UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 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 26, 2007
Global Aircraft Solutions, Inc.
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(Exact Name of Registrant as Specified in Charter)
Nevada 000-28575 84-1108499
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(State of Incorporation) (Commission File Number) (IRS Employer
(Identification No.)
P.O. Box 23009 Tucson, AZ 85734
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(Address of principal executive offices)
(520) 294-3481
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(Registrant's telephone number, including area code)
N/A
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(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):
|_| Written communications 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 communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b)).
|_| Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-14(c).
ITEM 1.01. Entry Into a Material Definitive Agreement
On December 20, 2007, Global Aircraft Solutions, Inc. ("Global") and its
subsidiaries Hamilton Aerospace Technologies, Inc. ("HAT"), World Jet
Corporation ("WJ") and Hamilton Aerospace S.A. de C.V. ("HATMEX") (collectively
the "Companies") entered into and closed on three non-convertible secured
debenture financing agreements with two accredited institutional investors
("Holders") in the total amount of $10 million (collectively the "Debentures").
These Debentures consist of (i) one non-convertible senior secured debenture in
the amount of $5 million; (ii) one non-convertible senior secured debenture in
the amount of $3 million; and (iii) one non-convertible junior secured debenture
in the amount of $2 million. The Debentures accrue interest at the rate of 15%
per annum which is payable quarterly in arrears beginning April 1, 2008. The
Debentures also provide for a cash flow recapture to the Holders equal to 60% of
any proceeds related to the sale of Global's aircraft inventory. The Debentures
mature on December 19, 2008.
In connection with the Debentures, the Companies and Holders executed a Pledge
and Security Agreement, Aircraft Security Agreements, Securities Purchase
Agreement, Registration Rights Agreement, and a Post Closing Agreement.
Additionally, Global issued a Warrant (as defined and detailed below) to one
Holder as an inducement to purchase a Debenture. Mr. John B. Sawyer, President
of the Companies, also executed a personal guaranty for $2 million of the
Debentures ("Personal Guaranty"). These transaction documents are attached
hereto as Exhibits to this Form 8-K. Mr. Ian Herman, CEO of the Companies,
executed an identical personal guaranty to Mr. Sawyer for $1 million of the
Personal Guaranty.
Pursuant to the Pledge and Security Agreement and Aircraft Security Agreements,
the Debentures are secured by (a) a first lien on all the current and future
assets of the Companies including any owned aircraft; (b) the equity interests
currently held by Global in HAT, WJ and HATMEX; and (c) the 40% membership
interest of Global in Global Aircraft Leasing Partners, LLC. However, in the
event of default, foreclosure of the foregoing equity and membership interests
held by Global can only be enforced if the foreclosure on all other assets of
the Companies is insufficient to satisfy repayment of the Debentures.
Similar to the foreclosure conditions set forth in the preceding paragraph,
enforcement of the Personal Guaranty cannot occur until and unless the
foreclosure on all other assets of the Companies is insufficient to satisfy
repayment of the Debentures.
As an inducement for Holder Victory Park Master Fund, Ltd. ("Victory Park") to
purchase a Debenture, Global issued Victory Park a 5-year warrant exercisable
into 1,500,000 shares of Global common stock ("Common Stock") at an exercise
price of $0.45 per share ("Warrant"). However, if Victory Park should choose to
exercise the Warrant then it would receive a reduced number of Common Stock
shares based upon the cashless exercise formula contained therein.
The Warrant also contains a contingent obligation which shall be determined
pursuant to a one-time value test on December 20, 2008 ("Test Date"). In the
event that the difference between the Common Stock VWAP (for the 20 trading days
prior to such Test Date) and the exercise price multiplied by the number of
Warrant shares is not at least equal to $750,000 ("Target Value"), then Global
will be obligated to issue an additional warrant to Victory Park. If Global is
obligated to issue an additional warrant (such warrant will contain identical
terms and provisions as the Warrant set forth above), that warrant shall be
exercisable into that number of Common Stock shares that would cause the
additional warrant and the Warrant combined to equal the Target Value, but in no
event shall the additional warrant be exercisable into more than 500,000 warrant
shares.
