Document/Exhibit Description Pages Size
1: 10-K Annual Report HTML 1.02M
2: EX-2.1 Plan of Acquisition, Reorganization, Arrangement, 39 225K
Liquidation or Succession
3: EX-2.2 Plan of Acquisition, Reorganization, Arrangement, 65 424K
Liquidation or Succession
4: EX-10.39 Material Contract 84 330K
5: EX-10.40 Material Contract 17 64K
6: EX-11.1 Statement re: Computation of Earnings Per Share 1 9K
7: EX-11.2 Statement re: Computation of Earnings Per Share 1 9K
8: EX-11.3 Statement re: Computation of Earnings Per Share 1 9K
9: EX-14.1 Material Foreign Patent 3 13K
10: EX-21.1 Subsidiaries of the Registrant 2± 9K
11: EX-23.1 Consent of Experts or Counsel 1 10K
12: EX-31.1 Certification per Sarbanes-Oxley Act (Section 302) HTML 14K
13: EX-31.2 Certification per Sarbanes-Oxley Act (Section 302) HTML 13K
14: EX-32.1 Certification per Sarbanes-Oxley Act (Section 906) HTML 11K
15: EX-32.2 Certification per Sarbanes-Oxley Act (Section 906) HTML 11K
EXHIBIT 10.40
CONFIDENTIAL
** NOTE: CERTAIN MATERIAL HAS BEEN OMITTED PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT AND SUCH MATERIAL HAS BEEN FILED SEPARATELY WITH THE SEC.
AMENDED AND RESTATED
CONFIDENTIAL SETTLEMENT AGREEMENT AND MUTUAL RELEASE(1)
This AMENDED AND RESTATED CONFIDENTIAL SETTLEMENT AGREEMENT AND MUTUAL
RELEASE ("AGREEMENT") is entered into as of this 27th day of February 2004 (the
"EXECUTION DATE") by and between LEVEL 3 COMMUNICATIONS, LLC, a Delaware limited
liability company ("LEVEL 3"), ALLEGIANCE TELECOM COMPANY WORLDWIDE, a Delaware
corporation ("ALLEGIANCE") and XO Communications, Inc., a Delaware corporation
or its designee (the "PURCHASER"). Level 3, Allegiance and Purchaser (except
where specifically indicated) may be referred to individually as a "PARTY" and
together as the "PARTIES". This Agreement supercedes and replaces that certain
Confidential Settlement Agreement and Mutual Release dated as of February 27,
2004 between Level 3 and Allegiance.
For purposes of this Agreement, Level 3 is defined to include Level 3
Communications, LLC together, where applicable, with all of its relevant
corporate parents, subsidiaries, and affiliated entities, and all of the agents,
employees, officers and directors of any of them.
For purposes of this Agreement, Allegiance is defined to include Allegiance
Telecom Company Worldwide together, where applicable, with all of its relevant
corporate parents, subsidiaries, and affiliated entities, and all of the agents,
employees, officers and directors of any of them, and includes Allegiance and
all of its corporate parents, subsidiaries, and affiliated entities in their
respective capacities as debtors and debtors-in-possession in the Bankruptcy
Case, as hereinafter defined.
For purposes of this Agreement, Purchaser is defined to include XO
Communications, Inc. together, where applicable, with all of its relevant
corporate parents, subsidiaries, and affiliated entities, and all of the agents,
employees, officers and directors of any of them.
----------
(1) On March 5, 2004, the Court entered an order (the "Settlement Agreement Seal
Order") authorizing the Debtors to, among other things, file only a redacted
version of the Settlement Agreement; and providing that the redacted information
in the Settlement Agreement remain confidential. The Court further allowed the
Debtors to serve the unredacted Settlement Agreement only on the Court, the U.S.
Trustee, attorneys for the Creditors Committee and attorneys for the Debtors'
prepetition secured lenders (the "Prepetition Lenders"). Moreover, under the
terms of the Settlement Agreement Seal Motion, the Settlement Agreement shall
not be made available to the general public or any parties in interest in these
chapter 11 cases; PROVIDED that the Settlement Agreement may be provided to
certain persons, at the discretion of the Debtors, who are subject to
confidentiality obligation to the Debtors; AND PROVIDED FURTHER that any such
person receiving an unredacted version of the Settlement Agreement pursuant to
this Order shall also be bound by this Order to maintain the confidentiality of
the Settlement Agreement.
THIS IS THE REDACTED VERSION OF THE AMENDED AND RESTATED SETTLEMENT AGREEMENT.
** NOTE: CERTAIN MATERIAL HAS BEEN OMITTED PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT AND SUCH MATERIAL HAS BEEN FILED SEPARATELY WITH THE SEC.
BACKGROUND
A. Allegiance and Level 3's predecessor-in-interest, Genuity Solutions,
Inc. ("GENUITY"), entered into an Integrated Network Solution Purchase Agreement
on or about July 24, 2000 (as amended, the "INSPA"), pursuant to which
Allegiance agreed to supply, and Genuity agreed to procure, an integrated
network solution which Genuity used to support its dial-up modem services
business. Capitalized terms used but not otherwise defined herein shall have the
meanings set forth in the INSPA.
B. On February 4, 2003, Genuity (in its own bankruptcy cases filed in the
United States Bankruptcy Court for the Southern District of New York) assumed
the INSPA and the INSPA was assigned to Level 3.
