Document:

vhgi8kex101092512.htm

EX. 10.1

 

LILY GROUP INC.

 

PROMISSORY NOTE

 

	
$1,275,000.00

	
September 20, 2012

 

FOR VALUE RECEIVED, the undersigned, Lily Group Inc., an Indiana corporation (“Maker”), hereby promises to pay to the order of ________, individually, or its successors or assigns (“Payee”), One Million Two Hundred Seventy Five Thousand Dollars and No/100 Dollars  ($1,275,000), together with interest thereon which shall accrue at a rate equal to ten percent (10%) per annum provided, however, upon the occurrence of an Event of Default (as defined below), then to the extent permitted by law, Maker will pay interest to the Payee on the outstanding principal balance of this Promissory Note (this “Note”) from the date of the Event of Default until payment in full at the rate of ten percent (10%) per annum.  All payments on this Note shall be due and payable in lawful money of the United States of America.  The proceeds of this Note shall only be used for working capital purposes.

 

1. Principal and Interest Payments.  The principal of, and accrued but unpaid interest on, this Note shall be due and payable on March 15th, 2013 (the “Maturity Date”).

 

2. Prepayments.  Maker may at its sole option prepay all or any part of the principal of this Note, or interest thereon, before maturity without penalty or premium. All such prepayments shall first be applied to accrued interest under this Note, and the remaining balance of any such prepayments, if any, shall be applied to principal of this Note.

 

3. Method of Payment.  All payments made under this Note, whether of principal or interest, shall be made by Maker to Payee on the date specified or provided herein and shall be delivered by means of certified or cashiers’ check or wire transfer of immediately available funds to an account specified by the holder hereof.  Whenever payment hereunder shall be due on a day which is not a Business Day, the date for payment thereof shall be extended to the next succeeding Business Day.  If the date for any payment is extended by operation of law or otherwise, interest thereon shall be payable for such extended time.  “Business Day” means every day which is not a Saturday, Sunday or legal holiday.

 

4. Events of Default.  The following shall constitute events of default (“Events of Default”) hereunder:

 

(a) failure of Maker to make any payment on this Note as and when the same becomes due and payable in accordance with the terms hereof and the continuance of such failure for a period of five (5) days after written notice specifying such default has been delivered to Maker by Payee;

 

(b) failure of Maker to perform any other covenant contained herein, if the same has continued for thirty (30) days after written notice specifying such default has been delivered to Maker by Payee;

 

 

  

  

  

 

(c) if Maker makes an assignment for the benefit of creditors, or petitions or applies for the appointment of a liquidator, receiver or custodian (or similar official) of it or of any substantial part of its assets, or if Maker commences any proceeding or case relating to it under the Bankruptcy Code or any other bankruptcy, reorganization, arrangement, insolvency, readjustment of debt, dissolution or liquidation or similar law of any jurisdiction, or takes any action to authorize any of the foregoing; or

 

(d) if any petition or application of the type described in subparagraph (c) immediately above is filed or if any such proceeding or case described in subparagraph (c) is commenced against Maker and is not dismissed within sixty (60) days, or if Maker indicates its approval thereof, consents thereto or acquiesces therein, or if an order is entered appointing any such liquidator or receiver or custodian (or similar official), or adjudicating Maker bankrupt or insolvent, or approving a petition in any such proceeding, or if a decree or order for relief is entered in respect of Maker in an involuntary case under the Bankruptcy Code or any other bankruptcy, reorganization, arrangement, insolvency, readjustment of debt, dissolution or liquidation or similar law of any jurisdiction.

 

In the event any one or more of the Events of Default specified above occurs and is continuing, the holder of this Note may (i) accelerate the maturity of this Note with notice to Maker at which time all such amounts shall be immediately due and payable, (ii) proceed to protect and enforce its rights either by suit in equity or by action at law, or by other appropriate proceedings, whether for the specific performance of any covenant or agreement contained in this Note or in aid of the exercise of any power or right granted by this Note, and/or (iii) enforce any other legal or equitable right of the holder of this Note.

