Creation of a Direct Financial Obligation or an Obligation under an Off
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 Company's 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 Company's acquisition of Small Mine Development, LLC (this pending transaction has previously been disclosed in the Company's 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� the Note or any related transaction document is canceled, terminated, revoked or rescinded without the express prior written consent of Auramet, or any action is commenced to cancel, revoke or rescind the Note or any related transaction document; and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.
Item 8.01 Other Events As described above in Item 1.01, all of the Series A Preferred Shares of the Company have been cancelled or converted into common shares. No Series A Preferred Shares remain outstanding. The Company previously disclosed its obligation to repurchase the Series A Preferred Shares in its Current Report on Form 8-K, as filed with the SEC on March 11, 2008, discussing the severance agreement dated March 10, 2008 (the "Severance Agreement") between the Company, Mr. Kettle and David and Margaret Deeds. The Severance Agreement provided for the repurchase of the Series A Preferred Shares by the Company. Subsequent to the execution of the Severance Agreement, the Series A Preferred Shares held by Mr. and Mrs. Deeds were transferred to Mr. Kettle.
Yes, this is a nail in your coffin if you are short!! Hahahaha. TLR is going to get huge institutional investment once SMD M&A is completed and that is coming just around the corner. I hope you are shorting so heavily that you will be begging us for shares in a month when the deal is done and TLR is the largest publicly traded mining underground services companies in the USA with $150 million plus in 08 revenues and $30-35 million in cash flow.