<PAGE>

                                                                     EXHIBIT 3.2



                                    BYE-LAWS

                                       of

                          FLAG Telecom Holdings Limited


I HEREBY CERTIFY that the within written Bye-laws are a true copy of the
Bye-laws of FLAG TELECOM HOLDINGS LIMITED as subscribed by the subscribers to
the Memorandum of Association and approved by written resolution of the
Shareholders of the Company on the 24th day of February 1999, as amended through
9th February 2000.



                                          Director



<PAGE>

                                    I N D E X


FLAG TELECOM HOLDINGS LIMITED.................................................4
INTERPRETATION................................................................4
REGISTERED OFFICE.............................................................6
SHARE RIGHTS..................................................................6
MODIFICATION OF RIGHTS........................................................7
SHARES........................................................................7
CERTIFICATES..................................................................7
LIEN..........................................................................8
CALLS ON SHARES...............................................................9
FORFEITURE OF SHARES.........................................................10
REGISTER OF SHAREHOLDERS.....................................................11
REGISTER OF DIRECTORS AND OFFICERS...........................................11
TRANSFER OF SHARES...........................................................11
TRANSMISSION OF SHARES.......................................................12
INCREASE OF CAPITAL..........................................................12
ALTERATION OF CAPITAL........................................................13
REDUCTION OF CAPITAL.........................................................13
GENERAL MEETINGS AND WRITTEN RESOLUTIONS.....................................13
NOTICE OF GENERAL MEETINGS...................................................14
GENERAL MEETINGS AT MORE THAN ONE PLACE......................................14
PROCEEDINGS AT GENERAL MEETINGS..............................................15
VOTING.......................................................................16
PROXIES AND CORPORATE REPRESENTATIVES........................................17
APPOINTMENT AND REMOVAL OF DIRECTORS.........................................18
RESIGNATION AND DISQUALIFICATION OF DIRECTORS................................20
ALTERNATE DIRECTORS..........................................................20
DIRECTORS' FEES AND ADDITIONAL REMUNERATION AND EXPENSES.....................21
DIRECTORS' INTERESTS.........................................................21
POWERS AND DUTIES OF THE BOARD...............................................22
MATTERS REQUIRING SPECIAL APPROVAL...........................................22
BUSINESS PLAN................................................................24
GRATUITIES, PENSIONS AND INSURANCE...........................................25
DELEGATION OF THE BOARD'S POWERS.............................................25
PROCEEDINGS OF THE BOARD.....................................................26
OFFICERS.....................................................................28
EXECUTIVE DIRECTORS..........................................................28
MINUTES......................................................................29
SECRETARY AND RESIDENT REPRESENTATIVE........................................29
THE SEAL.....................................................................29
DIVIDENDS AND OTHER PAYMENTS.................................................30
RESERVES.....................................................................31
CAPITALIZATION OF PROFITS....................................................31
RECORD DATES.................................................................31
ACCOUNTING RECORDS...........................................................31
AUDIT........................................................................32
SERVICE OF NOTICES AND OTHER DOCUMENTS.......................................32
DESTRUCTION OF DOCUMENTS.....................................................32
UNTRACED SHAREHOLDERS........................................................33



                                       2
<PAGE>

                                    I N D E X

WINDING UP...................................................................34
INDEMNITY....................................................................34
AMALGAMATION.................................................................35
CONTINUATION.................................................................35
ALTERATION OF BY-LAWS........................................................35
BUSINESS COMBINATIONS........................................................36


                                       3
<PAGE>


                                    BYE-LAWS
                                       OF
                          FLAG TELECOM HOLDINGS LIMITED

                                 INTERPRETATION

1.    (1)   In these Bye-laws unless the context otherwise requires -
<TABLE>
           <S>                        <C>
            "Associated Person"        means, in relation to any Shareholder, (i) any subsidiary
                                       company or holding company of such Shareholder or any
                                       other subsidiary company of any such holding company,
                                       (ii) any company in which such Shareholder or any
                                       holding company of such Shareholder holds or controls
                                       directly or indirectly not less than 20% of the issued
                                       share capital and (iii) any other affiliate of, or other
                                       person controlling, controlled by or under common
                                       control with, such Shareholder (the expressions
                                       "subsidiary company", "holding company", and "control"
                                       having respectively the meanings given to them in
                                       Section 86 of the Companies Act of 1981 of Bermuda, as
                                       amended);

            "Bermuda"                  means the Islands of Bermuda;

            "Board"                    means the Board of Directors of the Company or the
                                       Directors present at a meeting of Directors at which
                                       there is a quorum;

            "Business                  Plan" means, as of any date, the business plan in effect
                                       as of such date in accordance with the provisions of
                                       Bye-laws 98 and 99;

            "the                       Companies Acts" means every Bermuda statute from time to
                                       time in force concerning companies insofar as the same
                                       applies to the Company;

            "Company"                  means the company incorporated in Bermuda under the name
                                       of FLAG TELECOM HOLDINGS LIMITED on the 3rd day of
                                       February, 1999;

            "Entire Board"             means, at any time, all of the Directors then in office;

            "Officer"                  means a person appointed by the Board pursuant to
                                       Bye-law 117 of these Bye-laws and shall not include an
                                       auditor of the Company;

            "paid up"                  means paid up or credited as paid up;

            "person"                   means any individual, corporation, partnership, firm,
                                       joint venture, association, joint-stock company, trust,
                                       unincorporated organisation, governmental body or other
                                       entity;
</TABLE>


                                       4
<PAGE>

<TABLE>
           <S>                        <C>
            "Register"              means the Register of Shareholders of the Company;

            "Registered Office"     means the registered office for the time being of the
                                    Company;

            "Resident               Representative" means the person (or, if permitted in
                                    accordance with the Companies Acts, the company)
                                    appointed to perform the duties of resident
                                    representative set out in the Companies Acts and
                                    includes any assistant or deputy Resident Representative
                                    appointed by the Board to perform any of the duties of
                                    the Resident Representative;

            "Resolution"            means a resolution of the Shareholders or, where
                                    required, of a separate class or separate classes of
                                    Shareholders, adopted either in general meeting or by
                                    written resolution, in accordance with the provisions of
                                    these Bye-laws;

            "Seal"                  means the common seal of the Company and includes any
                                    duplicate thereof;

            "Secretary"             includes a temporary or assistant or deputy Secretary
                                    and any person appointed by the Board to perform any of
                                    the duties of the Secretary;

            "Security Interest"     means any lien, option, security, mortgage, charge
                                    (whether fixed or floating), pledge, assignment, title
                                    retention arrangement, hypothecation, encumbrance, or
                                    other right by way of security (and any agreement or
                                    arrangement having substantially the same economic
                                    effect as any of the foregoing);

            "Shareholder"           means a Shareholder or member of the Company;

            "Specified Place"       means the place, if any, specified in the notice of any
                                    meeting of the Shareholders, or adjourned meeting of the
                                    Shareholders, at which the chairman of the meeting shall
                                    preside;

            "Stock Exchange"        means any stock exchange on which shares of the Company
                                    may be listed from time to time; and

            "these Bye-laws"        means these Bye-laws in their present form or as from
                                    time to time amended.
</TABLE>

(2)   For the purposes of these Bye-laws a corporation shall be deemed to be
      present in person if its representative duly authorised pursuant to the
      Companies Acts is present.

(3)   Words importing only the singular number include the plural number and
      vice versa.

(4)   Words importing only the masculine gender include the feminine and neuter
      genders respectively.

(5)   Words importing persons include companies or associations or bodies of
      persons, whether corporate or un-incorporate.



                                       5
<PAGE>

(6)   Reference to writing shall include typewriting, printing, lithography,
      photography and other modes of representing or reproducing words in a
      legible and non-transitory form.

(7)   Any words or expressions defined in the Companies Acts in force at the
      date when these Bye-laws or any part thereof are adopted shall bear the
      same meaning in these Bye-laws or such part (as the case may be).

(8)   In these Bye-laws: (a) powers of delegation shall not be restrictively
      construed but the widest interpretation shall be given thereto; (b) the
      word "Board" in the context of the exercise of any power contained in
      these Bye-laws includes any committee consisting of one or more Directors,
      any Director holding executive office and any local or divisional Board,
      manager or agent of the Company to which or, as the case may be, to whom
      the power in question has been delegated; (c) no power of delegation shall
      be limited by the existence or, except where expressly provided by the
      terms of delegation, the exercise of that or any other power of
      delegation; and (d) except where expressly provided by the terms of
      delegation, the delegation of a power shall not exclude the concurrent
      exercise of that power by any other body or person who is for the time
      being authorised to exercise it under these Bye-laws or under another
      delegation of the powers.

                                REGISTERED OFFICE

2.    The Registered Office shall be at such place in Bermuda as the Board shall
      from time to time appoint.

                                  SHARE RIGHTS

3.    Subject to any special rights conferred on the holders of any share or
      class of shares, any share in the Company may be issued with or have
      attached thereto such preferred, deferred, qualified or other special
      rights or such restrictions, whether in regard to dividends, voting,
      return of capital or otherwise, as the Company may by Resolution determine
      or, if there has not been any such determination or so far as the same
      shall not make specific provision, as the Board may determine.

4.    (1)   Subject to the Companies Acts, any preference shares may, with
            the sanction of a resolution of the Board, be issued on terms:

            (a)   that they are to be redeemed on the happening of a specified
                  event or on a given date; and/or,

            (b)   that they are liable to be redeemed at the option of the
                  Company; and/or,

            (c)   if authorised by the memorandum/Incorporating Act of the
                  Company, that they are liable to be redeemed at the option of
                  the holder.

            The terms and manner of redemption shall be provided for in such
            resolution of the Board and shall be attached to but shall not form
            part of these Bye-laws.

      (2)   The Board may, at its discretion and without the sanction of a
            Resolution, authorise the purchase by the Company of its own shares,
            of any class, at any price (whether at par or above or below par),
            and so that any shares to be so purchased may be selected in any
            manner whatsoever, upon such terms as the Board may in its
            discretion determine PROVIDED ALWAYS that such purchase is effected
            in accordance with the provisions of the Companies Acts.


                                       6
<PAGE>

                             MODIFICATION OF RIGHTS

5.    Subject to the Companies Acts, all or any of the special rights for the
      time being attached to any class of shares for the time being issued may
      from time to time (whether or not the Company is being wound up) be
      altered or abrogated with the consent in writing of the holders of not
      less than 75% of the issued shares of that class or with the sanction of a
      Resolution passed at a separate general meeting of the holders of such
      shares voting in person or by proxy. To any such separate general meeting,
      all the provisions of these Bye-laws as to general meetings of the Company
      shall MUTATIS MUTANDIS apply, but so that the necessary quorum shall be
      two or more persons holding or representing by proxy the majority of the
      shares of the relevant class and that every holder of shares of the
      relevant class shall be entitled to one vote for every such share held by
      him; provided, however, that if the Company or a class of Shareholders
      shall have only one Shareholder, one Shareholder present in person or by
      proxy shall constitute the necessary quorum.

6.    For the purposes of Bye-law 5, unless otherwise expressly provided by the
      rights attached to any shares or class of shares, those rights shall be
      deemed to be altered (a) by the reduction of the capital paid up on those
      shares otherwise than by a purchase or redemption by the Company of its
      own shares, and (b) by the allotment of other shares ranking in priority
      for payment of a dividend or in respect of capital or which confer on the
      holders voting rights more favourable than those conferred by such first
      mentioned shares but shall not otherwise be deemed to be altered by the
      creation or issue of further shares ranking PARI PASSU therewith or by the
      purchase or redemption by the Company of any of its own shares.

                                     SHARES

7.    Subject to the provisions of these Bye-laws, the unissued shares of the
      Company (whether forming part of the original capital or any increased
      capital) shall be at the disposal of the Board, which may offer, allot,
      grant options over or otherwise dispose of them to such persons, at such
      times and for such consideration and upon such terms and conditions as the
      Board may determine.

8.    The Board may in connection with the issue of any shares exercise all
      powers of paying commission and brokerage conferred or permitted by law.
      Subject to the provisions of the Companies Acts, any such commission or
      brokerage may be satisfied by the payment of cash or by the allotment of
      fully or partly paid shares or partly in one way and partly in the other.

9.    Except as ordered by a court of competent jurisdiction or as required by
      law, no person shall be recognised by the Company as holding any share
      upon trust and the Company shall not be bound by or required in any way to
      recognise (even when having notice thereof) any equitable, contingent,
      future or partial interest in any share or any interest in any fractional
      part of a share or (except only as otherwise provided in these Bye-laws,
      or by law) any other right in respect of any share except an absolute
      right to the entirety thereof in the registered holder.

                                  CERTIFICATES

10.   The preparation, issue and delivery of certificates shall be governed by
      the Companies Acts. In the case of a share held jointly by several
      persons, delivery of a certificate to one of several joint holders shall
      be sufficient delivery to all.

11.   If a share certificate is defaced, lost or destroyed it may be replaced
      without fee but on such terms (if any) as to evidence and indemnity and to
      payment of the costs and out of pocket expenses of the Company in
      investigating such evidence and preparing such indemnity as the Board may
      think fit and, in case of defacement, on delivery of the old certificate
      to the Company.

12.   All certificates for share or loan capital or other securities of the
      Company (other than letters of allotment, scrip certificates and other
      like documents) shall, except to the extent that the terms and conditions
      for the time being relating thereto otherwise provide, be issued under the
      Seal. The Board



                                       7
<PAGE>

      may by resolution determine, either generally or in any particular case,
      that any signatures on any such certificates need not be autographic but
      may be affixed to such certificates by some mechanical means or may be
      printed thereon or that such certificates need not be signed by any
      persons, and may determine that a representation of the Seal may be
      printed on any such certificates.

13.   Nothing in these Bye-laws shall prevent title to any securities of the
      Company from being evidenced and/or transferred without a written
      instrument in accordance with regulations made from time to time in this
      regard under the Companies Acts, and the Board shall have power to
      implement any arrangements which it may think fit for such evidencing
      and/or transfer which accord with those regulations.

                                      LIEN

14.   The Company shall have a first and paramount lien on every share (not
      being a fully paid share) for all monies, whether presently payable or
      not, called or payable at a date fixed by or in accordance with the terms
      of issue of such share in respect of such share, and the Company shall
      also have a first and paramount lien on every share (other than a fully
      paid share) standing registered in the name of a Shareholder, whether
      singly or jointly with any other person, for all the debts and liabilities
      of such Shareholder or his estate to the Company, whether the same shall
      have been incurred before or after notice to the Company of any interest
      of any person other than such Shareholder, and whether the time for the
      payment or discharge of the same shall have actually arrived or not, and
      notwithstanding that the same are joint debts or liabilities of such
      Shareholder or his estate and any other person, whether a Shareholder or
      not. The Company's lien on a share shall extend to all dividends payable
      thereon. The Board may at any time, either generally or in any particular
      case, waive any lien that has arisen or declare any share to be wholly or
      in part exempt from the provisions of this Bye-law.

