Document:

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                                                                  Execution Copy
                                                                     Exhibit 4.3

                         LEVEL 3 COMMUNICATIONS, INC.

                                (Euro)800,000,000
                         10-3/4% Senior Notes due 2008
                         11-1/4% Senior Notes due 2010

                          EURO REGISTRATION AGREEMENT

                                                          New York, New York
                                                          February 24, 2000

To:  MORGAN STANLEY & CO. INTERNATIONAL LIMITED
SALOMON BROTHERS INTERNATIONAL LIMITED
GOLDMAN SACHS INTERNATIONAL
CHASE SECURITIES INC.
BARCLAYS CAPITAL INC.
CREDIT LYONNAIS SA
J.P. MORGAN SECURITIES LTD.
CREDIT SUISSE FIRST BOSTON (EUROPE) LIMITED
KLEINWORT BENSON LIMITED
SOCIETE GENERALE

In care of:

Morgan Stanley & Co. International Limited
25 Cabot Square
Canary Wharf
London, E 14 4 QA

Ladies and Gentlemen:

          Level 3 Communications, Inc., a Delaware corporation (the "Company"),
proposes to issue and sell to certain purchasers (the "Purchasers"), upon the
terms set forth in a purchase agreement dated the date hereof (the "Purchase
Agreement"), (U)500,000,000 aggregate principal amount of its 10-3/4% Senior
Notes due 2008 and (U)300,000,000 aggregate principal amount of its 11-1/4%
Senior Notes due 2010 (collectively the "Securities") (the "Initial Placement").
As an inducement to the Purchasers to enter into the Purchase Agreement and in
satisfaction of a condition to your obligations thereunder, the Company agrees
with you, (i) for your benefit and the benefit of the other Purchasers and (ii)
for the benefit of the holders from time to time of the Securities (including
you and the other
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                                                                               2

Purchasers) (each of the foregoing a "Holder" and together the "Holders"), as
follows:

          1.  Definitions.   Capitalized terms used herein without definition
              ------------
shall have their respective meanings set forth in the Purchase Agreement. As
used in this Agreement, the following capitalized defined terms shall have the
following meanings:

          "Affiliate" of any specified person means any other person which,
           ---------
directly or indirectly, is in control of, is controlled by, or is under common
control with, such specified person. For purposes of this definition, control of
a person means the power, direct or indirect, to direct or cause the direction
of the management and policies of such person whether by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.

          "Exchange Offer Registration Period" means the 180-day period
           ----------------------------------
following the consummation of the Registered Exchange Offer, exclusive of any
period during which any stop order shall be in effect suspending the
effectiveness of the Exchange Offer Registration Statement.

          "Exchange Offer Registration Statement" means a registration statement
           -------------------------------------
of the Company on an appropriate form under the Securities Act with respect to
the Registered Exchange Offer, all amendments and supplements to such
registration statement, including post-effective amendments, in each case
including the Prospectus contained therein, all exhibits thereto and all
material incorporated by reference therein.

          "Exchanging Dealer" means any Holder (which may include the
           -----------------
Purchasers) which is a broker-dealer electing to exchange Securities acquired
for its own account as a result of market-making activities or other trading
activities for New Securities.

          "Holder" has the meaning set forth in the preamble hereto.
           ------

          "Indentures" means the Indentures relating to the Securities and the
           ----------
New Securities, each to be dated as of February 29, 2000, between the Company
and The Bank of New York, as trustee, as the same may be amended from time to
time in accordance with the terms thereof.

          "Initial Placement" has the meaning set forth in the preamble hereto.
           -----------------
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                                                                               3

          "Majority Holders" means the Holders of a majority of the aggregate
           ----------------
principal amount of securities registered under a Registration Statement.

          "Managing Underwriters" means the investment banker or investment
           ---------------------
bankers and manager or managers that shall administer an offering of securities
under a Shelf Registration Statement.

          "New Securities" means debt securities of the Company identical in all
           --------------
material respects to the Securities (except that the interest rate step-up
provisions and the transfer restrictions will be modified or eliminated, as
appropriate), to be issued under the Indentures.

          "Prospectus" means the prospectus included in any Registration
           ----------
Statement (including, without limitation, a prospectus that discloses
information previously omitted from a prospectus filed as part of an effective
registration statement in reliance upon Rule 430A under the Securities Act), as
amended or supplemented by any prospectus supplement, with respect to the terms
of the offering of any portion of the Securities or the New Securities, covered
by such Registration Statement, and all amendments and supplements to the
Prospectus, including post-effective amendments.

          "Registered Exchange Offer" means the proposed offer to the Holders to
           -------------------------
issue and deliver to such Holders, in exchange for the Securities, a like
principal amount of the New Securities.

          "Registration Securities" has the meaning set forth in Section 3(a)
           -----------------------
hereof.

          "Registration Statement" means any Exchange Offer Registration
           ----------------------
Statement or Shelf Registration Statement that covers any of the Securities or
the New Securities pursuant to the provisions of this Agreement, all amendments
and supplements to such registration statement, including, without limitation,
post-effective amendments, in each case including the Prospectus contained
therein, all exhibits thereto and all material incorporated by reference
therein.

          "Securities" has the meaning set forth in the preamble hereto.
           ----------

          "Shelf Registration" means a registration effected pursuant to Section
           ------------------
3 hereof.

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                                                                               4

          "Shelf Registration Period" has the meaning set forth in Section 3(b)
           -------------------------
hereof.

          "Shelf Registration Statement" means a "shelf" registration statement
           ----------------------------
of the Company pursuant to the provisions of Section 3 hereof which covers some
of or all the Securities or New Securities, as applicable, on an appropriate
form under Rule 415 under the Securities Act, or any similar rule that may be
adopted by the Commission, all amendments and supplements to such registration
statement, including post-effective amendments, in each case including the
Prospectus contained therein, all exhibits thereto and all material incorporated
by reference therein.

          "Trustee" means the trustee with respect to the Securities and the New
           -------
Securities under the Indentures.

          "underwriter" means any underwriter of securities in connection with
           -----------
an offering thereof under a Shelf Registration Statement.

          2.  Registered Exchange Offer; Resales of New Securities by Exchanging
              ------------------------------------------------------------------
Dealers; Private Exchange.
--------------------------

          (a) The Company shall prepare and, not later than 90 days after the
date of the original issuance of the Securities, shall file with the Commission
the Exchange Offer Registration Statement with respect to the Registered
Exchange Offer. The Company shall use its best efforts to cause the Exchange
Offer Registration Statement to become effective under the Securities Act within
150 days after the date of the original issuance of the Securities.

          (b) Upon the effectiveness of the Exchange Offer Registration
Statement, the Company shall promptly commence the Registered Exchange Offer, it
being the objective of such Registered Exchange Offer to enable each Holder
electing to exchange Securities for New Securities (assuming that such
Securities do not constitute a portion of an unsold allotment acquired by such
Holder directly from the Company and such Holder is not an affiliate of the
Company within the meaning of the Securities Act, acquires the New Securities in
the ordinary course of such Holder's business and has no arrangements with any
person to participate in the distribution of the New Securities) to trade such
New Securities from and after their receipt without any limitations or
restrictions under the Securities Act and without material restrictions under
the securities laws of a substantial proportion of the several states of the
United States.
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                                                                               5

          (c) In connection with the Registered Exchange Offer, the Company
shall:

          (i) mail to each Holder a copy of the Prospectus forming part of the
     Exchange Offer Registration Statement, together with an appropriate letter
     of transmittal and related documents;

         (ii) keep the Registered Exchange Offer open for not less than 30 days
     after the date notice thereof is mailed to the Holders (or longer if
     required by applicable law);

        (iii) utilize the services of a depositary for the Registered Exchange
     Offer with an address in the Borough of Manhattan, The City of New York;
     and

         (iv) comply in all material respects with all applicable laws.

          (d) As soon as practicable after the close of the Registered Exchange
Offer, the Company shall:

          (i) accept for exchange all Securities tendered and not validly
     withdrawn pursuant to the Registered Exchange Offer;

         (ii) deliver to the Trustee for cancellation all Securities so accepted
     for exchange; and

        (iii) cause the Trustee promptly to authenticate and deliver to each
     Holder of Securities, New Securities equal in principal amount to the
     Securities of such Holder so accepted for exchange.

