{\rtf1\deflang1033\deflangfe1033\margl720\margr720\margt360\margb360{\stylesheet {\fs20\lang1033\snext0 Normal;} {\s1\sb240\keepn{\*\pn \pnlvl1

\pndec\pnprev1\pnstart1\pnsp144}\b\f0\fs30\lang103 3 \sbasedon0\snext0 heading 1;} {\s2\sb200\keepn{\*\pn \pnlvl2\pndec\pnprev1\pnstart1\pnsp144{\pntxtb.}}\b\f0\fs 26\lang1033 \sbasedon0\snext0 heading 2;} {\s3\sb180\keepn{\*\pn \pnlvl3\pndec\pnprev1\pnstart1\pnsp144{\pntxtb.}}\b\f0\fs 22\lang1033 \sbasedon0\snext0 heading 3;} {\s4\sb160\keepn{\*\pn \pnlvl4\pnucltr\pnprev1\pnstart1\pnsp144{\pntxtb.}}\b\f0\ fs22\lang1033 \sbasedon0\snext0 heading 4;} {\s5\sb140\keepn{\*\pn \pnlvl5\pncltr\pnprev1\pnstart1\pnsp144}\b\f0\fs20\lang10 33 \sbasedon0\snext0 heading 5;} {\s6\tqc\lang1033\sbasedon0\snext6 footer;} {\*\cs16 \additive\super\sbasedon10 footnote reference;} {\*\cs18 \additive\sbasedon10 page number;}} {\fonttbl{\f0\fnil Times New Roman;}{\f1\fnil Courier New}{\f2005\fnil Courier N ew;}{\f2010\fnil Wingdings;}{\f2020\fnil Webdings;}{\f2\fnil Arial;}{\f3\fnil Ar ial;}{\f4\fnil LucidaHandwriting;}{\f5\fnil Symbol;}{\f6\fnil Symbol;}{\f7\fnil Ferdsch;}{\f30\fnil Myriad Cn Semibold;}{\f31\fnil Myriad Roman;}{\f50\fnil Cour ier New;}{\f51\fnil Times New Roman;}{\f52\fnil Arial;}{\f53\fnil Symbol;}{\f54\ fnil Wingdings;}{\f55\fnil Wingdings 2;}{\f56\fnil Wingdings 3;}{\f57\fnil Webdi ngs;}{\f58\fnil Arial Narrow;}{\f59\fnil Arial Unicode MS;}{\f60\fnil Cyberbit;} {\f61\fnil Morningstar 1U Light;}{\f62\fnil Calibri;}} {\colortbl;\red0\green0\blue0;\red127\green0\blue0;\red0\green0\blue255;\red127\ green127\blue127;\red0\green51\blue153;\red4\green68\blue119;\red240\green113\bl ue0;\red255\green255\blue255;\red150\green220\blue255;\red6\green104\blue165;} {\trowd \trbrdrt\brdrs\brdrw5\brdrcf5 \trbrdrl\brdrs\brdrw5\brdrcf5 \trbrdrr\brd rs\brdrw5\brdrcf5 \trrh4500 \clbrdrl\brdrs\brdrw5\brdrcf5 \clbrdrr\brdrs\brdrw5\ brdrcf5 \clbrdrt\brdrs\brdrw5\brdrcf5 \cellx10700 \pard\intbl\plain \cell\row} {\trowd \trbrdrl\brdrs\brdrw5\brdrcf5 \trbrdrr\brdrs\brdrw5\brdrcf5 \trrh1500 \c lbrdrl\brdrs\brdrw5\brdrcf5 \clbrdrr\brdrs\brdrw5\brdrcf5 \clvertalb\cellx10700 \pard\intbl\plain\ql \li400 {\*\shppict{\pict\jpegblip\picw320\pich35\picscalex1 00\picscaley100\bliptag-550752398 {\*\blipuid df2c2f72f0df5f0e8d3b01e121f00de0}ffd8ffe000104a464946000101010048004 80000ffe100164578696600004d4d002a00000008000000000000ffdb00430001010101010101010 1010101010101 01010101010101010101010101010101010101010101010101010101010101010101010101010101 010101010101010101ffdb00430101010101010101010101 01010101010101010101010101010101010101010101010101010101010101010101010101010101 0101010101010101010101010101ffc00011080023014003 012200021101031101ffc4001c00010100020301010000000000000000000009080a0506070403ff c40037100001040300020103020306040700000005030406 070102080009131415160a1211173822233978b7b81821243a3177797a89b5b9ffc4001401010000 0000000000000000000000000000ffc40014110100000000 000000000000000000000000ffda000c03010002110311003f00dfe3ce2fef817eeff8ff00de05fd fbe8fee3f64fb834fbbfdbfe4f8bebbedbf37d6fd1fcbfdd fd4fc3f07c9fd8fdff00bbfe5e729e6a11df0e1c51fef20f7b0062bacd18f16d4beb85bdc8e3e5df 765a72c752dabd75cdf7a3e7a393db4ddf6b0b7734af2d5c 2b8ca9a8d4aba72f954708a4a3a681b79acb24dd25575d54d04104f7596596df54d24524f5ceea2a aa9be75d134d3d35cefbefbed8d74d719db6ce318ce7cf8c 5161471820542131e6063af97e9888a7ad883073f02ca365be078d1459badf0b8455415f8d4dbe35 92512dff0086fa6dae26d7b6d9b4807f1f93a260855f05b4 7b86caad7862b928334d32fc2bae933d889d932f68ae535d468b57144236d59babe6ed9caec7f0cf abd344b08ece9bcf3f563d1d54f04fa64e6551dc36712fc1 ceb4eafe68e7fa5ead602ccd836659129f603d5216bdada21896486311a6ce30180932e5a4132964 7e3b1f8bc70ec84f1b6acc72ca6c1b20f8f27c547ec0064c 6e0b1f9d6e6e7cba398efbafe9373d1e3ebcb21ed51306b65d2038ca3173d37ade734f59161428a2 91497bb171795c6ce998e4843113f1c75f6f7220ba4493c6 e857bb1a3675c7566f7e8be6febd19c9959d2236e6cd9727afeb88dba9f2eb936626415cd6b1d2b6

db7772795429fbb51848e45bb91d56bb2638a8f88d832950 739df40b31e7c2c498d29877b0c22c48e183e7431f658bb6eef0cc932df09bc1cef2dd4530ddf34d f38d1d345bf638437ce35553d339fe1e4e0807b2c8e49ba0 69da3ec1e66e95a1417503595b8e4dbaada0f5835af2fa730a882b601807a8688d9f2cb3a9d95188 2b525328544af5815732591800c65076281ca58fe2eaf8c3 2efbe12e3ca1bafafb8953369416bb807b219bd17d08ce0f050c724f36ea8b26ceafe21615c81a34 367449fc9e332093cec19a22e597d2ce8931604b50d5bbb3 3a8d0a4c2ca78f27a52bec0da58bd22db95edce63e87e4fb56615bc9ae2a51bde9a538401ddd5b42 cd0107317d123d4cdb76b8e093487ad298c1195d67345e3b 340c124234a6e3574b427a0dc4a98fbd1a6a0f47585d8053947b14970bc37695b38df5f47a2d4c10 afed029172efe32d330e82bdbb85dc83a233d98b2d2175ad 9b38af2275c49a4a443b6792708c0b8d24e82e078f2707427b1446a3b9e7341541ca5d27d8164d39 55c56edbe585018a4980da7eba9bb999210f48c91b9ee4aa 7329b2264840654521b56c09b49a527840776f7e2658507a6ff08bb5bdb34ee382fd5ed85c8148f4 55b94bf64deb431f776357f12a156136a55163d557d4cf7e 6f8c33b7ae084cb62b7f3f73028acc0a60c46e290f170e1e684ff35d9ca1c2b1c502fe78f27459be c00f4565906a9aaee2aeabbe2fe9351f11e819b53111fe41 43df51308993c7c20587b8ecdb3ef18752ac6c4da421a471e46095fd8d619724f2306ca8acbd8a24 ca44fbcf0f7b86e5e8a71fc37b364b12be05c18ff4587e52 9956fa576c08ddd4e5e4e6d07d50ca617655783a50e56d8857b3218f91943181119c9a243d36cea0 82264a9218d5e055af3f170e1bb36ebbb76ba2d5ab545570 e5cb857441bb76e869b2ab2ebacaedaa68a28a7aeca2aaa9b6ba27a6bb6fbed8d719ce23bdcbcf36 9f7feb4e5f3b5652ca4b31831a6ad28fe9d916617200ac62 13093e51909a094dbbb3747c2ee000606123d0f693caf6523d287c0b42f206a499be10272bfb743b f8f7adcebb8f943e42544c1f105fa1c8ca0b688a65648fc6 50d2c64f0f934dbe356fa1030e10508bdd10d7547572e14d52c634c6b8f032dc24e2172576a308e4 be2f207c937dddaacc21f1255da4d1351247772a3760ed75 b46fa2cba096eb6da613d54592d33b636534c6dda3cd76eb5f52fc07697ab2a22611de58a369bbfd 6e1eaaac487f4b5235c45e99bee1973668401220d6b8eb6a b2151a9c3a950f987c1257ab952e4da9f7987494819166841fb6759314cfb3b4f1c67eb0e626eb8b 2ba17ab3bd682afe4b0ea72a36b07107e592e8fd31189ddf 9382676c89857d5ec22b9823d259706640764ecf3bae7a341808b2c5cdb01db858cf1e4e8ae7d95d 3c6a21d7e66ef84d91cb133e0e8fb49a750d676fa1112e7a 155e9c869e9f42ac68d9faa25761c2ac287cf6351693662abc4a46fcdb93f1d35177c0981d689337 3c5f3dfb241771dbd5853766f2d749f27c87a16b793db7cc afafc6f4e2c3ef0854319470c4adab14ea1b76d3235e5811d8ecb01498b56f693287c9d006e5dae9 b75dd8a28c99852bf1e4e14bda0504b7ae48e7b3cd621706 28493c3e17366111d8042f16f222a756085ad8437780316066189906c74eb476452467ee1b222537 2bb676f1e689305b8eb7bd958683742db5ca75272bf4ff00 50df54a41e0168cee234e8ea64588675bcf999278ce48ce5f6cdc95b817241aec31614ce14a2ede7 12e36afd341e3f23182a50623c14bfc791a61feec6839fc5 69cbca254574dbee31b8a795f544d7b4c9442051ba7a196f5932361050f0c98c3e45640dbddb8703 67bf4aa39bda21aa63354c6acfc2b1bfcc8836664cb0fc81 b87d81bc895d961f3f73f725f44f655894805869ebfb4a449509138ed3c9d8219793c36305e417fd d34eb695d8d228926da5cc20b004a5045bc6ca067e65c08d cc896ef828af8f25a4abdbaf3280a478eef70510be2c88ef70d984297a5e2b5f578348d86d2dd180 e7eedfd773b8a9b9647d48bc807cbeb691d5a695d5e110d1 99d2585a5258241989d9a87e72b5f642a4e5f74356e7b8dbaae05d47ce317af6c03fc94533cee6ed 8b1ab5b4cc14090cb069c9780bf9ed09388da84004987c89 65ae10ae6306230642936fa90d832460297f9d74ecbe2717ddb2725944763bbbcd55dda6874d8d13 bbad11ce9aadb36d5fb96f95f54b2a2785764b1b613ca9a6 36ce33b6bfc64efa5aedfbd7b779161b3ebfa9db9a3135db59a107b744d80d291dac2d8ca970d961 188aac06d6565c9a4886d5f0304262f22d6630183e9bbd65 aae31eca70ab82eb635fb1701c6f23f6e7c103fb982f331ea5b5e2aedc70d58f580eab0a55f89ba7 66f2b6a0976edadf45789e25498f50dea2554f4fbbe8cd42 b867b611d9de321b050d2634cb16e4c39162546bbd76dda901aedbbe62e74d14dd2df66eedaa8aa0 b6baaa9ee9edb26a6d8d54d37d339c6dae718fbbcd7c7843 1cb554fb01efa9df12695640fd72c5f9339f8edae72924840ae5063d5f1398dfe4aca335aef0dd71 53a6623343b3812772ab5ceba263483700da6096a6d24b5d 727e21eda401a568f9ccdb8f7abe9ee59e9a9a57502a1facec56b45255ecacddc4eda8da788cbabb