15.   The Company may sell, in such manner as the Board may think fit, any share
      on which the Company has a lien but no sale shall be made unless some sum
      in respect of which the lien exists is presently payable nor until the
      expiration of fourteen days after a notice in writing, stating and
      demanding payment of the sum presently payable and giving notice of the
      intention to sell in default of such payment, has been served on the
      holder for the time being of the share.

16.   The net proceeds of sale by the Company of any shares on which it has a
      lien shall be applied in or towards payment or discharge of the debt or
      liability in respect of which the lien exists so far as the same is
      presently payable, and any residue shall (subject to a like lien for debts
      or liabilities not presently payable as existed upon the share prior to
      the sale) be paid to the person who was the holder of the share
      immediately before such sale. For giving effect to any such sale the Board
      may authorise some person to transfer the share sold to the purchaser
      thereof. The purchaser shall be registered as the holder of the share and
      he shall not be bound to see to the application of the purchase money, nor
      shall his title to the share be affected by any irregularity or invalidity
      in the proceedings relating to the sale.

17.   Whenever any law for the time being of any country, state or place imposes
      or purports to impose any immediate or future or possible liability upon
      the Company to make any payment or empowers any government or taxing
      authority or government official to require the Company to make any
      payment in respect of any shares registered in any of the Company's
      registers as held either jointly or solely by any Shareholder or in
      respect of any dividends, bonuses or other monies due or payable or
      accruing due or which may become due or payable to such Shareholder by the
      Company on or in respect of any shares registered as aforesaid or for or
      on account or in respect of any Shareholder and whether in consequence
      of:-


            (1)   the death of such Shareholder;

            (2)   the non-payment of any income tax or other tax by such
                  Shareholder;



                                       8
<PAGE>

            (3)   the non-payment of any estate, probate, succession, death,
                  stamp, or other duty by the executor or administrator of such
                  Shareholder or by or out of his estate; or

            (4)   any other act or thing;

      in every such case (except to the extent that the rights conferred upon
      holders of any class of shares render the Company liable to make
      additional payments in respect of sums withheld on account of the
      foregoing):-

            (a)   the Company shall be fully indemnified by such Shareholder or
                  his executor or administrator from all liability;

            (b)   the Company shall have a lien upon all dividends and other
                  monies payable in respect of the shares registered in any of
                  the Company's registers as held either jointly or solely by
                  such Shareholder for all monies paid or payable by the Company
                  in respect of such shares or in respect of any dividends or
                  other monies as aforesaid thereon or for or on account or in
                  respect of such Shareholder under or in consequence of any
                  such law together with interest at such rate as the Board may
                  determine from the date of payment to the date of repayment
                  and may deduct or set off against such dividends or other
                  monies payable as aforesaid any monies paid or payable by the
                  Company as aforesaid together with interest as aforesaid;

            (c)   the Company may recover as a debt due from such Shareholder or
                  his executor or administrator wherever constituted any monies
                  paid by the Company under or in consequence of any such law
                  and interest thereon at the rate and for the period aforesaid
                  in excess of any dividends or other monies as aforesaid then
                  due or payable by the Company; and

            (d)   the Company may if any such money is paid or payable by it
                  under any such law as aforesaid refuse to register a transfer
                  of any shares by any such Shareholder or his executor or
                  administrator until such money and interest as aforesaid is
                  set off or deducted as aforesaid or in case the same exceeds
                  the amount of any such dividends or other monies as aforesaid
                  then due or payable by the Company until such excess is paid
                  to the Company.

      Subject to the rights conferred upon the holders of any class of shares,
      nothing herein contained shall prejudice or affect any right or remedy
      which any law may confer or purport to confer on the Company and as
      between the Company and every such Shareholder as aforesaid, his executor,
      administrator and estate wheresoever constituted or situate, any right or
      remedy which such law shall confer or purport to confer on the Company
      shall be enforceable by the Company.

                                 CALLS ON SHARES

18.   The Board may from time to time make calls upon the Shareholders in
      respect of any monies unpaid on their shares (whether on account of the
      par value of the shares or by way of premium or to reimburse the Company
      for any payments it may have made as a result of a request made of the
      Company from any governmental agency or taxing authority to make payments
      in respect of its shares) and not by the terms of issue thereof made
      payable at a date fixed by or in accordance with such terms of issue, and
      each Shareholder shall (subject to the Company serving upon him at least
      14 days notice specifying the time or times and place of payment) pay to
      the Company at the time or times and place so specified the amount called
      on his shares. A call may be revoked or postponed as the Board may
      determine.

19.   A call may be made payable by instalments and shall be deemed to have been
      made at the time when the resolution of the Board authorising the call was
      passed.



                                       9
<PAGE>

20.   The joint holders of a share shall be jointly and severally liable to pay
      all calls in respect thereof.

21.   If a sum called pursuant to Bye-law 18 in respect of the share shall not
      be paid before or on the day appointed for payment thereof the person from
      whom the sum is due shall pay interest on the sum from the day appointed
      for the payment thereof to the time of actual payment at such rate as the
      Board may determine, but the Board shall be at liberty to waive payment of
      such interest wholly or in part.

22.   Any sum which, by the terms of issue of a share, becomes payable on
      allotment or at any date fixed by or in accordance with such terms of
      issue, whether on account of the nominal amount of the share or by way of
      premium, shall for all the purposes of these Bye-laws be deemed to be a
      call duly made, notified and payable on the date on which, by the terms of
      issue, the same becomes payable and, in case of non-payment, all the
      relevant provisions of these Bye-laws as to payment of interest,
      forfeiture or otherwise shall apply as if such sum had become payable by
      virtue of a call duly made and notified.

23.   The Board may on the issue of shares differentiate between the allottees
      or holders as to the amount of calls to be paid and the times of payment.

                              FORFEITURE OF SHARES

24.   If a Shareholder fails to pay any call or instalment of a call on the day
      appointed for payment thereof, the Board may at any time thereafter during
      such time as any part of such call or instalment remains unpaid serve a
      notice on him requiring payment of so much of the call or instalment as is
      unpaid, together with any interest which may have accrued.

25.   The notice shall name a further day (not being less than 14 days from the
      date of the notice) on or before which, and the place where, the payment
      required by the notice is to be made and shall state that, in the event of
      non-payment on or before the day and at the place appointed, the shares in
      respect of which such call is made or instalment is payable will be liable
      to be forfeited. The Board may accept the surrender of any share liable to
      be forfeited hereunder and, in such case, references in these Bye-laws to
      forfeiture shall include surrender.

26.   If the requirements of any such notice as aforesaid are not complied with,
      any share in respect of which such notice has been given may at any time
      thereafter, before payment of all calls or instalments and interest due in
      respect thereof has been made, be forfeited by a resolution of the Board
      to that effect. Such forfeiture shall include all dividends declared in
      respect of the forfeited shares and not actually paid before the
      forfeiture.

27.   When any share has been forfeited, notice of the forfeiture shall be
      served upon the person who was before forfeiture the holder of the share;
      but no forfeiture shall be in any manner invalidated by any omission or
      neglect to give such notice as aforesaid.

28.   A forfeited share shall be deemed to be the property of the Company and
      may be sold, re-offered or otherwise disposed of either to the person who
      was, before forfeiture, the holder thereof or entitled thereto or to any
      other person upon such terms and in such manner as the Board shall think
      fit, and at any time before a sale, re-allotment or disposition the
      forfeiture may be cancelled on such terms as the Board may think fit.

29.   A person whose shares have been forfeited shall thereupon cease to be a
      Shareholder in respect of the forfeited shares but shall, notwithstanding
      the forfeiture, remain liable to pay to the Company all monies which at
      the date of forfeiture were presently payable by him to the Company in
      respect of the shares with interest thereon at such rate as the Board may
      determine from the date of forfeiture until payment, and the Company may
      enforce payment without being under any obligation to make any allowance
      for the value of the shares forfeited.



                                       10
<PAGE>

30.   An affidavit in writing that the deponent is a Director of the Company or
      the Secretary and that a share has been duly forfeited on the date stated
      in the affidavit shall be conclusive evidence of the facts therein stated
      as against all persons claiming to be entitled to the share. The Company
      may receive the consideration (if any) given for the share on the sale,
      re-allotment or disposition thereof and the Board may authorise some
      person to transfer the share to the person to whom the same is sold,
      re-allotted or disposed of, and he shall thereupon be registered as the
      holder of the share and shall not be bound to see to the application of
      the purchase money (if any) nor shall his title to the share be affected
      by any irregularity or invalidity in the proceedings relating to the
      forfeiture, sale, re-allotment or disposal of the share.

                            REGISTER OF SHAREHOLDERS

31.   The Company shall establish and maintain the Register in the manner
      prescribed by the Companies Acts. Unless the Board otherwise determines,
      the Register shall be open to inspection in the manner prescribed by the
      Companies Acts between 9:00 a.m. and 5:00 p.m. on every working day.
      Unless the Board so determines, no Shareholder or intending Shareholder
      shall be entitled to have entered in the Register any indication of any
      trust or any equitable, contingent, future or partial interest in any
      share or any interest in any fractional part of a share and if any such
      entry exists or is permitted by the Board it shall not be deemed to
      abrogate any of the provisions of Bye-law 9.

32.   Subject to the provisions of the Companies Acts, the Company may keep one
      or more overseas or branch registers in any place, and the Board may make,
      amend and revoke any such regulations as it may think fit respecting the
      keeping of such registers.

                REGISTER OF DIRECTORS AND OFFICERS

33.   The Secretary shall establish and maintain a register of the Directors and
      Officers of the Company as required by the Companies Acts. The register of
      Directors and Officers shall be open to inspection in the manner
      prescribed by the Companies Acts between 9:00 a.m. and 5:00 p.m. on every
      working day.

                               TRANSFER OF SHARES

34.   Any Shareholder may transfer all or any of his shares by an instrument of
      transfer in the usual common form or in any other form which the Board may
      approve.

35.   The instrument of transfer of a share shall be signed by or on behalf of
      the transferor and where any share is not fully-paid, the transferor shall
      be deemed to remain the holder of the share until the name of the
      transferee is entered in the Register in respect thereof. All instruments
      of transfer when registered may be retained by the Company. The Board may,
      in its absolute discretion and without assigning any reason therefor,
      decline to register any transfer of any share which is not a fully-paid
      share. The Board may also decline to register any transfer unless:-

      (1)   the instrument of transfer is duly stamped and lodged with the
            Company, at such place as the Board shall appoint for the purpose,
            accompanied by the certificate for the shares (if any has been
            issued) to which it relates, and such other evidence as the Board
            may reasonably require to show the right of the transferor to make
            the transfer;

      (2)   the instrument of transfer is in respect of only one class of share;
            and


      (3)   where applicable, the permission of the Bermuda Monetary Authority
            with respect thereto has been obtained.

      Subject to any directions of the Board from time to time in force, the
      Secretary may exercise the powers and discretions of the Board under this
      Bye-law and Bye-laws 34 and 36.



                                       11
<PAGE>

36.   If the Board declines to register a transfer it shall, within three months
      after the date on which the instrument of transfer was lodged, send to the
      transferee notice of such refusal.

37.   No fee shall be charged by the Company for registering any transfer,
      probate, letters of administration, certificate of death or marriage,
      power of attorney, distringas or stop notice, order of court or other
      instrument relating to or affecting the title to any share, or otherwise
      making an entry in the Register relating to any share.

                             TRANSMISSION OF SHARES

38.   In the case of the death of a Shareholder, the survivor or survivors,
      where the deceased was a joint holder, and the estate representative,
      where he was sole holder, shall be the only person recognised by the
      Company as having any title to his shares; but nothing herein contained
      shall release the estate of a deceased holder (whether the sole or joint)
      from any liability in respect of any share held by him solely or jointly
      with other persons. For the purpose of this Bye-law, estate representative
      means the person to whom probate or letters of administration has or have
      been granted in Bermuda or, failing any such person, such other person as
      the Board may in its absolute discretion determine to be the person
      recognised by the Company for the purpose of this Bye-law.

39.   Any person becoming entitled to a share in consequence of the death of a
      Shareholder or otherwise by operation of applicable law may, subject as
      hereafter provided and upon such evidence being produced as may from time
      to time be required by the Board as to his entitlement, either be
      registered himself as the holder of the share or elect to have some person
      nominated by him registered as the transferee thereof. If the person so
      becoming entitled elects to be registered himself, he shall deliver or
      send to the Company a notice in writing signed by him stating that he so
      elects. If he shall elect to have his nominee registered, he shall signify
      his election by signing an instrument of transfer of such share in favour
      of his nominee. All the limitations, restrictions and provisions of these
      Bye-laws relating to the right to transfer and the registration of
      transfer of shares shall be applicable to any such notice or instrument of
      transfer as aforesaid as if the death of the Shareholder or other event
      giving rise to the transmission had not occurred and the notice or
      instrument of transfer was an instrument of transfer signed by such
      Shareholder.

40.   A person becoming entitled to a share in consequence of the death of a
      Shareholder or otherwise by operation of applicable law shall (upon such
      evidence being produced as may from time to time be required by the Board
      as to his entitlement) be entitled to receive and may give a discharge for
      any dividends or other monies payable in respect of the share, but he
      shall not be entitled in respect of the share to receive notices of or to
      attend or vote at general meetings of the Company or, save as aforesaid,
      to exercise in respect of the share any of the rights or privileges of a
      Shareholder until he shall have become registered as the holder thereof.
      The Board may at any time give notice requiring such person to elect
      either to be registered himself or to transfer the share and, if the
      notice is not complied with within 60 days, the Board may thereafter
      withhold payment of all dividends and other monies payable in respect of
      the shares until the requirements of the notice have been complied with.

41.   Subject to any directions of the Board from time to time in force, the
      Secretary may exercise the powers and discretions of the Board under
      Bye-laws 38, 39 and 40.

                               INCREASE OF CAPITAL

42.   The Company may from time to time increase its capital by such sum to be
      divided into shares of such par value as the Company by Resolution shall
      prescribe.

43.   The Company may, by the Resolution increasing the capital, direct that the
      new shares or any of them shall be offered in the first instance either at
      par or at a premium or (subject to the provisions of the Companies Acts)
      at a discount to all the holders for the time being of shares of any class
      or



                                       12
<PAGE>

      classes in proportion to the number of such shares held by them
      respectively or make any other provision as to the issue of the new
      shares.

44.   The new shares shall be subject to all the provisions of these Bye-laws
      with reference to lien, the payment of calls, forfeiture, transfer,
      transmission and otherwise.

                              ALTERATION OF CAPITAL

45.   The Company may from time to time by Resolution:-

      (1)   divide its shares into several classes and attach thereto
            respectively any preferential, deferred, qualified or special
            rights, privileges or conditions;

      (2)   consolidate and divide all or any of its share capital into shares
            of larger par value than its existing shares;

      (3)   sub-divide its shares or any of them into shares of smaller par
            value than is fixed by its memorandum, so, however, that in the
            sub-division the proportion between the amount paid and the amount,
            if any, unpaid on each reduced share shall be the same as it was in
            the case of the share from which the reduced share is derived;

      (4)   make provision for the issue and allotment of shares which do not
            carry any voting rights;

      (5)   cancel shares which, at the date of the passing of the resolution in
            that behalf, have not been taken or agreed to be taken by any
            person, and diminish the amount of its share capital by the amount
            of the shares so cancelled; and

      (6)   change the currency denomination of its share capital.

