EXHIBIT 10.20



                            ENGINEERING, PROCUREMENT
                            AND CONSTRUCTION CONTRACT

                          dated as of November 10, 1998

                                     between

                       VIATEL GLOBAL COMMUNICATIONS, LTD.

                                       and

                         ALCATEL SUBMARINE NETWORKS S.A.

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


                               CIRCE CABLE SYSTEM


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                                TABLE OF CONTENTS

                                                                            Page
     SECTION 1.   DEFINITIONS; INTERPRETATION..................................1

         1.1.   Defined Terms..................................................1

         1.2.   Rules of Construction..........................................1

     SECTION 2.   INTENT.......................................................3

         2.1.   Generally......................................................3

     SECTION 3.  CONTRACT DOCUMENTS............................................3

         3.1.   Form Part of this Contract.....................................3

         3.2.   Conflicts......................................................3

     SECTION 4.   RESPONSIBILITIES OF THE CONTRACTOR...........................4

         4.1.   Scope of Work..................................................4

         4.2.   Technical Information..........................................5

     SECTION 5.   TECHNICAL REQUIREMENTS, PLAN OF WORK AND PROGRESS MEETINGS...5

         5.1.   Technical Requirements.........................................5

         5.2.   Plan of Work...................................................5

         5.3.   Progress Meetings..............................................5

    SECTION 6.    CONTRACTOR TO INFORM ITSELF FULLY............................5

         6.1.   Generally......................................................5

         6.2.   No Liability of Purchaser Persons..............................6

         6.3.   Familiarity....................................................6

     SECTION 7.   COMPLIANCE WITH LAWS; PERMITS................................6

         7.1.   Compliance With Laws...........................................6

         7.2.   Variations Required By Law.....................................6

         7.3.   Permits........................................................7

         7.4.   No Liability...................................................8

     SECTION 8.   MARINE ROUTE SELECTION.......................................8

         8.1.   Desk Study and Marine Route Survey.............................8

         8.2.   Marine Route Survey............................................8

         8.3.   Route Selection, Etc...........................................8



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     SECTION 9.   DESIGN AND PERFORMANCE RESPONSIBILITY........................8

         9.1.   The Contractor Solely Responsible..............................8

         9.2.   No Diminishment................................................8

     SECTION 10.  MAINTENANCE OF BOOKS AND RECORDS.............................9

         10.1.  Maintenance of Records.........................................9

         10.2.  Access to Records..............................................9

     SECTION 11.  TAXES........................................................9

         11.1.  Responsibility for Taxes.......................................9

         11.2.  Exemption from Taxes..........................................10

         11.3.  Withholding...................................................10

     SECTION 12.  INTELLECTUAL PROPERTY RIGHTS................................10

         12.1.  Generally.....................................................10

         12.2.  Injunction....................................................11

         12.3.  Infringement..................................................11

     SECTION 13.  PAYMENTS FOR THE WORK.......................................11

         13.1.  Initial Contract Price........................................11

         13.2.  General Conditions of Payment.................................11

         13.3.  [REDACTED]....................................................13

         13.4.  Contractor Invoices...........................................14

         13.5.  The Purchaser's Right to Withhold Payment.....................15

         13.6.  Overdue Payments..............................................16

     SECTION 14.  DEDUCTIONS FROM PAYMENTS TO THE CONTRACTOR..................16

         14.1.  Amounts Payable...............................................16

         14.2.  Deduction.....................................................16

         14.3.  Certificate...................................................17

     SECTION 15.  CONTRACTOR BOND.............................................17

         15.1.  Generally.....................................................17

         15.2.  Form of Contractor Bond.......................................17

         15.3.  Issuer Requirements...........................................17

         15.4.  Return of Contractor Bond.....................................17

     SECTION 16.  CONTRACT VARIATIONS.........................................18

         16.1.  Generally.....................................................18


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         16.2.  Amendment.....................................................19

         16.3.  Other Adjustments.............................................19

         16.4.  Effect of Contract Variations.................................19

         16.5.  Pricing.......................................................19

         16.6.  Valuation.....................................................19

         16.7.  No Delay......................................................20

         16.8.  Obsolete or Surplus Supplies..................................20

     SECTION 17.  TECHNICAL SUPPORT, SPARE PARTS, ETC.........................20

         17.1.  Technical Support.............................................20

         17.2.  Spare Parts...................................................20

         17.3.  [REDACTED]....................................................21

     SECTION 18.  [REDACTED]

     SECTION 19.  FORCE MAJEURE...............................................22

         19.1.  Definition....................................................22

         19.2.  Mitigation....................................................23

         19.3.  Notice........................................................23

         19.4.  Application...................................................23

         19.5.  Extension of Time.............................................24

         19.6.  Limitation....................................................24

     SECTION 20.  PROJECT MANAGER AND THE PURCHASER'S REPRESENTATIVE..........24

         20.1.  Project Manager...............................................24

         20.2.  The Purchaser's Representative................................25

     SECTION 21.  INSPECTION RIGHTS...........................................25

         21.1.  Generally.....................................................25

         21.2.  Covered Work..................................................25

         21.3.  No Relief.....................................................26

     SECTION 22.  DEFECTIVE WORK..............................................26



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     SECTION 23.  SUSPENSION OF WORK BY THE PURCHASER.........................26

         23.1.  Generally.....................................................26

         23.2.  The Contractor's Duties Upon Suspension.......................27

         23.3.  The Contractor's Duties After Suspension......................27

     SECTION 24.  TERMINATION FOR CONVENIENCE.................................27

         24.1.  Termination...................................................27

         24.2.  Termination Date..............................................27

         24.3.  Termination Payment (Convenience).............................28

     SECTION 25.  EVENTS OF DEFAULT AND REMEDIES..............................29

         25.1.  Events of Default and Remedies................................29

         25.2.  No Prejudice..................................................31

         25.3.  Notice of Exercise of Remedies................................32

     SECTION 26.  TAKE OVER AND PAYMENTS TO THE PURCHASER.....................32

         26.1.  Replacement Contractors.......................................32

         26.2.  No Right of Compensation......................................32

         26.3.  Payments to the Purchaser.....................................32

     SECTION 27.  TERMINATION FOR DEFAULT.....................................32

         27.1.  Effect of Termination.........................................32

         27.2.  Termination Date..............................................33

         27.3.  Right to Terminate............................................33

         27.4.  Right to Complete the Work....................................33

     SECTION 28.  DUTIES UPON TERMINATION.....................................33

         28.1.  Generally.....................................................33

         28.2.  Subcontractor Claims..........................................35

         28.3.  Funds Held by the Purchaser...................................35

     SECTION 29.  LIMITATION OF LIABILITY.....................................35

         29.1.  No Consequential Damages......................................35

         29.2.  Other Limitations.............................................35

         30.1.  Reasonable Precautions........................................36

         30.2.  Waste Disposal................................................36

SECTION 31.     PERFORMANCE TESTS.............................................36

         31.1.  Generally.....................................................36

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         31.2.  Right of Waiver...............................................36

         31.3.  Long-Term Obligations.........................................37

         31.4.  Operating Revenues............................................37

SECTION 32.     SYSTEM ACCEPTANCE.............................................37

         32.1.  Initial System Commissioning Report...........................37

         32.2.  Provisional Acceptance........................................37

         32.3.  Commercial Acceptance.........................................38

         32.4.  Failure to Achieve Provisional or Commercial Acceptance.......39

         32.5.  Final Acceptance..............................................40

SECTION 33.     WARRANTIES....................................................40

         33.1.  General Warranties............................................40

SECTION 34.     ASSIGNMENT AND SUBCONTRACTING.................................43

         34.1.  Generally.....................................................43

         34.2.  Subcontracts..................................................43

         34.3.  Existing Subcontracts.........................................44

         34.4.  Breach........................................................44

         34.5.  Conditional Assignment........................................44

SECTION 35.     THE CONTRACTOR'S PERSONNEL....................................44

SECTION 36.     THE PURCHASER'S STAFF.........................................44

         36.1.  Generally.....................................................44

         36.2.  Limitations...................................................45

SECTION 37.     TITLE.........................................................45

         37.1.  Title to Supplies.............................................45

         37.2.  Removal of Liens..............................................45

         37.3.  No Release of the Contractor..................................45

         37.4.  Title to the System...........................................46

SECTION 38.     REPRESENTATIONS AND WARRANTIES................................46

         38.1.  The Contractor's Representations and Warranties...............46

         38.2.  The Purchaser's Representations and Warranties................47

SECTION 39.     CONSENT TO JURISDICTION.......................................48

SECTION 40.     INDEMNIFICATION...............................................49

         40.1.  Generally.....................................................49

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         40.2.  Waiver........................................................49

SECTION 41.     RISK OF LOSS..................................................49

         41.1.  Generally.....................................................49

         41.2.  Payments to the Purchaser.....................................50

SECTION 42.     INSURANCE.....................................................50

         42.1.  Types of Insurance............................................50

         42.2.  Notice of Cancellation........................................52

         42.3.  Copies........................................................52

         42.4.  Failure to Maintain Insurance.................................52

         42.5.  Compliance With Policies......................................52

         42.6.  Claim Information.............................................53

         42.7.  Remedy of Loss or Damage......................................53

         42.8.  Insolvency of Insurers........................................53

SECTION 43.     DOCUMENTS, INFORMATION AND CONFIDENTIALITY....................53

         43.1.  Generally.....................................................53

         43.2.  The Contractor to Retain Drawings.............................53

         43.3.  Confidentiality...............................................53

SECTION 44.     PUBLICITY.....................................................55

SECTION 45.     CORRUPT GIFTS AND THE PAYMENT OF COMMISSIONS..................55

         45.1.  Gifts, Etc....................................................55

         45.2.  Payments......................................................55

         45.3.  Foreign Corrupt Practices Act.................................56

         45.4.  Permitted Activities..........................................56

         45.5.  Materiality...................................................56

SECTION 46.     RELATIONSHIP OF THE PARTIES...................................56

         46.1.  Generally.....................................................56

         46.2.  No Obligations of the Purchaser to Subcontractors.............57

SECTION 47.     NOTICES.......................................................57

         47.1.  Methods and Effectiveness.....................................57

         47.2.  Addresses.....................................................57

         47.3.  English Language..............................................58

SECTION 48.     DISPUTE RESOLUTION............................................58

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         48.1.  Mutual Discussions............................................58

SECTION 49.     NO CONFLICTS..................................................58

SECTION 50.     MISCELLANEOUS.................................................58

         50.1.  Headings......................................................58

         50.2.  Governing Law.................................................58

         50.3.  Severability..................................................58

         50.4.  Integration...................................................58

         50.5.  Amendments and Waivers........................................58

         50.6.  Further Assurances............................................59

         50.7.  Counterparts..................................................59

         50.8.  Successors and Assigns........................................59

         50.9.  No Third Party Beneficiaries..................................59

         50.10. United Nations Convention On Contracts For The
                International Sale Of Goods...................................59

         50.11. Remedies Cumulative...........................................59




EXHIBITS


EXHIBIT 1             Defined Terms
EXHIBIT 2             Form of Contractor Bond
EXHIBIT 3             Form of Certificate of Payment and Final Release
EXHIBIT 4             Form of Lien Release

Appendix 1            Provisions Schedule
Appendix 2            Payment Schedule
Appendix 3            Scope of Work
Appendix 4            Plan of Work
Appendix 5            Technical Specifications
Appendix 6            Technical Descriptions
Appendix 7            Equipment Descriptions
Appendix 8            Principal Subcontractors

























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                               CIRCE CABLE SYSTEM

               ENGINEERING, PROCUREMENT AND CONSTRUCTION CONTRACT


          ENGINEERING,  PROCUREMENT  AND  CONSTRUCTION  CONTRACT,  dated  as  of
November  10,  1998,  between  VIATEL  GLOBAL  COMMUNICATIONS,  LTD., a Delaware
corporation (the  "PURCHASER"),  and ALCATEL  SUBMARINE  NETWORKS S.A., a French
corporation (the "CONTRACTOR").


                              W I T N E S S E T H :

          WHEREAS,  the  Purchaser  is  developing  the System  (as  hereinafter
defined); and

          WHEREAS, the Contractor desires to provide certain services for:

          (a) the design, engineering, start-up and testing of the System; and

          (b) the procurement  and  construction of the System on a fixed-price,
              turnkey, date certain basis,

in each case as set forth in this Contract; and

          NOW THEREFORE,  the Parties,  in consideration of the mutual covenants
herein expressed, covenant and agree with each other as follows:


    SECTION 1. DEFINITIONS; INTERPRETATION

    1.1.  DEFINED TERMS. As used in this Contract and in all Contract Documents,
          capitalized  terms shall have the meanings ascribed thereto in Exhibit
          1 hereto.

    1.2.  RULES OF CONSTRUCTION.  In the interpretation of this Contract, unless
          the context otherwise requires:

          (a)  The  singular   includes  the  plural  and  vice  versa  and,  in
               particular   (but  without   limiting  the   generality   of  the
               foregoing),  any word or  expression  defined in the singular has
               the corresponding meaning used in the plural and vice versa;

          (b)  The term "or" is not exclusive;

          (c)  The term "including" shall mean "including, without limitation";

                                       
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          (d)  Any reference to any gender includes the other gender;

          (e)  Any  reference to any  agreement,  instrument,  contract or other
               document shall:

               (i)  Include all  appendices,  exhibits,  annexes  and  schedules
                    thereto; and

               (ii) Be a reference to such  agreement,  instrument,  contract or
                    other   document   as   amended,   supplemented,   modified,
                    suspended, restated or novated from time to time;

          (f)  Any reference to any Law or Codes and Standards shall include all
               statutory and administrative provisions  consolidating,  amending
               or replacing such Law or Codes and  Standards,  and shall include
               all rules and regulations promulgated thereunder;

          (g)  Any reference to "hereof", "hereto", "herein", "hereunder" or any
               other  similar term is a reference  to this  Contract as a whole,
               and not to any particular provision or part of this Contract;

          (h)  Any reference to any Person includes its permitted successors and
               assigns;

          (i)  Unless otherwise specified, a reference to a Section, Exhibit, or
               Appendix  is  to  the  Section,  Exhibit,  or  Appendix  of  this
               Contract;

          (j)  Unless  otherwise  specified,  any right may be  exercised at any
               time and from time to time;

          (k)  All  obligations  under this Contract of any Party are continuing
               obligations throughout the term hereof;

          (l)  The fact  that  counsel  to any Party  shall  have  drafted  this
               Contract shall not affect the  interpretation of any provision of
               this  Contract  in a manner  adverse to such  Party or  otherwise
               prejudice or impair the rights of such Party; and

          (m)  If an index or similar reference  referred to in this Contract is
               changed or no longer published or reported by the Person (or such
               Person's successor) who, on the date hereof, publishes or reports
               such index or  reference,  then the Parties  shall use their best
               efforts to replace  such index with the best  substitute  for the
               changed or no-longer published index or reference.



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    SECTION 2. INTENT

    2.1.  GENERALLY.

          (a)  In consideration of the Contract Price, the Contractor shall:

               (i)   undertake  all  necessary  Work  and  perform  in full  its
                     obligations  hereunder  in  order  to  plan,   manufacture,
                     supply, install, assemble and test the System;

               (ii)  achieve Provisional  Acceptance for the System on or before
                     the Guaranteed RFPA Date; and

               (iii) furnish to the Purchaser the System capable of operation in
                     accordance with the Technical  Specification  and the other
                     requirements  of this Contract,  in each case,  through the
                     end of the Warranty Periods.

          (b)  The  Contractor  shall  perform  all of  its  Work  specified  or
               reasonably   inferred  from  this  Contract.   The   Contractor's
               performance   under  this  Contract   shall  include   everything
               requisite   and   necessary   to   complete   the   entire   Work
               notwithstanding the fact that every item necessarily involved may
               not be  specifically  mentioned.  Details  not  indicated  by the
               Technical Requirements shall be performed by the Contractor at no
               extra cost if such  details are  necessary to complete the intent
               of this Contract.

    SECTION 3. CONTRACT DOCUMENTS

    3.1.  FORM PART OF THIS CONTRACT.  Each Contract Document shall be deemed to
          form  and be read  and  construed  as part of this  Contract,  and all
          matters and things herein  expressed as a duty or obligation of either
          Party  (either  actual  or  potential)  therein  shall  be the duty or
          obligation of such Party hereunder.

    3.2.  CONFLICTS.  In the event of any  conflict  between a provision of this
          Contract and a provision of any  Contract  Document,  the former shall
          prevail.  In the event of any conflict between or among the provisions
          of one or more  Contract  Documents  that  cannot be  resolved  by any
          provision  of  this  Contract,  then  the  provision  in the  Contract
          Document having the highest order of precedence below shall prevail:

          (a)  Technical Specification;

          (b)  Provisioning Schedule;

          (c)  Payment Schedule;

          (d)  Scope of Work;

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          (e)  Plan of Work;

          (f)  Marine Route Survey Report; and

          (g)  Desk Study Report.

    SECTION 4. RESPONSIBILITIES OF THE CONTRACTOR

    4.1.  SCOPE  OF  WORK.  The  Contractor  shall  plan,  manufacture,  supply,
          install, assemble and test the System in accordance with all the terms
          and conditions  contained in this Contract on a fixed-price,  turnkey,
          date certain basis.  The System shall be in full  accordance  with the
          Technical Requirements and the other requirements of this Contract and
          the Contract Documents,  including the Purchaser's overall performance
          requirements set forth therein. As more specifically  described in the
          Technical  Specification  and including the Scope of Work,  Contractor
          shall perform or continue to perform the following  obligations,  with
          each item listed herein  constituting,  individually and as referenced
          collectively, the Work (the "WORK"):

          (a)  ENGINEERING    AND    DESIGN    SPECIFICATION.    Provision    of
               specifications,  engineering,  design  and  testing of the System
               (which shall be consistent with the design, equipment and testing
               parameters set forth in the Contract  Documents) and finalization
               of the engineering  design  documentation  for the integration of
               System components.

          (b)  MARINE ROUTE SPECIFICATIONS.  Finalization of all marine crossing
               and  landing  specifications  in  accordance  with the  Technical
               Requirements,  including  performance  of all  obligations of the
               Contractor specified in Section 8 hereof;

          (c)  FIBER OPTIC CABLE.  Manufacture or procurement of the Fiber Optic
               Cable  and the  installation  thereof  (including  all  ancillary
               equipment   necessary  for  the   placement,   safeguarding   and
               beach-jointing of such Fiber Optic Cable) along the System Route,
               including the provision of materials,  testing  equipment,  labor
               and services,  cable laying vessels,  support craft,  submersible
               vehicles and cable plows as necessary for the secure placement of
               the  Fiber  Optic  Cable  in   accordance   with  the   Technical
               Requirements and the Warranties;

          (d)  FIBER OPTIC CABLE  SPLICING AND TESTING.  Splicing and testing of
               the entire  length of the Fiber Optic  Cable at the  Contractor's
               facilities,  on board  cable  laying  vessels  and at the Landing
               Sites;

          (e)  COORDINATION.  Technical  coordination  in  the  manufacture  and
               installation of the Fiber Optic Cable  (including the manufacture
               and installation of the joint casings) such that the System shall
               be compatible with the performance  parameters  identified in the
               Technical Specification;

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          (f)  PERFORMANCE   GUARANTEES   AND  THE   WARRANTIES.   Meeting   the
               requirements  of the Technical  Specification  by the  Guaranteed
               RFPA Date and complying  with all  Warranties  during  applicable
               Warranty Periods;

          (g)  MEET  INTENT OF  CONTRACT.  All other  matters  specified  as the
               responsibility of the Contractor in this Contract or any Contract
               Document;  satisfying in all respects the intent of this Contract
               as  expressed  in Section 2 hereof and  elsewhere in the Contract
               Documents; and

          (h)  RELATED WORK; ANCILLARY SERVICES AND SUPPLIES. In connection with
               any and all of the foregoing, the Contractor shall:

               (i)   furnish all construction  tools and equipment,  small tools
                     and temporary electricity, water, heat, telephone and other
                     construction utilities required to complete the System;

               (ii)  arrange  for  transportation  and  receipt,  unloading  and
                     storage at appropriate  locations of all Supplies and other
                     components of the System and the Work; and

               (iii) obtain,  furnish  and  maintain  in effect  all  Contractor
                     Permits.

    4.2.  TECHNICAL  INFORMATION.  In  addition  to  the  requirements  for  the
          provision of technical  information  described in this  Contract,  the
          Contractor  shall,  upon  request,  provide  the  Purchaser  with such
          additional  technical  information in connection with this Contract as
          the Purchaser may reasonably require.

    SECTION 5. TECHNICAL REQUIREMENTS, PLAN OF WORK AND PROGRESS MEETINGS

    5.1.  TECHNICAL  REQUIREMENTS.  In accordance  with Section 4.1 hereof,  the
          Work shall comply with the Technical Requirements.

    5.2.  PLAN OF WORK. The Contractor shall perform all Work in conformity with
          the Plan of Work.

    5.3.  PROGRESS  MEETINGS.  The  Contractor  shall attend  meetings  with the
          Purchaser's representatives and customers, at such times and places as
          may be required by the Purchaser,  to discuss the general  progress of
          the Work.

