Document:

EXHIBIT 10.39

                         SECOND AMENDED AND RESTATED
                            OPERATING AGREEMENT
                                    OF
                           SLINGSHOT NETWORKS, LLC

     This SECOND AMENDED AND RESTATED  OPERATING  AGREEMENT (the "Agreement") is
entered  into as of June 21,  2000,  between  Anschutz  Digital  Media,  Inc., a
Colorado corporation ("ADMI"), and U.S. Telesource, Inc., a Delaware corporation
("UST"),  both of which are referred to as the "Members" and  individually  as a
"Member."

     A limited liability company was formed in accordance with the provisions of
the  Delaware  Limited  Liability  Company  Act (the  "Act")  under  the name of
Slingshot  Networks,  LLC (the "Company") pursuant to a Certificate of Formation
filed  July 14,  1999,  with the  Delaware  Secretary  of  State.  An  Operating
Agreement of the Company was entered into as of that same date, under which ADMI
was the sole member.  Pursuant to a Subscription  Agreement by and between Qwest
Communications  International Inc., a Delaware  corporation  ("Qwest"),  and the
Company  dated as of October  22,  1999 (the  "Subscription  Agreement"),  Qwest
agreed to purchase an equity interest in the Company. Additionally,  ADMI agreed
under a  Contribution  Agreement  dated as of October 22, 1999 by and among ADMI
and the Company (the "Contribution Agreement") to contribute certain assets (the
"ADMI Contributed  Assets") to the Company. In conjunction with the Subscription
Agreement  and the  Contribution  Agreement,  on October 22, 1999 ADMI and Qwest
entered into an Amended and Restated Operating  Agreement.  Subsequently,  Qwest
transferred  its  interest in the  Company to its wholly  owned  subsidiary  UST
(references to UST herein shall be deemed to include Qwest as its predecessor in
interest).  On June __, 2000 ADMI and UST entered into a Unit Purchase Agreement
(the "Purchase  Agreement")  pursuant to which UST purchased a portion of ADMI's
equity  interest in the Company in exchange for cash and a promissory  note (the
"Purchase Note"). In light of the foregoing, the Members now desire to amend and
restate  the  Amended  and   Restated   Operating   Agreement  of  the  Company.
Accordingly,  from and after the date hereof, the affairs of the Company will be
governed  by  this  Second  Amended  and  Restated   Operating   Agreement.   In
consideration of the foregoing, and of the mutual promises contained herein, the
Members agree as follows:

                               ARTICLE 1

                      THE LIMITED LIABILITY COMPANY

     1.1  Name.  The name of the limited  liability  company  shall be Slingshot
          Networks, LLC.

     1.2  Certificate  of Formation.  A Certificate  of Formation  that complies
          with the  requirements  of the Act has been  properly  filed  with the
          Delaware Secretary of State. In the future, the Managers shall execute
          such further  documents  (including  amendments to the  Certificate of
          Formation)  and take such further  action as shall be  appropriate  or
          necessary to comply with the requirements of law for the formation and
          operation  of a limited  liability  company in all states and counties
          where the Company elects to carry on its business.

     1.3  Business. The business of the Company shall be (a) to provide advanced
          digital  production,   post-production  and  transmission  facilities,
          digital media storage and distribution services,  telephony-based data
          storage and enhanced services,  access and routing services; (b) to do
          any and all other things  necessary,  desirable or  incidental  to the
          foregoing  purposes;  and (c) to engage in such other legal and lawful
          business  activities as the Management  Committee may deem  desirable.
          The Company may sell or otherwise  dispose of all or substantially all
          of its assets and any such sale or disposition  shall be considered to
          be within the scope of the Company's business.

     1.4  Registered  Office;  Agent. The registered office of the Company shall
          be at 950 Seventeenth Street,  Suite 2050, Denver,  Colorado 80202, or
          such other place in  Colorado  as may be  selected  by the  Management
          Committee.  The  Company's  registered  agent at such address shall be
          Brad Hamilton.

                                       ARTICLE 2

                                      DEFINITIONS

     2.1  Cash Flow.  "Cash Flow" shall mean the excess of all cash  receipts of
          the Company over all cash disbursements of the Company.

     2.2  Code. "Code" shall mean the Internal Revenue Code of 1986, as amended,
          or any successor statute.

     2.3  Manager. "Manager" is defined in Section 7.1(a).

     2.4  Profit or Loss.  "Profit"  or "Loss"  shall mean the profit or loss of
          the  Company  as  determined  under the  capital  accounting  rules of
          Treasury   Regulation  Section   1.704-1(b)(2)(iv)   for  purposes  of
          adjusting  the  capital  accounts of the  Members  including,  without
          limitation,  the  provisions of  paragraphs  (b), (f) and (g) of those
          regulations  relating to the compu-  tation of items of income,  gain,
          deduction and loss.

     2.5  Sharing Ratio. "Sharing Ratio" shall mean the percentage  representing
          the  ratio  that the  number of Units  owned by a Member  bears to the
          aggregate  number  of  Units  owned  by all of the  Members.  Upon the
          issuance  of  additional   Units  or  the   transfer,   repurchase  or
          cancellation  of any  outstanding  Units,  the  Sharing  Ratios of the
          Members  shall  be  recalculated  as of the  date  of  such  issuance,
          transfer,  repurchase or cancellation.  The recalculated Sharing Ratio
          of each Member shall be the per- centage  representing  the ratio that
          the number of Units owned by the Member bears to the aggregate  number
          of Units  owned  by all of the  Members  after  giving  effect  to the
          issuance, trans- fer, repurchase or cancellation.

     2.6  Treasury  Regulations.  "Treasury  Regulations" shall mean regulations
          issued by the  Department of Treasury under the Code. Any reference to
          a specific  section or sections of the Treasury  Regulations  shall be
          deemed to include a reference to any corresponding provision of future
          regulations under the Code.

     2.7  Units.  "Unit"  shall  mean an equity  interest  in the  Company.  The
          Company shall have two classes of Units:  Class A and Class B. The two
          classes of Units shall be identical  in all respects  except for their
          respective Voting Interests.  The number of Units owned by each Member
          shall be determined  in  connection  with the issuance of a membership
          interest in the Company in exchange for the capital  contribution made
          by such  Member.  Initially  the  Units  shall not be  represented  by
          certificates. If the Management Committee determines that it is in the
          interest  of the  Company  to issue  certificates  represent-  ing the
          Units, certificates shall be issued and the Units shall be represented
          by such  certificates.  The Company is authorized to issue 200,000,000
          Class A Units and 100,000,000 Class B Units.

     2.8  Voting  Interest.  (a) With  respect  to the  Class A  Units,  "Voting
          Interest"  shall  mean that  number of Class A Units held by a Member,
          and (b) with  respect to the Class B Units,  "Voting  Interest"  shall
          mean that number of Class B Units held by a Member divided by 10.

                                    ARTICLE 3

                                CAPITAL CONTRIBUTIONS

     3.1  Initial Capital Contributions.

          (a)  In accordance with the terms of the Contribution Agreement,  ADMI
               contributed  to the Company all of its right,  title and interest
               in and to the  ADMI  Contributed  Assets.  As a  result  of  such
               contribution,  ADMI was initially credited with a capital account
               equal to $84,816,696, and received 84,816,696 Class A Units.

          (b)  In accordance with the terms of the Subscription  Agreement,  UST
               contributed  to the  Company,  a  promissory  note (the  "Capital
               Note") in the amount of  $84,816,696,  and such  amount  shall be
               credited to UST's  capital  account  when and as the  payments of
               principal  are made on the  Capital  Note.  As a result  of UST's
               agreement  to  make  such   contribution   and  pursuant  to  the
               Subscription  Agreement,  UST was  admitted  as a  Member  of the
               Company, and received 84,816,696 Class A Units.

          (c)  Since  October 22,  1999,  each of UST and ADMI have made contri-
               butions of $11,578,518.50 to their respective capital accounts in
               exchange for  11,578,518  Class A Units.  In accordance  with the
               terms of the Purchase Agreement,  UST acquired 48,197,607 Class A
               Units from ADMI in exchange for cash and the Purchase  Note. As a
               result,  48,197,607  Class A Units were  transferred from ADMI to
               UST.

          (d)  As a result of the transactions  described above, the Members own
               the number and classes of Units and have capital account balances
               attributable to the Units as set forth below:
<TABLE>
<CAPTION>
<S>                             <C>                       <C>                      <C>

------------------------------- ------------------------- ------------------------ -----------------------------------

                                     Class A Units             Class B Units       Capital Account Balance
------------------------------- ------------------------- ------------------------ -----------------------------------
ADMI                                   48,197,607                   -0-                        $48,197,607
------------------------------- ------------------------- ------------------------ -----------------------------------
UST                                   144,592,821                   -0-                        $59,776,125
------------------------------- ------------------------- ------------------------ -----------------------------------
</TABLE>

          (e)  Based on the above,  the  Sharing  Ratio of ADMI is 25%,  and the
               Sharing Ratio of UST is 75%.

     3.2  Additional Capital Contributions.

          (a)  If, from time to time in the  reasonable  judgment of the Manage-
               ment Committee,  the Company requires  additional capital for any
               purpose,  the Management  Committee is hereby authorized to cause
               the Company to issue  additional  Units,  on terms and conditions
               and with  repayment  priorities  as  approved  by the  Management
               Committee.  Notwithstanding  the  foregoing,  until a third party
               becomes a Member,  Units  shall not be issued at a price per Unit
               that is less than $1.00.

          (b)  If the Company desires to issue  additional Units pursuant to (a)
               above,  the  Company  hereby  grants to the  Members the right of
               first refusal to purchase a pro rata share (equaling the Member's
               respective  Sharing Ratio on the day before such additional Units
               are to be  issued)  of the  additional  Units  which the  Company
               proposes  to  issue.  If  the  Company  proposes  to  issue  such
               additional Units, it shall give the Members written notice of its
               intention,  describing the price and terms upon which the Company
               proposes to issue the Units.  Each Member shall have 15 days from
               the date such  notice is sent by the Company to agree to purchase
               the portion of the  additional  Units issued which it is entitled
               to purchase  for the price and upon the terms so specified in the
               notice.  Such notice  shall be in writing  and shall  specify the
               quantity of additional Units to be purchased. If any Member fails
               to exercise the right of first refusal  within the 15-day period,
               the  Company  shall  have the right  thereafter  to sell or issue
               those  additional  Units  upon  terms  no more  favorable  to the
               purchasers  of  the  additional   Units  than  specified  in  the
               Company's notice to Members.

     3.3  Return  of  Capital  Contributions.  Capital  contributions  shall  be
          expended in furtherance of the business of the Company.  All costs and
          expenses  of the  Company  shall be paid from its funds.  No  interest
          shall be paid on  capital  contributions.  No  Manager  shall have any
          personal liability for the repayment of any capital  contribution to a
          Member.

     3.4  Loans.

          (a)  The Company may borrow  additional  capital from any source,  in-
               cluding any Member.  No Member  shall be obligated to make a loan
               to the Company.

          (b)  If from time to time in the  reasonable  judgment  of the Manage-
               ment Committee the Company  requires  additional  capital for any
               purpose  related to the business of the Company,  the  Management
               Committee  is  authorized  to cause the  Company  to borrow  such
               capital,  on terms and  conditions as approved by the  Management
               Committee.  If the  Management  Committee  decides to borrow such
               capital from a Member (the "Loan  Amount"),  each Member shall be
               given the  opportunity,  but shall not be obligated,  to loan its
               share of the Loan Amount to the Company.  A Member's share of the
               Loan Amount shall be the Loan Amount  multiplied  by the Member's
               Sharing  Ratio.  The loans  shall be made  within  10 days  after
               request by the Management Committee to the Members.  Such request
               shall be in  writing  and shall  specify  the  amount of the Loan
               Amount.  If a Member  does not loan its share of the Loan  Amount
               (the "Shortfall Amount") and the other Member does loan its share
               (a "Participating  Member"),  the Participating Member shall have
               the right,  exercisable  within 10 days after notice, to loan the
               Company  the  Shortfall  Amount.  The loans to the Company by the
               Participating Members shall be unsecured, evidenced by promissory
               Note of the Company,  shall accrue  interest at a rate determined
               by the Management Committee, shall be payable on a pro rata basis
               solely from Cash Flow prior to any distributions to Members,  and
               shall not contain any default interest or penalty provisions.

                                          ARTICLE 4

                                        DISTRIBUTIONS

     4.1  Nonliquidating  Distributions.  Cash Flow shall be  distributed to the
          Members in amounts  deemed  appropriate  by the  Management  Committee
          after establishing appropriate reserves. Except as provided in Section
          4.2, all distributions of Cash Flow shall be made among the Members in
          accordance with their respective Sharing Ratios.

     4.2  Liquidating Distributions. All distributions made in connec- tion with
          the sale or exchange of all or substantially all of the Company assets
          and all  distributions  made in connection with the liquidation of the
          Company shall be made to the Members in accordance with their relative
          capital account balances at the time of distribution.

                                        ARTICLE 5

                               ALLOCATION OF PROFIT AND LOSS

     5.1  Determination of Profit and Loss. Profit or Loss shall be de- termined
          on an annual basis and for such other periods as may be required.

     5.2  Loss  Allocation.  Except as  provided in Section  5.4,  Loss shall be
          allocated among the Members in accordance with their relative  Sharing
          Ratios.

     5.3  Profit Allocation.

          (a)  Except as provided  in Section  5.3(b) and  Section  5.4,  Profit
               shall be  allocated  among the Members in  accordance  with their
               relative Sharing Ratios.

