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                                                                    Exhibit 99.2



                           NETWORK ALLIANCE AGREEMENT

                                     BETWEEN

                      FLAG TELECOM IRELAND NETWORK LIMITED

                                       AND

                    VERIZON GLOBAL SOLUTIONS HOLDINGS II LTD.











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                           NETWORK ALLIANCE AGREEMENT

         This Network Alliance Agreement ("AGREEMENT") is entered into as of
April 3, 2001, between FLAG Telecom Ireland Network Limited ("FTINL" and,
together with FLAG Telecom Holdings Limited and all directly or indirectly
wholly-owned subsidiaries of FLAG Telecom Holdings Limited, and any other
Affiliates (as defined below) added pursuant to Section 1.2 below, "FLAG"), a
company limited by shares organized under the laws of Ireland with its
registered office located at 6 Fitzwilliam Square, Dublin 2, Ireland, and
Verizon Global Solutions Holdings II Ltd. ("VGSL" and, together with its
Affiliates, "VGS"), a company organized under the laws of Bermuda with its
registered office located at 41 Cedar Avenue, Hamilton HM 12, Bermuda.
Hereinafter, FTINL and VGSL may be referred to together as "PARTIES", and
individually as a "PARTY".

WHEREAS:

A. VGS wishes to establish, own and operate a European backbone network (the
"VGSIEN") with sufficient capacity and geographic scope to enable both VGS (and
its Affiliates) and FLAG to provide end-to-end provisioning of network services
to their respective customers and to market such service offerings under their
separate, proprietary brands.

B. FLAG has spent considerable time in the planning of extensions to its
existing network.

C. VGS and FLAG desire to create a network alliance to participate in the
establishment and use of the VGSIEN (the "ALLIANCE"). The initial scope of the
VGSIEN is that set out in Exhibit C and may be expanded in accordance with the
terms of this Agreement.

D. As part of the Alliance, VGS desires to provide transport and related
telecommunications services to FLAG to support the services that FLAG offers to
their customers.


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      In consideration of the premises recited above and of the mutual promises
and undertakings set forth in this Agreement, and intending to be legally bound,
the Parties hereby agree as follows:

1.    SERVICES; FORECASTS; SERVICE ORDERS
      -----------------------------------

      1.1   The services which VGS will make available through the VGSIEN (the
            "SERVICES") are set forth in Exhibit B hereto, which is incorporated
            by reference and which may be amended from time to time in order to
            add additional Services by mutual agreement of the Parties.

      1.2   VGS shall provide Services under the terms of this Agreement to FLAG
            Telecom Holdings Limited and any directly or indirectly wholly owned
            subsidiary of FLAG Telecom Holdings Limited, as well as to such
            other Affiliates of FTINL as FTINL may request, and VGSL in its sole
            discretion shall agree to in writing. VGSL may provide the Services
            through one or more operating Affiliates. As used herein, an
            "AFFILIATE" of any company shall mean another company which
            controls, is controlled by, or is under common control with such
            company. FTINL shall be responsible for all orders placed by any
            member of FLAG, and shall be liable to VGSL for all amounts due
            hereunder with respect to any Services provided to any member of
            FLAG as well as for performance by all members of FLAG of all of
            their respective obligations hereunder. FTINL shall be bound by any
            action taken pursuant to or in connection with this Agreement by any
            member of FLAG. VGSL shall be responsible for all Services provided
            by any member of VGS. VGSL shall be bound by any action taken
            pursuant to or in connection with this Agreement by any member of
            VGS. The Purchase Commitments (as defined in Section 1.4) shall be
            determined on an aggregate basis for FLAG, and any Service provided
            to any member of FLAG shall be counted toward the applicable
            Purchase Commitment for such order, with VGSL having no
            responsibility to allocate such Purchase Commitment among the
            members of FLAG except as provided in Section 3. FLAG may purchase
            and use the Services only for



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            purposes of providing bundled end-to-end services to end-users, and
            are strictly prohibited from reselling any Service unless bundled
            with other products or services provided by FLAG or other suppliers.

      1.3   Not later than October 1 of each calendar year, FTINL shall provide
            VGSL with a good faith forecast of FLAG's projected need for
            Services in each of the following three calendar years, which
            forecast shall be in such form as shall be mutually agreed upon by
            FTINL and VGSL and shall indicate, for each Service, the aggregate
            quantity of such Service forecasted for each individual designated
            PoP pair on the VGSIEN (a "ROUTE") for each calendar quarter. The
            forecast for the balance of 2001 (the "INITIAL FORECAST") is
            attached to this Agreement as Exhibit A and is accepted as to 2001.
            FTINL shall have the right to amend Exhibit A, not later than March
            30, 2001, to provide for purchase of different Services (within each
            category of Service) of equivalent value. If VGSL believes that the
            VGSIEN will be unable to provide any part of the Services (for any
            Route, for any period) shown on any forecast (except for the Initial
            Forecast), it shall so notify FTINL, and the Parties shall discuss
            the matter in good faith with the objective of satisfying FLAG's
            forecast. The forecast shall be reduced or the timing of activation
            of Services adjusted, as the case may be, by the amounts VGSL
            believes cannot reasonably be provided by the VGSIEN, or by such
            other amounts as may be agreed in writing by the Parties not later
            than 30 days after the date the forecast was provided to VGSL. Each
            such forecast, as so reduced or adjusted if applicable, shall be
            referred to herein as a "FORECAST" (which term includes the Initial
            Forecast).

      1.4   FLAG's initial purchase hereunder (the "INITIAL PURCHASE") shall be
            as set forth in Exhibit D. Upon finalization (which for purposes of
            this Agreement shall be deemed to have occurred 30 days after
            submission of a forecast by FTINL) of the Forecast in each year,
            FLAG shall make a further purchase hereunder (the "INCREMENTAL
            PURCHASE") equal to the aggregate IRU Prices



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            (as defined in Exhibit B) for the Aggregate Purchase Commitment (as
            defined below) for the following calendar year. The "AGGREGATE
            PURCHASE COMMITMENT" shall be equal to the sum of the Purchase
            Commitments for each Service on each Route. The "PURCHASE
            COMMITMENT" for each Service on each Route for any calendar year
            shall be equal to [*] of the incremental quantity of Service on such
            Route shown on the Forecast submitted in the year preceding such
            calendar year.

      1.5   FLAG shall have the right to purchase additional Services on any
            Route in any calendar quarter, in addition to the Initial Purchase
            and/or Incremental Purchase for the applicable year, up to 100% of
            the amount of Service forecasted for such Route for such calendar
            quarter in the current Forecast for such year. In the event FLAG
            wishes to purchase such additional services, FLAG shall make such
            request in writing to VGSL, and VGSL shall advise FLAG of the date
            on which such Services will be ready for service. In the event FLAG
            wishes to purchase additional Services beyond such 100% level, FLAG
            shall make such request in writing to VGSL, and VGSL, within 30 days
            after such request, shall notify FLAG whether, to what extent, for
            what price and on what date it is willing to provide such Services.
            FLAG shall either accept or decline such offer within 15 days after
            receiving it from VGSL.

      1.6   All Services purchased hereunder shall be purchased and provided on
            an indefeasible right of use ("IRU") basis. For purposes of this
            Agreement, an "IRU" shall mean an exclusive, irrevocable and
            non-transferable right to use a Service for a period of [*] years
            from activation (or such other period of time as may be mutually
            agreed between the Parties) that is vested in FLAG but which will
            not include the right to control any Service-related facilities nor
            any right to salvage value upon decommissioning of any such
            facilities.

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*   Confidential treatment has been requested from the Securities and Exchange
    Commission. Omitted portions.


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      1.7   Orders for Services shall be transmitted by FLAG, and processed by
            VGSL, in accordance with VGSL's then-current, standard order
            procedures and guidelines as notified to FTINL in writing (as such
            procedures and guidelines may be modified from time to time by VGSL
            upon reasonable prior written notice to FTINL). Services shown in
            any calendar quarter of any Forecast, to the extent such Services
            are contained in the associated Purchase Commitment, shall be ready
            for service on the first day of such calendar quarter, except that
            Services shown in the second quarter of 2001 in the Initial Forecast
            may not be ready for service until the end of such quarter.

2.    TERM OF THE AGREEMENT
      ---------------------

      2.1   This Agreement is effective and the Parties' obligations shall
            commence upon the date first set forth above ("EFFECTIVE Date").
            This Agreement shall continue in effect for a period of [*] years
            from the Effective Date ("INITIAL TERM"), unless (and then only to
            the extent) terminated earlier in accordance with Section 5.

      2.2   Upon expiration of the Initial Term, this Agreement shall continue
            from year to year unless and until (i) this Agreement is terminated
            by one Party giving the other Party 180 days' written notice of
            termination, with the earliest date for such notice being 180 days
            prior to the expiration of the Initial Term, or (ii) this Agreement
            is terminated pursuant to Section 5 (and then only to the extent so
            terminated).

      2.3   The Parties acknowledge and agree that except with respect to a
            termination of this Agreement pursuant to Sections 5.2, 5.3, 5.4 or
            5.5, no termination of this Agreement will terminate or otherwise
            affect any Services theretofore purchased on an IRU basis, meaning
            that FLAG shall continue to have the

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*   Confidential treatment has been requested from the Securities and Exchange
    Commission. Omitted portions.


