Document:

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                                                                   Exhibit 10.18

                                                                  EXECUTION COPY

                         CAPACITY RIGHT OF USE AGREEMENT

THIS AGREEMENT, dated as of the 8th day of October 1999, is among FLAG
ATLANTIC LIMITED, a company organised under the laws of Bermuda and having
its principal office at The Emporium Building, 69 Front Street, 4th Floor,
Hamilton, Bermuda, FLAG ATLANTIC USA LIMITED, a company organised under the
laws of Delaware, USA and having its principal office at 570 Lexington
Avenue, 38th Floor, New York, NY 10022, USA, (together hereinafter referred
to as "FA-1") and GTE GLOBAL NETWORKS INCORPORATED ("GTE"), a Delaware
corporation having its principle office 3 Van de Graaff Drive, Burlington,
Massachusetts 01803, USA.

                                   WITNESSETH:

WHEREAS, except as set out below, FLAG Atlantic Limited is constructing and will
directly and/or indirectly own, operate and maintain a fiberoptic cable system
to be known as FLAG Atlantic-1 as more fully described in Schedule 1 (the
"System"); and

WHEREAS, FLAG Atlantic USA Limited is constructing and will own all that part of
the System that is within the territory (including the territorial waters) of
the United States of America; and

WHEREAS, the System is currently scheduled to go into service in stages with the
initial stage, as more particularly described in Schedule 1, ("Initial Stage")
currently scheduled to go into service on or about 31 March 2001 ("Scheduled
Initial RFS Date"); and

WHEREAS, GTE desires to acquire from FA-1, and FA-1 is willing to provide to
GTE, an indefeasible right of use ("IRU") (except as otherwise provided herein)
in the capacity on the System as set out in Schedule 2A or 2B, as applicable
(the "Capacity"); and

WHEREAS, FA-1 and GTE (the "Parties") desire to define the terms and conditions
under which the Capacity will be acquired by GTE.

NOW, THEREFORE, the Parties hereby agree as follows:

1.       PURCHASE OF CAPACITY

1.1      Individual units of Capacity as set out in Schedule 2A or 2B, as
         applicable, (each a "Unit") shall be available for activation in
         tranches (each a "Tranche") pursuant to the delivery schedule set out
         in Schedule 6A or 6B, as applicable. GTE agrees to acquire the IRU
         (except as otherwise provided herein) in the Capacity in Tranche 1 and
         has the option to acquire the IRU (except as otherwise provided herein)
         in the Capacity in Tranches 2, 3, 4 and (if applicable) 5 for the
         purchase price set forth in Schedule 2A or 2B, as applicable (the
         "Purchase Price"), subject to the terms and conditions of this
         Agreement. GTE may exercise its option to acquire the Capacity in
         Tranches 2, 3, 4 and (if applicable) 5 by notice to FA-1 ***. GTE shall
         by the earlier of ***

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

Confidential Treatment has been requested with respect to the portions of
this agreement marked with three asterisks (***) and the redacted material has
been filed separately with the Securities and Exchange Commission.

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         notify FA-1 whether Schedule 2A or 2B shall apply to this Agreement
         (and if GTE fails to give such notice by the required date Schedule 2A
         shall apply). If Schedule 2A applies then Schedule 6A shall apply and
         if Schedule 2B applies then Schedule 6B shall apply.

1.2      FA-1 shall notify GTE of the actual date upon which the Initial
         Stage of the System is able to carry commercial traffic ("Initial
         RFS Date"). Subject to the foregoing, when GTE wishes to activate
         one or more units of Capacity as set out in Schedule 2A or 2B, as
         applicable, (each a "Unit") it shall provide FA-1 with a notice
         ("Activation Notice") indicating the number of Units of Capacity that
         GTE wishes to activate ("Requested Capacity") and a proposed
         activation date for each Unit of Capacity. An Activation Notice for
         Units of Capacity in a Tranche shall not be valid unless GTE has
         activated all the Capacity within the previous Tranche.

1.3      ***

1.4      FA-1 shall:

         1.4.1    Provide to GTE the circuit designations within one day after
                  receipt of an Activation Notice from GTE; and

         1.4.2    Provision the Requested Capacity within *** days (*** days in
                  the case of the initial Requested Capacity to be activated
                  following the Initial RFS Date) after receipt of an Activation
                  Notice for such Requested Capacity in accordance with the
                  standards described in Schedule 7.

1.5      Subject to GTE paying the Purchase Price in accordance with the terms
         of this Agreement, GTE shall have the right, subject to the terms of
         this Agreement, to use such Requested Capacity from the date
         provisioned under clause 1.4.2 until the System is decommissioned.

1.6      GTE shall be entitled to collocation pursuant to a collocation
         agreement to be negotiated between the Parties within 90 days of the
         execution of this Agreement, based on the principles set out in
         Schedule 4.

1.7      Nothing set forth in this Agreement shall require GTE to use purchased
         Capacity for transport of communications until such time as (a) GTE, in
         its sole discretion, determines to use such purchased Capacity, and (b)
         GTE has obtained all necessary approvals to use such purchased
         Capacity.

1.8      GTE shall have an ownership interest in the Capacity as provided herein
         but GTE shall have no legal title or ownership in the physical assets
         of the System itself, including any proceeds from the disposition of
         the System.

1.9      In the event that (i) after using commercially reasonable efforts, FA-1
         does not have the underlying rights to grant an IRU in portions of the
         System located in France, England and between France and England and/or
         (ii) if any jurisdiction in which the System is located does not
         currently recognize or does not recognize in the future the conveyance
         of communications facilities on an IRU basis and/or (iii) FA-1 chooses
         not to obtain an IRU on the portion of the System located in England
         that FLAG Atlantic Limited or a subsidiary will not own outright, then
         as to the Capacity on such portions of the System or within such
         jurisdiction(s) only, this Agreement shall be considered an agreement
         for a lease of such Capacity ("Lease").

1.10     In the event that this Agreement is to be treated as a Lease for any
         portion of the Capacity, then as to such portion only, the terms
         "purchase" and any variations thereon shall mean "lease" or the
         appropriate variation thereof, and the terms "indefeasible right of
         use" and "IRU" shall mean "Lease." Any other terms and conditions of
         this Agreement also shall be deemed modified only

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         to the extent necessary to be consistent with the grant of a lease to
         GTE. All other terms and conditions of this Agreement shall remain
         unchanged and fully valid and enforceable.

2.       PAYMENTS

2.1      GTE shall pay to FA-1 the Purchase Price for Capacity to be acquired
         pursuant hereto as follows (and all such payments shall be
         non-refundable except as otherwise provided in clause 4):

         2.1.1    GTE shall pay to FA-1 the Purchase Price for Capacity in
                  Tranche 1 pursuant to the payment schedule set out in Schedule
                  3.

         2.1.2    If GTE exercises its option in clause 1.1 to acquire Capacity
                  in Tranche 2, 3, 4 or (if applicable) 5 it shall pay *** of
                  the Purchase Price specified for the Capacity in that Tranche
                  on notice to FA-1 of the exercise of its option, with the
                  remaining *** of the Purchase Price being payable when such
                  Capacity has passed the bringing-into-service tests specified
                  in Schedule 7.

2.2      GTE shall pay to FA-1 such amounts for the operation and maintenance of
         the System as are set forth in, or determined pursuant to, Schedule 5
         ("O&M Payments").

2.3      FA-1 shall render to GTE invoices for amounts payable pursuant to this
         Agreement. Invoices for the Purchase Price shall be rendered in
         accordance with clause 2.1. Invoices for O&M Payments shall be rendered
         pursuant to Schedule 5. All invoices shall be due and payable within 30
         days after receipt by GTE.

2.4      If GTE disputes any invoiced amount for O&M payments in good faith, GTE
         must provide to FA-1, on or before the due date of the invoice,
         reasonable notice and a detailed explanation of the basis of the
         dispute, and pay any undisputed amount in accordance with this
         Agreement. *** The parties will make a good faith effort to resolve all
         billing disputes as expeditiously as possible.

2.5      FA-1 shall maintain complete and accurate records of all amounts
         billable to and payments made by GTE under this Agreement and in
         accordance with generally accepted accounting principles. FA-1 shall
         retain and preserve such records in accordance with FA-1's standard
         record-retention practices during the term of this Agreement and for
         a period of three  years after expiration or termination of this
         Agreement. FA-1 will provide GTE at GTE's request, reasonable
         supporting documentation concerning any invoice amount to GTE ***.

