Exhibit 28
FINAL EXECUTION COPY
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MUTUAL RELEASE AND SETTLEMENT AGREEMENT
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This Mutual Release and Settlement Agreement (this "SETTLEMENT
AGREEMENT") is entered into as of the 13th day of October 2002, by and
among XO COMMUNICATIONS, INC., a Delaware corporation ("XO"), FORSTMANN
LITTLE & CO. EQUITY PARTNERSHIP-VII, L.P. ("EQUITY-VII"), a Delaware
limited partnership, FORSTMANN LITTLE & CO. SUBORDINATED DEBT AND EQUITY
MANAGEMENT BUYOUT PARTNERSHIP-VIII, L.P., a Delaware limited partnership
("MBO-VIII"), FLC XXXI PARTNERSHIP, L.P., a New York limited partnership
("FORSTMANN LITTLE & CO.", and together with Equity-VII and MBO-VIII,
"FORSTMANN LITTLE"), and TELEFONOS DE MEXICO, S.A. DE C.V., a sociedad
anonima de capital variable organized under the laws of the United Mexican
States ("TELMEX", and together with Equity-VII and MBO-VIII, the "POTENTIAL
INVESTORS") (collectively, the "PARTIES").
RECITALS
WHEREAS, XO and the Potential Investors entered into a Stock Purchase
Agreement, dated as of January 15, 2002 (the "STOCK PURCHASE AGREEMENT");
WHEREAS, the Stock Purchase Agreement contains numerous conditions to
the Potential Investors' obligations to consummate the transactions
contemplated by that agreement and provides that if certain of the
conditions to closing have not been satisfied by September 15, 2002, the
Potential Investors may terminate the Stock Purchase Agreement;
WHEREAS, the Potential Investors have stated that it is virtually
impossible that many of the conditions to their obligations to consummate
the transactions contemplated by the Stock Purchase Agreement will ever be
satisfied, including, without limitation, the conditions relating to (i) a
Material Adverse Effect (as defined in the Stock Purchase Agreement), (ii)
a business plan reasonably acceptable to the Potential Investors, (iii) a
bank credit facility reasonably acceptable to them and (iv) the
satisfactory resolution, in the sole discretion of the Potential Investors,
of certain litigation;
WHEREAS, the Potential Investors have further stated that, in the
judgment of each of them, the foregoing closing conditions were unsatisfied
on September 15, 2002 and remain unsatisfied;
WHEREAS, XO has stated that it believes that each of such conditions
has been satisfied, has disputed the Potential Investors' claims that any
of the conditions in the Stock Purchase Agreement have not or cannot be met
and has stated that the Potential Investors are not entitled to terminate
the Stock Purchase Agreement;
WHEREAS, XO is a debtor in a chapter 11 case filed on June 17, 2002,
in the United States Bankruptcy Court for the Southern District of New York
(the "COURT");
WHEREAS, the Parties wish to resolve their differences; and
WHEREAS, High River Limited Partnership and Meadow Walk Limited
Partnership (collectively, the "ICAHN DEBT HOLDERS"), who between them own
approximately 85% of XO's senior secured debt and approximately $1.33
billion in principal face amount of XO's senior notes, have executed and
delivered to the Potential Investors the Voting Agreement, attached as
Exhibit D, and the Icahn Debt Holders, Chelonian Corp. and Icahn Associates
Corp. (collectively, the "ICAHN AFFILIATES") have executed and delivered to
the Potential Investors their Acknowledgement, Agreement and Consent,
attached as Exhibit B;
NOW, THEREFORE, in consideration of the recitals, covenants and
releases contained herein, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the Parties
agree as follows:
1. Definitions. The following additional terms shall have the meanings
listed:
(a) AFFILIATES means, with respect to any specified Person, all
Persons controlled by, controlling or under common Control
(as defined below) with such specified Person.
(b) APPROVAL MOTION means the motion for approval of this
Settlement Agreement, substantially in the form attached as
Exhibit E.
(c) APPROVAL ORDER means the order of the Court, in the form
attached as Exhibit A, approving this Settlement Agreement
and the transactions and releases contemplated by it.
(d) APPROVAL DATE means the date upon which the Approval Order
becomes a Final Order.
(e) BANKRUPTCY CODE means title 11 of the United States Code, 11
U.S.C.ss.101, et seq., as now in effect or hereafter
amended.
(f) BOARD shall have the meaning specified in Section 5.
