) Chapter 11 In re ) ) Case No (AJG) XO COMMUNICATIONS, INC., ) ) Debtor. ) )

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1 JONES DAY 222 East 41 st Street New York, NY Telephone: (212) Facsimile: (212) John J. Rapisardi (JR 7781) Scott J. Friedman (SF 5778) and North Point 901 Lakeside Avenue Cleveland, Ohio Telephone: (216) Facsimile: (216) Richard M. Cieri and 77 West Wacker Chicago, IL Telephone: (312) Facimile: (312) Michelle Morgan Harner Special Counsel for Debtor and Debtor in Possession UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK ) Chapter 11 In re ) ) Case No (AJG) XO COMMUNICATIONS, INC., ) ) Debtor. ) ) APPLICATION OF JONES DAY, SPECIAL COUNSEL TO DEBTOR XO COMMUNICATIONS, INC., FOR FINAL ALLOWANCE OF COMPENSATION AND REIMBURSEMENT OF EXPENSES FOR THE PERIOD FROM JUNE 17, 2002 THROUGH JANUARY 16, 2003 Name of Applicant: Jones Day

2 Authorized to Provide Professional Services to: Date of Retention: Debtor (Special Counsel) June 17, 2002, nunc pro tunc Period for Which Compensation and Reimbursement is Sought: June 17, 2002 through January 16, 2003 Amount of Compensation Requested: $119, Amount of Expense Reimbursement Requested: $5, Total Compensation and Expenses Previously Requested and Awarded on an Interim Basis: $59,

3 PROFESSIONAL SERVICES RENDERED BY JONES DAY ON BEHALF OF THE DEBTOR JUNE 17, 2002 THROUGH JANUARY 16, 2003 NAME OF PROFESSIONAL YEAR ADMITTED DEPT. HOURLY RATE 1 TOTAL HOURS BILLED TOTAL COMPENSATION PARTNERS: Cogan, J.K L $ $75.00 Droller, L.W T Erens, B.B B , Gray, M.J L Rickert, J.M B Stewart, W.K L , Total Partners $7, NAME OF PROFESSIONAL YEAR ADMITTED DEPT. HOURLY RATE TOTAL HOURS BILLED TOTAL COMPENSATION ASSOCIATES: Black, C.E B , Bredin, A.M B , Friedman, S B , Harner, M.M B , Kallergis, G B Klein, S B , Palmer, N.J L , Prieto, D.B B , Radefeld, M.B. N/A S Sellers, L.J B , Spitznagle, S.C L True, M.R L Total Associates $94, NAME OF PROFESSIONAL YEAR ADMITTED DEPT. HOURLY RATE TOTAL HOURS BILLED TOTAL COMPENSATION STAFF ATTY: Fischer, L.C B $ $3, Total Staff Atty $3, NAME OF PROFESSIONAL YEAR ADMITTED DEPT. HOURLY RATE TOTAL HOURS BILLED TOTAL COMPENSATION PARAPROFESSIONALS AND STAFF: Burston, M.L. N/A , Cahal, S.J. N/A Dezsi, S.M. N/A As of January 1,

4 NAME OF PROFESSIONAL YEAR ADMITTED DEPT. HOURLY RATE TOTAL HOURS BILLED TOTAL COMPENSATION Farrington, A.C. N/A , Johnson, L. N/A , Montgomery, L.J. N/A Sciabarassi, D.M. N/A , Draksic, A. N/A Nash, G.M. N/A , Total Paraprofessionals and Staff $26, PROFESSIONALS BLENDED RATE TOTAL HOURS TOTAL COMPENSATION Partners , Associates , Staff Attorney , Paraprofessionals and Staff , Grand Total $ $131, B - Business Restructuring and Reorganization Practice; C - Capital Markets and Mergers & Acquisitions Practice; T - General Tax Practice; L - Litigation.; E - Employee Benefits; I - Issues & Appeals; F - Lending/Structured Finance; CB - Cross-Border Transactions; PL - Product Liability; R - Real Estate; N - New Associates Group; S - Summer Associate. -4-

