**Exhibit 10.3**
**INDEMNIFICATION AGREEMENT**
     This **Indemnification Agreement**, dated and effective as of November 1, 2004(this “***Agreement***”), is by and between **XO Communications, Inc.**, aDelaware corporation (the “***Company***”), Starfire Holdings Corporation (a Delawarecorporation and an affiliate of the Company (“Starfire”) and Fredrik Gradin(the “***Indemnitee***”).
**Recitals:**
     **A. **The Company desires to attract and retain the services of highlyqualified individuals, such as the Indemnitee, to serve the Company and itsrelated entities.
     **B. **In order to induce Indemnitee to continue to provide services to theCompany, the Company wishes to provide for the indemnification of, and theadvancement of expenses to, the Indemnitee to the maximum extent permitted bylaw.
     **C. **The Company and Indemnitee recognize the significant increases in thecost of adequate liability insurance for persons serving as directors,officers, employees, agents or fiduciaries of private and public companies andthe general reductions in the coverage of such insurance.
     **D. **The Company and Indemnitee further recognize the substantial increasein corporate litigation in general, subjecting directors, officers, employees,agents and fiduciaries to expensive litigation risks.
     **E. **In view of the considerations set forth above, the Company desires thatIndemnitee shall be indemnified and advanced expenses by the Company as setforth herein.
**Agreement:**
     **Now, Therefore,**in consideration of the foregoing and the mutual covenantsand agreements set forth in this Agreement, and for other good and valuableconsideration had and received, the Company and the Indemnitee hereby agree asfollows:
     **1. Certain Definitions.**
          **(a) *****“Change in Control”***shall mean, and shall be deemed to have occurredif, on or after the date of this Agreement, (i) any “person” (as such term isused in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, asamended) (the ***“Exchange Act”***), other than a trustee or other fiduciary holdingsecurities under an employee benefit plan of the Company acting in suchcapacity or a corporation owned directly or indirectly by the stockholders ofthe Company in substantially the same proportions as their ownership of stockof the Company, becomes the “beneficial owner” (as defined in Rule 13d-3 underthe Exchange Act), directly or indirectly, of securities of the Companyrepresenting more than 50% of the total voting power represented by theCompany’s then outstanding Voting Securities (as defined below), (ii) CarlIcahn shall not beneficially own at least 15% of the voting power of theoutstanding voting securities of the Company at a time when any other suchperson beneficially owns in excess of 25% of such voting power of theoutstanding voting securities of the Company, (iii) the stockholders of theCompany approve a merger or consolidation of the Company with any othercorporation other than (x) a merger or consolidation which would result in theVoting Securities of the Company outstanding immediately prior theretocontinuing to
 

 

represent (either by remaining outstanding or by being converted intoVoting Securities of the surviving entity) at least 51% of the total votingpower represented by the Voting Securities of the Company or such survivingentity outstanding immediately after such merger or consolidation or (y) amerger or consolidation after which Mr. Icahn does not own at least 15% of theoutstanding voting power of the surviving entity when another person owns atleast 25% of the outstanding voting power of the surviving entity, or (iv) thestockholders of the Company approve a plan of complete liquidation of theCompany or an agreement for the sale or disposition by the Company of (in onetransaction or a series of related transactions) all or substantially all ofthe Company’s assets.
          **(b) *****“Claim”***shall mean with respect to a Covered Event (as defined below):any threatened, pending or completed action, suit, arbitration or otheralternative dispute resolution mechanism, or investigation, discovery request,inquiry, administrative hearing or any other actual, threatened or completedproceeding, whether civil, criminal, administrative or investigative,including, without limitation, all appeals therefrom, that the Indemnitee ingood faith believes might lead to the institution of any such action, suit,proceeding or alternative dispute resolution mechanism.
          **(c) *****“Company”***shall include, in addition to XO Communications, Inc. andits Subsidiaries (as defined below), any constituent corporation (including anyconstituent of a constituent) absorbed in a consolidation or merger to which XOCommunications, Inc. (or any of its Subsidiaries) is a party which, if itsseparate existence had continued, would have had power and authority toindemnify its directors, officers, and employees or agents, so that ifIndemnitee is or was a director, officer, employee or agent of such constituentcorporation, or is or was serving at the request of such constituentcorporation as a director, officer, employee or agent of another corporation,partnership, joint venture, trust or other enterprise, Indemnitee shall standin the same position under the provisions of this Agreement with respect to theresulting or surviving corporation as Indemnitee would have with respect tosuch constituent corporation if its separate existence had continued.
