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Exhibit 10.1.1

XO COMMUNICATIONS, INC.
2002 STOCK INCENTIVE PLAN

SECTION 1. Purpose. The purpose of this 2002 Stock Incentive Plan (this
Plan) is to provide a means whereby XO Communications, Inc. (the Company)
or any parent or subsidiary of the Company, as defined in Subsection 5.8 (the
related entities), may continue to attract, motivate and retain selected
employees, officers and independent contractors who can materially contribute
to the Companys growth and success, and to encourage stock ownership in the
Company through the grant of (i) incentive stock options, (ii) nonqualified
stock options and (iii) shares of restricted stock (or any combination thereof)
(each, an award) with respect to the Common Stock of the Company (as defined
in Section 3), so that such key employees and other persons and entities will
more closely identify their interests with those of the Company and its
stockholders.

SECTION 2. Administration. This Plan shall be administered by the
Compensation Committee (the Compensation Committee) of the Board of Directors
of the Company (the Board), unless (a) the Board shall resolve to administer
this Plan itself or shall not have appointed, or revoked the appointment of,
the Compensation Committee, in which case the Board shall administer the Plan
or (b) the Board shall appoint or authorize another committee of the Board to
administer this Plan, in which case such committee shall administer the Plan.
The administrator of this Plan shall hereinafter be referred to as the Plan
Administrator.

2.1. Procedures. The Board may designate one of the members of the Plan
Administrator as chairperson. The Plan Administrator may hold meetings at such
times and places as it shall determine. The acts of a majority of the members
of the Plan Administrator present at meetings at which a quorum exists, or acts
reduced to or approved in writing by all Plan Administrator members, shall be
valid acts of the Plan Administrator.

2.2. Responsibilities. Except for the terms and conditions explicitly
required in this Plan, the Plan Administrator shall have the authority, in its
discretion, to determine all matters relating to the awards to be granted under
this Plan, including selection of the individuals to be granted awards, the
number of shares to be subject to each award, the exercise price, and all other
terms and conditions of the awards. Grants under this Plan need not be
identical in any respect, even when made simultaneously. The interpretation
and construction by the Plan Administrator of any terms or provisions of this
Plan or any award issued under this Plan, or of any rule or regulation
promulgated in connection with this Plan, shall be conclusive and binding on
all interested parties, so long as such interpretation and construction with
respect to incentive stock options correspond to the requirements of Section
422 of the Internal Revenue Code (the Code), as amended, and the regulations
thereunder.

2.3. Section 16(b) Compliance and Bifurcation of Plan. It is the
intention of the Company that this Plan, and awards granted under this Plan,
comply in all respects with Rule
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16b-3 under the Exchange Act and, if any Plan provision is later found not
to be in compliance with such Section, the provision shall be deemed null and
void, and in all events this Plan shall be construed in favor of its meeting
the requirements of Rule 16b-3. Notwithstanding anything in this Plan to the
contrary, the Board, in its absolute discretion, may bifurcate this Plan so as
to restrict, limit or condition the use of any provision of this Plan to
participants who are officers and directors subject to Section 16(b) of the
Exchange Act without so restricting, limiting or conditioning other Plan
participants.

SECTION 3. Stock Subject to This Plan. The stock subject to this Plan
shall be the Companys Common Stock (the Common Stock), authorized but
unissued or held or subsequently acquired by the Company as treasury shares.
Subject to adjustment as provided in Section 7 of this Plan, the aggregate
amount of Common Stock to be delivered pursuant to all awards granted under
this Plan shall not exceed 17,590,020 shares of Common Stock (the Plan
Maximum). If any award granted under this Plan expires or is surrendered,
canceled, terminated or exchanged for another award for any reason without
having vested or having been exercised in full, as applicable, the
undistributed shares subject to such expired, surrendered, canceled, terminated
or exchanged award shall again be available for purposes of this Plan,
including use as replacement awards that may be granted in exchange for such
surrendered, canceled or terminated awards.

SECTION 4. Eligibility. An incentive stock option may be granted only to
an individual who, at the time the option is granted, is an employee of the
Company (or a corporate related entity, as described in Section 5.8) and who
the Plan Administrator may from time to time select for participation in this
Plan. Members of the Board shall not be eligible for grants of incentive stock
options unless they are also employees of the Company. At the discretion of
the Plan Administrator, employees and independent contractors of the Company
(including nonemployee directors) or any related entity may receive awards of
nonqualified stock options and restricted stock. Notwithstanding anything to
the contrary herein, the maximum number of shares of Common Stock with respect
to which options may be granted to any individual in any calendar year shall
not exceed the Plan Maximum, as such number may change from time to time. Any
party to whom an option is granted under this Plan shall be referred to in this
Plan as an Optionee. Any party to whom an award of restricted stock is
granted under this Plan shall be referred to in this Plan as a Holder.

SECTION 5. Terms and Conditions of Options. Options granted under this
Plan shall be evidenced by written agreements that contain such terms,
conditions, limitations and restrictions as the Plan Administrator shall deem
advisable and which are not inconsistent with this Plan. Notwithstanding the
foregoing, options shall include or incorporate by reference the following
terms and conditions:

5.1. Number of Shares. The maximum number of shares that may be purchased
pursuant to the exercise of each option shall be as established by the Plan
Administrator.

