Document:

<PAGE>

                                                                    Exhibit 10.2

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------
PRESALE PROCEEDS SCHEDULE 1.1(a)

                                        Invoiced
                                          CSA          Proceeds     To Rebate    Net Presale
 Country        Administration           Amount        Received      Account      Proceeds
--------------------------------------------------------------------------------------------
<S>             <C>                   <C>            <C>            <C>          <C>
UAE             ETISALAT              $41,263,000    $41,263,000                 $41,263,000
--------------------------------------------------------------------------------------------
China           China Telecom         $30,000,000    $25,000,000                 $25,000,000
--------------------------------------------------------------------------------------------
India           VSNL                  $28,940,000                                         $0
--------------------------------------------------------------------------------------------
UK              C&W Comm(MCL)         $26,352,800    $26,352,800                 $26,352,800
--------------------------------------------------------------------------------------------
USA             AT&T                  $23,568,000    $23,568,000                 $23,568,000
--------------------------------------------------------------------------------------------
Germany         DTAG                  $19,336,000    $19,336,000                 $19,336,000
--------------------------------------------------------------------------------------------
Hong Kong       HKTI                  $18,658,850    $18,658,850                 $18,658,850
--------------------------------------------------------------------------------------------
Malaysia        Telecom Malaysia      $12,018,000    $12,018,000                 $12,018,000
--------------------------------------------------------------------------------------------
Japan           IDC                   $10,854,300    $10,854,300   $1,703,250     $9,151,050
--------------------------------------------------------------------------------------------
Korea           Korea Telecom          $9,818,775     $9,818,775                  $9,818,775
--------------------------------------------------------------------------------------------
Japan           KDD                    $9,523,000     $9,523,000                  $9,523,000
--------------------------------------------------------------------------------------------
Iran            TCI                    $8,595,000                                         $0
--------------------------------------------------------------------------------------------
Thailand        CAT                    $8,148,000     $8,148,000                  $8,148,000
--------------------------------------------------------------------------------------------
Spain           Telefonica             $9,279,982     $9,279,982   $1,279,982     $8,000,000
--------------------------------------------------------------------------------------------
Italy           Telecom Italia         $9,350,798     $9,350,798   $1,558,448     $7,792,350
--------------------------------------------------------------------------------------------
USA             Sprint                 $6,495,000     $6,495,000                  $6,495,000
--------------------------------------------------------------------------------------------
Canada          Teleglobe              $5,730,000     $5,730,000                  $5,730,000
--------------------------------------------------------------------------------------------
USA             MCI                    $5,230,000     $5,230,000                  $5,230,000
--------------------------------------------------------------------------------------------
Korea           Dacom                  $5,050,000     $5,050,000                  $5,050,000
--------------------------------------------------------------------------------------------
Kuwait          MOC Kuwait             $5,045,000     $5,045,000                  $5 045,000
--------------------------------------------------------------------------------------------
Belgium         Balgacom               $4,143,000     $4,142,982                  $4,142,982
--------------------------------------------------------------------------------------------
Sweden          Telia AB               $4,034,000     $4,034,000                  $4,034,000
--------------------------------------------------------------------------------------------
Switzerland     Swiss Telecom          $3,960,000     $3,960,000                  $3,960,000
--------------------------------------------------------------------------------------------
Qatar           QTEL                   $3,585,000     $3,564,980                  $3,564,980
--------------------------------------------------------------------------------------------
Australia       Optus                  $3,375,000     $3,375,000                  $3,375,000
--------------------------------------------------------------------------------------------
Bahrain         Batelco                $3,345,000     $3,344,985                  $3,344,985
--------------------------------------------------------------------------------------------
Oman            GTO                    $3,240,000     $3,240,000                  $3,240,000
--------------------------------------------------------------------------------------------
Russia          Rostelecom             $2,745,000     $2,744,983                  $2,744,983
--------------------------------------------------------------------------------------------
USA             Viatel                 $2,720,000       $700,000     $540,000       $180,000
--------------------------------------------------------------------------------------------
Morocco         ONPT                   $2,688,000                                         $0
--------------------------------------------------------------------------------------------
Eqypt           Telecom Eqypt          $2,809,400                                         $0
--------------------------------------------------------------------------------------------
Hungary         HTC                    $2,310,000     $2,310,000                  $2,310,000
--------------------------------------------------------------------------------------------
Poland          Polish Tel.            $2,225,000     $2,225,000                  $2,225,000
--------------------------------------------------------------------------------------------
Turkey          TPTT                   $2,220,000     $2,220,000                  $2,220,000
--------------------------------------------------------------------------------------------
Ukraine         UKRTEC                 $2,110,000     $2,109,985                  $2,109,985
--------------------------------------------------------------------------------------------
Malaysia        Celcom                 $2,100,000     $2,100,000                  $2,100,000
--------------------------------------------------------------------------------------------
Philippines     PLDT                   $1,890,000     $1,890,000                  $1,890,000
--------------------------------------------------------------------------------------------
Taiwan          Chunghwa/ITDC          $1,881,000     $1,881,000                  $1,881,000
--------------------------------------------------------------------------------------------
USA             Facilicom              $1,861,000     $1,853,991                  $1,853,991
--------------------------------------------------------------------------------------------
Netherlands     NPTT                   $1,363,000     $1,363,000                  $1,363,000
--------------------------------------------------------------------------------------------
Philippines     ICC                    $1,350,000                                         $0
--------------------------------------------------------------------------------------------
Norway          Norwegina Telecom      $1,110,000     $1,110,000                  $1,110,000
--------------------------------------------------------------------------------------------
Austria         PTA                      $860,000       $860,000                    $860,000
--------------------------------------------------------------------------------------------
Indonesia       Satelindo                $810,000       $809,958                    $809,958
--------------------------------------------------------------------------------------------
Korea           ONSE                     $765,000                                         $0
--------------------------------------------------------------------------------------------
Japan           ITJ                      $750,000       $751,423       $1,423       $750,000
--------------------------------------------------------------------------------------------
</TABLE>
<PAGE>

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------
                                        Invoiced
                                          CSA          Proceeds     To Rebate    Net Presale
 Country        Administration           Amount        Received      Account      Proceeds
--------------------------------------------------------------------------------------------
<S>             <C>                  <C>            <C>            <C>          <C>
Malta           Tetemalta                $655,000                                        $0
--------------------------------------------------------------------------------------------
Malaysia        Measat                   $525,000       $525,000                    $525,000
--------------------------------------------------------------------------------------------
Bulgaria        Bulgarian Tel. Co.       $410,000       $410,000                    $410,000
--------------------------------------------------------------------------------------------
Monaco          OMT                      $300,000       $300,000                    $300,000
--------------------------------------------------------------------------------------------
USA             MFS                      $240,000       $240,000                    $240,000
--------------------------------------------------------------------------------------------
USA             GTE Hawaii               $210,000       $210,000                    $210,000
--------------------------------------------------------------------------------------------
USA             IDB Worldcom             $210,000       $221,528      $11,528        $21,000
--------------------------------------------------------------------------------------------
Denmark         Telecom Denmark          $150,000       $149,983                    $149,983
--------------------------------------------------------------------------------------------
South Africa    Telkom SA                $145,000       $145,000                    $145,000
--------------------------------------------------------------------------------------------
Indonesia       Indosat                  $125,000                                         $0
--------------------------------------------------------------------------------------------
Tunisia         Tunisia Telecom          $l20,000       $119,968                    $119,968
--------------------------------------------------------------------------------------------
Kazakhstan      Kazak. Telecom           $115,000       $115,000                     $15,000
--------------------------------------------------------------------------------------------
Philippines     ETPI                     $105,000       $105,000                    $105,000
--------------------------------------------------------------------------------------------
Gibraltar       NYNEX Gibraltar           $64,000        $63,990                     $63,990
--------------------------------------------------------------------------------------------
Romania         Romtelecom                $35,000        $34,980                     $34,980
--------------------------------------------------------------------------------------------

--------------------------------------------------------------------------------------------
                        TOTAL:       $356,694,905   $303,953,239   $5,094,631   $298,858,509
--------------------------------------------------------------------------------------------
</TABLE>
<PAGE>

                        FLAG Cable System Configuration

                               [GRAPHIC OMITTED]
<PAGE>

                                Schedule 1.1(c)
                         Present Value Coverage Ratios

I.    PRESENT VALUE COVERAGE RATIOS

      The "Present Value Coverage Ratios" shall be the collective reference to
      the Loan Life Coverage Ratio and the Note Life Coverage Ratio (each as
      defined Part IV of the Schedule).

II.   INFORMATION REQUIRED TO CALCULATE THE PRESENT VALUE COVERAGE RATIOS

      As set forth in the Credit Agreement, the Present Value Coverage Ratios
      will be calculated by the Borrower quarterly, at the end of each calendar
      quarter, using a quarterly financial model (the "Compliance Model")
      acceptable to the Administration Agent.

      The data required to perform the quarterly calculations of the Present
      Value Coverage Ratios includes the following:

            (i) The Capacity in MTUs planned to be sold in each calendar year
      staring in 1998 (the "Plan Annual Capacity Sales") over the first ten
      years of operation in accordance with the FLAG Business Plan on a route by
      route basis. Quarterly sale of Capacity in MTUs (the "Plan Quarterly
      Capacity Sales") will be assumed equal to 25% of Plan Annual Capacity
      Sales within each such calendar year.

            (ii) The standby maintenance payment schedule (the "Closing Standby
      Schedule") and all Capacity pricing schedules corresponding to various
      cumulative sales amounts per customer (the "Closing Pricing Schedule") to
      be provided on the Closing Date, specifying such amounts on a route by
      route basis.

            (iii) Then current standby maintenance payment schedule and Capacity
      pricing schedules as of such calendar quarter, which schedules must be
      consistent with actual amounts reflected in recently executed Capacity
      Sales Agreements and other types of sales and leases (the "Current Pricing
      Schedules").

            (iv) The amount of Capacity in MTUs disposed of in the prior quarter
      (as evidenced by executed Capacity Sales Agreements and other documents),
      together with the Segments, Capacity prices or lease payments, Standby
      Maintenance Payment rates, and payment dates related thereto and, after
      giving effect to such sales of Capacity the amount of Capacity in MTUs
      remaining to be sold on each Segment.
<PAGE>

            (v) The projected Operating Budget in each year (the "Annual
      Operating Budget") over the first ten years of operation in accordance
      with the FLAG Business Plan. The quarterly Operating Budget (the
      "Quarterly Operating Budget") will be assumed to equal to 25% of the
      Annual Operating Budget within each such calendar year.

III.  ASSUMPTIONS

      Pro forma assumptions used in the calculation of the Present Value
      Coverage Ratios include the following:

            (i) To the extent revenues are not realized or not expected to be
      realized when due, corresponding gross revenue reductions will be
      introduced through a "bad debt factor" as a percentage of such revenues in
      each succeeding quarter.

            (ii) Prospective operating expenses and permitted capital
      expenditures will be calculated based upon the initial Operating Budget
      and operating projections delivered on the Closing Date in accordance with
      Sections 4.1(u) and 4.1(ac) of the Credit Agreement. To the extent prior
      actual operating expenses or capital expenditures had been overestimated
      or underestimated relative to the prospective corresponding amounts
      provided on the Closing Date, corrections will be introduced through
      "calibration factors" which will be applied prospectively in succeeding
      quarters. Such calibration factors will be calculated as the ratio of the
      aggregate corresponding amounts paid during the prior four quarters (or
      such shorter period during the first four quarters after closing) to the
      corresponding assumed amounts in the schedules delivered on the Closing
      Date.

            (iii) Restoration sales and leasing revenues will be based upon
      actual I contracts executed. Contracts for restoration sales must be
      acceptable to the Administrative Agent for this purpose.

            (iv) Unearned revenue movement (net of credits utilized) will be
      aggregated each quarter until fully utilized.

            (v) Initial rates for Landing Party commissions and discount sales
      commissions, and bad debts will be set at 3.1%, 3.0%, 3.0%, respectively
      of gross capacity sales and the initial rate for taxes will be set at 5.0%
      of the consolidated EBITDA, until historical data is available to
      appropriately introduce modifications.

IV.   OTHER DEFINITIONS, CALCULATION METHODOLOGY

            "Loan Life Coverage Ratio" shall mean, at any quarterly calculation
      date, the ratio of (x) the net present value of Projected Cash Available
      for Debt Service until the Maturity Date (discounted by the then current
      interest rate on the Term Loans) (y) the Loan Life Outstanding Debt.

                                       2
<PAGE>

            "Loan Life Outstanding Debt" shall mean, at any quarterly
      calculation date, the sum of (a) the aggregate principal amount of the
      Term Loans and Revolving Credit Loans then outstanding, and (b) the net
      present value of scheduled debt service on the Senior Unsecured Notes,
      including interest and the repayment of principal, discounted by the
      coupon rate on the Senior Unsecured Notes to the Maturity Date.

            "Note Life Coverage Ratio" shall mean, at any quarterly calculation
      date, the ratio of (x) the net present value of the Projected Cash
      Available for Debt Service until the final maturity of the Senior
      Unsecured Notes (discounted by the then current interest rate on the Term
      Loans) to (y) the Note Life Outstanding Debt.

            "Note Life Outstanding Debt" shall mean, at any quarterly
      calculation date, the sum of (a) the aggregate principal amount of the
      Term Loans and Revolving Credit Loans then outstanding and (b) the then
      aggregate outstanding amount of the Senior Unsecured Notes.

            "Projected Cash Available for Debt Service" shall mean, in each
      quarter, an amount equal to the sum of (a) the Projected Quarterly
      Capacity Revenues (after unearned revenue movement and after payment of
      Landing Party commissions and discounts, sales commissions, provisions for
      bad debt, taxes) from the sale of Capacity, net of any amount subject to a
      rebate obligation, plus (b) prospective quarterly Restoration Payments as
      evidenced by executed contracts acceptable to the Administrative Agent,
      net of any amount subject to a rebate obligation, plus (c) prospective
      quarterly revenue from other executed contracts (including the leasing of
      Capacity), net of any amount subject to a rebate obligation, plus (d)
      Projected Quarterly Standby Maintenance Payments reduced by the amount of
      such Standby Maintenance Payments which are no longer payable as a result
      of any reconfiguration of the FLAG System, minus (e) prospective quarterly
      cash expenses (net of repair maintenance expenses and restoration expenses
      reimbursable by third parties) made in accordance with the Quarterly
      Operating Budget and permitted capital expenditures (excluding capital
      expenditures provided for with the Capital Expenditure Account, and other
      cash payment obligations of Borrower.

            "Projected Quarterly Capacity Revenues" in each succeeding quarter
      will equal the sum of the product for each route of the Projected
      Quarterly Capacity Sales, the Selected Current Pricing Schedule (as
      modified prospectively), the Pricing Calibration Factor, and the Capacity
      Bad Debt Factor, as more fully described below.

            "Projected Quarterly Capacity Sales (in MIUs)" will be derived by
      reducing Plan Quarterly Capacity Sales (in MIUs) during each succeeding
      quarter (in forward order depletion) on a route by route basis by the
      excess amount, if any, of the sum of the following amounts over the
      cumulative capacity sales contained in the Plan Quarterly Capacity Sales:
      (a) cumulative capacity previously sold (excluding the MIUs corresponding
      to the Pre-Sales), (b) cumulative capacity leased, whether directly or on
      a deferred basis (such leased capacity will be reinstated upon termination
      of the lease with no purchase options assumed exercised), (c) cumulative
      unused capacity credits and rebates available (excluding capacity
      corresponding to the unearned

                                        3
<PAGE>

      revenue movement), and (d) capacity which can no longer be sold as a
      result of possible System reconfiguration, segment saturations, and other
      causes which lead to the reduction or unavailability of sellable unsold
      capacity inventory.

      The Projected Quarterly Capacity Sales (in MIUs) are then multiplied by
      the Current Pricing Schedule corresponding to the $40 to $49 million
      cumulative investment (the "Selected Current Pricing Schedule"), reduced
      prospectively by the following factors in order to derive the "Calculated
      Capacity Sales Revenues" in each succeeding quarter on a route-by-route
      basis: (a) prospectively and incrementally for each quarter by the
      quarterly percentage price reduction, if any, acrually experienced since
      the Closing Date (i.e., the "nth" root of the ratio of the current price
      per route in the Selected Current Pricing Schedule divided by the
      corresponding price per route in the Closing Pricing Schedules, where "n"
      is the number of quarters since the Closing Date) and (b) consistent with
      the CSMG Study and the derivation of the FLAG Business Plan, by 25% for
      prospective quarters starting the first quarter of 2003.

      The Calculated Capacity Sales Revenues on a route-by-route basis in each
      succeeding quarter will then be multiplied by the Pricing Calibration
      Factor and the Capacity Bad Debt Factor in each succeeding period. The
      Pricing Calibration Factor will be calculated as the ratio of the
      aggregate Calculated Capacity Sales Revenues during the prior four
      quarters (or such shorter period during the first four quarters after
      closing) to the cumulative sales revenue amount on the corresponding
      Capacity Sales Agreements during such period. The Capacity Bad Debt Factor
      will initially be assumed to be 3% and will be revised over time as the
      ratio of the cumulative sales revenue amount on the Capacity Sales
      Agreements actually paid in cash when due during the prior four quarters
      (or such shorter period during the first four quarters after closing) to
      the cumulative sales revenue amount on the corresponding Capacity Sales
      Agreements during such period.

