Document:

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                                                                   Exhibit 4.5

                                  FLAG LIMITED
                          1998 LONG-TERM INCENTIVE PLAN

                            OPTION GRANT CERTIFICATE
                                  (Performance)

This Grant Certificate evidences the grant of an option pursuant to the
provisions of the 1998 Long-Term Incentive Plan (the "Plan") of FLAG Limited
(the "Company") to the individual whose name appears below (the "Grantee"),
covering the specific number of shares of Class B Common Stock of the Company
(the "Shares") set forth below, pursuant to the provisions of the Plan and on
the following express terms and conditions (capitalized terms not otherwise
defined herein shall have the meaning ascribed thereto in the Plan):

1.       Name of Grantee:

                  Stuart Rubin

2.       Number of Shares:

                  608,000 shares

3.       Exercise price per Share:

                  US$ 1.07

4.       Date of grant of this option:

                  March 31, 1998

5.       Expiration date of this option:

                  Tenth anniversary of the date of grant

6.       Vesting:

                  As of each of the first two fiscal year ends following the
                  date of grant, the Chief Executive Officer of the Company
                  shall determine, in his discretion based on the Grantee's
                  performance during each such fiscal year, the number of Shares
                  that become available for future vesting; provided, however,
                  that as of the end of the first such fiscal year, no more than
                  304,000 shall become available for future vesting. The Shares
                  subject to the option that became available for future vesting
                  pursuant to the preceding sentence shall vest and be
                  exercisable in two equal installments on each of the third and
                  fourth anniversaries of the date of grant; provided that in
                  the case of an initial public offering of any class of the
                  Company's common shares ("IPO"), such Shares shall become
                  fully vested and exercisable upon the later of the
                  commencement of the IPO or the date they become available for
                  future vesting pursuant to the preceding sentence.
                  Notwithstanding the foregoing, (i) all Shares subject to the
                  option shall become fully vested and exercisable immediately
                  prior to any termination of the option pursuant to Section
                  6(b)(iv) of the Plan, (ii) 50% of all Shares subject to the
                  option that have not yet become vested and exercisable shall
                  become vested and exercisable immediately prior to any
                  termination of the Grantee's employment with the Company and
                  its subsidiaries initiated by the Company or any of its
                  subsidiaries for reasons other than Cause or initiated by the
                  Grantee for "good reason" (as defined below), except that if
                  such termination occurs within three years following a "change
                  in control" (as defined below), "100%" shall be substituted
                  for "50%", (iii) 50% of all Shares subject to the option that
                  have not yet become vested and exercisable shall become vested
                  and exercisable immediately prior to any termination of the
                  Grantee's employment with the Company and its subsidiaries
                  that occurs prior to the third anniversary of the date of
                  grant, and is by reason of the Grantee's death or is initiated
                  by the Company or any of its subsidiaries because of the
                  Grantee's disability, and (iv) all Shares subject to the
                  option will vest and become exercisable on the eighth
                  anniversary of the date of grant.

                  The term "good reason" shall have the meaning ascribed thereto
                  in any employment agreement between the Company and the
                  Grantee. If no such definition exists, then the provisions
                  herein relating to good reason shall be disregarded. A change
                  in control shall be deemed to have occurred upon: (a) any
                  "person"as such term is used in Sections 13(d) and 14(d) of
                  the Securities Exchange Act of 1934 (the "Exchange Act")
                  (other than the Company, any trustee or other fiduciary
                  holding securities under any employee benefit plan of the
                  Company, any company owned, directly or indirectly, by the
                  stockholders of the Company in substantially the same
                  proportions as their ownership of Common Stock of the Company
                  or any current shareholder of the Company or its affiliates
                  (collectively the "Exceptions")) is or becomes the owner (as
                  defined in Rule 13d-3 under the Exchange Act), directly or
                  indirectly, of securities of the Company representing more
                  than fifty percent (50%)

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                  of the combined voting power of the Company's then outstanding
                  securities; (b) the merger or consolidation of the Company
                  with any other corporation, other than a merger or
                  consolidation which would result in the voting securities of
                  the Company outstanding immediately prior thereto continuing
                  to represent (either by remaining outstanding or by being
                  converted into voting securities of the surviving entity),
                  together with any shares owned by Exceptions, more than fifty
                  percent (50%) of the combined voting power of the voting
                  securities of the Company or such surviving entity outstanding
                  immediately after such merger or consolidation; provided,
                  however, that a merger or consolidation effected to implement
                  a recapitalization of the Company (or similar transaction) in
                  which no person (other than an Exception) acquires more than
                  fifty percent (50%) of the combined voting power of the
                  Company's then outstanding securities shall not constitute a
                  change in control of the Company; or (c) the stockholders of
                  the Company approve a plan of liquidation of the Company or
                  closing of an agreement for the sale or disposition by the
                  Company of all or substantially all of the Company's assets
                  other than the sale of all or substantially all of the assets
                  of the Company to a person or persons who beneficially own,
                  directly or indirectly, at least fifty percent (50%) or more
                  of the combined voting power of the outstanding voting
                  securities of the Company at the time of the sale or to a
                  person who is an Exception.

7.       Termination of employment:

                  The option shall terminate upon the earliest of (i) the
                  expiration date, (ii) a termination of the Grantee's
                  employment with the Company and its subsidiaries initiated by
                  the Company or any of its subsidiaries for Cause, (iii) a
                  material breach by the Grantee of any non-compete and
                  confidentiality agreement between the Grantee and the Company
                  (iv) 30 days following the Grantee's termination of employment
                  with the Company and its subsidiaries initiated by the Grantee
                  (other than for good reason or by reason of death), or (v) one
                  year following the Grantee's termination of employment with
                  the Company and its subsidiaries for reasons other than those
                  specified in (ii) and (iv) above, provided that if the
                  Company's common shares are not publicly traded at the time of
                  such termination, such one year period shall be extended to
                  the earlier of three years following such termination and one
                  year following an IPO, and provided further that if at the end
                  of the applicable period specified in this clause (v), an
                  underwriter-imposed lock-up is in effect, the applicable
                  period referred to in this clause (v) shall expire 90 days
                  after the expiration of such lock-up. During any period
                  following the Grantee's termination of employment, the option
                  shall be exercisable only to the extent it was vested and
                  exercisable as of such termination of employment.

8.       Conversion of Shares in the event of an IPO:

                  If, in connection with an initial public offering of common
                  stock of the Company (other that the Class B Common Stock) or
                  an affiliate of the Company, shareholders of Class B Common
                  Stock are granted the right to convert their Class B Common
                  Stock into the common stock being publicly offered, the
                  Grantee shall have the right to convert this option to
                  purchase Shares into an option to purchase the common stock
                  being publicly offered on the same basis as a shareholder of
                  Class B Common Stock, and the per share exercise price shall
                  be adjusted accordingly (provided that the aggregate exercise
                  price shall remain the same).

9.       Restrictions on Shares:

                  As permitted pursuant to Section 3(a)(vi) of the Plan, the
                  Committee may condition the delivery of the Shares upon the
                  Grantee's agreement to such restrictions on the Shares as the
                  Committee shall determine, provided that such restrictions
                  shall be no more restrictive than those imposed on other Class
                  B shareholders. The Grantee hereby waives any rights he may
                  have in connection with a transfer of shares of Class B Common
                  Stock by any other shareholder.