C. A number of disputes have arisen between Allegiance and Level 3
concerning the performance of Allegiance's responsibilities under the INSPA,
Level 3 has claimed entitlement to certain performance warranty remedies and
other remedies available to it under the INSPA and Allegiance has disputed such
claim.
D. On May 14, 2003 (the "PETITION DATE"), Allegiance and most of its
direct and indirect domestic subsidiaries each filed voluntary petitions
(collectively, the "BANKRUPTCY CASE") under Chapter 11 of Title 11 of the United
States Code, 11 U.S.C. Section101, ET SEQ. (the "BANKRUPTCY CODE") with the
United States Bankruptcy Court for the Southern District of New York (the
"BANKRUPTCY COURT") and Allegiance is currently operating its business and
managing its property as a debtor-in-possession.
E. In January and February 2004, Allegiance delivered notices of default
under the INSPA to Level 3. Level 3 has disputed the notice of default.
F. On February 4, 2004, Level 3 filed a motion (the "CREDIT MOTION"), in
part under seal, to permit recoupment and for other relief. Allegiance has
disputed the Credit Motion.
G. On February 8, 2004, Level 3 filed a complaint (the "COMPLAINT"),
filed in part under seal, for certain declaratory relief relating to the INSPA.
Allegiance disputes the allegations contained in the Complaint.
H. On February 18, 2004, Purchaser entered into an agreement with
Allegiance (the "ASSET PURCHASE AGREEMENT") pursuant to which it agreed to
purchase substantially all of the assets of Allegiance and other assets
described therein, but excluding (among other assets) the INSPA, the KMC
Agreement (as defined herein) and related managed modem facilities and business
assets specified in the Asset Purchase Agreement and/or the Disclosure Schedules
(as defined in the Asset Purchase Agreement).
I. Allegiance and Level 3 now seek to amicably resolve, compromise and
settle any and all claims or demands with respect to the INSPA, and to orderly
terminate the INSPA subject to and in accordance with the terms hereof.
2
** NOTE: CERTAIN MATERIAL HAS BEEN OMITTED PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT AND SUCH MATERIAL HAS BEEN FILED SEPARATELY WITH THE SEC.
J. The Parties agree that the transactions contemplated hereby and the
consideration exchanged in respect thereof and hereof constitute contemporaneous
exchanges for new value and that such consideration is of reasonably equivalent
value in exchange for the transactions contemplated hereby.
In consideration of the foregoing premises and the mutual covenants and
agreements contained herein, subject to the entry of the Bankruptcy Court
Approval Order (as defined in Section 11 below) each of the Parties agrees as
set forth below.
1. THE TRANSACTION. The transaction contemplated by this Agreement shall take
place in two stages: (a) commencing immediately (but subject to entry of
the Bankruptcy Court Approval Order), the Parties shall perform pursuant to
Section 2 below; and (b) on the "EARLY FUNDING DATE" (as defined in the
Asset Purchase Agreement), the transaction described in Section 3 below
shall be consummated; the Parties acknowledge, however, that the two stages
may occur simultaneously if the Early Funding Date shall occur prior to or
contemporaneous with the entry of the Bankruptcy Court Approval Order.
2. IMMEDIATE TRANSACTIONS.
(a) [**REDACTED]
(b) Commencing on the Execution Date, Allegiance and Level 3 shall work to
procure and cooperate with Level 3 in the procurement of consents from
the suppliers of the Off-Net Assets (as defined in Section 4 hereof)
as may be required in order for Level 3 to continue to use the Off-Net
Assets (including software contained therein) for their intended use.
The costs of obtaining any licenses or consents from such suppliers
shall be borne solely by Level 3.
(c) Commencing on the Execution Date, the Parties shall commence
preparation of the agreed Migration Plan (as defined in Section 8
below).
(d) Level 3's obligations to make the Purchase Price Payment under the
INSPA which were allegedly due and payable in February 2004 shall be
suspended pending the Parties' efforts to secure the Bankruptcy Court
Approval Order (such suspension shall terminate if this Agreement is
deemed void AB INITIO pursuant to Section 12 hereof).
(e) Level 3 shall reimburse Allegiance for payments made by Allegiance to
KMC under and pursuant to the KMC Agreement (each as defined in
Section 3 below) for services delivered to Allegiance in support of
the INSPA relating to the period of time from and after February 1,
2004 through the soonest to occur of the Early Funding Date or the
Option Exercise Date. Level 3 shall have the right to review and audit
all invoices and other materials delivered to Allegiance from KMC in
order to confirm the validity and accuracy of the charges imposed by
KMC under the KMC Agreement. To the extent that Level 3 wishes to have
the "Competitive
3
** NOTE: CERTAIN MATERIAL HAS BEEN OMITTED PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT AND SUCH MATERIAL HAS BEEN FILED SEPARATELY WITH THE SEC.
Offer" (as defined in the KMC Agreement) provisions of the KMC
Agreement invoked prior to the assumption and assignment thereof to
Level 3, Allegiance agrees to cooperate with Level 3 in regard to the
enforcement of such rights.
3. EARLY FUNDING DATE TRANSACTIONS. Subject to entry of the Bankruptcy Court
Approval Order, from and after the Early Funding Date:
(a) The INSPA shall be terminated and no Party shall have any continuing
obligations under the INSPA except as set forth in this Agreement.