          **(d) *****“Covered Event”***shall mean any event or occurrence related in any wayto the fact that Indemnitee is or was a director, officer, employee, agent, orfiduciary of the Company, or is or was serving at the request of the Company asa director, officer, employee, agent or fiduciary of another corporation,partnership, joint venture, employee benefit plan, trust or other enterprise,or by reason of any action or inaction alleged to have been taken or omitted onthe part of Indemnitee while serving in any such capacity.
          **(e) *****“Expenses”***shall mean any and all reasonable expenses including,without limitation, any reasonable attorneys’ fees, retainers, court costs,transcript costs, fees of experts, witness fees, travel expenses, duplicatingcosts, printing and binding costs, telephone charges, postage, delivery servicefees and all other reasonable costs, expenses and obligations incurred inconnection with investigating, prosecuting, defending, preparing to prosecuteor defend, being or preparing to be a witness in or participating in (includingon appeal), or preparing to participate in, any action, suit, proceeding,alternative dispute resolution mechanism, hearing, inquiry or investigation, aswell as all judgments, fines, penalties and amounts paid in settlement (if suchsettlement is approved in advance by the Company, which approval shall not beunreasonably withheld), together with all interest, assessments and othercharges relating to the foregoing, actually and reasonably incurred, relatingin any way to any
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Claim and any federal, state, local or foreign taxes imposed on anyIndemnitee as a result of the actual or deemed receipt of any payments underthis Agreement.
          **(f) *****“Expense Advance”***shall mean a payment to the Indemnitee pursuant toSection 3 of Expenses in advance of the settlement of or final judgment in anyaction, suit, proceeding or alternative dispute resolution mechanism, hearing,inquiry or investigation which constitutes a Claim.
          **(g) *****“Independent Legal Counsel”***shall mean an attorney or firm ofattorneys, selected in accordance with the provisions of Section 4(c) hereof.
          **(h) **References to “***other enterprises***” shall include, without limitation,employee benefit plans; references to “***fines***” shall include, withoutlimitation, any excise taxes assessed on the Indemnitee with respect to anemployee benefit plan; and references to “***serving at the request of theCompany***” shall include, without limitation, any service as a director, officer,employee, agent or fiduciary of the Company which imposes duties on, orinvolves services by, such director, officer, employee, agent or fiduciary withrespect to an employee benefit plan, its participants or its beneficiaries; andif the Indemnitee acted in good faith and in a manner the Indemnitee reasonablybelieved to be in the interest of the participants and beneficiaries of anemployee benefit plan, Indemnitee shall be deemed to have acted in a manner“***not opposed to the best interests of the Company***” as referred to in thisAgreement.
          **(i) *****“Reviewing Party”***shall mean, subject to the provisions of Section4(c), any person or body appointed by the Board of Directors in accordance withapplicable law to review the Company’s obligations hereunder and underapplicable law, which may include a member or members of the Company’s Board ofDirectors, a disinterested committee of the Board of Directors, IndependentLegal Counsel or any other person or body not a party to the particular Claimfor which the Indemnitee is seeking indemnification.
          **(j) *****“Section”***refers to a section of this Agreement unless otherwiseindicated.
          **(k) *****“Subsidiary”***shall mean any corporation, limited liability company,partnership, joint venture, trust or other entity of which more than 50% of theoutstanding voting securities are owned directly or indirectly by the Company,by the Company and one or more other subsidiaries, or by one or more othersubsidiaries.
          **(l) *****“Voting Securities”***shall mean any securities of the Company that votegenerally in the election of directors.
     **2. Indemnification.**
          **(a) Indemnification of Expenses.**Subject to the provisions of Section4(a) and Section 12 below, the Company shall promptly indemnify the Indemnitee(or the Indemnitee’s heirs, executor, administrator or personal representative)for all Expenses to the fullest extent permitted by law if the Indemnitee wasor is or becomes a party to or witness or other participant in, or isthreatened to be made a party to or witness or other participant in, any Claim,whether by reason of or arising in whole or in part out of, a Covered Event.
