Document:

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                                                                   EXHIBIT 10.20

                                                                  EXECUTION COPY

                         CAPACITY RIGHT OF USE 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")
PSINETWORKS COMPANY, a corporation organised under the laws of Delaware, USA and
having its principal office at 510 Huntmar Park Drive, Herndon, VA 20170 USA,
PSINET TELECOM LIMITED, a company organised under the laws of England and having
its principal office at Brookmount Court, Unit A&B, Kirkwood Road, Cambridge CB4
2QH, UK and PSINETWORKS SARL, a company organised under the laws of Switzerland
and having its principal office at Rue Fritz - Coorrisier 103, 2300 La Chaux -
de - Fonds, Switzerland (PSINETWORKS COMPANY, PSINET TELECOM LIMITED and
PSINETWORKS SARL being hereinafter jointly and severally referred to as
"Purchaser").

                                   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 (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 acquire from FA-1, and FA-1 is willing to provide
to Purchaser the Rights (as defined below); and

WHEREAS, Purchaser has already made a payment to FA-1 of *** million of the
Purchase Price (as defined below); and

--------------------------------------
  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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WHEREAS, FA-1 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.     PURCHASE OF RIGHTS

1.1    Purchaser agrees to acquire, and FA-1 agrees to grant to Purchaser, for
       *** (the "Purchase Price"), subject to the terms and conditions of this
       Agreement: (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 fibre pair (the "Terrestrial 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").

1.2    FA-1 shall notify Purchaser of the actual date upon which the Initial
       Stage of the System is able to carry commercial traffic ("Initial RFS
       Date") and the actual date upon which the Final Stage of the System is
       able to carry commercial traffic ("Final RFS Date").

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

       1.3.1  in the Capacity, from the Initial RFS Date (or, if later, the date
              of payment by Purchaser of the penultimate instalment of the
              Purchase Price in accordance with Schedule 3) for the Initial
              Stage and from the Final RFS Date (or, if later, the date of
              payment by Purchaser of the final instalment of the Purchase Price
              in accordance with Schedule 3) for the Final Stage;

       1.3.2  in the Terrestrial Fibre Pair and in each Facility (as such term
              is described in Schedule 2), from the date that the Terrestrial
              Fibre Pair is made available to FA-1 or the relevant Landing
              Station, Terminal Point or amplifier/regenerator site is made
              available to FA-1 for the installation of its equipment (in each
              case being at least 60 days prior to the Initial RFS Date) but not
              for commercial use until the Initial RFS Date (or, if later, the
              date of payment by Purchaser of the penultimate instalment of the
              Purchase Price in accordance with Schedule 3);

       1.3.3  the Rights shall subsist until the System is decommissioned in
              accordance with clause 7.

1.4    Within *** days after the Initial RFS Date, or, if later, within *** days
       after payment by Purchaser of the penultimate instalment of the Purchase
       Price in accordance with Schedule 3, FA-1 will activate the initial
       bandwidth of the Capacity (40 gigabits per second, consisting of four
       wavelengths of ten gigabits per second per wavelength) in each of Links
       2, 5, and 6 in accordance with the terms of this Agreement.

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1.5    Within ten days after the Final RFS Date, or, if later, within ten days
       after payment by Purchaser of the final instalment of the Purchase Price
       in accordance with Schedule 3, FA-1 will activate the initial bandwidth
       of the Capacity (40 gigabits per second, consisting of four wavelengths
       of ten gigabits per second per wavelength) in Link 9 in accordance with
       the terms of this Agreement.

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

2.     PAYMENTS

2.1    Having already paid to FA-1 *** of the Purchase Price for the Rights to
       be acquired pursuant hereto, Purchaser shall pay the remaining *** of the
       Purchase Price pursuant to the payment schedule set out in Schedule 3
       ("Payment Schedule").

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 5 ("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 5. 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 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. ***

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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    Purchaser's obligation to pay the Purchase Price and other amounts shall
       not be subject to any rights of set-off, counterclaim, deduction, defense
       or other right which Purchaser may have against FA-1 or any other party.

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. In the event that
       Purchaser provides FA-1 with a duly authorised exemption certificate,
       exempting Purchaser from any such tax, FA-1 agrees to exempt Purchaser in
       accordance with the applicable tax law, effective on the date the
       exemption certificate is received by FA-1.

3.2    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    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 capacity within
       the Subsea Element or the Terrestrial Fibre Pair not theretofore
       activated or to effect any upgrade pursuant to clause 6 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 and deny Purchaser the right of access to co-located
       spaces (except for the purposes of maintaining its then existing services
       to its customers) until Purchaser has paid in full all undisputed amounts
       overdue together with applicable default interest. ***

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4.2    If the defaulted payment is for any portion of the Purchase Price and
       such default continues for a further period of *** days after the initial
       *** days of delay referred to in clause 4.1, FA-1 may, in its discretion,
       either:

       4.2.1  require Purchaser forthwith to pay the unpaid balance of the
              Purchase Price; or

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

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

4.3    Purchaser shall conduct all operations and use of the Capacity and the
       Terrestrial Fibre Pair in a manner which does not interrupt, impair or
       interfere with the operations of the System or the use thereof by FA-1 or
       any other purchaser or user of optical fibres or capacity in the System.
       If, after notification by FA-1, Purchaser does not take immediate
       corrective action to comply with its obligations under this clause 4.3,
       FA-1 may take reasonable action required to protect the System, including
       but not limited to the interruption of Purchaser's use of the Capacity or
       the Terrestrial Fibre Pair and installation of protective equipment.
       Purchaser shall, within 15 days of receipt of an invoice, reimburse FA-1
       for its total reasonable direct costs properly incurred *** for any
       protective measures reasonably required by FA-1 to be installed on the
       System resulting from the use of the Capacity or the Terrestrial Fibre
       Pair in violation of this clause. In applying restrictions on use of the
       System by FA-1's customers FA-1 shall act in an equal and
       non-discriminatory manner.

4.4    Except as provided herein, Purchaser shall have no right to terminate or
       cancel this Agreement or its obligation to purchase the Rights. If the
       Initial RFS Date has not occurred within *** months after the Scheduled
       Initial RFS Date Purchaser may by two months written notice terminate its
       purchase of the Rights. Purchaser shall have no obligation to make any
       further payments of the Purchase Price under this Agreement following
       such termination and FA-1 shall within *** days of such termination
       refund to 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. In the event Purchaser
       has not exercised this right of termination, FA-1 may notify Purchaser of
       the revised expected Initial RFS Date. Purchaser shall have 30 days from
       receipt of this notice to notify FA-1 that it wishes to terminate its
       obligation to purchase the Rights or that it accepts the delay to the
       revised expected Initial RFS Date (and failure by Purchaser to provide a
       timely notice shall be deemed acceptance of the delay). If the Initial
       RFS Date does not occur by the revised expected Initial RFS Date the
       above procedure will be repeated until the earlier of the occurrence of
       the Initial RFS Date and Purchaser's termination of its obligation to
       purchase the Rights.

