SUBORDINATED REVOLVING LINE OF CREDIT AGREEMENT
Exhibit
10.5
SUBORDINATED
REVOLVING
This
Subordinated Revolving Line of Credit Agreement dated as of October 4, 2007
(this “Agreement”)
is
entered into by and between FMG Acquisition Corp., a Delaware corporation
(“Borrower”),
and
FMG Investors LLC, a Connecticut limited liability company (“Lender”),
with
reference to the following facts.
(a) Borrower
has been organized for the purpose of effecting a merger, capital stock
exchange, asset acquisition or other similar business combination with an
operating business (a “Business
Combination”).
(b) Borrower
proposes to: (a) make a public offering (the “Public
Offering”)
of its
securities pursuant to a registration statement (the “Registration
Statement”)
filed
with and to be declared effective by the Securities and Exchange Commission
(the
“SEC”);
(b) deposit the proceeds from the Public Offering into a trust account (the
“Trust
Account”)
for
the benefit of the purchasers of securities in the Public Offering, net of
offering costs, underwriting discounts and $1,200,000 of interest earned on
such
proceeds, together with $100,000 to be held outside of the Trust Account, to
be
used for general corporate purposes (such $1,300,000, the “Non-Trust Funds”), to
be held and disbursed in accordance with the terms of the Investment Management
Trust Agreement to be entered into between Borrower and Continental Stock
Transfer & Trust Company as trustee (the “Trust
Agreement”);
and
(c) utilize the funds in the Trust Account in connection with a Business
Combination.
(c)
Borrower may need funds (i) to pay costs and expenses prior to consummation
of a
Business Combination or (ii) to pay costs, expenses and claims in connection
with Borrower’s dissolution and the liquidation of Borrower and the Trust
Account to its public stockholders.
(d) On
the terms and subject to the conditions set forth in this Agreement, Lender
is
willing to make available to Borrower a revolving line of credit to pay certain
costs and expenses that may arise prior to a Business Combination or to pay
costs, expenses and claims in connection with Borrower’s dissolution and the
liquidation of the Trust Account to its public stockholders (the “Loan”).
1. The
Loan
1.1 If
the Non-Trust Funds are insufficient for the Borrower’s working capital purposes
(including the payment of costs, expenses and claims in connection with
Borrower’s dissolution and the liquidation of Borrower and the distribution of
the Trust Account to its public stockholders), then Lender agrees to make
advances to Borrower, and Borrower agrees to repay such advances, from time
to
time in accordance with the terms and conditions of this Agreement and the
form
of revolving promissory note attached hereto as Exhibit A (the
“Note”);
provided, however, that notwithstanding anything to the contrary in this
Agreement, at no time shall the aggregate of all advances and readvances
outstanding under the Loan at any time exceed $250,000.
This
Agreement and the Note are each sometimes referred to in this Agreement
individually as a “Loan
Document,”
and
are sometimes collectively referred to as the “Loan
Documents.”
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1.2 Lender’s
obligation to make advances shall expire upon the first to occur
of the
following:
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| 1.2.1 |
Upon
a material breach or default of any representation, warranty or agreement
of Borrower that is not cured or corrected within 20 days of notice
of
such breach from Lender;
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| 1.2.2 |
Upon
consummation of a Business
Combination;
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1.2.3 If
no Business Combination is consummated, after the completion of the liquidation
of the Trust Account and Borrower’s completed and fully implemented dissolution
and distribution;
1.2.4
Thirty days after Borrower provides written notice to Lender of its termination
of this Agreement and the Loan facility, and the payment of all amounts due
hereunder to Lender.
2. Conditions
of Advances. Upon
reasonable advance request from Borrower, Lender shall make advances to or
as
directed by Borrower, provided that each and all of the following conditions
is
satisfied:
| 2.1 |
Borrower
shall have executed and delivered the Note to Lender, as
applicable;
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| 2.2 |
The
aggregate amount of outstanding advances following such advance
shall not
exceed $250,000;
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2.3The
representations and warranties of Borrower in the Loan Documents shall be
true
and correct in all material respects;
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Borrower
shall have complied in all material respects with each of its agreements
in the Loan Documents;
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| 2.5 |
The
advances shall be used only for such purposes as are set forth
in
Section 4.1 of this Agreement;
and
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| 2.6 |
Borrower
shall have completed the Public
Offering.
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3. Borrower
Representations
3.1 Borrower
represents and warrants as follows:
3.1.1 Borrower
has full power and authority to execute and deliver this Agreement and the
other
Loan Documents to be executed and delivered by it pursuant hereto and to perform
its obligations hereunder and thereunder. This Agreement and such Loan Documents
constitute the valid and legally binding obligations of the Borrower and are
enforceable against Borrower in accordance with their terms.
