ex4_2.htm


    STATE
OF LOUISIANA §

    PARISH
OF ORLEANS §

     

    PROMISSORY
NOTE

     

    $2,000,000.00                                                                                                                     JUNE 4,
2009

     

    FOR VALUE RECEIVED, FLINT TELECOM GROUP, INC., a
Nevada corporation (“Parent”),
CVC INT’L, INC., a
Florida corporation (“CVC”),
PHONE HOUSE OF FLORIDA,
INC., a Florida corporation (“Phone
House Florida”), DIAL-TONE COMMUNICATION, INC.,
a Florida corporation (“Dial-Tone”),
DIGITAL PHONE SOLUTIONS,
INC., a Florida corporation (“Digital”),
BETTER CHOICE COMMUNICATIONS,
INC., a Florida corporation (“Better
Choice”), WIZE
COMMUNICATIONS, INC., a Florida corporation (“Wize”),
STARCOM ALLIANCE, INC.,
a Florida corporation (“Starcom”),
and PHONE HOUSE, INC. a
California corporation (“Phone
House California,” and together with, CVC, Phone House Florida,
Dial-Tone, Digital, Better Choice, Wize and Starcom, each a Subsidiary and
jointly and severally, the “Subsidiaries,”
and together with Parent, jointly and severally, the “Debtor”)
unconditionally and jointly and severally promise to pay to the order of THERMO CREDIT, LLC, a Colorado
limited liability company (together with its successors and assigns, “Lender”),
without setoff, at its offices at 639 Loyola Avenue, Suite 2565, New Orleans,
Louisiana 70113, or at such other place as may be designated by Lender, TWO MILLION AND NO/100 DOLLARS
($2,000,000.00), or so much thereof as may from time to time be advanced
and outstanding hereunder in immediately available funds, together with interest
computed daily on the outstanding principal balance hereunder, at the annual
interest rate set forth in this Note (the “Rate”),
and in accordance with the payment schedule, indicated below.  This
PROMISSORY NOTE (this
“Note”)
is executed pursuant to and evidences the Indebtedness funded by Lender and
secured pursuant to that certain LOAN AND SECURITY AGREEMENT
between Debtor and Lender dated as of even date herewith (as the same may be
amended, restated, supplemented, renewed or extended from time to time, the
“Loan
Agreement”) to which reference is made for a statement of the collateral,
rights and obligations of Debtor and Lender in relation thereto; but neither
this reference to the Loan Agreement  nor any provision thereof shall
affect or impair the absolute and unconditional obligation of Debtor to pay
unpaid principal of and interest on this Note when due.  Capitalized
terms not otherwise defined herein shall have the same meanings as in the Loan
Agreement.

     

    1.Rate.  The
Rate shall be the LESSER
of (a) the MAXIMUM RATE,
or (b) the GREATER
of: (i) the PRIME RATE
plus EIGHT PERCENT (8.00%), or (ii)
FIFTEEN PERCENT
(15.00%).  The term “Prime
Rate” means a variable rate of interest per annum equal to the prime rate
as published from time to time in the “Bonds, Rates &
Yields” table of The
Wall Street Journal.  If such prime rate, as so quoted, is
split between two or more different interest rates, then the prime rate shall be
the highest of such interest rates.  If the prime rate is no longer
published in the “Bonds, Rates &
Yields” table of The
Wall Street Journal, then the Prime Rate shall be (a) the rate of
interest per annum established from time to time by Lender and designated as its
base or prime rate, which may not necessarily be the lowest rate charged by
Lender and is set by Lender in its sole discretion, or (b) if Lender does not
publish or announce a base or prime rate, or does so infrequently or
sporadically, then the Prime Rate shall be determined by reference to another
base rate, prime rate, or similar lending rate index, generally accepted on a
national basis, as selected by Lender in its sole and absolute
discretion.  Notwithstanding any provision of this Note or any other
agreement or commitment between Debtor and Lender, whether written or oral,
express or implied, Lender shall never be entitled to charge, receive, or
collect, nor shall amounts received hereunder be credited so that Lender shall
be paid, as interest a sum greater than interest at the Maximum
Rate.  It is the intention of the parties that this Note, and all Loan
Documents securing the payment of this Note or executed or delivered in
connection therewith, shall comply with applicable law.  If Lender
ever contracts for, charges, receives or collects anything of value under the
Loan Documents which is deemed to be interest under applicable law, and if the
occurrence of any circumstance or contingency, whether acceleration of maturity
of this Note, prepayment of this Note, delay in advancing proceeds of this Note,
or any other event, should cause such interest to exceed the maximum lawful
amount, any amount which exceeds interest at the Maximum Rate shall be applied
to the reduction of the unpaid principal balance of this Note, and if this Note
and such other indebtedness are paid in full, any remaining excess shall be paid
to Debtor.  In determining whether the interest payable hereunder
exceeds interest at