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5.2. Price of Shares. The price per share at which each option is
exercisable (the exercise price) shall be as established by the Plan
Administrator, provided that the Plan Administrator shall act in good faith to
establish the exercise price as follows:

5.2.1. Incentive Stock Options and Nonqualified Stock Options. With
respect to incentive stock options intended to qualify under Section 422 of the
Code, and subject to Subsection 5.2.2 below, the per share exercise price shall
be not less than the fair market value of one share of the Common Stock at the
time the option is granted, except with respect to the substitution of a new
option for an old option, or an assumption of an old option, in accordance with
Code Section 424(a). With respect to nonqualified stock options, the exercise
price shall be the amount set by the Plan Administrator; provided, however,
that the exercise price of the nonqualified stock options to be granted on or
following the Companys reorganization under chapter 11 of the Bankruptcy Code
presided over by the United States Bankruptcy Court for the Southern District
of New York (the Plan of Reorganization) covering 12,199,820 shares of Common
Stock (the Bankruptcy Options) shall have an exercise price no less than that
allowed under the Plan of Reorganization, based upon the post-rights offering
equity value ($475 million plus the amount subscribed to in the rights
offering) of the Company assumed in connection with the Plan of Reorganization.
Notwithstanding the foregoing, to the degree that any of the Bankruptcy
Options are forfeited, such that the underlying shares are again available for
issuance pursuant to awards under the Plan, the exercise price for any future
nonqualified stock options relating to such forfeited shares shall be the
amount set by the Plan Administrator without the price limitation set forth in
the immediately preceding sentence.

5.2.2. Incentive Stock Options to Greater than 10% Shareholders. With
respect to incentive stock options granted to greater than 10% shareholders of
the Company, the exercise price shall be as required by Section 6.

5.2.3. Fair Market Value. The fair market value per share of the Common
Stock for the purpose of determining the exercise price under this Section 5.2
shall be determined as follows:

(a) if the Common Stock is listed on any established stock exchange or a
national market system including without limitation the National Market System
of the National Association of Securities Dealers, Inc. Automated Quotation
(NASDAQ) System, the fair market value shall be the closing sales price for
such stock (or the closing bid, if no sales were reported), as quoted on such
system or exchange for the last market trading date prior to the time of
determination as reported in The Wall Street Journal or such other source as
the Plan Administrator deems reliable;

(b) if the Common Stock is quoted on the NASDAQ System (but not on the
National Market System thereof) or regularly quoted by a recognized securities
dealer but selling prices are not reported, the fair market value shall be the
mean between the high and low asked prices for the Common Stock on the last
market trading date prior to the day of determination, as reported in The Wall
Street Journal or such other source as the Plan

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Administrator deems reliable; or

(c) In the absence of an established market for the Common Stock, fair
market value shall be determined by the Plan Administrator in good faith at the
time the option is granted.

5.3. Term, Maturity and Exercisability. Subject to the restrictions
contained in Section 6 with respect to granting incentive stock options to
greater than 10% shareholders of the Company, the term of each stock option
shall be 10 years from the date it is granted unless a shorter period of time
is established by the Plan Administrator, but in no event shall the term of any
incentive stock option exceed 10 years. Options shall have such vesting and
exercisability conditions as shall be determined by the Plan Administrator, in
its sole discretion, and set forth in the written agreement evidencing such
subsequent grant.

5.4. Exercise. Subject to the vesting schedule as determined by the Plan
Administrator, if any, and to any additional holding period required by
applicable law, each option may be exercised in whole or in part; provided,
however, that only whole shares will be issued pursuant to the exercise of any
option. During an Optionees lifetime, any stock options granted under this
Plan are personal to him or her and are exercisable solely by such Optionee,
except as provided in Section 5.7. Options shall be exercised by delivery to
the Company of notice of the number of shares with respect to which the option
is exercised, together with payment of the exercise price.

5.5. Payment of Exercise Price. Payment of the option exercise price
shall be made in full at the time the notice of exercise of the option is
delivered to the Company and shall be in cash, bank certified or cashiers
check or personal check (unless at the time of exercise the Plan Administrator
in a particular case determines not to accept a personal check) for the Common
Stock being purchased.

The Plan Administrator can determine at the time the option is granted for
incentive stock options, or at any time before exercise for nonqualified stock
options, that additional forms of payment will be permitted, including
installment payments on such terms and over such period as the Plan
Administrator may determine in its discretion. To the extent permitted by the
Plan Administrator in its sole discretion, and if permitted by applicable laws
and regulations (including, but not limited to, federal tax and securities laws
and regulations and state corporate law), an option may be exercised by:

(a) delivery of shares of stock of the Company held by an Optionee having
a fair market value equal to the exercise price, such fair market value to be
determined in good faith by the Plan Administrator;

(b) delivery of a full-recourse promissory note executed by the Optionee,
provided that (i) such note delivered in connection with an incentive stock
option shall, and such note delivered in connection with a nonqualified stock
option may, in the sole discretion of the Plan Administrator, bear interest at
a rate specified by the Plan Administrator but in no case
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less than the rate required to avoid imputation of interest (taking into
account any exceptions to the imputed interest rules) for federal income tax
purposes; (ii) the Plan Administrator in its sole discretion shall specify the
term and other provisions of such note at the time an incentive stock option is
granted or at any time prior to exercise of a nonqualified stock option; (iii)
the Plan Administrator may require that the Optionee pledge the Optionees
shares to the Company for the purpose of securing the payment of such note and
may require that the certificate representing such shares be held in escrow in
order to perfect the Companys security interest; (iv) the note provides that
90 days following the Optionees termination of employment with the Company or
a related entity, the entire outstanding balance under the note shall become
due and payable, if not previously due and payable; and (v) the Plan
Administrator in its sole discretion may at any time restrict or rescind this
right upon notification to the Optionee; or

(c) delivery of a properly executed exercise notice, together with
irrevocable instructions to a broker, all in accordance with the regulations of
the Federal Reserve Board, to promptly deliver to the Company the amount of
sale or loan proceeds to pay the exercise price and any federal, state or local
withholding tax obligations that may arise in connection with the exercise;
provided, that the Plan Administrator, in its sole discretion, may at any time
determine that this Subparagraph (c), to the extent the instructions to the
broker call for an immediate sale of the shares, shall not be applicable to any
Optionee who is subject to Section 16(b) of the Exchange Act if such
transaction would result in a violation of Section 16(b), or is not an employee
at the time of exercise.

