Document:

exv10w2

Exhibit 10.2

EXECUTION VERSION

     REGISTRATION RIGHTS AGREEMENT dated as of July 25, 2008 between XO HOLDINGS, INC., a Delaware
corporation (the “Company”), and the entities listed on the signature pages hereto under the
caption “Purchasers” (each a “Purchaser” and, collectively, the “Purchasers”).

     Pursuant to the Stock Purchase Agreement dated as of July 25, 2008 (the “Stock Purchase
Agreement”) by and between the Company and the Purchasers, the Purchasers will acquire on the
Closing Date an aggregate of 555,000 shares of the Company’s 7% Class B Convertible Preferred Stock
(the “Convertible Preferred Stock”) and 225,000 shares of the Company’s 9.5% Class C Perpetual
Preferred Stock (the “Perpetual Preferred Stock”). Each of the Convertible Preferred Stock and
Perpetual Preferred Stock shall be referred to as the “Preferred Stock” herein.

     It is a condition precedent to the consummation of the transactions contemplated by the Stock
Purchase Agreement that the Company and the Purchasers enter into this Agreement to provide for the
rights of the Purchasers with respect to the registration of the shares of Preferred Stock held by
the Purchasers and the shares of Common Stock issuable upon conversion of the Convertible Preferred
Stock.

     Accordingly, the parties hereto agree as follows:

SECTION
1. Definitions.

     As used herein, unless the context otherwise requires, the following terms have the following
respective meanings:

     “Closing Date” is defined in the Stock Purchase Agreement.

     “Commission” means the Securities and Exchange Commission or any other Federal agency at the
time administering the Securities Act.

     “Common
Stock” means the Common Stock, par value $0.01 per share, of the Company.

     “Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and
regulations of the Commission thereunder, all as the same shall be in effect at the time.

     “Initiating Purchasers” means, collectively, Purchasers who properly initiate a registration
request under this Agreement.

     “Permitted Holder” means and includes: (i) a Purchaser or any Affiliate (as defined in the
Stock Purchase Agreement) of a Purchaser; (ii) any Person to whom a Purchaser or its transferee
transfers its Preferred Stock and/or Common Stock issued upon conversion of
the Convertible Preferred Stock, in whole or in part, together with the assignment of such
Purchaser’s or transferee’s (as applicable) rights under this Agreement under Section 4.3 hereof;

 

 

and (iii) 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.

     “Person” means a corporation, an association, a partnership, an organization, a business, a
trust, an individual, or any other entity or organization, including a government or political
subdivision or an instrumentality or agency thereof.

     “Registrable Securities” means (i) any shares of Preferred Stock, (ii) any shares of Common
Stock issued or issuable upon the conversion of any Convertible Preferred Stock held by the
Purchasers, and (iii) any shares of Common Stock issued with respect to the Convertible Preferred
Stock or the Common Stock referred to in clauses (i) and (ii) by way of a stock dividend, stock
split or reverse stock split or in connection with a combination of shares, recapitalization,
merger, consolidation or otherwise. As to any particular Registrable Securities, such securities
shall cease to be Registrable Securities (a) when a registration statement with respect to the sale
of such securities shall have become effective under the Securities Act and such securities shall
have been disposed of in accordance with such registration statement, (b) when such securities
shall have been otherwise transferred, new certificates for them not bearing a legend restricting
further transfer shall have been delivered by the Company and subsequent public distribution of
them shall not require registration of them under the Securities Act or (c) when such securities
are eligible for sale under clause (b) of Rule 144 of the Securities Act or any successor
provision.

     “Registration Expenses” means all expenses incident to the registration and disposition of the
Registrable Securities pursuant to Section 2 hereof, including, without limitation, all
registration, filing and applicable national securities exchange fees, all fees and expenses of
complying with state securities or blue sky laws (including fees and disbursements of counsel to
the underwriters in connection with “blue sky” qualification of the Registrable Securities and
determination of their eligibility for investment under the laws of the various jurisdictions), all
word processing, duplicating and printing expenses, all messenger and delivery expenses, the fees
and disbursements of counsel for the Company and of its independent public accountants, including
the expenses of “cold comfort” letters or any special audits required by, or incident to, such
registration, all fees and disbursements of underwriters (other than underwriting discounts and
commissions), all transfer taxes, and all fees and expenses of counsel to the Purchasers;
provided, however, that Registration Expenses shall exclude, and the Purchasers
shall pay, underwriting discounts and commissions in respect of the Registrable Securities being
registered.

     “Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations
of the Commission thereunder, all as the same shall be in effect at the time.

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SECTION 2. Registration Under Securities Act, etc.

     2.1. Demand Registration.

     (a) Requests for Registration. Each Purchaser will have the right, by written notice
delivered to the Company (a “Demand Notice”) and subject to the terms and conditions set forth in
this Agreement, to require the Company to register Registrable Securities under and in accordance
with the provisions of the Securities Act (a “Demand Registration”); provided that (i) no Purchaser
may make more than one Demand Registration, (ii) the aggregate offering price (net of underwriters’
discounts and commissions) of the Registrable Securities requested by the Initiating Purchasers to
be so registered pursuant to this Section must exceed $5,000,000 and (iii) each Initiating
Purchaser must provide to the Company a certificate (the “Authorizing Certificate”) signed by such
Initiating Purchaser. For purposes of the preceding sentence, the filing of two or more
registration statements in response to one Demand Notice shall be counted as one Demand
Registration. Each request for a Demand Registration shall state the amount of the Registrable
Securities proposed to be sold and the intended method of disposition thereof. The Authorizing
Certificate shall set forth (A) the name of Initiating Purchaser signing such Authorizing
Certificate, (B) the number of Registrable Securities held by such Purchaser and the number of
Registrable Securities such Purchaser has elected to have registered, and (C) the intended methods
of disposition of the Registrable Securities.

     (b) Withdrawal of Registration Request. An Initiating Purchaser may at its option
withdraw Registrable Securities from a registration and, in such event (1) any continuing
registration of Registrable Securities shall constitute the Demand Registration to which the
Initiating Purchaser is entitled and (2) the withdrawing Initiating Purchaser shall reimburse the
Company for the registration and filing fees (including any fees payable to the SEC, the Financial
Industry Regulatory Authority, or any successor organization) it has incurred with respect to the
withdrawn Registrable Securities (unless all Registrable Securities are withdrawn, in which case
the withdrawing Initial Purchaser shall reimburse the Company for all costs and expenses incurred
by it in connection with the registration of such Registrable Securities). Subject to compliance
with clause (2) of the preceding sentence, a Demand Registration that is terminated in its entirety
prior to the effected date of the applicable registration statement will not constitute a Demand
Registration.