 

5. Delay or Omission Not Waiver.  No delay or omission on the part of the holder of this Note in the exercise of any power, remedy or right under this Note, or under any other instrument executed pursuant hereto, shall operate as a waiver thereof, nor shall a single or partial exercise of any such power or right preclude any other or further exercise thereof or the exercise of any other right or power hereunder.

 

6. Waiver.  Any term, covenant, agreement or condition of this Note may, with the written consent of Maker and Payee, be amended or compliance therewith may be waived (either generally or in a particular instance and either retroactively or prospectively), altered, modified or amended.

 

7. Attorneys’ Fees and Costs.  In the event an Event of Default shall occur, and in the event that thereafter this Note is placed in the hands of an attorney for collection, or in the event this Note is collected in whole or in part through legal proceedings of any nature, then and in any such case Maker promises to pay all costs of collection, including, but not limited to, reasonable attorneys’ fees and court costs incurred by the holder hereof on account of such collection, whether or not suit is filed.

 

8. Successors and Assigns.  All of the covenants, stipulations, promises and agreements in this Note made by Maker and Payee shall bind its successors and assigns, whether so expressed or not.

 

 

  

  

  

 

9. Maximum Lawful Rate. It is the intent of the Maker and holder of this Note to conform to and contract in strict compliance with applicable usury law from time to time in effect.  In no way, nor in any event or contingency (including but not limited to prepayment, default, demand for payment, or acceleration of the maturity of any obligation), shall the rate of interest taken, reserved, contacted for, charged or received under this Note exceed the highest lawful interest rate permitted under applicable law.  If the holder of this Note shall ever receive anything of value which is characterized as interest under applicable law and which would apart from this provision be in excess of the highest lawful interest rate permitted under applicable law, an amount equal to the amount which would have been excessive interest shall, without penalty, be applied to the reduction of the principal amount owing on this Note in the inverse order of its maturity and not to the payment of interest, or refunded to Maker or the other payor thereof if and to the extent such amount which would have been excessive exceeds such unpaid principal.  All interest paid or agreed to be paid to the holder hereof shall, to the extent permitted by applicable law, be amortized, prorated, allocated and spread throughout the full stated term (including any renewal or extension) of this Note so that the amount of interest on account of such obligation does not exceed the maximum permitted by applicable law.  As used in this Section, the term “applicable law” shall mean the laws of the State of Texas or the federal laws of the United States, whichever laws allow the greater interest, as such laws now exist or may be changed or amended or come into effect in the future.

 

10. Governing Law; Venue.  This Note shall be governed by and construed in accordance with the substantive laws (but not the rules governing conflicts of laws) of the State of Indiana.  Any and all disputes arising or relating to this Note shall be adjudicated exclusively in Terre Haute, Indiana.

 

11. Notice.  Any notice or demand given hereunder shall be deemed to have been given and received (i) when actually received by the receiving party, if delivered in person, by facsimile transmission (as evidenced by confirmation), by e-mail or by overnight courier service, or (ii) if mailed, on the earlier of the date actually received or (whether ever received or not) five Business Days after a letter containing such notice, certified or registered, with postage prepaid, addressed to the receiving party, is deposited in the United States mail.  The address of: (i) Maker is 103 North Court Street, Sullivan, Indiana 47882, Attn: Chief Executive Officer, rick@lilygroup.com; and (ii) Payee is 2017 South County Road 50W, Sullivan, IN Attn: Rick Risinger in each case of (i) or (ii) above, or such other address as either Maker or Payee shall advise the other by the procedure set forth above.

 

12. Severability.  In case any one or more of the provisions contained in this Note shall for any reason be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provision hereof.

 

[Signatures on following page]

 

 

  

  

  

 

 

EXECUTED as of the date set forth above.

 

	 	
LILY GROUP INC.

 

 

By: _________________________________________________

 

 

The undersigned executes this Note in order to acknowledgement the undersigned’s agreements and obligations set forth herein.

 

	 	
VHGI HOLDINGS, INC.