    SECTION 6. CONTRACTOR TO INFORM ITSELF FULLY

    6.1.  GENERALLY.  The  Contractor  shall be deemed to have notice of, and to
          have  fully  examined   and   independently  verified,  the  Technical


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          Requirements  and all  other  Contract  Documents,  and all  drawings,
          specifications,  schedules,  terms and  conditions  of this  Contract,
          Laws,  Codes and  Standards and other  information  in relation to the
          Work and this  Contract  and to have fully  examined,  understood  and
          satisfied  itself as to all  information  that is  relevant  as to the
          risks  (whether  political  or  otherwise),  contingencies  and  other
          circumstances that could affect this Contract and, in particular,  the
          laying of the Fiber Optic Cable for the System,  including the matters
          listed below:

          (a)  Permit  requirements and approvals for transiting,  surveying and
               laying the System in the territorial  waters,  exclusive economic
               zones and other claimed waters through which it shall pass;

          (b)  fees, pilotage and any dues payable to port authorities;

          (c)  conditions affecting labor, including work permits and visas; and

          (d)  rules  and  regulations  of  Governmental   Authorities  or  port
               authorities.

    6.2.  NO LIABILITY OF PURCHASER PERSONS.  No Purchaser Person shall have any
          liability  in law or equity or in contract or in tort with  respect to
          any such information, risk, contingency or other circumstance.

    6.3.  FAMILIARITY.  The Contractor has reviewed all requirements relating to
          the Work as a whole and in detail  and has fully  satisfied  itself of
          the feasibility and practicability thereof.

    SECTION 7. COMPLIANCE WITH LAWS; PERMITS

    7.1.  COMPLIANCE  WITH LAWS. The  Contractor  shall comply with all Laws and
          Codes  and  Standards  of  the   countries,   states,   provinces  and
          territories  in which  any part of the Work is to be done and with all
          international   treaties  in  any  way  affecting   this  Contract  or
          applicable to any of the Work.

    7.2.  VARIATIONS  REQUIRED BY LAW. The Contractor  shall,  before making any
          variation  from any design,  drawing,  plan or  procedure  that may be
          necessitated  by so complying,  give to the Purchaser  written notice,
          specifying  the  variations  proposed to be made,  and the reasons for
          making them, and apply for instructions  thereon. The Contractor shall
          be  responsible  for the  payment of any and all costs  incurred  as a
          result of the need to vary design,  drawings,  plans or  procedures to
          comply with any of the  circumstances  set forth in this  Section 7.2;
          PROVIDED,  HOWEVER,  that the Purchaser  shall be responsible  for all
          reasonable  additional  costs incurred as a result of a Change in Law.
          The Contractor shall:

          (a)  give all notices  required by Law to be given to any Governmental
               Authority;

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<PAGE>

          (b)  perform or permit the  performance  by authorized  Persons of any
               inspection required by Law; and

          (c)  pay all fees, charges, impositions or any other moneys payable to
               any  Governmental  Authority or any public  officer in respect of
               the Work.

    7.3.  PERMITS.

          (a)  CONTRACTOR PERMITS.  The Contractor shall be responsible,  at its
               expense,  for  obtaining,  maintaining  and  complying  with  all
               Permits  in  connection  with  the  installation  of  the  System
               (collectively, the "CONTRACTOR PERMITS") including:

               (i)   Permits from naval and port authorities;

               (ii)  Permits  for  the  Contractor's  and  its   Subcontractors'
                     personnel and equipment used to perform the Work;

               (iii) Permits    necessary   for   the   Contractor's   and   its
                     Subcontractors'  vessels and equipment to enter and work in
                     the waters of the applicable country;

               (iv)  Permits to conduct installation activities within exclusive
                     economic zones and territorial waters; and

               (v)   approval  for,  and the removal  of, fishing  nets, fishing
                     gear and other commercial  obstructions along the route for
                     marine operations.

          (b)  PURCHASER  PERMITS.  The Purchaser shall be  responsible,  at its
               expense,  for  obtaining,  maintaining  and  complying  with  all
               Permits  in  connection  with  the  permanent  ownership,  laying
               operation and landing of the System (collectively, the "PURCHASER
               PERMITS") including:

               (i)   Permits  to  land  the  System  and for  the  System  to be
                     operated and maintained along the System Route;

               (ii)  Permits  for  dredging,  boring,  sampling  and other  such
                     activities  conducted by the  Contractor  during the Marine
                     Route Survey, but excluding such Permits required solely in
                     respect of the entry and  operation in the relevant  waters
                     of the  Contractor's  and its  Subcontractors'  vessels and
                     equipment in connection with the Marine Route Survey, which
                     Permits shall be the sole  responsibility of the Contractor
                     pursuant to Section 7.3(a)(iii) hereof;

                                       7
<PAGE>

               (iii) Permits for the  occupation of the land,  waters and seabed
                     along the System Route; and

               (iv)  Permits from the respective  owners to cross existing cable
                     systems,  pipelines  or  lease  blocks  and  for  long-term
                     maintenance agreements at the crossing points.

          (c)  COOPERATION. Each Party shall:

               (i)   use all reasonable  efforts in assisting the other Party to
                     obtain the Permits contemplated by this Section 7.3; and

               (ii)  exchange  material  information  and  attend  meetings,  as
                     reasonably  necessary,  with the other Party  regarding the
                     progress in obtaining such Permits.

    7.4.  NO LIABILITY.  No Purchaser Person shall be responsible for any act or
          omission of the Contractor that violates any Law.

    SECTION 8. MARINE ROUTE SELECTION

    8.1.  DESK STUDY AND MARINE ROUTE SURVEY.  The  Contractor has performed the
          Desk Study and has supplied to the Purchaser the Desk Study Report.

    8.2.  MARINE ROUTE  SURVEY.  The  Contractor  has performed the Marine Route
          Survey in a prudent manner, using the highest professional standards.

    8.3.  ROUTE SELECTION,  ETC. The Contractor  shall be fully  responsible for
          selection of the System Route,  the types and quantities of cable, the
          percentage  cable slack  allowance,  the  protection  of shallow water
          sections,  any other special  protection  requirements for the System,
          the System link loss  budget and all other  design  parameters  of the
          System. The Contractor shall base its design of the above items on the
          Marine Route Survey  Report (with  appropriate  analysis of the routes
          and associated  survey  results),  and may propose changes relating to
          the  System  Route in  accordance  with the  procedures  set  forth in
          Section 16.1(a)(ii) hereof.

    SECTION 9. DESIGN AND PERFORMANCE RESPONSIBILITY

    9.1.  THE CONTRACTOR  SOLELY  RESPONSIBLE.  The  Contractor  shall be solely
          responsible for the Work  (including  design of and for all details of
          the  System)  and for the  adequacy  thereof,  and shall not claim any
          additional  payment nor be relieved from any obligation  imposed on it
          by this  Contract  on  grounds of  misunderstanding  or  incorrect  or
          insufficient  information,  including any information received from or
          supplied by any Purchaser Person on any matter  whatsoever  related to
          this Contract.

                                       8
<PAGE>

    9.2.  NO DIMINISHMENT. The Contractor's responsibility for the design of the
          System shall not in any way be diminished,  nor shall the Contractor's
          design approach be restricted or limited, by any Purchaser Person's:

          (a)  acceptance of the Contractor's  guidance or recommendations as to
               engineering standards and design specifications;

          (b)  suggestions or recommendations on any aspect of the design of any
               part of the System;

          (c)  acceptance  or approval of any portion of the Work  delivered  in
               connection therewith; or

          (d)  acceptance or approval of any Subcontractor.

    SECTION 10. MAINTENANCE OF BOOKS AND RECORDS

    10.1. MAINTENANCE OF RECORDS.  The Contractor shall keep, and maintain for a
          period ending upon the later of:

          (a)  five (5) years after the RFPA Date; and

          (b)  the date on which no claim based upon,  arising out of or related
               to this Contract is outstanding,

          all books, records, vouchers and accounts pertaining to this Contract,
          including such books,  records,  accounts and vouchers  related to the
          Contractor's  billing of items specified in the Provisioning  Schedule
          and with respect to the  engineering,  provision and  installation  of
          facilities  of the System  (which  shall  include  all  details of any
          Contract Variations or additional Work, information on any Defects and
          remedial  actions taken,  as well as all other data that the Purchaser
          may  reasonably   require  for  the  Contractor  to  substantiate  the
          Contractor Invoices or other claims for payment). The Contractor shall
          obtain  from its  Subcontractors  such  supporting  records  as may be
          required by this Section 10.1 and shall maintain such records for such
          period.

    10.2. ACCESS TO RECORDS.

          (a)  GENERALLY. The Contractor shall, until the Final Acceptance Date,
               give  each  Purchaser  Person  access  to all  documentation  and
               records required to be kept,  obtained and maintained pursuant to
               Section 10.1 hereof and shall not destroy any such  documentation
               or records  without  affording  the Purchaser an  opportunity  to
               review or copy such  documentation  and records.  With respect to
               financial  records  required to be maintained under this Contract
               (including  Section  10.1  hereof),  the  Contractor  may, at its


                                       9
<PAGE>

               discretion,   require  that  the  Purchaser  appoint  independent
               accountants to review such financial records.

          (b)  LIMITATION.  Notwithstanding  the  foregoing  clause  (a) of this
               Section 10.2,  the Parties  hereby agree that access to financial
               information of the  Contractor  shall be limited to that strictly
               necessary  for the  purpose  of  Sections  11,  16, 17, 24 and 28
               hereof.

    SECTION 11. TAXES

    11.1. RESPONSIBILITY FOR TAXES. The Purchaser acknowledges that the Contract
          Price  is  exclusive  of  applicable  Taxes.  The  Purchaser  shall be
          responsible for and shall pay all such Taxes. The Purchaser shall bear
          responsibility  for  importation,  including  customs  clearances,  of
          Supply to the relevant Site. Notwithstanding the foregoing, nothing in
          this  Contract  shall be construed  as imposing  any  liability on the
          Purchaser  with  respect  to any  Tax  levied  on or  attributable  to
          property owned or income earned by the Contractor.

    11.2. EXEMPTION FROM TAXES. The Contractor shall use all reasonable  efforts
          to have all items of Work made exempt  from all Taxes,  whether in the
          manufacture  thereof or  related to the  importation  or  location  or
          installation  thereof, and shall cooperate fully with the Purchaser in
          this respect.  The Contractor  hereby  undertakes to make applications
          for such revisions and for drawbacks, remissions, reclassifications or
          the like to the appropriate  Governmental  Authorities,  in accordance
          with the relevant Laws then in force.  Notwithstanding  the foregoing,
          should the Purchaser be made aware of any area of exemption from taxes
          or  duties,  then  the  Purchaser  shall  identify  such  area  to the
          Contractor, which shall investigate the same.

    11.3. WITHHOLDING.  To the extent that any Law or Regulatory Authority shall
          require the  Purchaser  to withhold  any amount on account of any Tax,
          the procedures specified in Section 13.2(c) shall apply.

    SECTION 12. INTELLECTUAL PROPERTY RIGHTS

    12.1. GENERALLY.  The  Contractor shall obtain for itself and the Purchaser,
          without cost to the Purchaser, any and all patent, copyright and other
          industrial or intellectual property licenses:

          (a)  in the case of the  Contractor,  necessary for the performance of
               this Contract; and

          (b)  in the  case  of the  Purchaser,  necessary  for  the  ownership,
               operation, maintenance and marketing of the System.


                                       10
<PAGE>

          The  Contract  Price shall  include  all  amounts  payable for patent,
          copyright  and  other  industrial  or  intellectual  property  rights,
          royalties or similar  expenses,  on or with respect to the Supplies or
          Work or any part  thereof,  and,  without  limiting the  generality of
          Section 40 hereof, the Contractor shall indemnify, protect, defend and
          hold harmless each Purchaser  Person from and against all Losses based
          upon,  arising  out of, or  otherwise  related to an  infringement  or
          claimed  infringement  of patent,  copyright  or other  industrial  or
          intellectual  property rights by reason of the manufacture,  purchase,
          possession or use of the Supplies,  the Work or the System or any part
          thereof.  Notwithstanding the foregoing, the Contractor shall be under
          no obligation  to indemnify  the Purchaser  with respect to any Losses
          relating  to  any  infringement  or  claimed  infringement  where  the
          manufacture,  purchase,  possession or use for which  infringement  is
          claimed was  undertaken by the Contractor at the  Purchaser's  express
          instruction  and the  Supplies  or other  items of Work  manufactured,
          purchased,  possessed  or  used  were  selected  or  furnished  by the
          Purchaser.  The  Purchaser  shall,  in such cases,  indemnify and hold
          harmless the Contractor from and against any Losses so incurred by the
          Contractor at the Purchaser's direction.

    12.2. INJUNCTION.  If, as a consequence of any action or claim  described in
          Section 12.1 hereof, the use of the System is enjoined, the Contractor
          shall use its best  efforts to  negotiate  with the  claimant so as to
          remove  such  injunction  or  to  obtain  for  the  Purchaser  or  the
          Contractor,  as the case  may be, a  license  or  other  agreement  in
          respect  thereof as soon as possible.  Subject to Section 29.1, if the
          Contractor is unable to have the  injunction  removed,  the Contractor
          shall be liable to the  Purchaser  for  Losses  arising as a result of
          such  injunction,  none of which shall  result in any  increase in the
          Contract Price.

    12.3. INFRINGEMENT.  If the System or any part thereof is held to constitute
          infringement  and  is  subject  to an  order  restraining  its  use or
          providing for its surrender or  destruction,  the Contractor  shall at
          its own expense  promptly  (but in no event later than sixty (60) Days
          after such injunction, or such shorter period imposed by any claimant)
          either:

          (a)  procure for the Purchaser the right to retain and continue to use
               the affected System; or

          (b)  modify the System so that it becomes non-infringing.

    SECTION 13. PAYMENTS FOR THE WORK

    13.1. INITIAL CONTRACT PRICE. The Contractor shall provide the System to the
          Purchaser for a price of  [REDACTED] (the "INITIAL  CONTRACT  PRICE").
          The Initial  Contract  Price is the price to be paid by the  Purchaser
          for the full and proper  performance by the Contractor of the Work and
          all of its other  obligations  under this  Contract,  and shall not be
          varied except as provided in Section 16 hereof.



                                       11
<PAGE>

    13.2. GENERAL CONDITIONS OF PAYMENT.

          (a)  PAYMENTS IN DOLLARS. All payments to the Contractor shall be made
               in  Dollars,  free of all bank  charges  arising  from the United
               States.  Any  such  charges  shall be the  responsibility  of the
               Purchaser.

          (b)  INVOICES.  All  Contractor  Invoices  shall be  submitted  to the
               Purchaser in accordance with Section 13.4 hereof.

          (c)  TAXES. With respect to any Tax that is payable on any payment due
               to the Contractor, the following procedure shall apply:

               (i)  If the Purchaser:

                    (A)  receives  a  notice,   order  or  instruction   from  a
                         competent Governmental Authority that a Tax is required
                         to be withheld by Law; or

                    (B)  otherwise  has a  reasonable  belief  that  any  Tax is
                         required  to be  withheld  from any  payment due to the
                         Contractor,

                    then the Purchaser  shall  promptly so inform the Contractor
                    as  far  in  advance  of  any   proposed   withholdings   as
                    practicable.

               (ii)  The Contractor shall obtain  documentary  evidence from the
                     relevant taxing authorities reasonably  satisfactory to the
                     Purchaser  that the  Purchaser  is not required to withhold
                     such Tax.  If the  Contractor  is  unable  to  obtain  such
                     documentary  evidence on a timely basis, then the Purchaser
                     shall  proceed to withhold any such Tax via an escrow agent
                     or other  mutually  agreeable  procedure.  Thereafter,  the
                     Purchaser shall, at the Contractor's  expense,  provide any
                     documentation  or other  cooperation  as may be  reasonably
                     requested by the  Contractor  to permit the  Contractor  to
                     recover any  withheld  amounts to which the  Contractor  is
                     entitled.

               (iii) The Contractor shall protect, defend, indemnify in full and
                     hold  harmless each  Purchaser  Person from and against any
                     Losses based upon,  arising out of or otherwise  related to
                     Taxes  that  are  owed  by the  Contractor  to  any  taxing
                     authority.

          (d)  FINAL PAYMENT.  On receipt by the Contractor of the final payment
               of the Contract Price (the "FINAL PAYMENT"):

               (i)  the  Purchaser  shall  thereby be  released  from all claims
                    whatsoever by the  Contractor,  whether at law or in equity,
                    contract or tort or otherwise,  by reason of anything  based
                    upon,  arising out of or relating  to this  Contract,  other
                    than:

                                       12
<PAGE>

                    (A)  claims  asserted  in  writing  on or  before  the Final
                         Payment is made;

                    (B)  claims  arising  from  circumstances,  acts  or  events
                         occurring after the Final Payment is made; and

                    (C)  claims that the  Contractor was not aware of, and could
                         not have been  aware of,  and that are based  solely on
                         the  willful   misconduct  or  gross  negligence  of  a
                         Purchaser Person; and

               (ii) the  covenants  and   agreements  of  the  Purchaser   shall
                    terminate  and be of no further  force and effect except the
                    requirement of the Purchaser to return to the Contractor the
                    Contractor Bond at the expiration of the Warranty Period.

          (e)  EFFECT OF PAYMENT.  No payment (final or otherwise) made under or
               in connection with this Contract shall be conclusive  evidence of
               the performance of the Work, or of this Contract,  in whole or in
               part, and no such payment shall:

               (i)  be construed to constitute  the  acceptance of any Defective
                    Work or Supplies containing Defects; or

               (ii) release the  Contractor  from any of its  obligations  under
                    this Contract.

    13.3. [REDACTED]





                                       13
<PAGE>

    13.4. CONTRACTOR INVOICES.

          (a)  GENERALLY.  Each Contractor  Invoice shall detail the items to be
               paid and the amount  due,  with  specific  reference  to the item
               number or numbers stated in the Provisioning  Schedule, and shall
               be in form and substance satisfactory to the Purchaser.

                                       14
<PAGE>

          (b)  DOCUMENTS.  The  Contractor  shall  provide one (1)  original and
               three  (3)  copies  of  each  Contractor  Invoice,  plus  one (1)
               additional  copy to be sent by  facsimile on the date of issuance
               of such Contractor  Invoice.  At a minimum and where  applicable,
               the  following  documents  in  the  following   quantities  shall
               accompany each Contractor Invoice:

               (i)   Packing List - One (1) original and four (4) copies;

               (ii)  Certificate  of  Origin - One (1)  original  and  three (3)
                     copies;

               (iii) Certificate   of  Loading  signed  by  Contractor  and  the
                     Purchaser or its designee -- One (1) original and three (3)
                     copies;

               (iv)  Insurance  Certificate  - One (1)  original  and  three (3)
                     copies;

               (v)   Lien Release - One (1) original and three (3) copies;

               (vi)  Factory Release Certificate,  signed by the Contractor, and
                     counter-signed  by the  Purchaser's  Representative  or his
                     designee (in each case,  within a reasonable time after the
                     Contractor's  submission  thereof for  signature) - One (1)
                     original and three (3) copies; and

               (vii) such   other   documentation   necessary   to   demonstrate
                     compliance   with  the  terms  of  this  Contract  in  such
                     quantities as the Purchaser shall request.

          (c)  MONTHLY  INVOICES.  Only one  Contractor  Invoice shall be issued
               during any month.

    13.5. THE PURCHASER'S RIGHT TO WITHHOLD PAYMENT.

          (a)  GENERALLY.  Notwithstanding  the  foregoing,  the  Purchaser  may
               withhold  any  payment  or  other  amount  due to the  Contractor
               hereunder  in an amount and to such extent as the  Purchaser  may
               determine to be  reasonably  necessary  to protect the  Purchaser
               from Loss or damage because of:

               (i)    Defective  Work  not  remedied  in  accordance  with  this
                      Contract;

               (ii)   Work that is not complete;

               (iii)  the Contractor's failure to comply with any Warranty;

                                       15
<PAGE>

               (iv)   the Contractor's failure to perform the Work in accordance
                      with this Contract;

               (v)    third-party  claims,  suits,  stop  notices,  attachments,
                      levies or Liens (other than  Purchaser  Liens) against the
                      System, the Work, the Supplies or any Party;

               (vi)   Losses   or  other   damage  to  the   Purchaser   or  any
                      Subcontractor  that results from the Contractor's  failure
                      to obtain or maintain insurance required hereunder;

               (vii)  the Contractor's  failure to provide on a timely basis the
                      documentation required under Section 13 hereof; or

               (viii) reasonable  evidence  that  any  payment  previously  made
                      hereunder  (together with all other  previously  requested
                      amounts)  exceeds the amount  payable  with respect to the
                      Work actually performed.

          (b)  THE PURCHASER'S APPLICATION OF FUNDS WITHHELD. The Purchaser may,
               upon notice to the  Contractor  of its  intention to do so, apply
               any funds  withheld or moneys to become due to the  Contractor to
               satisfy,  discharge or secure the release of such claims that the
               Contractor  has failed to settle  within  thirty  (30) Days after
               notice by the Purchaser to the Contractor.  Any such  application
               shall be deemed payment to the Contractor. Any additional expense
               incurred by the Purchaser as a result of the Contractor's default
               hereunder shall be deducted from the Contract Price. No action by
               either Party during the above activities shall affect the Plan of
               Work unless a Contract  Variation is agreed to by the  Purchaser.
               If the Purchaser's  withholding is determined to be wrongful, the
               Purchaser shall promptly pay the withheld amount with interest at
               the rate set  forth in  paragraph  (c) from the due date  thereof
               until the date of payment.