                                       4
<PAGE>

            "Projected Standby Maintenance Payments" in each succeeding quarter
      will equal the sum of the product for each route of (a) cumulative
      Projected Quarterly Capacity Sales (in MIUs, less such capacity sales
      offered without an obligation to pay Standby Maintenance Payments, if any)
      plus the MIUs corresponding to Presale Proceeds, (b) the Current Pricing
      Schedule for standby maintenance payments, modified prospectively and
      incrementally for each quarter by the quarterly percentage price
      reduction, if any, actually experienced since the Closing Date (i.e., the
      "nth" root of the ratio of the current price per route in the Current
      Pricing Schedule divided by the corresponding price per route in the
      Closing Pricing Schedule, where "n" is the number of quarters since the
      Closing Date), (c) the Standby Calibration Factor, calculated as the ratio
      of the aggregate Calculated Standby Maintenance Payments (equal to the
      product of the above two factors) during the prior four quarters (or such
      shorter period during the first four quarters after closing) to the
      cumulative sales revenue amount billed during such period, and (d) the
      Standby Bad Debt Factor, which will initially be assumed to be 3% and will
      be revised over time as the ratio of the cumulative standby maintenance
      payments actually paid when due during the prior four quarters (or such
      shorter period during the first four quarters after closing) to the
      cumulative standby maintenance payments billed (equal to the product of
      the above three factors) during such period.

                                       5
<PAGE>

                                                                 Schedule 2.1 to
                                                                Credit Agreement

                             Commitments: Addresses

                                          Term Loan      Revolving Credit
      Lender                            Commitment ($)    Commitment ($)
      ------                            --------------    --------------

Barclays Bank PLC                      105,179,054.05       20,945,945.95
222 Broadway
New York, NY 10038
Attn: Mr. Peter Yetman
Tel:  212-412-7683
Fax:  212-412-7511

Gulf International Bank B.S.C.          12,972,972.97        2,027,027.03
380 Madison Avenue - 21st Floor
 New York, NY 10017
Attn: Mr. Thomas E. Fitzherbert
      Vice President
Tel:  212-922-2320
Fax:  212-922-2339

Dresdner Bank AG                        21,621.621.62        3,378,378.38
New York and Grand Cayman
 Branches
75 Wall Street
New York, NY 10005
Attn: Mr. Robert Grella
      Vice President
Tel:  212-429-2252
Fax:  212-429-2129

<PAGE>
                                                                               2

Merrill Lynch Senior Floating Rate      20,000,000.00                 -0-
 Fund. Inc.
800 Scudders N4 ill Road - Area 2C
Princeton. NJ 08543-9011
Attn: Ann Marie Smith
Tel:  609-282-3 136/41 65
Fax:  609-282-3542

                                         8,648,648.65        1,351,351.35

Bank Brussels Lambert,
New York Branch
630 Fifth Avenue
New York, NY 10111
Attn: Neil McMorrow / Sandra Zafra
Tel:  212-632-5312/5304
Fax:  212-333-5786

Australia and New Zealand Banking       21,621,621.62        3,378,378.38
Group Limited
1177 Avenue of the Americas
New York. NY 10036-2798
Attn: Robert V. Botschka
Tel:  212-801-9883
Fax:  212-801-9131

Westdeutsche Landesbank Girozentrale,   21,621,621.62        3.378,378.38
New York Branch
1211 Avenue of the Americas
New York. NY 10036
Attn: Ralph R. White
Tel:  212-852-6096
Fax:  212-852-6307
<PAGE>
                                                                               3

Landesbank Sachsen Girozentrale         15,496,621.62        3,378,378.38
Humboldtstr. 25
D-04105 Leipzig
Attn: Hans-Peter Kochs
      Department 314
Tel:  01 1-49-341-979-3313
Fax:  011-49-341-979-3309

BHF-BANK AG. New York Branch            34,594,594.59        5,405,405.41
590 Madison Avenue
New York. NY 10022-2540
Attn: Ms. Heidi Skor
Tel:  212-756-5938
Fax:  212-756-5536

The Sumitomo Trust & Banking            21,621,621.62        3,378,378.38
Co., Ltd., New York Branch
527 Madison Avenue
New York, NY 10022
Attn: Glenda B. Francis
Tel:  212-326-0558
Fax:  212-418-4848

Helaba Dublin Landesbank                21,621,621.62        3,378,378.38
Hessen-Thuringen International
420 Fifth Avenue
New York, NY 10018-2729
Attn: Michael Novack
      Assistant Vice President
Tel:  212-703-5224
Fax:  212-703-5256

Octagon Credit Investors Loan           15,000,000.00                 -0-
 Portfolio, a unit of The Chase
 Manhattan Bank
380 Madison Avenue, 12th Fl.
New York, NY 10017
Attn: Andrew Gordon
Tel:  212-622-3064
Fax:  212-622-3797
<PAGE>

                                                              Schedule 2.7(b) to
                                                                Credit Agreement

                  Term Loan Amortation; Principal Payment Dates

   Principal Payment Date                  Contractual Amortization (US$)
   ----------------------                  ------------------------------

      April 30, 1998                                      0
      July 30, 1998                                       0
      October 30, 1998                                    0
      January 30, 1999                                    0
      April 30, 1999                                   320,000
      July 30, 1999                                    320,000
      October 30, 1999                                 320,000
      January 30, 2000                                320,000
      April 30, 2000                                 3,040,000
      July 30, 2000                                  3,040,000
      October 30, 2000                               3,040,000
      January 30, 2001                               3,040,000
      April 30, 2001                                 6,720,000
      July 30, 2001                                  6,720,000
      October 30. 2001                               6,720,000
      January 30, 2002                               6,720,000
      April 30, 2002                                 16,960,000
      July 30, 2002                                  16,960,000
      October 30, 2002                               16,960,000
      January 30, 2003                               16,960,000
      April 30, 2003                                 26,640,000
      July 30, 2003                                  26,640,000
      October 30, 2003                               26,640,000
      January 30, 2004                               26,640,000
      April 30, 2004                                 26,320,000
      July 30, 2004                                  26,320,000
      October 30, 2004                               26,320,000
      January 30, 2005                               26,320,000
<PAGE>

SCHEDULE 3.6(a) (page 1 of 2)

                                  FLAG LIMITED
                                 CAPITALIZATION
                            AS OF SEPTEMBER 30, 1997
                                   (UNAUDITED)
                                     (000'S)

                                                                   September 30,
                                                                      1997
                                                                   -------------
Total Long-term debt - Old Credit Facility                          $  615,087
Preferred stock                                                        127,216

Shareholders' equity
  Class A common shares, $.0001 par value                                   13
  Class B common shares, $.0001 par value                                   48
Additional paid in capital (see attached)                              463,630
Accumulated deficit                                                    (79,549)
                                                                    ----------

Total shareholders' equity                                             384,142
                                                                    ----------

Total capitalization                                                $1,126,445
                                                                    ==========
<PAGE>

                                                       Page 2 of Schedule 3.6(a)

<TABLE>
<S>                                                         <C>          <C>
Aggregate number of shares of Class A Common Stock
   Outstanding as of the Closing Date                                      132,000,000

          NYNEX Network Systems Company                     31,200,000
          Rathburn Limited                                  62,400,000
          Marubeni Telecom Development Limited              12,000,000
          Gulf Associates Communications, Limited           26,400,000

Aggregate number of shares of Class B Common Stock
   Outstanding as of the Closing Date                               --     565,858,740

           NYNEX Network Systems Company                   223,000,410
           Rathburn Limited                                103,341,643
           K.I.N. (Thailand) Company Limited               108,780,685
           Marubeni Telecom Development Limited             54,390,342
           The Asian Infrastructure Fund                    54,390,342
           AT&T Capital Corporation                          5,488,829
           GE Capital Project Finance VI Ltd.               16,466,489

Aggregate number of shares of Preferred Stock
   Outstanding as of the Closing Date (before
   giving effect to the consummation of the Refinancing)            --   1,306,428,578

      AT&T Capital Corporation                             321,529,936
      GE Capital Project Finance VI Ltd.                   984,898,642
</TABLE>
<PAGE>
                                  FLAG Limited
                      Analysis of Class A Shares (Common)
                            as at December 31, 1997
                          (par value 0.0001 per share)

<TABLE>
<CAPTION>
                                                                                         G.E.       AT&T
                           NYNEX    Gulf Associates    DALLAH      MARUBENI   AIF  TH   Capital    Capital         TOTAL
<S>                     <C>           <C>            <C>          <C>          <C>  <C>    <C>         <C>      <C>
TOTAL "A" Shares Held
as at 12/31/94          31,200,000    26,400,000     62,400,000   12,000,000   0    0      0           0        132,000,000

1995 ACTIVITY
no activity in 1995

TOTAL "A" Shares Held
as at 12/31/95          31,200,000    26,400,000     62,400,000   12,000,000   0    0      0           0        132,000,000

1996 ACTIVITY
no activity in 1996

TOTAL "A" Shares Held
as at 12/31/96          31,200,000    26,400,000     62,400,000   12,000,000   0    0      0           0        132,000,000

1997 ACTIVITY
no activity in 1997

TOTAL "A" Shares Held
as at 12/31/97          31,200,000    26,400,000     62,400,000   12,000,000   0    0      0           0        132,000,000

</TABLE>
<PAGE>

SCHEDULE 3.6(a)

                                  FLAG Limited
                       Analysis of Class B Common Shares
                           Additional Paid in Capital

<TABLE>
<CAPTION>
                                                                     FUNDING SHARES ($1/share)               NON-FUNDING
                                              BELL                                                                GE
                                            ATLANTIC       DALLAH       MARUBENI        AIF           TH      Capital Corp.
<S>                                        <C>           <C>           <C>           <C>           <C>             <C>
Total B Shares                             85,399,288    39,575,270    20,829,093    20,629,093    41,658,186      231
Pd for @ 12/31/96

                           % Funded             41.00%        19.00%        10.00%        10.00%        20.00%    0.00%

1997 ACTIVITY
1997 Capital Calls
funded to 09/30/97                        106,600,000    49,400,000    26,000,000    26,000,000    52,000,000        0

                           % Funded             41.00%        10.00%        10.00%        10.00%        20.00%    0.00%

Total B Shares
Pd for @ 09/30/97                         191,999,288    86,975,270    46,829,093    46,829,093    93,658,186      231

                           % Funded             41.00%        10.00%        10.00%        10.00%        20.00%    0.00%

Less: Par Value                                19,200         8,898         4,683         4,863         9,366    1,211

Additional Paid in Capital                191,980,088    88,966,372    46,824,410    46,824,410    93,646,820     (980)

Less:
Payments made to Gulf Associates

Unfunded Par Value
of Class A Common
Shares

Additional Paid in Capital
as at Sept 30, 1997

<CAPTION>
                                       NON-FUNDING
                                                           Total
                                          AT&T         Pd in Capital     Total #
                                       Capital Corp.         $          Shares o/s
<S>                                         <C>         <C>            <C>
Total B Shares                              77          208,291,238    215,485,946
Pd for @ 12/31/96

                           % Funded       0.00%              100.00%          0.00%

1997 ACTIVITY
1997 Capital Calls
funded to 09/30/97                           0          260,000,000    268,956,243

                           % Funded       0.00%              100.00%

Total B Shares
Pd for @ 09/30/97                           77          488,291,238    484,422,189

                           % Funded       0.00%              100.00%

Less: Par Value                            402               48,443

Additional Paid in Capital                (325)         468,242,795

Less:
Payments made to Gulf Associates                         (4,600,000)

Unfunded Par Value
of Class A Common
Shares                                                      (13,200)

Additional Paid in Capital
as at Sept 30, 1997                                     463,629,595    484,422,189
</TABLE>
<PAGE>

                                 SCHEDULE 3.6(b)

                                  SUBSIDIARIES

                                      None.
<PAGE>

ITALY

Wayleave to use existing ducts issued by Telecom Italia

EGYPT

Right of Way issued by ARENTO for Alexandria Duct Wayleave issued by ARENTO for
Alexandria Duct

HONG KONG

Wayleave for Duct Route issued by District Lands Office

CHINA

Land Cable Route Permit issued by Shanghai City Planning and Design Institute
Permit for connect Cable Route issued by Shanghai Long Distance
Telecommunications Administration

KOREA

Approval of system provision and installation issued by Ministry of Information
and Communications Use Permit issued by National Parks Authority

JAPAN

Notice for use of Public Waters issued by Ministry of Posts and
Telecommunications (see a floor occupation)

Permits for Water Use issued by Kanagawa Prefecture (cable route easement within
Japanese territorial waters)

Permits for Water Use issued by Tokyo Metropolitan Prefecture (cable route
easement within Japanese territorial Waters)

Permit for Water Time issued by Kagoshima Prefecture (cable route easement
within Japanese territorial waters)

Permit for Water Use Issued by Nagasaki Prefecture (cable route easement within
Japanese territorial waters)

Permit for Occupation on Seashore Preservation Area issued by Civil Work Office
of Kanagawa Prefecture (cable route easement at shoreline)

                                       4
<PAGE>

PIPELINE AND POWER CABLE CROSSING AGREEMENTS

Type of Agreement                           Company
-----------------                           -------

Pipeline Crossing Agreement                 EMPL, Madrid

Power Cable Crossing Agreement              Red Electrica, Madrid

Pipeline Crossing Agreement                 EGPC/GUPCO, Cairo

Other Domestic Permits, Wayleaves and Rights of Way Landing Parties are required
to obtain and maintain pursuant to Sub-Paragraph 18.2 of the C&MA, which states
that "each Landing Party Signatory.... will for the duration of this Agreement
maintain all such Licenses in full farce and effect and will obtain or grant and
maintain all such additional Licenses as may at any time hereafter be required
in its Country for the construction, operation and maintenance of the FLAG Cable
System." Examples of Licenses are listed in Appendix B of the C&MA, "FLAG Cable
System Initial Costs in Addition to Costs Arising under the Supply Contract", as
follows: I

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------
                                                        PERFORMANCE      INITIAL COST
ITEM #       DESCRIPTION                              RESPONSIBILITY    RESPONSIBILITY
---------------------------------------------------------------------------------------

---------------------------------------------------------------------------------------
<S>          <C>                                      <C>               <C>
  4          Permission in Principle or License       LANDING PARTIES   LANDING PARTIES
             to operate FLAG Cable System in the
             respective countries of the Landing
             Parties
---------------------------------------------------------------------------------------

---------------------------------------------------------------------------------------
  5          Licenses and Permits associated          LANDING PARTIES   LANDING PARTIES
             with Segment "T" (including Building
             and Real Estate Permits, Rights of
             Way for land cable route between cable
             station and beach joint)
---------------------------------------------------------------------------------------
</TABLE>

Licenses and Permits which must be obtained and maintained by the Landing
Parties pursuant to Item #5 above include, but are not limited to, the
following:

UNITED KINGDOM

Wayleave issued by Crown Estates Commission
Wayleave issued by Duchy of Cornwall
Consent of Cable & Wireless (public highway)
Consent of St. Levan Parish Council (playing field)

                                       5
<PAGE>

                           ROUTE PERMIT NOTIFICATIONS

Permit Description                Agency Notified
------------------                ---------------

Notification                      France Ministry of Foreign Affairs

Notification                      Portugal Ministry of Foreign Affairs

Notification                      Morocco Ministry of Foreign Affairs

Notification                      Algeria Ministry of Foreign Affairs

Notification                      Greece Ministry of Foreign Affairs

Notification                      Sudan Ministry of Foreign Affairs

Notification                      Eritrea Ministry of Foreign Affairs

Notification                      Yemen Ministry of Foreign Affairs

Notification                      Oman Ministry of Foreign Affairs

Notification                      Sri Lanka Ministry of Foreign Affairs

Notification                      Philippines Ministry of Foreign Affairs

                                 ROUTE PERMITS

Permit Description                Issuing Authority
------------------                -----------------

Greece Route Permit               Ministry of Foreign Affairs

Oman Route Permit                 Ministry of Foreign Affairs

Cable Laying Permit               Vietnam DGPT

Route Permit/Notification         Taiwan Ministry of Foreign Affairs

                                       2
<PAGE>

                                                                 SCHEDULE 3.7(b)

                   LANDING LICENSE OR PERMISSION IN PRINCIPLE
                               IN LANDING COUNTRY

Permit Description                        Issuing Authority
------------------                        -----------------

Landing License, or Permission in         UK Department of Transport
Principal (UK)

Landing License, or Permission in         Egypt Government (contained in Landing
Principal (Egypt)                         Party Agreement)

Landing License, or Permission in         Thailand Government
Principal (Thailand)

Landing License, or Permission in         Ministry of Energy, Telecommunications
Principal (Malaysia)                      and Post, Malaysia

Landing License, or Permission in         Office of Telecom Authorities
Principal (Hong Kong)

Landing License, or Permission in         Ministry of Information and
Principal (Korea)                         Communication

Landing License, or Permission in         Ministry of Posts and
Principal (Miura)                         Telecommunications

Landing License (China)                   PRC State Planning Committee

Permission in Principle to Sign C&MA      Spain Government Authorities
and Participate in FLAG Project

Verification of Concession                Italy Ministero P.P.T.T.