8bddb25be2a589dac55e8e1f099259556c790dd63d16c49d b45f73c9a6d82b7f8f25b742fb45034b597d015e40f94fa77a65a7214562b35eb49c526de916f19a 4414be10a59a307e58da97456f2fb326c8d6fab79dbf85d5 d189593651d281555d5d5f9762c15ef5697b1683022547c2f9e29fb73b26dbe88a5f4e90adab2a45 4ace2ee91e7ddf31ad51b827932be6c3a8609028995712b0 e1e32d4d487f299448dc281c3475ce479b7424287f8f27444bd995226b9a6fae8c97c1ee7ac9ef2e cf085477e50b258630905ef07b89aed104c3d6c3e315d482 691f9b949e2960c154ae0e42e546a252f612f0845b1e6cdb623b0ef969df620e265d0f04e64be791 ba4b8eec9b9a1339b0283deef7942ca2376f86adb50ef270 005c8282baae26516b1a3208eb1931781ccb60845103a3c78ddcbaddb61154290f8f25d7327b5ba7 3ab074ea7305a6fa261d4454ac6f9cdbdd136bc3e210da9a bf90f3f4c0ac625514dc9369f1d35312440403253d665604164d161114fa3632b3f1f9dec4e1627e 3a07da9446eab0b9fa2d2ae60e99e7b82f628934638eae3b 987d408c2efd480c21ed98a8ed02d7f6e4f2c0aa0f48eb71cfe7b030970c4212f65d1a1c47e9f466 79ba209c854562447934777035f3320dd370e5a6ebb17283 b47476c97ddb3c6dbaadf7534d5c3472928ddca39db0a20ba7ba4aeba29a6dae3f35cb0a6cebe85c 931eddefc6d16fa35deb649d7c4fdeea358abf4ea29aabf1 bd23be83da6ffb3f6b87bb6ad51ceebed84f3abafaff00f628c792391fa3a4a6795fa7ed5a4291ef 3f61a57a4aff00abc0d66ac168f0affb02d5923b2ee63536 b3e1b6ada83e25113836673f7f4a57f610b8846d57387a417918b2f1b1f596d7e068af47da45af86 36fecca3365a352c9dba00411328e9cb3853fadcf857f1e9 13b9eef1810897610866487c8a37030f326c7148e16772d340630de2a40297a2e1bb8cadaa0ba2be 5b2db37718455d14ca0e35d34536416c69b6d9496d74513d f64b7fdbbe34534db3ae31beb9cfede782503492f498cb0117d2cfcc8d597622b69ca0bea156028a d3337078347e6af198d58ec832cc7c865b16332f1c2507ba b38cb091b788b0d17631f6e41f7bdf80f20d4928f8874c7b46f6b1cf13f475561777faaee47aae49 b65b26e95682a7535ecf8e3924cd25764f18242b04304c5a fa2a82ed48b46ae9b386ee114964ef2f9d3d957b001b393d670e83c3d8595298f8189c9ec265190a d673238ac55d987f178c9e9620c933e623f1b7f213ef4086 2041c0e0eece18723db37589bddd70d70bd6b5cd2eef8e81e378ddaba7d64f7d4673659518ea849c 385ddbc69ec0a47329af170ad0ee8e924f289c6d52513d03 67ecdb7d72e51137e4289edaa5870d36f3c079e4d0287faf7f4c3614c7462de0503f7a3d40f66722 32e998f8f439bccef4f6af53c3a49202c45449809629da16 240c4b37aed6474c9d2e21a24a6ae5d219f36a78554353d6c6e7d26aeaafaee0324b5a49f995a320 8542a35153764cbfe0fa5fcaa7c5410c60fe6324fa6ffa7f be489c1127f07f73f55f1ff67ce137e7aa095a9cbd0aa51f4fa946483f23fbf52fbd690bdea737f9 84948cce5bf77aeb60b98792fca66060b4ae47f5a1d6fbdc 94a113a4fea8a3d72e95092bd35bb296fb86ac1947766a449539ea7bb64e59dbb5d915548b8eb56d 2a083566c8d2c8e54dd93e943b87cddec7c6bffa755f0e02 7c90fd164193ddf4c09b234d34fd1f83b5d35d74c67d61555be71aeb8d719dd40f0f514db38c6318 fddbefb6dbefb7fe3b6fb6db6d9ce739cf9b1b50dc89cb1c b7139041b9c39d295a3a232e5b2e25e06afada250c633071f0ba6da2f2ed418a66a4a56419bd743d b2a7d421bb51ab6c35b6c930c6adf5ee2e685a31ed3faf3c bca62a77740e9176908d28e735d4417a7f485b0d11498c435acd50fbc2f58bb24db374da00c04c09 6da208e88b4d354b4c6a1363d92ff577e967fcff00ce7fd9 4750f9206c0fe913babff73ed6bfef5f927cdb364b5ec02665e15209841e1f2b3f5b481796574724 b190a74bc0654e82148d399342891464e9ec5a40e23870d4 7d732097604560860a0a51cecc083b416e9ee39ea827620ec7ddd1d4fba0129b41b5df2606e2b485 ac2245743236224acede3a3540bb322f683491c7c0c81b4f c820e25681b0820aa45b47e359ae884b9ee210f8ff00b5ef56a085a89a44cd72bfb6e10395595dd0 4937c4a1bc7ccda28aac9ebba88a7a38593db7574d37dd3d 719df5d76db18c6626dc7d85cd319fd284e2962b6d41c7ddd1de508df2848a8cde440b4b900dfb01 920a824fe086eb1c10c4bc59489bf8f1f94c8767c251fa38 20e713953f70055bbd5f7282b5ec04f4ca21631c83c3ccd855f0f950980cecac642919942054e930 a94dc644250f192c6e343e6294723c9ca99057cc9b485302 1742e9bcd45b1c21af35cdc29de1d2b4edb7c9b72732f122b38bc3e4ad6ddf6911995c7229624fe8 a52c21e6df1c5a8e89f3e899937b80bd6cc5189ab0cdaca6 d5bb299614902734541a280d70191fd175c07b4fb27a2ecbe2be9b39c93ec179768fa61b5e0a5851 81f21e57bfa919223624fea41978c18f391fb9f8bc7df30b 14125765767e1d3aabf2f24a27268c356cd83b6c70bd3a5c774a72dfe9e5ead390a1f468cb7bd897

29d945e1ef576a3639095e65c9bd6c9e1b0f22e3460db317 266c9b6fc389ba498ac6859802b6ed507e4b0d316daf0e35e49e98351f92744733511784862acf61 91f3b6ad55099d981815577b10711d40949029179b45de10 db045fc5d65958fbf209a0f9e8d5ddb66eb27dfec6a2e92b86bdc5496dd3955da554e13168e2b1b1 abd894debdc24134d530a9621726104e3784c427a6898bd3 037f68fd34d75698475d718c04afb26d3b57a57d885d5ca0cbafe5dc854473bf27513d0adf34d214 cb1b43a277ba24970b092cf74b3edb85d9ece3d48d3e2eb7 0814a6b058c812ce6552dd49179db716dc78c7115692791735c0f4f14874f8d5bb073bfaa8ab92f0 fb5252fd0347ed5869af636148c62c73a59b8b0ad0d129f0 076c254fcab60c299955cba8f9b0d64ddc26d93da5ecee04e1dba455500adae41e6cb1015141c3c6 e99072ea5abd3416af8ac7db3266121f0612f23ea0f8dc2c 6331a399b4870c6cde309341ec5b604fc0d1ba69fab25cf14022158c6d1a329d4a3a32ce19760d00 95650a4c28fb9429a6d240d6db115a84c316967099132667 c64f5ba09ca981a68d8a352a93e4125f40f61f3103d84ff40bdc3fe503a5bfd189af997fe70f218f 009700391495830f278b49c3938f496352118c8d00908034 c971a6419c0c4907238b072c39cb9604c63f6ce193f64e176ae905505544f608f70eebfe7de73f4e 348ce27f6bd7a39c86f5f5520f0514525c177954d270af3c c6c7472bb8946dabb707e473694c8d7611b07190835f9a206083664d98a8ba98d3cc57a26b257922 dffd38957dbc3f58f1a887afaea7e6f24464ee990f6c07a3 a4553711ca73026ae9ea6c75da4c751abadd151704969f79223c2146fa6af1668ef656c3d65ebe38 229595309d537c41c8552cdc52c9381731acb9aa9981ca86 b8436cee82ec24316858a2ecd6477ce774956ef13dd3db39db4db19cff001f3d96e9a1e93e908110 ab7a06a4adeecae0a386cf5f41ed385c7a771754832c2bf6 f2ba06928f22c5b9819b2ca2c28c36451262dc6df523ddb6718d54c06aedecea3a5ad8947ea372f5 7b6fbf37827ab8e4eada62fc26d8575d275127bd2972cd22 db38618570ece476a62010a4885efbfd78e1e6c1367ed936e4d9e54d889c75373099b8b9220039f0 79bd87d235bd916d73a1c8f021d264585611789458c4ae6d 891b7cace2191791869646420e2c8e51612720f9b01d56555d70963d7e9ce7ca239e6bb46a4a1e9a abe9babd051eaf8afeb382c6a151059d934126e5483d031e 1ac071028612412c1928f9bb822636d30a1374e95ce77cf40a1f89b8f3972472f97f3772f50943ca 67c9eade6320a92a985400b481968efee1a0c7efa32186af b874dfff0007c9864f74c526f31aba4d9eabebaa980d5c1fd89048cfe927a76327a5f1d17235e134 953880074599ea65c5a916eb788b693d7e80cd55d9eaf2a8 ee401c727042486ee848e104cabfd1018c9cbb4ed872aff8c97b79ff002ffeac3ffa3eccf32e56f5 e3c12e67962da0f38bb96885856e6dba9684bc950f591237 3e59732ce46edc4a9e3f8d38d8d3a23221c3e4255d3dc2ae4b1e1ec4c9255d1266d9ca592a2abd80 81994bec607078786b0ac11f15133e9d8a8c851d329b8a82 a6692840c97ca19b244dc947c39291c8538ab234f9eb68f2678d6821367a947d85c353363ff6b754 5fe6039d3ffd9baefcca6a26aaba66bec7fdc744a21ec36e 3e379007e83a5edd7f57c26bae459a3795d5928e48a3c2c72e9d89744d136cc8ff001ffab8899843 a751b3aca2609e44f6124d80f9026ff556fbebcf5416b56b 3a375a3e9fd6941e40716614f6b5a42f156b12a1e66dac7104d9d7d80b889b6202ec366d27839ea2 23472c666d5b4a1b2891c4127daf9af4070c718f569b8e49 ba639579fafa91c451d5a46e416d54b089d9b103b0e3777b076a564415fbff00b0aaed4ddd3800a3 85033971b65670c55533fbbc0d7b2a311510f8cfa312b455 8d6f5c159cd7db0f6a4f84dad760284c625f649c96d65dde56793c1a02bc1c12263a0b2fb0159448 6bfdc4808fb5290f2420db60cc99936daed4fa39fe3e772f fe903cd1fef3facbca6ca53750ac8d62d95aaeb755bd26f10234ca0a41e31ba351906b1b210d6afa b14b6179d204f1b440b148a20e62ba895d18d92200d3df51 6f1cb553984ebd80a33e7b6ba30787a56911878caf485929c642a73e7f010a68b490341decc75658 913a8789911f3a786465722a056068d1628d5924f88bc5d6 0937e828f827feacb9b01b13425e9b8e3abd18c843b422cdc9504f75e95b934d99991e8adbbb16eb 5df4df4d9bbe450571b69b6b9d319d738c711d33028358be eb783a3f60c32273b03a70677611d024ca3a1e4e23420dad6e4749bbed469b66f99eaf104dc384d1 738470b25a2eb69a6faeaaef8daa1d73cdfcf14ecc27f615 4742d2f564fad778891b4a715cd5d07844c2ca20dddbe7e83e9fc96320861a993c41f1426f117322 7a45649d917ce34df559db8dd4ef0f6bd80129c81b388c1e 1efeca8b47cf44e31613d8c8575398e45654ec3bf944640cb1764a1f0f1f923f8f007a7830f20dc7 18760c3b920d9c2c3196e806b51d5f4b30ab7a37dd9509cc 75cb58602e89f426f6e156b2ad047d80049ba3dc3ded1a5d848a3114098631e1f3292c68743829a7