          (c)  RELEASE  OF PUNCH  LIST  RESERVE.  Within ten (10) Days after the
               Contractor  has, to the  Purchaser's  satisfaction,  remedied the
               deficiencies  and completed the Work indicated on any Punch List,
               the  Contractor  shall release to the  Contractor  the Punch List
               Reserve held by the  Purchaser in respect of such  incomplete  or
               Defective Work.

    13.6. OVERDUE PAYMENTS.  If a party shall fail to pay any undisputed  amount
          within  thirty (30) days of the date such payment is due, the party to
          whom such amount is owed shall have the right to charge  interest upon
          such amount at a rate which is equal to the London  Interbank  Offered
          Rate as published for such period in the Wall Street Journal,  Eastern
          Edition.

                                       16
<PAGE>

    SECTION 14. DEDUCTIONS FROM PAYMENTS TO THE CONTRACTOR

    14.1. AMOUNTS PAYABLE.  To the  extent  that an  amount is not  withheld  in
          respect thereof  pursuant to Section 13.5 hereof,  all Losses that the
          Purchaser  shall have  incurred or sustained by reason of any act that
          entitles the Purchaser to  indemnification  under this Contract or any
          default or  omission  of the  Contractor  in the  performance  of this
          Contract,  together with any sum or sums payable to the Purchaser,  as
          Delay Damages or otherwise,  under this Contract, shall be paid by the
          Contractor on or prior to the earlier of:

          (a)  the  date  that  is  thirty  (30)  Days  after   receipt  of  the
               certificate referenced in Section 14.3 hereof; and

          (b)  the date the Final Payment is made.

    14.2. DEDUCTION.  Should the Contractor  fail to make any  payment  required
          under Section 14.1 hereof by the due date  thereof,  the Purchaser may
          then deduct the amount of the  requested  payment from any moneys that
          are, or may become,  due to the Contractor or have been made available
          by it under the  Contractor  Bond.  If the moneys so due or  deposited
          shall be less than the amount so deductible,  the difference  shall be
          treated as a debt by the Contractor to the Purchaser and shall be paid
          by the  Contractor  to the  Purchaser  within seven (7) Days after the
          Contractor's  receipt  of  the  Purchaser's  demand  therefor.  If the
          Contractor  fails to make such payment  within such  period,  then the
          amount of such  deficiency  may be recovered in any court of competent
          jurisdiction.

    14.3. CERTIFICATE.  A certificate signed by the Purchaser stating the amount
          of the Losses,  costs,  charges,  expenses,  damages or other  amounts
          referred to in this  Section 14 shall be prima  facie  evidence of the
          matter stated.

    SECTION 15. CONTRACTOR BOND

    15.1. GENERALLY.  The  performance  of all of the  Contractor's  obligations
          under this Contract shall be secured by a performance and payment bond
          in substantially the form of Exhibit 3 hereto (the "CONTRACTOR BOND").
          The Contractor  shall deliver the Contractor  Bond to the Purchaser no
          later than five (5) Days after the date hereof.

    15.2. FORM OF CONTRACTOR BOND. The Contractor Bond shall:

          (a)  be issued and outstanding until the later to occur of (i) date of
               expiration of all Warranty  Periods and (ii) the Final Acceptance
               Date;

          (b)  be in an amount  equal to not less than ten percent  (10%) of the
               Contract  Price on any date up to and  including  the RFPA  Date,
               whereupon  the  Contractor  shall  have the right to reduce  such
               amount  to an  amount  not less  than  five  percent  (5%) of the


                                       17
<PAGE>

               Contract Price until Final Acceptance provided, however, if after
               the fifth anniversary of the RFPA Date any Replacement Items have
               been provided by the  Contractor,  the Contractor  shall have the
               right to reduce  the amount of the  Contractor  Bond to an amount
               not less than the value of such  Replacement  Items  until  Final
               Acceptance; and

          (c)  name the Purchaser or their  permitted  assigns as  beneficiaries
               thereof.

    15.3. ISSUER REQUIREMENTS.  The Contractor Bond and all renewals, extensions
          and  replacements  thereof  shall be issued by a bonding or  insurance
          company  acceptable to the  Purchaser at the time of issuance.  If the
          financial  condition of any such bonding or insurance company declines
          to less than an A.M. Best rating of A-, the Contractor  shall,  at its
          sole cost and expense,  within thirty (30) Days after any such decline
          in rating,  replace the issuer of the  Contractor  Bond with an entity
          acceptable to the Purchaser;  PROVIDED that if the Contractor  Bond is
          provided by more than one bonding or  insurance  company and each such
          company is jointly and severally liable thereunder, the highest rating
          of any one of such companies shall be controlling.

    15.4. RETURN OF CONTRACTOR  BOND.  The Purchaser shall return the Contractor
          Bond to the Contractor after Final Acceptance.

    SECTION 16. CONTRACT VARIATIONS

    16.1. GENERALLY.  The Purchaser  may from time to time,  with the consent of
          the Contractor  (which consent shall not be  unreasonably  withheld or
          delayed), direct by written order to the Contractor (each, a "CONTRACT
          VARIATION")  that  changes be made,  within the general  scope of this
          Contract, to drawings, designs,  specifications,  the method or manner
          of  performance of the Work, the method of shipment and packing or the
          time or place of delivery.  The Purchaser may, with the consent of the
          Contractor  (which  consent  shall  not be  unreasonably  withheld  or
          delayed),  by Contract  Variation,  require additional Work, reduce or
          direct the omission of Work or suspend the Work pursuant to Section 23
          hereof or, as appropriate,  extend the period of any General Warranty.
          Subject to the  provisions  of this Section 16, the  Contractor  shall
          comply with each such Contract Variation.  The total value of Contract
          Variations  made  under this  Section 16 shall not exceed ten  percent
          (10%) of the Initial Contract Price.

          (a)  CONTRACTOR-PROPOSED VARIATIONS.

               (i)   GENERALLY.  The Contractor may propose modifications to the
                     Work if it determines that such  modifications  will result
                     in  improved   manufacturing   processes   or   timeframes,
                     reductions  in  costs  or  maintenance   requirements,   or
                     improvements in the System's  technical  capabilities.  The


                                       18
<PAGE>

                     Purchaser  shall in good  faith  consider  such  Contractor
                     proposals, and shall seek to implement the same where doing
                     so  would  not,  in the  Purchaser's  judgment,  impair  or
                     adversely  affect the System as delivered by the Contractor
                     or the Warranties.

               (ii)  MARINE  ROUTE  SURVEY.  The  Contractor  may,  based on the
                     Marine Route Survey results,  propose  Contract  Variations
                     with  respect  to the  System  Route or the  types of Fiber
                     Optic  Cable to be used for the System,  and the  Purchaser
                     shall not  unreasonably  withhold  its  consent to any such
                     Contract Variation.

               (iii) FISHERMEN COMPENSATION. The Contractor shall be entitled to
                     a Contract Variation to increase the Initial Contract Price
                     in  the  reasonable  amount  of  compensation  paid  by the
                     Contractor  to  fishermen  to remove  gear or fishing  nets
                     subject to the prior approval by the Purchaser.

               (iv)  CHANGE  IN LAW.  The  Contractor  shall  be  entitled  to a
                     Contract  Variation to increase the Initial  Contract Price
                     in the  reasonable  amount of reasonable  additional  costs
                     incurred  by the  Contractor  because  of a Change  in Law,
                     subject to the prior approval of the Purchaser  which shall
                     not unreasonable be withheld.

          (b)  PURCHASER-CAUSED  DELAY OR LOSS.  If (i) the negligent or willful
               acts or omissions of the Purchaser shall cause any Loss or damage
               to the  Site,  the  Work or the  System,  and (ii)  such  Loss or
               damage, despite the Contractor's reasonable efforts in mitigation
               thereof,  results in any  material  increase  in the cost or time
               required  for  the  Contractor's  performance  of the  Work,  the
               Contractor  shall be entitled to a Contract  Variation in respect
               of the  most  appropriate,  as  determined  by the  Purchaser  in
               consultation with the Contractor,  of the following terms of this
               Contract:

               (A)  the Plan of Work (including the Guaranteed RFPA Date); or

               (B)  the Contract  Price (but only to the extent that such Losses
                    or increased costs are not recoverable  from the proceeds of
                    insurance  required  to  be  maintained  by  the  Contractor
                    hereunder); or

               (C)  both the Plan of Work and the Contract Price.

    16.2. AMENDMENT.  Each  Contract  Variation  shall be recorded by means of a
          formal written amendment  executed by the Parties.  Subject to Section
          16.6  hereof,  no  Contract  Variation  shall be  effective  until the
          Parties execute such amendment.

                                       19
<PAGE>

    16.3. OTHER  ADJUSTMENTS.  No  claim  for  adjustment  in time or cost  with
          respect to any change in the Work shall be made, recognized or acceded
          to unless  such  change  has been made in  accordance  with a Contract
          Variation issued in accordance with Sections 16.1 and 16.2 hereof. The
          Purchaser shall not be liable for the cost of any additional  Supplies
          or Work unless made pursuant to a Contract Variation. No claim for any
          adjustment  pursuant to any Contract Variation shall be made after the
          Final Payment is made. The Purchaser shall not unreasonably  refuse to
          authorize  any Contract  Variation  issued in  accordance  with action
          taken by the Purchaser pursuant to Section 23 hereof.

    16.4. EFFECT OF CONTRACT VARIATIONS.  No Contract Variation shall vitiate or
          invalidate  this  Contract.  A  Contract  Variation  may  result in an
          increase, decrease or no change in the Contract Price, with any change
          in the Contract Price effected  thereby  determined in accordance with
          the valuation procedures set forth in Section 16.6 hereof.

    16.5. PRICING.  Unless  otherwise  approved by the Purchaser,  the price for
          each  Contract  Variation  shall  be  determined  as  provided  in the
          relevant  provision of this Contract before the Contract  Variation is
          authorized.

    16.6. VALUATION. A Contract Variation shall be valued at the Scheduled Rates
          to the extent that, in the reasonable  opinion of the  Purchaser,  the
          Scheduled Rates are applicable to such Contract Variation. In the case
          of a Contract  Variation to which no Scheduled Rate applies,  the rate
          or price  payable for the Contract  Variation  shall be  determined by
          agreement between the Parties, and the Contractor shall provide to the
          Purchaser  all price detail and other  information  the  Purchaser may
          require to determine  for this  purpose.  If the Parties are unable to
          agree, at the request of the Purchaser,  the Contractor shall continue
          to perform in accordance with the terms of this Contract,  as modified
          by such Contract Variation, pending resolution of the matter.

    16.7. NO DELAY. The Contractor shall,  unless otherwise agreed to in writing
          by the Purchaser  (such  agreement not to be  unreasonably  withheld),
          implement  all  Contract  Variations  within the time  allowed in this
          Contract for  completion of the Work. In this respect,  the Contractor
          shall develop all reasonable  work-around plans,  alternate sources or
          any other means available in order to prevent delays.

    16.8. OBSOLETE OR SURPLUS SUPPLIES. If the cost of Supplies made obsolete or
          surplus  as a  result  of a  Contract  Variation  is  included  in the
          Contractor's claim for adjustment,  the Purchaser shall have the right
          to  prescribe  the  manner of  disposition  of such  Supplies  and the
          Purchaser shall receive an equitable  credit arising from  disposition
          of such Supplies.

                                       20
<PAGE>

    SECTION 17. TECHNICAL SUPPORT, SPARE PARTS, ETC.

    17.1. TECHNICAL SUPPORT.  Without limiting Section 33 hereof, the Contractor
          shall  provide  technical  support to the  Purchaser  and to undertake
          repairs  and to  investigate  trend  faults  for  the  Purchaser  when
          required,  at reasonable  cost, to ensure the successful  operation of
          the System throughout the System Design Life. Furthermore,  during the
          System Design Life, the Contractor  shall provide  technical advice to
          the Purchaser, when requested and at a reasonable cost, concerning all
          aspects of the design, maintenance and operation of the System.

    17.2. SPARE PARTS.

          (a)  GENERALLY.  The  Contractor  warrants  the  availability  of, and
               undertakes  to enter into  long-term  contracts to supply,  spare
               parts and  replacement  equipment and  facilities to maintain all
               parts of the System,  including all training  courses that may be
               necessary for the maintenance of the System, all under reasonable
               technical  and  commercial  conditions,  during the System Design
               Life.  If  the  Contractor   cannot  supply  identical  units  or
               components due to obsolescence,  then the spares and replacements
               to be supplied shall be the equivalent of the original  parts. In
               addition,  the  Contractor  shall  carry out as  practicable  any
               adaptive  engineering  work  necessary  and provide all necessary
               implementation documentation.

          (b)  CESSATION  OF  MANUFACTURE.  If for  any  reason  the  Contractor
               intends to cease  manufacturing  identical  parts and replacement
               equipment,  the Contractor  shall inform the Purchaser by written
               notice at least one (1) year before ceasing such  manufacture and
               allow the  Purchaser  to order from the  Contractor  any required
               spare parts or replacement equipment.

          (c)  PRICING.  The Contractor  undertakes to provide such spare parts,
               replacements and facilities:

               (i)  if of its  own  manufacture,  at the  Scheduled  Rates,  but
                    varied in  accordance  with the price  variation  formula in
                    Section 17.3 hereof;

               (ii) if not of its own manufacture,  at mutually agreed equitable
                    prices.

    17.3. [REDACTED]



                                       21
<PAGE>



    SECTION 18. [REDACTED]


                                       22
<PAGE>

    SECTION 19. FORCE MAJEURE

    19.1. DEFINITION.

          (a)  INCLUDED  EVENTS.  An event shall be a "FORCE  MAJEURE  EVENT" if
               such event:

               (i)   is beyond the Contractor's reasonable control;

               (ii)  is not the  result of any breach by the  Contractor  of any
                     provision of this Contract;

               (iii) was not caused by the negligent or careless act or omission
                     of any Contractor Person;

               (iv)  will result in a delay in the  completion  of any  material
                     part of the Work despite the  Contractor's  exercise of all
                     reasonable diligence and pursuit of alternative measures of
                     performance; and

               (v)   is within one or more of the following categories:

                    (A)  civil  disturbance,  war,  invasion  or act of  foreign
                         enemies;

                    (B)  civil uprising or rebellion,  or broad-based  strike or
                         disruption in freight or distribution networks;

                    (C)  fire, flood,  epidemic, act of God and natural disaster
                         (PROVIDED that the Contractor shall remain  responsible
                         for  all  weather  conditions  that  do not  constitute
                         Unusually Severe Weather Conditions);

                    (D)  Unusually Severe Weather Conditions;

                    (E)  acts or  failures  to act of  Governmental  Authorities
                         (including Changes in Law);

                    (F)  acts of third parties; and

                    (G)  trawler or anchor damage  (other than damage  resulting
                         from or aggravated by Defective Work,  including faulty
                         or defective installation).

                                       23
<PAGE>


          (b)  EXCLUDED  EVENTS.  The following  events are explicitly  excluded
               from  the  term   Force   Majeure   Event  and  are   solely  the
               responsibility of the Contractor:

               (i)   strikes,  labor disputes and lockouts of any kind involving
                     employees of the  Contractor,  or of any  Subcontractor  or
                     agent;

               (ii)  late  delivery of  equipment  or  materials  (except to the
                     extent caused by a Force Majeure Event);

               (iii  economic hardship;

               (iv)  default of Subcontractors (except to the extent caused by a
                     Force Majeure Event);

               (v)   events and  conditions  of which the  Contractor  is deemed
                     hereunder to have fully informed itself; and

               (vi)  all other events and acts not  specifically  identified  in
                     Section 19(a) hereof as a Force Majeure Event.

    19.2. MITIGATION.  The Contractor shall use its best efforts to mitigate and
          minimize the effects of any Force  Majeure Event and to resume in full
          its performance under this Contract.

    19.3. NOTICE. The Contractor shall advise the Purchaser's  Representative in
          reasonable detail of any Force Majeure Event within fourteen (14) Days
          from  the  date  of  the  occurrence  thereof;  PROVIDED  that  if the
          Contractor  can  satisfactorily  demonstrate to the Purchaser that the
          Contractor  has been  unavoidably  delayed  in  becoming  aware of the
          occurrence  of such  Force  Majeure  Event,  such  period and the time
          period set forth in Section 19.4 hereof shall  commence  from the date
          reasonably  determined by the  Purchaser  that the  Contractor  became
          aware, or should have become aware, of such occurrence.

    19.4. APPLICATION. If the Contractor is directly delayed in the execution of
          the Work by any Force Majeure  Event,  the  Contractor  shall have the
          right to apply in writing  to the  Purchaser's  Representative  within
          thirty (30) Days after the  occurrence of such Force Majeure Event for
          an extension of the Guaranteed  RFPA Date or any date set forth in the
          Plan of Work,  if and to the extent any such date is  affected by such
          Force Majeure Event.  Such application  shall set forth a statement of
          all the  facts on which  the  Contractor  bases  such an  application,
          including  a detailed  description  of  work-around  plans,  alternate
          sources or any other means the Contractor  will utilize to make up for
          any such period of delay and to prevent any further delay to the Work.
          The  Contractor  shall not be entitled to any increase in the Contract
          Price on account of a Force Majeure Event.


                                       24
<PAGE>

    19.5. EXTENSION OF TIME. The extension of time, if any, to be allowed to the
          Contractor  pursuant  to this  Section  19  shall  be set  forth  in a
          Contract  Variation  duly executed and  delivered in  accordance  with
          Section 16  hereof,  and shall be for such  periods  as the  Purchaser
          approves  (which  approval  shall  not be  unreasonably  withheld)  as
          necessary to remedy the effect of the Force Majeure  Event,  but shall
          in  no  event  limit  the  Purchaser's  rights  under  this  Contract,
          including  its rights  with  respect to matters  arising  prior to the
          occurrence of the Force Majeure Event.

          (a)  DELAYS IN MARINE  INSTALLATION  DUE TO UNUSUALLY  SEVERE  WEATHER
               CONDITIONS. In the event that, due to the occurrence of Unusually
               Severe Weather  Conditions,  (i) marine  installation  is delayed
               beyond the date  specified  therefor in the Plan of Work, or (ii)
               such date is  extended  by the  Parties in  accordance  with this
               Section 19, then the Purchaser shall reimburse the Contractor, on
               a  cost-incurred  basis  at the  Scheduled  Rate  that  would  be
               applicable if such costs were  incurred as part of the Work,  for
               any  additional   cableship  costs  incurred  by  the  Contractor
               (despite its best efforts in  mitigation  thereof) in  completing
               the marine installation under such circumstances.

    19.6. LIMITATION. Unless:

          (a)  an event is a Force  Majeure  Event as provided  in Section  19.1
               hereof;

          (b)  the  Contractor  notifies the Purchaser  thereof  within the time
               period provided in Section 19.3 hereof;

          (c)  the  Contractor  applies  for an  extension  of time  in  respect
               thereof  within the time period  provided in Section 19.4 hereof;
               and

          (d)  the Purchaser approves an extension of time in respect thereof in
               accordance with Section 19.5 hereof,

           the  Contractor  shall  not be  entitled  to,  and shall not claim an
           extension  of time,  for such  event,  and shall not by reason of any
           delay  arising  from any such event be relieved in any way, or to any
           extent,  from its  obligations to proceed with,  execute and complete
           the Work within the time fixed by this Contract.

    SECTION 20. PROJECT MANAGER AND THE PURCHASER'S REPRESENTATIVE

    20.1. PROJECT  MANAGER.  The Contractor shall designate in writing a project
          manager (the "PROJECT MANAGER") to be responsible for the coordination
          and  monitoring  of the Work on the  Contractor's  behalf,  and  shall
          provide  the  Purchaser  with a  summary  of  such  Project  Manager's
          background and relevant  experience.  The Project Manager shall act as
          the  principal  point  of  contact  between  the  Contractor  and  the
          Purchaser,  and shall  have  authority  to act and make  decisions  on
          behalf of, and be  authorized  to bind by contract or  otherwise,  the
          Contractor.  If the  Project  Manager  shall  resign or at any time be
          unable to act, the Contractor shall immediately  designate a successor
          by notice to the Purchaser.

                                       25
<PAGE>

    20.2. THE  PURCHASER'S  REPRESENTATIVE.  The  Purchaser  shall  designate in
          writing a system  manager  (the  "PURCHASER'S  REPRESENTATIVE")  to be
          responsible  for  coordination  and  monitoring  of  the  Work  on the
          Purchaser's behalf. The Purchaser's  Representative  shall provide the
          interface with the Contractor on all technical and contractual matters
          pertaining  hereto, and shall have authority to act and make decisions
          on behalf of, and be authorized to bind by contract or otherwise,  the
          Purchaser.  The  Purchaser's  Representative  shall  from time to time
          authorize  in  writing  Persons  to carry  out  specific  tasks on the
          Purchaser's behalf. The Purchase has authorized Bechtel  International
          Inc. or an affiliate  ("Bechtel")  to act as a  Purchaser's  Inspector
          hereunder.

