Exhibit 10.4
SECURITY AGREEMENT
     This Security Agreement (hereinafter referred to as the “Agreement”) is
made this 17th day of March, 2010, by and between LIGHTYEAR NETWORK SOLUTIONS,
LLC, a Kentucky limited liability company, having an address of 1901 Eastpoint
Parkway, Louisville, Kentucky 40223 (hereinafter referred to as “Debtor”), and
FIRST SAVINGS BANK, F.S.B., having an address of 501 East Lewis and Clark
Parkway, Clarksville, Indiana 47129 (hereinafter referred to as “Secured
Party”).
RECITALS:
     A. The Collateral. For purposes of this Agreement, the term “Collateral”
means and includes the following:
          1. That certain Limited Access Lockbox Account of Debtor, 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”).
          2. That certain business operating account of Debtor, Account
No. 7380314950 (hereinafter referred to as the “Operating Account”), held with
Fifth Third.
          3. All goods, instruments, documents, documents of title, policies and
certificates of insurance, general intangibles (including without limitation
choses in action, tax refunds and insurance proceeds) chattel paper, deposits,
money, cash or other property of Debtor now owned or hereafter acquired;
including, but not limited to all trade names, trademarks, trade secrets,
goodwill, patents, patent applications, copyrights, deposit accounts, licenses
and franchises.
          4. All cash and non-cash proceeds of all the foregoing, all products
of the foregoing, and all substitutions.
     B. Secured Indebtedness and Liabilities. This Agreement secures:
          1. That certain line of credit promissory note dated March 17, 2010,
in the principal amount of $1,000,000.00, maturing on March 17, 2011, executed
and delivered by Debtor to Secured Party (hereinafter referred to as the
“Note”);
          2. Those certain guaranties from Ronald L. Carmicle and J. Sherman
Henderson (hereinafter referred to as the “Guarantors”), in favor of Secured
Party securing the Note (hereinafter referred to, collectively, as the
“Guaranty”);
          3. All sums payable on or by reason of the promissory notes and/or
guaranties identified above and any other instrument securing payment of said
promissory notes and the performance and observance of all of the provisions
hereof or any instrument securing

 

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payment of said promissory note;
          4. All other present and future, direct and indirect obligations and
liabilities of Secured Party to Secured Party or any of its affiliates up to a
maximum aggregate indebtedness of $1,000,000.00; and
          5. Any extensions, renewals, modifications and replacements of the
foregoing, without limit as to number or frequency
(hereinafter referred to as the “Indebtedness”). The Indebtedness is further
secured, inter alia, by (i) 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 Debtor,
Secured Party, and Fifth Third; (ii) the Guaranty; and (iii) certain other
security instruments which may be executed in connection with, or as security
for, the Indebtedness (all of the above-described being hereinafter referred to
as the “Credit Facilities”).
     In addition to the above-described Indebtedness, this Agreement shall
further secure (i) the performance of all of the covenants of Debtor and the
payment of all sums payable by Debtor, under the terms of this Agreement, the
Indebtedness, and/or the Credit Facilities; (ii) the repayment of all sums
advanced by Secured Party to protect its interest in the Collateral or to
perform any covenants of Debtor hereunder which Debtor shall have failed to
perform and interest at the Default Rate on such sums advanced by Secured Party;
(iii) any and all now existing and future obligations of Debtor to Secured
Party, however created, evidenced or acquired, whether direct or indirect,
absolute or contingent, matured or unmatured, primary or secondary, or with
joint, several, or joint and several liability, including future obligations and
advances to the same extent as if such future obligations and advances were made
on the date of execution of this Agreement (it being understood that Secured
Party is not under any obligation to make any future advances except as
specifically set forth in the notes comprising the Indebtedness); (iv) any and
all modifications, extensions, renewals, substitutions and replacements of any
Indebtedness or obligation hereinabove described; and (v) costs of collection of
all such sums, including, but not limited to, attorney fees and court costs. All
of the foregoing are sometimes hereinafter called the “Liabilities”.
     “Default Rate”, for purposes of this Agreement, shall mean the interest
rate applicable under the notes comprising the Indebtedness after maturity or
the occurrence of an event of default.
GRANT
     NOW, THEREFORE, for and in consideration of Secured Party making the loan
described in the Indebtedness to or for the benefit of Debtor, and for the
purpose of securing the Indebtedness and the Liabilities and the performance by
Debtor of its obligations hereunder, and in consideration of the various
agreements contained herein, and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged by Debtor, DEBTOR HEREBY
WARRANTS, CONVEYS, GRANTS, AND ASSIGNS TO THE SECURED PARTY AND ITS SUCCESSORS
AND ASSIGNS FOREVER A CONTINUING