4.5    If Purchaser has exercised its right to terminate its obligation to
       purchase the Rights and the Initial

                                                                    Page 5 of 26
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       RFS Date actually occurs prior to the date *** months after the Scheduled
       Initial RFS Date, Purchaser shall be entitled within six months from the
       Initial RFS Date to notify FA-1 that it wishes to acquire capacity on the
       System in the amount of the Purchase Price theretofore paid by Purchaser
       and not refunded pursuant to clause 4.4, the amount of the capacity being
       determined on the basis of the unit cost for the initial bandwidth that
       Purchaser would have received under this Agreement but for such
       termination. In such case, this Agreement shall be amended by the Parties
       to reflect the different nature of the capacity being acquired and the
       different rights and obligations of the Parties as a consequence thereof.

4.6    If the Initial RFS Date has not occurred within *** months after the
       Scheduled Initial RFS Date, Purchaser may by 30 days notice terminate
       this Agreement ***.

4.7    The foregoing shall be the limit of Purchaser's rights for delays to the
       Initial RFS Date.

4.8    ***

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 Terrestrial Fibre Pair/Capacity on becoming aware of
       the same, locate the site of such fault, and in relation to the
       Terrestrial 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 Terrestrial Fibre
       Pair in order to safely repair the Terrestrial Fibre Pair or the System
       provided that FA-1 takes reasonable care in so doing.

5.2        ***

5.3    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 shall provide Purchaser with a copy
       thereof (in draft form at least 60 days prior to the Initial RFS Date).
       FA-1 may from time to time amend such procedures and shall provide
       Purchaser with a copy of each amendment prior to its effectiveness.

5.4        ***

5.5    Following the Initial RFS Date, FA-1 shall solicit views from
       representative samplings of its customers on operation and maintenance of
       the System through such means as FA-1 considers appropriate. Purchaser
       may, of course, provide its views on an unsolicited basis. If Purchaser
       believes the manner in which FA-1 is operating and maintaining the System
       constitutes a breach

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       of this Agreement, Purchaser shall notify FA-1 and the Parties shall
       promptly meet to discuss Purchaser's concerns. If Purchaser is not
       satisfied with the outcome of such meeting or, notwithstanding the
       outcome, Purchaser believes that the manner in which FA-1 is operating
       and maintaining the System after the meeting constitutes a breach of this
       Agreement, Purchaser shall be entitled to require a meeting among FA-1,
       Purchaser and other users of the System, at which meeting Purchaser may
       voice its concerns. The Parties will in good faith consider
       implementation of the recommendations emanating from such meeting.

5.6    For ease of contract performance, each Party shall designate a single
       point of contact who shall manage and be responsible for such Party's
       performance of its obligations under this Agreement. Such persons shall
       be referred to as Project Managers. Each Party agrees that its Project
       Manager's performance of his or her respective responsibilities under
       this Agreement is integral to the overall performance of such Party's
       obligations to the other. To the extent that a Project Manager of a Party
       is not performing his or her obligations, the other Party may request a
       new Project Manager be assigned to assume the prior Project Manager's
       obligations, and any such request shall not be unreasonably denied.

6.     SYSTEM ENHANCEMENTS AND UPGRADES

6.1    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.

6.2    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 6.4. 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.

6.3    Purchaser shall be entitled at its own cost at any time to upgrade the
       Capacity and/or the Terrestrial Fibre Pair provided that such upgrades
       are carried out in consultation with FA-1 and at a time mutually agreed
       by the Parties (which agreement will not be unreasonably withheld or
       delayed). Purchaser shall pay to FA-1 a fee equal to the direct costs
       incurred by FA-1 in connection with such upgrade (unless FA-1 is project
       managing the upgrade pursuant to clause 6.4). Purchaser shall be liable
       for any damage to any part of the System directly involved with any such
       upgrade and Purchaser shall be liable for any damage to or interruption
       of any other part of the System resulting in this case from the gross
       negligence or wilful misconduct of Purchaser (or any person acting on
       behalf of Purchaser) in connection with any such upgrade, except in
       either case where such damage or interruption results from Purchaser
       following FA-1's instructions. ***

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6.4    Purchaser may at any time request FA-1 to project manage any upgrade of
       the Capacity provided that each upgrade shall be a minimum of 40 gigabits
       per second on each Link being upgraded. Upon FA-1 receiving such request
       FA-1 will, within 60 days, subject to receiving from Purchaser the
       information required, submit to Purchaser a proposal for the upgrade
       ("Proposal"). The Proposal will identify third party costs and a
       completion timeline for the upgrade. Purchaser will notify FA-1 within 30
       days of receiving the Proposal as to whether it accepts or rejects the
       Proposal. ***

6.5    All amplifiers, SLTEs, LTEs and transponders added as a part of any
       upgrade by, or on behalf of, Purchaser in connection with the Subsea
       Element shall be owned by FA-1. Purchaser shall transfer to FA-1 title to
       upgraded equipment in consideration of FA-1 maintaining the upgraded
       equipment and spares.

7.     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. This provision is without prejudice to the rights of
       FA-1 to decommission the System without any liability to Purchaser
       whatsoever, in the event of a catastrophic failure of all or a portion of
       the System, whether caused by natural hazard or major technical fault,
       which makes it impossible to maintain the business efficacy of the
       System, or if any governmental, municipal, institutional, or commercial
       authority, license, permission authorisation, right, or concession
       necessary for the business efficacy of the System is not granted, subject
       to prohibitive conditions or is terminated with no reasonable prospect of
       retrieval within a period of 12 months following the date of termination.
       ***

8.     REPRESENTATIONS, WARRANTIES AND COVENANTS

8.1    PSINetworks Company, PSINet Telecom Limited and PSINetwork SARL each
       represents, warrants and covenants to FA-1 as follows:

       8.1.1  It is duly established and in good standing under the laws of the
              jurisdiction of its corporation and has full power and authority
              to enter into this Agreement.

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

       8.1.3  It will use commercially reasonable efforts to 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 Rights.

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

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

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

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

       8.2.3  It shall use commercially reasonable efforts to obtain all
              necessary consents, licenses, 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 complete the
              construction of the System.

