exv10w10



 





Exhibit 10.10



EMPLOYMENT AGREEMENT




     This Employment Agreement is entered into by and between Wayne M.
Rehberger (“Executive”) and XO Communications, Inc., a Delaware corporation
(“Employer” or the “Company”), executed this
31st day of December 2001, but
effective as of September 25, 2000 (the “Commencement Date”).



WITNESSETH:



     WHEREAS, Employer is engaged in the business of providing high-quality,
non-mobile telecommunications services to the rapidly growing business market;
and



     WHEREAS, Executive has skills and experience in telephony generally and
with the technology associated with Employer’s business specifically; and



     WHEREAS, Employer desires to obtain Executive’s services for the conduct
of its business, and Executive desires to be employed in such business by and
for Employer;



     NOW, THEREFORE, in consideration of the premises and the mutual covenants
herein set forth, the parties hereto agree as follows:



     1. Employment. Employer acknowledges and agrees that it hired
Executive as its Senior Vice President, Finance as of the Commencement Date and
that, effective November 11, 2000, it promoted Executive to Senior Vice
President, Chief Financial Officer, and Executive acknowledges and agrees that
he accepted such employment and promotion upon the terms and conditions
hereinafter set forth.



     2. Duties.



          a. Executive shall report directly to Employer’s Chief Executive
Officer and shall perform his services within the framework of the
policies, objectives and
Bylaws of Employer. In his corporate capacity, Executive (i) shall
exercise general
supervisory responsibility and management authority over Employer’s
financial and
accounting functions and, effective as of the date of Executive’s
promotion to Chief
Financial Officer, as Employer’s principal accounting and financial
officer, and (ii) shall
perform such other duties commensurate with his position as may be
assigned to him
from time to time by Employer’s Chairman and Chief Executive Officer or
board of directors (the “Board of Directors”).



          b. Executive shall devote substantially all his business time, attention
and energies to the performance of his duties and functions under this
Employment
Agreement and shall not during the term of his employment hereunder be
engaged in
any other substantial business activity for gain, profit or other
pecuniary advantage.
Executive shall faithfully, loyally and diligently perform his assigned
duties and functions
and shall not engage in any activities whatsoever which conflict with his
obligations to Employer during the term of his employment hereunder.



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     3. Term. The term of this Employment Agreement shall commence on the
Commencement Date and, unless terminated earlier pursuant to
paragraph 12 hereof,
shall continue through September 25, 2003 (the “Initial Term”), and
thereafter shall
continue unless and until such time as (i) either party hereto
notifies the other, upon sixty
(60) days prior written notice, that this Employment Agreement will
be terminated at the
end of the Initial Term or the later expiration of such sixty day
notice period, or (ii)
Executive’s employment is otherwise terminated pursuant to paragraph
12 hereof (the
“Extended Term”) (the Initial Term, together with the Extended Term,
if any, being
referred to herein as the “Employment Term”).



     4. Compensation. Employer shall pay to Executive, in consideration of
and as compensation for the services agreed to be rendered by Executive
hereunder, the following:



          a. Base Salary. During the Employment Term, the Company shall
pay to Executive a Base Salary of $250,000 per annum; provided that
the amount of
such Base Salary shall be reviewed at least annually and may, in
Employer’s sole
discretion, be increased by Employer from time to time during the
Employment Term in
light of the conditions then existing and the services then being
rendered by Executive,
in which case Executive’s Base Salary shall be such higher amount as
may be
determined by Employer (such annual Base Salary, as in effect from
time to time, being
referred to herein as the “Base Salary”). The Base Salary shall be
payable in
accordance with Employer’s normal payroll schedule, less appropriate
deductions for
federal, state and local income taxes, FICA contributions and any
other deductions
required by law or authorized by Executive.



          b. Annual Performance Bonus. In addition to the Base Salary,
Executive shall be entitled to receive an annual performance bonus
(the “Annual Bonus”)
during each year of service during the Employment Term (each such year
being referred
to as an “Annual Bonus Period”), in an amount, if any, as may be
determined by the
compensation committee of the Board of Directors (the “Compensation
Committee”)
and/or the Board of Directors in their complete discretion, with a
target of 50% of the
Base Salary payable during such Annual Bonus Period, based on
Executive’s
performance against objectives for the prior year of service, provided
that Executive’s
eligibility to receive the Annual Bonus shall be subject to and
conditioned upon
Executive’ continuing to be employed by Employer on the date of
payment of the Annual
Bonus. Each Annual Bonus shall be payable in accordance with
Employer’s normal
annual bonus payment schedule, less appropriate deductions for
federal, state, and local
income taxes, FICA contributions and any other deductions required by
law or authorized by Executive.



          c. Options.



