Cost Sharing and IRU Agreement - Level 3 Communications LLC and INTERNEXT LLC


                         COST SHARING AND IRU AGREEMENT


                                     between


                           LEVEL 3 COMMUNICATIONS, LLC


                                       and


                                 INTERNEXT, LLC










                               Dated July 18, 1998





                                       





                         COST SHARING AND IRU AGREEMENT

     THIS COST SHARING AND IRU AGREEMENT  ("Agreement") is made and entered into
as of the 18th day of July, 1998, by and between LEVEL 3 COMMUNICATIONS,  LLC, a
Delaware limited  liability company  ("Grantor") and INTERNEXT,  LLC, a Delaware
limited liability a company ("Grantee").

                                    RECITALS

     A.  Grantor  intends to  construct  a  nationwide  multiconduit  (currently
estimated at eight 1 1/4" conduits,  taking into account this  Agreement)  fiber
optic communications system, including certain Opamp Facilities and Regeneration
Facilities (as such terms are defined  herein) as generally  depicted on Exhibit
"A-1"  attached  hereto and which will  connect the cities  described on Exhibit
"A-2" attached hereto (the "Grantor System").
     B.  Grantor  further  intends to install  within one of the conduits of the
Grantor System a high fiber count (currently estimated at 96 fibers, taking into
account this  Agreement)  fiber optic cable (as more fully  described in Exhibit
"H", the "Cable").
     C. Grantee  desires to own or to possess an  indefeasible  right to use and
control  a  network  consisting  of 24  conduit-protected  fibers  and one spare
conduit  connecting the cities  described on Exhibit "A-2" attached  hereto.  D.
Grantor and Grantee can complete their desired networks less expensively if such
networks are  constructed  as part of a single project than if each network were
constructed independently.  E. Grantor and Grantee therefore desire to share the
costs of  constructing  the Grantor  System,  and,  pursuant to such  sharing of
costs,  Grantor desires to grant to Grantee  ownership of and/or an indefeasible
right to use certain  facilities in the Grantor System,  all upon and subject to
the terms and conditions set forth below.





                                       1






                                   ARTICLE 1.
                                   DEFINITIONS

     1.01  "Acceptance  Date" shall mean the date when  Grantee  delivers (or is
deemed to have  delivered)  notice of  acceptance  of a  Completion  Notice with
respect to a Segment in accordance with Article 9.
     1.02 "Acceptance Testing" shall have the meaning set forth in Section 9.01.
     1.03 "Access Points" shall have the meaning set forth in Section 10.01.
     1.04 "Actual  Operating  Expenses"  shall mean,  without  duplication,  the
actual  out-of-pocket costs and expenses reasonably and necessarily  incurred by
Grantor in connection  with the operation of the Grantor  System,  as more fully
described in Exhibit "L" hereto.
     1.05  "Additional  Grantee  Fibers"  shall  have the  meaning  set forth in
Section 3.01.
     1.06  "Affiliate"  shall mean,  with respect to any specified  Person,  any
other Person that directly,  or indirectly  through one or more  intermediaries,
controls,  is controlled  by, or is under common  control with,  such  specified
Person. "Control" (including the terms "controlled by" and "under common control
with") means the possession,  directly or indirectly,  of the power to direct or
cause the direction of the management or policies of a Person,  whether  through
the  ownership  of voting  securities,  by  contract or credit  arrangement,  as
trustee or executor,  or otherwise,  provided that,  with respect to Grantor and
for the purpose of Sections  3.04(i),  6.04 and 7.02 only, the term "Affiliates"
shall not include the following  Persons if they would  otherwise be Affiliates:
(A)  Cable  Michigan,   Inc.,  RCN  Corporation   and   Commonwealth   Telephone
Enterprises,  Inc. (and any  intermediate  holding  companies or other  entities
formed solely for the purpose of owning stock in such  Persons),  unless Grantor
or its other  Affiliates  shall  acquire  more than fifty  percent of the voting
control of such Persons,  and (B)  California  Private  Transportation  Company,
L.P., to the extent California  Private  Transportation  Company,  L.P. has been
required to construct or install fibers or conduits  pursuant to the requirement
of any Governmental Authority.



                                       2





     1.07 "Associated  Property" shall mean the tangible and intangible property
needed for the use of the Grantee  Fibers and Grantee  Conduit as  permitted  by
this Agreement,  including the Regeneration Facilities and Opamp Facilities, but
excluding in any and all events any electronic and/or optronic  equipment.
     1.08  "Authorization"  shall  mean  any  consent,   registration,   filing,
agreement,  notarization,  certificate,  license, approval, permit, authority or
exemption from, by or with any Governmental Authority or other Person.
     1.09  "Canadian  Person"  shall mean any Person  which is  permitted  under
applicable   Canadian    telecommunications   laws   to   own   or   operate   a
telecommunications system located in Canada.
     1.10 "CBD" shall mean the commonly referred to central business district of
a city.
     1.11  "Commencement  Date" shall mean the date on which  Grantor  commences
construction of the Grantor  System,  provided that if Grantor has not commenced
such construction on or prior to December 31, 1998, then the "Commencement Date"
shall mean December 31, 1998.
     1.12  "Commencement  Contribution"  shall  have the  meaning  set  forth in
Section 4.01.
     1.13  "Completion  Date" shall mean (i) in the case of all Segments  within
Phase One and Phase Two, the (***) anniversary of the Commencement Date and (ii)
in the case of all  Segments  within  Phase  Three,  the earlier to occur of (a)
(***) months from the date that Grantor  commences  construction  of Phase Three
and (b) the (***) anniversary of the Commencement  Date, subject in each case to
any Force Majeure Event or Grantee Delay Event.
     1.14 "Completion  Contribution" shall have the meaning set forth in Section
4.01.
     1.15 "Completion Notice" shall have the meaning set forth in Section 9.02.
     1.16 "Costs" shall mean actual,  direct costs paid or payable in accordance
with the established  accounting  procedures generally used by Grantor and which
it utilizes in billing third parties for reimbursable projects which costs shall
be limited to the  following:  (i)  internal  labor costs,  including  wages and
salaries, and benefits and


                                       3




overhead  (provided  that the costs of such  benefits and overhead do not exceed
thirty percent (30%) of such wages and salary),  and (ii) other direct costs and
out-of-pocket  expenses on a  pass-through  basis (e.g.,  equipment,  materials,
supplies, contract services, etc.).
     1.17 "Dark Fiber" shall have the meaning set forth in Section 15.03.
     1.18 "Designated Party" shall mean (i) Eagle River, Inc.,  Teledesic Corp.,
Nextel Communications, Inc., (***).
     1.19 "Dispute Notice" shall have the meaning set forth in Article 24.
     1.20 "Effective Date" shall have the meaning set forth in Section 5.01.
     1.21 "Execution  Contribution"  shall have the meaning set forth in Section
4.01.
     1.22 "Final Contribution" shall have the meaning set forth in Section 4.01.
     1.23 "Force Majeure Event" shall have the meaning set forth in Article 19.
     1.24  "Governmental  Authority"  shall mean any federal,  state,  regional,
county,  city,  municipal,  local,  territorial  or tribal  government,  whether
foreign or domestic,  or any department,  agency, bureau or other administrative
or regulatory  body obtaining  authority  from any of the foregoing,  including,
without limitation, courts, public utilities and sewer authorities.
     1.25 "Grantee Conduit" shall have the meaning set forth in Section 3.01.
     1.26  "Grantee  Delay  Event"  shall mean the  failure of Grantee to timely
observe and perform its  obligations  and  agreements  hereunder,  which failure
delays the  construction  and installation of the Grantor System with respect to
one or more segments.
     1.27 "Grantee Fibers" shall have the meaning set forth in Section 3.01.



                                       4





     1.28 "Grantor System" shall have the meaning set forth in the Recitals.
     1.29  "Grantor  Termination  Point"  shall  have the  meaning  set forth in
Section 2.02.
     1.30  "Hotel"  shall  mean a  building  in  which  points  of  presence  of
interexchange carriers are found.
     1.31  "Impositions"  shall mean all taxes,  fees,  levies,  imposed  duties
charges  or  withholdings  of any nature  (including  without  limitation  gross
receipts,  taxes and  franchise,  license and permit  fees),  together  with any
penalties,   fines  or  interest   thereon  arising  out  of  the   transactions
contemplated by this Agreement  and/or imposed upon the Grantor  System,  or any
part thereof, by any Governmental Authority.
     1.32  "Incremental  Costs" shall mean,  with  respect to Sections  7.02 and
7.06, the Costs of  construction  and  installation  of the  Additional  Grantee
Fibers but shall not include the cost of constructing and installing the conduit
in which such fibers are installed,  the cost of constructing and installing the
Initial Grantee Fibers or any other costs associated with the Grantor System.
     1.33 "Initial  Grantee  Fibers" shall have the meaning set forth in Section
3.01.
     1.34 "IRU" shall have the meaning set forth in Section 3.01.
     1.35 "IRU Contribution" shall have the meaning set forth in Section 4.01.
     1.36  "Lien"  shall  mean  any  mortgage,  pledge,  hypothecation,   claim,
assessment,  security interest, lease, sublease, license, lien, conditional sale
contract,  title retention  contract,  adverse or infringing  claim or interest,
easement,  encroachment,  voting trust agreement, option, charge, right of first
refusal or other  encumbrance or restriction of any kind, or rights of others or
other contract to give any of the foregoing,  excluding any of the foregoing (i)
in favor of the grantor of any  Required  Right,  or granted by the grantor of a
Required Right  independent of the  transactions  contemplated  by such Required
Right, (ii) arising under or resulting from the terms and provisions of, and the
execution by,  Grantor of the instrument  evidencing  such Required  Right,  and
(iii) which are customary for agreements of that type.
     1.37 "Major Cities" shall mean the cities designated as Major Cities listed
on Exhibit A-2.
     1.38 "Minimum Period" shall mean, with respect to each Segment, a period of
(***) years from the Acceptance Date for such Segment.




                                       5





     1.39  "Node  Site"  shall mean the  facilities  (other  than  long-distance
backbone  Regeneration  Facilities and Opamp  Facilities)  which  accommodate or
house  switch  equipment,  fiber optic  transmission  and  associated  ancillary
equipment to serve as a switch terminal,  transport concentrator,  hub terminal,
junction or end user pop location.
     1.40 "Operating Expense Charge" shall have the meaning set forth in Section
13.02.
     1.41  "Operating  Expense  Estimate"  shall have the  meaning  set forth in
Section 13.05.
     1.42 "Opamp  Facilities"  shall mean  facilities  to optically  amplify lit
fibers as more particularly described on Exhibit "I".
     1.43 "Option Right" shall have the meaning set forth in Section 6.01.
     1.44  "Person"  shall mean any natural  person,  corporation,  partnership,
limited liability company, business trust, joint venture,  association,  company
or government, or any agency or political subdivision thereof.
     1.45 "Phase" shall mean Phase One, Phase Two or Phase Three.
     1.46 "Phase One" shall have the meaning set forth in Section 2.04.
     1.47 "Phase Two" shall have the meaning set forth in Section 2.04.
     1.48 "Phase Three" shall have the meaning set forth in Section 2.04.
     1.49 "Pinch Event" shall have the meaning set forth in Section 7.02.
     1.50 "Proprietary  Information" shall have the meaning set forth in Section
23.01.
     1.51  "Recurring  Charges"  shall  mean the ROW  Charge  and the  Operating
Expense Charge.
     1.52  "Regeneration  Facilities"  shall mean  facilities to regenerate  the
signal of lit fibers as more particularly described on Exhibit "I".
     1.53 "Required Rights" shall have the meaning set forth in Section 6.01.
     1.54  "Required  Right  Payment"  shall mean any payment  which  Grantor is
required to make to the grantor or provider of a Required  Right pursuant to the
terms of the instrument governing such Required Right.



                                       6




     1.55 "Route Miles" shall mean, for each Segment, the actual number of route
miles for such Segment as  constructed,  provided  that,  if the Grantor  System
follows more than one route for all or any portion of a Segment, only the actual
route  miles  for the route  containing  the  Initial  Grantee  Fibers  shall be
included.
     1.56 "ROW Charge" shall have the meaning set forth in Section 13.02.
     1.57 "RRG" shall have the meaning set forth in Section 2.02.
     1.58 "Segments" shall have the meaning set forth in Section 2.01.
     1.59 "Segment End Points" shall have the meaning set forth in Section 2.01,
as the same may be extended and terminated pursuant to Section 2.02.
     1.60 "System Route" shall have the meaning set forth in Section 2.01.
     1.61 "Term" shall have the meaning set forth in Section 5.01.

                                   ARTICLE 2.
                                  SYSTEM ROUTE

     2.01  Grantor  shall  cause the  Grantor  System to connect  the city pairs
identified on Exhibit "B" attached  hereto (each city  identified on Exhibit "B"
is herein called a "Segment End Point", the route between the applicable Segment
End Points is herein  called a "Segment",  and all of the Segments  together are
herein called the "System Route").
     2.02 In the case of the Major  Cities,  Grantor  shall  cause  the  Grantor
System,  or at a minimum the portion  thereof in which Grantee shall receive the
IRU, to extend to (***) the serving  manholes or access points located  adjacent
to the building  containing  Grantee's Node Site as specified by Grantee in each
such Major City, in accordance with Exhibit "M" attached  hereto,  provided that
Grantee shall obtain all necessary  permits or waivers for such  extension  from
the owner of such  building  and/or the owner of the real property on which such
building is located,  and provided  further that all  end-point  locations  with
respect to the Major Cities will have diverse  routing from the main backbone of
the Grantor System. In the event that, for any Major City,  Exhibit "M" does not
contain  the  address  of the  building  in which  Grantee's  Node  Site will be
located,



                                       7




Grantee  shall  provide  Grantor with such  address,  which will be within (***)
miles of the center  point of the CBD, no later than (***)  months  prior to the
targeted  completion date for such Major City set forth in Exhibits "B", "D" and
"E", except that Grantee shall have a 30-day grace period in circumstances where
Grantee  has made  substantial  efforts to locate  real estate to house its Node
Site. For all Segment End Points which are not Major Cities, the Grantor System,
or at a minimum the portion  thereof in which  Grantee  shall have  received the
IRU,  shall connect to and  terminate at a splice point  contained in any of the
following,  in Grantor's sole  discretion:  (i) a Node Site of Grantee or one of
its Affiliates in the CBD of such city,  (ii) the primary or secondary Hotel for
such city, or (iii) a  Regeneration  Facility,  Opamp Facility or a Node Site of
Grantor or one of its Affiliates in such city (each such Regeneration  Facility,
Opamp  Facility  or Node Site of  Grantor or one of its  Affiliates,  a "Grantor
Termination Point"), provided that (A) such Grantor Termination Point is located
within (***) miles of the center point of such city's CBD and (B) Grantor  shall
return the Grantor System or such portion thereof in which Grantee shall receive
the IRU to a publicly  dedicated  street  adjacent to such  Grantor  Termination
Point,  provided that all end-point locations for cities other than Major Cities
will have diverse  routing from the main  backbone of the Grantor  System to the
extent  the  Grantor  System  provides  such  diverse  routing to Grantor or its
Affiliates. (***).




                                       8




The Grantor Termination Point in any Segment End Point shall be the same for all
Segments  ending at such Segment End Point.  2.03 The  specific  location of the
System  Route  between  Segment End Points is subject to Grantor  obtaining  the
Required Rights, provided that in any event Grantor shall cause the System Route
to connect the Segment End Points for each Segment.  The Grantor  System will be
constructed and installed in three phases (the "Phases"). The first Phase of the
Grantor  System ("Phase One"),  estimated at  approximately  11,411 route miles,
shall  include the  Segments  described  on Exhibit "C"; the second Phase of the
Grantor  System  ("Phase Two"),  estimated at  approximately  3,714 route miles,
shall include the Segments  described on Exhibit "D"; and the third Phase of the
Grantor  System ("Phase  Three"),  estimated at  approximately  910 route miles,
shall  include  the  Segments   described  on  Exhibit  "E"  provided  that  (i)
construction of each of (A) the Seattle to Vancouver  Segment in Phase Three and
(B) the aggregate of the Albany to Montreal,  Montreal to Toronto and Toronto to
Buffalo  Segments in Phase Three,  shall be optional in the sole  discretion  of
Grantor,  and (ii) in the event  Grantor  elects to not construct the Seattle to
Vancouver  Segment,  the Final Contribution shall be reduced by the sum of (***)
and Grantee will not be required to pay the Completion Contribution set forth in
Exhibit "F" for the Seattle to Vancouver Segment, and (iii) in the event Grantor
elects not to construct the Albany to Montreal,  Montreal to Toronto and Toronto
to Buffalo Segments in Phase Three, (A) the Final  Contribution shall be reduced
by the sum of  (***),  and (B) an Albany to  Buffalo  Segment  shall be added to
Phase One with a Completion Contribution equal to the aggregate amount set forth
in Exhibit  "F" for the Albany to  Montreal,  Montreal to Toronto and Toronto to
Buffalo  Segments  less the sum of (***).  Grantor  shall  provide  Grantee with
written notice of the  commencement  of construction of each Phase promptly upon
commencement thereof and of any determination not to construct Phase Three. 2.05
Notwithstanding anything to the contrary contained herein, Grantor may elect, at
its option,  to acquire any  portions of the Grantor  System from third  parties
(whether under a lease,  sublease,  indefeasible  right of use, or otherwise) in
lieu of constructing and installing the Grantor System respecting such portions;
(***).



                                       9





                                   ARTICLE 3.
                                  GRANT OF IRU

     3.01 Subject to the terms of Article 7 below,  as of the Effective Date for
each Segment delivered by Grantor to Grantee hereunder, Grantor hereby grants to
Grantee,  and Grantee  hereby  acquires from Grantor for the purposes  described
herein (i) an exclusive  indefeasible  right of use in (or, if and to the extent
provided in Section 3.02 hereof,  ownership  of),  twenty-four  (24) fibers (the
"Initial  Grantee  Fibers") plus (a) to the extent Grantee  exercises its option
pursuant  to Section  7.06,  the fibers  acquired  by Grantee  pursuant  to such
option,  (b) the fibers in excess of 24 delivered to Grantee pursuant to Section
7.02 and (c) fibers  installed in the Grantee  Conduit (the fibers  described in
clauses  (a),  (b) and (c) are herein  referred  to as the  "Additional  Grantee
Fibers"),  in each  case to be  specifically  identified  in the Cable or cables
between the Segment End Points for such Segment (the  "Initial  Grantee  Fibers"
and the  "Additional  Grantee  Fibers",  together  with  all  substitutions  and
replacements  thereof, are herein referred to as the "Grantee Fibers"),  (ii) an
exclusive  indefeasible  right of use in (or,  if and to the extent  provided in
Section  3.02  hereof,  ownership  of) one  specifically  identified  unoccupied
conduit in the Grantor System between the Segment End Points for


 
                                       10




each Segment (the "Grantee Conduit"),  and (iii) an associated and non-exclusive
indefeasible  right  of use in the  Associated  Property  with  respect  to such
Segment,  all upon and  subject  to the terms and  conditions  set forth  herein
(collectively the "IRU").
     3.02 Notwithstanding  anything contained herein to the contrary: (a) if and
to the extent not prohibited by the Required  Right(s)for a particular  Segment,
and (b) if the  Required  Right(s)  with respect to such Segment do not and will
not  impose  upon  Grantor  any  additional  fees,  costs or charges as a result
thereof (unless Grantee shall pay the same or make  arangements  satisfactory to
Grantor to assure such payment),  Grantor shall, upon the request of Grantee and
on a  Segment-by-Segment  basis on the  Acceptance  Date  with  respect  to such
Segment and without the need for any further action or execution of documents by
Grantor to Grantee:  (i)  transfer  title to the Grantee  Fibers and the Grantee
Conduit to Grantee  free and clear of all Liens  attributable  to  Grantor; 
(ii)grant to Grantee a lease,  subeasement or similar agreement providing 
rights (at no additional cost to or monetary  obligations of Grantee, except to
the extent provided in clause (b) above) to Grantee  substantially identical to
the rights held by Grantor under the relevant Required  Right(s) (a 
"Sublease");  and (iii) continue  the  grant  of the IRU in the  Associated  
Property.  Nothing  in this Section 3.02 or in any such  Sublease  shall  
relieve  Grantor or Grantee of its rights, duties and obligations set forth 
in this Agreement or diminish,  enlarge or otherwise  affect such rights,  
     duties and obligations  (except that, to the extent  applicable  under this
Section 3.02,  Grantee's  property interest will consist of title in the Grantee
Fibers and the Grantee  Conduit and a grant of a Sublease)  and if any  Sublease
shall  terminate or Grantee  shall be  otherwise  subsequently  prohibited  from
owning  title to the  Grantee  Fibers and the  Grantee  Conduit,  Grantor  shall
maintain the Required Rights in accordance with and pursuant to Article 6, title
to such Grantee  fibers and Grantee  Conduit  shall revert and be  reconveyed to
Grantor and  Grantee  shall have and retain the IRU in such  Grantee  Fibers and
Grantee Conduit under and subject to the terms and conditions of this Agreement.

