Air T, Inc. completed the acquisition of two (2) CFM56-5B3/SP engines. The engines were the first and second engines of eight (8) engines to be purchased pursuant to the purchase agreement dated January 19, 2022 reported in Air T, Inc's Current Report on Form 8-K dated January 24, 2022. The transaction value for the purchase of the two engines exceeded $5,000,000.

The purchase continues Contrail's business of purchasing aircraft and/or aircraft engines for the purpose of leasing or disassembling them and selling them for parts. CAS obtained the funds necessary to fund the acquisition of the eight (8) engines to be purchased pursuant to the January 19, 2022 purchase agreement from Old National Bank. On February 18, 2022, CAS and Old National Bank entered into Supplement #9 to the Master Loan Agreement dated June 24, 2019 and Term Note H. Term Note H is a multiple advance term loan in the principal amount of $14,875,000.

The loan bears a variable interest rate at the Wall Street Journal prime rate plus 0.75% and requires 18 monthly payments of interest until the loan maturity date of August 18, 2023. Principal reduction payments are due monthly in an amount equal to 100% of the amount of the gross sales proceeds collected that are derived from any of the engines or any component sold during the prior month. The loan is secured by a first lien on the engines acquired and to be acquired with the loan proceeds and may be prepaid without penalty.

The loan includes a quarterly rolling cash flow coverage ratio covenant and a tangible net worth covenant.