5 JONES DAY 222 East 41 st Street New York, NY Telephone: (212) Facsimile: (212) John J. Rapisardi (JR 7781) Scott J. Friedman (SF 5778) and North Point 901 Lakeside Avenue Cleveland, Ohio Telephone: (216) Facsimile: (216) Richard M. Cieri and 77 West Wacker Chicago, IL Telephone: (312) Facimile: (312) Michelle Morgan Harner Special Counsel for Debtor and Debtor in Possession UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK ) Chapter 11 In re ) ) Case No (AJG) XO COMMUNICATIONS, INC., ) ) Debtor. ) ) APPLICATION OF JONES DAY, SPECIAL COUNSEL TO DEBTOR XO COMMUNICATIONS, INC., FOR FINAL ALLOWANCE OF COMPENSATION AND REIMBURSEMENT OF EXPENSES FOR THE PERIOD FROM JUNE 17, 2002 THROUGH JANUARY 16, 2003

6 Jones Day, 2 special counsel to the above-captioned debtor and debtor in possession (the "Debtor"), hereby makes its final application for allowance of compensation in the amount of $119, and reimbursement of related expenses in the amount of $5, for the period from June 17, 2002 through January 16, 2003 (the "Compensation Period"). In support of this Application, Jones Day respectfully represents as follows: BACKGROUND 1. On June 17, 2002 (the "Petition Date"), the Debtor commenced its reorganization case by filing a voluntary petition for relief under chapter 11 of the Bankruptcy Code, 11 U.S.C (the "Bankruptcy Code"). 2. On June 25, 2002, the United States Trustee (the "US Trustee") appointed an official committee of unsecured creditors (the "Creditors' Committee") in this chapter 11 case. 3. On August 16, 2002, the Debtor filed its Application to Employ and Retain Jones, Day, Reavis & Pogue as Special Counsel (the "Jones Day Retention Application"). By the Jones Day Retention Application, the Debtor sought to retain Jones Day as special counsel, nunc pro tunc as of June 17, On August 26, 2002, the Court entered an Order approving the Jones Day Retention Application (the "Retention Order"). 2 As of January 1, 2003, "Jones Day" became the official name of the law firm formerly known as "Jones, Day, Reavis & Pogue." 3 Jones Day is requesting $119, in fees (instead of the $131, in fees actually incurred) on account of Jones Day's $11, voluntary reduction in fees and expenses requested by the Interim Fee Application (as defined herein), in response to the US Trustee Objection (as defined herein). -2-

7 4. On or about November 15, 2002, this Court entered an order confirming the Debtor's Third Amended Plan of Reorganization, as it relates to the Stand-Alone Plan (the "Plan"). 4 The Plan became effective on January 16, 2003 (the "Effective Date"). RELIEF REQUESTED Authority for Relief 5. Jones Day makes this Application pursuant to the following: (a) sections 330(a) and 331 of the Bankruptcy Code; (b) Rule 2016 of the Federal Rules of Bankruptcy Procedure (the "Bankruptcy Rules"); (c) Rule of the Local Rules of the Bankruptcy Court for the Southern District of New York (the "Local Rules"); (d) certain applicable provisions of the United States Trustee Guidelines for Reviewing Applications for Compensation and Reimbursement of Expenses Filed Under 11 U.S.C. 330, adopted on January 30, 1996 (the "UST Guidelines"); (e) General Order M-151, Amended Guidelines for Fees and Disbursements for Professionals in Southern District of New York Bankruptcy Cases (the "Local Guidelines"); and (f) Order Under Local Rule and 11 U.S.C. 105(a) and 331 Establishing Procedures for Interim Compensation and Reimbursement of Professionals (the "Interim Compensation Order" and, together with the UST Guidelines and the Local Guidelines, the "Guidelines"), entered by the Court on July 9, Request for Final Allowance of Compensation and Reimbursement of Expenses 6. Jones Day seeks final allowance of compensation for professional services rendered during the Compensation Period in the aggregate amount of $119, and 4 Capitalized terms not otherwise defined herein have the meanings given to them in the Plan. -3-