2.6      Any amount payable pursuant to this Agreement which is not paid when
         due shall accrue interest at the annual rate of *** above the U.S.
         Dollar LIBOR for one month as quoted in THE WALL STREET JOURNAL on the
         first business day of the month in which the payment is due or the
         maximum rate permitted under the laws of the State of New York, USA,
         whichever is less. All such default interest shall accrue from the day
         following the date payment of the relevant amount was due until it is
         paid in full and shall accrue both before and after judgement. Such
         interest shall be payable on demand. ***

2.7      All amounts payable by GTE pursuant hereto shall be paid in full in
         U.S. dollars by wire transfer, free and clear of all bank or transfer
         charges to such account(s) as FA-1 may by notice to GTE designate
         without reduction for any deduction or withholding for or on account of
         any tax, duty or other charge of whatever nature imposed by any taxing
         authority in lieu of a direct tax on FA-1 in connection with its
         income. If GTE is required by law to make any deduction or withholding
         from any payment hereunder, GTE shall pay such additional amount to
         FA-1 so that after such deduction or withholding the net amount
         received by FA-1 will be not less than the

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         amount FA-1 would have received had such deduction or withholding not
         been required. GTE shall make the required deduction or withholding,
         shall pay the amount so deducted or withheld to the relevant
         governmental authority and shall promptly provide FA-1 with evidence
         of such payment.

2.8      In the case of payments of the Purchase Price, until the Initial RFS
         Date there shall be such controls over the account(s) designated by
         FA-1 pursuant to clause 2.7 so as to ensure that payments of the
         Purchase Price may only be used to make timely payments required to be
         made by FA-1 in connection with the planning, design, construction and
         project management of the System. Any interest arising from amounts
         held in the account(s) shall accrue for the benefit of FA-1.

2.9      GTE's obligation to pay the Purchase Price and other amounts shall not
         be subject to any rights of set-off, counterclaim, deduction, defence
         or other right which GTE may have against FA-1 or any other party under
         this Agreement or otherwise.

3.       TAXES

         Save as the context requires or as otherwise stated herein all
         references to payments made in this Agreement are references to such
         payments exclusive of all applicable sales and use taxes, gross
         turnover taxes, value added taxes, or other similar turnover or sales
         based taxes, excise taxes, duties and levies chargeable under
         applicable law in respect of the supply for which the payment is or is
         deemed to be consideration. Where applicable, such taxes shall be added
         to the invoice and shall be paid to FA-1 at the same time as the
         relevant invoice is settled in accordance with clause 2. FA-1 shall be
         solely responsible for payment of taxes on its income and, except as
         provided in clause 2.7, for withholding taxes, including, but not
         limited to, social security and payroll taxes for its employees. GTE
         shall be solely responsible for payment of taxes on its income and for
         withholding taxes, including, but not limited to, social security and
         payroll taxes for its employees. Neither Party shall have any liability
         for such taxes which are to be borne by the other Party. Each Party
         indemnifies the other Parties and their respective affiliates for all
         claims, losses, penalties, interest, attorney's fees, and costs and
         expenses, including litigation costs, arising from any failure to make
         timely payment of such taxes, duties, and fees such Party is required
         to pay under this Agreement. Each Party shall co-operate in any effort
         by any other Party to contest application or payment or to seek refunds
         of any such taxes, duties, and levies.

4        DEFAULT AND TERMINATION

4.1      In the event that GTE shall have failed to pay any portion of the
         Purchase Price for Capacity in Tranche 1 for more than *** days after
         its due date, then FA-1 may deactivate all then activated Capacity (and
         refuse to activate any additional Capacity) until GTE has paid in full
         all amounts overdue together with applicable default interest provided
         that prior to such deactivation, FA-1 shall notify GTE in writing of
         its concern regarding the overdue payment and shall provide GTE with an
         opportunity to discuss this matter with FA-1 in order to reach an
         amicable solution to the issue of non-payment and avoid deactivation.
         ***

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4.2      If such  default in payment of any portion of the Purchase  Price for
         Capacity in Tranche 1 continues  for a further period of *** days FA-1
         may in its discretion by notice to GTE, either:

         4.2.1    require GTE forthwith to pay the unpaid balance of the
                  Purchase Price for Capacity in Tranche 1; or

         4.2.2    terminate this Agreement and relieve GTE of its obligation to
                  pay any portion of the Purchase Price which has not yet become
                  due and its right to acquire Capacity pursuant hereto.

         Neither such termination of this Agreement nor the exercise by FA-1 of
         such remedy shall relieve GTE of its obligation to pay amounts already
         due hereunder plus default interest thereon.

4.3      In the event that GTE shall have failed to pay any amount (including
         O&M Payments) payable by GTE pursuant hereto (and not being disputed in
         good faith) for more than *** days after its due date, then GTE shall
         not be entitled to activate any additional Capacity or to exercise its
         option to acquire any additional Capacity in Tranche 2, 3, 4 or (if
         applicable) 5 pursuant to clause 1.1 until GTE has paid in full all
         amounts overdue together with applicable default interest. If such
         failure continues for a further *** days, FA-1 shall be entitled to
         refrain from performing any services for GTE required by this Agreement
         and to deny GTE the right of access to collocated spaces until GTE has
         paid in full all amounts overdue together with applicable default
         interest.

4.4      FA-1 reserves the right to temporarily or permanently deactivate all
         then activated Capacity (and refuse to activate any additional
         Capacity) and/or to disconnect GTE's equipment from the System in the
         event GTE's use of the System may result in material damage or
         disruption to the System provided that where practicable FA-1 shall
         notify GTE prior to such deactivation or disconnection and shall
         provide GTE with an opportunity to discuss this matter with FA-1 in
         order to reach a solution to avoid deactivation or disconnection.

4.5      Except as provided herein, GTE shall have no right to terminate or
         cancel this Agreement for any reason whatsoever. If the Initial RFS
         Date has not occurred within *** months after the Scheduled Initial RFS
         Date *** GTE may by two months written notice terminate its purchase of
         the Capacity. GTE shall have no obligation to make any further payments
         under this Agreement following such termination and FA-1 shall within
         60 days of such termination refund to GTE any portion of the Purchase
         Price already paid by GTE to FA-1 which has not been used to make
         timely payments required to be made by FA-1 in connection with the
         planning, design, construction and project management of the System.
         Subject to clause 20.1, the foregoing shall be the limit of GTE's
         rights for delays to the Initial RFS Date.

5.       OPERATION AND MAINTENANCE

5.1      FA-1 shall be responsible for the operation and maintenance of the
         System including arranging for the repair of the System in the event of
         any fault. FA-1 shall use reasonable commercial efforts to operate
         and maintain the System in accordance with acceptable industry
         standards and by reference to Schedule 7, provided that except in the
         case of FA-1's gross negligence or wilful misconduct FA-1 shall not be
         liable to GTE for any loss or damage sustained by reason of any
         failure in or breakdown of the facilities constituting the System or
         any interruption of GTE's use of the Capacity, regardless of the cause
         of such failure, breakdown or interruption, and regardless of how long
         it shall last. GTE's sole responsibility with regard to operation and
         maintenance of the System shall be to make the O&M Payments as and when
         they become due pursuant to this Agreement.

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5.2      FA-1 shall promulgate procedures for the maintenance, use and operation
         of the System according to standards generally accepted in the ocean
         cable industry meeting the standards of Schedule 7 and shall provide
         GTE with a copy thereof. FA-1 may, from time to time, amend such
         procedures and shall provide GTE with a copy of each amendment.

6.       RESTORATION

         FA-1 shall provide restoration on the System as set forth in Schedule
         1. If such restoration is not sufficient for GTE, then GTE shall be
         responsible for making its own restoration arrangements for Capacity
         which is then activated.

7.       SYSTEM ENHANCEMENTS, UPGRADES AND ADDITIONAL CAPACITY

7.1      FA-1 reserves the right to further upgrade the capacity of the System
         and to make any enhancements to the System from time to time. FA-1
         shall provide at least 45 days advance notice for System upgrades or
         enhancements. FA-1 shall use reasonable efforts to minimise the
         interruption, interference or impairment of the System caused by the
         implementation of any such enhancement or upgrade and will consult with
         GTE in determining the date, time and expected duration of any such
         interruption, interference or impairment.

