SECOND AMENDMENT TO SETTLEMENT AGREEMENT
SECOND
AMENDMENT TO SETTLEMENT AGREEMENT
THIS SECOND AMENDMENT TO SETTLEMENT
AGREEMENT (“Amendment”) is made and entered into as of the 7th day of
February, 2011, by and among (i) LY HOLDINGS, LLC, a Kentucky
limited liability company (“LYH”), (ii) LIGHTYEAR NETWORK SOLUTIONS,
LLC, a Kentucky limited liability company (“LNS”), (iii) XXXXX XXXXXXXX, an individual
resident of Nevada (“Xxxxxxxx”), (iv) LANJK, LLC, a Kentucky limited
liability company (“LANJK”), (v) RICE REALTY COMPANY, LLC, a
Kentucky limited liability company (“RRC”), (vi) XXXXXX X. XXXX, III, an
individual resident of California (“Xxxx”), (vii) CTS EQUITIES LIMITED
PARTNERSHIP, a Nevada limited partnership (“CTS”), and (viii) XXXXXX XXXXXXXX, an individual
resident of Kentucky (“Xxxxxxxx,” collectively with LANJK, RRC, Xxxx, and CTS,
the “Letter Agreement Holders”).
RECITALS:
A. LYH,
LNS, Xxxxxxxx, and the Letter Agreement Holders entered into that certain
Settlement Agreement dated April 29, 2010 (the “Original Agreement”), as amended
by that certain First Amendment to Settlement Agreement dated August 12, 2010
and made effective on April 29, 2010 (the “First Amendment,” collectively with
the Original Agreement, the “Settlement Agreement”), pursuant to which (1) LNS
purchased and assumed the Xxxxxxxx Note from Xxxxxxxx in exchange for the
Settlement Payment, (2) LYH became indebted to LNS pursuant to and in the amount
of the Xxxxxxxx Note, and (3) the Letter Agreement Holders (a) granted LNS
security interests in the Letter Agreements to secure payment by LYH of the
Xxxxxxxx Note to LNS, and (b) gave LNS an option pursuant to which LNS may
purchase the Letter Agreements.
B. Pursuant
to the terms of the Settlement Agreement, LNS made a $250,000 payment to Fifth
Third at Xxxxxxxx’x direction on April 29, 2010, and made a second $250,000
payment to Fifth Third at Xxxxxxxx’x direction on October 1,
2010. Then, on January 25, 2011, in order to secure an extension of
the Fifth Third Note from Fifth Third and a simultaneous extension of the
Maturity Date herein from Xxxxxxxx, LNS made a $1,000,000 payment to Fifth
Third. As a result of the payments described in this recital, the
outstanding balance of the Settlement Payment is $6,250,000.
C. The
parties now desire to amend the Settlement Agreement to, inter alia, acknowledge the
aggregate $1,500,000 in payment made by LNS pursuant to the Settlement
Agreement, acknowledge the concurrent extension of the Fifth Third Note maturity
date to January 10, 2013, modify and extend the Maturity Date of the Settlement
Agreement to January 10, 2013, and modify and amend the payment schedule under
the Settlement Agreement. All capitalized terms not defined in this
Amendment shall have the definitions set forth in the Settlement
Agreement.
NOW, THEREFORE, in consideration of the
mutual covenants and agreements contained herein and for other good and valuable
consideration, the receipt and sufficiency of all of which is hereby
acknowledged, the parties do hereby agree as follows:
1. Settlement
Payment. The first paragraph of Section 2(b) of the Settlement
Agreement is hereby deleted and replaced in its entirety with the
following:
Settlement
Payment. In exchange for the purchase of the Xxxxxxxx Note,
LNS shall pay to Xxxxxxxx the sum of Seven Million Seven Hundred Fifty Thousand
and No/100 Dollars ($7,750,000) (the “Settlement Payment”). Xxxxxxxx
acknowledges that, as of the date of this Amendment, LNS has paid $1,500,000 in
payments of principal under the Settlement Agreement. The remaining
$6,250,000 principal amount shall be paid as follows: (a) on February 10 , 2011,
and on the first day of each quarter year thereafter until and including the
Maturity Date (as defined below), all accrued and unpaid interest payable to
Fifth Third as directed by Xxxxxxxx (the “Quarterly Interest Payments”), (b) on
January 10, 2012, $1,000,000 payable to Fifth Third as directed by Xxxxxxxx (the
“January 2012 Principal Payment”), and (c) on the Maturity Date, the
then-outstanding principal amount plus accrued and unpaid interest (the “Final
Payment,” collectively with the Quarterly Interest Payments and the January 2012
Principal Payment, the “Deferred Payment”). 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 (as defined below). For
purposes of this Agreement, “Maturity Date” shall mean January 10,
2013.