          **(b) Mandatory Payment of Expenses.**Notwithstanding any other provision ofthis Agreement other than Section 12 hereof, and in particular not inlimitation of the rights of the Indemnitee under Section 2(a), to the extentthat the Indemnitee has been successful on the
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merits or otherwise, including, without limitation, the dismissal of anaction without prejudice, in defense of any Claim, the Indemnitee shall beindemnified against all Expenses incurred by the Indemnitee in connectiontherewith. Without limiting the generality of the foregoing, if any Claim isdisposed of, on the merits or otherwise (including a disposition withoutprejudice), without (i) the disposition being adverse to the Indemnitee, (ii)an adjudication that the Indemnitee was liable to the Company, (iii) a plea ofguilty or nolocontendere by the Indemnitee, (iv) an adjudication that theIndemnitee did not act in good faith and in a manner he reasonably believed tobe in or not opposed to the best interests of the Company, and (v) with respectto any criminal proceeding, an adjudication that the Indemnitee had reasonablecause to believe his conduct was unlawful, the Indemnitee shall be consideredfor the purpose hereof to have been wholly successful with respect thereto. IfIndemnitee is not wholly successful in defense of such Proceeding but issuccessful, on the merits or otherwise, as to one or more but less than allclaims, issues or matters in such Claim, the Company shall indemnify Indemniteeagainst all Expenses incurred by him or on his behalf in connection with eachsuccessfully resolved claim, issue or matter. For purposes of this Section andSection 4 and without limitation, the termination of any claim, issue or matterin such a Claim by dismissal, with or without prejudice, shall be deemed to bea successful result as to such claim, issue or matter.
     **3. Expense Advances.**
          **(a) Obligation to Make Expense Advances.**The Company shall make ExpenseAdvances to the Indemnitee in connection with any Claim, in the event of thereceipt by the Company of a statement or statements from the Indemniteerequesting Expense Advances from time to time. Such statement or statementsshall include a written undertaking by or on behalf of the Indemnitee to repaysuch amounts if it shall ultimately be determined (as set forth herein) thatthe Indemnitee is not entitled to be indemnified therefore by the Company.
          **(b) Form of Undertaking.**Any obligation to repay any Expense Advanceshereunder pursuant to a written undertaking by the Indemnitee shall beunsecured, shall be accepted without reference to the financial ability of theIndemnitee to make repayment and no interest shall be charged thereon.
     **4. Procedures for Indemnification and Expense Advances.**
          **(a) Review of Indemnification Obligations.**Notwithstanding any other termof this Agreement, in the event any Reviewing Party shall have determined ingood faith (as detailed in written opinion of counsel, in any case in whichIndependent Legal Counsel is the Reviewing Party), that the Indemnitee is notentitled to be indemnified or otherwise compensated under this Agreement underapplicable law, (i) the Company shall have no further obligation under thisAgreement to make any payments to the Indemnitee not made prior to suchdetermination by such Reviewing Party, and (ii) the Company shall be entitledto be reimbursed by the Indemnitee (who hereby agrees to reimburse the Company)for all Expenses previously paid in indemnifying the Indemnitee; provided,however, that if the Indemnitee has commenced or thereafter commences legalproceedings in a court of competent jurisdiction to secure a determination thatthe Indemnitee is entitled to be indemnified hereunder under applicable law,any determination made by any Reviewing Party that the Indemnitee is notentitled to be indemnified hereunder under applicable law shall not be bindingin such legal proceedings, and the Indemnitee shall not be required toreimburse the Company for any Expenses previously paid
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in indemnifying the Indemnitee until a final judicial determination ismade with respect thereto (as to which all rights of appeal therefrom have beenexhausted or lapsed). The Indemnitee’s obligation to reimburse the Company forany Expenses shall be unsecured and no interest shall be charged thereon.
          **(b) Indemnitee Rights on Unfavorable Determination; Binding Effect.**Ifany Reviewing Party makes a determination relating to indemnification eitherthe Company or the Indemnitee shall have the right to commence litigationseeking an initial determination by the court or challenging any suchdetermination by such Reviewing Party or any aspect thereof, including thelegal or factual bases therefore, and, subject to the provisions of Section14(d) each of the Company and the Indemnitee hereby consents to service ofprocess and to appear in any such proceeding.