8 reimbursement of expenses incurred in connection with such services in the aggregate amount of $5, During the Compensation Period, Jones Day attorneys and paraprofessionals expended a total of hours for which compensation is requested. 7. The cover sheet required by the UST Guidelines is attached to the front of this Application and incorporated herein by reference. This cover sheet includes a schedule (the "Professional Schedule") setting forth (a) the names of all Jones Day professionals and paraprofessionals who have performed services for which compensation is sought, (b) the person's position in the firm and (c) the year each attorney was first admitted to practice law. In addition, the Professional Schedule sets forth for each person (a) their hourly rate(s) during the Compensation Period, (b) the total hours billed for which compensation is sought and (c) the total compensation for such hours. 8. A summary of the project categories of services rendered by Jones Day for which compensation is sought by this Application is attached hereto as Exhibit A and incorporated herein by reference. A listing of the detailed time entries of Jones Day professionals and paraprofessionals with respect to the compensation requested by this Application is attached hereto as Exhibit B and incorporated herein by reference. A summary of the types of expenses for which reimbursement is sought by this Application is attached hereto as Exhibit C and incorporated herein by reference. A detailed itemization of such expenses is attached hereto as Exhibit D and incorporated herein by reference. Prior Payments to Jones Day and the Monthly Statement 9. Prior to the Petition Date, on or about February 20, 2002 and March 7, 2002, the Debtor paid to Jones Day a total of $38, for services to be rendered and for -4-

9 reimbursement of expenses to be incurred (collectively, the "Prepayment"). 5 As of the Petition Date, the entire amount of the Prepayment remained unapplied. On September 30, 2002, in accordance with the terms of the Retention Order, Jones Day filed the Disclosure of Jones, Day, Reavis & Pogue with Respect to Reconciliation of Prepetition Fees and Expenses (the "Reconciliation Statement"), which identified (a) Jones Day's reconciliation, through September 30, 2002, of $17, in prepetition fees and expenses actually incurred through and including June 16, 2002 (the "Reconciled Fees and Expenses"); and (b) the corresponding application of the Prepayment to the Reconciled Fees and Expenses. The Reconciliation Statement noted that Jones Day applied $17, of the Prepayment to the Reconciled Fees and Expenses and, further, that the remaining Prepayment in the amount of $21, is being held by Jones Day in its trust account until further order of the Court. 10. On or about October 30, 2002, Jones Day submitted a Monthly Statement (the "First Monthly Statement") to the Debtor for the period from June 17, 2002 through September 30, 2002 (the "First Compensation Period"). By the First Monthly Statement, Jones Day sought: (a) payment of $61, in fees relating to services rendered to the Debtor during the First Compensation Period, as adjusted from $76, in accordance with the 20% fee holdback established pursuant to the Interim Compensation Order; and (b) reimbursement of $3, in expenses incurred during the First Compensation Period. 11. On or about November 30, 2002, Jones Day submitted a Monthly Statement (the "Second Monthly Statement") to the Debtor for the period from October 1, 2002 through October 31, 2002 (the "Second Compensation Period"). By the Second Monthly 5 A schedule explaining all payments made by the Debtor to Jones Day in the year prior to the Petition Date is attached as Exhibit B to the Jones Day Retention Application. -5-

10 Statement, Jones Day sought: (a) payment of $11, in fees relating to services rendered to the Debtor during the Second Compensation Period, as adjusted from $14, in accordance with the 20% fee holdback established pursuant to the Interim Compensation Order; and (b) reimbursement of $ in expenses incurred during the Second Compensation Period. 12. On or about December 30, 2002, Jones Day submitted a Monthly Statement (the "Third Monthly Statement") to the Debtor for the period from November 1, 2002 through November 30, 2002 (the "Third Compensation Period"). By the Third Monthly Statement, Jones Day sought: (a) payment of $13, in fees relating to services rendered to the Debtor during the Third Compensation Period, as adjusted from $17, in accordance with the 20% fee holdback established pursuant to the Interim Compensation Order; and (b) reimbursement of $ in expenses incurred during the Third Compensation Period. 13. On or about January 30, 2003, Jones Day submitted a Monthly Statement (the "Fourth Monthly Statement" and, together with the First Monthly Statement, the Second Monthly Statement and the Third Monthly Statements, the "Monthly Statements") to the Debtor for the period from December 1, 2002 through December 31, 2002 (the "Fourth Compensation Period"). By the Fourth Monthly Statement, Jones Day sought: (a) payment of $12, in fees relating to services rendered to the Debtor during the Fourth Compensation Period, as adjusted from $15, in accordance with the 20% fee holdback established pursuant to the Interim Compensation Order; and (b) reimbursement of $ in expenses incurred during the Fourth Compensation Period. 14. For the period of January 1, 2003 through January 16, 2003, Jones Day incurred fees relating to services rendered to the Debtor during this period in the amount of $6, and expenses in the amount of $ (collectively, the "January Fees and -6-