          (e) The Purchasers and the Company acknowledge that, pursuant to
current interpretations by the Commission's staff of Section 5 of the Securities
Act, and in the absence of an applicable exemption therefrom, each Exchanging
Dealer is required to deliver a Prospectus in connection with a sale of any New
Securities received by such Exchanging Dealer pursuant to the Registered
Exchange Offer in exchange for Securities acquired for its own account as a
result of market-making activities or other trading activities. Accordingly, the
Company shall:

          (i) include the information set forth in Annex A hereto on the cover
     of the Exchange Offer Registration Statement, in Annex B hereto in the
     forepart of the Exchange Offer Registration Statement in a section setting
     forth details of the Exchange Offer, in Annex C
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                                                                               6

     hereto in the underwriting or plan of distribution section of the
     Prospectus forming a part of the Exchange Offer Registration Statement, and
     in Annex D hereto in the Letter of Transmittal delivered pursuant to the
     Registered Exchange Offer (it being understood that a Holder's
     participation in the Exchange Offer is conditioned on the Holder, by
     executing and returning the Letter of Transmittal, representing in writing
     to the Company as set forth in Rider B of Annex D hereto); and

          (ii)  use its best efforts to keep the Exchange Offer Registration
     Statement continuously effective under the Securities Act during the
     Exchange Offer Registration Period for delivery by Exchanging Dealers in
     connection with sales of New Securities received pursuant to the Registered
     Exchange Offer, as contemplated by Section 4(h) below.

           (f)  In the event that any Purchaser determines that it is not
eligible to participate in the Registered Exchange Offer with respect to the
exchange of Securities constituting any portion of an unsold allotment, at the
request of such Purchaser, the Company shall issue and deliver to such Purchaser
or the party purchasing New Securities registered under a Shelf Registration
Statement as contemplated by Section 3 hereof from such Purchaser, in exchange
for such Securities, a like principal amount of New Securities. The Company
shall seek to cause the CUSIP Service Bureau to issue the same CUSIP number for
such New Securities as for New Securities issued pursuant to the Registered
Exchange Offer.

            3.   Shelf Registration.   If, (i) because of any change in law or
                 ------------------
applicable interpretations thereof by the Commission's staff, the Company
determines upon advice of its outside counsel that it is not permitted to effect
the Registered Exchange Offer as contemplated by Section 2 hereof, or (ii) for
any other reason the Exchange Offer Registration Statement is not declared
effective within 150 days after the Closing Date or the Registered Exchange
Offer is not consummated within 180 days after the Closing Date, or (iii) any
Purchaser so requests with respect to Securities (or any New Securities received
pursuant to Section 2(f)) not eligible to be exchanged for New Securities in a
Registered Exchange Offer or, in the case of any Purchaser that participates in
the Registered Exchange Offer, such Purchaser does not receive freely tradable
New Securities, or (iv) any Holder (other than a Purchaser) is not eligible to
participate in the Registered Exchange Offer or (v) in the case of any such
Holder that participates in

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                                                                               7

the Registered Exchange Offer, such Holder does not receive freely tradable New
Securities in exchange for tendered securities, other than by reason of such
Holder being an affiliate of the Company within the meaning of the Securities
Act (it being understood that, for purposes of this Section 3, (x) the
requirement that a Purchaser deliver a Prospectus containing the information
required by Items 507 and/or 508 of Regulation S-K under the Securities Act in
connection with sales of New Securities acquired in exchange for such Securities
shall result in such New Securities being not "freely tradeable" but (y) the
requirement that an Exchanging Dealer deliver a Prospectus in connection with
sales of New Securities acquired in the Registered Exchange Offer in exchange
for Securities acquired as a result of market-making activities or other trading
activities shall not result in such New Securities being not "freely
tradeable"), the following provisions shall apply:

          (a)  The Company shall as promptly as practicable (but in no event
more than the later of (i) 90 days after the Closing Date or (ii) 45 days after
so required or requested pursuant to this Section 3), file with the Commission
and thereafter shall use its best efforts to cause to be declared effective
under the Securities Act a Shelf Registration Statement relating to the offer
and sale of the Securities or the New Securities, as applicable, by the Holders
from time to time in accordance with the methods of distribution elected by such
Holders and set forth in such Shelf Registration Statement (such Securities or
New Securities, as applicable, to be sold by such Holders under such Shelf
Registration Statement being referred to herein as "Registration Securities");
provided, however, that, with respect to New Securities received by a Purchaser
--------  -------
in exchange for Securities constituting any portion of an unsold allotment, the
Company may, if permitted by current interpretations by the Commission's staff,
file a post- effective amendment to the Exchange Offer Registration Statement
containing the information required by Regulation S-K Items 507 and/or 508, as
applicable, in satisfaction of its obligations under this paragraph (a) with
respect thereto, and any such Exchange Offer Registration Statement, as so
amended, shall be referred to herein as, and governed by the provisions herein
applicable to, a Shelf Registration Statement.

          (b)  The Company shall use its best efforts to keep the Shelf
Registration Statement continuously effective in order to permit the Prospectus
forming part thereof to be usable by Holders for a period of two years from the
date the Shelf Registration Statement is declared effective by

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                                                                               8

the Commission or such shorter period that will terminate when all the
Securities or New Securities, as applicable, covered by the Shelf Registration
Statement have been sold pursuant to the Shelf Registration Statement (in any
such case, such period being called the "Shelf Registration Period"). The
Company shall be deemed not to have used its best efforts to keep the Shelf
Registration Statement effective during the Shelf Registration Period if it
voluntarily takes any action that would result in Holders of securities covered
thereby not being able to offer and sell such securities during that period,
unless (i) such action is required by applicable law or (ii) such action is
taken by the Company in good faith and for valid business reasons (not including
avoidance of the Company's obligation hereunder), including the acquisition or
divestiture of assets, so long as the Company promptly thereafter complies with
the requirements of Section 4(k) hereof, if applicable.

          4.   Registration Procedures. In connection with any Shelf
               ------------------------
Registration Statement and, to the extent applicable, any Exchange Offer
Registration Statement, the following provisions shall apply:

          (a)  (i)  The Company shall furnish to you, prior to the filing
     thereof with the Commission, a copy of any Exchange Offer Registration
     Statement, each amendment thereof and each amendment or supplement, if any,
     to the Prospectus included therein and shall use its best efforts to
     reflect in each such document, when so filed with the Commission, such
     comments as you reasonably may propose.

          (ii) The Company shall furnish to you, prior to the filing thereof
     with the Commission, a copy of any Shelf Registration Statement, each
     amendment thereof and each amendment or supplement, if any, to the
     Prospectus included therein and shall use its best efforts to reflect in
     each such document, when so filed with the Commission, such comments as any
     Holder whose securities are to be included in such Shelf Registration
     Statement reasonably may propose.

          (b)  The Company shall ensure that (i) any Registration Statement and
     any amendment thereto and any Prospectus forming part thereof and any
     amendment or supplement thereto complies in all material respects with the
     Securities Act and the rules and regulations thereunder, (ii) any
     Registration Statement and any amendment thereto does not, when it becomes
     effective, contain an untrue statement of a material fact or omit to state
     a material fact required to be stated therein
<PAGE>

                                                                               9

     or necessary to make the statements therein not misleading and (iii) any
     Prospectus forming part of any Registration Statement, and any amendment or
     supplement to such Prospectus, does not include an untrue statement of a
     material fact or omit to state a material fact necessary in order to make
     the statements therein, in the light of the circumstances under which they
     were made, not misleading.

          (c)   (1)   The Company shall advise you and, in the case of a Shelf
     Registration Statement, the Holders of securities covered thereby, and, if
     requested by you or any such Holder, confirm such advice in writing:

                (i)   when a Registration Statement and any amendment thereto
          has been filed with the Commission and when the Registration Statement
          or any post-effective amendment thereto has become effective; and

               (ii)   of any request by the Commission for amendments or
          supplements to the Registration Statement or the Prospectus included
          therein or for additional information.