(b) The Parties' obligations respecting Termination Assistance Services
(as set forth in Section 7 below) shall become effective with respect
to the migration of the all of the Ports as to both Allegiance until
the Closing Date and as to the Purchaser from and after the Closing
Date.
(c) Pursuant to Section 5.6 of the INSPA, title in and to all of the
"BUY-OUT ASSETS" shall be conveyed to Level 3 free and clear of all
liens, interests, claims, or encumbrances (and the Parties shall work
to create a schedule ("SCHEDULE 3(C)") listing all such Buy-Out
Assets). For the avoidance of doubt, the Buy-Out Assets are the
"Buyout Assets" referred to on Schedule 6.26 of the Disclosure
Schedules (as defined in the Asset Purchase Agreement). With respect
to the conveyance of the Buy-Out Assets, any software licenses or
rights of use shall be conveyed to Level 3 if and only if such rights
are transferable to Level 3 pursuant to applicable law (and Allegiance
makes no representation to Level 3 with respect to the transferability
of such rights). Commencing on the Bankruptcy Court Approval Date,
Allegiance and Level 3 shall work to procure consents from the
suppliers of the Buy-Out Assets as may be required in order for Level
3 to continue to use (from and after the Early Funding Date) the
Buy-Out Assets (including software contained therein) for their
intended use. The costs of obtaining any licenses or consents from
such suppliers, or the costs associated with asserting the
transferability of software licenses or rights of use, shall be borne
solely by Level 3. Any maintenance agreements that Allegiance has with
respect to the Buy-Out Assets are not being conveyed, assigned or
assumed by Level 3 or Purchaser, and Level 3 shall, from and after the
effective date of conveyance of the Buy-Out Assets to Level 3, be
responsible for all maintenance respecting the Buy-Out Assets.
Purchaser shall not be financially responsible for any amounts owed
under any maintenance agreement.
(d) Allegiance shall assume and assign to Level 3 that certain Primary
Rate Interface Services Agreement dated as of February 11, 2002 (as
amended, the "KMC AGREEMENT") between Allegiance and KMC Telecom XI,
LLC. (including, without limitation, subsidiaries and affiliates
thereof, "KMC"). Such assumption and assignment shall preserve in full
all rights of Allegiance under the KMC Agreement against KMC as of the
date of assumption and assignment thereof to Level 3, including,
without limitation, rights, liabilities and claims respecting
4
** NOTE: CERTAIN MATERIAL HAS BEEN OMITTED PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT AND SUCH MATERIAL HAS BEEN FILED SEPARATELY WITH THE SEC.
KMC performance warranty breaches, if any, under the KMC Agreement
(provided, however, that any claims respecting backhaul latency or
non-delivery of ports relating to periods of time prior to the
assumption and assignment of the KMC Agreement shall not be assigned
to Level 3, and may be enforced by Allegiance in its sole discretion).
Notwithstanding any other provision of this Agreement, nothing in this
Agreement shall preclude Allegiance from rejecting the KMC Agreement
pursuant to applicable bankruptcy laws, provided that Allegiance
secures Level 3's prior written consent thereto (which consent may be
given or withheld in Level 3's sole and absolute discretion); in the
event of any such rejection, the cash consideration paid to Allegiance
under Section 5 hereof shall be increased by an amount to be agreed
upon by Allegiance and Level 3.
(e) If Allegiance assumes the KMC Agreement and assigns it to Level 3, as
between Allegiance and Level 3, Allegiance shall have the obligation
to make the cure payment, if any, to KMC in connection with the
assumption and assignment of the KMC Agreement and Level 3 shall have
no liability for any cure amount relating to the assumption and
assignment of the KMC Agreement, to KMC, Purchaser, Allegiance or its
estates. Level 3 shall have standing to participate in any contested
matters between KMC and Allegiance as to the cure amount and related
issues to the extent that Level 3 reasonably determines that its
rights may be affected by such contested matter.
(f) Prior to and continuing after the Early Funding Date, each of Level 3,
Purchaser and Allegiance shall reasonably cooperate with respect to
transition services needed, if any, regarding the KMC Agreement, and
Allegiance (and Purchaser, to the extent that migration is not
completed by the Early Funding Date or the Closing Date) shall provide
Termination Assistance Services (as described in Section 7 below) to
Level 3 with respect to its efforts to migrate the Off-Net Ports under
the KMC Agreement to the Level 3 network.
(g) Upon receipt of any business downturn notice delivered at any time
after the Effective Date and through the soonest to occur of the Early
Funding Date or Option Exercise Date, Allegiance shall immediately
(and in no event later than seven (7) days after receipt thereof)
deliver appropriate notice to KMC under the KMC Agreement of
termination of the services provided by KMC which are affected by such
business downturn notice.
