EXHIBIT 10.21


                          EQUIPMENT PURCHASE AGREEMENT





                                     BETWEEN





                                   VIATEL INC.





                                       AND





                                   NORTEL PLC.







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THIS AGREEMENT,  DATED DECEMBER 31, 1998 (HEREINAFTER THE "EFFECTIVE  DATE"), BY
AND BETWEEN:

NORTEL PLC., WHOSE REGISTERED  OFFICES ARE AT MAIDENHEAD OFFICE PARK,  WESTACOTT
WAY, MAIDENHEAD, BERKSHIRE SL6 3QH, ENGLAND (HEREINAFTER CALLED "NORTEL");

AND

VIATEL INC.,  WHOSE  REGISTERED  OFFICES ARE AT 685 THIRD  AVENUE,  NEW YORK, NY
10017, USA (HEREINAFTER CALLED "VIATEL");


and jointly referred to as the "Parties".

WHEREAS Viatel desires to purchase and/or license various  Equipment,  Software,
and  related  Services  from  Nortel's  portfolio  of  ETSI   telecommunications
equipment  ("Products") from Nortel for deployment within its telecommunications
network in various countries;

AND WHEREAS  Nortel is willing to supply such  Products to Viatel upon the terms
and conditions hereinafter contained.

NOW THEREFORE, the Parties agree as follows:

1.  DEFINITIONS

The  meaning  of terms and  expressions  used  herein are set out in Clause 1 of
Annex A hereto.

2.  SCOPE

2.1    This  Agreement  shall  govern the  ordering  and purchase of Products by
       Viatel and its  Affiliates  from Nortel and its Affiliates but nothing in
       this  Agreement  obliges  Nortel to  provide,  or  Viatel  to order,  any
       Products.

2.2    Viatel may from time to time  identify to Nortel  countries in which they
       wish to deploy  Products or equipment  other than the Products  that they
       wish to deploy in their network whereupon the Parties shall determine the
       configuration(s)  of such  Equipment  suitable  to  Viatel's  needs,  the
       specification  with respect  thereto and prices  therefore  applicable to
       each country for which  Viatel  expects to place  Orders.  The results of
       this  determination  shall be incorporated into Annex C of this Agreement
       thus defining the  contractual  rights and  obligations of the Parties in
       relation to the type and  specification  of the  Equipment,  Software and
       Services  which  Nortel are to provide and the prices  which Viatel shall
       pay for them.


3.  EFFECTIVE DATE, TERM, AND RENEWAL

3.1    This Agreement shall come into force and effect on the Effective Date and
       shall  continue for a term of [REDACTED]  thereafter and shall govern the
       provision of any specific Equipment,  Software,  or Services set forth in
       the relevant Annex C hereof.  A separate  Specification  will be prepared
       for each  product  type  specific  to each  country or  related  group of
       countries of deployment and shall be numbered sequentially (C1, C2 etc.).

4.  PRICES

4.1    The  Prices  to be paid by  Viatel  for  Products  purchased  under  this
       Agreement  shall be  those  set  forth  in  Annex C as it may be  amended
       pursuant to the terms hereof.

4.2    Unless the Parties agree  otherwise and in respect of deployments  within
       the European  Union,  the Prices  include  Delivery on DDP European Union
       Site (INCOTERMS 1990) terms and unloading at the applicable sites.  Based
       upon the  principle  that at the date of this  Agreement,  sales  between

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       member states of the European Union do not attract import duties or sales
       taxes  other  than Value  Added Tax,  DDP terms will be subject to review
       should this change.

4.3    Where sales take place  outside of the  European  Union the Prices  shall
       include  Delivery on a CIP  port/airport  of entry  basis.  Where  Nortel
       undertakes  delivery  beyond  this point then Viatel  shall,  at Nortel's
       direction,  promptly  reimburse  Nortel or pay directly to the applicable
       government or taxing  authority all taxes and charges arising  hereunder,
       except  for taxes  computed  upon the net  income of  Nortel.  This shall
       include  Value Added Tax and taxes on Services  which are not included in
       the Total Price by virtue of the relevant INCOTERM.  Viatel's obligations
       pursuant  to  this  Clause  4  shall  survive  any  termination  of  this
       Agreement.


4.4    [REDACTED]

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5.  ORDERING PROCESS

The following procedure shall apply to Equipment,  Software and related Services
to be supplied and installed by Nortel hereunder:

5.1    The  specific  terms for the purchase of Products by Viatel are set forth
       in this  Agreement.  Orders shall  reference  this Agreement and shall be
       governed  solely by the terms and  conditions  set forth  herein.  Orders
       shall specify the Viatel nominated  address to which the foregoing are to
       be  consigned,  the  relevant  implementation  schedule,  and  any  other
       information  which may be required to be included in accordance  with the
       provisions of this Agreement.

5.2    This  Agreement  sets the  master  terms  and  conditions  for  supply of
       Products by Nortel and their  Affiliates,  and where  appropriate,  their
       distributors,  to  Viatel  and  Viatel  Affiliates  for  their own use in
       specified countries. The Nortel Affiliates appropriate to the sale of the
       Products in each  specified  country of deployment is set out in Annex B,
       Nortel  reserves  the right to change  this  detail  from time to time by
       written notice to Viatel.  This list may also be subject to alteration in
       relation to  purchases of  different  products.  Subject to the terms and
       conditions of this  Agreement,  Viatel or a Viatel  Affiliate may place a
       Order for  Products  on Nortel or the  appropriate  Nortel  Affiliate  or
       distributor  covering  the  territory  into which the  Products are to be
       delivered.

5.3    The Parties  recognise  that it may not be possible for Nortel to provide
       Products for certain countries outside of the European Union by reason of
       the  non-standardisation  of the  Products  in the  country of  delivery;
       relationships with distributors,  agents, manufacturers or other entities
       limiting Nortel's ability to sell in such region; the inability of Nortel
       to support the delivery,  installation or performance of the Products; or
       the  violation  of  any   applicable   law,   regulation  or  contractual
       relationship  created by any such  sale,  delivery,  installation  and/or
       performance.

5.4    The  Parties  recognise  that  Viatel  expects to place  Orders that will
       comprise one or more Networks or Systems.  It is a condition precedent to
       the  effectiveness  of any Order from Viatel with  respect to any Product
       which comprises part of a Network or System that the  Specification  with
       respect to such Network or System be prepared and added to this Agreement
       and  numbered  sequentially  as Annex D1, D2, etc.  and that a Guaranteed
       Acceptance  Date  with  respect  to such  Network  or System be agreed in
       writing between the parties.

6.  SUCCESSORS

This Agreement shall be binding upon the Parties to it and their  successors and
permitted assigns.

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7.  CONTRACTOR NOT AGENT

Nortel agrees that the relationship established by this Agreement constitutes it
as an  independent  contractor  and that  this  Agreement  shall  not in any way
constitute Nortel or its employees or agents,  an employee,  partner or agent of
Viatel  nor  appoint  nor  authorise  Nortel to act as agent of Viatel  and that
furthermore no tax,  assessment or legal liability of Nortel or of its employees
or agents becomes, by reason of this Agreement, an obligation of Viatel.