          (b)  Any Profit with respect to the sale,  exchange or other  disposi-
               tion of all or  substantially  all of the Company  assets or with
               respect to the  liquidation  of the  Company  shall be  allocated
               among the  Members so that their  capital  account  balances  are
               proportionate to their Sharing Ratios.

          (c)  For  purposes  of Section  5.3(b),  the  capital  accounts of the
               Members  shall  be   determined   (i)  before  giving  effect  to
               distributions  under Section 4.2; (ii) after allocating all other
               items  of  Profit   and  Loss;   and  (iii)   after   making  all
               distributions under Section 4.1.

     5.4  Regulatory Allocations and Curative Provision.

          (a)  The "qualified income offset"  provisions of Treasury  Regulation
               Section  1.704-1(b)(2)(ii)(d)  are  incorporated  herein  by ref-
               erence  and shall  apply to adjust the  allocation  of Profit and
               Loss  otherwise  provided  for under  Sections 5.2 and 5.3 to the
               extent provided in that regulation.

          (b)  The "minimum  gain"  provisions  of Treasury  Regulation  Section
               1.704-2 are  incorporated  herein by reference and shall apply to
               adjust the allocation of Profit and Loss  otherwise  provided for
               under  Sections  5.2  and  5.3 to the  extent  provided  in  that
               regulation.

          (c)  Notwithstanding  the  provisions  of Section  5.2,  if during any
               fiscal  year  of  the  Company  the  allocation  of any  loss  or
               deduction,  net of any income or gain, to a Member would cause or
               increase a negative  balance in a Member's  capital account as of
               the end of that  fiscal  year,  only the  amount  of such loss or
               deduction  that reduces the balance to zero shall be allocated to
               the Member and the  remaining  amount  shall be  allocated to the
               other  Member.  For the  purpose  of the  preceding  sentence,  a
               capital account shall be reduced by the adjustments,  allocations
               and  distributions  described  in  Treasury  Regulations  Section
               1.704-1(b)(2)(d)(4), (5) and (6), and increased by the amount, if
               any,  that the Member is  obligated  to  restore to the  Member's
               capital account within the meaning of Treasury Regulation Section
               1.704-1(b)(2)(ii)(c)  as of that time or is deemed  obligated  to
               restore  under  Treasury  Regulation  Section   1.704-2(g)(1)  or
               Section 1.704-2(i)(5).

          (d)  All  allocations  pursuant to the  foregoing  provisions  of this
               Section 5.4 (the  "Regulatory  Allocations")  shall be taken into
               account in computing  allocations  of other items under  Sections
               5.2 and 5.3, including,  if necessary,  allocations in subsequent
               fiscal years,  so that the net amounts  reflected in the Members'
               capital accounts and the character for income tax purposes of the
               taxable income recognized (e.g., as capital or ordinary) will, to
               the extent possible, be the same as if no Regulatory  Allocations
               had been given effect.

                                         ARTICLE 6

                             ALLOCATION OF TAXABLE INCOME AND LOSS

     6.1  In General.

          (a)  Except as provided  in Section  6.2,  each item of income,  gain,
               loss and  deduction  of the Company  for federal  income tax pur-
               poses shall be allocated  among the Members in the same manner as
               such item is allocated for capital account purposes under Article
               5.

          (b)  To the  extent of any  recapture  income (as  defined  below) re-
               sulting from the sale or other taxable  disposition  of a Company
               asset, the amount of any gain from such disposition  allocated to
               (or  recognized  by) a Member (or its  successor in interest) for
               federal  income  tax  purposes  shall be  deemed  to  consist  of
               recapture  income to the extent  such  Member  (or such  Member's
               predecessor  in interest)  has been  allocated or has claimed any
               deduction  directly or indirectly giving rise to the treatment of
               such  gain as  recapture  income.  For this  pu- pose  "recapture
               income"  shall  mean  any gain  recognized  by the  Company  (but
               computed  without regard to any adjustment re- quired by sections
               734 and 743 of the Code) upon the  disposi-  tion of any property
               or asset of the Company that does not constitute capital gain for
               federal  income tax  purposes  because such gain  represents  the
               recapture  of  deductions  previously  taken with respect to such
               property or assets.

     6.2  Allocation of Section  704(c) Items.  The Members  recognize that with
          respect to  property  contributed  to the  Company by a Membe and with
          respect to property  revalued in accordance with Trea- sury Regulation
          Section  1.704-1(b)(2)(iv)(f),  there will be a difference between the
          agreed  values or  "carrying  values" of such  property at the time of
          contribution  or  revaluation  and  the  adjusted  tax  basis  of such
          property at that time. All items of tax  depreciation,  cost recovery,
          amortization,  amount  realized  and gain or loss with respect to such
          assets shall be  allocated  among the Members to take into account the
          book-tax  disparities  in accordance  with the  provisions of sections
          704(b) and 704(c) of the Code and the Treasury Regulations under those
          sections.

     6.3  Integration  With  Section 754  Election.  All items of income,  gain,
          loss,  deduction  and credit  recognized  by the  Company  for federal
          income tax purposes and  allocated to the Members in  accordance  with
          the provisions  hereof and all basis  allocations to the Members shall
          be determined  without regard to any election under section 754 of the
          Code  that  may  be  made  by the  Company;  provided,  however,  such
          allocations,  once made, shall be adjusted as necessary or appropriate
          to take into account the adjustments permitted by sections 734 and 743
          of the Code.

                                       ARTICLE 7

                                       MANAGEMENT

     7.1  Management Committee.

          (a)  Management  of  the  Company  shall  be  vested  in a  management
               committee (the  "Management  Committee").  Until such time as the
               Purchase  Note is paid in  full  by UST in  accordance  with  its
               terms,  the  Management  Committee  shall  consist of six members
               (each, a "Manager"), three of whom shall be appointed by ADMI and
               three  of  whom  shall  be  appointed  by  UST.   Upon  the  full
               satisfaction  of the Purchase Note in accordance  with its terms,
               the Management Committee shall consist of nine Managers, three of
               whom shall be appointed by ADMI,  four of whom shall be appointed
               by UST,  one of  whom  shall  be  appointed  by  ADMI  and UST as
               mutually agreed upon and one of whom shall be the Chief Executive
               Officer of the  Company.  Subject to the  limitations  of Section
               8.9, the Management  Committee shall have the exclusive power and
               authority to conduct the business of the Company.  In  conducting
               the business of the Company,  the Management Committee shall have
               all rights,  duties and powers  conferred  by the Act,  except as
               limited  hereby.  The  Management  Committee is hereby  expressly
               authorized  on behalf of the Company to make all de- cisions with
               respect  to the  Company's  business  and  to  take  all  actions
               necessary to carry out such decisions. No actions shall be taken,
               nor any decisions  made, by any Manager or officer of the Company
               without  the  prior  approval  of,  or  pursuant  to  an  express
               delegation of authority by, the Management Committee.  Subject to
               the limitations of Section 8.9 and clauses (b) and (c) below, the
               act of the  majority of the members of the  Management  Committee
               shall be the act of the Management Committee. Notwithstanding the
               foregoing,  all documents  executed on behalf of the Company need
               only be signed by a Manager or by an officer of the  Company  who
               has been given the power and authority to do so by the Management
               Committee.

          (b)  The  Management   Committee  shall  have  the  power  to  appoint
               individuals  to  serve  as the  Chief  Executive  Officer,  Chief
               Financial Officer and Chief Operating Officer of the Company.  In
               addition,  the  Management  Committee  shall  have  the  right to
               delegate  all or portions of its  management  authority to one or
               more  officers of the Company.  Any officer may be removed or its
               authority  withdrawn  at any  time by the  Management  Committee.
               Notwithstanding  any other provision of this Operating  Agreement
               to the contrary,  until such time as the Purchase Note is paid in
               full by UST in accordance with its terms (i) no individual may be
               appointed  or  terminated  as  Chief  Executive  Officer,   Chief
               Financial  Officer  or Chief  Operating  Officer  of the  Company
               without the prior approval of the Managers appointed by ADMI (the
               "ADMI Managers"),  and (ii) all determinations as to compensation
               and  benefits  to be  paid  or  granted  to the  Chief  Executive
               Officer, Chief Financial Officer or Chief Operating Officer shall
               require the approval of the ADMI Managers.

          (c)  Until  such time as the  Purchase  Note is paid in full by UST in
               accordance with its terms, without the prior approval of the ADMI
               Managers,  the Company may not directly or  indirectly  through a
               subsidiary or other controlled entity (i) incur  Indebtedness (as
               defined below) for an amount  individually or in the aggregate in
               excess of $10 million,  (ii) issue equity interests or securities
               for  consideration  individually or in the aggregate in excess of
               $10 million,  (iii) make any single capital expenditure in excess
               of $2 million,  (iv) acquire or dispose of assets with a value in
               excess of $2 million in any single  transaction,  (v)  approve or
               enact any  annual  budget of the  Company or (vi) amend or repeal
               any material provision of the Company's Operating Agreement.  For
               purposes  of this  Agree-  ment,  "Indebtedness"  shall mean with
               respect to any person,  without duplication,  all indebtedness in
               respect of money  borrowed,  including  without  limitation,  all
               obligations   under   capital   leases,   all   synthetic   lease
               obligations,  the  deferred  purchase  price of any  property  or
               services,  the aggregate face amount of all surety bonds, letters
               of  credit,  and  bankers'  acceptances,   and  all  payment  and
               reimbursement  obligations  in  respect  thereof  whether  or not
               matured,  evidenced  by a  promissory  note,  bond,  debenture or
               similar  written  obligation for the payment of money  (including
               reimbursement  agreements and conditional  sales or similar title
               retention  agreements),  including all such items incurred by any
               partnership or joint venture as to which such person is liable as
               a general  partner or joint  venturer,  other than trade payables
               and accrued expenses incurred in the ordinary course of business.

     7.2  Management Committee Meetings.

          (a)  The  Management  Committee will hold regular  quarterly  meetings
               without  call or notice at such time as will from time to time be
               fixed by standing resolution of the Management Committee.

          (b)  Special meetings of the Management Committee may be called by any
               two  Managers.  All meetings will be held upon 10 days' notice by
               mail or 72 hours' notice delivered personally or by tel- phone or
               facsimile.  A notice need not specify the purpose of any meeting.
               Notice of a special  meeting need not be given to any Manager who
               signs a waiver of notice or a consent to holding  the  meeting or
               an approval of the minutes  thereof,  whether before or after the
               meeting, or who attends the meeting without protesting,  prior to
               its  commencement,  the lack of notice to such Manager.  All such
               waivers,  consents and  approvals  will be filed with the Company
               records or made a part of the minutes of the meeting.

          (c)  Meetings  of the  Management  Committee  may be held at any place
               within or  without  the State of  Delaware  that has been  desig-
               nated in the  notice of the  meeting  or at such  place as may be
               approved by the Management Committee. Managers may participate in
               a  meeting  through  use  of  conference   telephone  or  similar
               communications  equipment,  so long as all Managers participating
               in such meeting can hear one another.  Participation in a meeting
               in such manner constitutes a presence in person at such meeting.

          7.3  Duties.  The Managers shall carry out their duties in good faith,
               in a manner the Managers  believe to be in the best  interests of
               the Company,  and with such care as an ordinarily  prudent person
               in a like  position  would use  under  similar  circumstances.  A
               Manager who so performs its duties  shall not have any  liability
               by reason of being or having been a Manager of the Company.

          7.4  Time  Devoted to  Business.  The Members and the  Managers  shall
               devote such time to the business of the Company as they, in their
               discretion,  deem necessary for the efficient  carrying on of the
               Company's  business.  The Members and the  Managers  shall at all
               times be free to engage  for their own  account  in any  business
               that competes with any business of the Company.

          7.5  Reliance  by Third  Parties.  No  third  party  dealing  with the
               Company  shall be  required to  ascertain  whether any Manager is
               acting in accordance with the provisions of this  Agreement.  All
               third parties may rely on a document executed by a Manager (or an
               officer duly authorized by the Management  Committee to exe- cute
               such document) as binding the Company. The foregoing pro- visions
               shall not apply to third parties who are  affiliates of a Member,
               the Managers,  or an officer of the Company. A Manager or officer
               acting without  authority  shall be liable to the Members for any
               damages arising out of its unauthorized actions.

          7.6  Resignation.  Any  Manager  may be  removed  at any time  with or
               without  cause by the  Member who  appointed  such  Manager.  Any
               Manager  may resign at any time by giving  written  notice to the
               Members.  Unless  otherwise  specified in the notice,  the resig-
               nation  shall take effect upon  receipt by the  Members,  and the
               acceptance of the  resignation  shall not be necessary to make it
               effective. Upon the resignation,  retirement, death or removal of
               any Manager,  the Member who appointed such Manager will nominate
               and appoint a replacement Manager.

          7.7  Transactions  Between  Company and Managers.  The Members  hereby
               acknowledge that the Company may be required to borrow funds from
               any Manager or such Manager's  affiliates,  from time to time and
               at any time, in connection with the business of the Company. Each
               Manager is hereby  authorized,  without  further  approval by the
               Members,  to execute all documents and take all action  necessary
               to consummate any loans,  secured and/or  unsecured by the assets
               of the Company, to the Company by such Manager or an affiliate of
               such Manager, on terms and conditions that are acceptable to such
               Manager and  consistent  with the  provisions  of Section 3.4. In
               addition,  each Manager is hereby authorized to contract and deal
               with the Company,  or cause any person or entity  affiliated with
               such  Manager to  otherwise  contract  or deal with the  Company,
               provided  such  contracts  and  dealings   either  are  on  terms
               comparable to and competitive with those available to the Company
               from  others   dealing  at  arm's   length  or  are  approved  by
               disinterested  Members having more than 50% of the Sharing Ratios
               of all disinterested Members.