          **(c) Selection of Reviewing Party; Change in Control.**If there has notbeen a Change in Control, any Reviewing Party shall be selected by the Board ofDirectors, and if there has been such a Change in Control, any Reviewing Partywith respect to all matters thereafter arising concerning the rights of theIndemnitee to indemnification of Expenses under this Agreement or any otheragreement or under the Company’s certificate of incorporation or bylaws as nowor hereafter in effect, or under any other applicable law, if desired by theIndemnitee, shall be by Independent Legal Counsel selected by the Board ofDirectors subject to the approval of Indemnitee (which approval shall not beunreasonably withheld). Such counsel, among other things, shall render itswritten advice to the Company and the Indemnitee as to whether and to whatextent the Indemnitee would be entitled to be indemnified hereunder underapplicable law (or under any other agreement or the Company’s certificate byincorporation or by-laws as now or hereafter in effect) and the Company agreesto abide by such advice. The Company agrees to pay the reasonable fees andexpenses of the Independent Legal Counsel referred to above and to indemnifyfully such counsel against any and all expenses (including attorneys’ fees),claims, liabilities and damages arising out of or relating to this Agreement orits engagement pursuant hereto.
          **(d) Timing of Payments.**All payments of Expenses (including withoutlimitation Expense Advances) by the Company to the Indemnitee to the extentrequired to be paid pursuant to this Agreement shall be made to the fullestextent permitted by law as soon as practicable after written demand by theIndemnitee therefor is presented to the Company, but in no event later thanthirty (30) calendar days after such written demand by the Indemnitee ispresented to the Company, except in the case of Expense Advances, which shallbe made no later than ten (10) business days after such written demand by theIndemnitee is presented to the Company.
          **(e) Notice/Cooperation by Indemnitee.**The Indemnitee shall, as acondition precedent to the Indemnitee’s right to be indemnified or theIndemnitee’s right to receive Expense Advances under this Agreement, give theCompany notice in writing as soon as practicable of any Claim made against theIndemnitee for which indemnification will or could be sought under thisAgreement. Notice to the Company shall be directed to the Chief ExecutiveOfficer of the Company at the address shown on the signature page of thisAgreement (or such other address as the Company shall designate in writing toIndemnitee). In addition, the Indemnitee shall give the Company suchinformation and cooperation as it may reasonably require and as shall be withinIndemnitee’s power. Notwithstanding the foregoing, any failure of
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Indemnitee to provide such notice to the Company shall not relieve theCompany of any liability it may have to Indemnitee unless and to the extentsuch failure materially prejudices the Company’s ability to defend or contestsuch Claim.
          **(f) No Presumptions; Burden of Proof**. (i) For purposes of thisAgreement, the termination of any Claim by judgment, order, settlement (whetherwith or without court approval) or conviction, or upon a plea of nolocontendere, or its equivalent, shall not create a presumption that Indemniteedid not meet any particular standard of conduct or have any particular beliefor that a court has determined that indemnification is not permitted by thisAgreement or applicable law. In addition, neither the failure of any ReviewingParty to have made a determination as to whether the Indemnitee has met anyparticular standard of conduct or had any particular belief, nor an actualdetermination by any Reviewing Party that the Indemnitee has not met suchstandard of conduct or did not have such belief, prior to the commencement oflegal proceedings by the Indemnitee to secure a judicial determination that theIndemnitee should be indemnified under this Agreement or applicable law, shallbe a defense to the Indemnitee’s claim or create a presumption that theIndemnitee has not met any particular standard of conduct or did not have anyparticular belief. In connection with any determination by any Reviewing Partyor otherwise as to whether the Indemnitee is entitled to be indemnifiedhereunder, the burden of proof shall be on the Company to establish that theIndemnitee is not so entitled.
     (ii) For purposes of any determination of good faith, Indemnitee shall bedeemed to have acted in good faith if Indemnitee’s action is based on therecords or books of account of the Company, including financial statements, oron information supplied to Indemnitee by the officers of the Company in thecourse of their duties, or on the advice of legal counsel for the Company, byan independent certified public accountant or by an appraiser or other expertselected with reasonable care by the Company. The knowledge and/or actions, orfailure to act, of any other director, officer, agent or employee of theCompany shall not be imputed to Indemnitee for purposes of determining theright to indemnification under this Agreement.
          **(g) Notice to Insurers.**If, at the time of the receipt by the Company ofa notice of a Claim pursuant to Section 4(e) hereof, the Company has liabilityinsurance in effect which may cover such Claim in whole or in part, the Companyshall give prompt notice of the commencement of such Claim to the insurers inaccordance with the procedures set forth in the respective policies. TheCompany shall thereafter take all necessary or desirable action to cause suchinsurers to pay, on behalf of the Indemnitee, all amounts payable as a resultof such Claim in accordance with the terms of such policies, subject to anyother claims which may be paid pursuant to such policies.