5.6. Withholding Tax Requirement. The Company or any related entity shall
have the right to retain and withhold from any payment of cash or Common Stock
under this Plan the amount of taxes required by any government to be withheld
or otherwise deducted and paid with respect to such payment. At its
discretion, the Company may require an Optionee receiving shares of Common
Stock to reimburse the Company or a related entity for any such taxes required
to be withheld and may withhold any distribution in whole or in part until the
Company, or related entity, is so reimbursed. In lieu of such withholding or
reimbursement, the Company (or related entity) shall have the right to withhold
from any other cash amounts due or to become due from the Company (or related
entity) to the Optionee an amount equal to such taxes or to retain and withhold
a number of shares having a market value not less than the amount of such taxes
required to be withheld as reimbursement for any such taxes and cancel or sell
(in whole or in part) any such shares so withheld on Optionees behalf.
Alternatively, the Committee may, pursuant to certain procedures that it may
establish from time to time, allow the Optionee to elect to have a number of
shares, having a market value not less than the amount of such taxes required
to be withheld, withheld and delivered to a broker to be sold into the market
on the Optionees behalf with the proceeds being returned to the Company to
reimburse the Company for payment of such taxes.

5.7. Nontransferability of Option. Options granted under this Plan and
the rights and privileges conferred by this Plan may not be transferred,
assigned, pledged or hypothecated in any manner (whether by operation of law or
otherwise) other than by will or by the applicable laws of descent and
distribution; provided, with respect to a non-qualified stock
Page 5- STOCK OPTION PLAN

option, an Optionee may transfer the option to a revocable trust created
by the Optionee for the benefit of his or her descendants, to an immediate
family member or to a partnership in which only immediate family members or
such trusts are partners. Options under this Plan shall not be subject to
execution, attachment or similar process. Any attempt to transfer, assign,
pledge, hypothecate or otherwise dispose of any option under this Plan or of
any right or privilege conferred by this Plan, contrary to the Code or to the
provisions of this Plan, or the sale or levy or any attachment or similar
process upon the rights and privileges conferred by this Plan shall be null and
void. Notwithstanding the foregoing, an Optionee may during the Optionees
lifetime, designate a person who may exercise the option after the Optionees
death by giving written notice of such designation to the Plan Administrator.
Such designation may be changed from time to time by the Optionee by giving
written notice to the Plan Administrator revoking any earlier designation and
making a new designation.

5.8. Termination of Relationship. If the Optionees employment
relationship with the Company or any related entity ceases for any reason other
than termination for cause, death or permanent and total disability, and unless
by its terms the option sooner terminates or expires, then the Optionee may
exercise, for a period of three months after such cessation, that portion of
the Optionees option which is exercisable at the time of such cessation. The
Optionees option, however, shall terminate at the end of the three month
period following such cessation as to all shares of Common Stock that have not
been exercised, unless such provision is waived in the agreement evidencing the
option or by resolution adopted by the Plan Administrator. If, in the case of
an incentive stock option, an Optionees relationship with the Company or
related entity changes (i.e., from employee to nonemployee, such as a
consultant), such change shall constitute a termination of an Optionees
employment with the Company or related entity and the Optionees incentive
stock option shall terminate in accordance with this subsection. Upon the
expiration of the three month period following cessation of employment, the
Plan Administrator shall have sole discretion in a particular circumstance to
extend the exercise period following such cessation beyond that specified
above. If, however, in the case of an incentive stock option, the Optionee
does not exercise the Optionees option within three months after cessation of
employment, the option will no longer qualify as an incentive stock option
under the Code.

Upon an Optionees termination of employment for cause, all of the
optionees outstanding (i.e., unexercised) options issued under this Plan shall
immediately expire and no longer be available for exercise. For purposes of
this Section 5.8, cause means the Company or a related entity having cause to
terminate an Optionees employment or service under any existing employment,
consulting or any other agreement between the Optionee and the Company or
related entity. In the absence of any such an employment, consulting or other
agreement cause shall have the same meaning as set forth in subsection 8.1.4
herein.

If an Optionees relationship with the Company or any related entity
ceases because of a permanent and total disability, the Optionees option shall
not terminate upon such Optionees cessation of employment but rather shall
expire at the end of the 12-month period following such cessation (unless by
its terms it sooner terminates and expires). In the event of
Page 6- STOCK OPTION PLAN

such permanent and total disability any incentive stock option held by the
Optionee shall continue to be treated as an incentive stock option until its
expiration. As used in this Plan, the term permanent and total disability
has the same meaning provided in Code Section 22(e)(3).

For purposes of this subsection 5.8, a transfer of relationship between or
among the Company and/or any related entity shall not be deemed to constitute a
cessation of relationship with the Company or any of its related entities. For
purposes of this subsection 5.8, with respect to incentive stock options,
employment shall be deemed to continue while the Optionee is on military leave,
sick leave or other bona fide leave of absence (as determined by the Plan
Administrator). The foregoing notwithstanding, employment shall not be deemed
to continue beyond the first 90 days of such leave, unless the Optionees
reemployment rights are guaranteed by statute or by contract.