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

8.3    Except as provided above, FA-1 disclaims, and Purchaser waives, all
       representations and warranties regarding the System and the Rights,
       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 System or the Rights will be uninterrupted or error free
       or that the System or the Rights will meet Purchaser's requirements for
       the equipment to be deployed by Purchaser in connection with the System
       or the Rights or services to be offered by Purchaser utilising this
       equipment.

       9.     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 commonly known
       as "force majeure".

10.    CONFIDENTIALITY

10.1    Other than in connection with an assignment permitted under clause 12 or
        in connection with the enforcement of this Agreement or if disclosure is
        required by applicable law, 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

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       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.

10.2   For purposes of this clause 10.2 and clauses 10.3, 10.4 and 10.5,
       Confidential Information shall include all information, of any nature,
       provided by one Party to the other in connection with this Agreement
       except for that information which the originating Party has expressly
       identified as being non-confidential. The receiving Party shall keep in
       confidence all Confidential Information and will not disclose such
       information to any third party other than in accordance with this
       Agreement. The receiving Party shall use no lesser degree of care than
       would apply to its own confidential information.

10.3   The provisions of clause 10.2 do not apply to any Confidential
       Information which:

       10.3.1 enters into the public domain other than by reason of a breach of
              this Agreement;

       10.3.2 is known to the Party to which it is disclosed at the time of its
              disclosure, other than as a result of a breach of any other
              covenant of confidentiality;

       10.3.3 is independently generated, developed or discovered at any time by
              or for the Party to which it is disclosed;

       10.3.4 is necessary for the purposes of permitting a Party to (1) perform
              its obligations under this Agreement provided that any third party
              which receives Confidential Information pursuant to this provision
              has agreed to be bound by the restrictions contained in this
              section in the same manner as if it were a party to this
              Agreement, or (2) enforce its rights under this Agreement;

       10.3.5 is required to be disclosed by law, regulation or stock exchange
              rules.

10.4   Confidential Information shall only be used for the purposes for which it
       was disclosed.

10.5   The obligations of confidentiality in this clause 10 shall continue for
       five years following the termination of this Agreement. 10.6 FA-1 shall
       ensure that the entities entitled to receive copies of notices pursuant
       to clause 17 shall abide by clauses 10.1 to 10.5.

11.    NO LICENCE

11.1   Nothing in this Agreement shall or shall be deemed to give rise to any
       right of Purchaser to use any FA-1 Intellectual Property, provided that
       Purchaser may require a license of FA-1 Intellectual Property in
       connection with an acquisition pursuant to clause 7.

11.2   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

                                                                   Page 10 of 26
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       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.

12.    ASSIGNMENT

12.1   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 its obligations) under this
       Agreement to one or more financial institutions and/or export credit
       agencies as collateral security for financing provided to FA-1 or in
       connection with a sale of receivables by FA-1 and the assignment by such
       financial institutions (and their assignees) of the rights and
       obligations 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. However, Purchaser
       may assign this agreement to any subsidiary or affiliate without prior
       written consent of FA-1 and in the event there is a merger or transfer of
       control of substantially all the assets of Purchaser, no prior approval
       of assignment of this Agreement is required.

12.2   Notwithstanding clause 12.1, FLAG Atlantic Limited and FLAG Atlantic USA
       Limited may allocate their rights and obligations under this Agreement
       between themselves and their affiliates.

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

13.    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.

14.    VARIATION

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

15.    WAIVER

15.1   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

                                                                   Page 11 of 26
<PAGE>

       Agreement or any part of it and no waiver of a breach of this Agreement
       shall constitute a waiver of any subsequent breach.

15.2   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.

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

16.    INVALIDITY

16.1   Subject to clause 16.2 below 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:

       16.1.1 the validity, legality and enforceability under the law of that
              jurisdiction of any other provision; and

       16.1.2 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.

16.2   The Parties acknowledge that the consideration for the Rights set out in
       clause 2 was agreed upon taking into account clauses 4, 7, 8, and 18 and
       in the event any of these clauses is or becomes (whether pursuant to any
       judgement or otherwise) invalid, illegal or unenforceable in any respect
       under the law of any jurisdiction, the Parties agree to renegotiate in
       good faith the amounts payable by Purchaser under clause 2.

17.    NOTICE

17.1   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:

       510 Huntmar Park Drive
       Herndon, VA 20170
       USA

                                                                   Page 12 of 26
<PAGE>

       Attention:  VP Capacity Planning
       With a copy to : General Counsel
       Tel:  +1-703-904-4100
       Fax:  +1-703-904-4200

       If to FA-1:

       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 the following entity for so long as it is affiliated with
FA-1:

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

       Attention:  General Counsel
       Tel:  +44-207-317-0800
       Fax: +44-207-317-0808

       With a copy to the following entity for so long as it is affiliated with
FA-1:

       GTS Carrier Services
       Terhulpsesteenweg 6A
       1560 Hoeilaart
       Belgium

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

17.2   The Parties acknowledges that all communications in connection with this
       Agreement shall be between PSINetworks Company and FLAG Atlantic Limited.
       For this purpose, FLAG Atlantic USA Limited hereby appoints FLAG Atlantic
       Limited as its agent, and PSINet Telecom Limited

                                                                   Page 13 of 26
<PAGE>

       and PSINetworks SARL each appoints PSINetworks Company as its agent, to
       receive and send all communications in connection with this Agreement.

17.3   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.

18.    LIABILITY

18.1   Except to the extent stated in clauses 2.6, 4.4, 4.6 and 4.8 and Schedule
       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.

18.2   Notwithstanding any other provision in this Agreement to the contrary,
       neither Party shall be liable to the 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.

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

18.4   Neither Party shall be liable to the other Party hereunder for
       occurrences caused by the failure of the other Party or any of its
       affiliates to duly perform its obligations hereunder or under any
       agreement relating to any Facility.

18.5   ***

19.    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.

                                                                   Page 14 of 26
<PAGE>

20.    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.

21.    GOVERNING LAW

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

22.    ***

       ***

                                                                   Page 15 of 26
<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:  Smaih Kawar
Title: Director

FLAG ATLANTIC USA LIMITED

    /s/ Gerard Caccappolo
BY ________________________
Name:  Gerard Caccappolo
Title: Authorised Signatory

PSINETWORKS COMPANY

     /s/ Name of Signatory
BY ________________________
Name:
Title:

PSINET TELECOM LIMITED

    /s/ Name of Signatory
BY ________________________
Name:
Title:

PSINETWORKS SARL

    /s/ Name of Signatory
BY ________________________
Name:
Title:

                                                                   Page 16 of 26<PAGE>

                                                                   Exhibit 10.21

                       INDEFEASIBLE RIGHT OF USE AGREEMENT

THIS AGREEMENT ("Agreement"), dated as of the ______ day of October 1999, is
among FLAG ATLANTIC LIMITED, a company organized 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 organized 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 TELEGLOBE USA INC. ("Purchaser"), a corporation organized under the
laws of Delaware, USA, and having its principal office at 11480 Commerce Park
Drive, Reston, Virginia 20191, USA.

