STOCK OPTION AGREEMENT
dated as of October __, 2003
by and between
FRANKLIN MUTUAL ADVISERS, LLC
and
CARDIFF HOLDING INC.
with respect to 6,250,073 shares of
common stock of
XO COMMUNICATION, INC.
This STOCK OPTION AGREEMENT dated as of October __, 2003 is
made and entered into by and between Cardiff Holding LLC, a Delaware limited
liability company ("Purchaser"), and Franklin Mutual Advisers, LLC, a Delaware
limited liability company, as agent on behalf of its advisory clients listed on
the signature page hereof (each, an "Individual Seller", and collectively
"Seller"). Capitalized terms not otherwise defined herein have the meanings set
forth in Article IV.
WHEREAS, Purchaser desires to acquire from the Seller an
option to acquire 6,250,073 shares (the "Shares") of the Common Stock of XO
Communication, Inc. on the terms and subject to the conditions set forth in this
Agreement;
NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth in this Agreement, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
ARTICLE I
GRANT OF OPTION, SALES OF SHARES AND CLOSING
1.01 Grant of Option. In consideration of a payment by
Purchaser to Seller of an aggregate of $1,562,518.25, to be wired to Seller on
the date hereof in accordance with the wire instructions set forth on the
signature page hereof, Seller hereby grants to Purchaser the right and option to
purchase the Shares at a Strike price of $4.25 per share (the "Option").
Purchaser may exercise the Option, in whole or in part, from time to time, from
the date hereof through June 21, 2004 by delivery of one or more notices (each
and "Exercise Notice") to Seller by email as follows: xxxxx@xxxx.xxx, with a
copy to xxxxxxxxxxx@xxxx.xxx at or prior to 3:00 p.m. New York City time on the
date of exercise to be accompanied by a phone call to Purchaser as follows:
Xxxxxxx Xxxxxxxxx (973.912.2152) or Xxxxx Xxxxxxxxxx (973.912.2124) indicating
that such notice has been sent.
1.02 Purchase and Sale. Seller agrees to and shall sell to
Purchaser, and Purchaser agrees to purchase from the Seller, those Shares
subject to each such Exercise Notice at the closing for such Shares as
contemplated in Section 1.04 below, on the terms set forth in this Agreement.
1.03 Purchase Price. The applicable purchase price of
$4.25 per share is payable in immediately available United States funds at the
closing for such Shares in the manner provided in Section 1.04.
1.04 Closing. The Shares to be sold in any particular
closing will be delivered by Seller via a DTC-book entry transfer from Seller to
the account of Purchaser with Icahn & Co., Inc., against delivery of the
applicable purchase price, in a transaction to be closed not later than the
close of trading on the first NYSE trading day following the date of delivery of
the applicable Exercise Notice.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Each Individual Seller hereby represents and warrants to
Purchaser, as to itself only and not jointly, and severally, and with respect
only to the Shares beneficially owned by such Individual Seller, as of the date
hereof and as of the date of each closing as follows:
2.01 Existence of the Seller. Individual Seller is duly
organized, validly existing and in good standing under the Laws of its
jurisdiction of organization or incorporation. Individual Seller has full power
and authority to execute and deliver this Agreement and to perform its
obligations hereunder and to consummate the transactions contemplated hereby,
including without limitation to sell and transfer (pursuant to this Agreement)
the Shares.
2.02 Authority. This Agreement has been duly and validly
executed and delivered by Individual Seller and constitutes a legal, valid and
binding obligation of Individual Seller enforceable against Individual Seller in
accordance with its terms.
2.03 Shares. The Shares are owned by Individual Seller
free and clear of all Liens, and at each closing Individual Seller will transfer
to Purchaser good and valid title to the Shares purchased thereby, free and
clear of all Liens.
2.04 No Conflicts. The execution and delivery by
Individual Seller of this Agreement do not, and the performance by Individual
Seller of its obligations under this Agreement and the consummation of the
transactions contemplated hereby will not:
(a) conflict with or result in a violation or breach of any of
the terms, conditions or provisions of the organizational documents of
Individual Seller; or
(b) conflict with or result in a violation or breach of any
term or provision of any Contract, Law or Order applicable to Individual Seller
or any of its Assets and Properties.