As used in this Plan, the term related entity, when referring to a
subsidiary, shall mean any business entity (other than the Company) which, at
the time of the granting of the option, is in an unbroken chain of entities
ending with the Company, if stock or voting interests possessing 50% or more of
the total combined voting power of all classes of stock or other ownership
interests of each of the entities other than the Company is owned by one of the
other entities in such chain. When referring to a parent entity, the term
related entity shall mean any entity in an unbroken chain of entities ending
with the Company if, at the time of the granting of the option, each of the
entities other than the Company owns stock or other ownership interests
possessing 50% or more of the total combined voting power of all classes of
stock (or other ownership interests) in one of the other entities in such
chain. In addition, with respect to an incentive stock option, the definition
of related entity as used in this Plan shall apply by only considering
entities that are corporations.

5.9. Death of Optionee. If an Optionee dies while he or she has a
relationship with the Company or any related entity or dies within the three
month period (or 12-month period in the case of totally disabled Optionees)
following cessation of such relationship, any option held by such Optionee to
the extent that the Optionee would have been entitled to exercise such option,
may be exercised within one year after his or her death by the personal
representative of his or her estate or by the person or persons to whom the
Optionees rights under the option shall pass by will or by the applicable laws
of descent and distribution.

5.10. Status of Shareholder. Neither the Optionee nor any party to which
the Optionees rights and privileges under the option may pass shall be, or
have any of the rights or privileges of, a shareholder of the Company with
respect to any of the shares issuable upon the exercise of any option granted
under this Plan unless and until such option has been exercised.

5.11. Modification and Amendment of Option. Subject to the requirements
of Code Section 422 with respect to incentive stock options and to the terms
and conditions and within the limitations of this Plan, the Plan Administrator
may modify or amend outstanding options granted under this Plan. The
modification or amendment of an outstanding option shall not, without the
consent of the Optionee, impair or diminish any of his or her rights or any of
the
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obligations of the Company under such option. Except as otherwise
provided in this Plan, no outstanding option shall be terminated without the
consent of the Optionee. Unless the Optionee agrees otherwise, any changes or
adjustments made to outstanding incentive stock options granted under this Plan
shall be made in such a manner so as not to constitute a modification as
defined in Code Section 424(h) and so as not to cause any incentive stock
option issued hereunder to fail to continue to qualify as an incentive stock
option as defined in Code Section 422(b).

5.12. Limitation on Value for Incentive Stock Options. As to all
incentive stock options granted under the terms of this Plan, to the extent
that the aggregate fair market value (determined at the time the incentive
stock option is granted) of the stock with respect to which incentive stock
options are exercisable for the first time by the Optionee during any calendar
year (under this Plan and all other incentive stock option plans of the
Company, a related entity or a predecessor corporation) exceeds $100,000, those
options (or the portion of an option) beyond the $100,000 threshold shall be
treated as nonqualified stock options. The previous sentence shall not apply
if the Internal Revenue Service publicly rules, issues a private ruling to the
Company, any Optionee, or any legatee, personal representative or distributee
of an Optionee or issues regulations changing or eliminating such annual limit.

SECTION 6. Greater Than 10% Shareholders.

6.1. Exercise Price and Term of Incentive Stock Options. If incentive
stock options are granted under this Plan to employees who own more than 10% of
the total combined voting power of all classes of stock of the Company or any
related entity, the term of such incentive stock options shall not exceed five
years and the exercise price shall be not less than 110% of the fair market
value of the Common Stock at the time the incentive stock option is granted.
This provision shall control notwithstanding any contrary terms contained in an
option agreement or any other document.

6.2. Attribution Rule. For purposes of subsection 6.1, in determining
stock ownership, an employee shall be deemed to own the stock owned, directly
or indirectly, by or for his brothers, sisters, spouse, ancestors and lineal
descendants. Stock owned, directly or indirectly, by or for a corporation,
partnership, estate or trust shall be deemed to be owned proportionately by or
for its shareholders, partners or beneficiaries. If an employee or a person
related to the employee owns an unexercised option or warrant to purchase stock
of the Company, the stock subject to that portion of the option or warrant
which is unexercised shall not be counted in determining stock ownership. For
purposes of this Section 6, stock owned by an employee shall include all stock
actually issued and outstanding immediately before the grant of the incentive
stock option to the employee.

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SECTION 7. Restricted Stock Awards.

7.1. Award of Restricted Stock.

7.1.1. The Plan Administrator shall have the authority (1) to grant awards
of restricted stock to eligible individuals hereunder, (2) to issue or transfer
restricted stock to such individual, and (3) to establish terms, conditions and
restrictions applicable to such restricted stock, including the restricted
period, which may differ with respect to each Holder, the time or times at
which restricted stock shall be granted or become vested and the number of
shares to be covered by each grant.

7.1.2. The Holder of a restricted stock award shall execute and deliver to
the Company an award agreement with respect to the restricted stock setting
forth the restrictions applicable to such restricted stock. If the Plan
Administrator determines that the restricted stock shall be held in escrow
rather than delivered to the Holder pending the release of the applicable
restrictions, the Holder additionally shall execute and deliver to the Company
(i) an escrow agreement satisfactory to the Plan Administrator, and (ii) the
appropriate blank stock powers with respect to the restricted stock covered by
such agreements. If a Holder shall fail to execute a restricted stock
agreement and, if applicable, an escrow agreement and stock powers, the award
shall be null and void. Unless otherwise determined by the Plan Administrator
and subject to the restrictions set forth in Section 7.2, the Holder shall
generally have the rights and privileges of a stockholder as to such restricted
stock, including the right to vote such restricted stock. At the discretion of
the Plan Administrator, cash dividends and stock dividends, if any, with
respect to the restricted stock may be either currently paid to the Holder or
withheld by the Company for the Holders account. Unless otherwise determined
by the Plan Administrator, no interest will accrue or be paid on the amount of
any cash dividends withheld. Unless otherwise determined by the Plan
Administrator, cash dividends or stock dividends so withheld by the Plan
Administrator shall be subject to forfeiture to the same degree as the shares
of restricted stock to which they relate.