(g) BUSINESS DAY means any day other than a Saturday or Sunday
which is not a day on which banking institutions in New York
City are authorized or obligated by law or executive order
to close.
(h) CONSENTING PARTY shall have the meaning specified in Section 4.
(i) CONSENT shall have the meaning specified in Section 4.
(j) CONTROL shall have the meaning specified in Rule 12b-2 of
the Securities Exchange Act of 1934, as amended.
(k) CONTROLLING PERSON means, with respect to any Person, any
other Person that Controls such Person.
(l) COVERED DIRECTOR means any director of XO on the date
hereof, except any director who (i) is an executive officer
of XO on the date hereof and (ii) shall continue as a
director of XO following the Plan Effective Date.
(m) CREDITORS' COMMITTEE shall have the meaning specified in
Section 4.
(n) EFFECTIVE DATE means the later of (i) the Approval Date and
(ii) the date upon which XO shall have received the Payment
Amount as set forth in Section 2 hereto.
(o) EXECUTION DATE means the date this Settlement Agreement is
fully executed by the Parties.
(p) FINAL ORDER means an order which has not been stayed,
reversed, vacated or modified, and the time to appeal or
seek review or rehearing has expired and (i) no appeal or
request for review or rehearing was filed; or (ii) if an
appeal or request for review or rehearing was filed, such an
appeal or request for review or rehearing is no longer
pending.
(q) FL DESIGNEES shall have the meaning specified in Section 5.
(r) FORSTMANN LITTLE ENTITIES means (i) FLC XXIX Partnership,
L.P.; (ii) FLC XXX Partnership, L.P.; (iii) FLC XXXI
Partnership, L.P. (d/b/a Forstmann Little & Co.); (iv) FLC
XXXII Partnership, L.P.; (v) FLC XXXIII Partnership, L.P.;
(vi) Forstmann Little & Co. Equity Partnership-V, L.P.;
(vii) Forstmann Little & Co. Equity Partnership-VI, L.P.;
(viii) F.L. Fund, L.P.; (ix) Forstmann Little & Co.
Subordinated Debt and Equity Management Buyout
Partnership-VI, L.P.; and (x) Forstmann Little & Co.
Subordinated Debt and Equity Management Buyout
Partnership-VII, L.P.
(s) XXXXXXX INDEMNIFICATION AGREEMENT means that certain
Indemnification Agreement, dated as of June 14, 2002,
between XO Management (as defined below) and Xxxxxx X.
Xxxxxxx.
(t) INVESTOR RELEASED PARTIES shall have the meaning specified
in Section 6(a).
(u) XXXXX INDEMNIFICATION AGREEMENT means that certain
Indemnification Agreement, dated as of June 14, 2002,
between XO Management and Xxxx X. Xxxxx.
(v) PAYMENT AMOUNT shall have the meaning specified in Section 2
hereof.
(w) PERSON means any individual, firm, corporation, limited
liability company, partnership, company, trust or other
entity, and shall include any successor (by merger or
otherwise) of such entity.
(x) PLAN EFFECTIVE DATE means the Effective Date of XO's Plan,
as defined therein.
(y) OTHER STOCK PURCHASE AGREEMENTS shall mean (i) the Stock
Purchase Agreement, dated as of December 7, 1999, among
NEXTLINK Communications, Inc., Forstmann Little & Co. Equity
Partnership-VI, L.P., Forstmann Little & Co. Subordinated
Debt and Equity Management Buyout Partnership-VII, L.P. and
F.L. Fund, L.P.; (ii) the Stock Purchase Agreement, dated as
of June 14, 2000, among NEXTLINK Communications, Inc.
(including, if applicable, NM Acquisition Corp. as its
successor), Forstmann Little & Co. Equity Partnership-VI,
L.P., Forstmann Little & Co. Subordinated Debt and Equity
Management Buyout Partnership-VII, L.P. and F.L. Fund, L.P.;
(iii) the Amendment and Stock Purchase Agreement, dated as
of April 25, 2001, among XO Communications, Inc., Forstmann
Little & Co. Equity Partnership-VI, L.P., Forstmann Little &
Co. Subordinated Debt and Equity Management Buyout
Partnership-VII, L.P. and F.L. Fund, L.P; (iv) the
Assignment and Assumption Agreement, dated as of January 19,
2000, among NEXTLINK Communications, Inc., Forstmann Little
& Co. Equity Partnership-VI, L.P., Forstmann Little & Co.