Under the Registration Rights Agreement, Victory Park cannot request Global to
register the underlying warrant shares for at least six months after the closing
date. After June 20, 2008, Victory Park can request that Global commence the
process to register the warrant shares. If Global is required to register the
warrant shares subsequent to June 20, 2008, Global will be obligated to file a
registration statement within 45 days of such request and cause the registration
statement to become effective within 270 days of filing. In the event Global is
asked to file a registration statement and fails to comply with the filing and
effectiveness deadlines as set forth above, Global will be obligated to pay
Victory Park liquidated damages in the amount of 2% of the total amount of the
Debentures each and every month until Global satisfies the filing and/or
effectiveness requirements.
The Post Closing Agreement allows the Companies to complete certain conditions
of closing within certain time frames subsequent to closing and subjects the
Companies to an event of default should the Companies fail to meet such
conditions within the time frames set forth in the Post Closing Agreement.
Upon the occurrence of certain events of default as defined in the Debentures
and the Post Closing Agreement, including events of default under the
transaction documents related to the Debentures, the full principal amount of
the Debentures, together with interest and other amounts owing become
immediately due and payable. Moreover, an event of default also subjects the
assets of the Companies and the equity and membership interests as well as the
Personal Guaranty to foreclosure pursuant to the order of foreclosure and
enforcement as outlined in the third and fourth paragraphs of this Item 1.01.
Proceeds of the Debentures will be utilized to satisfy and terminate the
Companies' existing credit facility ($5,052,336.26) and other existing
indebtedness as well as to pay down certain trade accounts and fund working
capital.
Pursuant to the closing of this transaction, the Companies incurred a closing
fee equal to 3% of the Debentures and legal and accounting costs.
ITEM 2.03 Creation of a Direct Financial Obligation or an Obligation under an
Off-Balance Sheet Arrangement of a Registrant
The disclosure provided in Item 1.01 of this Form 8-K is hereby incorporated by
reference into this Item 2.03.
ITEM 3.02 Unregistered Sales of Equity Securities
The disclosure provided in Item 1.01 of this Form 8-K is hereby incorporated by
reference into this Item 3.02. The issuance of the Debentures, Warrant and
Warrant Shares are exempt from registration under the Securities Act of 1933, as
amended, pursuant to Rule 506 promulgated thereunder.
ITEM 3.03 Material Modification to Rights of Security Holders
Certain current outstanding warrants of Global include a price adjustment
feature entitling the holder thereof to a price adjustment of their existing
warrant to the price of any subsequently issued warrant should Global issue new
warrants with an exercise price lower than certain current outstanding warrants.
As a consequence of the issuance of the Warrant at an exercise price of $0.45
per share as set forth in Item 1.01, Global is obligated to re-issue new price
adjusted warrants to certain existing warrant holders as follows:
Warrants representing 1,040,866 shares of Global common stock at an original
exercise price of $1.00 per share will be reduced to an exercise price of $0.45
per share and maintain an expiration date of September 2, 2009. Warrants
representing 1,137,020 shares of Global common stock at an original exercise
price of $1.36 will be reduced to an exercise price of $0.45 per share and
maintain an expiration date of September 2, 2009
ITEM 9.01. Financial Statements and Exhibits
(a) None
(b) None
(c) Exhibits
Exhibit No. Document
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4.1 Form of Senior Secured Debentures dated December 20, 2007
4.2 Form of Junior Secured Debenture dated December 20, 2007
4.3 Securities Purchase Agreement dated December 20, 2007
4.4 Warrant dated December 20, 2007
4.5 Registration Rights Agreement dated December 20, 2007
4.6 Post Closing Agreement dated December 20, 2007
10.1 Pledge and Security Agreement dated December 20, 2007
10.2 Form of Aircraft Security Agreement dated December 20, 2007 used
to secure all subject aircraft
10.3 Personal Guaranty dated December 20, 2007
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: December 26, 2007
Global Aircraft Solutions, Inc.
(Registrant)
By: /s/ John B. Sawyer
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Name: John B. Sawyer
Title: President