3.1.2 Neither
the execution and the delivery of the Loan Documents by Borrower, nor the
consummation of the transactions contemplated by the Loan Documents,
nor the borrowing by Borrower, will (a) violate any constitution,
statute, regulation, rule, injunction, judgment, order, decree, ruling, charge,
or other restriction of any government, governmental agency, or court to which
Borrower is subject or any provision of the Amended and Restated Certificate
of
Incorporation or Bylaws of Borrower, or (b) conflict with, result in a
breach of, constitute a default under, result in the acceleration of, create
in
any entity or natural person (each, a “Person”)
the
right to accelerate, terminate, modify, or cancel, any agreement, contract,
lease, license, instrument, or other arrangement to which Borrower is a party
or
by which it is bound or to which any of its assets are subject (or result in
the
imposition of any security interest upon any of its assets), in each case other
than where such violation, conflict, breach, default, acceleration or creation
of right would not reasonably be expected to have a material adverse effect
on
the ability of Borrower to repay amounts due under the Note in accordance with
the terms of the Loan Documents. (a “Material
Adverse Effect”).
3.1.3 Borrower
does not need to give any notice to, make any filing with, or obtain any
authorization, permit, certificate, registration, consent, approval or order
of
any government or governmental agency in order for the parties to consummate
the
transactions contemplated by this Agreement, except where the failure would
not
reasonably be expected to have a Material Adverse Effect.
3.1.4 The
conditions to the obligation of Lender to make the advance, as set forth in
Section 2, shall be satisfied.
3.2 Each
and every representation and warranty made by Borrower in this Agreement shall
be deemed renewed and remade upon the making of each and every advance or
readvance under the Note that Lender may make.
4. Borrower
Covenants. For
as long as Lender shall have a commitment to make advances or there shall be
any
outstanding balance on the Loan, without the prior consent of Lender, Borrower
shall:
4.1 use
the proceeds of any advance made hereunder only for (i) ordinary and reasonable
operating costs and expenses during the period Borrower seeks to identify,
investigate, negotiate and consummate a Business Combination, including
Borrower’s reporting obligations with the SEC, the audit and review of
Borrower’s financial statements, identifying and investigating potential targets
for a Business Combination, deposits, down payments or funding of “no-shop”
provisions in connection with a particular Business Combination, negotiating
and
closing the Business Combination, legal and other professional fees and
expenses, fees, salaries and compensation for directors, officers, employees,
consultants and advisors, and insurance premiums or (ii) to pay claims of
vendors, prospective target businesses or other entities related to 4.1(i)
and
any costs or expenses incurred in connection with Borrower’s dissolution and the
liquidation of Borrower and the distribution of the Trust Account to its public
stockholders;
4.2 not declare or pay any dividend or distribution with respect to,
or repurchase or redeem any shares of, the capital stock of Borrower, provided
that this shall not prohibit payments from the Trust Account to stockholders
of
Borrower in accordance with the Trust Agreement;
4.3 not
engage in any business other than identifying, investigating, negotiating and
closing a Business Combination;
4.4 not
make any material capital expenditure or purchase any material property or
asset
(other than office supplies and equipment); and
4.5 upon
request of Lender, provide to Lender copies of all filings with the Securities
and Exchange Commission.
5. No
Recourse to Trust Account
Lender,
on behalf of itself and its successors and assigns, hereby acknowledges and
agrees that under no circumstance shall Lender have any right, title or interest
in or to any of the funds in the Trust Account, notwithstanding the fact that
such funds were received for the purchase and sale of securities of Borrower,
or
any funds distributed from the Trust Account other than in a Business
Combination Distribution (as defined below), and that their sole recourse for
repayment of any and all amounts due under the Note shall be against the assets
or properties of Borrower never deposited into the Trust Account or distributed
to Borrower from the Trust Account in a Business Combination Distribution.
Lender hereby irrevocably waives any claim it might have to funds in the Trust
Account, and any funds distributed from the Trust Account other than in a
Business Combination Distribution, at law or in equity, agree not to make any
such claim, and agree to indemnify and hold Borrower harmless from any such
claim made by or on behalf of Lender. For purposes of this Section 5, a
“Business
Combination Distribution”
means
a
distribution from the Trust Account in connection with the consummation of
a
Business Combination pursuant to the Trust Agreement.