          (i) Grant of Compensatory Options. Effective as of the
Commencement Date, Employer granted to Executive, pursuant to Employer’s Stock
Option Plan (“Plan”) and subject to the terms and conditions set forth in this
paragraph 4(c), an option to acquire 250,000 shares (the “Compensatory
Options”) of Employer’s Class A voting common stock (“Common Stock”) on the
terms set forth in Annex A hereto. The shares of Employer’s Common Stock that
will be issued on exercise of the Compensatory Options are among the Shares
covered by the Form S-8 Registration Statement previously filed and currently
in effect covering awards made under the Plan,



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such
that, upon issuance and distribution of such shares to
Executive, there are no restrictions under federal or state
securities laws on the further transfer of such shares, other than
restrictions imposed by virtue of Executive’s status as an officer
or director of the Company or as may otherwise be imposed by law
with respect to unrestricted shares. In addition, the Company shall
ensure that the provisions of Rule 16b-3 under the Securities
Exchange Act of 1934, as amended (“Exchange Act”) are applicable to
the grant and distribution of the Compensatory Options, and that the
distribution of the Compensatory Options shall not constitute a
“purchase” of the Common Stock pursuant to Section 16(b) of the
Exchange Act.



          (ii) Grant of Inducement Options. At or prior to the Commencement
Date, and subject to the terms and conditions set forth in this paragraph 4(c),
the employer granted to Executive, pursuant to the Plan, an option to acquire
another 25,000 shares of Employer’s Common Stock on the terms set forth in
Annex A hereto (the “Inducement Options”). The shares of Employer’s
Common Stock that will be issued on exercise of the Inducement Options are
among the shares covered by the Form S-8 Registration Statement previously
filed and currently in effect covering awards made under the Plan, such that,
upon issuance and distribution of such shares to Executive, there are no
restrictions under federal or state securities laws or regulations on the
further transfer of such shares, other than restrictions imposed by virtue of
Executive’s status as an officer or director of the Company or as otherwise may
be imposed by law with respect to unrestricted shares. In addition, the
Employer shall exercise its best efforts to ensure that the provisions of Rule
16b-3 under the Exchange
Act are applicable to the grant of the Inducement Options and any
subsequent
distribution of the shares issued upon exercise thereof, and that the
distribution of such shares to Executive shall not constitute a
“purchase” of Common Stock pursuant to
Section 16(b) of the Exchange Act. The Compensatory Options and the
Inducement
options are collectively referred to as the “Options”.



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          (iii) Vesting. The Options shall be subject to vesting schedules, as
follows:



	 	 	 	 	 
	Period of Executive’s	 	Portion of Compensatory
	Continuous Employment from	 	Option Which Becomes
	the Commencement Date
	 	Exercisable

	After one year
	 	 	25	%
	Monthly thereafter
	 	 	2.083	%







Following four (4) years of continuous relationship with the Employer
from the Commencement Date, the Compensatory Options will be 100% vested.



	 	 	 	 	 
	Number of Years of Continuous	 	Shares Available
	Employment from the Effective	 	upon Exercise of the
	Date of this Agreement
	 	Inducement Options

	1
	 	 	6,250	 
	2
	 	 	6,250	 
	3
	 	 	6,250	 
	4
	 	 	6,250	 







          Executive may, in his sole discretion, elect to defer vesting of the
Compensatory or the Inducement Options by delivering to the Employer a written
notice of such election no later than December 31 of the calendar year
immediately preceding the calendar year in which such vesting would otherwise
occur. Any such election shall be irrevocable and shall set a specific date for
the vesting of such Options; provided that Executive may also specify that the
applicable Options shall vest on the earlier of such specified date or the
termination of Executive’s employment hereunder. In the event of such election,
Executive shall indemnify and hold harmless Employer from any and all
withholding amounts and penalties and interest associated therewith that may be
assessed by the Internal Revenue Service or any relevant state of local taxing
authority in connection with any such deferral by Executive in the vesting of
any of the Options and the recognition of income associated therewith.



          (iv) Termination. Upon termination of employment for any reason
other than (w) termination by Employer (other than for Cause) after the
occurrence of a Change in Control, (x) permanent disability (as defined below)
or (y) death or (z) by Executive upon establishment of Constructive
Termination, the unvested portion (if any) of the Options shall immediately
expire and be forfeited. If termination of employment occurs because of
permanent disability or death, Executive shall be deemed to have one additional
year of continuous employment from the date of death or permanent disability
for purposes of applying the vesting schedules. If termination of employment
occurs upon establishment of Constructive Termination or if there is a
termination by Employer (other than for Cause) after the occurrence of a Change
in Control, vesting of the Options shall occur upon the final effectiveness of
such Constructive Termination or the effectiveness of such termination by
Employer (other than for Cause) after the occurrence of a Change of Control.