    SECTION 21. INSPECTION RIGHTS

    21.1. GENERALLY.  The Purchaser  and its  designees  shall at all times have
          access  to  the  Work  and  Supplies.  The  Contractor  shall  provide
          appropriate facilities,  as described in the Technical  Specification,
          for such  access and for the  purpose  of  inspection  and  testing in
          accordance  with the  provisions  of the Technical  Requirements.  The
          Purchaser and its designees shall be allowed  reasonable access to all
          plants,  offices and Sites of the Contractor and its Subcontractors to
          enable it to inspect the Work and  Supplies  and to monitor  progress.
          The  Purchaser  and its  designees  shall have the right to  establish
          resident representative(s) at the Contractor's and its Subcontractors'
          plants and at all Sites,  and the  Contractor  and its  Subcontractors
          shall,  at the  Purchaser's or its designee's  request,  make suitable
          office space,  facilities  and shipboard  accommodation  available for
          such  representative(s)  at the Contractor's  expense.  The Contractor
          shall  include in all of its  Subcontracts  such  provisions as may be
          necessary  to secure  such  rights on behalf of the  Purchaser  or its
          designees.  The Purchaser's and its designee's  inspection  activities
          may include:

          (a)  an  audit of the  Contractor's  and its  Subcontractors'  quality
               control  system and practices and their  application  to the Work
               and   Supplies,    including   to   the   design,    manufacture,
               transportation,   installation   and  testing  of  all  Supplies,
               materials and components; and

          (b)  inspection  of all  parts  of the  Supplies  and  Work to  ensure
               compliance with the Technical Requirements.

    21.2. COVERED WORK. If any portion of the Work should be covered contrary to
          the  request  of or to  requirements  specifically  expressed  in this
          Contract,  such Work must,  if required in writing by the Purchaser or
          its designee,  be uncovered for its observation  and replaced,  at the
          Contractor's  expense. If any other portion of the Work is covered and
          the Purchaser or its designee had not specifically requested the


                                       26
<PAGE>

          opportunity  to inspect such Work prior to it being covered and it was
          not covered  contrary to requirements  specifically  expressed in this
          Contract, the Purchaser or its designee may request the opportunity to
          inspect such Work and it shall be uncovered by the Contractor. If such
          Work is found to be in  accordance  with  this  Contract,  the cost of
          uncovering  and  recovering  shall,  by a Contract  Variation  made in
          accordance with Section 16, be charged to the Purchaser.  If such Work
          is found not to be in accordance  with this  Contract,  the Contractor
          shall pay all costs of uncovering and recovering.

    21.3. NO RELIEF.  No  inspection,  audit or  approval by or on behalf of the
          Purchaser  or its designee in respect of any aspect of the Work or any
          Supply shall  relieve the  Contractor  of any of its  responsibilities
          under this Contract.

    SECTION 22. DEFECTIVE WORK

          If at any time before the Provisional  Acceptance  Date, the Purchaser
          states that, in accordance with the Technical Requirements, any of the
          Contractor's Work contains Defects,  or is otherwise not in accordance
          with this Contract, the Purchaser or its designee may reject such Work
          or Supplies, and the Purchaser shall have no liability with respect to
          payment therefor, notwithstanding that:

          (a)  satisfaction may previously have been expressed;

          (b)  title to such Work or Supplies  may have passed to the  Purchaser
               in accordance with Section 37 hereof;

          (c)  such Work or Supplies may previously have been accepted; or

          (d)  payment may have been made in respect of such Work or Supplies,

          and  the  Contractor  shall  promptly  replace,  at its own  cost  and
          expense,  the Defective Work or inferior  Supplies to the satisfaction
          of the Purchaser.  If,  however,  the Work was not Defective Work, the
          Contractor   shall  be  reimbursed   for  its   reasonable   costs  of
          replacement.

    SECTION 23. SUSPENSION OF WORK BY THE PURCHASER

    23.1. GENERALLY.  Should the Purchaser  desire,  in its sole  discretion, to
          suspend  the  whole or any part of the Work or  suspend  for a further
          period  Work  already  suspended  pursuant  to this  Section  23,  the
          Purchaser  shall notify the  Contractor,  indicating the period of the
          proposed suspension or further suspension.  If the Contractor believes
          that such suspension will result in additional  costs or delay for the
          Contractor, the Contractor shall, within fourteen (14) Days after such
          notice,  furnish an itemized  statement  of such  estimated  costs and
          estimated  delays to the Purchaser's  Representative.  Upon receipt of
          such itemized  statement (or if no such  statement is received  within
          the stipulated fourteen 14-Day period), the Purchaser's Representative


                                       27
<PAGE>

          shall  either  confirm  or cancel the  proposal  to suspend or further
          suspend the Work or further  question the  Contractor  on the basis of
          such  itemized  statement.  Promptly  after the  Parties  agree on the
          amount of such costs or any  extension of time,  they shall  execute a
          Contract  Variation in respect  thereof in accordance  with Section 16
          hereof.

          (a)  LIMITATION ON THE PURCHASER'S RIGHT TO SUSPEND WORK. In the event
               that the Purchaser shall,  pursuant to this Section 23.1, suspend
               the Work in its entirety for (i) a period of six (6)  consecutive
               months,  or  (ii)  periods  totaling  twelve  (12)  months,  such
               suspension  shall, upon the expiry of such 6- or 12-month period,
               as applicable,  constitute a Termination  for Convenience for all
               purposes hereof.

    23.2. THE CONTRACTOR'S  DUTIES UPON SUSPENSION.  During any such suspension,
          the Contractor shall:

          (a)  cease  performance  of the Work and  place no  further  orders or
               Subcontracts relating to the suspended Work;

          (b)  protect and care for all Work, Supplies and materials, in transit
               to or from  the  System  or at  storage  areas  for  which  it is
               responsible; and

          (c)  give the Purchaser copies of all outstanding orders and contracts
               for  Supplies,  materials  and  services and take any action with
               respect to such orders and contracts as the Purchaser may direct.

    23.3. THE CONTRACTOR'S  DUTIES AFTER SUSPENSION.  Upon the cessation of such
          suspension, the Contractor shall resume performance of the Work within
          a reasonable period after being directed to do so by the Purchaser.



                                       28
<PAGE>

    SECTION 24. TERMINATION FOR CONVENIENCE

    24.1. TERMINATION.  The  Purchaser  may,  upon written  notice (a "NOTICE OF
          TERMINATION FOR CONVENIENCE") to the Contractor at any time, terminate
          this  Contract or  otherwise  terminate  the  Contractor's  employment
          hereunder  as to either the whole or part of the Work (a  "TERMINATION
          FOR  CONVENIENCE").  A Termination for  Convenience  shall not nullify
          this Contract but shall operate to terminate the Contractor's right to
          proceed  with  the  Work  and to  discharge  the  Purchaser  from  its
          obligations under this Contract, except for the Purchaser's obligation
          to pay  the  Termination  Payment  (Convenience).  A  Termination  for
          Convenience  shall not relieve the  Contractor  from  liability  under
          applicable  Law for damages for any failure or omission to perform any
          portion of this Contract  prior to such  termination  or prejudice any
          legal rights of the Purchaser or the Contractor,  whether those rights
          arise under this Contract or otherwise.

    24.2. TERMINATION  DATE. A Termination for  Convenience  shall be effective,
          and this Contract shall be terminated,  when the Notice of Termination
          for Convenience is delivered to the Contractor.

    24.3. TERMINATION PAYMENT (CONVENIENCE).

          (a)  AMOUNT.

               (i)  FORMULA.  In the case of a Termination for Convenience,  the
                    Purchaser  shall  make  a  payment  to the  Contractor  (the
                    "TERMINATION  PAYMENT  (CONVENIENCE)")  to  reimburse  it as
                    follows:

                    (A)  the  Scheduled  Rate  for  completed   items  of  Work,
                         including  Supplies  manufactured  by or purchased from
                         any Subcontractor in respect of this Contract; and

                    (B)  in the case of  incomplete  Work,  an amount (the "COST
                         FOR  INCOMPLETE  WORK")  equal to the  total  costs and
                         expenses  incurred for each category of Work identified
                         on the Provisioning Schedule,  with the addition of the
                         individual   category's   gross   margin  to  the  cost
                         category.

                         Costs for which the  Contractor  has,  despite its best
                         efforts in mitigation  thereof,  become  legally liable
                         shall  be  considered  incurred  for  purposes  of this
                         Section 24.3.

               (ii) LIMITATION.  Notwithstanding  the preceding  clause (i), the
                    Termination Payment  (Convenience),  taken together with all
                    other payments made to the  Contractor  under this Contract,
                    shall not exceed the sum of: 

                                       29
<PAGE>

                    (A)  the portion of the  Contract  Price  applicable  to the
                         portion  of  the  Work  that  has  been   completed  in
                         accordance   with   this   Contract;    plus   (without
                         duplication)

                    (B)  the Cost for Incomplete Work.

               (b)  TERMINATION  CLAIM.  The  Contractor  shall  submit  to  the
                    Purchaser  a written  termination  claim  (the  "TERMINATION
                    CLAIM"). The Termination Claim shall set forth a calculation
                    of the  Termination  Payment  (Convenience)  and  all  other
                    relevant facts, and shall contain  supporting  documentation
                    in respect thereof. The Termination Claim shall be submitted
                    promptly, but in no event later than six (6) months from the
                    effective date of termination of this Contract.

               (c)  REVIEW PERIOD.  Within ninety (90) Days after its receipt of
                    the  Termination  Claim  (the   "TERMINATION   CLAIM  REVIEW
                    PERIOD"),  the  Purchaser  shall  convey any  objections  or
                    requests for additional information it may have with respect
                    to   the   determination   of   the   Termination    Payment
                    (Convenience). The Contractor shall provide such information
                    to the  Purchaser as soon as  practicable.  If the Purchaser
                    objects to any portion of the  Termination  Claim,  it shall
                    notify the Contractor in writing,  not later than the end of
                    the  Termination  Claim  Review  Period,  of  each  item  it
                    believes  requires  adjustment and, for not more than thirty
                    (30) Days  thereafter,  the  Parties  shall  attempt in good
                    faith to resolve any differences.

               (d)  ACCOUNTING  FIRM.  If the  Parties  are unable to so resolve
                    such differences within such time period, they shall, within
                    ten (10) Days, jointly submit the items in dispute to a "Big
                    Four" accounting firm mutually agreed upon by the Contractor
                    and the Purchaser for resolution on an expedited  basis with
                    a  request  for a written  report  thereon  to be  submitted
                    within thirty (30) Days from such submittal.  If the Parties
                    cannot agree on the  determination of the accountant for the
                    purposes  hereof,  the  accountant  shall  be a  "Big  Four"
                    accounting firm designated by the mutual agreement of a "Big
                    Four" accounting firm designated by the Purchaser and a "Big
                    Four"   accounting   firm   designated  by  the  Contractor.
                    Adjustments to the Termination  Claim by the accountant,  if
                    any, shall be:

                    (i)   made in accordance with the criteria set forth in this
                          Section 24.3;

                    (ii)  set forth in its written report; and

                    (iii) final and  binding on the  Parties  in the  absence of
                          manifest error.

                    Judgment  may be  entered  thereon  in a court of  competent
                    jurisdiction.  The  accountant  shall have no  authority  to
                    change or alter the terms and  conditions of this  Contract.


                                       30
<PAGE>

                    Such  determination  by the  accountant  shall  not  relieve
                    either Party from liability under applicable Law for damages
                    for breach of contract or  prejudice  any legal right of the
                    Parties,  whether  those rights arise under this Contract or
                    otherwise.  The Contractor shall provide the accountant with
                    access, under  confidentiality  conditions,  to all books of
                    account  and  records of the  Contractor  that relate to the
                    System  and  are  relevant  to  the   determination  of  the
                    Termination  Claim,  based on the criteria set forth in this
                    Section  24.3.  The  accountant  shall not be  permitted  to
                    disclose to the Purchaser the underlying  cost  information.
                    The fees and expenses incurred in connection with any review
                    by the accountant  pursuant to this Section 24.3(d) shall be
                    borne   one-half  by  the  Purchaser  and  one-half  by  the
                    Contractor.

    SECTION 25. EVENTS OF DEFAULT AND REMEDIES

    25.1. EVENTS OF DEFAULT AND REMEDIES.  If at any time (any of the following,
          an "Event of Default"):

          (a)  the  Contractor  fails to  carry  out  engineering,  fabrication,
               supply,  delivery,  installation and testing the Supplies and the
               Work at the rate of progress  required by the Plan of Work and in
               accordance  with  this  Contract  that is  likely  to result in a
               material breach of this Contract; or

          (b)  the Contractor fails to make any payment hereunder when due; or

          (c)  the  Contractor  commits any material  breach of, or fails in any
               material  respect to comply with and  observe,  any  provision of
               this Contract; or

          (d)  the  Contractor  abandons  the Work for a period in excess of ten
               (10) Days,  or intimates  without  lawful cause or  justification
               that the Work will not or cannot be completed; or

          (e)  the Contractor shall make a general assignment for the benefit of
               creditors,   or  any  proceeding   shall  be  instituted  by  the
               Contractor  seeking to adjudicate it a bankrupt or insolvent,  or
               seeking  liquidation,  winding up,  reorganization,  arrangement,
               adjustment,  protection,  relief or composition of the Contractor
               or its debts under Law  relating  to  bankruptcy,  insolvency  or
               reorganization  or  relief  or  the  appointment  of a  receiver,
               trustee or other similar  official for the  Contractor or for any
               substantial part of its property or the Contractor shall take any
               corporate  action to authorize any of the actions set forth above
               in this Section 25.1(e); or

          (f)  an involuntary petition shall be filed or an action or proceeding
               otherwise    commenced    against    the    Contractor    seeking
               reorganization,  arrangement or readjustment of the  Contractor's


                                       31
<PAGE>

               debts or for any other relief under any  bankruptcy or insolvency
               act or Law, now or hereafter  existing and remain  undismissed or
               unvacated for a period of thirty (30) Days; or

          (g)  a receiver, assignee,  liquidator, trustee or similar officer for
               the  Contractor  or for all or any part of its property  shall be
               appointed involuntarily; or

          (h)  the  Contractor  shall file a certificate  of  dissolution  under
               applicable Law or shall be  liquidated,  dissolved or wound up or
               shall  commence  or  have  commenced  against  it any  action  or
               proceeding for dissolution,  winding up or liquidation,  or shall
               take any corporate action in furtherance thereof; or

          (i)  the Contractor either:

               (i)  fails to make prompt payment of any  undisputed  invoice due
                    to any Subcontractor or otherwise for materials or labor; or

               (ii) repudiates  or is in  default  with  respect  to  any of its
                    obligations to a Subcontractor; or

          (j)  the  Contractor  fails,  after  being  notified  thereof  by  the
               Purchaser,   to  promptly   correct  any  Defective  Work  during
               performance of the Work or within the relevant  Warranty  Period;
               or

          (k)  any  representation  or warranty made by the Contractor herein or
               in  any  certificate,   financial  statement  or  other  document
               furnished  to the  Purchaser  by or on behalf  of the  Contractor
               shall prove to be false or misleading in any material  respect as
               of the time made, confirmed or furnished;

          then,  upon the  occurrence  of any Event of  Default  referred  to in
          paragraph  (a),  (c), (j) or (k) of this Section  25.1,  the Purchaser
          may,  by notice in  writing,  advise the  Contractor  of such Event of
          Default and the  Contractor  shall have  fifteen  (15) Days to correct
          such Event of Default to the  satisfaction of the Purchaser  PROVIDED,
          HOWEVER,  that,  if such  Event  of  Default  can not be cured in such
          15-Day period through the diligent  efforts of Contractor,  but can be
          cured in a longer period  without there  occurring any failure to meet
          the Plan of Work, the Contractor shall have an additional  period, not
          to exceed 45 Days so long as it shall  commence  the cure  during such
          15-Day period and diligently pursue such cure. If the Contractor fails
          to  correct  any such  Event of  Default  to the  satisfaction  of the
          Purchaser  within such 15-Day period (or subject to the conditions set
          forth in the  previous  sentence,  such longer  period),  or, upon the
          occurrence of any other Event of Default, then the Purchaser may, upon
          written notice (a "NOTICE OF EXERCISE OF REMEDIES") to the Contractor,
          exercise any or all of the following rights and remedies:

                    (A)  suspend  payment  under  this  Contract  in whole or in
                         part;

                                       32
<PAGE>

                    (B)  take the Work  wholly or partly  out of the  control of
                         the  Contractor or any other Person in whose control or
                         possession the Work or any part of it may be, and cause
                         to be completed the same in accordance  with Section 26
                         hereof (a "TAKE OVER");

                    (C)  terminate  this Contract in accordance  with Section 27
                         hereof (such event, a "TERMINATION  FOR DEFAULT";  such
                         Notice  of   Exercise   of   Remedies,   a  "NOTICE  OF
                         TERMINATION FOR DEFAULT");

                    (D)  exercise its rights under the Contractor Bond; or

                    (E)  apply any amount owning to the Contractor  hereunder to
                         the payment and  performance of the  obligations of the
                         Contractor hereunder; or

                    (F)  exercise  any and all rights and  remedies  it may have
                         under  law  or  equity,   including   seeking  specific
                         performance and the recovery of damages.

          The foregoing remedies are cumulative, and the Purchaser may elect one
          or more  thereof  without  prejudice  to any other right or remedy the
          Purchaser may have.

    25.2. NO PREJUDICE.  No action taken by the Purchaser  under this Section 25
          shall prejudice any right of the Purchaser under Section 14 hereof.

    SECTION 26. TAKE OVER AND PAYMENTS TO THE PURCHASER

    26.1. REPLACEMENT  CONTRACTORS.  If the  Purchaser  elects a Take Over,  the
          Purchaser may contract with and employ any Person or Persons  (each, a
          "REPLACEMENT  CONTRACTOR") to further execute and complete the Work or
          any portion thereof, and each Replacement  Contractor may provide such
          Supplies and labor as may be necessary to enable that completion.

    26.2. NO RIGHT OF COMPENSATION. If the Purchaser elects a Take Over (whether
          or not through a Replacement Contractor), the Contractor shall have no
          right to any  compensation  arising from such action and the Purchaser
          may pay each  Replacement  Contractor  such amounts of money as may be
          agreed upon between such Replacement Contractor and the Purchaser.

    26.3. PAYMENTS TO THE  PURCHASER.  If the Purchaser  elects a Take Over, the
          Contractor shall, without prejudice to any other rights or remedies of
          the Purchaser  hereunder or under  applicable  Law with respect to the
          Event  of  Default  (including  Delay  Damages  and  recourse  to  the
          Contractor  Bond), be liable to the Purchaser as direct damages for an
          amount equal to:


                                       33
<PAGE>

          (a)  all costs (including the costs of redoing any portion of the Work
               not  reasonably  usable  in  the  completion  of the  System)  so
               incurred by the Purchaser; PLUS

          (b)  the amounts  already paid or payable to the Contractor in respect
               of  completed  Work  accepted by the  Purchaser as of the date on
               which  the  Notice  of  Exercise  of  Remedies  is  given  by the
               Purchaser,  which  amounts  the  Contractor  shall be entitled to
               retain or receive, as applicable; PLUS

          (c)  the  amounts  paid  to the  Contractor  and not  refunded  to the
               Purchaser as required pursuant to this Section 26.3; MINUS

          (d)  the total amount paid to the Purchaser under the Contractor Bond;
               MINUS

          (e)  the Initial Contract Price.

          The  Contractor  shall refund to the Purchaser all amounts paid to the
          Contractor  for Work not  reasonably  usable in the  completion of the
          System within  fifteen (15) Days after  written  notice that such Work
          has been rejected by the Purchaser.

    SECTION 27. TERMINATION FOR DEFAULT

    27.1. EFFECT OF  TERMINATION.  A  Termination  for Default shall not nullify
          this Contract but shall operate to terminate the Contractor's right to
          proceed  with  the  Work  and to  discharge  the  Purchaser  from  its
          obligations  under this Contract.  A Termination for Default shall not
          relieve the Contractor from liability under applicable Law for damages
          for any failure or  omission  to perform any portion of this  Contract
          prior  to such  termination  or  prejudice  any  legal  rights  of the
          Purchaser  or  Contractor,  whether  those  rights  arise  under  this
          Contract or otherwise.

    27.2. TERMINATION  DATE. A Termination  for Default shall be effective,  and
          this Contract shall be terminated,  when the Notice of Termination for
          Default is served upon the Contractor.

    27.3. RIGHT TO TERMINATE.  The Purchaser may exercise its right to terminate
          this Contract whether or not any of the Work remains to be executed or
          whether or not the time limit for completion of the Work has expired.

    27.4. RIGHT TO COMPLETE THE WORK.  On  termination  of this Contract upon an
          Event of Default,  the  Purchaser  shall be  empowered to complete the
          Work in the same manner as provided for under Section 26 hereof, as if
          the Work had been taken wholly out of the control of the Contractor by
          the Purchaser and this Contract had not been terminated.