      Where any difficulty arises in regard to any division, consolidation, or
      sub-division under this Bye-law, the Board may settle the same as it
      thinks expedient and, in particular, may arrange for the sale of the
      shares representing fractions and the distribution of the net proceeds of
      sale in due proportion amongst the Shareholders who would have been
      entitled to the fractions, and for this purpose the Board may authorise
      some person to transfer the shares representing fractions to the purchaser
      thereof, who shall not be bound to see to the application of the purchase
      money nor shall his title to the shares be affected by any irregularity or
      invalidity in the proceedings relating to the sale.

46.   Subject to the Companies Acts and to any confirmation or consent required
      by law or these Bye-laws, the Company may by Resolution from time to time
      convert any preference shares into redeemable preference shares.

                              REDUCTION OF CAPITAL

47.   Subject to the Companies Acts, its memorandum and any confirmation or
      consent required by law or these Bye-laws, the Company may from time to
      time by Resolution authorise the reduction of its issued share capital or
      any share premium or contributed surplus account in any manner.

48.   In relation to any such reduction, the Company may by Resolution determine
      the terms upon which such reduction is to be effected including in the
      case of a reduction of part only of a class of shares, those shares to be
      affected.

             GENERAL MEETINGS AND WRITTEN RESOLUTIONS

49.   (1)   The Board shall convene and the Company shall hold general
            meetings as Annual General Meetings in accordance with the
            requirements of the Companies Acts at such times and places as the
            Board shall appoint. The Board may, whenever it thinks fit, and
            shall, when



                                       13
<PAGE>

            requisitioned by Shareholders pursuant to the provisions of the
            Companies Acts, convene general meetings other than Annual General
            Meetings which shall be called Special General Meetings.

      (2)   Except in the case of the removal of auditors and Directors,
            anything which may be done by resolution of the Company in general
            meeting or by resolution of a meeting of any class of the
            Shareholders of the Company may, without a meeting and without any
            previous notice being required, be done by resolution in writing,
            signed by all of the Shareholders or their proxies, or, in the case
            of a Shareholder that is a corporation (whether or not a company
            within the meaning of the Companies Acts), on behalf of such
            Shareholder, being all of the Shareholders of the Company who at the
            date of the resolution in writing would be entitled to attend such
            meeting and vote on the resolution. Such resolution in writing may
            be signed by, or, in the case of a Shareholder that is a corporation
            (whether or not a company within the meaning of the Companies Acts),
            on behalf of, all the Shareholders of the Company, or any class
            thereof, in as many counterparts as may be necessary.

      (3)   For the purposes of this Bye-law, the date of the resolution in
            writing is the date when the resolution is signed by, or in the case
            of a Shareholder that is a corporation (whether or not a company
            within the meaning of the Companies Acts), on behalf of, the last
            Shareholder to sign and any reference in any enactment to the date
            of passing of a resolution is, in relation to a resolution in
            writing made in accordance with this section, a reference to such
            date.

      (4)   A resolution in writing made in accordance with this Bye-law is as
            valid as if it had been passed by the Company in general meeting or,
            if applicable, by a meeting of the relevant class of Shareholders of
            the Company, as the case may be. A resolution in writing made in
            accordance with this section shall constitute minutes for the
            purposes of the Companies Acts and these Bye-laws.

                           NOTICE OF GENERAL MEETINGS

50.   An Annual General Meeting shall be called by not less than 20 days notice
      in writing and a Special General Meeting shall be called by not less than
      20 days notice in writing. The notice shall be exclusive of the day on
      which it is served or deemed to be served and of the day for which it is
      given, and shall specify the place, day and time of the meeting, and the
      nature of the business to be considered. Notice of every general meeting
      shall be given in any manner permitted by Bye-laws 140 and 141 to all
      Shareholders other than such as, under the provisions of these Bye-laws or
      the terms of issue of the shares they hold, are not entitled to receive
      such notice from the Company and to each Director, and to any Resident
      Representative who or which has delivered a written notice upon the
      Registered Office requiring that such notice be sent to him or it.

51.   The accidental omission to give notice of a meeting or (in cases where
      instruments of proxy are sent out with the notice) the accidental omission
      to send such instrument of proxy to, or the non-receipt of notice of a
      meeting or such instrument of proxy by, any person entitled to receive
      such notice shall not invalidate the proceedings at that meeting.

52.   A Shareholder present, either in person or by proxy, at any meeting of the
      Company or of the holders of any class of shares in the Company shall be
      deemed to have received notice of the meeting and, where requisite, of the
      purposes for which it was called.

             GENERAL MEETINGS AT MORE THAN ONE PLACE

53.   (1)   The provisions of this Bye-law shall apply if any general
            meeting is convened at or adjourned to more than one place.

      (2)   The notice of any meeting or adjourned meeting may specify the
            Specified Place and the Board shall make arrangements for
            simultaneous attendance and participation at other places



                                       14
<PAGE>

            (whether adjoining the Specified Place or in a different and
            separate place or places altogether or otherwise) by Shareholders,
            provided that persons attending at any particular place shall be
            able to see and hear and be seen and heard (whether by audio visual
            links or otherwise howsoever enabling the same) by persons attending
            at the other places at which the meeting is convened.

      (3)   The Board may from time to time make such arrangements for the
            purpose of controlling the level of attendance at any such place
            (whether involving the issue of tickets or the imposition of some
            means of selection or otherwise) as they shall in their absolute
            discretion consider appropriate, and may from time to time vary any
            such arrangements or make new arrangements in place of them,
            provided that a Shareholder who is unable to attend, in person or by
            proxy, at any particular place because the number of attendees at
            such place is too great shall be entitled so to attend at one of the
            other places; and the entitlement of any Shareholder so to attend
            the meeting or adjourned meeting at such place shall be subject to
            any such arrangements as may be for the time being in force and by
            the notice of meeting or adjourned meeting stated to apply to the
            meeting.

      (4)   For the purposes of all other provisions of these Bye-laws any such
            meeting shall be treated as being held at the Specified Place.

      (5)   If a meeting is adjourned to more than one place, notice of the
            adjourned meeting shall be given notwithstanding any other provision
            of these Bye-laws.

                         PROCEEDINGS AT GENERAL MEETINGS

54.   No business shall be transacted at any general meeting unless a quorum is
      present when the meeting proceeds to business, but the absence of a quorum
      shall not preclude the appointment, choice or election of a chairman which
      shall not be treated as part of the business of the meeting. Save as
      otherwise provided by these Bye-laws, at least two Shareholders present in
      person or by proxy and entitled to vote representing the holders of more
      than 50.1% of the issued shares shall be a quorum for all purposes;
      provided, however, that if the Company or a class of Shareholders shall
      have only one Shareholder, one Shareholder present in person or by proxy
      shall constitute the necessary quorum.

55.   If within five minutes (or such longer time as the chairman of the meeting
      may determine to wait) after the time appointed for the meeting, a quorum
      is not present, the meeting, if convened on the requisition of
      Shareholders, shall be dissolved. In any other case, it shall stand
      adjourned to such other day and such other time and place as the chairman
      of the meeting may determine and at such adjourned meeting two
      Shareholders present in person or by proxy and entitled to vote and
      representing the holders of more than 50.1% of the issued shares shall be
      a quorum, provided that if the Company or a class of Shareholders shall
      have only one Shareholder, one Shareholder present in person or by proxy
      shall constitute the necessary quorum. The Company shall give not less
      than seven days notice of any meeting adjourned through want of a quorum
      and such notice shall state that the sole Shareholder or, if more than
      one, two Shareholders present in person or by proxy and entitled to vote
      and representing the holders of more than 50.1% of the issued shares shall
      be a quorum. If at the adjourned meeting a quorum is not present within
      fifteen minutes after the time appointed for holding the meeting, the
      meeting shall be dissolved.

56.   The Resident Representative, if any, upon giving the notice referred to in
      Bye-law 50 above, shall be entitled to attend any general meeting of the
      Company and each Director shall be entitled to attend and speak at any
      general meeting of the Company.

57.   The Chairman (if any) of the Board or (the President) or in his absence,
      the Deputy Chairman of the Board (or the Vice-President) shall preside as
      chairman at every general meeting. If there is no such Chairman (or Deputy
      Chairman) or President (or Vice President), or if at any meeting neither
      the Chairman (nor Deputy Chairman) nor the President (nor Vice President)
      is present within five



                                       15
<PAGE>

      minutes after the time appointed for holding the meeting, or if neither of
      them is willing to act as chairman, the Directors present shall choose one
      of their number to act or if one Director only is present he shall preside
      as chairman if willing to act. If no Director is present, or if each of
      the Directors present declines to take the chair, the persons present and
      entitled to vote shall elect one of their number to be chairman.

58.   The chairman of the meeting may, with the consent of a majority of the
      persons present and entitled to vote at any meeting at which a quorum is
      present (and shall if so directed by such persons), adjourn the meeting
      from time to time and from place to place but no business shall be
      transacted at any adjourned meeting except business which might lawfully
      have been transacted at the meeting from which the adjournment took place.
      When a meeting is adjourned for three months or more or for an indefinite
      period, a notice shall be given as in the case of the original meeting.

59.   Save as expressly provided by these Bye-laws, it shall not be necessary to
      give any notice of an adjournment or of the business to be transacted at
      an adjourned meeting.

                                     VOTING

60.   If an amendment shall be proposed to any resolution under consideration
      but shall in good faith be ruled out of order by the chairman of the
      meeting, the proceedings on the substantive resolution shall not be
      invalidated by any error in such ruling. With the consent of the chairman
      of the meeting, an amendment may be withdrawn by its proposer before it is
      voted upon.

61.   Save where a greater majority is required by the Companies Acts or these
      Bye-laws, any question proposed for consideration at any general meeting
      shall be decided on by a simple majority of votes cast.

62.   Subject to any rights or restrictions attached to any class of shares, at
      any meeting of the Company, each Shareholder present in person or by proxy
      shall be entitled to one vote for each share held by him.

63.   At any general meeting, a resolution put to the vote of the meeting shall
      be decided on a poll.

64.   Votes may be cast either personally or by proxy and a person entitled to
      more than one vote need not use all his votes or cast all the votes he
      uses in the same way.

65.   In the case of an equality of votes at a general meeting, the chairman of
      such meeting shall not be entitled to a second or casting vote and the
      resolution shall fail.

66.   In the case of joint holders of a share, the vote of the senior who
      tenders a vote, whether in person or by proxy, shall be accepted to the
      exclusion of the votes of the other joint holders, and for this purpose
      seniority shall be determined by the order in which the names stand in the
      Register in respect of the joint holding.

67.   A Shareholder who is a patient for any purpose of any statute or
      applicable law relating to mental health or in respect of whom an order
      has been made by any Court having jurisdiction for the protection or
      management of the affairs of persons incapable of managing their own
      affairs may vote by his receiver, committee, CURATOR BONIS or other person
      in the nature of a receiver, committee or CURATOR BONIS appointed by such
      Court and such receiver, committee, CURATOR BONIS or other person may
      vote, and may otherwise act and be treated as such Shareholder for the
      purpose of general meetings.

68.   No Shareholder shall, unless the Board otherwise determines, be entitled
      to vote at any general meeting unless all calls or other sums presently
      payable by him in respect of shares in the Company have been paid.



                                       16
<PAGE>

69.   If:

            (a)   any objection shall be raised to the qualification of any
                  voter; or

            (b)   any votes have been counted which ought not to have been
                  counted or which might have been rejected; or

            (c)   any votes are not counted which ought to have been counted,

      the objection or error shall not vitiate the decision of the meeting or
      adjourned meeting on any resolution unless the same is raised or pointed
      out at the meeting or, as the case may be, the adjourned meeting at which
      the vote objected to is given or tendered or at which the error occurs.
      Any objection or error shall be referred to the chairman of the meeting
      and shall only vitiate the decision of the meeting on any resolution if
      the chairman decides that the same may have affected the decision of the
      meeting. The decision of the chairman on such matters shall be final and
      conclusive.

              PROXIES AND CORPORATE REPRESENTATIVES

70.   The instrument appointing a proxy shall be in writing under the hand of
      the appointor or of his attorney authorised by him in writing or, if the
      appointor is a corporation, either under its seal or under the hand of an
      officer, attorney or other person authorised to sign the same.

71.   Any Shareholder may appoint a standing proxy or (if a corporation)
      representative by depositing at the Registered Office, or at such place or
      places as the Board may otherwise specify for the purpose, a proxy or (if
      a corporation) an authorisation and such proxy or authorisation shall be
      valid for all general meetings and adjournments thereof or, resolutions in
      writing, as the case may be, until notice of revocation is received at the
      Registered Office, or at such place or places as the Board may otherwise
      specify for the purpose. Where a standing proxy or authorisation exists,
      its operation shall be deemed to have been suspended at any general
      meeting or adjournment thereof at which the Shareholder is present or in
      respect to which the Shareholder has specially appointed a proxy or
      representative. The Board may from time to time require such evidence as
      it shall deem necessary as to the due execution and continuing validity of
      any such standing proxy or authorisation and the operation of any such
      standing proxy or authorisation shall be deemed to be suspended until such
      time as the Board determines that it has received the requested evidence
      or other evidence satisfactory to it. A person so authorised as a
      representative of a corporation shall be entitled to exercise the same
      power on behalf of the grantor of the authority as the grantor could
      exercise if it were an individual Shareholder of the Company and the
      grantor shall for the purposes of these Bye-laws be deemed to be present
      in person at any such meeting if a person so authorised is present at it.

72.   Subject to Bye-law 71, the instrument appointing a proxy together with
      such other evidence as to its due execution as the Board may from time to
      time require, shall be delivered at the Registered Office (or at such
      place or places as may be specified in the notice convening the meeting or
      in any notice of any adjournment or, in either case or the case of a
      written resolution, in any document sent therewith) not less than two
      hours or such other period as the Board may determine, prior to the
      holding of the relevant meeting or adjourned meeting at which the person
      named in the instrument proposes to vote or, in the case of a written
      resolution, prior to the effective date of the written resolution and in
      default the instrument of proxy shall not be treated as valid.

73.   Instruments of proxy shall be in any common form or in such other form as
      the Board may approve and the Board may, if it thinks fit, send out with
      the notice of any meeting or any written resolution forms of instruments
      of proxy for use at that meeting or in connection with that written
      resolution. The instrument of proxy shall be deemed to confer authority to
      vote on any amendment of a written resolution or amendment of a resolution
      put to the meeting for which it is given as the proxy thinks fit. The
      instrument of proxy shall unless the contrary is stated therein be valid
      as well for any adjournment of the meeting as for the meeting to which it
      relates.



                                       17
<PAGE>

74.   A vote given in accordance with the terms of an instrument of proxy shall
      be valid notwithstanding the previous death or unsoundness of mind of the
      principal, or revocation of the instrument of proxy or of the authority
      under which it was executed, provided that no intimation in writing of
      such death, insanity or revocation shall have been received by the Company
      at the Registered Office (or such other place as may be specified for the
      delivery of instruments of proxy in the notice convening the meeting or
      other documents sent therewith) at least one hour before the commencement
      of the meeting or adjourned meeting or the day before the effective date
      of any written resolution, at or on which the instrument of proxy is used.