Subordinated Debt and Equity Management Buyout
Partnership-VII, L.P. and F.L. Fund, L.P.; and (v) the
Second Amended and Restated Registration Rights Agreement,
dated as of June 5, 2001, among the Company, Forstmann
Little & Co. Equity Partnership-VI, L.P., Forstmann Little &
Co. Subordinated Debt and Equity Management Buyout
Partnership-VII, L.P. and F.L. Fund, L.P.
(z) STAND-ALONE NOTICE shall have the same meaning as in XO's
Plan.
(aa) STAND-ALONE PLAN shall have the same meaning as in XO's
Plan.
(bb) TELMEX ENTITIES means (i) Carso Global Telecom, S.A. de
C.V.; (ii) Controladora de Servicios de Telecomunicaciones,
S.A. de C.V.; and (iii) Teninver, S.A. de C.V.
(cc) TERMINATION NOTICE shall have the meaning specified in
Section 10.
(dd) XO MANAGEMENT means XO Management Services, Inc., a
Washington corporation.
(ee) XO RELEASED PARTIES shall have the meaning specified in
Section 6(b).
(ff) XO'S DISCLOSURE STATEMENT means the Disclosure Statement
with Respect to XO's Plan.
(gg) XO'S PLAN means the Third Amended Plan of Reorganization for
XO Communications, Inc., dated July 22, 2002, filed by XO
with the Court.
2. Payment. On the next Business Day following the Approval Date,
Forstmann Little & Co. and Telmex each shall pay to XO, TWELVE MILLION FIVE
HUNDRED THOUSAND DOLLARS ($12,500,000.00), for an aggregate amount of
TWENTY FIVE MILLION DOLLARS ($25,000,000.00) (the "PAYMENT AMOUNT"), by
wire transfer in accordance with written instructions provided by XO prior
to the Approval Date.
3. Bankruptcy Court Approval. Within two (2) Business Days following
the Execution Date, XO shall file with the Court the Approval Motion
seeking entry of the Approval Order. XO shall seek a prompt hearing on such
motion pursuant to the Federal Rules of Bankruptcy Procedure and other
applicable law and rules and each of XO and each Potential Investor shall
use its reasonable best efforts to obtain entry of the Approval Order and
to seek to cause the Approval Order to become a Final Order as soon as
possible.
4. XO's Delivery of Consent from Creditors' Committee. XO shall use
reasonable efforts to deliver to the Potential Investors, as soon as
practicable, an Acknowledgement, Agreement and Consent substantially in the
form of Exhibit C from the Official Committee of Unsecured Creditors
appointed in XO's chapter 11 case (the "CREDITORS' COMMITTEE"). In
discharge of its obligations under this Section 4, XO shall have no
obligation to offer, or to encourage any other Person to offer, any
financial or other consideration, including, without limitation, any
modification to XO's Plan, in an effort to obtain such Consent.
5. Board Resignation and Continuing Obligations.
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(a) On or before the Effective Date, Forstmann Little shall
directly or indirectly cause its Affiliates who hold any shares of Series C
Cumulative Convertible Participating Preferred Stock of XO or Series D
Convertible Participating Preferred Stock of XO to remove the directors
currently serving on XO's Board of Directors (the "BOARD") who were
designated by such series of preferred stock (the "FL DESIGNEES"), unless
such director has theretofore tendered his or her resignation.
(b) From the date hereof and continuing through and after the
Effective Date, any and all obligations of XO existing on the date hereof
to indemnify and hold harmless each FL Designee shall survive unimpaired
and unaffected following their termination as directors of XO as provided
for, and consistent with the terms currently set forth, in XO's Plan. Until
the third (3rd) anniversary of the Effective Date, XO shall not take, and
shall not cause or permit to be taken, any action and shall not fail to
take any action, where such action or failure to take such action adversely
affects the indemnification and hold harmless rights of the FL Designees
existing on the date hereof. Until the sixth (6th) anniversary of the
Effective Date, any and all indemnification and hold harmless rights of the
FL Designees shall at all times be at least as favorable as the treatment
of, and indemnification and hold harmless rights provided to, any director
of XO as of the date hereof. Until the sixth (6th) anniversary of the
Effective Date, upon the reasonable request from time to time of either FL
Designee, XO shall provide to such FL Designee any and all information
reasonably requested by such FL Designee regarding the material terms of
and any and all amendments, modifications, or changes to any obligation of
XO to indemnify or hold harmless any director of XO as of the date hereof.
