Document:

exv10w8

 

Exhibit 10.8

EMPLOYMENT AGREEMENT

     This Employment Agreement is entered into by and among John H.
Jacquay (“Executive”) and XO Communications, Inc., a Delaware
corporation (the “Company” or “Employer”) this 20th day of November
2002 (the “Commencement Date”).

WITNESSETH:

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

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

     WHEREAS, Employer desires to obtain Executive’s services for the
conduct of the business of the Company, 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 to serve as the President, National Sales for the company
(although Executive’s corporate office title is and shall continue to
be Senior Vice President, National Sales) as of February 22, 2002, and
that the parties have agreed to enter into this Employment Agreement as
of the Commencement Date and in connection with Executive’s
responsibilities as President, National Sales.

     2. Duties.

          (a) Executive shall report directly to the Company’s President and
Chief Operating Officer and shall perform his services within the
framework of the policies, objectives and Bylaws of the company.
Executive’s base of operation shall be at the company’s corporate
headquarters in Reston, Virginia. In his corporate capacity, Executive
(i) shall exercise general supervisory responsibility and management
authority over the Company’s national sales organization, and (ii)
shall perform such other duties commensurate with his position as may
be assigned to him from time to time by the Company’s President and
Chief Operating 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.

     3. Term.
The term of this Employment Agreement shall commence on the
commencement Date and, unless terminated earlier pursuant to paragraph
10 hereof, shall continue through November 20, 2004 (the “Initial
Term”), and unless notice is given by either party at least sixty (60)
days prior to the end of the Initial Term that it desires that this
Employment Agreement terminate at the end of the Initial Term, shall
continue thereafter 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, or

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(ii) Executives employment is otherwise terminated pursuant to
paragraph 10 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, PICA 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 55% 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. Executive
acknowledges and agrees that, unless notified by Employer to the
contrary, Employer shall replace
the Annual Bonus for 2002 and 2003 with a retention bonus plan in
connection with XO’s plan of reorganization in its Chapter 11
proceeding and its stand-alone plan of reorganization (the “Retention
Bonus Plan”) and in such event Executive shall be entitled to any
amounts due as specified and in accordance with the Retention Bonus
Plan in lieu of any right to the Annual Bonus for 2002 and 2003. Unless
notified by Employer to the contrary, the term Annual Bonus shall
globally be replaced with the term Retention Bonus (and the terms of
the Retention Bonus Plan shall govern such Bonus) and Executive agrees
that the replacement of the Annual Bonus for 2002 and 2003 with the
Retention Bonus as specified in this paragraph shall not constitute
Constructive Termination.

          (c) Equity Incentive Compensation. The Compensation Committee may,
in its discretion, grant to Executive, pursuant to any stock option plan
of the Company, options to acquire shares of the Company’s common stock
and/or awards of restricted stock of the Company (collectively, “Equity
Awards”). The terms and conditions of such Equity Awards shall be
pursuant to such applicable stock option plan and as determined by the
Company in its sole discretion.

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     5. 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
or its subsidiaries and provided generally to the Company’s 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.

     6. Expenses: Relocation.

          (a) Travel and Entertainment 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.

          (b) Relocation Expenses. Employer shall reimburse Executive for
relocation expenses incurred in connection with his relocation from the
San Francisco, California area to the Reston, Virginia area in
accordance with Employer’s relocation policy as it applies generally to
the Company’s executive officers (as amended or modified from time to
time, the “Relocation Policy”), subject to the additional terms and
conditions of this paragraph 6(b). Employer agrees and acknowledges
that Executive desires to delay his relocation temporarily, and
Executive agrees and acknowledges that (i) he must make use of any
relocation benefits to which he may be entitled pursuant to the
Relocation Policy or this Employment Agreement by July 31, 2003, and
(ii) he will forfeit all rights with respect to any such relocations
benefits,
including any right of expense reimbursement, if he fails to make
use of such relocation benefits by July 31, 2003; provided, however,
that Employer shall reimburse relocation expenses, so long as Executive
incurs a relocation related expense for which he is entitled to
reimbursement pursuant to the Relocation Policy or the terms of this
Employment Agreement prior to July 31, 2003 and applies for expense
reimbursement promptly thereafter, in accordance with Employer’s
policies and procedures with respect to expense reimbursement. Until
the earlier of August 31, 2003 or the date that Executive has
relocated to Reston, Virginia, Employer will reimburse Executive for
the cost of leasing a temporary studio-type apartment in the Reston,
Virginia area and travel to and from Executive’s residence in the San
Francisco area; provided, however, that (i) such reimbursement for the
apartment shall not exceed $2,500 per month, and (ii) one-half of the
aggregate amount of such lease expense reimbursed by Employer shall be
deducted from the amount of expense reimbursement to which Executive
would otherwise be entitled to under the Relocation Policy. If, within
one (1) year of the date that Executive commences his relocation,
Executive voluntarily terminates his employment, other than with
respect to a Constructive Termination (as defined below), or Employer
terminates Executive’s employment for Cause, Executive agrees to
reimburse Employer the full cost of all relocation expenses for which
Executive was reimbursed by Employer. By executing this Employment
Agreement, Executive consents to Employer deducting such relocation
costs subject to reimbursement from Executive’s final payment of Base
Salary or other compensation.