7.2      GTE shall have the right to acquire the IRU in the Capacity in Tranches
         2, 3, 4 and (if applicable) 5 pursuant to clause 1.1 whether or not
         FA-1 upgrades the capacity of the System in accordance with clause 7.1.

8.       SYSTEM DECOMMISSIONING

         The System shall be decommissioned at such time, no earlier than 15
         years and no later than 25 years from the Initial RFS Date, as either
         FA-1 or the holders of three quarters of the then activated capacity on
         the System determine that the System is technically obsolete or has
         reached the end of its useful economic life. There shall be no
         compensation payable to GTE whether GTE voted for or against
         decommissioning. This provision is without prejudice to the rights of
         FA-1 to decommission the System without any liability to GTE
         whatsoever, in the event of a Force Majeure Event which makes it
         impossible to maintain the business efficacy of the System. FA-1 will
         notify GTE of the possibility of any such decommissioning of the System
         by FA-1 and give due consideration to GTE's position and concerns
         regarding such possible decommissioning when considering whether to
         decommission the System.

9.       REPRESENTATIONS, WARRANTIES AND COVENANTS

9.1      GTE represents and warrants to FA-1 as follows:

         9.1.1    GTE is duly established and in good standing under the laws of
                  Delaware and has full power and authority to enter into this
                  Agreement.

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         9.1.2    This Agreement constitutes the legal, valid and binding
                  obligation of GTE, enforceable against GTE in accordance with
                  its terms.

         9.1.3    GTE has obtained or will obtain all necessary consents,
                  licenses, permits and other approvals, both governmental and
                  private, as may be necessary to permit GTE to perform its
                  obligations under this Agreement and to acquire and use the
                  Capacity.

         9.1.4    GTE shall perform its obligations under this Agreement and use
                  the Capacity in a manner consistent with applicable law, and
                  shall not use, or permit the Capacity to be used, for any
                  illegal purpose or in any other unlawful manner.

9.2      FA-1 represents and warrants to GTE as follows:

         9.2.1    It is duly established and in good standing under the laws of
                  the country of its incorporation and has full power and
                  authority to enter into this Agreement.

         9.2.2    This Agreement constitutes its legal, valid and binding
                  obligation enforceable against it in accordance with its
                  terms.

         9.2.3    FA-1 shall perform its obligations under this Agreement and
                  construct, acquire, provide, sell, operate, and maintain the
                  System and Capacity in a manner consistent with applicable
                  law.

         9.2.4    No interruption or impairment of GTE's use of the Capacity
                  will be as a result of the System failing to comply with the
                  "Year 2000 Criteria" provided below.

                  "Year 2000 Criteria" means the System and its components
                  accurately processes date/time data from, into, and between
                  the twentieth and twenty-first centuries and the years 1999
                  and 2000.

9.3      FA-1 will, to the extent applicable, comply with the Government
         Requirements set forth in Schedule 8 in the performance of this
         Agreement. Reference to "Seller" in Schedule 8 shall be deemed to be
         references to FA-1.

9.4      FA-1 will use commercially reasonable efforts to obtain all necessary
         consents, licenses and permits and other approvals, both governmental
         and private, as may be necessary to permit FA-1 to perform its
         obligations under this Agreement and to construct, acquire, operate,
         provide, sell, operate and maintain the System and Capacity.

9.5      Except as provided above, FA-1 disclaims, and GTE waives, all
         representations and warranties regarding the Capacity, including any
         warranty of merchantability or fitness for a particular use, and in
         particular, without limiting the foregoing FA-1 does not warrant that
         the Capacity will be uninterrupted or error free or that the Capacity
         will meet GTE's requirements for the equipment to be deployed by GTE in
         connection with the Capacity or services to be offered by GTE utilising
         this equipment.

10.      FORCE MAJEURE

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         "Force Majeure Event" means fire, strike, embargo, any requirement
         imposed by government regulation, civil or military authorities, act of
         God or by the public enemy, or other cause beyond a Party's reasonable
         control. Default of any of FA-1's subcontractors or suppliers shall not
         constitute a Force Majeure Event unless such default arises out of
         causes beyond the reasonable control of both FA-1 and its
         subcontractors or suppliers and without the fault or negligence of
         either of them. No failure or omission by any Party to carry out or
         observe any of the terms and conditions of this Agreement (other than
         payment obligations) shall give rise to any claim against such Party or
         be deemed a breach of this Agreement if such failure or omission arises
         from a Force Majeure Event.

11.      CONFIDENTIALITY

         Other than in connection with an assignment permitted under clause 13,
         or if it is required by applicable law in connection with the
         enforcement of this Agreement, or as required under subpoena or rule of
         order of a court or other governmental body of competent jurisdiction,
         neither FA-1 nor GTE shall disclose the terms of this Agreement to any
         third party without the prior written consent of the other Party.
         Notwithstanding the foregoing, GTE may disclose this Agreement to
         persons with whom it or its affiliates propose to merge, including, but
         not limited to, GTE Corporation and its affiliates, and/or to any GTE
         affiliate provided such affiliate is bound by these obligations of
         confidentiality. In the event of a demand to disclose the Agreement
         under such rule, order, or subpoena, the Party subject to such demand
         shall where possible give prompt notice to the other Parties in advance
         of disclosure to permit the other parties to seek reasonable protective
         arrangements. Without limiting the generality of the foregoing, neither
         FA-1 nor GTE shall issue any press release or otherwise publicise the
         existence or the terms of this Agreement without the prior written
         consent of the other Party.

12.      NO LICENCE

         Nothing in this Agreement shall or shall be deemed to give rise to any
         right on the part of any Party to use any other Party's Intellectual
         Property. For the purposes of this clause "Intellectual Property" means
         any and all patents, trade marks, rights in designs, copyrights, and
         topography rights, (whether registered or not and any applications to
         register or rights to apply for registration of any of the foregoing),
         rights in inventions, know-how, trade secrets and other confidential
         information, rights in databases and all other intellectual property
         rights of a similar or corresponding character which may now or in the
         future subsist in any part of the world, and a Party's Intellectual
         Property means Intellectual Property owned by or licensed to that Party
         together with the goodwill relating thereto.

13.      ASSIGNMENT

13.1     This Agreement and all the provisions hereof shall be binding upon and
         inure to the benefit of the Parties hereto and their respective
         successors and permitted assigns; provided that, except for the
         assignment of FA-1's rights (but not FA-1's obligations) under this
         Agreement to one or more financial institutions, lenders, creditors and
         export credit agencies as collateral security for financing provided to
         FA-1 or in connection with a sale of receivables by FA-1, neither this
         Agreement nor any of the rights, interest or obligations hereunder
         shall be assigned or

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         transferred by any of the Parties hereto without the prior written
         consent of the other Parties, and any attempted assignment or transfer
         in violation of this clause shall be void. Notwithstanding the
         foregoing, GTE may assign its rights, duties and obligations under
         this Agreement upon notice to FA-1, but without FA-1's prior consent,
         to GTE Affiliates or to any transferee of or successor to all or
         substantially all of the business assets of GTE, provided:

         13.1.1  the  Affiliate,  transferee  or  successor  agrees  to be
                 bound by all  terms  and  conditions  of this Agreement; and

         13.1.2  the Affiliate, transferee or successor is authorised or
                 permitted under the laws and regulations of its country to
                 acquire and use the Capacity.

         For the purposes of this clause, an "Affiliate" shall mean any other
         entity that controls, is controlled by or is under common control with
         GTE.

13.2     FLAG Atlantic Limited and FLAG Atlantic USA Limited may use
         subcontractors or agents to fulfil their obligations hereunder.

14.      ENTIRE AGREEMENT

         This Agreement constitutes the whole agreement between the Parties and
         supersedes any previous or contemporaneous agreements, arrangements or
         understandings between them, oral or written, relating to the subject
         matter hereof. Each of the Parties acknowledges that it is not relying
         on any statements, warranties or representations given or made by any
         of them, whether written or oral, relating to the subject matter
         hereof, save as expressly set out in this Agreement.

15.      VARIATION

         No variation or amendment to this Agreement shall be effective unless
         in writing signed by authorised representatives of each of the Parties.