8.  NOTICES

Any and all  notices  or other  information  required  to be given by one of the
Parties  to the other  shall be deemed  sufficiently  given  when  forwarded  by
prepaid  registered mail, by facsimile or  hand-delivered  to the other Party at
the following address:

         Viatel Inc.,                             Nortel plc.,
         685 Third Street,                        Maidenhead Office Park,
         New York,                                Westacott Way,
         NY 10017,                                Maidenhead,
         USA.                                     Berkshire SL6 3QH
                                                  England

         Attention:  General Counsel              Attention:  Legal Department
         Facsimile: 212-350-9245                  Facsimile:

and such notices  shall be deemed to have been  received ten (10)  business days
after mailing if forwarded by mail, and the following  business day if forwarded
by  facsimile  or  hand-delivered  and  three  (3)  business  days if  forwarded
internationally  by an  internationally  recognised courier service for quickest
delivery.  The aforementioned address of either Party may be changed at any time
by giving  fifteen  (15)  business  days  prior  notice  to the  other  Party in
accordance with the foregoing.

Furthermore,  for the purpose of service of all  notices,  writs,  or summons or
other documents in any suit at law,  action or proceeding  which Viatel may take
under  the  Agreement,  and for all  legal  intent or  purposes,  Nortel  elects
domicile at the aforementioned address.

9.  APPLICABLE LAW

This  Agreement  shall be construed and governed by the laws of the State of New
York.  Should any  provisions  of this  Agreement be illegal or not  enforceable
under such laws, it or they shall be considered severable and this Agreement and
its  conditions  shall remain in force and be binding upon the Parties as though
the said provisions had never been included.

The  courts  of the State of New York in the  County of New York or the  Federal
courts of the United  States of America  for the  Southern  District of New York
shall have exclusive  jurisdiction  with respect to any  litigation  between the
parties.  Each party submits to the  jurisdiction  of such courts and submits to
the enforcement of any interim  judgements  issued by any such courts and agrees
not to object to the jurisdiction of such courts..

10. ASSIGNMENT

Either  Party  shall  have the right to assign  all or any part of its rights or
interests  under this Agreement to any of its Affiliates  without the consent of
the other Party.  Such  assignment to an Affiliate  shall however be notified to
the other Party prior to execution. Otherwise, neither Party shall assign all or
any part of its  rights or  interest  under  this  Agreement  without  the prior
written consent of the other Party.

11. PUBLIC RELEASE OF INFORMATION

The Parties shall obtain the written  approval one of the other  concerning  the
content  and  timing  of news  releases,  articles,  brochures,  advertisements,
prepared speeches and other information  releases  concerning this Agreement and
any subsequent Order.

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12. NOT USED

13. ATTACHED DOCUMENTS

The following documents attached hereto form part hereof:

         Annex A - Conditions of Order

         Annex B - Schedule of Nortel Affiliates.

         Annex C - Product Descriptions and Pricing.

         Annex D - Specification

14. ENTIRE AGREEMENT

This  Agreement  including  its  Annexes  sets  forth the entire  agreement  and
understanding  between the Parties with respect to the supply and acquisition of
Products   subsequent  to  the  date  hereof.   There  are  no   understandings,
representations,  conditions,  or warranties,  express or implied,  statutory or
otherwise,  made or assumed by the Parties, other than those expressly contained
in this Agreement.  Neither Party shall be bound by any term, clause,  provision
or  condition  save as  expressly  provided  herein  or as duly set  forth on or
subsequent to the date of this  Agreement in writing  signed by duly  authorised
officers of the Parties except as provided in Section 4.4.

IN WITNESS  WHEREOF the Parties have executed  these  presents on the date first
herein above written.

            VIATEL INC.                     NORTEL PLC.
            

            By: /S/ (SIGNATURE ILLEGIBLE)   By: /S/ (SIGNATURE ILLEGIBLE)
                -------------------------       -------------------------
            Name                            Name:
            
            Title:                          Title:

            Date: 12/31/98                  Date: 12/31/98




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                                     ANNEX A


                               GENERAL CONDITIONS


<PAGE>

1        DEFINITIONS AND INTERPRETATION

1.1

The following  expressions shall have the meanings hereby respectively  assigned
to them:-

1.1.1    "Acceptance"

Means in respect of any System and any  Equipment  and  Software  installed  and
commissioned  by Nortel when Acceptance  Certificates  shall have been issued in
respect  of that  System or any part  thereof  in  accordance  with the  process
described  in  Clauses  15 and 16  hereof.  "Accept"  and  "Accepted"  shall  be
interpreted accordingly.

1.1.2    "Acceptance Certificate"

Means the  certificate  to be issued when a System or any specified part thereof
has  satisfactorily  completed the appropriate  Acceptance  Tests, in accordance
with the requirements of Clauses 15 and 16 hereof.

1.1.3    "Acceptance Tests"

Means such tests  described in Clauses 15 and 16 hereof  carried out pursuant to
test  specifications  acceptable  to Viatel,  as may be  undertaken by Nortel to
demonstrate  to the  reasonable  satisfaction  of the  Parties  that a System as
installed  and  commissioned  on Site by Nortel  or any  integral  part  thereof
complies with the Specification and other provisions of the Agreement.

1.1.4    "Affiliate"

Means a Party's  parent  company,  or any  corporation  or  company  effectively
controlled  directly or indirectly by such parent company  through the ownership
or control of shares or other  securities in such corporation or company and, in
the case of Nortel,  listed on Annex B. Nortel Dasa GmbH.  of Germany  shall for
the purposes of this Agreement also be treated as an Affiliate of Nortel.

1.1.5    "Amendment"

Means the  written  document  executed by both  Parties by which  changes to the
Agreement are effected pursuant to Clause 3.

1.1.6    "Delivery Acceptance"

Means the Acceptance  that takes place at the successful  conclusion of Delivery
Acceptance Testing as set forth in Clause 15.1.a) hereof.

1.1.7    "Equipment"

Means all items of  hardware  which  Nortel  is  required  to supply to meet the
requirements  of this  Agreement and any Order placed by Viatel  pursuant to the
terms hereof, including those items set forth in Annex C.

1.1.8    "Guaranteed Acceptance Date"

Means,  with  respect to any System  that Viatel may order  hereunder,  the date
which is specified as the "Guaranteed  Acceptance Date" for that System which is
set forth in a written notice from Viatel and accepted by Nortel.

1.1.9    "Network"


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Means any  combination of Equipment,  Software  and/or Services which comprise a
telecommunications network or sub-set thereof and which are ordered under one or
more Orders.

1.1.10   "Network Acceptance"

Means the Acceptance  that takes place at the  successful  conclusion of Network
Acceptance Testing as set forth in Clause 15.1 c) hereof.

1.1.11   "Network Price"

Means  the  aggregate  of all the  Order  Prices  to be paid by  Viatel  and its
Affiliates to Nortel and its Affiliates hereunder for a Network.

1.1.12   "Nortel"

Means Nortel Plc. or its  nominated  Affiliate and includes its  successors  and
permitted assigns.

1.1.13   "Order"

Means the purchase  order placed by Viatel's  appropriate  Affiliate on Nortel's
appropriate  Affiliate for the provision of Works  incorporating these terms and
Specifications and other documents contained herein.

1.1.14   "Order Price"

Means the price  payable to Nortel by Viatel  pursuant  to the terms  hereof for
items of Equipment,  Software,  the  performance of the Work, or for Services as
detailed in Annex C.

1.1.15   "Provisional Acceptance"

Means  the  Acceptance  that  takes  place  at  the  successful   conclusion  of
Provisional Acceptance Testing as set forth in Clause 15.1 b) hereof.