6. Events
of Default. The
occurrence of any of the following shall constitute an event of default (an
“Event
of Default”)
hereunder and under each and every other Loan Document:
6.1 The
Borrower shall fail to pay any principal or any other amount as and when due
and
payable under any Loan Document;
6.2 Any
representation or warranty which is made or deemed made in any Loan Document
by
the Borrower shall prove to have been incorrect or misleading in any material
respect on or as of the date made or deemed made or remade;
6.3 The
Borrower shall fail to perform or observe any term, provision, covenant, or
agreement contained in any Loan Document to be performed or observed by the
Borrower (other than any payment obligation) and such failure shall continue
more than 20 days after notice thereof from Lender;
6.4 The
Borrower shall (a) generally not, or be unable to, or admit in writing its
inability to, pay its debts as such debts become due, only after the Company
has
borrowed the entire $250,000 pursuant hereto; or (b) make an assignment for
the benefit of creditors, or petition or apply to any tribunal for the
appointment of a custodian, receiver, or trustee for it or a substantial part
of
its assets; or (c) commence any proceeding under any bankruptcy,
reorganization, arrangement, readjustment of debt, dissolution, or liquidation
law or statute of any jurisdiction, whether now or hereafter in effect; or
(d) have any such petition or application filed or any such proceeding
commenced against it in which an order for relief is entered or adjudication
or
appointment is made and which remains undismissed for a period of 30 days or
more; or (e) by any act or omission to act indicate consent to, approval
of, or acquiescence in any such petition, application, or proceeding, or order
for relief, or the appointment of a custodian, receiver or trustee for all
or
any such substantial part of its properties; or (f) suffer any such
custodianship, receivership, or trusteeship for all or any substantial part
of
its properties; or (g) suffer any such custodianship, receivership, or
trusteeship to continue undischarged for a period of 30 days or more;
provided,
however,
that
the adoption of a plan of dissolution and distribution and its implementation
by
the Borrower’s Board of Directors due to the failure of Borrower to complete a
Business Combination shall not in any instance be deemed an Event of Default
hereunder; or
6.5 At
any time after execution and delivery of this Agreement, and whether or not
due
to any fault of Lender, any Loan Document shall cease to be in full force and
effect and enforceable in accordance with its terms, or shall be declared null
and void.
7. Consequences
of Default. If
an Event of Default shall occur, Lender:
7.1 shall
have no further obligation to make advances under the Loan Documents;
and
7.2 may
declare the Note and all amounts payable under this Agreement and any other
Loan
Document to be forthwith due and payable, whereupon the Note and all such
amounts shall become and be forthwith due and payable, without presentment,
demand, protest, or further notice of any kind, all of which are hereby
expressly waived by Borrower.
8. Miscellaneous
Provisions
8.1 Notices. All
notices, requests, demands and other communications (collectively, “Notices”)
given
pursuant to this Agreement shall be in writing, and shall be delivered by
personal service, courier, facsimile transmission or by United States first
class, registered or certified mail, addressed to the following addresses:
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If
to Borrower:
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Xxxx
Xxxxxx Xxxx
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Xxxxxxxxx,
XX 00000
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Facsimile:
(000)
000-0000
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If
to Lender:
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FMG
Investors LLC
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Xxxx
Xxxxxx Xxxx
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Xxxxxxxxx,
XX 00000
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Facsimile:
(000)
000-0000
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Any
Notice, other than a Notice sent by registered or certified mail, shall be
effective when received; a Notice sent by registered or certified mail, postage
prepaid return receipt requested, shall be effective on the earlier of when
received or the third day following deposit in the United States mails (or
on
the seventh day if sent to or from an address outside the United States). Any
party may from time to time change its address for further Notices hereunder
by
giving notice to the other party in the manner prescribed in this Section.
8.2 No
Waivers; Remedies Cumulative.
No
failure or delay by a party in exercising any right, power or privilege
hereunder shall operate as a waiver thereof, nor shall any single or partial
exercise thereof preclude any other or further exercise thereof or the exercise
of any other right, power or privilege. The rights and remedies provided herein
shall be cumulative and not exclusive of any rights or remedies provided by
law.
8.3 Amendments
and Waivers.
Any
provision of this Agreement may be amended or waived if, but only if, such
amendment or waiver is in writing and is signed by Borrower and Lender.
8.4 Successors
and Assigns.
Borrower may not assign its right or duties hereunder without the prior written
consent of Lender, which consent Lender may deny, withhold or delay in its
sole
and absolute discretion.
8.5 Governing
Law.
This
Agreement has been made and entered into in the State of Delaware and shall
be
construed in accordance with the laws of the State of Delaware without giving
effect to the principles of conflicts of law thereof.
8.6 Prior
Understandings.
This
Agreement supersedes all prior understandings and agreements (whether written,
oral or otherwise) pertaining to the subject matter hereof, and constitutes
the
entire agreement between the parties hereto relating to the subject matter
hereof and the transactions provided for herein.