          (v) Exercise of Options. Executive’s right to exercise the Options



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shall be governed by the terms of the Employer’s Stock Option Plan and the
individual option letter agreements issued to Executive.



          (vi) Withholding. Upon the vesting of any Inducement Options, or
in connection with the exercise of any Compensatory Options, Executive
shall pay to Employer an amount equal to such amount as Employer shall be
obligated to remit to the Internal Revenue Service or any relevant state or
local taxing authority as withholding attributable to the compensation
evidenced by the Inducement Options that have vested. At the discretion of
the Compensation Committee, Executive may pay such amount either in cash or
by delivery to the Company of a number of shares of Common Stock (or
proceeds from the sale thereof) having a Fair Market Value equal to such
withholding amount (which delivery may be made by an instruction to the
Company to retain a portion of the shares available upon exercise of the
Compensatory Options, or shares available upon exercise of Inducement
Options, otherwise distributable to Executive or by an instruction to the
selling broker to remit such sales proceeds, otherwise distributable to
Executive, to the Company).



          (vii) Adjustments. In the event that the Common Stock is changed
into or exchanged for a different number or kind of securities of Employer
or of another entity (by reason of merger, consolidation, recapitalization,
reclassification, stock split, stock dividend, stock combination or
otherwise), or if there is a distribution of cash, securities or other
property made to the holders of the Common Stock (other than cash dividends
made out of current earnings of Employer) then an appropriate and equitable
adjustment shall be made in the number and kind of securities issuable upon
exercise of the Options hereunder, with a view towards preserving the value
to Executive of the rights granted pursuant to this paragraph 4(c). Without
limiting the generality of the foregoing, in the event that an adjustment
is required pursuant to the terms of any options, warrants or convertible
securities of Employer pursuant to any event of the kind specified above,
at least an equivalent adjustment shall be required pursuant to this
paragraph 4(c)(vii). In the event any adjustment is required under this
paragraph 4(c)(vii), appropriate conforming adjustment shall be made to the
exercise price of the Compensatory Options, as appropriate, to all
references to numbers of Inducement Options and/or to the number of shares
covered by the Compensatory Options, as appropriate, contained in this
paragraph 4(c), to the definition of Common Stock, and to any other
provisions of this paragraph 4(c) as necessary to accomplish the intent of
this subparagraph (vii).



               5. Certain Definitions. For purposes of this Agreement:



          “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, other than a merger or
consolidation or reorganization into or with a company or other legal entity
that is an affiliate of Craig O. McCaw, 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;



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               (B) The Company sells or otherwise transfers all or
substantially all of its assets to any other company or other legal
entity, other than a such a sale or transfer to a company or other legal
entity that is an affiliate of Craig O. McCaw, 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 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 Craig O. McCaw and his
affiliates 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) Notwithstanding
the foregoing provisions of subparagraphs
(A), (B), (C) and (D) hereof, a “Change of Control” shall not be deemed to
have occurred solely because Craig O. McCaw or one or more of his affiliates,
or Wendy P. McCaw or a combination thereof, has converted some or all of the
shares of Class B common stock of the Company held by any of them into shares
of Class A common stock of the Company.



               (E) Notwithstanding the foregoing provisions of subparagraphs
(C) and (D) hereof, a “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.



               (F) Notwithstanding the foregoing provisions of subparagraphs
(A) through (D) above, no Change in Control shall result from a merger,
consolidation or reorganization of the Company with any entity in which Eagle River
Investments, L.L.C. has prior to such merger, consolidation or reorganization invested at
least $10,000,000 in equity.



          “Fair Market Value” of a share of Common Stock shall mean, as of any
given date, (i) the closing price of a share of Common Stock on the
principal exchange on which Common Stock then trades, if any, on the day
previous to such date, or, if shares were not traded on the day previous
to such date, then on the next preceding trading day during which a sale
occurred; or (ii) If such Common Stock is not traded on an exchange but is
quoted on NASDAQ or a successor quotation system, (1) the last



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sales price (if the Common Stock is then listed as a National Market Issue
under the NASDAQ National Market System) or (2) the mean between the closing
representative bid and asked prices (in all other cases) for the Common
Stock on the day previous to such date (or, if shares were not traded on the
day previous to such date, then on the next preceding trading day during
which a sale occurred), as reported by NASDAQ or such successor quotation
systems.



          “Cause” shall have the meaning ascribed in Paragraph 12(b)
below.



          “Permanent Disability” shall have the same meaning as “permanent and
total disability,” as defined in the Employer’s Stock Option Plan.



