Exhibit 10.38
 
 

 
DISCRETIONARY REVOLVING LINE OF CREDIT NOTE
 
 
$7,500,000.00
Louisville, Kentucky
 
as of June 29, 2007

 
FOR VALUE RECEIVED, the undersigned, CITIZENS FINANCIAL CORPORATION, a Kentucky
corporation (“Borrower”), having an address of Suite 300, The Marketplace, 12910
Shelbyville Road, Louisville, Kentucky 40243, hereby promises and agrees to pay
to the order of DARRELL R. WELLS (“Lender”), having an address of Suite 310,
4310 Brownsboro Road, Louisville, Kentucky 40207, the principal sum of SEVEN
MILLION FIVE HUNDRED THOUSAND DOLLARS ($7,500,000.00) or so much thereof as may
be advanced by Lender to or for the account of Borrower (the “Loan”), together
with interest thereon or on the balance thereof from time to time outstanding,
to be computed as hereinafter provided from the date hereof until the said
principal sum shall be fully repaid, all without any relief whatever from
valuation or appraisement laws and with reasonable attorney’s fees, on or before
June 30, 2008 (the “Final Maturity Date”).
 
NOTWITHSTANDING ANYTHING TO THE CONTRARY HEREIN, THE HOLDER OF THIS
DISCRETIONARY REVOLVING LINE OF CREDIT NOTE (THIS “NOTE”) SHALL HAVE THE RIGHT
TO REQUIRE REPAYMENT IN FULL OF THIS NOTE IN WHOLE OR IN PART AND ALL ACCRUED
AND UNPAID INTEREST HEREON BY GIVING WRITTEN NOTICE TO BORROWER AT THE ADDRESS
FIRST SET FORTH ABOVE SPECIFYING A DATE FOR REPAYMENT THAT SHALL BE NOT LESS
THAN NINETY (90) DAYS AFTER THE DATE BORROWER RECEIVES SUCH NOTICE.
 
This Note amends, consolidates, restates and replaces the Third Amended,
Consolidated and Restated Promissory Note ($5,630,000.00) dated as of April 2,
2007 made by Borrower to the order of Lender (the “Prior Note”).  This Note is
not intended to be and shall not be construed as a novation of the indebtedness
evidenced by the Prior Note.  This Note shall be entitled to the benefits (in
the same priority) of, interalia, any security at any time granted and pledged
by Borrower to Lender in conjunction with the original execution and delivery of
the Prior Note or predecessor notes or by Borrower or any other person at any
time thereafter.  This Note also evidences an additional loan from Lender to
Borrower made on the date hereof in the original principal amount of One Hundred
Thirty Thousand Dollars ($130,000.00).  As of the date hereof, this Note
evidences a principal balance disbursed and outstanding of Five Million Seven
Hundred Sixty Thousand Dollars ($5,760,000.00) plus interest accrued under the
Prior Note and a predecessor note from and after April 1, 2007.
 
Lender may make disbursements of the Loan hereunder (“Advances”) from time to
time in his sole and absolute discretion to or for the account of Borrower,
including without limitation payments of interest on the Loan.  Borrower may
borrow, repay in whole or in part without premium or penalty, and reborrow
hereunder, subject to the terms hereof.
 
Lender shall record in his accounts the date and amount of each Advance and each
payment on this Note from time to time, which accounts shall be deemed correct
and complete in the absence of manifest error.
 