16.      HEADINGS

         The Clause headings of this Agreement are for convenience of reference
         only and are not intended to restrict, affect or influence the
         interpretation or construction of provisions of such Clause.

17.      SEVERABILITY

         If any provision of this Agreement is found by an arbitral, judicial or
         regulatory authority having jurisdiction to be void or unenforceable,
         such provision shall be deemed to be deleted from this Agreement and
         the remaining provisions shall continue in full force and effect.

18.      WAIVER

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18.1     Failure by a Party at any time to enforce any of the provisions of this
         Agreement shall neither be construed as a waiver of any rights or
         remedies hereunder nor in any way affect the validity of this Agreement
         or any part of it and no waiver of a breach of this Agreement shall
         constitute a waiver of any subsequent breach.

18.2     Termination of this Agreement shall not operate as a waiver of any
         breach by a Party of any of the provisions hereof and shall be without
         prejudice to any rights or remedies of a Party which may arise as a
         consequence of such breach or which may have accrued hereunder up to
         the date of such termination.

18.3     No waiver of a breach of this Agreement shall be effective unless given
         in writing.

19.      NOTICE

19.1     Any notice, request, demand or other communication required or
         permitted hereunder shall be sufficiently given if in writing in
         English and delivered by hand or sent by prepaid registered or
         certified mail (airmail if international), by facsimile or by prepaid
         international courier service of international reputation addressed to
         the appropriate Party at the following address or to such address as
         such Party may from time to time designate in writing by notice sent in
         accordance with this clause:

         If to GTE:

         GTE Global Networks Incorporated
         5221 N. O'Connor Boulevard
         East Tower
         Irving
         Texas 75039
         Attention:  AVP Product Market Management

         With copies to:

         GTE Global Networks Incorporated
         1411 Greenway Drive
         Irving
         Texas 75038
         Attention:  Contract Management

         If to FA-1:

         FLAG Atlantic Limited
         The Emporium Building
         69 Front Street
         4th Floor
         Hamilton HM 12
         Bermuda

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         Attention: Co-chairmen
         Tel:  +1-441-296-0909
         Fax: +1-441-296-0938

         With a copy to:

         FLAG Telecom Limited
         103 Mount Street - 3rd Floor
         London  W1Y 5HE

         U.K.

         Attention:  General Counsel
         Tel:  +44-171-317-0800
         Fax: +44-171-317-0808

         With a copy to:

         GTS Carrier Services
         Terhulpsesteenweg 6A
         Hoeilaart 1560
         Belgium

         Attention:  General Counsel
         Tel:  +322-658-5200
         Fax: +322-658-5100

19.2     GTE acknowledges that all communications in connection with this
         Agreement shall be between GTE and FLAG Atlantic Limited. For this
         purpose, FLAG Atlantic USA Limited hereby appoints FLAG Atlantic
         Limited as its agent to receive and send all communications in
         connection with this Agreement.

19.3     Any notice, request, demand or other communication given or made
         pursuant to this clause shall be deemed to have been received (i) in
         the case of hand delivery or courier, on the date of receipt as
         evidenced by a receipt of delivery from the recipient, (ii) in the case
         of mail delivery, on the date which is seven days after the mailing
         thereof, and (iii) in the case of transmission by facsimile, on the
         date of transmission with confirmed answer back. Each such
         communication sent by facsimile shall be promptly confirmed by notice
         in writing hand-delivered or sent by courier, mail or air mail as
         provided herein, but failure to send such a confirmation shall not
         affect the validity of such communication.

20.      LIABILITY

20.1     ***

20.2     Notwithstanding any other provision in this Agreement to the contrary,
         no Party shall be liable to any other Party for any indirect, special,
         punitive or consequential damages (including, but not limited to, any
         loss of profit or business or claim from any customer for loss of
         services)

                                                                              11

<PAGE>

         arising out of this Agreement or from any breach of any of the terms
         and conditions of this Agreement.

20.3     ***

21.      COUNTERPARTS

         This Agreement may be executed in counterparts. Any single counterpart
         or set of counterparts signed, in either case, by all the Parties
         hereto shall constitute a full and original agreement for all purposes.

22.      WAIVER OF IMMUNITY

         The Parties acknowledge that this Agreement is commercial in nature,
         and the Parties expressly and irrevocably waive any claim or right
         which they may have to immunity (whether sovereign immunity or
         otherwise) for themselves or with respect to any of their assets in
         connection with an arbitration, arbitral award or other proceedings to
         enforce this Agreement, including, without limitation, immunity from
         service of process, immunity of any of their assets from pre- or
         post-judgement attachment or execution and immunity from the
         jurisdiction of any court or arbitral tribunal.

23.      FA-1 FINANCIAL CLOSURE

23.1     The obligation of GTE to pay the Purchase Price (or any instalment
         thereof) and the obligation of FA-1 to provide the Capacity is
         conditional upon the occurrence of FA-1 Financial Closure.

23.2     If FA-1 Financial Closure has not occurred by 31 October 1999, then
         this Agreement shall terminate (with the exception of clauses 11, 20,
         22 and 24 which shall survive termination).

23.3     For the purposes of this Agreement, "FA-1 Financial Closure" shall be
         deemed to take place on the date when FA-1 and its shareholders have
         put in place arrangements satisfactory to them for the financing of the
         construction of the System.

24.      GOVERNING LAW AND DISPUTE RESOLUTION

24.1     This Agreement shall be governed by and construed in accordance with
         the laws of the state of New York, United States of America, without
         regard to the law of New York governing conflicts of law.

24.2     Except as otherwise provided herein, any dispute or controversy arising
         under or in connection with this Agreement shall be finally settled
         under the Rules of Arbitration of the International Chamber of Commerce
         by one arbitrator appointed in accordance with such Rules. The place of
         arbitration shall be London. The arbitration shall be conducted in
         English. The decision and award resulting from such arbitration shall
         be final and binding on the Parties. Judgement upon the arbitration
         award may be rendered by any court of competent jurisdiction, or
         application may be made to such court for a judicial acceptance of the
         award and an order of enforcement.

                                                                              12

<PAGE>

         Insofar as permissible under the applicable laws, the Parties hereby
         waive all rights to object to any action for judgement or execution
         which may be brought before a court of competent jurisdiction on an
         arbitration award or on a judgement rendered thereon.

25.      NON-EXCLUSIVE MARKET RIGHTS

         It is expressly understood and agreed that this Agreement does not
         grant to FA-1 an exclusive privilege to sell or otherwise provide to
         GTE any or all products and services of the type described in this
         Agreement. It is, therefore, understood that GTE may contract with
         other suppliers for the procurement of comparable products and
         services.

26.      AFFILIATE PURCHASES

         Affiliates (which shall have the same meaning as that term is given in
         clause 13.1) designated by GTE may acquire the Capacity in place of GTE
         by issuing an order to FA-1 that incorporates this Agreement by
         reference. Such Affiliates that order Capacity shall be entitled to all
         the rights, and subject to all the obligations, of GTE under this
         Agreement and as to orders by such Affiliates, references in this
         Agreement to GTE shall be deemed to be references to such Affiliates.

27.      SURVIVAL

         Clauses 11, 20, 22 and 24 and any rights of a Party which have accrued
         prior to the cancellation, termination, or expiration of this Agreement
         shall survive such cancellation, termination, or expiration.

28.      ***

                                                                              13

<PAGE>

29.      CUSTOMER INPUT

         Following the Initial RFS Data, FA-1 shall collect views from its
         customers on operation and maintenance (including assignment and
         routing of capacity) of the System through such means as FA-1 shall
         consider appropriate, including by way of periodic conference calls
         with a representative sampling of such customers.

IN WITNESS WHEREOF, FA-1 and GTE have each caused this Agreement to be signed
and delivered by its duly authorised representatives, effective as of the date
first set forth above.