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            right to use such Services and shall continue to pay O&M Charges (as
            defined in Exhibit B) relating to such Services. Any Party
            terminating this Agreement in whole or in part pursuant to Sections
            5.2, 5.3, 5.4 or 5.5 shall have the right, by notice to the other
            Party, to terminate any or all Services which were theretofore
            purchased on an IRU basis, in which case FLAG shall have no further
            right to use such Service and FLAG shall not be entitled to any
            refund of any part of the initial payment made for such IRU except
            as set forth in the last sentence of this Section 2.3. FLAG,
            however, will continue to be obligated to pay O&M Charges relating
            to such Services except (a) with respect to any Services terminated
            pursuant to Section 5.5, as to which such obligation will cease as
            of the effective date of the termination, and (b) with respect to
            any Services actually resold by VGSL, as to which such obligation
            will cease as described in the next sentence. If any Service is so
            terminated, VGSL will use commercially reasonable efforts to resell
            any such Service which FLAG had purchased on an IRU basis, and if
            VGSL does resell such Service, such IRU will be terminated (but
            except as described in the next sentence, no part of the initial
            payment made therefor shall be refundable) and FLAG will be released
            from its obligation to pay O&M Charges relating to such Service from
            and after the effective date of the resale. If VGSL actually resells
            any Service on an IRU basis following a termination pursuant to
            Section 5.5, VGSL shall, upon receipt of payment for such resale,
            make a payment to FTINL (or to such other FLAG entity as may be
            specified by FTINL in writing) equal to (a) the payment so received,
            times (b) the number of years remaining in the IRU term for such
            Service under FLAG's IRU (i.e., [*] less the number of years elapsed
            since such Service was placed in service hereunder), divided by (c)
            the number of years in the term of the IRU in such resale; provided
            that such payment shall in no event be greater than the
            proportionate part of the IRU Price paid

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*   Confidential treatment has been requested from the Securities and Exchange
    Commission. Omitted portions.


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            by FLAG for such Service applicable to the remaining term of FLAG's
            IRU for such Service.

      2.4   If FLAG determines that it has Service purchased on an IRU basis for
            a given Route which it is not using or which it will not need in the
            future (the "EXCESS IRU SERVICE"), and has a need for additional
            Service on another Route (the "NEW IRU SERVICE"), FLAG may so notify
            VGSL and request a termination of the Excess IRU Service in exchange
            for purchase of the New IRU Service. If VGSL has capacity available,
            or is able through commercially reasonable efforts to obtain
            capacity, to provide the New IRU Service, then it will permit FLAG
            to terminate the Excess IRU Service in exchange for purchase of the
            New IRU Service. The foregoing notwithstanding, VGSL shall have no
            obligation to permit any such exchange (x) with respect to Service
            on a Route which was implemented at the request of FLAG and is not
            being used by any other customer of VGSL other than FLAG, or (y) to
            the extent that the Excess IRU Price (as defined below) of such
            Excess IRU Service, when aggregated with the Excess IRU Prices of
            all other Excess IRU Services theretofore exchanged, exceeds [*]% of
            the total price theretofore paid by FLAG for Services under this
            Agreement. The IRU term for the New IRU Service shall be equal to
            the remaining term of the Excess IRU Service. The purchase price for
            the New IRU Service shall be equal to the sum of (a) the amount (if
            any) by which the New IRU Price (as defined below) exceeds the
            Excess IRU Price (as defined below), plus (b) all costs and expenses
            incurred by VGSL to plan and implement the exchange of Services,
            plus a margin of [*]% on such costs and expenses, plus (c) a
            rearrangement fee, calculated at the rate of [*]% per annum of the
            Excess IRU Price, payable monthly for each month through and
            including the earlier of (i) the month in which VGSL resells the
            Excess IRU Service and (ii) the twelfth month after the effective
            date of the exchange. For

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*   Confidential treatment has been requested from the Securities and Exchange
    Commission. Omitted portions.


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            exchanges made during the Initial Term, the total rearrangement fees
            paid pursuant to clause (c) above shall be limited to $[*]. The "NEW
            IRU PRICE", as to any New IRU Service, shall be the amount VGSL
            would have charged for such Service on such Route on an IRU basis at
            the time the Excess IRU Service was purchased (prorated to reflect
            the elapsed term of the Excess IRU Service). The "EXCESS IRU PRICE"
            shall be that portion of the initial purchase price for the IRU of
            which the Excess IRU Service is a part which is allocable to the
            Excess IRU Service, and shall be equal to the initial purchase price
            for such IRU prorated to reflect both the capacity of such IRU being
            retained by FLAG and the elapsed term of such IRU. VGSL shall make
            commercially reasonable efforts to resell any exchanged Excess IRU
            Service. If the New IRU Price is less than the Excess IRU Price, the
            difference shall be carried forward as a credit usable by FLAG
            solely toward the purchase price for any subsequent exchanges for
            New IRU Services, provided that such credit shall automatically be
            amortized to zero over the remaining term of the Excess IRU.

      2.5   The obligations of the Parties to each other under this Agreement
            are conditional upon VGS and FLAG entering into the Resale and
            Purchase Agreement (Dark Fibre and Co-location Facilities) dated as
            of April 3, 2001, which provides for acquisition by VGS of certain
            dark fiber capacity and licensing by VGS of certain collocation
            space from FLAG to the aggregate value of at least $[*] which FLAG
            has acquired and licensed respectively from KPNQwest Services UK
            Limited.

3.    BILLING AND PAYMENT; RATES AND CHARGES; TAXES AND ASSESSMENTS
      -------------------------------------------------------------

      3.1   The IRU Price and O&M Charge (both as defined in Exhibit B) for the
            Services set forth in the Initial Forecast (and for the Initial
            Purchase) are set

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*   Confidential treatment has been requested from the Securities and Exchange
    Commission. Omitted portions.

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            forth in Exhibit D. The IRU Prices and O&M Charges for the Services
            ordered pursuant to Incremental Purchases shall be determined as set
            forth in Exhibit B.

      3.2   VGS shall invoice ("INVOICE") such entity as shall be designated by
            FTINL with respect to each Service (the "BILLED ENTITY") as set
            forth in this Section. VGS shall Invoice the Billed Entity:

            (a)   Promptly after the date of this Agreement, for the amount of
                  the Initial Purchase;

            (b)   At the beginning of each calendar quarter (or as soon as
                  practicable thereafter), for the amount of Services called for
                  to be provided in the next following calendar quarter under
                  the Incremental Purchase;

            (c)   Monthly, for (i) the IRU Price of any new Service placed in
                  service in such month which was not included in an Incremental
                  Purchase payment, (ii) the O&M Charge for the balance of such
                  calendar quarter for any Service Invoiced in such month
                  pursuant to clause (c)(i), (iii) any costs incurred during
                  such month for any FLAG-specific development work in the BSS
                  or network OSS Architecture, plus [*]% margin, and (iv) any
                  other costs incurred in such month which are chargeable to
                  FLAG in accordance with Exhibit B, plus [*]% margin; and

            (d)   On the first day of each calendar quarter, for the O&M Charges
                  for such quarter for each Service then in service or being
                  placed in service as of the start of such quarter.


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*   Confidential treatment has been requested from the Securities and Exchange
    Commission. Omitted portions.


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      3.3   Each Invoice shall be paid by the Billed Entity by wire transfer,
            made pursuant to the instructions set forth below, in immediately
            available U.S. funds, so that the payment is received by VGS not
            later than the date (the "DUE DATE") which is 30 calendar days from
            the date of the Invoice; provided, however, that the Due Date for
            payment of the amount of the Initial Purchase shall be the date on
            which VGS makes payment for the initial payment of at least $[*]
            under the definitive agreement(s) referred to in Section 2.5.
            Subject to Section 4, any delinquent Invoice shall bear late payment
            fees at the rate of 1.5% per month (or such lower rate as may be
            required by law) from the Due Date until paid.

            Wire Transfer Instructions (subject to change by VGSL by not less
            than 10 Business Days prior notice in writing) as follows (to be
            advised):

            BANK NAME
            ADDRESS
            CITY, STATE, ZIP AND COUNTRY
            PHONE #
            ABA #
            FOR CREDIT TO:
            ACCOUNT #
            SPECIAL INSTRUCTIONS:

            A "BUSINESS DAY" shall mean any day other than a Saturday, a Sunday
            or a day on which banks in the City of London are permitted to
            remain closed.

      3.4   FLAG shall be responsible for the collection and remittance of all
            governmental assessments, surcharges and fees pertaining to its
            resale of the Services. FLAG shall provide VGSL with, and maintain,
            valid and properly executed certificates of exemption for such
            assessments, surcharges and fees, as applicable. Each Party shall be
            responsible for own taxes on its net income arising under this
            Agreement. If FLAG or VGS is required by law to deduct or withhold
            any taxes from any amounts payable under this Agreement, such
            amounts shall be increased as necessary so that VGS receives an
            amount equal to the sum it would have received had no such deduction
            or withholding been



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            made, provided that VGSL provides evidence (in a form reasonably
            satisfactory to FTINL) that no credit is available for any amount
            withheld or deducted. FLAG shall make timely payment of, the amount
            withheld (before penalties attach thereto or interest accrues
            thereon) to the applicable taxing authority. To the extent that the
            Services are subject to Value Added Tax, VGS and FLAG shall work
            together in good faith and within applicable laws such that prior to
            the issuance of any invoices, any invoicing arrangements are
            structured so as to facilitate FLAG's recovery of any Value Added
            Tax that VGS is required to invoice to FLAG hereunder in the most
            expeditious manner.

