Warrant Agreement - Level 3 Communications Inc. and William L. Grewcock


                          LEVEL 3 COMMUNICATIONS, INC.

                                       and

                               WILLIAM L. GREWCOCK









                             ______________________

                                Warrant Agreement

                           Dated as of March 11, 2002

                             ______________________

 



     WARRANT AGREEMENT (the  "Agreement"),  dated as of March 11, 2002,  between
Level 3  Communications,  Inc.,  a Delaware  corporation  (the  "Company"),  and
William L. Grewcock (the "Purchaser").

     The  Company  proposes  to  issue  Common  Stock  Purchase   Warrants,   as
hereinafter described (the "Warrants"), to purchase up to an aggregate 1,514,840
shares of its Common Stock,  par value $.01 per share (the "Common  Stock") (the
shares of Common Stock  issuable on exercise of the Warrants  being  referred to
herein as the "Warrant Shares"). The Warrants will be issued in a single series.

     In consideration of the foregoing and for the purpose of defining the terms
and  provisions  of the  Warrants  and the  respective  rights  and  obligations
thereunder  of the  Company  and the  registered  owners  of the  Warrants  (the
"Holders"), the Company and the Purchaser hereby agree as follows:

     SECTION 1.  Issuance  of  Warrants.  Concurrently  with the  execution  and
delivery  of this  Agreement,  the  Company is  issuing  and  delivering  to the
Purchaser Warrants to purchase 1,514,840 Warrant Shares.

     SECTION 2. Transferability and Form of Warrant.

     2.1 Registration. The Warrants shall be numbered and shall be registered on
the books of the  Company as they are issued.  The Company  shall be entitled to
treat the Holder of any Warrant as the owner in fact  thereof  for all  purposes
and shall not be bound to recognize  any equitable or other claim or interest in
such  Warrant on the part of any other  person,  and shall not be liable for any
registration  of  transfer  of  any  Warrants  which  are  registered  or  to be
registered in the name of a fiduciary or the nominee of a fiduciary  unless made
with the actual  knowledge that a fiduciary or nominee is committing a breach of
trust in requesting such registration of transfer, or with such actual knowledge
of such facts that its participation therein amounts to intentional  conversion.
The Warrants shall initially be registered in the name of the Purchaser.

     2.2 Form of Warrant. The text of the Warrant and of the Purchase Form shall
be substantially  in the form set forth in Exhibit A attached hereto.  The price
per Warrant  Share and the number of Warrant  Shares  issuable  upon exercise of
each Warrant are subject to adjustment  upon the  occurrence of certain  events,
all as  hereinafter  provided.  The Warrants  shall be executed on behalf of the
Company by its Chairman of the Board, Chief Executive Officer,  President or one
of its Executive or Group Vice  Presidents,  under its corporate seal reproduced
thereon attested by its Secretary or Assistant  Secretary.  The signature of any
such officers on the Warrants may be manual or facsimile.




     Warrants  bearing the  signatures of  individuals  who were at any time the
proper officers of the Company shall bind the Company, notwithstanding that such
individuals  or any one of them shall have ceased to hold such offices  prior to
the delivery of such Warrants.

     SECTION 3. Term of Warrants; Exercise of Warrants.

     3.1 Term of Warrants.  Subject to the terms of this  Agreement,  the Holder
shall have the right,  which may be exercised at any time and from time to time,
to purchase from the Company the number of fully paid and nonassessable  Warrant
Shares which the Holder may at the time be entitled to purchase upon exercise of
such Warrant.

     3.2 Vesting. The Warrants shall be vested as of the date of this Agreement.
Each  Warrant  shall expire at 5:00 p.m.,  New York City time,  on June 30, 2009
(the "Expiration Date").

     3.3 Exercise of Warrants.  Subject to the provisions of Section 3.4 hereof,
a Warrant  that is  exercisable  under  this  Agreement  may be  exercised  upon
surrender  to the  Company  at  its  principal  office  of  the  certificate  or
certificates  evidencing the Warrant or Warrants to be exercised,  together with
the  Purchase  Form on the reverse  thereof  duly  filled in and  signed,  which
signature (if not the Purchaser)  shall be guaranteed by a bank or trust company
or a  broker  or  dealer  which  is a  member  of the  National  Association  of
Securities  Dealers,  Inc., and upon payment to the Company of the Warrant Price
as defined in and  determined  in  accordance  with the  provisions of Section 7
hereof for the number of Warrant  Shares in respect of which such  Warrants  are
then exercised (the "Exercise Amount").  Payment of the Exercise Amount shall be
made (i) by payment to the Company in cash, by certified or official bank check,
or by wire transfer of the Exercise Amount, (ii) by surrender to the Company for
cancellation of securities (which may include Warrant Shares received in respect
of such  Warrants  being  exercised)  of the Company  having a Market  Price (as
hereinafter  defined) on the date of exercise equal to the Exercise  Amount;  or
(iii) by a combination  of the methods  described in clauses (i) and (ii) above,
in each case at the option of the Holder.  For purposes hereof, the term "Market
Price"  shall  mean (1) the  average  of the daily  closing  price of a share of
Common Stock or other securities of the Company,  as the case may be, for the 15
consecutive  trading  days  preceding  the date the  Warrant  is  presented  for
exercise  on the  principal  national  securities  exchange  on which the Common
Stock,  or securities are listed or admitted to trading or, (2) if not listed or
admitted  to trading on any  national  securities  exchange,  the average of the
reported  bid  and  asked  prices  during  such 15  trading  day  period  in the
over-the-counter market as furnished by the National Quotation Bureau, Inc., or,
if such firm is not then engaged in the business of  reporting  such prices,  as
furnished by any member of the National Association of Securities Dealers,  Inc.
selected  by the  Company  or, (3) if the  Common  Stock or  securities  are not
publicly  traded,  the Market  Price for such day shall be the fair market value
thereof  determined  jointly by the Company and the Holder;  provided,  however,
that if  pursuant  to this  subclause  (3)  such  parties  are  unable  to reach
agreement  within  a  reasonable  period  of time,  the  Market  Price  shall be
determined  in good faith by the  independent  investment  banking firm selected
jointly  by the  Company  and the Holder  or, if that  selection  cannot be made
within 15 days,  by an  independent  investment  banking  firm  selected  by the
American Arbitration Association in accordance with its rules.



     Subject  to  Section  3.4 and  Section 4 hereof,  upon the  surrender  of a
Warrant  that is  exercisable  under this  Agreement  and payment of the Warrant
Price as aforesaid,  the Company shall cause to be issued and delivered with all
reasonable  dispatch  (but in not event  later  than (i) 5  business  days after
payment is received if payment is made in immediately  available funds or by the
surrender of  securities  and (ii) 10 business days after payment is received if
payment  is not  made in  immediately  available  funds or by the  surrender  of
securities) to or upon the written order of the Holder and in such name or names
as the Holder may  designate,  a certificate or  certificates  for the number of
full Warrant Shares so purchased  upon the exercise of such  Warrants,  together
with cash, as provided in Section 8 hereof, in respect of any fractional Warrant
Shares otherwise  issuable upon such surrender.  If permitted by applicable law,
to the extent that the Warrant Price consideration consists solely of securities
(which may include  Warrant  Shares  received in respect of such Warrants  being
exercised) of the Company,  the Warrant  Shares so acquired  (together  with the
related certificate or certificates) shall be deemed to have been acquired as of
the date hereof.  The rights of purchase  represented  by the Warrants  shall be
exercisable, at the election of the Holders thereof, either in full or from time
to time in part and,  in the event that a  certificate  evidencing  Warrants  is
exercised  in  respect of less than all of the  Warrant  Shares  purchasable  on
exercise  at any time  prior  to the date of  expiration  of the  Warrants,  the
Company  shall,  at the time of  delivery  of the  certificate  or  certificates
representing Warrant Shares,  deliver to the Holder a new Warrant evidencing the
rights to purchase the remaining Warrant Shares,  which new Warrant shall in all
other respects be identical to this Warrant.

