GLOBAL CROSSING LTD, S-1/A, 1998-08-10

GLOBAL CROSSING LTD
S-1/A, 1998-08-10
TELEPHONE COMMUNICATIONS (NO RADIOTELEPHONE)

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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 10, 1998
REGISTRATION NO. 333-53393
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

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PRE-EFFECTIVE AMENDMENT NO. 4
TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
GLOBAL CROSSING LTD.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

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<S> <C> <C>
BERMUDA 4813 98-0189783
(STATE OR OTHER (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
JURISDICTION OF CLASSIFICATION CODE NUMBER) IDENTIFICATION NUMBER)
INCORPORATION OR
ORGANIZATION)
</TABLE>

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WESSEX HOUSE
45 REID STREET
HAMILTON HM12, BERMUDA
(441) 296-8600
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)

CT CORPORATION
1633 BROADWAY, 23RD FLOOR
NEW YORK, NEW YORK 10019
(212) 479-8200
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)

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COPIES TO:
<TABLE>
<S> <C> <C>
D. RHETT BRANDON, ESQ. JAMES C. GORTON, ESQ. ROGER KIMMEL, ESQ.
SIMPSON THACHER & BARTLETT GLOBAL CROSSING LTD. LATHAM & WATKINS
425 LEXINGTON AVENUE 150 EL CAMINO DRIVE, SUITE 885 THIRD AVENUE, SUITE 1000
NEW YORK, NEW YORK 10017 204 NEW YORK, NEW YORK 10022
(212) 455-2000 BEVERLY HILLS, CALIFORNIA (212) 906-1200
90212
(310) 281-4900
</TABLE>

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF THE SECURITIES TO THE
PUBLIC:
As soon as practicable after this Registration Statement becomes effective.

If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [_]

If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act of 1933, check the following
box and list the Securities Act of 1933 registration statement number of the
earlier effective registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act of 1933, please check the following box and list the
Securities Act of 1933 registration statement number of the earlier effective
registration statement for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434
under the Securities Act of 1933, please check the following box. [_]

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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE
REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION,
ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
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EXPLANATORY NOTE

This Registration Statement contains two prospectus cover pages: one to be
used for a prospectus in connection with a United States and Canadian offering
(the "U.S. Prospectus") and one to be used for a prospectus in connection with
a concurrent international offering (the "International Prospectus"). The
International Prospectus will be identical to the U.S. Prospectus except that
it will have a different front cover page and back cover page and a different
section entitled "Underwriting." The front cover page, back cover page, and
"Underwriting" section to be used in the International Prospectus are located
at the end of the U.S. Prospectus and have been labeled "Alternate Page for
International Prospectus."
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++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF +
+ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++

SUBJECT TO COMPLETION, DATED AUGUST 10, 1998

PROSPECTUS
21,000,000 SHARES

[LOGO OF GLOBAL CROSSING LTD. APPEARS HERE]

COMMON STOCK

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Of the 21,000,000 shares of Common Stock, par value $.01 per share, offered
hereby (the "Shares"), 16,800,000 Shares are being offered by the U.S.
Underwriters (as defined herein) in the United States and Canada (the "U.S.
Offering") and 4,200,000 Shares are being offered by the International
Underwriters (as defined herein) in a concurrent international offering outside
the United States and Canada (the "International Offering" and, collectively
with the U.S. Offering, the "Offerings"), subject to transfers between the U.S.
Underwriters and the International Underwriters (collectively, the
"Underwriters"). The Price to Public and Underwriting Discount per Share will
be identical for the U.S. Offering and the International Offering. See
"Underwriting." The closings of the U.S. Offering and the International
Offering are conditioned upon each other.

Of the 21,000,000 Shares offered hereby, 18,950,000 Shares are being sold by
Global Crossing Ltd., a Bermuda company ("GCL" or the "Issuer" and, together
with its subsidiaries, "Global Crossing" or the "Company"), and 2,050,000
Shares are being sold by certain selling shareholders (the "Selling
Shareholders"). See "Principal and Selling Shareholders." The Company will not
receive any proceeds from the sale of the Shares by the Selling Shareholders.

Prior to the Offerings, there has been no public market for the Common Stock
of the Issuer. It is currently estimated that the Price to Public will be
between $17 and $19 per share. See "Underwriting" for information relating to
the factors considered in determining the Price to Public. Upon completion of
the Offerings, purchasers of Shares in the Offerings will own approximately
10.41% (11.79% if the Underwriters' over-allotment options are exercised in
full) and existing shareholders will own 89.59% (88.21% if the over-allotment
options are exercised in full) of the outstanding Common Stock. See "Principal
and Selling Shareholders."

Application has been made to have the Common Stock listed on the Nasdaq Stock
Market's National Market (the "Nasdaq National Market") under the symbol "GBLX"
and listed supplementally on the Bermuda Stock Exchange.

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SEE "RISK FACTORS" BEGINNING ON PAGE 15 FOR A DISCUSSION OF CERTAIN FACTORS
WHICH SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE SHARES OFFERED
HEREBY.

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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.

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<TABLE>
<CAPTION>
UNDERWRITING
PRICE TO DISCOUNTS AND PROCEEDS TO PROCEEDS TO SELLING
PUBLIC COMMISSIONS(1) COMPANY (2) SHAREHOLDERS
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<S> <C> <C> <C> <C>
Per Share $ $ $ $
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Total(3) $ $ $ $
</TABLE>
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(1) The Company and the Selling Shareholders have agreed to indemnify the
Underwriters against certain liabilities under the Securities Act of
1933. See "Underwriting."
(2) Before deducting expenses estimated at $2,400,000 payable by the Company.
(3) The Company has granted to the U.S. Underwriters and the International
Underwriters 30-day options to purchase up to an aggregate of 3,150,000
additional shares of Common Stock at the Price to Public, less
Underwriting Discounts and Commissions, solely to cover over-allotments,
if any. If the Underwriters exercise such options in full, the total
Price to Public, Underwriting Discounts and Commissions and Proceeds to
Company will be $ , $ and $ , respectively.
See "Underwriting."

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The Shares are offered subject to receipt and acceptance by the Underwriters,
to prior sale and to such Underwriters' right to reject any order in whole or
in part and to withdraw, cancel or modify the offer without notice. It is
expected that delivery of the Shares will be made at the offices of Smith
Barney Inc. at 333 West 34th Street, New York, New York 10001 or through the
facilities of The Depository Trust Company (the "Depository") on or about
, 1998.

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Joint Book-Running Managers

SALOMON SMITH BARNEY MERRILL LYNCH & CO.

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CIBC OPPENHEIMER
DEUTSCHE BANK SECURITIES
GOLDMAN, SACHS & CO.
MORGAN STANLEY DEAN WITTER

The date of this Prospectus is , 1998.
<PAGE>

CERTAIN PERSONS PARTICIPATING IN THE OFFERINGS MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN, OR OTHERWISE AFFECT THE PRICE OF THE COMMON STOCK,
INCLUDING OVER-ALLOTMENT, STABILIZING AND SHORT-COVERING TRANSACTIONS IN THE
COMMON STOCK, EFFECTING SYNDICATE COVERING TRANSACTIONS AND THE IMPOSITION OF
A PENALTY BID, DURING AND AFTER THE OFFERINGS. FOR A DESCRIPTION OF THESE
ACTIVITIES, SEE "UNDERWRITING."

THIS PROSPECTUS HAS BEEN FILED WITH THE REGISTRAR OF COMPANIES IN BERMUDA
PURSUANT TO PART III OF THE COMPANIES ACT, 1981 OF BERMUDA AND THE BERMUDA
MONETARY AUTHORITY ("BMA") HAS GIVEN ITS CONSENT TO THE ISSUE AND TRANSFER OF
UP TO 24,150,000 SHARES OF COMMON STOCK. IN ACCEPTING THE PROSPECTUS FOR
FILING, THE REGISTRAR OF COMPANIES ACCEPTS NO RESPONSIBILITY FOR THE FINANCIAL
SOUNDNESS OF ANY PROPOSALS OR FOR THE CORRECTNESS OF ANY STATEMENTS MADE OR
OPINIONS EXPRESSED WITH REGARD TO THEM. APPROVALS OR PERMISSIONS RECEIVED FROM
THE BMA DO NOT CONSTITUTE A GUARANTEE BY THE BMA AS TO THE PERFORMANCE OF THE
COMPANY OR ITS CREDIT WORTHINESS. ACCORDINGLY, IN GIVING SUCH APPROVALS OR
PERMISSIONS, THE BMA SHALL NOT BE LIABLE FOR THE PERFORMANCE OR THE DEFAULT OF
THE COMPANY OR FOR THE CORRECTNESS OF ANY OPINIONS OR STATEMENTS EXPRESSED IN
THIS PROSPECTUS.

THE BERMUDA STOCK EXCHANGE TAKES NO RESPONSIBILITY FOR THE CONTENTS OF THIS
DOCUMENT, MAKES NO REPRESENTATIONS AS TO ITS ACCURACY OR COMPLETENESS AND
EXPRESSLY DISCLAIMS ANY LIABILITY WHATSOEVER FOR ANY LOSS HOWSOEVER ARISING
FROM OR IN RELIANCE UPON ANY PART OF THE CONTENTS OF THIS DOCUMENT.

i
<PAGE>

SERVICE OF PROCESS AND ENFORCEMENT OF LIABILITIES

The Issuer is organized pursuant to the laws of Bermuda. In addition,
certain of the directors and officers of the Issuer reside outside the United
States and a substantial portion of the assets of the Issuer are located
outside the United States. As a result, it may be difficult for investors to
effect service of process within the United States upon such persons or to
realize against them in courts of the United States upon judgments of courts
of the United States predicated upon civil liabilities under the United States
federal securities laws. The Company has been advised by its legal counsel in
Bermuda, Appleby, Spurling & Kempe, that there is doubt as to the enforcement
in Bermuda, in original actions or in actions for enforcement of judgments of
United States courts, of liabilities predicated upon U.S. federal securities
laws, although Bermuda courts will enforce foreign judgments for liquidated
amounts in civil matters subject to certain conditions and exceptions.

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In this Prospectus, references to "dollars" and "$" are to United States
dollars, and the terms "United States" and "U.S." mean the United States of
America, its states, its territories, its possessions and all areas subject to
its jurisdiction.

INFORMATION REGARDING FORWARD-LOOKING STATEMENTS

This Prospectus contains forward-looking statements that include, among
others, statements concerning the Company's plans to effect the design,
construction, and operations of, and sales of capacity on, its planned
telecommunications systems, expectations as to funding its future capital
requirements and other statements of expectations, beliefs, future plans and
strategies, anticipated developments and other matters that are not historical
facts. Management cautions the reader that these forward-looking statements
are subject to risks and uncertainties that could cause actual events or
results to differ materially from those expressed or implied by the
statements. The most important factors that could prevent the Company from
achieving its goals include, but are not limited to, failure by the Company
to: (i) complete its systems within currently estimated time frames and
budgets, (ii) sell capacity on its systems, (iii) make a successful transition
from a system development to an operating company and (iv) effectively compete
in the context of a rapidly evolving market characterized by intense price
competition and unpredictable levels of demand for telecommunication capacity.
See "Risk Factors."

ii
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SUMMARY

The following summary should be read in conjunction with, and is qualified in
its entirety by, the more detailed information and financial information
appearing elsewhere in this Prospectus. For a discussion of certain factors to
be considered in connection with an investment in the Shares, see "Risk
Factors." Unless the context otherwise requires, the term "Company" means GCL
and all of its direct and indirect subsidiaries. A glossary of relevant terms
used in the telecommunications business is included at the end of this
Prospectus.

THE COMPANY

Global Crossing is the world's first independent provider of global Internet
and long distance telecommunications facilities and services utilizing a
network of undersea digital fiber optic cable systems and associated
terrestrial backhaul capacity. As such, the Company believes it is the first to
offer "one-stop shopping" for its customers to multiple destinations worldwide.
The Company operates as a "carriers' carrier", providing tiered pricing and
segmented products to licensed providers of international Internet and
telecommunications services. Capacity on the Company's network is offered to
all customers on an open, equal access basis. The first four cable systems
under development by the Company, together with associated terrestrial backhaul
capacity, will form a state-of-the-art interconnected worldwide high capacity
undersea fiber optic network (the "Global Crossing Network"): Atlantic Crossing
("AC-1"), a system connecting the United States and Europe; Pacific Crossing
("PC-1"), a system connecting the United States and Asia; Mid-Atlantic Crossing
("MAC"), a system connecting the eastern United States and the Caribbean; and
Pan American Crossing ("PAC"), a system connecting the western United States,
Central America and the Caribbean. The undersea component of the Global
Crossing Network initially totals 51,300 km. The Company is in the process of
developing several new cable systems and evaluating other business development
opportunities which will complement the Global Crossing Network.

Global Crossing's business is designed to meet the varying needs of the
global carrier market. The Company offers customers the ability to purchase
capacity on demand, thereby (i) eliminating their need to commit the
substantial capital which would otherwise be required to build undersea cable
capacity and (ii) decreasing the risks associated with forecasting their future
capacity requirements. Compared with traditional undersea cable systems, the
Company offers more comprehensive, flexible and low-cost purchasing
alternatives designed to meet current market requirements of international
carriers, including direct international city-to-city connectivity, the ability
to purchase capacity annually and discounts based upon aggregate volume
purchased on the Global Crossing Network.

The Global Crossing Network is being engineered and constructed to allow
multiple upgrades to its initial circuit capacity at a fraction of the original
network cost. The Company is focusing on expanding the products and services it
offers to customers in order to increase revenues and profits. The Company
anticipates that its future revenues, beyond the sale of the initial capacity
of its first four cable systems, will derive from several sources, including
system upgrades, additional undersea cable projects, the development or
purchase of additional terrestrial fiber capacity and the introduction of new
services.

1
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RISK FACTORS

PROSPECTIVE INVESTORS SHOULD CONSIDER CAREFULLY CERTAIN FACTORS RELATING TO
AN INVESTMENT IN THE SHARES. These risk factors include (i) the Company's
limited operating history, (ii) its leverage and substantial future capital
requirements, (iii) risks relating to the completion of the Company's planned
cable systems and the achievement of its sales and marketing objectives and
(iv) the highly competitive nature of the international telecommunications
industry. See "Risk Factors."

MARKET OPPORTUNITY

The Global Crossing Network is being developed to capitalize on certain
trends in the international telecommunications industry:

Impact of Global Deregulation. The continued deregulation of the global
telecommunications industry has significantly increased in the number of
competitors, including traditional carriers, wireless operators, ISPs and new
local exchange service providers, due in large part to: (i) privatization
activity globally and (ii) the ability of new entrants to effectively compete.
This change in the global competitive landscape is generating significant
demand for broadband telecommunications capacity as carriers seek to secure
sufficient capacity for their expansion plans.

Shortage of Available Capacity. The Company believes that while there has
been a significant increase in the demand for global telecommunications
capacity, there has not been a corresponding growth in the number of new
international transport facilities. Furthermore, the construction of competing
undersea cable systems will be limited in the near future due to barriers to
entry, including (i) extensive construction lead times, (ii) the limited number
of major undersea cable supply and construction companies, (iii) the limited
number of qualified and experienced undersea cable personnel and (iv)
significant capital requirements.

Increasing Challenges for Consortia Systems. Historically, the planning and
ownership of undersea cable systems was conducted through large consortia
typically led by the monopoly telecommunications providers. Global Crossing
believes that the consortium approach is becoming less effective as (i)
carriers increasingly view capital investments in capacity to be a suboptimal
utilization of resources, (ii) international deregulation leads to direct
competition among consortia members, (iii) new entrant competition makes
capacity requirements increasingly difficult to predict and (iv) rapid
technological change creates difficulties in the ability of carriers to
accurately forecast telecommunications traffic growth.

Acceptance of Privately Sponsored Cable Systems. Carriers have responded
positively to the Company's ability to offer (i) capacity as and when needed
without incurring significant initial capital investments, (ii) a wide range of
purchasing options, (iii) state-of-the-art system quality combined with cost-
effective high quality operations, administration and maintenance support and
(iv) the absence of direct competition with its customers.

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BUSINESS STRATEGY

Global Crossing's mission is to create the world's first independent global
fiber optic network designed to offer the highest quality city-to-city
communications connectivity among approximately 50 of the largest metropolitan
markets worldwide. The principal elements of the Company's business strategy
include:

Create a Worldwide Network. Upon completion, the currently announced undersea
segments of the Global Crossing Network will directly connect Asia, North
America, Europe, Central America and the Caribbean through the major
transoceanic routes utilizing state-of-the-art technology. To increase the
attractiveness of the Global Crossing Network, the Company is making selective
wholesale acquisitions of terrestrial fiber capacity, thereby providing
customers low cost global city-to-city connectivity. The Company also intends
to actively pursue additional opportunities for the expansion of the Global
Crossing Network, including complementary businesses and facilities.

Maintain Position as a Leading Wholesale Service Provider. Global Crossing is
the world's first independent provider of global Internet and long distance
telecommunications facilities and services utilizing a network of undersea
digital fiber optic cable systems and associated terrestrial backhaul capacity.
The Company's products are segmented to meet the varying needs of the global
carrier market, with shore-to-shore capacity, city-to-city capacity and network
purchasing options. Global Crossing also offers a combination of volume-based
purchasing flexibility.

Utilize State-of-the-Art Technology. The Global Crossing Network is being
engineered and constructed using the latest undersea cable technology which the
Company believes will (i) provide a cost advantage over existing alternatives,
(ii) make it more reliable than competing systems, (iii) allow the Company to
offer substantially more capacity than existing cable systems and (iv) enable
the capacity of each of the Company's cable systems to be upgraded rapidly at a
fraction of the initial system cost.

Maintain Position as Low-Cost Provider. Global Crossing believes that its
low-cost position results from a combination of (i) low sales and marketing and
general and administrative costs, (ii) ownership of state-of-the-art
facilities, resulting in lower operating and maintenance costs, and (iii)
leveraging the Company's strong position in the undersea fiber optic facilities
market to obtain low-cost terrestrial connectivity between cable landing
stations and major telecommunications sites.

Provide "One-Stop" Sales and Service. Global Crossing plans to offer one-stop
sales and service to customers worldwide. The Company's 18 marketing
professionals located in its headquarters in Bermuda and in major cities
throughout the world facilitate the sales of its telecommunications capacity
and increase market awareness and name recognition. In addition, Global
Crossing is developing a centralized operations, administration and maintenance
support system to serve the entire Global Crossing Network. Through such
integrated customer support, the Company will enable customers to have a single
point of contact regarding capacity sales and service on the Global Crossing
Network.

Leverage Extensive Management Experience. Global Crossing has assembled and
will continue to build a strong management team comprised of executives with
extensive operating experience in the telecommunications industry and the
undersea cable sector. Prior to joining the Company, Jack Scanlon, the
Company's Chief Executive Officer with over 30 years experience in the
telecommunications industry, including 24 years with AT&T and Bell
Laboratories, was President and General Manager of the Cellular Networks and
Space Sector of Motorola, Inc. In addition, William Carter, the Company's
senior executive in charge of system development with over 30 years experience
at AT&T, was formerly the President and Chief Executive Officer of AT&T
Submarine Systems, Inc. ("SSI"), overseeing the research and development,
engineering, implementation and integration of AT&T's international cable and
satellite facilities. Dan J. Cohrs, the Company's Chief Financial Officer, was
formerly Vice President and Chief Planning and Development Officer at GTE
Corporation ("GTE"), where he was responsible for corporate development
activities, including mergers and acquisitions and strategic transactions, as
well as strategic planning and competitive analysis. See "Management."

3
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THE GLOBAL CROSSING NETWORK

As part of Global Crossing's mission to create an integrated global, high
capacity undersea fiber optic cable network, the initial Global Crossing
Network is being engineered and constructed to connect the two most heavily
trafficked international corridors in the world via AC-1 (United States to
Europe) and PC-1 (United States to Asia). Global Crossing plans to interconnect
these systems with two north-south systems (MAC and PAC), directly connecting
Bermuda, the Caribbean, Central America and, through unaffiliated cable
systems, South America. Of the four undersea fiber optic cable systems
currently being constructed by Global Crossing, AC-1, MAC and PAC are wholly-
owned projects, while PC-1 is being constructed through a joint venture with
one or more partners, including Marubeni Corp. of Japan ("Marubeni"). Global
Crossing will initially have approximately a 58% interest in PC-1 and, in
conjunction with Marubeni, will manage its development, sales and operation.

ATLANTIC CROSSING

The Company commenced operations in March 1997, when it contracted for the
construction of AC-1, a 14,000 km digital fiber optic cable system that will
link the United States, the United Kingdom, The Netherlands and Germany. AC-1
commenced service on its United States-United Kingdom segment on May 26, 1998
and the full system, encompassing a self-healing ring, is scheduled for
completion by February 1999.

AC-1 is equipped with state-of-the-art DWDM and the full ring will initially
offer 40 Gbps of service capacity, significantly increasing the existing fiber
optic cable capacity on this transatlantic route. Capacity on AC-1 is
upgradeable to a minimum of 80 Gbps using DWDM technology. The aggregate costs
of AC-1, which are estimated to be approximately $750 million (excluding
potential future upgrades), have been fully financed prior to the Offerings.

The Company has successfully marketed capacity on AC-1 to licensed
telecommunications providers, including PTTs, Internet service providers and
established and emerging telecommunications companies. As of June 30, 1998, the
Company had entered into capacity purchase agreements and other binding
commitments (collectively, "CPAs") with customers providing for payments to the
Company of $556 million. The Company's AC-1 customers now total more than 22
international telecommunications carriers, including Deutsche Telekom, GTE,
Qwest, Teleglobe, Swisscom, PTT Telecom BV, Telia AB and a number of emerging
telecommunications companies. The timing of payments by purchasers under CPAs
generally depends on when service commences on the segment or segments of AC-1
on which capacity is acquired. All of the foregoing payment amounts assume the
completion of the related segment prior to specified dates falling after the
scheduled ready-for-service ("RFS") date for that segment.

Based upon its current expectations regarding sales of capacity on AC-1, the
Company believes that it will develop and eventually construct Atlantic
Crossing-2 ("AC-2"), an additional four fiber pair cable connecting the United
States to Europe. When combined with AC-1, AC-2 would double the capacity that
Global Crossing would be able to offer customers on the transatlantic route.

PACIFIC CROSSING

PC-1, the Company's first undersea fiber optic cable in the Pacific region,
is being developed as a 21,000 km four fiber pair self-healing ring that, upon
completion, will connect California, Washington and two landing sites in Japan,
providing connectivity to other points in Asia through interconnection with
third party cable systems. PC-1 is designed to operate initially at 80 Gbps of
service capacity and to be upgradeable to a minimum of 160 Gbps, using DWDM
technology.

In April 1998, the Company executed a contract with TSSL for the construction
of PC-1 (the "PC-1 Contract"), which provides for a system completion date of
Summer 2000 at an aggregate cost of approximately

4
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$1.2 billion (excluding potential future upgrades). Equity investments in PC-1
by Global Crossing and its partners are currently estimated at $400 million (of
which $231 million will be provided by the Company), with the remaining $800
million financed through incurrence of non-recourse indebtedness at the PC-1
level. The credit agreement for the financing of such indebtedness was executed
on July 30, 1998. On July 6, 1998, the Company executed a memorandum of
understanding with DDI Corporation, the second largest telephone company in
Japan, to purchase capacity on PC-1 which, if successfully converted to a CPA,
would represent its first sale to an Asian customer of capacity on this system.

MID-ATLANTIC CROSSING

MAC is being developed as a 9,300 km two fiber pair self-healing ring that,
upon completion, will connect New York, Bermuda, the Caribbean and Florida.
Global Crossing intends that MAC will be connected to AC-1 via its cable
station in Brookhaven, New York, providing connectivity between Europe, the
eastern United States, Bermuda, and the Caribbean and, through interconnection
with third party cable systems, South America. MAC is being designed to operate
initially at 20 Gbps of service capacity and to be upgradeable to a minimum of
40 Gbps using DWDM technology.

In June 1998, the Company executed a contract with Alcatel Submarine Networks
("Alcatel") for the construction of MAC, which provides for a system completion
date of December 1999 at an aggregate cost of approximately $350 million
(excluding potential future upgrades and amounts capitalized with respect to
the PCG Warrants (as defined herein)), of which approximately $110 million will
consist of equity contributions by the Company and $240 million is to be
financed through non-recourse indebtedness at the MAC level. The contractual
commitment for the financing of such indebtedness was obtained on June 26,
1998.

PAN AMERICAN CROSSING

PAC is being developed as a 7,000 km two fiber pair cable that, upon
completion, will connect California, Mexico, Panama and the Caribbean. PAC is
being designed to interconnect with PC-1 and with MAC. It is anticipated that
PAC will transverse Panama via an existing terrestrial right-of-way. PAC is
being designed to operate initially at 20 Gbps of service capacity and to be
upgradeable to a minimum of 40 Gbps using DWDM technology.

In July 1998, the Company executed a contract with TSSL for the construction
of this system, which provides for a completion date of February 2000 at a cost
of approximately $475 million (excluding potential future upgrades and amounts
capitalized with respect to the PCG Warrants). Approximately $165 million will
be financed through equity contributions from the Company and $310 million is
to be financed through non-recourse indebtedness at the PAC level. The
contractual commitment for the financing of such indebtedness was obtained on
July 22, 1998.

TERRESTRIAL BACKHAUL SERVICES

In addition to the undersea segments of the Global Crossing Network, the
Company has made and expects to continue to make acquisitions of terrestrial
fiber capacity which complement its core undersea cable business and which
address customer demands for global city-to-city connectivity. The Company has
already entered into contractual arrangements to provide terrestrial backhaul
service between its landing stations in the United States and the United
Kingdom and New York City and London, respectively, as well as other
arrangements to provide backhaul service in Germany and The Netherlands. In
addition, the Company recently entered into an agreement with Qwest
Communications International Inc. ("Qwest") whereby Global Crossing will
receive access to over 25 U.S. metropolitan communications markets on Qwest's
terrestrial network. Through Global Access Limited ("Global Access"), a
Japanese telecommunications carrier owned by Marubeni, the Company will offer
backhaul services to PC-1 customers from the Company's Japanese landing
stations directly to Tokyo at prices substantially lower than existing
alternatives. The Company is also currently negotiating with Marubeni to
acquire a minority investment in Global Access, which is constructing a
domestic terrestrial fiber optic cable network connecting the PC-1 cable
station with Tokyo, Nagoya and Osaka.

5
<PAGE>

ADDITIONAL NETWORK EXPANSION OPPORTUNITIES

The Company is in the process of developing several new cable systems and
evaluating other business development opportunities which will complement the
Global Crossing Network. There can be no assurance that the Company will
ultimately elect to proceed with such opportunities or, if it elects to do so,
that such opportunities will help the Company achieve and sustain operating
profitability.

ORGANIZATION OF THE COMPANY
<TABLE>
<CAPTION>
Global Crossing Ltd.

Global Crossing Holdings Ltd.
<S> <C> <C> <C> <C>
Global Telesystems Pacific Crossing Mid-Atlantic Crossing Pan America Crossing Development
Holdings Ltd. Holdings Ltd. Holdings Ltd. Holdings Ltd. and Marketing
Activities

AC-1 PC-1 MAC PAC
(Wholly-Owned) (Joint Venture*) (Wholly Owned) (Wholly Owned)
</TABLE>

* Approximately 58% interest. All other subsidiaries of the Issuer are wholly-
owned.

The Company's executive offices are located at Wessex House, 45 Reid Street,
Hamilton, Bermuda and its telephone number is (441) 296-8600. The Company's
home page on the Internet is http://www.globalcrossing.bm.

6
<PAGE>

FINANCING PLAN

Of the $750 million in total estimated costs for AC-1 (excluding potential
future upgrades), approximately $660 million has been incurred as of June 30,
1998. All future costs with respect to AC-1 are fully financed with the
remaining availability under the existing $482 million credit facility (the
"AC-1 Credit Facility") of Atlantic Crossing Ltd. ("ACL").

Global Crossing estimates that the total cost of developing and deploying its
other fiber optic cable systems currently under active development is
approximately $2,025 million (excluding potential future upgrades and the
amounts capitalized with respect to the PCG Warrants), which is comprised of
$1,200 million for PC-1, $350 million for MAC and $475 million for PAC. Equity
investments in PC-1 by Global Crossing and its partners will be $400 million
(of which $231 million will be provided by the Company), with the remaining
$800 million of estimated costs to be financed initially through the incurrence
of non-recourse indebtedness at the PC-1 level. With respect to MAC and PAC,
based upon executed debt financing commitments, the Company currently
anticipates making investments of approximately $110 million and $165 million,
respectively, with the remaining $240 million and $310 million, respectively,
of estimated costs expected to be financed through the incurrence of non-
recourse indebtedness at the system level. With respect to AC-2 and other
network expansion opportunities currently under evaluation by the Company, it
is anticipated that additional financing will be required. Global Crossing has
historically been able to secure non-recourse indebtedness for its systems for
at least 65% of system costs and intends to finance its future expansion
opportunities in a similar fashion. The actual amounts of the Company's future
capital requirements will depend on certain factors including the cost of
developing its cable systems, the speed of developing its systems and the
pricing of the Company's services. There can be no assurance that financing for
such systems will be available to the Company or, if available, that such
financing can be obtained on a timely basis and on acceptable terms. See "Risk
Factors--Substantial Future Capital Requirements" and "Management's Discussion
and Analysis of Financial Condition and Results of Operations--Liquidity and
Capital Resources."

On May 18, 1998, Global Crossing Holdings Ltd. ("GCH"), the direct wholly-
owned subsidiary of GCL, consummated an $800 million private offering (the
"Note Offering") of 9 5/8% Senior Notes Due 2008 (the "GCH Senior Notes"). GCH
utilized approximately $295 million of the net proceeds of the Note Offering to
refinance certain obligations incurred as part of the initial financing of AC-
1. The balance will be utilized to make equity investments in certain of the
Company's systems and for general corporate purposes.

7
<PAGE>

THE OFFERINGS

Common Stock offered by the Company:

U.S. Offering ............
15,160,000 shares

International Offering.... 3,790,000 shares

Total (1)................. 18,950,000 shares

Common Stock offered by the Selling Shareholders:

U.S. Offering ............
1,640,000 shares

International Offering.... 410,000 shares

Total .................... 2,050,000 shares

Common Stock to be
outstanding after the 201,688,519 shares
Offerings (1)(2) ..........

Net Proceeds to the
Company..................... Approximately $318.2 million (approximately
$371.5 million if the Underwriters' over-
allotment options are exercised in full).

Nasdaq National Market
symbol...................... GBLX

Use of Proceeds............. The Company intends to use the net proceeds of
the Offerings as follows: (i) approximately $220
million to make investments in the Global
Crossing Network, (ii) up to $50 million to make
minority investments in telecommunications
companies and Internet service providers, (iii)
up to $25 million to fund the Company's proposed
investment in Global Access Limited and (iv) the
balance for general corporate purposes. The
Company will receive no proceeds from the sale of
Shares by the Selling Shareholders. See "Use of
Proceeds."
- --------
(1) Does not include up to an aggregate of 3,150,000 shares of Common Stock
subject to over-allotment options granted to the U.S. Underwriters and
International Underwriters (see "Underwriting").

(2) After giving effect to the Offerings and the transactions associated
therewith, including the exchange by substantially all of the shareholders
of Global Crossing Ltd., LDC, a Cayman Island limited duration company
("Old GCL"), of equity interests in Old GCL for Common Stock at a rate of
1.5 shares of Common Stock per share of common stock of Old GCL (the "Old
GCL Exchange"), the PCG Warrant Conversion (as defined herein), the
Advisory Services Agreement Termination (as defined herein) and the TDC
Exchange (as defined herein). See "Certain Transactions" and "Description
of Capital Stock." Based on shares outstanding as of August 10, 1998. Does
not include: (i) 16,607,865 shares of Common Stock reserved for issuance
under the Stock Incentive Plan (see "Management--Stock Incentive Plan");
(ii) 2,696,074 shares of Common Stock reserved for issuance under the GCL
Warrants (see "Description of Capital Stock--Old GCL Exchange"); and
(iii) 6,597,227 shares of Common Stock reserved for issuance under the New
PCG Warrants (see "Certain Transactions"). Unless otherwise disclosed
herein, share amounts indicated have been adjusted to give effect to the
Old GCL Exchange.

8
<PAGE>

SUMMARY CONSOLIDATED FINANCIAL AND OPERATING DATA

The summary data presented below under the captions "Statement of Operations
Data" and "Balance Sheet Data" as of December 31, 1997 and for the period from
March 19, 1997 (date of inception) through December 31, 1997 are derived from
the Consolidated Financial Statements of the Company included herein, which
financial statements are prepared in accordance with United States Generally
Accepted Accounting Principles ("U.S. GAAP") and have been audited by Arthur
Andersen & Co., independent public accountants, as indicated in their report
thereon included elsewhere in this Prospectus. The financial data as of and for
the three and six months ended June 30, 1998 are derived from the Company's
unaudited interim financial statements. The unaudited interim financial
statements include all adjustments, consisting of normal recurring adjustments,
that management considers necessary for fair presentation of the financial
position as of June 30, 1998 and results of operations for the interim periods
presented. Results of operations for the interim periods are not necessarily
indicative of the results of operations for a full year. The operating data
presented below are derived from the Company's records. The financial data
presented herein and elsewhere in this Prospectus is not necessarily indicative
of the financial position or results of operations of the Company in the
future. The information set forth below should be read in conjunction with the
discussion under "Management's Discussion and Analysis of Financial Condition
and Results of Operations," "Business" and the Consolidated Financial
Statements and the notes thereto appearing elsewhere in this Prospectus.
<TABLE>
<CAPTION>
FOR THE PERIOD
MARCH 19, 1997
THREE MONTHS (DATE OF INCEPTION)
ENDED SIX MONTHS ENDED TO DECEMBER 31,
JUNE 30, 1998 JUNE 30, 1998 1997
-------------- ---------------- -------------------
<S> <C> <C> <C>
STATEMENT OF OPERATIONS
DATA:
Sales and Operating
Revenues................. $ 101,255,867 $ 101,255,867 $ --
-------------- -------------- ------------
Expenses:
Cost of Capacity Sold.... 41,200,229 41,200,229 --
Operating,
Administrative and
Other (1)............... 183,705,088 187,748,840 3,101,708
-------------- -------------- ------------
224,905,317 228,949,069 3,101,708
-------------- -------------- ------------
Operating Loss............ (123,649,450) (127,693,202) (3,101,708)
Other Income (Expense)
Interest Income.......... 4,327,602 4,673,436 2,941,352
Interest Expense......... (7,403,037) (7,426,271) --
Provision for Income Taxes
(2)...................... (9,000,000) (9,000,000) --
Extraordinary Loss on
Retirement of GTH Senior
Notes (3)................ (19,709,471) (19,709,471) --
-------------- -------------- ------------
Net Loss.................. (155,434,356) (159,155,508) (160,356)
GTH Preference Share Non-
Cash Dividends (4)....... (3,898,203) (8,306,433) (12,689,923)
Redemption of GTH
Preference Shares (5).... (34,140,067) (34,140,067) --
-------------- -------------- ------------
Net Loss Applicable to
Common Shareholders...... $ (193,472,626) $ (201,602,008) $(12,850,279)
============== ============== ============
Basic and Diluted Net Loss
per Common Share before $ (1.05) $ (1.10) $ (0.08)
Extraordinary Item....... ============== ============== ============
Net Loss per Common Share $ (0.12) $ (0.12) $ --
on Extraordinary Item.... ============== ============== ============
Basic and Diluted Net Loss $ (1.17) $ (1.22) $ (0.08)
per Common Share......... ============== ============== ============
Shares used in Computing
Basic and Diluted Net 166,194,035 166,062,697 165,441,150
Loss per Common Share.... ============== ============== ============
<CAPTION>
AS OF
AS OF JUNE 30, 1998 DECEMBER 31, 1997
-------------------------------- -------------------
AS
HISTORICAL ADJUSTED(6) HISTORICAL
-------------- ---------------- -------------------
<S> <C> <C> <C>
BALANCE SHEET DATA:
Cash and Restricted Cash
(7)...................... $ 541,610,392 $ 859,844,392 $ 26,727,880
Accounts Receivable, Net
of Allowance for Doubtful
Accounts................. 232,638,302 232,638,302 --
Construction in Progress
and Capacity Available
for Sale (8)............. 779,646,579 797,564,960 518,518,509
Investment in Pacific
Crossing Ltd. (9)........ 126,456,345 152,519,445 --
Deferred Finance and
Organizational Costs, Net
of Accumulated
Amortization............. 44,338,405 44,338,405 25,934,021
Other Assets.............. 30,326,686 30,326,686 1,015,958
-------------- -------------- ------------
Total Assets.............. $1,755,016,709 $2,117,232,190 $572,196,368
============== ============== ============
Long Term Debt and Other
Obligations.............. $1,207,702,986 $1,207,702,986 $315,334,000
GTH Preference Shares..... -- -- 90,643,919
Shareholders' Equity:
Common Stock............ 110 2,016,885 110
Treasury Stock.......... -- (198,255,724) --
Other Shareholders'
Equity................. 397,095,005 955,549,435 74,280,922
Accumulated Deficit..... (159,315,864) (159,315,864) (160,356)
-------------- -------------- ------------
Total Shareholders'
Equity................... 237,779,251 599,994,732 74,120,676
-------------- -------------- ------------
Total Capitalization...... $1,445,482,237 $1,807,697,718 $480,098,595
============== ============== ============
</TABLE>

9
<PAGE>

<TABLE>
<CAPTION>
AS OF
JUNE 30, 1998
--------------
<S> <C>
OPERATING DATA:
Executed CPAs............................................... $556 million
<CAPTION>
ESTIMATED(10)
--------------
<S> <C>
Route Kilometers............................................ 51,300
Fiber Kilometers............................................ 345,200
Estimated System Costs (excluding potential future upgrades
and amounts capitalized with respect to the PCG Warrants)
AC-1 ..................................................... $750 million
Other Systems Under Development........................... $2,025 million
Landing Stations............................................ 14
</TABLE>
- -------

(1) Includes a charge for the Advisory Services Agreement Termination on June
30, 1998. See "Certain Transactions." The Company acquired the rights of
those entitled to fees payable under the Advisory Services Agreements in
consideration for the issuance of Common Stock in the Company having an
aggregate value of $135 million and the cancellation of approximately $2.7
million owed to the Company under a related advance agreement. As a result
of this transaction, the Company has recorded a non-recurring charge in
the approximate amount of $137.7 million. Also, during each of the three
and six months ended June 30, 1998, the Company recognized $21.1 million
from a total of $67.1 million of stock-related expense relating to stock
options issued during such period. The remaining $46.0 million will be
recognized as follows: $4.8 million in each of the third and fourth
quarters of 1998, $19.2 million in 1999, $13.5 million in 2000 and $3.7
million in 2001.

(2) Reflects income taxes on profits earned during the three months ended June
30, 1998 attributable to both United States and other foreign
jurisdictions. A significant portion of the Company's operating losses
have been incurred in non-taxable jurisdictions and therefore these
operating losses cannot be applied to offset future taxable earnings of
the Company.

(3) On May 18, 1998, a portion of the proceeds from the issuance of the GCH
Senior Notes was used to repurchase the 12% Senior Notes Due 2004 ("GTH
Senior Notes") of Global Telesystems Holdings Ltd., an indirect subsidiary
of the Company ("GTH"). The Company recognized an extraordinary loss of
$19.7 million on this repurchase, comprising a repurchase premium of
approximately $9.8 million and a write-off of approximately $9.9 million
of unamortized deferred financing costs.

(4) The holders of the 14% senior increasing rate redeemable exchangeable
preference shares of GTH (the "GTH Preference Shares") were entitled to
receive cumulative, compounding dividends at an initial annual rate of
14%. Preference share dividends include cumulative 14% dividends and
amortization of the discount and issuance costs. Effective June 17, 1998,
the Company used proceeds from the GCH Senior Notes to redeem all
outstanding GTH Preference Shares. All dividends prior to the redemption
had been paid through the issuance of additional preference shares and
charged against additional paid-in capital.

(5) As a result of the redemption of the GTH Preference Shares, the Company
incurred a one time $34.1 million charge against Additional Paid-in
Capital. The charge was comprised of: (i) a $15.9 million charge for the
redemption premium and (ii) a write-off of $18.2 million of unamortized
discount and unamortized deferred financing costs.

(6) See the pro forma financial information and the notes thereto on pages 11-
14 for a full description of the adjustments.

(7) The majority of Cash and Restricted Cash is comprised of proceeds from the
issuance of the GCH Senior Notes and funds which have been reserved for
the purpose of funding future interest payable on the GCH Senior Notes.

(8) Construction in Progress and Capacity Available for Sale includes direct
and indirect expenditures for construction of AC-1 and other systems and
is stated at cost. Includes costs incurred under (i) the AC-1 construction
contract; (ii) advisory, consulting and legal fees; (iii) interest
(including amortization of debt issuance costs incurred during the
construction phase); and (iv) other costs necessary for developing AC-1.
This amount also includes backhaul capacity purchases. Additionally, the
Company granted the PCG Warrants to Pacific Capital Group, Inc. ("PCG"), a
shareholder, for the PC-1, MAC and PAC systems and related rights. The
$213.3 million estimated value of the Common Stock to be issued under the
PCG Warrants has been allocated to Construction in Progress in the amount
of $86.8 million and as Investment in Pacific Crossing Ltd. in the amount
of $126.5 million.

(9) Includes $126.5 million as of June 30, 1998, as described above,
representing the estimated value of the PCG Warrants applicable to Pacific
Crossing Ltd.

(10) Assumes full completion of AC-1, PC-1, MAC and PAC based upon current
Company estimates, including anticipated financing costs. See "Risk
Factors--Risks Related to Completing the Company's Cable Systems" and
"Risk of Error in Forward-Looking Statements."

10
<PAGE>

PRO FORMA FINANCIAL INFORMATION

The impact of the Offerings, the PCG Warrant Conversion, the Advisory
Services Agreement Termination, the TDC Exchange and the Old GCL Exchange have
all been reflected in the pro forma balance sheet as of June 30, 1998. The pro
forma statement of operations data give effect to recurring items only.
Accordingly, the one time charge resulting from the redemption of the GTH
Preference Shares, the one time extraordinary loss resulting from the
repurchase of the GTH Senior Notes and any impact from the Advisory Services
Agreement (including the Termination) have not been reflected in the pro forma
statement of operations data. These transactions are described in the footnotes
to the pro forma data. The "As Adjusted For the Six Months Ended June 30, 1998"
column gives effect to the pro forma adjustments for the period from January 1,
1998 to June 30, 1998 as if all of the foregoing transactions had occurred on
January 1, 1998. The "As Adjusted For the Period March 19, 1997 (Date of
Inception) to December 31, 1997" column gives effect to the pro forma
adjustments for the period from March 19, 1997 (Date of Inception) to December
31, 1997 as if such transactions had occurred on March 19, 1997. The "As
Adjusted For the Period March 19, 1997 (Date of Inception) to June 30, 1998"
column gives effect to the pro forma adjustments for the period from March 19,
1997 (Date of Inception) to June 30, 1998 as if such transactions had occurred
on March 19, 1997.

<TABLE>
<CAPTION>
PRO FORMA BALANCE SHEET DATA:
ADJUSTED
ADVISORY AS OF
PCG SERVICES OLD JUNE 30, 1998
HISTORICAL AS OF WARRANT AGREEMENT TDC GCL PRIOR TO
JUNE 30, 1998 CONVERSION(1) TERMINATION(2) EXCHANGE(3) EXCHANGE(4) OFFERINGS OFFERINGS(5)
---------------- ------------- -------------- ------------ ----------- -------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Cash and restricted
cash.............. $ 541,610,392 $ -- $ -- $ -- $ -- $ 541,610,392 $318,234,000
Backhaul capacity
available for
sale.............. 54,738,560 -- -- -- -- 54,738,560 --
Other current
assets............ 235,986,912 -- -- -- -- 235,986,912 --
Long term accounts
receivable........ 26,978,076 -- -- -- -- 26,978,076 --
Capacity available
for sale.......... 206,271,310 -- -- -- -- 206,271,310 --
Construction in
progress.......... 518,636,709 17,918,381 -- -- -- 536,555,090 --
Investment in
Pacific Crossing
Ltd............... 126,456,345 26,063,100 -- -- -- 152,519,445 --
Deferred finance
and organizational
costs, net of
accumulated
amortization...... 44,338,405 -- -- -- -- 44,338,405 --
-------------- ----------- ------- ------------ ---------- -------------- ------------
Total Assets....... $1,755,016,709 $43,981,481 $ -- $ -- $ -- $1,798,998,190 $318,234,000
============== =========== ======= ============ ========== ============== ============
Deferred revenue... $ 211,260,127 $ -- $ -- $ -- $ -- $ 211,260,127 $ --
Other current
liabilities....... 98,274,345 -- -- -- -- 98,274,345 --
Long term debt..... 367,048,000 -- -- -- -- 367,048,000 --
Senior notes....... 796,277,203 -- -- -- -- 796,277,203 --
Long term deferred
revenue........... 29,187,836 -- -- -- -- 29,187,836 --
Obligations under
inland service
agreements and
capital leases.... 15,189,947 -- -- -- -- 15,189,947 --
-------------- ----------- ------- ------------ ---------- -------------- ------------
Total Liabilities.. 1,517,237,458 -- -- -- -- 1,517,237,458 --
-------------- ----------- ------- ------------ ---------- -------------- ------------
Commitments(6).....
Shareholders'
Equity:...........
Common Stock(7). 110 118,560 75,000 108,507 1,525,208 1,827,385 189,500
Treasury Stock.. -- -- -- (198,255,724) -- (198,255,724) --
Other
shareholders'
equity......... 397,095,005 43,862,921 (75,000) 198,147,217 (1,525,208) 637,504,935 318,044,500
Accumulated
Deficit........ (159,315,864) -- -- -- -- (159,315,864) --
-------------- ----------- ------- ------------ ---------- -------------- ------------
Total Shareholders'
Equity............ 237,779,251 43,981,481 -- -- -- 281,760,732 318,234,000
-------------- ----------- ------- ------------ ---------- -------------- ------------
Total Liabilities
and Shareholders'
Equity............ $1,755,016,709 $43,981,481 $ -- $ -- $ -- $1,798,998,190 $318,234,000
============== =========== ======= ============ ========== ============== ============
</TABLE>

<TABLE>
<CAPTION>
ADJUSTED AS OF
JUNE 30, 1998
---------------
<S> <C>
Cash and restricted
cash.............. $ 859,844,392
Backhaul capacity
available for
sale.............. 54,738,560
Other current
assets............ 235,986,912
Long term accounts
receivable........ 26,978,076
Capacity available
for sale.......... 206,271,310
Construction in
progress.......... 536,555,090
Investment in
Pacific Crossing
Ltd............... 152,519,445
Deferred finance
and organizational
costs, net of
accumulated
amortization...... 44,338,405
---------------
Total Assets....... $2,117,232,190
===============
Deferred revenue... $ 211,260,127
Other current
liabilities....... 98,274,345
Long term debt..... 367,048,000
Senior notes....... 796,277,203
Long term deferred
revenue........... 29,187,836
Obligations under
inland service
agreements and
capital leases.... 15,189,947
---------------
Total Liabilities.. 1,517,237,458
---------------
Commitments(6).....
Shareholders'
Equity:...........
Common Stock(7). 2,016,885
Treasury Stock.. (198,255,724)
Other
shareholders'
equity......... 955,549,435
Accumulated
Deficit........ (159,315,864)
---------------
Total Shareholders'
Equity............ 599,994,732
---------------
Total Liabilities
and Shareholders'
Equity............ $2,117,232,190
===============
</TABLE>

11
<PAGE>

PRO FORMA STATEMENT OF OPERATIONS DATA:

<TABLE>
<CAPTION>
HISTORICAL AS ADJUSTED HISTORICAL AS ADJUSTED
FOR THE FOR THE FOR THE PERIOD FOR THE PERIOD HISTORICAL
SIX MONTHS SIX MONTHS MARCH 19, 1997 MARCH 19, 1997 FOR THE PERIOD
ENDED ENDED (DATE OF INCEPTION) (DATE OF INCEPTION) MARCH 19, 1997
JUNE 30, JUNE 30, TO DECEMBER 31, TO DECEMBER 31, (DATE OF INCEPTION)
1998 1998(8) 1997 1997(8) TO JUNE 30, 1998
------------- ------------ ------------------- ------------------- -------------------
<S> <C> <C> <C> <C> <C>
Sales and Operat-
ing Revenues.... $ 101,255,867 $101,255,867 $ -- $ -- $ 101,255,867
Expenses(2)(11).. 228,949,069 89,279,729(11) 3,101,708 3,101,708 232,050,777
------------- ------------ ------------ ------------ -------------
Operating Loss... (127,693,202) 11,976,138 (3,101,708) (3,101,708) (130,794,910)
Other Income (Ex-
pense):
Interest In-
come(9)........ 4,673,436 4,673,436 2,941,352 2,941,352 7,614,788
Interest Ex-
pense(10)...... (7,426,271) (22,692,831) -- (42,030,654) (7,426,271)
Provision for In-
come Taxes...... (9,000,000) (9,000,000) -- -- (9,000,000)
------------- ------------ ------------ ------------ -------------
Net Loss before
Non-Recurring
Charges......... (139,446,037) (15,043,257) (160,356) (42,191,010) (139,606,393)
Preference Share
Dividends....... (8,306,433) -- (12,689,923) -- (20,996,356)
------------- ------------ ------------ ------------ -------------
Net Loss Applica-
ble to Common
Shareholders be-
fore Non-Recur-
ring Charges.... $(147,752,470) $(15,043,257) $(12,850,279) $(42,191,010) $(160,602,749)
============= ============ ============ ============ =============
Basic and Diluted
Net Loss per
Common Share
before Non-
Recurring
Charges......... $ (0.89) $ (0.08) $ (0.08) $ (0.21) $ (0.97)
============= ============ ============ ============ =============
Shares Used in
Computing Basic
and Diluted net
loss per common
share........... 166,062,697 201,577,884 165,441,150 201,113,519 165,642,489
============= ============ ============ ============ =============
<CAPTION>
AS ADJUSTED
FOR THE PERIOD
MARCH 19, 1997
(DATE OF INCEPTION)
TO JUNE 30, 1998(8)
---------------------
<S> <C>
Sales and Operat-
ing Revenues.... $101,255,867
Expenses(2)(11).. 92,381,437 (11)
---------------------
Operating Loss... 8,874,430
Other Income (Ex-
pense):
Interest In-
come(9)........ 7,614,788
Interest Ex-
pense(10)...... (64,723,485)
Provision for In-
come Taxes...... (9,000,000)
---------------------
Net Loss before
Non-Recurring
Charges......... (57,234,267)
Preference Share
Dividends....... --
---------------------
Net Loss Applica-
ble to Common
Shareholders be-
fore Non-Recur-
ring Charges.... $(57,234,267)
=====================
Basic and Diluted
Net Loss per
Common Share
before Non-
Recurring
Charges......... $ (0.29)
=====================
Shares Used in
Computing Basic
and Diluted net
loss per common
share........... 201,297,745
=====================
</TABLE>

(1) Adjustment for the PCG Warrant Conversion which is to occur immediately
preceding the Offerings. Effective January 21, 1998, Old GCL entered into
a warrant agreement with PCG in connection with Old GCL's acquisition from
PCG of the PC-1, MAC and PAC systems (then under development) and related
rights. The warrants issued under the warrant agreement (the "PCG
Warrants") provided PCG with the right to purchase a total of 18,453,185
Class B shares of Old GCL conditioned on an initial public offering of
shares of Old GCL (or any successor of Old GCL) and the achievement of
certain financial performance levels from cable systems other than AC-1.
The Board of Directors of Old GCL has determined that upon completion of
the Offerings these conditions will have been met. In connection with the
Offerings, Old GCL has amended the terms of these warrants to convert them
into Class B shares and new warrants (the "New PCG Warrants") based upon
the anticipated price per share of Common Stock in the Offerings (the "PCG
Warrant Conversion"). The Company has agreed to assume the obligations of
Old GCL under the New PCG Warrants. See "Certain Transactions--
Transactions with Pacific Capital Group ("PCG") and its Affiliates--PCG
Warrants."

The total estimated value of the PCG Warrant Conversion is approximately
$257.3 million, which is comprised of approximately $213.3 million relating
to the conversion of the PCG Warrants into 11,855,949 Class B shares of Old
GCL and approximately $44.0 million relating to the value of the New PCG
Warrants. Since the PCG Warrants were assumed to be converted to Class B
shares of Old GCL on June 30, 1998, the value of $213.3 million was recorded
in the Company's consolidated financial statements. The New PCG Warrants
granted to purchase the remaining Class B shares of Old GCL are reflected in
this adjustment at the estimated value of $6.67 per warrant for a total
value of $44.0 million, which has been allocated to each of the projects for
which the rights were obtained. The portion of the cost related to MAC and
PAC ($8 million and $10 million, respectively) has been capitalized as
construction in progress. The portion of the cost related to PC-1 ($26
million) has been capitalized and included as part of the Company's
investment in Pacific Crossing Ltd. since Pacific Crossing Ltd. is not
consolidated. Also included in this adjustment is a $118,560
reclassification from additional paid-in capital to common stock to reflect
the actual issuance of shares of Common Stock at a $.01 par value under the
PCG Warrant Conversion.

(2) Adjustment for the issuance of Common Stock under the Advisory Services
Agreement Termination, pursuant to which the Advisory Services Agreements
have been terminated. The Advisory Service Agreements had terms of 25
years subject to earlier termination by either party in the event of a
material breach and by PCG Telecom in certain other events. The Advisory
Services Agreements did not contain provisions regarding cancellation fees
or liquidated damages in the event of early termination or breach. The
Advisory Services Agreement Termination was recorded as an increase in
additional paid-in capital and a charge against the statement of
operations in the amount of $137.7 million. Of this amount, $135 million
was determined by applying the 2% advisory fee to projected revenues for
the Company's systems. The present value of the aggregate advisory fees
was then calculated as $155.5 million, using a discount rate of 12% in
respect of AC-1 and 15% in respect of systems other than AC-1. This amount
was subsequently reduced to $135 million. Both the discount rates and the
ultimate valuation were determined as a result of a negotiation process
including a disinterested director of the Company

12
<PAGE>

and the various persons entitled to fees under the Advisory Services
Agreements. The Company has obtained a fairness opinion from an independent
financial advisor in connection with this transaction. The remaining $2.7
million of the $137.7 million charge reflected the cancellation of $2.7
million advanced by the Company in respect of amounts expected to be earned
under the Advisory Services Agreements. See "Certain Transactions--
Transactions with Pacific Capital Group ("PCG") and its Affiliates--
Advisory Services Agreements."

The adjustment recorded in the pro forma balance sheet data reflects a
$75,000 reclassification from additional paid-in capital to common stock to
record the actual issuance of shares of Common Stock under the Advisory
Services Agreement Termination at a $.01 par value per share.

(3) Adjustment for the repurchase of the Company's shares held by
Telecommunications Development Corporation ("TDC") pursuant to the TDC
Exchange. Prior to the Offerings, the Company will acquire 11,000,686
shares of Common Stock in exchange for 10,850,686 newly-issued shares of
Common Stock, a net acquisition by the Company of 150,000 shares of
Common Stock. The Company will record the treasury stock acquired in the
TDC Exchange at its fair value of $198.3 million.

(4) Adjustment for the Old GCL Exchange. See "Description of Capital Stock--
Old GCL Exchange." In connection with the Old GCL Exchange, each holder
of Class D shares of Old GCL will convert such shares into a fraction of
a Class E share of Old GCL, based upon a valuation at the time of such
conversion, together with a warrant to purchase the remaining fraction of
such Class E share. See "Description of Capital Stock--Old GCL Exchange."
This conversion will reduce shares of Old GCL outstanding by 2,696,080.
The holders of Class E shares of Old GCL will then convert such shares
into an equal number of Class B shares. Subsequent to such conversions,
substantially all of the Shareholders of Old GCL will exchange their
equity interests in Old GCL for Common Stock at a rate of 1.5 Shares of
Common Stock per share of common stock of Old GCL. These transactions
collectively result in an adjustment between additional paid-in capital
and common stock of $1,525,208.

The following table shows (i) the shares of Common Stock of Old GCL
outstanding as of June 30, 1998, (ii) the effects on Old GCL shares of the
PCG Warrant Conversion, the Advisory Services Agreement Termination and the
conversions of Class D and Class E shares, (iii) the effect on the Company
of the Old GCL Exchange and (iv) changes in the number of shares of Common
Stock resulting from the TDC Exchange and the Offerings.

<TABLE>
<CAPTION>
OLD GCL
OLD ADVISORY COMMON
GCL AS OF PCG SERVICES CONVERSION CONVERSION STOCK AS OF OLD
COMMON JUNE 30, WARRANT AGREEMENT OF CLASS OF CLASS JUNE 30, GCL TDC
STOCK 1998 CONVERSION TERMINATION D SHARES E SHARES 1998 EXCHANGE EXCHANGE OFFERINGS
- ---------------- ----------- ---------- ----------- ----------- ----------- ----------- ----------- -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Class A......... 31,102,950 -- -- -- -- 31,102,950 -- -- --
Class B......... 51,075,000 11,855,949 7,500,000 -- 30,729,620 101,160,569 -- -- --
Class C......... 50,625,000 -- -- -- -- 50,625,000 -- -- --
Class D......... 33,088,200 -- -- (33,088,200) -- -- -- -- --
Class E......... 337,500 -- -- 30,392,120 (30,729,620) -- -- -- --
Company Common
Stock........... -- -- -- -- -- -- 182,888,519 (150,000) 18,950,000
----------- ---------- --------- ----------- ----------- ----------- ----------- -------- ----------
Total........... 166,228,650 11,855,949 7,500,000 (2,696,080) -- 182,888,519 182,888,519 (150,000) 18,950,000
=========== ========== ========= =========== =========== =========== =========== ======== ==========
<CAPTION>
OLD
GCL COMPANY
COMMON PRO FORMA
STOCK JUNE 30, 1998
- ---------------- -------------
<S> <C>
Class A......... --
Class B......... --
Class C......... --
Class D......... --
Class E......... --
Company Common
Stock........... 201,688,519
-------------
Total........... 201,688,519
=============
</TABLE>

(5) Adjustment to reflect the estimated net proceeds of the Offerings ($318.2
million) after deducting underwriting and offering expenses, assuming a
Price to Public per Share of $18.00, the midpoint of the expected pricing
range of the Offerings.

(6) In June and July, 1998, the Company entered into contracts for the
construction of MAC and PAC, respectively, and at the same time obtained
commitment letters to finance, in part, the construction costs. No effect
has been given to the commitment letters in the pro forma balance sheet.

(7)Pro forma common stock of the Company is as follows:
<TABLE>
<CAPTION>
PRO FORMA
AS OF JUNE 30, 1998
-------------------
<S> <C>
201,688,519 shares issued and outstanding, $.01 par
value per share.................................... $2,016,885
</TABLE>

(8) The "As Adjusted" columns give effect to the May 18, 1998 issuance of the
GCH Senior Notes assuming that the GCH Senior Notes had been issued at
the beginning of the period. The net proceeds from this transaction were
used to repurchase the GTH Senior Notes and to redeem the GTH Preference
Shares.

13
<PAGE>

The "As adjusted" columns do not give effect to non-recurring items such as
the $19.9 million extraordinary loss resulting from the repurchase of the
GTH Senior Notes, the $34.1 million one time charge in connection with the
redemption of the GTH Preference Shares or the $139.7 million charge
related to the Advisory Services Agreement Termination.

(9) The Company has assumed that GCH Senior Notes proceeds not used to redeem
the GTH Preference Shares or repurchase GTH Senior Notes were placed in
non-interest bearing accounts and therefore no interest income has been
reflected in the "As adjusted" columns.

(10) The effect on interest expense resulting from the issuance of the GCH
Senior Notes and the concurrent redemption of the GTH Preference Shares
and repurchase of the GTH Senior Notes has been included in the "As
adjusted" columns. The Company capitalized as construction in progress
only the amount of interest that would be permitted under SFAS 34 had the
GCH Senior Notes been outstanding for the entire period covered on the
actual average qualifying expenditures for such period. The remaining
interest cost attributable to the GCH Senior Notes has been included in
the "As adjusted" columns as interest expense.

The following table presents the calculations used to determine pro forma
interest expense for the periods presented:

<TABLE>
<CAPTION>
FOR THE PERIOD
FOR THE SIX MARCH 19, 1997 FOR THE PERIOD
MONTHS ENDED (DATE OF INCEPTION) MARCH 19, 1997
JUNE 30, TO DECEMBER (DATE OF INCEPTION)
1998 31, 1997 TO JUNE 30, 1998
------------ ------------------- -------------------
<S> <C> <C> <C>
TOTAL PRO FORMA INTEREST
COST INCURRED
Principal outstanding on
GCH Senior Notes........ $800,000,000 $800,000,000 $800,000,000
Interest rate............ 9.625% 9.625% 9.625%
------------ ------------ ------------
Total interest cost in-
curred.................. $ 38,500,000 $ 61,386,111 $ 99,886,111
============ ============ ============
TOTAL PRO FORMA INTEREST
CAPITALIZED
Actual average qualifying
expenditures for the
period(A)............... $569,000,000 $278,300,000 $391,640,293
Effective Capitalization
rate.................... 9.53% 9.59% 9.56%
------------ ------------ ------------
Total interest
capitalizable........... $ 27,112,850 $ 20,832,224 $ 47,945,074
Less: interest capital-
ized on existing long (11,305,681) (1,476,767) (12,782,448)
term debt............... ------------ ------------ ------------
Total interest capital-
ized on GCH Senior 15,807,169 19,355,457 35,162,626
Notes................... ============ ============ ============
TOTAL PRO FORMA INTEREST
EXPENSE................. $ 22,692,831 $ 42,030,654 $ 64,723,485
============ ============ ============
</TABLE>
- -------

(A) Average qualifying expenditures are taken from actual amounts recorded in
the Company's consolidated financial statements.

(11) During each of the three and six months ended June 30, 1998, the Company
recognized $21.1 million from a total of $67.1 million stock-related
expense relating to stock options issued during such period. The
remaining $46.0 million of stock-related expense will be recognized as
follows: $4.8 million in each of the third and fourth quarters of 1998,
$19.2 million in 1999, $13.5 million in 2000 and $3.7 million in 2001.

14
<PAGE>

RISK FACTORS

In addition to the other information contained in this Prospectus, the
following risk factors should be considered carefully by prospective investors
in evaluating the Company and its business prospects before purchasing the
Shares.

LIMITED OPERATING HISTORY

The Company was organized in March 1997 and was in the development stage
through May 26, 1998, when the United States--United Kingdom segment of AC-1
achieved RFS and began to generate revenues. The Company's financial
information relates principally to a period in which the Company was engaged
in construction and development of AC-1 and, until June 1998, had minimal
revenues and operating costs because the costs of construction had been
capitalized. Despite recognizing approximately $101 million in revenues, the
Company has incurred a net loss applicable to common shareholders of
approximately $214.5 million for the period from March 19, 1997 (date of
inception) through June 30, 1998, due primarily to the Advisory Services
Agreement Termination, awards under the Company's Stock Incentive Plan, the
extraordinary loss on the retirement of the GTH Senior Notes and the
redemption of GTH Preference Shares. Global Crossing to date has financed its
net losses, debt service, capital expenditures and other cash needs through
the proceeds of sales of common and preferred equity and the issuance of debt,
including non-recourse indebtedness of ACL. In addition, the Company will
require substantial additional capital in order to carry out its business
plan. See "--Substantial Future Capital Requirements."

The Company's success will substantially depend on sales of capacity upon
its systems. While the Company has been primarily marketing and selling
capacity on AC-1 during its construction period and this activity has resulted
in executed CPAs as of June 30, 1998 to purchase capacity totaling $556
million, including related sales of terrestrial capacity, there can be no
assurance that the Company will continue to be successful in selling capacity
on AC-1 or its other systems under development. There also can be no assurance
that the Company will be able to realize its business plan or that such
realization will help the Company achieve or sustain operating profitability
or sufficient cash flow to service its indebtedness. See "--Sales of Capacity;
Termination of CPAs," "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and "Business."

LEVERAGE

As of June 30, 1998, on a consolidated pro forma basis after giving effect
to the Offerings and the application of the net proceeds therefrom, the
Company would have had $1,517.2 million of total liabilities, including
approximately $1,228.2 million of senior indebtedness, of which $367 million
would have been secured. In addition, the Company has entered into a $850
million non-recourse credit facility with respect to PC-1 (under which $200
million of indebtedness has been incurred as of August 10, 1998), as well as
contractual commitments with respect to MAC and PAC in the amount of $240
million and $310 million, respectively.

The Company's significant debt burden could have important consequences to
the Company, including, but not limited to, the following: (i) the cash
received from operations may be insufficient to meet the principal and
interest payments on the Company's debt as the same become due; (ii) a
significant portion of the Company's cash flow from operations must be used to
service its debt instead of being used in the Company's business; and (iii)
the Company's flexibility to obtain additional financing in the future may be
impaired by the amount of debt outstanding and the restrictions imposed by the
covenants contained in the debt instruments of the Company. See "Description
of Certain Indebtedness."

The ability of the Company to meet its financial obligations will be subject
to financial, business and other factors, many of which are beyond its
control, such as prevailing economic conditions. In addition, the ability of
GCL's operating subsidiaries to pay dividends or to make other payments to GCL
will be restricted by the terms of various credit arrangements expected to be
entered into by such operating subsidiaries, as well as legal restrictions.
The instruments governing existing and future indebtedness contain, or may
contain, covenants that limit the operating and financial flexibility of the
Company. Failure to generate sufficient cash flow may impair the Company's
ability to obtain additional equity or debt financing or to meet its debt
service requirements. In such circumstances, the Company may be required to
renegotiate the terms of the instruments relating to its long term debt or to
refinance all or a portion thereof. There can be no assurance that the Company
would be able to renegotiate successfully such terms or refinance its
indebtedness when required or that satisfactory terms of any

15
<PAGE>

such refinancing would be available. If the Company were unable to refinance
its indebtedness or obtain new financing under these circumstances, it would
have to consider other options such as the sale of certain assets to meet its
debt service obligations, the sale of equity, negotiations with its lenders to
restructure applicable indebtedness or other options available to it under
applicable law.

SUBSTANTIAL FUTURE CAPITAL REQUIREMENTS

Global Crossing will require substantial capital investment to pursue the
implementation of its business plan. Because the Company anticipates that each
of its systems will require separate financing in addition to the equity
investment made by the Company in such system, it intends to raise additional
non-recourse debt or equity capital at the system level to meet these
financing requirements. The Company currently estimates that its capital
resources, together with the additional capital that it intends to raise at
the system level, will be sufficient to fund its currently planned systems.
Failure to generate sufficient funds in the future, whether from operations or
by raising additional debt or equity capital, would have a material adverse
effect on the Company's business prospects. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations--Liquidity and
Capital Resources."

RISKS RELATED TO COMPLETING THE COMPANY'S CABLE SYSTEMS

The Company's ability to achieve its strategic objectives will depend in
large part upon the successful, timely and cost-effective completion of the
Company's planned cable systems as well as on achieving substantial capacity
sales on these systems once they become operational. The construction of the
Company's systems will be affected by a variety of factors, uncertainties and
contingencies, many of which are beyond the Company's control. There can be no
assurance that each of these systems will be completed at the cost and in the
time frame currently estimated by Global Crossing, or even at all. Although
the Company will be awarding contracts for construction of its systems to
certain suppliers who in most cases are expected to be bound by a fixed-price
construction cost schedule, and to provide guarantees in respect of completion
dates and system design specifications, there can be no assurance that the
actual construction costs or the time required to complete these systems will
not exceed current Company estimates. Such circumstances could have a material
adverse effect on the Company. See "Business--Suppliers."

The successful completion of the Company's cable systems will depend, among
other things, upon the Company's ability to manage their construction
effectively and to obtain all permits and licenses required for construction.
Successful completion will also depend on the timely performance by third-
party contractors of their obligations. There can be no assurance that
construction will be completed as scheduled or that the required permits and
licenses will be obtained. There are a limited number of suppliers with whom
the Company can negotiate these arrangements. There can be no assurance that
the Company will be able to enter into these contracts. Any of the foregoing
may significantly delay or prevent completion of one or more of the Company's
systems, which could have a material adverse effect on the Company.

SALES OF CAPACITY; REALIZATION OF OTHER REVENUES

The ability of the Company to achieve its business objectives will also
depend in large part upon its sales and marketing capabilities. Through its
wholly-owned subsidiary, Global Crossing International, Ltd. ("GCI"), the
Company has assembled a dedicated sales and marketing force and will be
dependent upon the ability of such employees to effectively market and sell
capacity. There can be no assurance that the Company will be able to
effectively sell capacity on its cable systems. Failure of the Company to
effectively sell capacity on its cable systems would have a material adverse
effect on the Company.

The Company's ability to increase revenues and profits will depend in part
on its ability to expand the products and services it offers to customers. The
Company currently believes that potential sources of these revenues include
potential upgrades of the capacity available on its planned systems, the
development of additional subsea cable projects and the provision of
terrestrial backhaul services to customers acquiring capacity on its undersea
cable systems. See "Business." In the event the Company is unable to effect
these upgrades, develop additional cable projects or obtain required
terrestrial backhaul capacity, the Company's ability to increase its revenues
and profits will be adversely affected.

16
<PAGE>

TERMINATION OF CPAS

A purchaser's payment obligation under a CPA for AC-1 terminates with
capacity on any segment other than the United States-United Kingdom segment
(and, in certain cases, with respect to capacity on the United States-United
Kingdom segment), if the RFS date for the full AC-1 system has not occurred by
June 30, 1999. Performance under certain CPAs for AC-1 is also contingent upon
the obtaining and continuance of such approvals, consents, governmental
authorizations, licenses and permits as may be required or reasonably deemed
necessary by each party thereto for performance by such party thereunder and
as may be satisfactory to it. It is expected that CPAs for the Company's other
systems will contain similar provisions. Termination of a substantial number
of CPAs for any of the foregoing reasons would have a material adverse effect
on the Company. See "Business--Sales and Marketing" and "--Summary of
Principal Terms of Standard Contractual Documentation."

COMPETITION

The international telecommunications industry is highly competitive. The
Company faces competition from existing and planned systems along each of its
planned routes and from satellite providers, including existing geosynchronous
satellites and low-earth orbit systems now under construction. On certain
routes, terrestrial cable systems may also compete with the Global Crossing
Network. The Company competes primarily on the basis of price, availability,
transmission quality and reliability, customer service and the location of its
systems. Traditionally, carriers have made substantial long term investments
in ownership of cable capacity, making lower price and superior service less
determinative in convincing such carriers to acquire additional capacity on
the Company's systems than is the case in industries without such long term
relationships. Accordingly, there can be no assurance that the Company will be
able to compete successfully against systems to which prospective customers
have made long term commitments.

The routes underlying Global Crossing's systems are currently served by
several undersea cables as well as satellites. Primary future sources of
competition for the Company may result from, among others, (i) TAT-14, a
transatlantic cable system which is being developed by its consortium members,
(ii) Gemini, a transatlantic cable system being operated and marketed by
WorldCom and Cable & Wireless, (iii) China-US, a transpacific system being
developed as a "private cable system" by fourteen large carriers, including
SBC, MCI, AT&T and Sprint, most of whom have traditionally sponsored
consortium cables and (iv) the Japan-US Cable Network, a transpacific system
being developed by a consortium of major telecommunications carriers including
Worldcom, AT&T, KDD, NTT, Cable & Wireless and GTE. Other regional and global
systems are being considered by developers, including Project Oxygen, a global
system being evaluated by CTR Group, Ltd. The Company believes that the other
planned transatlantic systems would compete directly with AC-1 and the
commitments of the developers of these systems could substantially reduce
these customers' demand for capacity on AC-1. Although the Company believes
that the other planned transpacific systems will not satisfy the demand for
capacity between the United States and Japan and that there is currently
enough demand projected to accommodate all such systems, the other planned
transpacific systems will receive commitments for capacity that PC-1 could
have received in their absence. In addition, the Company may face competition
from existing and planned regional undersea cable systems and satellites on
its MAC and PAC routes, where entrants are vying for purchases from a small
but rapidly growing customer base. See "--Rapid Growth in a Changing Industry;
Pricing Uncertainties" and "Business--Competition."

RELATIONSHIP WITH PRINCIPAL SHAREHOLDERS; CONFLICTS OF INTEREST

As of August 10, 1998, Pacific Capital Group, Inc. ("PCG") had a 26.88%
beneficial ownership interest in GCL (after giving effect to the Old GCL
Exchange). PCG and its affiliates have entered into certain transactions with
the Company in connection with the development by PCG and its affiliates of
several of Global Crossing's systems, including AC-1, PC-1, PAC and MAC, and
the decision by the Board of Directors of GCL to assume the ongoing
development of systems (other than AC-1) from an affiliate of PCG. PCG and its
subsidiaries are controlled by Mr. Gary Winnick, the Co-Chairman of the Board
of Directors of GCL, and several other officers and directors of GCL are
affiliated with PCG. In addition, through an affiliate, Canadian Imperial Bank
of

17
<PAGE>

Commerce ("CIBC") had a 25.00% beneficial ownership interest in GCL (after
giving effect to the Old GCL Exchange). An affiliate of CIBC is an Underwriter
in the Offerings, and CIBC and its affiliates have also entered into certain
financing transactions with the Company in connection with the development and
construction of the Company's systems. Several members of the Board of
Directors of GCL are affiliated with CIBC. See "Management," "Principal and
Selling Shareholders" and "Certain Transactions."

Upon completion of the Offerings, PCG and CIBC collectively will
beneficially own 47.18% of the outstanding Common Stock (46.46% assuming the
over-allotment option is exercised in full). Accordingly, PCG and CIBC may be
able to determine the vote on matters submitted to a vote of the Company's
stockholders, including the election of directors.

Certain officers and directors of the Company also serve as officers and
directors of other companies and certain officers and directors of the Company
are active investors in the telecommunications industry. See "Management."
Service as a director or officer of the Company and as a director or officer
of another company could create or appear to create conflicts of interest when
the director or officer is faced with decisions that could have different
implications for the Company and such other company. A conflict of interest
could also exist with respect to allocation of time and attention of persons
who are officers of both the Company and another company. The pursuit of these
other business interests could distract these officers and directors from
pursuing opportunities on behalf of the Company. Such conflicts of interest
could have a material adverse affect on the Company.

BENEFICIAL OWNERSHIP BY MANAGEMENT AND AFFILIATES

The Company's executive officers and directors have substantial equity
interests in the Company and have also received amounts from the Company due
to advisory services fees paid to PCG and its affiliates. This advisory fee
arrangement will be terminated prior to the Offerings, with such individuals
receiving Common Stock as a result of such termination, thereby increasing
their significant equity interests in the Company following the Offerings. Set
forth below for each executive officer and director of the Company is the
amount and value of (i) all shares of Common Stock to be sold by such
individual in the Offerings, (ii) all shares of Common Stock to be
beneficially owned by such individual immediately following the Offerings
(determined pursuant to Rule 13d-3 of the Securities Exchange Act of 1934, as
amended, except with respect to options, all of which are shown in the column
entitled "Stock Options Held"), (iii) all options to acquire Common Stock held
by such individual, (iv) all warrants held by such individual to purchase
additional Common Stock and (v) all fees paid to such individual indirectly
through the advisory fees paid to PCG. See "Principal and Selling
Shareholders" and "Certain Transactions." The values set forth in the
following table assume a price of $18 per share of Common Stock (the midpoint
of the expected pricing range of the Offerings).

<TABLE>
<CAPTION>
COMMON COMMON STOCK STOCK ADVISORY
STOCK OWNED AFTER WARRANTS OPTIONS SERVICES
INVESTOR TO BE SOLD VALUE OFFERINGS(1) VALUE HELD(2) VALUE(2) HELD(3) VALUE FEES(4)
- -------- ---------- ----------- ------------ ------------ --------- ----------- --------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Gary Winnick.... 1,158,636 $20,855,448 46,612,141 $839,018,538 4,526,388 $34,026,470 900,000 $14,700,000 $ 3,191,630
Lodwrick M.
Cook........... -- $ -- 1,720,391 $ 30,967,038 502,779 $ 3,351,860 450,000 $ 7,350,000 $ --
Jack M. Scanlon. -- $ -- -- $ -- -- $ -- 1,800,000 $29,400,000 $ --
Dan J. Cohrs.... -- $ -- -- $ -- -- $ -- 675,000 $ 7,650,000 $ --
David L. Lee.... 324,093 $ 5,833,674 10,060,178 $181,083,204 1,314,741 $ 9,780,395 450,000 $ 7,350,000 $ 481,130
Abbott L. Brown. 243,178 $ 4,377,204 5,663,382 $101,940,876 960,713 $ 6,967,484 450,000 $ 7,350,000 $ 320,754
Barry Porter.... 324,093 $ 5,833,674 9,153,049 $164,754,882 1,286,669 $ 9,511,840 450,000 $ 7,350,000 $ 481,130
James C. Gorton. -- $ -- -- $ -- -- $ -- 750,000 $ 8,500,000 $ --
Jack Finlayson.. -- $ -- -- $ -- -- $ -- 735,000 $ 6,630,000 $ --
K. Eugene
Shutler........ -- $ -- 148,986 $ 2,681,748 -- $ -- 300,000 $ 4,900,000 $ --
Hillel
Weinberger..... -- $ -- 21,330,900 $383,956,200 -- $ -- 60,000 $ 980,000 $ --
Jay R. Bloom.... -- $ -- 48,550,622 $873,911,196 -- $ -- 300,000 $ 4,900,000 $ --
Dean C. Kehler.. -- $ -- 48,550,622 $873,911,196 -- $ -- 300,000 $ 4,900,000 $ --
Jay R. Levine... -- $ -- 48,550,622 $873,911,196 -- $ -- 300,000 $ 4,900,000 $ --
William D.
Phoenix........ -- $ -- 48,550,622 $873,911,196 -- $ -- 300,000 $ 4,900,000 $ --
Bruce Raben..... -- $ -- 48,550,622 $873,911,196 -- $ -- 300,000 $ 4,900,000 $ --
Michael R.
Steed.......... -- $ -- 16,591,109 $298,639,962 368,353 $ 3,523,910 60,000 $ 980,000 $ 194,696
<CAPTION>
TOTAL
INVESTOR VALUE(5)
- -------- ------------
<S> <C>
Gary Winnick.... $911,792,086
Lodwrick M.
Cook........... $ 41,668,898
Jack M. Scanlon. $ 29,400,000
Dan J. Cohrs.... $ 7,650,000
David L. Lee.... $204,528,403
Abbott L. Brown. $120,956,318
Barry Porter.... $187,931,526
James C. Gorton. $ 8,500,000
Jack Finlayson.. $ 6,630,000
K. Eugene
Shutler........ $ 7,581,748
Hillel
Weinberger..... $384,936,200
Jay R. Bloom.... $878,811,196
Dean C. Kehler.. $878,811,196
Jay R. Levine... $878,811,196
William D.
Phoenix........ $878,811,196
Bruce Raben..... $878,811,196
Michael R.
Steed.......... $303,338,568
</TABLE>
- --------

(1) The amount shown for Mr. Weinberger includes 20,037,585 shares of Common
Stock owned by Continental Casualty Company, an affiliate of Loews/CNA
Holdings Corp. Mr. Weinberger is an officer of Loews/CNA Holdings Corp.
The amounts shown for Messrs. Bloom, Kehler, Levine, Phoenix and Rabin
include 48,550,622 shares of Common Stock owned beneficially by CIBC, an
affiliate of

18
<PAGE>

their employer, CIBC Oppenheimer Corp. ("CIBC Oppenheimer"). The amount
shown for Mr. Steed includes 16,591,109 shares of Common Stock owned by
MRCo, Inc., a wholly-owned subsidiary of Union Labor Life Insurance Company
("ULLICO") and certain fees paid to ULLICO. Mr. Steed is an officer of both
such companies.

(2) Includes New PCG Warrants and GCL Warrants. The value of warrants held is
presented based upon a value of $6.67 per New PCG Warrant and $9.57 per
GCL Warrant, the value assigned to such warrants by the Company based upon
independent appraisals.

(3) Of the 7,380,000 aggregate shares of Common Stock issuable upon the
exercise of options reflected in the table, options in respect of
2,260,000 shares are exercisable within 60 days of August 10, 1998 and
options in respect of 5,120,000 shares are exercisable, subject to various
conditions, following vesting on various dates through July 2001. The
amounts shown for Messrs. Bloom, Kehler, Levine, Phoenix and Raben include
options in respect of 300,000 shares of Common Stock owned beneficially by
CIBC.

(4) The agreements providing for the payment of advisory services fees to PCG
and its affiliates also provided that varying portions of such fees were
payable to ULLICO, CIBC and Messrs. Winnick, Cook, Brown, Lee and Porter.
The Company and the other parties to these agreements have agreed to
terminate these agreements in connection with the Offerings in
consideration for the issuance, through an affiliate of PCG, to the
persons entitled to receive such fees of shares of Common Stock having an
aggregate value (determined on the basis of the Price to Public per Share
payable in the Offerings) of $135 million and the cancellation of $2.7
million owed to the Company under a related advance agreement. Pursuant to
this termination, shares of Common Stock will be issued to and
beneficially owned by the following persons in the amounts and having the
values (based upon a Price to Public per Share of $18.00) indicated. The
net proceeds from the sale of the Shares to be sold in the Offerings by
Messrs. Winnick, Cook, Lee, Brown and Porter are to be used by such
individuals to fund anticipated income tax liabilities resulting from the
termination of these advisory fee agreements.

<TABLE>
<CAPTION>
RECIPIENT COMMON STOCK VALUE
--------- ------------ ------------
<S> <C> <C>
Gary Winnick (including PCG and PCG Telecom). 3,438,557 $ 61,894,026
CIBC......................................... 707,222 12,729,996
ULLICO....................................... 386,944 6,964,992
Lodwrick M. Cook............................. 321,917 5,794,506
Abbott L. Brown.............................. 721,694 12,990,492
David L. Lee................................. 961,833 17,312,994
Barry Porter................................. 961,833 17,312,994
--------- ------------
Total...................................... 7,500,000 $135,000,000
========= ============
</TABLE>

(5) The amounts shown give effect to the Old GCL Exchange, Advisory Services
Agreement Termination and TDC Exchange. Amounts under "Warrants Held"
include New PCG Warrants and GCL Warrants. See "Principal and Selling
Shareholders," "Certain Transactions" and "Description of Capital Stock--
Old GCL Exchange."

TRANSITION FROM PROJECT MANAGEMENT TO OPERATING COMPANY

The Company must undergo substantial changes in its operations to transition
from being a development stage company primarily involved in the planning and
development of a major telecommunications infrastructure system to one which
operates, markets, supports and services multiple systems. These changes are
expected to be a significant challenge to the Company's managerial,
administrative and operational resources. The Company is in the process of
expanding the management and operational capabilities necessary for this
transition. The Company's ability to manage this transition successfully will
depend on, among other things: (i) expansion, training and management of its
employee base, including attracting, retaining and motivating highly skilled
personnel; (ii) taking over or outsourcing the Company's customer interface
and operations, administration and maintenance systems; (iii) procuring
terrestrial capacity to provide connectivity to inland cities; and (iv)
control of the Company's expenses. There can be no assurance that the Company
will succeed in developing all or any of these capabilities, and any failure
to do so could have a material adverse effect on the Company. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and "Management."

RAPID GROWTH IN A CHANGING INDUSTRY; PRICING UNCERTAINTIES

Part of the Company's strategy is to rapidly construct several cable systems
in a short time frame in order to take advantage of the supply and demand
imbalance that currently exists and is projected in the global marketplace.
Each of the Company's currently announced systems is expected to be
operational between 1998 and 2000. As a result of the Company's implementation
of the aggressive timing of its strategy, the Company is experiencing rapid
expansion that management expects will continue for the foreseeable future.
This growth has increased the operating complexity of the Company. At the same
time, the international telecommunications industry is changing rapidly due
to, among other things, regulatory liberalization, privatization of
established carriers, the expansion of telecommunications infrastructure, the
globalization of the world's economies and the

19
<PAGE>

changing technology for wireless and satellite communication. Much of the
Company's planned growth is predicated upon the growth in demand for
international telecommunications capacity which will consume the increased
supply of telecommunications capacity from new cables and other technology so
that price declines will not be greater than the price declines anticipated by
the Company in its business plan. There can be no assurance that such
anticipated demand growth will occur.

The undersea fiber optic cable transmission industry has experienced
significant per circuit price declines resulting from technological advances
in fiber optic technology. Recent technological advances have created even
greater per circuit pricing pressure in the industry. A lower than projected
increase in demand or a higher than projected decline in per circuit price
could have a material adverse effect on the Company. There can be no
assurance, even if the Company's projections with respect to such factors are
realized, that the Company will be able to implement its strategy or that its
strategy will be successful in the rapidly evolving telecommunications market.