(h) [**REDACTED]
(i) [**REDACTED]
4. FAILURE TO ACHIEVE EARLY FUNDING DATE. In the event that the Early Funding
Date has not occurred on or before April 15, 2004, Level 3 shall have the
option (provided that it is not then in breach of the Agreement) to cause
Allegiance to consummate the transactions described in Sections 3(d), (e),
and (f) above, and (immediately upon such election): (a)
5
** NOTE: CERTAIN MATERIAL HAS BEEN OMITTED PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT AND SUCH MATERIAL HAS BEEN FILED SEPARATELY WITH THE SEC.
the INSPA shall be deemed immediately amended hereby so as to eliminate
Allegiance's obligation to deliver, and Level 3's obligation to purchase,
any ports in Off-Net Serviceable Rate Centers (either Level 3 or Allegiance
may propose or require a formal amendment to the INSPA in respect thereof
by written notice delivered on or before the date of exercise of the option
granted hereunder); and (b) the INSPA shall thereafter continue to apply
with respect to the approximately 260,232 ports installed in Serviceable
On-Net Rate Centers as of the Execution Date (the "ON-NET PORTS"), and
neither Party waives any rights under the INSPA with respect to such On-Net
Ports except as expressly set forth in this Agreement. The date upon which
Level 3 exercises such option shall be the "OPTION EXERCISE DATE." On the
Option Exercise Date, Level 3 shall pay Allegiance the amount of $5,000,000
(the "OPTION EXERCISE PRICE"). In such event, provided that the Bankruptcy
Court Approval Order has been entered, Allegiance shall convey to Level 3,
free and clear of all liens, interests, claims and encumbrances, the
equipment owned and/or used by and as may be permitted by applicable law,
all general intangibles, licenses, copyrights, trademarks, patents,
intellectual property and other personal property owned and/or used by
Allegiance in connection with the KMC Agreement (and the Parties shall work
to create a "SCHEDULE 4" to this Agreement listing such assets), PROVIDED,
HOWEVER, that such assets do not constitute Acquired Assets pursuant to the
Asset Purchase Agreement (the "OFF-NET ASSETS"). Allegiance shall provide
Level 3 with, or transfer to Level 3, all goods, intangible rights, and
services which Allegiance is presently entitled to enjoy, or is in
possession of, under and in respect of the KMC Agreement, PROVIDED,
HOWEVER, that such assets do not constitute Acquired Assets pursuant to the
Asset Purchase Agreement. With respect to the conveyance of the Off-Net
Assets, any software licenses or rights of use relating exclusively thereto
shall be conveyed to Level 3 if and only if such rights are transferable to
Level 3 pursuant to applicable law (and Allegiance makes no representation
to Level 3 with respect to the transferability of such rights). The costs
of obtaining any licenses or consents from the suppliers of the Off-Net
Assets, or the costs associated with asserting the transferability of
software licenses or rights of use, shall be borne solely by Level 3. In
addition, in such event, Allegiance shall supply Level 3 with Termination
Assistance Services respecting the Off-Net Ports as set forth in this
Agreement (notwithstanding the fact that the Early Funding Date has not
occurred).
5. CASH TERMINATION CONSIDERATION. On the Early Funding Date (provided that
the Bankruptcy Court Approval Order shall have entered), provided further
that Allegiance is not then in default under the Agreement, Level 3 shall
pay Allegiance $54,000,000, which amount shall be paid by wire transfer.
The Option Exercise Price is included in the $54,000,000 payable by Level 3
hereunder; therefore, if the Option Exercise Price has been paid, the cash
consideration due hereunder shall be reduced by the Option Exercise Price.
6. MUTUAL RELEASE AND LITIGATION STANDSTILL. Upon the Early Funding Date
(provided that the Bankruptcy Court Approval Order has been entered),
provided that each Party has fully performed its obligations hereunder and
under the INSPA and satisfied all related
6
** NOTE: CERTAIN MATERIAL HAS BEEN OMITTED PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT AND SUCH MATERIAL HAS BEEN FILED SEPARATELY WITH THE SEC.
requirements and conditions hereunder, then, except as otherwise
specifically set forth herein, in the Bankruptcy Court Approval Order, in
the Migration Plan, or in any documents, agreements, schedules, and
instruments specifically agreed to by the Parties to effectuate the terms
of this Agreement, the Bankruptcy Court Approval Order or the Migration
Plan, the Parties agree as follows:
(a) Allegiance and Purchaser hereby fully and forever waive, release,
acquit, discharge and hold harmless Level 3 and its owners,
stockholders, successors, assigns, partners, parents, insurance
carriers, bonding companies, affiliates and subsidiaries, and each of
their respective directors, officers, agents, employees and
representatives from any and all claims, actions, debts, demands,
damages, judgments, liabilities, duties, indemnities, covenants,
liens, and obligations of any kind whatsoever, whether known or
unknown, whether in law or in equity, whether fixed and liquidated or
contingent and unliquidated, whether billed or unbilled, which
Allegiance and Purchaser has, had, may have or claim to have had
against Level 3 arising prior to the Early Funding Date in respect of
the INSPA (including but not limited to claims arising out of Level
3's assertion of remedies or claims under, in respect of or at all
relating to, the INSPA), occurring at any time up to and including the
Early Funding Date.
(b) Level 3 hereby fully and forever waives, releases, acquits, discharges
and holds harmless Allegiance and Purchaser and their respective
owners, stockholders, successors, assigns, partners, parents,
insurance carriers, bonding companies, attorneys, affiliates and
subsidiaries, and each of their respective directors, officers,
agents, employees and representatives, from any and all claims,
actions, debts, demands, damages, judgments, liabilities, duties,
indemnities, covenants, liens, and obligations of any kind whatsoever,
whether known or unknown, whether in law or in equity, whether fixed
and liquidated or contingent and unliquidated, whether billed or
unbilled, which Level 3 has, had, may have or claim to have had
against Allegiance arising prior to the Early Funding Date in respect
of the INSPA, occurring at any time up to and including the Early
Funding Date.