     3.4 Cash in Lieu of Shares Upon Exercise of Warrants. Prior to the exercise
of any  Warrants,  the Holder  shall give notice to the Company that such Holder
intends to exercise all or a portion of the Warrants. Following such notice, the
Company shall have the right, exercisable at its sole election, by giving notice
to the Holder of such election within 10 business days of such notice, to pay to
the Holder,  in lieu of the issuance of the Warrant Shares which otherwise would
be issued upon such exercise, and payment of the Warrant Price relating thereto,
an amount  equal to the  product  of (x)  99.8% of the  difference  between  the
Warrant Price and the current market price of the Common Stock on the date prior
to the date on which the notice of exercise is given  (determined as provided in
Section  7.2(f))  (the  "Spread")  and (y) the number of shares which would have
been issued upon  exercise of the Warrants had the Company not made the election
set forth herein.  In the event the Company notifies the Holder that it does not
intend to exercise its right to pay the Spread (or fails to notify the Holder of
its intent within such 10 business day period),  the Holder will have 60 days to
obtain the funds necessary to acquire the shares of Common Stock pursuant to the
Warrants and/or exercise the  registration  rights provided in Exhibit B. If the
Holder  fails to obtain the funds  necessary  to acquire the Common Stock within
such 60 days,  the  requirement  to provide  the  notices  contemplated  by this
Section 3.4 shall once again be applicable. If the Holder exercises the Holder's
registration  rights,  the Holder need not pay for the Warrant Shares until such
registration  shall become  effective and the issuance of shares of Common Stock
pursuant thereto shall have been consummated. The Company shall take all actions
necessary to cause the certificates representing the Warrant Shares to be issued
upon exercise of such Warrants to be issued to the Holder promptly following the
payment of the Warrant Price by the Holder.

     3.5 Split Up, Combination and Exchange of Warrant Certificates. At or prior
to the Expiration  Date, this Warrant,  with or without other  Warrants,  may be
split up, combined or 



exchanged  for an other  Warrant  or  Warrants,  entitling  the  Holder  to
purchase a like number of Warrant Shares as such surrendered Warrant or Warrants
then entitled such Holder to purchase.  Any Holder desiring to split up, combine
or exchange  this Warrant  shall make such  request in writing  delivered to the
Company, and shall surrender the Warrant or Warrants to be split up, combined or
exchanged to the Company. Thereupon the Company shall within a reasonable period
of time sign and deliver to such Holder a Warrant or  Warrants,  as the case may
be, as so requested  containing  such legends as are required by this  Agreement
and applicable law.

     3.6  Registration   Rights.  The  Purchaser  and  the  Holders  shall  have
registration rights as set forth in Exhibit B hereto with respect to the Warrant
Shares.

     SECTION 4.  Payment of Taxes.  The Company will pay all  documentary  stamp
taxes, if any,  attributable to the initial  issuance of Warrant Shares upon the
exercise of Warrants;  provided, however, that the Company shall not be required
to pay any tax or taxes which may be payable in respect of any transfer involved
in the issue or delivery of any Warrant or certificates  for Warrant Shares in a
name other than that of the Holder of such Warrants.

     SECTION 5. Mutilated or Missing  Warrants.  In case any of the certificates
evidencing  the Warrants  shall be mutilated,  lost,  stolen or  destroyed,  the
Company  will  issue and  deliver  in  exchange  and  substitution  for and upon
cancellation  of  the  mutilated  Warrant   certificate,   or  in  lieu  of  and
substitution  for the  Warrant  certificate  lost,  stolen or  destroyed,  a new
Warrant  certificate  of like  tenor and  representing  an  equivalent  right or
interest,  but only upon  receipt of  evidence  reasonably  satisfactory  to the
Company of such loss,  theft or  destruction of such Warrant and an indemnity or
bond, if requested,  also reasonably satisfactory to it. An applicant for such a
substitute  Warrant  certificate  shall also comply  with such other  reasonable
regulations and pay such other reasonable charges as the Company may prescribe.

     SECTION 6.  Reservation of Warrant  Shares;  Purchase and  Cancellation  of
Warrants.

     6.1  Reservation  of  Warrant  Shares.  There have been  reserved,  and the
Company shall at all times keep reserved,  out of its authorized Common Stock, a
number of shares of Common Stock  sufficient  to provide for the exercise of the
rights of purchase represented by the outstanding  Warrants.  The transfer agent
for the Common Stock and every  subsequent  transfer agent for any shares of the
Company's  capital  stock  issuable  upon the  exercise  of any of the rights of
purchase  aforesaid will be irrevocably  authorized and directed at all times to
reserve such number of authorized  shares as shall be required for such purpose.
The Company will keep a copy of this  Agreement on file with the transfer  agent
for the Common Stock and with every subsequent  transfer agent for any shares of
the Company's capital stock issuable upon the exercise of the rights of purchase
represented by the Warrants.  The Company may requisition from time to time from
such  transfer  agent  the  stock  certificates  required  to honor  outstanding
Warrants upon exercise  thereof in accordance  with the terms of this Agreement.
The  Company  will  supply  such  transfer   agent  with  duly  executed   stock
certificates  for such purposes and will provide or otherwise make available any
cash which may be payable as  provided  in Section 8 hereof.  The  Company  will
furnish  such  transfer  agent  a  copy  of  all  notices  of  adjustments   and
certificates  related thereto.  All Warrants  surrendered in the exercise of the
rights thereby evidenced shall be canceled.



     6.2  Purchase  of  Warrants  by the  Company.  In  addition  to its  rights
contained in this  Agreement,  the Company may,  except as limited by applicable
law,  other  agreements or herein,  with the consent of the Holder,  purchase or
otherwise  acquire  Warrants  at  such  times,  in  such  manner  and  for  such
consideration as the Company and such Holder may deem appropriate.

     6.3  Cancellation  of Warrants.  In the event the Company shall purchase or
otherwise acquire Warrants, the certificates evidencing the same shall thereupon
be canceled  and  retired.  The  Company  shall  cancel any Warrant  certificate
surrendered  for  exchange,  substitution,  transfer  or exercise in whole or in
part.

     SECTION 7. Warrant Price.

     7.1  Unadjusted  Warrant  Price.  The initial price at which Warrant Shares
shall be purchasable upon exercise of Warrants shall be $8.00 per share, subject
to adjustment pursuant to Sections 7.2 through 7.5 hereof (the "Warrant Price").

     7.2  Adjustments.  The number and kind of securities  purchasable  upon the
exercise of each Warrant and the Warrant Price shall be subject to adjustment as
follows:

          (a) Stock  dividends,  splits,  etc. In case the Company  shall at any
     time or from time to time after the date of this  Agreement  (i) declare or
     pay a dividend on any of its shares of Common Stock or make a  distribution
     to all  holders of shares of Common  Stock in shares of Common  Stock (or a
     series thereof), (ii) subdivide its outstanding shares of Common Stock into
     a greater number of shares,  (iii) combine its outstanding shares of Common
     Stock  into a smaller  number of  shares of Common  Stock or (iv)  issue by
     reclassification  of its shares of Common  Stock  other  securities  of the
     Company  (including  any  such   reclassification   in  connection  with  a
     consolidation  or merger in which the Company is the  continuing  company),
     the number of shares purchasable upon exercise of each Warrant  immediately
     prior  thereto  shall be adjusted  so that the Holder  shall be entitled to
     receive  solely  the kind and number of shares or other  securities  of the
     Company that it would have owned or have been entitled to receive after the
     happening  of any of the  events  described  above  had such  Warrant  been
     exercised  immediately  prior to the  happening of such event or any record
     date with respect  thereto.  An adjustment  made pursuant to this paragraph
     (a) shall become  effective  immediately  after the effective  date of such
     event, retroactive to the record date, if any, for such event.

          (b) Distribution of rights or warrants.  In case the Company shall fix
     a record  date for the  issuance  of rights or  warrants  to all holders of
     Common Stock (other than pursuant to the Rights Agreement,  dated as of May
     29, 1998, between the Company and Norwest Bank Minnesota,  N.A., (now known
     as Wells Fargo Bank  Minnesota,  N.A.) as rights  agent,  or any  successor
     agreement),  entitling  them to subscribe for or purchase  shares of Common
     Stock at a price per share (or having a conversion price per share) that is
     lower on the date of issuance  thereof than the then  current  market price
     per share of Common Stock (as defined in paragraph  (f) below),  the number
     of shares thereafter  purchasable upon the exercise of each Warrant (at the
     price  determined  in  accordance  with  paragraph  (j)  hereof)  shall  be
     determined by multiplying the number of shares theretofore purchasable upon
     exercise of each Warrant by a fraction, of which the 



     numerator shall be the number of shares of Common Stock  outstanding on the
     date of issuance of such rights or warrants  plus the number of  additional
     shares of Common Stock offered for  subscription or purchase (or into which
     the convertible  securities so offered are initially  convertible),  and of
     which the  denominator  shall be the  number  of  shares  of  Common  Stock
     outstanding  on the date of issuance  of such  rights or warrants  plus the
     number of shares that the aggregate  offering  price of the total number of
     shares of Common  Stock so offered  (or the  aggregate  initial  conversion
     price of the convertible  securities so offered) would purchase at the then
     current  market  price per share of Common  Stock.  Such  adjustment  shall
     become  effective  immediately  after the date such rights or warrants  are
     issued,   retroactive  to  the  record  date  for  the   determination   of
     stockholders entitled to receive such rights or warrants.