                                   WITNESSETH:

WHEREAS, FA-1 and its Affiliates are constructing and will directly and/or
indirectly own, operate and maintain a fiberoptic cable system as more fully
described in Schedule 1 (the "System"); and

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

WHEREAS, Purchaser desires to acquire from FA-1, and FA-1 is willing to provide
to Purchaser (i) an indefeasible and exclusive right of use ("IRU") in the
derivable capacity from a fiber pair on the subsea portion of the System as set
out in Part A of Schedule 2 (the "Submarine IRU") and (ii) an IRU (except as
otherwise specifically provided in clause 2.8 of this Agreement) in a dark fiber
pair on the backhaul portion of the System as set out in Part B of Schedule 2
(the "Terrestrial IRU"); and

WHEREAS, FA-1 intends to convey to Purchaser the Submarine IRU and the
Terrestrial IRU in two steps, an initial IRU to be granted after Initial RFS
Date for the Initial Stage of the System (the "Initial IRU") and a second IRU to
be granted after Final RFS Date in the remaining portion of the System (the
"Final IRU") (the Initial IRU and the Final IRU being referred to collectively
as the "System IRU"); and

WHEREAS, FLAG Atlantic Limited and Purchaser are entering into a certain
collocation and maintenance agreement concurrently herewith; and

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

NOW, THEREFORE, the Parties hereby agree as follows:

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

  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.       DEFINITIONS

1.1      "ACKNOWLEDGEMENT" shall have the meaning set forth in clause 2.4.

1.2      "AFFILIATE" shall mean any other entity that controls, is controlled by
         or is under common control with an entity.

1.3      "ALCATEL" shall mean Alcatel Submarine Networks and, where applicable,
         certain of its Affiliates.

1.4      "BIS TESTS" shall have the meaning set forth in clause 2.5.

1.5      "DARK FIBER" means individual strands of optical fiber in the System
         provided by FA-1 to Purchaser without electronics or optronics and
         which is not "lit" or activated.

1.6      "FA-1 FINANCIAL CLOSURE" shall have the meaning set forth in clause
         24.3.

1.7      "FINAL CLOSING" shall have the meaning set forth in clause 3.1.3.

1.8      "FINAL CONFIRMATION" shall have the meaning set forth in clause 2.5.2.

1.9      "FINAL RFS DATE" shall have the meaning set forth in clause 2.5.

1.10     "FINANCING AGREEMENT" shall mean the definitive project financing
         agreement for the funding of the construction of the System as amended
         or supplemented from time to time, obligating the financial
         institutions party thereto to make loans for the construction of the
         System (subject to satisfaction of conditions precedent).

1.11     "INDEMNITY EVENT" shall have the meaning set forth in clause 14.3.1.

1.12     "INITIAL CLOSING" shall have the meaning set forth in clause 3.1.2.

1.13     "INITIAL CONFIRMATION" shall have the meaning set forth in clause
         2.5.2.

1.14     "INITIAL PAYMENT" shall have the meaning set forth in clause 3.1.

1.15     "INITIAL RFS DATE" shall have the meaning set forth in clause 2.5.

1.16     "INTELLECTUAL PROPERTY" shall have the meaning set forth in clause
         13.2.

1.17     "PROPOSAL" shall have the meaning set forth in clause 8.4.

1.18     "PURCHASE PRICE" shall have the meaning set forth in clause 3.1.

                                       2
<PAGE>

1.19     "SUPPLY CONTRACT" shall mean that certain agreement dated 20 September
         1999 between FLAG Atlantic Limited and certain of its subsidiaries and
         Alcatel for the construction of the subsea portions of the System
         (including related electronics), as amended from time to time.

1.20     "SYSTEM LIFE" shall mean the period of time between the Initial RFS
         Date and the date the System is decommissioned in accordance with
         clause 9.

1.21     "TAX REDUCTION" shall have the meaning set forth in clause 4.3.4.

1.22     "TERRESTRIAL FIBER LEASE" shall have the meaning set forth in clause
         2.8.

1.23     "WITHHOLDING TAXES" shall mean any taxes, duties or charges to be borne
         by Purchaser pursuant to clause 4.3.1.

2.       PURCHASE AND GRANT OF SYSTEM IRU

2.1      PURCHASE AND GRANT. FA-1 hereby grants to Purchaser, and Purchaser
         hereby accepts such grant, on the occurrence of the Initial Closing and
         the Final Closing for the System Life the Initial IRU and the Final
         IRU, respectively, subject to the terms and conditions of this
         Agreement.

2.2      USE OF SYSTEM IRU. Notwithstanding anything in this Agreement to the
         contrary, following the grant Purchaser may resell, assign, transfer or
         otherwise use the System IRU 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 date of grant under clause 2.1, it shall have no right to use
         the Initial IRU or the Final IRU, as applicable, during the System
         Life.

2.3      PROPERTY INTEREST.

2.3.1    ***

2.3.2    ***

2.4      ***

2.5      TESTING.

2.5.1    ***

2.5.2    ***

2.6      ***

2.7      COLLOCATION AND MAINTENANCE AGREEMENT. Purchaser and FLAG Atlantic
         Limited are entering into a collocation and maintenance agreement
         concurrently herewith.

                                       3
<PAGE>

2.8      TERRESTRIAL FIBER LEASES.

         2.8.1    In the event that (i) after using commercially reasonable
                  efforts, FA-1 does not have the underlying rights to grant an
                  IRU on portions of the Terrestrial IRU 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 telecommunications facilities on an IRU basis, and/or (iii)
                  FA-1 chooses not to obtain an IRU on the portion of the
                  Terrestrial IRU located in England, then as to such portions
                  of the System IRU or such jurisdiction(s) only, this Agreement
                  shall be considered an agreement for a lease of the capacity
                  on the relevant portions of the Terrestrial IRU ("Terrestrial
                  Fiber Lease"). The term of the Terrestrial Fiber Lease shall
                  be from the grant of the Initial IRU for the System Life. All
                  amounts owed under this Agreement shall be paid as provided in
                  this Agreement and Purchaser shall not be required to make any
                  additional payments as a result of the above-described change
                  in status of the rights granted under this Agreement.
                  Notwithstanding the foregoing, the Terrestrial Fiber Lease
                  shall provide Purchaser with all of the same rights and
                  privileges contained in this Agreement as the rest of the
                  System IRU except for the nature of its interest.