3.03 Except to the extent not permitted by any Required Right, Grantor
hereby grants to Grantee a security interest and lien in all of Grantor's right,
title and interest in


 
                                       11




the Grantee Fibers and the Grantee Conduit,  whether now or hereafter  acquired,
in order to secure  performance  of  Grantor's  obligations  to  Grantee in this
Agreement.
     3.04  Grantor  shall use  commercially  reasonable  best  efforts  to cause
construction  and  Acceptance  Testing  for  all  Segments  to  be  successfully
completed  no later than (***) (or in the case of Phase  Three,  the  earlier of
(***) and (***) months after the  commencement of construction  thereof) and, if
not so completed by such date, then as soon as practicable  thereafter.  Grantor
acknowledges  that time is of the essence in this  Agreement and that Grantee is
relying on delivery of all  Segments by such date.  In light of the fact that it
would be  impossible  to  calculate  the  reduction in the value of the IRU that
Grantee bargained for in the event that  construction or Acceptance  Testing for
any Segment is not  completed by such date,  or if Grantor  fails to deliver any
Segment  altogether,  Grantor and Grantee hereby agree to the following payments
and/or reductions (which constitute adjustments to the IRU Contribution),  which
except as otherwise  specifically  provided for in paragraph (i) below, shall be
the sole remedy of Grantee in the event of the late delivery or  non-delivery of
any Segment:
     (a) At any time that Grantor  determines,  in its best  judgment,  that the
Acceptance  Date for any Segment will be delayed past (***), it shall deliver to
Grantee a notice in  writing  (a "Delay  Notice"),  specifying  the  Segment  or
Segments affected, stating that the Acceptance Date(s) for such Segments will be
delayed  past (***),  and  setting  forth a new firm  delivery  date(s) for such
Segments.  Grantor may not deliver more than two Delay Notices in respect of any
segment, and may only deliver a second Delay Notice in respect of any Segment if
the  second  Delay  Notice  sets forth an earlier  firm  delivery  date for such
Segment Date.  Such firm  delivery  date, as it may be revised in a second Delay
Notice,  is  hereinafter  referred to as the  "Revised  Delivery  Date" for such
Segment.
     (b) If Grantor delivers to Grantee a Delay Notice for any Segment, then the
following provisions shall apply: (i) Grantee may terminate this Agreement as to
such  Segment  at any time on or prior to (x) the date which is the later of (A)
ninety (90) days following the date of delivery of such Delay Notice and (B) six
(6) months prior to the Revised Delivery Date



                                       12




for such Segment or (y) the Acceptance Date with respect to such Segment, if the
Acceptance  Date for such  Segment  does  not  occur on or prior to its  Revised
Delivery Date. Upon any such termination pursuant to this paragraph (b), Grantor
shall pay Grantee,  in respect of the  non-delivery  of such Segment,  an amount
equal to the Total  Contribution  for such  Segment  multiplied,  in the case of
termination pursuant to clause (x) above, by the First Adjustment Factor, and in
the case of termination  pursuant to clause (y) above, by the Second  Adjustment
Factor.
                  (ii) If Grantee does not terminate  this  Agreement as to such
Segment,  the  Completion  Contribution  for such Segment shall be reduced by an
amount  equal  to  the  sum of (x)  the  Total  Contribution  for  such  Segment
multiplied  by the sum of (A) either (1) if the Revised  Delivery  Date for such
Segment  is on or prior to (***)  multiplied  by the  number of whole or partial
months occurring during the period from and including (***) and to and including
the month in which the  Revised  Delivery  Date  occurs,  or (2) if the  Revised
Delivery Date for such Segment is on or after (***), the sum of (***) multiplied
by the number of whole or partial  months  occurring  during the period from and
including  (***) and to and  including  the month in which the Revised  Delivery
Date  occurs  plus (***),  plus (B) (***)  multiplied  by the number of whole or
partial  months during the period from and  including the Revised  Delivery Date
and to and including the month in which the Acceptance Date occurs, plus (C) the
Additional Percentage, if any, based on the date of delivery of the Delay Notice
as to such Segment,  plus (y) the Second Notice Amount,  if any,  arising out of
the delivery of a second Delay Notice as to such  Segment.  Grantee shall notify
Grantor of the Second  Notice  Amount at the time of payment of such  Completion
Contribution.
     (c) If Grantor fails to deliver a Delay Notice as to any Segment,  then the
following  provisions  shall apply:  (i) If the Acceptance Date for such Segment
occurs after (***),  and on or prior to (***),  the Completion  Contribution for
such Segment shall be reduced by an amount equal to the Total  Contribution  for
such Segment  multiplied  by (***)  multiplied by the number of whole or partial
months occurring during


                                       13




the period from and including (***) and to and including the month in which such
Acceptance Date occurs.
                   (ii) If the Acceptance Date for such Segment has not occurred
on or prior to (***),  Grantee may terminate this Agreement with respect to such
Segment at any time on or prior to such  Acceptance  Date, in which case Grantor
shall pay Grantee,  in respect of the  non-delivery  of such Segment,  an amount
equal to the Total  Contribution  for such Segment  multiplied by (x) if Grantee
has sent Grantor a Reminder  with respect to such Segment at least 10 days prior
to the date of such termination,  (***) or (y) if Grantee has not sent Grantor a
Reminder with respect to such Segment at least 10 days prior to the date of such
termination,  the  amount  that  would  have been  payable  in  respect  of such
termination  under  paragraph  (b)(i)(x)  above as if  Grantor  had sent a Delay
Notice  on (***)  specifying  a  Revised  Delivery  Date the same as the date of
termination.
                  (iii) If the Acceptance Date for such Segment has not occurred
on or prior to (***),  and if Grantee does not  terminate  this  Agreement as to
such Segment,  the Completion  Contribution for such Segment shall be reduced by
an amount equal to the Total  Contribution for such Segment multiplied by (x) if
Grantee has sent  Grantor a Reminder  with  respect to such  Segment at least 10
days prior to the Acceptance  Date, (***) or (y) if Grantee has not sent Grantor
a Reminder with respect to such Segment at least 10 days prior to the Acceptance
Date, the amount of such reduction that would have been applicable in respect of
such Completion  Contribution under paragraph (b) above as if Grantor had sent a
Delay  Notice  on  (***)  specifying  a  Revised  Delivery  Date the same as the
Acceptance Date.
     (d) In the event the  Acceptance  Date for a Segment  has not  occurred  by
(***) and Grantee has not terminated  this Agreement as to such Segment prior to
such date,  this  Agreement  shall be deemed  terminated  as to such  Segment on
(***), in which case Grantor shall pay Grantee,  in respect of the  non-delivery
of such  Segment,  an amount  equal to the Total  Contribution  for such Segment
multiplied by (***).


                                       14




     (e)  Grantor  shall pay  Grantee  any  amounts  required  by the  foregoing
paragraphs  to be  paid  within  thirty  (30)  days  after  termination  of this
Agreement  as to any  Segment.  Any sums not paid by Grantor when due shall bear
interest at the rate of eighteen percent (18%) per annum. Grantee shall have the
right to set off  against  any other  amounts  payable  to  Grantor  under  this
Agreement  the amount of any payment due Grantee  pursuant to this Section 3.04.
All payments by Grantor  pursuant to this Section 3.04,  and all  adjustments to
the  Completion  Contributions  payable  by Grantee  on the  Acceptance  Date of
Segments, shall be treated by both Grantor and Grantee as adjustments to the IRU
Contribution payable hereunder.  Grantor and Grantee shall file (and shall cause
their respective  parents to file) their respective income tax returns and other
returns and reports for their respective businesses on such basis and, except as
otherwise required by law, not take any positions inconsistent therewith.
     (f) In the  event  that  Grantor  breaches  its  obligations  in the  first
sentence of this  Section  3.04 as to any Segment,  Grantee may  terminate  this
Agreement  as to such  Segment.  Upon  any  such  termination  pursuant  to this
paragraph (f), Grantor shall pay Grantee, in respect of the non-delivery of such
Segment,  an amount equal to the Total  Contribution for such Segment multiplied
by (***).
     (g) As used in this  Section  3.04,  the  following  terms  shall  have the
meanings set forth below:
                  (i)  "Additional   Percentage"   shall  be  (***)  and  (***),
respectively,  with  respect to any Segment if the Delay Notice for such Segment
is delivered on or before (***) and at any time on or after (***), respectively.
                  (ii) "First Adjustment Factor" shall equal, as to any Segment,
(w) (***) multiplied by the number of whole or partial months in the period from
and including (***) and to and including the month in which the Revised Delivery
Date occurs,  if the Revised  Delivery Date is on or before (***), (x) (***), if
the  Revised  Delivery  Date is on or after  (***) and on or before  (***),  (y)
(***), if the Revised Delivery Date is on or after (***) and on or before (***),



 
                                       15




or (z) (***),  if the Revised  Delivery Date is on or after (***),  in each case
plus the  Additional  Percentage,  if any,  based on the date of delivery of the
Delay Notice.
                  (iii)  "Reminder" shall mean a written notice sent on or after
(***) by Grantee to Grantor  reminding Grantor of Grantee's  termination  rights
under  paragraph  (d) of this  Section 3.04 as to any Segments not for which the
Acceptance  Date has not occurred and Grantor has not prior thereto  delivered a
Delay Notice.
                  (iv)  "  Second  Adjustment  Factor"  shall  equal,  as to any
Segment,  (x) (***) plus (y) (***)  multiplied by the number of whole or partial
months in the period from and including  (***) and to and including the month in
which Grantee  notifies  Grantor in writing of the termination of this Agreement
as to such Segment.
                  (v)  "Second  Notice  Amount"  shall  mean,  as to any Segment
regarding which Grantor has delivered a second Delay Notice,  an amount,  not to
exceed the product of (***)  multiplied by the number of whole or partial months
occurring  during the period from and  including  the  Acceptance  Date for such
Segment and to and  including  the month in which the Revised  Delivery Date set
forth in the original  Delay Notice  occurs,  determined by Grantee,  absent bad
faith,  to  be  necessary  to  compensate  it  for  costs   incurred,   business
opportunities  foregone  or damages  otherwise  suffered  based upon the initial
notification of the Revised Delivery Date which are not fully compensated for by
the earlier delivery of such Segment.
                  (vi) "Total  Contribution"  for any Segment shall be deemed to
equal,  for purposes of  convenience in this Section 3.04 only, and for no other
purposes  whatsoever,  an amount equal to 70/60.375 multiplied by the Completion
Contribution  due upon the  Acceptance  Date for such  Segment  as set  forth in
Exhibit "F".
     (h) Under circumstances where more than one of the foregoing paragraphs may
apply to the termination of this Agreement as to any Segment,  Grantee shall not
be entitled to payment under more than one of the such  paragraphs.  Each of the
foregoing  paragraphs  shall be limited by the provision  that in no event shall
the payments in respect of the non-delivery of any Segment, or the reductions in
the amount of the Completion Contribution with respect to any Segment,  required
under  this  Section  3.04  exceed  (***)  of the  Total  Contribution  for such
Segments.



 
                                       16





     (i) (i) (***).
     (ii)  If  Grantee  accepts  such  offer,   the  amount  of  the  Completion
Contribution  and/or Recurring Charges payable with respect to such Segment upon
acceptance of such fibers  and/or  conduit shall be reduced by an amount (not to
exceed  (***) of  70/60.375  of the  Completion  Contribution),  as Grantor  and
Grantee shall agree,  in good faith,  to reflect the reduced value of the fibers
and/or conduit accepted as compared to what Grantee had bargained for hereunder,
taking into account,  if this  Agreement has been  terminated as to such Segment
prior to the  acceptance of such offer by Grantee,  any amounts  already paid by
Grantor in respect  of the  non-delivery  of such  Segment.  The  amounts of the
Execution Contribution,  Commencement  Contribution and Final Contribution shall
also all be reduced by an amount  equal to, in each case,  the  original  amount
thereof   multiplied   by  the  products  of  17.5/700,   8.75/700  and  70/700,
respectively,   multiplied  by  the  percentage   reduction  in  the  Completion
Contribution  for such Segment.  If Grantor and Grantee shall be unable to agree
upon the  appropriate  reductions in the Completion  Contribution  and Recurring
Charges payable hereunder within the thirty (30) day period following acceptance
by  Grantee of such  offer,  the amount of the  reductions  shall be  determined
through an arbitration procedure in accordance with Section 24.01(iv).




                                       17





                  (iii) If Grantee rejects such offer, the preceding  provisions
of this Section 3.04 shall  continue to apply as to such Segment,  provided that
this  paragraph  (i) shall  continue  to apply to other  fibers and or  conduits
constructed or acquired by Grantor or its Affiliates prior to (***).
                  (iv) If this  Agreement has been  terminated as to any Segment
prior to the time  that the  payments  and/or  reductions  provided  for in this
Section 3.04 no longer  constitute  the sole remedy of Grantee in respect of the
non-delivery  of such  Segment,  then even if Grantor has prior  thereto  made a
payment to Grantee in respect of the  non-delivery of such Segment,  Grantee may
nevertheless  bring an action for damages for the  non-delivery of such Segment,
in which case the amount of any damages  awarded  shall be reduced by the amount
previously paid by Grantor to Grantee.
     (j) The  determination  as to whether  the  delivery of any Segment is late
shall be made after taking into  consideration  the effect of any Grantee  Delay
Events or Force Majeure Events applicable to such Segment.
     (k) In the event that this  Agreement has been  terminated  with respect to
one or more Segments,  the amount of the Final  Contribution shall be reduced by
an amount equal to (x) the original Final  Contribution set forth on Exhibit "F"
multiplied by (y) a fraction, the number of which is the total of the amounts of
the Completion  Contributions  set forth on Exhibit "F" for all such  terminated
Segments  divided by the total  original  Completion  Contribution  set forth on
Exhibit "F" and Grantor  shall  reimburse  Grantee in an amount equal to (A) the
sum of the original  Execution  Contribution and  Commencement  Contribution set
forth on Exhibit  "F"  multiplied  by (B) the  fraction  set forth in clause (y)
above.

                                   ARTICLE 4.
                                  CONSIDERATION

     4.01 Grantee agrees to make  contributions  to Grantor for the construction
of the  Grantor  System as set  forth in  Exhibit  "F",  as such  amount  may be
adjusted as provided herein (the "IRU Contribution"). The IRU Contribution shall
consist of a contribution to



                                       18




be made upon  execution of this  Agreement  (the  "Execution  Contribution"),  a
contribution  to be made upon  Grantor's  commencement  of  construction  of the
Grantor System (the "Commencement Contribution"), a contribution to be made with
respect to each Segment on the Acceptance Date for such Segment (the "Completion
Contribution")  and a  contribution  to be made  upon  final  completion  of the
Grantor System, excluding any Segments terminated by Grantee pursuant to Section
3.04 or otherwise undelivered by Grantor (the "Final Contribution"), all as more
particularly described in Exhibit "F".
     4.02 In addition to the IRU  Contribution,  Grantee  shall pay  directly or
reimburse  Grantor  for all  other  sums,  costs,  fees and  expenses  which are
expressly provided to be paid by Grantee under this Agreement, including without
limitation,  the  Recurring  Charges.  Except  as  expressly  set  forth in this
Agreement, Grantee shall have no obligation to pay any amounts in respect of the
IRU granted hereunder.
     4.03  Grantor  will  deliver to Grantee  invoices  for  payments of the IRU
Contribution  and all other sums,  costs,  fees and expenses  owed by Grantee to
Grantor  hereunder  and  Grantee  shall  pay  such  invoiced  amounts,  less any
reasonably  disputed  amounts,  within  thirty  (30) days after  receipt of such
invoice.  Grantee shall provide  Grantor with written  notice by the payment due
date  describing  in  reasonable  detail  the  basis for any  disputed  amounts;
provided that any disputed amounts resolved in favor of Grantor shall thereafter
be paid  promptly by Grantee.  Any sums not paid by Grantee  when due shall bear
interest at the rate of eighteen (18%) per annum, other than reasonably disputed
amounts,  which  shall bear  interest  at the rate of twelve  percent  (12%) per
annum. 
     4.04 Grantor agrees that it will not, for a period of (***) years after the
Acceptance Date of the last Segment delivered hereunder, sell, transfer or grant
rights of use or similar rights to use any  facilities,  in whole or in part, in
the Grantor System (other than to an Affiliate of Level 3  Communications,  Inc.
or an RRG) upon  economic or other  material  terms more  beneficial  than those
provided to Grantee  hereunder.  Prior to entering  into any  agreement or other
arrangement  with any other Person (other than such a subsidiary or such an RRG)
regarding the use or transfer of all or part of the Grantor System,  (i) Grantor
will provide Grantee with sufficient detail of the terms thereof (the



 
                                       19




confidentiality  of which information shall be maintained by Grantee as provided
in  Article  23) in order to  enable  Grantee  to  compare  such  terms to those
provided to Grantee hereunder and (ii) at Grantee's option, this Agreement shall
be modified  to give  Grantee the  benefits of the more  beneficial  economic or
other material terms contained in such other  agreement or  arrangement.  In the
event that  Grantor and Grantee are unable to agree  whether such terms are more
beneficial or have been appropriately incorporated in this Agreement, if Grantee
so  requests,  the parties  shall submit such  disagreement  to  arbitration  in
accordance  with Section  24.01(iv).  The  provisions of this Section 4.04 shall
survive any  modification  of this  Agreement  pursuant to this Section  4.04. A
merger or  consolidation of Grantor or a sale by Grantor of all or substantially
all of its assets shall not be considered a sale, transfer or grant of rights to
use the Grantor System covered by this Section 4.04.

                                   ARTICLE 5.
                                      TERM

     5.01 The IRU with respect to each Segment shall become  effective  (and the
transfer  of  title to the  Grantee  Fibers  and the  Grantee  Conduit  for each
Segment,  if  applicable,  shall  occur)  on the  first  day  when  both (i) the
Acceptance  Date with  respect to the Segment has  occurred and (ii) Grantor has
received  payment of all of the IRU  Contribution  then due to Grantor  for such
Segment (as to such Segment, its "Effective Date"). Subject to the provisions of
Article 6 and Article 7, the IRU with respect to each Segment shall terminate at
the end of the  economically  useful life of both the Grantee Fibers and Grantee
Conduit  within  such  Segment,  as  determined  pursuant  to Section  5.03 (the
"Term").
     5.02 Notwithstanding  anything in this Agreement to the contrary,  the Term
with respect to each Segment shall not be less than the Minimum Period.  Grantor
shall take all such actions as may be necessary to cause each Required  Right to
remain in effect  so that the Term for each  Segment  shall be not less than the
Minimum Period  (including,  without  limitation,  exercising any renewal rights
under any Required Right, or otherwise



                                       20




acquiring  at no cost to Grantee  such  extensions  or additions of any Required
Right and/or obtaining  replacements or substitutions of any Required Right (and
relocating such Segment or portions thereof at Grantor's sole cost under Section
6.05) as may be  necessary,  in order to cause  the term of each  such  Required
Right, or such replacement or substitution thereof, to be continued until a date
that is not earlier than the last day of the Minimum Period for such Segment).
     5.03 Grantee  shall  determine,  in its sole  discretion,  when the Grantee
Fibers and/or Grantee Conduit with respect to any Segment shall have reached the
end of their  economically  useful  life and shall give  written  notice of such
determination  to  Grantor.  Upon any such  determination  by Grantee  after the
Minimum Period, the Term shall expire with respect to such Grantee Fibers and/or
Grantee  Conduit  in such  Segment  and all  title to  and/or  rights to the use
thereof  shall  revert  to  Grantor  without  reimbursement  of any  of the  IRU
Contribution or other sums, costs, fees or expenses previously made with respect
thereto,  and from and after such time  Grantee  shall  have no further  rights,
obligations or liabilities hereunder or any other liability with respect thereto
unless such rights,  obligations or liabilities are specifically provided herein
to survive the Term.
     5.04 Absent a  determination  by Grantee  under Section 5.03, at the end of
the Term for each Segment,  at Grantee's option,  (i) Grantor shall transfer all
of Grantor's  right,  title and  interest to the Grantee  Fibers and the Grantee
Conduit  within  such  Segment  not then owned by  Grantee to Grantee  for $1.00
(except if Grantee has given  written  notice as to such  Segment  described  in
Section 5.03), in which case Grantee shall assume, and Grantor shall be relieved
of, all obligations in connection therewith,  or (ii) Grantee shall transfer all
of Grantee's  right,  title and  interest to the Grantee  Fibers and the Grantee
Conduit within such Segment not then owned by Grantor to Grantor for $1.00.
     5.05  Grantor  and  Grantee  acknowledge  and agree that  Grantee  shall be
treated for accounting and federal and all applicable  state tax purposes as the
exclusive  beneficial  owner of all Grantee Fibers and Grantee  Conduit (each of
which  constitutes  an interest in real  property)  with respect to which it has
received  an IRU  hereunder,  and as the holder of an  associated  non-exclusive
indefeasible  right  of use in the  Associated  Property  (which  constitutes  a
leasehold interest in real property). Grantor and Grantee further agree that



                                       21




the transactions  contemplated in this Agreement constitute,  for accounting and
federal and  applicable  state tax purposes,  a joint  undertaking  to share and
minimize   the   expenses   of   constructing   of   each   party's   respective
telecommunications  network,  and not as a separate entity or as a sale or lease
(except with respect to lease of the Associated  Property).  Grantor and Grantee
shall file (and shall cause their  respective  Parents to file) their respective
income  tax  returns  and  other  returns  and  reports  for  their   respective
Impositions on such basis and, except as otherwise required by law, not take any
positions inconsistent therewith.
     5.06 This Agreement shall become  effective on the date hereof,  subject to
Section 20.04 hereof, and shall terminate on the date when, after completion and
delivery of the Segments all the Terms of all such  Segments  shall have expired
or  terminated,  except  that  Articles  16,  24 and  those  provisions  of this
Agreement which are expressly  provided herein to survive such termination shall
remain binding on the parties hereto. 
     5.07 If (i)  Grantee or an entity  which  directly or  indirectly  controls
Grantee (each a "Grantee Parent") makes a general  assignment for the benefit of
its  creditors,  files a voluntary  petition in  bankruptcy  or any  petition or
answer seeking,  consenting to, or acquiescing in  reorganization,  arrangement,
adjustment,  composition,  liquidation,  dissolution, or similar relief, (ii) an
involuntary  petition  in  bankruptcy  or other  insolvency  protection  against
Grantee or any  Grantee  Parent is filed and not  dismissed  within one  hundred
twenty (120) days,  (iii) Grantee or any Grantee Parent defaults with respect to
any  borrowed  money  indebtedness  of Grantee or such Grantee  Parent  having a
principal  amount in excess of (***),  which  indebtedness  is  already  due and
payable  in full or  which  default  has  resulted  in,  or  would  permit,  the
acceleration  of the maturity of such  indebtedness,  (iv) except as provided in
(v) below,  Grantee  materially  breaches this Agreement and such breach remains
uncured for 30 days (or, if not susceptible of cure within such period, cure has
not been  commenced and  diligently  pursued  thereafter)  after written  notice
thereof by Grantor,  (v) Grantee fails,  for a period of ten (10) days following
written  notice by  Grantor  of such  failure,  to make  payment in excess of an
aggregate  of (***) due  hereunder  (unless the unpaid sum is being  disputed in
good faith), or (vi) any Permitted  Guarantor shall materially breach Section 16
of its guaranty



                                       22




referred  to in Section  20.06 and such  breach  shall  have a material  adverse
effect or such Permitted Guarantor's ability to perform under such Guaranty, and
such breach  remains  uncured (or Grantee  has not  substituted  a new  Guaranty
therefor) for 30 days (or, if not  susceptible of cure within such period,  cure
has not been commenced and diligently  pursued  thereafter) after written notice
thereof by Grantor,  Grantor may, upon twenty (20) days prior written  notice to
Grantee and while such event is  continuing,  terminate this Agreement as to all
Segments as to which Grantee has not yet paid the  Completion  Contribution,  in
which  case  Grantee  shall  have no  further  obligation  to make any  payments
hereunder as to the Segments terminated. In addition, upon the occurrence of any
event  described in clauses (iv) or (v) above, in addition to any other remedies
available to Grantor at law or in equity,  including  specific  performance  and
injunctive relief,  Grantor shall have no obligations under Article 12 hereunder
as to any  Segments as to which  Grantee has paid the  Completion  Contribution,
unless and until such  default is cured.  Except as provided in the  immediately
preceding sentence,  and  notwithstanding  other provisions in this Agreement to
the contrary,  Grantor  acknowledges and agrees that Grantor shall have no right
under any circumstances to terminate the IRU, in whole or in part, or any of the
rights and interests of Grantee hereunder, with respect to any Segment for which
the Completion  Contribution  relating thereto has been fully paid in accordance
with the terms hereof prior to the termination of the Term of such Segment. 5.08
If (i) Grantor or an entity which directly or indirectly  controls Grantor (each
a "Grantor Parent") makes a general assignment for the benefit of its creditors,
files a voluntary petition in bankruptcy or the filing by Grantor or any Grantor
Parent of any  petition or answer  seeking,  consenting  to, or  acquiescing  in
reorganization,  arrangement, adjustment, composition, liquidation, dissolution,
or  similar  relief,  (ii)  an  involuntary  petition  in  bankruptcy  or  other
insolvency  protection  against  Grantor or any Grantor  Parent is filed and not
dismissed  within one hundred  twenty (120) days,  (iii)  Grantor or any Grantor
Parent  defaults with respect to any borrowed money  indebtedness  of Grantor or
such  Grantor  Parent  having a  principal  amount in  excess  of  (***),  which
indebtedness  is already due and payable in full or which  default has  resulted
in, or would permit, the acceleration of the maturity of such indebtedness, (iv)
Grantor materially



 
                                       23



breaches  this  Agreement  (except  breaches  covered by Section  3.04) and such
breach  remains  uncured 30 days (or,  if not  susceptible  of cure  within such
period,  cure has not been commenced and diligently  pursued  thereafter)  after
written notice thereof by Grantee,  or (v) Level 3 Communications,  Inc. (or any
successor  guarantor  thereunder)  shall  materially  breach  Section  16 of its
guaranty  referred  to in Section  20.05 and such  breach  shall have a material
adverse  effect on its ability to perform under such  guaranty,  and such breach
remains  uncured for 30 days (or, if not susceptible of cure within such period,
cure has not been commenced and  diligently  pursued  thereafter)  after written
notice  thereof by Grantee,  then,  after written  notice  thereof from Grantee,
Grantee may (i)  terminate  this  Agreement,  in whole or in part, in which case
Grantee shall have no further  obligation  to make any payments  hereunder as to
the  portion  terminated,  and (ii)  subject  to  Article  17,  pursue any legal
remedies it may have under  applicable  law or principles of equity  relating to
such default, including specific performance and injunctive relief.