     6. Additional Options The Compensation Committee of the Board of
Directors of Employer may, in its discretion, grant to Executive,
pursuant to Employer’s
Stock Option Plan, additional options to acquire shares of Employer’s
Common Stock
(“Additional Options”). Except as otherwise provided herein, the terms
and conditions of
such Additional Options shall be as determined by Employer in its sole
discretion.
Executive’s rights with respect to any Additional Options shall be
separate from (and in
addition to) the rights set forth in paragraph 4(c) above with respect
to the
Compensatory Options and Inducement Options.



     7. Benefits. During the Employment Term, Executive shall be entitled to
participate in all group health, major medical, pension and profit
sharing, 401(k) and
other benefit plans maintained by Employer and provided generally to its
executive
officers, on the same terms as apply to participation therein by
management generally
(except as otherwise provided herein). Further, during the Employment
Term, Executive
shall be entitled to participate in all fringe benefit programs and
shall receive all
perquisites if and to the extent that Employer establishes and makes
such benefits and
perquisites available to management generally, including, but not
limited to, Employer-paid long-term disability insurance and life insurance coverage.



     8. Expenses. During the Employment Term, Employer shall reimburse
Executive for all reasonable travel, entertainment and other business
expenses incurred or paid by Executive in performing his duties and functions hereunder.



     9. Vacations. Executive shall be entitled to such vacations, holidays,
sick leave and personal time off as is allowed under the policies of Employer
to management generally (except as otherwise provided herein).



     10. Non-Competition: Non-Solicitation.



     a. During the Employment Term and (except as provided in paragraph 12
herein) for a period of one years thereafter, Executive shall not enter
into or participate in any business competitive to the business carried on by Employer.



     b. During the Employment Term and (except as provided in paragraph 12
herein) for a period of one years thereafter, Executive shall not (i)
directly or indirectly cause or attempt to cause any employee of Employer or any of its
affiliates to leave the employ of Employer or any affiliate of Employer, (if) in any way
interfere with the relationship between Employer and any employee or between an affiliate of
Employer and any employee of such an affiliate, or (iii) interfere or
attempt to interfere with any



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transaction in which Employer or any of its affiliates was involved during
the Employment Term.


     c. The provisions of
this paragraph 10 shall survive the expiration and/or termination of this Employment Agreement.



     11. Confidential
Information. During the Employment Term and for a period of two years thereafter, Executive will not use for his own advantage or
disclose any proprietary or confidential information relating to the business
operations or properties of Employer, any affiliate of Employer or any of their respective
customers, suppliers, landlords, licensors or licensees. Upon the expiration or termination of
the Employment Term, upon Employer’s request, Executive will surrender and deliver to
Employer all documents and information of every kind relating to or connected with
Employer and its affiliates and their respective businesses, customers, suppliers,
landlord, licensors and licensees. The foregoing confidential information provisions shall not
apply to information which: (i) is or becomes publicly known through no wrongful
act of the Executive, (ii) is rightfully received from any third party without
restriction and without breach by Executive of this Employment Agreement; or (iii) is
independently developed by Executive after the term of his employment hereunder or is
independently developed by a competitor of Employer at any time. The provisions of this
paragraph 11 shall survive the expiration and/or termination of this Employment Agreement.



     12. Termination.



          a. Automatic Termination Upon Death. In the event of Executive’s
death during the Employment Term, Executive’s employment hereunder shall
be automatically terminated upon the date of death. As soon as reasonably
practicable following Executive’s death, Employer shall pay to Executive’s
Representative (defined below in paragraph 22) (i) Executive’s accrued but unpaid Base Salary
and Annual Bonus, through the last day of the month of his death, and (ii) any
amount due hereunder for accrued but unused vacation time as of the date of death.
In addition, Executive’s Representative shall be entitled to exercise Executive’s
rights with respect to the Compensatory Options and/or the Inducement Options, as appropriate,
as set forth in Paragraph 4(c) above, and Executive’s rights with respect to the
Options, as provided herein and in the stock option agreement(s) pertaining thereto.



          b. Termination by Employer. During the Initial Term, Employer shall
be entitled to terminate Executive’s employment hereunder only upon the
establishment of “Cause” or the “Permanent Disability” of Executive (as those terms
are defined below) by giving written notice to that effect to Executive. During any
Extended Term, Employer Shall be entitled to terminate Executive’s employment hereunder (i) upon
the establishment of Cause or the Permanent Disability of Executive, by
giving written notice to that effect to Executive or (ii) for any other reason or for no
reason upon 12 months prior written notice to Executive.