          7.8  Reimbursements.  Each  Manager  and each  officer  shall be reim-
               bursed by the  Company  for any  reasonable  out-of-pocket  costs
               incurred on behalf of the Company and a reasonable charge for the
               cost of general office and administrative  overhead  attributable
               to the performance of their duties to the Company,  together with
               reasonable  interest  that has accrued on such  amounts  from the
               date incurred until paid.

          7.9  Insurance.  The Company shall  maintain for the protection of the
               Company and all of its Members such  insurance as the  Management
               Committee,  in its  sole  discretion,  deems  necessary  for  the
               operations being conducted.

          7.10 Exculpation.  The Management  Committee and any officer appointed
               by the Management Committee shall not be liable to the Company or
               to any Member  for any act or failure to act,  nor for any errors
               of judgment, but only for willful misconduct or gross negligence.
               The Company shall  indemnify and hold harmless each member of the
               Management Committee, each officer and their agents and employees
               against and from any liability  other than such person's  willful
               misconduct or gross negligence. Any such indemnification shall be
               paid only from the assets of the Company, and no Member, Manager,
               officer or third party shall have  recourse  against the personal
               assets of any Member for such indemnification.

          7.11 Informal Action.  Any action required or permitted to be taken by
               the  Management  Committee  may be taken without a meeting if the
               action is evidenced by a written  consent  describing  the action
               taken, signed by each member of the Management Committee.  Action
               taken  under this  section is  effective  when all members of the
               Management Committee have signed the consent,  unless the consent
               specifies a different effective date.

                                         ARTICLE 8

                                          MEMBERS

          8.1  Participation.  A Member, in its capacity as a Member, shall take
               no part in the control,  management,  direction or oper- ation of
               the  affairs of the  Company  and shall have no power to bind the
               Company.

          8.2  Quorum.  A majority of the  outstanding  Voting  Interests,  rep-
               resented in person or by proxy,  shall be necessary to constitute
               a quorum at meetings of the Members.  Each of the Members  hereby
               consents and agrees that one or more Members may participate in a
               meeting  of the  Members  by means  of  conference  telephone  or
               similar communication  equipment by which all persons participat-
               ing in the  meeting  can hear one  another at the same time,  and
               such  participation  shall  constitute  presence in person at the
               meeting.  If a quorum is  present,  the  affirmative  vote of the
               majority of the Voting  Interests  represented at the meeting and
               entitled  to vote on the subject  matter  shall be the act of the
               Members,  unless a greater  number is required by the Act. In the
               absence of a quorum,  those  present  may adjourn the meeting for
               any period, but in no event shall such period exceed 60 days.

          8.3  Informal Action.  Any action required or permitted to be taken at
               a meeting of the  Members  may be taken  without a meeting if the
               action is evidenced by a written  consent  describing  the action
               taken, signed by each Member entitled to vote. Action taken under
               this section is effective when all Members  entitled to vote have
               signed the  consent,  unless the  consent  specifies  a different
               effective date.

          8.4  Meetings. Meetings of the Members for any purpose or purposes may
               be called by the  Management  Committee or by holders of not less
               than 10% of all Voting  Interests.  The place of meeting shall be
               the registered office of the Company.

          8.5  Notice of Meeting. Written notice stating the place, day and hour
               of the meeting of the  Members  and the  purpose or purposes  for
               which the meeting is called, shall be delivered either personally
               or by mail, by or at the direction of the Management Committee or
               other  person  calling  the  meeting,  to each  Member  of record
               entitled to vote at such meeting. If mailed, such notice shall be
               deemed  delivered  as provided  in the Act.  Waiver of notice and
               actions  taken at a meeting shall be effective as provided in the
               Act.

          8.6  Proxies.  At all  meetings of Members,  a Member may vote in per-
               son or by proxy  executed  in writing by the Member or by his dul
               authorized  attorney-in-fact.  Such proxy shall be filed with the
               Management  Committee  before or at the time of the  meeting.  No
               proxy  shall be valid  after  eleven  months from the date of its
               execution, unless otherwise provided in the proxy.

          8.7  Conduct of Meeting.  At each meeting of the  Members,  a Chairman
               for that particular meeting shall be elected.  The Chairman shall
               be the  Member in  attendance  who has  received  the vote of the
               majority of the Voting Interests  represented at the meeting. The
               Chairman  shall  preside  over and  conduct the meeting and shall
               appoint  someone in attendance  to make  accurate  minutes of the
               meeting. Following each meeting, the minutes of the meeting shall
               be sent to the Management Committee and each Member.

          8.8  Tax Matters Member.  UST is hereby  designated as the tax matters
               Member for the Company  pursuant to section  6231(a) of the Code.
               UST is  authorized  to  perform,  on behalf of the Company or any
               Member,  any act that may be necessary  to make this  designation
               effective.

          8.9  Miniority  Protections.  Notwithstanding  any other  provision of
               this Operating Agreement to the contrary, without the approval of
               ADMI or its successor until such time as ADMI (a) holds less than
               10% of the voting  equity of the Company on a fully diluted basis
               or (b) sells or otherwise  transfers to a non-affiliate more than
               50% of its equity  holdings in the  Company as of June 21,  2000,
               the Company may not

               (i)  authorize (w) a liquidation,  dissolution  winding up of the
                    affairs of the Company (or any of its sub- sidiaries), (x) a
                    recapitalization or reorganization of the Company that would
                    be reasonably  likely to have a material  adverse  effect on
                    ADMI's (1) Units, (2) Capital  Account,  (3) relative rights
                    or  obligations  under  this  Agreement  or (4)  status as a
                    Member  generally,  (y) a Change in  Ownership  (as  defined
                    below), or (z) a Funda- mental Change (as defined below);

               (ii) permit any subsidiary to issue or sell, or obligate it- self
                    to issue or sell,  except to the Company or any wholly-owned
                    subsidiary  of  the  Company,  any  capital  stock  of  such
                    subsidiary  in  excess  of  20%  in the  aggr-  gate  of the
                    outstanding  capital  stock  of such  subsidiary  on a fully
                    diluted  basis  as of the  date  hereof  (as the same may be
                    adjusted by any transaction approved by ADMI);

               (iii) permit the Company or any of its subsidiaries to enter into
                    any agreement for the  acquisition  of any business  through
                    purchase of assets, purchase of stock, licensing arrangement
                    or otherwise  involving  consideration  of  $100,000,000  or
                    more;

               (iv) increase  or  decrease  the  outstanding   equity  ownership
                    available in the Company,  or authorize the same, other than
                    additional issuances of equity (or a reduction in the amount
                    of outstanding equity) not to exceed 20% in the aggregate of
                    the  outstanding  equity of the  Company on a fully  diluted
                    basis as of the date  hereof (as the same may be adjusted by
                    any transaction approved by ADMI);

               (v)  authorize  the  issuance  or   restructuring   of  any  debt
                    securities  of the  Company  or any of its  subsidiaries  or
                    otherwise  incur  Indebtedness  directly  or  through a sub-
                    sidiary, including increases to any revolving line of credit
                    maximum limits,  other than (1) purchase money indebtedness,
                    (2)  nonrecourse  indebtedness  on  receiv-  ables  and  (3)
                    unsecured  indebtedness in an aggregate amount not to exceed
                    $75,000,000;

               (vi) authorize  the payment of any  dividends  or  distributions,
                    except as may be  required to allow for the payment of taxes
                    when due  attributable  to a  Member  as the  result  of the
                    allocation  of income in  accordance  with the terms of this
                    Agreement;

               (vii) enter  into  any  transaction  with  an  affiliate with  an
                    aggregate  transaction  value  (based  on goods or  services
                    provided or received or to be provided or received in excess
                    of $25,000,000);

               (viii) increase or decrease the authorized  size of the Company's
                    Management Committee or alter the representative composition
                    thereof;

               (ix) increase  the  equity  interests   available  to  employees,
                    advisors,  management or consultants in excess of 10% in the
                    aggregate  of the  outstanding  equity of the  Company  on a
                    fully  diluted  basis as of the date hereof (as the same may
                    be adjusted by any transaction approved by ADMI); or

               (x)  amend or repeal any  provision  of the  Company's  Operating
                    Agreement that would be reasonably likely to have a material
                    adverse effect on ADMI's (w) Units, (x) Capital Account, (y)
                    relative  rights or obligations  under this Agreement or (z)
                    status as a Member generally.

     For purposes of clauses (i) and (x) of this Section 8.9, any  alteration of
the Company's  Operating  Agreement  that would be reasonably  likely to have an
adverse financial impact to ADMI shall be deemed material.

     For purposes of this Section 8.9: (1) "Change in Ownership" means any sale,
transfer or issuance or series of sales,  transfers  and/or  issuances of equity
interests in the Company by the Company or any holders  thereof which results in
any Person or group of Persons (as the term "group" is used under the Securities
Exchange Act of 1934, as amended), other than the holders of equity interests as
of May, 2000, owning equity interests of the Company possessing the voting power
(under ordinary circumstances) to elect at least 50% of the Company's Management
Committee;  (2) "Fundamental Change" means (A) any sale or transfer of more than
50% of the assets of the Company and its  subsidiaries  on a consolidated  basis
(measured either by book value in accordance with generally accepted  accounting
principles  consistently  applied  or by fair  market  value  determined  in the
reasonable  good faith judgment of the Management  Committee) in any transaction
or series of transactions (other than sales in the ordinary course of business),
and (B) any merger or consolidation to which the Company is a party,  except for
a merger  in  which  the  Company  is the  surviving  entity,  the  terms of the
outstanding  equity interests of all holders thereof are not changed and none of
the  outstanding  equity  interests are exchanged for cash,  securities or other
property,  and after giving effect to such merger,  the holders of the Company's
outstanding  equity  interests  possessing  the  voting  power  (under  ordinary
circumstances)  to  elect  a  majority  of the  Company's  Management  Committee
immediately prior to the merger shall continue to own the Company's  outstanding
equity interests  possessing the voting power (under ordinary  circumstances) to
elect a majority of the Company's  Management  Committee;  (3) "Person" means an
individual, a partnership, a corporation, a limited liability company, a limited
liability partnership,  an association,  a joint stock company, a trust, a joint
venture,  an  unincorporated  organization  and a  governmental  entity  or  any
department, agency or political subdivision thereof; and (4) "subsidiary" means,
with  respect  to any  Person,  any other  Person of which  securities  or other
ownership  interests  having  ordinary  voting  power to elect a majority of the
board of directors or other persons performing similar functions are at the time
directly or indirectly owned by the Person.

     Notwithstanding  any other  provision  of this  Operating  Agreement to the
contrary,  all rights of ADMI or its  successors  under this  Section  8.9 shall
lapse upon the  completion by the Company of an initial  public  offering of its
equity securities in accordance with the rules and regulations of the Securities
Act of 1933, as amended, by means of an effective  registration  statement under
Form S-1 (or any successor form thereto).

                                    ARTICLE 9

                             ACCOUNTING AND REPORTING

          9.1  Books.  The  Management  Committee  shall  maintain  complete and
               accurate  books  of  account  at  the  registered  office  of the
               Company.  The Management  Committee  shall provide any Member any
               information  requested  relating to the  business of the Company.
               During  ordinary  business  hours any  Member  or its  authorized
               representative  shall  have  access  to all  books,  records  and
               materials regarding the Company and its activities.

          9.2  Capital  Accounts.  The  Management  Committee  shall  maintain a
               separate  capital  account for each Member in accordance with the
               Treasury  Regulations  under section  704(b) of the Code and such
               other  accounts as may be  necessary  or desirable to comply with
               the requirements of applicable laws and regulations.

          9.3  Transfers  During Year.  In order to avoid an interim  closing of
               the  Company's  books,  the share of  profits  and  losses  under
               Article 5 of a Member who  transfers  part or all of its interest
               in the  Company  during  the  Company's  accounting  year  may be
               determined  by taking  its pro rata  share of the  amount of such
               profits and losses for the year. The proration  shall be based on
               the  portion of the  Company's  accounting  year that has elapsed
               prior  to the  transfer  or may be  determined  under  any  other
               reasonable method; provided,  however, that any gain or loss from
               the sale of Company assets shall be allocated to the owner of the
               Company  interest  at the time of such sale.  The  balance of the
               profits  and  losses   attributable   to  the  Company   interest
               transferred   shall  be  allocated  to  the  transferee  of  such
               interest.

          9.4  Reports.  The books of account shall be closed promptly after the
               end of each fiscal year. As soon as practicable  thereafter,  the
               Management  Committee  shall  deliver  a  written  report to each
               Member,  which shall  include a statement of  receipts,  expendi-
               tures,  profits  and losses  for the year,  a  statement  of each
               Member's  capital  account and such  additional  statements  with
               respect to the status of the  Company's  assets and the distribu-
               tion of Company  funds as are  necessary  to advise  the  Members
               properly  about their  investment in the Company.  Prior to March
               15th of each year, the Members shall also be provided with a copy
               of the Company  federal  income tax return (Form 1065) to b filed
               for the preceding year.

          9.5  Section 754 Election.  If requested by a Member the Company shall
               make the election provided for under section 754 of the Code. Any
               costs  attributable to making such election shall be borne solely
               by the requesting Member.

                                      ARTICLE 10

                              TRANSFERS; RIGHT OF FIRST REFUSAL

          10.1 Additional  Members.  Additional Members shall not be admitted to
               the  Company  without  the  written  consent of Members  having a
               Sharing Ratio of more than 50%.

