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AAIR > SEC Filings for AAIR > Form 8-K on 6-Dec-2012All Recent SEC Filings

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Form 8-K for AVANTAIR, INC


6-Dec-2012

Entry into a Material Definitive Agreement, Creation of a Direct Financial Obligati


Item 1.01 Entry into a Material Definitive Agreement.

Senior Secured Convertible Promissory Notes and Warrants

On November 30, 2012, Avantair, Inc. (the "Company") entered into a Note and Warrant Purchase Agreement (the "Purchase Agreement") providing for the issuance of an aggregate of up to $10.0 million in principal amount of senior secured convertible promissory notes (the "Notes") and warrants to purchase up to an aggregate of 40,000,000 shares of the common stock (the "Warrants") at an initial and additional closings (the "Financing"). At the initial closing, which occurred on November 30, 2012, the Company issued an aggregate of $2.8 million in aggregate principal amount of Notes and warrants to purchase an aggregate of 11,200,000 shares to certain members of, and an affiliate of a member of, the Company's Board of Directors (the "Holders"). The securities offered will not be and have not been registered under the Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements.

The Senior Secured Convertible Promissory Notes

The Notes will bear interest at an initial rate of 2.0% per annum. If the Company is unsuccessful in obtaining stockholder approval by March 31, 2013 to increase the Company's authorized shares of common stock so that a sufficient number of shares are reserved for the conversion of the Notes, then the interest rate will increase to 12.0% per annum until such stockholder approval is obtained. The Company has agreed to use best efforts to obtain such stockholder approval.

Holders of the Notes may optionally elect to convert all outstanding principal and accrued but unpaid interest on the Notes into shares of common stock at a conversion price of $0.25 per share. To the extent that there are not adequate authorized shares of common stock to effect the optional conversion, the Holders of Notes who elect to convert may convert Notes representing a portion of the number of authorized shares of common stock available for issuance upon such conversion. The Company may prepay the Notes on or after the second anniversary of the issuance of the Notes upon 30 days written notice to the Holders of the Notes.

The principal amount of the Notes plus accrued interest will be due and payable three years after the issuance date of the Notes, or November 30, 2015, unless the Notes are earlier converted or an event of default or liquidation event occurs. An "event of default" occurs, in certain cases following a cure period or declaration by the Holders, if: the Company's fails to pay any principal or interest when due under the Note; the Company materially breaches any covenant, representation or warranty under the Financing documents; certain bankruptcy related events occur; the Company admits in writing that it is generally unable to pay its debts as they become due; or the Company ceases the operation of its business without the consent of Holders of a majority of the Notes. Upon an event of default, in such case following any applicable cure period or applicable declaration by the Holders, or liquidation event, the Notes will become due and payable.

In addition, Holders of the Notes are entitled to certain anti-dilution protections for issuances of certain securities of the Company at a price less than 75% of the then current conversion price.

Warrants to Purchase Common Stock

The Warrants to purchase common stock are initially exercisable at an exercise price of $0.50 per share, which exercise price is subject to certain anti-dilution protections for issuances of certain securities of the Company at a price less than 75% of the then current exercise price. The Warrants are not exercisable, however, unless a sufficient number of authorized shares of common stock are available for the exercise of the Warrants. The Company has agreed to use best efforts to obtain stockholder approval to increase the number of authorized shares so that a sufficient number will be reserved for issuance upon exercise of the Warrants. Each Warrant expires on the date that is five years following the date the Warrant is issued, or November 30, 2017.

Security Agreement

In connection with the Financing, on November 30, 2012 the Company entered into a Security Agreement


with Barry Gordon, a director of the Company, to serve as the initial collateral agent under the Security Agreement on behalf of the Holders. Under the Security Agreement, the Company granted to the Holders of the Notes a first priority security interest in substantially all of the assets of the Company that are not otherwise encumbered and excluding all aircraft, fractional ownership interests in aircraft, restricted cash, deposits on aircraft and flight hour cards.

Registration Rights Agreement

In connection with the Financing, on November 30, 2012, the Company entered into a Registration Rights Agreement with the Holders of the Notes and Warrants pursuant to which the Company has agreed to register under the Securities Act of 1933, as amended, the shares of common stock issuable upon conversion of the Notes. The Company is required to file such resale registration statement on Form S-1 (or Form S-3 if the Company is eligible to use Form S-3) under most circumstances within 180 days after January 15, 2013. If the Company has not obtained stockholder approval to increase the number of authorized shares of . . .



Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.

The disclosure set forth above under Item 1.01 is hereby incorporated by reference into this Item 2.03.



Item 3.02 Unregistered Sale of Equity Securities.

The disclosure set forth above under Item 1.01 is hereby incorporated by reference into this Item 3.02.



Item 7.01 Regulation FD Disclosure.

On December 6, 2012, the Company delivered an investor presentation (the "Investor Presentation") to certain investors and on December 6, 2012, the Company issued a press release announcing the initial closing of the Financing (the "Press Release"). The Investor Presentation and the Press Release are attached as Exhibits 99.1 and 99.2 hereto and are incorporated by reference into this Item 7.01.

The information provided pursuant to this Item 7.01 shall not be deemed "filed" for purposes of Section 18 of the Exchange Act or otherwise subject to the liabilities of that section, and shall not be incorporated by reference into any filing or other document filed by the Company pursuant to the Securities Exchange Act of 1934, as amended, or the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing or document. The information provided pursuant to this Item 7.01 shall instead be deemed "furnished."



Item 9.01 Financial Statements and Exhibits.

(d) Exhibits.

10.1    Note and Warrant Purchase Agreement, dated as of November 30, 2012, by and
        among the Company and the purchasers named therein.

10.2    Form of Senior Secured Convertible Promissory Note issued by the Company.

10.3    Form of Warrant issued by the Company.


--------------------------------------------------------------------------------
10.4     Security Agreement, dated as of November 30, 2012, by and among the
         Company and Barry Gordon, as Collateral Agent.

10.5     Registration Rights Agreement, dated as of November 30, 2012, by and
         among the Company and the investors party thereto.

10.6     Amendment No. 1 to Restricted Stock Agreement, dated as of November 30,
         2012, issued by the Company to LW Air.

10.7     Warrant issued by the Company to LW Air on November 30, 2012.

10.8     Amendment No. 1 to Amended and Restated Warrant, dated as of November 30,
         2012, issued by the Company to Lorne Weil.

10.9     Amended and Restated Restricted Stock Agreement, dated as of November 30,
         2012, issued by the Company to Hugh Fuller.

10.10    Warrant issued by the Company to Hugh Fuller on November 30, 2012.

10.11    Warrant issued by the Company to Hugh Fuller on November 30, 2012.

10.12    Amendment No. 1 to the N180HM Aircraft Lease Agreement, dated as of
         November 30, 2012, by and among the Company and Clear Aircraft, Inc.

99.1     Avantair, Inc. Investor Presentation, dated December 6, 2012.

99.2     Press Release announcing the initial closing of the Financing, dated
         December 6, 2012.


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