-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, LGPDVJU7yvAlMUqCel4Fuio/NYLzumsK+fUAPGQvu6G8kENkNHd1R0TvaSGlKedm Ka2dbc/RuSmnmPLxBhwUKA== 0000895345-02-000527.txt : 20021022 0000895345-02-000527.hdr.sgml : 20021022 20021022134501 ACCESSION NUMBER: 0000895345-02-000527 CONFORMED SUBMISSION TYPE: SC 13D/A PUBLIC DOCUMENT COUNT: 3 FILED AS OF DATE: 20021022 GROUP MEMBERS: FL FUND, L.P. GROUP MEMBERS: THEODORE J. FORSTMANN FL &CO. SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: XO COMMUNICATIONS INC CENTRAL INDEX KEY: 0001111634 STANDARD INDUSTRIAL CLASSIFICATION: TELEPHONE COMMUNICATIONS (NO RADIO TELEPHONE) [4813] IRS NUMBER: 541983517 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A SEC ACT: 1934 Act SEC FILE NUMBER: 005-59237 FILM NUMBER: 02794813 BUSINESS ADDRESS: STREET 1: 11111 SUNSNET HILLS ROAD CITY: RESTON STATE: VA ZIP: 22102 BUSINESS PHONE: 7035472000 MAIL ADDRESS: STREET 1: 11111 SUNSET HILLS ROAD CITY: RESTON STATE: VA ZIP: 20190 FORMER COMPANY: FORMER CONFORMED NAME: NM ACQUISITION CORP DATE OF NAME CHANGE: 20000411 FORMER COMPANY: FORMER CONFORMED NAME: NEXTLINK COMMUNICATIONS INC/NEW DATE OF NAME CHANGE: 20000622 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: FORSTMANN LITTLE & CO SUB DEBT & EQ MGMT BUYOUT PAR VII LP CENTRAL INDEX KEY: 0001095466 IRS NUMBER: 134002846 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A BUSINESS ADDRESS: STREET 1: WINSTON HUTCHINS STREET 2: 767 FIFTH AVE CITY: NEW YORK STATE: NY ZIP: 10153 BUSINESS PHONE: 2123555656 MAIL ADDRESS: STREET 1: WINSTON HUTCHINS STREET 2: 767 FIFTH AVE CITY: NEW YORK STATE: NY ZIP: 10153 SC 13D/A 1 tc13daxo.txt UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 SCHEDULE 13D UNDER THE SECURITIES EXCHANGE ACT OF 1934 (AMENDMENT NO. 9)* XO COMMUNICATIONS, INC. - ------------------------------------------------------------------------------- (Name of Issuer) CLASS A COMMON STOCK, PAR VALUE $0.02 PER SHARE - ------------------------------------------------------------------------------- (Title of Class of Securities) 65333H707 - ------------------------------------------------------------------------------- (CUSIP Number) FRIED, FRANK, HARRIS, SHRIVER FORSTMANN LITTLE & CO. SUBORDINATED & JACOBSON DEBT & EQUITY MANAGEMENT BUYOUT ONE NEW YORK PLAZA PARTNERSHIP-VII, L.P. NEW YORK, NY 10004 FORSTMANN LITTLE & CO. EQUITY ATTN: STEPHEN FRAIDIN, ESQ. PARTNERSHIP-VI, L.P. (212) 859-8000 FL FUND, L.P. THEODORE J. FORSTMANN C/O FORSTMANN LITTLE & CO. 767 FIFTH AVENUE NEW YORK, NY 10153 ATTN: WINSTON W. HUTCHINS (212) 355-5656 (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) OCTOBER 13, 2002 ------------------------------------------------------------------- (Date of Event which Requires Filing of this Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of ss.ss.240.13d-1(e), 240.13d-1(f) or 240.13(g), check the following box. [ ] NOTE: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. Seess.240.13d-7 for other parties to whom copies are to be sent. *The remainder of this cover page shall be filled out for a reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page. The information required on the remainder of this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes). SCHEDULE 13D - -------------------- -------------------------- CUSIP NO. 65333H707 Page 2 of 28 - -------------------- -------------------------- - -------- ---------------------------------------------------------------------- 1 NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON FORSTMANN LITTLE & CO. SUBORDINATED DEBT AND EQUITY MANAGEMENT BUYOUT PARTNERSHIP-VII, L.P. - -------- ---------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) | | (b) |X| - -------- ---------------------------------------------------------------------- 3 SEC USE ONLY - -------- ---------------------------------------------------------------------- 4 SOURCE OF FUNDS* OO - -------- ---------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) - -------- ---------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION DELAWARE - -------- ---------------------------------------------------------------------- 7 SOLE VOTING POWER NUMBER OF 50,183,824** SHARES ------- -------------------------------------------------- 8 SHARED VOTING POWER BENEFICIALLY 0 OWNED BY ------- -------------------------------------------------- EACH 9 SOLE DISPOSITIVE POWER REPORTING 50,183,824** PERSON ------- -------------------------------------------------- 10 SHARED DISPOSITIVE POWER WITH 0 - -------- ---------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 50,183,824** - -------- ---------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* - -------- ---------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 12.9% - -------- ---------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* PN - -------- ---------------------------------------------------------------------- *SEE INSTRUCTIONS INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7 (INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION. ** Section 8(a)(i) of the Amended and Restated Certificate of Designation of the Powers, Preferences and Relative, Participating, Optional and Other Special Rights of Series C Cumulative Convertible Participating Preferred Stock (the "Series C Preferred") and Qualifications, Limitations and Restrictions Thereof (the "Amended and Restated Series C Certificate of Designation") sets forth a formula for determining the number of shares of Class A Common Stock issuable, as at any date, upon conversion of the Series C Preferred. The number of shares referred to in items 7, 9 and 11 above was calculated in accordance with such formula assuming that the Conversion Price and the Net Realizable FMV (each such term as defined in the Amended and Restated Series C Certificate of Designation) equal $17.00. Section 8(a)(i) of the Amended and Restated Certificate of Designation of the Powers, Preferences and Relative, Participating, Optional and Other Special Rights of Series G Cumulative Convertible Participating Preferred Stock (the "Series G Preferred") and Qualifications, Limitations and Restrictions Thereof (the "Amended and Restated Series G Certificate of Designation") sets forth a formula for determining the number of shares of Class A Common Stock issuable, as at any date, upon conversion of the Series G Preferred. The number of shares referred to in items 7, 9 and 11 above was calculated in accordance with such formula assuming that the Conversion Price and the Net Realizable FMV (each such term as defined in the Amended and Restated Series G Certificate of Designation) equal $17.00. SCHEDULE 13D - -------------------- -------------------------- CUSIP NO. 65333H707 Page 3 of 28 - -------------------- -------------------------- - -------- ---------------------------------------------------------------------- 1 NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON FORSTMANN LITTLE & CO. EQUITY PARTNERSHIP-VI, L.P. - -------- ---------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) | | (b) |X| - -------- ---------------------------------------------------------------------- 3 SEC USE ONLY - -------- ---------------------------------------------------------------------- 