COLLATERAL RELEASE AGREEMENT
THIS COLLATERAL RELEASE AGREEMENT (this
“Agreement”) is made and entered into as of the 21st day of January, 2011, by
and among (i) LY HOLDINGS,
LLC, a Kentucky limited liability company (“LYH”), (ii) LIGHTYEAR NETWORK SOLUTIONS,
LLC, a Kentucky limited liability company (“Lightyear”), (iii) LIGHTYEAR NETWORK SOLUTIONS,
INC., a Nevada corporation (“LNS”), (iv) XXXXX X. XXXXXXXX,
individually (“Xxxxxxxx”), (v) CTS EQUITIES, LIMITED
PARTNERSHIP, a Nevada limited partnership (“CTS”), and (vi) XXXXXX X. XXXX, III,
individually, (“Xxxx,” together with Lightyear, LNS, Xxxxxxxx and CTS, the
“Releasing Parties”).
WITNESSETH
A. LNS
intends to obtain a loan from First Savings Bank, F.S.B. (the “Bank”) in the
amount of $2,000,000 (the “Loan”), and the Bank agreed to provide the Loan, for
the purpose of providing $1,000,000 to SE Acquisitions, LLC for the construction
of the Phase 1 build out of a switching portal and providing $1,000,000 to
Lightyear to be paid to Fifth Third Bank as directed by Xxxxxxxx on his
behalf. To secure the Loan, the Bank intends to obtain a stock pledge
from LYH of 2,000,000 shares of LNS preferred stock represented by stock
certificate number 102 (the “Pledge”). LYH has pledged all of its LNS
stock pursuant to the agreements set forth below. LYH desires to
obtain, and the Releasing Parties desire to provide, a release of 2,000,000
shares of LNS preferred stock represented by stock certificate number 102 (the
“Released Stock”) from each of the Releasing Parties in order to allow LYH to
grant the Pledge to the Bank.
B. Pursuant
to that certain Security Agreement dated December 31, 2004, by and between LYH
and Xxxxxxxx (the “Xxxxxxxx Security Agreement”), LYH granted a security
interest to Xxxxxxxx in the collateral described in the Security Agreement,
“wherever located, now existing and hereafter arising or coming into existence,”
including, without limitation, Investment Property (as that term is defined in
the Uniform Commercial Code). A UCC-1 financing statement was filed
as UCC-1 File No. 0000-0000000-00 (the “Xxxxxxxx UCC-1”) with the Kentucky
Secretary of State. The security interest secures LYH’s obligation to
pay Xxxxxxxx pursuant to that certain Commercial Note of even date therewith, as
most recently amended by that certain Fifth Amended and Restated Commercial Note
dated February 11, 2010 in the face principal amount of $8,000,000 (the
“Xxxxxxxx Note”).
C. Pursuant
to that certain Settlement Agreement dated April 29, 2010, by and between LYH,
Lightyear and Xxxxxxxx, Xxxxxxxx sold and transferred the Xxxxxxxx Note and the
collateral securing the Xxxxxxxx Note, including without limitation, the
Xxxxxxxx Security Agreement and the Xxxxxxxx UCC-1, to Lightyear. The
Settlement Agreement provides that Xxxxxxxx may declare the Settlement Agreement
to be void ab initio
upon an Event of Default, and may thereafter cause the Xxxxxxxx Note and the
collateral securing the Xxxxxxxx Note to revert to
Xxxxxxxx. Therefore, Lightyear desires to obtain, and Xxxxxxxx
desires to grant, Xxxxxxxx’x acknowledgement and consent to Lightyear’s release
of the Released Stock from the Xxxxxxxx Security Agreement and the amendment of
the Xxxxxxxx UCC-1 to delete the Released Stock from the collateral description
thereunder.
D. Pursuant
to that certain Security Agreement dated March 31, 2004, by and between LYH,
Lightyear, CTS, Xxxx and MAP II, LLC (the “CTS Security Agreement”), LYH granted
a security interest to CTS, as Administrative Agent, in all assets of
LYH. Pursuant to that certain First Amendment to Security Agreement
dated as of February 11, 2010, the parties to the CTS Security Agreement agreed
that the LNS stock held by LYH is subject to the lien created in the CTS
Security Agreement. A UCC-1 financing statement was filed as UCC-1
File No. 0000-0000000-00 (the “CTS UCC-1”) with the Kentucky Secretary of
State.
E. Pursuant
to that certain Stock Pledge Agreement dated March 31, 2004, by and between LYH,
Lightyear, CTS, Xxxx and MAP II, LLC (the “CTS Pledge Agreement”), LYH granted a
security interest to CTS, as Administrative Agent, “in and to the shares of
capital stock, partnership interests, limited liability company membership
interests or other units of equity ownership” held by LYH. Pursuant
to that certain First Amendment to Security Agreement dated as of February 11,
2010, the parties to the CTS Pledge Agreement terminated the security interest
as to membership interests in Lightyear then held by LYH, but did not
specifically agree that the LNS stock held by LYH is subject to the lien created
in the CTS Pledge Agreement.
F. A
UCC-1 financing statement was filed as UCC-1 File No. 0000-0000000-00 listing
LYH as the debtor and Xxxx, as Administrative Agent, as the secured party (the
“Xxxx UCC-1”) with the Kentucky Secretary of State. The collateral
description contained in the Xxxx UCC-1 defines the secured collateral as all of
LYH’s assets.