RAPID TECHNOLOGICAL CHANGE

Recent technological advances, such as the use of DWDM, have greatly
expanded the availability of capacity of new fiber optic cable at constant
construction costs, resulting in a corresponding decrease in the cost per
circuit of capacity. In addition, the introduction of new products or the
emergence of new technologies may enable competitors to install competing
systems at a lower per-circuit cost on routes currently targeted by the
Company or to expand capacity on existing competitive systems, potentially
rendering the Company's systems not cost competitive. While the Company
believes that being the first to market and construct cable systems with
significant capacity on certain routes may prevent competitors from
overbuilding in those situations, Global Crossing cannot predict the behavior
of potential competitors who might otherwise build a system even if it would
be uneconomical for an additional system to be constructed. The Company
believes that for the foreseeable future, technology changes will neither
materially affect the continued use of fiber optic cable nor materially hinder
the Company's ability to deploy the state-of-the-art technology; however, the
effect of such technological changes on the Company's operations cannot be
predicted and could have a material adverse effect on the Company.

OPERATIONS RISKS

Each of Global Crossing's systems will be subject to the risks inherent in a
large-scale, complex undersea fiber optic telecommunications system employing
advanced technology. The operations, administration, maintenance and repair of
these systems requires the coordination and integration of sophisticated and
highly specialized hardware and software technologies and equipment located
throughout the world. There can be no assurance that, even if built to
specifications, the Company's systems will function as expected in a cost-
effective manner. The failure of the hardware or software to function as
required could render a cable system unable to perform at design
specifications.

AC-1 has, and each of the Company's other systems are expected to have, a
design life of not less than 25 years; however, there can be no assurance of
the actual useful life of any of these systems. A number of factors will
affect the useful life of each of the Company's systems, including, among
other things, quality of construction, unexpected deterioration and
technological or economic obsolescence. Failure of any of the Company's
systems to operate for its full design life could have a material adverse
effect on the Company.

DEPENDENCE ON KEY PERSONNEL

The Company's future success depends on the efforts of certain of its
officers and key technical, sales and other employees, some of whom have only
recently joined the Company, as well as its ability to attract, retain and
motivate highly skilled officers and employees. There can be no assurance that
the Company will successfully integrate new management personnel and employees
into its existing operations, or that the Company will be able to attract,
retain and motivate highly skilled management personnel and employees.

20
<PAGE>

Furthermore, the Company does not presently maintain any key person life
insurance policies on any of its management personnel. See "Management--
Employment Contracts and Termination of Employment and Change-in-Control
Arrangements."

RISKS ASSOCIATED WITH INTERNATIONAL OPERATIONS

The Company will derive substantial revenues from international operations.
The Company intends to have substantial physical assets in several
jurisdictions along the routes of its planned systems. International
operations are subject to political, economic and other uncertainties,
including, among other things, risk of war, revolution, border disputes,
expropriation, renegotiation or modification of existing contracts, labor
disputes and other uncertainties arising out of foreign government sovereignty
over the Company's international operations. There can be no assurance that
these factors will not have a material adverse effect on the Company.

FOREIGN EXCHANGE; EXCHANGE CONTROLS

The Company will invoice all sales of capacity in U.S. dollars, and each
customer will incur maintenance and other obligations denominated in U.S.
dollars; however, many actual and prospective customers of the Company derive
their revenues in currencies other than U.S. dollars. The obligations of
customers whose revenues are preponderantly in foreign currencies will be
subject to unpredictable and indeterminate increases in the event that such
currencies devalue relative to U.S. dollars. Furthermore, such customers may
be or may become subject to exchange control regulations which might restrict
or prohibit the conversion of their revenue currencies into dollars. There can
be no assurance that the occurrence of any such factors will not have a
material adverse effect on the Company.

EFFECT OF GOVERNMENT REGULATION

The Company, in the ordinary course of development, construction and
operation of its fiber optic cable systems, will be required to obtain and
maintain various permits, licenses and other authorizations in both the United
States and in foreign jurisdictions where its cables land. In particular,
undersea cable landing or similar licenses will be required in many of the
jurisdictions where Global Crossing's systems will land. Such licenses are
typically issued for a term of years, subject to renewal. Moreover, the
licenses may subject the Company's business and operations to varying forms of
regulation, which could change over the course of time. Failure to obtain or
renew such a license, or a material change in the nature of the regulation to
which the Company's operations are subject, could have a material adverse
effect on the Company's business. In addition, the Company's international
operations may be affected from time to time by political developments and
national and local laws and regulations and may be subject to risks such as
the imposition of governmental controls, license requirements and changes in
tariffs. Specifically, in connection with the construction of each cable
system, the Company must obtain certain permits and licenses with respect to
construction, operations and maintenance. Although Global Crossing intends
that the construction contracts for each of the Company's cable systems will
impose the burden of acquiring and maintaining construction licenses and
permits on the contractor for each of such systems, there can be no assurance
that such contractor will successfully obtain such permits and licenses.
Failure to obtain or maintain any permits or licenses so required could have a
material adverse effect on the Company. See "Business--Regulation."

DEPENDENCE ON THIRD PARTIES

The Company is and will continue to be dependent upon third parties to (i)
provide access to certain origination and termination points of its systems in
various jurisdictions, (ii) construct and operate landing stations in certain
of such jurisdictions, (iii) construct and maintain the Company's systems
pursuant to contractual arrangements with the Company, (iv) provide backhaul
service to the Company's customers through contractual arrangements with such
parties and (v) act as joint venture participants with respect to PC-1 and,
potentially, certain of the Company's future systems. There can be no
assurance that such parties will perform their contractual obligations or that
there will not be political or economic events in relation to such parties
which may have a material adverse effect on the Company.

21
<PAGE>

RISK OF ERROR IN FORWARD-LOOKING STATEMENTS

Until May 26, 1998, the Company was a development stage company.
Accordingly, all statements in this Prospectus that are not clearly historical
in nature are forward-looking. Examples of such forward-looking statements
include the statements concerning the Company's operations, prospects, size of
world telecommunications traffic, size of addressable market, technological
and customer support capabilities, pricing, potential customers and liquidity
and working capital needs, estimated demand forecasts, and information
concerning characteristics of competing systems. These forward-looking
statements are inherently predictive and speculative and no assurance can be
given that any of such statements will prove to be correct. Actual results and
developments may be materially different from those expressed or implied by
such statements. Prospective investors should carefully review the other risk
factors set forth in this section of this Prospectus for a discussion of
certain factors which could result in any of such forward-looking statements
proving to be inaccurate.

TAX MATTERS

The Company believes that a significant portion of its income will not be
subject to tax by any of (i) Bermuda, which currently does not have a
corporate income tax, or (ii) certain other countries in which the Company
conducts activities or in which customers of the Company are located,
including the United States. However, this belief is based upon the
anticipated nature and conduct of the business of the Company, which may
change, and upon the Company's understanding of its position under the tax
laws of the various countries in which the Company has assets or conducts
activities, which position is subject to review and possible challenge by
taxing authorities and to possible changes in law (which may have retroactive
effect). The extent to which certain jurisdictions may require the Company to
pay tax or to make payments in lieu of tax cannot be determined in advance. In
addition, the operations and payments due to the Company may be affected by
changes in taxation, including retroactive tax claims or assessment of
withholding on amounts payable to the Company or other taxes assessed at the
source, in excess of the taxation anticipated by the Company based on business
contacts and practices of the Company and the current tax regimes. There can
be no assurance that any of the foregoing factors would not have a material
adverse effect on the Company. See "Tax Considerations."

FOREIGN PERSONAL HOLDING COMPANY, PASSIVE FOREIGN INVESTMENT COMPANY,
CONTROLLED FOREIGN CORPORATION AND PERSONAL HOLDING COMPANY RULES

It is possible that the Issuer or one of its non-United States subsidiaries
will be classified as a foreign personal holding company (a "FPHC") under the
United States Internal Revenue Code of 1986, as amended (the "Code"). If the
Issuer or one of its non-United States subsidiaries were classified as an
FPHC, all United States Holders (as defined below under "Tax Considerations")
of Common Stock would be required to include in income, as a dividend, their
pro rata share of the Issuer's (or its relevant non-United States
subsidiary's) undistributed FPHC income (generally, taxable income with
certain adjustments). While the Company intends to manage its affairs so as to
attempt to avoid or minimize having income imputed to United States Holders
under these rules, to the extent such management of its affairs is consistent
with its business goals, there can be no assurance that the Company will be
successful in this endeavor.

The Issuer believes that it is not a passive foreign investment company (a
"PFIC") and does not expect to become a PFIC in the future, although there can
be no assurance in this regard. In addition, this belief is based, in part, on
interpretations of existing law that the Issuer believes are reasonable, but
which have not been approved by any taxing authority. If the Issuer were a
PFIC, then each United States Holder of Common Stock would, upon certain
distributions by the Issuer, or upon disposition of the Common Stock at a
gain, be liable to pay tax at the then prevailing rates on ordinary income
plus an interest charge, generally as if the distribution or gain had been
recognized ratably over the United States Holder's holding period (for PFIC
purposes) for the Common Stock, or if a "qualified electing fund" election
were made by a United States Holder of Common Stock, a pro rata share of the
Issuer's ordinary earnings and net capital gain would be required to be
included in such United States Holder's income each year. A United States
Holder may also be able to make a mark to

22
<PAGE>

market election. If the mark to market election is available to a United
States Holder, annual increases and decreases in share value would be included
as ordinary income or deducted from ordinary income by marking-to-market the
value of the shares at the close of each year. See "Tax Considerations."

Furthermore, additional tax considerations would apply if the Issuer or any
of its affiliates were a controlled foreign corporation (a "CFC") or a
personal holding company (a "PHC"). See "Tax Considerations."

DIVIDEND POLICY; RESTRICTION ON PAYMENT OF DIVIDENDS

The Company does not anticipate paying cash dividends in the foreseeable
future. See "Dividend Policy." The Company's ability to pay dividends is
limited by certain of its debt instruments. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations--Liquidity and
Capital Resources" and "Description of Certain Indebtedness."

DILUTION

The public offering price is substantially higher than the tangible book
value of the outstanding Common Stock. Purchasers of Shares in the Offerings
will therefore experience immediate and substantial dilution in tangible book
value per share, and existing shareholders of GCL will receive a material
increase in the tangible book value per share of their shares of Common Stock.
The dilution to new investors will be $15.24 per Share (based on a Price to
Public of $18.00 per Share and assuming no exercise of the over-allotment
options granted to the Underwriters). See "Dilution."

VOTING AND TRANSFER RESTRICTIONS

The Amended and Restated Bye-Laws of the Company (the "Bye-Laws") will
provide that each share of Common Stock will have one vote. However, if the
Controlled Shares (as defined herein) of any person constitute 9.5% (or, in
the case of CIBC and its affiliates, 35%) of the voting power of the
outstanding shares, the voting rights with respect to such Controlled Shares
will be limited pursuant to the Bye-Laws and the voting rights attached to
such shares allocated to the other holders of Common Stock on a pro rata
basis. The other holders allocated these voting rights may not exceed the
above limitation as a result of this allocation. The Bye-Laws will also
prohibit any transfer of shares of Common Stock that, subject to certain
exceptions, would result in a person beneficially owning Controlled Shares in
excess of 5% of the outstanding shares of Common Stock, in the case of a
natural person, or 9.5% of the outstanding shares of Common Stock, in the case
of a group or any person other than a natural person, without the approval of
a majority of the members of the Board of Directors and stockholders holding
at least 75% of the votes that may be cast by all holders of Common Stock.
Such voting and transfer restrictions will increase the difficulty for any
person or group of persons acting in concert (other than certain existing
stockholders) to acquire a substantial ownership position in, or control of,
the Company. See "Description of Capital Stock--GCL--Voting and Transfer
Restrictions."

NO PRIOR PUBLIC MARKET; POSSIBLE VOLATILITY OF STOCK PRICE

Prior to the Offerings, there has been no public market for the Common
Stock. There can be no assurance that an active trading market will develop or
be sustained. The offering price has been determined by negotiations between
the Company and the Underwriters and there can be no assurance that the prices
at which the Common Stock will sell in the public market after the Offerings
will not be lower than the price at which the Common Stock is sold in the
Offerings. See "Underwriting." Historically, the market prices for securities
of emerging companies in the telecommunications industry have been highly
volatile. The trading price of the Common Stock after the Offerings could be
subject to wide fluctuations in response to numerous factors, including, but
not limited to, quarterly variations in operating results, competition,
announcements of technological innovations or new products by the Company or
its competitors, product enhancements by the Company or its competitors,
regulatory changes, any differences in actual results and results expected by
investors and analysts, changes in financial estimates by securities analysts
and other events or factors. In addition, the stock market has

23
<PAGE>

experienced volatility that has affected the market prices of equity
securities of many companies and that often has been unrelated to the
operating performance of such companies. These broad market fluctuations may
adversely affect the market price of the Common Stock.

SHARES ELIGIBLE FOR FUTURE SALE

Upon completion of the Offerings (assuming no exercise of the over-allotment
options granted to the Underwriters), GCL will have 201,688,519 shares of
Common Stock outstanding, including 21,000,000 Shares of Common Stock offered
hereby and 180,688,519 "restricted" shares of Common Stock. The Shares of
Common Stock offered hereby will be freely tradeable without restriction or
further registration under the Securities Act of 1933, as amended (the
"Securities Act"), by persons other than "affiliates" of the Company within
the meaning of Rule 144 promulgated under the Securities Act. Holders of
restricted shares generally will be entitled to sell these shares in the
public securities market without registration under the Securities Act to the
extent permitted by Rule 144 (or Rule 145, as applicable) promulgated under
the Securities Act or any exemption under the Securities Act. The restricted
shares generally will be eligible for sale under Rule 144, as currently in
effect, beginning as early as 180 days from the date of this Prospectus.

The Company intends to file a registration statement under the Securities
Act after the Offerings to register shares of Common Stock reserved for
issuance under the Stock Incentive Plan, thus permitting the resale of such
shares by non-affiliates upon issuance in the public market without
restriction under the Securities Act. Such registration statement will
automatically become effective immediately upon filing. See "Management--Stock
Incentive Plan."

Subject to certain exceptions, the Company and its shareholders have agreed
not to offer, sell, contract to sell or otherwise dispose of, directly or
indirectly, or announce the offering of any shares of Common Stock, including
any such shares beneficially or indirectly owned or controlled by the Company,
or any securities convertible into, or exchangeable or exercisable for, shares
of Common Stock, for 180 days from the date of this Prospectus, without the
prior written consent of Smith Barney Inc. and Merrill Lynch.

Sales of a substantial amount of Common Stock in the public market, or the
perception that such sales may occur, could adversely affect the market price
of the Common Stock prevailing from time to time in the public market and
could impair the Company's ability to raise additional capital through the
sale of its equity securities. See "Shares Eligible for Future Sale."

24
<PAGE>

USE OF PROCEEDS

The net proceeds from the Offerings to the Company are estimated to be
approximately $318.2 million (after deducting the Underwriters' discount and
estimated Offerings fees and expenses payable by the Company). The Company
intends to use the net proceeds of the Offerings as follows: (i) approximately
$220 million to make investments in the Global Crossing Network, (ii) up to
$50 million to make minority investments in telecommunications companies and
Internet service providers, (iii) up to $25 million to fund the Company's
proposed investment in Global Access Limited and (iv) the balance for general
corporate purposes. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations--Liquidity and Capital Resources" and
"Business." Pending the application of the net proceeds of the Offerings as
described above, the Company will invest such proceeds in short-term,
interest-bearing U.S. Government securities and certain other short term,
investment grade securities. The Company will receive no proceeds from the
sale of the Shares by the Selling Shareholders. The net proceeds from the sale
of the Shares by the Selling Shareholders will be used by such Selling
Shareholders to fund anticipated income tax liabilities resulting from the
Company's acquisition of the rights to advisory fees payable under the
Advisory Services Agreements as described under "Certain Transactions."

DIVIDEND POLICY

GCL does not anticipate paying dividends in the foreseeable future. The
terms of certain debt instruments of the Company also place limitations on
GCL's ability to pay dividends. Future dividends, if any, will be at the
discretion of the Board of Directors of GCL and will depend upon, among other
things, the Company's operations, capital requirements and surplus, general
financial condition, contractual restrictions and such other factors as the
Board of Directors of GCL may deem relevant. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and "Description of
Certain Indebtedness."

DILUTION

At June 30, 1998, the "Pro forma net tangible book value" of the Company
prior to the Offerings was $237 million or $1.30 per share of Common Stock.
Pro forma net tangible book value per share prior to the Offerings represents
the Company's net worth less intangible assets of $44 million divided by
182,738,519 shares of Common Stock outstanding (after giving effect to the PCG
Warrant Conversion, Advisory Services Agreement Termination, TDC Exchange and
Old GCL Exchange). After giving effect to the sale by the Company of
18,950,000 Shares pursuant to the Offerings at an assumed initial public
offering price of $18.00 per share and after deducting the underwriting
discount and expenses of the Offerings, the pro forma net tangible book value
of the Company at June 30, 1998 would have been $556 million, or $2.76 per
share of Common Stock. Such amount represents an immediate increase in pro
forma net tangible book value of $1.46 per share of Common Stock to the
existing shareholders and an immediate dilution to new investors of $15.24 per
share of Common Stock. The following table illustrates the dilution in pro
forma net tangible book value per share to new investors:

<TABLE>
<S> <C> <C>
Assumed public offering price per Share........................ $18.00
Pro Forma net tangible book value per share as of June 30, 1998
prior to the Offerings ....................................... $1.30
Increase in Pro forma net tangible book value per share attrib-
utable to the effects of the Offerings........................ 1.46
-----
Pro forma net tangible book value per share after the Offer-
ings.......................................................... 2.76
------
Dilution per share to new investors............................ $15.24
======
</TABLE>

25
<PAGE>

The following table summarizes, on a pro forma basis after the Offerings,
the number of shares of Common Stock purchased from the Company, the total
consideration paid to the Company and the cash contribution per share of
existing shareholders and the price per Share to be paid by purchasers of the
Shares offered by the Company hereby (assuming an initial public offering
price of $18.00 per Share before deducting estimated underwriting discounts
and commissions and estimated offering expenses payable by the Company):

<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION
------------------- -------------------- AVERAGE PRICE
NUMBER PERCENT AMOUNT(1) PERCENT PER SHARE
----------- ------- ------------ ------- -------------
<S> <C> <C> <C> <C> <C>
Existing
shareholders(1)........ 182,738,519 90.60% $ 75,000,000 18.02% $ 0.41
Shares sold by the
Company................ 18,950,000 9.40% 341,100,000 81.98% $18.00
----------- ------- ------------ -------
Total................. 201,688,519 100.00% $416,100,000 100.00%
=========== ======= ============ =======
</TABLE>
- --------

(1) Sales by the Selling Shareholders in the Offerings will reduce the number
of shares of Common Stock held by existing shareholders to 180,688,519
shares or 89.59% (88.21% if the Underwriters' over-allotment option is
exercised in full), and will increase the number of shares of Common Stock
held by new investors to 21,000,000 or 10.41% (24,150,000 or 11.79% if the
Underwriters' over-allotment option is exercised in full). See "Principal
and Selling Shareholders."

The foregoing tables assume no exercise of options issued under the
Company's Stock Incentive Plan or outstanding GCL Warrants or New PCG
Warrants. As of June 30, 1998, there were 16,607,865 shares of Common Stock
reserved for issuance under the Company's Stock Incentive Plan, 2,696,074
shares of Common Stock issuable upon the exercise of outstanding GCL Warrants
at an exercise price equal to the Price to Public per Share of the Offerings
and 6,597,227 shares of Common Stock issuable upon the exercise of the New PCG
Warrants at an exercise price equal to the Price to Public per Share of the
Offerings. The foregoing tables also assume no exercise of the Underwriters'
over-allotment options. To the extent that any of such shares are issued in
connection with the Stock Incentive Plan, there will be further dilution to
new investors. See "Certain Transactions" and "Description of Capital Stock."

26
<PAGE>

CAPITALIZATION

The following table sets forth as of June 30, 1998 (i) the historical
consolidated capitalization of the Company and (ii) the capitalization as
adjusted to reflect the Offerings and the application of the net proceeds
therefrom, the TDC Exchange, the Advisory Services Agreement Termination, the
Old GCL Exchange and the PCG Warrant Conversion. This table should be read in
conjunction with "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and the Consolidated Financial Statements and the
notes thereto appearing elsewhere in this Prospectus.

<TABLE>
<CAPTION>
AS OF JUNE 30, 1998
------------------------------
ACTUAL AS ADJUSTED(1)
-------------- --------------
(UNAUDITED)
<S> <C> <C>
Long Term Debt:
AC-1 Credit Facility(2)................... $ 367,048,000 $ 367,048,000
Long Term Deferred Revenue................ 29,187,836 29,187,836
Obligations under Inland Services
Agreements(3)............................ 7,628,050 7,628,050
Obligations under Capital Leases(4)....... 7,561,897 7,561,897
GCH Senior Notes(5)....................... 796,277,203 796,277,203
-------------- --------------
Total Long Term Debt.................... 1,207,702,986 1,207,702,986
-------------- --------------
Shareholders' Equity:
Common Stock.............................. 110 2,016,885
Treasury Stock............................ -- (198,255,724)
Additional Paid-in Capital................ 397,095,005 955,549,435
Accumulated Deficit....................... (159,315,864) (159,315,864)
-------------- --------------
Total Shareholders' Equity.............. 237,779,251 599,994,732
-------------- --------------
Total Capitalization.................... $1,445,482,237 $1,807,697,718
============== ==============
</TABLE>
- --------

(1) As adjusted to reflect the Offerings, the TDC Exchange, the Advisory
Services Agreement Termination, the Old GCL Exchange and the PCG Warrant
Conversion. For detailed information on these adjustments, see the
footnotes to the pro forma financial information presented on pages 11-14.

(2) The AC-1 Credit Facility provides non-recourse financing at the ACL level
for the construction and development of AC-1. A total of $482.0 million is
available to be borrowed under this facility, of which $367.0 million was
outstanding as of June 30, 1998. See "Description of Certain
Indebtedness--AC-1 Credit Facility."

(3) Net of the $43.5 million current portion of such obligations.

(4) Net of the $6.2 million current portion of such obligations.

(5) The GCH Senior Notes provide funds for refinancing corporate indebtedness
and investments in the Company's PC-1, MAC and PAC systems. See
"Description of Certain Indebtedness--GCH Senior Notes."

27
<PAGE>

SELECTED CONSOLIDATED FINANCIAL DATA

The selected data presented below under the captions "Statement of
Operations Data" and "Balance Sheet Data" as of December 31, 1997 and for the
period from March 19, 1997 (date of inception) through December 31, 1997 are
derived from the Consolidated Financial Statements of the Company included
herein, which financial statements are prepared in accordance with U.S. GAAP
and have been audited by Arthur Andersen & Co., independent public
accountants, as indicated in their report thereon included elsewhere in this
Prospectus. The financial data as of and for the three and six months ended
June 30, 1998 are derived from the Company's unaudited interim financial
statements. The unaudited interim financial statements include all
adjustments, consisting of normal recurring adjustments, that management
considers necessary for fair presentation of the financial position as of June
30, 1998 and results of operations for the interim periods presented. Results
of operations for the interim periods are not necessarily indicative of the
results of operations for a full year. The operating data presented below are
derived from the Company's records. The financial data presented herein and
elsewhere in this Prospectus is not necessarily indicative of the financial
position or results of operations of the Company in the future. The
information set forth below should be read in conjunction with the discussion
under "Management's Discussion and Analysis of Financial Condition and Results
of Operations," "Business" and the Consolidated Financial Statements and the
notes thereto appearing elsewhere in this Prospectus.
<TABLE>
<CAPTION>
FOR THE PERIOD
MARCH 19, 1997
SIX MONTHS (DATE OF INCEPTION)
THREE MONTHS ENDED ENDED TO DECEMBER 31,
JUNE 30, 1998 JUNE 30, 1998 1997
------------------ ------------- -------------------
<S> <C> <C> <C>
STATEMENT OF OPERATIONS
DATA
Sales and Operating
Revenues............... $ 101,255,867 $ 101,255,867 $ --
------------- ------------- ------------
Expenses:
Cost of Capacity Sold. 41,200,229 41,200,229 --
Operating,
Administrative and 183,705,088 187,748,840 3,101,708
Other (1)............ ------------- ------------- ------------
224,905,317 228,949,069 3,101,708
------------- ------------- ------------
Operating Loss.......... (123,649,450) (127,693,202) (3,101,708)
Other Income (Expense):
Interest Income....... 4,327,602 4,673,436 2,941,352
Interest Expense...... (7,403,037) (7,426,271) --
Provision for Income
Taxes (2).............. (9,000,000) (9,000,000) --
Extraordinary Loss on (19,709,471) (19,709,471) --
Retirement of Debt (3). ------------- ------------- ------------
Net Loss................ (155,434,356) (159,155,508) (160,356)
Preference Share Non-
Cash Dividends (4)..... (3,898,203) (8,306,433) (12,689,923)
Redemption of Preference (34,140,067) (34,140,067) --
Shares (5)............. ------------- ------------- ------------
Net Loss Applicable to $(193,472,626) $(201,602,008) $(12,850,279)
Common Shareholders.... ============= ============= ============
Basic and Diluted Net
Loss per Common Share
before Extraordinary $ (1.05) $ (1.10) $ (0.08)
Item................... ============= ============= ============
Net loss per Common
Share on Extraordinary $ (0.12) $ (0.12) $ --
Item................... ============= ============= ============
Basic and Diluted Net
Loss per Common Share $ (1.17) $ (1.22) $ (0.08)
(6).................... ============= ============= ============
Shares used in Computing
Basic and Diluted Net 166,194,035 166,062,697 165,441,150
Loss per Common Share.. ============= ============= ============
</TABLE>

<TABLE>
<CAPTION>
AS OF AS OF
JUNE 30, 1998 DECEMBER 31, 1997
-------------- -----------------
<S> <C> <C>
BALANCE SHEET DATA:
Current Assets Including Cash and Restricted
Cash (7).................................... $ 832,335,864 $ 48,943,838
Long Term Accounts Receivable................ 26,978,076 --
Construction in Progress and Capacity
Available for Sale (8)...................... 724,908,019 497,318,509
Investment in Pacific Crossing Ltd. (9)...... 126,456,345 --
Deferred Finance and Organization Costs, Net 44,338,405 25,934,021
of Accumulated Amortization................. -------------- ------------
$1,755,016,709 $572,196,368
============== ============
Current Liabilities.......................... $ 309,534,472 $ 92,097,773
Long Term Debt............................... 367,048,000 162,325,000
Senior Notes................................. 796,277,203 150,000,000
Long Term Deferred Revenue................... 29,187,836 --
Obligations Under Inland Service Agreements
and Capital Leases (10)..................... 15,189,947 3,009,000
GTH Preference Shares (11)................... -- 90,643,919
Shareholders' Equity.........................
Common Stock............................... 110 110
Other Shareholders' Equity................. 397,095,005 74,280,922
Accumulated Deficit........................ (159,315,864) (160,356)
-------------- ------------
Total Shareholders' Equity................... 237,779,251 74,120,676
-------------- ------------
Total Liabilities and Shareholders' Equity... $1,755,016,709 $572,196,368
============== ============
</TABLE>

28
<PAGE>

<TABLE>
<CAPTION>
AS OF
JUNE
30, 1998
------------
<S> <C>
OPERATING DATA:
Executed CPAs...................................................... $556 million
</TABLE>

<TABLE>
<CAPTION>
ESTIMATED(12)
--------------
<S> <C>
Route Kilometers............................................... 51,300
Fiber Kilometers............................................... 345,200
Estimated System Costs (excluding potential future upgrades and
amounts capitalized with respect to the PCG Warrants)
AC-1 ......................................................... $ 750 million
Other Systems Under Development............................... $2,025 million
Landing Stations............................................... 14
</TABLE>
- --------

(1) Includes a charge for the Advisory Services Agreement Termination on June
30, 1998. See "Certain Transactions." The Company acquired the rights of
those entitled to fees payable under the Advisory Services Agreements in
consideration for the issuance of Common Stock in the Company having an
aggregate value of $135 million and the cancellation of approximately
$2.7 million owed to the Company under a related advance agreement. As a
result of this transaction, the Company has recorded a non-recurring
charge in the approximate amount of $137.7 million. Also, during each of
the three and six months ended June 30, 1998, the Company recognized
$21.1 million from a total of $67.1 million of stock-related expense
relating to stock options issued during such period. The remaining $46.0
million will be recognized as follows: $4.8 million in each of the third
and fourth quarters of 1998, $19.2 million in 1999, $13.5 million in 2000
and $3.7 million in 2001.

(2) Reflects income taxes on profits earned during the three months ended
June 30, 1998 attributable to both United States and foreign
jurisdictions. A significant portion of the Company's operating losses
have been incurred in non-taxable jurisdictions and therefore these
operating losses cannot be applied to future taxable earnings of the
Company.

(3) On May 18, 1998, a portion of the proceeds from the issuance of the GCH
Senior Notes was used to repurchase the GTH Senior Notes. The Company
recognized an extraordinary loss of $19.7 million on repurchase
comprising a premium of approximately $9.8 million and a write-off of
approximately $9.9 million of unamortized deferred financing costs.

(4) The holders of GTH Preference Shares were entitled to receive cumulative,
compounding dividends at an initial annual rate of 14%. Preference share
dividends include cumulative 14% dividends and amortization of the
discount and issuance costs. Effective June 17, 1998, the Company used
proceeds from the GCH Senior Notes to redeem all outstanding GTH
Preference Shares. All dividends prior to the redemption had been paid
through the issuance of additional preference shares and charged against
additional paid-in capital.

(5) As a result of the redemption of the GTH Preference Shares, the Company
incurred a one-time $34.1 million charge recorded against Additional
Paid-in Capital. The charge was comprised of: (i) a $15.9 million charge
for the redemption premium and (ii) a write-off of $18.2 of unamortized
discount and unamortized deferred financing costs.

(6) Basic net loss per share is computed using the weighted average number of
shares of common stock outstanding. Diluted net loss per share is
computed using the weighted average number of shares of common stock
outstanding and common stock equivalents including shares issuable under
options and warrants that are dilutive using the treasury stock method.

(7) The majority of Cash and Restricted Cash is comprised of proceeds from
the issuance of the GCH Senior Notes and funds which have been reserved
for the purpose of funding future interest payable on the GCH Senior
Notes.

(8) Construction in Progress and Capacity Available for Sale includes direct
and indirect expenditures for construction of AC-1 and other Systems and
is stated at cost. Includes costs incurred under (i) the AC-1 Contract;
(ii) advisory, consulting and legal fees; (iii) interest (including
amortization of debt issuance costs incurred during the construction
phase); and (iv) other costs necessary for developing AC-1. Additionally,
the Company granted the PCG Warrants to PCG, a shareholder, for the PC-1,
MAC and PAC systems and related rights. The $213.3 million estimated
value of the Common Stock to be issued under the PCG Warrants has been
recorded as Construction in Progress in the amount of $86.8 million and
Investment in Pacific Crossing Ltd. in the amount of $126.5 million.

29
<PAGE>

(9) Includes $126.5 million as of June 30, 1998, as described above,
representing the estimated value of the PCG Warrants applicable to
Pacific Crossing Ltd.

(10) Certain contracts to acquire backhaul capacity and certain capital leases
require payments over a 25-year period. The amount shown reflects the
present value of such payments, net of the $49.7 million ($30.2 million
as of December 31, 1997) current portion of such payments, which is
included under "Current Liabilities."

(11) The December 31, 1997 amount is comprised of (i) $100 million of GTH
Preference Shares originally issued, plus (ii) $9.8 million of GTH
Preference Shares issued as dividends thereon, less (iii) $19.2 million
reflecting the unamortized discount and issue costs associated therewith.
The Company has redeemed all of the outstanding GTH Preference Shares
effective as of June 17, 1998.

(12) Assumes full completion of AC-1, PC-1, MAC and PAC based upon current
Company estimates, including anticipated financing costs. See "Risk
Factors--Risks Relating to Completing the Company's Cable Systems" and
"Risk of Error in Forward-Looking Statements."

30
<PAGE>

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

This Prospectus contains forward-looking statements that include, among
others, statements concerning the Company's plans to effect the design,
construction, and operations of, and sales of capacity on, its planned
telecommunications systems, expectations as to funding its future capital
requirements and other statements of expectations, beliefs, future plans and
strategies, anticipated developments and other matters that are not historical
facts. Management cautions the reader that these forward-looking statements
are subject to risks and uncertainties that could cause actual events or
results to differ materially from those expressed or implied by the
statements. The most important factors that could prevent the Company from
achieving its goals include, but are not limited to, failure by the Company
to: (i) complete its systems within currently estimated time frames and
budgets, (ii) sell capacity on its systems, (iii) make a successful transition
from a system development and construction company to an operating company and
(iv) effectively compete in the context of a rapidly evolving market
characterized by intense price competition and unpredictable levels of demand
for telecommunication capacity. The Company does not intend to publish updates
or revisions of any forward-looking statements included in this Prospectus to
reflect events or circumstances after the date hereof or to reflect subsequent
market analysis. See "Risk Factors--Risk of Error in Forward-Looking
Statements."

The following discussion and analysis should be read in conjunction with the
Company's audited Consolidated Financial Statements and the notes thereto
contained in this Prospectus.

OVERVIEW

The Company was formed as the world's first independent developer, owner and
operator of undersea digital fiber optic cable systems to capitalize on the
accelerating growth of international Internet and telecommunications traffic.
The Company commenced operations in March 1997, when it entered into a fixed
price contract with Tyco Submarine Systems Ltd. ("TSSL"), formerly AT&T
Submarine Systems, Inc., for the design, development, construction and
installation of AC-1, and obtained commitments for AC-1's initial financing.
AC-1, the first of Global Crossing's planned fiber optic cable systems, is
designed to be a four fiber pair system connecting (i) the United States to
the United Kingdom, (ii) the United Kingdom to The Netherlands and Germany,
(iii) The Netherlands to Germany and (iv) Germany to the United States. The
first segment of AC-1, the United States to United Kingdom route, was
completed and commenced operations on May 26, 1998. The Company currently
anticipates that the full AC-1 system will be completed and commence
operations by February 1999. See "Risk Factors--Risks Related to Completing
the Company's Cable Systems."

Until May 26, 1998, the Company was a development stage company and since
its inception, has been involved in the planning, financing, marketing,
organization, development, design and construction of the AC-1 system. In
addition, the Company has been engaged in the planning, developing and
financing of the three other planned systems currently under active
development by the Company (PC-1, MAC and PAC). The Company has also achieved
a number of significant milestones, including (i) the recruitment of
experienced professionals in undersea cable and telecommunications operations,
(ii) the signing of construction contracts on AC-1, PC-1, MAC and PAC, (iii)
the execution of the AC-1 and PC-1 credit facilities and the execution of
financing commitments with respect to MAC and PAC, (iv) the construction and
activation of the United States to United Kingdom segment of AC-1 and (v) the
execution of over $500 million of CPAs. Effective May 26, 1998, the United
States--United Kingdom segment of AC-1 achieved RFS and the Company began
recognizing revenue from the sale of capacity. Accordingly, the Company is no
longer a development stage company.

On March 18, 1998, Old GCL formed a wholly-owned subsidiary, GCL, a Bermuda
company, and contributed its investment in GTH to GCL. On April 30, 1998, GCL
formed a wholly-owned subsidiary, GCH, a Bermuda company. GCL contributed its
investment in GTH to GCH upon its formation. Prior to the Offerings,
substantially all of the shareholders of Old GCL will exchange their equity
interests in Old GCL for Common Stock of GCL.

31
<PAGE>

The Company, together with other partners, formed a joint venture company,
Pacific Crossing Ltd. ("PCL"), which on April 21, 1998 entered into a contract
with TSSL to construct the PC-1 cable system. The estimated cost of the PC-1
system is approximately $1.2 billion (excluding potential future upgrades) and
will be financed through a $400 million equity contribution by the joint
venture partners and through borrowings under the credit facility discussed
below. PC-1 is an undersea fiber optic cable system connecting California,
Washington and two landing sites in Japan. The Company has approximately a 58%
economic interest in PCL, represented by a 50% direct voting interest in PCL
and, through an equity ownership interest in one of the other joint venture
partners, a further 8% economic (but not voting) interest. The Company's
funding commitment in respect of the $400 million of equity in PCL totals $231
million, which is proportional to its economic interest. PCL has obtained an
$850 million senior secured, non-recourse credit facility from certain lenders
to finance the remaining construction costs of the PC-1 system. Prior to
obtaining such financing, PCL borrowed approximately $104 million under a
promissory note from the underwriters of the $850 million credit facility to
make the initial payments on the PC-1 construction contract. The $850 million
credit facility has been used to repay the $104 million promissory note. The
Company accounts for its investment in PCL on an equity basis.

Effective June 2, 1998, the Company, through its wholly-owned subsidiary
Mid-Atlantic Crossing Ltd. ("MACL"), entered into a contract with Alcatel
Submarine Networks for the construction of MAC, an undersea fiber optic cable
system connecting New York, the Caribbean and Florida. The estimated costs of
the MAC system of approximately $350 million (excluding potential future
upgrades and amounts capitalized with respect to the PCG Warrants) will be
financed through a $110 million equity contribution and through borrowings
under a non-recourse credit facility. On June 26, 1998, MACL entered into a
commitment letter to obtain $240 million of non-recourse indebtedness.

Effective July 21, 1998, the Company, through its wholly owned subsidiary
Pan American Crossing Ltd. ("PACL"), entered into a contract with TSSL to
construct PAC, an undersea fiber optic cable system connecting California with
two landing sites in Mexico, Panama and the Caribbean. The estimated costs of
the PAC system of approximately $475 million (excluding potential future
upgrades and amounts capitalized with respect to the PCG Warrants) will be
financed through a $165 million equity contribution and through borrowings
under a non-recourse credit facility. On July 21, 1998, PACL entered into a
commitment letter to obtain $310 million of non-recourse indebtedness.

Sales of capacity by the Company on its cable systems are effected through
Capacity Purchase Agreements ("CPAs") pursuant to which the Company's
customers obtain an indefeasible right of use ("IRU") for a certain number of
circuits. Each IRU entitles the customer to the use of the related capacity
for a period ending 25 years after the RFS date for the related system. Global
Crossing also sells backhaul capacity on terrestrial cables through Inland
Capacity Purchase Agreements ("ICPAs"), linking certain of the Company's
landing stations with major cities in order to provide city-to-city
connectivity to its customers. This backhaul capacity, which is purchased by
the Company through Inland Services Agreements ("ISAs") from the owners of
terrestrial cable systems, is resold by the Company to its customers through
ICPAs. The CPAs and ICPAs generally provide for a cash deposit upon execution,
followed by full payment upon activation of the related capacity pursuant to
the terms of the CPA.

The Company's basic pricing structure currently provides for volume-based
discounts to its customers as well as discounts for early purchases on a
particular system. Customers are generally provided options in their CPAs to
purchase additional capacity in the future at prices which reflect the
aggregate purchases made by such customers. Consequently, the prices under
such options in the future are often lower than the current price paid by such
customers for their initial capacity.

REVENUES

Revenues from CPAs and ICPAs are recognized in the period during which (i)
the purchaser obtains the right to use the capacity, which can only be
suspended following a failure of the purchaser to pay the full purchase price
or fulfill its contractual obligations, (ii) the purchaser becomes obligated
to pay OA&M costs and (iii) the segment of the system related to the capacity
purchased is ready for service.

32
<PAGE>

CPAs for capacity on completed segments that do not meet the Company's
revenue recognition policy are recorded in the Company's consolidated
financial statements as Deferred Revenue and related Accounts Receivable. CPAs
that relate to System segments that have not achieved RFS are not recorded in
the Company's consolidated financial statements.

Since the RFS date for the United States--United Kingdom segment of AC-1,
which occurred on May 26, 1998, the Company's revenues have been comprised
principally of revenues from sales of cable capacity on AC-1 and the sale of
associated backhaul capacity.

Pursuant to the CPAs, the Company bills its customers for operations, direct
administration and maintenance costs incurred, plus 10%, subject to certain
annual maximum amounts.

COST OF CAPACITY SOLD; CONSTRUCTION IN PROGRESS; CAPACITY AVAILABLE FOR SALE

Construction costs incurred with respect to each segment of a system are
reflected as "Construction in Progress" in the Company's consolidated balance
sheet until a segment becomes operational, at which time such costs are
reflected as Capacity Available For Sale. Capacity Available For Sale is
recorded at the lower of cost or fair value less cost to sell and is charged
to Cost of Capacity Sold in the period the related revenues are recognized.
Fair value of capacity is derived from a third party consultant's market study
of expected sales of capacity.

The Company capitalizes the cost of acquiring backhaul capacity and records
in Backhaul Capacity Available for Sale amounts equal to the present value of
future payments associated with the acquisition of such backhaul capacity,
less estimated future operations and maintenance costs associated with such
backhaul.

Construction in Progress includes direct expenditures for construction of
systems, including advisory, consulting and legal fees, interest during
construction and amortized debt issuance costs incurred during the
construction phase.

Amounts charged to Cost of Capacity Sold are calculated based on the ratio
of capacity revenues recognized in a period to total expected capacity
revenues over the life of the system, multiplied by the total cost to
construct the system. Management's forecast of revenues expected over the life
of the system will be supported by an independent consultant's forecast.
Changes in management's estimate of the expected revenues to be derived from
sales of a cable system's capacity will result in adjustments to the
calculations of Cost of Capacity Sold. These adjustments will be recorded on a
prospective basis over future periods commencing with the period when
management revises its estimate. Cost of Capacity Sold represents amortization
of construction costs, a non-cash expense in the period in which it is
recognized. The cost to acquire backhaul capacity is charged to Cost of
Capacity Sold in the period during which the related revenues are recognized.

OPERATING EXPENSES

In addition to Cost of Capacity Sold, the Company's operating expenses
principally comprise sales and marketing, operations and maintenance, general
and administrative and network development costs. Costs relating to the
Company's evaluation of possible additional systems are expensed as incurred.

RESULTS OF OPERATIONS FOR THE PERIOD FROM MARCH 19, 1997 (DATE OF INCEPTION)
TO DECEMBER 31, 1997

Interest Income. Pursuant to the purchase agreement relating to the sale of
its outstanding $150 million GTH Senior Notes, the Company was required to
maintain certain amounts in restricted cash and cash equivalents accounts to
fund future semi-annual interest payments on such notes. Interest income
earned on this balance, together with interest income earned on cash raised
from financing and cash on CPA deposits, totalled approximately $2.9 million
for the period from March 19, 1997 to December 31, 1997. The Company utilized
a portion of the net proceeds from the Note Offering to repurchase the GTH
Senior Notes. See "--Liquidity and Capital Resources."

Expenses. During the period ended December 31, 1997, the Company incurred
expenses of $3.1 million. Of this amount, approximately $1.4 million was
attributable to sales and marketing expenses, relating principally to AC-1,
$0.1 related to network development and approximately $1.6 million was
attributable to general and administrative expenses.

33
<PAGE>

GTH Preference Share Dividends. The GTH Preference Shares accrued
compounding dividends at an annual rate of 14%. During the period ended
December 31, 1997, the Company recorded preference share dividends of
approximately $12.7 million. This amount is comprised of $11.1 million in
paid-in-kind ("PIK") dividends, $1.0 million in amortization of the discount
on issuance and $0.6 million in amortization of issuance costs. The $11.1
million in PIK dividends includes $1.3 million accrued but unpaid as of
December 31, 1997.

In connection with the issuance of the GTH Preference Shares, the exclusive
placement agent thereof, CIBC Wood Gundy Securities Corp., received a total of
19,852,950 shares of Class A common stock of Global Crossing Ltd., LDC ("Old
GCL") for no additional consideration. The Company has recorded the
$13,235,000 estimated fair value of such shares as a discount in the carrying
value of the GTH Preference Shares, which discount is being amortized over the
term of such shares. See "Certain Transactions--Transactions Regarding Class A
Shares of Old GCL."

The Company utilized a portion of the net proceeds from the Note Offering to
redeem the GTH Preference Shares effective June 17, 1998. See "--Liquidity and
Capital Resources."

Net Loss and Net Loss Applicable to Common Shareholders. During the period
ended December 31, 1997, the Company had a net loss applicable to common
shareholders of $12.9 million, resulting primarily from the $12.7 million of
dividends on the GTH Preference Shares described above.

RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED JUNE 30, 1998 AND JUNE 30,
1997

Revenues

Through June 30, 1998, the Company had executed CPAs totalling approximately
$556 million. Of that amount, the Company recognized revenues of subsea and
backhaul capacity on AC-1 of $100.9 million for the three months ended June
30, 1998, in addition to revenues from operation and maintenance services of
$0.4 million. Of the remaining $455 million, $240 million relating to the
United States-United Kingdom segment of AC-1 was recorded as Deferred Revenue
on the consolidated balance sheet and $215 million has not yet been reflected
in the financial statements, since such CPAs relate to sales that are
conditional on the completion of additional segments of AC-1. As of June 30,
1998, the Company had entered into CPAs with 22 international
telecommunications carriers and had sold approximately 19% of the minimum
projected sales capacity of 512 circuits on the AC-1 system. There were no
revenues in the three months ended June 30, 1997, as the Company was in its
development stage. As of June 30, 1998, the Company recorded an allowance for
doubtful accounts in the amount of $1.0 million.

Expenses

Cost of Capacity Sold. For the three months ended June 30, 1998, the Company
recognized $41.2 million in costs of capacity sold, resulting in a gross
profit on capacity sales of 59%. The Company calculates cost of capacity sold
for AC-1 as previously described based on the ratio of the period's actual
revenue to total expected revenues given a minimum projected sales capacity of
512 circuits. This calculation of cost of sales matches costs with the
relative sales value of each sale. Cost of capacity sold also includes the
cost of backhaul capacity sold during the three months ended June 30, 1998 of
approximately $9 million. There were no sales or related costs recognized in
the three months ended June 30, 1997.

Operation and Maintenance. The Company incurred OA&M costs on the United
States-United Kingdom segment of AC-1 in the amount of $2.4 million during the
three months ended June 30, 1998. The Company has entered into an agreement
with TSSL relating to operations, administration and maintenance of AC-1 and
related backhaul capacity ("the AC-1 OA&M Agreement"). Following the AC-1 full
system RFS date, the Company anticipates that its costs under the AC-1 OA&M
Agreement will be largely recovered through charges to its customers under the
terms of CPAs.

34
<PAGE>

providing for the payment by the Company of an advisory fee of 2.0% of the
gross revenues of ACL. The Company's Board of Directors also approved similar
advisory fees and authorized the Company to enter into similar agreements in
respect of other cable systems developed by the Company. The Company has
agreed to acquire the rights of the persons entitled to the fees payable under
these agreements in consideration for the issuance by the Company of Common
Stock having an aggregate value of $135 million and the cancellation of
approximately $2.7 million owed to the Company under a related advance
agreement. As a result of this transaction, the Company incurred a charge of
$137.7 million, reflected in the statement of operations for the three month
period ended June 30, 1998. In addition, the Company recognized approximately
$2 million of advisory fees incurred prior to termination of the contract. See
"Certain Transactions." Upon the consummation of this transaction, all
obligations of the Company and ACL in respect of the advisory services
agreements will be terminated.

Sales and Marketing. During the three months ended June 30, 1998, the
Company recognized sales and marketing expenses of $6.5 million, including
commissions of $4.1 million incurred on the capacity sales recognized during
this period. During the three months ended June 30, 1997, the Company incurred
sales and marketing costs of approximately $40,000.

Network Development. The Company incurred network development costs during
the three months ended June 30, 1998 in the amount of $4.3 million relating to
the development of possible new systems. No such costs were incurred during
the three months ended June 30, 1997.

General and Administrative. General and administrative expenses totaled $6.5
million during the three months ended June 30, 1998, comprised principally of
salaries, employee benefits and recruiting fees reflecting the Company's
staffing for multiple systems; travel; insurance costs and rent expenses.
During the three months ended June 30, 1997, the Company incurred general and
administrative costs of approximately $50,000.

Stock-Related Expense. On April 3, 1998 and June 12, 1998, the Board of
Directors of Old GCL approved the issuance of options relating to 5,557,500
shares of common stock of Old GCL and 3,352,950 shares of common stock of Old
GCL, respectively, under the Company's Stock Incentive Plan. The options
granted on April 3, 1998 have exercise prices of $1.67 per share and the
options granted on June 12, 1998 have exercise prices of $6.67 per share and
generally have three-year vesting periods and ten-year expiration periods.
During the three months ended June 30, 1998, the Company recorded $67.1
million of unearned compensation, which is being recognized as an expense over
the vesting period of the options. Of this amount, the Company recognized
approximately $21.1 million of compensation expense during the three months
ended June 30, 1998 for the options issued in April and June, since the
exercise price was less than the estimated fair market value of the stock on
the date of grant. Additionally, $1.6 million in stock-related expense was
recorded in respect of shares issued during the period.

Interest Expense and Interest Income

During the three months ended June 30, 1998, the Company incurred $21.3
million in interest costs, including the amortization of debt discount and
expense. Of this amount, the Company capitalized interest to construction in
progress of $13.9 million and expensed $7.4 million. The Company's accounting
policy, in accordance with SFAS 34, provides for capitalization of interest to
construction in progress until such time as a segment reaches its Ready-for-
Service ("RFS") date. Accordingly, all interest costs were capitalized in the
three months ended June 30, 1997.

Interest income of $4.3 million and $1.3 million in the three months ended
June 30, 1998 and 1997, respectively, represents earnings on restricted cash,
cash raised from financing, and on CPA and ICPA deposits.

Provision for Income Taxes

The income tax provision of $9 million for the three months ended June 30,
1998 provides for taxes on profits earned from subsea and backhaul capacity
sales and OA&M revenues in certain jurisdictions where the Company is deemed
to have a taxable presence. The Company has incurred operating losses which
relate to non-taxable jurisdictions and therefore operating losses incurred to
date cannot be applied against future taxable earnings. Accordingly, no tax
provision or deferred tax benefit was recorded in 1997.

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Extraordinary Item; Preference Share Dividends

On May 18, 1998, the Company's wholly-owned subsidiary, GCH, issued $800
million of senior unsecured notes for the purpose of repurchasing the GTH
Senior Notes, redeeming the GTH Preference Shares, repaying in full amounts
drawn under a $200 million senior bridge facility (the "Global Crossing Bridge
Facility") and financing new projects. The Company recognized an extraordinary
loss of $19.7 million upon the repurchase of the GTH Senior Notes on May 18,
1998, comprised of a repurchase premium of approximately $9.8 million payable
to repurchase the GTH Senior Notes and a write-off of approximately $9.9
million of unamortized deferred financing costs. The redemption of the GTH
Preference Shares occurred on June 17, 1998 and resulted in a $34.1 million
charge against additional paid-in capital, comprised of approximately a $15.9
million redemption premium and $18.2 million of unamortized discount and
deferred financing costs on the GTH Preference Shares on the date of the
redemption. The redemption premium and write-off of unamortized discount and
issuance costs on the GTH Preference Shares are treated as a deduction to
arrive at net loss applicable to common shareholders in the consolidated
statement of operations.

The GTH Preference Shares accrued compounding dividends at an annual rate of
14%. During the three months ended June 30, 1998, the Company recorded
preference share dividends of approximately $3.9 million. This amount is
comprised of $3.5 million in paid-in-kind dividends, $0.3 million in
amortization of the discount on issuance and $0.1 million in amortization of
issuance costs. Preference share dividends for the three months ended June 30,
1997 were approximately $4.0 million comprised of $3.5 million in paid-in-kind
dividends, $0.3 million in amortization of the discount on issuance and $0.2
million in amortization of issuance costs. On June 17, 1998, the Company
redeemed the GTH Preference Shares as stated above.

Net Loss and Net Loss Applicable to Common Shareholders

The Company incurred a net loss of $155.4 million for the three months ended
June 30, 1998, compared to net income of $1.2 million in the three months
ended June 30, 1997. The loss for the three months ended June 30, 1998
reflects an extraordinary loss on retirement of GTH Senior Notes of $19.7
million and a non-recurring charge of $137.7 million relating to the
termination of its Advisory Services Agreement. The Company's net income
before these items would have been $2.0 million.

Net Loss Applicable to Common Shareholders during the three months ended
June 30, 1998 of $193.5 million reflects preference share dividends of $3.9
million and the redemption of GTH Preference Shares of $34.1 million. During
the three months ended June 30, 1997 the Company incurred a Net Loss
Applicable to Common Shareholders of $2.8 million after preference share
dividends of $4.0 million.

RESULTS OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 1998 AND THE PERIOD
FROM MARCH 19, 1997 (DATE OF INCEPTION) TO JUNE 30, 1997

Revenues

Through June 30, 1998, the Company had signed CPAs totalling approximately
$556 million. Of that amount, the Company recognized revenues of subsea and
backhaul capacity on AC-1 of $100.9 million for the six months ended June 30,
1998, in addition to revenues from operation and maintenance services of $0.4
million. Of the remaining $455 million, $240 million relating to the United
States-United Kingdom segment of AC-1 was recorded as deferred revenue on the
balance sheet and $215 million has not yet been reflected in the financial
statements since such CPAs relate to sales that are conditional on the
completion of additional segments of AC-1. As of June 30, 1998, the Company
had entered into CPAs with 22 international telecommunications carriers and
had sold approximately 19% of the minimum projected sales capacity of 512
circuits on the AC-1 system. There were no revenues in the period from March
19, 1997 (date of inception) to June 30, 1997, as the Company was in its
development stage. As of June 30, 1998, the Company recorded an allowance for
doubtful accounts in the amount of $1.0 million.

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Expenses

Cost of Capacity Sold. For the six months ended June 30, 1998, the Company
recognized $41.2 million in costs of capacity sold, resulting in a gross
profit on capacity sales of 59%. The Company calculates cost of capacity sold
for AC-1 as previously described based on the ratio of the period's actual
revenue to total expected revenues given a minimum projected sales capacity of
512 circuits. This calculation of cost of sales matches costs with the
relative sales value of each sale. Cost of capacity sold also includes the
cost of backhaul capacity sold during the six months ended June 30, 1998 of
approximately $9 million. There were no sales or related costs recognized for
the period from March 19, 1997 (date of inception) to June 30, 1997.

Operation and Maintenance. The Company incurred OA&M costs on the United
States-United Kingdom segment of AC-1 in the amount of $2.4 million during the
six months ended June 30, 1998. The Company has entered into the AC-1 OA&M
Agreement with TSSL relating to operations, administration and maintenance of
AC-1 and related backhaul capacity. Following the AC-1 full system RFS date,
the Company anticipates that its costs under the AC-1 OA&M Agreement will be
largely recovered through charges to its customers under the terms of CPAs.

Termination of Advisory Services Agreement with PCG Telecom. In connection
with the development and construction of AC-1, ACL entered into an advisory
services agreement with an affiliate of the Company providing for the payment
by the Company of an advisory fee of 2.0% of the gross revenues of ACL. The
Company's Board of Directors also approved similar advisory fees and
authorized the Company to enter into similar agreements in respect of other
cable systems developed by the Company. The Company has agreed to acquire the
rights of the persons entitled to the fees payable under these agreements in
consideration for the issuance by the Company of Common Stock having an
aggregate value of $135 million and the cancellation of approximately $2.7
million owed to the Company under a related advance agreement. This charge of
$137.7 million is reflected in the statement of operations for the six month
period ended June 30, 1998. In addition, the Company recognized approximately
$2 million of advisory fees incurred prior to termination of the contract. See
"Certain Transactions." Upon the consummation of this transaction, all
obligations of the Company and ACL in respect of the advisory services
agreements will be terminated.

Sales and Marketing. During the six months ended June 30, 1998, the Company
recognized sales and marketing expenses of $7.3 million, including commissions
of $4.1 million incurred on the capacity sales recognized during this period.
During the period from March 19, 1997 (date of inception) to June 30, 1997,
the Company incurred sales and marketing costs of approximately $40,000.

Network Development. The Company incurred network development costs during
the six months ended June 30, 1998 in the amount of $4.3 million relating to
the development of possible new systems. No such costs were incurred during
the period from March 19, 1997 (date of inception) to June 30, 1997.

General and Administrative. General and administrative expenses totaled $9.1
million during the six months ended June 30, 1998, comprised principally of
salaries, employee benefits and recruiting fees reflecting the Company's
staffing for multiple systems; travel; insurance costs and rent expenses.
During the period from March 19, 1997 (date of inception) to June 30, 1997,
the Company incurred general and administrative costs of approximately
$50,000.

Stock-Related Expense. On January 21, 1998, April 3, 1998 and June 12, 1998,
the Board of Directors of Old GCL approved the issuance of options relating to
4,231,500, 5,557,500 and 3,352,950 shares of common stock of Old GCL,
respectively, under the Company's Stock Incentive Plan. The options granted on
January 21, 1998 and April 3, 1998 have exercise prices of $1.67 per share and
the options granted on June 12, 1998 have exercise prices of $6.67 per share
and generally have three-year vesting periods and ten-year expiration periods.
During the six months ended June 30, 1998, the Company recorded $67.1 million
of unearned compensation which is being recognized as an expense over the
vesting period of the options. Of this amount the Company recognized
approximately $21.1 million of compensation expense during the six months
ended June 30, 1998 for the options issued in April and June, since the
exercise price was less than the estimated fair market value of

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the stock on the date of grant. During the six months ended June 30, 1998, the
Company also recorded stock-related expense of $2.3 million relating to shares
issued during this period. The Company's Stock Incentive Plan commenced on
January 21, 1998 and therefore no issuances were made during the period from
March 19, 1997 (date of inception) to June 30, 1997.

Interest Expense and Interest Income

During the six months ended June 30, 1998, the Company incurred $31.8
million in interest costs, including the amortization of debt discount and
expense. Of this amount, the Company capitalized interest to construction in
progress of $24.4 million and expensed $7.4 million. The Company's accounting
policy, in accordance with SFAS 34, provides for capitalization of interest to
construction in progress until such time as a segment reaches its Ready-for-
Service ("RFS") date. Accordingly, all interest costs were capitalized in the
period from March 19, 1997 (date of inception) to June 30, 1997.

Interest income of $4.7 million and $1.3 million in the six months ended
June 30, 1998 and during the period from March 19, 1997 (date of inception) to
June 30, 1997, respectively, represents earnings on restricted cash, cash
raised from financing, and on CPA and ICPA deposits.

Provision for Income Taxes

The income tax provision of $9 million for the six months ended June 30,
1998 provides for taxes on profits earned from subsea and backhaul capacity
sales and OA&M revenues in certain jurisdictions where the Company is deemed
to have a taxable presence. The Company has incurred operating losses which
relate to non-taxable jurisdictions and therefore operating losses incurred to
date cannot be applied against future taxable earnings. Accordingly, no tax
provision or deferred tax benefit was recorded in 1997.

Extraordinary Item; Preference Share Dividends

On May 18, 1998, the Company's wholly-owned subsidiary, GCH, issued $800
million of senior unsecured notes for the purpose of repurchasing the GTH
Senior Notes, redeeming the GTH Preference Shares, repaying amounts drawn
under the Global Crossing Bridge Facility and financing new projects. The
Company recognized an extraordinary loss of $19.7 million upon the repurchase
of the GTH Senior Notes on May 18, 1998, comprised of a premium of
approximately $9.8 million payable to repurchase the GTH Senior Notes and a
write-off of approximately $9.9 million of unamortized deferred financing
costs. The redemption of the GTH Preference Shares occurred on June 17, 1998
and resulted in a $34.1 million charge against additional paid-in capital,
comprised of approximately a $15.9 million redemption premium and $18.2
million of unamortized discount and issuance cost on the GTH Preference Shares
on the date of the redemption. The redemption premium and write-off of
unamortized discount and issuance costs on the GTH Preference Shares are
treated as a deduction to arrive at net loss applicable to common shareholders
in the consolidated statement of operations.

The GTH Preference Shares accrued compounding dividends at an annual rate of
14%. During the six months ended June 30, 1998, the Company recorded
preference share dividends of approximately $8.3 million. This amount is
comprised of $7.3 million in paid-in-kind dividends, $0.6 million in
amortization of the discount on issuance and $0.4 million in amortization of
issuance costs. Preference share dividends for the period from March 19, 1997
(date of inception) to June 30, 1997 were $4.2 million comprised of $3.7
million paid-in-kind dividends, $0.3 million in amortization of the discount
on issuance and $0.2 million in amortization of issuance costs. On June 17,
1998, the Company redeemed the GTH Preference Shares as stated above.

Net Loss and Net Loss Applicable to Common Shareholders

The Company incurred a net loss of $159.2 million for the six months ended
June 30, 1998, compared to net income of $1.2 million in the period from March
19, 1997 (date of inception) to June 30, 1997. The loss for the six months
ended June 30, 1998 reflects an extraordinary loss on retirement of GTH Senior
Notes of $19.7 million and a non-recurring charge of $137.7 million relating
to the termination of its Advisory Services Agreement. The Company's net loss
before these items would have been $1.8 million.

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<PAGE>

Net Loss Applicable to Common Shareholders during the six months ended June
30, 1998 of $201.6 million also reflects preference share dividends of $8.3
million and the redemption of GTH Preference Shares of $34.1 million. During
the period from March 19, 1997 (date of inception) to June 30, 1997, the
Company incurred a Net Loss Applicable to Common Shareholders of $3.0 million
after preference share dividends of $4.2 million.

BALANCE SHEET AS OF JUNE 30, 1998

The Company's investment in Construction in Progress, Capacity Available for
Sale, Backhaul Capacity Available for Sale and Investment in PCL totaled
approximately $906 million as at June 30, 1998.

In June 1998, the Board of Directors amended the terms of the PCG Warrants
so that the PCG Warrants will become exercisable upon the successful
completion of the Offerings. The Board of Directors also amended the terms of
the PCG Warrants to give each holder the option to convert each share under
warrant into a fraction of a Class B share of Old GCL based upon the ratio of
the current per share valuation at the time of conversion less the per share
exercise price of the warrant divided by the current per share valuation at
the time of conversion, together with a new warrant ("New PCG Warrants") to
purchase the remaining fraction of such Class B share at an exercise price
equal to the current per share valuation. Prior to the Offerings, it is
expected that the holders of the PCG Warrants will exercise their warrants to
acquire Class B shares of Old GCL by way of the cashless conversion and the
New PCG Warrants will be issued with an exercise price based on the per share
valuation at the conversion date.

The Company has accounted for the PCG Warrants based upon the value of the
cashless conversion as of June 30, 1998 using the current estimated per share
valuation at the expected conversion date multiplied by the number of Class B
shares of Old GCL estimated to be converted in exchange for the PCG Warrants.
The Company has recorded an increase in its Investment in PCL in the amount of
approximately $126.5 million and an increase in Construction in Progress for
PAC and MAC in the amounts of approximately $49.9 million and $36.9 million,
respectively, with a corresponding increase of approximately $213.3 million in
Additional Paid-in-Capital. The $213.3 million was allocated on a pro rata
basis to the three projects according to the estimated cost of each system.
The Company's accounting for the PCG Warrants is pursuant to Emerging Issues
Task Force 96-18, "Accounting for Equity Instruments with Variable Terms that
are Issued for Consideration other than Employee Services under FASB Statement
No. 123" ("EITF 96-18"). Under EITF 96-18, the fair value of equity
instruments issued for consideration other than employee services should be
measured using the stock price or other measurement assumptions as of the date
at which a firm commitment for performance has been reached. The Company has
recorded the estimated value of the PCG Warrants as of June 30, 1998, since
the Offerings were probable at that date. The $213.3 million value attributed
to the PCG Warrants as of June 30, 1998 will be adjusted to the actual value
on the date of the Offerings.

The Company will give accounting recognition for the New PCG Warrants on the
date these warrants are issued, which is expected to be the date of the
Offerings. The Company estimates the value of each New PCG Warrant at $6.67
based on an independent valuation assuming a Price to Public Per Share of the
Offerings of $18.00 per share. Assuming all of the PCG Warrants are converted
as of June 30, 1998, the New PCG Warrants would have a total value of $44
million. Upon the issuance of the New PCG Warrants, the Company will record
the actual value of the New PCG Warrants at the date of the Offerings in a
manner similar to that described above whereby the total value will be
allocated to the investment in PCL and Construction in Progress for MAC and
PAC based on their relative total contract costs with a corresponding increase
in Additional Paid-in-Capital.

During the six months ended June 30, 1998, the Company paid fees of $7.0
million to PCG, a shareholder of the Company, relating to system evaluation
costs incurred by PCG. This amount was treated as a dividend and charged
against paid-in-capital.

LIQUIDITY AND CAPITAL RESOURCES

The Company's principal capital expenditure requirements involve the
construction of undersea cable systems, the related landing stations, and
certain investments in backhaul capacity to connect the landing stations

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to major metropolitan areas. As of June 30, 1998 and December 31, 1997,
respectively, the Company had incurred approximately $724 million and $519
million, respectively, of capital expenditures in respect of AC-1, principally
for system construction costs and purchases of backhaul capacity and was
committed to a further $64 million and $195 million, respectively, of capital
expenditures under the AC-1 Contract in connection with the completion of AC-
1. Backhaul capacity purchases are recorded at the present value of future
payments required to be made by the Company for such capacity.

The total cost of AC-1 is estimated at approximately $750 million, excluding
purchases of backhaul capacity and potential future upgrades but including
financing costs capitalized during the period AC-1 is under construction. All
future costs with respect to AC-1 will be fully financed with the remaining
availability under the AC-1 Credit Facility. AC-1 was initially financed
through (i) the $482 million AC-1 Credit Facility; (ii) $150 million of GTH
Senior Notes; (iii) $100 million of GTH Preference Shares; and (iv) $75
million of GCL common equity. See "Description of Certain Indebtedness." As of
December 31, 1997 and June 30, 1998, the Company had borrowed $162 million and
$367 million, respectively, under the AC-1 Credit Facility. The Company's
principal source of liquidity through those dates was the AC-1 Credit
Facility.

On May 18, 1998, GCH consummated an $800 million private offering of 9 5/8%
Senior Notes Due 2008 (the "Note Offering"). The Company has utilized (or will
utilize) the net proceeds of the Note Offering (i) to purchase all of the $150
million outstanding GTH Senior Notes, (ii) to redeem all of the $100 million
outstanding GTH Preference Shares, (iii) to repay in full the $67.2 million
outstanding under the Global Crossing Bridge Facility, (iv) to make $315
million of equity investments in certain of the Company's systems and (v) for
general corporate purposes, including $74 million to fund a one-year interest
reserve on the GCH Senior Notes.

Cash provided by operating activities was approximately $37.4 million for
the six months ended June 30, 1998 and $5.1 million for the period from March
19, 1997 (date of inception) to December 31, 1997 and principally represents
cash received on deposits on signed CPAs plus interest income received, less
sales and marketing and general and administrative expenses paid.

Cash provided by financing activities was approximately $456.3 million for
the six months ended June 30, 1998 and primarily represents borrowings under
the AC-1 Credit Facility and the Global Crossing Bridge Facility net of the
increase in proceeds on borrowings held in restricted cash and cash
equivalents. Cash provided by financing activities of $425.1 million for the
period from March 19, 1997 (date of inception) to December 31, 1997
principally relates to net proceeds from the issuance of common stock,
preference shares and senior notes, and borrowings under the AC-1 Credit
Facility less finance and organization costs paid, less an increase in
proceeds on borrowings held in restricted cash and cash equivalents.

Cash used in investing activities was approximately $191.1 million and
$429.0 million for the six months ended June 30, 1998 and the period from
March 19, 1997 (date of inception) to December 31, 1997, respectively,
represents cash paid for Construction in Progress.

The Company is currently actively developing three additional systems, PC-1,
MAC and PAC. The Company currently estimates that the costs of constructing
these systems will total approximately $2,025 million, including financing
costs but excluding potential future upgrades and amounts capitalized with
respect to the PCG Warrants. The Company expects to use approximately $315
million of the net proceeds from the Note Offering to fund initial investments
in PC-1, MAC and PAC. In order to finance certain initial costs relating to
the development of these systems, the Company has obtained additional
financing. During the first quarter of 1998, the Company, acting through GCL,
entered into the $200 million Global Crossing Bridge Facility with a syndicate
of banks led by CIBC. The Company utilized a portion of the net proceeds from
the Note Offering to repay such borrowings and terminate the remaining
commitments under the Global Crossing Bridge Facility. The Company expects
that the additional capital required to finance these cable systems will be
raised through a combination of commercial bank borrowings, non-recourse
project financings, and public and private offerings of debt and equity
securities. Effective July 30, 1998, the Company entered into a credit
agreement for the $850 million non-recourse project debt financing of PC-1
(including $50 million for the initial upgrade of the PC-1 system). Effective
June 26, 1998, the Company entered into a commitment letter for the $240
million

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<PAGE>

non-recourse project debt financing of MAC. Effective July 21, 1998, the
Company entered into a commitment letter for $310 million non-recourse project
debt financing of PAC. There can be no assurance that the Company will be
successful in raising additional capital at all or on terms acceptable to the
Company. See "Risk Factors--Substantial Future Capital Requirements" and "Risk
Factors--Risks Related to Completing the Company's Cable Systems."

Because the Company's cost of developing and constructing its systems, as
well as operating its business, will depend on a variety of factors (including
the Company's ability to successfully negotiate construction supply contracts
at favorable prices, the ability of the Company to generate sufficient sales
to customers, changes in the competitive environment of the markets served by
the Company, the estimated levels of participation by the Company's joint
venture partners, and changes in technology), actual costs and revenues will
vary from expected amounts, possibly materially, and such variations will
likely impact the Company's future capital requirements. The development of
additional systems which may be pursued by the Company will lead to additional
future capital requirements.

As of April 21, 1998, a supply contract (the "PC-1 Contract") was entered
into with TSSL to construct PC-1. The PC-1 Contract contains construction
payments totaling approximately $1.0 billion to be made by Global Crossing and
its joint venture partners. On June 2, 1998, the Company entered into a supply
contract (the "MAC Contract") with Alcatel to construct MAC. On July 21, 1998,
the Company entered into a supply contract (the "PAC Contract") with TSSL to
construct PAC. See "Risk Factors--Substantial Future Capital Requirements" and
"Risk Factors--Risk of Error in Forward-Looking Statements."

The Company has extended financing to a small number of customers in
connection with certain CPAs. The financing terms provide for installment
payments over a period of up to four years. To date, less than ten percent of
the Company's sales have been made on this basis. The Company believes that
its extension of financing to its customers will not have a material effect on
the Company's liquidity.

The Company has entered into a commission sharing agreement with TSSL
providing for the payment to TSSL of commissions in respect of marketing of
capacity on the AC-1 and PC-1 systems. Payments by the Company to TSSL of
these commissions is fully contingent upon the receipt by the Company of cash
payment under the related CPAs and, accordingly, payment by the Company of
these commissions has no material effect on its liquidity.

FOREIGN CURRENCY EXPOSURE

All of the Company's sales and substantially all of its expenditures are
denominated in U.S. dollars. Monetary assets and liabilities denominated in
foreign currencies at year end are translated into U.S. dollars at the rate of
exchange at that date. Resulting gains or losses on exchange are recorded in
the statement of operations.

INFLATION

Management does not believe that its business is impacted by inflation to a
significantly different extent than the general economy.

YEAR 2000 COMPLIANCE

The Company believes that its computer information systems will enable it to
process transactions relating to Year 2000 and beyond and that its computer
systems relating to AC-1 will be Year 2000 compliant. The Company has received
assurances from TSSL and Lucent Technologies regarding Year 2000 compliance
status of these suppliers with respect to AC-1, but does not currently have
such information regarding its customers. In the event that any of the
Company's significant suppliers or customers do not successfully and timely
achieve Year 2000 compliance, the Company's business or operations could be
adversely affected.

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BUSINESS

Global Crossing is the world's first independent provider of global Internet
and long distance telecommunications facilities and services utilizing a
network of undersea digital fiber optic cable systems and associated
terrestrial backhaul capacity. As such, the Company believes it is the first
to offer "one-stop shopping" for its customers to multiple destinations
worldwide. The Company operates as a "carriers' carrier", providing tiered
pricing and segmented products to licensed providers of international
telecommunications services. Capacity on the Global Crossing Network is
offered to all customers on an open, equal access basis. The first four cable
systems under development by the Company, together with associated terrestrial
backhaul capacity, will form a state-of-the-art interconnected worldwide high
capacity undersea fiber optic network: AC-1, a system connecting the United
States and Europe; PC-1, a system connecting the United States and Asia; MAC,
a system connecting the eastern United States, Bermuda and the Caribbean; and
PAC, a system connecting the western United States, Mexico, Panama and the
Caribbean. The undersea component of this initial network totals 51,300 km.
The Company is in the process of developing several new cable systems and
evaluating other business development opportunities which will complement the
Global Crossing Network.

Global Crossing's business is designed to meet the varying needs of the
global carrier market. The Company offers customers the ability to purchase
capacity on demand, thereby (i) eliminating their need to commit the
substantial capital which would otherwise be required to build undersea cable
capacity and (ii) decreasing the risks associated with forecasting their
future capacity requirements. Compared with traditional undersea cable
systems, the Company offers more comprehensive, flexible and low-cost
purchasing alternatives designed to meet current market requirements of
international carriers and licensed Internet service providers, including
direct international city-to-city connectivity, the ability to purchase
capacity annually and discounts based upon aggregate volume purchased on the
Global Crossing Network.

The Global Crossing Network is being engineered and constructed to allow
multiple upgrades to its initial circuit capacity at a fraction of the initial
system cost, and the Company is exploring opportunities to expand its subsea
and terrestrial systems, as well as the range of the products it offers. The
Company anticipates that its future revenues, beyond those obtained from the
sale of the initial capacity of its first four cable systems, will derive from
several sources. First, each of the currently-planned systems under
development by the Company is upgradeable to capacities significantly beyond
the initial capacity at a fraction of the original system cost. These upgrades
can be used to meet growth in market demand for telecommunications capacity
and to achieve additional revenues. In addition, the Company is currently
evaluating a number of additional undersea cable projects, as well as
proposals to develop or purchase additional terrestrial fiber capacity in
North America, Europe, and Asia. These potential projects will be pursued to
the extent that they further the Company's strategy of developing an
integrated global network that serves approximately 50 of the largest
metropolitan communications markets worldwide. As the Company's global network
is developed, additional wholesale revenues may be generated from the sale of
additional products and services. See "Risk Factors--Sales Capacity;
Realization of Other Revenues."

Global Crossing was formed to capitalize on the accelerating growth of
international voice and data telecommunications traffic. The significant
increase in Internet usage and other bandwidth-intensive applications and the
growing use of corporate networks have substantially increased the demand for
international fiber optic cable capacity. The proliferation of
telecommunications service providers due, in large part, to industry
deregulation has further contributed to increased demand for such
international cable capacity. Additionally, the Company believes that other
technological developments, such as improvements in "last mile" access
technology, including xDSL and cable modems, and the increasing video content
of Internet applications, will result in further capacity demand growth.

The Company commenced operations in March 1997, when it contracted for the
construction of AC-1, a 14,000 km digital fiber optic cable system that will
link the United States, the United Kingdom, The Netherlands and Germany and
will initially offer 40 Gbps of service capacity, which is upgradeable to a
minimum of 80 Gbps, increasing the existing undersea fiber optic cable
capacity along the heavily trafficked transatlantic route

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by approximately 65% prior to upgrades. AC-1 commenced service on its United
States-United Kingdom segment on May 26, 1998 and the full system,
encompassing a four fiber pair self-healing ring, is scheduled for completion
by February 1999. In April 1998, Global Crossing contracted for the
construction of PC-1, a 21,000 km digital cable system that will link the
United States and Japan and will initially offer 80 Gbps of service capacity,
upgradeable to a minimum of 160 Gbps. PC-1, a four fiber pair self healing
ring, is scheduled to commence initial service in March 2000. In June 1998,
Global Crossing contracted for the construction of MAC, a 9,300 km digital
cable system that will connect New York, Bermuda, the Caribbean and Florida
and will initially offer 20 Gbps of service capacity, upgradeable to a minimum
of 40 Gbps. In addition, in July 1998, Global Crossing contracted for the
construction of PAC, a 7,000 km two fiber pair digital cable that will connect
California, Mexico, Panama and the Caribbean and will initially offer 20 Gbps
of service capacity, upgradable to a minimum of 40 Gbps.

MARKET OPPORTUNITY

The Global Crossing Network is being developed to capitalize on certain
trends in the international telecommunications industry:

Rapid Growth of International Internet and Telecommunications Traffic. While
international voice traffic from 1996-2000 is expected to grow at a rate of
13% annually, international data traffic growth is expected to significantly
outpace voice traffic growth. One of the key factors contributing to the
growth in data traffic is the increasing use of broadband applications
dominated by Internet, which has grown at a compound annual rate of 86% for
the past five years as measured by the number of Internet hosts. Reflecting
this growth, the number of ISPs is growing explosively on a global basis. ISPs
outside the United States, particularly in Europe, Asia and Latin America, are
expected to require significant subsea optical circuit capacity to provide
efficient service to their customers to popular Internet web sites in the
United States. In addition, improvements in "last mile" technology, such as
xDSL and cable modems, are contributing to the significant increase in the
number of subscribers using such bandwidth-intensive applications. For
example, the number of cable modem subscribers in the United States alone is
projected to increase by approximately 600% in 1998. Several additional key
factors are expected to drive the rapid growth in worldwide telecommunications
traffic, including the (i) worldwide growth in the use of bandwidth-intensive
applications, such as video conferencing and corporate intranets, (ii)
increased globalization of commerce and (iii) a general decline in
international tariffs.

Impact of Global Deregulation. The continued deregulation of the global
telecommunications industry has resulted in a significant increase in the
number of competitors, including traditional carriers, wireless operators,
ISPs and new local exchange service providers, due in large part to: (i) the
breadth and volume of privatization activity globally and (ii) the ability of
new entrants to effectively compete against the formerly protected incumbent
providers. This change in the global competitive landscape is generating
significant demand for broadband communications capacity as carriers seek to
secure sufficient capacity for their expansion plans. As of July 1998, the ITU
estimated that there were 1,000 international carriers, representing a 181%
increase since the end of 1996. In addition, further telecom privatization is
expected during 1998 and 1999, which in turn is expected to generate increased
global competition.

Shortage of Available Capacity. The Company believes that additional network
undersea capacity and faster response times will be required to satisfy
current and anticipated growth in telecommunications traffic. While there has
been a significant increase in the demand for global telecommunications
capacity, there has not

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<PAGE>

been a corresponding growth in the number of new transport facilities,
especially in the undersea cable industry. The Company believes that
construction of competing undersea cable systems will be limited in the near
future due to barriers to entry, including (i) the extensive lead time
required to engineer and construct cable systems, (ii) the limited number of
major undersea cable supply and construction companies, (iii) the limited
number of qualified personnel with extensive experience in the undersea cable
industry and (iv) the significant capital required to develop undersea cable
systems.

Increasing Challenges for Consortia Systems. Historically, the planning and
ownership of undersea cable systems was conducted through large consortia
typically led by the monopoly telecommunications providers. Global Crossing
believes that the consortium approach to constructing, owning and operating
undersea cable systems is becoming far less effective as (i) carriers
increasingly view significant long term capital investments in capacity to be
a suboptimal utilization of resources, (ii) deregulation of international
telecommunications markets leads to direct competition among consortia members
for customers, (iii) competition from new entrants makes carriers' market
share and capacity requirements increasingly difficult to predict and (iv) the
rapid pace of technological change creates difficulties in the ability of
carriers to accurately forecast the growth of telecommunications traffic.

Acceptance of Privately Sponsored Cable Systems. The Company believes that
telecommunications service providers have become increasingly receptive to the
advantages of independent, privately-owned cable systems. In connection with
the marketing of capacity on the Global Crossing Network, carriers have
responded positively to the Company's ability to offer (i) capacity as and
when needed without the incurrence of significant initial capital investments,
(ii) a wide range of purchasing options appealing to both established carriers
and new market entrants, (iii) state-of-the-art system quality combined with
cost-effective high quality operations, administration and maintenance support
and (iv) the absence of direct competition with its customers.

BUSINESS STRATEGY

Global Crossing's mission is to create the world's first independent global
fiber optic network designed to offer its customers the highest quality city-
to-city communications connectivity among approximately 50 of the largest
metropolitan markets worldwide. The principal elements of the Company's
business strategy include:

Create a Worldwide Network. Upon completion, the currently announced
undersea segments of the Global Crossing Network will directly connect Asia,
North America, Europe, Central America and the Caribbean through the major
transoceanic routes utilizing state-of-the-art technology. To increase the
attractiveness of the Global Crossing Network, the Company is making selective
wholesale acquisitions of terrestrial fiber capacity, thereby providing its
customers with international city-to-city connectivity through Global
Crossing's cable systems at prices significantly lower than if such customers
had attempted to gain connectivity by separately purchasing required
terrestrial backhaul capacity. The Company also intends to actively pursue
additional opportunities for the expansion of the Global Crossing Network,
including complementary businesses and facilities.

The Company has entered into contractual arrangements to provide terrestrial
backhaul service between its landing stations in the United States and the
United Kingdom and New York City and London, respectively, as well as other
arrangements to provide backhaul service in Germany and The Netherlands. In
addition, the Company recently entered into an agreement with Qwest whereby
Global Crossing will receive access to over 25 U.S. metropolitan
communications markets on Qwest's terrestrial network. Through Global Access,
a Japanese telecommunications carrier owned by Marubeni, the Company will
offer backhaul services to PC-1 customers from the Company's Japanese landing
stations directly to Tokyo at prices substantially lower than existing
alternatives. The Company is also currently negotiating with Marubeni to
obtain a minority investment in Global Access, which is constructing a
domestic terrestrial fiber optic cable network connecting the PC-1 cable
station with Tokyo, Nagoya and Osaka. See "Use of Proceeds."

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<PAGE>

network of undersea digital fiber optic cable systems and associated
terrestrial backhaul capacity. The Company's products are segmented to meet
the varying needs of the global carrier market, with shore-to-shore capacity
offered to major carriers that have their own terrestrial backhaul capacity
and city-to-city capacity provided to other customers that require such
service. Global Crossing also offers carriers, through wholesale channels, a
combination of volume-based purchasing flexibility, typically according to a
tiered scale with various incentive levels, and volume discounts for purchases
of capacity on one cable system based upon purchases previously made on the
Company's other systems. See "--Sales and Marketing."

Utilize State-of-the-Art Technology. The Global Crossing Network is being
engineered and constructed using the latest in fiber optic technology, self-
healing ring structures, erbium doped fiber amplifier repeaters, DWDM and
redundancies of capacity to ensure instantaneous restoration. The Company
believes that incorporating such technology in the Global Crossing Network
will (i) provide a cost advantage over existing alternatives, (ii) make it
more reliable than competing systems, (iii) allow the Company to offer
substantially more capacity than existing cable systems and (iv) enable the
capacity of each of the Company's cable systems to be upgraded at the landing
stations rapidly and at a fraction of the initial system cost without physical
modification of the submerged portion of the system.

Maintain Position as Low-Cost Provider. The Company plans to maintain its
position as a low-cost provider of facilities and services to its carrier
customers relative to its competitors. Global Crossing believes that this low-
cost position results from a combination of (i) low sales and marketing and
general and administrative costs, reflecting a commitment to wholesale
customers, (ii) ownership of undersea fiber optic facilities utilizing state-
of-the-art technology, resulting in lower operating and maintenance costs that
will be passed on to its customers, and (iii) leveraging the Company's strong
position in the undersea fiber optic facilities market to obtain low-cost
terrestrial connectivity between cable landing stations and major
telecommunications sites.

Provide "One-Stop" Sales and Service. Through both its marketing and sales
force, as well as its ongoing operations, administrative and maintenance
support, Global Crossing plans to offer one-stop sales and service to
customers worldwide. The Company currently employs 18 marketing professionals
located in the Company's headquarters in Bermuda and in major cities
throughout the world in order to facilitate the sales of its
telecommunications capacity and increase market awareness and name
recognition. See "--Sales and Marketing." The efforts of the sales force have
resulted in significant contractual arrangements to date with international
telecommunications carriers. In addition, Global Crossing is developing a
centralized operations, administration and maintenance support system to serve
the entire Global Crossing Network, including a customer care center, network
operations center and technical support center. Through such integrated
customer support, in combination with its sales force, the Company intends to
enable customers to have a single point of contact regarding capacity sales
and service on the Global Crossing Network.

Leverage Extensive Management Experience. Global Crossing has assembled and
will continue to build a strong management team comprised of executives with
extensive operating experience in the telecommunications industry and the
undersea cable sector. Prior to joining the Company, Jack Scanlon, the
Company's Chief Executive Officer, was President and General Manager of the
Cellular Networks and Space Sector of Motorola, Inc., responsible for
approximately $6 billion in annual revenues and 16,000 employees. Mr. Scanlon
has over 30 years of experience in the telecommunications industry, including
24 years with AT&T and Bell Laboratories. In addition, William Carter, the
Company's senior executive in charge of system development, was formerly the
President and Chief Executive Officer of SSI, overseeing the research and
development, engineering, implementation and integration of AT&T's
international cable and satellite facilities. Mr. Carter had been at AT&T for
30 years prior to joining the Company. During Mr. Carter's tenure, SSI had the
leading worldwide market share in the undersea cable industry. Dan J. Cohrs,
the Company's Chief Financial Officer, was formerly Vice President and Chief
Planning and Development Officer at GTE, where he was responsible for
corporate development activities, including mergers and acquisitions and
strategic transactions, as well as strategic planning and competitive
analysis. In addition, the Company's system development team includes several
individuals with extensive experience with major undersea cable and
telecommunications industry participants. See "Management."