4.    BILLING DISPUTES
      ----------------

      The Billed Entity shall have the affirmative obligation of providing
      written notice of any dispute regarding any Invoice within 30 days after
      receipt of the Invoice by the Billed Entity (which notice shall include
      sufficient detail for VGS to investigate the dispute). The Billed Entity
      shall not withhold any payment except for amounts legitimately in dispute
      and notified to VGSL in accordance with the preceding sentence. If the
      Billed Entity does not provide timely notice of a dispute with respect to
      an Invoice, the Billed Entity is deemed to have waived its dispute rights
      for that Invoice and to have agreed to pay the same. Provided the Billed
      Entity has provided sufficient detail for investigation of the dispute,
      VGS will use reasonable efforts to resolve and communicate its position
      regarding the dispute to the Billed Entity in writing within 60 days of
      its receipt of the dispute notice from the Billed Entity. In the event
      that the Parties are unable to resolve any such dispute within 120 days of
      notice from the Billed Entity to VGSL, at the request of either Party the
      dispute shall promptly be submitted to the President, FLAG Network
      Services and the Group Vice President of Carrier Sales of VGS (together,
      the "SENIOR OFFICERS") for resolution of the dispute or determination of
      an appropriate procedure for resolving the dispute. If the dispute is
      resolved in VGS's favor any amounts to be paid by the Billed Entity



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      shall be subject to the late payment charges under Section 3.3 retroactive
      to the Due Date of the disputed Invoice.

5.    TERMINATION RIGHTS
      ------------------

      5.1   If any governmental authority or court having jurisdiction over VGS,
            any part of the VGSIEN or any of the Services issues a rule,
            regulation, law or order which has the effect of canceling,
            changing, or superseding any material term or provision of this
            Agreement (collectively, "REGULATORY REQUIREMENT"), then this
            Agreement shall be deemed modified in such a way as the Parties
            mutually agree is consistent with the form, intent and purpose of
            this Agreement and is necessary to comply with such Regulatory
            Requirement. Should the Parties not be able to agree on
            modifications necessary to comply with a Regulatory Requirement
            within 30 days after the Regulatory Requirement is effective, then
            upon written notice either Party may terminate that portion of this
            Agreement impacted by the Regulatory Requirement, or, if partial
            termination is not practicable or substantially alters the
            fundamental terms of this Agreement, terminate this Agreement in its
            entirety.

      5.2   Either Party may terminate this Agreement upon the other Party's
            insolvency, dissolution or cessation of business operations.

      5.3   VGSL may terminate this Agreement upon 30 days written notice to
            FTINL for a Billed Entity's failure to pay any Invoice by 60 days
            after the Due Date therefor (except for items being disputed in
            accordance with Section 4), unless the Billed Entity pays such
            invoice in full during the 30 day period.

      5.4   In the event of a breach of any material term or condition of this
            Agreement by a Party (other than a failure to pay a delinquent
            Invoice which is covered under Section 5.3, and other than failure
            to meet Service Level Agreements which is covered in Section 5.5),
            the other Party may terminate this Agreement upon 60 days written
            notice, unless the breaching Party cures the breach during the 60
            day period or, if such breach cannot be reasonably be cured within a
            60 day



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            period, if the breaching Party institutes good faith efforts to cure
            such breach during such 60 day period and such breach is cured
            within 180 days.

      5.5   In the event that VGSL substantially fails to meet Service Level
            Agreements for any Service in any three consecutive months, or in
            any four months in any consecutive twelve-month period, and FLAG
            customers representing committed revenues to FLAG of at least US$[*]
            for either the current and preceding calendar year combined or the
            current and next calendar year combined have notified FLAG in
            writing that they intend to terminate or non-renew their service
            agreements with FLAG as a result of such failures, FTINL shall have
            the right to terminate this Agreement upon 60 days written notice,
            unless VGSL meets the Service Level Agreements for such Service
            during such period (or, if such failure cannot be reasonably be
            cured within a 60 day period, if VGSL institutes good faith efforts
            (as approved by FTINL, which approval shall not be unreasonably
            withheld) to cure such failure during such 60 day period and such
            failure is cured within 120 days); provided that if VGSL fails to
            meet the Service Level Agreements for such Service during any of the
            next three months after the end of such 60-day or 120-day period, as
            applicable, FTINL shall have the right to terminate this Agreement
            upon 30 days written notice without giving VGSL any further
            opportunity to cure. This termination right will not be available to
            FTINL to the extent that the failure of a Service to achieve the
            Service Level Agreements results from any event or circumstance
            described in Section 10 or a breach by FTINL of its obligations
            under this Agreement.

      5.6   [*]

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*   Confidential treatment has been requested from the Securities and Exchange
    Commission. Omitted portions.

*   Confidential treatment has been requested from the Securities and Exchange
    Commission. Omitted portions.



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      5.7   Either Party may terminate this Agreement upon 30 days written
            notice to the other in the event that (i) Verizon Communications
            Inc. and its controlled affiliates shall own, in the aggregate, less
            than 9% of the outstanding voting shares of FLAG Telecom Holdings
            Limited, or (ii) a majority of the members of FLAG Telecom Holdings
            Limited's board of directors then in office shall have been
            nominated, appointed or elected by any person, or group of persons
            acting in concert, other than Verizon Communications Inc. and its
            controlled affiliates, or (iii) FLAG Telecom Holdings Limited shall
            have sold a controlling interest in its telecom network business or
            any significant portion thereof to any person, or group of persons
            acting in concert, other than Verizon Communications Inc. and its
            controlled affiliates. Notwithstanding a termination pursuant to
            this Section 5.7, all then-existing performance and payment
            obligations of the Parties relating to purchased IRUs and the
            associated operations and maintenance responsibilities shall remain
            fully in effect.

      5.8   Upon any material breach by FTINL not cured after expiration of all
            applicable notice and cure periods, if any, in addition to any other
            rights and remedies available to it, VGSL may at its sole option do
            any or all of the following:

            A.    Cease accepting or processing orders for Service and suspend
                  Service;

            B.    Cease all electronically and manually generated information
                  and reports;

            C.    Terminate this Agreement, either in whole or with respect to
                  any or all of the Services, without liability to FTINL;

            D.    Pursue any other legal or equitable remedy or relief available
                  to it.



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6.    SERVICE LEVEL AGREEMENTS
      ------------------------

      Set forth in Exhibit B-3 are performance standards for each of the
      Services ("SERVICE LEVEL AGREEMENTS" or "SLAS"). Compliance by VGSL with
      each of the Service Level Agreements shall be monitored and reported in
      writing to FTINL by VGSL for each calendar month, unless a different
      timeframe is agreed in writing between the Parties. Except as may
      otherwise be specifically provided herein, VGSL shall exercise all
      reasonable efforts to provide such written reports to FTINL by the
      twentieth day of the next succeeding calendar month.

7.    ACQUISITION OF FLAG CAPACITY BY VGSIEN; EXPANSION OF THE VGSIEN
      ---------------------------------------------------------------

      7.1   The Parties acknowledge that FLAG may from time to time have
            opportunities to acquire terrestrial network capacity and/or
            facilities which may be complementary to the VGSIEN. The Parties
            agree to discuss in good faith the possibility of including any such
            capacity and/or facilities in the VGSIEN.

      7.2   [*]

8.    INDEMNIFICATION; LIMITATION OF LIABILITY
      ----------------------------------------

      8.1   Each Party (in each case the "INDEMNITOR") shall defend and
            indemnify the other Party and its directors, officers, employees,
            representatives and agents (together the "INDEMNITEES") from any and
            all claims, taxes, penalties, interest, expenses, damages, lawsuits
            or other liabilities (including without limitation, reasonable
            attorney fees and court costs) resulting from (i) the failure of the
            Indemnitor to comply with any applicable law or regulation as
            required by Section 13, (ii) knowing infringement or
            misappropriation by the Indemnitor or any of its Representatives in
            the performance of this Agreement of any intellectual property right
            necessary for the Indemnitor's performance

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*   Confidential treatment has been requested from the Securities and Exchange
    Commission. Omitted portions.


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            hereunder, or (iii) the Indemnitor's breach, or failure to exercise
            reasonable care in the performance, of this Agreement; provided,
            however, that VGSL shall not be liable and shall not be obligated to
            indemnify FTINL, and FTINL shall defend and indemnify VGSL
            hereunder, for any claims by any third party, including end-users,
            with respect to services provided by FLAG which may incorporate any
            of VGSL's Services except to the extent that such claim relates to
            the Services provided by VGSL.

