Exhibit 10.1

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

Teléfonos de México, S.A. de C.V.

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TABLE OF CONTENTS

                              Page            

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ARTICLE I   ISSUANCE AND SALE OF NEW COMMON SHARES; AMENDMENTS     2       1.1.
  Issuance, Purchase and Sale     2       1.2.   The Closing; Deliveries     2  
    1.3.   Capitalized Terms     3     ARTICLE II   REPRESENTATIONS AND
WARRANTIES OF THE COMPANY     3       2.1.   Organization; Subsidiaries     3  
    2.2.   Due Authorization     4       2.3.   Capitalization     5       2.4.
  SEC Reports     6       2.5.   Financial Statements     6       2.6.   Absence
of Certain Changes     7       2.7.   Litigation     7       2.8.   Consents; No
Violations     7       2.9.   Communications Regulatory Matters     8      
2.10.   Compliance with Laws     9       2.11.   Commitments     9       2.12.  
Financial Advisory, Legal and Other Fees     10       2.13.   Taxes     10      
2.14.   ERISA Compliance     11       2.15.   Intellectual Property; Technology
    13       2.16.   Environmental Matters     14       2.17.   Insurance     14
      2.18.   Business Combination and Takeover Statutes     15       2.19.  
Offering of New Common Shares     15       2.20.   Network Facilities     15    
  2.21.   Disclosure     16       2.22.   Confidentiality     16     ARTICLE III
  REPRESENTATIONS AND WARRANTIES OF THE INVESTORS     17       3.1.  
Acquisition for Investment     17       3.2.   Restricted Securities     17    
  3.3.   Accredited Investor     17       3.4.   Organization     17       3.5.
  Due Authorization     18       3.6.   Consents; No Violations     18      
3.7.   Availability of Funds     19       3.8.   Litigation     19  

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                      3.9.   No Other Representations     19     ARTICLE IV  
COVENANTS     19       4.1.   Conduct of Business by the Company Pending the
Closing     19       4.2.   Press Releases; Interim Public Filings     22      
4.3.   HSR Act; Foreign Competition Filings     22       4.4.   Consents;
Approvals     22       4.5.   Listing     23       4.6.   Board Representation;
VCOC     23       4.7.   Amended and Restated Certificate of Incorporation    
24       4.8.   Cooperation     24       4.9.   Access to Property; Records    
24       4.10.   Reserve Shares     25       4.11.   Use of Proceeds     25    
  4.12   Restructuring     25       4.13   Notice of Proposal     26       4.14
  Access to Certain Information     26       4.15   Limitation on Equity Sales  
  26       4.16   Alternative Investment Structure     27       4.17  
Supplemental Schedules     27       4.18   Stockholders Agreement     27      
4.19   Management Shares     28       4.20   Releases     28       4.21  
Retention Bonus Plan Payments     28       4.22   Company’s Obligation Regarding
Fees and Expenses     28     ARTICLE V   CONDITIONS     28       5.1.  
Conditions to Obligations of Each Investor and the Company     28       5.2.  
Conditions to Obligations of Each Investor     29       5.3.   Conditions to
Obligations of the Company     33     ARTICLE VI   TERMINATION     34       6.1.
  Termination     34       6.2.   Effect of Termination     36       6.3  
Break-Up Payment     36     ARTICLE VII   SURVIVAL AND LOSSES     37       7.1.
  Survival     37       7.2.   Losses     37     ARTICLE VIII   MISCELLANEOUS  
  38       8.1.   Defined Terms; Interpretations     38       8.2.   Fees and
Expenses     50       8.3.   Restrictive Legends     51  

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                      8.4.   Further Assurances     51       8.5.   Successors
and Assigns     51       8.6.   Entire Agreement     52       8.7.   Notices    
52       8.8.   Amendments     54       8.9.   Counterparts     54       8.10.  
Headings     54       8.11.   Governing Law     54       8.12.   Submission to
Jurisdiction     54       8.13.   Waiver Of Jury Trial     54       8.14.  
Severability     54  

          Exhibit A   —   New Capitalization Exhibit B   —   Stockholders
Agreement Exhibit C   —   Registration Rights Agreement Exhibit D   —   Amended
and Restated Certificate of Incorporation Exhibit E   —   Restated Bylaws
Exhibit F   —   Contractual Management Rights Letter Exhibit G   —  
Investor/Management Common Stock Terms Exhibit H   —   New Employee Stock Option
Plan

 

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Execution Copy

STOCK PURCHASE AGREEMENT

                  STOCK PURCHASE AGREEMENT (this “Agreement”), dated as of
January 15, 2002, among XO Communications, Inc., a Delaware corporation (the
“Company”), 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, “Forstmann Little”) and Teléfonos de
México, S.A. de C.V., sociedad anónima de capital variable organized under the
laws of the United Mexican States (“Telmex”; Forstmann Little and Telmex are
sometimes hereinafter referred to as the “Investors” and each is sometimes
referred to individually as an “Investor”).

W I T N E S S E T H :

                  WHEREAS, the Company desires to undertake the Restructuring
(as hereinafter defined) that will, among other things, result in the New
Capitalization (as hereinafter defined); and

                  WHEREAS, in connection with the Restructuring, the Investors
desire to make a significant investment in the Company; and

                  WHEREAS, to implement such investment, the Investors desire to
purchase from the Company, and the Company desires to issue and sell to the
Investors, upon the terms and subject to the conditions set forth herein, the
New Common Shares (as hereinafter defined) of the Company; and

                  WHEREAS, as an inducement to the Investors to enter into this
Agreement, the Investors and the Company shall, on or prior to the Closing (as
hereinafter defined), enter into a stockholders agreement in the form attached
hereto as Exhibit B (the “Stockholders Agreement”) setting forth certain rights
and obligations of the Investors and the Company; and

                  WHEREAS, as a further inducement to the Investors to enter
into this Agreement, the Investors and the Company shall, on or prior to the
Closing, enter into a registration rights agreement in the form attached hereto
as Exhibit C (the “Registration Rights Agreement”), in respect of the New Common
Shares and shares of Common Stock (as hereinafter defined) into which New Common
Shares may be convertible; and

                  WHEREAS, in order to effect the transactions contemplated by
this Agreement, the Company shall, on or prior to the Closing of the
transactions contemplated hereby, amend and restate its certificate of
incorporation and bylaws in the respective forms attached hereto as Exhibit D
and Exhibit E, respectively.

                  NOW, THEREFORE, in consideration of the premises and the
mutual representations, warranties, covenants and agreements set forth in this
Agreement and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto hereby agree as follows:

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ARTICLE I

ISSUANCE AND SALE OF NEW COMMON SHARES; AMENDMENTS

                  1.1. Issuance, Purchase and Sale. Upon the terms and subject
to the conditions set forth herein, at the Closing: (a) the Company shall issue
and sell to Forstmann Little and Forstmann Little shall purchase from the
Company 79,999,998 shares of the Company’s Class A Common Stock, par value $0.01
per share (the “Class A Common Stock”), and two shares of the Company’s
to-be-designated Class D Common Stock, par value $0.01 per share, in each case
having the rights and preferences stated in the Amended and Restated Certificate
of Incorporation (as hereinafter defined) (the “Class D Common Stock”), which
shares of Class A Common Stock and Class D Common Stock shall (subject to
footnote no. 5 to Exhibit A) in the aggregate equal 40.00% of the New
Outstanding Equity (as hereinafter defined) (collectively, the “New Forstmann
Little Shares”); (b) the Company shall issue and sell to Telmex and Telmex shall
purchase from the Company 80,000,000 shares of the Company’s to-be-designated
Class C Common Stock, par value $0.01 per share, having the rights and
preferences stated in the Amended and Restated Certificate of Incorporation (the
“Class C Common Stock”), which Class C Common Stock shall (subject to footnote
no. 5 to Exhibit A) in the aggregate equal 40.00% of the New Outstanding Equity
(the “New Telmex Shares” and together with the New Forstmann Little Shares, the
“New Common Shares”); and (c) Telmex and Forstmann Little shall each pay to the
Company, by wire transfer of immediately available funds, an aggregate purchase
price of $400,000,000 in cash in United States dollars (collectively, the
amounts to be paid by all of the Investors pursuant to this Section 1.1, the
“Purchase Price”) in consideration for the New Common Shares purchased by such
Investor upon the Closing (collectively, the “Investment”).

                  1.2. The Closing; Deliveries. (a) The closing of the purchase
and sale of the New Common Shares hereunder and the other transactions
contemplated hereby (the “Closing”) shall take place at the offices of Fried,
Frank, Harris, Shriver & Jacobson, One New York Plaza, New York, New York 10004,
at a date (the “Closing Date”) and time to be mutually agreed upon by the
Company and the Investors, which shall be at least three (3) but no more than
thirty (30) days after the date following the satisfaction or waiver by each
Investor or the Company, as appropriate, of all of the conditions set forth in
Article V (other than those conditions that by their nature are to be satisfied
at the Closing, but subject to the satisfaction or waiver of those conditions);
provided, however, that in the event the parties are not able mutually to agree
on a Closing Date in accordance with the immediately proceeding clause, the
parties agree that the Closing Date shall be on the thirtieth (30th) day
following the satisfaction or waiver of all of the conditions set forth in
Article V (other than those conditions that by their nature are to be satisfied
at the Closing, but subject to the satisfaction or waiver of those conditions).

                  (b)  At the Closing, the Company shall deliver certificates to
(i) Equity VII and MBO VIII representing the New Forstmann Little Shares being
purchased by Equity VII and MBO VIII, respectively, each registered in the name
of Equity VII or its nominee or designee or MBO VIII or its nominee or designee
in such amounts as Equity VII or MBO VIII shall specify to the Company prior to
the Closing and (ii) Telmex representing the New Telmex Shares being purchased
by Telmex and registered in the name of Telmex or its nominee or designee in
such amounts as Telmex shall specify to the Company prior to the Closing.
Delivery of such

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certificates to each Investor shall be made against receipt by the Company of
the portion of the Purchase Price payable by such Investor, which shall be paid
by wire transfer of immediately available funds to an account designated at
least three Business Days prior to the Closing Date by the Company.

                  1.3. Capitalized Terms. Capitalized terms not otherwise
defined herein shall have the meanings ascribed to such terms in Section 8.1.

ARTICLE II

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

                  The Company hereby represents and warrants to each Investor,
as of the date hereof and as of the Closing, as follows:

                  2.1. Organization; Subsidiaries. (a) The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware and has the requisite corporate power and authority to
carry on its business as it is now being conducted. The Company is duly
qualified and licensed as a foreign corporation to do business and is in good
standing (and has paid all relevant franchise or analogous taxes), in each
jurisdiction where the character of its assets owned or held under lease or the
nature of its business makes such qualification necessary except where the
failure to be so qualified or licensed would not individually or in the
aggregate reasonably be expected to have a Material Adverse Effect.

                  (b)  Exhibit 21 to the Company’s Annual Report on Form 10-K
for the year ended December 31, 2000 (the “2000 10-K”) and Schedule 2.1(b)(i)
together set forth a complete and correct list as of the date hereof of each
corporation, limited liability company, partnership, business association or
other Person with respect to which the Company has, directly or indirectly,
ownership of or rights with respect to securities or other interests having the
power to elect a majority of such Person’s board of directors or analogous or
similar governing body, or otherwise having the power to direct the management,
business or policies of that corporation, limited liability company,
partnership, business association or other Person which is a “Significant
Subsidiary” as defined in Rule 1-02(w) of Regulation S-X (each, a “Significant
Subsidiary” and, collectively, the “Significant Subsidiaries”). Except as set
forth in Exhibit 21 to the 2000 10-K or on Schedule 2.1(b)(ii), as of the date
hereof (i) the Company owns, either directly or indirectly through one or more
Subsidiaries, all of the capital stock or other equity interests of the
Significant Subsidiaries free and clear of all Encumbrances, other than
Permitted Encumbrances, and (ii) there are no outstanding subscription rights,
options, warrants, convertible or exchangeable securities or other rights of any
character whatsoever relating to issued or unissued capital stock or other
equity interests of any Significant Subsidiary, or any Commitments of any
character whatsoever relating to issued or unissued capital stock or other
equity interests of any Significant Subsidiary or pursuant to which any
Significant Subsidiary is or may become bound to issue or grant additional
shares of its capital stock or other equity interests or related subscription
rights, options, warrants, convertible or exchangeable securities or other
rights, or to grant preemptive rights. Except for any Subsidiaries which are not
Significant Subsidiaries, all of which (other than those wholly owned
Subsidiaries that do not engage in any material business activities or hold any
material assets) are set forth on Schedule

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2.1(b)(iii), and except as set forth in Exhibit 21 to the 2000 10-K or on
Schedule 2.1(b)(iv), as of the date hereof the Company does not own, directly or
indirectly, any interest in any corporation, limited liability company,
partnership, business association or other Person.

                  (c)  Except as would not have a Material Adverse Effect, each
Subsidiary is a corporation or limited liability company duly organized, validly
existing and in good standing (in jurisdictions where such concept is
recognized) under the laws of the jurisdiction of its organization and has the
requisite corporate power and authority to carry on its business as it is now
being conducted. Each Subsidiary of the Company is duly qualified and licensed
as a foreign corporation or other business entity to do business and is in good
standing (and has paid all relevant franchise or analogous taxes), in each
jurisdiction where the character of its assets owned or held under lease or the
nature of its business makes such qualification necessary and where the failure
to be so qualified or licensed would not individually or in the aggregate
reasonably be expected to have a Material Adverse Effect.

                  2.2. Due Authorization. The Company has all right, corporate
power and authority to enter into this Agreement and each of the other
Transaction Documents to which it is a party, subject to approval of the
Bankruptcy Court, if applicable, and to consummate the transactions contemplated
hereby and thereby. The execution and delivery by the Company of this Agreement
and each of the other Transaction Documents to which it is a party is, and the
issuance, sale and delivery of the New Common Shares by the Company and the
compliance by the Company with each of the provisions of this Agreement and each
of the other Transaction Documents to which it is a party (including the
reservation and issuance of the Conversion Shares after giving effect to the
consummation by the Company of the transactions contemplated hereby) will, upon
the effectiveness of the Amended and Restated Certificate of Incorporation, be
(a) within the corporate power and authority of the Company, and (b) have been
duly authorized by all requisite corporate and other action of the Company. At
the time of the Closing, the Confirmation Order and the Bankruptcy Plan, if
applicable, shall have directed and authorized the Company to have filed the
Amended and Restated Certificate of Incorporation, and the Amended and Restated
Certificate of Incorporation shall authorize a number of shares of Class A
Common Stock, Class C Common Stock and Class D Common Stock at least equal to
the number of shares of New Common Shares to be issued to the Investors pursuant
to the terms of this Agreement plus the Conversion Shares. This Agreement has
been, and each of the other Transaction Documents to which the Company is a
party when executed and delivered by the Company will be, duly and validly
executed and delivered by the Company, and this Agreement constitutes, and each
of such other Transaction Documents when executed and delivered by the Company
will constitute, a valid and binding agreement of the Company, enforceable
against the Company in accordance with its terms, except as such enforcement is
limited by bankruptcy, insolvency and other similar laws affecting the
enforcement of creditors’ rights generally and for limitations imposed by
general principles of equity. The Conversion Shares will have been validly
reserved for issuance at the Closing, and upon such issuance, will be duly
authorized and validly issued and outstanding, fully paid and nonassessable. The
Company has taken all action necessary to waive, and by its execution hereof
does hereby waive, the provisions of Section 4.16 of the 1999 Stock Purchase
Agreement and Section 4.16 of the 2000 Stock Purchase Agreement to the extent
necessary to permit each Investor to consummate the transactions contemplated by
this Agreement and the other Transaction Documents. The terms, designations,
powers, preferences and relative participation, optional and other special
rights, qualifications,

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limitations and restrictions of the Class C Common Stock and the Class D Common
Stock shall be as set forth in the Amended and Restated Certificate of
Incorporation. The New Common Shares, when issued and delivered in accordance
with the terms of this Agreement, will be duly authorized and validly issued and
outstanding, fully paid and nonassessable, free and clear of any Encumbrances
and not subject to the preemptive or other similar rights of any stockholders of
the Company, other than as contemplated by this Agreement and the other
Transaction Documents.

                  2.3. Capitalization. As of January 11, 2002, the authorized
capital stock of the Company consists of (a) 1,000,000,000 shares of Class A
Common Stock, par value $0.02 per share, of which 337,774,204 shares are issued
and outstanding, with any increase since that date being attributable solely to
(i) the exercise of outstanding employee stock options and purchases under
employee stock plans set forth on Schedule 2.3 and (ii) the other transactions
described on Schedule 2.3; (b) 120,000,000 shares of Class B Common Stock, par
value $0.02 per share (the “Class B Common Stock”, and together with the Class A
Common Stock, the “Common Stock”), of which 104,423,158 shares are issued and
outstanding, with any changes in the number of such issued and outstanding
shares of Class B Common Stock resulting solely from the conversion of shares of
Class B Common Stock into shares of Class A Common Stock, and (c) 25,000,000
shares of Preferred Stock, par value $0.01 per share, of which (i) 10,961,885
shares are issued and outstanding as 14% Series A Senior Exchangeable Redeemable
Preferred Shares (the “Series A Preferred Stock”), (ii) 1,768,695 shares are
issued and outstanding as the 61/2% Series B Cumulative Convertible Preferred
Stock (the “Series B Preferred Stock”), (iii) 584,375 shares are issued and
outstanding as the Series C Cumulative Convertible Participating Preferred Stock
(the “Series C Preferred Stock”), (iv) 265,625 shares are issued and outstanding
as the Series D Convertible Participating Preferred Stock (the “Series D
Preferred Stock”), (v) 238,070 shares are issued and outstanding as the 131/2%
Series E Senior Redeemable Exchangeable Preferred Stock due 2010 (the “Series E
Preferred Stock”), (vi) 58,125 shares are issued and outstanding as the 7%
Series F Convertible Redeemable Preferred Stock (the “Series F Preferred
Stock”), (vii) 268,750 shares are issued and outstanding as the Series G
Cumulative Convertible Participating Preferred Stock (the “Series G Preferred
Stock”) and (viii) 131,250 shares are issued and outstanding as the Series H
Convertible Participating Preferred Stock (the “Series H Preferred Stock” and,
together with the Series A Preferred Stock, the Series B Preferred Stock, the
Series C Preferred Stock, the Series D Preferred Stock, the Series E Preferred
Stock, the Series F Preferred Stock, and the Series G Preferred Stock, the
“Preferred Stock”), with any changes in the number of such issued and
outstanding shares of Preferred Stock resulting solely from the conversion of
shares of Preferred Stock into shares of Class A Common Stock. As of the
Closing, after giving effect to the Investment and the Restructuring, the
authorized capital stock of the Company shall be as set forth in the Amended and
Restated Certificate of Incorporation (as revised pursuant to Section 4.19) and
the complete capitalization of the Company shall be the New Capitalization,
including the New Forstmann Little Shares, the New Telmex Shares and the
Management Shares, but excluding shares of Class A Common Stock to be issued
upon the exercise of options issued under the New Employee Stock Option Plan.
All of the issued and outstanding shares of Common Stock and Preferred Stock
have been duly authorized and are validly issued and outstanding, fully paid and
nonassessable. Except as provided in the 1999 Stock Purchase Agreement or the
2000 Stock Purchase Agreement, no shares of capital stock of the Company are
entitled to preemptive or similar rights. Except as set forth on Schedule 2.3,
as of the date hereof, there are no outstanding subscription rights, options,
warrants, convertible or

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exchangeable securities or other rights of any character whatsoever relating to
issued or unissued capital stock of the Company, or any Commitments of any
character whatsoever relating to issued or unissued capital stock of the Company
or pursuant to which the Company or any of the Subsidiaries is or may become
bound to issue or grant additional shares of its capital stock or related
subscription rights, options, warrants, convertible or exchangeable securities
or other rights, or to grant preemptive rights. Except as set forth on
Schedule 2.3 or as contemplated by this Agreement and the other Transaction
Documents, as of the date hereof, (a) the Company has not agreed to register any
securities under the Securities Act or under any state securities law or granted
registration rights to any Person or entity and (b) there are no voting trusts,
stockholders agreements, proxies or other Commitments or understandings in
effect to which the Company is a party or of which it has Knowledge with respect
to the voting or transfer of any of the outstanding shares of Common Stock or
Preferred Stock.

                  2.4. SEC Reports. Except as set forth on Schedule 2.4, since
December 31, 1998, the Company, or its predecessor, has timely filed all proxy
statements, reports and other documents required to be filed by it under the
Exchange Act. The Company has made available to each Investor complete copies of
all annual reports, quarterly reports, proxy statements and other reports filed
by the Company under the Exchange Act, each as filed with the SEC (collectively,
the “SEC Reports”). Except as set forth on Schedule 2.4, each SEC Report was on
the date of its filing, in compliance in all material respects with the
requirements of its respective report form and the Exchange Act and did not, on
the date of filing, contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.

                  2.5. Financial Statements. The consolidated financial
statements of the Company (including any related schedules and/or notes)
included in the SEC Reports, have been prepared in accordance with United States
generally accepted accounting principles (“GAAP”) consistently followed
throughout the periods involved (except as may be indicated in the notes
thereto) and fairly present in accordance with GAAP the consolidated financial
condition, results of operations, cash flows and changes in stockholders’ equity
of the Company and the Subsidiaries as of the respective dates thereof and for
the respective periods then ended (in each case subject, as to interim
statements, to the absence of footnotes and as permitted by Form 10-Q and
subject to changes resulting from year-end adjustments, none of which are
material in amount or effect). Except as set forth on Schedule 2.5 or disclosed
in the SEC Reports, neither the Company nor any Subsidiary has any liability or
obligation (whether accrued, absolute, contingent, unliquidated or otherwise,
whether known or unknown, whether due or to become due and regardless of when
asserted), except (a) liabilities and obligations in the respective amounts
reflected or reserved against in the unaudited consolidated balance sheet of the
Company and the Subsidiaries as of September 30, 2001 or (b) liabilities and
obligations incurred in the ordinary course of business since September 30, 2001
which individually or in the aggregate would not reasonably be expected to have
a Material Adverse Effect.

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                  2.6. Absence of Certain Changes. Except as set forth on
Schedule 2.6 or as disclosed in the SEC Reports or as contemplated by this
Agreement or any of the other Transaction Documents, since September 30, 2001,
neither the Company nor any of the Subsidiaries has suffered any change, event
or development or series of changes, events or developments which individually
or in the aggregate has had or would reasonably be expected to have a Material
Adverse Effect or an adverse effect on the ability of the Company to perform its
obligations under this Agreement or any of the Transaction Documents.

                  2.7. Litigation. (a) Except (i) as set forth on
Schedule 2.7(a) or (ii) as disclosed in the SEC Reports, there is no claim,
action, suit, investigation or proceeding of any kind or nature whatsoever
(“Litigation”) pending or, to the Knowledge of the Company, threatened against
the Company or any of the Subsidiaries or involving any of their respective
properties or assets by or before any court, arbitrator or other Governmental
Entity which (i) in any manner challenges or seeks to prevent, enjoin, alter or
materially delay the transactions contemplated by this Agreement or any of the
other Transaction Documents or (ii) if resolved adversely to the Company or a
Subsidiary would reasonably be expected to have a Material Adverse Effect.

                  (b)  Except as set forth on Schedule 2.7(b) or as disclosed in
the SEC Reports, neither the Company nor any of the Subsidiaries is in default
under or in breach of any order, judgment or decree of any court, arbitrator or
other Governmental Entity, and neither the Company nor any of the Subsidiaries
is a party or subject to any order, judgment or decree of any court, arbitrator
or other Governmental Entity which, in either case, would reasonably be expected
to have a Material Adverse Effect.

                  2.8. Consents; No Violations. Except as set forth on
Schedule 2.8(a), neither the execution, delivery or performance by the Company
of this Agreement or any of the other Transaction Documents to which the Company
is a party nor the consummation of the transactions contemplated hereby or
thereby will: (a) conflict with, or result in a breach or a violation of, any
provision of the certificate of incorporation or bylaws or other organizational
documents of the Company or any of the Subsidiaries including, without
limitation, any of the provisions of the certificates of designation for the
Preferred Stock; (b) constitute, with or without notice or the passage of time
or both, a breach, violation or default, create an Encumbrance, other than
Permitted Encumbrances, or give rise to any right of termination, modification,
cancellation, prepayment, suspension, limitation, revocation or acceleration,
under (i) any Law or (ii) any provision of any agreement or other instrument to
which the Company or any of the Subsidiaries is a party or pursuant to which any
of them or any of their assets or properties is subject, except, with respect to
the matters set forth in this clause (ii), for breaches, violations, defaults,
Encumbrances, other than Permitted Encumbrances, or rights of termination,
modification, cancellation, prepayment, suspension, limitation, revocation or
acceleration, which, individually or in the aggregate, would not reasonably be
expected to result in a Material Adverse Effect or adversely affect the ability
of the Company to perform its obligations under this Agreement or any of the
Transaction Documents to which it is a party; (c) except for the (i) filing of
the Amended and Restated Certificate of Incorporation with the Secretary of
State of the State of Delaware, (ii) any required filings under the HSR Act, the
Exchange Act or the Securities Act, (iii) the Regulatory Approvals, (iv) the
Required Consents, (v) the Confirmation Order, if applicable, (vi) the Break-Up
Payment Order, if applicable, and (vii) any consents of

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third parties required under any agreement or other instrument to which the
Company or any of the Subsidiaries is a party or pursuant to which any of them
or any of their material assets or properties is subject, all of which are set
forth on Schedule 2.8(b) (the “Third Party Consents”), require any consent,
approval or authorization of, notification to, filing with, or exemption or
waiver by, any Governmental Entity or any other Person on the part of the
Company or any of the Subsidiaries.

                  2.9. Communications Regulatory Matters. (a) Except as set
forth on Schedule 2.9(a), as of the date hereof and as of the Closing, the
Company has all licenses, permits, certificates, franchises, consents, waivers,
registrations or other regulatory authorizations from each Governmental Entity
that regulates telecommunications in each applicable jurisdiction, including
without limitation, (i) the State PUCs (together with any renewals, extensions,
or modifications thereof and any additions thereto made as of the Closing Date,
the “State Licenses”); (ii) the appropriate foreign Governmental Entities
(together with any renewals, extensions, or modifications thereof and any
additions thereto made as of the Closing Date, the “Foreign Licenses”); (iii)
the appropriate municipal Governmental Entities (together with any renewals,
extensions, or modifications thereof and any additions thereto made as of the
Closing Date, the “Local Authorizations”) and (iv) the FCC (together with any
renewals, extensions or modifications thereof and any additions thereto made as
of the Closing Date, the “FCC Licenses”) that are required for the conduct of
its business as presently conducted, except where the failure to hold such
Communications Licenses (as herein defined) would not reasonably be expected to,
individually or in the aggregate, result in a Material Adverse Effect. The FCC
Licenses, Foreign Licenses, Local Authorizations and the State Licenses are
hereafter collectively referred to as the “Communications Licenses”. All of the
Communications Licenses other than the Local Authorizations are set forth in
Schedule 2.9(b).

                  (b)  Other than Communications Licenses the loss of which
would not reasonably be expected, individually or in the aggregate, to result in
a Material Adverse Effect, each of the Communications Licenses was duly issued,
is valid and in full force and effect, has not been suspended, canceled, revoked
or modified in any materially adverse manner and is not subject to conditions or
requirements that are not generally imposed on such authorizations.

                  (c)  Except as would not reasonably be expected to,
individually or in the aggregate, result in a Material Adverse Effect, (i) each
holder of a Communications License has operated in compliance with all terms
thereof; and (ii) each holder of a Communications License is in compliance with,
and the conduct of its business has been and is in compliance with, the
Communications Act and any applicable state or local regulations, and each such
holder has filed all registrations and reports and paid all required fees,
including any renewal applications, required by the Communications Act, any non
U.S. laws or regulations or any applicable state or local regulations. Except as
would not reasonably be expected to, individually or in the aggregate, result in
a Material Adverse Effect, (x) there is no pending or, to the Knowledge of the
Company, threatened action by or before the FCC, any State PUC, any municipal
Governmental Entity or any foreign Governmental Entity to revoke, cancel,
suspend, modify or refuse to renew any of the Communications Licenses, and (y)
except as set forth in Schedule 2.9(c)(ii), there is not now issued, outstanding
or, to the Knowledge of the Company, threatened, any notice by the FCC, any
State PUC, any municipal Governmental Entity or any foreign Governmental Entity
of any violation or complaint, or any application, complaint, or proceeding

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(other than applications, proceedings, or complaints that generally affect the
Company’s industry as a whole) relating to the business or operations of the
Company or any Subsidiary.

                  (d)  Except as set forth in Schedule 2.9(d) or as would not
reasonably be expected, individually or in the aggregate, to result in a
Material Adverse Effect, no event has occurred which permits the revocation or
termination of any of the Communications Licenses or the imposition of any
restriction thereon, or that would prevent any of the Communications Licenses
from being renewed on a routine basis or in the ordinary course.

                  (e)  None of the execution, delivery or performance of this
Agreement or any of the other Transaction Documents by the Company, nor the
consummation of the transactions contemplated hereby or thereby will result in
any revocation, cancellation, suspension or material modification of any
Communications Licenses or give rise to the right of any Governmental Entity to
take any such action or to fail to renew any Communications License.

                  2.10. Compliance with Laws. Except as set forth on
Schedule 2.10 or as disclosed in the SEC Reports, the Company and the
Subsidiaries are in compliance with all Laws, and neither the Company nor any
Subsidiary has received any notice of any alleged violation of Law applicable to
it that would reasonably be expected to have a Material Adverse Effect. In
addition to the Communications Licenses, the Company holds all other licenses,
franchise permits, consents, registrations, certificates, and other governmental
or regulatory permits, authorizations or approvals required for the operation of
the business as presently conducted and for the ownership, lease or operation of
the Company’s and its Subsidiaries’ properties (collectively, “Licenses”),
except as would not reasonably be expected, individually or in the aggregate, to
result in a Material Adverse Effect. Except as set forth on Schedule 2.10 or as
would not reasonably be expected, individually or in the aggregate, to result in
a Material Adverse Effect, the Company and the Subsidiaries have all Licenses,
and all of such Licenses are valid and in full force and effect, and the Company
and the Subsidiaries have duly performed and are in compliance with all of their
obligations under such Licenses.

                  2.11. Commitments. The 2000 10-K (as supplemented by
Schedule 2.11(a)) discloses or lists as of the date hereof each binding
contract, agreement, understanding, arrangement and commitment of any nature
whatsoever, whether written or oral, including all amendments thereof and
supplements thereto (“Commitments”) of the following types to which the Company
or any Subsidiary is a party or by or to which the Company or any Subsidiary or
any of their properties may be bound or subject: (a) Commitments containing
covenants purporting to limit the freedom of the Company or any Subsidiary to
compete in any line of business in any geographic area or to hire any individual
or group of individuals that would individually or in the aggregate have a
Material Adverse Effect; (b) written Commitments relating to planned or in
process capital expenditures or other purchases in excess of $20,000,000; (c)
Commitments relating to indentures, mortgages, promissory notes, loan
agreements, guarantees, letters of credit or other agreements or instruments of
the Company or any Subsidiary involving indebtedness in amounts in excess of
$20,000,000; (d) written Commitments relating to the acquisition or disposition
of any operating business or the capital stock of any Person in each case having
a purchase price in excess of $10,000,000 that has not been consummated or that
has been consummated but contains representations, warranties, covenants,
guarantees, indemnities or other obligations that remain in effect;
(e) Commitments in

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respect of any joint venture, partnership or other similar arrangement, but not
including any subsidiaries, in each case involving a Commitment of future
capital of $10,000,000 on the part of the Company; (f) except for performance
bonds and sales, use and income taxes, Commitments with any Governmental Entity
involving reasonably contemplated annual payments by the Company or any
subsidiaries in excess of $7,500,000; (g) Commitments relating to
interconnection agreements with local carriers and Commitments with resellers
(1) involving payments in 2001, or reasonably expected to involve payments in
2002, in each case in excess of $5,000,000 or (2) with any regional Bell
operating company; and (h) Commitments with customers under which the customer
is obligated to purchase communications services to the extent such Commitments
involve expected payments to the Company in 2002 in excess of $30,000,000.
Except as set forth on Schedule 2.11(b) or as would not reasonably be expected
to have a Material Adverse Effect, neither the Company nor any of its
Subsidiaries are in breach of any Commitment, to the Knowledge of the Company,
no other party to a Commitment is in breach thereof or intends to cancel,
terminate or refuse to renew such Commitment or to exercise or decline to
exercise any option or right thereunder and the Commitments remain valid and
binding in accordance with their terms.

                  2.12. Financial Advisory, Legal and Other Fees. As of the date
hereof, no agent, broker, accounting firm, investment bank, other financial
advisor, commercial bank, other financial institution, law firm, public
relations firm or any other Person is or will be entitled to any fee,
commission, expense or other amount from the Company or any of the Subsidiaries
in connection with any of the transactions contemplated by this Agreement or the
other Transaction Documents except for (i) the fees of Houlihan, Lokey, Howard &
Zukin Capital, Jeffries & Co. and PricewaterhouseCoopers LLP, (1) the bases of
which have been disclosed to the Investors, (2) which have been calculated
assuming the successful completion of the transactions contemplated hereby,
including the New Capitalization, and (3) which do not and will not in the
aggregate total more than $30.0 million, and (ii) the fees, commissions,
expenses and other amounts accrued through the date hereof and paid or payable
to all other such Persons, which do not in the aggregate total more than
$5.0 million (taking into account any amount saved if any of the aforementioned
advisors is replaced); provided that the amounts referred to in clauses (i) and
(ii) above shall (A) include any and all fees, expenses and other amounts
(including, without limitation, legal fees and expenses, but excluding amounts
paid to settle Litigation or as judgments or other awards in connection with
Litigation) not covered by liability or other insurance and payable by the
Company or any Subsidiary in connection with any Litigation brought by
stockholders of the Company or derivatively on behalf of, or in the name of, the
Company related to the Company, its business, its governance, its securities
regulatory disclosure practices, the purchase or sale of any of the Company’s
equity or debt securities, the Investment or the Restructuring Transaction and
(B) exclude (1) the Company’s obligations to pay Expenses pursuant to
Section 8.2 and (2) any and all fees (but not reimbursable expenses, including,
without limitation, fees and expenses of counsel) paid or payable to any
commercial bank or any other financial institution in connection with any
amendments to the Bank Credit Facility or entering into the Amended Bank Credit
Facility.

                  2.13. Taxes. (a) Except as set forth in Schedule 2.13(a),
(i) the Company and each Subsidiary of the Company has (or will have by the
Closing Date) timely filed all material Tax Returns required to be filed by any
of them, and all Tax Returns are correct and complete in all material respects;
(ii) all material Taxes of the Company and the Subsidiaries have been paid

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or adequate reserves for such Taxes have been established in the financial
statements included in the most recent SEC Report; and (iii) the Company and
each Subsidiary of the Company has either withheld and paid over to the relevant
taxing authority or set aside in accounts for such purpose amounts sufficient to
pay all material Taxes required to have been withheld and paid in connection
with payments to employees, independent contractors, creditors, stockholders or
other third parties.

                  (b)  Except as set forth in Schedule 2.13(b), (i) there are no
material Encumbrances for Taxes upon the assets of the Company or any subsidiary
of the Company except Encumbrances for Taxes not yet due; (ii) there are no
material outstanding deficiencies for any Taxes threatened, proposed, asserted
or assessed in writing against the Company or any Subsidiary of the Company
which are not adequately provided for in the financial statements included in
the most recent SEC Report; (iii) no Taxes or Tax Returns of the Company or any
Subsidiary of the Company are currently under audit or examination or subject to
any other administrative or judicial proceedings by any taxing authority;
(iv) the statutes of limitation for the assessment of federal income Taxes filed
by the Company and each Subsidiary for all periods through and including 1996
have expired; (v) none of the Company or any Subsidiary of the Company has been
a member of an “affiliated group” (within the meaning of Section 1504(a) of the
Code), or any similar affiliated, combined or consolidated group for state,
local or foreign Tax purposes (other than a group the common parent of which is
the Company), or has any liability for the Taxes of any person (other than the
Company or any subsidiary of the Company) under Treasury Regulation
Section 1.1502-6 or any similar provision of state, local or foreign law or as a
transferee, successor, by contract or otherwise; (vi) neither the Company nor
any Subsidiary of the Company is a party to any Tax sharing, Tax indemnity or
other agreement or arrangement with respect to Taxes with any entity not
included in the financial statements included in the SEC Reports; (vii) to the
Knowledge of the Company, no claim involving material amounts has been made by
any taxing authority in any jurisdiction where the Company or any Subsidiary of
the Company does not file Tax Returns that the Company or such Subsidiary of the
Company is or maybe subject to taxation by that jurisdiction; and (viii) no
agreement or other document waiving, extending, or having the effect of waiving
or extending the statute of limitations, the period of assessment or collection
of any material Taxes on the Company or any Subsidiary of the Company and no
power of attorney with respect to any such Taxes, has been filed with any
governmental authority which waiver, extension or power of attorney is currently
in effect.

                  (c)  The Company is not a “U.S. real property holding company”
as defined in Section 897 of the Code.

                  2.14. ERISA Compliance. (a) Absence of Changes in Plans.
Schedule 2.14(a)(i) contains a complete and correct list, as of the date hereof,
of (i) all Plans, as amended, that consist of material severance and employment
agreements of the Company or the Subsidiaries with their respective current
employees and their respective officers, or directors, (ii) all Plans, as
amended, that consist of material severance programs, policies and practices of
each of the Company and each of the Subsidiaries, (iii) any Plans that contain
change of control provisions, including in all cases any and all amendments
entered on or prior to the date hereof, and (iv) all other material Plans.
Except as set forth in Schedule 2.14(a)(ii) or in the documents set forth in
Schedule 2.14(a)(i), since January 1, 2001, until the date hereof, there has not
been

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(x)  any adoption of or amendment to, written interpretation of or announcement
of a modification of, any Plan by the Company or any of the Subsidiaries,
(y) any material change in any actuarial or other assumptions used to calculate
funding obligations thereunder (if applicable), or (z) any change in the manner
in which contributions, eligibility for benefits or participation are determined
thereunder, in the case of each of (x) through (z) that, individually or in the
aggregate, would result in a material increase in the Company’s or the
Subsidiaries’ liabilities thereunder.

                  (b)  With respect to each Plan, no event has occurred and
there exists no condition or set of circumstances in connection with which the
Company or any of the Subsidiaries would be subject to any liability under
ERISA, the Code or any other applicable law that, individually or in the
aggregate, would have, or would reasonably be expected to result in, a Material
Adverse Effect.

                  (c)  Except as would not have a Material Adverse Effect, each
Plan has been administered in accordance with its terms, and each of the Plans
(and any related trust) has been operated and is in compliance with the
applicable provisions of ERISA, the Code and all other applicable laws. Except
as set forth on Schedule 2.14(c), each Plan which is an “employee pension
benefit plan,” as defined in Section 3(2) of ERISA, which is intended to be
qualified under Section 401(a) of the Code is so qualified and has been
determined by the IRS to be so qualified. Except as would not result,
individually or in the aggregate, in material liability, each Plan which is
primarily subject to the laws of a jurisdiction outside of the United States is
in good standing with applicable regulatory authorities.

                  (d)  Neither the Company, nor any ERISA Affiliate nor any of
the Subsidiaries has incurred any material unsatisfied liability under Title IV
of ERISA in connection with any Plan and, to the knowledge of the Company, no
condition exists that presents a material risk to the Company, any ERISA
Affiliate or any Subsidiary of incurring any such liability. No Plan has
incurred an “accumulated funding deficiency” within the meaning of Section 302
of ERISA or Section 412 of the Code, whether or not waived.

                  (e)  As of the date hereof, except as set forth in
Schedule 2.14(e), no Plan (i) is subject to Title IV of ERISA; (ii) is a
“multiemployer plan” within the meaning of Section 3(37) of ERISA; (iii) is a
“multiple employer plan” within the meaning of Section 413(c) of the Code; or
(iv) is or at any time was funded through a “welfare benefit fund” within the
meaning of Section 419(e) of the Code and no benefits under a Plan are or at any
time have been provided through a voluntary employees’ beneficiary association
within the meaning of Section 501(c)(9) of the Code or a supplemental
unemployment benefit plan within the meaning of Section 501(c)(17) of the Code.

                  (f)  None of the Company or any of the Subsidiaries has any
material liability for unpaid contributions with respect to any Plan, each of
them has made all required contributions under each Plan for all prior periods
(except contributions that are not, individually or in the aggregate, material),
and proper accruals relating to each Plan have been made and are appropriately
reflected on the books of the Company.

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                  (g)  Except as set forth on Schedule 2.14(g), no Plan provides
medical benefits (whether or not insured), with respect to current or former
employees after retirement or other termination of service (other than
(x) coverage mandated by statute or (y) benefits the full cost of which is borne
by the current or former employee).

                  (h)  Except as set forth in Schedule 2.14(h), amounts payable
under each Plan are, in all material respects, deductible for federal income Tax
purposes. Except as set forth in Schedule 2.14(h) or as expressly contemplated
by this Agreement and subject to the limitations provided in Section 5.2(p), the
consummation of the transactions contemplated by this Agreement and the other
Transaction Documents will not, either alone or in combination with another
event, (i) entitle any current or former employee, agent, independent contractor
or officer of the Company or any Subsidiary to severance pay, unemployment
compensation or any other payment, (ii) accelerate the time of payment or
vesting, or increase the amount of compensation due any such employee, agent,
independent contractor or officer, (iii) constitute a “change in control”
causing a material increase or acceleration of benefits under any Plan,
(iv) result in any payment or benefit that will be characterized as an “excess
parachute payment” within the meaning of Section 280G(b)(1) of the Code or
(v) result in any material loss of deduction for federal income Tax purposes.

                  (i)  There is no pending or, to the Knowledge of the Company,
threatened (i) assessment, complaint, proceeding, or investigation of any kind
in any court or government agency with respect to any Plan (other than routine
claims for benefits) or (ii) litigation relating to the employment or
termination of employment of any current or former employee of the Company or
any of its Subsidiaries, in each case except as would not be reasonably likely
to, individually or in the aggregate, result in a Material Adverse Effect.

                  (j)  The Company and the Subsidiaries are and have been in
compliance in all material respects with all applicable federal, state and local
laws, rules and regulations (domestic and foreign) respecting employment,
employment practices, labor, terms and conditions of employment and wages and
hours, in each case, with respect to employees. Except as set forth on
Schedule 2.14(j), neither the Company nor any of the Subsidiaries is a party to
or bound by any collective bargaining agreement or other labor union contract.
No work stoppage or labor strike by employees is pending or threatened; neither
the Company nor any of the Subsidiaries is involved in or threatened with any
labor dispute, grievance or litigation relating to labor matters, in each case
that is material to the Company; and no organizational effort or other activity
the purpose of which is to achieve representation of employees has been
threatened or is ongoing.

                  2.15. Intellectual Property; Technology. Except as would not
have a Material Adverse Effect or except as set forth in Schedule 2.15, (a) to
the Knowledge of the Company, the conduct of the business of the Company and the
Subsidiaries as currently conducted does not infringe upon or misappropriate the
Intellectual Property rights of any third party, and no claim has been asserted
to the Company that the conduct of the business of the Company and the
Subsidiaries as currently conducted infringes upon the Intellectual Property
rights of any third party; (b) with respect to each item of Intellectual
Property owned by the Company or a Subsidiary of the Company and used in
connection with its business as currently conducted (“Company Owned Intellectual
Property”), the Company or such Subsidiary of the Company owns such Company
Owned Intellectual Property free and clear of all Encumbrances, other than

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Permitted Encumbrances; (c) with respect to each item of Intellectual Property
licensed to the Company or a Subsidiary of the Company (“Company Licensed
Intellectual Property”), the Company or such Subsidiary has the right to use
such Company Licensed Intellectual Property in the continued operation of its
respective business pursuant to the terms of the license agreement governing the
use of such Company Licensed Intellectual Property; (d) the Company Owned
Intellectual Property has not been adjudged invalid or unenforceable in whole or
in part; (e) to the Knowledge of the Company, no person is engaging in any
activity that infringes upon the Company Owned Intellectual Property; (f) each
license governing the use of the Company Licensed Intellectual Property is valid
and enforceable, is binding (except as may be limited by bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium or similar laws of general
applicability affecting or relating to the rights of creditors or by general
principles of equity) on the Company or its Subsidiary and, to the Knowledge of
the Company, all other parties to such license, and is in full force and effect;
(g) neither the Company nor any subsidiary is, and, to the knowledge of the
Company, no other party to any license of the Company Licensed Intellectual
Property is in breach thereof or default thereunder; and (h) neither the
execution of this Agreement nor the consummation of the transactions
contemplated hereby shall adversely affect any of the Company’s rights with
respect to the Company Owned Intellectual Property or the Company Licensed
Intellectual Property.