1.1.16   "Services"

Means, as appropriate to any particular Order, the factory testing, engineering,
testing,  installation  and  commissioning of the Equipment and the testing of a
Network and other services  specified or reasonably  inferred herein,  including
everything necessary to complete the installation of the Equipment in accordance
with the terms of this Agreement.

1.1.17   "Site"

Means the land,  buildings and environment  where a System is to be installed or
the storage premises nominated by Viatel.

1.1.18   "Software"

Means the set of  machine  readable  instructions  provided  by  Nortel  for the
control and operation of the System.

1.1.19   "Specification"

Means any Specification incorporated in Annex D.

1.1.20   "System"

Means  the  Equipment   and  Software   integrated  as  necessary  to  meet  the
requirements of the Specification and the other provisions of this Agreement.


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1.1.21   "Viatel"

Means Viatel Inc. or its  nominated  Affiliate and includes its  successors  and
permitted assigns.

1.1.22   "Work"

Means,  as appropriate to any particular  Order,  the (i)  manufacture,  factory
testing,  engineering,  testing, installation and commissioning of the Equipment
and  testing  of the  specified  System  in  accordance  with all the  terms and
conditions contained in this Agreement,  (ii) all services necessary so that any
System  to be  provided  by Nortel  hereunder  shall be in  accordance  with the
Specification  relevant  thereto and the other  requirements  of this Agreement,
(iii) the  provision  of  materials,  test  equipment,  labour and  services  as
necessary for the terms of this  Agreement,  (iv)  complying with the Guaranteed
Acceptance Date, (v) complying with the Warranties during the applicable period,
(vi) technical and other  co-ordination with Viatel and its Project Manager such
that the System shall be compatible with the Specifications, and (vii) all other
matters specified as the responsibility of Nortel in this Agreement.

1.2

Words  indicating the singular only also include the plural and vice versa where
the context requires.

1.3

The heading of the terms shall not affect their interpretation.

1.4

The term "including" shall mean "including, without limitation".

1.5

Any reference to any gender includes the other gender.

1.6

Any reference to "hereof", "hereto",  "herein",  "hereunder" or any similar term
is a reference to this Agreement as a whole, and not to any particular provision
or part of this Agreement.

1.7

Any  reference  to "this  Agreement"  shall  include all  appendices,  exhibits,
annexes and schedules thereto, and be a reference to such agreement, instrument,
contract  or other  document  as  amended,  supplemented,  modified,  suspended,
restated or novated from time to time.

2.       DOCUMENTS

All drawings, diagrams,  Specifications and any other information to be provided
by one Party to the other  Party  hereunder  shall be  supplied  in the  English
language.



3.       ALTERATION TO ORDER

3.1

All  alterations,  waivers,  consents or  amendments  shall be  mutually  agreed
between Viatel and Nortel and recorded by means of formal Amendments executed by
Viatel and by Nortel before it is effective.

3.2

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<PAGE>

From time to time,  Nortel  may  submit to Viatel a request  for,  or Viatel may
submit to Nortel a proposed amendment that may result in:

(a)      an increase or  decrease  in a unit Price  contained  in Annex C or the
         total Network Price set forth in Annex C ; or

(b)      an adjustment in a Guaranteed  Acceptance  Date, the project  schedule,
         the  progress   schedule  and  any  other  dates  related  to  Nortel's
         performance set forth in the scope of work.

As a result of the following:

(i)      any Force Majeure; or

(ii)     any change in any applicable law occurring after the Effective Date; or

(iii)    an Optional Suspension.

Viatel's  grant of an  adjustment  shall not  constitute  a waiver of any of its
rights in respect thereof.

4.       PRICES

The prices stated herein shall be firm and fixed in United States of America
Dollars  ($US) and shall not be varied  except by formal  Amendment as permitted
herein or as contemplated pursuant to Clause 4.4 of the Agreement.

5.       TAXES, DUTIES AND LEVIES

Responsibility  for  customs  formalities,   including  administration  charges,
duties, taxes and/or levies payable upon exportation or importation of Equipment
shall be apportioned in accordance with the INCOTERM  shipping term set forth in
Clause  4 of the  Agreement  or in  Annex  C.  In any  event,  Viatel  shall  be
responsible  for the  payment of Value  Added Tax as an addition to the Price at
the rate prevailing at the date of invoice.

6.       TERMS OF PAYMENT

6.1

Invoices shall be submitted to Viatel by Nortel in accordance with the following
payment schedule:

6.1.1    Networks:

         i)    [REDACTED] of the Price upon placement of an Order hereunder.

         ii)   [REDACTED]  of the value of each item on the date of  shipment of
               each item of the Equipment and Software.

         iii)  [REDACTED]  of the value each item of Equipment and Software upon
               Provisional Acceptance.

         iv)   [REDACTED] of the Price upon Network Acceptance.

         v)    [REDACTED]  of the  value  of each  item  of  Services  upon  its
               completion.

6.1.2    Additional Items

         Payment  of the Price for  Additional  Items  shall  become  payable as
         follows:

6.1.2.1  In the case of supply and install  items,  the pattern of payment shown
         in 6.1.1 above shall apply except that where Network  Acceptance is not
         a  requirement  of an Order then the payment set forth in Clause  6.1.1
         iv) shall be made upon Provisional Acceptance..


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6.1.2.2  In the case of supply only items,  the pattern of payments  shown below
         shall apply:

         i)    [REDACTED]  of the Price upon  Nortel's  acceptance  of  purchase
               order.

         ii)   [REDACTED]  of the Price upon  shipment of the  Equipment  and/or
               Software.

6.2

Payment  shall be made to Nortel by Viatel within 30 days of receipt of Nortel's
invoices.  Subject to Section  6.3,  in the event that  Nortel  does not receive
payment  within  45  (forty  five)  calendar  days  of  Viatel's  receipt  of an
undisputed invoice, then Nortel reserves the right to charge daily interest upon
the  outstanding  sum(s) at a rate which is 2% (two  percent)  above the Midland
Bank Base Lending Rate as then current until Nortel receives payment in full.

6.3

Viatel  may  withhold  payment  where  it can be shown to  protect  Viatel  from
financial loss when:

a)   defective work attributable to Nortel has not been remedied by Nortel;

b)   there are third party claims against the Equipment,  or Nortel  pursuant to
     the terms hereof by virtue of the acts or omissions of Nortel;

c)   Nortel has failed to obtain or maintain  insurance as required by Clause 20
     hereof;

e)   Nortel has failed to provide all documentation required hereunder;

f)   Nortel's failure to pay an amount of liquidated damages;

g)   Nortel has failed to properly make payments for materials or labour;

h)   Viatel can demonstrate  that any prior progress  payment exceeds the amount
     that should have been payable based upon the Work actually performed.

In all cases,  the amount  withheld  shall not  exceed  the amount  which  would
otherwise have become due to Nortel but for Nortel's  shortcoming in meeting the
contractual  obligation in question.  When Nortel has rectified its shortcoming,
then the sum withheld shall be paid by Viatel forthwith.

7.       DELIVERY TERMS, PROPERTY AND RISK

7.1

Nortel  shall  undertake  delivery of  Equipment  in  accordance  with the Order
implementation  plan upon  shipping  terms in  accordance  with  INCOTERMS  1990
published  by the  International  Chamber of Commerce set forth in the Order and
determined in accordance with Clause 4 of the Agreement.