     


    
      
        
          


           

          PROMISSORY
NOTE – PAGE 

          THERMO
CREDIT, LLC – FLINT TELECOM GROUP, INC.

          


          


        

         


      

      
         


        
          

        

      

      
         


      

    


     the
Maximum Rate, the total amount of interest shall be spread, prorated and
amortized throughout the entire term of this Note until its payment in
full.  The term “Maximum
Rate” as used in this Note means the maximum nonusurious rate of interest
per annum permitted by whichever of applicable United States federal law or
Louisiana law permits the higher interest rate, including to the extent
permitted by applicable law, any amendments thereof hereafter or any new law
hereafter coming into effect to the extent a higher Maximum Rate is permitted
thereby.  If at any time the Rate shall exceed the Maximum Rate, the
Rate shall be automatically limited to the Maximum Rate until the total amount
of interest accrued hereunder equals the amount of interest which would have
accrued if there had been no limitation to the Maximum Rate.

     

    2.Accrual
Method. Interest on the
Indebtedness evidenced by this Note shall be computed on the basis of a THREE HUNDRED SIXTY (360) day
year and shall accrue on the actual number of days elapsed.  In
computing the number of days during which interest accrues, the day on which
funds are initially advanced shall be included regardless of the time of day
such advance is made, and the day on which funds are repaid shall be included
unless repayment is credited prior to the close of business on the Business Day
received as provided herein.

     

    3.Rate
Change Date. The Rate will change
each time and as of the date that the Prime Rate changes.

     

    4.Payment
Schedule.  Except as expressly
provided herein to the contrary, all payments on this Note shall be applied in
the following order of priority: (a) the payment or reimbursement of any
reasonable out –of-pockets costs and expenses (other than the outstanding
principal balance hereof and interest hereon) for which either Debtor shall be
obligated or Lender shall be entitled pursuant to the provisions of this Note or
the other Loan Documents, (b) the payment of accrued but unpaid interest
and fees thereon, and (c) the payment of all or any portion of the
principal balance hereof then outstanding hereunder, in the direct order of
maturity.  If an Event of Default exists under any of the other Loan
Documents, then Lender may, at the sole option of Lender, apply any such
payments, at any time and from time to time, to any of the items specified in
clauses (a), (b) or (c) above without regard to the order of priority
otherwise specified herein and any application to the outstanding principal
balance hereof may be made in either direct or inverse order of
maturity.  If any payment of principal or interest on this Note shall
become due on a day other than a Business Day, such payment shall be made on the
next succeeding Business Day and such extension of time shall be such case be
included in computing interest in connection with such
payment.  Accrued and unpaid interest on the outstanding principal
balance of this Note (plus all accrued fees which shall be due and owing under
the Loan Agreement) shall be due and payable monthly commencing on JUNE 30, 2009 and continuing
on the LAST day of each
calendar month thereafter (each such date being a “Payment
Date”) and on the Maturity Date.  The outstanding principal
balance of this Note shall be due and payable in monthly installments in an
amount necessary to amortize the outstanding principal balance of this Note as
of SEPTEMBER 30, 2009
over a period of TWENTY
(20) months, commencing on SEPTEMBER 30, 2009 and
continuing on each Payment Date thereafter, with a final payment of the
outstanding principal balance of this Note plus all accrued and
unpaid interest thereon due and payable (together with all fees due and owing
under the Loan Agreement) on the earlier of: (i) the
acceleration of the Indebtedness pursuant to the terms of the Loan Documents;
(ii) MAY 30, 2011; or
(iii) such other date as may be established by a written instrument between
Debtor and Lender from time to time (the “Maturity
Date”).  All advances under this Note shall be governed by the
Loan Documents and secured by the Collateral.  Lender shall incur no
liability for its refusal to advance funds based upon its determination that any
conditions of such further advances have not been met.  Debtor hereby
acknowledges and agrees that payments under this Note may change from time to
time as additional advances are made.

