter into Supplement #8 to the Master Loan Agreement and Term Note G in substantially the form attached as Exhibit A to the Third Amendment and consummate the transactions contemplated therein by December 31, 2020. Supplement #8 and Term Note G relate to a $43,598,000 loan to be extended pursuant to, and intended to comply with, the requirements of the Main Street Priority Loan Facility Program established by the U.S. Federal Reserve. The contemplated loan proceeds are to be used as working capital to support the operations of CAS in the ordinary course of business and the indebtedness incurred would be subject to the terms and provisions of the Master Loan Agreement. The principal terms of the contemplated loan are: (a) interest on the loan would accrue at a floating rate of LIBOR plus 3.00% and interest would be payable commencing on a date certain in 2021; (b) principal payments would be due in 2023 (15%) and 2024 (15%), with the remainder due on the loan maturity date in 2025; (c) the loan would not be guaranteed; and, (c) a 2% origination fee would be due on funding of the loan. The loan is also expected to contain affirmative covenants as to cash flow coverage and tangible net worth. Because the loan transaction has not yet been completed, no assurance can be given at this time that this financing will be completed and funded or that the terms of the loan will be as described above.
The foregoing summary of the terms of the Third Amendment and Exhibit A thereto do not purport to be complete and are qualified in their entirety by reference to the documents which are filed as Exhibit 10.1 hereto which are incorporated by reference herein.
Item 9.01 Financial Statements and Exhibits
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: September 30, 2020
AIR T, INC.
By: /s/ Brian Ochocki
Brian Ochocki, Chief Financial Officer
20422282v2
Contrail Aviation Support, LLC, Contrail Aviation Leasing, LLC
Loan No. [________________]
September ___, 2020
Note
PROMISSORY NOTE
TERM NOTE G
$43,598,000.00 September ___, 2020
FOR VALUE RECEIVED, the undersigned CONTRAIL AVIATION SUPPORT, LLC (“Support”) and CONTRAIL AVIATION LEASING, LLC (“Leasing”, and together with Support, each a “Borrower,” and collectively, the “Borrowers”), jointly and severally, promise to pay to the order of OLD NATIONAL BANK (the “Lender”) the principal sum of Forty-Three Million Five Hundred Ninety-Eight Thousand Dollars ($43,598,000.00)together with interest thereon as hereinafter provided.
1.RATE OF INTEREST
The principal amount of the Loan outstanding from time to time shall bear interest at the variable rate of LIBOR Rate (as defined in the Master Loan Agreement referenced below) plus 3.00% per annum and such rate shall be adjusted on the 1st day of each month (the “Loan Rate”).
2.PAYMENTS
Payments of both principal and interest are to be made in immediately available funds in lawful currency of the United States of America at the office of Lender, or such other place as the holder hereof shall designate to the undersigned in writing. Unless required by applicable law, and prior to any default being declared, payments will be applied first to any accrued unpaid interest unless capitalized; then to principal; then to escrow; then to any late charges; and then to any unpaid collection costs. Funds shall be deemed received by Lender on the next business day if not received by 12:00 p.m. local time at the location payments hereunder are to be made.
Borrowers shall make the following payments on Term Loan G during the following periods or on the following dates:
(a)No payments of principal or interest shall be due or payable during the period beginning on the Closing Date and ending on __________, 2021. Interest shall accrue on the outstanding balance during such period and such amount shall be capitalized by adding it to the principal amount of Term Loan G at the conclusion of such period.
(b)Forty-eight (48) consecutive monthly payments of accrued unpaid interest, commencing on __________, 2021, and continuing on the 1st day of each successive month thereafter;
(c)A principal payment equal to 15% of the outstanding principal balance of Term Loan G on __________, 2023;
(d)A principal payment equal to 15% of the outstanding principal balance of Term Loan G on __________, 2024; and
(e)A final payment of all outstanding principal and accrued and unpaid interest together with such other amounts as shall then be due and owing from Borrowers to Lender under the Term Loan G on the Term Loan G Maturity Date.
3.FINAL PAYMENT MATURITY DATE
Notwithstanding anything set forth above, all sums due under this Note, both principal and interest, if not sooner paid, shall be due and payable on __________, 2025 (“Term Loan G Maturity Date”).
