Document:

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                                                                     Exhibit 4.6

                                                     [Execution Version]

THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "ACT"), OR THE SECURITIES LAWS OF ANY JURISDICTION. THIS NOTE MAY NOT BE
OFFERED, SOLD, HYPOTHECATED, GIVEN, BEQUEATHED, TRANSFERRED, ASSIGNED, PLEDGED,
ENCUMBERED, OR OTHERWISE DISPOSED OF ("TRANSFERRED") EXCEPT PURSUANT TO (I) A
REGISTRATION STATEMENT WITH RESPECT TO THIS NOTE THAT IS EFFECTIVE UNDER SUCH
ACT OR APPLICABLE STATE SECURITIES LAW, OR (II) ANY EXEMPTION FROM REGISTRATION
UNDER SUCH ACT, OR APPLICABLE STATE SECURITIES LAW, RELATING TO THE DISPOSITION
OF SECURITIES, PROVIDED THAT AN OPINION OF COUNSEL IS FURNISHED TO THE COMPANY,
TO THE EXTENT REASONABLY REQUESTED BY THE COMPANY, IN FORM AND SUBSTANCE
REASONABLY SATISFACTORY TO THE COMPANY, TO THE EFFECT THAT AN EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE ACT AND/OR APPLICABLE STATE SECURITIES LAW IS
AVAILABLE.

$________  New York, New York

                                                 June __, 2005

                        VIATEL HOLDING (BERMUDA) LIMITED
                  SENIOR SECURED INCREASING RATE NOTE DUE 2007

            Viatel Holding (Bermuda) Limited, a company organized under the laws
of Bermuda (or its successor, the "Company"), hereby unconditionally promises to
pay to the order of _______________________ (the "Holder"), a
_________________________, the principal amount of ____________________ U.S.
Dollars (U.S.$_____________), on June __, 2007 (the "Maturity Date"), and to pay
interest at the time, in the form and at the rate set forth herein. Certain
capitalized terms used herein without definition shall have the meanings
assigned to them in Article 9 hereof. This Note is issued in accordance with and
subject to the following terms and conditions:

                                   ARTICLE 1
                             PRINCIPAL AND INTEREST

            Section 1.1. Principal and Interest.

            (a) The Company shall on the Maturity Date pay to the order of the
Holder an amount equal to the aggregate principal amount of this Note
outstanding on the Maturity Date, plus accrued and unpaid interest thereon,
unless and to the extent that this Note is earlier redeemed, repurchased or
repaid in accordance with the terms of this Note.

            (b) Interest shall be payable semi-annually, in arrears, on each
July 15 and January 15 after the issuance of this Note (the "Interest Payment
Dates"); provided, however, that the first Interest Payment Date shall be
January 15, 2006. Interest shall accrue on the unpaid principal amount of this
Note at the rate of 12% per annum from the Closing Date, or from the most recent
Interest Payment Date for which the applicable interest payment has been made,

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until the principal amount of this Note is paid in full; provided, that such
interest rate shall increase by 0.50% per annum on each Interest Payment Date
beginning on January 15, 2006 (such interest rate as of any date of
determination, the "Applicable Rate"). Notwithstanding the foregoing, interest
accruing before July 15, 2006 may, at the election of the Company, be paid on
the applicable Interest Payment Date in the form of Additional Notes. Interest
on this Note shall be computed on the basis of a 360-day year composed of twelve
30-day months.

            (c) If a date for payment of principal or interest is a Legal
Holiday, payment shall be made on the next succeeding day that is not a Legal
Holiday, and interest shall accrue for the intervening period.

            (d) The Holder of this Note must surrender this Note to the Company
to collect principal payments.

            (e) Except with respect to interest paid in the form of Additional
Notes as permitted under the penultimate sentence of Section 1.1(b) above and
Section 1.1(j) below, the Company will pay principal and interest in money of
the United States that at the time of payment is legal tender for payment of
public and private debts in immediately available funds (without any
counterclaim, setoff, recoupment or deduction whatsoever, and free and clear of,
and without any withholding or deduction for or on account of, any present or
future taxes, levies, imports, duties, charges or fees of any nature) and by
wire transfer to a U.S. dollar account maintained by the Holder with a bank in
the United States designated in writing by the Holder. All payments of interest
and principal in respect of this Note shall be made on the due date thereof no
later than 3:00 p.m., New York, New York time. Any payment received by the
Holder after 3:00 p.m., New York, New York time, on any day, will be deemed to
have been received on the following Business Day.

            (f) The Company agrees that to the extent the Company makes a
payment or payments hereunder which payment or payments, or any part thereof,
are subsequently invalidated, declared to be fraudulent or preferential, set
aside and/or required to be repaid to the Company or its successors under any
Bankruptcy Law, state or federal law, common law or equitable cause, then, to
the extent of such payment or repayment, the obligations, or part thereof, under
this Note that have been paid, reduced or satisfied by such amount shall be
reinstated and continued in full force and effect as of the time immediately
preceding such initial payment, reduction or satisfaction.

            (g) To the extent lawful, the Company shall pay interest on (i)
overdue principal and (ii) overdue installments (without regard to any
applicable grace period or payment blockage) of interest, in each case at a rate
equal to the Applicable Rate plus 2% per annum, compounded semi-annually.

            (h) To guarantee the due and punctual payment of the principal and
interest, if any, on this Note and all other amounts payable by the Company
under this Note when and as the same shall be due and payable, whether at
maturity, by acceleration or otherwise, according to the terms of this Note, the
Guarantors have, jointly and severally, unconditionally guaranteed the
Obligations pursuant to the terms of the Security Trust Agreement.

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            (i) This Note and the other Senior Secured Increasing Rate Notes are
secured on a first-priority basis by the Security Interest created by the
Security Documents pursuant to, and subject to the terms of, the Security Trust
Agreement.

            (j) If any deduction or withholding for any present or future taxes,
assessments or other governmental charges of (x) Bermuda or any political
subdivision or governmental authority thereof or therein having power to tax,
(y) any jurisdiction, other than the United States, from or through which
payment on this Note is made by the Company or Guarantors, or any political
subdivision or governmental entity thereof or therein having the power to tax or
(z) or any other jurisdiction, other than the United States, in which the
Company or Guarantors are organized, or any political subdivision or
governmental authority thereof or therein having power to tax, shall at any time
be required by such jurisdiction (or any such political subdivision or taxing
authority) in respect of any amounts to be paid by the Company or Guarantors
under this Note, the Company or Guarantors will pay to the Holder any additional
amounts as may be necessary in order that the net amounts paid to such Holder
who, with respect to any such tax, assessment or other governmental charge, is
not resident in, or a citizen of, such jurisdiction, after such deduction or
withholding, shall be not less than the amount specified in this Note to which
the Holder is entitled; provided, that the Company may elect to pay any such
additional amounts that become due prior to July 15, 2006 in the form of
Additional Notes.

                                   ARTICLE 2
                                    TRANSFER

            The Company and, by acceptance of this Note, the Holder hereby agree
that the following provisions shall govern the registration, sale, assignment,
pledge, transfer, encumbrance or other disposition of this Note.

            Section 2.1. Note Registration. The Company shall keep at its
principal office a register (the "Register") in which the Company shall enter
the name and address of the registered holder of this Note. References to the
"Holder" of this Note shall mean the person listed in the Register as the payee
of this Note unless the payee shall have presented this Note to the Company for
transfer and the transferee shall have been entered in the Register as a
subsequent holder, in which case the term shall mean such subsequent holder. The
registered holder of this Note may be treated as the owner of it for all
purposes.

            Section 2.2. Disposition. (a) This Note may, directly or indirectly,
be sold, assigned, pledged, transferred, encumbered or otherwise disposed of
(each, a "transfer") in accordance with applicable law.

            (b) A transfer of this Note permitted by paragraph (a) of this
Section shall only be effected by the Holder hereof by delivery of this Note to
the Company (with the instrument of assignment provided on this Note properly
completed in accordance with the terms and conditions of this Note), accompanied
by an opinion of counsel, in form and substance, and from counsel, reasonably
satisfactory to the Company, and by such other evidence as the Company may
reasonably require of compliance with the Securities Act and applicable state
securities laws and with the provisions of this Note, at the Company's principal
office or at such

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other location as the Company shall designate in writing to the Holder;
provided, however, that such transfer of this Note shall become effective only
upon, and shall not be effective for any purpose until, the Company has received
this Note.

            (c) No service charge will be made for any such transfer or
assignment.

                                   ARTICLE 3
                               OUTSTANDING NOTES

            Section 3.1. (a) Outstanding Notes. The Senior Secured Increasing
Rate Notes outstanding at any time are all the Senior Secured Increasing Rate
Notes issued by the Company except for those cancelled by it and those
surrendered to it for cancellation. A Note also ceases to be outstanding because
the Company or any direct or indirect Subsidiary of the Company holds the Note.

            (b) Direction, Waiver and Consent Requirements. In determining
whether the Noteholders of the required principal amount of Senior Secured
Increasing Rate Notes have concurred in any direction, waiver or consent, Senior
Secured Increasing Rate Notes owned by the Company or any direct or indirect
Subsidiary of the Company shall not be considered as though they are
outstanding.

                                   ARTICLE 4
                             INTENTIONALLY OMITTED

                                   ARTICLE 5
                            REDEMPTION OF SECURITIES

            Section 5.1. Optional Redemption. This Note along with all other
Senior Secured Increasing Rate Notes shall be redeemable at the option of the
Company, in whole and not in part, on not less than 5 nor more than 20 days
prior notice, in cash by wire transfer to a U.S. dollar account maintained by
the Holder with a bank in the United States designated in writing by the Holder
at 100% of the principal amount, plus accrued and unpaid interest to the
Redemption Date; provided, that in the event of a Change of Control prior to or
in connection with any such optional redemption, the Redemption Price will be
the greater of the price set forth above and the Change of Control Put Price.

            Section 5.2. Mandatory Redemption.

            (a) Asset Sales. Not later than the second Business Day following
receipt by the Company or any of its Subsidiaries of any Net Asset Sale
Proceeds, except with respect to certain possible asset sales disclosed to the
Noteholders prior to the date hereof, the Company shall send a notice of
redemption in accordance with Section 5.3 below to redeem the Notes in an
aggregate amount equal to such Net Asset Sale Proceeds.

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            (b) Insurance/Condemnation Proceeds. Not later than the second
Business Day following the date of receipt by the Company or any of its
Subsidiaries of any Net Insurance/Condemnation Proceeds, the Company shall send
a notice of redemption in accordance with Section 5.3 below to redeem the Notes
in an aggregate amount equal to such Net Insurance/Condemnation Proceeds.

            (c) Issuance of Equity Securities. Not later than the second
Business Day following the date of receipt by the Company or any of its
Subsidiaries of any cash proceeds from a capital contribution to, or the
issuance of any Capital Stock of, the Company or any of its Subsidiaries to any
Person other than the Company or any of its Subsidiaries, the Company shall send
a notice of redemption in accordance with Section 5.3 below and redeem the Notes
in an aggregate amount equal to 100% of such proceeds, net of underwriting
discounts and commissions and other reasonable costs and expenses associated
therewith, including reasonable legal fees and expenses.

            (d) Issuance of Debt. Not later than the second Business Day
following the date of receipt by the Company or any of its Subsidiaries of any
cash proceeds from incurrence of any indebtedness of the Company or any of its
Subsidiaries, the Company shall send a notice of redemption in accordance with
Section 5.3 below and shall redeem the Notes in an aggregate amount equal to
100% of such proceeds, net of underwriting discounts and commissions and other
reasonable costs and expenses associated therewith, including reasonable legal
fees and expenses.

            (e) Redemption Price; Redemption Date. Each redemption pursuant to
this Section 5.2 shall be made at 100% of the principal amount, plus accrued and
unpaid interest to the redemption date. The redemption date for each such
redemption shall be a date that is not less than 5 days nor more than 10 days
after the date the respective notice of redemption shall have been required to
be sent.

            Section 5.3. Notice of Redemption.

            Notice of redemption shall be given by first-class mail, postage
prepaid, mailed not less than 10 nor more than 40 days prior to the Redemption
Date, to the Holder at the Holder's address appearing in the Register.

            All notices of redemption shall state:

                  (i) the date on which this Note will be redeemed (the
            "Redemption Date");

                  (ii) that on the Redemption Date the amount required to be
            paid in respect of such redemption in accordance with Section 5.1 or
            5.2, as applicable (the "Redemption Price") will become due and
            payable in respect of this Note and all other Senior Secured
            Increasing Rate Notes, the amount of the Redemption Price, and that
            interest thereon will cease to accrue on and after said date; and

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                  (iii) the place or places (which shall in no event be outside
            the continental United States) where the Note is to be surrendered
            for payment of the Redemption Price.