2.05 Brokers. All negotiations relative to this Agreement
and the transactions contemplated hereby have been carried out on behalf of
Individual Seller directly with Purchaser without the intervention of any person
on behalf of Individual Seller in such manner as to give rise to any valid claim
by any person against Purchaser for a finder's fee, brokerage commission or
similar payment.
2.06 Holdings. At all times after the execution of this
Agreement and prior to June 22, 2004 Individual Seller shall continue to hold
beneficial ownership of the Shares subject to the Option and one or more
custodians for Individual Seller shall hold record ownership thereof and
Individual Seller shall not loan or sell such Shares.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby represents and warrants to the Seller as
follows:
- 2 -
3.01 Organization of Purchaser. Purchaser is a limited
partnership duly organized, validly existing and in good standing under the Laws
of the State of Delaware. Purchaser has full authority to execute and deliver
this Agreement and to perform Purchaser's obligations hereunder and to
consummate the transactions contemplated hereby, including, without limitation,
to buy (pursuant to this Agreement) the Shares.
3.02 Authority. This Agreement has been duly and validly
executed and delivered by Purchaser and constitutes a legal, valid and binding
obligation of Purchaser enforceable against Purchaser in accordance with its
terms.
3.03 No Conflicts. The execution and delivery by Purchaser
of this Agreement do not, and the performance by Purchaser of its obligations
under this Agreement and the consummation of the transactions contemplated
hereby will not:
(a) conflict with or result in a violation or breach of any of
the terms, conditions or provisions of its organizational documents; or
(b) conflict with or result in a violation or breach of any
term or provision of any Contract, Law or Order applicable to Purchaser or any
of its Assets and Properties.
3.04 Brokers. All negotiations relative to this Agreement
and the transactions contemplated hereby have been carried out by Purchaser
directly with the Seller without the intervention of any Person on behalf of the
Purchaser in such manner as to give rise to any valid claim by any Person
against the Seller for a finder's fee, brokerage commission or similar payment.
ARTICLE IV
DEFINITIONS
4.01 Definitions.
(a) Defined Terms. As used in this Agreement, the
following defined terms have the meanings indicated below:
"Agreement" means this Stock Option Agreement, as the same
shall be amended from time to time.
"Assets and Properties" of any Person means all assets and
properties of every kind, nature, character and description (whether real,
personal or mixed, whether tangible or intangible, and wherever situated),
including the goodwill related thereto, operated, owned or leased by such
Person.
"Seller" has the meaning ascribed to it in the forepart of
this Agreement.
"Contract" means any agreement, lease, license, evidence of
indebtedness, mortgage, indenture, security agreement or other contract.
- 3 -
"Laws" means all laws, statutes, rules, regulations,
ordinances and other pronouncements having the effect of law of the United
States or any state, county, city or other political subdivision or of any
governmental or regulatory authority.
"Liens" means any mortgage, pledge, assessment, security
interest, lease, lien, adverse claim, levy, charge or other encumbrance of any
kind, or any conditional sale Contract, title retention Contract or other
Contract to give any of the foregoing.
"Person" means any natural person, corporation, limited
liability company, general partnership, limited partnership, proprietorship,
other business organization, trust, union, association or governmental or
regulatory authority.
"Purchaser" has the meaning ascribed to it in the forepart of
this Agreement.
"Shares" has the meaning ascribed to it in the forepart of
this Agreement.
ARTICLE V
MISCELLANEOUS
5.01 Entire Agreement. This Agreement supersedes all prior
discussions and agreements between the parties with respect to the subject
matter hereof and contains the sole and entire agreement between the parties
hereto with respect to the subject matter hereof.
5.02 Expenses. Each party will pay its own costs and
expenses incurred in connection with the negotiation, execution and closing of
this Agreement and the transactions contemplated hereby.