75.   Subject to the Companies Acts, the Board may at its discretion waive any
      of the provisions of these Bye-laws related to proxies or authorisations
      and, in particular, may accept such verbal or other assurances as it
      thinks fit as to the right of any person to attend and vote on behalf of
      any Shareholder at general meetings or to sign written resolutions.

               APPOINTMENT AND REMOVAL OF DIRECTORS

76.   At the first Annual General Meeting after the initial public offering of
      shares all the Directors shall retire from office, and at every subsequent
      Annual General Meeting one-third of the Directors who are subject to
      retirement by rotation or, if their number is not three or a multiple of
      three, the number nearest to one-third shall retire from office; but, if
      there is only one Director who is subject to retirement by rotation, he
      shall retire.

77.   Subject to the provisions of the Companies Acts and these Bye-laws, the
      Directors to retire by rotation shall be those who have been longest in
      office since their last appointment or reappointment, but as between
      persons who became or were last reappointed Directors on the same day
      those to retire shall (unless they otherwise agree among themselves) be
      determined by lot. The Directors to retire on each occasion (both as to
      number and identity) shall be determined by the composition of the Board
      at the date of the notice convening the Annual General Meeting and no
      Director shall be required to retire or be relieved from retiring or be
      retired by reason of any change in the number or identity of the Directors
      after the date of the notice but before the close of the meeting.

78.   If the Company, at the meeting at which a Director retires by rotation or
      otherwise, does not fill the vacancy, the retiring Director shall, if
      willing to act, be deemed to have been reappointed unless at the meeting
      it is resolved not to fill the vacancy or unless a resolution for the
      reappointment of the Director is put to the meeting and lost.

79.   Except as provided in Bye-law 82, no person other than a Director retiring
      by rotation shall be appointed a Director at any general meeting unless he
      is recommended by the Board or he is nominated in accordance with the
      procedures set out in the Companies Acts and as provided by applicable
      U.S. securities laws.

80.   All Directors, upon appointment, must provide written acceptance of their
      appointment, in such form as the Board may think fit, by notice in writing
      to the Registered Office within thirty days of their appointment.

81.   The Company shall at the Annual General Meeting and may by Resolution
      determine the minimum number of Directors, which shall be not less than
      two, and the maximum number of Directors and may by Resolution determine
      that one or more vacancies in the Board shall be deemed casual vacancies
      for the purposes of these Bye-laws, provided that an increase in the
      maximum number of Directors beyond ten shall be approved only if at least
      two-thirds of the votes cast are in favour of such increase. Without
      prejudice to the power of the Company by Resolution in pursuance of any of
      the provisions of these Bye-laws to appoint any person to be a Director,
      the Board, so long as a quorum of Directors remains in office, shall have
      power at any time and from time to time to appoint any individual to be a
      Director so as to fill a casual vacancy. A Director so appointed shall
      hold office only until the next following Annual General Meeting and shall
      not be taken into account in


                                       18
<PAGE>

      determining the Directors who are to retire by rotation at the meeting. If
      not reappointed at such Annual General Meeting, he shall vacate office at
      the conclusion thereof.

82.   Each Shareholder holding at least 9% of the issued and outstanding shares
      shall have the right from time to time for each 9% of the issued and
      outstanding shares held by such Shareholder to designate one Director
      (which may be a retiring Director) by notice to the Company. If such
      procedures do not result in the appointment of at least one Director
      designated by each of Bell Atlantic Network Systems Company and/or
      Rathburn Limited, for so long as Bell Atlantic Network Systems Company
      owns any shares it shall have the right to designate one Director by
      notice to the Company and for so long as Rathburn Limited owns any shares
      it shall have the right to designate one Director by notice to the
      Company.

83.   (1)   Any Shareholder or class of Shareholders designating a Director
            may by notice in writing to the Company and to the other
            Shareholders request the removal of such Director and designate
            another person to be elected in his place in accordance with Bye-law
            82. Upon the sale or transfer of shares held by a Shareholder with
            the result that such Shareholder ceases to hold such percentage of
            the issued and outstanding shares that entitled it to designate such
            total number of Directors calculated pursuant to Bye-law 82, there
            shall be delivered to the Company, upon the closing of such sale or
            transfer, written resignations of such number of Directors as such
            Shareholder is no longer entitled to designate pursuant to Bye-law
            82. Without prejudice to the generality of the foregoing, upon the
            sale or transfer of shares held by Bell Atlantic Network Systems
            Company or Rathburn Limited with the result that Bell Atlantic
            Network Systems Company or, as the case may be, Rathburn Limited
            ceases to hold any of the issued and outstanding shares, there shall
            be delivered to the Company, upon the closing of such sale or
            transfer, written resignations of all Directors serving upon the
            designation of Bell Atlantic Network Systems Company or, as the case
            may be, Rathburn Limited.

      (2)   Any Shareholder may, by notice to the Company, request the removal
            of any Director or Directors designated pursuant to Bye-law 82 by a
            Shareholder that, at the time of such request, does not hold such
            percentage of the issued and outstanding shares that entitled it to
            designate such Director or Directors under Bye-law 82.

      (3)   The Company shall in a special general meeting or class meeting
            called for that purpose remove a Director whose removal is requested
            pursuant to Bye-law 83(1); provided that notice of any such meeting
            shall be served upon the Director concerned not less than 14 days
            before the meeting. Any vacancy created by the removal of a Director
            and a special general meeting or class meeting may be filled at the
            meeting by the election of another Director in his place.


84.   If any Director is removed in accordance with the provisions of Bye-law
      83, the Shareholder (or Shareholders, jointly and severally, if more than
      one) who designated such Director shall be responsible for and shall hold
      harmless the other Shareholders and the Company from and against any claim
      for compensation arising out of such removal and any reasonable costs and
      expenses incurred in defending such proceedings, including, without
      limitation, the fees, disbursements and related charges of counsel.

85.   The Company may in a Special General Meeting called for that purpose
      remove a Director provided notice of any such meeting shall be served upon
      the Director concerned not less than 14 days before the meeting and he
      shall be entitled to be heard at that meeting. Any vacancy created by the
      removal of a Director at a Special General Meeting may be filled at the
      Meeting by the election of another Director in his place or, in the
      absence of any such election, by the Board.



                                       19
<PAGE>

          RESIGNATION AND DISQUALIFICATION OF DIRECTORS

86.   The office of a Director shall be vacated upon the happening of any of the
      following events:

      (1)   he resigns his office by notice in writing delivered to the
            Registered Office or tendered at a meeting of the Board;

      (2)   he becomes of unsound mind or a patient for any purpose of any
            statute or applicable law relating to mental health and the Board
            resolves that his office is vacated;

      (3)   he becomes bankrupt under the laws of any country or compounds with
            his creditors;

      (4)   he is prohibited by law from being a Director;

      (5)   he ceases to be a Director by virtue of the Companies Acts or these
            Bye-laws or is removed from office pursuant to these Bye-laws;

      (6)   he shall for more than six consecutive months have been absent
            without permission of the Board from meetings of the Board held
            during that period and his Alternate Director (if any) shall not
            during such period have attended in his stead and the Board resolves
            that his office be vacated; or

      (7)   he is requested to resign in writing by not less than three quarters
            of the other Directors. In calculating the number of Directors who
            are required to make such a request to the Director (a) there shall
            be excluded any Alternate Director appointed by him acting in his
            capacity as such, and (b) a Director and any Alternate Director
            appointed by him and acting in his capacity as such shall constitute
            a single Director for this purpose, so that the signature of either
            shall be sufficient.

                               ALTERNATE DIRECTORS

87.   Any Director (other than an Alternate Director) may appoint any other
      Director, or any other person approved by resolution of the Board and
      willing to act, to be an Alternate Director and may remove from office an
      Alternate Director so appointed by him. Any appointment or removal of an
      Alternate Director by a Director shall be effected by depositing a notice
      of appointment or removal with the Secretary at the Registered Office,
      signed by such Director, and such appointment or removal shall become
      effective on the date of receipt of such notice by the Secretary. Any
      Alternate Director may also be removed by resolution of the Board. An
      Alternate Director may also be a Director in his own right and may act as
      alternate to more than one Director.

88.   An Alternate Director shall cease to be an Alternate Director:-

      (1)   if his appointor ceases to be a Director, but, if a Director retires
            by rotation or otherwise but is reappointed or deemed to have been
            reappointed at the meeting at which he retires, any appointment of
            an Alternate Director made by him which was in force immediately
            prior to his retirement shall continue after his reappointment;

      (2)   on the happening of any event which, if he were a Director, would
            cause him to vacate his office as Director;

      (3)   if he is removed from office pursuant to Bye-law 87; or

      (4)   if he resigns his office by notice to the Company.

89.   An Alternate Director shall be entitled to receive notices of all meetings
      of Directors, to attend, be counted in the quorum and vote at any such
      meeting at which any Director to whom he is alternate is



                                       20
<PAGE>

      not personally present, and generally to perform all the functions of any
      Director to whom he is alternate in his absence.

90.   Every person acting as an Alternate Director shall (except as regards
      powers to appoint an alternate and remuneration) be subject in all
      respects to the provisions of these Bye-laws relating to Directors and
      shall alone be responsible to the Company for his acts and defaults and
      shall not be deemed to be the agent of or for any Director for whom he is
      alternate. An Alternate Director may be paid expenses and shall be
      entitled to be indemnified by the Company to the same extent MUTATIS
      MUTANDIS as if he were a Director. Every person acting as an Alternate
      Director shall have one vote for each Director for whom he acts as
      alternate (in addition to his own vote if he is also a Director). The
      signature of an Alternate Director to any resolution in writing of the
      Board or a committee of the Board shall, unless the terms of his
      appointment provides to the contrary, be as effective as the signature of
      the Director or Directors to whom he is alternate.

                               DIRECTORS' FEES AND
                  ADDITIONAL REMUNERATION AND EXPENSES

91.   Each such Director shall be paid a fee (which shall be deemed to accrue
      from day to day) at such rate as may from time to time be determined by
      the Board. Each Director may be paid his reasonable travel, hotel and
      incidental expenses in attending and returning from meetings of the Board
      or committees constituted pursuant to these Bye-laws or general meetings
      and shall be paid all expenses properly and reasonably incurred by him in
      the conduct of the Company's business or in the discharge of his duties as
      a Director. Any Director who, by request, goes or resides abroad for any
      purposes of the Company or who performs services which in the opinion of
      the Board go beyond the ordinary duties of a Director may be paid such
      extra remuneration (whether by way of salary, commission, participation in
      profits or otherwise) as the Board may determine, and such extra
      remuneration shall be in addition to any remuneration provided for by or
      pursuant to any other Bye-law.

                              DIRECTORS' INTERESTS

92.   (1)   A Director may hold any other office or place of profit with the
            Company (except that of auditor) in conjunction with his office of
            Director for such period and upon such terms as the Board may
            determine, and may be paid such extra remuneration therefor (whether
            by way of salary, commission, participation in profits or otherwise)
            as the Board may determine, and such extra remuneration shall be in
            addition to any remuneration provided for by or pursuant to any
            other Bye-law.

      (2)   A Director may act by himself or his firm in a professional capacity
            for the Company (otherwise than as auditor) and he or his firm shall
            be entitled to remuneration for professional services as if he were
            not a Director.

      (3)   Subject to the provisions of the Companies Acts, a Director may
            notwithstanding his office be a party to, or otherwise interested
            in, any transaction or arrangement with the Company or in which the
            Company is otherwise interested; and be a director or other officer
            of, or employed by, or a party to any transaction or arrangement
            with, or otherwise interested in, any body corporate promoted by the
            Company or in which the Company is interested. The Board may also
            cause the voting power conferred by the shares in any other company
            held or owned by the Company to be exercised in such manner in all
            respects as it thinks fit, including the exercise thereof in favour
            of any resolution appointing the Directors or any of them to be
            directors or officers of such other company, or voting or providing
            for the payment of remuneration to the directors or officers of such
            other company.

      (4)   So long as, where it is necessary, he declares the nature of his
            interest at the first opportunity at a meeting of the Board or by
            writing to the Directors as required by the Companies Acts, a
            Director shall not by reason of his office be accountable to the
            Company for any benefit



                                       21
<PAGE>

            which he derives from any office or employment to which these
            Bye-laws allow him to be appointed or from any transaction or
            arrangement in which these Bye-laws allow him to be interested, and
            no such transaction or arrangement shall be liable to be avoided on
            the ground of any interest or benefit.

      (5)   Subject to the Companies Acts and any further disclosure required
            thereby, a general notice to the Directors by a Director or Officer
            declaring that he is a director or officer or has an interest in a
            person and is to be regarded as interested in any transaction or
            arrangement made with that person, shall be a sufficient declaration
            of interest in relation to any transaction or arrangement so made.

      (6)   For the purposes of these Bye-laws, without limiting the generality
            of the foregoing, a Director or Officer is deemed to have an
            interest in a transaction or arrangement with the Company if he is
            the holder of or beneficially interested in 1% or more of any class
            of the equity share capital of any body corporate or of the voting
            rights available to members of the relevant body corporate with
            which the Company is proposing to enter into a transaction or
            arrangement, provided that there shall be disregarded any shares
            held by such Director or Officer as bare or custodian trustee and in
            which he has no beneficial interest, any shares comprised in a trust
            in which the Director's or Officer's interest is in reversion or
            remainder if and so long as some other person is entitled to receive
            the income thereof, and any shares comprised in an authorised unit
            trust in which the Director or Officer is only interested as a unit
            holder. For the purposes of this Bye-law, an interest of a person
            who is connected with a Director or Officer shall be treated as an
            interest of the Director or Officer.

                         POWERS AND DUTIES OF THE BOARD

93.   Subject to the provisions of the Companies Acts and these Bye-laws and to
      any directions given by the Company by Resolution, the Board shall manage
      the business of the Company and may pay all expenses incurred in promoting
      and incorporating the Company and may exercise all the powers of the
      Company. No alteration of these Bye-laws and no such direction shall
      invalidate any prior act of the Board which would have been valid if that
      alteration had not been made or that direction had not been given. The
      powers given by this Bye-law shall not be limited by any special power
      given to the Board by these Bye-laws and a meeting of the Board at which a
      quorum is present shall be competent to exercise all the powers,
      authorities and discretions for the time being vested in or exercisable by
      the Board.

94.   The Board may exercise all the powers of the Company to borrow money and
      to mortgage or charge all or any part of the undertaking, property and
      assets (present and future) and uncalled capital of the Company and to
      issue debentures and other securities, whether outright or as collateral
      security for any debt, liability or obligation of the Company or of any
      other persons.

95.   All cheques, promissory notes, drafts, bills of exchange and other
      instruments, whether negotiable or transferable or not, and all receipts
      for money paid to the Company shall be signed, drawn, accepted, endorsed
      or otherwise executed, as the case may be, in such manner as the Board
      shall from time to time by resolution determine.

