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Long-Term Obligations
9 Months Ended
Sep. 30, 2011
Long-Term Obligations
Note 8.  Long-Term Obligations

On October 4, 2011, the Company issued a $100,000 convertible promissory note to an accredited investor.  The note is secured by a subordinate lien on all assets of the Company, bears interest at the rate of 7% per annum, which is payable monthly, and is due on October 3, 2016.  The principal is convertible at the option of the holder into shares of common stock at $.10 per share.  The proceeds of the note along with $30,000 of the Company's available cash were used to purchase 500,000 shares of the Company’s common stock from the O&W Plan for $130,000.

On October 17, 2011, in accordance with the Settlement Agreement, the Company issued the PBGC Note.  All obligations of the Company under the PBGC Note are secured by a security interest in all assets of the Company, subordinate to certain pre-existing obligations, including the security interest of the lender under the Company’s credit facility.  Minimum future annual payments of principal are as follows: 2011 - $3,000; 2012 - $12,000; 2013 - $12,000; 2014 - $12,000; 2015 and thereafter - $261,000.  The Company has also agreed to make future payments through December 31, 2017 out of the Company’s “Free Cash Flow”, as defined in the Settlement Agreement, not to exceed $569,999.  The Settlement Agreement contains  specific events of default and provisions for remedies upon default.

On October 28, 2011, the Company issued a $23,000 promissory note to an officer of the Company. The note is secured by a subordinate lien on all assets of the Company, bears interest at the rate of 18% per annum, which is payable monthly, and is due on demand.