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SECURITY INTEREST IN AND TO ALL OF THE COLLATERAL.
COVENANTS AND AGREEMENTS OF DEBTOR
     To further secure the payment of the Indebtedness and the performance and
satisfaction of the Liabilities, Debtor hereby represents, warrants, covenants,
and agrees as follows:
     1. Title. Debtor has or will acquire, and will maintain full and absolute
title in Debtor to the Collateral, except for the lien created hereby, and
Debtor has good right to subject the Collateral to the security interest granted
by this Security Agreement. Except for Collateral in the possession of the
Secured Party or in possession of a third party per agreement of Debtor and
Secured Party, Debtor has and will maintain full possession of the Collateral
and will defend it against all adverse claims.
     2. Perfection and Priority. Upon the execution and delivery of this
Agreement by Debtor, and upon the Secured Party filing of appropriate financing
statements with the appropriate governmental agencies and payment of the
appropriate recording fees, the execution and delivery of investment account
control agreements, and/or, as applicable, Secured Party’s taking possession or
control of the Collateral, Secured Party will have a perfected security interest
in and to the Collateral having first priority in such Collateral.
     3. Protection and Use of Collateral. Debtor shall not, without the prior
written consent of Secured Party, sell, assign, transfer, or otherwise dispose
of any of the Collateral or any of Debtor’s right, title or interest therein,
and shall not otherwise do or permit anything to be done or occur that may
impair the Collateral as security hereunder. Moreover, Debtor shall maintain,
handle, and otherwise deal with the Collateral as provided in, and subject to
the limitations of, the Control Agreement, including any addenda thereto. Said
separate Control Agreement, and the rights of Secured Party and obligations of
Debtor provided therein, shall be deemed to supplement and add to this
Agreement. In the event of any conflict between the provisions of this Agreement
and said separate Control Agreement, the terms of said Control Agreement shall
prevail.
     4. Financing Statements, Certificates, Etc. Debtor will do such acts as
Secured Party may deem necessary or appropriate to establish and maintain in
Secured Party a valid first lien and security interest in the Collateral to
secure full and prompt performance and payment of the obligations. Debtor
authorizes Secured Party, at the expense of Debtor, to sign and file, without
Debtor’s signature, such financing and continuation statements, amendments, and
supplements thereto, notices to third parties and other documents which Secured
Party may from time to time deem necessary to perfect, preserve and protect its
security interest in the Collateral, including, without limitation, such
financing statements as may be necessary or appropriate, in the reasonable
opinion of the Secured Party, to perfect and protect Secured Party’s security
interest in such of the Collateral as may be or be deemed to be or constitute
fixtures under Indiana law. Debtor agrees to execute and deliver to Secured
Party any such financing statements and documents and to furnish and endorse
such other instruments, certificates, certificates of title with Secured Party’s
security interest noted thereon or executed applications for said certificates
as Secured Party may from time to time request in order to evidence, perfect,