      8.2   EACH PARTY'S LIABILITY IN CONNECTION WITH THIS AGREEMENT (WHETHER
            BASED IN CONTRACT, TORT (INCLUDING, WITHOUT LIMITATION, NEGLIGENCE),
            MISREPRESENTATION, WARRANTY OR ANY OTHER LEGAL OR EQUITABLE
            GROUNDS), SHALL IN ALL CASES BE LIMITED TO DIRECT DAMAGES SUFFERED
            BY THE OTHER PARTY, AND THE ENTIRE AGGREGATE LIABILITY OF EACH PARTY
            IN CONNECTION WITH THIS AGREEMENT, OTHER THAN LIABILITY FOR FAILURE
            TO PAY AMOUNTS DUE AND OWING HEREUNDER FOR SERVICES, SHALL NOT
            EXCEED IN ANY CALENDAR YEAR AN AMOUNT EQUAL TO [*] OF THE INITIAL
            PURCHASE. IN NO EVENT WILL EITHER PARTY HAVE ANY LIABILITY IN
            CONNECTION WITH THIS AGREEMENT (WHETHER BASED IN CONTRACT, TORT
            (INCLUDING, WITHOUT LIMITATION, NEGLIGENCE), MISREPRESENTATION,
            WARRANTY OR ANY OTHER LEGAL OR EQUITABLE GROUNDS) FOR, AND EACH
            PARTY HEREBY WAIVES AND RELEASES ANY CLAIMS IT MIGHT OTHERWISE HAVE
            TO BE COMPENSATED BY THE OTHER IN CONNECTION WITH THIS AGREEMENT OR
            OTHERWISE FOR, ANY: (A) CONSEQUENTIAL, SPECIAL, INCIDENTAL OR
            INDIRECT DAMAGES (SUCH AS, WITHOUT LIMITATION, LOSS OF REVENUE,

-------------------
*   Confidential treatment has been requested from the Securities and Exchange
    Commission. Omitted portions.


                                      -16-
<Page>

            LOSS OF PROFIT, LOSS OF DATA, LOSS OF USE, LOSS OF GOODWILL, LOSS OF
            SAVINGS, INTERRUPTION OF BUSINESS OR CLAIMS OF THIRD PARTIES), EVEN
            IF SUCH FIRST PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH
            LOSSES OR DAMAGES; OR (B) PUNITIVE OR EXEMPLARY DAMAGES.

9.    RELATIONSHIP OF THE PARTIES
      ---------------------------

      The Parties acknowledge and agree that the relationship between them is
      solely that of independent contractors, and nothing herein shall be deemed
      to constitute a partnership between the Parties nor the appointment of one
      of the Parties as agent for the other. Neither Party, nor their respective
      employees, agents or representatives, has any right, power or authority to
      act or create any obligation, express or implied, on behalf of the other
      Party.

10.   FORCE MAJEURE

      10.1  Other than with respect to failure to make payments due hereunder,
            neither Party shall be liable under this Agreement for delays,
            failures to perform, damages, losses or destruction, or malfunction
            of any equipment, or any consequence thereof, caused by or due to
            fire, earthquake, flood, water, the elements, third party labor
            disputes, utility curtailments, power failures (provided that VGSL
            shall have provided reasonable backup in relation to industry
            standards), explosions, civil disturbances, governmental actions,
            shortages of equipment or supplies, unavailability of
            transportation, acts or omissions of third parties, or any other
            cause beyond its reasonable control; provided, however, that in the
            event that any such event of force majeure causes any delay or
            failure on the part of VGSL to deliver any Service on any Route for
            a continuous period of 180 days or more, FTINL may terminate this
            Agreement as to such Service on such Route or PoP by notice to VGS
            in writing effective immediately. VGSL shall give FTINL notice
            promptly after it becomes aware of the occurrence of an event of the
            types specified in this



                                      -17-
<Page>

            Section, and shall use commercially reasonable efforts to mitigate
            the impact of any such event.

      10.2  The Parties acknowledge that at time of this Agreement, some of the
            licenses, permits and consents required for the installation and
            operation of the VGSIEN have not been obtained. VGSL shall not be
            liable for any failure or delay in providing any Service which is
            due to failure or delay in obtaining any license, certification,
            authorization or similar governmental authority needed to supply
            such Service, provided that VGSL shall have made commercially
            reasonable efforts to obtain such authority. VGSL and FTINL shall,
            and shall procure that the other members of VGSL and FLAG,
            respectively, shall, cooperate in good faith to use their respective
            assets, and to take such steps, as may be reasonable and practicable
            to avoid or limit the impact of any such failure or delay.

11.   DISPUTE RESOLUTION
      ------------------

      11.1  Except as otherwise provided in Section 4, all disputes,
            controversies or differences arising out of this Agreement will be
            submitted by the Parties to a panel composed of one principal
            appointed by each of the Parties. This panel will meet for three
            days, or for such longer period as they may agree, in order to
            resolve the dispute, controversy or difference. All information
            exchanged by the principals in resolving the dispute, controversy,
            or difference may be used by the Parties only for the purpose of
            resolving the dispute, controversy, or difference and for no other
            purpose except as may be agreed by the Parties in writing. If the
            principals resolve the dispute, the terms of the resolution will be
            set forth in a written settlement agreement that will be signed by
            the Parties. If the dispute, difference, or controversy is not
            resolved by the principals after three days of meetings, or for such
            longer period as the principals may agree, then the Parties may
            pursue formal arbitration as set forth below. Each Party will bear
            its own costs in connection with this informal dispute resolution
            process except as the Parties otherwise agree in writing. Nothing in
            the



                                      -18-
<Page>

            foregoing shall be deemed to limit any rights or remedies available
            to either Party at law or in equity.

      11.2  In the event that a dispute remains unsettled after the procedures
            set forth above have been exhausted, either Party notify the other
            in writing that the dispute is being submitted to arbitration in
            accordance with and subject to the Rules of Arbitration of the
            International Chamber of Commerce and finally settled by three
            arbitrators appointed in accordance with such rules, unless the
            Parties to the arbitration agree upon a single arbitrator under such
            rules. The place of arbitration shall be London, U.K. The
            arbitrators shall decide any such dispute strictly in accordance
            with the governing law specified in Section 14.6. Any decision or
            award of the arbitral tribunal shall be final and binding upon the
            Parties, and judgment on the decision or award may be entered in any
            court having jurisdiction thereof or having jurisdiction over either
            of the Parties or any of their assets, and the Parties hereby
            consent to the jurisdiction of any court in a proceeding to enforce
            such decision or award. The arbitrator(s) shall have the right to
            award costs, including legal fees.

12.   CONFIDENTIALITY
      ---------------

      12.1  Each Party agrees that all information furnished to it by the other
            Party (or its Affiliates), or to which it has access under this
            Agreement, shall be deemed the confidential and proprietary
            information or trade secrets (collectively referred to as
            "PROPRIETARY INFORMATION") of the Disclosing Party and shall remain
            the sole and exclusive property of the Disclosing Party (the Party
            furnishing the Proprietary Information referred to as the
            "DISCLOSING PARTY" and the other Party referred to as the "RECEIVING
            PARTY"). Neither Party shall use the Proprietary Information of the
            other Party for any purpose other than the performance of its
            obligations under this Agreement. Each Party shall treat the
            Proprietary Information of the other Party, and the contents of this
            Agreement, in a confidential manner and shall not, without the
            written consent of the Disclosing Party, directly or indirectly
            disclose the same to anyone other



                                      -19-
<Page>

            than its employees and Affiliates, and its consultants, vendors and
            contractors, who need to know such information for the purposes of
            this Agreement and who agree to be bound by the terms of this
            Section 12.

      12.2  The confidentiality of obligations of this Section 12 do not apply
            to any portion of the Proprietary Information which is (i) or
            becomes public knowledge through no fault of the Receiving Party;
            (ii) in the lawful possession of Receiving Party prior to disclosure
            of the Proprietary Information to the Receiving Party by the
            Disclosing Party (as confirmed by the Receiving Party's records); or
            (iii) disclosed to the Receiving Party without restriction on
            disclosure by a person who has the lawful right to disclose the
            information. If the Receiving Party is requested or legally
            compelled by any court, agency, authority, department, regulatory
            body or other instrumentality of any government or country to
            disclose any of the Proprietary Information of the Disclosing Party
            or any of the contents of this Agreement, the Receiving Party agrees
            that it will provide the Disclosing Party with prompt written notice
            of such requests so that the Disclosing Party has the opportunity to
            pursue its legal and equitable remedies regarding potential
            disclosure, and the Receiving Party will seek confidential treatment
            for any such information which it is ultimately required to
            disclose.

      12.3  Each Party acknowledges that its breach or threatened breach of this
            Section 12 may cause the Disclosing Party irreparable harm which
            would not be adequately compensated by monetary damages.
            Accordingly, in the event of any such breach or threatened breach,
            the Receiving Party agrees that equitable relief, including
            temporary or permanent injunctions, is an available remedy in
            addition to any legal remedies to which the Disclosing Party may be
            entitled.

      12.4  Neither Party may use the name, logo, trade name, service marks,
            trade marks, or printed materials of the other Party, in any
            promotional or advertising material, statement, document, press
            release or broadcast without the prior



                                      -20-
<Page>

            written consent of the other Party, which consent may be granted or
            withheld at the other Party's sole discretion.