(c) From the date hereof and continuing through and after the
Effective Date, the treatment of, and coverage provided to, the FL
Designees under any (i) run-off directors' and officers' liability
insurance policies and/or endorsements and (ii) any directors' and
officers' liability insurance policies and/or endorsements obtained or
maintained by XO governing claims arising from facts or events that
occurred on or before the Effective Date (including without limitation the
consummation of this Settlement Agreement or the consummation or failure to
consummate the transactions contemplated by the Stock Purchase Agreement),
in either case, shall at all times be at least as favorable to the FL
Designees as the treatment of, and coverage provided to, any Covered
Director; provided that nothing herein shall obligate XO to obtain or
maintain any such policy or endorsement. Upon the reasonable request from
time to time of either FL Designee, XO shall provide to such FL Designee
any and all information reasonably requested by such FL Designee regarding
the existence, material terms, amendments, extensions, renewals or
terminations of any directors' and officers' liability insurance policies
and/or endorsements of XO or any of its Affiliates naming as an insured or
otherwise covering any Covered Director.
(d) This Section 5 shall be binding on, and enforceable against,
XO and its successors and assigns, including, without limitation, any
purchaser of all or substantially all of XO's assets pursuant to Section
363(b) of the Bankruptcy Code, or otherwise.
(e) Any and all claims for indemnification or insurance under
this Section 5 shall survive and be rendered unimpaired and unaffected
pursuant to Section 1124(1) of the Bankruptcy Code by the entry of any
confirmation order with respect to any chapter 11 plan approved in XO's
chapter 11 case, and from and after the Effective Date but prior to the
consummation of any such chapter 11 plan, all such claims shall be entitled
to administrative expense priority pursuant to Section 503(b) of the
Bankruptcy Code.
(f) Unless the Approval Motion shall have theretofore been denied
or the Approval Order is reversed on appeal, XO will not propose or support
any chapter 11 plan in XO's chapter 11 case that would be inconsistent with
the due performance of its obligations under this Section 5, it being
understood and agreed that nothing herein requires XO to alter, amend or
resolicit acceptances in connection with the Stand-Alone Plan.
6. Releases
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(a) As of the Effective Date, XO irrevocably, unconditionally and
forever releases and discharges (i) the Potential Investors, (ii) each of
the Potential Investors' respective current and former Affiliates
(including, without limitation, the Forstmann Little Entities and the
Telmex Entities), (iii) to the extent not covered by clause (ii), any and
all current and former officers, partners, directors, employees, agents,
members, shareholders, Controlling Persons, attorneys, advisors and other
professionals of any Person covered by clauses (i) or (ii), and (iv) to the
extent not covered by clauses (ii) or (iii), the FL Designees
(collectively, the "INVESTOR RELEASED PARTIES"), from any and all claims,
obligations, suits, judgments, damages, demands, rights, causes of action
and liabilities, whether liquidated or unliquidated, fixed or contingent,
matured or unmatured, known or unknown, foreseen or unforeseen, now
existing or hereafter arising, in law, equity or otherwise, arising from or
relating in any way whatsoever to XO, any of XO's businesses, the Stock
Purchase Agreement, the Other Stock Purchase Agreements, XO's chapter 11
case, XO's Plan or XO's Disclosure Statement or the purchase or sale of
XO's equity or debt securities by any Person; provided, however, that this
release shall not extend to any obligations in respect of
telecommunications services provided by or to XO or its subsidiaries in the
ordinary course of their business nor to any promise made or obligation
assumed in this Settlement Agreement.