                                   ARTICLE 6.
                                 REQUIRED RIGHTS

     6.01 Grantor covenants and agrees that, during the Term of each Segment, it
shall  obtain  and  maintain  in full force and  effect  all  rights,  licenses,
permits, authorizations, rights-of-way, easements and other agreements which are
necessary in order to permit Grantor to construct,  install,  keep installed and
maintain the Grantee  Fibers and Grantee  Conduit  comprising  such Segment,  to
grant the IRU and to provide  Grantee with all other rights and  privileges  (it
being  understood that Grantee's  option rights under Section 7.06, prior to the
exercise thereof, shall not be considered for this purpose) under this Agreement
(collectively,  the  "Required  Rights").  Grantor  shall  use its  commercially
reasonable best efforts to cause each such Required Right to provide (a) Grantee
with  notice of any  default  on the part of  Grantor  thereunder  and to permit
Grantee to cure,  on behalf of and at the expense of Grantor,  any such  default
and,  thereafter,  to continue the use of such Required Right in accordance with
Grantor's rights and interests  thereunder,  (b) subject to the last sentence of
this Section 6.01, option or


 
                                       24



renewal  rights  ("Option  Rights")  permitting the stated term of each Required
Right to be  continued  until  the end of the  economically  useful  life of the
Grantee Fibers and Grantee Conduit located in the Segment to which such Required
Right relates or otherwise beyond the scheduled expiration date of such Required
Right and (c)  provide  Grantee  with  non-disturbance  agreements  (in form and
substance  reasonably  satisfactory to Grantee)  relating to the Grantee Fibers,
the Grantee Conduit,  the Associated  Property and Grantee's interest in, and/or
ownership  and use thereof.  Each Required  Right shall by its terms,  or by the
terms of an option or similar  renewal right  exercisable at the sole discretion
of Grantor,  remain in effect for the Minimum  Period for each  Segment  covered
thereby, (***), provided further that Grantor shall nevertheless remain bound by
the provisions of Section 5.02 with respect to such Required Rights.
     6.02 Grantor  further  covenants and agrees that during the Term of the IRU
with respect to each Segment:
     (a) Grantor  shall  observe and perform  each and every of its  obligations
under  each  Required  Right if the  failure  to observe  and  perform  any such
obligation or obligations  would permit the grantor or provider of such Required
Right to terminate such Required Right prior to its stated expiration date or to
increase the fees,  charges or assessments  due to such grantor or provider,  or
would otherwise  adversely  impair or affect Grantee's rights to use the Grantee
Fibers, the Grantee Conduit and the Associated Property hereunder;
     (b) in the event Grantor shall receive  notice from any grantor or provider
of a  Required  Right  that  Grantor  has  failed  to  observe  or  perform  its
obligations under such Required Right (unless Grantor is contesting the validity
of such claimed or alleged failure in good faith, provided such contest does not
adversely  impair or affect  Grantee's  rights  hereunder ), Grantor  shall give
written notice of such failure to Grantee  (promptly  following the date Grantor
shall have  received  notice of such  failure)  and  Grantee  may, at its option
(subject to the terms and provisions of the Required Right and



                                       25




the ability of third parties to cure defaults of Grantor  thereunder),  (i) cure
or correct any such failure and (ii) pay any  subsequent  amounts due under such
Required  Right to the grantor or provider if such Required Right unless Grantee
shall have received written notice from Grantor that Grantor will pay timely all
such amounts;
     (c) in the event Grantor is in default of any of its obligations  under any
Required Right and Grantee cures such default pursuant to Section  6.02(b)(i) or
Grantee  exercises  its rights  pursuant to Section 6.02 (b)(ii) , Grantor shall
reimburse  Grantee promptly upon demand for any and all amounts  reasonably paid
by Grantee;
     (d)  Grantor  shall at its sole  reasonable  cost and  expense  defend  and
protect  Grantor's  rights in and  interests  under  each  Required  Right,  and
Grantee's  rights under this  Agreement  and  Grantee's  interest in the Grantee
Fibers, the Grantee Conduit, any Sublease and the Associated  Property,  against
all Liens attributable to Grantor;
     (e) Grantor shall not exercise any right or otherwise take any action under
a Required Right which is inconsistent with its obligations, or Grantee's rights
under this Agreement, nor shall Grantor fail to exercise any such rights if such
failure would be inconsistent with such obligations or rights or would otherwise
adversely affect  Grantee's  ownership of and/or  indefeasible  right to use the
Grantee Fibers, the Grantee Conduit and the Associated Property hereunder;
     (f) Grantor shall not take any action which would result in the termination
of a Required  Right prior to its scheduled  expiration  (including any extended
term pursuant to an exercised option); and
     (g) In the event that (i) the grantor or provider of a Required Right is in
default under such Required Right, (ii) such grantor or provider makes a general
assignment  for the  benefit of its  creditors,  files a  voluntary  petition in
bankruptcy or any petition or consider seeking, consenting to, or acquiescing in
reorganization,  arrangement, adjustment, composition,  liquidation, dissolution
or  similar  relief,  (iii)  an  involuntary  petition  in  bankruptcy  or other
insolvency  protection  against  such  grantor or  provider is filed or (iv) any
other event or condition arises which may materially  adversely affect Grantor's
rights under such Required Right or Grantee's rights under this Agreement,  then
Grantor shall provide Grantee with prompt written notice of each such event or



                                       26




condition and keep Grantee  reasonably  informed with respect to any  subsequent
developments relating thereto.
     6.03 In the event any Required Right shall contain,  or shall  otherwise be
subject to, an Option  Right in favor of Grantor  with respect to any portion of
the Grantor  System,  Grantor shall give Grantee written notice thereof at least
90 days prior to the last date  required  for  exercise  thereof  and either (i)
exercise such Option Right  (provided  that (a) Grantor shall not be required to
expend,  as  consideration  for exercising any such Option Right,  more than the
fair market rate  payable at such time for similar  rights and terms,  except to
the extent that Grantee and the other users of the Grantor System agree at their
option to pay directly or reimburse  Grantor for any amounts required to be paid
in excess of such fair market rate, and (b) any such extension  shall not modify
the rights or obligations of Grantor or Grantee under this Agreement (including,
without  limitation,  the amount of fees payable by Grantee  pursuant to Article
13)) or (ii) if Grantor  elects not to exercise  such  Option  Right and Grantee
wishes to  exercise  such  Option  Right and  continue to use the portion of the
Grantor  System to which such Option Right  relates,  then Grantor  shall (a) if
such Option Right and the Required Right relating thereto are assignable, assign
its  interest  therein  and in such  portion of the Grantor  System  (including,
without  limitation,  all facilities and rights therein) to Grantee for $1.00 or
(b) if  such  Option  Right  or the  Required  Right  relating  thereto  are not
assignable,  exercise  such Option  Right on behalf of Grantee  pursuant to this
Section 6.03, whereupon Grantor shall have no further right, title,  interest or
obligation  (and  Grantee  shall  have  all  such  right,  title,  interest  and
obligation)  under this Agreement to or with respect to such affected portion of
the Grantor System during the period of extension or renewal,  provided,  and on
the condition,  that Grantee shall assume and agree to pay,  observe and perform
all of the duties,  obligations  and  liabilities  associated with such Required
Right  relating  to  such  affected  portion  arising  after  the  date  of such
assumption  and shall  indemnify  Grantor  in  accordance  with  Article 16 with
respect to any Losses  suffered by Grantor  relating to the duties,  obligations
and liabilities assumed by Grantee pursuant to this sentence.



                                       27





     6.04 Subject to Grantor's  compliance  with Sections  6.01,  6.02 and 6.03,
then notwithstanding any other provision of this Agreement to the contrary, if a
Required  Right  expires or otherwise  terminates  at any time after the Minimum
Period,  the Term (with  respect to the Segment or Segments or portions  thereof
affected  thereby) shall likewise  automatically  expire;  provided that, in the
event Grantor or any of its Affiliates  shall extend,  renew or enter into a new
agreement  with respect to such  Required  Right,  the Term shall  continue with
respect to such  Segment or Segments or portions  thereof  until the  subsequent
expiration or termination of such Required Right; provided further that any such
extension,  renewal or new agreement  shall not modify the rights or obligations
of Grantor or Grantee under this Agreement (including,  without limitation,  the
amount of fees payable by Grantee  pursuant to Article  13).  
     6.05 If, after the  Acceptance  Date with respect to a Segment,  Grantor is
required  by any  Governmental  Authority,  or by any  grantor or  provider of a
Required  Right prior to the scheduled  expiration of such  Required  Right,  to
surrender,  cease using or relocate such Segment or portion  thereof,  including
any of the  facilities  used or required in  providing  the IRU,  Grantor  shall
relocate  such  Segment of  portion  thereof  and shall have the right,  in good
faith, to reasonably  determine the extent and timing of, and methods to be used
for such  relocation;  provided that (i) Grantee shall be kept fully informed of
all actions to be taken and  determinations  made by Grantor in connection  with
such relocation, (ii) any such relocated Segment or portion thereof shall (a) be
constructed  in accordance  with the  construction  specifications  set forth in
Exhibits   "G"  and  "J"  and   incorporate   fiber  and  conduit   meeting  the
specifications set forth in Exhibit "H" (b) be subject to successful  completion
of  Acceptance  Testing  (which shall be  completed,  if  practicable,  prior to
termination  of service on the affected  portion of the Grantor  System) and (c)
contain  the same  number of Grantee  Fibers as the  Segment or portion  thereof
being relocated and, if the Segment or portion thereof being relocated  contains
the Grantee Conduit, any such relocated Segment or portion thereof shall contain
the Grantee Conduit and (iii) Grantor shall use its commercially reasonable best
efforts to minimize any disruption  resulting from such  relocation to Grantee's
telecommunication  operations. Unless such relocation is the result of a failure
by Grantor to observe and



 
                                       28




perform its  obligations  under any  Required  Rights or this  Agreement  (e.g.,
failure to obtain a Required  Right with a scheduled  term at least equal to the
Minimum  Period or failure to comply with the terms thereof in order to maintain
such Required Right in effect for the Minimum  Period),  Grantee shall reimburse
Grantor  for its  proportionate  share of the Costs of such  relocation  of such
Segment or portion  thereof (to the extent  Grantor has not been  reimbursed  or
otherwise  compensated  by any other  Person) as  follows:  (i) if the  affected
Segment or portion thereof includes any conduits (whether or not occupied),  the
total Costs of relocation  of the affected  conduits  shall be allocated  (***).
     6.06  Notwithstanding  anything in this Agreement to the contrary,  the IRU
and Grantee's rights are subject to the terms of the Required  Rights,  provided
that the Required  Rights shall not contain  terms,  provisions  or  obligations
which conflict or are  inconsistent  with Grantee's  rights (it being understood
that Grantee's option rights under Section 7.06, prior to the exercise  thereof,
shall not be  considered  for this purpose)  under the IRU or this  Agreement or
Grantor's obligations thereunder or hereunder or which impose any other material
obligations or duties on Grantee,  and provided further that the Required Rights
may  contain   customary   provisions   regarding  access  and  other  customary
restrictions  and limitations.  Except as otherwise  provided in this Agreement,
Grantor will not obtain for itself or any of its Affiliates any material  rights
or benefits in respect of the Grantor System from the grantor or provider of any
Required  Right that it does not make available or cause to be made available to
Grantee on comparable terms.



 
                                       29




                                   ARTICLE 7.
                                     CONDUIT

     7.01 Grantor shall use its commercially reasonable best efforts to have the
IRU for  each  Segment  of the  Grantor  System  consist  of 24  fibers  and one
unoccupied conduit (or comparable aerial segment).
     7.02 (***).



 
                                       30




     7.03 Grantor shall give written notice to Grantee of the likely  occurrence
of a Pinch  Event  with  respect  to a Segment  or a portion  thereof,  promptly
following  Grantor's  knowledge of the  likelihood  of such Pinch  Event,  which
notice shall  certify that, in Grantor's  good faith  determination,  either (i)
such Pinch Event will be temporary and Grantor will deliver the Grantee  Conduit
in such Segment or portion  thereof by the date  specified in such notice (which
date shall not be later than the applicable  Completion Date) or (ii) such Pinch
Event will be permanent and Grantor will not deliver the Grantee  Conduit by the
applicable  Completion Date.  Notwithstanding  anything in this Agreement to the
contrary, (a) in the event that Grantor delivers a notice pursuant to clause (i)
above,  for  purposes of  determining  the Minimum  Period with  respect to such
Segment only,  the Acceptance  Date for the Segment or portion  thereof to which
such notice relates shall not commence  until the date that the Grantee  Conduit
has been delivered and (b) in the event that Grantor  delivers a notice pursuant
to clause (ii) above,  then Grantor  shall have no  obligation  to deliver,  and
Grantee shall have no  obligation  to accept or pay for, the Grantee  Conduit in
the Segment or portion  thereof to which such notice  relates  after the date of
such notice.  In each of clauses (a) and (b) above, the IRU Contribution and the
Recurring  Charge for such Segment shall be adjusted in accordance  with Section
7.04 below. If, prior to the later of the third  anniversary of the Commencement
Date and the delivery of the last Segment delivered  hereunder,  such Segment or
portion thereof includes at least three conduits, (A) in the event that a notice
has been delivered pursuant to clause (i) above,  Grantee shall take delivery of
and pay for the Grantee  Conduit in accordance with the terms of this Agreement,
and (B) in the event that a notice has been  delivered  pursuant  to clause (ii)
above, Grantee shall have the option (which option shall


 
                                       31




be exercisable  within 30 days  following  receipt of written notice of proposed
delivery  by Grantor)  to take  delivery  of and pay for the Grantee  Conduit in
accordance  with the terms of this  Agreement.  In either such case,  if Grantee
takes delivery of and pays for the Grantee  Conduit,  the IRU  Contribution  and
Recurring  Charge for such Segment shall be adjusted as provided in Section 7.05
below.
     7.04 (***).
     7.05 In the event that (i)  Grantor  delivers a notice  pursuant to Section
7.03(i) and  Grantee  takes  delivery  of the Grantee  Conduit in the Segment or
portion  thereof to which such notice relates by the applicable  Completion Date
or (ii) Grantee exercises its


 
                                       32




option  pursuant to clause (B) of the last  sentence of Section  7.03,  then (a)
Grantee  shall  reconvey to  Grantor,  or  relinquish  the use of, any fibers in
excess of the  Initial  Grantee  Fibers  granted to Grantee  pursuant to Section
7.02,  (b) Grantor shall  reimburse  Grantee for all  Incremental  Costs paid by
Grantee pursuant to Section 7.02 and (c) Grantee shall pay Grantor the excess of
the IRU Contribution for such Segment over the amount of the fee paid by Grantee
with respect thereto  pursuant to Section 7.04 and the Recurring Charge shall be
restored  from and after the date of such delivery to what it would have been if
such Pinch Event had not occurred.
     7.06  Grantor  agrees that in the event the  Grantor  System in any Segment
shall  include six or more conduits  (inclusive  of the Grantee  Conduit and the
conduit housing the Cable),  Grantee shall have the option to elect that the IRU
with  respect to the  Grantee  Fibers in such  Segment be  increased  to include
twenty-five  percent  (15%) of the fibers  installed  (rounded up to the nearest
whole fiber) in every conduit  after the first five  conduits  (inclusive of the
Grantee  Conduit  and  the  conduit   housing  the  Cable),   provided  that  if
Grantorgrants  to an  unrelated  party an  indefeasible  right to use all of the
fibers installed in any such conduit,  Grantee shall not have such option but in
lieu thereof  Grantor shall pay Grantee,  simultaneously  with the grant of such
right, an amount in cash equal to 25% of the value of the consideration received
by Grantor for such  indefeasible  right to use such fibers (it being understood
that,  if such  indefeasible  right  to use  such  fibers  is  part of a  larger
transaction,  any allocation of consideration  in such transaction  shall not be
relevant  for  purposes  of this  Section  7.06 and,  if Grantor and Grantee are
unable  to agree on the  amount  of the total  consideration  allocable  to such
indefeasible right to use, such amount shall be determined by the procedures set
forth in Article  24).  Grantor  shall give written  notice to Grantee  prior to
installing  any fiber in such sixth conduit and any  subsequent  conduit,  which
notice shall contain  Grantor's good faith  estimate of Grantee's  proportionate
share of the costs and other  amounts  described  below which will be payable by
Grantee.  If Grantor  installs  fiber in one or more conduits  contemporaneously
under circumstances where at least one of such conduits would be subject to this
Section  7.06,  Grantee  may select  which of those  conduits  is subject to its
option  rights under this Section  7.06.  Grantee  shall have a period of ninety
(90) days



 
                                       33





after  receipt of such notice to exercise  its option under this Section 7.06 by
written  notice to Grantor.  In the event Grantee shall exercise its option with
respect  to such a conduit in any  Segment,  all fibers  installed  therein  for
Grantee's use shall be deemed to be and  constitute  Additional  Grantee  Fibers
hereunder and Grantee shall be responsible for, and Grantee shall pay to Grantor
from  time to time  during  the Term (at least  five (5) days  prior to the date
Grantor  is  required  to make  payments  as a result of the  occupancy  of such
conduit),  Grantee's  proportionate share (based on the number of fibers in such
conduit which will become Additional Grantee Fibers and the total fiber count in
such  conduit)  of each of: (i) the  Incremental  Costs  incurred  by Grantor in
connection  with the  installation  of the  Additional  Grantor  Fibers  in such
conduit;  (ii) the operating expenses incurred by Grantor in connection with the
fibers in such conduit;  and (iii) the fees,  costs or charges payable under the
terms of any related  Required  Right(s) as a result of the  placement or use of
fiber in such conduit.  In the event  Grantee shall fail to timely  exercise the
option  provided in this Section  7.06 with respect to a conduit,  or if Grantee
notifies  Grantor in writing of its desire to surrender such option with respect
to any conduit in any  Segment,  Grantee's  option with  respect to such conduit
shall terminate, but Grantee's option with respect to any subsequent conduits or
other Segments shall continue in full force and effect. Notwithstanding anything
contained in this Agreement to the contrary, Grantor shall never be obligated to
cause six or more  conduits to be installed as a part of the Grantor  System and
Grantor  shall not be in breach or  default  hereunder  or  otherwise  liable to
Grantee if the Grantor System does not include six or more conduits.  The rights
granted to Grantee under this Section 7.06 shall not apply to (x) any inner city
or local loop conduit  constructed or installed by Grantor in a city in the form
of a spur (which may have two or more connection  points) to the Grantor System,
provided that this sentence shall not modify Grantor's obligations under Section
2.02 or (y) if the Grantor System  consists of (***)  conduits,  any conduits in
excess of (***)  conduits  constructed  or installed by Grantor,  simultaneously
with and adjacent to the other conduits constituting part of the Grantor System,
expressly for exchange for conduits in another Segment or portion of the Grantor
System  provided  by an  unrelated  third  party  (and no more than a de minimis
amount of other consideration).



                                       34


     7.07  Grantee  may elect at any time  during  the Term of a Segment to have
fibers  installed within all or any part of the Grantee Conduit in such Segment,
on such  reasonable  schedule as may be  specified  by Grantee  and  approved by
Grantor (which approval shall not be  unreasonably  withheld),  and,  subject to
Article 19, Grantor shall install such fibers in accordance  with such schedule,
subject to the  following:  (i) Grantee  shall  provide to Grantor for Grantor's
reasonable  approval  and, if  applicable,  to the  grantors or providers of any
Required Rights,  detailed  installation plans and specifications,  the proposed
contractor  or  contractors,  the  schedule  for  installation,  and such  other
information or documentation as may be reasonably requested by Grantor or as may
be required under any Required Right,  and (ii) Grantee shall reimburse  Grantor
for all Costs incurred by Grantor in connection with such  installation (but not
including the cost of  construction  of the Grantee  Conduit  itself).  7.08 Any
installation  of fiber for Grantee's use within a Segment under Sections 7.06 or
7.07 shall not extend the Minimum Period with respect to such Segment.

                                   ARTICLE 8.
                       CONSTRUCTION OF THE GRANTOR SYSTEM

     8.01 Grantor  will  design,  engineer,  install and  construct  the Grantor
System  (including  any  portion of the  Grantor  System  delivered  pursuant to
Article  7) in  conformity  with the  construction  specifications  set forth in
Exhibit "G" and all applicable manufacturer  specifications and in a workmanlike
manner and in accordance with industry standards and building,  construction and
safety codes, as well as any and all other applicable  governmental laws, codes,
ordinances,  statutes and  regulations.  Such  responsibilities  shall  include,
without   limitation,    preparation   of   construction   drawings,   materials
specifications  and  materials  requisitions.  The Grantee  Fibers shall meet or
exceed the applicable fiber specifications set forth in Exhibit "H". The Grantee
Conduit, and all other conduits in which Grantee Fibers are located,  shall meet
the applicable specifications set forth in Exhibit "H".