FLAG ATLANTIC LIMITED

           /s/ Samih Kawar
BY ________________________
Name:      Samih Kawar
Title:     Director

FLAG ATLANTIC USA LIMITED

           /s/ James E. Shields                           /s/ Larry F. Bautista
BY ________________________                      BY ________________________
Name:      James E. Shields                      Name:     Larry F. Bautista
Title:     Authorised Signatory                  Title:    Authorised Signatory

GTE INTELLIGENT NETWORK SERVICES INCORPORATED

           /s/ Steven H. Blumenthal
By __________________________
Name:      Steven H. Blumenthal
Title:     Vice President, Engineering GTEI

GTE GLOBAL NETWORKS INCORPORATED

           /s/ Mark P. Hileman
By __________________________
Name:      Mark P. Hileman
Title:     Assistant Secretary-GNI

                                                                              14<PAGE>

                                                                   Exhibit 10.19

                FIBRE, CAPACITY AND FACILITIES PURCHASE AGREEMENT

THIS AGREEMENT, dated as of the ______ day of _______________ 1999, is among
FLAG ATLANTIC LIMITED, a company organised under the laws of Bermuda and having
its principal office at The Emporium Building, 69 Front Street, 4th Floor,
Hamilton, Bermuda, FLAG ATLANTIC USA LIMITED, a company organised under the laws
of Delaware, USA and having its principal office at 570 Lexington Avenue, 38th
Floor, New York, NY 10022, USA, (FLAG ATLANTIC LIMITED AND FLAG ATLANTIC USA
LIMITED being hereinafter jointly and severally referred to as "FA-1") and GTS
TRANSATLANTIC CARRIER SERVICES LIMITED ("Purchaser"), a company organised under
the laws of Bermuda and having its principal office at Clarendon House, 2 Church
Street, Hamilton, HM11, Bermuda.

                                   WITNESSETH:

WHEREAS, FLAG Atlantic Limited is constructing and will directly and/or
indirectly own, operate and maintain a fibre optic cable system to be known as
FLAG Atlantic-1 (the "System") consisting of a subsea element (the "Subsea
Element") and two backhaul elements (the "Backhaul Elements"), the System,
Subsea Element and Backhaul Elements being more fully described in Schedule 1;
and

WHEREAS, FLAG Atlantic USA Limited is constructing and will own all that part of
the System that is within the territory (including the territorial waters) of
the United States of America; and

WHEREAS, the System is currently scheduled to go into service in stages with the
initial stage, as more particularly described in Schedule 1 ("Initial Stage"),
currently scheduled to go into service on or about 31 March 2001 ("Scheduled
Initial RFS Date"), and the final stage, as more particularly described in
Schedule 1 ("Final Stage"), currently scheduled to go into service on or about
30 June 2001 ("Scheduled Final RFS Date"); and

WHEREAS, Purchaser desires to purchase from FA-1, and FA-1 is willing to sell to
Purchaser: (i) an indefeasible and exclusive right of use ("IRU") in the
derivable capacity from one fibre pair (the "Capacity") on each Link (as such
term is described in Schedule 1) of the Subsea Element; (ii) the exclusive right
to use one dedicated dark fibre pair (the "Dark Fibre Pair") on each Link of the
Backhaul Elements; and (iii) all such other rights as are set out in Schedule 2
(together the "Rights"); and

WHEREAS, FLAG Atlantic Limited, FLAG Atlantic USA Limited and Purchaser (the
"Parties") desire to define the terms and conditions under which the Rights will
be acquired by Purchaser.

NOW, THEREFORE, the Parties hereby agree as follows:

1.       GRANT OF RIGHTS AND DELIVERY

1.1      Purchaser agrees to purchase and FA-1 agrees to grant to Purchaser, the
         Rights for the sum of *** (the "Purchase Price"), payable in accordance
         with the schedule set forth in clause 2.1, in each case subject to the
         terms and conditions of this Agreement.

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

  CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE PORTIONS OF THIS
  AGREEMENT MARKED WITH THREE ASTERISKS (***) AND THE REDACTED MATERIAL HAS
  BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION

<PAGE>

1.2      Where provision is made in this Agreement for the provision of
         operations and maintenance services ("O&M") by FA-1, O&M shall be
         provided by FA-1 to Purchaser *** in accordance with Schedule 3.

1.3      Testing and Inspection

1.3.1    ***

1.3.2    ***

1.3.3    ***

1.4      *** The fibre pair so allocated is herein referred to as the "Allocated
         Fibre Pair". Except as set out below, the Preliminary Bandwidth (as
         such term is described in Schedule 2) will be provided and the rest of
         the Capacity will be installed on the Allocated Fibre Pair. ***

                 ***

1.5      Upon the Initial RFS Date, FA-1 will activate the Preliminary Bandwidth
         of the Capacity in each of Links 2, 5, 6 in accordance with the terms
         of this Agreement.

1.6      Upon the Final RFS Date, FA-1 will activate the Preliminary Bandwidth
         of the Capacity in Link 9 in accordance with the terms of this
         Agreement.

1.7      Subject to Purchaser complying with clause 2.1, the Rights shall pass
         to and vest in Purchaser as follows:

1.7.1    in the Capacity, from the Initial RFS Date for the Initial Stage and
         from the Final RFS Date for the Final Stage;

1.7.2    in the Dark Fibre Pair and in each Facility (as such term is described
         in Schedule 2), from the date that the relevant Landing Station,
         Terminal Point or amplifier/regenerator site is made available to FA-1
         for the installation of its equipment being at least 120 days prior to
         the Initial RFS Date;

1.7.3    The Rights shall subsist until the System is decommissioned in
         accordance with clause 8;

1.7.4    Purchaser shall have no legal ownership or other rights in the System
         itself or in the physical assets thereof, in any proceeds from the
         disposition of the System or in any other capacity therein, except as
         specifically provided herein.

1.8      Except as otherwise required by law or generally accepted accounting
         policies, the Parties agree to file their respective income tax returns
         to reflect the terms of clause 1.7 and not to take any actions
         inconsistent therewith.

1.9      ***

                                                                               2

<PAGE>

1.10     Notwithstanding anything in this Agreement to the contrary, following
         the grant of any of the Rights relating to the Capacity or Dark Fibre
         Pair, Purchaser may resell, assign, transfer or otherwise use any such
         rights for any lawful purpose. Notwithstanding any resale, assignment
         or transfer, Purchaser remains liable for its obligations under this
         Agreement. FA-1 agrees and acknowledges that from the Initial RFS Date
         it shall have no right to use the Capacity or Dark Fibre Pair forming
         part of the Initial Stage during the term of this Agreement and that
         from the Final RFS date it shall have no right to use the Capacity
         forming part of the Final Stage during the term of this Agreement.

2.       PAYMENTS

2.1      Purchaser shall pay to FA-1 the Purchase Price for the Rights as
         follows (and all such payments shall be non-refundable except as
         otherwise provided in clause 4.4):

2.1.1    Purchaser shall pay to FA-1 *** of the Purchase Price on receipt of a
         notice from FA-1 that FA-1 Financial Closure (as defined in clause 22)
         has occurred.

2.1.2    Purchaser shall pay the remaining *** of the Purchase Price in
         instalments of *** of the Purchase Price, such instalments being paid
         quarterly with the first payment on 31 December 1999 ***.

2.2      Purchaser shall pay to FA-1 such amounts for the operation and
         maintenance of the System as are set forth in, or determined pursuant
         to, Schedule 4 ("O&M Payments").

2.3      FA-1 shall render to Purchaser invoices for amounts payable pursuant to
         this Agreement. Invoices for the Purchase Price shall be rendered in
         accordance with clause 2.1. Invoices for O&M Payments shall be rendered
         pursuant to Schedule 4. All invoices shall be due and payable within 30
         days after delivery to Purchaser.

2.4      Any amount payable pursuant to this Agreement which is not paid when
         due shall accrue interest at the annual rate of *** above the U.S.
         Dollar LIBOR for one month as quoted in The Wall Street Journal on the
         first business day of the month in which the payment is due. All such
         default interest shall accrue from the day following the date payment
         of the relevant amount was due until it is paid in full and shall
         accrue both before and after judgement. Such interest shall be payable
         on demand.

2.5      All amounts payable by Purchaser pursuant hereto shall be paid in full
         in U.S. dollars by wire transfer free and clear of all bank or transfer
         charges to such account(s) as FA-1 may by notice to Purchaser designate
         without reduction for any deduction or withholding for or on account of
         any tax, duty or other charge of whatever nature imposed by any taxing
         authority. If Purchaser is required by law to make any deduction or
         withholding from any payment hereunder, Purchaser shall pay such
         additional amount to FA-1 so that after such deduction or withholding
         the net amount received by FA-1 will be not less than the amount FA-1
         would have received had such deduction or withholding not been
         required. Purchaser shall make the

                                                                               3

<PAGE>

         required deduction or withholding, shall pay the amount so deducted or
         withheld to the relevant governmental authority and shall promptly
         provide FA-1 with evidence of such payment.