UAE Landing License                       Fujairah Municipality

India Landing License                     Government of India, Department of
                                          Telecommunications

Landing License, or Permission            Ministry of Pools and
Principle (Ninomiya)                      Telecommunications
<PAGE>

                                                                    SCHEDULE 3.9

                                   LITIGATION

1.    Mr. Neil Tagare, a former consultant to Bell Atlantic Network Systems
      (Bermuda) Limited, the marketing agent for the Company, filed suit in 1996
      against the Borrower and others in U.S. District Court for the Southern
      District of New York, alleging that the defendants, inter alia, violated
      the federal and New York laws prohibiting employment discrimination by
      mistreating him on the basis of race and ethnicity. Mr. Tagare sought
      damages of $1.8 million in bonuses which Mr. Tagare states were owed him
      under his employment contract, and incidental damages, damages for
      emotional distress and punitive damages in unspecified amounts. On
      December 8, 1997, summary judgment was entered by Judge William C. Conner
      in favor of the defendants on all claims, and on January 9, 1998, Mr.
      Tagare filed a notice of appeal.

      The Borrower has received a full indemnity from BA Worldwide Services
      Group, Inc., a wholly-owned subsidiary of Bell Atlantic Corporation,
      against Mr. Tagare's claims.

2.    Ms. Judy Ming-Mussenden, a former employee of the Borrower, has threatened
      to file suit for wrongful termination. The amount claimed is $132,000. The
      Borrower has been negotiating with Ms. Ming-Mussenden to settle the claim.
      The settlement amount currently being proposed by the claimant is
      substantially less than $132,000.
<PAGE>

<TABLE>
<CAPTION>
=======================================================================================================================
Party                            Place of Filing                  Collateral Covered
-----------------------------------------------------------------------------------------------------------------------
<S>                              <C>                              <C>
Marubeni Telecom Development     Westchester County,              All shares of capital stock, notes, and instruments
Ltd.                             New York County,                 issued by FLAG Limited and its successors, now owned
                                 New York Secretary of State      or hereafter acquired by the pledgor, and all of the
                                                                  pledgor's rights and privileges with respect thereto,
                                                                  and all income and profits thereon. and all dividends
                                                                  and other payments and distributions with respect
                                                                  thereto, and all proceeds and products of the
                                                                  foregoing.
-----------------------------------------------------------------------------------------------------------------------

Rathburn Ltd.                    Westchester County,              All shares of capital stock, notes, and instruments
                                 New York County,                 issued by FLAG Limited and its successors. now owned
                                 New York Secretary of State      or hereafter acquired by the pledgor, and all of the
                                                                  pledgor's rights and privileges with respect thereto,
                                                                  and all income and profits thereon. and all dividends
                                                                  and other payments and distributions with respect
                                                                  thereto, and all proceeds and products of the
                                                                  foregoing.
=======================================================================================================================
</TABLE>

<PAGE>

                                SCHEDULE 3.11(b)

                        COLLATERAL RECORDINGS AND FILINGS

PART A:   UCC FILINGS IN
          THE UNITED STATES

<TABLE>
<CAPTION>
=======================================================================================================================
Party                            Place of Filing                  Collateral Covered
-----------------------------------------------------------------------------------------------------------------------
<S>                              <C>                              <C>
FLAG Limited                     Westchester County,              Accounts, chattel paper, contract rights, general
                                 New York County,                 intangibles and documents now owned or hereafter
                                 New York Secretary of State      acquired, including all proceeds of the foregoing.
-----------------------------------------------------------------------------------------------------------------------

NYNEX Network Systems            Westchester County,              All shares of capital stock. notes. and instruments
Company                          New York County,                 issued by FLAG Limited and its successors, now owned
                                 New York Secretary of State,     or hereafter acquired by the pledgor, and all of the
                                 Delaware Secretary of State      pledgor's rights and privileges with respect thereto,
                                                                  and all income and profits thereon, and all dividends
                                                                  and other payments and distributions with respect
                                                                  thereto, and all proceeds and products of the
                                                                  foregoing.
=======================================================================================================================
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
=======================================================================================================================
Party                            Place of Filing                  Collateral Covered
-----------------------------------------------------------------------------------------------------------------------
<S>                              <C>                              <C>
GE Capital Project Finance VI    Westchester County,              All shares of capital stock, notes, and instruments
Limited                          New York Country,                issued by FLAG Limited and its successors, now owned
                                 New York Secretary of State,     or hereafter acquired by the pledgor, and all of the
                                 Stamford, Connecticut,           pledgor's rights and privileges with respect thereto,
                                 Connecticut Secretary of State   and all income and profits thereon, and all dividends
                                                                  and other payments and distributions with respect
                                                                  thereto, and all proceeds and products of the
                                                                  foregoing.
-----------------------------------------------------------------------------------------------------------------------

AT&T Capital Corporation         Westchester County,              All shares of capital stock, notes, and instruments
                                 New York County,                 issued by FLAG Limited and its successors, now owned
                                 New York Secretary of State,     or hereafter acquired by the pledgor, and all of the
                                 Delaware Secretary of State,     pledgor's rights and privileges with respect thereto,
                                 Morris County, New Jersey,       and all income and profits thereon, and all dividends
                                 New Jersey Secretary of State    and other payments and distributions with respect
                                                                  thereto, and all proceeds and products of the
                                                                  foregoing.
=======================================================================================================================
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
=======================================================================================================================
Party                            Place of Filing                  Collateral Covered
-----------------------------------------------------------------------------------------------------------------------
<S>                              <C>                              <C>
Asian Infrastructure Fund        Westchester County,              All shares of capital stock, notes, and instruments
                                 New York County,                 issued by FLAG Limited and its successors, now owned
                                 New York Secretary of State      or hereafter acquired by the pledgor, and all of the
                                                                  pledgor's rights and privileges with respect thereto,
                                                                  and all income and profits thereon, and all dividends
                                                                  and other payments and distributions with respect
                                                                  thereto, and all proceeds and products of the
                                                                  foregoing.
-----------------------------------------------------------------------------------------------------------------------

K.I.N. (Thailand) Company Ltd.   Westchester County,              All shares of capital stock, notes, and instruments
                                 New York County,                 issued by FLAG Limited and its successors, now owned
                                 New York Secretary of State      or hereafter acquired by the pledgor, and all of the
                                                                  pledgor's rights and privileges with respect thereto,
                                                                  and all income and profits thereon, and all dividends
                                                                  and other payments and distributions with respect
                                                                  thereto, and all proceeds and products of the
                                                                  foregoing.
=======================================================================================================================
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
======================================================================================================================
              Document                                    Nature or                           Nature of
                                                           Charge                              Filing
----------------------------------------------------------------------------------------------------------------------
<S>                                           <C>                                  <C>
Pledge Agreement, dated as of January 28,     A first priority security interest   With the Registrar of Companies in
1998, betweeen Rathburn Ltd. and              in favor of the Collateral Trustee   Bermuda pursuant to Section 55(1)
International Trust Company of Bermuda        for the benefit of the secured       of the Companies Act 1981, of
Ltd., as Collateral Trustee                   parties in the Pledged Securities    Bermuda
                                              and in all of its rights and in
                                              all interest dividends and other
                                              payments with respect thereto and
                                              in all shares of FLAG issued to
                                              Pledgor and in any note or
                                              indebtedness
----------------------------------------------------------------------------------------------------------------------
Pledge Agreement, dated as of January 28,     A first priority security interest    With the Registrar of Companies in
1998, between Asian Infrastructure Fund       in favor of the Collateral Trustee    Bermuda pursuant to Section 55(1)
and International Trust Company of            for the benefit of the secured        of the Companies Act 1981, of
Bermuda Ltd., as Collateral Trustee           parties in the Pledged Securities     Bermuda
                                              and in all of its rights and in
                                              all interest dividends and other
                                              payments with respect thereto and
                                              in all shares of FLAG issued to
                                              Pledgor and in any note or
                                              indebtedness
----------------------------------------------------------------------------------------------------------------------
Pledge Agreement, dated as of January 28,     A first priority security interest   With the Registrar of Companies in
1998, between K.I.N. (Thailand) Company       in favor of the Collateral Trustee   Bermuda pursuant to Section 55(1)
Ltd. and International Trust Company of       for the benefit of the secured       of the Companies Act 1981, of
Bermuda Ltd., as Collateral Trustee           parties in the Pledged Securities    Bermuda
                                              and in all of its rights and in
                                              all interest dividends and other
                                              payments with respect thereto and
                                              in all shares of FLAG issued to
                                              Pledgor and in any note or
                                              indebtedness
======================================================================================================================
</TABLE>
<PAGE>

PART B: CHARGES FILED IN BERMUDA

<TABLE>
<CAPTION>
======================================================================================================================
              Document                                    Nature or                           Nature of
                                                           Charge                              Filing
----------------------------------------------------------------------------------------------------------------------
<S>                                           <C>                                  <C>
Security Agreement, dated as of January 28,   A first priority security interest   With the Registrar of
1998. made by FLAG Ltd. in favor of           in all right, title, and interest    Companies in Bermuda
International Trust Company of Bermuda        of FLAG in, to, and under the        pursuant to Section 55(1)
Ltd., as Collateral Trustee                   Collateral as defined in the         of the Companies Act 1981,
                                              Agreement) in favor of the           of Bermuda
                                              Collateral Trustee for the Secured
                                              Parties
----------------------------------------------------------------------------------------------------------------------
Pledge Agreement, dated as of January 28,     A first priority security interest   With the Registrar of
1998, between NYNEX Network Systems           in favor of the Collateral Trustee   Companies in Bermuda
Company and International Trust Company       for the benefit of the secured       pursuant to Section 55(1)
of Bermuda Ltd.. as Collateral Trustee        party in the Pledged Securities      of the Companies Act 1981,
                                              and in all of its rights and         of Bermuda
                                              privileges thereon, and in all
                                              interest, dividends and other
                                              payments with respect thereto and
                                              in all shares of FLAG issued to
                                              Pledgor and in any note or
                                              indebtedness
----------------------------------------------------------------------------------------------------------------------
Pledge Agreement, dated as of January 28,     A first priority security interest   With the Registrar of
1998, between Marubeni Telecom                in favor of the Collateral Trustee   Companies in Bermuda
Development Ltd. and International Trust      for the benefit of the secured       pursuant to Section 55(1)
Company of Bermuda Ltd., as Collateral        parties in the Pledged Securities    of the Companies Act 1981,
Trustee                                       and in all of its rights and         of Bermuda
                                              privileges thereon, and in all
                                              interest, dividends and other
                                              payments with respect thereto and
                                              in all shares of FLAG issued to
                                              Pledgor and in any note or
                                              indebtedness
======================================================================================================================
</TABLE>

<PAGE>

PART C: OTHER RELEVANT FILINGS

<TABLE>
<CAPTION>
======================================================================================================================
Party                                         Place of Filing                      Collateral Covered
----------------------------------------------------------------------------------------------------------------------
<S>                                           <C>                                  <C>
Rathburn Ltd.                                 Register of Mortgages and Charges    All shares of capital stock,
                                              maintained at Rathburn in the        notes, and instruments issued by
                                              British Virgin Islands, Companies    FLAG Limited and its successors,
                                              Registry of the British Virgin       now owned or hereafter acquired by
                                              Islands                              the pledgor, and all of the
                                                                                   pledgor's rights and privileges
                                                                                   with respect thereto, and all
                                                                                   income and profits thereon, and
                                                                                   all dividends and other payments
                                                                                   and distributions with respect
                                                                                   thereto, and all proceeds and
                                                                                   products of the foregoing.
----------------------------------------------------------------------------------------------------------------------
K.I.N. (Thailand) Company Ltd.                Share register of FLAG maintained    All shares of capital stock,
                                              in Bermuda                           notes, and instruments issued by
                                                                                   FLAG Limited and its successors,
                                                                                   now owned or hereafter acquired by
                                                                                   the pledgor, and all of the
                                                                                   pledgor's rights and privileges
                                                                                   with respect thereto, and all
                                                                                   income and profits thereon, and
                                                                                   all dividends and other payments
                                                                                   and distributions with respect
                                                                                   thereto, and all proceeds and
                                                                                   products of the foregoing.
======================================================================================================================
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
======================================================================================================================
              Document                                    Nature or                           Nature of
                                                           Charge                              Filing
----------------------------------------------------------------------------------------------------------------------
<S>                                           <C>                                  <C>
Pledge Agreement, dated as of January 28,     A first priority security interest   With the Registrar of Companies in
1998, between GE Capital Project Finance      in favor of the Collateral Trustee   Bermuda pursuant to Section 55(1)
VI Ltd. and International Trust Company of    for the benefit of the secured       of the Companies Act 1981, of
Bermuda Ltd., as Collateral Trustee           parties in the Pledged Securities    Bermuda
                                              and in all of its rights and
                                              privileges thereon, and in all
                                              interest, dividends and other
                                              payments with respect thereto and
                                              in all shares of FLAG issued to
                                              Pledgor and in any note or
                                              indebtedness
----------------------------------------------------------------------------------------------------------------------
Pledge Agreement, dated as of January 28,     A first priority security interest   With the Registrar of Companies in
1998, between AT&T Capital Corporation        in favor of the Collateral Trustee   Bermuda pursuant to Section 55(1)
and International Trust Company of            for the benefit of the secured       of the Companies Act 1981, of
Bermuda Ltd., as Collateral                   parties in the Pledged Securities    Bermuda
Trustee                                       and in all of its rights and
                                              privileges thereon, and in all
                                              interest, dividends and other
                                              payments with respect thereto and
                                              in all shares of FLAG issued to
                                              Pledgor and in any note or
                                              indebtedness
======================================================================================================================
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
======================================================================================================================
Party                                         Place of Filing                      Collateral Covered
----------------------------------------------------------------------------------------------------------------------
<S>                                           <C>                                  <C>
Asian Infrastructure Fund                     Register of Mortgages and Charges    All shares of capital stock,
                                              maintained at AIF in the Cayman      notes, and instruments issued by
                                              Islands                              FLAG Limited and its successors,
                                                                                   now owned or hereafter acquired by
                                                                                   the pledgor, and all of the
                                                                                   pledgor's rights and privileges
                                                                                   with respect thereto, and all
                                                                                   income and profits thereon, and
                                                                                   all dividends and other payments
                                                                                   and distributions with respect
                                                                                   thereto, and all proceeds and
                                                                                   products of the foregoing.
======================================================================================================================
</TABLE>

<PAGE>

10.   Landing Party Agreement between FLAG Limited and Telecom Italia, S.p.A.

11.   Landing Party Agreement between FLAG Limited and Korea Telecom.

12.   Landing Party Agreement between FLAG Limited and Telefonica de Espana.

13.   Landing Party Agreement between FLAG Limited and Telekom Malaysia Berhad.

14.   Landing Party Agreement between FLAG Limited and The Communications
      Authority of Thailand.

15.   Landing Party Agreement between FLAG Limited and The Directorate General
      of Telecommunications of the Peoples Republic of China

16.   Landing Party Agreement between FLAG Limited and Kokusai Denshin Denwa
      Co., Ltd.

17.   Landing Party Agreement between FLAG Limited and ARENTO.

18.   Amended and Restated Software Development and License Agreement, between
      FLAG Limited and AT&T Corp., dated as of December 14, 1994.

19.   Amended and Restated Technology Escrow Deposit Agreement, between FLAG
      Limited and AT&T Corp., dated as of December 14, 1994.

20.   Program Management Services Agreement dated April 19, 1994 between NYNEX
      Network Systems Company and FLAG Limited.

21.   Marketing Services Agreement dated April 19, 1994 between NNS (Bermuda)
      Limited and FLAG Limited.

22.   Agreement for the Provision of Services (in China) between FLAG Limited
      and AT&T Submarine Systems Inc. dated April 25, 1997.

23.   Agreement for the Provision of Services (in China) between FLAG Limited
      and KDD Submarine Cable Systems, Inc. dated April 25, 1997.

24.   Agreement for the Provision of Services (in India) between FLAG Limited
      and AT&T Submarine Systems Inc. dated November 22, 1996.
<PAGE>

25.   Agreement for the Provision of Services (in India) between FLAG Limited
      and KDD Submarine Cable Systems, Inc. dated December 10, 1996.

26.   Agreement for the Sale of Equipment (in India) between FLAG Limited and
      AT&T Submarine Systems Inc. dated November 22, 1996.

27.   Agreement for the Sale of Equipment (in India) between FLAG Limited and
      KDD Submarine Cable Systems, Inc. dated December 10, 1996.

28.   Agreement dated January 27, 1996 between the Egyptian General Petroleum
      Corporation Gulf of Suez Petroleum Company and FLAG Limited in connection
      with the crossing of pipelines in the Gulf of Suez by the FLAG Cable
      System.

29.   Agreement dated December 1995 between FLAG Limited and E.M.P.L. for
      crossing of the Straits of Gibraltar pipelines by the FLAG Cable System.

30.   Cable Crossing Agreement dated April 8, 1997 among FLAG Limited, Red
      Electrica de Espana, S.A. and L'Office National de L'Electricite du Maroc.

31.   Barcelona-Savona and FLAG Submarine Cable Systems Restoration Agreement
      dated October 23, 1997 between FLAG Limited and Telefonica de Espana S.A.
      and Telecom Italia S.p.A.

32.   Rioja and FLAG Submarine Cable Systems Restoration Agreement dated
      December 1, 1997 between FLAG Limited and Telefonica de Espana S.A.,
      British Telecommunications plc, Belgacom S.A. and PTT Telecom B.V.

33.   Restoration Agreement dated September 11, 1997 between Mercury
      Communications Limited and FLAG Limited.

34.   Restoration Agreement dated December 31, 1997 between Telekom Malaysia
      Berhad and FLAG Limited for utilization of Telekom Malaysia restoration
      capacity.

35.   Restoration Agreement dated November 7, 1997 between Telefonica de Espana
      and FLAG Limited granting transit capacity for restoration of the FLAG
      Cable System on Telefonica's network.

