EMPLOYMENT AGREEMENT


     THIS EMPLOYMENT AGREEMENT  ("Agreement") is made as of the 1st day of July,
1999 by and between ICG Communications,  Inc.  ("Employer" or the "Company") and
Michael D. Kallet ("Employee").

                                 R E C I T A L S

     WHEREAS, the Company desires to employ Employee as provided herein; and

     WHEREAS, Employee desires to be employed by Employer as provided herein.

     NOW,  THEREFORE,  in  consideration  of the mutual covenants and agreements
contained herein, the parties agree as follows:

     1.  Employment.  The Company agrees to employ  Employee and Employee hereby
agrees to be  employed  on a  full-time  basis by the  Company or by such of its
subsidiary  or  affiliate  corporations  as  determined  by the  Company  in the
position  described  in  Section  2,  for the  period  and upon  the  terms  and
conditions hereinafter set forth.

     2.  Duties.  The  Company  agrees to employ  the  Employee  for the term of
employment  under this  Agreement in the position of Executive Vice President of
Products and Strategic  Development,  reporting to the President of the Company.
During  his  employment,   Employee  shall  perform  the  duties  and  bear  the
responsibilities  commensurate  with his  position  and shall serve the Employer
faithfully and to the best of his ability. These duties will include the overall
management of the Product Marketing,  Product Development and Engineering,  CTO,
Strategic Planning and Business  Development  groups of the Company.  The duties
will also include setting the strategy for supporting the Company's services and
the overall Company product road map.  Employee shall devote 100% of his working
time to carrying out his obligations hereunder.

     3. Compensation and Benefits.

     3.1 The Company  shall pay  Employee  during the Term of this  Agreement an
annual base salary, payable semi-monthly.  The annual base salary will initially
be Two Hundred Forty Thousand Dollars ($240,000).

     3.2 In addition to the base salary, Employee will be eligible for an annual
performance  bonus in an exact amount to be determined by the Board of Directors
of the Company. The annual bonus will be determined in accordance with the bonus
plan of the  Company  and will be  based on  objectives  and  goals  set for the
Company and the Employee.  Employee's  annual bonus is initially  established at
45% of annual base salary if all objectives and goals are met.

     3.3 In addition to salary and bonus payments as provided above, the Company
will provide Employee,  during the Term of this Agreement,  with the benefits of
such insurance plans,  hospitalization  plans and other  perquisites as shall be
generally  provided  to  employees  of the  Company  at his  level and for which
Employee may be eligible under the terms and conditions  thereof.  Employee will
also be entitled to all  benefits  provided  under any  directors  and  officers
liability insurance or errors and omissions insurance maintained by the Company.


                                       1
<PAGE>

Throughout the Term of this Agreement,  the Company will provide Employee with a
car allowance in the amount of Five Hundred Dollars ($500.00) per month.

     3.4  Throughout  the Term of this  Agreement,  the Company  will  reimburse
Employee  for all  reasonable  out-of-pocket  expenses  incurred  by Employee in
connection  with the business of the Company and the  performance  of his duties
under  this  Agreement,  upon  presentation  to the  Company by  Employee  of an
itemized accounting of such expenses with reasonable supporting data.

     3.5 The Company  will from time to time provide to Employee  stock  options
pursuant  to and  subject to the terms and  conditions  of the  Company's  Stock
Option Plans.

     4.  Term.  The  initial  term of this  Agreement  will be for two (2) years
commencing  as of the date  hereof  ("Term").  After  one (1) year from the date
hereof,  this Agreement will thereafter  automatically renew from month-to-month
such that there will always be one (1) year  remaining  in the Term,  unless and
until  either  party  shall give at least sixty (60) days notice to the other of
his or its desire to terminate  this Agreement (in such case, the Term shall end
upon the date indicated in such notice).  The applicable  provisions of Sections
6, 7, and 8 shall remain in full force and effect for the time periods specified
in such Sections notwithstanding the termination of this Agreement.

     5. Termination.

     5.1 If Employee dies during the Term of this Agreement, this Agreement will
terminate.  The Company will pay the estate of Employee an amount equal to three
months salary. In addition,  the estate of Employee will be entitled to exercise
all options  theretofore  vested  under the  Company's  Stock Option Plans for a
period of one (1) year after the date of death of  Employee in  accordance  with
the plans and agreements relating to such options.