                                       34
<PAGE>

    SECTION 28. DUTIES UPON TERMINATION

    28.1. GENERALLY.  Upon receipt of a Notice of Termination for Convenience or
          a Notice of Termination for Default (each, a "NOTICE OF TERMINATION"),
          unless  otherwise  directed  by the  Purchaser  in  such  notice,  the
          Contractor shall:

          (a)  stop  work  under  this  Contract  on the date and to the  extent
               specified in the Notice of Termination;

          (b)  place no further orders or contracts for  materials,  services or
               facilities  except  as may be  necessary  for  completion  of the
               portion  of the Work,  if any,  under this  Contract  that is not
               terminated;

          (c)  unless  otherwise  directed  by  the  Purchaser,  use  reasonable
               efforts to terminate all orders and  contracts  and  Subcontracts
               (other than Subcontracts  assigned to the Purchaser in accordance
               with  clause  (d) below) to the  extent  that they  relate to the
               performance of Work terminated by the Notice of Termination;

          (d)  assign to the Purchaser  (or at the  Purchaser's  direction,  any
               Replacement  Contractor),  in the manner,  at the time and to the
               extent directed by the Purchaser,  all of the Contractor's right,
               title and interest under such orders, contracts and Subcontracts,
               whether or not terminated;

          (e)  use reasonable efforts to settle all outstanding  liabilities and
               all  claims  arising  out  of  such  termination  of  orders  and
               contracts,  with the Purchaser's  approval or ratification to the
               extent the Purchaser so requires;

          (f)  relinquish title as provided for in Section 37 hereof and deliver
               the following to the Purchaser in the manner, at the time, at the
               place and to the extent (if any) directed by the Purchaser:

               (i)  the  fabricated  or  unfabricated  parts,  Work in  process,
                    completed  Work,  Supplies  and all other  items  commenced,
                    partly  executed,  produced  or  completed  as part  of,  or
                    acquired in connection  with,  the  performance  of the Work
                    terminated by the Notice of Termination; and

               (ii) the  completed  or  partially  completed  plans,   drawings,
                    information,  Permits  and  other  property  that,  if  this
                    Contract had not been  terminated,  would have been required
                    to be furnished to the Purchaser;

          (g)  in the  case  of any  property  referred  to in  Section  28.1(f)
               hereof:


                                       35
<PAGE>

               (i)  use its best  efforts  in the case of an Event of Default or
                    reasonable   efforts  in  the  case  of  a  Termination  for
                    Convenience to use such property in the manufacture of other
                    projects  that  the  Contractor  has,  or will  have,  under
                    contract for other  customers;  the  Scheduled  Rate thereof
                    shall be deducted from the Termination Payment (Convenience)
                    or paid in such other  manner as the  Purchaser  may direct;
                    and

               (ii) use reasonable efforts to sell, in the manner, at the times,
                    to the  extent  and at  the  price  or  prices  directed  or
                    authorized by the  Purchaser;  the proceeds of any such sale
                    shall be deducted from the Termination Payment (Convenience)
                    or paid in such other manner as the Purchaser may direct;

          (h)  complete  performance  of such  part of the  Work as may not have
               been terminated by the Notice of Termination;

          (i)  take such action as may be necessary,  or which the Purchaser may
               direct,  for the  protection  and  preservation  of the  property
               related to this Contract that is in the  Contractor's  possession
               and in which the Purchaser has or may acquire an interest;

          (j)  grant  to the  Purchaser,  any  Replacement  Contractor  and each
               Subcontractor at the Contractor's  expense, the right to continue
               to use any and all patented or proprietary  information  that the
               Purchaser  deems  necessary  to complete  the System,  subject to
               reasonable proprietary restrictions; and

          (k)  at the Purchaser's request and at the Contractor's expense:

               (i)  For Default supply any proprietary components needed for the
                    completion and operation of the System;

               (ii) assist  the  Purchaser  in  preparing  an  inventory  of all
                    equipment in use or in storage;

               (iii)assign to the  Purchaser  or to any  Replacement  Contractor
                    and make  available  all  issued  Permits  then  held by the
                    Contractor pertaining to the System; and

               (iv) remove  all  such  equipment,   waste  and  rubbish  as  the
                    Purchaser may designate.

    28.2. SUBCONTRACTOR  CLAIMS.  For  a  Notice  of  Termination  for  Default,
          notwithstanding  Section 21(e),  the Purchaser  shall not be liable to
          the Contractor  with respect to any claim that any  Subcontractor  may
          make arising out of any termination of this Contract.


                                       36
<PAGE>

    28.3. FUNDS HELD BY THE PURCHASER.  Without  prejudice to Section 14 hereof,
          for a Notice of Termination for Default:

          (a)  all sums of money that may  remain in the hands of the  Purchaser
               with respect to this Contract;

          (b)  all funds made available  under the Contractor  Bond or any other
               security retained for the due fulfillment of this Contract; and

          (c)  all sums named in this  Contract as Delay Damages that may be due
               to the Purchaser,

          at the  election of the  Purchaser  may be withheld  pending the final
          determination  of the rights and obligations of the Parties under this
          Contract.

    SECTION 29. LIMITATION OF LIABILITY

    29.1. NO CONSEQUENTIAL  DAMAGES. The Contractor shall not be liable, whether
          at  contract,  at law,  in  tort or  otherwise,  for any  indirect  or
          consequential  losses  or any  loss  of  income  or  profit,  loss  of
          opportunity  to do business or the costs of, or associated  with,  the
          use of restoration  facilities;  PROVIDED that the foregoing shall not
          in any way limit the Contractor's liability for Delay Damages.

    29.2. OTHER LIMITATIONS.  The Contractor's maximum liability hereunder shall
          be:

          (a)  For indemnity claims, there shall be no limit;

          (b)  For delay,  the damages  shall be limited to the Delay Damages as
               set forth in Section 18.3 hereof; and

          [REDACTED]

    SECTION 30. THE CONTRACTOR'S ON-SITE DUTIES

    30.1. REASONABLE  PRECAUTIONS.  The Contractor acknowledges that, until such
          time  as  title  to the  System  has  passed  in its  entirety  to the
          Purchaser,  it shall remain solely responsible for the institution and
          maintenance  of all such  usual  and  reasonable  precautions  for the
          protection  of the  Sites,  the  System  and  any  Work,  and  for the
          prevention  of danger or damage to all  persons or property on or near
          the Sites.  Without  limiting the  generality  of the  foregoing,  the
          Contractor  shall,  at its  own  expense,  ensure  that  each  Site is
          constructed,  secured,  illuminated  and  maintained in such manner as
          would a reasonably prudent owner of a facility analogous to such Site.


                                       37
<PAGE>

    30.2. WASTE DISPOSAL.  The Contractor shall, at its own expense,  manage and
          dispose of all waste  materials in strict  accordance  with applicable
          Laws and  Codes  and  Standards,  and  shall  keep each Site free from
          debris and waste  resulting  from the  performance of the Work and the
          presence of the Contractor Persons at such Site. In the event that any
          Contractor  Person  shall  discover  the  presence  of,  or cause  the
          discharge of, any material of a hazardous  nature on or from any Site,
          the  Contractor  shall  immediately  notify the  Purchaser,  and shall
          instruct all Contractor  Persons to desist  immediately  from the Work
          until further instruction from the Purchaser.

    SECTION 31. PERFORMANCE TESTS

    31.1. GENERALLY.

     (a)  THE  CONTRACTOR'S   OBLIGATION  TO  CONDUCT   PERFORMANCE  TESTS.  The
          Contractor  shall, at its own cost and expense,  conduct and repeat as
          necessary the  Performance  Tests as required  hereunder in connection
          with   Provisional   Acceptance   (and,  as   applicable,   Commercial
          Acceptance)  and Final  Acceptance,  in accordance  with the Technical
          Specification.

     (b)  SAFETY.  If during any Performance Test, it is discovered that testing
          cannot be  conducted  in a safe  manner in  accordance  with  industry
          practice, such Performance Test shall be terminated and the Contractor
          shall remedy the unsafe  condition,  whereupon such  Performance  Test
          shall start over.

    31.2. RIGHT OF WAIVER.  The Purchaser  may, but shall have no obligation to,
          waive,  defer  or  reduce  any of  the  requirements  relating  to the
          achievement of Provisional  Acceptance or Final Acceptance at any time
          by written  notice to the  Contractor;  PROVIDED that the  Purchaser's
          exercise of any rights hereunder shall apply only to such requirements
          as the  Purchaser  may  specify  and  shall  in no event  relieve  the
          Contractor of any requirements,  liability or other obligations not so
          specified.

    31.3. LONG-TERM  OBLIGATIONS.  Nothing in this  Section  31,  including  the
          Purchaser's approvals, nor the issuance of a Certificate of Commercial
          Acceptance or a Certificate  of Provisional  Acceptance,  shall in any
          way  modify or alter the  Contractor's  obligations  with  respect  to
          Warranties  hereunder.  Neither the  inspection,  approval or payment,
          including the Final Payment, under this Contract shall:

          (a)  be construed to be an acceptance of any Defective Work;

          (b)  be an admission of the Contractor's  satisfactory  performance of
               the Work; or

          (c)  relieve  the  Contractor  of any of its  obligations  under  this
               Contract.


                                       38
<PAGE>

    31.4. OPERATING REVENUES. Any and all revenues generated by the operation of
          the System shall be solely for the account of the Purchaser.

    SECTION 32. SYSTEM ACCEPTANCE

    32.1. INITIAL SYSTEM  COMMISSIONING  REPORT.  The Contractor shall submit to
          the Purchaser the Initial System  Commissioning Report with respect to
          the System in  accordance  with the  Technical  Specification.  Within
          thirty  (30) Days after its  receipt of the  relevant  Initial  System
          Commissioning Report, the Purchaser shall:

          (a)  issue a Certificate of Provisional  Acceptance in accordance with
               Section 32.2 hereof; or

          (b)  issue a Certificate of Commercial  Acceptance in accordance  with
               Section 32.3 hereof; or

          (c)  not accept the System in its existing condition and the terms and
               provisions of Section 32.4 hereof shall apply.

    32.2. PROVISIONAL ACCEPTANCE.

          (a)  GENERALLY.  When,  in respect of the  System,  the  Purchaser  is
               reasonably satisfied:

               (i)   with the Initial System Commissioning Report;

               (ii)  that the System has been  completed in accordance  with the
                     Technical  Requirements and any other  requirements of this
                     Contract;

               (iii) that the System has achieved all requirements  contained in
                     the Technical  Specifications,  as of the RFPA Date, during
                     the Performance Tests;

               (iv)  that the System is available for full commercial operation;
                     and

               (v)   that all  requirements  of this  Contract  relating  to the
                     System  (including  all Technical  Requirements)  have been
                     fulfilled   and  all   required   documentation   has  been
                     completed,  in each case other  than those that do not,  by
                     the express terms hereof, have to be fulfilled or completed
                     on or prior to the RFPA Date,

                     the Purchaser  shall issue a  "CERTIFICATE  OF  PROVISIONAL
                     ACCEPTANCE" in accordance with the Technical  Specification
                     dated  the same  day as the  Initial  System  Commissioning
                     Report or bearing the date (the "RFPA Date") on which the


                                       39
<PAGE>

                    above conditions for the System to be provisionally accepted
                    were  actually  met. The  following  shall occur on the RFPA
                    Date:

                    (A)  the System shall be deemed to be provisionally accepted
                         by the Purchaser; and

                    (B)  title to any part of the System that has not previously
                         passed and the risks  thereof  and  responsibility  for
                         routine  maintenance shall,  subject to Section 32.2(b)
                         hereof, vest in the Purchaser.


          (b)  PUNCH LIST. The Certificate of Provisional Acceptance may, in the
               Purchaser's sole  discretion,  be unqualified or may have annexed
               to it a Punch List, which shall be compiled by the Purchaser,  of
               any  outstanding  minor  deficiencies or items to be completed by
               the  Contractor.  The Contractor  shall,  as soon as practicable,
               remedy the  deficiencies  and complete the Work  indicated on all
               such  listed  items  so as to  ensure  full  compliance  with the
               requirements of this Contract.  Such  corrective  action shall be
               taken  by  the  Contractor  at no  cost  to  the  Purchaser.  The
               Contractor  shall continue to bear the risk with respect to these
               items, as long as any such items are outstanding, notwithstanding
               that title shall have passed to the Purchaser.

    32.3. COMMERCIAL ACCEPTANCE.

          (a)  GENERALLY.  If the  Purchaser  does not  issue a  Certificate  of
               Provisional  Acceptance  because the System contains Defects that
               would prevent the full  commercial  operation of the System,  but
               nevertheless  the Purchaser has determined that the System or any
               part thereof is suitable to be put into  commercial  service (the
               System or such part,  the "RFCS  PORTION") and desires to put the
               RFCS Portion into  commercial  service,  then the Purchaser shall
               issue,  with the consent of the  Contractor  (which consent shall
               not be  unreasonably  withheld or delayed),  to the  Contractor a
               "CERTIFICATE  OF  COMMERCIAL  ACCEPTANCE."  On the date that such
               Certificate is issued:

               (i)   the  Purchaser  shall be entitled  to  commence  commercial
                     service over the RFCS Portion;

               (ii)  title to the RFCS Portion that has not  previously  passed,
                     and the  responsibility  for routine  maintenance  thereof,
                     shall be vested in the Purchaser; and

               (iii) the risk  for the  RFCS  Portion  shall  be  vested  in the
                     Purchaser,  except that any risk attributable to the System
                     or part of the System that  requires  corrective  action by
                     the Contractor shall remain the sole  responsibility of the
                     Contractor.

                                       40
<PAGE>

          (b)  PUNCH LIST. The Certificate of Commercial  Acceptance  shall have
               as an attachment a list of items requiring  corrective action and
               items still to be provided. Such corrective action shall be taken
               promptly and such items completed by the Contractor at no cost to
               the Purchaser. When:

               (i)   the outstanding corrective action has been taken;

               (ii)  all outstanding items have been delivered and approved; and

               (iii) the  conditions  described in Section 32.2 hereof have been
                     satisfied,

               the   Purchaser   shall  issue  a  Certificate   of   Provisional
               Acceptance.  Upon such issuance,  title and risk to the remainder
               of the System shall pass to the Purchaser  and the  provisions of
               Section 32.2(b) shall apply.

          (c)  NO RELIEF. The issuance of a Certificate of Commercial Acceptance
               shall in no way relieve the  Contractor  from its  obligation  to
               provide  a  System   complying   with  the  technical  and  other
               requirements   of  this   Contract   and,  in   particular,   any
               deterioration  or  Defects in the System  occurring  or  becoming
               known  between the date of issuance of such  Certificate  and the
               date of issuance of a Certificate of Provisional Acceptance shall
               be corrected at the sole expense of the Contractor.

    32.4. FAILURE TO ACHIEVE PROVISIONAL OR COMMERCIAL ACCEPTANCE.  If neither a
          Certificate of Provisional  Acceptance nor a Certificate of Commercial
          Acceptance  is issued due to the  existence of Defects with respect to
          the System or the Work, the Purchaser shall,  without prejudice to any
          of its other rights and  remedies  under this  Contract,  issue a list
          detailing  such Defects and advise the  Contractor of a period of time
          in which such  Defects  shall be remedied to the  satisfaction  of the
          Purchaser.  The  Contractor  shall issue an  additional  commissioning
          report   similar  in  form  and   substance  to  the  Initial   System
          Commissioning  Report to the Purchaser  after all actions  required to
          remedy such Defects have been taken by the  Contractor and such report
          shall be considered in accordance  with the provisions of Section 32.1
          hereof.

    32.5. FINAL  ACCEPTANCE.  The  Purchaser  shall  issue to the  Contractor  a
          "CERTIFICATE OF FINAL  ACCEPTANCE" in respect of the System within ten
          (10)  Days  after the date on which  all of the  following  conditions
          have, in the Purchaser's judgment, been satisfied in full:

          (a)  the Purchaser has issued a Certificate of Provisional Acceptance;

          (b)  during the period since the RFPA Date:


                                       41
<PAGE>

               (i)   the System  has continuously  performed in  accordance with
                     the Technical   Requirements,   including   the   Technical
                     Specification;

               (ii)  there has been no component failure; and

               (iii) the  Contractor  fully  discharged  all of  its obligations
                     comprising the Work on the System;

          (c)  the Warranty  Period  applicable to each  component of the System
               has  expired and there are no Warranty  claims  outstanding  with
               respect thereto;

          (d)  any and all items on all Punch Lists  relating to the System have
               been completed;

          (e)  the Purchaser has received the  Certificate  of Payment and Final
               Release;

          (f)  the System has  achieved  during  the Final  Acceptance  Test and
               conforms  with the  specifications  set  forth  in the  Technical
               Specifications,  including the Design Life Performance Standards,
               as of the Final Acceptance Date; and

          (g)  the  Purchaser  has  received  such  other  documentation  as the
               Purchaser or any Financing Party may have reasonably requested to
               establish   the   Contractor's   satisfaction   in  full  of  its
               obligations relating to the System.

    SECTION 33. WARRANTIES

    33.1. GENERAL WARRANTIES.

          (a)  WARRANTIES.  Notwithstanding the System having been provisionally
               accepted  by the  Purchaser  and without  prejudice  to any other
               warranty  made  by  the  Contractor  hereunder,   the  Contractor
               warrants  until  the  expiration  of the  Warrant  Period  to the
               Purchaser  that  the  System  shall  (each  of the  following,  a
               "GENERAL WARRANTY"):

               (i)   be free from Defects in design, materials, construction and
                     workmanship;

               (ii)  not  develop  any  pattern of failure or  degradation  that
                     would be  likely  to cause  the  System to fail to meet the
                     Design Life Performance Standards;

               (iii) be fit for the  particular  use  described in the Technical
                     Specification; and

               (iv)  meet   the   Technical   Specifications   and   all   other
                     requirements of this Contract.

                                       42
<PAGE>

          (b)  REPAIR GENERALLY.  If at any time within any applicable  Warranty
               Period any  Defect  occurs in the System as a result of a failure
               of a Warranty,

               (i)  and  such  Defect  causes  the  System  to fail to meet  the
                    Technical  Specifications,  the  Contractor  shall  promptly
                    repair  or  replace  such  part  or  parts  thereof  to  the
                    satisfaction  of the  Purchaser  without  any  charge to the
                    Purchaser; or

               (ii) while the System is meeting  the  Technical  Specifications,
                    the  Contractor  shall,  at the direction of the  Purchaser,
                    either:

                    (A)  replace any Defective Work immediately; or

                    [REDACTED]

                    PROVIDED that the Contractor  shall not be  responsible  for
                    any  cost  or  expense  relating  to  any  repair  cableship
                    necessary  for  installation,  de-installation  or otherwise
                    required to effect repairs of any Defect occurring after the
                    first two (2) years of the applicable  Warranty Period.  The
                    Contractor  shall make every  reasonable  effort to minimize
                    the period of time to repair or replace  any faulty  unit or
                    equipment and to deliver such unit or equipment, as repaired
                    or replaced, to the Purchaser.

          (c)  REPLACEMENT ONLY. If during any applicable Warranty Period:



                                       43
<PAGE>

               (i)  based  on  analysis  pursuant  to  Section  33.1(g)  hereof,
                    related  or  substantially  similar  defects  are  found  on
                    repeated occasions in any part of the System; or

               (ii) any other  pattern of failure or pattern of  degradation  is
                    likely to cause  any part of the  System to fail to meet the
                    Design Life  Performance  Guarantees  over the System Design
                    Life,

               then, in either case, at the request of the Purchaser,  each such
               part shall not be repaired but shall be replaced by a new part.

          (d)  OUT OF SERVICE. The Contractor shall make every reasonable effort
               to minimize  the period of time that the System is out of service
               for repair and testing. For failures or any situations that cause
               or risk an outage of the System,  the Contractor shall initiate a
               corrective intervention  immediately after receipt of notice from
               the Purchaser.

          (e)  REPAIR BY THE PURCHASER.  Upon any breach of any General Warranty
               of  the  Contractor  occurring  during  the  applicable  Warranty
               Period,  the Purchaser may, to the extent that the Contractor has
               failed to (i) make prompt repair or replacement, or (ii) minimize
               System  out-of-service  time for testing and repair,  arrange for
               the  repair  or   replacement  of  any  Defective  Work  and  the
               Contractor  shall reimburse the Purchaser for the cost of repairs
               or  replacements,  including the cost of  chartering  cableships,
               remotely operated  vehicles and other repair equipment;  provided
               that the  Contractor  shall  not be  responsible  for any cost or
               expense relating to any repair  cableship or equipment  necessary
               for installation, de-installation or otherwise required to effect
               repairs of Defects occurring after the first two (2) years of the
               applicable  Warranty Period. The Purchaser agrees to (i) give the
               Contractor  prompt  notice of any such repair  undertaking,  (ii)
               coordinate its repair  activities  with those of the  Contractor,
               and (iii) comply with the Contractor's  repair policies delivered
               to the Purchaser, and the Contractor shall be permitted to have a
               representative  on board to observe  at-sea repairs to the extent
               accommodation  is available and the repair ship's  sailing or the
               repair  will  not  be  delayed.  The  Contractor  shall,  at  the
               Purchaser's  option,  also repair or replace  any such  recovered
               defective  part or parts and return  the same to the cable  depot
               nominated by the Purchaser at the Contractor's expense in lieu of
               reimbursement   for  the  use  of  the  Purchaser's   spares  for
               replacement.  Any  repair by the  Purchaser  shall not in any way
               diminish the Contractor's obligations under this Section 33.

          (f)  REPAIRED OR  REPLACEMENT  PARTS.  Each defective part repaired or
               replaced pursuant to this Section 33 (a "REPLACEMENT ITEM") shall
               itself be subject to the provisions of this Section 33 (including
               this  Section  33.1),  and  shall be  warranted  from the date of


                                       44
<PAGE>

               repair or replacement, as applicable, until a date five (5) years
               thereafter;  provided that the Warranty Period  applicable to any
               Replacement Item shall in no case exceed seven (7) years from the
               RFPA Date.

          (g)  INVESTIGATION. The Contractor shall investigate, at its sole cost
               and expense,  any  defective  part or parts  repaired or replaced
               pursuant  to this  Section  33 to  determine,  to the  reasonable
               satisfaction  of the Purchaser,  the type of defect and the cause
               of failure of the part or parts.  The Contractor  shall provide a
               descriptive written report to the Purchaser on the results of the
               investigation,  the type of defect found and,  when  appropriate,
               the  repair  carried  out on such  defective  part or parts.  The
               Contractor  shall also state  whether  the type of defect and the
               cause of the  failure  are  expected  to occur  elsewhere  in the
               System; PROVIDED that the Contractor's determination shall not be
               conclusive for the purposes of Section 33.1(c) hereof.