          (c)  Distributions  of assets.  In the event the  Company  shall fix a
     record  date for the  distribution  to all  holders of its shares of Common
     Stock (i) evidences of its indebtedness, (ii) securities (other than Common
     Stock or rights or warrants of the type described in Section 7.2(a) or (b))
     or (iii) assets  (including  extraordinary  cash  dividends,  but excluding
     regular  distributions,  including  cash  dividends,  paid in the  ordinary
     course),  then in each case the Warrant  Price shall be adjusted to a price
     determined by multiplying the Warrant Price in effect  immediately prior to
     such  distribution by a fraction,  of which the numerator shall be the then
     current market price per share of Common Stock (as defined in paragraph (f)
     below)  on the date of such  distribution,  less the then  fair  value  (as
     determined  in good faith by the Board of Directors  of the Company,  whose
     determination  shall be conclusive and set forth in a certified  resolution
     of the Board of Directors)  of the portion of the assets or the  securities
     or the evidences of indebtedness so distributed  applicable to one share of
     Common Stock, and of which the denominator shall be the then current market
     price per share of Common Stock. Such adjustment shall be made whenever any
     such  distribution  is made,  and  shall  become  effective  on the date of
     distribution,  retroactive  to the  record  date for the  determination  of
     stockholders entitled to receive such distribution.

          (d) Issuance of Common  Stock.  In case the Company shall issue shares
     of Common Stock  (excluding  shares  issued (i) in any of the  transactions
     described  in paragraph  (a) hereof,  (ii) upon  conversion  or exchange of
     securities convertible into or exchangeable for Common Stock, including the
     Warrants, (iii) to the Company's employees under bona fide employee benefit
     plans  adopted by the  Company,  (iv) upon  exercise  of rights or warrants
     issued  to the  holders  of Common  Stock,  but only if at the time of such
     issuance  the current  market  price of the Common Stock is greater than or
     equal to the Warrant Price,  (v) issued to acquire,  or in connection  with
     the  acquisition  of, all or any portion of a business as a going  concern,
     whether such acquisition shall be effected by purchase of assets,  exchange
     of securities,  merger,  consolidation or otherwise,  (vi) upon exercise of
     rights or warrants issued in a firm  commitment  public  offering,  with an
     initial  exercise  price at least equal to the current  market price at the
     date of  issuance or (vii) in a firm  commitment  public  offering),  for a
     consideration  per share of Common Stock less than the current market price
     per share of Common Stock (as defined in paragraph  (f) hereof) on the date
     the Company fixes the offering price of such additional shares, the Warrant
     Price  shall be  adjusted  immediately  prior  thereto by  multiplying  the
     Warrant Price in effect  immediately  prior to such issuance by a fraction,

     
     of which the numerator  shall be the total number of shares of Common Stock
     outstanding  immediately  prior to the issuance of such  additional  shares
     plus the number of shares of Common Stock which the aggregate consideration
     received  (determined as provided in paragraph (g) hereof) for the issuance
     of such  additional  shares would purchase at the then current market price
     per share of Common Stock, and of which the denominator shall be the number
     of shares of Common  Stock  outstanding  immediately  after the issuance of
     such additional shares. Such adjustment shall be made successively whenever
     such an issuance is made.

          (e)  Issuance of  convertible  securities.  In case the Company  shall
     issue any  securities  convertible  into or  exchangeable  for Common Stock
     (excluding  securities  issued  in  transactions  described  in  paragraphs
     (a)(iv),  (b) and (c) hereof) for a consideration per share of Common Stock
     initially  deliverable  upon  conversion  or  exchange  of such  securities
     (determined  as provided  in  paragraph  (g) hereof)  less than the current
     market price per share of Common Stock (as defined in paragraph (f) hereof)
     in effect immediately prior to the issuance of such securities, the Warrant
     Price shall be adjusted  immediately  thereafter so that it shall equal the
     price  determined by  multiplying  the Warrant Price in effect  immediately
     prior thereto by a fraction,  of which the numerator shall be the number of
     shares of Common  Stock  outstanding  immediately  prior to the issuance of
     such  securities  plus the  number  of shares  of  Common  Stock  which the
     aggregate  consideration  received (determined as provided in paragraph (g)
     hereof) for such securities  would purchase at the current market price per
     share of Common Stock, and of which the denominator  shall be the number of
     shares of Common Stock outstanding  immediately prior to such issuance plus
     the maximum number of shares of Common Stock deliverable upon conversion of
     or in exchange for such  securities  at the initial  conversion or exchange
     price or rate. Such adjustment shall be made successively  whenever such an
     issuance is made.

          Upon  the  termination  of the  right  to  convert  or  exchange  such
     securities,  the Warrant Price shall be readjusted to such Warrant Price as
     would have been obtained had the adjustments made upon the issuance of such
     convertible  or  exchangeable  securities  been  made upon the basis of the
     delivery of only the number of shares of Common  Stock  actually  delivered
     upon  conversion or exchange of such  securities  and upon the basis of the
     consideration  actually received by the Company  (determined as provided in
     paragraph (g) hereof) for such  securities.  Such a readjustment  shall not
     affect the number of shares issued upon the exercise of any Warrants  prior
     to the date the readjustment is made.

          (f)  Definition  of market price.  For the purpose of any  computation
     under  paragraphs  (b),  (c),  (d) and (e) of this  Section 7.2 and for the
     purpose of Section 3.4 hereof, the current market price per share of Common
     Stock at any date shall be deemed to be the  average  of the daily  closing
     price per share for the 10 consecutive  trading days  commencing 20 trading
     days  before such date.  The  closing  price for each day shall be the last
     sale price or, in case no such sale takes place on such day, the average of
     the highest  reported bid and lowest  reported asked prices as furnished by
     the National  Association  of Securities  Dealers Inc.  through Nasdaq or a
     similar organization if Nasdaq is no longer reporting such information.  If
     on any such  trading day shares of Common  



     Stock  are not  quoted  by any such  organization,  the fair  value of such
     shares on such day, as  determined  in good faith by the Board of Directors
     of the Company, shall be used.

          (g)  Valuation  of  consideration.  For  purposes  of any  computation
     respecting  consideration  received  pursuant  to  paragraphs  (d)  and (e)
     hereof, the following shall apply:

               (i) in the case of the  issuance  of shares  of Common  Stock for
          cash,  the  consideration  shall be the amount of such cash,  provided
          that in no case  shall  any  deductions  be made for any  commissions,
          discounts  or  other   expenses   incurred  by  the  Company  for  any
          underwriting of the issue or otherwise in connection therewith;

               (ii) in the case of the  issuance of shares of Common Stock for a
          consideration  in whole or in part other than cash, the  consideration
          other than cash shall be deemed to be the fair market value thereof as
          determined  in good  faith by the Board of  Directors  of the  Company
          (irrespective   of   the   accounting   treatment   thereof),    whose
          determination  shall  be  conclusive  and  described  in  a  certified
          resolution; and

               (iii) in the case of the issuance of securities  convertible into
          or   exchangeable   for  shares  of  Common   Stock,   the   aggregate
          consideration   received   therefor   shall  be   deemed   to  be  the
          consideration  received  by the  Company  for  the  issuance  of  such
          securities plus the additional  minimum  consideration,  if any, to be
          received by the Company upon the  conversion or exchange  thereof (the
          consideration  in each  case to be  determined  in the same  manner as
          provided in clauses (i) and (ii) of this paragraph (g)).

          (h)  Definition  of shares of Common  Stock.  For the purposes of this
     Section 7.2, the term "shares of Common  Stock" shall mean (i) the class of
     stock  designated  as the Common  Stock of the  Company at the date of this
     Agreement  or (ii) any  other  class of stock  resulting  from  changes  or
     reclassifications of such shares consisting solely of changes in par value,
     or from par value to no par value,  or from no par value to par  value.  In
     the event that at any time, as a result of an  adjustment  made pursuant to
     paragraph  (a) above,  the Holders  shall  become  entitled to purchase any
     shares of the Company  other than shares of Common  Stock,  thereafter  the
     number of such other shares so  purchasable  upon  exercise of each Warrant
     and the Warrant  Price of such shares shall be subject to  adjustment  from
     time to time in a manner and on terms as nearly  equivalent as  practicable
     to the provisions with respect to the Warrant Shares  contained in Sections
     7.2 through  7.3,  inclusive as they would have been applied to the Warrant
     Shares.