     5.2 If,  during the Term of this  Agreement,  Employee  is  prevented  from
performing  his duties by reason of illness or incapacity  for one hundred forty
(140) days in any one hundred eighty (180) day period, the Company may terminate
this  Agreement,  upon thirty (30) days notice to Employee or his duly appointed
legal  representative.  Employee will be entitled to all benefits provided under
any disability plans of the Company. In addition, Employee or his duly appointed
legal representative will be entitled to exercise all options theretofore vested
under the  Company's  Stock  Option Plans for a period of one (1) year after the
date of termination in accordance with the plans and agreements relating to such
options.

     5.3 For the  purposes  of this  Agreement,  a "Change  in  Control"  of the
Company  shall mean and be deemed to have  occurred if (a) any "person" (as such
term is used in Sections 13(d) and 14(d) of the Securities  Exchange Act of 1934
as amended  (Exchange Act)) is or becomes the "beneficial  owner" (as defined in
Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the
Company  representing  50% or more of the combined voting power of the Company's
then outstanding securities;  (b) at any time a majority of the directors of the
Company are persons who were not  nominated  for election by the Board;  (c) the
stockholders  of the Company  approve a merger or  consolidation  of the Company
with any other  corporation,  other than a merger or  consolidation  which would
result in the voting  securities of the Company  outstanding  immediately  prior
thereto  continuing to represent  (either by remaining  outstanding  or by being
converted  into voting  securities of the surviving  entity) at least 50% of the
combined voting power of the voting  securities of the Company or such surviving
entity  outstanding  immediately  after such  merger or  consolidation;  (d) the
Company shall sell or otherwise  dispose of, in one  transaction  or a series of
related  transactions,  assets  aggregating  more than 50% of the  assets of the
Company  and  its  subsidiaries  consolidated;  or (e) the  stockholders  of the


                                       2
<PAGE>

Company  approve a plan of complete  liquidation of the Company or any agreement
for the sale or  disposition  by the  Company  of all or  substantially  all the
Company's assets. Upon the occurrence of a Change in Control,  the Company shall
pay Employee an amount equal to one (1) times the aggregate amount of his annual
base salary plus his targeted annual bonus plus the annual value of his benefits
and  perquisites.  At the time of the  occurrence  of a Change  in  Control  all
options to  purchase  shares of the Company  that have been  granted to Employee
pursuant  to the  Company's  Stock  Option  Plans,  but  not  yet  vested,  will
immediately  vest and  Employee  shall be entitled to exercise  such  options in
accordance with the plans and agreements  relating to such options. In addition,
the Company or Employee may terminate  this  Agreement upon at least thirty (30)
days notice at any time within one (1) year after the  occurrence of a Change in
Control of the Company.

     5.4 Employee may terminate  this  Agreement  upon at least thirty (30) days
notice upon the  occurrence  of a  constructive  dismissal of Employee.  For the
purposes  of  this  Agreement,   "constructive  dismissal"  shall  mean,  unless
consented  to by  Employee  in  writing,  any of the  following  actions  by the
Company:

     (i)  any reduction in the annual salary or bonus level of Employee;

     (ii) any  requirement to relocate,  except for office  locations that would
          not  increase the  Employee's  one-way  commute  distance by more than
          twenty (20) miles;

     (iii)any material  reduction in the value of Employee's  benefits plans and
          programs; and

     (iv) any  reduction  or  material  change  in  title,  positions,   duties,
          responsibilities, powers and reporting structure.

     5.5 The Company may terminate  this Agreement  immediately  for willful and
intentional  gross  negligence,  misconduct or the conviction of a felony by the
Employee, in which case all rights under this Agreement shall end as of the date
of such  termination.  No act, shall be considered  "willful"  unless  committed
without good faith and a  reasonable  belief that the act or omission was in the
Company's best interest.