            Section 5.4. Notes Payable on Redemption Date. A notice of
redemption having been given as aforesaid, this Note shall on the Redemption
Date become due and payable at the Redemption Price therein specified, and from
and after such date (unless the Company shall default in the payment of the
Redemption Price) shall cease to bear interest. Upon surrender of this Note for
redemption in accordance with said notice, this Note shall be paid by the
Company at the Redemption Price.

            If this Note is called for redemption and the Redemption Price for
the Note is not paid in full on the Redemption Date upon surrender thereof for
redemption, then the Redemption Date shall be deemed not to have occurred and in
that case (x) the Company will be required to comply with all provisions of this
Article 5 in order to redeem this Note as if the notice required by this Section
5.3 had not been delivered, (y) all payments of the Redemption Price shall be
allocated first to any accrued and unpaid interest to the Redemption Date and
then to the unpaid principal amount of this Note and (z) the unpaid principal
amount of this Note shall, until paid, continue to bear interest at the rate
prescribed herein, and all other terms and conditions of this Note shall
continue to apply.

                                   ARTICLE 6
                            CHANGE OF CONTROL OFFER

            Section 6.1. Change of Control Offer. (a) Upon a Change of Control,
the Holder shall have the right to require that the Company repurchase all or
any part (equal to $1,000 or an integral multiple thereof) of the Note at a
purchase price in cash equal to 101% of the principal amount thereof plus
accrued and unpaid interest thereon, if any, to the date of repurchase (the
"Change of Control Put Price") (subject to the right of the Holder to receive
interest due on the relevant interest payment date) in accordance with the terms
contemplated in Section 6.1(b).

            (b) Within five Business Days following any Change of Control, the
Company shall mail a notice to the Holder (the "Change of Control Offer")
stating:

                  (i) that a Change of Control has occurred and that the Holder
            has the right to require the Company to purchase all or a portion
            (equal to $1,000 or an integral multiple thereof) of the Note at a
            purchase price in cash equal to 101% of the principal amount
            thereof, plus accrued and unpaid interest to the date of repurchase
            (subject to the right of the Holder to receive interest due on the
            relevant interest payment date if prior to the date of repurchase);

                  (ii) the circumstances and relevant facts and financial
            information regarding such Change of Control;

                  (iii) the repurchase date (which shall be no earlier than 30
            days (or such shorter time period as may be permitted under
            applicable laws, rules and regulations) nor later than 60 days from
            the date such notice is mailed); and

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                  (iv) the instructions reasonably determined by the Company,
            consistent with this Section 6.01, that the Holder must follow in
            order to have this Note purchased.

            (c) If the Holder elects to have the Note purchased, the Holder
shall be required to (1) complete and manually sign the notice on the back of
this Note (or complete and manually sign a facsimile of such notice) and deliver
such notice to the Company and (2) surrender the Note to the Company at the
address specified in the notice at least three Business Days prior to the
purchase date. The Holder shall be entitled to withdraw its election if the
Company receives not later than one Business Day prior to the purchase date a
telegram, telex, facsimile transmission or letter setting forth the name of the
Holder, the principal amount of the Note which was delivered for purchase by the
Holder and a statement that the Holder is withdrawing his election to have the
Note purchased. The Company will issue to the Holder a new Note equal in
principal amount to such unpurchased portion.

            (d) On the purchase date, the Note, or any portion thereof,
purchased by the Company under this Section 6.1 shall be cancelled, and the
Company shall pay the purchase price determined pursuant to Section 6.1(b)(i) to
the Holder.

            (e) The Company shall comply, to the extent applicable, with the
requirements of Section 14(e) of the Exchange Act and any other securities laws
or regulations in connection with the repurchase of the Note pursuant to this
Section 6.1. To the extent that the provisions of any applicable securities laws
or regulations require the Company to act in a manner that conflicts with
provisions of this Note relating to Change of Control Offers, the Company shall
comply with the applicable securities laws and regulations and shall not be
deemed to have breached its obligations under this Section 6.1 by virtue
thereof.

                                   ARTICLE 7
                               EVENTS OF DEFAULT

            Section 7.1. Events of Default. The following shall be Events of
Default:

            (a) the Company or any Guarantor defaults in any payment of interest
on any Senior Secured Increasing Rate Note, and such default continues for a
period of 3 days;

            (b) the Company or any Guarantor (i) defaults in the payment of the
principal of any Senior Secured Increasing Rate Note when the same becomes due
and payable at its Maturity Date, upon required redemption or repurchase, upon
declaration or otherwise, or (ii) fails to redeem or purchase Notes when
required pursuant to the terms hereof;

            (c) the Company or any Guarantor fails to comply with Article 6 or
Section 5.2 hereof;

            (d) the Company or any Guarantor fails to comply with any of its
covenants in this Note or any Transaction Document (other than those referred to
in paragraphs (a), (b) or (c) above) and such failure continues for 60 days
after written notice of such failure shall have been delivered to the Company by
a Noteholder or the Security Trustee;

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            (e) the Company or any Subsidiary pursuant to or within the meaning
of any Bankruptcy Law or otherwise shall be liquidated, dissolved, adjudicated
insolvent, or shall fail to pay, or shall admit in writing its inability to pay
its debts as they mature, or shall make a general assignment for the benefit of
creditors; or the Company or any Subsidiary shall apply for or consent to the
appointment of any receiver, custodian, trustee or similar officer for it or for
all or any substantial part of its property, or such receiver, custodian,
trustee or similar officer shall be appointed without the application or consent
of the Company or any Subsidiary; or the Company or any Subsidiary shall
institute (by petition, application, answer, consent or otherwise), or take any
action to authorize the institution of, any bankruptcy, insolvency,
reorganization, dissolution, liquidation or similar proceeding relating to the
Company or any Subsidiary under the laws of any jurisdiction or takes any
comparable action under any foreign laws relating to insolvency; or any such
proceeding shall be instituted (by petition, application or otherwise) against
the Company or any Subsidiary and such proceeding shall not be dismissed within
60 days after being instituted;

            (f) (i) any Security Document or any security interest granted
thereby shall be held in any judicial proceeding to be unenforceable or invalid,
or not perfected, or shall cease or fail for any reason to be in full force and
effect or to create or constitute a security interest with the priority and
effect required under the Security Trust Agreement and such default or failure
continues for 10 days after written notice, or (ii) the Company or any
Guarantor, or any Person acting on behalf of such Guarantor, shall deny or
disaffirm its obligations under this Note or any Security Document;

            (g) A representation or warranty made or repeated by the Company or
any Guarantor in or in connection with this Note or any Security Document or in
any certificate or statement delivered by or on behalf of the Company or any
Guarantor under or in connection with this Note or any Security Document is
incorrect in any material respect when made or deemed to have been made or
repeated;

            (h) The Company and its Subsidiaries (taken as a whole) cease to
carry on all or a substantial part of its business;

            (i) Any litigation, arbitration or administrative proceedings of or
before any court, arbitral body or agency have been started against the Company
or any Subsidiary where there is a reasonable likelihood of an adverse outcome
to the Company or any Subsidiary where that outcome is of a nature which would
have a Material Adverse Effect; or

            (j) All or a material part of the undertakings, assets, rights or
revenues of, or shares or other ownership interests in, the Company or any
material Subsidiary are seized, expropriated, nationalised or otherwise
compulsory acquired by or under the authority of any government or government
entity.

            Section 7.2. Acceleration of Maturity; Rescission and Annulment. If
an Event of Default (other than an Event of Default specified in Section 7.1(e))
occurs and is continuing, then and in every such case the Majority Noteholders
may declare the principal of, and all accrued and unpaid interest under, all
Senior Secured Increasing Rate Notes, including this Note, to be due and payable
immediately, by a notice in writing to the Company, and upon any such

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declaration such principal and interest shall become due and payable
immediately. If an Event of Default specified in Section 7.1(e) occurs, the
principal of and interest on this Note shall ipso facto become and be
immediately due and payable in cash without any declaration or other act on the
part of any Holders.

            Notwithstanding any of the foregoing, at any time after such a
declaration of acceleration has been made and before a judgment or decree for
payment of the money due has been obtained, the Majority Noteholders may rescind
and annul such declaration and its consequences by notice to the Company in
writing of their desire to do so. No such rescission and annulment shall affect
any subsequent default or impair any right consequent thereon.

                                   ARTICLE 8
                                   COVENANTS

            Section 8.1. Payment of Notes. The Company shall promptly pay the
principal of and interest on this Note on the dates and in the manner provided
herein. The Company shall, to the extent lawful, pay interest on overdue
principal and overdue installments of interest to the extent and in the manner
set forth in Section 1.1(g) of this Note.

            Section 8.2. Compliance with Bye-Laws. The Company shall, and shall
cause all of its Subsidiaries to, comply with all of the terms and conditions of
Section 76A and Schedule 2 of the Bye-Laws.

            Section 8.3. Compliance Certificate. The Company shall deliver to
the Holder within 120 days after the end of each fiscal year of the Company an
Officers' Certificate stating that in the course of the performance by the
signers of their duties as Officers of the Company they would normally have
knowledge of any Default and whether or not the signers know of any Default that
occurred during such period. If they do, the certificate shall describe the
Default, its status and what action the Company is taking or proposes to take
with respect thereto.

                                   ARTICLE 9
                                  DEFINITIONS

            Section 9.1. Definitions. The following terms shall have the
meanings set forth below:

            "Additional Notes" means additional Senior Secured Increasing Rate
Notes due 2007, having terms and conditions identical to those of this Note, and
which are issued in face amount equal to interest that would otherwise be
payable in cash on this Note or on such Notes or any other Senior Secured
Increasing Rate Note.

            "Affiliate" of any specified Person means any other Person, directly
or indirectly, controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any Person

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means the power to direct the management and policies of such Person, directly
or indirectly, whether through the ownership of voting securities, by contract
or otherwise; and the terms "controlling" and "controlled" have meanings
correlative to the foregoing.

            "Bye-Laws" means the Bye-Laws of the Company.

            "Asset Sale" means the sale by the Company or any of its
Subsidiaries to any Person other than Company or any of its wholly-owned
Subsidiaries of (i) any of the Capital Stock of any of the Company's
Subsidiaries, (ii) all or substantially all of the assets of any division or
line of business of the Company or any of its Subsidiaries, or (iii) any other
assets (whether tangible or intangible) of the Company or any of its
Subsidiaries (other than inventory sold in the ordinary course of business).

            "Bankruptcy Law" means Title 11, United States Code, or any similar
Federal, state or foreign law for the relief of debtors.

            "Board of Directors" means the Board of Directors or any committee
thereof duly authorized to act on behalf of the Board of Directors.

            "Business Day" means each day which is not a Legal Holiday.

            "Capital Stock" of any Person means any and all shares, partnership,
membership or other interests, participations or other equivalents of or
interests in (however designated) equity of such Person, including any Preferred
Stock (but excluding any debt securities convertible into such equity) and any
rights to purchase, warrants, options or similar interests with respect to the
foregoing.

            "Change of Control" means the occurrence (x) of a Liquidity Event
(as defined in the Existing Notes), (y) of the adoption of a plan relating to
the liquidation or dissolution of the Company, or (z) at any time following the
occurrence of a Liquidity Event, of any of the following events:

            (a) (i) any "person" (as such term is used in Section 13(d)(3) of
the Exchange Act), other than one or more Permitted Holders, becomes the
beneficial owner (as defined in Rules 13d-3 and 13d-5 under the Exchange Act,
except that a person shall be deemed to have "beneficial ownership" of all
shares that any such person has the right to acquire, whether such right is
exercisable immediately or only after the passage of time), directly or
indirectly, of more than 40% of the total voting power of the Voting Stock of
the Company, whether as a result of issuance of securities of the Company, any
merger, consolidation, liquidation or dissolution of the Company, any direct or
indirect transfer of securities by any Permitted Holder or otherwise, and (ii)
the Permitted Holders "beneficially own" (as defined in clause (i) above),
directly or indirectly, in the aggregate a lesser percentage of the total voting
power of the Voting Stock of the Company, than such other person and do not have
the right or ability by voting power, contract or otherwise to elect or
designate for election a majority of the Board of Directors; or

            (b) during any period of two consecutive years, individuals who at
the beginning of such period constituted the Board of Directors (together with
any new directors or members of such governing body, as the case may be, whose
designation or election to such

                                       10
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Board of Directors, or whose nomination for election by the shareholders of the
Company, (x) was approved by a vote of a majority of the directors of the
Company then still in office who were either directors or members of such
governing body, as the case may be, at the beginning of such period or whose
election or nomination for election was previously so approved or (y) was
effected in accordance with Sections 83A, 83B and 83C of the Bye-Laws), cease
for any reason to constitute a majority of the Board of Directors, then in
office; or

            (c) the merger or consolidation of the Company with or into another
Person or the merger of another Person with or into the Company, or the sale of
all or substantially all the assets of the Company to another Person (other than
a Person that is controlled by the Permitted Holders), and, in the case of any
such merger or consolidation, the securities of the Company that are outstanding
immediately prior to such transaction and which represent 100% of the aggregate
voting power of the Voting Stock of the Company are changed into or exchanged
for cash, securities or property, unless pursuant to such transaction such
securities are changed into or exchanged for, in addition to any other
consideration, securities of the surviving Person or transferee that represent
immediately after such transaction, at least a majority of the aggregate voting
power of the Voting Stock of the surviving Person or transferee or a Person
controlling such surviving Person or transferee.

