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) CHRIS SULLIVAN, an
individual resident of Nevada (“Sullivan”), (iv) LANJK, LLC, a Kentucky limited
liability company (“LANJK”), (v) RICE REALTY COMPANY, LLC, a Kentucky limited
liability company (“RRC”), (vi) RIGDON O. DEES, III, an individual resident of
California (“Dees”), (vii) CTS EQUITIES LIMITED PARTNERSHIP, a Nevada limited
partnership (“CTS”), and (viii) RONALD CARMICLE, an individual resident of
Kentucky (“Carmicle,” collectively with LANJK, RRC, Dees, and CTS, the “Letter
Agreement Holders”).

RECITALS:

A.           LYH, LNS, Sullivan, 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 Sullivan Note
from Sullivan in exchange for the Settlement Payment, (2) LYH became indebted to
LNS pursuant to and in the amount of the Sullivan Note, and (3) the Letter
Agreement Holders (a) granted LNS security interests in the Letter Agreements to
secure payment by LYH of the Sullivan 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 Sullivan’s direction on April 29, 2010, and
made a second $250,000 payment to Fifth Third at Sullivan’s 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 Sullivan, 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:
 
 
 

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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 Sullivan Note, LNS
shall pay to Sullivan the sum of Seven Million Seven Hundred Fifty Thousand and
No/100 Dollars ($7,750,000) (the “Settlement Payment”).  Sullivan 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 Sullivan (the “Quarterly Interest Payments”), (b) on January 10,
2012, $1,000,000 payable to Fifth Third as directed by Sullivan (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 Sullivan Twelve Thousand Five Hundred and No/100 Dollars ($12,500)
plus closing costs incurred by Sullivan arising from the renewal of the Fifth
Third Note and LNS shall pay to McBrayer, McGinnis, Leslie & Kirkland PLLC as
directed by Sullivan Seven Thousand Two Hundred and No/100 Dollars ($7,200) for
legal fees incurred by Sullivan 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.

 
LY HOLDINGS, LLC
       
By:
/s/ J. Sherman Henderson, III
       
Its:
Manager/Member
       
LIGHTYEAR NETWORK SOLUTIONS, LLC
       
By:
/s/ J. Sherman Henderson, III
       
Its:
CEO
          
/s/ Chris Sullivan
 
CHRIS SULLIVAN
       
 LANJK, LLC
       
By:
/s/ J. Sherman Henderson, III
       
Its:
Manager
       
RICE REALTY COMPANY, LLC
       
By:
/s/ W. Brent Rice
       
Its:
Member

 
 
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/s/ Rigdon O. Dees, III
 
RIGDON O. DEES, III
       
CTS EQUITIES LIMITED PARTNERSHIP
       
By:
/s/ Chris Sullivan
       
Its:
  General Partner
       
/s/ Ronald Carmicle 
 
RONALD CARMICLE

 
 
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