2247372071fb312408aeabd5775dc751355b049bfae7e299 9ddfed9babeece75bfe49c0d1aabe8aabe9fe0cd48d8f6b296953f24a9ab28b9b8af3b42ecb4d4af ac78b0829374b3628d95028f40e528ca5d3d7cc8a0a7db45 eb05846b3756ccd61d15d6c75e2a84156b0358f08c4dd684352ee0fb6872b2bc33c1e522adcf3c76 6d08f6eff22112ee9c124d9eaf17556db1a203ebdf84aaab 79ddff0059f1cf33406ec78e9e3fded2885275dc7a6cdc8124146e5490d3e2e3ed9f082461159c6a 6888a559bd33974ef726bbb51db9d950973d3a287b6babd8 4760707f453ee7feade498ac35b770d357545d948394ba7e3f05a319db359a968c68c3a1f258aacf ea425a43a2dd05574a22cec78e1c5011717296a09ca28e3d b02965751fb4ce6fb1ebee90b6bd742dd51e8ff9a6c5ae23114847394b8a4a4a0ebbacfb0ec3a45b 31e84a82ce8d6f26a823d6dc0481d1d09060e43b0c57520b 6aa8118e93617badfe28e3ce829a09b1af5e5ae7eb8a7a118b1143a6366545049ac8d3102dfec584 86705a420883c7e14418db26848720aba182cde3430c1ab7 27a68eb5e7affe51e65eac8c0b85f4bd014fdf11702f32463e1ad6afa31386b1d21be1be8b3e8e64 f8d7ab47de3945aa0d5db90eab25de32d3e85d6eb33df743 60d7d8bdd7ff0005f417b5fe81a07a96cee85bf9df66f26f3d5f3d73d1d5c522c29caeed22ec39ab 9d6453a8e462920553410e85e71a9277156f3945cc5c0b05 2c588a0c246a181a99e2ae3b7cc2be69547ba2f52d0a91f6fdf1d676d3881f7049e5a06e1394e2cd a1608ad029ea0a5a1a174954556c6a08de78fd336d4524f5 bb8dcd898b612139788c788bdcdf38c739f3ec2a9e539e62146d4319a1170a5238e694075c43c655 0f001cc2d83819f57cd03a5147c34e65cb9d8d337629640b 28e5ca847472a2eb6dbf9f525c37c65cdba86fe4172a73e53ee23a60b484112afea383468c883c74 33b8d99323ce0d088186a509c6dfbd8e3d7e93ed5cb88fba 7011457616aeed32113793e2f2098fe9b5eb3884359387b2e97d51eea23b1a66c30a6af88494e748 76f8706ddb65beb95f678e1faec9b37d92c6cb637f8b54f1 9ceba63ca37cf5d4dcc29d1feaa22cf1f079bcafa7eac84b5e68d81021f2c70dc941f9b179acd656 8afa7caea1c2e330d0e681c86428e88e449228da2a4b66ce 4afd36d43a075ec06ac8cb5855630787d730d62424059944a07190b108cb32b2c9095974a89b5031 f643c5372125959d3727903d49a68e4cc84c153445472488 3b72b785541c3bc6bcfd644b6e1a3395f9fa9fb4e748ba6d2db02b6a920f0c961b6cfddea409b572 6c00460f936a6096891236d9b2a8206c920dc8964de3d6e8 2e98426aabfedf7f701ffcf37fa9bd65e5ff00e4ff00e9679abff2029bff004ea39e76f694852ec2 be9854ac6a1abd955561fe7bf9fd64d201146f5f4e3f9a8e 8b3db3ff003086222748e49bf98ef4f9d773dfbd0d7bf983a3459c487ee2a9279bade802448a0028 602043078508147b2121c38964d870a12287364d98f18307 b34d168c07b0688a2d59326a8a4d9ab64934104d3493d75c0721e3c78f01e3c78f01e3c78f01e3c7 8f01e3c78f01e3c78f01e3c78f01e3c78f01e3c78f01e3c7 8f01e3c78f01e3c78f01e3c78f01e3c78f01e3c78f01e3c78f01e3c78f01e3c78f01e3c78f01e3c7 8f01e3c78f03ffd9}}\cell\row} {\trowd \trbrdrl\brdrs\brdrw5\brdrcf5 \trbrdrr\brdrs\brdrw5\brdrcf5 \trrh300 \cl brdrl\brdrs\brdrw5\brdrcf5 \clbrdrr\brdrs\brdrw5\brdrcf5 \cellx10700 \pard\intbl\plain \cell\row} {\trowd \trbrdrl\brdrs\brdrw5\brdrcf5 \trbrdrr\brdrs\brdrw5\brdrcf5 \trrh3500 \c lbrdrl\brdrs\brdrw5\brdrcf5 \clbrdrr\brdrs\brdrw5\brdrcf5 \cellx10700 \pard\intbl\plain \li400 \f3\fs60 Form 10-K \par\pard\intbl\plain \li400 \f3\fs20 \par\pard\intbl\plain \li400 \f3\fs34 GLOBAL CROSSING LTD - GLBC \par\pard\intbl\plain \li400 \f3\fs30 \par\pard\intbl\plain \li400 \f3\fs26 Filed: March 17, 2000 (period: December 31 , 1999) \par\pard\intbl\plain \li400 \f3\fs30 \par\pard\intbl\plain \li400 \f3\fs24 Annual report which provides a comprehensi ve overview of the company for the past year\cell\row} {\trowd \trbrdrl\brdrs\brdrw5\brdrcf5 \trbrdrr\brdrs\brdrw5\brdrcf5 \trbrdrb\trb rdrs\trbrdrw5\brdrcf5 \trrh5200 \clbrdrl\brdrs\brdrw5\brdrcf5 \clbrdrr\brdrs\brd rw5\brdrcf5 \clbrdrb\brdrs\brdrw5\brdrcf5 \cellx10700 \pard\intbl\plain \cell\row}\page {\trowd \trbrdrt\brdrs\brdrw5\brdrcf5 \trbrdrl\brdrs\brdrw5\brdrcf5 \trbrdrr\brd rs\brdrw5\brdrcf5 \trrh500 \clbrdrt\brdrs\brdrw5\brdrcf5 \clbrdrl\brdrs\brdrw5\b rdrcf5 \clbrdrr\brdrs\brdrw5\brdrcf5 \cellx10700

\pard\intbl\plain \cell\row} {\trowd \trbrdrl\brdrs\brdrw5\brdrcf5 \trbrdrr\brdrs\brdrw5\brdrcf5 \trrh1000 \c lbrdrl\brdrs\brdrw5\brdrcf5 \clbrdrr\brdrs\brdrw5\brdrcf5 \clvertalc\clshdng100\ clcfpat10\clcbpat10\cellx10700 \pard\intbl\plain \cf8\f3\fs60\qc Table of Contents\cell\row} {\trowd \trbrdrl\brdrs\brdrw5\brdrcf5 \trbrdrr\brdrs\brdrw5\brdrcf5 \trbrdrb\brd rs\brdrw5\brdrcf5 \trrh13350 \clbrdrl\brdrs\brdrw5\brdrcf5 \clbrdrr\brdrs\brdrw5 \brdrcf5 \clbrdrb\brdrs\brdrw5\brdrcf5 \clvertalt\cellx10700 \pard\intbl\plain \cf8\f3\fs14\ql \par\pard\intbl\plain\f3\fs14\ql \par\pard\intbl\plain\f3\fs20\ql\ul\li800{\field{\*\fldinst HYPERLINK \\l "doc_1 _1"}{\*\fldrslt 10-K - FORM 10-K}}\par\pard\intbl\plain \f3\fs14\ql \par\pard\intbl\plain \f3\fs28\ql\ul \li800 {\field{\*\fldinst HYPERLINK \\l "pa rt_1_2_1"}{\*\fldrslt Part I.}}\par\pard\intbl\plain\brdrb\brdrs\brdrcf5\f3\fs10 \ql \par\pard\intbl\plain\f3\fs10\ql \par\pard\intbl\plain\f3\fs20\ul\pnindent1800\lnhang\li1800\ri0\fi-1000{{{\field {\*\fldinst HYPERLINK \\l "item_1_3_1"}{\*\fldrslt Item 1.}}}\plain\f3\fs20\tab} \plain\f3\fs20\ul{\field{\*\fldinst HYPERLINK \\l "item_1_3_1"}{\*\fldrslt Busin ess...................................................... 1}} \par\pard\intbl\plain \f3\fs14\ql \par\pard\intbl\plain \f3\fs28\ql\ul \li800 {\field{\*\fldinst HYPERLINK \\l "pa rt_1_2_2"}{\*\fldrslt Part I.}}\par\pard\intbl\plain\brdrb\brdrs\brdrcf5\f3\fs10 \ql \par\pard\intbl\plain\f3\fs10\ql \par\pard\intbl\plain\f3\fs20\ul\pnindent1800\lnhang\li1800\ri0\fi-1000{{{\field {\*\fldinst HYPERLINK \\l "item_1_3_2"}{\*\fldrslt Item 2.}}}\plain\f3\fs20\tab} \plain\f3\fs20\ul{\field{\*\fldinst HYPERLINK \\l "item_1_3_2"}{\*\fldrslt Prope rties.................................................... 23}} \par\pard\intbl\plain \f3\fs14\ql \par\pard\intbl\plain \f3\fs28\ql\ul \li800 {\field{\*\fldinst HYPERLINK \\l "pa rt_1_2_3"}{\*\fldrslt Part I.}}\par\pard\intbl\plain\brdrb\brdrs\brdrcf5\f3\fs10 \ql \par\pard\intbl\plain\f3\fs10\ql \par\pard\intbl\plain\f3\fs20\ul\pnindent1800\lnhang\li1800\ri0\fi-1000{{{\field {\*\fldinst HYPERLINK \\l "item_1_3_3"}{\*\fldrslt Item 3.}}}\plain\f3\fs20\tab} \plain\f3\fs20\ul{\field{\*\fldinst HYPERLINK \\l "item_1_3_3"}{\*\fldrslt Legal Proceedings............................................. 23}} \par\pard\intbl\plain \f3\fs14\ql \par\pard\intbl\plain \f3\fs28\ql\ul \li800 {\field{\*\fldinst HYPERLINK \\l "pa rt_1_2_4"}{\*\fldrslt Part I.}}\par\pard\intbl\plain\brdrb\brdrs\brdrcf5\f3\fs10 \ql \par\pard\intbl\plain\f3\fs10\ql \par\pard\intbl\plain\f3\fs20\ul\pnindent1800\lnhang\li1800\ri0\fi-1000{{{\field {\*\fldinst HYPERLINK \\l "item_1_3_4"}{\*\fldrslt Item 4.}}}\plain\f3\fs20\tab} \plain\f3\fs20\ul{\field{\*\fldinst HYPERLINK \\l "item_1_3_4"}{\*\fldrslt Submi ssion of Matters to a Vote of Security Holders........... 24}} \par\pard\intbl\plain \f3\fs14\ql \par\pard\intbl\plain \f3\fs28\ql\ul \li800 {\field{\*\fldinst HYPERLINK \\l "pa rt_1_2_5"}{\*\fldrslt Part II.}}\par\pard\intbl\plain\brdrb\brdrs\brdrcf5\f3\fs1 0\ql \par\pard\intbl\plain\f3\fs10\ql \par\pard\intbl\plain\f3\fs20\ul\pnindent1800\lnhang\li1800\ri0\fi-1000{{{\field {\*\fldinst HYPERLINK \\l "item_1_3_5"}{\*\fldrslt Item 5.}}}\plain\f3\fs20\tab} \plain\f3\fs20\ul{\field{\*\fldinst HYPERLINK \\l "item_1_3_5"}{\*\fldrslt Marke t for the Registrant's Common Stock and Related 25}} \par\pard\intbl\plain \f3\fs14\ql \par\pard\intbl\plain \f3\fs28\ql\ul \li800 {\field{\*\fldinst HYPERLINK \\l "pa rt_1_2_6"}{\*\fldrslt Part II.}}\par\pard\intbl\plain\brdrb\brdrs\brdrcf5\f3\fs1 0\ql

\par\pard\intbl\plain\f3\fs10\ql \par\pard\intbl\plain\f3\fs20\ul\pnindent1800\lnhang\li1800\ri0\fi-1000{{{\field {\*\fldinst HYPERLINK \\l "item_1_3_6"}{\*\fldrslt Item 6.}}}\plain\f3\fs20\tab} \plain\f3\fs20\ul{\field{\*\fldinst HYPERLINK \\l "item_1_3_6"}{\*\fldrslt Selec ted Financial Data....................................... 26}} \par\pard\intbl\plain \f3\fs14\ql \par\pard\intbl\plain \f3\fs28\ql\ul \li800 {\field{\*\fldinst HYPERLINK \\l "pa rt_1_2_7"}{\*\fldrslt Part II.}}\par\pard\intbl\plain\brdrb\brdrs\brdrcf5\f3\fs1 0\ql \par\pard\intbl\plain\f3\fs10\ql \par\pard\intbl\plain\f3\fs20\ul\pnindent1800\lnhang\li1800\ri0\fi-1000{{{\field {\*\fldinst HYPERLINK \\l "item_1_3_7"}{\*\fldrslt Item 7.}}}\plain\f3\fs20\tab} \plain\f3\fs20\ul{\field{\*\fldinst HYPERLINK \\l "item_1_3_7"}{\*\fldrslt Manag ement's Discussion and Analysis of Financial Condition 29}} \par\pard\intbl\plain \f3\fs14\ql \par\pard\intbl\plain \f3\fs28\ql\ul \li800 {\field{\*\fldinst HYPERLINK \\l "pa rt_1_2_8"}{\*\fldrslt Part II.}}\par\pard\intbl\plain\brdrb\brdrs\brdrcf5\f3\fs1 0\ql \par\pard\intbl\plain\f3\fs10\ql \par\pard\intbl\plain\f3\fs20\ul\pnindent1800\lnhang\li1800\ri0\fi-1000{{{\field {\*\fldinst HYPERLINK \\l "item_1_3_8"}{\*\fldrslt Item 7A.}}}\plain\f3\fs20\tab }\plain\f3\fs20\ul{\field{\*\fldinst HYPERLINK \\l "item_1_3_8"}{\*\fldrslt Quan titative and Qualitative Disclosures about Market Risk.... 41}} \par\pard\intbl\plain \f3\fs14\ql \par\pard\intbl\plain \f3\fs28\ql\ul \li800 {\field{\*\fldinst HYPERLINK \\l "pa rt_1_2_9"}{\*\fldrslt Part II.}}\par\pard\intbl\plain\brdrb\brdrs\brdrcf5\f3\fs1 0\ql \par\pard\intbl\plain\f3\fs10\ql \par\pard\intbl\plain\f3\fs20\ul\pnindent1800\lnhang\li1800\ri0\fi-1000{{{\field {\*\fldinst HYPERLINK \\l "item_1_3_9"}{\*\fldrslt Item 8.}}}\plain\f3\fs20\tab} \plain\f3\fs20\ul{\field{\*\fldinst HYPERLINK \\l "item_1_3_9"}{\*\fldrslt Finan cial Statements and Supplementary Data................... 42}} \par\pard\intbl\plain \f3\fs14\ql \par\pard\intbl\plain \f3\fs28\ql\ul \li800 {\field{\*\fldinst HYPERLINK \\l "pa rt_1_2_10"}{\*\fldrslt Part II.}}\par\pard\intbl\plain\brdrb\brdrs\brdrcf5\f3\fs 10\ql \par\pard\intbl\plain\f3\fs10\ql \par\pard\intbl\plain\f3\fs20\ul\pnindent1800\lnhang\li1800\ri0\fi-1000{{{\field {\*\fldinst HYPERLINK \\l "item_1_3_10"}{\*\fldrslt Item 9.}}}\plain\f3\fs20\tab }\plain\f3\fs20\ul{\field{\*\fldinst HYPERLINK \\l "item_1_3_10"}{\*\fldrslt Cha nges in and Disagreements With Accountants on Accounting 42}} \par\pard\intbl\plain \f3\fs14\ql \par\pard\intbl\plain \f3\fs28\ql\ul \li800 {\field{\*\fldinst HYPERLINK \\l "pa rt_1_2_11"}{\*\fldrslt Part III.}}\par\pard\intbl\plain\brdrb\brdrs\brdrcf5\f3\f s10\ql \par\pard\intbl\plain\f3\fs10\ql \par\pard\intbl\plain\f3\fs20\ul\pnindent1800\lnhang\li1800\ri0\fi-1000{{{\field {\*\fldinst HYPERLINK \\l "item_1_3_11"}{\*\fldrslt Item 10.}}}\plain\f3\fs20\ta b}\plain\f3\fs20\ul{\field{\*\fldinst HYPERLINK \\l "item_1_3_11"}{\*\fldrslt Di rectors and Executive Officers of the Registrant............ 43}} \par\pard\intbl\plain \f3\fs14\ql \par\pard\intbl\plain \f3\fs28\ql\ul \li800 {\field{\*\fldinst HYPERLINK \\l "pa rt_1_2_12"}{\*\fldrslt Part III.}}\par\pard\intbl\plain\brdrb\brdrs\brdrcf5\f3\f s10\ql \par\pard\intbl\plain\f3\fs10\ql \par\pard\intbl\plain\f3\fs20\ul\pnindent1800\lnhang\li1800\ri0\fi-1000{{{\field {\*\fldinst HYPERLINK \\l "item_1_3_12"}{\*\fldrslt Item 11.}}}\plain\f3\fs20\ta b}\plain\f3\fs20\ul{\field{\*\fldinst HYPERLINK \\l "item_1_3_12"}{\*\fldrslt Ex ecutive Compensation........................................ 47}} \par\pard\intbl\plain \f3\fs14\ql