     

    5.Delinquency
Charge.  To the extent permitted by law, a delinquency charge
will be imposed in an amount not to exceed FIVE PERCENT (5.00%) of the
amount of any payment of principal or interest on this Note that is more than
TEN (10) days past
due.  The provisions herein for a delinquency charge shall not be
deemed to extend the time for any payment hereunder or to constitute a “grace
period” giving Debtor a right to cure any Event of Default.

     


    
      
        
          


           

          PROMISSORY
NOTE – PAGE 

          THERMO
CREDIT, LLC – FLINT TELECOM GROUP, INC.

          


          


        

         


      

      
         


        
          

        

      

      
         


      

    


    


     

    6.Waivers,
Consents and Covenants.  Debtor, any endorser or guarantor
hereof, or any other party hereto (individually an “Obligor”
and collectively “Obligors”)
and each of them jointly and severally: (a) waives presentment, demand, protest,
notice of demand, notice of intent to accelerate, notice of acceleration of
maturity, notice of protest, notice of nonpayment, notice of dishonor, and any
other notice required to be given under the law to any Obligor in connection
with the delivery, acceptance, performance, default or enforcement of this Note,
any endorsement or guaranty of this Note, or any other documents executed in
connection with this Note or any other Loan Documents now or hereafter executed
in connection with any obligation of Debtor to Lender; (b) consents to all
delays, extensions, renewals or other modifications of this Note or the Loan
Documents, or waivers of any term hereof or of the Loan Documents, or release or
discharge by Lender of any of Obligors, or release, substitution or exchange of
any security or Collateral for the payment hereof, or the failure to act on the
part of Lender, or any indulgence shown by Lender (without notice to or further
assent from any of Obligors); (c) agrees that no such action, failure to act or
failure to exercise any right or remedy by Lender shall in any way affect or
impair the obligations of any Obligors or be construed as a waiver by Lender of,
or otherwise affect, any of Lender's rights under this Note, under any
endorsement or guaranty of this Note or under any of the Loan Documents; and (d)
agrees to pay, on demand, all costs and expenses of collection or defense of
this Note or of any endorsement or guaranty hereof and/or the enforcement or
defense of Lender's rights with respect to, or the administration, supervision,
preservation, or protection of, or realization upon, any property securing
payment hereof, including, without limitation, reasonable attorney's fees,
including fees related to any suit, mediation or arbitration proceeding, out of
court payment agreement, trial, appeal, bankruptcy proceedings or other
proceeding, in such amount as may be determined reasonable by any arbitrator or
court, whichever is applicable.

     

    7.Prepayments.
Debtor may prepay the unpaid principal balance of this Note at any time by
paying, in addition to the entire unpaid principal amount, all accrued interest
and any other sums due Lender at the time of prepayment, plus an amount equal
to (a) if such prepayment shall occur on or prior to the FIRST (1st) anniversary of the date of
this Note, FOUR PERCENT
(4.00%) of the highest Commitment Amount of Lender under this Note, (b)
if such prepayment shall occur after the FIRST (1st) anniversary of the date of
this Note and on or
prior to NOVEMBER 30,
2010, TWO PERCENT
(2.00%) of the highest Commitment Amount of Lender under this Note; and
(c) if such prepayment shall occur after NOVEMBER 30, 2010 and prior to
MAY 30, 2011, ONE PERCENT (1.00%) of the
highest Commitment Amount of Lender under this Note, provided however, that no
prepayment premium shall be due and payable for any prepayments (i) received by
Lender no more than FIVE
(5) days before the Maturity Date, or (ii) resulting from any
restructuring of the Loans between Debtor and Lender.

