PROMISSORY NOTE
Exhibit 10.1
| $1,000,000.00 | New Albany, Indiana | |
| LOAN NO. 0379000058 | March 17, 2010 |
FOR VALUE RECEIVED, the undersigned, LIGHTYEAR NETWORK SOLUTIONS, LLC, a Kentucky limited
liability company, having an address of 0000 Xxxxxxxxx Xxxxxxx, Xxxxxxxxxx, Xxxxxxxx 00000
(hereinafter referred to, whether one or more, as “Maker”), hereby promises and agrees to pay to
the order of FIRST SAVINGS BANK, F.S.B., having an address of 000 Xxxx Xxxxx xxx Xxxxx Xxxxxxx,
Xxxxxxxxxxx, Xxxxx Xxxxxx, Xxxxxxx 00000 (hereinafter referred to as “Bank”), or its assigns, at
its offices, in lawful money of the United States of America, the principal sum of One Million and
00/100 Dollars ($1,000,000.00), together with interest thereon until paid at the rate and in the
manner described below and those other charges permitted by applicable law and authorized by the
terms of this Note, all without relief from valuation and appraisement laws.
INTEREST RATE: From and after the date of this Note, the interest rate on this Note is subject to
change from time to time based on changes in an independent index which is the “Prime Rate.” So
long as there is not a default under this Note, interest on this Note shall accrue at the Prime
Rate PLUS Four and 00/100 percent (4.00%) (hereinafter referred to as the “Note Rate”).
Notwithstanding the foregoing, the Note Rate shall never be less than 7.25% per annum. The “Prime
Rate” shall mean, as of any date, the highest Prime Rate reported in the Money Rates column or any
successor column of the Wall Street Journal. In the event the Wall Street Journal ceases
publication of the Prime Rate, then “Prime Rate” shall mean the “prime rate” or “base rate”
announced by Lender or any other bank designated by Lender, from time to time (regardless of
whether such rate has actually been charged by such bank). In the event the Wall Street Journal:
(i) publishes more than one Prime Rate, the highest of such rates shall be the “Prime Rate;” or
(ii) publishes a retraction or correction of any such rate, the rate reported in such retraction or
correction shall be the “Prime Rate” (hereinafter referred to as the “Index”). The Index is not
necessarily the lowest rate charged by Lender on its loans. If the Index becomes unavailable
during the term of this loan, Lender may designate a substitute index after notice to Maker.
Lender will tell Maker the current Index rate upon Maker’s request. Maker understands that Lender
may make loans based on other rates as well. The interest rate change will not occur more often
than each day. Interest shall be computed on the basis of the actual number of days elapsed in a
year of 365 days. As of the date hereof, the Prime Rate is 3.25% such that the initial Note Rate
is 7.25%.
DEFAULT RATE: In the event of a default under this Note, Bank may, in its sole discretion,
determine that all amounts owing to Bank shall bear interest at the a rate of Five and 00/100
percent (5.00%) per annum above the Note Rate (hereinafter referred to as the “Default Rate”).
MATURITY DATE: This Note shall mature and the principal balance shall be due and payable in full
together with any unpaid interest and other amounts due under this Note on March 30, 2011
(hereinafter referred to as the “Maturity Date”). If all such sums are not paid and satisfied
in full by the Maturity Date, any sums remaining due shall thereafter bear interest at the Default
Rate.