     (c) Company Right of Deferral. Notwithstanding the foregoing obligations, if the
Company furnishes to an Initiating Purchaser requesting a registration pursuant to this Section 2.1
a certificate signed by the Company’s chief executive officer stating that in the good faith
judgment of the Company’s Board of Directors it would be materially detrimental to the Company and
its stockholders for such registration statement to either become effective or remain effective for
as long as such registration statement otherwise would be required to remain effective, because
such action would (i) materially interfere with a significant acquisition, corporate
reorganization, or other similar transaction involving the Company; (ii) require premature
disclosure of material information that the Company has a bona fide business purpose for preserving
as confidential; or (iii) render the Company unable to comply with requirements under the
Securities Act or Exchange Act, then the Company shall have the right to defer taking action with
respect to such filing, and any time periods with respect to filing or effectiveness

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thereof shall
be tolled correspondingly, for a period of not more than one hundred twenty (120)
days after the request of the Initiating Purchaser is received by the Company; provided,
further, that the Company shall not register any securities for its own account or that of any
other stockholder during such one hundred twenty (120) day period other than pursuant to a
registration relating to the sale of securities to employees of the Company or a subsidiary
pursuant to a stock option, stock purchase, or similar plan or a registration in which the only
securities being registered are Common Stock issuable upon conversion of debt securities that are
also being registered.

     (d) Recent Registration. The Company shall not be obligated to effect, or to take any
action to effect, any registration pursuant to Section 2.1(a): (i) during the period that is thirty
(30) days before the Company’s good faith estimate of the date of filing of, and ending on a date
that is ninety (90) days after the effective date of, a Company-initiated registration, provided,
that the Company is actively employing in good faith commercially reasonable efforts to cause such
registration statement to become effective; or (ii) if the Company has effected a Demand
Registration pursuant to Section 2.1(a) within the six (6) month period immediately preceding the
date of such request.

     (e) Piggyback Rights. If the Company proposes to file a registration statement,
whether or not for sale for the Company’s own account or for the account of a shareholder of the
Company, on a form and in a manner that would also permit registration, offer or sale of
Registrable Securities, the Company shall each such time use reasonable efforts to give to the
Purchasers holding Registrable Securities known to the Company written notice of such proposed
filing at least 20 days before the anticipated filing. The notice referred to in the preceding
sentence shall (i) describe the proposed registration and offering and (ii) offer the Purchaser the
opportunity to register, offer or sell such amount of Registrable Securities as the Purchaser may
request (a “Piggyback Registration”). Subject to Section 2(f), the Company will include in each
such Piggyback Registration (and any related qualification under state blue sky laws and other
compliance filings, and in any underwriting involved therein) all Registrable Securities with
respect to which the Company has received written requests for inclusion therein within 10 days
after the written notice from the Company is given.

     (f) Registration of Other Securities. The Company will cause the managing underwriter
or underwriters of a proposed underwritten offering, if any, to permit any Purchaser holding
Registrable Securities requested to be included in the registration for such offering, to include
therein all such Registrable Securities requested to be so included (such securities, together with
any other shares of the same class requested to be included in such registration by any other
Person pursuant to similar registration rights, the “Piggyback Shares”) on the same terms and
conditions as any securities of the Company included therein (other than the indemnification by
such Purchasers, which will be limited to the dollar amount of the proceeds received by the
Purchaser upon the sale of the Registrable Securities giving rise to such indemnification
obligation; provided, that the Purchasers give customary representations and warranties); provided
that, if the Company or managing underwriter advises, in good faith, the Purchasers in writing to
the effect that the total amount of securities that the Purchasers, the Company and any other
Person propose to include in a registration statement is such as to

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materially and adversely affect
the success of an offering of securities, then the Company will include in such registration:

(x) in the case of a registration in connection with a sale of securities for the Company’s
own account, (i) first, 100% of the securities that the Company proposes to sell for its own
account, (ii) second, to the extent that the number of securities in clause (i) above is
less than the number of securities which the Company or underwriter has advised can be sold
in such offering without having the adverse effect referred to above, the Piggyback Shares,
determined pro rata on the basis of the number of shares of the class being sold owned by
the Purchasers, and (iii) third, to the extent that the number of securities in clauses (i)
and (ii) above is less than the number of securities which the Company has been advised can
be sold in such offering without having the adverse effect referred to above, the number of
Piggyback Shares requested to be included in such offering by any other Persons pursuant to
similar registration rights, determined pro rata on the basis of the number of shares of the
class being sold owned by such other Persons requesting registration, collectively;

(y) in the case of a Demand Registration (i) first, 100% of the securities, if any, that the
Initiating Purchasers propose to sell, (ii) second, to the extent that the number of
securities in clause (i) above is less than the number of securities which the Company or
underwriter has advised can be sold in such offering without having the adverse effect
referred to above, the Piggyback Shares, determined pro rata on the basis of the number of
shares of the class being sold owned by the Purchasers, (iii) third, to the extent that the
number of securities in clauses (i) and (ii) above is less than the number of securities
which the Company has been advised can be sold in such offering without having the adverse
effect referred to above, the securities sought to be included by the Company in the
offering and (iv) fourth, to the extent that the number of securities in clauses (i) through
(iii) above is less than the number of securities which the Company has been advised can be
sold in such offering without having the adverse effect referred to above, the number of
Piggyback Shares requested to be included in such offering by any other Persons pursuant to
similar registration rights, determined pro rata on the basis of the number of shares of the
class being sold owned by such other Persons requesting registration.

(z) in the case of a registration in connection with a sale of securities on account of
Persons other than the Company or Purchasers (i) first, 100% of the securities, if any, that
those Persons propose to sell, (ii) second, to the extent that the number of securities in
clause (i) above is less than the number of securities which the Company or underwriter has
advised can be sold in such offering without having the adverse effect referred to above,
the Piggyback Shares, determined pro rata on the basis of the number of shares of the class
being sold owned by the Purchasers, (iii) third, to the extent that the number of securities
in clauses (i) and (ii) above is less than the number of securities which the Company has
been advised can be sold in such offering without having the adverse effect referred to
above, the number of Piggyback Shares requested to be included in such offering by any other
Persons pursuant to similar registration rights, determined pro rata on the basis of the
number of shares of the class being sold owned by such other Persons

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requesting registration
and (iv) fourth, to the extent that the number of securities in clauses (i) through (iii)
above is less than the number of securities which the Company has been advised can be sold
in such offering without having the adverse effect referred to above, the securities sought
to be included by the Company in the offering.

          (g) Registration Statement Form. Registration under this Section 2.1 shall be on such
appropriate registration form of the Commission as, subject to clause (a) above, shall be selected
by the Company and as shall be reasonably acceptable to the Purchasers. The Company agrees to
include in any such registration statement all information which, in the opinion of counsel to the
Purchasers and counsel to the Company, is necessary or desirable to be included therein.

          (h) Expenses. The Company shall pay all Registration Expenses in connection with
registration pursuant to this Section 2.1.

          (i) Effective Registration Statement. Registration pursuant to this Section 2.1 shall
not be deemed to have been effected (i) if after it has become effective, such registration is
interfered with by any stop order, injunction or other order or requirement of the Commission or
other governmental agency or court for any reason not attributable to the Purchasers and has not
thereafter become effective, or (ii) if the conditions to closing specified in the underwriting
agreement, if any, entered into in connection with such registration are not satisfied or waived.