(c) Notwithstanding anything herein to the contrary, no Party releases or
otherwise waives any claims relating to performance of this Agreement.
(d) Upon the Execution Date, each of Allegiance and Level 3 shall stand
still respecting the contested matters joined by the Credit Motion,
the adversary proceeding initiated by the Complaint and all related
threatened or pending litigation or claims respecting the INSPA, and
such matters shall be deemed administratively stayed upon entry, as
more fully set forth herein, of the Bankruptcy Court Approval Order.
Without limitation, neither Party shall conduct discovery with respect
to, or otherwise prosecute, any such litigation or claim, and all
rights of the Parties in respect thereto shall be preserved in full
until the releases provided for
7
** NOTE: CERTAIN MATERIAL HAS BEEN OMITTED PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT AND SUCH MATERIAL HAS BEEN FILED SEPARATELY WITH THE SEC.
above are effective. When the releases provided for above are
effective, the Credit Motion and the Complaint shall be dismissed with
prejudice, and Level 3 shall, within three (3) business days following
the Early Funding Date, amend its proof of claim filed in connection
with the Bankruptcy Case so as to eliminate any claims associated with
or related to the INSPA.
(e) Nothing in the "BANKRUPTCY PLAN" or the "DISCLOSURE STATEMENT" (as
each is defined in the Asset Purchase Agreement) to be filed by
Allegiance shall in any way be inconsistent with the provisions of
this Agreement. To the extent that the Bankruptcy Plan and the
Disclosure Statement, as the case may be, are consistent with the
provisions of this Agreement, and so long as Allegiance and Purchaser
each are in compliance with this Agreement, Level 3 shall not (nor
will it encourage any other person to): (i) object to the Bankruptcy
Plan or propose, file or support any restructuring, workout, or plan
of reorganization for Allegiance other than the Bankruptcy Plan; (ii)
object to the Disclosure Statement; (iii) delay, impede, or take any
other action to interfere, directly, or indirectly, in any respect
with the approval of the Disclosure Statement, or the acceptance,
confirmation, or implementation of the Bankruptcy Plan.
7. TERMINATION ASSISTANCE SERVICES. Commencing on the Early Funding Date (or
the Option Exercise Date, with respect to the Off-Net Ports), and
continuing during the Migration Period (as defined in Section 8 below),
Allegiance and Purchaser shall provide Termination Assistance Services to
Level 3 so as to assure the orderly transition of services provided under
the INSPA from the Allegiance network to the Level 3 network. The
Termination Assistance Services shall include the continued provision by
Allegiance and (if applicable) Purchaser of network connectivity, space,
power and other services such that the delivery of the Integrated Network
Solution shall continue notwithstanding the occurrence of the Early Funding
Date or the Closing Date. With respect to the Termination Assistance
Services during the Migration Period:
(a) [**REDACTED]
(b) [**REDACTED]
(c) [**REDACTED]
(d) [**REDACTED]
(e) [**REDACTED]
8. MIGRATION PLAN. Commencing on the Execution Date, the Parties shall work
cooperatively to establish an agreed "MIGRATION PLAN" specifying the steps
to be taken by the Parties in order to effectuate an orderly migration of
services; the Migration Plan, once completed, shall become "SCHEDULE 8" to
this Agreement. Each Party shall, commencing on the Early Funding Date (or
the Option Exercise Date, with respect to the Off-Net Ports), work
cooperatively and in good faith to migrate services delivered under
8
** NOTE: CERTAIN MATERIAL HAS BEEN OMITTED PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT AND SUCH MATERIAL HAS BEEN FILED SEPARATELY WITH THE SEC.
the INSPA to the Level 3 network pursuant to the Migration Plan. Each Party
shall take such actions as are reasonably required in order to effectuate
the Migration Plan. The Migration Plan shall contemplate the completion of
all migration of ports to the Level 3 network within six (6) months after
the Closing Date (such period of time shall be the "MIGRATION PERIOD").
Upon the conclusion of the six (6) month period following the Closing Date,
unless all of the Parties otherwise agree in writing, the obligation to
deliver Termination Assistance Services shall cease. All termination
liability (if any) with respect to the cancellation of underlying third
party circuits after migration of service to the Level 3 network will be
borne equally by Allegiance and (if applicable) Purchaser; provided,
however, that Purchaser's cumulative liability for the payment of such
termination liability shall be capped at $100,000.00 and Allegiance shall
pay all termination liability charges in excess of such cap. In no event
shall Level 3 have any liability for such termination liability.
9. FILING UNDER SEAL. Allegiance agrees to file this Agreement with the
Bankruptcy Court under seal. Notwithstanding the foregoing, subject to the
requirements of Section 11 hereof, Allegiance shall be permitted to
disclose the terms of the Agreement in the Compromise Motion (as defined in
Section 11 hereof), if necessary, to obtain Bankruptcy Court approval
therefor. Notwithstanding anything herein to the contrary, Allegiance shall
be permitted to disclose the terms of the Agreement and provide copies
thereof, without the need for a confidentiality agreement, to the
attorneys, advisors and principals of (i) the official committee of
unsecured creditors of Allegiance (the "COMMITTEE"), and (ii) the agent for
the senior secured lenders of Allegiance.