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<PAGE>

THE GLOBAL CROSSING NETWORK

As part of Global Crossing's mission to create an integrated global, high
capacity undersea fiber optic cable network, the Global Crossing Network is
being engineered and constructed to connect the two most heavily trafficked
international corridors in the world via AC-1 (United States to Europe) and
PC-1 (United States to Asia). Global Crossing plans to interconnect these
systems with two north-south systems (MAC and PAC), directly connecting
Bermuda, the Caribbean, Central America and, through unaffiliated cable
systems, South America. Of the four undersea fiber optic cable systems
currently being constructed by Global Crossing, AC-1, MAC and PAC are wholly-
owned projects by the Company, while PC-1 is being constructed through a joint
venture with one or more partners, principally Marubeni. Global Crossing will
initially have approximately a 58% interest in PC-1 and, in conjunction with
Marubeni, will manage its development, sales and operation.

The following table contains information regarding the estimated system
cost, initial RFS date and ownership structure of the Company's four currently
planned systems:

<TABLE>
<CAPTION>
ESTIMATED
SYSTEM COST(1) EXPECTED INITIAL OWNERSHIP
SYSTEM (MILLIONS) RFS DATE(2) STRUCTURE
------ -------------- ------------------------- -------------
<S> <C> <C> <C>
AC-1 $ 750 May 1998 (US-UK) Wholly-Owned
(complete)
February 1999 (Full Ring)
PC-1 1,200 March 2000 Joint Venture
July 2000 (Full Ring)
MAC 350 December 1999 Wholly-Owned
PAC 475 February 2000 Wholly-Owned
------
$2,775
======
</TABLE>
- --------

(1) Includes anticipated financing costs. Excludes the costs of potential
future upgrades and any amount capitalized with respect to the PCG
Warrants. The amount indicated under "Estimated System Cost" is based upon
executed supply and financing documents. Certain factors, such as
increases in interest rates and delays in construction, could result in
higher actual costs or later RFS dates than currently estimated. See "Risk
Factors--Risks Related to Completing the Company's Cable Systems" and
"Risk Factors--Risk of Error in Forward-Looking Statements."

(2) Based upon executed supply and financing documents. Certain factors, such
as reliance upon third party suppliers, could result in timing delays. See
"Risk Factors--Dependence on Third Parties."

ATLANTIC CROSSING

AC-1, the Company's first undersea fiber optic cable in the Atlantic region,
is a 14,000 km four fiber pair self-healing ring that, upon completion, will
connect the United States and Europe with landing stations in the United
States, the United Kingdom, The Netherlands and Germany. AC-1 is equipped with
state-of-the-art DWDM and the full ring will initially offer 40 Gbps of
service capacity, increasing the existing undersea fiber optic cable capacity
along the heavily trafficked transatlantic route by approximately 65% prior to
upgrades. Capacity on AC-1 is upgradeable to a minimum of 80 Gbps using DWDM
technology. AC-1 commenced service on its United States-United Kingdom segment
on May 26, 1998 and the full system, encompassing a self-healing ring, is
scheduled for completion by February 1999.

The aggregate costs of AC-1, which are estimated to be approximately $750
million (excluding potential future upgrades), have been fully financed prior
to the Offerings. In addition to the AC-1 Contract with TSSL for construction
of the system, Global Crossing has entered into other contracts with TSSL
pursuant to which TSSL will provide operations, administration and maintenance
services for the system.

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<PAGE>

of capacity on AC-1 and related backhaul commenced in October 1997 and, as of
June 30, 1998, the Company had entered into CPAs with customers providing for
payments to the Company of $556 million and $108 million of payments
(including deposits) had been received in respect thereof. These CPAs
represent approximately 19% of the minimum projected sales capacity of 512
circuits on the AC-1 system. The balance of these payments is scheduled to be
collected over the next four years. The Company's AC-1 customers now total
more than 22 international telecommunications carriers, including Deutsche
Telekom, GTE, Qwest, Teleglobe, Swisscom, PTT Telecom BV, Telia AB and a
number of emerging telecommunications companies. The Company generally grants
customers who have entered into CPAs options to acquire further capacity on
AC-1. The amount of such capacity depends upon a number of factors, including
upgrades to AC-1, future prices for AC-1 capacity and the amount of unsold
capacity on AC-1 at certain dates after the AC-1 system RFS date. In addition,
the Company has received as of June 30, 1998 non-binding indications of
interest from customers pursuant to memoranda of understanding ("MOUs") that
would, if converted into CPAs, provide for payments to the Company of
approximately $90 million. The timing of payments by purchasers under CPAs
generally depends on when service commences on the segment or segments of AC-1
on which capacity is acquired. All of the foregoing payment amounts assume the
completion of the related segment prior to specified dates falling after the
scheduled RFS date for that segment. There can be no assurance that any MOUs
will be converted into CPAs or that the final form of any CPA will contain the
same capacity purchase or payment provisions as the related MOU.

Based upon its current expectations regarding sales of capacity on AC-1, the
Company believes that it will develop and eventually construct AC-2, an
additional four fiber pair cable connecting the United States to Europe. When
combined with AC-1, AC-2 would double the capacity that Global Crossing would
be able to offer customers on the transatlantic route. There can be no
assurance that the Company will ultimately elect to proceed with AC-2 or that
such system will help the Company achieve and sustain operating profitability.

PACIFIC CROSSING

PC-1, the Company's first undersea fiber optic cable in the Pacific region,
is being developed as a 21,000 km four fiber pair self-healing ring that, upon
completion, will connect California, Washington and two landing sites in
Japan, providing connectivity to other points in Asia through interconnection
with other third party cable systems. PC-1 is designed to operate initially at
80 Gbps of service capacity and to be upgradeable to a minimum of 160 Gbps,
using DWDM technology.

In April 1998, the Company executed the PC-1 Contract with TSSL for the
construction of PC-1, which provides for a system completion date of Summer
2000 at an aggregate cost of approximately $1.2 billion. Equity investments in
PC-1 by Global Crossing and its partners are currently estimated at $400
million (of which $231 million will be provided by the Company), with the
remaining $800 million financed through incurrence of non-recourse
indebtedness at the PC-1 level. The credit agreement for the financing of such
indebtedness was executed on July 30, 1998.

On July 6, 1998, the Company executed a memorandum of understanding with DDI
Corporation, the second largest telephone company in Japan, to purchase
capacity on PC-1 which, if successfully converted to a CPA, would represent
its first sale of capacity to an Asian customer on this system.

MID-ATLANTIC CROSSING

MAC is being developed as a 9,300 km two fiber pair self-healing ring that,
upon completion, will connect New York, Bermuda the Caribbean and Florida.
Global Crossing intends that MAC will be connected to AC-1 via its cable
station in Brookhaven, New York, providing connectivity between Europe, the
eastern United States, Bermuda and the Caribbean and, through interconnection
with other non-Global Crossing submarine cable systems, South America. MAC is
being designed to operate initially at 20 Gbps of service capacity and to be
upgradeable to a minimum of 40 Gbps using DWDM technology.

Global Crossing is negotiating with TeleBermuda International Limited
("TBI"), the second international carrier in Bermuda, to acquire from TBI the
now operational BUS-1 undersea cable which connects Bermuda to

47
<PAGE>

New Jersey, in exchange for cash and certain capacity on AC-1. If such
transaction is consummated, the BUS-1 cable would be integrated with MAC,
providing an additional landing in the United States.

In June 1998, the Company executed a contract with Alcatel Submarine
Networks ("Alcatel") for the construction of MAC, which provides for a system
completion date of December 1999 at an aggregate cost of approximately $350
million (excluding potential future upgrades and amounts capitalized with
respect to the PCG Warrants), of which approximately $110 million will be
financed by equity contributions by the Company and $240 million is to be
financed through non-recourse indebtedness at the MAC level. The contractual
commitment for the financing of such indebtedness was obtained on June 26,
1998.

PAN AMERICAN CROSSING

PAC is being developed as a 7,000 km two fiber pair cable that, upon
completion, will connect California, Mexico, Panama and the Carribean,. PAC is
being designed to interconnect with PC-1 through the Company's landing station
in San Luis Obispo, California and with MAC through the Company's landing
station in St. Croix. It is anticipated that PAC will transverse Panama via an
existing terrestrial right-of-way. PAC is being designed to operate initially
at 20 Gbps of service capacity and to be upgradeable to a minimum of 40 Gbps
using DWDM technology.

In July 1998, the Company executed a contract with TSSL for the construction
of this system which provides for a system completion date of February 2000
and will cost approximately $475 million (excluding potential future upgrades
and amounts capitalized with respect to the PCG Warrants), with $165 million
financed through equity contributions from the Company and $310 million to be
financed through non-recourse indebtedness at the PAC level. The contractual
commitment for the financing of such indebtedness was obtained on July 22,
1998.

TERRESTRIAL BACKHAUL SERVICES

In addition to the undersea segments of the Global Crossing Network, the
Company has made and expects to continue to make acquisitions of terrestrial
fiber capacity which complement its core undersea cable business and which
address customer demands for global city-to-city connectivity. Global Crossing
intends to acquire such connectivity to approximately 50 of the largest
metropolitan telecommunications markets worldwide. The Company has entered
into contractual arrangements to provide terrestrial backhaul service between
its landing stations in the United States and the United Kingdom and New York
City and London, respectively, as well as other arrangements to provide
backhaul service in Germany and The Netherlands. In addition, the Company
recently entered into an agreement with Qwest whereby Global Crossing will
receive access to over 25 U.S. metropolitan communications markets on Qwest's
terrestrial network. Through Global Access, a Japanese telecommunications
carrier owned by Marubeni, the Company will offer backhaul services to PC-1
customers from the Company's Japanese landing stations directly to Tokyo at
prices substantially lower than existing alternatives. The Company is also
currently negotiating with Marubeni to obtain a minority investment in Global
Access, which is constructing a domestic terrestrial fiber optic cable network
connecting the PC-1 cable station with Tokyo, Nagoya and Osaka. See "Use of
Proceeds."

ADDITIONAL NETWORK EXPANSION OPPORTUNITIES

Further Undersea Opportunities. The undersea routes served by the Global
Crossing Network and other cable systems are projected to have substantial
growth greatly exceeding all capacity currently in use and under development
(including planned upgrades). To address such demand, the Company plans to
evaluate and, as appropriate, build additional systems on such routes. It is
anticipated that such systems, where possible, would be restored on the
existing systems and would achieve further cost efficiencies through the use
of existing landing stations.

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<PAGE>

Terrestrial Backhaul Opportunities. The Company is reviewing opportunities
to obtain terrestrial backhaul connectivity from the major cities in Europe
and Japan to landing sites for both AC-1 and PC-1 landing stations
respectively.

Other Development Opportunities. The Company is actively pursuing
development opportunities whereby Global Crossing would provide "fee for
service" expertise in the planning, design, implementation and operation of
global undersea cable systems and associated terrestrial backhaul.

OTHER ACTIVITIES

Neptune Acquisition. The Company entered into a letter agreement on May 26,
1998 with Neptune Communications, L.L.C. ("Neptune") to acquire substantially
all of the business of its wholly-owned subsidiary, Neptune Communications
Corp. ("NCC"), for an acquisition price of $20,000,000 payable in Common
Stock. Neptune is controlled by the Carlyle Group, an international investment
firm ("Carlyle"), and was formed to pursue opportunities in the undersea cable
business. Pursuant to such agreement, the Company will acquire all tangible
and intangible assets of NCC (except for assets relating to its North Pacific
Cable business), which consist principally of certain telecommunications
licenses. In addition, Carlyle managing director William Conway, the former
Chief Financial Officer of MCI, has agreed to serve on the Company's Board of
Directors. The Company and Neptune intend to enter long-form agreements with
respect to the transactions contemplated by the letter agreement. Neptune has
an option to terminate the transaction if the Company has not consummated the
Offerings by August 15, 1998.

Possible Investments. The Board of Directors of the Company has approved in
principle the making of minority investments in telecommunications and
Internet service providers that do not compete with the Company in its core
business and that will also be current or prospective purchasers of capacity
on the Global Crossing Network. Such investments may consist of purchases of
equity securities for either cash or contributions of capacity on the Global
Crossing Network. Such investments may be managed either by the Company
directly or, if the Board of Directors deems advisable, by one or more third-
party investment advisers so as to minimize potential conflicts of interest
and the amount of time allocated by the Company's senior management to such
investments.

SYSTEM PERFORMANCE

AC-1, PC-1 and MAC are each designed utilizing self-healing ring technology
to optimize system performance. Two types of protection switching, span
switching and ring switching, are provided. Span switching protects a system
against failures between adjacent landing sites which only affect service line
traffic and not the protection fibers. Ring switching protects a system
against complete failures between adjacent landing sites. Because such
technology will protect any single system failure in less than 500
milliseconds, no outages will result as a consequence of a single system
failure. Accordingly, the estimated system availability on any point-to-point
link on such systems is 99.995%.

As undersea cable systems become more powerful (i.e., carry more traffic
along their transmission paths), it is important to provide a "self-
restoration solution" because other systems do not have the capacity to
provide restoration for these new high performance undersea cable systems.
Single span systems must enter into reciprocal arrangements with either other
undersea fiber-optic operators or satellite carriers to pick up and deliver
this traffic if a system failure should occur. Providing self-restoration
through this ring design with the switching techniques described above is now
viewed as offering a qualitative advantage over single span systems with
external restoration.

With respect to PAC, which does not employ self-healing ring technology, the
Company is exploring options to enter into restoration arrangements with
terrestrial fiber optic cable operators to protect against system traffic
interruptions. The Company may also enter into similar arrangements to protect
against catastrophic system malfunction on its other cable systems.

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<PAGE>

SALES AND MARKETING

The Company markets capacity on its systems to licensed telecommunications
providers, including PTTs, Internet service providers and established and
emerging telecommunications companies. The Company believes its current
customers represent a broad array of telecommunications companies.

The initial sales strategy of the Company emphasizes the sale of capacity on
an IRU basis, whereby the customer purchases a unit of capacity for the
remaining design life of a particular cable system. On AC-1, the Company is
selling capacity at an increment of 155 megabits (Mbps), known as an STM-1,
for the 25-year life of AC-1. For the other Global Crossing cable systems, the
Company also expects to sell capacity to customers at the STM-1 level, as well
as at the smaller increment of 45 Mbps, where warranted based upon the actual
demand levels along certain routes. The Company has instituted a tiered
pricing schedule for all of its systems which provides for volume discounts,
thereby allowing customers to reduce their average circuit cost as more
circuits are purchased. In addition, the Company offers pricing discounts on
purchases of capacity prior to a system's commercial operation date, in order
to induce customers to make early purchase commitments.

To further increase the attractiveness of the Company's network, Global
Crossing intends to make selective wholesale acquisitions of backhaul
capacity, thereby enabling customers to achieve city-to-city connectivity
through the Global Crossing Network at prices significantly lower than if such
customers had attempted to gain such connectivity by separately purchasing
such backhaul capacity. For AC-1 customers, the Company entered into
contractual arrangements providing backhaul capacity between its landing
stations in the United States and the United Kingdom and New York City and
London, respectively. In addition, Deutsche Telecom and KPN provide backhaul
services directly to the Company's AC-1 customers in Germany and The
Netherlands, respectively. In addition, the Company has recently entered into
an agreement with Qwest whereby Global Crossing will receive access to over 25
U.S. cities on Qwest's terrestrial network.

Global Crossing is exploring the development of other products designed to
take advantage of its ownership of several cable systems in different parts of
the world. For example, the Company has offered its customers volume discounts
for purchases of capacity on one system based upon purchases previously made
on the Company's other systems and the ability to transfer a portion of unused
capacity purchases from one Global Crossing system to another depending on
customers' individual traffic needs.

The Company's marketing entity, Global Crossing International, was
established to facilitate the sales of communications capacity on the Global
Crossing Network, as well as to increase market awareness and name recognition
of Global Crossing. Global Crossing has been able to recruit and train a full-
service sales and marketing team, including Mr. Jack Finlayson, President of
Global Crossing International, a former senior executive of Motorola who
recently joined the Company, and Mr. Patrick Joggerst, Vice President,
Worldwide Sales and Marketing, who had been at TSSL and AT&T for a total of 17
years prior to joining the Company, most recently as Managing Director of
TSSL's Americas Region. Mr. Joggerst directly oversees the Americas Region and
is responsible for overseeing the duties of the two regional vice presidents,
each being in charge of one of the two other regions of the Company's
marketing organization, Europe/Middle East/Africa and Asia. Each regional
vice-president oversees the performance of regional marketing directors who
have direct account responsibility in certain geographic areas of the region.
In total, the Company employed 18 marketing professionals as of June 30, 1998.
While the Company intends to expand the current size of its marketing
organization, management believes that a moderately-sized sales force is
sufficient to adequately address all customers seeking to acquire undersea
cable capacity on a wholesale basis.

During the pre-operational period for AC-1, in which the Company sought to
generate significant pre-sales of capacity, the Company presented project
information meetings (otherwise known as data gathering meetings) in order to
better educate potential customers about AC-1 and Global Crossing's other
planned cable systems. To date, the Company has hosted three such meetings,
with the most recent event attracting 200 attendees representing over 75
companies. Attendees of such meetings have been affiliated with both existing
and prospective customers and have represented a variety of sectors of the
telecommunications industry. Ongoing, the Company intends to organize at least
one major international conference per year in order to provide updated

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<PAGE>

information on the Global Crossing Network. The Company also intends to host
regional project information meetings focusing on a particular cable system,
with such meetings scheduled to precede the anticipated commercial operation
date for such system.

The Company intends to reinforce customer awareness through a variety of
marketing campaigns, including its Global Crossing international conferences
and regional marketing events, participation in key industry and user group
conferences, speaking engagements, press conferences and promotional
campaigns. In addition, Global Crossing expects its marketing team to
periodically visit current and prospective customers to obtain a greater
understanding of the individual needs of such customers.

SUMMARY OF PRINCIPAL TERMS OF STANDARD CONTRACTUAL DOCUMENTATION

Capacity Purchase Agreements (CPAs)

In general, a CPA provides for the sale of capacity by the Company on an IRU
basis, whereby the purchaser owns a unit of capacity for the remaining design
life of a particular system. The term of a CPA is 25 years from the RFS date
for the system on which capacity is being acquired, which is the entire useful
life of the system. Upon execution of a CPA prior to a segment RFS date, the
Company generally receives 10% of the purchase price immediately, with the
balance of the purchase price due to the Company upon the applicable RFS date
for that segment. A limited number of CPAs provide for payment of the purchase
price in installments over two to three year periods. Each purchaser under a
CPA is required to pay its allocated share of the cost of operating,
maintaining and repairing the system. A purchaser's payment obligation under a
CPA shall generally terminate with respect to any purchased capacity on AC-1
other than the United States-United Kingdom segment (and, in some cases, with
respect to purchased capacity on the United States-United Kingdom segment), if
the RFS date for the AC-1 system has not occurred by June 30, 1999.
Performance under CPAs is also contingent upon the obtaining and continuance
of such approvals, consents, governmental authorizations, licenses and permits
as may be required or reasonably deemed necessary by each party thereto for
performance by such party thereunder and as may be satisfactory to it. The
obligations of purchasers under certain CPAs are additionally contingent upon
the execution of related ICPAs. See "Risk Factors--Sales of Capacity;
Termination of CPAs."

Additionally, each purchaser acquiring capacity on AC-1 prior to the system
RFS date is granted the right to receive additional capacity ("residual
capacity") at no additional cost upon the date which is 12 1/2 years after the
RFS date for the system. Furthermore, neither party is liable to the other for
consequential, incidental, indirect or special damages sustained by reason of
(i) any failure in or breakdown on the system or the facilities associated
with the system, (ii) the failure of any inland carrier to perform the terms
and conditions of any agreement to which it and the purchaser are parties or
(iii) for any interruption of service, whatever the cause and however long it
shall last. Each CPA is subject to an arbitration clause. Some CPAs are
supported by a parent guarantee from the purchaser.

Inland Services Agreements (ISAs)

The Company has entered into agreements with certain terrestrial fiber cable
systems to purchase inland capacity on such systems for resale to its
purchasers. In general, the term of each ISA is 25 years from the RFS date of
the particular system or until the system is retired, whichever occurs first.
In certain cases, the Company has the option to extend the term of each ISA
for an additional five years. Neither party to an ISA is responsible for any
loss, damage, delay or failure of performance resulting from an event of Force
Majeure (as defined therein). If an event of Force Majeure continues for a
period of 30 days, the Company may terminate the ISA. Each ISA is subject to
an arbitration clause.

Inland Capacity Purchase Agreements (ICPAs)

The Company has entered into ICPAs with some of its customers. Under an
ICPA, the Company provides the customer with a portion of the backhaul
capacity it purchased from owners of terrestrial cable systems under ISAs. The
term of each ICPA is 25 years from the RFS date for the particular system.
Upon execution of an

51
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ICPA, the Company generally receives 10% of the purchase price immediately,
with the balance due no later than the RFS date for the particular segment. A
purchaser's payment obligation under an ICPA generally shall terminate with
respect to any purchased capacity on AC-1 other than the United States-United
Kingdom segment (and, in some cases, with respect to purchased capacity on the
United States-United Kingdom segment), if the RFS Date for the AC-1 system has
not occurred by June 30, 1999. Unlike a CPA, the purchaser under an ICPA is
generally not required to make any additional payments for costs associated
with operating, maintaining and repairing the backhaul capacity in which the
IRU is granted. Neither party is liable to the other for consequential,
incidental, indirect or special damages sustained (i) by reason of any failure
of any inland carrier to perform the terms and conditions of any ISA to which
it is a party or (ii) for any interruption of service, whatever the cause and
however long it shall last. Each ICPA is subject to an arbitration clause. An
ICPA may be supported by a corresponding parent guarantee from the purchaser.

OPERATIONS, ADMINISTRATION AND MAINTENANCE SUPPORT

Pursuant to the AC-1 OA&M Agreement, TSSL will provide operations,
administration and maintenance support on behalf of AC-1 for a term of eight
years following the commencement of commercial operations. As of June 30,
1998, the Company was committed under the AC-1 OA&M Agreement to make payments
totalling approximately $261 million. Such agreement is extendible at the
option of the Company for two additional periods of 8.5 years each. For AC-1,
TSSL's network operations center is designed to ensure the overall ongoing
monitoring of the system's operation, maintenance and control systems. The
network management equipment located at the Brookhaven, New York landing
station provides fault management, security management, configuration
management and performance management, while undersea network management
equipment located at all landing stations provides system level monitoring of
the undersea terminating equipment. The full integration of these control
elements allows the AC-1 cable system to be "self-diagnostic," with such
control elements facilitating localization and repair in the event of the
occurrence of a system fault.

In addition, Global Crossing is separately developing a worldwide
operations, administration and maintenance support system to serve each of its
cable systems (exclusive of AC-1 for the initial term of the TSSL OA&M
Agreement). Such support will be handled through three co-located work centers
currently anticipated to be located in Bermuda: a customer care center
("CCC"), network operations center ("NOC") and technical support center
("TSC").

Customer Care Center. The CCC will provide capacity purchasers with a single
point of contact for service provisioning, interconnect coordination support
and billing inquiries.

Network Operations Center. The NOC will handle operations, administrative
and maintenance activities for each of the Company's cable systems, including
capacity provisioning, network performance, repair and restoration activities.
Capacity provisioning relates to the appropriate allocation of capacity on the
Company's cable systems among capacity purchasers. Management of network
performance entails detection and response to system degradation and other
performance parameters, as well as preventative activities.

Technical Support Center. The TSC will be a 24-hour center managed by
highly-trained experts to handle technical inquiries from purchasers regarding
system performance and interconnection arrangements.

COMPETITION

The international telecommunications industry is highly competitive. The
Company faces competition from existing and planned cable systems along each
of its planned routes and from satellite providers, including existing
geosynchronous satellites and low-earth orbit systems now under construction.
The Company competes primarily on the basis of price, availability,
transmission quality and reliability, customer service and the location of its
systems. Traditionally, carriers have made long term investments in ownership
of cable capacity, making lower price and superior service less determinative
in convincing such carriers to acquire additional capacity on the Company's
systems than is the case in industries without such long-term relationships.
See "Risk Factors--Competition."

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<PAGE>

Existing and Planned Cable Systems

The routes addressed by Global Crossing's planned systems are currently
served by several undersea cables as well as satellites. Currently, there are
several fiber optic transatlantic cable systems, each of which will compete
directly with AC-1. Primary future sources of transatlantic competition for
the Company may result from, among others, (i) TAT-14, a transatlantic cable
system which is being developed by its consortium members, including British
Telecom, AT&T, France Telecom and Deutsche Telekom, and (ii) Gemini, a
transatlantic cable system being operated and marketed by WorldCom and Cable &
Wireless. The Company believes that such other cable systems will compete
directly with AC-1 and the commitments of the developers and other carriers on
these systems could substantially reduce demand for capacity on AC-1.

Similarly, there are several cable systems currently operating between the
United States and Asia, the route to be served by PC-1. Competition in the
transpacific market may result from, among others, (i) China-US, a
transpacific system being developed as a "private cable system" by fourteen
large carriers, including SBC, MCI, AT&T and Sprint, most of whom have
traditionally sponsored consortium cables and (ii) a transpacific system being
developed by a consortium of major telecommunications carriers, including
Worldcom, AT&T, KDD, NTT, Cable & Wireless and GTE. Although the Company
believes that such other cable systems will not satisfy the demand for
capacity between the United States and Japan and that there is currently
enough demand projected to accommodate all such systems, such other cable
systems will receive commitments for capacity that PC-1 could have received in
their absence.

Other regional and global systems are being considered by developers,
including Project Oxygen, a global system being evaluated by CTR Group, Ltd.
In addition, the Company may face competition from existing and planned
regional systems and satellites on its MAC and PAC routes, where entrants are
vying for purchases from a small but rapidly growing customer base.

Satellite Transmission

When comparing cable transmission against satellite transmission, the
Company believes that cable has a distinct advantage with respect to latency
(i.e., transmission delay) and voice quality. Cable transmission has a lower
cost per circuit, higher capacity and longer expected equipment life than
satellite transmission. Satellite transmission is generally considered to have
a comparative advantage versus cable transmission for mobile communications
only in the area of point-to-multipoint broadcast and "thin route"
transmission, as opposed to the more common point-to-point, high volume
transmission for which cable usage is considered to be preferable.

In early 1997, the FCC granted Ka-band licenses and orbital locations to 13
companies. The firms developing future satellite technology envision a network
of satellites that will provide broadband data transmission with data rates of
2 Mbps, 20 Mbps, and even 155 Mbps. Potential participants in the field
include Astrolink, Skybridge, Teledesic Corporation, CyberStar and SpaceWay,
who are seeking to provide high bandwidth transmission sublet networks. Due to
(i) the significant initial costs related to these systems, (ii) the risks
relating to satellite launch systems and (iii) the significantly lower
transmission capacity versus current fiber optic systems, the Company believes
that the new satellite systems will not be able to offer competitive cost per
unit of transmission capacity in the dense metropolitan markets the Company is
targeting. Further, the Company believes it will have at least five years lead
time to help it solidify a sustainable competitive market position before true
broadband satellite service commences.

SUPPLIERS

There are currently three major supply companies in the undersea cable
industry: TSSL, Alcatel and KDD SCS. Cable & Wireless and Pirelli also have a
presence in the industry and there are a number of smaller suppliers who have
focused primarily on regional routes or non-repeatered systems. TSSL is
completing construction of AC-1, is responsible for the design and
installation of PAC and, together with KDD SCS (as a subcontractor), is
responsible for design and installation of PC-1. Alcatel is responsible for
design and construction of MAC. See "Risk Factors--Dependence on Third
Parties."

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PROPERTIES

The Company leases executive and administrative offices at its worldwide
headquarters at Wessex House, 45 Reid Street, Hamilton HM12 Bermuda. The
Company owns a cable station in Brookhaven, New York and a cable station in
White Sands, United Kingdom. The Company leases cable station space in Sylt,
Germany and cable station space in Beverwijk, The Netherlands. Such leases run
for the anticipated 25-year term of AC-1. The Company also leases office space
in Los Angeles, Morristown, New Jersey, Dallas, London and San Francisco.

REGULATION

The Company, in the ordinary course of development, construction and
operation of its fiber optic cable systems, will be required to obtain and
maintain various permits, licenses and other authorizations in both the United
States and in foreign jurisdictions where its cables land, and will be subject
to applicable telecommunications regulations in such jurisdictions. In
particular, submarine cable landing or similar licenses will be required in
many of the jurisdictions where Global Crossing's planned systems will land.
With respect to AC-1, an undersea cable landing license (the "AC-1 Landing
License") and a subsequent modification have been obtained from the United
States Federal Communications Commission ("FCC"), which license permits AC-1
to land in the United States at the Brookhaven, New York landing site and to
operate between the United States, the United Kingdom, The Netherlands and
Germany. The AC-1 Landing License authorizes the Company to provide capacity
on a private carriage basis, and AC-1 is not presently regulated by the FCC as
a common carrier. Global Crossing has obtained landing licenses similar to the
AC-1 Landing License in each of the other jurisdictions where the AC-1 cable
system will land and where such licenses are required. With respect to each of
the Company's cable systems other than AC-1, the Company anticipates both
filing applications for cable landing licenses with the FCC (and, where
necessary, foreign regulatory agencies) and seeking private carriage status
for these systems as well. These licenses are typically issued for a term of
years (in the case of the FCC-issued cable landing license, 25 years), and are
subject to renewal. United States law (and the law of several foreign
jurisdictions, as well) limits foreign ownership, direct or indirect, of
entities holding cable landing licenses, although the FCC has progressively
relaxed to the rules to examine only those foreign holders that are affiliated
with a foreign telecommunications carrier that has market power in the
destination country. More recently, in order to implement a multilateral World
Trade Organization agreement, the FCC adopted regulations that presumptively
permit unlimited foreign ownership by nationals of countries that are party to
that agreement. See "Risk Factors--Government Regulation."

Construction of each of the Company's cable systems also requires the
acquisition and maintenance of various permits and licenses in the ordinary
course of business. Pursuant to its construction contracts for AC-1 and PC-1,
TSSL is contractually obligated to obtain and maintain all such licenses and
permits. Although Global Crossing intends that the construction contracts for
each of the Company's other planned cable systems will impose the burden of
acquiring and maintaining construction licenses and permits on the contractor
for each of such systems, there can be no assurance that such contractor will
successfully obtain such permits and licenses. See "Risk Factors--Risks
Related to Completing the Company's Cable Systems."

EMPLOYEES

As of June 30, 1998, the Company had 82 employees. The Company considers its
relations with its employees to be good.

LEGAL PROCEEDINGS

The Company is not presently subject to any legal claims or proceedings.

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MANAGEMENT

DIRECTORS AND EXECUTIVE OFFICERS

The following table sets forth the names, ages and positions of the
directors and executive officers of GCL.

Prior to the Offerings, GCL will amend and restate its Bye-Laws (the "Bye-
Laws") to provide for a Board of Directors consisting of 16 members divided
into three classes with terms of three years each. Mr. Brown, Mr. Porter, Mr.
Phoenix, Mr. Levine and Mr. Conway will be elected as Class A Directors, with
a term expiring in 1999; Mr. Cook, Mr. Lee, Mr. Raben, Mr. Kent and Mr.
Scanlon will be elected as Class B Directors, with a term expiring in 2000;
and Mr. Winnick, Mr. Bloom, Mr. Kehler, Mr. Weinberger, Mr. Steed and
Mr. Ogasawara will be elected as Class C Directors, with a term expiring in
2001. The form of Amended and Restated Bye-Laws is an exhibit to the
Registration Statement of which this Prospectus is a part.

<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
Gary Winnick.......... 50 Co-Chairman of the Board and Director
Lodwrick Cook......... 70 Co-Chairman of the Board and Director
Jack M. Scanlon....... 56 Chief Executive Officer and Director
David L. Lee.......... 49 President, Chief Operating Officer and Director
Barry Porter.......... 41 Senior Vice President and Director
Abbott L. Brown....... 54 Senior Vice President and Director
Dan J. Cohrs.......... 45 Senior Vice President and Chief Financial Officer
James C. Gorton....... 36 Senior Vice President and General Counsel
K. Eugene Shutler..... 60 Senior Vice President
Hillel Weinberger..... 44 Director
Jay R. Bloom.......... 42 Director
Dean C. Kehler........ 41 Director
Jay R. Levine......... 41 Director
William D. Phoenix.... 41 Director
Bruce Raben........... 44 Director
Michael R. Steed...... 48 Director
William E. Conway..... 48 Director*
Toshiaki Ogasawara.... 67 Director*
Geoffrey J.W. Kent.... 56 Director*
</TABLE>
- --------
* Effective immediately prior to Offerings

GARY WINNICK--Mr. Winnick, founder of Global Crossing, has been Co-Chairman
of the Board of GCL since January 1998 and, prior thereto, was Chairman of the
Board since the inception of the Company in March 1997. Mr. Winnick is the
founder and has been the Chairman and Chief Executive Officer of Pacific
Capital Group since its inception, having been in the principal equity
investment and merchant banking business since 1985. Mr. Winnick holds a BA in
Economics and Business Management from C.W. Post College.

LODWRICK M. COOK--Mr. Cook has been Co-Chairman of the Board of GCL since
January 1998 and Vice Chairman, Managing Director of PCG since 1997. Prior to
joining PCG, Mr. Cook spent 39 years at Atlantic Richfield Co., serving as
President and Chief Executive Officer from 1985 to 1995 and as Chairman of the
Board of Directors from 1986 to 1995, when he became Chairman Emeritus. Mr.
Cook is also a member of the Board of Directors of Castle and Cooke, Litex and
Ocean Energy, Inc. Mr. Cook received BS degrees in mathematics and petroleum
engineering from Louisiana State University and holds an MBA degree from
Southern Methodist University.

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<PAGE>

JACK M. SCANLON--Mr. Scanlon has been Chief Executive Officer and a director
of GCL since April 1998. Prior to joining the Company, Mr. Scanlon was
President and General Manager of the Cellular Networks and Space Sector of
Motorola Inc. and had been affiliated with Motorola Inc. since 1990. Mr.
Scanlon was Chief Operating Officer of Cambridge Technology Group from 1988 to
1990 and, prior thereto, spent 24 years with AT&T Corp. and Bell Laboratories,
rising to Group Vice President at AT&T Corp. Mr. Scanlon received his BS
degree from the University of Toronto and a MS degree in electrical
engineering from Cornell University.

DAVID L. LEE--Mr. Lee has been President and Chief Operating Officer and a
director of GCL since the inception of the Company in March 1997. He has also
been a managing director of PCG since 1989. Prior to joining PCG, Mr. Lee was
Group Vice President of Finance and Acquisitions at TRW Information Systems
Group. Mr. Lee is a graduate of McGill University and holds a PhD. in Physics
and Economics from the California Institute of Technology.

BARRY PORTER--Mr. Porter is Senior Vice President, Corporate Development and
a director of GCL. Mr. Porter has been a director of the Company since 1997
and has also been a managing director of PCG since 1993. From 1986 to 1993,
Mr. Porter was affiliated with Bear, Stearns & Co. Inc., rising to a Senior
Managing Director in the investment banking department. Mr. Porter received
his JD and MBA degrees from the University of California (Berkeley) and his BS
degree from The Wharton School.

ABBOTT L. BROWN--Mr. Brown is Senior Vice President, Corporate Affairs and a
director of GCL. Mr. Brown has been a director of the Company since 1997 and
has also been a managing director and Chief Financial Officer of PCG since
1994. From 1990 through 1994, Mr. Brown was Executive Vice President, Chief
Financial Officer and a member of the board of directors of Sony Pictures
Entertainment Inc., a wholly-owned subsidiary of Sony Corporation. Prior
thereto, Mr. Brown was a partner in the international accounting firm of Price
Waterhouse LLP. Mr. Brown holds a BS degree from Lehigh University and is a
Certified Public Accountant.

DAN J. COHRS--Mr. Cohrs has been Senior Vice President and Chief Financial
Officer of GCL since May 18, 1998. From 1993 to 1998, Mr. Cohrs was affiliated
with GTE Corporation, rising to the position of Vice President and Chief
Planning and Development Officer in 1997. From 1990 to 1993, he was at
Northwest Airlines and prior to leaving Northwest Airlines served as Vice
President of International Finance (Tokyo, Japan); from 1986 to 1990, he was
at the Marriott Corporation and served in such capacities as Vice President of
Financial Planning and Acquisitions and Vice President of Project Finance; and
from 1983 to 1986, he was a Strategy and Financial Consultant at Marakon
Associates. Mr. Cohrs received his BS degree from Michigan State University in
Engineering and his PhD degree from Cornell University in Economics, Finance
and Public Policy.

JAMES C. GORTON--Mr. Gorton became Senior Vice President and General Counsel
of GCL effective July 15, 1998. From 1994 to 1998, Mr. Gorton was a member of
the New York law firm Simpson Thacher & Bartlett and had been associated with
the firm since 1986. Mr. Gorton holds a BA degree from Columbia College and a
JD degree from New York University School of Law.

K. EUGENE SHUTLER--Mr. Shutler is a Senior Vice President of GCL and is also
President of ACL. From 1996 to 1997, Mr. Shutler served as Chairman of the
Board and Chief Executive Officer of Styles On Video, Inc. Prior thereto, Mr.
Shutler was Executive Vice President, General Counsel and a Director of MGM
Grand, Inc. from 1991 to 1995; a member of the Los Angeles law firm of Troy
and Gould from 1983 to 1991; and Vice President/General Counsel of Republic
Corporation, Continental Aircraft Services (Continental Airlines) and Caesars
World, Inc. Mr. Shutler holds a BA degree from the University of Pennsylvania
and an LLB degree from Yale Law School.

HILLEL WEINBERGER--Mr. Weinberger, a director of GCL since June 1997, has
been a Senior Vice President of Loews/CNA Holdings Corp. since 1988. Prior
thereto, Mr. Weinberger was a Senior Vice President of Presidential Life from
1982 to 1988. Mr. Weinberger serves as director to News Communications Inc.

JAY R. BLOOM--Mr. Bloom, a director of GCL since the Company's inception in
March 1997, is a managing director of CIBC Oppenheimer Corp. ("CIBC
Oppenheimer"), co-head of its High Yield Group and

56
<PAGE>

co-head of CIBC World Markets High Yield Merchant Banking Funds. Mr. Bloom
also serves on the board of directors of Heating Oil Partners, L.P.,
Consolidated Advisers Limited, L.L.C. and Morris Material Handling, Inc. Prior
to joining CIBC Oppenheimer in August 1995, Mr. Bloom was a founder and
managing director of The Argosy Group L.P. From 1984 to 1990, Mr. Bloom was a
managing director in the Mergers and Acquisitions Group of Drexel Burnham
Lambert Incorporated. Mr. Bloom was an investment banker associated with
Lehman Brothers Kuhn Loeb Incorporated from 1982 to 1984 and, from 1981 to
1982, practiced law at Paul Weiss Rifkind Wharton & Garrison in New York. Mr.
Bloom received his BS and MBA degrees from Cornell University and his JD
degree from Columbia University School of Law.

DEAN C. KEHLER--Mr. Kehler, a director of GCL since the Company's inception,
is a managing director of CIBC Oppenheimer and co-head of its High Yield
Group. In addition, he is a member of CIBC's Investment Committee and co-head
of CIBC World Markets High Yield Merchant Banking Funds. Prior to joining CIBC
Oppenheimer in 1995, Mr. Kehler was a founder and managing director of The
Argosy Group. From 1985 to 1990, Mr. Kehler was a managing director in the
Mergers and Acquisitions Group, Co-Head of Merchant Banking and a member of
the Corporate Finance Executive Committee of Drexel Burnham Lambert
Incorporated. Mr. Kehler serves on the board of directors of Booth Creek
Group, Inc., Telebanc Financial Corporation and Heating Oil Partners, L.P.
From 1979 to 1985, Mr. Kehler was an investment banker at Lehman Brothers. Mr.
Kehler received his BS degree from The Wharton School.

JAY R. LEVINE--Mr. Levine, a director of GCL since the Company's inception,
is a managing director of CIBC Oppenheimer, and manages the CIBC World Markets
High Yield Merchant Banking Funds. Prior to joining CIBC Oppenheimer in May,
1997, Mr. Levine was President of PPMJ Inc., a private consulting firm, from
September 1996 to April 1997 that advised its clients on private equity
investments. From August 1990 to June 1996, Mr. Levine was a senior executive
in the Morningside and Springfield Group, Inc., a private investment company.
Mr. Levine serves as a director of Aircraft Service International Group,
Consolidated Advisers Limited, L.L.C., Heating Oil Partners, L.P. and Talton
Holdings, Inc. Mr. Levine received a BS degree from Syracuse University, a JD
degree from Tulane University and an LLM in Taxation from New York University.

WILLIAM P. PHOENIX--Mr. Phoenix, a director of GCL since its inception, is a
managing director of CIBC Oppenheimer and co-head of Credit Capital Markets.
Prior to joining CIBC Oppenheimer in 1995, Mr. Phoenix had been the Managing
Director of the Canadian Imperial Bank of Commerce since 1982. Mr. Phoenix
serves as a director of the Electrolux Corporation. Mr. Phoenix received his
BA degree from the University of Western Ontario and his MBA degree from the
University of Toronto.

BRUCE RABEN--Mr. Raben, a director of GCL since its inception, is a managing
director of CIBC Oppenheimer. Prior to joining CIBC Oppenheimer in January
1996, Mr. Raben was a founder, managing director and co-head of the Corporate
Finance Department of Jefferies & Co., Inc. since 1990. Mr. Raben serves as a
director of Optical Security, Inc., Talton Holdings, Inc., Terex Corporation
and Equity Marketing, Inc. Mr. Raben received his MBA degree from Columbia
Business School and his AB degree from Vassar College.

MICHAEL R. STEED--Mr. Steed, a director of GCL since its inception, is
Senior Vice President of Investments for the Union Labor Life Insurance
Company, ULLICO Inc. ("ULLICO") and its Family of Companies and President of
Trust Fund Advisors, ULLICO's investment management subsidiary. Mr. Steed
joined ULLICO in November 1992 after serving seven years as President and
Founder of A.F.I.C. Group, Ltd., a financial and investment consulting firm.
From 1983 to 1985, Mr. Steed was the Executive Director of the Democratic
National Committee. Mr. Steed serves as a director of The Lewis & Clark Snake
River Beverage Company. He received his JD degree from Loyola University
School of Law in Los Angeles and his BA degree from Loyola Marymount
University in Los Angeles.

WILLIAM E. CONWAY--Mr. Conway is a nominee for director for GCL. Mr. Conway
has been a managing director of The Carlyle Group since 1987. Mr. Conway was
Senior Vice President and Chief Financial Officer of MCI Communications
Corporation from 1984 until he jointly founded The Carlyle Group in August
1987. Mr.

57
<PAGE>

Conway serves as director to GTS Duratek, Inc., Nextel Communications, Inc.
and Hownet International Corporation. Mr. Conway received his BA degree from
Dartmouth College and his MBA in Finance from Chicago Graduate School of
Business.

TOSHIAKI OGASAWARA--Mr. Ogasawara is a nominee for director for GCL. Mr.
Ogasawara has been Chairman and Publisher of The Japan Times, Limited since
1985 and President and Representative Director of Nifco Inc since 1967. Mr.
Ogasawara serves as Chairman and Representative Director for FM Inter-Wave,
Inc. and Simmons Co. Ltd.

GEOFFREY J.W. KENT--Mr. Kent is a nominee for director for GCL. Mr. Kent is
Chairman and Chief Executive Officer of the Abercrombie & Kent Group of
companies and has been associated with the company since 1967.

ADDITIONAL MANAGEMENT

Global Crossing's management team utilizes additional executives with
extensive experience in the telecommunications industry and the undersea cable
sector, including the following individuals:

WILLIAM B. CARTER, JR. is President of Global Crossing Development Co. and
the Company's Senior executive in charge of development. Prior to joining the
Company, Mr. Carter spent 30 years with AT&T, where he headed up the
International Facilities Planning (both cable and satellite) and served as
President and Chief Executive Officer for SSI and as Director of International
Network Operations for AT&T. During Mr. Carter's tenure, SSI had the leading
worldwide market share in the undersea cable industry, with an average market
share of 35-50%. Mr. Carter is a member of the World Telecommunications
Advisory Council to the International Telecommunications Union (ITU) and
Senior Advisory Council to the U.S. government on communications and economic
development. Mr. Carter received a BEE degree from Georgia Institute of
Technology and has completed the advanced program for senior managers at MIT's
Sloan School.

JACK FINLAYSON--Mr. Finlayson has been President of Global Crossing
International, Ltd. since June 1998. Prior to joining the Company, Mr.
Finlayson was corporate vice president and general manager of Motorola Inc.'s
Asia Pacific Cellular Infrastructure group, where he was responsible for
managing the wireless infrastructure business, and had been affiliated with
Motorola Inc. since 1994. Prior to joining Motorola Inc., Mr. Finlayson was
employed by AT&T, where he was sales vice president of Business Network Sales
for the southeastern United States. Mr. Finlayson has more than 17 years
experience in the telecommunications field. Mr. Finlayson received his BS
degree in marketing from LaSalle University and holds an MBA degree in
information management from St. Joseph's University.

S. WALLACE DAWSON, JR., Senior Vice President of Operations of Global
Crossing Development Co., worked at SSI for 29 years, where he had overall
delivery responsibility for the implementation of all submarine cable
projects. Prior thereto, he held various positions at AT&T, where his work
centered on specialized equipment design for military and commercial undersea
cable systems and development of various network services. Mr. Dawson holds a
BEE degree from the University of Virginia, and an MSEE degree from Duke
University. He also completed the Advanced Management Program at INSEAD,
Fountainbleu, France.

HAROLD D. GROSSNICKLE, Managing Director of Global Crossing Development Co.,
is responsible for directing the operations, administration and maintenance of
the Global Crossing Network. Mr. Grossnickle has 28 years of experience in the
telecommunications industry, including over 24 years at AT&T and AT&T
Paradyne, where he served as a vice president of network management systems
and services. Mr. Grossnickle received his BS from Iowa State University and
his MBA from the University of Missouri.

PATRICK JOGGERST is Vice President of Global Sales & Marketing of Global
Crossing International Ltd. and the Company's Senior executive in charge of
sales. Prior to joining the Company, Mr. Joggerst served as Managing Director
for the Americas Region at TSSL. His 17-year tenure at AT&T included positions
with

58
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several departments, including international services operations,
organizational development/human resources, and communications products and
service sales. Mr. Joggerst graduated from Georgetown University's School of
Foreign Service.

IAN MCLEAN--Mr. McLean is Vice President of GCL and also serves as Chief
Financial Officer of ACL. Prior to joining the Company in September, 1997, Mr.
McLean was Chief Financial Officer and Systems Information Officer at Price
Waterhouse, Bermuda from 1994 to 1997; Chief Financial Officer for Horizons
Limited from 1992 to 1994; Deputy Manager, Corporate Trust at Bank of Bermuda
Limited from 1988 to 1992 and Vice President of Finance for the Baillargeon
Group from 1985 to 1988. Mr. McLean is a Canadian Chartered Accountant and
holds a Bba degree from Bishop's University and a graduate diploma in
accountancy from McGill University.

WILLIAM T. RICHARDS is Vice President of Operations of ACL. Mr. Richards was
employed at British Telecommunications for seven years, most recently as
Manager of Subsea Projects & Consultancies, and served as Independent Engineer
on the FLAG system. Prior to his position at British Telecommunications, he
served as Business Development Manager at Dowty Magnetics. Mr. Richards
received his BFc (Hons.) degree from City University of London.

LISA DADOURIS, Director of Business Development of Global Crossing
Development Co., spent 12 years at AT&T and Lucent Technologies, where she
held a number of positions in business development, marketing and finance,
including Chief Financial Officer for Local Service in the northeast United
States and Director of Manufacturing Planning for Lucent. Ms. Dadouris
graduated from Wake Forest University with a BS in business, and received her
MBA in accounting from Fuqua School of Business at Duke University.

MOOL SINGHI is Director of Network Planning of Global Crossing Development
Co. Prior to joining the Company, Mr. Singhi served as the Director of Market
Planning at TSSL. Mr. Singhi spent 27 years at AT&T, where he held various key
positions in manufacturing, finance, engineering, operations and international
network planning. Mr. Singhi received a bachelor's degree in mechanical
engineering and a master's degree in operations research and industrial
engineering from the University of Buffalo.

CHARLES D. HOGAN, Director of Operations of Asia Systems of Global Crossing
Development Co., spent 42 years at AT&T, serving as Regional Managing
Developer of AT&T's General Departments. Immediately prior to joining the
Company, Mr Hogan was based in Hong Kong where he was responsible for the
planning of international digital lightwave undersea cables for AT&T in the
Asia/Pacific region, including the planned China-United States cable system.

JOHN MERCOGLIANO, Vice President of Sales and Marketing of Global Crossing
International Ltd., has over 19 years of experience in the telecommunications
industry. Prior to joining the Company, Mr. Mercogliano was employed as Vice
President-Europe of Bell Atlantic Network Systems (Bermuda) Ltd., where he was
responsible for developing strategies and directing sales and marketing
opportunities in the FLAG European region. Mr. Mercogliano received his B.A.
degree from New York University and his M.B.A. from Pace University.

COMPENSATION

Total compensation paid or accrued to the executive officers of GCL and its
consolidated subsidiaries as a group during the fiscal year ended December 31,
1997 was $155,409. Directors of GCL and its consolidated subsidiaries do not
receive compensation, except as officers or employees of GCL or its
consolidated subsidiaries.

59
<PAGE>

OPTION GRANTS AND OPTION VALUES

The table below sets forth information as of August 10, 1998 concerning
options granted since January 1, 1998 to principal officers of the Company.
Options representing a total of 9,877,500 shares of Common Stock have been
issued to officers or directors of the Company at exercise prices ranging from
$1.67 per share to the price of the Offerings.

<TABLE>
<CAPTION>
GRANT
DATE
INDIVIDUAL GRANTS VALUE(1)
---------------------------------------------- ----------
NUMBER OF
SECURITIES % OF TOTAL
UNDERLYING OPTIONS GRANT
OPTIONS GRANTED TO EXERCISE OR DATE
GRANTED EMPLOYEES IN BASE PRICE EXPIRATION PRESENT
NAME (#) FISCAL YEAR ($/SHARE) DATE VALUE($)
---- ---------- ------------ ----------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Gary Winnick............ 900,000 7.65% 1.67 03/31/07 14,700,000
Co-Chairman of the
Board
Jack Scanlon............ 1,800,000 15.30% 1.67 04/01/08 29,400,000
Chief Executive Officer
Bill Carter............. 1,500,000 12.75% 1.67 10/27/07 24,500,000
President, Global
Crossing Development
Co.
James Gorton............ 750,000 6.38% 6.67 06/12/08 8,500,000
Senior Vice President
and General Counsel
Jack Finlayson.......... 585,000 4.97% 6.67 06/12/08 6,630,000
President, Global
Crossing International,
Ltd. 150,000 1.28% (2) 06/12/08 --
</TABLE>
- --------
(1) Based upon difference between exercise price and midpoint of expected
pricing range of the Offerings.
(2) Exercise price will equal the price of the Offerings.

The table below sets forth information as of August 10, 1998 concerning
exercises of stock options by the individuals named above for the current year
and the value of such individuals' unexercised options based upon the midpoint
of the expected pricing range of the Offerings.

<TABLE>
<CAPTION>
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS(#) OPTIONS($)
SHARES VALUE ----------------- --------------------
ACQUIRED ON REALIZED EXERCISABLE/ EXERCISABLE/
NAME EXERCISE(#) ($) UNEXERCISABLE UNEXERCISABLE(1)
---- ----------- -------- ----------------- --------------------
<S> <C> <C> <C> <C>
Gary Winnick............ -- -- 300,000/600,000 4,900,000/9,800,000
Co-Chairman of the
Board
Jack Scanlon............ -- -- 450,000/1,350,000 7,350,000/22,050,000
Chief Executive Officer
Bill Carter............. -- -- 0/1,500,000 0/24,500,000
President, Global
Crossing Development
Co.
James Gorton............ -- -- 187,500/562,500 2,125,000/6,375,000
Senior Vice President
and General Counsel
Jack Finlayson.......... -- -- 292,500/442,500 3,315,000/3,315,000
President, Global
Crossing International,
Ltd.
</TABLE>
- --------
(1) Based upon difference between exercise price and midpoint of expected
pricing range of the Offerings.

EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL
ARRANGEMENTS

The 1998 Global Crossing Ltd. Stock Incentive Plan (the "Stock Incentive
Plan") provides that, upon a "change in control," certain of the awards
granted under the Stock Incentive Plan will vest immediately. A "change in
control" is defined under the Stock Incentive Plan as the occurrence of any of
the following: (i) any Person (other than a Person holding securities
representing 10% or more of the combined voting power of GCL's outstanding
securities as of July 15, 1998, GCL, any trustee or other fiduciary holding
securities under an employee benefit plan of GCL, or any company owned,
directly or indirectly, by the shareholders of GCL in

60
<PAGE>

substantially the same proportions as their ownership of stock of GCL) becomes
the beneficial owner (as defined under Rule 13d-3 under the Exchange Act) of
securities of GCL (a) in excess of the interest held by the existing
shareholders of GCL as of July 15, 1998 and (b) representing 30% or more of
the combined voting power of GCL's then outstanding securities; (ii) during
any period of 24 months, individuals who at the beginning of such period
constitute the board of directors and any new director (other than those
directors who meet certain exceptions specified in the Stock Incentive Plan)
whose election was approved in advance by a vote of at least two-thirds of the
directors then still in office, cease for any reason to constitute at least a
majority of the board of directors; (iii) the shareholders of GCL approve any
transaction under which GCL is merged or consolidated with any other company,
other than a merger or consolidation which would result in shareholders of GCL
immediately prior thereto continuing to own more than 65% of the combined
voting power of the voting securities of GCL or such surviving entity; or (iv)
the shareholders of GCL approve a plan of complete liquidation of the company
or an agreement for the sale or disposition by GCL of all or substantially all
of GCL's assets, other than the liquidation of GCL into a wholly-owned
subsidiary.

GCL has entered into an employment agreement, dated as of April 1, 1998,
with Mr. Jack Scanlon, providing for Mr. Scanlon's employment as GCL's Chief
Executive Officer for a term of two years and continuing thereafter for
successive two-year terms unless either GCL or Mr. Scanlon provides at least
three months' notice in advance of the expiration of the current term. In
connection with such agreement, Mr. Scanlon was issued an option to purchase a
total of 1,800,000 shares of Common Stock at an exercise price of $1.67 per
share. Such options vest in 25% increments upon the first day of employment
and at the end of each of the first three years of Mr. Scanlon's employment
with GCL. Upon a "change of control", as defined in the Stock Incentive Plan,
or any other "non-fault" termination as defined in Mr. Scanlon's employment
agreement, vesting of all of such options shall immediately occur and Mr.
Scanlon shall be entitled to terminate the agreement and receive a lump sum
payment equal to the sum of two times Mr. Scanlon's then annual base salary
and bonus. In the event that a public offering of Common Stock or a reasonably
equivalent opportunity to liquidate stock does not occur within three years of
the commencement of Mr. Scanlon's employment, Mr. Scanlon may require GCL to
purchase up to 450,000 shares of Common Stock held by him at $13.33 per share.
GCL has agreed to make similar arrangements available to Mr. Cohrs with
respect to 150,000 shares of Common Stock after three years of employment. Mr.
Finlayson has the option to sell 150,000 shares of Common Stock to the Company
at $13.33 per share after two years of employment.

GCL COMMITTEES

Audit Committee. The purpose of the Audit Committee is to: (i) make
recommendations concerning the engagement of independent public accountants;
(ii) review with GCL management and the independent public accountants the
plans for, and scope of, the audit procedures to be utilized and results of
audits; (iii) approve the professional services provided by the independent
public accountants; (iv) review the adequacy and effectiveness of GCL's
internal accounting controls; (v) review GCL's insurance program; and (vi)
perform any other duties and functions required by any organization under
which GCL's securities may be listed. Messrs. Kehler, Weinberger and Brown are
the current members of the Audit Committee. Following the Offerings, GCL will
reconstitute the Audit Committee so that it will be comprised of three members
of GCL's Board of Directors, at least two of which will be independent
directors.

Compensation Committee. The purpose of the Compensation Committee is to
establish and submit to the Board of Directors of GCL recommendations with
respect to (i) compensation of officers and other key employees of GCL and
(ii) awards to be made under the Stock Incentive Plan. Messrs. Cook, Steed and
Levine are the current members of the Compensation Committee.

61
<PAGE>

PRINCIPAL AND SELLING SHAREHOLDERS

The following table and the accompanying footnotes set forth, as of August
10, 1998, certain information regarding the beneficial ownership of the common
stock of GCL ("Common Stock") by (i) each person or entity who is known to GCL
to own beneficially five percent or more of GCL's voting Common Stock, (ii)
each of GCL's directors and executive officers and (iii) all directors and
executive officers of GCL as a group. To the knowledge of GCL, each such
stockholder has sole voting and investment power with respect to the shares
shown, unless otherwise noted. For a summary of the principal terms of the
Common Stock, see "Description of Capital Stock."
<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP
OF COMMON STOCK
--------------------------------------------------------
NUMBER NUMBER OF
OF SHARES PERCENTAGE NUMBER OF SHARES PERCENTAGE
PRIOR TO PRIOR TO SHARES TO AFTER AFTER
BENEFICIAL OWNER OFFERINGS(1) OFFERINGS BE SOLD OFFERINGS OFFERINGS
---------------- ------------ ---------- --------- ----------- ----------
<S> <C> <C> <C> <C> <C>
Pacific Capital Group,
Inc.(2) ............... 52,297,165 26.88% 1,158,636 51,138,529 23.95%
150 El Camino Drive,
Suite 204
Beverly Hills,
California 90212
Canadian Imperial Bank
of Commerce(3)......... 48,625,622 25.00% -- 48,625,622 22.78%
161 Bay Street, 8th
Floor--BCE Place
P.P. Box 500
M5J258
Toronto, Canada
Continental Casualty
Company(4)............. 20,037,585 10.30% -- 20,037,585 9.39%
CNA Plaza, Floor 23
South
Chicago, Illinois 60685
MRCo, Inc. (5).......... 16,959,462 8.72% -- 16,959,462 7.94%
111 Massachusetts
Avenue NW
Washington, DC 20001
Gary Winnick(6)......... 52,597,165 27.04% 1,158,636 51,438,529 24.09%
Lodwrick M. Cook(7)..... 2,373,170 1.22% -- 2,373,170 1.11%
Jack M. Scanlon(8)...... 450,000 * -- 450,000 *
Dan J. Cohrs(9)......... 225,000 * -- 225,000 *
David L. Lee(10)........ 11,849,012 6.09% 324,093 11,524,919 5.40%
Abbott L. Brown(11)(12). 7,017,273 3.61% 243,178 6,774,095 3.17%
Barry Porter(13)........ 10,913,811 5.61% 324,093 10,589,718 4.96%
James C. Gorton(14)..... 187,500 * -- 187,500 *
Jack Finlayson(15)...... 292,500 * -- 292,500 *
K. Eugene
Shutler(12)(16)........ 248,986 * -- 248,986 *
Hillel Weinberger(17)... 21,345,900 10.97% -- 21,345,900 10.00%
Jay R. Bloom(18)........ 48,625,622 25.00% -- 48,625,622 22.78%
Dean C. Kehler(18)...... 48,625,622 25.00% -- 48,625,622 22.78%
Jay R. Levine(18)(19)... 48,625,622 25.00% -- 48,625,622 22.78%
William P.
Phoenix(18)(19)........ 48,625,622 25.00% -- 48,625,622 22.78%
Bruce Raben(18)(19)..... 48,625,622 25.00% -- 48,625,622 22.78%
Michael R. Steed(20).... 16,974,462 8.73% -- 16,974,462 7.95%
William E. Conway(21)... 15,000 * -- 15,000 *
Toshiaki Ogasawara(21).. 15,000 * -- 15,000 *
Geoffrey J.W. Kent(21).. 15,000 * -- 15,000 *
All Directors and
Executive Officers as a
Group.................. 173,145,383 89.01% 2,050,000 171,095,383 80.14%
</TABLE>
- --------
* Percentage of shares beneficially owned does not exceed one percent.

(1) As of August 10, 1998, after giving effect to the Old GCL Exchange, the
PCG Warrant Conversion, the Advisory Services Agreement Termination, the
TDC Exchange and the transactions associated therewith, 182,738,519
shares of Common Stock would have been issued and outstanding. An
additional 2,500,500 shares of Common Stock would have been issuable upon
the exercise of options within 60 days of August 10, 1998; an additional
2,696,074 shares of Common Stock would have been issuable upon the
exercise of the GCL Warrants (effective upon the Offerings); and an
additional 6,597,227 shares of Common Stock

62
<PAGE>

would have been issuable upon the exercise of the New PCG Warrants
(effective upon the Offerings). Both the GCL Warrants and the New PCG
Warrants will have a per share exercise price equal to the Price to Public
per Share of the Offerings. Amounts appearing in the foregoing table
include (i) all shares of Common Stock outstanding as of August 10, 1998,
(ii) all shares of Common Stock issuable upon the exercise of options
within 60 days of August 10, 1998 and (iii) all shares of Common Stock
issuable upon the exercise of the GCL Warrants and New PCG Warrants.

(2) Includes 38,670,241 shares of Common Stock and 1,327,776 shares of Common
Stock issuable upon the exercise of GCL Warrants which in May 1998 were
transferred to GKW Unified Holdings, LLC, a company formed for the
benefit of Gary Winnick and members of his family that is managed by PCG.
Includes 3,198,612 shares of Common Stock issuable upon the exercise of
New PCG Warrants.

(3) Includes 75,000 shares of Common Stock issuable upon the exercise of
options within 60 days of August 10, 1998 granted to the members of the
Board of Directors affiliated with CIBC.

(4) Includes 8,397,750 shares of Common Stock owned by Continental Casualty
Corporation and 933,150 shares of Common Stock held by Continental
Casualty Corp. Designated High Yield, for which Continental Casualty
Corporation holds sole voting and investment power. Includes 10,706,685
shares of Common Stock to be acquired by Continental Casualty Corp.
Designated High Yield prior to the Offerings.

(5) Includes 368,353 shares of Common Stock issuable upon the exercise of GCL
Warrants.

(6) Includes all shares of Common Stock owned by GKW Unified Holdings, LLC,
of which PCG is manager, and all shares of Common Stock owned by PCG, of
which Mr. Winnick is Chairman and Chief Executive Officer. Includes
300,000 shares of Common Stock issuable upon the exercise of options
within 60 days of August 10, 1998.

(7) Includes 502,779 shares of Common Stock issuable upon the exercise of New
PCG Warrants. Includes 150,000 shares of Common Stock issuable upon the
exercise of options within 60 days of August 10, 1998.

(8) Includes 450,000 shares of Common Stock issuable upon the exercise of
options within 60 days of August 10, 1998.

(9) Includes 225,000 shares of Common Stock issuable upon exercise of options
within 60 days of August 10, 1998.

(10) Includes 4,936,156 shares of Common Stock and 270,832 shares of Common
Stock issuable upon the exercise of GCL Warrants owned by San Pasqual
Corp., of which Mr. Lee and his family are the sole shareholders.
Includes 2,707,890 shares of Common Stock and 79,325 shares of Common
Stock issuable upon the exercise of GCL Warrants owned by the David and
Ellen Lee Family Trust of which Mr. Lee and his wife are the sole
shareholders. Includes 150,000 shares of Common Stock issuable upon the
exercise of options within 60 days of August 10, 1998. Includes 964,584
shares of Common Stock issuable upon the exercise of New PCG Warrants.

(11) Includes all 3,762,154 shares of Common Stock and 194,045 shares of
Common Stock issuable upon the exercise of GCL Warrants owned by
Ridgestone Corp., of which Mr. Brown's family and a related trust are the
sole shareholders. Includes 150,000 shares of Common Stock issuable upon
the exercise of options within 60 days of August 10, 1998. Includes
766,668 shares of Common Stock issuable upon the exercise of New PCG
Warrants.

(12) After giving effect to the liquidation of PCG Telecom LDC, which is
managed by Ridgestone Corp. and of which Mr. Brown and Mr. Shutler are
shareholders, and the distribution therefrom of 37,209 shares to Mr.
Brown and 148,986 shares to Mr. Shutler.

(13) Includes all 5,926,271 shares of Common Stock and 298,528 shares of
Common Stock issuable upon the exercise of GCL Warrants owned by
Galenight Corp., of which Mr. Porter is the sole shareholder. Includes
150,000 shares of Common Stock issuable upon the exercise of options
within 60 days of August 10, 1998. Includes 23,557 shares of Common Stock
issuable upon the exercise of GCL Warrants and 964,584 shares of Common
Stock issuable upon the exercise of New PCG Warrants.

(14) Includes 187,500 shares of Common Stock issuable upon exercise of options
within 60 days of August 10, 1998.

63
<PAGE>

(15) Includes 292,500 shares of Common Stock issuable upon exercise of options
within 60 days of August 10, 1998.

(16) Includes 100,000 shares of Common Stock issuable upon the exercise of
options within 60 days of August 10, 1998.

(17) Includes all shares of Common Stock owned by Continental Casualty
Company, an affiliate of Loews/CNA Holdings Corp. Mr. Weinberger is an
officer of Loews/CNA Holdings Corp. Includes 1,293,315 shares of Common
Stock, consisting of 1,050,000 shares to be held by Global Crossing Trust
1998, of which Mr. Weinberger is a trustee and 243,315 shares to be held
by a partnership of which Mr. Weinberger is a managing partner. Includes
15,000 shares of Common Stock issuable upon the exercise of options
within 60 days of August 10, 1998.

(18) Includes all shares of Common Stock beneficially owned by CIBC. Messrs.
Bloom, Kehler, Levine, Phoenix and Raben are all affiliated with CIBC
Oppenheimer, an affiliate of CIBC.

(19) Beneficial ownership of all shares of Common Stock indicated is
disclaimed.

(20) Includes all shares of Common Stock owned by MRCo, Inc. Mr. Steed is the
Senior Vice President of ULLICO and the President of MRCo, Inc., which is
a wholly-owned subsidiary of ULLICO. Includes 15,000 shares of Common
Stock issuable upon the exercise of options within 60 days of August 10,
1998. Includes 368,353 shares of Common Stock issuable upon the exercise
of GCL Warrants.

(21) Includes 15,000 shares of Common Stock issuable upon the exercise of
options within 60 days of August 10, 1998. Effective immediately prior to
Offerings.

64
<PAGE>

CERTAIN TRANSACTIONS

GENERAL

The Company has entered into certain transactions described below with
entities affiliated with the Company, its officers and directors.

TRANSACTIONS WITH PACIFIC CAPITAL GROUP (PCG) AND ITS AFFILIATES

PCG and its affiliates, including PCG Telecom Services LLC ("PCG Telecom")
and Ocean Systems International LLC ("OSI"), have entered into certain
transactions with the Company described below in connection with the
development by PCG and its affiliates of several of Global Crossing's systems,
including AC-1, PC-1, PAC and MAC, and the decision by the Board of Directors
of GCL to assume the ongoing development of systems (other than AC-1) from
OSI. Revenue from the Company comprises the sole source of revenues for PCG
Telecom. PCG and its affiliates are controlled by Mr. Gary Winnick, the Co-
Chairman of the Board of Directors of GCL, and certain other officers and
directors of GCL are affiliated with PCG, including Messrs. Cook, Lee, Porter
and Brown. See "Management" and "Principal and Selling Shareholders."

Advisory Services Agreements. ACL has entered into an Advisory Services
Agreement, dated as of March 25, 1997 (as amended, the "AC-1 Advisory
Agreement"), with PCG Telecom with respect to AC-1, under which PCG Telecom is
entitled to an advisory fee of 2.0% of the gross revenues of ACL. The Board of
Directors of GCL has agreed that each other direct subsidiary of GCL shall
from time to time enter into, or cause each of its subsidiaries to enter into,
similar Advisory Services Agreements (together with the AC-1 Advisory
Agreement, the "Advisory Services Agreements") with PCG Telecom, providing for
an advisory services fee of 2% of such subsidiary's gross revenues (not double
counting any portion of intercompany revenues on which the advisory services
fee has already been calculated). The aggregate amount of all advisory fees
payable under the Advisory Services Agreements shall be reduced by the amount,
if any, by which principals of PCG receive cash compensation (as opposed to
reimbursement of expenses) from the Company other than cash compensation paid
to such principals in their capacities as officers or directors of the Company
as approved by the Board of Directors. In addition, until the earlier of (i)
the date GCL has a public equity market value in excess of $1.5 billion and
(ii) March 25, 2002 (such earlier date, the "Deferred Fee Payment Date"), the
aggregate cumulative amount of the fees paid under the Advisory Services
Agreements in respect of the calendar years prior to and including each
calendar year set forth below shall not exceed the amounts set forth below,
with any excess being deferred and paid (together with interest thereon at a
rate per annum equal to LIBOR) on the Deferred Fee Payment Date: 1998--$10
million; 1999--$20 million; 2000--$30 million; and 2001--$40 million.

Amounts payable under the AC-1 Advisory Agreement are to be divided annually
in the following manner: 90% of the initial $5 million in advisory services
fees is retained by PCG Telecom, 5% of the initial $5 million in advisory
service fees is payable to ULLICO, Inc. ("ULLICO"), which is the ultimate
parent of MRCo, Inc., and 5% of the initial $5 million in advisory service
fees is payable to PCG. With respect to amounts over the initial $5 million
annually in advisory services fees, 15.5% is payable to ULLICO, 15.5% is
payable to PCG, 35% is payable to CIBC and the remaining 34% is retained by
PCG Telecom. Amounts retained by PCG Telecom, after deducting associated
expenses incurred by PCG relating to salaries, bonuses, overhead and an annual
discretionary expense reduction, are divided amongst Messrs. Winnick, Brown,
Lee, and Porter in the following percentages: 40%, 15%, 22.5%, and 22.5%,
respectively.

All amounts payable annually under each of the other Advisory Services
Agreements will be retained by PCG Telecom and, after deducting associated
expenses incurred by PCG relating to salaries, bonuses, overhead and an annual
discretionary expense reduction, divided amongst Messrs. Winnick, Cook, Brown,
Lee, and Porter in the percentages: 50%, 8%, 12%, 15%, and 15% respectively.

The Company has agreed to acquire the rights to advisory fees payable under
the Advisory Services Agreements in consideration for the issuance, through
PCG Telecom, to the persons entitled to receive such fees

65
<PAGE>

of shares of Common Stock having an aggregate value (determined on the basis
of the Price to Public per Share payable in the Offerings) of $135 million and
the cancellation of approximately $2.7 million owed to the Company under a
related advance agreement (the "Advisory Services Agreement Termination").
Upon the consummation of this transaction, all of the obligations of the
Company and ACL in respect of the Advisory Services Agreements will be
terminated. Any final agreement will be subject to the approval of the
Company's current shareholders. The Company has obtained a fairness opinion
from an independent financial advisor in connection with this transaction. As
a result of this transaction, the Company will incur a charge of approximately
$137.7 million which has been reflected in its statement of operations for the
period ended June 30, 1998. Of this amount, $135 million was determined by
applying the 2% advisory fee to projected revenues for the Company's systems.
The present value of the aggregate advisory fees was then calculated at $155.5
million, using a discount rate of 12% in respect of AC-1 and 15% in respect of
systems other than AC-1. This amount was subsequently reduced to $135 million.
Both the discount rates and the ultimate valuation were determined as a result
of a negotiation process including a disinterested director of the Company and
the various persons entitled to fees under the Advisory Services Agreements.
The Company anticipates that the shares of Common Stock to be issued in
connection with the Advisory Services Agreement Termination will be issued to
and beneficially owned by the following persons in the following amounts:

<TABLE>
<CAPTION>
RECIPIENT COMMON STOCK VALUE(1)
--------- ------------ ------------
<S> <C> <C>
Gary Winnick (including PCG and PCG Telecom)... 3,438,557 $ 61,894,026
CIBC........................................... 707,222 12,729,996
ULLICO......................................... 386,944 6,964,992
Lodwrick M. Cook............................... 321,917 5,794,506
Abbott L. Brown................................ 721,694 12,990,492
David L. Lee................................... 961,833 17,312,994
Barry Porter................................... 961,833 17,312,994
--------- ------------
Total........................................ 7,500,000 $135,000,000
========= ============
</TABLE>
- --------

(1) Based upon the midpoint of expected pricing range of the Offerings.

The net proceeds from the sale of the Shares being offered by the Selling
Shareholders in the Offerings are to be used by such Selling Shareholders to
fund anticipated income tax liabilities resulting from this transaction. See
"Principal and Selling Shareholders."

PCG Warrants. Old GCL and PCG entered into a warrant agreement, dated as of
January 21, 1998 (the "PCG Warrant Agreement"), pursuant to which Old GCL
issued PCG three separate warrants (collectively, the "PCG Warrants")
providing PCG with the right to purchase (i) 9,226,592 of Old GCL's Class B
Shares for an aggregate purchase price of $50,000,000; (ii) an additional
4,613,297 of Old GCL's Class B Shares for an aggregate purchase price of
$31,250,000; and (iii) an additional 4,613,297 of Old GCL's Class B Shares for
an aggregate purchase price of $37,500,000. Such PCG Warrants would entitle
PCG to acquire an additional 10% of the capital stock of Old GCL (as of the
date of issuance of the PCG Warrants), with the exercise price of each PCG
Warrant based upon a different market valuation of the Company. In connection
with issuance of the PCG Warrants, the PC-1, MAC and PAC systems (then under
development) were acquired by the Company, as was the development team that
had been assembled by Pacific Capital Group (led by William Carter, former
President of AT&T Submarine Systems International ("SSI") and Wally Dawson,
former Senior Vice President of SSI). The exercise of each of the PCG Warrants
is conditioned upon (i) an initial public offering of shares of Old GCL (or
any successor thereto), underwritten by an investment banking firm of national
reputation (as determined by a majority of the Board of Directors of Old GCL)
from which Old GCL shall have received at least $50,000,000 in net proceeds,
(ii) the investment by Old GCL in the aggregate of at least $500,000,000 of
Net Attributable Capital (as defined below) in cable systems other than AC-1
and (iii) the generation in the aggregate by cable systems other than AC-1 of
at least $100,000,000 in Net Attributable Revenues (as defined below). For
purposes of the PCG Warrant Agreement, with respect to any cable system, (i)
"Net Attributable Capital" means the aggregate debt and equity capitalization
of such system multiplied by the percentage ownership of Old GCL (directly or
indirectly) in such system, and (ii) "Net Attributable Revenues" means the net
revenues of such system multiplied by the percentage ownership interest of Old
GCL (directly or indirectly)

66
<PAGE>

in such system. Rights under each of the PCG Warrants has been divided amongst
Messrs. Winnick, Cook, Brown, Lee and Porter in the following percentages:
50%, 8%, 12%, 15% and 15%, respectively.

The Board of Directors of Old GCL has determined that upon the successful
completion of the Offerings the conditions precedent to exercising the PCG
Warrants will have been met and therefore the PCG Warrants have been deemed
exercisable. The Board of Directors of Old GCL has also amended the terms of
the PCG Warrants to give each holder the option to convert each share under
warrant into a fraction of a Class B Share based upon the ratio of the current
per share valuation at the time of conversion less the per share exercise
price of the warrant divided by the current per share valuation at the time of
conversion multiplied by the number of warrants to be converted, together with
a new warrant ("New PCG Warrants") to purchase the remaining fraction of such
Class B Share at an exercise price equal to the Price to Public Per Share
payable in the Offerings. The New PCG Warrants will terminate five years from
the date of issuance. Prior to the Offerings, PCG will convert the PCG
Warrants in such manner into Class B Shares and New PCG Warrants, utilizing
the anticipated price of the Offerings as the current per share valuation for
such purposes, with the Company assuming the obligations of Old GCL under the
New PCG Warrants (the "PCG Warrant Conversion"). Upon the PCG Warrant
Conversion, Messrs. Winnick, Cook, Brown, Lee and Porter will transfer
100,000, 25,000, 25,000, 25,000 and 25,000 New PCG Warrants, respectively, to
Nelson S. Zand, an employee of PCG.

The Company anticipates that, following such transactions, shares of Common
Stock and New PCG Warrants issued in connection with the conversion of the PCG
Warrants will be issued to the following persons in the following amounts:

<TABLE>
<CAPTION>
COMMON NEW PCG
NAME STOCK WARRANTS VALUE(1)
---- ---------- --------- ------------
<S> <C> <C> <C>
Gary Winnick.......................... 5,927,979 3,198,612 $128,027,702
David L. Lee.......................... 1,778,392 964,584 38,441,616
Barry Porter.......................... 1,778,392 964,584 38,441,616
Abbott L. Brown....................... 1,422,712 766,668 30,719,936
Lodwrick M. Cook...................... 948,474 502,779 20,424,392
Nelson S. Zand........................ 0 200,000 1,333,333
---------- --------- ------------
Total............................... 11,855,949 6,597,227 $257,388,595
========== ========= ============
</TABLE>
- --------

(1) Based upon a price per share of Common Stock of $18.00 (the midpoint of
the expected pricing range for the Offerings) and the Company's estimated
value, based upon independent appraisals, of $6.67 per warrant. See "Pro
Forma Financial Information."

Advance Agreements. GCL has entered into an Advance Agreement, dated as of
March 24, 1998 (the "AC-1 Advance Agreement"), with PCG Telecom, pursuant to
which GCL has agreed to make advances to PCG Telecom within three days of a
written request from PCG in respect of fees which will become owing to PCG
Telecom under the AC-1 Advisory Agreement in an amount not to exceed 1% of the
amounts payable under long-form capacity purchase agreements executed by ACL.
As security for the obligation of PCG Telecom to repay such advances, PCG
Telecom has granted a security interest to GCL in its rights to receive
payments under the AC-1 Advisory Agreement. The AC-1 Advance Agreement will be
terminated and the obligation of PCG Telecom to repay approximately $2.7
million to the Company thereunder cancelled in connection with the termination
of the Advisory Service Agreements discussed above.

Of the $4,669,340 advanced to PCG Telecom under the AC-1 Advance Agreement,
the following amounts were paid to directors, executive officers and
shareholders of the Company:

<TABLE>
<CAPTION>
NAME AMOUNT
---- ----------
<S> <C>
Gary Winnick............................. $3,191,630(1)
David L. Lee............................. 481,130
Barry Porter............................. 481,130
Abbott L. Brown.......................... 320,754
MRCo, Inc................................ 194,696
----------
Total.................................. $4,669,340
==========
</TABLE>
- --------
(1) Includes amounts received by PCG, including reimbursement of PCG expenses
of $1,987,914.

67
<PAGE>

Assignment of Rights. As part of the consideration for the assumption by the
Company of the rights of OSI to the ongoing development of cable systems, in
the first quarter of 1998 the Company paid PCG $7.0 million for costs incurred
by PCG to such date in connection with such development.

Arrangement Fees. Additionally, during 1997, $7,250,000 in fees were paid to
PCG and certain of its key executives, who are shareholders of GCL, and
another shareholder of GCL for services provided in respect of arranging the
AC-1 Credit Facility, the GTH Senior Notes and GTH Preference Shares. Of such
fees, the following amounts were paid to directors, executive officers and
shareholders of the Company:

<TABLE>
<CAPTION>
NAME AMOUNT
---- ----------
<S> <C>
Gary Winnick................................ $3,000,000
David L. Lee................................ 1,250,000
Abbott L. Brown............................. 1,000,000
Barry Porter................................ 1,000,000
MRCo, Inc. ................................. 1,000,000
----------
Total..................................... $7,250,000
==========
</TABLE>

TRANSACTIONS WITH CIBC AND ITS AFFILIATES

CIBC and its affiliates have entered into certain financing transactions
with the Company in connection with the development and construction of the
Company's systems: (i) CIBC, Inc. was the arranger and initial lender under
the $200 million Global Crossing Bridge Facility, which was repaid and
terminated on May 18, 1998; (ii) CIBC, Inc. is one of the lead agents under
the $482 million AC-1 Credit Facility, (iii) CIBC Wood Gundy Securities Corp.,
an affiliate of CIBC, acted as exclusive placement agent for the issuance by
GTH of its $100 million outstanding GTH Preference Shares and the issuance by
GTH of its $150 million outstanding GTH Senior Notes; (iv) CIBC Oppenheimer
was an Initial Purchaser in connection with the issuance by GCH of its $800
million GCH Senior Notes; (v) CIBC, Inc. and other banks entered into a credit
agreement with the Company, effective July 30, 1998, for the $850 million non-
recourse project debt financing of PC-1; (vi) CIBC, Inc. and other lenders
issued a $104 million loan to Pacific Crossing Ltd. to make the initial
payments with respect to the PC-1 construction contract, which was repaid and
terminated on July 30, 1998, and (vii) CIBC, Inc. will be a lead agent under
the proposed $240 million MAC bank credit facility. See "Description of
Certain Indebtedness." During 1997, the Company paid CIBC approximately $25
million in fees in connection with these transactions. CIBC is a substantial
shareholder in GCL and certain members of the Board of Directors of the GCL
are affiliated with CIBC, including Messrs. Bloom, Kehler, Phoenix, Raben and
Levine. See "Management" and "Principal and Selling Shareholders."

TRANSACTIONS WITH WORLDPORT

On April 7, 1998, the Company entered into a CPA with Worldport
Communications, Inc. ("Worldport"), whereby Worldport acquired a total of five
STM-1s of capacity on AC-1 in a transaction that occurred in the ordinary
course of business of the Company and on terms and conditions no less
favorable to the Company than those contained in its other CPAs. Worldport
also executed an MOU to purchase capacity on PC-1, PAC and MAC. Certain
officers and directors of the Company, including Mr. Winnick, Mr. Cook, Mr.
Scanlon, Mr. Lee, Mr. Porter, Mr. Brown, Mr. Raben, Mr. Bloom, Mr. Kehler and
Mr. Steed, have direct or indirect equity ownership positions in Worldport
aggregating approximately 10% of the current common stock of Worldport. In
addition, Continental Casualty Corporation, with which Mr. Weinberger is
affiliated, holds warrants to purchase common stock in Worldport aggregating
less than 1% of the current common stock of Worldport and has also engaged in
certain debt financing transactions with Worldport. Campuslink Communications
Systems Inc., a private company which provides telecommunications services to
colleges and universities and which is indirectly majority-owned by Mr.
Winnick and Union Labor Life Insurance Company, an affiliate of MRCo, Inc.,
has reached an agreement in principle to be acquired by Worldport. In
addition, in connection with the Company's recent decision to explore the
making of minority investments in telecommunications and internet service
providers that are current or prospective customers on the Global Crossing
Network, the Company is considering an investment in Worldport. If the Company
chooses to make such investment, it is currently anticipated that such
investment would amount to approximately $10 million of cash and two STM-1
circuits on AC-1.

68
<PAGE>

TRANSACTIONS WITH TELECOMMUNICATIONS DEVELOPMENT CORPORATION

Prior to the Offerings and after giving effect to the Old GCL Exchange,
Telecommunications Development Corporation, a Cayman Islands corporation
("TDC"), will own 11,000,686 shares of Common Stock, as well as 307,670 GCL
Warrants. See "Description of Capital Stock--Old GCL Exchange." TDC was formed
in 1996 for the purpose of making investments in start-up telecommunications
companies and one of the companies in which TDC invested was Old GCL. Mr. Lee
is the Chairman and Mr. Winnick is a director of TDC. Messrs. Lee, Winnick,
Brown and Porter beneficially own a majority of the outstanding common stock
of TDC and approximately 29% of the outstanding preferred stock of TDC. The
balance of such stock is owned by persons not affiliated with the Company (the
"Unaffiliated Shareholders"). TDC has informed the Company that, in connection
with the Offerings, it is undergoing a reorganization to facilitate the
ability of Unaffiliated Shareholders to sell Common Stock in the open market
following the Offerings. In connection with this reorganization, TDC proposed
a transaction (the "TDC Exchange") pursuant to which the Company will acquire
the 11,000,686 shares of Common Stock owned by TDC in exchange for 10,850,686
newly-issued shares of Common Stock (assuming a Price to Public per Share in
the Offerings of $18.00). The TDC Exchange has been structured to enable TDC
to achieve the reorganization without the incurrence of gain for tax purposes.
Following the TDC Exchange, TDC will distribute all of the shares of Common
Stock and GCL Warrants owned by it to the holders of its preferred and common
stock and then liquidate (the "TDC Liquidation"). The TDC Exchange was
approved by a committee of disinterested members of the Company's Board of
Directors. The benefit to the Company from the TDC Exchange is that it will
have effectively acquired 150,000 shares of Common Stock for no cost. The
Company anticipates that, following the TDC Exchange and TDC Liquidation,
shares of Common Stock and GCL Warrants originally held by TDC will be issued
to the following persons in the following amounts:

<TABLE>
<CAPTION>
COMMON GCL
NAME STOCK WARRANTS VALUE (1)
---- ---------- -------- ------------
<S> <C> <C> <C>
Gary Winnick............................. 2,392,140 69,365 $ 43,722,122
David L. Lee............................. 2,707,890 79,325 49,500,896
Barry Porter............................. 810,646 23,557 14,816,990
Abbott L. Brown.......................... 270,215 7,852 4,938,987
Non-affiliates........................... 4,669,795 127,571 85,276,739
---------- ------- ------------
Total.................................. 10,850,686 307,670 $198,255,724
========== ======= ============
</TABLE>
- --------

(1) Based upon a price per share of Common Stock of $18.00 (the midpoint of
the expected pricing range for the Offerings) and the Company's estimated
value, based upon an independent appraisal, of $9.57 per warrant.