The principal sums actually disbursed and outstanding hereon from time to time
shall bear interest for each calendar quarter (each such calendar quarter, an
“Interest Period”) at a rate per annum equal to the greater of [i] six percent
(6%) or [ii] one percent (1%) in excess of the Prime Rate as it existed at the
opening of business on the first day of such Interest Period.  The interest rate
per annum shall be reset at the opening of business on the first day of each
Interest Period hereafter (each an “Adjustment Date”) so that for the Interest
Period beginning on that day the interest rate per annum shall equal the greater
of [i] six percent (6%) or [ii] one percent (1%) in excess of the Prime Rate at
the opening of business on that day.  The “Prime Rate, as used in this Note,
shall mean that rate of interest announced from time to time by National City
Bank (the “Bank”) to be its prime rate at its principal office in Louisville,
Kentucky, it being understood and agreed that such rate shall not necessarily be
the lowest rate the Bank then offers to its most creditworthy borrowers.  As of
April 1, 2007, the Prime Rate of the Bank was eight and one-quarter percent
(8-1/4%), and accordingly the interest rate per annum on this Note until the
first Adjustment Date shall be nine and one-quarter percent (9-1/4%).
 
Principal of this Note shall be paid in a single payment on the Final Maturity
Date.  All accrued and unpaid interest shall be paid on each Adjustment Date for
the preceding Interest Period and also on the Final Maturity Date or any other
date on which the principal balance of this Note is paid in full.  Failure of
Lender to make an Advance for the payment of interest on this Note shall not
relieve Borrower of the obligation to pay interest accrued on this Note.
 
All payments of principal and interest and any other sums due under this Note
shall be made in immediately available funds to Lender at his address set forth
above in this Note or to such other person or at such other address as may be
designated in writing by the holder of this Note.  All payments on this Note
shall be applied first to the payment of any expenses or charges payable
hereunder, and next to accrued interest, and then to the principal balance
hereof, or in such other order as Lender may elect in his sole discretion.
 
Any payment on this Note that is overdue for more than five (5) days from its
due date shall, if requested by and at the sole option of the holder of this
Note, in order to compensate the holder for the inconvenience and administrative
expense incident to such delinquency and not as a penalty, be increased by an
amount equal to five percent (5%) of the overdue payment, unless such increase
would exceed the maximum increase permitted by law, in which event the overdue
payment shall be increased by such lesser increment, if any, as would not exceed
the maximum increase permitted by law.  The charging or collection of a late
charge shall not be deemed a waiver of any of the holder’s other rights and
remedies hereunder, including, if applicable, the right to exercise the remedies
of the holder upon a default under this Note as hereinafter provided.
 
The occurrence of any one or more of the following shall constitute a default
under this Note:  [i] Borrower does not pay any installment of principal of, or
interest on, this Note as and when due or within five (5) days thereafter; [ii]
a proceeding is filed or commenced against Borrower for dissolution or
liquidation that is not dismissed within sixty (60) days after filing; [iii]
Borrower becomes insolvent, or a custodian, trustee, liquidator or receiver is
appointed for Borrower or for any of its property, or Borrower makes an
assignment for the
 
 
 
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benefit of its creditors, files a petition under bankruptcy, insolvency or
debtor’s relief law or for any readjustment of indebtedness, composition or
extension or [iv] any such proceeding is filed against Borrower and is not
dismissed within sixty (60) days).
 
Whenever there is a default under this Note, the entire principal balance of and
all accrued interest on this Note, shall, at the option of Lender, become
forthwith due and payable, without presentment, notice, protest or demand of any
kind (all of which are expressly waived by Borrower).  Upon any such default,
the rate of interest applicable to the entire unpaid principal balance of this
Note shall, at the sole and exclusive option of the holder of this Note, be
increased by four percent (4%) per annum, unless the resulting rate would exceed
the maximum rate permitted by law, in which event the rate of interest shall be
increased to a rate that shall not exceed such maximum rate.
 
This Note is hereby expressly limited so that in no event whatsoever, whether by
reason of acceleration of the maturity hereof or otherwise, shall the amount
paid or agreed to be paid to the holder of this Note for the use, forbearance or
retention of money loaned hereunder exceed the maximum amount permissible under
applicable law.  If from any circumstance the holder of this Note shall ever
receive anything of value deemed by applicable law to be interest in any amount
that would exceed the highest lawful rate payable hereunder, an amount equal to
any excessive interest shall be applied to the reduction of the principal amount
owing hereunder and not to the payment of the interest, and if the amount that
would be excessive interest exceeds the principal balance then owing, such
excess shall be refunded to the party paying the same.
 