36.   Restoration Agreement dated December 31, 1997 between Telecom Italia
      S.p.A. and FLAG Limited for utilization of Telecom Italia restoration
      capacity (Telecom Italia earth station and backhaul).
<PAGE>

3.    Registration Agreement dated January 30, 1998 between FLAG Limited and the
      Initial Purchasers.

4.    Purchase Agreement dated January 23, 1998 between FLAG Limited and the
      Initial Purchasers.
<PAGE>

                                                                SCHEDULE 3.19(b)

                            CONTRACTUAL OBLIGATIONS

Project Documents

1.    Fiber Optic Link Around the Globe (FLAG) Cable System Construction and
      Maintenance Agreement, dated December 14, 1994, among FLAG Limited and the
      signatories thereto, as amended by Amendatory Agreement Nos. 1, 2, 3 and 4
      and as amended pursuant to Paragraph 30.3(i).

2.    FLAG Cable System Terms and Conditions of Contract, dated December 14,
      1994, among TYCO Submarine Systems, Ltd. (formerly AT&T Submarine Systems
      Inc.), KDD Submarine Cable Systems Inc., Marubeni Corporation and FLAG
      Limited, as amended by Amendment No. 1 dated July 3, 1995, Amendment No. 2
      dated October 19, 1995, Amendment No. 3 dated November 30, 1995, Amendment
      No. 4 dated September 19, 1996, Amendment No. 5 dated November 14, 1996,
      Amendment No. 6 dated March 18, 1997 and Amendment No. 7 dated as of
      October 15, 1997.

3.    Each of the Capacity Sales Agreements and Capacity Purchase Orders set
      forth on Annex 1 hereto.

4.    Capacity Lease/Purchase Agreement dated as of November 14, 1997 between
      FLAG Limited and Telecom Italia S.p.A.

5.    Capacity Credit Agreement dated June 25, 1997 between FLAG Limited and
      Chunghwa Telecom.

6.    Capacity Credit Agreement dated June 25, 1997 between FLAG Limited and
      Viatel Inc.

7.    Memorandum of Agreement dated December 14, 1994 between FLAG Limited and
      Cable & Wireless plc.

8.    Landing Party Agreement between FLAG Limited and Hong Kong Telecom
      International Limited.

9.    Landing Party Agreement between FLAG Limited and International Digital
      Communications, Inc.
<PAGE>

37.   Restoration Agreement dated November 7, 1997 between Telecom Italia s.p.A.
      and FLAG Limited (Telecom Italia backhaul).

38.   Universal Joint Contract for the FLAG Cable System dated October 30, 1997
      between FLAG Limited and Cable & Wireless Marine Limited.

39.   Agreement for the Storage of Spare Plant of the FLAG Cable System dated
      November 10, 1997 between FLAG Limited and Cable & Wireless Marine
      Limited.

40.   Agreement for the Storage of Spare Plant of the FLAG Cable System dated
      May 17, 1997 between FLAG Limited and S-B Submarine Systems Company
      Limited.

41.   Agreement for Storage of FLAG Submarine Cable System between FLAG Limited
      and ETISALAT (signed by FLAG, ETISALAT signature pending).

42.   Agreement for the Storage of Spare Plant of the FLAG Cable System dated as
      of April 22, 1997 between FLAG Limited and Telecom Italia.

43.   Agreement for the Storage of Spare Plant in the KDD Yokohama Depot for
      FLAG Cable System dated September 28, 1997 between FLAG Limited and
      Kokusal Denshin Denwa Co., Ltd.

44.   Atlantic Cable Maintenance Agreement dated as of January 1, 1998.

45.   Mediterranean Cable Maintenance Agreement dated November 25, 1992, as
      amended.

46.   Agreement for the Maintenance of Pacific Ocean Cable Systems in the
      Yokohama Zone dated March 11, 1997, as amended.

47.   South East Asia and Indian Ocean Cable Maintenance Agreement dated June 1,
      1986, as amended.

48.   Agreement for the Maintenance of the FLAG Submarine Cable System dated
      November 1, 1997 between Emirates Telecommunications Corporation and FLAG
      Limited.

49.   Memorandum of Understanding dated November 30, 1997 between FLAG Limited
      and Global Telesystems Limited.

50.   Operations Contract for the FLAG Network Operations Center dated June 30,
      1997.
<PAGE>

51.   Letter dated August 26, 1997 from Ismail Hassan (ARENTO) to Samih Kawar
      re: payments to ARENTO

52.   Memorandum of Understanding for Sharing of Coherent OTDR for Hong Kong
      Station dated June 24, 1997 between APCN and FLAG.

53.   Construction Agreement for the Construction of Alexandria Cable Conduit
      System dated March 14, 1996 among FLAG Limited and Consolidated
      Contractors International Company SAL, as amended.

54.   Construction Agreement for Construction of Satun-Songkhla Cable Conduit
      System dated March 13, 1996 among The Communications Authority of
      Thailand, FLAG Limited, as Purchaser and PIDO International Co., Ltd., as
      Contractor.

55.   Construction Agreement for Construction of Satun-Songkhla Cable Conduit
      System dated March 13, 1996 among The Communications Authority of
      Thailand, FLAG Limited, as Purchaser and United Communication Industry
      Public Company Limited (Network), as Contractor.

56.   Services Contract dated September 30, 1997 between FLAG Limited and P&P
      Telecom Company Limited.

57.   Agreement pursuant to correspondence dated August 28, 1997 and September
      11, 1997 between Jamal Abdul-Jalil and Mr. Samir Donia of the Suez Canal
      Authority Agreement

58.   Supplemental Agreement dated October 14, 1997 between HKTI and FLAG
      Limited on Remedial Burial off Hong Kong.

59.   Agreement, dated as of April 19, 1994, by and between NYNEX Network
      Systems Company, Rathburn Limited, Gulf Associates Communications Limited,
      Spinconsult S.A., Hormoz Sabet, Reja Sabet, Lua'y Swaidi, FLAG Limited and
      Fiber Optics Association for International Research Inc.

Non-Project Documents

1.    Each of the Financing Documents which are incorporated herein by
      reference.

2.    Senior Unsecured Note Indenture dated January 30, 1998 between FLAG
      Limited and IBJ Schroeder Bank & Trust Company.
<PAGE>

20.   Capacity Purchase Order between FLAG Limited and WorldCom Services Inc.
      (signed by WorldCom, pending FLAG signature).
<PAGE>

                                     ANNEX I

                            CAPACITY SALES AGREEMENTS

1.    Capacity Sales Agreement dated March 31, 1995 between FLAG Limited and
      Videsh Sanchar Nigam Limited

2.    Capacity Sales Agreement dated December 14, 1994 between FLAG Limited and
      Telecommunications Company of Iran

3.    Capacity Sales Agreement dated November 27, 1995 between FLAG Limited and
      Office Nationale des Posts & Telecommunications

4.    Capacity Sales Agreement dated March 30, 1995 between FLAG Limited and
      Arab Republic of Egypt National Telecommunications Organization

5.    Capacity Sales Agreement dated June 5, 1995 between FLAG Limited and
      International Communications Corporation

6.    Capacity Sales Agreement dated October 17, 1996 between FLAG Limited and
      ONSE Telecom

7.    Capacity Sales Agreement dated December 14, 1994 between FLAG Limited and
      Telemalta Corporation

8.    Capacity Sales Agreement dated December 7, 1995 between FLAG Limited and
      Telemalta Corporation

9.    Capacity Sales Agreement dated October 17, 1996 between FLAG Limited and
      INDOSAT

10.   Capacity Sales Agreement dated December 7, 1995 between FLAG Limited and
      China Telecom

11.   Capacity Sales Agreement dated December 14, 1994 between FLAG Limited and
      Hungarian Telecommunications Corporation

12.   Capacity Sales Agreement dated December 7, 1995 between FLAG Limited and
      International Digital Communications Inc.

13.   Capacity Sales Agreement dated November 1, 1997 between FLAG Limited and
      Syrian Telecommunications Establishment

14.   Capacity Sales Agreement dated September 25, 1997 between FLAG Limited and
      Telecommunications Company of Iran

15.   Capacity Sales Agreement dated November 14, 1997 between FLAG Limited and
      Telecom Italia S.p.A.

16.   Capacity Sales Agreement dated November 14, 1997 between FLAG Limited and
      Telecom Italia S.p.A.

17.   Capacity Sales Agreement dated March 20, 1997 between FLAG Limited and
      Singapore Telecom.

18.   Capacity Purchase Order dated January 24, 1998 between FLAG Limited and
      Telkom SA Limited.

19.   Capacity Purchase Order dated January 25, 1998 between FLAG Limited and
      Tunisie Telecom.
<PAGE>

Available Capacity Schedule (CA Section 3.26)

                               [GRAPHIC OMITTED]

<TABLE>
<CAPTION>
                                                                       Segment
                        ---------------------------------------------------------------------------------------------------------
                          S1        S2        S3     S4,S5       S6        S7        S8        S9       S10       S11        S12

                        UK-Sp     Sp-It     It-Eg    Eg-UAE    UAE-In     In-Ma     Ma-Th     Th-HK    HK-Ch     Ch-Ko      Ko-Ja

<S>                     <C>       <C>       <C>       <C>       <C>       <C>       <C>       <C>       <C>       <C>       <C>
Sold / Committed         561       574       322       364       318       220       248       244       618       558       583

Maximum Available       8064      8064      8064      8064      8064      8064      8064      8064      8064      8064      8064

Available Capacity      7503      7490      7742      7700      7746      7844      7816      7820      7446      7506      7481
</TABLE>
<PAGE>

            (e)   Property insurance on an "a11 risk" basis covering tie
                  Borrower's assets including spare parts related to the Project
                  for an amount not less than the full replacement thereof;

            (f)   directors and officers liability insurance against claims
                  arising out of any dutifully taken action by any director or
                  officer of the Borrower for an aggregate amount not less than
                  $50,000,000; and

            (g)   comprehensive general (primary and excess) liability insurance
                  in an aggregate amount equal to or greater than $25,000,000,
                  to cover such contractual and/or legal liabilities for any one
                  accident or occurrence as are not covered under any more
                  specific insurance and/or to act as excess "umbrella"
                  insurance against risks of the types described in clauses (a)
                  through (c) above on terms satisfactory to the Administrative
                  Agent and in conformity with Applicable Law.

All such insurance shall be on terms which are customary for the class of
business and shall also cover the Borrower's subsidiaries.

ADDITIONAL COVENANTS

      1.    The Borrower shall pay or cause to be paid as they become due all
            premiums for insurance required to be maintained pursuant to this
            Schedule and shall, promptly upon request, deliver or cause to be
            delivered receipts for payment of premiums or such other evidence of
            payment reasonably satisfactory to the Administrative Agent. The
            Borrower shall, upon becoming aware of any of the following,
            promptly advise the Collateral Trustee and the Administrative Agent
            of any default in the payment of any premium and of any other act or
            omission on the part of the Borrower which could reasonably be
            expected to invalidate or render

                                       2
<PAGE>
                      Schedule 5.9 to the Credit Agreement

                                    INSURANCE

REQUIRED INSURANCE

The Borrower shall, for itself and its subsidiaries, obtain, carry and maintain
in full force and effect, at all times, at no cost to the Collateral Trustee,
the Administrative Agent or the Lenders, the following minimum insurance
coverages from the Closing Date until the Obligations have been paid in hill and
the Commitments have been terminated which may include reasonable deductible
levels satisfactory to the Administrative Agent (other than as required to
satisfy applicable legislation):

      (a)   statutory workmen's compensation and/or employer's liability
            insurance as required by the country and/or the civil jurisdiction
            in which the Borrower or any of its subsidiaries has an office in an
            amount not less than the amount required to satisfy applicable
            legislation but in no event less than $1,000,000 for any one
            incident or series of incidents or such lesser amount as the
            Administrative Agent shall approve);

      (b)   motor liability insurance for claims arising out of owned or hired
            vehicles, whether licensed for road use or not in an amount not less
            than the amount required to satisfy applicable legislation and not
            less than $1,000,000 combined single limit for the death of or
            injury to any person per accident and not less than $1,000,000 for
            the loss of or damage to property resulting from any one accident;

      (c)   primary and excess pipeline crossings liability insurance to cover
            contractual and/or legal liabilities which arise or could arise out
            of the cable crossing submarine pipelines, fur an aggregate amount
            not less than $50,000,000.

                                       1
<PAGE>

      (b)   to name the Collateral Trustee and the Administrative Agent as
            additional insureds (the "Additional Insured") and provide that in
            respect of the interest of any Additional Insured in such policies
            the insurance shall not be invalidated by any act or neglect of the
            Collateral Trustee or any other Additional Insured;

      (c)   to contain a waiver of any rights of recourse and/or subrogation of
            the insurer I against the Borrower and the Additional Insureds and a
            waiver of any rights of the insurer to any set-off or counterclaim
            or any other deduction, whether by attachment or otherwise, in
            respect of any liability of either the Borrower or the Additional
            Insureds;

      (d)   to include a loss payable clause with respect to any insurance
            obtained and I maintained pursuant to Section 1(e) and name the
            Collateral Trustee as loss payee and to provide that all payments to
            be made under such policy shall be made jointly to the Collateral
            Trustee and the Borrower for deposit into the Insurance Proceeds
            Account;

      (e)   to provide that the Additional Insureds shall have no obligation or
            liability for I premiums, commissions, assessments or calls or other
            obligations in connection with such insurance (provided, that if the
            Borrower is in default of its obligations to pay any of the
            preceding amounts, then the Collateral Trustee may (but shall not be
            obligated to) pay such amounts at the request of the Majority
            Lenders, and the Borrower shall pay to the Collateral Trustee on
            demand such amounts so paid by the Collateral Trustee with interest
            from the time of payment;

      (f)   in an amount sufficient to prevent any coinsurance penalty on
            property;

                                       2
<PAGE>

            uneaforceable, in whole or in part, any insurance being maintained
            or required to be maintained by the Borrower pursuant to this
            Schedule.

      2.    The Borrower shall comply with and confirm to, and shall cause to be
            complied with and confirmed to, (a) all provisions of each insurance
            policy maintained or required to be maintained pursuant to this
            Schedule and (b) all requirements of the insurers applicable to the
            Borrower or any of its subsidiaries or to any of the insured
            property or to the use, manner of use, occupancy, possession,
            operation, maintenance, alteration or repair of any of the insured
            property.

      3.    The Borrower shall not do, consent or agree to (and shall not permit
            any of its subsidiaries to do, consent or agree to) any act or
            omission which would or could permit any insurer to (a) invalidate
            any of the insurance maintained or required to be maintained by the
            Borrower or any of its subsidiaries pursuant to this Schedule, (b)
            render void or voidable the whole or any part of any of the
            insurance maintained or required to be maintained by the Borrower or
            any of its subsidiaries pursuant to this Schedule or (c) bring any
            particular liability within the scope of an exclusion or exception
            to any of the insurance maintained or required to be maintained by
            the Borrower or any of its subsidiaries pursuant to this Schedule.

      4.    The Borrower shall cause each insurance policy maintained in
            accordance with this Schedule:

            (a)   to provide that no cancellation, termination or material
                  change in such insurance shall be effective until at least 30
                  days after the insurer shall have given written notice thereof
                  to the Borrower and the Collateral Trustee. Upon receipt of
                  such notice, the Borrower shall immediately notify the
                  Administrative Agent;

                                       3
<PAGE>

            coverage maintained by the Borrower, nor shall the Collateral
            Trustee, the Administrative Agent or any Lender be responsible for
            any representations or warranties made by underwriter.

      9.    The Borrower shall cause each insurer or such broker to advise the
            Borrower in writing of any default in the payment of any premiums or
            any other act or omission to its knowledge on the part of the
            Borrower which might invalidate or render unenforceable, in whole or
            in part, any insurance provided hereunder.

                                       4
<PAGE>

      (g)   to provide for deductibles or excesses solely for the account of the
            Borrower, and, unless otherwise agreed in writing by the
            Administrative Agent, such deductibles or excesses shall not exceed
            the norm for the type of insurance to which they apply.

5.    Notwithstanding anything to the contrary that may be contained herein, the
      Borrower may maintain, at its own expense, other insurance on or with
      respect to the Project, any portion thereof or any property or equipment
      in connection therewith; provided, that (a) such other insurance shall not
      conflict with or otherwise Limit the availability of the insurance
      required to be maintained pursuant to this Schedule and (b) such other
      insurance shall not reduce the amount of proceeds that would otherwise be
      payable under the insurance required to be maintained pursuant to this
      Schedule.

6.    On the Closing Date and annually thereafter, the Borrower shall furnish
      the Collateral Trustee and the Administrative Agent with evidence that the
      Borrower is maintaining all required insurance. Such evidence of insurance
      shall be executed by each insurer or by an authorized representative of
      each insurer where it is not practical for such insurer to execute the
      evidence of insurance itself. Such evidence of insurance shall identify
      underwriters, the type of insurance, the insurance limits, the policy term
      and, shall state that such insurance is in full force and effect.

7.    The Borrower shall cause to be deposited in the Insurance Proceeds Account
      all payments received by the Borrower from any insurer within one Business
      Day of receipt thereof.