          10.2 Offer to Other  Members.  If at any time any Member  proposes  to
               sell,  assign  or  otherwise  transfer  all  or any  part  of its
               interest in the Company, such Member ("Offeror") shall first make
               a written offer to sell such interest in the Company to the other
               Members on the same terms and subject to the same con- ditions as
               those on which the Offeror  proposes to transfer  the interest in
               the  Company.  Such offer  shall  state the name of the  proposed
               transferee  and all the  terms  and  conditions  of the  proposed
               transfer,   including  the  price  to  the  proposed  transferee.
               Notwithstanding  anything in this Section  10.2 to the  contrary,
               any Member  shall be free to  transfer  all or any portion of its
               interest  in the  Company  free of the  right  of  first  refusal
               provided  that such Member  transfers  its  interest to an entity
               controlled by the  transferor.  A transferee of a Member pursuant
               to the foregoing  sentence shall be subject to the right of first
               refusal contained in this Section 10.2.

          10.3 Acceptance of Offer. The other Members shall have the right for a
               period of 30 days after receipt of the offer from the Offeror, or
               such longer  period as may be required  under  Section  10.5,  to
               elect to purchase all of the interest in the Company offered.  In
               exercising their right to purchase,  the other Members may divide
               the interest offered in any manner to which they all agree and in
               the absence of agreement  the offered  interest  shall be divided
               among the Members in proportion to the relative Sharing Ratios of
               the Members who choose to partici- pate. To exercise their rights
               to purchase,  the other Members shall give written  notice to the
               Offeror.  Upon the  exercise of a right to purchase  and provided
               the right is exercised with respect to all of the interest in the
               Company offered, the purchase shall be closed and payment made on
               the same  terms  and  conditions  as those on which  the  Offeror
               proposes to transfer the interest in the Company.

          10.4 Failure  to Accept  Offer.  If the other  Members do not elect to
               purchase all of the interest in the Company offered,  the Offeror
               may  transfer  the offered  interest to the  proposed  transferee
               named in the offer to the Company.  However,  if that transfer is
               not made within 90 days after the end of the period  provided for
               in Section  10.3, a new offer shall be made to the other  Members
               and the  provisions of Sections  10.1,  10.2 and 10.3 shall again
               apply.

          10.5 Cash Equivalents. If the proposed offer under Section 10.2 is for
               consideration other than cash or cash plus deferred pay- ments of
               cash,  the  purchasing  Members  may pay the  present  value cash
               equivalent of such other  consideration or may pay using the same
               instrument as contemplated by the proposed offer. The Offeror and
               the  purchasing  Members  shall  attempt  to  agree  upon  a cash
               equivalent  of such other  consideration.  If they  cannot  agree
               within 20 days after the  beginning  of the 30-day  period  under
               Section  10.3,  any of such  Members  may, by five days'  written
               notice  to  the  others,  initiate  arbitration  proceedings  for
               determination of the cash equivalent without regard to income tax
               consequences  to the Offeror as a result of receiving cash rather
               than the other consideration. The purchasing Members may elect to
               purchase the interest at the determined cash equivalent by notice
               of  such  election  to the  Offeror  within  10  days  after  the
               arbitrator's decision.

          10.6 Direct and Indirect  Transfers.  For purposes of this  agreement,
               restrictions  upon the sale,  assignment  or other  transfer of a
               Member's  interest shall extend to any direct or indirect  trans-
               fer including,  without limitation,  an involuntary transfer such
               as a transfer  pursuant to a  foreclosure  sale or a transfer re-
               sulting by operation of law.

          10.7 Substitution of a Member.

               (a)  No  assignee,   legatee,   or  transferee  (by   conveyance,
                    operation of law or  otherwise)  of the whole or any portion
                    of a Member's  interest in the Company  shall have the right
                    to become a sub- stituted Member without the written consent
                    of Members other than the assignor,  legator or  transferor,
                    as the case may be, having a Sharing Ratio of more than 50%.
                    The granting or denial of a request for such written consent
                    shall be within the absolute  discretion  of each Member.  A
                    substituted  Member  shall  succeed  to all the  rights  and
                    interest of its  assignor in the  Company.  An assignee of a
                    Member that is not  admitted  as a Member  shall be entitled
                    only  to the  distributions  to  which  its  assignor  would
                    otherwise be entitled.

               (b)  If a Member shall be dissolved, merged or consolidated,  its
                    successor  in  interest  shall  have  the  same  rights  and
                    obligations  that such  Member  would have had if it had not
                    been  dissolved,  merged or  consolidated,  except  that the
                    successor shall not become a substituted  Member without the
                    prior written  consent of Members other than the predecessor
                    Member having a Sharing Ratio of more than 50%.

               (c)  As  conditions  to its  substitution  as a  Member  (a)  any
                    successor  of  a  Member  shall  execute  and  deliver  such
                    instruments,  in  form  and  substance  satisfactory  to the
                    Management Committee, as the Management Committee shall deem
                    necessary,  and (b) such successor  shall pay all reasonable
                    expenses in  connection  with its admission as a substituted
                    Member.

          10.8 Conditions  to  Transfer.  No  transfer  of any  interest  in the
               Company  otherwise   permitted  under  this  agreement  shall  be
               effective for any purpose  whatsoever  until the transferee shall
               have assumed the  transferor's  obligations  to the extent of the
               interest transferred and shall have agreed to be bound by all the
               terms  and  conditions  hereof,  by  written   instrument,   duly
               acknowledged,  in form and substance  reasonably  satisfactory to
               the Management Committee.

                                   ARTICLE 11

                                TAG-ALONG RIGHTS

     Subject  to the  provisions  of  Section  10,  in the  event a  Member  (an
"Offering  Member")  intends to transfer  all or any part of its interest in the
Company (also referred to as "Offered  Interests"),  such Offering  Member shall
notify each other  Member who has a Sharing  Ratio of more than 10%, in writing,
of such  proposed  transfer  and its terms and  conditions,  including,  without
limitation,  (i)  its  bona  fide  intention  to sell or  transfer  the  Offered
Interests,  (ii) the  number  and  class of Units  of  Offered  Interests  to be
transferred,  (iii) the price  and  terms,  if any,  for  which it  proposes  to
transfer  the Offered  Interests  and (iv) the name and address of the  proposed
purchaser or  transferee  and that such  purchaser or transferee is committed to
acquire  the  stated  number of Units on the stated  price and terms  ("Offering
Member Notice").  Within ten days of the date of such notice, each Member (other
than the  Offering  Member)  shall  notify the  Offering  Member in writing (the
"Co-Sale Notice") if it elects to participate in such transfer. Each Member that
so notifies the Offering  Member shall have the right to sell, at the same price
and on the same terms as the  Offering  Member,  an amount of Units equal to the
Units the third  party  proposes  to  purchase  multiplied  by a  fraction,  the
numerator  of which  shall be the number of Units  owned by such  Member and the
denominator  of  which  shall be the  aggregate  number  of  Units  owned by the
Offering  Member and each Member  exercising  its rights  under this Section 11.
Nothing  contained  in this  Section 11 shall in any way limit or  restrict  the
Offering  Member's  ability to amend,  modify or terminate any agreement  with a
third party with respect to any  transfer of its Units  pursuant to this Section
11, and the  Offering  Member shall have no liability to any Member with respect
to such  amendment,  modification  or  termination  unless any of the  foregoing
breaches this  Agreement.  If no Co-Sale  Notice is received  during the ten-day
period  referred  to above (or if the  Co-Sale  Notice does not cover all of the
Units proposed to be transferred), the Offering Member shall have the right, for
a sixty-day period after the expiration of the ten-day period referred to above,
to  transfer  the Units so  specified  in the  Offering  Member  Notice  (or the
remaining  Units) at the same or a lower price and on other terms and conditions
no more favorable than those stated in the Offering Member Notice.

                                   ARTICLE 12

                                     TERM

     Subject to Section 8.9, the Company shall continue  until  dissolved by the
written  consent of Members having a Sharing Ratio of more than 50% or upon sale
of all or substantially all of its assets.

                                    ARTICLE 13

                              INITIAL PUBLIC OFFERING

          13.1 Conversion to Corporation.  If the Company decides to initiate an
               initial public offering,  and if that decision  requires that the
               Company  be  restructured  into  a  corporation  (the  "Resulting
               Corporation"),  then,  subject to the approval of the  Management
               Committee pursuant to Section7.1:

               (a)  the Resulting Corporation will be organized and incorporated
                    under the Laws of the State of Delaware;

               (b)  the Certificate of Incorporation and Bylaws of the Resulting
                    Corporation will include  standard and customary  provisions
                    as  will  then  be   applicable   to   public   corporations
                    incorporated  under the Laws of the State of  Delaware,  and
                    such  other   provisions  as  may  be  agreed  upon  by  the
                    Management Committee; and

               (c)  the  Members and the Company  will  negotiate  in good faith
                    with the intent of entering into a  shareholders'  agreement
                    that  will  contain  customary  provisions,  including  "tag
                    along" rights.

                                       ARTICLE 14

                                DISSOLUTION AND TERMINATION

          14.1 Final  Accounting.  In case of the dissolution of the Company,  a
               proper  accounting  shall be made as provided in Section 9.4 from
               the  date  of  the  last  previous  accounting  to  the  date  of
               dissolution.

          14.2 Liquidation.  Upon the dissolution of the Company, the Management
               Committee  shall select a person to act as  liquidator to wind up
               the Company.  The liquidator  shall have full power and authority
               to sell,  assign and encumber any or all of the Company's  assets
               and to wind up and  liquidate  the  affairs of the  Company in an
               orderly and  businesslike  manner.  All proceeds from liquidation
               shall be distributed in the following  order of priority:  (i) to
               the  payment  of debts and  liabilities  of the  Company  and the
               expenses of liquidation;  (ii) to the setting up of such reserves
               as  the  liquidator   may  reasonably   deem  necessary  for  any
               contingent  liabilities of the Company;  and (iii) to the Members
               in accordance with Article 4.

          14.3 Distribution  in Kind. If the liquidator  shall  determine that a
               Company asset should be distributed in kind, the liquidator shall
               obtain an  independent  appraisal of the fair market value of the
               asset as of a date  reasonably  close to the date of liquidation.
               Any unrealized  appreciation or depreciation with respect to such
               asset shall be allocated  among the Members (in  accordance  with
               the  provisions of Article 5 assuming that the asset was sold for
               the   appraised   value)  and  taken  into  consid-   eration  in
               determining the balance in the Member' capital accounts as of the
               date of liquidation.  Distribution of any such asset in kind to a
               Member shall be considered a  distribution  of an amount equal to
               the asset's fair market value for purposes of Section  14.2.  The
               liquidator, in its sole discretion, may distribute any percentage
               of any asset in kind to a Member eve if such  percentage  exceeds
               the  percentage  in which the Member shares in  distributions  as
               long as the sum of the  cash  and  fair  market  value of all the
               assets  distributed  to each  Member  equals  the  amount  of the
               distribution to which each Member is entitled.

          14.4 Waiver of Right to Court Decree of Dissolution. The Members agree
               that  irreparable  damage  would  be done to the  Company  if any
               Member  brought  an  action  in court to  dissolve  the  Company.
               Accordingly,  each of the Members  accepts the  provisions of thi
               Agreement as its sole  entitlement on termination of the Member's
               membership  in  the  Company.   Each  Member  hereby  waives  and
               renounces all rights to seek a court decree of  dissolution or to
               seek the appointment by a court of a liquidator for the Company.

          14.5 Articles of  Dissolution.  Upon the  completion  of the distribu-
               tion of  Company  assets as  provided  in this  Article  14,  the
               Company shall be  terminated  and the person acting as liquidator
               shall  file  articles  of  dissolution  and shall take such other
               actions as may be necessary to terminate the Company.

                                      ARTICLE 15

                                        NOTICES

          15.1 Method of Notices.  All notices  required  or  permitted  by this
               agreement shall be in writing and shall be hand delivered or sent
               by registered or certified mail,  postage  prepaid,  and shall be
               effective  when  received or, if mailed,  on the date se forth on
               the receipt of registered or certified  mail, or on the fifth day
               after mailing, whichever is earlier.

          15.2 Computation  of Time.  In computing any period of time under this
               agreement,  the day of the act,  event or default  from which the
               designated period of time begins to run shall not be included The
               last day of the period so computed  shall be included,  unless it
               is a Saturday, Sunday or legal holiday, in which event the period
               shall run until the end of the next day which is not a  Saturday,
               Sunday or legal holiday.

                                     ARTICLE 16

                             INVESTMENT REPRESENTATIONS

          16.1 Investment Purpose. In acquiring an interest in the Company, each
               Member  represents  and  warrants  to  the  Company  that  it  is
               acquiring  such interest for its own account for  investment  and
               not  with a  view  to  its  sale  or  distribution.  Each  Member
               recognizes  that  investments  such as those  contemplated by the
               Company are  speculative and involve  substantial  risk. Each Me-
               ber further  represents and warrants that it has not received any
               guaranty or  representation  upon which it has relied  concerning
               the  possibility  or probability of profit or loss as a result of
               its acquisition of an interest in the Company.

          16.2 Investment  Restriction.  Each Member  recognizes  that:  (a) its
               Units have not been registered  under the Securities Act of 1933,
               as amended,  in reliance  upon an exemption  from such  registra-
               tion, (b) a Member may not sell, offer for sale, transfer, pledge
               or hypothecate  all or any part of its interest in the Company in
               the absence of an effective  registration statement covering such
               interest  under the  Securities  Act of 1933, as amended,  unless
               such sale,  offer of sale,  transfer,  pledge or hypothecation is
               exempt from  registration  under the  Securities  Act of 1933, as
               amended,  (c) the  Company  has no  obligation  to  register  any
               Member's  interest  for sale,  or to assist in estab-  lishing an
               exemption  from  registration  for any proposed sale, and (d) the
               restrictions  on transfer may severely  affect the liquidity of a
               Member's investment.