PAYMENT SCHEDULE: Maker shall payments to Bank on the Note as follows:
(a) beginning on April 30, 2010, and continuing on the 30th day of
each month thereafter (or the last day of the month in the month of February) up
through and including June 30, 2010, Maker shall make monthly payments of all
accrued but unpaid interest on this Note as of said payment date;
(b) beginning on July 30, 2010, and continuing on the 30th day of
each month thereafter (or the last day of the month in the month of February) until
the Maturity Date, Maker shall make monthly payments of all accrued but unpaid
interest on this Note as of said payment date PLUS monthly principal payments in the amount of $111,112.00 each, unless and
until the outstanding principal balance of this Note is paid in full;
(c) in addition to the payment described hereinabove, Maker shall apply to
payment of the principal balance of this Note fifty percent (50%) of all net
proceeds in excess of $1,000,000.00 and up to $2,000,000.00 from the sale of equity
securities in Maker’s parent company, Libra Alliance Corporation, unless and until
the outstanding principal balance of this Note is paid in full. For purposes of
clarity, if the proceeds from said sale of equity securities is less than
$1,000,000.00, Maker shall make no payment under this Section (c); if the proceeds
from said sale of equity securities is more than $1,000,000.00, Maker shall apply
as a payment to principal 50% of the proceeds received in excess of $1,000,000.00
up to a maximum payment under this Section (c) of $500,000.00;
(d) any late payment charges or other costs, expenses, or charges due under
this Note or any other document executed in connection herewith shall be due and
payable immediately upon notice to Maker from Bank (except that Maker’s obligation
to pay any late payment charge hereunder shall not be dependent upon or require
notice from Bank); and
(e) the remaining principal balance of this Note, if any, together with all
interest and other sums due hereunder shall be due and payable on the Maturity
Date.
All payments will be made to Bank at its address described above and shall be collected in funds in
lawful currency of the United States of America. All payments and prepayments on this Note shall
be applied first to expenses or charges due hereunder, and then to the payment of accrued interest
hereunder, and then to principal. On the Maturity Date, the entire principal balance remaining
due, together with any unpaid interest and other amounts due under this Note, shall be paid in
full.
CLOSED END CREDIT; ADVANCES ON NOTE: This Note represents a closed end credit
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facility with a limited future multiple advance feature, representing an arrangement that allows Maker to obtain
advances without giving Bank a separate note for each advance. Maker shall be entitled to borrow
up to the full principal amount of the Note from time to time, but only up through, and not after,
June 16, 2010, subject to the limitations described herein. Beginning on June 17, 2010, and
thereafter throughout the term of this Note, Maker shall not be permitted to make any additional
advances. Bank will record the date and amount of each advance on Bank’s loan account records.
Maker agrees that each advance so recorded shall be prima facie evidence that an advance was made
on the date and in the amount indicated and the aggregate unpaid principal amount shown on such
records shall be prima facie evidence of the principal amount owing and unpaid on this Note.
Bank’s failure to record the date and amount of any advance in such records shall not limit of
otherwise affect the obligations of Maker under this Note to repay the principal amount of the
advances together with all interest accruing thereon. Bank shall not be obligated to provide Maker
with a copy of such records on a periodic basis, however, Maker shall be entitled to inspect or
obtain a copy of such records during Bank’s business hours. Except as set out hereinabove as to
the timing of advances, the number of advances and the amount of each advance are not limited;
provided, however, that the maximum unpaid principal balance outstanding at any time shall not
exceed the face amount of this Note.
CONDITIONS OF ADVANCE: Provided Maker is not in default under the terms of this Note, there is no
adverse change in the financial condition of Maker (or any officer or shareholder thereof), and
there is no other breach of this Note, the Control Agreement, and/or the Guaranties (as said
instruments are hereinafter defined), Maker shall be entitled to borrow under this Note, subject to
the limitations described above. Maker hereby authorizes such advances under this Note to be
deposited directly into checking account number
held at Bank upon the written authorization of
Xxxxxx X. Xxxx.
PREPAYMENT: Maker may prepay all or any part of the principal of this Note at any time without
penalty.
LATE PAYMENT CHARGE: If Maker fails to pay any installment in full on or before ten (10) days from
its due date, Maker, in the case of each such failure, will incur and shall pay to Bank a late fee
equal to five percent (5%) of the payment amount (or $17.50, whichever amount is greater). The
payment of a late charge will not cure or
constitute a waiver of any “Event of Default” (as hereinafter defined). Additionally, if any
payment of Maker to Bank via check or other order is returned to Bank due to insufficient funds,
closure of account at the depository institution upon which said check or order is drawn, or for
any other reason, Maker will incur and shall pay to Bank a fee of $20.00.
SECURITY: Payment of this Note is secured, inter alia, by: (i) a certain Security Agreement dated
as of even date herewith covering that certain Limited Access Lockbox Account, Account No.