     

    8.Remedies
Upon Default.  Whenever there is a Event of Default (a) the
entire balance outstanding hereunder and all other obligations of Debtor to
Lender (however acquired or evidenced) shall, at the option of Lender, become
immediately due and payable and any obligation of Lender to permit further
borrowing under this Note shall immediately cease and terminate, and/or (b) to
the extent permitted by law, the Rate of interest on the unpaid principal shall
be increased at Lender's discretion up to (i) the Maximum Rate, or (ii) if no
Maximum Rate, EIGHTEEN PERCENT
(18.00%) per annum (the “Default
Rate”).  The provisions herein for a Default Rate shall not be
deemed to extend the time for any payment hereunder or to constitute a “grace
period” giving  Obligors a right to cure any default.  At
Lender's option, any accrued and unpaid interest, fees or charges may, for
purposes of computing and accruing interest on a daily basis after the due date
of this Note or any installment thereof, be deemed to be a part of the principal
balance, and interest shall accrue on a daily compounded basis after such date
at the Default Rate provided in this Note until the entire outstanding balance
of principal and interest is paid in full.  Upon an Event of Default,
Lender is hereby authorized at any time, at its option and without notice or
demand, to set off and charge against any deposit accounts of any Obligor (as
well as any money, instruments, securities, documents, chattel paper, credits,
claims, demands, income and any other property, rights and interests of any
Obligor), which at any time shall come into the possession or custody or under
the control of Lender or any of its agents, affiliates or correspondents, any
and all obligations due hereunder.  Additionally, Lender shall have
all rights and remedies available under each of the Loan Documents, as well as
all rights and remedies available at law or in equity.

     


    
      
        
          


           

          PROMISSORY
NOTE – PAGE 

          THERMO
CREDIT, LLC – FLINT TELECOM GROUP, INC.

          


          


        

         


      

      
         


        
          

        

      

      
         


      

    


    


     

    9.Waiver.  The
failure at any time of Lender to exercise any of its options or any other rights
hereunder shall not constitute a waiver thereof, nor shall it be a bar to the
exercise of any of its options or rights at a later date.  All rights
and remedies of Lender shall be cumulative and may be pursued singly,
successively or together, at the option of Lender.  The acceptance by
Lender of any partial payment shall not constitute a waiver of any default or of
any of Lender's rights under this Note.  No waiver of any of its
rights hereunder, and no modification or amendment of this Note, shall be deemed
to be made by Lender unless the same shall be in writing, duly signed on behalf
of Lender; each such waiver shall apply only with respect to the specific
instance involved, and shall in no way impair the rights of Lender or the
obligations of Obligors to Lender in any other respect at any other
time.

     

    10.Applicable
Law, Venue and Jurisdiction.  Debtor agrees that this Note
shall be deemed to have been made in the State of Louisiana at Lender's address
indicated at the beginning of this Note and shall be governed by, and construed
in accordance with, the laws of the State of Louisiana and is performable in the
City and Parish of Louisiana indicated at the beginning of this
Note.  In any litigation in connection with or to enforce this Note or
any endorsement or guaranty of this Note or any Loan Documents, Obligors, and
each of them, irrevocably consent to and confer personal jurisdiction on the
courts of the State of Louisiana or the United States courts located within the
New Orleans, Orleans Parish, State of Louisiana.  Nothing contained
herein shall, however, prevent Lender from bringing any action or exercising any
rights within any other state or jurisdiction or from obtaining personal
jurisdiction by any other means available under applicable law.

     

    11.Partial
Invalidity.  The unenforceability or invalidity of any
provision of this Note shall not affect the enforceability or validity of any
other provision herein and the invalidity or unenforceability of any provision
of this Note or of the Loan Documents to any person or circumstance shall not
affect the enforceability or validity of such provision as it may apply to other
persons or circumstances.

     

    12.Binding
Effect.  This Note shall be binding upon and inure to the
benefit of Debtor, Obligors and Lender and their respective successors, assigns,
heirs, administrators and personal representatives, provided, however, that no
obligations of Debtor or Obligors hereunder can be assigned without prior
written consent of Lender.

     

    13.Controlling
Document.  To the extent that this Note conflicts with or is in
any way incompatible with any other document related specifically to the loan
evidenced by this Note, this Note shall control over any other such document,
and if this Note does not address an issue, then each other such document shall
control to the extent that it deals most specifically with an
issue.

     

    14.COMMERCIAL
PURPOSE.  DEBTOR REPRESENTS TO LENDER THAT THE PROCEEDS OF THIS
LOAN ARE TO BE USED PRIMARILY FOR BUSINESS, COMMERCIAL OR AGRICULTURAL PURPOSES
AND THIS NOTE IS SUBJECT TO LOUISIANA REVISED STATUTES § 9:3509, ET
SEQ.  DEBTOR ACKNOWLEDGES HAVING READ AND UNDERSTOOD, AND AGREES TO BE
BOUND BY, ALL TERMS AND CONDITIONS OF THIS NOTE.