4 SOURCE OF FUNDS* OO - -------- ---------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) - -------- ---------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION DELAWARE - -------- ---------------------------------------------------------------------- 7 SOLE VOTING POWER NUMBER OF 73,301,588** SHARES ------- -------------------------------------------------- 8 SHARED VOTING POWER BENEFICIALLY 0 OWNED BY ------- -------------------------------------------------- EACH 9 SOLE DISPOSITIVE POWER REPORTING 73,301,588** PERSON ------- -------------------------------------------------- 10 SHARED DISPOSITIVE POWER WITH 0 -------- --------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 73,301,588** - -------- ---------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* - -------- ---------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 20.3% - -------- ---------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* PN - -------- ---------------------------------------------------------------------- *SEE INSTRUCTIONS INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7 (INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION. ** Section 8(a)(i) of the Amended and Restated Certificate of Designation of the Powers, Preferences and Relative, Participating, Optional and Other Special Rights of Series D Convertible Participating Preferred Stock (the "Series D Preferred") and Qualifications, Limitations and Restrictions Thereof (the "Amended and Restated Series D Certificate of Designation") sets forth a formula for determining the number of shares of Class A Common Stock issuable, as at any date, upon conversion of the Series D Preferred. A portion of the number of shares referred to in items 7, 9 and 11 above was calculated, with respect to the number of shares of Class A Common Stock issuable upon conversion of the Series D Preferred, in accordance with such formula assuming that the Conversion Price and the Net Realizable FMV (each such term as defined in the Amended and Restated Series D Certificate of Designation) equal $17.00. Section 8(a)(i) of the Amended and Restated Certificate of Designation of the Powers, Preferences and Relative, Participating, Optional and Other Special Rights of Series H Convertible Participating Preferred Stock (the "Series H Preferred") and Qualifications, Limitations and Restrictions Thereof (the "Amended and Restated Series H Certificate of Designation") sets forth a formula for determining the number of shares of Class A Common Stock issuable, as at any date, upon conversion of the Series H Preferred. A portion of the number of shares referred to in items 7, 9 and 11 above was calculated, with respect to the number of shares of Class A Common Stock issuable upon conversion of the Series H Preferred, in accordance with such formula assuming that the Conversion Price and the Net Realizable FMV (each such term as defined in the Amended and Restated Series H Certificate of Designation) equal $17.00. SCHEDULE 13D - -------------------- -------------------------- CUSIP NO. 65333H707 Page 4 of 28 - -------------------- -------------------------- - -------- ---------------------------------------------------------------------- 1 NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON FL FUND, L.P. - -------- ---------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) | | (b) |X| - -------- ---------------------------------------------------------------------- 3 SEC USE ONLY - -------- ---------------------------------------------------------------------- 4 SOURCE OF FUNDS* OO - -------- ---------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) - -------- ---------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION DELAWARE - -------- ---------------------------------------------------------------------- 7 SOLE VOTING POWER NUMBER OF 44,000** SHARES ------- -------------------------------------------------- 8 SHARED VOTING POWER BENEFICIALLY 0 OWNED BY ------- -------------------------------------------------- EACH 9 SOLE DISPOSITIVE POWER REPORTING 44,000** PERSON ------- -------------------------------------------------- 10 SHARED DISPOSITIVE POWER WITH 0 - -------- ---------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 44,000** - -------- ---------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* - -------- ---------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 0.0% - -------- ---------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* PN - -------- ---------------------------------------------------------------------- *SEE INSTRUCTIONS INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7 (INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION. ** Section 8(a)(i) of the Amended and Restated Series D Certificate of Designation sets forth a formula for determining the number of shares of Class A Common Stock issuable, as at any date, upon conversion of the Series D Preferred. The number of shares referred to in items 7, 9 and 11 above was calculated in accordance with such formula assuming that the Conversion Price and the Net Realizable FMV (each such term as defined in the Amended and Restated Series D Certificate of Designation) equal $17.00. Section 8(a)(i) of the Amended and Restated Series H Certificate of Designation sets forth a formula for determining the number of shares of Class A Common Stock issuable, as at any date, upon conversion of the Series H Preferred. The number of shares referred to in items 7, 9 and 11 above was calculated in accordance with such formula assuming that the Conversion Price and the Net Realizable FMV (each such term as defined in the Amended and Restated Series H Certificate of Designation) equal $17.00. SCHEDULE 13D - -------------------- -------------------------- CUSIP NO. 65333H707 Page 5 of 28 - -------------------- -------------------------- - -------- ---------------------------------------------------------------------- 1 NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON THEODORE J. FORSTMANN - -------- ---------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) | | (b) |X| - -------- ---------------------------------------------------------------------- 3 SEC USE ONLY - -------- ---------------------------------------------------------------------- 4 SOURCE OF FUNDS* PF - -------- ---------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) - -------- ---------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION UNITED STATES - -------- ---------------------------------------------------------------------- 7 SOLE VOTING POWER NUMBER OF 800,000 SHARES ------- -------------------------------------------------- 8 SHARED VOTING POWER BENEFICIALLY 0 OWNED BY ------- -------------------------------------------------- EACH 9 SOLE DISPOSITIVE POWER REPORTING 800,000 PERSON ------- -------------------------------------------------- 10 SHARED DISPOSITIVE POWER WITH 0 - -------- ---------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 800,000 - -------- ---------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* - -------- ---------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 