ICG COMMUNICATIONS, INC.

                             1998 STOCK OPTION PLAN

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                         Effective as of January 1, 1998







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                            ICG Communications, Inc.

                             1998 Stock Option Plan


                                  INTRODUCTION

     ICG Communications,  Inc., a Delaware corporation  (hereinafter referred to
as the "Corporation"),  hereby establishes an incentive  compensation plan to be
known as the "ICG  Communications,  Inc.  1998 Stock Option  Plan"  (hereinafter
referred to as the "Plan"), as set forth in this document.  The Plan permits the
grant of Non-Qualified Stock Options and Incentive Stock Options.

     The  purpose of the Plan is to promote the success and enhance the value of
the  Corporation by linking the personal  interests of  Participants to those of
the Corporation's  stockholders by providing  Participants with an incentive for
outstanding performance.  The Plan is further intended to assist the Corporation
in its ability to motivate,  and retain the services of, Participants upon whose
judgment,  interest and special effort the successful  conduct of its operations
is largely dependent.


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                                   DEFINITIONS

     For purposes of this Plan, the following  terms shall be defined as follows
unless the context clearly indicates otherwise:

     A. "Code" shall mean the Internal Revenue Code of 1986, as amended, and the
rules and regulations thereunder.

     B.  "Committee"  shall  mean the  Stock  Option  Committee  of the Board of
Directors of the Corporation.

     C.  "Common  Stock"  shall mean the common  stock,  $.01 par value,  of the
Corporation.

     D.  "Corporation"   shall  mean  ICG   Communications,   Inc.,  a  Delaware
corporation.

     E. "Director  Participant"  shall mean a director of the  Corporation or of
any Parent or  Subsidiary  on the date of a grant of Options  under Section V(B)
hereof who is not a common law  employee of the  Corporation,  any Parent or any
Subsidiary.

     F.  "Disability"  shall have the same  meaning as the term  "permanent  and
total disability" under Section 22(e)(3) of the Code.

     G.  "Exchange  Act"  shall mean the  Securities  Exchange  Act of 1934,  as
amended, and the rules and regulations thereunder.

     H.  "Executive"  shall mean an employee of the Corporation or of any Parent
or Subsidiary  whose  compensation  is subject to the deduction  limitations set
forth under Code Section 162(m).

     I. "Fair Market Value" of the  Corporation's  Common Stock on a Trading Day
shall mean the last  reported  sale  price for Common  Stock or, in case no such
reported  sale takes place on such  Trading  Day, the average of the closing bid
and asked  prices for the Common  Stock for such  Trading Day, in either case on
the  principal  securities  exchange  on which  the  Common  Stock is  listed or
admitted to trading, or if the Common Stock is not listed or admitted to trading
on any securities exchange,  but is traded in the  over-the-counter  market, the
closing sale price of the Common Stock or, if no sale is publicly reported,  the


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average  of the  closing  bid and asked  quotations  for the  Common  Stock,  as
reported by the National  Association of Securities Dealers Automated  Quotation
System ("NASDAQ") or any comparable system or, if the Common Stock is not listed
on NASDAQ or a comparable system, the closing sale price of the Common Stock or,
if no sale is  publicly  reported,  the  average  of the  closing  bid and asked
prices,  as furnished by two members of the National  Association  of Securities
Dealers,  Inc. who make a market in the Common Stock  selected from time to time
by the  Corporation  for  that  purpose.  In  addition,  for  purposes  of  this
definition,  a "Trading  Day" shall mean,  if the Common  Stock is listed on any
securities  exchange,  a business  day during  which such  exchange was open for
trading and at least one trade of Common Stock was effected on such  exchange on
such  business  day,  or, if the  Common  Stock is not  listed  on any  national
securities exchange but is traded in the over-the-counter market, a business day
during which the  over-the-counter  market was open for trading and at least one
"eligible  dealer"  quoted both a bid and asked price for the Common  Stock.  An
"eligible  dealer" for any day shall include any broker-dealer who quoted both a
bid and asked price for such day,  but shall not include any  broker-dealer  who
quoted  only a bid or only an  asked  price  for  such  day.  In the  event  the
Corporation's Common Stock is not publicly traded, the Fair Market Value of such
Common Stock shall be determined by the Committee in good faith.

     J. "Good Cause" shall mean (i) a Participant's  willful or gross misconduct
or  willful  or  gross  negligence  in the  performance  of his  duties  for the
Corporation  or for any Parent or Subsidiary  after prior written notice of such
misconduct or  negligence  and the  continuance  thereof for a period of 30 days
after  receipt  by  such  Participant  of  such  notice,  (ii)  a  Participant's
intentional  or habitual  neglect of his duties for the  Corporation  or for any
Parent or  Subsidiary  after prior written  notice of such  neglect,  or (iii) a
Participant's  theft or  misappropriation  of funds of the Corporation or of any
Parent or Subsidiary or commission of a felony.

     K.  "Incentive  Stock  Option"  shall mean a stock  option  satisfying  the
requirements for tax-favored treatment under Section 422 of the Code.