          For purposes hereof, the term “Cause” means either (1) Executive’s
failure to substantially perform his duties and functions as contemplated
hereunder, if such failure constitutes gross neglect or willful malfeasance;
(2) Executive’s committing fraud or embezzlement or otherwise engaging in
conduct that results in Executive being convicted of a felony from which all
appeals have been exhausted; (3) Executive’s intentionally acting in a manner
which is materially detrimental or damaging to



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Employer’s reputation, business, operations or relations with its employees,
suppliers or customers, without taking reasonable steps to remedy such
actions promptly after receiving written notice thereof from Employer; (4)
Executive’s chronic or habitual abuse of alcohol or prescription drugs or
controlled substances; or (5) Executive’s committing any other material
breach of this Employment Agreement without taking reasonable steps to cease
or remedy such breach within thirty (30) days after Executive’s receipt of
written notice from Employer specifically identifying the nature of and
circumstances relevant to any such claimed material breach by Executive.



          For purposes hereof the term, “Permanent Disability” means: (i)
Executive’s failure to devote full normal working time as required herein to
his employment hereunder for a period of at least 90 consecutive normal
business days (or for at least a majority of the normal business days in any
consecutive 180-day period); and (ii) the existence of an illness or
incapacity (either physical or mental) affecting Executive which, in the
reasonable opinion of a Qualified Physician, is likely to be of such
character or severity that Executive would be unable to resume devoting his
full normal working time, as required herein, to his employment hereunder for
a period of at feast nine consecutive months; the term “Qualified Physician”
means an impartial physician competent to diagnose and treat the illness or
condition which Executive is believed to be suffering, selected by Employer
and reasonably acceptable to Executive (or if Executive is then incapable of
acting for himself, Executive’s Representative), who shall have
personally
examined Executive and shall have personally reviewed Executive’s relevant
medical records; provided Employer shall bear the costs of such Qualified
Physician’s services and Executive agrees to submit to an examination by such
Qualified Physician and to the disclosure of Executive’s relevant medical
records to such Qualified Physician.



          The date upon which any termination effected pursuant to this
subparagraph 12(b) shall be effective is set forth in subparagraph 12(d), and
the effect of any such termination shall be as described in
subparagraphs
12(e) and (f).



          c. Termination by Executive. During the Initial Term, Executive
shall be entitled to terminate his employment hereunder only upon the
establishment of “Constructive Termination” (as that term is defined below),
by giving written notice to that
effect to Employer. During any Extended Term, Executive shall be entitled to
terminate
his employment hereunder (i) upon the establishment of Constructive
Termination, by giving notice to that effect to Employer or (ii) for any other
reason or for no reason upon 6 months prior written notice to Employer.



          For purposes hereof, “Constructive Termination” shall mean Executive’s
termination of his employment hereunder as a direct result of (i) a reduction
in Executive’s initial Base Salary or in the target Annual Bonus percentage,
(ii) a material change in the nature or extent of Executive’s title or
responsibilities that is inconsistent with Executive’s intended position and
status hereunder, (iii) the relocation of Executive’s principal place of
employment to a location more than 50 miles from Executive’s current
principal place of employment or (iv) the material breach by the Employer of
any provision of this Agreement which continues without reasonable steps
being taken to cure such breach for a period of 30 days after written notice
thereof by Executive to Employer.



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          The date upon which any termination effected pursuant to this
subparagraph 12(c) shall be effective is set forth in subparagraph 12(d),
and the effect of any such termination shall be as described in
subparagraphs 12(f) and (g).



          d. Termination Date. In the event Executive’s employment
hereunder is terminated for circumstances constituting Cause, Permanent
Disability or
Constructive Termination, or if Executive’s employment hereunder is
terminated by
Employer (other than for Cause) after the occurrence of a Change of
Control, such
termination shall take effect upon the termination date set forth in the
written notice to
that effect given by Executive to Employer or by Employer to Executive,
as the case may
be (provided that if either party disputes the propriety of such
termination, the effective
date of termination shall be as established by final resolution of such
dispute, whether by
agreement of the parties or award of an arbitrator as contemplated
herein, In favor of the
propriety of such termination), and in any other case termination of
Executive’s
employment hereunder shall take effect on the date specified in the
written notice
thereof delivered by Executive to Employer or by Employer to Executive,
as the case
may be (the date on which any such termination takes effect being
referred to herein as
the “Termination Date”). Employer, at its option, may require Executive
to continue to
perform his duties hereunder until the Termination Date or pay to
Executive such
amount of compensation and benefits otherwise due hereunder in
accordance with
Employer’s then existing salary payment schedule or in one lump sum
payment.



          e. Effect of Termination by Employer For Cause. In the event
Executive’s employment is terminated by Employer for Cause, or in the
event Executive
voluntarily terminates his employment as contemplated by paragraph
12(c)(ii), at any
time during the Employment Term, then (i) Employer shall pay to
Executive Executive’s
accrued but unpaid Base Salary and Annual Bonus through the Termination
Date; (ii)
notwithstanding any of the provisions of Employer’s Stock Option Plan or
of any option
agreement with respect thereto to the contrary, any and all of the
Options (other than the
Inducement Options) that theretofore have vested may be exercised at any
time on or
before the ninetieth day following such Termination Date and, if not so
exercised,
thereupon automatically shall be canceled; and (iii) Executive’s rights
with respect to the
Compensatory Options and/or the Inducement Options, as appropriate,
shall be as
stated in paragraph 4(c) above.