0.2% - -------- ---------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* IN - -------- ---------------------------------------------------------------------- This Amendment No. 9, filed on behalf of Forstmann Little & Co. Subordinated Debt and Equity Management Buyout Partnership-VII, L.P., a Delaware limited partnership ("MBO-VII"), Forstmann Little & Co. Equity Partnership-VI, L.P., a Delaware limited partnership ("Equity-VI"), FL Fund, L.P., a Delaware limited partnership ("FL Fund", and together with MBO-VII and Equity-VI, the "FL Partnerships"), and Theodore J. Forstmann ("Mr. Forstmann" and, collectively with MBO-VII, Equity-VI and FL Fund, the "Reporting Persons"), amends and supplements the Schedule 13D filed on behalf of the FL Partnerships with the Securities and Exchange Commission on January 25, 2000, as amended by Amendment No. 1 filed on May 25, 2000, Amendment No. 2 filed on June 16, 2000, Amendment No. 3 filed on July 10, 2000, Amendment No. 4 filed on May 1, 2001, Amendment No. 5 filed on June 6, 2001, Amendment No. 6 filed on December 3, 2001, Amendment No. 7 filed on January 22, 2002 and Amendment No. 8 filed on June 7, 2002 (the "Schedule 13D"), relating to the Class A Common Stock, par value $0.02 per share, of XO Communications, Inc., a Delaware corporation ("XO"). Forstmann Little & Co. Equity Partnership-VII, L.P., a Delaware limited partnership ("Equity-VII"), Forstmann Little & Co. Subordinated Debt and Equity Management Buyout Partnership-VIII, L.P., a Delaware limited partnership ("MBO-VIII" and, together with Equity VII, the "FL Potential Investors"), 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 XO entered into a Stock Purchase Agreement (the "Stock Purchase Agreement"), dated January 15, 2002, a copy of which is attached to this Schedule 13D as Exhibit 22. XO, the FL Potential Investors, FLC XXXI Partnership, L.P., a New York limited partnership doing business as Forstmann Little & Co. ("FLC XXXI"), and Telmex entered into a Mutual Release and Settlement Agreement, dated October 13, 2002 (the "Settlement Agreement"), a copy of which is attached hereto as Exhibit 28, relating to the Stock Purchase Agreement. FLC XXXII Partnership, L.P., a New York limited partnership ("FLC XXXII"), is the general partner of Equity-VI and Equity-VII. FLC XXXIII Partnership, L.P., a New York limited partnership ("FLC XXXIII"), is the general partner of MBO-VII and MBO-VIII. Mr. Forstmann is a general partner of FLC XXXII and FLC XXXIII and a general partner of the general partners of FLC XXXI. FLCXXXI is the general partner of FL Fund. Capitalized terms used but not otherwise defined herein shall have the meanings ascribed to such terms in the Schedule 13D. Except as specifically provided herein, this Amendment does not modify any of the information previously reported in the Schedule 13D. ITEM 3. Source and Amount of Funds or Other Consideration ------------------------------------------------- Item 3 is hereby amended to add the following: As more fully described in Item 6 below, Forstmann Little & Co. Equity Partnership-VII, L.P., a Delaware limited partnership ("Equity-VII"), Forstmann Little & Co. Subordinated Debt and Equity Management Buyout Partnership-VIII, L.P., a Delaware limited partnership ("MBO-VIII" and together with Equity VII, the "FL Potential Investors") FLC XXXI Partnership, L.P., a New York limited partnership doing business as Forstmann Little & Co. ("FLC XXXI" and together with the FL Potential Investors "Forstmann Little"), 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 the FL Potential Investors, the "Potential Investors") and XO Communications, Inc., a Delaware corporation ("XO" or the "Company"), entered into a Mutual Release and Settlement Agreement (the "Settlement Agreement"), dated October 13, 2002, a copy of which is attached hereto as Exhibit 28. Pursuant to the Settlement Agreement and upon the terms and subject to the conditions contained therein, XO and the Potential Investors agreed to terminate the previously announced Stock Purchase Agreement, dated January 15, 2002 (the "Stock Purchase Agreement"), among XO and the Potential Investors, pursuant to which (i) XO had agreed to sell to the FL Potential Investors shares of the Company's Class A Common Stock, par value $0.01 per share, and the Company's to-be-designated Class D Common Stock, par value $0.01 per share, which shares would have in the aggregate equaled approximately 40.00% of the total outstanding equity securities of the Company, subject to adjustment, immediately after giving effect to the restructuring and investment contemplated by the Stock Purchase Agreement, for a purchase price of $400,000,000, and (ii) XO agreed to sell to Telmex shares of the Company's to-be-designated Class C Common Stock, par value $0.01 per share, which would have in the aggregate equaled 40.00% of the total outstanding equity securities of the Company, subject to adjustment, immediately after giving effect to the restructuring and investment contemplated by the Stock Purchase Agreement, for a purchase price of $400,000,000. Pursuant to the Settlement Agreement and upon the terms and subject to the conditions contained therein, FLC XXXI, an affiliate of the FL Potential Investors, and Telmex each agreed to pay to the Company $12,500,000, or $25,000,000 in the aggregate (the "Settlement Amount"), in consideration for the covenants, releases and agreements contained in the Settlement Agreement FLC XXXI will obtain the funds required to pay Forstmann Little's portion of the Settlement Amount from its general partner, FLC XXXIII Partnership, L.P., a New York limited partnership. ITEM 4. Purpose of Transaction ---------------------- Item 4 is hereby amended to add the following: As more fully described in Item 6 below, the Company, Forstmann Little and Telmex entered into the Settlement Agreement, pursuant to which the parties to the Stock Purchase Agreement agreed to terminate the Stock Purchase Agreement, FLC XXXI, an affiliate of the FL Potential Investors, and Telmex agreed to pay to the Company an aggregate amount of $25,000,000, and the parties agreed, among other things, that each party would be released from any claims relating to the Stock Purchase Agreement and its termination. The termination of the Stock Purchase Agreement and the Settlement Agreement are subject to the approval of the United States Bankruptcy Court of the Southern District of New York (the "Bankruptcy Court"), the bankruptcy court before which XO's chapter 11 case is pending, and the satisfaction of other conditions. Depending on various factors, including, without limitation, events that may transpire in XO's pending chapter 11 bankruptcy proceedings, each of the Reporting Persons may in the future take such actions with respect to its investment in XO as it deems appropriate, including, without limitation, taking any actions that might result in any of the matters set forth in subparagraphs (a)-(j) of Item 4. ITEM 5. Interest in Securities of the Issuer ------------------------------------ Item 5 is hereby amended as follows: The following information is as of October 13, 2002: (i) MBO-VII: (a) Amount Beneficially