            "Change of Control Offer" has the meaning set forth in Section
6.1(b).

            "Change of Control Put Price" has the meaning set forth in Section
6.1(a).

            "Closing Date" means June __, 2005.

            "Common Shares" means the Common Shares of the Company, par value
$0.01 per share.

            "Company" has the meaning set forth in the preamble.

            "Deed of Priorities" means the Deed of Priorities dated June __,
2005 by and between the Security Trustee, as security trustee for the Initial
Purchasers, and The Law Debenture Trust Company, p.l.c., as security trustee for
the holders of the Existing Notes.

            "Default" means any event which is, or after notice or passage of
time or both would be, an Event of Default.

            "Event of Default" has the meaning set forth in Section 7.1.

            "Exchange Act" means the Securities Exchange Act of 1934, as
amended.

            "Existing Notes" means the Company's 8% Convertible Senior Secured
Notes due 2014.

            "Guarantee" means any obligation, contingent or otherwise, of any
Person directly or indirectly guaranteeing any indebtedness of any other Person
and any obligation, direct or indirect, contingent or otherwise, of such Person
(a) to purchase or pay (or advance or supply funds for the purchase or payment
of) such indebtedness of such other Person (whether

                                       11
<PAGE>

arising by virtue of partnership arrangements, or by agreement to keep-well, to
purchase assets, goods, securities or services, to take-or-pay, or to maintain
financial statement conditions or otherwise) or (b) entered into for purposes of
assuring in any other manner the obligee of such indebtedness of the payment
thereof or to protect such obligee against loss in respect thereof (in whole or
in part); provided, however, that the term "Guarantee" shall not include
endorsements for collection or deposit in the ordinary course of business. The
term "Guarantee" used as a verb has a corresponding meaning.

            "Guarantors" means VTL (UK) Limited, Viatel Broadband Limited,
Viatel Internet Limited, and each other Subsidiary that may issue a Guarantee of
this Note under the Security Trust Agreement or other guarantee agreement.

            "Holder" has the meaning set forth in the preamble, as further
described in Section 2.1.

            "Initial Purchasers" means the "Purchasers" as defined in the
Purchase Agreement.

            "Interest Payment Date" has the meaning set forth in Section 1.1(b).

            "Legal Holiday" is a Saturday, a Sunday or other day on which
banking institutions are not open for general business in London or New York.

            "Letter Agreement" means that certain Letter Agreement dated as of
June __, 2005, by and between the Company, the holders of the Existing Notes and
the Initial Purchasers.

            "Majority Noteholders" means, at any time, the Noteholders holding a
majority of the principal amount of the Senior Secured Increasing Rate Notes
outstanding at such time.

            "Material Adverse Effect" means a material adverse effect on the
assets, liabilities, business, condition (financial or otherwise), results of
operations or prospects of the Company and its Subsidiaries taken as a whole, or
any other circumstance that in any manner would be expected to materially
adversely affect the interests of the Holder in the Note.

            "Maturity Date" has the meaning set forth in the preamble.

            "Morgan Stanley" means Morgan Stanley & Co. Incorporated.

            "Net Asset Sale Proceeds" means, with respect to any Asset Sale, an
amount equal to: (i) cash payments (including any Cash received by way of
deferred payment pursuant to, or by monetization of, a note receivable or
otherwise, but only as and when so received) received by the Company or any of
its Subsidiaries from such Asset Sale, minus (ii) any bona fide direct costs
(including, without limitation, transaction costs) incurred in connection with
such Asset Sale, including (a) all income or gains taxes payable at any time by
the seller as a result of any gain recognized in connection with such Asset
Sale, (b) payment of the outstanding principal amount of, premium or penalty, if
any, and interest on any Indebtedness (other than the Senior Secured Increasing
Rate Notes) that is secured by a Security Interest on the stock or assets in
question and that is required to be repaid under the terms thereof as a result
of such Asset Sale

                                       12
<PAGE>

and (c) a reasonable reserve for any indemnification payments (fixed or
contingent) attributable to seller's indemnities and representations and
warranties to purchaser in respect of such Asset Sale undertaken by the Company
or any of its Subsidiaries in connection with such Asset Sale.

            "Net Insurance/Condemnation Proceeds" means an amount equal to: (i)
any cash payments or proceeds received by the Company or any of its Subsidiaries
(a) under any casualty insurance policy in respect of a covered loss thereunder
or (b) as a result of the taking of any assets of the Company or any of its
Subsidiaries by any Person pursuant to the power of eminent domain, condemnation
or otherwise, or pursuant to a sale of any such assets to a purchaser with such
power under threat of such a taking, minus (ii) (a) any actual and reasonable
costs incurred by the Company or any of its Subsidiaries in connection with the
adjustment or settlement of any claims of the Company or such Subsidiary in
respect thereof, and (b) any bona fide direct costs incurred in connection with
any sale of such assets as referred to in clause (i)(b) of this definition,
including income taxes payable as a result of any gain recognized in connection
therewith and (c) any amounts required to be applied to the repayment of any
indebtedness secured by a lien which is prior to any liens of the Noteholders on
the asset or assets that are subject to the taking, condemnation or casualty but
excluding, however, an aggregate of $1,000,000 of such proceeds.

            "Note Documents" means this Note, the Security Trust Agreement, the
Deed of Priorities and the Security Documents.

            "Noteholders" means all registered owners of the Senior Secured
Increasing Rate Notes.

            "Note" means this Note, as amended, supplemented, extended,
restated, renewed, replaced, refinanced or otherwise modified, in each case from
time to time and whether in whole or in part.

            "Obligations" means all obligations of the Company and the
Guarantors under this Note and the other Note Documents, including obligations
to the Security Trustee, whether for payment of principal of or interest on this
Note and all other monetary obligations of the Company and the Guarantors under
this Note and the other Note Documents, whether for fees, expenses,
indemnification or otherwise.

            "Officer" means the Chairman of the Board, the Chief Executive
Officer, the Chief Financial Officer, the President, any Vice President, the
Treasurer, any Assistant Treasurer, the Secretary or any Assistant Secretary of
the Company. "Officer" of a Guarantor has a correlative meaning.

            "Officers' Certificate" means a certificate signed by two Officers
of each Person issuing such certificate. For the avoidance of doubt, any
Officers' Certificate to be delivered by the Company pursuant to this Note shall
be signed by two Officers of the Company.

            "Permitted Holders" means Morgan Stanley and its Affiliates and any
Person acting in the capacity of an underwriter in connection with a public or
private offering of the Company's Capital Stock.

                                       13
<PAGE>

            "Person" means any individual, corporation, partnership, limited
liability company, joint venture, association, joint-stock company, trust,
unincorporated organization, government or any agency or political subdivision
thereof or any other entity.

            "Preferred Stock", as applied to the Capital Stock of any Person,
means Capital Stock of any class or classes (however designated) that is
preferred as to the payment of dividends, or as to the distribution of assets
upon any voluntary or involuntary liquidation or dissolution of such Person,
over shares of Capital Stock of any other class of such Person.

            "Purchase Agreement" means the Investment and Note Purchase
Agreement, dated as of June __, 2005, by and among the Company and the Initial
Purchasers.

            "Redemption Date" has the meaning set forth in Section 5.3(i).

            "Redemption Price" has the meaning set forth in Section 5.1.

            "Register" has the meaning set forth in Section 2.1.

            "Securities Act" means the Securities Act of 1933, as amended.

            "Security Documents" means the Security Trust Agreement and any
mortgages, charges, assignments or other Security Interests from time to time
granted by the Company or the Guarantors to the Security Trustee pursuant to the
Security Trust Agreement or any other such security document.

            "Security Interest" means any mortgage, sub-mortgage, security
assignment, standard security, charge, sub-charge, pledge, lien, right of
set-off or other encumbrance or security interest of any kind, however created
or arising.

            "Senior Secured Increasing Rate Notes" means this Note and each
other Senior Secured Increasing Rate Note of the Company issued on the date of
issuance set forth above pursuant to the Purchase Agreement, as well as the
Additional Notes.

            "Security Trust Agreement" means the Security Trust and
Intercreditor Deed, dated as of June __, 2005, as amended, by and among the
Company, the Guarantors, the Security Trustee and the Noteholders.

            "Security Trustee" means The Law Debenture Trust Corporation p.l.c.
and its successors and assigns under the Security Trust Agreement.

            "Subsidiary" of any Person means any corporation, association,
partnership or other business entity of which more than 50% of the total Voting
Stock is at the time owned or controlled, directly or indirectly, by (a) such
Person, (b) such Person and one or more Subsidiaries of such Person or (c) one
or more Subsidiaries of such Person.

            "Transaction Documents" means the Senior Secured Increasing Rate
Notes, the Purchase Agreement, the Security Documents, and the Letter Agreement,
the Deed of Priorities.

                                       14
<PAGE>

            "transfer" has the meaning set forth in Section 2.2.

            "Voting Stock" of a Person means all classes of Capital Stock or
other interests (including partnership interests) of such Person then
outstanding and normally entitled at the time to vote in the election of
directors, managers or trustees thereof.

            Section 9.2. Interpretation. Unless the context otherwise requires:

                  (i) a term has the meaning assigned to it;

                  (ii) an accounting term not otherwise defined has the meaning
            assigned to it in accordance with generally accepted accounting
            principles;

                  (iii) references to "generally accepted accounting principles"
            shall mean generally accepted accounting principles in effect as of
            the time when and for the period as to which such accounting
            principles are to be applied;

                  (iv) "or" is not exclusive;

                  (v) words in the singular include the plural, and in the
            plural include the singular;

                  (vi) provisions apply to successive events and transactions;

                  (vii) "including" means including without limitation; and

                  (viii) any definition of or reference to any agreement,
            instrument or other document herein shall be construed as referring
            to such agreement, instrument or other document as from time to time
            amended, supplemented or otherwise modified.

                                   ARTICLE 10
                                  MISCELLANEOUS

            Section 10.1. Notices. Any notice or communication to be given
according to the terms of this Note shall be governed by the terms and
conditions for the giving of notices under Section 9.04 of the Purchase
Agreement. Failure to mail a notice or communication to a Noteholder or any
defect in it shall not affect its sufficiency with respect to other Noteholders.

            Section 10.2. No Recourse Against Others. A director, officer,
employee, creditor or shareholder, as such, of the Company shall not have any
liability for any obligations of the Company under this Note or for any claim
based on, in respect of or by reason of such obligations or their creation. Each
Noteholder by accepting a Note waives and releases all such liability. The
waiver and release are part of the consideration for the issuance of this Note.

            Section 10.3. Amendment. The provisions of this Note may be amended,
modified or waived if the Majority Noteholders shall, by written consent
delivered to the

                                       15
<PAGE>

Company, consent to such amendment, modification or waiver; provided, however,
that no such waiver shall extend to or affect any covenant set forth herein
except to the extent so expressly waived and, until such waiver shall become
effective, the obligations of the Company in respect of any such covenant shall
remain in full force and effect; and provided further that no such amendment,
modification or waiver (i) which would modify any requirement hereunder that any
particular action be taken by all of the Noteholders, or by Noteholders of a
specified percentage of the aggregate principal amount of the outstanding Senior
Secured Increasing Rate Notes, shall be effective unless consented to by all of
the Noteholders or by Noteholders of such specified percentage, respectively, or
(ii) which would extend the due date for, or reduce the amount of, or form of,
any payment of principal of or interest on any Senior Secured Increasing Rate
Note shall be made without the consent of the Noteholder of such Senior Secured
Increasing Rate Note. Any such amendment, modification or waiver consented to by
the Majority Noteholders shall be binding on all Noteholders.