TRANSACTIONS REGARDING CLASS A SHARES OF OLD GCL

The Class A common stock of Old GCL was issued in connection with the sale
by Old GCL of the GTH Preference Shares and was offered for nominal or no
consideration as an inducement to purchase the GTH Preference Shares. The
holders of Old GCL's Class B and Class C common stock agreed to the dilutive
effects of issuing the Class A stock on the understanding that Class A stock
not ultimately needed in connection with the sale of the GTH Preference Shares
would be transferred to the holders of the Class B and Class C common stock on
a pro rata basis. Of the 31,102,950 shares of Class A Common Stock issued by
Old GCL, 11,250,000 shares were sold to purchasers of the GTH Preference
Shares at a price of $.67 per Class A share. The remaining 19,852,950 shares
were issued to an affiliate of CIBC Wood Gundy Securities Corporation ("CIBC
Securities"), the placement agent for the offering of the GTH Preference
Shares. This affiliate of CIBC Securities transferred 14,696,150 Class A
shares to purchasers from it of the GTH Preference Shares for no additional
consideration and retained the remaining 5,161,800 Class A shares and CIBC
Securities retained a substantial ownership interest in the GTH Preference
Shares. The holders of the Old GCL Class B and Class C shares took the
position that, consistent with their understanding regarding the disposition
of Class A shares not needed in connection with sales by CIBC Securities of
the GTH Preference Shares, the Class A shares retained by its affiliate should

69
<PAGE>

be transferred to the holders of Old GCL's Class B and Class C shares.
Accordingly, such affiliate of CIBC Securities retained 2,580,900 of the Class
A shares based upon its ownership of Class C shares and transferred the
remaining 2,580,899 Class A shares as follows:

<TABLE>
<CAPTION>
CLASS A
NAME SHARES VALUE (1)
---- --------- -----------
<S> <C> <C>
Gary Winnick(2)................. 1,122,213 $20,199,834
MRCo, Inc. ..................... 611,769 11,011,842
Telecommunications Development
Corporation.................... 382,356 6,882,408
PCG Telecom LDC................. 170,148 3,062,664
Barry Porter(3)................. 130,000 2,340,000
David L. Lee(4)................. 95,589 1,720,602
Abbott L. Brown(5).............. 68,824 1,238,832
--------- -----------
Total......................... 2,580,899 $46,456,182
========= ===========
</TABLE>
- --------

(1) Based upon the number of shares of Common Stock to be received pursuant to
the Old GCL Exchange multiplied by $18.00 (the midpoint of the expected
pricing range for the Offerings).

(2) Shares indicated for Gary Winnick were acquired by GKW Unified Holdings,
LLC, which is managed by PCG.

(3) Shares indicated for Barry Porter were acquired by Galenight Corp., of
which Mr. Porter is sole shareholder.

(4) Shares indicated for David L. Lee were acquired by San Pasqual Corp., of
which Mr. Lee and his family are the sole shareholders.

(5) Shares indicated for Abbott L. Brown were acquired by Ridgestone Corp., of
which Mr. Brown's family and a related trust are the sole shareholders.

70
<PAGE>

DESCRIPTION OF CAPITAL STOCK

GENERAL

The following summary description of the capital stock of the Company does
not purport to be complete and is subject to the provisions of the constituent
documents of GCL and each of its subsidiaries.

OLD GCL EXCHANGE

As of the date hereof, all shares of common stock of the Company are held by
Old GCL. In order to provide for certain class voting protections and
differential rights upon liquidation, Old GCL has issued and outstanding five
classes of common stock: Class A shares, Class B shares, Class C shares, Class
D shares and Class E shares. Class A shares, Class B shares and Class C shares
have identical voting rights other than with respect to election of directors,
in which case it is specified in Old GCL's Articles of Association how many
directors each class is entitled to elect. Except with respect to any
shareholder vote that would modify the rights of such class, holders of Class
D shares and Class E shares have no voting rights. With respect to
distributions, Class D shares are subordinated to the rights of each of the
other classes of stock until such other classes shall have received cumulative
payments yielding a specific internal rate of return. In January 1998, Old GCL
authorized Class E shares, which are non-voting but otherwise identical in all
respects to Class B shares, to be issued to individuals receiving awards under
GCL's Stock Incentive Plan that was established at such time.

Prior to the Offerings, GCL will declare a stock dividend to Old GCL so that
Old GCL will hold 1.5 shares of common stock of GCL for each share of common
stock of Old GCL outstanding. Pursuant to the terms of the Articles of
Association of Old GCL, prior to the Offerings each holder of Class D shares
will convert such shares into a fraction of a Class E share based upon a
valuation at the time of such conversion, together with a warrant to purchase
the remaining fraction of such Class E share at an exercise price based upon
such market valuation. In addition, each holder of Class E shares of Old GCL
will have such Class E shares converted into Class B shares of Old GCL.
Accordingly, each holder of Class D and Class E shares will ultimately receive
Class B shares, with the warrants to purchase Class E shares received by
former Class D shareholders then cancelled in exchange for warrants ("GCL
Warrants") to purchase shares of Common Stock of GCL at an exercise price
equal to the Price to Public Per Share payable in the Offerings.

Immediately subsequent to such transactions and prior to the Offerings, each
shareholder of Old GCL (other than CIBC) will agree with Old GCL to exchange
their interests in Old GCL for shares of Common Stock of GCL held by Old GCL
at a rate of 1.5 shares of Common Stock of GCL per share of common stock of
Old GCL. CIBC will not participate in the Old GCL Exchange and will continue
to maintain its beneficial ownership position in GCL through Old GCL.
Subsequent to the Old GCL Exchange, each previous shareholder of Old GCL will
hold an equal proportionate interest in GCL, with Old GCL becoming wholly-
owned by CIBC.

71
<PAGE>

The following table sets forth the beneficial share ownership of Old GCL by
directors, executive officers and principal shareholders of the Company prior
to the Old GCL Exchange and the number of shares of Common Stock to be
transferred in connection with the Old GCL Exchange:

<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C CLASS D
-------------------- --------------------- --------------------- -------------------------------
GCL
OLD GCL GCL SHARES OLD GCL GCL SHARES OLD GCL GCL SHARES OLD GCL GCL SHARES WARRANTS
NAME SHARES RECEIVED SHARES RECEIVED SHARES RECEIVED SHARES(2) RECEIVED RECEIVED
- ---------------- --------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Canadian
Imperial Bank of
Commerce(3)..... 1,720,600 2,580,900 0 0 30,175,000 45,262,500 0 0 0
Pacific Capital
Group, Inc. .... 804,338 1,206,507 15,040,966 22,561,449 0 0 10,296,100 14,917,285 1,327,776
Continental
Casualty
Company......... 8,208,390 12,312,585 1,575,000 2,362,500 3,575,000 5,362,500 0 0 0
MRCo, Inc. ..... 407,846 611,769 7,626,700 11,440,050 0 0 3,013,800 4,152,346 368,353
Gary Winnick.... 804,338 1,206,507 15,040,966 22,561,449 0 0 10,296,100 14,917,285 1,327,776
Lodwrick M.
Cook............ 0 0 300,000 450,000 0 0 0 0 0
Jack M. Scanlon. 0 0 0 0 0 0 0 0 0
Dan L. Cohrs.... 0 0 0 0 0 0 0 0 0
David L. Lee.... 127,340 191,009 2,381,275 3,571,912 0 0 2,215,900 3,881,125 350,157
Abbott L. Brown. 53,490 80,234 1,000,253 1,500,379 0 0 1,523,400 2,181,541 194,045
Barry Porter.... 105,711 158,567 1,976,816 2,965,223 0 0 2,442,500 3,613,127 322,085
James C. Gorton. 0 0 0 0 0 0 0 0 0
Jack Finlayson.. 0 0 0 0 0 0 0 0 0
K. Eugene
Shutler......... 5,042 7,563 94,282 141,423 0 0 0 0 0
Hillel
Weinberger...... 9,070,600 13,605,900 1,575,000 2,362,500 3,575,000 5,362,500 0 0 0
Jay R. Bloom(3). 1,720,600 2,580,900 0 0 30,175,000 45,262,500 0 0 0
Dean C.
Kehler(3)....... 1,720,600 2,580,900 0 0 30,175,000 45,262,500 0 0 0
Jay R.
Levine(3)....... 1,720,600 2,580,900 0 0 30,175,000 45,262,500 0 0 0
William P.
Phoenix(3)...... 1,720,600 2,580,900 0 0 30,175,000 45,262,500 0 0 0
Bruce Raben(3).. 1,720,600 2,580,900 0 0 30,175,000 45,262,500 0 0 0
Michael R.
Steed........... 407,846 611,769 7,626,700 11,440,050 0 0 3,013,800 4,152,346 368,353
William E.
Conway.......... 0 0 0 0 0 0 0 0 0
Toshiaki
Ogasawara....... 0 0 0 0 0 0 0 0 0
Geoffrey J. W.
Kent............ 0 0 0 0 0 0 0 0 0
<CAPTION>
CLASS E(1)
----------------
GCL
OLD GCL SHARES
NAME SHARES RECEIVED
- ----------------- ------- --------
<S> <C> <C>
Canadian
Imperial Bank of
Commerce(3)..... 50,000 75,000
Pacific Capital
Group, Inc. .... 0 0
Continental
Casualty
Company......... 0 0
MRCo, Inc. ..... 0 0
Gary Winnick.... 200,000 300,000
Lodwrick M.
Cook............ 100,000 150,000
Jack M. Scanlon. 300,000 450,000
Dan L. Cohrs.... 150,000 225,000
David L. Lee.... 100,000 150,000
Abbott L. Brown. 100,000 150,000
Barry Porter.... 100,000 150,000
James C. Gorton. 125,000 187,500
Jack Finlayson.. 195,000 292,500
K. Eugene
Shutler......... 66,667 100,000
Hillel
Weinberger...... 10,000 15,000
Jay R. Bloom(3). 50,000 75,000
Dean C.
Kehler(3)....... 50,000 75,000
Jay R.
Levine(3)....... 50,000 75,000
William P.
Phoenix(3)...... 50,000 75,000
Bruce Raben(3).. 50,000 75,000
Michael R.
Steed........... 10,000 15,000
William E.
Conway.......... 10,000 15,000
Toshiaki
Ogasawara....... 10,000 15,000
Geoffrey J. W.
Kent............ 10,000 15,000
</TABLE>
- -------

(1) Includes shares of Common Stock issuable upon the exercise of stock
options which are exercisable within 60 days of August 10, 1998.

(2) In connection with the liquidation of TDC, Messrs. Winnick, Lee, Porter
and Brown will also receive 731,547, 828,108, 247,906 and 82,635 shares of
Common Stock, respectively, plus warrants to acquire a further 69,365,
79,325, 23,557 and 7,852 shares of Common Stock, respectively, directly
attributable to Class D shares held by TDC. Such amounts are reflected in
the post-liquidation columns under "Class D" above; however, amounts
initially held by TDC are not shown in the "Old GCL Shares" column under
"Class D" above. See "Certain Transactions--Transactions with
Telecommunications Development Company."

(3) Amounts appearing under "GCL Shares Received", other than Class E shares,
will be held through Old GCL, which will be wholly-owned by CIBC after the
Old GCL Exchange.

72
<PAGE>

GCL

General. Pursuant to its Memorandum of Association, the authorized share
capital of GCL is $6,000,000, divided into 600,000,000 shares of par value
$.01 each. Prior to the Old GCL Exchange, all 182,738,519 of the outstanding
shares of Common Stock of GCL will be held by Old GCL.

Voting and Transfer Restrictions. Following the adoption of the Amended and
Restated Bye-Laws of the Company immediately prior to the Offerings, each
share of Common Stock will have one vote, except that if, and so long as, the
Controlled Shares (as defined below) of any person constitute more than 9.5%
(or, in the case of CIBC and certain of its affiliates, collectively, 35%) of
the voting power of the outstanding shares, including the Common Stock, of the
Company (an "Over-the-Threshold Common Stockholder"), the voting rights with
respect to the Controlled Shares owned by such person will be limited, in the
aggregate, to a voting power of 9.5%, pursuant to a formula set forth in the
Bye-Laws. The votes that could be cast by Over-the-Threshold Common
Stockholders but for the restrictions on voting rights described above will be
allocated to the other holders of Common Stock, pro rata based upon the number
of shares of Common Stock held by all other holders of Common Stock, subject
only to the further limitation that no stockholder allocated any such voting
rights may exceed the applicable limitation set forth above as a result of
such allocation. "Controlled Shares" includes, among other things, all shares
of Common Stock that a person is deemed (i) to own directly, indirectly or
constructively pursuant to Section 958 of the Code or (ii) to beneficially own
directly or indirectly as a result of the possession of sole or shared voting
power within the meaning of Section 13(d) of the Exchange Act and the rules
and regulations promulgated thereunder.

The Bye-Laws also provide that any transfer of shares of Common Stock (or
any interest therein) that results in a person (other than PCG, GKW Unified
Holdings, LLC, CIBC, Continental Casualty Company or MRCo, Inc. or their
affiliates or certain lenders to any of them) beneficially owning (within the
meaning of Section 13(d) of the Exchange Act), directly or indirectly,
Controlled Shares in excess of the Maximum Percentage (as defined below) of
the outstanding shares of Common Stock without the approval of a majority of
the members of the Board of Directors and stockholders holding at least 75% of
the votes that may be cast by all holders of Common Stock (after giving effect
to the voting limitations outlined above) shall not be registered in the share
register of the Company and shall be void and of no effect. "Maximum
Percentage" means (x) in the case of a natural person, 5%, and (y) in the case
of any person (other than a natural person) or any group (as used in Section
13(d) of the Exchange Act), 9.5%.

Amendments to or waivers of the voting reallocation and transfer restriction
provisions of the Bye-Laws will require the approval of the Board of Directors
and stockholders holding 75% of the votes that may be cast by all holders of
Common Stock. In the event of any such amendment or waiver, under certain
circumstances the Company shall indemnify and hold harmless any stockholder
who, as a result thereof, becomes subject to treatment as a "United States
Shareholder" for purposes of Section 951 et seq. of the Code from and against
all losses, costs, damages, liabilities and expenses directly or indirectly
arising out of such treatment.

These voting reallocation and transfer restrictions could make it difficult
for any person or group of persons acting in concert (other than certain
existing owners) to acquire control of the Company.

Distributions. Holders of Common Stock will be treated equally with respect
to all distributions to shareholders of GCL.

GCL STOCKHOLDERS AGREEMENT AND REGISTRATION RIGHTS AGREEMENT

The Company, PCG, GKW Unified Holdings, LLC ("GKW"), CIBC, Continental
Casualty Company, MRCo, Inc. and certain other shareholders of the Company
(including certain of the Company's officers and

73
<PAGE>

directors and their affiliates) (collectively, the "Existing Holders") have
entered into a Stockholders Agreement and a Registration Rights Agreement,
each of which has been filed as an exhibit to the Registration Statement of
which this Prospectus constitutes a part.

Under the Stockholders Agreement, the Company has been granted a right of
first refusal on certain private transfers by the Existing Holders during the
first two years after the consummation of the Offerings. In addition, subject
to the exceptions set forth in the Stockholders Agreement, certain of the
Existing Holders have rights ("tag-along rights") permitting such shareholder
to participate, on the same terms and conditions, in certain transfers of
shares by other Existing Holders as follows: (i) PCG, GKW and CIBC (and their
affiliates and permitted transferees) shall have the right to participate in
any transaction initiated by any of them to transfer 5% or more of the
outstanding securities of the Company and (ii) PCG, GKW, CIBC, Continental
Casualty Company and MRCo, Inc (and their affiliates and permitted
transferees) shall have the right to participate in any transaction initiated
by any of them to transfer any securities of the Company which transaction
would result in a change of control of the Company. In addition, so long as
Gary Winnick, PCG and GKW and certain of their transferees ("PCG Holders")
collectively beneficially own (within the meaning of Section 13(d) of the
Exchange Act) at least 15% of the outstanding shares of Common Stock, any PCG
Holder shall be entitled to seek appraisal of the fair value of the Common
Stock beneficially owned by such person (and the payment thereof in cash) in
connection with any merger or consolidation of the Company or the sale, lease
or transfer of all or substantially all of the assets of the Company, if such
PCG Holder, in his capacity as a shareholder of the Company, shall not have
voted in favor of or given consent with respect to such transaction and
beneficially owns the Common Stock as to which appraisal is sought immediately
prior to consummation of the transaction.

Pursuant to the Registration Rights Agreement, the Existing Holders have
certain demand and piggyback registration rights and receive indemnification
and, in certain circumstances, expense reimbursement from the Company in
connection with such registration.

CAPITAL STOCK OF SUBSIDIARIES

GCL owns, directly or indirectly, 100% of the capital stock of each of its
subsidiaries, except for the PC-1 joint venture entity, in which it will have
approximately a 58% economic interest. See "Business--Pacific Crossing."

TRANSFER AGENT AND REGISTRAR FOR COMMON STOCK

The transfer agent and registrar for the Common Stock is First Chicago Trust
Company of New York.

74
<PAGE>

SHARES ELIGIBLE FOR FUTURE SALE

Prior to the Offerings, there has been no public market for the Common
Stock. Sales of a substantial amount of Common Stock in the public market, or
the perception that such sales may occur, could adversely affect the market
price of the Common Stock prevailing from time to time in the public market
and could impair the Company's ability to raise additional capital through the
sale of its equity securities in the future.

Upon completion of the Offerings, assuming no exercise of the over-allotment
options granted to the Underwriters, the Company will have 201,688,519 shares
of Common Stock outstanding, including 21,000,000 Shares of Common Stock
offered hereby and 180,688,519 restricted shares of Common Stock. The
restricted shares of Common Stock generally will be eligible for sale under
Rule 144 as currently in effect, beginning as early as 180 days from the date
of this Prospectus.

The Shares offered hereby will be freely tradable without restriction or
further registration under the Securities Act by persons other than affiliates
of the Company within the meaning of Rule 144 promulgated under the Securities
Act. The holders of restricted shares generally will be entitled to sell these
shares in the public securities market without registration under the
Securities Act to the extent permitted by Rule 144 (or Rule 145, as
applicable) promulgated under the Securities Act or any exemption under the
Securities Act.

In general, under Rule 144 as currently in effect, if one year has elapsed
since the later of the date of acquisition of restricted shares from the
Company or any affiliate of the Company, as that term is defined under the
Securities Act, the holder is entitled to sell within any three-month period a
number of shares of Common Stock that does not exceed the greater of 1% of the
then-outstanding shares of Common Stock or the average weekly trading volume
of shares of Common Stock on all exchanges and reported through the automated
quotation system of a registered securities association during the four
calendar weeks preceding the date on which notice of the sale is filed with
the Commission. Sales under Rule 144 are also subject to certain restrictions
on the manner of sales, notice requirements and the availability for current
public information about the Company. If two years have elapsed since the date
of acquisition of restricted shares from the Company or from any affiliate of
the Company, and the holder thereof is deemed not to have been an affiliate of
the Company at any time during the 90 days preceding a sale, such person would
be entitled to sell such Common Stock in the public market under Rule 144(k)
without regard to the volume limitations, manner of sale provisions, public
information requirements or notice requirements.

The Company intends to file a registration statement under the Securities
Act to register shares of Common Stock reserved for issuance under the Stock
Incentive Plan, thus permitting the resale of such shares by non-affiliates
upon issuance in the public market without restriction under the Securities
Act. Such registration statement will automatically become effective
immediately upon filing.

Subject to certain exceptions, the Company and its shareholders have agreed
not to offer, sell, contract to sell or otherwise dispose of, directly or
indirectly, or announce the offering of any shares of Common Stock, including
any such shares beneficially or indirectly owned or controlled by the Company
or any securities convertible into, or exchangeable or exercisable for, shares
of Common Stock for 180 days from the date of this Prospectus, without the
prior written consent of Smith Barney Inc. and Merrill Lynch.

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DESCRIPTION OF CERTAIN INDEBTEDNESS

GCH SENIOR NOTES

On May 18, 1998, GCH, the direct wholly-owned subsidiary of the Issuer,
issued and sold the GCH Senior Notes in the aggregate principal amount of
$800.0 million to a group of institutional investors in a private transaction
not subject to the registration requirements under the Securities Act. The GCH
Senior Notes are guaranteed by the Issuer and certain subsidiaries of GCH. The
Indenture for the GCH Senior Notes contains certain covenants that, among
other things, limit the ability of GCH and certain of its subsidiaries (the
"Restricted Subsidiaries") to incur additional indebtedness and issue
preferred stock, pay dividends or make other distributions, repurchase capital
stock or subordinated indebtedness, create certain liens, enter into certain
transactions with affiliates, sell assets of GCH or its Restricted
Subsidiaries, issue or sell capital stock of GCH's Restricted Subsidiaries or
enter into certain mergers and consolidations. In addition, under certain
limited circumstances, GCH will be required to offer to purchase the GCH
Senior Notes at a price equal to 100% of the principal amount thereof plus
accrued and unpaid interest to the date of purchase, with the excess proceeds
of certain asset sales. In the event of a Change of Control (as defined in the
Indenture), holders of the GCH Senior Notes will have the right to require GCH
to purchase all of their GCH Senior Notes at a price equal to 101% of the
aggregate principal amount thereof plus accrued and unpaid interest. The
Indenture relating to the GCH Senior Notes is an exhibit to the Registration
Statement of which this Prospectus is a part.

The Company entered into a Registration Agreement dated May 18, 1998 (the
"Registration Agreement") with the initial purchasers of the GCH Senior Notes
(the "Initial Purchasers") for the benefit of the holders of the GCH Senior
Notes. Pursuant to the Registration Agreement, GCH agreed, for the benefit of
the holders, that it will, at its cost, (a) file a registration statement (the
"Exchange Offer Registration Statement") with the Commission with respect to a
registered offer (the "Exchange Offer") to exchange the GCH Senior Notes for a
series of notes (the "New Notes") with terms identical in all material
respects to the GCH Senior Notes (except that the New Notes will not contain
terms with respect to registration rights or transfer restrictions) or (b) in
lieu of the Exchange Offer Registration Statement, file a shelf registration
statement (the "Shelf Registration Statement") with respect to registration of
resales of the GCH Senior Notes. If (i) the Exchange Offer Registration
Statement has not been filed with the Commission within 90 days after May 18,
1998 (the "Closing Date") or declared effective within 150 days after the
Closing Date, or the Exchange Offer has not been consummated within 180 days
after the Closing Date or (ii) in lieu thereof, the Shelf Registration
Statement has not been filed with the Commission on or prior to 30 days after
such filing obligation arises or declared effective within 90 days after such
obligation arises or (iii) after either the Exchange Offer Registration
Statement or the Shelf Registration Statement has been declared effective, as
the case may be, it thereafter ceases to be effective or usable (subject to
certain exceptions) in connection with resales of GCH Senior Notes or New
Notes in accordance with and during the periods specified in the Registration
Agreement (each such event referred to in clauses (i) through (iii), a
"Registration Default"), additional interest ("Special Interest") will accrue
on the GCH Senior Notes and the New Notes (in addition to the stated interest
on the GCH Senior Notes and the New Notes) from and including the date on
which any such Registration Default shall occur to but excluding the date on
which all Registration Defaults have been cured. Special Interest will accrue
and be payable semiannually at a rate of 0.50% per annum during the 90-day
period immediately following the occurrence of any Registration Default and
shall increase by 0.25% per annum at the end of each subsequent 90-day period,
but in no event shall such rates exceed 1.00% per annum in the aggregate
regardless of the number of Registration Defaults. The Registration Agreement
relating to the GCH Senior Notes is an exhibit to the Registration Statement
of which this Prospectus is a part.

AC-1 CREDIT FACILITY

ACL is the borrower under the $482.0 million senior secured AC-1 Credit
Facility, comprised of a $472.0 million term loan facility and a $10.0 million
working capital facility, with certain commercial lending institutions and
CIBC and Deutsche Bank AG, New York Branch, an affiliate of Deutsche Bank
Securities Inc., as lead agents for the lenders. The AC-1 Credit Facility is
secured by pledges of the stock of ACL and its

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subsidiaries (and other entities holding landing licenses or AC-1 assets) and
security interests in the assets and revenues of ACL and its subsidiaries and
is being used to provide financing for a portion of AC-1. A portion of the AC-
1 Credit Facility is available only to pay interest on the loans prior to the
AC-1 RFS date, and a portion is available to issue letters of credit to the
contractor of AC-1. The loans under the AC-1 Credit Facility will amortize in
eight semi-annual installments, commencing on the first initial principal
payment date (which shall be May 31 or November 30) to occur more than two
months after the commercial operation date (anticipated to occur in February
1999), with 15% of the principal amount to be amortized in the first year, 25%
in the second year, 30% in the third year and 30% in the fourth year.
Borrowings bear interest at an adjustable rate based on the adjusted base rate
or LIBOR plus an applicable margin. The facility also requires mandatory
prepayments to be made from, among other things, 50% of excess cash flow, 50%
of net cash proceeds of any equity offering of ACL and 100% of net cash
proceeds of any permitted debt offerings of ACL or its immediate parent,
permitted asset sales or insurance proceeds. As of June 30, 1998, a total of
$367 million in indebtedness (to which the Notes would be effectively
subordinated) was outstanding under the AC-1 Credit Facility.

The AC-1 Credit Facility contains covenants that, among other things,
restrict ACL's use of the term loan proceeds to the financing of AC-1 and the
payment of fees and expenses directly thereto and the use of the working
capital facility proceeds to AC-1 costs and for working capital purposes and
limit ACL's ability to make certain dividends, distributions or investments
and mergers. The facility generally only permits dividends or distributions
with respect to a portion of ACL's excess cash flow, but severely restricts
the payment of other dividends or distributions to GCL. The AC-1 Credit
Facility contains certain financial covenants relating to minimum sales of
capacity on AC-1 and ratio of EBITDA to interest expense, the failure to
comply with which would cause all excess cash flow to be applied to the
lenders under the AC-1 Credit Facility for such period. The AC-1 Credit
Facility contains certain events of default including, among other things,
failure to pay amounts when due, failure to comply with covenants and
insolvency. An event of default shall also occur upon the occurrence of
certain failures in connection with AC-1. Upon the occurrence of an event of
default, the AC-1 Credit Facility permits the lenders to declare all
outstanding borrowings to be immediately due and payable and to proceed
against the collateral. In addition, the AC-1 Credit Facility prescribes the
order by which proceeds from the sale of AC-1 capacity shall be applied, both
prior to and after the commencement of commercial operations, and requires ACL
to maintain certain reserve accounts. As a result of the foregoing, the
ability of ACL to use and distribute revenue is severely restricted so long as
the AC-1 Credit Facility remains in existence.

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TAX CONSIDERATIONS

TAXATION OF THE COMPANY

The Company believes that a significant portion of its income will not be
subject to tax in Bermuda, which currently has no corporate income tax, or
other countries in which the Issuer or its affiliates conduct activities or in
which customers of the Company are located, including the United States.
However, this belief is based upon the anticipated nature and conduct of the
business of the Company, which may change, and upon the Company's
understanding of its position under the tax laws of the various countries in
which the Company has assets or conducts activities, which position is subject
to review and possible challenge by taxing authorities and to possible changes
in law (which may have retroactive effect). The extent to which certain taxing
jurisdictions may require the Company to pay tax or to make payments in lieu
of tax cannot be determined in advance. In addition, the operations of and
payments due to the Company may be affected by changes in taxation, including
retroactive tax claims or assessments of withholding on amounts payable to the
Company or other taxes assessed at the source, in excess of the taxation
anticipated by the Company based on business contacts and practices of the
Company and the current tax regimes. There can be no assurance that these
factors will not have a material adverse effect on the Company.

United States Federal Income Tax Considerations

The Issuer and its non-United States subsidiaries will be subject to United
States federal income tax at regular corporate rates (and to United States
branch profits tax) on their income that is effectively connected with the
conduct of a trade or business within the United States, and will be required
to file federal income tax returns reflecting that income. The Company intends
to conduct its operations so as to reduce the amount of its effectively
connected income. However, no assurance can be given that the Internal Revenue
Service (the "IRS") will agree with the positions taken by the Company in this
regard. Moreover, the United States subsidiaries of the Issuer will be subject
to United States federal income tax on their worldwide income regardless of
its source (subject to reduction by allowable foreign tax credits), and
distributions by such United States subsidiaries to the Issuer or its foreign
subsidiaries generally will be subject to United States withholding.

Bermuda Tax Considerations

Under current Bermuda law, the Company is not subject to tax on income or
capital gains. Furthermore, the Company has obtained from the Minister of
Finance of Bermuda under the Exempted Undertakings Tax Protection Act 1966 (as
amended), an undertaking that, in the event that Bermuda enacts any
legislation imposing tax computed on profits, income, any capital asset, gain
or appreciation, or any tax in the nature of estate duty or inheritance tax,
then the imposition of such tax will not be applicable to the Company or to
any of its operations, or the shares, capital or Common Stock of the Company,
until March 28, 2016. This undertaking does not, however, prevent the
imposition of property taxes on any company owning real property or leasehold
interests in Bermuda.

TAXATION OF STOCKHOLDERS

In the opinion of Simpson Thacher & Bartlett, special United States federal
income tax counsel to the Company, the summary set forth below under "Taxation
of Stockholders--United States Federal Income Tax Considerations" accurately
describes certain material United States federal income tax consequences that
may be relevant to the purchase, ownership and disposition of the Common
Stock. In the opinion of Appleby, Spurling & Kempe, special Bermuda tax
counsel to the Company, the summary set forth below under "Taxation of
Stockholders--Bermuda Tax Considerations" accurately describes certain
material Bermuda tax consequences that may be relevant to the purchase,
ownership and disposition of the Common Stock. Unless otherwise stated, the
discussion below deals only with Common Stock held as capital assets by United
States Holders (as defined below) who purchase the Common Stock upon original
issuance at its original offering price. The discussion does not deal with all
possible tax consequences relating to an investment in the Common Stock

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and does not purport to deal with the tax consequences applicable to all
categories of investors, some of which (such as dealers in securities,
insurance companies and tax-exempt entities) may be subject to special rules.
In particular, the discussion does not address the tax consequences under
state, local or other national (e.g., non-United States, non-Bermuda) tax
laws. Accordingly, each prospective investor should consult its own tax
advisor regarding the particular tax consequences to it of an investment in
the Common Stock. The following discussion is based upon laws, regulations and
relevant interpretations thereof in effect as of the date of this Prospectus,
all of which are subject to change, possibly retroactively.

Bermuda Tax Considerations

Under current Bermuda law, no income, withholding or other taxes or stamp or
other duties are imposed upon the issue, transfer or sale of the Common Stock
or on any payments thereunder. See "Taxation of the Company--Bermuda Tax
Considerations" for a description of the undertaking on taxes obtained by the
Company from the Minister of Finance of Bermuda.

United States Federal Income Tax Considerations

The following is a summary of certain material United States federal income
tax considerations that apply to the acquisition, ownership and disposition of
Common Stock by United States Holders (as defined below) as of the date
hereof. This summary deals only with Common Stock that is held as a capital
asset by a United States Holder, and does not address tax considerations
applicable to United States Holders that may be subject to special tax rules,
such as dealers or traders in securities, financial institutions, insurance
companies, tax-exempt entities, United States Holders that hold Common Stock
as part of a straddle, conversion transaction, constructive sale or other
arrangement involving more than one position, United States Holders that have
a principal place of business or "tax home" outside the United States or
United States Holders whose functional currency is not the United States
dollar. In addition, the summary generally does not address the tax
consequences to United States Holders that own (or are deemed for United
States federal income tax purposes to own, pursuant to complex attribution and
constructive ownership rules) 10% or more of the voting stock of the Issuer or
any of its non-United States subsidiaries ("10% Shareholders"). 10%
Shareholders are advised to consult their own tax advisors regarding the tax
considerations incident to an investment in Common Stock.

The discussion below is based upon the provisions of the Code, and
regulations, rulings and judicial decisions thereunder as of the date hereof;
any such authority may be repealed, revoked or modified, perhaps with
retroactive effect, so as to result in United States federal income tax
consequences different from those discussed below.

THE DISCUSSION SET OUT BELOW IS INTENDED ONLY AS A SUMMARY OF CERTAIN UNITED
STATES FEDERAL INCOME TAX CONSEQUENCES OF AN INVESTMENT IN THE COMMON STOCK.
PROSPECTIVE INVESTORS ARE URGED TO CONSULT THEIR OWN TAX ADVISORS AS TO THE
TAX CONSEQUENCES OF AN INVESTMENT IN THE COMMON STOCK, INCLUDING THE
APPLICATION TO THEIR PARTICULAR SITUATIONS OF THE TAX CONSIDERATIONS DISCUSSED
BELOW, AS WELL AS THE APPLICATION OF STATE, LOCAL, FOREIGN OR OTHER FEDERAL
TAX LAWS. THE STATEMENTS OF UNITED STATES FEDERAL INCOME TAX LAW SET OUT BELOW
ARE BASED ON THE LAWS IN FORCE AND INTERPRETATIONS THEREOF AS OF THE DATE OF
THIS PROSPECTUS, AND ARE SUBJECT TO ANY CHANGES OCCURRING AFTER THAT DATE.

As used herein, a "United States Holder" of Common Stock means a holder that
is (i) a citizen or resident of the United States, (ii) a corporation or
partnership created or organized in or under the laws of the United States or
any political subdivision thereof, (iii) an estate the income of which is
subject to United States federal income taxation regardless of its source or
(iv) a trust which is subject to the supervision of a court within the United
States and the control of a United States person as described in section
7701(a)(30) of the Code.

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Taxation of Dividends

The gross amount of dividends paid to United States Holders of Common Stock
will be treated as dividend income to such United States Holders, to the
extent paid out of current or accumulated earnings and profits, as determined
under United States federal income tax principles. Such income will be
includible in the gross income of a United States Holder as ordinary income on
the day received by the United States Holder. Such dividends will not be
eligible for the dividends received deduction allowed to corporations under
the Code. Subject to the PFIC rules described below, to the extent that the
amount of any distribution exceeds the Issuer's current and accumulated
earnings and profits for a taxable year, the distribution will first be
treated as a tax-free return of capital, causing a reduction in the adjusted
basis of the Common Stock (thereby increasing the amount of gain, or
decreasing the amount of loss, to be recognized by the United States Holder on
a subsequent disposition of the Common Stock), and the balance in excess of
adjusted basis will be taxed as capital gain. The Issuer does not anticipate
paying cash dividends in the foreseeable future. See "Dividend Policy."

For so long as the Issuer is a "United States-owned foreign corporation,"
distributions with respect to the Common Stock that are taxable as dividends
generally will be treated for United States foreign tax credit purposes as
either (i) foreign source "passive income" (or, in the case of certain United
States Holders, foreign source "financial services income") or (ii) United
States source income, in proportion to the earnings and profits of the Issuer
in the year of such distribution allocable to foreign and United States
sources, respectively. For this purpose, the Issuer will be treated as a
United States-owned foreign corporation so long as stock representing 50% or
more of the voting power or value of the Issuer is owned, directly or
indirectly, by United States Holders.

Taxation of Capital Gains

For United States federal income tax purposes, a United States Holder will
recognize taxable gain or loss on any sale or exchange of Common Stock in an
amount equal to the difference between the amount realized for the Common
Stock and the United States Holder's adjusted basis in the Common Stock.
Subject to the PFIC and CFC rules discussed below, such gain or loss will be
capital gain or loss. Capital gain of individuals derived with respect to
capital assets held for more than one year is eligible for reduced rates of
taxation depending upon the holding period of such capital assets. The
deductibility of capital losses is subject to limitations. Any gain recognized
by a United States Holder generally will be treated as United States source
income. It is presently unclear whether any loss realized by a United States
Holder will be treated as United States or foreign source.

Passive Foreign Investment Company

The Issuer believes that it is not a PFIC and does not expect to become a
PFIC in the future for United States federal income tax purposes, although
there can be no assurance in this regard. This conclusion is a factual
determination made annually and thus is subject to change. In addition, it is
based, in part, on interpretations of existing law that the Issuer believes
are reasonable, but which have not been approved by any taxing authority.

In general, the Issuer will be a PFIC with respect to a United States Holder
if, for any taxable year in which the United States Holder held Common Stock,
either (i) at least 75% of the gross income of the Issuer for the taxable year
is passive income or (ii) at least 50% of the value (determined on the basis
of a quarterly average) of the Issuer's assets is attributable to assets that
produce or are held for the production of passive income. For this purpose,
passive income generally includes dividends, interest, royalties, rents (other
than rents and royalties derived in the active conduct of a trade or business
and not derived from a related person), annuities and gains from assets that
produce passive income. If the Issuer owns (directly or indirectly) at least
25% by value of the stock of another corporation, the Issuer will be treated
for purposes of the PFIC tests as owning its proportionate share of the assets
of the other corporation, and as receiving directly its proportionate share of
the other corporation's income. If the Issuer is classified as a PFIC in any
year with respect to which a United States person is a shareholder, the Issuer
generally will continue to be treated as a PFIC with respect to such
shareholder in all succeeding years, regardless of whether it continues to
meet the income or asset test described above, subject to certain possible
shareholder elections that may apply in certain circumstances.

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If the Issuer is treated as a PFIC, unless a United States Holder makes a
"QEF election" or a "mark to market election," each as described below:

1. Distributions made by the Issuer during a taxable year to a United
States Holder with respect to Common Stock that are "excess distributions"
(defined generally as the excess of the amount received with respect to the
Common Stock in any taxable year over 125% of the average received in the
shorter of either the three previous years or the United States Holder's
holding period before the taxable year) must be allocated ratably to each
day of the United States Holder's holding period. The amounts allocated to
the current taxable year and to taxable years prior to the first year in
which the Issuer was classified as a PFIC are included as ordinary income
in the United States Holder's gross income for that current year. The
amount allocated to each other prior taxable year is taxed as ordinary
income at the highest rate in effect for the United States Holder in that
prior year and the tax is subject to an interest charge at the rate
applicable to deficiencies in income taxes.

2. The entire amount of any gain realized upon the sale or other
disposition (including for these purposes a pledge) of Common Stock will be
treated as an excess distribution made in the year of sale or other
disposition and as a consequence will be treated as ordinary income and, to
the extent allocated to years prior to the year of sale or disposition,
will be subject to the interest charge described above. In addition, United
States Holders who acquire their Common Stock from decedents generally will
not receive a "stepped-up" basis in such Common Stock. Instead, such United
States Holders will have a tax basis equal to the lower of the fair market
value of such Common Stock or the decedent's basis.

The special PFIC tax rules described above will not apply to a United States
Holder if the United States Holder elects to have the Issuer treated as a
"qualified electing fund" (a "QEF election") and the Issuer provides certain
information to United States Holders. If the Issuer is treated as a PFIC, it
intends to notify United States Holders and to provide to United States
Holders such information as may be required to make such QEF election
effective.

A United States Holder that makes a QEF election will be taxable currently
on its pro rata share of the Issuer's ordinary earnings and net capital gain
(at ordinary income and capital gain rates, respectively) for each taxable
year of the Issuer during which it is treated as a PFIC, regardless of whether
or not distributions were received. The United States Holder's basis in the
Common Stock will be increased to reflect taxed but undistributed income.
Distributions of income that had previously been taxed will result in a
corresponding reduction of basis in the Common Stock and will not be taxed
again as a distribution to the United States Holder.

Alternatively, a United States Holder of stock in a PFIC that is treated as
"marketable stock" may make a mark to market election. A United States Holder
that makes such an election will not be subject to the PFIC rules described
above. Instead, in general, an electing United States Holder will include in
each year as ordinary income the excess, if any, of the fair market value of
such stock at the end of the taxable year over its adjusted basis and will be
permitted an ordinary loss in respect of the excess, if any, of the adjusted
basis of such stock over its fair market value at the end of the taxable year
(but only to the extent of the net amount previously included in income as a
result of the mark to market election). The electing United States Holder's
basis in the stock will be adjusted to reflect any such income or loss
amounts. Any gain or loss on the sale of the Common Stock will be ordinary
income or loss (except that such loss will be ordinary loss only to the extent
of the previously included net mark to market gain). The mark to market
election is only available with respect to stock that is regularly traded on
certain United States exchanges and other exchanges designated by the United
States Treasury. The meaning of the term "regularly traded," for purposes of
the mark to market election, is unclear.

A United States Holder who owns Common Stock during any year that the Issuer
is a PFIC must file IRS Form 8621. United States Holders are urged to consult
their tax advisors concerning the United States federal income tax
consequences of holding Common Stock of the Issuer if it is a PFIC, including
the advisability and availability of making any of the foregoing elections.

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Foreign Personal Holding Company

If the Issuer or one of its non-United States subsidiaries were classified
as an FPHC, all United States Holders (including certain indirect holders),
regardless of their percentage ownership, would be required to include in
income, as a dividend, their pro rata share of the Issuer's (or its relevant
non-United States subsidiary's) undistributed FPHC income (generally, taxable
income with certain adjustments) if they were holders on the last day of the
Issuer's taxable year (or if earlier, the last day on which the Issuer
satisfied the shareholder test). In addition, if the Issuer were classified as
an FPHC, United States Holders who acquire their Common Stock from decedents
would not receive a "stepped-up" basis in such Common Stock. Instead, such
United States Holders would have a tax basis equal to the lower of the fair
market value of such Common Stock or the decedent's basis.

A foreign corporation will be classified as an FPHC if (i) at any time
during the corporation's taxable year, five or fewer individuals, who are
United States citizens or residents, directly or indirectly own more than 50%
of the corporation's stock (by either voting power or value) (the "shareholder
test") and (ii) the corporation receives at least 60% of its gross income (50%
after the initial year of qualification), as adjusted, for the taxable year
from certain passive sources (the "income test"). It is possible that the
shareholder test will be met after the Offering. It is also possible that the
Issuer or one of its non-United States subsidiaries would meet the income test
in a given year and would be treated as an FPHC. The Company intends to manage
its affairs so as to attempt to avoid or minimize having income imputed to its
United States Holders under these rules, to the extent such management of its
affairs is consistent with its business goals, although there can be no
assurance in this regard.

Personal Holding Company

A corporation classified as a PHC is subject to a 39.6% tax on its
undistributed PHC income. Foreign corporations (such as the Issuer) determine
their liability for PHC tax by considering only (i) gross income derived from
United States sources and (ii) gross income that is effectively connected with
a United States trade or business. A corporation will be classified as a PHC
if (i) at any time during the last half of the corporation's taxable year,
five or fewer individuals own more than 50% of the corporation's stock (by
value) directly or indirectly and (ii) the corporation receives at least 60%
of its gross income, as adjusted, from certain passive sources. However, if a
corporation is an FPHC or a PFIC, it cannot be a PHC. It is possible that the
Issuer could meet the PHC shareholder test in a given taxable year. It is also
possible that the Issuer or one of its non-United States subsidiaries would
meet the income test in a given year and would be treated as a PHC. The
Company intends to manage its affairs so as to attempt to avoid or minimize
the imposition of the PHC tax, to the extent such management of its affairs is
consistent with its business goals, although there can be no assurance in this
regard.

Controlled Foreign Corporations

If 10% Shareholders (as defined above) own, in the aggregate, more than 50%
(measured by voting power or value) of the shares of the Issuer or any of its
non-United States corporate subsidiaries (directly, indirectly, or by
attribution), the Issuer or any such non-United States subsidiary would be a
CFC. If characterized as CFCs, then a portion of the undistributed income of
the Issuer and its non-United States subsidiaries may be includible in the
taxable income of 10% Shareholders of those entities, and a portion of the
gain recognized by such 10% Shareholders on the disposition of their shares in
the Issuer (which could otherwise qualify for capital gains treatment) may be
converted into ordinary dividend income. It is possible that the Issuer and
its non-United States corporate subsidiaries may be CFCs or may become CFCs in
the future. However, as discussed above, CFC status generally only has
potentially adverse consequences to 10% Shareholders.

In order to attempt to prevent any United States person from being a 10%
Shareholder of the Issuer, the Bye-Laws of the Issuer generally provide, among
other things, that no holder of Common Stock (or any group of holders through
whom ownership may be attributed to another holder by the constructive
ownership or attribution rules of Section 958 of the Code) will be allowed to
cast votes with respect to more than 9.5% of the

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Common Stock, and certain restrictions have been placed on the transferability
of shares. There can be no assurance that these limitations will prevent the
characterization of the Issuer (or any of its non-United States subsidiaries)
as a CFC or of any United States Holder as a 10% Shareholder. However, a
United States Holder that owns directly less than 10% of the Common Stock
generally will not be treated as a 10% Shareholder unless it is attributed
Common Stock owned by other shareholders.

Taxation of Non-United States Holders

For United States federal income tax purposes, a non-United States Holder
generally will not be subject to tax or withholding on distributions made with
respect to, and gains realized from the disposition of, Common Stock unless
such distributions and gains are attributable to an office or fixed place of
business maintained by such non-United States Holder in the United States.

Information Reporting and Backup Withholding
United States Holders

In general, information reporting requirements will apply to dividends in
respect of the Common Stock or the proceeds received on the sale, exchange, or
redemption of the Common Stock paid within the United States (and in certain
cases, outside of the United States) to United States Holders other than
certain exempt recipients (such as corporations), and a 31% backup withholding
may apply to such amounts if the United States Holder fails to provide an
accurate taxpayer identification number or to report dividends required to be
shown on its United States federal income tax returns. The amount of any
backup withholding from a payment to a United States Holder will be allowable
as a refund or credit against the United States Holder's United States federal
income tax liability, provided that the required information or appropriate
claim for refund is furnished to the IRS.

Non-United States Holders

Under current law, United States information reporting requirements and
backup withholding generally will not apply to dividends paid to a non-United
States Holder at an address outside the United States (unless the payor has
knowledge that the payee is a United States person). However, under recently
finalized United States Treasury regulations effective for payments made after
December 31, 1999, a non-United States Holder will generally be subject to
backup withholding unless applicable certification requirements are met.

As a general matter, information reporting and backup withholding will not
apply to a payment of the proceeds of a sale of Common Stock effected outside
the United States by a foreign office of a non-United States Holder. However,
payment of the proceeds of a sale of Common Stock within the United States or
conducted through certain United States related financial intermediaries is
subject to both backup withholding and information reporting unless the
beneficial owner certifies under penalties of perjury that it is a non-United
States Holder (and the payor does not have actual knowledge that the
beneficial owner is a United States person) or the holder otherwise
establishes an exemption.

The amount of any backup withholding from a payment to a non-United States
Holder will be allowable as a refund or credit against such non-United States
Holder's United States federal income tax liability, provided that the
required information or appropriate claim for refund is furnished to the IRS.

83
<PAGE>

UNDERWRITING

Subject to the terms and conditions set forth in an underwriting agreement
among the Company, the Selling Shareholders and the U.S. Underwriters (the
"U.S. Underwriting Agreement"), the Company and the Selling Shareholders have
agreed to sell to each of the U.S. Underwriters named below (the "U.S.
Underwriters"), and each of the U.S. Underwriters, for whom Smith Barney Inc.,
Merrill Lynch, Pierce, Fenner & Smith Incorporated, CIBC Oppenheimer Corp.,
Deutsche Bank Securities Inc., Goldman, Sachs & Co. and Morgan Stanley & Co.
Incorporated are acting as the representatives (the "U.S. Representatives"),
has severally agreed to purchase the number of Shares set forth opposite its
name below:

<TABLE>
<CAPTION>
UNDERWRITING
U.S. UNDERWRITERS COMMITMENT
----------------- ------------
<S> <C>
Smith Barney Inc. ............................................
Merrill Lynch, Pierce, Fenner & Smith
Incorporated.............................................
CIBC Oppenheimer Corp. .......................................
Deutsche Bank Securities Inc. ................................
Goldman, Sachs & Co. .........................................
Morgan Stanley & Co. Incorporated.............................
Total....................................................... 16,800,000
==========
</TABLE>

The Company and the Selling Shareholders have been advised by the U.S.
Representatives that the several U.S. Underwriters initially propose to offer
such Shares to the public at the Price to Public set forth on the cover page
of this Prospectus and to certain dealers at such price less a concession not
in excess of $ per Share. The U.S. Underwriters may allow, and such dealers
may re-allow, a concession not in excess of $ per Share to other dealers.
After the Offerings, the Price to Public and such concessions may be changed.

The Company has granted to the U.S. Underwriters and the international
underwriters (the "International Underwriters" and, collectively with the U.S.
Underwriters, the "Underwriters") options, exercisable during the 30-day
period after the date of this Prospectus, to purchase up to 3,150,000
additional shares of Common Stock from the Company at the Price to Public less
the Underwriting Discount, solely to cover over-allotments. To the extent that
the U.S. Underwriters and the International Underwriters exercise such
options, each of the U.S. Underwriters and the International Underwriters, as
the case may be, will be committed, subject to certain conditions, to purchase
a number of option shares proportionate to such U.S. Underwriter's or
International Underwriter's initial commitment.

The Company and the Selling Shareholders have entered into an International
Underwriting Agreement with the International Underwriters named therein, for
whom Smith Barney Inc., Merrill Lynch International, CIBC Oppenheimer Corp.,
Deutsche Bank AG (London Branch), Goldman Sachs International and Morgan
Stanley & Co. International Limited are acting as the representatives (the
"International Representatives" and, together with the U.S. Representatives,
the "Representatives"), providing for the concurrent offer and sale of
4,200,000 Shares (in addition to the shares covered by the over-allotment
options described above) outside the United States and Canada. Both the U.S.
Underwriting Agreement and the International Underwriting Agreement provide
that the obligations of the U.S. Underwriters and the International
Underwriters are such that if any of the Shares are purchased by the U.S.
Underwriters pursuant to the U.S. Underwriting Agreement, or by the
International Underwriters pursuant to the International Underwriting
Agreement, all the Shares agreed to be purchased by either the U.S.
Underwriters or the International Underwriters, as the case may be, pursuant
to their respective agreements must be so purchased. The Price to Public and
Underwriting Discount per Share for the U.S. Offering and the International
Offering will be identical. The closing of the International Offering is a
condition to the closing of the U.S. Offering and the closing of the U.S.
Offering is a condition to the closing of the International Offering.

84
<PAGE>

Each U.S. Underwriter has severally agreed that, as part of the distribution
of the 16,800,000 Shares offered by the U.S. Underwriters, (i) it is not
purchasing any Shares for the account of anyone other than a United States or
Canadian Person, (ii) it has not offered or sold, and will not offer or sell,
directly or indirectly, any Shares or distribute this Prospectus to any person
outside of the United States or Canada, or to anyone other than a United
States or Canadian Person and (iii) any dealer to whom it may sell any Shares
will represent that it is not purchasing for the account of anyone other than
a United States or Canadian Person and agree that it will not offer or resell,
directly or indirectly, any Shares outside of the United States or Canada, or
to anyone other than
a United States or Canadian Person or to any other dealer who does not so
represent and agree. Each International Underwriter has severally agreed that,
as part of the distribution of the 4,200,000 Shares offered by the
International Underwriters, (i) it is not purchasing any Shares for the
account of any United States or Canadian Person, (ii) it has not offered or
sold, and will not offer or sell, directly or indirectly, any Shares or
distribute any Prospectus relating to the International Offering to any person
in the United States or Canada, or to any United States or Canadian Person and
(iii) any dealer to whom it may sell any Shares will represent that it is not
purchasing for the account of any United States or Canadian Person and agree
that it will not offer or resell, directly or indirectly, any Shares in the
United States or Canada, or to any United States or Canadian Person or to any
other dealer who does not so represent and agree.

The foregoing limitations do not apply to stabilization transactions or to
certain other transactions specified in the Agreement Between U.S.
Underwriters and International Underwriters, including sales of Directed
Shares (as defined below). "United States or Canadian Person" means any person
who is a national or resident of the United States or Canada, any corporation,
partnership or other entity created or organized in or under the laws of the
United States or Canada or of any political subdivision thereof, and any
estate or trust the income of which is subject to United States or Canadian
federal income taxation, regardless of its source (other than any non-United
States or non-Canadian branch of any United States or Canadian Person), and
includes any United States or Canadian branch of a person other than a United
States or Canadian Person.

Pursuant to the Agreement Between U.S. Underwriters and International
Underwriters, sales may be made between the U.S. Underwriters and the
International Underwriters of such number of Shares as may be mutually agreed.
The price of any Shares so sold shall be the Price to Public, less an amount
not greater than the concession to securities dealers. To the extent that
there are sales between the U.S. Underwriters and the International
Underwriters pursuant to the Agreement Between U.S. Underwriters and
International Underwriters, the number of Shares initially available for sale
by the U.S. Underwriters or by the International Underwriters may be more or
less than the amount specified on the cover page of this Prospectus.

Any offer of the Shares in Canada will be made only pursuant to an exemption
from the prospectus filing requirement and an exemption from the dealer
registration requirement (where such an exemption is not available, offers
shall be made only by a registered dealer) in the relevant Canadian
jurisdiction where such offer is made.

The U.S. Underwriting Agreement provides that the Company and the Selling
Shareholders will indemnify the U.S. Underwriters against certain liabilities
and expenses, including liabilities under the Securities Act, or contribute to
payments the U.S. Underwriters may be required to make in respect thereof.

Subject to certain exceptions, the Company and its shareholders have agreed
not to offer, sell, contract to sell or otherwise dispose of, directly or
indirectly, or announce the offering of any shares of Common Stock, including
any such shares beneficially or indirectly owned or controlled by the Company
or any securities convertible into, or exchangeable or exercisable for, shares
of Common Stock, for 180 days from the date of this Prospectus, without the
prior written consent of Smith Barney Inc. and Merrill Lynch.

85
<PAGE>

reduced to the extent of sales of Directed Shares to any of the persons for
whom they have been reserved. Any Shares not so purchased will be offered by
the U.S. Underwriters on the same basis as all other Shares offered hereby.
The Company has agreed to indemnify those certain U.S. Underwriters against
certain liabilities and expenses, including liabilities under the Securities
Act, in connection with the sales of the Directed Shares.

The Underwriters do not intend to confirm sales of Shares to accounts over
which they exercise discretionary authority.

In connection with the Offerings and in compliance with applicable law, the
Underwriters may overallot (i.e., sell more Shares than the total amount shown
on the list of Underwriters and participations which appears above) and may
effect transactions which stabilize, maintain or otherwise affect the market
price of the Shares at levels above those which might otherwise prevail in the
open market. Such transactions may include placing bids for the Shares or
effecting purchases of the Shares for the purpose of pegging, fixing or
maintaining the price of the Shares or for the purpose of reducing a syndicate
short position created in connection with the offering. A syndicate short
position may be covered by exercise of the option described above in lieu of
or in addition to open market purchases. In addition, the contractual
arrangements among the Underwriters include a provision whereby, if the
Representatives purchase Shares in the open market for the account of the
underwriting syndicate and the securities purchased can be traced to a
particular Underwriter or member of the selling group, the underwriting
syndicate may require the Underwriter or selling group member in question to
purchase the Shares in question at the cost price to the syndicate or may
recover from (or decline to pay to) the Underwriter or selling group member in
question the selling concession applicable to the securities in question. The
Underwriters are not required to engage in any of these activities and any
such activities, if commenced, may be discontinued at any time.

Prior to the Offerings, there has been no public market for the Common
Stock. The Price to Public was determined by negotiations between the Company,
the Selling Shareholders and the Representatives. Among the factors considered
in determining the Price to Public were prevailing market conditions, the
market values of publicly traded companies that the Underwriters believed to
be somewhat comparable to the Company, the demand for the Shares and for
similar securities of publicly traded companies that the Underwriters believed
to be somewhat comparable to the Company, the future prospects of the Company
and its industry in general, sales, earnings and certain other financial and
operating information of the Company in recent periods, and other factors
deemed relevant. There can be no assurance that the prices at which the Shares
will sell in the public market after the Offerings will not be lower than the
Price to Public. See "Risk Factors--No Prior Public Market; Possible
Volatility of Stock Price."

The Underwriters and certain of their affiliates have provided and may in
the future provide investment banking and other financial services to the
Company and certain of its affiliates for which they receive customary fees.
Salomon Brothers Inc, an affiliate of Smith Barney Inc., Merrill Lynch,
Pierce, Fenner & Smith Incorporated, CIBC Oppenheimer Corp., Deutsche Bank
Securities Inc. (formerly known as Deutsche Morgan Grenfell Inc.) and Morgan
Stanley & Co. Incorporated acted as Initial Purchasers in connection with the
issuance by GCH of its $800 million GCH Senior Notes. Affiliates of CIBC
Oppenheimer Corp. have engaged in certain related-party transactions with the
Company, including as a lender under the AC-1 Credit Facility. Affiliates of
Deutsche Bank Securities Inc. are acting as lenders under the AC-1 Credit
Facility and PC-1 credit agreement, and an affiliate of Goldman, Sachs & Co.
is acting as a lender under the PC-1 credit agreement. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations--
Liquidity and Capital Resources," "Principal and Selling Shareholders,"
"Certain Transactions" and "Description of Certain Indebtedness."

Under Rule 2720 ("Rule 2720") of the Conduct Rules of the National
Association of Securities Dealers, Inc. ("NASD"), the Company is considered an
affiliate of CIBC Oppenheimer Corp. The Offerings are being conducted in
accordance with Rule 2720, which provides that, among other things, when an
NASD member participates in the underwriting of an affiliate's equity
securities, the public offering price per share can be no higher than that
recommended by a "qualified independent underwriter" meeting certain standards
("QIU"). In accordance with this requirement, Smith Barney Inc. has assumed
the responsibilities of acting as QIU in pricing the Offerings and conducting
due diligence. The Company and the other Underwriters have agreed to indemnify
Smith Barney Inc. in its capacity as QIU against certain liabilities,
including liabilities under the Securities Act.

86
<PAGE>

LEGAL MATTERS

The validity of the Common Stock will be passed upon by the Company's
counsel, Appleby, Spurling & Kempe, Hamilton, Bermuda. Certain legal matters
under United States and New York law with respect to the Shares offered hereby
will be passed upon for the Company by Simpson Thacher & Bartlett, New York,
New York, and for the Underwriters by Latham & Watkins, New York, New York.
Simpson Thacher & Bartlett and Latham & Watkins will rely, as to matters of
Bermuda law, on the opinion of Appleby, Spurling & Kempe, Hamilton, Bermuda.

EXPERTS

The financial statements and schedules included in this prospectus and
elsewhere in the registration statement to the extent and for the periods
indicated in their reports have been audited by Arthur Andersen & Co.,
independent public accountants, and are included herein in reliance upon the
authority of said firm as experts in giving said reports.

AVAILABLE INFORMATION

The Company is not currently subject to the information requirements of the
Securities and Exchange Act of 1934, as amended (the "Exchange Act"). As a
result of the Offerings, GCL will be required to file reports and other
information with the Securities and Exchange Commission (the "Commission")
pursuant to the informational requirements of the Exchange Act. GCL intends to
furnish its stockholders with Annual Reports containing Consolidated Financial
Statements audited by independent certified public accountants and with
quarterly reports containing unaudited financial information for each of the
first three quarters of each year.

GCL has filed with the Commission a Registration Statement on Form S-1 under
the Securities Act of 1933, as amended (the "Securities Act"), with respect to
the securities offered hereby. As permitted by the rules and regulations of
the Commission, this Prospectus, which is a part of the Registration
Statement, omits certain information, exhibits, schedules and undertakings set
forth in the Registration Statement. For further information pertaining to the
Company and the securities offered hereby, reference is made to such
Registration Statement and the exhibits and schedules thereto. Statements
contained in this Prospectus as to the contents or provisions of any documents
referred to herein are not necessarily complete, and in each instance,
reference is made to the copy of the document filed as an exhibit to the
Registration Statement. GCL will issue annual and quarterly reports. Annual
reports will include audited financial statements prepared in accordance with
accounting principles generally accepted in the United States and a report of
its independent auditors with respect to the examination of such financial
statements. In addition, GCL will issue to its securityholders such other
unaudited quarterly or other interim reports as it deems appropriate.

The Registration Statement may be inspected without charge at the office of
the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549. Copies of
the Registration Statement may be obtained from the Commission at prescribed
rates from the Public Reference Section of the Commission at such address, and
at the Commission's regional offices located at 7 World Trade Center, 13th
Floor, New York, New York 10048, and at Northwestern Atrium Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661. In addition, registration
statements and certain other filings made with the Commission through its
Electronic Data Gathering, Analysis and Retrieval ("EDGAR") system are
publicly available through the Commission's site on the Internet's World Wide
Web, located at http://www.sec.gov.

87
<PAGE>

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
--------
<S> <C>
Report of Independent Public Accountants............................. F-2
Consolidated Balance Sheets as of June 30, 1998 (unaudited) and
December 31, 1997................................................... F-3
Consolidated Statements of Operations for the three months ended June
30, 1998 (unaudited) and June 30, 1997 (unaudited), for the six
months ended June 30, 1998 (unaudited), for the period from March
19, 1997 (Date of Inception) to June 30, 1997 (unaudited) and for
the period from March 19, 1997 (Date of Inception) to December 31,
1997.............................................................. F-4
Consolidated Statements of Shareholders' Equity for the six months
ended June 30, 1998 (unaudited) and for the period from March 19,
1997 (Date of Inception) to December 31, 1997..................... F-5
Consolidated Statements of Cash Flows for the six months ended June
30, 1998 (unaudited), for the period from March 19, 1997 (Date of
Inception) to June 30, 1997 (unaudited) and for the period from
March 19, 1997 (Date of Inception) to December 31, 1997........... F-6, F-7
Notes to Consolidated Financial Statements........................... F-8
</TABLE>

F-1
<PAGE>

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Shareholders of
Global Crossing Ltd., LDC:

We have audited the accompanying consolidated balance sheet of Global
Crossing Ltd., LDC (a Cayman Islands company in its development stage) and
subsidiaries as of December 31, 1997, and the related consolidated statements
of operations, shareholders' equity and cash flows for the period from March
19, 1997 (date of inception) to December 31, 1997. These financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on
a test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Global Crossing Ltd., LDC
and subsidiaries as of December 31, 1997, and the results of their operations
and their cash flows for the period from March 19, 1997 (date of inception) to
December 31, 1997, in conformity with accounting principles generally accepted
in the United States.

Arthur Andersen & Co.

Hamilton, Bermuda
April 21, 1998

F-2
<PAGE>

GLOBAL CROSSING LTD., LDC AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

AS OF JUNE 30, 1998 AND DECEMBER 31, 1997
(EXPRESSED IN U.S. DOLLARS)

<TABLE>
<CAPTION>
JUNE 30, 1998 DECEMBER 31, 1997
-------------- -----------------
(UNAUDITED)
<S> <C> <C>
ASSETS:
Current assets:
Cash and cash equivalents................ $ 304,125,205 $ 1,452,684
Accounts receivable, net of allowance for
doubtful accounts of $1,012,117......... 205,660,226 --
Interest receivable...................... 1,979,573 123,000
Backhaul capacity available for sale..... 54,738,560 21,200,000
Other assets and prepaid costs........... 28,347,113 892,958
Restricted cash and cash equivalents..... 237,485,187 25,275,196
-------------- ------------
832,335,864 48,943,838
Long term accounts receivable.............. 26,978,076 --
Capacity available for sale................ 206,271,310 --
Construction in progress................... 518,636,709 497,318,509
Investment in Pacific Crossing Ltd. ....... 126,456,345 --
Deferred finance and organization costs,
net of accumulated amortization of
$3,994,076 ($2,246,857 as of December 31,
1997)..................................... 44,338,405 25,934,021
-------------- ------------
$1,755,016,709 $572,196,368
============== ============
LIABILITIES:
Current liabilities:
Accrued construction costs............... $ 21,688,211 $ 52,003,875
Accounts payable and accrued liabilities. 8,520,395 1,658,399
Accrued interest and preference share
dividends............................... 9,361,111 2,921,854
Deferred revenue......................... 211,260,127 5,325,000
Income taxes payable..................... 9,000,000 --
Current portion of obligations under
inland services agreements.............. 43,489,498 17,891,000
Current portion of obligations under
capital leases.......................... 6,215,130 12,297,645
-------------- ------------
309,534,472 92,097,773
Long term debt............................. 367,048,000 162,325,000
Senior notes............................... 796,277,203 150,000,000
Long term deferred revenue................. 29,187,836 --
Obligations under inland services
agreements................................ 7,628,050 3,009,000
Obligations under capital leases........... 7,561,897 --
-------------- ------------
Total liabilities........................ 1,517,237,458 407,431,773
-------------- ------------
COMMITMENTS
MANDATORILY REDEEMABLE PREFERENCE SHARES
(109,830 shares as of December 31, 1997,
$1,000 preference liquidation preference
per share (net of unamortized discount and
issuance costs of $12,223,993 and
$6,962,407 respectively)).................. -- 90,643,919
-------------- ------------
SHAREHOLDERS' EQUITY:
Class A common stock, 31,102,950 shares
issued (31,102,950 as of December 31,
1997)..................................... 20 20
Class B common stock, 51,075,000 shares
issued (50,625,000 as of December 31,
1997)..................................... 34 34
Class C common stock, 50,625,000 shares
issued (50,625,000 as of December 31,
1997)..................................... 34 34
Class D common stock, 33,088,200 shares
issued, convertible to Class E shares
(33,088,200 as of December 31, 1997)...... 22 22
Class E common stock, 337,500 shares
issued (nil as of December 31, 1997)...... -- * --
Other shareholders' equity................. 397,095,005 74,280,922
Accumulated deficit........................ (159,315,864) (160,356)
-------------- ------------
237,779,251 74,120,676
-------------- ------------
$1,755,016,709 $572,196,368
============== ============
</TABLE>
- --------
*Amount less than $1.

The accompanying notes are an integral part of these consolidated financial
statements.

F-3
<PAGE>

GLOBAL CROSSING LTD., LDC AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(EXPRESSED IN U.S. DOLLARS)

<TABLE>
<CAPTION>
FOR THE PERIOD FOR THE PERIOD
THREE MONTHS THREE MONTHS SIX MONTHS FROM MARCH 19, 1997 FROM MARCH 19, 1997
ENDED ENDED ENDED (DATE OF INCEPTION) (DATE OF INCEPTION)
JUNE 30, 1998 JUNE 30, 1997 JUNE 30, 1998 TO JUNE 30, 1997 TO DECEMBER 31, 1997
------------- ------------- ------------- ------------------- --------------------
(UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
SALES AND OPERATING
REVENUES............... $ 101,255,867 $ -- $ 101,255,867 $ -- $ --
------------- ----------- ------------- ----------- ------------
EXPENSES:
Cost of capacity sold.. 41,200,229 -- 41,200,229 -- --
Operations and
maintenance........... 2,470,000 -- 2,470,000 -- --
Sales and marketing.... 6,528,780 40,235 7,312,995 40,235 1,366,724
Network development.... 4,314,183 -- 4,314,183 -- 78,000
General and
administrative........ 6,507,671 50,204 9,099,341 50,204 1,617,770
Termination of
advisory services
agreement............. 139,669,340 -- 139,669,340 -- --
Stock related expense.. 22,760,170 -- 23,397,670 -- --
Provision for doubtful
accounts.............. 1,012,117 -- 1,012,117 -- --
Depreciation and
amortization.......... 442,827 51,623 473,194 51,623 39,214
------------- ----------- ------------- ----------- ------------
224,905,317 142,062 228,949,069 142,062 3,101,708
------------- ----------- ------------- ----------- ------------
OPERATING LOSS.......... (123,649,450) (142,062) (127,693,202) (142,062) (3,101,708)
OTHER INTEREST INCOME
(EXPENSE):
Interest income........ 4,327,602 1,347,512 4,673,436 1,347,512 2,941,352
Interest expense....... (7,403,037) -- (7,426,271) -- --
------------- ----------- ------------- ----------- ------------
INCOME (LOSS) BEFORE
INCOME TAXES AND
EXTRAORDINARY ITEM..... (126,724,885) 1,205,450 (130,446,037) 1,205,450 (160,356)
Provision for income
taxes................. (9,000,000) -- (9,000,000) -- --
------------- ----------- ------------- ----------- ------------
INCOME (LOSS) BEFORE
EXTRAORDINARY ITEM..... (135,724,885) 1,205,450 (139,446,037) 1,205,450 (160,356)
Extraordinary loss on
retirement of senior
notes................. (19,709,471) -- (19,709,471) -- --
------------- ----------- ------------- ----------- ------------
NET INCOME (LOSS)....... (155,434,356) 1,205,450 (159,155,508) 1,205,450 (160,356)
Preference share
dividends............. (3,898,203) (4,041,664) (8,306,433) (4,236,108) (12,689,923)
Redemption of
preference shares..... (34,140,067) -- (34,140,067) -- --
------------- ----------- ------------- ----------- ------------
NET LOSS APPLICABLE TO
COMMON SHAREHOLDERS.... $(193,472,626) $(2,836,214) $(201,602,008) $(3,030,658) $(12,850,279)
============= =========== ============= =========== ============
LOSS PER COMMON SHARE
Net loss before
extraordinary item:
Basic and diluted.... $ (1.05) $ (0.02) $ (1.10) $ (0.02) $ (0.08)
============= =========== ============= =========== ============
Extraordinary item..... $ (0.12) $ -- $ (0.12) $ -- $ --
============= =========== ============= =========== ============
Net loss applicable to
common shareholders:
Basic and diluted.... $ (1.17) $ (0.02) $ (1.22) $ (0.02) $ (0.08)
============= =========== ============= =========== ============
Shares used in computing
basic and diluted net
loss per share......... 166,194,035 165,441,150 166,062,697 165,441,150 165,441,150
============= =========== ============= =========== ============
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.

F-4
<PAGE>

GLOBAL CROSSING LTD., LDC AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

FOR THE SIX MONTHS ENDED JUNE 30, 1998 (UNAUDITED) AND FOR THE PERIOD FROM
MARCH 19, 1997 (DATE OF INCEPTION) TO DECEMBER 31, 1997
(EXPRESSED IN U.S. DOLLARS)

<TABLE>
<CAPTION>
OTHER SHAREHOLDERS'
COMMON STOCK EQUITY
--------------------- --------------------------
ADDITIONAL TOTAL
PAID-IN UNEARNED ACCUMULATED SHAREHOLDERS'
SHARES AMOUNT(1) CAPITAL COMPENSATION DEFICIT EQUITY
----------- --------- ------------ ------------ ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Issuance of Class A
common stock for cash
on March 25, 1997...... 11,250,000 $ 7 $ 7,499,993 $ -- $ -- $ 7,500,000
Class A common stock
distributed for nil
consideration to the
initial purchaser of
preference shares on
March 25, 1997......... 19,852,950 13 13,234,987 -- -- 13,235,000(2)
Issuance of Class B
common stock for cash
on March 25, 1997...... 50,625,000 34 31,249,966 -- -- 31,250,000
Issuance of Class C
common stock for cash
on March 25, 1997...... 50,625,000 34 33,749,966 -- -- 33,750,000
Issuance of Class D
common stock for cash
to certain Class B
shareholders on
March 25, 1997......... 33,088,200 22 2,499,978 -- -- 2,500,000
Costs incurred related
to the issuance of
common stock........... -- -- (1,264,045) -- -- (1,264,045)
Preference share
dividends.............. -- -- (12,689,923) -- -- (12,689,923)
Net loss for the period. -- -- -- -- (160,356) (160,356)
----------- ---- ------------ ------------ ------------- -------------
Balance, December 31,
1997................... 165,441,150 110 74,280,922 -- (160,356) 74,120,676
----------- ---- ------------ ------------ ------------- -------------
Issuance of Class B
common stock for cash
on January 21, 1998.... 450,000 -- * 750,000 -- -- 750,000
Issuance of Class E
common stock for cash
on January 21, 1998.... 187,500 -- * 312,500 -- -- 312,500
Issuance of Class E
common stock for cash
on April 22, 1998...... 150,000 -- * 1,725,179 -- -- 1,725,179
Cash reimbursement to
certain shareholders... -- -- (7,047,044) -- -- (7,047,044)
Unearned compensation... -- -- 67,130,700 (67,130,700) -- --
Compensation expense.... -- -- -- 21,134,991 -- 21,134,991
PCG Warrants to be
converted to common
stock.................. -- -- 213,384,957 -- -- 213,384,957
Common stock to be
issued in exchange for
termination of advisory
services agreement..... -- -- 135,000,000 -- -- 135,000,000
Preference share
dividends.............. -- -- (8,306,433) -- -- (8,306,433)
Redemption of preference
shares................. -- -- (34,140,067) -- -- (34,140,067)
Net loss for the six
months ended June 30,
1998................... -- -- -- -- (159,155,508) (159,155,508)
----------- ---- ------------ ------------ ------------- -------------
Balance, June 30, 1998.. 166,228,650 $110 $443,090,714 $(45,995,709) $(159,315,864) $ 237,779,251
=========== ==== ============ ============ ============= =============
</TABLE>
- --------
*Amount less than $1.
(1)Amount per share less than $1.

(2)Per Note 7, value was determined based on the $1 per share paid for the
11,250,000 Class A shares.

The accompanying notes are an integral part of these consolidated financial
statements.

F-5
<PAGE>

GLOBAL CROSSING LTD., LDC AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(EXPRESSED IN U.S. DOLLARS)

<TABLE>
<CAPTION>
FOR THE PERIOD FOR THE PERIOD
SIX MONTHS MARCH 19, 1997 MARCH 19, 1997
ENDED (DATE OF INCEPTION) (DATE OF INCEPTION)
JUNE 30, TO JUNE 30, TO DECEMBER 31,
1998 1997 1997
------------- ------------------- -------------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C>
CASH FLOWS FROM
OPERATING ACTIVITIES:
Net loss applicable to
common shareholders... $(201,602,008) $ (3,030,658) $ (12,850,279)
Adjustments to
reconcile net loss to
net cash provided by
operating activities:
Depreciation and
amortization.......... 473,194 51,623 39,214
Provision for doubtful
accounts.............. 1,012,117 -- --
Termination of advisory
services agreement ... 135,000,000 -- --
Stock related expenses. 23,397,670 -- --
Preference share
dividends............. 8,306,433 4,236,108 12,689,923
Redemption of
preference shares..... 34,140,067 -- --
Extraordinary loss on
retirement of debt.... 19,709,471 -- --
Increase in accounts
receivable............ (233,650,419) -- --
Increase in interest
receivable............ (1,856,573) (246,449) (123,000)
Increase in backhaul
capacity available for
sale.................. (33,538,560) -- (21,200,000)
Increase in other
assets and prepaid
costs................. (27,454,155) (216,355) (909,015)
Capacity available for
sale transferred from
construction in
progress.............. 238,554,078 -- --
Increase in capacity
available for sale.... (206,271,310) -- --
Increase in deferred
revenue............... 235,122,963 -- 5,325,000
Increase in income tax
payable............... 9,000,000 -- --
Increase in accounts
payable and accrued
liabilities........... 6,861,996 1,991,377 1,248,133
Increase in obligations
under inland service
agreements............ 30,217,548 -- 20,900,000
------------- ------------- -------------
Net cash provided by
operating activities. 37,422,512 2,785,646 5,119,976
------------- ------------- -------------
CASH FLOWS PROVIDED BY
FINANCING ACTIVITIES:
Finance and
organization costs
incurred.............. (31,773,003) (25,320,533) (28,180,878)
Preference share
issuance costs........ -- (7,487,343) (7,529,651)
Costs related to
issuance of common
stock................. -- (1,264,045) (1,264,045)
Cash reimbursement to
certain shareholders.. (7,047,044) -- --
Proceeds from issuance
of common stock and
additional paid-in
capital............... 525,000 75,000,000 75,000,000
Proceeds from issuance
of preference shares.. -- 100,000,000 100,000,000
Redemption of
preference shares..... (134,371,773) -- --
Proceeds from long term
debt.................. 204,723,000 9,250,000 162,325,000
Proceeds from issuance
of senior notes....... 796,232,000 75,000,000 150,000,000
Retirement of senior
notes................. (159,750,000) -- --
Increase in restricted
cash and cash
equivalents........... (212,209,991) (77,354,396) (25,275,196)
------------- ------------- -------------
Net cash provided by
financing activities. 456,328,189 147,823,683 425,075,230
------------- ------------- -------------
CASH FLOWS USED IN
INVESTING ACTIVITIES:
Cash paid for
construction in
progress and capacity
available for sale.... (191,072,180) (147,597,810) (428,742,522)
Investment in Pacific
Crossing Ltd.......... (6,000) -- --
------------- ------------- -------------
Net cash used in
investing activities. (191,078,180) (147,597,810) (428,742,522)
------------- ------------- -------------
NET INCREASE IN CASH.... 302,672,521 3,011,519 1,452,684
CASH, beginning of
period................. 1,452,684 -- --
------------- ------------- -------------
CASH, end of period..... $ 304,125,205 $ 3,011,519 $ 1,452,684
============= ============= =============
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.

F-6
<PAGE>

GLOBAL CROSSING LTD., LDC AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

(EXPRESSED IN U.S. DOLLARS)

The accompanying notes are an integral part of these consolidated financial
statements.

F-7
<PAGE>

GLOBAL CROSSING LTD., LDC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

AS OF JUNE 30, 1998 AND DECEMBER 31, 1997

(INFORMATION FOR THE THREE MONTHS AND SIX MONTHS ENDED JUNE 30, 1998,

FOR THE THREE MONTHS ENDED JUNE 30, 1997, AND FOR THE PERIOD FROM MARCH 19,
1997

(DATE OF INCEPTION) TO JUNE 30, 1997 IS UNAUDITED)

(EXPRESSED IN U.S. DOLLARS)

1. BACKGROUND

On March 19, 1997, Global Crossing Ltd., LDC ("GCL"), formerly GT Parent
Holdings LDC, was incorporated as an exempted limited duration company in the
Cayman Islands. GCL is an independent developer, owner and operator of
undersea digital fiber optic cable systems. Atlantic Crossing Ltd. ("ACL"),
formerly Global Telesystems Ltd., a Bermuda company which is an indirect
wholly-owned subsidiary of GCL, was incorporated to construct and operate an
undersea fiber optic cable ring with landing stations in the United States,
the United Kingdom, Germany and the Netherlands. ACL has incorporated wholly-
owned subsidiaries in each of these countries in order to own the portion of
the cable system located in each country and the related territorial waters.

GCL entered into a joint venture, Pacific Crossing Ltd., ("PCL") for
purposes of constructing and operating PC-1, an undersea fiber optic cable
ring system connecting California, Washington and two landing sites in Japan
(see note 3).

Mid-Atlantic Crossing Ltd., a wholly-owned subsidiary of GCL, entered into a
contract with Alcatel Submarine Networks on June 2, 1998 for the construction
of MAC, an undersea fiber optic cable ring connecting New York, the Caribbean
and Florida at a total cost of $350 million. Mid-Atlantic Crossing Ltd. is in
the process of incorporating companies in each country in which the cable will
land in order to own the portion of the cable system located in each country
and the related territorial waters. To finance, in part, the construction of
MAC, the Company signed a commitment letter to obtain $240 million of senior
secured non-recourse indebtedness.

Effective July 21, 1998, the Company through its wholly-owned subsidiary Pan
American Crossing Ltd., entered into a contract with Tyco Submarine Systems
Ltd. ("TSSL"), formerly AT&T Submarine Systems, Inc. for the construction of
PAC, an undersea fiber optic cable system connecting California, Mexico and
Panama at a total cost of $475 million. To finance, in part, the construction
of PAC, Pan American Crossing Ltd. signed a commitment letter to obtain $310
million of non-recourse indebtedness on July 21, 1998.

To finance construction of ACL's undersea fiber optic cable ring, GCL issued
$75 million of common stock and Global Telesystems Holdings Ltd. ("GTH"), an
indirect wholly-owned subsidiary of GCL, and the parent of ACL, issued $100
million of preference shares and sold $150 million of senior notes, as
described in Note 6. These proceeds, together with a $482 million Credit
Facility, as described in Note 5, are being used to pay for construction
costs, financing fees and other related costs. Together GCL and its
subsidiaries are defined as the Company.

ACL has entered into a fixed price contract (the "Contract") with TSSL for
the development, design, construction and installation of a four fiber pair,
fiber optic cable system connecting (i) the United States to the United
Kingdom, (ii) the United Kingdom to the Netherlands and Germany, (iii) the
Netherlands to Germany and (iv) Germany to the United States (collectively,
"AC-1" or the "System"). AT&T Corp. has provided ACL with a guarantee in
respect of TSSL's obligations under the Contract. Assuming that construction
of AC-1 progresses according to the Contract schedule, the System will be
accepted by ACL and made available for commercial service on February 22, 1999
(the "System RFS date"). Certain segments of the System are expected to be
completed in advance of the System RFS date. The United States to the United
Kingdom segment was ready for service on May 26, 1998 and the Germany to the
United States segment is expected to be ready for service on November 30,
1998. Once ACL formally accepts each segment of the System, the segment

F-8
<PAGE>

GLOBAL CROSSING LTD., LDC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

AS OF JUNE 30, 1998 AND DECEMBER 31, 1997

(INFORMATION FOR THE THREE MONTHS AND SIX MONTHS ENDED JUNE 30, 1998,

FOR THE THREE MONTHS ENDED JUNE 30, 1997, AND FOR THE PERIOD FROM MARCH 19,
1997

(DATE OF INCEPTION) TO JUNE 30, 1997 IS UNAUDITED)

(EXPRESSED IN U.S. DOLLARS)

becomes ready for service and the ownership of the segment assets transfers to
ACL and its subsidiaries. The only exception to this transfer of ownership is
in respect of certain of the segment assets located in United States territory
to which TSSL retains title until such time as GT Landing Corp., a United
States wholly-owned subsidiary of ACL, exercises its $10,000 bargain purchase
option to purchase title. Pursuant to the Contract, TSSL granted GT Landing
Corp. an indefeasible right of use ("IRU"), for the estimated life of the
System of 25 years from the System RFS date. GT Landing Corp. has accounted
for the IRU as a capital lease, since the IRU transfers the risks and rewards
of ownership to GT Landing Corp. The United States assets governed by this IRU
includes all landing stations assets (with the exception of the building and
land, to which GT Landing Corp. has title), fiber optic cable located in the
United States and the landing license.

Customers of the Company enter into Capacity Purchase Agreements ("CPA") to
obtain an IRU in units of transatlantic and European capacity ("AC-1
Capacity"). The purchase price for AC-1 Capacity is non-refundable once the
segment of the System specified in the CPA is ready for service and the IRU
entitles the customer to all rights and obligations of ownership of the AC-1
capacity for a period ending 25 years after the System RFS date. The Company's
CPAs provide that the AC-1 System will have self-healing ring capability,
whether or not a CPA relates only to a segment of the System. Self-healing
capability enables capacity on the segment of the System to be instantaneously
restored either on the System's other segments or within the same segment in
the event of interruption so that the same point-to-point connectivity is
maintained.

Customers who purchase AC-1 capacity prior to the System RFS date will be
granted 80% of the capacity that remains unsold, if any, 12 1/2 years after
the System RFS date. However, based on sales projections provided by a third
party consultant, it is highly unlikely that there will be a material amount
of unsold capacity on AC-1 at the end of 12 1/2 years after the System RFS
date. The Company has no constraints on the pricing or structure of sales of
residual capacity and the Company would expect that if such capacity had any
remaining value, it would enter into one or more transactions to dispose of
such capacity prior to such date to realize such remaining value. As a result,
the right to residual capacity is not a substantive right.

ACL subsidiaries have entered into contracts, called Inland Services
Agreements, to obtain IRUs of capacity on terrestrial telecommunications
systems ("Backhaul Capacity") for terms of 25 years from the System RFS date.
Under the IRU, the Company is required to pay an up-front non-recurring charge
plus, in certain cases, monthly recurring charges over a 25 year period and in
exchange obtains all rights and obligations of ownership. The Company has
accounted for the IRUs as capital leases since these IRUs represent leases as
defined under Statement of Financial Accounting Standards No. 13, "Accounting
for Leases" ("SFAS 13"). The Company sells this Backhaul Capacity under
separate CPAs ("Backhaul CPA") to certain customers that have purchased
capacity on AC-1 for the purpose of extending capacity from AC-1 landing
stations to major telecommunication centers in the United States and the
United Kingdom. The purchase price for Backhaul Capacity is non-refundable and
grants the customer an IRU which entitles the customer to all rights and
obligations of ownership of the Backhaul Capacity for a period ending 25 years
after the System RFS date.

ACL has entered into an Operations, Administration and Maintenance ("OA&M")
agreement with TSSL whereby TSSL is obligated to provide operating,
administration and maintenance functions to AC-1. The administration functions
include but are not limited to the provision of billing information and annual
expense budgets. The operations and maintenance functions include but are not
limited to the management and maintenance of a Network Operating Center,
assumption of ship costs and any related ship repair costs, obtaining

F-9
<PAGE>

GLOBAL CROSSING LTD., LDC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

AS OF JUNE 30, 1998 AND DECEMBER 31, 1997

(INFORMATION FOR THE THREE MONTHS AND SIX MONTHS ENDED JUNE 30, 1998,

FOR THE THREE MONTHS ENDED JUNE 30, 1997, AND FOR THE PERIOD FROM MARCH 19,
1997

(DATE OF INCEPTION) TO JUNE 30, 1997 IS UNAUDITED)

(EXPRESSED IN U.S. DOLLARS)
and renewing all operating permits, providing repair equipment, providing
cable protection and ordering and restocking spares. The OA&M Agreement is for
an initial term of eight years with two renewal periods of eight and one half
years each. Quarterly payments under the OA&M Agreement to TSSL will commence
as ACL accepts ownership to the various segments.