          (i)  Minimum  adjustment.  No  adjustment  in  the  number  of  shares
     purchasable  hereunder  shall be  required  unless  such  adjustment  would
     require an  increase  or decrease of at least one half (1/2) of one percent
     (1%) in the number of shares purchasable upon the exercise of each Warrant;
     provided,  however,  that any adjustments which by reason of this paragraph
     (i) are not  required  to be made shall be carried  forward  and taken into
     account in any subsequent adjustment or upon any exercise of a Warrant.




          (j)  Warrant   Price   adjustment.   Whenever  the  number  of  shares
     purchasable  upon the  exercise  of each  warrant  is  adjusted,  as herein
     provided, the Warrant Price per share payable upon exercise of each Warrant
     shall be adjusted to the nearest cent by  multiplying  such  Warrant  Price
     immediately prior to such adjustment by a fraction,  of which the numerator
     shall be the number of shares purchasable upon the exercise of each Warrant
     immediately prior to such adjustment, and of which the denominator shall be
     the number of shares so purchasable immediately thereafter.

          (k) Notice of  adjustment.  Whenever the number of shares  purchasable
     upon the  exercise of each  Warrant or the Warrant  Price of such shares is
     adjusted,  as herein  provided,  the Company  shall  promptly  mail to each
     Holder, by first-class mail, postage prepaid,  notice of such adjustment or
     adjustments.

          (l) Company  may reduce  Warrant  Price or  increase  number of shares
     purchasable.  The Company may at its option, at any time during the term of
     the Warrants, reduce the then current Warrant Price, or increase the number
     of shares of Common Stock purchasable upon exercise of each Warrant, to any
     amount deemed appropriate by the Board of Directors of the Company.

          (m)  Consolidation,  Merger,  etc. In case the Company  after the date
     hereof  (a) shall  consolidate  with or merge  into any other  corporation,
     association, partnership, organization, business, individual, government or
     political subdivision thereof or a governmental agency ("Person") and shall
     not be the  continuing or surviving  corporation of such  consolidation  or
     merger,  or (b) shall permit any other Person to consolidate  with or merge
     into the Company  and the  Company  shall be the  continuing  or  surviving
     Person but, in  connection  with such  consolidation  or merger,  shares of
     Common Stock or other  securities  shall be changed  into or exchanged  for
     stock  or  other  securities  of any  other  Person  or cash  or any  other
     property,  or (c) shall transfer all or substantially all of its properties
     or assets to any other Person, or (d) shall effect a capital reorganization
     or  reclassification  of the Common Stock or other securities (other than a
     capital reorganization or reclassification resulting in the issue of shares
     of Common  Stock for which  adjustment  in the Warrant  Price is  otherwise
     provided in Section 7.2) (each a "Merger Event"),  then, and in the case of
     each such Merger Event,  proper  provision  shall be made so that, upon the
     basis and the terms and  conditions  as well as in the manner  provided  in
     this  Agreement,  the  Holder,  upon the  exercise of a Warrant at any time
     after the  consummation of such Merger Event,  shall be entitled to receive
     (at the aggregate Warrant Price adjusted to reflect the modification of the
     number of Warrant  Shares  pursuant to this Section 7.2(m) in effect at the
     time  of  such  consummation  for all  shares  of  Common  Stock  or  other
     securities   issuable  upon  such  exercise   immediately   prior  to  such
     consummation),  in lieu of the shares of Common  Stock or other  securities
     issuable upon such exercise prior to such consummation,  the highest amount
     of securities,  cash or other property to which such Holder would have been
     entitled  as a  stockholder  upon  such  consummation  if such  Holder  had
     exercised the rights represented by this Warrant  immediately prior thereto
     (or, if  applicable,  immediately  prior to the record date  established in
     connection with any such Merger Event), subject to adjustments  (subsequent
     to such  consummation) as nearly  equivalent as possible to the adjustments
     provided for in Sections 7.2 through 7.5.



     In addition,  for the period  commencing on the date of this  Agreement and
     terminating on the date that is the second  anniversary of this  Agreement,
     if  the  Company  shall  engage  in any  Merger  Event  wherein  all of the
     outstanding  Common  Stock of the  Company is  acquired  for  consideration
     consisting  of any  property  or asset  other than the common  stock of the
     acquiring company (the "Merger  Consideration") (a "Special Merger Event"),
     the Company shall pay immediately prior to any record date for such Special
     Merger Event by issuing to the Holder shares of  unregistered  Common Stock
     an amount equal to the  underlying  value of any Warrants  then held by the
     Holder absent the  consummation of the Special Merger Event,  calculated as
     of the  record  date of the  Special  Merger  Event  using a  Black-Scholes
     derived  option  pricing  model  for a sixty  (60)  day  historical  period
     immediately  preceding,  and ending on,  the record  date for such  Special
     Merger  Event.  In the  event  that a  payment  in the  form of  shares  of
     unrestricted  Common Stock is required by this Section  7.2(m) is required,
     it shall be a condition  to the closing of any  Special  Merger  Event that
     such shares of Common  Stock so issued by the  Company  will be entitled to
     receive the  consideration  in the Special Merger Event. To the extent that
     the Merger  Consideration  consists  of the common  stock of the  acquiring
     company and any other form of  consideration,  the payment required by this
     paragraph  shall be pro rated in the same  proportion  as the common  stock
     component of the Merger Consideration is to the other form of consideration
     component of the Merger Consideration.

     7.3 No  Adjustment  in Certain  Cases.  Except as set forth in Section  7.2
hereof,  no adjustment in respect of any dividends shall be made during the term
of a Warrant or upon the exercise of a Warrant.

     7.4 Other  Dilutive  Events.  If any event occurs as to which,  in the good
faith opinion of the Board of Directors of the Company,  the  provisions of this
Section 7.2 are not  strictly  applicable  or if strictly  applicable  would not
fairly protect the rights of the Holder in accordance with the essential  intent
and  principles of such  provisions,  then the Board of Directors  shall make an
adjustment  in the  application  of such  provisions,  in  accordance  with such
essential intent and principles,  so as to protect such rights as aforesaid, but
in no event  shall any  adjustment  have the effect of  increasing  the  Warrant
Shares as otherwise determined pursuant to any of the provisions of this Section
7.2.

     7.5 No Impairment. The Company will not, by amendment of its certificate of
incorporation or through  reorganization,  consolidation,  merger,  dissolution,
sale of  assets  or any  other  voluntary  action,  avoid or seek to  avoid  the
observance or performance  of any of the terms of this Warrant,  but will at all
times in good  faith  assist in the  carrying  out of all such  terms and in the
taking of all such action as may be necessary or appropriate in order to protect
the rights of the Holder against dilution or other impairment.  Without limiting
the generality of the foregoing,  the Company will not increase the par value of
any shares of stock  receivable  upon the  exercise  of this  Warrant  above the
amount payable therefor upon such exercise,  and at all times will take all such
action as may be necessary or  appropriate in order that the Company may validly
and legally issue fully paid and  nonassessable  stock upon the exercise of this
Warrant.

     7.6 Statement on Warrants.  Irrespective  of any adjustments in the Warrant
Price or the  number  or kind of shares  purchasable  upon the  exercise  of the
Warrants,  Warrants 



theretofore  or  thereafter  issued may  continue  to express the same price and
number  and kind of shares  as are  stated in the  Warrants  initially  issuable
pursuant to this Agreement,  but shall be modified and replaced upon the request
of the Holders thereof.

     SECTION 8. Fractional Interests. The Company shall not be required to issue
fractional Warrant Shares on the exercise of Warrants.  If more than one Warrant
shall be presented for exercise in full at the same time by the same Holder, the
number of full Warrant Shares which shall be issuable upon the exercise  thereof
shall be  computed  on the  basis of the  aggregate  number  of  Warrant  Shares
purchasable  on exercise  of the  Warrants so  presented.  If any  fraction of a
Warrant Share would, except for the provisions of this Section 8, be issuable on
the exercise of any Warrant (or specified  portion  thereof),  the Company shall
pay an amount in cash  equal to the  closing  price for one share of the  Common
Stock,  as  defined  in  paragraph  (f)  of  Section  7.2,  on the  trading  day
immediately preceding the date the Warrant is presented for exercise, multiplied
by such fraction.

     SECTION 9. Rights and Notices.