                MATTERS REQUIRING SPECIAL APPROVAL

96.   The Company shall not take any of the following actions (or permit any of
      its subsidiary companies to take any of the following actions) unless such
      action is approved by resolution validly passed by the Board by a
      two-thirds majority of the votes cast at a meeting (or a simple majority
      if indicated below):-

      (1)   effect a fundamental change in the nature of the Company's business
            comprising the development, construction, maintenance, sales,
            marketing and provision of telecommunications systems, networks and
            services nationally and internationally;



                                       22
<PAGE>

      (2)   make any amendment of the Memorandum of Association or Bye-laws of
            the Company;

      (3)   adopt or amend fundamental accounting policies (simple majority);

      (4)   appoint or replace the auditors of the Company or any of its
            subsidiary companies;

      (5)   make any composition or arrangement with its creditors, move for
            insolvency, receivership or administration or do or permit or suffer
            to be done any act or thing whereby the Company or any of its
            subsidiary companies may be wound up (whether voluntarily or
            compulsorily);

      (6)   create any Security Interest over the whole or any material part of
            the business, property or assets (tangible or intangible) of the
            Company or any of its subsidiary companies;

      (7)   incur indebtedness exceeding $150,000,000 in the aggregate (a simple
            majority if the indebtedness is in excess of $10,000,000 and not in
            excess of $150,000,000);

      (8)   subject to Bye-law 97, make any loan or advance or give any credit
            (other than normal trade credit) to any person other than a
            subsidiary company of the Company in excess of an amount equal to
            0.5% of the total paid up capital (nominal amount plus share
            premium) of the Company from time to time (simple majority);

      (9)   give any guarantee, indemnity or security to secure the liabilities
            or obligations of any other person, other than a subsidiary company
            of the Company;

      (10)  sell, transfer, lease, assign, dispose of or part with control of
            any interest in all or any material part of the business, property
            or assets (tangible or intangible) of the Company or any of its
            subsidiary companies, other than the sale or lease of cable capacity
            on arm's length terms (whether by a single transaction or a series
            of transactions), or contract to do so or acquire or contract to
            acquire any business, property or assets (tangible or intangible) or
            any interest therein which would, following such acquisition
            constitute a material part of the business, property or assets of
            the Company or any of its subsidiary companies (and for the purposes
            of this Bye-law 96(10), any such business, property or assets
            accounting for, or which would following such acquisition by the
            Company or any of its subsidiary companies account for, 10% or more
            of the net income or net asset value of the Company shall be deemed
            material);

      (11)  make or agree to make any change to the authorised share capital
            from time to time of the Company (including without limitation, the
            creation of any class of share capital, any increase in the number
            of authorised shares of any class of share capital or any change in
            the par value of any class of share capital);

      (12)  grant any option over, or issue any investment carrying rights of
            conversion into, any share capital of the Company or any of its
            subsidiary companies;

      (13)  repurchase, redeem (otherwise than in accordance with the terms of
            redemption established at the time of issue of the relevant share
            capital or loan stock), reorganise, consolidate, subdivide, cancel,
            reduce or convert (otherwise than in accordance with the terms of
            conversion established at the time of issue of the relevant share
            capital or loan stock) any of the share capital or loan stock of the
            Company or in any way alter the rights attaching thereto;

      (14)  acquire, purchase or subscribe at a price in excess of $150,000,000
            (a simple majority if the amount is in excess of $10,000,000 and not
            in excess of $150,000,000) for any shares, loan stock, debentures,
            mortgages or securities (or any interest therein) or any other
            interest in any company, trust or other body or person, other than
            the Company or a wholly owned



                                       23
<PAGE>

            subsidiary company, provided that this Bye-law 96(14) shall not
            apply to the acquisition of short-term investment grade securities
            for cash management purposes;

      (15)  make any general delegation of Directors' powers, except in
            accordance with these Bye-laws;

      (16)  subject to Bye-law 97, enter into or materially change any
            transaction that would require aggregate payments by the Company or
            any of its subsidiary companies in excess of $150,000,000 (a simple
            majority if the amount is in excess of $10,000,000 and not in excess
            of $150,000,000);

      (17)  establish the terms and conditions of the issuance of any shares by
            the Company or by any of the Company's subsidiary companies if the
            recipient of the shares is a person other than the Company or any of
            its wholly-owned subsidiary companies;

      (18)  declare any dividend on any share capital of the Company (other than
            by way of any capitalisation of share premium account); or

      (19)  participate in or facilitate any public offering of any shares
            whether by the Company or any other person.


97.   The Company shall not (and shall not permit any of its subsidiary
      companies to) enter into, amend in any material respect or terminate any
      agreement or transaction involving aggregate payments or other
      consideration with an aggregate value in excess of $1 million with any
      person in which a Shareholder or any of its Associated Persons has an
      interest unless such action is approved by at least two-thirds (a simple
      majority in the case of a vote to terminate an agreement or transaction)
      of the votes cast at a meeting of the Board, excluding for all purposes of
      such calculation all votes exercisable by the Director(s) designated by
      such interested Shareholder, and any such action with respect to any
      agreement or transaction involving payments or other consideration with an
      aggregate value of $1 million or less shall require approval by the
      affirmative vote of the Directors representing a majority of the total
      voting power of the Entire Board, excluding for all purposes of such
      calculation all votes exercisable by any Director appointed by the
      interested Shareholder. The Company shall not (and shall not permit any of
      its subsidiary companies to) make any loan or advance or give any credit
      (other than normal trade credit) to any Shareholder or Director or any
      relative or Associated Person of a Shareholder or Director unless such
      loan, advance or credit is approved by the affirmative vote of at least
      two-thirds of the votes cast at a meeting of the Board, excluding for all
      purposes of such calculation all votes exercisable by any Director
      appointed by an interested Shareholder. In case of doubt, the Board shall
      determine by majority vote, excluding for all purposes of such calculation
      all votes exercisable by the Director appointed by the potentially
      interested Shareholder whether a Shareholder is an interested Shareholder
      by virtue of it or any of its Associated Persons having an interest in any
      agreement or transaction of a nature requiring approval as provided in
      this Bye-law.

                                  BUSINESS PLAN

98.   The Board shall meet at least three months before the end of each
      financial year to approve a Business Plan for the following three
      financial years. Each such Business Plan shall deal with the following
      matters:

      (1)   the activities to be undertaken by the Company and its subsidiary
            companies;

      (2)   a budget setting out the expected revenues, expenses and capital
            requirements of the Company and each of its subsidiary companies;



                                       24
<PAGE>

      (3)   the manner in which the anticipated capital requirements of the
            Company and its subsidiary companies will be funded including the
            proportions to be funded by way of external borrowings,
            Shareholders' loans or guarantees and/or equity contributions; and

      (4)   such other matters as the Shareholders may determine should be dealt
            with in the Business Plan from time to time.

99.   Business Plans shall be approved, and any Business Plan may be amended, by
      the affirmative vote of at least a majority of the Entire Board. If the
      Board is unable to approve any Business Plan, the Business Plan then in
      effect shall continue to be operative until the earlier to occur of (i)
      the expiration of the period covered by such Business Plan and (ii)
      adoption by the Board of a subsequent Business Plan.

                GRATUITIES, PENSIONS AND INSURANCE

100.  (1)   The Board may (by establishment of or maintenance of schemes or
            otherwise) provide benefits, whether by the payment of gratuities or
            pensions or by insurance or otherwise, for any past or present
            Director or employee of the Company or any of its subsidiary
            companies or any body corporate associated with, or any business
            acquired by, any of them, and for any member of his family
            (including a spouse and a former spouse) or any person who is or was
            dependent on him, and may (as well before as after he ceases to hold
            such office or employment) contribute to any fund and pay premiums
            for the purchase or provision of any such benefit.

      (2)   Without prejudice to the provisions of Bye-laws 146 and 147, the
            Board shall have the power to purchase and maintain insurance for or
            for the benefit of any persons who are or were at any time
            Directors, Officers, or employees of the Company, or of any other
            company which is its holding company or in which the Company or such
            holding company has any interest whether direct or indirect or which
            is in any way allied to or associated with the Company, or of any
            subsidiary undertaking of the Company or any such other company, or
            who are or were at any time trustees of any pension fund in which
            employees of the Company or any such other company or subsidiary
            undertaking are interested, including (without prejudice to the
            generality of the foregoing) insurance against any liability
            incurred by such persons in respect of any act or omission in the
            actual or purported execution or discharge of their duties or in the
            exercise or purported exercise of their powers or otherwise in
            relation to their duties, powers or offices in relation to the
            Company or any such other company, subsidiary undertaking or pension
            fund.

      (3)   No Director or former Director shall be accountable to the Company
            or the Shareholders for any benefit provided pursuant to this
            Bye-law and the receipt of any such benefit shall not disqualify any
            person from being or becoming a Director of the Company.

                        DELEGATION OF THE BOARD'S POWERS

101.  The Board may, by two-thirds majority vote in the case of matters subject
      to such vote under Bye-law 96, by power of attorney appoint any company,
      firm or person or any fluctuating body of persons, whether nominated
      directly or indirectly by the Board, to be the attorney or attorneys of
      the Company for such purposes and with such powers, authorities and
      discretions (not exceeding those vested in or exercisable by the Board
      under these Bye-laws) and for such period and subject to such conditions
      as it may think fit, and any such power of attorney may contain such
      provisions for the protection and convenience of persons dealing with any
      such attorney and of such attorney as the Board may think fit, and may
      also authorise any such attorney to sub-delegate all or any of the powers,
      authorities and discretions vested in him.

102.  The Board may, by two-thirds majority vote in the case of matters subject
      to such vote under Bye-law 96, entrust to and confer upon any Director,
      Officer or, without prejudice to the provisions of



                                       25
<PAGE>

      Bye-law 103, other individual any of the powers exercisable by it upon
      such terms and conditions with such restrictions as it thinks fit, and
      either collaterally with, or to the exclusion of, its own powers, and may
      from time to time revoke or vary all or any of such powers but no person
      dealing in good faith and without notice of such revocation or variation
      shall be affected thereby.

103.  The Board may delegate, by two-thirds majority vote in the case of matters
      subject to such vote under Bye-law 96, any of its powers, authorities and
      discretions to committees, consisting of such person or persons (whether a
      member or members of its body or not) as it thinks fit. Any committee so
      formed shall, in the exercise of the powers, authorities and discretions
      so delegated, and in conducting its proceedings conform to any regulations
      which may be imposed upon it by the Board.

                            PROCEEDINGS OF THE BOARD

104.  The Board may meet for the despatch of business, adjourn and otherwise
      regulate its meetings as it thinks fit. Questions arising at any meeting
      shall be determined by a majority of votes (except as otherwise
      specifically required by these Bye-laws ). In the case of an equality of
      votes the motion shall be deemed to have been lost. A Director may, and
      the Secretary on the requisition of a Director shall, at any time summon a
      meeting of the Board.

105.  Notice of a meeting of the Board shall be deemed to be duly given to a
      Director if it is given to him personally or by word of mouth or sent to
      him by post, cable, telex, telecopier or other mode of representing or
      reproducing words in a legible and non-transitory form at his last known
      address or any other address given by him to the Company for this purpose.
      A Director may retrospectively waive the requirement for notice of any
      meeting by consenting in writing to the business conducted at the meeting.

106.  (1)   The quorum necessary for the transaction of the business of the
            Board may be fixed by the Board and, unless so fixed at any other
            number, shall be the majority of Directors from time to time serving
            on the Board. Any Director who ceases to be a Director at a meeting
            of the Board may continue to be present and to act as a Director and
            be counted in the quorum until the termination of the meeting if no
            other Director objects and if otherwise a quorum of Directors would
            not be present.

      (2)   The Resident Representative, if any, shall, upon delivering written
            notice of an address for the purposes of receipt of notice, to the
            Registered Office, be entitled to receive notice of, attend and be
            heard at, and to receive minutes of all meetings of the Board.

107.  So long as a quorum of Directors remains in office, the continuing
      Directors may act notwithstanding any vacancy in the Board but, if no such
      quorum remains, the continuing Directors or a sole continuing Director may
      act only for the purpose of calling a general meeting.

108.  The Chairman (or President) or, in his absence, the Deputy Chairman (or
      Vice-President), shall preside as chairman at every meeting of the Board.
      If at any meeting the Chairman or Deputy Chairman (or the President or
      Vice-President) is not present within five minutes after the time
      appointed for holding the meeting, or is not willing to act as chairman,
      the Directors present may choose one of their number to be chairman of the
      meeting.

109.  The meetings and proceedings of any committee consisting of two or more
      members shall be governed by the provisions contained in these Bye-laws
      for regulating the meetings and proceedings of the Board so far as the
      same are applicable and are not superseded by any regulations imposed by
      the Board.

110.  A resolution in writing signed by all the Directors for the time being
      entitled to receive notice of a meeting of the Board or by all the members
      of a committee for the time being shall be as valid and effectual as a
      resolution passed at a meeting of the Board or, as the case may be, of
      such committee duly called and constituted. Such resolution may be
      contained in one document or in several



                                       26
<PAGE>

      documents in the like form each signed by one or more of the Directors or
      members of the committee concerned.

111.  A meeting of the Board or a committee appointed by the Board may be held
      by means of such telephone, electronic or other communication facilities
      as permit all persons participating in the meeting to communicate with
      each other simultaneously and instantaneously and participation in such a
      meeting shall constitute presence in person at such meeting and any such
      meeting shall be deemed a valid meeting as long as a quorum is present
      throughout.

112.  All acts done by the Board or by any committee or by any person acting as
      a Director or member of a committee or any person duly authorised by the
      Board or any committee, shall, notwithstanding that it is afterwards
      discovered that there was some defect in the appointment of any member of
      the Board or such committee or person acting as aforesaid or that they or
      any of them were disqualified or had vacated their office, be as valid as
      if every such person had been duly appointed and was qualified and had
      continued to be a Director, member of such committee or person so
      authorised.

113.  Save as otherwise provided by these Bye-laws, no contract or transaction
      between the Company and one or more of the Directors or Officers, or
      between the Company and any other company, partnership, association, or
      other organisation in which one or more of Directors or Officers are
      directors or officers, or have a financial interest, shall be void or
      voidable solely for this reason, or solely because the Director or Officer
      is present at or participates in the meeting of the Board or committee
      which authorises the contract or transaction, or solely because his or
      their votes are counted for such purpose if (a) the material facts as to
      his or their relationship or interest and as to the contract or
      transaction are disclosed or are known to the Board or the committee, and
      the Board or committee in good faith authorises the contract or
      transaction by the affirmative votes of a majority of the disinterested
      Directors, even though the disinterested Directors be less than a quorum;
      or (b) the material facts as to his or their relationship or interest and
      as to the contract or transaction are disclosed or are known to the
      Shareholders entitled to vote thereon, and the contract or transaction is
      specifically approved in good faith by vote of the Shareholders, or (c)
      the contract or transaction is fair as to the Company as of the time it is
      authorised, approved or ratified, by the Board, a committee thereof or the
      Shareholders.

114.  The Company may by Resolution suspend or relax to any extent, either
      generally or in respect of any particular matter, any provision of these
      Bye-laws prohibiting a Director from voting at a meeting of the Board or
      of a committee of the Board, or ratify any transaction not duly authorised
      by reason of a contravention of any such provisions.