                                      ARTICLE 17

                                   GENERAL PROVISIONS

          17.1 Entire  Agreement.  This  Agreement  embodies  the entire  under-
               standing and agreement  among the parties  concerning the Company
               and supersedes any and all prior negotiations,  understandings or
               agreements in regard thereto.

          17.2 Amendment.  Except as  otherwise  specifically  provided  in this
               Agreement,  this  Agreement may not be amended nor may any rights
               hereunder be waived except by an instrument in writing  signed by
               Members having a Sharing Ratio of more than 50% in the aggregate.

          17.3 Applicable  Law. This Agreement  shall be construed in accordance
               with and governed by the laws of the State of Delaware.

          17.4 Pronouns.  References  to a  Member,  including  by use of a pro-
               noun, shall be deemed to include masculine,  feminine,  singular,
               plural,  individuals,  partnerships,  corporations or other legal
               entities where applicable.

          17.5 Counterparts.  This  instrument  may be executed in any number of
               counterparts each of which shall be considered an original.

                                  * * * * * * *

                            [SIGNATURE PAGE FOLLOWS]

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

                                   Anschutz Digital Media, Inc.

                              By:  /s/  Craig D. Slater
                            Name:  Craig D. Slater
                           Title:  Vice President

                                   U.S. TELESOURCE, INC.

                             By:  /s/  Marc B. Weisberg
                           Name:  Marc B. Weisberg
                          Title:  President and Chief Executive OfficerPURCHASE AGREEMENT

                            QWEST CAPITAL FUNDING, INC.

                                  $300,000,000

                        Floating Rate Notes due July 8, 2002
                Unconditionally Guaranteed as to Payment of Principal
                                 and Interest by

                       QWEST COMMUNICATIONS INTERNATIONAL INC.

                                                                 July 3, 2000

Salomon Smith Barney Inc.
388 Greenwich Street
New York, New York 10013

Ladies and Gentlemen:

     Qwest Capital Funding,  Inc., a Colorado corporation (formerly known as U S
WEST  Capital  Funding,  Inc.*) (the  "Company"),  proposes to issue and sell to
Salomon  Smith Barney Inc.  (the  "Initial  Purchaser")  $300,000,000  principal
amount of its  Floating  Rate  Notes due July 8,  2002 (the  "Securities").  The
Securities  will be  unconditionally  guaranteed  as to payment of principal and
interest  (the  "Guarantees")  by Qwest  Communications  International  Inc.,  a
Delaware  corporation (as successor to U S WEST,  Inc.) (the  "Guarantor"),  and
will be issued pursuant to the provisions of an Indenture,  dated as of June 29,
1998  (the  "Base  Indenture"),   as  supplemented  by  the  First  Supplemental
Indenture,  dated as of June  30,  2000  (the  "Supplemental  Indenture"),  and,
together with the Base Indenture, the "Indenture"),  each among the Company, the
Guarantor  and Bank One Trust  Company,  National  Association,  as trustee (the
"Trustee").

     The sale of the  Securities to the Initial  Purchaser  will be made without
registration of the Securities under the Securities Act of 1933, as amended (the
"Securities Act"), in reliance upon exemptions therefrom.

     In  connection  with  the  sale  of the  Securities,  the  Company  and the
Guarantor  have  prepared  an  offering  memorandum  dated the date  hereof (the
"Offering  Memorandum"),  for the  information of the Initial  Purchaser and for
delivery to  prospective  purchasers of the  Securities.  All references in this
Agreement to financial  statements and schedules and other  information which is
"contained,"  "included,"  "stated" or "given" in the  Offering  Memorandum  (or
other  references  of like import)  shall be deemed to mean and include all such
financial  statements and schedules and other  information which is incorporated
by reference in the Offering Memorandum.

*    Effective July 5, 2000, U S WEST Capital Funding, Inc. will change its name
     to Qwest Capital Funding, Inc.

     The Company and the  Guarantor  hereby agree with the Initial  Purchaser as
follows:

     1. The  Company  agrees to issue  and sell the  Securities  to the  Initial
Purchaser as hereinafter provided, and the Initial Purchaser,  upon the basis of
the  representations  and  warranties  herein  contained,  but  subject  to  the
conditions  hereinafter stated, agrees to purchase from the Company $300,000,000
principal  amount of  Securities  at a price  (the  "Purchase  Price")  equal to
99.812% of their principal amount,  plus accrued interest,  if any, from July 7,
2000 to the date of payment and delivery.

     2. The  Company and the  Guarantor  understand  that the Initial  Purchaser
intends (i) to offer the  Securities  privately as soon after this Agreement has
become  effective as in the judgment of the Initial  Purchaser is advisable  and
(ii) initially to offer the Securities  upon the terms set forth in the Offering
Memorandum.

     Each of the Company and the Guarantor  confirms that it has  authorized the
Initial  Purchaser,  subject to the  restrictions set forth below, to distribute
copies  of the  Offering  Memorandum  in  connection  with the  offering  of the
Securities.  The Initial Purchaser hereby makes to the Company and the Guarantor
the following representations and agreements:

     (i) it is a "qualified institutional buyer" within the meaning of Rule 144A
under the Securities Act; and

     (ii) (A) it will not solicit  offers for, or offer to sell,  the Securities
by any form of general  solicitation or general  advertising (as those terms are
used in Regulation D under the Securities Act ("Regulation  D")) and (B) it will
solicit offers for the Securities  only from, and will offer the Securities only
to, persons who it reasonably  believes to be "qualified  institutional  buyers"
within the meaning of Rule 144A under the  Securities Act that in purchasing the
Securities are deemed to have represented and agreed as provided in the Offering
Memorandum;

     3. Payment for the Securities shall be made by wire transfer in immediately
available funds to the account specified by the Company to the Initial Purchaser
at 9:00 A.M.,  New York City time, on July 7, 2000, or at such other time on the
same or such other date,  not later than the fifth Business Day  thereafter,  as
the Initial  Purchaser  and the Company may agree upon in writing.  The time and
date of such  payment are  referred  to herein as the  "Closing  Date".  As used
herein,  the term  "Business  Day" means any day other than a day on which banks
are permitted or required to be closed in New York City.

     Payment for the Securities  shall be made against  delivery with respect to
Securities  to be resold to  "qualified  institutional  buyers"  by the  Initial
Purchaser, to the nominee of The

                                      -2-

Depository Trust Company for the account of the Initial Purchaser of one or more
global  notes  (the  "Global  Notes")  representing  such  Securities,  with any
transfer taxes payable in connection with the transfer to the Initial  Purchaser
of the  Securities  duly paid by the  Company.  The  Global  Notes  will be made
available for inspection by the Initial Purchaser at the office of Salomon Smith
Barney Inc.  at the  address set forth above not later than 1:00 P.M.,  New York
City time, on the Business Day prior to the Closing Date.

     4. The  Company  and the  Guarantor  represent  and  warrant to the Initial
Purchaser that:

     (a) the  Offering  Memorandum  will not,  in the form  used by the  Initial
Purchaser  to confirm  sales of the  Securities  and prior to the Closing  Date,
contain any untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in light of the circumstances
existing  at  such  dates,  not  misleading;   provided,   however,   that  this
representation  and warranty shall not apply to any statements or omissions made
in reliance upon and in  conformity  with written  information  furnished to the
Company or the Guarantor by the Initial Purchaser, specifically for use therein;

     (b) the documents incorporated by reference in the Offering Memorandum (the
"Incorporated Documents"), when they were filed with the Securities and Exchange
Commission  (the  "Commission"),  conformed  in  all  material  respects  to the
requirements  of the Securities  Exchange Act of 1934, as amended (the "Exchange
Act"), and the rules and regulations of the Commission  thereunder,  and none of
such  documents  contained an untrue  statement of a material fact or omitted to
state a material fact necessary to make the statements  therein, in light of the
circumstances  under  which  they were made,  not  misleading;  and any  further
documents so filed and  incorporated  by  reference in the Offering  Memorandum,
when such documents are filed with the Commission,  will conform in all material
respects to the requirements of the Exchange Act, and will not contain an untrue
statement of a material fact or omit to state a material fact  necessary to make
the  statements  therein,  in light of the  circumstances  under which they were
made, not misleading;

     (c) the  financial  statements of U S WEST,  Inc. and Qwest  Communications
International  Inc.,  together  with the related  schedules  and notes  thereto,
incorporated  by  reference  in  the  Offering  Memorandum  present  fairly  the
consolidated  financial  position  of each  such  entity  and  its  consolidated
subsidiaries  as of  the  dates  indicated  and  the  statement  of  operations,
shareowners'  equity  and cash flows of each such  entity  and its  consolidated
subsidiaries for the periods specified;  and said financial statements have been
prepared  in  conformity  with  generally  accepted  accounting  principles  and
practices applied on a consistent basis throughout the periods involved. The pro
forma  inancial  statements  and  the  related  notes  thereto  incorporated  by
reference  in the  Offering  Memorandum  present  fairly the  information  shown
therein,  have been  prepared  in  accordance  with the  Commission's  rules and
guidelines with respect to pro forma

                                        -3-

financial  statements  and have been  properly  compiled on the bases  described
therein,  and the assumptions used in the preparation thereof are reasonable and
the adjustments  used therein are appropriate to give effect to the transactions
and circumstances referred to therein;

     (d)  since the  respective  dates as of which  information  is given in the
Offering  Memorandum,  except as otherwise stated therein, (A) there has been no
material  adverse change in the financial  condition or results of operations of
the  Company  or of the  Guarantor  and its  subsidiaries,  taken  as a whole (a
"Material Adverse Effect"),  (B) there have been no transactions entered into by
the Company or by the Guarantor or any of its subsidiaries,  other than those in
the ordinary course of business,  which are material with respect to the Company
or the Guarantor and its subsidiaries,  taken as a whole, and (C) there has been
no dividend or distribution of any kind declared, paid or made by the Company or
the Guarantor on any class of its capital  stock,  except for regular  quarterly
dividends on the  Guarantor's  common stock in amounts that are consistent  with
past practice;

     (e) this Agreement has been duly authorized, executed and delivered by each
of the Company and the Guarantor;

     (f) the Indenture has been duly authorized,  executed and delivered by each
of the Company and the Guarantor and (assuming the due authorization,  execution
and delivery by the Trustee)  constitutes the legal, valid and binding agreement
of the Company and the Guarantor  enforceable against each of them in accordance
with its terms,  except as the enforcement thereof may be limited by bankruptcy,
insolvency  (including,  without  limitation,  all laws  relating to  fraudulent
transfers), reorganization,  moratorium or similar laws affecting enforcement of
creditors'  rights  generally  and except as  enforcement  thereof is subject to
general principles of equity (regardless of whether enforcement is considered in
a proceeding in equity or at law);

     (g) the Securities have been duly authorized and, at the Closing Date, will
have been duly  executed  by the Company  and,  when  authenticated,  issued and
delivered in the manner  provided for in the  Indenture  and  delivered  against
payment of the  purchase  price  therefor as provided  in this  Agreement,  will
constitute  legal,  valid and binding  obligations  of the Company,  enforceable
against the Company in accordance  with their terms,  except as the  enforcement
thereof may be limited by bankruptcy, insolvency (including, without limitation,
all laws  relating  to  fraudulent  transfers),  reorganization,  moratorium  or
similar laws affecting  enforcement of creditors' rights generally and except as
enforcement  thereof is subject to general  principles of equity  (regardless of
whether enforcement is considered in a proceeding in equity or at law), and will
be in the form contemplated by, and entitled to the benefits of, the Indenture;

     (h) the Guarantees have been duly authorized and, at the Closing Date, will
have been duly executed by the  Guarantor  and, when issued and delivered in the
manner provided for in the Indenture,  will constitute legal,  valid and binding
obligations of the

                                        -4-

Guarantor,  enforceable  against the Guarantor in  accordance  with their terms,
except as the  enforcement  thereof  may be  limited by  bankruptcy,  insolvency
(including,  without  limitation,  all laws relating to  fraudulent  transfers),
reorganization,  moratorium or similar laws affecting  enforcement of creditors'
rights  generally  and  except as  enforcement  thereof  is  subject  to general
principles  of equity  (regardless  of whether  enforcement  is  considered in a
proceeding in equity or at law),  and will be in the form  contemplated  by, and
entitled to the benefits of, the Indenture;

     (i)  as of the  Closing  Date,  the  Securities,  the  Guarantees  and  the
Indenture  will conform in all material  respects to the  respective  statements
relating thereto contained in the Offering Memorandum;

     (j) the  execution,  delivery and  performance  of this  Agreement  and the
consummation  of  the  transactions  contemplated  herein  (including,   without
limitation,  the issuance and sale of the  Securities  and the  Guarantees)  and
compliance by the Company and the Guarantor  with their  respective  obligations
hereunder have been duly authorized by all necessary corporate action and do not
and will not, whether with or without the giving of notice or passage of time or
both, conflict with or constitute a breach of, or default or Repayment Event (as
defined  below)  under,  or result in the  creation or  imposition  of any lien,
charge or encumbrance upon any property or assets of the Company,  the Guarantor
or any  subsidiary  of the  Guarantor  pursuant  to,  any  contract,  indenture,
mortgage,  deed of  trust,  loan or  credit  agreement,  note,  lease  or  other
agreement or instrument to which the Company, the Guarantor or any subsidiary of
the Guarantor is a party or by which it or any of them may be bound, or to which
any of the property or assets of the Company, the Guarantor or any subsidiary of
the Guarantor is subject (collectively, Agreements and Instruments") (except for
such  conflicts,  breaches or defaults or liens,  charges or  encumbrances  that
would not result in a Material Adverse  Effect),  nor will such action result in
any  violation of the  provisions  of the charter or bylaws of the Company,  the
Guarantor or any  subsidiary of the  Guarantor or, to the best  knowledge of the
Company and the  Guarantor,  any  applicable  law,  statute,  rule,  regulation,
judgment, order, writ or decree of any government, government instrumentality or
court, domestic or foreign,  having jurisdiction over the Company, the Guarantor
or any  subsidiary  of the  Guarantor  or any of  their  assets,  properties  or
operations.  As used herein,  a  "Repayment  Event" means any event or condition
which gives the holder of any note,  debenture or other evidence of indebtedness
of the Company,  the Guarantor or any subsidiary of the Guarantor (or any person
acting on such holder's behalf) the right to require the repurchase,  redemption
or  repayment  of all or a portion  of such  indebtedness  by the  Company,  the
Guarantor or any subsidiary of the Guarantor;