\par\pard\intbl\plain \f3\fs28\ql\ul \li800 {\field{\*\fldinst HYPERLINK \\l "pa rt_1_2_13"}{\*\fldrslt Part III.}}\par\pard\intbl\plain\brdrb\brdrs\brdrcf5\f3\f s10\ql \par\pard\intbl\plain\f3\fs10\ql \par\pard\intbl\plain\f3\fs20\ul\pnindent1800\lnhang\li1800\ri0\fi-1000{{{\field {\*\fldinst HYPERLINK \\l "item_1_3_13"}{\*\fldrslt Item 12.}}}\plain\f3\fs20\ta b}\plain\f3\fs20\ul{\field{\*\fldinst HYPERLINK \\l "item_1_3_13"}{\*\fldrslt Se curity Ownership of Certain Beneficial Owners and 55}} \par\pard\intbl\plain \f3\fs14\ql \par\pard\intbl\plain \f3\fs28\ql\ul \li800 {\field{\*\fldinst HYPERLINK \\l "pa rt_1_2_14"}{\*\fldrslt Part III.}}\par\pard\intbl\plain\brdrb\brdrs\brdrcf5\f3\f s10\ql \par\pard\intbl\plain\f3\fs10\ql \par\pard\intbl\plain\f3\fs20\ul\pnindent1800\lnhang\li1800\ri0\fi-1000{{{\field {\*\fldinst HYPERLINK \\l "item_1_3_14"}{\*\fldrslt Item 13.}}}\plain\f3\fs20\ta b}\plain\f3\fs20\ul{\field{\*\fldinst HYPERLINK \\l "item_1_3_14"}{\*\fldrslt Ce rtain Relationships and Related Transactions................ 56}} \par\pard\intbl\plain \f3\fs14\ql \par\pard\intbl\plain \f3\fs28\ql\ul \li800 {\field{\*\fldinst HYPERLINK \\l "pa rt_1_2_15"}{\*\fldrslt Part IV.}}\par\pard\intbl\plain\brdrb\brdrs\brdrcf5\f3\fs 10\ql \par\pard\intbl\plain\f3\fs10\ql \par\pard\intbl\plain\f3\fs20\ul\pnindent1800\lnhang\li1800\ri0\fi-1000{{{\field {\*\fldinst HYPERLINK \\l "item_1_3_15"}{\*\fldrslt Item 14.}}}\plain\f3\fs20\ta b}\plain\f3\fs20\ul{\field{\*\fldinst HYPERLINK \\l "item_1_3_15"}{\*\fldrslt Ex hibits, Financial Statement Schedules, and Reports on Form 60}} \par\pard\intbl\plain \f3\fs14\ql \par\pard\intbl\plain \f3\fs28\ql\ul \li800 {\field{\*\fldinst HYPERLINK \\l "pa rt_1_2_16"}{\*\fldrslt PART I}}\par\pard\intbl\plain\brdrb\brdrs\brdrcf5\f3\fs10 \ql \par\pard\intbl\plain\f3\fs10\ql \par\pard\intbl\plain\f3\fs20\ul\pnindent1800\lnhang\li1800\ri0\fi-1000{{{\field {\*\fldinst HYPERLINK \\l "item_1_3_16"}{\*\fldrslt ITEM 1.}}}\plain\f3\fs20\tab }\plain\f3\fs20\ul{\field{\*\fldinst HYPERLINK \\l "item_1_3_16"}{\*\fldrslt BUS INESS}} \par\pard\intbl\plain\f3\fs20\ul\pnindent1800\lnhang\li1800\ri0\fi-1000{{{\field {\*\fldinst HYPERLINK \\l "item_1_3_17"}{\*\fldrslt ITEM 2.}}}\plain\f3\fs20\tab }\plain\f3\fs20\ul{\field{\*\fldinst HYPERLINK \\l "item_1_3_17"}{\*\fldrslt PRO PERTIES}} \par\pard\intbl\plain\f3\fs20\ul\pnindent1800\lnhang\li1800\ri0\fi-1000{{{\field {\*\fldinst HYPERLINK \\l "item_1_3_18"}{\*\fldrslt ITEM 3.}}}\plain\f3\fs20\tab }\plain\f3\fs20\ul{\field{\*\fldinst HYPERLINK \\l "item_1_3_18"}{\*\fldrslt LEG AL PROCEEDINGS}} \par\pard\intbl\plain\f3\fs20\ul\pnindent1800\lnhang\li1800\ri0\fi-1000{{{\field {\*\fldinst HYPERLINK \\l "item_1_3_19"}{\*\fldrslt ITEM 4.}}}\plain\f3\fs20\tab }\plain\f3\fs20\ul{\field{\*\fldinst HYPERLINK \\l "item_1_3_19"}{\*\fldrslt SUB MISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS}} \par\pard\intbl\plain \f3\fs14\ql \par\pard\intbl\plain \f3\fs28\ql\ul \li800 {\field{\*\fldinst HYPERLINK \\l "pa rt_1_2_17"}{\*\fldrslt PART II}}\par\pard\intbl\plain\brdrb\brdrs\brdrcf5\f3\fs1 0\ql \par\pard\intbl\plain\f3\fs10\ql \par\pard\intbl\plain\f3\fs20\ul\pnindent1800\lnhang\li1800\ri0\fi-1000{{{\field {\*\fldinst HYPERLINK \\l "item_1_3_20"}{\*\fldrslt ITEM 5.}}}\plain\f3\fs20\tab }\plain\f3\fs20\ul{\field{\*\fldinst HYPERLINK \\l "item_1_3_20"}{\*\fldrslt MAR KET FOR THE REGISTRANT'S COMMON STOCK AND RELATED SHAREHOLDER}} \par\pard\intbl\plain\f3\fs20\ul\pnindent1800\lnhang\li1800\ri0\fi-1000{{{\field {\*\fldinst HYPERLINK \\l "item_1_3_21"}{\*\fldrslt ITEM 6.}}}\plain\f3\fs20\tab }\plain\f3\fs20\ul{\field{\*\fldinst HYPERLINK \\l "item_1_3_21"}{\*\fldrslt SEL ECTED FINANCIAL DATA}}

\par\pard\intbl\plain\f3\fs20\ul\pnindent1800\lnhang\li1800\ri0\fi-1000{{{\field {\*\fldinst HYPERLINK \\l "item_1_3_22"}{\*\fldrslt ITEM 7.}}}\plain\f3\fs20\tab }\plain\f3\fs20\ul{\field{\*\fldinst HYPERLINK \\l "item_1_3_22"}{\*\fldrslt MAN AGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND}} \par\pard\intbl\plain\f3\fs20\ul\pnindent1800\lnhang\li1800\ri0\fi-1000{{{\field {\*\fldinst HYPERLINK \\l "item_1_3_23"}{\*\fldrslt ITEM 7A.}}}\plain\f3\fs20\ta b}\plain\f3\fs20\ul{\field{\*\fldinst HYPERLINK \\l "item_1_3_23"}{\*\fldrslt QU ANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK}} \par\pard\intbl\plain\f3\fs20\ul\pnindent1800\lnhang\li1800\ri0\fi-1000{{{\field {\*\fldinst HYPERLINK \\l "item_1_3_24"}{\*\fldrslt ITEM 8.}}}\plain\f3\fs20\tab }\plain\f3\fs20\ul{\field{\*\fldinst HYPERLINK \\l "item_1_3_24"}{\*\fldrslt FIN ANCIAL STATEMENTS AND SUPPLEMENTARY DATA}} \par\pard\intbl\plain\f3\fs20\ul\pnindent1800\lnhang\li1800\ri0\fi-1000{{{\field {\*\fldinst HYPERLINK \\l "item_1_3_25"}{\*\fldrslt ITEM 9.}}}\plain\f3\fs20\tab }\plain\f3\fs20\ul{\field{\*\fldinst HYPERLINK \\l "item_1_3_25"}{\*\fldrslt CHA NGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND}} \par\pard\intbl\plain \f3\fs14\ql \par\pard\intbl\plain \f3\fs28\ql\ul \li800 {\field{\*\fldinst HYPERLINK \\l "pa rt_1_2_18"}{\*\fldrslt PART III}}\par\pard\intbl\plain\brdrb\brdrs\brdrcf5\f3\fs 10\ql \par\pard\intbl\plain\f3\fs10\ql \par\pard\intbl\plain\f3\fs20\ul\pnindent1800\lnhang\li1800\ri0\fi-1000{{{\field {\*\fldinst HYPERLINK \\l "item_1_3_26"}{\*\fldrslt ITEM 10.}}}\plain\f3\fs20\ta b}\plain\f3\fs20\ul{\field{\*\fldinst HYPERLINK \\l "item_1_3_26"}{\*\fldrslt DI RECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT}} \par\pard\intbl\plain\f3\fs20\ul\pnindent1800\lnhang\li1800\ri0\fi-1000{{{\field {\*\fldinst HYPERLINK \\l "item_1_3_27"}{\*\fldrslt ITEM 11.}}}\plain\f3\fs20\ta b}\plain\f3\fs20\ul{\field{\*\fldinst HYPERLINK \\l "item_1_3_27"}{\*\fldrslt EX ECUTIVE COMPENSATION}} \par\pard\intbl\plain\f3\fs20\ul\pnindent1800\lnhang\li1800\ri0\fi-1000{{{\field {\*\fldinst HYPERLINK \\l "item_1_3_28"}{\*\fldrslt ITEM 12.}}}\plain\f3\fs20\ta b}\plain\f3\fs20\ul{\field{\*\fldinst HYPERLINK \\l "item_1_3_28"}{\*\fldrslt SE CURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT}} \par\pard\intbl\plain\f3\fs20\ul\pnindent1800\lnhang\li1800\ri0\fi-1000{{{\field {\*\fldinst HYPERLINK \\l "item_1_3_29"}{\*\fldrslt ITEM 13.}}}\plain\f3\fs20\ta b}\plain\f3\fs20\ul{\field{\*\fldinst HYPERLINK \\l "item_1_3_29"}{\*\fldrslt CE RTAIN RELATIONSHIPS AND RELATED TRANSACTIONS}} \par\pard\intbl\plain \f3\fs14\ql \par\pard\intbl\plain \f3\fs28\ql\ul \li800 {\field{\*\fldinst HYPERLINK \\l "pa rt_1_2_19"}{\*\fldrslt PART IV}}\par\pard\intbl\plain\brdrb\brdrs\brdrcf5\f3\fs1 0\ql \par\pard\intbl\plain\f3\fs10\ql \par\pard\intbl\plain\f3\fs20\ul\pnindent1800\lnhang\li1800\ri0\fi-1000{{{\field {\*\fldinst HYPERLINK \\l "item_1_3_30"}{\*\fldrslt ITEM 14.}}}\plain\f3\fs20\ta b}\plain\f3\fs20\ul{\field{\*\fldinst HYPERLINK \\l "item_1_3_30"}{\*\fldrslt EX HIBITS, FINANCIAL STATEMENTS SCHEDULES, AND REPORTS ON FORM 10-K}} \par\pard\intbl\plain\f3\fs20\ul\li800{\field{\*\fldinst HYPERLINK \\l "part_1_2 _20"}{\*\fldrslt SIGNATURES}} \par\pard\intbl\plain\f3\fs14\ql \par\pard\intbl\plain\f3\fs20\ql\ul\li800{\field{\*\fldinst HYPERLINK \\l "doc_1 _2"}{\*\fldrslt EX-3.10 (CERTIFICATE OF DESIGNATIONS)}}\par\pard\intbl\plain\f3\ fs14\ql \par\pard\intbl\plain\f3\fs20\ql\ul\li800{\field{\*\fldinst HYPERLINK \\l "doc_1 _3"}{\*\fldrslt EX-10.33 (EMPLOYMENT AGREEMENT)}}\par\pard\intbl\plain\f3\fs14\q l \par\pard\intbl\plain\f3\fs20\ql\ul\li800{\field{\*\fldinst HYPERLINK \\l "doc_1 _4"}{\*\fldrslt EX-10.34 (CHANGE IN CONTROL AGREEMENT)}}\par\pard\intbl\plain\f3 \fs14\ql \par\pard\intbl\plain\f3\fs20\ql\ul\li800{\field{\*\fldinst HYPERLINK \\l "doc_1 _5"}{\*\fldrslt EX-10.36 (EMPLOYMENT AGREEMENT DATED AS OF 12/3/99)}}\par\pard\i