4.PREPAYMENT; MINIMUM FINANCE CHARGE
Borrowers agree that all loan fees and other prepaid finance charges are earned fully as of the date of the loan and will not be subject to refund upon early payment (whether voluntary or as a result of default), except as otherwise required by law. Borrowers may pay without penalty all or a portion of the amount owed earlier than it is due. Early payments will not, unless agreed to by Lender in writing, relieve Borrowers of Borrowers’ obligation to continue to make payments under the payment schedule. Rather, early payments will reduce the principal balance due and may result in Borrowers making fewer payments. Borrowers agree not to send Lender payments marked “paid in full,” “without recourse,” or similar language. If Borrowers send such a payment, Lender may accept it without losing any of Lender’s rights under this Note, and Borrowers will remain obligated to pay any further amounted 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: Old National Bank, PO Box 3728, Evansville, IN 47736-3728.
5.MANDATORY PREPAYMENTS
If, on any date (such date, a “Trigger Date”), the Board of Governors of the Federal Reserve System or a designee thereof has, after consultation with the Eligible Lender, notified the Eligible Lender in writing that the Borrower has materially breached, made a material misrepresentation with respect to or otherwise failed to comply with certifications in Section 2 (CARES Act Borrower Eligibility Certifications and Covenants) or Section 3 (FRA and Regulation A Borrower Eligibility Certifications) of the Borrower Certifications and Covenants in any material respect or that any such certification has failed to be true and correct in any material respect, then the Eligible Lender shall promptly so notify the Borrower and the Borrower shall, no later than two (2) Business Days after such Trigger Date, prepay Term Loan G in full, along with any accrued and unpaid interest thereon.
6.PAYMENT DUE DATE/FAILURE TO PAY
(a)All payments due under this Note shall be made without demand and received on the dates set forth in Section 2 above;
(b)In the event of a default as defined in this Note, or as set forth in the Master Loan Agreement or any Collateral Documents, at the option of Lender, for so long as the default exists, interest on the outstanding principal balance hereof shall accrue and will be paid at the rate in effect from time to time hereunder plus an additional 3% per annum, but in no event shall such default rate exceed, however, the maximum rate permitted by law (“Default Interest Rate”); and
(c)Any installment of principal and/or interest due hereunder which is not received on or before the 10th day following the date on which it is due shall be subject to a late payment fee of 5% of the amount owed on such installment (but not less than $50.00) for the purpose of defraying the expense incident to handling such delinquent payment (this payment is in addition to the amount set forth in (b) above).
7.INTEREST RATE COMPUTATION
Interest on this Note is computed on a 365/360 basis; that is, by applying the ratio of the interest rate over a year of 360 days, multiplied by the outstanding principal balance, multiplied by the actual number of days the principal balance is outstanding. All interest payable under this Note is computed using this method.
8.PLACE OF PAYMENT
All payments shall be made to Lender at the address on the interest billing statement provided by Lender or at the address of Lender set forth in Section 14 of this Note, at any branch of Lender, or such other place as Lender may from time to time designate in writing.
9.MASTER LOAN AGREEMENT AND SECURITY
This Note evidences indebtedness incurred under; is the “Term Note G” referred to in; and is subject to the terms and provisions of the Master Loan Agreement by and between Borrowers and Lender dated June 24, 2019 (as amended, restated, supplemented or otherwise modified from time to time, including, but not limited to, by Supplements thereto, the “Master Loan Agreement”). Capitalized terms not otherwise defined herein shall have the meaning ascribed to them in the Master Loan Agreement.
This Note is secured by the Collateral Documents. The terms of the Collateral Documents are incorporated herein and made a part hereof by reference.
10.DEFAULT
In the event of the occurrence of an Event of Default under the Master Loan Agreement, and after giving effect to any applicable right to cure provided by the Master Loan Agreement, Lender may, at its option and without notice, declare this Note to be, and this Note shall thereupon become, immediately due and payable, together with accrued interest thereon. Without limiting the foregoing right and without limiting any other rights and remedies of the Lender at law or in equity, the Lender is also entitled to the rights and remedies provided for in the Master Loan Agreement and the Collateral Documents and may enforce the covenants, agreements and undertakings of Borrowers contained therein and may exercise the remedies provided for thereby or otherwise available in respect thereto, all in accordance with the terms thereof. In addition to any other right, Lender may apply and/or set-off against amounts due it hereunder any deposits, account balances, or other credits of any Borrower in the possession of or in transit to Lender, and Borrowers hereby grant Lender a security interest in all of the foregoing.