            Section 10.4. Governing Law; Jurisdiction; Waiver of Trial by Jury.
(a) This Note shall be construed in accordance with the internal laws of the
State of New York without regard to the conflicts of laws provisions thereof.
The Company hereby irrevocably submits to the jurisdiction of any court of the
State of New York located in the County of New York or the United States
District Court for the Southern District of the State of New York, any appellate
courts from any thereof (any such court, a "New York Court") or any court of the
United Kingdom located in London, or any appellate courts from any thereof (any
such court, a "U.K. Court"), for the purpose of any suit, action or other
proceeding arising out of or relating to this Note or under any applicable
securities laws and arising out of the foregoing, which is brought by or against
the Company, and the Company hereby irrevocably agrees that all claims in
respect of any such suit, action or proceeding will be heard and determined in
any New York Court or U.K. Court. The Company hereby agrees not to commence any
action, suit or proceeding relating to this Note other than in a New York Court
except to the extent mandated by applicable law. The Company hereby waives any
objection that it may now or hereafter have to the venue of any such suit,
action or proceeding in any such court or that such suit, action or proceeding
was brought in an inconvenient court and agree not to plead or claim the same.
EACH PARTY TO THIS NOTE HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF
ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION ARISING UNDER THIS NOTE OR IN ANY
WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES
HERETO OR ANY OF THEM WITH RESPECT THIS NOTE, OR THE TRANSACTIONS RELATED
HERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER
FOUNDED IN CONTRACT OR TORT OR OTHERWISE; AND EACH PARTY HEREBY AGREES AND
CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED
BY COURT TRIAL WITHOUT A JURY, AND THAT ANY PARTY TO THIS NOTE MAY FILE AN
ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN
EVIDENCE OF THE CONSENT OF THE SIGNATORIES HERETO TO THE WAIVER OF THEIR RIGHT
TO TRIAL BY JURY.

            (a) The submission to the jurisdiction referred to in the preceding
paragraph shall not limit the right of the Holder to take proceedings against
the Company in courts of any other competent jurisdiction nor shall the taking
of proceedings against the Company in any one

                                       16
<PAGE>

or more jurisdictions preclude the taking of proceedings against the Company in
any other jurisdiction (whether concurrently or not) if and to the extent
permitted by applicable law.

            (b) The Company agrees that the process by which any suit, action or
proceeding is begun in connection with this Note may be served on it at its
principal place of business in the United Kingdom for the time being. If the
Company ceases to have a principal place of business in the United Kingdom, it
shall immediately appoint a further person in the United Kingdom to accept
service of process on its behalf in such jurisdiction. Nothing contained herein
shall affect the right of the Company or the Holder to serve process in any
other manner permitted by law. In addition, the Company acknowledges and agrees
that (a) it has, by separate letter, irrevocably appointed CT Corporation
System, as its authorized agent upon which process may be served in any suit or
proceeding against the Company arising out of or relating to this Note or under
any securities laws of the United States or any state thereof and arising out of
the foregoing, (b) it has, prior to the date hereof, paid such agent an amount
in cash sufficient to procure such agent's services for three years from the
date hereof and (c) service of process upon such agent, and written notice of
said service to the Company by the person serving the same to the address
provided above, shall be deemed in every respect effective service of process
upon the Company in any such suit or proceeding. The Company agrees to take any
and all action as may be necessary to maintain such designation and appointment
of such agent in full force and effect for a period of at least three years from
the date of this Note.

            Section 10.5. Successors. All agreements of the Company in this Note
shall bind its successor.

            Section 10.6. Severability. If any one or more of the provisions
contained in this Note shall, for any reason, be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provisions of this Note and such provision shall be
interpreted to the fullest extent permitted by the law; provided that the
Company and the Holder shall use their reasonable best efforts to find and
employ an alternative means to achieve the same or substantially the same result
as that contemplated by such provision.

            Section 10.7. Headings, etc. The headings of the Articles and
Sections of this Note have been inserted for convenience of reference only, are
not to be considered a part hereof, and shall in no way modify or restrict any
of the terms or provisions hereof.

            Section 10.8. Enforcement. The Company agrees to pay all fees
(including legal fees) and expenses which the Holder may reasonably incur as a
result of any contest by the Holder of the liability of the Company under any
provision of this Note in which a final and non-appealable decision or
settlement is made that the Company is liable to the Holder in substantially
such a manner as is claimed by the Holder.

            Section 10.9. Specific Performance. The Company acknowledges that
the Holder would not have an adequate remedy at law for money damages in the
event that the terms of this Note were not performed in accordance with its
terms, and therefore agrees that the Holder shall be entitled to (in addition to
any other remedy to which the Holder may be entitled, at law or in equity)
injunctive relief, including specific performance, to enforce such obligations,
without the

                                       17
<PAGE>

posting of any bond and if any action should be brought in equity to enforce any
of the provisions of this Note, the Company shall not raise the defense that
there is an adequate remedy at law.

            Section 10.10. Non-Waiver; Remedies Cumulative. Holder shall not, by
any act of omission or commission, be deemed to waive any of its rights or
remedies hereunder unless such waiver be in writing and signed by Holder and
then only to the extent specifically set forth therein; a waiver on one occasion
shall not, except as specifically set forth therein, be construed as continuing
or as a bar to or waiver of a right or remedy on any other occasion. All
remedies conferred upon Holder by this Note shall be cumulative and none is
exclusive, and such remedies may be exercised concurrently or consecutively at
Holder's option.

            Section 10.11. Waiver. The Company hereby waives presentment for
payment, protest and demand, and, except as specifically set forth or required
herein or hereunder, notice of protest, intent, demand, dishonor and nonpayment
of this Note and all other notices of any kind.

            Section 10.12. Assignment. This Note and the rights, duties and
obligations hereunder may not be assigned or delegated by the Company without
the prior written consent of the Holder. Section 10.13. Entire Agreement. This
Note and the agreements, documents and instruments executed in connection
herewith, constitutes the entire agreement of the Company and the Holder with
respect to the subject matter hereof and supersedes all prior and
contemporaneous agreements, representations, understandings, negotiations and
discussions between the Company and the Holder, whether oral or written, with
respect to the subject matter hereof.

            Section 10.14. Time of the Essence. Time is of the essence with
respect to all of the obligations and agreements specified in this Note.

                                      VIATEL HOLDING (BERMUDA) LIMITED

                                      By: __________________________
                                          Name:
                                          Title:

                                       18
<PAGE>

                              [FORM OF ASSIGNMENT]

The undersigned Holder, hereby * to _________ (herein called the "Assignee"), **
interest of the undersigned in this Note, with the effect and subject to the
provisions set forth in this Note, such assignment to be effected by delivery of
this Note to the Company with this assignment properly completed in accordance
with the terms and conditions of this Note, such transfer or assignment to
become effective on, and not to be effective for any purpose until, the Company
has acknowledged such transfer or assignment and executed and delivered a new
Note to the (partial) Assignee registered in the name of the (partial) Assignee
(and, in the case of a partial assignment, a new Note to the undersigned
Holder).

Dated: ____________        ______________________________________________

                                         Signature
                                (Use exact name of Holder as shown on this Note)

Fill in for registration of new Note:

_______________________

_______________________

_______________________

Please print address of Assignee (including zip code)

The undersigned, [insert name of assignee], hereby agrees to execute any
documents reasonably requested by the Company or the Majority Noteholders to
effect the foregoing.

___________________________

Signature of Assignee

-----------------
* Insert, as appropriate, the words "transfers", "assigns", or followed by a
description of the obligation, "pledges as security for".

** Insert, as appropriate, the words "(100%) the entire" or, preceded by a
percentage less than 100% in parentheses, "a partial".

            Notice of the foregoing assignment is hereby acknowledged and
approved.

                                  VIATEL HOLDING (BERMUDA) LIMITED

                                  By __________________________

Dated: ______________

                                       A-1
<PAGE>

[FORM OF OPTION OF HOLDER TO ELECT PURCHASE PURSUANT TO SECTION 6.1 - CHANGE OF
CONTROL]
TO VIATEL HOLDING (BERMUDA) LIMITED:

The undersigned Holder hereby elects to have the Company repurchase [all]
[ * principal amount] of this Note pursuant to Section 6.1 of this Note.

Dated: ____________         ___________________________________________

                                       Signature
                                (Use exact name of Holder as shown on this Note)

* If Note to be repurchased in part, state the amount ($1,000 or integral
multiple thereof)

                                       A-2<PAGE>

                                                                     EXHIBIT 4.7

                                                                  EXECUTION COPY

                              EMPLOYMENT AGREEMENT

            This AGREEMENT by and between Viatel Holding (Bermuda) Limited, a
company incorporated in Bermuda, whose registered office is at Cedar house, 41
Cedar Avenue, Hamilton, HM 12, Bermuda (the "Company"), and Lucy Woods of Kale
House, Reading Road, Mattingley, Hants RG27 8JY, UK (the "Executive"), dated as
of the 21st day of April 2004.

            1. Employment Period. Subject to the purchase of the Notes by the
Investors and the Executive contemplated by the Investment Agreement, dated as
of the date hereof (the "Investment Agreement"), by and among Morgan Stanley &
Co. Incorporated, CFSC Wayland Advisers, Inc., Ahab Partners, L.P., Stonehill
International Partners, L.P., Ore Hill Hub Fund Ltd., Varde Partners, Inc.
(together the "Investors"), the Executive and the Company, the Company hereby
agrees to employ the Executive, and the Executive hereby agrees to be employed
by the Company, subject to the terms and conditions of this Agreement, with
effect from the Closing Date and continuing thereafter unless and until
terminated in accordance with Section 3. Capitalized terms used and not defined
herein shall have the meanings ascribed to such terms in the Investment
Agreement. The Executive's period of continuous employment commenced on 12 May
2003.

            2. Terms of Employment.

            (a) Position and Duties.

                  (i) During the Executive's employment under the terms of this
Agreement (the "Employment Period"), the Executive shall (A) serve as Chief
Executive Officer of the Company and a member of the Board of Directors of the
Company (the "Board"), with such duties and responsibilities as are commensurate
with such position taking into account the duties and responsibilities of the
Chairman of the Board of Directors (B) report to the Board. In addition, the
Executive agrees to serve, without additional consideration, as a director of
the board of directors of any of the Company's subsidiaries or any company or
other entity directly or indirectly controlled by or under common control with
the Company (collectively, the Company and such entities, the "Affiliated
Group"). The Company shall provide or procure that the Executive is provided
with directors and officers' liability insurance in relation to her appointment
as a director and officer of the Company which is substantially similar to that
provided to members of the Board in their capacities as directors of the Board
and with directors and officers' liability insurance in relation to her
appointment as a director or officer of any member of the Affiliated Group which
is substantially similar to that provided to members of the board of directors
of such member of the Affiliated Group.

                  (ii) During the Employment Period, the Executive shall devote
her full attention and time to the business and affairs of the Company and use
her reasonable endeavors to perform such responsibilities in a professional
manner. The Executive may serve on corporate boards of companies outside the
Affiliated Group subject to the reasonable approval of the Board, but only to
the extent any of such board memberships do not interfere with her duties to the
Company, represent a conflict of interest with the Company or violate Section 5
of this Agreement.

<PAGE>

                  (iii) During the Employment Period, the Executive will work
during the Company's normal UK business hours, together with such additional
hours as may be reasonably necessary (with no further compensation) for the
proper performance of her duties. The Executive agrees in accordance with
Regulation 5 of the Working Time Regulations 1998 (the "Regulations") that the
provisions of Regulation 4(1) (which impose a cap on average weekly working
time) do not apply to the Executive and that the Executive will give three (3)
months' prior written notice if she wishes Regulation 4(1) to apply to her.

                  (iv) During the Employment Period, the Executive will be based
at the Company's principal UK offices (which, at the date of this Agreement, are
at Inbucon House, Wick Road, Egham, Surrey TW20 0HR) but will travel (both in
the United Kingdom and overseas) as reasonably required in the performance of
her duties. In the event that the principal offices of the Company are relocated
from the address specified in the previous sentence during the Employment Period
such that it becomes reasonably necessary for the Executive to relocate her
home, the Company will pay for or reimburse all reasonable expenses incurred by
the Executive and her family in undertaking the relocation of the Executive's
home and the personal effects and belongings of the Executive and her family
(including but not limited to any legal and estate agents fees and disbursements
incurred with the sale and purchase of suitable properties and charges incurred
in connection with the transportation of personal effects and belongings).

            (b) Compensation and Benefits.

                  (i) Base Salary. During the Employment Period, the Company
shall pay the Executive an annual base salary of (pound)320,000 (the "Base
Salary"), payable in equal monthly installments . The Executive's Base Salary
shall be reviewed (upwards only) by the Board on or as soon as reasonably
practicable after 1 January each year during the Employment Period for the
purposes of determining the amount, if any, by which the Executive's salary
shall be increased.

                  (ii) Annual Incentive Compensation.