                                       35




     8.02 Grantor will provide  Regeneration  Facilities and Opamp Facilities to
be located along the Grantor  System,  in each case  consisting of and providing
space and amenities as described in Exhibit "I".
     8.03 Grantor will undertake the Acceptance Testing of each of the Segments.
     8.04 Subject to Sections 7.02 and 7.07,  Grantor will procure all materials
to be  incorporated  in and to become a  permanent  part of the  Grantor  System
(other than fibers to be installed in the Grantee  Conduit which may be procured
by Grantee at Grantee's option).
     8.05  Subject  to the  provisions  of Article 6,  Grantor  will  obtain and
maintain in full force and effect the Required Rights without default by Grantor
thereunder.
     8.06  Grantor  and  Grantee  will  mutually  consult  with each other (on a
monthly  basis and at such other times upon request of either  party) to attempt
to coordinate construction of the Grantor System with other network construction
which may be undertaken by, or on behalf of, Grantee.
     8.07  During the  course of  construction  of each  Segment,  Grantor  will
prepare  and  provide to Grantee  (***) a  construction  schedule  and  progress
reports,  including notice regarding  whether Grantor  reasonably  believes that
such  Segment  may be  subject  to a  Pinch  Event.  Subject  to the  terms  and
provisions of any applicable  Required Right,  Grantee shall have the right, but
not the obligation,  on at least twenty four (24) hours prior notice to Grantor,
to inspect and be present at the  construction  and installation of each Segment
(which may consist of continuous  or regular  on-site  inspections  by dedicated
representatives of Grantee), including the installation, splicing and testing of
the Grantee  Fibers and the  installation  of the Grantee  Conduit  incorporated
therein;  provided  that no  inspection  or failure to inspect by Grantee  shall
impair or invalidate  any rights and remedies of Grantee under this Agreement or
modify,  amend  or  otherwise  affect  any of the  representations,  warranties,
covenants or agreements of Grantor under this  Agreement.  If, during the course
of any such construction,  installation, splicing or testing, any deviation from
the  specifications  set  forth  in  any  Exhibit  hereto  is  discovered,   the
construction or installation of the affected portion of the



                                       36




Segment  shall be repaired  promptly to such  specifications  in such Exhibit at
Grantor's sole cost and expense.
     8.08  Grantor  shall make  available to Grantee for  inspection  by Grantee
copies of all information, documents, agreements, reports, permits, drawings and
specifications  generated,  obtained or acquired  by Grantor in  performing  its
duties  pursuant to this  Article 8 that are material to the grant of the IRU to
Grantee,  including the Required Rights,  subject only to the condition that the
terms  of each  such  document  or the  legal  restrictions  applicable  to such
information  or document  permits  disclosure to Grantee;  provided that Grantor
will use its  commercially  reasonable  best  efforts  to obtain a waiver of any
existing  confidentiality  and/or  non-disclosure  restrictions,  and to  exempt
Grantee from subsequent confidentiality and/or non-disclosure restrictions, that
would  restrict  Grantor's  ability to make such  documents  and/or  information
available to Grantee for inspection. 
     8.09  For  purposes  of the  foregoing,  Grantor  shall be  deemed  to have
complied with any Exhibit notwithstanding  deviations to such Exhibit,  provided
that Grantor (i)  notifies  Grantee of such  deviation  (which may be given in a
general  format at monthly  intervals  unless  Grantee  requests  more  specific
details),  (ii) compliance was not or would not be commercially  practicable and
(iii) such  deviations  do not  diminish  the  value,  utility,  reliability  or
expected  useful life of the item or matter  concerned  or  otherwise  adversely
affect Grantee's rights or obligations under this Agreement.
     8.10 The parties  acknowledge  that Grantee's  contributions to the cost of
constructing  the  Grantor  System  are  limited  to  the  payment  of  the  IRU
Contribution. Without limitation, Grantee will not have any obligation, over and
above payment of the IRU Contribution as contemplated hereunder, with respect to
Grantor's responsibilities set forth in Sections 8.01, 8.02, 8.03, 8.04 or 8.05.


                                       37





                                   ARTICLE 9.
                               ACCEPTANCE TESTING

     9.01  Grantor  shall test the  Grantee  Fibers and the  Grantee  Conduit in
accordance   with  the  procedures  and  standards   specified  in  Exhibit  "J"
("Acceptance  Testing").  Acceptance  Testing shall  progress span by span along
each  Segment  as cable  splicing  progresses  or,  in the  case of the  Grantee
Conduit,  as set forth in Exhibit "J", so that test results may be reviewed in a
timely manner. Grantor shall provide Grantee with at least 14 days' prior notice
of the date and time of each  Acceptance  Testing  and  Grantee  shall  have the
right, but not the obligation, to be present to observe the Acceptance Testing.
     9.02 When Grantor reasonably  determines the Grantee Fibers and the Grantee
Conduit  with  respect to an entire  Segment  are  installed  and  operating  in
conformity  with the applicable  specifications  set forth in Exhibits "G", "H",
and "J", and Grantor is otherwise in  compliance  with the other  provisions  of
this  Agreement  with respect to such Segment,  Grantor  shall  provide  written
notice of same to Grantee (a "Completion  Notice"),  together with a copy of the
results of the  Acceptance  Testing  for such  Segment.  Grantee  shall,  within
fifteen (15) days of receipt of the Completion  Notice,  either accept or reject
the Completion Notice  (specifying,  if rejected,  the defect or failure in such
Acceptance  Testing and/or the items required to be remedied  and/or replaced in
order for such Segment to be in conformity  with the  applicable  specifications
set forth in Exhibit "J" and other  provisions of this Agreement) by delivery of
written notice to Grantor.  In the event Grantee rejects the Completion  Notice,
Grantor shall promptly, and at no cost to Grantee, commence to remedy the defect
or failure.  Thereafter,  Grantor  shall again give Grantee a Completion  Notice
with respect to such  Segment.  The  foregoing  procedure  shall apply again and
successively  thereafter until Grantor has remedied all defects or failures. Any
failure by  Grantee  to timely  reject a  Completion  Notice  shall be deemed to
constitute acceptance for purposes of this Agreement,  and in that event Grantee
shall be deemed to have  delivered a notice of  acceptance  on the thirtieth day
after delivery of the Completion Notice. The successful completion of Acceptance
Testing, and the


                                       38




occurrence of an  Acceptance  Date,  with respect to the Grantee  Fibers and the
Grantee  Conduit in accordance  with this Article 9 shall not relieve Grantor of
its  obligation  to repair  defects in the  Grantor  System in  accordance  with
Section 12.02.

                                   ARTICLE 10.
                                     ACCESS

     10.01 Grantor shall provide  Grantee with access to, and Grantee shall have
the right to  interconnect  with, the Grantee Fibers and the Grantee  Conduit at
Segment  End Points and,  subject to the terms and  provisions  of the  Required
Rights,  at other  technically  feasible  access points along the Grantor System
(the  "Access  Points").  The specific  location of such Access  Points shall be
determined by Grantor during the design,  engineering  and permitting  phases of
construction and after  consultation and  coordination  with Grantee,  and, at a
minimum,  Access Points will be provided at the  intervals  specified in Exhibit
"I".
     10.02 Grantor may route the Grantee Fibers through  Grantor's  space in the
Regeneration  Facilities or Opamp  Facilities in its sole discretion (so long as
such routing does not materially adversely affect the security, safety or use of
the  Grantee  Fibers or the  Associated  Property).  Grantee  Fibers  may,  upon
Grantee's written consent (which shall not be unreasonably  withheld), be routed
through Grantor's terminal, endlink or pop sites. In each case, Grantor shall be
responsible for all costs and expenses associated therewith.
     10.03 Grantor shall have the right to control all activities concerning the
Grantor System at all of the Access  Points,  provided that after the Acceptance
Date for each Segment,  Grantor shall not splice  Grantee  Fibers located in any
Segment or otherwise undertake any activities with respect to the Grantee Fibers
or the Grantee  Conduit  located in such  Segment  except in  connection  with a
relocation  pursuant to Section  6.05,  as required  to perform  maintenance  as
described  in Exhibit "K" or as  otherwise  directed  by  Grantee.  In the event
Grantor shall undertake any such activities  (including splicing) related to the
Grantee Fibers and/or Grantee Conduit at any Access Point at Grantee's  request,
such activities shall be conducted in accordance with requirements as agreed to


                                       39




by the parties and Grantee  shall  reimburse  Grantor for all Costs  incurred by
Grantor in connection with such activities.
     10.04  Grantor  shall  determine  the exact  locations of the  Regeneration
Facilities  and  Opamp  Facilities  after  consultation  and  coordination  with
Grantee.  Grantee  shall have access to the  Regeneration  Facilities  and Opamp
Facilities 24 hours per day, 7 days per week, provided that Grantee shall comply
with such customary access requirements  consistent therewith as provided in the
Required Rights.
     10.05  Following  the  initial  construction  of the  Grantor  System  in a
Segment,  Grantor agrees to allow Grantee, subject to customary access and other
customary  restrictions and limitations of any applicable  Required  Rights,  to
establish  additional  technically  feasible  Access  Points  along the  Grantor
System.  Grantor  agrees to use  commercially  reasonable  good faith efforts to
obtain the consent or approval,  if  necessary,  of a grantor or provider of any
applicable  Required Right in connection with such additional Access Points. Any
additional  Access Points shall be  constructed  or installed by Grantor and all
Costs associated therewith shall be paid by Grantee.
     10.06 Grantor shall (i) make available to Grantee such dedicated  space and
amenities (e.g., power, caging,  lighting,  etc.) in Regeneration Facilities and
Opamp Facilities (***) and (ii) cause such  Regeneration and Opamp Facilities to
be  located at such  intervals  as set forth on  Exhibit  "I" along the  Grantor
System as are  necessary to light the Initial  Grantee  Fibers  using  equipment
requiring facility space similar to  industry-standard  equipment like that used
by Grantor to provision similar capacity over the same number of fibers,  (***).
     10.07  If  after  the  Acceptance  Date  for a  Segment,  Grantee  requires
additional  space within a  Regeneration  Facility or Opamp Facility in order to
utilize the  Grantee  Fibers  (including  any fibers  which may be  subsequently
installed in the Grantee  Conduit),  Grantor shall use  commercially  reasonable
best  efforts  to  provide  such   additional   space  (which  may  include  the
construction of new regeneration or opamp facilities or the


                                       40




enlargement of existing Regeneration Facilities and Opamp Facilities); provided,
in no event shall  Grantor be required to provide  Grantee  with any  additional
space which,  with the initial Grantee space, is greater than the space required
by Grantor to provide similar capacity utilizing an equivalent number of its own
fibers,  provided  further that  Grantor  shall have no  obligations  under this
Section 10.07 for any additional  space located  outside Grantor System right of
way unless  Grantee has no other  commercially  reasonable  alternative.  To the
extent any such  additional  space  shall  require  the consent or approval of a
grantor  or  provider  or  a  Required  Right,  Grantor  will  use  commercially
reasonable  best efforts to obtain such consent or approval.  Grantee  shall pay
all Costs relating to any such additional space. 
     10.08 The IRU granted  hereunder  shall include  Grantee's right to install
equipment,  or replace  existing  equipment,  in the space  located at the Opamp
Facilities and  Regeneration  Facilities  made available to Grantee  pursuant to
this  Agreement.  All such equipment shall be owned by Grantee and Grantor shall
have no right, title or interest therein.

                                   ARTICLE 11.
                                   OPERATIONS

     11.01  Subject to Articles 6 and 15,  Grantee  shall have full and complete
control and  responsibility  for determining all matters with respect to the use
of the Grantee Fibersand the Grantee Conduit, including, without limitation, any
network  and  service   configuration   or  designs,   routing   configurations,
re-grooming,  rearrangement  or  consolidation  of channels or circuits  and all
related functions with regard to the use of the Grantee Fibers.
     11.02 Grantee acknowledges and agrees that except for the items included as
a part of the  Regeneration  Facilities  and Opamp  Facilities  as  described on
Exhibit  "I",  Grantor is not  supplying  nor is Grantor  obligated to supply to
Grantee any optronics or electronics or optical or electrical equipment or other
facilities,  all of which are the sole responsibility of Grantee, nor is Grantor
responsible for performing any work other than as specified in this Agreement.


                                       41





     11.03  Following the  Acceptance  Date for any Segment,  upon not less than
(***) days written  notice from  Grantor to Grantee,  Grantor may at its option,
subject  to  Grantee's  prior  written  approval  (which  approval  shall not be
unreasonably  delayed or withheld)  substitute for the Initial Grantee Fibers in
any Segment or Segments,  an equal number of  alternative,  newer fibers  within
another conduit constituting part of the Grantor System (but not fibers acquired
from third parties  unless the Grantee Fibers being  substituted  were delivered
pursuant to Section 2.05),  provided that in any such event,  such  substitution
(i) shall be in accordance with Grantee's applicable operating procedures,  (ii)
shall be effected at the sole cost of Grantor,  including,  without  limitation,
all  disconnect  and  reconnect  costs,  fees  and  expenses,   (iii)  shall  be
constructed in accordance  with the  specifications  and procedures set forth in
Exhibits "G" and "J",  incorporate fiber and conduit meeting the  specifications
set  forth  in  Exhibit  "H" and  successfully  tested  in  accordance  with the
Acceptance  Testing,  (iv) shall not interrupt the operation or adversely affect
the use,  operation or performance of Grantee's  network or business,  or change
any Segment End Points, Access Points,  Regeneration Facilities,  node or switch
facilities  used by  Grantee  hereunder,  all as  determined  by  Grantee in its
reasonable discretion,  (v) shall not modify Grantor's obligations under Article
7 and (vi) Grantee shall be reasonably  satisfied that any such relocation shall
not otherwise affect its rights, privileges or costs under this Agreement.

                                   ARTICLE 12.
                  MAINTENANCE AND REPAIR OF THE GRANTOR SYSTEM

     12.01 From and after the  Acceptance  Date with  respect  to each  Segment,
Grantor shall maintain such Segment, or cause such Segment to be maintained in a
workmanlike  manner and, in accordance  with the  maintenance  requirements  and
procedures set forth in Exhibit "K" attached hereto, all applicable manufacturer
specifications,  industry standards and building, construction and safety codes,
as well as any and all other applicable  governmental  laws, codes,  ordinances,
statutes and regulations. The costs of



                                       42




all scheduled  maintenance of the Grantee Fibers and/or Grantee Conduit shall be
paid by Grantor; provided, however, that Grantee shall reimburse Grantor for its
(***) of the Costs  (excluding costs which Grantor would otherwise have incurred
as part of  scheduled  maintenance  e.g.,  if  personnel  otherwise on scheduled
maintenance  duty  attend  to the  unscheduled  situation)  of  any  unscheduled
maintenance  and repair of the Grantee Fibers and/or Grantee Conduit as follows:
(i) if the affected portion of the Grantor System includes any conduits (whether
or not  occupied),  the total Costs of repair of the affected  conduits shall be
allocated  pro rata among the conduits  affected;  (ii) such Costs  allocated to
each affected conduit carrying the Grantee Fibers shall be further  allocated to
Grantee (***).
     12.02  Notwithstanding  anything in this Agreement to the contrary, if , at
any time prior to the date that is (***) months after the Acceptance  Date for a
Segment, Grantee shall notify Grantor in writing of its discovery of a deviation
from the  specifications  set forth in any Exhibit  hereto with  respect to such
Segment,  the  construction  or  installation  of the  affected  portion of such
Segment shall be repaired promptly to such specification by Grantor at Grantor's
sole cost and expense.

                                   ARTICLE 13.
                                RECURRING CHARGE

     13.01 Except as expressly  provided  otherwise in this  Agreement,  Grantor
shall be responsible  for the payment of all costs and expenses  relating to the
Grantor System, including,  without limitation, (i) all fees and charges payable
to the  grantors  or  providers  of the  Required  Rights,  (ii)  the  costs  of
constructing and maintaining the Grantor System,  (iii) all charges and expenses
(including  utility  charges)  associated with the operation of the Regeneration
Facilities and Opamp Facilities and (iv) all Impositions.


                                       43





     13.02 In consideration of Grantor's  responsibilities  in Section 13.01 and
otherwise under this Agreement, subject to the adjustments described in Sections
7.04, 7.06 and 13.03 through 13.07, Grantee shall pay to Grantor each year, with
respect to each Segment, commencing with the Acceptance Date of such Segment and
continuing  until the Term of the IRU with  respect to such  Segment  shall have
expired or terminated,  the following  sums (the  "Recurring  Charge"):  (i) the
product  obtained when: (A) (***) is multiplied by (B) the number of Route Miles
in such Segment (the "ROW  Charge"),  plus (ii) the product  obtained  when: (A)
(***) is  multiplied  by (B) the  number  of Route  Miles in such  Segment  (the
"Operating Expense Charge").
     13.03  Commencing on the date of  installation of any Grantee Fibers within
the Grantee  Conduit,  the ROW Charge shall be increased by the product obtained
when:  (i) (***) is  multiplied  by (ii) the number of Route Miles where Grantee
Fibers have been installed in the Grantee Conduit.
     13.04 (***).
     13.05 (***).



                                       44




     13.06 The Recurring Charge  applicable to each Segment,  as the same may be
adjusted from time to time pursuant to the foregoing  provisions of this Article
13, the Operating  Expense Estimate and the sums described in Section  13.03(i),
13.04(i)(A)  and  13.04(ii)(A),  shall be  adjusted on each  anniversary  of the
Acceptance  Date of such Segment by the change,  if any, in the  Consumer  Price
Index,  All Urban Consumers,  U.S. City Average,  published by the United States
Department of Labor, Bureau of Labor Statistics (the "CPI-U"), for the preceding
twelve month period (or, with respect to the Operating  Expense  Charge,  in the
event such index shall cease to be  computed or  published,  Grantor and Grantee
shall mutually designate a comparable  successor index to be used in determining
the  adjustment to such Charge);  provided that (a) the ROW Charge for a Segment
shall  only be  adjusted  pursuant  to this  Section  13.06  to the  extent  the
instrument governing the Required Right for such Segment explicitly provides for
an  adjustment  based on the CPI-U or a comparable  index and (b) the  Operating
Expense  Charge  and the  Operating  Expense  Estimate  shall  only be  adjusted
pursuant to this Section  13.06 if neither  Grantee nor Grantor has performed an
audit for the preceding twelve-month periods in accordance with Section 13.05.
     13.07  Grantee  shall  pay the  Operating  Expense  Charge  portion  of the
Recurring  Charge  for a Segment  monthly  on the first day of each month of the
Term of the IRU respecting  such Segment (with the Operating  Expense Charge for
any partial calendar month  prorated).  Grantee shall pay the ROW Charge portion
of the Recurring  Charge for all Segments in the  aggregate on a monthly  basis,
with the amount of each month's  payment  being equal to the amount  obtained by
multiplying  the total amount of ROW Charges due by Grantee on all Segments by a
fraction, the numerator of which is the total



                                       45




amount of Required  Right  Payments due by Grantor on all  Segments  during such
month  and the  denominator  of which is the  total  amount  of  Required  Right
Payments due by Grantor on all Segments during the calendar year.
     13.08  Notwithstanding  anything in this Agreement to the contrary,  if (i)
any  Segment  is the  subject  of a  Force  Majeure  Event  which  results  in a
disruption of Grantee's  operations or business and (ii) Grantor's obligation to
pay costs and expenses relating to such Segment of the type described in Section
13.01 is relieved or excused,  in whole or in part,  during the pendency of such
Force Majeure  Event,  then Grantee's  obligation to pay Recurring  Charges with
respect to such Segment during the pendency of such Force Majeure Event shall be
proportionately reduced.
     13.09 In  addition  to  Grantee's  other  rights  and  remedies  under this
Agreement and under  applicable  law,  Grantee shall have the right from time to
time, to the fullest extent  permitted by law, to set off or deduct amounts owed
to Grantor hereunder  (including,  without  limitations,  amounts required to be
reimbursed  to Grantee  pursuant to Sections  6.02(c) and 14.07) from or against
any and all payments required to be made to Grantor pursuant to this Article 13.