Owned: MBO-VII directly owns 584,375 shares of Series C Preferred, which are convertible into 34,375,000 shares of Class A Common Stock, assuming the conversion of all Series C Preferred and Series D Preferred pursuant to Section 8(a)(i) of the Amended and Restated Series C Certificate of Designation, which sets forth a formula for determining the number of shares of Class A Common Stock issuable, as at any date, upon conversion of the Series C Preferred. The number of shares of Class A Common Stock referred to above was calculated in accordance with such formula assuming that the Conversion Price and the Net Realizable FMV (each such term as defined in the Amended and Restated Series C Certificate of Designation) equal $17.00. MBO-VII directly owns 268,750 shares of Series G Preferred, which are convertible into 15,808,824 shares of Class A Common Stock, assuming the conversion of all Series G Preferred and Series H Preferred pursuant to Section 8(a)(i) of the Amended and Restated Series G Certificate of Designation, which sets forth a formula for determining the number of shares of Class A Common Stock issuable, as at any date, upon conversion of the Series G Preferred. The number of shares of Class A Common Stock referred to above was calculated in accordance with such formula assuming that the Conversion Price and the Net Realizable FMV (each such term as defined in the Amended and Restated Series G Certificate of Designation) equal $17.00. FLC XXXIII, having its principal business office at the address set forth in response to Item 2(b) of this statement, is the general partner of MBO-VII. Mr. Forstmann, Sandra J. Horbach, Thomas H. Lister, Winston W. Hutchins, Jamie C. Nicholls and Gordon A. Holmes (each a United States citizen (other than Mr. Holmes, who is a citizen of the Republic of Ireland) with his or her principal place of business being at the address set forth in response to Item 2(b) of this statement) are the general partners of FLC XXXIII. The shares of Series C Preferred and Series G Preferred beneficially owned by MBO-VII as calculated above are convertible into approximately 12.9% of the Class A Common Stock outstanding, based on calculations made in accordance with Rule 13d-3(d) of the Securities and Exchange Act of 1934, as amended, or any successor federal statute, and the rules and regulations promulgated thereunder (the "Act"), and there being 337,813,235 shares of Class A Common Stock outstanding as of August 1, 2002, based on XO's quarterly report on Form 10-Q for the period ended June 30, 2002. (b) Assuming conversion of all shares of Series C Preferred and Series G Preferred beneficially owned by MBO-VII, number of shares as to which MBO-VII has: (i) sole power to vote or to direct the vote - 50,183,824. (ii) shared power to vote or to direct the vote -- None. (iii) sole power to dispose or to direct the disposition of - 50,183,824. (iv) shared power to dispose or to direct the disposition of -- None. (ii) Equity-VI: (a) Amount Beneficially Owned: Equity-VI directly owns 265,075 shares of Series D Preferred, which are convertible into 15,592,647 shares of Class A Common Stock, assuming the conversion of all Series C Preferred and Series D Preferred pursuant to Section 8(a)(i) of the Amended and Restated Series D Certificate of Designation, which sets forth a formula for determining the number of shares of Class A Common Stock issuable, as at any date, upon conversion of the Series D Preferred. The number of shares of Class A Common Stock referred to above was calculated in accordance with such formula assuming that the Conversion Price and the Net Realizable FMV (each such term as defined in the Amended and Restated Series D Certificate of Designation) equal $17.00. Equity-VI directly owns 131,052 shares of Series H Preferred, which are convertible into 7,708,941 shares of Class A Common Stock, assuming the conversion of all Series H Preferred and Series G Preferred pursuant to Section 8(a)(i) of the Amended and Restated Series H Certificate of Designation, which sets forth a formula for determining the number of shares of Class A Common Stock issuable, as at any date, upon conversion of the Series H Preferred. The number of shares of Class A Common Stock referred to above was calculated in accordance with such formula assuming that the Conversion Price and the Net Realizable FMV (each such term as defined in the Amended and Restated Series H Certificate of Designation) equal $17.00. Equity-VI directly owns 50,000,000 shares of Class A Common Stock. FLC XXXII Partnership, L.P., a New York limited partnership having its principal business office at the address set forth in response to Item 2(b) of this statement, is the general partner of Equity-VI. Mr. Forstmann, Sandra J. Horbach, Thomas H. Lister, Winston W. Hutchins, Jamie C. Nicholls and Gordon A. Holmes (each a United States citizen (other than Mr. Holmes, who is a citizen of the Republic of Ireland) with his or her principal place of business being at the address set forth in response to Item 2(b) of this statement) are the general partners of FLC XXXII. The shares of (i) Series D Preferred and Series H Preferred as calculated above on an as-converted basis and (ii) Common Stock beneficially owned by Equity-VI represent approximately 20.3% of the Class A Common Stock outstanding, based on calculations made in accordance with Rule 13d-3(d) of the Act, and there being 337,813,235 shares of Class A Common Stock outstanding as of August 1, 2002, based on XO's quarterly report on Form 10-Q for the period ended June 30, 2002. Assuming conversion of all shares of Series D Preferred and Series H Preferred beneficially owned by Equity-VI, number of shares as to which Equity-VI has: (i) sole power to vote or to direct the vote - 73,301,588. (ii) shared power to vote or to direct the vote -- None. (iii) sole power to dispose or to direct the disposition of - 73,301,588. (iv) shared power to dispose or to direct the disposition of -- None. (iii) FL Fund: (a) Amount Beneficially Owned: FL Fund directly owns 550 shares of Series D Preferred, which are convertible into 32,353 shares of Class A Common Stock, assuming the conversion of all Series C Preferred and Series D Preferred pursuant to Section 8(a)(i) of the Amended and Restated Series D Certificate of Designation, which sets forth a formula for determining the number of shares of Class A Common Stock issuable, as at any date, upon conversion of the Series D Preferred. The number of shares of Class A Common Stock referred to above was calculated in accordance with such formula assuming that the Conversion Price and the Net Realizable FMV (each such term as defined in the Amended and Restated Series D Certificate of Designation) equal $17.00. FL Fund directly owns 198 shares of Series H Preferred, which are convertible into 11,647 shares of Class A Common Stock, assuming the conversion of all Series H Preferred and Series G Preferred pursuant to Section 8(a)(i) of the Amended and Restated Series H Certificate of Designation, which sets forth a formula for determining the number of shares of Class A Common Stock issuable, as at any date, upon conversion of