10.      Piggyback Registration Rights:

                  If the Company (or an affiliate of the Company) intends to
                  register securities of any of its shareholders for an offering
                  to the public while the Grantee is employed by the Company or
                  an affiliate of the Company or, thereafter, within one year
                  after he has a right to exercise an option, the Company shall
                  notify the Grantee of its intention to do so and, subject to
                  such limitations as shall affect all selling shareholders
                  equally and as may be imposed by any underwriter of such
                  offering or by law, the Grantee may irrevocably elect to
                  participate in such offering on a pari passu basis with any
                  other selling shareholders based on the relative number of
                  shares owned and options vested of each of such other selling
                  shareholders (and its affiliates and permitted assigns) and
                  the Grantee (the "Pari Passu Percentage"). Such participation
                  shall be under the same terms and conditions as may apply to
                  such other shareholders, provided that the Grantee shall not
                  have any rights to select the underwriter or similar matters
                  given to the other shareholders. The Grantee shall make any
                  election within 30 days of receipt of such notice of intent to
                  register by a writing given to the Secretary of the Company,
                  which writing shall indicate his irrevocable election to sell
                  in the intended offering, the number of Shares he wishes to
                  sell and the portion thereof to be included by him. The
                  Grantee's notice may not be for

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                  less than 100 percent of the number of Shares of the Grantee
                  which the Grantee could sell pursuant to Rule 144 or another
                  exemption from securities law registration or pursuant to an
                  S-8 (or similar registration statement) then effective (an
                  "Alternative Sales Means") within the next six months. The
                  Grantee shall be responsible for delivery of the Shares
                  covered by the notice on a timely basis. The Company shall
                  only have to give notice of intent to register under this
                  paragraph to the Grantee and any notice of intent to
                  participate shall only be valid if received from the Grantee
                  (or in the event of his death, his executor). The Company may
                  at any time abandon any offering. The Company or the
                  underwriter may at any time cutback (including, without
                  limitation, limiting the amount to the extent a prior amount
                  had not been specified) on the number of shares in any
                  offering in which the Company is offering shares and the
                  underwriter may at any time cutback (including, without
                  limitation, limiting the amount to the extent a prior amount
                  had not been specified) on the number of shares to be offered
                  by shareholders in any offering in which the Company is not
                  also offering shares. In either such case the Grantee's Shares
                  to be offered shall be proportionately reduced so that the
                  amounts offered by the Grantee and by other shareholders (and
                  their affiliates and permitted assigns) satisfy the Pari Passu
                  Percentage. The Grantee shall have no right to participate in
                  any offering by the Company that does not include any shares
                  owned by other shareholders and the provision of this
                  paragraph shall not apply to any registration on Form S-8, or
                  otherwise with regard to securities of compensatory plans of
                  the Company. The Grantee shall sign such underwriting and
                  other agreements in the same forms as signed by the other
                  participating shareholders.

The Grantee hereby acknowledges receipt of a copy of the Plan as presently in
effect. The text and all of the terms and provisions of the Plan are
incorporated herein by reference, and this option is subject to these terms and
provisions in all respects.

At any time when the Grantee wishes to exercise this option, in whole or in
part, the Grantee shall submit to the Company a written notice of exercise,
specifying the exercise date and the number of shares to be exercised. Upon
exercise, the Grantee shall remit to the Company the exercise price in cash or
in such other form as permitted under the Plan, plus an amount sufficient to
satisfy any withholding tax obligation of the Company that arises in connection
with such exercise.

FLAG LIMITED                                     AGREED TO AND ACCEPTED BY:

By: /s/ Name of Officer                           /s/ Stuart Rubin
   -------------------------------               -------------------------
                                                 Grantee

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                                  FLAG LIMITED
                         1998 LONG-TERM INCENTIVE PLAN

                            OPTION GRANT CERTIFICATE

                               (Non-Performance)

This Grant Certificate evidences the grant of an option pursuant to the
provisions of the 1998 Long-Term Incentive Plan (the "Plan") of FLAG Limited
(the "Company") to the individual whose name appears below (the "Grantee"),
covering the specific number of shares of Class B Common Stock of the Company
(the "Shares") set forth below, pursuant to the provisions of the Plan and on
the following express terms and conditions (capitalized terms not otherwise
defined herein shall have the meaning ascribed thereto in the Plan):

1.   Name of Grantee:

          Stuart Rubin

2.   Number of Shares:

          1,000,000 shares

3.   Exercise price per Share:

          US$ 1.07

4.   Date of grant of this option:

          March 31, 1998

5.   Expiration date of this option:

          Tenth anniversary of the date of grant

6.   Vesting:

          The option shall vest and be exercisable in two equal installments on
          each of the third and fourth anniversaries of the date of grant;
          provided that (i) the option shall become fully vested and exercisable
          upon commencement of an initial public offering of any class of the
          Company's common shares ("IPO"), (ii) the option shall become fully
          vested and exercisable immediately prior to any termination of the
          option pursuant to Section 6(b)(iv) of the Plan, (iii) the option
          shall become vested and exercisable as to 50% of the unvested portion
          of the option immediately prior to any termination of the Grantee's
          employment with the Company and its subsidiaries initiated by the
          Company or any of its subsidiaries for reasons other than Cause or
          initiated by the Grantee for "good reason" (as defined below), except
          that if such termination occurs within three years following a "change
          in control" (as defined below), "100%" shall be substituted for "50%",
          and (iv) the option shall become vested and exercisable as to 50% of
          the unvested portion of the option immediately prior to any
          termination of the Grantee's employment with the Company and its
          subsidiaries that occurs prior to the third anniversary of the date of
          grant, and is by reason of the Grantee's death or is initiated by the
          Company or any of its subsidiaries because of the Grantee's
          disability.

          The term "good reason" shall have the meaning ascribed thereto in any
          employment agreement between the Company and the Grantee. If no such
          definition exists, then the provisions herein relating to good reason
          shall be disregarded. A change in control shall be deemed to have
          occurred upon: (a) any "person"as such term is used in Sections 13(d)
          and 14(d) of the Securities Exchange Act of 1934 (the "Exchange Act")
          (other than the Company, any trustee or other fiduciary holding
          securities under any employee benefit plan of the Company, any company
          owned, directly or indirectly, by the stockholders of the Company in
          substantially the same proportions as their ownership of Common Stock
          of the Company or any current shareholder of the Company or its

                                       4
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          affiliates (collectively the "Exceptions")) is or becomes the owner
          (as defined in Rule 13d-3 under the Exchange Act), directly or
          indirectly, of securities of the Company representing more than fifty
          percent (50%) of the combined voting power of the Company's then
          outstanding securities; (b) the merger or consolidation of the Company
          with any other corporation, other than a merger or consolidation which
          would result in the voting securities of the Company outstanding
          immediately prior thereto continuing to represent (either by remaining
          outstanding or by being converted into voting securities of the
          surviving entity), together with any shares owned by Exceptions, more
          than fifty percent (50%) of the combined voting power of the voting
          securities of the Company or such surviving entity outstanding
          immediately after such merger or consolidation; provided, however,
          that a merger or consolidation effected to implement a
          recapitalization of the Company (or similar transaction) in which no
          person (other than an Exception) acquires more than fifty percent
          (50%) of the combined voting power of the Company's then outstanding
          securities shall not constitute a change in control of the Company;
          or (c) the stockholders of the Company approve a plan of liquidation
          of the Company or closing of an agreement for the sale or disposition
          by the Company of all or substantially all of the Company's assets
          other than the sale of all or substantially all of the assets of the
          Company to a person or persons who beneficially own, directly or
          indirectly, at least fifty percent (50%) or more of the combined
          voting power of the outstanding voting securities of the Company at
          the time of the sale or to a person who is an Exception.

7.   Termination of employment:

          The option shall terminate upon the earliest of (i) the expiration
          date, (ii) a termination of the Grantee's employment with the Company
          and its subsidiaries initiated by the Company or any of its
          subsidiaries for Cause, (iii) a material breach by the Grantee of any
          non-compete and confidentiality agreement between the Grantee and the
          Company (iv) 30 days following the Grantee's termination of employment
          with the Company and its subsidiaries initiated by the Grantee (other
          than for good reason or by reason of death), or (v) one year following
          the Grantee's termination of employment with the Company and its
          subsidiaries for reasons other than those specified in (ii) and (iv)
          above, provided that if the Company's common shares are not publicly
          traded at the time of such termination, such one year period shall be
          extended to the earlier of three years following such termination and
          one year following an IPO, and provided further that if at the end of
          the applicable period specified in this clause (v), an
          underwriter-imposed lock-up is in effect, the applicable period
          referred to in this clause (v) shall expire 90 days after the
          expiration of such lock-up. During any period following the Grantee's
          termination of employment, the option shall be exercisable only to the
          extent it was vested and exercisable as of such termination of
          employment.