            (A) Bonus Eligibility. Subject to clause (B) below, for each fiscal
      year completed during the Employment Period, the Executive shall be
      eligible to receive an annual cash bonus ("Annual Bonus") with a target of
      125% of the Executive's Base Salary (as increased from time to time) as
      set forth in this Agreement (the "Target Bonus") payable to the Executive
      as set forth in Section 2(b)(ii)(C) of this Agreement. Any such Annual
      Bonus shall be payable in pounds sterling. Any such Annual Bonus shall be
      based on the amount of (i) consolidated revenue of the Company calculated
      in accordance with generally accepted accounting principles ("Revenue")
      for such fiscal year (or with respect to the Hurdle described below for
      the applicable quarter) calculated in (pound)sterling and (ii) EBITDA -
      Working Capital (as defined below) for such fiscal year (or with respect
      to the Hurdle described below for the applicable quarter) calculated in
      (pound)sterling, in each case as compared to the "goal" amount of Revenue
      and EBITDA - Working Capital, respectively, planned for such year as set
      forth in the materials previously provided to the Executive by the Company
      (the "Plan"). Any such Annual Bonus will be determined by reference to the
      amount, if any, that results under clause (B)(1), (2) or (3) plus the
      amount, if any, that results under clause (B)(4), (5) or (6),

                                      -2-
<PAGE>

      below. For purposes of this Agreement, "EBITDA" shall mean the excess of
      (x) Revenue over (y) the sum of (I) cost of sales (II) property costs and
      rights of way, (III) repairs, maintenance lifts & shifts, (IV) staff costs
      (excluding any stock-based compensation expense), (V) marketing, IR & PR
      expenses, (VI) travel expenses, and (VII) other SG&A (excluding any
      professional services, foreign exchange gains or losses, gain or loss on
      sale of investments or fixed assets, receipts from bankruptcy estates and
      "Working Capital" shall mean the excess of (X) Trade Accounts Receivable
      over (Y) Trade Accounts Payable for cost of sales suppliers. The goals for
      Revenue and EBITDA - Working Capital as set out in the Plan for the 2004
      fiscal year have been agreed and have been provided in writing by the
      Company to the Executive. The goals for Revenue and EBITDA - Working
      Capital to be set out in the Plans for each subsequent fiscal year shall
      be determined by the Company promptly after the end of each fiscal year
      only after good faith discussions (undertaken with a view to reaching
      agreement) with the Executive on the appropriate levels for such goals.
      Any change from using Revenue and EBITDA-Working Capital as goals shall be
      subject to agreement between the Executive and the Company. If a goal is a
      negative number, then performance at less than 100% of the goal would be a
      higher negative number than the goal.

            (B) Calculation of Bonus. Subject to clauses (B)(7) and (B)(8)
      below, the amount of the Annual Bonus shall be calculated as follows:

                  (1) If the Company's Revenue for the applicable fiscal year is
      equal to or greater than 70% and less than 80% of the Revenue goal for the
      applicable fiscal year as set forth in the Plan, the Executive shall have
      earned an Annual Bonus of 50% to 74% of 50% of the Target Bonus.

                  (2) If the Company's Revenue for the applicable fiscal year is
      equal to or greater than 80% and less than 100% of the Revenue goal for
      the applicable fiscal year as set forth in the Plan, the Executive shall
      have earned an Annual Bonus of 75% to 100% of 50% of the Target Bonus.

                  (3) If the Company's Revenue for the applicable fiscal year is
      equal to or greater than 100% and is equal to or less than 110% of the
      Revenue goal for the applicable fiscal year as set forth in the Plan, the
      Executive shall have earned an Annual Bonus of 100% to 110% of 50% of the
      Target Bonus. If the Company's Revenue for the applicable fiscal year is
      greater than 110% of the Revenue goal for the applicable fiscal year as
      set forth in the Plan, the Executive shall have earned an Annual Bonus of
      110% of 50% of the Target Bonus.

                  (4) If the Company's EBITDA - Working Capital for the
      applicable fiscal year is equal to or greater than 70% and less than 80%
      of the EBITDA - Working Capital goal for the applicable fiscal year as set
      forth in the Plan, the Executive shall have earned an Annual Bonus of 50%
      to 74% of 50% of the Target Bonus .

                  (5) If the Company's EBITDA - Working Capital for the
      applicable fiscal year is equal to or greater than 80% and less than 100%
      of the EBITDA - Working

                                      -3-
<PAGE>

      Capital goal for the applicable fiscal year as set forth in the Plan, the
      Executive shall have earned an Annual Bonus of 75% to 100% of 50% of the
      Target Bonus.

                  (6) If the Company's EBITDA - Working Capital for the
      applicable fiscal year is equal to or greater than 100% and is equal to or
      less than 110% of the EBITDA - Working Capital goal for the applicable
      fiscal year as set forth in the Plan, the Executive shall have earned an
      Annual Bonus of 100% to 110% of 50% of the Target Bonus. If the Company's
      EBITDA -- Working Capital for the applicable fiscal year is greater than
      110% of the EBITDA -- Working Capital goal for the applicable fiscal year
      as set forth in the Plan, the Executive shall have earned an Annual Bonus
      of 110% of 50% of the Target Bonus.

                  (7) In each case set forth above, the percentage of the Target
      Bonus earned will be interpolated on a pro-rata basis and rounded to the
      nearest tenth of a percentage point based upon the percentage achievement
      of the Revenue or EBITDA - Working Capital goal, as applicable, before
      multiplying such percentage by the Target Bonus to determine the
      (pound)sterling amount of the Annual Bonus; provided, that in no event
      shall the Executive be eligible to earn an Annual Bonus in excess of 110%
      of the Target Bonus.

                  (8) Notwithstanding the foregoing, the Executive shall not be
      eligible to receive any Bonus unless the Hurdle (as defined below) shall
      have been met. If the Hurdle is met in one fiscal year, it shall be deemed
      to be satisfied for that and all subsequent fiscal years. The Hurdle will
      be deemed to be met in any fiscal year only if both (x) the average of
      quarterly Revenue for the third quarter and quarterly Revenue for the
      fourth quarter for such fiscal year is equal to at least 69.39% of the
      average of projected Revenue for the third quarter and projected Revenue
      for the fourth quarter of such fiscal year, as set forth in the Plan and
      (y) the average of quarterly EBITDA - Working Capital for the third
      quarter and quarterly EBITDA - Working Capital for the fourth quarter for
      such fiscal year is equal to at least 69.39% of the average of projected
      EBITDA - Working Capital for the third quarter and projected EBITDA -
      Working Capital for the fourth quarter of such fiscal year, as set forth
      in the Plan.

            (C) Allocation/Payment of the Annual Bonus. Subject to the
      provisions of this Section 2(b)(ii)(C), prior to the second anniversary of
      the date hereof, the Executive shall (and the Executive hereby agrees to)
      purchase Notes from the Company having an aggregate principal amount (at
      the date of issuance) of up to $520,000 (the "Total Investment Amount").
      At or prior to the Closing Date, the Executive has purchased from the
      Company Notes in the aggregate principal amount of $250,000 (the "Minimum
      Investment Amount"). The Company hereby agrees that any Notes which
      represent all or any part of the Additional Investment Amount (as defined
      below) which are acquired by the Executive from the Company in accordance
      with this Section 2(b)(ii)(C) will be subject to and have the benefit of
      all of the terms and conditions (to the extent applicable to the Executive
      under the terms of such Agreements) of the Shareholders Agreement dated as
      of the date hereof among the Company, the Executive, the Investors (the
      "Shareholders Agreement"), the Security Trust and Intercreditor Deed dated
      as of the date hereof, by and among the Company, the Guarantors and The
      Law Debenture Trust

                                      -4-
<PAGE>

      Corporation p.l.c and the Registration Rights Agreement dated as of the
      date hereof among the Company, the Executive and the other Investors named
      therein. In addition, on the date or dates of any such acquisition of
      Notes which represent all or any part of the Additional Investment Amount
      by the Executive, the Executive shall represent and warrant to the Company
      as to herself only and not jointly on the terms contained in Article IV of
      the Investment Agreement. The amount of the Total Investment Amount minus
      the Minimum Investment Amount shall be referred to as the "Additional
      Investment Amount." Notwithstanding the foregoing, the Executive shall not
      be required to purchase any of the Additional Investment Amount in excess
      of the aggregate after-tax amount of the Annual Bonuses for the 2004 and
      2005 fiscal years (except that the Executive shall be permitted to
      purchase such Additional Investment Amount prior to the end of fiscal year
      2005 in excess of the aggregate after-tax amount of the Annual Bonuses for
      the 2004 and 2005 fiscal years from her own funds if she wishes to do so).
      In the event that an Annual Bonus is payable in respect of the 2004 fiscal
      year, the entire after-tax amount of such bonus, if less than the
      Additional Investment Amount, shall be used to purchase Notes to satisfy
      this obligation. In the event that an Annual Bonus is payable in respect
      of the 2005 fiscal year and the Executive has not (on or prior to the time
      that such Annual Bonus would be payable) purchased the Additional
      Investment Amount from the Company, up to the entire after-tax amount of
      such bonus shall be used to purchase Notes from the Company to satisfy
      this obligation. The Company shall have the right to effect such purchases
      by setting off and reducing any Annual Bonus that is otherwise payable.
      The Annual Bonus shall be converted from pounds sterling into US dollars
      at the best (pound)sterling:US dollar exchange rate reasonably available
      to the Company (as reasonably determined by the Board) on the date of
      purchase of such Notes. From and after the time that the Minimum
      Investment Amount has been purchased by the Executive from the Company,
      any amounts not offset to effect any such purchase, and with respect to
      any Annual Bonuses that are payable with respect to fiscal years following
      2005, the Executive shall be paid such Annual Bonuses prior to the end of
      the first fiscal quarter following the end of the fiscal year for which
      the Annual Bonuses were earned (but in no event later than when bonuses
      are paid to other Company executives); provided, that with respect to any
      fiscal year for which the Executive has earned an Annual Bonus below 74%
      of the Target Bonus (a "Minimum Bonus"), the Executive shall not be paid
      the Minimum Bonus (or be permitted to use the Minimum Bonus to purchase
      Notes from the Company to satisfy the Additional Investment Amount) until
      the later of (i) the end of the first fiscal quarter following the end of
      the fiscal year for which the Minimum Bonus was earned (but in no event
      later than when bonuses are paid to other Company executives) and (ii) the
      end of the fiscal quarter on or before the first quarter of 2006 in which
      the Company achieves positive cash flow. In the event that the Company
      does not achieve positive cash flow on or before the first quarter of
      2006, the Executive shall forfeit all right to such Minimum Bonus.

            (D) Adjustments. In the event that an extraordinary, unusual or
      nonrecurring event affects the Company including, without limitation, if
      the Company disposes of a segment of a business or changes accounting
      principles or engages in a recapitalization such as a merger,
      consolidation, separation, spin-off, or other distribution of stock or
      property of the Company, the Board will consider equitably adjusting the
      Hurdle and the EBITDA - Working Capital and Revenue performance goals. Any
      such adjustment shall

                                      -5-
<PAGE>

      only be made following good faith consultations with the Executive during
      which the Company will give the Executive the detailed reasons for any
      such proposed adjustments and will consider in good faith any
      representations made by the Executive in relation to any such proposed
      adjustments. Any adjustments made by the Board shall be made or designated
      at or about the time of the event causing the adjustment to be made.

                  (iii) Employee Benefits. During the Employment Period, the
Executive shall be eligible to participate in employee benefit plans as may be
adopted from time to time by VTL (UK) Limited ("VTL (UK)") on the same basis as
provided to similarly situated executives of VTL (UK) generally.

                  (iv) Insurance Benefits. During the Employment Period, the
Executive will be eligible to participate in the VTL (UK) standard private
medical health (for the benefit of the Executive and her family). The provision
of insurance benefits will be subject to and in accordance with the rules
governing such arrangements from time to time in force.

                  (v) Legal Fees. The Company will reimburse the Executive for
all legal fees (including VAT and disbursements) reasonably incurred by her in
taking advice in connection with the preparation and drafting of this Agreement,
the Shareholders Agreement, the Investment Agreement, the Security Trust and
Intercreditor Deed, the terms of the Notes and all associated documents and
otherwise generally in connection with the transaction contemplated by those
documents.

                  (vi) Pension. During the Employment Period, the Company will,
subject to any applicable Inland Revenue limits, pay an annual amount equal to
6% of the Executive's Base Salary (as amended from time to time) to a personal
pension arrangement of the Executive's choice, subject to the requirements of
applicable law. Such payment will be paid in equal monthly installments at the
same time as the Executive's Base Salary under Section 2(b)(i) is paid.

                  (vii) Car Allowance. During the Employment Period, the Company
will pay the Executive an annual amount (less required deductions) of
(pound)10,000 by way of car allowance. For the avoidance of doubt, the car
allowance shall not be pensionable. The car allowance will be paid in equal
monthly installments at the same time as the Executive's Base Salary under
Section 2(b)(i) is paid.