7.2

A schedule of the  Equipment  shall be  submitted to Viatel prior to delivery to
facilitate  the checking of consignment  contents by Viatel when  deliveries are
made.

7.3

Risk of loss or damage to the Equipment shall pass upon Delivery Acceptance.

7.4

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Equipment  supplied  pursuant to this  Agreement  shall  become the  property of
Viatel  at the time that  payment  of the Price is made in full by Viatel to the
extent required pursuant to the terms of this Agreement.

7.5

Viatel  shall not acquire any rights in respect of the  Software  other than the
licence with respect to Software granted in accordance with Clause 19.

8.       PERSONNEL

8.1

Both Parties shall appoint project managers who shall each:

a)   be fully conversant with the requirements of this Agreement; and

b)   speak English on a technical level; and

c)   have full  control  of their  employer's  personnel,  including  any of its
     subcontractors, engaged in the performance of this Agreement.

8.2

The Parties  shall  ensure that their staff  assigned  under the  Agreement  are
suited in skill,  health and temperament to undertake  their duties.  Viatel may
object to and direct  Nortel to remove  within 24 hours any person  employed  by
Nortel  and such  person  shall not be  employed  again for any  portion  of the
Services hereunder without the prior approval of Viatel.

9.       SITE INFORMATION

9.1

When  requested by Nortel to do so, Viatel shall supply Nortel with accurate and
complete  information  in  all  material  respects  concerning  a Site  and  any
equipment and facilities  installed thereon,  and shall within a reasonable time
advise  Nortel of any  alterations  thereto  during  this  Agreement,  and shall
prepare  a  Site  for  installation  in  accordance  with  Nortel's   reasonable
requirements.

9.2

Nortel  shall  ensure  that  each  System  complies  with all  applicable  legal
requirements.  Nortel  shall  comply with all laws,  codes,  permits,  standards
applicable in the countries,  provinces and territories in which any part of the
Services are to be  performed.  Viatel shall not be  responsible  for any act or
omission of Nortel that  violates any such law,  code,  permit or standard,  and
Nortel shall  indemnify  and hold  harmless  Viatel from and against any and all
costs or liabilities arising in connection with any such violation by Nortel.

9.3

At  Nortel's  request  Viatel  shall  afford  Nortel  access  to any Site at all
reasonable times.


10.      LOCAL FACILITIES AND SERVICES

10.1

Viatel shall be responsible for the reasonable provision and costs of:

(i)      any crane, slings or other specialist lifting or positioning  equipment
         required to  facilitate  installation  activities  on Site which Viatel
         shall ensure are in safe working condition.

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<PAGE>

(ii)     suitable office and temporary  storage  facilities for use by Nortel or
         its sub-contractors until the date of Acceptance.

(iii)    interpreters as may be necessary to assist Nortel's  personnel in their
         duties under the Order.

(iv)     the fencing, lighting and guarding of the Site.

(v)      the supply of telephone, fax, electricity,  water and gas facilities as
         may be required by Nortel

(vi)     approaches to the Site suitable for Nortel's delivery vehicles.

10.2

Viatel  shall  obtain  at its own  expense,  prior  to the  date  scheduled  for
commencement of any work on Site, all necessary  consents,  licences and permits
for the  installation  and use of the Equipment  and Software  which it shall be
required under applicable law to obtain as the owner of any applicable System.

11.      PROGRESS

11.1

If  Nortel  at any  time  has  reason  to  believe  that  the  schedule  for the
performance of the Work may be delayed Nortel shall promptly notify Viatel.

11.2

If and to the  extent  that  the  schedule  for the  performance  of the Work is
delayed by reasons of Force Majeure the provisions of Clause 12 shall apply.

11.3

If Viatel at any time has reason to believe  that the date by which Viatel is to
provide  Sites,  equipment  or  services  ready for use by Nortel may be delayed
Viatel shall promptly  advise  Nortel.  In such event Nortel shall be granted an
extension of time to the  Guaranteed  Acceptance  Date in a number of days to be
agreed  by the  Parties,  but no more  than the  amount  of the  delay  directly
attributable  to Viatel.  The costs and  expenses  incurred  which are  directly
attributable  to the delay (less any savings) shall be  recoverable  from Viatel
and  reflected in an  appropriate  Amendment  to be agreed  between the Parties.
Nortel shall use reasonable efforts to mitigate such costs and expenses.

11.4

Viatel may suspend the Work, in whole or in part, at any time from time to time,
upon written notice to Nortel of such suspension, stating the effective date and
anticipated duration of the suspension ("Optional  Suspension").  Promptly after
receipt of such notice (and in any event,  within 10 days), Viatel shall suspend
the Work to the extent specified. During any Optional Suspension, Nortel shall:

a)   place no further orders relating to the suspended Work;

b)   shall  negotiate  reasonably  with Viatel to reschedule the  manufacture of
     Equipment;

c)   protect and care for all Work and Equipment already manufactured;

d)   give Viatel  copies of all  outstanding  orders  with  respect to the Work,
     materials  and  services and take any action with respect to such orders as
     Viatel may reasonably direct.


                                       7
<PAGE>

Thereafter, Nortel:

(i)  shall resume performance of the Work within a reasonable period after being
     directed to do so by Viatel; and

(ii) shall be entitled to an  amendment to the Price and  Guaranteed  Acceptance
     Date as agreed by the  Parties.  All  additional  costs  incurred by Nortel
     during an  Optional  Suspension  shall be  reimbursed  to Nortel by Viatel.
     Nortel shall use  reasonable  efforts to mitigate  such costs and expenses.
     Should the period of  Optional  Suspension  continue  for longer than three
     months then Nortel shall be entitled to  terminate  the Orders with respect
     to which the Optional Suspension applies.

12.      FORCE MAJEURE

12.1

The following events shall constitute Force Majeure events:

a)   Any  destruction  of or  damage  to,  or any  interruption,  suspension  or
     interference with, the Work caused by Acts of God,  landslides,  lightning,
     earthquakes,  volcanic  eruptions,  fires,  explosions,  floods,  epidemic,
     plague,  acts of a  public  enemy,  wars,  revolutions,  blockades,  riots,
     rebellions,   sabotage,   insurrections,   civil  disturbances  or  similar
     occurrences;

b)   Any national,  regional or local labour strike,  work stoppage,  boycott or
     walk-out  occurring  other than any such which pertains  solely to Nortel's
     employees,  (collectively  "Labour Disputes") so long as Nortel has advised
     Viatel as far in advance as possible of such Labour Dispute; and

c)   Any suspension,  termination,  interruption, denial or failure to obtain or
     renew any permit that Viatel has the responsibility to obtain;

d)   Any act or omission of Viatel, its agents or subcontractors;
     provided  that Force  Majeure  shall not include any of the forgoing to the
     extent that:

    (i)    it is or was within Nortel's control, provided that the forgoing does
           not imply that Nortel must meet any labour demand;

    (ii)   Nortel  should  have been able to prevent  or  provide  against it by
           exercise of reasonable diligence;

    (iii)  It does not result in a material  delay to,  and/or  increase in cost
           of, the Work to Nortel;

    (iv)   It results from the fault or  negligence of Nortel,  its  affiliates,
           subcontractors or vendors.