     7. 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).

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     8. Non-Competition; Non-Solicitation

          (a) During the Employment Term and (except as provided in
paragraph 10 herein) for a period of two years thereafter, Executive
shall not enter into or participate in any business competitive to the
business carried on by the Company or any of its subsidiaries.

          (b) During the Employment Term and (except as provided in
paragraph 10 herein) for a period of two 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, (ii) 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 transaction in which the
Company or any of its affiliates was involved during the Employment
Tern,.

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

     9. 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 9 shall survive the
expiration and/or termination of this Employment Agreement.

     
10. Termination.

          (a) Automatic Termination Upon Death. In the event of Executive’s
death during the Employment Term, Executive’s employment hereunder
shall he 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 20) (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.

          
(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
he 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 60 days prior written notice to Executive.

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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 the Company’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 least
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 10(b) shall be effective is set forth in subparagraph
10(d) and the effect of any such termination shall be as described in
subparagraphs 10(e), (f) and (g).

          
(c) Termination by Executive. 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 sixty (60) days 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 Employment 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 10(c) shall be effective is set forth in subparagraph
10(d), and the effect of any such termination shall be as described in
subparagraph 10(g).

     
     
(d) Termination Date. In the event Executive’s employment hereunder
is terminated for circumstances constituting Cause, Permanent
Disability or Constructive Termination, 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
if appropriate.

          
(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 10(c), at any time during the Employment Term, then
Employer shall pay to Executive his accrued but unpaid Base Salary and
Annual Bonus through the Termination Date.

          
(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.

          
(g) Effect of Wrongful or Constructive Termination. In the event
Executive’s employment is terminated during the Employment Term (x) by
Employer for any reason other than death, Permanent Disability or
Cause, or (y) by Executive in circumstances constituting Constructive
Termination, then, from and after such Termination Date:

               (i) Executive shall not be subject to the
non-competition
provisions set forth in paragraph 8 hereof.

               (ii) Executive shall he entitled to receive the Base Salary,
Annual Bonus, and benefits, which Executive reasonably would have
expected to receive in the period from the Termination Dale to the
expiration of the Initial Term (if such Termination Date occurs more
than six (6) months prior to the expiration of the

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Initial Term) or for a period of six (6) months following the
Termination Date (if such Termination Date occurs after the initial
Term or within the six-month period prior to the expiration of the
initial Term), all of which shall be paid upon the Termination Date.

     The foregoing shall be Executive’s sole and exclusive remedy for
any such termination of his employment under this subparagraph 10(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 to the Termination Date; and (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.

          (i) No
Set-off; No Duty of Mitigation. Subject to paragraph 6(h),
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
10(f) and (g) above). In the event of any termination of Executive’s employment under
this paragraph 10, 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.

     11. 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.

     12. 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 judgement 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

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  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. Employer shall pay for and bear the cost of
    its own and Executive’s experts, evidence and counsel in 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.
  
     13. Indemnification.

  
          (a) The
    Company (the “Indemnifying Party”) 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 Company or of any of its 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 Company (a “Proceeding”)

  
          (b) The Indemnifying Party shall advance to Executive all
reasonable costs and expenses incurred by him in connection with a
Proceeding within 20 days after receipt by the Indemnifying Party 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
the Indemnifying Party 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 the Certificate of Incorporation or Bylaws of the Indemnifying Party, any
    insurance maintained by the Company from time to time providing coverage to
    Executive and ether officers and directors of the Company, or any separate
    written agreement between Executive and the Company or one of its controlled
    affiliates. The provisions of this paragraph 13 shall survive any termination
    of this Employment Agreement.
  