8.    Notwithstanding anything to the contrary herein, no provision of this
      Schedule shall impose on the Collateral Trustee, the Administrative Agent
      or any Lender any duty or obligation to verify the existence or adequacy
      of the insurance

                                       5
<PAGE>

                                                             Schedule 8.10(b) to
                                                             Credit Agreement

                             Contingent Amortization

              Calendar Year                  Outstanding Amount (US$)
              -------------                  ------------------------

                   1998                         298,880,000

                   1999                         271,360,000

                   2000                         236,480,000

                   2001                         193,280,000

                   2002                         140,480,000

                   2003                         76,480,000

                   2004                               0

<PAGE>
                                                                               2

obligation to maintain the Register or (c) the provisions of Section 2.7(e) of
the Credit Agreement. the Lender may make (or cause to be made) appropriate
notations on the grid attached to this Revolving Credit Note (or on any
continuation of such grid).

            All parties now or hereafter liable with respect to this Revolving
Credit Note. whether as maker, principal, surety, guarantor, endorser or
otherwise, hereby waive presentment, demand, protest, notice of dishonor and all
other notices of any kind. No assignment of this Revolving Credit Note and the
obligation evidenced hereby (whether in whole or in part) shall be effective
unless it shall have been recorded in the Register by the Administrative Agent
in accordance with the terms of the Credit Agreement.

            THIS REVOLVING CREDIT NOTE SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

            IN WITNESS WHEREOF, the Borrower has caused this Revolving Credit
Note to be executed on its behalf by an authorized officer as of the day and
year first above written.

                                              FLAG LIMITED

                                              By________________________________
                                                Title:

<PAGE>

                                                                     EXHIBIT A-I

                                    [Form of]

                              REVOLVING CREDIT NOTE

$__________                                                     January 28, 1998

            FOR VALUE RECEIVED, the undersigned, FLAG LIMITED, a company
organized and existing under the laws of Bermuda (the "Borrower'),
unconditionally promises to pay to the order of _______________ (the "Lender")
the principal sum of _______________ DOLLARS ($__________) or, if less, the
aggregate unpaid principal amount of all Revolving Credit Loans (as defined in
the Credit Agreement referred to below) made by the Lender pursuant to the
Credit Agreement, dated as of January 28, 1998 (as amended, supplemented, or
otherwise modified from time to time, the "Credit Agreement"), among the
Borrower, the various financial institutions (including the Lender) from time to
time parties thereto. International Trust Company of Bermuda Limited, as
Collateral Trustee, and Barclays Bank PLC, as Administrative Agent, on the
Maturity Date. Unless otherwise defined herein, terms used herein shall have the
meanings provided in the Credit Agreement.

            The Borrower also promises to pay interest on the unpaid principal
amount hereof from time to time outstanding from and including the date hereof
until maturity (whether by acceleration or otherwise) and, after maturity, until
paid, at the rates per annum and on the dates specified in the Credit Agreement.

            Payments of both principal and interest are to be made without set
off or counterclaim in lawful money of the United States of America in same day
or immediately available funds to the account designated by the Administrative
Agent pursuant to the Credit Agreement.

            This Revolving Credit Note is one of the Revolving Credit Notes
referred to in, and evidences the Revolving Credit Loans made by the Lender
under, the Credit Agreement, to which reference is made for a description of the
security for this Revolving Credit Note and for a statement of the terms and
conditions on which the Borrower is permitted and required to make prepayments
and repayments of principal of the Indebtedness evidenced by this Revolving
Credit Note and on which such Indebtedness may be declared to be or shall
automatically become immediately due and payable. This Revolving Credit Note is
subject to the provisions of the Credit Agreement and the other Financing
Documents.

            Without affecting (a) the obligation of the Lender to maintain in
accordance with its usual practice an account or accounts evidencing the
indebtedness of the Borrower to the Lender in accordance with the Credit
Agreement, (b) the Administrative Agent's

<PAGE>
                  REVOLVING CREDIT LOANS AND PRINCIPAL PAYMENT

<TABLE>
<CAPTION>
====================================================================================================================================
       Amount of Revolving Credit
              Loan Made                                 Amount of Principal Repaid       Unpaid Principal Balance
       --------------------------                       --------------------------       ------------------------
       Alternate     Adjusted LIBO    Interest Period   Alternate         Adjusted       Alternate        Adjusted      Notation
Date   Base Rate          Rate        (If Applicable)   Base Rent         LIBO Rate      Base Rate       LIBO Rate       Made by
====================================================================================================================================
<S>    <C>           <C>              <C>               <C>               <C>            <C>             <C>             <C>
 -----------------------------------------------------------------------------------------------------------------------------------

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

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

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

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

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

====================================================================================================================================
</TABLE>

<PAGE>
                                                                               2

payable. This Term Note is subject to the provisions of the Credit Agreement and
the other Financing Documents.

            Without affecting (a) the obligation of the Lender to maintain in
accordance with its usual practice an account or accounts evidencing the
indebtedness of the Borrower to the Lender in accordance with the Credit
Agreement, (b) the Administrative Agent's obligation to maintain the Register or
(c) the provisions of Section 2.7(e) of the Credit Agreement, the Lender may
make (or cause to be made) appropriate notations on the grid attached to this
Term Note (or on any continuation of such grid).

            All parties now or hereafter liable with respect to this Term Note,
whether as maker, principal, surety, guarantor, endorser or otherwise, hereby
waive presentment, demand, protest, notice of dishonor and all other notices of
any kind. No assignment of this Term Note and the obligation evidenced hereby
(whether in whole or in part) shall be effective unless it shall have been
recorded in the Register by the Administrative Agent in accordance with the
terms of the Credit Agreement.

            THIS TERM NOTE SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK

            IN WITNESS WHEREOF, the Borrower has caused this Term Note to be
executed on its behalf by an authorized officer as of the day and year first
above written.

                                              FLAG LIMITED

                                              By________________________________
                                                Title:

<PAGE>

                                                                    EXHIBIT A-2

                                   [Form of]

                                   TERM NOTE

$___________________                                            January 28, 1998

            FOR VALUE RECEIVED, the undersigned, FLAG LIMITED, a company
organized and existing under the laws of Bermuda (the "Borrower"),
unconditionally promises to pay to the order of _______________ (the "Lender")
the principal sum of __________________ ______ DOLLARS ($________) or, if less,
the aggregate unpaid principal amount of the Term Loan made by the Lender
pursuant to the Credit Agreement, dated as of January 28, 1998 (as amended,
supplemented, or otherwise modified from time to time, the "Credit Agreement"),
among the Borrower, the various financial institutions (including the Lender)
from time to time parties thereto, International Trust Company of Bermuda
Limited, as Collateral Trustee, and Barclays Bank PLC, as Administrative Agent,
payable in quarterly installments on Principal Payment Dates, in an amount for
each such Principal Payment Date as set forth in the Credit Agreement. To the
extent not previously paid, the aggregate unpaid principal amount of all Term
Loans made by the Lender shall be payable on the Maturity Date. Unless otherwise
defined herein, terms used herein have the meanings provided in the Credit
Agreement.

            The Borrower also promises to pay interest on the unpaid principal
amount hereof from time to time outstanding from and including the date hereof
until maturity (whether by acceleration or otherwise) and, after maturity, until
paid, at the rates per annum and on the dates specified in the Credit Agreement.

            Payments of both principal and interest are to be made without set
off or counterclaim in lawful money of the United States of America in same day
or immediately available funds to the account designated by the Administrative
Agent pursuant to the Credit Agreement.

            This Term Note is one of the Term Notes referred to in, and
evidences the Term Loans made by the Lender under, the Credit Agreement, to
which reference is made for a description of the security for this Term Note and
for a statement of the terms and conditions on which the Borrower is permitted
and required to make prepayments and repayments of principal of the Indebtedness
evidenced by this Term Note and on which such Indebtedness may be declared to be
or shall automatically become immediately due and

<PAGE>

                        TERM LOANS AND PRINCIPAL PAYMENTS

<TABLE>
<CAPTION>
====================================================================================================================================
       Amount of Term Loan Made                         Amount of Principal Repaid       Unpaid Principal Balance
       --------------------------                       --------------------------       ------------------------
       Alternate     Adjusted LIBO    Interest Period   Alternate         Adjusted       Alternate        Adjusted      Notation
Date   Base Rate          Rate        (If Applicable)   Base Rent         LIBO Rate      Base Rate       LIBO Rate       Made by
====================================================================================================================================
<S>    <C>           <C>              <C>               <C>               <C>            <C>             <C>             <C>
 -----------------------------------------------------------------------------------------------------------------------------------

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

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

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

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

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

====================================================================================================================================
</TABLE>

<PAGE>
                                                                               2

            (iii) the Proposed Borrowing shall be comprised of [$_________ of
            ABR Loans,] [$__________ of Eurodollar Loans with an initial
            Interest Period of ___ month(s) ending on ______,] [and
            $_____________ of Eurodollar Loans with an initial Interest Period
            of ______________month(s) ending on _____________].

            The Borrower hereby certifies that [no Designated Event has occurred
and is continuing as of the date hereof] [a Designated Event has occurred and is
continuing, and (i) the aggregate amount of the Revolving Credit Commitments
(without giving effect to any limitation in the availability thereunder pursuant
to Section 2.6(e)) is $______ and (ii) the percentage applicable to the date
hereof under Section 2.6(e) is _______%]. After giving effect to the Revolving
Credit Loans requested herein, the aggregate outstanding principal amount of
Revolving Credit Loans shall be $ _______ and the aggregate amount of unused
available Revolving Credit Commitments shall be $ _______

            The Borrower has caused this Borrowing Request to be executed and
delivered by a Responsible Officer this _____ day of _____________

                                              FLAG LIMITED

                                              By________________________________
                                                Title:

<PAGE>

                                                                     EXHIBIT B-1

                                BORROWING REQUEST

                            (Revolving Credit Loans)

Barclays Bank PLC,
 as Administrative Agent
222 Broadway
New York, New York 10038

Attention: Peter Yetman

                                  FLAG LIMITED

Ladies and Gentlemen:

            This Borrowing Request is delivered to you pursuant to Section 2.3
of the Credit Agreement, dated as of January 28, 1997 (as amended, supplemented,
or otherwise modified from time to time, the "Credit Agreement"), among FLAG
Limited, a company organized and existing under the laws of Bermuda (the
"Borrower'), the various financial institutions from time to time parties
thereto (collectively, the "Lenders"), Barclays Bank PLC, as administrative
agent for the Lenders (in such capacity, the "Administrative Agent") and
International Trust Company of Bermuda Limited, as collateral trustee (in such
capacity, the "Collateral Trustee"). Unless otherwise defined herein, terms used
herein shall have the meanings provided in the Credit Agreement.

            The Borrower hereby gives you notice, irrevocably, pursuant to
Section 2.3 of the Credit Agreement, that the Borrower hereby requests a
Revolving Credit Borrowing under the Credit Agreement and, in that connection,
sets forth below the information relating to such Revolving Credit Borrowing
(the "Proposed Borrowing") as required by Section 2.3 of the Credit Agreement.

            The Borrower hereby requests that Revolving Credit Loans be made as
follows:

            (i) the Business Day of the Proposed Borrowing is _________________;

            (ii) the aggregate principal amount of Revolving Credit Loans
            requested under the Proposed Borrowing is $______________; and

<PAGE>
                                                                               2

            The Borrower hereby undertakes that in the event of the failure to
borrow any Eurodollar Loan on the date specified in this Notice, the Borrower
shall compensate each Lender for the loss. cost and expense attributable to such
event. In the case of a Eurodollar Loan. the loss to any Lender attributable to
any such event may include an amount determined by such Lender to be equal to
the excess, if any, of (i) the amount of interest that such Lender would pay for
a deposit equal to the principal amount of such Loan for the period from the
date of the Proposed Borrowing to the last day of the Interest Period specified
above for such Loan if the interest rate payable on such deposit were equal to
the Adjusted LIBO Rate for such Interest Period, over (ii) the amount of
interest that such Lender would earn on such principal amount for such period if
such Lender were to invest such principal amount for such period at the interest
rate that would be bid by such Lender (or an affiliate of such Lender) for
dollar deposits from other banks in the eurodollar market at the commencement of
such period. A certificate of any Lender setting forth the details of any amount
or amounts that such Lender is entitled to receive pursuant to this paragraph
shall be delivered by such Lender to the Borrower (with a copy to the
Administrative Agent) and shall be conclusive absent manifest error. The
Borrower hereby undertakes to pay such Lender the amount shown as due within 10
days after receipt thereof

            The Borrower has caused this Borrowing Request to be executed and
delivered by a Responsible Officer of the Borrower this _th day of January,
1998.

                                              FLAG LIMITED

                                              By________________________________
                                                Title:

<PAGE>

                                                                     EXHIBIT B-2

                                BORROWING REQUEST

                                  (Term Loans)

Barclays Bank PLC,
 as Administrative Agent
222 Broadway
New York. New York 10038

Attention: Peter Yetman

                                  FLAG LIMITED

Ladies and Gentlemen:

            This Borrowing Request is delivered to you in anticipation of
entering into the Credit Agreement. dated as of January 28, 1998 (as amended,
supplemented, or otherwise modified from time to time, the "Credit Agreement"),
among FLAG Limited, a company organized and existing under the laws of Bermuda
(the "Borrower"), the various financial institutions from time to time parties
thereto (collectively, the "Lenders"), Barclays Bank PLC, as administrative
agent for the Lenders (in such capacity, the "Administrative Agent") and
International Trust Company of Bermuda Limited, as collateral trustee (in such
capacity, the "Collateral Trustee"), Unless otherwise defined herein, terms used
herein shall have the meanings provided in the Credit Agreement (whether or not
in effect on the date hereof).

            The Borrower hereby gives you irrevocable notice that the Borrower
hereby requests a Term Loan Borrowing and, in that connection, sets forth below
the information relating to such Term Loan Borrowing (the "Proposed Borrowing").

            The Borrower hereby requests that Term Loans be made as follows:

            (i) the date of the Proposed Borrowing is January 30, 1998:

            (ii) the aggregate principal amount of Term Loans requested under
            the Proposed Borrowing is $320,000,000; and

            (iii) the Proposed Borrowing shall be comprised of $320,000.000 of
            Eurodollar Loans with an initial Interest Period of three months
            ending on April 30, 1998.

<PAGE>
                                                                               2

      Documents to cancel, suspend or terminate its performance thereunder in
      accordance with the terms thereof or which could reasonably be expected to
      excuse any such party from liability for non-performance thereunder unless
      such cancellation, suspension or termination or non-performance could not
      reasonably be expected to have a Material Adverse Effect:

            [(d) no action. proceeding or investigation has been instituted or
      threatened by or before any Governmental Authority, nor has any order,
      judgment or decree been issued or proposed to be issued by any
      Governmental Authority, to set aside, restrain, enjoin, limit, restrict or
      prevent the consummation of the Refinancing;](1)

            (e) the representations and warranties made by the Borrower and any
      of its Subsidiaries in any Financing Document to which it is a party are
      true and correct in all material respects on and as of the date hereof
      (unless any such representation or warranty relates solely to an earlier
      date, in which ease it shall have been true and correct in all material
      respects on such earlier date).

      The Borrower has caused this Borrowing Certificate to be executed and
delivered, and the certification and warranties herein made, by a Responsible
Officer this __day of ________, ____.

                                              FLAG LIMITED

                                              By________________________________
                                                Title:

----------
(1)   To be included for the Borrowing on the Closing Date only.

<PAGE>

                                                                       EXHIBIT C

                              BORROWING CERTIFICATE

Barclays Bank PLC
 as Administrative .Agent
222 Broadway
New York, New York 10038

Attention: Peter Yetman

                                  FLAG LIMITED

Ladies and Gentlemen:

            This Borrowing Certificate is delivered to you pursuant to Section
4.2(i) of the Credit Agreement, dated as of January 28, 1998 (as amended,
supplemented or otherwise modified from time to time, the "Credit Agreement"),
among FLAG Limited, a corporation organized and existing under the laws of
Bermuda (the "Borrower"), the various financial institutions from time to time
parties thereto (collectively, the "Lenders"), Barclays Bank PLC, as
administrative agent (in such capacity, the "Administrative Agent") and
International Trust Company of Bermuda Limited, as collateral trustee (in such
capacity, the "Collateral Trustee"). Unless otherwise defined herein, terms used
herein shall have the meanings provided in the Credit Agreement.

            The Borrower submitted a Borrowing Request to the Administrative
Agent requesting a Borrowing of Loans on the date hereof and, in connection
therewith, and pursuant to Section 4.2(i) of the Credit Agreement. the Borrower
hereby certifies that:

            (a) no Default or Event of Default has occurred or is continuing (or
      shall occur after giving effect to the Loans to be made on the date
      hereof):

            [(b) the Present Value Coverage Ratios calculated as of the most
      recent calendar quarter are _______ and _______, respectively, and are no
      less than 1.5 to l.00;](1)

            (c) no event of force majeure or similar event or condition exists
      under any Project Document (i) which could reasonably be expected to have
      a Material Adverse Effect or (ii) which permits or requires any party to
      any of the Principal Project

----------
(1)   To be included only if Revolving Credit Loans are requested.

<PAGE>
                                                                               2

                  (B) continued as $ _______________ of Eurodollar Loans with an
            Interest Period of ____ month(s) ending on _______; and

                  (C) convened into $_____________ of ABR Loans.]

      [(iii) $______________ of the currently outstanding principal amount of
Revolving Credit Loans currently being maintained as ABR Loans should be: (A)
continued as $______________ of ABR Loans;

                  (B) converted into $_____________ of Eurodollar Loans with an
            Interest Period of __ month(s) ending on ______; and

                  (C) converted into $____________ of Eurodollar Loans with an
            Interest Period of __ month(s) ending on ------.]]