                  2.16. Environmental Matters. Except as described in
Schedule 2.16, or as would not reasonably be expected to have a Material Adverse
Effect, (a) the Company and the Subsidiaries have at all times complied with all
applicable Environmental Laws, including compliance with all Environmental
Permits and authorizations required pursuant to all applicable Environmental
Laws; (b) the Company and the Subsidiaries are not the subject of any litigation
related to any Environmental Law with respect to any of the current or past
operations of the Company or any of the Subsidiaries, or any of the currently or
formerly owned, leased or used property or assets of the Company or any of the
Subsidiaries; (c) the Company has no liability relating to, and neither the
Company nor any of the Subsidiaries, nor, to the Knowledge of the Company, any
other Person, has caused or taken any action that will result in any liability
or obligation on the part of the Company or any of the Subsidiaries relating to
(x) the environmental conditions on, under, or about the real property or other
properties or assets currently or formerly owned, leased, operated or used by
the Company or any of the Subsidiaries or (y) the past or present use,
management, handling, transport, treatment, generation, storage, disposal, or
release of any Hazardous Materials; and (d) neither the Company nor any of the
Subsidiaries is subject to any outstanding order from, or contractual or other
obligation with, or to its Knowledge, investigation by, any Governmental Entity
or other person in respect of which the Company or any of the Subsidiaries may
be required to incur costs arising from the release or threatened release of a
Hazardous Material.

                  2.17. Insurance. Schedule 2.17 contains a complete and correct
list and description (including the name of the insurer(s), name of the
insured(s), amount of coverage, type of coverage, deductible amounts and
significant exclusions) of all material insurance policies maintained (including
directors’ and officers’ liability insurance) by or on behalf of the Company and
the Subsidiaries, including policies that have expired (the “Expired Policies”)
but have been renewed by the Company but in respect of which the Company has not
yet received a new policy (the “Replacement Policies”); provided, that any
Replacement Policy shall not contain any significant exclusions that are
materially more adverse to the Company than those

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contained in the Expired Policy. The Company has made available to each Investor
complete and correct copies of all such policies together with all riders and
amendments thereto. Such policies are valid and in full force and effect, and
all premiums due thereon have been paid. The Company and the Subsidiaries have
complied in all material respects with the terms and provisions of such
policies. The insurance coverage provided by such policies, in all material
respects, (a) is on such terms (including, without limitation, as to deductibles
and self-insured retentions), (b) covers such categories of risk (including,
without limitation, errors and omissions, property and casualty, directors’ and
officers’ liability, and workers’ compensation liabilities liability, securities
liability, fiduciary liability, employment practices), (c) the Company has no
liability relating to, and contains such deductibles and retentions, and (d) is
in such amounts as, with respect to each of the criteria set forth in the
foregoing clauses (a) through (d), is adequate and suitable for the business and
operations of the Company and the Subsidiaries.

                  2.18. Business Combination and Takeover Statutes. (a) The
Board of Directors has taken all actions necessary or advisable so that the
restrictions contained in Section 203 of the DGCL applicable to a “business
combination” (as defined in such Section) will not apply to the execution,
delivery or performance of this Agreement or any of the other Transaction
Documents or the consummation of the transactions contemplated hereby or
thereby, including, but not limited to, conversion of any shares of Class C
Common Stock or Class D Common Stock into Conversion Shares.

                  (b)  The execution, delivery and performance of this Agreement
or any of the other Transaction Documents and the consummation of the
transactions contemplated hereby or thereby, including, but not limited to,
conversion of any shares of Class C Common Stock or Class D Common Stock into
the Conversion Shares, will not cause to be applicable to the Company
Section 203 or any “fair price,” “moratorium,” “control share acquisition” or
other similar anti-takeover statute or regulation enacted under state or federal
laws.

                  2.19. Offering of New Common Shares. Neither the Company nor
any Person acting on its behalf has taken or will take any action (including,
without limitation, any offering of any securities of the Company under
circumstances which would require, under the Securities Act, the integration of
such offering with the offering and sale of the New Common Shares) which might
reasonably be expected to subject the offering, issuance or sale of the New
Common Shares to the registration requirements of Section 5 of the Securities
Act.

                  2.20. Network Facilities. (a) Schedule 2.20(a) consists of
maps of (i) fiber routes that make up the Company’s domestic inter city and
metro fiber optic networks, and (ii) the Company’s domestic fixed wireless
licenses to use broadband fixed wireless spectrum (collectively, the “Network
Maps”). As of the date hereof, the information set forth in the Network Maps is
true, correct and complete in all material respects, subject to (i) inherent
dimensional limitations of the presentation of such information on maps, and
(ii) with respect to the fixed wireless licenses, subject to the information set
forth on Schedule 2.9(a).

                  (b)  Except to the extent that the Company or the Subsidiaries
can access the Customer Base directly through the Company’s network facilities,
including the location of the fiber optic cables, fibers or conduits used or
available for use by the Company in connection with

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its operations and the provision of telecommunications services including,
without limitation, the Company’s longhaul network, each longhaul segment
thereof, fiber optic cables, fibers, or conduits subject to the Company’s rights
pursuant to agreements with third parties providing for an indefeasible right of
use for its metropolitan networks (the “Network Facilities”) or as would not
have a Material Adverse Effect, the Company or the Subsidiaries have all rights
necessary to offer telecommunication services to the Customer Base on a resale
or other basis from each incumbent local exchange carrier.

                  (c)  Except as set forth on the Network Maps, or as would not
reasonably be expected to have a Material Adverse Effect, the Company or its
Subsidiaries have good and marketable title to, a valid leasehold interest in,
or a valid right to use all of the Network Facilities. Except as would not
reasonably be expected to have a Material Adverse Effect, each of the Network
Facilities owned by the Company or the Subsidiaries: (i) is located on property
to which the Company has good and marketable title or is operating pursuant to
valid rights-of-way or other similar rights; (ii) is free and clear of any
Encumbrances, other than Permitted Encumbrances or Encumbrances which are
inherent in an indefeasible right to use; and (iii) is not subject to any
pending Litigation or administrative actions relating to any such property or
right of way.

                  (d)  Except as would not have a Material Adverse Effect, each
agreement with third parties providing for an indefeasible right to use (each,
an “IRU Agreement”) or other agreement permitting the Company or its
Subsidiaries to use the Network Facilities is legal, valid and binding on the
parties thereto and permits each of the Company and the Subsidiaries to use the
applicable Network Facilities set forth on the Network Maps, and is enforceable
in accordance with its terms. Except as would not have a Material Adverse
Effect, the Company or one of the Subsidiaries has an IRU Agreement or other
agreement permitting it to use each of the Network Facilities that it does not
own.

                  2.21. Disclosure. Neither this Agreement nor any other
Transaction Document, nor any schedule or exhibit hereto or thereto, nor any
certificate furnished to the Investors by or on behalf of the Company in
connection with the transactions contemplated hereby and thereby, when read in
conjunction with the 2000 10-K and the SEC Reports filed at any time after the
2000 10-K was filed with the SEC, contains any untrue statement of a material
fact or omits to state a material fact necessary in order to make the statements
contained herein or therein not misleading. For purposes of the preceding
sentence, any preliminary document or written information shall be disregarded
if a final or updated version of such document or written information was
delivered to each Investor by the Company prior to the date hereof. As of the
date hereof there is no fact or information relating to the Company and/or any
of its Subsidiaries that, to the Company’s Knowledge, would reasonably be
expected to be material to the Company and its Subsidiaries and that has not
been described in the SEC Reports or otherwise disclosed to each Investor in
writing.

                  2.22. Confidentiality. The Company acknowledges and agrees
that all Confidential Information disclosed to Telmex by Forstmann Little or any
of its Affiliates prior to the execution of the Telmex Confidentiality Agreement
in connection with the transactions contemplated by this Agreement and the other
Transaction Documents was disclosed only

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pursuant to the Forstmann Little Confidentiality Agreement and not pursuant to
any other confidentiality agreement between the Company and any affiliates of
Forstmann Little.

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF THE INVESTORS

                  Each Investor, as to those representations and warranties that
are applicable to each such Investor, hereby represents and warrants to the
Company, severally and not jointly, as of the date hereof and as of the Closing,
as follows:

                  3.1. Acquisition for Investment. (a) Forstmann Little is
acquiring the New Forstmann Little Shares and any Conversion Shares for its own
account, for investment and not with a view to the distribution thereof within
the meaning of the Securities Act.

                  (b)  Telmex is acquiring the New Telmex Shares and any
Conversion Shares for its own account, for investment and not with a view to the
distribution thereof within the meaning of the Securities Act.

                  3.2. Restricted Securities. (a) Forstmann Little understands
that (i) the New Forstmann Little Shares and any Conversion Shares have not been
registered under the Securities Act or any state securities laws by reason of
their issuance by the Company in a transaction exempt from the registration
requirements thereof and (ii) the New Forstmann Little Shares and any Conversion
Shares may not be sold or otherwise disposed of unless such sale or disposition
is registered under the Securities Act and applicable state securities laws or
such sale or other disposition is exempt from registration thereunder.

                  (b)  Telmex understands that (i) the New Telmex Shares and any
Conversion Shares have not been registered under the Securities Act or any state
securities laws by reason of their issuance by the Company in a transaction
exempt from the registration requirements thereof and (ii) the New Telmex Shares
and any Conversion Shares may not be sold or otherwise disposed of unless such
sale or disposition is registered under the Securities Act and applicable state
securities laws or such sale or other disposition is exempt from registration
thereunder.

                  3.3. Accredited Investor. Equity VII, MBO VIII and Telmex is
each an “accredited investor” (as defined in Rule 501(a) under the Securities
Act). Equity VII, MBO VIII and Telmex each has sufficient knowledge and
experience in financial and business matters so as to be capable of evaluating
the merits and risks of its investment in the New Common Shares and is capable
of bearing the economic risks of such investment.

                  3.4. Organization. (a) Each of Equity VII and MBO VIII is a
limited partnership duly organized, validly existing and in good standing under
the laws of the State of

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Delaware and has the requisite power and authority to carry on its business as
it is now being conducted.

                  (b)  Telmex is a sociedad anónima de capital variable duly
organized, validly existing and in good standing under the laws of the United
Mexican States and has the requisite power and authority to carry on its
business as it is now being conducted.

                  3.5. Due Authorization. Each Investor has all rights, power
and authority to enter into this Agreement and the other Transaction Documents
to which it is a party and to consummate the transactions contemplated hereby
and thereby. The execution and delivery by each Investor of this Agreement and
the other Transaction Documents to which it is a party, the compliance by each
Investor with each of the provisions of this Agreement and the other Transaction
Documents to which it is a party, and the consummation by such Investor of the
transactions contemplated hereby and thereby (a) are within the power and
authority of each Investor and (b) have been duly authorized by all necessary
action on the part of each Investor. This Agreement constitutes, and each of the
other Transaction Documents to which it is a party will constitute upon
execution and delivery by each Investor, a valid and binding agreement of each
Investor enforceable against each Investor in accordance with its respective
terms, except as such enforcement is limited by bankruptcy, insolvency and other
similar laws affecting the enforcement of creditors’ rights generally and for
limitations imposed by general principles of equity.

                  3.6. Consents; No Violations. Neither the execution, delivery
or performance by each Investor of this Agreement and the other Transaction
Documents to which it is a party nor the consummation of the transactions
contemplated hereby or thereby will (a) conflict with, or result in a breach or
a violation of, any provision of the organizational documents of such Investor;
(b) constitute, with or without notice or the passage of time or both, a breach,
violation or default, create an Encumbrance (other than Encumbrances which would
not, individually or in the aggregate, materially impair the ability of such
Investor to consummate the transactions contemplated by this Agreement and the
other Transaction Documents) or give rise to any right of termination,
modification, cancellation, prepayment, suspension, limitation, revocation or
acceleration, under (i) any Law, or (ii) any Commitment of each Investor, or to
which each Investor or any of its assets or properties is subject, except, with
respect to the matters set forth in clause (ii), for breaches, violations,
defaults, Encumbrances (other than Encumbrances which would not, individually or
in the aggregate, materially impair the ability of such Investor to consummate
the transactions contemplated by this Agreement and the other Transaction
Documents) or rights of termination, modification, cancellation, prepayment,
suspension, limitation, revocation or acceleration, which, individually or in
the aggregate, would not have a material adverse effect on the ability of each
Investor to consummate the transactions contemplated hereby; or (c) except as
set forth on Schedule 3.6 and except for any required filing under the HSR Act,
the Foreign Competition Approvals, the Regulatory Approvals, the completion of
the Restructuring Transaction, including, if applicable, the Confirmation Order
and the Third Party Consents, require any consent, approval or authorization of,
notification to, filing with, or exemption or waiver by, any Governmental Entity
or any other Person on the part of any Investor.

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                  3.7. Availability of Funds. Equity VII, MBO VIII, and Telmex
each has available or committed sufficient funds to pay its respective portion
of the Purchase Price.

                  3.8. Litigation. Except as set forth on Schedule 3.8, as of
the date hereof, to the knowledge of each Investor there is no pending or
threatened Litigation against such Investor or any of its Affiliates or
involving any of its properties or assets by or before any court, arbitrator or
other Governmental Entity which in any manner challenges or seeks to prevent,
enjoin, alter or materially delay the transactions contemplated by this
Agreement.

                  3.9. No Other Representations. Each Investor acknowledges and
agrees that it is an informed and sophisticated purchaser, and has undertaken
such investigation and has been provided with and has evaluated such documents
and information as it deems necessary to enable such Investor to make an
informed decision with respect to the execution, delivery and performance of
this Agreement. Each Investor will undertake, prior to the Closing, such further
investigation and request such additional documents and information as it deems
necessary. Each Investor agrees to accept the New Common Shares based upon its
own inspection, examination and determination with respect thereto as to all
matters.

ARTICLE IV

COVENANTS

                  4.1. Conduct of Business by the Company Pending the Closing.
(a) Except as set forth on Schedule 4.1 or as contemplated by this Agreement
(including but not limited to Section 4.12) and the Restructuring Transaction or
any of the other Transaction Documents, to which the Investors are parties
during the period from the date of this Agreement and continuing until the
earlier of the termination of this Agreement or the Closing, unless each
Investor otherwise agrees in writing, the Company shall, and shall cause each of
the Subsidiaries to, (i) conduct its business only in the ordinary course and
consistent with past practice or as may be ordered or otherwise required by the
Bankruptcy Court; (ii) use reasonable best efforts to preserve and maintain its
assets and properties and its relationships with its customers, suppliers,
advertisers, distributors, agents, officers and employees and other Persons with
which it has significant business relationships; (iii) use reasonable best
efforts to maintain all of the material assets it owns or uses in the ordinary
course of business consistent with past practice; (iv) use reasonable best
efforts to preserve the goodwill and ongoing operations of its business;
(v) maintain its books and records in the usual, regular and ordinary manner, on
a basis consistent with past practice; and (vi) comply in all material respects
with applicable Laws.

                  (b)  Except as expressly contemplated by this Agreement
(including but not limited to Section 4.12) and the Restructuring Transaction or
as set forth on Schedule 4.1, between the date of this Agreement and the
Closing, the Company shall not, and shall cause each of the Subsidiaries not to,
without the prior written consent of each Investor:

            (i) (x) incur any additional Indebtedness, except as contemplated by
the Forebearance Agreement, (y) make any loans, advances or capital
contributions to, or investments in, any Person, except as contemplated by the
Forebearance Agreement or (z) make capital expenditures (1) in any fiscal
quarter that exceed the budget for capital

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  expenditures set forth in the Operational Plan for such fiscal quarter by more
than ten percent and (2) in the aggregate, for all fiscal quarters that exceed
the budget for capital expenditures set forth in the Operational Plan for such
overall period by more than five percent;

            (ii) change any method of accounting or accounting practice used by
the Company or any Subsidiary, other than such changes required by GAAP;

            (iii) repurchase, redeem or otherwise acquire or exchange any share
of Common Stock, Preferred Stock or other equity interests other than as
required by the terms of the Preferred Stock or the Class B Common Stock;

            (iv) issue or sell any additional shares of the capital stock of, or
other equity interests in, the Company or any Subsidiary, or securities
convertible into or exchangeable for such shares or other equity interests, or
issue or grant any subscription rights, options, warrants or other rights of any
character relating to shares of such capital stock, such other equity interests
or such securities, except for (x) issuances of Class A Common Stock pursuant to
the exercise of options to purchase or conversion rights exercisable for Class A
Common Stock, in each case outstanding on the date hereof, (y) options to
purchase 28,246,805 shares of Class A Common Stock pursuant to the exchange
offer filed by the Company with the SEC on Schedule TO on May 29, 2001, as
amended and (z) options to purchase up to 610,000 shares of Class A Common Stock
to be issued as promotion awards pursuant to the XO Communications, Inc. Stock
Option Plan;

            (v) declare, set aside, make or pay any dividend, or make any
distribution, in respect of any shares of capital stock of the Company,
including dividends required to paid by the Company pursuant to the terms of the
Preferred Stock;

            (vi) redeem, retire, defease, offer to purchase or change any
material term of any Public Debt or any indebtedness for borrowed money except
as required by the Forebearance Agreement in connection with asset sales
otherwise permitted by this Agreement;

            (vii) amend (x) the Company’s Certificate of Incorporation, bylaws
or other organizational documents or (y) any Subsidiary’s charter, bylaws or
other organizational documents except for the adoption and filing of the Amended
and Restated Certificate of Incorporation;

            (viii) take any action that is reasonably likely to result in (x)
any of the representations and warranties set forth in Article II becoming false
or inaccurate in any material respect as of the Closing Date or (y) the failure
of any of the conditions set forth in Article V to be satisfied;

            (ix) make any interest payments or other distributions on or in
respect of the Public Debt;

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            (x) permit any insurance policy listed on Schedule 2.17 to lapse or
cease to remain effective or be renewed when subject to expiration without
(A) replacing such policy (the “Old Policy”) immediately upon notice of pending,
threatened or actual cancellation, termination, expiration with another policy
(the “New Policy”) (1) that provides the Company and its Subsidiaries with
coverage that is no less favorable than that provided by the Old Policy, taking
into account the insurer(s), the insured(s), the type, scope and amount of
coverage, deductibles, exclusions and other material terms (the “Material
Terms”) of the Old Policy and the New Policy or (2) the Material Terms of which
are customary for similar companies operating in the same industry and
geographic markets as the Company and its Subsidiaries and which are adequate
and suitable for the business and operations of the Company and its Subsidiaries
or (B) otherwise ensuring that the potential exposure or liability of the
Company, the Subsidiaries, directors, officers, employees, assets and properties
for any risk or any Loss is no greater without the Old Policy or the New Policy
than is customary for similar companies operating in the same industry and
geographic markets as the Company and the Subsidiaries and which are adequate
and suitable for the business and operations of the Company and the
Subsidiaries; provided, however, that notwithstanding anything to the contrary
in this Section 4.1(b)(x), the Company shall at all times during the term of the
Stockholders Agreement maintain directors’ and officers’ liability insurance in
such amounts and otherwise on terms and conditions reasonably acceptable to each
Investor;

            (xi) (A) materially increase the compensation or benefits of, or pay
any bonuses or other similar compensation to, any officer, director, employee or
consultant, except for ordinary merit increases for employees other than
officers based on periodic reviews in accordance with past practice; or
(B) enter into, modify or terminate any Plan, (including without limitation, any
employment agreement or severance agreement), provided, however, that
notwithstanding clause (A) above, the Company and the Subsidiaries may pay
bonuses under and pursuant to the Company’s 2001 Bonus Plan (the “2001 Bonus
Plan”) for the fiscal year ended December 31, 2001, in an aggregate amount
(1) which does not exceed $28,000,000 and is otherwise approved by the
compensation committee of the Board of Directors and (2) which, when added to
the total aggregate amount of bonuses and other amounts paid or payable under
the Retention Bonus Plan as a result of, or in connection with, the transactions
contemplated hereby and by the other Transaction Documents, does not exceed
$35.0 million; provided, further, that the Company and the Subsidiaries shall
not pay any bonus or other amount under or pursuant to the 2001 Bonus Plan to
any officer, director, employee or consultant who has received, or is to
receive, any bonus or other amount under or pursuant to the Retention Bonus Plan
as a result of, or in connection with, the transactions contemplated hereby and
the other Transaction Documents;

            (xii) sell, lease, license, encumber or otherwise dispose of, or
agree to sell, lease, license, encumber or otherwise dispose of any of its
assets other than (A) immaterial dispositions of personal property in the
ordinary course of business consistent with past practice, (B) swaps of “dark
fiber” for “dark fiber” in the ordinary course of business consistent with past
practice, (C), the sale or grant of indefeasible rights to use of “dark fiber”
in the ordinary course of business consistent with past practice, so long as any
such sale or grant, or any series of related sales or grants, does not in the
aggregate

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  exceed $10 million in any calendar quarter or (D) a sale of either (x) XO One,
Inc. or its assets or (y) XO Limited, its assets or those of its subsidiaries,
provided that the net consideration received by the Company for any such sale
shall be in a form and amount reasonably acceptable to each Investor; or

            (xiii) agree to take any of the actions restricted by this Section
4.1.

                  (c)  Notwithstanding the foregoing provisions of this
Section 4.1, the parties acknowledge that the transfer of control of the Company
may require Regulatory Approvals and that all final decisions with respect to
the Communications Licenses must be taken by the Company until the Regulatory
Approvals have been obtained. The parties do not intend that the foregoing
provisions of this Section 4.1 shall transfer control of the Company or of the
Communications Licenses prior to obtaining the Regulatory Approvals.

                  4.2. Press Releases; Interim Public Filings. The Company
shall, and shall cause each Subsidiary to, deliver to each Investor complete and
correct copies of all press releases and public filings made between the date
hereof and the Closing Date, and, to the extent any such press releases refer to
any of the Investors or their Affiliates, shall give each Investor the
reasonable opportunity to review and comment on such releases and filings (on a
strictly confidential basis until such information is released), in each case,
prior to release in the form in which it will be issued. Each Investor shall
give to the Company and to the other Investor the reasonable opportunity to
review and comment on all Investor Press Announcements (on a strictly
confidential basis until such information is released), in each case prior to
release in the form in which it will be issued.

                  4.3. HSR Act; Foreign Competition Filings. Each Investor and
the Company shall cooperate in making all filings required (a) under the HSR
Act; and (b) to be filed with any Governmental Entity in connection with seeking
the Foreign Competition Approvals, and shall use its reasonable best efforts to
take, or cause to be taken, all actions necessary, proper or advisable to
consummate and make effective as promptly as practicable the transactions
contemplated by this Agreement, including using its reasonable best efforts to
resolve such objections, if any, as the Antitrust Division of the Department of
Justice or the Federal Trade Commission or state antitrust enforcement or other
Governmental Entities may assert under U.S. and foreign antitrust and
competition Laws with respect to the transactions contemplated hereby.

                  4.4. Consents; Approvals. (a) The Company and each Investor
shall each use its reasonable best efforts to obtain all consents, waivers,
exemptions, approvals, authorizations or orders, including without limitation,
the Regulatory Approvals, the Foreign Competition Approvals and the Third Party
Consents (collectively, “Consents”) required in connection with the transactions
contemplated by this Agreement or any of the other Transaction Documents
(including, without limitation (i) all Consents required to avoid any breach,
violation, default, Encumbrance, other than Permitted Encumbrances, or right of
termination, modification, cancellation, prepayment, suspension, limitation,
revocation or acceleration of any material agreement or instrument to which the
Company or any Significant Subsidiary is a party or by which any of their
material assets are bound, in each case, only to the extent that the Company

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reasonably believes that such breach, violation, default, encumbrance or right
of termination, modification, cancellation, prepayment, suspension, limitation,
revocation or acceleration will not be discharged or otherwise extinguished
pursuant to the Confirmation Order, (ii) all Consents required as a result of
the Restructuring Transaction, (iii) all Consents required as a result of the
filing of the Bankruptcy Case, the Confirmation Order or the change of control
resulting therefrom and (iv) all Consents required from the SEC). The Company
also shall use its reasonable best efforts to obtain all necessary state
securities laws or blue sky permits and approvals required to carry out the
transactions contemplated hereby and shall give each Investor the reasonable
opportunity to review and comment on all filings related to such permits or
approvals (on a strictly confidential basis until such information is released).
The Company shall furnish to each Investor all information as may be reasonably
requested in connection with any such action.

                  (b)  Notwithstanding the provisions of Section 4.3,
Section 4.4(a) and Section 4.8, nothing contained in this Agreement will require
or obligate an Investor or its respective Affiliates to: (i) agree to otherwise
become subject to any limitations on its respective rights effectively to
acquire, control, or operate the business of the Company or its Subsidiaries, or
exercise full rights of ownership of the Company or (ii) agree or otherwise be
required to sell or otherwise dispose of, hold separate (through the
establishment of a trust or otherwise), divest itself of all or a material
portion of the assets or business of such Investor or its Affiliates or the
business of the Company or its Subsidiaries, or (iii) suffer to exist any other
material condition in respect of all or a material portion of the assets or
business of such Investor or its Affiliates. The parties agree that no
representation, warranty or covenant of the Company or each Investor contained
in this Agreement shall be breached or deemed breached as a result of the
failure by any party hereto or any of its Affiliates to take any of the actions
specified in the preceding sentence.

                  4.5. Listing. The Company shall use its reasonable best
efforts to have its Class A Common Stock listed on the NASDAQ National Market
System (the “NMS”) or the New York Stock Exchange for so long as any New Common
Shares or any Conversion Shares are outstanding and held by any of the
Investors; provided, that if the Company is unable to maintain the listing of
the Class A Common Stock on the NMS prior to Closing, the Company shall use its
reasonable best efforts to have the Class A Common Stock quoted on another
inter-dealer quotation system. Prior to the Closing, the Company shall, at the
reasonable request of either Investor, prepare and submit to the NMS or the New
York Stock Exchange, in consultation with each Investor, a listing application
covering the New Common Shares and the Conversion Shares and shall use its
reasonable best efforts to obtain approval for the listing of such shares,
subject to official notice of issuance.

                  4.6. Board Representation; VCOC. (a) The Company agrees to
take all actions required so that, at Closing, the Board of Directors will
include the number of directors nominated or appointed by Forstmann Little equal
to the product of (A) forty percent (40.00%) times (B) the total number of
directors on the Board of Directors, rounded up to the nearest whole number,
times (C) two (2) ; provided, however, that in the event that any
non-terminating or non-terminated Investor shall have assumed the rights and
obligations of a terminating or terminated Investor pursuant to Section 8.5(b),
the number of directors to be nominated or appointed by each Investor shall be
adjusted to that number of directors to which each such

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Investor would be entitled to appoint or nominate pursuant to the Stockholders
Agreement as revised pursuant to Section 4.18 if determining such number of
directors as of the Closing. For avoidance of doubt, this formula can be
expressed mathematically as (0.40 x A = B; B x 2 = C), where A is the total
number of directors on the Board of Directors, B is the result of the first
multiplication, rounded up to the nearest whole number and C is the total number
of directors to be nominated or appointed by Forstmann Little.

                  (b)  At any time and for so long as any of Equity VI, Equity
VII, MBO VII or MBO VIII holds any equity securities of the Company and does not
have a contractual right from the Company or right pursuant to the Company’s
Amended and Restated Certificate of Incorporation to appoint or nominate at
least one director to the Board of Directors, at the request of Forstmann
Little, the Company shall enter into a letter agreement substantially in the
form attached hereto as Exhibit F (the “Contractual Management Rights Letter”)
with Equity VI, Equity VII, MBO VII and/or MBO VIII (or one of their respective
Affiliates) and such letter agreement shall remain in full force and effect.

                  4.7. Amended and Restated Certificate of Incorporation. The
Company shall, prior to the Closing, use its reasonable best efforts to take, or
cause to be taken, all action (under Section 242 of the DGCL or otherwise) to
cause the Amended and Restated Certificate of Incorporation to be the
certificate of incorporation of the Company at the Closing. In the event that
the Bankruptcy Case is commenced, the Confirmation Order and the Bankruptcy Plan
shall approve the Amended and Restated Certificate of Incorporation and shall
direct and authorize the Company to file it with the Delaware Secretary of
State.

                  4.8. Cooperation. Each Investor and the Company shall use its
reasonable best efforts to take, or cause to be taken, all such further actions
and to do, or cause to be done, all things necessary, proper or advisable to
consummate and make effective as promptly as practicable the transactions
contemplated by this Agreement and the other Transaction Documents including,
but not limited to, (i) obtaining all Consents from any Governmental Entity and
other third parties required for the consummation of transactions contemplated
by this Agreement and the other Transaction Documents and (ii) timely making all
necessary filings under the HSR Act. Each Investor will furnish such information
as the Company may reasonably request in connection with any Bankruptcy Case and
will otherwise reasonably support the Company’s preparation and presentation of
any motion, filing or other pleading in any Restructuring Transaction consistent
with the terms of this Agreement.

                  4.9. Access to Property; Records. Between the date hereof and
the Closing the Company shall afford each Investor and its employees, counsel,
accountants, partners, members, investors, and other authorized representatives
reasonable access, upon notice, during normal business hours, to the assets,
properties, offices and other facilities, officers, employees, Commitments and
books and records of the Company and of the Subsidiaries, and to the outside
auditors of the Company and their work papers relating to the Company and the
Subsidiaries. All such information shall be held in confidence in accordance
with the terms of the Forstmann

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Little Confidentiality Agreement and the Telmex Confidentiality Agreement. The
parties hereto agree that no investigation by the Investors or their
representatives shall affect or limit the scope of the representations and
warranties of the Company contained in this Agreement or in any other
Transaction Document delivered pursuant hereto or limit the liability for breach
of any such representation or warranty.

                  4.10. Reserve Shares. Following the Closing, the Company will
at all times reserve and keep available, solely for issuance and delivery upon
conversion of outstanding Class C Common Stock and Class D Common Stock, the
number of shares of Class A Common Stock from time to time issuable upon
conversion of all shares of the Class C Common Stock and Class D Common Stock at
the time outstanding. All shares of Class A Common Stock issuable upon
conversion of the Class C Common Stock and the Class D Common Stock shall be
duly authorized and, when issued upon such conversion, shall be validly issued,
fully paid and nonassessable.

                  4.11. Use of Proceeds. The proceeds received by the Company in
respect of the Investment shall be used by the Company for general corporate
purposes, except that the Company may commit a portion of such proceeds or other
cash in an amount up to $200 million in the aggregate in connection with the
Restructuring.

                  4.12 Restructuring. (a) The Company shall use its reasonable
best efforts to restructure the capitalization of the Company such that the
complete capitalization of the Company shall, upon the Closing, be the New
Capitalization (the “Restructuring”). In furtherance of and without limiting the
generality of the foregoing, the Company shall use its reasonable best efforts
to undertake one or more of the following actions as expeditiously as possible
following the date hereof:

            (i) (A) commencing an exchange offer pursuant to which the Company
will offer to exchange all of its outstanding Public Debt and the Preferred
Stock for Class A Common Stock and resulting in the New Capitalization, and
(B) commencing a related consent solicitation with respect to the approval of a
prepackaged plan of reorganization that will result in the Company having the
New Capitalization (the “Prepackaged Plan”);

            (ii) if the exchange offer described in the immediately preceding
paragraph (i) fails to result in the Company having the New Capitalization, but
the Company has received the consents necessary under the Bankruptcy Code to
confirm the Prepackaged Plan, commence a Bankruptcy Case and file the
Prepackaged Plan and a related disclosure statement with the Bankruptcy Court
and seeking to obtain the Confirmation Order with respect to the Prepackaged
Plan as expeditiously as possible (either of the options described in this
paragraph (ii) and in the immediately preceding paragraph (i) being hereinafter
referred to as the “Prepackaged Approach”);

            (iii) if the Company determines in good faith upon the advice of its
financial and legal advisors and representatives that it is not advisable or
feasible to implement the Prepackaged Approach or if such Prepackaged Approach
is unsuccessful

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  in effecting the New Capitalization, (A) the Company shall use commercially
reasonable efforts to obtain consents or lock-up agreements sufficient to
proceed with a pre-negotiated plan of reorganization that will result in the
Company having the New Capitalization (the “Pre-negotiated Plan”), and (B) if
such consents and/or lock-up agreements are obtained, the Company shall commence
a Bankruptcy Case and file the Pre-negotiated Plan and a related disclosure
statement with the Bankruptcy Court and seek to obtain the Confirmation Order
with respect to the Pre-negotiated Plan as expeditiously as possible; and/or

            (iv) any other actions reasonably likely to effect the New
Capitalization which are acceptable to each Investor in its reasonable
discretion.

                  (b)  The Company shall provide each Investor with copies of
all material motions, orders, applications and supporting papers and notices
prepared by the Company (including without limitation, forms of orders and
notices to interested parties), prior to their being filed with the Bankruptcy
Court, relating in any way to the Bankruptcy Case and shall consult as
practicable with each Investor prior to taking any significant action with
respect to the Restructuring, including the Bankruptcy Case.

                  4.13 Notice of Proposal. The Company will:

                  (a)  Promptly notify each Investor of the receipt of any oral
or written proposal, offer or inquiry from any Person (including the other
Investor) regarding any proposed (i) merger, (ii) consolidation, (iii) other
business combination, (iv) acquisition of 10% or more of the then-outstanding
equity securities of the Company, (v) acquisition of debt or other securities
convertible into or exchange for, equity securities of the Company which would,
after giving effect to such conversion or exchange, constitute more than 10% of
the outstanding equity securities of the Company, (vi) acquisition of debt
securities of the Company with a principal amount in excess of $100 million or
(vii) Change of Control (each, a “Proposal”); and

                  (b)  Keep each Investor apprised regarding the status and
details of any negotiations regarding any Proposal.

                  4.14 Access to Certain Information. From the date hereof until
the Closing, the Company hereby agrees to the fullest extent permitted by the
DGCL:

                  (a)  that the members of the Board of Directors who were
elected by the Series C Preferred Stock and the Series D Preferred Stock shall
be permitted to participate in all meetings and votes of the Board of Directors
and shall receive all information provided to other members of the Board of
Directors regarding any Proposal unless Forstmann Little or its Affiliates are
the parties making such Proposal; and

                  (b)  that Telmex shall receive, on a confidential basis,
subject to applicable law, including applicable provisions of the DGCL, all
information provided to members of the Board of Directors regarding any
Proposal.

                  4.15 Limitation on Equity Sales. Except as expressly
contemplated by this Agreement and the other Transaction Documents, the Company
agrees:

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                  (a)  to cause its respective Executive Officers (as such term
is defined in Rule 3b-7 promulgated under the Exchange Act) and directors, on
any date on or after the Closing Date, not to, until the six month anniversary
of the Closing Date, without the prior written consent of each Investor,
directly or indirectly sell, offer, contract to sell, make any short sale,
pledge, sell any option or contract to purchase, purchase any option or contract
to sell, grant any option, right or warrant to purchase or otherwise transfer or
dispose of any shares of Common Stock or any securities convertible into or
exchangeable or exercisable for or any rights to purchase or acquire Common
Stock, in each case, acquired pursuant to the transactions contemplated by this
Agreement; and

                  (b)  not to, and to use its reasonable best efforts to cause
each holder of 5% or more of the Common Stock (other than the Investors) on any
date on or after the Closing Date, not to, until the first anniversary of the
Closing Date, without the prior written consent of the Company and each
Investor, directly or indirectly, (i) sell, offer, contract to sell, make any
short sale, pledge, sell any option or contract to purchase, purchase any option
or contract to sell, grant any option, right or warrant to purchase or otherwise
transfer or dispose of any shares of Common Stock or any securities convertible
into or exchangeable or exercisable for or any rights to purchase or acquire
Common Stock or (ii) enter into any swap or other agreement that transfers, in
whole or in part, any of the economic consequences or ownership of Common Stock,
whether any such transaction described in clause (i) or (ii) above is to be
settled by delivery of Common Stock or such other securities, in cash or
otherwise.

                  4.16 Alternative Investment Structure. At any time on or prior
to September 15, 2002, if Telmex notifies the Company and Forstmann Little that
Telmex has concluded in good faith that the Regulatory Approvals in respect of
the FCC Licenses are not likely to be obtained prior to January 15, 2003,
because of the nature or extent of Telmex’s proposed ownership of capital stock
of the Company, the Company and each Investor agrees that they shall use their
respective reasonable best efforts to restructure Telmex’s portion of the
Investment hereunder in such a manner that is (i) likely to result in receipt of
the Regulatory Approvals in respect of the FCC Licenses and (ii) on terms and
conditions that are no less favorable in all material respects to the Company,
Forstmann Little and Telmex than the Investment.

                  4.17 Supplemental Schedules. The Investors acknowledge and
agree that the Company shall be entitled, following the date hereof, to amend
and supplement Schedules 2.6 and 2.7(a), in each case solely to identify
additional complaints from Litigation (other than complaints related to Ordinary
Course Litigation) of which the Company did not have Knowledge on the date
hereof, that are exceptions to the representations and warranties contained in
such Sections 2.6 and 2.7(a). The Company shall promptly, and in any event
within two Business Days after receipt of any complaint or other notice of any
Litigation that the Company intends to identify on Schedule 2.6 and/or 2.7(a),
deliver copies of any such amendment or supplement to such Schedule, together
with copies of such complaint or other notice, to each Investor. Nothing in this
Section 4.17 shall adversely affect the rights of each Investor under
Section 5.2(u), Section 6.1(d) or Section 7.2.

                  4.18 Stockholders Agreement. If an Investor becomes an
Assuming Investor pursuant to Section 8.5(b), (a) the Company and the Assuming
Investor shall use their reasonable best efforts to revise the Stockholders
Agreement to take into account the revised percentage

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ownership of the Company and (b) the Assuming Investor may, in its sole
discretion, elect to terminate the Stockholders Agreement.

                  4.19 Management Shares. (a) Subject to Section 4.19(b),
(i) upon the Closing, the Company shall have the right (but not the obligation)
to issue to the members of management of the Company designated by the Company
and approved by the Investors (such approval not to be unreasonably withheld) up
to 4,000,000 shares in the aggregate (the “Management Shares”) of a
to-be-designated Class E Common Stock which shall have the rights and
preferences set forth on Exhibit G (the “Class E Common Stock”).

                  (b)  Between the date hereof and the Closing, the parties
hereto shall use their reasonable best efforts to agree upon the definitive
rights and preferences of the Class E Common Stock and upon revisions to the
Amended and Restated Certificate of Incorporation to reflect the terms of the
Class E Common Stock as set forth on Exhibit G.

                  4.20 Releases. In the event a Bankruptcy Case is commenced,
the Company shall use its reasonable best efforts to ensure that the
Confirmation Order shall provide, among other things, that the directors of the
Company and each Investor and its affiliates, members, managers, shareholders,
partners, representatives, employees, attorneys and agents are released from any
and all Litigation related to the Company, its business, its governance, its
securities disclosure practices, the purchase or sale of any of the Company’s
equity or debt securities, the Investment or the Restructuring Transaction.

                  4.21 Retention Bonus Plan Payments. The Company shall use its
reasonable best efforts consistent with its contractual and other legal
obligations to minimize the total aggregate amount of bonuses and other amounts
paid or payable under the Retention Bonus Plan as a result of, or in connection
with, the consummation of the transactions contemplated hereby and by the other
Transaction Documents.

                  4.22 Company’s Obligation Regarding Fees and Expenses. The
Company shall use its reasonable best efforts, consistent with its contractual
obligations, to minimize the amount of fees, commissions, expenses and other
amounts paid or payable by the Company and the Subsidiaries in connection with
the transactions contemplated hereby and by the other Transaction Documents,
including, without limitation, the fees, commissions, expenses and other amounts
referred to in Sections 2.12 and 5.2(t).

ARTICLE V

CONDITIONS

                  5.1. Conditions to Obligations of Each Investor and the
Company. The respective obligation of each Investor and the Company to
consummate the transactions contemplated hereby are subject to the satisfaction
or waiver by such Investor or the Company, as the case may be, at or prior to
the Closing of each of the following conditions:

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                  (a)  No statute, rule or regulation or order, judgment or
decree of any court or administrative agency or other Governmental Entity shall
be in effect which prohibits the consummation of the transactions contemplated
hereby or by any of the other Transaction Documents; provided, however, that
except as otherwise provided in this Agreement, each of the parties shall have
used, subject to Section 4.4, reasonable efforts to prevent the entry of any
such injunction or other order and to appeal as promptly as possible any
injunction or other order that may be entered; and provided further that no
party hereto can assert the failure of this condition to be satisfied if such
failure resulted from such party’s failure to satisfy the first proviso of this
Section 5.1(a) or any other provision of this Agreement or any other Transaction
Document;

                  (b)  Any waiting period (and any extension thereof) under the
HSR Act applicable to this Agreement and the transactions contemplated hereby
shall have expired or been terminated; and

                  (c)  All material Foreign Competition Approvals required for
the consummation of the transactions contemplated by this Agreement and the
other Transaction Documents shall have been obtained.