11.WAIVERS
Except as herein provided, Borrowers and all others who may become liable for all or part of the principal balance hereof or for any obligations of Borrowers to Lender or the holder hereof (a) forever waive presentment, protest and demand, notice of protest, demand and dishonor and non-payment of this Note, and all other notices in connection with the delivery, acceptance, performance, default or enforcement of the payment of this Note, (b) agree that the time of payment of the debt or any part thereof may be extended from time to time without modifying or releasing the lien of the Collateral Documents or the liability of Borrowers or any other such parties, the right of recourse against Borrowers and such parties being hereby reserved by Lender; and (c) agree that time is of the essence. Borrowers agree to pay all reasonable costs of collection when incurred, whether suit be brought or not, including reasonable attorneys’ fees and costs of suit and preparation therefore, and to perform and comply with each of the covenants, conditions, provisions and agreements of Borrowers contained in this Note, the Master Loan Agreement and Collateral Documents. It is expressly agreed by Borrowers that no extensions of time for the payment of this Note, nor the failure on the part of Lender to exercise any of its rights hereunder, shall operate to release, discharge, modify, change or affect the original liability under this Note, the Master Loan Agreement or any of the Collateral Documents, either in whole or in part.
12.WAIVER OF JURY TRIAL
BORROWERS WAIVE ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING RELATING TO THIS INSTRUMENT AND TO ANY OF THE LOAN DOCUMENTS, THE OBLIGATIONS HEREUNDER OR THEREUNDER, ANY COLLATERAL SECURING THE OBLIGATIONS, OR ANY TRANSACTION ARISING THEREFROM OR CONNECTED THERETO.
BORROWERS REPRESENT THAT THIS WAIVER IS KNOWINGLY, WILLINGLY AND VOLUNTARILY GIVEN.
13.COMPLIANCE
This Note is to be governed by, and construed and enforced in accordance with, the laws of the State of Wisconsin (without giving effect to Wisconsin’s principles of conflicts of law), except to the extent (a) of procedural and substantive matters relating only to the creation, perfection, foreclosure and enforcement of rights and remedies against specific collateral, which matters shall be governed by the laws of the state in which the collateral is located (the “Collateral State”), and (b) that the laws of the United States of America and any rules regulations, or orders issued or promulgated thereunder, applicable to the affairs and transactions entered into by the Lender, otherwise preempt Collateral State law or Wisconsin law; in which event such federal law shall control. Borrowers hereby irrevocably submit to the jurisdiction of any Wisconsin or federal court sitting in Milwaukee, Wisconsin (or, with respect to the matters set forth in subsection (a) above, any state in which the property encumbered by the Collateral Documents is located) over any suit, action or proceeding arising out of or relating to this Note or any of the Loan Documents. Borrowers hereby waive any right to object to the location of venue in any Wisconsin or federal court sitting in Milwaukee, Wisconsin, or, with respect to the matters set forth in subsection (a) above, to the appropriate court located in the Collateral State, concerning any suit, action or proceeding arising out of or relating to this Note or any of the Loan Documents and waives any objection which it may have at any time to the laying of venue in any proceedings brought in any such court, waives any claim that such proceedings have been brought in an inconvenient forum and further waives the right to object, with respect to such proceedings, that such court does not have jurisdiction over such party to object to the choice of governing law set forth in this section. Borrowers acknowledge that the loan evidenced by this Note was solicited, negotiated, closed and funded in the State of Wisconsin, and waives any implication that the laws of any other state shall apply for usury purposes.
14.NOTICES
All notices, requests and demands to be made hereunder to the parties hereto must be in writing and must be delivered to the applicable address stated below by any of the following means: (a) personal service; (b) electronic communication, including, but not limited to electronic mail, telex, telegram or telecopying (and, if by telex, telegram or telecopying, then only if confirmed in writing sent by registered or certified, first class mail, return receipt requested); or (c) registered or certified, first class mail, return receipt requested. Such addresses may be changed by notice to the other parties given in the same manner as provided above. Any notice, demand or request sent pursuant to either subsection (a) or (b) hereof will be deemed received upon such personal service or upon dispatch by electronic means, and, if sent pursuant to subsection (c) will be deemed received three (3) days following deposit in the mail.
Borrowers: CONTRAIL AVIATION SUPPORT, LLC
CONTRAIL AVIATION LEASING, LLC
435 Investment Court
Verona, WI 53593-8788
Lender: OLD NATIONAL BANK
25 W. Main St.
Madison, WI 53703
15.INTEREST NOT TO EXCEED MAXIMUM ALLOWED BY LAW.