115.  Where proposals are under consideration concerning the appointment
      (including fixing or varying the terms of appointment) of two or more
      Directors to offices or employment with the Company or any body corporate
      in which the Company is interested, the proposals may be divided and
      considered in relation to each Director separately and in such cases each
      of the Directors concerned shall be entitled to vote and be counted in the
      quorum in respect of each resolution except that concerning his own
      appointment.

116.  If a question arises at a meeting of the Board or a committee of the Board
      as to the entitlement of a Director to vote or be counted in a quorum, the
      question may, before the conclusion of the meeting, be referred to the
      chairman of the meeting and his ruling in relation to any Director other
      than himself shall be final and conclusive except in a case where the
      nature or extent of the interests of the Director concerned have not been
      fairly disclosed. If any such question arises in respect of the chairman
      of the meeting, it shall be decided by resolution of the Board (on which
      the chairman shall not vote) and such resolution will be final and
      conclusive except in a case where the interests of the chairman have not
      been fairly disclosed.



                                       27
<PAGE>

                                    OFFICERS

117.  (1)   The Officers of the Company shall include a President and a
            Vice-President or a Chairman and a Deputy Chairman who shall be
            Directors and shall be elected by the Board as soon as possible
            after the statutory meeting and each Annual General Meeting. The
            President or Chairman, as the case may be, shall be the chief
            executive officer of the Company and, subject to the control of the
            Board, shall have general charge and control of all its business and
            affairs and shall have all powers and shall perform all duties
            incident to the office of President or Chairman, as the case may be.

            Each Vice-President or Deputy Chairman, as the case may be, shall
            have the powers and shall perform all duties incident to the office
            of Vice-President or Deputy Chairman, as the case may be, and shall
            have such other duties and perform such other duties as may from
            time to time be assigned by these Bye-laws or by the Board or the
            President or Chairman, as the case may be.

      (2)   In addition, the Board may appoint any person whether or not he is a
            Director to hold such office as the Board may from time to time
            determine. Any person elected or appointed pursuant to this Bye-law
            shall hold office for such period and upon such terms as the Board
            may determine and the Board may revoke or terminate any such
            election or appointment. Any such revocation or termination shall be
            without prejudice to any claim for damages that such Officer may
            have against the Company or the Company may have against such
            Officer for any breach of any contract of service between him and
            the Company which may be involved in such revocation or termination.
            Save as provided in the Companies Acts or these Bye-laws, the powers
            and duties of the Officers of the Company shall be such (if any) as
            are determined from time to time by the Board.

                               EXECUTIVE DIRECTORS

118.  (1)   Subject to the provisions of the Companies Acts, the Board may
            appoint one or more of its body to be the holder of any executive
            office (except that of auditor) under the Company and may enter into
            any agreement or arrangement with any Director for his employment by
            the Company or for the provision by him of any services outside the
            scope of the ordinary duties of a Director. Any such appointment,
            agreement or arrangement may be made upon such terms, including
            terms as to remuneration, as the Board determines, and any
            remuneration which is so determined may be in addition to or in lieu
            of any ordinary remuneration as a Director. The Board may revoke or
            vary any such appointment but without prejudice to any rights or
            claims which the person whose appointment is revoked or varied may
            have against the Company by reason thereof.

      (2)   Any Director holding executive office shall not be subject to
            retirement by rotation. Any Director who is not subject to
            retirement by rotation shall be disregarded in determining which
            Directors are subject to retirement by rotation under the provisions
            of these Bye-laws.

119.  Any appointment of a Director to an executive office shall terminate if he
      ceases to be a Director but without prejudice to any rights or claims
      which he may have against the Company by reason of such cessation. A
      Director appointed to an executive office shall not IPSO FACTO cease to be
      a Director if his appointment to such executive office terminates.

120.  The emoluments of any Director holding executive office for his services
      as such shall be determined by the Board, and may be of any description,
      and (without limiting the generality of the foregoing) may include
      admission to or continuance of membership of any scheme (including any
      share acquisition scheme) or fund instituted or established or financed or
      contributed to by the Company for the provision of pensions, life
      assurance or other benefits for employees or their dependants, or the
      payment of a pension or other benefits to him or his dependants on or
      after retirement or death, apart from membership or any such scheme or
      fund.



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<PAGE>

                                     MINUTES

121.  The Board shall cause minutes to be made and books kept for the purpose of
      recording -

      (1)   all appointments of Officers made by the Board;

      (2)   the names of the Directors and other persons (if any) present at
            each meeting of the Board and of any committee;

      (3)   all proceedings at meetings of the Company, of the holders of any
            class of shares in the Company, of the Board and of committees
            appointed by the Board or the Shareholders; and

      (4)   all proceedings of its managers (if any).

      Shareholders shall only be entitled to see the Register of Directors and
      Officers, the Register, the financial information provided for in Bye-law
      138 and the minutes of meetings of the Shareholders of the Company.

              SECRETARY AND RESIDENT REPRESENTATIVE

122.  The Secretary (including one or more deputy or assistant secretaries) and,
      if required, the Resident Representative, shall be appointed by the Board
      at such remuneration (if any) and upon such terms as it may think fit and
      any Secretary and Resident Representative so appointed may be removed by
      the Board. The duties of the Secretary and the duties of the Resident
      Representative shall be those prescribed by the Companies Acts and by
      these Bye-laws, together with such other duties as shall from time to time
      be prescribed by the Board.

      The Secretary shall keep the minutes of all meetings of the Board and the
      minutes of all meetings of the Shareholders in books provided for that
      purpose. The Secretary shall attend to the giving or serving of all
      notices of the Company; shall have custody of the corporate seal of the
      Company and shall affix the same to such documents and other papers, in
      accordance with the terms of these Bye-laws; and shall have charge of the
      share certificate books, transfer books and share ledgers and such other
      books and papers as the Board or the President or Chairman, as the case
      may be, shall direct.

123.  A provision of the Companies Acts or these Bye-laws requiring or
      authorising a thing to be done by or to a Director and the Secretary shall
      not be satisfied by its being done by or to the same person acting both as
      Director and as, or in the place of, the Secretary.

                                    THE SEAL

124.  (1)   The Seal shall consist of a circular metal device with the name
            of the Company around the outer margin thereof and the country and
            year of incorporation across the centre thereof. Should the Seal not
            have been received at the Registered Office in such form at the date
            of adoption of this Bye-law then, pending such receipt, any document
            requiring to be sealed with the Seal shall be sealed by affixing a
            red wafer seal to the document with the name of the Company, and the
            country and year of incorporation type written across the centre
            thereof.

      (2)   The Board shall provide for the custody of every Seal. A Seal shall
            only be used by authority of the Board or of a committee constituted
            by the Board. Subject to these Bye-laws, any instrument to which a
            Seal is affixed shall be signed by either two Directors, or by the
            Secretary and one Director, or by the Secretary and/or by any one
            person whether or not a Director or Officer, who has been authorised
            either generally or specifically to affirm the use of a Seal;
            provided that the Secretary or a Director may affix a Seal over his
            signature



                                       29
<PAGE>

            alone to authenticate copies of these Bye-laws, the minutes of any
            meeting or any other documents requiring authentication.

                          DIVIDENDS AND OTHER PAYMENTS

125.  The Board may from time to time declare dividends or distributions out of
      contributed surplus to be paid to the Shareholders according to their
      rights and interests including such interim dividends as appear to the
      Board to be justified by the position of the Company. The Board, in its
      discretion, may determine that any dividend shall be paid in cash or shall
      be satisfied, subject to Bye-law 133, in paying up in full shares in the
      Company to be issued to the Shareholders credited as fully paid or partly
      paid or partly in one way and partly the other. The Board may also pay any
      fixed cash dividend which is payable on any shares of the Company half
      yearly or on such other dates, whenever the position of the Company, in
      the opinion of the Board, justifies such payment.

126.  Except  insofar as the rights  attaching to, or the terms of
      issue of, any share otherwise provide:-

      (1)   all dividends or distributions out of contributed surplus may be
            declared and paid according to the amounts paid up on the shares in
            respect of which the dividend or distribution is paid, and an amount
            paid up on a share in advance of calls may be treated for the
            purpose of this Bye-law as paid-up on the share;

      (2)   dividends or distributions out of contributed surplus may be
            apportioned and paid pro rata according to the amounts paid-up on
            the shares during any portion or portions of the period in respect
            of which the dividend or distribution is paid.

127.  The Board may deduct from any dividend, distribution or other monies
      payable to a Shareholder by the Company on or in respect of any shares all
      sums of money (if any) presently payable by him to the Company on account
      of calls or otherwise in respect of shares of the Company.

128.  No dividend, distribution or other monies payable by the Company on or in
      respect of any share shall bear interest against the Company.

129.  Any dividend, distribution or interest, or part thereof payable in cash,
      or any other sum payable in cash to the holder of shares may be paid by
      cheque or warrant sent through the post addressed to the holder at his
      address in the Register or, in the case of joint holders, addressed to the
      holder whose name stands first in the Register in respect of the shares at
      his registered address as appearing in the Register or addressed to such
      person at such address as the holder or joint holders may in writing
      direct. Every such cheque or warrant shall, unless the holder or joint
      holders otherwise direct, be made payable to the order of the holder or,
      in the case of joint holders, to the order of the holder whose name stands
      first in the Register in respect of such shares, and shall be sent at his
      or their risk and payment of the cheque or warrant by the bank on which it
      is drawn shall constitute a good discharge to the Company. Any one of two
      or more joint holders may give effectual receipts for any dividends,
      distributions or other monies payable or property distributable in respect
      of the shares held by such joint holders.

130.  Any dividend or distribution out of contributed surplus unclaimed for a
      period of six years from the date of declaration of such dividend or
      distribution shall be forfeited and shall revert to the Company and the
      payment by the Board of any unclaimed dividend, distribution, interest or
      other sum payable on or in respect of a share into a separate account
      shall not constitute the Company a trustee in respect thereof.

131.  The Board may also, in addition to its other powers, direct payment or
      satisfaction of any dividend or distribution out of contributed surplus
      wholly or in part by the distribution of specific assets, and in
      particular of paid-up shares or debentures of any other company, and where
      any difficulty arises in regard to such distribution or dividend the Board
      may settle it as it thinks expedient, and in particular, may authorise any
      person to sell and transfer any fractions or may ignore fractions
      altogether, and



                                       30
<PAGE>

      may fix the value for distribution or dividend purposes of any such
      specific assets and may determine that cash payments shall be made to any
      Shareholders upon the footing of the values so fixed in order to secure
      equality of distribution and may vest any such specific assets in trustees
      as may seem expedient to the Board provided that such dividend or
      distribution may not be satisfied by the distribution of any partly paid
      shares or debentures of any company without the sanction of a Resolution.

                                    RESERVES

132.  The Board may, before recommending or declaring any dividend or
      distribution out of contributed surplus, set aside such sums as it thinks
      proper as reserves which shall, at the discretion of the Board, be
      applicable for any purpose of the Company and pending such application
      may, also at such discretion, either be employed in the business of the
      Company or be invested in such investments as the Board may from time to
      time think fit. The Board may also without placing the same to reserve
      carry forward any sums which it may think it prudent not to distribute.

                            CAPITALIZATION OF PROFITS

133.  The Board may, from time to time resolve to capitalise all or any part of
      any amount for the time being standing to the credit of any reserve or
      fund which is available for distribution or to the credit of any share
      premium account and accordingly that such amount be set free for
      distribution amongst the Shareholders or any class of Shareholders who
      would be entitled thereto if distributed by way of dividend and in the
      same proportions, on the footing that the same be not paid in cash but be
      applied either in or towards paying up amounts for the time being unpaid
      on any shares in the Company held by such Shareholders respectively or in
      paying up in full of unissued shares, debentures or other obligations of
      the Company, to be allotted and distributed credited as fully paid amongst
      such Shareholders, or partly in one way and partly in the other, provided
      that for the purpose of this Bye-law, a share premium account may be
      applied only in paying up of unissued shares to be issued to such
      Shareholders credited as fully paid and provided further that any sum
      standing to the credit of a share premium account may only be applied in
      crediting as fully paid shares of the same class as that from which the
      relevant share premium was derived.

134.  Where any difficulty arises in regard to any distribution under the last
      preceding Bye-law, the Board may settle the same as it thinks expedient
      and, in particular, may authorise any person to sell and transfer any
      fractions or may resolve that the distribution should be as nearly as may
      be practicable in the correct proportion but not exactly so or may ignore
      fractions altogether, and may determine that cash payments should be made
      to any Shareholders in order to adjust the rights of all parties, as may
      seem expedient to the Board. The Board may appoint any person to sign on
      behalf of the persons entitled to participate in the distribution any
      contract necessary or desirable for giving effect thereto and such
      appointment shall be effective and binding upon the Shareholders.

                                  RECORD DATES

135.  Notwithstanding any other provisions of these Bye-laws, the Company may by
      Resolution or the Board may fix any date as the record date for any
      dividend, distribution, allotment or issue and for the purpose of
      identifying the persons entitled to receive notices of general meetings.
      Any such record date may be on or at any time not more than 60 days before
      any date on which such dividend, distribution, allotment or issue is
      declared, paid or made or not more than 60 days nor less than 10 days
      before the date of any such meetings.

                               ACCOUNTING RECORDS

136.  The Board shall cause to be kept accounting records sufficient to give a
      true and fair view of the state of the Company's affairs and to show and
      explain its transactions, in accordance with the Companies Acts.



                                       31
<PAGE>

137.  The records of account shall be kept at the Registered Office or at such
      other place or places as the Board thinks fit, and shall at all times be
      open to inspection by the Directors; PROVIDED that if the records of
      account are kept at some place outside Bermuda, there shall be kept at an
      office of the Company in Bermuda such records as will enable the Directors
      to ascertain with reasonable accuracy the financial position of the
      Company at the end of each three-month period. No Shareholder (other than
      an Officer of the Company) shall have any right to inspect any accounting
      record or book or document of the Company except as conferred by law or
      authorised by the Board or by Resolution.

138.  A copy of every balance sheet and statement of income and expenditure,
      including every document required by law to be annexed thereto, which is
      to be laid before the Company in general meeting, together with a copy of
      the auditors' report, shall be sent to each person entitled thereto in
      accordance with the requirements of the Companies Acts.

                                      AUDIT

139.  Save and to the extent that an audit is waived in the manner permitted by
      the Companies Acts, auditors shall be appointed and their duties regulated
      in accordance with the Companies Acts, any other applicable law and such
      requirements not inconsistent with the Companies Acts as the Board may
      from time to time determine.

              SERVICE OF NOTICES AND OTHER DOCUMENTS

140.  Any notice or other document (including a share certificate) may be served
      on or delivered to any Shareholder by the Company either personally or by
      sending it through the post (by airmail where applicable) in a pre-paid
      letter addressed to such Shareholder at his address as appearing in the
      Register or by delivering it to or leaving it at such registered address.
      In the case of joint holders of a share, service or delivery of any notice
      or other document on or to one of the joint holders shall for all purposes
      be deemed as sufficient service on or delivery to all the joint holders.
      Any notice or other document if sent by post shall be deemed to have been
      served or delivered seven days after it was put in the post, and in
      proving such service or delivery, it shall be sufficient to prove that the
      notice or document was properly addressed, stamped and put in the post.