Pursuant to the terms of CPAs, ACL is obliged to use commercially reasonable
efforts to cause the System to be maintained in efficient working order and in
accordance with industry standards. In exchange for the operating,
administration and maintenance services provided by ACL through the OA&M
agreement with TSSL, customers are obligated for the term of the IRU to pay
for their allocable share of the costs for operating and maintaining the
System. In accordance with the CPA, customers appoint members to a System
Advisory Committee which is charged with the responsibility of directing the
operations and maintenance of the System. Customers pay for 110% of ACL's cost
to operate and maintain the system based on their pro-rata share of total
capacity subject to annual maximum amounts per circuit purchased of $250,000
per transatlantic circuit and $50,000 per European circuit. Their pro-rata
share is effectively calculated by taking the weighted average of purchased
capacity over total capacity multiplied by 110% of actual costs incurred.
These OA&M costs are billed to customers quarterly in advance based on the
prior year's actual costs, are non-refundable, and should a customer fail to
make an OA&M payment, ACL may suspend all rights to capacity granted under the
IRU.

ACL originally entered into a Sales Agency Agreement with TSSL whereby TSSL
was responsible for the marketing and sale of capacity of the System and
received commissions on sales proceeds received at rates that varied as
certain cumulative revenue levels were reached. Effective March 5, 1998, the
Company entered into a commissions sharing agreement with TSSL whereby GCL
assumed primary responsibility for the marketing and sale of capacity of the
System and will share a percentage of commissions payable to TSSL under the
Sales Agency Agreement as consideration for assuming primary responsibility
for the sales effort and marketing of the Company's projects. The Sales Agency
Agreement with TSSL will terminate on March 25, 2002 with an option to extend
it until March 25, 2005.

On January 21, 1998, GCL effected a 100-for-1 stock split of each of the
Class A, B, C and D common stock and undesignated stock and amended the par
value of each share of common stock from $.0001 per share to $.000001 per
share. All share information presented in the consolidated financial
statements, including these Notes, gives effect to the stock split.

Shares of common stock of GCL outstanding have been restated to reflect the
equivalent number of shares of New GCL that will be issued in connection with
the Old GCL Exchange as described in "Description of Capital Stock."

2. SIGNIFICANT ACCOUNTING POLICIES

These consolidated financial statements have been prepared in accordance
with accounting principles generally accepted in the United States. The
preparation of financial statements in conformity with generally

F-10
<PAGE>

GLOBAL CROSSING LTD., LDC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

AS OF JUNE 30, 1998 AND DECEMBER 31, 1997

(INFORMATION FOR THE THREE MONTHS AND SIX MONTHS ENDED JUNE 30, 1998,

FOR THE THREE MONTHS ENDED JUNE 30, 1997, AND FOR THE PERIOD FROM MARCH 19,
1997

(DATE OF INCEPTION) TO JUNE 30, 1997 IS UNAUDITED)

(EXPRESSED IN U.S. DOLLARS)

accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements, as well as the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates. The
significant accounting policies are summarized as follows:

a) Principles of Consolidation

The consolidated financial statements include the accounts of GCL and its
wholly owned subsidiaries. All significant intercompany transactions have been
eliminated. Investment in PCL, in which GCL does not exercise control, has
been accounted for using the equity method.

b) Development Stage Company

The Company was in its development stage until May 26, 1998 when the United
States to United Kingdom segment of the AC-1 system was placed into service
and the Company began generating significant revenues. All aspects of the AC-1
System are scheduled to be ready for commercial service by February 22, 1999.
Currently, construction of the Company's other undersea fiber optic cable
systems are underway.

Successful future operations are subject to several risks, including the
ability of the Company to ensure the successful, timely and cost-effective
completion of AC-1 and other cable systems as well as to successfully market
and generate significant revenue from the sale of capacity of the system. GCL
may encounter problems, delays and expenses, many of which may be beyond its
control. There can be no assurance that the cable systems will be completed
within the time frame and that capacity sales will meet expectations, or that
substantial delays would not adversely affect GCL's achievement of profitable
operations.

c) Cash and Cash Equivalents

The Company considers short-term highly liquid investments with an original
maturity of three months or less at the date of purchase to be cash
equivalents. Cash and cash equivalents include cash in banks and short-term
money market deposits with a maturity of one month.

d) Sales, Cost of Sales and Deferred Revenue

The Company enters into CPAs to sell capacity on the transatlantic and
European segments. In addition, in conjunction with most sales of AC-1
capacity, the Company enters into Backhaul CPAs to sell Backhaul Capacity.
Both AC-1 and Backhaul CPAs grant the customer an IRU of capacity for the life
of the cable which is 25 years from the ready for service date.

Sales of capacity under CPAs are accounted for as sales type leases as they
represent leases of property and meet the criteria for sales-type lease
accounting under SFAS 13.

Revenues from the sale of AC-1 capacity and backhaul capacity are recognized
in the period that the rights and obligations of ownership transfer to the
purchaser, which occurs when (1) the purchaser obtains the right to use the
capacity, which can only be suspended following a failure of the purchaser to
pay the full purchase price

F-11
<PAGE>

GLOBAL CROSSING LTD., LDC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

AS OF JUNE 30, 1998 AND DECEMBER 31, 1997

(INFORMATION FOR THE THREE MONTHS AND SIX MONTHS ENDED JUNE 30, 1998,

FOR THE THREE MONTHS ENDED JUNE 30, 1997, AND FOR THE PERIOD FROM MARCH 19,
1997

(DATE OF INCEPTION) TO JUNE 30, 1997 IS UNAUDITED)

(EXPRESSED IN U.S. DOLLARS)

or fulfill its contractual obligations, (2) the purchaser is obligated to pay
OA&M costs and (3) the segment of the System related to the capacity purchased
is available for service. CPAs that have not met all three criteria described
above, yet relate to capacity purchased on a ready for service segment are
recorded as deferred revenue on the consolidated balance sheet. Customers who
have entered into CPAs for AC-1 capacity to date have paid deposits toward the
purchase price and such amounts have been included as deferred revenue in the
accompanying consolidated balance sheet. Certain CPAs require a refund of
these deposits should the System RFS date occur after June 30, 1999. The
Company's CPAs provide that the AC-1 system will have self-healing ring
capability, whether or not a customer purchases capacity on a single segment
of the system. Substantially all of the Company's customers to date for its
AC-1 System have assumed the risk of full ring completion. In a limited number
of CPAs, customers who have purchased capacity on the United States to United
Kingdom segment prior to the date the full AC-1 ring is operational have
contractually required full self-healing ring capability as a legal condition
subsequent which, if not satisfied, would enable them to terminate the CPA and
require the Company to refund capacity payments. For these CPAs, the Company
will defer any revenue recognition, on the consolidated balance sheet, until
such time as the full self-healing ring is operative.

Costs incurred on each segment of the System, currently reflected as
construction in progress in the accompanying consolidated balance sheet, will
be recorded as capacity available for sale at the date each segment of the
System becomes operational. AC-1 Capacity and Backhaul Capacity available for
sale will be recorded at the lower of cost or fair value less costs to sell
and will be charged to costs of sales in the period the related revenues are
recognized. Fair value of AC-1 capacity will be derived from a third party
consultant's market study of expected sales of capacity.

The amount charged to cost of sales in any period relating to System
capacity will be calculated based on the ratio of System capacity revenues
recognized in the period to total expected System capacity revenues over the
life of the System multiplied by the total costs incurred to construct the
System. This calculation of the cost of sales amount matches costs with the
value of each sale relative to total expected revenues. Until the entire
System is completed, for purposes of calculating cost of sales, the total
System costs incurred will include an estimate of remaining costs to be
incurred to complete the entire System. Backhaul Capacity sold to customers is
acquired from third party capacity providers generally when needed to fulfill
the Company's commitments under Backhaul CPA agreements. The cost of acquiring
Backhaul Capacity will be charged to cost of sales in the period that the
related revenue is recognized.

The calculation of cost of sales will be based on a total system cost and
revenue forecast that includes both the initial system cost and the cost of
system upgrades that management has the intent and ability to complete,
provided the need for such upgrades is supported by a consultant's independent
revenue forecast.

The AC-1 System was designed to enable the Company to upgrade the System in
future years so as to increase the initial design capacity of 256 circuits
available for sale. The business plan for the investment in AC-1 indicated a
minimum capacity sales level of 512 circuits and management currently has both
the intent and ability to upgrade the system to that level. This is
demonstrated by the fact that (i) the Board of Directors has authorized the
purchase of the upgrade, (ii) the Company has the financial ability to
purchase the upgrade and (iii) there are no regulatory or technology issues
preventing the completion of the upgrade. In the period the Company purchases
any further upgrades, the total expected System capacity revenues and cost of
the System

F-12
<PAGE>

GLOBAL CROSSING LTD., LDC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

AS OF JUNE 30, 1998 AND DECEMBER 31, 1997

(INFORMATION FOR THE THREE MONTHS AND SIX MONTHS ENDED JUNE 30, 1998,

FOR THE THREE MONTHS ENDED JUNE 30, 1997, AND FOR THE PERIOD FROM MARCH 19,
1997

(DATE OF INCEPTION) TO JUNE 30, 1997 IS UNAUDITED)

(EXPRESSED IN U.S. DOLLARS)

used in the cost of sales calculation will change to take into account the
further increase in System cost and in System capacity. The total expected
System capacity revenues used by the Company in its cost of sales calculation
will always be limited by total sales forecasted by a third party consultant
which will be updated on an annual basis. Based on the current third party
consultant's sales forecast, the Company expects to sell all 512 circuits
available for sale, which includes the initial upgrade.

In addition to capacity upgrades, management's estimate of future expected
AC-1 capacity revenues may change due to a number of factors including
possible variances in actual sales prices and volume from management's
estimates. Management will continually evaluate these factors in conjunction
with the updated third party consultant's sales forecast and, as necessary,
revise its estimate of the total expected revenues of AC-1 capacity to be
derived over the life of the System. Changes in management's estimate of the
total expected revenues to be derived from sales of AC-1 capacity will result
in adjustments to the calculations of cost of sales. These adjustments will be
recorded on a prospective basis over future periods commencing with the period
management revises its estimate.

Under their respective CPAs, certain customers have been provided options to
purchase additional capacity at specified prices for specified future periods
as well as the option to purchase additional capacity should the Company
upgrade the System capacity in the future. In many cases, prices under the
options to purchase capacity during these specified periods are lower than the
current price for capacity charged to the customer. Management's estimate of
future revenues for purposes of calculating cost of sales takes into
consideration prices under these options.

Undersea and backhaul OA&M revenues are recognized in the period the
services are provided. On an annual basis the actual undersea OA&M costs
incurred by the Company will be accumulated and an adjustment will be made to
true up actual undersea OA&M revenues so that they equal 110% of actual costs
incurred, provided specified contractual limits have not been reached. This
adjustment will be recorded in the period in which the adjustment is made.

e) Commissions and Advisory Services Fees

The Company's policy is to record the commission and advisory fee expense
and related payable upon the recognition of revenue so as to appropriately
match these costs with the related revenue. Under the Advisory Services
Agreement ("ASA"), the Company pays PCG Telecom Services LLC ("PCG Telecom")
and its affiliates 2% of revenues for advisory services performed and under
the Sales Agency Agreement pays TSSL a commission based on a percentage of
capacity revenues. See Note 12 for discussion of the termination of the ASA.

f) Backhaul Capacity Available For Sale

The cost of acquiring Backhaul Capacity under Inland Service Agreements has
been capitalized to backhaul capacity available for sale. Under these
agreements the Company is required to pay an up-front non-recurring charge
plus, in certain cases, recurring charges over the period the capacity is
provided. The Company has capitalized the present value of total future
payments (excluding OA&M costs) in backhaul capacity available for sale and
has recorded an equal amount as an obligation under Inland Services Agreements
in the

F-13
<PAGE>

GLOBAL CROSSING LTD., LDC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

AS OF JUNE 30, 1998 AND DECEMBER 31, 1997

(INFORMATION FOR THE THREE MONTHS AND SIX MONTHS ENDED JUNE 30, 1998,

FOR THE THREE MONTHS ENDED JUNE 30, 1997, AND FOR THE PERIOD FROM MARCH 19,
1997

(DATE OF INCEPTION) TO JUNE 30, 1997 IS UNAUDITED)

(EXPRESSED IN U.S. DOLLARS)

accompanying consolidated balance sheets (see Note 5). The related OA&M costs
will be expensed in the period the services are provided.

g) Construction in Progress

Construction in progress includes direct expenditures for construction of
the System and is stated at cost. Capitalized costs include costs incurred
under the Contract; advisory, consulting and legal fees; interest; and
amortized finance costs incurred during the construction phase. Once it is
probable that a cable system will be constructed, costs directly identifiable
with the cable system under development are capitalized. Costs relating to the
evaluation of new projects incurred prior to the date development of the cable
system becomes probable are expensed as incurred.

Additionally, the Company has included in construction in progress the
minimum lease payments related to the IRU held by GT Landing Corp. on System
assets in the United States and minimum lease payments related to leases of
buildings and conduits in Germany and Netherlands described further in Note 5.

Interest costs incurred which includes the amortization of deferred finance
fees and the issuance discount, ("interest cost") are capitalized to
construction in progress in accordance with Statement of Financial Accounting
Standards No. 34, "Capitalization of Interest Costs" ("SFAS 34"). Total
interest cost incurred and interest capitalized to construction in progress
during the periods were:

<TABLE>
<CAPTION>
PERIOD FROM
MARCH 19, 1997
(DATE OF
THREE MONTHS ENDED SIX MONTHS ENDED INCEPTION) TO
JUNE 30, 1998 JUNE 30, 1998 DECEMBER 31, 1997
------------------ ---------------- -----------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C>
Interest cost incurred... $21,312,645 $31,828,147 $9,776,767
=========== =========== ==========
Interest cost capitalized
to construction in
progress................ $13,909,608 $24,401,876 $9,776,767
=========== =========== ==========
</TABLE>

No interest costs were incurred as of June 30, 1997.

h) Deferred Finance and Organization Costs

Costs incurred to obtain financing for the System through the issuance of
senior notes and long term debt have been reflected as an asset in the
accompanying consolidated balance sheets. Costs incurred to obtain financing
for the System through the issuance of common stock and preference shares,
respectively, have been reflected as a reduction in the carrying value of the
issued common and preference shares. The financing costs relating to the debt
are amortized over the term of the related debt agreements. Offering costs of
$7,529,651 related to the issuance of preference shares were being amortized
on a straight line basis through the mandatory redemption date of April 1,
2007. The issuance discount, as explained in Note 7, was also being amortized
through the mandatory redemption date. On June 17, 1998 the preference shares
were redeemed at which time the remaining balance of unamortized discount and
offering costs was charged against additional paid-in capital. During the
construction period of the System, the amortized portion of deferred financing
costs relating to the senior notes and the long term debt are included in
construction in progress as a component of interest capitalized or recorded as
interest expense in accordance with SFAS 34. The amortized portion of the
deferred financing costs relating to the preference shares is included as a
component of preference share dividends. Deferred

F-14
<PAGE>

GLOBAL CROSSING LTD., LDC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

AS OF JUNE 30, 1998 AND DECEMBER 31, 1997

(INFORMATION FOR THE THREE MONTHS AND SIX MONTHS ENDED JUNE 30, 1998,

FOR THE THREE MONTHS ENDED JUNE 30, 1997, AND FOR THE PERIOD FROM MARCH 19,
1997

(DATE OF INCEPTION) TO JUNE 30, 1997 IS UNAUDITED)

(EXPRESSED IN U.S. DOLLARS)
organization costs, which include legal and professional fees incurred to
bring GCL, GTH and ACL into legal existence, are amortized to expense over a
period of five years.

i) Translation of Foreign Currencies

Transactions in foreign currencies are translated into United States dollars
at the rate of exchange prevailing at the date of each transaction. Monetary
assets and liabilities denominated in foreign currencies at year end are
translated into United States dollars at the rate of exchange at that date.
Resulting gains or losses on exchange are recorded as other income or loss in
the statement of operations.

j) Stock Option Plan

The Company accounts for stock option grants in accordance with Accounting
Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees"
("APB 25"), and, accordingly, recognizes compensation expense for stock option
grants to the extent that the estimated fair value of the stock exceeds the
exercise price of the option at the measurement date. The compensation expense
is charged against operations ratably over the vesting period of the options.
Disclosures will be made in the consolidated financial statements of future
periods in accordance with Statement of Financial Accounting Standards No.
123, "Accounting for Stock-Based Compensation" ("SFAS 123"), (see Note 9).

k) Interest Rate Derivatives

The Company uses derivative financial instruments for the purpose of
reducing its exposure to adverse fluctuations in interest rates. The Company
does not utilize derivative financial instruments for trading or other
speculative purposes. The counterparty to these instruments is CIBC. The
Company is exposed to credit loss in the event of nonperformance by this
counterparty.

As discussed in Note 5, effective December 31, 1997, the Company entered
into an interest rate swap agreement to hedge its exposure to interest rates
on its long term debt. The net cash amounts paid or received on the agreement
are accrued and recognized as an adjustment to interest expense on the related
debt.

For interest rate derivatives to qualify for hedge accounting, the debt
instrument being hedged must expose the Company to interest rate risk and, at
the inception of the derivative instrument and throughout the period the
derivative is held, there must be a high correlation of changes in the market
value of the derivative and interest expense of the hedged item. Gains and
losses on interest rate derivatives and other derivative instruments which do
not meet this criteria would be recorded in the statement of operations.

If an interest rate derivative instrument were to terminate or be replaced
by another instrument and no longer qualify as a hedge instrument, then it
would be marked to market and carried on the balance sheet at fair value.

l) Interim Financial Information

The unaudited financial statements as of June 30, 1998, and for the three
months and six months ended June 30, 1998, for the three months ended June 30,
1997 and for the period from March 19, 1997 (date of

F-15
<PAGE>

GLOBAL CROSSING LTD., LDC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

AS OF JUNE 30, 1998 AND DECEMBER 31, 1997

(INFORMATION FOR THE THREE MONTHS AND SIX MONTHS ENDED JUNE 30, 1998,

FOR THE THREE MONTHS ENDED JUNE 30, 1997, AND FOR THE PERIOD FROM MARCH 19,
1997

(DATE OF INCEPTION) TO JUNE 30, 1997 IS UNAUDITED)

(EXPRESSED IN U.S. DOLLARS)

inception) to June 30, 1997 include, in the opinion of management, all
adjustments (consisting of normal recurring adjustments) considered necessary
for the fair presentation of such financial statements.

m) Net loss per Share

Basic net loss per share is computed using the weighted average number of
shares of common stock outstanding. Diluted net loss per share is computed
using the weighted average number of shares of common stock outstanding and
common stock equivalents including shares issuable under options and warrants
that are dilutive using the treasury stock method.

The following is a reconciliation of the numerator and the denominator of
the basic and diluted net loss per share:

<TABLE>
<CAPTION>
FOR THE PERIOD FOR THE PERIOD
THREE MONTHS THREE MONTHS SIX MONTHS MARCH 19, 1997 MARCH 19, 1997
ENDED ENDED ENDED (DATE OF INCEPTION) (DATE OF INCEPTION)
JUNE 30, 1998 JUNE 30, 1997 JUNE 30, 1998 TO JUNE 30, 1997 TO DECEMBER 31, 1997
-------------- ------------- -------------- ------------------- --------------------
(UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
Basic and Diluted
Net income (loss)
before extraordinary
item.................. $ (135,724,885) $ 1,205,450 $ (139,446,037) $ 1,205,450 $ (160,356)
Preference share
dividends............. (3,898,203) (4,041,664) (8,306,433) (4,236,108) (12,689,923)
Redemption of
preference shares..... (34,140,067) -- (34,140,067) -- --
-------------- ------------ -------------- ------------ ------------
Net loss applicable to
common shareholders
before extraordinary
item.................. $(173,763,155) $ (2,836,214) $(181,892,537) $ (3,030,658) $(12,850,279)
============== ============ ============== ============ ============
Weighted average shares
outstanding........... 166,194,035 165,441,150 166,062,697 165,441,150 165,441,150
============== ============ ============== ============ ============
Basic and diluted net
loss per common share
before extraordinary
item................... $ (1.05) $ (0.02) $ (1.10) $ (0.02) $ (0.08)
============== ============ ============== ============ ============
</TABLE>

n) Income taxes

The Company accounts for income taxes in accordance with Statement of
Financial Accounting Standards No. 109, "Accounting for Income Taxes" ("SFAS
109"). The Company recognizes current and deferred income tax assets and
liabilities based upon all events that have been recognized in the
consolidated financial statements. Deferred tax assets and liabilities are
determined based on differences between the financial reporting and tax bases
of assets and liabilities. A deferred tax liability or asset is recorded using
the enacted tax rates expected to apply to taxable income in the period in
which the deferred tax liability or asset is expected to be settled or
realized. Future tax benefits attributable to these differences, if any, are
recognized to the extent that realization of such benefits is more likely than
not.

o) Pending and New Accounting Standards

The Financial Accounting Standards Board has recently issued Statement of
Financial Accounting Standards No. 130, "Reporting Comprehensive Income"
("SFAS 130") and Statement of Financial Accounting Standards No. 131,
"Disclosures About Segments of an Enterprise and Related Information" ("SFAS
131"). SFAS 130 and SFAS 131 are effective for periods beginning after
December 15, 1997. There was no impact to the financial

F-16
<PAGE>

GLOBAL CROSSING LTD., LDC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

AS OF JUNE 30, 1998 AND DECEMBER 31, 1997

(INFORMATION FOR THE THREE MONTHS AND SIX MONTHS ENDED JUNE 30, 1998,

FOR THE THREE MONTHS ENDED JUNE 30, 1997, AND FOR THE PERIOD FROM MARCH 19,
1997

(DATE OF INCEPTION) TO JUNE 30, 1997 IS UNAUDITED)

(EXPRESSED IN U.S. DOLLARS)

statements due to the adoption of SFAS 130 in the first six months of 1998.
Management does not expect the impact of the adoption of SFAS 131 on the
Company's financial position or results of operations to be material.

The Financial Accounting Standards Board has also recently issued Statement
of Financial Accounting Standards No. 133, "Accounting for Derivative
Instruments and Hedging Activities," ("SFAS 133") which is effective for
periods beginning after June 15, 1999. Management does not expect the impact
of the adoption of SFAS 133 on the Company's financial position or results of
operations to be material.

The American Institute of Certified Public Accountants recently issued
Statement of Position 98-5, "Reporting on the Cost of Start-Up Activities"
("SOP 98-5"). SOP 98-5 is effective for periods beginning after December 15,
1998. Management does not expect the impact of the adoption of SOP 98-5 on the
Company's financial position or results of operations to be material.

p) Reclassifications

Certain reclassifications have been made to the December 31, 1997
consolidated financial statements to conform with the presentation as of June
30, 1998.

3. INVESTMENT IN PACIFIC CROSSING LTD.

On April 9, 1998, a wholly-owned subsidiary of GCL entered into a joint
venture to construct a cable system project, PC-1. PC-1 is owned and operated
by PCL. The Company has an economic interest in PCL represented by a 50%
direct voting interest and, through one of the joint venture partners, owns a
further 8% economic non-voting interest. PCL entered into a contract on April
21, 1998 with TSSL to construct PC-1 for a total price of approximately $1.2
billion, which will be financed through a $400 million equity contribution by
the joint venture partners and an $850 million credit facility. On July 30,
1998, an $850 million aggregate senior secured non-recourse loan facility
("the PCL Credit Facility") was executed, for the construction and financing
costs of PC-1. The PCL Credit Facility is comprised of an $840 million
multiple drawdown term loan facility and a $10 million working capital
facility. On July 30, 1998, an initial drawdown was made on the term loan
facility to repay the $104 million promissory note used for initial
construction costs on PC-1 as well as fees incurred to secure the credit
facility. Additionally, the Company has placed $231 million into a restricted
cash collateral account to satisfy its equity funding commitment in respect of
its 58% economic interest in PCL.

The investment in Pacific Crossing Ltd. is comprised of the following items:

<TABLE>
<S> <C>
Equity investment in PCL.................................... $ 6,000
PC-1 development costs...................................... 126,450,345
------------
Investment in Pacific Crossing Ltd. ........................ $126,456,345
============
</TABLE>

The PC-1 development costs represent the estimated value of the PCG Warrants
as of June 30, 1998 which were granted to PCG in exchange for the PC-1 system
and related rights.

F-17
<PAGE>

GLOBAL CROSSING LTD., LDC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

AS OF JUNE 30, 1998 AND DECEMBER 31, 1997

(INFORMATION FOR THE THREE MONTHS AND SIX MONTHS ENDED JUNE 30, 1998,

FOR THE THREE MONTHS ENDED JUNE 30, 1997, AND FOR THE PERIOD FROM MARCH 19,
1997

(DATE OF INCEPTION) TO JUNE 30, 1997 IS UNAUDITED)

(EXPRESSED IN U.S. DOLLARS)

4. RESTRICTED CASH AND CASH EQUIVALENTS

Restricted cash and cash equivalents comprises approximately $78 million as
of June 30, 1998 ($nil as of December 31, 1997) for the collateralization of
the promissory note used to make the initial payments on the PC-1
construction, $74 million as of June 30, 1998 ($20 million as of December 31,
1997) reserved for purposes of funding future interest payable on senior
notes, approximately $72 million as of June 30, 1998 ($5 million as of
December 31, 1997) in funds received pursuant to CPAs that may be used only in
accordance with the terms of the long term debt agreement and approximately
$14 million as of June 30, 1998 ($nil as of December 31, 1997) restricted for
purchases of Backhaul Capacity.

5. LONG TERM DEBT AND OBLIGATIONS UNDER INLAND SERVICES AGREEMENTS AND CAPITAL
LEASES

On June 27, 1997, ACL entered into a $410 million aggregate senior secured
non-recourse loan facility (the "Credit Facility") with a group of banks led
by CIBC and Deutsche Bank AG, for the construction and financing costs of AC-
1. On December 15, 1997, the Credit Facility was amended to increase it to
$482 million comprised of a $472 million multiple draw down term loan facility
(the "Term Facility") and a $10 million working capital facility (the "Working
Capital Facility") for the purpose of extending the System to include, among
other things, a Netherlands landing site. The Credit Facility is secured by
pledges of the stock of ACL and its subsidiaries and security interests in its
assets and revenues. As of June 30, 1998, ACL had borrowed $367,048,000
($162,325,000 as of December 31, 1997) under the Credit Facility.

The Credit Facility provides that ACL may select loan arrangements as either
a Eurodollar loan or an Alternative Base Rate ("ABR") Loan. The Eurodollar
interest rate is LIBOR plus 2.5% and the ABR interest rate is the greatest of
(a) the Prime Rate (b) the Base CD Rate plus 1% and (c) the Federal Funds
Effective Rate plus 0.5%, plus 1.5%. ACL pays a commitment fee of 0.5% per
annum on the unused portion of the Credit Facility. The Credit Facility
contains various covenants that, among other things, (i) limit further
indebtedness by ACL and its subsidiaries, (ii) limit the ability of ACL to pay
dividends, (iii) require ACL to meet certain minimum capacity sales levels and
(iv) require ACL to meet a minimum interest coverage ratio for the years 1999
through to maturity of the Credit Facility. The Credit Facility will be repaid
in eight semi-annual installments, commencing on the first May 31 or November
30 occurring two months after the System RFS date, with $72.3 million of the
principal amount due in the initial year and $120.5 million, $144.6 million,
and $144.6 million due in the second, third and fourth years, respectively. If
at any semi-annual installment date the outstanding loan balance is lower than
the installment amounts noted in the previous sentence, then the outstanding
loan balance amount will be repaid. In addition, on each semi-annual
installment date, ACL will apply an amount equal to 50% of Excess Cash Flow to
the mandatory prepayment of the remaining outstanding balance under the Credit
Facility. Excess Cash Flow is defined under the terms of the Credit Facility
as all cash received from revenues during the period reduced by the payment of
OA&M expenses, ASA fees, commissions under the Sales Agency Agreement, and
transfers to certain reserve accounts. The Credit Facility also requires
mandatory prepayments to be made from 50% of net cash proceeds of any equity
offering of ACL and 100% of net cash proceeds from permitted debt offerings by
ACL or GTH. Optional prepayments may be made at any time without premium or
penalty. All revenues received prior to the System RFS date are used to fund
certain reserve accounts, as defined by the Credit Facility, and thereafter
applied against the borrowings under the Credit Facility and the Old Senior
Notes as determined by the Credit Facility agreement.

F-18
<PAGE>

GLOBAL CROSSING LTD., LDC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

AS OF JUNE 30, 1998 AND DECEMBER 31, 1997

(INFORMATION FOR THE THREE MONTHS AND SIX MONTHS ENDED JUNE 30, 1998,

FOR THE THREE MONTHS ENDED JUNE 30, 1997, AND FOR THE PERIOD FROM MARCH 19,
1997

(DATE OF INCEPTION) TO JUNE 30, 1997 IS UNAUDITED)

(EXPRESSED IN U.S. DOLLARS)

On September 30, 1997, pursuant to the Contract with TSSL and the Credit
Facility agreement, ACL put in place a $50 million letter of credit in favor
of TSSL which will expire at such time as ACL has paid all costs under the
contract. ACL pays a commitment fee of 2.5% per annum on the full amount of
the letter of credit.

As of June 30, 1998, all borrowings under the Credit Facility were
Eurodollar Loans and were drawn down under the Term Facility. As of December
31, 1997, $500,000 was borrowed under the Working Capital Facility and
$161,825,000 was borrowed under the Term Facility. Effective December 31,
1997, ACL entered into an interest rate swap transaction based on one month
LIBOR to minimize its exposure to increases in interest rates on its
borrowings. The swap transaction was amended on February 2, 1998 and currently
fixes ACL's floating interest rate at 5.7825% on a notional amount of
borrowings ranging between $200 million and $310 million until January 31,
1999.

As described in Note 1, the Company has capitalized the minimum lease
payments of the IRU held by GT Landing Corp. on System assets held in the
United States. The Company has been granted a bargain purchase option to
purchase for $10,000 all rights and title to these assets at any time during
the term of this contract which is 25 years from the System RFS. As of June
30, 1998, the present value of the payments under the IRU recorded as an
obligation under capital leases is $5,660,619 ($12,297,645 as of December 31,
1997).

The Company has capitalized building and conduit leases in the Netherlands
and Germany. The leases are for a period of 25 years which represents more
than 75 percent of the economic life of the asset being purchased. The Company
has the option to extend the Netherlands lease for an additional 5 year term.
As of June 30, 1998, the present value of the obligation has been recorded as
an obligation under capital leases in the accompanying consolidated balance
sheet in the amount of $8,116,408 ($ nil as of December 31, 1997.)

Contracts to purchase Backhaul Capacity have a duration of 25 years from
System RFS which represents more than 75 percent of the economic life of the
asset being purchased. Certain of these contracts require payments over the 25
year period. As of June 30, 1998, the present value of the payments under
these contracts has been recorded as obligations under Inland Services
Agreements in the accompanying consolidated balance sheets in the amount of
$51,117,547 ($20,900,000 as of December 31, 1997).

At June 30, 1998 future minimum payments, in the aggregate for the six
months ending December 31, 1998 and for the four succeeding years, under these
Inland Services Agreements and capital leases are as follows:

<TABLE>
<S> <C>
For the six months ending December 31, 1998.................... $ 39,138,000
1999........................................................... 23,069,000
2000........................................................... 7,057,000
2001........................................................... 4,692,000
2002........................................................... 4,847,000
Thereafter until 2024.......................................... 152,083,000
------------
Total minimum lease payments................................... 230,886,000
Less: Amount representing interest............................. 27,476,095
Less: Amount representing maintenance payments................. 138,515,331
------------
Present value of net minimum lease payments.................... $ 64,894,574
============
</TABLE>

F-19
<PAGE>

GLOBAL CROSSING LTD., LDC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

AS OF JUNE 30, 1998 AND DECEMBER 31, 1997

(INFORMATION FOR THE THREE MONTHS AND SIX MONTHS ENDED JUNE 30, 1998,

FOR THE THREE MONTHS ENDED JUNE 30, 1997, AND FOR THE PERIOD FROM MARCH 19,
1997

(DATE OF INCEPTION) TO JUNE 30, 1997 IS UNAUDITED)

(EXPRESSED IN U.S. DOLLARS)
6. SENIOR NOTES

New Senior Notes

The 9 5/8% senior notes due May 15, 2008 with a face value of $800 million
("New Senior Notes") are general unsecured obligations of Global Crossing
Holdings Ltd. ("GCH"), a wholly owned subsidiary of GCL and will rank senior
to any future subordinated indebtedness of GCH and pari passu in right of
payment with any future unsecured senior indebtedness of GCH. GCH has set
aside $74 million to fund the first two interest payments. Interest is payable
semi-annually in arrears on each May 15 and November 15 commencing on November
15, 1998. The New Senior Notes are redeemable at the option of GCH on May 15,
2003 at 104.813%, May 15, 2004 at 103.208%, on May 15, 2005 at 101.604% and on
May 15, 2006 and on May 15 thereafter at par. The New Senior Notes are
redeemable at the option of the Holder only upon the occurrence of a change in
control in GCL. The New Senior Notes agreement imposes certain limitations on
the ability of GCH and its subsidiaries to, among other things, (i) incur
additional indebtedness including senior indebtedness and (ii) pay certain
dividends and make certain other restricted payments and investments.

Old Senior Notes

The 12% senior notes due March 31, 2004 with a face value of $150 million
("Old Senior Notes") are general unsecured obligations of GTH and will rank
senior to any future subordinated indebtedness of GTH and pari passu in right
of payment with any future unsecured senior indebtedness of GTH. The Old
Senior Notes bear an initial interest rate of 12% per annum. Interest is
payable semi-annually in arrears on each June 1 and December 1. If the Old
Senior Notes are not repaid by April 1, 2000, the interest rate will increase
by 0.5% on April 1, 2000 and by an additional 0.5% on each subsequent April 1,
until repaid. If the interest rate exceeds 15% per annum (the interest rate
payable increases by 2% upon any event of default) GTH may, at its option,
cause such interest in excess of 15% to be paid in additional senior notes.

As described in Note 5, revenues received prior to the System RFS date are
used to fund certain reserve accounts which are then applied against
borrowings under the Credit Facility and the Old Senior Notes as determined by
the Credit Facility agreement. Additionally, GTH will on each June 1 and
December 1, commencing on the first such date to occur more than 90 days after
the System RFS date, apply an amount equal to 50% of ACL's Excess Cash Flow
(as defined in Note 5), to redeem the Old Senior Notes at face value, plus
accrued interest to the date of repurchase. The Old Senior Notes are
redeemable at the option of GTH, at redemption prices starting at 106% of the
face value beginning April 1, 2000, declining to 103% in 2001, and 100% in
2002 and 2003, plus accrued interest (see Note 15).

On May 18, 1998, a portion of the proceeds from the issuance of the New
Senior Notes was used to repurchase the Old Senior Notes. The Company
recognized an extraordinary loss of $19.7 million on repurchase comprising a
premium of approximately $9.8 million and a write-off of approximately $9.9
million of unamortized deferred financing costs.

7. MANDATORILY REDEEMABLE PREFERENCE SHARES

The authorized preference shares consist of 500,000 shares at a liquidation
preference of $1,000 per share. Effective March 25, 1997, 100,000 shares were
issued for $100 million in cash and as of June 30, 1998, nil shares (109,830
shares as of December 31, 1997) were issued and outstanding.

F-20
<PAGE>

GLOBAL CROSSING LTD., LDC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

AS OF JUNE 30, 1998 AND DECEMBER 31, 1997

(INFORMATION FOR THE THREE MONTHS AND SIX MONTHS ENDED JUNE 30, 1998,

FOR THE THREE MONTHS ENDED JUNE 30, 1997, AND FOR THE PERIOD FROM MARCH 19,
1997

(DATE OF INCEPTION) TO JUNE 30, 1997 IS UNAUDITED)

(EXPRESSED IN U.S. DOLLARS)

The holders of preference shares are entitled to receive cumulative,
compounding dividends at an initial annual rate of 14% of the $1,000
liquidation preference per share. If the preference shares are not redeemed on
or prior to April 1, 2001, the annual dividend rate will increase by 0.5% per
annum (the dividend rate payable increases by 2% upon any event of default)
thereafter, subject to a maximum annual dividend rate of 20%. At the option of
GTH, accrued dividends may be paid in cash or paid by issuing additional
preference shares (i.e. pay-in-kind) until April 1, 2002, at which time they
must be paid in cash. However, if the dividend rate exceeds 15% per annum, GTH
may cause dividends in excess of 15% to be paid in additional preference
shares. Dividends paid in additional preference shares are payable on a
quarterly basis and cash dividends are payable on a semi-annual basis. All
dividends declared to date have been paid in additional preference shares. The
preference shares rank senior to all common stock with respect to dividend
rights, rights of redemption or rights on liquidation and senior to any future
preferred stock. The preference shares are non-voting unless GTH fails to pay
a dividend, fails to make a mandatory redemption or upon a change in control,
fails to make an offer to purchase the preference shares at 101%, at which
time the holders of a majority of the preference shares will be entitled to
elect one to two directors. In the event that any preference shares are still
outstanding on April 1, 2001, the holders thereof will receive warrants to
purchase shares of Class A common stock of GCL at an exercise price of $.01
per share, up to a maximum of 46,440 shares of GCL common stock.

The preference shares have a mandatory redemption on April 1, 2007 at their
liquidation preference. In addition, the preference shares will be redeemed
out of ACL's Excess Cash Flows (as described in Note 5) after repayment of the
Credit Facility and Senior Notes at redemption prices starting at 114% for
both 1997 and 1998, declining to 112% in 1999 and 2000, 107% in 2001 and 100%
thereafter. The preference shares can be redeemed, in whole or in part, at the
option of GTH at redemption prices starting at 114% of the liquidation
preference through 2001, declining to 111% in 2002, 108% in 2003, 105% in
2004, 102% in 2005 and 100% thereafter. The outstanding preference shares are
exchangeable, in whole, at the option of GTH for Senior Subordinated Exchange
Notes ("Exchange Notes") issued by ACL at a rate of $1,000 principal amount of
Exchange Notes for each $1,000 of liquidation preference of preference shares.
These Exchange Notes will bear an interest rate equal to the dividend rate of
the preference shares and will have repayment terms similar to the preference
shares described above.

In connection with the issuance of the preference shares, the holders of
preference shares purchased an aggregate of 11,250,000 shares of GCL's Class A
common stock for total proceeds of $7.5 million. Additionally, in connection
with the issuance of the preference shares, the initial purchaser of the
preference shares received 19,852,950 shares of GCL's Class A common stock for
no additional consideration representing 15% of the aggregate number of GCL's
Class A, B and C shares outstanding, after giving effect to the issuance. The
initial purchaser had the right to distribute these Class A shares to
purchasers of the preference shares. The Company has reflected the
$13,235,000 estimated fair value of the GCL's Class A common stock as a
discount in the carrying value of the preference shares.

The fair value of the 19,852,950 shares of GCL's Class A common stock
distributed to preference shareholders was based on the $.67 per share paid by
the holders of preference shares for the 11,250,000 GCL's Class A shares
purchased for cash.

On June 17, 1998, proceeds from the issuance of the New Senior Notes were
used to redeem the preference shares. The redemption of the preference shares
resulted in a charge against additional paid-in capital comprised

F-21
<PAGE>

GLOBAL CROSSING LTD., LDC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

AS OF JUNE 30, 1998 AND DECEMBER 31, 1997

(INFORMATION FOR THE THREE MONTHS AND SIX MONTHS ENDED JUNE 30, 1998,

FOR THE THREE MONTHS ENDED JUNE 30, 1997, AND FOR THE PERIOD FROM MARCH 19,
1997

(DATE OF INCEPTION) TO JUNE 30, 1997 IS UNAUDITED)

(EXPRESSED IN U.S. DOLLARS)

of approximately a $15.9 million redemption premium and $18.2 million of
unamortized discount and issuance cost on the preference shares on the date of
the redemption. The redemption premium and write-off of unamortized discount
and issuance costs on the preference shares were treated as a deduction to
arrive at the net loss applicable to common shareholders in the consolidated
statement of operations. Furthermore, upon the redemption of the preference
shares, the warrants attached to the preference shares expired.

Preference share dividends included the following:

<TABLE>
<CAPTION>
FOR THE
FOR THE PERIOD
PERIOD FROM
FROM MARCH 19,
MARCH 19, 1997 (DATE
SIX 1997 (DATE OF
MONTHS OF INCEPTION)
THREE MONTHS THREE MONTHS ENDED INCEPTION) TO
ENDED JUNE ENDED JUNE JUNE 30, TO JUNE 30, DECEMBER 31,
30, 1998 30, 1997 1998 1997 1997
------------ ------------ ----------- ----------- ------------
(UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
Preference share
dividends.............. $3,448,123 $3,500,001 $7,337,031 $3,694,445 $11,111,672
Amortization of discount
on preference shares... 286,759 349,257 617,634 349,257 1,011,007
Amortization of
preference share
issuance costs......... 163,321 192,406 351,768 192,406 567,244
---------- ---------- ---------- ---------- -----------
$3,898,203 $4,041,664 $8,306,433 $4,236,108 $12,689,923
========== ========== ========== ========== ===========
</TABLE>

8. COMMON STOCK AND ADDITIONAL PAID-IN CAPITAL

<S>
Common Stock:
Authorized:
1,000,000,000 Class A common stock of $.00000067 par
value
1,000,000,000 Class B common stock of $.00000067 par
value
1,000,000,000 Class C common stock of $.00000067 par
value
3,000,000,000 Class D common stock of $.00000067 par
value
1,000,000,000 Class E common stock of $.00000067 par
value
43,000,000,000 undesignated common stock of $.00000067
par value
<CAPTION>
JUNE 30, DECEMBER 31,
1998 1997
----------- ------------
(UNAUDITED)
<S> <C> <C>
Issued and Outstanding as of June 30, 1998:
31,102,950 Class A shares (31,102,950 as of December 31,
1997).................................................. $20 $20
51,075,000 Class B shares (50,625,000 as of December 31,
1997).................................................. 34 34
50,625,000 Class C shares (50,625,000 as of December 31,
1997).................................................. 34 34
33,088,200 Class D shares (33,088,200 as of December 31,
1997).................................................. 22 22
337,500 Class E shares (nil as of December 31, 1997).... -- * --
</TABLE>
- --------
* Amount less than $1.

F-22
<PAGE>

GLOBAL CROSSING LTD., LDC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

AS OF JUNE 30, 1998 AND DECEMBER 31, 1997

(INFORMATION FOR THE THREE MONTHS AND SIX MONTHS ENDED JUNE 30, 1998,

FOR THE THREE MONTHS ENDED JUNE 30, 1997, AND FOR THE PERIOD FROM MARCH 19,
1997

(DATE OF INCEPTION) TO JUNE 30, 1997 IS UNAUDITED)

(EXPRESSED IN U.S. DOLLARS)

As discussed in Note 1, on January 21, 1998, GCL effected a 100 for 1 stock
split of each of the Class A, B, C and D common stock and undesignated stock
and amended the par value of each share of common stock from $.0001 per share
to $.000001 per share. Shares of common stock of GCL outstanding have been
restated to reflect the equivalent number of shares of New GCL that will be
issued in the Old GCL Exchange as discussed in "Description of Capital Stock".
Class A shares, Class B shares and Class C shares all have voting rights. On
March 25, 1997, GCL issued 11,250,000 Class A shares, 50,625,000 Class B
shares, 50,625,000 Class C shares for $.67 per share, resulting in aggregate
proceeds of $75 million. As discussed in Note 7, in addition to the 11,250,000
Class A shares issued to the preference shareholders for cash, in connection
with the issuance of the preference shares, a total of 19,852,950 Class A
shares were distributed to the initial preference shareholder representing 15%
of the aggregate number of Class A, B and C shares outstanding. In addition,
warrants to acquire a maximum of 46,440 shares of common stock of GCL were
issued into escrow for the benefit of the holders of preference shares. All or
a portion of the warrants may be exercised at a price of $.01 per share if the
preference shares are outstanding on April 1, 2001. Effective January 21,
1998, GCL authorized 1,000,000,000 of new Class E non-voting shares.

Certain of the Class B shareholders were issued a total of 33,088,200 Class
D shares. Of the $33,750,000 of proceeds received from the issuance of Class B
shares, $2,500,000 was allocated to the Class D shares representing the
estimated fair value of the Class D shares based on an independent valuation.
Class D shares are non-voting shares which carry special preference rights on
the cash distributions made by GCL. Class D shareholders will receive 10% of
cash distributions to common shareholders once the internal rate of return to
Class C shareholders exceeds 10%, and then increasing to 20% of cash
distributions to common shareholders once the internal rate of return to Class
C shareholders exceeds 30%. Effective January 21, 1998, Class D share rights
were amended such that Class D shareholders now have the option to convert
each Class D share into one Class E share upon payment to GCL of $1.47 per
share or are entitled to a fraction of a Class E share based upon a valuation
at the time of such conversion, together with a warrant to purchase the
remaining fraction of such Class E share at an exercise price based upon such
market valuation. By granting to holders of the Class D shares an option to
convert such shares into Class E shares, the Company obtained effective
assurance that it could effect a change to a corporate structure in the event
of a major equity event, such as a merger or other business combination or in
the event of an IPO by GCL's wholly-owned subsidiary, New GCL, see Note 10, of
its common stock, since the holders of the Class D shares would need to
exercise their options in order to participate directly in benefits of a
merger or acquisition of GCL or in order to obtain the benefits of any trading
market for the common stock of GCL; no trading market was expected to develop
for the Class D shares. The grant of the options to Class D shareholders
represents an equity transaction since the Company granted these shareholders
amended share rights in the form of options with new warrants. As an equity
transaction, the fair value of the option would be recorded as an increase in
additional paid-in capital and a corresponding charge against retained
earnings, but since the Company has an accumulated deficit, the charge would
be made against additional paid in capital which would have no impact on the
consolidated financial statements. The Company will account for the new
warrants as an equity transaction on the date the warrants are issued, which
is expected to be the IPO date. The accounting would increase additional paid
in capital and a charge to retained earnings to the extent the Company has
retained earnings on that date, or against additional paid in capital if the
Company does not have retained earnings.

F-23
<PAGE>

GLOBAL CROSSING LTD., LDC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

AS OF JUNE 30, 1998 AND DECEMBER 31, 1997

(INFORMATION FOR THE THREE MONTHS AND SIX MONTHS ENDED JUNE 30, 1998,

FOR THE THREE MONTHS ENDED JUNE 30, 1997, AND FOR THE PERIOD FROM MARCH 19,
1997

(DATE OF INCEPTION) TO JUNE 30, 1997 IS UNAUDITED)

(EXPRESSED IN U.S. DOLLARS)

During the six months ended June 30, 1998, the Company issued, at a price of
$.67 per share, 450,000 Class B shares and 337,500 Class E shares. Since the
estimated fair value of shares exceeded the issue price, the Company increased
stock related expense and shareholder's equity by $1,625,000 and $2,262,500 in
the three and six months ended June 30, 1998, respectively.

9. STOCK OPTION PLAN

On January 21, 1998, GCL adopted the 1998 Stock Incentive Plan ("the Plan")
which provides for the granting of non-qualified stock options to key officers
and employees of GCL at the discretion of the compensation committee or Board
of Directors. As of June 30, 1998, the maximum number of shares of common
stock which may be issued under the Plan was 16,607,865 shares of Class E
common stock. Generally, options vest equally over a period of three years and
expire ten years from the date of grant.

The following table summarizes the transactions of the Company's stock
option plans for the six months ended June 30, 1998:

<TABLE>
<CAPTION>
WEIGHTED NUMBER
NUMBER OF AVERAGE EXERCISABLE
OPTIONS EXERCISE AS AT
OUTSTANDING PRICE JUNE 30, 1998
----------- -------- -------------
<S> <C> <C> <C>
Options outstanding as of December 31,
1997.................................. -- -- --
Options granted on January 21, 1998.... 4,231,500 $1.67 --
Options granted April 3, 1998.......... 5,557,500 1.67 1,305,000
Options granted June 12, 1998.......... 3,352,950 6.67 831,251
Options forfeited...................... (1,563,000) 1.67 --
---------- ----- ---------
Options outstanding as of June 30,
1998.................................. 11,578,950 $3.01 2,136,251
========== ===== =========
</TABLE>

The weighted average remaining life of the options outstanding as of June
30, 1998 is 9.5 years. During the three month and six month periods ended June
30, 1998, no options had expired or were exercised. Of the options granted on
April 3, 1998 and June 12, 1998, there were 90,000 options and 370,500
options, respectively, which had an exercise price equal to the IPO price.
Since the IPO price was unknown as of June 30, 1998, these options were not
considered in the weighted average exercise price computations.

During the three months ended June 30, 1998, the Company recorded $67.1
million of unearned compensation which is being recognized as an expense over
the vesting period of the options. Of this amount, the Company recognized
$21.1 million of compensation expense during the three months and six months
ended June 30, 1998, for the options issued in April and June since the
exercise price was less than the estimated fair value of the stock on the
dates of grant. The remaining $46.0 million will be recognized in the amounts
of $4.8 million in each of the third and fourth quarters of 1998, $19.2
million in 1999, $13.5 million in 2000 and $3.7 million in 2001. No
compensation expense was recognized in respect of the January 21, 1998 option
grant since the estimated fair value of the stock, on that date did not exceed
the exercise price. Certain employees have the right, after three years of
employment, to require the Company to purchase up to 600,000 shares of common
stock held by them for $13.33 per share, if the Company has not completed an
IPO of its stock by that time and one employee has the option to sell 150,000
shares of stock to the Company at $13.33 per share for a period of two years
from the grant date.

On August 9, 1998, the Company granted options to purchase 182,500 shares
under the Plan at a exercise price equal to the IPO price. Such options
generally have a three year vesting period and expire ten years from the date
of grant.

F-24
<PAGE>

GLOBAL CROSSING LTD., LDC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

AS OF JUNE 30, 1998 AND DECEMBER 31, 1997

(INFORMATION FOR THE THREE MONTHS AND SIX MONTHS ENDED JUNE 30, 1998,

FOR THE THREE MONTHS ENDED JUNE 30, 1997, AND FOR THE PERIOD FROM MARCH 19,
1997

(DATE OF INCEPTION) TO JUNE 30, 1997 IS UNAUDITED)

(EXPRESSED IN U.S. DOLLARS)

As permitted by SFAS 123, the Company has chosen to account for employee
stock options under APB 25 and is recognizing compensation expense over the
vesting period to the extent that the estimated fair value of the stock on the
date the options were granted exceeded the exercise price on the dates of
grant. Had compensation cost for the Company's stock-based compensation plans
been determined consistent with the SFAS 123 fair value approach, the impact
on the Company's loss applicable to common shareholders and loss per share
would be as follows:

<TABLE>
<CAPTION>
FOR THE THREE FOR THE SIX
MONTHS ENDED MONTHS ENDED
JUNE 30, 1998 JUNE 30, 1998
------------- -------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C>
Net loss applicable to common shareholders:
As reported.................................... $(193,472,626) $(201,602,008)
Pro forma...................................... $(195,220,089) $(203,496,876)
Basic and diluted net loss per share:
As reported.................................... $ (1.17) $ (1.22)
Pro forma...................................... $ (1.17) $ (1.23)
</TABLE>

The fair value of options for purposes of the SFAS 123 disclosure is
estimated on the date of grant using the minimum value method with the
following average assumptions: no dividend yield, risk-free interest rates of
5.45% and an average expected life of 4 years. The estimated fair value of the
options granted on January 21, April 3, and June 12, 1998 were $0.49, $11.40
and $15.90 respectively.

10. FORMATION OF GLOBAL CROSSING HOLDINGS LTD.

On March 18, 1998, GCL formed a wholly-owned subsidiary, New GCL, a Bermuda
company, and contributed its investment in GTH to New GCL. On April 30, 1998,
New GCL formed a wholly-owned subsidiary GCH, a Bermuda company. New GCL
contributed its investment in GTH to GCH upon its formation.

Because GCL, New GCL and GCH are entities under common control, the
transfers by GCL to New GCL and New GCL to GCH were accounted for similar to
pooling of interests. Accordingly, the summarized financial information of GCH
presented below reflects the accounts of GTH and its subsidiaries retroactive
to inception of GTH (March 24, 1997). GCL, New GCL and GTH each provide a
guarantee of the New Senior Notes described in Note 6. Additionally, Global
Crossing International, Inc. ("GCI"), a wholly-owned subsidiary of GCH that
provides marketing and development services to GCL, along with its wholly-
owned subsidiaries also provide guarantees of the New Senior Notes. All
guarantees are full, unconditional, joint and several. Separate financial
statements of each subsidiary guarantor have not been provided because they
would not be material to investors.

F-25
<PAGE>

GLOBAL CROSSING LTD., LDC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

AS OF JUNE 30, 1998 AND DECEMBER 31, 1997

(INFORMATION FOR THE THREE MONTHS AND SIX MONTHS ENDED JUNE 30, 1998,

FOR THE THREE MONTHS ENDED JUNE 30, 1997, AND FOR THE PERIOD FROM MARCH 19,
1997

(DATE OF INCEPTION) TO JUNE 30, 1997 IS UNAUDITED)

(EXPRESSED IN U.S. DOLLARS)

SUMMARIZED FINANCIAL INFORMATION OF GCH AND GUARANTORS:
($ AMOUNTS IN '000S)

(UNAUDITED)

<TABLE>
<CAPTION>
NEW GUARANTOR NON-GUARANTOR CONSOLIDATING ELIMINATION GCL
GCL GCL GCH SUBSIDIARIES SUBSIDIARIES ENTRIES ENTRIES CONSOLIDATED
AS OF JUNE 30, 1998 -------- -------- -------- ------------ ------------- ------------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Current assets......... $ 782 $ 47 $376,479 $ 15,736 $ 452,636 $ -- $ (13,344) $ 832,336
Long term accounts
receivable............ -- -- -- -- 26,978 -- -- 26,978
Senior notes........... -- -- 150,000 -- -- -- (150,000) --
Capacity available for
sale.................. -- -- -- -- 201,328 4,943 -- 206,271
Construction in
progress.............. -- -- -- -- 418,793 99,988 (144) 518,637
Investment in
subsidiary............ 46,038 46,022 294,399 341,201 -- -- (727,660) --
Investment in Pacific
Crossing Ltd.......... -- -- -- -- 6 126,450 -- 126,456
Deferred finance costs,
net................... 190 171 30,904 9,816 13,074 -- (9,816) 44,339
-------- -------- -------- -------- ---------- --------- --------- ----------
Total assets........... $ 47,010 $ 46,240 $851,782 $366,753 $1,112,815 $ 231,381 $(900,964) $1,755,017
======== ======== ======== ======== ========== ========= ========= ==========
Current liabilities.... $ 989 $ 202 $ 9,483 $ 3,149 $ 297,388 $ 11,668 $ (13,344) $ 309,535
Long term debt......... -- -- -- -- 367,048 -- -- 367,048
Senior notes........... -- -- 796,277 150,000 -- -- (150,000) 796,277
Long term deferred
revenue............... -- -- -- -- 29,188 -- -- 29,188
Obligations under
inland service
agreements............ -- -- -- -- 7,628 -- -- 7,628
Obligations under
capital leases........ -- -- -- -- 7,562 -- -- 7,562
Shareholders' equity... 46,021 46,038 46,022 213,604 404,001 219,713 (737,620) 237,779
-------- -------- -------- -------- ---------- --------- --------- ----------
Total liabilities and
shareholders' equity.. $ 47,010 $ 46,240 $851,782 $366,753 $1,112,815 $ 231,381 $(900,964) $1,755,017
======== ======== ======== ======== ========== ========= ========= ==========

- -------------------------------------------------------------------------------------------------------------------------
FOR THE SIX MONTHS ENDED
JUNE 30, 1998
Sales and operating
revenue............... $ -- $ -- $ -- $ -- $101,256 $ -- $ -- $ 101,256
Operating expenses..... 1,009 284 3,346 16,774 53,518 154,018 -- 228,949
-------- -------- -------- -------- ---------- --------- --------- ----------
Operating income
(loss)................ (1,009) (284) (3,346) (16,774) 47,738 (154,018) -- (127,693)
Other income (expense),
net................... -- -- (2,643) (1,103) 993 -- (2,753)
Provision for income
taxes................. -- -- -- -- -- (9,000) -- (9,000)
Extraordinary loss..... -- -- (9,750) -- -- (9,960) -- (19,710)
-------- -------- -------- -------- ---------- --------- --------- ----------
Net income (loss)...... (1,009) (284) (15,739) (17,877) 48,731 (172,978) -- (159,156)
Equity in gain (loss)
from subsidiary....... (27,615) (27,331) (11,592) 48,407 -- -- 18,131 --
Preference share
dividends............. -- -- -- (8,306) -- -- -- (8,306)
Premium on redemption
of preference shares.. -- -- -- (34,140) -- -- -- (34,140)
-------- -------- -------- -------- ---------- --------- --------- ----------
Net income (loss)
applicable to common
shareholders.......... $(28,624) $(27,615) $(27,331) $(11,916) $ 48,731 $(172,978) $ 18,131 $ (201,602)
======== ======== ======== ======== ========== ========= ========= ==========
</TABLE>

F-26
<PAGE>

GLOBAL CROSSING LTD., LDC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

AS OF JUNE 30, 1998 AND DECEMBER 31, 1997

(INFORMATION FOR THE THREE MONTHS AND SIX MONTHS ENDED JUNE 30, 1998,

FOR THE THREE MONTHS ENDED JUNE 30, 1997, AND FOR THE PERIOD FROM MARCH 19,
1997

(DATE OF INCEPTION) TO JUNE 30, 1997 IS UNAUDITED)

(EXPRESSED IN U.S. DOLLARS)
SUMMARIZED FINANCIAL INFORMATION OF GCH AND GUARANTORS (CONTINUED):
($ AMOUNTS IN '000S)

<TABLE>
<CAPTION>
NEW GUARANTOR NON-GUARANTOR ELIMINATION GCL
GCL GCL GCH SUBSIDIARIES SUBSIDIARIES ENTRIES CONSOLIDATED
-------- -------- -------- ------------ ------------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
AS OF DECEMBER 31, 1997
Current assets.......... $ 33 $ 12 $ 12 $ 21,307 $ 6,597 $ (217) $ 27,744
Construction in
progress, including
Backhaul capacity...... -- -- -- 9,014 509,505 -- 518,519
Investment in
subsidiary............. 73,964 73,952 73,940 276,897 -- (498,753) --
Deferred finance costs,
net.................... 208 -- -- 10,619 15,107 -- 25,934
-------- -------- -------- -------- -------- --------- --------
Total assets............ $ 74,205 $ 73,964 $ 73,952 $317,837 $531,209 $(498,970) $572,197
======== ======== ======== ======== ======== ========= ========
Current liabilities..... $ 72 $ -- $ -- $ 3,253 $ 88,978 $ (205) $ 92,098
Long term debt.......... -- -- -- -- 162,325 -- 162,325
Senior notes............ -- -- -- 150,000 -- -- 150,000
Obligations under inland
service agreements..... -- -- -- -- 3,009 -- 3,009
Mandatorily redeemable
preference shares...... -- -- -- 90,644 -- -- 90,644
Shareholders' equity.... 74,133 73,964 73,952 73,940 276,897 (498,765) 74,121
-------- -------- -------- -------- -------- --------- --------
Total liabilities and
shareholders' equity... $ 74,205 $ 73,964 $ 73,952 $317,837 $531,209 $(498,970) $572,197
======== ======== ======== ======== ======== ========= ========

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

FOR THE PERIOD FROM
MARCH 19, 1997 TO
DECEMBER 31, 1997
Interest income......... $ -- $ -- $ -- $ 556 $ 2,385 $ -- $ 2,941
Operating expenses...... 42 -- -- 200 2,859 -- 3,101
-------- -------- -------- -------- -------- --------- --------
Net income (loss)....... (42) -- -- 356 (474) -- (160)
Equity in loss of
subsidiary............. (12,808) (12,808) (12,808) (474) -- 38,898 --
Preference share
dividends.............. -- -- -- (12,690) -- -- (12,690)
-------- -------- -------- -------- -------- --------- --------
Net loss applicable to
common shareholders.... $(12,850) $(12,808) $(12,808) $(12,808) $ (474) $ 38,898 $(12,850)
======== ======== ======== ======== ======== ========= ========
</TABLE>

11. FINANCIAL INSTRUMENTS

The following table presents the carrying amounts and fair values of the
Company's financial instruments:

<TABLE>
<CAPTION>
JUNE 30, 1998 DECEMBER 31, 1997
---------------------------- ----------------------------
CARRYING FAIR CARRYING FAIR
AMOUNT VALUE AMOUNT VALUE
------------- ------------- ------------- -------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
Cash, restricted cash
and cash equivalents... $ 541,610,392 $ 541,610,392 $ 26,727,880 $ 26,727,880
Current portion of
obligations under
Inland Services
Agreements and capital
leases................. (49,704,628) (49,704,628) (30,188,645) (30,188,645)
Long term debt,
obligations under
Inland Services
Agreements
and capital leases..... (382,237,947) (382,237,947) (165,334,000) (165,334,000)
Preference shares....... -- - (90,643,919) (90,643,919)
Senior notes............ (796,277,203) (796,277,203) (150,000,000) (150,000,000)
Interest rate swap
transaction............ -- (115,344) -- (115,115)
</TABLE>

F-27
<PAGE>

GLOBAL CROSSING LTD., LDC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

AS OF JUNE 30, 1998 AND DECEMBER 31, 1997

(INFORMATION FOR THE THREE MONTHS AND SIX MONTHS ENDED JUNE 30, 1998,

FOR THE THREE MONTHS ENDED JUNE 30, 1997, AND FOR THE PERIOD FROM MARCH 19,
1997

(DATE OF INCEPTION) TO JUNE 30, 1997 IS UNAUDITED)

(EXPRESSED IN U.S. DOLLARS)

Cash, restricted cash and cash
equivalents.............. The carrying amount of restricted cash and
cash equivalents is a reasonable estimate of
fair value as the balances include amounts
held in banks and money market deposits with
a short-term maturity.

Long term debt, obligations
under Inland Services
Agreements and capital
leases........................ The Credit Facility is a special financing
for the construction of the System, and the
interest rates provided under the existing
Credit Facility are the best estimate of cur-
rent market rates available to ACL for fi-
nancing with similar terms. Obligations under
Inland Services Agreements and capital leases
are recorded at their present value using a
weighted average interest rate of the Credit
Facility, preference shares, and Senior
Notes.

Preference shares.............. Since the preference shares are a special fi-
nancing for the construction of the System,
the dividend rates provided under the exist-
ing preference share agreement are the best
estimate of current market rates available
for financing with similar terms and redemp-
tion provisions.

Senior notes.............. Since the Senior Notes are a special financ-
ing for the construction of the Systems, the
interest rates provided under the existing
Senior Notes arrangement are the best esti-
mate of current market rates available for
financing with similar terms.

Interest rate swap
transaction................... The interest rate swap transaction is "zero
cost" meaning that the cost of acquiring the
transaction is embedded in the fixed interest
rate paid. As the transaction is accounted
for as a hedge against interest rate fluctua-
tions on the long term debt there is no car-
rying value. The fair value is a mid-market
valuation provided by CIBC.

12. RELATED PARTY TRANSACTIONS

Advisory Services Agreement

ACL has entered into the ASA with PCG Telecom, an affiliate of Pacific
Capital Group, Inc. ("PCG") which is a shareholder of GCL. Under the ASA, PCG
Telecom provides ACL with advice in respect of the development and maintenance
of the System, development and implementation of marketing and pricing
strategies and the preparation of business plans and budgets. As compensation
for its advisory services, PCG Telecom receives a 2% fee on the gross revenues
of the Company, subject to certain restrictions, with the first such payment
occurring at the System RFS date. Advances on fees payable under the ASA are
being paid to PCG Telecom at a rate of 1% on signed CPAs and Backhaul CPAs
until the System RFS date and are secured by amounts payable under the ASA.
Fees paid under the ASA to PCG Telecom are shared amongst ULLICO, Inc., PCG,
CIBC, and Messrs. Winnick, Cook, Brown, Lee and Porter, all of whom are
shareholders of GCL. The Advisory Service Agreements ("ASA") which were
terminated effective on June 30, 1998 had terms of 25 years subject to
termination, however, the ASA did not contain provisions regarding
cancellation fees or liquidated damages in the event of termination or breach.
The Advisory Services Agreement Termination was recorded in the consolidated
financial statements as an increase in additional paid-in capital and a charge
against the statement of operations in the amount of $137.7 million. The
$137.7 million is comprised of a $135 million (determined based on the IPO
price) settlement of the fees that would have been payable and the
cancellation of approximately $2.7 million owed to the Company under a related
advance agreement. The $135 million amount was calculated by applying the 2%
advisory services fee to projected future revenues and discounting the amount
relating to AC-1 revenues by 12% and the amount relating to all other system's
revenues by 15%. The result of this calculation was $155.5 million, which
amount was subsequently reduced to $135 million. Both the discount rates and
the ultimate valuation were determined as a result of a negotiation process
including a disinterested director of the Company and the various persons
entitled to fees under the ASA. The Company has obtained a fairness opinion
from an independent financial advisor in connection with this transaction.

F-28
<PAGE>

GLOBAL CROSSING LTD., LDC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

AS OF JUNE 30, 1998 AND DECEMBER 31, 1997

(INFORMATION FOR THE THREE MONTHS AND SIX MONTHS ENDED JUNE 30, 1998,

FOR THE THREE MONTHS ENDED JUNE 30, 1997, AND FOR THE PERIOD FROM MARCH 19,
1997

(DATE OF INCEPTION) TO JUNE 30, 1997 IS UNAUDITED)

(EXPRESSED IN U.S. DOLLARS)

PCG Warrants

Prior to January 21, 1998, PCG and its affiliates had commenced development
of systems other than AC-1, namely PC-1, MAC and PAC. Through January 21,
1998, such development included assembling a management team, negotiating with
potential suppliers, partners, financing sources, obtaining preliminary market
and feasibility studies and developing technical requirements. On January 21,
1998, the Board determined that it was in the Company's best interests to
pursue these new systems, obtain the results of the work and the employees
then within the scope of activity of PCG and broaden the goals, objectives and
business plan of the Company. In consideration of PCG transferring the results
of its activities and becoming limited in its future activities in fiber optic
telecommunications other than through the Company, the Board approved and the
shareholders subsequently approved the transaction whereby PCG received
approximately $7 million representing PCG's costs related thereto and GCL
entered into a warrant agreement ("PCG Warrants") under which PCG was issued
three separate warrants permitting PCG to purchase (i) 9,226,592 of GCL's
Class B shares for an aggregate price of $50,000,000; (ii) an additional
4,613,297 of the GCL's Class B shares for an aggregate price of $31,250,000;
and (iii) an additional 4,613,297 of GCL's Class B shares for an aggregate
price of $37,500,000. The PCG Warrants were granted in exchange for the rights
to commence the development of the new projects that previously had been under
development by an affiliate of PCG.

These warrants are intended to entitle PCG to acquire, in addition to their
existing ownership, 10% of the capital stock of GCL, as of the date these
warrants were issued. Exercise of these warrants is contingent upon (i) an
initial public offering ("IPO") of shares of GCL (or any successor thereto),
underwritten by an investment banking firm of national reputation (as
determined by a majority of the Board of Directors of GCL) from which GCL
shall have received at least $50,000,000 in net proceeds, (ii) the investment
by GCL in the aggregate of at least $500,000,000 of Net Attributable Capital
(as defined below) in cable systems other than AC-1 and (iii) the generation
in the aggregate by cable systems other than AC-1 of at least $100,000,000 in
Net Attributable Revenues (as defined below). For purposes of the PCG Warrant
Agreement, with respect to any cable system, "Net Attributable Capital" means
the aggregate debt and equity capitalization of such system multiplied by the
percentage ownership of Old GCL (directly or indirectly) in such system, and
"Net Attributable Revenues" means the net revenues of such system multiplied
by the percentage ownership interest of GCL (directly or indirectly) in such
system. No accounting was made for the PCG Warrants at the time of issuance on
the basis that it was indeterminable when the conditions described above would
be met.

In June, 1998, the Board of Directors amended the terms of the PCG Warrants
so that the PCG Warrants will become exercisable upon the successful
completion of the initial public offering ("IPO") and eliminated conditions
(ii) and (iii) above. Further to this amendment, the Board of Directors also
amended the terms of the PCG Warrants to give each holder the option to
convert each share under warrant into a fraction of a Class B share based upon
the ratio of the current per share valuation at the time of conversion less
the per share exercise price of the warrant divided by the current per share
valuation at the time of conversion multiplied by the 18,453,185 shares
available under the PCG Warrants, together with a new warrant ("New PCG
Warrants") to purchase the remaining fraction of such Class B share at an
exercise price equal to the current per share valuation. Prior to the IPO, it
is expected that the holders of the PCG Warrants will exercise their warrants
to acquire Class B shares by way of the cashless conversion and the New PCG
Warrants will be issued with an exercise price based on the per share
valuation at the conversion date.

F-29
<PAGE>

GLOBAL CROSSING LTD., LDC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

AS OF JUNE 30, 1998 AND DECEMBER 31, 1997

(INFORMATION FOR THE THREE MONTHS AND SIX MONTHS ENDED JUNE 30, 1998,

FOR THE THREE MONTHS ENDED JUNE 30, 1997, AND FOR THE PERIOD FROM MARCH 19,
1997

(DATE OF INCEPTION) TO JUNE 30, 1997 IS UNAUDITED)

(EXPRESSED IN U.S. DOLLARS)

The Company has accounted for the PCG Warrants by assuming the cashless
conversion took place as of June 30, 1998 using the current estimated per
share valuation at the expected conversion date, multiplied by the number of
Class B shares estimated to be converted in exchange for the PCG Warrants. The
resulting value under this calculation is approximately $213.3 million which
has been allocated to the new systems acquired in exchange for the PCG
Warrants. Therefore, the Company recorded an increase in its investment in PCL
in the amount of approximately $126.5 million and an increase in construction
in progress for PAC and MAC in the amounts of approximately $49.9 million and
$36.9 million, respectively, with a corresponding increase of $213.3 million
in additional paid in capital. The $213.3 million was allocated on a pro rata
basis to the three projects according to the estimated cost of each system.
The Company's accounting for the PCG Warrants is pursuant to Emerging Issues
Task Force 96-18, "Accounting for Equity Instruments with Variable Terms that
are Issued for Consideration other than Employee Services under FASB Statement
No. 123" ("EITF 96-18"). Under EITF 96-18, the fair value of equity
instruments issued for consideration other than employee services should be
measured using the stock price or other measurement assumptions as of the date
at which a firm commitment for performance level has been reached. The Company
has recorded the estimated value of the PCG Warrants as of June 30, 1998,
since the IPO was probable at that date. The $213.3 million value attributed
to the PCG Warrants as of June 30, 1998 will be adjusted to the actual value
on the actual date of the IPO.

The Company will give accounting recognition for the New PCG Warrants on the
date these warrants are issued, which is the date of the IPO. The Company has
estimated the value of each of the New PCG Warrants at $6.67 based on an
independent valuation assuming an IPO price of $18 per share. Assuming a
cashless conversion, as of June 30, 1998 the New PCG Warrants would have a
total value of approximately $44 million. Upon the issuance of the New PCG
Warrants the Company will record the actual value of the New PCG Warrants in a
manner similar to that described above whereby the total value will be
allocated to the investment in PCL, MAC and PAC based on their relative total
contract costs.

Other transactions

$7,250,000 in fees were paid to PCG and certain of its key executives, who
are shareholders of GCL, and another shareholder for services provided in
respect of obtaining the Credit Facility, Senior Notes and preference share
financing. Of the fees paid, $5,523,775 was allocated to the Credit Facility
and Senior Notes and recorded as deferred finance costs, $986,725 was
allocated to the preference shares and recorded as a reduction in the carrying
value of the preference shares and $739,500 was recorded as common stock
issuance costs and is included in the approximately $1.3 million which is
reflected as a reduction in additional paid-in capital.

GCL has paid CIBC and affiliates ("CIBC"), a shareholder, approximately $25
million in fees related to the financing obtained under the Old Senior Notes,
Credit Facility, and the issuance of preference shares. Of the fees incurred,
approximately $6.2 million related to underwriting and commitment fees
pertaining to the issuance of the preference shares and were recorded as a
reduction in the carrying value of the preference shares, approximately $9.2
million related to underwriting, commitment and advisory fees in connection
with the issuance of the Senior Notes and approximately $9.6 million related
to fees associated with obtaining the Credit Facility which were recorded as
deferred finance costs. CIBC is a member of the syndicate funding the Credit

F-30
<PAGE>

GLOBAL CROSSING LTD., LDC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

AS OF JUNE 30, 1998 AND DECEMBER 31, 1997

(INFORMATION FOR THE THREE MONTHS AND SIX MONTHS ENDED JUNE 30, 1998,

FOR THE THREE MONTHS ENDED JUNE 30, 1997, AND FOR THE PERIOD FROM MARCH 19,
1997

(DATE OF INCEPTION) TO JUNE 30, 1997 IS UNAUDITED)

(EXPRESSED IN U.S. DOLLARS)

Facility under which GCL has borrowings of $367,048,000 ($162,325,000 as of
December 31, 1997), as of June 30, 1998 and has been paid interest and other
related fees in the amount of approximately $19 million as of June 30, 1998
($4.2 million as of December 31, 1997). CIBC is also one of the initial
purchasers of the New Senior Notes and received a $5,817,425 commitment and
structuring fee as well as portion of the $24,750,000 underwriting fee paid to
the initial purchasers.

On April 7, 1998, the Company signed a CPA with Worldport Communications,
Inc. ("Worldport"), to acquire capacity on AC-1. This transaction occurred in
the ordinary course of business of the Company and on terms and conditions no
less favorable to the Company than in its other CPAs. Certain officers and
directors of the Company, have direct or indirect equity ownership positions
in Worldport, aggregating approximately 10% of the current common stock of
Worldport.

The Board of Directors authorized, that immediately prior to the IPO, the
Company will purchase all common shares owned by Telecommunications
Development Corporation ("TDC") in the Company in exchange for 150,000 fewer
shares of newly issued common shares based upon the per share value at the
repurchase date. The transaction benefited the Company since 150,000 fewer
shares were outstanding after the repurchase without any cost to the Company.
The transaction will be accounted for as the acquisition of treasury stock and
will be recorded at the fair value of the consideration given.

13. TAXES

The Company accounts for income taxes in accordance with SFAS 109. The
components of income tax expense are as follows:

<TABLE>
<CAPTION>
THREE
MONTHS ENDED SIX MONTHS ENDED
JUNE 30, 1998 JUNE 30, 1998
------------- ----------------
(UNAUDITED)
<S> <C> <C>
Current
U.S. .......................................... $8,000,000 $8,000,000
Other foreign.................................. 1,000,000 1,000,000
---------- ----------
Total income tax expense....................... $9,000,000 $9,000,000
---------- ----------
</TABLE>

Bermuda does not impose a statutory income tax and consequently the
provision for income taxes recorded relates to income earned in taxable
jurisdictions. There are no significant temporary differences between
accounting and taxable income.

Since the Company has not recognized any income in periods prior to April 1,
1998, no tax provision has been reflected in those periods. Operating losses
incurred in those periods relate almost entirely to non-taxable jurisdictions
and therefore these operating losses cannot be applied to future taxable
earnings of the Company. Therefore the Company has not recorded any deferred
tax asset as a result of such losses in accordance with SFAS 109.

F-31
<PAGE>

GLOBAL CROSSING LTD., LDC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

AS OF JUNE 30, 1998 AND DECEMBER 31, 1997

(INFORMATION FOR THE THREE MONTHS AND SIX MONTHS ENDED JUNE 30, 1998,

FOR THE THREE MONTHS ENDED JUNE 30, 1997, AND FOR THE PERIOD FROM MARCH 19,
1997

(DATE OF INCEPTION) TO JUNE 30, 1997 IS UNAUDITED)

(EXPRESSED IN U.S. DOLLARS)

14. COMMITMENTS

As of June 30, 1998, ACL was committed under its contract with TSSL for
future construction costs totaling approximately $64 million ($195 million as
of December 31, 1997) and is committed under the OA&M contract with TSSL to
quarterly payments, over the next eight years, totaling approximately $261
million ($263 million as of December 31, 1997).

ACL is committed to paying TSSL commissions ranging from 4% to 7% on
revenues received until 2002, subject to certain reductions. As of June 30,
1998, Mid Atlantic Crossing Ltd. was committed under its contract with Alcatel
Submarine Networks for future construction costs totaling approximately $180
million and as of July 21, 1998 Pan American Crossing Ltd. was committed under
its contract with TSSL for future construction costs totaling approximately
$335 million.

GCL and its subsidiaries have commitments under various operating leases
primarily relating to its office facility in Bermuda. Rent expense for
operating leases $26,556 and $361,354 for the three and six months ended June
30, 1998. Estimated future minimum lease payments on all operating leases are
approximately as follows:

<TABLE>
<S> <C>
For the six months ended December 31, 1998................... $ 438,000
1999......................................................... 953,000
2000......................................................... 963,000
2001......................................................... 971,000
2002......................................................... 652,000
Thereafter................................................... 1,910,000
</TABLE>

F-32
<PAGE>

GLOSSARY OF CERTAIN DEFINED TERMS

Unless the context otherwise requires, any reference in this Prospectus to
any agreement shall mean such agreement and all schedules, exhibits and
attachments thereto, as amended, supplemented or otherwise modified as of the
date of this Prospectus. All terms defined herein used or the singular shall
have the same meanings when used in the plural and vice versa.

<TABLE>
<C> <S>
Amplifier: A device used to boost the strength of an
electronic or optical signal, which is
weakened (attenuated) as it passes through
the transport network. Amplifiers add gain
to the signal by an amount equal to the
loss in the previous section of the
network since last amplification.
Backhaul Capacity: Capacity on terrestrial fiber optic cables
from undersea cable landing stations to
metropolitan areas.
Band: A range of frequencies between two defined
limits.
Bandwidth: A measure of capacity of information-
carrying capacity on a communications
channel. 1) The difference between the
high and low frequencies of a transmission
band, expressed in cycles per second
(Hertz) or in wavelengths (nanometers). It
is a measure of raw capacity without
compression or coding of the information
signal. A voice transmission requires
about 3 KHz and a TV channel about 6 MHz.
2) Transmission capacity is expressed in
bits per second. For example megabits per
second (Mbps) is a bit rate expressed in
millions of bits per second while gigabits
per second (Gbps) is a bit rate expressed
in billions.
. Narrowband: Less than or equal to 64-
kbps
. Wideband: Digital rates between 64-kbps
and 1.544-Mbps (DS1) or 2.048-Mbps
(E1)--LANs, bulk files transfer, video
conferencing, and multimedia.
. Broadband: Greater than 44.736-Mbps (D3)
or 34.368-Mbps (E3)
Bit: A binary unit of information that can have
either of two values, 0 or 1. Contraction
of binary digit:
. KILOBIT = 1,000 bits
. MEGABIT = 1 million bits
. GIGABIT = 1 billion bits
. TERABIT = 1 trillion bits
Broadband: A transmission channel usually carrying a
tremendous amount of information at
transmission speeds of 45 Mbps (45,000,000
bits per second) or greater. Some
facilities have transmission speeds in the
billion of bits (gigabits per second or
Gbps).
1. A communications channel with bandwidth
sufficiently large to carry voice, data
and video on a single channel.
2. Any voice communications channel having
a bandwidth greater than a voice grade
channel.
. A bandwidth of 45 Mbps can carry 672
voice connections.
. In theory up to 64 telephone grade
communication channels can be carried on
one 6 MHz broadband channel.
</TABLE>

GL-1
<PAGE>

<TABLE>
<C> <S>
Capacity: The information-carrying ability of a
telecommunications system, as defined by
its design (number of fibers, system
length, and opto/electronic equipment)
and its deployed equipment (amount of
opto/electronics in the station) and
measured in bits per second. Capacity is
sold in discrete units, usually system
interface levels such as DS-3's and STM-
1's, that in the aggregate are the
equivalent of total system capacity.
Carrier: 1. A third party provider of communications
services by wire, fiber or radio.
. Common Carrier: A private company
offering facilities or services to the
general public on a non-discriminatory
basis and regulated as to market entry,
practices, and rates by various Federal
and State authorities.
. Private Carrier: Services provided for
internal use and free of most common
carrier regulations to allow
discrimination in service provision or
pricing.
2. A signal that is modulated in order to
transmit information.
Common Carrier: A business authorized by the FCC to provide
communications services by wire or radio
from place to place without influence of
content. Services are provided to the
public on a non-discriminatory basis, and
are regulated by Title II of the
Communications Act of 1934. Regulatory
agencies are the FCC and state public
utility commissions.
. Non-dominant carrier is one which has
insufficient market power to practice
anti-competitive pricing.
. Private carriers are not regulated by
government agencies and may charge
whatever the market will bear.
Compression: Algorithm that minimizes the redundancy in
the signal to be transmitted.
Digital: Describes a method of storing, processing
and transmitting information through the
use of distinct electronic or optic pulses
representing the binary digits 0 and 1. In
communications they will modify a carrier
at a selected frequency. The precise
signal transitions preclude any distortion
such as graininess or snow in the case of
video transmission, or static or other
background distortion in the case of audio
transmission.
Digital Transmission: Method of storing, processing and
transmitting information through the use
of distinct electronic or optical pulses
that represent the binary digits 0 and 1.
Digital transmission and switching
technologies employ a sequence of these
pulses to represent information as opposed
to a continuously variable analog signal.
The precise digital numbers preclude any
distortion such as graininess or snow in
the case of video transmission, or static
or other background distortion in the case
of audio transmission.
</TABLE>

GL-2
<PAGE>

<TABLE>
<C> <S>
Doped Fibers: Various impurities may be added to silica-
based fiber-optic strands as they are
constructed to achieve specifically
desired transmission or physical
properties.
. Erbium-Doped Optical Fiber Amplifier
(EDFA) optical amplifiers use a section
of optical fiber doped with the rare
earth erbium and optically pumped with
a laser diode. It can amplify a range
of wavelengths at the same time
surrounding a base wavelength of 1550
nm.
. Praseodymium-doped fibers produce a
signal gain of 30 dB in 1310 nm fibers.
DS1: A digital transmission hierarchy
supporting 1.544 million bits per second
that may be used for "near full-motion"
or compressed video, data or voice
circuits (24, 48 or 96).
DWDM (Dense Wavelength Division
Multiplexing): A technique which employs more than one
light source and detector operating at
different wavelengths and simultaneously
transmits optical signals through the
same fiber while message integrity of
each signal is preserved.
EDFA (Erbium Doped Fiber A purely optical (as opposed to
Amplifier): electronic) device used to boost an
optical signal. It contains several
meters of glass fiber doped with erbium
ions. When the erbium ions are excited to
a higher energy state, the doped fiber
changes from a passive medium to an
active amplifying medium.
Fiber Kilometers: The number of route kilometers installed
multiplied by the number of fiber strands
along the path.
Gbps (Gigabit per second): A data rate of 1 Gbps corresponds to 1,000
million bits per second.
Internet: A fabric of interconnected computer
networks, originally known as the DARPA
network (Defense Advanced Research
Projects Agency) connecting government
and academic sites. It currently links
about 50 million people world-wide who
use it for everything from scientific
research to simple E-Mail.
Indefeasible Right of Use (IRU): A measure of currency in the undersea
cable business. The owner of an IRU has
the right to use the capacity for the
time and bandwidth to which the IRU
applies.
ISP: Independent service provider.
ITU (International
Telecommunications
Union): The ITU is an intergovernmental agency of
the United Nations within which the
public and private sectors cooperate for
the development of telecommunications.
The ITU adopts international regulations
governing the use of the radio spectrum
and develops standards to facilitate the
interconnection of telecommunications
systems on a worldwide basis. It is
headquartered in Geneva, Switzerland. In
1996, the ITU comprised 185 Member States
and 363 members (scientific and
industrial companies, public and private
operators, broadcasters, regional and
international organizations active in
three sectors: Radio communications,
Standardization and Development).
</TABLE>

GL-3
<PAGE>

<TABLE>
<C> <S>
Mbps (Megabit per second): One Mbps corresponds to a data rate of
1,000,000 bite per second.
Multimedia: The electronic conversation between two or
more people or groups of people in
different places using two or more types
of digitally integrated communication for
voice, sound, text, data, graphics,
video, image or presence at the same
time. Applications include conferencing,
presentations, training, referencing,
games, etc.
Multiplexing: An electronic or optical process that
combines two or more lower bandwidth
transmissions into one higher bandwidth
signal by splitting the total available
bandwidth into narrower bands (frequency
division) or by allotting a common
channel to several transmitting sources
one at a time in sequence (time
division).
Multipoint: Pertaining or referring to a
communications line to which three or
more stations are connected. It implies
that the line physically extends from one
station to another until all are
connected.
Optical Fibers: Thin filaments of glass through which
light beams are transmitted. Enormous
capacity, low-cost, low-power
consumption, small space, lite-weight,
insensitivity to electromagnetic
interference characterize this transport
media.
PTTs (Post, Telephone and
Telegraph
companies): International telecommunications carriers
which are generally under the control of
the government in a country that has not
yet privatized its telecommunications
markets.
Repeater: 1. Equipment that receives a low-power
signal, possibly converting it from
light to electrical form, amplifying it
or retiming and reconstructing it for
transmission. It may need to be
reconverted to light for retransmission.
2. An optoelectrical device used at each
end and occasionally at intermediate
points of exceptionally long fiber-optic
span. Optical input is converted to
electrical form to restore a clean
signal, which drives lasers that fully
restores the optical signal at the
original signal strength.
Route Kilometers: The number of route kilometers installed.
RFS (Ready for Service): The data of provisional acceptance or
commercial service of a cable system.
STM (Synchronous Transfer Mode): New term for traditional TDM switching to
distinguish it from ATM.
STM-1: The largest standard circuit unit of
capacity, which consists of 155,500 Kbps
(equal to 155 Mbps). Thus, each Gbps
contains enough capacity for 6.4 STM-1
circuits. While capacity is sold to the
largest telecommunications companies in
minimum investment units equal to one
STM-1 unit, most telecommunications
companies buy smaller units at a price
higher than the equivalent STM-1 price.
</TABLE>

GL-4
<PAGE>

<TABLE>
<C> <S>
Wavelength: The distance between two crests of a signal
or a carrier and is measured in terms of
meters, millimeters, nanometers, etc. In
lightwave applications, because of the
extremely high frequencies, wavelength is
measured in nanometers.
xDSL: A term referring to a variety of new
Digital Subscriber Line technologies. Some
of these varieties are asymmetric with
different data rates in the downstream and
upstream directions. Others are symmetric.
Downstream speeds range from 384 Kbps (or
"SDSL") to 1.5-8 Mbps (or "ADSL").
</TABLE>

GL-5
<PAGE>

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

NO DEALER, SALESPERSON OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS IN CONNECTION WITH THE OFFER CONTAINED HEREIN AND, IF GIVEN OR MADE,
SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY OR BY ANY OF THE UNDERWRITERS. THIS PROSPECTUS DOES
NOT CONSTITUTE AN OFFER OF ANY SECURITIES OTHER THAN THOSE TO WHICH IT RELATES
OR AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, THOSE TO WHICH IT
RELATES IN ANY STATE TO ANY PERSON TO WHOM IT IS NOT LAWFUL TO MAKE SUCH OFFER
IN SUCH STATE. THE DELIVERY OF THIS PROSPECTUS AT ANY TIME DOES NOT IMPLY THAT
THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS
DATE.