If from any circumstances whatsoever, by reason of acceleration or otherwise, the fulfillment of any provision of this Note involves transcending the limit of validity prescribed by any applicable usury statute or any other applicable law, with regard to obligations of like character and amount, then the obligations to be fulfilled will be reduced to the limit of such validity as provided in such statute or law, so that in no event shall any exaction be possible under this Note in excess of the limit of such validity.
16.SUCCESSORS
All rights, powers, privileges and immunities herein granted to Lender shall extend to its successors and assigns and any other legal holder of this Note, with full right by Lender to assign and/or sell same.
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IN WITNESS WHEREOF, the Parties have executed this Note as of the date and year first above written.
BORROWERS: LENDER:
CONTRAIL AVIATION SUPPORT, LLC OLD NATIONAL BANK
By: By:
Joseph Kuhn Tommy Olson
Its: CEO Its: SVP
CONTRAIL AVIATION LEASING, LLC
By:
Joseph Kuhn
Its: CEO
[Signature Page to Promissory Note Term Note G]
SUPPLEMENT #8 TO MASTER LOAN AGREEMENT
Date of Supplement: September ___, 2020
THIS SUPPLEMENT #8 TO MASTER LOAN AGREEMENT (this “Supplement”) is made and entered into by Lender and Borrowers as of the date written above pursuant to the Master Loan Agreement by and between Lender and Borrowers dated June 24, 2019 (the “Master Loan Agreement”).
This Supplement constitutes a Supplement under the Master Loan Agreement and is hereby made a part of the Master Loan Agreement. All capitalized terms herein not otherwise defined herein shall have the meaning ascribed to them in the Master Loan Agreement. The credit facility described in this Supplement is governed by and shall be construed and administered in accordance with the terms and conditions of the Master Loan Agreement and this Supplement; provided, however, the credit facility described in this Supplement is being extended pursuant to, and is intended in all respects to comply with the requirements of the Main Street Priority Loan Facility Program established by the U.S. Federal Reserve (the "Main Street Program"), and to the extent compliance with any term or provision of this Supplement or the Master Loan Agreement would result in the credit facility's non-compliance with or failure to qualify under the Main Street Program, such term or provision is waived or amended, but only to the extent necessary to avoid such non-compliance or disqualification.
To the extent any term or condition of this Supplement is inconsistent with any term or condition in the Master Loan Agreement or in any Supplement dated prior to this Supplement, the terms and conditions of this Supplement shall control. Except as specifically waived or amended hereby, all terms and conditions of the Master Loan Agreement and all prior Supplements remain in effect.
In consideration of the mutual covenants contained herein and in the Master Loan Agreement and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:
1.definitions.
As used in this Supplement, the following terms have the following meanings:
“Term Loan G” means an extension of credit to Borrowers by Lender pursuant to this Supplement.
“Term Loan G Maturity Date” means the first to occur of: (1) ____________, 2025; and (2) the date on which Term Loan G is accelerated as provided hereunder, in Term Note G or in the Master Loan Agreement.
“Term Note G” means the Promissory Note of Borrowers in the form of Exhibit A to be executed concurrently with this Supplement.
2.THE CREDIT FACILITY; BORROWING PROCEDURES; INTEREST RATE; and PAYMENTS.
a.Credit Facility. Lender shall make a term loan to the Borrowers, on the Closing Date, in an amount equal to Forty-Three Million Five Hundred Ninety-Eight Thousand Dollars ($43,598,000.00) (“Term Loan G”), subject to the terms and conditions hereof and of the Master Loan Agreement. Term Loan G shall be evidenced by Term Note G, be payable in accordance with the terms of Term Note G and be made by disbursement of Loan proceeds when and as directed by Borrowers. Amounts borrowed and repaid under the Term Loan G may not be reborrowed.
b.Borrowing Procedures. The entire amount of Term Loan G is to be advanced in one single advance on the Closing Date.
c.Interest Rate. The unpaid principal balance of Term Loan g outstanding from time to time shall bear interest for the period commencing on the Closing Date of Term Loan G until such Loan is paid in full. Term Loan G shall accrue interest at a variable rate equal to the LIBOR Rate plus 3.00% per annum and such rate shall be adjusted on the 1st day of each month.
d.Payments. Borrowers shall make the following payments on Term Loan G during the following periods or on the following dates:
(i)No payments of principal or interest shall be due or payable during the period beginning on the Closing Date and ending on __________, 2021. Interest shall accrue on the outstanding balance during such period and such amount shall be capitalized by adding it to the principal amount of Term Loan G at the conclusion of such period.