      [(b) The Borrower hereby request that Term Loans be [converted]
[continued] as follows:

            (i)The effective date of the Proposed Continuation/Conversion is
      _____________ __, ___(which is a Business Day).

            [(ii) $_______________ of the currently outstanding principal amount
      of Term Loans currently being maintained as Eurodollar Loans with an
      Interest Period of ____ month(s), the last day of which is the date of the
      Proposed Continuation/Conversion referred to in clause (i) above, should
      be:

                  (A) continued as $______________ of Eurodollar Loans with an
            Interest Period of ___________ month(s) ending on _______;

                  (B) continued as $______________ of Eurodollar Loans with an
            Interest Period of___________ month(s) ending on ______; and

                  (C) converted into $_____________ of ABR Loans.]

      [(iii) $___________ of the currently outstanding principal amount of Term
Loans currently being maintained as ABR Loans should be:

                  (A) continued as $_____________ of ABR Loans;

                  (B) converted into $___________ of Eurodollar Loans with an
            Interest Period of __ month(s) ending on ______; and

                  (C) converted into S__________ of Eurodollar Loans with an
            Interest Period of -- month(s) ending on ______.]]

<PAGE>

                                                                       EXHIBIT D

                         CONTINUATION CONVERSION NOTICE

Barclays Bank PLC,
 as Administrative Agent
222 Broadway
New York, New York 10038

Attention: Peter Yetman

                                  FLAG LIMITED

Ladies and Gentlemen:

            This Continuation/Conversion Notice is delivered to you pursuant to
Section 2.5 of the Credit Agreement, dated as of January 28 1998 (as amended,
supplemented or otherwise modified from time to time, the "Credit Agreement"),
among FLAG Limited, a company organized and existing under the laws of Bermuda
(the "Borrower"), the various financial institutions from time to time parties
thereto (collectively, the "Lenders"), Barclays Bank PLC, as administrative
agent (in such capacity, the "Administrative Agent") and International Trust
Company of Bermuda Limited, as collateral trustee (in such capacity, the
"Collateral Trustee"). Unless otherwise defined herein, terms used herein shall
have the meanings provided in the Credit Agreement.

            The Borrower hereby gives you notice, irrevocably, pursuant to
Section 2.5 of the Credit Agreement, that the Borrower hereby requests a
[conversion] [continuation] of Loans under the Credit Agreement and, in that
connection, sets forth below the information relating to such [conversion]
[continuation] (the "Proposed Continuation/Conversion") as required by Section
2.5 of the Credit Agreement.

            [(a) The Borrower hereby requests that Revolving Credit Loans be
[converted] [continued] as follows:

            (i) The effective date of the Proposed Continuation/Conversion is
      _________ -- (which is a Business Day).

            [(ii) $___________ of the currently outstanding principal amount of
      Revolving Credit Loans currently being maintained as Eurodollar Loans with
      an Interest Period of ______________ month(s), the last day of which is
      the date of the Proposed Continuation/Conversion referred to in clause (i)
      above, should be:

                  (A) continued as $____________ __ of Eurodollar Loans with an
                  Interest Period of __ month(s) ending on _______;

<PAGE>
                                                                               3

            (c) No Event of Default has occurred and continuing.

            The Borrower has caused this Continuation/Conversion Notice to be
executed and delivered by a Responsible Officer this _______________ day of
_______, __.

                                              FLAG LIMITED

                                              By________________________________
                                                Title:

<PAGE>
                                                                               2

Financing Document or any other instrument or document furnished pursuant hereto
or thereto: and (c) attaches any Notes held by it evidencing the Assigned
Facilities and (i) requests that the Administrative Agent, upon request by the
Assignee, exchange the attached Notes for a new Note or Notes payable to the
Assignee and (ii) if the Assignor has retained any interest in the Assigned
Facility, requests that the Administrative Agent exchange the attached Notes for
a new Note or Notes payable to the Assignor, in each case in amounts which
reflect the assignment being made heresy (and after giving effect to any other
assignments which have become effective on the Effective Date).

            3. The Assignee (a) represents and warrants that it is legally
authorized to enter into this Assignment and Acceptance; (b) confirms that it
has received a copy of the Credit Agreement and the other Financing Documents,
together with copies of the financial statements delivered pursuant to Section
3.1 of the Credit Agreement and such other documents and information as it has
deemed appropriate to make its own credit analysis and decision to enter into
this Assignment and Acceptance; (c) agrees that it will, independently and
without reliance upon the Assignor, the Administrative Agent, the Collateral
Trustee or any other Lender and based on such documents and information as it
shall deem appropriate at the time, continue to make its own credit decisions in
taking or not taking action under the Credit Agreement, the other Financing
Documents or any other instrument or document furnished pursuant hereto or
thereto; (d) appoints and authorizes the Administrative Agent and the Collateral
Trustee to take such action as agent on its behalf and to exercise such powers
and discretion under the Credit Agreement, the other Financing Documents or any
other ` instrument or document furnished pursuant hereto or thereto as are
delegated to the Administrative Agent or the Collateral Trustee, as the case may
be, by the terms thereof, together with such powers as are incidental thereto;
and (e) agrees that it will be bound by the provisions of the Credit Agreement
and the other Financing Documents and will perform in accordance with its terms
all the obligations which by the terms of the Credit Agreement and the Financing
Documents are required to be performed by it as a Lender including pursuant to
Section 2.15(e) of the Credit Agreement.

            4. The effective date of this Assignment and Acceptance shall be the
Effective Date of Assignment described in Schedule 1 hereto (the "Effective
Date"). Following the execution of this Assignment and Acceptance by the
Assignor and the Assignee, it will be delivered to the Administrative Agent and,
so long as no Default or Event of Default shall have occurred and be continuing,
the Borrower, for their prior written consent and it will then be delivered to
the Administrative Agent for acceptance by it and recording by the
Administrative Agent pursuant to the Credit Agreement, effective as of the
Effective Date (which shall not, unless otherwise agreed to by the
Administrative Agent, be earlier than five Business Days after the date of such
acceptance and recording by the Administrative Agent).

            5. Upon such acceptance and recording, from and after the Effective
Date, the Administrative Agent shall make all payments in respect of the
Assigned Interest (including payments of principal, interest, fees and other
amounts) to the Assignee whether such amounts have accrued prior to the
Effective Date or accrue subsequent to the Effective Date. The Assignor and the
Assignee shall make all appropriate adjustments in payments by

<PAGE>

                                                                       EXHIBIT M

                                     FORM OF
                            ASSIGNMENT AND ACCEPTANCE

            Reference is made to the Credit Agreement, dated as of January 28,
1998 (as amended, supplemented or otherwise modified from time to time, the
"Credit Agreement"), among FLAG Limited, a corporation organized and existing
under the laws of Bermuda (the "Borrower"), the various financial institutions
from time to time parties thereto (collectively, the "Lenders"), Barclays Bank
PLC, as administrative agent (in such capacity, the "Administrative Agent") and
International Trust Company of Bermuda Limited, as collateral trustee (in such
capacity, the "Collateral Trustee"). Unless otherwise defined herein, terms
defined in the Credit Agreement and used herein shall have the meanings given to
them in the Credit Agreement.

            The Assignor identified on Schedule 1 hereto (the "Assignor") and
the Assignee identified on Schedule 1 hereto (the "Assignee") agree as follows:

            1. The Assignor hereby irrevocably sells and assigns to the Assignee
without recourse to the Assignor, and the Assignee hereby irrevocably purchases
and assumes from the Assignor without recourse to the Assignor, as of the
Effective Date (as defined below), the interest described in Schedule 1 hereto
(the "Assigned Interest") in and to the Assignor's rights and obligations under
the Credit Agreement with respect to those credit facilities contained in the
Credit Agreement as are set forth on Schedule 1 hereto (individually, an
"Assigned Facility" collectively, the "Assigned Facilities"), in a principal
amount for each Assigned Facility as set forth on Schedule I hereto. The
Assignor shall be deemed to have assigned to the Assignee, and the Assignee
shall be deemed to have purchased from the Assignor, a pro rata share of the
Assignor's related rights and obligations under each of the other Financing
Documents concurrently with the assignment described above. After giving effect
to the foregoing assignment, the Assignor's and Assignee's outstanding Loans and
Commitments will be as set forth on Schedule 2 hereto.

            2. The Assignor (a) makes no representation or warranty and assumes
no responsibility with respect to any statements, warranties or representations
made in or in connection with the Credit Agreement or any other Financing
Document or with respect to the execution, legality, validity, enforceability,
genuineness, sufficiency or value of the Credit Agreement, any other Financing
Document or any other instrument or document furnished pursuant thereto, other
than that the Assignor has not created any adverse claim upon the interest being
assigned by it hereunder and that such interest is free and clear of any such
adverse claim; (b) makes no representation or warranty and assumes no
responsibility with respect to the financial condition of the Borrower, any of
its Subsidiaries or any other obligor or the performance or observance by the
Borrower, any of its Subsidiaries or any other obligor of any of their
respective obligations under the Credit Agreement or any other

<PAGE>

                                   Schedule 1
                          to Assignment and Acceptance

Name of Assignor: _______________________________________

Name of Assignee: _______________________________________

Effective Date of Assignment: ___________________________

                          Principal           Commitment            Percentage
Credit Facility        Amount Assigned      Amount Assigned         Assigned(1)
---------------        ---------------      ---------------         -----------

Revolving Credit Loan    $___________       $_____________          __.________%

Term Loan                $___________           N/A                 __.________%

[Name of Assignee]                          [Name of Assignor]

By:________________________________         By:___________________________
  Title:                                       Title:

Accepted:                                               Consented To:

BARCLAYS BANK PLC,                                      FLAG LIMITED(2)
as Administrative Agent

By:________________________________         By:___________________________
  Title:                                       Title:

----------
(1)   Calculate the Commitment Percentage that is assigned to at least [4]
      decimal places and show as a percentage of the aggregate Revolving Credit
      Commitments of all Lenders in the case of Revolving Credit Loans and as a
      percentage of the aggregate principal amount of Term Loans of all Lenders
      in the case of Term Loans.
(2)   Not necessary if a Default or Event of Default has occurred and is
      continuing.

<PAGE>
                                                                               3

the Administrative Agent for periods prior to the Effective Date or with respect
to the making of this assignment directly between themselves.

            6. From and after the Effective Date, ( a) the Assignee shall be a
party to the Credit Agreement and, to the extent provided in this Assignment and
Acceptance, have the rights and obligations of a Lender thereunder and under the
other Financing Documents and shall b' bound by the provisions thereof and (b)
the Assignor shall, to the extent provided in this Assignment and Acceptance,
relinquish its rights and be released from its obligations under the Credit
Agreement.

            7. The Assignor and the Assignee hereby agree that the [Assignor]
[Assignee](1) will pay to the Administrative Agent the processing fee referred
to in Section 11.4 of the Credit Agreement, and it is understood and agreed that
this Assignment and Acceptance shall be null and void unless and until such fee
is paid by the Effective Date.

            8. The Assignee hereby advises the Administrative Agent the
following administrative details with respect to the assigned Loans and
Commitments and requests the Administrative Agent (and, the Borrower, if
applicable) to consent to the assignment of the Assigned Interest as herein
provided in accordance with the terms of the Credit Agreement:

                Address for Notices:
                Institution Name:
                Attention:
                Domestic Office:
                Telephone:
                Facsimile:
                LIBOR Office:
                Telephone:
                Facsimile:

                Payment Instructions:

            9. This Assignment and Acceptance may be executed by the Assignor,
the Assignee, the Administrative Agent and, if applicable, the Borrower, in
separate counterparts, each of which when so executed and delivered shall be
deemed to be an original and all of which taken together shall constitute one
and the same agreement.

            10. This Assignment and Acceptance shall be governed by and
construed in accordance with the laws of the State of New York.

            IN WITNESS WHEREOF, the parties hereto have caused this Assignment
and Acceptance to be executed as of the date first above written by their
respective duly authorized officers on Schedule 1 hereto.

----------
(1)   Insert as appropriate

<PAGE>

                                                                       EXHIBIT Q

                               EXPENSE CERTIFICATE

                                                              _____________,____

Barclays Bank PLC, as Administrative Agent
 222 Broadway
New York, New York 10038
Attention: Peter Yetman

International Trust Company of Bermuda Limited, as Collateral Trustee
44 Church Street
Hamilton HM 12, Bermuda
Attention: General Manager

                                Re: FLAG Limited

Dear Gentlemen and Ladies:

            This Expense Certificate is delivered to you pursuant to the Credit
Agreement, dated as of January 28, 1998 (as amended, supplemented or otherwise
modified from time to time, the "Credit Agreement"), among FLAG Limited, a
company organized and existing under the laws of Bermuda (the "Borrower"), the
various financial institutions from time to time parties thereto as lenders
(collectively, the "Lenders"), Barclays Bank PLC, as administrative agent (in
such capacity, the "Administrative Agent"), and International Trust Company of
Bermuda Limited, as collateral trustee (the "Collateral Trustee"). Unless
otherwise defined herein, terms used herein shall have the meanings provided in
the Credit Agreement.

            The undersigned hereby certifies that he is a Responsible Officer of
the Borrower and, as such, he is authorized to execute this certificate on
behalf of the Borrower and further certifies that:

<PAGE>
                                                                               2

            (1) The following Operating Expenses, payments in respect of capital
      expenditures and payments in respect of income taxes are due and payable
      by the Borrower to the following Persons in an amount, for each such
      Person, in excess of $200,000 and attached hereto are copies of the
      applicable invoices:

                [INSERT PAYMENTS TO PAYEES IN EXCESS OF $200,000]

            Amount         Description        Payee            Wire Instructions
            ------         -----------        -----            -----------------

            (2) The following Operating Expenses, payments in respect of capital
      expenditures and payments in respect of income taxes are due and payable
      by the Borrower to the following Persons in an amount, for each such
      Person, equal to or less than $200,000 and attached hereto are copies of
      the applicable invoices:

[INSERT PAYMENTS TO PAYEES WHICH ARE LESS THAN OR EQUAL TO $200,000]

            Amount         Description        Payee
            ------         -----------        -----

            (3) None of the Operating Expenses set forth in items (1) or (2)
      above are in respect of repair maintenance expenses or restoration
      expenses reimbursable by third parties.

            (4) The following Operating Expenses, capital expenditures and
      income taxes are expected to be due and payable by the Borrower to the
      following Persons in the period after the Operating Expense Transfer Date
      in respect of which this Certificate is being delivered and prior to the
      Operating Expense Transfer Date immediately thereafter:

                                Total
                                Estimated       Due
             Description        Amount Due      Date         Payee
             -----------        ----------      ----         -----

      The Borrower requests that $_________ (representing the total of the
      amounts set forth in this Item 4) be transferred to the Current Account.

            (5) The amounts requested in Item 2 of the previous Expense
      Certificate were applied by the Borrower to the payments as set forth in
      such Expense Certificate.

<PAGE>
                                                                               3

            (6) After giving effect to the requested disbursements set forth in
      Items 1 and 2 above (together with the aggregate amount of all Operating
      Expenses and capital expenditures paid by the Borrower and its
      subsidiaries during the calendar year in which this Expense Certificate is
      made) the Borrower is in compliance with the then current Operating
      Budget.

            (7) The aggregate Project Revenues of the Borrower since the date of
      the last Expense Certificate, all of which has been deposited into the
      Revenue Account, is $_________________. Among such Project Revenues, the
      aggregate amount subject to rebate obligation is $__________ which should
      be transferred to the Rebate Account.

            (8) No Default or Event of Default has occurred and be continuing.

            IN WITNESS WHEREOF, the undersigned has executed this Expense
Certificate on this __ day of __________________.

                                              FLAG LIMITED

                                              By:_______________________________
                                                Name
                                                Title:

<PAGE>

                                   Schedule 2
                          to Assignment and Acceptance

A.    Assignor's Principal Amounts and Commitments after Assignment:

            Outstanding Revolving Credit Loan:             $____________________

            Outstanding Term Loan:                         $____________________

            Revolving Credit Commitment:                   $____________________

            Applicable Percentage:                         ____________________%

B.    Assignee's Principal Amounts and Commitments after Assignment:

            Outstanding Revolving Credit Loan:            $____________________

            Outstanding Term Loan:                        $____________________

            Revolving Credit Commitment:                  $____________________

            Applicable Percentage:                        ____________________%<PAGE>
                                                                    Ex-10.4

                              Schedules to

                          Restated Shareholders

                               Agreement

<PAGE>

                                                                         Annex 2
                                      to Further Restated Shareholders Agreement

                   TERMS FOR THE CUSTOMER MARKETING AGREEMENT
                               (SEE CLAUSE 3.3(b))

--------------------------------------------------------------------------------
  Subject                                 Terms
--------------------------------------------------------------------------------
   Brand     The parties agree that whenever they sell to customers any of the
             products covered by this customer marketing agreement, they will
             communicate clearly and prominently to the customer that they
             will use the networks of the other party to this agreement.
--------------------------------------------------------------------------------
 Products    The parties will agree a product range to be included in the
             customer marketing agreement.
--------------------------------------------------------------------------------
  Prices     The parties will agree favorable prices that each will charge the
             others for each of the products included in the customer
             marketing agreement.
--------------------------------------------------------------------------------
Preferred    Each party will preferentially use the other party's network to
Supplier     fulfil the capacity needs of its customers for locations on the
 Rights      other party' network that is not fulfilled by its own network,
             provided that the price offered by the other party for such
             capacity needs is less than or equal to the price offered by any
             third party for such capacity needs on similar terms and
             conditions and the quality of the capacity offered by the other
             party is not less than that offered by such third party.
--------------------------------------------------------------------------------

                                                                              18
<PAGE>

                                                                         Annex 3
                                      to Further Restated Shareholders Agreement

                         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") and [  ]
("Purchaser"), a [  ] organised under the laws of [  ] and having its principal
office at [       ].