12.2

In the event that either Party shall be prevented  from material  performance of
its  obligations  hereunder  by  reason  of an  event  of  Force  Majeure  for a
continuous  period of more than six months the other  Party shall have the right
to terminate  the  Agreement by notice in writing  whereupon  the  provisions of
Clauses 21.5 or 22.6 as appropriate shall apply.

12.3

Notwithstanding  Clause 12.1, such cause shall not apply to Viatel's  obligation
to make payments hereunder.

13.      [REDACTED]




                                       8
<PAGE>

14.      FACTORY TESTS AND INSPECTIONS

14.1

Nortel shall be responsible for standard  factory testing  procedures which will
ensure that the Equipment  meets the needs of the System and the other terms and
conditions of the Agreement.

14.2

Viatel  shall  have the right to inspect  Nortel's  manufacturing  facility  and
witness  factory  testing and shall give Nortel,  in writing,  30 calendar days'
notice of its  intention to visit  Nortel's  facility.  In any event the factory
tests shall  proceed  according  to Nortel's  plan which has been  disclosed  to
Viatel in writing whether or not Viatel's representative is in attendance.

14.3

Viatel  shall be  responsible  for all  costs and  expenses  in  respect  of its
representative(s)  visiting  Nortel's  facility.  Whilst  on  Nortel's  premises
Viatel's representative(s) shall comply with all Nortel's regulations in force.

15.      ACCEPTANCE TESTING

15.1

Nortel shall submit for the approval of Viatel a comprehensive schedule of tests
in respect of Equipment and Software,  which Nortel is to install and commission
on Site,  designed to  demonstrate  that a System and each portion  thereof will
perform in accordance  with the criteria  defined in the relevant  Specification
and the other terms and conditions hereof. The schedule of Acceptance Tests will
vary according to the extent of the Work required under each Order.  These shall
comprise the  combination  of the  following  which most  effectively  meets the
requirements of each Order:

a)   Delivery  Acceptance Testing - this will take place following  installation
     of the  Equipment  at each  installation  Site  and its  connection  to its
     specified  electricity  supply. It shall demonstrate that the Equipment and
     Software so installed  works  correctly in isolate mode.  Where supply only
     items are a requirement of an Order,  Delivery Acceptance shall be effected
     by Viatel and  acceptance  or rejection  communicated  to Nortel  within 10
     working days of receipt.

b)   Provisional Acceptance Testing - this will be carried out on each completed
     route or node following the connection of all of the Equipment and Software
     within the said route or node  already the subject of Delivery  Acceptance.
     It shall  demonstrate  that the System  comprised  in the route or node can
     provide the  facilities  and  services  required for each route or node and
     that  the  route  or  node  will  carry  traffic  all as set  forth  in the
     Specification.

c)   Network  Acceptance  Testing - this will be  carried  out on the  completed
     Network  following  connection  of all of the routes  and nodes  which have
     passed Provisional  Acceptance.  It shall demonstrate that the total System
     meets the technical  requirements  set forth in the  Specification  and the
     other terms and  conditions  of this  Agreement.  For  non-Network  Orders,
     Network Acceptance Testing will not be a requirement.

Viatel  shall  approve  the  schedule  of tests,  or reject  on the  grounds  of
non-compliance  with this Agreement,  within 14 (fourteen) days of submission by
Nortel.



                                       9
<PAGE>

15.2

Nortel  shall  give  Viatel  14  (fourteen)   days  notice  in  writing  of  the
commencement of the each of the tests of the System or any Equipment or Software
thereof so that  Viatel  can  either  make the  necessary  arrangements  for its
representative to be present to witness such tests and approve results or advise
Nortel that its representative will not attend.

15.3

On satisfactory  completion of each schedule of tests a comprehensive  record of
results shall be provided by Nortel to Viatel.  If Viatel has advised  Nortel in
accordance with Clause 15.2 that its representative  will not attend the testing
of any part or parts of the System,  the schedule of results  shall be annotated
to this effect by Nortel.

16.      ACCEPTANCE

16.1

Acceptance of each portion of the System as set out in Clause 15 above, shall be
signified  by the  appropriate  Acceptance  Certificate  signed by  Viatel  upon
satisfactory  completion  of each of the  Acceptance  Tests,  where  applicable.
Viatel will not unreasonably refuse to sign an Acceptance Certificate on account
of minor  omissions  or defects  which do not  materially  affect the use of the
System.

16.2

In the event that the Equipment  and/or  Software or any portion  thereof is put
into use for  commercial  purposes by Viatel after  completion of the applicable
tests but prior to its signature of an appropriate Acceptance Certificate,  then
the appropriate  Acceptance shall be deemed to have taken place upon the date of
such putting into use for commercial  purposes,  unless within a reasonable time
Viatel shall have given written notice to Nortel of material shortcomings in the
Network as demonstrated by the Acceptance Tests or other terms and conditions of
this Agreement  which it requires Nortel to rectify.  Such  Acceptance  shall be
without  prejudice to Nortel's  obligations to complete the System in accordance
with the requirements of the Agreement.

16.3

The Network  Acceptance  Date,  where  applicable,  shall occur when the Network
Acceptance  Certificate  has  been  issued  as set  forth  above.  It shall be a
condition  precedent to the issuance of the Network Acceptance  Certificate that
the following conditions have been satisfied:

a)   an initial commissioning report has been delivered;

b)   that the System has been completed in accordance with the Specification and
     any other  requirements of this Agreement as demonstrated by the Acceptance
     Tests;

c)   that the  System  has  achieved  all  performance  requirements  during the
     Network Acceptance Tests;

d)   that the System is available for  commercial  operation as described in the
     Specification;

e)   that all liens  relating to the system have been  discharged  and  releases
     given therefor, except for those which may apply by virtue of any financing
     arrangement which Viatel are using to make the purchase.

f)   that no unresolved event of default by Nortel exists;

g)   that all  requirements  of the  Agreement  relating to the System,  or such
     smaller  portion  of the  System as has,  by the  mutual  agreement  of the
     Parties,  undergone Acceptance (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 on or completed prior to Network Acceptance.


                                       10
<PAGE>

16.6 

Final  Acceptance  with  respect to a System  shall occur when  Viatel  issues a
Certificate of Final Acceptance acknowledging that the following conditions have
been satisfied:

a)   A Delivery,  Provisional or Network  Acceptance  Certificate as appropriate
     has been issued;

b)   the Warranty  Period  shall have expired and there shall be no  outstanding
     warranty claims thereunder;

c)   all documentation required under the Agreement has been delivered;

d)   there  shall be no  outstanding  liens  except for those which may apply by
     virtue of any  financing  arrangement  which  Viatel  are using to make the
     purchase.

17.      WARRANTY

17.1

The following shall be Nortel's general warranties ("General Warranties"):

a)   The Work,  including the Equipment and Software shall meet the  performance
     criteria set out in the Specification;

b)   The Work shall be done in a workmanlike manner and in accordance with:

     (i)   best practices of the telecommunications industry;

     (ii)  all applicable  mandatory  requirements  of the law of the country of
           deployment;

     (iii) all other workmanship requirements specified in the Agreement.

     (iv)  be  free  from  defects  in  design,   materials,   installations  or
           workmanship.

c)   The  Equipment  shall  be new and  Equipment  and  Software  (except  where
     expressly specified in the Agreement), fit for the purpose specified in the
     Agreement, and shall meet the requirements of the Agreement; and

d)   The Equipment shall be:

     (i)   fit for the purpose of transmitting and receiving  telecommunications
           signals of the type specified in the Agreement;

     (ii)  capable of achieving  the  performance  specification  set out in the
           Specification; and

     (iii) built strictly in accordance with the Specification.