          (j) Shelf Registration. If the Company effects a registration of Registrable
Securities by means of shelf registration pursuant to Rule 415 under the Securities Act (a “Shelf
Registration Statement”), in addition to the other requirements contained herein, the Company
shall, at its cost, use its reasonable commercial efforts to keep the Shelf Registration Statement
continuously effective in order to permit the prospectus forming part thereof to be usable by the
Purchasers until such time as all the Registrable Securities covered by the Shelf Registration
Statement have been sold pursuant to the Shelf Registration Statement or cease to be outstanding
(the “Effectiveness Period”); provided, however, that the Effectiveness Period in
respect of the Shelf Registration Statement shall be extended to the extent required to permit
dealers to comply with the applicable prospectus delivery requirements under the Securities Act and
as otherwise provided herein.

          (k) Availability. The registration rights set forth in this Agreement shall not be
available to any Purchaser (i) until after the first anniversary of the purchase by such Purchaser
of such shares of Preferred Stock, (ii) if in the opinion of counsel to the Company, all of the
Registrable Securities then owned by such Purchaser could be sold in any 6-month period pursuant to
Rule 144 under the Securities Act (without giving effect to the provisions of Rule 144(b)(1)) or
(iii) if all of the Registrable Securities held by such Purchaser have been sold in a registration
pursuant to the Securities Act or pursuant to said Rule 144.

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          2.2. Registration Procedures. In connection with the registration of any Registrable
Securities under the Securities Act as provided in Sections 2.1 hereof, the Company shall as
expeditiously as possible:

     (a) prepare and file with the Commission the requisite registration statement to effect
such registration (and shall include all financial statements required by the Commission to
be filed therewith) and thereafter use its reasonable efforts to cause such registration
statement to become effective; provided, however, that before filing such registration
statement (including all exhibits) or any amendment or supplement thereto or comparable
statements under securities or blue sky laws of any jurisdiction, the Company
shall as promptly as practicable furnish such documents to the Purchasers and each
underwriter, if any, participating in the offering of the Registrable Securities and their
respective counsel, which documents will be subject to the review and comments of the
Purchasers, each underwriter and their respective counsel;

     (b) notify the Purchasers of the Commission’s requests for amending or supplementing
the registration statement and the prospectus, and prepare and file with the Commission such
amendments and supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to keep such registration statement effective and
to comply with the provisions of the Securities Act with respect to the disposition of all
Registrable Securities covered by such registration statement for such period as shall be
required for the disposition of all of such Registrable Securities in accordance with the
intended method of distribution thereof; provided, that except with respect to any such
registration statement filed pursuant to Rule 415 under the Securities Act, such period need
not exceed 365 days;

     (c) furnish, without charge, to the Purchasers and each underwriter such number of
conformed copies of such registration statement and of each such amendment and supplement
thereto (in each case including all exhibits), such number of copies of the prospectus
contained in such registration statement (including each preliminary prospectus and any
summary prospectus) and any other prospectus filed under Rule 424 under the Securities Act,
in conformity with the requirements of the Securities Act, and such other documents, as the
Purchasers and such underwriters may reasonably request;

     (d) use its reasonable efforts (i) to register or qualify all Registrable Securities
and other securities covered by such registration statement under such securities or blue
sky laws of such States of the United States of America where an exemption is not available
and as the Purchasers or any managing underwriter shall reasonably request, (ii) to keep
such registration or qualification in effect for so long as such registration statement
remains in effect, and (iii) to take any other action which may be reasonably necessary or
advisable to enable the Purchasers to consummate the disposition in such jurisdictions of
the securities to be sold by the Purchasers, except that the Company shall not for any such
purpose be required to qualify generally to do business as a foreign corporation in any
jurisdiction wherein it would not but for the requirements of this subsection (d) be
obligated to be so qualified or to consent to general service of process in any such
jurisdiction;

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     (e) use its reasonable efforts to cause all Registrable Securities covered by such
registration statement to be registered with or approved by such other federal or state
governmental agencies or authorities as may be necessary in the opinion of counsel to the
Company and counsel to the Purchasers to consummate the disposition of such Registrable
Securities;

     (f) furnish to the Purchasers and each underwriter, if any, participating in the
offering of the securities covered by such registration statement, a signed counterpart of
(i) an opinion of counsel for the Company as is customarily requested of issuer’s counsel,
and (ii) a “comfort” letter signed by the independent public accountants who have
certified the Company’s or any other entity’s financial statements included or
incorporated by reference in such registration statement, covering substantially the same
matters with respect to such registration statement (and the prospectus included therein)
and, in the case of the accountants’ comfort letter, with respect to events subsequent to
the date of such financial statements, as are customarily covered in opinions of issuer’s
counsel and in accountants’ comfort letters delivered to the underwriters in underwritten
public offerings of securities (and dated the dates such opinions and comfort letters are
customarily dated);

     (g) promptly notify the Purchasers and each managing underwriter, if any, participating
in the offering of the securities covered by such registration statement (i) when such
registration statement, any pre-effective amendment, the prospectus or any prospectus
supplement related thereto or post-effective amendment to such registration statement has
been filed, and, with respect to such registration statement or any post-effective
amendment, when the same has become effective; (ii) of any request by the Commission for
amendments or supplements to such registration statement or the prospectus related thereto
or for additional information; (iii) of the issuance by the Commission of any stop order
suspending the effectiveness of such registration statement or the initiation of any
proceedings for that purpose; (iv) of the receipt by the Company of any notification with
respect to the suspension of the qualification of any of the Registrable Securities for sale
under the securities or blue sky laws of any jurisdiction or the initiation of any
proceeding for such purpose; (v) at any time when a prospectus relating thereto is required
to be delivered under the Securities Act, upon discovery that, or upon the happening of any
event as a result of which, the prospectus included in such registration statement, as then
in effect, includes an untrue statement of a material fact or omits to state any material
fact required to be stated therein or necessary to make the statements therein not
misleading, in the light of the circumstances under which they were made, and in the case of
this clause (v), at the request of the Purchasers promptly prepare and furnish to the
Purchasers and each managing underwriter, if any, participating in the offering of the
Registrable Securities, a reasonable number of copies of a supplement to or an amendment of
such prospectus as may be necessary so that, as thereafter delivered to the purchasers of
such securities, such prospectus shall not include an untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances under which they were
made; and (vi) at any time when the

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representations and warranties of the Company
contemplated by Section 2.2(k) hereof cease to be true and correct;

     (h) otherwise comply with all applicable rules and regulations of the Commission, and
make available to its security holders, as soon as reasonably practicable, an earnings
statement covering the period of at least twelve months beginning with the first full
calendar month after the effective date of such registration statement, which earnings
statement shall satisfy the provisions of Section 11(a) of the Securities Act and Rule 158
promulgated thereunder, and promptly furnish to the Purchasers a copy of any amendment or
supplement to such registration statement or prospectus;

     (i) provide and cause to be maintained a transfer agent and registrar (which, in each
case, may be the Company) for all Registrable Securities covered by such registration
statement from and after a date not later than the effective date of such registration;

     (j) deliver promptly to counsel to the Purchasers and each underwriter, if any,
participating in the offering of the Registrable Securities, copies of all correspondence
between the Commission and the Company, its counsel or auditors and all memoranda relating
to discussions with the Commission or its staff with respect to such registration statement;

     (k) make such representations and warranties to the underwriters, if any, with respect
to the businesses of the Company and its subsidiaries, the registration statement and
documents incorporated by reference or deemed incorporated by reference therein, if any, in
each case, in form, substance and scope as are customarily made by issuers to underwriters
in underwritten offerings;

     (l) cause the Company’s management to be made available for, and assist in, the
marketing and disposition of such Registrable Securities in the manner and to the extent
reasonably requested by the managing underwriter, if any, including, without limitation,
participation by management in customary road shows, investor conferences and other similar
presentations;

     (m) use its reasonable efforts to obtain the withdrawal of any order suspending the
effectiveness of the registration statement;

     (n) provide a CUSIP number for all Registrable Securities, no later than the effective
date of the registration statement; and

     (o) in connection with any underwritten public offering, make available its senior
executive officers, directors and chairman and otherwise provide reasonable assistance to
the underwriters (taking into account the needs of the Company’s business) in their
marketing of Registrable Securities.