ntbl\plain\f3\fs14\ql \par\pard\intbl\plain\f3\fs20\ql\ul\li800{\field{\*\fldinst HYPERLINK \\l "doc_1 _6"}{\*\fldrslt EX-12.1 (COMPUTATION OF RATIO OF EARNINGS)}}\par\pard\intbl\plai n\f3\fs14\ql \par\pard\intbl\plain\f3\fs20\ql\ul\li800{\field{\*\fldinst HYPERLINK \\l "doc_1 _7"}{\*\fldrslt EX-21.1 (SUBSIDIARIES OF THE REGISTRANT)}}\par\pard\intbl\plain\ f3\fs14\ql \par\pard\intbl\plain\f3\fs20\ql\ul\li800{\field{\*\fldinst HYPERLINK \\l "doc_1 _8"}{\*\fldrslt EX-23.1 (CONSENT OF ARTHUR ANDERSEN)}}\par\pard\intbl\plain\f3\f s14\ql \par\pard\intbl\plain\f3\fs20\ql\ul\li800{\field{\*\fldinst HYPERLINK \\l "doc_1 _9"}{\*\fldrslt EX-27.1 (FINANCIAL DATA SCHEDULE)}}\cell\row} {\*\bkmkstart filing_1}{\*\bkmkend filing_1}{\*\bkmkstart doc_1_1}{\*\bkmkend do c_1_1} \par\pard\plain\fs16 \par\pard\plain\fs16 \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql -----------------------------------------------------------------------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql -----------------------------------------------------------------------------\par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql UNIT ED STATES \par\pard\plain\fs16\plain\cf1\f50\fs16\ql SECURITIES AND EXCHANGE COMMISSION \par\pard\plain\fs16\plain\cf1\f50\fs16\ql WASHINGTO N, D.C. 20549 \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql FO RM 10-K \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql FOR ANNUAL AND TRANSITION REPORTS PURSUANT TO SECTIONS 13 OR 15(d) OF THE \par\pard\plain\fs16\plain\cf1\f50\fs16\ql SECURITIES EX CHANGE ACT OF 1934 \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (Mark One) \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql [X]ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ACT OF 1934 \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql For the fiscal year ended December 31, 1999 \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql OR \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql [_]TRANSITION REPORT PURSUANT TO SECT ION 13 OR 15(d) OF THE SECURITIES \par\pard\plain\fs16\plain\cf1\f50\fs16\ql EXCHANGE ACT OF 1934 \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Commission Fil e Number: 000-24565 \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql GLOBAL C ROSSING LTD. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql BERMUDA 98-0189783

\par\pard\plain\fs16\plain\cf1\f50\fs16\ql (I.R.S. Employer Identification No.) \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql EX HOUSE \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ID STREET \par\pard\plain\fs16\plain\cf1\f50\fs16\ql HM12, BERMUDA \par\pard\plain\fs16\plain\cf1\f50\fs16\ql pal Executive Offices) \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 296-8600 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Number, Including Area Code) \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql tion 12(b) of the Act: None. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql tion 12(g) of the Act: \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Names of Each Exchange on Which \par\pard\plain\fs16\plain\cf1\f50\fs16\ql e Registered \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Nasdaq National Market \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Registrant (1) has filed all reports \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 15(d) of the Securities Exchange Act of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql or for such shorter period that the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql reports), and (2) has been subject to \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 90 days. Yes [X] No [_] \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql e of delinquent filers pursuant to Item \par\pard\plain\fs16\plain\cf1\f50\fs16\ql d herein, and will not be contained, to \par\pard\plain\fs16\plain\cf1\f50\fs16\ql n definitive proxy or information \par\pard\plain\fs16\plain\cf1\f50\fs16\ql in Part III of this Form 10-K or any \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ommon stock of the Registrant held by \par\pard\plain\fs16\plain\cf1\f50\fs16\ql arch 3, 2000, based on the closing price \par\pard\plain\fs16\plain\cf1\f50\fs16\ql asdaq National Market on such date of $56 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16

(State or other jurisdiction of incorporation or organization) WESS 45 RE HAMILTON (Address Of Princi (441) (Registrant's Telephone Securities registered pursuant to Sec Securities registered pursuant to Sec Title of Each Class Common Stock, par value $.01 per shar

Indicate by check mark whether the required to be filed by Section 13 or 1934 during the preceding 12 months ( registrant was required to file such such filing requirements for the past Indicate by check mark if disclosur 405 of Regulation S-K is not containe the best of Registrant's knowledge, i statements incorporated by reference amendment to this Form 10-K. [_] The aggregate market value of the c non-affiliates of the Registrant on M of the common stock reported on the N 7/16 per share, was $32,719,415,619.

\par\pard\plain\fs16\plain\cf1\f50\fs16\ql The number of shares of the Registr ant's common stock, par value $0.01 per \par\pard\plain\fs16\plain\cf1\f50\fs16\ql share, outstanding as of March 3, 200 0, was 801,748,228, including 22,033,758 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql treasury shares. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql -----------------------------------------------------------------------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql -----------------------------------------------------------------------------\par\pard\plain\fs16 \page \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql GLOBAL CROSSING LTD. AND SUBSIDI ARIES \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql For The Year En ded December 31, 1999 \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql INDEX \par\pard\plain\fs16 \par\pard\plain\fs16 \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql Page \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ---\par\pard\plain\fs16 \par\pard\plain\fs16{\*\bkmkstart part_1_2_1}{\*\bkmkend part_1_2_1}\par\pard\pl ain\f0\fs16\par\pard\plain\cf1\f50\fs16\ql Part I. \par\pard\plain\fs16{\*\bkmkstart item_1_3_1}{\*\bkmkend item_1_3_1}\par\pard\pl ain\f0\fs16\par\pard\plain\cf1\f50\fs16\ql Item 1. Business................... ................................... 1 \par\pard\plain\fs16{\*\bkmkstart part_1_2_2}{\*\bkmkend part_1_2_2}{\*\bkmkstar t item_1_3_2}{\*\bkmkend item_1_3_2}\par\pard\plain\f0\fs16\par\pard\plain\cf1\f 50\fs16\ql Item 2. Properties................................................. ... 23 \par\pard\plain\fs16{\*\bkmkstart part_1_2_3}{\*\bkmkend part_1_2_3}{\*\bkmkstar t item_1_3_3}{\*\bkmkend item_1_3_3}\par\pard\plain\f0\fs16\par\pard\plain\cf1\f 50\fs16\ql Item 3. Legal Proceedings.......................................... ... 23 \par\pard\plain\fs16{\*\bkmkstart part_1_2_4}{\*\bkmkend part_1_2_4}{\*\bkmkstar t item_1_3_4}{\*\bkmkend item_1_3_4}\par\pard\plain\f0\fs16\par\pard\plain\cf1\f 50\fs16\ql Item 4. Submission of Matters to a Vote of Security Holders........ ... 24 \par\pard\plain\fs16{\*\bkmkstart part_1_2_5}{\*\bkmkend part_1_2_5}\par\pard\pl ain\f0\fs16\par\pard\plain\cf1\f50\fs16\ql Part II. \par\pard\plain\fs16{\*\bkmkstart item_1_3_5}{\*\bkmkend item_1_3_5}\par\pard\pl ain\f0\fs16\par\pard\plain\cf1\f50\fs16\ql Item 5. Market for the Registrant's Common Stock and Related 25 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Shareholder Matters....... .................................... \par\pard\plain\fs16{\*\bkmkstart part_1_2_6}{\*\bkmkend part_1_2_6}{\*\bkmkstar t item_1_3_6}{\*\bkmkend item_1_3_6}\par\pard\plain\f0\fs16\par\pard\plain\cf1\f 50\fs16\ql Item 6. Selected Financial Data.................................... ... 26 \par\pard\plain\fs16{\*\bkmkstart part_1_2_7}{\*\bkmkend part_1_2_7}{\*\bkmkstar t item_1_3_7}{\*\bkmkend item_1_3_7}\par\pard\plain\f0\fs16\par\pard\plain\cf1\f 50\fs16\ql Item 7. Management's Discussion and Analysis of Financial Condition 29 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql and Results of Operations. ....................................

\par\pard\plain\fs16{\*\bkmkstart part_1_2_8}{\*\bkmkend part_1_2_8}{\*\bkmkstar t item_1_3_8}{\*\bkmkend item_1_3_8}\par\pard\plain\f0\fs16\par\pard\plain\cf1\f 50\fs16\ql Item 7A. Quantitative and Qualitative Disclosures about Market Risk. ... 41 \par\pard\plain\fs16{\*\bkmkstart part_1_2_9}{\*\bkmkend part_1_2_9}{\*\bkmkstar t item_1_3_9}{\*\bkmkend item_1_3_9}\par\pard\plain\f0\fs16\par\pard\plain\cf1\f 50\fs16\ql Item 8. Financial Statements and Supplementary Data................ ... 42 \par\pard\plain\fs16{\*\bkmkstart part_1_2_10}{\*\bkmkend part_1_2_10}{\*\bkmkst art item_1_3_10}{\*\bkmkend item_1_3_10}\par\pard\plain\f0\fs16\par\pard\plain\c f1\f50\fs16\ql Item 9. Changes in and Disagreements With Accountants on Accoun ting 42 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql and Financial Disclosure.. .................................... \par\pard\plain\fs16{\*\bkmkstart part_1_2_11}{\*\bkmkend part_1_2_11}\par\pard\ plain\f0\fs16\par\pard\plain\cf1\f50\fs16\ql Part III. \par\pard\plain\fs16{\*\bkmkstart item_1_3_11}{\*\bkmkend item_1_3_11}\par\pard\ plain\f0\fs16\par\pard\plain\cf1\f50\fs16\ql Item 10. Directors and Executive O fficers of the Registrant............ 43 \par\pard\plain\fs16{\*\bkmkstart part_1_2_12}{\*\bkmkend part_1_2_12}{\*\bkmkst art item_1_3_12}{\*\bkmkend item_1_3_12}\par\pard\plain\f0\fs16\par\pard\plain\c f1\f50\fs16\ql Item 11. Executive Compensation................................. ....... 47 \par\pard\plain\fs16{\*\bkmkstart part_1_2_13}{\*\bkmkend part_1_2_13}{\*\bkmkst art item_1_3_13}{\*\bkmkend item_1_3_13}\par\pard\plain\f0\fs16\par\pard\plain\c f1\f50\fs16\ql Item 12. Security Ownership of Certain Beneficial Owners and 55 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Management................ .................................... \par\pard\plain\fs16{\*\bkmkstart part_1_2_14}{\*\bkmkend part_1_2_14}{\*\bkmkst art item_1_3_14}{\*\bkmkend item_1_3_14}\par\pard\plain\f0\fs16\par\pard\plain\c f1\f50\fs16\ql Item 13. Certain Relationships and Related Transactions......... ....... 56 \par\pard\plain\fs16{\*\bkmkstart part_1_2_15}{\*\bkmkend part_1_2_15}\par\pard\ plain\f0\fs16\par\pard\plain\cf1\f50\fs16\ql Part IV. \par\pard\plain\fs16{\*\bkmkstart item_1_3_15}{\*\bkmkend item_1_3_15}\par\pard\ plain\f0\fs16\par\pard\plain\cf1\f50\fs16\ql Item 14. Exhibits, Financial State ment Schedules, and Reports on Form 60 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 10-K...................... .................................... \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Consolidated Financial Statements... ..................................... F-1 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Signatures.......................... ..................................... S-1 \par\pard\plain\fs16 \page \par\pard\plain\fs16{\*\bkmkstart part_1_2_16}{\*\bkmkend part_1_2_16}\pard\plai n\cf1\f50\fs16\ql PART I \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql In this Annual Report on Form 10-K, "GCL" refers to Global Crossing Ltd. and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql the "Company," "Global Crossing," "we ," "our" and "us" refer to GCL and its \par\pard\plain\fs16\plain\cf1\f50\fs16\ql consolidated subsidiaries (unless the context otherwise requires). \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Throughout this Annual Report on Fo rm 10-K, references to "dollars" and "$" \par\pard\plain\fs16\plain\cf1\f50\fs16\ql are to United States dollars. \par\pard\plain\fs16

\par\pard\plain\fs16{\*\bkmkstart item_1_3_16}{\*\bkmkend item_1_3_16}\plain\cf1 \f50\fs16\ql ITEM 1. BUSINESS \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Introduction \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql We are building and offering servic es over the world's first integrated \par\pard\plain\fs16\plain\cf1\f50\fs16\ql global fiber optic network, consistin g of 101,000 announced route miles and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql serving five continents, 27 countries and more than 200 major cities. Upon \par\pard\plain\fs16\plain\cf1\f50\fs16\ql completion of our currently announced systems, our network and its \par\pard\plain\fs16\plain\cf1\f50\fs16\ql telecommunications and Internet produ ct offerings will be available in markets \par\pard\plain\fs16\plain\cf1\f50\fs16\ql constituting over 80% of the world's international communications traffic. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql We are included in both the S&P 500 index and the Nasdaq 100 index. Our \par\pard\plain\fs16\plain\cf1\f50\fs16\ql operations are headquartered in Hamil ton, Bermuda, with executive offices in \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Los Angeles, California; Morristown, New Jersey; and Rochester, New York. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql We are incorporated in Bermuda, and the address of our principal executive \par\pard\plain\fs16\plain\cf1\f50\fs16\ql offices is Wessex House, 45 Reid Stre et, Hamilton HM12, Bermuda. Our telephone \par\pard\plain\fs16\plain\cf1\f50\fs16\ql number is 441-296-8600. You may visit us at our website located at \par\pard\plain\fs16\plain\cf1\f50\fs16\ql www.globalcrossing.com. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Business Strategy \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Global Crossing's strategy is to be the premier provider of global Internet \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Protocol ("IP") and data services for both wholesale and retail customers. We \par\pard\plain\fs16\plain\cf1\f50\fs16\ql are building a state-of-the-art fiber optic network that we believe to be of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql unprecedented global scope and scale to serve as the backbone for this \par\pard\plain\fs16\plain\cf1\f50\fs16\ql strategy. We believe that our network will enable us to be the low cost \par\pard\plain\fs16\plain\cf1\f50\fs16\ql service provider in most of our addre ssable markets. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Global Crossing offers a variety of voice, data and Internet services \par\pard\plain\fs16\plain\cf1\f50\fs16\ql throughout most of North America and Europe. During 2000, we intend to \par\pard\plain\fs16\plain\cf1\f50\fs16\ql aggressively roll out similar service s in Asia, Mexico, Central America and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql South America. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql In Asia, these services will be off ered through our Asia Global Crossing \par\pard\plain\fs16\plain\cf1\f50\fs16\ql joint venture with Softbank Corp. and Microsoft Corporation. Asia Global