The warranty period ("Warranty Period") shall end:  [REDACTED]

Notwithstanding  the appropriate  Acceptance having occurred,  Nortel undertakes
that during the Warranty  Period,  it shall promptly  repair or replace,  at its
option,  without charge to Viatel,  the whole or any part of the System found to
be  faulty  by reason of the  above  causes.  This  Warranty  shall not apply to
consumable items or routine maintenance materials.




                                       11
<PAGE>

17.2

Any parts found not to be  compliant  with the  Warranty in Clause 17.1 shall be
returned  by Viatel to  Nortel's  works,  carriage  and  insurance  to  Nortel's
account,  and the  replacement  or repaired  parts  supplied by Nortel  shall be
delivered free of charge to the Site.

17.3

In the event of a major  service-affecting  failure  during the Warranty  Period
Nortel shall promptly:

(a)  advise any corrective action that Viatel may be able to take on Site; or

(b)  despatch by express delivery such parts and/or Software as may be necessary
     to restore the System; or

(c)  send an appropriate specialist to Site and maintain him there at no cost to
     Viatel for as long as is necessary to rectify the defect.

Nortel  shall make every  reasonable  effort to minimise 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 Network,  Nortel shall initiate a
corrective  action  immediately  after  receipt of notice from Viatel.  Upon any
breach of the Warranties contained herein during the applicable Warranty Period,
Viatel may,  to the extent  that Nortel has failed to (i) make prompt  repair or
replacement, or (ii) minimise System out-of-service time for testing and repair,
arrange for the repair or  replacement  of any  defective  Work and Nortel shall
reimburse Viatel for the cost of repairs or replacements.

17.4

Nortel shall have no obligation to repair or replace  Equipment  and/or Software
which has been abused,  used in  unauthorised  applications in accordance as per
Clause 19 hereof,  altered,  or used in  conjunction  with third party  material
which is defective or of poor quality, or which has been operated and maintained
by Viatel  with a  material  lack of  compliance  with  Nortel's  operating  and
maintenance instructions. Nortel shall be entitled to charge Viatel for any work
performed  in  investigating  and/or  rectifying  problems  not  covered  by the
provisions of Clause 17.1.

17.5

EXCEPT AS PROVIDED BY  APPLICABLE  LAW, THE WARRANTY  PROVIDED IN THIS CLAUSE 17
CONSTITUTES THE SOLE LIABILITY OF NORTEL IN RESPECT OF THOSE MATTERS TO WHICH IT
REFERS. ALL OTHER TERMS,  CONDITIONS AND WARRANTIES EXPRESSED OR IMPLIED WHETHER
STATUTORIALLY OR OTHERWISE ARE HEREBY EXPRESSLY  EXCLUDED TO THE EXTENT THAT THE
PARTIES CANNOT SO EXCLUDE AT APPLICABLE LAW.

18.      SUPPORT

For a period of 10 (ten) years from the date of  Acceptance  with respect to any
System  Nortel  shall,  if required by Viatel,  supply any spare or  replacement
parts,  or  suitable  alternatives,   for  the  Equipment  at  the  prices  then
prevailing.

19.      RIGHTS TO USE THE SOFTWARE


                                       12
<PAGE>

19.1

In  consideration  of Viatel  paying to Nortel fees as  specified  in the Order,
Nortel grants to Viatel a permanent  (subject to  compliance  with terms hereof)
non-exclusive  non-transferable  Right to Use licence in respect of the Software
and associated documentation delivered in accordance with this Agreement. Viatel
shall not duplicate nor modify nor disassemble nor decompile the Software except
as provided for under the Council of the European  Communities  Directive on the
legal protection of Computer  Programs dated the 14th May 1991  (91/250/EEC) and
furthermore Viatel shall not divulge or otherwise make available any Software or
associated  documentation to persons other than its employees  without the prior
written consent of Nortel.

19.2

The Right to Use licence is granted on  condition  that the Software is utilised
for the operation and maintenance of the  appropriate  elements of the System as
detailed  herein and for no other  purpose  and on no  equipment  other than the
Equipment without the prior written authorisation of Nortel.

19.3

This  Software  licence  is granted  only on those  features  identified  in the
Software  Specification  and for which licence fees have been paid in accordance
with the Price Schedule.  Viatel  understands that Nortel may furnish within the
Software load  features  which Viatel is not granted a right to use by virtue of
not being included  within the specified  licence fees, but may  nevertheless be
accessible to them. Where Viatel wishes to use such  non-licensed  features then
it shall be  entitled to do so subject to payment of the  applicable  additional
Software  right to use fee prior to commercial  deployment of such  non-licensed
Software feature or functionality.

19.4

The  conditions of this Clause 19 shall survive the expiry or termination of the
Agreement  except  where  termination  is by virtue  of  breach of the  software
licence.


20.      LIABILITY AND INSURANCE

20.1

Each Party shall be indemnified by the other Party against any liability,  loss,
claim  and/or  proceedings  whatsoever  in respect of personal  injury to and/or
death of any person and damages to and/or loss of  tangible  property  howsoever
arising  pursuant  to this  Agreement  or any breach  thereof due to the acts or
omissions of such other Party, its servants or agents.

20.2     [REDACTED]

20.3

IN NO EVENT SHALL  EITHER  VIATEL OR NORTEL BE LIABLE,  WHETHER AS THE RESULT OF
CONTRACT,  TORT,  INCLUDING,   WITHOUT  LIMITATION,   NEGLIGENCE,  OR  OTHERWISE
HOWSOEVER ARISING, FOR ANY SPECIAL, INDIRECT OR CONSEQUENTIAL DAMAGES OR FOR ANY
DAMAGES  ARISING FROM OR ATTRIBUTABLE  TO FAILURE TO REALISE  EXPECTED  SAVINGS,
LOSS OF DATA,  CAPITAL DOWNTIME COSTS,  LOSS OF USE, LOSS OF GOODWILL OR LOSS OF
ANTICIPATED OR ACTUAL REVENUE OR PROFIT EVEN IF EITHER PARTY HAS BEEN ADVISED OF
THE POSSIBILITY OF ANY SUCH DAMAGES.





                                       13
<PAGE>

20.4

Subject to sub-clause 20.1 of these conditions in the event that Nortel is found
liable for  breach of its  obligations  under an Order then its total  liability
shall not under  any  circumstances  exceed  the Order  Price for any  breach or
breaches.

20.5

20.5.1  Nortel  shall  insure the Works and keep each part  thereof  insured for
their full  replacement  value  against all loss or damage from  whatever  cause
arising  until a Delivery  Acceptance  Certificate  has been issued.  All monies
received  under any such policy  shall be applied in or towards the  replacement
and repair of the Works lost, damaged or destroyed.

20.5.2  Nortel  shall,  prior to  commencing  work on the Site  pursuant  to the
Agreement,  insure in an amount  which  shall not exceed  [REDACTED]  per event,
against his liability for damage or death or personal  injury  occurring  before
the Works have achieved  Acceptance,  to any person  (including  any employee of
Nortel or Viatel) or to any property  (other than  property  forming part of the
Works) due to or arising out of the execution of the Works.