          (2)  The Company shall advise you and, in the case of a Shelf
     Registration Statement, the Holders of securities covered thereby, and, in
     the case of an Exchange Offer Registration Statement, any Exchanging Dealer
     which has provided in writing to the Company a telephone or facsimile
     number and address for notices, and, if requested by you or any such Holder
     or Exchanging Dealer, confirm such advice in writing:

                (i)   of the issuance by the Commission of any stop order
          suspending the effectiveness of the Registration Statement or the
          initiation of any proceedings for that purpose;

               (ii)   of the receipt by the Company of any notification with
          respect to the suspension of the qualification of the securities
          included therein for sale in any jurisdiction or the initiation or
          threatening of any proceeding for such purpose; and

              (iii)   of the happening of any event that requires the making of
          any changes in the Registration Statement or the Prospectus so that,
          as of such date, the statements therein are not misleading and do not
          omit to state a material

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                                                                              10

          fact required to be stated therein or necessary to make the statements
          therein (in the case of the Prospectus, in the light of the
          circumstances under which they were made) not misleading (which advice
          shall be accompanied by an instruction to suspend the use of the
          Prospectus until the requisite changes have been made).

     Each such Holder or Exchanging Dealer agrees by its acquisition of such
     securities to be sold by such Holder or Exchanging Dealer, that, upon being
     so advised by the Company of any event described in clause (iii) of this
     paragraph (c)(2), such Holder or Exchanging Dealer will forthwith
     discontinue disposition of such securities under such Registration
     Statement or Prospectus, until such Holder's or Exchanging Dealer's receipt
     of the copies of the supplemented or amended Prospectus contemplated by
     paragraph 4(k) hereof, or until it is advised in writing by the Company
     that the use of the applicable Prospectus may be resumed.

          (d) The Company shall use its best efforts to obtain the withdrawal of
     any order suspending the effectiveness of any Registration Statement at the
     earliest possible time.

          (e) The Company shall furnish to each Holder of securities included
     within the coverage of any Shelf Registration Statement, without charge, at
     least one copy of such Shelf Registration Statement and any post-effective
     amendment thereto, including financial statements and schedules, and, if
     the Holder so requests in writing, any documents incorporated by reference
     therein and all exhibits thereto (including those incorporated by reference
     therein).

          (f) The Company shall, during the Shelf Registration Period, deliver
     to each Holder of securities included within the coverage of any Shelf
     Registration Statement, without charge, as many copies of the Prospectus
     (including each preliminary Prospectus) included in such Shelf Registration
     Statement and any amendment or supplement thereto as such Holder may
     reasonably request; and the Company consents to the use of the Prospectus
     or any amendment or supplement thereto by each of the selling Holders of
     securities in connection with the offering and sale of the securities
     covered by the Prospectus or any amendment or supplement thereto.

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                                                                              11

         (g) The Company shall furnish to each Exchanging Dealer which so
     requests, without charge, at least one copy of the Exchange Offer
     Registration Statement and any post-effective amendment thereto, including
     financial statements and schedules and, if the Exchanging Dealer so
     requests in writing, any documents incorporated by reference therein and
     all exhibits thereto (including those incorporated by reference therein).

         (h) The Company shall, during the Exchange Offer Registration Period,
     promptly deliver to each Exchanging Dealer, without charge, as many copies
     of the Prospectus included in such Exchange Offer Registration Statement
     and any amendment or supplement thereto as such Exchanging Dealer may
     reasonably request for delivery by such Exchanging Dealer in connection
     with a sale of New Securities received by it pursuant to the Registered
     Exchange Offer; and the Company consents to the use of the Prospectus or
     any amendment or supplement thereto by any such Exchanging Dealer, as
     aforesaid.

         (i) Prior to the Registered Exchange Offer or any other offering of
     securities pursuant to any Registration Statement, the Company shall
     register or qualify or cooperate with the Holders of securities included
     therein and their respective counsel in connection with the registration or
     qualification of such securities for offer and sale under the securities or
     blue sky laws of such jurisdictions as any such Holder reasonably requests
     in writing and do any and all other acts or things necessary or advisable
     to enable the offer and sale in such jurisdictions of the securities
     covered by such Registration Statement; provided, however, that the Company
                                             --------  -------
     will not be required to qualify generally to do business in any
     jurisdiction where it is not then so qualified or to take any action which
     would subject it to general service of process or to taxation in any such
     jurisdiction where it is not then so subject.

         (j) The Company shall cooperate with the Holders of Securities to
     facilitate the timely preparation and delivery of certificates representing
     Securities to be sold pursuant to any Registration Statement free of any
     restrictive legends and in such denominations and registered in such names
     as Holders may request prior to sales of securities pursuant to such
     Registration Statement.

<PAGE>

                                                                              12

         (k) Upon the occurrence of any event contemplated by paragraph
     (c)(2)(iii) above, the Company shall promptly prepare a post-effective
     amendment to any Registration Statement or an amendment or supplement to
     the related Prospectus or file any other required document so that, as
     thereafter delivered to purchasers of the securities included therein, the
     Prospectus will not include an untrue statement of a material fact or omit
     to state any material fact necessary to make the statements therein, in the
     light of the circumstances under which they were made, not misleading.

         (l) Not later than the effective date of any such Registration
     Statement hereunder, the Company shall provide a CUSIP number for the
     Securities or New Securities, as the case may be, registered under such
     Registration Statement, and provide the Trustee with printed certificates
     for such Securities or New Securities, in a form, if requested by the
     applicable Holder or Holder's Counsel, eligible for deposit with The
     Depository Trust Company or any successor thereto under the Indentures.

         (m) The Company shall use its best efforts to comply with all
     applicable rules and regulations of the Commission to the extent and so
     long as they are applicable to the Registered Exchange Offer or the Shelf
     Registration and will make generally available to its security holders a
     consolidated earnings statement (which need not be audited) covering a
     twelve-month period commencing after the effective date of the Registration
     Statement and ending not later than 15 months thereafter, as soon as
     practicable after the end of such period, which consolidated earnings
     statement shall satisfy the provisions of Section 11(a) of the Securities
     Act.

         (n) The Company shall cause the Indentures to be qualified under the
     Trust Indenture Act of 1939, as amended, on or prior to the effective date
     of any Shelf Registration Statement or Exchange Offer Registration
     Statement.

         (o) The Company may require each Holder of securities to be sold
     pursuant to any Shelf Registration Statement to furnish to the Company in
     writing such information regarding the Holder and the distribution of such
     securities as the Company may from time to time reasonably require for
     inclusion in such Registration Statement. The Company may exclude from any
     such Registration Statement the securities of any

<PAGE>

                                                                              13

     such Holder who fails to furnish such information within a reasonable time
     after receiving such request. Each Holder as to which any Shelf
     Registration is being effected agrees to furnish promptly to the Company
     all information required to be disclosed in order to make the information
     previously furnished to the Company by such Holder not materially
     misleading.

         (p) The Company shall, if requested, promptly incorporate in a
     Prospectus supplement or post- effective amendment to a Shelf Registration
     Statement, such information as the Managing Underwriters, if any, and
     Majority Holders reasonably agree should be included therein and shall make
     all required filings of such Prospectus supplement or post-effective
     amendment as soon as notified of the matters to be incorporated in such
     Prospectus supplement or post-effective amendment.

         (q) (i) In the case of any Shelf Registration Statement, the Company
     shall enter into such agreements (including underwriting agreements) and
     take all other appropriate actions in order to expedite or facilitate the
     registration or the disposition of the Securities, and in connection
     therewith, if an underwriting agreement is entered into, cause the same to
     contain indemnification provisions and procedures no less favorable than
     those set forth in Section 6 hereof (or such other provisions and
     procedures acceptable to the Majority Holders and the Managing
     Underwriters, if any), with respect to all parties to be indemnified
     pursuant to Section 6 hereof from Holders of Securities to the Company.

             (ii) Without limiting in any way paragraph (q)(i), no Holder may
     participate in any underwritten registration hereunder unless such Holder
     (x) agrees to sell such Holder's securities to be covered by such
     registration on the basis provided in any underwriting arrangements
     approved by the Majority Holders and the Managing Underwriters and (y)
     completes and executes in a timely manner all customary questionnaires,
     powers of attorney, underwriting agreements and other documents reasonably
     required by the Company or the Managing Underwriters in connection with
     such underwriting arrangements.