          f. Effect of Termination Upon Permanent Disability. In the event
Executive’s employment is terminated by Employer upon the permanent
disability of Executive at any time during the Employment Term, then:



               (i) Employer shall pay to Executive (x) Executive’s accrued but
unpaid Base Salary and Annual Bonus through the Termination Date, (y)
Executive’s then existing Base Salary for 12 months from the date written
notice of the termination of Executive’s employment is given by Employer, and
(z) any amount due hereunder for accrued but unused vacation time as of the
Termination Date.



               (ii) Employer, at its expense, shall make all benefit payments, on
behalf of Executive and Executive’s dependents, for such benefits Executive
otherwise would have been entitled to receive hereunder, for 12 months
following the date written notice of the termination of Executive’s
employment is given by Employer.



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               (iii) With respect to any of the Options (other than the inducement
Options) which remain unvested upon such Termination Date, notwithstanding any
provision to the contrary in Employer’s Stock Option Plan and/or any stock
option agreement with respect thereto, there shall be immediate vesting of
that portion of such unvested Options which would have vested within 12 months
of the date written notice of the termination of Executive’s employment is
given by Employer. After giving effect to the foregoing sentence, any Options
(other than the Inducement Options) which remain unvested shall automatically
terminate.



               (iv) Executive’s rights with respect to the
Compensatory
Options and/or the Inducement Options, as appropriate, shall be as stated in
paragraph 4(c) above.



          g. Effect of Wrongful or Constructive Termination or Termination
Following a Change of Control.



               (i) In the event Executive’s employment is terminated during the
Employment Term by Employer (other than for Cause) after the occurrence of a
Change of Control, or by Executive in circumstances constituting Constructive
Termination, then, from and after such Termination Date:



                    (A) Executive
shall not be subject to the non-competition provisions set forth in paragraph 10 hereof.



                    (B) Executive shall be entitled to receive the Base
Salary, Annual Bonus, and benefits, which Executive reasonably would have
expected to receive (I) in the period from the Termination Date to the
expiration of the Initial Term (if such Termination Date occurs more than 6
months prior to the expiration of the Initial Term) or
(II) during the 6 months
following the date written notice of the termination of Executive’s employment
is given by Employer or Executive, as the case may be, (if such Termination
Date occurs after the Initial Term or 6 months prior to the expiration of the
Initial Term). All of such amounts shall be payable upon, and the benefits
shall become effective upon, the Termination Date. The treatment of any Options
other than the Inducement Options shall be governed by the terms of the
applicable granting documents and Annex A.



                    (C) Executive’s rights with respect to the
Compensatory Options and/or the Inducement Options, as appropriate, shall
be as stated in paragraph 4(c) above.



The foregoing shall be Executive’s sole and exclusive remedy for any such
termination of his employment under this subparagraph 12(g).



          h. Miscellaneous. In the event of any termination or attempted
termination hereof: (i) if multiple events, occurrences or circumstances are
asserted as bases for such termination or attempted termination, the event,
occurrence or circumstance that is earliest in time, and any termination or
attempted termination found to be proper hereunder based thereon, shall take
precedence over the others: (ii) no termination of this Employment Agreement
shall relieve or release either party from liability hereunder based on any
breach of the terms hereof by such party occurring prior



11









 





to the Termination Date; (iii) the terms of this Employment Agreement relevant
to performance or satisfaction of any obligation hereunder expressly remaining
to be performed or satisfied in whole or in part at the Termination Date shall
continue in force until such full performance or satisfaction has been
accomplished and otherwise neither party hereto shall have any other or
further remaining obligations to other party hereunder; and (iv) the vesting
and exercise provisions set forth in Employer’s Stock Option Plan and/or any
option agreement with respect to the Options (other than the Inducement
Options) shall continue to apply except to the extent otherwise expressly
provided in this paragraph 12 or Annex A.



          i. No
Set-off; No Duty of Mitigation. There shall be no right of
setoff or counterclaim, in respect of any actual or alleged claim, debt or
obligation, against any payments or benefits required to be made or provided to
Executive hereunder (including, without limitation, pursuant to subparagraphs
12(f) and (g) above). In the event of any termination of Executive’s employment
under this paragraph 12, Executive shall be under no obligation to seek other
employment and shall be entitled to all payments or benefits required to be
made or provided to Executive hereunder, without any duty of mitigation of
damages and regardless of any other employment obtained by Executive.