20.5.3 Nortel shall insure and shall  maintain  insurance  against his liability
for accidents or injuries to their employees.

20.5.4 If Nortel shall fail to effect and keep in force the insurances specified
herein then Viatel may effect and keep in force any such  insurance and pay such
premium or premiums as may be necessary  and from time to time deduct the amount
so paid by Viatel from any monies due or which may become due to, or recover the
same as a debt due from Nortel.  Nortel shall  furnish  Viatel with  documentary
evidence as to the existence of the above policies.

21.      TERMINATION BY VIATEL

21.1

If Nortel shall be in material breach of the its obligations  under an Order and
Viatel  shall so inform  Nortel  by notice in  writing  and  should  the  breach
continue  for more  than 30  (thirty)  days,  or such  longer  period  as may be
specified by Viatel,  after such notice then Viatel may  terminate the Agreement
or the Order by notice in writing to Nortel and may suspend  further  payment to
Nortel pending resolution of financial settlement pursuant to the conditions set
out below.

21.2

Upon  termination of the Agreement or an Order as provided in Clauses 21.1 or 23
Nortel shall  forthwith cease work and remove its labour from the relevant Site.
However Nortel shall not remove from the relevant Site any Equipment,  the title
of  which  has not  passed  to  Viatel,  nor any of its  installation  tools  or
materials  unless  given  permission  to do so in writing by Viatel.  Viatel may
elect  to  complete  the  purchase  of any  such  Equipment  and  use  any  such
installation  tools or  materials  by paying  Nortel  the  unpaid  price of such
Equipment  and a fair  price for use of such  tools  and/or  materials  less any
amount payable hereunder by Nortel to Viatel.

21.3

Upon termination of the Agreement or an Order as provided for in Clauses 21.1 or
23, Viatel may at its option;

21.3.1  reject the relevant  System and elect to retain such  portion(s)  of the
relevant System as it may determine.  Nortel shall refund any amount(s) of money
to Viatel which Viatel has paid in respect of the rejected  items subject to the
payment by Viatel to the extent  required to the for those  items  which  Viatel
elects to retain (less any amount payable hereunder by Nortel to Viatel), and/or


                                       14
<PAGE>

21.3.2 continue work either by itself or by  sub-contracting to a third party to
complete  the  System.  Nortel  shall if so  required  by Viatel  to the  extent
allowable by such agreements,  within 14 (fourteen) calendar days of the date of
termination  assign to Viatel  without  payment the benefit of any agreement for
supply of materials  or goods  and/or  execution of any work for the purposes of
the  Agreement.  In the event that Viatel had already paid the price  thereof to
Nortel,  then Nortel shall promptly repay such sum(s) to Viatel. In the event of
the  System  being  completed  by  Viatel or a third  party  and the total  cost
incurred by Viatel in so  completing  the System  being  greater than that which
would have been incurred had the Order not been terminated then Nortel shall pay
to Viatel such excess up to a maximum of the Order Price.

21.4

In addition to any other powers to terminate the Agreement Viatel shall have the
power to terminate an Order in whole or in part for its own  convenience  at any
time up to 30 days prior to the scheduled  date for delivery of the Equipment or
carrying out of the Services contained in that Order by giving notice in writing
to Nortel.  In the event of Viatel  exercising such power of termination  Nortel
shall carry out Viatel's reasonable instructions in regard to termination.

21.5

Upon  termination by the Viatel in accordance  with the provisions of Clauses 12
or 21.4  Nortel  shall  immediately  cease work and  Viatel  shall pay to Nortel
forthwith upon  termination the proportion of the Order Price  applicable to the
portion or portions fully or substantially performed prior to the termination in
accordance with pricing set forth in Annex C.

21.6

Termination of an Order shall be without prejudice to the rights and remedies of
the parties accrued under the Agreement immediately prior to the termination.


22.      TERMINATION BY NORTEL

22.1

Nortel  shall not have the right to  terminate  an Order  except for  reasons of
Force Majeure (Clause 12) or in the event of actual insolvency of Viatel (Clause
23) or in  respect  of a  material  breach of the terms  and  provisions  of the
Agreement by Viatel (Clause 22.2).

22.2

Without  prejudice  to the  provisions  of Clause  22.3,  if Viatel  shall be in
material breach of it obligations under the Agreement and Nortel shall so inform
Viatel by notice in writing and should the breach  continue for 30 (thirty) days
after  such  notice,  or, in the case of failure by Viatel to pay any sum due to
Nortel hereunder,  10 (ten) working days after such notice, Nortel shall without
prejudice to any of its other rights and remedies have the right to  immediately
terminate the Agreement and claim from Viatel for any resulting loss or damage.

22.3

Notwithstanding the provisions of Clause 22.2, in the event of a material breach
or  violation  of the Software  Right to Use  conditions  (Clause 19) by Viatel,
Nortel  shall  inform  Viatel by notice in  writing  and  should  the  breach or
violation continue for more than 14 (fourteen) days after such notice Nortel may
terminate the Software Right to Use licence forthwith.

22.4


                                       15
<PAGE>

Upon  termination of the Software Right to Use licence in accordance with Clause
22.3 Nortel may, at its absolute discretion, either require Viatel to return all
copies of the Software and associated documentation within 14 (fourteen) days of
the notice to do so, or permit  Viatel the  continued  use of the  Software  and
associated documentation upon such terms as Nortel may direct.

22.5

Application  of the  provisions  of Clause  22.4 shall be without  prejudice  to
Nortel's right to recover costs and/or damages for breach of contract by Viatel.
The sums to be paid by  Viatel to Nortel in  respect  of such  costs or  damages
shall  be as  agreed  by the  Parties  or as  awarded  by a court  of  competent
jurisdiction subject to the limitation set forth herein.

22.6

Upon  termination  by Nortel in accordance  with the  provisions of Clause 12.2,
Viatel shall pay to Nortel  forthwith  upon  termination  the  proportion of the
Order Price  applicable  to the portion or portions of the Order which have been
delivered or are in progress of manufacture  (unless such Equipment is sold to a
third  party) plus the price of services  performed  prior to such  termination,
together  with any  additional  sums  properly  expended  by Nortel in regard to
termination  plus a  reasonable  rate of profit on the same (less any  savings).
Nortel shall have a duty to mitigate damages hereunder.


23.      INSOLVENCY AND LIQUIDATION

If either party shall  commence any case,  proceeding  or other action under any
law relating to  bankruptcy,  insolvency,  reorganisation  or relief of debtors,
seeking  to have an order for  relief  entered  with  respect  to or  seeking to
adjudicate  it a bankrupt or insolvent or seeking  reorganisation,  arrangement,
adjustment,  winding up, liquidation,  dissolution,  composition or other relief
with respect to it or its debts or seeking  appointment of a receiver,  trustee,
custodian,  conservator  or  other  similar  official  for it or for  all or any
substantial  part of its  assets,  or shall  make a general  assignment  for the
benefit of its creditors or there is commenced against it any such action, case,
or proceeding, then the other Party shall be entitled to terminate the Agreement
and exercise any remedies provided for herein or in law.