7380314745 (hereinafter referred to as the “Lockbox Account”), held with Fifth Third Bank, an Ohio
corporation (hereinafter referred to as the “Fifth Third”), executed by and between Maker, Bank,
and Fifth Third, a certain business operating account of Debtor, Account No. 7380314950
(hereinafter referred to as the “Operating Account”) held with Fifth Third, and certain other
collateral, all as more particularly described therein (hereinafter referred to as the “Security
Agreement”); (ii) a certain Lockbox and Account Control Agreement dated as of even
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date herewith (hereinafter referred to as the “Control Agreement”) covering the Lockbox Account; (iii) those
certain independent personal guaranties from Xxxxxx X. Xxxxxxxx and X. Xxxxxxx Xxxxxxxxx, III
(hereinafter referred to, collectively, as the “Guaranty”); and (iv) certain other security
instruments which may be executed in connection with, or as security for, this Note.
DEFAULT: The occurrence of any of the following shall constitute an “Event of Default” under this
Note: (i) this Note, or any part thereof, shall not be paid in full promptly when due (whether by
lapse of time, acceleration of maturity, or otherwise); (ii) Maker fails to comply with any term,
condition, requirement, or covenant of this Note; (iii) Maker’s gross accounts receivable balance
falling below $3,000,000.00; or (iv) the occurrence of an Event of Default as defined in the
Security Agreement, the Control Agreement, the Guaranty, and/or any other security agreements.
RIGHTS OF BANK UPON DEFAULT: At the election of the holder hereof, and without notice, the
outstanding principal balance hereof, together with accrued interest hereon shall become at once
due and payable at the place herein provided for payment upon the occurrence of any Event of
Default. If, upon the occurrence of an Event of Default, this Note is placed in the hands of an
attorney for collection, or is collected through any court, including bankruptcy court, Maker shall
be responsible to the holder of this Note for its reasonable attorneys’ fees, court costs, and
other expenses, incurred in collecting or attempting to collect or securing or attempting to secure
this Note or otherwise enforcing the holder’s rights in any collateral securing this Note,
including without limitation, the recovery of costs associated with environmental investigations,
paralegal fees, site assessments, and surveys. Moreover, if there is a default under this Note,
Bank shall be entitled to exercise, in its sole and absolute discretion, any and all rights upon
default as are set out and described in the Security Agreement, the Control Agreement, the
Guaranty, or other security agreements, as well as any and all rights afforded in equity or at law.
MAKER’S COVENANTS: Maker, and each person now or hereafter liable, whether primarily or
secondarily, for the whole or any part of the indebtedness evidenced by this Note or any
instruments which secure this note jointly and severally:
(a) agrees to remain and continue bound for the payment of the principal of and
interest on this Note notwithstanding any extension or extensions of the time of the
payment of said principal or interest, or any change or changes in the amount or
amounts to be paid under and by virtue of the obligation to pay provided for in this
note, or any change or changes by way of release or surrender of any collateral,
real or personal, held as security for the payment of this Note, and waive all and
every kind of notice of such extension or extensions, change or changes, and agree
that same may be made without the joinder of any such persons;
(b) agrees to comply with any and all terms, requirements, stipulations, and/or
conditions of this Note;
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(c) agrees to promptly furnish to Bank all information relating to the
Lockbox Account and the financial condition or operations of Maker as Lender may
reasonably require from time to time, including, but not limited to, as applicable,
delivery of weekly borrowing base reports showing eligible gross
receivables of not less than $3,000,000.00, delivery of annual financial statements
within ninety (90) days of the end of Maker’s fiscal year, delivery of monthly
statements within thirty (30) days of the end the month, and delivery of accounts
receivable and inventory reports within thirty (30) days of the request therefore,
and warrants that the financial statements and information provided to Bank are or
will be accurate, correct, and complete;
(d) waives presentment, notice of dishonor, protest, notice of protest and
diligence in collection, and all exemptions, to which Maker, or any one of them, may
now or hereafter be entitled under the laws of Indiana or any other state;
(e) agrees, upon the occurrence of an Event of Default, to pay all costs of
collecting, securing or attempting to collect, or secure this note, including a
reasonable attorney’s fee, whether same be collected or secured by suit or
otherwise, providing the collection of such costs and fees are permitted by
applicable law; and
(f) waives valuation and appraisement.