     L. "Non-Qualified  Option" shall mean a stock option which does not satisfy
the  requirements  for,  or which is not  intended to qualify  for,  tax-favored
treatment under Section 422 of the Code.

     M.  "Option" or "Plan  Award"  shall mean an  Incentive  Stock  Option or a
Non-Qualified  Stock  Option  granted  pursuant to the  provisions  of Section V
hereof.

     N.  "Optionee"  shall mean a Participant who is granted an Option under the
terms of this Plan.

     O. "Outside  Directors" shall mean members of the Board of Directors of the
Corporation  who are classified as "outside  directors"  under Section 162(m) of
the Code.

     P. "Parent" shall mean a parent  corporation of the Corporation  within the
meaning of Section 424(e) of the Code.

     Q.  "Participant"  shall mean any employee of the Corporation or any Parent
or Subsidiary, or a Director Participant, participating under the Plan.

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     R. "Plan Quarter"  shall mean the three  calendar  month periods  beginning
January 1st, April 1st, July 1st and October 1st.

     S.  "Retirement"  shall mean the termination of employment by a Participant
in the Plan from the  Corporation or from any Parent or  Subsidiary,  who at the
time of such  termination is at least  fifty-five  (55) years of age and who has
completed at least ten (10) years of service (at least 1,000 hours in any fiscal
year) with the  Corporation  or any  Parent or  Subsidiary,  or any  combination
thereof.

     T. "Securities Act" shall mean the Securities Act of 1933, as amended,  and
the rules and regulations thereunder.

     U.  "Subsidiary"  shall mean a subsidiary  corporation  of the  Corporation
within the meaning of Section 424(f) of the Code.


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                                   SECTION I.
                                 ADMINISTRATION

     The Plan shall be  administered  by the Committee,  which shall be composed
solely of at least two  Non-Employee  Directors,  as defined in Rule 16b-3(b)(3)
promulgated  under the Exchange Act, and who also qualify as Outside  Directors.
Subject to the  provisions of the Plan, the Committee may establish from time to
time such regulations,  provisions,  proceedings and conditions of awards which,
in its opinion,  may be advisable in the  administration of the Plan. A majority
of the Committee shall  constitute a quorum,  and,  subject to the provisions of
Section IV of the Plan,  the acts of a majority  of the  members  present at any
meeting at which a quorum is present,  or acts approved in writing by a majority
of the Committee, shall be the acts of the Committee.

                                   SECTION II.
                                SHARES AVAILABLE

     Subject  to  the  adjustments  provided  in  Section  VI of the  Plan,  the
aggregate  number of shares of the Common  Stock  which may be  granted  for all
purposes  under the Plan  shall be  3,400,000  shares.  Shares  of Common  Stock
underlying  awards of Options shall be counted  against the limitation set forth
in the immediately  preceding  sentence and may be reused to the extent that (i)
an Option expires, is terminated unexercised,  or is forfeited or (ii) shares of
Common Stock are returned to the Corporation's  treasury as a result of any form
of "cashless"  exercise of Options or tax withholding of shares permitted by the
Committee  under Section IV hereof.  Incentive and  Non-Qualified  Stock Options
awarded under the Plan may be fulfilled in accordance with the terms of the Plan
with either authorized and unissued shares of the Common Stock, issued shares of
such Common Stock held in the  Corporation's  treasury or shares of Common Stock
acquired on the open market.

                                  SECTION III.
                                   ELIGIBILITY

     Officers  and  employees  (including  officers  or  employees  who are also
directors) of the Corporation, or of any Parent or Subsidiary, who are regularly
employed  on a  salaried  basis as common law  employees  shall be  eligible  to
participate  in the Plan.  Directors  of the  Corporation,  or of any  Parent or
Subsidiary, who are not common law employees of the Corporation or of any Parent
or Subsidiary shall also be eligible to participate in the Plan, but only to the
extent  provided  under Section V(B) hereof and,  where  appropriate  under this
Plan,  shall be referred to as  "employees"  and their  service as  directors as
"employment".

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                                   SECTION IV.
                             AUTHORITY OF COMMITTEE

     The  Plan  shall be  administered  by,  or  under  the  direction  of,  the
Committee,  which  shall  administer  the Plan so as to comply at all times with
Section  16 of the  Exchange  Act  and the  rules  and  regulations  promulgated
thereunder,  to the extent such compliance is required, and shall otherwise have
plenary authority to interpret the Plan and to make all determinations specified
in  or  permitted  by  the  Plan  or  deemed  necessary  or  desirable  for  its
administration  or for the conduct of the Committee's  business.  Subject to the
provisions of Section X hereof,  all  interpretations  and determinations of the
Committee  may be made on an  individual  or group  basis  and  shall be  final,
conclusive  and  binding  on all  interested  parties.  Subject  to the  express
provisions of the Plan, the Committee shall have  authority,  in its discretion,
to determine  the persons to whom Plan Awards  shall be granted,  the times when
such Plan Awards shall be granted, the number of Plan Awards, the exercise price
of each  Plan  Award,  the  period(s)  during  which  such Plan  Award  shall be
exercisable  (whether in whole or in part), the restrictions to be applicable to
Plan  Awards  and the other  terms and  provisions  thereof  (which  need not be
identical).  In addition, the authority of the Committee shall include,  without
limitation, the following:

