XO Communications 2010 Annual Report Download - page 77

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XO Holdings, Inc.
Notes to Consolidated Financial Statements
15. RELATED PARTY TRANSACTIONS
Various entities controlled by the Chairman hold the following interests in the Company:
At December 31,
2010
(1)
At December 31,
2009
(2)
Outstanding Common Stock ................... Greater than 60% Greater than 50%
Series A, B and C Warrants
(3)
................. NA Greater than 40%
Class A Convertible Preferred Stock
(4)
............ NA Greater than 80%
Class B Convertible Preferred Stock ............. 100% 100%
Class C Perpetual Preferred Stock ............... 100% 100%
(1) As reported in the January 3, 2011 Form 4 for the Chairman and other parties to such joint filing, and the
January 3, 2011 Amendment No. 29 to Schedule 13D filed by the Chairman and other parties to such
joint filing.
(2) As reported in the January 4, 2010 Form 4 for the Chairman and other parties to such joint filing, and the
January 4, 2010, Amendment No. 23 to Schedule 13D filed by the Chairman and other parties to such
joint filing.
(3) The terms of the Company’s Series A, B and C Warrants provided that all such unexercised warrants
expired on January 15, 2010.
(4) The original terms of the Company’s Class A preferred stock required that by January 15, 2010, the
Company would redeem in cash and in a manner provided for therein all of the shares of Class A
preferred stock then outstanding at a redemption price equal to 100% of its liquidation preference. On
February 5, 2009, ACF Holding Corp. (‘‘ACF Holding’’), an affiliate of the Chairman, agreed to extend
the date on which the Company would be required to redeem the shares of Class A preferred stock held
by ACF Holding (the ‘‘ACF Holding Shares’’) from January 15, 2010 to a date no later than April 15,
2010. The extension did not affect the redemption date of any of the shares of Class A preferred stock
other than the ACF Holding Shares. Accordingly, on January 15, 2010, the Company redeemed all
599,137 shares of Class A preferred stock held by entities unaffiliated with the Chairman at an aggregate
purchase price of approximately $41.4 million. On April 15, 2010, the Company redeemed the
outstanding shares of Class A preferred stock held by ACF Holding for cash at a redemption price equal
to 100% of the aggregate liquidation preference for such shares of $217.5 million as of such date. As of
December 31, 2010, there were no shares of Class A preferred stock outstanding.
As a result of his ownership of a majority of the Company’s common stock and voting preferred stock,
the Chairman can elect all of the Company’s directors. Currently, three employees of entities controlled by the
Chairman are members of the Company’s Board of Directors and certain of its committees. Under applicable
law and the Company’s Certificate of Incorporation and By-laws, certain actions cannot be taken without the
approval of holders of a majority of the Company’s voting stock, including mergers, acquisitions, the sale of
substantially all of the Company’s assets and amendments to the Company’s Certificate of Incorporation and
By-laws.
The Company provides certain telecommunications services to companies affiliated with the Chairman.
The total revenue recognized on such services for 2010, 2009 and 2008 was $2.1 million, $1.7 million and
$1.7 million, respectively. Amounts receivable in respect to such services from affiliates related to the
Chairman as of December 31, 2010 and 2009 were not significant.
Icahn Sourcing LLC (‘‘Icahn Sourcing’’) is an entity formed and controlled by the Chairman in order to
leverage the potential buying power of a group of entities which the Chairman either owns or with which he
otherwise has a relationship in negotiating with a wide range of suppliers of goods, services, and tangible and
intangible property. The Company is a member of the buying group and, as such, is afforded the opportunity
to purchase goods, services and property from vendors with whom Icahn Sourcing has negotiated rates and
terms. Icahn Sourcing does not guarantee that the Company will purchase any goods, services or property
from any such vendors and the Company is under no legal obligation to do so. The Company does not pay
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