                  (viii) Expenses. During the Employment Period, the Executive
shall be entitled to prompt reimbursement for all reasonable business expenses
incurred by the Executive, in accordance with the policies provided to similarly
situated executives of the Company generally as may be in effect from time to
time.

                  (ix) Vacation. During the Employment Period, the Executive
shall be entitled to 25 working days' holiday per annum in addition to public
holidays in England and Wales. Holiday entitlement shall be pro-rated for any
part year of employment. Up to a maximum of five days of holiday may be carried
forward from one calendar year to the next. On termination of employment, the
Executive will be entitled to pay in lieu of any holiday entitlement outstanding
for the then current holiday year.

                                      -6-
<PAGE>

                  (x) Management Incentive Plan. (i) Within six (6) months
following the Closing Date, subject to the prior relinquishment of all
outstanding stock options held by the Executive and any future promise of option
grants to the Executive upon execution of the Investment Agreement (other than
the contractual commitments contained in this Section 2(b)(i)(x)), the Company
shall establish the Plan. The "Plan" means an option, equity or cash bonus plan
pursuant to which the management team of the Company shall receive in respect of
vested awards in connection with a liquidity event (to be defined for purposes
of the Plan) a range of value (payable in cash or equity) equal to 5% of the
Equity Value at a liquidity event implying an Equity Value of $100 million, 10%
of the Equity Value at a liquidity event implying an Equity Value of (or in
excess of) $350 million (with interpolated values in between $100 million and
$350 million on a pro rata basis) and no value at a liquidity event implying an
Equity Value less than $100 million or if a liquidity event has not occurred
prior to the tenth anniversary of the date hereof. It is the intention of the
parties that any payment required to be made on the grant or exercise of awards
under the Plan would be nominal.

                  (ii) For these purposes "Equity Value" means the value of all
of the common stock of the Company that is outstanding on the date hereof , all
of the Notes issued in the transactions contemplated by the Investment Agreement
(including all issued Additional Notes (as defined in the terms of the Notes)
and Notes issued as Additional Investment Amount) and all of the stock issuable
(at the time of determination of Equity Value) on conversion of such Notes (as
the same may be adjusted as a result of stock splits or reverse stock splits)
and the value of all equity awards under the Plan outstanding as of the time of
such determination, provided that (A) equitable reductions in Equity Value will
be made to the extent that any such Notes have been repaid or repurchased prior
to the determination of Equity Value, (B) subject to the provisions of clause
(C), any additional equity or securities convertible into or exchangeable for
equity issued by the Company, whether through options, sales, in connection with
acquisitions or otherwise, shall be dilutive to the management team, and (C)
appropriate adjustments shall be made by the Board to protect the participants
against dilution (x) from the first $7.75 million of equity securities (or
securities convertible into or exchangeable for equity securities) of the
Company issued by the Company in respect of cash investments in the Company
(other than the sale to the Executive of the Additional Investment Amount) to
fund the Viatel Business Plan (other than any funding in connection with or as
consideration for the acquisition of assets, shares or businesses by the Company
or any subsidiary) following the initial sale of Notes by the Company pursuant
to the Investment Agreement (a "Business Plan Funding") (and against dilution
resulting from any adjustment to the conversion price of the Notes that is made
(after giving effect to any amendment or waiver by any Noteholder of any
antidilution provisions) as a result of any Business Plan Funding) and (y) from
the issuance of equity or securities convertible into or exchangeable for equity
of the Company in connection with or as consideration for any acquisition of
assets, shares or businesses by the Company or any subsidiary, but in the case
of this clause (y) only to the extent that, and on the same basis that, the
holders of Notes are also actually protected against dilution in such
transaction (after giving effect to any amendment or waiver by any Noteholder of
any antidilution provisions).

                  (iii) Awards under the Plan will vest in three tranches
(one-third on establishment of the Plan and one-third on each of the two
anniversaries of the Closing Date), subject to the Executive's continued
employment through each applicable vesting date. The Plan will provide that in
the event of the termination of the Executive's employment by the Company

                                      -7-
<PAGE>

without Cause or by the Executive for Good Reason or by reason of the
Executive's death or Disability, the Executive will be entitled to immediate
accelerated vesting of the entire next tranche of the award that would have
vested on establishment of the Plan or the anniversary of the Closing Date
following the Date of Termination, if any. In the event that the Executive's
employment terminates for any other reason, the Executive will not be entitled
to vesting of any further tranches (or pro-rata proportions thereof) (it being
understood that vested and unvested awards will be subject to mechanisms to
ensure that the value received by the Executive does not exceed the value
contemplated to be received as set forth above).

                  (iv) The Executive's Awards will constitute 45% of all awards
available under the Plan. Bona fide consideration will be given to inclusion of
appropriate tag-along rights under the Plan. The Plan will have such other terms
not inconsistent with the foregoing as determined by the Board after
consultation with the Executive.

            3. Termination of Employment.

            (a) Death or Disability. The Executive's employment shall terminate
automatically upon the Executive's death during the Employment Period. If the
Company reasonably and in good faith determines that the Disability of the
Executive has occurred during the Employment Period (pursuant to the definition
of Disability set forth below), it may provide the Executive with written notice
in accordance with Section 7(b) of this Agreement terminating the Executive's
employment. In such event, the Executive's employment with the Company shall
terminate effective on the 30th day after receipt of such notice by the
Executive (the "Disability Effective Date"). For purposes of this Agreement,
"Disability" shall mean any physical or mental condition which would qualify the
Executive for a disability benefit under any long-term disability plan
maintained by VTL UK.

            (b) Without Cause. The Company may only terminate the Executive's
employment during the Employment Period without Cause (other than by reason of
Disability) by either (i) giving the Executive 24 months' written notice (or
such lesser full months' written notice determined by the Company); or (ii)
terminating the Executive's employment without the notice required under Section
3(b)(i) and, in either case, paying to the Executive the sum specified in
Section 4(a) below.

            (c) Cause. The Company may terminate the Executive's employment
during the Employment Period for Cause by giving a Notice of Termination in
accordance with Section 3(e). For purposes of this Agreement, "Cause" shall
mean:

                  (i) the Executive's continued failure to substantially perform
      her duties under Section 2(a) of this Agreement, other than any such
      failure resulting from the Executive's incapacity due to her physical or
      mental illness; or

                  (ii) the Executive's engagement in any gross misconduct (which
      materially damages or is reasonably likely to materially damage the
      reputation or business of the Company or any other member of the
      Affiliated Group or the reputation of the Executive in connection with her
      position as Chief Executive Officer or director of the Company) or fraud;
      or

                                      -8-
<PAGE>

                  (iii) the Executive's charged with or convicted of a criminal
      offense (other than a road traffic offense) punishable with at least three
      months' imprisonment; or

                  (iv) the Executive becomes prohibited by law from being a
      director of the Company due to the Executive's misconduct; or

                  (v) the Executive's material breach of Section 5(a) of this
      Agreement or the Executive's failure to make the Minimum Investment Amount
      when required to do so accordance with Section 2(b)(ii)(C); or

                  (vi) the Executive's willful failure or refusal to comply in
      any material respect with any duly authorized and reasonable directive of
      the Board or willful failure to comply with the Company's material
      policies as in effect from time to time covering any of the following:
      securities laws, code of ethics, equal opportunities and sexual
      harassment, Company security, use of alcohol and illegal substances,
      possession of illegal weapons or any additional topics that the Board
      reasonably determines are material policies of the Company and
      specifically notifies the Executive in writing that such policies are to
      be considered material policies within the meaning of, and thus covered
      by, this clause (vi).

                  (vii) the Executive's providing notice pursuant to the final
      sentence of Section 2(a)(iii).

provided that, in relation to any event or circumstance in (i) to (vi) which is
capable of remedy by the Executive, the event or circumstance shall only
constitute "Cause" if the Company has first given written notice to the
Executive (specifically identifying the event or circumstance which the Company
believes constitutes Cause) giving the Executive 30 days from the date of such
notice in which to remedy the breach, and the Executive shall have failed to
remedy such breach within those 30 days, provided, further, that in the event
that the Executive's employment is terminated by the Company solely by reason of
the Executive being charged with a criminal offense under clause (iii) above and
the Executive is later finally acquitted of such charges or the charges against
the Executive are later finally dismissed, the Company will provide the
Executive with the benefits under Section 4(a) as if the date of such final
acquittal or dismissal, as the case may be, is the Date of Termination.

            (d) Good Reason. The Executive may resign from employment during the
Employment Period with Good Reason. If (x) an event or circumstance set forth in
clauses (i) through (iv) below shall have occurred and the Executive provides
the Company with written notice thereof within 30 days after the Executive has
knowledge of the occurrence or existence of such event or circumstance, which
notice shall specifically identify the event or circumstance that the Executive
believes constitutes Good Reason, (y) the Company fails to correct the
circumstance or event so identified within 30 days after the receipt of such
notice, and (z) the Executive resigns within 90 days after the date of delivery
of the notice referred to in clause (x) above, the Executive shall be considered
to have resigned for Good Reason. For purposes of this Agreement, "Good Reason"
shall mean, in the absence of the Executive's prior written consent (and except
in consequence of a prior termination of the Executive's employment), the
occurrence of any of the following:

                                      -9-
<PAGE>

                  (i) (x) the removal of the Executive from the position as
      Chief Executive Officer of the Company (or, the removal of the Executive
      as a director of the Board for any reason other than (A) Disability, (B)
      death, (C) in connection with a termination for Cause, (D) in connection
      with a termination by the Executive without Good Reason or (E) by the
      Board or stockholders in a situation in which (1) Morgan Stanley owns more
      than 50% of the outstanding principal amount of the Notes or more than 50%
      of the outstanding shares of the Company's common stock and (2) Morgan
      Stanley (or each of its employees that are directors of the Company) voted
      against removal or voted in favor of her remaining on the Board) or (y)
      any material diminution of the Executive's duties or responsibilities as
      Chief Executive Officer as set forth in Section 2(a)(i)(A) (other than as
      a result of the Executive's physical or mental incapacity), provided,
      that, any diminution of the Executive's duties or responsibilities as
      Chief Executive Officer or -------- removal from the Board which occurs as
      a result of a Liquidity Event or Change of Control (as defined in the
      Notes) shall not constitute Good Reason if the Executive is (or is
      requested to be but she declines such position) the chief executive
      officer (or similar position in an entity which is not a corporation) of
      the Company (or the Company's successor), even if the Company or such
      successor is a subsidiary of another entity; or

                  (ii) the Company's material breach of any of the provisions of
      Section 2(b); or

                  (iii) the refusal by a purchaser of all or substantially all
      of the assets of the Company to assume in writing and in a timely manner
      the Company's obligations under this Agreement; or

                  (iv) the Company's requirement that the Executive relocate to
      an office location outside of the United Kingdom.

            (e) Notice of Termination. Any termination by the Company or by the
Executive shall be communicated by a Notice of Termination to the other party
hereto given in accordance with Section 7(b) of this Agreement. For purposes of
this Agreement, a "Notice of Termination" means a written notice which (i)
except in respect of a resignation by the Executive without Good Reason,
indicates the specific termination provision in this Agreement relied upon, (ii)
except in respect of a resignation by the Executive without Good Reason, sets
forth in reasonable detail the facts and circumstances claimed to provide a
basis for termination of the Executive's employment under the provision so
indicated and (iii) specifies the Date of Termination (as defined below), which
date, in the case of a termination for Good Reason, shall comply with the
provisions of Section 3(c). The failure by the Company or the Executive to set
forth in the Notice of Termination any fact or circumstance which contributes to
a showing of Cause or Good Reason (respectively) shall not waive any right of
that party from asserting such fact or circumstance in enforcing that party's
rights hereunder.

            (f) Date of Termination. "Date of Termination" means (i) if the
Executive's employment is terminated by the Executive for Good Reason, the date
that the Executive resigns during the 90-day period described in Section 3(d);
(ii) if the Executive's employment is

                                      -10-
<PAGE>

terminated by the Company other than for Cause under Section 3(b)(i); the Date
of Termination shall be the expiry of the notice period provided in Section
3(b)(i); (iii) if the Executive's employment is terminated by the Company other
than for Cause under the provisions of Section 3(b)(ii), the Date of Termination
shall be the date on which the Company provides the Executive with a Notice of
Termination; (iv) if the Executive's employment is terminated by the Company for
Cause, the Date of Termination shall be the date on which the Company provides
the Executive with a Notice of Termination; (v) if the Executive's employment is
terminated by the Executive without Good Reason, the Date of Termination shall
be the date that is 30 days after the date on which the Executive provides the
Company with a Notice of Termination, provided that after the Company has
received such a Notice of Termination, the Company may terminate the Executive's
employment at any time prior to the date that is 30 days after it has received
such Notice of Termination and such termination of employment shall for all
purposes of this Agreement be deemed to be a resignation by the Executive
without Good Reason; and (vi) if the Executive's employment is terminated by
reason of death or Disability, the Date of Termination shall be the date of
death of the Executive or the Disability Effective Date, as the case may be.