141.  Any notice of a general meeting of the Company shall be deemed to be duly
      given to a Shareholder, or other person entitled to it, if it is sent to
      him by cable, telex, telecopier or other mode of representing or
      reproducing words in a legible and non-transitory form at his address as
      appearing in the Register or any other address given by him to the Company
      for this purpose. Any such notice shall be deemed to have been served
      twenty-four hours after its despatch.

142.  Any notice or other document delivered, sent or given to a Shareholder in
      any manner permitted by these Bye-laws shall, notwithstanding that such
      Shareholder is then dead or bankrupt or that any other event has occurred,
      and whether or not the Company has notice of the death or bankruptcy or
      other event, be deemed to have been duly served or delivered in respect of
      any share registered in the name of such Shareholder as sole or joint
      holder unless his name shall, at the time of the service or delivery of
      the notice or document, have been removed from the Register as the holder
      of the share, and such service or delivery shall for all purposes be
      deemed as sufficient service or delivery of such notice or document on all
      persons interested (whether jointly with or as claiming through or under
      him) in the share.

                            DESTRUCTION OF DOCUMENTS

143.  The Company shall be entitled to destroy all instruments of transfer of
      shares which have been registered, and all other documents on the basis of
      which any entry is made in the register, at any time after the expiration
      of six years from the date of registration thereof and all dividend
      mandates or variations or cancellations thereof and notifications of
      change of address at any time after the expiration of two years from the
      date of recording thereof and all share certificates which have been
      cancelled at any time after the expiration of one year from the date of
      cancellation thereof and all paid dividends, warrants and cheques at any
      time after the expiration of one year from the date of actual payment
      thereof and all



                                       32
<PAGE>

      instruments of proxy which have been used for the purpose of a poll at any
      time after the expiration of one year from the date of such use and all
      instruments of proxy which have not been used for the purpose of a poll at
      any time after one month from the end of the meeting to which the
      instrument of proxy relates. It shall conclusively be presumed in favour
      of the Company that every entry in the register purporting to have been
      made on the basis of an instrument of transfer or other document so
      destroyed was duly and properly made, that every instrument of transfer so
      destroyed was a valid and effective instrument duly and properly
      registered, that every share certificate so destroyed was a valid and
      effective certificate duly and properly cancelled and that every other
      document hereinbefore mentioned so destroyed was a valid and effective
      document in accordance with the recorded particulars thereof in the books
      or records of the Company, provided always that:-

      (1)   destruction of a document is in good faith and without notice of any
            claim (regardless of the parties thereto) to which the document
            might be relevant;

      (2)   nothing herein contained shall be construed as imposing upon the
            Company any liability in respect of the destruction of any such
            document earlier than as aforesaid or in any other circumstances
            which would not attach to the Company in the absence of this
            Bye-law; and

      (3)   references herein to the destruction of any document include
            references to the disposal thereof in any manner.

                              UNTRACED SHAREHOLDERS

144.        (1) The Company shall be entitled to sell, at the best price
            reasonably obtainable, the shares of a Shareholder or the shares to
            which a person is entitled by virtue of transmission on death,
            bankruptcy, or otherwise by operation of law if and provided that:-

            (a)   during the period of 12 years prior to the date of the
                  publication of the advertisements referred to in paragraph (b)
                  below (or, if published on different dates, the first thereof)
                  at least three dividends in respect of the shares in question
                  have been declared and all dividends, warrants and cheques
                  which have been sent in the manner authorised by these
                  Bye-laws in respect of the shares in question have remained
                  uncashed; and

            (b)   the Company shall as soon as practicable after expiry of the
                  said period of 12 years have inserted advertisements both in a
                  national daily newspaper and in a newspaper circulating in the
                  area of the last known address of such Shareholder or other
                  person giving notice of its intention to sell the shares; and

            (c)   during the said period of 12 years and the period of three
                  months following the publication of the said advertisements
                  the Company shall have received no indication either of the
                  whereabouts or of the existence of such Shareholder or person;
                  and

            (d)   if the shares are listed on a Stock Exchange, notice shall
                  have been given to the Quotations Department of such Stock
                  Exchange of the Company's intention to make such sale prior to
                  the publication of advertisements.

            If, during any 12-year period referred to in paragraph (a) above,
            further shares have been issued in right of those held at the
            beginning of such period or of any previously issued during such
            period and all the other requirements of this Bye-law (other than
            the requirement that they be in issue for twelve years) have been
            satisfied in regard to the further shares, the Company may also sell
            the further shares.



                                       33
<PAGE>

      (2)   To give effect to any such sale, the Board may authorise some person
            to execute an instrument of transfer of the shares sold to, or in
            accordance with the directions of, the purchaser and an instrument
            of transfer executed by that person shall be as effective as if it
            had been executed by the holder of, or person entitled by
            transmission to, the shares. The transferee shall not be bound to
            see to the application of the purchase money, nor shall his title to
            the shares be affected by any irregularity in, or invalidity of, the
            proceedings in reference to the sale.

      (3)   The net proceeds of sale shall belong to the Company which, for the
            period of six years after the sale, shall be obliged to account to
            the former Shareholder or other person previously entitled as
            aforesaid for an amount equal to such proceeds and shall enter the
            name of such former Shareholder or other person in the books of the
            Company as a creditor for such amount. No trust shall be created in
            respect of the debt, no interest shall be payable in respect of the
            same and the Company shall not be required to account for any money
            earned on the net proceeds, which may be employed in the business of
            the Company or invested in such investments as the Board from time
            to time thinks fit.

                                   WINDING UP

145.  If the Company shall be wound up, the liquidator may, with the sanction of
      a Resolution of the Company and any other sanction required by the
      Companies Acts, divide amongst the Shareholders in specie or kind the
      whole or any part of the assets of the Company (whether they shall consist
      of property of the same kind or not) and may for such purposes set such
      values as he deems fair upon any property to be divided as aforesaid and
      may determine how such division shall be carried out as between the
      Shareholders or different classes of Shareholders. The liquidator may,
      with the like sanction, vest the whole or any part of such assets in
      trustees upon such trust for the benefit of the contributories as the
      liquidator, with the like sanction, shall think fit, but so that no
      Shareholder shall be compelled to accept any shares or other assets upon
      which there is any liability.

                                    INDEMNITY

146.  Subject to the proviso below, every Director, Officer of the Company and
      member of a committee constituted under Bye-law 103 and any Resident
      Representative shall be indemnified out of the funds of the Company
      against all liabilities, loss, damage or expense (including but not
      limited to liabilities under contract, tort and statute or any applicable
      foreign law or regulation and all reasonable legal and other costs and
      expenses properly payable) incurred or suffered by him as such Director,
      Officer, committee member or Resident Representative and the indemnity
      contained in this Bye-law shall extend to any person acting as a Director,
      Officer, committee member or Resident Representative in the reasonable
      belief that he has been so appointed or elected notwithstanding any defect
      in such appointment or election PROVIDED ALWAYS that the indemnity
      contained in this Bye-law shall not extend to any matter which would
      render it void pursuant to the Companies Acts.

147.  Every Director, Officer, member of a committee duly constituted under
      Bye-law 103 or Resident Representative of the Company shall be indemnified
      out of the funds of the Company against all liabilities incurred by him as
      such Director, Officer, committee member or Resident Representative in
      defending any proceedings, whether civil or criminal, in which judgement
      is given in his favour, or in which he is acquitted, or in connection with
      any application under the Companies Acts in which relief from liability is
      granted to him by the court.

148.  To the extent that any Director, Officer, member of a committee duly
      constituted under Bye-law 103 or Resident Representative is entitled to
      claim an indemnity pursuant to these Bye-laws in respect of amounts paid
      or discharged by him, the relative indemnity shall take effect as an
      obligation of the Company to reimburse the person making such payment or
      effecting such discharge.

149.  Each Shareholder and the Company agree to waive any claim or right of
      action he or it may at any time have, whether individually or by or in the
      right of the Company, against any Director, Officer,



                                       34
<PAGE>

      member of a committee duly constituted under Bye-law 103 or Resident
      Representative on account of any action taken by such Director, Officer,
      committee member or Resident Representative or the failure of such
      Director, Officer, committee member or Resident Representative to take any
      action in the performance of his duties with or for the Company PROVIDED
      HOWEVER that such waiver shall not apply to any claims or rights of action
      arising out of the fraud of such Director, Officer, member of a committee
      duly constituted under Bye-law 103 or Resident Representative or to
      recover any gain, personal profit or advantage to which such Director,
      Officer, member of a committee duly constituted under Bye-law 103 or
      Resident Representative is not legally entitled.

150.  Subject to the Companies Acts, expenses incurred in defending any civil or
      criminal action or proceeding for which indemnification is required
      pursuant to Bye-laws 146 and 147 shall be paid by the Company in advance
      of the final disposition of such action or proceeding upon receipt of an
      undertaking by or on behalf of the indemnified party to repay such amount
      if it shall ultimately be determined that the indemnified party is not
      entitled to be indemnified pursuant to Bye-laws 146 and 147 PROVIDED THAT
      no monies shall be paid hereunder unless payment of the same shall be
      authorised in the specific case upon a determination that indemnification
      of the Director or Officer or member of a committee duly constituted under
      Bye-law 103 or Resident Representative would be proper in the
      circumstances because he has met the standard of conduct which would
      entitle him to the indemnification thereby provided and such determination
      shall be made:

      (1)   by the Board, by a majority vote at a meeting duly constituted by a
            quorum of Directors not party to the proceedings or matter with
            regard to which the indemnification is, or would be, claimed; or

      (2)   in the case such a meeting cannot be constituted by lack of a
            disinterested quorum, by independent legal counsel in a written
            opinion; or

      (3)   by a Resolution.

      Each Shareholder of the Company, by virtue of its acquisition and
      continued holding of a share, shall be deemed to have acknowledged and
      agreed that the advances of funds may be made by the Company as aforesaid,
      and when made by the Company under this Bye-law 150 are made to meet
      expenditures incurred for the purpose of enabling such Director, Officer,
      member of a committee duly constituted under Bye-law 103 or Resident
      Representative to properly perform his or her duties as an officer of the
      Company.

                                  AMALGAMATION

151.  Any resolution proposed for consideration at any general meeting to
      approve the amalgamation of the Company with any other company, wherever
      incorporated, shall require the approval of a simple majority of votes
      cast at such meeting and the quorum for such meeting shall be that
      required in Bye-law 54.

                                  CONTINUATION

152.  Subject to the Companies Act, the Shareholders may by Resolution approve
      the discontinuation of the Company in Bermuda and the continuation of the
      Company in a jurisdiction outside Bermuda. The Shareholders, having
      resolved to approve the discontinuation of the Company, may by Resolution
      further resolve not to proceed with any application to discontinue the
      Company in Bermuda or may vary such application as they see fit.

                              ALTERATION OF BY-LAWS

153.  Subject to Bye-law 162, these Bye-laws may be amended from time to time by
      the Board, subject to approval by Resolution, provided that in the case of
      any amendment or repeal of Bye-law 82, 96, 97,



                                       35
<PAGE>

      98 or 99, such amendment or repeal shall be approved only if at least 75%
      of the votes cast are in favor of such amendment or repeal.

                              BUSINESS COMBINATIONS

154.  The  following  definitions  shall apply with respect to the
      provisions of Bye-laws 154 to 162, inclusive:

      (1)   "the Act" means the Securities Exchange Act of 1934 of the United
            States of America, as amended, and the rules and regulations
            thereunder (or any subsequent provisions replacing the Act, rules or
            regulations).

      (2)   "Affiliate" or "Associate" shall have the respective meanings
            ascribed to such terms in Rule 12b-2 of the General Rules and
            Regulations under the Act, as in effect on November 8, 1990 (the
            term "registrant" in said Rule 12b-2 meaning in this case the
            Company).

      (3)   A person shall be a "beneficial owner" of any Voting Shares: (a)
            which such person or any of its Affiliates or Associates
            beneficially owns, directly or indirectly; (b) which such person or
            any of its Affiliates or Associates has, directly or indirectly (i)
            the right to acquire (whether such rights is exercisable immediately
            or subject only to the passage of time), pursuant to any agreement,
            arrangement or understanding or upon the exercise of conversion
            rights, exchange rights, warrants or options, or otherwise, or (ii)
            the right to vote pursuant to any agreement, arrangement or
            understanding; or (c) beneficially owned, directly or indirectly, by
            any other person with which such person or any of its Affiliates or
            Associates has any agreement, arrangement or understanding for the
            purpose of acquiring, holding, voting or disposing of such Voting
            Shares. For the purposes of determining whether a person is an
            Interested Shareholder pursuant to paragraph (8) of this Bye-law
            154, the number of Capital Shares deemed to be outstanding shall
            include shares deemed beneficially owned by such person through
            application of this paragraph (3) of this Bye-law 154, but shall not
            include any other Capital Shares that may be issuable pursuant to an
            agreement, arrangement or understanding, or upon exercise of
            conversion rights, warrants or options, or otherwise.

      (4)   "Business Combination" means:

            (a)   any merger, consolidation or amalgamation of the Company or
                  any Subsidiary with (i) any Interested Shareholder, or (ii)
                  any other company (whether or not itself an Interested
                  Shareholder) which is or after such merger, consolidation or
                  amalgamation would be an Affiliate or Associate of an
                  Interested Shareholder; or

            (b)   any sale, lease, exchange, mortgage, pledge, transfer or other
                  disposition or security arrangement, investment, loan,
                  advance, guarantee, agreement to purchase, agreement to pay,
                  extension of credit, joint venture participation or other
                  arrangement (in one transaction or a series of transactions)
                  with or for the benefit of any Interested Shareholder or any
                  Affiliate or Associate of any Interested Shareholder involving
                  any assets, securities or commitments of the Company, any
                  Subsidiary or any Interested Shareholder or any Affiliate or
                  Associate of any Interested Shareholder (except for any
                  arrangement, whether as employee, consultant or otherwise,
                  other than as a Director, pursuant to which any Interested
                  Shareholder or any Affiliate of Associate thereof shall,
                  directly or indirectly, have any control over or
                  responsibility for the management of any aspect of the
                  business or affairs of the Company, with respect to which
                  arrangements the value tests set forth below shall not apply),
                  together with all other such arrangements (including all
                  contemplated future events), has an aggregate Fair Market
                  Value and/or involves aggregate commitments of $5,000,000 or
                  more or constitutes more than 5% of the book value of the
                  total assets (in the case of transactions involving



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<PAGE>

                  assets or commitments other than Capital Shares) or 5% of the
                  Shareholders' equity (in the case of transactions in Capital
                  Shares) of the entity in question (the "Substantial Part"), as
                  reflected in the most recent fiscal year and consolidated
                  balance sheet of such entity existing at the time the
                  Shareholders of the Company would be required to approve or
                  authorise the Business Combination involving the assets,
                  securities and/or commitments constituting any Substantial
                  Part; or

            (c)   the adoption of any plan or proposal for the liquidation or
                  dissolution of the Company or for any amendment to these
                  Bye-laws; or

            (d)   any reclassification of securities (including any reverse
                  stock split), or recapitalisation of the Company, or any
                  merger, consolidation or amalgamation of the Company with any
                  of its Subsidiaries or any other transaction (whether or not
                  with or into or otherwise involving an Interested Shareholder)
                  that has the effect, directly or indirectly, of increasing the
                  proportionate share of any class or series of Capital Shares,
                  or any securities convertible into Capital Shares or into
                  equity securities of any Subsidiary, that is beneficially
                  owned by an Interested Shareholder or any Affiliate or
                  Associate of any Interested Shareholder; or

            (e)   any agreement, contract or other arrangement providing for any
                  one or more of the actions specified in the foregoing clauses
                  (a) to (d).