 

 

By: _________________________________________________vhgi8kex102092512.htm

EX. 10.2

 

EXCHANGE AGREEMENT

 

This Exchange Agreement (this “Agreement”) is made and entered into as of September 24, 2012, by and among Lily Group Holdings Company (“Holder”), VHGI Holdings, Inc., a Delaware corporation (“Parent”), and VHGI Coal, Inc., a Delaware corporation and wholly-owned subsidiary of Parent (“Coal”).  Holder, Parent and Coal are sometimes each referred to herein as a “Party” and collectively, as the “Parties”.

 

WHEREAS, Holder owns 700,000 shares of Series A Preferred Stock of Coal (the “Series A Preferred Stock”); and

 

WHEREAS, Holder desires to contribute the Series A Preferred Stock to Parent and in exchange Parent will issue 50,000,000 shares of Common Stock of Parent (the “Exchange Shares”) and a promissory note equal to the accrued, but unpaid, interest and dividends payable with respect to the Series A Preferred Stock as of the Effective Time (as defined below) to Holder on the terms set forth herein; and

 

WHEREAS, Parent and the shareholders of Parent have authorized the increase of the authorized Common Stock of Parent to 250,000,000 shares of Common Stock pursuant to an amendment to the Parent’s certificate of incorporation (the “Increase”), which Increase will become effective when Parent files such amendment with the Secretary of State of the State of Delaware on or about 20 days after the date Parent mails an information statement to the shareholders of Parent (the “Effective Time”);

 

WHEREAS, Paul R. Risinger, the sole owner of Holder (“Risinger”), holds a promissory note made payable to him by Coal in the original principal amount of $17,000,000 (the “SPA Note”) and has agreed as part of this transaction to waive all current defaults for nonpayment thereunder and such future defaults through March 31, 2013 and not take action for any such defaults until after March 31, 2013, pursuant to a letter agreement (the “Letter Agreement”) in the exact form attached hereto as Exhibit B;

 

NOW, THEREFORE, in consideration of the mutual agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged and confessed, the Parties hereby agree as follows:

 

1. Contribution and Issuance of Exchange Shares.

 

(a) Contribution of Series A Preferred Stock.  At the Effective Time:

 

(i) Holder shall contribute and transfer to Parent all of Holder’s right, title and interest in and to the Series A Preferred Stock in exchange for Parent issuing to Holder the Exchange Shares on the terms and subject to the conditions set forth herein.

 

(ii) All accrued, but unpaid, interest and dividends payable with respect to the Series A Preferred Stock as of the Effective Time shall be converted into a promissory note payable by Parent to Holder in the form attached hereto as Exhibit A (the “Promissory Note”).

 

 

  

1

  

 

(iii) Holder shall no longer hold any rights as a stockholder with respect to the Series A Preferred Stock.

 

(iv) Holder shall deliver the certificate representing the Series A Preferred Stock along with an executed blank stock power to Parent.

 

(b)  Issuance of Exchange Shares.  At the Effective Time, assuming Holder has delivered the certificate representing the Series A Preferred Stock and an executed blank stock power as provided above, Parent shall accept the contribution of the Series A Preferred Stock and shall issue the Exchange Shares to Holder and deliver the Promissory Note to Holder.

 

(c) Legend. The certificate representing the Exchange Shares shall contain the following restrictive legend:

 

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE FEDERAL SECURITIES LAWS OR THE SECURITIES LAWS OF ANY STATE.  SUCH SECURITIES MAY NOT BE SOLD, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED AT ANY TIME WHATSOEVER, EXCEPT UPON SUCH REGISTRATION OR UPON DELIVERY TO THE COMPANY OF AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT REGISTRATION IS NOT REQUIRED FOR SUCH TRANSFER AND/OR SUBMISSION TO THE COMPANY OF SUCH EVIDENCE AS MAY BE SATISFACTORY TO THE COMPANY TO THE EFFECT THAT ANY SUCH TRANSFER SHALL NOT BE IN VIOLATION OF THE SECURITIES ACT OF 1933, AS AMENDED, APPLICABLE STATE SECURITIES LAWS AND ANY RULES OR REGULATIONS PROMULGATED THEREUNDER.