     5.6 If this  Agreement is  terminated  by the Company  under Section 4, the
Company shall pay Employee a termination fee in an amount equal to the aggregate
amount of his annual base salary that would have been paid during the  remaining
Term of the  Agreement  plus his targeted  annual bonus plus the annual value of
his benefits and  perquisites.  If this  Agreement is  terminated by the Company
under Section 5.3, or, for the avoidance of doubt, under Section 4 within twelve
(12)  months of a "change of  control"  as defined in Section  5.3,  the Company
shall pay  Employee a  termination  fee in an amount  equal to two (2) times the
aggregate  amount of his annual base salary plus his targeted  annual bonus plus
the annual value of his benefits and  perquisites.  Such termination fee will be
paid in a lump sum within  fifteen  (15) days from the date of  termination.  If
this Agreement is terminated by Employee under Section 5.4, the Company will pay
Employee a termination  fee equal to two (2) times the  aggregate  amount of his
annual base salary plus his  targeted  annual bonus plus the annual value of his
benefits and perquisites. Such termination fee will be paid in a lump sum within
fifteen  (15)  days  from the date of  termination.  In  addition,  if  Employee
terminates this Agreement under Section 5.3 or Section 5.4 or Company terminates
this Agreement  under Section 4 or Section 5.3 all options to purchase shares of
the Company that have been granted to Employee  pursuant to the Company's  Stock
Option  Plans,  but  not  yet  vested,  will  immediately  vest  on the  date of
termination  and  Employee  will be entitled to exercise all options held by the


                                       3
<PAGE>

Employee  for a period of twelve (12) months  after the date of  termination  in
accordance with the plans and agreements relating to such options.

     5.7. If Employee  remains an employee  of the Company  until  February  17,
2000, then Employee will have the right to voluntarily  terminate his employment
with the Company  anytime  thereafter  and  receive six months  salary and fifty
percent (50%) of his annual bonus and six (6) months health insurance benefits.

     5.8. The parties  acknowledge  that all stock  options  granted to Employee
under the Netcom  On-Line  Communication  Services,  Inc. 1993 Stock Option Plan
(Amended and Restated as of January 23,  1997) have been vested.  If  Employee's
employment terminates for any reason, including Employee's resignation, Employee
will be entitled to exercise all such options for a period of one (1) year after
the date of termination in accordance with the plans and agreements  relating to
such options.

     6. Non-Compete and Non-Interference.

     6.1 During the Term of this  Agreement and, if Employee's  employment  with
the Company is terminated under Section 4 or Section 5.3, for a period of twelve
(12) months after such termination,  Employee shall not, directly or indirectly,
own, manage,  operate,  control, be employed by, or participate in the ownership
(more than 5%), management,  operation or control of, a business that is engaged
materially  in the same  business as the Company  within any area  constituting,
during the term of Employee's employment or at the time Employee's employment is
terminated, a Relevant Area. A "Relevant Area" shall be defined for the purposes
of this Agreement as any area located within, or within fifty (50) miles of, the
legal  boundaries  or limits of any city within  which the Company is engaged in
business or in which the Company has publicly  announced or privately  disclosed
to Employee that it plans to engage in business.

     6.2.  During the Term of this  Agreement  and for a period of two (2) years
after  termination  of  this  Agreement,  Employee  shall  not (i)  directly  or
indirectly  cause or attempt to cause any  employee of the Company or any of its
affiliates to leave the employ of the Company or any affiliate,  (ii) in any way
interfere with the relationship  between the Company and any employee or between
an affiliate and any employee of the affiliate, or (iii) interfere or attempt to
interfere with any transaction in which the Company or any of its affiliates was
involved during the Term of this Agreement.

     6.3 Employee  agrees  that,  because of the nature and  sensitivity  of the
information to which he will be privy and because of the nature and scope of the
Company's  business,  the restrictions  contained in this Section 6 are fair and
reasonable.


     7. Confidential Information.

     7.1 The relationship  between the Company and Employee is one of confidence
and trust.  This  relationship and the rights granted and duties imposed by this
Section  shall  continue  until a date ten (10) years  from the date  Employee's
employment is terminated.

     7.2  As  used  in  this  Agreement  (i)  "Confidential  Information"  means
information  disclosed  to or acquired by Employee  about the  Company's  plans,
products,  processes and services,  including  information relating to research,
development,  inventions,  manufacturing,  purchasing, accounting,  engineering,
marketing,  merchandising,  selling,  pricing,  tariffed or  contractual  terms,
customer lists and prospect lists and other market information,  with respect to


                                       4
<PAGE>

any of the  Company's  business  activities;  and (ii)  "Inventions"  means  any
inventions,   discoveries,  concepts  and  ideas,  whether  patentable  or  not,
including, without limitation,  processes, methods, formulas, and techniques (as
well as  related  improvements  and  knowledge)  that are based on or related to
Confidential   Information,   that  pertain  in  any  manner  to  the  Company's
technology,  expertise  or business  and that are made or conceived by Employee,
either solely or jointly with others, and while employed by the Company, whether
or not made or conceived  during  working hours or with the use of the Company's
facilities, materials or personnel.

