On April 27, 2012, we entered into a $10,000,000 senior secured note purchase agreement (“Note Purchase Agreement”) with Apollo Investment Corporation (“Apollo”). The Notes, which mature on April 27, 2015, are secured by substantially all of the assets of the company, including a mortgage on all of our Oklahoma leases. The Notes have an interest rate of Libor plus fifteen percent (15%) with a Libor floor of 2.0%, with interest payable in cash monthly.
In addition, Apollo received a warrant to purchase 1,496,843 shares of common stock, $0.0001 par value, exercisable at $0.01 per share with an expiration date of April 27, 2017. Minimum draw downs on the Note Purchase Agreement are $1,000,000. At closing, we did not draw down any funds. At closing, we paid $100,000 placement fee, to CC Natural Resource Partners, LLC (“CCNRP”) and issued a warrant to purchase 250,000 shares of common stock, $0.0001 par value, exercisable at $0.01 per share with an expiration date of April 27, 2014. We will pay CCNRP an additional placement fee of 4.0% of the amount drawn, once we have drawn $2,500,000 under the Note Purchase Agreement.
On April 17, 2011, we issued a $2,500,000 secured promissory note (“Secured Promissory Note”) to Boothbay Royalty Co., (“Boothbay”) for gross proceeds of $2,500,000. The Secured Promissory Note matures April 17, 2013 and has an 18% interest rate, payable in cash monthly. In addition, Boothbay received 400,000 shares of common stock, $0.0001 par value, a 1.5% overriding royalty on our leases in section 29, township 17 North, range 3 in Logan County, Oklahoma and a 1.7143% overriding royalty on our leases in section 36, township 19 North, range 4 West in Logan County, Oklahoma. The Secured Promissory Note is secured by a First Mortgage (with Power of Sale), Security Agreement and Financing Statement (“Mortgage”), and other collateral documents of even date covering a 5% overriding royalty interest, proportionately reduced, in all of the Company’s leases in Logan County, Oklahoma.
