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Item 1.01
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Entry into a Material Definitive Agreement.
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On March 15, 2018 (the “Agreement Date”), Saker Aviation Services, Inc. (the “Company”) entered into a loan agreement (the “Loan Agreement”) with KeyBank National Association (the “Bank”), pursuant to which the Bank has provided the Company with the following credit facilities:
The Acquisition Loan Facility
Pursuant to a multiple draw demand note dated as of the Agreement Date (the “Acquisition Note”), the Company may, at the discretion of the Bank, borrow up to an aggregate amount of $2,500,000, to be used for the acquisition by the Company of one or more business entities. The Company is required to make consecutive monthly payments of interest, calculated at a rate per annum equal to one-day LIBOR (adjusted daily) plus 2.75%, on any outstanding principal balance under the Acquisition Note from the date of its issuance through September 15, 2018 (the “Conversion Date”).
At any time through and including the Conversion Date, at the Bank
’s discretion, the Company may request that any loan made under the Acquisition Note be converted into a term loan that will be repaid in full, including accrued interest, by consecutive monthly payments over a 48-month Amortization Period beginning after the Conversion Date. For any loan outstanding that is not converted into a term loan in or before the Conversion Date, the Company will also begin making consecutive monthly payments of principal and interest after the Conversion Date, over a 48-month Amortization Period, after which the remaining unpaid principal and accrued interest shall become due and payable.
All loans under the Acquisition Note shall, after the Conversion Date, accrue interest at a rate per annum equal to the Bank
’s four year cost of funds rate plus 2.5%.
The Revolving Loan Facility
Pursuant to a revolving line of credit note dated as of the Agreement Date (the “Revolver Note”), the Company may, at the discretion of the Bank, borrow up to $1,000,000. The Revolver Note is a demand note with no stated maturity date. Borrowings under the Revolver Note will bear interest at a rate per annum equal to one-day LIBOR (adjusted daily) plus 2.75%. The Company will make monthly payments of interest on any outstanding principal balance under the Revolver Note and is required to pay the entire balance, including principal and all accrued and unpaid interest and fees, upon demand by the Bank.
The Term Loan Facility
The Bank has extended a term loan to the Company in the principal amount of $338,481.86, pursuant to a note dated as of the Agreement Date (the “Term Note”). The Company will pay interest on the outstanding principal balance of the Term Note at a fixed rate of 4.85% per annum and is required to repay the outstanding balance of the Term Note in equal consecutive monthly installments of principal and interest over a 48-month period (“Amortization Period”).
Under the Loan Agreement, the Company has covenanted to maintain
a minimum operating cash flow to fixed charges ratio of not less than 1.20 to 1.00. The Company has also covenanted under the Loan Agreement to maintain a total debt to tangible net worth ratio of not more than 2.0 to 1.0 at the end of each fiscal year.
In connection with the Loan Agreement, the Company has granted the Bank a security interest in all of the Company
’s property and assets, pursuant to a security agreement entered into by and between the Company and the Bank on the Agreement Date (the “Security Agreement”).
Each of the Loan Agreement, the Revolver Note, the Term Note, the Acquisition Note and the Security Agreement contains such other terms and conditions customary to similar agreements and instruments.