5.03 Waiver. Any term or condition of this Agreement may
be waived at any time by the party that is entitled to the benefit thereof, but
no such waiver shall be effective unless set forth in a written instrument duly
executed by or on behalf of the party waiving such term or condition. No waiver
by any party of any term or condition of this Agreement, in any one or more
instances, shall be deemed to be or construed as a waiver of the same or any
other term or condition of this Agreement on any future occasion. All remedies,
either under this Agreement or by Law or otherwise afforded, will be cumulative
and not alternative.
5.04 Amendment. This Agreement may be amended,
supplemented or modified only by a written instrument duly executed by or on
behalf of each party hereto.
5.05 No Third Party Beneficiary. The terms and provisions
of this Agreement are intended solely for the benefit of each party hereto and
their respective successors or permitted assigns, and it is not the intention of
the parties to confer third-party beneficiary rights upon any other Person.
5.06 No Assignment; Binding Effect. Neither this Agreement
nor any right, interest or obligation hereunder may be assigned by any party
hereto without the prior written consent of the other party hereto and any
attempt to do so will be void, except for assignments
- 4 -
and transfers by operation of Law. Subject to the preceding sentence, this
Agreement is binding upon, inures to the benefit of and is enforceable by the
parties hereto and their respective successors and assigns.
5.07 Headings. The headings used in this Agreement have
been inserted for convenience of reference only and do not define or limit the
provisions hereof.
5.08 Invalid Provisions. If any provision of this
Agreement is held to be illegal, invalid or unenforceable under any present or
future Law, and if the rights or obligations of any party hereto under this
Agreement will not be materially and adversely affected thereby, (a) such
provision will be fully severable, (b) this Agreement will be construed and
enforced as if such illegal, invalid or unenforceable provision had never
comprised a part hereof, and (c) the remaining provisions of this Agreement will
remain in full force and effect and will not be affected by the illegal, invalid
or unenforceable provision or by its severance herefrom.
5.09 Governing Law. This Agreement shall be governed by
and construed in accordance with the Laws of the State of New York applicable to
a Contract executed and performed in such State, without giving effect to the
conflicts of laws principles thereof.
5.10 Counterparts. This Agreement may be executed in any
number of counterparts, each of which will be deemed an original, but all of
which together will constitute one and the same instrument.
5.11 Authority of Agent. Franklin Mutual Advisers, LLC
("FMA") hereby represents and warrants to Purchaser that FMA has full authority
to execute and deliver this Agreement on behalf of each Individual Seller and
that this Agreement constitutes the legal, binding and enforceable obligation of
each such Individual Seller. Each Individual Seller represents, warrants and
agrees, for the benefit of Purchaser that FMA is its agent with full power and
authority to act on behalf of Individual Seller hereunder and that Purchaser may
deal with and take instructions from, and rely in dealing with and taking
instruction from, FMA, as agent of Individual Seller, in all respects with
respect to this Agreement and any matter arising in connection therewith.
- 5 -
IN WITNESS WHEREOF, this Agreement has been duly executed and
delivered by the duly authorized officer of each party hereto as of the date
first above written.
Purchaser: CARDIFF HOLDING INC.
By:________________________________
Seller: FRANKLIN MUTUAL ADVISERS, LLC on
behalf of the Sellers listed below
By:_________________________________
Sellers:
INDIVIDUAL SELLER NUMBER OF SHARE
Mutual Shares Fund 2,321,108
Mutual Qualified Fund 1,081,175
Mutual Beacon Fund 1,349,370
Mutual Discovery Fund 1,042,901
Mutual Shares Securities Fund 230,239
Mutual Discovery Securities Fund 49,930
Mutual Beacon Fund (Canada) 27,913
Franklin Mutual Beacon Fund 143,428
Franklin Mutual Shares Fund 4,009
Seller's Wire Instructions:
ABA No.: 000-000-000
Acct.: Mutual Series Pass Through A/C
Acct No. 0000125123
Ref.: XO
[Stock Option Agreement with Franklin Mutual dated October __, 2003]
- 6 -