24.      PATENTS AND COPYRIGHTS

24.1

Nortel  shall  defend and  indemnify  Viatel  against  all actions or claims for
infringement  of patents,  copyright,  registered  design or other  intellectual
property  rights  arising by reason of Viatel's  purchase,  possession or use of
Systems, the Software, or the Equipment provided that Viatel:

(i)   gives notice to Nortel of any actual or threatened  action or claim within
      a reasonable time of becoming aware of the same; and

(ii)  gives Nortel the sole  conduct of the defence to any actual or  threatened
      action  or  claim  in  respect  of  an   alleged   intellectual   property
      infringement and does not at any time,  following receiving a threat of or
      notice of  commencement  of  proceedings,  admit  liability  or  otherwise
      attempt to settle or  compromise  the said action or claim except with the
      prior written consent of Nortel; and

(iii) acts in accordance with the reasonable instructions of Nortel and gives to
      Nortel such  assistance as it shall  reasonably  require in respect of the
      conduct of the said defence including, without prejudice to the generality
      of the foregoing,  the filing of all pleadings and other court process and
      the  provision of all  relevant  documents.  In this respect  Nortel shall
      reimburse  Viatel's  reasonable out of pocket expenses incurred in such an
      exercise.


                                       16
<PAGE>

24.2

In the event  that it is held that  there is an  infringement  as  described  in
Clause 24.1,  Viatel  agrees that  Nortel's  total  liability in addition to the
payment  of any losses or damage  awarded  against  Viatel  shall,  at  Nortel's
option, be either :

(i)   to modify the System or part thereof so that it does not infringe; or

(ii)  to replace the System or part thereof with non-infringing products; or

(iii) to procure  for Viatel  the right for  Viatel to  continue  its use of the
      System

In the event that Nortel cannot  perform under (i), (ii) or (iii) above,  Viatel
shall have the right to return the  infringing  Equipment  and / or  Software to
Nortel  following  written  notice to Nortel,  and in the event of such  return,
neither Party shall have any further  liabilities  or  obligations in respect of
such Equipment and Software, except that Nortel shall refund the Order Price and
take possession of the affected Equipment and Software.

24.3

This indemnity shall not extend to  infringement  resulting from use or adoption
by Nortel of Viatel's parts, designs or specific instructions or from use of the
System, the Equipment or the Software in a manner or for a purpose not stated in
the  Specification  or in the event that Viatel  makes an  admission,  following
receiving a threat of or notice of commencement of proceedings,  which is or may
be prejudicial to Nortel's case.

24.4

The copyright in all drawings, specifications and data issued by either Party in
connection with the Agreement shall remain the property of the issuing Party but
the other Party shall be entitled for all reasonable purposes in connection with
the Agreement to a personal,  non-exclusive,  non-transferable  licence, free of
charge, to use such drawings, specifications and data. Use by the other Party of
such  drawings,  specifications  and data for any other purpose will entitle the
issuing Party to terminate such license forthwith.


25.      CONFIDENTIAL INFORMATION

Each Party shall keep  confidential and shall disclose only to its own employees
and agents to the extent  necessary for the  performance  of this  Agreement and
shall not,  without the other  Party's prior  written  consent,  disclose to any
third party any document or  information  acquired from the other Party pursuant
to the Agreement and such documents and  information  shall only be used for the
purpose of the Agreement  provided  however that nothing  shall  prevent  either
Party from disclosing information which:

(a)   is in its possession with the full right to disclose prior to receiving it
      from the other Party or,

(b)   is or later becomes public knowledge other than by a breach of this Clause
      25 or,

(c)   it may  independently  receive  from a third  party with the full right to
      disclose or,

(d)   is developed  independently of the information disclosed under this Clause
      25 or,

(e)   is required by law to be disclosed,

subject, in the case of disclosure to agents, to the signature by such agents of
a  confidentiality  undertaking  in  favour  of the  party to whom any  relevant
information belongs in terms equivalent to the provisions of this clause 25.

26.      GIFTS OR CONSIDERATIONS

                                       17
<PAGE>

Nortel  shall  not  offer  to give or agree  to give to any  person  any gift or
consideration  of any kind as an inducement or reward for doing or forbearing to
do or for having done or forborne to do any act in relation to the  obtaining or
execution  of  this  or any  other  agreement  with  Viatel  or for  showing  or
forbearing  to show favour or disfavour to any person in relation to this or any
other Agreement with Viatel.

27.      EXPORT AND RE-EXPORT

27.1

All Orders are subject to the granting of all  appropriate  Governmental  export
and where applicable, import licences prior to any deliveries. In the event that
such  licences  are not granted  within 6 (six)  months of issuance of the Order
then the Agreement  shall be declared null and void. In such event neither Party
shall have any claims against the other Party with respect to that Order.

27.2

Regardless  of  any  disclosure  made  by  Viatel  to  Nortel  of  the  ultimate
destination of any System or any part thereof,  Viatel undertakes not to export,
either  directly or  indirectly,  any System in whole or in part, nor any system
incorporating  any  System in whole or in part  without  having  first  obtained
clearance or a licence to re-export from the USA and/or Canadian  Governments as
required under their respective re-export regulations.


28.      CONSTRUCTION OF AGREEMENT

If any term or  condition  of the  Agreement  is held to be  invalid  under  any
applicable  statute or rule of law, it shall be deemed to be omitted  from these
terms and  conditions to the extent of such  invalidity but the remainder of the
Agreement provisions shall continue in full force.

29.      SUBCONTRACTING

Should  any  sub-contractor  required  by Nortel to  perform  the Works or parts
thereof which were not identified to Viatel prior to signature of the Agreement,
Nortel will submit details of the proposed sub-contractors for Viatel's approval
prior to the sub-contractors  commencing any work. Any notification by Nortel of
such  sub-contract not relieve Nortel from any liability or obligation under the
Agreement.

30.      NON-WAIVER

The  failure  of  either  Party to give  notice  to the  other of any  breach or
non-fulfilment  of any  provision,  term or  Clause  of  this  Order  shall  not
constitute   a  waiver   thereof,   nor  shall  the  waiver  of  any  breach  or
non-fulfilment  of any provision,  term or Clause hereof  constitute a waiver of
any other provision, term or Clause hereof.


31.      SURVIVAL OF CONDITIONS

The provisions of the following Clauses shall survive and shall continue in full
force and effect  notwithstanding  the expiration or earlier  termination of the
Order:

Clause 17    relating to Warranty

Clause 19    relating to Right to Use Software

Clause 20    relating to Liability and Insurance

Clause 24    relating to Patents & Copyrights

Clause 25    relating to Confidential Information

Clause 27.2  relating to Re-export Controls

Clause 28.1  relating to Applicable Law


                                       18
<PAGE>

                                     ANNEX B


                                NORTEL AFFILIATES



<PAGE>


GERMANY

Nortel Dasa Network Systems GmbH &Co.KG
Public Carrier Networks
Hahnstr. 37 - 39
60528 Frankfurt/Main, Germany

UNITED KINGDOM

Nortel plc.,
Maidenhead Office Park
Westacott Way
Maidenhead
Berkshire
SL6 3QH

NETHERLANDS

Northern Telecom BV
Siriusdreef 17-27
2132 WT Hoofddorp

FRANCE

Matra Nortel Communications SAS
33 quai Paul Doumer
Paris la Defense
92415 Courbevoie Cedex

BELGIUM

Northern Telecom NV
Belgicastraat 4
1930 Zaventum
Brussels


<PAGE>

                                    ANNEX C

                        PRODUCT DESCRIPTION AND PRICING

                                   [REDACTED]

<PAGE>



                                     ANNEX D


                                 SPECIFICATIONS

                                   [REDACTED]