                                   ARTICLE 14.
                                   IMPOSITIONS

     14.01  Grantor and Grantee  acknowledge  and agree that it is their  mutual
objective  and intent to (i)  minimize,  to the extent  feasible,  the aggregate
Impositions  payable  with  respect  to the  Grantor  System and (ii) share such
Impositions  according to their respective  interests in the Grantor System, and
that they will cooperate with each other and coordinate  their mutual efforts to
achieve such objectives in accordance with the provisions of this Article 14.
     14.02  Grantor  shall be  responsible  for and shall timely pay any and all
Impositions with respect to the Grantor System which  Impositions are imposed or
assessed  prior  to  the  Acceptance  Date  of a  Segment.  Notwithstanding  the
foregoing  obligations,  Grantor  shall  have the  right to  challenge  any such
Impositions so long as the



                                       46




challenge of such  Impositions  does not adversely  affect  Grantee's  rights or
interests hereunder.
     14.03 After the Acceptance Date for each Segment, Grantor shall timely pay,
or cause to be paid,  any and all  Impositions  imposed  upon or with respect to
such  Segment  to the  extent  such  Impositions  (a) have  not been  separately
assessed  or imposed  upon or against  the  interest  of Grantee in the  Grantor
System or (b)  consist of real  property  or ad valorem  taxes  relating  to the
Grantor System, including, without limitation, real property or ad valorem taxes
on the Initial Grantee  Fibers,  the Grantee  Conduit and the  Regeneration  and
Opamp Facilities  (whether or not such Impositions have been separately assessed
or imposed upon or against the interest of Grantee in the Grantor System), which
real property or ad valorem taxes shall  constitute part of the Actual Operating
Expenses  and shall be subject to  adjustment  as  described in Article 13. Upon
receipt of a notice of any Imposition after the Acceptance Date for any Segment,
Grantor shall promptly notify Grantee of such  Imposition and following  payment
of such  Imposition by Grantor,  Grantee  shall,  within thirty (30) days of its
receipt of an invoice  from  Grantor,  reimburse  Grantor for its  proportionate
share of such Imposition (except for the Impositions  described in clause (b) of
this Section 14.03,  which Impositions shall constitute part of Actual Operating
Expenses and shall be paid in accordance  with Article 13), which share shall be
determined  (i) to the extent  possible,  based upon the manner and  methodology
used by the particular authority imposing such Impositions (e.g., on the cost of
the  relative  property   interests,   historic  or  projected  revenue  derived
therefrom,  or any  combination  thereof);  or (ii)  if the  same  cannot  be so
determined,  then based upon  Grantee's  proportionate  share of the total fiber
count in the  affected  portion of the Grantor  System,  provided  that any such
Imposition  which was separately  assessed  against  Grantee or any other Person
using the  Grantor  System  shall be taken  into  account  in  determining  such
proportionate  share.  Grantor shall provide Grantee with reasonable  supporting
documentation  for  Impositions  for which Grantor seeks  reimbursement.  If any
Imposition  assessed  upon  Grantor or Grantee is based on assets or business in
any state in addition  to its  interest in the  Grantor  System  (i.e.,  central
assessment), Grantor and Grantee shall work together in good faith to allocate a
proper portion of such


                                       47




assessment  to such  interests  alone and if Grantor  and  Grantee are unable to
agree on such  allocation  within  thirty  (30)  days from the date  Grantor  or
Grantee  delivered  notice to the other party  regarding such  allocation,  such
allocation  shall be determined by an arbitration  procedure in accordance  with
Section 24.01(iv).
     14.04 Upon notice of the assertion or proposed  assertion of any Imposition
described in Section  14.03,  Grantor  shall  promptly and in good faith consult
with  Grantee  concerning  the  underlying  facts and  whether  to contest or to
continue to contest such assertion or proposed  assertion.  Notwithstanding  any
provision  herein to the  contrary,  Grantor shall have the right to contest any
Imposition  described in Section 14.03 above by any lawful and appropriate means
(including by nonpayment of such Imposition),  provided such nonpayment does not
adversely affect the title (if applicable),  rights or property  delivered or to
be delivered to Grantee pursuant hereto.  The  out-of-pocket  costs and expenses
(including  reasonable  attorney  fees)  incurred by Grantor in any such contest
shall be shared by Grantor  and Grantee in the same  proportion  as to which the
parties would have shared in such Impositions, as they were originally assessed.
Any refunds or credits resulting from a contest brought pursuant to this Section
14.04 shall be divided  between Grantor and Grantee in the same proportion as to
which such refunded or credited  Impositions  were borne by Grantor and Grantee.
In any such event,  Grantor  shall provide  timely  notice of such  challenge to
Grantee.  If Grantor  chooses to proceed with such challenge  after receipt of a
written  objection to the  challenge  from  Grantee,  Grantor shall conduct such
challenge at its own cost and expense,  provided  that Grantee shall not receive
the  benefit  of any  refund  or  credit,  if any,  obtained  as a  result  of a
successful challenge.  If Grantor does not contest an Imposition,  Grantee shall
have the right,  after notice to Grantor,  to contest such Imposition as long as
such contest does not adversely affect the title, property or rights of Grantor.
The  out-of-pocket  costs and expenses  (including  reasonable  attorney's fees)
incurred by Grantee in any such  contest  shall be shared by Grantee and Grantor
in the same proportion as to which the parties shared in such Imposition,  as it
was originally  assessed.  Any refunds or credits resulting from a contest shall
be divided  between  Grantee and Grantor in the same proportion as to which such
refunded or credited Imposition was borne by Grantee and Grantor. If


                                       48




Grantee chooses to proceed with such contest after receipt of written  objection
to the challenge  from Grantor,  Grantee shall conduct such challenge at its own
cost and expense,  provided  that  Grantor  shall not receive the benefit of any
refund  or  credit,  if any,  obtained  as a result of a  successful  challenge;
provided, however, that notwithstanding anything to the contrary in this Article
14,  Grantor  shall  have  complete  authority  over and  discretion  to control
(including  the  authority  to dismiss or not pursue) any  contests  relating to
Impositions  based upon the  computation  of Grantor's  taxable income under the
Internal Revenue Code or state income or franchise tax laws.
     14.05 Following the Acceptance Date for each Segment,  Grantor and Grantee,
respectively,  shall  be  separately  responsible  for any  and all  Impositions
(except for the  Impositions  described  in clause (b) of Section  14.03,  which
shall  constitute a part of the Actual  Operating  Expenses and shall be paid in
accordance  with Article 13) (i)  expressly or implicitly  imposed  upon,  based
upon, or otherwise measured by the gross receipts, gross income, net receipts or
net income  received by or accrued to such party due to its respective  interest
in or use of such Segment and/or the Grantee  Fibers and/or the Grantee  Conduit
located  within such  Segment,  or (ii) which have been  separately  assessed or
imposed upon the  respective  interest of such party in such Segment  and/or the
Grantee Fibers and/or the Grantee Conduit located within such Segment.
     14.06 Grantor and Grantee agree to cooperate  fully in the  preparation  of
any returns or reports relating to the Impositions.  Grantor and Grantee further
acknowledge  and agree that the  provisions  of this  Article 14 are intended to
allocate  the  Impositions  expected to be assessed  against or imposed upon the
parties with respect to the Grantor System based upon the procedures and methods
of computation by which Impositions  generally have been assessed and imposed to
date, and that material  changes in the procedures and methods of computation by
which such  assessments are assessed and imposed could  significantly  alter the
fundamental  economic assumptions  underlying the transactions  hereunder to the
parties.  Accordingly,  Grantor  and Grantee  agree  that,  if in the future the
procedures  or methods of  computation  by which  Impositions  are  assessed  or
imposed against the parties change  materially from the procedures or methods of
computation  by which they are imposed as of the date  hereof,  the parties will
negotiate in



                                       49




good  faith  an  amendment  to the  provisions  of this  Article  14 in order to
preserve,  to the extent reasonably possible,  the economic intent and effect of
this Article 14 as of the date hereof.
     14.07  Notwithstanding  anything in this Agreement to the contrary,  in the
event that Grantor fails to pay any  Imposition it is required to pay under this
Agreement  Grantee  may,  at its  option (i) pay such  Imposition  to the taxing
authority  assessing such  Imposition  and (ii) pay all  subsequent  Impositions
assessed by such taxing  authority,  unless Grantee shall have received  written
notice from  Grantor the Grantee  will pay timely all such  Impositions.  In the
event Grantee makes any payments  pursuant to this Section 14.07,  Grantor shall
reimburse Grantee promptly upon demand for any and all amounts paid by Grantee.

                                   ARTICLE 15.
                              USE OF GRANTOR SYSTEM

     15.01 Grantee  represents  and warrants that it will use the Grantee Fibers
and/or Grantee  Conduit and the IRU hereunder in compliance  with all applicable
government codes,  ordinances,  laws, rules and regulations.  Grantor represents
and  warrants  that it will use the Grantor  System,  and shall obtain from each
other user of the Grantor System a representation  and warranty that it will use
the  Grantor  System,  in  compliance  with  all  applicable  government  codes,
ordinances, laws, rules and regulations.
     15.02 Subject to the  provisions of Article 6 and this Article 15,  Grantee
may use the  Grantee  Fibers,  the  Grantee  Conduit  and the IRU for any lawful
purpose. Grantee acknowledges and agrees that it has no right to use any fibers,
other than the Grantee  Fibers,  included or incorporated in the Grantor System,
and that Grantee  shall keep any and all of the Grantor  System,  other than the
Grantee Fibers,  the Grantee Conduit and Grantee's  interest in and right to use
the Associated  Property,  free from all Liens attributable to Grantee.  Grantor
acknowledges  and agrees that it (i) has no right to use the  Grantee  Fibers or
the Grantee Conduit,  (ii) shall keep the portion of the Grantor System in which
Grantee shall receive the IRU free and clear of all Liens attributable to



                                       50




Grantor  (other  than the Liens in favor of  Grantee  created  pursuant  to this
Agreement)  and (iii) shall obtain an  acknowledgment  and  agreement  from each
other  Person that uses the Grantor  System that such Person has no right to use
the  Grantee  Fibers or the  Grantee  Conduit  and shall keep the portion of the
Grantor  System in which  Grantee  shall  receive  the IRU free and clear of all
Liens of any third party attributable to such Person.
     15.03 (***).
     15.04  Neither  Grantor nor Grantee  shall use the Grantor  System in a way
which physically  interferes in any way with or otherwise  adversely affects the
use of the  fibers,  cable or  conduit  of any other  Person  using the  Grantor
System,  provided that customary and normal  telecommunications  activities will
never be deemed to physically  interfere with or otherwise  adversely affect the
use of the fibers, cable or conduit of any Person and


                                       51




Grantor  shall obtain a similar  agreement  from each other Person that uses the
Grantor System.
     15.05 Grantee and Grantor shall  promptly  notify each other of any matters
pertaining  to, or the  occurrence  (or impending  occurrence)  of, any event of
which it is aware that could give rise to any damage or  impending  damage to or
loss of the Grantor System, or any impairment of Grantee's right of use or other
rights and privileges therein.

                                   ARTICLE 16.
                                 INDEMNIFICATION

     16.01 Subject to the provisions of Section 3.04, Section 16.07,  Article 17
and Section 22.03, Grantor hereby agrees to indemnify,  defend, protect and hold
harmless Grantee,  its Affiliates,  the Designated Parties and their Affiliates,
and their respective employees,  officers, directors, agents and representatives
(the "Grantee Indemnified Parties") from and against, and assumes liability for,
any and all  claims,  injuries,  losses,  expenses,  damages or  liabilities  of
Grantee or any other Grantee  Indemnified Party (including,  without limitation,
reasonable  attorneys'  fees)  (collectively,  "Losses")  which  arise out of or
result  from,  directly or  indirectly,  in whole or in part:  (i) the breach by
Grantor of any of its representations, covenants or other obligations hereunder;
(ii) the negligence or willful misconduct of Grantor,  its officers,  employees,
servants,  Affiliates,  agents,  contractors,  licensees,  invitees  and vendors
arising out of or in connection  with the  performance  by Grantor or such other
Persons  of  their  respective  obligations  under  this  Agreement;  (iii)  any
violation by Grantor or its Affiliates of any regulation, rule, statute or court
order of any  Governmental  Authority  in  connection  with the  performance  by
Grantor of its obligations under this Agreement;  and (iv) any interference with
or  infringement  of the  rights  of a third  party  as a  result  of a  Grantee
Indemnified  Party's use of the Grantor System in accordance with the provisions
of this Agreement.
     16.02 Grantee hereby agrees to indemnify, defend, protect and hold harmless
Grantor and its Affiliates, and their respective employees, officers, directors,
agents and representatives (the "Grantor Indemnified Parties") from and against,
and assumes


                                       52




liability  for, any and all Losses of Grantor or any other  Grantor  Indemnified
Party which arise out of or result from, directly or indirectly,  in whole or in
part:  (i) the  breach by Grantee of any of its  representations,  covenants  or
other  obligations  hereunder;  (ii) the  negligence  or willful  misconduct  of
Grantee, its officers,  employees,  servants,  Affiliates,  agents, contractors,
licensees,  invitees  and  vendors  arising  out of or in  connection  with  the
performance  by Grantee or such other  Persons of their  respective  obligations
under this  Agreement;  and (iii) any violation by Grantee or its  Affiliates of
any regulation,  rule,  statute or court order of any Governmental  Authority in
connection  with the  performance  by  Grantee  of its  obligations  under  this
Agreement.
     16.03 Grantor and Grantee agree to promptly  provide each other with notice
of any  claim  which  may  result in an  indemnification  obligation  hereunder,
provided, however, that the indemnifying party's obligations hereunder shall not
be affected by the failure to give such notice  except to the extent that it can
demonstrate that it was materially  prejudiced  thereby.  The indemnifying party
may defend such claim and, if it so elects,  such defense shall be controlled by
the indemnifying party and all costs associated with such defense shall be borne
by the indemnifying  party. In any such proceeding,  the indemnified party shall
have the right to participate in such defense at its own expense,  provided that
the  indemnifying  party shall pay the  reasonable  fees and expenses of counsel
retained by the indemnified  party in the event that (i) the indemnifying  party
and the  indemnified  party shall have mutually  agreed to the retention of such
counsel  or (ii) the  named  parties  to any  such  proceedings  (including  any
impleaded parties) include both the indemnifying party and the indemnified party
and  the   representation   of  both  parties  by  the  same  counsel  would  be
inappropriate,  in the  reasonable  opinion  of the  indemnified  party,  due to
material,  actual or potential  differing  interests  between them. In the event
that the indemnified  party retains separate counsel at the indemnified  party's
expense in accordance with the foregoing sentence, the indemnified party and its
counsel will reasonably cooperate with the indemnifying party and its counsel in
order to minimize the  indemnifying  party's overall legal expenses  relating to
the claim. In no event shall the indemnifying  party be liable for more than one
firm of attorneys (in addition to local counsel with respect to any jurisdiction
in which



                                       53




local  counsel may be  required)  for all  indemnified  parties in any one legal
action or group or related legal actions.
     16.04 The  indemnifying  party shall have the right to settle or compromise
any such claim of which it has  assumed  the  defense  only upon the  receipt of
written consent to such  settlement or compromise  from the  indemnified  party,
which consent shall not be unreasonably withheld or delayed; provided,  however,
that the  indemnified  party shall not be obligated to consent to any settlement
unless it involves  claims for money  damages only or other relief not involving
or affecting the indemnified party, which are being paid or performed in full by
other than the indemnified  party,  and any such failure to consent shall not be
deemed unreasonable.
     16.05 If the  indemnifying  party  fails to assume  the  defense of a claim
pursuant  to  Section  16.03,   then,  upon  twenty  (20)  days  notice  to  the
indemnifying  party setting forth the details  thereof,  the  indemnified  party
shall  have the right to pay,  compromise  or  defend  any such  claim  (without
further  notice  to the  indemnifying  party)  and to assert  the  amount of any
payment on such claim plus the expense of defense or  settlement as an indemnity
claim.  The  indemnified  party shall also have the right,  exercisable  in good
faith and upon reasonable prior notice to the  indemnifying  party, to take such
action as may be reasonably necessary to avoid a default prior to the assumption
of the defense of the claim by the indemnifying  party and any expenses incurred
by so acting shall be paid by the indemnifying party.
     16.06  Grantor  and Grantee  each  expressly  recognize  and agree that its
obligation to indemnify,  defend,  protect and save the other  harmless is not a
material  obligation to the continuing  performance of its obligations,  if any,
hereunder.  In the event that a party shall fail for any reason to so indemnify,
defend,  protect and save the other harmless, the injured party hereby expressly
recognizes  that its sole remedy in such event shall be the right to bring legal
proceedings  against  the other  party for its  damages as a result of the other
party's said failure to  indemnify,  defend,  protect and save  harmless.  These
obligations shall survive the expiration or termination of this Agreement.
     16.07  Notwithstanding the foregoing  provisions of this Article 16, to the
extent  Grantor is required under the terms and provisions of any Required Right
to indemnify


                                       54




the grantor or  provider  thereof  from and  against any and all claims,  suits,
judgments,   liabilities,  losses  and  expenses  arising  out  of  the  service
interruption,  cessation or unreliability  of the Grantor System,  regardless of
whether such claims,  suits,  judgments,  liabilities,  losses or expenses arise
from the sole or partial  negligence,  actions or  inaction  of such  grantor or
provider and its employees,  servants, agents,  contractors,  sub-contractors or
other Persons using the property covered by such Required Right,  Grantee hereby
releases such grantor or provider from, and hereby  waives,  all claims,  suits,
judgments, liabilities, losses and expenses for which Grantor would be otherwise
be required to indemnify  such Required  Right grantor or provider  (unless such
indemnification  is not  enforceable  as a  matter  of law)  arising  out of the
service   interruption,   cessation  or  unreliability  of  the  Grantor  System
regardless  of whether such claims,  suits,  judgments,  liabilities,  losses or
expenses  arise from the sole or partial  negligence,  actions or inactions,  of
such  grantor or  provider  or its  employees,  servants,  agents,  contractors,
subcontractors  or other  Persons  using the property  covered by such  Required
Right.

                                   ARTICLE 17.
                             LIMITATION OF LIABILITY

     Notwithstanding  any provision of this  Agreement to the contrary,  neither
party shall be liable to the other party for any special, incidental,  indirect,
punitive or consequential  damages,  whether foreseeable or not, arising out of,
or in connection with such party's failure to perform its respective obligations
hereunder,  including,  but not limited to, loss of profits or revenue  (whether
arising out of  transmission  interruptions  or problems,  any  interruption  or
degradation of service or otherwise), or claims of customers, whether occasioned
by any construction, reconstruction, relocation, repair or maintenance performed
by, or failed to be performed by, the other party or any other cause whatsoever,
including  breach  of  contract,  breach  or  warranty,  negligence  and  strict
liability,  all claims for which damages are hereby specifically waived.  Except
as set forth in Section  16.07,  nothing  contained  herein  shall  operate as a
limitation on the right of


                                       55




either  party  hereto to bring an action for damages  against  any third  party,
including claims for indirect,  special or consequential  damages,  based on any
acts or omissions of such third party.

                                   ARTICLE 18.
                                    INSURANCE

     18.01  During  the term of this  Agreement,  each  party  shall  obtain and
maintain,  and shall require any of its permitted  subcontractors  to obtain and
maintain,  the  following  insurance,  naming the other  party as an  additional
insured:  (i)  not  less  than  $5,000,000.00combined   single  limit  liability
insurance,  on an occurrence  basis,  for personal  injury and property  damage,
including  injury or damage  arising from the operation of vehicles or equipment
and liability for completed operations;  (ii) worker's compensation insurance in
amounts  required by applicable  law and employer's  liability  insurance with a
limit of at least  $1,000,000.00  per  occurrence;  (iii)  automobile  liability
insurance  covering  death or injury  to any  person  or  persons,  or damage to
property  arising from the operation of vehicles of vehicles or equipment,  with
limits  of not less  than  $1,000,000.00  per  occurrence;  and  (iv) any  other
insurance  coverages required under or pursuant to the Required Rights.  Grantor
shall  require  its  subcontractors  who are  engaged  in  connection  with  the
construction  of the  Grantor  System  to  maintain  insurance  in the types and
amounts as would be obtained by a prudent person to provide adequate  protection
against loss. In all circumstances,  Grantor shall require its subcontractors to
carry a minimum of $1,000,000 in commercial general liability insurance. Grantee
shall be listed as an additional insured on all polices set forth above,  except
workers'  compensation.  Grantor  shall  provide  to  Grantee a  certificate  of
insurance  evidencing such insurance  coverage.  Evidence of insurance furnished
shall contain a clause  stating  Grantee  "shall be notified in writing at least
thirty (30) days prior to any  cancellation  of, or any  material  change or new
exclusions in, the policy".
     18.02  During the term of this  Agreement:  (i)  Grantee  shall  obtain and
maintain  "all risk"  property  insurance in an amount equal to the  replacement
costs of all electronic,


                                       56




optronic and other equipment  utilized by Grantee in connection with the Grantee
Fibers and/or Grantee Conduit, naming Grantor as an additional insured; and (ii)
Grantor shall obtain and maintain "all risk" property  insurance in amount equal
to the replacement cost of the Regeneration and Opamp Facilities, naming Grantee
as an additional insured.
     18.03 Both parties expressly acknowledge that a party shall be deemed to be
in  compliance  with the  provisions of this Article if it maintains an approved
self-insurance  program  providing  for a retention of up to  $1,000,000.00.  If
either  party  provides any of the  foregoing  coverages on a claims made basis,
such  policy  or  policies  shall  be for at  least a three  (3)  year  extended
reporting or discovery period.
     18.04 Unless otherwise agreed, all insurance policies shall be obtained and
maintained  with  companies  rated "A" or better by Best's Key Rating  Guide and
each party  shall,  upon  request,  provide  the other  party with an  insurance
certificate confirming compliance with the requirements of this Article 18.
     18.05 Grantee and Grantor  shall each obtain from the  insurance  companies
providing  the  coverages  required by this  Agreement,  the  permission of such
insurers to allow such party to waive all rights of  subrogation  and such party
does hereby waive all rights of said insurance  companies to subrogation against
the other party, its affiliates,  subsidiaries,  assignees,  officers, directors
and employees.
     18.06 In the event either  party fails to maintain  the required  insurance
coverages and a claim is made or suffered,  such party shall  indemnify and hold
harmless  the  other  party  from any and all  claims  for  which  the  required
insurance would have provided  coverage.  In addition,  in the event of any such
failure  which  continues  after seven (7) days' written  notice  thereof by the
other party,  such other party may, but shall not be obligated  to,  obtain such
insurance  and  shall  have  the  right  to be  reimbursed  for the cost of such
insurance by the party failing to obtain such insurance.
     18.07 In no event shall either  Grantee or Grantor be required to obtain or
maintain  insurance  against  loss or damage to the  Grantee  Fibers or  Grantee
Conduit.


                                       57




                                   ARTICLE 19.
                                  FORCE MAJEURE

     Except as may be otherwise specifically provided in this Agreement, neither
party  shall be in default  under this  Agreement  if and to the extent that any
failure or delay in uch party's  performance  of one or more of its  obligations
hereunder  is  caused  by any of the  following  conditions,  and  such  party's
performance of such obligation or obligations  shall be excused and extended for
and during the period of any such  delay:  acts of God,  war,  strikes and other
similar  catastrophic  events  beyond  such  party's  control  (***).  The party
claiming  relief  under this  Article  shall  notify the other in writing of the
existence of the event relied on, the steps it is taking or proposing to take to
remedy such event and the cessation or termination of said event.