      12.5  Each Party shall ensure that each of its managers and executive
            employees engaged in Alliance is legally bound by confidentiality
            obligations in connection with his or her employment by such Party.

13.   COMPLIANCE WITH LAWS
      --------------------

      During the term of this Agreement, the Parties shall comply with all
      local, state, federal and national laws and regulations applicable to this
      Agreement and to their respective businesses. Further, each Party shall
      obtain, file and maintain any tariffs, permits, certifications,
      authorizations, licenses or similar documentation as may be required by
      any governmental agency having jurisdiction over its business
      ("AUTHORIZATIONS"). Upon the request of a Party, which request shall be no
      more frequent than once every six months (unless based on a request or an
      order of a governmental agency having jurisdiction over either Party), the
      other Party will provide documentation showing that the Party has complied
      with applicable governmental requirements. The Parties shall conform with
      applicable privacy directives, laws and regulations governing their
      businesses.

14.   MISCELLANEOUS
      -------------

      14.1  PUBLICITY. (a) Neither Party will make any public announcement of
            the formation of the Alliance, or of the execution of this
            Agreement, without the prior consent of the other Party, which
            consent shall not be unreasonably withheld or delayed; provided that
            a Party may make such announcement without such prior consent if
            such an announcement is required by applicable laws or regulations
            or the rules of any applicable stock exchange and it is
            impracticable to obtain such prior consent.

            (b) The Parties will use commercially reasonable efforts to ensure
            that any press release, announcement or other public communication,
            including any



                                      -21-
<Page>

            issued by a controlled affiliate participating in the VGSIEN,
            regarding FLAG's participation in the VGSIEN shall be consistent
            with the spirit that VGSL and FTINL have formed a network alliance
            with respect to the VGSIEN rather than a supplier/customer
            relationship. Further, VGSL will also advise Genuity, Inc. that VGSL
            and FTINL have formed a "network alliance" and request that, in the
            event that Genuity, Inc. might discuss FLAG and its participation in
            the VGSIEN with third parties, it do so in a manner consistent with
            the spirit of the network alliance.

      14.2  WAIVERS. Except as set forth in Section 4, no waiver of any term or
            condition of this Agreement shall be enforceable unless it is in
            writing and signed by the Party against whom it is sought to be
            charged. No failure or delay by either Party in exercising any
            right, power or remedy will operate as a waiver of any such right,
            power or remedy, unless otherwise provided herein. The waiver by
            either Party of any of the covenants, conditions or agreements to be
            performed by the other or any breach thereof shall not operate or be
            construed as a waiver of any subsequent breach of any such covenant,
            condition or agreement.

      14.3  ASSIGNMENT. Neither Party may assign or transfer its rights or
            obligations under this Agreement without the other Party's written
            consent. Any assignment or transfer without the required consent is
            void. The foregoing notwithstanding, either Party may assign this
            Agreement to an entity which is directly or indirectly wholly owned
            either by such Party or by a company which directly or indirectly
            wholly owns such Party without the other Party's consent.

      14.4  INTEGRATION; CONSISTENCY. This Agreement and all Exhibits, schedules
            and other attachments attached hereto (which Exhibits, schedules and
            other attachments are hereby incorporated by reference), represent
            the entire agreement between the Parties with respect to the subject
            matter hereof and supersede and merge all prior agreements,
            promises, understandings, statements, representations, warranties,
            indemnities and inducements to the



                                      -22-
<Page>

            making of this Agreement relied upon by either Party, whether
            written or oral. In the event of any inconsistency between the terms
            of this Agreement and the terms of any Exhibits, schedules and other
            attachments incorporated herein, the terms of such Exhibits,
            schedules and other attachments shall prevail.

      14.5  CONSTRUCTION. The language used in this Agreement is deemed the
            language chosen by the Parties to express their mutual intent. No
            rule of strict construction shall be applied against either Party.
            Article and Section headings are used in this Agreement for purposes
            of convenience only, and shall not be deemed a part of this
            Agreement nor used to interpret or construe the provisions hereof.
            Any reference herein to any article, section, subsection, paragraph,
            subparagraph, exhibit, schedule or attachment shall be deemed a
            reference to such portion of this Agreement unless otherwise
            specified.

      14.6  GOVERNING LAW. This Agreement will be construed and enforced in
            accordance with the law of the state of New York, without regard to
            that state's choice of law principles.

      14.7  NOTICES. All notices, including but not limited to, demands,
            requests and other communications required or permitted hereunder
            (not including Invoices) shall be in writing and shall be deemed
            given: (i) when delivered in person, (ii) 24 hours after deposit
            with an overnight delivery service for next day delivery, (iii) the
            same day when sent by facsimile transmission during normal business
            hours, receipt confirmed by sender's equipment, or (iv) seven
            Business Days after deposit in the official mail service of the
            sender's jurisdiction, postage prepaid, registered or certified
            mail, return receipt requested, and addressed to the recipient Party
            at the address set forth below:



                                      -23-
<Page>

<Table>
<S>                                 <C>
            If to FTINL or FLAG:    FLAG Telecom Ireland Network Limited
                                    Office 708
                                    Premier Business Centre
                                    Dublin, Ireland

            with a copy to:         FLAG Telecom Limited
                                    9 South Street
                                    London W1K 2XA, United Kingdom
                                    Attn: General Counsel
                                    Facsimile #: +44-20-7317-0898

            If to VGSL:             Verizon Global Solutions Inc.
                                    110 Allen Road
                                    Liberty Corner, New Jersey 07938, USA
                                    Attn: Group Vice President of Carrier Sales
                                    Facsimile #: +1-908-647-3108

            with a copy to:         John C. Cuddy, Esq.
                                    1095 Avenue of the Americas, 38th Floor
                                    New York, New York 10036, USA
                                    Facsimile #: +1-212-840-1110
</Table>

      14.8  COUNTERPARTS. This Agreement may be executed in several
            counterparts, each of which shall constitute an original, but all of
            which shall constitute one and the same instrument.

      14.9  NO THIRD PARTY BENEFICIARIES. The provisions of this Agreement and
            the rights and obligations created hereunder are intended for the
            sole benefit of VGS and FLAG, and do not create any right, claim or
            benefit on the part of any other person not a Party to this
            Agreement.

      14.10 SURVIVAL. Any obligations of the Parties relating to monies owed, as
            well as those provisions relating to confidentiality, limitations on
            liability and indemnification, shall survive termination of this
            Agreement.

      14.11 SEVERABILITY. The illegality or unenforceability of any provision of
            this Agreement does not affect the legality or enforceability of any
            other provision or portion. If any provision or portion of this
            Agreement is deemed illegal or unenforceable for any reason, there
            shall be deemed to be made such minimum



                                      -24-
<Page>

            change in such provision or portion as is necessary to make it valid
            and enforceable as so modified.

      14.12 CUMULATIVE RIGHTS AND REMEDIES. Except as may otherwise be provided
            herein, the assertion by a Party of any right or the obtaining of
            any remedy hereunder shall not preclude such Party from asserting or
            obtaining any other right or remedy, at law or in equity, hereunder.

      14.13 AMENDMENTS. Any amendments or modifications to this Agreement must
            be in writing and signed by a Vice President (or higher level
            officer) of each of the Parties.

      14.14 AUTHORITY. Each individual executing below on behalf of a Party
            hereby represents and warrants to the other Party that such
            individual is duly authorized to execute and deliver this Agreement.
            By its signature below, each Party acknowledges and agrees that
            sufficient allowance has been made for review of this Agreement by
            respective counsel and that each Party has been advised by its legal
            counsel as to its legal rights, duties and obligations under this
            Agreement.



                                      -25-
<Page>


      IN WITNESS WHEREOF, the Parties have executed this Agreement as of the
date first set forth above.

FLAG TELECOM IRELAND NETWORK           VERIZON GLOBAL SOLUTIONS
LIMITED                                HOLDINGS II LTD.



By:                                    By:
    ---------------------------           ---------------------------
    Name:                                 Name:
    Title:                                Title:


<Page>



                                    EXHIBIT A
                                    ---------

                                INITIAL FORECAST
                                ----------------

<Table>
<Caption>
TOTAL TRAFFIC BY SERVICE 2001

                                      --------------------------------------------------------------------
                                                                     TOTAL
                                      --------------------------------------------------------------------
A-END      B-END       INCLUDED OR
                     EXCLUDED BY GSI   E1      DS3       STM1        STM-4s      STM-16s    WAVELENGTHS
                        AT FLAG
                       DIRECTION
                                      --------------------------------------------------------------------
<S>        <C>       <C>               <C>     <C>       <C>         <C>         <C>        <C>

</Table>


     [*]




---------------------
*  Confidential treatment has been requested from the Securities and Exchange
   Commission. Omitted portions.