8.   Conversion of Shares in the event of an IPO:

          If, in connection with an initial public offering of common stock of
          the Company (other that the Class B Common Stock) or an affiliate of
          the Company, shareholders of Class B Common Stock are granted the
          right to convert their Class B Common Stock into the common stock
          being publicly offered, the Grantee shall have the right to convert
          this option to purchase Shares into an option to purchase the common
          stock being publicly offered on the same basis as a shareholder of
          Class B Common Stock, and the per share exercise price shall be
          adjusted accordingly (provided that the aggregate exercise price shall
          remain the same).

                                      5
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9.   Restrictions on Shares:

          As permitted pursuant to Section 3(a)(vi) of the Plan, the Committee
          may condition the delivery of the Shares upon the Grantee's agreement
          to such restrictions on the Shares as the Committee shall determine,
          provided that such restrictions shall be no more restrictive than
          those imposed on other Class B shareholders. The Grantee hereby waives
          any rights he may have in connection with a transfer of shares of
          Class B Common Stock by any other shareholder.

10.  Piggyback Registration Rights:

          If the Company (or an affiliate of the Company) intends to register
          securities of any of its shareholders for an offering to the public
          while the Grantee is employed by the Company or an affiliate of the
          Company or, thereafter, within one year after he has a right to
          exercise an option, the Company shall notify the Grantee of its
          intention to do so and, subject to such limitations as shall affect
          all selling shareholders equally and as may be imposed by any
          underwriter of such offering or by law, the Grantee may irrevocably
          elect to participate in such offering on a pari passu basis with any
          other selling shareholders based on the relative number of shares
          owned and options vested of each of such other selling shareholders
          (and its affiliates and permitted assigns) and the Grantee (the "Pari
          Passu Percentage"). Such participation shall be under the same terms
          and conditions as may apply to such other shareholders, provided that
          the Grantee shall not have any rights to select the underwriter or
          similar matters given to the other shareholders. The Grantee shall
          make any election within 30 days of receipt of such notice of intent
          to register by a writing given to the Secretary of the Company, which
          writing shall indicate his irrevocable election to sell in the
          intended offering, the number of Shares he wishes to sell and the
          portion thereof to be included by him. The Grantee's notice may not be
          for less than 100 percent of the number of Shares of the Grantee which
          the Grantee could sell pursuant to Rule 144 or another exemption from
          securities law registration or pursuant to an S-8 (or similar
          registration statement) then effective (an "Alternative Sales Means")
          within the next six months. The Grantee shall be responsible for
          delivery of the Shares covered by the notice on a timely basis. The
          Company shall only have to give notice of intent to register under
          this paragraph to the Grantee and any notice of intent to participate
          shall only be valid if received from the Grantee (or in the event of
          his death, his executor). The Company may at any time abandon any
          offering. The Company or the underwriter may at any time cutback
          (including, without limitation, limiting the amount to the extent a
          prior amount had not been specified) on the number of shares in any
          offering in which the Company is offering shares and the
          underwriter may at any time cutback (including, without limitation,
          limiting the amount to the extent a prior amount had not been
          specified) on the number of shares to be offered by shareholders in
          any offering in which the Company is not also offering shares. In
          either such case the Grantee's Shares to be offered shall be
          proportionately reduced so that the amounts offered by the Grantee and
          by other shareholders (and their affiliates and permitted assigns)
          satisfy the Pari Passu Percentage. The Grantee shall have no right to
          participate in any offering by the Company that does not include any
          shares owned by other shareholders and the provision of this paragraph
          shall not apply to any registration on Form S-8, or otherwise with
          regard to securities of compensatory plans of the Company. The Grantee
          shall sign such underwriting and other agreements in the same forms as
          signed by the other participating shareholders. The Grantee hereby
          acknowledges receipt of a copy of the Plan as presently in effect.
          The text and all of the terms and provisions of the Plan are
          incorporated herein by reference, and this option is subject to these
          terms and provisions in all respects.

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<PAGE>
          At any time when the Grantee wishes to exercise this option, in whole
          or in part, the Grantee shall submit to the Company a written notice
          of exercise, specifying the exercise date and the number of shares to
          be exercised. Upon exercise, the Grantee shall remit to the Company
          the exercise price in cash or in such other form as permitted under
          the Plan, plus an amount sufficient to satisfy any withholding tax
          obligation of the Company that arises in connection with such
          exercise.

FLAG LIMITED                                         AGREED TO AND ACCEPTED BY:

    /s/ Name of Officer                              /s/ Stuart Rubin
   ------------------------------                   ---------------------------
                                                    Grantee
                                        7<PAGE>

                                                                     Exhibit 4.6

                      FORM OF REGISTRATION RIGHTS AGREEMENT

                  This Registration Rights Agreement, dated as of January 13,
2000, is entered into by and between FLAG TELECOM HOLDINGS LIMITED, a
corporation organized and existing under the laws of Bermuda (the "COMPANY"), on
the one hand, and RATHBURN LIMITED, a corporation organized and existing under
the laws of the British Virgin Islands ("RATHBURN"), ABDUL LATIF OMAR GHURAB, an
individual with a place of business in Jeddah, Saudi Arabia ("GHURAB"), ABDUL
AZIZ ABDULLAH KAMEL, an individual with a place of business in Jeddah, Saudi
Arabia ("KAMEL", and collectively with Rathburn and Ghurab, the "RATHBURN
SHAREHOLDERS") BELL ATLANTIC NETWORK SYSTEMS COMPANY, a corporation organized
and existing under the laws of the state of Delaware, United States of America
("BELL ATLANTIC"), K.I.N. (THAILAND) CO. LTD., a corporation organized and
existing under the laws of Thailand ("KIN"), MARUBENI TELECOM DEVELOPMENT
LIMITED, a corporation organized and existing under the laws of Bermuda
("MARUBENI"), THE ASIAN INFRASTRUCTURE FUND, a corporation organized and
existing under the laws of the Cayman Islands, British West Indies ("AIF"), REJA
SABET, an individual, with a place of business in New York, New York ("R
SABET"), HORMOZ SABET, an individual, with a place of business in New York, New
York ("H SABET"), SPINCONSULT SA, a corporation organized and existing under the
laws of Panama ("SPINCONSULT"), GE CAPITAL PROJECT FINANCE VI LTD., a
corporation organized and existing under the laws of Bermuda ("GE"), and AT&T
CAPITAL CORPORATION, a corporation organized and existing under the laws of
Delaware ("AT&T"), on the other hand (all of the foregoing other than the
Company collectively, the "SHAREHOLDERS").

                               W I T N E S S E T H

                  WHEREAS, as of the date hereof the Shareholders own
substantially all of the outstanding common shares of the Company; and

                  WHEREAS, the Company contemplates an initial public offering
of its common shares and has agreed to provide the Shareholders with liquidity
for the shares that they own by providing them with registration rights with
respect thereto;

                  NOW, THEREFORE, in consideration of the premises and the
covenants hereinafter contained, it is hereby agreed as follows:

                  1. DEFINITIONS. The following terms shall have (unless
otherwise provided elsewhere in this Agreement) the following respective
meanings (such meanings being equally applicable to both the singular and plural
form of the terms defined):

<PAGE>

                  "AFFILIATE" shall mean, with respect to any Person, any other
Person directly or indirectly controlling or controlled by, or under direct or
indirect common control with, such Person.