     9.1 No Rights as  Stockholders;  Notices to Holders.  Nothing  contained in
this Agreement or in any of the Warrants  shall be construed as conferring  upon
the Holders or their  transferees,  the right to vote or to receive dividends or
to consent or to receive  notice as  stockholders  in respect of any  meeting of
stockholders  for the election of directors of the Company or any other  matter,
or any rights  whatsoever as  stockholders of the Company.  If, however,  at any
time prior to the expiration of the Warrants and prior to their exercise, any of
the following events shall occur:

          (a) the Company shall declare any dividend  payable in any  securities
     upon its  shares of Common  Stock or make any  distribution  (other  than a
     regular cash dividend, as such dividend may be increased from time to time)
     to the holders of its shares of Common Stock; or

          (b) the  Company  shall  offer to the  holders of its shares of Common
     Stock any cash,  additional  shares of Common Stock or other  securities of
     the Company or any right to subscribe for or purchase any thereof; or

          (c) a  dissolution,  liquidation  or winding up of the Company  (other
     than in connection with a consolidation, merger, sale, transfer or lease of
     all or  substantially  all of  its  property,  assets  and  business  as an
     entirety) shall be proposed,

then in any one or more of said events the Company  shall give notice in writing
of such event as  provided  in Section  10 hereof,  such  giving of notice to be
completed  at least 30 days prior to the date fixed as a record date or the date
of closing the transfer books for the determination of the stockholders entitled
to such dividend,  distribution, or subscription rights or for the determination
of stockholders  entitled to vote on such proposed  dissolution,  liquidation or
winding up or the date of  expiration  of such offer.  Such notice shall specify
such  record  date or the  date of  closing  the  transfer  books or the date of
expiration,  as the case may be.  Failure to mail or receive  such notice or any
defect  therein or in the  publication  or mailing  thereof shall not 


affect  the  validity  of  any  action  in   connection   with  such   dividend,
distribution, liquidation or winding up, or such offer.

     9.2 Reports to Holders.  If at any time while any Warrants are  outstanding
the Company is no longer subject to the reporting  requirements of Section 12 or
15 of the  Securities  Exchange  Act of 1934,  the Company will cause annual and
quarterly  reports to be sent to the Holders that shall  contain such  financial
statements  and other  information  concerning  the  business and affairs of the
Company as would be required to permit Holders to sell securities of the Company
pursuant to Rule 144 of the Securities Act of 1933, as amended (the  "Securities
Act"),  including  information  required to be included in annual and  quarterly
reports filed with the Securities and Exchange Commission pursuant to Section 13
or  15(d)  of the  Securities  Exchange  Act of  1934  by an  issuer  registered
therewith pursuant to Section 12 of said Act.

     SECTION 10. Notices. Any notice pursuant to this Agreement by any Holder to
the  Company,  shall be in  writing  and  shall be  delivered  in  person  or by
facsimile  transmission,  or mailed first class, postage prepaid to the Company,
at its principal office, Attention: General Counsel. Any notice pursuant to this
Agreement by the Company to the Holders, shall be in writing and shall be mailed
first class, postage prepaid, or otherwise  delivered,  to such Holders at their
respective  addresses  on the books of the  Company.  Each party hereto may from
time to time change the address to which  notices to it are to be  delivered  or
mailed hereunder by notice to the other party.

     SECTION  11.  Successors.  Except  as  expressly  provided  herein  to  the
contrary,  all the  covenants  and  provisions  of this  Agreement by or for the
benefit of the Company and the Purchaser  shall bind and inure to the benefit of
their respective successors and permitted assigns hereunder.

     SECTION 12. Merger or  Consolidation  of the Company.  The Company will not
merge  or  consolidate  with  or  into,  or  sell,  transfer  or  lease  all  or
substantially all of its property to, any other corporation unless the successor
or  purchasing  corporation,  as the  case  may be (if not the  Company),  shall
expressly assume, by supplemental  agreement,  the due and punctual  performance
and  observance of each and every covenant and condition of this Agreement to be
performed and observed by the Company.

     SECTION 13. Private Placement.

     The Purchaser hereby represents that:

          (a) The  Purchaser  understands  that  the  offering  and  sale of the
     Warrants is intended to be exempt from  registration  under the  Securities
     Act pursuant to Section 4(2) of the Securities Act.

          (b) To the extent  that the  Purchaser  has  employed  any  investment
     banker,  broker or finder or incurred any liability for any brokerage fees,
     commissions   or  finder's  fees  in  connection   with  the   transactions
     contemplated by this Agreement,  the Purchaser shall be responsible for the
     payment of any such fees or commissions.




          (c) The Purchaser  understands  that the Warrants  have not been,  and
     will not be,  registered under any securities laws, state or federal;  that
     the  Warrants  must be  held  indefinitely  unless  they  are  subsequently
     registered  under  applicable  securities  laws or an  exemption  from such
     registration  is  available;  that the  Company is under no  obligation  to
     register the Warrants or in complying with any exemption from registration.
     In addition,  the Purchaser  understands  that the Warrant  Shares have not
     been,  and may not be,  registered  under  any  securities  laws,  state or
     federal;  that the Warrant Shares must be held indefinitely unless they are
     subsequently  registered under  applicable  securities laws or an exemption
     from such  registration  is  available;  that  except as  provided  in this
     Agreement,  the  Company is under no  obligation  to  register  the Warrant
     Shares or to assist in complying with any exemption from registration.

          (d) The Purchaser agrees that it will not transfer,  by way of gift or
     otherwise,  or sell the Warrants or any part thereof or the Warrant Shares,
     unless such Warrants or Warrant Shares, as applicable, have been registered
     under  the  Securities  Act or it first  obtains,  at its own  expense,  an
     opinion of counsel reasonably satisfactory to the Company that the transfer
     of such  Warrants or Warrant  Shares may be effected  without  registration
     under the  Securities  Act,  provided that no opinion shall be necessary to
     effect a  transfer  to  affiliates  of the  Purchaser,  to the  extent  the
     Purchaser  or such person  confirms the  representations  set forth in this
     Section 13.

          (e) The Purchaser is not acquiring the Warrants as a result of (i) any
     advertisement,  article,  notice or other  communication  published  in any
     newspaper, magazine, or similar media or broadcast over television or radio
     or (ii) any seminar  meeting  whose  attendees had been invited as a result
     of, subsequent to, or pursuant to any of the foregoing.

          (f) The Purchaser  understands that there will be no public market for
     the Warrants.

          (g) The Purchaser  (i) has carefully  evaluated the risks of investing
     in the  Company,  (ii) has no need for  liquidity in this  investment,  and
     (iii) should it decide to exercise the  Warrants,  will be able to bear the
     substantial economic risks of an investment in the Warrant Shares.

          (h)  The  Purchaser  has   sufficient   knowledge  and  experience  in
     financial,   tax  and  business  matters  to  enable  him  to  utilize  the
     information  made  available to him in connection  with the purchase of the
     Warrants,  to evaluate the merits and risks of the  prospective  investment
     and to make an informed investment decision with respect thereto.

          (i) The  Purchaser  acknowledges  that the Company is relying upon the
     representations and warranties  contained herein in determining to make the
     sale of the Warrants, and the Purchaser consents to such reliance.

          (j) The  Purchaser  has  received  and  carefully  reviewed  financial
     information  pertaining to the Company, has had a reasonable opportunity to
     ask questions of and


     receive answers from the Company and its directors,  officers and employees
     concerning  the Warrants and the business and affairs of the Company,  and,
     all such  questions  have been  answered  to the full  satisfaction  of the
     Purchaser.  No oral  representations  have  been  made or oral  information
     furnished  in  connection  with the sale of Warrants  which were in any way
     relied upon by the Purchaser.

          (k) Company  Excluded  Information.  The  Purchaser  acknowledges  and
     agrees  that the Company may possess  material  information  not  generally
     known  by the  public  or by  the  Purchaser  regarding  the  Company,  its
     business,   its  condition  (financial  or  otherwise)  and  its  prospects
     (collectively,  the  "Company  Excluded  Information"),  and the  Purchaser
     agrees that the Company  shall have no  liability  to the  Purchaser to the
     extent the  Purchaser  incurs or  otherwise  suffers any  liability,  loss,
     expense, cost or damage arising out of or relating to the non-disclosure of
     the Company Excluded Information.

     SECTION 14. Legends.  Certificates  evidencing the Warrants issued pursuant
to this Agreement and any Warrant Shares shall bear the following legend:

          "The securities  evidenced  hereby have not been registered  under the
     Securities  Act of 1933,  as amended (the "Act"),  or any state  securities
     law,  and  may  not  be  transferred   except   pursuant  to  an  effective
     registration  under  the  Act  and  such  state  securities  laws  or  in a
     transaction which, in the opinion of counsel reasonably satisfactory to the
     Company,  qualifies as an exempt  transaction  under the Act and applicable
     state securities laws and the rules and regulations promulgated thereunder.

          In addition,  such securities are subject to the terms of that certain
     Warrant  Agreement,  dated as of March 11, 2002, by and between the Company
     and William L. Grewcock, including certain restrictions on transfer. A copy
     of such  Agreement  has been filed with the Secretary of the Company and is
     available upon request."

