Exhibit 10.1
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.
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(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
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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.
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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
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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
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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
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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
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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
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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
10
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.
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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
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
12
TELEFONOS DE MEXICO, S.A. DE C.V.
By: /s/ Lic Xxxxxx Xxxxxxxxx Xxxxxxx
------------------------------------
Name: Lic Xxxxxx Xxxxxxxxx Xxxxxxx
Title: General Counsel
13