     A.  Financing.  The  arrangement of temporary  financing for an Optionee by
registered  broker-dealers,  under  the  rules and  regulations  of the  Federal
Reserve  Board,  for the purpose of assisting the Optionee in the exercise of an
Option,  such  authority  to  include  the  payment  by the  Corporation  of the
commissions of the broker-dealer;

     B. Procedures for Exercise of Option.  The  establishment of procedures for
an Optionee  (i) to exercise an Option by payment of cash or any other  property
acceptable  to the  Committee,  (ii) to have  withheld  from the total number of
shares of Common Stock to be acquired upon the exercise of an Option that number
of shares having a Fair Market Value, which, together with such cash as shall be
paid in respect of fractional  shares,  shall equal the option exercise price of
the total number of shares of Common Stock to be acquired, (iii) to exercise all
or a portion of an Option by  delivering  that number of shares of Common  Stock
already  owned by him having a Fair  Market  Value  which shall equal the Option
exercise  price for the portion  exercised  and, in cases where an Option is not
exercised  in its  entirety,  to permit the  Optionee  to deliver  the shares of
Common  Stock thus  acquired  by him in payment of shares of Common  Stock to be
received  pursuant to the exercise of  additional  portions of such Option,  the
effect of which shall be that an Optionee  can in  sequence  utilize  such newly
acquired  shares of Common Stock in payment of the exercise  price of the entire
Option, together with such cash as shall be paid in respect of fractional shares
and (iv) to engage in any form of "cashless" exercise.

     C. Withholding. The establishment of a procedure whereby a number of shares
of Common  Stock or other  securities  may be withheld  from the total number of
shares of Common  Stock or other  securities  to be issued  upon  exercise of an
Option,  or for the  tender  of cash or  shares  of  Common  Stock  owned by any


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Participant  to meet any  obligation of  withholding  for taxes  incurred by the
Optionee upon such exercise.

     D. Types of Plan  Awards.  The  Committee  may grant  awards in the form of
Incentive Stock Options and Non-Qualified Stock Options.

                                   SECTION V.
                                  STOCK OPTIONS

A.   For Employees.

     The  Committee  shall  have  the  authority,  in its  discretion,  to grant
Incentive Stock Options or to grant Non-Qualified Stock Options or to grant both
types of  Options.  No Option  shall be granted for a term of more than ten (10)
years.  Notwithstanding  anything contained herein to the contrary, an Incentive
Stock Option may be granted only to common law employees of the  Corporation  or
of any Parent or Subsidiary  now existing or hereafter  formed or acquired,  and
not to any  director or officer who is not also such a common law  employee.  In
order to satisfy the  "performance-based"  exception to the deduction limitation
under Code Section 162(m),  the maximum number of shares of Common Stock subject
to Options which may be granted to any single  Executive during any one calendar
year is 300,000.  The terms and  conditions  of the Options  shall be determined
from time to time by the Committee;  provided, however, that the Options granted
under the Plan shall be subject to the following:

          I. Exercise Price. The Committee shall establish the exercise price at
     the time any  Option  is  granted  at such  amount as the  Committee  shall
     determine;  provided,  however,  that the exercise  price for each share of
     Common Stock  purchasable under any Option which is intended to satisfy the
     performance-based  exception  to the  deduction  limitation  under  Section
     162(m) of the Code or any Incentive Stock Option granted hereunder shall be
     such amount as the Committee  shall, in its best judgment,  determine to be
     not less than one hundred percent (100%) of the Fair Market Value per share
     of Common Stock at the date the Option is granted;  and provided,  further,
     that in the case of an Incentive  Stock Option  granted to a person who, at
     the time such  Incentive  Stock Option is granted,  owns shares of stock of
     the Corporation or of any Parent or Subsidiary  which possess more than ten
     percent (10%) of the total  combined  voting power of all classes of shares
     of stock of the  Corporation or of any Parent or  Subsidiary,  the exercise
     price for each share of Common Stock shall be such amount as the Committee,
     in its best judgment,  shall  determine to be not less than one hundred ten
     percent  (110%) of the Fair Market  Value per share of Common  Stock at the
     date  the  Option  is  granted.  The  exercise  price  will be  subject  to
     adjustment in accordance with the provisions of Section VI of the Plan.

          (ii)  Payment of Exercise  Price.  The price per share of Common Stock
     with  respect  to each  Option  shall be  payable at the time the Option is
     exercised.  Such price  shall be payable in cash or  pursuant to any of the
     methods set forth in Sections  IV(A) or (B) hereof.  Shares of Common Stock
     delivered  to the  Corporation  in payment of the  exercise  price shall be


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     valued at the Fair Market Value of the Common  Stock on the date  preceding
     the date of the exercise of the Option.

          (iii) Employment Requirement.  Notwithstanding anything else contained
     herein,  each Option by its terms shall  require the  Optionee to remain in
     the continuous  full-time  employ of the  Corporation,  or of any Parent or
     Subsidiary,  for at  least  six (6)  months  from  the date of grant of the
     Option  before the right to exercise  any part of the Option (by him or any
     other person) will accrue.