                                   ARTICLE 20.
                              ADDITIONAL COVENANTS

     20.01 Grantor and Grantee shall be entitled,  to the extent permitted under
applicable law, to jointly participate in any condemnation proceedings regarding
the Grantor System, the Grantee Fibers, the Grantor Conduit, any Sublease or the
Required Rights and to seek  compensation by either joint or separate awards for
the economic value of their  respective  interests in the portion of the Grantor
System  subject  to such  condemnation  proceeding.  If  Grantor  shall  receive
compensation   with   respect  to  any  such   condemnation   proceeding   under
circumstances  where  Grantee does not, to the extent such  compensation  is not
applied to relocate the  affected  portion of the Grantor  System under  Section
6.05,  Grantee shall be entitled to a portion of the Grantor award  commensurate
with  Grantee's  rights  under this  Agreement.  Grantor  shall  notify  Grantee
immediately  upon receipt of a formal notice of condemnation or taking or of any
similar  threatened  condemnation  proceeding  regarding the Grantor System, the
Grantee Fibers, the Grantee Conduit,  or the Required Rights.  Grantor shall not
sell the Grantor System


                                       58




(or any portion thereof) or any Required Rights to an acquiring agency authority
or other party in lieu of condemnation  without prior written notice of at least
thirty (30) days to Grantee.  Grantee's rights under this Section 20.01 shall be
in addition to, not in substitution of, Grantee's rights under Section 6.05.
     20.02 All transactions  between Grantor and any of its Affiliates  relating
to this Agreement (including,  without limitation,  transactions relating to the
maintenance of the Grantor System) shall be upon fair and reasonable  terms that
are no less  favorable to Grantor than those which would have been obtained in a
comparable  arm's-length  transaction  with a Person not an  Affiliate.  Grantor
shall  provide  Grantee  with prompt  written  notice,  including  a  reasonably
detailed summary of the economic terms, of all such transactions.
     20.03  Except to the  extent  prohibited  by any  Required  Right,  Grantor
agrees,  upon  request of Grantee,  to  execute,  acknowledge  and deliver  such
documents or  instruments  as Grantee  shall deem  necessary or  appropriate  to
evidence  or  safeguard  the IRU,  the  transfer of title  contemplated  by this
Agreement,  any Sublease and the security interest provided for in Section 3.03.
If Grantor files any documents on its own behalf,  it will  simultaneously  file
documents in the same location for Grantee at Grantee's cost, if so requested.
     20.04 To the extent that the Hart-Scott-Rodino  AntiTrust  Improvements Act
of  1976,  as  amended  (the  "HSR  Act"),  applies  to any of the  transactions
contemplated  by this  Agreement,  Grantee and Grantor  shall take  promptly all
actions necessary to make any filings required under the HSR Act with respect to
such transactions and to resolve any  investigation or other inquiry  concerning
such  transactions  commenced by the Federal  Trade  Commission or the AntiTrust
Division  of the United  States  Department  of  Justice or any state  attorneys
general.  Notwithstanding  anything in this  Agreement to the  contrary,  in the
event the HSR Act is applicable to any of the transactions  contemplated by this
Agreement,  then this  Agreement  shall not  become  effective  (except  for the
provisions  of Articles 20, 21 and 23 through 31), and no payments  shall be due
hereunder,  until the requirements of the HSR Act and any similar  antitrust law
applicable


                                       59




to such transactions shall have been satisfied and the waiting period thereunder
shall  have  expired  or been  terminated.  
     20.05 On and  after  the date  hereof,  Grantor's  obligations  under  this
Agreement shall be guaranteed by Level 3  Communications,  Inc., (or, subject to
the consent of Grantee,  which consent shall not be unreasonably  withheld,  any
other entity) pursuant to a guaranty in the form of Exhibit "N" attached hereto.
     20.06 On and  after  the date  hereof,  Grantee's  obligations  under  this
Agreement  shall be guaranteed  by NEXTLINK  Communications,  Inc.,  Eagle River
Investments,  LLC or Nextel Communications,  Inc. (or, subject to the consent of
Grantor,  which consent shall not be  unreasonably  withheld,  any other entity)
(each, a "Permitted Guarantor"),  pursuant to one or more guaranties in the form
of Exhibit "O" attached hereto.  From time to time after the date hereof,  (i) a
Permitted  Guarantor  which has not  previously  delivered  such a guaranty  may
execute  and deliver  such a guaranty to Grantor and (ii) a Permitted  Guarantor
may cancel a guaranty previously delivered by such Permitted Guarantor or reduce
or increase the  percentage of such  obligations  guaranteed  by such  Permitted
Guarantors'  guaranty,  provided that at all times after the date hereof 100% of
such obligations in the aggregate are guaranteed by one or more of the Permitted
Guarantors and provided further that without the consent of Grantor, which shall
not be unreasonably  withheld,  the percentage of such obligations guaranteed by
any  Permitted  Guarantor's  guaranty  shall not be increased if such  Permitted
Guarantor has suffered a material  adverse change in its financial  condition or
prospects relative to such condition or prospects on the date hereof.

                                   ARTICLE 21.
                                   ASSIGNMENT

     21.01  Neither  party shall  assign,  encumber or otherwise  transfer  this
Agreement to any other  Person  without the prior  written  consent of the other
party, which consent shall not be unreasonably  withheld;  provided,  each party
shall have the right,  without the other party's consent, but with prior written
notice to the other party, to assign or


                                       60




otherwise transfer this Agreement, in whole or in part, (i) as collateral to any
institutional  lender of such party subject to the prior rights and  obligations
of the  parties  hereunder,  (ii) in the case of  Grantor,  to an  Affiliate  of
Grantor,  or to any entity with which Grantor may be merged or consolidated,  or
which purchases all or substantially  all of the assets of Grantor,  or (iii) in
the case of Grantee,  to any Designated Party;  provided that in each of clauses
(i) through (iii) above,  such party shall not be released from its  obligations
hereunder.  Any assignee or transferee shall be subject to all of the provisions
of this Agreement  (except that any lender referred to in clause (i) above shall
not be restricted from  exercising any right of enforcement or foreclosure  with
respect to any related  security  interest or lien,  so long as the purchaser in
foreclosure is subject to the provisions of this  Agreement  (whether  before or
after  foreclosure)  and neither  Grantor's nor Grantee's rights and obligations
hereunder are otherwise impaired or adversely affected).
     21.02 Any and all additional fees, charges,  costs or expenses which result
under the Required  Rights or otherwise as a result of any permitted  assignment
or transfer of this Agreement by a party shall be paid by such party.
     21.03  This  Agreement  and  each of the  parties'  respective  rights  and
obligations  under this Agreement,  shall be binding upon and shall inure to the
benefit of the parties hereto and each of their respective  permitted successors
and assigns.
     21.04 Nothing  contained in this Article 21 shall be deemed or construed to
prohibit Grantor from selling,  leasing,  granting indefeasible rights of use or
entering into similar  agreements or arrangements with other Persons  respecting
any fibers and conduit constituting a part of the Grantor System,  provided that
no such sale, lease,  grant,  agreement or arrangement shall impair or otherwise
adversely affect Grantee's rights and privileges  hereunder and Grantor complies
with all of its obligations hereunder in connection therewith.


                                       61





                                   ARTICLE 22.
                         REPRESENTATIONS AND WARRANTIES

     22.01 Each party  represents  and warrants that: (i) it is a corporation or
limited liability company duly organized,  validly existing and in good standing
under the laws of the jurisdiction of its incorporation or formation; (ii) it is
duly  qualified  and in good  standing  as a foreign  corporation  in each other
jurisdiction  in which it owns or leases property or in which the conduct of its
business requires it to so qualify or be licensed except where the failure to so
qualify or be  licensed  is not  reasonably  likely to have a  material  adverse
effect on its  business,  operations,  condition  (financial  or  otherwise)  or
properties or Grantee's or Grantor's rights and obligations hereunder; (iii) has
the full right and  authority  to enter into,  execute,  deliver and perform its
obligations  under this  Agreement;  (iv) it has taken all  requisite  corporate
action to approve the execution, delivery and performance of this Agreement; (v)
this Agreement  constitutes a legal,  valid and binding  obligation  enforceable
against  such  party  in  accordance  with its  terms,  subject  to  bankruptcy,
insolvency,  creditors'  rights and general equitable  principles;  and (vi) its
execution,  delivery and  performance  of this  Agreement  shall not violate any
applicable  existing  regulations,  rules,  statutes  or  court  orders  of  any
Governmental  Authority  and shall not conflict with or result in the breach of,
or  constitute a default under (a) in the case of Grantor,  any  contract,  loan
agreement,  indenture, mortgage, deed of trust, lease, Required Right agreement,
indefeasible  right of use agreement or other agreement  binding on or affecting
Grantor or any of its properties,  or (b) in the case of Grantee,  any contract,
loan agreement,  indenture,  mortgage,  deed of trust, lease, or other agreement
binding on or affecting Grantee or any of its properties.
     22.02 [Intentionally omitted]
     22.03  Grantor  represents  and  warrants  that the Segments of the Grantor
System that it delivers  pursuant hereto shall be constructed in accordance with
the  specifications  set forth in the applicable  Exhibit attached hereto and in
Section 8.01;  provided  Grantee's sole rights and remedies against Grantor with
respect  to any  breach  of such  representation  shall  be those  set  forth in
Sections 8.07 and 12.02 of this Agreement.


                                       62





     22.04  EXCEPT  AS SET FORTH IN THE  FOREGOING  SECTIONS  22.01  and  22.03,
GRANTOR  MAKES NO  WARRANTY,  EXPRESS OR  IMPLIED,  WITH  RESPECT TO THE GRANTEE
FIBERS,  THE GRANTEE  CONDUIT,  THE ASSOCIATED  PROPERTY OR THE GRANTOR  SYSTEM,
INCLUDING ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR PARTICULAR PURPOSE, AND
ALL SUCH WARRANTIES ARE HEREBY EXPRESSLY DISCLAIMED.
     22.05 Grantee  acknowledges and agrees that Grantor shall have no liability
with respect to any defect in or failure of the Grantee  Fibers  and/or  Grantee
Conduit to perform in accordance with the vendor's or manufacturer's  warranties
applicable to such Grantee Fibers and/or the Grantee Conduit, provided that such
defect  or  failure  is  not  attributable  to  any  breach  by  Grantor  of its
obligations under this Agreement.  Grantor shall (i) provide Grantee with copies
of all manufacturer's,  vendor's, contractor's or other warranties applicable to
the Grantee  Fibers and/or the Grantee  Conduit  within each  Segment,  (ii) use
commercially  reasonable  best  efforts  to cause all such  warranties  to be in
effect for at least twelve months after the Acceptance Date for such Segment and
to use  commercially  reasonable  best  efforts  to obtain  additional  warranty
coverage after such 12-month  period,  (iii) to the extent the assignment of any
such warranty is not prohibited by the terms thereof, assign all such warranties
with respect to the Grantee  Fiber or Grantee  Conduit to Grantee on or prior to
the Acceptance  Date of such Segment,  and (iv) to the extent  assignment of any
such warranty is prohibited by the terms thereof and any  maintenance or repairs
to the Grantor System are required as a result of a breach of any such warranty,
Grantor shall pursue all remedies  against such  manufacturers,  contractors  or
vendors on behalf of Grantee  and other  Persons  having the right of use of the
Grantor System, and Grantor shall reimburse  Grantee's costs for any maintenance
Grantee  has  incurred  as a result of any breach of  warranty to the extent the
manufacturer, contractor or vendor pays such costs.
     22.06  Grantor  and  Grantee  acknowledge  and agree that for  purposes  of
federal,  state and local  law,  (i) the grant of the IRU to the  Grantee in the
Grantee Fibers, the Grantee Conduit and the Associated Property for each Segment
hereunder shall be treated


                                       63




by each of them as an executed  grant to Grantee of an interest in real property
with respect to such Segment,  (ii) to the extent that  ownership of the Grantee
Fibers and the Grantee Conduit is transferred to Grantee  hereunder,  such grant
shall  constitute  a transfer of title of real  property  and to the extent that
ownership of the Grantee  Fibers and the Grantee  Conduit is not  transferred to
Grantee  hereunder,  such grant shall  constitute  a leasehold  interest in real
property, (iii) no material obligation of either Grantee or Grantor shall remain
to be  performed  with respect to such grant or Segment and (iv) with respect to
each such grant,  this  Agreement is not  intended as an  executory  contract or
unexpired lease subject to assumption, rejection or assignment by the trustee in
bankruptcy  of any  party  to this  Agreement,  including,  without  limitation,
assumption,  rejection or assignment  under Section 365 of the Bankruptcy  Code.
     22.07 The  representations of Grantor and Grantee under Section 22.01 shall
be deemed to have been made on the date hereof and on each date on which Grantee
is required to make an IRU Contribution or Recurring Charge payment hereunder.

                                   ARTICLE 23.
                                 CONFIDENTIALITY

     23.01  Grantor  and  Grantee  hereby  agree that if either  party  provides
confidential  or  proprietary  information  to  the  other  party  ("Proprietary
Information"), such Proprietary Information shall be held in confidence, and the
receiving  party  shall  afford  Proprietary   Information  the  same  care  and
protection  as it affords  generally  to its own  confidential  and  proprietary
information  (which in any case shall be not less than reasonable care) in order
to avoid  disclosure  to or  unauthorized  use by any third  party.  The parties
acknowledge  and agree that all  information  disclosed  by either  party to the
other in  connection  with or pursuant to this  Agreement  shall be deemed to be
Proprietary Information provided that written information is clearly marked in a
conspicuous place as being confidential or proprietary and verbal information is
indicated as being confidential or proprietary when given and promptly confirmed
in writing as such  thereafter.  All Proprietary  Information,  unless otherwise
specified in writing, shall remain the property


                                       64




of the  disclosing  party,  shall be used by the  receiving  party  only for the
intended purpose, and such written Proprietary Information, including all copies
thereof,  shall be  returned  to the  disclosing  party or  destroyed  after the
receiving  party's need for it has expired or upon the request of the disclosing
party.  Proprietary  Information  shall not be  reproduced  except to the extent
necessary  to  accomplish  the  purpose  and  intent  of this  Agreement,  or as
otherwise may be permitted in writing by the disclosing party.
     23.02 The  foregoing  provisions  of Section  23.01  shall not apply to any
Proprietary  Information which (i) becomes publicly available other than through
the  disclosing  party;  (ii) is required to be disclosed by a  governmental  or
judicial law, order, rule or regulation; (iii) is independently developed by the
receiving  party;  or  (iv)  becomes  available  to  the  receiving  party  on a
non-confidential  basis from a third  party which is not  actually  known by the
receiving party to be bound by a confidentiality agreement or obligation. If any
Proprietary  Information  is required to be disclosed  pursuant to the foregoing
clause (ii), the party required to make such  disclosure  shall promptly  inform
the other party of the requirements of such disclosure.
     23.03 Notwithstanding  anything in this Article 23 to the contrary,  either
party may disclose Proprietary  Information to its employees,  agents, and legal
and financial  advisors and providers  (including  its existing and  prospective
lenders, joint venture partners and other financiers) to the extent necessary or
appropriate  in  connection  with the  negotiation  and/or  performance  of this
Agreement or in obtaining  financing,  provided that each such party is notified
of the confidential and proprietary  nature of such Proprietary  Information and
is  subject  to or agrees  to be bound by  similar  restrictions  on its use and
disclosure.
     23.04 The parties shall (i) maintain in confidence  both the fact that this
Agreement  has been entered into and its contents and (ii) without  limiting the
foregoing  clause  (i),  not refer to this  Agreement  or the other party in any
press release,  marketing  materials,  governmental filing or other documents or
publications,  in each case  without  the  consent  of such other  party  (which
consent  shall  not be  unreasonably  withheld),  except in each case (a) to the
extent  required by law (and in such case, only after  reasonable  prior written
notice to the other party), (b) in the case of Grantee, to customers


                                       65




or  potential  customers  of  Grantee,  (c) to  employees,  agents and legal and
financial  advisors  and  providers  as  provided  in  Section  23.03 and (d) in
connection with public filings made pursuant to Section 23.02.
     23.05  The  provisions  of this  Article  23 shall  survive  expiration  or
termination of this Agreement.

                                   ARTICLE 24.
                               DISPUTE RESOLUTION.

     24.01 If the parties are unable to resolve  any  dispute  arising  under or
relating to this Agreement,  including,  without limitation, any disagreement as
to the appropriate  reduction of the IRU  Contribution  and/or  Recurring Charge
described in Article 7, the parties shall resolve such  disagreement  or dispute
as follows:
                  (i) The matter  shall first be referred by either party to the
chief  executive  officers  or the chief  operating  officers  of the parties by
written  notice to the other party (the "Dispute  Notice").  Within fifteen (15)
days after  delivery of the Dispute  Notice such  officers of both parties shall
meet  at  a  mutually  acceptable  time  and  place  to  exchange  all  relevant
information in an attempt to resolve the dispute. All negotiations  conducted by
such  officers  shall be  confidential  and shall be treated as  compromise  and
settlement negotiations for purposes of federal and state rules of evidence.
                  (ii) If the matter has not been  resolved  within  thirty (30)
days after  delivery of the Dispute  Notice,  or if such  officers  fail to meet
within fifteen (15) days after delivery of such Dispute Notice, either party may
initiate  mediation  and, if  applicable,  arbitration  in  accordance  with the
procedures set forth in (iii) and (iv) below.
                  (iii) If such  officers  are unable to resolve  the dispute or
have failed to meet, the parties agree to participate in a non-binding mediation
procedure as follows: (A) a mediator will be selected by having counsel for each
party agree on a single person to act as mediator.  The parties' counsel as well
as up to three  representatives  of each of the parties  will appear  before the
mediator at a time and place determined by the mediator, but not more than sixty
(60) days after delivery of the Dispute Notice. The fees



                                       66




of the mediator and other costs of the mediation  will be shared  equally by the
parties.  (B) Each  party will  present a review of the matter and its  position
with respect to such matter. At the conclusion of both presentations the parties
may ask  questions  of each  other.  Either  party  may  abandon  the  mediation
procedure at the end of the  presentation and question periods and the mediation
procedure shall not be binding on either party.
                  (iv) If the matter is not resolved after attempts at mediation
as set forth  above,  or if either party  refuses to take part in the  mediation
process,  the parties  hereby agree to submit all such matters to arbitration in
Wilmington,  Delaware  according to the  commercial  rules and  practices of the
American Arbitration Association from time to time in effect.  Arbitration shall
be by three independent and impartial  arbitrators.  Such arbitrators shall have
experience in the subject  matter  involved in the dispute,  unless both parties
agree in  writing  to waive  any such  requirement.  Each of the  parties  shall
appoint one arbitrator  within fifteen (15) days after initiation of arbitration
and the two arbitrators so appointed shall select a third arbitrator  within ten
(10) days of their appointment, which third arbitrator shall be the chair of the
panel. In the event the parties or the arbitrators fail to select arbitrators as
required  herein,  the  American  Arbitration   Association  shall  select  such
arbitrators.  The  arbitrators  shall conduct a hearing no later than sixty (60)
days after  initiation  of the  matter to  arbitration  and a decision  shall be
rendered  by the  arbitrators  within  thirty (30) days of the  hearing.  At the
hearing the parties  shall present such evidence and witnesses as they may chose
with or without  counsel.  Adherence  to formal  rules of evidence  shall not be
required but the arbitration  panel shall consider any evidence and testimony it
determines  to be relevant in  accordance  with  procedures  it determines to be
appropriate.  Consistent  with the expedited  nature of arbitration  provided in
this Agreement,  each party shall,  upon the written request of the other party,
promptly provide the other with copies of documents relevant to issues raised by
any claim or counterclaim  submitted to arbitration.  Any dispute  regarding the
relevance  or  scope  of  discovery  shall  be  determined  by the  chair of the
arbitration panel, whose determination shall be conclusive.  All discovery shall
be commenced promptly after the initiation of arbitration and shall be completed
no  less  than  ten  (10)  days  before  the  scheduled  arbitration  date.  The
arbitration determination



                                       67




shall be in  writing  and shall  specify  the  factual  and legal  bases for the
determination.  The parties agree to abide by all  decisions and  determinations
rendered in such  proceedings  and such  decisions and  determinations  shall be
final and  binding on the  parties.  The  arbitrators  shall have the power,  if
requested by any party in connection with an arbitration hereunder, to order any
preliminary  and/or final  injunctive  relief or equitable relief requested by a
party  and  deemed  appropriate  by the  arbitrators  solely  to  carry  out the
provision of this Agreement.  All such decisions and determinations may be filed
for  confirmation  in any federal  court  located in the State of Delaware.  The
arbitrators, fees and other costs of arbitration (including, without limitation,
attorneys'  fees) shall be borne by the party against whom the award is rendered
except as the arbitration  panel may otherwise  provide.  24.02  Notwithstanding
anything in this Agreement to the contrary, and without first complying with the
dispute resolution procedures set forth in this Article 24, Grantee may apply to
any court of  competent  jurisdiction  where the  Grantor  System is located for
preliminary injunctive relief or specific performance in accordance with Section
24.03,  in the event that Grantee's use of the Grantee  Fibers,  Grantee Conduit
and Associated Property, or its rights and privileges hereunder, are jeopardized
by virtue of an alleged breach by Grantor of its obligations hereunder.
     24.03 Subject to Sections 3.04 and 7.02,  Grantor  acknowledges  and agrees
that, in light of the unique derivative nature of Grantee's rights hereunder and
the importance of the Grantor System to Grantee's business operations as well as
the  provisions of Article 17 limiting  certain  claims for monetary  liability,
Grantee would not have an adequate remedy at law for money damages if any of the
covenants  or  agreements  contained  in this  Agreement  were not  performed in
accordance with their terms and therefore  agrees that Grantee shall be entitled
to specific  enforcement  of such  covenants and  agreements in any  arbitration
proceeding  pursuant to Section  24.01 or any  judicial  proceeding  pursuant to
Section 24.02.


                                       68





                                   ARTICLE 25.
                                     NOTICES

     All notices or other  communications which are required or permitted herein
shall be in writing and sufficient if delivered  personally,  sent by nationally
recognized  prepaid  overnight  air courier,  or sent by registered or certified
mail, postage prepaid, return receipt requested, addressed as follows:

IF TO GRANTOR:                      Level 3 Communications, LLC
                                    1450 Infinite Drive
                                    Louisville, CO  80027
                                    Attention:  Dan Caruso

with a copy to:                     Level 3 Communications, LLC
                                    3555 Farnam Street, Ste.200
                                    Omaha, NE  68131
                                    Attention:  General Counsel

IF TO GRANTEE:                      INTERNEXT, LLC
                                    c/o NEXTLINK Communications, Inc.
                                    500 108th Avenue, NE, Ste. 2200
                                    Bellevue, WA  98004
                                    Attention:  General Counsel

with a copy to:                     NEXTLINK Communications, Inc.
                                    1730 Rhode Island Avenue, NW  Ste. 1000
                                    Washington, DC  20036
                                    Attention:  Counsel

or at such  other  address  as the  party to whom  notice  is be given  may have
furnished  to the  other  party in  writing  in  accordance  herewith.  Any such
communication shall be deemed to have been given when delivered  personally,  on
the business  day after  dispatch if sent by  overnight  air courier,  or on the
seventh business day after posting if sent by mail.



                                       69





                                   ARTICLE 26.
                      ENTIRE AGREEMENT; AMENDMENT; HEADINGS

     This Agreement constitutes the entire and final agreement and understanding
between the parties with respect to the subject matter hereof and supersedes all
prior agreements relating to the subject matter hereof,  which are of no further
force or effect.  The Exhibits  referred to herein are integral parts hereof and
are hereby made a part of this Agreement. This Agreement may only be modified or
supplemented  by  an  instrument  in  writing  executed  by  a  duly  authorized
representative  of each party.  The title and headings of this Agreement and its
various  Articles are for convenience of reference only and shall not affect the
meaning or interpretation of this Agreement.

                                   ARTICLE 27.
                           RELATIONSHIP OF THE PARTIES

     The relationship between Grantee and Grantor shall not be that of partners,
agents,  or joint  venturers  for one  another,  and nothing  contained  in this
Agreement  shall be deemed  to  constitute  a  partnership  or agency  agreement
between them for any purposes,  including but not limited to federal  income tax
purposes.

                                   ARTICLE 28.
                                  COUNTERPARTS

     This  Agreement may be executed in one or more  counterparts,  all of which
taken together shall constitute one and the same instrument.


                                       70





                                   ARTICLE 29.
                      GOVERNING LAW, VENUE AND JURISDICTION

     This  Agreement  shall be governed by and construed in accordance  with the
internal  laws of the  State of  Delaware,  without  regard to  conflict  of law
principles.  Except as provided in Article 24, any litigation  based hereon,  or
arising  out  of or in  connection  with  a  default  by  either  party  in  the
performance  of its  obligations  hereunder,  shall be  brought  and  maintained
exclusively  in the  courts of the State of  Delaware  or in the  United  States
District Court for the District of Delaware,  and each party hereby  irrevocably
submits  to the  jurisdiction  of  such  courts  for  the  purpose  of any  such
litigation and waives any objection based on forum non conveniens or otherwise.