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     The Purchasers will furnish to the Company such information regarding the Purchasers and the
distribution of the Registrable Securities as the Company may from time to time reasonably request
in writing.

     The Purchasers agree that upon receipt of any notice from the Company of the happening of any
event of the kind described in paragraph (g)(iii) or (v) of this Section 2.2, the Purchasers will,
to the extent appropriate, discontinue their disposition of Registrable Securities pursuant to the
registration statement relating to such Registrable Securities until, in the case of paragraph
(g)(v) of this Section 2.2, their receipt of the copies of the supplemented or amended prospectus
contemplated by paragraph (g)(v) of this Section 2.2 and, if so directed by the Company, will
deliver to the Company (at the Company’s expense) all copies, other than permanent file copies,
then in their possession, of the prospectus relating to such Registrable Securities current at the
time of receipt of such notice. If the disposition by the Purchasers of their securities is
discontinued pursuant to the foregoing sentence, the Company shall extend the
period of effectiveness of the registration statement by the number of days during the period
from and including the date of the giving of notice to and including the date when the Purchasers
shall have received copies of the supplemented or amended prospectus contemplated by paragraph
(g)(v) of this Section 2.2; and, if the Company shall not so extend such period, the Purchasers’
request pursuant to which such registration statement was filed shall not be counted for purposes
of the requests for registration to which the Purchasers are entitled pursuant to Section 2.1
hereof.

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     2.3. Requested Underwritten Offerings. If, pursuant to Section 2.1,
the Initiating Purchasers intend to distribute the Registrable Securities covered by their request
by means of an underwriting, they shall so advise the Company as a part of their request made
pursuant to Section 2.1, and the Company shall include such information in the Demand
Notice. The managing underwriter will be selected by the Company and shall be reasonably
acceptable to a majority in interest of the Initiating Purchasers. In such event, the right of any
Purchaser to include such Purchaser’s Registrable Securities in such registration shall be
conditioned upon such Purchaser’s participation in such underwriting and the inclusion of such
Purchaser’s Registrable Securities in the underwriting to the extent provided herein. All
Purchasers proposing to distribute their securities through such underwriting shall (together with
the Company) enter into an underwriting agreement in customary form with the underwriters selected
for such underwriting.

     2.4. Preparation; Reasonable Investigation. In connection with the preparation and
filing of each registration statement under the Securities Act pursuant to this Agreement, the
Company will give the Purchasers, their underwriters, if any, and their respective counsel,
accountants and other representatives and agents the opportunity to participate in the preparation
of such registration statement, each prospectus included therein or filed with the Commission, and
each amendment thereof or supplement thereto, and give each of them such access to its books and
records and such opportunities to discuss the business of the Company with its officers and
employees and the independent public accountants who have certified its financial statements, and
supply all other information reasonably requested by each of them, as shall be necessary or
appropriate, in the opinion of the Purchasers and such underwriters’ respective counsel, to conduct
a reasonable investigation within the meaning of the Securities Act.

     2.5. Unlegended Certificates. In connection with the offering of any Registrable
Securities registered pursuant to this Section 2, the Company shall (i) facilitate the timely
preparation and delivery to the Purchasers and the underwriters, if any, participating in such
offering, of unlegended certificates representing ownership of such Registrable Securities being
sold in such denominations and registered in such names as requested by the Purchasers or such
underwriters and (ii) instruct any transfer agent and registrar of such Registrable Securities to
release any stop transfer orders with respect to any such Registrable Securities.

     2.6. No Required Sale. Nothing in this Agreement shall be deemed to create an
independent obligation on the part of the Purchasers to sell any Registrable Securities pursuant to
any effective registration statement.

     2.7. Market Stand-off. Each Purchaser agrees that it will not sell or otherwise
transfer or dispose of any Registrable Securities held by such Purchaser during any period which
the Company determines in its good faith judgment that the filing of a registration statement
under Section 2 or the use of any related prospectus would require the disclosure of material
information that the Company has a bona fide business purpose for preserving as confidential or the
disclosure of which would impede the Company’s ability to consummate a significant transaction, and
that the Company is not otherwise required by applicable securities laws or regulations to
disclose, upon written notice of such determination by the Company, until the date upon which the
Company notifies such Purchaser in writing that suspension of such rights for the

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grounds set forth
in this Section 2.7 is no longer necessary. The Company agrees to give such notice as promptly as
practicable following the date that such suspension of rights is no longer necessary.

     2.8. Rule 144. The Company shall take all actions reasonably necessary to enable
holders of Registrable Securities to sell such securities without registration under the Securities
Act within the limitation of the exemptions provided by (i) Rule 144, or (ii) any similar rule or
regulation hereafter adopted by the Commission including, without limiting the generality of the
foregoing, filing on a timely basis all reports required to be filed by the Exchange Act. Upon the
request of the Purchasers, the Company will deliver to such holder a written statement as to
whether it has complied with such requirements.

SECTION 3. Miscellaneous

     3.1. Amendments and Waivers. This Agreement may be amended, modified or supplemented
only by written agreement of the party against whom enforcement of such amendment, modification or
supplement is sought.

     3.2. Notice. All notices and other communications hereunder shall be in writing and,
unless otherwise provided herein, shall be deemed to have been given when received by the party to
whom such notice is to be given at its address set forth below, or such other address for the party
as shall be specified by notice given pursuant hereto:

	 	(a)	 	If to the Purchasers, to:

Arnos Corp.

c/o Icahn Associates Corp.

767 Fifth Avenue, 47th Floor

New York, NY 10153

Attn: General Counsel

	 	(b)	 	If to the Company, to it at :

XO Holdings, Inc.

13865 Sunrise Valley Drive

Herndon, Virginia 20171

Attn: General Counsel

     3.3. Assignment; Third Party Beneficiaries. This Agreement shall be binding upon and
inure to the benefit of and be enforceable by the parties hereto and their respective successors
and permitted assigns. This Agreement may not be assigned by the Company, without
the prior written consent of the Purchasers. The Purchasers may, at their election, at any
time or from time to time, assign their rights under this Agreement, in whole or in part, to any
Affiliate (as defined in the Stock Purchase Agreement) or any purchaser or other transferee of
shares of Common Stock held by them.