                  5.2. Conditions to Obligations of Each Investor. The
obligation of each Investor to consummate the transactions contemplated hereby
shall be subject to the satisfaction, in the judgment of each Investor, or
waiver by such Investor at or prior to the Closing of each of the following
conditions:

                  (a)  Each of the representations and warranties of the Company
and the other Investor contained in this Agreement and each of the other
Transaction Documents (i) that are qualified as to materiality or Material
Adverse Effect shall be true and correct in all respects as of the date hereof
and as of the Closing (except to the extent such representations and warranties
are made as of a particular date, in which case such representations and
warranties shall have been true and correct as of such date) and (ii) that are
not so qualified shall be true and correct in all respects as of the date hereof
and as of the Closing (except to the extent such representations and warranties
are made as of a particular date, in which case such representations and
warranties shall have been true and correct as of such date) except for such
inaccuracies in the representations and warranties referred to in this clause
(ii) that do not have, and are not reasonably likely to have, individually or in
the aggregate, a Material Adverse Effect;

                  (b)  The Company and the other Investor shall have performed,
satisfied and complied in all material respects with all of their respective
covenants and agreements set forth in this Agreement and each of the other
Transaction Documents to be performed, satisfied and complied with prior to or
at the Closing;

                  (c)  The Company shall have delivered to the Investors an
officer’s certificate certifying as to the Company’s compliance with the
conditions set forth in clauses (a) and (b) of this Section 5.2;

                  (d)  The Company and the other Investor shall have executed
and delivered the Registration Rights Agreement, the Registration Rights
Agreement shall be in full force and effect and there shall exist no breach of,
or default under, the Registration Rights Agreement;

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                  (e)  The Company and the other Investor shall have executed
and delivered the Stockholders Agreement, the Stockholders Agreement shall be in
full force and effect and there shall exist no breach of or default under the
Stockholders Agreement;

                  (f)  All of the Transaction Documents shall be in full force
and effect and there shall exist no breach of, or default under, any of the
Transaction Documents by the Company, excluding any breach by such Investor;

                  (g)  The Amended and Restated Certificate of Incorporation
substantially in the form of Exhibit D hereto, as it may be revised pursuant to
the mutual agreement of the parties hereto in accordance with Section 4.19(b) to
reflect the terms of the Class E Common Stock as set forth on Exhibit G, shall
have been duly filed by the Company with the Secretary of State of the State of
Delaware and shall be effective, provided that if, despite their compliance with
Section 4.19(b) hereof, the parties hereto cannot agree upon revisions to the
Certificate of Incorporation to reflect the terms of the Class E Common Stock as
set forth on Exhibit G, this condition shall be satisfied by the filing of the
Amended and Restated Certificate of Incorporation substantially in the form
attached hereto as Exhibit D;

                  (h)  There shall be no outstanding shares of the Class B
Common Stock;

                  (i)  All Consents required in connection with the transactions
contemplated by this Agreement and the other Transaction Documents shall have
been obtained except where the failure to have obtained any such Consent would
not, individually or in the aggregate, have a Material Adverse Effect;

                  (j)  The Class A Common Stock shall be listed on the NMS or
the New York Stock Exchange and the New Common Shares and the Conversion Shares
shall have been approved for listing on the NMS or such other national
securities exchange, subject to notice of issuance; provided, however, this
Section 5.2(j) shall be deemed waived if the Investors do not permit the Company
to take any actions reasonably necessary to meet any applicable listing
requirements regarding a minimum number of stockholders;

                  (k)  Either (i) the Bank Credit Facility shall be in form and
substance reasonably acceptable to such Investor, shall be in full force and
effect, there shall exist no breach of or default under the Bank Credit Facility
and any and all fees and expenses paid or payable to any commercial bank or any
other financial institution in connection with any amendments to the Bank Credit
Facility shall be reasonably acceptable to each Investor or (ii) the Amended
Bank Credit Facility shall be in form and substance reasonably acceptable to
such Investor, shall be in full force and effect, there shall exist no breach of
or default under the Amended Bank Credit Facility and any and all fees and
expenses paid or payable to any commercial bank or any other financial
institution in connection with entering into the Amended Bank Credit Facility
shall be reasonably acceptable to each Investor;

                  (l)  Upon the Closing, after giving effect to the issuance of
the New Common Shares pursuant to the terms of this Agreement, the complete
capital structure of the Company shall be the New Capitalization in all material
respects;

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                  (m)  If a Bankruptcy Case is commenced, (i) the Bankruptcy
Plan shall be in form and substance reasonably satisfactory to such Investor in
all material respects and shall have been approved by the Bankruptcy Court
pursuant to the Confirmation Order, (ii) the Confirmation Order shall be in form
and substance reasonably satisfactory to such Investor in all material respects
and shall be final and non-appealable and (iii) all other material orders of the
Bankruptcy Court in respect of the Restructuring shall be final and
non-appealable;

                  (n)  (i) Except as may be rendered moot by the entry of the
Confirmation Order, no Litigation shall have been instituted before any court or
Governmental Entity seeking to restrain, modify or prevent the consummation of
the transactions contemplated by this Agreement and the other Transaction
Documents; and (ii) no Litigation shall have been instituted against the Company
or for which the Company would be required to indemnify any Person before any
court or Governmental Entity that, in the reasonable opinion of such Investor,
would reasonably be expected to have a Material Adverse Effect;

                  (o)  (i) Daniel F. Akerson shall continue to be employed by
the Company as the Chief Executive Officer and shall not have expressed any
intention to leave the Company and (ii) each of the following positions at the
Company shall be held either by the person who holds such position on the date
hereof or another person acceptable to each Investor and none of the persons
employed in such positions shall have expressed any intention to leave the
Company; provided, however, that it is understood that the persons employed in
such positions as of the date hereof are acceptable to each Investor: President
and Chief Operating Officer, Chief Financial Officer, Chief Technology Officer,
Chief Marketing Officer; General Counsel, Senior Vice President – Market Sales
Operations and Senior Vice President – National Accounts, Sales & Marketing;

                  (p)  Except as expressly contemplated by Exhibit A or
Exhibit H, the Company shall not have made and shall have no obligation (other
than obligations theretofore waived by the recipient) to make any payment, issue
any securities or make any distribution of any kind or nature whatsoever under
the Plans in connection with or as a result of the consummation of the
transactions contemplated by this Agreement and the other Transaction Documents
(including, without limitation, any severance or other payment to any person
upon termination of such person’s employment with the Company or any Subsidiary,
whether such termination occurs before, upon or after the Closing) because such
payment, issuance or distribution is not required by the terms of the Plans, the
party entitled to receive such payment, securities or distribution has waived
its rights thereto or otherwise or the obligation to make such payment has been
terminated by the Confirmation Order, provided that, in connection with or as a
result of the consummation of the transactions contemplated by this Agreement
and the other Transaction Documents, the Company and the Subsidiaries shall have
the right to make payments under and pursuant to the Retention Bonus Plan in an
amount not to exceed $35.0 million less the total aggregate amount of all
bonuses and other amounts paid or payable under and pursuant to the 2001 Bonus
Plan;

                  (q)  A Business Plan that is reasonably acceptable to such
Investor shall have been adopted by the Company;

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                  (r)  Since the date hereof, there shall not have occurred any
event, circumstance, condition, fact, effect or other matter which, individually
or in the aggregate, has had or would reasonably be expected to have a material
adverse effect (i) on the business, operations, assets, financial condition,
prospects, or results of operations of the Company and its Subsidiaries taken as
a whole (a “Material Adverse Effect”) or (ii) on the ability of the Company and
such Subsidiaries to perform any material obligation under this Agreement or the
other Transaction Documents or to consummate the transactions contemplated by
this Agreement and the other Transaction Documents; provided, however, that any
event, circumstance, condition, fact, effect, or other matter that would
otherwise constitute a Material Adverse Effect shall not constitute a Material
Adverse Effect if the material adverse effect thereof shall have been eliminated
or rendered moot by the Confirmation Order;

                  (s)  All Regulatory Approvals that are required in order to
consummate the transactions contemplated by this Agreement and the other
Transaction Documents, shall have been obtained by a Final Order (or waived in
whole or in part, which waiver will not be unreasonably withheld, in a writing
executed by such Investor, unless such a waiver is prohibited by law), other
than Regulatory Approvals the absence of which would not reasonably be expected
to have a Material Adverse Effect or be unreasonably burdensome to any Investor,
and all parties shall have complied with the conditions, if any, imposed in
connection with the grant of the Regulatory Approvals, other than Regulatory
Approvals the absence of which would not reasonably be expected to have a
Material Adverse Effect or be unreasonably burdensome to any Investor; provided,
that no Investor shall be required to accept or comply with any material
condition that would be unreasonably burdensome or that would have a material
adverse effect on it or on the value of the Company and shall not be obligated
to effect the transactions contemplated by the Transaction Documents if such
conditions are imposed;

                  (t)  As of the Closing, the total amount of any and all fees,
commissions, expenses, and other amounts paid or payable by the Company and the
Subsidiaries to any Person, including, without limitation, any and all broker,
agent, accounting firm, investment bank, other financial advisor, commercial
bank, other financial institution, law firm or public relations firm in
connection with any of the transactions contemplated by this Agreement or the
other Transaction Documents (“Transaction Fees”) shall not exceed $45.0 million;
provided that Transaction Fees shall (A) include any and all fees, expenses and
other amounts (including, without limitation, legal fees and expenses, but
excluding amounts paid to settle Litigation or as judgments or other awards in
connection with Litigation) not covered by liability or other insurance and
payable by the Company or any Subsidiary in connection with any Litigation
brought by stockholders of the Company or derivatively on behalf of, or in the
name of, the Company related to the Company, its business, its governance, its
securities regulatory disclosure practices, the purchase or sale of any of the
Company’s equity or debt securities, the Investment or the Restructuring
Transaction and (B) exclude (1) the Company’s obligations to pay Expenses
pursuant to Section 8.2 and (2) any and all fees (but not reimbursable expenses,
including, without limitation, fees and expenses of counsel) paid or payable to
any commercial bank or any other financial institution in connection with any
amendments to the Bank Credit Facility or entering into the Amended Bank Credit
Facility; and provided further that nothing in this Section 5.2(t) shall limit
the Company’s obligation to pay Expenses pursuant to Section 8.2;

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                  (u)  Any and all Litigation pending or threatened against the
Company or its Affiliates, officers, directors, employees, representatives,
attorneys and agents, and any and all Litigation pending or threatened against
either Investor or its respective Affiliates, officers, directors, managers,
partners, members, stockholders, employees, representatives, attorneys and
agents, related to the Company, its business, its governance, its securities
regulatory disclosure practices, the purchase or sale of any of the Company’s
equity or debt securities, the Investment or the Restructuring Transaction,
shall have been resolved in a manner that is satisfactory to each Investor in
its sole discretion; provided that neither Investor shall be able to assert the
failure of this condition to be satisfied solely as a result of pending Ordinary
Course Litigation; and

                  (v)  The bylaws of the Company, substantially in the form
attached hereto as Exhibit E (the “Bylaws”), shall have been adopted by the
Board of Directors and shall be in full force and effect.

                  5.3. Conditions to Obligations of the Company. The obligation
of the Company to consummate the transactions contemplated hereby shall be
subject to the satisfaction or waiver by the Company at or prior to the Closing
of each of the following conditions:

                  (a)  Each of the representations and warranties of each
Investor contained in this Agreement shall be true and correct when made and as
of the Closing (except to the extent such representations and warranties are
made as of a particular date, in which case such representations and warranties
shall have been true and correct as of such date), except for failures to be
true and correct which individually or in the aggregate would not have a
material adverse effect on the ability of such Investor to consummate the
transactions contemplated hereby;

                  (b)  Each Investor shall have performed, satisfied and
complied in all material respects with all of its covenants and agreements set
forth in this Agreement to be performed, satisfied and complied with on or prior
to the Closing Date;

                  (c)  Each Investor shall have delivered to the Company an
officer’s certificate certifying as to such Investor’s compliance with the
conditions set forth in clauses (a) and (b) of this Section 5.3;

                  (d)  Each Investor shall have executed and delivered the
Registration Rights Agreement and the Stockholders Agreement to the Company, the
Registration Rights Agreement and the Stockholders Agreement shall each be in
full force and effect and there shall exist no breach of or default under either
of the Registration Rights Agreement or the Stockholders Agreement;

                  (e)  If a Bankruptcy Case is commenced, (i) the Bankruptcy
Plan shall have been approved by the Bankruptcy Court pursuant to the
Confirmation Order without material modifications or conditions and (ii) the
Confirmation Order shall have become final and non-appealable; and

                  (f)  All Regulatory Approvals that are required in order to
consummate the transactions contemplated by this Agreement and the other
Transaction Documents, shall have

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been obtained by a Final Order (or waived in whole or in part in a writing
executed by the Company, unless such a waiver is prohibited by law), other than
Regulatory Approvals the absence of which would not reasonably be expected to
have a Material Adverse Effect, and all parties shall have complied with the
conditions, if any, imposed in connection with the grant of the Regulatory
Approvals, other than Regulatory Approvals the absence of which would not
reasonably be expected to have a Material Adverse Effect; provided that no
Investor shall be required to accept or comply with any material condition that
would be unreasonably burdensome or that would have a material adverse effect on
it or on the value of the Company and shall not be obligated to effect the
transactions contemplated by the Transaction Documents if such condition is
imposed.

ARTICLE VI

TERMINATION

                  6.1. Termination. This Agreement may be terminated at any time
prior to the Closing:

                  (a)  by mutual written agreement of the Company and each
Investor;

                  (b)  by either Investor, but only with respect to its own
rights and obligations hereunder and not those of the other Investor, if the
Closing shall not have been consummated on or before September 15, 2002;
provided, that in the event all of the conditions set forth in Article V other
than the condition set forth in Section 5.2(s) regarding Regulatory Approvals
hereof shall have been satisfied or waived by the parties hereto on or before
September 15, 2002, then the termination right set forth in this clause
(b) shall not be available to either Investor until the earlier of
(i) January 15, 2003 and (ii) the date on which the Company shall notify each
Investor in writing that the Regulatory Approvals cannot be obtained; provided,
further, that in the event all of the conditions set forth in Article V other
than the condition set forth in Section 5.2(s) regarding Regulatory Approvals
hereof shall have been satisfied or waived by the parties hereto on or before
September 15, 2002 and the condition set forth in Section 5.2(s) regarding
Regulatory Approvals hereof shall have been satisfied or waived by the parties
hereto in all respects other than receipt of a Final Order on or before
January 15, 2003, then the termination right set forth in this clause (b) shall
not be available to either Investor until the earlier of (i) March 15, 2003 and
(ii) the date on which the Company shall notify each Investor in writing that
the Final Order has been denied; provided, further, that in the event either
Investor elects, pursuant to Section 1.2, to delay the Closing beyond the third
day following satisfaction or waiver of all of the conditions set forth in
Article V hereof, any of the dates set forth in this clause (b), as applicable,
shall be extended by the actual number of days of such delay;

                  (c)  by either Investor, but only with respect to its own
rights and obligations hereunder and not those of the other Investor, if the
other Investor or the Company shall have breached any of its respective
representations, warranties, covenants or other agreements contained in this
Agreement, which breach constitutes or would reasonably be expected to have a
Material Adverse Effect and cannot reasonably be expected to be cured by the
Closing;

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                  (d)  by either Investor, but only with respect to its own
rights and obligations hereunder and not those of the other Investor, if any
event, circumstance, condition, fact, effect, or other matter has occurred or
exists which (i) would, or would be reasonably likely to give rise to the
failure of any of the conditions to the obligations of such Investor set forth
in Section 5.1 or Section 5.2; and (ii) cannot be or has not been cured within
20 days after the giving of written notice to the Company and the other
Investor;

                  (e)  by either Investor, but only with respect to its own
rights and obligations hereunder and not those of the other Investor, if the
Company has not complied with its obligations under Section 6.3(b) relating to
obtaining Bankruptcy Court approval of the Company’s obligations to pay the
Break-Up Payment and Expenses (including the timing of the filing of a motion
and proposed order related thereto that is acceptable to each Investor in all
respects) or if the Bankruptcy Court has not issued an order approving such
obligations, in substance reasonably satisfactory to such Investor, within 45
days following commencement of the Bankruptcy Case;

                  (f)  by either Investor if the other Investor has terminated
this Agreement;

                  (g)  by either Investor or the Company if a court of competent
jurisdiction or governmental, regulatory or administrative agency or commission
shall have issued a final and nonappealable order, judgment or decree or taken
any other action having the effect of permanently restraining, enjoining or
otherwise prohibiting the transactions contemplated by this Agreement;

                  (h)  by the Company if (i) the Board of Directors determines
in good faith that termination of this Agreement is necessary in order for the
Company to accept any Proposal or (ii) the Bankruptcy Court has ordered the
Company to terminate this Agreement in order to accept any Proposal, provided
that the Company shall have the right to terminate this Agreement pursuant to
clause (i) above only if it has complied in all material respects with all of
the provisions of Section 4.13, including the notice provisions thereof, and in
any event it shall comply in all material respects with the requirements of
Sections 6.3 and 8.2 relating to the payment (including the timing of any
payment) of Expenses and the Break-Up Payment prior to termination of this
Agreement pursuant to this Section 6.1(h);

                  (i)  by either Investor, but only with respect to its rights
and obligations hereunder and not those of the other Investor, if the Company
enters into a written agreement with respect to any Proposal;

                  (j)  by the Company, if either Investor terminates its rights
and obligations under this Agreement pursuant to this Section 6.1 and the other
Investor shall not have agreed, within 10 Business Days of receipt of notice of
such termination from the terminating Investor (the delivery of such notice
being a condition precedent to any termination under this Section 6.1(j)) to
exercise its rights to assume all of the rights and obligations of the
terminating Investor pursuant to Section 8.5(b);

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                  (k)  by the Company, if the Closing shall not have been
consummated on or before the date specified in Section 6.1(b), including the
extensions provided for in each of the three provisos contained therein, if
applicable;

                  (l)  by the Company, if either Investor shall have breached in
any material respect any of its representations, warranties, covenants or other
agreements contained in this Agreement, which breach cannot reasonably be
expected to be cured by the Closing; provided, that the non-breaching Investor
(if there is one) shall not have agreed, within 10 Business Days of receipt of
notice from the Company of the determination that such breach cannot reasonably
be expected to be cured by the Closing (the delivery of such notice being a
condition precedent to any termination under this Section 6.1(l)), to waive such
breach and exercise its rights to assume all of the rights and obligations of
the breaching Investor pursuant to Section 8.5(b); and

                  (m)  by the Company, if any material event, circumstance,
condition, fact, effect or other matter has occurred or exists which (i) would,
or would be reasonably likely to give rise to the failure of any of the
conditions to the obligation of the Company set forth in Section 5.1 or 5.3; and
(ii) cannot be cured within 20 days after the giving of written notice to each
Investor.

                  6.2. Effect of Termination. Subject to Section 8.5(b), in the
event of the termination of this Agreement by any party pursuant to Section 6.1,
this Agreement shall forthwith become void as to such terminating party and
there shall be no liability on the part of any party hereto (or any stockholder,
director, officer, partner, employee, agent, consultant or representative of
such party) to the party that has terminated this Agreement, except as set forth
in this Section 6.2, provided, that nothing contained in this Agreement shall
relieve any party from liability for any breach of this Agreement; and provided,
further, that this Section 6.2 and Sections 7.1, 7.2, 8.1, 8.2, 8.5, 8.6, 8.7,
8.8, 8.11, 8.12, 8.13 and 8.14 shall survive termination of this Agreement by
any party.

                  6.3 Break-Up Payment. (a) The Company shall pay or cause to be
paid to each Investor a payment (the “Break-Up Payment”) equal to one percent
(1%) of the implied, pre-money enterprise value of the Company if the Company
proposes to terminate this Agreement under Section 6.1(h) or both Investors
elect to terminate this Agreement pursuant to Section 6.1(i). The parties agree
that the implied, pre-money enterprise value of the Company shall be determined
using the accounting methods and principles and valuation methodology set forth
on Schedule 6.3(a). The payment of the Break-Up Payment, in same day funds, to
each Investor, shall (i) be a condition precedent to the effectiveness of any
termination by the Company of this Agreement under Section 6.1(h) or (ii) be
made by the Company promptly, but in no event later than the third Business Day
following delivery of notice by either Investor to the Company that either
Investor has elected to terminate this Agreement pursuant to Section 6.1(i);
provided, however, that in the event the Company is engaged in a Bankruptcy
Case, the timing of the payment of the Break-Up Payment shall, in all events, be
in accordance with the Break-Up Payment Order.

                  (b)  In the event a Bankruptcy Case is commenced, the Company
shall promptly, but in no event later than three Business Days after
commencement of such Bankruptcy Case, take all action reasonably necessary to
obtain approval from the Bankruptcy

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Court of the Company’s obligation to pay the Expenses and the Break-Up Payment
to each Investor in accordance with the terms of this Section 6.3. Any and all
motions and other documents filed by the Company in connection with its
obligations under this Section 6.3 must be reasonably acceptable to each
Investor. Furthermore, to the extent that the Company seeks to establish bidding
or similar procedures in connection with any Proposal, such procedures (and any
and all motions and other documents filed by the Company in connection
therewith) must, subject to applicable fiduciary duties of the Board of
Directors, be reasonably acceptable to each Investor in all respects.

                  (c)  The Company acknowledges and agrees that (i) the payment
of the Break-Up Payment is an integral part of the transactions contemplated by
this Agreement, (ii) in the absence of the Company’s obligations to make this
payment, neither Investor would have entered into this Agreement and (iii)
subject to the proviso to the last sentence of Section 6.3(a), time is of the
essence with respect to the payment of the Break-Up Payment. The Company
accordingly agrees that in the event that the Company fails to pay the Break-Up
Payment in accordance with this Section 6.3 promptly, the Company will, in
addition to the payment of such amount, also pay to each Investor all of its
reasonable costs and expenses (including reasonable attorneys’ fees and
expenses) incurred by such Investor in the enforcement of its rights under this
Section 6.3, together with interest on such amount accruing from the date of
such failure at a rate of 10% per annum from the date upon which such payment
was due, to and including the date of payment.

ARTICLE VII

SURVIVAL AND LOSSES

                  7.1. Survival. The representations and warranties of the
parties hereto contained in this Agreement or in any of the other Transaction
Documents shall expire on the three-year anniversary of the Closing Date, except
that the representations and warranties set forth in Section 2.13 shall expire
on the earlier of (i) the expiration of the statute of limitations applicable to
the substance of such representation or warranty or (ii) the five-year
anniversary of the Closing Date, in each case except to the extent a party has
asserted a claim in accordance with this Article VII for breach of any such
representation or warranty prior to the expiration of such period, in which
event any representation or warranty to which such claim relates shall survive
with respect to such claim until such claim is resolved as provided in this
Article VII. After the expiration of such periods, any claim by a party hereto
based upon any such representation or warranty shall be of no further force or
effect. The covenants and agreements of the parties hereto contained in this
Agreement and in any of the other Transaction Documents shall survive the
Closing until performed in accordance with their terms.

                  7.2. Losses. (a) The Company shall indemnify, defend and hold
harmless each Investor, their Affiliates, and their respective officers,
directors, partners, members, managers, employees, agents, representatives,
successors and assigns (each an “Investor Covered Person”) from and against any
and all Losses incurred or suffered by an Investor Covered Person (whether
incurred or suffered directly or indirectly through ownership or proposed
ownership of Common Stock, membership on the Board of Directors or any committee
thereof or otherwise) arising from or in connection with any Litigation
threatened, commenced or pending by any

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direct or indirect stockholder of the Company (whether in the name of the
Company or otherwise).

                  (b)  An Investor Covered Person seeking indemnification under
this Section 7.2 shall, promptly upon becoming aware of the facts indicating
that a claim for indemnification may be warranted, give to the Company a notice
of claim relating to such Loss (a “Claim Notice”). Each Claim Notice shall
specify the nature of the claim, and, if possible, the amount or the estimated
amount thereof. No failure or delay in giving a Claim Notice and no failure to
include any specific information relating to the claim (such as the amount or
estimated amount thereof) shall affect the obligation of the party from whom
indemnification is sought.

ARTICLE VIII

MISCELLANEOUS

                  8.1. Defined Terms; Interpretations. (a) The following
capitalized terms, as used in this Agreement, shall have the following meanings:

                  “Affiliate” shall have the meaning ascribed thereto such term
in Rule 12b-2 of the General Rules and Regulations under the Exchange Act.

                  “Agreement” shall have the meaning ascribed thereto in the
preamble.

                  “Amended and Restated Certificate of Incorporation” shall mean
the Amended and Restated Certificate of Incorporation attached hereto as
Exhibit D, which shall be revised and completed in accordance with Section 4.19.

                  “Amended Bank Credit Facility” shall mean a bank credit
facility under which the Company is the borrower, in effect as of the Closing as
a replacement to the Bank Credit Facility, which provides for a term loan or
term loans and revolving loans.

                  “Assuming Investor” shall have the meaning ascribed thereto in
Section 8.5(b).

                  “Bank Credit Facility” shall mean the Credit and Guarantee
Agreement, dated as of February 3, 2000, among Nextlink, certain subsidiaries of
Nextlink, various Lenders (as defined therein), Goldman Sachs Credit Partners,
L.P., as Syndication Agent, Toronto Dominion (Texas), Inc., as Administrative
Agent, Barclays Bank plc and The Chase Manhattan Bank, as Co-Documentation
Agents, and TD Securities, together with Goldman Sachs Credit Partners, L.P.,
the Joint Lead Arrangers, and all ancillary agreements entered into pursuant to
the terms thereof, each as amended as of the Closing.

                  “Bankruptcy Case” shall mean all legal proceedings, if any,
instituted in a United States Bankruptcy Court in connection with the
Restructuring or otherwise involving the Company, and any of its Affiliates, as
debtor.

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                  “Bankruptcy Code” shall mean Title 11 of the United States
Code, 11 U.S.C. §101, et seq., as now in effect or hereafter amended.

                  “Bankruptcy Court” shall mean the United States Bankruptcy
Court or other U.S. federal court of competent jurisdiction in which the
Bankruptcy Case is pending.

                  “Bankruptcy Plan” shall mean either the Prepackaged Plan or
the Pre-negotiated Plan, whichever may be filed in connection with the
Bankruptcy Case.

                  “Board of Directors” shall mean the Board of Directors of the
Company.

                  “Break-Up Payment” shall have the meaning ascribed thereto in
Section 6.3(a).

                  “Break-Up Payment Order” shall mean an order of the Bankruptcy
Court approving the Break-Up Payment.

                  “Business Day” shall mean 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.

                  “Business Plan” shall mean the business plan of the Company,
as approved by each Investor prior to the Closing, which approval shall not be
unreasonably withheld, and as the same may be amended from time to time in
accordance with the Stockholders Agreement.

                  “Bylaws” shall have the meaning ascribed thereto in
Section 5.2(v).

                  “Capital Lease” shall mean a lease with respect to which the
lessee is required concurrently to recognize the acquisition of an asset and the
incurrence of a liability in accordance with GAAP.

                  “Change of Control” shall mean the occurrence of any of the
following events:

                  (i)  any “person” or “group” (as such terms are used in
Sections 13(d) and 14(d) of the Securities Exchange Act of 1934), is or becomes
the beneficial owner, directly or indirectly, of more than 50% of the total
outstanding voting stock of the Company;

                  (ii)  during any period of two consecutive years, individuals
who at the beginning of such period constituted the Board of Directors or other
governing body of the Company (together with any new directors whose election to
such Board of Directors or whose nomination for election by the stockholders of
the Company was approved by a vote of 662/3% of the directors then still in
office who were either directors at the beginning of such period or whose
election or nomination for election was previously so approved), cease for any
reason to constitute a majority of such Board of Directors then in office;

                  (iii)  the Company consolidates with or merges with or into
any Person, or any Person consolidates with or merges with or into the Company,
and immediately following the consummation of such transaction the holders of
the outstanding common stock of the Company immediately prior to such
transaction hold less than 50% of the outstanding common

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stock and the combined voting power of the outstanding voting securities of
(x) the surviving Person in such transaction or (y) the Person into whose
securities the outstanding common stock of the Company was converted in such
transaction or whose securities were otherwise issued to holders of the
outstanding common stock of the Company in such transaction;

                  (iv)  the Company sells, transfers, conveys, leases or
otherwise disposes of all or substantially all of its assets in one transaction
or a series of related transactions; or

                  (v)  the Company is liquidated or dissolved or adopts a plan
of liquidation or dissolution.

                  “Claim Notice” shall have the meaning ascribed thereto in
Section 7.2(b).

                  “Class A Common Stock” shall have the meaning ascribed thereto
in Section 1.1.

                  “Class B Common Stock” shall have the meaning ascribed thereto
in Section 2.3.

                  “Class C Common Stock” shall have the meaning ascribed thereto
in Section 1.1.

                  “Class D Common Stock” shall have the meaning ascribed thereto
in Section 1.1.

                  “Class E Common Stock” shall have the meaning ascribed thereto
in Section 4.19(a).

                  “Closing” shall have the meaning ascribed thereto in
Section 1.2(a).

                  “Closing Date” shall have the meaning ascribed thereto in
Section 1.2(a).

                  “Code” shall mean the Internal Revenue Code of 1986, as
amended.

                  “Commitments” shall have the meaning ascribed thereto in
Section 2.11.

                  “Common Stock” shall have the meaning ascribed thereto in
Section 2.3 and shall include, as the context may require, Class A Common Stock,
Class B Common Stock and all common stock now or hereafter authorized to be
issued (including, without limitation, the Class C Common Stock and Class D
Common Stock), and any and all securities of any kind whatsoever of the Company
which may be exchanged for or converted into Common Stock, and any and all
securities of any kind whatsoever of the Company which may be issued on or after
the date hereof in respect of, in exchange for, or upon conversion of shares of
Common Stock pursuant to a merger, consolidation, stock split, stock dividend,
recapitalization of the Company or otherwise.

                  “Communications Act” shall mean the Communications Act of
1934, as amended, and the rules and regulations (including those issued by the
FCC) promulgated thereunder.

                  “Communications License” or “Communications Licenses” shall
have the meaning ascribed thereto in Section 2.9(a).

                  “Company” shall have the meaning ascribed thereto in the
preamble.

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                  “Company Licensed Intellectual Property” shall have the
meaning ascribed thereto in Section 2.15.

                  “Company Owned Intellectual Property” shall have the meaning
ascribed thereto in Section 2.15.

                  “Confidential Information” shall have the meaning ascribed
thereto in the Forstmann Little Confidentiality Agreement.

                  “Confirmation Order” shall mean the order entered by the
Bankruptcy Court in the Bankruptcy Case confirming the Bankruptcy Plan pursuant
to Section 1129 of the Bankruptcy Code. The Confirmation Order shall provide,
among other things, that (i) the sale of Common Stock pursuant to this Agreement
shall be free and clear of all liens, claims, interests, rights of others or
encumbrances of any kind, (ii) an express finding that the Company and each
Investor have acted in good faith, and (iii) the issuance of Common Stock to
creditors under the Bankruptcy Plan is exempt from registration under the
Securities Act.

                  “Consents” shall have the meaning ascribed thereto in
Section 4.4(a).

                  “Contractual Management Rights Letter” shall have the meaning
ascribed thereto in Section 4.6(b).

                  “Conversion Shares” shall mean shares of Class A Common Stock
issuable upon conversion of the Class C Common Stock and Class D Common Stock
into Class A Common Stock pursuant to the Amended and Restated Certificate of
Incorporation, and any and all securities of any kind whatsoever of the Company
which may be issued on or after the date hereof in respect of, in exchange for,
or upon conversion of shares of Class A Common Stock pursuant to a merger,
consolidation, stock split, stock dividend, recapitalization of the Company or
otherwise.

                  “Customer Base” shall mean those Persons to which the Company
or the Subsidiaries provide telecommunications service.

                  “DGCL” shall mean the Delaware General Corporation Law.

                  “Encumbrance” shall mean, with respect to any Person, any
mortgage, lien, pledge, charge, claim, option, proxy, voting trust, security
interest or other encumbrance, or any interest or title of any vendor, lessor,
lender or other secured party to or of such Person under any conditional sale or
other title retention agreement or Capital Lease, upon or with respect to any
property or asset of such Person (including in the case of stock, stockholder
agreements, voting trust agreements and all similar arrangements).

                  “Environmental Law” shall mean any foreign, federal, state or
local law, statute, regulation, rule, ordinance, decree, or any other
requirement of law (including common law) regulating or relating to the
protection of human health and safety or the environment, including, but not
limited to, laws relating to releases or threatened releases of Hazardous
Materials into the environment.

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                  “Environmental Permits” shall mean all federal, state, local
and foreign franchises, approvals, authorizations, franchises, licenses, orders,
registrations, certificates, filings, variances, notices and other similar
permits or rights obtained from any Governmental Entity, related to any
Environmental Law.

                  “Equity VI” shall mean Forstmann Little & Co. Equity
Partnership VI, L.P., a Delaware limited partnership.

                  “Equity VII” shall have the meaning ascribed thereto in the
preamble.

                  “ERISA” shall mean the Employee Retirement Income Security Act
of 1974, as amended.

                  “ERISA Affiliate” shall mean any trade or business, whether or
not incorporated, which together with the Company would be deemed a “single
employer” within the meaning of Section 4001(b) of ERISA.

                  “Exchange Act” shall mean the Securities Exchange Act of 1934,
as amended, or any successor federal statute, and the rules and regulations of
the SEC thereunder, all as the same shall be in effect at the time. Reference to
a particular section of the Securities Exchange Act of 1934, as amended, shall
include reference to the comparable section, if any, of any such successor
federal statute.

                  “Expenses” shall have the meaning ascribed thereto in
Section 8.2.

                  “Expired Policies” shall have the meaning ascribed thereto in
Section 2.17.

                  “FCC” shall mean the Federal Communications Commission and any
successor Governmental Entity.

                  “FCC Licenses” shall have the meaning ascribed thereto in
Section 2.9(a).

                  “Final Order” shall mean an order or determination by the FCC
or other regulatory authority (including State PUCs) (w) that is not reversed,
stayed, enjoined, set aside, annulled or suspended within the deadline, if any,
provided by applicable statute or regulation, (x) with respect to which no
request for stay, motion or petition for reconsideration, application or request
for review, or notice of appeal or judicial petition for review that is filed
within the period referred to in clause (w) above is pending, (y) as to which
the deadlines, if any, for filing such request, motion, petition, application,
appeal or notice have expired, and (z) as to which the deadlines, if any, for
the entry by the FCC or other regulatory authority of orders staying,
reconsidering or reviewing on its own motion such order or determination have
expired; provided, however, that if the statutes and rules applicable to the
regulatory authority do not specify deadlines for the regulatory authority to
enter such orders, this clause (z) shall not apply to the orders or
determinations of that regulatory agency.

                  “FL Fund” shall mean FL Fund, L.P., a Delaware limited
partnership.

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                  “Forebearance Agreement” shall mean that certain Forebearance
Agreement, by and between the Company, the lenders under the Senior Credit
Facility and certain Subsidiaries of the Company, dated December 14, 2001, as in
effect as of the date hereof.

                  “Foreign Licenses” shall have the meaning ascribed thereto in
Section 2.9(a).

                  “Foreign Competition Approvals” shall mean all consents,
authorizations, approvals, waivers, filings and other actions required by any
Governmental Entities related to antitrust or competition Laws in connection
with the transactions contemplated by this Agreement and the other transactions
documents.

                  “Forstmann Little” shall have the meaning ascribed thereto in
the preamble.

                  “Forstmann Little Confidentiality Agreement” shall mean the
Confidentiality Agreement, dated as of September 27, 2001, between the Company
and FLC XXXI Partnership, L.P., a Delaware limited partnership doing business as
Forstmann Little & Co., which is an affiliate of Forstmann Little.

                  “GAAP” shall have the meaning ascribed thereto in Section 2.5.

                  “Governmental Entity” shall mean any supernational, national,
foreign, federal, state or local judicial, legislative, executive,
administrative or regulatory body or authority.

                  “Guaranty” shall mean, with respect to any Person, any
obligation (except the endorsement in the ordinary course of business of
negotiable instruments for deposit or collection) of such Person guaranteeing or
in effect guaranteeing (whether by reason of being a general partner of a
partnership or otherwise) any indebtedness, dividend or other obligation of any
other Person in any manner, whether directly or indirectly, including (without
limitation) obligations incurred through an agreement, contingent or otherwise,
by such Person: (a) to purchase such indebtedness or obligation or any property
constituting security therefor; (b) to advance or supply funds (i) for the
purchase or payment of such indebtedness or obligation, or (ii) to maintain any
working capital or other balance sheet condition or any income statement
condition of any other Person or otherwise to advance or make available funds
for the purchase or payment of such indebtedness or obligation; (c) to lease
properties or to purchase properties or services primarily for the purpose of
assuring the owner of such indebtedness or obligation of the ability of any
other Person to make payment of the indebtedness or obligation; or (d) otherwise
to assure the owner of such indebtedness or obligation against loss in respect
thereof. In any computation of the indebtedness or other liabilities of the
obligor under any Guaranty, the indebtedness or other obligations that are the
subject of such Guaranty shall be assumed to be direct obligations of such
obligor.

                  “Hazardous Materials” shall mean any substance or material
that is classified or regulated as “hazardous” or “toxic” or similar designation
pursuant to any Environmental Law, including, without limitation, asbestos,
polychlorinated biphenyls, petroleum and urea-formaldehyde insulation.

                  “HSR Act” shall mean the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, and the rules and regulations thereunder.

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                  “Indebtedness” shall mean, with respect to any Person , at any
time, without duplication, (a) its liabilities for borrowed money; (b) its
liabilities for the deferred purchase price of property acquired by such Person
(excluding accounts payable arising in the ordinary course of business but
including all liabilities created or arising under any conditional sale or other
title retention agreement with respect to any such property); (c) all
liabilities appearing on its balance sheet in accordance with GAAP in respect of
Capital Leases; (d) all liabilities for borrowed money secured by any
Encumbrance with respect to any property owned by such Person (whether or not it
has assumed or otherwise become liable for such liabilities); (e) all its
liabilities in respect of letters of credit or instruments serving a similar
function issued or accepted for its account by banks and other financial
institutions (whether or not representing obligations for borrowed money); (f)
Swaps of such Person; and (g) any Guaranty of such Person with respect to
liabilities of a type described in any of clauses (a) through (f) hereof.

                  “Intellectual Property” shall mean the United States and
foreign trademarks, service marks, trade names, trade dress, domain names,
logos, business and product names, and slogans including registrations and
applications to register or renew the registration of any of the foregoing;
copyrights and registrations or renewals thereof; United States and foreign
letters patent and patent applications, including all reissues, continuations,
divisions, continuations-in-part or renewals or extensions thereof; inventions,
processes, designs, formulae, trade secrets, know-how, confidential business and
technical information; software and computer programs of any kind whatsoever
(including without limitation all modeling software in both source code and
object code versions) and all documentation relating thereto; Internet websites;
mask works and other semiconductor chip rights and registrations or renewals
thereof; and all other intellectual property and proprietary rights, tangible
embodiments of any of the foregoing (in any form or medium including electronic
media), and licenses of any of the foregoing.

                  “Investment” shall have the meaning ascribed thereto in
Section 1.1.

                  “Investor Covered Person” shall have the meaning ascribed
thereto in Section 7.2(a).

                  “Investor Press Announcement” shall mean any press releases
and public filings made by an Investor between the date hereof and the Closing
Date and referring to the Company, the other Investor, this Agreement or any of
the other Transaction Documents, or any of the transactions contemplated
thereby.

                  “Investor Reimbursement Cap” shall have the meaning ascribed
thereto in Section 8.2.

                  “Investors” shall have the meaning ascribed thereto in the
preamble.

                  “IRS” shall mean the United States Internal Revenue Service.

                  “IRU Agreement” shall have the meaning ascribed thereto in
Section 2.20(d).

                  “Knowledge”, with respect to the Company, shall mean the
knowledge of Daniel F. Akerson, Noelle Beams, Gary D. Begeman, Douglas Carter,
Peter Campbell, Mark Coppersmith, Nathaniel Davis, Mark Faris, Reese Feuerman,
Nancy Gofus, Scott Macleod,

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Cathy Massey, Richard Montfort, Wayne Rehberger, Michael Ruley, R. Gerard
Salemme, Charles Sackley, Laura Thomas and Joseph Zarella or any such persons
and the knowledge that any of the foregoing persons would have after due and
reasonable inquiry and investigation.

                  “Laws” shall mean all foreign, federal, state, and local laws,
statutes, ordinances, rules, regulations, orders, judgments, decrees and bodies
of law.

                  “Licenses” shall have the meaning ascribed thereto in
Section 2.10.

                  “Litigation” shall have the meaning ascribed thereto in
Section 2.7(a).

                  “Local Authorizations” shall have the meaning ascribed thereto
in Section 2.9(a).

                  “Losses” shall mean each and all of the following items:
claims, losses, (including, without limitation, losses of earnings) liabilities,
obligations, payments, damages (actual or punitive but not consequential),
charges, judgments, fines, penalties, amounts paid in settlement, costs and
expenses (including, without limitation, interest which may be imposed in
connection therewith, costs and expenses of investigation, Litigation, demands,
assessments and fees, expenses and disbursements of counsel, consultants and
other experts).

                  “Management Shares” shall have the meaning ascribed thereto in
Section 4.19.

                  “Material Adverse Effect” shall have the meaning ascribed
thereto in Section 5.2(r).

                  “Material Terms” shall have the meaning ascribed thereto in
Section 4.1(b)(x).

                  “MBO VII” shall mean Forstmann Little & Co. Subordinated Debt
and Equity Management Buyout Partnership VII, L.P., a Delaware limited
partnership.

                  “MBO VIII” shall have the meaning ascribed thereto in the
preamble.

                  “Network Facilities” shall have the meaning ascribed thereto
in Section 2.20(b).

                  “Network Maps” shall have the meaning ascribed thereto in
Section 2.20(a).

                  “New Capitalization” shall mean the total capitalization of
the Company as set forth on Exhibit A hereto, including, without limitation, the
Management Shares, but excluding shares of Class A Common Stock issued or
issuable upon exercise of options issued under the New Employee Stock Option
Plan.

                  “New Common Shares” shall have the meaning ascribed thereto in
Section 1.1.

                  “New Employee Stock Option Plan” shall mean a stock option
plan having terms and conditions outlined in Exhibit H hereto, and otherwise
reasonably satisfactory in form and substance to each of the Investors.

                  “New Forstmann Little Shares” shall have the meaning ascribed
thereto in Section 1.1.

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                  “New Outstanding Equity” shall mean the total outstanding
equity securities of the Company immediately after giving effect to the
Restructuring and the Investment, excluding any options outstanding under a New
Employee Stock Option Plan approved by the Investors, but including but not
limited to, all outstanding Common Stock.

                  “New Policy” shall have the meaning ascribed thereto in
Section 4.1(b)(x).

                  “New Telmex Shares” shall have the meaning ascribed thereto in
Section 1.1.

                  “Nextlink” shall mean NEXTLINK Communications, Inc., a
Delaware Corporation and the predecessor to the Company.

                  “1999 Stock Purchase Agreement” shall mean the Stock Purchase
Agreement, dated as of December 7, 1999, by and between Equity VI, MBO VII, FL
Fund, and Nextlink.

                  “NMS” shall have the meaning ascribed thereto in Section 4.5.

                  “Old Policy” shall have the meaning ascribed thereto in
Section 4.1(b)(x).

                  “Operational Plan” shall mean the revised financial
projections and business plan prepared by the Company and its advisors for
presentation to the lenders under the Bank Credit Facility, a copy of which has
been provided by the Company to each of the Investors.

                  “Ordinary Course Litigation” shall mean Litigation arising in
the ordinary course of business of the Company and the Subsidiaries relating to
the business and operations of the Company and the Subsidiaries which satisfies
all of the following criteria:

                  (i)  Such Litigation which would not, or would not reasonably
be expected to have, either individually or in the aggregate, (x) a Material
Adverse Effect or (y) a material adverse effect upon any officer or director of
the Company or upon either Investor or any Affiliate, officer, director,
manager, partner, member, stockholder, employee, representative, attorney or
agent of either Investor;

                  (ii)  The plaintiffs, claimants or other Persons commencing or
pursuing such Litigation do not include any direct or indirect stockholders of
the Company or of any Subsidiary or any representatives of any such stockholders
suing in such capacity;

                  (iii)  Such Litigation is not, and does not include, in whole
or in part, a derivative or similar claim or action brought by or on behalf of,
or in the name of, the Company or any Subsidiary;

                  (iv)  Such Litigation does not arise out of or relate to, in
whole or in part, the governance or securities regulatory disclosure practices
of the Company, the direct or indirect purchase or sale of any debt or equity
securities of the Company or any Subsidiary, the Investment or the Restructuring
Transaction; and

                  (v)  Such Litigation does not include, in whole or in part,
any claim or allegation of (i) breach of fiduciary duty by the Company or any
director, officer, employee or

46

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stockholder of the Company or (ii) breach of any federal, state or foreign
securities or blue sky laws.

                  “Permitted Encumbrances” shall mean: any Encumbrance
(x) permitted under the Bank Credit Facility, (y) permitted under any Amended
Bank Credit Facility, or (z) securing Indebtedness ranking pari passu with the
Bank Credit Facility or any Amended Bank Credit Facility.

                  “Person” shall mean 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.

                  “Plan” shall mean each collective bargaining agreement,
employment agreement or severance agreement, and any bonus, pension,
post-retirement benefit, profit sharing, deferred compensation, incentive
compensation, stock ownership, stock purchase, stock option, phantom stock,
retirement, vacation, severance, disability, death benefit, hospitalization,
medical, dental or other plan, arrangement or understanding providing
compensation or benefits generally to current employees, officers, independent
contractors, or directors of the Company or any of the Subsidiaries, including
without limitation, the Retention Bonus Plan and all other plans, agreements,
arrangements and understandings set forth on Schedule 2.14(a)(i).

                  “Preferred Stock” shall have the meaning ascribed thereto in
Section 2.3.

                  “Pre-negotiated Plan” shall have the meaning ascribed thereto
in Section 4.12(a)(iii).

                  “Prepackaged Approach” shall have the meaning ascribed thereto
in Section 4.12(a)(ii).

                  “Prepackaged Plan” shall have the meaning ascribed thereto in
Section 4.12(a)(i)(B).

                  “Proposal” shall have the meaning ascribed thereto in
Section 4.13(a).

                  “Public Debt” shall mean the Company’s (a) 12 1/2% Senior
Notes due 2006, (b) 9 5/8% Senior Noted due 2007, (c) 9% Senior Noted due 2008,
(d) 9.45% Senior Discount Notes due 2008, (e) 10 3/4% Senior Notes due 2008,
(f) 10 3/4% Senior Notes due 2009, (g) 12 1/4% Senior Discount Notes due 2009,
(h) 10 1/2% Senior Notes due 2009, (i) 12 1/8% Senior Discount Notes due 2009,
(j) 12 3/4% Senior Notes due 2007, and (k) 5 3/4% Convertible Subordinated Notes
due 2009.