         (r) In the case of any Shelf Registration Statement, the Company shall
     (i) make reasonably available for inspection by the Holders of securities
     to be registered thereunder, any underwriter

<PAGE>

                                                                              14

     participating in any disposition pursuant to such Registration Statement,
     and any attorney, accountant or other agent retained by the Holders or any
     such underwriter all relevant financial and other records, pertinent
     corporate documents and properties of the Company and its subsidiaries
     reasonably requested by such person; (ii) cause the Company's officers,
     directors and employees to supply all relevant information reasonably
     requested by the Holders or any such underwriter, attorney, accountant or
     agent in connection with any such Registration Statement as is customary
     for due diligence examinations in connection with primary underwritten
     offerings; provided, however, that any information that is nonpublic at
                --------  -------
     the time of delivery of such information shall be kept confidential by the
     Holders or any such underwriter, attorney, accountant or agent, unless such
     disclosure is made in connection with a court proceeding or required by
     law, or such information becomes available to the public generally or
     through a third party without an accompanying obligation of
     confidentiality; (iii) make such representations and warranties to the
     Holders of securities registered thereunder and the underwriters, if any,
     in form, substance and scope as are customarily made by issuers to
     underwriters in primary underwritten offerings; (iv) obtain opinions of
     counsel to the Company (which counsel and opinions (in form, scope and
     substance) shall be reasonably satisfactory to the Managing Underwriters,
     if any) addressed to each selling Holder and the underwriters, if any,
     covering such matters as are customarily covered in opinions requested in
     underwritten offerings and such other matters as may be reasonably
     requested by such Holders and underwriters; (v) obtain "cold comfort"
     letters (or, in the case of any person that does not satisfy the conditions
     for receipt of a "cold comfort" letter specified in Statement on Auditing
     Standards No. 72, an "agreed-upon procedures" letter under Statement on
     Auditing Standards No. 35) and updates thereof from the independent
     certified public accountants of the Company (and, if necessary, any other
     independent certified public accountants of any subsidiary of the Company
     or of any business acquired by the Company for which financial statements
     and financial data are, or are required to be, included or incorporated by
     reference in the Registration Statement), addressed to each selling Holder
     of securities registered thereunder and the underwriters, if any, in
     customary form and covering matters of the type customarily covered in
     "cold comfort" letters in connection with primary underwritten offerings;
     and (vi) deliver such documents

<PAGE>

                                                                              15

     and certificates as may be reasonably requested by the Majority Holders and
     the Managing Underwriters, if any, including those to evidence compliance
     with Section 4(k) and with any customary conditions contained in the
     underwriting agreement or other agreement entered into by the Company. The
     foregoing actions set forth in clauses (iii), (iv), (v) and (vi) of this
     Section 4(r) shall be performed (A) on the effective date of such
     Registration Statement and each post-effective amendment thereto and (B) at
     each closing under any underwriting or similar agreement as and to the
     extent required thereunder.

         (s) In the case of any Exchange Offer Registration Statement, the
     Company shall (i) make reasonably available for inspection by each
     Purchaser, and any attorney, accountant or other agent retained by such
     Purchaser, all relevant financial and other records, pertinent corporate
     documents and properties of the Company and its subsidiaries reasonably
     requested by such person; (ii) cause the Company's officers, directors and
     employees to supply all relevant information reasonably requested by such
     Purchaser or any such attorney, accountant or agent in connection with any
     such Registration Statement as is customary for due diligence examinations
     in connection with primary underwritten offerings; provided, however, that
                                                        --------  -------
     any information that is nonpublic at the time of delivery of such
     information shall be kept confidential by such Purchaser or any such
     attorney, accountant or agent, unless such disclosure is made in connection
     with a court proceeding or required by law, or such information becomes
     available to the public generally or through a third party without an
     accompanying obligation of confidentiality; (iii) make such representations
     and warranties to such Purchaser, in form, substance and scope as are
     customarily made by issuers to underwriters in primary underwritten
     offerings; (iv) obtain opinions of counsel to the Company (which counsel
     and opinions (in form, scope and substance) shall be reasonably
     satisfactory to such Purchaser and its counsel), addressed to such
     Purchaser, covering such matters as are customarily covered in opinions
     requested in underwritten offerings and such other matters as may be
     reasonably requested by such Purchaser or its counsel; (v) obtain "cold
     comfort" letters and updates thereof from the independent certified public
     accountants of the Company (and, if necessary, any other independent
     certified public accountants of any subsidiary of the Company or of any
     business acquired by the Company for which

<PAGE>

                                                                              16

     financial statements and financial data are, or are required to be,
     included or incorporated by reference in the Registration Statement),
     addressed to such Purchaser, in customary form and covering matters of the
     type customarily covered in "cold comfort" letters in connection with
     primary underwritten offerings, or if requested by such Purchaser or its
     counsel in lieu of a "cold comfort" letter, an agreed-upon procedures
     letter under Statement on Auditing Standards No. 35, covering matters
     requested by such Purchaser or its counsel; and (vi) deliver such documents
     and certificates as may be reasonably requested by such Purchaser or its
     counsel, including those to evidence compliance with Section 4(k) and with
     conditions customarily contained in underwriting agreements. The foregoing
     actions set forth in clauses (iii), (iv), (v) and (vi) of this Section 4(s)
     shall be performed (A) at the close of the Registered Exchange Offer and
     (B) on the effective date of any post-effective amendment to the Exchange
     Offer Registration Statement.

          5.  Registration Expenses. The Company shall bear all expenses
              ----------------------
     incurred in connection with the performance of its obligations under
     Sections 2, 3 and 4 hereof and, in the event of any Shelf Registration
     Statement, will reimburse the Holders for the reasonable fees and
     disbursements of one firm or counsel (in addition to one local counsel in
     each relevant jurisdiction) designated by the Majority Holders to act as
     counsel for the Holders in connection therewith ("Holders' Counsel").
     Notwithstanding the foregoing, the Holders of the securities being
     registered shall pay all agency or brokerage fees and commissions and
     underwriting discounts and commissions attributable to the sale of such
     securities and the fees and disbursements of any counsel or other advisors
     or experts retained by such holders (severally or jointly), other than the
     counsel and experts specifically referred to above in this Section 5,
     transfer taxes on resale of any of the securities by such Holders and any
     advertising expenses incurred by or on behalf of such Holders in connection
     with any offers they may make.

          6.  Indemnification and Contribution. (a) In connection with any
              ---------------------------------
     Registration Statement, the Company agrees to indemnify and hold harmless
     each Holder of securities covered thereby (including each Purchaser and,
     with respect to any Prospectus delivery as contemplated in Section 4(h)
     hereof, each Exchanging Dealer), the directors, officers, employees and
     agents of each such Holder and each other person, if any, who controls any
     such Holder within the meaning of Section 15 of the Securities Act or
     Section 20 of the Exchange Act against any and all losses,

<PAGE>

                                                                              17

claims, damages or liabilities, joint or several, to which they or any of them
may become subject under the Securities Act, the Exchange Act or other Federal
or state statutory law or regulation, at common law or otherwise, insofar as
such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon any untrue statement or alleged untrue statement
of a material fact contained in the Registration Statement as originally filed
or in any amendment thereof, or in any preliminary Prospectus or Prospectus, or
in any amendment thereof or supplement thereto, or arise out of or are based
upon the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading,
and agrees to reimburse each such indemnified party, as incurred, for any legal
or other expenses reasonably incurred by them in connection with investigating
or defending any such loss, claim, damage, liability or action; provided,
                                                                --------
however, that the Company will not be liable in any case to the extent that any
-------
such loss, claim, damage or liability arises out of or is based upon any such
untrue statement or alleged untrue statement or omission or alleged omission
made therein in reliance upon and in conformity with written information
furnished to the Company by or on behalf of any such Holder specifically for
inclusion therein; provided further, however, that the indemnity agreement
                   ----------------  -------
contained in this Section 6(a) shall not inure to the benefit of any indemnified
party to the extent that it is determined by a final, non-appealable judgment
that (i) a preliminary Prospectus contained an untrue statement of a material
fact or omitted to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, (ii) the sale to the
person asserting any such losses, claims, damages or liabilities was an initial
resale of securities by any Holder, (iii) any such loss, claim, damage or
liability of such indemnified party results from the fact that there was not
sent or given to such person, at or prior to the written confirmation of the
sale of such securities to such person, a copy of any revised preliminary
Prospectus, the related Prospectus or the related Prospectus as amended or
supplemented in any case where such delivery is required by the Securities Act,
and the Company had previously furnished copies thereof to such Holder and (iv)
the revised preliminary Prospectus, the related Prospectus or the related
Prospectus as amended or supplemented corrected such untrue statement or
omission. This indemnity agreement will be in addition to any liability which
the Company may otherwise have.