\par\pard\plain\fs16\plain\cf1\f50\fs16\ql Crossing aims to become the first tru ly pan-Asian carrier to offer worldwide \par\pard\plain\fs16\plain\cf1\f50\fs16\ql bandwidth and data communications. As such, we believe that Asia Global \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Crossing will be uniquely positioned to take advantage of the anticipated \par\pard\plain\fs16\plain\cf1\f50\fs16\ql explosive growth and increasingly fav orable regulatory environment in the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Asian telecommunications markets. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql In each of our businesses, we inten d to expand significantly our current \par\pard\plain\fs16\plain\cf1\f50\fs16\ql product offerings, with an increasing focus on value-added services. In \par\pard\plain\fs16\plain\cf1\f50\fs16\ql particular, our GlobalCenter subsidia ry will expand its product set to become \par\pard\plain\fs16\plain\cf1\f50\fs16\ql a single-source e-commerce service so lution that will provide web-centric \par\pard\plain\fs16\plain\cf1\f50\fs16\ql businesses with the high availability , flexibility and scalability necessary \par\pard\plain\fs16\plain\cf1\f50\fs16\ql to compete in the rapidly expanding d igital economy. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Business Combinations \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql The Asia Global Crossing joint vent ure was established on November 24, 1999. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql We contributed to the joint venture o ur development rights in East Asia \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Crossing, an approximately 11,000 mil e undersea network that will link several \par\pard\plain\fs16\plain\cf1\f50\fs16\ql countries in eastern Asia, and our 58 % interest in Pacific Crossing, an \par\pard\plain\fs16\plain\cf1\f50\fs16\ql undersea system connecting \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 1 \par\pard\plain\fs16 \page \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql the United States and Japan. Sof tbank Corp. and Microsoft Corporation each \par\pard\plain\fs16\plain\cf1\f50\fs16\ql contributed $175 million in cash to A sia Global Crossing. In addition, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Softbank and Microsoft committed to m ake a total of at least $200 million in \par\pard\plain\fs16\plain\cf1\f50\fs16\ql capacity purchases on our network ove r a three-year period, expected to be \par\pard\plain\fs16\plain\cf1\f50\fs16\ql utilized primarily on PC-1 and EAC. S oftbank and Microsoft have also agreed to \par\pard\plain\fs16\plain\cf1\f50\fs16\ql use Asia Global Crossing's network in the region, subject to specified \par\pard\plain\fs16\plain\cf1\f50\fs16\ql conditions. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Also on November 24, 1999, we compl eted our acquisition of Racal Telecom, a \par\pard\plain\fs16\plain\cf1\f50\fs16\ql group of wholly owned subsidiaries of Racal Electronics plc, for approximately \par\pard\plain\fs16\plain\cf1\f50\fs16\ql $1.6 billion in cash. Racal Telecom o wns one of the most extensive fiber \par\pard\plain\fs16\plain\cf1\f50\fs16\ql telecommunications networks in the Un

ited Kingdom, consisting of approximately \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ng more than 2,000 cities and towns. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql the acquisition of Frontier Corporation \par\pard\plain\fs16\plain\cf1\f50\fs16\ql r $10 billion, with Frontier shareholders \par\pard\plain\fs16\plain\cf1\f50\fs16\ql tock for each share of Frontier common \par\pard\plain\fs16\plain\cf1\f50\fs16\ql rgest long distance telecommunications \par\pard\plain\fs16\plain\cf1\f50\fs16\ql e of the leading providers of facilities\par\pard\plain\fs16\plain\cf1\f50\fs16\ql nternet services. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql cquisition of the Global Marine Systems \par\pard\plain\fs16\plain\cf1\f50\fs16\ql approximately $908 million in cash and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql stems owns the largest fleet of cable \par\pard\plain\fs16\plain\cf1\f50\fs16\ql world and currently services more than a \par\pard\plain\fs16\plain\cf1\f50\fs16\ql iles. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Leo Hindery had succeeded Robert \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Executive Officer. Mr. Hindery will also \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Officer of GlobalCenter Inc., our \par\pard\plain\fs16\plain\cf1\f50\fs16\ql hosting and Internet infrastructure \par\pard\plain\fs16\plain\cf1\f50\fs16\ql e as a director of Global Crossing. In \par\pard\plain\fs16\plain\cf1\f50\fs16\ql nnounced our intentions to create a \par\pard\plain\fs16\plain\cf1\f50\fs16\ql h will continue to complement our \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql that we had concluded an agreement to \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ty to Deutsche Telekom AG. Total capacity \par\pard\plain\fs16\plain\cf1\f50\fs16\ql gabits per second ("Gbps") on AC-1, the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql nk between North America and Germany. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql a definitive agreement to acquire IXnet, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ed IP-based network services to the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql

4,650 route miles of fiber and reachi On September 28, 1999, we completed in a merger transaction valued at ove receiving 2.05 shares of our common s stock held. Frontier is one of the la companies in the United States and on based integrated communications and I On July 2, 1999, we completed our a division of Cable & Wireless Plc for assumed liabilities. Global Marine Sy laying and maintenance vessels in the third of the world's undersea cable m Recent Developments On March 2, 2000, we announced that Annunziata as Global Crossing's Chief continue to serve as Chief Executive subsidiary that provides complex web services. Mr. Annunziata will continu addition, on March 2, 2000, we also a tracking stock for GlobalCenter, whic worldwide operations. On February 29, 2000, we announced provide substantial additional capaci sold to Deutsche Telekom is now 35 gi fiber-optic system that provides a li On February 22, 2000, we announced Inc., a leading provider of specializ global financial services community,

and its parent company, IPC \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Communications, Inc., in exchange for shares of common stock of Global \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Crossing valued at approximately $3.8 billion. Under the terms of the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql definitive merger agreement, 1.184 Gl obal Crossing shares will be exchanged \par\pard\plain\fs16\plain\cf1\f50\fs16\ql for each IXnet share not owned by IPC and 5.417 Global Crossing shares will be \par\pard\plain\fs16\plain\cf1\f50\fs16\ql exchanged for each share of IPC. The acquisition is expected to be completed \par\pard\plain\fs16\plain\cf1\f50\fs16\ql in the second quarter of 2000 and is subject to regulatory approval and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql customary closing conditions. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql On January 26, 2000, our Asia Globa l Crossing joint venture announced an \par\pard\plain\fs16\plain\cf1\f50\fs16\ql agreement to create GlobalCenter Japa n, a joint venture with Japan's Internet \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Research Institute, Inc. ("IRI"). Glo balCenter Japan will design, develop and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql construct a media distribution center in Japan providing connectivity \par\pard\plain\fs16\plain\cf1\f50\fs16\ql worldwide through the Global Crossing Network. The joint venture will also \par\pard\plain\fs16\plain\cf1\f50\fs16\ql develop and provide complex web hosti ng services, e-commerce support and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql applications hosting solutions. Asia Global Crossing will own 89 percent of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql GlobalCenter Japan, with IRI owning t he remaining 11 percent. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql On January 12, 2000, we established a joint venture, called Hutchison Global \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Crossing, with Hutchison Whampoa Limi ted to pursue fixed-line \par\pard\plain\fs16\plain\cf1\f50\fs16\ql telecommunications and Internet oppor tunities in Hong Kong. For its 50% share, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Hutchison Whampoa contributed to the joint venture its building-to-building \par\pard\plain\fs16\plain\cf1\f50\fs16\ql fixed-line telecommunications network in Hong Kong and a number of Internet\par\pard\plain\fs16\plain\cf1\f50\fs16\ql related assets. In addition, Hutchiso n Whampoa has agreed that any fixed-line \par\pard\plain\fs16\plain\cf1\f50\fs16\ql telecommunications activities it purs ues in China will be carried out by \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 2 \par\pard\plain\fs16 \page \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql the joint venture. For our 50% s hare, we provided to Hutchison Whampoa $400 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql million in Global Crossing convertibl e preferred stock (convertible into \par\pard\plain\fs16\plain\cf1\f50\fs16\ql shares of Global Crossing common stoc k at a rate of $45 per share) and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql committed to contribute to the joint venture international telecommunications \par\pard\plain\fs16\plain\cf1\f50\fs16\ql capacity rights on our network and ce

rtain media distribution center \par\pard\plain\fs16\plain\cf1\f50\fs16\ql d at $350 million, as well as $50 million \par\pard\plain\fs16\plain\cf1\f50\fs16\ql nterest in Hutchison Global Crossing into \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql pal segments. Our telecommunications \par\pard\plain\fs16\plain\cf1\f50\fs16\ql integrated telecommunications products \par\pard\plain\fs16\plain\cf1\f50\fs16\ql global fiber optic network. Our \par\pard\plain\fs16\plain\cf1\f50\fs16\ql segment, consisting of our Global Marine \par\pard\plain\fs16\plain\cf1\f50\fs16\ql tains undersea fiber optic cable systems \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ly, our incumbent local exchange carrier \par\pard\plain\fs16\plain\cf1\f50\fs16\ql cal communications services through local \par\pard\plain\fs16\plain\cf1\f50\fs16\ql es, serving over one million access \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql of integrated telecommunications and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql eet the customer's total communications \par\pard\plain\fs16\plain\cf1\f50\fs16\ql tic and international voice services, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql s, structured bandwidth services and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql arily small to mid-size business \par\pard\plain\fs16\plain\cf1\f50\fs16\ql other telecommunication carriers. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql eting products more intensely to large \par\pard\plain\fs16\plain\cf1\f50\fs16\ql width-intensive applications and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql omers demand global end-to-end solutions. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql s market due to the international scope \par\pard\plain\fs16\plain\cf1\f50\fs16\ql along with the flexibility of product \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql g products and services to its customers: \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql tbound voice services for local,

capabilities which together are value in cash. We intend to integrate our i Asia Global Crossing. Services General We provide services in three princi services segment offers a variety of and services to customers through our installation and maintenance services Systems subsidiary, installs and main to carrier customers worldwide. Final ("ILEC") services segment provides lo exchange service providers in 13 stat lines. Telecommunications Services Global Crossing provides a variety Internet-based products designed to m needs. Global Crossing provides domes data products, Internet-based service other communications products to prim customers, web-centric businesses and Beginning in 2000, we will begin mark multinational customers who have band international requirements. Such cust We are well positioned to address thi and broadband capacity of our network pricing to maintain competitiveness. Global Crossing offers the followin . Voice: Switched and dedicated ou

\par\pard\plain\fs16\plain\cf1\f50\fs16\ql fic. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ata services in a number of products \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ame relay, X.25 and Internet access) and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql actional T-1 to OC-192). \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Customizable network solutions where \par\pard\plain\fs16\plain\cf1\f50\fs16\ql etwork by using the Global Crossing \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ated facilities. In addition, customers \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ity requirements between points over \par\pard\plain\fs16\plain\cf1\f50\fs16\ql to meet changing requirements. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql "): Expanded services providing retail \par\pard\plain\fs16\plain\cf1\f50\fs16\ql reduced cost. We currently provide \par\pard\plain\fs16\plain\cf1\f50\fs16\ql erdam, Frankfurt, Paris and Tokyo, with \par\pard\plain\fs16\plain\cf1\f50\fs16\ql to 18 additional cities within the next \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ion of digital distribution services, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql les, consulting services and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql supporting customers' mission critical \par\pard\plain\fs16\plain\cf1\f50\fs16\ql t is easily scalable to meet customer \par\pard\plain\fs16\plain\cf1\f50\fs16\ql by our GlobalCenter subsidiary. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql : These services combine traditional \par\pard\plain\fs16\plain\cf1\f50\fs16\ql tional features. Products include \par\pard\plain\fs16\plain\cf1\f50\fs16\ql services, voice mail, audio \par\pard\plain\fs16\plain\cf1\f50\fs16\ql and broadcast fax. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ucts include basic dial-up and dedicated \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ased applications such as e-mail \par\pard\plain\fs16\plain\cf1\f50\fs16\ql site data storage and backup. \par\pard\plain\fs16 \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql

domestic, and international traf . Data Transport: Point-to-point d (including private line, ATM, fr varying bandwidth sizes (from fr . Virtual Private Network ("VPN"): our customers create a private n Network without purchasing dedic have flexibility to change capac time and reconfigure their VPNs . International Private Line ("IPL customers greater flexibility at access to New York, London, Amst access expected to be available six months. . Web Hosting Services: A combinat server co-location, equipment sa professional expertise aimed at Internet operations. This produc needs and is marketed primarily . Advanced Voice and Data Services voice or data products with addi calling card, 800/888 toll free conferencing, video conferencing . Advanced Internet Services: Prod Internet access along with web-b hosting, unified messaging, off-