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preserve and protect its security interest in the Collateral. Debtor agrees to
prepare and execute such notices to third parties regarding the security
interest in the Collateral created by this Agreement as Secured Party deems
advisable to perfect, preserve, and protect the security interest. Debtor, from
time to time, and at any time, upon request by Secured Party, will deliver to
Secured Party certified schedules, in such form as may be specified by Secured
Party, identifying the Collateral, or such part thereof as may be specified by
Secured Party, together with such supporting documents and information as
Secured Party reasonably may request.
     5. Taxes and Assessments. Debtor agrees to pay promptly when due all taxes,
assessments, and governmental charges upon or against Debtor for the Collateral,
in each case before the same become delinquent and before penalties accrue
thereon, unless and to the extent that the same are being contested in good
faith by appropriate proceedings and for which Debtor has established adequate
reserves.
     6. Other Obligations and Costs. In the event Debtor fails to pay any taxes,
assessments, charges, or other costs or expenses which Debtor is required to pay
in order to comply with the terms hereof, Secured Party may, but shall have not
duty to, make expenditures for any and all such purposes on Debtor’s behalf.
Secured Party may also, but shall have no duty to, perform on behalf of Debtor
any agreement or obligation of Debtor hereunder which Debtor shall have failed
to perform. Debtor will forthwith reimburse Secured Party for all costs and
expenses of Secured Party in connection with or relating to any such payment or
performance, including reasonable attorney’s fees, which amounts shall
constitute part of the Liabilities due to Secured Party from Debtor, shall be
secured hereby and shall bear interest at the Default Rate.
     7. Events of Default/Acceleration. Upon the occurrence of any of the
following (hereinafter referred to as “Events of Default”), Secured Party shall
be entitled to exercise its remedies under this Agreement or as otherwise
provided by law: (1) Debtor fails to pay when due any amount payable under the
notes comprising the Indebtedness, the Credit Facilities, or any agreement
evidencing the Indebtedness; (2) Debtor (a) fails to observe or perform any
other agreement evidencing or securing the Indebtedness, including, but not
limited to the notes comprising the Indebtedness, the Credit Facilities or
(b) make any materially incorrect or misleading representation in any financial
statement or other information delivered to the Secured Party; (3) Debtor
defaults under the terms of the notes comprising the Indebtedness, Credit
Facilities, or any other note, loan agreement, mortgage, security agreement, or
document executed as part of the Indebtedness transaction or any guaranty of the
Indebtedness becomes unenforceable in whole or in part, or any guarantor fails
to promptly perform under such a guaranty; (4) Debtor fails to pay when due any
amount payable under any note or agreement evidencing debt to Secured Party or
defaults under the terms of any agreement or instrument relating to or securing
any debt for borrowed money owing to Secured Party; (5) Debtor becomes insolvent
or unable to pay his debts as they become due; (6) Debtor (a) makes an
assignment for the benefit of creditors, (b) consents to the appointment of a
custodian, receiver, or trustee for itself or for a substantial part of its
assets, or (c) commences any proceeding under any bankruptcy, reorganization,
liquidation, insolvency, or similar laws of any jurisdiction; (7) a custodian,
receiver, or trustee is appointed for Debtor or for a substantial part of his
assets without the consent of the party against which the appointment is made
and is not removed within sixty (60) days after such appointment; or Debtor
consents to such appointment; (8)

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proceedings are commenced against Debtor under any bankruptcy, reorganization,
liquidation, or similar laws of any jurisdiction, and such proceedings remain
undismissed for sixty (60) days after commencement; or Debtor consents to the
commencement of such proceedings; (9) any judgment is entered against Debtor, or
any attachment, levy, or garnishment is issued against any property of Debtor;
(10) any proceedings are instituted for the foreclosure or collection of any
mortgage, judgment, or lien affecting the Collateral; (11) Debtor sells,
transfers, or hypothecates or attempts to sell, transfer, or hypothecate all or
any part of the Collateral except as provided in this Security Agreement without
the prior written consent of Secured Party; (12) Debtor dies; (13) Debtor, as
applicable, without Secured Party’s written consent, (a) is dissolved or its
existence is terminated, (b) merges or consolidates with any third party,
(c) sells a material part of its assets or business outside the ordinary course
of its business, or (d) agrees to do any of the foregoing; (14) there is a
substantial change in the existing or prospective financial condition of Debtor
which Secured Party in good faith determines to be materially adverse; or
(15) if at any time or for any reason Secured Party reasonably and in good faith
deems itself insecure.
     8. Remedies Upon Default. Time is of the essence under this Security
Agreement. Upon the occurrence of any Event of Default and the expiration of any
applicable grace period provided in the notes comprising the Indebtedness and/or
Credit Facilities and at any time thereafter, the Secured Party shall be
entitled, without notice to Debtor, to declare all of the Indebtedness to be
immediately due and payable, whereupon the same shall become immediately due and
payable, without presentation, demand, protest, notice of protest, or other
notice of dishonor of any kind, all of which are hereby expressly waived. In
addition, upon the occurrence of any Event of Default under this Security
Agreement and the expiration of any applicable grace period provided in the
notes comprising the Indebtedness, and at any time thereafter, Secured Party
shall have all the remedies of a secured party under the Indiana Uniform
Commercial Code and as otherwise provided by applicable law, including but not
limited to the following:
          (a) Secured Party may take possession of the Collateral and may use it
after having done so. For purposes of taking possession, Secured Party may enter
upon any premises on which the Collateral may be situated without legal process
and remove the Collateral. Debtor hereby releases Secured Party from any claims
arising from such removal and shall hold Secured Party harmless from any
liability resulting therefrom.
          (b) Secured Party may notify any person indebted to Debtor to pay
Secured Party directly any amounts due Debtor under an account receivable,
general intangible, investment account, instrument or chattel paper, and Secured
Party may enforce payment of the same through legal proceedings, or otherwise,
in its own name or in the name of Debtor.
          (c) Secured Party may require Debtor to assemble the Collateral and
make it available at a place to be designated by Secured Party.
          (d) Unless the Collateral threatens to decline speedily in value or is
of a type customarily sold on a recognized market, Secured Party shall give
Debtor at least ten (10) days prior written notice of the time and place of any
public sale thereof or of the time after which any private sale or any other
intended disposition thereof is to be made. Debtor stipulates and agrees that a
disposition complying with this subparagraph shall be deemed a commercially
reasonable