<Page>

<Table>
<Caption>
TOTAL TRAFFIC BY SERVICE 2001

                                      --------------------------------------------------------------------
                                                                     TOTAL
                                      --------------------------------------------------------------------
A-END      B-END       INCLUDED OR
                     EXCLUDED BY GSI   E1      DS3       STM1        STM-4s      STM-16s    WAVELENGTHS
                        AT FLAG
                       DIRECTION
                                      --------------------------------------------------------------------
<S>        <C>       <C>               <C>     <C>       <C>         <C>         <C>        <C>

</Table>


     [*]




---------------------
*  Confidential treatment has been requested from the Securities and Exchange
   Commission. Omitted portions.



                                  Exhibit A-2
<Page>




<Table>
<Caption>
TOTAL TRAFFIC BY SERVICE 2001

                                      --------------------------------------------------------------------
                                                                     TOTAL
                                      --------------------------------------------------------------------
A-END      B-END       INCLUDED OR
                     EXCLUDED BY GSI   E1      DS3       STM1        STM-4s      STM-16s    WAVELENGTHS
                        AT FLAG
                       DIRECTION
                                      --------------------------------------------------------------------
<S>        <C>       <C>               <C>     <C>       <C>         <C>         <C>        <C>

[*]


                       INCLUDED
                       Excluded

                                TOTAL
</Table>







---------------------
*  Confidential treatment has been requested from the Securities and Exchange
   Commission. Omitted portions.

                                  Exhibit A-3


<Page>


                                    EXHIBIT B
                                    ---------

                    SERVICE PRICING FOR INCREMENTAL PURCHASES
                    -----------------------------------------

PRICING PRINCIPLES
------------------

Pricing for the Initial Purchase is contained in Exhibit D. VGSL's prices for
Incremental Purchases shall be [*] as set forth in this Exhibit. [*].

IRU PRICES
----------

The "IRU PRICE" for each Service will be [*]. Service pricing will in general
include the following cost components:

[*]

Methodology

In accordance with the above principles, the detailed methodology is as follows:

[*]




---------------------
*  Confidential treatment has been requested from the Securities and Exchange
   Commission. Omitted portions.
<Page>



O&M CHARGES
-----------

The annual operations and maintenance charge ("O&M CHARGE") for each Service
will be [*] paid for such Service, as follows:

[*]

Any additional costs incurred due to FLAG-requested re-arrangements, service
requests, and/or FLAG requirements outside of normal industry practices will be
incremental [*].

[*]







---------------------
*  Confidential treatment has been requested from the Securities and Exchange
   Commission. Omitted portions.



<Page>



                                  EXHIBIT B - 1
                                  -------------

                  SERVICE SCHEDULE - MANAGED BANDWIDTH SERVICES
                  ---------------------------------------------

15.   PRODUCT DEFINITION

Managed Bandwidth Service is offered on a PoP-to-PoP basis, where FLAG
interconnects to the service in a PoP location. Managed Bandwidth Services are
available in DS1/E1 or higher bandwidth rates. A PoP is defined as a Point of
Presence within the VGSIEN.

      15.1  Bandwidth Rates

Managed Bandwidth Services PoP-to-PoP only:

o     DS1, E1
o     DS3, E3
o     OC3, OC-3c, STM1
o     OC-12, OC-12c STM4
o     OC-48, STM16
o     OC-192, STM64

The Managed Bandwidth Service is based on SONET/SDH as the underlying network
technology. Synchronous Optical Network is a family of optical transmission
rates and interface standards allowing internetworking of products from
different vendors. Base optical rate is 51.840 Mb/s. Higher rates are direct
multiples. DS1, DS3, SONET (OC-3, OC-12, OC-48, OC-3c, OC-12c, and OC-48c) SDH
(STM1, STM4, STM16, STM64)

Optical Carrier level 1 (OC-1): The optical signal that results from an optical
conversion of an electrical STS-1 signal (51.840 Mb/s).

o     STM1/OC-3: Optical Carrier level 3 signal operating at 155.520 Mb/s.
o     STM4/OC-12: Optical Carrier level 12 signal transmitting at 622.080 Mb/s.
o     STM16/OC-48: Optical Carrier level 48 signal transmitting at 2488.32 Mb/s.
o     STM64/OC-192 Optical Carrier level 192 signal transmitting at 9953.28 Mb/s

16.   MANAGED BANDWIDTH SERVICES (POP-TO-POP) SERVICE ARRANGEMENTS
      ------------------------------------------------------------

      16.1  VGSIEN Network Facilities with Redundant Capabilities

      The VGSIEN Transport Network will be managed by VGSI's SMC operations [by
      07/01/01]. PoP-to-PoP bandwidth will be offered to FLAG from DS1/E1
      through STM1/64,/OC-N.



<Page>

      The VGSIEN PoPs are located in London, Paris, Brussels, Amsterdam,
      Frankfurt and Duesseldorf.

      The VGSIEN PoP locations are depicted above. Managed Bandwidth services
      over the VGSIEN will be available between any of these PoP locations.

      16.2  Customer Interface Specification

      FLAG will interface to the Managed Bandwidth Service with direct
      connections at VGSIEN PoPs. The meet-me point is an electrical or optical
      interface (DS1/E1, E3/DS3, STM1, STM4, STM16, STM64). The VGSIEN will
      utilize the Lucent BWD network element to groom STM1 segments, Digital
      Cross-connect Systems will be used to groom DS1/E1 segments and electrical
      interfaces will be made available to FLAG.

      LOCAL ACCESS PROVISIONING

      Not included

      BANDWIDTH

      DS1, E1
      DS3, E3
      OC3, OC-3c STM1
      OC-12, OC-12c STM4
      OC-48 STM16
      OC-192 STM 64

      MANAGED BANDWIDTH PRESENTATION

      DCS cross-connect
      LGX cross-connect
      Standardized 1310 nm or 1550 nm

      BACKBONE TECHNOLOGY

      DWDM

      16.3  Reliability

o     Diversely routed unprotected paths
o     One spare channel per link
o     Bit error rate performance per G.826
o     Jitter and Wander compliant with G.813 and G.825


<Page>



                                  EXHIBIT B - 2
                                  -------------

                SERVICE SCHEDULE - WAVELENGTH BANDWIDTH SERVICES
                ------------------------------------------------

1.    PRODUCT DEFINITION

Wavelength bandwidth capacity is provided at the 2.5Gbps (OC-48c) and 10Gbps
(OC-192c) based on DWDM (dense wave division multiplexing) technology with the
inherent capability of providing wavelength services.

VGSIEN is a WDM Optical Ring that provides transit on the 10 Gbps bandwidth.
VGSI monitors optical parameters on a PoP-to-PoP basis. Dense Wavelength
Division Multiplexing (DWDM) systems are coupled with optical amplifier
solutions to provide optical transport scalable to 1.6 terabits per second over
a single strand of fiber or can transport optical signals up to 4000 km without
electrical regeneration.

DWDM is available in all VGSIEN PoP locations depicted in the diagram below.
Wavelength services may be offered between any two VGSIEN PoP locations on the
network ring.

[GRAPHIC]

The diagram above depicts the VGSIEN North European ring. All PoPs have DWDM
capabilities.

As an example, if FLAG buys a wavelength from GSI between Amsterdam and London,
the service is sold as a linear service, and the redundant portion would be made
available at an additional cost to FLAG.

2.    FEATURES
      --------

   o     Concatenation: Multiple signals are linked together with reduced
         overhead.

   o     Transparency: FLAG dictates the type of service received from the
         OC-192/OC-48 bandwidth. Protection Switching: Protection switching
         and restoration is provided by VGSL.

   o     Clear Channel: The VGSIEN is Clear Channel capable.


<Page>

   o     Customized Bandwidth: The OC-192/48 bandwidth may be divided into
         segments.

3.    INTERFACE SPECIFICATIONS
      ------------------------

      FLAG will interface to the VGSIEN Wavelength bandwidth service with direct
      optical connections on the LGX bay which interconnects the VGSIEN DWDM
      equipment in the VGSIEN PoPs. The meet-me point is an optical interface on
      the Light Guide Crossconnect system (OC-48, OC-192).

      LOCAL ACCESS PROVISIONING

      Not included

      BANDWIDTH

      2.5   Gbps/10 Gbps

      BANDWIDTH PRESENTATION

      Standardized G.957

      WAVELENGTH FREQUENCIES

      Standardized 1310 nm or 1550 nm

      BACKBONE TECHNOLOGY

      Dense Wave Division Multiplexing

      2.1   Reliability

      o     Diversely routed unprotected paths
      o     One spare channel per link
      o     Bit error rate performance per G.826
      o     Jitter and Wander compliant with G.813 and G.825

<Page>



                                  EXHIBIT B - 3
                                  -------------

                            SERVICE LEVEL AGREEMENTS
                            ------------------------

1.    SLA MEASUREMENT
      ---------------

Each SLA is outlined below and will be measured each month for each Service.

2.    SERVICE PROVISIONING
      --------------------

o     VGSL will respond within [*] hours to a request for Service Feasibility
      for those Services included in FLAG's Initial Purchase which do not entail
      any special design requirements.

o     VGSL will deliver Services in five business days from receipt of a Service
      Order. This timeframe shall apply only to Services included in a FLAG
      Purchase Commitment which do not entail any special design requirements
      and to orders in excess of the Purchase Commitment (but still within the
      associated Forecast) with respect to which VGSL has provided an
      affirmative response to FLAG's request for Service Feasibility.