(b) As of the Effective Date, each of the Potential Investors
irrevocably, unconditionally and forever releases and discharges (i) XO,
(ii) each of XO's current and former Affiliates, and (iii) to the extent
not covered by clause (ii), any and all current and former officers,
partners, directors, employees, agents, members, shareholders, Controlling
Persons, attorneys, advisors and other professionals of any Person covered
by clauses (i) or (ii) (but excluding the Forstmann Little Entities and the
FL Designees) (collectively, the "XO RELEASED PARTIES"), from any and all
claims, obligations, suits, judgments, damages, demands, rights, causes of
action and liabilities, whether liquidated or unliquidated, fixed or
contingent, matured or unmatured, known or unknown, foreseen or unforeseen,
now existing or hereafter arising, in law, equity or otherwise, arising
from or relating in any way whatsoever to XO, any of XO's businesses, the
Stock Purchase Agreement, the Other Stock Purchase Agreements, XO's chapter
11 case, XO's Plan or XO's Disclosure Statement or the purchase or sale of
XO's equity or debt securities by any Person; provided, however, that this
release shall not extend to any obligations in respect of
telecommunications services provided by or to XO or its subsidiaries or by
or to Telmex or its subsidiaries in the ordinary course of their businesses
nor to any promise made or obligation assumed in this Settlement Agreement;
and provided, further, that this release shall not extend to any
indemnification obligations of XO to the FL Designees as set forth in XO's
Plan, or any obligations of XO Management under the Xxxxxxx Indemnification
Agreement or the Xxxxx Indemnification Agreement.
(c) Unless otherwise required or ordered by the Court (or any
court to which any plan of reorganization in XO's chapter 11 case may be
appealed) in connection with the approval of XO's Plan or any other plan of
reorganization in XO's chapter 11 case, XO shall not propose or support
(and shall use its reasonable best efforts, consistent with its fiduciary
duties, to oppose) any amendment to Section 8.3, 10.4 or 10.5 of XO's Plan
(or the corresponding provisions in any other plan of reorganization in
XO's chapter 11 case) that would adversely affect any Investor Released
Party without the express written consent of (i) such affected Investor
Released Party, if such affected Investor Released Party is a Potential
Investor or an FL Designee, and/or (ii) the Potential Investor affiliated
with such affected Investor Released Party, if such affected Investor
Released Party is not a Potential Investor or an FL Designee.
7. Preservation of Rights Prior to the Effective Date. Until the
Effective Date and subject to Section 13, nothing in this Settlement
Agreement shall limit or constitute a waiver of any of the Parties' rights,
obligations, claims and defenses under the Stock Purchase Agreement and
otherwise (whether in law or equity), including without limitation under
Section 8.12 of the Stock Purchase Agreement.
8. Defenses and Appeals. XO covenants that it will vigorously defend
against any appeal or request for reconsideration or modification of the
Approval Order and that it will not object to any motion by the Potential
Investors to intervene or otherwise participate in any such appeals or
requests as interested parties, and each Potential Investor covenants that
it will use reasonable best efforts to support and cooperate with XO in
vigorously defending against any such appeals or requests.
9. Indemnification.
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(a) From and after the Effective Date, XO shall indemnify, defend
and hold harmless any and all Investor Released Parties from and against
any and all claims, losses, liabilities, obligations, payments, damages,
charges, judgments, fines, penalties, amounts paid in settlement, costs and
expenses (including, without limitation, reasonable attorneys' fees)
resulting from any breach of this Settlement Agreement by XO. Any and all
claims for indemnification under this Section 9(a) shall survive and be
rendered unimpaired and unaffected pursuant to Section 1124(1) of the
Bankruptcy Code by the entry of any confirmation order with respect to any
chapter 11 plan approved in XO's chapter 11 case, and from and after the
Effective Date but prior to consummation of any such chapter 11 plan, all
such claims shall be entitled to administrative expense priority pursuant
to Section 503(b) of the Bankruptcy Code.
(b) From and after the Effective Date, each Potential Investor
shall indemnify, defend and hold harmless any and all XO Released Parties
from and against any and all claims, losses, liabilities, obligations,
payments, damages, charges, judgments, fines, penalties, amounts paid in
settlement, costs and expenses (including, without limitation, reasonable
attorneys' fees) resulting from any breach of this Settlement Agreement by
such Potential Investor.