                                   WITNESSETH:

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

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

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

WHEREAS, Purchaser desires to acquire from FA-1, and FA-1 is willing to provide
to Purchaser, a right of use in the capacity on the System as set out in
Schedule 2 (the "Capacity"); and

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

NOW, THEREFORE, the Parties hereby agree as follows:

1.    PURCHASE OF CAPACITY

1.1   Purchaser agrees to acquire the right to use the Capacity for the purchase
      price set forth in Schedule 2 (the "Purchase Price"), subject to the terms
      and conditions of this Agreement.

1.2   Individual units of Capacity as set out in Schedule 2 (each a "Unit")
      shall be available for activation in tranches (each a "Tranche") pursuant
      to the delivery schedule set out in Schedule 3. 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"). FA-1 shall further
      notify Purchaser of the actual date upon which Units of Capacity within
      subsequent Tranches are available for activation ("Availability Notice").
      Subject to the foregoing, when Purchaser wishes to activate one or more
      Units of Capacity it shall provide FA-1 with a notice ("Activation
      Notice") indicating the

                                                                    Page 1 of 18
<PAGE>

      number of Units of Capacity that Purchaser wishes to activate ("Requested
      Capacity") and a proposed activation date for each Unit of Capacity.

1.3   In accordance with the provisions of clause 1.2 Purchaser shall:

            1.3.1 Within 90 days of the date hereof, provide FA-1 with an
            estimate of the initial number of Units of Capacity it will wish to
            activate pursuant hereto following the Initial RFS Date.

            1.3.2 Not less than 60 days prior to the Scheduled Initial RFS Date,
            provide FA-1 with an Activation Notice indicating the Requested
            Capacity it wishes to activate pursuant hereto following the Initial
            RFS Date.

            1.3.3 For each of Tranches 2, 3 and 4 provide FA-1 with an
            Activation Notice indicating the Requested Capacity it wishes to
            activate within the Tranche 45 days prior to the beginning of the
            quarter in which the Capacity within that Tranche will be available
            for activation.

            1.3.4 Subject to clause 1.3.2, when it wishes to activate any Units
            of Capacity within a Tranche, provided that an Availability Notice
            has been delivered for that Tranche and Purchaser has activated all
            the Capacity within the previous Tranche, provide FA-1 with an
            Activation Notice therefor not less than 45 days prior to the
            proposed activation date.

1.4   FA-1 shall use reasonable endeavours to ensure that the date upon which
      Requested Capacity is activated (the "Date of Activation") is on or before
      the proposed activation date set out in the Activation Notice for such
      Requested Capacity.

1.5   Subject to Purchaser paying the Purchase Price in accordance with the
      terms of this Agreement, Purchaser shall have the right, subject to the
      terms of this Agreement, to use such Requested Capacity from the Date of
      Activation until the System is decommissioned. Purchaser shall have no
      legal ownership or other rights in the System itself, in any proceeds from
      the disposition of the System or in any other capacity therein, except as
      specifically provided in Schedule 3.

1.6   Purchaser shall be entitled to collocation pursuant to a collocation
      agreement to be negotiated between the Parties based on the principles set
      out in Schedule 4.

2.    PAYMENTS

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

            2.1.1 Purchaser shall pay to FA-1 30% of the Purchase Price on
            receipt of a notice from FA-1 that FA-1 Financial Closure (as
            defined in clause 22) has occurred.

            2.1.2 Purchaser shall pay the remaining 70% of the Purchase Price
            pursuant to the payment schedule set out in Schedule 2 ("Payment
            Schedule").

                                                                    Page 2 of 18
<PAGE>

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 3% 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 (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. 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.

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.

2.8   Within 14 days after the date of this Agreement Purchaser shall deliver to
      FA-1 such security for payment of the Purchase Price as is set forth in
      Schedule 6.

                                                                    Page 3 of 18
<PAGE>

3.    TAXES

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

4.    DEFAULT AND TERMINATION

4.1   In the event that Purchaser shall have failed to pay any amount payable by
      Purchaser pursuant hereto (including but not limited to any O&M Payments)
      for more than 30 days after its due date, then FA-1 may deactivate all
      then activated Capacity (and refuse to activate any additional Capacity)
      until Purchaser has paid in full all amounts overdue together with
      applicable default interest.

4.2   If the defaulted payment is for any portion of the Purchase Price and such
      default continues for a further period of 30 days, 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 Capacity 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.

1.3   FA-1 reserves the right to temporarily or permanently deactivate all then
      activated Capacity (and refuse to activate any additional Capacity) and/or
      to disconnect Purchaser's equipment from the System in the event that
      Purchaser is in breach of clause 9.1 or if, in FA-1's reasonable
      judgement, Purchaser's use of the System may damage or disrupt the System.

4.4   Except as provided herein, Purchaser shall have no right to terminate or
      cancel this Agreement for any reason whatsoever. If the Initial RFS Date
      has not occurred within 12 months after the Scheduled Initial RFS Date (24
      months if the delay is caused by a force majeure event) Purchaser may by
      two months written notice terminate its purchase of the Capacity.
      Purchaser shall have no obligation to make any further payments under this
      Agreement following such termination and FA-1 shall within 60 days of such
      termination refund to 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. The foregoing shall be
      the limit of Purchaser's rights for delays to the Initial RFS Date.

                                                                    Page 4 of 18
<PAGE>

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 sole responsibility with regard to operation and
      maintenance of the System shall be to make the O&M Payments as and when
      they become due pursuant to this Agreement.

5.2   FA-1 shall provide the service level guarantees set out in Schedule 5.

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. FA-1 may from time to time amend such procedures and shall
      provide Purchaser with a copy of each amendment prior to its
      effectiveness.

6.    RESTORATION

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

7.    SYSTEM ENHANCEMENTS AND UPGRADES

      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. The
      rights granted to Purchaser in this Agreement do not extend to
      participating in System enhancements or upgrades except to the extent
      referred to in Schedule 3. FA-1 shall use reasonable efforts to minimise
      the interruption, interference or impairment of the System caused by the
      implementation of any such enhancement or upgrade.

8.    SYSTEM DECOMMISSIONING

            The System shall be decommissioned at such time, no earlier than 15
      years and no later than 25 years from the Initial RFS Date, as either FA-1
      or the holders of three quarters of the then activated capacity on the
      System determine that the System is technically obsolete or has reached
      the end of its useful economic life. There shall be no compensation
      payable to Purchaser whether Purchaser voted for or against
      decommissioning. 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.

                                                                    Page 5 of 18
<PAGE>

9     REPRESENTATIONS AND WARRANTIES

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

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

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

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

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

1.3   FLAG Atlantic Limited and FLAG Atlantic USA Limited each represents and
      warrants to Purchaser as follows:

            0.3.1 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.

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

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

10.   FORCE MAJEURE

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

11.   CONFIDENTIALITY

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

                                                                    Page 6 of 18
<PAGE>

      Purchaser shall issue any press release or otherwise publicise the
      existence or the terms of this Agreement without the prior written consent
      of the other Party.

12.   NO LICENCE

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

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

13.   ASSIGNMENT

13.1  This Agreement and all the provisions hereof shall be binding upon and
      inure to the benefit of the Parties hereto and their respective successors
      and permitted assigns; provided that, except for the assignment of 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.

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

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

14.   ENTIRE AGREEMENT

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

15.   VARIATION

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

                                                                    Page 7 of 18
<PAGE>

16.   WAIVER

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

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

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

17.   INVALIDITY

0.1   Subject to clause 17.2 below 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:

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

            0.1.2 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.

0.2   The Parties acknowledge that the consideration for the Capacity set out in
      clause 2 was agreed upon taking into account clauses 4, 8, 9, and 19 and
      in the event any of these clauses is or becomes (whether pursuant to any
      judgment 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.

18.   NOTICE

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

         If to Purchaser:

                                                                    Page 8 of 18
<PAGE>

         [name if different then Purchaser]
         [address]

      Attention: [ ]
      Tel: [ ]
      Fax: [ ]

         If to FA-1:

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

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

      With a copy to:

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

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

      With a copy to:

      GTS Carrier Services
      Terhulpsesteenweg 6A
      1560 Hoeilaart
      Belgium

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

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

                                                                    Page 9 of 18
<PAGE>

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

37.   LIABILITY

37.1  Except to the extent stated in clause 4.4 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.

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

      19.3 Any financier of the System, at its election, shall have a right to
      cure any breach by 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.

20.   COUNTERPARTS

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

21.   WAIVER OF IMMUNITY

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

                                                                   Page 10 of 18
<PAGE>

22.   FA-1 FINANCIAL CLOSURE

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

      22.2 If FA-1 Financial Closure has not occurred by 31 October 1999, then
      this Agreement shall terminate (with the exception of clauses 11, 19, 21
      and 23 which shall survive termination).

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

23.   GOVERNING LAW AND DISPUTE RESOLUTION

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

      23.2 Except as otherwise provided herein, any dispute or controversy
      arising under or in connection with this Agreement shall be finally
      settled under the Rules of Arbitration of the International Chamber of
      Commerce by one arbitrator appointed in accordance with such Rules. The
      place of arbitration shall be London. The arbitration shall be conducted
      in English. The decision and award resulting from such arbitration shall
      be final and binding on the Parties. 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.

                                                                   Page 11 of 18
<PAGE>

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

FLAG ATLANTIC LIMITED

By ____________________
Name:
Title:

FLAG ATLANTIC USA LIMITED

By ____________________
Name:
Title:

[PURCHASER]

By ____________________
Name:
Title:

                                                                   Page 12 of 18
<PAGE>

                                   SCHEDULE I

                              DESCRIPTION OF SYSTEM

A trans-Atlantic cable system known as FLAG Atlantic-I which is to operate from
London and Paris to New York and will include a trans-Atlantic subsea element
and backhaul elements in Europe and the United States.

The subsea element will involve the construction of four landing stations ("the
Landing Stations"), a six fibre pair ring system across the Atlantic Ocean, with
six fibre pairs connecting the US Landing Stations and six fibre pairs
connecting the European Landing Stations. The Landing Stations are currently
expected to be at (i) Cornwall (UK), (ii) St. Brieuc (France), (iii) Makamah
Beach on the North shore of Long Island, New York (US) and (iv) Long Beach on
the South shore of Long Island, New York (US). Each fibre pair will be designed
for a maximum capacity of 40 wavelengths with each wavelength running at 10
Gbps.

The backhaul elements will seamlessly connect the Landing Stations to the
digital/optical input/output port on the digital/optical distribution frame
("Terminal Point") in the heart of London, Paris and Manhattan, New York City.

The initial stage of the system will consist of the Northern subsea link from
Cornwall to the North shore of Long Island, the Cornwall to Brittany
Trans-Channel link and the backhaul elements (which includes the terrestrial
link between the North shore and the South shore of Long Island). The full
system will consist of the initial stage and the Southern subsea link from
Brittany to the south shore of Long Island ("Full System").

The system will be installed initially with 160 Gbps of capacity but will be
designed with technology capable of upgrade to 2.4 terabits per second.

The base system has been designed to provide restoration within its own
capabilities by way of protection switching. This has been achieved by means of
a redundant multi-loop architecture within the system which provides redundancy
in the event of a failure of any component within the system.

The system will have:

-     the ability to carry commercial traffic between any two points (consisting
      of one or many segments) which meets ITU-T G.826.

-     automatic self-healing ring protection between any two points (consisting
      of one or many segments)

-     network management capability for the system as a whole.

                                                                   Page 13 of 18
<PAGE>

                                   SCHEDULE 2

1. Capacity

--------------------------------------------------------------------------------
Route                                  Capacity               Purchase Price US$
                                 (each STM within the            (excl. taxes)
                                 package of 8 x STM
                                 being a "Unit")
--------------------------------------------------------------------------------
o     Amount of Capacity from    One package of 8 x           US$
      Terminal Point             STM___
      facilities in New York
      City to the Terminal
      Point facilities in
      London
--------------------------------------------------------------------------------
o     Amount of Capacity from    One package of 8 x           US$
      Terminal Point             STM___
      facilities in New York
      City to the Terminal
      Point facilities in
      Paris
--------------------------------------------------------------------------------
                                     Total Purchase
                                          Price US$
--------------------------------------------------------------------------------

2. Payment Schedule

--------------------------------------------------------------------------------
Date                                              Percentage of
                                                  Purchase
                                                  Price
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
Tranche 1* -- Initial RFS Date                    20%
--------------------------------------------------------------------------------
Date on which FA-1 notifies Purchaser             20%
that the Full System is able to carry
commercial traffic.
--------------------------------------------------------------------------------
Date of Notice of Availability for Tranche 2*     10%
--------------------------------------------------------------------------------
Date of Notice of Availability for Tranche 3*     10%
--------------------------------------------------------------------------------
Date of Notice of Availability for Tranche 4*     10%
--------------------------------------------------------------------------------

                           * As set out in Schedule 3

                                                                   Page 14 of 18
<PAGE>

                                   SCHEDULE 3

                                DELIVERY SCHEDULE

Purchaser's Capacity will be made available for activation as follows:

--------------------------------------------------------------------------------
Availability schedule   Date                  Capacity available to activate
--------------------------------------------------------------------------------
  Tranche 1             Initial RFS Date      1 x STM-___
--------------------------------------------------------------------------------
  Tranche 2             Q4 2002               1 x STM-___
--------------------------------------------------------------------------------
  Tranche 3             Q4 2003               2 x STM-___
--------------------------------------------------------------------------------
  Tranche 4             Q4 2004               4 x STM-___
--------------------------------------------------------------------------------

                                                                   Page 15 of 18
<PAGE>

                                   SCHEDULE 4

                      Provisions for Collocation Agreement

If Purchaser desires to install equipment at the Terminal Point in order to
connect to the Capacity, the Parties agree to negotiate in good faith a
Collocation Agreement which shall be based on the following principles:

1.    Purchaser shall be granted a license to place its equipment in racks at
      the Terminal Point premises for the term of this Agreement. Purchaser will
      pay a fair market price per rack per annum for use of the racks, payable
      annually in advance.

2.    Purchaser shall be permitted to use the racks only for the purpose of
      connecting to the System.

3.    Access to the Terminal Point premises will be available to Purchaser's
      authorised personnel on a 24*365 basis subject to compliance with safety,
      security and access rules.

4.    Commercial terms for services (such as installation, first line
      maintenance, shifts and changes) and for utilities (such as power heating
      lighting) to be provided by FA-1 at the Terminal Point are to be
      negotiated.

5.    Assignment or sublicensing of the racks by Purchaser is prohibited.

                                                                   Page 16 of 18
<PAGE>

                                   SCHEDULE 5

                                  O&M PAYMENTS

1.    Purchaser shall pay to FA-1 on activated Capacity annual operation and
      maintenance charges ("O&M Charges") as specified in the attached annex.
      Upon the Date of Activation of a Unit of Capacity FA-1 shall render an
      invoice for the O&M Charges on such Unit of Capacity from the Date of
      Activation until the end of then calendar year. Thereafter the O&M Charges
      on such Unit of Capacity shall be invoiced annually in advance on or about
      1 January in each year.

2.    FA-1 will use commercially reasonable efforts to provide restoration on
      the System so that each Unit of Capacity achieves a level of availability
      to carry traffic between the relevant Terminal Points of 99.50% per month
      as from the date on which FA-1 notifies Purchaser that the Full System is
      able to carry commercial traffic ("Availability Level"). Failure to
      achieve this Availability Level in any calendar month shall entitle
      Purchaser to a credit of 8% of the annual O&M Charges. Availability Level
      will be calculated each calendar month as follows:

   (Total time for month [x] - Sum of all events of unavailable time as agreed
                          during fault clearance) * 100
   ---------------------------------------------------------------------------
                            Total time for month [x]

      Per event, unavailable time begins at the time of Purchaser problem
      reporting, or FA-1 problem detection, whichever is earlier. Unavailable
      time ends as agreed between FA-1 and Purchaser during fault clearance.
      Unavailable time is measured between Terminal Points.

      Planned works notified to Purchaser at least 15 days in advance are
      excluded from availability calculations.

      Credits shall be applied against payment obligations of Purchaser under
      this Agreement and if there are any outstanding credits upon termination
      of this Agreement and there are no longer any payment obligations of
      Purchaser, FA-1 shall pay to Purchaser an amount equal to the outstanding
      credits. Credits provided pursuant to the foregoing shall be the limit of
      Purchaser's rights under this Agreement if activated Capacity is not able
      to carry traffic.

                                                                   Page 17 of 18
<PAGE>

                                   SCHEDULE 6

                                    SECURITY

Standby irrevocable letter of credit with an expiration date 60 days after the
date that the last percentage of the Purchase Price is payable in accordance
with Schedule 2 for full payment of the Purchase Price issued on Purchaser's
behalf by a bank rated A or better by Standard & Poor's (or the equivalent by
Moody's) in favour of FA-1 and otherwise in form and substance satisfactory to
FA-1.