The Service Feasibility and Provisioning SLAs will not apply if more than [*] of
the Services included in a quarterly forecast is requested in a contiguous [*]
day period. In such cases, VGSL will nevertheless use commercially reasonable
efforts to meet such standards.

3.    SERVICE AVAILABILITY
      --------------------

      The Service Availability percentage will be calculated and measured as
      follows:

      Service Availability %       P   =   A  X  100
                                           ---------
                                              B

      A is the number of hours for which the circuit was available in the
      relevant month. This is based on VGS OSS reporting tools.

      B is the total number of hours in the month for which the availability is
      being calculated.

      P is the resulting Service Availability percentage.

      Service will not be deemed to be unavailable, for the purposes of the
      calculation above, if the unavailability arises from or is otherwise
      caused by:

      o     FLAG requesting VGSL to test a particular circuit although no fault
            has been detected or reported by VGS;


-------------------
*  Confidential treatment has been requested from the Securities and Exchange
   Commission. Omitted portions.
<Page>


      o     A Service being physically modified or altered in any way at FLAG's
            request in accordance with this Agreement (i.e., not record changes)
            unless VGS has not performed the re-arrangement properly;

      o     Any suspension of the Service in accordance with the terms of this
            Agreement;

      o     Any failure or fault arising pursuant to a Force Majeure event;

      o     FLAG failing to operate the Service in accordance with the terms of
            this Agreement.

The period of unavailability of any Managed Bandwidth Service including
Wavelength Services (an "Outage") will be measured from the time the
unavailability is reported to the VGS Service Management Center by FLAG in
accordance with this Agreement

4.    PLANNED WORK NOTIFICATION
      -------------------------

If Service affecting, VGSL will notify FTINL of planned work [*] before the work
commences

If not Service-affecting, VGSL will endeavor to notify FTINL of planned work [*]
before the work commences

5.    MEAN TIME TO REPAIR (SERVICE RESTORATION TIME)
      ----------------------------------------------

Mean Time to Repair (MTR) will be not more than [*] hours for E1s/DS1s,
E3s/DS3s, OC1s, OC3s, OC12s,OC48s, OC-192. SDH: STM-1, STM-4, STM-16, and
STM-64.

VGS's Customer Care Center is available 24 hours a day, 7 days a week.

6.    CIRCUIT PERFORMANCE
      -------------------

Circuit performance is measured using two parameters: Availability and
Error-Free Seconds.

AVAILABILITY is a measure of the relative amount of time during which the
circuit is available for use. Unavailability begins when the Bit Error Ratio
(BER) in each second is worse than 1.0 E-3 for a period of 10 consecutive
seconds in conformance with ITU Standard G.826.

ERROR-FREE SECONDS (EFS) and ERRORED SECONDS (ES) are the primary measure of
error performance. An Error-Free Second is defined as any second in which no bit
errors are received. An Errored Second is any second in which one or more bit
errors are received.


-------------------
*  Confidential treatment has been requested from the Securities and Exchange
   Commission. Omitted portions.

<Page>

GENERAL PERFORMANCE OBJECTIVES:

Network Availability for "on net" (PoP-to-PoP) Wavelength and Managed Bandwidth
Services:

      o     [*]% for Linear Network

      o     [*]% for SONET/SDH Ring Network (when available)



AUTO-RESTORAL TIME (SONET/SDH BASED SERVICES) (DETERMINED BY SWITCHING PROTOCOL)
--------------------------------------------------------------------------------

      [*]

LATENCY
-------

      [*]

Scheduled maintenance is excluded from the performance objectives stated above.

SERVICE OUTAGES / TESTING AND CONFIRMATION PROCEDURES

A Service shall be deemed to be in an "Outage" condition if, following the
Service's In Service Date, while VGS is actually using or attempting to use such
circuit, the circuit loses continuity and becomes unavailable as defined above
or the MTR exceeds [*].

Service Outages do not include:

      (a) Outage periods when FLAG has released the Service to VGS for
      maintenance purposes or to make rearrangements or FLAG requested changes
      in the Service;

      (b) Non-Service affecting failures of VGS applications, equipment or
      facilities;

      (c) Acts or omissions of FLAG or any user of the Service authorized by
      FLAG; or

      (d) Outages resulting from Force Majeure.



*  *  *

Service Availability and Circuit Performance for all circuits between PoPs will
be determined on a rolling [*]. The Parties will work together to keep this
determination period in pace with changing market standards.


-------------------
*  Confidential treatment has been requested from the Securities and Exchange
   Commission. Omitted portions.

<Page>

7.    CONTACTS
      --------

In order to provide a standard communication and escalation channel, VGS will
provide contact and escalation names and numbers, which correspond to the FLAG
contacts, for each of the key functions identified below. FLAG and VGS will
jointly create a single point of contact for Service Provisioning and a separate
single point of contact for Fault Management.

<Table>
<Caption>
--------------------------------------------------------------------------------------------------------------------
REQUIREMENT                              FLAG GROUP RESPONSIBLE                 VGS GROUP RESPONSIBLE
--------------------------------------------------------------------------------------------------------------------
<S>                                      <C>                                    <C>
Service Feasibility and Quotation        Customer Provisioning Centre (CPC)     Customer Support Center (CSC)

Service Ordering                         CPC                                    CSC

Service Provisioning and Activation      CPC                                    CSC

Service Hand-over                        CPC                                    CSC

Service Operations/Fault Mgmt            Network Operations Centre (NOC)        Service Management Center (SMC)

Planned Work                             Customer Care                          Carrier Relations

Escalation                               Carrier Relations                      Carrier Relations
---------------------------------------- -------------------------------------- --------------------------------------
</Table>

<Table>
<Caption>
FLAG GROUP CONTACT INFORMATION:
--------------------------------------------------------------------------------------------------------------------
GROUP                           CONTACT                      PHONE                        E-MAIL
--------------------------------------------------------------------------------------------------------------------
<S>                             <C>                          <C>                          <C>
CPC                             Mike Quinn

NOC                             Jason Tutty

Customer Care                   Customer Rep

Carrier Relations               Director-Carrier Relations
--------------------------------------------------------------------------------------------------------------------
</Table>

<Table>
<Caption>
VGS GROUP CONTACT INFORMATION:
--------------------------------------------------------------------------------------------------------------------
GROUP                           CONTACT                      PHONE                        E-MAIL
--------------------------------------------------------------------------------------------------------------------
<S>                             <C>                          <C>                          <C>
CSC                             Steve Brandt                 908-607-7240

NOC                             Phyllis Fasone               908-607-7060

Customer Care                   Customer Rep

Carrier Relations               Glenda Hoppe                 908-607-7212
--------------------------------------------------------------------------------------------------------------------
</Table>

<Page>

8.    CREDITS
      -------

Credits will be applied for failure to meet commitments detailed in the SLAs as
set forth in the tables below. Credits for failures to meet SLA commitments will
be capped at $[*] over any [*] period. All cost and credit amounts in the tables
below are in US$.

<Table>
<Caption>
----------------------------------------------------------------------------------------------------------------------------
PROVISIONING CREDIT CALCULATION
----------------------------------------------------------------------------------------------------------------------------
                                                                    DAYS BEYOND ISD

----------------------------------------------------------------------------------------------------------------------------
         SERVICE          MONTHLY             ANNUAL            UP TO 3       BETWEEN [*]       BETWEEN [*]       OVER [*]
                          SERVICE COST        SERVICE COST      DAYS          DAYS              DAYS              DAYS
----------------------------------------------------------------------------------------------------------------------------
                                                                    [*]%              [*]%              [*]%           [*]%
----------------------------------------------------------------------------------------------------------------------------
                                                                                           CREDIT
----------------------------------------------------------------------------------------------------------------------------
<S>                       <C>                 <C>               <C>           <C>               <C>               <C>
E1                                 [*]                 [*]          [*]               [*]               [*]            [*]

DS3                                [*]                 [*]          [*]               [*]               [*]            [*]

STM-1                              [*]                 [*]          [*]               [*]               [*]            [*]

STM-4                              [*]                 [*]          [*]               [*]               [*]            [*]

Wavelength                         [*]                 [*]          [*]               [*]               [*]            [*]
----------------------------------------------------------------------------------------------------------------------------
</Table>

<Table>
<Caption>
-------------------------------------------------------------------------------------------------------------------------------
CIRCUIT PERFORMANCE CALCULATION              NETWORK AVAILABILITY

-------------------------------------------------------------------------------------------------------------------------------
                                                                                                                   NOT TO
           MONTHLY                                                                                                 EXCEED
           SERVICE       ANNUAL             [*]% OR                                               LESS THAN        (PER
           COST          SERVICE COST       GREATER         [*]%          [*]%           [*]%       [*]%           ANNUM)
-------------------------------------------------------------------------------------------------------------------------------
                                                                                CREDIT

-------------------------------------------------------------------------------------------------------------------------------
                                            [*]%            [*]%          [*]%           [*]%       [*]%
-------------------------------------------------------------------------------------------------------------------------------
<S>        <C>           <C>                <C>             <C>           <C>            <C>      <C>              <C>
E1             [*]                [*]            [*]           [*]           [*]             [*]        [*]           [*]

DS3            [*]                [*]            [*]           [*]           [*]             [*]        [*]           [*]

STM-1          [*]                [*]            [*]           [*]           [*]             [*]        [*]           [*]

STM-4          [*]                [*]            [*]           [*]           [*]             [*]        [*]           [*]

Wave-length    [*]                [*]            [*]           [*]           [*]             [*]        [*]           [*]
-------------------------------------------------------------------------------------------------------------------------------
</Table>


-------------------
*  Confidential treatment has been requested from the Securities and Exchange
   Commission. Omitted portions.