11 Expenses"). By this Application, Jones Day requests payment in full of the January Fees and Expenses. 15. In addition, on or about November 14, 2002, Jones Day filed its Application of Jones, Day, Reavis & Pogue for Allowance of Compensation and Reimbursement of Expenses for the Period of June 17, 2002 through September 30, 2002 (the "Interim Fee Application"). On or about December 3, 2002, the US Trustee filed an Objection to the Interim Fee Application (the "US Trustee Objection"). To resolve the US Trustee Objection, Jones Day voluntarily agreed to reduce its fees to $65, On December 19, 2002, this Court entered an Order awarding $59, in fees and $3, in expenses with respect to the Interim Fee Application (the "Interim Fee Application Order"). The Interim Fee Application Order resolved the US Trustee Objection and the amount awarded represents: (a) 90% of the $65, reduced fees requested and (b) 100% of the expenses requested in the Interim Fee Application. 16. As of the date of this Application, Jones Day has received payment of $9, of the fees requested with respect to the Monthly Statements. Description of Services Rendered by Jones Day 17. During the Compensation Period, Jones Day assisted the Debtor with a number of matters relating to this chapter 11 case and its day-to-day operations. Jones Day's professionals and paraprofessionals billed their time during the Compensation Period to 12 distinct project billing categories. Below is a summary of the primary activities performed by Jones Day during the Compensation Period in certain of those billing categories. Although this summary is intended to highlight areas of particular importance in this chapter 11 case, a complete description of all such activities is found in the contemporaneous, daily time records included in the attached Exhibit B. -7-

12 Case Administration ( hours; $18,616.90) 18. Jones Day reviewed and analyzed numerous pleadings filed in other bankruptcy cases in which the Debtor is a creditor or party in interest and distributed daily docket updates of such cases to the Debtor. Executory Contracts/Unexpired Leases (25 hours; $7,592.00) 19. Jones Day advised the Debtor in connection with an existing lease (the "Lease") between the Debtor and chapter 11 debtor 360networks (USA), Inc. Specifically, Jones Day reviewed the Lease, as modified by the parties; prepared a motion to assume the Lease; and prepared for the hearing relating to assumption of the Lease. On September 4, 2002, the Court approved the Debtor's motion to assume the Lease. Use, Sale, Lease of Assets (50.40 hours; $15,981.50) 20. Jones Day assisted the Debtor with respect to its rights in the e.spire Communications, Inc. ("e.spire") chapter 11 bankruptcy cases. Specifically, Jones Day: (a) reviewed and analyzed e.spire's motion for approval of a proposed sale of various assets; (b) drafted a limited objection to such motion and the related notice of cure amounts with respect to the Debtor's contracts that would be assumed pursuant to such a sale; (c) drafted a limited objection to e.spire's motion for authority to assign a Network Services Agreement (the "e.spire NSA") that previously had been assumed by e.spire; and (d) drafted a motion for an order granting the allowance and payment of an administrative expenses claim relating to the e.spire NSA (after e.spire rejected the e.spire NSA). 21. Jones Day also advised the Debtor in connection with a dispute between the Debtor, the Debtor's nondebtor affiliate XO Intercity Holdings No. 2, LLC and Level 3 Communications, LLC relating to certain agreements among the parties, including a Cost -8-