     (k)  other  than as set  forth  in the  Offering  Memorandum,  there is not
pending or, to the  knowledge of the Company or the  Guarantor,  threatened  any
action,  suit,  proceeding,  inquiry or investigation to which the Company,  the
Guarantor or any  subsidiary of the Guarantor is a party or to which the assets,
properties or operations of

                                        -5-

the Company, the Guarantor or any subsidiary of the Guarantor is subject, before
or by any court or governmental agency or body, domestic or foreign, which might
reasonably  be  expected to result in a Material  Adverse  Effect or which might
reasonably be expected to materially and adversely affect the assets, properties
or operations of the Company, the Guarantor and any subsidiary of the Guarantor,
taken as a whole, or the consummation of the  transactions  contemplated by this
Agreement or the Indenture or the performance by the Company or the Guarantor of
their respective obligations thereunder;

     (l) the Guarantor  and its  subsidiaries  possess such  permits,  licenses,
approvals,  consents  and  other  authorizations  (collectively,   "Governmental
Licenses") issued by the appropriate federal, state, local or foreign regulatory
agencies or bodies  necessary to conduct the business now operated by them;  the
Guarantor and its  subsidiaries  are in compliance with the terms and conditions
of all such Governmental  Licenses,  except where the failure so to comply would
not,  singly or in the aggregate,  have a Material  Adverse  Effect;  all of the
Governmental  Licenses  are valid and in full force and effect,  except when the
invalidity  of such  Governmental  Licenses or the failure of such  Governmental
Licenses  to be in full  force  and  effect  would not have a  Material  Adverse
Effect;  and neither the Guarantor nor any of its  subsidiaries has received any
notice of  proceedings  relating to the revocation or  modification  of any such
Governmental  Licenses which,  singly or in the aggregate,  if the subject of an
unfavorable  decision,  ruling or finding,  would  result in a Material  Adverse
Effect;

     (m)  none  of  the  Company,  the  Guarantor  or any  of  their  respective
affiliates (as defined in Rule 501(b) of Regulation D) has directly,  or through
any  agent,  sold,  offered  for  sale,  solicited  offers  to buy or  otherwise
negotiated in respect of, any security (as defined in the Securities  Act) which
is or will be integrated  with the sale of the Securities in a manner that would
require the registration  under the Securities Act of the offering  contemplated
by the Offering Memorandum;

     (n) none of the Company, the Guarantor, any affiliate of the Company or the
Guarantor  or any person  acting on its or their  behalf has offered or sold the
Securities by means of any general  solicitation or general  advertising  within
the meaning of Rule 502(c) under the Securities Act;

     (o) the Securities  satisfy the  requirements  set forth in Rule 144A(d)(3)
under the Securities Act;

     (p) assuming the accuracy of the  representations  of the Initial Purchaser
contained in Section 2 hereof, it is not necessary in connection with the offer,
sale and delivery of the Securities in the manner contemplated by this Agreement
to register the  Securities  under the Securities Act or to qualify an indenture
under the Trust Indenture Act of 1939 (the "Trust Indenture Act"); and

     (q) none of the  transactions  contemplated  by this Agreement  (including,
without  limitation,  the use of the proceeds  from the sale of the  Securities)
will violate or

                                        -6-

result in a  violation  of  Section 7 of the  Exchange  Act,  or any  regulation
promulgated thereunder,  including, without limitation,  Regulations T, U, and X
of the Board of Governors of the Federal Reserve System.

     5. The  Company  and the  Guarantor  covenant  and agree  with the  Initial
Purchaser as follows:

     (a) to deliver to the  Initial  Purchaser  as many  copies of the  Offering
Memorandum  (including all amendments  and  supplements  thereto) as the Initial
Purchaser may reasonably request;

     (b)  before  distributing  any  amendment  or  supplement  to the  Offering
Memorandum, to furnish to the Initial Purchaser a copy of the proposed amendment
or supplement  for review and not to distribute  any such proposed  amendment or
supplement to which the Initial Purchaser reasonably objects;

     (c) if, at any time prior to the completion of the initial placement of the
Securities,  any event shall occur as a result of which the Offering  Memorandum
as then amended or supplemented  would 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, or if it is necessary to amend or supplement the Offering Memorandum
to comply  with law,  forthwith  to prepare and  furnish,  at the expense of the
Company,  to the  Initial  Purchaser,  such  amendments  or  supplements  to the
Offering Memorandum as may be necessary to correct such statement or omission or
to effect compliance with law;

     (d) to  endeavor  to qualify  the  Securities  for offer and sale under the
securities or Blue Sky laws of such jurisdictions as the Initial Purchaser shall
reasonably  request  and to  continue  such  qualification  in effect so long as
reasonably  required  for  distribution  of the  Securities;  provided  that the
Company shall not be required to file a general consent to service of process in
any jurisdiction;

     (e) during the period of two years after the date hereof, to furnish to the
Initial  Purchaser,  as soon as practicable after the end of each fiscal year, a
copy of the Guarantor's  annual report to  shareholders,  if any, for such year,
and to furnish to the Initial Purchaser and to counsel to the Initial Purchaser,
(i) as soon as available,  a copy of each report of the Guarantor filed with the
Commission under the Exchange Act or mailed to stockholders,  and (ii) from time
to time, such other  information  concerning the Guarantor or the Company as the
Initial Purchaser may reasonably request;

     (f) during the period  beginning on the date hereof and  continuing  to and
including  the Business Day  following  the Closing  Date,  not to,  directly or
indirectly,  sell, offer to sell, grant any option for the sale of, or otherwise
dispose of, any of its senior debt  securities  having a maturity of one year or
more without the prior written consent of the Initial Purchaser;

                                        -7-

     (g) to use the net  proceeds  received by the Company  from the sale of the
Securities  pursuant to this  Agreement in the manner  specified in the Offering
Memorandum under the caption "Use of Proceeds";

     (h) to furnish to the holders of the Securities as soon as practical  after
the end of each  fiscal year an annual  report  (including  a balance  sheet and
statements of income,  stockholders'  equity and cash flows of the Guarantor and
its consolidated  subsidiaries certified by independent public accountants) and,
as soon as practicable after the end of each of the first three quarters of each
fiscal year  (beginning  with the fiscal  quarter  ending  after the date of the
Offering   Memorandum),   consolidated  summary  financial  information  of  the
Guarantor and its subsidiaries of such quarter in reasonable detail;

     (i) during the period of two years after the Closing Date,  the Company and
the Guarantor will not, and will not permit any of their respective "affiliates"
(as  defined  in Rule  144  under  the  Securities  Act) to,  resell  any of the
Securities which  constitute  "restricted  securities"  under Rule 144 that have
been reacquired by any of them;

     (j) whether or not the  transactions  contemplated  by this  Agreement  are
consummated  or this  Agreement  is  terminated,  to pay or cause to be paid all
costs and expenses  incident to the  performance of its  obligations  hereunder,
including without limiting the generality of the foregoing,  all fees, costs and
expenses (i) incident to the preparation,  issuance,  execution,  authentication
and delivery of the  Securities,  including  any  expenses of the Trustee,  (ii)
incident  to  the  preparation,   printing  and  distribution  of  the  Offering
Memorandum (including all exhibits,  amendments and supplements thereto),  (iii)
incurred in connection with the registration or qualification  and determination
of  eligibility  for  investment  of the  Securities  under  the  laws  of  such
jurisdictions as the Initial Purchaser may designate  (including fees of counsel
for the Initial Purchaser and their disbursements) and the printing of memoranda
relating  thereto,  (iv) in  connection  with the  approval  for  trading of the
Securities on any securities exchange or inter-dealer  quotation system (as well
as in connection with the designation of the Securities as PORTAL securities, if
so requested),  (v) in connection  with the printing  (including word processing
and  duplication  costs) and  delivery of this  Agreement,  the  Indenture,  any
Preliminary and Supplemental  Blue Sky Memoranda and any Legal Investment Survey
and the  furnishing  to Initial  Purchaser and dealers of copies of the Offering
Memorandum,  including mailing and shipping, as herein provided, (vi) payable to
rating agencies in connection with the rating of the Securities,  if applicable,
and (vii) any expenses  incurred by the Company in connection with a "road show"
presentation to potential investors;

     (k) while the Securities remain outstanding and are "restricted securities"
within the  meaning of Rule  144(a)(3)  and cannot be sold  without  restriction
under Rule 144(k) under the Securities  Act, the Company and the Guarantor will,
during any period in which the  Guarantor  is not subject to Section 13 or 15(d)
under the  Exchange  Act or is not  complying  with the  reporting  requirements
thereof, make available to the purchasers

                                        -8-

and any  holder  of  Securities  in  connection  with any sale  thereof  and any
prospective  purchaser of Securities and securities analysts,  in each case upon
request,  the information  specified in, and meeting the  requirements  of, Rule
144A(d)(4) under the Securities Act (or any successor thereto);

     (l)  neither  the  Company  nor the  Guarantor  will not  take  any  action
prohibited  by  Regulation  M under the  Exchange  Act, in  connection  with the
distribution of the Securities contemplated hereby;

     (m) none of the Company, the Guarantor,  any of their respective affiliates
(as defined in Rule 501(b)  under the  Securities  Act) or any person  acting on
behalf of the Company, the Guarantor or such affiliate will solicit any offer to
buy or offer or sell the Securities by means of any form of general solicitation
or general advertising,  including:  (i) any advertisement,  article,  notice or
other  communication  published in any newspaper,  magazine or similar medium or
broadcast  over  television  or radio;  and (ii) any  seminar or  meeting  whose
attendees have been invited by any general  solicitation or general advertising;
and

     (n) none of the Company, the Guarantor,  any of their respective affiliates
(as defined in Regulation  501(b) of Regulation D under the  Securities  Act) or
any person acting on behalf of the Company, the Guarantor or such affiliate will
sell, offer for sale or solicit offers to buy or otherwise  negotiate in respect
of any security (as defined in the Securities Act) which will be integrated with
the sale of the  Securities  in a manner  which would  require the  registration
under the  Securities  Act of the  Securities  and the Company and the Guarantor
will take all  action  that is  appropriate  or  necessary  to  assure  that its
offerings  of  other  securities  will not be  integrated  for  purposes  of the
Securities Act with the offering contemplated hereby.

     6. The  obligation  of the Initial  Purchaser  hereunder  to  purchase  the
Securities on the Closing Date is subject to the  performance by the Company and
the  Guarantor of their  respective  obligations  hereunder and to the following
additional conditions:

     (a) the  representations  and  warranties  of the Company and the Guarantor
contained  herein are true and correct on and as of the Closing  Date as if made
on and as of the Closing Date, the statements of the officers of the Company and
the Guarantor  made pursuant to the  provisions  hereof are true and correct and
the Company and the Guarantor  shall have complied with all  agreements  and all
conditions  on their part to be performed or satisfied  hereunder at or prior to
the Closing Date;

     (b) on or after the date of this  Agreement  and prior to the Closing Date,
there shall not have  occurred any  downgrading,  nor shall any notice have been
given of (i) any  downgrading,  (ii) any  intended or potential  downgrading  or
(iii) any review or possible  change that does not indicate an  improvement,  in
the rating  accorded any debt  securities of or guaranteed by the Company or the
Guarantor by any "nationally recognized

                                        -9-

statistical rating  organization",  as such term is defined for purposes of Rule
436(g)(2) under the Securities Act;

     (c)  since the  respective  dates as of which  information  is given in the
Offering  Memorandum,  there  shall  not have been any  change in the  financial
condition of the Company or of the  Guarantor and its  subsidiaries,  taken as a
whole,  or in the earnings,  affairs or business  prospects of the Company or of
the  Guarantor and its  subsidiaries,  taken as a whole,  otherwise  than as set
forth or contemplated in the Offering Memorandum, the effect of which is, in the
judgment  of the  Initial  Purchaser,  so  material  and  adverse  as to make it
impracticable or inadvisable to proceed with the offering or the delivery of the
Securities  on the Closing Date on the terms and in the manner  contemplated  in
the Offering Memorandum;

     (d) the Initial Purchaser shall have received on and as of the Closing Date
a  certificate  of the  President,  any Vice  President,  the  Treasurer  or any
Assistant  Treasurer of the Company in which such officers  shall state that, to
the best of their knowledge after reasonable investigation,  the representations
and  warranties of the Company in this Agreement are true and correct as if made
at and as of the Closing Date, that the Company has complied with all agreements
and satisfied all conditions on its part to be performed or satisfied  hereunder
at or prior to the Closing Date and that, since the respective dates as of which
information  is given in the  Offering  Memorandum,  there has been no  material
adverse  change in the  financial  condition  or  results of  operations  of the
Company, except as set forth in or contemplated by the Offering Memorandum;

     (e) the Initial Purchaser shall have received on and as of the Closing Date
a  certificate  of the  President,  any Vice  President,  the  Treasurer  or any
Assistant Treasurer of the Guarantor in which such officers shall state that, to
the best of their knowledge after reasonable investigation,  the representations
and  warranties  of the  Guarantor in this  Agreement are true and correct as if
made at and as of the Closing  Date,  that the  Guarantor  has complied with all
agreements and satisfied all conditions on its part to be performed or satisfied
hereunder at or prior to the Closing Date and that,  since the respective  dates
as of which information is given in the Offering  Memorandum,  there has been no
material  adverse change in the financial  condition or results of operations of
the Guarantor and its subsidiaries,  taken as a whole, except as set forth in or
contemplated by the Offering Memorandum;

     (f) Holme,  Roberts & Owen LLP,  counsel for the Company and the Guarantor,
shall have furnished to the Initial  Purchaser their written opinion,  dated the
Closing Date, in form and substance  satisfactory to the Initial  Purchaser,  to
the effect that:

     (i) The Company is a  corporation  validly  existing  and in good  standing
under the laws of the State of Colorado and has all  requisite  corporate  power
and  authority  to own,  lease and  operate its  properties  and to carry on its
business as now being conducted.