          (h)  THE  PURCHASER'S  EXPENSES.  The  Contractor  shall  pay  to  the
               Purchaser  all the expenses (if any) incurred by the Purchaser in
               testing or examining any part of the System for the purpose of or
               in  connection  with  this  Section  33  or  in  or  about  or in
               connection with the correction, replacement or repair of any part
               of the System.

    SECTION 34. ASSIGNMENT AND SUBCONTRACTING

    34.1. GENERALLY. The Contractor shall not, without the prior written consent
          of the Purchaser,  assign this Contract or Subcontract any part of the
          Work, or assign, mortgage, charge or encumber any of the moneys due or
          becoming due under this  Contract,  or any other benefit or obligation
          whatsoever  arising,  or that  may  arise  under  this  Contract.  The
          Contractor shall not be relieved of responsibility under this Contract
          for such  parts  of the Work as are  assigned  or  Subcontracted.  The
          Subcontractors as of the date hereof are set forth on Appendix 8.

    34.2. SUBCONTRACTS.  The Contractor shall ensure that each Subcontract shall
          contain:

          (a)  provisions  allowing the Purchasers and its designees  reasonable
               access  to all  plants,  offices  and  Sites in  accordance  with
               Section 21 hereof;

          (b)  provisions  stating that the  Subcontractor  shall have no rights
               against the Purchaser  and shall not file any Lien  (equitable or
               otherwise)  against the Purchaser,  the System or any of the Work
               or Supplies; and

          (c)  such other  provisions  of this  Contract as prudently  should be
               made applicable to such  Subcontract or Subcontractor in order to
               permit the  Contractor  to fulfill its  obligations  hereunder or
               otherwise give full effect to the provisions of this Contract.


                                       45
<PAGE>

    34.3. EXISTING  SUBCONTRACTS.   The  Contractor  represents,   warrants  and
          covenants that all  Subcontracts  entered into by the Contractor on or
          prior to the date  hereof  contain,  or shall be amended  to  contain,
          provisions addressing the matters set forth in Section 34.2 hereof.

    34.4. BREACH.  If the Contractor  commits any breach of this Section 34, any
          assignment,   mortgage,   charge,   encumbrance   or   Subcontract  in
          contravention  of this Section 34 shall, as against the Purchaser,  be
          null and void and of no force and  effect,  and may be  ignored by the
          Purchaser.  The Contractor shall protect,  defend,  indemnify and keep
          indemnified  the Purchaser  against all Losses suffered or incurred by
          the Purchaser arising out of or related to such assignment,  mortgage,
          charge, encumbrance or Subcontract.

    34.5. SUBCONTRACTOR ASSIGNMENT. The Contractor shall make reasonable efforts
          so that its Subcontracts include provisions  permitting the assignment
          of that Subcontract to the Purchaser upon a Termination For Default or
          Take Over.

    SECTION 35. THE CONTRACTOR'S PERSONNEL

          The Contractor shall employ,  and shall ensure that its Subcontractors
          employ, for Work to be performed in connection with this Contract only
          such persons who are careful,  suitably skilled and  experienced.  The
          Purchaser, or its designee, may object to and direct the Contractor to
          remove any person employed by the Contractor or any  Subcontractor and
          such person shall be removed  within a  reasonable  period of time and
          shall not be employed  again for any  portion of the Work  without the
          prior approval of the Purchaser's Representative.

    SECTION 36. THE PURCHASER'S STAFF

    36.1. GENERALLY.  Where the Technical  Requirements  provide for  stipulated
          Work to be carried  out by the  Purchaser,  such Work shall be carried
          out in the manner and with the  responsibilities  as defined  therein.
          Such  participation  by any of the  Purchaser's  staff  (or any  other
          Person  designated  by the  Purchaser by contract or otherwise) in the
          Work  shall  not be  construed  as  relieving  the  Contractor  of its
          responsibility for the design, quality and performance of the System.

    36.2. LIMITATIONS.  Where any of the Purchaser's staff (or any other Persons
          designated by the Purchaser by contract or otherwise)  participate  in
          the Work, they shall remain  officers,  partners,  employees or agents
          and under the administrative control of the Purchaser.  The Contractor
          shall not be liable for any  negligent  act or omission of such staff,
          agents or designees,  but if in giving  instructions to be carried out
          by any such  Persons,  or by omitting to give such  instructions,  the
          Contractor fails to use proper skill and care, the Contractor shall be
          deemed to have been negligent and shall be liable for the  consequence
          of such negligence.


                                       46
<PAGE>

    SECTION 37. TITLE

    37.1. TITLE TO  SUPPLIES.  The  absolute  and  exclusive  right,  title  and
          interest to each item of Supply  intended  for use in the System shall
          vest in and be the absolute  property of the Purchaser from the moment
          that the Contractor Invoice (together with all documentation  required
          under Section 13.4 hereof) for the Progress Payment in respect of such
          Supply is submitted to the  Purchaser and such  Contractor  Invoice is
          paid by the Purchaser subject to the Purchaser's  rights under Section
          13.5. The Contractor  represents and warrants that the Purchaser shall
          at that time  acquire  good and clear title to such  Supply,  free and
          clear of all  Liens.  When  held at any  Site,  such  Supply  shall be
          identified as clearly as possible by the prominent  display of notices
          and by marking as being the property of the Purchaser.  The Contractor
          shall  ensure  that  the  relevant   books  of  account  are  suitably
          annotated,  and shall allow the  Purchaser  access to the premises and
          records in order to check that such  identification  has been  carried
          out.

    37.2. REMOVAL OF LIENS.  The Contractor shall secure the removal of any Lien
          (other than  Purchaser  Liens) on the Work and Supplies  within thirty
          (30) Days after  obtaining  notice  thereof.  If any Lien  (other than
          Purchaser Liens) is not discharged,  satisfied or released within such
          30 Days or such  earlier  time as may be  necessary  in order  for the
          Purchaser to avoid being  damaged  thereby,  the  Purchaser  may, upon
          notice to the  Contractor  of its  intention to do so, apply any funds
          withheld  or moneys  to  become  due to the  Contractor  hereunder  to
          satisfy, discharge or secure the release (including by posting a bond)
          of such items.  Any such  application by the Purchaser shall be deemed
          payment to the  Contractor.  Any  additional  expense  incurred by the
          Purchaser as a result of the  Contractor's  breach of any provision of
          this Section 37.2 shall be borne by the Contractor.

    37.3. NO RELEASE OF THE CONTRACTOR.  The transfer of title shall not absolve
          or release the Contractor from its  obligations and liabilities  under
          this  Contract.  The  Contractor  shall be deemed  the  bailee of such
          Supplies and shall remain liable to the  Purchaser  therefor and shall
          bear  the  risk of loss or  damage  thereto,  until  the  risk of loss
          thereof has passed to the  Purchaser  in  accordance  with  Section 41
          hereof.

    37.4. TITLE TO THE SYSTEM. Upon:

          (a)  the issuance of a  Certificate  of  Provisional  Acceptance  or a
               Certificate of Commercial  Acceptance in accordance  with Section
               32 hereof; or

          (b)  termination,  in  whole  or in  part,  of  this  Contract  or the
               Contractor pursuant to Sections 24 or 27 hereof,

          absolute and  exclusive  right,  title and interest to any part of the
          System that has not previously  passed to the Purchaser  under Section
          37.1  hereof  (other  than Work being  completed  pursuant  to Section
          28.1(h)  hereof)  shall  thereupon  pass to the  Purchaser;  PROVIDED,


                                       47
<PAGE>

          HOWEVER that,  with respect to a  Termination  For  Convenience,  such
          title shall not pass to the Purchaser  until the  Termination  Payment
          (Convenience)  has been paid. The  Contractor  represents and warrants
          that the Purchaser  shall acquire good and clear title  thereto,  free
          and clear of all Liens.

    SECTION 38. REPRESENTATIONS AND WARRANTIES

    38.1. THE CONTRACTOR'S REPRESENTATIONS AND WARRANTIES. The Contractor hereby
          represents and warrants that:

          (a)  ORGANIZATION;  POWER  AND  AUTHORITY.  It is a  corporation  duly
               organized,  validly  existing and in good standing under the Laws
               of France and is qualified  to do business in all  jurisdictions,
               including the United  Kingdom,  the  Netherlands  and France,  in
               which  the  nature of the  business  conducted  by it makes  such
               qualification  necessary,  and has all requisite  legal power and
               authority  to execute  this  Contract  and to perform  the terms,
               conditions and provisions thereof.

          (b)  AUTHORIZATION.  The execution  and delivery by the  Contractor of
               this Contract has been duly authorized by all requisite corporate
               action.

          (c)  ENFORCEABILITY.  This Contract  constitutes the legal,  valid and
               binding  obligation of the Contractor,  enforceable in accordance
               with the terms thereof except as enforceability may be limited by
               applicable bankruptcy, insolvency, reorganization,  moratorium or
               other similar Laws affecting  creditors'  rights generally and to
               the extent that the remedies of specific performance,  injunctive
               relief  and  other  forms of  equitable  relief  are  subject  to
               equitable defenses,  the discretion of the court before which any
               proceeding therefor may be brought,  and the principles of equity
               in general.

          (d)  NO CONFLICT.  Neither the  execution,  delivery or performance by
               the  Contractor of this  Contract,  nor the  consummation  of the
               transactions contemplated thereby, will result in:

               (i)  a violation  of, or a conflict  with,  any  provision of the
                    organizational documents of the Contractor;

               (ii) a contravention  or breach of, or a default under,  any term
                    or  provision  of  any  material   contract,   agreement  or
                    instrument to which the Contractor is a party or by which it
                    or its property may be bound, which contravention, breach or
                    default  could be  reasonably  expected  to have a  material
                    adverse  effect on the ability of the  Contractor to perform
                    its  obligations  under  this  Contract  to  consummate  the
                    transactions contemplated by this Contract; or


                                       48
<PAGE>

               (iii) a violation by the Contractor of any Law.

          (e)  NO  VIOLATION  OF  LAW.  It  is  not  in  violation  of  any  Law
               promulgated,  or judgment entered, by any governmental authority,
               which  violations,   individually  or  in  the  aggregate,  would
               adversely  affect  it  or  its  performance  of  any  obligations
               hereunder.

          (f)  LITIGATION.  There  are no  actions,  suits or  proceedings,  now
               pending or (to its best knowledge)  threatened  against it before
               any court or administrative  body or arbitral tribunal that might
               materially  adversely affect the ability of the Contractor or any
               Subcontractor to perform its obligations hereunder.

          (g)  LICENSES. It will hold all national,  provincial, local and other
               Permits  required to allow it to operate or conduct its  business
               now and as contemplated by this Contract.

          (h)  QUALIFICATIONS. It has:

               (i)   examined the Contract  Documents  thoroughly and has become
                     familiar with their terms;

               (ii)  full  experience and proper  qualifications  to perform the
                     Work and to construct the System; and

               (iii) ascertained  the  nature  and  location  of the  Work,  the
                     character and  accessibility of the System  build-out,  the
                     existence of obstacles to construction, the availability of
                     facilities  and  utilities,  the location and  character of
                     existing or adjacent work or  structures  and other general
                     and  local   conditions   (including   labor,   safety  and
                     environmental)  that might  affect its  performance  of the
                     Work or the Contract Price.

    38.2. THE PURCHASER'S  REPRESENTATIONS AND WARRANTIES.  The Purchaser hereby
          represents and warrants that:

          (a)  ORGANIZATION;  POWER  AND  AUTHORITY.  It is a  corporation  duly
               organized,  validly  existing and in good standing under the Laws
               of Delaware and is qualified to do business in all  jurisdictions
               in which the nature of the  business  conducted  by it makes such
               qualification  necessary,  and has all requisite  legal power and
               authority  to execute  this  Contract  and to perform  the terms,
               conditions and provisions thereof.

          (b)  AUTHORIZATION.  The  execution  and delivery by the  Purchaser of
               this Contract has been duly authorized by all requisite corporate
               action.


                                       49
<PAGE>

          (c)  ENFORCEABILITY.  This Contract  constitutes the legal,  valid and
               binding  obligation of the  Purchaser,  enforceable in accordance
               with the terms thereof except as enforceability may be limited by
               applicable bankruptcy, insolvency, reorganization,  moratorium or
               other similar Laws affecting  creditors'  rights generally and to
               the extent that the remedies of specific performance,  injunctive
               relief  and  other  forms of  equitable  relief  are  subject  to
               equitable defenses,  the discretion of the court before which any
               proceeding therefor may be brought,  and the principles of equity
               in general.

    SECTION 39. CONSENT TO JURISDICTION

    The Parties hereto agree that,  without limiting the ability of either Party
    to appeal an order of any such court,  the United States  District Court for
    the Southern  District of New York and state courts  located in the State of
    New York  shall have  exclusive  jurisdiction  to enforce  the terms of this
    Contract and to decide any claims or disputes that may arise or result from,
    or be connected  with,  this  Contract and any  superseding  agreement,  any
    breach or default hereunder or thereunder,  or the transactions contemplated
    herein or therein. Any and all claims,  actions,  causes of action, suits or
    proceedings  relating to the foregoing shall be filed and maintained only in
    such courts, and the Parties hereto hereby irrevocably consent and submit to
    the  jurisdiction  of such  courts.  If an  action,  suit or  proceeding  is
    instituted in the United States District Court for the Southern  District of
    New York or a state  court  located  in the  State of New York,  each  Party
    agrees not to assert,  by way of motion,  as a defense or otherwise,  in any
    such action, suit or proceeding, any claim that:

          (a)  it is not subject personally to the jurisdiction of such court;

          (b)  such action,  suit or  proceeding  is brought in an  inconvenient
               forum;

          (c)  the venue of such action, suit or proceeding is improper; or

          (d)  this Contract and any superseding agreement or the subject matter
               hereof or thereof may not be enforced in or by such court.

    Any and all service of process,  and any other  notice in any such  action,
    shall be given  personally  or by  registered  or  certified  mail,  return
    receipt  requested,  or by any other  means of mail that  requires a signed
    receipt,  postage prepaid,  mailed to such a Party as herein provided.  The
    Parties agree to and submit to enforcement of interim  judgments  issued in
    any such court.

    SECTION 40. INDEMNIFICATION

    40.1. GENERALLY.  The Contractor  shall be liable for, and shall  indemnify,
          protect,  defend and hold  harmless  each  Purchaser  Person  from and
          against, all Losses:


                                       50
<PAGE>

          (a)  in respect of any injury to, or death or disease  of, any person,
               or any damage to, or loss of use of, any  property or asset based
               upon,  arising under or otherwise related to the act, omission or
               negligence  of any  Contractor  Person  in  connection  with  the
               performance of this Contract; or

          (b)  arising  in   connection   with  any   infringement   or  claimed
               infringement  of  intellectual  property  rights as  described in
               Section 12.1 hereof; or

          (c)  arising  from any act or omission of any  Contractor  Person that
               violates any Law; or

          (d)  to the extent  not  covered by items (a)  through  (c) above,  in
               respect of any injury to, or death or disease of, any person,  or
               any damage to, or loss of use of, any property as a result of the
               discharge or presence of any environmentally hazardous substance,
               which  discharge or presence was caused in any manner by the act,
               omission or  negligence  of any  Contractor  Person in connection
               with the performance of this Contract; or

          (e)  suffered  or  incurred  as a result  of the  breach of any of the
               Contractor's General Warranties.

               except for such Losses (i) solely due to the  willful  misconduct
               or  gross   negligence  of  such   Purchaser   Person,   or  (ii)
               representing  consequential,  special or indirect damages arising
               from the interruption of telecommunications  services provided by
               the Purchaser, its contractors, representatives, agents, lessees,
               customers and correspondents.

    40.2. WAIVER.  The Contractor shall not make any claim or demand or commence
          or prosecute any proceeding  against any Purchaser Person with respect
          to any of the matters  referred to in Section 40.1 hereof,  and hereby
          waives  all  causes of  action,  rights  and  remedies  in  connection
          therewith.

    SECTION 41. RISK OF LOSS

    41.1. GENERALLY.  Notwithstanding  that  title  in  whole  or in part to the
          Supplies or Work may have passed to the Purchaser  pursuant to Section
          37 hereof, the Contractor shall retain the risk of loss and remain and
          be responsible to the Purchaser to make good for loss or damage to the
          System or such Supplies or Work arising from any cause (other than the
          negligent or willful acts or omissions of the Purchaser) whatsoever as
          follows:

          (a)  For Supplies or Work generally (other than spare parts), from the
               date hereof  until (i) the RFPA Date,  or (ii) the  issuance of a
               Certificate of Commercial Acceptance (but only to the extent that
               such  Supplies  or Work  constitute  part of the  RFCS  Portion),
               whichever is earlier, in accordance with Section 32 hereof; and


                                       51
<PAGE>

          (b)  For Supplies or Work that are spare  parts,  from the date hereof
               until  such spare  parts are  delivered  to cable  depots or made
               available at a port for transfer to a cable  maintenance  vessel,
               in either case, in accordance with the Purchaser's instruction.

    41.2. PAYMENTS TO THE PURCHASER.  Where the  Contractor  has not,  either in
          accordance with the terms of this Contract or otherwise,  without cost
          or expense to the Purchaser, corrected any damage to the System or any
          portion thereof with respect to which it retains the risk of loss, the
          Contractor  shall  pay  to the  Purchaser  compensation  equal  to the
          expenses  reasonably  incurred by the  Purchaser  of  correcting  such
          damage or other  loss.  This  Section 41 is without  prejudice  to the
          obligations  of the  Contractor  under  any  other  provision  of this
          Contract.

    SECTION 42. INSURANCE

    42.1. TYPES OF INSURANCE.  The Contractor shall, at its own expense, provide
          insurance to the reasonable  satisfaction  of the Purchaser  until the
          RFPA Date (except,  in the case of property  insurance on the Work, to
          the extent that the  Contractor no longer has the risk of loss thereof
          as provided in Section 41 hereof),  for all risks  normally  insurable
          and insured in accordance with industry standards relating to the Work
          or Supplies or covered in this Contract.  Such  insurance  shall be in
          the name of the Contractor and, to the extent available, shall include
          the  Purchaser  as a joint  insured or as an  additional  insured,  as
          applicable, and shall include the following:

          (a)  ALL RISKS  PHYSICAL  DAMAGE  INSURANCE  COVERING  THE WORK AT THE
               CONTRACTOR'S  PREMISES.  This  insurance  shall be  written  on a
               replacement  cost basis for the full value at risk. This coverage
               may terminate  when the last  shipment of the  completed  Work is
               loaded  on board  any  vehicle  or  carrier  for the  purpose  of
               transportation from the Contractor's premises.

          (b)  CARGO AND  INSTALLATION  ALL RISKS ON GOODS OF THE CONTRACT.  The
               Contractor  shall  procure  and  maintain  in force an  insurance
               contract  written on the latest  edition of the  Institute  Cargo
               Clauses "A" (All Risks Form), modified if required to pick up the
               installation exposures.  This insurance is to cover the cable and
               equipment  from the point  where  the  insurance  required  under
               Section  42.1(a)  hereof  ceases,  and to continue until the RFPA
               Date. Such insurance  shall include the perils of jettison,  loss
               overboard,  due and labor.  The limit of such insurance  shall be
               not less than the  replacement  value of any one  shipment at any
               time.

          (c)  WORKER'S COMPENSATION  INSURANCE.  From the date hereof until the
               RFPA Date, the Contractor  shall, at its own expense,  maintain a
               policy of  insurance  with an insurer  nominated by it that shall
               indemnify the Parties from and against all liability, loss, cost,
               expense,  claim or proceedings under any legislation  relating to
               workers'  compensation  or  employers'  liability  or  under  any
               applicable  Law with  respect  to any  accident  or injury to, or
               death of, or any  liability  to,  workers (as  designated in such


                                       52
<PAGE>

               legislation)  and other persons  employed by the Contractor in or
               about or in connection  with the Work and the  performance of the
               Contractor's  obligations  under this  Contract.  This  insurance
               shall cover all employees and servants of the  Contractor for all
               compensation and other benefits required by any applicable Law or
               by Governmental  Authority in respect of injury,  death, sickness
               or disease. The territorial  restriction shall be amended so that
               employees  working  at sea or in the  area of  operation  are not
               excluded.

          (d)  EMPLOYER'S LIABILITY INSURANCE. This insurance shall cover claims
               presented  by or on  behalf  of  employees  or  servants  of  the
               Contractor and related to employer's liability, whether the claim
               arises under  statute or maritime Law or  otherwise.  [REDACTED]

          (e)  CHARTERER'S LIABILITY.  To the extent applicable hereunder,  this
               coverage shall cover the legal and  contractual  liability of the
               Contractor  as charterer  of a vessel.  The limit of liability of
               this coverage shall be  appropriate  to the vessel  chartered and
               the coverage shall include any loss, damage or expense, including
               demurrage,  removal of wreck,  collision  liability  or any other
               consequential loss or damage resulting from an accident involving
               any chartered vessel used by the Contractor in the performance of
               this Contract. This insurance shall include claims for Protection
               and Indemnity as well as War Protection  and  Indemnity,  loss or
               damage  to any  chartered  vessel  including  claims  related  to
               detention or delay and the consequences  thereof.  It should also
               provide  recovery for liability in respect of general average and
               salvage charges as well as legal expenses and costs incurred with
               underwriter's approval in defending or investigating claims.