7.1.3. Upon the award of restricted stock, the Plan Administrator shall
cause a stock certificate registered in the name of the Holder to be issued
and, if it so determines, deposited together with the stock powers with an
escrow agent designated by the Plan Administrator. If an escrow arrangement is
used, the Plan Administrator shall cause the escrow agent to issue to the
Holder a receipt evidencing any stock certificate held by it registered in the
name of the Holder.

7.2. Restrictions.

7.2.1. Restricted stock awarded to a Participant shall be subject to the
following restrictions until vested at the expiration of the restricted period,
and to such other terms and conditions as may be set forth in the applicable
award agreement: (1) if an escrow arrangement is used, the Holder shall not be
entitled to delivery of the stock certificate; (2) the shares shall be subject
to the restrictions on transferability set forth in the award agreement; (3)
the shares shall be subject to forfeiture to the extent provided in Section 7.4
and the award
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agreement and, to the extent such shares are forfeited, the stock
certificates shall be returned to the Company, and all rights of the Holder to
such shares and as a shareholder shall terminate without further obligation on
the part of the Company.

7.2.2. The Plan Administrator shall have the authority to remove any or
all of the restrictions on the restricted stock whenever it may determine that,
by reason of changes in applicable laws or other changes in circumstances
arising after the date of the restricted stock award, such action is
appropriate.

7.3. Restricted Period. The restricted period for the restricted stock,
after which the restricted stock shall be vested, fully transferable and no
longer subject to forfeiture, shall commence on the date of grant and shall
expire from time to time as to that part of the restricted stock indicated in a
schedule established by the Plan Administrator and set forth in a written award
agreement.

7.4. Forfeiture Provisions. Except to the extent determined by the Plan
Administrator and reflected in the underlying award agreement, in the event a
Holder terminates employment with the Company and all related entities during a
restricted period, that portion of the award with respect to which restrictions
have not expired (Non-Vested Portion) shall be immediately forfeited to the
Company.

7.5. Delivery of Restricted Stock. Subject to Section 7.7 below, upon the
expiration of the restricted period with respect to any shares of Common Stock
covered by a restricted stock award, the restrictions set forth in Section 7.2
and the award agreement and the forfeiture provisions set forth in Section 7.4
shall be of no further force or effect with respect to shares of restricted
stock which have not then been forfeited. If an escrow arrangement is used,
upon such expiration, the Company shall deliver to the Holder, or his
beneficiary, without charge, the stock certificate evidencing the shares of
restricted stock which have not then been forfeited and with respect to which
the restricted period has expired (to the nearest full share) and any cash
dividends or stock dividends credited to the Holders account with respect to
such restricted stock and the interest thereon, if any.

7.6. Stock Restrictions. Each certificate representing restricted stock
awarded under the Plan shall bear the following legend until the end of the
restricted period with respect to such stock:



| |                                                                                                                                                                                                                                                                       
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Transfer of this certificate and the shares represented hereby is
restricted pursuant to the terms of a Restricted Stock Agreement, dated
as of, between XO Communications, Inc. and
.
A copy of such Agreement is on file at the offices of XO Communications,
Inc.

Stop transfer orders shall be entered with the Companys transfer agent and
registrar against the transfer of legended securities.

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7.7. Withholding Tax Requirement. The Company or any related entity shall
have the right to retain and withhold from any distribution of Common Stock
under this Plan, and sell, the number of shares having an equal value to the
amount of taxes required by any government to be withheld or otherwise deducted
and paid by the Company with respect to such distribution and cancel (in whole
or in part) any such shares so withheld on Holders behalf. At its discretion,
the Company may require a Holder receiving shares of Common Stock to reimburse
the Company or a related entity for any such taxes required to be paid and may
suspend any distribution in whole or in part until the Company, or related
entity, is so reimbursed. In lieu of such withholding or reimbursement, the
Company (or related entity) shall have the right to withhold from any other
cash amounts due or to become due from the Company (or related entity) to the
Holder an amount equal to such taxes. Moreover, the Company, in its sole
discretion, may cancel and cause the complete forfeiture of any award hereunder
with respect to which the recipient does not reimburse the Company, within a
reasonable period of time (as determined by the Company), for any taxes
required to be paid by the Company to any such government. To the extent the
Company chooses to cancel any award for the failure to timely reimburse the
Company for any taxes required to be paid by the Company, such award and any
dividends or other attributes associated therewith shall be fully forfeited to
the Company and the recipient shall have no further rights or interest in such
award. Alternatively, the Committee may, pursuant to certain procedures that it
may establish from time to time, allow the Holder to elect to have a number of
shares, having a market value not less than the amount of such taxes required
to be withheld, withheld and delivered to a broker to be sold into the market
on the Holders behalf with the proceeds being returned to the Company to
reimburse the Company for payment of such taxes.

SECTION 8. Adjustments Upon Changes in Capitalization. The aggregate
number and class of shares for which awards may be granted under this Plan, the
number and class of shares covered by each outstanding award and the exercise
price per share thereof (but not the total price), and each such award, shall
all be proportionately adjusted for any increase or decrease in the number of
issued shares of Common Stock of the Company resulting from a split-up or
consolidation of shares or any like capital adjustment, or the payment of any
stock dividend.