                  "AGREEMENT" shall mean this Registration Rights Agreement,
including all amendments, modifications and supplements and any exhibits or
schedules hereto, and shall refer to the Registration Rights Agreement as the
same may be in effect at the time such reference becomes operative.

                  "BLACKOUT PERIOD" shall have the meaning assigned to such term
in Section 5 hereof.

                  "BUSINESS DAY" shall mean any day that is not a Saturday, a
Sunday or a day on which commercial banks are required or permitted by law to be
closed in New York, New York, United States of America, London, the United
Kingdom or Hamilton, Bermuda.

                  "COMMON SHARES" shall be the common shares of the Company, par
value $.0001 per share, and any Securities issuable or issued or distributed in
respect of the Common Shares by way of stock dividend or stock split or in
connection with a combination of shares, recapitalization, reorganization,
merger, consolidation or otherwise.

                  "DEMAND REGISTRATION" shall have the meaning assigned to such
term in Section 2(a) hereof.

                  "DEMAND REGISTRATION STATEMENT" shall have the meaning
assigned to such term in Section 2(a) hereof.

                  "DERIVATIVE SECURITIES" shall have the meaning assigned to
such term in Section 4 hereof.

                  "EFFECTIVE DATE" shall mean the closing date of the Company's
initial public offering.

                  "HOLDER" shall mean any Shareholder and any assignee or
transferee of any Shareholder or Holder who continues to be entitled to the
rights of a Holder hereunder.

                  "INDEMNIFIED PARTY" shall have the meaning assigned to such
term in Section 8(d) hereof.

                  "INDEMNIFYING PARTY" shall have the meaning assigned to such
term in Section 8(d) hereof.

                  "INITIATING DEMAND HOLDER" shall have the meaning assigned to
such term in Section 2(a) hereof.

                                       2
<PAGE>

                  "MAXIMUM NUMBER OF SECURITIES" shall have the meaning assigned
to such term in Section 2(b) hereof.

                  "NASD" shall mean the National Association of Securities
Dealers, Inc., or any successor entity thereof.

                   "PARTICIPATING DEMAND HOLDERS" shall have the meaning
assigned to such term in Section 2(a) hereof.

                  "PARTICIPATING PIGGY-BACK HOLDERS" shall have the meaning
assigned to such term in Section 3(b) hereof.

                  "PERSON" shall mean any individual, corporation, partnership,
joint venture, firm, trust, unincorporated organization, government or any
agency or political subdivision thereof or other entity.

                  "PIGGY-BACK REGISTRATION" shall have the meaning assigned to
such term in Section 3(a) hereof.

                  "PIGGY-BACK REGISTRATION STATEMENT" shall have the meaning
assigned to such term in Section 3(a) hereof.

                   "REGISTRABLE SECURITIES" shall mean (a) the Common Shares
held by a Holder and (b) any Securities issuable or issued or distributed in
respect of any of the Common Shares identified in clause (a) by way of stock
dividend or stock split or in connection with a combination of shares,
recapitalization, reorganization, merger, consolidation or otherwise. For
purposes of this Agreement, (i) Registrable Securities shall cease to be
Registrable Securities when a Registration Statement covering such Registrable
Securities has been declared effective under the Securities Act by the SEC and
such Registrable Securities have been disposed of pursuant to such effective
Registration Statement and (ii) the Registrable Securities of a Holder shall not
be deemed to be Registrable Securities at any time when such Registrable
Securities have been sold in a sale made pursuant to Rule 144 (or any successor
provision then in effect) of the Securities Act.

                  "REGISTRATION STATEMENT" shall mean a Demand Registration
Statement, a Piggy-Back Registration Statement and/or a Shelf Registration
Statement, as the case may be.

                  "SECURITIES" shall have the meaning assigned to such term in
Section 2(a)(1) of the Securities Act.

                  "SECURITIES ACT" shall mean the United States Securities Act
of 1933, as amended, and all rules and regulations promulgated thereunder.

                  "SEC" shall mean the United States Securities and Exchange
Commission, or any successor thereto.

                                       3
<PAGE>

                  "SHELF REGISTRATION" shall have the meaning assigned to such
term in Section 4 hereof.

                  "SHELF REGISTRATION STATEMENT" shall have the meaning assigned
to such term in Section 4 hereof.

                  2. DEMAND REGISTRATION.

                        (a) At any time from and after 180 days following the
Effective Date and subject to Sections 2(c) and 2(d) hereof, after receipt of a
written request from a Holder (the "INITIATING DEMAND HOLDER") requesting that
the Company effect a registration (a "DEMAND REGISTRATION") under the Securities
Act covering all or part of the Registrable Securities held by such Holder,
which specifies the intended method or methods of disposition thereof, the
Company shall promptly notify all Holders in writing of the receipt of such
request and each such Holder, in lieu of exercising its rights under Section 3
hereof, may elect (by written notice sent to the Company within twenty (20) days
from the date of such Holder's receipt of the aforementioned Company's notice)
to have all or part of such Holder's Registrable Securities included in such
registration thereof pursuant to this Section 2, and such Holder shall specify
in such notice the number of Registrable Securities that such Holder elects to
include in such registration. Thereupon the Company shall, as expeditiously as
is reasonably possible, file with the SEC and use commercially reasonable
efforts to cause to be declared effective, a registration statement (a "DEMAND
REGISTRATION STATEMENT") relating (subject to Section 2(b) hereof) to all of the
Registrable Securities which the Company has been so requested to register by
such Holders ("PARTICIPATING DEMAND HOLDERS") for sale, to the extent required
to permit the disposition (in accordance with the intended method or methods
thereof, as aforesaid) of the Registrable Securities so registered, PROVIDED,
HOWEVER, that the aggregate number of Registrable Securities requested to be
registered by all Participating Demand Holders shall be, subject to Section 2(b)
below, at least the greater of (a) five percent (5%) of the Common Shares issued
and outstanding on the Effective Date, and (b) an aggregate value of
$100,000,000, based on the closing trading price of the Common Shares on the
date the demand to file such Demand Registration Statement is made.

                        (b) If the Initiating Demand Holder so requests that the
offering be underwritten with a managing underwriter (which shall be selected in
the manner set forth in Section 12 below) and such managing underwriter of such
Demand Registration advises the Company in writing that, in its opinion, the
number of Securities to be included in such offering is greater than the total
number of Securities which can be sold therein without having a material adverse
effect on the distribution of such Securities or otherwise having a material
adverse effect on the marketability thereof (the "MAXIMUM NUMBER OF
SECURITIES"), then the Company shall include in such Demand Registration the
Registrable Securities that the Participating Demand Holders have requested to
be registered thereunder only to the extent the number of such Registrable
Securities does not exceed the Maximum Number of Securities. The Company shall
include such Registrable Securities in a Demand Registration even if the Maximum
Number of

                                       4
<PAGE>

Securities is less than the threshold set forth in Section 2(a) above. If such
amount exceeds the Maximum Number of Securities, the number of Registrable
Securities included in such Demand Registration shall be allocated among all the
Participating Demand Holders on a PRO RATA basis, unless any of the
Participating Demand Holders otherwise agree between or among themselves and
notify the Company in writing of such agreement. If the amount of such
Registrable Securities does not exceed the Maximum Number of Securities, the
Company may include in such Registration any other Securities of the Company,
and then other Securities held by other security holders of the Company, on a
PRO RATA basis if necessary, in an amount which together with the Registrable
Securities included in such Demand Registration shall not exceed the Maximum
Number of Securities.