     SECTION  15.  Applicable  Law.  This  Agreement  and  each  Warrant  issued
hereunder  shall be governed by and  constructed in accordance  with the laws of
the State of Delaware,  without  giving effect to principles of conflict of laws
thereof.

     SECTION 16. Benefits of this Agreement.  Nothing in this Agreement shall be
construed  to give to any person or  corporation  other than the Company and the
Holders any legal or equitable right, remedy or claim under this Agreement;  but
this  Agreement  shall be for the sole and exclusive  benefit of the Company and
the Holders.

     SECTION 17.  Counterparts.  This Agreement may be executed in any number of
counterparts and each of such  counterparts  shall for all purposes be deemed to
be an original,  and all such counterparts shall together constitute but one and
the same instrument.

     SECTION 18. Captions.  The captions of the Sections and subsections of this
Agreement have been inserted for convenience  only and shall have no substantive
effect.


     SECTION 19. Miscellaneous.

     (a) If any  term or  provision  of  this  Agreement  is held by a court  of
competent jurisdiction or other authority to be invalid, void,  unenforceable or
against its regulatory policy, the remainder of the terms, provisions, covenants
and  restrictions  of this  Agreement  shall remain in full force and effect and
shall in no way be affected, impaired or invalidated.

     (b) Except as otherwise  provided  herein,  each party hereto shall pay its
own expenses incurred with this Agreement.

                            [Signature Page Follows]



     IN WITNESS  WHEREOF,  the parties  hereto have caused this  Agreement to be
duly executed, all as of the day and year first above written.

                                                 LEVEL 3 COMMUNICATIONS, INC.



                                                 By: /S/ Neil J. Eckstein
                                                  Name:  Neil J. Eckstein
                                                  Title:  Vice President

                                                 WILLIAM L. GREWCOCK
                                                 /S/ William L. Grewcock




                                                                       EXHIBIT A

THE SECURITIES  EVIDENCED  HEREBY HAVE NOT BEEN REGISTERED  UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY STATE SECURITIES LAW, AND MAY NOT BE
TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE  REGISTRATION UNDER THE ACT AND SUCH
STATE  SECURITIES  LAWS OR IN A  TRANSACTION  WHICH,  IN THE  OPINION OF COUNSEL
REASONABLY SATISFACTORY TO THE COMPANY, QUALIFIES AS AN EXEMPT TRANSACTION UNDER
THE ACT AND  APPLICABLE  STATE  SECURITIES  LAWS AND THE RULES  AND  REGULATIONS
PROMULGATED THEREUNDER.

IN ADDITION,  SUCH  SECURITIES ARE SUBJECT TO THE TERMS OF THAT CERTAIN  WARRANT
AGREEMENT, DATED AS OF MARCH 11, 2002, BY AND BETWEEN THE COMPANY AND WILLIAM L.
GREWCOCK,  INCLUDING CERTAIN  RESTRICTIONS ON TRANSFER. A COPY OF SUCH AGREEMENT
HAS BEEN FILED WITH THE SECRETARY OF THE COMPANY AND IS AVAILABLE UPON REQUEST.


VOID AFTER 5:00 P.M., New York City time, June 30, 2009

                              Warrants to Purchase

                           [Number of Warrant Shares]
                             Shares of Common Stock


                          LEVEL 3 COMMUNICATIONS, INC.
                         COMMON STOCK PURCHASE WARRANTS

     This certifies  that, for value received,  _________ or registered  assigns
(the  "Holder"),  is entitled to purchase from Level 3  Communications,  Inc., a
Delaware  corporation,  (the  "Company"),  at any time after 9:00 a.m., New York
City time,  on December 31, 2001 and prior to 5:00 p.m.,  New York City time, on
June 30, 2009, at the purchase  price of $8.00 per share (the "Warrant  Price"),
the number of shares of its Common Stock,  par value $.01 per share (the "Common
Stock"),  shown above.  The number of shares  purchasable  upon  exercise of the
Common  Stock  Purchase  Warrants  (the  "Warrants")  and the Warrant  Price are
subject to  adjustment  from time to time as set forth in the Warrant  Agreement
referred to below.  Outstanding Warrants not exercised prior to 5 p.m., New York
City time, on June 30, 2009 shall thereafter be void.

     Warrants  may be  exercised  in  whole or in part by  presentation  of this
Warrant  Certificate  with the  Purchase  Form on the  reverse  side hereof duly
executed,  which signature (if not the Purchaser)  shall be guaranteed by a bank
or trust  company  or a broker  or  dealer  which  is a member  of the  National
Association of Securities Dealers, Inc., and simultaneous payment of the Warrant
Price at the  principal  office of the  Company.  Payment of such price shall be
made in cash or by certified or official bank check or as otherwise  provided in
the Warrant  Agreement  


referred to below. As provided in the Warrant  Agreement  referred to below, the
Warrant  Price and the number of kind of shares which may be purchased  upon the
exercise of the Warrants  evidenced by this Warrant  Certificate  are,  upon the
happening of certain events, subject to modification and adjustment.

     This Warrant  Certificate is issued under and in accordance  with a Warrant
Agreement dated as of March 11, 2002 between the Company and William L. Grewcock
and is subject to the terms and provisions  contained in the Warrant  Agreement,
to all of which the Holder of this  Warrant  Certificate  by  acceptance  hereof
consents.  A copy of the Warrant  Agreement may be obtained by the Holder hereof
upon written request to the Company.

     Upon  any  partial  exercise  of the  Warrants  evidenced  by this  Warrant
Certificate,  there  shall  be  issued  to  the  Holder  hereof  a  new  Warrant
Certificate  in respect of the shares of Common  Stock as to which the  Warrants
evidenced  by this  Warrant  Certificate  shall  not have been  exercised.  This
Warrant  Certificate  may be exchanged at the office of the Company by surrender
of  this  Warrant   Certificate   properly  endorsed  either  separately  or  in
combination  with one or more  other  Warrant  Certificates  for one or more new
Warrant Certificates  evidencing the right of the Holder thereof to purchase the
aggregate  number of shares as were  purchasable  on  exercise  of the  Warrants
evidenced by the Warrant  Certificate or Certificates  exchanged.  No fractional
shares will be issued upon the exercise of any Warrant, but the Company will pay
the cash value  thereof  determined as provided in the Warrant  Agreement.  This
Warrant  Certificate is  transferable at the office of the Company in the manner
and subject to the limitations set forth in the Warrant Agreement.

     The  Holder  hereof may be treated  by the  Company  and all other  persons
dealing  with this  Warrant  Certificate  as the  absolute  owner hereof for any
purpose and as the person entitled to exercise the rights represented hereby, or
to the transfer  hereof on the books of the company,  any notice to the contrary
notwithstanding,  and until such  transfer on such books,  the Company may treat
the Holder hereof as the owner for all purposes.


     Neither the Warrants nor this  Warrant  Certificate  entitles any Holder to
any of the rights of a stockholder of the Company.

DATED:

                                                   LEVEL 3 COMMUNICATIONS, INC.

                                                   By:   

                                                   Attest:    




                                  PURCHASE FORM

                    (To be executed upon exercise of Warrant)

To LEVEL 3 COMMUNICATIONS, INC.:

     The undersigned hereby irrevocably elects to exercise the right of purchase
represented by the within Warrant  Certificate for, and to purchase  thereunder,
_______ shares of Common Stock,  as provided for therein,  and tenders  herewith
payment  of the  purchase  price in full in the form of cash or a  certified  or
official  bank  check in the  amount of $_____ or  securities  in the  amount of
$_________ pursuant to the non-cash exercise provisions set forth in the Warrant
Agreement  dated  as of  December  31,  2001  between  the  Company  and  Kiewit
Construction Company.

     Please issue a certificate or certificates  for such shares of Common Stock
in the name of, and pay any cash for any fractional share to:

PLEASE INSERT SOCIAL SECURITY OR         NAME
OTHER IDENTIFYING NUMBEROF PURCHASER     (Please Print Name & Address)


                                         Address
                                         Signature
                                         NOTE:  The above signature should 
                                                correspond exactly with the name
                                                on the face of this Warrant 
                                                Certificate or with the name of 
                                                the assignee appearing in the 
                                                assignment form below.


And, if said number of shares shall not be all the shares  purchasable under the
within  Warrant  Certificate,  a new Warrant  Certificate is to be issued in the
name of said  undersigned  for the balance  remaining  of the share  purchasable
thereunder less any fraction of a share paid in cash.