         2.8.2    In the event that this Agreement is to be treated as a
                  Terrestrial Fiber Lease for any portion of the System IRU,
                  then as to such portion only, the terms "purchase,"
                  "Purchaser," and any variations thereon shall mean "lease,"
                  "Lessee," or the appropriate variation thereof, and the terms
                  "indefeasible and exclusive right of use" and "IRU" shall mean
                  "Lease." Any other terms and conditions of this Agreement also
                  shall be deemed modified only to the extent necessary to be
                  consistent with the grant of a lease to the Purchaser. All
                  other terms and conditions of this Agreement shall remain
                  unchanged and fully valid and enforceable.

         2.8.3    Notwithstanding the provisions of clauses 2.8.1 and 2.8.2, it
                  is the intent of the Parties that the Purchaser be granted an
                  IRU or the next highest rights with regard to use of the
                  System IRU. To the extent that (i) FA-1 obtains the ability to
                  grant an IRU on a portion of the System IRU previously
                  conveyed as a Terrestrial Fiber Lease pursuant to clause
                  2.8.1(i) and (ii) any jurisdiction(s) recognizes the
                  conveyance of telecommunications facilities on an IRU basis at
                  any time during the term of the Agreement, then, the rights
                  and interest granted in connection with the relevant portion
                  of the System IRU shall be an IRU, and the terms of this
                  Agreement relating to the lease of capacity shall be of no
                  force or effect as to such portion of the System IRU.

2.9      ***

2.10     ***

3.       CONSIDERATION FOR GRANT OF SYSTEM IRU AND CLOSING OF IRU PURCHASES

                                       4
<PAGE>

3.1      PURCHASE PRICE. In consideration of the grants of the Initial IRU and
         Final IRU, Purchaser agrees to pay to FA-1 an aggregate purchase price
         of *** (the "Purchase Price") as follows:

         3.1.1    INITIAL PAYMENT. Purchaser shall pay to FA-1 *** of the
                  Purchase Price (the "Initial Payment") pursuant to an invoice
                  delivered by FA-1 after the satisfaction of each of the
                  following items:

                  ***

                  ***

         3.1.2    INITIAL CLOSING. Purchaser shall pay to FA-1 *** of the
                  Purchase Price (the "Initial Closing") pursuant to an invoice
                  delivered by FA-1 and receipt by Purchaser from FA-1 of a
                  certificate dated as of a recent date as to the following:

                  ***

         3.1.3    FINAL CLOSING. Purchaser shall pay to FA-1 the remaining ***
                  of the Purchase Price (the "Final Closing") pursuant to an
                  invoice delivered by FA-1 and receipt by Purchaser from FA-1
                  of a certificate dated as of a recent date as to the
                  following:

                  ***

4.       PAYMENTS

4.1      INVOICES. FA-1 shall render to Purchaser invoices for all amounts
         payable pursuant to this Agreement. All invoices for the Purchase Price
         shall be due and payable within 30 days after delivery to Purchaser.
         All other invoices shall be due and payable within 45 days after
         delivery to Purchaser.

4.2      DEFAULT INTEREST. Any amount payable pursuant to this Agreement which
         is not paid when due shall accrue interest as follows at the annual
         rate of *** above the U.S. Dollar LIBOR for one month in each case 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.

4.3      WITHHOLDING

         4.3.1    All amounts payable by Purchaser pursuant hereto shall be paid
                  in full in U.S. dollars (or such other currency as FA-1 may
                  designate) 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. ***
                  Purchaser shall make the

                                       5
<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.

         4.3.2    FA-1 and Purchaser will work together in good faith and use
                  their respective reasonable commercial efforts to minimize or
                  eliminate Withholding Taxes within the legal and/or
                  administrative framework of the relevant country's (or
                  subdivision thereof) tax authorities, including, without
                  limitation, applying at Purchaser's expense for Withholding
                  Tax waivers from such relevant tax authorities.

         4.3.3    Notwithstanding clause 4.3.2, should Purchaser have to
                  withhold Withholding Taxes by virtue of the laws of any
                  country (or subdivision thereof), FA-1 and Purchaser will at
                  Purchaser's expense work together in good faith and use their
                  reasonable commercial efforts to claim a refund of such
                  Withholding Taxes from the relevant tax authority(ies).

         4.3.4    ***

         4.3.5    ***

4.4      Purchaser's obligation to pay the Purchase Price and other amounts that
         have become due and payable pursuant hereto shall not be subject to any
         set-off, counterclaim, deduction, defense or other right which
         Purchaser may have against FA-1 or any other party, provided that
         nothing in this clause shall prevent in any way Purchaser from
         otherwise enforcing any of its rights against FA-1.

4.5      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
         3.

5.       TAXES

5.1      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 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"). Subject to clause 5.2, 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 3.

5.2      VAT. Subject to clause 4.3, in the event that value added tax in the UK
         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 cashflow

                                       6
<PAGE>

         impact for FA-1. Notwithstanding these discussions, invoices (excluding
         the VAT) shall be issued and be payable in accordance with clauses 3
         and 4.1.

5.3      RATES. Purchaser shall be responsible for all rates and similar
         property based taxes appropriately assessed and arising directly or
         indirectly from Purchaser's interest in the System IRU and exercise of
         its rights in connection with the System IRU.

6.       DEFAULT AND TERMINATION

         6.1.1    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 System IRU or
                  to effect any upgrade pursuant to clause 8 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 or the
                  collocation and maintenance agreement referred to in clause
                  2.7, 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 Fiber on which
                  Purchaser has its Terrestrial IRU until Purchaser has paid in
                  full all undisputed amounts overdue together with applicable
                  default interest.

         6.1.2    FA-1 shall be entitled to terminate this Agreement without
                  liability to Purchaser if either the Initial Payment or the
                  payment constituting the Initial Closing is not made within
                  *** days of its due date. FA-1 shall be entitled to terminate
                  Purchaser's right to purchase the Final IRU if the payment
                  constituting the Final Closing is not made within *** days of
                  its due date.