                        (c) The following Shareholders shall be entitled to the
following number of registrations of Registrable Securities pursuant to this
Section 2: the Rathburn Shareholders collectively - 3, Bell Atlantic - 6, KIN -
2, Marubeni - 1, and AIF - 1. All Holders who are assignees or transferees of
one of such Shareholders, or assignees or transferees of an assignee or
transferee of one of such Shareholders shall collectively be entitled to such
number of registrations pursuant to this Section 2 as the original Shareholder
Holder of the relevant Registrable Securities was entitled pursuant to this
Section 2(c), less any registrations demanded prior to the date such Person
becomes a Holder hereunder. None of R Sabet, H Sabet, Spinconsult, GE or AT&T
are entitled to any registrations of Registrable Securities pursuant to this
Section 2. Each Shelf Registration pursuant to Section 4 hereof shall be deemed
one Demand Registration pursuant hereto.

                        (d) Notwithstanding anything to the contrary contained
herein, the Company shall not be required to prepare and file (i) more than one
(1) Demand Registration Statement under this Agreement in any six-month period,
or (ii) any Demand Registration Statement within ninety (90) days following the
date of effectiveness of any Registration Statement (other than a Shelf
Registration Statement).

                        (e) A Demand Registration requested pursuant to Section
2(a) hereof shall not be deemed to have been effected with respect to any
Participating Demand Holder that is not able to register and sell at least 80%
of the amount of Registrable Securities requested to be included on behalf of
such Holder in such registration.

                        (f) A Participating Demand Holder may withdraw its
request with respect to a Demand Registration at any time prior to the effective
date of the Demand Registration Statement relating thereto by providing to the
Company written notice. Upon any such withdrawal, if the Company determines not
to otherwise continue with such Registration Statement for the purpose of
registering Common Shares of the Company, another Holder or another shareholder
of the Company, the withdrawing Participating Demand Holder shall be obligated,
pro rata with any other withdrawing Participating Demand Holder, to reimburse
the Company, within 20 days of the date of the written notice of withdrawal, for
all Expenses (as defined in Section 12 below)

                                       5
<PAGE>

incurred by the Company, in connection with such withdrawn Demand Registration
that would not otherwise have been incurred by the Company. Any such withdrawn
Demand Registration shall be counted with respect to such Holder for purposes of
Section 2(c) hereof as a completed Demand Registration, unless such withdrawal
was the result of a change in market conditions that would materially adversely
effect the amount and/or price of the Registrable Securities to be included in
the Demand Registration.

                  3. PIGGY-BACK REGISTRATION.

                        (a) If the Company at any time after 180 days from the
Effective Date proposes to file on its behalf and/or on behalf of any holder of
its Securities a registration statement under the Securities Act on any form
(other than a registration statement on Form S-4 or S-8 or any successor form
for Securities to be offered in a transaction of the type referred to in Rule
145 under the Securities Act or to employees of the Company pursuant to any
employee incentive plan, respectively) for the registration of Securities (a
"PIGGY-BACK REGISTRATION"), it will give written notice to all Holders at least
20 days before the initial filing with the SEC of such piggy-back registration
statement (a "PIGGY-BACK REGISTRATION STATEMENT"), which notice shall set forth
the intended method of disposition of the Securities proposed to be registered
by the Company. The notice shall offer to include in such filing the aggregate
number of shares of Registrable Securities as such Holders may request.

                        (b) Each Holder desiring to have Registrable Securities
registered under this Section 3 ("PARTICIPATING PIGGY-BACK HOLDERS") shall
advise the Company in writing within ten (10) days after the date of receipt of
such offer from the Company, setting forth the amount of such Registrable
Securities for which registration is requested. The Company shall thereupon
include in such filing the number or amount of Registrable Securities for which
registration is so requested, subject to paragraph (c) below, and shall use
commercially reasonable efforts to effect registration of such Registrable
Securities under the Securities Act.

                        (c) If the Piggy-Back Registration relates to an
underwritten public offering and the managing underwriter of such proposed
public offering advises in writing that, in its opinion, the amount of
Registrable Securities requested to be included in the Piggy-Back Registration
in addition to the Securities being registered by the Company would be greater
than the Maximum Number of Securities, then:

                        (i) in the event the Company initiated the Piggy-Back
         Registration, the Company shall include in such Piggy-Back Registration
         FIRST, the Securities the Company proposes to register and SECOND, the
         Securities of all other selling security holders, including the
         Participating Piggy-Back Holders, to be included in such Piggy-Back
         Registration in an amount which together with the Securities the
         Company proposes to register, shall not exceed the Maximum Number of
         Securities, such amount to be allocated among such other selling
         security holders on a PRO RATA basis;

                                       6
<PAGE>

                        (ii) in the event any holder (or holders) of Securities
         of the Company initiated the Piggy-Back Registration, the Company shall
         include in such Piggy-Back Registration FIRST, the Securities such
         security holder (or holders) proposes to register, SECOND, any
         Securities that the Company proposes to register, and THIRD, the
         Securities of any other selling security holders, in an aggregate
         amount which shall not exceed the Maximum Number of Securities; if the
         aggregate of all Securities proposed to be registered exceeds the
         Maximum Number of Securities, the number to be registered shall be
         allocated in the foregoing order and among any such other selling
         security holders piggy backing on such registration, on a PRO RATA
         basis;

                        (d) The Company will not hereafter enter into any
agreement which is inconsistent with the rights of priority provided in
paragraph (c) above.

                  4. SHELF REGISTRATION. In the event that at any time from and
after 180 days following the Effective Date, and subject to Sections 2(c) and
2(d) above, a Shareholder or one of its Affiliates (other than R Sabet, H Sabet,
Spinconsult, GE or AT&T or any of their respective Affiliates) issues Securities
(the "DERIVATIVE SECURITIES") that by their terms are convertible into or
exchangeable for Registrable Securities and which will be issued in reliance on
Regulation S and/or Rule 144A under the Securities Act, upon the written request
of such Shareholder, provided that the aggregate number of Registrable
Securities requested to be registered shall be at least the greater of (a) five
percent (5%) of the Common Shares issued and outstanding on the Effective Date,
and (b) an aggregate value of $100,000,000, based on the closing trading price
of the Common Shares on the date the request for such shelf registration
statement is made, as promptly as practicable, but in any event no later than 45
days after receipt of such request, the Company shall file with the SEC and
thereafter use commercially reasonable efforts to cause to be declared effective
as promptly as practicable, but no later than 110 days after receipt of such
request, a shelf registration statement (the "SHELF REGISTRATION STATEMENT") on
an appropriate form under the Securities Act relating to the conversion or
exchange of the Derivative Securities from time to time in accordance with the
methods and distribution set forth in the Shelf Registration Statement and Rule
415 under the Securities Act (hereafter, the "SHELF REGISTRATION"). Subject to
Section 5 below, the Company shall use commercially reasonable efforts to keep
the Shelf Registration Statement continuously effective in order to permit the
prospectus included therein to be lawfully delivered to holders of the
Derivative Securities for a period of time until such time as all the Derivative
Securities have been converted or exchanged pursuant thereto.

                  5. BLACKOUT PERIODS. Notwithstanding anything to the contrary
contained in this Agreement, the Company shall have the right to delay the
filing or effectiveness of a Registration Statement requested pursuant to
Section 2, 3 or 4 hereof during no more than two (2) periods aggregating to not
more than 90 days in any twelve-month period (a "BLACKOUT PERIOD") in the event
that (i) (a) the Company would, in accordance with the reasonable advice of its
counsel, be required to disclose in the prospectus information not otherwise
then required by law to be publicly disclosed, and (b) in the judgment of the

                                       7
<PAGE>

Company's Board of Directors, there is a reasonable likelihood that such
disclosure, or any other action to be taken in connection with the prospectus,
would materially and adversely affect or interfere with any financing,
acquisition, merger, material joint venture, disposition of assets (not in the
ordinary course of business), corporate reorganization or other similar
transaction involving the Company, or (ii) the Company is actively involved in
the preparation of its annual audited financial statements (during which time,
if a Blackout Period, the Company shall not be required to permit the use of an
effective Registration Statement and related Prospectus); PROVIDED, HOWEVER,
that during any such Blackout Period, the Company shall also delay the filing or
effectiveness of any registration statement with respect to any Securities of
the Company or any other shareholder of the Company. The Company shall promptly
give the Holders written notice of such determination containing a general
statement of the reasons for such postponement and an approximation of the
anticipated delay; and PROVIDED FURTHER, HOWEVER, that the implementation of any
Blackout Period shall be done in good faith, and not for the purpose or
intention of impeding such rights.