                  “Purchase Price” shall have the meaning ascribed thereto in
Section 1.1.

                  “Registration Rights Agreement” shall have the meaning
ascribed thereto in the recitals.

                  “Regulatory Approvals” shall mean all approvals, consents
(including consents to assignments of permits and rights of way), waivers,
certificates, and other authorizations

47

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required to be obtained from the FCC, any State PUCs or any other federal,
state, foreign or municipal communications regulatory agency having jurisdiction
over the Company’s or either Investor’s business in order to consummate the
transactions contemplated by this Agreement and the other Transaction Documents.

                  “Replacement Policies” shall have the meaning ascribed thereto
in Section 2.17.

                  “Required Consents” shall mean such consents or agreements of
creditors and security holders as shall be required to effectuate the
Restructuring Transaction.

                  “Restructuring” shall have the meaning ascribed thereto in
Section 4.12(a).

                  “Restructuring Transaction” shall mean any transaction,
filing, case, action or event or other series of transactions, filings, cases,
actions or events (including, without limitation, an exchange offer, a consent
solicitation, a Prepackaged Plan, a Pre-negotiated Plan or any other Bankruptcy
Case), whereby the completion of which, as evidenced by a Final Order, if
applicable, the Company, in all material respects, shall have effectuated the
Restructuring.

                  “Retention Bonus Plan” shall mean the NEXTLINK Communications,
Inc. Change of Control Retention Bonus and Severance Pay Plan, as filed with the
SEC as Exhibit 10.3 to the Company’s Annual Report on Form 10-K for the fiscal
year ended December 31, 1999.

                  “SEC” shall mean the United States Securities and Exchange
Commission and any successor Governmental Entity.

                  “SEC Reports” shall have the meaning ascribed thereto in
Section 2.4.

                  “Securities Act” shall mean the Securities Act of 1933, as
amended, or any successor federal statute, and the rules and regulations of the
SEC thereunder, all as the same shall be in effect at the time. Reference to a
particular section of the Securities Act shall include reference to the
comparable section, if any, of such successor federal statute.

                  “Series A Preferred Stock” shall have the meaning ascribed
thereto in Section 2.3.

                  “Series B Preferred Stock” shall have the meaning ascribed
thereto in Section 2.3.

                  “Series C Preferred Stock” shall have the meaning ascribed
thereto in Section 2.3.

                  “Series D Preferred Stock” shall have the meaning ascribed
thereto in Section 2.3.

                  “Series E Preferred Stock” shall have the meaning ascribed
thereto in Section 2.3.

                  “Series F Preferred Stock” shall have the meaning ascribed
thereto in Section 2.3.

                  “Series G Preferred Stock” shall have the meaning ascribed
thereto in Section 2.3.

                  “Series H Preferred Stock” shall have the meaning ascribed
thereto in Section 2.3.

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                  “Stockholders Agreement” shall have the meaning ascribed
thereto in the recitals.

                  “Significant Subsidiaries” shall have the meaning ascribed
thereto in Section 2.1(b).

                  “State Licenses” shall have the meaning ascribed thereto in
Section 2.9(a).

                  “State PUCs” shall mean the state and local public service and
public utilities commissions and agencies, commissions, and similar bodies
performing similar functions.

                  “Subsidiaries” shall mean the collective reference to the
Significant Subsidiaries and all other direct or indirect subsidiaries of the
Company.

                  “Swaps” shall mean, with respect to any Person, payment
obligations with respect to interest rate swaps, currency swaps and similar
obligations obligating such Person to make payments, whether periodically or
upon the happening of a contingency.

                  “Tax” shall mean any tax, assessment or other governmental
charge imposed by any federal, state, provincial, local government or other
political subdivision or agency thereof, including any income, alternative
minimum, accumulated earnings, personal holding company, franchise, capital
stock, profits, windfall profits, gross receipts, sales, use, value added,
transfer, registration, stamp, premium, excise, customs duties, severance, real
property, personal property, ad valorem, occupancy, license, occupation,
employment, payroll, social security, disability, unemployment, workers’
compensation, withholding, estimated or other similar tax, assessment or other
governmental charge, including penalties, interest and additions thereto.

                  “Tax Return” shall mean any return, report or similar
statement required to be filed with respect to any Tax (including any attached
schedules), including, without limitation, any information return, claim for
refund, amended return or declaration of estimated Tax.

                  “Telmex” shall have the meaning ascribed thereto in the
preamble.

                  “Telmex Confidentiality Agreement” shall mean the letter
agreement, of even date herewith, between Telmex and the Company, regarding the
disclosure of information concerning the Company.

                  “Third Party Consents” shall have the meaning ascribed thereto
in Section 2.8.

                  “Transaction Documents” shall mean this Agreement, the Amended
and Restated Certificate of Incorporation, the Bylaws, the Stockholders
Agreement, the Registration Rights Agreement, the Bankruptcy Plan, if
applicable, and all other contracts, agreements, schedules, certificates and
other documents being delivered pursuant to or in connection with this
Agreement.

                  “Transaction Fees” shall have the meaning ascribed thereto in
Section 5.2(t).

                  “Transferring Investor” shall have the meaning ascribed
thereto in Section 8.5(b).

49

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                  “2000 Stock Purchase Agreement” shall mean the Stock Purchase
Agreement, dated as of June 14, 2000, by and between Equity VI, MBO VII, FL
Fund, and Nextlink.

                  “2000 10-K” shall have the meaning ascribed thereto in
Section 2.1(b).

                  “2001 Bonus Plan” shall have the meaning ascribed thereto in
Section 4.1(b)(xi).

                  (b)  For all purposes of this Agreement, unless otherwise
expressly provided or unless the context requires otherwise:

       (i) the terms defined in this Section 8.1 and elsewhere in this Agreement
may include both the plural and singular, as the context may require;

       (ii) the words “herein”, “hereto” and “hereby”, and other words of
similar import, refer to this Agreement as a whole and not to any particular
Article, Section or other subdivision of this Agreement;

       (iii) unless otherwise specified, references to Articles, Sections,
paragraphs, clauses, subclauses, subparagraphs, Exhibits and Schedules are
references to Articles, Sections, paragraphs, clauses, subclauses,
subparagraphs, Exhibits and Schedules of this Agreement;

       (iv) the words “including” and “include” and other words of similar
import shall be deemed to be followed by the phrase “without limitation”;

       (v) any reference herein to a statute, rule or regulation of any
governmental entity (or any provision thereof) shall include such statute, rule
or regulation (or provision thereof), including any successor thereto, as it may
be amended from time to time; and

       (vi) whenever the context may require, any pronouns used herein shall
include the corresponding masculine, feminine or neuter forms, and the singular
form of names and pronouns shall include the plural and vice versa.

                  8.2. Fees and Expenses. The Company shall pay, or cause to be
paid, to the Investors, all of their reasonable, documented, out-of-pocket costs
and expenses incurred in connection with the transactions contemplated by this
Agreement and the other Transaction Documents, including, without limitation,
all fees and expenses (a) incurred in connection with evaluating such
transactions, conducting a due diligence investigation of the Company and the
Subsidiaries, negotiating and documenting this Agreement and the other
Transaction Documents, taking all actions reasonably necessary or appropriate to
consummate such transactions (including, without limitation, the Investment and
the Restructuring Transaction) and enforcing any provision of this Agreement or
any other Transaction Document, (b) of law firms, investment banking firms,
accountants, public relations firms, experts, consultants and all other Persons
engaged by an Investor and (c) incurred in connection with any regulatory
filings, including filings under the HSR Act, the Communications Act, the
Securities Act and the Exchange Act, any foreign antitrust or competition Laws
and with the State PUCs and non-U.S. regulatory authorities (collectively
“Expenses”); provided that the Company shall have no

50

--------------------------------------------------------------------------------

 

obligation to reimburse the Investors for any Expenses pursuant to this
Section 8.2 in an amount in excess of $14,000,000 in the aggregate (the
“Investor Reimbursement Cap”), except that Expenses (including, without
limitation, legal fees) incurred by the Investors in enforcing any provision of
this Agreement or any other Transaction Document shall not be subject to the
Investor Reimbursement Cap. Subject to approval of the Bankruptcy Court, if
applicable, the Company shall pay Expenses to an Investor promptly following
receipt by the Company of documentation for any such Expenses, which such
Investor may, at its option, deliver to the Company on an “as-incurred” basis.

                  8.3. Restrictive Legends. No New Common Shares may be
transferred without registration under the Securities Act and applicable state
securities laws unless counsel to the Company shall advise the Company that such
transfer may be effected without such registration. Each certificate
representing any of the foregoing shall bear legends in substantially the
following form:

  THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933 OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE
SOLD OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS OR AN APPLICABLE
EXEMPTION TO THE REGISTRATION REQUIREMENTS OF SUCH ACT OR SUCH LAWS.

                  8.4. Further Assurances. At any time or from time to time
after the Closing, the Company, on the one hand, and each Investor, on the other
hand, agree to cooperate with each other, and at the request of the other party,
to execute and deliver any further instruments or documents and to take all such
further action as the other party may reasonably request in order to evidence or
effectuate the consummation of the transactions contemplated hereby or by the
other Transaction Documents and to otherwise carry out the intent of the parties
hereunder or thereunder.

                  8.5. Successors and Assigns. (a) This Agreement shall bind and
inure to the benefit of the Company and each Investor and their respective
successors, permitted assigns, heirs and personal representatives, provided that
the Company may not assign its rights or obligations under this Agreement to any
Person without the prior written consent of each Investor, and provided,
further, that neither Investor may assign its rights or obligations under this
Agreement to any Person without the prior written consent of the Company, which
consent shall not be unreasonably withheld or delayed; provided, further, that
notwithstanding the foregoing, either Investor may assign its rights and
obligations hereunder to one of its Affiliates; provided, that no such
assignment to an Affiliate shall release the party making such assignment from
any of its obligations under this Agreement. For the purpose of clarity, the
Company may withhold consent to any transfer by either Investor to any Person
(including without limitation, an Affiliate of such Investor), if such
assignment would reasonably be expected to result in the Company incurring a
significant delay in obtaining the Regulatory Approvals.

51

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                  (b)  Notwithstanding anything to the contrary contained in
Section 8.5(a) or elsewhere in this Agreement, if (i) one Investor (but not both
Investors) terminates this Agreement pursuant to Section 6.1(b), 6.1(c), 6.1(d),
6.1(e), 6.1(i) or 6.1(n) or (ii) the Company proposes to terminate this
Agreement pursuant to Section 6.1(l) as a result of a breach of a
representation, warranty, covenant or other agreement made by one Investor in
this Agreement, the non-terminating Investor in the case of clause (i) above and
the non-breaching Investor in the case of clause (ii) above (such
non-terminating Investor or such non-breaching Investor, the “Assuming
Investor”) shall have the right, in its sole discretion, without the consent of
the terminating Investor in the case of clause (i) above or the breaching
Investor in the case of clause (ii) above (such terminating Investor or such
breaching Investor, the “Transferring Investor”) or, in the case of clauses
(i) and (ii) above, the Company, to assume the rights and obligations of the
Transferring Investor under this Agreement and the other Transaction Documents
to which it is a party and, except as expressly provided in Section 6.1(j), the
Company shall have no right to terminate this Agreement or any other Transaction
Document solely as a result thereof; provided, however, that an Assuming
Investor shall have no obligation or liability to the Company or any other
Person for any breach by the Transferring Investor of any representation,
warranty, covenant or agreement made by such Transferring Investor pursuant to
this Agreement or any other Transaction Document; and provided further that the
Company shall have no right to terminate this Agreement as a result of any
breach by the Assuming Investor of any representation, warranty, covenant or
agreement made by such Assuming Investor pursuant to this Agreement or any other
Transaction Document which breach arises solely as a result of the termination
of this Agreement by the Transferring Investor.

                  8.6. Entire Agreement. This Agreement and the other
Transaction Documents and paragraph 4 of the Letter Agreement, dated
November 21, 2001, between Telmex and Forstmann Little & Co. contain the entire
agreement among the parties with respect to the subject matter hereof and
supersede all prior and contemporaneous arrangements or understandings with
respect thereto; provided, that the Forstmann Little Confidentiality Agreement
and the Telmex Confidentiality Agreement will remain in full force and effect in
accordance with their terms.

                  8.7. Notices. All notices, requests, consents and other
communications hereunder to any party shall be deemed to be sufficient if
contained in a written instrument delivered in person or sent by telecopy,
nationally recognized overnight courier or first class registered or certified
mail, return receipt requested, postage prepaid, addressed to such party at the
address set forth below or such other address as may hereafter be designated in
writing by such party to the other parties:

      (i)   if to the Company, to:       XO Communications, Inc.     11111
Sunset Hills Road     Reston, VA 20190     Attn: Gary D. Begeman, Esq.      
with a copy to:

52

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          Willkie Farr & Gallagher     787 Seventh Avenue     New York, NY 10019
    Telecopy: (212) 728-8111     Attn: Bruce R. Kraus, Esq.   (ii)   if to
Forstmann Little, to:       c/o Forstmann Little & Co.     767 Fifth Avenue    
New York, NY 10153     Attention: Sandra J. Horbach       with a copy to:      
Fried, Frank, Harris, Shriver & Jacobson     One New York Plaza     New York, NY
10004     Telecopy: (212) 859-4000     Attention: Stephen Fraidin, Esq.   (iii)
  if to Telmex, to:       Teléfonos de México, S.A. de C.V.     Parque Via 190,
Piso 10     Colonia Cuauhtémoc     06599 México, D.F.     Attention: Lic. Javier
Mondragon Alarcon       with a copy to:       Latham & Watkins     885 Third
Avenue     Suite 1000     New York, NY 10022-4802     Telecopy: (212) 751-4864  
  Attention: Charles M. Nathan, Esq.

                  All such notices, requests, consents and other communications
shall be deemed to have been given or made if and when delivered personally or
by overnight courier to the parties at the above addresses or sent by electronic
transmission, with confirmation received, to the telecopy numbers specified
above (or at such other address or telecopy number for a party as shall be
specified by like notice). Any notice delivered by any party hereto to any other
party hereto shall also be delivered to each other party hereto simultaneously
with delivery to the first party receiving such notice.

53

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                  8.8. Amendments. The terms and provisions of this Agreement
may be modified or amended, or any of the provisions hereof waived, temporarily
or permanently, in a writing executed and delivered by the Company and each
Investor. No waiver of any of the provisions of this Agreement shall be deemed
to or shall constitute a waiver of any other provision hereof (whether or not
similar). No delay on the part of any party in exercising any right, power or
privilege hereunder shall operate as a waiver thereof.

                  8.9. Counterparts. This Agreement may be executed in any
number of counterparts, and each such counterpart hereof shall be deemed to be
an original instrument, but all such counterparts together shall constitute but
one agreement.

                  8.10. Headings. The headings of the sections of this Agreement
have been inserted for convenience of reference only and shall not be deemed to
be a part of this Agreement.

                  8.11. Governing Law. THIS 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.

                  8.12. Submission to Jurisdiction. Each of the parties hereto
hereby irrevocably and unconditionally consents to submit to the exclusive
jurisdiction of the courts of the State of Delaware and of the United States of
America, in each case located in New Castle County, for any Litigation arising
out of or relating to this Agreement or the other Transaction Documents and the
transactions contemplated hereby and thereby (and agrees not to commence any
Litigation relating hereto or thereto except in such courts), and further agrees
that service of any process, summons, notice or document by U.S. registered mail
to its respective address set forth in this Agreement shall be effective service
of process for any Litigation brought against it in any such court. Each of the
parties hereto hereby irrevocably and unconditionally waives any objection to
the laying of venue of any litigation arising out of this Agreement or the
transactions contemplated hereby in the courts of the State of Delaware or the
United States of America, in each case located in the New Castle County, hereby
further irrevocably and unconditionally waives and agrees not to plead or claim
in any such court that any such litigation brought in any such court has been
brought in an inconvenient forum.

                  8.13. Waiver Of Jury Trial. THE COMPANY AND THE INVESTORS
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 AGREEMENT OR THE OTHER TRANSACTION DOCUMENTS.

                  8.14. Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
adverse to any party. Upon such determination that any term or other provision
is invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to

54

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modify this Agreement so as to effect the original intent of the parties as
closely as possible in an acceptable manner to the end that the transactions
contemplated hereby are fulfilled to the fullest extent possible.

55

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                  IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first above written.

      Investors   FORSTMANN LITTLE & CO. EQUITY PARTNERSHIP VII, L.P.   By:  
FLC XXXII Partnership, L.P.     its general partner   By:   /s/ Sandra J.
Horbach     Name: Sandra J. Horbach     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/
Sandra J. Horbach     Name: Sandra J. Horbach     Title: General Partner

TELÉFONOS DE MÉXICO, S.A. DE C.V.

      By:   /s/ Francisco Javier Mondragon     Name: Francisco Javier Mondragon
    Title: General Counsel

56

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XO COMMUNICATIONS, INC.                           

      By:   /s/ Daniel F. Akerson     Name: Daniel F. Akerson     Title:
Chairman and Chief Executive Officer

57

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Exhibit A
The New Capitalization

     Upon Closing, the complete capitalization of the Company, after giving
effect to (i) the Restructuring, (ii) the issuance of the Management Shares and
(iii) the other transactions contemplated by the Stock Purchase Agreement of
which this Exhibit is a part and to which it is attached, but excluding any
options issued under the New Employee Stock Option Plan or any shares of Class A
Common Stock issued or issueable upon exercise of such options, shall be as
follows:

         

--------------------------------------------------------------------------------

    Amount   Ownership of the Company1  

--------------------------------------------------------------------------------

Unrestricted Cash   If the Closing occurs at any time during a period specified
below, the Company’s unrestricted cash upon Closing shall not be less than the
amount set forth opposite such period:2   —

      Period   Unrestricted Cash   From the date hereof
through and including
March 31, 2002   $486 million   From April 1, 2002
through and including
June 30, 2002   $335 million   From July 1, 2002
through and including
September 30, 2002   $192 million   From October 1, 2002
through and including
the Closing   $70 million

         

--------------------------------------------------------------------------------

Aggregate Indebtedness3   Not to exceed $1.034 billion   —  

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

      1   Without giving effect to New Employee Stock Option Plan.   2   The
amounts set forth below are exclusive of any and all Transaction Fees payable
during such period, provided that in no event shall the total aggregate amount
of all Transaction Fees exceed the amount set forth in Section 5.2(t)   3   For
purposes of this Exhibit A, “Indebtedness” means all indebtedness of the Company
and its subsidiaries for borrowed money and all liabilities appearing on the
Company’s balance sheet in accordance with GAAP in respect of Capital Leases.
“Indebtedness” does not include intercompany debt or accrued interest.

A-1

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--------------------------------------------------------------------------------

Forstmann Little’s New Equity
(79,999,998 shares of Class A
Common Stock and two shares of
Class D Common Stock)   $400 million     40.00 %  

--------------------------------------------------------------------------------

Telmex’s New Equity (80,000,000
shares of Class C Common Stock)   $400 million     40.00 %  

--------------------------------------------------------------------------------

Management Shares (up to 4,000,000
shares of Class E
Common Stock)4   approximately $7.0 million5     2.00%6    

--------------------------------------------------------------------------------

Other Equity Holders (up to
36,000,000 shares of Class A
Common Stock)   $180 million7     18.00 %  

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

      4   See generally Exhibit G for the rights and preferences of the Class E
Common Stock.   5   This figure is subject to change within the range set forth
on Exhibit G. Any change to this figure may affect the percentage of the
outstanding Common Stock represented by the Management Shares and the percentage
of the outstanding Common Stock acquired by Forstmann Little and Telmex in the
Investment but shall not effect the percentage of the outstanding Common Stock
allocable to the other equity holders as set forth above.   6   See footnote no.
5 above.   7   Implied valuation.

A-2

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Exhibit B

STOCKHOLDERS AGREEMENT

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.

dated as of

_____________, 2002

 

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TABLE OF CONTENTS

              Page    

--------------------------------------------------------------------------------

  ARTICLE I DEFINITIONS     1     1.1. Definitions     1   1.2. General
Interpretation     1     ARTICLE II CORPORATE GOVERNANCE     2     2.1. Board of
Directors     2   2.2. Election of Directors     2   2.3. Board Vacancies     4
  2.4. Quorum Requirements     4   2.5. Initial Directors; Certificate of
Incorporation and By-laws     4   2.6. Veto Rights     5   2.7. Committees     5
  2.8. Executive Officers     7   2.9. Directors’ Indemnification     8   2.10.
Expenses     8   2.11. Non-Voting Observer     9   2.12. Consultation Rights    
9     ARTICLE III CERTAIN COVENANTS     9     3.1. Voting     9   3.2.
Cooperation     10   3.3. Restrictions on other Agreements     10   3.4. Right
of First Refusal on Major Events     10     ARTICLE IV TRANSFER RESTRICTIONS    
12     4.1. Restrictions on Transfers of Shares     12   4.2. Transfers During
Investment Period     12   4.3. General Conditions to Transfer     12   4.4.
Termination of Transfer Restrictions     13     ARTICLE V STANDSTILL PROVISIONS
    13     5.1. Standstill Provisions     13   5.2. Exceptions to the Standstill
Provisions     14  

-i-

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              Page    

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  ARTICLE VI [INTENTIONALLY OMITTED]     14     ARTICLE VII PREEMPTIVE RIGHTS  
  14     7.1. Preemptive Rights     14   7.2. Substitute Securities     16    
ARTICLE VIII TERM     17     8.1. Term     17     ARTICLE IX GENERAL     17    
9.1. Accounting; Financial Statements and Other Information     17   9.2.
Competition     18   9.3. Legend on Stock Certificates, Etc.     18   9.4.
Successors and Assigns     19   9.5. Entire Agreement     19   9.6. Notices    
19   9.7. Amendments     21   9.8. Counterparts     21   9.9. Headings     21  
9.10. Governing Law     21   9.11. Submission to Jurisdiction     21   9.12.
Waiver of Jury Trial     21   9.13. Severability     21   9.14. Third Party
Beneficiaries     22   9.15. Remedies     22  

-ii-

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STOCKHOLDERS AGREEMENT

     STOCKHOLDERS AGREEMENT (this “Agreement”) is made as of _____, 2002, by and
among 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 collectively with Equity VII and their Permitted Transferees,
“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]
(together with its Subsidiaries and its Permitted Transferees, “Telmex” and
Telmex and Forstmann Little sometimes being hereinafter collectively referred to
as the “Investors” and individually as an “Investor”) and XO Communications,
Inc., a Delaware corporation (“XO” or the “Company”).

W I T N E S S E T H:

     WHEREAS, the Company and the Investors are parties to that certain Stock
Purchase Agreement, dated as of January 15, 2002 (the “Stock Purchase
Agreement”) pursuant to which Forstmann Little is purchasing _______ shares of
Class A Common Stock, par value $0.01 per share, of the Company (“Class A Common
Stock”), and two shares of Class D Common Stock, par value $0.01 per share, of
the Company (“Class D Common Stock”) and Telmex is purchasing _______ shares of
Class C Common Stock, par value $0.01 per share, of the Company (“Class C Common
Stock”, together with the Class A Common Stock and Class D Common Stock
sometimes being hereinafter collectively referred to as “Common Stock”);

     WHEREAS, the Stock Purchase Agreement contemplates that the parties hereto
will enter into this Agreement and the parties hereto deem it to be in their
best interests to establish and set forth their agreement with respect to
certain rights and obligations associated with ownership of Common Stock;

     WHEREAS, the execution and delivery of this Agreement is a condition to the
closing of the Stock Purchase Agreement.

     NOW, THEREFORE, in consideration of the promises and the mutual covenants
contained herein, the parties hereto hereby agree as follows:

ARTICLE I

DEFINITIONS

     1.1. Definitions. Capitalized terms used in this Agreement shall have the
meanings set forth in Annex A.

     1.2. General Interpretation. For all purposes of this Agreement, unless
otherwise expressly provided or unless the context requires otherwise:

 

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     (a)  the terms defined in Annex A to this Agreement may include both the
plural and singular, as the context may require;

     (b)  the words “herein”, “hereto” and “hereby”, and other words of similar
import, refer to this Agreement as a whole and not to any particular Article,
Section or other subdivision of this Agreement;

     (c)  unless otherwise specified, references to Articles, Sections, clauses,
subclauses, subparagraphs, Annexes and Schedules are references to Articles,
Sections, clauses, subclauses, subparagraphs, Annexes and Schedules of this
Agreement;

     (d)  the words “including” and “include” and other words of similar import
shall be deemed to be followed by the phrase “without limitation”;

     (e)  any reference herein to a statute, rule or regulation of any
governmental entity (or any provision thereof) shall include such statute, rule
or regulation (or provision thereof), including any successor thereto, as it may
be amended from time to time; and

     (f)  whenever the context may require, any pronouns used herein shall
include the corresponding masculine, feminine or neuter forms, and the singular
form of names and pronouns shall include the plural and vice versa.

ARTICLE II

CORPORATE GOVERNANCE

     2.1. Board of Directors. The total number of authorized directors
constituting the Board of Directors of the Company from time to time (each, a
“Director” and collectively, the “Board of Directors” or the “Board”) shall be
determined in the manner specified by the By-laws. Each Investor shall take, or
cause to be taken, and shall use its reasonable best efforts to cause the
Company to take, or cause to be taken, all action necessary to cause the By-laws
to provide that, prior to the Board Representation Date, the Board of Directors
shall be fixed at twelve and, at and after the Board Representation Date, the
Board of Directors may be expanded to include a greater number of Directors as
set forth in Section 2.2(d). The initial Directors shall be those individuals
determined pursuant to Section 2.5. Thereafter, the Directors shall be elected
annually in accordance with the Certificate of Incorporation, By-laws and this
Article II.

     2.2. Election of Directors. (a) Prior to the Board Representation Date, so
long as Forstmann Little Beneficially Owns shares of Common Stock representing
at least 10% of the outstanding shares of Common Stock, Forstmann Little shall
have the right to appoint or nominate to the Board of Directors such number of
Directors, equal to the sum of (A) (i) a fraction in which the numerator is the
total number of outstanding shares of Common Stock Beneficially Owned by
Forstmann Little, and the denominator is the total number of shares of Common
Stock outstanding, multiplied by (ii) the total number of Directors on the Board
of Directors, rounded up to the nearest whole number, plus (B) (i) a fraction in
which the numerator is the total number of outstanding shares of Common Stock
Beneficially Owned by Telmex, and the denominator is the total number of shares
of Common Stock outstanding multiplied by (ii)

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the total number of Directors on the Board of Directors, rounded up to the
nearest whole number; provided, however, that Forstmann Little shall, in
connection with such appointment or nomination, include among its appointees or
nominees, if so requested by Telmex by written notification, the Telmex
Independent Designees. At the Board Representation Date, Telmex shall cause the
Telmex Independent Designees nominated pursuant to this Section 2.2(a) to resign
from the Board and such Directors shall thereafter be replaced in accordance
with Section 2.2(b) or Section 2.3, as applicable. The Directors nominated or
appointed by Forstmann Little pursuant to Article II (other than Telmex
Independent Designees) are referred to herein individually as a “Forstmann
Little Designee” or collectively as the “Forstmann Little Designees.” The
Directors appointed or nominated by Telmex pursuant to Article II (including the
Telmex Independent Designees) are referred to herein individually as a “Telmex
Designee” or collectively as the “Telmex Designees.” The Forstmann Little
Designees and the Telmex Designees are sometime referred to herein individually
as an “Investor Designee” or collectively as the “Investor Designees.”

     (b)  At and after the Board Representation Date, so long as an Investor
Beneficially Owns shares of Common Stock representing at least 10% of the
outstanding shares of Common Stock, such Investor shall have the right to
appoint or nominate to the Board of Directors such number of Directors, rounded
up to the next whole number, equal to the product of (i) a fraction in which the
numerator is the total number of outstanding shares of Common Stock Beneficially
Owned by such Investor, and the denominator is the total number of shares of
Common Stock outstanding, multiplied by (ii) the total number of Directors on
the Board of Directors.

     (c)  At each annual meeting of stockholders held at which the term of
office of one or more Directors expires, the Company shall nominate the
Forstmann Little Designees and the Telmex Designees to serve as Directors and
shall include such Directors in the slate of nominees recommended by the Board
to stockholders for election as Directors; provided that, if any such person
declines or is unable to accept the nomination, and if Forstmann Little or
Telmex, as the case may be, determines to designate another person, the Company
shall nominate and include in such slate of nominees such other person
designated by Forstmann Little or Telmex, as the case may be.

     (d)  Each Investor shall take, or cause to be taken, and shall use its
reasonable best efforts to cause the Company to take, or cause to be taken, all
action necessary to cause the Board to include, in addition to the Investor
Designees, the Chief Executive Officer of the Company and such number of other
independent Directors (the “Independent Directors”) as shall be required by any
stock exchange or quotation system on which the Common Stock is quoted or
listed. The initial Independent Directors shall be approved by each of the
Investors.

     (e)  At each such time after the Closing Date as the percentage Beneficial
Ownership in the Company of an Investor is increased or decreased, the number of
Investor Designees to be designated by such Investor shall be recalculated in
accordance with the procedure set forth in Section 2.2(a). Any change resulting
from the application of this Section 2.2(e) shall be effected on the earlier to
occur of (x) the first meeting of stockholders of the Company following the
determination of such change, and (y) the first meeting of the Board of
Directors following the determination of such change.

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     2.3. Board Vacancies. (a) Each Investor Designee shall hold office until
his or her death, resignation or removal or until his or her successor shall
have been duly elected and qualified. If any Forstmann Little Designee shall
cease to serve as a Director of the Company (and any committee thereof) for any
reason, each Investor shall take, or cause to be taken, and shall use its
reasonable best efforts to cause the Company to take, or cause to be taken, such
action as is necessary so that the vacancy resulting thereby can be filled by
another person designated by Forstmann Little in accordance with this Agreement.
If any Telmex Designee shall cease to serve as a Director of the Company (and
any committee thereof) for any reason, each Investor shall take, or cause to be
taken, and shall use its reasonable best efforts to cause the Company to take,
or cause to be taken, such action as is necessary so that the vacancy resulting
thereby can be filled by another person designated by Telmex in accordance with
the terms of this Agreement. Any Director appointed (or nominated and elected)
to replace another Director shall serve for the remainder of the term of the
Director being replaced, subject to earlier death, resignation or removal or
until his successor shall have been duly elected and qualified. In the event
that at any time during the term of this Agreement there exist vacancies on the
Board due to the death, resignation or removal of an Investor Designee, each of
the Investors agrees to use its best efforts to designate successors to fill any
such vacancies as promptly as practicable, but in no event later than the 30th
day following such vacancy (the period from the first date of such vacancy until
the earlier to occur of the filling of such vacancy or the 30th day thereafter,
the “Vacancy Period”); provided, however, that if such vacancy is not filled
during such 30-day period, the Investor that has the right to fill such vacancy
may do so at any time following such 30-day period. During the Vacancy Period,
no action (except for such Board actions as are required to fill such vacancy in
accordance with the terms of this Agreement) may be taken by the Board until
such vacancy is filled or this requirement is waived by the Investor that has
the right to fill such vacancy. Each Independent Director shall hold office
until his or her death, resignation or removal or until his or her successor
shall have been duly elected and qualified. If any Independent Director shall
cease to serve as a Director of the Company (and any committee thereof) for any
reason, the vacancy resulting thereby shall be filled by another person selected
by the Board of Directors in accordance with the By-laws and approved by each of
the Investors.

     (b)  No Forstmann Little Designee may be removed from office except by
Forstmann Little and no Telmex Designee may be removed from office except by
Telmex. Forstmann Little shall have the right to remove any Forstmann Little
Designee, and Telmex shall have the right to remove any Telmex Designee, in each
case, with or without cause, at any time.

     2.4. Quorum Requirements. During such time as Forstmann Little Beneficially
Owns shares of Common Stock representing at least 10% of the outstanding shares
of Common Stock, the Board of Directors may not take any action unless a quorum
consisting of at least one Forstmann Little Designee is present and during such
time as Telmex Beneficially Owns shares of Common Stock representing at least
10% of the outstanding shares of Common Stock, the Board of Directors may not
take any action unless a quorum consisting of at least one Telmex Designee
(which, prior to the Board Representation Date, shall be a Telmex Independent
Designee, to the extent a Telmex Independent Designee has been designated
pursuant to Section 2.2(a)) is present.

     2.5. Initial Directors; Certificate of Incorporation and By-laws. (a) The
initial Directors of the Company shall consist of those individuals selected by
the mutual written

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agreement of the Investors and the Company (consistent with the procedures set
forth in Section 2.2) prior to the Closing Date. Each Investor, by its execution
and delivery of this Agreement, shall be deemed to have ratified and approved
the appointment of the initial Directors. Subject to Section 2.2(e), each of the
initial Directors shall serve in such office until the first annual stockholders
meeting (or until his earlier death, resignation or removal or until his
successor shall have been duly elected and qualified).

     (b)  On the Closing Date, the Certificate of Incorporation and By-laws of
the Company shall be substantially in the forms appended as Annex B and C
hereto.

     2.6. Veto Rights. So long as (i) an Investor Beneficially Owns shares of
Class A Common Stock representing at least 20% of the outstanding shares of
Common Stock and (ii) no Major Event or Acquisition has occurred, the approval
of at least one Director nominated or appointed by such Investor shall be
required before the Company may take any of the following actions:

     (i)  amend, alter or repeal the Certificate of Incorporation or By-Laws, or
any part thereof, or amend, alter or repeal any constituent instruments of any
Company Subsidiary, or any part thereof;

     (ii)  enter into any transaction with any Affiliate (other than a wholly
owned Subsidiary of the Company), officer, director or stockholder of the
Company, except for compensation and benefits paid to Directors and Officers in
the ordinary course of business and other than those entered into concurrently
with or prior to the Closing Date;

     (iii)  file any voluntary petition for bankruptcy or for receivership
(including a voluntary petition for the liquidation, dissolution or winding up
of the Company or any of its Subsidiaries other than a liquidation of a
Subsidiary in which all the assets of the liquidating Subsidiary are distributed
to the Company or another Subsidiary of the Company) or make any assignment for
the benefit of creditors;

     (iv)  adopt any stockholder rights plan or other anti-takeover provisions
in any document or instrument; or

     (v)  issue or agree to issue any Preferred Stock.

     2.7. Committees. (a) Subject to Section 2.7(b), the federal securities
laws, and the rules and regulations of the SEC and any stock exchange or
quotation system on which the Common Stock is quoted or listed, so long as an
Investor Beneficially Owns shares of Common Stock representing at least 10% of
the outstanding shares of Common Stock, each Investor shall take, or cause to be
taken, and shall use its reasonable best efforts to cause the Company to take,
or cause to be taken, all action necessary to provide that at least one of the
Director designees of such Investor (which, as to Telmex, prior to the Board
Representation Date, shall be a Telmex Independent Designee, to the extent that
a Telmex Independent Designee has been designated pursuant to Section 2.2(a))
shall be entitled to sit on each committee of the Board and each Investor shall
take, or cause to be taken, and shall use its reasonable best efforts to cause
the Company to take, or cause to be taken, all action necessary to cause such
designee to be

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appointed to each of the committees of the Board as may be requested at any time
or from time to time by Forstmann Little or Telmex, as the case may be.

     (b)  Each Investor shall take, or cause to be taken, and shall use its
reasonable best efforts to cause the Company to take, or cause to be taken, all
action necessary to provide that the Board of Directors shall annually, during
the term of this Agreement, appoint an Executive Committee which shall be
comprised of five members, including the Chief Executive Officer of the Company.
Prior to the Board Representation Date, Forstmann Little shall have the right to
have (i) three of its Director designees on the Executive Committee so long as
Forstmann Little Beneficially Owns shares of Common Stock representing 15% or
more of the outstanding shares of Common Stock or (ii) two of its Director
designees on the Executive Committee so long as Forstmann Little Beneficially
Owns shares of Common Stock representing at least 10% of the outstanding shares
of Common Stock but less than 15% of the outstanding shares of Common Stock.
Prior to the Board Representation Date, Telmex shall have the right to have one
Telmex Independent Designee (to the extent a Telmex Independent Designee has
been designated pursuant to Section 2.2(a)) on the Executive Committee so long
as Telmex Beneficially Owns shares of Common Stock representing at least 10% of
the outstanding shares of Common Stock. After the Board Representation Date,
each Investor shall have the right to have (i) two of its Director designees on
the Executive Committee so long as such Investor Beneficially Owns shares of
Common Stock representing 15% or more of the outstanding shares of Common Stock
or (ii) one of its Director designees on the Executive Committee so long as such
Investor Beneficially Owns shares of Common Stock representing at least 10% of
the outstanding shares of Common Stock but less than 15% of the outstanding
shares of Common Stock. The initial Executive Committee shall consist of the
Chief Executive Officer of the Company, three Forstmann Little Designees and one
Telmex Independent Designee.

     (c)  The Company shall not, and each Investor shall cause the Company to
not, directly or indirectly, and shall not permit any of the Company’s
Subsidiaries to, directly or indirectly, take any of the following actions
(except to the extent any such action is specifically authorized under the
Transaction Documents) without the approval of (x) prior to the Board
Representation Date, at least three-fifths of the members of the Executive
Committee, or (y) at and after the Board Representation Date, at least
two-thirds of the members of the Executive Committee:

     (i)  adopt a new Business Plan, materially modify the Business Plan or take
any action that would constitute a material deviation from the Business Plan;

     (ii)  approve or recommend a Major Event;

     (iii)  acquire, by purchase, merger or otherwise, in one transaction or a
series of related transactions, any equity or other ownership interest in, or
assets of, any Person in exchange for consideration with a Fair Market Value
greater than $100 million;

     (iv)  authorize for issuance or issue any equity securities or Equity
Derivative Securities in one transaction or a series of related transactions
with a Fair Market Value at the time of issuance in excess of $100 million
(excluding any Permitted Benefit Plan Issuance);

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     (v)  purchase, redeem, prepay, acquire or retire for value any shares of
its capital stock or securities exercisable for or convertible into shares of
its capital stock other than as required under the terms of such capital stock
or securities;

     (vi)  declare, incur any liability to declare, or pay any dividends, or
make any distributions in respect of, any shares of its capital stock other than
as required under the terms of such capital stock;

     (vii)  redeem, retire, defease, offer to purchase or change any material
term, condition or covenant in respect of outstanding long-term Indebtedness
other than as required under the terms of such Indebtedness;

     (viii)  incur Indebtedness in one transaction or a series of related
transactions in excess of $100 million in aggregate principal amount (other than
intercompany Indebtedness and Indebtedness outstanding as of the Closing Date
(and borrowings pursuant to the terms thereof), and any amendment or refinancing
of such Indebtedness in a principal amount not exceeding the principal amount so
refinanced and on financial and other terms no less favorable to the Company
than such outstanding Indebtedness);

     (ix)  make any material change in its accounting principles or practices
(other than as required by GAAP or recommended by the Company’s outside
auditors), or remove the Company’s outside auditors or appoint new auditors; or

     (x)  appoint, or terminate or modify the terms of the employment of, any
member of the Company’s senior management as set forth on Annex E, and any of
their successors or replacements, and any other persons of a similar level of
authority and responsibility in the organizational structure who are appointed
after the date hereof.

Notwithstanding the foregoing, if any of the matters referred to in this
Section 2.7(c) are proposed to but not approved by the requisite three-fifths
majority (or, at and after the Board Representation Date, the requisite
two-thirds majority) of the Executive Committee, then the Investor Designees on
the Executive Committee shall attempt in good faith to resolve any objections
any such Investor Designee may have to the proposal and, if the Investor
Designees on the Executive Committee are unable to resolve in good faith the
disagreement within 30 days after the Executive Committee meeting at which the
matter was not approved, any member of the Executive Committee shall be entitled
to present such issue to the Board of Directors where the issue may be adopted
or rejected by a majority vote of the Board of Directors.

     (d)  Each Investor shall take, or cause to be taken, and shall use its
reasonable best efforts to cause the Company to take, or cause to be taken, all
action necessary to cause the Board to annually, during the term of this
Agreement, appoint an Audit and a Compensation Committee.

     2.8. Executive Officers. Each Investor shall take, or cause to be taken,
and shall use its reasonable best efforts to cause the Company to take, or cause
to be taken, all action necessary to cause the Board of Directors to appoint a
Chief Executive Officer and such other officers of the Company (“Officers”) as
it may determine from time to time pursuant to the By-laws. Such Officers shall
serve subject to the pleasure of the Board of Directors.

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     2.9. Directors’ Indemnification.

     (a)  For a period of at least six years after the Closing Date, the Company
shall obtain and cause to be maintained in effect, with financially sound
insurers, either (i) the current policy of directors’ and officers’ liability
insurance maintained by the Company (provided that the Company may substitute
therefor policies of at least the same coverage and amounts containing terms and
conditions which are no less advantageous in any material respect to the insured
parties thereunder) with respect to claims arising from facts or events that
occurred at or before the Closing Date (including consummation of the the
Investment and the Restructuring), or (ii) a run-off (i.e., “tail”) policy or
endorsement with respect to the current policy of directors’ and officers’
liability insurance covering claims asserted within six years after the Closing
Date arising from facts or events that occurred at or before the Closing Date
(including consummation of the Investment and the Restrucutring); and such
policies or endorsements shall name as insureds thereunder all present and
former directors and officers of the Company or any of its Subsidiaries.

     (b)  The Company shall obtain and cause to be maintained in effect, with
financially sound insurers, a policy of directors’ and officers’ liability
insurance covering all present and former directors and officers of the Company
or any of its Subsidiaries and, to the extent available, the Telmex Observers
(and their respective successors) in an amount and upon such terms as are
reasonably acceptable to the Investors. The Company shall enter into
indemnification agreements in customary form with each member of the Board of
Directors and each Telmex Observer.

     (c)  The Certificate of Incorporation, By-laws and other organizational
documents of the Company and each of its Subsidiaries shall at all times, to the
fullest extent permitted by law, provide for indemnification of, advancement of
expenses to, and limitation of the personal liability of, present and former
directors and officers of the Company, and the present and former members of the
boards of directors or other similar managing bodies of each of the Company’s
Subsidiaries and such other persons, if any, who, pursuant to a provision of
such Certificate of Incorporation, By-laws or other organizational documents,
exercise or perform any of the powers or duties otherwise conferred or imposed
upon members of the Board or the boards of directors or other similar managing
bodies of each of the Company’s Subsidiaries. Such provisions may not be
amended, repealed or otherwise modified in any manner adverse to any present or
former directors and officers of the Company or any present or former member of
the boards of directors or other similar managing bodies of any of the Company’s
Subsidiaries, until at least six years following the termination of this
Agreement.

     (d)  Each member of the Board of Directors, each officer of the Company and
each Telmex Observer is intended to be a third-party beneficiary of the
obligations of the Company pursuant to this Section 2.9, and the obligations of
the Company pursuant to this Section 2.9 shall be enforceable by the members of
the Board of Directors, the officers of the Company or the Telmex Observers, as
applicable.

     2.10. Expenses. The Company shall pay the reasonable out-of-pocket expenses
incurred by each of the members of the Board of Directors and the Telmex
Observers in connection with performing his or her duties, including without
limitation the reasonable out-of-

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pocket expenses incurred by such person attending meetings of the Board or any
committee thereof or meetings of any board of directors or other similar
managing body (and any committee thereof) of any Subsidiary of the Company.

     2.11. Non-Voting Observer. Prior to the Board Representation Date and so
long as Telmex Beneficially Owns shares of Common Stock representing 10% or more
of the outstanding shares of Common Stock, Telmex shall have the right to
designate up to two non-voting observers to the Board of Directors (each a
“Telmex Observer” and, collectively, the “Telmex Observers”). The Telmex
Observers shall have the same access to information concerning the business and
operations of the Company and at the same time as the Directors of the Company,
shall be entitled to receive notice of, and to be present at, all regular and
special meetings of the Board of Directors, and any meeting of a committee
thereof, and shall be entitled to participate in discussions and consult with,
and make proposals and furnish advice to, the Board of Directors, and the
various committees thereof, but shall not have any right to vote at such
meetings. The Telmex Observers shall not be considered a “Director” of the
Company for any purposes hereunder, under the By-laws or otherwise.