6.2      Initial RFS Date.

         6.2.1    If the Initial Confirmation has not been delivered to
                  Purchaser within *** months and 10 days after the Scheduled
                  Initial RFS Date, whether due to a force majeure event or
                  otherwise, Purchaser shall have the right to immediately
                  terminate its obligation to purchase the System IRU upon
                  written notice of termination delivered to FA-1. In the event
                  Purchaser has not exercised this right of termination, FA-1
                  may notify Purchaser of the revised expected Initial RFS
                  Date ***. Purchaser shall have *** days from receipt of this
                  notice to notify FA-1 that it wishes to terminate its
                  obligation to purchase the System IRU or that it accepts the
                  delay to the revised expected Initial RFS Date (and failure
                  by Purchaser to provide a timely notice shall be deemed
                  acceptance of the delay). If the Initial Confirmation is not
                  delivered to Purchaser within 10 days after the revised
                  expected Initial RFS Date the above procedure will be repeated
                  until the earlier of the actual delivery of the Initial
                  Confirmation to Purchaser and Purchaser's termination of its
                  obligation to purchase the System IRU.

                                       7
<PAGE>

         6.2.2    If Purchaser has exercised its right to terminate its
                  obligation to purchase the System IRU and the Initial RFS Date
                  actually occurs prior to the date *** months after the
                  Scheduled Initial RFS Date, Purchaser shall be entitled within
                  six months from the date that FA-1 delivers the Initial
                  Confirmation to notify FA-1 that it wishes to acquire capacity
                  on the FLAG Atlantic-1 System (of which the System would have
                  been a part) in the amount of the Initial Payment of the
                  Purchase Price, the amount of the capacity being determined on
                  the basis of the then prevailing rate for comparable capacity
                  on the FLAG Atlantic-1 System at the time of such delivery of
                  the Initial Confirmation. In such case, this Agreement shall
                  be amended by the Parties to reflect the different nature of
                  the capacity being acquired and the different rights and
                  obligations of the Parties as a consequence thereof.

         6.2.3    If the Initial RFS Date has not occurred within *** months
                  after the Scheduled Initial RFS Date, Purchaser may by 30 days
                  notice terminate this Agreement ***. Purchaser shall have no
                  obligation to make any further payments of the Purchase Price
                  under this Agreement following a termination.

6.3      FINAL RFS DATE. If the Final Confirmation has not been delivered to
         Purchaser within the later of *** months and 10 days after the
         Scheduled Final RFS Date and *** months and 10 days after the Initial
         RFS Date, whether due to a force majeure event or otherwise, Purchaser
         shall have the right to immediately terminate its obligation to
         purchase the Final IRU without further liability to pay the portion of
         the Purchase Price applicable to the Final IRU upon written notice
         delivered to FA-1. In the event Purchaser has not exercised this right
         of termination of its obligation to purchase the Final IRU, FA-1 may
         notify Purchaser of the revised expected Final RFS Date ***. Purchaser
         shall have *** days from receipt of this notice to notify FA-1 that it
         wishes to terminate its obligation to purchase the Final IRU or that it
         accepts the delay to the revised expected Final RFS Date (and failure
         by Purchaser to provide a timely notice shall be deemed acceptance of
         the delay). If the Final Confirmation is not delivered to Purchaser
         within 10 days after the revised expected Final RFS Date the above
         procedure will be repeated until the earlier of the actual delivery of
         the Final Confirmation and Purchaser's termination of its obligation to
         purchase the Final IRU.

6.4      Except as provided herein, Purchaser shall have no right to terminate
         or cancel this Agreement or its obligation to purchase the System IRU
         for any reason whatsoever.

7.       OPERATION

7.1      Purchaser shall conduct all operations and use of the System IRU in a
         manner which does not interrupt, impair or interfere with the
         operations of the System or the use thereof by FA-1 or any other
         purchaser or user of optical fibers or capacity in the System. If,
         after notification by FA-1, Purchaser does not take immediate
         corrective action to comply with its obligations under this clause 7.1,
         FA-1 may take reasonable action required to protect the System,
         including but not limited to the interruption of Purchaser's use of the
         System IRU and installation of protective equipment. Purchaser shall,
         within 15 days of receipt of an invoice, reimburse FA-1 for its total
         reasonable direct costs properly incurred *** for any
         protective measures reasonably required by FA-1 to be installed on the
         System resulting from the use of the System IRU in violation of
         this clause.

                                       8
<PAGE>

7.2      Except where FA-1 is carrying out emergency, routine or preventative
         maintenance or repair activities (which shall be carried out in
         accordance with clause 11.5 of the collocation and maintenance
         agreement), 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 System IRU by Purchaser or Purchaser's customers.

8.       SYSTEM ENHANCEMENTS AND UPGRADES

8.1      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 System IRU as a result of FA-1's
         failure to use such reasonable efforts.

8.2      FA-1 INITIATED UPGRADES. 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 Submarine IRU 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 8.4. 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.

8.3      PURCHASER INITIATED UPGRADES. Purchaser shall be entitled at its own
         cost at any time to upgrade the capacity on the Submarine IRU,
         including upgrading the Submarine IRU so that it is equipped with the
         ability to carry greater than 400 Gbps of traffic when this becomes
         possible, provided that such upgrades are carried out in consultation
         with FA-1 and at a time mutually agreed by the Parties (which agreement
         will not be unreasonably withheld or delayed). *** FA-1 agrees to use
         reasonable efforts to coordinate with the third party supplier.
         Purchaser shall indemnify FA-1 for any damage or interruption to the
         System as a result of the upgrades.

8.4      FA-1 PROJECT MANAGED UPGRADES. Purchaser may at any time request FA-1
         to project manage any upgrade of the Submarine IRU provided that each
         upgrade shall be a minimum of 40 Gbps on each segment being upgraded.
         Upon FA-1 receiving such request FA-1 will, within 60 days, subject to
         receiving from Purchaser the information required, submit to Purchaser
         a proposal for the upgrade ("Proposal"). The Proposal will identify
         third party costs and a completion timeline for the upgrade.

                                       9
<PAGE>

         Purchaser will notify FA-1 within 30 days of receiving the Proposal as
         to whether it accepts or rejects the Proposal.***

8.5      TERRESTRIAL IRU UPGRADES. Purchaser shall be entitled at its own cost
         at any time to upgrade the Terrestrial IRU (including any portion
         covered by a Terrestrial Fiber Lease) provided that such upgrades 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 will not be unreasonably withheld nor
         delayed).

9.       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 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.

10.      REPRESENTATIONS, WARRANTIES AND COVENANTS

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

         10.1.1   Purchaser is duly established and in good standing under the
                  laws of Delaware, USA and has full power and authority to
                  enter into this Agreement.

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

         10.1.3   Purchaser 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 System IRU.

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

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

         10.2.1   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.