                                   ARTICLE 30.
                                  SEVERABILITY

     If any term,  covenant or condition  contained herein shall, to any extent,
be  invalid  or  unenforceable  in any  respect  under the laws  governing  this
Agreement,  the remainder of this Agreement shall not be affected  thereby,  and
each  term,  covenant  or  condition  of  this  Agreement  shall  be  valid  and
enforceable to the fullest extent permitted by law.

                                   ARTICLE 31.
                          NO THIRD PARTY BENEFICIARIES

     Nothing in this  Agreement  shall  confer any rights upon any Person  other
than the parties hereto and their  respective  heirs,  successors or assigns and
the Persons entitled to indemnification under Article 16 hereof.


                                       71





                                   ARTICLE 32.
                               FURTHER ASSURANCES

     Each  party  shall  take  such  other  actions  as may from time to time be
necessary  or  appropriate  in order to carry out the intent and purpose of this
Agreement and the transactions contemplated hereby.

     IN WITNESS WHEREOF, Grantor and Grantee have executed this IRU Agreement as
of the date first above written.

LEVEL 3 COMMUNICATIONS, LLC, a
Delaware limited liability company

By  /s/ Kevin J. O'Hara

Title:  President


INTERNEXT, LLC, a
Delaware limited liability company

By   /s/ Wayne Perry

Title:   Manager



                                       72




EXHIBIT "A-2"
CITY LIST



No.                   Major Cities
---                   ------------

  1                   New York City
  2                   Boston
  3                   Washington, D.C.
  4                   Philadelphia
  5                   Chicago
  6                   Denver
  7                   Detroit
  8                   Seattle
  9                   Houston
 10                   Dallas
 11                   Atlanta
 12                   Los Angeles
 13                   San Francisco
 14                   San Diego
 15                   San Jose
 16                   Newark
 17                   Baltimore
 18                   Miami
 19                   Tampa
 20                   Orlando
 21                   Toronto
 22                   St. Louis
 23                   Cincinnati
 24                   Pittsburgh
 25                   Portland

                      Non-Major Cities
                      ----------------

 26                   Phoenix
 27                   Cleveland
 28                   Stamford
 29                   White Plains
 30                   Princeton
 31                   Richmond
 32                   Charlotte
 33                   Sacramento
 34                   Raleigh
 35                   Kansas City
 36                   Hartford
 37                   Austin
 38                   Memphis
 39                   Nashville
 40                   Omaha
 41                   Salt Lake City


 
                                       1



 42                   San Antonio
 43                   Vancouver
 44                   Indianapolis
 45                   Jacksonville
 46                   Montreal
 47                   New Orleans
 48                   Louisville
 49                   Wilmington
 50                   Las Vegas


In the event Grantor elects not to construct Phase Three, Toronto, Vancouver and
Montreal  shall be removed  the the above City List and  Grantee  may (i) move a
city from the Non-Major Cities list to the Major Cities list, and (ii) designate
up to three of the following  cities as Non-Major  Cities:  El Paso,  Stratford,
Fort Worth, Albany or Buffalo.


                                       2


                                   EXHIBIT "N"

                               GUARANTY AGREEMENT

     GUARANTY   AGREEMENT,   dated  as  of  July  __,  1998,   between  Level  3
Communications,  Inc., a _______  corporation  ("Guarantor"),  and  ________,  a
_______ [Grantee]("Beneficiary").

                              W I T N E S S E T H :
     WHEREAS,  Guarantor is,  directly or  indirectly,  the owner of 100% of the
issued and outstanding  membership  interests in Level 3 Communications,  LLC, a
Delaware limited liability company ("Grantor");

     WHEREAS,  Beneficiary and Grantor have entered into an IRU Agreement, dated
as of  July  18,  1998  (the  "IRU  Agreement"),  providing  for  the  grant  to
Beneficiary  of  ownership  of  and/or  an  indefeasible  right  to use  certain
facilities in the Grantor System (as defined in the IRU Agreement); and

     WHEREAS, pursuant to the terms of the IRU Agreement,  Grantor's obligations
under the IRU Agreement are required to be guaranteed by Guarantor.

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

     1. Defined Terms.  Capitalized  terms used herein without other  definition
shall have the respective meanings ascribed to them in the IRU Agreement.

     2. Guaranty. Guarantor hereby unconditionally and irrevocably guarantees to
Beneficiary (a) the due,  prompt and complete  payment by Grantor of all amounts
due to Beneficiary  under the IRU  Agreement,  when and as the same shall become
due and  payable  and (b) the due,  prompt  and  faithful  performance  of,  and
compliance  with, all other  covenants,  undertakings and obligations of Grantor
set forth in the IRU Agreement (the  obligations  referred to in clauses (a) and
(b) of this Section 2 are herein  referred to  collectively  as the  "Guaranteed
Obligations").

     This guaranty is a guaranty of payment,  performance and compliance and not
of collectibility and is in no way conditioned or contingent upon any attempt to
collect from or enforce  performance  or compliance by Grantor or upon any other
event or condition  whatsoever.  If for any reason whatsoever Grantor shall fail
or be unable duly, punctually and fully to pay such amounts as and when the same
shall  become due and payable or to perform or comply with any other  Guaranteed
Obligation,  Guarantor  will  forthwith  pay or cause to be paid the  Guaranteed
Obligations to Beneficiary,  in lawful money of the United States, or perform or
comply with such Guaranteed Obligations or cause such



                                       1




Guaranteed  Obligations  to be performed or complied with.  Guarantor,  promptly
after  demand,  will  reimburse  Beneficiary  for  all  costs  and  expenses  of
collecting  such  amounts or  otherwise  enforcing  this  Agreement,  including,
without limitation, the fees and expenses of counsel.  Notwithstanding any other
provision of this Agreement to the contrary,  Guarantor shall have all rights of
Grantor under IRU Agreement with respect to the determination of amounts due and
determination  of  other  obligations,   including,   without  limitation,   the
provisions  of Article 24 of the IRU  Agreement,  except to the extent that such
rights have been exhausted or waived by Grantor.

     3. Representations and Warranties. Guarantor hereby represents and warrants
as follows:

(a)  Organization, Good Standing, Etc. Guarantor is a corporation duly organized
     and validly  existing and in good  standing  under the laws of the State of
     Delaware and has all  requisite  corporate  power and  authority to own and
     operate its  properties,  to carry on its business as now  conducted and as
     proposed to be  conducted,  and to enter into and to carry out the terms of
     this Agreement.
(b)  Authorization and  Enforceability.  The execution and delivery by Guarantor
     of this Agreement and all other agreements and documents to be executed and
     delivered by it in connection herewith, the performance by Guarantor of its
     obligations   hereunder  and  thereunder,   and  the  consummation  of  the
     transactions  contemplated  hereby and  thereby  have been duly and validly
     authorized  by all  requisite  corporate  acts  and  other  proceedings  of
     Guarantor.  This  Agreement  and all other  agreements  and documents to be
     executed and delivered by Guarantor in  connection  herewith have been duly
     and validly executed and delivered by Guarantor and constitute legal, valid
     and binding obligations of Guarantor,  enforceable against it in accordance
     with their respective  terms,  except as limited by applicable  bankruptcy,
     insolvency,   reorganization,    moratorium,   liquidation,   rearrangment,
     fraudulent  transfers,  conservatorship  or  other  laws  (including  court
     decisions) affecting the enforcement of creditors' rights generally.
(c)  Relationship to Company.  Guarantor owns,  directly or indirectly,  100% of
     the issued and outstanding membership interests in Grantor.
(d)  Compliance  with Other  Instruments,  Etc.  The  execution  and delivery by
     Guarantor of, and performance of the obligations of Guarantor  under,  this
     Agreement  will not result in any  violation  of or be in conflict  with or
     constitute a default under any term of any agreement or instrument to which
     it is a party or by which  it is bound or any term of any  applicable  law,
     ordinance,  rule or regulation of any governmental authority or any term of
     any  applicable  order,  judgment  or decree of any  court,  arbitrator  or
     governmental  authority  or  result  in  the  creation  of (or  impose  any
     obligation  on Guarantor to create) any lien upon any of the  properties or
     assets of Guarantor  pursuant to any such term, which violation,  conflict,
     default or lien might have a  materially  adverse  effect on the  business,
     operations,  condition (financial or physical),  properties,  net assets or
     liabilities  of  Guarantor  or upon the ability of Guarantor to perform its
     obligations under this Agreement.



                                       2




(e)  Governmental  Consent.  No  consent,   approval  or  authorization  of,  or
     declaration  or filing with,  any  governmental  authority,  on the part of
     Guarantor  is  required  for  the  valid  execution  and  delivery  of this
     Agreement and the due  performance of the  obligations  of Guarantor  under
     this Agreement.

     4.  Guarantor's  Obligations  Unconditional.  The  obligations of Guarantor
under this  Agreement are primary,  absolute and  unconditional  obligations  of
Guarantor, are not subject to any counterclaim,  set-off, deduction, diminution,
abatement,  recoupment,  suspension,  deferment or defense  based upon any claim
Guarantor or any other person may have against Grantor, Beneficiary or any other
person,  and shall remain in full force and effect  without regard to, and shall
not be  released,  discharged  or in any way affected  by, any  circumstance  or
condition  whatsoever  (whether  or not  Guarantor  or  Grantor  shall  have any
knowledge or notice thereof), including, without limitation:

(a)  any  amendment  of or change  in, or  termination  or  waiver  of,  the IRU
     Agreement;
(b)  any  furnishing,  acceptance  or release of, or any defect in any  security
     for, any of the Guaranteed Obligations;
(c)  any  waiver  of  the  payment,  performance  or  observance  of  any of the
     obligations,  conditions,  covenants  or  agreements  contained  in the IRU
     Agreement, or any other waiver, consent, extension, indulgence, compromise,
     settlement,  release or other action or inaction under or in respect of the
     IRU Agreement;
(d)  any  failure,  omission  or delay on the part of  Beneficiary  to  enforce,
     assert or  exercise  any  right,  power or remedy  conferred  on it in this
     Agreement;
(e)  any  voluntary  or  involuntary  bankruptcy,  insolvency,   reorganization,
     arrangement,   readjustment,  assignment  for  the  benefit  of  creditors,
     composition,  receivership,  conservatorship,  custodianship,  liquidation,
     marshalling of assets and liabilities or similar  proceedings  with respect
     to Grantor or any other  person or any of their  respective  properties  or
     creditors,  or any action  taken by any trustee or receiver or by any court
     in any such proceeding;
(f)  any  discharge,  termination,   cancellation,   frustration,  irregularity,
     invalidity or unenforceability, in whole or in part, of the IRU Agreement;
(g)  any merger or  consolidation of Grantor or Guarantor into or with any other
     corporation, or any sale, lease or transfer of any of the assets of Grantor
     or Guarantor to any other person;
(h)  any change in the ownership of any membership  interests in Grantor, or any
     change in the corporate relationship between Grantor and Guarantor,  or any
     termination of such relationship; or
(i)  any other occurrence,  circumstance, happening or event whatsoever, whether
     similar or dissimilar to the foregoing, whether foreseen or unfore



                                       3




seen, and any other  circumstance  which might  otherwise  constitute a legal or
equitable  defense or discharge of the  liabilities  of a guarantor or surety or
which might otherwise limit recourse against Guarantor.

     5. Full Recourse Obligations. The obligations of Guarantor set forth herein
constitute the full recourse obligations of Guarantor  enforceable against it to
the full extent of all its assets and properties.

     6. Waiver.  Guarantor  unconditionally  waives,  to the extent permitted by
applicable  law, (a) notice of any of the matters  referred to in Section 4, (b)
notice to  Guarantor of the  incurrence  of any of the  Guaranteed  Obligations,
notice to  Guarantor or Grantor of any breach or default by Grantor with respect
to any of the  Guaranteed  Obligations or any other notice that may be required,
by statute,  rule of law or  otherwise,  to preserve  any rights of  Beneficiary
against  Guarantor,  (c)  presentment  to or demand of payment  from  Grantor or
Guarantor with respect to any Guaranteed Obligation or protest for nonpayment or
dishonor, (d) any right to the enforcement, assertion, exercise or exhaustion by
Beneficiary  of any  right,  power,  privilege  or remedy  conferred  in the IRU
Agreement  or  otherwise,  (e)  any  requirement  of  diligence  on the  part of
Beneficiary,  (f) any  requirement  to mitigate the damages  resulting  from any
default under the IRU Agreement,  (g) any notice of any sale,  transfer or other
disposition  of any right,  title to or interest in the IRU  Agreement,  (h) any
release of Guarantor from its obligations  hereunder  resulting from any loss by
it of its  rights  of  subrogation  hereunder  and  (i) any  other  circumstance
whatsoever  which might  otherwise  constitute a legal or  equitable  discharge,
release or defense  of a  guarantor  or surety or which  might  otherwise  limit
recourse against Guarantor.

     7. Subrogation.  Upon the payment and performance in full of all Guaranteed
Obligations,  Guarantor  shall be  subrogated  to the rights of  Beneficiary  in
respect of any payment or other  obligation  with respect to which an amount has
been payable by Guarantor  hereunder.  Guarantor  shall not seek to exercise any
rights of subrogation,  reimbursement or indemnity arising from payments made by
Guarantor  pursuant  to the  provisions  of this  Agreement  until  the full and
complete payment or performance and discharge of the Guaranteed Obligations.

     8. Effect of Bankruptcy  Proceedings,  etc. This Guaranty shall continue to
be effective or be automatically  reinstated, as the case may be, if at any time
any  payment  made by any person on  account of any of the sums due  Beneficiary
pursuant to the terms of the IRU  Agreement is  rescinded  or must  otherwise be
restored  or  returned   by  such  holder  upon  the   insolvency,   bankruptcy,
dissolution,  liquidation or  reorganization  of Grantor or any other person, or
upon or as a result of the  appointment  of a  custodian,  receiver,  trustee or
other officer with similar powers with respect to Grantor or other person or any
substantial part of its property,  or otherwise,  all as though such payment had
not been made.

     9. Term of  Agreement.  This  Agreement and all  guarantees,  covenants and
agreements of Guarantor contained herein shall continue in full force and effect
and shall not be discharged until such time as all of the Guaranteed Obligations
and


                                       4




other independent payment obligations of Guarantor under this Agreement shall be
paid and  performed in full and all of the  agreements  of  Guarantor  hereunder
shall be duly paid and performed in full.

     10. Notices.  All notices under the terms and provisions hereof shall be in
writing,  and  shall be  delivered  or sent by telex or  telecopy  or  mailed by
first-class  mail,  postage prepaid,  addressed,  (a) if to Beneficiary,  at the
address set forth in Article 25 of the IRU  Agreement,  or at such other address
as Beneficiary shall from time to time designate in writing to Guarantor and (b)
if to Guarantor,  at , or at such other address as Guarantor  shall from time to
time  designate  in writing to  Beneficiary.  Any notice so  addressed  shall be
deemed  to be given  when so  delivered  or sent or,  if  mailed,  on the  third
business day after being so mailed.

     11. Amendments,  etc. No amendment,  alteration,  modification or waiver of
any term or  provision  of this  Agreement,  nor  consent  to any  departure  by
Guarantor therefrom, shall in any event be effective unless the same shall be in
writing  and signed by  Beneficiary,  and then such  waiver or consent  shall be
effective only in the specific  instance and for the specific  purpose for which
given.

     12.  Submission to Jurisdiction.  Guarantor,  for itself and its successors
and assigns,  hereby  irrevocably (a) agrees that any legal or equitable action,
suit  or  proceeding  against  Guarantor  arising  out of or  relating  to  this
Agreement or any transaction contemplated hereby or the subject matter of any of
the  foregoing  may be  instituted in any state or federal court in the State of
Delaware,  (b) waives any  objection  which it may now or hereafter  have to the
venue of any action,  suit or proceeding,  (c) irrevocably submits itself to the
nonexclusive   jurisdiction   of  any  state  or  federal   court  of  competent
jurisdiction  in the State of Delaware for purposes of any such action,  suit or
proceeding.  Guarantor  waives  personal  service of process and  consents  that
service of process upon it may be made by certified or registered  mail,  return
receipt requested, at its address specified or determined in accordance with the
provisions  of Section 10, and service so made shall be deemed  completed on the
third business day after mailing.  Nothing contained in this Section 12 shall be
deemed to affect the right of  Beneficiary  to serve process in any other manner
permitted by law or to commence legal  proceedings or otherwise  proceed against
Guarantor in any jurisdiction.

     13. WAIVER OF JURY TRIAL. EACH OF GUARANTOR AND BENEFICIARY IRREVOCABLY AND
UNCONDITIONALLY  WAIVES  THE  RIGHT TO TRIAL BY JURY IN ANY  LEGAL OR  EQUITABLE
ACTION,  SUIT OR PROCEEDING  ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY
TRANSACTION  CONTEMPLATED  HEREBY OR THEREBY OR THE SUBJECT MATTER OF ANY OF THE
FOREGOING.

     14.  Survival.  All  warranties,  representations  and  covenants  made  by
Guarantor herein or in any certificate or other instrument delivered by it or on
its behalf hereunder shall be considered to have been relied upon by Beneficiary
and shall survive the execution  and delivery of this  Agreement,  regardless of
any investigation made by


                                       5




Beneficiary or on its behalf.  All  statements in any such  certificate or other
instrument  shall  constitute   warranties  and   representations  by  Guarantor
hereunder.

     15.  Miscellaneous.  Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability  without  invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render  unenforceable such provision in any
other jurisdiction.  To the extent permitted by applicable law, Guarantor hereby
waives any  provision of law that renders any  provisions  hereof  prohibited or
unenforceable in any respect. The terms of this Agreement shall be binding upon,
and inure to the benefit of,  Guarantor  and  Beneficiary  and their  respective
successors  and assigns.  No term or provision of this Agreement may be changed,
waived,  discharged or terminated  orally,  but only by an instrument in writing
signed by Guarantor and Beneficiary.  The section and paragraph headings in this
Agreement and the table of contents are for  convenience  of reference  only and
shall not modify, define, expand or limit any of the terms or provisions hereof,
and all references herein to numbered sections,  unless otherwise indicated, are
to sections in this Agreement.  This Agreement shall in all respects be governed
by, and construed in accordance with, the laws of the State of Delaware, without
giving effect to applicable principles of conflicts of law.

     16.  Special  Covenants.  Guarantor,  as issuer,  and IBJ Schroder Bank and
Trust Company, as trustee,  are parties to a certain Indenture dated as of April
28,  1998   respecting   $2,000,000,000   9-1/8%  Senior  Notes  due  2008  (the
"Indenture").  Sections 801, 1005, 1016 and 1018 (including related definitions)
of the Indenture, as the same may be amended or modified from time to time shall
be deemed  incorporated  herein by reference and deemed obligations of Guarantor
to  Beneficiary  for and during the period  commencing  with the date hereof and
ending on the final  completion of the Grantor  System  (excluding  any Segments
terminated  by  Beneficiary  or  otherwise  undelivered  by Grantor  pursuant to
Section  3.04  of  the  IRU  Agreement),  following  which,  the  covenants  and
agreements of Guarantor in this Section 16 shall  terminate and such sections of
the  Indenture  shall no  longer  be deemed  incorporated  herein by  reference.
Guarantor  shall deliver to  Beneficiary  on request (but not more than once per
year),  a brief  certificate  from the principal  executive  officer,  principal
financial officer or principal  accounting officer as to his or her knowledge of
Guarantor's  compliance  during  the  period  covered  by such  report  with all
conditions and covenants of this Agreement.

     17.  Qualification to Special  Covenants..  The provisions of section 16 of
this  Agreement  shall be of no force or  effect  during  any  period  that,  if
Guarantor  has   publicly-traded   common  stock,  the  total  market  value  of
Guarantor's outstanding common stock as determined on the basis of closing price
(or, if Guarantor is privately held, the total value of its  outstanding  common
stock, as demonstrated  to the reasonable  satisfaction of Beneficiary)  exceeds
$1.5 billion.



                                       6




     IN  WITNESS  WHEREOF,  Guarantor  and  Beneficiary  have each  caused  this
Agreement to be duly executed as of the day and year first above written.

LEVEL 3 COMMUNICATIONS, INC.,
as Guarantor



By ______________________
Title:


---------------------------------------,
as Beneficiary



By _______________________
Title:




                                       7





                                   EXHIBIT "O"

                               GUARANTY AGREEMENT

     GUARANTY AGREEMENT,  dated as of _____ __, ____, between [Name of Permitted
Guarantor],  a _______  corporation  ("Guarantor"),  and Level 3 Communications,
LLC, a Delaware limited liability company ("Beneficiary").

                              W I T N E S S E T H :

     WHEREAS,  Guarantor is,  directly or indirectly,  the owner of [__]% of the
issued and outstanding  [membership  interests  in][capital stock of] INTERNEXT,
LLC a Delaware limited liability company ("Grantee");

     WHEREAS,  Beneficiary and Grantee have entered into an IRU Agreement, dated
as of July 18, 1998 (the "IRU Agreement"), providing for the grant to Grantee of
an  indefeasible  right to use and/or  ownership  of certain  facilities  in the
Grantor System (as defined in the IRU Agreement);

     WHEREAS, pursuant to the terms of the IRU Agreement,  Grantee's obligations
under the IRU Agreement  are required to be guaranteed  from time to time by one
or more of the Permitted Guarantors (as defined in the IRU Agreement); and

     WHEREAS, Guarantor is a Permitted Guarantor.

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

     1. Defined Terms.  Capitalized  terms used herein without other  definition
shall have the respective  meanings  ascribed to them in the IRU  Agreement.  In
addition, the following terms shall have the following meanings:

(a)  "Guaranteed  Obligations"  shall mean, as of any date of determination,  an
     amount  equal  to (but  not  exceeding)  __% of the  the  IRU  Obligations,
     provided that any IRU Obligations (including, without limitation,  interest
     and penalty  obligations)  resulting from or relating to another  Permitted
     Guarantor's  failure to make any payment under such  Permitted  Guarantor's
     guaranty  shall  be  excluded  for  purposes  of   determining   Guaranteed
     Obligations.

(b)  "IRU  Obligations"  shall mean (i) the due, prompt and complete  payment of
     all amounts due to Beneficiary by Grantee under the IRU Agreement, when and
     as the same  shall  become  due and  payable  and (ii) the due,  prompt and
     faithful   performance  of,  and  compliance  with,  all  other  covenants,
     undertakings and obligations of Grantee set forth in the IRU Agreement.



