This excerpt taken from the TLR 8-K filed Jul 3, 2008.
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant
On June 27, 2008, the Company entered into a Promissory Note with Auramet. The following is a summary of the material terms of the Note:
Security. The Companys obligations under the Note are secured by (1) the guaranty of Kettle Drilling, Inc. (Kettle Drilling), a wholly-owned subsidiary of the Company, and (2) a pledge by the Company of all of the shares held by it in Kettle Drilling.
Interest. The Note bears interest at 12% and shall be paid monthly in arrears commencing on August 1, 2008.
Maturity. The $8.0 million principal is due on October 27, 2008.
Prepayments. The Company may make prepayments on the Note in increments of $250,000. The Company also must make mandatory prepayments on the Note if the Company or Kettle Drilling issue any debt or equity, other than certain permitted issuances, including but not limited to, raising funds through the issuance of debt or equity to complete the Companys acquisition of Small Mine Development, LLC (this pending transaction has previously been disclosed in the Companys preliminary proxy statement filed with the Securities and Exchange Commission (the SEC) on June 11, 2008). The Company must also make a mandatory prepayment in the event of a change in control.
Events of Default. Events of Default under the Note include:
· failure to make a scheduled payment of principal or interest or other amount payable by the Company in accordance with the Note terms;
· any representation or warranty made by the Company or Kettle Drilling in connection with the Note or related documents shall prove to have been materially incorrect when made;
· bankruptcy or insolvency related defaults;
· inability of the Company or Kettle Drilling to pay its debts as they become due;
· the Note or any related transaction document is canceled, terminated, revoked or rescinded without the express prior written consent of Auramet, or any action is commenced to cancel, revoke or rescind the Note or any related transaction document; and
· any judgment for payment of money in excess of $100,000 is rendered against the Company or Kettle Drilling and remains undischarged for 30 days or any legal action is taken by a judgment creditor to attach or levy upon any assets of the Company or Kettle Drilling to enforce any such judgment.
Upon an Event of Default, Auramet may declare the balance of the Note then outstanding to be due and payable in full, together with accrued interest thereon and all fees and other obligations of the Company accrued under the Note. From and after the occurrence of an Event of Default, the Note will bear interest at a rate of 15% per annum.
The foregoing description of the Note is not a complete description of the terms and conditions of the Note and is qualified in its entirety by reference to the full text of the Note, which is filed as Exhibit 10.32 hereto and incorporated herein by reference.