          (iv)  Exercisability  of Options.  Each Option shall be exercisable in
     whole  or in  installments,  and  at  such  time(s),  and  subject  to  the
     fulfillment of any conditions on exercisability as may be determined by the
     Committee at the time of the grant of such  Options.  The right to purchase
     shares  of  Common  Stock  shall be  cumulative  so that  when the right to
     purchase any shares of Common Stock has accrued such shares of Common Stock
     or any part  thereof  may be  purchased  at any time  thereafter  until the
     expiration or termination of the Option. Unless otherwise determined by the
     Committee in its sole  discretion,  each Option granted  hereunder shall be
     exercisable,  on a cumulative basis, as to twenty-five percent (25%) of the
     shares of Common Stock set forth  thereunder on each of the first,  second,
     third and fourth anniversaries of the date such Option is granted.

          (v) Expiration of Options. No Option by its terms shall be exercisable
     after  the  expiration  of ten  (10)  years  from  the date of grant of the
     Option; provided, however, in the case of an Incentive Stock Option granted
     to a person who,  at the time such Option is granted,  owns shares of stock
     of the Corporation or of any Parent or Subsidiary  possessing more than ten
     percent (10%) of the total  combined  voting power of all classes of shares
     of stock of the  Corporation  or of any Parent or  Subsidiary,  such Option
     shall not be  exercisable  after the  expiration of five (5) years from the
     date such Option is granted.

          (vi)  Exercise  Upon Death of Optionee.  Subject to the  provisions of
     Sections  V(A)(iii) and V(A)(ix)  hereof,  in the event of the death of the
     Optionee  prior to his  termination of employment  with the  Corporation or
     with any Parent or  Subsidiary,  or within 3 (three)  months  following his
     Retirement,  his estate (or other beneficiary,  if so designated in writing
     by the  Participant)  shall have the  right,  within one (1) year after the
     date of death (but in no case after the expiration  date of the Option(s)),
     to exercise his Option(s)  with respect to all or any part of the shares of
     Common Stock as to which the deceased Optionee had not exercised his Option
     at the time of his death, but only to the extent the Option or Options were
     exercisable  as of the earlier of the date of his Retirement or the date of
     his death.

          (vii) Exercise Upon Disability of Optionee.  Subject to the provisions
     of  Sections  V(A)(iii)  and  V(A)(ix)  hereof,  if the  employment  by the
     Corporation  or by any Parent or  Subsidiary  of an Optionee is  terminated
     because of Disability,  he shall have the right,  within one (1) year after
     the date of such  termination  (but in no case after the  expiration of the
     Option(s)),  to exercise his  Option(s)  with respect to all or any part of


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     the shares of Common Stock as to which he had not  exercised  his Option at
     the time of such termination, but only to the extent such Option or Options
     were  exercisable  as of the date of his  termination  of employment due to
     Disability.

          (viii) Exercise Upon Optionee's  Termination of Employment.  Except as
     provided in the following sentence, if the employment of an Optionee by the
     Corporation  or by any Parent or Subsidiary  is  terminated  for any reason
     other than those  specified in Sections  V(A)(vi) and V(A)(vii)  above,  he
     shall  have the  right,  within  three  (3)  months  after the date of such
     termination (but in no case after the expiration date of the Option(s)), to
     exercise his Option(s) only with respect to that number of shares of Common
     Stock that he was  entitled  to  purchase  pursuant  to  Options  that were
     exercisable  immediately  prior to such  termination.  Notwithstanding  the
     provisions  of  the  immediately   preceding  sentence,  if  an  Optionee's
     employment is terminated by the  Corporation or by any Parent or Subsidiary
     for Good Cause,  the Optionee  shall,  at the time of such  termination  of
     employment, forfeit his rights to exercise all of such Option(s).

          (ix) Maximum Amount of Incentive Stock Options.  Each Plan Award under
     which  Incentive Stock Options are granted shall provide that to the extent
     the  aggregate  of the (a) Fair Market  Value of the shares of Common Stock
     (determined  as of the time of the  grant of the  Option)  subject  to such
     Incentive Stock Option and (b) the Fair Market Values (determined as of the
     date(s)  of grant of the  options)  of all other  shares  of  Common  Stock
     subject  to  incentive   stock  options  granted  to  an  Optionee  by  the
     Corporation  or any Parent or  Subsidiary,  which are  exercisable  for the
     first time by any person  during any calendar  year,  exceed(s) one hundred
     thousand dollars  ($100,000),  such excess shares of Common Stock shall not
     be deemed to be purchased pursuant to Incentive Stock Options. The terms of
     the immediately  preceding sentence shall be applied by taking options into
     account in the order in which they are granted.