     7.3  Employee  agrees  that he  shall  at no time  during  the Term of this
Agreement or at any time thereafter disclose any Confidential Information to any
person,  firm or  corporation  to any extent or for any reason or purpose or use
any  Confidential  Information  for any  purpose  other than the  conduct of the
Company's  business,  unless such  Confidential  Information  has been  publicly
disclosed by the Company or a third party.

     7.4 Any Confidential Information that is directly or indirectly originated,
developed  or  perfected  to any  degree  by  Employee  during  the  term of his
employment  by the Company  shall be and remain the sole property of the Company
and shall be deemed trade secrets of the Company.

     7.5  Upon  termination  of  Employee's  employment  pursuant  to any of the
provisions  herein,  Employee or his legal  representative  shall deliver to the
Company  all  originals  and all  duplicates  and/or  copies  of all  documents,
records,  notebooks,  and similar  repositories  of or  containing  Confidential
Information then in his possession, whether prepared by him or not.

     7.6 Employee  agrees that the  covenants and  agreements  contained in this
Section 7 are fair and  reasonable  and that no waiver or  modification  of this
Section or any covenant or condition  set forth herein shall be valid unless set
forth in writing and duly executed by the parties hereto.

     8.  Injunctive  Relief.  Upon a material  breach by  Employee of any of the
provisions of Sections 6 or 7 of this  Agreement,  the Company shall be entitled
to an injunction  restraining Employee from such breach. Nothing herein shall be
construed as  prohibiting  the Company from pursuing any other remedies for such
breach, including recovery of damages from Employee.

     9. No Waiver.  A waiver by the Company of a breach of any provision of this
Agreement  by  Employee  shall not  operate or be  construed  as a waiver of any
subsequent or other breach by Employee.

     10.  Severability.  It is the  desire and  intent of the  parties  that the
provisions of this Agreement shall be enforced to the fullest extent permissible
under  the  laws and  public  policies  applied  in each  jurisdiction  in which
enforcement is sought.  Accordingly,  if any particular  provision or portion of
this  Agreement  shall be  adjudicated  to be  invalid  or  unenforceable,  this
Agreement  shall  be  deemed  amended  to  delete  therefrom  the  portion  thus
adjudicated  to be invalid or  unenforceable,  such  deletion to apply only with
respect to the operation of such  provision in the  particular  jurisdiction  in
which such adjudication is made.

     11.  Gross-Up  Payment.  In the event it is determined  that any payment or
distribution of any type to or for the benefit of the Employee, pursuant to this
Agreement or  otherwise,  by the Company,  any person who acquires  ownership or
effective control of the Company,  or ownership of a substantial  portion of the
assets of the  Company  (within  the  meaning  of section  260G of the  Internal
Revenue Code ("Code") and the  regulations  thereunder) or any affiliate of such


                                       5
<PAGE>

person  (the  "Total  Payments')  would be subject to the excise tax  imposed by
Section  4999 of the Code or any such  interest and  penalties,  with respect to
such excise tax (such excise tax,  together  with any interest and penalties are
collectively  referred  to as the  "Excise  Tax"),  then the  Employee  shall be
entitled to receive an  additional  payment (a "Gross-Up  Payment") in an amount
such that, after payment by the Employee of all taxes (including any interest or
penalties imposed with respect to such taxes), including any Excise Tax, imposed
upon the  Gross-Up  Payment,  the  Employee  retains  an amount of the  Gross-Up
Payment equal to the Excise Tax imposed upon the Total Payment.