          The Company also agrees to indemnify or contribute to Losses (as
defined below) of, as provided in Section

<PAGE>

                                                                              18

6(d), any underwriters of Securities registered under a Shelf Registration
Statement, their officers, directors, employees and agents and each person who
controls such underwriters on substantially the same basis as that of the
indemnification of the Purchasers and the selling Holders provided in this
Section 6(a) and shall, if requested by any Holder, enter into an underwriting
agreement reflecting such agreement, as provided in Section 4(q) hereof.

          (b) Each Holder of securities covered by a Registration Statement
(including each Purchaser and, with respect to any Prospectus delivery as
contemplated in Section 4(h) hereof, each Exchanging not jointly agrees to
indemnify and hold harmless the Company, each of its directors and officers and
each other person, if any, who controls the Company within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act to the same
extent as the foregoing indemnity from the Company to each such Holder, but only
with reference to written information relating to such Holder furnished to the
Company by or on behalf of such Holder specifically for inclusion in the
documents referred to in the foregoing indemnity. This indemnity agreement will
be in addition to any liability which any such Holder may otherwise have.

          (c) Promptly after receipt by an indemnified party under this Section
6 of notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party under this
Section 6, notify the indemnifying party in writing of the commencement thereof;
but the failure so to notify the indemnifying party (i) will not relieve it from
liability under paragraph (a) or (b) above unless and to the extent it did not
otherwise learn of such action and such failure results in the forfeiture by the
indemnifying party of substantial rights and defenses and (ii) will not, in any
event, relieve the indemnifying party from any obligations to any indemnified
party other than the indemnification obligation provided in paragraph (a) or (b)
above. The indemnifying party shall be entitled to appoint counsel of the
indemnifying party's choice at the indemnifying party's expense to represent the
indemnified party in any action for which indemnification is sought (in which
case the indemni fying party shall not thereafter be responsible for the fees
and expenses of any separate counsel retained by the indem nified party or
parties except as set forth below); provided, however, that such counsel shall
be reasonably satisfactory to the indemnified party. Notwithstanding the
indemnifying party's election to appoint counsel to represent the indemnified
party in an action, the

<PAGE>

                                                                              19

indemnified party shall have the right to employ separate counsel (including
local counsel), and the indemnifying party shall bear the reasonable fees, costs
and expenses of such separate counsel (and local counsel) if (i) the use of
counsel chosen by the indemnifying party to represent the indemnified party
would present such counsel with a conflict of interest, (ii) the actual or
potential defendants in, or targets of, any such action include both the
indemnified party and the indemnifying party and the indemnified party shall
have reasonably concluded that there may be legal defenses available to it
and/or other indemnified parties which are different from or additional to those
available to the indemnifying party, (iii) the indemnifying party shall not have
employed counsel reasonably satisfactory to the indemnified party to represent
the indemnified party within a reasonable time after notice of the institution
of such action or (iv) the indemnifying party shall authorize the indemnified
party to employ separate counsel at the expense of the indemnifying party. An
indemnifying party will not, without the prior written consent of the
indemnified parties, settle or compromise or consent to the entry of any
judgment with respect to any pending or threatened claim, action, suit or
proceeding in respect of which indemnification or contribution may be sought
hereunder (whether or not the indemnified parties are actual or potential
parties to such claim or action) unless such settlement, compromise or consent
includes an unconditional release of each indemnified party from all liability
arising out of such claim, action, suit or proceeding. It is understood,
however, that the Company shall, in connection with any one such action or
separate but substantially similar or related actions in the same jurisdiction
arising out of the same general allegations or circumstances, be liable for the
reasonable fees and expenses of only one separate firm of attorneys (in addition
to any local counsel) at any time for all such Holders and controlling persons.
An indemnifying party shall not be liable under this Section 6 to any
indemnified party regarding any settlement or compromise or consent to the entry
of any judgment with respect to any pending or threatened claim, action, suit or
proceeding in respect of which indemnification or contribution may be sought
hereunder (whether or not the indemnified parties are actual or potential
parties to such claim or action) unless such settlement, compromise or consent
is consented to by such indemnifying party, which consent shall not be
unreasonably withheld.

          (d) In the event that the indemnity provided in paragraph (a) or (b)
of this Section 6 is unavailable to or insufficient to hold harmless an
indemnified party for any

<PAGE>

                                                                              20

reason, then each applicable indemnifying party, in lieu of indemnifying such
indemnified party, shall have a joint and several obligation to contribute to
the aggregate losses, claims, damages and liabilities (including legal or other
expenses reasonably incurred in connection with investigating or defending same)
(collectively "Losses") to which such indemnified party may be subject in such
proportion as is appropriate to reflect the relative benefits received by such
indemnifying party, on the one hand, and such indemnified party, on the other
hand, from the Initial Placement and the Registration Statement which resulted
in such Losses; provided, however, that in no case shall any Purchaser or any
                --------  -------
subsequent Holder of any Security or New Security be responsible, in the
aggregate, for any amount in excess of the purchase discount or commission
applicable to such Security, or in the case of a New Security, applicable to the
Security which was exchangeable into such New Security, as set forth on the
cover page of the Final Memorandum, nor shall any underwriter be responsible for
any amount in excess of the underwriting discount or commission applicable to
the securities purchased by such underwriter under the Registration Statement
which resulted in such Losses. If the allocation provided by the immediately
preceding sentence is unavailable for any reason, the indemnifying party and the
indemnified party shall contribute in such proportion as is appropriate to
reflect not only such relative benefits but also the relative fault of such
indemnifying party, on the one hand, and such indemnified party, on the other
hand, in connection with the statements or omissions which resulted in such
Losses as well as any other relevant equitable considerations. Benefits received
by the Company shall be deemed to be equal to the sum of (x) the total net
proceeds from the Initial Placement (before deducting expenses) as set forth on
the cover page of the Final Memorandum and (y) the total amount of additional
interest which the Company was not required to pay as a result of registering
the securities covered by the Registration Statement which resulted in such
Losses. Benefits received by the Purchasers shall be deemed to be equal to the
total purchase discounts and commissions as set forth on the cover page of the
Final Memorandum, and benefits received by any other Holders shall be deemed to
be equal to the value of receiving Securities or New Securities, as applicable,
registered under the Securities Act. Benefits received by any underwriter shall
be deemed to be equal to the total underwriting discounts and commissions, as
set forth on the cover page of the Prospectus forming a part of the Registration
Statement which resulted in such Losses. Relative fault shall be determined by
reference to whether any alleged untrue statement or omission relates to
<PAGE>

                                                                              21

information provided by the indemnifying party, on the one hand, or by the
indemnified party, on the other hand. The parties agree that it would not be
just and equitable if contribution were determined by pro rata allocation or any
other method of allocation which does not take account of the equitable
considerations referred to above. Notwithstanding the provisions of this
paragraph (d), no person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. For purposes of this Section 6, each person who controls a
Holder within the meaning of either the Securities Act or the Exchange Act and
each director, officer, employee and agent of such Holder shall have the same
rights to contribution as such Holder, and each person who controls the Company
within the meaning of either the Securities Act or the Exchange Act, each
officer of the Company who shall have signed the Registration Statement and each
director of the Company shall have the same rights to contribution as the
Company, subject in each case to the applicable terms and conditions of this
paragraph (d).

          (e)  The provisions of this Section 6 will remain in full force and
effect, regardless of any investigation made by or on behalf of any Purchaser,
any other Holder, the Company or any underwriter or any of the officers,
directors or controlling persons referred to in this Section 6, and will survive
the sale by a Holder of securities covered by a Registration Statement.

          7.   Miscellaneous.
               --------------

          (a)  No Inconsistent Agreements.  The Company has not, as of the date
               --------------------------
hereof, entered into, nor shall it, on or after the date hereof, enter into, any
agreement with respect to its securities that limits the rights granted to the
Holders herein or otherwise conflicts with the provisions hereof.