B.   For Director Participants.

          (i) General  Provisions - Formula Grant Options.  Subject to the terms
     and  conditions  of this  Section  V(B),  as of January 1, 1998,  and as of
     January 1 of each succeeding calendar year through and including January 1,
     2007,  each  individual  who is serving  as a  Director  on such date shall
     automatically  be granted  Options to  purchase  twenty  thousand  (20,000)
     shares  of  Common  Stock,   subject  to   availability   under  the  Plan.
     Notwithstanding the foregoing, each individual who is serving as a Director
     and  receives   formula  grant   options  under  Section   V(B)(i)  of  the
     Corporation's 1996 Stock Option Plan, as amended,  shall not be eligible to
     receive  grants of Options under Section  V(B)(i) of this Plan covering the
     same periods. In the event that an individual becomes a Director during any
     Plan Quarter, but did not serve as a Director on January 1, such individual
     shall  automatically  be  granted,  as of the  date  of  election  of  such
     individual  as a  Director,  Options to  purchase  that pro rata  number of
     shares of Common Stock for such calendar year as a Director would otherwise
     be entitled  to receive  under this  Section  V(B)(i) (at the rate of 5,000
     shares per Plan  Quarter,  subject  to the last  sentence  of this  Section
     V(B)(i)).  Subject to the  provisions of Section VI  hereunder,  the option


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     price of the shares of Common  Stock  covered by each  Option  shall be the
     Fair  Market  Value of such  shares on the date of the grant.  Each  Option
     granted under this Section V(B)(i) by its terms shall expire ten (10) years
     from the date of its grant. Furthermore, an Option granted pursuant to this
     Section V(B)(i) shall become exercisable as to 5,000 shares of Common Stock
     covered  thereby on the last day of the Plan Quarter  during which the date
     of grant  occurs and as to 5,000 shares on the last day of each of the next
     succeeding Plan Quarters during such year, respectively,  but only if, with
     regard to the  shares of Common  Stock  with  respect  to which the  Option
     becomes exercisable at the end of any Plan Quarter, the Director has served
     in such  capacity  on an  uninterrupted  basis for more than fifty  percent
     (50%) of the business days contained in such Plan Quarter.

          (ii) General  Provisions - Discretionary  Option Grants. The Committee
     shall  have  the  authority,  in its  discretion,  to  grant to one or more
     Directors from time to time Non-Qualified Stock Options. No Option shall be
     granted  for a term of more  than  ten  (10)  years.  The  Committee  shall
     establish  the  exercise  price at the time any  Option is  granted at such
     amount as the Committee shall determine. The exercise price will be subject
     to adjustment in accordance  with the provisions of Section VI of the Plan.
     Except as  otherwise  expressly  provided in this  Section V, the terms and
     conditions of the Options shall be determined by the Committee.

          (iii)Payment  of Exercise  Price.  The price per share of Common Stock
     with  respect  to each  Option  shall be  payable at the time the Option is
     exercised.  Such price  shall be payable in cash or  pursuant to any of the
     methods set forth in Sections  IV(A) or (B) hereof.  Shares of Common Stock
     delivered  to the  Corporation  in payment of the  exercise  price shall be
     valued at the Fair Market Value of the Common  Stock on the date  preceding
     the date of the exercise of the Option.

          (iv)  Exercisability  of Options.  Each Option shall be exercisable in
     whole  or in  installments,  and  at  such  time(s),  and  subject  to  the
     fulfillment of any conditions on exercisability as may be determined by the
     Committee at the time of the grant of such  Options.  The right to purchase
     shares  of  Common  Stock  shall be  cumulative  so that  when the right to
     purchase any shares of Common Stock has accrued such shares of Common Stock
     or any part  thereof  may be  purchased  at any time  thereafter  until the
     expiration or termination of the Option.

          (v) Director's  Termination.  If a Director's service as a director of
     the  Corporation  is  terminated by reason of (1) his  Disability,  (2) the
     failure of the  Corporation to retain,  or nominate for  re-election,  such
     Director  (who is otherwise  eligible)  other than for Good Cause,  (3) his
     ineligibility for re-election pursuant to the Corporation's By-laws, or (4)
     his voluntary  termination of such directorship,  such termination shall be
     considered  a  "Qualifying  Termination"  and each  Option  granted to such
     Director, to the extent exercisable (and not exercised) on the date of such
     Qualifying Termination, shall remain so exercisable by him until the end of
     the  exercise  period  under  such  Option.  If a  Director's  service as a
     director of the  Corporation  or of any Parent or  Subsidiary is terminated
     for Good Cause,  such  termination  shall be  considered a  "Non-Qualifying
     Termination." In the event of a Non-Qualifying Termination, all outstanding
     unexercised  stock options  granted  pursuant to this Section V(B) shall be
     forfeited or canceled, as the case may be.

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                  (vi)  Director's  Death.  If a Director  dies while holding an
outstanding  Option,  such Option, to the extent exercisable (and not exercised)
on the date of his death,  shall remain so  exercisable  by his estate (or other
beneficiaries,  as designated in writing by such Director)  until the end of the
exercise period under the Option.