     13. Injunctive Relief. It is agreed that the services of Executive are
unique and that any breach or threatened breach by Executive of any provision of
this Employment Agreement cannot be remedied solely by damages. Accordingly, in
the event of a breach by Executive of his obligations under this Employment
Agreement, Employer shall be entitled to seek and obtain interim restraints and
permanent injunctive relief without proving the inadequacy of damages as a remedy, restraining
Executive and any business, firm, partnership, individual, corporation or entity
participating in such breach or attempted breach. Nothing herein, however, shall be construed as
prohibiting Employer from pursuing any other remedies available at law or in equity
for such breach or threatened breach, including the recovery of damages and the
termination of the services of Executive.



     14. Arbitration. Any dispute or controversy arising out of or relating to
this Employment Agreement or any claimed breach hereof shall be settled, at the
request of either party, by an arbitration proceeding conducted in accordance with
the rules of the American Arbitration Association (“AAA”), with the award determined to be
appropriate by the arbitrator therein to be final, non-appealable and binding on the
parties hereto, and with judgment upon such award as is rendered in any such arbitration
proceeding available for entry and enforcement in any court having jurisdiction of
the parties hereto. The arbitrator shall be an impartial arbitrator qualified to serve in
accordance with the rules of the AAA and shall be reasonably acceptable to each of the
Employer and the Executive. If no such acceptable arbitrator is so appointed within 15 days
after the initial request for arbitration of such disputed matter, each of the parties
promptly shall designate a person qualified to serve as an arbitrator in accordance with
the rules of the AAA, and the two persons so designated promptly shall select the
arbitrator from among those persons qualified to serve in accordance with the rules of the AAA.
The arbitration shall be held in the greater Northern Virginia area, or in such other
place as may be agreed upon at the time by the parties. The expenses of the arbitration
proceeding shall  be borne by Employer, but the arbitrator’s award may provide that
Executive shall reimburse Employer for an equitable share of such expenses if Executive is
not the prevailing party on any of the issues involved in such arbitration. The
Employer shall pay for and bear the cost of its own and Executive’s experts, evidence and
counsel in



12









 





such arbitration proceeding, but the arbitrator’s award may provide that, in
addition to any other amounts or relief due to Employer, Executive shall
reimburse Employer on demand for all of such costs of Executive’s experts,
evidence and counsel initially incurred by Employer, to the extent the award
finds such costs properly allocable to any issue(s) in dispute as to which the
award indicates the Employer to be the prevailing party.



     15. Indemnification.



          a. Employer shall Indemnify Executive to the fullest extent permitted
by Delaware law as in effect on the date hereof against all costs,
expenses, liabilities
and losses (including, without limitation, attorneys’ fees, judgments,
penalties and
amounts paid in settlement) reasonably incurred by Executive in connection
with any
action, suit or proceeding, whether civil, criminal, administrative or
investigative in which
Executive is made, or is threatened to be made, a party to or a witness in
such action,
suit or proceeding by reason of the fact that he is or was an officer,
director, consultant,
agent or Executive of the Employer or of any of Employer’s controlled
affiliates or is or
was serving as an officer, consultant director, member, Executive,
trustee, agent or
fiduciary of any other entity at the request of the Employer (a
“Proceeding”).



          b. Employer shall advance to Executive all reasonable costs and
expenses incurred by him in connection with a proceeding within 20 days
after receipt by
Employer of a written request for such advance, accompanied by an itemized
list of the
costs and expenses and Executive’s written undertaking to repay to
Employer on
demand the amount of such advance if it shall ultimately be determined
that Executive is
not entitled to be indemnified against such costs and expenses.



          c. The indemnification provided to Executive hereunder is in addition
to, and not in lieu of, any additional indemnification to which he may be
entitled pursuant
to Employer’s Certificate of Incorporation or Bylaws, any insurance
maintained by
Employer from time to time providing coverage to Executive and other
officers and
directors of Employer, or any separate written agreement with Executive.
The provisions
of this paragraph 15 shall survive any termination of this Employment
Agreement.



     16. Amendment and Modification. This Employment Agreement (including
the Annex A hereto) contains the entire agreement between the parties with
respect to
the subject matter hereof, and supersedes any and all prior agreements,
arrangements
or understandings between the parties hereto with respect to the subject
matter hereof,
whether written or oral Subject to applicable law and upon the consent of
the Board of
Directors of Employer, this Employment Agreement may be amended, modified
and
supplemented by written agreement of Employer and Executive with respect
to any of
the terms contained herein.



     17. Waiver of Compliance. Any failure of either party to comply with any
obligation, covenant, agreement or condition on its part contained herein
may be
expressly waived in writing by the other party, but such waiver or failure
to insist upon
strict compliance shall not operate as a waiver of, or estoppel with
respect to, any
subsequent or other failure. Whenever this Employment Agreement requires
or permits
consent by or on behalf of any party, such consent shall be given in
writing.