the Series H Preferred. The number of shares of Class A Common Stock referred to above was calculated in accordance with such formula assuming that the Conversion Price and the Net Realizable FMV (each such term as defined in the Amended and Restated Series H Certificate of Designation) equal $17.00. FLC XXXI, having its principal business office at the address set forth in response to Item 2(b) of this statement, is the general partner of FL Fund. FLC XXIX Partnership, L.P. ("FLC XXIX"), a New York limited partnership, and FLC XXXIII are the general partners of FLC XXXI. Mr. Forstmann, Sandra J. Horbach, Thomas H. Lister, Winston W. Hutchins, Jamie C. Nicholls and Gordon A. Holmes (each a United States citizen (other than Mr. Holmes, who is a citizen of the Republic of Ireland) with his or her principal place of business being at the address set forth in response to Item 2(b) of this statement) are the general partners of each of FLC XXIX and FLC XXXIII. The shares of Series D Preferred and Series H Preferred beneficially owned by FL Fund as calculated above are convertible into less than 0.1% of the Class A Common Stock outstanding, based on calculations made in accordance with Rule 13d-3(d) of the Act, and there being 337,813,235 shares of Class A Common Stock outstanding as of August 1, 2002, based on XO's quarterly report on Form 10-Q for the period ended June 30, 2002. (b) Assuming conversion of all shares of Series D Preferred and Series H Preferred beneficially owned by FL Fund, number of shares as to which FL Fund has: (i) sole power to vote or to direct the vote - 44,000. (ii) shared power to vote or to direct the vote -- None. (iii) sole power to dispose or to direct the disposition of - 44,000. (iv) shared power to dispose or to direct the disposition of -- None. (iv) Theodore J. Forstmann: (a) Amount Beneficially Owned: Mr. Forstmann directly owns 800,000 shares of Class A Common Stock. The shares of Class A Common Stock beneficially owned by Mr. Forstmann represents 0.2% of the Class A Common Stock outstanding, based on calculations made in accordance with Rule 13d-3(d) of the Act, and there being 337,813,235 shares of Class A Common Stock outstanding as of August 1, 2002, based on XO's quarterly report on Form 10-Q for the period ended June 30, 2002. (b) Number of shares as to which Mr. Forstmann has: (i) sole power to vote or to direct the vote - 800,000. (ii) shared power to vote or to direct the vote -- None. (iii) sole power to dispose or to direct the disposition of - 800,000. (iv) shared power to dispose or to direct the disposition of -- None. (v) Except as set forth above, none of the Reporting Persons nor, to the knowledge of any of the Reporting Persons, any person identified in Schedule I, beneficially owns any shares of Class A Common Stock or has effected any transactions in shares of Class A Common Stock during the preceding 60 days. (vi) The right to receive dividends on, and proceeds from the sale of, the shares of Class A Common Stock beneficially owned by the FL Partnerships is governed by the limited partnership agreements of each such entity, and such dividends or proceeds may be distributed with respect to numerous general and limited partnership interests. ITEM 6. Contracts, Arrangements, Understandings or Relationships with Respect to Securities of the Issuer ------------------------------------------------------------- Item 6 is hereby amended to add the following: Settlement Agreement -------------------- On October 13, 2002, the Potential Investors, FLC XXXI and XO entered into the Settlement Agreement, a copy of which is attached hereto as Exhibit 28. The Settlement Agreement is subject to the approval of the Bankruptcy Court. Under the Settlement Agreement, the Company is required to file a motion with the Bankruptcy Court within two business days of the execution of the agreement seeking an order approving the terms of the agreement (the "Proposed Order"), a form of which is attached hereto as Exhibit 29. Forstmann Little understands that such motion was filed with the Bankruptcy Court on October 14, 2002. Pursuant to the Settlement Agreement, the principal terms of the settlement will become effective upon the later of (i) the date upon which the order of the Bankruptcy Court becomes final and non-appealable (taking into account the resolution of all appeals, reviews and rehearings, if any) and (ii) the date upon which the Settlement Amount is paid (the later of such dates, the "Effective Date"). Settlement Amount. Pursuant to the Settlement Agreement, FLC XXXI, an affiliate of the FL Potential Investors, and Telmex shall each pay to the Company $12,500,000. Termination of Stock Purchase Agreement. Pursuant to the Settlement Agreement, upon the Effective Date, the Stock Purchase Agreement shall terminate by mutual agreement of XO and the Potential Investors. Upon the Effective Date, the Stock Purchase Agreement will be deemed to have been terminated by the mutual agreement of the parties as of September 16, 2002, with no further rights, duties, obligations or liabilities under it to survive. The Settlement Agreement provides that the Company is required to file a motion to approve a stipulation between XO and the Potential Investors lifting the automatic stay resulting from XO's chapter 11 case for the limited purpose of permitting the Potential Investors to deliver a formal notice of termination of the Stock Purchase Agreement pursuant to Section 6.1 of the agreement. Forstmann Little understands that such motion was filed with the Bankruptcy Court on October 14, 2002. The Company has informed Forstmann Little that the Bankruptcy Court has tentatively scheduled a hearing on the motion discussed above for late October. Releases. Upon the Effective Date, XO will release the Potential Investors, each of their current and former affiliates, officers, partners, directors, employees, agents, members, shareholders, controlling persons, attorneys, advisors and other professionals, and the Preferred Stock Designees (as defined below) (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, certain prior agreements relating to the purchase or ownership of securities of XO, XO's chapter 11 case, XO's plan of reorganization or XO's disclosure statement with respect to such plan of reorganization or the purchase or sale of XO's equity or debt securities by any person; provided, however, that the 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 the Settlement Agreement. Upon the Effective Date, the Potential Investors will release the Company and each of its current and former affiliates, officers, partners, directors, employees, agents, members, shareholders, controlling persons, attorneys, advisors and other professionals 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, certain prior agreements relating to the purchase or ownership of securities of XO, XO's chapter 11 case, XO's plan of reorganization or XO's disclosure statement with respect to such plan of reorganization or the purchase or sale of XO's equity or debt securities by any person; provided, however, that the release shall not extend to any obligations in respect of telecommunications