     

    15.Collection.  If
this Note is placed in the hands of an attorney for collection, or if it is
collected through any legal proceeding at law or in equity or in bankruptcy,
receivership or other court proceedings, Debtor agrees to pay all costs of
collection, including, but not limited to, court costs and reasonable attorneys'
fees.

     

    16.Notice of
Balloon Payment.  At maturity (whether by acceleration or
otherwise), Debtor must repay the entire outstanding principal balance of this
Note and accrued and unpaid interest then due.  Lender is under no
obligation to refinance the outstanding principal balance of this Note (if any)
at that time.  Debtor will, therefore, be required to make payment out
of other assets Debtor may own; or Debtor will have to find a lender willing to
lend Debtor the money at prevailing market rates, which may be higher than the
interest rate on the

     


    
      
        
          


           

          PROMISSORY
NOTE – PAGE 

          THERMO
CREDIT, LLC – FLINT TELECOM GROUP, INC.

          


          


        

         


      

      
         


        
          

        

      

      
         


      

    


     outstanding
principal balance of this Note.  If Obligors have guaranteed payment
of this Note, Obligors may be required to perform under such
guaranty.

     

    17.Waiver Of
Jury Trial.  DEBTOR HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT,
PROCEEDING, OR COUNTERCLAIM THAT RELATES TO OR ARISES OUT OF THIS NOTE OR ANY OF
THE LOAN DOCUMENTS OR THE ACTS OR FAILURE TO ACT OF OR BY LENDER IN THE
ENFORCEMENT OF ANY OF THE TERMS OR PROVISIONS OF THIS NOTE OR THE OTHER LOAN
DOCUMENTS.

     

    REMAINDER
OF PAGE LEFT INTENTIONALLY BLANK

     


    
      
        
          


           

          PROMISSORY
NOTE – PAGE 

          THERMO
CREDIT, LLC – FLINT TELECOM GROUP, INC.

          


          


        

         


      

      
         


        
          

        

      

      
         


      

    


    


     

    EXECUTED as of the date first
written above.

     

    DEBTOR:                                                                                     ADDRESS:

     

    FLINT
TELECOM GROUP,
INC.                                                                                                           3155
E. Patrick Lane, Suite 1

    Las Vegas, NV 89120

    By:           /s/
Vincent Browne

    Name:                      Vincent
Browne

    Title:           Chief
Executive Officer

    


    CVC
INT’L, INC.

    


    By:           /s/
Bill Burbank

    Name:                      Bill
Burbank

    Title:           President

    


    PHONE
HOUSE OF FLORIDA, INC.

    


    By:           /s/
Bill Burbank

    Name:                      Bill
Burbank

    Title:           President

    


    DIAL-TONE
COMMUNICATION, INC.

    


    By:           /s/
Bill Burbank

    Name:                      Bill
Burbank

    Title:           President

    


    


    DIGITAL
PHONE SOLUTIONS, INC.

    


    By:           /s/
Bill Burbank

    Name:                      Bill
Burbank

    Title:           President

    


    


    BETTER
CHOICE COMMUNICATIONS, INC.

    


    By:           /s/
Bill Burbank

    Name:                      Bill
Burbank

    Title:           President

    


    


    WIZE
COMMUNICATIONS, INC.

    


    By:           /s/
Bill Burbank

    Name:                      Bill
Burbank

    Title:           President

    


    


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          PROMISSORY
NOTE – PAGE 

          THERMO
CREDIT, LLC – FLINT TELECOM GROUP, INC.

          


          


        

         


      

      
         


        
          

        

      

      
         


      

    


    


    


    


    


    


    


    


    


    


    STARCOM
ALLIANCE, INC.

    


    By:           /s/
Bill Burbank

    Name:                      Bill
Burbank

    Title:           President

    


    


    PHONE
HOUSE, INC.

    


    By:           /s/
Bill Burbank

    Name:                      Bill
Burbank

    Title:           President

    



    
      
        
          


           

          PROMISSORY
NOTE – PAGE 

          THERMO
CREDIT, LLC – FLINT TELECOM GROUP, INC.