-----------

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Service of Process and Enforcement of Liabilities......................... ii
Information Regarding Forward-Looking Statements.......................... ii
Summary................................................................... 1
Risk Factors.............................................................. 15
Use of Proceeds........................................................... 25
Dividend Policy........................................................... 25
Dilution.................................................................. 25
Capitalization............................................................ 27
Selected Consolidated Financial Data...................................... 28
Management's Discussion and Analysis of Financial Condition and Results of
Operations............................................................... 31
Business.................................................................. 42
Management................................................................ 55
Principal and Selling Shareholders........................................ 62
Certain Transactions...................................................... 65
Description of Capital Stock.............................................. 71
Shares Eligible for Future Sale........................................... 75
Description of Certain Indebtedness....................................... 76
Tax Considerations........................................................ 78
Underwriting.............................................................. 84
Legal Matters............................................................. 87
Experts................................................................... 87
Available Information..................................................... 87
Index to Consolidated Financial Statements................................ F-1
Glossary of Certain Defined Terms......................................... GL-1
</TABLE>

UNTIL , 1998 (25 DAYS AFTER COMMENCEMENT OF THE OFFERING), ALL DEALERS
EFFECTING TRANSACTIONS IN THE COMMON STOCK, WHETHER OR NOT PARTICIPATING IN
THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS IS IN ADDITION
TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN ACTING AS
UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.

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

21,000,000 SHARES

GLOBAL CROSSING LTD.

COMMON STOCK

[LOGO OF GLOBAL CROSSING APPEARS HERE]

-------

PROSPECTUS

DATED , 1998

-------

SALOMON SMITH BARNEY

MERRILL LYNCH & CO.

CIBC OPPENHEIMER

DEUTSCHE BANK SECURITIES

GOLDMAN, SACHS & CO.

MORGAN STANLEY DEAN WITTER

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>

APPENDIX DESCRIBING GRAPHIC MATERIAL
PURSUANT TO RULE 304 OF REGULATION S-T

Inside Front cover

Beginning clockwise from top left corner.

Picture 1.

Picture of assorted European currency on top of newspaper background.
Caption below picture says "cost effective".

Picture 2.

Picture of face of a clock with hands featured prominently. Caption
below picture says "reliable".

Picture 3.

Picture of fiber optic cables. Caption below picture says
"connectivity".

Picture 4.

Picture of hand holding cellular telephone.

Picture 5.

Picture of globe with focus on the North Atlantic Ocean. Caption in
picture says "global".

Gatefold

Map of world indicating the Company's network of undersea fiber optic
cables linking the continents and indicating terrestrial capacity acquired from
third parties.

The descriptive caption in the top left corner of the map reads: "The
Global Crossing Network will be initially comprised of: Atlantic Crossing, which
commenced service on the United States to United Kingdom segment in May 1998;
Mid-Atlantic Crossing, scheduled to commence service in November 1999; Pan-
American Crossing, scheduled to commence service in February 2000; and Pacific
Crossing, scheduled to commence initial service in March 2000."

<PAGE>

Inside Back Cover

Beginning clockwise in top left corner.

Picture 1.

Fiber optic cable being loaded into water from cable laying ship.

Picture 2.

Woman verifying computer equipment in landing station.

Picture 3.

Cable-laying vessel on high seas.

Picture 4.

Manufacturing process of optical repeater being worked on by five
technicians.

Picture 5.

Two men laying fiber optic cable.

<PAGE>

[ALTERNATE PAGE FOR INTERNATIONAL PROSPECTUS]

SUBJECT TO COMPLETION, DATED AUGUST 10, 1998

PROSPECTUS
21,000,000 SHARES

[LOGO OF GLOBAL CROSSING LTD. APPEARS HERE]

COMMON STOCK

--------

Of the 21,000,000 shares of Common Stock, par value $.01 per share, offered
hereby (the "Shares"), 4,200,000 Shares are being offered by the International
Underwriters (as defined herein) outside the United States and Canada (the
"International Offering") and 16,800,000 Shares are being offered by the U.S.
Underwriters (as defined herein) in a concurrent offering in the United States
and Canada (the "U.S. Offering" and, collectively with the International
Offering, the "Offerings"), subject to transfers between the International
Underwriters and the U.S. Underwriters (collectively, the "Underwriters"). The
Price to Public and Underwriting Discount per Share will be identical for the
International Offering and the U.S. Offering. See "Underwriting." The closings
of the International Offering and the U.S. Offering are conditioned upon each
other.

--------

SEE "RISK FACTORS" BEGINNING ON PAGE 15 FOR A DISCUSSION OF CERTAIN FACTORS
WHICH SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE SHARES OFFERED
HEREBY.

--------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

--------
The Shares are offered subject to receipt and acceptance by the Underwriters,
to prior sale and to such Underwriters' right to reject any order in whole or
in part and to withdraw, cancel or modify the offer without notice. It is
expected that delivery of the Shares will be made at the offices of Smith
Barney Inc. at 333 West 34th Street, New York, New York 10001 or through the
facilities of The Depository Trust Company (the "Depository") on or about
, 1998.

--------
Joint Book-Running Managers

SALOMON SMITH BARNEY INTERNATIONAL MERRILL LYNCH INTERNATIONAL

--------
CIBC OPPENHEIMER
DEUTSCHE BANK
GOLDMAN SACHS INTERNATIONAL
MORGAN STANLEY DEAN WITTER

The date of this Prospectus is , 1998.
<PAGE>

[ALTERNATE PAGE FOR INTERNATIONAL PROSPECTUS]

UNDERWRITING

Subject to the terms and conditions set forth in an underwriting agreement
among the Company, the Selling Shareholders and the International Underwriters
(the "International Underwriting Agreement"), the Company and the Selling
Shareholders have agreed to sell to each of the International Underwriters
named below (the "International Underwriters"), and each of the International
Underwriters, for whom Smith Barney Inc., Merrill Lynch International, CIBC
Oppenheimer Corp., Deutsche Bank AG (London Branch), Goldman Sachs
International and Morgan Stanley & Co. International Limited are acting as the
representatives (the "International Representatives"), has severally agreed to
purchase the number of Shares set forth opposite its name below:
<TABLE>
<CAPTION>
UNDERWRITING
INTERNATIONAL UNDERWRITERS COMMITMENT
-------------------------- ------------
<S> <C>
Smith Barney Inc.................................................
Merrill Lynch International......................................
CIBC Oppenheimer Corp. ..........................................
Deutsche Bank AG (London Branch).................................
Goldman Sachs International......................................
Morgan Stanley & Co. International Limited.......................
---------
Total.......................................................... 4,200,000
=========
</TABLE>

The Company and the Selling Shareholders have been advised by the
International Representatives that the several International Underwriters
initially propose to offer such Shares to the public at the Price to Public
set forth on the cover page of this Prospectus and to certain dealers at such
price less a concession not in excess of $ per Share. The International
Underwriters may allow, and such dealers may re-allow, a concession not in
excess of $. per Share to other dealers. After the Offerings, the Price to
Public and such concessions may be changed.

The Company has granted to the International Underwriters and the U.S.
underwriters (the "U.S. Underwriters" and, collectively with the International
Underwriters, the "Underwriters") options, exercisable during the 30-day
period after the date of this Prospectus, to purchase up to 3,150,000
additional shares of Common Stock from the Company at the Price to Public less
the Underwriting Discount, solely to cover over-allotments. To the extent that
the International Underwriters and the U.S. Underwriters exercise such
options, each of the International Underwriters and the U.S. Underwriters, as
the case may be, will be committed, subject to certain conditions, to purchase
a number of option shares proportionate to such International Underwriter's or
U.S. Underwriter's initial commitment.

The Company and the Selling Shareholders have entered into a U.S.
Underwriting Agreement with the U.S. Underwriters named therein, for whom
Smith Barney Inc., Merrill Lynch, Pierce, Fenner & Smith Incorporated, CIBC
Oppenheimer Corp., Deutsche Bank Securities Inc., Goldman, Sachs & Co. and
Morgan Stanley & Co. Incorporated are acting as the representatives (the "U.S.
Representatives" and, together with the International Representatives, the
"Representatives") providing for the concurrent offer and sale of 16,800,000
Shares (in addition to the shares covered by the over-allotment options
described above) in the United States and Canada. Both the International
Underwriting Agreement and the U.S. Underwriting Agreement provide that the
obligations of the International Underwriters and the U.S. Underwriters are
such that if any of the Shares are purchased by the International Underwriters
pursuant to the International Underwriting Agreement, or by the U.S.
Underwriters pursuant to the U.S. Underwriting Agreement, all the Shares
agreed to be purchased by either the International Underwriters or the U.S.
Underwriters, as the case may be, pursuant to their respective agreements must
be so purchased. The Price to Public and Underwriting Discount per Share for
the International Offering and the U.S. Offering will be identical. The
closing of the U.S. Offering is a condition to the closing of the
International Offering and the closing of the International Offering is a
condition to the closing of the U.S. Offering.

Each International Underwriter has severally agreed, that, as part of the
distribution of the 4,200,000 Shares offered by the International
Underwriters, (i) it is not purchasing any Shares for the account of any
United States or Canadian Person, (ii) it has not offered or sold, and will
not offer or sell, directly or indirectly, any Shares or

84
<PAGE>

[ALTERNATE PAGE FOR INTERNATIONAL PROSPECTUS]

distribute this Prospectus to any person in the United States or Canada, or to
any United States or Canadian Person and (iii) any dealer to whom it may sell
any Shares will represent that it is not purchasing for the account of any
United States or Canadian Person and agree that it will not offer or resell,
directly or indirectly, any Shares in the United States or Canada, or to any
United States or Canadian Person or to any other dealer who does not so
represent and agree. Each U.S. Underwriter has severally agreed that, as part
of the distribution of the 16,800,000 Shares by the U.S. Underwriters, (i) it
is not purchasing any Shares for the account of anyone other than a United
States or Canadian Person, (ii) it has not offered or sold, and will not offer
or sell, directly or indirectly, any Shares or distribute any Prospectus
relating to the U.S. Offering to any person outside of the United States or
Canada, or to anyone other than a United States or Canadian Person and (iii)
any dealer to whom it may sell any Shares will represent that it is not
purchasing for the account of anyone other than a United States or Canadian
Person and agree that it will not offer or resell, directly or indirectly, any
Shares outside of the United States or Canada, or to anyone other than a
United States or Canadian Person or to any other dealer who does not so
represent and agree.

Pursuant to the Agreement Between U.S. Underwriters and International
Underwriters, sales may be made between the U.S. Underwriters and the
International Underwriters of such number of Shares as may be mutually agreed.
The price of any Shares so sold shall be the Price to Public, less an amount
not greater than the concession to securities dealers. To the extent that
there are sales between the International Underwriters and the U.S.
Underwriters pursuant to the Agreement Between U.S. Underwriters and
International Underwriters, the number of Shares initially available for sale
by the International Underwriters or by the U.S. Underwriters may be more or
less than the amount specified on the cover page of this Prospectus.

Each International Underwriter has severally represented and agreed that (i)
it has not offered or sold and, prior to the expiry of six months from the
closing date of the Offerings, will not offer or sell in the United Kingdom
any Shares other than to persons whose ordinary activities involve them in
acquiring, holding, managing or disposing of investments (whether as principal
or agent) for the purposes of their businesses or otherwise in circumstances
which have not resulted in and will not result in an offer to the public
within the meaning of the Public Offers of Securities Regulations 1995 (the
"Regulations"); (ii) it has complied and will comply with all applicable
provisions of the Financial Services Act 1986 and the Regulations with respect
to anything done by it in relation to the Shares in, from or otherwise
involving the United Kingdom; and (iii) it has only issued or passed on, and
will only issue or pass on, to any person in the United Kingdom any document
received by it in connection with the issue of the Shares to a person who is
of a kind described in Article 11(3) of the Financial Services Act 1986
(Investment Advertisements) (Exemptions) Order 1995, or is a person to whom
the document may otherwise lawfully be issued or passed on.

Purchasers of the Shares offered hereby may be required to pay stamp taxes
and other charges in accordance with the laws and practices of the country of
purchase in addition to the Price to Public set forth in the cover page
hereof.

The International Underwriting Agreement provides that the Company and the
Selling Shareholders will indemnify the International Underwriters against
certain liabilities and expenses, including liabilities under the Securities
Act, or contribute to payments the International Underwriters may be required
to make in respect thereof.

Subject to certain exceptions, the Company and its Shareholders have agreed
not to offer, sell, contract to sell or otherwise dispose of, directly or
indirectly, or announce the offering of any shares of Common Stock, including
any such shares beneficially or indirectly owned or controlled by the Company
or any securities

85
<PAGE>

[ALTERNATE PAGE FOR INTERNATIONAL PROSPECTUS]

convertible into, or exchangeable or exercisable for, shares of Common Stock,
for 180 days from the date of this Prospectus, without the prior written
consent of Smith Barney Inc. and Merrill Lynch.

At the Company's request, certain of the U.S. Underwriters have reserved up
to 10% of the Shares (the "Directed Shares") for sale at the Price to Public
to persons who are directors, officers or employees of, or otherwise
associated with, the Company and its affiliates and who have advised the
Company of their desire to purchase such Shares. The number of Shares of
Common Stock available for sale to the general public will be reduced to the
extent of sales of Directed Shares to any of the persons for whom they have
been reserved. Any Shares not so purchased will be offered by the U.S.
Underwriters on the same basis as all other Shares offered hereby. The Company
has agreed to indemnify those certain U.S. Underwriters against certain
liabilities and expenses, including liabilities under the Securities Act, in
connection with sales of the Directed Shares.

The Underwriters do not intend to confirm sales of Shares to accounts on
which they exercise discretionary authority.

In connection with the Offerings and in compliance with applicable law, the
Underwriters may overallot (i.e., sell more Shares than the total amount shown
on the list of Underwriters and participations which appears above) and may
effect transactions which stabilize, maintain or otherwise affect the market
price of the shares at levels above those which might otherwise prevail in the
open market. Such transactions may include placing bids for the Shares or
effecting purchases of the Shares for the purpose of pegging, fixing or
maintaining the price of the Shares or for the purpose of reducing a syndicate
short position created in connection with the offering. A syndicate short
position may be covered by exercise of the option described above in lieu of
or in addition to open market purchases. In addition, the contractual
arrangements among the Underwriters include a provision whereby, if the
Representatives purchase Shares in the open market for the account of the
underwriting syndicate and the securities purchased can be traced to a
particular Underwriter or member of the selling group, the underwriting
syndicate may require the Underwriter or selling group member in question to
purchase the Shares in question at the cost price to the syndicate or may
recover from (or decline to pay to) the Underwriter or selling group member in
question the selling concession applicable to the securities in question. The
Underwriters are not required to engage in any of these activities and any
such activities, if commenced, may be discontinued at any time.

The Underwriters and certain of their affiliates have provided and may in
the future provide investment banking and other financial services to the
Company and certain of its affiliates for which they receive customary fees.
Salomon Brothers Inc, an affiliate of Smith Barney Inc., Merrill Lynch,
Pierce, Fenner & Smith Incorporated, CIBC Oppenheimer Corp., Deutsche Bank
Securities Inc. (formerly known as Deutsche Morgan Grenfell Inc.) and Morgan
Stanley & Co. Incorporated acted as Initial Purchasers in connection with the
issuance by GCH of its $800 million GCH Senior Notes. Affiliates of CIBC
Oppenheimer Corp. have engaged in certain related-party transactions with the
Company, including as a lender under the AC-1 Credit Facility. Affiliates of
Deutsche Bank Securities Inc. are acting as lenders under the AC-1 Credit
Facility and PC-1 credit agreement and an affiliate of Goldman, Sachs & Co. is
acting as lender under the PC-1 credit agreement. See "Management's Discussion
and Analysis of Financial Condition and Results of Operations--Liquidity and
Capital Resources," "Principal and Selling Shareholders," "Certain
Transactions," and "Description of Certain Indebtedness."

86
<PAGE>

[ALTERNATE PAGE FOR INTERNATIONAL PROSPECTUS]

LEGAL MATTERS

EXPERTS

AVAILABLE INFORMATION

87
<PAGE>

[ALTERNATE PAGE FOR INTERNATIONAL PROSPECTUS]
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

-----------

TABLE OF CONTENTS

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

21,000,000 SHARES

GLOBAL CROSSING LTD.

COMMON STOCK

[LOGO OF GLOBAL CROSSING LTD. APPEARS HERE]

-------

PROSPECTUS

DATED , 1998

-------

SALOMON SMITH BARNEY INTERNATIONAL

MERRILL LYNCH INTERNATIONAL

CIBC OPPENHEIMER

DEUTSCHE BANK

GOLDMAN SACHS INTERNATIONAL

MORGAN STANLEY DEAN WITTER

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>

PART II

INFORMATION NOT REQUIRED IN THE PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

The registrant estimates that expenses in connection with the offering
described in this Registration Statement will be as follows:
<TABLE>
<S> <C>
SEC registration fee........................................... $ 135,361
NASD filing fee................................................ 30,500
NASDAQ National Market listing fee............................. 95,000
Bermuda Stock Exchange listing fee............................. 20,000
Printing and engraving expenses................................ 500,000
Legal fees and expenses........................................ 1,000,000
Accounting fees and expenses................................... 500,000
Blue Sky fees and expenses..................................... 5,000
Transfer agent and registrar fees.............................. 15,000
Miscellaneous.................................................. 99,139
----------
Total...................................................... $2,400,000
</TABLE>

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

No provision is made in Bermuda statutory law for indemnification of
officers and directors.

The Bye-laws of the registrant provide for indemnification of the
registrant's officers and directors against all liabilities, loss, damage or
expense incurred or suffered by such party as an officer or director of the
registrant; provided that such indemnification shall not extend to any matter
which would render it void pursuant to the Companies Acts as in effect from
time to time in Bermuda.

The Underwriting Agreements provide for indemnification of directors and
officers of the registrant by the Underwriters against certain liabilities.

The directors and officers of the Company are covered by directors' and
officers' insurance policies maintained by the Company.

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.

In the three years preceding the filing of this Registration Statement, the
registrant and its predecessor, Global Crossing Ltd., LDC ("Old GCL") issued
the following securities that were not registered under the Securities Act of
1933, as amended (the "Securities Act"):

(a) $800,000,000 aggregate principal amount of 9-5/8% Senior Notes Due
2008 (the "GCH Senior Notes") issued on May 18, 1998 by the registrant's
wholly-owned subsidiary, Global Crossing Holdings, Ltd. and sold to each of
Salomon Brothers Inc, Merrill Lynch, Pierce, Fenner & Smith Incorporated,
CIBC Oppenheimer Corp., Morgan Stanley & Co. Incorporated and Deutsche Bank
Securities Inc. (formerly known as Deutsche Morgan Grenfell Inc.);

(b) $150,000,000 aggregate principal amount of 12% Senior Notes Due 2004
(the "GTH Senior Notes") issued on March 25, 1997 by the registrant's
indirect wholly-owned subsidiary, Global Telesystems Holdings, Ltd.
("GTH"), and sold to CIBC Wood Gundy Securities Corp.;

(c) $100,000,000 million aggregate principal amount of 14% Mandatorily
Redeemable Preference Shares (the "GTH Preference Shares") issued on March
25, 1997 by GTH and sold to CIBC Wood Gundy Securities Corp.;

II-1
<PAGE>

(d) upon formation of Old GCL on March 25, 1997, (i) 7,500,000 Class A
shares, 31,250,000 Class B shares and 33,750,000 Class C shares of common
stock of Old GCL at $1.00 per share and (ii) 22,058,800 Class D shares of
common stock of Old GCL, valued at $.11 per share, in each case to the
initial shareholders thereof;

(e) 13,235,300 Class A shares of common stock of Old GCL, valued at $1.00
per share, issued on March 25, 1997 for no consideration to CIBC Wood Gundy
Securities Corp. in connection with the sale of the GTH Preference Shares;

(f) 300,000 Class B shares and 125,000 Class E shares of common stock of
Old GCL at $1.00 per share issued on January 21, 1998 to additional
shareholders of Old GCL;

(g) 100,000 Class E shares of common stock of Old GCL at $1.00 per share
issued on April 22, 1998 to an additional shareholder of Old GCL; and

(h) upon formation of the registrant on March 18, 1998, 1,200,000 shares
of its Common Stock, at its par value of $.01 per share, to its sole
stockholder.

The GCH Senior Notes, GTH Senior Notes and GTH Preference Shares have been
resold only to institutional investors that are "qualified institutional
buyers" within the meaning of Rule 144A under the Securities Act or pursuant
to Regulation S under the Securities Act. All issuances specified above were
made in reliance upon an exemption from the registration provisions of the
Securities Act set forth in Section 4(2) thereof relative to transactions by
an issuer not involving any public offering or the rules and regulations
thereunder. All of such shares of Common Stock are deemed restricted
securities within the meaning of Rule 144 under the Securities Act.

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

(a) Exhibits

<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT
------- -------
<C> <S>
1.1 Form of U.S. Underwriting Agreement
3.1* Memorandum of Association of the Registrant, dated March 5, 1998
3.2* Bye-laws of the Registrant, dated March 18, 1997
3.3* Certificate of Incorporation of Change of Name
3.4* Memorandum of Increase of Share Capital
3.5* Form of Amended and Restated Bye-laws of the Registrant
4.1* Form of Certificate for Common Stock
4.2* Indenture, dated as of May 18, 1998, between Global Crossing
Holdings Ltd. and United States Trust Company of New York, as
Trustee
4.3* Registration Agreement, dated as of May 18, 1998, among the
registrant, Global Crossing Holdings Ltd. and the other parties
named therein
4.4* Form of Registration Rights Agreement among the Registrant and
the investors named therein
4.5* Credit Agreement, dated as of June 27, 1997 (the "Credit
Agreement"), among Global Telesystems Ltd., various financial
institutions names therein, Deutsche Bank AG, New York Branch
and Canadian Imperial Bank of Commerce, as Lead Agents, Deutsche
Bank AG, New York Branch, as Administrative Agent, Canadian
Imperial Bank of Commerce, as Syndication Agent, Documentation
Agent and the Issuing Bank and Deutsche Morgan Grenfell Inc. and
CIBC Gundy Securities Corp, as Arrangers
4.6* First Amendment and Consent, dated as of December 15, 1997, to
Credit Agreement, among Global Telesystems Ltd., the lenders
named therein, Deutsche Bank AG, New York Branch and Canadian
Imperial Bank of Commerce, as Lead Agents, Deutsche Bank AG, New
York Branch, as Administrative Agent, Canadian Imperial Bank of
Commerce, as Syndication Agent, Documentation Agent and the
Issuing Bank and Deutsche Morgan Grenfell Inc. and CIBC Gundy
Securities Corp, as Arrangers
</TABLE>

II-2
<PAGE>

<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT
------- -------
<C> <S>
4.7* Form of Amended and Restated Stockholders' Agreement among GCT
Pacific Holdings, Ltd., SCS (Bermuda) Ltd., Marubeni Pacific
Cable Limited and Pacific Crossing Ltd.
4.8* Second Amendment and Consent, dated as of June 12, 1998, to the
Credit Agreement, among Atlantic Crossing Ltd. (f/k/a Global
Telesystems Ltd.), the lenders named therein, Deutsche Bank AG,
New York Branch and Canadian Imperial Bank of Commerce, as Lead
Agents, Deutsche Bank AG, New York Branch, as Administrative
Agent, Canadian Imperial Bank of Commerce, as Syndication Agent,
Documentation Agent and the Issuing Bank and Deutsche Morgan
Grenfell Inc. and CIBC Gundy Securities Corp, as Arrangers
5.1* Opinion of Appleby, Spurling & Kempe as to the legality of the
Shares being registered
8.1* Opinion of Simpson Thacher & Bartlett as to tax matters relating
to the Shares being registered
8.2* Opinion of Appleby, Spurling & Kempe as to tax matters relating
to the Shares being registered
9.1* Form of Stockholders Agreement among the Registrant and the
investors named therein
10.1* Form of 1998 Global Crossing Ltd. Stock Incentive Plan
10.2* Project Development and Construction Contract, dated March 18,
1997, among AT&T Submarine Systems, Inc. and Global Telesystems
Ltd.
10.3** Project Development and Construction Contract, dated as of April
21, 1998, among Tyco Submarine Systems, Ltd. and Pacific
Crossing Ltd.
10.4* Project Development and Construction Contract, dated as of June
2, 1998, among Alcatel Submarine Networks and Alcatel Submarine
Networks, Inc. and Mid-Atlantic Crossing Ltd.
10.5* Advisory Services Agreement, dated as of March 25, 1997, among
Global Telesystems Ltd. and PCG Telecom Services LLC
10.6* First Amendment, dated as of June 27, 1997, to the Advisory
Services Agreement, dated as of March 25, 1997, among Global
Telesystems Ltd. and PCG Telecom Services LLC
21.1* Subsidiaries of the Registrant
23.1* Consent of Appleby Spurling & Kempe (included in the opinions
filed as Exhibit 5.1 and Exhibit 8.2)
23.2 Consent of Arthur Andersen & Co.
23.3* Consent of Simpson Thacher & Bartlett (included in the opinion
filed as Exhibit 8.1)
24.1* Power of Attorney (included on signature page II-4 of the
original filing of Registration Statement on Form S-1)
27.1* Financial Data Schedule
99.1* Consent of Nominee Director
99.2* Consent of Nominee Director
99.3* Consent of Nominee Director
</TABLE>
--------
* Previously filed

** Portions have been omitted pursuant to a request for confidential
treatment

(b) Financial Statement Schedules

ITEM 17. UNDERTAKINGS.

(1) The undersigned registrant hereby undertakes to provide to the
underwriter at the closing specified in the underwriting agreements,
certificate in such denominations and registered in such names as required by
the underwriter to permit prompt delivery to each purchaser.

(2) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the

II-3
<PAGE>

registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act
and will be governed by the final adjudication of such issue.

(i) For purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of prospectus filed as part of
this registration statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.

(ii) That, for the purpose of determining any liability under the
Securities Act of 1933, each post-effective amendment that contains a form
of prospectus shall be deemed to be a new registration statement relating
to the securities offered therein, and the offering of such securities at
that time shall be deemed to be the initial bona fide offering thereof.

II-4
<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, as amended, the
registrant has duly caused this Amendment No. 4 to the registration statement
to be signed on its behalf by the undersigned, thereunto duly authorized, in
the City of Los Angeles, State of California on August 10, 1998.

Global Crossing Ltd.

By /s/ John M. Scanlon
----------------------------------
NAME: JOHN M. SCANLON
TITLE: CHIEF EXECUTIVE OFFICER

Pursuant to the requirements of the Securities Act of 1933, as amended, this
Amendment No. 4 to the registration statement has been signed on August 10,
1998 by or on behalf of the following persons in the capacities indicated with
the registrant.

<TABLE>
<S> <C>
SIGNATURE TITLE

/*/ Co-Chairman of the Board and Director
-------------------------------------
Gary Winnick

/*/ Co-Chairman of the Board and Director
-------------------------------------
Lodwrick Cook

/s/ John M. Scanlon Chief Executive Officer and Director
-------------------------------------
John M. Scanlon

/*/ President, Chief Operating Officer
------------------------------------- and Director
David Lee

/*/ Senior Vice President and Director
-------------------------------------
Barry Porter

/*/ Senior Vice President and Director
-------------------------------------
Abbott Brown

/*/ Senior Vice President and Chief
------------------------------------- Financial Officer
Dan J. Cohrs

/*/ Director
-------------------------------------
Hillel Weinberger
</TABLE>

II-5
<PAGE>

SIGNATURE TITLE

/*/ Director
------------------------------------
Jay Bloom

/*/ Director
------------------------------------
Dean Kehler

/*/ Director
------------------------------------
Jay Levine

/*/ Director
------------------------------------
William Phoenix

/*/ Director
------------------------------------
Bruce Raben

/*/ Director
------------------------------------
Michael Steed

/s/ John M. Scanlon Authorized Representative in the
------------------------------------ United States
John M. Scanlon

* By Power of Attorney

/s/ John M. Scanlon Attorney-in-Fact
------------------------------------
John M. Scanlon

II-6
<PAGE>

INDEX TO EXHIBITS

<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT PAGE
------- ------- ----
<C> <S> <C>
1.1 Form of U.S. Underwriting Agreement
3.1* Memorandum of Association of the Registrant, dated March 5,
1998
3.2* Bye-laws of the registrant, dated March 18, 1997
3.3* Certificate of Incorporation of Change of Name
3.4* Memorandum of Increase of Share Capital
3.5* Form of Amended and Restated Bye-laws of the Registrant
4.1* Form of Certificate for Common Stock
4.2* Indenture, dated as of May 18, 1998, between Global Crossing
Holdings Ltd. and United States Trust Company of New York, as
Trustee
4.3* Registration Agreement, dated as of May 18, 1998, among the
Registrant, Global Crossing Holdings Ltd. and the other parties
named therein
4.4* Form of Registration Rights Agreement among the Registrant and
the investors named therein
4.5* Credit Agreement, dated as of June 27, 1997 (the "Credit
Agreement"), among Global Telesystems Ltd., various financial
institutions names therein, Deutsche Bank AG, New York Branch
and Canadian Imperial Bank of Commerce, as Lead Agents,
Deutsche Bank AG, New York Branch, as Administrative Agent,
Canadian Imperial Bank of Commerce, as Syndication Agent,
Documentation Agent and the Issuing Bank and Deutsche Morgan
Grenfell Inc. and CIBC Gundy Securities Corp, as Arrangers
4.6* First Amendment and Consent, dated as of December 15, 1997, to
Credit Agreement, among Global Telesystems Ltd., the lenders
named therein, Deutsche Bank AG, New York Branch and Canadian
Imperial Bank of Commerce, as Lead Agents, Deutsche Bank AG,
New York Branch, as Administrative Agent, Canadian Imperial
Bank of Commerce, as Syndication Agent, Documentation Agent and
the Issuing Bank and Deutsche Morgan Grenfell Inc. and CIBC
Gundy Securities Corp, as Arrangers
4.7* Form of Amended and Restated Stockholders' Agreement among GCT
Pacific Holdings, Ltd., SCS(Bermuda) Ltd., Marubeni Pacific
Cable Limited and Pacific Crossing Ltd.
4.8* Second Amendment and Consent, dated as of June 12, 1998, to the
Credit Agreement, among Atlantic Crossing Ltd. (f/k/a Global
Telesystems Ltd.), the lenders named therein, Deutsche Bank AG,
New York Branch and Canadian Imperial Bank of Commerce, as Lead
Agents, Deutsche Bank AG, New York Branch, as Administrative
Agent, Canadian Imperial Bank of Commerce, as Syndication
Agent, Documentation Agent and the Issuing Bank and Deutsche
Morgan Grenfell Inc. and CIBC Gundy Securities Corp, as
Arrangers
5.1* Opinion of Appleby, Spurling & Kempe as to the legality of the
Shares being registered
8.1* Opinion of Simpson Thacher & Bartlett as to tax matters
relating to the Shares being registered
8.2* Opinion of Appleby, Spurling & Kempe as to tax matters relating
to the Shares being registered
9.1* Form of Stockholders' Agreement among the Registrant and the
investors named therein
10.1* Form of 1998 Global Crossing Ltd. Stock Incentive Plan
10.2* Project Development and Construction Contract, dated March 18,
1997, among AT&T Submarine Systems, Inc. and Global Telesystems
Ltd.
</TABLE>
<PAGE>

<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT PAGE
------- ------- ----
<C> <S> <C>
10.3** Project Development and Construction Contract, dated as of
April 21, 1998, among Tyco Submarine Systems, Ltd. and Pacific
Crossing Ltd.
10.4* Project Development and Construction Contract, dated as of June
2, 1998, among Alcatel Submarine Networks and Alcatel Submarine
Networks, Inc. and Mid-Atlantic Crossing Ltd.
10.5* Advisory Services Agreement, dated as of March 25, 1997, among
Global Telesystems Ltd. and PCG Telecom Services LLC
10.6* First Amendment, dated as of June 27, 1997, to the Advisory
Services Agreement, dated as of March 25, 1997, among Global
Telesystems Ltd. and PCG Telecom Services LLC
21.1* Subsidiaries of the Registrant
23.1* Consent of Appleby Spurling & Kempe (included in the opinions
filed as Exhibit 5.1 and Exhibit 8.2)
23.2 Consent of Arthur Andersen & Co.
23.3* Consent of Simpson Thacher & Bartlett (included in the opinion
filed as Exhibit 8.1)
24.1* Power of Attorney (included on signature page II-4 of the
original filing of Registration Statement on Form S-1)
27.1* Financial Data Schedule
99.1* Consent of Nominee Director
99.2* Consent of Nominee Director
99.3* Consent of Nominee Director
</TABLE>
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* Previously filed

** Portions have been omitted pursuant to a request for confidential treatment

<PAGE>

EXHIBIT 1.1

Proof of August 10, 1998

16,800,000 Shares

GLOBAL CROSSING LTD.

Common Stock

U.S. UNDERWRITING AGREEMENT
---------------------------

August __, 1998
Smith Barney Inc.
Merrill Lynch, Pierce, Fenner & Smith Incorporated
CIBC Oppenheimer Corp.
Deutsche Bank Securities Inc.
Goldman, Sachs & Co.
Morgan Stanley & Co. Incorporated

As Representatives of the Several Underwriters

c/o Smith Barney Inc.
388 Greenwich Street
New York, New York 10013

Dear Sirs:

Global Crossing Ltd., a Bermuda Company (the "Company"), proposes to
issue and sell an aggregate of 15,160,000 shares of its common stock, par value
$0.01 per share, and the persons named in Part A of Schedule I hereto (the
"Selling Stockholders") propose to sell an aggregate of 1,640,000 shares of
common stock of the Company (together with the 15,160,000 shares of common stock
to be issued and sold by the Company, the "Firm Shares") to the several
Underwriters named in Schedule II hereto (the "U.S. Underwriters") for whom
Smith Barney Inc., Merrill Lynch, Pierce, Fenner & Smith Incorporated, CIBC
Oppenheimer Corp., Deutsche Bank Securities Inc., Goldman, Sachs & Co. and
Morgan Stanley & Co. Incorporated are acting as representatives (the
"Representatives"). In addition, solely for the purpose of covering over-
allotments, the Company proposes to sell to the U.S. Underwriters, upon the
terms and conditions set forth in Section 2 hereof, up to an additional
2,520,000 shares (the "Additional Shares") of the

1
<PAGE>

Company's common stock. The Company and the Selling Stockholders are hereinafter
sometimes referred to as the "Sellers." The Firm Shares and the Additional
Shares are hereinafter collectively referred to as the "Shares." The Company's
common stock, par value $0.01 per share, including the Shares and the
International Shares (as defined herein), is hereinafter referred to as the
"Common Stock."

It is understood that the Company and the Selling Stockholders are
concurrently entering into an International Underwriting Agreement, dated the
date hereof (the "International Underwriting Agreement"), providing for the sale
of 4,200,000 shares of the Common Stock (the "Firm International Shares"), of
which 3,790,000 shares will be sold by the Company and of which 410,000 shares
will be sold by the Selling Stockholders (plus an option granted by the Company
to purchase up to an additional 630,000 shares of Common Stock (the "Additional
International Shares") solely for the purpose of covering over-allotments)
through arrangements with certain underwriters outside the United States and
Canada (the "Managers"), for whom Smith Barney Inc., Merrill Lynch
International, CIBC Oppenheimer Corp., Deutsche Bank AG (London Branch), Goldman
Sachs International and Morgan Stanley & Co. International Limited are acting as
lead managers (the "Lead Managers"). All shares of Common Stock proposed to be
offered to the Managers pursuant to the International Underwriting Agreement,
including the Firm International Shares and the Additional International Shares,
are herein called the "International Shares"; the International Shares and the
Shares, collectively, are herein called the "Underwritten Shares."

The Company and the Selling Stockholders also understand that the
Representatives and the Lead Managers have entered into an agreement (the
"Agreement Between U.S. Underwriters and Managers") contemplating the
coordination of certain transactions between the U.S. Underwriters and the
Managers and that, pursuant thereto and subject to the conditions set forth
therein, the U.S. Underwriters may purchase from the Managers a portion of the
International Shares or sell to the Managers a portion of the Shares. The
Company and the Selling Stockholders understand that any such purchases and
sales between the U.S. Underwriters and the Managers shall be governed by the
Agreement Between U.S. Underwriters and Managers and shall not be governed by
the terms of this Agreement or the International Underwriting Agreement.

The Company and the Selling Stockholders wish to confirm as follows
their respective agreements with you and the other several Underwriters on whose
behalf you are acting, in connection with the several purchases of the Shares by
the Underwriters.

1. REGISTRATION STATEMENT AND PROSPECTUS. The Company has prepared
and filed with the Securities and Exchange Commission (the "Commission") in
accordance with the provisions of the Securities Act of 1933, as amended, and
the rules and regulations of the Commission thereunder (collectively, the
"Act"), a registration statement on Form S-1, including prospectuses subject to
completion, relating to the Underwritten Shares. The term "Registration
Statement" as used in this Agreement means the registration statement (including
all financial schedules and exhibits), as amended at the time it becomes
effective, and as thereafter amended by post-effective amendment. The term
"Prospectuses" as used in this Agreement means the

2
<PAGE>

prospectuses in the forms included in the Registration Statement, or, if the
prospectuses included in the Registration Statement omit information in reliance
on Rule 430A under the Act and such information is included in prospectuses
filed with the Commission pursuant to Rule 424(b) under the Act, the term
"Prospectuses" as used in this Agreement means the prospectuses in the forms
included in the Registration Statement as supplemented by the addition of the
Rule 430A information contained in the prospectuses filed with the Commission
pursuant to Rule 424(b). The term "Prepricing Prospectuses" as used in this
Agreement means the prospectuses subject to completion in the forms included in
the Registration Statement at the time of the initial filing of the Registration
Statement with the Commission, as such prospectuses shall have been amended from
time to time prior to the date of the Prospectuses.

It is understood that two forms of Prepricing Prospectus and two forms
of Prospectus are to be used in connection with the offering and sale of the
Underwritten Shares: a Prepricing Prospectus and a Prospectus relating to the
Shares that are to be offered and sold in the United States (as defined herein)
or Canada (as defined herein) to U.S. or Canadian Persons (the "U.S. Prepricing
Prospectus" and the "U.S. Prospectus," respectively), and a Prepricing
Prospectus and a Prospectus relating to the International Shares which are to be
offered and sold outside the United States or Canada to persons other than U.S.
or Canadian Persons (the "International Prepricing Prospectus" and the
"International Prospectus," respectively). The U.S. Prospectus and the
International Prospectus are herein collectively called the "Prospectuses," and
the U.S. Prepricing Prospectus and the International Prepricing Prospectus are
herein called the "Prepricing Prospectuses." For purposes of this Agreement:
"Rules and Regulations" means the rules and regulations adopted by the
Commission under either the Act or the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), as applicable; "U.S. or Canadian Person" means any
resident or national of the United States or Canada, any corporation,
partnership or other entity created or organized in or under the laws of the
United States or Canada or any estate or trust the income of which is subject to
United States or Canadian income taxation regardless of the source of its income
(other than the foreign branch of any U.S. or Canadian Person), and includes any
United States or Canadian branch of a person other than a U.S. or Canadian
Person; "United States" means the United States of America (including the states
thereof and the District of Columbia) and its territories, its possessions and
other areas subject to its jurisdiction; and "Canada" means Canada and its
territories, its possessions and other areas subject to its jurisdiction.

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<PAGE>

2. AGREEMENTS TO SELL AND PURCHASE. Upon the basis of the
representations, warranties and agreements contained herein and subject to all
the terms and conditions set forth herein and to such adjustments as you may
determine to avoid fractional shares, the Company hereby agrees to issue and
sell to each U.S. Underwriter and each U.S. Underwriter agrees, severally and
not jointly, to purchase from the Company, at a purchase price of $ ___ per
share (the "purchase price per share"), the number of Firm Shares that bears the
same proportion to the aggregate number of Firm Shares to be issued and sold by
the Company as the number of Firm Shares set forth opposite the name of such
Underwriter in Schedule II hereto (or such number of Firm Shares increased as
set forth in Section 12 hereof) bears to the aggregate number of Firm Shares to
be sold by the Company and the Selling Stockholders.

Upon the basis of the representations, warranties and agreements
contained herein and subject to all the terms and conditions set forth herein
and to such adjustments as you may determine to avoid fractional shares, each
Selling Stockholder agrees to sell to each U.S. Underwriter and each U.S.
Underwriter agrees, severally and not jointly, to purchase from each Selling
Stockholder, at the purchase price per share, the number of Firm Shares that
bears the same proportion to the number of Firm Shares set forth opposite the
name of such Selling Stockholder in Schedule I hereto as the number of Firm
Shares set forth opposite the name of such U.S. Underwriter in Schedule II
hereto (or such number of Firm Shares increased as set forth in Section 12
hereof) bears to the aggregate number of Firm Shares to be sold by the Company
and the Selling Stockholders.

Upon the basis of the representations, warranties and agreements
contained herein and subject to all the terms and conditions set forth herein,
the Company also agrees to sell to the U.S. Underwriters, and the U.S.
Underwriters shall have the right to purchase from the Company, at the purchase
price per share, pursuant to an option (the "over-allotment option") which may
be exercised prior to 5:00 p.m., New York City time, on the 30th day after the
date of the U.S. Prospectus (or, if such 30th day shall be a Saturday or Sunday
or a holiday, on the next day thereafter when the New York Stock Exchange is
open for trading), up to an aggregate of 2,520,000 Additional Shares from the
Company. Additional Shares may be purchased only for the purpose of covering
over-allotments made in connection with the offering of the Firm Shares.

Certificates in transferable form for the Shares that each of the
Selling Stockholders agrees to sell pursuant to this Agreement have been placed
in custody with [Name of Custodian] (the "Custodian") for delivery under this
Agreement pursuant to a Custody Agreement and Power of Attorney (the "Custody
Agreement") executed by each of the Selling Stockholders appointing
_____________ and ___________ as agents and attorneys-in-fact (the "Attorneys-
in-Fact"). Each Selling Stockholder agrees that (i) the Shares represented by
the certificates held in custody pursuant to the Custody Agreement are subject
to the interests of the U.S. Underwriters, the Company and each other Selling
Stockholder, (ii) the arrangements made by the Selling Stockholders for such
custody are, except as specifically provided in the Custody Agreement,
irrevocable, and (iii) the obligations of the Selling Stockholders hereunder and
under the Custody Agreement shall not be terminated by any act of such Selling
Stockholder or by operation of law,

4
<PAGE>

whether by the death or incapacity of any Selling Stockholder or the occurrence
of any other event or, if the Selling Stockholder is not a natural person, upon
any dissolution, winding up, distribution of assets or other event affecting the
legal existence of such Selling Stockholder. If any Selling Stockholder shall
die or be incapacitated or if any other event shall occur before the delivery of
the Shares hereunder, or if the Selling Stockholder is not a natural person, if
such selling Stockholder shall dissolve, wind up, distribute assets or if any
other event affecting the legal existence of such Selling Stockholder shall
occur before the delivery of the Shares hereunder, certificates for the Shares
of such Selling Stockholder shall be delivered to the Underwriters by the
Attorneys-in-Fact in accordance with the terms and conditions of this Agreement
and the Custody Agreement as if such death or incapacity, dissolution, winding
up or distribution of assets or other event had not occurred, regardless of
whether or not the Attorneys-in-Fact or any U.S. Underwriter shall have received
notice of such death, incapacity, dissolution, winding up or distribution of
assets or other event. Each Attorney-in-Fact is authorized, on behalf of each of
the Selling Stockholders, to execute this Agreement and any other documents
necessary or desirable in connection with the sale of the Shares to be sold
hereunder by such Selling Stockholder, to make delivery of the certificates for
such Shares, to receive the proceeds of the sale of such Shares, to give
receipts for such proceeds, to pay therefrom any expenses to be borne by such
Selling Stockholder in connection with the sale and public offering of such
Shares, to distribute the balance thereof to such Selling Stockholder, and to
take such other action as may be necessary or desirable in connection with the
transactions contemplated by this Agreement. Each Attorney-in-Fact agrees to
perform his duties under the Custody Agreement.

Each U.S. Underwriter represents, warrants, covenants and agrees that,
except as contemplated under Section 2 of the Agreement Between U.S.
Underwriters and Managers dated the date hereof, (i) it is not purchasing any
Shares for the account of anyone other than a U.S. or Canadian Person, (ii) it
has not offered or sold, and will not offer, sell, resell or deliver, directly
or indirectly, any Shares or distribute any U.S. Prospectus outside the United
States or Canada or to anyone other than a U.S. or Canadian Person and (iii) any
offer of Shares in Canada will be made only pursuant to an exemption from the
requirement to file a prospectus in the relevant province of Canada in which
such offer is made.

As part of the offering contemplated by this Agreement, Smith Barney Inc.
has agreed to reserve out of the Firm Shares set forth opposite its name on
Schedule II hereto, up to _______ shares, for sale to the Company's employees,
officers, and directors (the "Employee Participants") and other parties
associated with the Company (the "Non-Employee Participants" and, together with
the Employee Participants, the "Participants"), as set forth in the Prospectus
under the heading "Underwriting" (the "Directed Share Program"), provided that
--------
Smith Barney Inc. will have full discretion over the allocation of the Firm
Shares to any Non-Employee Participants. The Firm Shares to be sold by Smith
Barney Inc. pursuant to the Directed Share Program (the "Directed Shares") will
be sold by Smith Barney Inc. pursuant to that certain Directed Share Program
Side Letter, dated as of the date hereof, between the Company and Smith Barney
Inc. (the "DSP Side Letter"), at the public offering price. Any Directed Shares
not orally confirmed for purchase by any Participants by the end of the business
day immediately following

5
<PAGE>

the date hereof will be offered to the public by Smith Barney Inc. as set forth
in the Prospectus.

3. TERMS OF PUBLIC OFFERING. The Sellers have been advised by you
that the U.S. Underwriters propose to make a public offering of their respective
portions of the Shares as soon after the Registration Statement and this
Agreement have become effective as in your judgment is advisable and initially
to offer the Shares upon the terms set forth in the U.S. Prospectus.

4. DELIVERY OF THE SHARES AND PAYMENT THEREFOR. Delivery to the U.S.
Underwriters of and payment for the Firm Shares shall be made at the office of
Smith Barney Inc., 333 West 34th Street, New York, NY 10003, at 10:00 A.M., New
York City time, on August __, 1998 (the "Closing Date"). The place of closing
for the Firm Shares and the Closing Date may be varied by agreement among you,
the Company and the Attorneys-in-Fact.

Delivery to the U.S. Underwriters of and payment for any Additional
Shares to be purchased by the U.S. Underwriters shall be made at the
aforementioned office of Smith Barney Inc. at such time on such date (the
"Option Closing Date"), which may be the same as the Closing Date but shall in
no event be earlier than the Closing Date nor earlier than two nor later than
ten business days after the giving of the notice hereinafter referred to, as
shall be specified in a written notice from you on behalf of the U.S.
Underwriters to the Company of the U.S. Underwriters' determination to purchase
a number, specified in such notice, of Additional Shares. The place of closing
for any Additional Shares and the Option Closing Date for such Shares may be
varied by agreement between you and the Company.

Certificates for the Firm Shares and for any Additional Shares to be
purchased hereunder shall be registered in such names and in such denominations
as you shall request by written notice prior to 9:30 A.M., New York City time,
on the second business day preceding the Closing Date or the Option Closing
Date, as the case may be. Such certificates shall be made available to you in
New York City for inspection and packaging not later than 9:30 A.M., New York
City time, on the business day next preceding the Closing Date or the Option
Closing Date, as the case may be. The certificates evidencing the Firm Shares
and any Additional Shares to be purchased hereunder shall be delivered to you on
the Closing Date or the Option Closing Date, as the case may be, against payment
of the purchase price therefor in immediately available funds.

5. AGREEMENTS OF THE COMPANY. The Company agrees with the several
U.S. Underwriters as follows:

6
<PAGE>

(b) The Company will advise you promptly and, if requested by you,
will confirm such advice in writing: (i) of any request by the Commission for
amendment of or a supplement to the Registration Statement, any Prepricing
Prospectuses or the Prospectuses or for additional information; (ii) of the
issuance by the Commission of any stop order suspending the effectiveness of the
Registration Statement or of the suspension of qualification of the Shares for
offering or sale in any jurisdiction or the initiation of any proceeding for
such purpose; and (iii) within the period of time referred to in paragraph (f)
below, of any change in the Company's business, assets, condition (financial or
otherwise) or results of operations, or of the happening of any event, including
the filing of any information, documents or reports pursuant to the Exchange
Act, that makes any statement of a material fact made in the Registration
Statement or the Prospectuses (as then amended or supplemented) untrue or which
requires the making of any additions to or changes in the Registration Statement
or the Prospectuses (as then amended or supplemented) in order to state a
material fact required by the Act or the regulations thereunder to be stated
therein or necessary in order to make the statements therein not misleading, or
of the necessity to amend or supplement the Prospectuses (as then amended or
supplemented) to comply with the Act or any other law. If at any time the
Commission shall issue any stop order suspending the effectiveness of the
Registration Statement, the Company will make every reasonable effort to obtain
the withdrawal of such order at the earliest possible time.

(c) The Company will furnish to you, without charge, one signed copy
of the Registration Statement as originally filed with the Commission and of
each amendment thereto, including financial statements and all exhibits to the
Registration Statement and will also furnish to you, without charge, such number
of conformed copies of the Registration Statement as originally filed and of
each amendment thereto, but without exhibits, as you may reasonably request.

(d) The Company will not (i) file any amendment to the Registration
Statement or make any amendment or supplement to the Prospectuses of which you
shall not previously have been advised or to which you shall reasonably object
in writing after being so advised or (ii) so long as, in the written opinion of
counsel for the U.S. Underwriters (a copy of which shall be delivered to the
Company), a prospectus is required to be delivered in connection with sales by
any U.S. Underwriter or dealer, file any information, documents or reports
pursuant to the Exchange Act, without delivering a copy of such information,
documents or reports to you, as Representatives of the U.S. Underwriters, prior
to or concurrently with such filing.

(e) Prior to the execution and delivery of this Agreement, the Company
has delivered or will deliver to you, without charge, in such quantities as you
have reasonably requested or may hereafter reasonably request, copies of each
form of the U.S. Prepricing Prospectus. The Company consents to the use, in
accordance with the provisions of the Act and with the securities or Blue Sky
laws of the jurisdictions in which the Shares are offered by the several U.S.
Underwriters and by dealers, prior to the date of the U.S. Prospectus, of each
U.S. Prepricing Prospectus so furnished by the Company.

7
<PAGE>

(f) As soon after the execution and delivery of this Agreement as
possible and thereafter from time to time for such period as in the written
opinion of counsel for the U.S. Underwriters a U.S. Prospectus is required by
the Act to be delivered in connection with sales by any U.S. Underwriter or
dealer, the Company will expeditiously deliver to each U.S. Underwriter and each
dealer, without charge, as many copies of the U.S. Prospectus (and of any
amendment or supplement thereto) as you may reasonably request. The Company
consents to the use of the U.S. Prospectus (and of any amendment or supplement
thereto) in accordance with the provisions of the Act and with the securities or
Blue Sky laws of the jurisdictions in which the Shares are offered by the
several U.S. Underwriters and by all dealers to whom Shares may be sold, both in
connection with the offering and sale of the Shares and for such period of time
thereafter as the U.S. Prospectus is required by the Act to be delivered in
connection with sales by any U.S. Underwriter or dealer. If during such period
of time any event shall occur that in the judgment of the Company or in the
written opinion of counsel for the U.S. Underwriters is required to be set forth
in the U.S. Prospectus (as then amended or supplemented) or should be set forth
therein in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, or if it is necessary
to supplement or amend the U.S. Prospectus to comply with the Act or any other
law, the Company will forthwith prepare and, subject to the provisions of
paragraph (d) above, file with the Commission an appropriate supplement or
amendment thereto and will expeditiously furnish to the U.S. Underwriters and
dealers a reasonable number of copies thereof.

(g) The Company will cooperate with you and with counsel for the U.S.
Underwriters in connection with the registration or qualification of the Shares
for offering and sale by the several U.S. Underwriters and by dealers under the
securities or Blue Sky laws of such jurisdictions as you may reasonably
designate and will file such consents to service of process or other documents
necessary or appropriate in order to effect such registration or qualification;
provided that in no event shall the Company be obligated to qualify to do
- --------
business in any jurisdiction where it is not now so qualified or to take any
action that would subject it to service of process in suits, other than those
arising out of the offering or sale of the Shares, in any jurisdiction where it
is not now so subject.

(h) The Company will make generally available to its security holders
a consolidated earnings statement, which need not be audited, covering a twelve-
month period commencing after the effective date of the Registration Statement
and ending not later than 15 months thereafter, as soon as reasonably
practicable after the end of such period, which consolidated earnings statement
shall satisfy the provisions of Section 11(a) of the Act; provided that such
--------
requirement shall be deemed satisfied if the Company complies with the
provisions of Rule 158 of the Act.

(i) During the period of one year hereafter, the Company will furnish
to you (i) as soon as available, a copy of each report of the Company mailed to
stockholders or filed with the Commission or the NASDAQ National Market, and
(ii) from time to time such other information concerning the Company as you may
reasonably request.

8
<PAGE>

(j) If this Agreement shall terminate or shall be terminated after
execution pursuant to any provisions hereof (otherwise than pursuant to the
second paragraph of Section 12 hereof or by notice given by you terminating this
Agreement pursuant to Section 12 or Section 13 hereof) or if this Agreement
shall be terminated by the U.S. Underwriters because of any failure or refusal
on the part of the Company or any of the Selling Stockholders to comply, in any
material respect, with the terms or fulfill, in any material respect, any of the
conditions of this Agreement, the Company agrees to reimburse the
Representatives for all reasonable out-of-pocket expenses (including reasonable
fees and expenses of counsel for the U.S. Underwriters) incurred by you in
connection herewith.

(k) The Company will apply the net proceeds from the sale of the
Shares to be sold by it hereunder substantially in accordance with the
description set forth in the Prospectuses.

(l) If Rule 430A of the Act is employed, the Company will timely file
the Prospectuses pursuant to Rule 424(b) under the Act and will advise you of
the time and manner of such filing.

(m) For a period of 180 days after the date hereof (the "Lock-up
Period"), the Company will not, without the prior written consent of Smith
Barney Inc., offer, sell, contract to sell or otherwise dispose of any Common
Stock (or any securities convertible into or exercisable or exchangeable for
Common Stock) or grant any options or warrants to purchase Common Stock
exercisable within the Lock-up Period, except for (i) sales to the U.S.
Underwriters pursuant to this Agreement and the Managers pursuant to the
International Underwriting Agreement, (ii) transactions disclosed in the
Prospectuses or (iii) the grant of options in the ordinary course of business
pursuant to the Company's Stock Incentive Plan (provided that any recipient of
options exercisable within 180 days of the date hereof shall execute an
agreement for the benefit of the U.S. Underwriters not to transfer such options
(or shares of Common Stock underlying such options) for the remainder of such
180-day period).

(n) The Company has furnished or will furnish to you "lock-up"
letters, in form and substance satisfactory to you, signed by each of its
current officers and directors and each of its stockholders designated by you.

(o) Except as stated in this Agreement and in the International
Underwriting Agreement and in the Prepricing Prospectuses and Prospectuses, the
Company has not taken, nor will it take, directly or indirectly, any action
designed to or that might reasonably be expected to cause or result in
stabilization or manipulation of the price of the Common Stock to facilitate the
sale or resale of the Shares.

(p) The Company will use its best efforts to have the Common Stock
listed, subject to notice of issuance, on the NASDAQ National Market
concurrently with the effectiveness of the Registration Statement.

9
<PAGE>

6. AGREEMENTS OF THE SELLING STOCKHOLDERS. Each of the Selling
Stockholders agrees with the several U.S. Underwriters as follows:

(a) Such Selling Stockholder will cooperate to the extent necessary to
cause the Registration Statement or any post-effective amendment thereto to
become effective at the earliest possible time.

(b) Such Selling Stockholder will pay all Federal and other taxes, if
any on the transfer or sale of such Shares that are sold by the Selling
Stockholder to the U.S. Underwriters.

(c) Such Selling Stockholder will do or perform all things required
to be done or performed by the Selling Stockholder prior to the Closing Date to
satisfy all conditions precedent to the delivery of the Shares that are sold by
such Selling Stockholder pursuant to this Agreement.

(d) Such Selling Stockholder has executed or will execute a "lock-up"
letter as provided in Section 5(n) above and will not sell, contract to sell or
otherwise dispose of any Common Stock, except for the sale of Shares to the
Underwriters pursuant to this Agreement and the sale of Shares to the Managers
pursuant to the International Underwriting Agreement, prior to the expiration of
180 days after the date of the Prospectus, without the prior written consent of
Smith Barney Inc.

(e) Except as stated in this Agreement and the International
Underwriting Agreement and in the Prepricing Prospectuses and the Prospectuses,
such Selling Stockholder has not taken, nor will it take, directly or
indirectly, any action designed to or that might reasonably be expected to cause
or result in stabilization or manipulation of the price of the Common Stock to
facilitate the sale or resale of the Shares.

(f) Such Selling Stockholder will advise you promptly upon becoming
aware, and if requested by you, will confirm such advice in writing, within the
period of time referred to in Section 5(f) hereof, of any change that results in
a material adverse effect on the business, assets, condition (financial or
otherwise) or results of operations of the Company and its Subsidiaries, taken
as a whole (a "Material Adverse Effect"), or of the happening of any event that
makes any statement made in the Registration Statement or the Prospectuses (as
then amended or supplemented) untrue or which requires the making of any
additions to or changes in the Registration Statement or the Prospectuses (as
then amended or supplemented) in order to state a material fact required by the
Act or the regulations thereunder to be stated therein or necessary in order to
make the statements therein not misleading, or of the necessity to amend or
supplement the Prospectuses (as then amended or supplemented) to comply with the
Act or any other law.

7. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants to each U.S. Underwriter that:

(a) Each U.S. Prepricing Prospectus included as part of the
Registration Statement as originally filed or as part of any amendment or
supplement thereto, or filed pursuant to

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<PAGE>

Rule 424 under the Act, complied when so filed in all material respects with the
provisions of the Act; except that this representation and warranty does not
apply to statements in or omissions from such U.S. Prepricing Prospectus (or any
amendment or supplement thereto) made in reliance upon and in conformity with
information relating to any Selling Stockholder or to any U.S. Underwriter or
Manager furnished to the Company in writing by a U.S. Underwriter through the
Representatives or by a Manager through the Lead Managers expressly for use
therein. The Commission has not issued any order preventing or suspending the
use of any Prepricing Prospectus.

(b) The Registration Statement in the form in which it became or
becomes effective and also in such form as it may be when any post-effective
amendment thereto shall become effective and the Prospectuses and any supplement
or amendment thereto when filed with the Commission under Rule 424(b) under the
Act, complied or will comply in all material respects with the provisions of the
Act and will not at any such times contain an untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements therein not misleading; except that this representation
and warranty does not apply to statements in or omissions from the Registration
Statement or the Prospectuses made in reliance upon and in conformity with
information relating to any Selling Stockholder or to any U.S. Underwriter or
Manager furnished to the Company in writing by a U.S. Underwriter through the
Representatives or by a Manager through the Lead Managers expressly for use
therein.

(c) All the outstanding shares of Common Stock of the Company have
been duly authorized and validly issued, are fully paid and nonassessable and
are free of any preemptive or similar rights; the Shares to be issued and sold
by the Company have been duly authorized and, when issued and delivered to the
U.S. Underwriters against payment therefor in accordance with the terms hereof,
will be validly issued, fully paid and nonassessable and free of any preemptive
or similar rights; and the capital stock of the Company conforms to the
description thereof in the Registration Statement and the Prospectuses.

(d) The Company is a company duly organized and validly existing in
good standing under the laws of Bermuda and has the requisite corporate power
and authority to own, lease and operate its properties and to conduct its
business as described in the Registration Statement and the Prospectuses, and is
duly registered and qualified to conduct its business and is in good standing in
each jurisdiction where the nature of its properties or the conduct of its
business requires such registration or qualification, except where the failure
so to register or qualify does not have a Material Adverse Effect.

(e) All the Company's Subsidiaries are listed in an exhibit to the
Registration Statement. Each Subsidiary is a company duly organized, validly
existing and in good standing in the jurisdiction of its organization (to the
extent that such concepts have legal significance in such jurisdiction), and has
the requisite power (corporate and other) and authority to own, lease and
operate its properties and to conduct its business as described in the
Registration Statement and the Prospectus, and is duly registered and qualified
to conduct its business and is in good standing in each jurisdiction or place
where the nature of its properties or the conduct of its business requires

11
<PAGE>

such registration or qualification, except where the failure so to register or
qualify does not have a Material Adverse Effect; all the outstanding shares of
capital stock of each of the Subsidiaries have been duly authorized and validly
issued, are fully paid and nonassessable, and are owned by the Company directly,
or indirectly through one of the other Subsidiaries, free and clear of any lien,
adverse claim, security interest, equity or together encumbrance, except as
described in the Registration Statement and the Prospectuses.

(f) There are no legal or governmental proceedings pending or, to the
knowledge of the Company, threatened, against the Company or any of the
Subsidiaries which have a Material Adverse Effect or to which the Company or any
of the Subsidiaries, or to which any of their respective properties, is subject
which have a Material Adverse Effect that are required to be described in the
Registration Statement or the Prospectuses but are not described as required,
and there are no agreements, contracts, indentures, leases or other instruments
relating to the Company that are required to be described in the Registration
Statement or the Prospectuses or to be filed as an exhibit to the Registration
Statement that are not described or filed as required by the Act or the Exchange
Act. The descriptions of the terms of any such contracts or documents contained
in the Registration Statement or the Prospectuses are correct in all material
respects.

(g) Neither the Company nor any of the Subsidiaries is (i) in
violation of its certificate or articles of incorporation or bylaws, or other
organizational documents, (ii) in violation of any law, ordinance,
administrative or governmental rule or regulation applicable to it or of any
decree of any court or governmental agency or body having jurisdiction over it
(except where any such violation or violations in the aggregate would not have a
Material Adverse Effect), or (iii) in default in any material respect in the
performance of any obligation, agreement or condition contained in any bond,
debenture, note or any other evidence of indebtedness or in any material
agreement, indenture, lease or other instrument to which it is a party or by
which it or any of its properties may be bound, and no condition or state of
facts exists, which with the passage of time or the giving of notice or both,
would constitute such a default (except where any such default or defaults in
the aggregate would not have a Material Adverse Effect), except as may be
disclosed in the Registration Statement and the Prospectuses.

(h) Neither the issuance and sale of the Shares, the execution,
delivery or performance of this Agreement or the International Underwriting
Agreement by the Company nor the consummation by the Company of the transactions
contemplated hereby and thereby (i) requires any consent, approval,
authorization or other order of or registration or filing with, any court or
governmental agency or body having jurisdiction over it (except such as may be
required for the registration of the Shares under the Act and compliance with
the securities or Blue Sky laws of various jurisdictions, all of which have been
or will be effected in accordance with this Agreement), (ii) conflicts or will
conflict with or constitutes or will constitute a breach of, or a default under,
the certificate or articles of incorporation or bylaws, or other organizational
documents, of the Company or any of the Subsidiaries or any material agreement,
indenture, lease or other instrument to which the Company or any of the
Subsidiaries is a party or by which any of them or any of their respective
properties may be bound, (iii) violates or will violate any statute, law,
regulation or filing

12
<PAGE>

or judgment, injunction, order or decree applicable to the Company or any of the
Subsidiaries or any of their respective properties or (iv) will result in the
creation or imposition of any lien, charge or encumbrance upon any property or
assets of the Company or any of the Subsidiaries pursuant to the terms of any
agreement or instrument to which any of them is a party or by which any of them
may be bound or to which any of the property or assets of any of them is
subject.

(i) The accountants, Arthur Andersen & Co., who have certified or
shall certify the financial statements filed or to be filed as part of the
Registration Statement or the Prospectuses (or any amendment or supplement
thereto) are independent public accountants as required by the Act and the
applicable rules and regulations thereunder.

(j) The financial statements, together with the related schedules and
notes thereto included as part of the Registration Statement and the
Prospectuses (and any amendment or supplement thereto), present fairly in all
material respects the consolidated financial position, results of operations,
cash flows and changes in stockholders' equity of the Company and the
Subsidiaries on the basis stated in the Registration Statement at the respective
dates or for the respective periods to which they apply (to the extent such
entities were in existence at such dates or for such periods); such statements
and related schedules and notes have been prepared in accordance with generally
accepted accounting principles consistently applied throughout the periods
involved, except as disclosed therein and met the requirements of Regulation S-X
under the Act for registration statements on Form S-1; and the other financial
information and data set forth in the Registration Statement and the
Prospectuses (and any amendment or supplement thereto) are accurately presented
and prepared on a basis consistent with the books and records of the Company and
its Subsidiaries. The selected financial data set forth under the captions
"Summary Consolidated Financial and Operating Data" and "Selected Consolidated
Financial Data" in the Prospectuses fairly present the information included
therein.

(k) The execution and delivery of, and the performance by the Company
of its obligations under, each of this Agreement and the International
Underwriting Agreement have been duly and validly authorized by the Company, and
each of this Agreement and the International Underwriting Agreement has been
duly executed and delivered by the Company and, assuming due authorization,
execution and delivery by the other parties hereto and thereto, constitutes the
valid and legally binding agreement of the Company, enforceable against the
Company in accordance with its terms, except that the enforceability of the
Company's obligations hereunder or thereunder may be limited by bankruptcy,
insolvency or other similar laws affecting the enforcement of creditors' rights
generally and subject to the applicability of general principles of equity, and
except as rights to indemnity and contribution hereunder or thereunder may be
limited by Federal or state securities laws or principles of public policy.

(l) Except as disclosed in, or specifically contemplated by, the
Registration Statement and the Prospectuses (or any amendment or supplement
thereto, if applicable), subsequent to the respective dates as of which such
information is given in the Registration Statement and the Prospectuses (or any
amendment or supplement thereto, if applicable), neither

13
<PAGE>

the Company nor any of the Subsidiaries has incurred any liability or
obligation, direct or contingent, or entered into any transaction, in each case,
not in the ordinary course of business, that is material to the Company and the
Subsidiaries taken as a whole, and there has not been any material change in the
capital stock of the Company, or material increase in the short-term debt or
long-term debt, of the Company or any of the Subsidiaries, or any development
involving or which would be expected to involve, a Material Adverse Effect.

(m) Each of the Company and the Subsidiaries has good and
indefeasible title to all property (real and personal) described in the
Prospectuses as being owned by it, free and clear of all liens, claims, security
interests or other encumbrances except such as are described in the Registration
Statement and the Prospectuses or in a document filed as an exhibit to the
Registration Statement or would not have a Material Adverse Effect and all the
material property described in the Prospectuses as being held under lease by
each of the Company and the Subsidiaries is held by it under valid, subsisting
and enforceable leases with only such exceptions as would not have a Material
Adverse Effect.

(n) The Company has not distributed and, prior to the later to occur
of (i) the Closing Date or the Option Closing Date, if any, and (ii) completion
of the distribution of the Shares, will not distribute any offering material in
connection with the offering and sale of the Shares other than the Registration
Statement, the Prepricing Prospectuses, the Prospectuses or other materials, if
any, permitted by the Act.

(o) The Company and each of the Subsidiaries has such permits,
licenses, franchises, certificates of need and other approvals or authorizations
of governmental or regulatory authorities ("Permits") as are necessary under
applicable law to own its respective properties and to conduct its business in
the manner described in the Prospectuses, except where the failure to have any
such Permit would not have a Material Adverse Effect and subject to such
qualifications as may be set forth in the Prospectuses; the Company and each of
the Subsidiaries has fulfilled and performed in all material respects all its
material obligations with respect to such Permits and no event has occurred that
allows, or after notice or lapse of time would allow, revocation or termination
thereof or results in any other material impairment of the rights of the holder
of any such Permit, subject in each case to such qualification as may be set
forth in the Prospectuses and except to the extent that any such revocation or
termination would not have a Material Adverse Effect.

(p) Each of the Company and the Subsidiaries are insured by insurers
of recognized financial responsibility against such losses and risks and in such
amounts as are prudent.

(q) Neither the Company nor the Subsidiaries have violated any
applicable foreign, federal, state or local law or regulation relating to the
protection of human health and safety, the environment or hazardous or toxic
substances or wastes, pollutants or contaminants ("Environmental Laws"), except
for such violations which, singly or in the aggregate, would not have a Material
Adverse Effect.

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<PAGE>

(r) There are no costs or liabilities associated with any applicable
Environmental Laws (including, without limitation, any capital or operating
expenditures required for clean-up, closure of properties or compliance with
Environmental Laws or any permit, license or approval, any related constraints
on operating activities and any potential liabilities to third parties) which
would, singly or in the aggregate, have a Material Adverse Effect.

(s) Except as described in the Prospectuses, no holder of any
security of the Company has any right to require registration of shares of
Common Stock or any other security of the Company because of the filing of the
Registration Statement or consummation of the transactions contemplated by this
Agreement or the International Underwriting Agreement, or otherwise. No such
rights with respect to shares of Common Stock not listed in Schedule I hereto
were exercised nor will be exercised in connection with the sale of the Shares
and for a period of 180 days after the date hereof. Except as described in or
contemplated by the Prospectuses, there are no outstanding options, warrants or
other rights calling for the issuance of, and there are no commitments, plans or
arrangements to issue, any shares of Common Stock of the Company or any security
convertible into or exchangeable or exercisable for Common Stock of the Company.

(t) The Company and the Subsidiaries own or possess all patents,
trademarks, trademark registration, service marks, service mark registrations,
trade names, copyrights, licenses, inventions, trade secrets and rights
described in the Prospectuses as being owned by them or any of them or necessary
for the conduct of their respective businesses, and the Company is not aware of
any claim to the contrary or any challenge by any other person to the rights of
the Company and the Subsidiaries with respect to the foregoing.

(u) The Company is not and, upon sale of the Shares to be issued and
sold in accordance herewith and upon application of the net proceeds to the
Company from such sale as described in the Prospectuses under the caption "Use
of Proceeds," will not be an "investment company" within the meaning of the
Investment Company Act of 1940, as amended.

8. REPRESENTATIONS AND WARRANTIES OF THE SELLING STOCKHOLDERS. Each
Selling Stockholder represents and warrants to each U.S. Underwriter that:

(a) Such Selling Stockholder now has, and on the Closing Date will
have, valid and marketable title to the Shares to be sold by such Selling
Stockholder hereunder, free and clear of any lien, claim, security interest or
other encumbrance, including, without limitation, any restriction on transfer,
except as otherwise described in the Prospectuses.

(b) Such Selling Stockholder now has, and on the Closing Date will
have, full legal right, power and authorization, and any approval required by
law, to sell, assign, transfer and deliver such Shares in the manner provided in
this Agreement and the International Underwriting Agreement and, upon delivery
of and payment for such Shares to be sold hereunder, the several U.S.
Underwriters will acquire valid and marketable title to such Shares free and
clear of any lien, claim, security interest, or other encumbrance.

15
<PAGE>

(c) Each of this Agreement, the International Underwriting Agreement
and the Custody Agreement has been duly executed and delivered by or on behalf
of such Selling Stockholder and, assuming due authorization, execution and
delivery by the other parties hereto and thereto, constitutes the valid and
legally binding agreement of such Selling Stockholder, enforceable against such
Selling Stockholder in accordance with its terms, except that the enforceability
of such Selling Stockholder's obligations hereunder or thereunder may be limited
by bankruptcy, insolvency or other similar laws affecting the enforcement of
creditors' rights generally and subject to the applicability of general
principles of equity, and except as rights to indemnity and contribution
hereunder or thereunder may be limited by Federal or state securities laws or
principles of public policy.

(d) Neither the sale of the Shares to be sold by such Selling
Stockholder hereunder, the execution, delivery or performance of this Agreement,
the International Underwriting Agreement or the Custody Agreement by or on
behalf of such Selling Stockholder nor the consummation by such Selling
Stockholder of the transactions contemplated hereby and thereby (i) requires any
consent, approval, authorization or other order of or registration or filing
with, any court or governmental agency or body having jurisdiction over it
(except such as may be required for the registration of the Shares under the Act
and compliance with the securities or Blue Sky laws of various jurisdictions,
all of which have been or will be effected in accordance with this Agreement),
(ii) conflicts or will conflict with or constitutes or will constitute a breach
of, or a default under any material agreement, indenture, lease or other
instrument to which such Selling Stockholder is a party or by which such Selling
Stockholder may be bound, (iii) violates or will violate any statute, law,
regulation or filing or judgment, injunction, order or decree applicable to such
Selling Stockholder or (iv) will result in the creation or imposition of any
lien, charge or encumbrance upon any property or assets of such Selling
Stockholder pursuant to the terms of any agreement or instrument to which such
Selling Stockholder is a party or by which such Selling Stockholder may be bound
or to which any of the property or assets of such Selling Stockholder is
subject.

(e) The information pertaining to such Selling Stockholder provided
to the Company for inclusion under the caption "Principal and Selling
Shareholders" in the Prospectuses, does not and will not contain an untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein not misleading.

(f) The representations and warranties of such Selling Stockholder in
the Custody Agreement are, and on the Closing Date will be, true and correct.

(g) Such Selling Stockholder has not taken, directly or indirectly,
any action designed to or that might reasonably be expected to cause or result
in stabilization or manipulation of the price of the Common Stock to facilitate
the sale or resale of the Shares, except for the lock-up arrangements referred
to in the Prospectuses.

(h) Such Selling Stockholder does not have any knowledge or any
reason to believe that the Registration Statement or the Prospectuses (or any
amendment or supplement

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<PAGE>

thereto) contains any untrue statement of a material fact or omits to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading.

9. INDEMNIFICATION AND CONTRIBUTION. (a) The Company agrees to
indemnify and hold harmless you and each other U.S. Underwriter, the directors,
officers, employees and agents of each U.S. Underwriter and each person, if any,
who controls any U.S. Underwriter within the meaning of Section 15 of the Act or
Section 20(a) of the Exchange Act from and against any and all losses, claims,
damages or liabilities, joint or several, to which they or any of them may
become liable under the Act or the Exchange Act or other Federal or state
statutory law or regulation, at common law or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of or
are based upon any untrue statement or alleged untrue statement of a material
fact contained in any U.S. Prepricing Prospectus or in the Registration
Statement or the U.S. Prospectus or in any amendment or supplement thereto, or
arise out of or are based upon any omission or alleged omission to state therein
a material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, and agree to reimburse each such indemnified party, as
incurred, for any legal or other expenses reasonably incurred by them in
connection with investigating or defending any such loss, claim, damage,
liability or action except insofar as such losses, claims, damages or
liabilities arise out of or are based upon any untrue statement or omission or
alleged untrue statement or omission or omitted therefrom in reliance upon and
in conformity with the information relating to such U.S. Underwriter or Manager
furnished in writing to the Company by or on behalf of any U.S. Underwriter
through you or by or on behalf of any Manager through a Lead Manager expressly
for use in connection therewith; provided, however, that the indemnification
-------- -------
contained in this paragraph (a) with respect to any U.S. Prepricing Prospectus
shall not inure to the benefit of any U.S. Underwriter (or to the benefit of any
person controlling such U.S. Underwriter) on account of any such loss, claim,
damage, liability or expense arising from the sale of the Shares by such U.S.
Underwriter to any person if a copy of the U.S. Prospectus shall not have been
delivered or sent to such person within the time required by the Act and the
regulations thereunder, and the untrue statement or alleged untrue statement or
omission or alleged omission of a material fact contained in such U.S.
Prepricing Prospectus was corrected in the U.S. Prospectus, provided that the
Company has delivered the U.S. Prospectus to the several U.S. Underwriters in
requisite quantity on a timely basis to permit such delivery or sending. This
indemnity agreement will be in addition to any liability which the Company may
otherwise have.

In addition to the foregoing indemnification of all the Underwriters,
including Smith Barney Inc., the Company agrees to indemnify and hold harmless
Smith Barney Inc., and each person who controls Smith Barney Inc. within the
meaning of Section 15 of the Act or Section 20(a) of the Exchange Act, from and
against any and all losses, claims, damages, liabilities and expenses incurred
by Smith Barney Inc. arising out of or based upon Smith Barney Inc. serving as
"qualified independent underwriter" for the offering, including reasonable costs
of investigation and fees and disbursements of counsel retained by Smith Barney
Inc. to represent it in its capacity as "qualified independent underwriter".

17
<PAGE>

(b) Each Selling Stockholder, jointly and severally, agrees that, in
the event any U.S. Underwriter shall have made a demand for payment to the
Company for amounts payable by the Company to such U.S. Underwriter pursuant to
this Section 9, which demand remains unsatisfied for a period of days or
more, then such Selling Stockholder shall promptly, upon the request of such
U.S. Underwriter, pay to such U.S. Underwriter an amount equal to the amount
payable by the Company to such U.S. Underwriter. Notwithstanding the foregoing,
the aggregate liability of any Selling Stockholder pursuant to the provisions of
this paragraph, collectively with any liability of such Selling Stockholder for
any breach of the provisions of Section 6(f) or Section 8(h) of this Agreement,
shall be limited to an amount equal to the initial public offering price per
Share multiplied by the number of Shares sold by such Selling Stockholder. This
indemnity agreement will be in addition to any liability which any Selling
Stockholder may otherwise have, including as a controlling stockholder of the
Company.

(c) Each U.S. Underwriter agrees, severally and not jointly, to
indemnify and hold harmless the Company, its directors, its officers who sign
the Registration Statement, any person who controls the Company within the
meaning of Section 15 of the Act or Section 20(a) of the Exchange Act, the
Selling Stockholders and each person, if any, who controls any of the Selling
Stockholders within the meaning of Section 15 of the Act or Section 20(a) of the
Exchange Act to the same extent as the foregoing indemnity from the Company and
the Selling Stockholders to each U.S. Underwriter, but only with reference to
written information relating to such U.S. Underwriter furnished in writing by or
on behalf of such U.S. Underwriter specifically for inclusion in the
Registration Statement, the U.S. Prospectus or any U.S. Prepricing Prospectus
(or in any amendment or supplement thereto). This indemnity agreement will be
in addition to any liability which any U.S. Underwriter may otherwise have.

(d) Promptly after receipt by an indemnified party under this Section
9 of notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party under this
Section 9, notify the indemnifying party in writing of the commencement thereof;
but the failure so to notify the indemnifying party (i) will not relieve it from
liability under paragraphs (a), (b) or (c) above unless and to the extent it did
not otherwise learn of such action and such failure results in the forfeiture by
the indemnifying party of substantial rights and defenses and (ii) will not, in
any event, relieve the indemnifying party from any obligations to any
indemnified party other than the indemnification obligation provided in
paragraph (a), (b) or (c) above. The indemnifying party shall be entitled to
appoint counsel of the indemnifying party's choice at the indemnifying party's
expense to represent the indemnified party in any action for which
indemnification is sought (in which case the indemnifying party shall not
thereafter be responsible for the fees and expenses of any separate counsel
retained by the indemnified party or parties except as set forth below);
provided, however, that such counsel shall be satisfactory to the indemnified
party. Notwithstanding the indemnifying party's election to appoint counsel to
represent the indemnified party in an action, the indemnified party shall have
the right to employ separate counsel (including local counsel), and the
indemnifying party shall bear the reasonable fees, costs and expenses of such
separate counsel if (i) the use of counsel chosen by the indemnifying party to
represent the indemnified party would present such counsel with a conflict of
interest, (ii) the actual or potential defendants in, or targets of, any such
action include both the indemnified party and the indemnifying party and the
indemnified party shall have reasonably concluded that there may be legal
defenses available to it and/or other indemnified parties which are

18
<PAGE>

different from or additional to those available to the indemnifying party, (iii)
the indemnifying party shall not have employed counsel satisfactory to the
indemnified party to represent the indemnified party within a reasonable time
after notice of the institution of such action or (iv) the indemnifying party
shall authorize the indemnified party to employ separate counsel at the expense
of the indemnifying party. It is understood that the indemnifying party shall
not, in connection with any proceeding or related proceeding in the same
jurisdiction, be liable for the fees and expenses of more than one separate firm
(in addition to any local counsel) for all indemnified parties, and that all
such fees and expenses shall be reimbursed as they are incurred. Any such
separate firm for the U.S. Underwriters and such control persons shall be
designated in writing by the first of the named U.S. Underwriters on Schedule II
hereto and any such separate firm of the Company, its directors, its officers,
any such controlling person and the Selling Stockholders shall be designated in
writing by the Company and the Selling Stockholders. An indemnifying party will
not, without the prior written consent of the indemnified parties, settle or
compromise or consent to the entry of any judgment with respect to any pending
or threatened claim, action, suit or proceeding in respect of which
indemnification or contribution may be sought hereunder (whether or not the
indemnified parties are actual or potential parties to such claim or action)
unless such settlement, compromise or consent includes an unconditional release
of each indemnified party from all liability arising out of such claim, action,
suit or proceeding.

(e) If the indemnification provided for in this Section 9 is
unavailable to an indemnified party under paragraphs (a), (b) or (c) hereof in
respect of any losses, claims, damages, liabilities or expenses referred to
therein, then an 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, claims, damages, liabilities or expenses (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Company and the Selling Stockholders on the one hand and the U.S. Underwriters
on the other hand from the offering of the Shares, or (ii) if the allocation
provided by clause (i) above is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits referred
to in clause (i) above but also the relative fault of the Company and the
Selling Stockholders on the one hand and the U.S. Underwriters on the other hand
in connection with the statements or omissions that resulted in such losses,
claims, damages, liabilities or expenses, as well as any other relevant
equitable considerations. The relative benefits received by the Company and the
Selling Stockholders on the one hand and the U.S. Underwriters on the other hand
shall be deemed to be in the same proportion as the total net proceeds from the
offering (before deducting expenses) received by the Company and the Selling
Stockholders bear to the total underwriting discounts and commissions received
by the U.S. Underwriters, in each case as set forth in the table on the cover
page of the U.S. Prospectus; provided that, in the event that the U.S.
Underwriters shall have purchased any Additional Shares hereunder, any
determination of the relative benefits received by the Company, the Selling
Stockholders or the U.S. Underwriters from the offering of the Shares shall
include the net proceeds (before deducting expenses) received by the Company,
and the total underwriting discounts and commissions received by the U.S.
Underwriters, from the sale of such Additional Shares, in each case computed on
the basis of the respective amounts set forth in the notes to the table on the
cover page of the U.S. Prospectus. The relative fault of the Company and the
Selling

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<PAGE>

Stockholders on the one hand and the U.S. Underwriters on the other hand
shall be determined by reference to whether the untrue or alleged untrue
statement of a material fact or the omission or alleged omission to state a
material fact relates to information supplied by the Company or the Selling
Stockholders on the one hand or by the U.S. Underwriters on the other hand and
the parties' relative intent, knowledge, access to information and opportunity
to correct or prevent such statement or omission.