3 \par\pard\plain\fs16 \page \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql : Historically, we have sold capacity on \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ight of Use ("IRU") basis, whereby the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql nt to point capacity for the expected \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ically in increments of 155 megabits per \par\pard\plain\fs16\plain\cf1\f50\fs16\ql an STM-1. However, with the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql of Frontier in September 1999, we have \par\pard\plain\fs16\plain\cf1\f50\fs16\ql urce of revenue from service offerings \par\pard\plain\fs16\plain\cf1\f50\fs16\ql our systems in smaller increments and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql r than the expected useful life of the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql so engage in sales of "dark" fiber \par\pard\plain\fs16\plain\cf1\f50\fs16\ql quipped with the electronic components \par\pard\plain\fs16\plain\cf1\f50\fs16\ql transmission). \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql capacity or dark fiber is typically made \par\pard\plain\fs16\plain\cf1\f50\fs16\ql gh in some cases a customer's payments \par\pard\plain\fs16\plain\cf1\f50\fs16\ql o to four years. For short-term \par\pard\plain\fs16\plain\cf1\f50\fs16\ql e typically billed on a monthly basis. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Crossing Network, we are uniquely \par\pard\plain\fs16\plain\cf1\f50\fs16\ql pacity to our customers. Many customers \par\pard\plain\fs16\plain\cf1\f50\fs16\ql large bandwidth is increasing, but they \par\pard\plain\fs16\plain\cf1\f50\fs16\ql to the precise routes where their \par\pard\plain\fs16\plain\cf1\f50\fs16\ql e. In order to stimulate customer \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ainty, we have developed the Global \par\pard\plain\fs16\plain\cf1\f50\fs16\ql lows customers who can make a multi-year \par\pard\plain\fs16\plain\cf1\f50\fs16\ql tivate capacity where needed, in a \par\pard\plain\fs16\plain\cf1\f50\fs16\ql for volume discounted pricing. As our \par\pard\plain\fs16\plain\cf1\f50\fs16\ql are exploring other marketing programs \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ts to our customers and position Global \par\pard\plain\fs16\plain\cf1\f50\fs16\ql

. Structured Bandwidth Services our systems on an Indefeasible R customer purchased a unit of poi economic life of the system, typ second ("Mbps"), a unit known as consummation of our acquisition begun to derive a significant so involving leases of capacity on for periods significantly shorte system. From time to time, we al (i.e., fiber that has not been e necessary for telecommunications Payment for long-term leases of in advance of activation, althou are made in installments over tw bandwidth services, customers ar Due to the breadth of the Global positioned to offer worldwide ca acknowledge that their need for are often uncertain with regard particular growth will take plac loyalty and leverage this uncert Crossing Network Offer, which al commitment the flexibility to ac "just-in-time" manner, in return network continues to expand, we that will provide further benefi Crossing as the broadband infras

tructure provider of choice. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql d Global Crossing Network Center \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ds, London, England, enables us to \par\pard\plain\fs16\plain\cf1\f50\fs16\ql on our cable systems worldwide, we \par\pard\plain\fs16\plain\cf1\f50\fs16\ql advantage in being able to more quickly \par\pard\plain\fs16\plain\cf1\f50\fs16\ql on any of our systems. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql iginating and switched terminating \par\pard\plain\fs16\plain\cf1\f50\fs16\ql rs over our switched services network. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql red on a month-to-month basis, and the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql f-use basis. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ffer IP Services to carriers, Internet \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ther business customers over our global \par\pard\plain\fs16\plain\cf1\f50\fs16\ql fered on a month-to-month basis and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql r second (Mbps) basis. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql s \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql tenance services for undersea cable \par\pard\plain\fs16\plain\cf1\f50\fs16\ql tems subsidiary. Global Marine Systems \par\pard\plain\fs16\plain\cf1\f50\fs16\ql in the world, comprised of both \par\pard\plain\fs16\plain\cf1\f50\fs16\ql vessels. These vessels operate throughout \par\pard\plain\fs16\plain\cf1\f50\fs16\ql bal Marine Systems added three ships, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ervice early in 2000. Global Marine \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ith Maersk to charter ships as needed. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql sists of two components: installation and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ms is the world's market leader for \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 31% of the world market by value in \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql

Moreover, because our centralize ("GCNC"), located in The Docklan monitor and direct transmission believe that we have a strategic activate capacity for a customer . Switched Services: We provide or services to long distance carrie Such services are generally offe service is billed on a minutes-o . Internet Protocol Services: We o Service Providers ("ISPs") and o IP network. Such services are of generally billed on a megabit pe Installation and Maintenance Service We offer both installation and main systems through our Global Marine Sys has the largest fleet of cable ships maintenance vessels and installation the world. Since the acquisition, Glo with five additional ships to enter s Systems also announced an agreement w Global Marine Systems' business con maintenance. . Maintenance: Global Marine Syste submarine cable maintenance with 1999.

4 \par\pard\plain\fs16 \page \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql Global Marine Systems' maintenan ce business is centered around cable \par\pard\plain\fs16\plain\cf1\f50\fs16\ql system security. Despite optimum route planning and installation, cables \par\pard\plain\fs16\plain\cf1\f50\fs16\ql are sometimes damaged on the sea bed. The maintenance cable ship must be \par\pard\plain\fs16\plain\cf1\f50\fs16\ql able to retrieve a partially bur ied cable down to two thousand meters as \par\pard\plain\fs16\plain\cf1\f50\fs16\ql well as retrieve and repair a ca ble from the furthest ocean depths. With \par\pard\plain\fs16\plain\cf1\f50\fs16\ql cable in water depths of up to n ine thousand meters, the cable ship is a \par\pard\plain\fs16\plain\cf1\f50\fs16\ql specialized vessel designed to o perate continuously in the extreme \par\pard\plain\fs16\plain\cf1\f50\fs16\ql weather conditions found in the major cable routes around the world. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql . Installation: Global Marine Sys tems' installation business has a market \par\pard\plain\fs16\plain\cf1\f50\fs16\ql share in excess of 25%, making i t a leading competitor in the undersea \par\pard\plain\fs16\plain\cf1\f50\fs16\ql telecommunications installation industry. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Revenue from installation is lin ked to the number of submarine \par\pard\plain\fs16\plain\cf1\f50\fs16\ql telecommunication cable systems annually installed worldwide. Such \par\pard\plain\fs16\plain\cf1\f50\fs16\ql systems traverse many types of s eabed, including active continental \par\pard\plain\fs16\plain\cf1\f50\fs16\ql shelves, flat deep-water abyssal plains and mountainous oceanic ridges. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql The objective when installing ca ble is to deploy it in such a way as to \par\pard\plain\fs16\plain\cf1\f50\fs16\ql minimize the risk of damage to t he cable either from external threats or \par\pard\plain\fs16\plain\cf1\f50\fs16\ql from natural wear effects caused by ocean currents and tides. The cable \par\pard\plain\fs16\plain\cf1\f50\fs16\ql can either be buried into the se abed if protection is required from \par\pard\plain\fs16\plain\cf1\f50\fs16\ql threats such as fishing and anch oring or it can simply be laid across \par\pard\plain\fs16\plain\cf1\f50\fs16\ql the surface of the seabed. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ILEC Services \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Global Crossing's ILEC services seg ment comprises one of the largest local \par\pard\plain\fs16\plain\cf1\f50\fs16\ql exchange service providers in the Uni ted States. This segment consists of 34 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql regulated telephone operating subsidi aries in 13 states, serving in excess of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql one million access lines. Such servic es are marketed under the name Frontier \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Telephone, a Frontier Communications Company. The local exchange carriers \par\pard\plain\fs16\plain\cf1\f50\fs16\ql provide local, toll, access and resal

e services, sell, install and maintain \par\pard\plain\fs16\plain\cf1\f50\fs16\ql de directory services. Our ILEC services \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ded by our subsidiaries authorized as \par\pard\plain\fs16\plain\cf1\f50\fs16\ql "CLECs"), which services are included in \par\pard\plain\fs16\plain\cf1\f50\fs16\ql nt. Generally speaking, ILECs tend to be \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ge service in a given area and, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql of regulation than do CLECs and other \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql switching platforms throughout all of our \par\pard\plain\fs16\plain\cf1\f50\fs16\ql he first in the industry to be served by \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ocal exchange companies. We have achieved \par\pard\plain\fs16\plain\cf1\f50\fs16\ql he elimination of duplicative services \par\pard\plain\fs16\plain\cf1\f50\fs16\ql of administrative functions. We believe \par\pard\plain\fs16\plain\cf1\f50\fs16\ql e obtainable from advanced switching \par\pard\plain\fs16\plain\cf1\f50\fs16\ql systems. We intend to pursue additional \par\pard\plain\fs16\plain\cf1\f50\fs16\ql these technologies where feasible and by \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ses. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ss lines in service on December 31, 1999, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 5,000 were business lines. Long distance \par\pard\plain\fs16\plain\cf1\f50\fs16\ql tside of the telephone companies' \par\pard\plain\fs16\plain\cf1\f50\fs16\ql interconnection with the facilities of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql s to provide expanded broadband \par\pard\plain\fs16\plain\cf1\f50\fs16\ql e, we have installed over 31,000 fiber \par\pard\plain\fs16\plain\cf1\f50\fs16\ql es, totaling more than 930 route miles, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ovide our customers with enhanced \par\pard\plain\fs16\plain\cf1\f50\fs16\ql w products. We provide expanded broadband \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ng video-distance learning arrangements \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ss to SONET based fiber rings for major \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ese offerings, we plan to aggressively

customer premises equipment and provi segment excludes local services provi competitive local exchange carriers ( our telecommunications services segme the original provider of local exchan accordingly, receive a greater degree carriers without market power. We have installed advanced digital switching network, making it one of t an entirely digital network for our l substantial cost reductions through t and procedures and the consolidation that additional cost reductions may b platforms and outside plant delivery gains in productivity by investing in reengineering customer service proces Of the approximately 1,072,000 acce 737,000 were residential lines and 33 network service to and from points ou operating territories is provided by interexchange carriers. We are pursuing several alternative capabilities to our customers. To dat miles of fiber based network faciliti in the Rochester, New York area to pr capacity and to enable us to offer ne services to select customers, includi for educational institutions and acce business customers. In addition to th

\par\pard\plain\fs16\plain\cf1\f50\fs16\ql begin marketing Digital Subscriber Li ne ("DSL") services in 2000. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql In connection with our integration strategy, we have developed a program \par\pard\plain\fs16\plain\cf1\f50\fs16\ql known as "Frontier Long Distance," wh ereby our local exchange companies resell \par\pard\plain\fs16\plain\cf1\f50\fs16\ql our integrated services. We believe t hat many customers prefer the convenience \par\pard\plain\fs16\plain\cf1\f50\fs16\ql of obtaining their long distance serv ice through their local telephone company \par\pard\plain\fs16\plain\cf1\f50\fs16\ql and receiving a single bill. Frontier Long Distance is currently offered in \par\pard\plain\fs16\plain\cf1\f50\fs16\ql the product lines of most of Global C rossing's local telephone exchange \par\pard\plain\fs16\plain\cf1\f50\fs16\ql companies. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 5 \par\pard\plain\fs16 \page \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql The Global Crossing Network \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql The fiber optic cable systems that we have completed or that are under \par\pard\plain\fs16\plain\cf1\f50\fs16\ql development will form a state-of-theart interconnected worldwide high \par\pard\plain\fs16\plain\cf1\f50\fs16\ql capacity fiber optic network. The fol lowing systems are currently in service: \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql . Atlantic Crossing-1, referred to as "AC-1", an undersea system \par\pard\plain\fs16\plain\cf1\f50\fs16\ql connecting the United States and Europe; \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql . North American Crossing, referre d to as "NAC", formerly part of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Frontier, a terrestrial system c onnecting major cities in the United \par\pard\plain\fs16\plain\cf1\f50\fs16\ql States; \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql . Pan European Crossing, referred to as "PEC", a primarily terrestrial \par\pard\plain\fs16\plain\cf1\f50\fs16\ql system connecting major European cities to AC-1; \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql . Racal Telecom Network, a terrest rial network in the United Kingdom to be \par\pard\plain\fs16\plain\cf1\f50\fs16\ql operated in conjunction with PEC ; \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql . Pacific Crossing, referred to as "PC-1", an undersea system connecting \par\pard\plain\fs16\plain\cf1\f50\fs16\ql the United States and Japan; \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql . Global Access Ltd., referred to as "GAL", a terrestrial system \par\pard\plain\fs16\plain\cf1\f50\fs16\ql connecting a number of major cit ies in Japan to PC-1; \par\pard\plain\fs16

\par\pard\plain\fs16\plain\cf1\f50\fs16\ql red to as "HGC", a terrestrial network \par\pard\plain\fs16\plain\cf1\f50\fs16\ql and \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql to as "MAC", an undersea system \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ates and the Caribbean. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql g stages of development: \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql together with AC-1, referred to as \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ill connect the United States and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql as "EAC", an undersea system that will \par\pard\plain\fs16\plain\cf1\f50\fs16\ql a to PC-1; \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql to as "PAC", a primarily undersea system \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ited States, Mexico, Panama, Venezuela \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql d to as "SAC", an undersea and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql nect the major cities of South America \par\pard\plain\fs16\plain\cf1\f50\fs16\ql network. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql cable systems are wholly-owned, some are \par\pard\plain\fs16\plain\cf1\f50\fs16\ql s with one or more partners. EAC and our \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ng developed through our Asia Global \par\pard\plain\fs16\plain\cf1\f50\fs16\ql are responsible for management and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql construct parts of the terrestrial \par\pard\plain\fs16\plain\cf1\f50\fs16\ql arrangements, and terrestrial \par\pard\plain\fs16\plain\cf1\f50\fs16\ql milarly be developed through a joint \par\pard\plain\fs16\plain\cf1\f50\fs16\ql anagement and operation of these \par\pard\plain\fs16\plain\cf1\f50\fs16\ql est in Hutchison Global Crossing and a \par\pard\plain\fs16\plain\cf1\f50\fs16\ql hich is constructing GAL. Management and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql be performed by or with our joint venture \par\pard\plain\fs16\plain\cf1\f50\fs16\ql

. Hutchison Global Crossing, refer in Hong Kong, connecting to EAC; . Mid-Atlantic Crossing, referred connecting the eastern United St The following systems are in varyin . Atlantic Crossing-2 ("AC-2", and "AC"), an undersea system that w Europe; . East Asia Crossing, referred to connect several countries in Asi . Pan American Crossing, referred that will connect the western Un and the Caribbean; and . South American Crossing, referre terrestrial system that will con to MAC, PAC and the rest of our Although many of these fiber optic being developed through joint venture 58% economic interest in PC-1 are bei Crossing joint venture, for which we operation. In addition, we expect to portion of SAC through joint venture connectivity to PAC in Mexico will si venture. We will be responsible for m entities. Finally, we own a 50% inter 49% interest in Global Access Ltd., w operation of these two entities will partners.