                                       10
<PAGE>

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

         10.2.3   It is qualified to do business in all jurisdictions where such
                  qualification is required by applicable law, and where the
                  failure to be so qualified reasonably could be expected to
                  have a material adverse effect on FA-1's ability to perform
                  its obligations under this Agreement.

         10.2.4   ***

         10.2.5   The execution and performance of this Agreement by FA-1 will
                  not result in a breach of any agreement FA-1 may have with
                  third parties or any applicable law, which reasonably could be
                  expected to have a material adverse effect on its ability to
                  perform its obligations under this Agreement.

         10.2.6   There are no pending or, to its knowledge, threatened claims,
                  actions, suits, audits, investigations or proceedings by or
                  against it which reasonably could be expected to have a
                  material adverse effect on its ability to perform its
                  obligations under this Agreement.

         10.2.7   FA-1 shall perform its obligations under this Agreement and
                  use the System in a manner consistent with applicable law, and
                  shall not use, or knowingly permit the System to be used, for
                  any illegal purpose or in any other unlawful manner in each
                  case to the extent any failure to so act would have a material
                  adverse effect on the System IRU.

         10.2.8   The Terrestrial IRU will be designed and implemented in
                  accordance with Schedule 2.

         10.2.9   FLAG Atlantic Limited and FLAG Atlantic USA Limited each
                  undertakes to use reasonable commercial efforts to obtain all
                  material consents, approvals, licenses, permits, both
                  governmental and private, as are necessary to permit it to
                  perform its obligations under this Agreement.

         10.2.10  ***

10.3     Except as provided herein, FA-1 disclaims, and Purchaser waives, all
         representations and warranties regarding the System IRU, 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 System IRU will be uninterrupted or error free or that the System
         IRU will meet Purchaser's requirements for the equipment to be deployed
         by Purchaser in connection with the System IRU or services to be
         offered by Purchaser utilizing this equipment.

11.      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) which is not a result of the negligence or willful
         misconduct of that Party shall give rise to any claim against such
         Party or be deemed a breach of

                                       11
<PAGE>

         this Agreement if such failure or omission arises from an act of God,
         or any other circumstance or act of government commonly known as "force
         majeure" which event was not within the reasonable control of, or
         reasonably preventable by, such Party. In the event of a force majeure
         occurrence, the Party claiming the occurrence shall, within 60 days
         thereof, notify the other Parties hereto of the existence of the event
         and its expected consequences on the System or the performance of its
         obligations hereunder.

12.      CONFIDENTIALITY

         The provisions of this Agreement and any non-public information,
         written or oral, with respect to this Agreement ("Confidential
         Information") will be kept confidential and shall not be disclosed, in
         whole or in part, to any person other than Affiliates, officers,
         directors, employees, agents or representatives of a Party
         (collectively, "Representatives") who need to know such Confidential
         Information for the purpose of negotiating, executing and implementing
         this Agreement. Each party agrees to inform each of its Representatives
         of the non-public nature of the Confidential Information and to direct
         such persons to treat such Confidential Information in accordance with
         the terms of this clause 12. Nothing herein shall prevent a party from
         disclosing Confidential Information (i) upon the order of any court or
         administrative agency, (ii) upon the request or demand of, or pursuant
         to any regulation of, any regulatory agency or authority, (iii) to the
         extent reasonably required in connection with the exercise of any
         remedy hereunder, (iv) to a Party's legal counsel, financial or other
         advisors or independent auditors, (v) in the case of FA-1, to existing
         or prospective lenders under the Financing Agreement or their
         Affiliates, and (vi) to any actual or proposed assignee, transferee or
         lessee of all or part of its rights hereunder provided that such actual
         or proposed assignee agrees in writing to be bound by the provisions of
         this clause 12. Notwithstanding the foregoing, in the event that
         Purchaser intends to disclose any Confidential Information pursuant to
         clause (i) or (ii) of the preceding sentence, Purchaser agrees to (a)
         provide FA-1 with prompt notice before such disclosure in order that
         FA-1 may attempt to obtain a protective order or other assurance that
         confidential treatment will be accorded such Confidential Information
         and (b) cooperate with FA-1 in attempting to obtain such order or
         assurance. The foregoing shall not restrict either Party from publicly
         announcing that it has entered in this Agreement with the Parties
         provided that (x) the initial announcement by either Party containing
         the other Party's name shall be subject to such other Party's consent,
         and (y) in the case of an announcement by Purchaser, such announcement
         shall provide no details as to the System other than the name of the
         System except for details (i) that have already been disclosed publicly
         by FA-1, (ii) relating to the amount of capacity Purchaser has
         activated on the System or (iii) otherwise relating to matters
         particular to Purchaser's use of the System IRU. Notwithstanding the
         foregoing, no such public announcement shall be permitted to include
         any details of this Agreement.

13.      NO LICENSE

                                       12
<PAGE>

13.1     Nothing in this Agreement shall or shall be deemed to give rise to any
         right of either Party to use any Intellectual Property of the other
         Parties except as may be needed to utilize the System IRU or to
         maintain the System.

13.2     "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, together with the goodwill relating thereto.

14.      INDEMNIFICATION

14.1     ***

14.2     Subject to the provisions of clauses 14.3 and 21, Purchaser hereby
         releases and agrees to indemnify, defend, protect and hold harmless
         FA-1, its employees, officers, directors, agents, shareholders and
         affiliates, from and against, and assumes liability for:

         14.2.1   Any injury, loss or damage to any person, tangible property or
                  facilities of any third person or entity other than FA-1 or an
                  Affiliate of FA-1 or any officers, employees, affiliates,
                  agents, contractors, licensees, invitees or vendors of FA-1 or
                  any such Affiliate (including reasonable attorneys' fees and
                  costs) to the extent arising out of or resulting from the acts
                  or omissions, negligent or otherwise, of Purchaser, its
                  officers, employees, affiliates, agents, contractors,
                  licensees, invitees or vendors constituting a breach by
                  Purchaser in the performance of its obligations hereunder or
                  arising out of or resulting from the breach of any
                  representation or warranty made by Purchaser under this
                  Agreement.

         14.2.2   Any claims, liabilities or damages arising out of any failure
                  by Purchaser to comply with any regulation, rule, statute or
                  court order of any local, state, national or European Union
                  governmental agency, court or body in connection with its use
                  of the System IRU hereunder.

         14.2.3   Any claims, liabilities or damages arising out of any
                  interference with or infringement of the rights of any third
                  party as a result of Purchaser's use of the System IRU not in
                  accordance with the provisions of this Agreement.