     3.4. Remedies. The parties hereto agree that money damages or other remedy at law
would not be sufficient or adequate remedy for any breach or violation of, or a default

-12-

 

under, this
Agreement by them and that, in addition to all other remedies available to them, each of them shall
be entitled to an injunction restraining such breach, violation or default or threatened breach,
violation or default and to any other equitable relief, including without limitation specific
performance, without bond or other security being required. In any action or proceeding brought to
enforce any provision of this Agreement (including the indemnification provisions thereof), the
successful party shall be entitled to recover reasonable attorneys’ fees in addition to its costs
and expenses and any other available remedy.

     3.5. No Inconsistent Agreements. The Company will not, on or after the date of this
Agreement, enter into any agreement with respect to its securities which is inconsistent with the
rights granted to the Purchasers in this Agreement or otherwise conflicts with the provisions
hereof; provided that the Company may enter into agreements on substantially similar terms as this
agreement with respect to Preferred Stock or other securities sold hereafter. The Company further
represents and warrants that the rights granted to the Purchasers hereunder do not in any way
conflict with and are not inconsistent with any other agreements to which the Company is a party or
by which it is bound.

     3.6. Descriptive Headings. The descriptive headings of the several sections and
paragraphs of this Agreement are inserted for reference only and shall not control or otherwise
affect the meaning hereof.

     3.7. Governing Law. This Agreement shall be construed and enforced in accordance
with, and the rights and obligations of the parties hereto shall be governed by, the laws of the
State of New York, without giving effect to the conflicts of law principles thereof. Each of the
parties hereto hereby irrevocably and unconditionally consents to submit to the exclusive
jurisdiction of the courts of the State of New York and the United States of America located in the
County of New York for any action or proceeding arising out of or relating to this Agreement and
the transactions contemplated hereby (and agrees not to commence any action or proceeding relating
thereto except in such courts), and further agrees that service of any process, summons, notice or
document by U.S. registered mail to its respective address set forth in Section 5 hereof shall be
effective service of process for any action or proceeding brought against it in any such court.
Each of the parties hereto hereby irrevocably and unconditionally waives any objection to the
laying of venue of any action or proceeding arising out of this Agreement or the transactions
contemplated hereby in the courts of the State of New York or the United States of America located
in the County of New York, and hereby further irrevocably and unconditionally waives and agrees not
to plead or claim in any such court that any such action or proceeding brought in any such court
has been brought in an inconvenient forum.

     3.8. Counterparts. This Agreement may be executed in any number of counterparts, each
of which shall be deemed an original, but all such counterparts shall together constitute one and
the same instrument.

     3.9. Invalidity of Provision. The invalidity or unenforceability of any provision of
this Agreement in any jurisdiction shall not affect the validity or enforceability of the remainder
of this Agreement in that jurisdiction or the validity or enforceability of this Agreement,
including that provision, in any other jurisdiction. If any restriction or provision of

-13-

 

this
Agreement is held unreasonable, unlawful or unenforceable in any respect, such restriction or
provision shall be interpreted, revised or applied in a manner that renders it lawful and
enforceable to the fullest extent possible under law.

     3.10. Further Assurances. Each party hereto shall do and perform or cause to be done
and performed all further acts and things and shall execute and deliver all other agreements,
certificates, instruments, and documents as any other party hereto reasonably may request in order
to carry out the intent and accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.

     3.11. Entire Agreement; Effectiveness. This Agreement constitutes the entire
agreement, and supersedes all prior agreements and understandings, oral and written, between the
parties hereto with respect to the subject matter hereof.

-14-

 

EXECUTION VERSION

     IN WITNESS WHEREOF, the parties have caused this Agreement to be executed and delivered by
their respective officers thereunto duly authorized.

	 	 	 	 	 
	 	XO HOLDINGS, INC.

 	 
	 	By:  	/s/ Carl J. Grivner
 	 
	 	 	Name:  	Carl J. Grivner 	 
	 	 	Title:  	Chief Executive Officer 	 
	 

-15-

 

EXECUTION VERSION

	 	 	 	 	 	 	 
	 	 	PURCHASERS	 	 
	 
	 	 	 	 	 	 
	 	 	ARNOS CORP.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Keith Cozza	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:
	 	Keith Cozza	 	 
	 

	 	Title:
	 	Authorized Signatory	 	 
	 
	 	 	 	 	 	 
	 	 	BARBERRY CORP.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Keith Cozza	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:
	 	Keith Cozza	 	 
	 

	 	Title:
	 	Treasurer	 	 
	 
	 	 	 	 	 	 
	 	 	HIGH RIVER LIMITED PARTNERSHIP	 	 
	 	 	BY: Hopper Investments LLC, its general partner	 	 
	 	 	BY: Barberry Corp., its sole member	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Keith Cozza	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:
	 	Keith Cozza	 	 
	 

	 	Title:
	 	Treasurer	 	 
	 
	 	 	 	 	 	 
	 	 	ACF INDUSTRIES HOLDING CORP.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Keith Cozza	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:
	 	Keith Cozza	 	 
	 

	 	Title:
	 	Vice President	 	 

-16-exv10w3

EXECUTION VERSION

Exhibit 10.3

TAX ALLOCATION AGREEMENT

     Agreement as of July 25, 2008 by and among Starfire Holding Corporation (“Parent”), a Delaware
corporation, having offices at 767 Fifth Avenue, New York and XO Holdings, Inc., a Delaware
corporation (“XO”), having offices at 13865 Sunrise Valley Drive, Herndon Virginia, 20171 and the
XO Subsidiaries (as defined below).

     WHEREAS, Parent is the common parent of an affiliated group (as such term is defined in the
Internal Revenue Code of 1986, as amended, or any succeeding law (the “Code”)) of corporations for
federal income tax purposes:

     WHEREAS, Parent and its subsidiaries have been filing consolidated federal income tax returns
(“Consolidated Federal Returns”) and will continue to file Consolidated Federal Returns;

     WHEREAS, XO and its subsidiaries joined the Consolidated Group (as defined below) in filing
Consolidated Federal Returns for the Prior Consolidation Period (as defined below);

     WHEREAS, during the Prior Benefit Period (as defined below), the Consolidated Group utilized a
Prior Consolidation Tax Benefit (as defined below);

     WHEREAS, it is contemplated that the XO Group will continue to file separate state or local
income or franchise tax returns unless Parent elects, or is required by law, to file such returns
on a consolidated or combined basis with the XO Group (“Consolidated State Returns”);

     WHEREAS, XO has minority shareholders and third-party lenders; and

     WHEREAS, Parent and XO believe it is desirable to provide for the allocation and payment of
federal and state income tax liabilities and certain related matters.

     NOW, THEREFORE, in consideration of the foregoing and of the covenants set forth below, the
parties hereto have agreed as follows:

1. Definitions.

     (i) “XO Group” means XO together with the XO Subsidiaries. “XO Subsidiaries” means all direct
and indirect subsidiaries of XO that are eligible to be included in a Consolidated Return (as
defined below) with XO.

     (ii) “Consolidated Returns” mean all Consolidated Federal Returns and Consolidated State
Returns.

     (iii) “Federal Income Taxes” means any income tax imposed under the Code including, without
limitation, the corporate income tax, the minimum tax imposed on corporations, and the personal
holding company tax.