13 Sharing and IRU Agreement, National Master Community Services Agreement, Master Wavelengths Agreement and Workout Agreement (collectively, the "Level 3 Agreements"). Specifically, Jones Day: (a) assisted the Debtor with negotiating and documenting a settlement agreement (the "Settlement Agreement") relating to the parties' rights and obligations under the Level 3 Agreements and (b) drafted and filed a motion to approve the Settlement Agreement in this case. Further, Jones Day addressed the concerns of the official committee of unsecured creditors appointed in this case relating to the Settlement Agreement. On September 27, 2002, the Court approved the Settlement Agreement. Claims Administration ( hours; $30,960.60) 22. During the Compensation Period, Jones Day: (a) assisted the Debtor in responding to claims (collectively, the "Claims") asserted by various chapter 11 debtors, including claims relating to avoidable preferences pursuant to section 547 of the Bankruptcy Code; (b) researched and analyzed legal issues relating to the Claims, including questions regarding setoff of claims pursuant to section 553 of the Bankruptcy Code; (c) participated in negotiations regarding the Claims, including negotiations with debtors EXDS, Inc., Freei Networks, Inc., PSINet Inc., 360 Networks, GST Telecom, Inc. and PointOne Communications; and (d) participated in a telephone conference with counsel for debtor IXG with respect to a deposit to be returned subsequent to IXG's emergence from bankruptcy. Jones Day also assisted the Debtor in filing pre- and postpetition claims in the cases of various chapter 11 debtors and responding to objections in respect of these claims. Court Hearings (12.20 hours; $3,887.50) 23. Jones Day prepared for and attended the December 18, 2002 hearing regarding the United State Trustee's objection to the Interim Fee Application. -9-

14 Employee Matters (48.40 hours; $10,799.00) 24. During the Compensation Period, Jones Day represented the Debtor in connection with an Equal Employment Opportunity Commission (the "EEOC") charge filed by current employee, Dawn Baskevice. Specifically, Jones Day: (a) reviewed and analyzed the Debtor's documents regarding Baskevice's employment; (b) conducted a fact finding investigation; (c) researched for the EEOC position statement; (d) drafted the EEOC position statement; (e) met with witnesses and attended an on-site investigation by the EEOC; and (f) generally assisted the Debtor in formulating a strategy with respect to the EEOC charge. Litigation/Adversary Proceedings (8.80 hours; $2,375.50) 25. During the Compensation Period, Jones Day assisted the Debtor in defending an avoidable preference action asserted by debtor Northpoint Communications, Inc. under section 547 of the Bankruptcy Code. Professional Retention/Fee Issues ( hours; $12,919.40) During the Compensation Period, Jones Day devoted time to preparing the Jones Day Retention Application. In connection therewith, Jones Day researched its comprehensive client database to check and clear potential conflicts of interest in this case and determine whether it has or had any relationships with the following entities: (a) the Debtor and its nondebtor affiliates; (b) the Debtor's current and directors and officers; (c) the Debtor's 30 largest unsecured creditors; (d) other material creditors and parties in interest; (e) the Debtor's prospective investors; (f) parties to significant litigation with the Debtor and its nondebtor affiliates, including the Debtor's insurance carriers; (g) the Debtor's material secured creditors; 6 Jones Day voluntarily reduced the amount of fees requested in this category by $11, in response to the US Trustee Objection; accordingly, Jones Day's total fees in this category have been reduced from $24, to $12,

15 (h) the Debtor's material known unsecured bank, noteholder lenders, public bondholders and indenture trustees; and (i) other significant parties in interest, including the Debtor's major equity holders. Further, Jones Day prepared documentation disclosing the results of this comprehensive search. Fee Application Preparation (79.50 hours; $15,080.10) 27. Jones Day devoted time to the following during the Compensation Period: (a) preparing the Monthly Statements and the Interim Fee Application; and (b) completing certain advance activities in preparation of the Monthly Statements and the Interim Fee Application, including (i) reviewing the time and expense detail relating to the Monthly Compensation Periods; (ii) reviewing (A) Rule of the Local Rules of the Bankruptcy Court for the Southern District of New York, (B) certain applicable provisions of the United States Trustee Guidelines for Reviewing Applications for Compensation and Reimbursement of Expenses Filed Under 11 U.S.C. 330, adopted on January 30, 1996 and (C) General Order M- 151, Amended Guidelines for Fees and Disbursements for Professionals in Southern District of New York Bankruptcy Cases; and (iii) preparing the related fee application exhibits. Description of Expenses Incurred 28. Section 330 of the Bankruptcy Code authorizes "reimbursement for actual, necessary expenses" incurred by professionals employed in a chapter 11 case. 11 U.S.C. 330(a)(1)(B). Accordingly, Jones Day seeks reimbursement for actual and necessary expenses (the "Expenses") incurred in rendering services to the Debtor during the Compensation Period. Jones Day maintains the following policies with respect to the Expenses: No amortization of the cost of any investment, equipment or capital outlay is included in the Expenses. In addition, for those items or services that Jones Day -11-