          (b)  Amendments and Waivers.  The provisions of this Agreement,
               ----------------------
including the provisions of this sentence, may not be amended, qualified,
modified or supplemented, and waivers or consents to departures from the
provisions hereof may not be given, unless the Company has obtained the written
consent of the Holders of at least a majority of the then outstanding aggregate
principal amount of Securities (or, after the consummation of any Exchange Offer
in accordance with Section 2 hereof, of New Securities); provided that, with
respect to any matter that directly or indirectly affects the rights of any
Purchaser hereunder,
<PAGE>

                                                                              22

the Company shall obtain the written consent of each such Purchaser against
which such amendment, qualification, supplement, waiver or consent is to be
effective. Notwithstanding the foregoing (except the foregoing proviso), a
waiver or consent to departure from the provisions hereof with respect to a
matter that relates exclusively to the rights of Holders whose securities are
being sold pursuant to a Registration Statement and that does not directly or
indirectly affect the rights of other Holders may be given by the Majority
Holders, determined on the basis of securities being sold rather than registered
under such Registration Statement.

          (c)  Notices.  All notices and other communications provided for or
               --------
permitted hereunder shall be made in writing by hand-delivery, first-class mail,
facsimile, or air courier guaranteeing overnight delivery:

               (1) if to a Holder, at the most current address given by such
          Holder to the Company in accordance with the provisions of this
          Section 7(c), which address initially is, with respect to each Holder,
          the address of such Holder maintained by the registrar under the
          Indentures, with a copy in like manner to Salomon Smith Barney Inc. by
          facsimile (212-816-7912) and confirmed by mail to it at 388 Greenwich
          Street, New York, New York 10013, Attention: General Counsel;

               (2) if to you, initially at the address set forth in the Purchase
          Agreement; and

               (3) if to the Company, initially at its address set forth in the
          Purchase Agreement.

          All such notices and communications shall be deemed to have been duly
given when received.

          The Purchasers or the Company by notice to the other may designate
additional or different addresses for subsequent notices or communications.

          (d)  Successors and Assigns.  This Agreement shall inure to the
               ----------------------
benefit of and be binding upon the successors and assigns of each of the
parties, including, without the need for an express assignment or any consent by
the Company or subsequent Holders of Securities and/or New Securities. The
Company hereby agrees to extend the benefits of this Agreement to any Holder of
Securities and/or New Securities and any such Holder may specifically enforce
the provisions of this Agreement as if an original party hereto.

<PAGE>

                                                                              23

          (e)  Counterparts.  This Agreement may be executed in any number of
               -------------
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.

          (f)  Headings.  The headings in this Agreement are for convenience of
               ---------
reference only and shall not limit or otherwise affect the meaning hereof.

          (g)  Governing Law.  THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
               --------------
IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK (WITHOUT REGARD TO
THE CONFLICT OF LAW PROVISIONS THEREOF).

          (h)  Severability.  In the event that any one of more of the
               -------------
provisions contained herein, or the application thereof in any circumstances, is
held invalid, illegal or unenforceable in any respect for any reason, the
validity, legality and enforceability of any such provision in every other
respect and of the remaining provisions hereof shall not be in any way impaired
or affected thereby, it being intended that all the rights and privileges of the
parties shall be enforceable to the fullest extent permitted by law.

          (i)  Securities Held by the Company, etc.  Whenever the consent or
               ------------------------------------
approval of Holders of a specified percentage of principal amount of Securities
or New Securities is required hereunder, Securities or New Securities, as
applicable, held by the Company or its Affiliates (other than subsequent Holders
of Securities or New Securities if such subsequent Holders are deemed to be
Affiliates solely by reason of their holdings of such Securities or New
Securities) shall not be counted in determining whether such consent or approval
was given by the Holders of such required percentage.

          (j)  Termination.  This Agreement shall automatically terminate,
               ------------
without any further action on the part of the Company or the Purchasers, upon
the termination or cancellation of the Purchase Agreement prior to the Closing
Date.

<PAGE>

                                                                              24

          Please confirm that the foregoing correctly sets forth the agreement
between the Company and you.

                                                    Very truly yours,

                                                    LEVEL 3 COMMUNICATIONS, INC.

                                                    By: /s/ Thomas C. Stortz
                                                       -----------------------
                                                       Name: Thomas C. Stortz
                                                       Title: Group Vice
                                                              President, General
                                                              Counsel and
                                                              Secretary

The foregoing Agreement is
hereby confirmed and accepted
as of the date first above written

To:  MORGAN STANLEY & CO. INTERNATIONAL LIMITED
SALOMON BROTHERS INTERNATIONAL LIMITED
GOLDMAN SACHS INTERNATIONAL
CHASE SECURITIES INC.
BARCLAYS CAPITAL INC.
CREDIT LYONNAIS SA
J.P. MORGAN SECURITIES LTD.
CREDIT SUISSE FIRST BOSTON (EUROPE) LIMITED
KLEINWORT BENSON LIMITED
SOCIETE GENERALE

By:  MORGAN STANLEY & CO. INTERNATIONAL LIMITED

By: /s/ Elizabeth R. Chandler
   -----------------------------
   Name: Elizabeth R. Chandler
   Title: Managing Director

<PAGE>

                                                                         ANNEX A

Each broker-dealer that receives New Securities for its own account pursuant to
the Registered Exchange Offer must acknowledge that it will deliver a prospectus
in connection with any resale of such New Securities. The Letter of Transmittal
states that by so acknowledging and by delivering a prospectus, a broker-dealer
will not be deemed to admit that it is an "underwriter" within the meaning of
the Securities Act. This Prospectus, as it may be amended or supplemented from
time to time, may be used by a broker-dealer in connection with resales of New
Securities received in exchange for Securities where such New Securities were
acquired by such broker-dealer as a result of market-making activities or other
trading activities. The Company has agreed that, starting on the date hereof
(the "Expiration Date") and ending on the close of business on the day that is
180 days following the Expiration Date, it will make this Prospectus available
to any broker-dealer for use in connection with any such resale. See "Plan of
Distribution."
<PAGE>

                                                                        ANNEX B

Each broker-dealer that receives New Securities for its own account in exchange
for Securities, where such Securities were acquired by such broker-dealer as a
result of market-making activities or other trading activities, must
acknowledge that it will deliver a prospectus in connection with any resale of
such New Securities. See "Plan of Distribution."
<PAGE>

                                                                         ANNEX C

                             PLAN OF DISTRIBUTION

     Each broker-dealer that receives New Securities for its own account
pursuant to the Registered Exchange Offer must acknowledge that it will deliver
a prospectus in connection with any resale of such New Securities. The
Prospectus, as it may be amended or supplemented from time to time, may be used
by a broker-dealer in connection with resales of New Securities received in
exchange for Securities where such Securities were acquired as a result of
market-making activities or other trading activities. The Company has agreed
that, starting on the Expiration Date and ending on the close of business on the
day that is 180 days following the Expiration Date, it will make this
Prospectus, as amended or supplemented, available to any broker-dealer for use
in connection with any such resale. In addition, until            , 2000, all
dealers effecting transactions in the Exchange Securities may be required to
deliver a prospectus. */
                      -

     The Company will not receive any proceeds from any sale of New Securities
by broker-dealers. New Securities received by broker-dealers for their own
account pursuant to the Exchange Offer may be sold from time to time in one or
more transactions in the over-the-counter market, in negotiated transactions,
through the writing of options on the New Securities or a combination of such
methods of resale, at market prices prevailing at the time of resale, at prices
related to such prevailing market prices or negotiated prices. Any such resale
may be made directly to purchasers or to or through brokers or dealers who may
receive compensation in the form of commissions or concessions from any such
broker-dealer and/or the purchasers of any such New Securities. Any broker-
dealer that resells New Securities that were received by it for its own account
pursuant to the Registered Exchange Offer and any broker or dealer that
participates in a distribution of such New Securities may be deemed to be an
"underwriter" within the meaning of the Securities Act and any profit of any
such resale of New Securities and any commissions or concessions received by any
such persons may be deemed to be underwriting compensation under the Securities
Act. The Letter of Transmittal states that by acknowledging that it will deliver
and by delivering a prospectus, a broker-dealer will not be deemed to admit that
it is an "underwriter" within the meaning of the Securities Act.