2.6      In the case of payments of the Purchase Price, until the Initial RFS
         Date there shall be such controls over the account(s) designated by
         FA-1 pursuant to clause 2.5 so as to ensure that payments of the
         Purchase Price may only be used to make timely payments required to be
         made by FA-1 in connection with the planning, design, construction and
         project management of the System. Any interest arising from amounts
         held in the account(s) shall accrue for the benefit of FA-1.

2.7      Subject to clause 2.1.2, Purchaser's obligation to make payments
         hereunder shall not be subject to any rights of set-off, counterclaim,
         deduction, defence or other right which Purchaser may have against FA-1
         or any other party.

2.8      Should any invoice for O&M Payments or other service payments or part
         thereof be under dispute as to its correctness, then default interest
         shall not accrue on the amount in dispute pursuant to clause 2.4 above
         provided that within 30 days of receipt of the invoice, Purchaser has
         advised FA-1 by electronic mail, facsimile or like means of
         communication of the amount in dispute and the nature of that dispute.

2.9      Purchaser shall pay the undisputed amount of the invoice by the payment
         date. The amount in dispute shall be investigated by the Parties and
         resolved in a timely manner.

2.10     Notwithstanding the foregoing, in the event that upon investigation the
         amount in dispute or part thereof is found to be correct as originally
         invoiced, Purchaser shall pay, in addition to the amount in dispute,
         interest in accordance with clause 2.4 on all unpaid portions which are
         found to have been correctly invoiced, such interest to be paid from
         the date payment of the relevant amount was originally due until it is
         paid in full.

2.11     Prior to FA-1 Financial Closure, Purchaser shall deliver to FA-1 such
         security for payment of the Purchase Price as is set forth in Schedule
         5.

3.       TAXES

3.1      Save as the context requires or as otherwise stated herein all
         references to payments made in this Agreement are references to such
         payments exclusive of all sales and use taxes, gross turnover taxes,
         value added taxes, or other similar turnover or sales based taxes,
         excise taxes, duties, fees, charges, levies, surcharges to recover the
         cost of universal service contributions, or similar liabilities (other
         than the general income taxes of FA-1) imposed by any authority,
         government or government agency in connection with or as a result of
         or in respect of the supply for which the payment is or is deemed to
         be consideration (collectively "taxes"). Where applicable such taxes
         shall be added to the invoice and shall be paid to FA-1 at the same
         time as the relevant invoice is settled in accordance with clause 2.

                                                                               4

<PAGE>

3.2      In the event that value added tax in the U.K. or France is considered
         to be applicable, FA-1 shall notify Purchaser to this effect prior to
         the issuance of the relevant VAT invoice and both Parties shall work
         together in good faith to restructure the arrangements to reduce the
         impact of VAT on Purchaser, where legally possible, but such that there
         is no adverse cash flow impact for FA-1. Notwithstanding these
         discussions, invoices (excluding the VAT) shall be issued and be
         payable in accordance with clause 2.

3.3      Purchaser shall be responsible for all rates and similar property based
         taxes appropriately assessed and arising directly or indirectly from
         Purchaser's interest in and exercise of the Rights.

4.       DEFAULT AND TERMINATION

4.1      Except as provided in this Agreement, neither Party shall have a right
         to terminate or cancel this Agreement for any reason whatsoever.

4.2      In the event that Purchaser shall have failed to pay any amount payable
         by Purchaser pursuant hereto for more than *** days after its due date,
         then Purchaser shall not be entitled to activate any additional
         capacity within the Subsea Element pursuant to this Agreement or the
         Dark Fibre Pair or to effect any upgrade pursuant to clause 7 until
         Purchaser has paid in full all amounts overdue together with applicable
         default interest. If such failure continues for a further *** days,
         FA-1 shall be entitled to refrain from performing any services for
         Purchaser required by this Agreement, deny Purchaser the right of
         access to co-located spaces (except for the purpose of maintaining its
         existing services to its customers), and refuse to carry out any
         additional break-outs along the route of the Dark Fibre Pair until
         Purchaser has paid in full all undisputed amounts overdue together with
         applicable default interest.

4.3      FA-1 reserves the right to temporarily or permanently deactivate all
         then activated Capacity (and refuse to activate any additional
         Capacity) and/or to disconnect Purchaser's equipment from the System in
         the event that Purchaser is in breach of clause 9.1 or if, in FA-1's
         reasonable judgement, Purchaser's use of the System may damage or
         disrupt the System. Except in case of emergency FA-1 shall notify
         Purchaser in advance of its intent to deactivate Capacity and FA-1
         shall not permanently deactivate the Capacity without first allowing
         Purchaser a reasonable period (being not less than 90 days) within
         which Purchaser may remedy the breach of clause 9.1 or amend its use of
         the System so that the cause or potential cause of the damage or
         disruption has been rectified and the risk removed, as the case may be.
         FA-1 shall reconnect the Capacity as soon as Purchaser has established
         to FA-1's satisfaction that the breach of clause 9.1 has been cured or
         that the cause or potential cause of damage or disruption to be System
         has been rectified and the risk removed.

4.4      If this clause becomes applicable pursuant to clause 2.1.2 or if the
         Initial RFS Date has not occurred within *** months after the Scheduled
         Initial RFS Date (*** months if the delay is caused by a force majeure
         event) Purchaser may by written notice terminate this Agreement.
         Purchaser shall have no obligation to make any further payments under
         this Agreement following such termination and FA-1 shall within ***
         days of such termination refund to

                                                                               5

<PAGE>

         Purchaser any portion of the Purchase Price already paid by Purchaser
         to FA-1 which has not been used to make timely payments required to be
         made by FA-1 in connection with the planning, design, construction and
         project management of the System. Subject to Clauses 4.5 and 4.6, the
         foregoing shall be the limit of Purchaser's rights for delays to the
         Initial RFS Date.

4.5      ***

4.6      ***

5.       OPERATION AND MAINTENANCE

5.1      FA-1 shall be responsible for the operation and maintenance of the
         System including arranging for the repair of the System in the event of
         any fault. Purchaser's responsibility with regard to operation and
         maintenance of the System shall be to make the O&M Payments as and when
         they become due pursuant to this Agreement and to notify FA-1 of each
         fault related to the Dark Fibre Pair/Capacity on becoming aware of the
         same, locate the site of such fault, and in relation to the Dark Fibre
         Pair to shut down Purchaser's lasers within two hours of receipt of
         instructions to enable FA-1 to safely repair the fault. If Purchaser
         fails to shut down its lasers within the required time period, FA-1
         shall be entitled to remove the lasers from the Dark Fibre Pair in
         order to safely repair the Dark Fibre Pair or the System provided that
         FA-1 takes reasonable care in so doing. Purchaser shall also be
         required to provide FA-1 reasonable assistance to determine if a fault
         on the System is due to one or more of Purchaser's break-out points on
         the System.

5.2      FA-1 shall be responsible for maintaining sufficient spares and
         adequate inventory tracking systems to ensure that the System is
         properly and efficiently maintained and repaired, in accordance with
         industry standards.

5.3      Any planned works that will interrupt the Capacity on any Link of the
         Subsea Element or will interrupt the Dark Fibre Pair or will hinder
         access to the Facilities shall be notified to Purchaser at least 15
         days in advance.

5.4      FA-1 shall promulgate procedures for the maintenance, use and operation
         of the System according to standards generally accepted in the
         telecommunications cable industry and in order to maintain the
         Standards and shall provide Purchaser with a copy thereof. FA-1 may
         from time to time amend such procedures provided that such amendments
         do not affect the quality or use of the Rights and remain consistent
         with standards generally accepted in the telecommunications cable
         industry and shall provide Purchaser with a copy of each amendment
         prior to its effectiveness.

5.5      In operating and maintaining the System, FA-1 shall provide operation
         and maintenance on an equal and non-discriminatory basis.

5.6      Except where FA-1 is acting in a reasonable manner in carrying out
         emergency, routine or preventative maintenance or repair activities,
         FA-1 shall conduct all operations and use of the System in a manner
         which does not interrupt, impair or interfere with the use of the
         Rights by Purchaser or Purchaser's customers.