16 justifiably purchased or contracted from a third party (such as outside copy services), Jones Day seeks reimbursement only for the exact amount billed to Jones Day by the third party vendor and paid by Jones Day to the third party vendor. Photocopying by Jones Day was charged at $0.20 per page. To the extent practical, Jones Day utilized less expensive, outside copying services. Facsimile transmissions by Jones Day typically are charged at $0.50 per page for outgoing local transmissions and $1.00 per page for outgoing long distance transmissions. Jones Day does not charge long-distance tariffs for outgoing facsimiles, nor does it impose charges for incoming facsimiles. Mileage was charged at the prevailing rate allowed by the Internal Revenue Service for tax deductions for mileage. All airfare Expenses are for coach class travel. Jones Day professionals are to incur only reasonable meal, lodging and car rental costs when traveling on client matters. Computer-assisted legal research was used when time pressures rendered it impracticable to conduct such research manually or where the use of such computer services was determined to be more cost-efficient. Computer-assisted research is billed at actual cost on a per-search and/or per-minute basis, depending upon the provider. Among other things, Jones Day used computer research in the following instances in connection with the preparation of certain internal legal memoranda, the development of responses to inquiries of the Debtor and other parties, the analysis of issues arising in this case, the completion of certain corporate activities and transactions and the preparation of pleadings filed with the Court in this case and in other courts: research of case law, statutory and regulatory provisions and factual data regarding particularly important issues; and shepardization of cases cited in pleadings filed with the Court in these cases or in other courts. With computer assistance, the total shepardization and research time is greatly reduced. To complete these activities manually would have taken significantly more lawyer or paraprofessional time, resulting in a greater cost to the Debtor's estate. -12-

17 Jones Day does not charge for postage less than $1.00. Postage is billed at actual cost for postage over $1.00, including postage for large group mailings where the postage for each individual item is less than $1.00. Overnight delivery services and messenger services were used only when time pressures rendered it impracticable to use regular mail services. Messenger services are billed at the actual rates charged by comparable, outside delivery services or the actual cost of such services. Jones Day does not charge for telephone calls between its offices or for local or long distance calls less than $1.00. Long distance telephone charges over $1.00 and operator assisted conference calls are billed at actual cost. Jones Day bills for the actual cost of staff overtime only when staff overtime services are used for the needs of its clients and not for Jones Day's own convenience. 29. Jones Day seeks reimbursement for $5, in actual and necessary expenses incurred in rendering services to the Debtor during the Compensation Period. A summary and itemization of these expenses is attached hereto as Exhibit D and incorporated herein by reference. Adjustments to Fees and Expenses 30. Consistent with its own internal policies and to comply with the "reasonableness" requirements of section 330 of the Bankruptcy Code, Jones Day has reviewed its monthly service descriptions and has determined that certain fees should not be charged to the Debtor. This Application reflects these adjustments. The adjustments made by Jones Day result from, among other things: (a) the reduction (or elimination) of fees where the time charged for the particular services exceeded the amount of time that, in Jones Day's estimation, it should have taken the lawyer or the paraprofessional to render the services; (b) the deletion of charges for duplicative or nonproductive services; and (c) other adjustments considered appropriate by Jones Day or required by applicable rules. In total for the Compensation Period, Jones Day has -13-