8.1. Effect of Liquidation, Reorganization or Change in Control.

8.1.1. Cash, Stock or Other Property for Stock. Except as provided in
subsection 8.1.2, upon a merger (other than a merger of the Company in which
the holders of Common Stock immediately prior to the merger have the same
proportionate ownership of Common Stock in the surviving corporation
immediately after the merger), consolidation, acquisition of property or stock,
separation, reorganization (other than a mere reincorporation or the creation
of a holding company) or liquidation of the Company, as a result of which the
shareholders of the Company receive cash, stock or other property in exchange
for or in connection with their shares of Common Stock, any option and any
Non-Vested Portion of a restricted stock award granted under this Plan shall
terminate. Notwithstanding the foregoing, the Optionee shall have the right
immediately prior to any such merger, consolidation, acquisition of property or
stock, separation, reorganization or liquidation to exercise such option
Page 11- STOCK OPTION PLAN

in whole or in part, to the extent the vesting requirements set forth in
this Plan have been satisfied, unless stated otherwise in the Optionees
individual option agreement.

8.1.2. Conversion of Options on Stock for Stock Exchange. If the
shareholders of the Company receive capital stock of another corporation
(Exchange Stock) in exchange for their shares of Common Stock in any
transaction involving a merger (other than a merger of the Company in which the
holders of Common Stock immediately prior to the merger have the same
proportionate ownership of common stock in the surviving corporation
immediately after the merger), consolidation, acquisition of property or stock,
separation or reorganization (other than a mere reincorporation or the creation
of a holding company), all options granted under this Plan shall be converted
into options to purchase shares of Exchange Stock and any Non-Vested Portion of
any restricted stock award will be converted into the right to acquire
similarly restricted shares of Exchange Stock upon the surrender of such
restricted stock unless the Company and the corporation issuing the Exchange
Stock, in their sole discretion, determine that any or all such options or
restricted stock granted under this Plan shall not be converted into options to
purchase or rights to acquire shares of Exchange Stock, but instead shall
terminate in accordance with the provisions of subsection 8.1.1. The amount and
price of converted options and the number of shares of restricted stock subject
to an award shall be determined by adjusting the amount and price of the
options granted under this Plan in the same proportion as used for determining
the number of shares of Exchange Stock the holders of the Common Stock receive
in such merger, consolidation, acquisition of property or stock, separation or
reorganization. Unless accelerated by the Board, the vesting schedule set
forth in the option and restricted stock agreements and the restrictions and
forfeiture provisions shall continue to apply for the Exchange Stock.

8.1.3. Change in Control.



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (a) In the event of an Acceleration Change in Control, as defined
in Section 8.1.4 below, of the Company, except as provided in Section
8.1.3(b) or unless otherwise determined by the Board prior to the
occurrence of such a Acceleration Change in Control, any shares of
restricted stock and options or portions of such options outstanding as of
the date such an Acceleration Change in Control is determined to have
occurred that are not yet fully vested shall NOT become fully vested
merely by the occurrence of an Acceleration Change in Control.



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (b) Each option and share of restricted stock granted under the Plan
shall provide that, unless otherwise expressly determined in a resolution
duly adopted by the Board on the date of grant or such later date on which
the Board may ratify such grant, such option and each such share of
restricted stock shall (1) if the Optionee or Holder is a Nonaffiliate
Director, immediately become fully vested and exercisable and no longer
subject to any applicable restrictions or forfeiture provisions, as
applicable, upon the occurrence of an Acceleration Change of Control of
the Company or (2) if the Optionee or Holder is recognized by the Company
or any of the related entities as a regular full time employee who is
subject to U.S. income tax withholding or similar tax law of a foreign

Page 12- STOCK OPTION PLAN



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| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | country, immediately become fully vested and exercisable and no
longer subject to any applicable restrictions or forfeiture provisions, as
applicable, upon the termination of the Optionees or Holders employment
by the Company or any of the related entities without Cause during the
Accelerated Vesting Period or, in the case of an Optionee or Holder who is
an Executive, upon the termination of the Optionees or Holders
employment by the Optionee or Holder for Good Reason during the
Accelerated Vesting Period.

8.1.4. Definitions. For purposes of Section 8.1.3, the following defined
terms shall have the following meanings:

Acceleration Change of Control shall mean the occurrence of any of the
following events:



| | (A) |  | The Company is merged or consolidated or
reorganized into or with another company or other legal entity
and as a result of such merger, consolidation or
reorganization less than a majority of the combined voting
power of the then-outstanding securities of such company or
person immediately after such transaction is held directly or
indirectly in the aggregate by the holders of voting
securities of the Company immediately prior to such sale or
transfer, including voting securities issuable upon exercise
or conversion of options, warrants or other securities or
rights;                                                                                                                                                                              
| | --- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | (B) |  | The Company sells or otherwise transfers all or
substantially all of its assets to any other company or other
legal entity, and as a result of such sale or other transfer
of assets, less than a majority of the combined voting power
of the then-outstanding securities of such company or person
immediately after such sale or transfer is held directly or
indirectly in the aggregate by the holders of voting
securities of the Company immediately prior to such sale or
transfer, including voting securities issuable upon exercise
or conversion of options, warrants or other securities or
rights;                                                                                                                                                           
|
| | (C) |  | There is a report filed on Schedule 13D or
Schedule 14D-1 (or any successor schedule, form or report),
each as promulgated pursuant to the Securities Exchange Act of
1934, as amended (the Exchange Act), disclosing that any
person (as the term person is used in Section 13(d)(3) or
Section 14(d)(2) of the Exchange Act), other than a Permitted
Holder (as that term is defined below), has become the
beneficial owner (as the term beneficial owner is defined
under Rule 13d-3 or any successor rule or regulation
promulgated under the Exchange Act) of securities representing
50% or more of the voting securities of the Company, including
voting securities issuable upon exercise or conversion of
options, warrants or other securities or rights;
|
| | (D) |  | The Company files a report or proxy statement
with the Securities and Exchange Commission pursuant to the
Exchange Act disclosing in                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       