<Page>

<Table>
<Caption>
-----------------------------------------------------------------------------------------------------
MEAN TIME REPAIR CREDIT CALCULATION

(Pertains only to service unavailability of [*] or more)
-----------------------------------------------------------------------------------------------------
                            MONTHLY SERVICE    ANNUAL SERVICE   [*]% OF ANNUAL     MAXIMUM CREDIT
                                 COST               COST            AMOUNT

-----------------------------------------------------------------------------------------------------
<S>                         <C>                <C>              <C>                <C>
E1                                      [*]               [*]              [*]                [*]

DS3                                     [*]               [*]              [*]                [*]

STM-1                                   [*]               [*]              [*]                [*]

STM-4                                   [*]               [*]              [*]                [*]

Wavelength                              [*]               [*]              [*]                [*]
-----------------------------------------------------------------------------------------------------
</Table>


--------
*   Confidential treatment has been requested from the Securities and Exchange
    Commission. Omitted portions.


<Page>


                                    EXHIBIT C
                                    ---------

                 NETWORK DESCRIPTION; ROLES AND RESPONSIBILITIES
                 -----------------------------------------------


                        [NORTH EUROPEAN NETWORK GRAPHIC]


VGSL and FTINL agree that through the Alliance, VGSL will provide and manage all
network elements and facilities used by the Alliance on the PoP to PoP VGSIEN
network. External to the VGSIEN, FLAG will provide and manage the elements and
systems directly related to FLAG's IP layer and space for FLAG customer
equipment.

VGSL supplied elements:

      o     Fiber

      o     Physical location space (not including any co-location space for
            co-locating FLAG's customers' equipment)

      o     WDM and SDH equipment

      o     DCN and OSS related to the above

FLAG supplied elements

      o     FLAG routers (Juniper)


<Page>

      o     Edge routers

      o     All associated FLAG IP OSS systems

      o     Co-location space for FLAG's customers' equipment


NETWORK DEMARCATION
-------------------

                     [VGS - FLAG Interconnect Point Graphic]



o     A demarcation point will be supplied in each co-location point from which
      point the following relationship will govern FLAG's IP layer equipment
      resident within that location.

o     VGSL will work with FLAG to determine the feasibility and requirements of
      providing "test points" at the very edge of the VGSIEN network at some
      point in the future. FLAG will have access to these "test points" through
      the test systems reporting facilities managed by VGSL. In the interim,
      VGSL will perform manual tests to meet FLAG requirements on a VGSIEN PoP
      to PoP basis.

VGSL RESPONSIBILITIES

o     Provide EFI, operations and maintenance on all VGSIEN network elements and
      facilities. This does not include FLAG's IP layer equipment, network
      systems, and any other FLAG systems.

o     Design of the network, this converts the Service requirements into VGSL's
      network planning and implementation. This includes, without limitation,
      the choice of supplier and suppliers equipment.


                                  Exhibit C-2

<Page>

o     Procure all equipment and fiber including ancillary equipment such as
      power plants, air conditioning, clock distribution circuits.

o     Manage the installation of all the equipment through the supplier(s).

o     Negotiate with the landlords for all required equipment and NOC space.

o     Manage the non-FLAG IP supplier's developmental activities for any
      interfaces between surveillance systems procured under this agreement with
      existing FLAG provided systems.

o     Authorization of payment of relevant suppliers.

o     Provision all VGSIEN network elements between the FLAG IP layer
      demarcation points established at each POP.

o     Provide a basic level of maintenance for FLAG's IP layer equipment as may
      be mutually agreed between the Parties. This will include:

            o     Card replacement

            o     Basic wiring

o     Surveillance of all VGSIEN equipment, except the FLAG IP equipment.

o     Assignment of all transport Services.

o     Implementation of all FLAG requested Services in a timely manner as
      specified in the Service Level Agreements.

o     Maintenance of all equipment and building space. (One exception would be
      the FLAG IP equipment which VGSL would maintain as described above.)

o     Negotiate with suppliers for maintenance support.

o     Manage the performance of all relevant suppliers (equipment, fiber,
      landlords)

o     Preparation of a monthly review of performance and presenting according to
      FLAG's reasonable requirements the same to FTINL for its review.

o     VGSL will provide agreed to network views to FLAG via remote
      terminal-based surveillance devices.

FLAG RESPONSIBILITIES

o     FLAG will EFI FLAG's IP layer equipment and associated DCN equipment.

o     FLAG will provide advanced maintenance and administration of FLAG's IP
      layer equipment and associated DCN including:


                                  Exhibit C-3
<Page>

            o     Troubleshooting

            o     Local and remote configuration

            o     Hardware and software upgrades and augmentation etc.

o     Manage the IP supplier's developmental activities for any interfaces
      between surveillance systems procured under this Agreement.

o     FLAG will perform the surveillance and control function on the Juniper
      routers.

JOINT VGSL-FLAG RESPONSIBILITIES

o     In order to ensure the realization of a targeted, timely network
      implementation, VGSL and FLAG commit to do ongoing, detailed discussions
      of network topology and capacity requirements.

o     VGSL and FLAG will jointly establish escalation contacts, procedures and
      time intervals. The target model is to provide a single point of contact
      that can perform both logging and low level troubleshooting. VGSL and FLAG
      will also establish bureau to bureau, NOC to NOC and cross-departmental
      relationships to handle troubles of differing complexity in an expedient
      and efficient manner.

o     Provisioned and Ordered records will be held by both organizations and
      updated simultaneously as circuits are provided and ceased.

o     Periodic exercises to compare and correct any variations that exist
      between the two sets of records will be carried out. Development of
      mutually agreed automated interfaces between relevant OSS systems to
      maintain these records within a year of executing this Agreement.

o     VGSL and FLAG will co-operate on achieving a means of aligning or
      cross-referencing order references, circuit identification designations
      etc. to enable unambiguous identification of these entities.

SYSTEMS AND OPERATIONS INTERACTIONS

o     VGSL will provide fault, capacity and performance monitoring services
      throughout the VGSIEN network for all elements except FLAG's IP layer
      elements and their associated DCN.

o     VGSL will provide FLAG with a mutually agreed upon "read-only" view of the
      following parameters associated with FLAG's bandwidth on the VGSIEN:

            o     Fault alarms

            o     Pertinent performance indicators


                                  Exhibit C-4
<Page>

o     FLAG will provide pertinent status information regarding FLAG's IP layer
      network elements to VGSL to aid in fault isolation and testing.

o     Mutually agreed interfaces will be developed within a year of executing
      this Agreement to allow for the automated transfer of trouble tickets and
      service orders generated by the FLAG systems into the VGS systems.

o     VGSL will provide Service order confirmations for FLAG's use in order to
      build and maintain a database of orders active circuit information.

o     The following general principles will apply with respect to the BSS and
      OSS systems used by VGS and FLAG:

            o     OSS shall provide maximum amount of flow through for service
                  orders and changes

            o     OSS shall recognize various operational alarms

            o     OSS shall provide customer care work flow and status

            o     OSS shall provide information for customer SLA reports

            o     All information is confidential and cannot be used for
                  competitive purposes

o     Mutually agreed interfaces to FLAG's Workflow Management and Inventory
      systems will be developed in parallel, with mutually agreed automation of
      interfaces being achieved within a year of executing this Agreement.

o     Reporting requirements from systems to enable the generation of update
      information, performance reporting and SLA management to be specified.

o     Ongoing discussions will be conducted to keep both parties informed of the
      timing of various evolutionary milestones in each company's systems
      development/implementation.

o     The Network Alliance agreement covers VGSIEN PoP-to-PoP services and
      therefore any performance measurements and SLAs would only apply to that
      section of an end-to-end circuit. However, both parties agree that they
      will work together in support of the commitments that had been made to
      FLAG's end customers.

o     By the VGSIEN Ready for Service date, the following processes will be
      established between FLAG and VGSL:

            o     Order flow

            o     End to end testing process and responsibilities

            o     Customer acceptance

            o     VGSL and FLAG will establish bureau to bureau, NOC to NOC and
                  cross-departmental relationships to handle the various
                  troubles that will need to be addressed


                                  Exhibit C-5

<Page>



                                    EXHIBIT D
                                    ---------

                     PRICING FOR INITIAL PURCHASE COMMITMENT
                     ---------------------------------------

The purchase price for the Initial Forecast is US$[*] on a [*] year IRU Basis
plus annual O&M Charges as noted below. Accordingly, the purchase price for the
Initial Purchase is US$[*] (plus annual O&M Charges).

[*]
















--------
*   Confidential treatment has been requested from the Securities and Exchange
    Commission. Omitted portions.