                                   ASSIGNMENT

  (To be executed only upon assignment of Warrant Certificate)

     For value  received,  _________  hereby sells,  assigns and transfers  unto
_________ the within  Warrant  Certificate,  together with all right,  title and
interest therein,  and does hereby irrevocably  constitute and appoint _________
attorney,  to transfer said Warrant Certificate on the books of the within-named
Company, with full power of substitution in the premises.

Dated:     
                              NOTE:    The above signature should correspond
                                       exactly with the name on the face of this
                                       Warrant Certificate.

PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER
OF ASSIGNEE



                                                     
                                                                      Exhibit B
                                              
                              REGISTRATION RIGHTS

     (a) At any time after  December 31, 2003,  and subject to the  restrictions
contained  in this  Agreement,  upon a written  request  to  register  under the
Securities Act of 1933, as amended,  by the Purchaser,  or by the Holders of (i)
Warrants  representing  the right to purchase Warrant Shares and/or (ii) Warrant
Shares, which in the aggregate comprise 50% or more of the Common Stock issuable
upon  exercise of the  Warrants  (the  "Majority  Holders"),  the Company  shall
promptly  prepare and file no later than 45 days  following  any such request at
its sole expense,  a  registration  statement  with the  Securities and Exchange
Commission (the "Commission") to register the resale of the Warrant Shares to be
received  by any  Holder,  and any  other  shares of  Common  Stock  held by the
Purchaser (the "Registrable Securities").  However, in no event will the Company
be required to file more than one such  registration  statement  and the Company
shall  not  be  required  to  file  a  registration  statement  relating  to the
registration  of the  Warrants.  The Company  shall notify all other  Holders of
Registrable  Securities  of such  registration,  and shall allow such  Holders a
reasonable   opportunity  to  participate  in  such  registration.   Subject  to
subsection (c) hereof,  the Holders  acknowledge that the Company may include in
such registration statement shares of Common Stock to be sold for the account of
other holders of Common Stock or the Company.

     (b) The  obligations  of the  Company to use its best  efforts to cause the
Registrable  Securities to be registered under the Securities Act are subject to
the following limitations:

          (i) The Company  shall be  entitled to postpone  for up to 120 days in
     any twelve-month period the filing of any registration  statement otherwise
     required to be prepared and filed by it pursuant to  subsection  (a) if, at
     the  time  it  receives  a  request  for  such  registration,  the  Company
     determines,  in its reasonable  judgment,  that such  registration and sale
     would  materially  interfere  with any  financing,  acquisition,  corporate
     reorganization or other material  transaction  involving the Company or any
     of its  subsidiaries  and promptly gives the Holders written notice of such
     determination.   If  the  Company   shall  so  postpone  the  filing  of  a
     registration  statement,  the  requesting  party or parties  shall have the
     right to withdraw the request for  registration by giving written notice to
     the  Company  within  30  calendar  days  after  receipt  of the  notice of
     postponement (and, in the event of such withdrawal,  such request shall not
     be  counted  for  purposes  of  determining  the  number  of  requests  for
     registration to which the Holders are entitled pursuant to subsection (a)).

          (ii) A registration statement with respect to a registration requested
     pursuant to subsection  (a) that has not become  effective  within 120 days
     following  any  such  request  shall  not be  counted  for the  purpose  of
     determining  the number of requests for  registration  to which the Holders
     are entitled pursuant to  subsection (a)  unless agreed to by the Purchaser
     and  by  the  Majority  Holders  or  more  of  the  Registrable  Securities
     outstanding.  Notwithstanding the foregoing, in the event that such failure
     to become  effective is the result of action or inaction on the part of the
     Purchaser or the Majority  Holders,  such  registration  statement shall 


     be  counted  for  purposes  of  determining  the  number  of  requests  for
     registration under subsection (a).

          (iii)  The  Company  shall  pay the  costs  of one  such  registration
     statement filed pursuant to subsection (a),  including  without  limitation
     all  registration  and filing fees,  fees and expenses of  compliance  with
     securities  or Blue Sky laws  (including  counsel's  fees and  expenses  in
     connection therewith),  printing expenses, messenger and delivery expenses,
     internal expenses of the Company  (including all salary and expenses of its
     officers and employees  performing legal or accounting  services),  listing
     fees  and  expenses,  and  fees  and  expenses  of the  Company's  counsel,
     independent  accountants  and other  persons  retained  or  employed by the
     Company in connection with such registration  statement  (provided that the
     selling Holders shall pay all underwriters discounts, commissions and fees,
     the fees and  expenses  of counsel to the  Holders  and all other costs and
     expenses incurred by such Holders).

     (c)  Priority  in  Requested  Registrations.  If a  requested  registration
involves an underwritten offering, and the managing underwriter shall advise the
Company  in  writing  (with a copy  to each  holder  of  Registrable  Securities
requesting  registration)  that,  in  its  opinion,  the  number  of  securities
requested  to be  included in such  registration  (including  securities  of the
Company which are not  Registrable  Securities)  exceeds the number which can be
sold in such  offering  within a price  range  acceptable  to the  holders  of a
majority  of  the  Registrable  Securities  requested  to be  included  in  such
registration,  the Company will include in such  registration,  to the extent of
the number  which the  Company is so advised can be sold in such  offering,  (i)
first,  Registrable  Securities requested to be included in such registration by
the holder or  holders of  Registrable  Securities,  pro rata among the  holders
thereof such holders  requesting such registration on the basis of the number of
such  securities  requested  to be  included by such  holders  and (ii)  second,
securities  the  Company  proposes to sell and other  securities  of the Company
included in such registration by the holders thereof.

     (d) Upon any such registration  statement becoming  effective,  the Company
shall use its best  efforts to keep such  registration  statement  current for a
period of six (6) months or such lesser  period as the parties may agree (but in
no event beyond the completion of the distribution or  distributions  being made
pursuant  thereto).  The Company shall make such filings,  and will use its best
efforts to cause such filings to become effective,  so that the securities being
registered  shall be registered  or qualified  for sale under the  securities or
Blue Sky laws of such  jurisdictions as shall be reasonably  appropriate for the
distribution of the securities covered by the registration statement;  provided,
however,  that the  Company  shall not be  required  to  register as a broker or
dealer in any jurisdiction where it is not presently so registered or to qualify
as a foreign  corporation to do business under the laws of any  jurisdiction  in
which it is not then  qualified  or to file any  general  consent  to service of
process.  The Company will furnish to the selling Holders such numbers of copies
of a prospectus,  including a  preliminary  prospectus,  in conformity  with the
requirements  of the  Securities  Act and such other  related  documents  as the
selling  Holders  may  reasonably  request  in order to  effect  the sale of the
securities  to be offered  and sold by the selling  Holders,  but only while the
Company is required to cause the registration statement to remain current.


     (e) To effect  any such  registration,  and if  requested  by the  Majority
Holders, the Company and the selling Holders shall enter into with an investment
banking firm,  selected by the Majority  Holders and reasonably  satisfactory to
the Company, an underwriting agreement containing customary  representations and
warranties  and  provisions   relating  to   indemnification   and  contribution
(including  appropriate  indemnification  and  contribution  between the selling
Holders as selling stockholders and the Company and other customary provisions).

     (f) Except as may  otherwise  be  provided  in any  underwriting  agreement
entered  into by the Company  and the  Holders,  in the event of any  registered
offering of shares of Common  Stock  pursuant to this  Agreement in which any of
the  Holder's  shares of Common  Stock are sold,  and as the sole and  exclusive
remedy of the Holders:

          (i) The  Company  will  indemnify  and hold  harmless,  to the fullest
     extent permitted by law, the Holders and each person,  if any, who controls
     each Holder within the meaning of the Securities  Act, from and against any
     and all losses, damages, claims,  liabilities,  joint or several, costs and
     expenses  (including any amounts paid in any  settlement  effected with the
     Company's  consent) to which the Holders or any such controlling person may
     become subject under the Securities Act, state securities or blue sky laws,
     common  law  or  otherwise,   insofar  as  such  losses,  damages,  claims,
     liabilities  (or  actions  or  proceedings  in respect  thereof),  costs or
     expenses arise out of or are based upon (x) any untrue statement or alleged
     untrue  statement  of any  material  fact  contained  in  the  registration
     statement or included  prospectus,  as amended or supplemented,  or (y) the
     omission or alleged  omission to state  therein a material fact required to
     be stated therein or necessary to make the statements  therein, in light of
     the  circumstances in which they are made, not misleading,  and the Company
     will reimburse the Holders and each such controlling  person of the Holders
     promptly  upon  demand  for any  reasonable  legal  or any  other  expenses
     incurred by them in connection with  investigating,  preparing to defend or
     defending against or appearing as a third-party  witness in connection with
     such  loss,  claim,  damage,  liability,  action or  proceeding;  provided,
     however, that the Company will not be liable to any Holder in any such case
     to the extent that any such loss, damage, liability, cost or expense arises
     out of or is based upon an untrue  statement or alleged untrue statement or
     omission  or  alleged  omission  so made  in  conformity  with  information
     furnished   by  such  Holder  or  such   controlling   persons  in  writing
     specifically  for use in the  preparation  thereof.  Such  indemnity  shall
     remain in full force and effect regardless of any investigation  made by or
     on behalf of any  Holder or any  controlling  person of the  Investor,  and
     shall survive the transfer of such securities by the Investor.