5.7      FA-1 undertakes to operate and maintain the System as economically as
         is reasonably possible.

                                                                               6

<PAGE>

6.     INTENTIONALLY LEFT BLANK

7.     SYSTEM ENHANCEMENTS AND UPGRADES

7.1      FA-1 reserves the right to upgrade the amount of the capacity of the
         System and to make any enhancements to the System from time to time.
         FA-1 shall use reasonable efforts to minimize the interruption,
         interference or impairment of the System caused by the implementation
         of any such enhancement or upgrade and shall indemnify Purchaser for
         any damage or interruption to the Dark Fibre or Capacity as a result of
         FA-1's failure to use such reasonable efforts.

7.2      FA-1 will notify Purchaser of any planned upgrade of, or enhancement
         to, the System. Such notice shall set forth the costs of such upgrade
         or enhancement, based on its pricing agreement with or proposal from
         its suppliers. If Purchaser wishes to participate in such upgrade or
         enhancement for the purposes of upgrading or enhancing the Capacity it
         shall notify FA-1 within 30 days of receiving notice from FA-1. If
         Purchaser agrees to participate in the upgrade or enhancement, the
         upgrade or enhancement will then be treated as FA-1 project managing
         the upgrade or enhancement, pursuant to clause 7.3. If Purchaser elects
         not to participate or fails to timely respond to the notice, FA-1 shall
         be entitled to proceed with the upgrade or enhancement without
         participation by Purchaser.

7.3      Purchaser shall be entitled at its own cost at any time to upgrade the
         Capacity, including upgrading the Capacity to over 400 Gbps if this
         becomes possible. FA-1 shall carry out each upgrade (including the
         provision of the necessary transponders) on Purchaser's behalf in
         increments of 40 Gbps on each Link being upgraded. *** Upon FA-1
         receiving a request to upgrade from Purchaser, FA-1 will within 60
         days, subject to receiving from Purchaser the information required,
         submit to Purchaser costs for the upgrade. The Proposal will identify
         third party costs and project management costs and a completion
         timeline for the upgrade ***. The upgrade will be carried out in
         accordance with the terms of this Agreement (including BIS Testing).

7.4      Purchaser shall be entitled at its own cost at any time to equip the
         Dark Fibre Pair provided that such activities are carried out in
         consultation with FA-1 and at a time, not later than 30 days after the
         date Purchaser wishes to do the work, mutually agreed by the Parties
         (which agreement shall not be unreasonably withheld or delayed).

8.       SYSTEM DECOMMISSIONING

         The System shall be decommissioned at such time, no earlier than 15
         years and no later than 25 years from the Initial RFS Date, as either
         FA-1 or the holders of three quarters of the then activated capacity on
         the System determine that the System is technically obsolete or has
         reached the end of its useful economic life. There shall be no
         compensation payable to Purchaser whether Purchaser voted for or
         against decommissioning. FA-1 shall where possible notify Purchaser if
         the System or any material portion thereof is to be decommissioned at
         least 12 months prior to such decommissioning (or by such later date as
         may be possible if 12 months notice is not possible). This provision is
         without prejudice to

                                                                               7

<PAGE>

         the rights of FA-1 to decommission the System without any liability to
         Purchaser whatsoever in the event of a force majeure event which makes
         it impossible to maintain the business efficacy of the System.

9.       REPRESENTATIONS, WARRANTIES AND COVENANTS

9.1      Purchaser represents, warrants and covenants to FA-1 as follows:

9.1.1    Purchaser is duly established and in good standing under the laws of
         Bermuda and has full power and authority to enter into this Agreement.

9.1.2    This Agreement constitutes the legal, valid and binding obligation of
         Purchaser, enforceable against Purchaser in accordance with its terms.

9.1.3    Purchaser or its affiliate has obtained or will obtain all necessary
         consents, licenses, permits and other approvals, both governmental and
         private, as may be necessary to permit Purchaser to perform its
         obligations under this Agreement and to acquire and use the Capacity.

9.1.4    Purchaser shall perform its obligations under this Agreement and use
         the Capacity in a manner consistent with applicable law, and shall not
         use, or permit the Capacity to be used, for any illegal purpose or in
         any other unlawful manner.

9.2      FLAG Atlantic Limited and FLAG Atlantic USA Limited each represents,
         warrants and covenants to Purchaser as follows:

9.2.1    It is duly established and in good standing under the laws of the
         country of its incorporation and has full power and authority to enter
         into this Agreement.

9.2.2    This Agreement constitutes its legal, valid and binding obligation
         enforceable against it in accordance with its terms.

9.2.3    It shall perform its obligations under this Agreement in a manner
         consistent with applicable law.

9.2.4    It shall use reasonable commercial efforts to design the System in a
         manner consistent with and to require its suppliers to construct and
         install the system in accordance with Schedule 1 and the Standards.

9.2.5    It shall enforce the warranties, guarantees, indemnities,
         undertakings, representations, covenants, or other assurances
         provided by suppliers of the System to FA-1 or its Affiliates,
         including but not limited to the Design Life Warranty, the Defects
         Warranty and other warranties expressly provided by Alcatel
         Submarine Networks in its supply agreement relating to the Subsea
         Element (each a "Warranty"). In the event FA-1***

9.2.6    ***

9.3      Except as provided above, FA-1 disclaims, and Purchaser waives, all
         representations and warranties regarding the System, including any
         warranty of merchantability or fitness for a particular use, and in
         particular, without limiting the foregoing FA-1 does not warrant that
         the Dark Fibre Pair or Capacity will be uninterrupted or error free or
         that the Dark Fibre Pair or Capacity will meet Purchaser's requirements
         for the equipment to be deployed by Purchaser

                                                                              8

<PAGE>

         in connection with the Dark Fibre Pair or Capacity or services to be
         offered by Purchaser utilising this equipment.

10.      FORCE MAJEURE

         No failure or omission by any Party to carry out or observe any of the
         terms and conditions of this Agreement (other than any payment
         obligation) shall give rise to any claim against such Party or be
         deemed a breach of this Agreement if such failure or omission arises
         from an act of God, an act of any government or any other circumstance
         beyond the reasonable control of that Party commonly known as "force
         majeure".

11.      CONFIDENTIALITY

         Other than in connection with an assignment permitted under clause 13
         or if it is required by applicable law in connection with the
         enforcement of this Agreement, neither FA-1 nor Purchaser shall
         disclose the terms of this Agreement to any third party without the
         prior written consent of the other Party. Without limiting the
         generality of the foregoing, neither FA-1 nor Purchaser shall issue
         any press release or otherwise publicise the existence or the terms of
         this Agreement without the prior written consent of the other Party.

12.      NO LICENCE

12.1     Nothing  in this  Agreement  shall or shall be deemed to give rise to
         any right of  Purchaser  to use any FA-1 Intellectual Property.

12.2     For the purposes of this clause "Intellectual Property" means any and
         all patents, trade marks, rights in designs, copyrights, and topography
         rights, (whether registered or not and any applications to register or
         rights to apply for registration of any of the foregoing), rights in
         inventions, know-how, trade secrets and other confidential information,
         rights in databases and all other intellectual property rights of a
         similar or corresponding character which may now or in the future
         subsist in any part of the world, and "FA-1 Intellectual Property"
         means Intellectual Property owned by or licensed to FA-1 together with
         the goodwill relating thereto.

13.      ASSIGNMENT

13.1     This Agreement and all the provisions hereof shall be binding upon and
         inure to the benefit of the Parties hereto and their respective
         successors and permitted assigns; provided that, except for the
         assignment of a Party's rights (but not its obligations) under this
         Agreement to one or more financial institutions and/or export credit
         agencies as collateral security for financing provided to that Party or
         in connection with a sale of receivables by that Party and the
         assignment by such financial institutions (and their assignees) of the
         rights and obligations

                                                                               9

<PAGE>

         under this Agreement to any other persons following exercise of any
         rights or remedies on such collateral security, neither this Agreement
         nor any of the rights, interest or obligations hereunder shall be
         assigned or transferred by any of the Parties hereto without the prior
         written consent of the other Parties, and any attempted assignment or
         transfer in violation of this clause shall be void.

13.2     Notwithstanding clause 13.1, FLAG Atlantic Limited and FLAG Atlantic
         USA Limited may allocate their rights and obligations under this
         Agreement between themselves and their Affiliates.