     14. Amendment
    and Modification. This Employment Agreement 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, this Employment Agreement may be amended, modified
    and
  
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supplemented by written agreement of Employer and Executive with
respect to any of the terms contained herein.

  
     15. 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.
  
     16. 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 Emoloyer:

	 	If to Executive:
	XO Communications, Inc.

	 	John H. Jacquay
	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 aforesaide.
  
     17. 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
    20.
  
     18. 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.
  
     19. 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.
  
     20. 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 (“Executives Representative”)
    solely for the purpose of providing a clear mechanism for
  
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the exercise of Executive’s rights hereunder in the Case of
Executive’s death Or Permanent Disability.

     21. Bankruptcy
    Court Approval. Although the Company believes it may enter into this Employment
    agreement in the ordinary course of its Business, out of an abundance of caution,
    the Company shall seek Bankruptcy Court approval hereof.
  
     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.

By: /s/ DANIEL F. AKERSON

    Name:Daniel F. Akerson

Title: Chairman and Chief Executive Officer

  

/s/ JOHN
H. JACQUAY          

John H. Jacquay

 

10exv10w9

 

Exhibit 10.9

EMPLOYMENT AGREEMENT

     This
Employment Agreement is entered into by and between Gary D. Begeman
(“Executive”) and NEXTLINK Communications, Inc., a Delaware corporation
(“Employer” or the “Company”), to be effective on
and as of November 20, 1999.

WITNESSETH:

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

     WHEREAS, Executive has skills and experience in legal matters generally
and with NEXTLINK’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 hereby employs Executive as Vice President
and General Counsel, and Executive hereby accepts such employment upon
the terms and conditions hereinafter set forth.

     2.     Duties.

          a. Executive shall serve as Vice President and General Counsel, and
Secretary to the Board of Directors of Employer, and shall perform his
services as such within the framework of the policies, objectives and Bylaws of Employer.

          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. Notwithstanding the
foregoing, Executive may be a party to, and perform the services contemplated by, the
Consulting Services Agreement dated as of November 20, 1999 between Executive and
NEXTEL Communications, Inc.

     3.     Term. The term of this Employment Agreement shall commence on the
date hereof (the “Commencement Date”) and, unless terminated earlier pursuant
to paragraph 12 hereof, shall continue through November 20, 2002 (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

1

 

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 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 (with the first such review to occur during September, 2000) 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 and/or the Board of Directors in their complete
discretion, with a target of 60% of the Base Salary payable during such Annual Bonus
Period, based on executive’s performance against objectives for the prior year of service.
Notwithstanding the foregoing, the Annual Bonus for 2000, based on
performance during Executive’s employment during 1999 and payable before February 28, 2000,
shall be $110,000. Each Annual Bonus shall be payable in accordance with Employer’s
normal annual bonus payment schedule (except as modified by the prior
sentence), 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. Employer agrees to grant 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
100,000 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,
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

2

 

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 execution of
this Agreement and subject to the terms and conditions set forth in this
paragraph 4(c), the Employer shall grant to Executive, pursuant to the Plan, an
option to acquire another 68,000 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”.

3

 

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

	 	 	 	 	 
	Number of Years of Continuous	 	Shares Available
	Employment from the Effective	 	upon Exercise of the
	Date of this Agreement	 	Compensatory Option
	
	 	

	1
	 	 	25,000	 
	2
	 	 	25,000	 
	3
	 	 	25,000	 
	4
	 	 	25,000	 

	 	 	 	 	 
	 	 	Shares Available
	 	 	upon Exercise of the
	Vesting Date	 	Inducement Options
	
	 	

	 March 31, 2001
	 	 	39,200	 
	 March 31, 2002
	 	 	18,400	 
	 March 31, 2003
	 	 	10,400	 

                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, (x) permanent disability
(as defined below) or (y) death or (z) by Executive upon establishment of
Constructive Termination or upon a Change in Control, 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 upon a Change in Control, vesting of the Options shall occur
upon the consummation of such Change in Control, or upon final effectiveness of
such Constructive Termination.

          (v) Exercise
of, Options. Executive’s right to exercise the Options
shall be governed by the terms of the Employer’s Stock Option Plan and the
individual option letter agreements issued to Executive.

4

 

          (vi) Withholding. Upon the vesting of any Compensatory Options, or in
connection with the exercise of any Inducement 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 Compensatory
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 Inducement Options, as appropriate,
to all references to numbers of Compensatory Options and/or to the number of
shares covered by the Inducement 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;

               (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.