          (ii) Each  Holder will  indemnify  and hold  harmless,  to the fullest
     extent permitted by law, the Company and each person,  if any, who controls
     the  Company  from  and  against  any  and  all  losses,  damages,  claims,
     liabilities,  joint or several,  costs or expenses  (including  any amounts
     paid in any settlement with such Holder's  consent) to which the Company or
     any such  controlling  person may become subject under the Securities  Act,
     state securities or blue sky laws, common law or otherwise, insofar as such
     losses, damages, claims,  liabilities (or 


     actions or proceedings in respect thereof),  costs or expenses arise out of
     or are based upon any untrue or alleged  untrue  statement  of any material
     fact contained in the  registration  statement or included  prospectus,  as
     amended or supplemented,  or arise out of or are based upon the omission or
     the alleged omission to state therein a material fact required to be stated
     therein  or  necessary  to make  the  statements  therein,  in light of the
     circumstances in which they were made, not misleading,  in each case to the
     extent,  but only to the  extent,  that such  untrue  statement  or alleged
     untrue  statement  or  omission or alleged  omission  was so made in strict
     conformity with written  information  furnished by such Holder specifically
     for use in the  preparation  thereof  and such Holder  will  reimburse  the
     Company  and each such  controlling  person of the  Company  promptly  upon
     demand for any reasonable  legal or any other expenses  incurred by them in
     connection with investigating,  preparing to defend or defending against or
     appearing as a  third-party  witness in connection  with such loss,  claim,
     damage,  liability,  action or proceeding.  Such indemnity  shall remain in
     full force and effect regardless of any investigation  made by or on behalf
     of the Company or any controlling person of the Company,  and shall survive
     the transfer of such securities by the Holder. Each Holder, by allowing its
     shares of Common Stock or Warrant Shares to be included in the registration
     statement, agrees to the terms of this Exhibit B.

          (iii) Promptly  after receipt by an indemnified  party pursuant to the
     provisions of subsection  (f)(i) or (ii) of this Exhibit B of notice of the
     commencement  of any action  involving the subject  matter of the foregoing
     indemnity provisions, such indemnified party will, if a claim thereof is to
     be made against the  indemnifying  party pursuant to the provisions of said
     subsection  (f)(i) or (ii),  promptly notify the indemnifying  party of the
     commencement  thereof;  but the omission to notify the  indemnifying  party
     will not relieve it from any liability which it may have to any indemnified
     party otherwise  hereunder,  except to the extent of actual  prejudice.  In
     case such action is brought against any  indemnified  party and it notifies
     the indemnifying party of the commencement  thereof, the indemnifying party
     shall have the right to  participate  in,  and,  to the extent  that it may
     wish,  jointly with any other  indemnifying  party similarly  notified,  to
     assume the defense  thereof with counsel  reasonably  satisfactory  to such
     indemnified  party;  provided,  however,  if the  defendants  in any action
     include both the indemnified party and the indemnifying  party and there is
     a conflict of interest  which would  prevent  counsel for the  indemnifying
     party from also  representing the indemnified  party, the indemnified party
     or  parties  shall  have the  right  to  select  one  separate  counsel  to
     participate  in the  defense of such  action on behalf of such  indemnified
     party  or  parties.  After  notice  from  the  indemnifying  party  to such
     indemnified  party of its  election so to assume the defense  thereof,  the
     indemnifying party will not be liable to such indemnified party pursuant to
     the  provisions  of said  subsection  (f)(i) or (ii) for any legal or other
     expense subsequently  incurred by such indemnified party in connection with
     the defense thereof other than reasonable  costs of  investigation,  unless
     (x) the  indemnified  party shall have employed  counsel in accordance with
     the proviso of the preceding sentence, (y) the indemnifying party shall not
     have employed counsel  


     reasonably   satisfactory  to  the  indemnified   party  to  represent  the
     indemnified  party  within  a  reasonable  time  after  the  notice  of the
     commencement of the action, or (z) the indemnifying party agrees in writing
     to bear such expenses.  No indemnifying  party will consent to entry of any
     judgment  or enter  into  any  settlement  which  does  not  include  as an
     unconditional  term thereof the giving by the claimant or plaintiff to such
     indemnified  party of a release from all liability in respect to such claim
     or litigation.

          (iv) If recovery is not available under the foregoing  indemnification
     provisions,  for any reason  other than as specified  therein,  the parties
     entitled  to  indemnification  by the terms  thereof  shall be  entitled to
     contribution  to  liabilities  and  expenses,  except  to the  extent  that
     contribution is not permitted under Section 11(f) of the Securities Act. In
     determining the amount of contribution to which the respective  parties are
     entitled,  there shall be considered  the parties'  relative  knowledge and
     access to information concerning the matter with respect to which the claim
     was  asserted,  the  opportunity  to correct and prevent any  statement  or
     omission,  and any other  equitable  considerations  appropriate  under the
     circumstances.

     (g) If, at any time after December 31, 2003, the Company shall determine to
register  any of its equity  securities  either  for its own  account or for the
account  of a security  holder or holders  exercising  their  respective  demand
registration  rights,  other than a  registration  relating  solely to  employee
benefit plans, a registration on Form S-4 or any successor or substitute form or
a  registration  relating  solely to a  Commission  Rule 145  transaction,  or a
registration on any  registration  form which does not permit secondary sales or
does not include  substantially  the same information as would be required to be
included  in  a  registration   statement   covering  the  sale  of  Registrable
Securities,  the Company will (i) promptly give to each of the Holders a written
notice  thereof  (which shall include a list of the  jurisdictions  in which the
Company intends to attempt to qualify such securities  under the applicable blue
sky or other state securities  laws); and (ii) include in such registration (and
any related  qualification under blue sky laws or other compliance),  and in any
underwriting  involved  therein,  all the Warrant Shares  specified in a written
request or requests,  made by the Holders  within twenty (20) days after receipt
of the written notice from the Company described in clause (i) above,  except as
set forth in paragraph (h) below. Such written request may specify all or a part
of the Holders' Warrant Shares.

     (h)  If the  registration  of  which  the  Company  gives  notice  is for a
registered  public  offering  involving an  underwriting,  the Company  shall so
advise  each of the Holders as a part of the written  notice  given  pursuant to
paragraph (g). In such event,  the right of each of the Holders to  registration
pursuant to paragraph (g) shall be conditioned upon such Holders'  participation
in such  underwriting  and the inclusion of such Holders'  Warrant Shares in the
underwriting to the extent provided  herein.  The Holders whose shares are to be
included in such  registration  shall  (together  with the Company and the other
stockholders distributing their securities through such underwriting (the "Other
Stockholders")) enter into an underwriting  agreement in customary form with the
representative  of the underwriter or underwriters  selected for underwriting by
the Company.  Notwithstanding  any other  provision  of  paragraph  (g) and this
paragraph (h), if the representative determines that marketing factors require a
limitation on 


the number of shares to be underwritten,  the representative may (subject to the
allocation  priority set forth  below) limit the number of Warrant  Shares to be
included in the registration and  underwriting.  The Company shall so advise all
holders  of  securities  requesting  registration,  and the  number of shares of
securities that are entitled to be included in the registration and underwriting
shall be allocated in the  following  manner:  The  securities to be sold by the
Company and securities  held by persons who by contractual  right  initiated the
demand  for such  registration  ("Demanding  Holders")  shall not be  subject to
reduction. The securities of the Company held by Holders, and Other Stockholders
of the Company  (other  than  securities  held by  Demanding  Holders)  shall be
reduced,  on a pro rata basis (based on the number of shares proposed to be sold
by such Holders and other stockholders),  by such minimum number of shares as is
necessary  to comply with such  limitation.  If any of the Holders or  Demanding
Holders or any officer,  director or Other Stockholder  disapproves of the terms
of any such underwriting, such holder may elect to withdraw therefrom by written
notice  to the  Company  and  the  underwriter.  Any  Warrant  Shares  or  other
securities  excluded or withdrawn from such underwriting shall be withdrawn from
such registration.