10. CONFIDENTIALITY. The terms and conditions of this Agreement are
confidential and each Party warrants and represents that it will not
(except as permitted in Section 9) reveal or engage in any action which it
knows or has reason to believe will result in the disclosure of any
information concerning the terms of this Agreement to anyone; provided,
however, that each Party may reveal the terms of this Agreement (a) to its
successors, assigns and its or their officers, directors, employees,
agents, counsel, financial advisors and accountants in the normal course of
business provided that the recipients are instructed that the terms of this
Agreement are confidential and are to be maintained as such, and (b) upon
order of or direction by a court or government unit of competent
jurisdiction. Notwithstanding the foregoing, a Party may disclose such
information as is required to be disclosed by applicable law or in order to
obtain the Bankruptcy Court Approval Order. Each Party shall notify the
other of any process, order or direction of a court or government unit of
competent jurisdiction requiring the disclosure of the terms of this
Agreement in a writing delivered as soon as possible upon receipt of any
subpoena or other similar process or order and in any event no later than
three (3) days prior to any required disclosure. The Parties agree that
money damages are an insufficient measure of the harm disclosure of the
terms of this Agreement, the Migration Plan, or any related documents,
agreements, schedules, and instruments, may cause to either Party and each
agree that either is entitled to injunctive relief to quash any disclosure
of the terms of this
9
** NOTE: CERTAIN MATERIAL HAS BEEN OMITTED PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT AND SUCH MATERIAL HAS BEEN FILED SEPARATELY WITH THE SEC.
Agreement, the Migration Plan, or any related documents, agreements,
schedules, and instruments.
11. FILING FOR APPROVAL. Within five (5) business days after the Execution
Date, Allegiance shall file with the Bankruptcy Court and serve upon
parties in interest pursuant to applicable administrative Orders of the
Bankruptcy Court, and as otherwise required by applicable bankruptcy law
and procedures, a motion seeking approval of this Agreement, the
transactions described herein, the compromises evidenced hereby under and
pursuant to Bankruptcy Code Sections363, 365, Fed. R. Bankr. P. 9019, and
otherwise applicable bankruptcy or non-bankruptcy law (the "COMPROMISE
MOTION"). With respect to the Compromise Motion and for all purposes
related hereto, the Parties agree that this Agreement represents a
settlement and compromise of disputed matters under the INSPA and shall not
be subject to any solicitation or auction initiated by or on behalf of
Allegiance, the Committee, or any employees, agents, members or
professionals thereof. The Compromise Motion must be in form and substance
acceptable to the Parties prior to its filing with the Bankruptcy Court.
For all purposes under this Agreement, a "BANKRUPTCY COURT APPROVAL ORDER"
shall mean an order, in form and content reasonably satisfactory to the
Parties, approving this Agreement, the Migration Plan and the transactions
described herein entered on the docket of the Bankruptcy Court, upon due
and proper notice to parties in interest, which Order shall be final,
non-appealable and unstayed and shall: (i) survive confirmation of a plan
of reorganization or liquidation in the Bankruptcy Case, the sale,
assignment, transfer or other disposition of any Allegiance assets,
compromises with other parties in interest, and conversion or dismissal of
the Bankruptcy Case and (ii) govern (and as appropriate, be incorporated
into) any plan, related Orders of the Bankruptcy Court under applicable
bankruptcy or non-bankruptcy law, including, without limitation, an Order
in respect of plan confirmation, a Bankruptcy Code Sections363 or 365
Order, or a Bankruptcy Court Order under Fed. R. Bankr. P. 9019. The
Bankruptcy Court Approval Order shall expressly state that the assumption
and assignment to Level 3 of the KMC Agreement shall not release or waive
any claims that Allegiance may have against KMC respecting performance of
the KMC Agreement, and that (except with respect to claims respecting
backhaul latency or non-delivery of ports relating to periods of time prior
to the assumption and assignment of the KMC Agreement, as set forth in
Section 3(d) hereof) Level 3 shall be free to enforce all such rights
against KMC (even if such rights relate to periods of time prior to the
assignment of the KMC Agreement to Level 3). All Parties shall in good
faith endeavor to obtain the Bankruptcy Court Approval Order. Each Party
shall bear its own fees and costs associated with such efforts.
12. BANKRUPTCY COURT APPROVAL DATE. Except with respect to Sections 10 and 11,
this Agreement shall have no binding effect upon any Party until the
Bankruptcy Court Approval Date. Subject to the Bankruptcy Court's calendar
and availability, the Bankruptcy Approval Order must be approved by the
Court and so ordered thereby no later than March 25, 2004. The "BANKRUPTCY
COURT APPROVAL DATE" is the first date upon which the Bankruptcy Court
Approval Order is unstayed, and has become final and non-
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appealable, without an appeal having been filed with respect thereto.
Notwithstanding the foregoing, the Parties may begin taking steps to
perform the terms of this Agreement prior to the Bankruptcy Court Approval
Date. If the Bankruptcy Court does not grant the Compromise Motion, approve
the terms of this Agreement, and authorize the compromise and transactions
evidenced hereby within the times set forth above, this Agreement (except
with respect to Section 10 hereof) will be deemed null and void AB INITIO.
In such event, the claims, rights and remedies of the Parties under and in
respect of the INSPA and otherwise shall remain in full force and effect
and shall be immediately enforceable without impairment or modification.