          **(h) Selection of Counsel.**In the event the Company shall be obligatedhereunder to provide indemnification for or make any Expense Advances withrespect to the Expenses of any Claim, the Company, shall be entitled to assumethe defense of such Claim with counsel approved by Indemnitee (which approvalshall not be unreasonably withheld) upon the delivery to the Indemnitee ofwritten notice of the Company’s election to do so. After delivery of suchnotice, approval of such counsel by the Indemnitee and the retention of suchcounsel by the Company, the Company will not be liable to the Indemnitee underthis Agreement for any fees or expenses of separate counsel subsequentlyretained by or on behalf of the Indemnitee with respect to the same Claim;*provided, however*, that, (i) the Indemnitee shall have the right to
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employ the Indemnitee’s separate counsel in any such Claim at theIndemnitee’s expense, and (ii) if (A) the employment of separate counsel by theIndemnitee has been authorized by the Company, or (B) there may be a conflictof interest between the Company and the Indemnitee in the conduct of any suchdefense or that the Indemnitee has defenses or counterclaims which may beinconsistent with the position of the Company or the other defendants and theIndemnitee has received written advice of counsel to such effect, or (C) theCompany shall fail to retain or not continue to retain counsel to defend suchClaim on behalf of the Company, then the fees and expenses of Indemnitee’sseparate counsel shall be Expenses for which Indemnitee shall receiveindemnification or Expense Advances hereunder. The Company shall not bepermitted to settle any Proceeding, or any claim, issue or matter therein, onbehalf of the Indemnitee, without the prior written consent of Indemnitee,unless the Company assumes full and sole responsibility for such settlement andsuch settlement grants the Indemnitee a complete and unqualified release inrespect of any potential or resulting liability or the Indemnitee is otherwisefully indemnified against all such liability. The Indemnitee may not settleany Proceeding, or any claim, issue or matter therein, without the priorwritten consent of the Company (which consent shall not be unreasonablywithheld), unless such settlement provides for no liability on the part of theCompany, including without limitation its indemnification obligations owed toIndemnitee pursuant to this Agreement.
     **5. Contribution.**If the indemnification provided for in Section 2 above isunavailable for any reason other than the statutory limitations set forth inthe General Corporation Law of the State of Delaware, then in respect of anyclaim, incident or proceeding in which the Company is jointly liable with theIndemnitee (or would be if joined in such claim, incident or proceeding) theCompany shall contribute to the amount of the Indemnitee’s Expenses in suchproportion as is appropriate to reflect (a) the relative benefits received bythe Company on the one hand and by the Indemnitee on the other hand from thetransaction from which such claim, incident or proceeding arose, and (b) therelative fault of the Company on the one hand and of the Indemnitee on theother hand in connection with the events which resulted in such expenses, aswell as any other relevant equitable considerations. The relative fault of theCompany on the one hand and of the Indemnitee on the other shall be determinedby reference to, among other things, the parties’ relative intent, knowledge,access to information and opportunity to correct or prevent the circumstancesresulting in such expenses. The Company agrees that it would not be just andequitable if contribution pursuant to this Section 6 were determined by prorata or per capita allocation or any other method of allocation which does nottake account of the equitable considerations referred to in the immediatelypreceding sentence. The foregoing provisions notwithstanding, no person foundguilty of fraudulent misrepresentation (within the meaning of Section 11(f) ofthe Securities Act) shall be entitled to contribution from any person who wasnot found guilty of such fraudulent misrepresentation.
     **6. Additional Indemnification Rights; Non-Exclusivity.**
          **(a) Scope.**The Company hereby agrees to indemnify the Indemnitee to thefullest extent permitted by law, notwithstanding that such indemnification isnot specifically authorized by the other provisions of this Agreement, theCompany’s certificate of incorporation, the Company’s bylaws or by statute. Inthe event of any change after the date of this Agreement in any applicable law,statute or rule which expands the right of a Delaware corporation to indemnifya member of its board of directors or an officer, employee, agent or fiduciary,it is the intent of the parties hereto that the Indemnitee shall enjoy by thisAgreement the greater benefits
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afforded by such change. In the event of any change in any applicablelaw, statute or rule which narrows the right of a Delaware corporation toindemnify a member of its board of directors or an officer, employee, agent orfiduciary, such change, to the extent not otherwise required by such law,statute or rule to be applied to this Agreement, shall have no effect on thisAgreement or the parties’ rights and obligations hereunder except as requiredby law.