Page 13- STOCK OPTION PLAN



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| |     |  | response to Form 8-K or Schedule 14A (or any successor
schedule, form or report or item therein) that a change in
control of the Company has occurred; or                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | --- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | (E) |  | Notwithstanding the foregoing provisions of
subparagraphs (C) and (D) hereof, an Acceleration Change of
Control shall not be deemed to have occurred solely because
(x) the Company, (y) an entity in which the Company directly
or indirectly beneficially owns 50% or more of the voting
securities, or (z) any Company-sponsored employee stock
ownership plan or other employee benefit plan of the Company,
either files or becomes obligated to file a report or proxy
statement under or in response to Schedule 13D, Schedule
14D-1, Form 8-K or Schedule 14A (or any successor schedule,
form or report or item therein) under the Exchange Act,
disclosing beneficial ownership by it of voting securities,
whether in excess of 50% or otherwise, or because the Company
reports that a change of control of the Company has or may
have occurred or will or may occur in the future by reason of
such beneficial ownership;

Accelerated Vesting Period means the period beginning on the effective
date of an Acceleration Change of Control and ending on the first anniversary
of such effective date.

Cause means (i) the conviction of a felony involving an intentional act
of fraud, embezzlement or theft in connection with ones duties or otherwise in
the course of ones employment with an Employer, (ii) the intentional and
wrongful damaging of property, contractual interests or business relationships
of an Employer, (iii) the intentional and wrongful disclosure of secret
processes or confidential information of an Employer in violation of an
agreement with or a policy of an Employer, or (iv) intentional conduct contrary
to an Employers announced policies or practices (including those contained in
the Corporations Employee Handbook) where either:



| | (A) |  | the nature and/or severity of the conduct or its
consequences typically would have resulted in immediate
termination based on the Corporations established employee
termination or disciplinary practices in place on the
Reference Date; or                                                                       
| | --- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | (B) |  | the employee has been provided with written
notice detailing the relevant policy or practice and the
nature of the objectionable conduct or other violation, and
within 20 business days of the receipt of such notice the
employee has not remedied the violation or ceased to engage in
the objectionable conduct.

Executive means any individual employed by the Company or any of the
related entities in a position having a salary grade of EX3, EX2, EX1A or
EX1B(adjusted as appropriate for any changes to the Companys system of
classifying its employees by salary grades implemented subsequent to the
effective date of the Plan).

Page 14- STOCK OPTION PLAN



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##### 



Good Reason means that an Executive shall have made a good faith
determination that one or more of the following has occurred:



| | (i)   |  | any significant and adverse change in the
Executives duties, responsibilities and authority, as
compared in each case to the corresponding circumstances in
place on the Reference Date;                                                                                                                                                                                                                                                                                                                         
| | ----- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | (ii)  |  | a relocation of the Executives principal
work location as established on the Reference Date to a
location that is more than 30 miles away from such
location;                                                                                                                                                                                                                                                                                                                                                    
|
| | (iii) |  | a reduction in the Executives salary or
target bonus percentage attributable to the Executives
grade level within the Company or such other target
bonus percentage as specified in any relevant
employment or bonus agreement between the Company and
the Executive that is not in either case agreed to by
the Executive, or any other significant adverse
financial consequences associated with the Executives
employment as compared to the corresponding
circumstances in place on the Reference Date; or
|
| | (iv)  |  | a breach by any Employer of its
obligations under any agreement to which the Employer
and the Executive are parties that is not cured within
20 business days following the Employers receipt of a
written notice from the Executive specifying the
particulars of such breach in reasonable detail.                                                                                                                                                                                                             

"Icahn Familymeans and includes: (i) Carl C. Icahn, his spouse, and his
children; (ii) the current and former spouses of any person described in clause
(i) of this definition; and (iii) the ancestors, siblings and descendants,
whether by blood, marriage or adoption, of any person described in clause (i)
or (ii) of this definition.

Joint Venture means a joint venture, partnership or other similar
arrangement, whether in corporate, partnership or other legal form; provided,
in no event shall any corporate subsidiary of any Person be considered to be a
Joint Venture to which such Person is a party.

Nonaffiliate Director means a person who (i) is serving (or who has been
elected or appointed and has agreed to serve) as a member of the Board, (ii) is
not an officer or employee of the Company or any of the related entities or a
beneficial owner of 10 percent or more of the outstanding common stock of the
Company and (iii) was not elected or appointed as a member of the Board
pursuant to or in connection with any contractual or other commitment on the
part of the Company to cause such person to be elected or appointed, or to
nominate or otherwise advance such person for election or appointment, as a
member of the Board.

"Permitted Holdermeans and includes: (i) any member of the Icahn Family;
(ii) any conservatorship, custodianship, or decedents estate of any member of
the Icahn Family, (iii)
Page 15- STOCK OPTION PLAN

any trust established for the benefit of any Person described in clause
(i) or (ii) of this definition; and (iv) any corporation, limited liability
company, partnership, or other entity, the controlling equity interests in
which are held by or for the benefit of any one or more persons described in
clause (i), (ii), or (iii) of this definition; and (v) any foundation or
charitable organization established by a member of the Icahn Family, and having
at least one director, trustee, or member who is a member of the Icahn Family.

