27-Jul-2011
Entry into a Material Definitive Agreement, Creation of a Direct Financing
Item 1.01. Entry Into a Material Definitive Agreement
On July 21, 2011, Great American Group, LLC ("GAG"), a wholly owned subsidiary of Great American Group, Inc. (the "Company"), entered into a Loan Agreement (the "Loan Agreement") with Dialectic Capital Partners, LP, Dialectic Offshore Ltd., Dialectic Antithesis Partners, LP and Dialectic Antithesis Offshore Fund, Ltd. (collectively, the "Lender") and Dialectic Capital Management, LLC as Collateral Agent. The Loan Agreement provides for the loan of $7,000,000 to GAG pursuant to a promissory note (the "Note") with a stated principal amount of $7,608,696 (the "Maturity Value"). No interest is due on the loan until after November 1, 2011, at which time the Note begins to accrue interest at a rate of 14%, payable quarterly on the last day of January, April, July and October. The final maturity date of the Note is July 31, 2013. The Note may be prepaid at any time with no penalty.
The loan will be used to fund a portion of GAG's obligations in connection with its participation in a liquidation transaction. The Loan Agreement also provides for profit participation payments to the Lender up to a maximum of 5% of the Maturity Value (approximately $380,000).
GAG's obligations under the Loan Agreement are subordinated to the Company's indebtedness under the First Amended and Restated Credit Agreement, dated as of December 8, 2010, between Great American Group WF, LLC, GA Asset Advisors Limited and Wells Fargo Bank, National Association, and are senior to other GAG indebtedness.
The Note is attached hereto as Exhibit 4.1 and is incorporated herein by reference. The foregoing description of the Note does not purport to be complete and is qualified in its entirety by reference to the full text of the Note.
Form 8-K: http://www.sec.gov/Archives/edgar/data/1464790/000119312511210615/d8k.htm
Promissory Note: http://www.sec.gov/Archives/edgar/data/1464790/000119312511197822/dex41.htm