     12.  Determination  by  Accountant.  All  mathematical  determinations  and
determinations as to whether any of the Total Payments are "parachute  payments"
(within  the  meaning  of  Section  280G  of  the  Code),  in  each  case  which
determinations  are required to be made under this Section 12, including whether
a Gross-Up Payment is required, the amount of such Gross-Up Payment, and amounts
relevant  to the  last  sentence  of  this  Section  12,  shall  be  made  by an
independent  accounting firm selected by the Employee from among the largest six
accounting  firms in the United States (the "Accounting  Firm").  The Accounting
Firm shall  provide to the Company and to the  Employee its  determination  (the
"Determination"),  together with detailed supporting  calculations regarding the
amount of any Gross-Up  Payment and any other relevant  matter,  within ten (10)
days after termination of the Employee's employment,  if applicable,  or at such
earlier time following termination of employment as is requested by the Employee
(if the  Employee  reasonably  believes  that any of the Total  Payments  may be
subject to the Excise Tax). If the Accounting Firm determines that no Excise Tax
is  payable  by the  Employee,  it shall  furnish  the  Employee  with a written
statement that such  Accounting Firm has concluded that no Excise Tax is payable
(including the reasons therefor) and that the Employee has substantial authority
not to report any Excise Tax on the Employee's  federal income tax return.  If a
Gross-Up  Payment is determined to be payable,  it shall be paid to the Employee
within ten (10) days after the  Determination is delivered to the Company or the
Employee.  Any  determination  by the Accounting  Firm shall be binding upon the
Company and the Employee, absent manifest error.

     As a result of uncertainty  in the  application of Section 4999 of the Code
at the time of the initial determination by the Accounting Firm hereunder, it is
possible  that  Gross-Up  Payments  not made by the  Company  and members of the
Company should have been made  ("Underpayment"),  or that Gross-Up Payments will
have been made by the Company  and  members of the Company  that should not have
been made  ("Overpayments").  In either such event,  the  Accounting  Firm shall
determine the amount of the  underpayment or Overpayment  that has occurred.  In
the case of an  Underpayment,  the  Company  promptly  shall pay, or cause to be
paid, the amount of such Underpayment to or for the benefit of the Employee.  In
the case of an Overpayment,  the Employee shall, at the direction and expense of
the Company,  take such steps as are reasonably  necessary (including the filing
of returns and claims for refund),  follow  reasonable  instructions  from,  and
procedures  established by the Company,  and otherwise reasonably cooperate with
the Company to correct such Overpayment;  provided,  however,  that (1) Employee
shall not in any event be obligated  to return to the Company an amount  greater
than the net  after-tax  portion  of the  Overpayment  that he has  retained  or
recovered  as a  refund  from the  applicable  taxing  authorities  and (2) this
provision shall be interpreted in a manner consistent with the intent of Section
11,  which  is to make the  Employee  whole,  on an  after-tax  basis,  from the
application  of the Excise Tax, it being  understood  that the  correction of an
Overpayment may result in the Employee repaying to the Company an amount that is
less than the Overpayment.

     13.  Notices.  All  communications,  requests,  consents and other  notices
provided for in this Agreement  shall be in writing and shall be deemed given if
delivered by hand or mailed by first class mail,  postage  prepaid,  to the last
known address of the recipient.

                                       6
<PAGE>

     14.  Governing Law;  Arbitration.  This Agreement  shall be governed by and
construed and enforced in accordance with the laws of the State of Colorado. Any
dispute  or  controversy  arising  out  of  the  Employee's  employment  or  the
termination thereof,  including, but not limited to, any claim of discrimination
under state or federal law,  shall be settled  exclusively by arbitration in San
Jose,  California,  in  accordance  with the rules of the  American  Arbitration
Association then in effect. Judgment may be entered on the arbitrator's award in
any court having jurisdiction.

     15.  Assignment.  Neither this Agreement nor any rights or duties hereunder
may be assigned by Employee or the Company  without the prior written consent of
the other, such consent not to be unreasonably withheld.

     16. Amendments.  No provision of this Agreement shall be altered,  amended,
revoked or waived except by an  instrument  in writing,  signed by each party to
this Agreement.

     17. Binding Effect.  Except as otherwise  provided  herein,  this Agreement
shall be binding  upon and shall inure to the benefit of the parties  hereto and
their respective legal representatives, heirs, successors (including pursuant to
mergers) and assigns.

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

     19. Entire  Agreement.  This Agreement sets forth the entire  agreement and
understanding of the parties and supersedes all prior understandings, agreements
or  representations  by or between the parties,  whether written or oral,  which
relate in any way to the subject matter hereof.

     IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.


                                          /s/ Michael D. Kallet
                                          --------------------------------------
                                          Michael D. Kallet



                                          ICG COMMUNICATIONS, INC.



                                          By:     /s/ John Kane
                                                  ------------------------------

                                          Name:   John Kane
                                                  ------------------------------

                                          Title:  President
                                                  ------------------------------


                                       7