                                                                   Page 18 of 18
<PAGE>

Annex 5
to Further Restated Shareholders Agreement

Backhaul Technical Specification

      Contents

      1. Introduction                                           2

      2. Network Design                                         2
        2.1 European Backhaul                                   2
         2.1.1  Company Backhaul requirements                   3
         2.1.2  GTS Backhaul Requirements                       3
         2.1.3  Overall Backhaul Network Design                 4
           2.1.3.1 Company backhaul design                      5
         2.1.4  Migrations & Upgrades                           6
        2.2 US Backhaul Element                                 6
         2.2.1  Company Backhaul requirements                   7
         2.2.2  GTS Backhaul Requirements                       7
         2.2.3  US Backhaul Network Design                      7
         2.2.4  Migrations & Upgrades                           8

      3. Space requirements                                     8
        3.1 Telecom equipment                                   8
        3.2 Power/auxiliary equipment                           9

      4. Route requirements                                     9
        4.1 Number of fibres                                    9
        4.2 Type of fibres                                      9
        4.3 Amplifier Spacing                                  10

                                                                               2
<PAGE>

1       Introduction

This specification deals with the Backhaul Elements in Europe and the US which
are to be established in relation to the agreement on the transatlantic cable
system. This document sets out the preliminary agreement between GTS and the
Company on the technical specification for the Backhaul Elements of the System.
Both parties acknowledge that further details have to be worked out in order to
finalise the technical specification.

In anticipation of having a terabit system in operation on each of the submarine
cables, the backhaul networks will have a sufficient capacity to offer the
required bandwidth for the Company.

The European backhaul network will constitute a ring, covering the landing sites
on the coasts of England and France and the sites in London and Paris. It is
foreseen that London and Paris are the breakout points.

The US backhaul network will also constitute a ring covering the North and South
landing points as well as the Terminal Points in New York 1 and New York 2/ New
Jersey 1.

2       Network Design

The Backhaul Network design consists of two parts: the European Backhaul and the
US Backhaul. For each of these two parts, a distinction has been made in the
requirements, between the Company backhaul requirements, and the GTS backhaul
requirements. An overall network design is proposed taking into account both
Company and GTS requirements expressed in Clauses 6.2 and 6.3 of the Agreement.

                                                                               3
<PAGE>

                                [GRAPHIC OMITTED]
Backhaul                                                            2.1 European

The European Backhaul Element consists of the physical infrastructure
(facilities, fibre, equipment) and related services (maintenance, project
management) from the demarcation points in the Landing Stations A and B (as
indicated in Annex 1) up to, including and between the Terminal Points in London
and Paris.

The following two sections explain the specific requirements for the backhaul.

2.1.1 Company Backhaul requirements

The European Backhaul Element that is required for the Company is described
below, and consists of this minimum set of building blocks:

For the fibre infrastructure:
Link 1: Landing point A(Porthcurno) to London: 6 fibre pairs
Link 2: Landing point B(St Brieuc) to Paris: 6 fibre pairs
Link 3: London to Paris: 6 fibre pairs

Fibre type: the type of fibre required is specified in section 4.2 of this Annex

For the European Backhaul Element DWDM Terminal Multiplexes and In-Line
Amplifiers equipment on links 3, 7 and 10 of the backhaul supporting at least 40
wavelengths at STM-64 (10 Gb/s). The total number of wavelengths to be supported
by the Backhaul for the Company = 240 at STM-64 (10 Gb/s).

                                                                               4
<PAGE>

For the Space requirements:
Terminal Point Located in central London with 1,830 m(2)
Terminal Point Located in Paris with 1,500 m(2)
Optical Amplifier locations along the fibre route with 13 m(2) per location
Mid terminal locations of 79 m(2) each
Note. Above requirements are net.

2.1.2 GTS Backhaul Requirements

The additional Backhaul part required for GTS consists of the following building
blocks:

For the fibre infrastructure:
Link 1: Landing Point A to London: 1 fibre pairs
Link 2: Landing Point B to Paris: 1 fibre pairs
Link 3: London to Paris: 1 fibre pairs

Note that the above fibre requirements are included in the 6 fibre pairs
required for the FA-1 backhaul.

2.1.3 Overall Backhaul Network Design

The overall backhaul network design captures the Company Requirements and
summarises these in the following figures.

Assumptions: UK Network provider -- RACAL

  London - Porthcurno 5 span design

              [GRAPHIC OMITTED]

                              Porthcurno - London:
                              --------------------
                                   o 2x5 spans
                                   o 1 LT
                                   o 8 ILA

                                                                          France

                                                                               5
<PAGE>

Network provider -- LDCom and SAPN

  London - Paris 5 span design

              [GRAPHIC OMITTED]

   London - Paris:
   ---------------
     o 2x5 spans
     o 1 LT
     o 8 ILA

Paris - St Brieuc 5 span design

Paris - St-Brieuc:
------------------
    o lx5 + 1x4 spans
    o 1 LT
    o 7 ILA

              [GRAPHIC OMITTED]

backhaul design                                                  2.1.3.1 Company

                                                                               6
<PAGE>

The physical design of the WDM (TM and ILA) equipment is as shown in the figures
above. It consists of two WDM sections for all three Links (3, 7 and 10) with
4-5 spans per link. This is applicable to each fibre pair.

    [GRAPHIC OMITTED]                Landing Point   Landing Point
         Link 7    Link 10   Link 3        B               A          Facilities

Client layer equipment: SDH or Backhaul WDM Terminal
Optical Cross Connect    Equipment      Fiber infrastructure   Paris     London

      European Backhaul                            [GRAPHIC OMITTED]

[GRAPHIC OMITTED]

                                    Figure 1

2.1.4 Migrations & Upgrades

                                                                               7
<PAGE>

The migration scenario's for the European Backhaul Element is summarised below:

On completion of Phase I of the Subsea part, i.e.16 wavelengths STM-64 deployed
in two legs, the Company requires that the European Backhaul Element be able to
carry these 16 wavelengths on one fiber pair of Links 3, 7 and 10.

The European backhaul should be upgraded in line with the total capacity of the
subsea part.

2.2     US Backhaul Element

The US Backhaul Element consists of the physical infrastructure (facilities,
fibre, equipment) and related services (maintenance, project management) from
the demarcation points in the Landing Stations A and B up to, including and
between the Terminal Points in New York 1 and New York 2 / New Jersey 1.

                                [GRAPHIC OMITTED]

2.2.1 Company Backhaul requirements

                                                                               8
<PAGE>

The US Backhaul Element that is required for the Company is described below, and
consists of this minimum set of building blocks:

For the fibre infrastructure:

Link 1: Landing Point A to Terminal Point New York 1: 6 fibre pairs
Link 2: Landing Point B to Terminal Point New York 2 / New Jersey 1: 6 fibre
pairs
Link 3: Link in-between the Terminal Points New York 1 and New York 2 / New
Jersey 1 : 6 fibre pairs

Fibre type: the type of fibre required is specified in section 4.2 of this Annex

For the US Backhaul Element WDM Terminal Multiplexers and In-Line Amplifiers
equipment on links 1, 4 and 8 of the backhaul supporting at least 40 wavelengths
at STM-64 (10 Gb/s). The total number of wavelengths to be supported by the
Backhaul for the Company = 240 at STM-64 (10 Gb/s).

For the Space requirements:
One Terminal Point Located in New York City of 1,680 m(2)
One Terminal Point Located in Newark of 1,680 m(2)
One Optical Amplifier (located along the fibre route of Link 1) with 13 m(2)
Note. Above requirements are net.

2.2.2   GTS Backhaul Requirements

The additional backhaul part required for GTS consists of the following building
blocks:

For the fibre infrastructure:-

Link 1 - 1 fibre pairs
Link 4 - 1 fibre pairs
Link 8 - 1 fibre pairs

Note that the above fibre requirements are included in the 6 fibre pairs
required for the FA-1 bachaul

2.2.3    US Backhaul Network Design

The US backhaul network design is summarised in the following figures. The US
backhaul consists of the fibre pairs and Backhaul WDM equipment for Link 1, 4
and 8.

                                                                               9
<PAGE>

                                [GRAPHIC OMITTED]

New York 2 / New
  Jersey 1

2.2.4   Migrations & Upgrades

The migration scenario's for the US backhaul is summarised below:

                                                                              10
<PAGE>

On completion of Phase 1 of the Subsea part, i.e.16 wavelengths STM-64 deployed
in two legs, the Company requires that the US Backhaul Element be able to carry
these 16 wavelengths on one fiber pair of Link 1.

Subsequent phases: all three links of the US backhaul are equipped with 16
wavelengths on one fibre pair.

The US backhaul should be upgraded in line with the total capacity of the subsea
part.

3       Space requirements

3.1     Telecom equipment

Each US Terminal Location (including SDH equipment): 1680 m(2)
London Terminal Location (including SDH equipment): 1830 m(2)
Paris Terminal Location (including SDH equipment): 1500 m(2)
Each Optical Amplifier Location: 13 m(2)
Each Mid Terminal Equipment: 79 m(2) (European Backhaul Element only)
Note. Above requirements are net.

0.1     Power/auxiliary equipment

DC power for transmission equipment

The power will be delivered by N=1 rectifiers supplying -48V DC to each
individual rack. Each rack will have 2 separate (A&B) redundant feeds, each feed
protected by an individual breaker. The power assumptions for the telecom are at
750W/ gross m(2) (Regenerators and Amplifier sites)
The power assumptions for the telecom are at 500W/ gross m(2) (POP sites)

AC power for auxiliary equipment

The AC power will be used for the air-conditioning, lighting, etc and has been
set at 250W/ gross

4       Route requirements

4.1     Number of fibres

                                                                              11
<PAGE>

For the final phase 240 wavelengths at 10 Gb/s have to be transported on the
Backhaul Elements that connect the submarine landing points to the cities of
London, Paris and New York / New Jersey. We assume that one DWDM system at 10
Gb/s can transport (greater than or equal to)40 X. This requires the
availability of at least 6 fibre pairs (240/40). As explained in the previous
design section, fibre pairs will be required for the specific GTS (and others)
requirements.

4.2     Type of fibres

In order to accommodate STM-64 10Gb/s data rates with the required number of
wavelengths (>= 40), ITU G.652 SSM-F (Standard Single Mode Fibre) has to be used
as a preference on all built / leased portions of the backhaul networks.
(Reference GTS R & D presentation and memorandum dated February 12th 1999 "Fibre
choice for FA-1 Backhaul Networks".

All fibres will have to show a PMD (Polarisation mode dispersion) value that
should not exceed 0.2 ps/km (1/2) (typical PMD values for newly build fibres are
less than 0.1ps/km(1/2).

4.3     Amplifier Spacing

A typical attenuation for recently installed fibres is in the range of 0.22
dB/km. The current model for the network design assumes a (less than or equal
to)70km amplifier spacing for terrestrial WDM systems with max. 20dB link span
attenuation.

                                                                              12
<PAGE>

                                                                Annex 6 - Part I
                                      to Further Restated Shareholders Agreement

      KEY COMMERCIAL TERMS FOR GTS FIBRE AND FACILITIES PURCHASE AGREEMENT
                                (SEE CLAUSE 7.1)

-----------------------------------------------------------------------------
Subject                                    Terms

-----------------------------------------------------------------------------
Product                 GTS will purchase rights in dark fibre,
                        facilities and capacity on the system at cost
                        for *** as follows:

                        ***

Upgrades                1.    GTS will be entitled to activate its capacity
                              on the dark fibre pair as it requires;

                        2.    GTS will be entitled to upgrade its
                              capacity on the Subsea Element by givi
                              prior notice to FA-1. Following
                              installation of the Initial Capacity
                              FA-1 will carry out the upgrades at
                              cost.

                        subject in both cases to the covenants of the
                        Project Finance documents regarding activation
                        of capacity.

Landing Stations        Currently the four Landing Stations
                        are planned as Long Island (North), USA
                        -Porthcurno, UK --Saint Brieuc, France -- Long
                        Island (South), USA.

Purchase Price          ***

Payment Terms           See Clause 7.1 of Shareholders Agreement

O&M Charges             GTS will pay the Company *** the Products listed above.
                        Costs may be verified independently. The Company will
                        undertake to run the System as economically as is
                        reasonably possible.

-----------------
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>

 Hand-over           By the applicable RFS, the Company will
                     demonstrate that the System, or the first leg, as
                     relevant, was commissioned in accordance with a
                     plan that had been previously approved by the
                     parties. Terms for System Acceptance are:

                     Fibre Type Approval

                     The Fibre will undergo a type approval test
                     during which the Company will demonstrate to GTS
                     that it complies with a set of requirements that
                     will be jointly agreed upon by the parties.

                     WDM Type Approval

                     The WDM system will undergo a type approval test
                     during which the Company will demonstrate to GTS
                     that it complies with a set of requirements that
                     will be jointly agreed upon by the parties.

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

                     Link/Wavelength

                     The acceptance of a Link/Wavelength will be
                     mainly based on the following criteria:

                     o  Verification of the compliance of the system interfaces

                     o  Verification of jitter/wander performances as per ITU-T
                        recommendations G82 G958

                     o  Verification of the transparency of the system to the
                        SDH payload

                     o  Proper working of offered protection schemes

                     o  Verification of the correct interfacing to GTS' NMS

                     o  Verification of correct alarm reporting and performance
                        monitoring to GT NMS

                     o  Round trip delay, according to specifications provided
                        by the Company

                     o  Verification of the correct operation of ALS

                     o  Synchronisation transparency

                     Trouble Free Running

                     A test will be performed with traffic running on
                     each provided wavelength for 30 consecutive days
                     in accordance with BER specification to be agreed
                     between the parties.

      Term           The interest will exist for the lifetime of the
                     System. The design criteria will require the
                     Subsea Element to be designed to last for 25
                     years.

 Assignability       GTS may assign the Agreement to an affiliated
                     company, provided such party shall remain liable
                     for the obligations thereunder and may assign the
                     Agreement to a lender as security.
<PAGE>

***

Equipment Installation  GTS will have the right to install, maintain and operate
and Connection Rights   equipment (belonging to themselves or their contractors
                        or customers) at the Landing Stations and Pops and will
                        be entitled to connect the equipment to their own or
                        other telecommunications networks. If GTS should require
                        more than their allotted racks in any Landing Station or
                        PoP the incremental cost shall be borne by GTS such
                        additional space is subject to availability

<PAGE>

                                                               Annex 6 - Part II
                                      to Further Restated Shareholders Agreement

           KEY COMMERCIAL TERMS FOR FLAG - OPTION TO PURCHASE CAPACITY
                             (SEE CLAUSE 7.1.(b) (A))

------------------------------------------------------------------------------
Subject                                          Terms
------------------------------------------------------------------------------
Product                     FLAG will be entitled to purchase capacity in FA-1
                            at cost in lots (see clause 7.1(b) of Shareholders
                            Agreement).

Capacity                    FLAG will be entitled to purchase capacity on the
                            System as follows:

                            ***

Landing Stations            Currently the four Landing Stations are
                            planned as Long Island (North), USA - Porthcurno, UK
                            - Saint Brieuc, France - Long Island (South), USA.

Purchase Price              Up to ***

Payment Terms               See Clause 7.1 of Shareholders Agreement

O&M Charges                 FLAG will pay the Company a *** the System.
                            Costs may be verified independently. The Company
                            will undertake to run the System as economically as
                            is reasonably possible.

Liquidated Damages          ***
<PAGE>

Hand-over                         By the applicable RFS, the Company
                                  will demonstrate that the System, or
                                  the first leg, as relevant, was
                                  commissioned in accordance with a
                                  plan that had been previously
                                  approved by the parties. Terms for
                                  System Acceptance are:

                                  WDM Type Approval

                                  The WDM system will undergo a type approval
                                  test during which the Company will demonstrate
                                  to FLAG that it complies with a set of
                                  requirements that will be jointly agreed upon
                                  by the parties.

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

                                  Link/Wavelength

                                  The acceptance of a Link/Wavelength will be
                                  mainly based on the following criteria:

                                  o  Verification of the compliance of
                                     the system interfaces

                                  o  Verification of jitter/wander
                                     performances as per ITU-T
                                     recommendations G82 G958

                                  o  Verification of the transparency
                                     of the system to the SDH payload

                                  o  Proper working of offered
                                     protection schemes

                                  o  Verification of the correct
                                     interfacing to FLAG'S NMS

                                  o  Verification of correct alarm
                                     reporting and performance
                                     monitoring to FLAG NMS

                                  o  Round trip delay, according to
                                     specifications provided by the
                                     Company

                                  o  Verification of the correct
                                     operation of ALS

                                  o  Synchronisation transparency

                                  Trouble Free Running

                                  A test will be performed with traffic running
                                  on each provided wavelength for 30 consecutive
                                  days in accordance with BER specification to
                                  be agreed between the parties

Term                              The interest will exist for the
                                  lifetime of the System. The design
                                  criteria will require the Subsea
                                  Element to be designed to last for 25
                                  years.

Assignability                     FLAG may assign the Agreement to an affiliated
                                  company, provided such party shall remain
                                  liable for the obligations thereunder and may
                                  assign the Agreement to a lender as security.

***

Equipment Installation            FLAG will have the right to install,
and Connection Rights             maintain and operate equipment
                                  (belonging to themselves or their contractors
                                  or customers) at the Landing Stations and Pops
                                  and, subject to applicable safety and access
                                  control procedures, will be entitled to
                                  connect the equipment to their own or other
                                  telecommunications networks. If FLAG should
                                  require more than their allotted racks in any
                                  Landing Station or PoP the incremental cost
                                  shall be borne by FLAG, such additional space
                                  being subject to availability.
--------------------------------------------------------------------------------

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