            (g) Resignation from All Positions. Notwithstanding any other
provision of this Agreement, upon the termination of the Executive's employment
for any reason, the Executive shall immediately resign as of the Date of
Termination from all positions that she holds or has ever held with the Company
and any other member of the Affiliated Group (and with any other entities with
respect to which the Company has requested the Executive to perform services),
including, without limitation, the Board and all boards of directors of any
member of the Affiliated Group. This obligation is without prejudice to any
claims the Executive may have against the Company arising from her employment or
the termination of her employment with the Company. The Executive hereby agrees
to execute any and all documentation to effectuate such resignations upon
request by the Company (and the Company is hereby irrevocably authorized to
appoint some person in her name and on her behalf to execute any documents or do
anything necessary or requisite to give effect to such resignations) and the
Company will use its reasonable endeavors to take such administrative actions
required to ensure such resignations are effected as soon as reasonably
practicable (including but not limited to ensuring that any such resignations
are notarized as required by local law), but she shall be treated for all
purposes as having so resigned upon termination of her employment, regardless of
when or whether she executes any such documentation.

            (h) Garden Leave. In the event of termination of the Executive's
employment by the Company under the provisions of Section 3(b)(i), subject to
the Company's continued provision to the Executive of the Base Salary and other
contractual benefits in accordance with the terms of this Agreement, the Company
shall have, at its discretion, the right for a period not to exceed six months
or if shorter, the length of the notice period (the "Garden Leave Period") (i)
to exclude the Executive from any premises of the Company or any other member of
the Affiliated Group and require the Executive not to attend at any premises of
the Company or any other member of the Affiliated Group; and/or to require the
Executive to carry out no duties; and/or to require the Executive not to
communicate or deal with any employees, agents, consultants, clients or other
representatives of the Company or any other member of the Affiliated Group;
and/or (ii) to resign with immediate effect from any offices she holds with the
Company or any other member of the Affiliated Group (and any related
trusteeships); and/or to take any holiday which has accrued under Section
2(b)(viii) during the Garden Leave Period.

                                      -11-
<PAGE>

The Executive shall continue to be bound by duties of good faith and fidelity
and the duties set forth in Section 5 of this Agreement during the Garden Leave
Period.

            4. Obligations of the Company upon Termination. The Executive agrees
that the amounts payable under this Section 4 are in lieu of any other claims
the Executive may have with regard to the termination of her employment with the
Company and shall be the Executive's sole and exclusive remedy for any such
claims. The Executive agrees to execute and not to revoke a general release of
claims in the form attached hereto as Exhibit A (except for completion of the
appropriate matters in square brackets) in favor of the Company, its Affiliates
and shareholders and their employees and directors waiving any claims against
such entities or persons in connection with the Executive's employment or
termination of employment (other than any statutory claims) as a condition of
receipt of the amounts payable under this Section 4.

            (a) Termination by the Company other Than for Cause/by the Executive
for Good Reason/by reason of the Executive's death or Disability. If the Company
terminates the Executive's employment without Cause under the provisions of
Section 3(b)(ii) above (or under section 3(b)(i) with less than 24 months
notice) or the Executive resigns for Good Reason or the Executive's employment
terminates by reason of the Executive's death or Disability, the Company will,
within 14 days of the Date of Termination, pay to the Executive (or the
Executive's estate, as the case may be) and the Executive will be contractually
entitled to receive a sum equal to the aggregate of the following (together the
"Severance Payment") (i) twice the Annual Base Salary in effect immediately
prior to the Date of Termination; and (ii) twice the last Annual Bonus paid to
the Executive in respect of a complete fiscal year of the Company (or, in the
event of a termination without Cause or resignation for Good Reason or
termination of employment due to death or Disability prior to determination of
an Annual Bonus in respect of the fiscal year 2004, twice the Target Bonus);
provided, that solely in the event of a termination of the Executive's
employment by reason of the Executive's death or Disability, the aggregate
amount payable under clauses (i) and (ii) shall in no event be less than $3
million. In addition, (except in the case of termination as a result of death)
the Company will procure that the Executive continues to participate in the
private medical plan for 24 months following the Date of Termination at the same
level of cover as was in place immediately prior to the termination of the
Executive's employment. If continued cover is not possible at the same level of
cover for all or any part of the 24 months period, the Company will pay to the
Executive a sum equal to the cost the Executive would have to incur to obtain
such insurance(s) cover in an individual capacity in the open market, subject to
a cost limit of (pound)35,000. The Executive shall also be entitled to receive
any Annual Bonuses earned in respect of any completed fiscal years preceding the
year in which the Date of Termination occurs (to the extent that any such Annual
Bonuses have not already been paid) to be calculated and paid in accordance with
Section 2(b)(ii). The severance obligation under this Section 4(a) shall be
reduced by the amount of compensation payments and insurance coverage received
by the Executive during the notice period given under Section 3(b)(i), if any.
In addition, both the Company and the Executive shall be released from any
obligation to sell or purchase, as the case may be, any Notes that have not yet
been purchased by the Executive in satisfaction of the Additional Investment
Amount and the restriction set forth in Section 5(h) shall lapse.

            (b) Cause; Resignation without Good Reason; If (i) the Executive's
employment shall be terminated by the Company for Cause, or (ii) the Executive
shall resign

                                      -12-
<PAGE>

without Good Reason, the Company shall pay or provide to the Executive to the
extent not theretofore paid or provided, the Executive's Annual Base Salary
through the Date of Termination. The Executive shall also be entitled to receive
any Annual Bonuses earned in respect of any completed fiscal years preceding the
year in which the Date of Termination occurs (to the extent that any such Annual
Bonuses have not already been paid) to be calculated and paid in accordance with
Section 2(b)(ii). In addition, in the event of a termination of employment as
set forth in subclauses (i) or (ii), both the Company and the Executive shall be
released from any obligation to sell or purchase, as the case may be, any Notes
that have not yet been purchased by the Executive in satisfaction of the
Additional Investment Amount and the restriction set forth in Section 5(h) shall
lapse.

            5. Executive's Covenants.

            (a) Confidential Information. The Executive shall hold in a
fiduciary capacity for benefit of the Affiliated Group, all secret or
confidential information, knowledge or data relating to the Affiliated Group and
its businesses (including, without limitation, any proprietary information
concerning any processes, methods, trade secrets, research or secret data,
costs, names of users or purchasers of their respective products or services,
business methods, operating procedures or programs or methods of promotion and
sale) that the Executive has obtained or obtains during the Executive's
employment by the Company that is not publicly available (other than as a result
of the Executive's violation of this Section 5(a)) ("Confidential Information").
For the purposes of this Section 5(a), information shall not be deemed to be
publicly available merely because it is embraced by general disclosures or
because individual features or combinations thereof are publicly available. The
Executive shall not communicate, divulge, disseminate, reproduce or otherwise
use Confidential Information at any time during or after the Executive's
employment with the Company, except (i) with prior written consent of the
Company, (ii) as required by law or legal process or (iii) as such disclosure or
use may be required in the course of the Executive performing her duties and
responsibilities as the Chief Executive Officer of the Company and is not in
violation of the reasonable policies of the Board. Notwithstanding the foregoing
provisions, if the Executive is required to disclose any such confidential or
proprietary information pursuant to applicable law or a subpoena or court order,
the Executive shall, to the extent that she is legally permitted to do so,
promptly notify the Company in writing of any such requirement so that the
Company or the appropriate member of the Affiliated Group may seek an
appropriate protective order or other appropriate remedy or waive compliance
with the provisions hereof. The Executive shall reasonably cooperate with the
Affiliated Group to obtain such a protective order or other remedy. If such
order or other remedy is not obtained prior to the time the Executive is
required to make the disclosure, or the Company waives compliance with the
provisions hereof, the Executive shall disclose only that portion of the
confidential or proprietary information which she is advised by counsel that she
is legally required to so disclose. Upon her termination of employment with the
Company for any reason, the Executive shall promptly return to the Company, all
records, files, memoranda, correspondence, notebooks, notes, reports, customer
lists, drawings, plans, documents, and other documents and the like relating to
the business of the Affiliated Group or containing any trade secrets relating to
the Affiliated Group or that the Executive uses, prepares or comes into contact
with during the course of the Executive's employment with the Company, and all
property supplied to the Executive by the Company including, without limitation,
any lap top computers, palm held electronic devices, cell phones, pagers, keys,
credit cards and passes, and such

                                      -13-
<PAGE>

materials shall remain the sole property of the Company and/or the Affiliated
Group, as applicable.

            (b) Non-Recruitment of Affiliated Group Employees. The Executive
will not, at any time during the period of 12 months following the Date of
Termination (reduced by the amount of time during which the Executive has been
suspended under Section 3(h)), without the prior written consent of the Company,
directly or indirectly

                  (i) solicit; or

                  (ii) recruit; or

                  (iii) employ

whether as an employee, officer, director, agent, consultant or independent
contractor any person who is at the Date of Termination an employee, officer or
director of the Company or of any other member of the Affiliated Group and who
is employed in an executive, managerial or technical position, and with whom the
Executive have had contact in the course of her employment at any time during
the 12 month period prior to the Date of Termination.

            (c) No Competition -- Solicitation of Business. The Executive will
not, at any time during the period of six months following the Date of
Termination (reduced by the amount of time during which the Executive has been
suspended under Section 3(h)), without the prior written consent of the Company,
directly or indirectly, carry on, set up, be employed, engaged, concerned or
interested in any business which is or is about to be in competition with any
business carried on by the Company or any other member of the Affiliated Group
as at the Date of Termination and in which business the Executive was actively
involved at any time during the 12 month period immediately prior to the Date of
Termination (a "Competitive Activity") in any location in which the Affiliated
Group engages in a Competitive Activity.

            (d) Non-Solicitation of Customers. The Executive will not, at any
time during the period of six months following the Date of Termination (reduced
by the amount of time during which the Executive has been suspended under
Section 3(h)), solicit or entice away or endeavor to solicit or entice away from
the Company or any other member of the Affiliated Group any person, firm,
company or other entity who is, or has been, in the 12 months immediately prior
to the Date of Termination a client or customer of the Company or any other
member of the Affiliated Group with whom the Executive had business dealings at
any time during the course of her employment in that 12 month period, so as to
cause such person, firm, company or other entity to cease doing business (or
reduce its levels of business) with the Company or any other member of the
Affiliated Group or to interfere with or seek to interfere in any way with such
person, firm, company or other entity's relationship with the Company or any
other member of the Affiliated Group.

            (e) Non-dealing with Customers. The Executive will not, at any time
during the period of six months following the Date of Termination (reduced by
the amount of time during which the Executive has been suspended under Section
3(h)), have any business dealings with any person, firm, company or other entity
who is, or has been, in the 12 months

                                      -14-
<PAGE>

immediately prior to the Date of Termination a client or customer of the Company
or any other member of the Affiliated Group with whom the Executive had business
dealings at any time during the course of her employment in that 12 month
period, so as to cause such person, firm, company or other entity to cease to do
business (or reduce its levels of business) with the Company or any member of
the Affiliated Group or to interfere with or seek to interfere in any way with
such person, firm, company or other entity's relationship with the Company or
any other member of the Affiliated Group.

            (f) Assistance. The Executive agrees that during and after her
employment by the Company, the Executive will assist the Affiliated Group in the
defense of any claims, or potential claims that may be made or threatened to be
made against any member of the Affiliated Group in any action, suit or
proceeding, whether civil, criminal, administrative, investigative or otherwise
other than by the Executive (a "Proceeding"), and will assist the Affiliated
Group in the prosecution of any claims that may be made by any member of the
Affiliated Group in any Proceeding, to the extent that such claims may relate to
the Executive's employment or the period of the Executive's employment by the
Company other than in relation to any such claims made by any member of the
Affiliated Group against the Executive which may relate to her employment or
period of employment. The Executive agrees, unless precluded by law, to promptly
inform the Company if the Executive is asked to participate (or otherwise become
involved) in any Proceeding involving such claims or potential claims. The
Executive also agrees, unless precluded by law, to promptly inform the Company
if the Executive is asked to assist in any investigation (whether governmental
or otherwise) of any member of the Affiliated Group (or their actions),
regardless of whether a lawsuit has then been filed against any member of the
Affiliated Group with respect to such investigation. The Company agrees to
reimburse the Executive for all of the Executive's reasonable out-of-pocket
expenses associated with such assistance, including travel expenses and any
attorneys' fees and shall pay a reasonable per diem fee for the Executive's
service. In addition, the Executive agrees to provide such services as are
reasonably requested by the Company to assist any successor to the Executive in
the transition of duties and responsibilities to such successor. It is agreed
that any obligation on the Executive to assist which arises after the
termination of the Executive's employment will be reasonably subject to any
commitments the Executive may have in any new employment or engagement.