5

 

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 a report filed on Schedule 13D or Schedule 14D-1
(or any successor schedule, form or report), each as promulgated pursuant
to the Securities Exchange Act of 1934, as amended (the “Exchange Act”),
disclosing that any person (as the term “person” is used in Section 13(d)(3) or Section
14(d)(2) of the Exchange Act) other than Craig 0. 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 the
Ampersand Trust
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 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

6

 

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. During the Employment Term and (except as provided
in paragraph 72 herein) for a period of two years thereafter, Executive
shall not enter into or participate in any business competitive to the Business carried on
by Employer, provided that this paragraph 10 shall not prohibit Executive, after the
Employment Term, from engaging (whether alone or as member of or in association with a law
firm) in the private practice of law, or otherwise providing legal services to any
person, entity, group or organization in any manner not involving a breach of Executive’s
obligations pursuant to paragraph 11 hereunder. 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,

7

 

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 (other than
the Inducement 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 6 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 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.

8

 

               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 least 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) or upon a
Change of Control, 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 or upon a Change of Control, 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 responsibilities
that is inconsistent with Executive’s Intended position and status hereunder,
or (iii) 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.

               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,
Change of Control or Constructive Termination, 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

9

 

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 thirtieth 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.

               (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.

10

 

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

               (1) In the event Executive’s employment is terminated during the
Employment Term by Employer other than for Cause, or by Executive in
circumstances constituting Constructive Termination or upon a Change of
Control, 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 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 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 which 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. Excess Parachute Payment. In the event that Employer treats any
portion of Executive’s payments or benefits hereunder (Including, without
limitation, under the foregoing subparagraphs 12(f) and (g)) as an “excess
parachute payment” within the meaning of Section 280G of the internal Revenue
Code (“Code”) or any comparable provision of state or local tax law, or it is
otherwise asserted (Including on an audit of either Employer or Executive) that
any portion of such payments or benefits is such an “excess parachute payment,”
Employer shall prior to the date on which any amount of excise tax (or penalty
or interest) must be paid In respect thereof, promptly make an additional lump
sum payment in cash to Executive in an amount sufficient, after giving effect
to all federal, state and other taxes and charges (including Interest and
penalties, if any) with respect to such payment to make Executive whole for all
taxes (including withholding and social security taxes) imposed under Section
4999 of the Code, or any comparable provision of state or local tax law, with
respect to the “excess parachute payment” and all associated interest and
penalty amounts. Executive shall cooperate in all reasonable respects with
Employer to attempt to minimize any such tax liability.

          i. 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

11

 

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 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.

          j.
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

12

 

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 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.     Identification.

          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 he 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

13

 

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.

     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:
	
	 	

	NEXTLINK Communications, Inc.	 	
Gary D. Begeman
	City Center Office	 	
12847 Parapet Way
	500 108th Avenue NE, Suite 2200	 	
Oak Hill, VA 20171
	Bellevue, WA 98004	 	
Facsimile: 703-648-0045
	Facsimile: (425) 519-7978	 	 
	Attention: President & CEO	 	 

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.

	 	 	 
	 	 	
NEXTLINK COMMUNICATIONS, INC.
	 	 	 
	 	 	
By: 
	 	 	

	 	 	
Name: Daniel Akerson
	 	 	
Title:   President & CEO

	 	 
	 	
	 	

	 	Gary D. Begeman

15

 

ANNEX A

To

Employment Agreement

between

NEXTLINK Communications, Inc.

and

Gary D. Begeman

Dated: November 22 _____, 1999

	 	 	 	The Inducement Options shall be granted as follows:
	 
	 	 	 	Non-qualified Options to acquire [68,000] shares for Employer
Class A Common Stock awarded on November 22, 1999. The Compensatory
Options shall vest annually in three equal amounts on March 1, 2001,
2002, and 2003. The exercise price of the Compensatory Options is
[$.01] per share.
	 
	 	 	 	The Compensatory Options shall be
granted as follows:
	 
	 	 	 	Non-qualified options to acquire 100,000 shares of Employer Class A
Common Stock awarded on November 22, 1999. The Compensatory Options
shall vest annually in four equal amounts on the first, second,
third and fourth anniversary dates of the effective date of the
Employment Agreement. The exercise price of the Compensatory Options
is the closing sale price on November 22, 1999, 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 a Change of Control Event

               All Options (upon vesting) will have an exercise period of ten (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 NEXTLINK Communications, Inc. Stock Option Plan.

16

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