ICG COMMUNICATIONS, INC.
1998 STOCK OPTION PLAN
--------------------
Effective as of January 1, 1998
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.
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
2
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.
3
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.
4
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".
5
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
6
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
7
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
8
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
9
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.
10
(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
11
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
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
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
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
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