            (g) Remedies. The Executive acknowledges and agrees that the terms
of Section 5: (i) are reasonable in geographic and temporal scope, (ii) are
necessary to protect legitimate proprietary and business interests of the
Company in, inter alia, near permanent customer relationships and confidential
information. The Executive further acknowledges and agrees that (A) the
Executive's breach of the provisions of Section 5 will cause the Company
irreparable harm, which cannot be adequately compensated by money damages, and
(B) if the Company elects to prevent the Executive from breaching such
provisions by obtaining an injunction against the Executive, there is a
reasonable probability of the Company's eventual success on the merits. The
Executive consents and agrees that if the Executive commits any such breach or
threatens to commit any breach, the Company shall be entitled to temporary and
permanent injunctive relief from a court of competent jurisdiction, in addition
to, and not in lieu of, such other remedies as may be available to the Company
for such breach, including the recovery of money damages. If any of the
provisions of this Section 5 are determined to be wholly or partially
unenforceable in any jurisdiction, such determination shall not be a bar to or
in any way diminish the Company's right to enforce any such covenant in any
other jurisdiction.

                                      -15-
<PAGE>

            (h) Restrictions on Transfer of Notes. During the Employment Period,
without the prior written consent of the Company or as otherwise required or
permitted pursuant to Section 3.3 and 3.4 of the Shareholder Agreement and to
members of the Executive's family or to limited partnerships, trusts or other
entities owned by or established for the benefit of such family members in
accordance with the Shareholders Agreement, the Executive shall not sell,
assign, transfer, exchange, pledge, hypothecate or otherwise encumber any Notes
(other than a transfer of the Notes to the Company upon conversion thereof) or
any shares of stock of the Company or other securities received in respect of
such Notes and no such sale, assignment, transfer, exchange, pledge,
hypothecation, or encumbrance, whether made or created by voluntary act of the
Executive or any agent of the Executive or by operation of law, shall be
recognized by, or be binding upon, or shall in any manner affect the rights of,
the Company. The Executive consents to the placement of an appropriate legend on
the Notes or other relevant securities evidencing this Agreement.
Notwithstanding the foregoing, the Executive shall be permitted to sell, assign,
transfer, exchange, pledge, hypothecate or otherwise encumber any Notes or any
shares of stock of the Company or other securities received in respect of such
Notes from and after the first date on which Morgan Stanley & Co. Incorporated
shall have transferred, sold or otherwise disposed for cash or freely tradable
securities that trade on an established securities exchange of (x) 20% or more
of the Notes issued to it on the Closing Date (as defined in the Investment
Agreement) or (y) a number of Conversion Shares (as defined in the Investment
Agreement) equal to the number of Conversion Shares issuable upon conversion of
20% of the Notes issued to it on the Closing Date.

            (i) Intellectual Property.

                  (i) The Executive may make discover or create intellectual
property in the course of her duties to the Company and agrees that in this
respect she has a special obligation to further the interests of the Company.

                  (ii) Subject to the provisions of the Patents Act 1977 the
Registered Designs Act 1949 and the Copyright Designs and Patents Act 1988 if at
any time during the Employment Period the Executive makes or discovers or
participates in the making or discovery of any intellectual property relating to
or capable of being used in the business for the time being carried on by the
Company or any other member of the Affiliated Group (the "Intellectual
Property") full details of the Intellectual Property shall immediately be
communicated by her to the Company and shall be the absolute property of the
Company. At the request and expense of the Company, the Executive shall give and
supply all such information data drawings and assistance as may be requisite to
enable the Company to exploit the Intellectual Property to the best advantage
and shall execute all documents and do all things which may be necessary or
desirable for obtaining patent or other protection for the Intellectual Property
in such parts of the world as may be specified by the Company and for vesting
the same in the Company or as it may direct.

                  (iii) The Executive irrevocably appoints the Company to be her
agent in her name and on her behalf to sign execute or do any such instrument or
thing and generally to use her name for the purpose of giving to the Company (or
its nominee) the full benefit of the provisions of this clause and in favor of
any third party a certificate in writing signed by any

                                      -16-
<PAGE>

director or the secretary of the Company that any instrument or act falls within
the authority conferred by this clause shall be conclusive evidence that such is
the case.

                  (iv) If the Intellectual Property is not the property of the
Company, the Company shall subject to the provisions of the Patents Act 1977
have the right to acquire for itself or its nominee her rights in the
Intellectual Property within three months after disclosure pursuant to this
clause on fair and reasonable terms to be agreed or settled by a single
arbitrator.

                  (v) The Executive waives all of her moral rights (as defined
in the Copyright, Designs and Patents Act 1988) in respect of any acts of the
Company or any acts of third parties done with the Company's authority in
relation to any Intellectual Property which is the property of the Company by
virtue of this clause.

                  (vi) Rights and obligations under this clause shall continue
in force after termination of this Agreement in respect of Intellectual Property
made during the Executive's employment under this Agreement and shall be binding
upon her representatives.

            6. Successors.

            (a) This Agreement is personal to the Executive and without the
prior written consent of the Company shall not be assignable by the Executive
otherwise than by will or the laws of descent and distribution. This Agreement
shall inure to the benefit of and be enforceable by the Executive's legal
representatives.

            (b) This Agreement shall inure to the benefit of and be binding upon
the Company and its successors and assigns. Except as provided in Section 6(c),
without the prior written consent of the Executive, this Agreement shall not be
assignable by the Company .

            (c) The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to assume
expressly and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no such succession
had taken place. "Company" means the Company as hereinbefore defined and any
successor to its business and/or assets as aforesaid that assumes and agrees to
perform this Agreement by operation of law or otherwise.

            7. Miscellaneous. (a) This Agreement shall be governed by and
construed in accordance with the laws of the England and Wales, without
reference to principles of conflict of laws. The Company and the Executive agree
to submit irrevocably to the exclusive jurisdiction of the courts of England and
Wales. The captions of this Agreement are not part of the provisions hereof and
shall have no force or effect. This Agreement may not be amended or modified
otherwise than by a written agreement executed by the parties hereto or their
respective successors and legal representatives.

            (b) All notices and other communications hereunder shall be in
writing and shall be given by hand delivery to the other party or by registered
or certified mail, return receipt requested, postage prepaid, addressed as
follows:

                                      -17-
<PAGE>

            If to the Executive:

            at the Executive's address on the books and records of the Company
            on the date of such notice

            With a copy to:

            LeBoeuf, Lamb, Greene & MacRae
            No. 1 Minster Court
            Mincing Lane
            London EC3R 7YL
            United Kingdom

            Attn: Managing Partner

            If to the Company:

            At its registered address.

            With a copy to:

            VTL (UK)
            Inbucon House
            Wick Road
            Egham, Surrey TW20 0HR

            Attn:  General Counsel

            And an additional copy to:

            Wachtell, Lipton, Rosen & Katz
            51 West 52nd Street
            New York, New York 10019

            Attn:  David M. Silk

or to such other address as either of the parties shall have furnished to the
other in writing in accordance herewith. Notice and communications shall be
effective when actually received by the addressee. The Company agrees that VTL
(UK) will be irrevocably appointed as the Company authorized agent for the
purpose of accepting service of any process in England under or in connection
with this Agreement.

            (c) The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement.

            (d) The Company may withhold from any amounts payable under this
Agreement (i) such taxes as shall be required to be withheld by any competent
taxing authority

                                      -18-
<PAGE>

pursuant to any applicable law or regulation and (ii) any sums which are owed
and payable by the Executive to the Company or any other member of the
Affiliated Group.

            (e) To the extent that this Agreement becomes effective on the
Closing Date, as of the Closing Date, this Agreement shall supersede any other
agreement, written or oral, pertaining to the subject matter of this Agreement,
including without limitation all previous employment, severance, termination,
change of control or other similar agreements, including without limitation the
employment letter between the Executive and the Company dated as of May 9, 2003
(and the Company option commitment therein). The Executive acknowledges and
agrees that she is not entering into this Agreement in reliance on any
representation not expressly set out in this Agreement.

            (f) This Agreement may be executed in several counterparts, each of
which shall be deemed an original, and such counterparts shall constitute but
one and the same instrument.

                                      -19-
<PAGE>

            IN WITNESS WHEREOF, this Agreement has been executed by the parties
on the date shown on the first page of this Agreement.

SIGNED as a DEED           )
and DELIVERED by           )
LUCY WOODS                 )
In the presence of:        )

Witness signature:

Witness name:

Witness address:

Witness occupation:

                                    ___________________________________
                                    Executive

                                    VIATEL HOLDING (BERMUDA) LIMITED

                                    By:______________________________
                                       Name:
                                       Title:

                                      -20-
<PAGE>

                                    Exhibit A

                             Form of General Release

            This Agreement is made on [________]:

            BETWEEN

            (1)   Viatel Holding (Bermuda) Limited (the COMPANY); and

            (2)   Lucy Woods (the EXECUTIVE)

            WHEREAS

(A)   The Executive has been employed by the Company under an employment
      agreement (the EMPLOYMENT AGREEMENT) dated April 21, 2004;

(B)   The Executive's employment pursuant to the Employment Agreement has
      terminated in accordance with Section [to specify] of the Employment
      Agreement;

(C)   Pursuant to Section 4 of the Employment Agreement, the Executive's
      entitlement to compensation on termination of her employment is
      conditional upon her entering into a general release of claims in the form
      set out in this Agreement;

(D)   Definitions used in this Agreement shall have the same meaning as they
      have in the Employment Agreement unless stated otherwise.

IT IS AGREED AS FOLLOWS:

In consideration of the payment to be made and benefits to be provided by the
Company to the Executive in accordance with Section [insert relevant subsection]
of the Employment Agreement, the Executive agrees with the Company (for itself
and as agent and trustee for and on behalf of each of its Affiliates, its or
their current of former shareholders, directors, officers or employees) that
she, on behalf of herself and her heirs, successors, spouses and assigns:

1.1 accepts the amount of (pound)[ ] and the benefits to be provided in
accordance with Section [insert relevant subsection] of the Employment Agreement
in full and final settlement of all Claims that the Executive has or may have
against the Company, any Affiliates or any of its or their current or former
shareholders (including without limitation Morgan Stanley & Co., Inc., its
affiliates, and each of their partners, directors, officers, employees,
representatives, contractors, attorneys, heirs, spouses, successors, assigns and
agents, in their individual and professional capacities), directors, officers,
employees or subsidiaries, partners, security holders, representatives,
contractors, attorneys, heirs, spouses, successors, assigns and agents in their
individual and professional capacities. For these purposes, Claim shall mean any
and all disputes, claims, actions, causes of action, damages, liabilities,
promises, debts, compensation, losses, obligations, costs and expenses of any
kind or nature, arising out of or in connection with

                                      -21-
<PAGE>

the Executive's employment with the Company or the termination of her
employment, directorship or other office held with the Company or any Affiliate
or resignation or removal therefrom (including claims which could be asserted by
way of contribution, counter-claim, set-off, indemnity or third party
proceedings, and any claims for interest and legal costs, but excluding any
statutory claims) whether such disputes or claims are asserted or known or not,
or existing or not, and whether or not such disputes or claims or the facts and
matters giving rise to them, could have been discovered as at the date of this
Agreement;

1.2 releases and forever discharges the Company, its Affiliates and any of its
or their current or former shareholders (including without limitation Morgan
Stanley & Co., Inc., its affiliates, and each of their partners, directors,
officers, employees, representatives, contractors, attorneys, heirs, spouses,
successors, assigns and agents, in their individual and professional
capacities), directors, officers, employees and subsidiaries, partners, security
holders, representatives, contractors, attorneys, heirs, spouses, successors,
assigns and agents in their individual and professional capacities from and
against any and all liabilities arising out of any Claim;

1.3 confirms that she will not make, bring or continue in any jurisdiction
against the Company, any of its Affiliates or any of its or their current or
former shareholders (including without limitation Morgan Stanley & Co., Inc.,
its affiliates, and each of their partners, directors, officers, employees,
representatives, contractors, attorneys, heirs, spouses, successors, assigns and
agents, in their individual and professional capacities), directors, officers,
employees, subsidiaries, partners, security holders, representatives,
contractors, attorneys, heirs, spouses, successors, assigns or agents in their
individual and professional capacities any civil claim, demand, action or
proceeding in respect of any Claim released or discharged under 1.2 above.

                                      -22-

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