                                       1





     2. Guaranty. Guarantor hereby unconditionally and irrevocably guarantees to
Beneficiary the Guaranteed Obligations.  This guaranty is a guaranty of payment,
performance  and  compliance  and  not  of  collectibility  and  is  in  no  way
conditioned  or  contingent   upon  any  attempt  to  collect  from  or  enforce
performance  or  compliance  by  Grantee  or upon any other  event or  condition
whatsoever.  If for any reason whatsoever  Grantee shall fail or be unable duly,
punctually  and fully to pay such  amounts as and when the same shall become due
and  payable  or to  perform  or comply  with any other  Guaranteed  Obligation,
Guarantor will  forthwith pay or cause to be paid the Guaranteed  Obligations to
Beneficiary,  in lawful  money of the United  States,  or perform or comply with
such Guaranteed Obligations or cause such Guaranteed Obligations to be performed
or complied with.  Guarantor,  promptly after demand, will reimburse Beneficiary
for all costs and expenses of  collecting  such  amounts or otherwise  enforcing
this Agreement, including, without limitation, the fees and expenses of counsel.
Notwithstanding any other provision of this Agreement to the contrary, Guarantor
shall  have all  rights of  Grantee  under IRU  Agreement  with  respect  to the
determination of amounts due and determination of other obligations,  including,
without limitation, the provisions of Article 24 of the IRU Agreement, except to
the extent that such rights have been exhausted or waived by Grantee.

     3. Representations and Warranties. Guarantor hereby represents and warrants
as follows:

(a)  Organization, Good Standing, Etc. Guarantor is a corporation duly organized
     and validly  existing and in good  standing  under the laws of the State of
     _______ and has all  requisite  corporate  power and  authority  to own and
     operate its  properties,  to carry on its business as now  conducted and as
     proposed to be  conducted,  and to enter into and to carry out the terms of
     this Agreement.

(b)  Authorization and  Enforceability.  The execution and delivery by Guarantor
     of this Agreement and all other agreements and documents to be executed and
     delivered by it in connection herewith, the performance by Guarantor of its
     obligations   hereunder  and  thereunder,   and  the  consummation  of  the
     transactions  contemplated  hereby and  thereby  have been duly and validly
     authorized  by all  requisite  corporate  acts  and  other  proceedings  of
     Guarantor.  This  Agreement  and all other  agreements  and documents to be
     executed and delivered by Guarantor in  connection  herewith have been duly
     and validly executed and delivered by Guarantor and constitute legal, valid
     and binding obligations of Guarantor,  enforceable against it in accordance
     with their respective  terms,  except as limited by applicable  bankruptcy,
     insolvency,   reorganization,    moratorium,   liquidation,   rearrangment,
     fraudulent  transfers,  conservatorship  or  other  laws  (including  court
     decisions) affecting the enforcement of creditors' rights generally.

(c)  Relationship to Company.  Guarantor owns,  directly or indirectly  [__]% of
     the issued and  outstanding  [membership  interests  in][capital  stock of]
     Grantee.

(d)  Compliance  with Other  Instruments,  Etc.  The  execution  and delivery by
     Guarantor of, and performance of the obligations of Guarantor under, this


                                       2




Agreement  will  not  result  in any  violation  of or be in  conflict  with  or
constitute a default  under any term of any  agreement or instrument to which it
is a party or by which it is bound or any term of any applicable law, ordinance,
rule or regulation of any  governmental  authority or any term of any applicable
order, judgment or decree of any court,  arbitrator or governmental authority or
result in the creation of (or impose any  obligation on Guarantor to create) any
lien upon any of the  properties  or assets of  Guarantor  pursuant  to any such
term, which violation, conflict, default or lien might have a materially adverse
effect  on  the  business,   operations,   condition  (financial  or  physical),
properties,  net  assets or  liabilities  of  Guarantor  or upon the  ability of
Guarantor to perform its obligations under this Agreement.

(e)  Governmental  Consent.  No  consent,   approval  or  authorization  of,  or
     declaration  or filing with,  any  governmental  authority,  on the part of
     Guarantor  is  required  for  the  valid  execution  and  delivery  of this
     Agreement and the due  performance of the  obligations  of Guarantor  under
     this Agreement.

     4.  Guarantor's  Obligations  Unconditional.  The  obligations of Guarantor
under this  Agreement are primary,  absolute and  unconditional  obligations  of
Guarantor, are not subject to any counterclaim,  set-off, deduction, diminution,
abatement,  recoupment,  suspension,  deferment or defense  based upon any claim
Guarantor or any other person may have against Grantee, Beneficiary or any other
person,  and shall remain in full force and effect  without regard to, and shall
not be  released,  discharged  or in any way affected  by, any  circumstance  or
condition  whatsoever  (whether  or not  Guarantor  or  Grantee  shall  have any
knowledge or notice thereof), including, without limitation:

(a)  any  amendment  of or change  in, or  termination  or  waiver  of,  the IRU
     Agreement;

(b)  any  furnishing,  acceptance  or release of, or any defect in any  security
     for, any of the Guaranteed Obligations;

(c)  any  waiver  of  the  payment,  performance  or  observance  of  any of the
     obligations,  conditions,  covenants  or  agreements  contained  in the IRU
     Agreement, or any other waiver, consent, extension, indulgence, compromise,
     settlement,  release or other action or inaction under or in respect of the
     IRU Agreement;

(d)  any  failure,  omission  or delay on the part of  Beneficiary  to  enforce,
     assert or  exercise  any  right,  power or remedy  conferred  on it in this
     Agreement;

(e)  any  voluntary  or  involuntary  bankruptcy,  insolvency,   reorganization,
     arrangement,   readjustment,  assignment  for  the  benefit  of  creditors,
     composition,  receivership,  conservatorship,  custodianship,  liquidation,
     marshalling of assets and liabilities or similar  proceedings  with respect
     to Grantee or any other  person or any of their  respective  properties  or
     creditors,  or any action  taken by any trustee or receiver or by any court
     in any such proceeding;



                                       3




(f)  any  discharge,  termination,   cancellation,   frustration,  irregularity,
     invalidity or unenforceability, in whole or in part, of the IRU Agreement;

(g)  any merger or  consolidation of Grantee or Guarantor into or with any other
     corporation, or any sale, lease or transfer of any of the assets of Grantee
     or Guarantor to any other person;

(h)  any change in the ownership of any [membership  interests in][capital stock
     of] Grantee,  or any change in the corporate  relationship  between Grantee
     and Guarantor, or any termination of such relationship; or

(i)  any other occurrence,  circumstance, happening or event whatsoever, whether
     similar or dissimilar to the foregoing, whether foreseen or unforeseen, and
     any  other  circumstance  which  might  otherwise  constitute  a  legal  or
     equitable  defense or discharge of the liabilities of a guarantor or surety
     or which might otherwise limit recourse against Guarantor.

     5. Full Recourse Obligations. The obligations of Guarantor set forth herein
constitute the full recourse obligations of Guarantor  enforceable against it to
the full extent of all its assets and properties.

     6. Waiver.  Guarantor  unconditionally  waives,  to the extent permitted by
applicable  law, (a) notice of any of the matters  referred to in Section 4, (b)
notice to  Guarantor of the  incurrence  of any of the  Guaranteed  Obligations,
notice to  Guarantor or Grantee of any breach or default by Grantee with respect
to any of the  Guaranteed  Obligations or any other notice that may be required,
by statute,  rule of law or  otherwise,  to preserve  any rights of  Beneficiary
against  Guarantor,  (c)  presentment  to or demand of payment  from  Grantee or
Guarantor with respect to any Guaranteed Obligation or protest for nonpayment or
dishonor, (d) any right to the enforcement, assertion, exercise or exhaustion by
Beneficiary  of any  right,  power,  privilege  or remedy  conferred  in the IRU
Agreement  or  otherwise,  (e)  any  requirement  of  diligence  on the  part of
Beneficiary,  (f) any  requirement  to mitigate the damages  resulting  from any
default under the IRU Agreement,  (g) any notice of any sale,  transfer or other
disposition  of any right,  title to or interest in the IRU  Agreement,  (h) any
release of Guarantor from its obligations  hereunder  resulting from any loss by
it of its  rights  of  subrogation  hereunder  and  (i) any  other  circumstance
whatsoever  which might  otherwise  constitute a legal or  equitable  discharge,
release or defense  of a  guarantor  or surety or which  might  otherwise  limit
recourse against Guarantor.

     7. Subrogation.  Upon the payment and performance in full of all Guaranteed
Obligations,  Guarantor  shall be  subrogated  to the rights of  Beneficiary  in
respect of any payment or other  obligation  with respect to which an amount has
been payable by Guarantor  hereunder.  Guarantor  shall not seek to exercise any
rights of subrogation,  reimbursement or indemnity arising from payments made by
Guarantor  pursuant  to the  provisions  of this  Agreement  until  the full and
complete payment or performance and discharge of the Guaranteed Obligations.




                                       4




     8. Effect of Bankruptcy  Proceedings,  etc. This Guaranty shall continue to
be effective or be automatically  reinstated, as the case may be, if at any time
any  payment  made by any person on  account of any of the sums due  Beneficiary
pursuant to the terms of the IRU  Agreement is  rescinded  or must  otherwise be
restored  or  returned   by  such  holder  upon  the   insolvency,   bankruptcy,
dissolution,  liquidation or  reorganization  of Grantee or any other person, or
upon or as a result of the  appointment  of a  custodian,  receiver,  trustee or
other officer with similar powers with respect to Grantee or other person or any
substantial part of its property,  or otherwise,  all as though such payment had
not been made.

     9. Term of  Agreement.  This  Agreement and all  guarantees,  covenants and
agreements of Guarantor contained herein shall continue in full force and effect
and shall not be discharged until such time as all of the Guaranteed Obligations
and other  independent  payment  obligations  of Guarantor  under this Agreement
shall  be paid and  performed  in full and all of the  agreements  of  Guarantor
hereunder shall be duly paid and performed in full.  Notwithstanding anything in
this Agreement to the contrary,  this  Agreement may be terminated,  replaced or
amended in the manner contemplated by, and subject to the provisions of, Section
20.06 of the IRU Agreement.

     10. Notices.  All notices under the terms and provisions hereof shall be in
writing,  and  shall be  delivered  or sent by telex or  telecopy  or  mailed by
first-class  mail,  postage prepaid,  addressed,  (a) if to Beneficiary,  at the
address set forth in Article 25 of the IRU  Agreement,  or at such other address
as Beneficiary shall from time to time designate in writing to Guarantor and (b)
if to Guarantor,  at , or at such other address as Guarantor  shall from time to
time  designate  in writing to  Beneficiary.  Any notice so  addressed  shall be
deemed  to be given  when so  delivered  or sent or,  if  mailed,  on the  third
business day after being so mailed.

     11.  Amendments,  etc.  Except as  provided  in  Section  9, no  amendment,
alteration,  modification  or waiver of any term or provision of this Agreement,
nor  consent to any  departure  by  Guarantor  therefrom,  shall in any event be
effective  unless the same shall be in writing  and signed by  Beneficiary,  and
then such waiver or consent shall be effective only in the specific instance and
for the specific purpose for which given.

     12.  Submission to Jurisdiction.  Guarantor,  for itself and its successors
and assigns,  hereby  irrevocably (a) agrees that any legal or equitable action,
suit  or  proceeding  against  Guarantor  arising  out of or  relating  to  this
Agreement or any transaction contemplated hereby or the subject matter of any of
the  foregoing  may be  instituted in any state or federal court in the State of
Delaware,  (b) waives any  objection  which it may now or hereafter  have to the
venue of any action,  suit or proceeding,  (c) irrevocably submits itself to the
nonexclusive   jurisdiction   of  any  state  or  federal   court  of  competent
jurisdiction  in the State of Delaware for purposes of any such action,  suit or
proceeding.  Guarantor  waives  personal  service of process and  consents  that
service of process upon it may be made by certified or registered  mail,  return
receipt requested, at its address specified or determined in accordance with the
provisions  of Section 10, and service so made shall be deemed  completed on the
third business day after mailing.



                                       5




Nothing  contained  in this  Section  12 shall be deemed to affect  the right of
Beneficiary to serve process in any other manner permitted by law or to commence
legal proceedings or otherwise proceed against Guarantor in any jurisdiction.

     13. WAIVER OF JURY TRIAL. EACH OF GUARANTOR AND BENEFICIARY IRREVOCABLY AND
UNCONDITIONALLY  WAIVES  THE  RIGHT TO TRIAL BY JURY IN ANY  LEGAL OR  EQUITABLE
ACTION,  SUIT OR PROCEEDING  ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY
TRANSACTION  CONTEMPLATED  HEREBY OR THEREBY OR THE SUBJECT MATTER OF ANY OF THE
FOREGOING.

     14.  Survival.  All  warranties,  representations  and  covenants  made  by
Guarantor herein or in any certificate or other instrument delivered by it or on
its behalf hereunder shall be considered to have been relied upon by Beneficiary
and shall survive the execution  and delivery of this  Agreement,  regardless of
any  investigation  made by Beneficiary or on its behalf.  All statements in any
such  certificate  or  other   instrument   shall   constitute   warranties  and
representations by Guarantor hereunder.

     15.  Miscellaneous.  Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability  without  invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render  unenforceable such provision in any
other jurisdiction.  To the extent permitted by applicable law, Guarantor hereby
waives any  provision of law that renders any  provisions  hereof  prohibited or
unenforceable in any respect. The terms of this Agreement shall be binding upon,
and inure to the benefit of,  Guarantor  and  Beneficiary  and their  respective
successors  and assigns.  No term or provision of this Agreement may be changed,
waived,  discharged or terminated  orally,  but only by an instrument in writing
signed by Guarantor and Beneficiary.  The section and paragraph headings in this
Agreement and the table of contents are for  convenience  of reference  only and
shall not modify, define, expand or limit any of the terms or provisions hereof,
and all references herein to numbered sections,  unless otherwise indicated, are
to sections in this Agreement.  This Agreement shall in all respects be governed
by, and construed in accordance with, the laws of the State of Delaware, without
giving effect to applicable principles of conflicts of law.

     16. Special Covenants. Guarantor hereby covenants and agrees as follows:

(a)  For purposes of this Section 16, the following terms are defined:

     (1) "Board of Directors" means the board of directors of Guarantor.

     (2)  "Capital  Stock" of any Person  means any and all  shares,  interests,
participations or other equivalents  (however  designated) of corporate stock or
other equity participations, including partnership interests, whether general or
limited,  of such Person and any rights (other than debt securities  convertible
or



                                       6




exchangeable into an equity interest),  warrants or options to acquire an equity
interest in such Person.

     (3) "Consolidated  Net Worth" of any Person means the stockholders'  equity
of such Person,  determined on a consolidated basis in accordance with generally
accepted accounting principles.

     (4) "Fair Market Value" means, with respect to any Property, the price that
could be  negotiated  in an  arm's-length  free  market  transaction,  for cash,
between a willing seller and a willing buyer,  neither of whom is under pressure
or compulsion to complete the transaction.  Unless otherwise  specified  herein,
Fair Market Value shall be determined  by the Board of Directors  acting in good
faith and shall be evidenced by a Board of Directors resolution.

     (5)  "Property"  means,  with  respect to any Person,  any interest of such
Person in any kind of property or asset,  whether  real,  personal or mixed,  or
tangible or intangible, including Capital Stock in, and other securities of, any
other Person.

     (6) "Subsidiary" of any Person means (i) a corporation more than 50% of the
combined  voting  power of the  outstanding  Voting  Stock  of  which is  owned,
directly or indirectly,  by such Person or by one or more other  Subsidiaries of
such Person or by such Person and one or more  Subsidiaries  thereof or (ii) any
other Person  (other than a  corporation)  in which such Person,  or one or more
other  Subsidiaries  of such  Person  or  such  Person  and  one or  more  other
Subsidiaries thereof, directly or indirectly,  has at least a majority ownership
and power to direct the policies, management and affairs thereof.

     (7) "Voting  Stock" of any Person means  Capital Stock of such Person which
ordinarily has voting power for the election of directors (or persons performing
similar  functions) of such Person,  whether at all times or only for so long as
no  senior  class  of  securities  has  such  voting  power  by  reason  of  any
contingency.

(b)  Guarantor  shall  not,  in a  single  transaction  or a series  of  related
     transactions,  (i)  consolidate  with or merge  into any  other  Person  or
     Persons  or permit  any  other  Person to  consolidate  with or merge  into
     Guarantor or (ii) directly or indirectly,  transfer, sell, lease, convey or
     otherwise  dispose  of all or  substantially  all its  assets  to any other
     Person or Persons, unless:

     (1) in a transaction in which  Guarantor is not the surviving  Person or in
which Guarantor transfers,  sells, leases,  conveys or otherwise disposes of all
or substantially all of its assets to any other Person, the resulting, surviving
or transferee Person (the "successor entity") is organized under the laws of the
United  States  or any State  thereof  or the  District  of  Columbia  and shall
expressly assume all of Guarantor's obligations under this Agreement;


                                       7





     (2) immediately after giving effect to such  transaction,  the Consolidated
Net Worth of  Guarantor  (or the  successor  entity) is equal to or greater than
that of Guarantor immediately prior to the transaction; and

     (3) in the case of a transfer, sale, lease, conveyance or other disposition
of all or substantially  all of the assets of Guarantor,  such assets shall have
been  transferred  as an entirety or  virtually as an entirety to one Person and
such Person shall have complied with all the provisions of (1) and (2) above.

(c)  Guarantor  shall cause all properties  owned by Guarantor or any Subsidiary
     or used or held for use in the conduct of its  business or the  business of
     any  Subsidiary to be  maintained  and kept in good  condition,  repair and
     working order and supplied with all necessary  equipment and shall cause to
     be made all necessary  repairs,  renewals,  replacements,  betterments  and
     improvements  thereof, all as in the judgment of Guarantor may be necessary
     so that the business carried on in connection therewith may be properly and
     advantageously  conducted at all times;  provided  that  nothing  contained
     herein shall prevent  Guarantor or any Subsidiary  from  discontinuing  the
     maintenance  of any of such  properties if such  discontinuance  is, in the
     judgment of  Guarantor,  desirable  in the  conduct of its  business or the
     business of any Subsidiary and not  disadvantageous in any material respect
     to Beneficiary.

(d)  Guarantor  shall  not,  and shall not permit  any of its  Subsidiaries  to,
     directly or indirectly,  sell, lease,  transfer or otherwise dispose of any
     material  portion of its Property  to, or purchase any material  portion of
     Property   from,   or  enter  into  any   material   contract,   agreement,
     understanding,  loan,  advance,  guarantee or  transaction  (including  the
     rendering of services)  with or for the benefit of, any Affiliate  (each of
     the  foregoing,   an  "Affiliate   Transaction"),   unless  such  Affiliate
     Transaction or series of Affiliate Transactions is (i) in the best interest
     of  Guarantor  or such  Subsidiary  and  (ii)  on  terms  that  are no less
     favorable to Guarantor or such  Subsidiary  than those that would have been
     obtained in a  comparable  arm's-length  transaction  by  Guarantor or such
     Subsidiary  with a Person that is not an  Affiliate  (or, in the event that
     there  are  no  comparable  transactions  involving  Persons  who  are  not
     Affiliates of Guarantor or the relevant Subsidiary to apply for comparative
     purposes,  is  otherwise  on terms that,  taken as a whole,  Guarantor  has
     determined   to  be  fair  to  Guarantor   or  the  relevant   Subsidiary).
     Notwithstanding the foregoing,  the following shall not be deemed Affiliate
     Transactions: (i) any employment agreement entered into by Guarantor or any
     of its  Subsidiaries in the ordinary course of business and consistent with
     industry  practice;  (ii) any agreement or arrangement  with respect to the
     compensation  of a  director  or  officer of  Guarantor  or any  Subsidiary
     approved  by a  majority  of the  disinterested  members  of the  Board  of
     Directors and consistent with industry practice; (iii) transactions between
     or among the Company and its Subsidiaries, provided that no more than 5% of
     the Voting Stock (on a fully diluted basis) of any such Subsidiary is owned
     by an Affiliate of



                                       8




Guarantor (other than a Subsidiary);  (iv) transactions pursuant to the terms of
any  agreement  or  arrangement  as in  effect  on  the  date  hereof;  and  (v)
transactions  with respect to wirelink or wireless  transmission  capacity,  the
lease or  sharing  or  other  use of cable  or  fiber  optic  lines,  equipment,
rights-of-way or other access rights,  between Guarantor (or any Subsidiary) and
any other Person.

(e)  Guarantor shall not, and shall not permit any Subsidiary to, sell, transfer
     or dispose of any of its Property with a Fair Market Value of $5,000,000 or
     more  outside the  ordinary  course of its  business  (excluding  any sale,
     transfer or  disposition  of Property that is obsolete or no longer used by
     or useful to Guarantor or any Subsidiary) unless:

     (1) Guarantor or the Subsidiary, as the case may be, receives consideration
for such  disposition  at least equal to the Fair Market  Value for the Property
sold or disposed of.

     (2) the consideration received in connection therewith is used by Guarantor
or such Subsidiary within 360 days of receipt for the payment of expenses in the
ordinary  course of  business,  for the  payment  of debt of  Guarantor  or such
Subsidiary, or for reinvestment in the business of Guarantor or such Subsidiary.

(f)  Guarantor  shall deliver to  Beneficiary on request (but not more than once
     per  year),  a brief  certificate  from the  principal  executive  officer,
     principal  financial officer or principal  accounting  officer as to his or
     her knowledge of Guarantor's  compliance  during the period covered by such
     report with all conditions and covenants of this Agreement.

The  covenants  and  agreements  contained  in this  Section 16 shall  terminate
effective  as of the  date  of  full  and  complete  payment  of the  IRU Fee to
Beneficiary in accordance with the terms and provisions of the IRU Agreement.

     17.  Qualification  to Special  Covenants..  Any Guarantor  maintaining  an
indenture  qualified under the Trust Indenture Act of 1939, as amended,  with at
least $100 million of indebtedness  outstanding  pursuant thereto shall have the
right,  in its sole  discretion,  to re-execute  and redeliver this Agreement to
Beneficiary  omitting  section  16 and  substituting  in its  place  a  covenant
substantially  equivalent  to section 16 of the  similar  agreement  executed by
Level 3 Communications,  Inc. as Guarantor, except referencing one of its public
indentures and the sections thereof  equivalent to the matters  addressed in the
current version of section 16 of this Agreement.  In addition, the provisions of
section 16 of this  Agreement  or of any  redelivered  Agreement  shall be of no
force or effect during any period that, if Guarantor has publicly-traded  common
stock,  the  total  market  value of  Guarantor's  outstanding  common  stock as
determined  on the basis of closing  price (or, if Guarantor is privately  held,
the  total  value  of its  outstanding  common  stock,  as  demonstrated  to the
reasonable  satisfaction of  Beneficiary)  exceeds the amount obtained when $1.5
billion is  multiplied  by the  percentage  set forth in paragraph  1(a) of this
Agreement.



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     IN  WITNESS  WHEREOF,  Guarantor  and  Beneficiary  have each  caused  this
Agreement to be duly executed as of the day and year first above written.

[Name of Permitted Guarantor],
as Guarantor


By _____________________
Title:

LEVEL 3 COMMUNICATIONS, LLC,
as Beneficiary


By ______________________
Title:





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