          (f)  INSURANCE COVERAGE TO BE MAINTAINED BY SHIPOWNER.  The Contractor
               shall  require the  shipowner  to provide  and  maintain in force
               during the charter period the following coverage:

               (i)  Protection and Indemnity coverage from one of the recognized
                    Protection and Indemnity  Associations as per Standard Rules
                    with an  unlimited  liability  for  general  Protection  and
                    Indemnity   Risks   [REDACTED]  for  each  vessel  owned  or
                    chartered by the Contractor  and used in the  performance of
                    this Contract; and

               (ii) Hull and Machinery  Insurance  coverage  (including War Risk
                    coverage,  as applicable) on full  conditions for a limit of



                                       53
<PAGE>

                    no less  than  the  actual  value  of each  vessel  owned or
                    chartered by the Contractor  and used in the  performance of
                    this  Contract.  The  territorial  warranties  of the policy
                    shall include the planned cable route.

               Coverage  described  under  clauses  (i) and (ii) above  shall be
               extended to pick up losses and exposures of any sub-sea equipment
               (sea  plow,  remotely-operated  vehicle  or the  like)  that  the
               Contractor may be using in the performance of the Work.

    42.2. NOTICE OF CANCELLATION.  All of the insurance  coverages shall provide
          that, prior to any  cancellation or material change thereto  initiated
          by the insurers,  a thirty (30) Day written  notice shall be forwarded
          to the Purchaser.

    42.3. COPIES. At the Purchaser's  request,  the Contractor shall furnish the
          Purchaser with certified copies of insurance  policies or certificates
          of insurance  that provide  sufficient  information to verify that the
          Contractor  has complied  with the insurance  requirements  under this
          Contract.

    42.4. FAILURE TO MAINTAIN  INSURANCE.  If the Contractor  fails to effect or
          keep in force any of the  insurance  required by this  Section 42, the
          Purchaser may, without prejudice to any other rights it may have under
          this Contract, effect and keep in force any such insurance and pay the
          premium due or take out new insurance  satisfactory  to the Purchaser,
          in which  event any  amounts  so paid by the  Purchaser  shall  become
          immediately due and payable by the Contractor to the Purchaser. Should
          the  Contractor  fail to make any  payment to the  Purchaser  upon its
          request therefor,  the Purchaser may deduct the amount of such payment
          from any payment that is, or may become, due to the Contractor.

    42.5. COMPLIANCE WITH POLICIES.  The Contractor shall comply with all terms,
          conditions  and guaranties  contained in all policies  relating to the
          insurance  required  by  this  Section  42 and  shall  provide  to the
          Purchaser copies of certificates of insurance, and all other evidence,
          including  information from insurance  brokers and insurers,  that the
          Purchaser may reasonably  request to demonstrate  compliance  with the
          terms of this Article 42.

    42.6. CLAIM  INFORMATION.  The Contractor shall notify the insurers promptly
          and shall supply all necessary  information  concerning any occurrence
          that may give rise to a claim  under the above  insurance  policies in
          order to expedite the processing of the claim.

    42.7. REMEDY OF LOSS OR DAMAGE.  Following a loss or damage,  the Contractor
          shall remedy any such loss or damage with due  diligence  and dispatch
          and shall not wait for any insurance proceeds to effect the repairs.


                                       54
<PAGE>

    42.8. INSOLVENCY OF INSURERS.  The  insolvency,  liquidation,  bankruptcy or
          failure of any insurer  providing  insurance for the Contractor or any
          Subcontractor,  or failure of any such insurer to pay claims accruing,
          shall  not be  considered  a  waiver  of,  nor  shall  it  excuse  the
          Contractor  from  complying  with,  any  of  the  provisions  of  this
          Contract.

    SECTION 43. DOCUMENTS, INFORMATION AND CONFIDENTIALITY

    43.1. GENERALLY.  All  drawings,  diagrams,  specifications  and  any  other
          information  to be provided by the  Contractor to the Purchaser  under
          this Contract shall be supplied by the  Contractor in accordance  with
          the  specified  procedures  and  schedules  set forth in the Technical
          Requirements (including the Technical  Specification).  The Contractor
          shall be solely  responsible  for any delay  resulting from failure on
          its part to provide such drawings,  diagrams,  specifications or other
          information to the Purchaser within the times required.

    43.2. THE CONTRACTOR TO RETAIN DRAWINGS.  All drawings and documents held by
          the  Contractor  at the RFPA Date shall be retained by the  Contractor
          during  the  Warranty  Period to enable the  Contractor  to supply any
          replacement   parts  or  extensions  to  the  System  if  these  shall
          subsequently be required.  At the Purchaser's  request, the Contractor
          shall provide the Purchaser with access to all such documents.

    43.3. CONFIDENTIALITY.

          (a)  GENERALLY.  All  drawings,  diagrams,   specifications  or  other
               information  supplied in  connection  with this Contract by or on
               behalf of either Party (such disclosing Party or person acting on
               its  behalf,  the  "DISCLOSING  PARTY") to the other  Party (such
               recipient   Party,   together  with  its   directors,   officers,
               employees,  agents or  subcontractors  or any of their respective
               directors,  officers,  employees,  agents or subcontractors,  the
               "RECIPIENTS") shall be used solely in assisting the Recipients in
               performance  of this  Contract and shall not be disclosed by such
               Recipients to any third party  without the prior written  consent
               of the  Disclosing  Party,  except as expressly  permitted  under
               clause (b) of this Section  43.3.  Each Party hereto shall ensure
               that each potential  Recipient under its control or acting on its
               behalf in connection with this Contract is subject to appropriate
               confidentiality  undertakings  with  respect  to all  information
               disclosed hereunder.

          (b)  Notwithstanding  the  absence  of the  Disclosing  Party's  prior
               written consent, any Recipient may disclose information furnished
               hereunder:

               (i)   as necessary for the performance of this Contract (and then
                     only  under conditions  of  confidentiality  as  set  forth
                     herein);


                                       55
<PAGE>

               (ii)  as required by Law or pursuant to court order;

               (iii) if it is or becomes  generally  available  to the public by
                     publication  or  otherwise, other  than  by  disclosure  in
                     violation of this Section 43;

               (iv)  if it was within any Recipient's possession  prior to being
                     furnished to a Recipient by or on behalf of the  Disclosing
                     Party;

               (v)   if  it   becomes   available   to   the   Recipient   on  a
                     nonconfidential basis; or

               (vi)  if it was  independently developed by the Recipient without
                     reference to  the  information  provided by or on behalf of
                     the Disclosing Party.

               To the extent  practicable,  any Recipient  shall give reasonable
               advance  notice to the  Disclosing  Party prior to any disclosure
               pursuant to Section 43.3(a)(ii) hereof.

          (c)  TITLE TO INTELLECTUAL PROPERTY. The copyright and all other forms
               of intellectual property in all drawings, specifications and data
               issued by either Party in  connection  with this  Contract  shall
               remain the property of that Party;  PROVIDED  that any  drawings,
               specifications  and data relating  specifically to the System (as
               distinguished   from  the  Contractor's   standard  products  and
               services)  provided by or on behalf of any  Contractor  Person to
               the Purchaser  shall become the property of the Purchaser and the
               Contractor  hereby  assigns  to the  Purchaser  all of its right,
               title and  interest,  that now exists or may arise in the future,
               in and to such drawings,  specifications  and data. The Purchaser
               shall have the right to use and reproduce all drawings,  diagrams
               and specifications and other information provided by or on behalf
               of the  Contractor  for  its  own  use  in  connection  with  the
               operation,   marketing   and   maintenance   of  the  System  and
               interconnection  with other systems, but not for other commercial
               purposes.

    SECTION 44. PUBLICITY

    No publicity relating to this Contract or the Work shall be published in any
    newspaper,  magazine,  journal or any other  written,  oral or visual medium
    without the prior written approval of the Purchaser's Representative.

    SECTION 45. CORRUPT GIFTS AND THE PAYMENT OF COMMISSIONS

    45.1. GIFTS, ETC. The Contractor:

          (a)  represents and warrants that no Contractor Person has; and


                                       56
<PAGE>

          (b)  covenants that no Contractor Person shall,

          offer or give or  agree  to give to any  Purchaser  Person  any  gift,
          commission,  rebate or  consideration  of any kind as an inducement or
          reward for doing,  influencing  or carrying out any act in relation to
          the  obtaining or execution of this  Contract or for showing any favor
          or disfavor to any Person in relation to this Contract.

    45.2. PAYMENTS.  The  Contractor  covenants  that  neither it, nor any other
          Contractor Person, shall, directly or indirectly:

          (a)  offer, pay, promise to pay or authorize the payment of any money,
               or  offer,  give,  promise  to give or  authorize  the  giving of
               anything of value to any foreign (non-U.S.)  government  official
               or any foreign political party, official thereof or candidate for
               political  office for purposes of influencing any act or decision
               of such  government  official  or  political  party,  official or
               candidate,  or inducing  such  government  official or  political
               party, official or candidate to use its or its influence with the
               government  or  instrumentality  thereof to influence  any act or
               decision of such government or instrumentality;

          (b)  offer, pay, promise to pay or authorize the payment of any money,
               or  offer,  give,  promise  to give or  authorize  the  giving of
               anything of value to any Person while  knowing or having a reason
               to know  that all or a  portion  of such  money or thing of value
               will be offered or given to any such  government  official or any
               such political party, official thereof or candidate for political
               office for  purposes of  influencing  any act or decision of such
               government official or political party, official or candidate, or
               inducing such government official or political party, official or
               candidate to use its or its influence  with respect to any act or
               decision of such government or instrumentality;

          (c)  use  fictitious,   inflated,  duplicate,  anonymous,  inadequate,
               unrecorded  or  otherwise  false  accounts,  transfers,  records,
               reports,  documents or bookkeeping entries for the purpose of (i)
               concealing,   mislabeling,   misstating,  omitting  or  otherwise
               falsifying the existence,  source or application of funds for the
               uses  proscribed  by  Section  45.2(a) or  45.2(b)  hereof,  (ii)
               excluding  them from the  Purchaser's  usual  system of financial
               accountability  or (iii)  obtaining  approval by the Purchaser of
               any activities proscribed by Section 45.2(a) or 45.2(b) hereof.

    45.3. FOREIGN CORRUPT  PRACTICES ACT. The Contractor  acknowledges  that the
          prohibitions   set  forth  in  Section  45.2  hereof  conform  to  the
          requirements  of the U.S.  Foreign  Corrupt  Practices Act of 1977, as
          amended,  and shall apply to all activities of each Contractor Person,
          notwithstanding  the fact that such activities may be permitted by the
          standards or customs of countries other than the United States.


                                       57
<PAGE>

    45.4. PERMITTED ACTIVITIES. Section 45.2 hereof does not prohibit:

          (a)  the  normal  extension  of those  common  courtesies  and  social
               amenities  (including  meals,  holiday  gifts and tips of nominal
               amounts)  consistent  with ethical  business  practices  that are
               offered and received on a basis of friendship or hospitality, and
               without the  expectation  of  anything in return,  and are of too
               little value,  duration or frequency to give even the  appearance
               of  impropriety;  PROVIDED  that the  cost  thereof  is  properly
               identified and disclosed on the books of the Purchaser;

          (b)  the payment of commissions  or fees to responsible  and qualified
               consultants,  agents,  marketing  representatives,  attorneys and
               others for necessary and legitimate  services actually performed;
               PROVIDED that the amount paid is reasonably  related to the value
               of such services or the benefits resulting therefrom;

          (c)  payments to Persons whose duties are  essentially  ministerial or
               clerical,  which are not  intended  to  influence  the  misuse of
               official  position,  but rather are  intended  to  encourage  the
               lawful use of  official  position  to expedite a matter or to act
               with respect to matters not involving any discretion; or

          (d)  any payment to a government official,  employee or agency that is
               specifically  required  by  Law,  regulation  or  decree  equally
               applicable to all similarly situated companies.

    45.5. MATERIALITY.  Breach of this Section 45 may render the Contractor, its
          Subcontractors  and agents  liable to  punishment by Law, and any such
          breach shall constitute an Event of Default.

    SECTION 46. RELATIONSHIP OF THE PARTIES

    46.1. GENERALLY.  The relationship  between the Parties shall not be that of
          partners or joint  venturers  and nothing  herein  contained  shall be
          deemed to  constitute  a  partnership  or joint  venture  among  them.
          Neither  Party shall have  authority or power to act  unilaterally  as
          agent for the other.

    46.2. NO OBLIGATIONS OF THE PURCHASER TO SUBCONTRACTORS. No Subcontractor or
          any of its  employees,  representatives  or agents  shall be deemed or
          construed to be employees, representatives or agents of the Purchaser.
          No Subcontractor shall be deemed a third-party beneficiary of, or have
          any interest in, this Contract.


                                       58
<PAGE>

    SECTION 47. NOTICES

    47.1. METHODS AND EFFECTIVENESS.  All notices, requests,  consents and other
          communications  hereunder  (each, a "Notice")  shall be in writing and
          shall be delivered by one or more of the following methods:


           METHOD                          DATE OF EFFECTIVENESS
           ======                          =====================
           Personal delivery               Date delivered

           Facsimile with return           Date sent
           confirmation of transmission

           Nationally recognized           Business day after the date sent if
           overnight courier  service      within  the same  country, otherwise
                                           the date delivered

           First-class  certified  mail,   Fifth day after the date sent
           postage prepaid and return 
           receipt requested


    47.2. ADDRESSES.  Unless otherwise notified in writing,  for the purposes of
          this Section 47, the addresses  and  facsimile  numbers of the Parties
          are:

          (a)  THE CONTRACTOR. If to the Contractor, at the following addresses:

                Alcatel Submarine Networks
                30 Rue Pierre Beregovoy
                BP 309, 92111 Clichy Cedex
                FRANCE
                Attention:  Charles Matthews
                Telephone:  +33-1-4756-6852
                Facsimile:  +33-1-4756-6569

          (b)  THE PURCHASER. If to the Purchaser, at the following address:

                Viatel Global Communications, Ltd.
                800 Third Avenue
                New York, New York 10022
                Attention: General Counsel
                Telephone: 212-350-9225
                Facsimile: 212-350-9250

          or to such other place and with such other  copies as either Party may
          designate as to itself by written notice to the other Party.

                                       59
<PAGE>

    47.3. ENGLISH  LANGUAGE.  Except where  otherwise  provided,  all  documents
          relating to this Contract and all  communications  between the Parties
          shall be in the English language.

    SECTION 48. DISPUTE RESOLUTION

    48.1. MUTUAL DISCUSSIONS.  If a dispute or difference of any kind whatsoever
          shall arise  between the Parties in  connection  with,  relating to or
          arising  out  of  this   Contract,   including   the   interpretation,
          performance,  non-performance  or termination  of this  Contract,  the
          Parties shall attempt to settle such dispute in the first  instance by
          mutual  discussions  between the Project  Manager and the  Purchaser's
          Representative.

    SECTION 49. NO CONFLICTS

    The  Contractor  represents  and  warrants  that  it has  not,  nor  will it
    hereafter enter into, any contract with any customer,  and has not, and will
    not,  take or omit any  action,  in either  case that could  jeopardize  its
    ability to perform its obligations under this Contract.

    SECTION 50. MISCELLANEOUS

    50.1. HEADINGS.  For the  purposes of  interpretation,  the  headings of the
          Sections hereof shall not be deemed to form part of this Contract.

    50.2. GOVERNING  LAW.  This  Contract  shall be  construed  and  governed in
          accordance  with the Laws in force in the  State of New  York,  United
          States,  applicable  to  agreements  made and to be  performed  wholly
          within such State.

    50.3. SEVERABILITY.  If any provision of this  Contract  shall be invalid or
          unenforceable,   such   invalidity  or   unenforceability   shall  not
          invalidate or render unenforceable the entire Contract, but rather the
          entire Contract shall be construed as if not containing the particular
          invalid  or  unenforceable  provision  or  provisions,  and rights and
          obligations of the Purchaser and the Contractor shall be construed and
          enforced accordingly.

    50.4. INTEGRATION.  This  Contract  supersedes  all  prior  oral or  written
          understandings   between  the  Parties  and,  constitutes  the  entire
          agreement with respect to the subject matter of this Contract.

    50.5. AMENDMENTS AND WAIVERS.

          (a)  AMENDMENTS.  This  Contract  and  any  of its  provisions  may be
               amended,  supplemented or otherwise modified by another agreement
               in writing signed by a duly  authorized  person on behalf of each
               Party.


                                       60
<PAGE>

          (b)  WAIVERS.  Any  provision  of this  Contract may be waived if, and
               only if,  such  waiver  is in  writing  and  signed  by the Party
               against whom the waiver is to be enforced. No failure or delay by
               any Party in exercising any right,  power or privilege  hereunder
               shall operate as waiver thereof,  nor shall any single or partial
               exercise  thereof  preclude any other or further exercise thereof
               or the exercise of any right, power or privilege.

    50.6. FURTHER  ASSURANCES.  The  Contractor  shall  provide any and all such
          cooperation and assistance as the Purchaser may reasonably  request in
          connection   with  the   implementation   of  this  Contract  and  the
          engineering, procurement and construction of the System. Specifically,
          the  Contractor  shall promptly  provide any  technical,  engineering,
          financial or other information that the Purchaser is entitled to under
          this  Contract,  whenever  requested  by the  Purchaser,  including in
          connection   with  any   requests  by,   filings  to,  or   regulatory
          requirements of, Governmental Authorities.

    50.7. COUNTERPARTS.   This   Contract   may  be  executed  in  one  or  more
          counterparts,  each of which when so executed shall be deemed to be an
          original.   Such  counterparts   together  shall  constitute  but  one
          Contract.

    50.8. SUCCESSORS  AND ASSIGNS.  This Contract  shall be binding upon, and is
          solely for the benefit of, each Party,  its  successors  and permitted
          assignees.  The  Purchaser  may assign its  interest in this  Contract
          without the consent of the  Contractor  to any  affiliate  or group of
          affiliates (after providing to Contractor  reasonable assurance of the
          ability of such affiliate to fulfill the obligations including payment
          obligations,  of the Purchaser  hereunder) or, with the consent to the
          Contractor (not to be unreasonably  withheld or delayed),  to Bechtel.
          The Contractor  may not assign its interests in this Contract  without
          the written consent of the Purchaser.

    50.9. NO THIRD PARTY BENEFICIARIES.  Nothing in this Contract is intended to
          confer  upon any Person  other than each  Party,  its  successors  and
          permitted  assignees  any rights or remedies of any nature  whatsoever
          under or by reason of this Contract.

   50.10. UNITED NATIONS  CONVENTION ON CONTRACTS FOR THE INTERNATIONAL  SALE OF
          GOODS.  The  Parties  agree  that the  United  Nations  Convention  on
          Contracts for the International  Sale of Goods shall not apply to this
          Contract.

   50.11. REMEDIES CUMULATIVE.  The rights and remedies herein provided shall be
          cumulative  and not  exclusive  of any rights or remedies  provided by
          Law.


                                       61
<PAGE>

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

ALCATEL SUBMARINE NETWORKS S.A.


By /S/ TERENCE L. HOUGHTON
  ------------------------------------
    Name:   TERENCE L. HOUGHTON
    Title:  MANAGER, BUSINESS STRATEGY


VIATEL GLOBAL COMMUNICATIONS, LTD.


By /S/ SHELDON M. GOLDMAN
  ------------------------------------
    Name:  SHELDON M. GOLDMAN
    Title: SENIOR VICE PRESIDENT



                                       62
<PAGE>

                                  DEFINED TERMS



     "AFFILIATE"  of any  Person  means  any  other  Person  that,  directly  or
indirectly through one or more intermediaries, controls the first Person, or any
other  Person  that is  controlled  by or under  common  control  with the first
Person. For the purposes of this definition, the term "control" shall be defined
as direct or  beneficial  ownership of greater than fifty  percent  (50%) of the
equity interests or greater than fifty percent (50%) of the voting control of an
entity.

     "BECHTEL" has the meaning ascribed thereto in Section 20.2.

     "CERTIFICATE OF COMMERCIAL  ACCEPTANCE" has the meaning ascribed thereto in
Section 32.3 of the Contract.

     "CERTIFICATE  OF FINAL  ACCEPTANCE"  has the  meaning  ascribed  thereto in
Section 32.5 of the Contract.

     "CERTIFICATE OF PAYMENT AND FINAL RELEASE" means the certificate  delivered
by the Contractor to the Purchaser in the form of Exhibit 4 to the Contract.

     "CERTIFICATE OF PROVISIONAL ACCEPTANCE" has the meaning ascribed thereto in
Section 32.2 of the Contract.

     "CHANGE IN LAW" means:

          (a)  the  adoption,  enactment or  application  to either Party or the
               System of any Law of the United Kingdom, the Netherlands,  France
               or the United  States not existing or applicable to such Party or
               System on the date of the Contract; or

          (b)  any change in any Law of the  United  Kingdom,  the  Netherlands,
               France or the United  States or in the  application  thereof by a
               Governmental Authority after the date of the Contract,

but not including any Law or application thereof in existence on the date of the
Contract that, by its terms,  becomes or will become effective and applicable to
either Party or the System after the date of the Contract.

     "CIF" means Carriage, Insurance and Freight, as defined in Incoterms.