NO USURY: None of the terms and provisions contained in this Note, the Security Agreement, the
Control Agreement, the Guaranty, any other security agreements, or any other document or instrument
now or hereafter securing same, or any other document or instrument now or hereafter securing the
indebtedness evidenced hereby or related hereto shall ever be construed to create a contract for
the use, forbearance, or detention of money requiring payment of interest at a rate in excess of
the maximum interest rate permitted to be charged by the laws of the State of Indiana. Neither
Maker nor any other party now or hereafter becoming liable for the payment of this Note shall ever
be required to pay interest on this Note at a rate in excess of the maximum interest rate that may
be lawfully charged under the laws of the State of Indiana, and the provisions of this paragraph
shall control over all other provisions hereof and of any other instrument executed in connection
herewith or executed to secure the indebtedness evidenced hereby which may be in apparent conflict
with this paragraph. In the event the holder shall collect monies which are deemed to constitute
payments in the nature of interest which would otherwise increase the effective interest rate on
this Note to a rate in excess of that permitted to be charged by the laws of the State of Indiana,
all such sums deemed to constitute interest in excess of the maximum rate shall be refunded to
Maker in cash and Maker hereby agrees to accept such refund.
SEVERABILITY: If any provision, or portion thereof, of this Note, or the application thereof to
any persons or circumstances shall to any extent be invalid or unenforceable, the remainder of this
Note, or the application of such provision, or portion thereof, to any other person or
circumstances shall not be affected thereby, and each provision of this Note shall be valid and
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enforceable to the fullest extent permitted by law. In the event of any inconsistency between the
terms hereof and those of any instrument securing payment hereof, the holder hereof shall have the
sole option to elect which of such provisions shall govern.
ASSIGNMENT: Maker will not be entitled to assign any of its rights, remedies, or obligations
described in this Note without the prior written consent of Bank, which may be withheld by Bank in
its sole and absolute discretion. Bank will be entitled to assign any or all of its rights and
remedies described in this Note without notice to or the prior consent of Maker in any manner.
APPLICABLE LAW: This Note shall be governed by, and construed in accordance with, the laws of the
State of Indiana.
WAIVER OF JURY TRIAL: Maker and Bank, after consulting or having had the opportunity to consult
with counsel, knowingly, voluntarily, and intentionally waive any right either of them may have to
a trial by jury in any litigation based upon or arising out of this Note, the Security Agreement,
the Control Agreement, the Guaranty, any other security agreements, or any related instrument or
agreement or any of the transactions contemplated by this Note or any course of conduct, dealing,
statements, whether oral or written, or actions of either of them. Neither
Maker nor Bank shall seek to consolidate, by counterclaim or otherwise, any action in which a jury
trial has been waived with any other action in which a jury trial cannot be or has not been waived.
MODIFICATION AND WAIVER: These provisions shall not be deemed to have been modified in any respect
or relinquished by either Maker or Bank except by a written instrument executed by both of them.
Failure of the holder of this Note to exercise any of its right and remedies shall not be deemed to
constitute a waiver of the right to exercise the same at that or any other time. All rights and
remedies of the holder hereof for default hereunder or under any of the other instruments executed
in connection with, or as security for, this Note shall be cumulative to the greatest extent
permitted by law.
NOTICE: Any notice or other communication to be provided under this Note shall be in writing and
shall be sent to the parties at the addresses described above in this Note or at such other
addresses as the parties may designate in writing from time to time.
[SPACE INTENTIONALLY BLANK; SIGNATURES ON FOLLOWING PAGE]
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IN WITNESS WHEREOF, Maker has caused this instrument to be executed effective as of the
date first written above.
MAKER:
LIGHTYEAR NETWORK SOLUTIONS, LLC
a Kentucky limited liability company
a Kentucky limited liability company
By: |
/s/ X. Xxxxxxx Xxxxxxxxx, III | |||
President |
Prepared by:
Xxxxx X. Xxxx
XXXX & XXXXX, LLC
0000 Xxxxxxxxxxx Xxxx
Xxx Xxxxxx, Xxxxxxx 00000
(000) 000-0000
XXXX & XXXXX, LLC
0000 Xxxxxxxxxxx Xxxx
Xxx Xxxxxx, Xxxxxxx 00000
(000) 000-0000