      (5)   "Capital Shares" means all shares of the Company authorised to be
            issued from time to time, "Common Shares" shall mean all common
            shares of the Company authorised to be issued from time to time, and
            the term "Voting Shares" shall mean all Capital Shares which by
            their terms may be voted on all matters submitted to Shareholders of
            the Company generally.

      (6)   "Continuing Director' means any member of the Board while such
            person is a member of the Board who is not an Affiliate or Associate
            or representative of the Interested Shareholder and was a member of
            the Board prior to the time that the Interested Shareholder became
            an Interested Shareholder, and any successor of a Continuing
            Director while such successor is a member of the Board, who is not
            an Affiliate or Associate or representative of the Interested
            Shareholder and is recommended or elected to succeed the Continuing
            Director by a majority of Continuing Directors.

      (7)   "Fair Market Value" means: (a) in the case of cash, the amount of
            such cash; (b) in the case of shares, the highest closing sale price
            during the 30-day period immediately preceding the date in question
            of a share on the Composite Tape for New York Stock Exchange Listed
            Stocks, or, if such shares are not quoted on the Composite Tape, on
            the New York Stock Exchange, or, if such shares are not listed on
            such Exchange, on the principal United States securities exchange
            registered under the Act on which such shares are listed or, if such
            shares are not listed on any such exchange, the highest closing bid
            quotation with respect to such shares during the 30-day period
            preceding the date in question on the National Association of
            Securities Dealers, Inc. Automated Quotations System, in the pink
            sheets of the National Quotation Bureau or any similar system then
            in use, or if no such quotations are available, the fair market
            value on the date in question of a share as determined by a majority
            of the Continuing Directors in good faith; and (c) in the case of
            property other than cash or shares, the fair market value of such
            property on the date in question as determined in good faith by a
            majority of the Continuing Directors.

      (8)   "Interested Shareholder" means any person (other than the Company or
            any subsidiary company, or any profit sharing, employee share
            ownership or other employee benefit plan of the Company or any
            Subsidiary or any trustee of or fiduciary with respect to any such
            plan when acting in such capacity and other than a Shareholder at
            the date of the adoption of these Bye-laws unless such Shareholder
            acquires Voting Shares representing 15% or



                                       37
<PAGE>

            more in additional voting power) who (a) is or has announced or
            publicly disclosed a plan or intention to become the beneficial
            owner of Voting Shares representing 15% or more of the vote entitled
            to be cast by the holders of all then outstanding Voting Shares, or
            (b) is an Affiliate or Associate of the Company and at any time
            within the two-year period immediately prior to the date in question
            was the beneficial owner of Voting Shares representing 15% or more
            of the votes entitled to be cast by the holders of all then
            outstanding Voting Shares.

      (9)   "person" means any individual, firm, company or other entity and
            shall include any group comprised of any person and any other person
            with whom such person or any Affiliate or Associate of such person
            has any agreement, arrangement or understanding directly or
            indirectly, for the purpose of acquiring, holding, voting or
            disposing of Capital Shares.

      (10)  "Proposed Action" means a Business Combination or any proposal to
            amend, repeal or adopt any provision of these Bye-laws inconsistent
            with these Bye-laws 154 through 162.

      (11)  "Subsidiary" means any company, wherever organised, of which a
            majority of any class of equity security is beneficially owned by
            the Company; provided, however, that for the purposes of the
            definition of Interested Shareholder set forth in paragraph (8) of
            this Bye-law 154, the term "Subsidiary" shall mean only a company of
            which a majority of each class of equity security is beneficially
            owned by the Company.

155.  In addition to any affirmative vote required by law or these Bye-laws, and
      except as otherwise expressly provided in Bye-law 156, a Business
      Combination with, or proposed by or on behalf of, any Interested
      Shareholder or any Affiliate or Associate of any Interested Shareholder or
      any person who thereafter would be an Affiliate or Associate of such
      Interested Shareholder shall require the affirmative vote of not less than
      66-2/3% of the votes entitled to be cast by the holders of all the then
      outstanding Voting Shares, voting together as a single class, excluding
      Voting Shares beneficially owned by such Interested Shareholder or any
      Affiliate or Associate of such Interested Shareholder. Such affirmative
      vote shall be required notwithstanding the fact that no vote may be
      required, or that a lesser percentage or separate class vote may be
      specified, by law or in any agreement with any national securities
      exchange or otherwise.

156.  The provisions of Bye-law 155 shall not be applicable to any particular
      Business Combination, and such Business Combination shall require only
      such affirmative vote, if any, as is required by law or any other
      provision of these Bye-laws, if all of the conditions specified in either
      of the following paragraph (1) or (2) are met:

      (1)   The Business Combination shall have been approved by a majority of
            the Continuing Directors.

      (2)   All of the following conditions shall have been met:

            (a)   The aggregate amount of the cash and the Fair Market Value as
                  of the date of the consummation of the Business Combination of
                  consideration other than cash to be received per share by
                  holders of Common Shares in such Business Combination shall be
                  at least equal to the highest amount determined under clauses
                  (i) and (ii) below:

                  (i)   (if applicable) the highest per share price (including
                        any brokerage commissions, transfer taxes and soliciting
                        dealers' fees) paid by or on behalf of the Interested
                        Shareholder for beneficial ownership of Common Shares
                        acquired by it (x) within the two-year period
                        immediately prior to the first public announcement of
                        the proposed Business Combination (the "Announcement
                        Date") or (y) in the transaction in which it became an
                        Interested Shareholder, whichever is higher, in either
                        case as adjusted for any subsequent stock split, stock
                        dividend, subdivision or reclassification with respect
                        to the Common Shares; and



                                       38
<PAGE>

                        (ii)  the Fair Market Value per share of Common Shares
                              on the Announcement Date or on the date on which
                              the Interested Shareholder became an Interested
                              Shareholder (the "Determination Date"), whichever
                              is higher, as adjusted for any subsequent stock
                              split, stock dividend, subdivision or
                              reclassification with respect to the Common
                              Shares.

            (b)   The aggregate amount of the cash and the Fair Market Value as
                  of the date of the consummation of the Business Combination of
                  consideration other than cash to be received per share by
                  holders of shares of any class or series of outstanding
                  Capital Shares, other than Common Shares, shall be at least
                  equal to the highest amount determined under clauses (i), (ii)
                  and (iii) below:

                        (i)   (if applicable) the highest per share price
                              (including any brokerage commissions, transfer
                              taxes and soliciting dealers' fees) paid by or on
                              behalf of the Interested Shareholder for any such
                              class or series of Capital Shares in connection
                              with the acquisition by the Interested Shareholder
                              of beneficial ownership of shares of such class or
                              series of Capital Shares (x) within the two-year
                              period immediately prior to the Announcement Date
                              or (y) in the transaction in which it became an
                              Interested Shareholder, whichever is higher, in
                              either case as adjusted for any subsequent share
                              split, share dividend, subdivision or
                              reclassification with respect to such class or
                              series of Capital Shares; .

                        (ii)  the Fair Market Value per share of such class or
                              series of Capital Shares on the Announcement Date
                              or on the Determination Date, whichever is higher,
                              as adjusted for any subsequent share split,
                              subdivision or reclassification with respect to
                              such class or series of Capital Shares; and.

                        (iii) (if applicable) the highest preferential amount
                              per share to which the holders of shares of such
                              class or series of Capital Shares would be
                              entitled in the event of any voluntary or
                              involuntary liquidation, dissolution or winding up
                              of the affairs of the Company regardless of
                              whether the Business Combination to be consummated
                              constitutes such an event. .

            (c)   The consideration to be received by holders of a particular
                  class or series of outstanding Capital Shares shall be in cash
                  or in the same form as previously has been paid by or on
                  behalf of the Interested Shareholder in connection with its
                  direct or indirect acquisition of beneficial ownership of
                  shares of such class or series of Capital Shares. If the
                  consideration so paid for shares of any class or series of
                  Capital Shares varied as to form, the form of consideration
                  for such class or series of Capital Shares shall be either
                  cash or the form used to acquire beneficial ownership of the
                  largest number of shares of such class or series of Capital
                  Shares previously acquired by the Interested Shareholder.

            (d)   After the Determination Date and prior to the consummation of
                  such Business Combination, (i) except as approved by a
                  majority of the Continuing Directors, there shall have been no
                  failure to declare and pay at the regular date therefor any
                  full quarterly dividends (whether or not cumulative) payable
                  in accordance with the terms of any outstanding Capital
                  Shares, (ii) there shall have been no reduction in the annual
                  rate of dividends paid on the Common Shares (except as
                  necessary to reflect any stock split, stock dividend or
                  subdivision of the Common Shares), except as approved by a
                  majority of the Continuing Directors, (iii) there shall have
                  been an increase in the annual rate of dividends paid on the
                  Common Shares as necessary to reflect any reclassification
                  (including any reverse stock split), recapitalisation,
                  reorganisation or any similar transaction that has the effect
                  of reducing the number of outstanding shares of Common Shares,
                  unless the failure so to increase such annual rate is approved
                  by a



                                       39
<PAGE>

                  majority of the Continuing Directors, and (iv) such Interested
                  Shareholders shall not have become the beneficial owner of any
                  additional shares of Capital Shares except as part of the
                  transaction that results in such Interested Shareholder
                  becoming an Interested Shareholder and except in a transaction
                  that, after giving effect thereto, would not result in any
                  increase in the Interested Shareholder's percentage beneficial
                  ownership of any class or series of Capital Shares.

            (e)   A proxy or information statement describing the proposed
                  Business Combination and complying with the requirements of
                  the Act shall be mailed to all Shareholders if required by the
                  Act at least 30 days prior to the consummation of such
                  Business Combination. The proxy or information statement shall
                  contain on the first page thereof, in a prominent place, any
                  statement as to the advisability (or inadvisability) of the
                  Business Combination that the Continuing Directors, or any of
                  them, may choose to make and, if deemed advisable by a
                  majority of the Continuing Directors, an opinion of an
                  investment banking firm selected by a majority of the
                  Continuing Directors as to the fairness (or unfairness) of the
                  terms of the Business Combination from a financial point of
                  view to the holders of the outstanding shares of Capital
                  Shares other than the Interested Shareholder and its
                  Affiliates or Associates, such investment banking firm to be
                  paid a reasonable fee for its services by the Company.

            (f)   Such Interested Shareholder shall not have made any major
                  change in the Company's business or equity capital structure
                  without the approval of a majority of the Continuing
                  Directors.

            The provisions of this paragraph (2) shall be required to be met
            with respect to every class or series of outstanding Capital Shares,
            whether or not the Interested Shareholder has previously acquired
            beneficial ownership of any shares of a particular class or series
            of Capital Shares.

157.  In the event of any Business Combination in which the Company survives,
      the phrase "consideration other than cash to be received" as used in
      paragraphs (2)(a) and (2)(b) of Bye-law 156 shall include the Common
      Shares and/or the shares of any other class or series of Capital Shares
      retained by the holders of such shares.

158.  A majority of the Continuing Directors shall have the power and duty to
      determine for the purpose of these Bye-laws 154 through 162, on the basis
      of information known to them after reasonable inquiry, all questions
      arising under these Bye-laws 154 through 162 including, without
      limitation, (a) whether a person is an Interested Shareholder, (b) the
      number of Capital Shares or other securities beneficially owned by any
      person, (c) whether a person is an Affiliate or Associate of another, (d)
      whether a Proposed Action is with, or proposed by, or on behalf of an
      Interested Shareholder or an Affiliate or Associate of an Interested
      Shareholder, (e) whether the assets that are the subject of any Business
      Combination have, or the consideration to be received for the issuance or
      transfer of securities by the Company or any Subsidiary in any Business
      Combination has, an aggregate Fair Market Value of $5,000,000 or more and
      (f) whether the assets or securities that are the subject of any Business
      Combination constitute a Substantial Part. The good faith determination of
      a majority of the Continuing Directors on such matters shall be conclusive
      and binding on all parties for all purposes of these Bye-laws 154 through
      162.

159.  Nothing contained in these Bye-laws 154 through 162 shall be construed to
      relieve any Interested Shareholder from any fiduciary obligation imposed
      by law.

160.  The fact that any Business Combination complies with the provisions of
      these Bye-laws 154 through 162 shall not be construed to impose any
      fiduciary duty, obligation or responsibility on the Board or any member
      thereof, to approve such Business Combination or recommend its adoption or
      approval to the Shareholders of the Company, nor shall such compliance
      limit, prohibit or



                                       40
<PAGE>

      otherwise restrict in any manner the Board or any member thereof, with
      respect to evaluations of or actions and responses taken with respect to
      such Business Combination.

161.  A Proposed Action is presumed to have been proposed by, or on behalf of,
      an Interested Shareholder or a person who thereafter would become such or
      an Affiliate or Associate thereof if (a) after the Interested Shareholder
      became such, the Proposed Action is proposed following the election of any
      Director who with respect to such Interested Shareholder or an Affiliate
      or Associate thereof, would not qualify to serve as a Continuing Director,
      or (b) such Interested Shareholder or an Affiliate or Associate thereof
      votes for or consents to the adoption of any such Proposed Action, unless
      as to such Interested Shareholder or an Affiliate or Associate thereof a
      majority of the Continuing Directors makes a good faith determination that
      such Proposed Action is not proposed by or on behalf of such Interested
      Shareholder or an Affiliate or Associate thereof, based on information
      known to them after reasonable inquiry.

162.  Notwithstanding any other provisions of these Bye-laws (and
      notwithstanding the fact that a lesser percentage or separate class vote
      may be specified by law or these Bye-laws), any proposal to amend, repeal
      or adopt any provision of these Bye-laws inconsistent with these Bye-laws
      154 through 162 which is proposed by or on behalf of an Interested
      Shareholder or an Affiliate or Associate of an Interested Shareholder
      shall require the affirmative vote of the holders of not less than 66-2/3%
      of the votes entitled to be cast by the holders of all the then
      outstanding Voting Shares, voting together as a single class, excluding
      Voting Shares beneficially owned by such Interested Shareholder; provided,
      however, that this Bye-law 162 shall not apply to, and such 66-2/3% vote
      shall not be required for, any amendment, repeal or adoption unanimously
      recommended by the Board if all of the Directors on the Board are persons
      who would be eligible to serve as Continuing Directors within the meaning
      of Bye-law 154(6).