     (iv) “State Income Taxes” means any income or franchise tax imposed under the tax law of any
state (or political subdivision thereof) including, without limitation, corporate income taxes and
minimum taxes.

 

 

     (v) “Net Operating Loss” means the amount of any net operating loss as defined in the Code or
under the tax law of any state.

     (vi) “Net Capital Loss” means the amount of any net capital loss as defined in the Code or
under the tax law of any state.

     (vii) “Credit” means the amount of any tax credit allowed under the Code or under the tax law
of any state including, without limitation, investment tax credits ad foreign tax credits.

     (viii) The “Regulations” means the federal income tax regulations and proposed federal income
tax regulations issued by the Secretary of the Treasury interpreting the Code and state and local
income tax regulations and rules issued by applicable state and local administrative authorities.

     (ix) The “Consolidated Group” means the affiliated group (as defined in the Code) of which
Parent (or its successor) is the common parent, for so long as such affiliated group files a
Consolidated Return.

     (x) “Tax Benefits” as to any entity (or group of entities) means the Net Operating Losses, Net
Capital Losses, and Credits generated by or available to such entity (or group of entities) and any
carryforwards thereof.

     (xi) “Final Determination” shall mean the final resolution of liability for any Tax for a
taxable period, (i) by IRS Form 870 or 870-AD (or any successor form thereto), on the date of the
final acceptance by or on behalf of a party thereto and XO’s approval (which shall not be
unreasonably withheld) in the case of a challenge of any XO Tax Benefit, or by a comparable form
under the laws of another jurisdiction; except that a Form 870 or 870-AD or comparable form that
reserves (whether by its terms or by operation of law) the right of the taxpayer to file a claim
for refund and/or the right of taxing authority to assert a further deficiency shall not constitute
a Final Determination; (ii) by a decision, judgment, decree, or other order by a court of competent
jurisdiction, which has become final and unappealable; (iii) by a closing agreement or accepted
offer in compromise under Section 7121 or 7122 of the Code, or comparable agreement under the laws
of another jurisdiction with such agreement or acceptance being approved by XO (which approval
shall not be unreasonably withheld) in the case of any matter relating to an XO Tax Benefit; (iv)
by any allowance of a refund or credit in respect of an overpayment of Tax, but only after the
expiration of all periods during which such refund may be recovered (including by way of offset) by
the Tax imposing jurisdiction; or (v) by any other final disposition, including by reason of the
expiration of the applicable statute of limitations or by mutual agreement of the parties.

     (xii) “Current Consolidation Tax Benefits” means any Tax Benefit for which Parent is obligated
to make a payment to XO under Section 4(d).

     (xiii) “Excess XO Tax Benefits” means any Tax Benefit of the XO Group (determined as if the XO
Group had always filed separate Consolidated Returns with respect to the XO Group) that reduces the
liability of the Consolidated Group for Federal Income Taxes or Consolidated State Income Taxes for
any taxable year ending after the date hereof in excess of

2

 

the Section 4(d) Amount. For avoidance
of doubt, the Excess XO Tax Benefits shall be calculated by not taking into account the Prior
Consolidation Tax Benefit.

     (xiv) “Previously Reimbursed XO Tax Benefit” means any Tax Benefit of the XO Group for which
Parent has previously made a payment to XO under Section 4(d) hereof.

     (xv) “Prior Benefit Period” means the period beginning with the beginning of the Prior
Consolidation Period and ending December 31, 2004.

     (xvi) “Prior Consolidation Period” means the period beginning January 16, 2003 until January
16, 2004.

     (xvii) “Prior Consolidation Tax Benefit” means the Tax Benefit of the XO Group (determined as
if the XO Group had filed a separate Consolidated Return with respect to the XO Group for each year
taxable year during the Prior Consolidation Period) that reduced the tax liability of the
Consolidated Group during the Prior Benefit Period as reflected on the Consolidated Return filed by
the Consolidated Group as adjusted by any Final Determination (but only to the extent that the
utilization of such adjustment resulted in a reduction of the tax liability of the Consolidated
Group).

     (xviii) “Section 4(d) Amount” shall have the meaning set forth in Section 4(d) hereof.

2. Joinder in Consolidated Returns.

     (a) XO hereby agrees and consents (i) to join with the Consolidated Group in the filing of
Consolidated Returns with respect to any fiscal year in which Parent elects to file such returns,
(ii) to use its best efforts to cause each of the XO Subsidiaries to consent to the filing of
Consolidated Returns for such years, (iii) to furnish to Parent all information relating to members
of the XO Group as may be necessary or appropriate for the preparation of Consolidated Returns,
(iv) to execute and deliver to Parent, and use its best efforts to cause the XO Subsidiaries to
execute and deliver to Parent, all consents, directors’ resolutions and other documentation which
Parent may reasonably require to evidence Parent’s authority to file Consolidated Returns, and (v)
to maintain the same fiscal year as Parent and use its best efforts to cause the XO Subsidiaries to
maintain the same fiscal year as Parent for all periods in which Parent and XO are members of an
affiliated group (as defined in the Code); provided, however, the foregoing shall not be
interpreted to prevent XO from issuing additional stock pursuant to strategic transactions,
corporate acquisitions, debt conversions and settlements, warrants, options or rights to subscribe
to its stock, or for other corporate purposes, which would cause the XO Group to not be a part of
the Consolidated Group.

     (b) Parent hereby consents to join with the Consolidated Group in the Filing of Consolidated
Returns; provided, however, that Parent is not precluded from taking any action which would require
Parent to discontinue the filing of Consolidated Returns including, without limitation, a sale or
other disposition of all or a portion of its stock ownership in XO and/or the
filing of an application with the Commissioner of Internal Revenue, or other appropriate
authorities, including tax authorities of any state (or political subdivision thereof) (“Taxing
Authorities”) on behalf of the Consolidated Group, requesting permission to discontinue the filing
of Consolidated Returns.

3

 

     (c) Parent shall prepare and file Consolidated Returns on behalf of the Consolidated Group and
may charge XO and the XO Subsidiaries an appropriate amount for XO’s share of reasonable
out-of-pocket expenses related to the preparation of such returns. Parent shall make all decisions
regarding any elections or other matters relating to the preparation and filing of Consolidated
Returns; provided, however, that in making elections and other decisions with respect to members of
the XO Group, Parent shall consult with the XO Group and in good faith consider their
recommendations regarding the possibility of making such elections in a manner as to maximize the
Tax Benefits that would be available to the XO Group.

     (d) XO will promptly pay to Parent an appropriate amount for all reasonable out-of-pocket
expenses (including legal and accounting expenses) incurred by Parent in connection with any
administrative or judicial proceedings with respect to such Consolidated Returns to the extent that
such proceedings are reasonably allocable to the XO Group; provided however that XO will not be
responsible for the payment of any such expenses to the extent they are allocable to Parent’s
utilization of Prior Consolidation Tax Benefits or other of XO’s Tax Benefits unless Parent has
made a payment to XO for the use of such Tax Benefits under Section 4(d).