                                   SECTION VI.
                         ADJUSTMENT OF SHARES; MERGER OR
                     CONSOLIDATION, ETC. OF THE CORPORATION

     A.  Recapitalization,  Etc.  In the event there is any change in the Common
Stock of the  Corporation  by  reason of any  reorganization,  recapitalization,
stock split,  stock  dividend or otherwise,  there shall be  substituted  for or
added to each  share of Common  Stock  theretofore  appropriated  or  thereafter
subject,  or which may become  subject,  to any  Option,  the number and kind of
shares of stock or other securities into which each outstanding  share of Common
Stock shall be so changed or for which each such share shall be exchanged, or to
which each such share be  entitled,  as the case may be, and the per share price
thereof also shall be appropriately adjusted. Notwithstanding the foregoing, (i)
each such adjustment with respect to an Incentive Stock Option shall comply with
the  rules  of  Section  424(a)  of the Code  and  (ii) in no  event  shall  any
adjustment  be made  which  would  render any  Incentive  Stock  Option  granted
hereunder to be other than an incentive stock option for purposes of Section 422
of the Code.

     B. Merger, Consolidation or Change in Control of Corporation.  Upon (i) the
merger or  consolidation  of the  Corporation  with or into another  corporation
(pursuant to which the stockholders of the Corporation immediately prior to such
merger  or   consolidation   will  not,  as  of  the  date  of  such  merger  or
consolidation,  own a beneficial  interest in shares of voting securities of the
corporation surviving such merger or consolidation having at least a majority of
the combined voting power of such corporation's then outstanding securities), if
the  agreement  of  merger  or  consolidation  does  not  provide  for  (1)  the
continuance  of the Options  granted  hereunder or (2) the  substitution  of new
options for Options granted hereunder,  or for the assumption of such Options by
the  surviving  corporation,  (ii)  the  dissolution,  liquidation  or  sale  of
substantially  all the assets of the  Corporation or (iii) the Change in Control
of the Corporation,  the holder of any such Option theretofore granted and still
outstanding (and not otherwise  expired) shall have the right  immediately prior
to the effective date of such merger, consolidation,  dissolution,  liquidation,
sale of  assets or  Change  in  Control  of the  Corporation  to  exercise  such
Option(s) in whole or in part without regard to any  installment  provision that
may have  been made part of the terms  and  conditions  of such  Option(s).  The
Corporation,  to the extent  practicable,  shall give advance notice to affected
Optionees of any such merger, consolidation,  dissolution,  liquidation, sale of


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<PAGE>

assets or Change in Control of the  Corporation.  All such Options which vest on
an  accelerated  basis in  accordance  with  this  Section  VI(B) and are not so
exercised   shall  be  forfeited  as  of  the  effective  time  of  any  merger,
consolidation,  dissolution,  liquidation or sale of assets (but not in the case
of a Change in Control of the Corporation).

     C. Definition of Change in Control of the  Corporation.  As used herein,  a
"Change in Control of the  Corporation"  shall be deemed to have occurred if any
person  (including any individual,  firm,  partnership or other entity) together
with all  Affiliates  and Associates (as defined under Rule 12b-2 of the General
Rules and Regulations  promulgated  under the Exchange Act) of such person,  but
excluding (i) a trustee or other fiduciary holding  securities under an employee
benefit plan of the  Corporation  or any subsidiary of the  Corporation,  (ii) a
corporation  owned,   directly  or  indirectly,   by  the  stockholders  of  the
Corporation in  substantially  the same  proportions  as their  ownership of the
Corporation,  (iii) the Corporation or any subsidiary of the Corporation or (iv)
only as provided in the immediately  following sentence,  a Participant together
with  all  Affiliates  and  Associates  of a  Participant,  is  or  becomes  the
Beneficial Owner (as defined in Rule 13d-3  promulgated under the Exchange Act),
directly or indirectly,  of securities of the  Corporation  representing  40% of
more  of the  combined  voting  power  of  the  Corporation's  then  outstanding
securities,  such person being  hereinafter  referred to as an Acquiring Person.
The provisions of clause (iv) of the immediately  preceding sentence shall apply
only with respect to the Option(s) held by the  Participant  who,  together with
his  Affiliates  or  Associates,  if any,  is or becomes  the direct or indirect
Beneficial Owner of the percentage of securities set forth in such clause.

                                  SECTION VII.
                            MISCELLANEOUS PROVISIONS

     A.  Administrative  Procedures.  The Committee may establish any procedures
determined by it to be appropriate in discharging its responsibilities under the
Plan.  Subject to the provisions of Section X hereof,  all actions and decisions
of the Committee shall be final.

     B. Assignment or Transfer.  No grant or award of any Incentive Stock Option
or any other  "derivative  security"  (as defined by Rule  16a-l(c)  promulgated
under the Exchange  Act) made under the Plan or any rights or interests  therein
shall be assignable or transferable by a Participant  except by will or the laws
of descent and distribution or pursuant to a domestic  relations  order.  During
the lifetime of a Participant,  Options  granted  hereunder shall be exercisable
only by the Participant.

     C. Investment Representation. Upon the exercise of an Option, the Committee
may require,  as a condition of receiving such securities,  that the Participant
furnish to the Corporation such written  representations  and information as the
Committee deems appropriate to permit the Corporation, in light of the existence
or nonexistence of an effective  registration statement under the Securities Act
to deliver such  securities in compliance  with the provisions of the Securities
Act.