10. Lifting of the Automatic Stay. Simultaneously with or prior to the
execution of this Settlement Agreement, XO and the Potential Investors
shall sign a stipulation and proposed order in the form attached as Exhibit
F consenting to lift the automatic stay under Section 362 of the Bankruptcy
Code for the limited purpose of allowing the Potential Investors to deliver
to XO a notice of termination of the Stock Purchase Agreement as of
September 16, 2002 in substantially the form attached as Exhibit G (the
"TERMINATION NOTICE"). Within two (2) Business Days following the Execution
Date, XO shall file with the Court the motion for the order consenting to
lift the automatic stay in the form attached as Exhibit H. The
effectiveness of the Termination Notice shall be subject to the entry of
such order and upon entry thereof, the Termination Notice shall
automatically become effective, without prejudice to any of the rights and
obligations of the parties under this Settlement Agreement or the Stock
Purchase Agreement, including, without limitation, the right of XO to
assert claims for breach of the Stock Purchase Agreement in the event the
Approval Motion is denied or this Settlement Agreement is otherwise
terminated or the right of any Potential Investor to assert the failure of
any of the conditions to its obligation to consummate the transactions
contemplated by the Stock Purchase Agreement or to assert any right of
termination provided for in the Stock Purchase Agreement. XO and the
Potential Investors shall file the stipulation with the Court to be "so
ordered" at the same time that XO files it motion seeking entry of the
Approval Order and shall use their reasonable best efforts to obtain
approval of the stipulation and order lifting the automatic stay as soon as
practicable.
11. Termination of the Stock Purchase Agreement. XO and the Potential
Investors mutually agree that upon the Effective Date, the Stock Purchase
Agreement shall be deemed to have been terminated in its entirety pursuant
to Section 6.1(a) thereof as of September 16, 2002, with no further rights,
duties, obligations or liabilities under it to survive, and the Termination
Notice shall in that event be deemed withdrawn nunc pro tunc and of no
force and effect. In the event the Stock Purchase Agreement is terminated
under this Section 11, (i) the Potential Investors shall be entitled to
retain any and all amounts reimbursed to them as expense reimbursement
under the Stock Purchase Agreement and XO's obligations to reimburse any
Potential Investor for any further fees and expenses not theretofore paid
to them under the Stock Purchase Agreement shall terminate upon such
termination of the Stock Purchase Agreement, (ii) XO will not challenge or
support or encourage any challenge to the Potential Investors' rights to
retain any and all amounts paid to them or on their behalf by XO under the
Stock Purchase Agreement and (iii) XO acknowledges and agrees that any and
all amounts reimbursed to the Potential Investors under the Stock Purchase
Agreement were within the scope and contemplation of that agreement and
were proper and reasonable, and XO hereby irrevocably, unconditionally and
forever waives and releases any and all rights, if any, it has or may have
to recoup any amounts reimbursed to the Potential Investors under the Stock
Purchase Agreement.
12. Termination of the Other Stock Purchase Agreements. XO and
Forstmann Little mutually agree that as of the Effective Date, the Other
Stock Purchase Agreements shall terminate in their entirety with no further
rights, duties, obligations or liabilities under them to survive.
13. Termination of this Settlement Agreement. Each Party shall have
the right, in its sole discretion, to terminate this Settlement Agreement
if (i) the Approval Motion is denied, (ii) the Approval Motion is granted
and later reversed on appeal and such reversal becomes a Final Order or
(iii) (A) in the judgment of such Party, the Approval Order has been
changed in any manner which deprives, or the Court or any court to which
the Approval Order may be appealed makes any ruling which has the effect of
depriving, such Party of any benefit of this Settlement Agreement or the
Approval Order in the form attached as Exhibit A or (B) Paragraph 4 of the
Approval Order has been changed, or the Court or any court to which the
Approval Order may be appealed makes any ruling which has the effect of
changing, Paragraph 4 of the Approval Order in any manner whatsoever from
Paragraph 4 in the form of the Approval Order attached as Exhibit A. Each
Potential Investor shall have the right, in its sole discretion, to
terminate this Settlement Agreement if (i) a hearing on the Approval Motion
shall not have been held on or before the sixtieth (60th) calendar day
following the Execution Date; provided that such right of termination of
the Settlement Agreement shall only be available until the tenth (10th)
Business Day following such date, (ii) the Approval Order shall not have
been granted on or before the ninetieth (90th) calendar day following the
Execution Date; provided that such right of termination of the Settlement
Agreement shall only be available until the tenth (10th) Business Day
following such date, or (iii) there shall have occurred or XO shall have
proposed or supported any amendment to Section 8.3, 10.4 or 10.5 of XO's
Plan (or the corresponding provisions in any other plan of reorganization
in XO's chapter 11 case) that would adversely affect any Investor Released
Party. Except as provided in Section 28 hereof, thereafter no Party shall
have any further rights, duties, obligations or liabilities hereunder and
this Settlement Agreement and all orders entered and proceedings undertaken
in connection with it (other than the lifting of the automatic stay in
accordance with Section 10) shall become null and void without further
action by any Party and each of the Parties shall be restored to their
status quo ante rights, including, without limitation, all rights,
obligations, claims and defenses under the Stock Purchase Agreement and
XO's claim, if made, that the Termination Notice was unwarranted as of
September 16, 2002. In the event this Settlement Agreement is terminated
pursuant to this Section 13, the Stock Purchase Agreement will be deemed to
have been terminated by the Potential Investors on September 16, 2002 under
Section 6.1 of the Stock Purchase Agreement. In light of XO's intention to
deliver the Stand-Alone Notice but not subject thereto, XO shall not at any
time seek specific performance of any obligation under the Stock Purchase
Agreement or any other equitable remedy to specifically enforce the terms
of the Stock Purchase Agreement. The Parties further acknowledge and agree
that they shall be permitted to exercise any and all termination rights
that they may have under this Section 13 without seeking and/or obtaining
any consents or approvals from the Court or otherwise (including, without
limitation, any relief from the automatic stay).