13.3     FLAG Atlantic Limited and FLAG Atlantic USA Limited may use
         subcontractors or agents to fulfil their obligations hereunder provided
         that FLAG Atlantic Limited and FLAG Atlantic USA Limited remain fully
         liable for the performance of those obligations.

13.4     Notwithstanding Clause 13.1, Purchaser may assign its rights under this
         Agreement to its Affiliates.

13.5     For the purpose of this clause and clause 19.1 "Affiliate" means any
         person or body corporate, controlling, controlled by or under common
         control with the relevant Party.

14.      ENTIRE AGREEMENT

         This Agreement constitutes the whole agreement between the Parties and
         supersedes any previous agreements, arrangements or understandings
         between them relating to the subject matter hereof. Each of the Parties
         acknowledges that it is not relying on any statements, warranties or
         representations given or made by any of them relating to the subject
         matter hereof, save as expressly set out in this Agreement.

15.      VARIATION

         No variation or amendment to this Agreement shall be effective unless
         in writing signed by authorised representatives of each of the Parties.

16.      WAIVER

16.1     Failure by a Party at any time to enforce any of the provisions of this
         Agreement shall neither be construed as a waiver of any rights or
         remedies hereunder nor in any way affect the validity of this Agreement
         or any part of it and no waiver of a breach of this Agreement shall
         constitute a waiver of any subsequent breach.

16.2     Termination of this Agreement shall not operate as a waiver of any
         breach by a Party of any of the provisions hereof and shall be without
         prejudice to any rights or remedies of a Party which may arise as a
         consequence of such breach or which may have accrued hereunder up to
         the date of such termination.

                                                                              10

<PAGE>

16.3     No waiver of a breach of this Agreement shall be effective unless given
         in writing.

17.      INVALIDITY

17.1     If any provision of this Agreement is or becomes (whether pursuant to
         any judgement or otherwise) invalid, illegal or unenforceable in any
         respect under the law of any applicable jurisdiction:

         (a)      the validity, legality and enforceability under the law of
                  that jurisdiction of any other provision; and

         (b)      the validity, legality and enforceability under the law of any
                  other jurisdiction of that or any other provision,

         shall not be affected or impaired in any way thereby.

18.      NOTICE

18.1     Any notice, request, demand or other communication required or
         permitted hereunder shall be sufficiently given if in writing in
         English and delivered by hand or sent by prepaid registered or
         certified mail (airmail if international), by facsimile or by prepaid
         international courier service of international reputation addressed to
         the appropriate Party at the following address or to such address as
         such Party may from time to time designate:

         If to Purchaser:

         GTS Transatlantic Carrier Services Limited
         Clarendon House
         2 Church Street
         Hamilton HM11
         Bermuda

         With a copy to:

         GTS
         Terhulpsesteenweg 6A
         1560 Hoeilaart
         Belgium

         Attention: Legal Director
         Tel: + 32 2 658 5200
         Fax: + 32 2 658 5101

         If to FA-1:

                                                                              11

<PAGE>

         FLAG Atlantic Limited
         The Emporium Building
         69 Front Street
         4th Floor
         Hamilton HM 12
         Bermuda

         Attention: FLAG Atlantic-1
         Tel:  +1-441-296-0909
         Fax: +1-441-296-0938

         With a copy to:

         FLAG Telecom Limited
         103 Mount Street - 3rd Floor
         London  W1Y  5HE
         U.K.

         Attention:  General Counsel
         Tel:  +44-171-317-0800
         Fax: +44-171-317-0808

18.2     Purchaser acknowledges that all communications in connection with this
         Agreement shall be between Purchaser and FLAG Atlantic Limited. For
         this purpose, FLAG Atlantic USA Limited hereby appoints FLAG Atlantic
         Limited as its agent to receive and send all communications in
         connection with this Agreement.

18.3     Any notice, request, demand or other communication given or made
         pursuant to this clause shall be deemed to have been received (i) in
         the case of hand delivery or courier, on the date of receipt as
         evidenced by a receipt of delivery from the recipient, (ii) in the case
         of mail delivery, on the date which is seven days after the mailing
         thereof and (iii) in the case of transmission by facsimile, on the date
         of transmission with confirmed answer back. Each such communication
         sent by facsimile shall be promptly confirmed by notice in writing
         hand-delivered or sent by courier, mail or air mail as provided herein,
         but failure to send such a confirmation shall not affect the validity
         of such communication.

19.      LIABILITY

19.1     Except to the extent stated in clauses 1.4, 4.4 to 4.6 and 9.2.5 ***
         FA-1 shall not be liable to Purchaser for any loss or damage sustained
         by reason of any delay in completion, failure or breakdown of the
         facilities constituting the System or any interruption of service,
         regardless of the cause of such delay in completion, failure or
         breakdown, and regardless of how long it shall last.

                                                                              12

<PAGE>

19.2     Notwithstanding any other provision in this Agreement to the contrary,
         no Party shall be liable to any other Party for any indirect, special,
         punitive or consequential damages (including, but not limited to, any
         loss of profit or business or claim from any customer for loss of
         services) arising out of this Agreement or from any breach of any of
         the terms and conditions of this Agreement.

19.3     Any financier of the System, at its election, shall have a right to
         cure any breach by FA-1 (or, if applicable, an affiliate thereof) under
         this Agreement, provided however, that such financier shall not assume
         any liabilities of FA-1 under this Agreement.

20.      COUNTERPARTS

         This Agreement may be executed in counterparts. Any single counterpart
         or set of counterparts signed, in either case, by all the Parties
         hereto shall constitute a full and original agreement for all purposes.

21.      WAIVER OF IMMUNITY

         The Parties acknowledge that this Agreement is commercial in nature,
         and the Parties expressly and irrevocably waive any claim or right
         which they may have to immunity (whether sovereign immunity or
         otherwise) for themselves or with respect to any of their assets in
         connection with an arbitration, arbitral award or other proceedings to
         enforce this Agreement, including, without limitation, immunity from
         service of process, immunity of any of their assets from pre- or
         post-judgement attachment or execution and immunity from the
         jurisdiction of any court or arbitral tribunal.

22.      FA-1 FINANCIAL CLOSURE

22.1     The obligation of the Purchaser to pay the Purchase Price (or any
         installment thereof) and the obligation of FA-1 to provide the Rights
         are conditional upon the occurrence of FA-1 Financial Closure.

22.2     If FA-1 Financial Closure has not occurred by 12 October 1999, then
         this Agreement shall terminate (with the exception of clauses 11, 19,
         21 and 23 which shall survive termination).

22.3     For the purposes of this Agreement, "FA-1 Financial Closure" shall be
         deemed to take place on the date when FA-1 and its shareholders have
         put in place arrangements satisfactory to them for the financing of the
         construction of the System.

                                                                              13

<PAGE>

23.      GOVERNING LAW AND DISPUTE RESOLUTION

23.1     This Agreement shall be construed in accordance with New York law,
         without regard to the law of New York governing conflicts of law.

23.2     The Parties shall seek to resolve any disputes between them by referral
         of such disputes to the Co-Chairmen of the Board of FA-1 and the
         Managing Director of Purchaser. If the Parties fail to agree within 7
         days of the initiation of this procedure the dispute shall be referred
         to arbitration in accordance with the Arbitration Agreement entered
         into between FA-1 and Purchaser (amongst others) of even date hereof.

24.      FINANCING AGREEMENT

         Notwithstanding any in this Agreement to the contrary, Purchaser shall
         not be entitled to activate or upgrade any capacity on the System to
         the extent and for so long as this would cause FLAG Atlantic Limited to
         violate Section 6.30 of the Financing Agreement.

                                                                              14

<PAGE>

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

FLAG ATLANTIC LIMITED

         /s/ Samih Kawar
BY ________________________
Name:    Samih Kawar
Title:   Director

FLAG ATLANTIC USA LIMITED

         /s/ James E. Shields                             /s/ Larry F. Bautista
BY ________________________                       BY ________________________
Name:    James E. Shields                         Name:    Larry F. Bautista
Title:   Authorised Signatory                     Title:   Authorised Signatory

GTS TRANSATLANTIC CARRIER SERVICES LIMITED

         /s/ Name of Signatory
By _____________________________
Name:    Name of Signatory
Title:                                                                        15

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