                  6. REGISTRATION PROCEDURES. If the Company is required by the
provisions of Section 2, 3 or 4 to use commercially reasonable efforts to effect
the registration of any of its Securities under the Securities Act, the Company
will, as expeditiously as possible:

                        (a) prepare and file with the SEC a Registration
Statement with respect to such Securities and use commercially reasonable
efforts to cause such Registration Statement to become and remain effective for
a period of time required for the disposition of such Securities by the Holders
thereof (or with respect to the Shelf Registration Statement, the Holder of the
Derivative Securities) but not to exceed 180 days (except with respect to the
Shelf Registration Statement). The Company shall not be deemed to have used
commercially reasonable efforts to keep a Registration Statement effective
during the applicable period if it voluntarily takes any action that would
result in the Holders of such Securities (or with respect to the Shelf
Registration, the holders of the Derivative Securities) not being able to sell
such Securities (or convert or exchange such Derivative Securities) during that
period, unless such action is required under applicable law or otherwise
permitted by this Agreement;

                        (b) prepare and file with the SEC such amendments and
supplements to such Registration Statement and the prospectus used in connection
therewith as may be necessary to keep such Registration Statement effective and
to comply with the provisions of the Securities Act with respect to the sale or
other disposition of all Securities covered by such Registration Statement until
the earlier of such time as all of such Securities have been disposed of in a
public offering and (except with respect to the Shelf Registration Statement)
the expiration of 180 days;

                        (c) furnish to all selling security holders such number
of copies of the applicable Registration Statement and each such amendment and
supplement thereto, and of a summary prospectus or other prospectus, including a
preliminary prospectus, in

                                       8
<PAGE>

conformity with the requirements of the Securities Act, and such other
documents, as such selling security holders may reasonably request;

                        (d) use commercially reasonable efforts to register or
qualify the Securities covered by such Registration Statement under such other
securities or blue sky laws of such jurisdictions within the United States and
Puerto Rico as each Holder of such Securities shall reasonably request
(PROVIDED, HOWEVER, that the Company shall not be obligated to qualify as a
foreign corporation to do business under the laws of any jurisdiction in which
it is not then qualified, to subject itself to taxation in any such
jurisdiction, or to file any general consent to service or process), and do such
other reasonable acts and things as may be required of it to enable such Holder
to consummate the disposition in such jurisdiction of the Securities covered by
such Registration Statement;

                        (e) furnish, at the request of any Holder requesting
registration of Registrable Securities, on the date that such Registrable
Securities are delivered to the underwriters for sale pursuant to such
registration or, if such Registrable Securities are not being sold through
underwriters, on the date that the Registration Statement with respect to such
shares of Registrable Securities becomes effective, (1) an opinion, dated such
date, of the independent counsel representing the Company for the purposes of
such registration, addressed to the underwriters, if any, in customary form and
covering matters of the type customarily covered in such legal opinions; and (2)
a comfort letter dated such date, from the independent certified public
accountants of the Company, addressed to the underwriters, in a customary form
and covering matters of the type customarily covered by such comfort letters and
as the underwriters shall reasonably request. Such opinion of counsel shall
additionally cover such other legal matters with respect to the registration in
respect of which such opinion is being given as such underwriters may reasonably
request;

                        (f) enter into customary agreements (including an
underwriting agreement in customary form) and take such other actions as are
reasonably required in order to expedite or facilitate the disposition of such
Registrable Securities;

                        (g) otherwise use commercially reasonable efforts to
comply with all applicable rules and regulations of the SEC, and make earnings
statements satisfying the provisions of Section 11(a) of the Securities Act
generally available to the Holders no later than 45 days after the end of any
twelve-month period (or 90 days, if such period is a fiscal year) (i) commencing
at the end of any fiscal quarter in which Registrable Securities are sold to
underwriters in an underwritten public offering, or (ii) if not sold to
underwriters in such an offering, beginning with the first month of the
Company's first fiscal quarter commencing after the effective date of the
Registration Statement, which statements shall cover said twelve-month periods;

                        (h) use commercially reasonable efforts to cause all
such Registrable Securities to be listed on each securities exchange or
quotation system on which similar Securities issued by the Company are listed or
traded;

                                       9
<PAGE>

                        (i) give prompt written notice to Holders:

                        (i) when such Registration Statement or any amendment
         thereto has been filed with the SEC and when such Registration
         Statement or any post-effective amendment thereto has become effective;

                        (ii) of any request by the SEC for amendments or
         supplements to such Registration Statement or the prospectus included
         therein or for additional information;

                        (iii) of the issuance by the SEC of any stop order
         suspending the effectiveness of such Registration Statement or the
         initiation of any proceedings for that purpose;

                        (iv) of the receipt by the Company or its legal counsel
         of any notification with respect to the suspension of the qualification
         of the Common Shares for sale in any jurisdiction or the initiation or
         threatening of any proceeding for such purpose; and

                        (v) of the happening of any event that requires the
         Company to make changes in such Registration Statement or the
         prospectus in order to make the statements therein not misleading
         (which notice shall be accompanied by an instruction to suspend the use
         of the prospectus until the requisite changes have been made);

                        (j) use commercially reasonable efforts to prevent the
issuance or obtain the withdrawal of any order suspending the effectiveness of
such Registration Statement at the earliest possible time;

                        (k) furnish to each Holder, without charge, at least one
copy of such Registration Statement and any post-effective amendment thereto,
including financial statements and schedules, and, if the Holder so requests in
writing, all exhibits (including those, if any, incorporated by reference);

                        (l) upon the occurrence of any event contemplated by
Section 6(i)(v) above, promptly prepare a post-effective amendment to such
Registration Statement or a supplement to the related prospectus or file any
other required document so that, as thereafter delivered to Holders, the
prospectus will not contain an untrue statement of a material fact or omit to
state any material fact necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading. If the Company
notifies the Holders in accordance with Section 6(i)(v) above to suspend the use
of the prospectus until the requisite changes to the prospectus have been made,
then the Holders shall suspend use of such prospectus, and the period of
effectiveness of such Registration Statement provided for above shall be
extended by the number of days from and including the date of the giving of such
notice to the date

                                       10
<PAGE>

Holders shall have received such amended or supplemented prospectus pursuant to
this Section 6(l);

                        (m) (i) make reasonably available for inspection by a
single representative of the Holders, any underwriter participating in any
disposition pursuant to such Registration Statement and any attorney, accountant
or other agent retained by such representative or any such underwriter all
relevant financial and other records, pertinent corporate documents and
properties of the Company and (ii) cause the Company's officers, directors and
employees during normal business hours and upon reasonable advance notice to
supply all relevant information reasonably requested by such representative or
any such underwriter, attorney, accountant or agent in connection with the
registration; and

                        (n) in connection with any underwritten offering, make
appropriate officers of the Company available to the selling security holders
for meetings with prospective purchasers of the Registrable Securities and
prepare and present to potential investors customary "road show" material in a
manner consistent with other new issuances of Securities similar to the
Registrable Securities, in connection with any proposed sale of the Registrable
Securities in an aggregate offering of at least $100,000,000.

                  It shall be a condition precedent to the obligation of the
Company to take any action pursuant to this Agreement in respect of the
Securities which are to be registered at the request of any Holder that such
Holder shall furnish to the Company such information regarding the Securities
held by such Holder and the intended method of disposition thereof as the
Company shall reasonably request and as shall be required in connection with the
action taken by the Company.