14.3     A Party's obligation to indemnify under this clause 14 is subject to
         the indemnified Party:

         14.3.1   promptly notifying the indemnifier of an event giving rise to
                  the indemnification ("Indemnity Event")

         14.3.2   giving the indemnifier the sole conduct of the defense to any
                  claim or action in respect of such Indemnity Event and not at
                  any time admitting liability or otherwise attempting to settle

                                       13
<PAGE>

                  or compromise except upon the express instructions of the
                  indemnifier (provided that the indemnifier shall not admit
                  liability nor wrong doing by the indemnified party without the
                  consent of the indemnified party); and

         14.3.3   acting in accordance with the reasonable instructions of the
                  indemnifier and giving to the indemnifier such assistance as
                  it shall reasonably require in respect of the conduct of the
                  said defense including without prejudice to the generality of
                  the foregoing the filing of all pleadings and other court
                  process and the provision of all relevant documents.

14.4     The Parties hereby expressly recognize and agree that each Party's
         obligation to indemnify, defend, protect and save the other harmless is
         not a material obligation to the continuing performance of the other
         Parties' obligations, if any, hereunder. In the event that a Party
         shall fail for any reason to so indemnify, the injured party hereby
         expressly recognizes that its sole remedy in such event shall be the
         right to bring an action against the other Party for its damages as a
         result of the other Party's failure to indemnify, defend, protect and
         save harmless. These obligations shall survive the expiration or
         termination of this Agreement.

14.5     To the extent not precluded by any other agreement, nothing contained
         herein shall operate as a limitation on the right of any Party hereto
         to bring an action for damages against any third party *** based on any
         acts or omissions of such third party as such acts or omissions may
         affect the construction, operation or use of the System IRU or the
         System.

14.6     The indemnification provided for in this clause 14 shall survive the
         expiration or termination of this Agreement until the expiration of all
         statutes of limitation applicable to any claims, liabilities or damages
         otherwise subject to this clause 14.

15.      ASSIGNMENT

15.1     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 under this Agreement to one or more
         financial institutions and/or export credit agencies as collateral
         security for financing provided to FA-1 or in connection with a sale of
         receivables by FA-1 and the assignment by such financial institutions
         (and their assignees) of the rights and obligations 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. Notwithstanding the
         foregoing, Purchaser may assign its rights under this Agreement upon
         notice to FA-1 but without FA-1's prior consent, to Purchaser's
         Affiliates, provided:

         15.1.1   the Affiliate agrees to be bound by all terms and conditions
                  of this Agreement; and

                                       14
<PAGE>

         15.1.2   the Affiliate is authorized or permitted under the laws and
                  regulations of its country to acquire and use the transferred
                  portion of the System IRU.

15.2     Notwithstanding clause 15.1, FLAG Atlantic Limited and FLAG Atlantic
         USA Limited may allocate their rights and obligations under this 0
         Agreement between themselves and their affiliates, provided that they
         remain jointly and severally liable for each of their obligations
         hereunder.

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

16.      ENTIRE AGREEMENT

         This Agreement (including the Schedules and Annexes hereto) 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.

17.      VARIATION

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

18.      WAIVER

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.      INVALIDITY

         If any provision of this Agreement is or becomes (whether pursuant to
         any judgment 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

                                       15
<PAGE>

                  (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.

20.      NOTICE

20.1     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:

      Teleglobe USA Inc.
      11480 Commerce Park Drive
      Reston, Virginia 20191

      Attention: General Counsel
      Tel:  (703) 755-2000
      Fax:  (703) 755-2694

      If to FA-1:

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

      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

                                       16
<PAGE>

      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
      1560 Hoeilaart
      Belgium

      Attention: Legal Director
      Tel:  +322-658-5200
      Fax: +322-658-5100

20.2     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.

20.3     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.

21.      LIABILITY

21.1     Except as otherwise specifically set forth in this Agreement, 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.

21.2     If the Initial Confirmation has not been delivered to Purchaser within
         *** after the Scheduled Initial RFS Date Purchaser shall be entitled to
         terminate its obligation to purchase the System IRU pursuant to clause
         6.2 ***. Clause 6.2 and the foregoing shall be the limit of Purchaser's
         right for delays to the Initial RFS Date.

21.3     ***

                                       17
<PAGE>

21.4     Subject to clause 21.5, FA-1 shall have the right to relocate any
         portion of the System, including any of the facilities used or required
         in providing the System IRU, and shall have the right to proceed with
         such relocation, including, but not limited to, the right to determine
         the extent of, the timing of, and methods to be used for such
         relocation and Purchaser shall reimburse FA-1 for its proportionate
         share of the cost of such relocation; ***.

21.5     If FA-1 is required to relocate any portion of the System, including
         any of the facilities used or required in providing the System IRU,
         because it has not secured the right to use that portion of the System
         for the System Life, FA-1 shall have the right to proceed with such
         relocation, including, but not limited to, the right to determine the
         extent of, the timing of, and methods to be used for such relocation;
         ***.

21.6     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.

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

22.      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.

23.      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-judgment attachment or execution and immunity from the
         jurisdiction of any court or arbitral tribunal.

24.      FA-1 FINANCIAL CLOSURE

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

                                       18
<PAGE>

24.2     If FA-1 Financial Closure has not occurred by 31 October 1999, then
         this Agreement shall terminate (with the exception of clauses 12, 14,
         21, 23 and 25 which shall survive termination).

24.3     For the purposes of this Agreement, "FA-1 Financial Closure" shall be
         deemed to take place on the date when at least 66% of the costs of the
         construction of the System are covered by secured commitments of
         equity, and by commitments of debt under the executed Financing
         Agreement.

25.      GOVERNING LAW AND DISPUTE RESOLUTION

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

25.2     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. Any such
         dispute or controversy to be settled under this clause shall be between
         Purchaser and FA-1 and Purchaser shall not have to identify whether the
         dispute or controversy is with FLAG Atlantic Limited or FLAG Atlantic
         USA Limited. The place of arbitration shall be New York. The
         arbitration shall be conducted in English. The decision and award
         resulting from such arbitration shall be final and binding on the
         Parties. Judgment 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. Insofar as permissible under the applicable laws, the
         Parties hereby waive all rights to object to any action for judgment or
         execution which may be brought before a court of competent jurisdiction
         on an arbitration award or on a judgment rendered thereon.

                                       19
<PAGE>

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

FLAG ATLANTIC LIMITED

BY /s/ Name of Signatory
  --------------------------
Name:
Title:

FLAG ATLANTIC USA LIMITED

BY /s/ Name of Signatory
  --------------------------
Name:
Title:

TELEGLOBE USA INC.

BY /s/ Name of Signatory
  --------------------------
Name:
Title:

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