     "CODES  AND  STANDARDS"  means  the  Laws,  rules,  regulations,  statutes,
ordinances,  codes, standards,  interpretations,  Permits and other governmental
requirements pertaining to or relating to the System and the Work.


<PAGE>

     "CONTRACT" means Sections 1 through 50 of the Engineering,  Procurement and
Construction  Contract,  dated November 10, 1998, between the Contractor and the
Purchaser, including all Exhibits thereto.

     "CONTRACT DOCUMENTS" means the items listed in Section 3.2 of the Contract.

     "CONTRACT  PRICE" means,  as of any date, the Initial  Contract  Price,  as
adjusted in accordance with Section 16 of the Contract.

     "CONTRACTOR"  has the  meaning  ascribed  thereto  in the  preamble  to the
Contract.

     "CONTRACTOR  BOND" has the meaning  ascribed thereto in Section 15.1 of the
Contract.

     "CONTRACTOR INVOICE" means an invoice in form and substance satisfactory to
the  Purchaser  which is duly  submitted by the  Contractor  to the Purchaser in
accordance with Section 13.4 of the Contract.

     "CONTRACTOR  PERMITS" has the meaning ascribed thereto in Section 7.3(a) of
the Contract.

     "CONTRACTOR PERSON" means (a) the Contractor,  (b) any Subcontractor or (c)
any subsidiary,  Affiliate, agent,  representative,  director, manager, officer,
employee (including the Project Manager), transferee, successor or assign of the
Contractor or any Subcontractor.

     "CONTRACT  VARIATION" has the meaning  ascribed  thereto in Section 16.1 of
the Contract.

     "COST FOR INCOMPLETE WORK" has the meaning ascribed thereto in Section 24.3
of the Contract.

     "DAY"  means  the  24-hour  period  beginning  and  ending  at 00.00  hours
Greenwich Mean Time.

     "DDP" means Delivered Duty Paid (as defined in Incoterms).

     "DEFECTIVE WORK" means any portion of the Work that contains Defects.

     "DEFECTS" means:

          (a)  when used with respect to  structures,  materials  and  Supplies,
               such items that are not:

               (i)  of  good  quality  or free  from  improper  workmanship  and
                    deficiencies; and

               (ii) free from errors or  omissions in design or  manufacture  in
                    light of the Technical Requirements; and

          (b)  when used with respect to the Work or any portion thereof:


                                       2
<PAGE>


               (i)   it is not in accordance with the Contract Documents;

               (ii)  it is not provided in a workmanlike manner;

               (iii) any design,  engineering, start-up  activities,  materials,
                     equipment, tools, Supplies, installation or quality-control
                     activities that, in the Purchaser's reasonable judgment:

                    (A)  does not conform to the Technical Requirements or is of
                         improper or inferior workmanship; or

                    (B)  would  adversely  affect  the  ability of the System to
                         meet any Warranty requirement hereunder;

               A Defect  shall be deemed to exist when  actually  discovered  or
               when it should have been apparent to a party in the  Contractor's
               position after reasonable inspection or testing.

     [TERM AND DEFINITION REDACTED]

     "DESIGN LIFE PERFORMANCE STANDARDS" means the performance standards for the
System over the System Design Life, as set forth in the Technical Specification.

     "DESK STUDY" means the desktop study  referenced in the Marine Route Survey
Agreement.

     "DESK STUDY REPORT" means the desktop study report for the proposed  System
Route furnished by the Contractor to the Purchaser.

     "DISCLOSING  PARTY" has the meaning ascribed thereto in Section 43.3 of the
Contract.

     "DOLLARS" or "$" means the lawful currency of the United States.

     "EVENT OF DEFAULT" has the meaning  ascribed thereto in Section 25.1 of the
Contract.

     "FACTORY RELEASE CERTIFICATE" means, in respect of each delivery of Supply,
the certificate issued by the Contractor's  Quality Assurance  Department in the
form specified in Annex 1.1 to Appendix 5.

     "FIBER  OPTIC CABLE" means the fiber optic cable to be used for the System,
as specifically described in the Technical Specification.

     "FINAL   ACCEPTANCE"  means  the  issuance  of  the  Certificate  of  Final
Acceptance.

     "FINAL  ACCEPTANCE  DATE" means the date on which Final  Acceptance  of the
System occurs.


                                       3
<PAGE>

     "FINAL  PAYMENT" means the remaining  portion of the Contract Price paid to
the  Contractor  after the  Contractor  has  completed the Work and remedied any
deficiencies.

     "FINAL  ACCEPTANCE TEST" means the performance test conducted in accordance
with the Technical Specification in connection with Final Acceptance.

     "FOB" means Free On Board (as defined in Incoterms).

     "FORCE MAJEURE EVENT" has the meaning  ascribed  thereto in Section 19.1 of
the Contract.

     "GENERAL  WARRANTY" has the meaning ascribed thereto in Section 33.1 of the
Contract.

     "GOVERNMENTAL AUTHORITY" means any nation or government, any state or other
political subdivision thereof, and any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government.

     [TERM AND DEFINITION REDACTED]

     "INCOTERMS" means the "International  Rules for the Interpretation of Trade
Terms," as adopted by the  International  Chamber of Commerce  (the "ICC") to be
effective as of July 1, 1990 and published in ICC  Publication  No. 460/90 (ISBN
92-842-0087-3).  All matters relating to the construction and  interpretation of
Incoterms  shall be resolved by reference to the Guide to  Incoterms  1990,  ICC
Publication No. 461/90 (ISBN 92-842-1088-7).

     "INITIAL  CONTRACT PRICE" has the meaning  ascribed thereto in Section 13.1
of the Contract.

     "INITIAL   SYSTEM   COMMISSIONING   REPORT"   means  the   Initial   System
Commissioning  Report for the System to be delivered to the  Purchaser  upon the
Contractor's  completion  of  the  commissioning  tests,  as  described  in  the
Technical Specification.

     "LANDING  SITE" means each of the four Fiber Optic Cable  landing sites (up
to and including the System beach joints  located  thereon) at each of the three
landing countries:

          (a)  United Kingdom (two sites);

          (b)  Netherlands; and

          (c)  France.

     "LAW" means any federal,  state,  provincial,  local or other constitution,
charter,  act,  statute,  law,  ordinance,   code,  rule,   regulation,   order,
proclamation,  specified standard or objective criteria,  Permit, other approval
or other  legislative or  administrative  action of any Governmental  Authority,
including:

          (a)  a final decree, judgment or order of a court; and


                                       4
<PAGE>

          (b)  any building code applicable to the System.

     "LIEN" means any mortgage,  pledge,  lien,  deed of trust,  claim,  charge,
security  interest,  attachment or encumbrance of any kind, or any other similar
type  of   preferential   arrangement,   including   materialmen's,   laborers',
mechanics',  Subcontractors'  and vendors' liens, and including any agreement to
give  any of the  foregoing,  any  conditional  sale or  other  title  retention
agreement, any lease in the nature thereof.

     "LIEN  RELEASE"  means  the lien  release  executed  and  delivered  by the
Contractor in the form of Exhibit 4 hereto, which shall contain:

          (a)  a  waiver  and  release  of any and  all  Liens  arising  from or
               relating  to such  portions  of the Work to which any  Contractor
               Invoice relates; and

          (b)  a  certification  to the  Purchaser  that the System and Work are
               free from Liens.

     "LOSSES"  means all damages,  obligations,  debts,  deficiencies,  demands,
judgments, causes of action, costs, charges, fines, penalties,  claims, actions,
proceedings,  liabilities,  losses,  demands,  suits,  prosecutions  or expenses
(including reasonable attorney's fees, disbursements,  costs, expenses and other
charges).

     "MARINE  ROUTE SURVEY" means the Marine Route Survey dated June 8, 1998, as
supplemented  by the Marine Route Survey dated  September,  1998, for the System
forming a part of the Work hereunder.

     "NOTICE" has the meaning ascribed thereto in Section 47.1 of the Contract.

     "NOTICE OF  EXERCISE  OF  REMEDIES"  has the  meaning  ascribed  thereto in
Section 25.1 of the Contract.

     "NOTICE OF TERMINATION" has the meaning ascribed thereto in Section 28.1 of
the Contract.

     "NOTICE OF TERMINATION FOR CONVENIENCE" has the meaning ascribed thereto in
Section 24.1 of the Contract.

     "NOTICE OF  TERMINATION  FOR DEFAULT" has the meaning  ascribed  thereto in
Section 25.1 of the Contract.

     "PARTIES" means the Purchaser and the Contractor.

     [TERM AND DEFINITION REDACTED]

     "PERFORMANCE  TESTS" means the System tests (including the Final Acceptance
Test) conducted in accordance with the Technical Specification.

     "PERMITS" means all:


                                       5
<PAGE>


          (a)  permits,      "no     objections",      permissions-in-principle,
               authorizations,     consents,    registrations,     certificates,
               rights-of-way,  way-leaves,  certificates of occupancy, licenses,
               orders, vessel and crew authorizations/visas,  permission for the
               operation  of  navigational  aids and radio  systems  and similar
               authorizations; and

          (b)  consents,   licenses,  waivers,   privileges,   acknowledgements,
               agreements,  concessions,  approvals  from and all other  filings
               with and applications submitted to, any Governmental Authority or
               any other Person.

     "PERSON"  means an  individual,  corporation,  limited  liability  company,
partnership,  joint venture, trust,  unincorporated organization or Governmental
Authority.

     "PLAN OF WORK" means Appendix 3 to the Contract.

     "PROGRESS  PAYMENT"  means  the  payment  made  by  the  Purchaser  to  the
Contractor  pursuant  to  Section  13.3(b)  of the  Contract  in  respect of any
Contractor Invoice.

     "PROJECT  MANAGER" has the meaning  ascribed thereto in Section 20.1 of the
Contract.

     "PROVISIONAL  ACCEPTANCE"  means  the  issuance  by  the  Purchaser  of the
Certificate of Provisional Acceptance.

     "PROVISIONING SCHEDULE" means Appendix 1 to the Contract.

     "PUNCH LIST" means the list prepared by the Purchaser  identifying items of
the Work that are incomplete or that contain Defects.

     "PUNCH LIST RESERVE"  means an amount in cash equal to two hundred  percent
(200%) of the cost of completing or correcting all items identified on the Punch
Lists  prepared  in  connection  with   Commercial   Acceptance  or  Provisional
Acceptance.

     "PURCHASER"  has  the  meaning  ascribed  thereto  in the  preamble  to the
Contract.

     "PURCHASER LIEN" means any Lien created directly by the Purchaser.

     "PURCHASER  PERMITS" has the meaning  ascribed thereto in Section 7.3(b) of
the Contract.

     "PURCHASER PERSON" means:

          (a)  the Purchaser, the Purchaser's Representative,  QA/QC Contractor,
               Bechtel;

          (b)  anyone else acting on behalf of the Purchaser in connection  with
               the Contract; and


                                       6
<PAGE>


          (c)  the successors,  assigns, employees,  agents, officers, directors
               and Affiliates of any of the foregoing.

     "PURCHASER'S   INSPECTOR"  means  a  qualified  Person  designated  as  the
authorized representative of the Purchaser to:

          (a)  make all necessary  inspections of the Work, including the labor,
               Supplies, materials and equipment furnished or being furnished by
               the Contractor under the Contract;

          (b)  to report on progress in the performance of the Work; and

          (c)  to  review  the  Performance  Tests,  the  Contractor   Invoices,
               acceptance of Commercial  Acceptance,  Provisional  Acceptance or
               Final Acceptance, and other matters relating to the Contract.

     "PURCHASER'S  REPRESENTATIVE"  has the meaning  ascribed thereto in Section
20.2 of the Contract.

     "QA/QC CONTRACTOR" means the  representative  nominated by the Purchaser to
facilitate the quality assurance/quality control program for the System.

     "RECIPIENT"  has  the  meaning  ascribed  thereto  in  Section  43.3 of the
Contract.

     "RELEVANT LABOR INDEX" means, for any Supply manufactured in:

          (a)  France,  the Price Index of Mechanical and Electrical  Industries
               labor costs (S) as published in the "Bulletin Official du Service
               de Prix"  (B.O.S.P.),  an  official  French  publication  that is
               published monthly by the French Treasury Department; or

          (b)  the United Kingdom,  the Index of Average Monthly Earnings of all
               employees employed in the United Kingdom  Electrical  Engineering
               Industry as  published  in Table  18.10 of the Monthly  Digest of
               Statistics.

     "RELEVANT PRICE INDEX" means, for any Supply manufactured in:

          (a)  France, the Price Index for Miscellaneous  Telephone Products and
               Services (PsdT) as published in the "Bulletin Official du Service
               de Prix"  (B.O.S.P.),  an  official  French  publication  that is
               published monthly by the French Treasury Department; or

          (b)  the  United  Kingdom,  the  Price  Index of  Materials  and Fuels
               Purchased - Electronic  Engineering  Industries,  as published in
               Table 18.6 of the Monthly Digest of Statistics.


                                       7
<PAGE>


     "REPLACEMENT  CONTRACTOR" has the meaning  ascribed thereto in Section 26.1
of the Contract.

     "REPLACEMENT  ITEM" has the meaning ascribed thereto in Section 33.1 of the
Contract.

     "REPLACEMENT STOCK" means all Supplies and other materials furnished to the
Purchaser by the Contractor to replace any of the  Purchaser's  spare  Supplies,
materials  or other  items  which are used by either  of the  Contractor  or the
Purchaser in connection with the Work or the Warranties.

     "RFCS  PORTION"  has the meaning  ascribed  thereto in Section  32.3 of the
Contract.

     "RFPA DATE" means the date on which  Provisional  Acceptance  of the System
occurs, as determined in accordance with Section 32.2 of the Contract.

     "SCHEDULED RATE" for any part of the Work means the rate or price set forth
therefor under the heading "TOTAL PRICE" in the Provisioning Schedule.

     "SCOPE OF WORK" means the Scope of Work set forth on Appendix 3.

     "SITE" means any location or locations at which any Contractor Person is at
any time performing the Work hereunder.

     "SUBCONTRACT"  means  any  contract,  or the  conclusion  of any  contract,
between the Contractor and any  Subcontractor,  or between any Subcontractor and
any other  Person,  relating  to the Work or any Supply to be  provided  by such
Subcontractor in respect of the System.

     "SUBCONTRACTOR" means any contractor (other than the Contractor), vendor or
supplier  that  contracts  to  perform  services  or  provide  Supplies  to  the
Contractor constituting part of the Work.

     "SUPPLIES"  means and includes  any and all  materials,  plant,  machinery,
equipment,  hardware  and items  (whether or not  identified  separately  in the
Provisioning Schedule) supplied by the Contractor under the Contract.

     "SYSTEM"  means the whole of the  submarine  Fiber  Optic  Cable link beach
joint to beach  joint (in each case  including  beach  joint but  excluding  the
manhole) along the System Route,  including all Work relating  thereto,  as more
particularly described in the Technical Specification.

     "SYSTEM DESIGN LIFE" means a period of twenty-five (25) years from the RFPA
Date.

     "SYSTEM  ROUTE" means the  submarine  Fiber Optic Cable route,  as shall be
more precisely identified in the Marine Route Survey Report.

     "TAKE  OVER"  has the  meaning  ascribed  thereto  in  Section  25.1 of the
Contract.


                                       8
<PAGE>


     "TAXES"  means all taxes and duties of any type,  including  sales-of-goods
taxes,  value-added taxes,  customs duties or other levies and duties applicable
to the performance of the Work hereunder.

     "TECHNICAL REQUIREMENTS" means the following documents:

          (a)  the Technical Specification; and

          (b)  the Marine Route Survey Report.

     "TECHNICAL SPECIFICATION" means Appendices 5, 6 and 7, collectively, to the
Contract.

     "TERMINATION CLAIM" has the meaning ascribed thereto in Section 24.3 of the
Contract.

     "TERMINATION  CLAIM  REVIEW  PERIOD"  has the meaning  ascribed  thereto in
Section 24.3 of the Contract.

     "TERMINATION  FOR  CONVENIENCE" has the meaning ascribed thereto in Section
24.1 of the Contract.

     "TERMINATION  FOR DEFAULT" has the meaning ascribed thereto in Section 25.1
of the Contract.

     "TERMINATION  PAYMENT  (CONVENIENCE)"  has the meaning  ascribed thereto in
Section 24.3 of the Contract.

     "UNITED STATES" means the United States of America.

     "UNUSUALLY SEVERE WEATHER CONDITIONS" means weather conditions occurring at
any Site that are materially  more severe than would  reasonably be anticipated,
based upon the  weather  pattern  records  for the most  recent  10-year  period
maintained  by the  London  meteorological  office  for the  time  of  year  and
geographical  location at issue, by a prudent contractor conducting work similar
to the Work.

     "WARRANTY" means any General Warranty.

     "WARRANTY  PERIOD"  means,  with respect to any item of Work to be provided
hereunder, a period [REDACTED]


                                       9
<PAGE>



     "WORK" has the meaning  ascribed  thereto in Section  4.1 of the  Contract.
Whether or not used in conjunction with the term "Supplies," the term Work shall
always be deemed to include Supplies, unless the context requires otherwise.


                                       10
<PAGE>

                                                                       EXHIBIT 3

                    CERTIFICATE OF PAYMENT AND FINAL RELEASE

                               Dated _____________

                               CIRCE CABLE SYSTEM

     Reference  is  made  to  the  Engineering,   Procurement  and  Construction
Contract,  dated as of November 10, 1998 (as amended,  supplemented or otherwise
modified  from  time  to  time,  the  "EPC  CONTRACT"),  between  Viatel  Global
Communications,  Ltd.  (the  "PURCHASER")  and Alcatel  Submarine  Networks (the
"CONTRACTOR").  Capitalized  terms used but not otherwise  defined  herein shall
have the meanings ascribed thereto in the EPC Contract.

1.   RELEASE AND WAIVER. In consideration of, and subject to, the Final Payment,
     the Contractor hereby and forever releases, waives, and discharges:

     1.1. any rights,  Liens or other claims that the Contractor has or may have
          against the Purchaser (including any shareholder, Affiliate, successor
          or assign of any of them)  arising out of or relating to the System or
          any Work,  including any  materials,  equipment or Supplies  forming a
          part of, or furnished in connection with, the Work; and

     1.2. any other legal or equitable  claim or right that the  Contractor  may
          have  against  any  Purchaser  Person in any manner  arising out of or
          relating to the System or the Work.

2.   CERTIFICATIONS. The Contractor certifies that:

     2.1. acceptance of the Final Payment by the Contractor  shall represent the
          Contractor's complete satisfaction with the final compensation for all
          claims and the Work;

     2.2. there are no expected or known Liens  arising out of or in  connection
          with the  performance  by the Contractor or any  Subcontractor  of the
          Work;

     2.3. all  Taxes  and  insurance   premiums  for  which  the  Contractor  is
          responsible  under  the EPC  Contract  that  have  accrued  to date in
          connection with the Work have been fully paid and discharged.


     IN WITNESS WHEREOF, the Contractor has executed this Certificate of Payment
and Final Release as of _______________, _____.


<PAGE>


                                                     ALCATEL SUBMARINE NETWORKS


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








                   [Certificate of Payment and Final Release]


<PAGE>

                                                                       EXHIBIT 4


                                  LIEN RELEASE

                               Dated _____________

                               CIRCE CABLE SYSTEM

     Reference  is  made  to  the  Engineering,   Procurement  and  Construction
Contract,  dated as of November 10, 1998 (as amended,  supplemented or otherwise
modified  from  time  to  time,  the  "EPC  CONTRACT"),  between  Viatel  Global
Communications,  Ltd.  (the  "PURCHASER")  and Alcatel  Submarine  Networks (the
"CONTRACTOR").  Capitalized  terms used but not otherwise  defined  herein shall
have the meanings ascribed thereto in the EPC Contract.

1.   RELEASE AND WAIVER.  In  consideration  of, and subject to, the Purchaser's
     payment for the Work described in the Contractor  Invoice,  dated as of the
     date hereof (the "Current Contractor  Invoice"),  the Contractor hereby and
     forever releases,  waives, and discharges any rights, Liens or other claims
     (other than claims arising in connection  with Dispute  Resolution that are
     subject to mutual  discussions  in  accordance  with  Section 48 of the EPC
     Contract)  that the Contractor has or may have against the Purchaser or any
     Financing Party or Sponsor (including any shareholder, Affiliate, successor
     or assign of any of them)  arising out of or relating to the System or such
     Work or any other Work heretofore performed or delivered (collectively, the
     "WORK-TO-DATE"),  including any materials,  equipment or Supplies forming a
     part of, or furnished in connection with, any Work-to-Date.

2.   CERTIFICATIONS. The Contractor certifies that:

     2.1. there are no expected or known Liens on the System or the Work arising
          out of or in connection  with the performance by the Contractor or any
          Subcontractor of the Work-to-Date; and

     2.2. all Taxes  (excluding  any income  taxes) and  insurance  premiums for
          which the Contractor is  responsible  under the EPC Contract that have
          accrued to date in connection  with the  Work-to-Date  have been fully
          paid and discharged.


     IN WITNESS  WHEREOF,  the  Contractor  has executed this Lien Release as of
this ___ day of _________________________, _____.


                                                     ALCATEL SUBMARINE NETWORKS


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

<PAGE>

                          LIST OF APPENDICES

Appendix 1     [REDACTED]                                   

Appendix 2     [REDACTED]

Appendix 3     [REDACTED]

Appendix 4     [REDACTED]

Appendix 5     [REDACTED]

Appendix 6     [REDACTED]

Appendix 7     [REDACTED]