(ii)Forty-eight (48) consecutive monthly payments of accrued unpaid interest, commencing on __________, 2021, and continuing on the 1st day of each successive month thereafter;
(iii)A principal payment equal to 15% of the outstanding principal balance of Term Loan G on __________, 2023;
(iv)A principal payment equal to 15% of the outstanding principal balance of Term Loan G on __________, 2024; and
(v)A final payment of all outstanding principal and accrued and unpaid interest together with such other amounts as shall then be due and owing from Borrowers to Lender under the Term Loan G on the Term Loan G Maturity Date.
e.Fees.
(i)On or before the Closing Date, Borrowers shall pay to Lender a fee in the amount of Eight Hundred Seventy-One Thousand Nine Hundred Sixty Dollars ($871,960.00).[2% of 43,598,000]
f.Use of Loan Proceeds. Borrowers shall only use the proceeds of Term Loan G for working capital to support operations in the ordinary course of business.
3.CONDITIONS FOR BORROWING.
In addition to all conditions to borrowing set forth in Section 5.1 of the Master Loan Agreement, Lender’s obligation to make the Loan described in this Supplement is subject to the satisfaction or waiver by Lender in writing on or before the Closing Date of such Loan of the following conditions:
a.Lender shall have received the following, all in form, detail and content satisfactory to Lender:
(i)Term Note G duly executed by both Borrowers.
(ii)The Main Street Priority Loan Facility form of Borrower Certifications and Covenants in a form identical to that attached hereto as Exhibit B (the "Borrower Certifications and Covenants") executed by both Borrowers.
(iii)The fee due under Section 2.5 hereof.
(iv)Evidence in a form reasonably acceptable to Lender that Borrowers have the due power and authority to execute and perform this Supplement and Term Note G.
(v)Lender shall have received a Commitment Letter from MS Facilities LLC that it will purchase a participation interest of $41,418,000.00 aggregate principal amount of Term Loan G under the Main Street Program.
4.AFFIRMATIVE COVENANTS.
In addition to all affirmative covenants set forth in Section 6 of the Master Loan Agreement, each Borrower covenants that it will, until Lender’s commitment to extend credit under this Supplement and all Permitted Swap Agreements relating to the credit facility extended under this Supplement have terminated or expired and the promissory note evidencing the credit facility extended under this Supplement, and all fees and expenses payable in connection with the credit facility extended under this Supplement have been paid in full:
a.Quarterly Rolling Cash Flow Coverage Ratio. Maintain, as of the last day of each fiscal quarter beginning with the fiscal quarter ending March 31, 2022, a Quarterly Rolling Cash Flow Coverage Ratio of not less than 1.25 to 1.0. Lender
may determine compliance with this Quarterly Cash Flow Coverage Ratio covenant at any time. [DOES THIS CREATE AMBIGUITY AND ARE ALL OTHER EXISTING CREDIT FACILITIES UNDER THE SAME MEASUREMENT?]
b.Tangible Net Worth. Maintain a Tangible Net Worth of at least Fifteen Million Dollars ($15,000,000.00) at all times. Lender may determine compliance with this Tangible Net Worth covenant at any time.
5.NEGATIVE COVENANTS.
In addition to all negative covenants set forth in Section 7 of the Master Loan Agreement, each Borrower covenants that, without the prior written consent of Lender, Borrowers will not, until Lender’s commitment to extend credit under this Supplement and all Permitted Swap Agreements relating to the credit facility extended under this Supplement have terminated or expired and the promissory note evidencing the credit facility extended under this Supplement, and all fees and expenses payable in connection with the credit facility extended under this Supplement, have been paid in full:
a.[Intentionally Omitted]
6.main street program covenants and provisions.