13. TERMINATION AND EARLY FUNDING DATE.
(a) In the event that the Early Funding Date has not occurred on or before
August 30, 2004, any Party may terminate this Agreement upon delivery
of written notice to the other Party (the effective date of such
termination to be the "TERMINATION DATE"). On the Termination Date,
Level 3 shall be obligated (if it has not already done so) to exercise
the option and pay the Option Purchase Price as contemplated by
Section 4 hereof, and termination of this Agreement shall not affect
the effectiveness of the transactions described in Section 4 hereof.
(b) In the event this Agreement is terminated pursuant to paragraph (a)
above, the Interim Services Payment shall cease and thereafter Level 3
shall be obligated to commence payment of the Purchase Price as set
forth in the INSPA (but not with respect to the Off-Net Ports, if
Level 3 has paid the Option Purchase Price). In such event, the
Parties agree that any outstanding issues or disputes under the INSPA
(including, but not limited to, disputes respecting the application of
any Business Downturn under Section 4.3 of the INSPA, disputes
regarding pricing for the ports as a result of any Competitive Offer,
disputes regarding the application of Performance Warranty Remedies
(even if such Performance Warranty Remedies related to periods of time
before the Execution Date), or any disputes arising out of Level 3's
assertion of remedies or claims under, in respect of or at all
relating to, the INSPA) shall be immediately submitted to binding
arbitration pursuant to this Section. Any Party may initiate such
binding arbitration action in accordance with the Commercial
Arbitration Rules (the "Rules") of the American Arbitration
Association ("AAA"). The confidentiality provisions of this Agreement
shall govern all AAA arbitration proceedings. The Parties shall
attempt to select a single neutral arbitrator to hear the matters in
dispute. Such arbitrator need not be affiliated with the AAA. If the
Parties fail to agree on a single neutral arbitrator within ten (10)
days of the filing of the demand for arbitration, then three neutral
arbitrators shall be appointed in accordance with the Rules. The
arbitration award shall be in writing and shall specify the factual
and legal basis for the award. The arbitration shall be conducted in
New York, NY, and judgment upon the award rendered by the
arbitrator(s) may be entered in any court having jurisdiction thereof.
Unless otherwise ordered by the
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arbitrator(s), the costs of the arbitration, including the AAA
administration fee, the arbitrator's fee, and costs for the use of
facilities during the hearings, shall be borne equally by the Parties.
Attorneys' fees and costs may be awarded to the prevailing or most
prevailing party at the discretion of the arbitrator(s).
(c) In the event of termination of this Agreement pursuant to paragraph
(a) above, Level 3 shall be obligated to pay the difference between
the Purchase Price which would have otherwise been due under the INSPA
(as may be modified as a result of the arbitration referenced in
paragraph (b) above) and the Interim Services Payments made hereunder
for the period of time from and after February 1, 2004 through the
Termination Date. With respect to any payment obligations arising
under the INSPA between February 1, 2004 and the Termination Date in
the event of a termination of this Agreement pursuant to paragraph (a)
above, the Parties agree that the decision of the arbitrator(s) with
respect to market pricing shall be applied retroactively as though
Level 3 had delivered each alleged Competitive Offer introduced by
Level 3 during such proceedings on the Execution Date, and the
decision of the arbitrator(s) with respect to such issue shall have
retroactive application to February 1, 2004 (such that, as an example,
if the arbitrator(s) find that the market price should be lower than
the present pricing, such price would be applied from and after
February 1, 2004).
14. MATERIAL BREACH. If there is a material breach of any material provision of
this Agreement or the Migration Plan, upon written notice to the allegedly
breaching Party, the Party asserting the breach may (in addition to any
other remedies it may have under applicable law) terminate this Agreement
within ten (10) business days' written notice. In such event, the claims,
rights and remedies of the Parties under and in respect of the INSPA and
otherwise shall remain in full force and effect and shall be immediately
enforceable without impairment or modification. In the event of a breach in
connection with the delivery of Termination Assistance Services or the
Migration Plan by Allegiance or Purchaser, each of Allegiance and Purchaser
agree that money damages are an insufficient measure of the harm any such
breach may cause and, as a result, Level 3 is entitled to injunctive relief
to compel specific performance of the obligations imposed on Allegiance and
Purchaser before the Bankruptcy Court or (in the case of claims against
Purchaser) before any court of competent jurisdiction. Each Party consents
to the jurisdiction of the Bankruptcy Court with respect to any actions to
enforce this Agreement.
15. WAIVER OF RIGHTS TO OBJECT; SATISFACTION OF CERTAIN OBLIGATIONS UNDER ASSET
PURCHASE AGREEMENT. . Allegiance hereby acknowledges and agrees that the
Purchaser's obligations under Sections 6.26 and 7.3(h) and Schedule 6.26 of
the Asset Purchase Agreement are satisfied in all respects. Notwithstanding
anything to the contrary contained herein, no provision of this Agreement
constitutes or effects, or shall be deemed to constitute or effect, an
amendment, modification or waiver of any provision of the Asset Purchase
Agreement, except solely in respect of the satisfaction of the
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CONFIDENTIAL TREATMENT AND SUCH MATERIAL HAS BEEN FILED SEPARATELY WITH THE SEC.
Purchaser's obligations under Sections 6.26 and 7.3(h) and Schedule 6.26
thereof. For the avoidance of doubt, the Purchaser's obligations hereunder
are limited to those specified in Sections 3(f), 6(a), 7, 8, 10 and 14
hereof. Level 3 shall not in any way seek to object to or otherwise oppose
the transactions contemplated by the Asset Purchase Agreement so long as
Purchaser and Allegiance are in compliance with this Agreement.