services provided by or to XO or its subsidiaries or Telmex or its subsidiaries in the ordinary course of their businesses nor to any promise made or obligation assumed in the Settlement Agreement or to XO's or one of XO's subsidiary's indemnification obligations to the Preferred Stock Designees. Waiver of Specific Performance. The Settlement Agreement provides that 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. Director Removal or Resignation. Upon 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 who were designated by such series of preferred stock (the "Preferred Stock Designees"), unless such directors have already tendered their respective resignations. The Settlement Agreement provides that the Preferred Stock Designees shall be entitled to certain indemnification and insurance protections from XO. Icahn Consent and Voting Agreement. In connection with the execution of the Settlement Agreement, entites controlled by Carl C. Icahn (the "Icahn Entities"), including entities that hold approximately 85% of XO's senior secured debt and approximately $1.33 billion in principal face amount of XO's senior notes, executed and delivered to the Potential Investors an Acknowledgement, Agreement and Consent. Pursuant to the Acknowledgement, Agreement and Consent, the Icahn Entities consented to the Settlement Agreement and the entry of the Proposed Order, agreed not to take any action that could reasonably be expected to adversely affect the rights of the Potential Investors under the Settlement Agreement or prevent or adversely affect the entry of the Proposed Order, and agreed to support the entry of the Proposed Order. In addition, the Icahn Entities released the Investor Released Parties from all claims relating in any way whatsoever to XO, any of XO's businesses, the Stock Purchase Agreement, certain prior agreements relating to the purchase or ownership of securities of XO, XO's chapter 11 case, XO's plan of reorganization or XO's disclosure statement with respect to such plan of reorganization or the purchase or sale of XO's equity or debt securities by any person. In addition, those Icahn Entities holding any of XO's senior secured debt or senior notes (the "Icahn Debt Holders"), the Potential Investors and FLC XXXI executed a Voting Agreement, pursuant to which the Icahn Debt Holders agreed not to vote for, support or encourage any plan of reoganization that does not contain the terms of the Settlement Agreement. No Admission of Fault or Liability. The parties to the Settlement Agreement agreed that neither the execution of the agreement nor compliance with its terms shall constitute an admission of any fault or liability on the part of any such party or its affiliates. Termination of Settlement Agreement. XO, the Potential Investors and FLC XXXI each has the right, in its sole discretion, to terminate the Settlement Agreement if (i) the motion seeking the entry of the Proposed Order is denied, (ii) the Proposed Order is granted and later reversed on appeal and such reversal becomes a final and non-appealable, (iii) in the judgment of such party, the Proposed Order has been changed in any manner which deprives, or the Bankruptcy Court or any court to which the Proposed Order may be appealed makes any ruling which has the effect of depriving, such party of any benefit of the agreement or the Proposed Order as attached to the agreement, or (iv) Paragraph 4 of the Proposed Order has been changed, or the Bankruptcy Court or any court to which the Proposed Order may be appealed makes any ruling which has the effect of changing, Paragraph 4 of the Proposed Order in any manner whatsoever from Paragraph 4 in the form of the Proposed Order as attached to the agreement. Each Potential Investor has the right, in its sole discretion, to terminate the Settlement Agreement if (i) a hearing on the motion seeking the entry of the Proposed Order has not been held on or before the 60th calendar day following the date of the agreement, (ii) the Proposed Order has not been granted on or before the 90th calendar day following the date of the agreement, 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 the Third Amended Plan of Reorganization of XO Communications, Inc., dated July 22, 2002 (or the corresponding provisions in any other plan of reorganization in XO's chapter 11 case) that would adversely affect any Investor Released Party. The foregoing description of the Settlement Agreement, including any exhibits thereto, is not intended to be complete and is qualified in its entirety by the complete text of the Settlement Agreement, including all exhibits thereto, which is incorporated herein by reference. The Settlement Agreement is filed as Exhibit 28 hereto. The Settlement Agreement in its entirety, including all exhibits thereto, has been filed with the Bankruptcy Court. ITEM 7. Material to be Filed as Exhibits -------------------------------- Item 7 is hereby amended as follows: 1. Stock Purchase Agreement, dated December 7, 1999, among XO (f/k/a NEXTLINK), MBO-VII and Equity-VI.* 2. Registration Rights Agreement, dated as of January 20, 2000, among XO (f/k/a NEXTLINK), MBO-VII and Equity-VI.* 3. Certificate of Designation of the Powers, Preferences and Relative, Participating, Optional and Other Special Rights of Series C Cumulative Convertible Participating Preferred Stock and Qualifications, Limitations and Restrictions Thereof.* 4. Certificate of Designation of the Powers, Preferences and Relative, Participating, Optional and Other Special Rights of Series D Convertible Participating Preferred Stock and Qualifications, Limitations and Restrictions Thereof.* 5. Assignment and Assumption Agreement, dated January 19, 2000, between Equity-VI and FL Fund.* 6. Joint Filing Agreement.* 7. Stock Purchase Agreement, dated as of June 14, 2000, among XO (f/k/a NEXTLINK), MBO-VII and Equity-VI.* 8. Amended and Restated Registration Rights Agreement, dated as of July 6, 2000, between XO (f/k/a NEXTLINK) and the FL Partnerships.* 9. Certificate of Designation of the Powers, Preferences and Relative, Participating, Optional and Other Special Rights of the Series G Cumulative Convertible Participating Preferred Stock and Qualifications, Limitations and Restrictions Thereof.* 10. Certificate of Designation of the Powers, Preferences and Relative, Participating, Optional and Other Special Rights of Series G Convertible Participating Preferred Stock and Qualifications, Limitations and Restrictions Thereof.* 11. Agreement and Waiver, dated as of June 14, 2000, among XO (f/k/a NEXTLINK), MBO-VII, Equity-VI and FL Fund.* 12. Amendment and Stock Purchase Agreement, dated as of April 25, 2001, by and between XO and the FL Partnerships.* 13. Form of Second Amended and Restated Registration Rights Agreement, dated as of _____, 2001, to be entered into by and between XO and the FL Partnerships.* 14. Form of Amended and Restated Certificate of Designation of the Powers, Preferences and Relative, Participating, Optional and Other Special Rights of the Series C Cumulative Convertible Participating Preferred Stock and Qualifications, Limitations and Restrictions Thereof.