     2.12. Consultation Rights. Prior to the Board Representation Date,
Forstmann Little shall consult with representatives of Telmex at least monthly
at mutually agreeable times regarding the business, finances and prospects of
the Company, including, without limitation, the matters considered by the
Executive Committee pursuant to Section 2.7(c) and the matters considered by the
Investors pursuant to Section 2.6; provided, however, that the information
provided to Telmex in connection with such consultations shall not include
information that Forstmann Little’s antitrust counsel has determined in their
sole discretion should not be the subject of such consultations because
providing such information to Telmex could reasonably be expected to constitute
a violation of applicable antitrust laws.

ARTICLE III

CERTAIN COVENANTS

     3.1. Voting. (a) Forstmann Little shall vote all shares of Common Stock
over which it exercises voting power in favor of the election of the Telmex
Designees and Telmex shall vote all shares of Common Stock over which it
exercises voting power in favor of the election of the Forstmann Little
Designees, in each case to the extent they have been nominated consistently with
this Agreement. Each Investor shall take such further action as shall be
necessary to comply with the terms of this Agreement and to cause the Investor
Designees to be elected as Directors in accordance with this Agreement
(including, to the extent consistent with this Agreement and applicable law,
causing their respective designees on the Board to nominate, and recommend to
the stockholders of the Company the election of the Investor Designees and
opposing, and causing their respective designees on the Board to oppose, any
proposal to remove an Investor Designee at each meeting of the stockholders of
the Company at which the election or removal of members of the Board is on the
agenda).

     (b)  Each Investor shall vote all shares of Common Stock over which it may
exercise voting power, and each Investor and the Company shall take all other
actions necessary and appropriate, to ensure that the Certificate of
Incorporation and By-laws do not at any time

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conflict with the provisions of this Agreement and shall not vote to approve (or
consent to the approval of) any amendment to the Certificate of Incorporation
and By-laws which would be inconsistent with this Agreement.

     3.2. Cooperation. (a) Each Investor shall vote all shares of Common Stock
over which it exercises voting power and shall take all other necessary or
desirable actions within its control (including, without limitation, attending
all meetings in person or by proxy for purposes of obtaining a quorum and
executing all written consents in lieu of meetings, as applicable), and the
Company shall take, and each Investor shall use its reasonable best efforts to
cause the Company to take, all necessary and desirable actions within its
control (including, without limitation, calling special Board and stockholder
meetings), to effectuate the provisions of Article II.

     (b)  Each Investor agrees that it shall not commence any claim, action,
suit or proceeding against the Company under any of the Transaction Documents
without providing the other Investors with prior written notice thereof.

     3.3. Restrictions on other Agreements. No Investor shall grant any proxy or
enter into or agree to be bound by any voting trust with respect to the Common
Stock other than those granted or established by this Agreement, nor shall any
Investor enter into any stockholder agreement or arrangements of any kind with
any Person with respect to the Common Stock, on terms that are inconsistent with
the provisions of this Agreement, or that would interfere with the ability of
any Investor to comply with the provisions of this Agreement, including
agreements or arrangements with respect to the acquisition, disposition or
voting shares of Common Stock on terms that are inconsistent with the provisions
of this Agreement, or that would interfere with the ability of any Investor to
comply with the provisions of this Agreement.

     3.4. Right of First Refusal on Major Events. From and after the fourth
anniversary of the Closing Date, the Company and each of the Investors agrees,
that:

     (a)  If (x) the Company or any of its Subsidiaries, officers, directors or
employees or (y) any investment banker, financial advisor, attorney, accountants
or other representatives retained by the Company or any of its Subsidiaries (the
“Representatives”), which Representatives are acting at the direction and/or
with the knowledge of the Company or such Subsidiary, directly or indirectly
through another Person, (i) solicits, initiates or encourages (including by way
of furnishing information) the making, submission or announcement of any inquiry
about or proposal for a Major Event, or knowingly takes any other action
designed to facilitate any Major Event, (ii) participates in any discussions or
negotiations regarding, or provides any nonpublic information or data with
respect to a Major Event, or (iii) receives, directly or indirectly, any
inquiries or proposals from any Person relating to, or that the Company
reasonably believes could lead to, a Major Event (each a “Preliminary
Activity”), the Company shall promptly advise each of the Investors in writing
of any Preliminary Activity (including the specific terms of any inquiry or
proposal and the identity of the Person making such inquiry or proposal).

     (b)  The Company shall promptly and fully inform each Investor of the
status of any such Preliminary Activity, of the furnishing of information to any
Person in respect of

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Preliminary Activity, and of any negotiations or discussions relating thereto
(including any material amendments or proposed material amendments). The Company
shall promptly provide to each Investor copies of all information made available
to any Person with respect to any Preliminary Activity and will afford each
Investor the same ability to conduct due diligence as afforded to such Person.

     (c)  Promptly upon receipt by the Company or any of its Subsidiaries of a
bona fide proposal from any Person for a Major Event (a “Major Event Proposal”),
the Company shall deliver to the Investors a written notice (a “Major Event
Notice”) attaching a copy (or, in the case of an oral Major Event Proposal, a
reasonably detailed written description) of the Major Event Proposal.

     (d)  Promptly upon receipt of a Major Event Notice, the Investors shall
engage in good faith discussions regarding the desirability and timing of the
proposed Major Event and shall endeavor to agree with respect to whether to
support or reject the Major Event Proposal within 5 Business Days following the
Investors receipt of a Major Event Notice (the “Reconciliation Period”);

     (i)  If the Investors agree to support or reject the Major Event Proposal
within the Reconciliation Period, then the Major Event Proposal shall be
submitted to the Executive Committee for approval or rejection in accordance
with Section 2.7 of this Agreement.

     (ii)  If the Investors are unable to agree within the Reconciliation
Period, then the Investor which objects to approval of the Major Event Proposal
(the “Objecting Investor”) shall be entitled, for a period of five Business Days
following the Reconciliation Period (the “Solicitation Period”), to solicit,
initiate, encourage or facilitate any inquiries with respect to, or the making
of, a bona-fide proposal for an alternative Major Event (a “Competing Proposal”)
and negotiate or otherwise engage in discussions with any Person (each a
“Competing Proposal Person”) with respect to such Competing Proposal, provided
that (A) the Objecting Investor shall, subject to clause (B), be entitled to
disclose to a Competing Proposal Person the existence of the Major Event
proposal and any information or material regarding the Major Event Proposal, but
shall not, without the express written approval of the Board of Directors or the
Executive Committee, disclose to any Person (including any Competing Proposal
Person) the identity of the Person making the Major Event Proposal, and (B) each
Competing Proposal Person enters into a customary confidentiality agreement with
the Company on terms no less favorable to such Person than those contained in
any confidentiality agreement with the proponent or proponents of the Major
Event Proposal.

     (e)  Within 5 Business Days after the Solicitation Period, a meeting of the
Board of Directors shall be held at which the Board of Directors shall consider
both the Competing Proposal and the Major Event Proposal. The Board of Directors
shall adopt the Competing Proposal if the Board of Directors determines, by
majority vote, that the Competing Proposal is at least as favorable to the
Company’s stockholders in all material respects, and is as likely or more likely
to be consummated, as the Major Event Proposal. In connection with such
determination the Board of Directors shall be entitled to rely on the advice of
outside counsel and the Company’s independent financial advisors regarding the
proposals. If the Board of Directors approves the Competing Proposal, such
Competing Proposal shall be recommended by the Board

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of Directors to the stockholders of the Company. If the Board of Directors (in a
manner consistent with the provisions of this Section 3.4) approves the Major
Event Proposal, the Company may enter into a definitive agreement with respect
to, and consummate, a transaction substantially on the terms set forth in such
Major Event Proposal.

     (f)  Notwithstanding anything to the contrary in this Section 3.4, the
Company’s obligations pursuant to this Section 3.4 shall be subject to (i) all
applicable laws, including without limitation the Delaware General Corporation
Law, and (ii) the execution by each Investor of a confidentiality agreement in
form and substance reasonably satisfactory to the Company.

ARTICLE IV

TRANSFER RESTRICTIONS

     4.1. Restrictions on Transfers of Shares. Except as provided in this
Article IV or with the prior written approval of the other Investor, no Investor
may, directly or indirectly, sell, assign, transfer or otherwise dispose of, by
merger, consolidation or otherwise (including by operation of law), or pledge or
otherwise encumber, any Restricted Securities (any such transaction, a
“Transfer” and any Investor Transferring Restricted Securities, a “Transferor”)
to or in favor of any other Person (any Person to whom Restricted Securities are
Transferred, a “Transferee”), prior to the fourth anniversary of the Closing
Date (the four-year period from (and including) the Closing Date to (but
excluding) such fourth anniversary, the “Investment Period”). Notwithstanding
the foregoing, nothing contained herein shall be deemed to limit the ability of
(i) the Investors to Transfer shares of Common Stock in connection with a Major
Event approved by the Board of Directors in accordance with this Agreement, and,
if required by applicable law or the Certificate of Incorporation, by the
holders of any class of Common Stock, (ii) the limited partners in either of
Equity VII or MBO VIII to transfer, directly or indirectly, their limited
partnership interests in Equity VII or MBO VIII, as the case may be, at any time
or from time to time, or (iii) the general partners of Equity VII or MBO VIII to
transfer, directly or indirectly, at any time or from time to time, up to 20% of
the equity interests in Equity VII or MBO VIII, as the case may be.

     4.2. Transfers During Investment Period. (a) During the Investment Period,
no Restricted Securities may be Transferred, in whole or in part, unless the
Transfer is to a Permitted Transferee.

     (b)  Following any Transfer of Restricted Securities in accordance with
this Section 4.2, the restrictions provided for in Section 4.1 shall continue to
apply to the shares of Common Stock so Transferred.

     4.3. General Conditions to Transfer. Every Transfer of Restricted
Securities made during the Investment Period must comply with the following
requirements as applicable:

     (a)  such Permitted Transferee shall have executed and delivered to the
Company, as a condition precedent to the Transfer, an instrument or instruments
in form and substance reasonably satisfactory to the Company confirming that
such Permitted Transferee

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agrees to be bound by the terms of this Agreement, including an agreement that
such Permitted Transferee shall not thereafter Transfer such Restricted
Securities to any Person to whom the Transferor would not be permitted to
Transfer such Common Stock pursuant to the terms of this Agreement;

     (b)  the certificates issued to the Permitted Transferee which represent
the Restricted Securities so Transferred shall bear the legends provided in
Section 9.3;

     (c)  no registration of any securities shall be required under the
Securities Act or the Exchange Act, or any other applicable securities or “blue
sky” laws, by reason of such Transfer and the Transferor shall have delivered to
the Company an opinion of counsel, which opinion and counsel shall be reasonably
satisfactory to the Company, to such effect; and

     (d)  such Transfer shall not be in violation of applicable law and shall be
subject to receipt of all necessary regulatory approvals.

     4.4. Termination of Transfer Restrictions. Notwithstanding anything herein
to the contrary, all restrictions on Transfers of Restricted Securities
contained herein (other than those related to compliance with federal and state
securities law) shall terminate after the fourth anniversary of the Closing
Date.

ARTICLE V

STANDSTILL PROVISIONS

     5.1. Standstill Provisions. Subject to Section 5.2, and except as otherwise
expressly permitted by this Agreement (including Transfers made in compliance
with the provisions of Article IV) each Investor agrees that, so long as the
other Investor Beneficially Owns shares of Common Stock representing 20% or more
of the outstanding shares of Common Stock, it shall not, and will cause each of
its Affiliates not to, either alone or as part of a “group” (as such term is
used in Section 13d-5 (as such rule is currently in effect) of the Exchange
Act), and such Investor will not, and will cause each of its Affiliates not to,
advise, assist or encourage others to, directly or indirectly, without the prior
written consent of the other Investor:

     (a)  acquire, or offer or agree to acquire, or become the Beneficial Owner
of or obtain rights in respect of any shares of Common Stock, other equity
securities of the Company or other securities convertible or exchangeable into
equity securities of the Company;

     (b)  solicit proxies or consents or become a “participant” in a
“solicitation” (as such terms are defined or used in Regulation 14A under the
Exchange Act) of proxies or consents with respect to any voting securities of
the Company or initiate or become a participant in any stockholder proposal or
“election contest” with respect to the Company or induce others to initiate the
same, or otherwise seek to advise or influence any Person with respect to the
voting of any voting securities of the Company in connection with the election
of Directors or with respect to an amendment to the Certificate of Incorporation
or By-laws that would increase or decrease the number of Directors on the Board
of Directors;

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     (c)  form, encourage or participate in a “person” within the meaning of
Section 13(d)(3) of the Exchange Act for the purpose of taking any actions
described in this Section 5.1;

     (d)  initiate any stockholder proposals for submission to a vote of
stockholders, with respect to the Company; or

     (e)  offer, seek, or propose to enter into any merger, acquisition, tender
offer, sale transaction involving a substantial portion of the Company’s assets
or other business combination involving the Company.

     5.2. Exceptions to the Standstill Provisions. (a) Notwithstanding the
foregoing, the provisions of Section 5.1 shall not prohibit:

     (i)  the acquisition of securities of the Company pursuant to (x) Article
VII, (y) a distribution made on a pro rata basis to all holders of a class of
the Company’s capital stock, or (z) stock dividends or stock splits and similar
reclassifications;

     (ii)  any transaction by an Investor involving a Major Event approved by
the Executive Committee or the Board of Directors pursuant hereto and, if
required, by the holders of any class of Common Stock;

     (iii)  the granting by the Company to the Directors of stock options or
stock grants on a pro-rata basis (and the exercise thereof); or

     (iv)  any transaction by an Investor involving a Competing Proposal in
compliance with Section 3.4.

     (b)  Nothing contained in Section 5.1 (i) shall prohibit any of the
Investors or their Affiliates from complying with Rules 13d-1 through 13d-7, as
applicable, promulgated under the Exchange Act or from making such disclosure to
the Company’s stockholders or from taking such action which, in their judgment
may be required under applicable law, or (ii) shall be deemed to restrict the
manner in which the Investor Designees participate in deliberations or
discussions of the Board of Directors.

ARTICLE VI

[INTENTIONALLY OMITTED]

ARTICLE VII

PREEMPTIVE RIGHTS

     7.1. Preemptive Rights. (a) Except for Excluded Securities, the Company
shall not issue, or agree to issue (i) any equity securities of the Company or
any of its Subsidiaries, (ii) any options, warrants or other rights to subscribe
for, purchase or otherwise acquire any equity securities of the Company or any
of its Subsidiaries or (iii) any other securities of the Company or any of its
Subsidiaries that are convertible into or exchangeable for any equity securities
of the

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Company or any of its Subsidiaries unless, in each case, the Company shall have
first given written notice (the “Preemptive Notice”) to each Investor (for
purposes of this Section, each a “Preemptive Offeree”) that shall (a) state the
Company’s intention to issue any of the securities described in (i), (ii), or
(iii) above (in each case, an “Issuance”), the amount to be issued, the terms of
such securities, the purchase price therefor and a summary of the other material
terms of the proposed Issuance, and (b) offer (a “Preemptive Offer”) to issue to
each Preemptive Offeree or their Affiliates up to such number of securities set
forth in the Preemptive Notice (subject to Section 7.1(b)) (with respect to each
Preemptive Offeree, the “Offered Securities”) upon the terms and subject to the
conditions set forth in the Preemptive Notice, which Preemptive Offer by its
terms shall remain open and irrevocable for a period of 20 Business Days from
the date it is delivered by the Company to the Investor (and, to the extent the
Preemptive Offer is accepted during such 20 Business Day period, until the
closing of the Issuance contemplated by the Preemptive Offer).

     (b)  Each Investor shall be entitled to participate in each Issuance on a
pro rata basis. The number of securities (or principal amount of debt
securities) to be offered to each Preemptive Offeree shall be an amount equal to
the product of (i) the total number of securities (or total principal amount of
debt securities) to be issued in the Issuance multiplied by (ii) a fraction in
which the numerator is the number of shares of Common Stock Beneficially Owned
by such Preemptive Offeree and the denominator is the aggregate number of shares
of Common Stock Beneficially Owned by all Preemptive Offerees, in each case
immediately prior to such Issuance.

     (c)  Notice of a Preemptive Offeree’s intention to accept a Preemptive
Offer, in whole or in part, shall be evidenced by a writing signed by such party
and delivered to the Company prior to the end of the 20 Business Day period of
such Preemptive Offer (each, a “Notice of Acceptance”), setting forth the
portion of the Offered Securities that the Preemptive Offeree elects to
purchase.

     (i)  In the event that a Notice of Acceptance is not given by a Preemptive
Offeree in respect of all the Offered Securities, the Company shall have 60 days
following the earlier of (A) delivery of the Notice of Acceptance from each of
the Preemptive Offerees or (B) the end of the 20 Business Day period referred to
in clause (a) above, if a Notice of Acceptance is not delivered by each of the
Preemptive Offerees, to issue all or any part of such remaining Offered
Securities not covered by the Notice of Acceptance to any other Person(s), but
only at a price not less than the price, and on terms no more favorable to the
other Person(s) than the terms, stated in the Preemptive Notice.

     (ii)  If the Company does not consummate the Issuance of all or part of the
remaining Offered Securities to such other Person(s) within such 60-day period,
the right provided hereunder shall be deemed to be revived with respect to such
remaining Offered Securities and such securities shall not be offered unless
first re-offered to each Preemptive Offeree in accordance with this Section.

     (iii)  Upon the closing of the Issuance to such other Person(s) (the “Other
Buyers”) of all or part of the remaining Offered Securities (or if there are no
Other Buyers, on the first Business Day following such 60th day), each
Preemptive Offeree shall purchase from the

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Company, and the Company shall issue to each such Preemptive Offeree, the
Offered Securities covered by its Notice of Acceptance delivered to the Company
by the Preemptive Offeree, on the terms specified in the Preemptive Offer;
provided that, if the closing of the Issuance to such Other Buyers is to occur
prior to the 20th Business Day following delivery of the Notice of Acceptance,
the Preemptive Offeree shall have until such 20th Business Day to pay the
purchase price for the Offered Securities covered by the Notice of Acceptance.
The purchase by a Preemptive Offeree of any Offered Securities is subject in all
cases to the execution and delivery by the Company and the Preemptive Offeree of
a purchase agreement relating to such Offered Securities in customary form and
in form and substance similar in all material respects to the extent applicable
to that executed and delivered between the Company and the Other Buyers or the
other Preemptive Offerees.

     (d)  For purposes of this Section 7.1, “Excluded Securities” shall mean:
(i) any securities issued as a stock dividend or upon any stock split or other
subdivision or combination of shares of capital stock of the Company or any of
its Subsidiaries; (ii) securities issuable or issued to employees of the Company
pursuant to an employee benefit plan or agreement duly approved or authorized by
the Board of Directors or a committee thereof; (iii) securities issued in
connection with a Major Event; (iv) securities issued upon exercise of any
then-previously issued warrants, options or other similar rights; (v) securities
issued in connection with the acquisition, by merger, purchase or otherwise, of
any equity interests in or assets of any other Person approved pursuant to
Section 2.7(c); (vi) any Indebtedness incurred pursuant to the Amended Bank
Credit Facility; (vii) any intercompany Indebtedness; and (viii) securities
issued pursuant to this Section 7.1 resulting from the prior exercise of
preemptive rights.

     7.2. Substitute Securities. So long as there remain outstanding any shares
of Class C Common Stock, the Company shall permit a Preemptive Offeree to
purchase, in lieu of shares of Class A Common Stock (or rights to acquire the
same, as the case may be) to be issued in the proposed Issuance, (i) shares of
Class C Common Stock (or rights to acquire the same, as the case may be) in the
case of Telmex, and (ii) shares of Class D Common Stock (or rights to acquire
the same, as the case may be) in the case of Forstmann Little (in the case of
either clause (i) or (ii), “Substitute Securities”); provided, however, that, to
the extent that there are not sufficient shares of Class C Common Stock or
Class D Common Stock, as the case may be, authorized by the Certificate of
Incorporation, the Preemptive Offeree may purchase the securities to be issued
in the proposed Issuance and the terms of the proposed Issuance shall be
adjusted accordingly to allow the Preemptive Offeree to convert such securities
into Substitute Securities as soon as reasonably practicable after such shares
of Class C Common Stock or Class D Common Stock are so authorized. The Company
shall take such further action (to the extent consistent with applicable law) as
shall be necessary to ensure that there is available out of its authorized but
unissued shares of Common Stock such number of its shares of Common Stock as
shall be sufficient to effect the issuance of Substitute Securities. If a
Preemptive Offeree elects to purchase Substitute Securities pursuant to this
Section 7.2, the number of securities to be issued to such Preemptive Offeree,
the purchase price therefor and the other material terms of the proposed
Issuance shall be adjusted accordingly to preserve the economics of the
securities.

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ARTICLE VIII

TERM

     8.1. Term. This Agreement shall become effective as of the closing under
the Stock Purchase Agreement (the date on which such closing occurs, the
“Closing Date”) and shall terminate on the date that either of the Investors
Beneficially Owns shares of Common Stock representing less than 10% of the
outstanding shares of Common Stock; provided, however, that this Agreement shall
not terminate as a result of a Transfer of Common Stock in violation of this
Agreement that causes an Investor to Beneficially Own shares of Common Stock
representing less than 10% of the outstanding shares of Common Stock. Upon such
termination, there shall be no liability on the part of any party hereto, except
that nothing in this Section 8.1 shall in any way relieve any party from
liability for any breach of the provisions set forth herein for the period prior
to the termination of this Agreement.

ARTICLE IX

GENERAL

     9.1. Accounting; Financial Statements and Other Information. (a) The
Company will maintain a system of accounting established and administered in
accordance with GAAP. Whenever the Company is not otherwise subject to the
reporting obligations of the Exchange Act, the Company will deliver to each
Investor:

     (i)  within 90 days after the end of each fiscal year of the Company,
consolidated balance sheets of the Company and its Subsidiaries as at the end of
such year and the related consolidated statements of income, stockholders’
equity and cash flows of the Company and its Subsidiaries for such fiscal year,
setting forth in each case in comparative form figures for the previous fiscal
year, all in reasonable detail and accompanied by a report thereon of
independent certified public accountants of recognized standing selected by the
Company which report shall state that such consolidated financial statements
present fairly in all material respects the financial position of the Company as
at the dates indicated and the results of its operations and its cash flows for
the periods indicated in conformity with GAAP applied on a basis consistent with
prior years (except as otherwise specified in such report) and that the audit by
such accountants in connection with such consolidated financial statements has
been made in accordance with generally accepted auditing standards;

     (ii)  within 45 days after the end of each fiscal quarter of the Company,
consolidated balance sheets of the Company and its Subsidiaries as at the end of
such quarter and the related consolidated statements of income, stockholders’
equity and cash flows of the Company and its Subsidiaries for such fiscal
quarter, setting forth, in each case in comparative form, figures for the
previous fiscal quarter, all in reasonable detail; and

     (iii)  with reasonable promptness, such other information and data with
respect to the Company or any of its Subsidiaries as from time to time may be
reasonably requested by an Investor.

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     (b)  Each set of financial statements required to be provided by the
Company pursuant to this Section 9.1 shall be substantially in the form
appropriate for inclusion in a filing on Form 10-K or Form 10-Q, as applicable,
with the SEC pursuant to the Exchange Act, and shall be accompanied by a
narrative report setting forth, in reasonable detail, for such period, any
material deviations by the Company and its Subsidiaries from the Business Plan.

     9.2. Competition. (a) The Company and each of the Investors agree that each
Investor and its Affiliates, officers, directors, employees and agents may,
alone or in combination with any other Person, engage in activities or
businesses, make investments in and acquisitions of any Person, and enter into
partnerships and joint ventures with any Person, whether or not competitive now
or in the future with the businesses or activities of the Company.

     (b)  The Company and each of the Investors agree that no Investor, nor any
Affiliate, officer, director, employee and agent thereof, shall have any
obligation to refer to the Company any business opportunities presented to or
developed by any of them, except to the extent they were presented to or
developed by such Person specifically in its capacity as a stockholder, officer,
director, employee or agent of the Company.

     9.3. Legend on Stock Certificates, Etc. (a) Each certificate representing
Restricted Securities shall contain a legend, in addition to any other legend
required by the Board of Directors or the Company pursuant to the By-laws or
applicable law, reading substantially as follows:

  “ANY SALE, ASSIGNMENT, TRANSFER OR OTHER DISPOSITION, OR ANY PLEDGE OR OTHER
ENCUMBRANCE, OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE IS RESTRICTED BY,
AND THE RIGHTS OF THE HOLDER OF SUCH SECURITIES ARE SUBJECT TO, THE TERMS AND
CONDITIONS CONTAINED IN THE STOCKHOLDERS AGREEMENT, DATED AS OF [         ], AS
IT MAY BE AMENDED FROM TIME TO TIME, AND THE COMPANY’S CERTIFICATE OF
INCORPORATION AND BY-LAWS, WHICH ARE AVAILABLE FOR EXAMINATION AT THE REGISTERED
OFFICE OF THE COMPANY.

  THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933 OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE
SOLD OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS OR AN APPLICABLE
EXEMPTION TO THE REGISTRATION REQUIREMENTS OF SUCH ACT OR SUCH LAWS.”

The Company will maintain an executed counterpart of this Agreement on file in
its principal office and will make such counterpart available for inspection.
The Company shall not transfer on its books any certificates representing
Restricted Securities, or other shares of capital stock, nor issue any
certificates in lieu thereof unless all the conditions hereof have been complied
with, and a purported transfer not in accordance with the terms hereof shall be
void.

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     (b)  The requirement that the above securities legend be placed upon
certificates evidencing any shares of Restricted Securities shall cease and
terminate upon the earliest of the following events: (i) when such shares are
transferred in an underwritten public offering, (ii) when such shares are
transferred pursuant to Rule 144 under the Securities Act or (iii) when such
shares are transferred in any other transaction if the Transferor delivers to
the Company an opinion of its counsel, which counsel and opinion shall be
reasonably satisfactory to the Company, or a “no-action” letter from the staff
of the SEC, in either case to the effect that such legend is no longer necessary
in order to protect the Company against a violation by it of the Securities Act
upon any sale or other disposition of such shares without registration
thereunder. The requirement that the above legend regarding this Agreement be
placed upon certificates evidencing shares of Restricted Securities shall cease
and terminate upon the Transfer of such shares other than to a Permitted
Transferee. Upon the consummation of any event requiring the removal of a legend
hereunder, the Company, upon the surrender of certificates containing such
legend, shall, at its own expense, deliver to the holder of any such shares as
to which the requirement for such legend shall have terminated, one or more new
certificates evidencing such shares not bearing such legend.

     9.4. Successors and Assigns. This Agreement shall bind and inure to the
benefit of the Company and the Investors and their respective successors and
permitted assigns, provided that, the Company may not assign its rights or
obligations under this Agreement to any Person without the prior written consent
of the Investors, and provided further that, except as provided in Article IV,
the Investors may not assign their rights or obligations under this Agreement to
any Person without the prior written consent of the Company and the other
Investor.

     9.5. Entire Agreement. This Agreement (including the Annexes, Schedules and
Exhibits hereto), the Stock Purchase Agreement and the Registration Rights
Agreement constitute the entire agreement between the parties and supersedes all
prior agreements and understandings, oral and written, between the parties
hereto with respect to the subject matter hereof.

     9.6. Notices. All notices, requests, consents and other communications
hereunder to any party shall be deemed to be sufficient if contained in a
written instrument delivered in person or sent by telecopy, nationally
recognized overnight courier or first class registered or certified mail, return
receipt requested, postage prepaid, addressed to such party at the address set
forth below or such other address as may hereafter be designated in writing by
such party to the other parties:

    if to the Company, to:   XO Communications, Inc. 11111 Sunset Hills Road
Reston, VA 20190 Attention: Gary D. Begeman, Esq

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  with a copy to:   Willkie Farr & Gallagher 787 Seventh Avenue New York, NY
10019 Telecopy: (212) 728-8111 Attention: Bruce R. Kraus, Esq   if to Forstmann
Little, to:   c/o Forstmann Little & Co. 767 Fifth Avenue New York, NY 10153
Attention: Sandra J. Horbach   with a copy to:   Fried, Frank, Harris, Shriver &
Jacobson One New York Plaza New York, NY 10004 Telecopy: (212) 859-4000
Attention: Stephen Fraidin, Esq   if to Telmex, to:   Teléfonos de México, S.A.
de C.V. Parque Via 190, Piso 10 Colonia Cuauhtémoc 06599 México, D.F Attention:
Lic. Javier Mondragon Alarcon   with a copy to:   Latham & Watkins 885 Third
Avenue Suite 1000 New York, NY 10022-4802 Telecopy: (212) 751-4864 Attention:
Charles M. Nathan, Esq

     Any notice, request, consents or other communication delivered hereunder
will be conclusively deemed to have been given: (i) if by personal delivery,
upon the actual delivery thereof; (ii) if by certified or registered mail, on
the fifth Business Day following the deposit thereof in the mail; and (iii) if
by electronic means, on the day of transmittal thereof if given on a Business
Day during normal business hours or on the next succeeding Business Day if given
at other times. A party giving notice, request, consent or other communication
by electronic means

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shall send the original thereof by personal delivery or by certified or
registered mail unless the intended recipient agrees otherwise.

     9.7. Amendments. The terms and provisions of this Agreement may be modified
or amended, or any of the provisions hereof waived, temporarily or permanently,
in a writing executed and delivered by the Company and each of the Investors. No
waiver of any of the provisions of this Agreement shall be deemed to or shall
constitute a waiver of any other provision hereof (whether or not similar). No
delay on the part of any party in exercising any right, power or privilege
hereunder shall operate as a waiver thereof.

     9.8. Counterparts. This Agreement may be executed in any number of
counterparts, and each such counterpart hereof shall be deemed to be an original
instrument, but all such counterparts together shall constitute but one
agreement.

     9.9. Headings. The headings of the sections of this Agreement have been
inserted for convenience of reference only and shall not be deemed to be a part
of this Agreement.

     9.10. Governing Law. THIS 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.

     9.11. Submission to Jurisdiction. Each of the parties hereto hereby
irrevocably and unconditionally consents to submit to the exclusive jurisdiction
of the courts of the State of Delaware and of the United States of America, in
each case located in the State of Delaware, for any litigation arising out of or
relating to this Agreement and the transactions contemplated hereby (and agrees
not to commence any litigation relating hereto other than in such courts), and
further agrees that service of any process, summons, notice or document by U.S.
registered mail to its respective address set forth in this Agreement shall be
effective service of process for any litigation brought against it in any such
court. Each of the parties hereto hereby irrevocably and unconditionally waives
any objection to the laying of venue of any litigation arising out of this
Agreement or the transactions contemplated hereby in the courts of the State of
Delaware or the United States of America, in each case located in the State of
Delaware, hereby further irrevocably and unconditionally waives and agrees not
to plead or claim in any such court that any such litigation brought in any such
court has been brought in an inconvenient forum.

     9.12. Waiver of Jury Trial. THE COMPANY AND THE INVESTORS 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 AGREEMENT.

     9.13. Severability. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any rule of law or public
policy, all other conditions and provisions of this Agreement shall nevertheless
remain in full force and effect so long as the economic or legal substance of
the transactions contemplated hereby is not affected in any manner adverse to
any party. Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties hereto shall negotiate in
good faith to

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modify this Agreement so as to effect the original intent of the parties as
closely as possible in an acceptable manner to the end that the transactions
contemplated hereby are fulfilled to the fullest extent possible.

     9.14. Third Party Beneficiaries. Except as provided in Section 2.9(c), none
of the provisions of this Agreement shall be for the benefit of, or enforceable
by, any third party.

     9.15. Remedies. The parties hereto agree that money damages or other remedy
at law would not be sufficient or adequate remedy for any breach or violation
of, or a default under, this Agreement by them and that in addition to all other
remedies available to them, each of them shall be entitled to an injunction
restraining such breach, violation or default or threatened breach, violation or
default and to any other equitable relief, including without limitation specific
performance, without bond or other security being required.

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     IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the day and year first above written.

FORSTMANN LITTLE & CO. EQUITY PARTNERSHIP VII, L.P.

      By:   FLC XXXII Partnership, L.P.,     its general partner   By:  
__________________     Sandra J. Horbach,     a general partner

FORSTMANN LITTLE & CO. SUBORDINATED DEBT AND EQUITY MANAGEMENT BUYOUT
PARTNERSHIP VIII, L.P.

      By:   FLC XXXIII Partnership,     its general partner   By:  
__________________     Sandra J. Horbach,     a general partner

TELEFONOS DE MEXICO, S.A. DE C.V.

      By:   __________________     Name: Ing. Jaime Chico Pardo     Title:
Director General

XO COMMUNICATIONS, INC.

      By:   __________________     Name: Daniel F. Akerson     Title: Chairman
and Chief Executive Officer

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Annex A

DEFINITIONS

     “Acquisition” shall mean the acquisition by any “person” or any “group” (as
such terms are used for purposes of Rules 13d-1 and 13d-5 under the Exchange
Act) of more than 50% of the total number of outstanding shares of Common Stock.

     “Affiliate” shall mean, with respect to any specified Person, any other
Person directly or indirectly controlling or controlled by or under direct or
indirect common control with such specified Person. For the purposes of this
definition, “control” when used with respect to any specified Person means the
power to direct the management and policies of such Person directly or
indirectly, whether through ownership of voting securities, by contract or
otherwise; and the terms “controlling” and “controlled” having meanings
correlative to the foregoing.

     “Agreement” shall have the meaning ascribed to such term in the preamble to
this Agreement.

     “Amended Bank Credit Facility” shall mean a bank credit facility under
which the Company is the borrower, in effect as of the Closing Date as a
replacement to the Bank Credit Facility, which provides for a term loan or term
loans and revolving loans.

     “Bank Credit Facility” shall mean the Credit and Guarantee Agreement, dated
as of February 3, 2000, among NEXTLINK Communications, Inc., the predecessor to
the Company (“Nextlink”), certain subsidiaries of Nextlink, various Lenders (as
defined therein), Goldman Sachs Credit Partners, L.P., as Syndication Agent,
Toronto Dominion (Texas), Inc., as Administrative Agent, Barclays Bank plc and
The Chase Manhattan Bank, as Co-Documentation Agents, and TD Securities,
together with Goldman Sachs Credit Partners, L.P., the Joint Lead Arrangers, and
all ancillary agreements entered into pursuant to the terms thereof, each as
amended as of the Closing Date.

     “Beneficial Ownership” shall have the meaning ascribed to such term in
Rules 13d-3 and 13d-5 under the Exchange Act, except that, solely for the
purpose of determining “Beneficial Ownership,” (i) a Person shall be deemed to
have “Beneficial Ownership” of all shares of Common Stock that such Person has
the right to acquire, whether such right is exercisable immediately or only
after the passage of time, and (ii) “Beneficial Ownership” shall be determined
without regard to any disclaimer of beneficial ownership and without regard to
the fact that one or more classes of the Common Stock is not registered under
the Exchange Act; provided, however, that an Investor shall be deemed to
Beneficially Own shares of Class A Common Stock only at such time, and to the
extent, that it has record ownership of shares of Class A Common Stock and shall
not be deemed to Beneficially Own shares of Class A Common Stock by virtue of
its ownership of shares of Class C Common Stock or Class D Common Stock or any
other option, warrant or security exercisable for or convertible into shares of
Class A Common Stock. Correlative meanings shall also be ascribed to the terms
“Beneficially Own” and “Beneficial Owner”.

A-1

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     "Board of Directors” or “Board” shall have the meaning ascribed to such
term in Section 2.1, as the same may be composed from time to time in accordance
with this Agreement and the By-laws.

     “Board Representation Date” shall mean the earlier of (i) the first date on
which the Board of Directors has received written notice from Telmex that Telmex
desires to designate Directors to the Board pursuant to Section 2.2(b), and
Telmex has determined in good faith, after consultation with its legal counsel,
which counsel shall be an outside law firm of national reputation, that one or
more directors, officers or employees of Telmex or a Subsidiary of Telmex can
become Directors without violating Section 8 of the Clayton Antitrust Act of
1914, as amended, and (ii) the first date upon which any director, officer or
employee of Telmex or a Subsidiary of Telmex is elected or appointed as a
Director.

     “Business Day” shall mean 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.

     “Business Plan” shall mean the business plan of the Company, as approved by
each of the Investors prior to the Closing Date, and as the same may be amended
from time to time in accordance with this Agreement. A copy of the Business
Plan, as approved by each of the Investors prior to the Closing Date, which
approval shall not be unreasonably withheld, shall be attached hereto as Annex
D.

     “By-laws” shall mean the By-laws of the Company, as in effect on the
Closing Date, as the same may be amended from time to time in accordance with
this Agreement and the terms thereof.

     “Capital Lease” shall mean a lease with respect to which the lessee is
required concurrently to recognize the acquisition of an asset and the
incurrence of a liability in accordance with GAAP.

     “Certificate of Incorporation” shall mean the Amended and Restated
Certificate of Incorporation of the Company, as in effect on the Closing Date,
as the same may be amended from time to time in accordance with this Agreement
and the terms thereof.

     “Class A Common Stock” shall have the meaning ascribed to such term in the
recitals to this Agreement.

     “Class C Common Stock” shall have the meaning ascribed to such term in the
recitals to this Agreement.

     “Class D Common Stock” shall have the meaning ascribed to such term in the
recitals to this Agreement.

     “Closing Date” shall have the meaning set forth in Section 8.1 of this
Agreement.

A-2

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     “Common Stock” shall have the meaning ascribed to such term in the recitals
to this Agreement.

     “Company” shall have the meaning ascribed to such term in the preamble to
this Agreement.

     “Competing Proposal” shall have the meaning ascribed to such term in
Section 3.4(d).

     “Competing Proposal Person” shall have the meaning ascribed to such term in
Section 3.4(d).

     “Director” shall have the meaning ascribed to such term in Section 2.1.

     “Encumbrance” shall mean, with respect to any Person, any mortgage, lien,
pledge, charge, claim, option, proxy, voting trust, security interest or other
encumbrance, or any interest or title of any vendor, lessor, lender or other
secured party to or of such Person under any conditional sale or other title
retention agreement or Capital Lease, upon or with respect to any property or
asset of such Person (including in the case of stock, stockholder agreements,
voting trust agreements and all similar arrangements).

     “Equity VII” shall have the meaning ascribed to such term in the preamble
to this Agreement.

     “Equity Derivative Securities” shall mean any and all equity or debt
securities (or any hybrid or combination thereof) convertible into or
exchangeable or exercisable for, or which otherwise give the holder thereof the
right to acquire, any equity securities of the Company.

     “Exchange Act” shall mean the United States Securities Exchange Act of 1934
and the rules and regulations promulgated thereunder.

     “Excluded Securities” shall have the meaning ascribed to such term in
Section 7.1(d).

     “Fair Market Value” shall mean (i) in the case of cash, the amount thereof,
(ii) in the case of capital stock that has been publicly traded for a period of
at least 12 months, the Market Value thereof, and (iii) in the case of other
assets or securities, the fair market value thereof as determined in good faith
by the Board of Directors (which determination shall be conclusive and binding
on all stockholders).

     “Forstmann Little” shall have the meaning ascribed to such term in the
preamble to this Agreement.

     “Forstmann Little Designee” or “Forstmann Little Designees” shall have the
meaning ascribed to such term in Section 2.2(a).

A-3

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     “GAAP” shall mean generally accepted accounting principles set forth from
time to time in the opinions and pronouncements of the Accounting Principles
Board and the American Institute of Certified Public Accountants and statements
and pronouncements of the Financial Accounting Standards Board (or agencies with
similar functions of comparable stature and authority within the U.S. accounting
profession), that are applicable to the circumstances as of the date of
determination.

     “Guaranty” shall mean, with respect to any Person, any obligation (except
the endorsement in the ordinary course of business of negotiable instruments for
deposit or collection) of such Person guaranteeing or in effect guaranteeing
(whether by reason of being a general partner of a partnership or otherwise) any
indebtedness, dividend or other obligation of any other Person in any manner,
whether directly or indirectly, including (without limitation) obligations
incurred through an agreement, contingent or otherwise, by such Person: (a) to
purchase such indebtedness or obligation or any property constituting security
therefor; (b) to advance or supply funds (i) for the purchase or payment of such
indebtedness or obligation, or (ii) to maintain any working capital or other
balance sheet condition or any income statement condition of any other Person or
otherwise to advance or make available funds for the purchase or payment of such
indebtedness or obligation; (c) to lease properties or to purchase properties or
services primarily for the purpose of assuring the owner of such indebtedness or
obligation of the ability of any other Person to make payment of the
indebtedness or obligation; or (d) otherwise to assure the owner of such
indebtedness or obligation against loss in respect thereof. In any computation
of the indebtedness or other liabilities of the obligor under any Guaranty, the
indebtedness or other obligations that are the subject of such Guaranty shall be
assumed to be direct obligations of such obligor.

     “Indebtedness” shall mean, with respect to any Person, at any time, without
duplication, (a) its liabilities for borrowed money; (b) its liabilities for the
deferred purchase price of property acquired by such Person (excluding accounts
payable arising in the ordinary course of business but including all liabilities
created or arising under any conditional sale or other title retention agreement
with respect to any such property); (c) all liabilities appearing on its balance
sheet in accordance with GAAP in respect of Capital Leases; (d) all liabilities
for borrowed money secured by any Encumbrance with respect to any property owned
by such Person (whether or not it has assumed or otherwise become liable for
such liabilities); (e) all its liabilities in respect of letters of credit or
instruments serving a similar function issued or accepted for its account by
banks and other financial institutions (whether or not representing obligations
for borrowed money); (f) Swaps of such Person; and (g) any Guaranty of such
Person with respect to liabilities of a type described in any of clauses
(a) through (f) hereof.

     “Independent Directors” shall have the meaning ascribed to such term in
Section 2.2(d).

     “Investment” shall have the meaning ascribed to such term in the Stock
Purchase Agreement.

     “Investment Period” shall have the meaning ascribed to such term in
Section 4.1.

A-4

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     “Investor” or “Investors” shall have the meaning ascribed to such terms in
the preamble to this Agreement.

     “Investor Designee” or “Investor Designees” shall have the meaning ascribed
to such term in Section 2.2(a).

     “Issuance” shall have the meaning ascribed to such term in Section 7.1(a).

     “Major Event” shall mean any merger (other than a merger of a wholly-owned
Subsidiary of the Company with and into the Company), consolidation,
reorganization or recapitalization of the Company or any sale of all or a
substantial portion of the assets of the Company and its Subsidiaries, taken as
a whole.

     “Major Event Notice” shall have the meaning ascribed to such term in
Section 3.4(c).

     “Major Event Proposal” shall have the meaning ascribed to such term in
Section 3.4(c).

     “Market Value” means, as of any date of determination, (i) with respect to
shares of any class or series of capital stock traded (1) on the New York Stock
Exchange (the “NYSE”) or another national stock exchange or quoted on The
National Market System of the Nasdaq Stock Market (“Nasdaq NMS”) the average of
the reported closing bid and asked prices regular way of a share of such class
or series for the 30 trading days immediately preceding such date of
determination (the “Relevant Trading Period”), as reported, (x) in the case of
the NYSE, on the NYSE composite tape, and (y) in the case of any other national
securities exchange or Nasdaq NMS, publicly by such exchange or Nasdaq NMS, or
(2) solely or primarily in the over-the-counter market, the average of the bid
and asked prices of a share of such class or series in the over-the-counter
market during the Relevant Trading Period as furnished by any NYSE member firm
selected from time to time by the Company or (ii) with respect to any class or
series of capital stock not traded or quoted on the NYSE, any other national
stock exchange or Nasdaq NMS or in the over-the-counter market, the fair market
value of a share of such class or series as determined in good faith by the
Board of Directors (which determination shall be conclusive and binding on all
stockholders).

     “Maximum Number” means the number, rounded up to the next whole number,
equal to the product of (i) the total number of Directors on the Board
multiplied by (ii) a fraction in which the numerator is the total number of
outstanding shares of Common Stock Beneficially Owned by Telmex, and the
denominator is the total number of shares of Common Stock outstanding; provided
that in no event shall the Maximum Number exceed the number of Directors on the
Board appointed or nominated by Forstmann Little (excluding the Telmex
Independent Designees).

