Attached files
file | filename |
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8-K - Lightyear Network Solutions, Inc. | v208900_8-k.htm |
EX-10.3 - Lightyear Network Solutions, Inc. | v208900_ex10-3.htm |
EX-10.4 - Lightyear Network Solutions, Inc. | v208900_ex10-4.htm |
EX-10.8 - Lightyear Network Solutions, Inc. | v208900_ex10-8.htm |
EX-10.9 - Lightyear Network Solutions, Inc. | v208900_ex10-9.htm |
EX-10.5 - Lightyear Network Solutions, Inc. | v208900_ex10-5.htm |
EX-10.2 - Lightyear Network Solutions, Inc. | v208900_ex10-2.htm |
EX-10.7 - Lightyear Network Solutions, Inc. | v208900_ex10-7.htm |
EX-10.6 - Lightyear Network Solutions, Inc. | v208900_ex10-6.htm |
EX-10.10 - Lightyear Network Solutions, Inc. | v208900_ex10-10.htm |
PROMISSORY
NOTE
$2,000,000.00
|
New
Albany, Indiana
|
LOAN
NO. 407010128651
|
January
21, 2011
|
FOR VALUE RECEIVED, the undersigned,
LIGHTYEAR NETWORK SOLUTIONS, INC., a Nevada corporation, having an address of
1901 Eastpoint Parkway, Louisville, Kentucky 40223 (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 501 East Lewis
and Clark Parkway, Clarksville, Clark County, Indiana 47129
(hereinafter referred to as “Bank”), or its assigns, at its offices, in lawful
money of the United States of America, the principal sum of Two Million and
00/100 Dollars ($2,000,000.00), 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 7.00% 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
January 21, 2013 (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 March 1, 2011, and continuing on the first (1st) day of
each month thereafter (or the last day of the month in the month of February) up
through and including January 1, 2013, Maker shall make monthly payments of all
accrued but unpaid interest on this Note as
of said payment date;
(b) in
addition to the payments described hereinabove, Maker shall make principal
payments of $500,000.00 each on or before January 21, 2012, and on or before
July 21, 2012;
(c) 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
(d) 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 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
February 21, 2011, subject to the limitations described herein. Beginning on February 22, 2011, 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.
2
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 Elaine G.
Bush.
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 Lightyear Network
Solutions, LLC, a Kentucky limited liability (hereinafter referred to as
“Account Pledgor”), and Bank, a certain business operating account of Account
Pledgor, 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 date herewith (hereinafter
referred to as the “Control Agreement”) covering the Lockbox Account executed by and between Account
Pledgor, Bank, and Fifth Third; (iii) a certain Stock Pledge Agreement dated as
of even date herewith (hereinafter referred to as the “Stock Pledge Agreement”)
covering 2,000,000 shares of preferred stock of Maker held by LY Holdings, LLC,
a Kentucky limited liability company (hereinafter referred to as “Stock
Pledgor”), executed by and between Stock Pledgor and Bank; (iv) those certain
independent personal guaranties from Account Pledgor, Ronald L. Carmicle and J.
Sherman Henderson, III (hereinafter referred to, collectively, as the
“Guaranty”); and (v) certain other security instruments which may be executed in
connection with, or as security for, this Note.
3
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, or cause Account Pledgor and/or
Stock Pledgor to comply with, any term, condition, requirement, or covenant of
this Note; (iii) Account Pledgor’s “Qualified Accounts Receivable” (defined as all earned
and billed accounts receivable not more than 90 days past due) balance is below
$3,400,000.00 on the
last day of any month during the term of this Note; (iv) Account
Pledgor’s “Gross Accounts Receivable” (defined as all earned and billed accounts
receivable and earned
and unbilled accounts receivable not more than 90 days past due) balance is
below $3,000,000.00 weekly
during the term of this Note; 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 Stock Pledge 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;
4
(c) agrees
to promptly furnish to Bank all information relating to the Lockbox Account and the financial condition or
operations of Maker and/or Account Pledgor as Lender may reasonably require from
time to time, including, but not limited to, as applicable, delivery of weekly
statements of Gross Accounts
Receivable from Account Pledgor, delivery of monthly statements of Qualified Accounts Receivable
and payables aging from Account Pledgor, monthly Lockbox Account activity
statement from Account Debtor, delivery of Maker’s and Account Debtor’s annual
financial statements within ninety (90) days of the end of Maker’s and Account
Pledgor’s fiscal years during the term of this Note, delivery of Maker’s,
Account Pledgor’s and SE Acquisitions, LLC’s (hereinafter referred to as
“SE”) monthly financial statements within thirty (30) days of the end
each month during the term of this Note, and with the delivery of any financial
statements hereunder, certificates signed by an officer of Maker, Account
Pledgor or SE, as applicable, representing that the financial statements and
information provided to Bank are or will be accurate, correct, and
complete;
(d) EBIDTA
generated by SE and, on a consolidated basis by Account Pledgor and SE, which is
at least 75% of the EBIDTA in the projections provided to the Bank dated
December 16, 2010 and attached hereto as Exhibit A (this
measurement shall commence based upon the EBIDTA generated through the
six-months ending June 30, 2011, and then measured each quarter thereafter; the
quarterly test will be both for the quarter and for the year to date
periods);
(e) no
additional borrowings of Maker, Account Pledgor, SE, or any other subsidiaries
of Lightyear Network Solutions, Inc. in excess of $100,000.00 shall be allowed
without the prior written consent of the Bank. No sale of assets (in
excess of $50,000.00 individually or $150,000 in the aggregate in any calendar
year) or other encumbrance of assets of any of the above entities without the
prior written consent of the Bank;
(f) the
net worth of SE shall remain at or above the net worth as provided to Bank in
financial statements as of October 1, 2010;
(g) annual
Debt Service Coverage Ratio (“DSCR”) of SE and the consolidated DSCR of Maker
and SE shall not be less than 1.25x as measured annually as of December 31st of each
year, beginning with December 31, 2011;
(h) no
debts of Maker to any shareholder or director shall be repaid (with the
exception of up to $1,000,000.00 of additional debt to Chris Sullivan, which is
in addition to the debt to be repaid by this Note) without the prior written
consent of the Bank;
(i) 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;
(j) 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
(k) waives
valuation and appraisement.
5
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 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.
6
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, INC.,
|
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a
Nevada corporation
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By:
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/S/ J. Sherman Henderson,
III
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J.
Sherman Henderson, III, CEO
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Prepared
by:
Keith D.
Mull
MULL
& HEINZ, LLC
2867
Charlestown Road
New
Albany, Indiana 47150
(812)
206-2315
S-1