3. Payment of Tax and Refunds.

     Subject to the provisions of this Agreement and compliance with the terms hereof, Parent shall
be obligated to and shall make all payments and be entitled to all refunds of Federal Income Taxes
and estimated Federal Income Taxes on behalf of any and all members of the Consolidated Group, and
shall indemnify and hold the members of the XO Group harmless against all such Taxes (including
penalties and interest). Further, subject to the provisions of this Agreement and compliance with
the terms hereof, whenever Parent elects, or is required by law, to file state or local income or
franchise tax returns on a consolidated or combined basis, Parent shall be obligated to and shall
make all payments and be entitled to all refunds of such State Income Taxes and estimated State
Income Taxes (such actual and estimated State Income Taxes are referred to herein as “Consolidated
State Income Taxes”) on behalf of all members of the Consolidated Group, and shall indemnify and
hold the members of the XO Group harmless against all such Taxes (including penalties and
interest). Subject to the provisions of Section 5(a) of this Agreement, (and to the extent not
indemnified pursuant to the two immediately preceding sentences) for all periods on or after the
date hereof, including periods after a Deconsolidation Event, Parent shall indemnify and hold XO
and the other members of the XO Group harmless against all Federal Income Taxes, Consolidated State
Income Taxes, and State Income Taxes and local income taxes payable by or with respect to any
member of the Consolidated Group other than the members of the XO Group, including any interest and
penalties with respect thereto and reasonable out-of-pocket expenses (including legal and
accounting expenses) incurred by the XO Group in connection with an administrative or judicial
proceeding initiated by a governmental authority relating to any such tax.

4. Payments.

     (a) XO shall pay to Parent, for any taxable year ending after the date hereof during which XO
is included in a Consolidated Return with the Consolidated Group, an amount equal to the amount of
Federal Income Taxes and Consolidated State Income Taxes that the XO Group

4

 

would have been required
to pay to the Taxing Authorities if it were never part of the Consolidated Group and if the XO
Group had filed separate Consolidated Returns for federal, state and/or local tax purposes, as the
case may be, with respect to the XO Group (the “XO Group Taxes”). The above calculation shall give
effect to any federal, state or local Net Operating Loss, Net Capital Loss and Credit carryforwards
which would have been available to the XO Group if it had never been included in a Consolidated
Return with the Consolidated Group (including, but not limited to, any Prior Consolidation Tax
Benefit, but excluding any Previously Reimbursed XO Tax Benefit), but such calculation shall be
subject to any Final Determination affecting computation of any item included in such calculation
and any limitations on the utilization of tax attributes (including, without limitation, such
carryforwards and any limitations on the utilization of depreciation, amortization or other similar
deductions) of the XO Group imposed by law.

     (b) XO shall pay to Parent any amount (including amounts in respect of estimated tax) that
would be due on the basis of the foregoing calculations within three business days after Parent
notifies XO of the calculated amount, but in no event earlier than the times such payments are, or
would be required, to be made to the applicable Taxing Authorities. The excess of any amounts paid
to Parent, with respect to estimated tax payments under this Section 4(b) for a taxable year, over
the liability of the XO Group to Parent under this Section 4(b) for such year, shall be refunded by
Parent to XO within three business days after Parent notifies XO of the calculated amount of tax
due for such year. At XO’s election, such refund may be applied as a credit against any future
estimated tax of the XO Group.

     (c) XO shall indemnify and hold Parent harmless against any liability for any interest and
penalties with respect thereto imposed upon Parent by reason of any false or fraudulent information
supplied by any member of the XO Group to Parent in connection with the determination of the
federal, state, or local income tax liability payable by any member of the Consolidated Group.

     (d) If, for any taxable year ending after the date hereof during which XO is included in a
Consolidated Return with the Consolidated Group, (i) the XO Group would have had a Tax Benefit had
it filed separate Consolidated Returns for federal, state and/or local tax purposes, as the case
may be, with respect to the XO Group instead of joining the Consolidated Group (including, without
limitation, any carryover of a Tax Benefit from a year when XO did not join in the filing of a
Consolidated Return), and (ii) such Tax Benefit reduces the liability of the Consolidated Group for
Federal Income Taxes or Consolidated State Income Taxes (with such reduction in liability being
measured as the excess, if any, of (x) such liability computed as though the XO Group had never
been included in a Consolidated Return with the Consolidated Group over (y) such liability), then,
subject to the succeeding sentence, Parent shall pay to XO an amount equal to 30% of the amount of
such reduction within 30 days after the filing of such Consolidated Return; provided that such
calculation shall be subject to any Final Determination affecting computation of any item included
in such calculation and any limitations on the
utilization of tax attributes (including, without limitation, such carryforwards and any
limitations on the utilization of depreciation, amortization or other similar deductions) of the XO
Group imposed by law. Notwithstanding the foregoing, aggregate payments pursuant to the preceding
sentence shall be required only with respect to the first $900,000,000 of Tax Benefits that reduce
the liability of the Consolidated Group for Federal Income Taxes or Consolidated State Income

5

 

Taxes
(the “Section 4(d) Amount”). It is intended that payments under this Section 4(d) shall be
characterized for tax purposes as contributions to capital by Parent to XO, and the parties shall
not take any position inconsistent with such characterization. Notwithstanding the foregoing, this
Section 4(d) shall not obligate Parent to make any payment on account of any Prior Consolidation
Tax Benefit or any Excess XO Tax Benefits; payments on account of Prior Consolidation Tax Benefits
and Excess XO Tax Benefits shall instead be governed by Section 6.

5. Adjustments During Consolidation.

     (a) In the event of a Final Determination with respect to the tax liability of the
Consolidated Group, appropriate adjustments (including, without limitation, adjustments to XO’s
payment obligation under Section 4(a) and to Parent’s payment obligations under Section 4(d))
shall, except as inconsistent with this Agreement, be made hereunder consistent with such Final
Determination. Further, XO shall pay to Parent any interest, penalties and additions to tax imposed
in connection with a Final Determination to the extent that such amounts are attributable to items
of XO or its subsidiaries. Similarly, Parent shall pay XO any interest received from a governmental
authority in connection with a Final Determination that there has been an overpayment, together
with the amount of any refund received, to the extent attributable to items of XO or its
subsidiaries.

     (b) Payments under this Section 5 shall be made promptly after the amounts thereof are
determined. For purposes of this Agreement, any Net Operating Loss, Net Capital Loss, or Credit
shall be carried forward.

6. Adjustments After Deconsolidation For Prior Consolidation Tax Benefits.

     (a) If there is a change in the ownership of the stock of XO or other event (a
“Deconsolidation Event”) and XO ceases to join in the filing of Consolidated Federal Returns and
where applicable, Consolidated State Returns with Parent, and any member of the XO Group would have
been entitled, if XO had never joined in the filing of such Consolidated Returns, to carry forward
to a taxable year (“Post-Consolidation Year”) which is not a taxable year for which XO joined in
the filing of such Consolidated Returns, a Prior Consolidation Tax Benefit or Excess XO Tax Benefit
(“Non-Available XO Carryforward Items”), then no later than April 15 following each
Post-Consolidation Year, Parent shall be obligated to pay to XO an amount equal to the excess of
(i) the XO Group’s actual Federal Income Taxes and, where applicable, actual State Income Taxes for
such Post-Consolidation Year over (ii) such Federal Income Taxes and, where applicable, State
Income Taxes for such Post-Consolidation Year computed as if such Non-Available XO Carryforward
Items were available to the XO Group. The calculation in Section 6(a)(ii) above shall be subject to
any audit adjustments and any limitations on the utilization of the Non-Available XO Carryforward
Items imposed by law (including, without limitation, any such limitation imposed or which would
have been imposed as a result of the Deconsolidation Event). It is intended that payments under
this Section 6(a) shall be
characterized for tax purposes as contributions to capital by Parent to XO, and the parties
shall not take any position inconsistent with such characterization.