 

2. Representations of Holder. Holder hereby represents and warrants as follows:

 

(a) The execution, delivery and performance by Holder of this Agreement, and the consummation of the transactions contemplated hereby, have been duly authorized by Holder.  This Agreement has been duly executed and delivered by Holder and constitutes the legal, valid and binding obligations of Holder, enforceable against Holder in accordance with its terms.

 

(b) Holder has the full power and authority to execute and deliver this Agreement and to consummate the transactions contemplated hereby.  Neither the execution, delivery or performance of this Agreement by Holder nor the consummation of the transactions contemplated hereby will (i) conflict with, or result in a violation or breach of the terms, conditions or provisions of, or constitute a default under any agreement or other instrument under which Holder is bound or to which the Series A Preferred Stock owned by Holder is subject, or result in the creation or imposition of any security interest, lien, charge or encumbrance upon the Series A Preferred Stock, or (ii) violate or conflict with any judgment, decree, order, statute, rule or regulation of any court or any public, governmental or regulatory agency or body having jurisdiction over Holder or the Series A Preferred Stock.

 

 

  

2

  

 

(c) No consent, authorization, approval, permit or license of, or filing with, any governmental body, agency or authority, any lender or lessor is required to authorize, or is required in connection with, the execution, delivery and performance of this Agreement by Holder.

 

(d) Holder owns all right, title and interest in, to and under the Series A Preferred Stock, free and clear of any liens, claims or encumbrances.  No claim has been asserted by any person as to the ownership of the Series A Preferred Stock.

 

(e) Holder has the knowledge and experience in financial, tax and business matters that Holder is capable of evaluating the merits and risks of transferring the Series A Preferred Stock to Parent in exchange for the Exchange Shares and Promissory Note to be issued to Holder under this Agreement.

 

(f) Holder recognizes that investment in the Exchange Shares involves substantial risks.  Holder further recognizes that no Federal or state agencies have passed upon this offering of the Exchange Shares and Promissory Note or made any finding or determination as to the fairness of this investment.  To the extent deemed advisable by Holder, Holder has consulted with its own financial, tax and legal advisors with respect to the transactions contemplated by this Agreement.  Holder has not relied on any financial, tax or legal advice of Parent or any of its directors, shareholders, officers, employees, attorneys or representatives in choosing to execute and deliver this Agreement or in participating in the transactions contemplated herein and therein.

 

3. Letter Agreement.  Risinger shall attach an original of the executed Letter Agreement to the SPA Note upon the execution of this Agreement and shall immediately provide confirmation of such to Coal and Parent.

 

4. Binding Effect.  This Agreement shall be binding upon and inure to the benefit of the successors and assigns of the respective Parties to this Agreement.

 

5. Governing Law.  The validity, performance and enforcement of this Agreement shall be construed, interpreted and governed in accordance with the laws of the State of Delaware.

 

6. Entire Agreement.  This Agreement and the agreements contemplated hereby constitute the entire agreement of the Parties hereto regarding the subject matter hereof, and supersede all prior agreements and understandings, both written and oral, between the Parties, or any of them, with respect to the subject matter hereof.

 

7. Counterparts.  This Agreement may be executed in multiple counterparts, each of which shall be deemed an original and all of which together shall constitute one and the same instrument.  Facsimile signatures shall be given the same effect as original signatures.

 

 

 

  

3

  

 

Signatures on following page

 

 

 

 

 

  

4

  

 

This Agreement is executed by the Parties as of the date first written above.

 

	 	
 

VHGI HOLDINGS, INC.

 

 

By: __________________________________________                                                                       

Michael E. Fasci,

Chief Financial Officer

 

 

VHGI COAL, INC.

 

 

By: __________________________________________                                                                       

Paul R. Risinger,

Chief Executive Officer

 

 

LILY GROUP HOLDINGS COMPANY

 

 

By: __________________________________________

Paul R. Risinger,

 

	  

 

 

  

5

  

 

Exhibit  A

 

Form of Promissory Note

 

 

 

 

 

 

 

 

 

 

 

 

 

  

  

  

 

Exhibit B

 

Letter Agreement

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00208-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00208-of-00352.parquet"}]]