          **(b) Non-Exclusivity; Effectiveness; Survival of Rights.**Theindemnification and the payment of Expenses and Expense Advances provided bythis Agreement shall be in addition to any rights to which the Indemnitee maybe entitled under the Company’s certificate of incorporation, its bylaws, anyother agreement, any vote of stockholders or disinterested directors, theGeneral Corporation Law of the State of Delaware, or otherwise. This Agreementshall be effective as of the date set forth on the first page and shall applyto acts or omissions of Indemnitee that occurred prior to, on and/or after suchdate, provided that the Indemnitee was service in an indemnified capacity atthe time such act or omission occurred. Without limiting the generality of theforegoing, the indemnification and the payment of Expenses and Expense Advancesprovided under this Agreement shall continue as to the Indemnitee for anyaction taken or not taken while serving in an indemnified capacity even thoughsubsequent thereto the Indemnitee may have ceased to serve in such capacity atthe time of the applicable action, suit or other covered Claim.
          **(c) Company Amendments.**All rights and obligations of the Company and theIndemnitee shall continue in full force and effect despite the subsequentamendment or modification of the Company’s certificate of incorporation or itsbylaws, as such are in effect on the date hereof, and such rights andobligations shall not be affected by any such amendment or modification, anyresolution of the board of directors or stockholders of the Company, or by anyother corporate action which conflicts with or purports to amend, modify, limitor eliminate any of the rights or obligations of the Company or the Indemniteehereunder.
     **7. Expenses Incurred in Action Relating to Enforcement or Interpretation.**In the event that any action is instituted by the Indemnitee under thisAgreement or under any liability insurance policies maintained by the Companyto enforce or interpret any of the terms hereof or thereof, the Indemniteeshall be entitled to be indemnified for all Expenses incurred by the Indemniteewith respect to such action (including without limitation reasonable attorneys’fees), regardless of whether Indemnitee is ultimately successful in suchaction, unless as a part of such action a court having jurisdiction over suchaction makes a final judicial determination (as to which all rights of appealtherefrom have been exhausted or lapsed) that each of the material assertionsmade by the Indemnitee as a basis for such action was not made in good faith orwas not based upon a reasonable likelihood of success; provided, however, thatuntil such final judicial determination is made, Indemnitee shall be entitledunder Section 3 to receive payment of Expense Advances hereunder with respectto such action. In the event of an action instituted by or in the name of theCompany under this Agreement to enforce or interpret any of the terms of thisAgreement, the Indemnitee shall be entitled to be indemnified for all Expensesincurred by the Indemnitee in defense of such action (including withoutlimitation costs and expenses incurred with respect to the Indemnitee’scounterclaims and cross-claims made in such action), unless as a part of suchaction a court having jurisdiction over such action makes a final judicialdetermination (as to which all rights of appeal therefrom have been exhaustedor lapsed) that each of the material defenses asserted by the Indemnitee insuch action was made in bad faith or
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was frivolous; provided, however, that until such final judicialdetermination is made, the Indemnitee shall be entitled under Section 3 toreceive payment of Expense Advances hereunder with respect to such action.
     **8. No Duplication of Payments.**The Company shall not be liable under thisAgreement to make any payment in connection with any Claim made against theIndemnitee to the extent the Indemnitee has otherwise actually received payment(under any insurance policy, provision of the Company’s certificate ofincorporation, bylaws or otherwise) of the amounts otherwise payable hereunder.
     **9. Partial Indemnification.**If the Indemnitee is entitled under anyprovision of this Agreement to indemnification by the Company for some or aportion of Expenses incurred in connection with any Claim, but not, however,for all of the total amount thereof, the Company shall nevertheless indemnifythe Indemnitee for the portion of such Expenses to which the Indemnitee isentitled.
     **10. Mutual Acknowledgment.**The Company and the Indemnitee acknowledge thatin certain instances, federal law or applicable public policy may prohibit theCompany from indemnifying its directors, officers, employees, agents orfiduciaries under this Agreement or otherwise. The Indemnitee understands andacknowledges that the Company has undertaken or may be required in the futureto undertake with the U.S. Securities and Exchange Commission to submit thequestion of indemnification to a court in certain circumstances for adetermination of the Company’s right under public policy to indemnifyIndemnitee.