     (b) Parent shall not be required to make payments to XO under Section 6(a) to the extent that
such payments would cause cumulative payments made by Parent to XO under

6

 

Section 6(a) to exceed the
cumulative reductions in Federal Income Taxes and, where applicable, Consolidated State Income
Taxes, of the Consolidated Group which resulted from the inclusion of the XO Group in the
Consolidated Group during the Prior Benefit Period or from the Consolidated Group’s use of Excess
XO Tax Benefits. Such cumulative reductions shall be determined (i) by deeming the reduction in
State Income Taxes (if any) to be reduced by any corresponding increase in Federal Income Taxes;
(ii) without any adjustment for an increase or reduction in Federal Income Taxes (and, where
applicable, Consolidated State Income Taxes) resulting from the Deconsolidation Event; and (iii) by
apportioning the reduction in Federal Income Taxes and, where applicable, Consolidated State Income
Taxes, resulting from the use of Tax Benefits of members of the XO Group and non-members in
accordance with the principles of the federal income tax consolidated return regulations (and
similar provisions of applicable state tax law) that determine the Tax Benefits that would be
attributed to a member in the event such member ceases to be a member of the consolidated group.

7. Certain Transactions.

     Notwithstanding anything in this Agreement to the contrary, in the event of the occurrence of
any transaction the result of which is that there are no longer any holders (other than Parent and
its Affiliates or any other single person or “group” as such term is used in Rule 13D under the
Securities Exchange Act of 1934) of equity securities of XO, all of Parent’s payment obligations
under this Agreement shall terminate immediately prior to the transaction and for purposes of
Section 4(a) of this Agreement, the computation of the XO Group Taxes shall not give effect to any
Net Operating Loss, Net Capital Loss or Credits carryforwards referred to in the second sentence
thereof. For the purpose of determining holders of equity securities pursuant to this Section 7,
neither (x) warrantholders who have no right to receive equity securities of XO on exercise thereof
nor (y) the holders of equity securities of the acquiring company, shall be considered holders of
equity securities.

8. Late Filing.

     Notwithstanding any other provisions of this agreement, Parent shall indemnify and hold
harmless the XO Group against any interest or penalties incurred by reason of late filing of any
Consolidated Return for the Consolidated Group, or by reason of late payment of any tax or
estimated tax for the Consolidated Group, unless such late filing or late payment is due to the
fault of XO or any other member of the XO Group.

9. State Taxes.

     XO and each of the XO Subsidiaries shall continue to prepare and file all applicable state tax
returns, at their own expense, and to pay, or cause its subsidiaries to so prepare, file and pay,
all amounts shown to be due thereunder unless Parent elects to have XO and/or members of the XO
Group file state and/or local tax returns on a consolidated or combined basis with Parent.

10. Accounting.

     (a) For the purpose of the computation of assumed tax liabilities herein, all payments made
(i) by Parent to XO and (ii) by XO to Parent, pursuant to the provisions thereof shall not be
considered income to the recipient of the payment or an expense of the payor, but rather shall be

7

 

considered the payment of a tax. Any difference between a Consolidated Group member’s tax liability
under this Agreement and such member’s liability under Treasury Regulation Sections 1.1502-33 and
1.1552-1 shall be treated as a distribution with respect to its stock or as a contribution to its
capital, as the case may be.

     (b) The calculation of the amounts hereunder shall be determined by Parent; provided, however,
that if XO disputes such determination, a mutually acceptable nationally recognized accounting firm
shall determine such amounts.

11. Parties.

     Any corporation which is an XO Subsidiary on the date hereof or which becomes an XO Subsidiary
at any time subsequent to such date shall automatically be subject to the terms and conditions of
this Agreement. If any entity other than Parent shall become the common parent of the affiliated
group of corporations for federal income tax purposes which includes members of the XO, Parent
shall cause such entity to enter into an agreement substantially identical to this Agreement with
XO.

12. Notices.

     All notices, requests, consents and other communications hereunder shall be in writing and
shall be deemed to have been duly and properly given or sent (a) on the date when such notice,
request, consent or other communication is personally delivered with receipt acknowledged, or (b)
if mailed, three days after the date on which the same is deposited in a post office box and sent
by certified or registered mail, return receipt requested, postage prepared and addressed to the
party for whom intended at its address set forth below or to such other address or addresses as any
of the parties hereto shall theretofore designated by notice hereunder.

If to Parent, at:

Starfire Holding Corporation

767 Fifth Avenue

New York, New York 10153

If to XO or the XO Subsidiaries, at:

XO Holdings, Inc.

13865 Sunrise Valley Drive,

Herndon, Virginia 20171

13. Entire Agreement.

     This agreement (a) contains the entire understanding of the parties hereto with respect to the
subject matter hereof, (b) shall be governed by and construed in accordance with the laws of the
State of New York applicable to contracts made and performed therein, and (c) shall be
binding upon and inure to the benefit of the parties hereto and their respective successors
and assigns.

     This agreement supersedes all other agreements, whether or not written, in respect of any tax
between or among any member or members of the Consolidated Group, on the one hand, and

8

 

any member
or members of the XO Group, on the other hand. All such other agreements, including, but not
limited to, that certain Tax Allocation Agreement by and among Parent and XO Communications, Inc.,
dated January 16, 2003, are hereby canceled and any rights or obligations existing thereunder are
hereby fully and finally settled by entry into this Agreement without any payment by any party
thereto.

14. Amendments.

     This Agreement may not be modified, changed or amended except by a writing signed by all
parties hereto.

15. Further Assurances.

     Each of the parties hereto agrees to execute, acknowledge, deliver, file, record and publish
such further certificates, instruments, agreements and other documents, and to take all such
further actions as may be required by law or deemed necessary or useful in furtherance of the
objectives and intentions underlying this Agreement and not inconsistent with the terms hereof.

16. Captions.

     Captions are inserted for convenience only and shall not be given any legal effect.

9

 

     IN WITNESS WHEREOF, the parties have executed this Agreement as of July 25, 2008.

	 	 	 	 	 
	 	STARFIRE HOLDING CORPORATION

 	 
	 	By:  	/s/ Keith Cozza
 	 
	 	 	Name:  	Keith Cozza 	 
	 	 	Title:  	Treasurer 	 
	 

	 	 	 	 	 
	 	XO HOLDINGS, INC.

 	 
	 	By:  	/s/ Carl J. Grivner
 	 
	 	 	Name:  	Carl J. Grivner 	 
	 	 	Title:  	Chief Executive Officer 	 
	 

10

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