Additionally,
at the Closing of this Amendment, LNS shall pay to Fifth Third as directed by
Xxxxxxxx Twelve Thousand Five Hundred and No/100 Dollars ($12,500) plus closing
costs incurred by Xxxxxxxx arising from the renewal of the Fifth Third Note and
LNS shall pay to McBrayer, McGinnis, Xxxxxx & Xxxxxxxx PLLC as directed by
Xxxxxxxx Seven Thousand Two Hundred and No/100 Dollars ($7,200) for legal fees
incurred by Xxxxxxxx arising from the renewal of the Fifth Third
Note.
The
second and third paragraphs of Section 2(b) shall remain as set forth in the
Settlement Agreement and shall not be amended or modified.
2. Representations, Warranties
and Covenants. Each party to this Amendment represents,
warrants and covenants, as of the date hereof, as follows:
a. Each
party hereto has the requisite power and authority to enter into this
Amendment. The execution and delivery hereof and the performance by
each party hereto of his or its obligations hereunder will not violate or
constitute an event of default under the terms and provisions of any agreement,
document or instrument to which any such party is a party or by which any such
party is bound;
b. This
Amendment is a valid and binding obligation of each party hereto;
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c. To
the best of each party’s knowledge as of the date hereof, each party is in full
compliance with all applicable laws and any other local, municipal, regional,
state or federal requirements and no party hereto has received actual notice
from any governmental authority that he or it is not in full compliance with all
applicable laws and any other local, municipal, regional, state or federal
requirements;
d. The
Letter Agreement Holders have not granted any option or any other rights to
acquire the Letter Agreements, other than as set forth in the
Settlement Agreement;
e. So
long as the Option remains in effect, each Letter Agreement Holder reaffirms
that he or it will take no action, or fail to take any required action, that
would prohibit him or it from complying with the obligations hereunder or that
would cause any of the representations or warranties hereunder to be untrue as
of the date hereof or at any future date;
f. So
long as the Option remains in effect, each Letter Agreement Holder reaffirms
that he or it will not grant any liens on any Letter Agreement, or sell or
otherwise transfer any Letter Agreement.
3. Miscellaneous. The
Settlement Agreement, as amended and modified by this Amendment, constitutes the
entire understanding between the parties with respect to the subject matter
hereof and supersedes all prior or contemporaneous agreements in regard
thereto. The Settlement Agreement, as modified, cannot be amended
except by an agreement in writing signed by authorized representatives of all
parties and specifically referring to the Settlement Agreement. The
paragraph headings set forth herein are for convenience only and do not
constitute a substantive part of this Amendment. This Amendment shall be
governed by and construed under the laws of the Commonwealth of Kentucky,
without regard to conflicts of law principles. If any
provision of this Amendment shall be determined to be illegal or unenforceable
by any Court of law or any competent governmental or other authority, the
remaining provisions shall be severable and enforceable in accordance with their
terms.
4. Binding
Effect. The Settlement Agreement, as amended and modified by
this Amendment, is binding upon, and shall inure to the benefit of, the parties
hereto and their heirs, personal representatives, successors and
assigns.
5. Counterparts. This
Amendment may be executed in several counterparts, each of which shall be an
original and all of which together shall constitute but one and the same
instrument.
6. Continuing
Obligation. As amended hereby, the Settlement Agreement shall
remain in full force and effect. From and after the date of this
Amendment, all references to the Settlement Agreement in any document executed
in conjunction with this transaction shall include the terms of this
Amendment.
[SPACE
INTENTIONALLY BLANK; SIGNATURES ON FOLLOWING PAGE]
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IN WITNESS WHEREOF, the
parties have executed this Amendment as of the day and date first above
written.
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LY
HOLDINGS, LLC
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By:
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/s/
J. Xxxxxxx Xxxxxxxxx, III
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Its:
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Manager/Member
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LIGHTYEAR
NETWORK SOLUTIONS, LLC
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By:
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/s/
J. Xxxxxxx Xxxxxxxxx, III
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Its:
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CEO
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/s/
Xxxxx Xxxxxxxx
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XXXXX
XXXXXXXX
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LANJK,
LLC
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By:
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/s/
J. Xxxxxxx Xxxxxxxxx, III
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Its:
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Manager
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RICE
REALTY COMPANY, LLC
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By:
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/s/
W. Xxxxx Xxxx
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Its:
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Member
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S-1
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/s/ Xxxxxx X. Xxxx, III
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XXXXXX
X. XXXX, III
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CTS
EQUITIES LIMITED PARTNERSHIP
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By:
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/s/ Xxxxx
Xxxxxxxx
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Its:
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General Partner
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/s/ Xxxxxx Xxxxxxxx
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XXXXXX
XXXXXXXX
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