Person means and includes natural persons, corporations, limited
partnerships, general partnerships, limited liability companies, limited
liability partnerships, joint stock companies, Joint Ventures, associations,
companies, trusts, banks, trust companies, land trusts, business trusts or
other organizations, whether or not legal entities, and governmental
authorities

Reference Date means the day before the effective date of any
Acceleration Change of Control of the Company.

8.2. Fractional Shares. In the event of any adjustment in the number of
shares covered by any option, any fractional shares resulting from such
adjustment shall be disregarded and each such option shall cover only the
number of full shares resulting from such adjustment.

8.3. Determination of Board to Be Final. All Section 8 adjustments shall
be made by the Board, and its determination as to what adjustments shall be
made, and the extent of such adjustments, shall be final, binding and
conclusive. Unless an Optionee agrees otherwise, any change or adjustment to
an incentive stock option shall be made in such a manner so as not to
constitute a modification as defined in Code Section 424(h) and so as not to
cause his or her incentive stock option issued under this Plan to fail to
continue to qualify as an incentive stock option as defined in Code Section
422(b).

8.4. Adjustment/Acceleration not Applicable to Chapter 11 Reorganization.
The adjustments, vesting acceleration and any other rights or requirements
under this Section 8 shall not apply to the Companys reorganization under
chapter 11 of the Bankruptcy Code presided over by the United States Bankruptcy
Court for the Southern District of New York or the Companys successful
emergence from chapter 11 or any other transaction consummated in connection
with such reorganization or emergence.

SECTION 9. Securities Regulation. Shares shall not be issued with respect
to an award granted under this Plan unless the exercise of such award and the
issuance and delivery of such shares pursuant to such award shall comply with
all relevant provisions of law, including, without limitation, any applicable
state securities laws, the Securities Act of 1933, as amended, the Exchange
Act, the rules and regulations promulgated thereunder, and the requirements of
any stock exchange upon which the shares may then be listed, and shall be
further subject to the approval of counsel for the Company with respect to such
compliance, including the availability of an exemption from registration for
the issuance and sale of any shares under this Plan. Inability of the Company
to obtain from any regulatory body having jurisdiction, the authority deemed by
the Companys counsel to be necessary for the lawful issuance and sale of any
shares under this Plan or the unavailability of an exemption from registration
for the issuance and sale
Page 16- STOCK OPTION PLAN

of any shares under this Plan shall relieve the Company of any liability
in respect of the nonissuance or sale of such shares as to which such requisite
authority shall not have been obtained.

As a condition to the distribution of shares of Common Stock pursuant to
an award, the Company may require the recipient to represent and warrant at the
time of any such distribution that the shares are being purchased only for
investment and without any present intention to sell or distribute such shares
if, in the opinion of counsel for the Company, such a representation is
required by any relevant provision of the aforementioned laws. At the option
of the Company, a stop-transfer order against any shares of stock may be placed
on the official stock books and records of the Company, and a legend indicating
that the stock may not be pledged, sold or otherwise transferred unless an
opinion of counsel is provided (concurred in by counsel for the Company)
stating that such transfer is not in violation of any applicable law or
regulation, may be stamped on stock certificates in order to assure exemption
from registration. The Plan Administrator may also require such other action
or agreement by the Optionees or Holders as may from time to time be necessary
to comply with the federal and state securities laws. THIS PROVISION SHALL NOT
OBLIGATE THE COMPANY TO UNDERTAKE REGISTRATION OF THE OPTIONS OR STOCK
HEREUNDER.

Should any of the Companys capital stock of the same class as the stock
subject to options or restricted stock granted under this Plan be listed on a
national securities exchange, all stock issued under this Plan if not
previously listed on such exchange shall be authorized by that exchange for
listing on such exchange prior to the issuance of such stock.

SECTION 10. Amendment and Termination.

10.1. Board Action. The Board may at any time suspend, amend or terminate
this Plan, provided that except as set forth in Section 8, the approval of the
Companys stockholders is necessary within 12 months before or after the
adoption by the Board of any amendment which will:

(a) increase the number of shares which are to be reserved for the
issuance of options under this Plan;

(b) permit the granting of stock options to a class of persons other than
those presently permitted to receive stock options under this Plan; or

(c) require shareholder approval under applicable law, including Section
16(b) of the Exchange Act.

Any amendment to this Plan that would constitute a modification to
incentive stock options outstanding on the date of such amendment shall not be
applicable to outstanding incentive stock options, but shall have prospective
effect only, unless individual Optionees agree otherwise.

Page 17- STOCK OPTION PLAN



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10.2. Automatic Termination. Unless sooner terminated by the Board, this
Plan shall terminate ten years from the earlier of (a) the date on which this
Plan is adopted by the Board or (b) the date on which this Plan is approved by
the stockholders of the Company. No award may be granted after such
termination or during any suspension of this Plan. The amendment or
termination of this Plan shall not, without the consent of the award holder,
alter or impair any rights or obligations under any award previously granted
under this Plan.

SECTION 11. Continuation of Employment. Nothing in this Plan or in any
award granted pursuant to this Plan shall confer upon any Optionee or Holder
any right to continue in the employ of the Company or of a related entity, or
to interfere in any way with the right of the Company or of any related entity
to terminate his or her employment or other relationship with the Company or a
related entity at any time

SECTION 12. Effectiveness of This Plan. This Plan shall become effective
upon adoption by the Board so long as it is approved by the Companys
stockholders any time within 12 months before or after the adoption of this
Plan.

Page 18- STOCK OPTION PLAN