8.7 Counterparts.
This
Agreement may be executed in any number of counterparts each of which shall
be
deemed an original and all of which shall constitute one and the same agreement
with the same effect as if all parties had signed the same signature page.
The
parties shall accept facsimile signatures as the equivalent of original ones.
8.8 Severability.
If any
provision of this Agreement or the application of such provision to any Person
or circumstance will be held invalid, the remainder of this Agreement or the
application of such provision to Persons or circumstances other than those
to
which it is held invalid will not be affected thereby.
8.9 Additional
Documents and Acts.
Borrower shall execute and deliver such additional documents and instruments
and
shall perform such additional acts as may be necessary or appropriate to
effectuate, carry out and perform all of the terms, provisions, and conditions
of this Agreement and the transactions contemplated by this Agreement.
8.10 Survival.
All
indemnities, rights, remedies, representations and warranties contained herein
shall survive the expiration or termination of this Agreement, and no
termination or expiration hereof shall relieve either party from liability
for
any breach of this Agreement.
[SIGNATURE
PAGE FOLLOWS]
IN
WITNESS WHEREOF, the parties have executed and delivered this Agreement to
one
another as of the date first above written.
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BORROWER:
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By:
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/s/
Xxxxxx Xxxxx
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Xxxxxx
Xxxxx
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Chief
Executive Officer
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LENDER:
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FMG
INVESTORS LLC
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By:
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/s/
Xxxxx X. Xxxxx, Xx.
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Xxxxx
X. Xxxxx, Xx.
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Managing
Member
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EXHIBIT
A
REVOLVING
LINE OF CREDIT NOTE
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Not
to Exceed $250,000 in Principal
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___________,
2007
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For
value
received, the undersigned FMG
ACQUISITION CORP.,
a
Delaware corporation (“Borrower”),
promises to pay, in lawful money of the United States, to the order of
FMG
INVESTORS LLC,
together with its successors and assigns (“Holder”),
at
such address as Holder may direct, the principal sum of Two Hundred Fifty
Thousand Dollars ($250,000), without interest, or so much thereof as shall
have
been advanced and shall remain unpaid hereunder.
This
Note
is delivered pursuant to, and is subject to all of the terms and conditions
of,
that certain Amended and Restated Subordinated Revolving Line of Credit
Agreement dated as of ________, 2007 (the “Loan
Agreement”)
between Borrower and Holder. Unless otherwise defined in this Note, capitalized
terms used in this Note shall have the meanings ascribed to them in the Loan
Agreement, and in the event of any conflict between the terms of this Note
and
the terms of the Loan Agreement, the terms of the Loan Agreement shall govern.
1. Maturity. This
Note shall mature and become due and payable upon the earlier of an Event of
Default (after the expiration of any cure period), upon consummation of a
Business Combination or as described in Section 1 of the Loan Agreement.
2. Prepayment. This
Note may be repaid in whole or in part at any time without penalty or premium.
3. Event
of Default. Should
an Event of Default occur, Lenders shall have the rights set forth in
Section 7 of the Loan Agreement.
4. Borrower’s
Acknowledgement. Borrower
acknowledges that Holder is extending the credit contemplated hereby solely
as
an accommodation to Borrower, and is willing to do so in reliance upon
Borrower’s monetary and non-monetary covenants contained herein and in the Loan
Agreement.
5. Holder’s
Acknowledgement. The
Holder acknowledges and agrees that, as specified in Section 5 of the Loan
Agreement, the Holder has limited recourse against Borrower for repayment of
any
and all amounts due and owing under this Note.
6. Miscellaneous. If
this Note (or any payment due hereunder) is not paid when due, Borrower promises
to pay all costs and expenses of collection and reasonable attorneys’ fees
incurred by the Holder hereof on account of such collection whether or not
suit
is filed hereon. Borrower consents to renewals, replacements and extensions
of
time for payment hereof, before, at, or after maturity, consents to the
acceptance, release or substitution of security for this Note, and waives demand
and protest. The indebtedness evidenced hereby shall be payable in lawful money
of the United States. In any action brought under or arising out of this Note,
Borrower, including successor(s) or assign(s), hereby consents to the
application of Delaware law, to the jurisdiction of any competent court within
the State of Delaware, and to service of process by any means authorized by
Delaware law. No single or partial exercise of any power hereunder, or under
any
other Loan Document in connection herewith, shall preclude other or further
exercises thereof or the exercise of any other such power.
IN
WITNESS WHEREOF, Borrower has executed and delivered this Note as of the date
first above written.
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By :
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/s/
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Name:
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Xxxxxx
Xxxxx
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Title:
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Chief
Executive Officer and President
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