     “MBO VIII” shall have the meaning ascribed to such term in the preamble to
this Agreement.

A-5

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     “Notice of Acceptance” shall have the meaning ascribed to such term in
Section 7.1(c).

     “Objecting Investor” shall have the meaning ascribed to such term in
Section 3.4(d).

     “Offered Securities” shall have the meaning ascribed to such term in
Section 7.1(a).

     “Officers” shall have the meaning ascribed to such term in Section 2.8.

     “Other Buyers” shall have the meaning ascribed to such term in Section
7.1(c).

     “Permitted Benefit Plan Issuance” means any issuance of equity securities
or Equity Derivative Securities to directors, officers, employees in the
ordinary course of business pursuant to an employee stock purchase plan,
employee stock option plan or other similar compensation plan approved by the
compensation committee of the Board of Directors or the Board of Directors.

     “Permitted Transferee” means a Transferee who (i) becomes such as a result
of a Transfer (x) in connection with a transaction in which the Transferor
(which must be a Person owning assets other than the Common Stock with a Fair
Market Value in excess of the Fair Market Value of the Common Stock Beneficially
Owned by it, as of the most recent practicable date prior to the Transfer)
consolidates, amalgamates or merges with, or sells or otherwise conveys all or
substantially all of its assets to, another Person or Persons, such that all
shares of Common Stock owned by the Transferor become owned, directly or
indirectly through the Person or Persons surviving such consolidation,
amalgamation or merger or acquiring all or substantially all of such assets, as
the case may be; or (y) in the case of Forstmann Little, to any Affiliate of
Equity VII or MBO VIII so long as the Transferee remains an Affiliate of Equity
VII or MBO VIII, as the case may be, or in the case of Telmex, to Telefonos de
Mexico, S.A. de C.V. or any Subsidiary of Telefonos de Mexico, S.A. de C.V. so
long as the Transferee remains a Subsidiary of Telefonos de Mexico, S.A. de
C.V.; and (ii) executes a copy of this Agreement.

     “Person” shall mean any individual, corporation, limited liability company,
partnership, trust or other entity, and shall include any successor (by merger
or otherwise) of such entity.

     “Preemptive Notice” shall have the meaning ascribed to such term in
Section 7.1(a).

     “Preemptive Offer” shall have the meaning ascribed to such term in Section
7.1(a).

     “Preemptive Offeree” shall have the meaning ascribed to such term in
Section 7.1(a).

A-6

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     “Preferred Stock” shall have the meaning ascribed to such term in the
Certificate of Incorporation.

     “Preliminary Activity” shall have the meaning ascribed to such term in
Section 3.4(a).

     “Reconciliation Period” shall have the meaning ascribed to such term in
Section 3.4(d).

     “Registration Rights Agreement” shall mean the Registration Rights
Agreement dated as of ____, 2002 among the Investors and the Company.

     “Representatives” shall have the meaning ascribed to such term in Section
3.4(a).

     “Restricted Securities” means shares of Common Stock of the Company
purchased pursuant to the Stock Purchase Agreement by an Investor and any
securities issued or issuable with respect to such shares of Common Stock by way
of a stock split, stock dividend or stock combination, or any shares of Common
Stock issued in connection with a recapitalization, merger, consolidation or
other reorganization.

     “Restructuring” shall have the meaning ascribed to such term in the Stock
Purchase Agreement.

     “SEC” shall mean the United States Securities and Exchange Commission or
any other federal agency at the time administering the Securities Act or the
Exchange Act.

     “Securities Act” shall mean the United States Securities Act of 1933 and
the rules and regulations promulgated thereunder.

     “Solicitation Period” shall have the meaning ascribed to such term in
Section 3.4(d).

     “Stock Purchase Agreement” shall have the meaning ascribed to such term in
the recitals to this Agreement.

     “Subsidiary” of any Person shall mean (i) a corporation more than 50% of
the outstanding voting stock of which is owned, directly or indirectly, by such
Person or by one or more other Subsidiaries of such Person or by such Person and
one or more Subsidiaries thereof or (ii) any other Person (other than a
corporation) in which such Person, or one or more other Subsidiaries of such
Person or such Person and one or more other Subsidiaries thereof, directly or
indirectly, has at least a majority ownership and power to direct the policies,
management and affairs thereof.

     “Substitute Securities” shall have the meaning ascribed to such term in
Section 7.2.

A-7

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     “Swaps” means, with respect to any Person, payment obligations with respect
to interest rate swaps, currency swaps and similar obligations obligating such
Person to make payments, whether periodically or upon the happening of a
contingency.

     “Telmex” shall have the meaning ascribed to such term in the preamble to
this Agreement.

     “Telmex Designee” or “Telmex Designees” shall have the meaning ascribed to
such term in Section 2.2(a).

     “Telmex Independent Designees” means those individuals nominated by Telmex
who are independent of, and not affiliated with, either Telmex or the Company.
The number of Telmex Independent Designees shall not exceed the Maximum Number.

     “Telmex Observer” or “Telmex Observers” shall have the meaning ascribed to
such term in Section 2.11.

     “Third Party” shall mean any Person other than the Company or the
Investors, or any of their respective Affiliates.

     “Transaction Documents” shall mean this Agreement, the Stock Purchase
Agreement, and the Registration Rights Agreement.

     “Transfer” shall have the meaning ascribed to such term in Section 4.1.

     “Transferee” shall have the meaning ascribed to such term in Section 4.1.

     “Transferor” shall have the meaning ascribed to such term in Section 4.1.

     “Vacancy Period” shall have the meaning ascribed to such term in Section
2.3(a).

     “XO” shall have the meaning ascribed to such term in the preamble to this
Agreement.

A-8

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Exhibit C

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

Teléfonos de México, S.A. de C.V.

 

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Table of Contents

                      Page        

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  1.   Definitions     1   2.   Registration Under Securities Act, etc.     3  
    2.1.      Registration on Request     3       2.2.      Incidental
Registration     5       2.3.      Registration Procedures     6       2.4.     
Underwritten Offerings     10       2.5.      Preparation; Reasonable
Investigation     11       2.6.      Indemnification     12       2.7.     
Unlegended Certificates     15       2.8.      No Required Sale     15   3.  
Rule 144     15   4.   Amendments and Waivers     15   5.   Notice     15   6.  
Assignment; Third Party Beneficiaries     16   7.   Remedies     17   8.   No
Inconsistent Agreements     17   9.   Descriptive Headings     17   10.  
Governing Law     17   11.   Counterparts     17   12.   Invalidity of Provision
    18   13.   Further Assurances     18   14.   Entire Agreement; Effectiveness
    18  

i

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REGISTRATION RIGHTS AGREEMENT

     This Registration Rights Agreement (this “Agreement”), dated as of
_________ ___, 2002, is among XO Communications, Inc., a Delaware corporation
(the “Company”), 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 collectively with Equity VII, “Forstmann Little”) and Teléfonos
de México, S.A. de C.V., a sociedad anonima de capital variable (“Telmex”;
Forstmann Little and Telmex are sometimes hereinafter referred to as the
“Purchasers” and each is sometimes individually referred to as a “Purchaser”).

     WHEREAS, pursuant to the Stock Purchase Agreement (the “Stock Purchase
Agreement”), dated as of January 15, 2002, among the Company and the Purchasers,
(a) Forstmann Little will acquire (i) ____________ shares (the “New Class A
Shares”) of Class A Common Stock, par value $0.01 per share, of the Company
(“Class A Common Stock”) and (ii) 2 shares of Class D Common Stock, par value
$0.01 per share, of the Company (the “Class D Common Shares”) and (b) Telmex
will acquire ____________ shares of Class C Common Stock, par value $0.01 per
share, of the Company (the “Class C Common Shares”).

     WHEREAS, each share of the Class C Common Shares and each Class D Common
Share is convertible, under certain circumstances, into one share of Class A
Common Stock, subject to adjustment.

     WHEREAS, as part of, and as partial consideration for, the acquisition of
the New Class A Shares and the Class D Common Shares by Forstmann Little and the
acquisition of the Class C Common Shares by Telmex, the Company hereby grants to
the Purchasers certain registration rights with respect to certain shares of
Class A Common Stock to be issued or issuable to each of them upon consummation
of the transactions contemplated by the Stock Purchase Agreement.

     Accordingly, the parties hereto agree as follows:

     1.     Definitions. As used in this Agreement, unless the context otherwise
requires, the following terms have the following respective meanings:

     “Commission” means the United States Securities and Exchange Commission or
any other federal agency at the time with primary responsibility for
administering the Securities Act.

     “Common Stock” means the New Class A Shares and the Class C Common Shares
and any shares of Class A Common Stock acquired by a Holder upon the conversion
of shares of the Class C Common Shares or the Class D Common Shares,
collectively.

     “Demand Holders” means Forstmann Little and Telmex and each Permitted
Transferee of Forstmann Little or Telmex that is a Holder and to which Forstmann
Little or Telmex has expressly assigned demand rights under Section 2.1.

 

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     “Exchange Act” means the Securities Exchange Act of 1934, as amended, or
any similar federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time. Reference to a
particular section of the Exchange Act shall include a reference to the
comparable section, if any, of any such similar federal statute.

     “Holders” means the Purchasers and any of their Permitted Transferees who
agree to be bound by the provisions of this Agreement.

     “Permitted Transferee” means any Person to whom any Purchaser shall have
the right to transfer any Registrable Securities in accordance with the terms of
the Stockholders Agreement, dated as of________ ___, 2002, among Forstmann
Little and Telmex and the Company, as in effect at the time of such transfer.

     “Person” means a corporation, an association, a partnership, an
organization, a business, a trust, an individual, or any other entity or
organization, including a government or political subdivision or an
instrumentality or agency thereof.

     “Registrable Securities” means (i) the New Class A Shares; (ii) any shares
of Class A Common Stock issued or issuable upon conversion of the Class C Common
Shares or the Class D Common Shares; and (iii) any shares of Class A Common
Stock or other securities of the Company issued or issuable with respect to the
Class A Common Stock referred to in clauses (i) and (ii) by way of a stock
dividend or stock split or in connection with a recapitalization, merger,
consolidation or otherwise. As to any particular Registrable Securities, such
securities shall cease to be Registrable Securities (a) when a registration
statement with respect to the sale of such securities shall have become
effective under the Securities Act and such securities shall have been disposed
of in accordance with such registration statement, (b) when such securities
shall have been otherwise transferred, new certificates for them not bearing a
legend restricting further transfer shall have been delivered by the Company and
subsequent public distribution of them shall not require registration of them
under the Securities Act, or (c) when all such securities owned by a Holder are
eligible for sale under Rule 144(k) under the Securities Act or any successor
provision.

     “Registration Expenses” means all expenses incident to the registration and
disposition of the Registrable Securities pursuant to Section 2 hereof,
including, without limitation, all registration, filing and applicable national
securities exchange fees, all fees and expenses of complying with state
securities or blue sky laws (including fees and disbursements of counsel to the
underwriters or any Holder in connection with “blue sky” qualification of the
Registrable Securities and determination of their eligibility for investment
under the laws of the various jurisdictions), all word processing, duplicating
and printing expenses, all messenger and delivery expenses, the fees and
disbursements of counsel for the Company and of its independent public
accountants, including the expenses of “cold comfort” letters or any special
audits required by, or incident to, such registration, all fees and
disbursements of underwriters (other than underwriting discounts and
commissions), all transfer taxes, and all fees and expenses of counsel to any
Holder; provided, however, that Registration Expenses shall exclude, and the
Holders shall pay, underwriting discounts and commissions in respect of the
Registrable Securities being registered.

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     “Securities Act” means the Securities Act of 1933, as amended, or any
similar Federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time. References to a
particular section of the Securities Act shall include a reference to the
comparable section, if any, of any such similar Federal statute.

     2.     Registration Under Securities Act, etc.

             2.1.      Registration on Request.

                         (a)  Request. Each Demand Holder shall have the right
to require the Company to effect the registration under the Securities Act of
all or part of the Registrable Securities, by delivering a written request
thereof to the Company specifying the number of shares of Registrable Securities
it wishes to register and the intended method of distribution. The Company shall
(i) use its reasonable best efforts to effect the registration under the
Securities Act (including by means of a shelf registration pursuant to Rule 415
under the Securities Act if so requested by the Demand Holder making such
request) of the Registrable Securities which the Company has been so requested
to register by Demand Holders, for distribution in accordance with the intended
method of distribution set forth in the written request delivered by such Demand
Holder, such registration to be effected as expeditiously as possible (but in
any event within 90 days of receipt of such written request), and (ii) if
requested by such Demand Holder, use its reasonable best efforts to obtain
acceleration of the effective date of the registration statement relating to
such registration.

                         (b)  Limitations on Registration on Request. Each of
the Purchasers and its respective Permitted Transferees that are Demand Holders
shall collectively be entitled to require the Company to effect, and the Company
shall effect, five (5) registrations, for a total of ten (10) registrations for
all Demand Holders, pursuant to this Section 2.1. The Company shall not be
required to effect any registration upon request by any Demand Holder if such
registration does not meet the Minimum Size (as hereinafter defined). “Minimum
Size” means the lesser of (i) an anticipated aggregate public offering price
(before deducting underwriting discounts and commissions) of $50 million or
(ii) an anticipated registration, offering and sale of 20% or more of the shares
of Common Stock acquired by such Purchaser pursuant to the Stock Purchase
Agreement, unless the total amount of Registrable Securities owned by a Demand
Holder is less than the amounts referred to in both clauses (i) and (ii) above,
in which case the Minimum Size with respect to such Demand Holder shall be such
lesser amount.

                         (c)  Registration of Other Securities. Whenever the
Company shall effect a registration pursuant to this Section 2.1 in connection
with an underwritten offering by Demand Holders of Registrable Securities, no
securities other than Registrable Securities shall be included among the
securities covered by such registration if inclusion of such other securities
would result in a request by the managing underwriters for a reduction in the
number of Registrable Securities requested to be so registered.

                         (d)  Registration Statement Form. Registrations under
this Section 2.1 shall be on such appropriate registration form of the
Commission as, subject to clause

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(a) above, shall be selected by the Company and as shall be reasonably
acceptable to the Demand Holder. The Company agrees to include in any such
registration statement all information that, in the opinion of counsel to a
Holder and counsel to the Company, is necessary or desirable to be included
therein.

                         (e)  Expenses. The Company shall pay all Registration
Expenses in connection with any registration requested pursuant to this
Section 2.1.

                         (f)  Effective Registration Statement. A registration
requested pursuant to this Section 2.1 shall not be deemed to have been effected
(including for purposes of paragraph (b) of this Section 2.1) (i) unless a
registration statement with respect thereto has become effective and has been
kept continuously effective for a period of at least 365 days (or such shorter
period which shall terminate when all the Registrable Securities covered by such
registration statement have been sold pursuant thereto), (ii) if after it has
become effective, such registration is interfered with by any stop order,
injunction or other order or requirement of the Commission or other governmental
agency or court for any reason not attributable to a Holder of Registrable
Securities covered by such registration statement and has not thereafter become
effective, or (iii) if the conditions to closing specified in the underwriting
agreement, if any, entered into in connection with such registration are not
satisfied or waived.

                         (g)  Selection of Underwriters. The underwriters of
each underwritten offering of the Registrable Securities so to be registered
shall be selected by the Demand Holders of a majority of the Registrable
Securities included in such registration request, subject to the Company’s
approval, which approval shall not be unreasonably withheld.

                         (h)  Right to Withdraw. If the managing underwriter of
any underwritten offering shall advise the Holders participating in such
offering and registration that the Registrable Securities covered by the
registration statement cannot be sold in such offering within a price range
acceptable to any such Holder, such Holder shall have the right to decline to
participate in such offering and registration. In addition, if such managing
underwriter shall advise such Holders that the Registrable Securities covered by
the registration statement cannot be sold in such offering within a price range
acceptable to Holders of a majority of the Registrable Securities included in
such registration, then the Holders of a majority of the Registrable Securities
so included shall have the right to notify the Company in writing that they have
determined that the registration statement shall be abandoned or withdrawn, in
which event the Company shall abandon or withdraw such registration statement.
In the event of such abandonment or withdrawal, such request shall not be
counted for purposes of the requests for registration to which the Holders are
entitled pursuant to this Section 2.1, and the Holders that sought to
participate in such offering and registration shall, on a pro rata basis, pay,
or reimburse the Company for, all Registration Expenses related thereto.

                         (i)  Postponement. The Company shall be entitled once
in any six-month period to postpone for a reasonable period of time (but not
exceeding 90 days) the filing of any registration statement required to be
prepared and filed by it pursuant to this Section 2.1 if the Company determines,
in its reasonable judgment, that such registration and offering would materially
interfere with any material financing, corporate reorganization or other
material

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transaction involving the Company or any significant subsidiary, or would
require premature disclosure thereof, and promptly gives the Holders
participating in such registration written notice of such determination,
containing a general statement of the reasons for such postponement (which the
Holders shall maintain in strict confidence) and an approximation of the
anticipated delay. If the Company shall so postpone the filing of a registration
statement, (i) the Company shall use its reasonable best efforts to limit the
delay to as short a period as is practicable and (ii) the Demand Holders of a
majority of the Registrable Securities included in such registration shall have
the right to withdraw the request for registration by giving written notice to
the Company at any time and, in the event of such withdrawal, such request shall
not be counted for purposes of the requests for registration to which the Demand
Holders are entitled pursuant to this Section 2.1.

                         (j)  Shelf Registration. If the Demand Holders request
that the Company effect a registration of Registrable Securities by means of
shelf registration pursuant to Rule 415 under the Securities Act (a “Shelf
Registration Statement”), in addition to the other requirements contained
herein, the Company shall, at its cost, use its reasonable best efforts to keep
the Shelf Registration Statement continuously effective in order to permit the
Prospectus forming part thereof to be usable by any Holder until such time as
all the Registrable Securities covered by the Shelf Registration Statement have
been sold pursuant to the Shelf Registration Statement or cease to be
outstanding (the “Effectiveness Period”); provided, however, that the
Effectiveness Period in respect of the Shelf Registration Statement shall be
extended to the extent required to permit dealers to comply with the applicable
prospectus delivery requirements under the Securities Act and as otherwise
provided herein.

             2.2.      Incidental Registration.

                         (a)  Right to Include Registrable Securities. If the
Company at any time proposes to register any of its securities for its own
account or the account of any other stockholder (including any Demand Holder)
under the Securities Act by registration on Form S-1, S-2 or S-3 or any
successor or similar form(s) (except registrations on any such Form or similar
form(s) solely for registration of securities in connection with an employee
benefit plan or dividend reinvestment plan or a merger or consolidation or
incidental to an issuance of securities under Rule 144A under the Securities
Act), it will each such time give prompt written notice to all of the Holders of
its intention to do so and of the Holders’ rights under this Section 2.2. Upon
the written request of any Holder (which request shall specify the maximum
number of Registrable Securities intended to be disposed of by such Holder),
made as promptly as practicable and in any event within 30 days after the
receipt of any such notice (10 days if the Company states in such written notice
or gives telephonic notice to the each of the Holders, with written confirmation
to follow promptly thereafter, stating that (i) such registration will be on
Form S-3 and (ii) such shorter period of time is required because of a planned
filing date), the Company shall use its reasonable best efforts to effect the
registration under the Securities Act of all Registrable Securities which the
Company has been so requested to register by such Holder; provided, however,
that if, at any time after giving written notice of its intention to register
any securities and prior to the effective date of the registration statement
filed in connection with such registration, the Company shall determine for any
reason not to register or to delay registration of

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such securities, the Company shall give written notice of such determination and
its reasons thereof to each of the Holders requesting registration under this
Section 2.2 (which such Holders will hold in strict confidence) and (i) in the
case of a determination not to register, shall be relieved of its obligation to
register any Registrable Securities in connection with such registration (but
not from any obligation of the Company to pay the Registration Expenses in
connection therewith), without prejudice, however, to the rights of the Holders
to request that such registration be effected as a registration under
Section 2.1 and (ii) in the case of a determination to delay registering, shall
be permitted to delay registering any Registrable Securities, for the same
period as the delay in registering such other securities. No registration
effected under this Section 2.2 shall relieve the Company of its obligation to
effect any registration upon request under Section 2.1. The Company will pay all
Registration Expenses in connection with any registration of Registrable
Securities requested pursuant to this Section 2.2.

                         (b)  Right to Withdraw. Any Holder shall have the right
to withdraw its request for inclusion of its Registrable Securities in any
registration statement pursuant to this Section 2.2 at any time prior to the
execution of an underwriting agreement with respect thereto by giving written
notice to the Company of its request to withdraw.

                         (c)  Priority in Incidental Registrations. If the
managing underwriter of any underwritten offering shall inform the Company by
letter of its belief that the number of Registrable Securities requested to be
included in such registration, when added to the number of other securities to
be offered in such registration, would materially adversely affect such
offering, then the Company shall include in such registration, to the extent of
the number which the Company is so advised can be sold in (or during the time
of) such offering without so materially adversely affecting such offering,
securities in the following priority: (A) securities proposed to be included by
the Company, (B) on a pro rata basis in accordance with (i) the number of
securities proposed to be included by the stockholders (including Demand
Holders), if any, triggering such registration and (ii) the Registrable
Securities requested by Holders to be included in such registration pursuant to
this Section 2.2 and then (C) any other securities of the Company requested to
be included in such registration by any other holder having the right to include
securities, on a pro rata basis, based on the number of shares of Common Stock
held, or obtainable by exercise or conversion of other securities of the
Company, by such holder.

                         (d)  Plan of Distribution. Any participation by Holders
of Registrable Securities in a registration by the Company shall be in
accordance with the Company’s plan of distribution, provided that the Holders of
a majority of the Registrable Securities included in such registration shall in
consultation with the Company have the right to select a co-managing
underwriter.

             2.3.      Registration Procedures. If and whenever the Company is
required to use its reasonable best efforts to effect the registration of any
Registrable Securities under the Securities Act as provided in Sections 2.1 and
2.2 hereof, the Company shall as expeditiously as possible:

                      (a) prepare and file with the Commission as soon as
practicable the requisite registration statement to effect such registration
(and

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  shall include all financial statements required by the Commission to be filed
therewith) and thereafter use its reasonable best efforts to cause such
registration statement to become effective; provided, however, that before
filing such registration statement (including all exhibits) or any amendment or
supplement thereto or comparable statements under securities or blue sky laws of
any jurisdiction, the Company shall as promptly as practicable furnish such
documents to each Holder and each underwriter, if any, participating in the
offering of the Registrable Securities and their respective counsel, which
documents will be subject to the review and comments of each such Holder, each
underwriter and their respective counsel; and provided, further, however, that
the Company may discontinue any registration of its securities which are not
Registrable Securities at any time prior to the effective date of the
registration statement relating thereto;

                      (b) notify each Holder of Registrable Securities covered
by any registration statement of the Commission’s requests for amending or
supplementing such registration statement and the prospectus, and prepare and
file with the Commission such amendments and supplements to such registration
statement and the prospectus used in connection therewith as may be necessary to
keep such registration statement effective and to comply with the provisions of
the Securities Act with respect to the disposition of all Registrable Securities
covered by such registration statement for such period as shall be required for
the disposition of all of such Registrable Securities in accordance with the
intended method of distribution thereof; provided, that except with respect to
any such registration statement filed pursuant to Rule 415 under the Securities
Act, such period need not exceed 365 days;

                      (c) furnish, without charge, to each Holder of Registrable
Securities covered by any registration statement and each underwriter such
number of conformed copies of such registration statement and of each such
amendment and supplement thereto (in each case including all exhibits), such
number of copies of the prospectus contained in such registration statement
(including each preliminary prospectus and any summary prospectus) and any other
prospectus filed under Rule 424 under the Securities Act, in conformity with the
requirements of the Securities Act, and such other documents, as such Holders
and such underwriters may reasonably request;

                      (d) use its reasonable best efforts (i) to register or
qualify all Registrable Securities and other securities covered by such
registration statement under such securities or blue sky laws of such States of
the United States of America where an exemption is not available and as each
Holder of Registrable Securities covered by such registration statement or any
managing underwriter shall reasonably request, (ii) to keep such registration or
qualification in effect for so long as such registration statement remains in
effect, and (iii) to take any other action which may be reasonably necessary or
advisable to enable each Holder of Registrable Securities covered by a
registration statement to consummate the

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  disposition in such jurisdictions of the securities to be sold by such Holders
pursuant thereto, except that the Company shall not for any such purpose be
required to qualify generally to do business as a foreign corporation in any
jurisdiction wherein it would not but for the requirements of this subsection
(d) be obligated to be so qualified or to consent to general service of process
in any such jurisdiction;

                      (e) use its reasonable best efforts to cause all
Registrable Securities covered by such registration statement to be registered
with or approved by such other federal or state governmental agencies or
authorities as may be necessary in the opinion of counsel to the Company and
counsel to any Holder of Registrable Securities covered by such registration
statement to consummate the disposition of such Registrable Securities;

                      (f) furnish to each Holder and each underwriter, if any,
participating in the offering of the securities covered by such registration
statement, a signed counterpart of (i) an opinion of counsel for the Company,
and (ii) a “comfort” letter signed by the independent public accountants who
have certified the Company’s or any other entity’s financial statements included
or incorporated by reference in such registration statement, covering
substantially the same matters with respect to such registration statement (and
the prospectus included therein) and, in the case of the accountants’ comfort
letter, with respect to events subsequent to the date of such financial
statements, as are customarily covered in opinions of issuer’s counsel and in
accountants’ comfort letters delivered to the underwriters in underwritten
public offerings of securities (and dated the dates such opinions and comfort
letters are customarily dated) and, in the case of the legal opinion, such other
legal matters;

                      (g) promptly notify each Holder and each managing
underwriter, if any, participating in the offering of the securities covered by
such registration statement (i) when such registration statement, any
pre-effective amendment, the prospectus or any prospectus supplement related
thereto or post-effective amendment to such registration statement has been
filed, and, with respect to such registration statement or any post-effective
amendment, when the same has become effective; (ii) of any request by the
Commission for amendments or supplements to such registration statement or the
prospectus related thereto or for additional information; (iii) of the issuance
by the Commission of any stop order suspending the effectiveness of such
registration statement or the initiation of any proceedings for that purpose;
(iv) of the receipt by the Company of any notification with respect to the
suspension of the qualification of any of the Registrable Securities for sale
under the securities or blue sky laws of any jurisdiction or the initiation of
any proceeding for such purpose; (v) at any time when a prospectus relating
thereto is required to be delivered under the Securities Act, upon discovery
that, or upon the happening of any event as a result of which, the prospectus
included in such registration

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  statement, as then in effect, includes an untrue statement of a material fact
or omits to state any material fact required to be stated therein or necessary
to make the statements therein not misleading, in the light of the circumstances
under which they were made, and in the case of this clause (v), at the request
of any Holder of Registrable Securities covered by such registration statement
promptly prepare and furnish to such Holder and each managing underwriter, if
any, participating in the offering of the Registrable Securities, a reasonable
number of copies of a supplement to or an amendment of such prospectus as may be
necessary so that, as thereafter delivered to such Holders, such prospectus
shall not include an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading in the light of the circumstances under which they were
made; and (vi) at any time when the representations and warranties of the
Company contemplated by Section 2.4(a) or (b) hereof cease to be true and
correct;

                      (h) otherwise comply with all applicable rules and
regulations of the Commission, and make available to its security holders, as
soon as reasonably practicable, an earnings statement covering the period of at
least twelve months beginning with the first full calendar month after the
effective date of such registration statement, which earnings statement shall
satisfy the provisions of Section 11(a) of the Securities Act and Rule 158
promulgated thereunder, and promptly furnish to each Holder of Registrable
Securities covered by a registration statement a copy of any amendment or
supplement to such registration statement or prospectus;

                      (i) provide and cause to be maintained a transfer agent
and registrar (which, in each case, may be the Company) for all Registrable
Securities covered by such registration statement from and after a date not
later than the effective date of such registration statement;

                      (j) (i) use its reasonable best efforts to cause all
Registrable Securities covered by such registration statement to be listed on
the NASDAQ “national market system” or the principal securities exchange on
which similar securities issued by the Company are then listed (if any), if the
listing of such Registrable Securities is then permitted under the rules of such
exchange, or (ii) if no similar securities are then so listed, use its
reasonable best efforts to (x) cause all such Registrable Securities to be
listed on a national securities exchange or (y) failing that, secure designation
of all such Registrable Securities as a NASDAQ “national market system security”
within the meaning of Exchange Act Rule 11Aa2-1 of the Commission or (z) failing
that, to secure NASDAQ authorization for such shares and, without limiting the
generality of the foregoing, to arrange for at least two market makers to
register as such with respect to such shares with the National Association of
Securities Dealers, Inc.;

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                      (k) deliver promptly to counsel to each Holder and each
underwriter, if any, participating in the offering of the Registrable
Securities, copies of all correspondence between the Commission and the Company,
its counsel or auditors and all memoranda relating to discussions with the
Commission or its staff with respect to such registration statement;

                      (l) use its reasonable best efforts to obtain the
withdrawal of any order suspending the effectiveness of the registration
statement;

                      (m) provide a CUSIP number for all Registrable Securities,
no later than the effective date of the registration statement; and

                      (n) in connection with any underwritten public offering,
make available its senior executive officers, directors and chairman and
otherwise provide reasonable assistance to the underwriters (taking into account
the needs of the Company’s business) in their marketing of Registrable
Securities.

The Company may require each Holder of Registrable Securities covered by a
registration statement to furnish the Company such information regarding such
Holder and the distribution of the Registrable Securities of such Holder as the
Company may from time to time reasonably request in writing.

     Each Holder agrees that, upon receipt of any notice from the Company of the
happening of any event of the kind described in paragraph (g)(iii) or (v) of
this Section 2.3, such Holder will, to the extent appropriate, discontinue its
disposition of Registrable Securities pursuant to the registration statement
relating to such Registrable Securities until, in the case of paragraph (g)(v)
of this Section 2.3, its receipt of the copies of the supplemented or amended
prospectus contemplated by paragraph (g)(v) of this Section 2.3 and, if so
directed by the Company, will deliver to the Company (at the Company’s expense)
all copies, other than permanent file copies, then in its possession, of the
prospectus relating to such Registrable Securities current at the time of
receipt of such notice. If the disposition by a Holder of its securities is
discontinued pursuant to the foregoing sentence, the Company shall extend the
period of effectiveness of the registration statement by the number of days
during the period from and including the date of the giving of notice to and
including the date when such Holder shall have received copies of the
supplemented or amended prospectus contemplated by paragraph (g)(v) of this
Section 2.3; and, if the Company shall not so extend such period, the request
pursuant to which such registration statement was filed shall not be counted for
purposes of the requests for registration to which the Holders are entitled
pursuant to Section 2.1 hereof.

             2.4.      Underwritten Offerings.

                         (a)  Requested Underwritten Offerings. If requested by
the underwriters for any underwritten offering by the Holders pursuant to a
registration requested under Section 2.1, the Company shall enter into a
customary underwriting agreement (in the form of underwriting agreement used at
such time by the managing underwriter(s)) with a managing underwriter or
underwriters selected by the Demand Holders of a majority of the Registrable

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Securities included in such registration. Such underwriting agreement shall be
satisfactory in form and substance to Demand Holders of a majority of the
Registrable Securities included in such registration and shall contain such
representations and warranties by, and such other agreements on the part of, the
Company and such other terms as are generally prevailing in agreements of the
managing underwriter(s), including, without limitation, their customary
provisions relating to indemnification and contribution. Each Holder
participating in such registration shall be a party to such underwriting
agreement and may, at its option, require that any or all of the representations
and warranties by, and the other agreements on the part of, the Company to and
for the benefit of such underwriters shall also be made to and for the benefit
of such Holder and that any or all of the conditions precedent to the
obligations of such underwriters under such underwriting agreement be conditions
precedent to the obligations of such Holder. No underwriting agreement (or other
agreement in connection with such offering) shall require any Holder to make any
representations or warranties to or agreements with the Company or the
underwriters other than representations, warranties or agreements regarding the
ownership of such Holder’s Registrable Securities and such Holder’s intended
method or methods of disposition or to furnish any indemnity to any Person which
is broader than the indemnity to be furnished by such Holder pursuant to
Section 2.6(b).

                         (b)  Incidental Underwritten Offerings. In the case of
a registration pursuant to Section 2.2 hereof, if the Company shall have
determined to enter into any underwriting agreements in connection therewith,
all of the Registrable Securities to be included in such registration shall be
subject to such underwriting agreements. Each Holder of Registrable Securities
included in such registration shall be a party to such underwriting agreement
and may, at its option, require that any or all of the representations and
warranties by, and the other agreements on the part of, the Company to and for
the benefit of such underwriters shall also be made to and for the benefit of
such Holder and that any or all of the conditions precedent to the obligations
of such underwriters under such underwriting agreement be conditions precedent
to the obligations of such Holder. No underwriting agreement (or other agreement
in connection with such offering) shall require any Holder to make any
representations or warranties to or agreements with the Company or the
underwriters other than representations, warranties or agreements regarding the
ownership of such Holder’s Registrable Securities and such Holder’s intended
method or methods of disposition or to furnish any indemnity to any Person which
is broader than the indemnity to be furnished by such Holder pursuant to
Section 2.6(b).

             2.5.      Preparation; Reasonable Investigation. In connection with
the preparation and filing of each registration statement under the Securities
Act pursuant to this Agreement, the Company will give each Holder of Registrable
Securities covered by such registration statement, its underwriters, if any, and
its counsel, accountants and other representatives and agents the opportunity to
participate in the preparation of such registration statement, each prospectus
included therein or filed with the Commission, and each amendment thereof or
supplement thereto, and give each of them such access to its books and records
and such opportunities to discuss the business of the Company with its officers
and employees and the independent public accountants who have certified its
financial statements, and supply all other information reasonably requested by
each of them, as shall be necessary or appropriate, in the opinion of such
Holder and such underwriters’ respective counsel, to conduct a reasonable

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investigation within the meaning of the Securities Act.

             2.6.      Indemnification.

                         (a)  Indemnification by the Company. The Company agrees
that in the event of any registration of any securities of the Company under the
Securities Act, the Company shall, and hereby does, indemnify and hold harmless
each Holder, its directors, officers, members, partners, agents and affiliates
and each other Person who participates as an underwriter in the offering or sale
of such securities and each other Person, if any, who controls such Holder or
any such underwriter within the meaning of the Securities Act, against any
losses, claims, damages, or liabilities, joint or several, to which such Holder
or any such director, officer, member, partner, agent or affiliate or
underwriter or controlling Person may become subject under the Securities Act or
otherwise, insofar as such losses, claims, damages or liabilities, joint or
several (or actions or proceedings, whether commenced or threatened, in respect
thereof), arise out of or are based upon (i) any untrue statement or alleged
untrue statement of any material fact contained in any registration statement
under which such securities were registered under the Securities Act, any
preliminary prospectus, final prospectus or summary prospectus contained
therein, or any amendment or supplement thereto, (ii) any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein in light of the circumstances in which
they were made not misleading, or (iii) any violation by the Company of any
federal, state or common law rule or regulation applicable to the Company and
relating to action required of or inaction by the Company in connection with any
such registration, and the Company shall reimburse such Holder and each such
director, officer, member, partner, agent or affiliate, underwriter and
controlling Person for any legal or any other expenses reasonably incurred by
them in connection with investigating or defending any such loss, claim,
liability, action or proceeding; provided that the Company shall not be liable
in any such case to a Holder or any such director, officer, member, partner,
agent, affiliate, or controlling Person to the extent that any such loss, claim,
damage, liability (or action or proceeding in respect thereof) or expense arises
out of or is based upon an untrue statement or alleged untrue statement or
omission or alleged omission made in such registration statement, any such
preliminary prospectus, final prospectus, summary prospectus, amendment or
supplement in reliance upon and in conformity with written information furnished
to the Company by or on behalf of such Holder, specifically stating that it is
for use in the preparation thereof. Such indemnity shall remain in full force
regardless of any investigation made by or on behalf of a Holder or any such
director, officer, member, partner, agent, affiliate, underwriter or controlling
Person and shall survive the transfer of such securities by a Holder.

                         (b)  Indemnification by the Holders. As a condition to
including any Registrable Securities in any registration statement, the Company
shall have received an undertaking reasonably satisfactory to it from each
Holder so including any Registrable Securities to indemnify and hold harmless,
severally and not jointly (in the same manner and to the same extent as set
forth in paragraph (a) of this Section 2.6), the Company, and each director of
the Company, each officer of the Company and each other Person, if any, who
controls the Company within the meaning of the Securities Act, with respect to
any statement or alleged statement in or omission or alleged omission from such
registration statement, any preliminary prospectus, final

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prospectus or summary prospectus contained therein, or any amendment or
supplement thereto, but only to the extent such statement or alleged statement
or omission or alleged omission was made in reliance upon and in conformity with
written information furnished to the Company by or on behalf of such Holder
specifically stating that it is for use in the preparation of such registration
statement, preliminary prospectus, final prospectus, summary prospectus,
amendment or supplement; provided, however, that the liability of such
indemnifying party under this Section 2.6(b) shall be limited to the amount of
proceeds (net of expenses and underwriting discounts and commissions) received
by such indemnifying party in the offering giving rise to such liability. Such
indemnity shall remain in full force and effect, regardless of any investigation
made by or on behalf of the Company or any such director, officer or controlling
Person and shall survive the transfer of such securities by such Holder.

                         (c)  Notices of Claims, etc. Promptly after receipt by
an indemnified party of notice of the commencement of any action or proceeding
involving a claim referred to in the preceding subsections of this Section 2.6,
such indemnified party shall, if a claim in respect thereof is to be made
against an indemnifying party, give written notice to the latter of the
commencement of such action or proceeding; provided, however, that the failure
of any indemnified party to give notice as provided herein shall not relieve the
indemnifying party of its obligations under the preceding subsections of this
Section 2.6, except to the extent that the indemnifying party is actually
prejudiced by such failure to give notice, and shall not relieve the
indemnifying party from any liability which it may have to the indemnified party
otherwise than under this Section 2.6. In case any such action or proceeding is
brought against an indemnified party, the indemnifying party shall be entitled
to participate therein and, unless in the opinion of outside counsel to the
indemnified party a conflict of interest between such indemnified and
indemnifying parties may exist in respect of such claim, to assume the defense
thereof, jointly with any other indemnifying party similarly notified to the
extent that it may wish, with counsel reasonably satisfactory to such
indemnified party; provided, however, that if the defendants in any such action
or proceeding include both the indemnified party and the indemnifying party and
if in the opinion of outside counsel to the indemnified party there may be legal
defenses available to such indemnified party and/or other indemnified parties
which are different from or in addition to those available to the indemnifying
party, the indemnified party or parties shall have the right to select separate
counsel to defend such action or proceeding on behalf of such indemnified party
or parties, provided, however, that the indemnifying party shall be obligated to
pay for only one counsel and one local counsel for all indemnified parties.
After notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof and approval by the indemnified party
of such counsel, the indemnifying party shall not be liable to such indemnified
party for any legal expenses subsequently incurred by the latter in connection
with the defense thereof other than reasonable costs of investigation (unless
the first proviso in the preceding sentence shall be applicable). No
indemnifying party shall be liable for any settlement of any action or
proceeding effected without its written consent. No indemnifying party shall,
without the consent of the indemnified party (which consent shall not be
unreasonably withheld or delayed), consent to entry of any judgment or enter
into any settlement which does not include as an unconditional term thereof the
giving by the claimant or plaintiff to such indemnified party of a release from
all liability in respect to such claim or litigation.

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                         (d)  Contribution. If the indemnification provided for
in this Section 2.6 shall for any reason be held by a court to be unavailable to
an indemnified party under subsection (a) or (b) hereof in respect of any loss,
claim, damage or liability, or any action in respect thereof, then, in lieu of
the amount paid or payable under subsection (a) or (b) hereof, the indemnified
party and the indemnifying party under subsection (a) or (b) hereof shall
contribute to the aggregate losses, claims, damages and liabilities (including
legal or other expenses reasonably incurred in connection with investigating the
same), (i) in such proportion as is appropriate to reflect the relative fault of
the indemnifying party on the one hand, and the indemnified party on the other,
which resulted in such loss, claim, damage or liability, or action in respect
thereof, with respect to the statements or omissions which resulted in such
loss, claim, damage or liability, or action in respect thereof, as well as any
other relevant equitable considerations, or (ii) if the allocation provided by
clause (i) above is not permitted by applicable law or if the allocation
provided in this clause (ii) provides a greater amount to the indemnified party
than clause (i) above, in such proportion as shall be appropriate to reflect not
only the relative fault but also the relative benefits received by the
indemnifying party and the indemnified party from the offering of the securities
covered by such registration statement as well as any other relevant equitable
considerations. The parties hereto agree that it would not be just and equitable
if contributions pursuant to this Section 2.6(d) were to be determined by pro
rata allocation or by any other method of allocation which does not take into
account the equitable considerations referred to in the preceding sentence of
this Section 2.6(d). No Person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any Person who was not guilty of such fraudulent
misrepresentation. In addition, no Person shall be obligated to contribute
hereunder any amounts in payment for any settlement of any action or claim
effected without such Person’s consent, which consent shall not be unreasonably
withheld. Notwithstanding anything in this subsection (d) to the contrary, no
indemnifying party (other than the Company) shall be required to contribute any
amount in excess of the proceeds (net of expenses and underwriting discounts and
commissions) received by such party from the sale of the Registrable Securities
in the offering to which the losses, claims, damages or liabilities of the
indemnified parties relate.

                         (e)  Other Indemnification. Indemnification and
contribution similar to that specified in the preceding subsections of this
Section 2.6 (with appropriate modifications) shall be given by the Company and
the Holders with respect to any required registration or other qualification of
securities under any federal, state or blue sky law or regulation of any
governmental authority other than the Securities Act. The indemnification
agreements contained in this Section 2.6 shall be in addition to any other
rights to indemnification or contribution which any indemnified party may have
pursuant to law or contract and shall remain operative and in full force and
effect regardless of any investigation made by or on behalf of any indemnified
party and shall survive the transfer of any of the Registrable Securities by a
Holder.

                         (f)  Indemnification Payments. The indemnification and
contribution required by this Section 2.6 shall be made by periodic payments of
the amount thereof during the course of the investigation or defense, as and
when bills are received or expense, loss, damage or liability is incurred.

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             2.7.      Unlegended Certificates. In connection with the offering
of any Registrable Securities registered pursuant to this Section 2, the Company
shall (i) facilitate the timely preparation and delivery to each Holder and
underwriter, if any, participating in such offering, of unlegended certificates
representing ownership of such Registrable Securities being sold in such
denominations and registered in such names as requested by such Holder or such
underwriters and (ii) instruct any transfer agent and registrar of such
Registrable Securities to release any stop transfer orders with respect to any
such Registrable Securities.

             2.8.      No Required Sale. Nothing in this Agreement shall be
deemed to create an independent obligation on the part of any Holder to sell any
Registrable Securities pursuant to any effective registration statement.

     3.     Rule 144. The Company shall take all actions reasonably necessary to
enable each Holder of Registrable Securities to sell such securities without
registration under the Securities Act within the limitation of the exemptions
provided by (i) Rule 144, or (ii) any similar rule or regulation hereafter
adopted by the Commission including, without limiting the generality of the
foregoing, filing on a timely basis all reports required to be filed by the
Exchange Act. Upon the request of any Holder, the Company will deliver to such
Holder a written statement as to whether it has complied with such requirements.

     4.     Amendments and Waivers. This Agreement may be amended, modified or
supplemented only by written agreement of the Company and Holders of a majority
of the Registrable Securities of each Purchaser and its Permitted Transferees,
provided, however, that any amendment that would materially and adversely affect
any particular Holder or Holders shall also require the written consent of such
Holder or Holders.