14. Publicity. All public announcements and public filings by any
Party regarding this Settlement Agreement must be reasonably acceptable to
the other Parties. The Parties agree that, prior to issuing any press
release or making any public filing announcing, describing or referring to
the settlement contained in this Settlement Agreement, the Parties shall
provide each other with a written copy of such press release or public
filing and permit the other Parties to comment thereon. XO and Telmex
acknowledge that pursuant to Section 13(d) of the Securities Exchange Act
of 1934, Forstmann Little or its Affiliates may be required to make a
filing in connection with the execution of this Settlement Agreement.
15. No Admission of Fault or Liability. The Parties agree that neither
the execution of this Settlement Agreement, nor compliance with its terms,
shall constitute an admission of any fault or liability on the part of any
of the Parties, or any of their Affiliates, officers, partners, directors,
employees, agents, members, shareholders, attorneys, advisors and other
professionals. None of the Parties to this Settlement Agreement admit fault
or liability of any sort and, in fact, all Parties expressly deny fault and
liability. In particular, but not by way of limitation, neither this
Settlement Agreement, nor the Stand-Alone Notice, nor any draft or final
pleadings, motions, affidavits or other papers filed by any Party with the
Bankruptcy Court in connection with seeking approval of this Settlement
Agreement, seeking to obtain the Approval Order or seeking to have the
Approval Order become a Final Order shall be used by any Party against
another Party as an admission or evidence of whether any condition to the
Potential Investors' obligations to consummate the transactions
contemplated by the Stock Purchase Agreement has been or is or was capable
of being satisfied. The Parties further acknowledge and agree that neither
a filing of the Stand-Alone Notice by XO nor any actions taken by XO in
furtherance of the Stand-Alone Plan subsequent to September 16, 2002 shall
constitute or give rise to (i) any of the events of termination under
Section 6.1 of the Stock Purchase Agreement or any rights, claims or other
defenses that would not have existed prior to September 16, 2002 or (ii)
any breach of any representation, warranty, covenant, default or event of
default under the Stock Purchase Agreement or the Other Stock Purchase
Agreements.
16. Attorneys' Fees, Expenses, and Costs. XO and the Potential
Investors are each responsible for and agree to bear their own respective
attorneys' fees, expenses, court costs, and other costs and expenses
incurred in connection with this Settlement Agreement.
17. Consultation with Attorneys and Construction of Agreement. Each
Party represents and warrants that this Settlement Agreement is the product
of negotiation and preparation by and among all of the Parties and their
respective attorneys, and that each Party has undertaken its own
investigation of the facts and is relying solely upon its own knowledge and
the advice of its respective attorneys. The Parties expressly acknowledge
that this Settlement Agreement shall not be deemed to have been prepared or
drafted by one Party or another, or its attorneys, and will be construed
accordingly.
18. Governing Law. This Settlement Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware, without
giving effect to the principles of conflicts of law, other than the choice
of law principles of such state.
19. Waiver Of Jury Trial. The Parties hereby waive any right they may
have to a trial by jury in respect of any action, proceeding or litigation
directly or indirectly arising out of, under or in connection with this
Settlement Agreement.
20. Amendments in Writing. This Settlement Agreement may only be
amended or modified if such amendment or modification is in writing and
signed by all the Parties and authorized pursuant to an order of the Court.
No waiver of any breach of this Settlement Agreement shall be construed as
an implied amendment or agreement to amend or modify any provision of this
Settlement Agreement.