     **11. Director and Officer Liability Insurance.**If the Company at any timechooses to purchase directors and officers liability insurance or otherinsurance policies insuring the Company’s officers or its members of the Boardof Directors with, among other things, coverage for losses (including defensecosts) from wrongful acts, then Indemnitee shall be named as an insured in sucha manner as to provide Indemnitee with at least the same rights and benefits asare accorded to the most favorably insured of the Company’s directors andofficers. The Company shall provide a copy of the insurance policy(ies) as ineffect from time to time to Indemnitee and at any time to Indemnitee uponrequest.
     **12. Exceptions.**Notwithstanding any other provision of this Agreement,the Company shall not be obligated pursuant to the terms of this Agreement:
          **(a) Insured Claims.**To indemnify the Indemnitee for Expenses orliabilities of any type whatsoever (including, but not limited to, judgments,fines, penalties, and amounts paid in settlement) to the extent such Expensesor liabilities have actually been paid in full directly to Indemnitee by theCompany’s insurance carrier under a policy of insurance.
          **(b) Court Determinations.**To indemnify the Indemnitee for any acts oromissions, or transactions from which a court of competent jurisdiction finallydetermines that the Indemnitee may not be relieved of liability underapplicable law or pertinent public policy.
          **(c) Claims Initiated by Indemnitee.**To indemnify or make Expense Advancesto the Indemnitee with respect to Claims initiated or brought voluntarily bythe Indemnitee and not by way of defense, counterclaim or crossclaim, except:(i) with respect to actions or proceedings brought to establish or enforce aright to indemnification under this Agreement or any other agreement orinsurance policy or under the Company’s certificate of
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incorporation or bylaws now or hereafter in effect relating to Claims forCovered Events, (ii) in specific cases if the Board of Directors has approvedthe initiation or bringing of such Claim, or (iii) as otherwise required underSection 145 of the Delaware General Corporation Law, regardless of whetherIndemnitee ultimately is determined to be entitled to such indemnification, orinsurance recovery, as the case may be.
          **(d) Lack of Good Faith.**To indemnify the Indemnitee for any Expensesincurred by the Indemnitee with respect to any action instituted by theIndemnitee to enforce or interpret this Agreement, if a court havingjurisdiction over such action determines as provided in Section 7 that each ofthe material assertions made by the Indemnitee as a basis for such action wasnot made in good faith or was frivolous.
     **13. Miscellaneous.**
          **(a) Counterparts.**This Agreement may be executed in one or morecounterparts, including facsimile counterparts, each of which shall constitutean original, but all of which taken together shall constitute one and the sameinstrument.
          **(b) Binding Effect; Successors and Assigns.**This Agreement shall bebinding upon and inure to the benefit of and be enforceable by the partieshereto and their respective successors, assigns (including any direct orindirect successor by purchase, merger, consolidation or otherwise to all orsubstantially all of the business or assets of the Company), spouses, heirs andpersonal and legal representatives. The Company shall require and cause anysuccessor by merger to assume and agree to perform this Agreement in the samemanner and to the same extent that the Company would be required to perform ifno such succession had taken place. This Agreement shall continue in effectregardless of whether Indemnitee continues to serve as a director, officer,employee, agent or fiduciary (as applicable) of the Company or of any otherenterprise at the Company’s request.
          **(c) Notice.**All notices, requests, demands and other communications underthis Agreement shall be in writing and shall be deemed duly given (i) ifdelivered by hand and signed for by the party addressed, on the date of suchdelivery, (ii) by certified U.S. mail, return receipt requested or (iii) ifsent via a nationally recognized express delivery service such as FedEx,charges prepaid, on the second business day after deposit with such service.Addresses for notice to either party are as shown on the signature page of thisAgreement, or as subsequently modified by written notice.
          **(d) Consent to Jurisdiction.**The Company and the Indemnitee each herebyirrevocably consent to the jurisdiction of the courts of the State of Delawarefor all purposes in connection with any action or proceeding which arises outof or relates to this Agreement and agree that any action instituted under thisAgreement shall be commenced, prosecuted and continued only in the Court ofChancery of the State of Delaware in and for New Castle County, which shall bethe exclusive and only proper forum for adjudicating such a claim.