                                        -10-

     (ii) The Guarantor is a corporation  validly  existing and in good standing
under the laws of the State of Delaware and has all  requisite  corporate  power
and  authority  to own,  lease and  operate its  properties  and to carry on its
business as now being conducted.

     (iii) The execution, delivery and performance of the Supplemental Indenture
by the Company and the  Guarantor  have been duly  authorized  by all  necessary
corporate action on the part of the Company and the Guarantor.  The Supplemental
Indenture  has been duly and validly  executed and  delivered by the Company and
the  Guarantor  and  (assuming  the due  authorization,  execution  and delivery
thereof by the Trustee),  constitutes the legal,  valid and binding agreement of
the Company and the  Guarantor  enforceable  against each of them in  accordance
with its terms,  subject to applicable federal or state bankruptcy,  insolvency,
fraudulent  conveyance,  reorganization,  moratorium  and similar laws affecting
creditor's rights and remedies generally, and subject, as to enforceability,  to
general principles of equity,  including  principles of materiality,  commercial
reasonableness,  good faith,  fair  dealing and to the  discretion  of the court
before  which  any  proceeding  therefore  may be  brought,  and  public  policy
(regardless  of  whether  enforcement  is  sought in a  proceeding  at law or in
equity).

     (iv) The  Securities,  when duly executed and  authenticated  in the manner
contemplated in the Indenture and issued and delivered to the Initial  Purchaser
against  payment  therefor  in  accordance  with  the  provisions  hereof,  will
constitute legal, valid and binding obligations of the Company,  entitled to the
benefits of the Indenture and enforceable against the Company in accordance with
their terms,  subject to  applicable  federal or state  bankruptcy,  insolvency,
fraudulent  conveyance,  reorganization,  moratorium  and similar laws affecting
creditor's rights and remedies generally, and subject, as to enforceability,  to
general principles of equity,  including  principles of materiality,  commercial
reasonableness,  good faith,  fair  dealing and to the  discretion  of the court
before  which  any  proceeding  therefore  may be  brought,  and  public  policy
(regardless  of  whether  enforcement  is  sought in a  proceeding  at law or in
equity).

     (v) The  Guarantees,  when duly executed in the manner  contemplated in the
Indenture and issued and delivered to the Initial  Purchaser in accordance  with
the  provisions of this  Agreement,  will  constitute  legal,  valid and binding
obligations  of the  Guarantor  enforceable  against the Guarantor in accordance
with their terms, subject to applicable federal or state bankruptcy, insolvency,
fraudulent  conveyance,  reorganization,  moratorium  and similar laws affecting
creditor's rights and remedies generally, and subject, as to enforceability,  to
general principles of equity,  including  principles of materiality,  commercial
reasonableness,  good faith,  fair  dealing and to the  discretion  of the court
before  which  any  proceeding  therefore  may be  brought,  and  public  policy
(regardless  of  whether  enforcement  is  sought in a  proceeding  at law or in
equity).

                                        11

     (vi) The  execution,  delivery  and  performance  of this  Agreement by the
Company and the Guarantor have been duly  authorized by all necessary  corporate
action on the part of the Company and the Guarantor; and this Agreement has been
duly  and  validly  executed  and  delivered  by  each  of the  Company  and the
Guarantor.

     (vii) No consent, approval,  authorization or other action by, or filing or
registration with, any federal governmental  authority is required in connection
with  the  execution  and  delivery  by  the  Company  or the  Guarantor  of the
Supplemental  Indenture  or the  issuance  and  sale of the  Securities  and the
Guarantees  to the Initial  Purchaser  pursuant to the terms of this  Agreement,
except such  consents,  approvals,  authorizations  or  registrations  as may be
required under state securities or Blue Sky laws in connection with the purchase
and distribution of the Securities by the Initial Purchaser.

     (viii)  The  statements  in the  Offering  Memorandum  under  the  headings
"Description  of Notes" and  "Notice to  Investors"  insofar as such  statements
constitute a summary of certain provisions of the documents referred to therein,
are accurate in all material respects.

     (ix) The Securities  satisfy the  requirements set forth in Rule 144A(d)(3)
under the Securities Act.

     (x)  Based  upon the  representations,  warranties  and  agreements  of the
Company and the Guarantor in Sections 4(m),  4(n),  5(n),  5(o) and 6(a) of this
Agreement and of the Initial Purchaser in Section 2 of this Agreement and on the
truth and accuracy of the  representations  and agreements  deemed to be made by
the purchasers of the Securities contained in the Offering Memorandum, it is not
necessary in connection  with the offer,  sale and delivery of the Securities to
the Initial  Purchaser  under this  Agreement or in connection  with the initial
resale of such Securities by the Initial  Purchaser in accordance with Section 2
of this  Agreement to register the  Securities  under the  Securities  Act or to
qualify the Indenture under the Trust  Indenture Act;  provided,  however,  that
such counsel need not express any opinion with respect to the  conditions  under
which the Securities may be further resold.

     In rendering such opinion,  such counsel may rely as to matters of fact, to
the extent such counsel deems proper, on certificates of responsible officers of
the Company and the  Guarantor  and of public  officials.  Such counsel may also
rely as to matters of Colorado law upon the opinion  referred to in Section 6(g)
without independent verification.

     In  addition,  such  counsel  shall  state  that  it  has  participated  in
conferences  with  representatives  of the Company,  the  Guarantor and with the
Initial  Purchaser  and its counsel,  at which  conferences  the contents of the
Offering Memorandum and related

                                        12

matters were discussed;  such counsel has not independently verified and are not
passing upon and assume no  responsibility  for the  accuracy,  completeness  or
fairness  of  the  statements  contained  in the  Offering  Memorandum  and  the
limitations  inherent in the examination made by such counsel and the nature and
extent of such counsel's  participation  in such  conferences are such that such
counsel is unable to assume,  and does not assume,  any  responsibility  for the
accuracy,  completeness or fairness of such statements; however, based upon such
counsel's participation in the aforesaid conferences,  no facts have come to its
attention  which lead it to believe that the Offering  Memorandum  (except as to
the  financial  statements  and the  notes  thereto,  and the  other  financial,
statistical and accounting data included or incorporated by reference therein or
omitted  therefrom),  as of its issue date or at the Closing Date,  contained or
contains any untrue  statement of a material fact or omitted or omits to state a
material  fact  necessary to make the  statements  therein,  in the light of the
circumstances under which they were made, not misleading.

     Such  opinion may state that it does not address the impact on the opinions
contained  therein of any  litigation or ruling  relating to the  divestiture by
American Telephone and Telegraph Company of ownership of its operating telephone
companies (the "Divestiture").

     The opinion of Holme,  Roberts & Owen LLP described above shall be rendered
to the Initial Purchaser and the Company at the request of the Company and shall
so state therein.

     (g) Yash Rana, Esq.,  Associate General Counsel and Assistant Secretary for
the Company and the Guarantor shall have furnished to the Initial  Purchaser his
written opinion,  dated the Closing Date, in form and substance  satisfactory to
the Initial Purchaser, to the effect that:

     (i) The Company is a  corporation,  validly  existing and in good  standing
under the laws of the State of Colorado and has all  requisite  corporate  power
and  authority  to own,  lease and  operate its  properties  and to carry on its
business as now being conducted.

     (ii) The Guarantor is a corporation,  validly existing and in good standing
under the laws of the state of its incorporation and has all requisite corporate
power and authority to own, lease and operate its properties and to carry on its
business as now being conducted.

     (iii) The execution, delivery and performance of the Supplemental Indenture
by the Company and the  Guarantor  have been duly  authorized  by all  necessary
corporate action on the part of the Company and the Guarantor.  The Supplemental
Indenture  has been duly and validly  executed and  delivered by the Company and
the  Guarantor  and  (assuming  the due  authorization,  execution  and delivery
thereof by the Trustee), constitutes the legal, valid and binding

                                        13

agreement of the Company and the Guarantor  enforceable  against each of them in
accordance with its terms,  subject to applicable  federal or state  bankruptcy,
insolvency, fraudulent conveyance,  reorganization,  moratorium and similar laws
affecting  creditor's  rights  and  remedies  generally,   and  subject,  as  to
enforceability,  to  general  principles  of  equity,  including  principles  of
materiality,  commercial  reasonableness,  good faith,  fair  dealing and to the
discretion  of the court before which any  proceeding  therefore may be brought,
and public policy  (regardless of whether  enforcement is sought in a proceeding
at law or in equity).

     (iv) The  Securities,  when duly executed and  authenticated  in the manner
contemplated in the Indenture and issued and delivered to the Initial  Purchaser
against  payment  therefor  in  accordance  with  the  provisions  hereof,  will
constitute legal, valid and binding obligations of the Company,  entitled to the
benefits of the Indenture and enforceable against the Company in accordance with
their terms,  subject to  applicable  federal or state  bankruptcy,  insolvency,
fraudulent  conveyance,  reorganization,  moratorium  and similar laws affecting
creditor's rights and remedies generally, and subject, as to enforceability,  to
general principles of equity,  including  principles of materiality,  commercial
reasonableness,  good faith,  fair  dealing and to the  discretion  of the court
before  which  any  proceeding  therefore  may be  brought,  and  public  policy
(regardless  of  whether  enforcement  is  sought in a  proceeding  at law or in
equity).

     (v) The  Guarantees,  when duly executed in the manner  contemplated in the
Indenture and issued and delivered to the Initial  Purchaser in accordance  with
the provisions hereof,  will constitute legal, valid and binding  obligations of
the Guarantor  enforceable against the Guarantor in accordance with their terms,
subject  to  applicable  federal  or state  bankruptcy,  insolvency,  fraudulent
conveyance,  reorganization,  moratorium and similar laws  affecting  creditor's
rights and remedies  generally,  and subject,  as to enforceability,  to general
principles  of  equity,   including   principles  of   materiality,   commercial
reasonableness,  good faith,  fair  dealing and to the  discretion  of the court
before  which  any  proceeding  therefore  may be  brought,  and  public  policy
(regardless  of  whether  enforcement  is  sought in a  proceeding  at law or in
equity).

     (vi) The  execution,  delivery  and  performance  of this  Agreement by the
Company and the Guarantor have been duly  authorized by all necessary  corporate
action on the part of the Company and the Guarantor; and this Agreement has been
duly  and  validly  executed  and  delivered  by  each  of the  Company  and the
Guarantor.

     (vii) All state regulatory  consents,  approvals,  authorizations  or other
orders  (except as to the state  securities  or Blue Sky laws,  as to which such
counsel  need  express no  opinion)  legally  required or the  execution  of the
Supplemental  Indenture  and the  issuance  and sale of the  Securities  and the
Guarantees to the

                                        14

Initial  Purchaser  pursuant to the terms of this  Agreement have been obtained;
provided that such counsel may rely on opinions of local counsel satisfactory to
said counsel.

     (viii) To such counsel's knowledge,  there is not pending or threatened any
action,  suit,  proceeding,  inquiry or investigation to which the Company,  the
Guarantor or any  subsidiary of the Guarantor is a party or to which the assets,
properties or operations of the Company,  the Guarantor or any subsidiary of the
Guarantor  is subject,  before or by any court or  governmental  agency or body,
domestic or foreign,  which (i) might  reasonably be expected to materially  and
adversely  affect the assets,  properties or operations of the Guarantor and its
subsidiaries,  taken as a whole,  or (ii) challenge the issuance and sale of the
Securities  or the payments by the Company and the  Guarantor  of principal  and
interest on the Securities.

     Such  opinion may state that it does not address the impact of the opinions
contained therein of any litigation or ruling relating to the Divestiture.

     In rendering such opinion,  such counsel may rely as to matters of New York
law  upon  the  opinion   referred  to  in  Section  6(f)  without   independent
verification.

     (h) Thomas O.  McGimpsey,  a former  Senior  Attorney and Secretary for U S
WEST Capital Funding,  Inc. and a former Senior Attorney and Assistant Secretary
for U S WEST,  Inc.,  shall have furnished to the Initial  Purchaser his written
opinion,  dated as of June 30, 2000, in form and substance  satisfactory  to the
Initial Purchaser, to the effect that:

     (i) U S WEST Capital Funding,  Inc. is a corporation duly  incorporated and
validly existing under the laws of the State of Colorado.

     (ii) U S WEST, Inc. is a corporation duly incorporated and validly existing
under the laws of the State of Delaware.

     (iii) The execution,  delivery and performance of the Base Indenture by U S
WEST Capital  Funding,  Inc. and U S WEST, Inc. have been duly authorized by all
necessary corporate action on the part of U S WEST Capital Funding, Inc. and U S
WEST,  Inc. The Base Indenture has been duly and validly  executed and delivered
by U S WEST Capital Funding, Inc. and U S WEST, Inc.