_____________

   */ In addition, the legend required by Item 502(e) of Regulation S-K will
   -
appear on the back cover page of the Exchange Offer Prospectus.
<PAGE>

                                                                               2

     For a period of 180 days after the Expiration Date, the Company will
promptly send additional copies of this Prospectus and any amendment or
supplement to this Prospectus to any broker-dealer that requests such documents
in the Letter of Transmittal. The Company has agreed to pay all expenses
incident to the Exchange Offer (other than the expenses of counsel for the
holders of the Securities) other than commissions or concessions of any brokers
or dealers and will indemnify the holders of the Securities (including any
broker-dealers) against certain liabilities, including liabilities under the
Securities Act.

     [If applicable, add information required by Regulation S-K Items 507 and/or
508.]
<PAGE>

                                                                         ANNEX D

                                    Rider A
                                    -------

     [_]       CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10
               ADDITIONAL COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY
               AMENDMENTS OR SUPPLEMENTS THERETO.

               Name: _______________________________________________________

               Address: ____________________________________________________

                        ____________________________________________________

                                    Rider B
                                    -------

If the undersigned is not a broker-dealer, the undersigned represents that it is
not engaged in, and does not intend to engage in, a distribution of New
Securities. If the undersigned is a broker-dealer that will receive New
Securities for its own account in exchange for Securities that were acquired as
a result of market-making activities or other trading activities, it
acknowledges that it will deliver a prospectus in connection with any resale of
such New Securities; however, by so acknowledging and by delivering a
prospectus, the undersigned will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act.<PAGE>

                                                                     EXHIBIT 4.2

                           CERTIFICATE OF DESIGNATIONS
                                       of
                            SERIES A PREFERRED STOCK
                                       for
                         LAKARO BIOPHARMACEUTICALS, LTD.

          LAKARO BIOPHARMACEUTICALS, LTD., a Delaware corporation (the
"COMPANY"), pursuant to the provisions of Section 151 of the General corporation
Law of the State of Delaware, does hereby make this Certificate of Designations
and does hereby state and certify that pursuant to the authority expressly
vested in the Board of Directors of the Company by the Certificate of
Incorporation of the Company, the Board of Directors duly adopted the following
resolutions, which resolutions remain in full force and effect as of the date
hereof:

          RESOLVED, that, pursuant to Article IV of the Certificate of
Incorporation of the Company, the Board of Directors hereby authorizes the
issuance of, and fixes the designation and preferences and relative,
participating, optional and other special rights, and qualifications,
limitations and restrictions, of a series of Preferred Stock consisting of
170,000 shares to be designated "Series A Preferred Stock" (the "SERIES A
PREFERRED STOCK").

          RESOLVED, that up to 170,000 shares of Series A Preferred Stock may be
issued in one or more tranches.

          RESOLVED, that each of the Series A Preferred Stock shall rank equally
in all respects and shall be subject to the following terms and provisions:

          1.   DIVIDENDS AND DISTRIBUTIONS. The holders of the Series A
Preferred Stock shall be entitled to receive dividends and distributions of
assets, securities, cash or other property, other than dividends of Common Stock
which are covered in Section 4(c) below (on the basis of the maximum amount of
Common Shares that such Series A Preferred Stock could be converted into
immediately prior to the close of business on the record date for such dividend
or distribution), at the same time and in the same manner as the holders of
Common Stock if, as and when a dividend or distribution is declared by the Board
of Directors of the Company with respect to shares of Common Stock.

          2.   LIQUIDATION PREFERENCE. In the event of any liquidation,
dissolution or winding up of the Company, either voluntary or involuntary, the
holders of the Series A Preferred Stock shall be entitled to receive, prior and
in preference to any distribution of any assets of the Company to the holders of
any other class or series of equity securities, the amount of $100 per share of
Series A Preferred Stock, plus all declared but unpaid dividends (the
"LIQUIDATION PREFERENCE"). The applicable Liquidation Preference shall be paid
to all holders of Series A Preferred Stock within 3 days of the Company's
receipt of a written notice requiring such payment.
<PAGE>

         3.    CONVERSION.

               (a)  Optional Conversion. Each holder of the Series A Preferred
Stock shall have the right at any time after the date that is twelve (12) months
from the date of issuance of the Series A Preferred Stock, and from time to time
thereafter, at the option of such holder, to convert any or all of its Series A
Preferred Stock into fully paid, validly issued and nonassessable shares
("COMMON SHARES") of common stock, par value $0.001 of the Company ("COMMON
STOCK"), free and clear of any liens, claims or encumbrances. The initial
conversion price per share of Common Stock shall be equal to $2.91 (the
"CONVERSION PRICE") and shall be subject to adjustment as provided herein. The
rate at which each share Series A Preferred Stock is convertible at any time
into Common Stock (the "CONVERSION RATE") shall be determined by dividing the
then existing Conversion Price into $100.00.Except in the case where a holder is
converting all of its Series A Preferred Stock, any conversion of Series A
Preferred Stock shall be in an amount not less than 300 Series A Preferred
Stock.

               (b)  Mechanics of Optional Conversion. To convert Series A
Preferred Stock into Common Shares, the holder shall give written notice
("OPTIONAL CONVERSION NOTICE") to the Company in the form of Exhibit A hereto
(which Optional Conversion Notice may be given by facsimile transmission)
stating that such holder elects to convert the same and shall state therein the
number of Series A Preferred Stock to be converted and the name or names in
which such holder wishes the certificate or certificates for Common Shares to be
issued (the date of such Optional Conversion Notice shall be referred to herein
as the "CONVERSION DATE"). As soon as reasonably possible after delivery of the
Optional Conversion Notice, such holder shall surrender the certificate or
certificates representing the shares being converted, duly endorsed (or a lost
share affidavit), at the office of the Company or, if identified in writing to
all the holders by the Company, at the offices of any transfer agent for such
shares. The Company shall, immediately upon receipt of such Optional Conversion
Notice, issue and deliver to or upon the order of such holder, against delivery
of the certificates representing the shares which have been converted (or a lost
share affidavit with, if necessary, a reasonable indemnity), a certificate or
certificates for the number of Common Shares to which such holder shall be
entitled (with the number of and denomination of such certificates designated by
such holder), and the Company shall immediately issue and deliver to such holder
a certificate or certificates for the number of Series A Preferred Stock which
such holder has not yet elected to convert hereunder but which are evidenced in
part by the certificate(s) delivered to the Company in connection with such
Optional Conversion Notice. The Company shall effect such issuance of Common
Shares (and certificates for unconverted Preferred Stock) within three (3)
Trading Days of the Conversion Date and shall transmit the certificates by
messenger or overnight delivery service to reach the address designated by such
holder within three (3) Trading Days after the receipt of such Optional
Conversion Notice. In lieu of delivering physical certificates representing the
Common Shares issuable upon conversion of Series A Preferred Stock, provided the
Company's transfer agent is participating in the Depository Trust Company
("DTC") Fast Automated Securities Transfer ("FAST") program, upon request of the
holder, the Company shall use its best efforts to cause its transfer agent to
electronically transmit the Common Shares issuable upon conversion or exercise

                                        2
<PAGE>

to the holder, by crediting the account of holder's prime broker with DTC
through its Deposit Withdrawal Agent Commission ("DWAC") system. The time
periods for delivery described above shall apply to the electronic transmittals
through the DWAC system. The parties agree to coordinate with DTC to accomplish
this objective. The conversion pursuant to this Section 4(b) shall be deemed to
have been made immediately prior to the close of business on the Conversion
Date. The person or persons entitled to receive the Common Shares issuable upon
such conversion shall be treated for all purposes as the record holder or
holders of such Common Shares at the close of business on the Conversion Date.

          The term "TRADING DAY" means a day on which there is trading on the
New York Stock Exchange or any other nationally recognized market or exchange.

               (c)  Adjustment to Conversion Rate for Stock Splits and Dividends

               (i)    If, at any time while the Series A Preferred Stock are
outstanding, the Company (A) shall pay a stock dividend or otherwise make a
distribution or distributions on any equity securities (including investments or
securities convertible into or exchangeable for such equity securities) in
shares of Common Stock, (B) subdivide outstanding Common Shares into a larger
number of shares, (C) combine outstanding Common Stock into a smaller number of
shares, then the number of Series A Preferred Stock issued and outstanding shall
be multiplied by a fraction, the numerator of which shall be the number of
shares of Common Stock outstanding before such event and the denominator of
which shall be the number of shares of Common Stock outstanding after such
event. Any adjustment made pursuant to this Section 3(c)(i) shall become
effective immediately after the record date for the determination of
shareholders entitled to receive such dividend or distribution and shall become
effective immediately after the effective date in the case of a subdivision or
combination.