* 15. Form of Amended and Restated Certificate of Designation of the Powers, Preferences and Relative, Participating, Optional and Other Special Rights of the Series C Convertible Participating Preferred Stock and Qualifications, Limitations and Restrictions Thereof.* 16. Form of Amended and Restated Certificate of Designation of the Powers, Preferences and Relative, Participating, Optional and Other Special Rights of the Series G Cumulative Convertible Participating Preferred Stock and Qualifications, Limitations and Restrictions Thereof.* 17. Form of Amended and Restated Certificate of Designation of the Powers, Preferences and Relative, Participating, Optional and Other Special Rights of the Series H Convertible Participating Preferred Stock and Qualifications, Limitations and Restrictions Thereof.* 18. Joint Filing Agreement.* 19. Term Sheet, dated November 28, 2001, among Forstmann Little & Co. Equity Partnership-VII, L.P., Forstmann Little & Co. Subordinated Debt and Equity Management Buyout Partnership-VIII, L.P. and XO Communications, Inc. * 20. Letter Agreement, dated November 21, 2001, between Telefonos de Mexico, S.A. de C.V. and Forstmann Little & Co. * 21. Letter, dated November 28, 2001, from Telefonos de Mexico, S.A. de C.V. to Forstmann Little & Co. * 22. Stock Purchase Agreement, dated as of January 15, 2002, among XO Communications, Inc., Forstmann Little & Co. Equity Partnership-VII, L.P., Forstmann Little & Co. Subordinated Debt and Equity Management Buyout Partnership-VIII, L.P. and Telefonos de Mexico, S.A. de C.V. * 23. Form of Stockholders Agreement, dated as of _____, 2002, by and among Forstmann Little & Co. Equity Partnership-VII, L.P., Forstmann Little & Co. Subordinated Debt and Equity Management Buyout Partnership-VIII, L.P., Telefonos de Mexico, S.A. de C.V. and XO Communications, Inc. * 24. Form of Registration Rights Agreement, dated as of _____, 2002, among XO Communications, Inc., Forstmann Little & Co. Equity Partnership-VII, L.P., Forstmann Little & Co. Subordinated Debt and Equity Management Buyout Partnership-VIII, L.P. and Telefonos de Mexico, S.A. de C.V. * 25. Form of Amended and Restated Certificate of Incorporation of XO Communications, Inc. * 26. Form of Restated Bylaws of XO Communications, Inc. * 27. Letter, dated June 6, 2002, from Fried, Frank Harris, Shriver & Jacobson and Latham & Watkins to Willkie, Farr & Gallagher. * 28. Mutual Release and Settlement Agreement, dated October 13, 2002, among XO Communications, Inc., Forstmann Little & Co. Equity Partnership-VII, L.P., Forstmann Little & Co. Subordinated Debt and Equity Management Buyout Partnership-VIII, L.P., FLC XXXI Partnership, L.P. and Telefonos de Mexico, S.A. de C.V. 29. Form of Order Approving Forstmann Little/Telmex Settlement Pursuant to Bankruptcy Rule 9019. - -------- * Previously filed. SIGNATURE --------- After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. Dated: October 22, 2002 FORSTMANN LITTLE & CO. SUBORDINATED DEBT AND EQUITY MANAGEMENT BUYOUT PARTNERSHIP-VII, L.P. By: FLC XXXIII Partnership, L.P. its general partner By: /s/ Winston W. Hutchins ----------------------------------- Winston W. Hutchins, a general partner FORSTMANN LITTLE & CO. EQUITY PARTNERSHIP-VI, L.P. By: FLC XXXII Partnership, L.P. its general partner By: /s/ Winston W. Hutchins ---------------------------------------- Winston W. Hutchins, a general partner FL FUND, L.P. By: FLC XXXI Partnership, L.P. its general partner By: FLC XXXIII Partnership, L.P. a general partner By: /s/ Winston W. Hutchins -------------------------------------- Winston W. Hutchins, a general partner /s/ Theodore J. Forstmann -------------------------- Theodore J. Forstmann Schedule I ---------- FLC XXXIII Partnership: General Partner of MBO-VII ------- FLC XXXIII Partnership, L.P., a New York limited partnership ("FLC XXXIII"), is the general partner of MBO-VII. Its purpose is to act as general partner of MBO-VII and other limited partnerships affiliated with MBO-VII. The address of the principal office of FLC XXXIII is c/o Forstmann Little & Co., 767 Fifth Avenue, New York, NY 10153. Partners of FLC XXXIII ---------- The following are the general partners of FLC XXXIII, the general partner of MBO-VII. All of the persons listed below are general partners of partnerships affiliated with Forstmann Little & Co., a private investment firm. The business address of each is 767 Fifth Avenue, New York, NY 10153 and each is a citizen of the United States other than Mr. Holmes, who is a citizen of the Republic of Ireland. Theodore J. Forstmann Sandra J. Horbach Winston W. Hutchins Thomas H. Lister Jamie C. Nicholls Gordon A. Holmes FLC XXXII Partnership, L.P.: General Partner of Equity-VI --------- FLC XXXII Partnership, L.P., a New York limited partnership ("FLC XXXII"), is the general partner of Equity-VI. Its purpose is to act as general partner of Equity-VI and other limited partnerships affiliated with Equity-VI. The address of the principal office of Equity-VI is c/o Forstmann Little & Co., 767 Fifth Avenue, New York, NY 10153. General Partners of FLC XXXII --------- The following are the general partners of FLC XXXII, the general partner of Equity-VI. All of the persons listed below are general partners of partnerships affiliated with Forstmann Little & Co., a private investment firm. The business address of each is 767 Fifth Avenue, New York, NY 10153 and each is a citizen of the United States other than Mr. Holmes, who is a citizen of the Republic of Ireland. Theodore J. Forstmann Sandra J. Horbach Thomas H. Lister Winston W. Hutchins Jamie C. Nicholls Gordon A. Holmes FLC XXXI Partnership, L.P.: General Partner of FL Fund ------- FLC XXXI Partnership, L.P., a New York limited partnership ("FLC XXXI"), is the general partner of FL Fund. Its purpose is to act as general partner of FL Fund and other limited partnerships affiliated with FL Fund. The address of the principal office of FL Fund is c/o Forstmann Little & Co., 767 Fifth Avenue, New York, NY 10153. General Partners of FLC XXXI -------- FLC XXIX Partnership, L.P., a New York limited partnership ("FLC XXIX"), and FLC XXXIII are the general partners of FLC XXXI, the general partner of FL Fund. Their purpose is to act as general partner of FLC XXXI and other limited partnerships affiliated with FLC XXXI. The address of the principal office of each of FLC XXIX and FLC XXXIII is c/o Forstmann Little & Co., 767 Fifth Avenue, New York, NY 10153. General Partners of FLC XXIX and FLC XXXIII ----------------------- The following are the general partners of FLC XXIX and FLC XXXIII, the general partners of FLC XXXI. All of the persons listed below are general partners of partnerships affiliated with Forstmann Little & Co., a private investment firm. The business address of each is 767 Fifth Avenue, New York, NY 10153 and each is a citizen of the United States other than Mr. Holmes, who is a citizen of the Republic of Ireland. Theodore J. Forstmann Sandra J. Horbach Thomas H. Lister Winston W. Hutchins Jamie C. Nicholls Gordon A. Holmes EX-99.28 3 ex28.txt EXHIBIT 28 Exhibit 28 FINAL EXECUTION COPY -------------------- MUTUAL RELEASE AND SETTLEMENT AGREEMENT --------------------------------------- 