18 voluntarily written off $40, in fees and expenses, including (a) hours of time charges aggregating $26, in respect of the Monthly Statements and (b) the $11, voluntary reduction in fees and expenses requested by the Interim Fee Application. LEGAL ARGUMENT Applicable Legal Standards 31. Section 330(a)(1) of the Bankruptcy Code provides, in pertinent part, for the payment of: (A) (B) reasonable compensation for actual, necessary services rendered by the trustee, examiner, professional person, or attorney and by any paraprofessional person employed by any such person; and reimbursement for actual, necessary expenses. 11 U.S.C. 330(a)(1). To grant a request for compensation pursuant to section 330 of the Bankruptcy Code, a court must find that such request is reasonable. review of a fee application: 32. Section 330 further provides the following standards for the Court's In determining the amount of reasonable compensation to be awarded, the court shall consider the nature, the extent, and the value of such services, taking into account all relevant factors, including -- (A) the time spent on such services; (B) the rates charged for such services; (C) whether the services were necessary to the administration of, or beneficial at the time the service was rendered toward the completion of, a case under this title; (D) whether the services were performed within a reasonable amount of time commensurate with the complexity, importance, and nature of the problem, issue, or task addressed; and -14-

19 11 U.S.C. 330(a)(3). Jones Day's Fees Are Reasonable (E) whether the compensation is reasonable, based on the customary compensation charged by comparably skilled practitioners in cases other than cases under this title. 33. Jones Day's fees during the Compensation Period were reasonable under the prevailing legal standard and should be allowed on a final basis, as requested herein. The amount of these fees is not unusual and are commensurate with fees that Jones Day has been awarded in other chapter 11 cases and that other attorneys of comparable experience and expertise have charged and been awarded in similar chapter 11 cases. 34. Moreover, for all of the reasons described herein, Jones Day's services have benefited the Debtor, its estate and creditors and have furthered the Debtor's ultimate goal of maximizing the value of its estate for the benefit of all stakeholders. Jones Day's Expenses Were Actual and Necessary 35. Section 330(a)(1)(B) of the Bankruptcy Code permits reimbursement for actual, necessary expenses. As noted above, Jones Day already has conducted a review to ensure that the Expenses comply with section 330(a)(1)(B), Local Rule and other applicable requirements. Accordingly, Jones Day has properly requested reimbursement only of actual, necessary and appropriate Expenses. Review by the Debtor 36. A copy of this Application will be sent to the Debtor for its review. No Sharing of Compensation 37. No agreement or understanding exists between Jones Day or any third person for the sharing of compensation, except as permitted by section 504(b) of the Bankruptcy -15-

20 Code and Bankruptcy Rule 2016 with respect to sharing of compensation between and among partners in Jones Day. All the services for which compensation is requested in this Application were rendered at the request of and solely on behalf of the Debtor. Waiver of Memorandum of Law 38. Pursuant to Local Rule (b), because there are no novel issues of law presented herein, Jones Day respectfully requests that the Court waive the requirements that Jones Day file a memorandum of law in support of this Application. Certification 39. In accordance with the Guidelines, the Certification of Scott J. Friedman is attached hereto as Exhibit E and incorporated herein by reference. NOTICE 40. No trustee or examiner has been appointed in this chapter 11 case. In accordance with the Interim Compensation Order, notice of this Motion will be given to the 2002 Service List. In light of the nature of the relief requested herein, Jones Day submits that no other or further notice is required. WHEREFORE, Jones Day respectfully requests that the Court enter an order, substantially in the form attached hereto as Exhibit F: (i) allowing, on a final basis, compensation of $119, for services rendered by Jones Day in connection with this chapter 11 case during the Compensation Period; (ii) allowing, on a final basis, reimbursement of Expenses of $5,263.78; (iii) authorizing and directing the Debtor to pay to Jones Day the January -16-

21 Fees and Expenses and all amounts requested herein that have not previously been paid pursuant to the Monthly Statements; and (iv) granting such other and further relief as the Court may deem proper. Dated: March 3, 2003 Respectfully submitted, /s/ Scott J. Friedman John J. Rapisardi (JR 7781) Scott J. Friedman (SF 5778) JONES DAY 222 East 41 st Street New York, NY Telephone: (212) Facsimile: (212) and Richard M. Cieri North Point 901 Lakeside Avenue Cleveland, Ohio Telephone: (216) Facsimile: (216) and Michelle Morgan Harner 77 West Wacker Chicago, IL Telephone: (312) Facsimile: (312) SPECIAL COUNSEL FOR DEBTOR AND DEBTOR IN POSSESSION -17-