21. No Waiver. The failure by any of the Parties to enforce at any
time, or for any period of time, any one or more of the terms or conditions
of this Settlement Agreement, or a course of dealings between the Parties,
shall not be a waiver of such terms or conditions or of such Party's right
thereafter to enforce each and every term and condition of this Settlement
Agreement.
22. No Third Party Beneficiaries. The only intended beneficiaries of
this Settlement Agreement are the Parties to this Settlement Agreement,
except that it is expressly acknowledged and agreed by the Parties that the
FL Designees are third party beneficiaries of Section 5 and all Investor
Released Parties and XO Released Parties are third party beneficiaries of
Sections 6 and 9, as applicable. XO and the Potential Investors acknowledge
and agree that there are not and have never been any intended third party
beneficiaries of or under the Stock Purchase Agreement and XO and the
Potential Investors never intended that any Person other than XO and the
Potential Investors have or ever had any rights under or relating to the
Stock Purchase Agreement.
23. Headings. Headings are for convenience only and shall not limit,
expand, affect or alter the meaning of any text.
24. Successors and Assigns. This Settlement Agreement and its exhibits
shall be binding on and shall inure to the benefit of the Parties and their
respective successors and assigns, including, without limitation, any
purchaser of all or substantially all of XO's assets pursuant to Section
363(b) of the Bankruptcy Code, or otherwise, and is enforceable against
them in accordance with its terms. Each of XO and the Potential Investors
represents and warrants that it has not assigned any rights or claims under
the Stock Purchase Agreement, other than as set forth and disclosed in the
Plan, Disclosure Statement and order confirming the FL/Telmex Plan (as
defined in the Plan).
25. Non-Assignment of Claims. To the extent permitted by law, XO shall
not sell, transfer, assign or otherwise dispose of any of its rights or
interests under, or any claims it may have against any party arising out of
or relating to, the Stock Purchase Agreement or arising out of or relating
to the negotiations related thereto, the transactions contemplated thereby
or any subsequent discussions related thereto or to the termination thereof
to any Person, or agree to take any of the foregoing actions.
26. Several, Not Joint, Obligations. The agreements, representations
and obligations of Telmex, on the one hand, and Forstmann Little, on the
other hand, under this Settlement Agreement are, in all respects, several
and not joint.
27. Warranty of Authority. Each Party represents and warrants for
itself that this Settlement Agreement has been duly authorized, executed
and delivered and that, subject to the Approval Order becoming a Final
Order, this Settlement Agreement constitutes a legal, valid, and binding
obligation of such Party, enforceable against such Party in accordance with
its terms.
28. Survival. Sections 10, 13, 15, 18, 19, 20, 21, 22, 23, 24, 26, 27,
28 and 29 hereto shall survive any termination hereof in perpetuity.
29. Multiple Counterparts and Facsimile Signatures. This Settlement
Agreement may be executed in several counterparts and as so executed shall
constitute an enforceable agreement, binding on all Parties,
notwithstanding that all Parties are not signatories to the original or the
same counterpart. This Settlement Agreement may be executed and delivered
by facsimile copies, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the Parties hereto have executed this Settlement
Agreement the day and year first above written.
XO COMMUNICATIONS, INC.
By: /s/ Xxxx X. Xxxxxxx
-------------------------------------
Name: Xxxx X. Xxxxxxx
Title: Senior Vice President,
General Counsel and Secretary
FORSTMANN LITTLE & CO. EQUITY
PARTNERSHIP-VII, L.P.
By: FLC XXXII Partnership, L.P.,
its general partner
By: /s/ Xxxxxx X. Xxxxxx
-------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: General Partner
FORSTMANN LITTLE & CO. SUBORDINATED
DEBT AND EQUITY MANAGEMENT BUYOUT
PARTNERSHIP-VIII, L.P.
By: FLC XXXIII Partnership, L.P.
its general partner
By: /s/ Xxxxxx X. Xxxxxx
-------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: General Partner
FLC XXXI PARTNERSHIP, L.P.
By: FLC XXXIII Partnership, L.P.,
a general partner
By: /s/ Xxxxxx X. Xxxxxx
-------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: General Partner
TELEFONOS DE MEXICO, S.A. DE C.V.
By: /s/ Xxxxxx Xxxxxxxxx Xxxxxxx
-------------------------------------
Name: Lic. Xxxxxx Xxxxxxxxx Xxxxxxx
Title: General Counsel