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disposition of the Collateral by Secured Party. The expenses of retaking,
holding, preparing for sale, selling, and the like, and reasonable attorney’s
fees and expenses incurred by Secured Party, may be paid from the proceeds of
the disposition.
          (e) Debtor agrees that Secured Party may obtain the appointment of a
receiver respecting the Collateral upon such notice as may be required by
applicable law and without notice if permitted by such law, and may obtain
immediate possession thereof in replevin.
All remedies of Secured Party shall be cumulative to the full extent provided by
law. Pursuit by Secured Party of certain judicial or other remedies shall not
abate nor bar resort to other remedies with respect to the Collateral, and
pursuit of certain remedies with respect to all or some of the Collateral shall
not bar other remedies with respect to the Indebtedness or the Liabilities or to
other portions of the Collateral. Secured Party may exercise its rights to the
Collateral without resorting or regard to other collateral or sources of
security or reimbursement for the Indebtedness or the Liabilities.
     9. Nonwaiver, Expenses, Proceeds of Collateral. No waiver by Secured Party
of any of its rights or of any Event of Default shall be effective unless in
writing, and in no event shall it operate as a waiver of any other of its rights
or any other Event of Default nor of the same rights or Event of Default on any
future occasion. Debtor shall pay to Secured Party on demand any and all
expenses, including reasonable attorney’s fees, incurred or paid by Secured
Party in perfecting, protecting, or enforcing its rights and interests with
respect to the Collateral. After deducting all of said expenses the residue of
any proceeds of collection or sale of the Collateral shall be applied to the
payment of the Indebtedness and the Liabilities and Debtor shall remain fully
liable for any deficiency.
     10. Applicable Law. Should applicable law confer any rights or impose any
duties inconsistent with or in addition to any of the provisions of this
Security Agreement, the affected provisions of this Security Agreement shall be
considered amended to conform to such law, but all other provisions hereof shall
remain in full force and effect without modification. This Security Agreement
shall be construed under the laws of the State of Indiana.
     11. Successors in Interest. This Security Agreement shall be binding upon
and inure to the benefit of Debtor and Secured Party and their respective
successors, assigns, and legal representatives.
     12. Notices. Any notice required to be given by any party to the other
under the provisions of this Security Agreement or under applicable law shall be
given to Debtor and shall be given to Secured Party, at the address set forth in
the initial paragraph of this Agreement.
[SPACE INTENTIONALLY BLANK; SIGNATURES ON FOLLOWING PAGE]

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     IN WITNESS WHEREOF, Debtor has executed and delivered this Agreement the
day and date first written above.
“DEBTOR”
LIGHTYEAR NETWORK SOLUTIONS, LLC
a Kentucky limited liability company

                By:   /s/ J. Sherman Henderson, III        J. Sherman Henderson,
III,
President               

Prepared by:
Keith D. Mull
MULL & HEINZ, LLC
2867 Charlestown Road
New Albany, Indiana 47150
(812) 206-2315