G. Pursuant
to that certain Subordination and Security Agreement dated February 12, 2010, by
and between LYH and LNS (formerly Libra Alliance Corporation) (the “LNS Security
Agreement”), LYH granted a junior security interest to LNS in “all capital stock
of [LNS] held by LYH, wherever located and whether now owned or hereafter
acquired, including without limitation the 10,000,000 shares of common stock of
[LNS] currently held by LYH and the 9,500,000 shares of preferred stock of [LNS]
currently held by LYH.” The security interest secures LYH’s
obligation to pay LNS Term Note dated February 12, 2010, in the principal amount
of $5,149,980 payable to the order of LNS (the “LNS Note”).
NOW, THEREFORE, in consideration of the
foregoing recitals and other good and valuable consideration, the receipt and
sufficiency of which are expressly acknowledged, the parties agree as
follows:
1. Release. The
Releasing Parties each release the Released Stock from each and every lien in
favor of such Releasing Party, including without limitation, all security
interests and stock pledges pursuant to, as applicable, the Xxxxxxxx Security
Agreement, the CTS Security Agreement, the CTS Pledge Agreement, and the LNS
Security Agreement.
2. Deletion of Collateral from
UCC-1. The Releasing Parties each authorize LYH to delete the
Released Stock from each and every UCC-1 financing statement that (i) names such
Releasing Party as the secured party and (ii) includes the Released Stock within
the collateral description of such UCC-1, including without limitation, as
applicable, the Xxxxxxxx UCC-1, the CTS UCC-1, and the Xxxx UCC-1.
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3. Consent to
Release. Xxxxxxxx acknowledges and consents to the release of
the Released Stock from the security interests and stock pledges granted under
the Xxxxxxxx Security Agreement, and further acknowledges and consents to the
deletion of the Released Stock from the collateral description contained within
the Xxxxxxxx UCC-1.
4. Continuing
Obligation. Except for the Released Stock, all security
interests and stock pledges granted and contained in the Xxxxxxxx Security
Agreement, the CTS Security Agreement, the CTS Pledge Agreement, the LNS
Security Agreement and the Xxxx UCC-1 shall remain pursuant to the terms of the
applicable agreement and/or the applicable UCC-1 financing statement, as
modified hereby. This Agreement shall not effect the indebtedness
owed by LYH and secured by the security agreements, pledge agreements and UCC-1
financing statements modified hereby. The terms and conditions of all
other agreements between LYH and any Releasing Party shall not be affected by
this Agreement, except as expressly modified hereby.
5. Agreements Remain in
Effect. Except to the extent provided herein, all terms and
conditions of the security agreements, pledge agreements and UCC-1 financing
statements between LYH and any of the Releasing Parties remain valid and in full
force and effect. The releases and consents described in this
Agreement shall not constitute a waiver of any of the Releasing Parties’ rights,
except in each case as contemplated by this Agreement.
6. Cooperation. Lightyear,
LNS, Xxxxxxxx, CTS and Xxxx shall execute and deliver to LYH any and all
documents to consummate the transactions set forth herein.
7. Representations, Warranties
and Covenants. Each of the parties to this Agreement
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
Agreement. 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
Agreement is a valid and binding obligation of each party hereto;
(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;
8. Miscellaneous. This
Agreement constitutes the entire understanding between the parties with respect
to the subject matter hereof and supersedes all prior or contemporaneous
agreements in regard thereto. This Agreement cannot be amended except
by an agreement in writing signed by authorized representatives of all parties
and specifically referring to this Agreement. The recitals set forth
above are an integral part of this Agreement and are hereby incorporated into
this Agreement. The paragraph headings set forth herein are for
convenience only and do not constitute a substantive part of this
Agreement. This Agreement 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 Agreement 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.
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9. Notice. All
notices, demands, requests, consents or approvals and other communications
required or permitted hereunder will be in writing, and, to the extent required
by applicable law, will comply with the requirements of the Uniform Commercial
Code then in effect, and will be addressed to such party at the address on file
with LYH or to such other address as any party may give to the other in writing
for such purpose. All such communications, if personally delivered,
will be conclusively deemed to have been received by a party hereto and to be
effective when so delivered, or if sent by telex, facsimile or telegraphic
means, on the day on which transmitted, or if sent by overnight courier service,
on the day after deposit thereof with such service, or if sent by certified or
registered mail, on the third business day after the day on which deposited in
the mail.
10. Binding
Effect. This Agreement is binding upon, and shall inure to the
benefit of, the parties hereto and their heirs, personal representatives,
successors and assigns.
11. Counterparts. This
Agreement 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.
[SPACE INTENTIONALLY BLANK; SIGNATURES
ON FOLLOWING PAGE]
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IN TESTIMONY WHEREOF, witness the
signatures of the parties as of the day and year 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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Name:
J. Xxxxxxx Xxxxxxxxx, III
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Title:
Member/Manager
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By:
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/S/
J. Xxxxxxx Xxxxxxxxx, III
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Name:
J. Xxxxxxx Xxxxxxxxx, III
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Title:
CEO
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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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Name:
J. Xxxxxxx Xxxxxxxxx, III
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Title:
CEO
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CTS
EQUITIES, LIMITED PARTNERSHIP
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By:
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/S/
Xxxxx X. Xxxxxxxx
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Name:
Xxxxx X. Xxxxxxxx
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Title:
General Partner
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/S/
Xxxxx Xxxxxxxx
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XXXXX
XXXXXXXX
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/S/
Xxxxxx X. Xxxx, III
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XXXXXX
X. XXXX, III
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