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) HORBACH INDEMNIFICATION AGREEMENT means that certain Indemnification Agreement, dated as of June 14, 2002, between XO Management (as defined below) and Sandra J. Horbach. (t) INVESTOR RELEASED PARTIES shall have the meaning specified in Section 6(a). (u) MYERS INDEMNIFICATION AGREEMENT means that certain Indemnification Agreement, dated as of June 14, 2002, between XO Management and John H. Myers. (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. -------------------------------------------- (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 -------- (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 Horbach Indemnification Agreement or the Myers 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. --------------- (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/ Gary D. Begeman ------------------------------------- Name: Gary D. Begeman 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/ Gordon A. Holmes ------------------------------------- Name: Gordon A. Holmes 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/ Gordon A. Holmes ------------------------------------- Name: Gordon A. Holmes Title: General Partner FLC XXXI PARTNERSHIP, L.P. By: FLC XXXIII Partnership, L.P., a general partner By: /s/ Gordon A. Holmes ------------------------------------- Name: Gordon A. Holmes Title: General Partner TELEFONOS DE MEXICO, S.A. DE C.V. By: /s/ Javier Mondragon Alarcon ------------------------------------- Name: Lic. Javier Mondragon Alarcon Title: General Counsel EX-99.29 4 ex29.txt EXHIBIT 29 Exhibit 99.29 EXHIBIT A --------- UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK - ------------------------------------ ) In re ) Chapter 11 ) XO COMMUNICATIONS, INC., ) Case No. 02-12947 (AJG) ) Debtor. ) ) - ------------------------------------ ORDER APPROVING FORSTMANN LITTLE/TELMEX SETTLEMENT PURSUANT TO BANKRUPTCY RULE 9019 ------------------------------------------- Upon the motion (the "Motion") of the above-captioned debtor and debtor-in-possession (the "Debtor") for an order pursuant to Rule 9019 of the Federal Rules of Bankruptcy Procedure approving a settlement agreement (the "Settlement Agreement") among the Debtor, Forstmann Little & Co. Equity Partnership-VII, L.P. ("Equity-VII"), Forstmann Little & Co. Subordinated Debt and Equity Management Buyout Partnership-VIII, L.P. ("MBO-VIII"), FLC XXXI Partnership, L.P. (together with Equity-VII and MBO-VIII, "Forstmann Little") and Telefonos de Mexico, S.A. de C.V. ("Telmex", and together with Equity-VII and MBO-VIII, the "Potential Investors"), and upon the hearing held before this Court on ____________, 2002 to consider approval of the Settlement Agreement; and it appearing that the Court has jurisdiction over this matter pursuant to 28 U.S.C. ss. 157 and 1334; and it appearing that due and appropriate notice of the Motion has been given and no further notice needs to be given; and upon all of the proceedings had before the Court; and the Debtor having determined that it is in the best interests of the Debtor to proceed at this time with the Settlement Agreement; and after due deliberation and sufficient cause appearing therefor; NOW THEREFORE, it is hereby ORDERED, ADJUDGED AND DECREED as follows: 1. The Motion is granted. 2. All capitalized terms herein and not otherwise defined shall have the same meaning as set forth in the Settlement Agreement 3. The Settlement Agreement is fair, equitable and adequate and is in the best interest of the Debtor's estate, and is hereby approved. 4. Other than any rights or claims that may be held or asserted by the Potential Investors, any and all rights and/or claims arising under, relating to or in connection with the Stock Purchase Agreement are solely property of the Debtor's estate under section 541(a) of the Bankruptcy Code, and accordingly may be settled and compromised in accordance with the Settlement Agreement. 5. As of the Effective Date (as defined in the Settlement Agreement), the Stock Purchase Agreement shall terminate in its entirety by mutual agreement of the Parties, with no further rights, duties, obligations, or liabilities under it to survive. 6. The Debtor is hereby deemed to irrevocably, unconditionally and forever release and discharge 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 the Debtor, any of the Debtor's businesses, the Stock Purchase Agreement, the Other Stock Purchase Agreements, the Debtor's chapter 11 case, XO's Plan or XO's Disclosure Statement or the purchase or sale of the Debtor'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 the Debtor or its subsidiaries in the ordinary course of their business nor to any promise made or obligation assumed in the Settlement Agreement. 7. Each of the Potential Investors is hereby deemed to irrevocably, unconditionally and forever release and discharge 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 the Debtor, any of the Debtor's businesses, the Stock Purchase Agreement, the Other Stock Purchase Agreements, the Debtor's chapter 11 case, XO's Plan or XO's Disclosure Statement or the purchase or sale of the Debtor's equity or debt securities by any Person; provided, however, that this release shall not extend to any to any obligations in respect of telecommunications services provided by or to the Debtor or its subsidiaries or by or to Telmex or its subsidiaries in the ordinary course of their businesses, or any promise made or obligation assumed in the Settlement Agreement; and provided, further, that this release shall not extend to any indemnification obligations of the Debtor to the FL Designees as set forth in XO's Plan, or any obligations of XO Management under the Horbach Indemnification Agreement or the Myers Indemnification Agreement. 8. Each of the Parties is hereby authorized and directed to perform each and every term of the Settlement Agreement, and each and every term of the Settlement Agreement is enforceable. 9. The Settlement Agreement and this Order implementing it shall be binding upon 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 the Debtor's assets pursuant to Section 363(b) of the Bankruptcy Code, or otherwise, and is enforceable against them in accordance with its terms. 10. The requirement pursuant to Local Rule 9013-1(b) that the Debtor file a memorandum of law in support of the Application is hereby waived. 11. The failure to specifically include any particular provisions of the Settlement Agreement in this Order shall not diminish or impair the effectiveness of such provisions, it being the intent of the Court to approve the Settlement Agreement in its entirety. 12. Upon entry of this Order, this Order shall be binding upon all parties to the Settlement Agreement and all holders of Claims against the Debtor or Interests (each as defined in XO's Plan). 13. The Court shall retain continuing jurisdiction in order to enter any further orders as may be necessary to effectuate the Settlement Agreement and the provisions of this Order. Dated: , 2002 ---------------- New York, New York ------------------------------------- ARTHUR J. GONZALEZ UNITED STATES BANKRUPTCY JUDGE -----END PRIVACY-ENHANCED MESSAGE-----