     D. Withholding  Taxes. The Corporation  shall have the right to deduct from


                                       12
<PAGE>

all cash payments hereunder any federal,  state, local or foreign taxes required
by law to be withheld with respect to such payments. In the case of the issuance
or distribution of Common Stock or other securities hereunder,  the Corporation,
as a  condition  of such  issuance  or  distribution,  may  require  the payment
(through withholding from the Participant's  salary,  reduction of the number of
shares of Common Stock or other  securities  to be issued,  or otherwise) of any
such taxes. The Participant may satisfy the withholding obligations by paying to
the  Corporation a cash amount equal to the amount required to be withheld or by
tendering to the  Corporation  a number of shares of Common Stock having a value
equivalent  to  such  cash  amount,  or by  use of any  available  procedure  as
described under Section IV(C) hereof.

     E. Costs and  Expenses.  The costs and expenses of  administering  the Plan
shall be borne by the Corporation and shall not be charged against any award nor
to any employee receiving a Plan Award.

     F. Funding of Plan. The Plan shall be unfunded.  The Corporation  shall not
be  required  to  segregate  any of its assets to assure the payment of any Plan
Award under the Plan.  Neither the Participants nor any other persons shall have
any interest in any fund or in any specific  asset or assets of the  Corporation
or any other entity by reason of any Plan Award,  except to the extent expressly
provided  hereunder.  The interests of each  Participant and former  Participant
hereunder  are  unsecured  and shall be subject to the general  creditors of the
Corporation.

     G. Other  Incentive  Plans.  The adoption of the Plan does not preclude the
adoption by appropriate means of any other incentive plan for employees.

     H. Plurals and Gender.  Where appearing in the Plan, masculine gender shall
include the feminine and neuter  genders,  and the  singular  shall  include the
plural,  and vice  versa,  unless the  context  clearly  indicates  a  different
meaning.

     I. Headings.  The headings and  sub-headings  in this Plan are inserted for
the  convenience of reference only and are to be ignored in any  construction of
the provisions hereof.

     J.  Severability.  In case any provision of this Plan shall be held illegal
or void, such illegality or invalidity shall not affect the remaining provisions
of this Plan, but shall be fully severable,  and the Plan shall be construed and
enforced  as if said  illegal or  invalid  provisions  had never  been  inserted
herein.

     K. Payments Due Missing  Persons.  The Corporation  shall make a reasonable
effort to locate all  persons  entitled  to  benefits  under the Plan;  however,
notwithstanding any provisions of this Plan to the contrary,  if, after a period
of one (1) year  from the date  such  benefits  shall be due,  any such  persons
entitled to benefits  have not been  located,  their rights under the Plan shall
stand suspended.  Before this provision becomes operative, the Corporation shall
send a  certified  letter to all such  persons  at their  last  known  addresses


                                       13
<PAGE>

advising  them that their rights under the Plan shall be  suspended.  Subject to
all  applicable  state laws,  any such  suspended  amounts  shall be held by the
Corporation  for a period of one (1) additional year and thereafter such amounts
shall be forfeited and thereafter remain the property of the Corporation.

     L.  Liability  and  Indemnification.  (i) Neither the  Corporation  nor any
Parent or Subsidiary  shall be responsible in any way for any action or omission
of the Committee,  or any other  fiduciaries in the  performance of their duties
and obligations as set forth in this Plan. Furthermore,  neither the Corporation
nor any Parent or Subsidiary shall be responsible for any act or omission of any
of their  agents,  or with  respect to  reliance  upon  advice of their  counsel
provided that the Corporation and/or the appropriate Parent or Subsidiary relied
in good faith upon the action of such agent or the advice of such counsel.

     (ii) Except for their own gross negligence or willful misconduct  regarding
the  performance  of the duties  specifically  assigned to them under,  or their
willful  breach of the terms of,  this Plan,  the  Corporation,  each Parent and
Subsidiary and the Committee shall be held harmless by the Participants,  former
Participants,  beneficiaries  and their  representatives  against  liability  or
losses occurring by reason of any act or omission. Neither the Corporation,  any
Parent or  Subsidiary,  the  Committee,  nor any  agents,  employees,  officers,
directors or  shareholders  of any of them,  nor any other person shall have any
liability  or  responsibility  with  respect to this Plan,  except as  expressly
provided herein.

     M. Incapacity.  If the Committee shall receive evidence  satisfactory to it
that a person entitled to receive payment of any Plan Award is, at the time when
such benefit becomes payable, a minor, or is physically or mentally  incompetent
to receive such Plan Award and to give a valid release thereof, and that another
person or an institution  is then  maintaining or has custody of such person and
that no guardian, committee or other representative of the estate of such person
shall have been duly  appointed,  the  Committee  may make  payment of such Plan
Award  otherwise  payable to such  person to such other  person or  institution,
including a  custodian  under a Uniform  Gifts to Minors  Act, or  corresponding
legislation (who shall be an adult, a guardian of the minor or a trust company),
and the  release  by such  other  person  or  institution  shall be a valid  and
complete discharge for the payment of such Plan Award.

     N. Cooperation of Parties. All parties to this Plan and any person claiming
any interest hereunder agree to perform any and all acts and execute any and all
documents and papers which are necessary or desirable for carrying out this Plan
or any of its provisions.