a.In addition to and not in lieu of the Provisions of Section 7.4 of the Master Loan Agreement, but in all respects subject to the limitations set forth in the second paragraph of this Supplement, the Borrower will not, nor will it permit any subsidiary to, create, incur, assume or suffer to exist any Lien upon any of its property, assets or revenues, whether now owned or hereafter acquired, securing any debt for borrowed money or any obligations evidenced by a bond, debenture, note, loan agreement or other similar instrument, or any guaranty of the foregoing, other than the following:
(i)Liens securing obligations under the MSPLF Loan;
(ii)Liens on real property in connection with loans with respect to which substantially all of the proceeds were used for acquisition, construction, fitout, and/or renovation of the property;
(iii)Junior Liens securing permitted Indebtedness; or
(iv)Liens on receivables assets and related assets incurred in connection with a receivables facility, provided that such debt is secured only by the newly acquired property.
b.If, on any date (such date, a “Trigger Date”), the Board of Governors of the Federal Reserve System or a designee thereof has, after consultation with the Eligible Lender, notified the Eligible Lender in writing that the Borrower has
materially breached, made a material misrepresentation with respect to or otherwise failed to comply with certifications in Section 2 (CARES Act Borrower Eligibility Certifications and Covenants) or Section 3 (FRA and Regulation A Borrower Eligibility Certifications) of the Borrower Certifications and Covenants in any material respect or that any such certification has failed to be true and correct in any material respect, then the Eligible Lender shall promptly so notify the Borrower and the Borrower shall, no later than two (2) Business Days after such Trigger Date, prepay Term Loan G in full, along with any accrued and unpaid interest thereon.
c.In addition to and not in lieu of the provisions of Section 8.1 of the Master Loan Agreement, but in all respects subject to the limitations set forth in the second paragraph of this Supplement, (i) the Borrower or any Subsidiary shall fail to make any payment when due (whether by scheduled maturity, required prepayment, acceleration, demand, or otherwise) in respect of any Indebtedness (other than Indebtedness under the Loan Documents) owing to the ELIGIBLE LENDER or any commonly controlled Affiliate of the ELIGIBLE LENDER, in each case beyond the applicable grace period with respect thereto, if any; or (ii) the Borrower or any Subsidiary shall fail to observe or perform any other agreement or condition relating to any such Indebtedness or contained in any instrument or agreement evidencing, securing or relating thereto, or any other event occurs, the effect of which failure to make a payment, default or other event described in cause (i) or (ii) is to cause such Indebtedness to become due or to be repurchased, prepaid, defeased or redeemed (automatically or otherwise), or an offer to repurchase, prepay, defease or redeem such Indebtedness to be made, prior to its stated maturity; provided that clause (ii) shall not apply to secured Indebtedness that becomes due as a result of the voluntary sale or transfer of the property or assets securing such Indebtedness, if such sale or transfer is permitted hereunder and under the documents providing for such Indebtedness and such Indebtedness is repaid when required under the documents providing for such Indebtedness; provided that, as used in this clause, the term “Indebtedness” shall mean all debt for borrowed money and any obligations evidenced by a bond, debenture, note, loan agreement or other similar instrument, and any guarantee of any of the foregoing.
d.In addition to and not in lieu of the provisions of Section 6.1 of the Master Loan Agreement, but in all respects subject to the limitations set forth in the second paragraph of this Supplement, as soon as available, but in any event within sixty (60) days after the end of each fiscal quarter of the Borrower, the Borrower shall deliver to the Eligible Lender financial reporting in a form and substance reasonably acceptable to the Eligible Lender setting forth the financial information, and where applicable reasonably detailed calculations of the required data, set forth in Exhibit C hereto as at the end of such fiscal quarter of the Borrower, which financial reporting and calculations, in each case, shall be true and accurate in all material respects and, where applicable, present fairly in all
material respects the financial condition of the Borrower for the period covered thereby in accordance with GAAP, consistently applied.
7.Limitation of Guaranties.
Notwithstanding any provision of any Guaranty Agreement relating to any Loan other than Term Loan G which provides or purports to extend such guaranty or indemnity to all Loans, Term Loan G is not and is not intended to be guarantied.
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IN WITNESS WHEREOF, the Parties have executed this Supplement as of the date first written above.
BORROWERS: LENDER:
CONTRAIL AVIATION SUPPORT, LLC OLD NATIONAL BANK
By: By:
Joseph Kuhn Tommy Olson
Its: CEO Its: SVP
CONTRAIL AVIATION LEASING, LLC
By:
Joseph Kuhn
Its: CEO
[Signature Page to Supplement #8 to Master Loan Agreement]
EXHIBIT A
Form of Term Note G
EXHIBIT B
Form of Borrower Certifications and Covenants
EXHIBIT C
Required Financial Reporting