               (ii)   Whenever the number of Series A Preferred Stock is
adjusted pursuant to Section 3(c)(i), the Company shall promptly mail to each
holder of the Series A Preferred Stock a notice setting forth a brief statement
of the facts requiring such adjustment.

               (d)  Reorganization, Merger or Going Private. In case of any
reorganization or any reclassification of the capital stock of the Company or
any consolidation or merger of the Company with or into any other company or
companies or a sale or transfer of all or substantially all of the assets of the
Company to any other person, pursuant to which the Common Stock is converted
into other securities, cash or property (each, a "BUSINESS COMBINATION"),
holders of Series A Preferred Stock shall have the right thereafter, in addition
to any other rights they may have hereunder, to convert their Series A Preferred
Stock, in whole or in part, into the shares of stock and other securities, cash
and/or property receivable upon or deemed to be held by holders of Common Stock
following such Business Combination, and such holders shall be entitled upon
such event to receive such amount of securities, cash or property as the shares
of the Common Stock of the Company into which the Series A Preferred Stock could
have been converted immediately prior to such Business Combination would have
been entitled, subject to such further applicable adjustments as set forth in
this Section 4. In addition to the foregoing, if the

                                       3
<PAGE>

holders of shares of Common Stock receive any non-publicly traded securities or
other property or cash as part or all of the consideration for such
reorganization, consolidation, merger or sale, then such distribution shall be
treated to the extent thereof as a distribution under Section 1 above and such
Section shall also apply to such distribution.

               (d)  Notice of Record Date. In the event of any taking by the
Company of a record date of the holders of any class of securities for the
purpose of determining the holders thereof who are entitled to receive any
dividend or other distribution, any security or right convertible into or
entitling the holder thereof to receive additional Common Shares, or any right
to subscribe for, purchase or otherwise acquire any shares of stock of any class
or any other securities or property, or to receive any other right, the Company
shall deliver to each holder of Series A Preferred Stock at least 20 days prior
to the date specified therein, a notice specifying the date on which any such
record is to be taken for the purpose of such dividend, distribution, security
or right and the amount and character of such dividend, distribution, security
or right.

               (e)  Issue Taxes. The Company shall pay any and all issue and
other taxes, excluding any income, franchise or similar taxes, that may be
payable in respect of any issue or delivery of Common Shares on conversion of
Series A Preferred Stock pursuant hereto.

               (f)  Reservation of Stock Issuable Upon Conversion. The Company
shall at all times reserve and keep available out of its authorized but unissued
Common Stock, solely for the purposes of effecting the conversion of the Series
A Preferred Stock, 100% of the maximum number of shares of Common Stock into
which all issued and outstanding Series A Preferred Stock may be converted.

               (g)  Mandatory Conversion. Each share of Series A Preferred Stock
shall be automatically converted into shares of Common Stock at the then
applicable Conversion Rate immediately prior to the closing of the first
underwritten public offering of Common Stock pursuant to an effective
registration statement under the Securities Act of 1933, as amended (the
"SECURITIES ACT") for aggregate gross proceeds to the Company in excess of
$10,000,000 (the "QUALIFIED IPO"). Such mandatory conversion shall be subject to
and governed by all the provisions relating to permissive conversion of the
Series A Preferred Stock contained herein.

                                        4
<PAGE>

          5.   VOTING RIGHTS. Each holder of Series A Preferred Stock shall be
entitled to the number of votes equal to the number of shares of Common Stock
into which its Series A Preferred Stock could be converted on the record date
for the vote or written consent of shareholders and shall have voting rights
equal to the voting rights of the holders of Common Stock. Each holder of Series
A Preferred Stock shall be entitled to notice of any shareholders' meeting in
accordance with the by-laws of the Company and shall vote with holders of the
Common Stock upon all matters submitted to a vote of shareholders, except those
matters required by law to be submitted to a class or series vote.

          6.   NOTICES. (a) The Company shall distribute to the holders of
Series A Preferred Stock copies of all notices, materials, annual and quarterly
reports, proxy statements, information statements and any other documents
distributed generally to the holders of shares of Common Stock of the Company,
at such times and by such method as such documents are distributed to such
holders of such Common Stock.

               (b)  Any notice or other communication given hereunder shall be
deemed sufficient if in writing and sent by registered or certified mail, return
receipt requested, or delivered by hand against written receipt therefor,
addressed to: the Company at 216 Jaffa Road Sha'arei Ha'ir, Jerusalem, Israel
94383, Attn: General Counsel, and to the holder at such holder's address as
appearing on the books of the Company. Notices shall be deemed to have been
given or delivered on the date of mailing, except notices of change of address,
which shall be deemed to have been given or delivered when received.

          7.   REPLACEMENT CERTIFICATES. The certificate(s) representing the
Series A Preferred Stock held by any holder of Series A Preferred Stock may be
exchanged by such holder at any time and from time to time for certificates with
different denominations representing an equal aggregate number of Series A
Preferred Stock, as reasonably requested by such holder, upon surrendering the
same. No service charge will be made for such registration or transfer or
exchange.

          8.   NO FRACTIONAL SHARES. No fractional shares or scrip representing
fractional shares of Common Stock shall be issued upon conversion of Series A
Preferred Stock. If more than on certificate evidencing shares of Series A
Preferred Stock shall be surrendered for conversion at one time by the same
holder, the number of full shares issuable upon conversion thereof shall be
computed on the basis of the aggregate number of shares of Series A Preferred
Stock so surrendered. Instead of any fractional share of Common Stock which
would otherwise be issuable upon conversion of any shares of Series A Preferred
Stock, the Company shall pay a cash adjustment in respect of such fractional
interest in an amount equal to the same fraction of the Conversion Price as of
the close of business on the day of conversion.

                                        5
<PAGE>

          9.   NO REISSUANCE. No Series A Preferred Stock acquired by the
Company by reason of redemption, purchase, conversion or otherwise shall be
reissued.

          10.  SEVERABILITY OF PROVISIONS. Whenever possible, each provision
hereof shall be interpreted in a manner as to be effective and valid under
applicable law, but if any provision hereof is held to be prohibited by or
invalid under applicable law, such provision shall be ineffective only to the
extent of such prohibition or invalidity, without invalidating or otherwise
adversely affecting the remaining provisions hereof. If a court of competent
jurisdiction should determine that a provision hereof would be valid or
enforceable if a period of time were extended or shortened or a particular
percentage were increased or decreased, then such court may make such change as
shall be necessary to render the provision in question effective and valid under
applicable law.

Signed on December 6, 1999

By: /s/ BENJAMIN CORN
    -------------------------
    Name: Benjamin Corn
    Title: President

                                       6
<PAGE>

                                    EXHIBIT A

                            (To be Executed by Holder
                      in order to Convert Preferred Stock)

                           OPTIONAL CONVERSION NOTICE
                                       FOR
                       SERIES A CONVERTIBLE PREFERRED STOCK

         The undersigned, as a holder ("Holder") of shares of Series A
Convertible Preferred Stock ("Preferred Stock") of LAKARO BIOPHARMACEUTICALS,
INC. (the "Company"), hereby irrevocably elects to convert _________ shares of
Preferred Stock for shares ("Common Shares") of common stock, par value $0.001
per share (the "Common Stock"), of the Company according to the terms and
conditions of the Certificate of Designations for the Preferred Stock as of the
date written below. The undersigned hereby requests that share certificates for
the Common Stock to be issued to the undersigned pursuant to this Optional
Conversion Notice be issued in the name of, and delivered to, the undersigned or
its designee as indicated below. No fee will be charged to the Holder of Series
A Preferred Stock for any conversion. Capitalized terms used herein and not
otherwise defined shall have the meanings ascribed thereto in the Certificate of
Designations.

Conversion Date: ______________________

Conversion Information:                    NAME OF HOLDER:

                                           By: _____________________________
                                                  Print Name:
                                                  Print Title:

                                           Print Address of Holder:

                                           _________________________________

                                           _________________________________

                                           Issue Common Stock to: __________

                                           at ______________________________

                                           _________________________________

         If Common Stock is to be issued to a person other than Holder, Holder's
         signature must be guaranteed below:

         SIGNATURE GUARANTEED BY:

         ________________________________

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