     5.     Notice. All notices and other communications hereunder shall be in
writing and, unless otherwise provided herein, shall be deemed to have been
given when received by the party to whom such notice is to be given at its
address set forth below, or such other address for the party as shall be
specified by notice given pursuant hereto:

  (a)      If to Forstmann Little, to:   c/o Forstmann Little & Co. 767 Fifth
Avenue New York, NY 10153 Attention: Sandra J. Horbach   With a copy to:  
Fried, Frank, Harris, Shriver & Jacobson One New York Plaza New York, New York
10004 Attention: Stephen Fraidin, Esq   (b)      If to Telmex, to:

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  Teléfonos de México, S.A. de C.V. Parque Via 190, Piso 10 Colonia Cuauhtémoc
06599 México, D.F Attention: Lic. Javier Mondragon Alarcon   With a copy to:  
Latham & Watkins 885 Third Avenue Suite 1000 New York, NY 10022 Attention:
Charles M. Nathan, Esq   (c)      If to the Company, to it at:   XO
Communications, Inc. 11111 Sunset Hills Road Reston, VA 20190 Attn: Gary D.
Begeman, Esq   With a copy to:   Willkie Farr & Gallagher 787 Seventh Avenue New
York, NY 10019 Attn: Bruce R. Kraus, Esq

     6.     Assignment; Third Party Beneficiaries. This Agreement shall be
binding upon and inure to the benefit of and be enforceable by the parties
hereto and their respective successors and permitted assigns. This Agreement may
not be assigned by the Company, without the prior written consent of the
Holders. The Purchasers and each of their Permitted Transferees may, at their
election, at any time or from time to time, assign their rights under this
Agreement, in whole or in part, to any purchaser or other transferee of shares
of Registrable Securities held by them to the extent such Person agrees in
writing to be bound by all of the provisions applicable hereunder to the
transferring Holder; provided, however, that (i) no Permitted Transferee or
assignee of any Purchaser shall have any demand rights pursuant to Section 2.1
unless such demand rights are expressly assigned to such Permitted Transferee or
assignee in writing and (ii) no such assignment will increase the total number
of registrations pursuant to Section 2.1 or underwritten offerings the Company
is required to effect hereunder. If the Company is a party to any merger or
consolidation pursuant to which the Registrable Securities are converted into or
exchanged for securities or the right to receive securities of any other Person
(“Conversion Securities”), the issuer of such Conversion Securities shall assume
(in

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a writing delivered to each Holder) all obligations of the Company under this
Agreement. The Company shall not effect any merger or consolidation unless the
issuer of any Conversion Securities complies with the provisions of this
Section 6.

     7.     Remedies. The parties hereto agree that money damages or other
remedy at law would not be sufficient or adequate remedy for any breach or
violation of, or a default under, this Agreement by them and that, in addition
to all other remedies available to them, each of them shall be entitled to an
injunction restraining such breach, violation or default or threatened breach,
violation or default and to any other equitable relief, including without
limitation specific performance, without bond or other security being required.
In any action or proceeding brought to enforce any provision of this Agreement
(including the indemnification provisions thereof), the successful party shall
be entitled to recover reasonable attorneys’ fees in addition to its costs and
expenses and any other available remedy.

     8.     No Inconsistent Agreements. The Company will not, on or after the
date of this Agreement, enter into any agreement with respect to its securities
which is inconsistent with the rights granted to the Holders in this Agreement
or otherwise conflicts with the provisions hereof. The Company further
represents and warrants that the rights granted to the Holders hereunder do not
in any way conflict with and are not inconsistent with any other agreements to
which the Company is a party or by which it is bound.

     9.     Descriptive Headings. The descriptive headings of the several
sections and paragraphs of this Agreement are inserted for reference only and
shall not control or otherwise affect the meaning hereof.

     10.     Governing Law. This Agreement shall be construed and enforced in
accordance with, and the rights and obligations of the parties hereto shall be
governed by, the laws of the State of New York, without giving effect to the
conflicts of law principles thereof. Each of the parties to this Agreement
hereby irrevocably and unconditionally consents to submit to the exclusive
jurisdiction of the courts of the State of New York and the United States of
America located in the County of New York for any action or proceeding arising
out of or relating to this Agreement (and agrees not to commence any action or
proceeding relating thereto except in such courts), and further agrees that
service of any process, summons, notice or document by U.S. registered mail to
its respective address set forth in Section 5 hereof shall be effective service
of process for any action or proceeding brought against it in any such court.
Each of the parties hereto hereby irrevocably and unconditionally waives any
objection to the laying of venue of any action or proceeding arising out of this
Agreement in the courts of the State of New York or the United States of America
located in the County of New York, and hereby further irrevocably and
unconditionally waives and agrees not to plead or claim in any such court that
any such action or proceeding brought in any such court has been brought in an
inconvenient forum.

     11.     Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all such
counterparts shall together constitute one and the same instrument.

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     12.     Invalidity of Provision. The invalidity or unenforceability of any
provision of this Agreement in any jurisdiction shall not affect the validity or
enforceability of the remainder of this Agreement in that jurisdiction or the
validity or enforceability of this Agreement, including that provision, in any
other jurisdiction. If any restriction or provision of this Agreement is held
unreasonable, unlawful or unenforceable in any respect, such restriction or
provision shall be interpreted, revised or applied in a manner that renders it
lawful and enforceable to the fullest extent possible under law.

     13.     Further Assurances. Each party hereto shall do and perform or cause
to be done and performed all further acts and things and shall execute and
deliver all other agreements, certificates, instruments, and documents as any
other party hereto reasonably may request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.

     14.     Entire Agreement; Effectiveness. This Agreement constitutes the
entire agreement, and supersedes all prior agreements and understandings, oral
and written, between the parties hereto with respect to the subject matter
hereof.

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     IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
and delivered by their respective officers thereunto duly authorized.

  XO COMMUNICATIONS, INC

      By:   ___________________________     Name: Daniel F. Akerson     Title:
Chairman and Chief Executive Officer

  FORSTMANN LITTLE & CO. EQUITY
PARTNERSHIP VII, L.P.

      By:   ___________________________     Name: Sandra J. Horbach,     Title:
General Partner

  FORSTMANN LITTLE & CO. SUBORDINATED
DEBT AND EQUITY MANAGEMENT BUYOUT
PARTNERSHIP – VIII, L.P.

      By:   ___________________________     Name: Sandra J. Horbach,     Title:
General Partner

  TELÉFONOS DE MÉXICO, S.A. DE C.V.

      By:   ___________________________     Name: Jaime Chico Pardo     Title:
Director General

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Exhibit D

AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION OF
XO COMMUNICATIONS, INC.

Pursuant to Sections [103 and 303] [242 and 245]
of the
Delaware General Corporation Law

*************

     XO COMMUNICATIONS, INC., a Delaware corporation, hereby certifies as
follows:

     The original Certificate of Incorporation of NM Acquisition Corp. (the
“Corporation”) was filed with the Secretary of State of the State of Delaware on
December 30, 1999 (the “Original Certificate of Incorporation”).

     The Original Certificate of Incorporation was amended and restated pursuant
to an Amended and Restated Certificate of Incorporation, which was filed with
the Secretary of State of the State of Delaware on June 8, 2000 (the “First
Amended and Restated Certificate of Incorporation”).

     The First Amended and Restated Certificate of Incorporation was further
amended pursuant to the Certificate of Merger of NEXTLINK Communications, Inc.
with and into the Corporation, pursuant to which the Corporation changed its
name to “NEXTLINK Communications, Inc.,” which was filed with the Secretary of
State of the State of Delaware on June 16, 2000.

     The First Amended and Restated Certificate of Incorporation, as amended,
was further amended pursuant to the Certificate of Merger of CONCENTRIC Network
Corporation with and into NEXTLINK Communications, Inc., which was filed with
the Secretary of State of the State of Delaware on June 16, 2000.

     The First Amended and Restated Certificate of Incorporation, as amended,
was further amended pursuant to a Certificate of Correction, which was filed
with the Secretary of State of the State of Delaware on July 5, 2000.

     The First Amended and Restated Certificate of Incorporation, as amended,
was further amended pursuant to a Certificate of Designation relating to the
Corporation’s Series G Cumulative Convertible Participating Preferred Stock, par
value $.01 per share, and a Certificate of Designation relating to the
Corporation’s Series H Convertible Participating Preferred Stock, par value $.01
per share, which were filed with the Secretary of State of the State of Delaware
on July 5, 2000.

     The First Amended and Restated Certificate of Incorporation, as amended,
was further amended pursuant to a Certificate of Amendment, pursuant to which
the Corporation changed

 

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its name to “XO Communications, Inc.,” which was filed with the Secretary of
State of the State of Delaware on October 20, 2000 to be effective as of
October 25, 2000.

     The First Amended and Restated Certificate of Incorporation, as amended,
was further amended pursuant to a Certificate of Amendment, which was filed with
the Secretary of State of the State of Delaware on June 5, 2001.

     The First Amended and Restated Certificate of Incorporation, as amended,
was further amended pursuant to the Certificate of Merger of Internex
Information Services, Inc., Delta Internet Services, Inc. and Anaserve, Inc.
with and into the Corporation, which was filed with the Secretary of State of
the State of Delaware on June 25, 2001 to be effective as of June 30, 2001.

     The First Amended and Restated Certificate of Incorporation, as amended,
was further amended pursuant to the Certificate of Merger of XO Technology
Services, Inc. with and into the Corporation, which was filed with the Secretary
of State of the State of Delaware on June 25, 2001 to be effective as of
June 30, 2001 (the First Amended and Restated Certificate of Incorporation, as
so amended to date, the “Current Certificate of Incorporation”).

     The Current Certificate of Incorporation is hereby amended and restated
pursuant to [the order of the United States Bankruptcy Court, [District] in [(In
re XO Communications, Inc., No. [    ] (_____))], and the Plan of Reorganization
confirmed therein in connection with the reorganization of the Corporation under
Title 11 of the United States Code and in accordance with Sections 103 and 303
of the Delaware General Corporation Law.] [Sections 242 and Section 245 of the
Delaware General Corporation Law and has been duly proposed and adopted by the
board of directors of the Corporation and the stockholders of the Corporation,
and all specifically affected classes or series of stockholders, in accordance
with Sections 242 and Section 245 of the Delaware General Corporation Law.
[INSERT DESCRIPTION OF OUT OF COURT TRANSACTION HERE]]

     This Amended and Restated Certificate of Incorporation restates and
integrates and further amends the Current Certificate of Incorporation. The text
of the Current Certificate of Incorporation is hereby amended and restated in
its entirety as follows:

          1.     Name. The name of the corporation is:

                  XO COMMUNICATIONS, INC.

     XO Communications, Inc. is referred to as the “Corporation” hereafter in
this Amended and Restated Certificate of Incorporation.

          2.     Purpose. The nature of the business or purpose to be conducted
or promoted by the Corporation is to engage in any lawful act or activity for
which corporations may be organized under the Delaware General Corporation Law.

2

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          3.     Shares.

    (a)  The Corporation shall have authority to issue ________________
(_________) shares of common stock of the Corporation, which shall be divided
into three classes, ________________ (_________) shares of Class A Common Stock,
par value $0.01 per share (the “Class A Common Stock”), ________________
(_________) shares of Class C Common Stock, par value $0.01 par share (the
“Class C Common Stock”), and two (2) shares of Class D Common Stock, par value
$0.01 per share (the “Class D Common Stock” and together with the Class A Common
Stock and the Class C Common Stock, the “Common Stock”). The Corporation shall
have authority to issue ________________ (_________) shares of preferred stock,
par value $0.01 per share (the “Preferred Stock”).

    (b)  Shares of Preferred Stock of the Corporation may be issued from time to
time in one or more classes or series, each of which class or series shall have
such distinctive designation or title as shall be fixed by the Board of
Directors and recorded in a Certificate of Designation adopted and filed as
required by Section 151 of the General Corporation Law of Delaware prior to the
issuance of any shares thereof. Each such class or series of Preferred Stock
shall have such voting powers, full or limited, or no voting powers, and such
preferences and relative participating, option or other special rights and such
qualifications, limitations or restrictions thereof, as shall be stated in such
resolution or resolutions providing for the issue of such class or series of
Preferred Stock as may be adopted from time to time by the Board of Directors
prior to the issuance of any shares thereof pursuant to the authority hereby
expressly vested in it, all in accordance with the laws of the State of
Delaware.

    (c)  Except with regard to the special voting power and conversion rights
provided in this paragraph 3, the Class A Common Stock, the Class C Common Stock
and the Class D Common Stock shall carry identical characteristics, rights,
preferences and limitations, including but not limited to participating equally
in any dividends when and as declared by the board of directors of the
Corporation (the “Board of Directors”) out of funds lawfully available therefor
and in any distribution resulting from a liquidation or distribution of assets,
whether voluntary or involuntary, in each case subject to any preferential
rights granted to any series of Preferred Stock that may be then outstanding.

    (d)  Holders of all classes of the Common Stock are entitled to vote on all
matters that come before the stockholders, including without limitation,
election of the directors to the Board of Directors. Subject to the differential
voting rights provided in this paragraph 3, holders of the Common Stock shall
vote together as a single class on all matters on which holders of the Common
Stock are entitled to vote. Each share of the Common Stock shall have one
(1) vote on all matters on which holders of the Common Stock are entitled to
vote.

    (e)  Each share of the Class C Common Stock may be converted, at any time
and from time to time at the option of the holder, into one share of the Class A
Common Stock. Such conversion shall be effected by the surrender of the
certificate representing the shares of Class C Common Stock to be converted at
the office of the Secretary of the Corporation (or at such additional place or
places as may from time to time be designated by the Secretary or any Assistant
Secretary of the Corporation) in such form and accompanied by all stock transfer
tax stamps, if any, as shall be required for such transfer. Upon such surrender,
the holder of such

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shares of Class C Common Stock shall be entitled to become, and shall be
registered in the stock transfer records maintained by or on behalf of the
Corporation as, the holder of the number of shares of the Class A Common Stock
into which such shares of Class C Common Stock are convertible, and thereupon
there shall be issued and promptly delivered to such holder, at the address of
such holder provided to the Corporation at the time of surrender of the
certificate or certificates representing the shares of Class C Common Stock so
surrendered, a certificate or certificates for such number of shares of the
Class A Common Stock into which such shares of Class C Common Stock are
convertible.

     (f)  Each share of Class C Common Stock shall automatically be converted,
without any further action on behalf of the Corporation, into one share of
Class A Common Stock upon the Transfer (or presentment to the Corporation for
Transfer in the stock transfer records maintained by or on behalf of the
Corporation) of such share of the Class C Common Stock by a Class C Permitted
Transferee to a Class C Prohibited Transferee. Such conversion shall be
effective automatically upon the Transfer of title to such share of Class C
Common Stock from the Class C Permitted Transferee to the Class C Prohibited
Transferee, which Transfer of title shall be deemed to occur no later than the
presentment of the certificate representing such share of Class C Common Stock
to the Corporation for Transfer in the stock transfer records maintained by or
on behalf of the Corporation. In addition, each share of the Class C Common
Stock shall automatically be converted, without any further action on behalf of
the Corporation, into one share of the Class A Common Stock upon any of the
following events, which conversion shall be deemed effective immediately upon
the occurrence of such event: (i) at such time as Class C Permitted Transferees
shall own in the aggregate less than 10% of the total number of outstanding
shares of the Common Stock or (ii) the fourth anniversary of the date of the
original issuance of the first share or shares of the Class C Common Stock (the
“Original Class C Issuance Date”). Promptly upon the conversion of all shares of
Class C Common Stock into shares of Class A Common Stock pursuant to the
preceding sentence, the Secretary of the Corporation (or such other employee of
the Corporation as may be designated by the Secretary or any Assistant Secretary
of the Corporation) shall send a notice of such conversion to each holder of
shares of Class C Common Stock at the address of such holder as set forth in the
stock transfer records maintained by or on behalf of the Corporation. Such
notice shall state that all shares of Class C Common Stock have automatically
been converted into shares of Class A Common Stock and that such holder shall
have the right to surrender the certificate or certificates representing shares
of Class C Common Stock held by such holder at the office of the Secretary of
the Corporation (or at such additional place or places as may be designated by
the Secretary or any Assistant Secretary of the Corporation) in such form and
accompanied by all stock transfer tax stamps, if any, as shall be required for
such transfer. Upon such surrender, such holder shall be entitled to be
registered in the stock transfer records maintained by or on behalf of the
Corporation as the holder of the number of shares of the Class A Common Stock
into which such shares of Class C Common Stock are convertible, and thereupon
there shall be issued and promptly delivered to such holder at the address of
such holder set forth above, a certificate or certificates representing such
number of shares of the Class A Common Stock into which such shares of Class C
Common Stock are convertible.

     (g)  Each share of the Class D Common Stock may be converted, at any time
and from time to time at the option of the holder, into one share of the Class A
Common Stock. Such

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conversion shall be effected by the surrender of the certificate or certificates
representing the shares of Class D Common Stock to be converted at the office of
the Secretary of the Corporation (or at such additional place or places as may
be designated by the Secretary or any Assistant Secretary of the Corporation) in
such form and accompanied by all stock transfer tax stamps, if any, as shall be
required for such transfer. Upon such surrender, the holder of such shares of
Class D Common Stock shall be entitled to become, and shall be registered in the
stock transfer records maintained by or on behalf of the Corporation as, the
holder of the number of shares of the Class A Common Stock into which such
shares of Class D Common Stock are convertible, and thereupon there shall be
issued and promptly delivered to such holder, at the address of such holder
provided to the Corporation at the time of surrender of the certificate or
certificates representing the shares of Class D Common Stock so surrendered, a
certificate or certificates representing such number of shares of Class A Common
Stock into which such Class D Common Stock is convertible.

     (h)  Each share of Class D Common Stock will automatically be converted,
without any further action on behalf of the Corporation, into one share of the
Class A Common Stock simultaneously upon the conversion of all outstanding
shares of the Class C Common Stock into the Class A Common Stock in accordance
with the terms of subparagraph 3(f), which conversion shall be deemed effective
immediately upon the occurrence of such event. Promptly upon the conversion of
all shares of Class D Common Stock into shares of Class A Common Stock pursuant
to this subparagraph (h), the Secretary of the Corporation (or such other
employee of the Corporation as may be designated by the Secretary or any
Assistant Secretary of the Corporation) shall send a notice of such conversion
to each holder of shares of Class D Common Stock at the address of such holder
as set forth in the stock transfer records maintained by or on behalf of the
Corporation. Such notice shall state that all shares of Class D Common Stock
have automatically been converted into shares of Class A Common Stock and that
such holder shall have the right to surrender the certificate or certificates
representing the shares of Class D Common Stock held by such holder at the
office of the Secretary of the Corporation (or at such additional place or
places as may be designated by the Secretary or any Assistant Secretary of the
Corporation) in such form and accompanied by all stock transfer tax stamps, if
any, as shall be required for such transfer. Upon such surrender, such holder
shall be entitled to be registered in the stock transfer records maintained by
or on behalf of the Corporation as the holder of the number of shares of the
Class A Common Stock into which such shares of Class D Common Stock are
convertible, and thereupon there shall be issued and promptly delivered to such
holder at the address of such holder as set forth in such stock transfer records
a certificate or certificates for such number of shares of the Class A Common
Stock into which shares of Class D Common Stock are convertible.

     (i)  At any time at which any shares of the Class C Common Stock or the
Class D Common Stock shall remain outstanding, the affirmative vote of the
holders of a majority of the outstanding shares of the Class C Common Stock and
the holders of a majority of the outstanding shares of the Class D Common Stock,
each voting as a separate class, shall be required before the Corporation may
enter into any agreement with respect to a Major Event. A “Major Event” shall
mean any merger (other than a merger of a wholly-owned Subsidiary of the
Corporation with and into the Corporation), consolidation, reorganization or
recapitalization of

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the Corporation or any sale of all or a substantial portion of the assets of the
Corporation and its subsidiaries, taken as a whole.

     (j)  If the Corporation in any manner subdivides the outstanding shares of
one class of Common Stock into a greater number of shares of such class, the
shares of all other classes of Common Stock shall be similarly subdivided, and
if the Corporation in any manner combines the outstanding shares of one class of
Common Stock into a lesser number of shares of such class, the shares of all
other classes of Common Stock shall be similarly combined. Upon any such
subdivision or combination, the Corporation shall give notice thereof to each
holder of Common Stock at the address of such holder as set forth in the stock
transfer records maintained by or on behalf of the Corporation.

     (k)  The Corporation shall not be required to issue or deliver fractional
shares of any Common Stock to any holder of Common Stock upon any conversion of
Common Stock provided for in this paragraph 3. If more than one share of Common
Stock shall be held at the same time by the same holder, the Corporation may
aggregate the number of shares of Common Stock that would be issuable upon any
such conversion. If there are fractional shares of any Common Stock to be issued
to any holder, the Corporation shall, if such fractional shares are not issued
to such holder, pay cash in respect of such fractional shares in an amount equal
to the Fair Market Value thereof (without interest).

     (l)  If, at any time following the Original Class C Issuance Date but prior
to the Board Representation Date, shares of Class C Common Stock are
outstanding, the affirmative vote of a majority of the outstanding shares of the
Class C Common Stock, voting as a separate class, shall be required before the
Corporation or any Subsidiary of the Corporation may:

  (i)   acquire, by purchase, merger or otherwise, in one transaction or a
series of related transactions, any equity or other ownership interest in, or
assets of, any Person in exchange for consideration with a Fair Market Value
greater than 20% of the consolidated Net Assets of the Corporation determined in
accordance with GAAP;     (ii)   authorize for issuance or issue any equity
securities or Equity Derivative Securities in one transaction or a series of
related transactions with a Fair Market Value at the time of issuance in excess
of $100 million (excluding any Permitted Benefit Plan Issuance);     (iii)  
incur Indebtedness in one transaction or a series of related transactions in
excess of $100 million in aggregate principal amount (other than intercompany
Indebtedness and Indebtedness outstanding as of the Original Class C Issuance
Date (and borrowings pursuant to the terms thereof), and any amendment or
refinancing of such Indebtedness in a principal amount not exceeding the
principal amount so refinanced and on financial and

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      other terms no less favorable to the Corporation than such outstanding
Indebtedness);     (iv)   amend this Amended and Restated Certificate of
Incorporation or the bylaws of the Corporation (the “Bylaws”);     (v)   issue
or agree to issue any Preferred Stock.

    [(m) The Corporation shall not create, designate, authorize or cause to be
issued any class or series of nonvoting stock. For purposes of this paragraph
3(m), any class or series of stock that has only such voting rights as are
mandated by the Delaware General Corporation Law shall be deemed to be nonvoting
subject to the restrictions of this subparagraph 3(m).] [(used if bankruptcy
case filed)]

           4.     Bylaws. In furtherance and not in limitation of the powers
conferred by statute, except as otherwise provided herein (including as provided
in paragraph 3(l)(iv)), the Bylaws may be made, altered, amended or repealed by
the stockholders or by a majority of the entire Board of Directors.

           5.     Registered Agent and Office. The name of the initial
registered agent of the Corporation and the address of its initial registered
office are as follows:

      Name   Address

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--------------------------------------------------------------------------------

Corporation Service Company   1013 Centre Road     Wilmington, DE 19805

           8.     Directors.

           (a)    The number of directors of the Corporation shall be determined
in the manner specified by the Bylaws and may be increased or decreased from
time to time in the manner provided therein.

           (b)    There is hereby established a five member committee (the
“Executive Committee”) consisting of, prior to the Board Representation Date,
three Forstmann Little Designees so long as Forstmann Little Beneficially Owns
shares of Common Stock representing 15% or more of the outstanding shares of
Common Stock or two Forstmann Little Designees so long as the Forstmann Little
Beneficially Owns shares of Common Stock representing at least 10% of the
outstanding shares of Common Stock but less than 15% of the outstanding shares
of Common Stock, and, prior to the Board Representation Date, one Telmex
Independent Designee (to the extent a Telmex Independent Designee has been
designated pursuant to Section 2.2(a) of the Stockholders Agreement) so long as
Telmex Beneficially Owns shares of Common Stock representing at least 10% of the
outstanding shares of Common Stock. After the Board Representation Date, the
Executive Committee shall include two Director designees of each Investor so
long as such Investor Beneficially Owns shares of Common Stock representing 15%
or more of the outstanding shares of Common Stock or one Director designee of
each Investor so long as such Investor Beneficially Owns shares of Common Stock
representing at least 10% of

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the outstanding shares of Common Stock but less than 15% of the outstanding
shares of Common Stock. The Chief Executive Officer of the Corporation shall be
a member of the Executive Committee. The Board of Directors shall appoint the
Executive Committee annually on a basis consistent with the foregoing. The
initial Executive Committee shall consist of the Chief Executive Officer of the
Corporation, three Forstmann Little Designees and one Telmex Independent
Designee. The Executive Committee, together with the Board of Directors, shall,
pursuant to Section 141(a) of the Delaware General Corporation Law (the “DGCL”),
exercise the powers and duties conferred and imposed upon the Board of Directors
by the DGCL as provided for herein.

           The Corporation shall not, directly or indirectly, and shall not
permit any of its Subsidiaries to, directly or indirectly, take any of the
following actions (except to the extent any such action is specifically
authorized under the Stockholders Agreement (to the extent it is in effect), the
Stock Purchase Agreement or the Registration Rights Agreement) without the
approval of (x) prior to the Board Representation Date, at least three-fifths of
the members of the Executive Committee, or (y) at and after the Board
Representation Date, at least two-thirds of the members of the Executive
Committee:

           (i)  adopt a new Business Plan, materially modify the Business Plan
or take any action that would constitute a material deviation from the Business
Plan;

           (ii)  approve or recommend a Major Event;

           (iii)  acquire, by purchase, merger or otherwise, in one transaction
or a series of related transactions, any equity or other ownership interest in,
or assets of, any Person in exchange for consideration with a Fair Market Value
greater than $100 million;

           (iv)  authorize for issuance or issue any equity securities or Equity
Derivative Securities in one transaction or a series of related transactions
with a Fair Market Value at the time of issuance in excess of $100 million
(excluding any Permitted Benefit Plan Issuance);

           (v)  purchase, redeem, prepay, acquire or retire for value any shares
of its capital stock or securities exercisable for or convertible into shares of
its capital stock other than as required by the terms of such capital stock or
securities;

           (vi)  declare, incur any liability to declare, or pay any dividends,
or make any distributions in respect of, any shares of its capital stock other
than as required under the terms of such capital stock;

           (vii)  redeem, retire, defease, offer to purchase or change any
material term, condition or covenant in respect of outstanding long-term
Indebtedness other than as required under the terms of such Indebtedness;

           (viii)  incur Indebtedness in one transaction or a series of related
transactions in excess of $100 million in aggregate principal amount (other than
intercompany Indebtedness and Indebtedness outstanding as of the Closing Date
(and borrowing pursuant to the terms thereof), and any amendment or refinancing
of such Indebtedness in a principal amount not exceeding the

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principal amount so refinanced and on financial and other terms no less
favorable to the Company then such outstanding Indebtedness);

           (ix)  make any material change in its accounting principles or
practices (other than as required by GAAP or recommended by the Corporation’s
outside auditors), or remove the Corporation’s outside auditors or appoint new
auditors; or

           (x)  appoint, or terminate or modify the terms of the employment of,
any member of the Corporation’s senior management as set forth on Annex E to the
Stockholders Agreement, and any of their successors or replacements, and any
other persons of a similar level of authority and responsibility in the
organizational structure who are appointed after the Closing Date.

           Notwithstanding the foregoing, if any of the matters referred to in
this paragraph 8(b) are proposed to but not approved by the requisite
three-fifths majority (or, at and after the Board Representation Date, the
requisite two-thirds majority) of the Executive Committee, then the Investor
Designees on the Executive Committee shall attempt in good faith to resolve any
objections any such Investor Designee may have to the proposal and, if the
Investor Designees on the Executive Committee are unable to resolve in good
faith the disagreement within 30 days after the Executive Committee meeting at
which the matter was not approved, any member of the Executive Committee shall
be entitled to present such issue to the Board of Directors where the issue may
be adopted or rejected by a majority vote of the Board of Directors.

           The Executive Committee shall have such other powers and perform such
other duties as may from time to time be assigned to it by the Board of
Directors.

           (c)  Except as otherwise expressly provided herein, the Corporation
shall be managed by and under the direction of the Board of Directors. During
such time as Forstmann Little Beneficially Owns shares of Common Stock
representing at least 10% of the outstanding shares of Common Stock, the Board
of Directors may not take any action unless a quorum consisting of at least one
Forstmann Little Designee is present and during such time as Telmex Beneficially
Owns shares of Common Stock representing at least 10% of the outstanding shares
of Common Stock, the Board of Directors may not take any action unless a quorum
consisting of at least one Telmex Designee (which, prior to the Board
Representation Date, shall be a Telmex Independent Designee, to the extent a
Telmex Independent Designee has been designated pursuant to Section 2.2(a) of
the Stockholders Agreement) is present. So long as (i) an Investor Beneficially
Owns shares of Class A Common Stock representing at least 20% of the outstanding
shares of Common Stock and (ii) no Major Event or Acquisition has occurred, the
approval of at least one Director nominated or appointed by such Investor
pursuant to the Stockholders Agreement shall be required before the Corporation
may take any of the following actions:

           (i)  amend, alter or repeal the Certificate of Incorporation or
Bylaws, or any part thereof, or any amend, alter or repeal any constituent
instruments of any Corporation Subsidiary, or any part thereof;

           (ii)  enter into any transaction with any Affiliate (other than a
wholly owned Subsidiary of the Corporation), officer, director or stockholder of
the Corporation, except for

9

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compensation and benefits paid to Directors and Officers in the ordinary course
of business and other than those entered into concurrently with or prior to the
Closing Date;

           (iii)  file any voluntary petition for bankruptcy or for receivership
(including a voluntary petition for the liquidation, dissolution or winding up
of the Corporation or any of its Subsidiaries other than a liquidation of a
Subsidiary in which all the assets of the liquidating Subsidiary are distributed
to the Corporation or another Subsidiary of the Corporation) or make any
assignment for the benefit of creditors;

           (iv)  adopt any stockholder rights plan or other anti-takeover
provisions in any document or instrument; or

           (v)   issue or agree to issue any Preferred Stock of the Company.

           9.    Indemnification.

           (a)  The Corporation shall indemnify to the fullest extent permitted
under and in accordance with the laws of the State of Delaware any person who
was or is a party or is threatened to be made a party to any threatened, pending
or completed action, suit or proceeding, whether civil, criminal, administrative
or investigative, by reason of the fact that he or she is or was a director,
officer, employee or agent of the Corporation, or is or was serving at the
request of the Corporation as a director, officer, trustee, employee or agent of
or in any other capacity with another corporation, partnership, joint venture,
trust or other enterprise, against expenses (including attorneys’ fees and
costs), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him or her in connection with such action, suit or proceeding if he
or she acted in good faith and in a manner he or she reasonably believed to be
in or not opposed to the best interests of the Corporation, and, with respect to
any criminal action or proceeding, had no reasonable cause to believe his or her
conduct was unlawful. The termination of any action, suit or proceeding by
judgment, order, settlement, conviction, or upon a plea of nolo contendere or
its equivalent, shall not, of itself, create a presumption that the person did
not act in good faith and in a manner he or she reasonably believed to be in or
not opposed to the best interests of the Corporation, and, with respect to any
criminal action proceeding, had reasonable cause to believe that his or her
conduct was unlawful.

           (b)  Expenses incurred in defending a civil or criminal action, suit
or proceeding shall (in the case of any action, suit or proceeding against a
director of the Corporation) or may (in the case of any action, suit or
proceeding against an officer, trustee, employee or agent) be paid by the
Corporation in advance of the final disposition of such action, suit or
proceeding as authorized by the Board of Directors upon receipt of an
undertaking by or on behalf of the indemnified person to repay such amount if it
shall ultimately be determined that he or she is not entitled to be indemnified
by the Corporation as authorized in this paragraph 9.

           (c)  The indemnification and other rights set forth in this paragraph
9 shall not be exclusive of any provisions with respect thereto in the Bylaws or
any other contract or

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agreement between the Corporation and any officer, director, employee or agent
of the Corporation.

           (d)  Neither the amendment nor repeal of this paragraph 9,
subparagraph (a), (b) or (c), nor the adoption of any provision of this Amended
and Restated Certificate of Incorporation inconsistent with this paragraph 9,
subparagraph (a), (b) or (c), shall eliminate or reduce the effect of this
paragraph 9, subparagraphs (a), (b) and (c), in respect of any matter occurring
before such amendment, repeal or adoption of an inconsistent provision or in
respect of any cause of action, suit or claim relating to any such matter which
would have given rise to a right of indemnification or right to receive expenses
pursuant to this paragraph 9, subparagraph (a), (b) or (c), if such provision
had not been so amended or repealed or if a provision inconsistent therewith had
not been so adopted.

           10.  Limitation of Director Liability. A director shall have no
liability to the Corporation or its stockholders for monetary damages for breach
of fiduciary duty as a director, except for any breach of the director’s duty of
loyalty to the Corporation or its stockholders, acts or omissions not in good
faith or which involve intentional misconduct or a knowing violation of law by
the director, conduct violating Section 174 of the General Corporation Law of
Delaware, or for any transaction from which the director will personally receive
a benefit in money, property or services to which the director is not legally
entitled. If the General Corporation Law of Delaware is hereafter amended to
authorize corporate action further eliminating or limiting the personal
liability of directors, then the liability of a director shall be eliminated or
limited to the full extent permitted by the General Corporation Law of Delaware,
as so amended. Any repeal or modification of this paragraph 10 shall not
adversely affect any right or protection of a director of the Corporation
existing at the time of such repeal or modification for or with respect to an
act or omission of such director occurring prior to such repeal or modification.
All references in this paragraph to a director shall also be deemed to refer to
any person who, pursuant to the provisions of this Certificate of Incorporation,
in accordance with Section 141(a) of the DGCL, exercises or performs any of the
powers or duties otherwise conferred or imposed upon the Board of Directors by
the DGCL.

           11.  Business Combinations with Interested Stockholders. The
Corporation hereby elects not to be governed by Section 203 of the Delaware
General Corporation Law.

           12.  Definitions. Any document referred to herein shall be provided
to any stockholder upon request without charge. For purposes of this Certificate
of Incorporation, the following capitalized terms shall have the following
meanings:

     “Acquisition” shall mean the acquisition by any “person” or any “group” (as
such terms are used for purposes of Rules 13d-1 and 13d-5 under the Exchange
Act) of more than 50% of the total number of outstanding shares of Common Stock.

     “Affiliate” shall mean, with respect to any specified Person, any other
Person directly or indirectly controlling or controlled by or under direct or
indirect common control with such specified Person. For the purposes of this
definition, “control” when used with respect to any specified Person means the
power to direct the management and policies of such Person directly or
indirectly, whether through ownership of voting securities, by contract or
otherwise; and the terms “controlling” and “controlled” having meanings
correlative to the foregoing.

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     “Beneficial Ownership” shall have the meaning ascribed to such term in
Rules 13d-3 and 13d-5 under the Exchange Act, except that, solely for the
purpose of determining “Beneficial Ownership,” (i) a Person shall be deemed to
have “Beneficial Ownership” of all shares of Common Stock that such Person has
the right to acquire, whether such right is exercisable immediately or only
after the passage of time, and (ii) “Beneficial Ownership” shall be determined
without regard to any disclaimer of beneficial ownership and without regard to
the fact that one or more classes of the Common Stock is not registered under
the Exchange Act; provided, however, that an Investor shall be deemed to
Beneficially Own shares of Class A Common Stock only at such time, and to the
extent, that it has record ownership of shares of Class A Common Stock and shall
not be deemed to Beneficially Own shares of Class A Common Stock by virtue of
its ownership of shares of Class C Common Stock or Class D Common Stock or any
other option, warrant or security exercisable for or convertible into shares of
Class A Common Stock. Correlative meanings shall also be ascribed to the terms
“Beneficially Own” and “Beneficial Owner”.

     “Board Representation Date” means the earlier of (i) the first date on
which the Board of Directors has received written notice from Telmex that Telmex
desires to designate Directors to the Board pursuant to the Stockholders
Agreement, and Telmex has determined in good faith, after consultation with its
legal counsel, which counsel shall be an outside law firm of national
reputation, that one or more directors, officers or employees of Telmex or a
Subsidiary of Telmex can become Directors without violating Section 8 of the
Clayton Antitrust Act of 1914, as amended, and (ii) the first date upon which
any director, officer or employee of Telmex or a Subsidiary of Telmex is elected
or appointed as a Director.

     “Business Plan” shall mean the business plan of the Corporation, as
approved by each of the Investors prior to the Closing Date, and as the same may
be amended from time to time in accordance with the Stockholders Agreement.

     “Capital Lease” means a lease with respect to which the lessee is required
concurrently to recognize the acquisition of an asset and the incurrence of a
liability in accordance with GAAP.

     “Class C Permitted Transferee” means Telmex or one of its Subsidiaries.

     “Class C Prohibited Transferee” means any Person other than a Class C
Permitted Transferee.

     “Closing Date” shall mean the date on which the closing under the Stock
Purchase Agreement occurs.

     “Encumbrance” means, with respect to any Person, any mortgage, lien,
pledge, charge, claim, option, proxy, voting trust, security interest or other
encumbrance, or any interest or title of any vendor, lessor, lender or other
secured party to or of such Person under any conditional sale or other title
retention agreement or Capital Lease, upon or with respect to any property or
asset of such Person (including in the case of stock, stockholder agreements,
voting trust agreements and all similar arrangements).

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     “Equity Derivative Securities” means any and all equity and debt securities
(or any hybrid or combination thereof) convertible into or exchangeable or
exercisable for, or which otherwise give the holder thereof the right to
acquire, any equity securities of the Corporation.

     “Exchange Act” shall mean the United States Securities Exchange Act of 1934
and the rules and regulations promulgated thereunder.

     “Fair Market Value” means (i) in the case of cash, the amount thereof,
(ii) in the case of capital stock that has been publicly traded for a period of
at least 12 months, the Market Value thereof, and (iii) in the case of other
assets or securities, the fair market value thereof as determined in good faith
by the Board of Directors (which determination shall be conclusive and binding
on all stockholders).

     “Forstmann Little” shall mean, collectively, Forstmann Little & Co. Equity
Partnership-VII, L.P. and Forstmann Little & Co. Subordinated Debt and Equity
Management Buyout Partnership-VIII, L.P.

     “Forstmann Little Designee” or “Forstmann Little Designees” shall mean a
Director, or the Directors, nominated or appointed by Forstmann Little pursuant
to the Stockholders Agreement (other than Telmex Independent Designees).

     “GAAP” means generally accepted accounting principles set forth from time
to time in the opinions and pronouncements of the Accounting Principles Board
and the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board (or agencies with
similar functions of comparable stature and authority within the U.S. accounting
profession), that are applicable to the circumstances as of the date of
determination.

     “Guaranty” means, with respect to any Person, any obligation (except the
endorsement in the ordinary course of business of negotiable instruments for
deposit or collection) of such Person guaranteeing or in effect guaranteeing
(whether by reason of being a general partner of a partnership or otherwise) any
indebtedness, dividend or other obligation of any other Person in any manner,
whether directly or indirectly, including (without limitation) obligations
incurred through an agreement, contingent or otherwise, by such Person: (a) to
purchase such indebtedness or obligation or any property constituting security
therefor; (b) to advance or supply funds (i) for the purchase or payment of such
indebtedness or obligation, or (ii) to maintain any working capital or other
balance sheet condition or any income statement condition of any other Person or
otherwise to advance or make available funds for the purchase or payment of such
indebtedness or obligation; (c) to lease properties or to purchase properties or
services primarily for the purpose of assuring the owner of such indebtedness or
obligation of the ability of any other Person to make payment of the
indebtedness or obligation; or (d) otherwise to assure the owner of such
indebtedness or obligation against loss in respect thereof. In any computation
of the Indebtedness or other liabilities of the obligor under any Guaranty, the
Indebtedness or other obligations that are the subject of such Guaranty shall be
assumed to be direct obligations of such obligor.

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     “Indebtedness” means, with respect to any Person, at any time, without
duplication, (a) its liabilities for borrowed money; (b) its liabilities for the
deferred purchase price of property acquired by such Person (excluding accounts
payable arising in the ordinary course of business but including all liabilities
created or arising under any conditional sale or other title retention agreement
with respect to any such property); (c) all liabilities appearing on its balance
sheet in accordance with GAAP in respect of Capital Leases; (d) all liabilities
for borrowed money secured by any Encumbrance with respect to any property owned
by such Person (whether or not it has assumed or otherwise become liable for
such liabilities); (e) all its liabilities in respect of letters of credit or
instruments serving a similar function issued or accepted for its account by
banks and other financial institutions (whether or not representing obligations
for borrowed money); (f) Swaps of such Person; and (g) any Guaranty of such
Person with respect to liabilities of a type described in any of clauses
(a) through (f) hereof.

     “Investor Designees” shall mean the Forstmann Little Designees and Telmex
Designees.

     “Market Value” means, as of any date of determination, (i) with respect to
shares of any class or series of capital stock traded (1) on the New York Stock
Exchange (the “NYSE”) or another national stock exchange or quoted on The
National Market System of the Nasdaq Stock Market (“Nasdaq NMS”), the average of
the reported closing bid and asked prices regular way of a share of such class
or series for the 30 trading days immediately preceding such date of
determination (the “Relevant Trading Period”), as reported, (x) in the case of
the NYSE, on the NYSE composite tape, and (y) in the case of any other national
securities exchange or Nasdaq NMS, publicly by such exchange or Nasdaq NMS, or
(2) solely or primarily in the over-the-counter market, the average of the bid
and asked prices of a share of such class or series in the over-the-counter
market during the Relevant Trading Period as furnished by any NYSE member firm
selected from time to time by the Corporation or (ii) with respect to any class
or series of capital stock not traded or quoted on the NYSE, any other national
stock exchange or Nasdaq NMS or in the over-the-counter market, the fair market
value of a share of such class or series as determined in good faith by the
Board of Directors (which determination shall be conclusive and binding on all
stockholders).

     “Net Assets” means, with respect to any Person, the total assets of such
Person minus the total liabilities of such Person, each as reflected on the
balance sheet of such Person for the most recently-ended fiscal quarter.

     “Permitted Benefit Plan Issuance” means any issuance of equity securities
or Equity Derivative Securities to directors, officers, employees in the
ordinary course of business pursuant to an employee stock purchase plan,
employee stock option plan or other similar compensation plan approved by the
compensation committee of the Board of Directors or the Board of Directors.

     “Person” means any individual, corporation, limited liability company,
partnership, trust or other entity, and shall include any successor (by merger
or otherwise) of such entity.

     “Preferred Stock” shall have the meaning set forth in paragraph 3(a)
herein.

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     “Registration Rights Agreement” shall mean the Registration Rights
Agreement dated as of      , 2002 among the Investors and the Corporation.

     “Stockholders Agreement” shall mean the Stockholders Agreement, dated as of
     , 2002, and as amended from time to time, by and among Forstmann Little,
[Telmex] (Telmex and Forstmann Little sometimes being herein collectively
referred to as the “Investors” and individually as an “Investor”), and the
Corporation.

     “Stock Purchase Agreement” shall mean the Stock Purchase Agreement, dated
January 15, 2002, by and among each of the Investors and the Corporation.

     “Swaps” means, with respect to any Person, payment obligations with respect
to interest rate swaps, currency swaps and similar obligations obligating such
Person to make payments, whether periodically or upon the happening of a
contingency.

     “Subsidiary” means, with respect to any Person, (i) a corporation more than
50% of the outstanding voting stock of which is owned, directly or indirectly,
by such Person or by one or more other Subsidiaries of such Person or by such
Person and one or more Subsidiaries thereof or (ii) any other Person (other than
a corporation) in which such Person, or one or more other Subsidiaries of such
Person or such Person and one or more other Subsidiaries thereof, directly or
indirectly, has at least a majority ownership and power to direct the policies,
management and affairs thereof. Unless the context otherwise requires, any
reference to a Subsidiary is to a Subsidiary of the Corporation.

     “Telmex” means Teléfonos de México, S.A. de C.V.

     “Telmex Designee” or “Telmex Designees” shall mean a Director, or the
Directors, appointed or nominated by Telmex pursuant to the Stockholders
Agreement (including the Telmex Independent Designees).

     “Telmex Independent Designees” means those individuals nominated by Telmex
in accordance with the Stockholders Agreement, who are independent of, and not
affiliated with, either Telmex or the Corporation.

     “Transfer” means, directly or indirectly, the sale, assignment, conveyance,
transfer or other disposition of, or pledge or other encumbrance of, a security
or interest, whether resulting from a contractual obligation of the holder, by
operation of law, by gift or for any other reason.

     IN WITNESS WHEREOF, said Corporation has caused this Amended and Restated
Certificate of Incorporation to be signed by its Senior Vice President and
Secretary this      th day of      , 2002.