                   7. EXPENSES. All expenses incurred in complying with the
provisions of this Agreement, including, without limitation, all registration
and filing fees (including all expenses incident to filing with the NASD),
printing expenses, fees and disbursements of counsel for the Company, the
reasonable fees and expenses of a single counsel for the selling security
holders (selected by the Initiating Demand Holder, in the case of a Demand
Registration, and otherwise selected by those holding a majority of the shares
being registered), expenses of any special audits incident to or required by any
such registration and expenses of complying with the Securities or blue sky laws
of any jurisdiction pursuant to Section 6(d), shall be paid by the Company
("Expenses"), except that:

                        (a) all such expenses in connection with any amendment
or supplement to the Registration Statement or prospectus filed more than 180
days after the effective date of such Registration Statement (except with
respect to a Shelf Registration Statement) because any Holder has not effected
the disposition of the Securities requested to be registered shall be paid by
such Holder; and

                                       11
<PAGE>

                        (b) The Company shall not be liable for any fees,
discounts or commissions to any underwriter or any fees or disbursements of
counsel for any underwriter in respect of the Securities sold by such Holder.

                  8. INDEMNIFICATION AND CONTRIBUTION.

                        (a) In the event of any registration of any Registrable
Securities under the Securities Act pursuant to this Agreement, the Company
shall indemnify and hold harmless the Holder of such Registrable Securities,
such Holder's partners, directors and officers, and each other person (including
each underwriter) to the extent permitted by law who participated in the
offering of such Registrable Securities and each other Person, if any, who
controls such Holder or such participating person within the meaning of the
Securities Act, against any losses, claims, damages or liabilities ("Losses"),
to which such Holder or any such partner, director or officer or participating
person or controlling person may become subject under the Securities Act or any
other statute or at common law, insofar as such Losses (or actions in respect
thereof) arise out of or are based upon (i) any alleged untrue statement of any
material fact contained, on the effective date thereof, in any Registration
Statement under which such Securities were registered under the Securities Act,
any preliminary prospectus or final prospectus contained therein, or any
amendment or supplement thereto, or (ii) any alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, and, upon receipt of reasonably detailed invoices
relating thereto, shall reimburse such Holder or such partner, director, officer
or participating person or controlling person for any legal or any other
expenses reasonably incurred by such Holder or such partner, director, officer
or participating person or controlling person in connection with investigating
or defending any such Loss or action; PROVIDED that the foregoing indemnity with
respect to any preliminary prospectus shall not inure to the benefit of any
indemnified party from whom the person asserting such Losses, expenses and
judgments purchased securities if such untrue statement or omission or alleged
untrue statement or omission made in such preliminary prospectus is eliminated
or remedied in the final prospectus and a copy of the final prospectus shall not
have been furnished to such person in a timely manner, unless such prospectus
was not furnished because the Company failed to provide the indemnified party in
accordance with law and the terms hereof with sufficient copies of such
corrected prospectus within the time period required; PROVIDED, FURTHER that the
Company shall not be liable in any case to the extent such Losses arise out of
or are based upon any untrue statement or actual or alleged omission made in
such Registration Statement, preliminary prospectus, final prospectus or
amendment or supplement, in reliance upon and in conformity with written
information furnished to the Company by such Holder or such Holder's partners,
directors, officers and/or controlling persons specifically for use therein, or
(in the case of any underwritten offering) so furnished for such purpose by any
underwriter.

                        (b) Each Holder, by acceptance hereof, agrees to
indemnify and hold harmless the Company, its directors and officers and each
other person, if any, who controls the Company within the meaning of the
Securities Act against any Losses, to which the Company or any such director or
officer or controlling person may become

                                       12
<PAGE>

subject under the Securities Act or any other statute or at common law, insofar
as such Losses (or actions in respect thereof) arise out of or are based upon
information in writing provided to the Company by or on behalf of such Holder
specifically for use in the following documents and contained, on the effective
date thereof, in any Registration Statement under which Securities were
registered under the Securities Act at the request of such Holder, any
preliminary prospectus or final prospectus contained therein, or any amendment
or supplement thereto. Notwithstanding the provisions of this paragraph (b) or
paragraph (c) below, no Holder shall be required to indemnify any person
pursuant to this Section 8 or to contribute pursuant to paragraph (c) below if
any such indemnification or contribution combined with all previous payments
made under this Section 8 would in the aggregate be in an amount in excess of
the amount of the aggregate net proceeds received by such Holder in connection
with any such registration under the Securities Act.

                        (c) If the indemnification provided for in this Section
8 from the indemnifying party is unavailable to an indemnified party hereunder
in respect of any Losses or expenses referred to therein, then the indemnifying
party, in lieu of indemnifying such indemnified party, shall contribute to the
amount paid or payable by such indemnified party as a result of such Losses or
expenses in such proportion as is appropriate to reflect the relative fault of
the indemnifying party and indemnified parties in connection with the actions
which resulted in such Losses or expenses, as well as any other relevant
equitable considerations. The relative fault of such indemnifying party and
indemnified parties shall be determined by reference to, among other things,
whether any action in question, including any untrue or alleged untrue statement
of a material fact or omission or alleged omission to state a material fact, has
been made by, or relates to information supplied by, such indemnifying party or
indemnified parties, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such action. The amount paid
or payable by a party as a result of the Losses and expenses referred to above
shall be deemed to include any legal or other fees or expenses reasonably
incurred by such party in connection with any investigation or proceeding. If
the allocation provided in this paragraph (c) is not permitted by applicable
law, the parties shall contribute based upon the relevant benefits received by
the Company and the Holders from the sale of Securities.

                  The parties hereto agree that it would not be just and
equitable if contribution pursuant to this Section 8(c) were determined by PRO
RATA allocation or by any other method of allocation which does not take account
of the equitable considerations referred to in the immediately preceding
paragraph. No Person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to contribution from
any Person who was not guilty of such fraudulent misrepresentation.

                        (d) Any person entitled to indemnification hereunder
(the "INDEMNIFIED PARTY") agrees to give prompt written notice to the
indemnifying party (the "INDEMNIFYING PARTY") after the receipt by the
Indemnified Party of any written notice of the commencement of any action, suit,
proceeding or investigation or threat

                                       13
<PAGE>

thereof made in writing for which the Indemnified Party intends to claim
indemnification or contribution pursuant to this Agreement; PROVIDED, that the
failure so to notify the Indemnifying Party shall not relieve the Indemnifying
Party of any liability that it may have to the Indemnified Party hereunder
unless such failure is materially prejudicial to the Indemnifying Party. If
notice of commencement of any such action is given to the Indemnifying Party as
above provided, the Indemnifying Party shall be entitled to participate in and,
to the extent it may wish, to assume the defense of such action at its own
expense, with counsel chosen by it and reasonably satisfactory to such
Indemnified Party. The Indemnified Party shall have the right to employ separate
counsel in any such action and participate in the defense thereof, but the fees
and expenses of such counsel shall be paid by the Indemnified Party unless (i)
the Indemnifying Party agrees in writing to pay the same, (ii) the Indemnifying
Party fails to assume the defense of such action, or (iii) the named parties to
any such action (including any impleaded parties) have been advised in writing
by such counsel that either (A) representation of such Indemnified Party and the
Indemnifying Party by the same counsel would be inappropriate under applicable
standards of professional conduct or (B) there are one or more legal defenses
available to the Indemnified Party which are substantially different from or
additional to those available to the Indemnifying Party. No Indemnifying Party
shall be liable for any settlement entered into without its written consent,
which consent shall not be unreasonably withheld.

                        (e) The agreements contained in this Section 8 shall
survive the transfer of the Registered Securities by any Holder and sale of all
the Registrable Securities pursuant to any Registration Statement and shall
remain in full force and effect, regardless of any investigation made by or on
behalf of any Holder or such partner, director, officer or participating or
controlling person.