     (iv) No consent,  approval,  authorization or other action by, or filing or
registration with, any federal governmental  authority is required in connection
with the execution and delivery by U S WEST Capital  Funding,  Inc. or U S WEST,
Inc. of the Base Indenture.

                                        15

     In  addition,  such  counsel  shall  state  that  it  has  participated  in
conferences with  representatives  of U S WEST Capital Funding,  Inc., U S WEST,
Inc. and with the Initial  Purchaser and its counsel,  at which  conferences the
contents of the Offering  Memorandum and related  matters were  discussed;  such
counsel has not  independently  verified  and are not passing upon and assume no
responsibility  for the  accuracy,  completeness  or fairness of the  statements
contained  in the  Offering  Memorandum  and  the  limitations  inherent  in the
examination  made by such  counsel  and the nature and extent of such  counsel's
participation  in such  conferences  are such  that  such  counsel  is unable to
assume, and does not assume,  any responsibility for the accuracy,  completeness
or fairness of such statements; however, based upon such counsel's participation
in the aforesaid conferences,  no facts have come to its attention which lead it
to  believe  that  the  Incorporated  Documents  (except  as  to  the  financial
statements  and the notes  thereto,  and the other  financial,  statistical  and
accounting  data  included  or  incorporated  by  reference  therein  or omitted
therefrom,  as to which such  counsel  need  express no belief),  when they were
filed with the Commission, complied as to form in all material respects with the
requirements of the Exchange Act and the rules and regulations of the Commission
thereunder.

     (i) on the date of the issuance of the Offering  Memorandum and also on the
Closing  Date,  Arthur  Andersen  LLP and KPMG LLP shall have  furnished  to the
Initial Purchaser  letters,  dated the respective dates of delivery thereof,  in
form and substance satisfactory to the Initial Purchaser,  containing statements
and  information  of the  type  customarily  included  in  accountants  "comfort
letters" to  underwriters  with respect to the financial  statements and certain
financial information contained in the Offering Memorandum;

     (j) the Initial Purchaser shall have received on and as of the Closing Date
an opinion of Brown & Wood LLP, counsel to the Initial  Purchaser,  with respect
to the validity of the  Indenture  and the  Securities,  and such other  related
matters as the Initial Purchaser may reasonably request,  and such counsel shall
have  received such papers and  information  as they may  reasonably  request to
enable them to pass upon such matters; and

     (k) on or prior to the Closing Date the Company shall have furnished to the
Initial  Purchaser  such  further  certificates  and  documents  as the  Initial
Purchaser shall reasonably request.

     7.  (a) The  Company  and the  Guarantor  jointly  and  severally  agree to
indemnify and hold harmless the Initial  Purchaser  against any losses,  claims,
damages or  liabilities,  joint or several,  to which the Initial  Purchaser may
become  subject,  as  incurred,  under the  Securities  Act, the Exchange Act 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 any material fact  contained in the Offering  Memorandum or
any  amendment  or  supplement  thereto,  or arise out of or are based  upon the
omission or alleged omission to state

                                        16

therein a material fact  required to be stated  therein or necessary to make the
statements  therein,  in the light of the  circumstances  under  which they were
made, not misleading, and will reimburse the Initial Purchaser, as incurred, for
any legal or other  expenses  reasonably  incurred by the Initial  Purchaser  in
connection  with  investigating  or  defending  any such  loss,  claim,  damage,
liability  or  action  or  amounts  paid  in  settlement  of any  litigation  or
investigation or proceeding  related thereto if such settlement is effected with
the written consent of the Company and the Guarantor;  provided,  however,  that
the Company and the Guarantor  will not be liable in any such case to the extent
that any such loss,  claim,  damage or liability  arises out of or is based upon
any untrue statement or alleged untrue statement or omission or alleged omission
made in any of such  documents in reliance upon and in  conformity  with written
information  furnished to the Company or the Guarantor by the Initial  Purchaser
specifically for use therein.

     (b) The Initial  Purchaser will indemnify and hold harmless the Company and
the Guarantor  against any losses,  claims,  damages or liabilities to which the
Company or the Guarantor may become subject,  as incurred,  under the Securities
Act 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 any  material  fact  contained in the Offering
Memorandum or any amendment or supplement  thereto, or arise out of or are based
upon the  omission or the  alleged  omission  to state  therein a material  fact
required to be stated  therein or necessary to make the statements  therein,  in
the light of the  circumstances  under which they were made, not misleading,  in
each case to the extent,  but only to the extent,  that such untrue statement or
alleged  untrue  statement or omission or alleged  omission was made in reliance
upon and in conformity with written information  furnished to the Company or the
Guarantor  by the  Initial  Purchaser  specifically  for use  therein,  and will
reimburse  the Company and the  Guarantor,  as incurred,  for any legal or other
expenses reasonably incurred by the Company and the Guarantor in connection with
investigating or defending any such loss, claim, damage, liability or action.

     (c) Promptly after receipt by an indemnified  party under this Section 7 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 7, notify the indemnifying  party of the commencement  thereof;  but the
omission  so to notify  the  indemnifying  party  will not  relieve  it from any
liability which it may have to any  indemnified  party otherwise than under this
Section 7. In case any such action is brought against any indemnified party, and
it notifies the indemnifying party of the commencement thereof, the indemnifying
party will be entitled  to  participate  therein  and, to the extent that it may
wish, jointly with any other indemnifying  party similarly  notified,  to assume
the defense thereof,  with counsel  satisfactory to such indemnified  party (who
shall not, except with the consent of the  indemnified  party, be counsel to the
indemnifying  party),  and  after  notice  from the  indemnifying  party to such
indemnified  party  of its  election  so to  assume  the  defense  thereof,  the
indemnifying  party  will not be liable to such  indemnified  party  under  this
Section  7 for  any  legal  or  other  expenses  subsequently  incurred  by such
indemnified  party in connection  with the defense thereof other than reasonable
costs of  investigation.  The indemnifying  party or parties shall not be liable
under this Agreement with

                                        17

respect to any settlement made by any indemnified party or parties without prior
written consent by the indemnifying party or parties to such settlement.

     (d) If the indemnification provided for in this Section 7 is unavailable or
insufficient to hold harmless an indemnified  party under  subsection (a) or (b)
above,  then each  indemnifying  party  shall  contribute  to the amount paid or
payable by such indemnified party as a result of the losses,  claims, damages or
liabilities  referred to in subsection (a) or (b) above,  (i) in such proportion
as is appropriate to reflect the relative  benefits  received by the Company and
the  Guarantor  on the one hand and the Initial  Purchaser on the other from the
offering  of the  Securities  or (ii) if the  allocation  provided by clause (i)
above is not permitted by applicable  law, in such  proportion as is appropriate
to reflect not only the  relative  benefits  referred to in clause (i) above but
also the relative fault of the Company and the Guarantor on the one hand and the
Initial  Purchaser on the other in connection  with the  statements or omissions
which  resulted in such losses,  claims,  damages or  liabilities as well as any
other relevant equitable  considerations.  The relative benefits received by the
Company and the Guarantor on the one hand and the Initial Purchaser on the other
shall be deemed to be in the same  proportion as the total net proceeds from the
offering (before deducting  expenses)  received by the Company bear to the total
discounts and commissions received by the Initial Purchaser.  The relative fault
shall be determined  by reference to, among other things,  whether the untrue or
alleged untrue  statement of a material fact or the omission or alleged omission
to state a material fact relates to information  supplied by the Company and the
Guarantor or the Initial Purchaser and the parties' relative intent,  knowledge,
access to  information  and  opportunity  to  correct  or  prevent  such  untrue
statement or omission.  The amount paid by an  indemnified  party as a result of
the losses,  claims, damages or liabilities referred to in the first sentence of
this  subsection  (d)  shall be deemed to  include  any legal or other  expenses
reasonably  incurred by such indemnified party in connection with  investigating
or defending  any action or claim which is the subject of this  subsection  (d).
Notwithstanding  the provisions of this  subsection  (d), the Initial  Purchaser
shall not be required to contribute  any amount in excess of the amount by which
the total price at which the Securities purchased by it were offered exceeds the
amount of any damages which the Initial Purchaser has otherwise been required to
pay by reason of such untrue or alleged untrue  statement or omission or alleged
omission. 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.

     (e) The  obligations of the Company and the Guarantor  under this Section 7
shall be in addition to any  liability  which the Company or the  Guarantor  may
otherwise  have and shall  extend,  upon the same terms and  conditions,  to the
person,  if any, who controls  the Initial  Purchaser  within the meaning of the
Securities Act or the Exchange Act; and the obligations of the Initial Purchaser
under this Section 7 shall be in addition to any liability  which the respective
Initial  Purchaser may otherwise have and shall extend,  upon the same terms and
conditions,  to each person,  if any, who controls the Company or the  Guarantor
within the meaning of the Securities Act or the Exchange Act.

                                        18

     The indemnity and contribution  agreements  contained in this Section 7 and
the  representations  and  warranties of the Company set forth in this Agreement
shall  remain  operative  and in full  force and  effect  regardless  of (i) any
termination of this Agreement,  (ii) any  investigation  made by or on behalf of
the Initial  Purchaser or any person  controlling the Initial Purchaser or by or
on behalf of the Company or the Guarantor or any person  controlling the Company
or the Guarantor and (iii) acceptance of and payment for any of the Securities.

     8.  Notwithstanding  anything  herein  contained,  this  Agreement  may  be
terminated in the absolute discretion of the Initial Purchaser,  by notice given
to the Company and the  Guarantor,  if after the  execution and delivery of this
Agreement  and prior to the Closing Date (i) trading  generally  shall have been
suspended  or  materially  limited  on or by, as the case may be, any of the New
York Stock Exchange,  the American Stock Exchange,  the National  Association of
Securities  Dealers,  Inc.,  the Chicago  Board  Options  Exchange,  the Chicago
Mercantile  Exchange  or  the  Chicago  Board  of  Trade,  (ii)  trading  of any
securities  of or  guaranteed  by the Company or the  Guarantor  shall have been
suspended on any  exchange or in any  over-the-counter  market,  (iii) a general
moratorium on commercial banking activities in New York shall have been declared
by either  Federal  or New York  State  authorities,  or (iv)  there  shall have
occurred any outbreak or  escalation of  hostilities  or any change in financial
markets  or any  calamity  or  crisis  that,  in  the  judgment  of the  Initial
Purchaser,  is material  and adverse and which,  in the  judgment of the Initial
Purchaser,  makes it  impracticable to market the Securities on the terms and in
the manner contemplated in the Offering Memorandum.

     9. This  Agreement  shall become  effective upon the execution and delivery
hereof by the parties hereto.

     10. If this Agreement shall be terminated by the Initial  Purchaser because
of any failure or refusal on the part of the Company or the  Guarantor to comply
with the terms or to fulfill any of the conditions of this Agreement,  or if for
any  reason  the  Company  or the  Guarantor  shall be  unable  to  perform  its
obligations  under this  Agreement or any  condition of the Initial  Purchaser's
obligations cannot be fulfilled,  (i) the Company and the Guarantor shall remain
responsible  for the  expenses  to be paid or  reimbursed  by them  pursuant  to
Section  5(k) and (ii) the  Company and the  Guarantor  agree to  reimburse  the
Initial  Purchaser for the  out-of-pocket  expenses  reasonably  incurred by the
Initial Purchaser in connection with this Agreement or the offering contemplated
hereunder,  not exceeding  $75,000,  and for the fees and disbursements of their
counsel.

     11. This  Agreement  shall inure to the benefit of and be binding  upon the
Company, the Guarantor,  the Initial Purchaser, any controlling persons referred
to herein and their  respective  successors  and assigns.  Nothing  expressed or
mentioned in this  Agreement is intended or shall be construed to give any other
person,  firm or corporation any legal or equitable right, remedy or claim under
or in respect of this Agreement or any provision herein contained.  No purchaser
of Securities  from any Initial  Purchaser  shall be deemed to be a successor by
reason merely of such purchase.

                                        19

     12. All notices and other communications  hereunder shall be in writing and
shall be deemed to have been duly given if mailed or transmitted by any standard
form of  telecommunication.  Notices to the Initial  Purchaser shall be given to
Salomon  Smith Barney  Inc.,  388  Greenwich  Street,  New York,  New York 10013
(telefax: (212) 316-5711);  Attention: Office of the General Counsel. Notices to
the Company and the  Guarantor  shall be given at  ___________________,  Denver,
Colorado 80202 (telefax: (303) 896-6468); Attention: ___________.

     13. This Agreement may be signed in counterparts, each of which shall be an
original and all of which together shall constitute one and the same instrument.

     14. THIS  AGREEMENT  SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE  WITH
THE LAWS OF THE STATE OF NEW YORK,  WITHOUT  GIVING  EFFECT TO THE  CONFLICTS OF
LAWS  PROVISIONS  THEREOF,  PROVIDED THAT THE PARTIES  HERETO ELECT  PURSUANT TO
SECTION 5-1401 OF THE GENERAL  OBLIGATION LAW OF NEW YORK TO HAVE THIS AGREEMENT
BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.

                                        20

     If the foregoing is in accordance with your understanding, please sign and
return a counterpart hereof.

                                   Very truly yours,

                                   QWEST CAPITAL FUNDING, INC.

                               By:  /s/  Yash A. Rana
                                   --------------------------------------------
                                   Name:  Yash A. Rana
                                   Title:  Assistant Secretary

                               By:  /s/ Yash A. Rana
                                    Name:  Yash A. Rana
                                    Title:  Assistant Secretary

           Accepted:  July 3, 2000

           SALOMON SMITH BARNEY INC.

      By:  /s/  Martha D. Bailey
           ----------------------------------------------------------
         Name:  Martha D. Bailey
        Title:  First Vice President and Counsel

                                        21

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