     (436036.8)

   

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  Gary D. Begeman   Senior Vice President and Secretary

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Exhibit E

RESTATED
BYLAWS
OF
XO COMMUNICATIONS, INC.

          These Bylaws are intended to conform to the mandatory requirements of
the General Corporation Law of Delaware (the “Act”). Any ambiguity arising
between these Bylaws and the discretionary provisions of the Act shall be
resolved in favor of the application of the Act.

ARTICLE I.

STOCKHOLDERS

     Section 1. Place.

          Stockholders meetings shall be held at the registered office of the
Corporation unless a different place shall be designated by the Board of
Directors.

     Section 2. Annual Meeting.

          The annual meeting of the Stockholders shall be held on the date and
time designated by the Board of Directors. The meeting shall be held for the
purpose of electing Directors and for the transaction of such other business as
may come before the meeting, whether stated in the notice of meeting or not,
except as otherwise expressly stated in the Certificate of Incorporation. If the
election of Directors shall not be held on the day designated herein, the Board
of Directors shall cause the election to be held at a special meeting of the
Stockholders on the next convenient day.

     Section 3. Special Meetings.

          Special meetings of the Stockholders may be called by the President or
the Board of Directors for any purpose at any time, and shall be called by the
President at the request of the holders of shares entitled to cast at least 25%
of votes eligible to be cast. Special meetings shall be held at such place or
places within or without the state of Delaware as shall be designated by the
Board of Directors and stated in the notice of such meeting. At a special
meeting no business shall be transacted and no corporate action shall be taken
other than that stated in the notice of the meeting.

     Section 4. Notice.

          Written or printed notice stating the place, hour and day of the
meeting and, in case of a special meeting, the purpose or purposes for which the
meeting is called, shall be delivered not less than ten (10) days nor more than
sixty (60) days before the date of the meeting, either personally or by mail, by
or at the direction of the President, the Secretary, or the officer or persons
calling the meeting to each Stockholder of record entitled to vote at such
meeting, or for such other notice period as may be required by the Act. Such
notice and the effective date thereof

 

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shall be determined as provided in the Act.

     Section 5. Quorum.

          A majority of votes entitled to be cast by the shares issued,
outstanding and entitled to vote upon the subject matter at the time of the
meeting, represented in person or by proxy, shall constitute a quorum for the
transaction of business at any meeting of the Stockholders, unless the
representation of a larger number of shares shall be required by law, by the
Certificate of Incorporation or by these Bylaws, in which case the
representation of the number of shares so required shall constitute a quorum;
provided that at any meeting of the Stockholders at which the holders of any
class of stock of the Corporation shall be entitled to vote separately as a
class, the holders of a majority in number of the total outstanding shares of
such class, present in person or by proxy, shall constitute a quorum for
purposes of such class vote unless the representation of a larger number of
shares of such class shall be required by law, the Certificate of Incorporation
or by these Bylaws.

     Section 6. Adjourned Meetings.

          If there is no quorum present at any annual or special meeting the
Stockholders present may adjourn to such time and place as may be decided upon
by the holders of the majority of the shares present, in person or by proxy;
provided, that if the holders of any class of stock of the Corporation are
entitled to vote separately as a class upon any matter at such meeting, any
adjournment of the meeting in respect of action by such class upon such matter
shall be determined by the holders of a majority of the shares of such class
present in person or by proxy and entitled to vote at such meeting. When a
meeting is adjourned to another time or place, notice of such adjournment shall
be given in accordance with Section 4 of this Article, but if a quorum is
present, adjournment may be taken from day to day or to such time and place as
may be decided and announced by the Stockholders holding a majority of the
shares present in person or by proxy, and subject to the requirements of the
Act, no notice of such adjournment need be given; provided, that, any
adjournment of a meeting in respect of action by holders of any class of stock
of the Corporation that are entitled to vote separately as a class upon any
matter at such meeting, may be taken from day to day or to such time and place
as may be decided and announced by the holders of a majority of the shares of
such class present in person or by proxy and entitled to vote at such meeting.
At any such adjourned meeting at which a quorum is present, any business may be
transacted which could have been transacted at the meeting originally called.

     Section 7. Voting.

          Each Stockholder entitled to vote on the subject matter shall be
entitled to that number of votes provided in the Certificate of Incorporation
for each share of stock standing in the name of the Stockholder on the books of
the Corporation at the time of the closing of the transfer books for said
meeting, whether represented and present in person or by proxy. Except as
otherwise provided in the Certificate of Incorporation, these Bylaws or by law,
Directors shall be elected by a plurality of the votes cast at a meeting of
Stockholders by the Stockholders entitled to vote in the election and, whenever
any corporate action, other than the election of Directors is to be taken, it
shall be authorized by the affirmative vote of the holders of a majority

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of the shares of each class represented at the meeting and entitled to vote
thereon. The Stockholders present at a duly organized meeting may continue to
transact business until adjournment, notwithstanding the withdrawal of enough
Stockholders to leave less than a quorum.

          The Secretary shall prepare and make, at least ten days before every
election of Directors, a complete list of the Stockholders entitled to vote,
arranged in alphabetical order and showing the address of each Stockholder and
the number of shares of each Stockholder. Such list shall be open at the offices
of the Corporation for said ten days, to the examination of any Stockholder, and
shall be produced and kept at the time and place of election during the whole
time thereof, and subject to the inspection of any Stockholder who may be
present.

     Section 8. Proxies.

          At all meetings of Stockholders, a Stockholder may vote in person or
by proxy executed in writing by the Stockholder or by his duly authorized
attorney in fact. No proxy shall be valid after eleven (11) months from the date
of its execution, unless otherwise provided in the proxy.

     Section 9. Record Date.

          The Board of Directors is authorized to fix in advance a date not
exceeding sixty days nor less than ten days preceding the date of any meeting of
the Stockholders, or the date for the payment of any dividend, or the date for
the allotment of rights, or the date when any change or conversion or exchange
of capital stock shall go into effect, or a date in connection with obtaining
the consent of Stockholders for any purposes, as a record date for the
determination of the Stockholders entitled to notice of, and to vote at, any
such meeting, and any adjournment thereof, or entitled to receive payment of any
such dividend, or to any such allotment of rights, or to exercise the rights in
respect of any such change, conversion or exchange of capital stock, or to give
such consent, and, in such case, such Stockholders and only such Stockholders as
shall be Stockholders of record on the date so fixed shall be entitled to such
notice of, and to vote at, such meeting, and any adjournment thereof, or to
receive payment of such dividend, or to receive such allotment of rights, or to
exercise such rights, or to give such consent, as the case may be,
notwithstanding any transfer of any stock on the books of the Corporation, after
such record date fixed pursuant to this Section.

     Section 10. Conduct of Meetings.

          The Chairman of the Board of Directors or, in his absence the Chief
Executive Officer, President, or the Vice President designated by the Chairman
of the Board, shall preside at all regular or special meetings of Stockholders.
To the maximum extent permitted by law, such presiding person shall have the
power to set procedural rules, including but not limited to rules respecting the
time allotted to Stockholders to speak, governing all aspects of the conduct of
such meetings.

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ARTICLE II.

DIRECTORS

     Section 1. In General.

          The business and affairs of the Corporation shall be managed by a
Board of Directors which, prior to the Board Representation Date, shall consist
of twelve (12) Directors. At and after the Board Representation Date, the Board
of Directors shall consist of such greater number of Directors as may be fixed
from time to time by resolution of the Board of Directors, consistent with the
Stockholders Agreement (to the extent it is in effect). The initial members of
the Board of Directors shall be appointed in accordance with the Stockholders
Agreement and shall, subject to the Stockholders Agreement (to the extent it is
in effect), hold office until the first annual meeting of the Stockholders and
his or her successor shall have been duly elected and qualified (or until his or
her earlier death, resignation or removal). Thereafter, Directors shall be
appointed or nominated in accordance with the Stockholders Agreement (to the
extent it is in effect) and the term of such Directors shall begin upon each
Director’s election by the Stockholders as provided in Article I, Section 7
above, and shall continue until his or her successor shall have been elected and
qualified (or until his or her earlier death, resignation or removal).

     Section 2. Powers.

          The corporate powers, business, property and interests of the
Corporation shall be exercised, conducted and controlled by the Board of
Directors, which shall have all power necessary to conduct, manage and control
its affairs, and to make such rules and regulations as it may deem necessary as
provided by the Act; to appoint and remove all officers, agents and employees;
to prescribe their duties and fix their compensation; to call special meetings
of Stockholders whenever it is deemed necessary by the Board, to incur
indebtedness and to give securities, notes and mortgages for same, all in a
manner consistent with the Certificate of Incorporation and the Stockholders
Agreement (to the extent it is in effect). It shall be the duty of the Board to
cause a complete record to be kept of all the minutes, acts, and proceedings of
its meetings.

     Section 3. Vacancies.

          Subject to the terms of the Stockholders Agreement (to the extent it
is in effect), upon a vacancy on the Board of Directors occurring as a result of
the death, resignation or removal of any Director, the Board of Directors shall,
by the affirmative vote of a majority of the remaining Directors, appoint or
nominate a person to fill such vacancy. Any Director appointed (or nominated and
elected) to replace another Director shall serve for the remainder of the term
of the Director being replaced, subject to earlier death, resignation or removal
or until his successor shall have been duly elected and qualified.

          The Board may act notwithstanding any vacancy in its number but, if
and so long as its number is reduced below the number fixed by these Bylaws as
the quorum necessary for the transaction of business at meetings of the Board,
the continuing Directors or Director may act

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only for the purpose of (i) filling such vacancy in accordance with the terms of
these Bylaws and the Stockholders Agreement (to the extent it is in effect); or
(ii) preserving the assets of the Corporation.

          In the event that at any time during the term of the Stockholders
Agreement there exist vacancies on the Board due to the death, resignation or
removal of a Forstmann Little Designee or a Telmex Designee, each of the
Investors agrees to use its best efforts to designate successors to fill any
such vacancies as promptly as practicable, but in no event later than the 30th
day following such vacancy (the period from the first date of such vacancy until
the earlier to occur of the filling of such vacancy or the 30th day thereafter,
the “Vacancy Period”); provided, however, that if such vacancy is not filled
during such 30-day period, the Investor that has the right to fill such vacancy
may do so at any time following such 30-day period. During the Vacancy Period,
no action (except for such Board actions as are required to fill such vacancy in
accordance with the terms of the Stockholders Agreement (to the extent it is in
effect)) may be taken by the Board until such vacancy is filled or this
requirement is waived by the Investor that has the right to fill such vacancy.

     Section 4. Annual Meeting.

          There shall be an annual meeting of the Board of Directors which shall
be held at such time and at such place as shall be determined by the Board of
Directors.

     Section 5. Special Meeting.

          Special meetings may be called from time to time by the President or
any one of the Directors. Any business may be transacted at any special meeting.

     Section 6. Quorum.

          A majority of the Directors shall constitute a quorum. As long as the
Certificate of Incorporation so requires, a quorum of the Board of Directors
shall include at least one Forstmann Little Designee and one Telmex Designee
(which, prior to the Board Representation Date, shall be a Telmex Independent
Designee, to the extent a Telmex Independent Designee has been appointed
pursuant to Section 2.2(a) of the Stockholders Agreement). The act of a majority
of the Directors present at a meeting at which a quorum is present shall be the
act of the Board of Directors. If less than a quorum is present at a meeting, a
majority of the Directors present may adjourn the meeting from time to time
without further notice, other than announcement at the meeting, until a quorum
shall be present. Interested Directors may be counted for quorum purposes.

     Section 7. Notice and Place of Meetings.

          Notice of all Directors’ meetings shall be given in accordance with
the Act. No notice need be given of any annual meeting of the Board of
Directors. One day prior notice shall be given for all special meetings of the
Board, but the purpose of special meetings need not be stated in the notice.

          Meetings of the Board of Directors may be held at the principal office
of the

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corporation, or at such other place as shall be stated in the notice of such
meeting. Members of the Board of Directors, or any committee designated by the
Board of Directors, shall, except as otherwise provided by law, the Certificate
of Incorporation or these Bylaws, have the power to participate in a meeting of
the Board of Directors, or any committee, by means of a conference telephone or
similar communications equipment by means of which all persons participating in
the meeting can hear each other, and such participation shall constitute
presence in person at this meeting.

     Section 8. Compensation.

          By resolution of the Board of Directors, each Director may either be
(i) reimbursed for his reasonable out-of-pocket expenses, if any, in connection
with performing his or her duties, including without limitation the reasonable
out-of-pocket expenses incurred by such person attending meetings of the Board
or any committee thereof or meetings of any board of Directors or other similar
managing body (and any committee thereof) of any Subsidiary of the Corporation
or (ii) paid a fixed fee for attending each meeting of the Board of Directors,
or both. No such payment shall preclude any Director from serving the
Corporation in any other capacity and receiving compensation therefor.

     Section 9. Removal or Resignation of Directors.

          Any Director may resign by delivering written notice of the
resignation to the Board of Directors or an officer of the Corporation. All or
any number of the Directors may be removed, with or without cause, at a meeting
expressly called for that purpose by a vote of the holders of the majority of
the shares then entitled to vote at an election of Directors. Except as set
forth in the preceding sentence, during the term of the Stockholders Agreement
no Forstmann Little Designee may be removed from office except by Forstmann
Little and no Telmex Designee may be removed from office except by Telmex.
Forstmann Little shall have the right to remove any Forstmann Little Designee
and Telmex shall have the right to remove any Telmex Designee, in each case,
with or without cause, at any time.

     Section 10. Presumption of Assent.

          A Director of the Corporation who is present at a meeting of the Board
of Directors at which action on any corporate matter is taken shall be presumed
to have assented to the action taken, unless his dissent shall be manifested in
the manner required by the Act. Such right to dissent shall not apply to a
Director who voted in favor of such action.

     Section 11. Committees.

          The Board of Directors shall annually, during the term of the
Stockholders Agreement, appoint an Executive Committee in accordance with the
Certificate of Incorporation. Other committees of two or more Directors, may be
appointed by the Board of Directors, which committees shall hold office for such
time and have such powers and perform such duties as may from time to time be
assigned to them by the Board of Directors. The Board of Directors shall
annually, during the term of the Stockholders Agreement, appoint an Audit and a
Compensation Committee. Subject to the Stockholders Agreement (to the extent it
is in effect), the federal securities laws, and the rules and regulations of the
Securities and Exchange Commission and

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any stock exchange or quotation system on which the Common Stock is quoted or
listed, so long as an Investor Beneficially Owns shares of Common Stock
representing at least 10% of the outstanding shares of Common Stock, at least
one of the Director designees of such Investor (which, as to Telmex, prior to
the Board Representation Date, shall be a Telmex Independent Designee, to the
extent a Telmex Independent Designee has been designated pursuant to Section
2.2(a) of the Stockholders Agreement) shall be entitled to sit on each committee
of the Board and the Corporation shall cause such designee to be appointed to
each of the committees of the Board as may be requested at any time or from time
to time by Forstmann Little or Telmex, as the case may be.

          Subject to the terms of the Certificate of Incorporation and the
Stockholders Agreement (to the extent it is in effect), any member of a
committee may be removed at any time, with or without cause, by a resolution of
a majority of the whole Board of Directors. Any vacancy in the Executive
Committee may be filled, subject to the terms of the Certificate of
Incorporation and the Stockholders Agreement (to the extent it is in effect),
from among the Directors by a resolution of a majority of the whole Board of
Directors.

ARTICLE III.

OFFICERS AND AGENTS – GENERAL PROVISIONS

     Section 1. Number, Election and Term.

          Officers of the Corporation shall be a Chief Executive Officer,
President, Secretary, and Treasurer. Officers shall be elected by the Board of
Directors at its first meeting, and at each regular annual meeting of the Board
of Directors thereafter. Each officer shall hold office until the next
succeeding annual meeting of the Directors and until his successor shall be
elected and qualified. Any one person may hold more than one office if it is
deemed advisable by the Board of Directors.

     Section 2. Additional Officers and Agents.

          The Board of Directors may appoint and create such other officers and
agents as may be deemed advisable and prescribe their duties.

     Section 3. Resignation or Removal.

          Any officer or agent of the Corporation may resign from such position
by delivering written notice of the resignation to the Board of Directors, but
such resignation shall be without prejudice to the contract rights, if any, of
the Corporation. Any officer or agent elected or appointed by the Board of
Directors may be removed by the Board of Directors whenever in its judgment the
best interests of the Corporation would be served thereby, but such removal
shall be without prejudice to the contract rights, if any, of the person so
removed. Election or appointment of an officer or agent shall not of itself
create contract rights.

     Section 4. Vacancies.

          Vacancies in any office caused by any reason shall be filled by the
Board of

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Directors at any meeting by selecting a suitable and qualified person to act
during the unexpired term.

     Section 5. Salaries.

          The salaries of all the officers, agents and other employees of the
Corporation shall be fixed by the Board of Directors and may be changed from
time to time by the Board, and no officer shall be prevented from receiving such
salary by reason of the fact that he or she is also a Director of the
Corporation. All Directors, including interested Directors, are specifically
authorized to participate in the voting of such compensation irrespective of
their interest.

ARTICLE IV.

DUTIES OF THE OFFICERS

     Section 1. Chairman of the Board.

          The Chairman of the Board, if any, shall be a member of the Board of
Directors and, subject to Sections 2 and 3 of this Article IV, shall preside at
all meetings of the Stockholders and Directors; perform all duties required by
the Bylaws of the Corporation, and as may be assigned from time to time by the
Board of Directors; and shall make such reports to the Board of Directors and
Stockholders as may be required.

     Section 2. Chief Executive Officer.

          The Chief Executive Officer, if any, shall have general charge and
control of the affairs of the Corporation subject to the direction of the Board
of Directors; sign as President all certificates of stock of the Corporation;
perform all duties required by the Bylaws of the Corporation, and as may be
assigned from time to time by the Board of Directors; and shall make such
reports to the Board of Directors and Stockholders as may be required. In
addition, if no Chairman of the Board is elected by the Board or if the Chairman
is unavailable, the Chief Executive Officer shall perform all the duties
required of such officer by these Bylaws.

     Section 3. President.

          The President shall, if no Chief Executive Officer shall have been
appointed or if the Chief Executive Officer is unavailable, perform all of the
duties of the Chief Executive Officer. If a Chief Executive Officer shall have
been appointed, the President shall perform such duties as shall be assigned by
the Board of Directors, and in the case of absence, death or disability of the
Chief Executive Officer, shall perform and be vested with all of the duties and
powers of the Chief Executive Officer, until the Chief Executive Officer shall
have resumed such duties or the Chief Executive Officer’s successor shall have
been appointed.

     Section 4. Vice President.

          The Vice President, or any of them, shall perform such duties as shall
be assigned by the Board of Directors, and in the case of absence, disability or
death of the President, the Vice President shall perform and be vested with all
the duties and powers of the President, until

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the President shall have resumed such duties or the President’s successor is
elected. In the event there is more than one Vice President, the Board of
Directors may designate one or more of the Vice Presidents as Executive Vice
Presidents, who, in the event of the absence, disability or death of the
President shall perform such duties as shall be assigned by the Board of
Directors.

     Section 5. Secretary.

          The Secretary shall keep a record of the proceedings at the meetings
of the Stockholders and the Board of Directors and shall give notice as required
in these Bylaws of all such meetings; have custody of all the books, records and
papers of the Corporation, except such as shall be in charge of the Treasurer or
some other person authorized to have custody or possession thereof by the Board
of Directors; sign all Certificates of Stock of the Corporation; from time to
time make such reports to the officers, Board of Directors and Stockholders as
may be required and shall perform such other duties as the Board of Directors
may from time to time delegate. In addition, if no Treasurer is elected by the
Board, the Secretary shall perform all the duties required of the office of
Treasurer by the Act and these Bylaws.

     Section 6. Treasurer.

          Treasurer shall keep accounts of all monies of the Corporation
received or disbursed; from time to time make such reports to the officers,
Board of Directors and Stockholders as may be required, perform such other
duties as the Board of Directors may from time to time delegate.

     Section 7. Assistant Secretary.

          The Assistant Secretary, if any, shall assist the Secretary in all
duties of the office of Secretary. In the case of absence, disability or death
of the Secretary, the Assistant Secretary shall perform and be vested with all
the duties and powers of the Secretary, until the Secretary shall have resumed
such duties or the Secretary’s successor is elected.

     Section 8. Assistant Treasurer.

          The Assistant Treasurer, if any, shall assist the Treasurer in all
duties of the office of Treasurer. In the case of absence, disability or death
of the Treasurer, the Assistant Treasurer shall perform and be vested with all
the duties and powers of the Secretary, until the Treasurer shall have resumed
such duties or the Treasurer’s successor is elected.

ARTICLE V.

STOCK

     Section 1. Certificates.

          The shares of stock of the Corporation shall be evidenced by an entry
in the stock transfer records of the Corporation, and may be represented by
stock certificates in a form adopted by the Board of Directors and every person
who shall become a Stockholder shall be entitled, upon request, to a certificate
of stock. All certificates shall be consecutively numbered

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by class. Certificates, if any, shall be signed by the Chairman of the Board of
Directors, the President or one of the Vice Presidents, and the Secretary or an
Assistant Secretary or the Treasurer or an Assistant Treasurer, provided,
however, that where such certificates are signed by a transfer agent or an
assistant transfer agent or by a transfer clerk acting on behalf of the
Corporation and a registrar, the signature of any such officer may be facsimile.
If the Corporation shall be authorized to issue more than one class of stock or
more than one series of any class, the designations, preferences and relative,
participating, optional or other special rights of each class of stock or series
thereof and the qualifications, limitations or restriction of such preferences
and/or rights shall be set forth in full or summarized on the face or back of
the certificate which the Corporation shall issue to represent such class or
series of stock, provided that, except as otherwise provided in Section 202 of
the Act, in lieu of the foregoing requirements, there may be set forth on the
face or back of the certificate which the Corporation shall issue to represent
such class or series of stock, a statement that the Corporation will furnish
without charge to each Stockholder who so requests the designations, preferences
and relative, participating, optional or other special rights of each class of
stock or series thereof and the qualifications, limitations or restrictions of
such preferences and/or rights.

     Section 2. Transfer of Certificates.

          Any certificates of stock transferred by endorsement shall be
surrendered, canceled and new certificates issued to the purchaser or assignee.

     Section 3. Transfer of Shares.

          Shares of stock shall be transferred only on the books of the
Corporation by the holder thereof, in person or by his attorney, and no
transfers of certificates of stock shall be binding upon the Corporation unless
made in accordance with the Stockholders Agreement, if applicable, and until the
terms of this Section and, with respect to certificated shares, the terms of
Section 2 of this Article are met to the satisfaction of the Secretary of the
Corporation.

          The Board of Directors may make other and further rules and
regulations concerning the transfer and registration of shares of the
Corporation, and may appoint a transfer agent or registrar or both and may
require all certificates of stock to bear the signature of either or both.

          The stock ledgers of the Corporation, containing the names and
addresses of the Stockholders and the number of shares held by them
respectively, shall be kept at the principal offices of the Corporation or at
the offices of the transfer agent of the Corporation.

     Section 4. Lost Certificates.

          In the case of loss, mutilation or destruction of a certificate of
stock, a duplicate certificate may be issued upon such terms as the Board of
Directors shall prescribe.

     Section 5. Dividends.

          The Board of Directors may from time to time declare, and the
Corporation may then pay, dividends on its outstanding shares in the manner and
upon the terms and conditions

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provided by the Act and in its Certificate of Incorporation. Section 6. Working
Capital.

          Before the payment of any dividends or the making of any distributions
of the net profits, the Board of Directors may set aside out of the net profits
of the Corporation such sum or sums as in their discretion they think proper, as
a working capital or as a reserve fund to meet contingencies. The Board of
Directors may increase, diminish or vary the capital of such reserve fund in
their discretion.

ARTICLE VI.

SEAL

          There shall be no corporate seal.

ARTICLE VII.

WAIVER OF NOTICE

          Whenever any notice is required to be given to any Stockholder or
Director of the Corporation, a waiver signed by the person or persons entitled
to such notice, whether before or after the time stated therein, shall be
equivalent to the giving of such notice.

ARTICLE VIII.

ACTION BY STOCKHOLDERS OR DIRECTORS
WITHOUT A MEETING

          Any action required to be taken at a meeting of the Stockholders of
the Corporation, or any other action which may be taken at a meeting of the
Stockholders, may be taken without a meeting, if a consent in writing setting
forth the actions so taken shall be signed by the holders of outstanding stock
having not less than the minimum number of votes that would be necessary to
authorize or take such action at a meeting at which all shares entitled to vote
thereon were present and voted with respect to the subject matter thereof. Such
consent shall have the same effect and force as a vote of said Stockholders.

          Any action required to be taken at a meeting of the Board of Directors
of the Corporation, or any other action which may be taken at a meeting of the
Board of Directors, or any committee thereof, may be taken without a meeting if
a consent in writing setting forth the actions so taken shall be signed by all
of the members of the Board of Directors or committee, as the case may be. Such
consent shall have the same effect and force as a unanimous vote of said
Directors or committee.

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ARTICLE IX.

MISCELLANEOUS

     Section 1. Fiscal Year.

          The fiscal year of the Corporation shall be fixed, and may be changed,
by resolution of the Board of Directors.

     Section 2. Notices.

          Except as otherwise expressly provided, any notice required by these
Bylaws to be given shall be sufficient if given as provided in the General
Corporation Law of Delaware.

     Section 3. Waiver of Notice.

          Any Stockholder or Director may at any time, by writing or by fax,
waive any notice required to be given under these Bylaws, and if any Stockholder
or Director shall be present at any meeting his presence shall constitute a
waiver of such notice.

     Section 4. Voting Stock of Other Corporations.

          Except as otherwise ordered by the Board of Directors, the Chairman of
the Board, Chief Executive Officer, President, Secretary or Treasurer, or any
Vice President, Assistant Secretary or Assistant Treasurer, shall have full
power and authority on behalf of the Corporation to attend and to act and to
vote at any meeting of the Stockholders of any corporation of which the
Corporation is a stockholder and to execute a proxy to any other person to
represent the Corporation at any such meeting, and at any such meeting such
person shall possess and may exercise any and all rights and powers incident to
ownership of such stock and which, as owner thereof, the Corporation might have
possessed and exercised if present.

ARTICLE X.

AMENDMENTS AND STOCKHOLDERS AGREEMENT

          Subject to the terms of the Stockholders Agreement (to the extent it
is in effect), any and all of these Bylaws may be altered, amended, repealed or
suspended by the affirmative vote of a majority of the Directors at any meeting
of the Directors or by the Stockholders as provided in the Certificate of
Incorporation. New Bylaws may be adopted in like manner.

          These Bylaws shall be read subject to and in accordance with the
Stockholders Agreement, until such time as the Stockholders Agreement terminates
in accordance with its terms. In the event of a conflict between these Bylaws
and the Stockholders Agreement (to the extent it is in effect), the Stockholders
Agreement shall prevail.

12

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ARTICLE XI.

DEFINITIONS

          For purposes of these Bylaws, the following capitalized terms shall
have the following meanings:

          “Beneficial Ownership” shall have the meaning ascribed to such term in
Rules 13d-3 and 13d-5 under the Exchange Act, except that, solely for the
purpose of determining “Beneficial Ownership,” (i) a Person shall be deemed to
have “Beneficial Ownership” of all shares of Common Stock that such Person has
the right to acquire, whether such right is exercisable immediately or only
after the passage of time, and (ii) “Beneficial Ownership” shall be determined
without regard to any disclaimer of beneficial ownership and without regard to
the fact that one or more classes of the Common Stock is not registered under
the Exchange Act; provided, however, that an Investor shall be deemed to
Beneficially Own shares of Class A Common Stock only at such time, and to the
extent, that it has record ownership of shares of Class A Common Stock and shall
not be deemed to Beneficially Own shares of Class A Common Stock by virtue of
its ownership of shares of Class C Common Stock or Class D Common Stock or any
other option, warrant or security exercisable for or convertible into shares of
Class A Common Stock. Correlative meanings shall also be ascribed to the terms
“Beneficially Own” and “Beneficial Owner”.

          “Board Representation Date” shall mean the earlier of (i) the first
date on which the Board of Directors has received written notice from Telmex
that Telmex desires to designate Directors to the Board pursuant to the
Stockholders Agreement, and Telmex has determined in good faith, after
consultation with its legal counsel, which counsel shall be an outside law firm
of national reputation, that one or more directors, officers or employees of
Telmex or a Subsidiary of Telmex can become Directors without violating
Section 8 of the Clayton Antitrust Act of 1914, as amended, and (ii) the first
date upon which any director, officer or employee of Telmex or a Subsidiary of
Telmex is elected or appointed as a Director.

          “Exchange Act” shall mean the United States Securities Exchange Act of
1934 and the rules and regulations promulgated thereunder.

          “Forstmann Little Designee” or “Forstmann Little Designees” shall mean
a Director, or the Directors, nominated or appointed by Forstmann Little
pursuant to the Stockholders Agreement (other than Telmex Independent
Designees).

          “Permitted Transferee” shall mean any Person to whom Restricted
Securities are Transferred (as such terms are defined in the Stockholders
Agreement), in accordance with the terms of the Stockholders Agreement.

          “Person” shall mean any individual, corporation, limited liability
company, partnership, trust or other entity, and shall include any successor (by
merger or otherwise) of such entity.

          “Stockholders Agreement” shall mean the Stockholders Agreement, dated
as of      , 2002, and as amended from time to time, by and among Forstmann
Little & Co. Equity

13

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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 collectively with Equity
VII and their Permitted Transferees, “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] (together with its Subsidiaries and its Permitted
Transferees, “Telmex” and Telmex and Forstmann Little sometimes being herein
collectively referred to as the “Investors” and individually as an “Investor”),
and the Corporation.

          “Subsidiary” of any Person shall mean (i) a corporation more than 50%
of the outstanding voting stock of which is owned, directly or indirectly, by
such Person or by one or more other Subsidiaries of such Person or by such
Person and one or more Subsidiaries thereof or (ii) any other Person (other than
a corporation) in which such Person, or one or more other Subsidiaries of such
Person or such Person and one or more other Subsidiaries thereof, directly or
indirectly, has at least a majority ownership and power to direct the policies,
management and affairs thereof.

          “Telmex Designee” or “Telmex Designees” shall mean a Director, or the
Directors, appointed or nominated by Telmex pursuant to the Stockholders
Agreement (including the Telmex Independent Designees).

          “Telmex Independent Designees” means those individuals nominated by
Telmex in accordance with the Stockholders Agreement, who are independent of,
and not affiliated with, either Telmex or the Corporation.

14

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IDENTIFICATION

          I hereby certify that I am the Secretary of XO Communications and that
the foregoing Bylaws were and are the Bylaws adopted by the Directors of the
Corporation at a duly constituted meeting of the Board of Directors.

   

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  [           ]   Secretary

(436859.10)

15

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Exhibit F
Contractual Management Rights Letter

XO Communications, Inc.
11111 Sunset Hills Road
Reston, VA 20190

[Insert date]

[Insert name and address of Investor]

To [Insert name of Investor]:

This letter will confirm our agreement that, effective immediately and
continuing for so long as you (“you,” or “Investor”) hold any equity securities
of XO Communications, Inc. (the “Company”), you will be entitled to each of the
following contractual management rights relating to the Company (collectively,
the “Management Rights”):

(1)   Investor shall be entitled to routinely consult with and advise management
of the Company with respect to the Company’s business and financial matters,
including management’s proposed annual operating plans, and management will meet
regularly during each year with representatives of Investor (the
“Representatives”) at the Company’s facilities at mutually agreeable times for
such consultation and advice, including to review progress in achieving said
plans. The Company shall give Investor reasonable advance written notice of any
significant new initiatives or material changes to existing operating plans and
shall afford Investor adequate time to meet with management to consult on such
initiatives or changes prior to implementation. The Company agrees to give due
consideration to the advice given and any proposals made by Investor.   (2)  
Investor may inspect all contracts, books, records, personnel, offices and other
facilities and properties of the Company and, to the extent available to the
Company after the Company uses reasonable efforts to obtain them, the records of
its legal advisors and accountants, including the accountants’ work papers, and
Investor may make such copies and inspections thereof as Investor may reasonably
request. The Company shall furnish Investor with such financial and operating
data and other information with respect to the business and properties of the
Company as Investor may request. The Company shall permit the Representatives to
discuss the affairs, finances and accounts of the Company with, and to make
proposals and furnish advice with respect thereto, the principal officers of the
Company.

F-1

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(3)   The Company shall, after receiving notice from Investor as to the identity
of any Representative, (i) permit a Representative to attend all meetings of the
Board of Directors of the Company (the “Board”) and all committees thereof as an
observer, (ii) provide the Representative advance notice of each such meeting,
including such meeting’s time and place, at the same time and in the same manner
as such notice is provided to the members of the Board (or such committee
thereof), (iii) provide the Representative with copies of all materials,
including notices, minutes and consents, distributed to the members of the Board
(or such committee thereof) at the same time as such materials are distributed
to such Board (or such committee thereof) and shall permit the Representative to
have the same access to information concerning the business and operations of
the Company and (iv) permit the Representative to discuss the affairs, finances
and accounts of the Company with, and to make proposals and furnish advice with
respect thereto to, the Board, without voting, and the Board and the Company’s
officers shall take such proposals or advice seriously and give due
consideration thereto. Reasonable costs and expenses incurred by the
Representative for the purposes of attending Board (or committee) meetings and
conducting other Company business will be paid by the Company.

         Investor agrees, and shall cause each of its Representatives to agree,
to hold in confidence and trust and not use or disclose any confidential
information provided to or learned by it in connection with the exercise of
Investor’s Management Rights under this letter agreement, unless otherwise
required by law or unless such confidential information otherwise becomes
publicly available or available to it other than through this letter agreement.

         The rights set forth in this letter agreement are intended to satisfy
the requirement of contractual management rights for purposes of qualifying
Investor’s interests in the Company as venture capital investments for purposes
of the Department of Labor’s “plan assets” regulations, and in the event that,
after the date hereof, as a result of any change in applicable law or regulation
or a judicial or administrative interpretation of applicable law or regulation,
it is determined that such rights are not satisfactory for such purpose,
Investor and the Company shall reasonably cooperate in good faith to agree upon
mutually satisfactory management rights which satisfy such regulations.

[signature page follows]

F-2

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          Very truly yours,       XO COMMUNICATIONS, INC.        

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      By:      

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      Its:      

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  AGREED AND ACCEPTED THIS       __ day of _______________.       [Insert name
of Investor]        

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      By:      

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Its:      

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F-3

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Exhibit G

Investor/Management Common Stock Terms1

     

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Investor Stock   To-be-designated (i) Class A Common Stock (to be held by
Forstmann Little), (ii) Class C Common Stock (to be held by Telmex) and
(iii) Class D Common Stock (to be held by Forstmann Little).2       The Investor
Stock shall have the rights and preferences set forth in the Amended and
Restated Certificate of Incorporation.

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Management Stock   To-be-designated Class E Common Stock, par value $0.01 per
share. The Management Stock will be issued to certain agreed upon members of
management of the Company (collectively “Eligible Management Members”). It is
intended that the Management Stock shall have the rights and preferences set
forth herein and, to the extent mutually agreed among the parties to the Stock
Purchase Agreement, in the Amended and Restated Certificate of Incorporation.

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Number of Shares of Each
Class  
 * Class A Common (Forstmann Little): 79,999,998 shares
 * Class C Common (Telmex): 80,000,000 shares
 * Class D Common (Forstmann Little): 2 shares
 * Class E Common (Eligible Management Members): 4,000,000 shares3

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Purchase Price   The Investors shall purchase shares of Investor Stock for $5.00
per share in cash (the “Investor Stock Purchase Price”). Management shall have
the right, but not the obligation, to purchase shares of Management Stock for
cash at a price equal to approximately one-third of the Investor Stock Purchase
Price (the “Management Stock Purchase Price” and together with the Investor
Stock Purchase Price, the “Aggregate Stock Purchase Price”)

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      1  
This Exhibit G is subject to Section 4.19(b) of the Stock Purchase Agreement.
The following sets forth only the indicative terms of the Class E Common Stock.
The definitive terms of such stock, which will be set forth in the Amended and
Restated Certificate of Incorporation, may differ from the indicative terms set
forth herein. Unless otherwise defined herein or the context otherwise requires,
capitalized terms used herein and defined in the Stock Purchase Agreement, to
which this Exhibit G is an Exhibit, shall be used herein as therein defined.
  2  
Some shares of the Company’s Class A Common Stock may remain outstanding after
the Closing of the Investment. All shares of the Company’s Class B Common Stock
shall be cancelled in connection with the Restructuring.
  3  
This number of shares is based upon an investment of approximately $7 million by
the Eligible Management Members. The amount of such investment may vary between
approximately $7 million and $8 million.

 

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Closing   Any purchase by Eligible Management Members of Management Stock shall
close simultaneously with the Closing of the Investment.

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Vesting of Certain Rights   Certain rights of the holders of Management Stock
shall vest over time in accordance with a schedule and subject to such
conditions as shall be mutually agreed among the parties to the Stock Purchase
Agreement prior to the Closing.

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Voting Rights   All shares of Investor Stock and Management Stock shall have one
vote per share. The classes of Investor Stock shall have the special voting and
other rights and preferences set forth in the Amended and Restated Certificate
of Incorporation. Otherwise the Investor Stock and the Management Stock shall
have the same voting rights and shall vote together as a single class.

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Dividends   The Investor Stock and the Management Stock shall receive dividends
in a ratio approximately equal to the ratio between the Investor Stock Purchase
Price and the Management Stock Purchase Price.

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Liquidation   Upon liquidation, the net assets of the Company shall be
distributed pro rata to the Company’s stockholders such that each holder of
Investor Stock and of Management Stock shall receive:

 * First, the lesser of (i) the amount of the Investor Stock Purchase Price or
   Management Stock Purchase Price paid in respect of such Investor Stock or
   Management Stock or (ii) net assets of the Company in a ratio approximately
   equal to the ratio between the Investor Stock Purchase Price and the
   Management Stock Purchase Price;
 * Second, each holder of Investor Stock shall receive net assets proportionate
   to its pro rata share of the difference between the Investor Stock Purchase
   Price and the Management Stock Purchase Price; and
 * Third, each stockholder of the Company shall receive its pro rata portion of
   the remaining net assets of the Company.

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Non-Transferability   The Management Stock may not be transferred, pledged or
otherwise disposed of except for (i) transfers upon death to an heir,
(ii) transfers back to the Company and (iii) such additional permissible
transfers as may be mutually agreed among the parties to the Stock Purchase
Agreement prior to the Closing. In addition, shares of Class A Common Stock into
which Management Stock shall be converted may be subject to transfer
restrictions to be mutually agreed among the parties to the Stock Purchase
Agreement prior to the

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    Closing.       The Investor Stock shall be transferable in accordance with
the terms of the Stockholders Agreement.

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Conversion to Management Stock to Class A Common Stock    

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      Voluntary Conversion   Each share of Management Stock shall be
convertible, at any time at the option of the holder, into shares of Class A
Common Stock at the Conversion Ratio (as hereinafter defined)

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      Mandatory Conversion of all Shares
      of Management Stock   All shares of Management Stock or such portion of
such shares as shall be determined by a majority of the Board of Directors shall
automatically be converted into shares of Class A Common Stock at the Conversion
Ratio upon the occurrence of certain events. These events shall include, but may
not be limited to, the following:
 1. a Major Event (as defined in the Stockholders Agreement)
 2. the sale by either Investor of 50% or more of the shares of Investor Stock
    acquired by such Investor under the Stock Purchase Agreement
 3. the sale by both Investors of 50% or more of the aggregate number of shares
    of Investor Stock acquired by the Investors pursuant to the Stock Purchase
    Agreement (the sales referred to in item no. 2 above and this item no. 3
    being hereinafter referred to as a “Major Investor Sale”)
 4. when the public trading price of the Class A Common Stock exceeds an agreed
    upon price for an agreed upon trading period
 5. the vote of a majority of the Board of Directors
 6. the vote of a majority of the members of the Executive Committee of the
    Board of Directors
 7. upon a date to be mutually agreed among the parties to the Stock Purchase
    Agreement prior to the Closing.

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      Automatic Conversion Upon
      Prohibited Transfer   A share of Management Stock shall automatically be
converted into shares of Class A Common Stock at the Conversion Ratio upon any
prohibited transfer of such share.

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Conversion Ratio   A ratio or ratios to be mutually agreed among the parties to
the Stock Purchase Agreement prior to the Closing, provided that in no event
shall any conversion ratio be greater than 1.00:1.00 (the “Conversion Ratio”).
The conversion ratio may vary based upon the event or circumstance causing such
conversion.

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Drag-Along Rights   The Management Stock shall be subject to customary
drag-along rights in the event of a Major Event or a Major Investor Sale

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Tag-Along Rights   The Management Stock shall have customary tag-along rights in
the event of a Major Event or Major Investor Sale.

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Registration Rights   Eligible Management Members shall have customary piggy
back (but not demand) registration rights with respect to Management Stock,
subject to customary indemnification, cutback and similar provisions.

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Repurchase   Management Stock may be repurchased by the Company or the Investors
from an Eligible Management Member under certain circumstances to be specified,
including, but not limited to, employee termination, death or disability, at
prices and upon terms and subject to conditions to be mutually agreed among the
parties to the Stock Purchase Agreement prior to the Closing.

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Documentation   The purchase by Eligible Management Members of Management Stock
shall be pursuant to subscription agreements between the Company and each
Eligible Management Member purchasing Management Stock containing customary
terms and conditions to be mutually agreed among the parties to the Stock
Purchase Agreement prior to the Closing.
The Company will use its reasonable best efforts to enter into subscription
agreements with such Eligible Management Members on or prior to the filing of
the Bankruptcy Case; provided, however, that the purchase by Eligible Management
Members of Management Stock shall close simultaneously with the Closing of the
Investment.

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Exhibit H
New Employee Stock Option Plan

     Concurrent with the Closing of the Investment and the Restructuring, the
Company shall have authorized and implemented an Employee Stock Option Plan (the
“New Option Plan”) providing for the grant of options (which may be
non-qualified options or incentive stock options, as recommended by management
and approved by the Investors, which approval shall not be unreasonably
withheld) (the “New Options”) to purchase shares of Class A Common Stock in an
amount up to 5.0% of the Common Stock outstanding after giving effect to the
issuance of Common Stock in connection with the Investment and the Restructuring
(including the Management Shares but excluding any Common Stock issuable
pursuant to the New Options) (the “Outstanding Common Stock”). Shares of Class A
Common Stock subject to New Options granted pursuant to the New Option Plan
shall be in addition to the Management Shares as contemplated by Exhibit H to
the Stock Purchase Agreement.

     The New Options shall have the following terms in addition to the terms
contemplated by the New Option Plan (which shall contain commercially reasonable
terms to be recommended by Company management and approved by the Investors
(such approval not to be unreasonably withheld)):

           Grant Date:   The first set of New Options (the “Initial Options”)
shall be granted as of the later of (i) the Closing Date and (ii) if the Company
is “publicly held” (as defined in the regulations (the “Regulations”)
promulgated under Section 162(m) of the Code) immediately following the Closing,
the date on which stockholder approval has been obtained such that the New
Options constitute “qualified performance-based compensation” (as defined in the
Regulations); subsequent New Options shall be granted from time to time
thereafter.        Exercise Price:   The exercise price for the Initial Options
shall be $5.00 per share and the exercise price for any subsequently-granted New
Options shall be the fair market value of the Common Stock on the date of grant.
       Grantees:   Employees of the Company to be recommended by Company
management and approved by the Investors (such approval not to be unreasonably
withheld); grants to be made (i) by the Company’s compensation committee or
(ii) if the Company is “publicly held” (as defined in the Regulations), by a

H-1

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          committee of two or more “outside directors” (as defined in the
Regulations)        Vesting:   25% of the Initial Options shall vest on the
Closing Date and 25% of the Initial Options shall vest on each of the first,
second and third anniversaries of the Closing Date, with the allocation of such
vested options among the employees as recommended by the Company management and
as approved by the Investors (such approval not to be unreasonably withheld);
25% of any subsequently-granted New Options shall vest on the grant date and 25%
on each of the first, second and third anniversaries thereof.        Term of
Options:   10 years

H-2