Failure of the holder of this Note to exercise any of its rights and remedies
shall not constitute a waiver of the right to exercise the same at that or any
other time.  All rights and remedies of the holder for default under this Note
shall be cumulative to the greatest extent permitted by law.  Time shall be of
the essence in the payment of all installments of interest and principal on this
Note and the performance of Borrower’s other obligations under this Note.
 
If there is any default under this Note, and this Note is placed in the hands of
an attorney for collection or is collected through any court, including any
bankruptcy court, Borrower promises to pay to the holder hereof its reasonable
attorneys’ fees and court costs incurred in collecting or attempting to collect
or securing or attempting to secure this Note or enforcing the holder’s rights
in any collateral securing this Note, provided the same is legally allowed by
the laws of the Commonwealth of Kentucky or any state where the collateral or
part thereof is situated.
 
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.
 
This Note, including matters of construction, validity and performance, and the
obligations arising hereunder, shall be construed in accordance with and
otherwise governed in all respects by the laws of the Commonwealth of Kentucky
applicable to contracts made and performed in such state and any applicable law
of the United States of America.
 
 
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Borrower and any other party who may become primarily or secondarily liable for
any of the obligations of Borrower hereunder hereby jointly and severally waive
presentment, demand, notice of dishonor, protest, notice of protest, and
diligence in collection, and further waive all exemptions to which they may now
or hereafter be entitled under the laws of the Commonwealth of Kentucky or any
other state or of the United States, and further agree that the holder of this
Note shall have the right without notice, to deal in any way, at any time, with
Borrower, or with any other party who may become primarily or secondarily liable
for, or pledge any collateral as security for, any of the obligations of
Borrower under this Note and to grant any extension of time for payment of this
Note or any other indulgence or forbearance whatsoever, and may release any
security for the payment of this Note and/or modify the terms of the any other
documents securing or pertaining to this Note, without in any way affecting the
liability of Borrower, or such other party who may pledge any collateral as
security for, or become primarily or secondarily liable for, the obligations of
Borrower hereunder and without waiving any rights the holder may have hereunder
or by virtue of the laws of this state or any other state of the Unites States.
 
Borrower hereby consents to the jurisdiction of any state or federal court
located within the County of Jefferson, Commonwealth of Kentucky, and
irrevocably agrees that, subject to Lender’s sole and absolute election, any
case or proceeding relating to Title 11 of the United States Code and any
actions relating to the indebtedness evidenced hereby shall be litigated in such
courts, and Borrower waives any objection that it may have based on improper
venue or forum non conveniens to the conduct of any proceeding in any such
court.  Nothing contained in this paragraph shall affect the right of Lender to
bring any action or proceeding against Borrower or its property in the courts of
any other jurisdiction.
 
LENDER AND BORROWER ACKNOWLEDGE THAT THE TIME AND EXPENSE REQUIRED FOR TRIAL BY
JURY EXCEED THE TIME AND EXPENSE REQUIRED FOR A BENCH TRIAL AND HEREBY KNOWINGLY
AND VOLUNTARILY WAIVE, TO THE FULLEST EXTENT PERMITTED BY LAW, AND AFTER HAVING
CONSULTED OR HAVING HAD AMPLE OPPORTUNITY TO CONSULT THEIR RESPECTIVE LEGAL
COUNSEL CONCERNING THE CONSEQUENCES OF SUCH WAIVER, TRIAL BY JURY IN ANY ACTION
OR OTHER PROCEEDING BROUGHT TO ENFORCE OR DEFEND AGAINST COLLECTION OF OR
OTHERWISE IN CONNECTION WITH THIS NOTE OR ANY RELATED DOCUMENTS.
 
CITIZENS FINANCIAL CORPORATION
 
By:    /s/ Len E. Schweitzer                       
Len E. Schweitzer
Vice President, Accounting, and Chief
 Financial Officer

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