          **(e) Severability.**The provisions of this Agreement shall be severable inthe event that any of the provisions hereof (including any provision within asingle section, paragraph or sentence) are held by a court of competentjurisdiction to be invalid, void or otherwise unenforceable, and the remainingprovisions shall remain enforceable to the fullest extent permitted by law.Furthermore, to the fullest extent possible, the provisions of this
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Agreement (including without limitation each portion of this Agreementcontaining any provision held to be invalid, void or otherwise unenforceable,that is not itself invalid, void or unenforceable) shall be construed so as togive effect to the intent manifested by the provision held invalid, illegal orunenforceable.
          **(f) Choice of Law.**This Agreement, and all rights, remedies, liabilities,powers and duties of the parties to this Agreement, shall be governed by andconstrued in accordance with the laws of the State of Delaware without regardto its principles of conflicts of laws.
          **(g) Subrogation.**In the event of payment under this Agreement, theCompany shall be subrogated to the extent of such payment to all of the rightsof recovery of the Indemnitee, who shall execute all documents required andshall do all acts that may be reasonably necessary to secure such rights and toenable the Company effectively to bring suit to enforce such rights.
          **(h) Amendment and Termination.**No amendment, modification, termination orcancellation of this Agreement shall be effective unless it is in writingsigned by both of the parties hereto. No amendment, alteration or repeal ofthis Agreement or of any provision hereof shall limit or restrict any right ofthe Indemnitee under this Agreement in respect of any action taken or omittedby such Indemnitee prior to such amendment, alteration or repeal. No waiver ofany of the provisions of this Agreement shall be deemed to be or shallconstitute a waiver of any other provisions hereof (whether or not similar),nor shall such waiver constitute a continuing waiver. The failure by eitherparty to enforce any rights under this Agreement shall not be construed as awaiver of any rights of such party.
          **(i) Integration and Entire Agreement.**This Agreement sets forth theentire understanding between the parties hereto and supersedes and merges allprevious written and oral negotiations, commitments, understandings andagreements relating to the subject matter hereof between the parties hereto.
          **(j) No Construction as Employment Agreement.**Nothing contained in thisAgreement shall be construed as giving Indemnitee any right to be retained inthe employ of the Company or any of its subsidiaries or affiliated entities.
          **(k) Company Acknowledgement Regarding Consideration.**The Companyexpressly confirms and agrees that it has entered into this Agreement andassumed the obligations imposed on it hereby in order to induce the Indemniteeto continue to serve as a director, officer, employee and/or agent of theCompany, and for other good and valuable consideration, the receipt andsufficiency of which is hereby acknowledged, and the Company acknowledges thatIndemnitee is relying upon this Agreement in serving in such capacity.
     **14. Guarantee of Company’s Obligations By Starfire**. In order to inducethe Indemnitee to continue to serve as a director of the Company, Starfirehereby jointly and severally guarantees the obligations of the Company to theIndemnitee under this Agreement, to the same extent, with the same effect, andfor the same intent and purpose as the Company obligates itself hereunder.Starfire expressly agrees to all of the terms and conditions of this Agreementand will comply with them to the same extent as required of the Company. Tothe extent the Company has not fully satisfied its obligations to theIndemnitee hereunder for
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whatever reason, Starfire shall irrevocably and unconditionally satisfy, forthe benefit of the Indemnitee (or the Indemnitee’s heirs, executor,administrator or personal representative), the obligations of the Company. Asan affiliate of the Company, Starfire acknowledges the sufficiency of theconsideration it has received in exchange for this guarantee. As security forits obligations herein, Starfire agrees to maintain at all times, a net worthof not less than $250,000,000.
**[Signature Page Follows]**
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     **In Witness Whereof**, the parties hereto have executed this **IndemnificationAgreement**as of the date first written above.         **XO Communications, Inc.**        By:   /s/ Carl Grivner          Carl Grivner     Chief Executive Officer         11111 Sunset Hills Drive  Reston, VA 20190  Facsimile: 703/547-2022         **STARFIRE HOLDINGS CORPORATION**        **By:**   /s/ Richard T. Buonato         **Name:  Richard T. Buonato**    **Title:   Authorized Signatory**         100 South Bedford Road  Mt. Kisco, New York 10549  Facsimile: 914/241-7497         **Indemnitee:**           /s/ Fredrik Gradin       **Fredrik gradin**
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