16. NOTICES. Any notice to a Party required or permitted under this Agreement
must be in writing and delivered by certified mail, by a nationally
recognized overnight delivery service (with signature required for
delivery), or by a courier service to the applicable address indicated
below or such address as the Party to be notified has designated by giving
notice in compliance with this Section:
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CONFIDENTIAL TREATMENT AND SUCH MATERIAL HAS BEEN FILED SEPARATELY WITH THE SEC.
If to Allegiance: Allegiance Telecom Company Worldwide
9201 North Central Expressway
Dallas, Texas 75231
Attn: General Counsel
With a copy to: Kirkland & Ellis, LLP
153 East 53rd
New York, New York 10022
Attn: Jonathan Henes, Esq.
Kimberly Taylor, Esq.
With a further copy to the Committee, care of:
Akin Gump Strauss Hauer & Feld, LLP
590 Madison Avenue
New York, New York 10022
Attn: Ira Dizengoff, Esq.
If to Level 3: Level 3 Communications, LLC
1025 Eldorado Blvd.
Broomfield, Colorado 80021
Attn: Assistant General Counsel
If to Purchaser: XO Communications, Inc.
11111 Sunset Hills Road
Reston, Virginia 20190
Attn: General Counsel
17. VALIDITY. This Agreement is for the benefit of and is binding upon the
respective past and present parents, subsidiaries, and divisions, and
predecessors and successors of the Parties, and each of their respective
directors, officers, shareholders, employees and representatives. Nothing
in this Agreement may be construed to create any rights in, or grant any
cause of action to, any person not a Party to this Agreement.
18. SURVIVABILITY. This Agreement inures to the benefit of the Parties, and
their respective successors and assigns, and is binding upon any trustee,
party, entity or other fiduciary that may be appointed in connection with
the Bankruptcy Case whether under Chapter 7 or Chapter 11 of the Bankruptcy
Code.
19. CHOICE OF LAW. This Agreement is governed by and construed in accordance
with the domestic laws of the State of New York without giving effect to
any choice or conflict of law provision or rule that would cause the
application of the laws of any jurisdiction other than the State of New
York.
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CONFIDENTIAL TREATMENT AND SUCH MATERIAL HAS BEEN FILED SEPARATELY WITH THE SEC.
20. RETENTION OF JURISDICTION. Except as otherwise expressly set forth herein,
the Parties to this Agreement consent to the jurisdiction of the Bankruptcy
Court. The Parties submit to the jurisdiction of the Bankruptcy Court in
connection with the interpretation and enforcement of this Agreement.
21. ATTORNEYS FEES. In the event that any of the Parties must resort to legal
action in order to enforce any provision or right under this Agreement or
to defend such suit, the prevailing Party is entitled to receive
reimbursement from the non-prevailing Party or Parties for all reasonable
attorneys' fees and costs incurred in the litigation of such suit.
22. NO ADMISSION; NO THIRD PARTY BENEFICIARY. This Agreement effects the
settlement of potential and existing claims and disputes and nothing
contained herein is construed as an admission by any Party hereto of any
wrongdoing of any kind. Each Party's consent to the terms of this
Agreement, including, without limitation, the consent to any assignment and
assumption of any other agreement or the assignment of any rights or
obligations thereunder, may be used against it as an admission or
declaration against interest in construing any of the agreements enumerated
herein nor any similar or other agreements. There shall be no third party
beneficiaries to the terms and conditions of this Agreement.
23. ENTIRE AGREEMENT. This Agreement and the Exhibits attached hereto
constitute the entire agreement and understanding between the Parties with
respect to the subject matter hereof and all prior negotiations,
agreements, understandings, written or oral, between the Parties are deemed
superseded and are replaced hereby. No provision may be changed, waived or
modified, except in writing, signed by the Parties hereto.
24. NON-INTEGRATION. The Parties agree that the Termination Assistance Services
and the other provisions of this Agreement are not intended to be
integrated and that upon the payment by Level 3 to Allegiance of the
amounts contemplated by Section 4 or Section 13(a) hereof, as applicable,
only the provisions regarding the Termination Assistance Services shall be
deemed to be executory.
25. COUNTERPARTS. This Agreement may be executed by facsimile and in multiple
counterparts, each of which is deemed an original, but all of which
together constitutes one and the same document.
[Signatures on following page]
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CONFIDENTIAL TREATMENT AND SUCH MATERIAL HAS BEEN FILED SEPARATELY WITH THE SEC.
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the
day and year written below.
Dated: February 27, 2004 LEVEL 3 COMMUNICATIONS, LLC, on behalf of
itself and other affiliated entities
governed hereby.
By:
---------------------------------------
Its:
--------------------------------------
Dated: February 27, 2004 ALLEGIANCE TELECOM COMPANY WORLDWIDE, on
behalf of itself and other affiliated
entities governed hereby.
By:
---------------------------------------
Its:
--------------------------------------
Dated: March 12, 2004 XO COMMUNICATIONS, INC., on behalf of
itself and other affiliated entities
governed hereby.
By:
---------------------------------------
Its:
--------------------------------------
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CONFIDENTIAL TREATMENT AND SUCH MATERIAL HAS BEEN FILED SEPARATELY WITH THE SEC.
SCHEDULE 8
MIGRATION PLAN
[**REDACTED]
17
Dates Referenced Herein and Documents Incorporated by Reference
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