(f) The Company, the Selling Stockholders and the U.S. Underwriters
agree that it would not be just and equitable if contribution pursuant to
paragraph (e) of this Section 9 were determined by a pro rata allocation (even
if the U.S. Underwriters were treated as one entity for such purpose) or by any
other method of allocation that does not take account of the equitable
considerations referred to in paragraph (e) above. The amount paid or payable
by an indemnified party as a result of the losses, claims, damages, liabilities
and expenses referred to in paragraph (dc) above shall be deemed to include,
subject to the limitations set forth above, any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
any claim or defending any such action, suit or proceeding. Notwithstanding the
provisions of this Section 9, no U.S. Underwriter shall be required to
contribute any amount in excess of the amount by which the total price of the
Shares underwritten by it and distributed to the public exceeds the amount of
any damages which such U.S. Underwriter has otherwise been required to pay by
reason of such untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. The U.S. Underwriters'
obligations to contribute pursuant to this Section 9 are several in proportion
to the respective numbers of Firm Shares set forth opposite their names in
Schedule II hereto (or such numbers of Firm Shares increased as set forth in
Section 12 hereof) and not joint.

(g) The indemnity and contribution agreements contained in this
Section 9 and the representations and warranties of the Company and the Selling
Stockholders set forth in this Agreement shall remain operative and in full
force and effect, regardless of (i) any investigation made by or on behalf of
any U.S. Underwriter or any person controlling any U.S. Underwriter, the
Company, its directors or officers or the Selling Stockholders, any director,
officer or partner of a Selling Stockholder or any person controlling the
Company or any Selling Stockholder,(ii) acceptance of any Shares and payment
therefor hereunder, and (iii) any termination of this Agreement. A successor to
any U.S. Underwriter or any person controlling any U.S. Underwriter, or to the
Company, its directors, officers, employees or agents or to a Selling
Stockholder, any director, officer or partner of a Selling Stockholder or any
person controlling the Company or any Selling Stockholder, shall be entitled to
the benefits of the indemnity, contribution and reimbursement agreements
contained in this Section 9. The remedies provided in this Section 9 are not
exclusive and shall not limit any rights or remedies which may otherwise be
available to any indemnified party at law or in equity.

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<PAGE>

10. CONDITIONS OF U.S. UNDERWRITERS' OBLIGATIONS. The several
obligations of the U.S. Underwriters to purchase the Firm Shares hereunder are
subject to the following conditions:

(a) If, at the time this Agreement is executed and delivered, it is
necessary for the Registration Statement or a post-effective amendment thereto
to be declared effective before the offering of the Shares may commence, the
Registration Statement or such post-effective amendment shall have become
effective not later than 5:30 P.M. New York City time, on the date hereof, or at
such later date and time as shall be consented to in writing by you, and all
filings, if any, required by Rules 424 and 430A under the Act shall have been
timely made; no stop order suspending the effectiveness of the Registration
Statement shall have been issued and no proceeding for that purpose shall have
been instituted or, to the knowledge of the Company or any U.S. Underwriter,
threatened by the Commission, and any request of the Commission for additional
information (to be included in the Registration Statement or the Prospectuses or
otherwise) shall have been complied with to your satisfaction.

(b) Subsequent to the effective date of this Agreement, there shall
not have occurred (i) any change, or any development involving a prospective
change, that would have a Material Adverse Effect not contemplated by the
Prospectuses, which in your reasonable opinion, as Representatives of the
several U.S. Underwriters, would materially and adversely affect the market for
the Shares, or (ii) any event or development relating to or involving the
Company or any officer or director of the Company or any Selling Stockholder
which makes any statement made in the Prospectuses untrue or which, in the
opinion of the Company and its counsel or the U.S. Underwriters and their
counsel, requires the making of any addition to or change in the Prospectuses in
order to state a material fact required by the Act or any other law to be stated
therein or necessary in order to make the statements therein not misleading, if
amending or supplementing the Prospectuses to reflect such event or development
would, in your reasonable opinion, as Representatives of the several U.S.
Underwriters, materially and adversely affect the market for the Shares.

(c) You shall have received on the Closing Date an opinion from
Simpson Thacher & Bartlett, corporate counsel for the Company and the Selling
Stockholders, dated the Closing Date and addressed to you, as Representatives of
the several U.S. Underwriters, to the effect that:

(i) The Registration Statement has become effective under the
Act and the Prospectus was filed on the date specified in such opinion pursuant
to the subsection set forth in such opinion of Rule 424(b) of the rules and
regulations of the Commission under the Act and, to the best knowledge of such
counsel, no stop order suspending the effectiveness of the Registration
Statement has been issued or proceeding for that purpose has been instituted or
threatened by the Commission;

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<PAGE>

(ii) Each of this Agreement and the International Underwriting
Agreement constitutes a valid and legally binding obligation of the Company,
enforceable against the Company in accordance with its terms;

(iii) The statements made in the Prospectuses under the
captions "Business," "Description of Capital Stock," "Description of
Indebtedness," "Certain Transactions" and "Underwriting," insofar as they
purport to constitute summaries of certain terms of documents referred to
therein, constitute accurate summaries of the terms of such documents in all
material respects;

(iv) No consent, approval, authorization, order, registration
or qualification of or with any Federal or New York governmental agency or body,
or, to our knowledge, any Federal or New York court is required for the valid
issue and sale of the Underwritten Shares by the Company and the compliance by
the Company with all of the provisions of this Agreement and the International
Underwriting Agreement, except for the registration under the Act and the
Exchange Act of the Underwritten Shares, and such consents, approvals,
authorizations, registrations or qualifications as may be required under state
securities or Blue Sky laws in connection with the purchase and distribution of
the Shares by the Underwriters and the International Shares by the Managers.

(v) The issue and sale of the Shares by the Company and the
compliance by the Company with all of the provisions of this Agreement and the
International Underwriting Agreement will not breach or result in a default
under any indenture, mortgage, deed of trust, loan agreement or other agreement
or instrument identified on annexed schedule furnished to such counsel by the
Company, nor will such action violate any Federal or New York statute or any
rule or regulation that has been issued pursuant to any Federal or New York
statute or any order known to such counsel issued pursuant to any Federal or New
York statute by any court or governmental agency or body or court having
jurisdiction over the Company or any of its properties;

(vi) Upon delivery of the Underwritten Shares pursuant to this
Agreement and the International Underwriting Agreement and payment therefor as
contemplated therein, the U.S. Underwriters and the Managers will acquire good
and marketable title to the Shares free and clear of any lien, claim, security
interest, or other encumbrance, restriction on transfer or other defect in
title;

(vii) To the knowledge of such counsel, the U.S. Underwriting
Agreement, the International Underwriting Agreement and the Custody Agreement
have each been duly executed and delivered by or on behalf of each of the
Selling Stockholders and are valid and binding agreements of each Selling
Stockholder enforceable against each Selling Stockholder in accordance with
their respective terms;

(viii) The execution and delivery of the U.S. Underwriting
Agreement, the International Underwriting Agreement and the Custody Agreement by
the Selling Stockholders and the consummation of the transactions contemplated
thereby will not conflict with, constitute a

22
<PAGE>

breach of, or a default under any material agreement, indenture, lease or other
instrument known to such counsel to which any Selling Stockholder is a party or
by which any of them or any of their assets or property is bound, or violate any
statute, law, regulation, court order or decree known to such counsel to be
applicable to any Selling Stockholder or to any of the property or assets of any
Selling Stockholder, except for any such conflicts, breaches, defaults or
violations that would not have a material adverse effect on the ability of such
Selling Stockholder to consummate the transactions contemplated by the
Underwriting Agreements;

(ix) To the knowledge of such counsel, each Selling
Stockholder has full legal right, power and authorization, and any approval
required by law, to sell, assign, transfer and deliver good and marketable title
to the Shares which such Selling Stockholder has agreed to sell pursuant to the
U.S. Agreement and the International Underwriting Agreement;

(x) The Company is not an "investment company" within the
meaning of and subject to regulation under the Investment Company Act of 1940,
as amended; and

(xi) The statements made in the Prospectuses under the caption
"Tax Considerations," insofar as they purport to constitute summaries of matters
of United States federal tax law and regulations or legal conclusions with
respect thereto, constitute accurate summaries of the matters described therein
in all material respects.

Such counsel shall also state that the opinions set forth in
paragraphs (ii) and (ix) above are (i) subject to the effects of bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and other similar
laws relating to or affecting creditors' rights generally, (ii) general
equitable principles (whether considered in a proceeding in equity or at law),
(iii) an implied covenant of good faith and fair dealing and (iv) the effects of
the possible judicial application of foreign laws or foreign governmental or
judicial action affecting creditors' rights. Such counsel shall also state that
the opinions set forth in paragraphs (ii) and (ix) above are further limited by
considerations of public policy.

Such counsel shall also state that such counsel has not independently
verified the accuracy, completeness or fairness of the statements made or
included in the Registration Statement or the Prospectuses, and takes no
responsibility therefor, except as and to the extent set forth in paragraphs
(ii) and (ix) above. Such counsel shall state that in the course of the
preparation by the Company of the Registration Statement and the Prospectuses,
such counsel participated in conferences with certain officers and employees of
the Company, with representatives of Arthur Andersen & Co. and with counsel to
the Company. Such counsel shall state that based upon such counsel's
examination of the Registration Statement and the Prospectuses, such counsel's
investigations made in connection with the preparation of the Registration
Statement and the Prospectuses and such counsel's participation in the
conferences referred to above, such counsel (i) is of the opinion that the
Registration Statement, as of its effective date, and the Prospectuses, as of
their respective dates, and as of the date of such opinion, comply as to form in
all material respects with the requirements of the Act and the applicable rules
and regulations of the Commission thereunder, except that in each case such
counsel expresses no opinion with respect to

23
<PAGE>

the financial statements or other financial or statistical data or the
statements with respect to regulation of telecommunications activities contained
in the Registration Statement or the Prospectuses and (ii) has no reason to
believe that the Registration Statement, as of its effective date, contained any
untrue statement of a material fact or omitted to state any material fact
required to be stated therein or necessary in order to make the statements
therein not misleading, or that the Prospectuses, as of their respective dates,
and as of the date of such opinion, contain any untrue statement of a material
fact or omit to state any material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, except that in each case such counsel expresses no belief
with respect to the financial statements or other financial or statistical data
or the statements with respect to regulation of telecommunications activities
contained in the Registration Statement or the Prospectuses.

(d) You shall have received on the Closing Date an opinion of
Appleby, Spurling & Kempe, Bermuda counsel for the Company, dated the Closing
Date and addressed to you, as Representatives of the several U.S. Underwriters,
to the effect that:

(i) The form of certificates for the Shares conforms to the
requirements of Bermuda Law;

(ii) The Company is a company duly organized, validly existing
and in good standing under the laws of Bermuda and has the requisite power to
conduct its business and authority to own its properties as described in the
Registration Statement and the Prospectuses and to enter into and perform the
respective terms and conditions of this Agreement and the International
Underwriting Agreement and to issue, sell and deliver the Shares to be sold by
it to the U.S. Underwriters and Managers as provided therein, and is duly
registered and qualified to conduct its business and is in good standing in each
jurisdiction or place where the nature of its properties or the conduct of its
business requires such registration or qualification, except where the failure
so to register or qualify to be in good standing would not have a Material
Adverse Effect;

(iii) The Company's authorized share capital is US $6,000,000
divided into 600,000,000 common shares of par value US $0.01 each.

(iv) All of the authorized and issued shares of the Company
prior to the issuance of the Shares to be issued have been duly and validly
authorized and the share register of each of the Subsidiaries organized under
Bermuda law (the "Bermuda Subsidiaries") discloses that all of the issued shares
of the Bermuda Subsidiaries are registered in the name of the Company. Such
counsel has searched the Register of Charges maintained by the Registrar of
Companies in Bermuda against the name of the Company and each of the Bermuda
Subsidiaries. Such counsel's search disclosed those charges set forth in such
opinion as having been registered in the names of these entities over the shares
of the Subsidiaries. Such counsel may state that registration of

24
<PAGE>

charges is not mandatory and that accordingly such counsel cannot definitively
opine that there are no additional charges over the shares of the Bermuda
Subsidiaries.

(v) The Shares to be issued and sold to the U.S. Underwriters
and Managers by the Company under this Agreement and the International
Underwriting Agreement have been duly authorized and when issued and delivered
to the U.S. Underwriters and Managers against payment therefor in accordance
with the terms of this Agreement and the International Underwriting Agreement,
will be validly issued, fully paid and nonassessable and free of any (A)
preemptive rights or (B) to the best knowledge of such counsel after reasonable
inquiry, similar rights that entitle or will entitle any person to acquire any
Shares upon the issuance thereof by the Company;

(vi) The Company has taken all necessary action to authorize
the execution and delivery of this Agreement and the International Underwriting
Agreement, and the performance by it of the transactions contemplated therein;

(vii) Neither the issuance, sale or delivery of the
Underwritten Shares, nor the execution, delivery or performance of this
Agreement or the International Underwriting Agreement, or compliance by the
Company with all provisions of this Agreement and the International Underwriting
Agreement, nor consummation by the Company of the transactions contemplated
hereby or by the International Underwriting Agreement will:

(a) violate any provision of any applicable law of
Bermuda, nor, as far as can be ascertained from public records, any regulation
or under of any governmental, judicial or public body or authority of or in
Bermuda;

(b) violate the Memorandum of Association or By-laws of
the Company; or

(viii) This Agreement and the International Underwriting
Agreement constitute legal, valid and binding obligations of the Company,
enforceable against the Company in accordance with their terms and, when
executed, delivered and paid for in accordance with the provisions of this
Agreement and the International Underwriting Agreement, the Shares will
constitute legal, valid and binding obligations of the Company;

(ix) Other than as specified in such opinion, there is no
registration or filing with, or consent, license, approval, declaration,
permission, authorization, exemption or similar instrument of, or the taking of
any other action by, any person in Bermuda which is required in connection with
the issuance of the Shares or the execution, delivery or performance of this
Agreement or the International Underwriting Agreement, or to ensure the
legality, validity,

25
<PAGE>

enforceability or admissibility in evidence of the this Agreement or the
International Underwriting Agreement in Bermuda;

(x) To the best of such counsel's knowledge, based solely
upon such counsel's search of the cause book of the Supreme Court, no
litigation, arbitration or administrative proceedings are presently current or
pending in Bermuda with respect to the Company, and no resolution has been
passed or petition presented for the appointment of a receiver or liquidator to
or for the dissolution, reconstruction or reorganization of the Company, or of
any of its assets;

(xi) Neither the Company nor any of its properties or assets
enjoys any rights of immunity from legal proceedings in Bermuda, or from the
execution of judgment upon or attachment of such property or assets or
otherwise;

(xii) The choice of the laws of the State of New York to govern
this Agreement and the International Underwriting Agreement is a proper, valid
and binding choice of law and will be recognized and applied by the Courts of
Bermuda, assuming that such choice of law is a valid and binding choice of law
under the laws of the State of New York;

(xiii) The irrevocable submission by the Company [and the
Selling Stockholders, as applicable,] to the jurisdiction of the New York State
and Federal courts sitting in New York and the appointment of the process agent
contained in this Agreement and the International Underwriting Agreement
constitutes the legal, valid and binding submission and appointment of the
Company, provided that such submission and appointment is accepted by the New
York State and Federal courts sitting in New York and, with respect to the
appointment of process agent, no other procedural requirements are necessary in
order to validate such appointment.

(xiv) A final and conclusive judgment of the United States
Federal or New York State courts under which a sum of money is payable not being
a sum payable in respect of taxes or other charges of a like nature in respect
of a fine or other penalty, or multiple damages, would be enforced as a debt
against the Company by an action in the Supreme Court of Bermuda without re-
examination of the merits of the case under the Common Law Doctrine of
Obligation, provided that such judgment was not obtained by fraud or that its
enforcement would not be contrary to public policy in Bermuda, or that the
proceedings in which the same was obtained were not contrary to natural justice;

(xv) The statements in the Prospectuses under the captions
"Service of Process and Enforcement of Liabilities," "Tax Considerations--
Taxation of the Company--Bermuda Tax Considerations" and "--Taxation of
Stockholders--Bermuda Tax Considerations" insofar as they purport to describe
the provisions of the laws of Bermuda referred to therein, are accurate and
correct in all material respects; and

(xvi) No stamp or other issuance or transfer taxes or duties
and no capital gains, income, withholding or other taxes are payable by or on
behalf of the U.S. Underwriters or

26
<PAGE>

the Managers to the Bermuda Government or to any political subdivision or taxing
authority thereof or therein in connection with the execution of this Agreement
or the International Underwriting Agreement or the issuance of the Shares.

In rendering such opinion, such counsel may rely as to matters of
fact, to the extent they deem proper, on certificates of responsible officers of
the Company and public officials. Such counsel may also make such assumptions
and qualifications as they deem proper. Such opinion shall also state that it
may be relied upon by Latham & Watkins, as if it were addressed to them, for the
purposes of any legal opinion that such firm may be asked to deliver pursuant to
this Agreement.

(e) You shall have received on the Closing Date an opinion of Preston
Gates Ellis & Rouvelas Meeds L.L.P., special U.S. regulatory counsel to the
Company, dated the Closing Date and addressed to the Initial Purchasers
substantially in the form of Exhibit A hereto.
---------

In rendering such opinion, such counsel may rely as to matters of
fact, to the extent they deem proper, on certificates of responsible officers of
the Company, the Subsidiaries and public officials. Such counsel may also make
such assumptions and qualifications as they deem proper.

(f) You shall have received on the Closing Date an opinion of
Clifford Chance, special U.K. regulatory counsel to the Company, dated the
Closing Date and disclosed to you substantially in the form of Exhibit B hereto.
---------

(g) You shall have received on the Closing Date an opinion of Latham
& Watkins, counsel for the U.S. Underwriters, dated the Closing Date, with
respect to such matters as you may reasonably request.

(h) You shall have received letters addressed to you, as
Representatives of the several U.S. Underwriters, and dated the date hereof and
the Closing Date from Arthur Andersen & Co., independent certified public
accountants, substantially in the forms heretofore approved by you.

(i) (i) No stop order suspending the effectiveness of the
Registration Statement shall have been issued and no proceedings for that
purpose shall have been taken or, to the knowledge of the Company, shall have
been contemplated by the Commission at or prior to the Closing Date; (ii) there
shall not have been any material change in the capital stock of the Company nor
any material increase in the short-term or long-term debt of the Company (other
than in the ordinary course of business) from that set forth or contemplated in
the Registration Statement or the

27
<PAGE>

Prospectuses (or any amendment or Supplement thereto); (iii) there shall not
have been, since the respective dates as of which information is given in the
Registration Statement and the Prospectuses (or any amendment or supplement
thereto), except as may otherwise be stated in the Registration Statement and
Prospectuses (or any amendment or supplement thereto), any material adverse
change in the condition (financial or other), business, prospects, properties,
net worth or results of operations of the Company and the Subsidiaries taken as
a whole; and (iv) all the representations and warranties of the Company
contained in this Agreement shall be true and correct on and as of the date
hereof and on and as of the Closing Date as if made on and as of the Closing
Date, and you shall have received a certificate, dated the Closing Date and
signed by the chief executive officer and the chief financial officer of the
Company (or such other officers as are acceptable to you), to the effect set
forth in this Section 10(i) and in Section 10(j) hereof.

(j) The Company shall not have failed at or prior to the Closing Date
to have performed or complied with any of its agreements herein contained and
required to be performed or complied with by it hereunder at or prior to the
Closing Date.

(k) All the representations and warranties of the Selling
Stockholders contained in this Agreement shall be true and correct, on and as of
the date hereof and on and as of the Closing Date as if made on and as of the
Closing Date, and you shall have received a certificate, dated the Closing Date
and signed by or on behalf of each of the Selling Stockholders to the effect set
forth in this Section 10(k) and in Section 10(l) hereof.

(l) The Selling Stockholders shall not have failed at or prior to the
Closing Date to have performed or complied with any of their agreements
contained in this Agreement or the International Underwriting Agreement and
required to be performed or complied with by them at or prior to the Closing
Date.

(m) The Sellers shall have furnished or caused to be furnished to you
such further certificates and documents as you shall have reasonably requested.

(n) The Common Stock shall have been listed or approved for listing,
subject to notice of issuance, on the NASDAQ National Market.

(o) The closing under the International Underwriting Agreement shall
have occurred concurrently with the closing hereunder on the Closing Date.

All such opinions, certificates, letters and other documents will be
in compliance with the provisions hereof only if they are reasonably
satisfactory in form and substance to you and your counsel.

Any certificate or document signed by any officer of the Company
or any Attorney-in-Fact or any Selling Stockholder and delivered to you, as
Representatives of the U.S. Underwriters, or to counsel for the U.S.
Underwriters, shall be deemed a representation and

28
<PAGE>

warranty by the Company, the Selling Stockholders or the particular Selling
Stockholder, as the case may be, to each U.S. Underwriter as to the statements
made therein.

The several obligations of the U.S. Underwriters to purchase
Additional Shares hereunder are subject to the satisfaction on and as of the
Option Closing Date of the conditions set forth in this Section 10 (other than
paragraphs (j) and (k)), except that, if the Option Closing Date is other than
the Closing Date, the certificates, opinions and letters referred to in this
Section 10 shall be dated the Option Closing Date in question and the opinions
or letters called for by paragraphs (c), (d), (e) and (f) shall be revised to
reflect the sale of Additional Shares and the fact that all of the Additional
Shares will be sold by the Company and not the Selling Stockholders.

11. EXPENSES. The Company agrees to pay the following costs and
expenses and all other costs and expenses incident to the performance by the
Sellers of their obligations hereunder: (i) the preparation, printing or
reproduction, and filing with the Commission of the Registration Statement
(including financial statements and exhibits thereto), each Prepricing
Prospectus, the Prospectus, and each amendment or supplement to any of them;
(ii) the printing (or reproduction) and delivery (including postage, air freight
(or reproduction) and delivery (including postage, air freight charges and
charges for counting and packaging) of such copies of the Registration
Statement, each Prepricing Prospectus, the Prospectus, and all amendments or
supplements to any of them as may be reasonably requested for use in connection
with the offering and sale of the Shares; (iii) the preparation, printing,
authentication, issuance and delivery of certificates for the Shares, including
any stamp taxes in connection with the original issuance and sale of the Shares;
(iv) the registration of the Common Stock under the Exchange Act and the listing
of the Shares on the NASDAQ National Market; (v) the registration or
qualification of the Shares for offer and sale under the securities or Blue Sky
laws of the several states as provided in Section 5(g) hereof (including the
reasonable fees, expenses and disbursements of counsel for the Underwriters
relating to the preparation and delivery of the Blue Sky Memorandum and such
registration and qualification); (vi) the filing fees and the fees and expenses
of counsel for the Underwriters in connection with any filings required to be
made with the National Association of Securities Dealers, Inc.; (vii) the
transportation and other expenses incurred by or on behalf of representatives of
the Company in connection with presentations to prospective purchasers of the
Shares; and (viii) the fees and expenses of the Company's accountants and the
fees and expenses of counsel (including local and special counsel) for the
Company and the Selling Stockholders.

12. EFFECTIVE DATE OF AGREEMENT. This Agreement shall become
effective: (i) upon the execution and delivery hereof by the parties hereto; or
(ii) if, at the time this Agreement is executed and delivered, it is necessary
for the Registration Statement or a post-effective amendment thereto to be
declared effective before the offering of the Shares may commence, when
notification of the effectiveness of the Registration Statement or such post-
effective amendment has been released by the Commission. Until such time as
this Agreement shall have become effective, it may be terminated by the Company,
by notifying you, or by you, as Representatives of the several U.S.
Underwriters, by notifying the Company and the Selling Stockholders.

29
<PAGE>

If any one or more of the U.S. Underwriters shall fail or refuse to
purchase Shares which it or they are obligated to purchase hereunder on the
Closing Date, and the aggregate number of Shares which such defaulting U.S.
Underwriter or Underwriters are obligated but fail or refuse to purchase is not
more than one-tenth of the aggregate number of Shares which the U.S.
Underwriters are obligated to purchase on the Closing Date, each non-defaulting
U.S. Underwriter shall be obligated, severally, in the proportion which the
number of Firm Shares set forth opposite its name in Schedule II hereto bears to
the aggregate number of Firm Shares set forth opposite the names of all non-
defaulting U.S. Underwriters or in such other proportion as you may specify in
accordance with Section 20 of the Master Agreement Among Underwriters of Smith
Barney Inc., to purchase the Shares which such defaulting U.S. Underwriter or
Underwriters are obligated, but fail or refuse, to purchase. If any one or more
of the U.S. Underwriters shall fail or refuse to purchase Shares which it or
they are obligated to purchase on the Closing Date and the aggregate number of
Shares with respect to which such default occurs is more than one-tenth of the
aggregate number of Shares which the U.S. Underwriters are obligated to purchase
on the Closing Date and arrangements satisfactory to you and the Company for the
purchase of such Shares by one or more non-defaulting U.S. Underwriters or other
party or parties approved by you and the Company are not made within 36 hours
after such default, this Agreement will terminate without liability on the part
of any non-defaulting U.S. Underwriter or the Company. In any such case which
does not result in termination of this Agreement, either you or the Company
shall have the right to postpone the Closing Date, but in no event for longer
than seven days, in order that the required changes, if any, in the Registration
Statement and the Prospectus or any other documents or arrangements may be
effected. Any action taken under this paragraph shall not relieve any
defaulting U.S. Underwriter from liability in respect of any such default of any
such Underwriter under this Agreement. The term "U.S. Underwriter" as used in
this Agreement includes, for all purposes of this Agreement, any party not
listed in Schedule II hereto who, with your approval and the approval of the
Company, purchases Shares which a defaulting U.S. Underwriter is obligated, but
fails or refuses, to purchase.

Any notice under this Section 12 may be given by telegram, telecopy or
telephone but shall be subsequently confirmed by letter.

13. TERMINATION OF AGREEMENT. This Agreement shall be subject to
termination in the absolute discretion of the U.S. Underwriters by notice given
to the Company or any Selling Stockholder, if prior to the Closing Date or the
Option Closing Date (if different from the Closing Date and then only as to the
Additional Shares), as the case may be, (i) trading in securities generally on
the New York Stock Exchange, the American Stock Exchange or the NASDAQ National
Market shall have been suspended or materially limited, (ii) a general
moratorium on commercial banking activities shall have been declared by either
Federal or New York State authorities, or (iii) there shall have occurred any
outbreak or escalation of hostilities, declaration by the United States or
Bermuda of a national emergency or war or other domestic calamity or crisis the
effect of which on financial markets is such as to make it, in the judgment of
the U.S. Underwriters, impracticable or inadvisable to proceed with the offering
or delivery of the Shares at the offering price to the public set forth on the
cover page of the U.S. Prospectus or to enforce contracts for the resale of the
Shares by the U.S. Underwriters.

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<PAGE>

Notice of such termination may be given by telegram, telecopy or
telephone and shall be subsequently confirmed by letter.

14. INFORMATION FURNISHED BY THE U.S. UNDERWRITERS. The statements
set forth in the last paragraph on the cover page, the stabilization legend on
the inside front cover page, and the statements in the first, second, seventh,
eighth and twelfth paragraphs and the third sentence of the thirteenth paragraph
under the caption "Underwriting" in any U.S. Prepricing Prospectus and in the
U.S. Prospectus constitute the only information furnished by or on behalf of the
U.S. Underwriters through you as such information is referred to in Sections
7(b) and 9 hereof.

15. MISCELLANEOUS. Except as otherwise provided in Sections 5, 12
and 13 hereof, notice given pursuant to any provision of this Agreement shall be
in writing and shall be delivered (i) if to the Company or the Selling
Stockholders at the office of the Company at Wessex House, 45 Reid Street,
Hamilton HM 12, Bermuda, Attention: Secretary of the Company; or (ii) if to
you, as Representatives of the several U.S. Underwriters, care of Smith Barney
Inc., 388 Greenwich Street, New York, New York 10013, Attention: Manager,
Investment Banking Division.

This Agreement has been and is made solely for the benefit of the
several U.S. Underwriters, the Company, its directors and officers, the other
controlling persons referred to in Section 9 hereof and the Selling Stockholders
and their respective successors and assigns, to the extent provided herein, and
no other person shall acquire or have any right under or by virtue of this
Agreement. Neither the term "successor" nor the term "successors and assigns"
as used in this Agreement shall include a purchaser from any U.S. Underwriter of
any of the Shares in his status as such purchaser.

16. Applicable Law; Counterparts. This Agreement shall be governed
by and construed in accordance with the laws of the State of New York. This
Agreement may be signed in various counterparts which together constitute one
and the same instrument. If signed in counterparts, this Agreement shall not
become effective unless at least one counterpart hereof shall have been executed
and delivered on behalf of each party hereto.

17. SUBMISSION TO JURISDICTION; APPOINTMENT OF AGENTS FOR SERVICE;
CURRENCY INDEMNITY.

(a) To the fullest extent permitted by applicable law, each of the
Company and the Selling Stockholders irrevocably submits to the jurisdiction of
any Federal or State court located in the Borough of Manhattan in The City Of
New York, New York in any suit, action or proceeding based on or arising out of
or relating to this Agreement or any Shares, and irrevocably agrees that all
claims in respect of such suit or proceeding may be determined in any such
court. Each of the Company and the Selling Stockholders irrevocably waives, to
the fullest extent permitted by law, any objection which it may have to the
laying of the venue of any such suit, action or proceeding brought in an
inconvenient forum. Each of the Company and the Selling Stockholders agrees
that final judgment in any such suit, action or proceeding brought in such a
court shall be conclusive and binding upon the Company and the Selling
Stockholders and may be enforced in the courts of

31
<PAGE>

Bermuda (or any other courts to the jurisdiction of which the Company or any of
the Selling Stockholders is subject by suit upon such judgment, provided that
--------
service of process is effected upon the Company or the Selling Stockholders in
the manner specified herein or as otherwise permitted by law. Each of the
Company and the Selling Stockholders hereby irrevocably designates and appoints
CT Corporation System, 1633 Broadway- 23rd Floor, New York, New York (the
"Process Agent"), as the authorized agent of the Company and the Selling
Stockholders upon whom process may be served in any such suit or proceeding, it
being understood that the designation and appointment of the Process Agent as
such authorized agent shall become effective immediately without any further
action on the part of the Company or the Selling Stockholders. Each of the
Company and the Selling Stockholders represents to the U.S. Underwriters that it
has notified the Process Agent of such designation and appointment and that the
Process Agent has accepted the same in writing. Each of the Company and the
Selling Stockholders hereby irrevocably authorizes and directs the Process Agent
to accept such service. Each of the Company and the Selling Stockholders further
agrees that service of process upon the Process Agent and written notice of said
service to the Company, mailed by prepaid registered first class mail or
delivered to the Process Agent at its principal office, shall be deemed in every
respect effective service of process upon the Company or any of the Selling
Stockholders in any such suit or proceeding. Nothing herein shall affect the
right of the U.S. Underwriters or any person controlling the U.S. Underwriters
to serve process in any other matter permitted by law. Each of the Company and
the Selling Stockholders further agrees to take any and all action, including
the execution and filing of any and all such documents and instruments as may be
necessary to continue such designation and appointment of the Process Agent in
full force and effect so long as the Company or any of the Selling Stockholders
has any outstanding obligations under this Agreement, the Custody Agreement or
the Shares. To the extent that the Company or any of the Selling Stockholders
has or hereafter may acquire any immunity from jurisdiction of any court or from
any legal process (whether through service of note, attachment in aid of
execution, executor or otherwise) with respect to itself or its property, each
of the Company and the Selling Stockholders hereby irrevocably waives such
immunity in respect of its obligations under this Agreement, to the extent
permitted by law.

(b) The obligation of the parties to make payments hereunder for the
Shares is in U.S. dollars (the "Obligation Currency") and such obligation shall
not be discharged or satisfied by any tender or recovery pursuant to any
judgment expressed in or converted into any currency other than the Obligation
Currency or any other realization in such other currency, whether as proceeds of
set-off, security, guarantee, distributions, or otherwise, except to the extent
such tender, recovery or realization shall result in the effective receipt by
the party which is to receive such payment (as additional, separate and
independent obligation) for the amount (if any) by which such effective receipt
is less than the full amount of the Obligation Currency payable hereunder and
such obligation to indemnify shall not be affected by judgment being obtained
for any other sums due under this Agreement.

[U.S. Underwriting Agreement Signature Pages Follow]

32
<PAGE>

Please confirm that the foregoing correctly sets forth the agreement
among the Company, the Selling Stockholders and the several U.S. Underwriters.

Very truly yours,

Global Crossing Ltd.

By ........................
Name: Jack M. Scanlon
Title: Chief Executive Officer

Each of the Selling Stockholders
named in Schedule I hereto

By ...................
Attorney-in-Fact

By ...................
Attorney-in-Fact
Confirmed as of the date first
above mentioned on behalf of
themselves and the other several U.S.
Underwriters named in Schedule II
hereto.

Smith Barney Inc.
Merrill Lynch, Pierce, Fenner & Smith Incorporated
CIBC Oppenheimer Corp.
Deutsche Bank Securities Inc.
Goldman, Sachs & Co.
Morgan Stanley & Co. Incorporated

As Representatives of the Several U.S. Underwriters

By SMITH BARNEY INC.

By ............................
Managing Director

33
<PAGE>

SCHEDULE I

Global Crossing Ltd.

Firm Shares
- -----------

Number of
Selling Stockholders Firm Shares
-------------------- -----------

______________

Total........ ______________

Total........ _______________

34
<PAGE>

SCHEDULE II

Global Crossing Ltd.

Number of
Underwriter Firm Shares
----------- -----------

Smith Barney Inc................
Merrill Lynch, Pierce, Fenner &
Smith Incorporated.............
CIBC Oppenheimer Corp...........
Deutsche Bank Securities Inc....
Goldman, Sachs & Co.............
Morgan Stanley & Co.
Incorporated...................

___________

Total.......... ___________

35
<PAGE>

EXHIBIT A

FORM OF OPINION OF PRESTON GATES ELLIS & ROUVELAS MEEDS L.L.P.

[SEE ATTACHED]

36
<PAGE>

EXHIBIT B

FORM OF OPINION OF CLIFFORD CHANCE

[SEE ATTACHED]

<PAGE>

EXHIBIT 10.3
EXECUTION COPY

_____________________________________

PC-1

_____________________________________

PROJECT DEVELOPMENT

AND

CONSTRUCTION CONTRACT

BETWEEN

TYCO SUBMARINE SYSTEMS LTD.

AND

PACIFIC CROSSING LTD.

_____________________________________

DATED AS OF APRIL 21, 1998

_____________________________________
<PAGE>

TABLE OF CONTENTS

GENERAL TERMS AND CONDITIONS

Article PAGE
- ------- ----

1 Provision of System...................................... 1

2 Documents Forming the Entire Contract.................... 2

3 Definitions.............................................. 2

4 Contract Price........................................... 12

5 Terms of Payment by Purchaser............................ 16

6 Contract Variations...................................... 18

6A. Optional Upgrades........................................ 19

7 Responsibilities for Permits............................. 22

8 Route Survey............................................. 23

9 Acceptance............................................... 24

10 Warranty................................................. 28

11 Contractor Support....................................... 32

12 Purchaser's Obligations.................................. 32

13 Termination for Default.................................. 33

14 Termination for Convenience.............................. 35

15 Suspension............................................... 37

16 Title and Risk of Loss................................... 38

17 Force Majeure............................................ 38

18 Intellectual Property.................................... 39

19 Infringement............................................. 45

20 Safeguarding of Information and Technology............... 46

i
<PAGE>

Article PAGE
- ------- ----

21 Export Control........................................... 47

22 Liquidated Damages....................................... 47

23 Limitation of Liability/Indemnification.................. 48

24 Counterparts............................................. 50

25 Design and Performance Responsibility.................... 50

26 Product Changes.......................................... 50

27 Risk and Insurance....................................... 50

28 Plant and Work Rules..................................... 54

29 Right of Access.......................................... 54

30 Quality Assurance........................................ 55

31 Documentation............................................ 55

32 Training................................................. 55

33 Settlement of Disputes/Arbitration....................... 56

34 Applicable Law........................................... 58

35 Notices.................................................. 58

36 Publicity and Confidentiality............................ 59

37 Assignment; Subcontractors............................... 59

38 Relationship of the Parties.............................. 61

39 Successors Bound......................................... 61

40 Article Captions......................................... 61

41 Severability............................................. 61

42 *........................................................ 61

43 Survival of Obligations.................................. 61

44 Non-Waiver............................................... 62

* MATERIAL OMITTED AND SEPARATELY FILED WITH THE COMMISSION UNDER AN APPLICATION
FOR CONFIDENTIAL TREATMENT.

ii
<PAGE>

Article PAGE
- ------- ----

45 Language................................................. 62

46 Entire Agreement......................................... 62

EXHIBITS

Exhibit A..................................................*
Exhibit B..............................Consent and Agreement
Exhibit C.................................Opinion of Counsel
Exhibit D...................................Escrow Agreement
Exhibit E............................Approved Subcontractors
Exhibit F..............................Intellectual Property

* MATERIAL OMITTED AND SEPARATELY FILED WITH THE COMMISSION UNDER AN APPLICATION
FOR CONFIDENTIAL TREATMENT.

iii
<PAGE>

PROJECT DEVELOPMENT AND
CONSTRUCTION CONTRACT
BETWEEN
TYCO SUBMARINE SYSTEMS LTD. AND
PACIFIC CROSSING LTD.

This Project Development and Construction Contract ("Contract") is
made as of this 21st day of April 1998 between Tyco Submarine Systems Ltd., a
corporation organized and existing under the laws of the State of Delaware,
United States, ("TSSL" or "Contractor") and Pacific Crossing Ltd., a company
organized and existing under the laws of Bermuda (hereinafter referred to as
"Purchaser").

WHEREAS, Purchaser desires to establish a fiber optic submarine cable
system, to be known as the Pacific Crossing 1 Submarine Cable System
(hereinafter, and as more fully defined herein, the "System"), which will be
used to provide service between the United States mainland and Japan; and

WHEREAS, the System will consist of the following Segments:

Segment N: From Norma Beach, Washington, United States to Ajigaura,
Japan;

Segment W: From Ajigaura, Japan to Shima, Japan;

Segment S: From Shima, Japan to Toro Creek, California, United
States; and

Segment E: From Toro Creek, California, United States to Norma Beach,
Washington, United States; and

WHEREAS, Contractor is in the business of designing, constructing,
installing, supplying, delivering and manufacturing fiber optic submarine cable
systems and is familiar with the general business of the fiber optic submarine
cable system industry; and

WHEREAS, Purchaser seeks to purchase and own the System and wishes to
engage Contractor to perform the Work and Upgrade Work; and

WHEREAS, Contractor is willing to perform the Work and the Upgrade
Work on a turn-key, fixed-price basis in accordance with and subject to the
terms hereof.

NOW THEREFORE, IT HAS BEEN AGREED AS FOLLOWS

ARTICLE 1 PROVISION OF SYSTEM
- -----------------------------

In consideration of the Contract Price and the Upgrade Prices, the
Contractor agrees to undertake the Work and the Upgrade Work and to provide the
Purchaser with the
<PAGE>

System meeting the System Performance Requirements on or before the Scheduled
System RFS Date and the System Upgrades meeting the requirements of Article 6A,
all in accordance with the terms hereof.

ARTICLE 2 DOCUMENTS FORMING THE ENTIRE CONTRACT
- -----------------------------------------------

This Contract consists of these commercial Terms and Conditions,
Exhibits E and F hereto, and the following documents (in the form of
attachments, including appendices, attached hereto), which shall be read and
construed as part of the Contract:

. Technical Volume (includes Route Information), Appendix 6
. Plan of Work, Appendix 3, Upgrade Plan of Work, Appendix 3A
. Provisioning Schedule, Appendix 1, Upgrade Provisioning Schedule,
Appendix 1A
. Billing Schedule, Appendix 2, Upgrade Billing Schedule, Appendix 2A
. Invoice Format, Appendix 4, Form of Contractor's Certificate, Appendix
4A
. Progress Schedule, Appendix 5

In the event of any inconsistency between the Terms and Conditions and
the above listed documents, the Terms and Conditions shall prevail. The
Appendices listed above have no order of precedence.

ARTICLE 3 DEFINITIONS
- ---------------------

Definitions are as described in the specific Articles. Except as
otherwise defined the following definitions shall apply throughout the Contract:

AAA has the meaning set forth in Sub-Article 33(B).

ACCEPTANCE TESTING means (i) with respect to a Segment or the System,
the tests described in the Commissioning and Acceptance section of the
Technical Volume or developed pursuant to such section by mutual agreement
of the Parties (with 15 days prior notice to the Independent Engineer) and
reasonably designed to verify that such Segment or the System meets the
applicable Performance Requirements and (ii) with respect to any System
Upgrade, the tests described in the Commissioning and Acceptance section of
the Technical Volume or developed pursuant to such section by mutual
agreement of the Parties (with 15 days notice to the Independent Engineer)
and reasonably designed to verify that the System Upgrade meets the
applicable Performance Requirements.

ACCESS RIGHTS means all ownership, easement and/or other property
rights, from both private and governmental entities, both on land and below
the surface of the water (including, without limitation, agreements to use
conduits, install manholes and to lease space in cable stations) necessary
to access, use and occupy cable stations and the sites for cable stations
(including, without limitation, to land and install the
<PAGE>

submarine cable and related equipment and to bring such cable from the
ocean to the cable stations) in order for the Purchaser to own, operate and
maintain the System.

ACTUAL KNOWLEDGE means the actual knowledge of any executives with
management responsibility for the Contract.

ASSIGNMENT has the meaning set forth in Sub-Article 37(A).

BANKRUPTCY EVENT means an event specified in Sub-Article 13(A)(3) or
13(A)(4) with Contractor as the "other Party".

BILLING SCHEDULE means a billing schedule attached hereto as Appendix
2.

CERTIFICATE OF COMMERCIAL ACCEPTANCE means a certificate issued by
Purchaser in accordance with Sub-Article 9(D) to Contractor certifying that
a Segment, the System or a System Upgrade is Ready for Commercial
Acceptance.

CERTIFICATE OF FINAL ACCEPTANCE means a certificate issued by
Purchaser in accordance with Sub-Article 9(E) to Contractor certifying that
the System or a System Upgrade is Ready for Final Acceptance.

CERTIFICATE OF PROVISIONAL ACCEPTANCE means a certificate issued by
Purchaser in accordance with Sub-Article 9(C) to Contractor certifying that
a Segment, the System or a System Upgrade is Ready for Provisional
Acceptance.

CIF means cost, insurance and freight as defined in the International
Chamber of Commerce, Guide to Incoterms (1990).

COMMISSIONING REPORT has the meaning set forth in the Commissioning
and Acceptance section of the Technical Volume.

CONFIDENTIAL INFORMATION has the meaning set forth in Sub-Article
36(B).

CONSENT means a Consent and Agreement to be entered into among
Contractor, Purchaser and the financing parties described in Sub-Article
37(C) and substantially in the form of Exhibit B hereto, with such changes
therein as made pursuant to Sub-Article 37(C) hereto.

CONTRACT means this agreement, specifically consisting of the
documents described in Article 2, and shall be deemed to include any
amendments thereto or Contract Variations pursuant to Article 6 (Contract
Variations).

CONTRACTOR means the entity that has executed this Contract as
Contractor (TSSL) and that will be responsible for the performance of the
Work (and if applicable, Upgrade Work) under this Contract and shall
include its permitted successors and/or assigns.
<PAGE>

CONTRACT PRICE means the Initial Contract Price, plus any variations
pursuant to Article 6 (Contract Variations), Taxes as set forth in Sub-
Article 4(B) and other adjustments to the Contract Price provided for in
this Contract.

CONTRACT TAXES has the meaning set forth in Sub-Article 4(B)(1).

CONTRACT VARIATION has the meaning set forth in Sub-Article 6(A).

DATE OF COMMERCIAL ACCEPTANCE, PROVISIONAL ACCEPTANCE OR FINAL
ACCEPTANCE means the date that Purchaser receives a Commissioning Report or
an Upgrade Commissioning Report, as the case may be, demonstrating that a
Segment or the System or a System Upgrade, as the case may be, is Ready for
Commercial Acceptance, Ready for Provisional Acceptance or Ready for Final
Acceptance in accordance with Article 9 (Acceptance).

DDP means delivered duty paid as defined in the International Chamber
of Commerce, Guide to Incoterms (1990).

DEFAULT means an Event of Default or any event, condition or
occurrence which with the giving of notice or passage of time or both would
be an Event of Default.

DELIVERABLE SOFTWARE has the meaning set forth in Sub-Article 18(C).

DELIVERABLE TECHNICAL MATERIAL has the meaning set forth in Sub-
Article 18(B).

DISPUTE ACCOUNT means the Dispute Account to be created under the
Escrow Agreement.

ESCROW AGENT means Citibank, N.A., in its capacity as escrow agent
under the Escrow Agreement, and its successors in such capacity.

ESCROW AGREEMENT means that Escrow Agreement to be entered into, in
the event of a dispute as described in Sub-Article 5(C)(5), by and among
the Contractor, the Purchaser and the Escrow Agent, substantially in the
form of Exhibit D hereto, with such changes therein as are reasonably
requested by the Escrow Agent, as amended modified or supplemented from
time to time.

EVENT OF DEFAULT has the meaning set forth in Sub-Article 13(A).

EXCLUDED TAX means (i) any franchise, excess profits, net worth,
capital or capital gains Tax, as well as any Tax on doing business or
imposed on net or gross income or receipts (including minimum and
alternative minimum Taxes measured by any items of Tax preference), but in
each case excluding Taxes that are or are in the nature of sales, use,
excise, license, stamp, rental, ad valorem, value added or property
<PAGE>

Taxes; (ii) any Taxes imposed by a jurisdiction other than one in which (a)
the Contractor is or is treated as engaged in activities contemplated by or
in fulfillment of the Contract or (b) the Purchaser or its affiliates has a
nexus to such jurisdiction and the Tax imposed is attributable to that
nexus, (iii) Taxes imposed on the Contractor as a result of Contractor's
gross negligence or willful misconduct and (iv) any import duty, other
import related charges, sales or use tax, VAT or property tax imposed by
the United States or any political subdivision thereof or Taxing authority
therein in respect of Supplies brought into the United States for testing,
modification or other similar purposes prior to being installed or used
outside the United States.

EXPEDITED UPGRADE has the meaning set forth in Sub-Article 6A(L).

FINAL COMMISSIONING REPORT has the meaning set forth in Section 7,
Commissioning and Acceptance section of the Technical Volume.

FINAL SURVEY REPORT means the final survey report described in Section
5 of the Marine Installation section of the Technical Volume.

FOB means free on board as defined in the International Chamber of
Commerce, Guide to Incoterms (1990).

FORCE MAJEURE has the meaning set forth in Sub-Article 17(A).

INDEPENDENT ENGINEER means Conexart Technologies, Inc. or a similarly
qualified successor in the capacity as the engineer to the financing
sources specified in Sub-Article 37(C) who has agreed to be bound by the
confidentiality provisions of this Contract and who is not affiliated with
a competitor of Contractor.

INFORMATION has the meaning set forth in Sub-Article 20(A).

INITIAL CONTRACT PRICE has the meaning set forth in Sub-Article
4(A)(1).

INITIAL UPGRADE PRICE has the meaning set forth in Sub-Article
4(A)(2).

INTELLECTUAL PROPERTY has the meaning set forth in Sub-Article 18(A).

LAWS means any laws, ordinances, regulations, rules, orders,
proclamations, requirements of governmental authorities or treaties.

MANUFACTURING MATERIALS has the meaning set forth in Sub-Article
13(B).

* MATERIAL OMITTED AND SEPARATELY FILED WITH THE COMMISSION UNDER AN APPLICATION
FOR CONFIDENTIAL TREATMENT.

<PAGE>

MILESTONES means the milestones set forth in the Progress Schedule
attached as Appendix 5 to this Contract.

NEXUS TAX means any Tax imposed by way of withholding in respect of or
in lieu of an Excluded Tax, but only to the extent such Tax would not have
been imposed but for the nexus (other than as a consequence of the
activities of the Contractor) of the Purchaser or its affiliate to the
jurisdiction imposing the Tax.

NON-SHIP COSTS has the meaning set forth in Sub-Article 10(A)(2).

NOTICE OF TERMINATION has the meaning set forth in Sub-Article 14(A).

OPTION PERIOD has the meaning set forth in Sub-Article 6A(B).

PARTY(IES) means either of the Purchaser and/or the Contractor, as
appropriate.

PERFORMANCE REQUIREMENTS means (i) with respect to a Segment or the
System, the applicable System Performance Requirements set forth or to be
developed by mutual agreement pursuant to the System Performance and
Availability section of the Technical Volume, (ii) with respect to any
System Upgrade, the applicable System Performance Requirements set forth in
or to be developed by mutual agreement pursuant to the Technical Volume or
(iii) in each case, such other Segment, System or System Upgrade
performance levels as mutually agreed by the Parties.

PERMITS means all Access Rights, permits, pipeline and cable crossing
agreements, approvals, "no objections", permissions-in-principle,
authorizations, consents, customs clearances, registrations, certificates,
rights-of-way, certificates of occupancy, licenses, including without
limitation, landing licenses, orders, vessel and crew authorizations/visas,
permission for the operation of navigational aids and radio systems and
similar authorizations necessary to complete the Work and operate and
maintain the System (other than any of the foregoing (i) relating to the
ownership, operation and maintenance of the System and not necessary until
after the System is Ready for Final Acceptance, (ii) which is or would be
needed by Purchaser to engage in any business outside the business of
developing, owning and operating a submarine cable system or (iii) which is
or would be needed at any time by any purchaser or lessee of capacity on
the System).

PROVISIONING SCHEDULE means the price schedule attached hereto in
Appendix 1.

PURCHASER means Pacific Crossing Ltd. and shall include its permitted
successors and assigns.

READY FOR COMMERCIAL ACCEPTANCE means

(i) for any Segment, that
<PAGE>

(a) if the System is not at the same time also Ready for
Commercial Acceptance, the Purchaser has consented, in its sole
discretion, to accept such Segment as Ready for Commercial
Acceptance,

(b) such Segment has the ability to carry commercial traffic
between the two landing points of such Segment meeting
performance criteria of ITU-T G.826 as defined in the System
Performance section of the Technical Volume and has line
monitoring and protection switching capability,

(c) Contractor has tested and provided for STM-1
interconnectivity capability (or such other interconnectivity
capability as may be mutually agreed) to the Segment terminal
equipment according to ITU-T G.826,

(d) Contractor has substantially performed its obligations
under Article 18 (Intellectual Property) then required to be
performed by it, and

(e) all Permits are obtained for such Segment, and

(ii) for the System,

(a) that the System has the ability to carry commercial
traffic throughout the System (operating at 20 Gb/s per fiber
pair) meeting performance criteria of ITU-T G.826 as defined in
the System Performance section of the Technical Volume with self
healing ring protection capability and per Segment protection
capability, has line monitoring and per Segment protection
switching capability and has network management capability,

(b) Contractor has tested and provided for STM-1
interconnectivity capability (or such other interconnectivity
capability as may be mutually agreed) to the System terminal
equipment according to ITU-T G.826,

(c) Contractor has substantially performed its obligations
under Article 18 (Intellectual Property) then required to be
performed by it and

(d) all Permits are obtained for the System and

(iii) for any System Upgrade, the System is Ready for Commercial
Acceptance at the capacity specified for such System Upgrade.
<PAGE>

READY FOR FINAL ACCEPTANCE means

(i) for the System, that

(a) (I) the System has successfully and continuously
(other than by reason of Force Majeure in which case the test
period shall be extended for a time period equal to the time
period of such Force Majeure) functioned in compliance with the
System Performance Requirements during the period of ninety (90)
consecutive days after the Date of Provisional Acceptance or

(II) if the System shall have failed to meet the System
Performance Requirements at any time during such period (other
than by reason of Force Majeure), the Contractor has corrected
such failure and the System has successfully and continuously
(other than by reason of Force Majeure in which case the test
period shall be extended for a time period equal to the time
period of such Force Majeure) functioned in compliance with the
System Performance Requirements for such additional period of
time not to exceed ninety (90) days (and not to end prior to the
date 90 days after the Date of Provisional Acceptance) as
reasonably determined by the Independent Engineer as being
sufficient to confirm that such failure has been corrected and
that no other failures are likely to appear and

(b) all deficiencies noted in the Certificate of Provisional
Acceptance have been corrected (other than minor deficiencies
which will not affect the operation of the System, in respect of
which an equitable adjustment to the Contract Price will be made)
and

(ii) for any System Upgrade, that

(a) (I) the System Upgrade has successfully functioned in
compliance with the System Performance Requirements during the
period of ninety (90) days after the Date of Provisional
Acceptance of the System Upgrade or (II) if the System Upgrade
shall have failed to meet the System Performance Requirements
during such period, the Contractor has corrected such failure and
the System Upgrade has successfully functioned in compliance with
the System Performance Requirements for such additional period of
time not to exceed ninety (90) days as reasonably determined by
the Independent Engineer as sufficient to confirm that such
failure has been corrected and
<PAGE>

READY FOR PROVISIONAL ACCEPTANCE means

(i) with respect to any Segment,

(a) in the case of all Segments other than Segment S, if the
System is not, at the same time, also Ready for Provisional
Acceptance, the Purchaser has consented, in its sole discretion,
to accept such segment as Ready for Provisional Acceptance,

(b) such Segment is complete in all material respects (and
in any event is Ready for Commercial Acceptance),

(c) the results of Acceptance Testing of such Segment
demonstrate that such Segment has satisfied the System
Performance Requirements,

(d) Contractor has substantially performed its obligations
under Article 18 (Intellectual Property) then required to be
performed by it,

(e) all Permits are obtained for such Segment, and

(ii) with respect to the System, the System is complete in all
material respects (and in any event is Ready for Commercial
Acceptance), all Segments are Ready for Provisional Acceptance with
self-healing ring protection capability and per Segment protection
capability and line monitoring and network management capability and

(iii) with respect to any System Upgrade, the results of
Acceptance Testing of such System Upgrade demonstrate that such System
Upgrade is complete in all material respects and is sufficient to
realize the Performance Requirements.

REPRESENTATIVES has the meaning set forth in Article 36(B).

RETAINAGE means an amount equal to *% of the Initial Contract Price.

RETESTING has the meaning set forth in Sub-Article 9(B)(3).

* MATERIAL OMITTED AND SEPARATELY FILED WITH THE COMMISSION UNDER AN APPLICATION
FOR CONFIDENTIAL TREATMENT.
<PAGE>

ROUTE SURVEY means the route survey described in the Marine section of the
Technical Volume.

SCHEDULED SEGMENT S RFS DATE has the meaning set forth in Sub-Article
9(A).

SCHEDULED SYSTEM RFS DATE has the meaning set forth in Sub-Article
9(A).

SCHEDULED UPGRADE DATE means for any System Upgrade, the date by which
the Contractor agrees such System Upgrade will be Ready for Provisional
Acceptance pursuant to Sub-Article 6A(K) hereof.

SEGMENT means Segment N, Segment S, Segment E or Segment W, as the
case may be.

SEGMENT E means the Segment of the System from Toro Creek, California,
United States to Norma Beach, Washington, United States and landing in
locations capable of interconnecting with major telecommunications
carriers.

SEGMENT N means the Segment of the System from Norma Beach,
Washington, United States to Ajigaura, Japan and landing in locations
capable of interconnecting with major telecommunications carriers.

SEGMENT S means the Segment of the System from Shima, Japan to Toro
Creek, California, United States and landing in locations capable of
interconnecting with major telecommunications carriers.

SEGMENT W means the Segment of the System from Ajigaura, Japan to
Shima, Japan and landing in locations capable of interconnecting with major
telecommunications carriers.

SHIP COSTS has the meaning set forth in Sub-Article 10(A)(2).

SHIP PERIOD has the meaning set forth in Sub-Article 10(A).

SUPPLIES means any and all materials, plant, machinery, equipment,
hardware and items supplied by the Contractor under this Contract.

SUSPENSION means a suspension in pursuant to Sub-Article 15(A) or
15(B).

SYSTEM means the four fiber pair submarine cable system consisting of
Segments N, S, E and W (at a per fiber pair capacity of * at the Date
of Commercial Acceptance or the Date of Provisional Acceptance, as the case
may be, of the System, with each Segment having the capability of being
upgraded to * per fiber pair at the Date of Provisional Acceptance),
including the cable stations, as more fully described in the System
Description section of the Technical Volume.

* MATERIAL OMITTED AND SEPARATELY FILED WITH THE COMMISSION UNDER AN APPLICATION
FOR CONFIDENTIAL TREATMENT.
<PAGE>

SYSTEM PERFORMANCE REQUIREMENTS has the meaning set forth in the
System Description section of the Technical Volume.

SYSTEM UPGRADE has the meaning set forth in Sub-Article 6A(A).

TAX means any tax, duty, levy, charge or custom (including, without
limitation, any sales or use tax, VAT or octroi duty relating to the
Contract items and fiscal stamps connected with Contract legalization)
imposed or collected by any taxing authority or agency (domestic or
foreign).

TECHNICAL VOLUME means the Technical Volume attached hereto as
Appendix 6.

TRANSFEREE means any entity to which purchaser assigns rights
hereunder pursuant to Sub-Article 37(D) hereof.

UPGRADE BILLING SCHEDULE means the billing schedule attached hereto as
Appendix 2A.

UPGRADE COMMISSIONING REPORT has the meaning set forth in the
Commissioning and Acceptance section of the Technical Volume.

UPGRADE PERIOD has the meaning set forth in Sub-Article 6A(E).

UPGRADE PLAN OF WORK means the plan of work attached hereto as
Appendix 3A.

UPGRADE PRICE means, for any System Upgrade, the Initial Upgrade Price
for such System Upgrade, plus any variations pursuant to Article 6
(Contract Variations), Taxes as set forth in Sub-Article 4(B) and other
adjustments to such Upgrade Price provided for in this Contract.

UPGRADE PROVISIONING SCHEDULE means the provisioning schedule attached
hereto as Appendix 1A.

UPGRADE WARRANTY PERIOD has the meaning set forth in Sub-Article
10(A).

UPGRADE WORK means the activities and services to be performed or
provided by Contractor under Article 6A (Optional Upgrades).

* MATERIAL OMITTED AND SEPARATELY FILED WITH THE COMMISSION UNDER AN APPLICATION
FOR CONFIDENTIAL TREATMENT.
<PAGE>

WARRANTY PERIOD has the meaning set forth in Sub-Article 10(A).

WORK means all activities and services (other than the activities and
services specified in this Contract to be provided by Purchaser) necessary
to be performed or provided in developing, planning, designing,
manufacturing, constructing, delivering, installing and testing the System,
until the System is Ready for Final Acceptance, including without
limitation, designating, coordinating, obtaining and paying for on behalf
of Purchaser the Access Rights and obtaining all Permits except landing
licenses. Whether or not used in conjunction with the term "Supplies", the
term "Work" shall always be deemed to include the provision of the relevant
Supplies, unless the context requires otherwise.

YEAR 2000 COMPLIANT means, when used with respect to any software or
materials, that such software or materials will operate accurately and,
without interruption, accept, possess and in all manner retain full
functionality when referring to, or involving, any year or date in the
twentieth or twenty-first centuries.

ARTICLE 4 CONTRACT PRICE
- ------------------------

A. Contract Price

1. The initial Contract Price for the Work, in United States Dollars
(US$) is a fee of * (the "Initial Contract Price") which includes
a fixed component of * (the "Fixed Component") and a variable
component of * (which is subject to adjustment to correspond to
the actual cost (including out-of-pocket fees and expenses)
incurred by Contractor in obtaining land in Japan on which two
cable stations, and any parking lots thereto, are built pursuant
to Sub-Article 6(D) (the "Variable Component"). The Initial
Contract Price does not include the cost of optional upgrades
which are described in Article 6A (Optional Upgrades), any
contract variations as provided for in Article 6 (Contract
Variations), or any Taxes. The Fixed Component of the Initial
Contract Price includes all costs and expenses incurred in
obtaining all Permits (including Access Rights) including those
incurred with respect to cable stations (excluding the cost of
acquiring land in Japan on which the two cable stations, and any
parking lots thereto, are built pursuant to Sub-Article 6(D)).
The Fixed Component of the Initial Contract Price includes all
the Work except for the Work described in the Variable Component.
The Fixed Component includes all charges for CIF.

2. The Initial Upgrade Price for any Upgrade Work, in United States
Dollars (US$) is the fixed fee set forth in Appendix 2A (the
"Initial Upgrade Price"). No Initial Upgrade Price includes the
cost of any contract variations as provided for in Article 6
(Contract Variations) or any Taxes.

* MATERIAL OMITTED AND SEPARATELY FILED WITH THE COMMISSION UNDER AN APPLICATION
FOR CONFIDENTIAL TREATMENT.
<PAGE>

3. The Provisioning Schedule sets forth the Contractor's estimate of
the breakdown of the Initial Contract Price among various aspects
of the Work. If the actual cost of any aspect of the Work is
greater or less than that set forth in the Provisioning Schedule,
such fact shall not cause any change in the Initial Contract
Price, except for the Variable Component.

4. Without the prior written consent of the Purchaser, which consent
shall not be unreasonably withheld or delayed, the Contractor
shall not arrange for any

(a) Access Right which requires payments to be made by the
Purchaser or made after the System is Ready for Provisional
Acceptance or

(b) Permit which requires aggregate payments in excess of
* to be made by Purchaser or made after the System is Ready
for Provisional Acceptance.

B. Taxes, Levies and Duties

1. The Initial Contract Price and each Initial Upgrade Price, as
stated in Sub-Article 4(A) above, excludes any Tax. The Contract
Price and each Upgrade Price shall without duplication be
adjusted for any Tax imposed on or in connection with this
Contract (including, without limitation, the execution and
delivery of this Contract, the Work, the Upgrade Work and the
Supplies, but excluding any Excluded Taxes) (any such Taxes,
other than Excluded Taxes, are hereinafter referred to as
"Contract Taxes"). Contractor has provided a good faith estimate
of the Contract Taxes payable by the Purchaser; it being
understood that the Contractor shall have no liability under this
Contract or otherwise to the Purchaser for any errors or
omissions in such estimate or any losses arising therefrom. The
Contractor shall be responsible for any Excluded Tax that might
be incurred by the Contractor as well as any Tax described in
clause (iv) of the definition of Excluded Tax.

2. The Purchaser will be ultimately responsible for the payment of
all Contract Taxes (including, without limitation, Contract Taxes
that are VAT, octroi duties relating to Contract items and fiscal
stamps, etc. connected with Contract legalizations to the
authorities in their countries). In the case of any Contract
Taxes paid by the Contractor, the Contractor shall submit payment
on the Purchaser's behalf and Contractor will be reimbursed by
the Purchaser in accordance with Article 5 (Terms of Payment by
Purchaser).

* MATERIAL OMITTED AND SEPARATELY FILED WITH THE COMMISSION UNDER AN APPLICATION
FOR CONFIDENTIAL TREATMENT.
<PAGE>

3. The Contractor agrees to use reasonable efforts including,
without limitation, by registering for VAT and any applicable
sales Taxes in any country, state or other jurisdiction where
legally required, to cooperate with and assist Purchaser in its
efforts (i) to have Supplies which are the subject of this
Contract made exempt from Contract Taxes, whether in the
manufacture of the Supplies or related to the importation or
location or installation of the Supplies, (ii) to request
revisions, drawbacks, remissions, reclassifications or the like
to the jurisdictions identified by the Purchaser; or (iii) to
reduce or eliminate Contract Taxes (including the provision of
applicable certifications and forms) and to obtain any available
refunds of Contract Taxes, provided that the Contractor shall not
--------
be required to act other than in accordance with the relevant
Laws then in force. The Purchaser shall reimburse the Contractor,
in accordance with Article 5, for any reasonable costs (including
the reasonable fees and expenses of legal counsel, accountants
and other advisors) incurred by the Contractor under this Sub-
Article 4(B)(3) provided that Purchaser was notified and has
--------
consented to the incurrence of such costs, fees and expenses.
Contractor shall not be required to cooperate with and assist
Purchaser in its efforts under this Sub-Article 4(B)(3) or to
take any action hereunder which in the Contractor's good faith
judgment would incur any costs or if in Contractor's good faith
judgment it would be advisable to obtain the advice of counsel,
accountants or other advisors prior to cooperating with or
assisting purchaser or taking any action, unless in each case,
Purchaser has agreed to reimburse Contractor under the foregoing
proviso.

4. Prior to the Date of Provisional Acceptance with respect to the
System or any System Upgrade, the Contractor shall provide
evidence of having made all payments for Taxes included in the
Contract Price or Upgrade Price or described in clause (iv) of
the definition of Excluded Taxes, other than VAT due on payments
of the Contract Price or Upgrade Price made on or after the Date
of Provisional Acceptance of the System or System Upgrade, which
evidence shall be provided within sixty (60) days of the date of
each such payment.

5. As part of Work or any Upgrade Work, the Contractor shall obtain
at its expense, on Purchaser's behalf, any import license or
other official authorization and carry out all customs
formalities necessary for the importation or exportation of goods
in connection with such Work or Upgrade Work. The Purchaser
agrees to be the Importer or Exporter of Record or designate an
Importer or Exporter of Record/Consignee on its behalf. Purchaser
must provide a Letter of Authorization from any third party
designate stating it agrees to be the Importer or Exporter of
Record on Purchaser's behalf and identify the name and address of
the designated Importer or Exporter of Record.
<PAGE>

6. The Supplies to be installed or held on land shall be delivered
to the agreed point at the named place of destination and shall
be consigned to the Purchaser.

C. Withholding Tax

1. If withholding for any Tax is required in respect of any payment
to the Contractor, the Purchaser shall (i) withhold the
appropriate amount from such payment, (ii) pay such amount to the
relevant authorities in accordance with the applicable Laws and
(iii) in the case of any such withholding in respect of a
Contract Tax or a Nexus Tax and subject to the Contractor's
satisfying the obligations set forth in the last sentence of this
Sub-Article 4(C)(1), pay the Contractor an additional amount such
that the net amount received by the Contractor is the amount the
Contractor would have received in the absence of such
withholding. In such a case, the Purchaser shall provide to the
Contractor, as soon as reasonably practicable, a certified copy
of an official tax receipt for any Tax which is retained from any
payment due to the Contractor or for any Tax which is paid on
behalf of the Contractor. All such receipts shall be in the name
of the Contractor. The Contractor agrees to complete accurately
and timely provide to the Purchaser or, if required, to the
applicable Taxing authority, such forms, certifications or other
documents as may be requested in timely manner by Purchaser, in
order to allow it to make payments to the Contractor without any
deduction or withholding on account of withholding Taxes (or at a
reduced rate thereof) or to receive a refund of any amounts
deducted or withheld on account of withholding Taxes.

2. If the Contractor shall become aware that it is entitled to
receive a refund or credit from a relevant taxing or governmental
authority in respect of a Contract Tax or Nexus Tax as to which
the Purchaser has paid an additional amount pursuant to Sub-
Article 4(C)(1) above, the Contractor shall promptly notify the
Purchaser of the availability of such refund or credit and shall,
within 30 days after receipt of a request by the Purchaser
(whether as a result of notification that it has made to the
Purchaser or otherwise), make a claim to such taxing or
governmental authority for such refund or credit at the
Purchaser's expense. If the Contractor receives a refund or
credit in respect of a Contract or Nexus Tax as to which the
Purchaser has paid an additional amount pursuant to Sub-Article
4(C)(1) above, or if, as a result of the Purchaser's payment of
such additional amounts, the Contractor or any other member of an
affiliated group, as defined in section 1504(a) of the Code, of
which the Contractor is a member, receives a credit against Taxes
imposed on its income or franchise taxes imposed on it by the
country under the laws of which it is organized or any political
subdivision thereof, the Contractor shall promptly notify the
Purchaser
<PAGE>

of such refund or credit and shall within 30 days from the date
of receipt of such refund or benefit of such credit pay over the
amount of such refund or benefit of such credit (including any
interest paid or credited by the relevant taxing or governmental
authority with respect to such refund or credit) to the Purchaser
(but only to the extent of the additional payments made by the
Purchaser under Sub-Article 4(C)(1) above with respect to the
Contract or Nexus Tax giving rise to such refund or credit), net
of all out-of-pocket expenses of the Contractor; provided,
--------
however, that the Purchaser, upon the request of the Contractor
-------
agrees to repay the amount paid over to the Purchaser (plus
penalties, interest or other charges due to the appropriate
authorities in connection therewith) to the Contractor in the
event the Contractor is required to repay such refund or credit
to such relevant authority.

ARTICLE 5 TERMS OF PAYMENT BY PURCHASER
- ---------------------------------------

A. General Conditions of Payment

1. All payments shall be made and all invoices shall be rendered in
US Dollars (US$). The Purchaser shall be responsible for and
shall pay all costs and fees for payment, as well as the banking
and wiring costs. All banking documents and correspondence must
be in English.

B. Invoice Procedures

1. All invoices for Work shall be submitted according to the Billing
Schedule, provided, that at the time of any such Invoice the
--------
relevant Milestones have been achieved. All invoices for Work
shall have a certificate addressed to Purchaser in the form of
Appendix 4A attached.

2. Any Contract Variations shall be invoiced and paid in accordance
with the terms of the Contract Variation as specified in Article
6 (Contract Variations).

3. Invoices for Upgrade Work shall be submitted according to the
Upgrade Billing Schedule and shall be paid in accordance with
this Article 5.

4. Invoices for amounts not described in Sub-Sections 1-3 above,
which may become payable hereunder shall be submitted after
applicable costs have been incurred or such other time as may be
specified in this Contract. Such invoices shall be accompanied by
a certificate of the Contractor explaining such amount and
certifying that it is payable.

5. The Contractor shall render all invoices to the following address
or facsimile number:
<PAGE>

Pacific Crossing Ltd.
Wessex House
45 Reid Street
Hamilton HM12
Bermuda
Facsimile: 441-296-6749/8606
Attn: Cameron Adderly

with a copy to

Conexart Technologies, Inc.
124 de Charante
Saint Lambert
Quebec, Canada
J4S 1K3
Facsimile: 514-466-1093
Attn: Mr. Martin Fournier

C. Payment Procedures

1. The Purchaser shall pay the Contractor, and the Contractor shall
accept payment, in accordance with this Article 5 (Terms of
Payment by Purchaser).

2. Purchaser agrees to pay an initial payment to Contractor in the
amount of *. Within three business days of the time this Contract
is signed, the first portion of the initial payment, in the
amount of *, shall be paid by Purchaser to Contractor. Failure to
receive this payment shall entitle Contractor to immediately
suspend Work hereunder. The second portion of the initial
payment, in the amount of *, shall be paid by Purchaser to
Contractor on June 30, 1998.

3. Invoices given to the Purchaser (and the Independent Engineer) on
or before the last day of any month shall, subject to Sub-Article
5(C)(5) below, be due and payable on the last day of the next
month or such other time as may be specified in this Contract;

provided that invoices given to Purchaser on or before April 30,
--------
1998 shall be due and payable no earlier than June 30, 1998.

4. Invoices not paid when due shall accrue late payment charges from
the day, following the day, on which payment was due until the
day on which it is paid. Invoices for such extended payment
charges shall not be issued for an amount less than U.S. $1,000.
Extended payment charges shall be computed at the rate of one
percent (1%) per month.

* MATERIAL OMITTED AND SEPARATELY FILED WITH THE COMMISSION UNDER AN APPLICATION
FOR CONFIDENTIAL TREATMENT.
<PAGE>

5. In the event that the Purchaser has an objection to any invoice
or other payment obligation or any amount owing by Contractor to
Purchaser shall not have been paid when due, the Purchaser shall
promptly notify the Contractor of such objection and such amount,
and the Purchaser and Contractor shall make every reasonable
effort to settle promptly the dispute concerning the payment(s)
in question. In the event such dispute cannot be settled, the
Purchaser will have the right to withhold payment of the disputed
amount(s) (or withhold from the invoice amount a sum equal to the
amount purportedly owing by Contractor) so long as it deposits,
in full, such disputed amount(s) into the Dispute Account.

(a) Provided such disputed amount is placed into the Dispute
Account in a timely manner, the Purchaser shall not be
deemed to be in breach of or in default for failing to pay
Contractor.

(b) The Escrow Agent will distribute the disputed amount in
accordance with the terms of the Escrow Agreement.

(c) In addition, the prevailing Party shall be entitled to
receive from the Dispute Account an amount equal to the
interest earned by the Escrow Agent on the distributed,
disputed amount, which shall be distributed by the Escrow
Agent under clause (b) above.

The Contractor and the Purchaser will share equally the costs and
expenses of the Escrow Agent.

The Contractor and the Purchaser will execute and deliver an
Escrow Agreement substantially in the form of Exhibit D hereto,
with such changes therein as the Escrow Agreement may reasonably
request.

6. The Purchaser shall make timely payments for that portion of the
invoice not in dispute in accordance with Sub-Article 5(C) or
such payments will be assessed extended payment charges as set
forth in Sub-Article 5(C)(4). Pending resolution of the dispute,
the Purchaser may not withhold payment (unless also subject to
dispute) on any other invoice concerning different goods and/or
services submitted by Contractor.

ARTICLE 6 CONTRACT VARIATIONS
- -----------------------------

A. Either Party may request, during construction of the System or any
System Upgrade, by written order, a contract variation requiring additions or
alterations to, deviations or deductions from the System or System Upgrade
("Contract Variation"). If the other Party consents, in its sole discretion,
this change will be formalized as an amendment to this Contract by a Contract
Variation; provided, that the Contractor will not unreasonably withhold
--------
<PAGE>

its consent to a Contract Variation requested by the Purchaser; and provided
--------
further, that Purchaser will not unreasonably withhold its consent to a Contract
- -------
Variation requested by the Contractor so long as such Contract Variation does
not affect the Contract Price, any Upgrade Price, the Scheduled System RFS Date,
the Scheduled Segment S RFS Date, any Scheduled Upgrade Date, any warranties or
the Performance Standards.

B. A Contract Variation shall not become effective unless and until the
price adjustment, the terms and schedule of payment and the extension of time
and all other terms have been mutually agreed upon by the Parties (and the
Parties shall act reasonably and in good faith in connection with all such
terms) and such Contract Variation is signed by an authorized representative of
each Party. Each Contract Variation shall be incorporated as an amendment to the
Contract.

C. Contractor may seek a Contract Variation for any change, after the
date hereof, of any Law (except, and to the extent, affecting Taxes or wages)
which requires a change in the Work or the Upgrade Work or affects the costs
(other than wages) incurred or to be incurred by the Contractor or any
combination of the foregoing and Purchaser shall agree to any such change in
Work or Upgrade Work as may be required and to an equitable adjustment to the
Contract Price or the applicable Upgrade Price. As of the date hereof, neither
Party has Actual Knowledge of any proposed change in any Law that would require
a change in the Work or the Upgrade Work.

D. The Parties will execute a Contract Variation to confirm the actual
amount of the Variable Component, after final adjustment, if any, pursuant to
Sub-Article 4(A)(1) hereof.

E. The Initial Contract Price is based on the assumption that Contractor
will acquire ownership of land and build, on such land, two cable stations in
Japan and two cable stations in the United States. To the extent that such
assumption is incorrect (if, for example, the Contractor shall lease space in
one or more existing cable stations) both Parties will agree to an equitable
adjustment, up or down, to the Contract Price and the terms and schedule of
payments. The Contractor will consult with, and obtain the consent of the
Purchaser (not to be unreasonably withheld or delayed) regarding the location of
cable stations and whether to acquire, build, or lease such cable stations. Any
lease for space in a cable station shall be reasonably satisfactory in form and
substance to the Purchaser.

ARTICLE 6A. OPTIONAL UPGRADES
- --------------------------------

A. This Article includes the terms and conditions governing an option for
future upgrades to the System (each a "System Upgrade") that may be exercised by
Purchaser during the Option Period.

B. *

* MATERIAL OMITTED AND SEPARATELY FILED WITH THE COMMISSION UNDER AN APPLICATION
FOR CONFIDENTIAL TREATMENT.
<PAGE>

C. *

D. *

E. *

F. *

G. *

* MATERIAL OMITTED AND SEPARATELY FILED WITH THE COMMISSION UNDER AN APPLICATION
FOR CONFIDENTIAL TREATMENT.
<PAGE>

H. *

I. *

J. *

K. *

L. *

* MATERIAL OMITTED AND SEPARATELY FILED WITH THE COMMISSION UNDER AN APPLICATION
FOR CONFIDENTIAL TREATMENT.
<PAGE>

ARTICLE 7 RESPONSIBILITIES FOR PERMITS; COMPLIANCE WITH LAWS
- -------------------------------------------------------------

A. The Purchaser shall reasonably cooperate with and assist the Contractor
to obtain all Permits (except those specified in paragraph C below), to the
extent that Purchaser's cooperation and assistance are necessary for Contractor
to expeditiously and cost-efficiently obtain such Permits. The Purchaser agrees
to respond promptly to any such request from Contractor. Further, the Purchaser
agrees that it will not impede or interfere with Contractor's activities or
Contractor's abilities to perform its obligations. Upon notice from Contractor
with respect to a Permit or receipt by Purchaser of a copy of a Permit,
Purchaser shall fulfill all conditions of such Permit and perform all
responsibilities thereunder, except to the extent that such conditions or
responsibilities are those of the Contractor under Work. Contractor will inform
Purchaser as to any such conditions or responsibilities that, in the
Contractor's reasonable judgment, are not ordinary and routine and obtain
Purchaser's consent, which consent shall not be unreasonably withheld, thereto
prior to arranging for any such Permit.

B. Subject to paragraph C below, the Contractor shall have the
responsibility for obtaining, at Contractor's sole cost and expense, all Permits
on Purchaser's behalf. The Contractor will cause all Permits not issued in the
name of Purchaser to be assignable to Purchaser, and to be assigned to Purchaser
at the time title to the System is transferred to Purchaser pursuant to this
Contract. Subject to Sub-Article 4(A)(4), Purchaser shall be

* MATERIAL OMITTED AND SEPARATELY FILED WITH THE COMMISSION UNDER AN APPLICATION
FOR CONFIDENTIAL TREATMENT.
<PAGE>

responsible for payment of all Permit fees and other costs and expenses due with
respect to any Permit after the Date of Provisional Acceptance of the System.

C. The Purchaser shall be responsible for obtaining, at its expense,
landing licenses in the United States and Japan. The Contractor will cooperate
with the Purchaser in connection therewith. Purchaser shall reimburse
reasonable outside counsel fees, reasonable independent consultant fees and
other reasonable out-of-pocket expenses incurred by Contractor in connection
with such cooperation.

D. Any delay in obtaining or failure to obtain any Permit shall constitute
a Force Majeure and be treated as described in Article 17 (Force Majeure),
except to the extent such delay is a result of Contractor's negligence or
willful misconduct.

E. Except with respect to variations necessitated by complying with any
changes, enacted after the date hereof, in any Laws (the costs with respect to
which shall be borne by the Purchaser), the Contractor shall be responsible for
the payment of any and all costs incurred as a result of the need to vary
design, drawings, plans or procedures to comply with any of the circumstances
set forth in this Article. The Contractor shall, before making any variations
from the designs, drawings, plans or procedures that may be necessitated by so
complying with any Laws and that would represent a material change to the
overall design of the System, give to the Purchaser written notice, specifying
the variations proposed to be made, and the reasons for making them. As of the
date hereof, neither Party has Actual Knowledge of any proposed changes in the
Laws which would necessitate any such variation.

F. The Contractor shall (i) give all notices required by any Laws to be
given to any authority and (ii) perform or permit the performance by authorized
persons of any inspection required by the said Laws, subject to Sub-Article
6(C).

G. Within 30 days after the date of execution of this Contract, the
Contractor will prepare and deliver to the Purchaser a detailed list of Permits
that to its knowledge are required to be obtained under current law in order to
complete the Work and shall update such list from time to time if it becomes
aware of changes in Permit requirements. Such list, as updated from time to
time, shall set forth the projected dates of filing for such Permits and an
estimate of when such Permits are expected to be obtained. Without limiting
Contractor's liabilities in respect of Sub-Articles 7(B), Contractor shall have
no liability in respect of the accuracy of the information furnished under this
Sub-Article, except in the case of gross negligence or willful misconduct.

ARTICLE 8 ROUTE SURVEY
- -----------------------

A. The Contractor shall conduct the Route Survey and select the cable
route for the System in accordance with the information in the Final Survey
Report. Contractor shall be permitted to make changes, at its discretion, to
the route selection, if necessary for operational reasons without additional
cost to Purchaser.
<PAGE>

B. Any changes to the route selection requested by Purchaser (such as a
change of location for, or an addition of, a cable station) shall be treated as
a Contract Variation in accordance with Article 6 (Contract Variations).

ARTICLE 9 ACCEPTANCE
- ---------------------

A. General

1. The Acceptance Testing shall be performed by the Contractor. The
Purchaser and its designated representatives (including the
Independent Engineer) may observe, at their own expense, the
Contractor's tests and review the test results. Purchaser may
request and conduct any additional tests, at its own expense, but
any delay caused by such process shall be a Force Majeure event.

2. Until the Date of Final Acceptance of the System or if a System
Upgrade is requested by Purchaser, the Date of Final Acceptance
of such System Upgrade, the Purchaser agrees to allow Contractor
access to all Segments of the System.

3. The Purchaser shall issue a Certificate of Commercial Acceptance
in accordance with the provisions of Sub-Article 9(D)(1).

4. Once a Segment of the System, the System, or a System Upgrade is
Ready for Provisional Acceptance, the Purchaser shall issue a
Certificate of Provisional Acceptance; provided, that it is
--------
within the Purchaser's sole discretion as to whether to accept a
Segment (other than Segment S) instead of the System.

5. Once the System or a System Upgrade is Ready for Final
Acceptance, the Purchaser shall issue a Certificate of Final
Acceptance.

6. The Purchaser shall not unreasonably withhold or delay issuance
of a Certificate of Commercial Acceptance, a Certificate of
Provisional Acceptance or a Certificate of Final Acceptance.

7. The Contractor agrees that the Date of Provisional Acceptance or
Commercial Acceptance of Segment S will occur by March 31, 2000
(as such date may be extended under Article 6 (Contract
Variations) Article 17 (Force Majeure) or otherwise under this
Contract or by agreement of the Parties, the "Scheduled Segment S
RFS Date").

8. The Contractor agrees that the Date of Provisional Acceptance or
Commercial Acceptance of the System will occur by July 31, 2000
(as such date may be extended under Article 6 (Contract
Variations),
<PAGE>

Article 17 (Force Majeure) or otherwise under this Contract or by
agreement of the Parties, the "Scheduled System RFS Date").

9. The Date of Commercial Acceptance, Provisional Acceptance and
Final Acceptance, as the case may be, shall be deemed to have
occurred with respect to a Segment, the System or a System
Upgrade if a Certificate of Commercial Acceptance, a Certificate
of Provisional Acceptance or a Certificate of Final Acceptance is
issued with respect thereto.

B. Notice of Acceptance or Rejection

1. Within thirty (30) days of receipt by Purchaser and Independent
Engineer of the Commissioning Report or Upgrade Commissioning
Report, as the case may be, the Purchaser must issue notification
to the Contractor of the following:

(a) issuance of a Certificate of Provisional Acceptance in
accordance with Sub-Article 9(C); or

(b) rejection of a Certificate of Provisional Acceptance, but
instead issuance of a Certificate of Commercial Acceptance
in accordance with Sub-Article 9(D) below; or

(c) rejection of the Segment, the System or System Upgrade in
its existing condition and issuance of neither a Certificate
of Provisional Acceptance nor a Certificate of Commercial
Acceptance, with in the case of the System or System Upgrade
a written explanation of reasons for rejection (it being
understood that acceptance of a Segment instead of the
System (other than Provisional Acceptance of Segment S) is
at the sole discretion of the Purchaser).

If the Purchaser (or the Independent Engineer on its behalf)
fails to respond with such notification within thirty (30) days,
then the Date of Provisional Acceptance of the Segment (subject
to Purchaser's consent), the System or System Upgrade shall be
deemed to be the date such Commissioning Report or Upgrade
Commissioning Report, as the case may be, was received by the
Purchaser.

2. On receipt of a notice from the Purchaser pursuant to Sub-
Articles 9(B)(1)(b) or (c) above, the Contractor shall be
entitled to address any disputes and explain any discrepancies to
the Purchaser regarding the results of the Acceptance Testing.
Unless Purchaser, for good cause, rejects such explanation, it
shall issue a new notice pursuant to Sub-Article 9(B)(1) above,
which shall be deemed to have been issued on the date of the
original notice.
<PAGE>

3. In case of rejection, and if the explanation by the Contractor as
in Sub-Article 9(B)(2) above is not accepted, for good cause, by
the Purchaser, the Contractor shall carry out the necessary
corrective actions and will effect a new series of Acceptance
Testing ("Retesting"). After receipt by Purchaser and Independent
Engineer of the new Commissioning Report or Upgrade Commissioning
Report, as the case may be, describing the results of Retesting,
the Purchaser will be granted a new period of thirty (30) days to
analyze the new Report according to the provisions of Sub-Article
9(B)(1) and any new notice of the Purchaser shall apply from the
date the Purchaser receives such new Commissioning Report or
Upgrade Commissioning Report, as the case may be.