     O.  Governing Law. All questions  pertaining to the validity,  construction
and  administration  of the Plan shall be determined in accordance with the laws
of the State of Delaware.

     P.  Nonguarantee  of  Employment.  Nothing  contained in this Plan shall be
construed as a contract of employment  between the Corporation (or any Parent or
Subsidiary),  and any  employee or  Participant,  as a right of any  employee or
Participant to be continued in the employment of the  Corporation (or any Parent

                                       14
<PAGE>


or Subsidiary), or as a limitation on the right of the Corporation or any Parent
or Subsidiary to discharge any of its employees, with or without cause.

     Q.  Notices.  Each  notice  relating  to this Plan shall be in writing  and
delivered in person or by certified mail to the proper  address.  All notices to
the Corporation or the Committee shall be addressed to it at ICG Communications,
Inc., 161 Inverness Drive West, Englewood,  Colorado 80112, Attn: Secretary. All
notices to  Participants,  former  Participants,  beneficiaries or other persons
acting for or on behalf of such persons shall be addressed to such person at the
last address for such person maintained in the Committee's records.

     R.  Written  Agreements.  Each Plan Award  shall be  evidenced  by a signed
written  agreement  between the Corporation  and the Participant  containing the
terms and conditions of the award.

                                  SECTION VIII.
                        AMENDMENT OR TERMINATION OF PLAN

     The Board of  Directors of the  Corporation  shall have the right to amend,
suspend or terminate the Plan and the Options granted  hereunder at any time and
for any purpose (including,  without  limitation,  an amendment necessary for an
Option to maintain its  qualification  as an "incentive stock option" within the
meaning of Section 422 of the Code, if applicable,  or to comply with Rule 16b-3
(or any successor rule) promulgated under the Exchange Act); provided,  however,
that no amendment  shall be made which shall increase the total number of shares
of the Common Stock of the Corporation  which may be issued and sold pursuant to
Options or reduce the minimum  exercise price in the case of an Incentive  Stock
Option,  unless  such  amendment  is  made  by  or  with  the  approval  of  the
stockholders (such approval being granted within 12 months of the effective date
of such  amendment),  but only if such  approval is  required by any  applicable
provisions  of the Code.  Such  stockholder  approval  shall be  effected by the
affirmative  vote  of a  majority  of  the  votes  cast  by the  holders  of the
outstanding  shares of Common Stock present,  by person or proxy,  and voting on
such amendment. Except as otherwise provided herein, no amendment, suspension or
termination of the Plan shall alter or impair any Plan Awards previously granted
under the Plan, without the consent of the holder thereof.

                                   SECTION IX.
                                  TERM OF PLAN

     The Plan shall remain in effect until  December 31, 2007,  which is the day
prior to the tenth  anniversary of the effective date of the Plan, unless sooner
terminated by the Board of Directors of the  Corporation.  No Plan Awards may be
granted under the Plan subsequent to the termination of the Plan.

                                       15
<PAGE>

                                   SECTION X.
                                CLAIMS PROCEDURES

     A. Denial. If any Participant,  former Participant or beneficiary is denied
any vested benefit to which he is, or reasonably  believes he is, entitled under
this Plan,  either in total or in an amount less than the full vested benefit to
which he would normally be entitled,  the Committee  shall advise such person in
writing the specific  reasons for the denial.  The Committee  shall also furnish
such  person  at the  time  with a  written  notice  containing  (i) a  specific
reference to pertinent  Plan  provisions,  (ii) a description  of any additional
material or  information  necessary  for such  person to perfect  his claim,  if
possible,  and an  explanation of why such material or information is needed and
(iii) an explanation of the Plan's claim review procedure.

     B. Written Request for Review. Within 60 days of receipt of the information
stated in subsection (a) above, such person shall, if he desires further review,
file a written request for reconsideration with the Committee.

     C.  Review of  Document.  So long as such  person's  request  for review is
pending  (including the 60 day period in subsection  (b) above),  such person or
his duly authorized  representative  may review pertinent Plan documents and may
submit issues and comments in writing to the Committee.

     D.  Committee's  Final and Binding  Decision.  A final and binding decision
shall be made by the  Committee  within 60 days of the filing by such  person of
this request for reconsideration;  provided,  however, that if the Committee, in
its discretion,  feels that a hearing with such person or his  representative is
necessary or desirable, this period shall be extended for an additional 60 days.

     E. Transmittal of Decision.  The Committee's  decision shall be conveyed to
such person in writing and shall (i) include  specific reasons for the decision,
(ii) be written in a manner calculated to be understood by such person and (iii)
set forth the specific  references to the pertinent Plan provisions on which the
decision is based.

     F. Limitation on Claims. Notwithstanding any provisions of this Plan to the
contrary,  no Participant (nor the estate or other beneficiary of a Participant)
shall be entitled  to assert a claim  against  the  Corporation  (or against any
Parent or Subsidiary)  more than three years after the date the  Participant (or
his estate or other  beneficiary)  initially  is  entitled  to receive  benefits
hereunder.

                                       16