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     18. Notices. All notices, requests, demands and other communications
required or permitted hereunder shall be in writing and shall be deemed
to have been
duly given if delivered by hand, sent by registered or certified U.S.
Mail, postage prepaid,
commercial overnight courier service or transmitted by facsimile and
shall be deemed
served or delivered to the addressee at the address for such notice
specified below
when hand delivered, upon confirmation of sending when sent by fax, on
the day after
being sent when sent by overnight delivery or five (5) days after having
been mailed,
certified or registered, with postage prepaid:



	 	 	 
	If to Employer
	 	If to Executive:

	XO Communications, Inc.

	 	Wayne M. Rehberger
	11111 Sunset Hills Road

	 	At such address as shall be reflected
	Reston, VA 20190

	 	in Employer’s payroll records
	Facsimile: 703-547-2025
	 	 
	Attention: General Counsel
	 	 







or/in the case of either such party, to such substitute address as such party
may designate from time to time for purposes of notices to be given to such
party hereunder, which substitute address shall be designated as such
in a
written notice given to the other party addressed as aforesaid.



     19. Assignment. This Employment Agreement shall inure to the benefit of
Executive and Employer and be binding upon the successors and general
assigns of Employer. This Employment Agreement shall not be assignable, except to the
extent set forth in paragraph 22.



     20. Enforceability. In the event it is determined that this Employment
Agreement is unenforceable in any respect, it is the mutual intent of the
parties that it be
construed to apply and be enforceable to the maximum extent permitted by
applicable law.



     21. Applicable Law. This Employment Agreement shall be construed and
enforced in accordance with the laws applicable to contracts executed,
delivered and fully to be performed in the State of Virginia.



     22. Beneficiaries: Executive’s Representative. Executive shall be entitled
to select (and to change, from time to time, except to the extent prohibited
under any
applicable law) a beneficiary or beneficiaries to receive any payments,
distributions or
benefits to be made or distributed hereunder upon or following Executive’s
death. Any
such designation shall be made by written notice to Employer. In the event
of Executive’s death or of a judicial determination of Executive’s
incompetence, references
in this Agreement to Executive shall be deemed, as appropriate, to refer
to his
designated beneficiary, to his estate or to his executor or personal
representative
(“Executive’s Representative”) solely for the purpose of providing a clear
mechanism for
the exercise of Executive’s rights hereunder in the case of Executive’s
death or Permanent Disability.



14









 





     IN WITNESS WHEREOF, the parties have executed this Employment
Agreement to be effective on and as of the day and year first above
written.



	 	 	 
	

	 	XO COMMUNICATIONS, INC.
	 
	 	 
	

	 	
	 
	 	 
	

	 	







15









 






ANNEX A

To

Employment Agreement

between

XO Communications, Inc.

and

Wayne M. Rehberger

Effective: September 25, 2000




     The Inducement Options shall be granted as follows:




Non-qualified Options to acquire 25,000 shares for Employer Class A
Common Stock awarded on the Commencement Date. The Inducement
Options shall vest annually in four equal amounts on September 25,
2001, 2002, 2003 and 2004. The exercise price of the Inducement
Options is $.01 per share.




The Compensatory Options shall be granted as follows:




Non-qualified options to acquire 250,000 shares of Employer
Class A Common Stock awarded on the Commencement Date. The
Compensatory Options shall vest pursuant to the standard
vesting schedule under the Stock Option Plan. The exercise
price of the Compensatory Options is $33.00, the closing sale
price on the Commencement Date as reported by NASDAQ.



     All Options shall, to the extent not theretofore vested in accordance with
their normal terms, vest on an automatic and accelerated basis (i) in the
circumstances set forth in paragraphs 12(f) and (g) of the Employment
Agreement, or (ii) upon the occurrence of Executive’s termination (other than
for Cause) after the occurrence of a Change of Control Event.



     All Options (upon vesting) will have an exercise period often (10) years
after the relevant grant date subject to earlier termination of the exercise
period in the event of termination of Executive’s employment either (i) by
Employer in circumstances constituting Cause or (ii) by Executive other than in
circumstances constituting Constructive Termination; in either of which case,
the Options shall be canceled if not exercised within 90 days following the
Termination Date with respect to such termination.



     All Options (and all shares issued on exercise of such Options) will be
subject to an effective Form S-8 (or other appropriate form) registration
statement and will be qualified for the treatment afforded under Rule 16b-3.



     To the extent not otherwise provided above, or in the Employment Agreement
of which this Annex A forms a part, the terms applicable to all of the Options
(and of any option agreement entered into in connection therewith) shall be the
standard terms normally applicable to a grant of “non-qualified” stock options
granted pursuant to the XO Communications, Inc. Stock Option Plan.




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