C. Provisional Acceptance

1. The Certificate of Provisional Acceptance may have annexed to it
a list of any outstanding deficiencies to be corrected by the
Contractor.

2. The Contractor shall, as soon as reasonably practicable, correct
such deficiencies and complete the Work or Upgrade Work indicated
on all such listed items so as to comply in all material respects
with the requirements of this Contract, provided that the
Purchaser allows Contractor the necessary access to the
Segment(s) as the Contractor needs to correct such deficiencies
and complete the Work or Upgrade Work. The Contractor shall give
the Purchaser reasonable notice of its requirement for such
access.

D. Commercial Acceptance

1. A Certificate of Commercial Acceptance shall be issued by
Purchaser with respect to a Segment, the System or System Upgrade
if the results of the Acceptance Testing demonstrate that such
Segment, the System or such System Upgrade does not justify the
issuance of a Certificate of Provisional Acceptance, but
nevertheless, such Segment, the System or such System Upgrade is
Ready for Commercial Acceptance; provided, that such acceptance
--------
of a Segment instead of the System shall be in the sole
discretion of the Purchaser.

2. Each Certificate of Commercial Acceptance shall have annexed to
it a mutually agreed list of all outstanding items to be
completed by the Contractor.

3. The Contractor shall, as soon as reasonably practicable, remedy
the outstanding items, provided that the Purchaser allows
Contractor the necessary access to the Segment(s) as the
Contractor needs to remedy such outstanding items. The Contractor
shall give the Purchaser
<PAGE>

reasonable notice of its requirement for such access.
Notwithstanding the above, provided that Contractor has been
allowed access to the Segment(s) as required in Sub-Article
9(A)(2), the Contractor shall continue to carry the risk of loss
for any outstanding item until such item is no longer
outstanding.

4. When the outstanding items referenced in Sub-Article 9(D)(3)
above have been remedied, and the Segment(s) or System Upgrade is
otherwise Ready for Provisional Acceptance, the Purchaser will
promptly issue a Certificate of Provisional Acceptance; provided,
--------
that acceptance of a Segment instead of the System shall be in
the sole discretion of the Purchaser.

5. The issuance of a Certificate of Commercial Acceptance with
respect to a Segment or System Upgrade shall in no way relieve
the Contractor from its obligation to provide a Segment or System
Upgrade conforming with the Performance Requirements at the time
of the issuance of a Certificate of Commercial Acceptance.

E. Final Acceptance

1. Within thirty (30) days of the date of receipt by Purchaser and
Independent Engineer of the Final Commissioning Report, the
Purchaser shall issue a Certificate of Final Acceptance or reject
such Report. If the Purchaser neither issues a Certificate of
Final Acceptance nor rejects such Report within such thirty (30)
day period, then the Date of Final Acceptance of the System shall
be deemed to be the date such Final Commissioning Report was
received by the Purchaser.

F. Title and Risk of Loss

1. If the Purchaser, in its sole discretion, chooses to accept a
Segment prior to accepting the System, then upon payment of all
amounts listed in the Billing Schedule with respect to a Segment
(other than the Retainage with respect thereto) and the issuance
of a Certificate of Commercial Acceptance or a Certificate of
Provisional Acceptance with respect to such Segment by the
Purchaser in accordance with this Contract, title (free and clear
of all liens other than those deriving through or from the
Purchaser) to such Segment shall vest in the Purchaser.

2. Upon (i) payment of all amounts listed in the Billing Schedule
with respect to the System (other than the Retainage) and (ii)
the issuance of a Certificate of Commercial Acceptance or a
Certificate of Provisional Acceptance with respect to the System
by the Purchaser in accordance with this Contract, title (free
and clear of all liens other than those
<PAGE>

deriving through or from the Purchaser) to the System shall vest
in the Purchaser.

3. Upon payment of the Upgrade Price with respect to a System
Upgrade and the issuance of a Certificate of Commercial
Acceptance or a Certificate of Provisional Acceptance with
respect to such System Upgrade by the Purchaser in accordance
with this Contract, title to such System Upgrade shall vest in
the Purchaser.

4. As from the date of vesting of title in a Segment, the System or
a System Upgrade, the Purchaser shall, except as set forth in the
following sentence, assume the risk of loss in respect of all
parts of such Segment, the System or System Upgrade and
responsibility for its maintenance. As stated in Sub-Article
9(A)(2), the Contractor will be allowed access to such Segment,
and, so long as the Contractor has been allowed access to such
Segment as may be required, the Contractor shall continue to
carry the risk of loss with respect of each item outstanding
under Sub-Article 9(C)(1) and 9(D)(2) until such item is no
longer outstanding.

ARTICLE 10 WARRANTY
- --------------------

A. The Contractor warrants that the System and each System Upgrade,
including its spares, shall be free from defects in supplies, workmanship and
design for a period of * commencing from the Date of Provisional Acceptance of
the System or such System Upgrade, as the case may be, (hereinafter "Warranty
Period" and "Upgrade Warranty Period"), with Ship Costs being covered for the
first * of the Warranty Period (the "Ship Period") and the Purchaser being
responsible for all Ship Costs thereafter.

1. During the Warranty Period for the System or the Upgrade Warranty
Period for a System Upgrade, the Contractor shall make good, by
repair or replacement, at its sole option, any defects in the
System or such System Upgrade, as the case may be, including any
spares, which may become apparent or be discovered due to
imperfect workmanship, faulty design or faulty material supplied
by the Contractor, or any act, neglect or omission on the
Contractors part.

(a) If at any time within the Warranty Period or the Upgrade
Warranty Period for a System Upgrade any defect occurs which
causes the System or such System Upgrade, as the case may
be, to fail to meet its overall Performance Requirements,
the Contractor shall repair or replace such part or parts.
In making such repairs, Contractor may make changes to the
System or such System Upgrade, as the case may be, or
substitute equipment of later or comparable design, provided
the changes, modifications, or substitutions under normal
and proper use do

* MATERIAL OMITTED AND SEPARATELY FILED WITH THE COMMISSION UNDER AN APPLICATION
FOR CONFIDENTIAL TREATMENT.
<PAGE>

not cause the System or such System Upgrade as the case may
be to fail to meet the Performance Requirements.

(b) The Contractor shall use reasonable efforts to minimize the
period of time that any Segment or the System is out of
service for testing and repair. The Purchaser agrees to
cooperate with the Contractor to facilitate the Contractor's
repair activity.

(c) It is understood that if there is a problem on the System,
the Purchaser may immediately dispatch the maintenance
authority to effect repairs. If and to the extent that such
problem is determined to be caused by a defect in the System
covered by this warranty, the Contractor shall reimburse the
Purchaser for its actual Non-Ship Costs incurred and, with
respect to any such repair relating to a defect identified
in good faith by Purchaser in writing prior to the end of
the Ship Period, actual Ship Costs incurred.

(i) The Contractor shall be given advance notice and be
entitled to have a representative on board ship to
observe at sea repairs and shall be given the earliest
possible notice of any such repair.

(ii) Subject to the foregoing and to Sub-Article 10(D), any
repair by the Purchaser shall not in any way diminish
the Contractor's obligation under the warranty. Any
equipment discovered to be defective or faulty and
recovered during a warranty repair shall be returned to
the Contractor at its request.

(d) In the event that the Contractor fails to make the repair or
to make reasonable efforts to minimize the period of time
that the System is out of service for repair, the Purchaser
may repair the System or the System Upgrade and the
Contractor shall reimburse the Purchaser for Non-Ship Costs
and, with respect to any such repair relating to a defect
identified in good faith by Purchaser in writing prior to
the end of the Ship Period, Ship Costs.

(i) The Contractor shall be given advance notice and be
entitled to have a representative on board ship to
observe at sea repairs and shall be given the earliest
possible notice of any such repair.

(ii) Subject to the foregoing, any repair by the Purchaser
shall not in any way diminish the Contractor's
obligation
<PAGE>

under the warranty. Any equipment discovered to be
defective or faulty and recovered during a warranty
repair shall be returned to the Contractor at its
request.

2. Contractor shall bear the Ship Costs of only those repairs of the
defects identified in good faith by Purchaser in writing prior to
the end of the Ship Period. However, the Contractor shall bear
the Non-Ship Costs of each repair, replacement or improvement
required during the Warranty Period.

As used herein, "Ship Cost" means the costs of operating a
vessel, including but not limited to running and standing charges
for the vessel (including but not limited to labor charges for
the vessel's crew, at sea insurance, port charges, fuel and lube
oils, consumables, cable loading, cable unloading, navigation and
maritime communications) as well as the costs associated with the
use and operation of a remotely operated vehicle and the tracked
self-propelled burial tool, and "Non-Ship Costs" means the costs
of making a repair, including the cost of components, equipment
or materials requiring replacement, the cost of any additional
equipment necessary to effect the repair, the cost of making the
repair, including the cost of reburying any previously buried
portion, the cost of labor and engineering assistance or
development required to make the repair and all necessary
associated costs, such as, but not limited to, shipping and
customs and services that may be required to make the repair, but
excluding any of the foregoing which are Ship Costs.

3. The Contractor shall effect all warranty repairs of the System
and shall supply all necessary repair materials. However, the
Contractor may use, with the consent of the Purchaser, which
shall not be unreasonably withheld, the materials needed to
effect a repair from the Purchaser's available spare materials.
The Contractor shall promptly replace in kind such materials
supplied from the Purchaser's spare materials, or at the option
of the Purchaser, reimburse the Purchaser for such materials at
its original purchase price. The replacement of or reimbursement
for such materials shall be made at a time mutually agreed to by
the Purchaser and the Contractor.

4. The Contractor warrants that services furnished hereunder will be
performed in a workmanlike manner using materials free from
defects except when such materials are provided by the Purchaser
(it being understood that all materials arranged for directly by
Contractor, whether or not purchased in the name of Purchaser,
are not materials provided by the Purchaser). If such services
prove to be not so performed and Purchaser notifies the
Contractor within six (6) months from the completion of the
service, the Contractor will promptly correct the defect.
<PAGE>

5. Any part which replaces a defective part during the applicable
Warranty Period or Upgrade Warranty Period, shall be subject to the remaining
Warranty Period and Ship Period, if any, or Upgrade Warranty Period, as the case
may be, of the part which was replaced. However, the Warranty Period shall never
exceed * from the Date of Provisional Acceptance of the System and the Upgrade
Warranty Period for any System Upgrade shall never exceed * from the Date of
Provisional Acceptance of such System Upgrade. Further, Ship Costs shall be
included only with respect to defects identified in good faith by Purchaser in
writing during the * from the Date of Provisional Acceptance of the System.

B. *

C. The Contractor warrants that all Deliverable Software and Deliverable
Technical Materials are Year 2000 Compliant.

D. The warranties provided above in Sub-Articles 10(A) and (B) by the
Contractor shall not apply to defects or failures of performance, which result
from damage caused by acts or omissions of the Purchaser or its agents,
employees or representatives or third parties (other than the Contractor), or
which result from modifications, misuse, neglect, accident or abuse, repair,
storage or maintenance by other than the Contractor or its agents or use in a
manner not in accordance with the System Description or other causes set forth
in Article 12 (Purchaser's Obligations) or Article 17 (Force Majeure).

E. THE FOREGOING WARRANTY IS EXCLUSIVE AND IS IN LIEU OF ALL OTHER
EXPRESS AND IMPLIED WARRANTIES INCLUDING, BUT NOT LIMITED TO, WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE WHICH ARE SPECIFICALLY
DISCLAIMED. THE PURCHASER'S SOLE AND EXCLUSIVE REMEDY WITH RESPECT TO DEFECTS
COVERED BY THE FOREGOING WARRANTY SHALL (EXCEPT AS SET FORTH IN SUB-ARTICLE B

* MATERIAL OMITTED AND SEPARATELY FILED WITH THE COMMISSION UNDER AN APPLICATION
FOR CONFIDENTIAL TREATMENT.
<PAGE>

ABOVE) BE THE CONTRACTOR'S OBLIGATION TO MAKE REPAIRS OR REPLACEMENTS AS SET
FORTH IN THIS ARTICLE; PROVIDED, THAT CONTRACTOR'S FAILURE TO SO PERFORM SHALL
--------
BE SUBJECT TO ARTICLE 13 HEREOF.

F. The Contractor shall, in accordance with its normal operating
practices, investigate any defective part or parts repaired or replaced pursuant
to this Article 10 to determine the type of defect and the cause of failure of
the part or parts. The Contractor shall provide a written report to the
Purchaser on the results of the investigation, if any.

ARTICLE 11 CONTRACTOR SUPPORT
- ------------------------------

A. For a period of ten (10) years from the applicable Date of Provisional
Acceptance or Date of Commercial Acceptance of the System whichever is earlier,
the Contractor will make available to the Purchaser replacement parts and repair
service for the System as may be reasonably necessary for its operation,
maintenance or repair. Where identical parts cannot be supplied, the Contractor
shall provide fully compatible parts with characteristics equal or superior to
those originally provided by the Contractor. Such parts and services shall be
provided under commercially reasonable conditions of price and delivery.

B. Notwithstanding Sub-Article 11(A), if for any reason the Contractor or
Contractor's suppliers intend to cease or ceases manufacturing or having
manufactured identical or fully compatible replacement parts, the Contractor
shall use reasonable efforts to give one year's prior written notice to the
Purchaser to allow the Purchaser to order from the Contractor any required
replacement parts and shall provide full details of the arrangements to provide
equivalents.

ARTICLE 12 PURCHASER'S OBLIGATIONS
- -----------------------------------

A. Purchaser agrees to pay all amounts payable by it when due under this
Contract and to perform all of its other obligations under this Contract.

B. In the event the Purchaser establishes a branch office in any of the
relevant jurisdictions, the Purchaser shall be solely responsible to perform all
activities necessary to establish such branch office.

C. If any loss, damage, delay or failure of performance of the System or
a System Upgrade results from the Purchaser's failure to perform its obligations
under this Contract and results in an increase in the costs of performance or
the time required for performance of any of the Contractor's duties or
obligations under this Contract, the Contractor shall be entitled, as
appropriate, to (i) an equitable adjustment in the Contract Price or applicable
Upgrade Price, (ii) an equitable extension of time for completion of its Work or
the Upgrade Work, (iii) reimbursement for all such additional costs incurred,
and (iv) to the extent necessary in light of Purchaser's failure and the
adjustments made in accordance with clauses (i), (ii) and (iii) above, an
equitable adjustment of the Work and/or Upgrade Work.
<PAGE>

1. The Contractor shall inform the Purchaser promptly of any
occurrence covered under this Sub-Article 12(C), and shall use
reasonable efforts to minimize any such additional costs or
delay.

2. The Contractor shall promptly provide to the Purchaser an
estimate of the anticipated additional costs and time required to
complete the Work or Upgrade Work and request relief from
contractual obligations or duties, as appropriate. Purchaser
shall, upon notification, make advance payment to Contractor for
the estimated amount of anticipated additional costs; provided
--------
that Purchaser may deposit such amount into the Dispute Account
and Sub-Article 5(C)(5) shall apply. Contractor shall without
limiting Purchaser's obligations in the foregoing sentence,
discuss such costs with Purchaser upon Purchaser's request.

3. As soon as reasonably practicable after the actual costs become
known to the Contractor, the Contractor shall provide a statement
of such actual costs to the Purchaser.

4. If the estimated amount is greater than the amount of actual
costs, then the Contractor shall reimburse the Purchaser. If the
amount of actual costs incurred is greater than the estimated
amount, then the Purchaser shall reimburse the Contractor for any
shortfall in accordance with Article 5 (Terms of Payment of
Purchaser).

ARTICLE 13 TERMINATION FOR DEFAULT
- -----------------------------------

A. Either Party may, by written Notice of Termination for Default,
immediately upon receipt or such later date as specified in the notice,
terminate the whole or any part of this Contract in any one of the following
circumstances (each an "Event of Default"):

1. In the case of the Purchaser, (a) if Contractor materially fails
to comply with the terms and conditions of this Contract and, if
such failure occurs prior to the Date of Commercial Acceptance or
the Date of Provisional Acceptance, it would not be reasonable to
believe that the Contractor will be able to provide the System
which is Ready for Provisional Acceptance, within 200 days after
the Scheduled System RFS Date or (b) the Contractor fails to
cause the System to be Ready for Commercial Acceptance or
Provisional Acceptance within 200 days after the Schedule RFS
Date;

2. If the other Party defaults on any of its payment obligations and
does not cure such default within a period of thirty (30) days
(or such longer period as the non-breaching Party may authorize
in writing) after receipt of written notice demanding cure
(subject to dispute provisions);
<PAGE>

3. If the other Party shall commence a voluntary case or other
proceeding seeking liquidation, reorganization or other relief
with respect to itself or its debts under any bankruptcy,
insolvency or other similar law now or hereafter in effect or
seeking the appointment of a trustee, receiver, liquidator,
custodian or other similar official of it or any substantial part
of its property, or shall consent to any such relief or to the
appointment of or taking possession by any such official in an
involuntary case or other proceeding commenced against it, or
shall make a general assignment for the benefit of creditors, or
shall fail generally to pay its debts as they become due, or
shall take any corporate action to authorize any of the
foregoing;

4. If an involuntary case or other proceeding shall be commenced
against the other Party seeking liquidation, reorganization or
other relief with respect to it or its debts under any
bankruptcy, insolvency or other similar law now or hereafter in
effect or seeking the appointment of a trustee, receiver,
liquidator, custodian or other similar official of it or any
substantial part of its property, and such involuntary case or
other proceeding shall remain undismissed and unstayed for a
period of 60 days; or an order for relief shall be entered
against the other Party.

B. If this Contract is terminated by the Purchaser as provided in Sub-
Article 13(A), the Purchaser, in addition to any other rights provided in this
Article and upon payment to Contractor of all monies due and owing as set forth
in clauses 1 and 2 of Sub-Article 13(C) below, may require the Contractor to
transfer title and deliver to the Purchaser in the manner and to the extent
directed by the Purchaser any completed equipment, material or supplies, and
such partially completed cable and materials, parts, tools, dies, jigs,
fixtures, plans, drawings, information, and contract rights (hereinafter
collectively "Manufacturing Materials") as the Contractor has had specifically
produced or specifically acquired for the performance of such part of this
Contract as has been terminated and which, if this Contract had been completed,
would have been required to be furnished to the Purchaser; and the Contractor
shall, upon the direction of the Purchaser, protect and preserve property in the
Contractor's possession in which the Purchaser has an interest.

C. If the Contract is terminated by Contractor as provided in Sub-Article
13(A), the Purchaser shall pay, in addition to any other damages payable
pursuant to Sub-Article 13(E) below, the total of:

1. the cost of settling and paying claims rising out of the
termination of Work under the contracts in orders, as provided in
Sub-Article 13(C)(2) below which are properly chargeable to the
terminated portion of this Contract; and

2. the reasonable costs of settlement including accounting, legal,
clerical and other expenses necessary for the preparation of
settlement claims and supporting data with respect to the
terminated portion of this
<PAGE>

Contract and for termination and settlement of contracts
thereunder, together with reasonable storage, transportation and
other costs incurred in connection with the protection,
preservation and disposition of property proper to this Contract.

D. Force Majeure events pursuant to Article 17 (Force Majeure) shall not
constitute a default or provide a basis for termination under this Article.

E. Regardless of any termination of this Contract as provided in Sub-
Article 13(A), neither Party shall be relieved from any liability for damages or
otherwise which may have been incurred by reason of any breach of this Contract.

F. Without limitation to the foregoing, in the event that Purchaser
terminates this Contract pursuant to Sub-Article 13(A), the Contractor shall be
liable to Purchaser (without duplication) for the total of all costs and
expenses reasonably incurred by Purchaser in completing the Work or in
correcting deficiencies in the Work to the extent that the payments made to
Contractor pursuant to this Contract, together with such costs and expenses,
exceed the Contract Price.

ARTICLE 14 TERMINATION FOR CONVENIENCE
- ---------------------------------------

A. The performance of Work under this Contract may be terminated by the
Purchaser in whole, or in part, at its discretion. The Purchaser shall deliver
to the Contractor a written notice specifying the extent to which performance of
Work under this Contract is terminated, and the date upon which such termination
becomes effective (a "Notice of Termination"). Upon termination, the Purchaser
will make payment to Contractor of all monies due and owing as set forth in Sub-
Article 14(D) below.

B. After receipt of such Notice of Termination, and except as otherwise
directed by the Purchaser, the Contractor shall:

1. Stop Work under this Contract on the date and to the extent
specified in the Notice of Termination;

2. Place no further orders or contracts for materials, services or
facilities except as may be necessary for completion of such
portion of Work under this Contract as is not terminated;

3. Use reasonable efforts to terminate all orders and contracts to
the extent that they relate to the performance of Work terminated
by the Notice of Termination;

4. Assign to the Purchaser, in the manner, at the time, and to the
extent directed by the Purchaser, all of the Contractor's rights,
title and interest under the orders and contracts so terminated;
<PAGE>

5. Use reasonable efforts to settle all outstanding liabilities and
all claims arising out of such termination of orders and
contracts, with the Purchaser's approval or ratification to the
extent required;

6. Transfer title and deliver to the Purchaser in the manner, at the
time and to the extent (if any) directed for the fabricated or
unfabricated parts, work in process, completed work, supplies and
other material produced as a part of, or acquired in connection
with, the performance of the Work terminated by the Notice of
Termination;

7. Use reasonable efforts to sell, in the manner, at the time, to
the extent and at the price or prices directed or authorized by
the Purchaser, any property of the types referred to in Sub-
Article 13(B)(6) above provided, however, that the Contractor:
-------- -------

(a) shall not be required to extend credit to any buyer; and

(b) may acquire any such property under the conditions
prescribed by and at a price approved by the Purchaser;

and provided further that the net proceeds of any such transfer
-------- -------
or disposition shall be applied in reduction of any payments to
be made by the Purchaser to the Contractor under this Contract
or, if no such payments are due, paid in such other manner as the
Purchaser may direct;

8. Complete performance of such part of the Work which was not
terminated by the Notice of Termination; and

9. Take such action as may be necessary, or as the Purchaser may
reasonably direct, for the protection and preservation of the
property related to this Contract which is in the Contractor's
possession and in which the Purchaser has acquired or may acquire
an interest.

C. After such Notice of Termination, the Contractor shall submit to the
Purchaser a written termination claim. Such claim shall be submitted promptly,
but, unless otherwise extended, in no event later than six months from the
effective date of termination.

D. In the settlement of any such partial or total termination claim, the
Purchaser shall pay to the Contractor the total of:

1. (i) all amounts invoiced in accordance with the Contract plus,
for Work or Supplies which have been done or provided but which
have not been invoiced, an amount calculated by reference to the
prices set forth in the Provisioning Schedule and to the amount
of such Work or Supplies done or provided;
<PAGE>

2. the cost of settling and paying claims arising out of the
termination of Work under the contracts in orders, as provided in
Sub-Article 14(D)(4) below which are properly chargeable to the
terminated portion of this Contract; and

3. the reasonable costs of settlement including accounting, legal,
clerical and other expenses necessary for the preparation of
settlement claims and supporting data with respect to the
terminated portion of this Contract and for termination and
settlement of contracts thereunder, together with reasonable
storage, transportation and other costs incurred in connection
with the protection and disposition of property proper to this
Contract.

E. In arriving at the amount due to the Contractor under this Article 14,
all unliquidated payments made to the Contractor, any liability which the
Contractor may have to the Purchaser, and the agreed price for, or the proceeds
of sale of any materials, supplies or other things acquired by the Contractor or
sold, pursuant to the provisions of this Article 14, and not otherwise recovered
by or credited to the Purchaser shall be deducted.

F. The Purchaser may, from time to time, under such terms and conditions
as they prescribe approve partial payments and payments on account against costs
incurred by the Contractor in connection with the terminated portion of this
Contract. If such payments total in excess of the amount finally agreed or
determined to be due under this Article 14, such excess shall be refunded, upon
demand, by the Contractor to the Purchaser.

G. For a period of one year after final settlement under this Contract,
the Contractor shall preserve and make available to the Purchaser at reasonable
times at the Contractor's office, but without direct charge to the Purchaser,
all supporting books, records and documents required to be kept relating to the
terminated Work.

ARTICLE 15 SUSPENSION
- ----------------------

A. The Purchaser may, at its convenience, order the Contractor to suspend
all or part of the Work for such period of time as the Purchaser determines to
be appropriate. If, as a result of such Suspension, the Contractor incurs
additional costs or losses in the discharge of its responsibilities under this
Contract, and where such suspension, losses or costs are not caused by the
Contractor's act or omission and could not have been reasonably prevented by the
Contractor, the Contractor shall be allowed an equitable adjustment to the
Contract Price or the Provisioning Schedule in Appendix 1 and an equitable
extension in the time required for performance.

B. Upon the occurrence of:

(i) an Event of Default by the Purchaser;
<PAGE>

(ii) any transfer prior to the Date of Final Acceptance of any
portion of the System except in accordance with Article 37; or

(iii) any supplement executed by a Transferee shall not be in full
force and effect;

the Contractor, in addition to any other rights provided in Article 13, may
suspend performance of its obligations and all Work and (in the case of clause
(i)) Upgrade Work.

C. Every forty-five (45) days, during the period of Suspension, the
Parties shall meet formally and review the circumstances surrounding the
Suspension including without limitation, the anticipated date of re-commencing
Work.

D. Thereafter, if the Suspension continues for a total of one hundred and
eighty (180) days, the Contractor may terminate the Contract by notice to the
Purchaser and the Contract shall be deemed to have been terminated by Purchaser,
effective on the date of Contractor's notice, in accordance with Sub-Article
13(A) and the remaining provisions of Article 13 shall apply.

ARTICLE 16 TITLE AND RISK OF LOSS
- ----------------------------------

A. Except as provided in Article 18 (Intellectual Property), Article 20
(Safeguarding of Information and Technology) and Article 21 (Export Control),
title to all Supplies provided by the Contractor hereunder for incorporation in
or attachment to a Segment shall pass to and vest in the Purchaser in accordance
with Article 9 (Acceptance). Risk of loss or damage to all Supplies provided by
the Contractor for incorporation in or attachment to such Segment shall pass to
and vest in the Purchaser in accordance with Article 9. Upon termination of this
Contract pursuant to Article 13 (Termination for Default) or 14 (Termination for
Convenience), the Purchaser may require, upon full payment of all amounts due
thereunder (provided that, without limiting Purchaser's obligation to make any
--------
such payment, if this Contract is terminated by Purchaser because of a
Bankruptcy Event full payment shall not be required prior to the transfer of
title), that title to the equipment, materials and supplies, which has not
previously passed to the Purchaser, pass to the Purchaser, free and clear of all
liens, claims, charges and other encumbrances other than those deriving through
Purchaser.

B. Upon the passage of title in accordance with the terms of Article 13
(except a transfer described in the proviso of the last sentence of Sub-Article
16(A)), the Contractor warrants that all parts, materials, and equipment to
which title has passed will be free and clear of all liens, claims, charges and
other encumbrances other than those deriving through the Purchaser.

ARTICLE 17 FORCE MAJEURE
- -------------------------

A. The Contractor shall not be responsible for any loss, damage, delay or
failure of performance resulting directly or indirectly from any cause which is
beyond its reasonable control ("Force Majeure"), including but not limited to:
delay in obtaining or failure to obtain
<PAGE>

any Permits (subject to the provisions of Sub-Article 7(D)); acts of God or of
the public enemy; acts or failure to act of any governmental authority; war or
warlike operations, civil war or commotion, mobilizations or military call-up,
and acts of similar nature; revolution, rebellions, sabotage, and insurrections
or riots; fires, floods, epidemics, quarantine restrictions; strikes, and other
labor actions; freight embargoes; unworkable weather; trawler or anchor damage;
damage caused by other marine activity such as fishing, marine research and
marine development; acts or omissions of transporters; or the acts or failure to
act of any of the Purchaser, of its representatives or agents, provided that (i)
--------
a loss by Contractor of employees (other than by reasons of Force Majeure), (ii)
strikes and other labor actions involving the Contractor's own work force, (iii)
the first 5 days of unworkable weather (unless any such day occurs during the 30
days immediately preceding the then Scheduled System RFS Date or Scheduled
Segment S RFS Date), (iv) the failure (other than by reason of force majeure) of
any subcontractor, supplier or transporter to perform its obligations to
Contractor (including on account of insolvency) unless such supplies or
transportation or other services are generally unavailable in the marketplace,
(v) the unavailability of any raw materials or components, unless such raw
materials or components are generally unavailable in the marketplace or are
unavailable by reason of force majeure or (vi) any increase in Contractor's
costs, shall not in and of itself constitute Force Majeure.

B. If any such Force Majeure causes an increase in the time required for
performance of any of its duties or obligations, the Contractor shall be
entitled to an equitable extension of time for completion of the Work or the
Upgrade Work, as the case may be.

C. Increase in cost due to Purchaser will be as provided for in Article
12, Purchaser's Obligations.

D. The Contractor shall inform the Purchaser promptly with written
notification, and in all cases within fourteen (14) days of discovery and
knowledge, of any occurrence covered under this Article and shall use its
reasonable efforts to minimize such additional delays. The Contractor shall
promptly provide an estimate of the anticipated time required to complete the
Work or the Upgrade Work. Contractor shall be entitled to an extension of time
equal to at least one day for each day of delay resulting from the Force Majeure
condition.

E. Within thirty (30) days of receipt of such a notice from Contractor,
the Purchaser and the Independent Engineer may provide a written response. The
absence of a response shall be deemed as acceptance of Contractor's notice and
request for additional time.

F. If a Force Majeure continues for a total of two hundred (200) days,
either Party may terminate the Contract by notice to the other and the Contract
shall be deemed to have been terminated by Purchaser, effective on the date of
the terminating Party's notice, in accordance with Sub-Article 14(A) and the
remaining provisions of Article 14 shall apply to such termination.

ARTICLE 18 INTELLECTUAL PROPERTY
- ---------------------------------

A. Ownership
<PAGE>

All right, title, and interest in and to all Intellectual Property
(excluding Project Patent Rights) created or developed by Contractor in the
course of its performance under this Contract that is (a) specifically and
exclusively applicable to the System or a System Upgrade; and (b) either (i)
embodied in Deliverable Technical Material (as that term is defined in Sub-
Article 18(B) below) or (ii) embodied in the System or a System Upgrade (the
"Project Intellectual Property"), is and shall remain the sole property of
Purchaser. All right, title and interest in and to all Intellectual Property
created or developed by Contractor before commencing its performance under this
Contract, or created or developed by Contractor exclusively in connection with
activities other than its performance under this Contract, or created or
developed by Contractor in the course of its performance under this Contract
that is not Project Intellectual Property, and all Project Patent Rights
(collectively, the "Contractor Intellectual Property"), is and shall remain the
sole property of Contractor. Unless otherwise expressed in this Contract, no
license is implied or granted herein to Purchaser to any Contractor Intellectual
Property by virtue of this Contract, nor by the transmittal or disclosure of any
such Contractor Intellectual Property to Purchaser. Any Contractor Intellectual
Property disclosed, furnished, or conveyed to Purchaser that is marked as
"Proprietary" or "Confidential" (or if transmitted orally is identified as being
proprietary or confidential in a subsequent writing) shall be treated in
accordance with the provisions of Article 20 (Safeguarding of Information and
Technology). As used herein, "Intellectual Property" means any information,
computer or other apparatus programs, software, specifications, drawings,
designs, sketches, tools, market research or operating data, prototypes,
records, documentation, works of authorship or other creative works, ideas,
concepts, methods, inventions, discoveries, improvements, or other business,
financial and/or technical information (whether or not protectable or
registrable under any applicable intellectual property law). As used herein,
"Project Patent Rights" means all inventions, discoveries, methods and
improvements of a patentable nature created or developed by Contractor in the
course of its performance under this Contract. Project Intellectual Property
will include the materials to be listed in a Schedule to be created mutually by
the Parties within thirty (30) days of execution of this Contract, as it may be
amended from time to time by mutual agreement of the Parties.

B. Licenses

Contractor shall furnish to Purchaser, upon the transfer of title to any
portion of the System or a System Upgrade pursuant to Article 9, copies of all
technical information, specifications, drawings, designs, sketches, tools,
operating data, records, documentation and/or other types of engineering or
technical data or information reasonably relating to the operation, maintenance
or repair of each component of such portion of the System or System Upgrade as
delivered by Contractor (the "Deliverable Technical Material"). Contractor
grants to Purchaser a perpetual, royalty-free, non-transferable (except under
the circumstances specified in Sub-Article 18(F) below) license to use and
reproduce those Deliverable Technical Materials owned, controlled, or developed
by Contractor and all Contractor Intellectual Property included in or necessary
to use all the Deliverable Technical Materials for purposes of fulfilling
Purchaser's obligations under this Contract and using and operating the System
(as upgraded by any System Upgrades) supplied by Contractor with the right to
employ third parties (under appropriate written obligations respecting
confidentiality) to assist Purchaser in fulfilling its obligations under this
Contract and in using and operating the
<PAGE>

System (as upgraded by any System Upgrades), but with no right to sublicense.
Contractor grants to Purchaser a perpetual, royalty-free, non-transferable
(except under the circumstances specified in Sub-Article 18(F) below) license to
use and reproduce those portions of Deliverable Technical Materials owned or
controlled by third parties (but only to the extent of any rights which may have
been granted to Contractor by such third parties) for the purpose of fulfilling
Purchaser's obligations under this Contract and using and operating the System
supplied by Contractor with the right to employ third parties (under appropriate
written obligations respecting confidentiality) to assist Purchaser in
fulfilling its obligations under this Contract and in using and operating the
System (as upgraded by any System Upgrades), but with no right to sublicense.
Except as set forth in this provision, no license under Contractor's patents,
copyrights, trade or service marks, trade secrets or other intellectual property
rights protectable under law in the United States or any foreign country is
granted to Purchaser. It is expressly understood that it shall not be a
violation of this license for Purchaser, on its own behalf or through third
parties (under appropriate written obligations respecting confidentiality)
specifically employed for the purpose, to use and reproduce Deliverable
Technical Material that is not Project Intellectual Property to modify the
System (as upgraded by any System Upgrades) or connect the System (as upgraded
by any System Upgrades) to other systems, provided that Purchaser may not use
the Deliverable Technical Materials that is not Project Intellectual Property in
achieving such modification or interconnection for any purpose other than
determining the technical configuration, systems interface and/or
interoperability requirements of the System (as upgraded by any System Upgrades)
as delivered by Contractor (subject to the rights of third parties therein and
thereto), and subject to the limitations on Contractor's obligations as set
forth in Articles 10(D) and 19(A) concerning any such modification or
interconnection.

C. Deliverable Software

Contractor shall furnish to the Purchaser, upon transfer of title to any
portion of the System or System Upgrade pursuant to Article 9, copies of all
computer or other apparatus programs and software, in executable form, and
related documentation relating to the operation, maintenance, or repair of the
computer systems of such portion of the System or System Upgrade, as the case
may be, as delivered by Contractor (the "Deliverable Software"). In the case of
Contractor Intellectual Property, such copies of programs and software shall
consist solely of executable code provided in offline media (e.g., tapes, or
diskettes) for restoration purposes, sufficient to operate, maintain or repair
the computer systems of such portion of the System or System Upgrade, as the
case may be, as delivered by Contractor, and in the case of Project Intellectual
Property, such programs and software shall be delivered in both source and
object code forms. Contractor shall furnish to Purchaser, from time to time
during the Warranty Period or any Upgrade Warranty Period, copies of all
computer or other apparatus programs and software, in executable form (and in
the case of Project Intellectual Property, in source code form), and related
documentation that Contractor may develop to correct errors or to maintain
Deliverable Software previously furnished to Purchaser, which shall also be
treated as Deliverable Software for purposes of this Contract upon delivery
thereof to Purchaser. Contractor grants to Purchaser a perpetual, royalty-free,
non-transferable (except under the circumstances specified in Sub-Article 18(F)
below) license to use and reproduce the Deliverable Software Materials owned,
controlled, or
<PAGE>

developed by Contractor for the purpose of fulfilling Purchaser's obligations
under this Contract and using and operating the System (as upgraded by any
System Upgrades) supplied by Contractor with the right to employ third parties
(under appropriate written obligations respecting confidentiality) to assist
Purchaser in fulfilling its obligations under this Contract and in using and
operating the System (as upgraded by any System Upgrades), but with no right to
sublicense. Contractor grants to Purchaser a perpetual, royalty-free, non-
transferable (except under the circumstances specified in Sub-Article 18(F)
below) license to use and reproduce those portions of Deliverable Software owned
or controlled by third parties (but only to the extent of any rights which may
have been granted to Contractor by such third parties) for the purpose of
fulfilling Purchaser's obligations under this Contract and using and operating
the System (as upgraded by any System Upgrades) supplied by Contractor with the
right to employ third parties (under appropriate written obligations respecting
confidentiality) to assist Purchaser in fulfilling its obligations under this
Contract and in using and operating the System (as upgraded by any System
Upgrades), but with no right to sublicense. These licenses shall be limited to
the right to use Deliverable Software that is not Project Intellectual Property
only with the particular type of computer equipment or substantially similar
replacement equipment for which such Deliverable Software was provided in the
System (as upgraded by any System Upgrades) as supplied by Contractor.

1. Confidentiality
Purchaser shall keep the Deliverable Software that is not Project
Intellectual Property confidential in accordance with Article 20
(Safeguarding of Information and Technology) and Article 21
(Export Control) to the extent that such Deliverable Software is
designated as Confidential Information by its owner and agrees to
use its best efforts to see that its employees, consultants, and
agents, and other users of such software, comply with the
provisions of this Contract. Purchaser also agrees to refrain
from taking any steps, such as reverse assembly or decompilation,
to derive a source code equivalent of any object code that is
furnished by Contractor, provided that Contractor continues to
maintain the Deliverable Software that is not Project
Intellectual Property in accordance with the terms of a support
and maintenance agreement to be entered into on such terms to be
agreed upon by the Parties, which terms shall in all events
contain assurances of support and maintenance at least as
favorable to Purchaser as those contained in the Operating,
Administration and Maintenance Agreement concerning AC-1 or is
willing and able to enter into an agreement to maintain the
Deliverable Software upon terms reasonably comparable to the
pertinent terms of the initial agreement to be entered into by
the Parties with regard to support and maintenance after the
expiration or termination thereof or does not go insolvent or
bankrupt to thereby *. In the case of insolvency or bankruptcy of
Contractor, Purchaser shall limit any derivation of a source code
equivalent to that portion of the Deliverable Software that is
Contractor Intellectual Property. Purchaser shall not under any
circumstances take any steps to derive a source code

* MATERIAL OMITTED AND SEPARATELY FILED WITH THE COMMISSION UNDER AN APPLICATION
FOR CONFIDENTIAL TREATMENT.
<PAGE>

equivalent from that portion of the Deliverable Software
comprising commercial, off-the-shelf software developed or
provided by third parties.

2. Backup Copies

Purchaser may make and retain two archive copies in executable
form of the Deliverable Software that is not Project Intellectual
Property. Any copy will contain the same copyright notice and
proprietary markings as are on the original software and shall be
subject to the same restrictions as the originals.

3. Termination of Software Licenses

In the event of (i) use by the Purchaser of Deliverable Software
that is not Project Intellectual Property in a manner other than
that permitted in Sub-Article 18(C) or (ii) any other material
breach of this Article 18 by Purchaser that in either event is
not cured within sixty (60) days from receipt by Purchaser of
written notice of such impermissible use or breach, Contractor,
at its option, may terminate the rights granted to Purchaser
pursuant to this Article, upon written notice to Purchaser, which
termination shall take effect no sooner than sixty (60) days
following receipt by Purchaser of a subsequent written notice of
termination. Upon termination, Purchaser shall either return or
destroy, at Contractor's option, all copies of Deliverable
Software that is not Project Intellectual Property furnished
under this Contract.

4. Indemnification

In the event of (i) use by Purchaser of Deliverable Software that
is not Project Intellectual Property furnished hereunder other
than that permitted in Sub-Article 18(C) or (ii) any other
material breach of this Article 18 by Purchaser, the Purchaser
shall indemnify and hold Contractor harmless from any and all
third party claims resulting therefrom whether arising from a
defect in the software or otherwise.

D. Trademarks, Tradenames, etc.

No rights are granted herein to either Party to use any identification
(such as, but not limited to tradenames, trademarks, service marks or symbols,
and abbreviations, contractions, or simulations thereof) owned or used by the
other Party or its parent company or its affiliates to identify itself or its
affiliates or any of its products or services. Each Party agrees that it will
not, without the prior written permission of the other Party, use such
identification in advertising, publicity, packaging, labeling, or in any other
manner to identify itself or any of its products, services, or organizations, or
represent directly or indirectly that any product, service, or organization of
it is a product, service, or organization of the other Party or its affiliates,
or that any product or service of a Party is made in accordance with or utilizes
any intellectual property of the other Party or its affiliates.
<PAGE>

E. DISCLAIMER, LIMITATION OF LIABILITY

CONTRACTOR REPRESENTS THAT ANY INFORMATION OR INTELLECTUAL PROPERTY
FURNISHED IN CONNECTION WITH THIS CONTRACT SHALL BE TRUE AND ACCURATE TO THE
BEST OF ITS KNOWLEDGE AND BELIEF, BUT CONTRACTOR SHALL NOT BE HELD TO ANY
LIABILITY FOR UNINTENTIONAL ERRORS OR OMISSIONS THEREIN. EXCEPT AS EXPRESSLY
PROVIDED, CONTRACTOR MAKES NO REPRESENTATIONS OR WARRANTIES, EXPRESSLY OR
IMPLIEDLY. BY WAY OF EXAMPLE, BUT NOT OF LIMITATION, CONTRACTOR AND ITS PARENT
COMPANY AND AFFILIATES MAKES NO REPRESENTATIONS OR WARRANTIES OF MERCHANTABILITY
OR FITNESS FOR A PARTICULAR PURPOSE, OR THAT THE USE OF INFORMATION OR
INTELLECTUAL PROPERTY DISCLOSED OR PROVIDED HEREUNDER WILL NOT INFRINGE ANY
PATENT OR OTHER INTELLECTUAL PROPERTY RIGHT OF A THIRD PARTY. EXCEPT AS
OTHERWISE PROVIDED IN THIS CONTRACT, CONTRACTOR AND ITS PARENT AND AFFILIATES
SHALL NOT BE HELD TO ANY LIABILITY WITH RESPECT TO ANY CLAIM BY PURCHASER OR ANY
THIRD PARTY CLAIM AGAINST PURCHASER ON ACCOUNT OF, OR ARISING FROM, PURCHASER'S
USE OF INFORMATION OR INTELLECTUAL PROPERTY DISCLOSED OR PROVIDED BY CONTRACTOR.

F. Transferability

The licenses granted to Purchaser by Contractor in the Deliverable
Technical Materials and Deliverable Software are personal and non-transferable,
except that Purchaser may assign or transfer such licenses to an affiliated
entity under common control with the Purchaser or to any entity succeeding to
Purchaser's entire interest in the System (as upgraded by any System Upgrades)
as a result of reorganization or restructuring of the Purchaser or in the event
of a change of control of the Purchaser.

G. *

* MATERIAL OMITTED AND SEPARATELY FILED WITH THE COMMISSION UNDER AN APPLICATION
FOR CONFIDENTIAL TREATMENT.
<PAGE>

ARTICLE 19 INFRINGEMENT
- ------------------------

A. The Contractor agrees to defend or settle at its own expense all suits
for infringement of any patent, copyright, trademark or other form of
intellectual property right in any country of the world, for the use and
operation of the System (as upgraded by any System Upgrades) as supplied by
Contractor and for any component part thereof or material or equipment used
therein (or the manufacture of any material or the normal use thereof) provided
by the Contractor or on its behalf pursuant to this Contract and will hold the
Purchaser harmless from all expense of defending any such suit and all payments
for final judgment assessed on account of such infringement, except such
infringement or claim arising from:

1. The Contractor's adherence to the Purchaser's directions in the
design and configuration of the System (as upgraded by any System
Upgrades) or to use materials, parts or equipment of the
Purchaser's selection; or

2. Such material, parts or equipment furnished to the Contractor by
the Purchaser, other than in each case, items of the Contractor's
design or selection or the same as any of the Contractor's
commercial merchandise or in processes or machines of the
Contractor's design or selection used in the manufacture of such
standard products or parts; or

3. Use of the System (as upgraded by any System Upgrades) or the
materials, parts or equipment furnished by Contractor other than
for the purposes indicated in, or reasonably to be inferred from,
this Contract or in conjunction with other products; or

4. Modification of the System (as upgraded by any System Upgrades)
or the materials, parts or equipment furnished by the Contractor,
or connection of the System to another system by any person or
entity other than Contractor, without prior expressed written
approval by Contractor.

* MATERIAL OMITTED AND SEPARATELY FILED WITH THE COMMISSION UNDER AN APPLICATION
FOR CONFIDENTIAL TREATMENT.
<PAGE>

B. The Purchaser will, at its own expense, defend all suits against the
Contractor for such excepted infringement and hold the Contractor harmless from
all expense of defending any such suit and from all payments by final judgment
assessed against the Contractor on account of such excepted infringement.

C. The Contractor and the Purchaser agree to give each other prompt
written notice of claims and suits for infringement, full opportunity and
authority to assume the sole defense, including appeals and, upon request and at
its own expense, the other agrees to furnish all information and assistance
available to it for such defense.

D. If all or any portion of the System (as upgraded by any System
Upgrades) or any material, part or equipment provided by the Contractor or on
its behalf is held to constitute an infringement (excluding such excepted
infringements specified in Sub-Article 19(A)) and is subject to an injunction
restraining its use or any order providing for its delivery up to or
destruction, or if in respect of any such claim of infringement the Contractor
deems it advisable to do so, the Contractor shall at its own expense either:

1. Procure for the Purchaser the right to retain and continue to use
the System, the affected portion thereof, or any such material,
part or equipment without interruption for the Purchaser;

2. Replace or modify the System, the affected portion thereof, or
any material, part or equipment so that it becomes noninfringing
while continuing to meet the Performance Requirements or

3. If the remedies specified in Sub-Articles 19(D)(1) an 19(D)(2)
are not feasible, refund to the Purchaser the full purchase price
paid for the System, the affected portion thereof, or any
material, part or equipment found to be infringing.

E. In no event shall the Purchaser make any admission or settle any claim
in relation with any claim for infringement without Contractor's consent.

ARTICLE 20 SAFEGUARDING OF INFORMATION AND TECHNOLOGY
- ------------------------------------------------------

A. In performance of this Contract, it may be mutually advantageous to the
Parties hereto to share certain specifications, designs, plans, drawings,
software, market research or operating data, prototypes, or other business,
financial, and or/technical information related to products, services, or
systems which are proprietary to the disclosing Party or its affiliates (and in
the case of Contractor, Contractor's parent company) (together with this
Contract and related documents, "Information"). The Parties recognize and agree
that Information includes information that was supplied in contemplation hereof
prior to execution of this Contract, and further agree that Information includes
information in both tangible and intangible form.

B. Unless such Information was previously known to the Party receiving
such Information free of any obligation to keep it confidential, or such
Information has been or is
<PAGE>

subsequently made public through other than unauthorized disclosure by the
receiving Party or is independently developed by the receiving Party (as
documented by the records of the receiving Party), it shall be kept confidential
by the Party receiving such Information, shall be used only in the performance
of this Contract, and may not be used for any other purposes except upon such
terms as may be agreed upon in writing by the Party owning such Information. The
receiving Party may disclose such Information to other persons, upon the
furnishing Party's prior written authorization, but solely to perform acts which
this Article expressly authorizes the receiving Party to perform itself and
further provided such other person agrees in writing (a copy of which writing
will be provided to the furnishing Party at its request) to the same conditions
respecting disclosure and use of Information contained in this Article and to
any other reasonable conditions requested by the furnishing Party. Nothing
herein shall prevent a Party from disclosing Information (a) upon the order of
any court or administrative agency, (b) upon the request or demand of, or
pursuant to any regulation of, any regulatory agency or authority, (c) to the
extent reasonably required in connection with the exercise of any remedy
hereunder and (d) to a Party's legal counsel or independent auditors.

C. The Purchaser may disclose Information to its lenders and their
representatives in connection with obtaining financing for the System, provided
that each such lender or third party enters into a confidentiality agreement
containing terms and conditions similar to those in this Contract. Any such
disclosure of Information shall be subject to the restrictions in Sub-Article
20(B).

ARTICLE 21 EXPORT CONTROL
- --------------------------

The Parties acknowledge that any products, software, and technical
information (including, but not limited to, services and training) provided by
either Party under this Contract are or may be subject to export laws and
regulations of the United States and destination countries and any use or
transfer of such products, software and technical information must be authorized
under those Laws. The Parties agree that they will not use, distribute, transfer
or transmit the products, software or technical information (even if
incorporated into other products) except in compliance with export Laws. If
requested by either Party, the other Party agrees to sign all necessary export-
related documents as may be required to comply with export Laws.

ARTICLE 22 LIQUIDATED DAMAGES
- ------------------------------

A. If the System is not Ready for Commercial Acceptance or Provisional
Acceptance by the Scheduled System RFS Date, as it may have been extended under:

1. Article 6 (Contract Variations);

2. Article 17 (Force Majeure); or

3. Other arrangements as agreed between the Purchaser and the Contractor;
<PAGE>

then Contractor shall pay to Purchaser for each day of delay, for up to 200
days, by way of pre-estimated and liquidated damages for the delay and not as a
penalty, an amount equal to 0.05% of the Initial Contract Price for the System
less that portion of the Initial Contract Price allocable to Segment S, provided
that prior to the Scheduled System RFS Date, the Date of Provisional Acceptance
for Segment S has occurred.

B. If Segment S is not Ready for Commercial Acceptance or Provisional
Acceptance within fifteen (15) days (the "Grace Period") following the Scheduled
Segment S RFS Date, as it may have been extended under:

1. Article 6 (Contract Variations)

2. Article 17 (Force Majeure); or

3. Other Arrangements as agreed between the Purchaser and Contractor;

then Contractor shall pay to Purchaser for each day of delay following the
expiration of the Grace Period, for up to 200 days, by way of pre-estimated and
liquidated damages for the delay and not as penalty, an amount equal to * of
that portion of the Initial Contract Price of the System allocable to Segment S.

C. If a System Upgrade is not Ready for Commercial Acceptance or
Provisional Acceptance by the Scheduled Upgrade Date, as it may have been
extended under:

1. Article 6 (Contract Variations);

2. Article 17 (Force Majeure); or

3. Other arrangements as agreed between the Purchaser and the Contractor;

then Contractor shall pay to Purchaser for each day of delay, for up to 90 days,
by way of pre-estimated and liquidated damages for the delay and not as a
penalty, an amount equal to * of the Initial Upgrade Price for such System
Upgrade.

ARTICLE 23 LIMITATION OF LIABILITY/INDEMNIFICATION
- ---------------------------------------------------

A. NOTWITHSTANDING ANY OTHER PROVISION IN THIS CONTRACT, AND IRRESPECTIVE
OF ANY FAULT, NEGLIGENCE OR GROSS NEGLIGENCE OF ANY KIND, IN NO EVENT SHALL
EITHER PARTY OR ANY OF ITS DIRECTORS, OFFICERS, EMPLOYEES OR AGENTS BE LIABLE
FOR ANY CONSEQUENTIAL, INCIDENTAL, INDIRECT, RELIANCE OR SPECIAL (INCLUDING
PUNITIVE) DAMAGES, INCLUDING, BUT NOT LIMITED TO, LOSS OF REVENUE, LOSS OF
BUSINESS OPPORTUNITY OR THE COSTS ASSOCIATED WITH THE USE OF RESTORATION
FACILITIES RESULTING FROM ITS FAILURE TO PERFORM PURSUANT TO THE TERMS AND
CONDITIONS OF THIS CONTRACT.

* MATERIAL OMITTED AND SEPARATELY FILED WITH THE COMMISSION UNDER AN APPLICATION
FOR CONFIDENTIAL TREATMENT.
<PAGE>

B. EXCEPT AS SET FORTH BELOW IN THE LAST TWO SENTENCES OF THIS SUB-ARTICLE
23(B), THE CONTRACTOR'S MAXIMUM AGGREGATE LIABILITY, WHETHER IN TORT, CONTRACT
OR OTHERWISE, EXCEPT FOR CLAIMS RELATING TO SYSTEM UPGRADES, SHALL NOT EXCEED
* OF THE CONTRACT PRICE. THE CONTRACTOR'S MAXIMUM AGGREGATE LIABILITY FOR CLAIMS
RELATING TO SYSTEM UPGRADES (IF CONTRACTOR CAN PROVE THAT THE SYSTEM WAS
DESIGNED WITH SUFFICIENT TRANSMISSION MARGIN AND THUS SUCH CLAIMS DO NOT ARISE
UNDER CLAUSE (ii) OF SUB-ARTICLE 10(B)) SHALL NOT EXCEED * OF THE APPLICABLE
UPGRADE PRICE. THE FOREGOING LIMITATION SHALL NOT APPLY TO CLAIMS UNDER SUB-
ARTICLES 19(A) AND 23(C). IF CONTRACTOR CANNOT PROVE THAT THE SYSTEM WAS
DESIGNED WITH SUFFICIENT TRANSMISSION MARGIN FOR A SYSTEM UPGRADE, THE
CONTRACTOR'S MAXIMUM AGGREGATE LIABILITY FOR CLAIMS ARISING UNDER CLAUSE (ii) OF
SUB-ARTICLE 10(B) SHALL NOT EXCEED *.

C. Contractor, at its expense, shall defend, indemnify and hold harmless
Purchaser, its agents, subcontractors and employees against any and all claims,
demands, and judgments for losses due to any act or omission, arising out of, or
in connection with this Contract or, prior to risk of loss passing to Purchaser,
the operation and maintenance of the System, to the extent such losses were
caused by the negligence or willful misconduct of the Contractor, its
subcontractors, employees or agents. The defense, indemnification and save
harmless obligation is specifically conditioned on the following: (i) Purchaser
providing prompt notification in writing of any such claim or demand when it
obtains Actual Knowledge thereof, unless such failure shall not have materially
impaired Contractor's ability to defend against such claim; (ii) Contractor
having control of the defense of any such action, claim or demand and of all
negotiations for its settlement or compromise; and (iii) Purchaser cooperating,
at Contractor's expense, in a reasonable way to facilitate the defense of such
claim or demand or the negotiations for its settlement.

D. Purchaser, at its expense, shall defend, indemnify and hold harmless
Contractor, its agents, subcontractors and employees against any and all claims,
demands, and judgments for losses due to any act or omission, arising out of, or
in connection with this Contract or, after risk of loss passes to Purchaser, the
operation or maintenance of the System, to the extent such losses were caused by
the negligence or willful misconduct of the Purchaser, its subcontractors,
employees or agents (other than Contractor). The defense, indemnification and
save harmless obligation is specifically conditioned on the following (i)
Contractor providing prompt notification in writing of any such claim or demand
when it obtains Actual Knowledge thereof, unless such failure shall not have
materially impaired Purchaser's ability to defend against such claim; (ii)
Purchaser having control of the defense of any such action, claim or demand and
of all negotiations for its settlement or compromise; and (iii) Contractor
cooperating, at Purchaser's expense, in a reasonable way to facilitate the
defense of such claim or demand or the negotiations for its settlement.

* MATERIAL OMITTED AND SEPARATELY FILED WITH THE COMMISSION UNDER AN APPLICATION
FOR CONFIDENTIAL TREATMENT.
<PAGE>

ARTICLE 24 COUNTERPARTS
- ------------------------

This Contract may be signed in any number of counterparts, each of which
shall be an original, with the same effect as if the signatures thereto and
hereto were upon the same instrument.

ARTICLE 25 DESIGN AND PERFORMANCE RESPONSIBILITY
- -------------------------------------------------

A. The Contractor shall be solely responsible for the design of and for
all details of the System and the System Upgrades and for the adequacy thereof.

B. The Contractor's responsibility for design of the System and the System
Upgrades shall not in any way be diminished nor shall the Contractor's design
approach be restricted or limited by the Purchaser's acceptance of the
Contractor's guidance or recommendations as to engineering standards and design
specifications, or by the Purchaser's suggestions or recommendations on any
aspect of the design.

C. Purchaser shall use reasonable efforts in assisting the Contractor to
obtain in a timely manner accurate information required for the Contractor to
perform the Work and the Upgrade Work, which Contractor cannot expeditiously and
cost-effectively obtain from any source other than the Purchaser.

ARTICLE 26 PRODUCT CHANGES
- ---------------------------

The Contractor may at any time make changes to the System or System
Upgrades furnished pursuant to this Contract, or modify the drawings and
published specifications relating thereto, or substitute equipment of later
design, provided the changes, modifications, or substitutions under normal and
proper use do not impact upon the form, fit, expected life or function of the
System as provided in the System Performance Requirements.

ARTICLE 27 RISK AND INSURANCE
- ------------------------------

A. The Contractor shall at all times maintain, after the date which is 30
days from the date hereof, and upon request, the Contractor shall furnish the
Purchaser with certificates, or other reasonable evidence, that Contractor
maintains, the following insurance or has adequate self-insurance (other than as
required to comply with any statutory insurance requirements); provided, that
--------
the following insurance coverages may be combined or in different form so long
as Contractor maintains insurance consistent with the following requirements:

1. Workmen's Compensation and Employers Liability Insurance (with a
limit of not less than * for any one incident or series of
incidents arising from one event or such higher limit as may be
required by the laws of any jurisdiction) covering the officers
and employees of the Contractor for all compensation or other
benefits required of the Contractor by the laws of any nation or
political sub-division thereof to

* MATERIAL OMITTED AND SEPARATELY FILED WITH THE COMMISSION UNDER AN APPLICATION
FOR CONFIDENTIAL TREATMENT.
<PAGE>

which the Contractor and its operations under this Contract are
subject in respect of injury of death of any such employee.

2. Comprehensive General Public Liability Insurance, covering
personal injury and/or property damage, with combined single
limits of not less than * for claims of injury or death of any
persons or loss of or damage to property resulting from any one
accident. This insurance to be extended to provide Marine
Comprehensive General Liability including liabilities arising out
of the operation of subsea equipment.

3. Comprehensive Automobile Liability insurance covering all
vehicles and automotive equipment owned, hired, or in the custody
and control of Contractor and complying with all applicable
legislation with limits not less than * combined single limit for
the death or injury of any person per accident and not less than
* for the loss or damage to property resulting from any one
accident.

4. All Risk Insurance in respect of all property of Contractor, its
respective officers, agents and employees connected with the
performance of the Work against all loss or damage from whatever
cause.

5. Conventional Marine Hull and Machinery Insurance including War
Risks or any vessel(s) owned, operated or chartered by the
Contractor, in an amount equal to the full value thereof. In the
event of damage to or loss of such vessel(s), the Contractor
agrees to look to its insurance carrier for payment of such loss
or damage and hereby releases the Purchaser and waives any claims
against the Purchaser for the loss of such vessel(s) unless due
to the negligence of Purchaser, its agent or representatives
(other than Contractor).

6. All vessels are to be entered in a Mutual Protection and
Indemnity Association with a full and unlimited entry or to have
Marine Protection and Indemnity Insurance with a limit of not
less than * including coverage far illness, injury or death of
crew members (unless covered under Workmen's Compensation
Insurance), Contractual Liability Coverage, Collision and Tower's
Liability, Removal of Wreck and Debris and Third Party Liability.

7. Excess Liability Coverage over that required in Sub-Articles
27(A)(1), (2) and (3) with minimum limits of * for any one
accident or occurrence.

8. Specialist Operations Insurance with a limit of not less than
* as per London Wording 1993 or equivalent.

* MATERIAL OMITTED AND SEPARATELY FILED WITH THE COMMISSION UNDER AN APPLICATION
FOR CONFIDENTIAL TREATMENT.
<PAGE>

9. Transit Insurance including inland, air, and Marine Cargo
coverage including War (other than on land) in an amount
sufficient to cover the expected highest value of any one
shipment. Coverage to include Institute Cargo Clauses, all risks
1.1.63, Institute War Clauses, London Malicious Damage Clause,
and Institute Strikes Riots and Civil Commotion Clauses or their
equivalent.

10. Marine Cargo or equivalent is required to protect, for full cost,
against all risks of physical loss or damage to the plant,
equipment and supplies to be included in the System (other than
War Risks) beginning with when each such item is ready for
shipping and ending when the submersible plant and equipment are
placed overside the cable laying vessel and when the equipment
and supplies are delivered to the cable stations, central
offices, or network operation center. The coverage continues to
cover cable lying on the seabed.

11. Sea Bed or equivalent coverage (including an Old Mines and
Torpedoes Clause, including other derelict weapons of War) is
required to protect, for full cost, against all risks of physical
loss or damage to the submersible plant and equipment described
in Sub-Article 27(A)(10) above. See last paragraph.

12. War Risks or equivalent coverage is required to protect against
damage to, seizure by and/or destruction of the System by means
of war, piracy, takings at sea and other warlike operations until
discharge of the submersible plant and equipment. For the
purposes of this Article "discharge of the submersible plant and
equipment" shall be deemed to take place when the plant and
equipment reaches the sea bottom, as far as the submersible plant
and equipment is concerned, and when the plant is off-loaded in
the respective terminal country, as far as non-submersible plant
is concerned.

13. Pollution Liability (EIL) insurance for installation operations
and as arising from the use of vessels in an amount not less than
* or such higher sum as may be required to meet any legal
requirement in area of operations.

The Comprehensive General Liability Insurance required pursuant to Sub-
Article 27(A)(2) above, shall include Contractual Liability Coverage which shall
specifically apply to the obligations assumed by the Contractor under the Terms
and Conditions of this Contract.

B. 1. All the foregoing insurances shall be effected with a
creditworthy insurer and shall be endorsed to provide Purchaser
with at least thirty (30) days prior written notice of
cancellation or material change.

* MATERIAL OMITTED AND SEPARATELY FILED WITH THE COMMISSION UNDER AN APPLICATION
FOR CONFIDENTIAL TREATMENT.
<PAGE>

2. All the foregoing insurances shall name Purchaser as an
additional insured as to operations hereunder, in which event the
Contractor's insurance shall be primary to any insurance carried
by Purchaser.

3. The limits specified herein are minimum requirements and shall
not be construed in any way as limits of liability or as
constituting acceptance by Purchaser of such responsibility for
financial liabilities in excess of such limits. The Contractor
shall bear all deductibles applicable to any insurance.

4. If it is judicially determined that the monetary limits of
insurance required hereunder or of any indemnity voluntarily
assumed under the Terms and Conditions of this Contact which the
Contractor agrees will be supported either by available liability
insurance or voluntarily self-insured, in part or whole, exceeds
the maximum limits permitted under applicable law, it is agreed
that said insurance requirements or indemnity shall automatically
be amended to conform to the maximum monetary limits permitted
under such law.

5. Contractor shall take reasonable steps to provide that any sub-
contractor engaged by it has in effect or will effect Employer's
Liability, Workmen's Compensation, Hull and Machinery and
Protection and Indemnity insurances and any other insurances
required by law, together with such other insurances as the
Contractor may consider necessary.

6. If the Contractor fails to effect or keep in force any of the
insurances required under this Contract, Purchaser may effect and
keep in force any such insurances and pay such premiums as may be
necessary for that purpose and from time to time deduct the
amount so paid by Purchaser from any money due or which may
become due to the Contractor hereunder or recover the same as a
debt due from the Contractor, provided that Purchaser is not in
Default.

7. Each Party shall give the other prompt notification of any claim
with respect to any of the insurances to be provided hereunder,
accompanied by full details giving rise to such claim. Each Party
shall afford the other all such assistance as may be required for
the preparation and negotiation of insurance claims.

8. Contractor shall report to Purchaser as soon as practicable all
accidents or occurrences resulting in injuries to Contractor's
employees or third parties, or damage to property of third
parties, arising out of our during the course of services for
Purchaser by Contractor.

C. The Contractor may organize such levels of deductibles, excesses and
self-insurance as it considers appropriate and which are within prudent industry
standards.
<PAGE>

D. The insurance requirements of this Article 27 will remain in place with
respect to each Segment, the System or System Upgrade, as the case may be, and
will not in any way be diminished or reduced until the transfer of title and
risk of loss shall have passed to Purchaser of such Segment, System or System
Upgrade, as the case may be, even in the event of the sale of substantially all
the assets of the Contractor by way of a merger, consolidation or sale of
assets.

ARTICLE 28 PLANT AND WORK RULES
- --------------------------------

Employees and agents of each Party shall, while on the premises of the
other or its subcontractors, comply with all plant rules and governmental
regulations.

ARTICLE 29 RIGHT OF ACCESS
- ---------------------------

A. The Contractor shall, upon reasonable notice of not less than ten (10)
working days, during normal business hours and in a manner to avoid any
disruption of the work on the premises including performance of other contracts,
permit access by the Purchaser or its Quality Assurance (QA) Representative
(other than a competitor of the Contractor or any affiliate of a competitor) to
the Contractor's premises where the work will be performed, and will use its
best endeavors to secure rights of access to premises of its subcontractors
where the work will be performed, having subcontracts or orders in the amount
of, or equivalent to U.S. $125,000 or more, in accordance with the Contractor's
contractual arrangements with its subcontractors, and allow the Purchaser or its
QA Representative to:

1. audit the Contractor's quality assurance system and its
application to the Work and Upgrade Work, including manufacture,
development and raw materials and components provision;

2. inspect all parts of the Work and Upgrade Work to the extent
reasonably practicable to ensure that their quality meets the
Technical Specification.

This right of access shall allow for the Purchaser and/or its QA representative
(up to a total of three (3) persons). The Purchaser shall provide the name(s),
nationality and title of each such visitor prior to the visit. The Contractor
shall not be responsible for any costs, including travel and accommodation
costs, of the Purchaser or its representatives.

B. The right of access shall also allow for the Purchaser and/or
representatives (up to a total of three (3) persons) to be aboard the vessel(s)
during installation and the route survey, provided accommodations are available.
The Contractor shall not be responsible for any costs of the Purchaser or its
representatives, except for living expenses on board the vessel which includes
one (1) daily telex or fax, all other travel and accommodation costs for the
Purchaser or its QA Representatives shall be for the account of the Purchaser.

C. Any right of access shall not be construed as creating any obligation
requiring the Contractor or its subcontractors to disclose trade secrets or
proprietary information.

<PAGE>

Further, such right of access may be conditioned on the execution of a
confidentiality and non-disclosure agreement and/or subject to routine building
or security rules, regulations or procedures.

D. Any exercise of any right of the Purchaser hereunder to inspect, audit,
visit or to serve any part of the Work or System Upgrades shall not be construed
as limiting any obligation of Contractor hereunder, including without
limitation, under Articles 1 and 10 hereof.

E. Contractor will have access to the System as necessary to accomplish
its responsibilities under this Contract and in order to make repairs and to
make System Upgrades. Contractor will provide reasonable notice of its need for
access and will take reasonable steps to minimize disruptions to the operation
of the System.

F. Contractor shall give the Purchaser reasonable prior written notice of
each monthly project management review meeting with respect to the status of the
construction and/or installation of the System, and Purchaser's representatives
(up to three such representatives) and the Independent Engineer shall at their
cost be permitted to attend and participate in such meetings.

ARTICLE 30 QUALITY ASSURANCE
- -----------------------------

All equipment, material and supplies provided under this Contract shall be
inspected and tested by representatives designated by the Contractor to the
extent reasonably practical to assure that the quality of the equipment,
materials and supplies being incorporated is sufficient to realize the System
Performance Requirements. The inspection and test program established for such
equipment, materials and supplies shall be consistent with commercial practices
normally employed by the Contractor in the construction of submarine cable
systems. The foregoing shall not be construed as limiting any of the
Contractor's obligations under this Contract.

ARTICLE 31 DOCUMENTATION
- -------------------------

The Contractor shall furnish to the Purchaser one copy of the standard
documentation in the English language for the System provided hereunder. Such
documentation shall be provided prior to the Acceptance testing. Additional
copies of the documentation are available at additional cost.

ARTICLE 32 TRAINING
- --------------------

The Contractor will provide, as part of the Initial Contract Price, until
the Date of Final Acceptance, any and all training, as more particularly
described in the training section of Appendix 6, necessary for the operation and
maintenance of the System.
<PAGE>

ARTICLE 33 SETTLEMENT OF DISPUTES/ARBITRATION/LITIGATION
- ---------------------------------------------------------

A. The Parties shall endeavor to settle amicably by mutual discussions any
disputes, differences, or claims whatsoever related to this Contract.

B. Failing such amicable settlement, any controversy, claim or dispute
arising under or relating to this Contract, including the existence, validity,
interpretation, performance, termination or breach thereof, shall, if both
Parties agree in writing thereto, finally be settled by arbitration in
accordance with the International Arbitration Rules of the American Arbitration
Association ("AAA"). Unless the Parties agree to a sole arbitrator, there shall
be three (3) arbitrators, with each Party appointing one arbitrator, who
collectively will select a third. The language of the arbitration shall be
English. The Arbitrator will not have authority to award punitive damages to
either Party. Each Party shall bear its own expenses, but the Parties shall
share equally the fees and expenses of the Arbitration Tribunal and the AAA.
This Contract shall be enforceable, and any arbitration award shall be final,
and judgment thereon may be entered in any court of competent jurisdiction. In
any such arbitration, the decision in any prior arbitration under this Contract
shall not be deemed conclusive of the rights as among themselves of the Parties
hereunder. The arbitration shall be held in New York, New York, U.S.A.

C. 1. If both Parties do not agree to arbitration pursuant to paragraph
(B) above, then either Party may institute suit in the Supreme
Court of the State of New York sitting in New York County or the
United States District Court of the Southern District of New
York, or any appellate court from any thereof.

2. Each Party hereby irrevocably and unconditionally submits to the
non-exclusive jurisdiction of any New York State or Federal court
sitting in The City of New York, and any appellate court from any
thereof, in any action or proceeding arising out of or relating
to this Contract, and each Party hereby irrevocably and
unconditionally agrees that all claims in respect of such action
or proceeding may be heard and determined in such New York State
court or, to the extent permitted by law, in such Federal court.
Each Party hereby irrevocably and unconditionally waives, to the
fullest extent it may effectively do so, any defense of an
inconvenient forum to the maintenance of such action or
proceeding in any such court and any right of jurisdiction on
account of the place of residence or domicile of either Party.
The Contractor hereby irrevocably and unconditionally appoints CT
Corporation System (the "New York Process Agent"), with an office
----------------------
on the date hereof at 1633 Broadway, New York, New York, as its
agent to receive on behalf of the Contractor and its respective
property service of copies of the summons and complaint and any
other process which may be served in any such action or
proceeding in any such New York State or Federal court and agrees
promptly to appoint a successor New York Process Agent in The
City of New York (which successor Process Agent shall accept such
<PAGE>

appointment in a writing prior to the termination for any reason
of the appointment of the initial New York Process Agent). In
any such action or proceeding in such New York State or Federal
court sitting in The City of New York, such service may be made
on the Contractor by delivering a copy of such process to the
Contractor in care of the appropriate Process Agent at such
Process Agent's above address and by depositing a copy of such
process in the mails by certified or registered air mail,
addressed to the Contractor at its address referred to in Article
35 of this Contract (such service to be effective upon such
receipt by the appropriate Process Agent and the depositing of
such process in the mails as aforesaid). The Contractor hereby
irrevocably and unconditionally authorizes and directs such
Process Agent to accept such service on its behalf. As an
alternate method of service, the Contractor also irrevocably and
unconditionally consents to the service of any and all process in
any such action or proceeding in such New York State or Federal
court sitting in The City of New York by mailing of copies of
such process to the Contractor, as the case may be, by certified
or registered air mail at its address referred to in Article 35
of this Contract. The Contractor agrees that, to the fullest
extent permitted by applicable law, a final judgment in any such
action or proceeding shall be conclusive and may be enforced in
other jurisdictions by suit on the judgment or in any other
manner provided by law.

3. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE
--------------------
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE
TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER
THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE,
AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY
OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B)
ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN
INDUCED TO ENTER INTO THIS AGREE MENT BY, AMONG OTHER THINGS, THE
MUTUAL WAIVERS AND CERTIFICATIONS IN THIS PARAGRAPH.

D. THE OBLIGATIONS OF EACH PARTY IN RESPECT OF THIS CONTRACT DUE TO ANY
PARTY SHALL, NOTWITHSTANDING ANY JUDGMENT IN A CURRENCY (THE "JUDGMENT
--------
CURRENCY") OTHER THAN DOLLARS, BE DISCHARGED ONLY TO THE EXTENT THAT ON THE
BUSINESS DAY FOLLOWING RECEIPT BY SUCH PARTY OF ANY SUM ADJUDGED TO BE SO DUE IN
THE JUDGMENT CURRENCY SUCH PARTY MAY IN ACCORDANCE WITH NORMAL
<PAGE>

BANKING PROCEDURES PURCHASE DOLLARS WITH THE JUDGMENT CURRENCY; IF THE AMOUNT OF
DOLLARS SO PURCHASED IS LESS THAN THE SUM ORIGINALLY DUE TO SUCH PARTY IN
DOLLARS, EACH PARTY AGREES, AS A SEPARATE OBLIGATION AND NOTWITHSTANDING ANY
SUCH JUDGMENT, TO INDEMNIFY SUCH PARTY AGAINST SUCH LOSS, AND IF THE AMOUNT OF
DOLLARS SO PURCHASED EXCEEDS THE SUM ORIGINALLY DUE TO ANY PARTY TO THIS
CONTRACT, EACH PARTY AGREES TO REMIT TO SUCH PARTY, SUCH EXCESS.

ARTICLE 34 APPLICABLE LAW
- --------------------------

THIS CONTRACT SHALL BE CONSTRUED AND GOVERNED IN ACCORDANCE WITH THE LAWS
OF THE STATE OF NEW YORK, UNITED STATES, EXCLUDING ITS CONFLICTS OF LAW
PROVISIONS AND EXCLUDING THE CONVENTION FOR THE INTERNATIONAL SALE OF GOODS.

ARTICLE 35 NOTICES
- -------------------

A. Any notices, consent, approval, or other communication pursuant to this
Contract shall be in writing, in the English language, and shall be deemed to be
duly given or served on a Party if sent to the Party at the address stipulated
in Sub-Article 35(B) and if sent by any one of the following means only:

1. Sent by hand: Such communication shall be deemed to have been
received on the day of delivery provided receipt of delivery is
obtained.

2. Sent by facsimile: Such communication shall be deemed to have
been received, under normal service conditions, twenty-four (24)
hours following the time of dispatch or on confirmation by the
receiving Party, whichever is earlier.

3. Sent by registered or certified mail: Such communication shall be
deemed to have been received, under normal service conditions, on
the day it was received or on the tenth day after it was
dispatched, whichever is earlier.

B. For purposes of this Article, the names, addresses and fax numbers of
the Parties are as detailed below. Any change to the name, address, and
facsimile numbers may be made at any time by giving thirty (30) days prior
written notice.

Tyco Submarine Systems Ltd.
340 Mt. Kemble Avenue
Morristown, New Jersey 07960
Tel: 973-326-3500
Fax: 973-326-2711
<PAGE>

Pacific Crossing Ltd.
Wessex House
45 Reid Street
Hamilton HM12
Bermuda
Fax: 441-296-6749/8606
Attn: Cameron Adderly

C. All provisions in this Contract regarding notices, consents, approvals
and other communications to and from, and other actions taken on behalf of, the
Contractor are subject to the provisions of Article 42 hereof.

ARTICLE 36 PUBLICITY AND CONFIDENTIALITY
- -----------------------------------------

A. No information relating to this Contract shall be released by either
Party to any newspaper, magazine, journal or other written, oral or visual
medium without the prior written approval of an authorized representative of the
other Party; provided that, subject to Article 20 (Safeguarding of Information
--------
and Technology) and the following Sub-Article, this Article shall not restrict
either Party from (i) responding to customary press inquiries or otherwise
making public or private statements in the normal course of business, so long as
consistent with a mutually agreed press-release and (ii) assisting in the
obtaining of financing in accordance with Sub-Article 37(C), including the
publication of a financial tombstone.

B. This Contract and any non-public information, written or oral, with
respect to this Contract, "Confidential Information", will be kept confidential
and shall not be disclosed, in whole or in part, to any person other than
affiliates, officers, directors, employees, agents or representatives of a Party
(collectively, "Representatives") who need to know such Confidential Information
for the purpose of negotiating and executing this Contract. Each Party agrees to
inform each of its Representatives of the non-public nature of the Confidential
Information and to direct such persons to treat such Confidential Information in
accordance with the terms of this Article. Nothing herein shall prevent a Party
from disclosing Confidential Information (a) upon the order of any court or
administrative agency, (b) upon the request or demand of, or pursuant to any
regulation of, any regulatory agency or authority, (c) to the extent reasonably
required in connection with the exercise of any remedy hereunder, (d) to a
Party's legal counsel or independent auditors, (e) prospective lenders to the
Purchaser or Holding Company, and (f) to any actual or proposed assignee of all
or part of its rights hereunder provided that such actual or proposed assignee
agrees in writing to be bound by the provisions of this Article.

ARTICLE 37 ASSIGNMENT; SUBCONTRACTORS
- --------------------------------------

A. Except as provided in this Article, neither Party shall assign this
Contract or any right or interest under this Contract, nor delegate any work or
obligation to be performed under this Contract ("Assignment"), without the other
Party's prior written consent which shall not be unreasonably withheld (it being
understood that it shall be deemed to be reasonable to withhold consent to the
assignment of this Contract or any rights, interest or
<PAGE>

obligations hereunder to a competitor of Contractor or an affiliate of a
competitor or uncreditworthy party). Nothing herein shall preclude a Party from
employing a subcontractor in carrying out its obligations under this Contract. A
Party's use of such subcontractor shall not release the Party from its
obligations or liability (including warranties) under this Contract. If a
proposed subcontractor of major equipment (i.e., equipment listed on Exhibit E)
is not listed on Exhibit E hereto, Contractor shall obtain approval thereof from
Purchaser, which approval shall not be unreasonably withheld. Purchaser and
Contractor shall agree on the form and substance of Exhibit E by May 1, 1998.

B. The Contractor has the right to assign all of its rights under this
Contract or to delegate all of its duties hereunder at any time without the
Purchaser's consent to any successor to substantially all the assets of the
Contractor by way of a merger, consolidation or sale of assets provided that in
the case of any assignment or delegation pursuant to this Sub-Article 37(B) such
assignee shall assume in writing all warranties, representations and obligations
of Contractor under this Contract. The Contractor shall give the Purchaser
written notice 30 days prior to the assignment.

C. The Parties acknowledge that Purchaser may finance construction of the
System on a "project finance" basis and that in connection therewith the
financing parties will require that such financing be secured by certain assets
of Purchaser (including but not limited to this Contract). The Purchaser may, in
connection with any such project financing grant a collateral assignment of the
System and/or its rights and obligations under this Contract to any such
financing parties, and in connection therewith, the Contractor will execute and
deliver a Consent, substantially in the form of Exhibit B hereto; provided that
Contractor agrees to make such changes or additions to such form as may be
reasonably requested by such financing parties, and Purchaser, and such
financing parties, may transfer in accordance with such Consent. Contractor
will also deliver an Opinion in the form of Exhibit C hereto, and a similar
opinion of Guarantor's counsel with respect to the Guaranty, to Purchaser and
such financing parties and such other documents as are reasonably requested by
such financing parties. Furthermore, Contractor agrees, for the benefit of any
such financing parties, that (i) prior to the closing of the financing and the
execution and delivery of the Consent the Contractor shall have no recourse to
such financing parties for any of Purchaser's obligations hereunder and (ii)
thereafter, the Contractor shall have recourse in accordance with the Consent.

D. The Purchaser has the right to assign all of its rights and delegate
all of its duties under this Contract to any other entity to whom all of
Purchaser's rights and interests in the System have been transferred. Purchaser
also has the right (i) to assign all of its rights hereunder with respect to any
particular Landing Assets to any Transferee, (ii) to assign Permits with respect
to such Landing Assets, or have Permits with respect to such Landing Assets
issued in the name of, such Transferee and (iii) to transfer such Landing Assets
or have such Landing Assets transferred directly to, such Transferee; provided
--------
that such Transferee shall execute a supplement to this Contract whereby it
becomes jointly and severally liable, together with Purchaser, for all of
Purchaser's obligations under this Contract. "Landing Assets" means, with
respect to each jurisdiction where a portion of the System is located, all or
part of such portion of the System located therein. It is understood that the
<PAGE>

Purchaser, at its option, may assign and transfer rights with respect to Landing
Assets in different jurisdictions to different Transferees. Purchaser shall not
transfer any of its rights under this Contract or the System except in
accordance with the foregoing. Any assignment or transfer not expressly
permitted by Sub-Articles 37(D) shall be of no force and effect. Any assignment
or transfer which results in any increase in costs or any loss, damage, delay or
failure of performance shall constitute a Force Majeure, and, without limiting
the applicability of Article 17 (Force Majeure), Purchaser shall be responsible
for any increase in costs resulting therefrom.

ARTICLE 38 RELATIONSHIP OF THE PARTIES
- ---------------------------------------

All work performed by a Party under this Contract shall be performed as an
independent contractor and not as an agent of the other and no persons furnished
by a Party shall be considered the employees or agents of the other. Each Party
shall be responsible for its employees' compliance with all Laws while
performing under this Contract. This Contract shall not form a joint venture or
partnership between the Parties.

ARTICLE 39 SUCCESSORS BOUND
- ----------------------------

This Contract shall be binding on the Contractor and the Purchaser and
their respective successors and permitted assigns.

ARTICLE 40 ARTICLE CAPTIONS
- ----------------------------

The captions of the Articles do not form part of this Contract and shall
not have any effect on the interpretation thereof.

ARTICLE 41 SEVERABILITY
- ------------------------

If any of the provisions of this Contract shall be invalid or
unenforceable, such invalidity or unenforceability shall not invalidate or
render unenforceable the entire Contract, but rather the entire Contract shall
be construed as if not containing the particular invalid or unenforceable
provision or provisions and the rights and obligations of the Contractor and the
Purchaser shall be construed and enforced accordingly. In the event such invalid
or unenforceable provision is an essential and material element of this
Contract, the Parties shall promptly negotiate a replacement provision.

ARTICLE 42 *
- --------------

ARTICLE 43 SURVIVAL OF OBLIGATIONS
- -----------------------------------

The Parties' rights and obligations, which, by their nature would continue
beyond the termination, cancellation or expiration of this Contract, including,
but not limited

* MATERIAL OMITTED AND SEPARATELY FILED WITH THE COMMISSION UNDER AN APPLICATION
FOR CONFIDENTIAL TREATMENT.
<PAGE>

to, those contained in Sub-Article 4(B) (Taxes, Levies and Duties) and Sub-
Article 4(C) (Withholding Tax), Article 18 (Intellectual Property), Article 20
(Safeguarding of Information and Technology), Article 21 (Export Control) and
Article 23 (Limitation of Liability/Indemnification) shall survive termination,
cancellation or expiration hereof. Article 10 (Warranty) and Article 11
(Contractor Support), shall survive termination, cancellation or expiration
hereof, if and only if, this Contract is terminated by Purchaser pursuant to
Sub-Article 13(A).

ARTICLE 44 NON-WAIVER
- ----------------------

A waiver of any of the terms and conditions of this Contract, or the
failure of either Party strictly to enforce any such term or condition, on one
or more occasions shall not be construed as a waiver of the same or of any other
term or condition of this Contract on any other occasion.

ARTICLE 45 LANGUAGE
- --------------------

This Contract has been executed in the English language and English will be
the controlling language for interpretation of this Contract.

ARTICLE 46 ENTIRE AGREEMENT
- ----------------------------

This Contract supersedes all prior oral or written understanding between
the Parties and constitutes the entire agreement with respect to the subject
matter herein. Any modification, amendment, waiver, approval or consent given
hereunder must be evidenced by a writing signed by authorized representatives of
all Parties.
<PAGE>

This Contract is executed in Bonn, Germany by a duly authorized
representative of the Purchaser and in Bonn, Germany by a duly authorized
representative of Contractor as set forth below.

TYCO SUBMARINE SYSTEMS LTD.

By: /s/ Martin T. Leone
-------------------------
Name: Martin T. Leone
Title: Managing Director
Date: May 6, 1998

PACIFIC CROSSING LTD.

By: /s/ David Lee
------------------------------
Name: David Lee
Title: Director
Date: May 6, 1998

<PAGE>

EXHIBIT 23.2

CONSENT OF INDEPENDENT ACCOUNTANTS

As independent public accountants, we hereby consent to the inclusion of our
report on the financial statements of Global Crossing Ltd., LDC and subsidiaries
dated April 21, 1998, in this Pre-Effective Amendment No. 3 Registration
Statement on Form S-1 of Global Crossing Ltd. (Registration No. 333-53393) and
in the related prospectus and to all references to our Firm included in or made
a part of this Registration Statement.

Arthur Andersen LLP

Hamilton, Bermuda
August 10, 1998