                  9. CERTAIN ADDITIONAL LIMITATIONS ON REGISTRATION RIGHTS.
Notwithstanding the other provisions of this Agreement, the Company shall not be
obligated to register the Registrable Securities of any Holder (i) if such
Holder or any underwriter of such Registrable Securities shall fail to furnish
to the Company necessary information in respect of the distribution of such
Registrable Securities, or (ii) if such registration involves an underwritten
offering, such Registrable Securities are not included in such underwritten
offering on the same terms and conditions as shall be applicable to the other
Securities being sold through underwriters in the registration or such Holder
fails to enter into an underwriting agreement in customary form with the
underwriter or underwriters selected for such underwritten offering. In
addition, each Holder agrees not to effect any public sale or distribution of
any Registrable Securities or of any securities convertible into or exchangeable
or exercisable for such Registrable Securities, including a sale pursuant to
Rule 144 under the Securities Act and to enter into a customary lock-up
agreement with the managing underwriter for an offering, during the 90-day
period beginning on the effective date of any Demand Registration Statement
(initiated by such Holder) or Piggy-Back Registration Statement in which such
Holder is participating or other underwritten offering (initiated by the
Company) (except as part of

                                       14
<PAGE>

such registration), if and to the extent requested by the managing underwriter
for such offering.

                  10. LIMITATIONS ON REGISTRATION OF OTHER SECURITIES;
REPRESENTATION. From and after the date of this Agreement, the Company shall
not, without the prior written consent of a majority in interest of the Holders,
enter into any agreement with any holder or prospective holder of any Securities
of the Company giving such Holder or prospective holder any registration rights
the terms of which are more favorable taken as a whole (taking into account the
aggregate remaining ownership interest of Registrable Securities by the Holders)
than the registration rights granted to the Holders hereunder unless the Company
shall also give such rights to the Holders hereunder.

                  11. NO INCONSISTENT AGREEMENTS. The Company will not hereafter
enter into any agreement with respect to its Securities which is inconsistent in
any material respects with the rights granted to the Holders in this Agreement.

                  12. SELECTION OF MANAGING UNDERWRITERS. The managing
underwriter or underwriters for any offering of Registrable Securities to be
registered pursuant to Sections 2 or 3 hereto shall be selected by the Company
and shall be acceptable to the Initiating Demand Holder.

                  13. MISCELLANEOUS.

                        (a) REMEDIES. Each Holder, in addition to being entitled
to exercise all rights granted by law, including recovery of damages, will be
entitled to specific performance of its rights under this Agreement. The Company
agrees that monetary damages would not be adequate compensation for any loss
incurred by reason of a breach by it of the provisions of this Agreement and
hereby agrees to waive the defense in any action for specific performance that a
remedy at law would be adequate. In any action or proceeding brought to enforce
any provision of this Agreement or where any provision hereof is validly
asserted as a defense, the successful party shall be entitled to recover
reasonable attorneys' fees in addition to any other available remedy.

                        (b) AMENDMENTS AND WAIVERS. Except as otherwise provided
herein, the provisions of this Agreement may not be amended, modified or
supplemented, and waivers or consents to departure from the provisions hereof
may not be given unless the Company has obtained the written consent of each
Shareholder who is a Holder and a majority in interest of the other Holders.

                        (c) NOTICE GENERALLY. Any notice, demand, request,
consent, approval, declaration, delivery or other communication hereunder to be
made pursuant to the provisions of this Agreement shall be sufficiently given or
made if in writing and either delivered in person with receipt acknowledged or
sent by overnight courier mail, return receipt requested, postage prepaid, or by
telecopy and confirmed by telecopy answerback, addressed as follows:

                                       15
<PAGE>

                        (i) If to any Holder, at its last known address
         appearing on the books of the Company maintained for such purpose.

                        (ii) If to the Company, at

                                    FLAG Telecom Holdings Limited
                                    Emporium Building
                                    69 Front Street
                                    Hamilton HM12, Bermuda
                                    Attention:  General Counsel
                                    Telecopy Number: 1-441-296-0938

                                    with a copy to:

                                    3rd Floor
                                    103 Mount Street
                                    London W1Y5HE
                                    England
                                    Telecopy Number: 011-441-317-0808

         or at such other address as may be substituted by notice given as
         herein provided.

         The giving of any notice required hereunder may be waived in writing by
the party entitled to receive such notice. Every notice, demand, request,
consent, approval, declaration, delivery or other communication hereunder shall
be deemed to have been duly given or served on the date on which personally
delivered, with receipt acknowledged, telecopied and confirmed by telecopy
answerback or three (3) Business Days after the same shall have been sent by
overnight courier.

                        (d) SUCCESSORS AND ASSIGNS. This Agreement shall inure
to the benefit of and be binding upon the successors and assigns of each of the
parties hereto including any person to whom Registrable Securities are assigned
or transferred.

                        (e) HEADINGS. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.

                        (f) GOVERNING LAW; JURISDICTION. This Agreement shall be
governed by, construed and enforced in accordance with the laws of the State of
New York, United States of America without giving effect to the conflict of laws
provisions thereof. Each of the parties hereby submits to personal jurisdiction
and waives any objection as to venue in the County of New York, State of New
York, United States of America. Service of process on the parties in any action
arising out of or relating to this Agreement shall be effective if mailed to the
parties in accordance with Section 13(c) hereof. The parties hereto waive all
right to trial by jury in any action or proceeding to enforce or defend any
rights hereunder.

                                       16
<PAGE>

                        (g) SEVERABILITY. Wherever possible, each provision of
this Agreement shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Agreement shall be prohibited
by or invalid under applicable law, such provision shall be ineffective to the
extent of such prohibition or invalidity, without invalidating the remainder of
such provision or the remaining provisions of this Agreement.

                        (h) ENTIRE AGREEMENT. This Agreement represents the
complete agreement and understanding of the parties hereto in respect of the
subject matter contained herein. This Agreement supersedes all prior agreements
and understandings between the parties with respect to the subject matter
hereof, including without limitation Section 7 of the Stock Purchase Agreement
between GE and FLAG Limited, dated as of October 19, 1995 and [ATT Agreement].

                        (i) COUNTERPARTS. This Agreement may be executed in
counterparts, each of which shall be deemed an original, but all such
counterparts shall together constitute but one and the same instrument. If any
party to this Agreement, other than the Company, fails to execute this Agreement
by the Effective Date, the Agreement shall be deemed to be valid, binding and
enforceable only for or against those parties who have executed the Agreement,
and shall not be valid, binding or enforceable by or against those parties who
have not so executed.

                  IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.

                                           FLAG TELECOM HOLDINGS LIMITED

                                           By:_________________________________
                                                Name:
                                                Title:

                                           RATHBURN LIMITED

                                           By:_________________________________
                                                Name:
                                                Title:

                                           ____________________________________
                                           ABDUL LATIF OMAR GHURAB

                                       17
<PAGE>

                                           ____________________________________
                                           ABDUL AZIZ ABDULLAH KAMEL

                                           BELL ATLANTIC NETWORK SYSTEMS COMPANY

                                           By:_________________________________
                                                Name:
                                                Title:

                                           K.I.N. (THAILAND) CO. LTD.

                                           By:_________________________________
                                                Name:
                                                Title:

                                           MARUBENI TELECOM DEVELOPMENT LIMITED

                                           By:_________________________________
                                                Name:
                                                Title:

                                           THE ASIAN INFRASTRUCTURE FUND

                                           By:_________________________________
                                                Name:
                                                Title:

                                           ____________________________________
                                                REJA SABET

                                           ____________________________________
                                                HORMOZ SABET

                                       18
<PAGE>

                                           SPINCONSULT SA

                                           By:_________________________________
                                                Name:
                                                Title:

                                           GE  CAPITAL PROJECT FINANCE VI LTD.

                                           By:_________________________________
                                                Name:
                                                Title:

                                           AT&T CAPITAL CORPORATION

                                           By:_________________________________
                                                Name:
                                                Title:

                                       19

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