\par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql All of our undersea systems are equ ipped with state-of-the-art dense wave \par\pard\plain\fs16\plain\cf1\f50\fs16\ql division multiplexing ("DWDM") techno logy, a method of increasing the amount \par\pard\plain\fs16\plain\cf1\f50\fs16\ql of a cable's transmission capacity th rough installation of electronic \par\pard\plain\fs16\plain\cf1\f50\fs16\ql equipment at cable landing stations a nd without requiring the undersea cable \par\pard\plain\fs16\plain\cf1\f50\fs16\ql to be physically handled. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql The twin operations and management centers for the Global Crossing Network \par\pard\plain\fs16\plain\cf1\f50\fs16\ql are the Customer Care Center, located in Bermuda, and the GCNC, located in The \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Docklands, London, England. These two facilities provide complete customer \par\pard\plain\fs16\plain\cf1\f50\fs16\ql support--from provisioning and assist ance to billing. From the GCNC, Global \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 6 \par\pard\plain\fs16 \page \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql Crossing technicians and network managers monitor and control all undersea \par\pard\plain\fs16\plain\cf1\f50\fs16\ql cable systems, shore station equipmen t and terrestrial facilities worldwide. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql The GCNC began operations in the four th quarter of 1999. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Network Systems \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Atlantic Crossing \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql AC-1, our first undersea fiber opti c cable in the Atlantic region, is an \par\pard\plain\fs16\plain\cf1\f50\fs16\ql approximately 9,000 mile, four fiber pair self-healing ring that connects the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql United States and Europe with landing stations in the United States, the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql United Kingdom, the Netherlands and G ermany. The full ring currently offers 80 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Gbps of service capacity and is being upgraded to offer 140 Gbps. AC-1 started \par\pard\plain\fs16\plain\cf1\f50\fs16\ql service on its United States to Unite d Kingdom segment during May 1998, and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql the full system was completed during February 1999. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql On February 17, 2000, we announced that we had entered into an agreement \par\pard\plain\fs16\plain\cf1\f50\fs16\ql with Level 3 Communications, Inc. to co-build an additional high-capacity, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql fiber optic transatlantic cable. Our two fiber pairs in the cable, to be \par\pard\plain\fs16\plain\cf1\f50\fs16\ql called AC-2, will provide us with an additional 560 Gbps of capacity along \par\pard\plain\fs16\plain\cf1\f50\fs16\ql this route. AC-2 will be integrated w ith the two cables of AC-1, providing AC-

\par\pard\plain\fs16\plain\cf1\f50\fs16\ql new cable is expected to be in service \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 3 Communications, Inc. agreed to acquire \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ommunications, Inc. with self-healing \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ier Optronics Network, as a result of our \par\pard\plain\fs16\plain\cf1\f50\fs16\ql orporation. The core fiber network, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql of optical fiber capacity, was completed \par\pard\plain\fs16\plain\cf1\f50\fs16\ql sisting of approximately 20,000 route \par\pard\plain\fs16\plain\cf1\f50\fs16\ql the end of March 2000. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql f eight self-healing rings offering \par\pard\plain\fs16\plain\cf1\f50\fs16\ql European metropolitan centers. Phase I of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql s completed in December 1999. The \par\pard\plain\fs16\plain\cf1\f50\fs16\ql of approximately 13,400 miles with 24 to \par\pard\plain\fs16\plain\cf1\f50\fs16\ql its, is anticipated to be completed by \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql com Network in conjunction with PEC. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Telecom Network is one of the most \par\pard\plain\fs16\plain\cf1\f50\fs16\ql tworks in the United Kingdom, consisting \par\pard\plain\fs16\plain\cf1\f50\fs16\ql fiber and reaching more than 2,000 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql c cable in the Pacific region, is being \par\pard\plain\fs16\plain\cf1\f50\fs16\ql mile, four fiber pair self-healing ring \par\pard\plain\fs16\plain\cf1\f50\fs16\ql in the western United States with two \par\pard\plain\fs16\plain\cf1\f50\fs16\ql -healing ring is designed to operate \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ity, upgradable to a minimum of 160 Gbps. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ervice in December 1999 and the full \par\pard\plain\fs16\plain\cf1\f50\fs16\ql

2 with self-healing capabilities. The in September 2000. In addition, Level capacity on AC-1 to provide Level 3 C ring circuitry. North American Crossing We acquired NAC, formerly the Front September 1999 merger with Frontier C offering more than 13,000 route miles in August 1999. The full network, con miles, is expected to be completed by Pan European Crossing Upon completion, PEC will consist o connectivity between AC and 41 major this system, connecting 13 cities, wa complete system, expected to consist 72 fiber pairs as well as spare condu early 2001. We intend to operate the Racal Tele Acquired in November 1999, the Racal extensive fiber telecommunications ne of approximately 4,500 route miles of cities and towns. Pacific Crossing PC-1, our first undersea fiber opti developed as an approximately 13,100 connecting California and Washington landing sites in Japan. The PC-1 self initially at 80 Gbps of service capac The first segment of PC-1 commenced s system is anticipated to be completed

in July 2000. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Global Access Ltd. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql GAL is an approximately 1,000 mile fiber optic terrestrial system in Japan \par\pard\plain\fs16\plain\cf1\f50\fs16\ql that, among other things, will connec t the PC-1 cable stations with Tokyo, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Osaka and Nagoya, Japan. The first ph ase of GAL's development was completed in \par\pard\plain\fs16\plain\cf1\f50\fs16\ql December 1999, with the full system a nticipated to be completed by the third \par\pard\plain\fs16\plain\cf1\f50\fs16\ql quarter of 2000. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Hutchison Global Crossing \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Hutchison Global Crossing owns and operates a building-to-building fixed\par\pard\plain\fs16\plain\cf1\f50\fs16\ql line telecommunications network in Ho ng Kong and a number of Internet-related \par\pard\plain\fs16\plain\cf1\f50\fs16\ql assets. The fiber optic network as of December 1999 extended over 400 miles \par\pard\plain\fs16\plain\cf1\f50\fs16\ql and is expected to be expanded during 2000. In addition, any fixed-line \par\pard\plain\fs16\plain\cf1\f50\fs16\ql telecommunications activities that Hu tchison Whampoa pursues in China will be \par\pard\plain\fs16\plain\cf1\f50\fs16\ql carried out by the joint venture. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 7 \par\pard\plain\fs16 \page \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql Mid-Atlantic Crossing \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql MAC is an approximately 4,700 mile two fiber pair self-healing ring \par\pard\plain\fs16\plain\cf1\f50\fs16\ql connecting New York, the Caribbean an d Florida. MAC connects to AC via its \par\pard\plain\fs16\plain\cf1\f50\fs16\ql cable station in Brookhaven, New York , to NAC via its cable stations in \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Brookhaven and in Hollywood, Florida and to SAC and PAC via its cable station \par\pard\plain\fs16\plain\cf1\f50\fs16\ql in St. Croix, United States Virgin Is lands. This system is being designed to \par\pard\plain\fs16\plain\cf1\f50\fs16\ql operate initially at 20 Gbps of servi ce capacity, upgradable to a minimum of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 40 Gbps. MAC commenced service in Jan uary 2000, with the full system \par\pard\plain\fs16\plain\cf1\f50\fs16\ql anticipated to be completed during 20 00. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql East Asia Crossing \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql EAC will be an approximately 11,000 mile terrestrial and undersea cable \par\pard\plain\fs16\plain\cf1\f50\fs16\ql system, Phase I of which will link Ja pan, Taiwan, South Korea and Hong Kong, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql and Phase II of which is expected to further link Singapore, Malaysia and the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Philippines. EAC is being designated

to operate initially at 80 Gbps of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql imum of 1,200 Gbps. The first segment of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Hong Kong, is expected to be completed by \par\pard\plain\fs16\plain\cf1\f50\fs16\ql system anticipated to be completed by \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql mile two fiber pair cable system \par\pard\plain\fs16\plain\cf1\f50\fs16\ql , Venezuela and the Caribbean. PAC will \par\pard\plain\fs16\plain\cf1\f50\fs16\ql gh our landing station in Grover Beach, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ing station in St. Croix, United States \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ur landing station in Fort Amador, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ate initially at 20 Gbps of service \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 40 Gbps. PAC is anticipated to commence \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql % interest in Global Crossing Landing \par\pard\plain\fs16\plain\cf1\f50\fs16\ql venture company jointly owned with an \par\pard\plain\fs16\plain\cf1\f50\fs16\ql at will provide approximately 2,200 miles \par\pard\plain\fs16\plain\cf1\f50\fs16\ql and connect to the PAC system. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql mile undersea and 1,500 mile terrestrial \par\pard\plain\fs16\plain\cf1\f50\fs16\ql the major cities of South America through \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ico, Central America, the Caribbean, Asia \par\pard\plain\fs16\plain\cf1\f50\fs16\ql hree phases. The first two phases, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql onnectivity to the Global Crossing \par\pard\plain\fs16\plain\cf1\f50\fs16\ql rvice in the fourth quarter of 2000. The \par\pard\plain\fs16\plain\cf1\f50\fs16\ql nd the continent, is scheduled for \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 01. Initially, SAC is expected to have a \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ble to a minimum of 80 Gbps. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql nstitute a state-of-the-art four-fiber \par\pard\plain\fs16\plain\cf1\f50\fs16\ql

service capacity, upgradable to a min EAC's development, linking Japan and December 2000, with the full Phase I June 2001. Pan American Crossing PAC will be an approximately 6,000 connecting California, Mexico, Panama interconnect with PC- 1 and NAC throu California, with MAC through our land Virgin Islands and with SAC through o Panama. PAC is being designed to oper capacity, upgradable to a minimum of service during 2000. In connection with PAC, we own a 49 Mexicana, S. de R.L. de C.V., a joint affiliate of Bestel, S.A. de C.V., th of terrestrial connectivity in Mexico South American Crossing SAC will be an approximately 9,900 fiber optic network directly linking MAC and PAC to the United States, Mex and Europe. We plan to build SAC in t providing Argentina and Brazil with c Network, are scheduled to commence se final phase, completing the loop arou completion in the first quarter of 20 capacity of 40 Gbps and to be upgrada The undersea portion of SAC will co pair, self-healing ring, expected to

connect to landing sites at St. Croix; \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Fortaleza, Rio de Janeiro and Santos, Brazil; Las Toninas, Argentina; \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Valparaiso, Chile; Lurin, Peru; Buena ventura, Colombia; and Fort Amador, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Panama. Terrestrial segments are expe cted to connect to most major South \par\pard\plain\fs16\plain\cf1\f50\fs16\ql American cities, including Rio de Jan eiro, Sao Paulo, Buenos Aires, Santiago, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Lima, Cali and Bogota. The SAC ring i s expected to be completed on its \par\pard\plain\fs16\plain\cf1\f50\fs16\ql southern-most end by a terrestrial li nk across the Andes between Las Toninas \par\pard\plain\fs16\plain\cf1\f50\fs16\ql and Valparaiso. The PAC system from P anama to St. Croix is expected to \par\pard\plain\fs16\plain\cf1\f50\fs16\ql complete the ring. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Additional Business Opportunities \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql In addition to the core components of the Global Crossing Network, we also \par\pard\plain\fs16\plain\cf1\f50\fs16\ql intend from time to time to make stra tegic investments and other contractual \par\pard\plain\fs16\plain\cf1\f50\fs16\ql arrangements to better enable us to e xpand our offerings of products and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql services. Some of these opportunities include: \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 8 \par\pard\plain\fs16 \page \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql NextWave. We have agreed to make an equity investment in NextWave Telecom \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Inc. as part of NextWave's plan of ba nkruptcy reorganization, subject to \par\pard\plain\fs16\plain\cf1\f50\fs16\ql certain conditions relating to NextWa ve's retaining communications licenses \par\pard\plain\fs16\plain\cf1\f50\fs16\ql from the Federal Communications Commi ssion. In addition, we have entered into \par\pard\plain\fs16\plain\cf1\f50\fs16\ql a strategic services agreement with N extWave making us the preferred provider \par\pard\plain\fs16\plain\cf1\f50\fs16\ql of backhaul, long distance backbone, web-hosting and other communications \par\pard\plain\fs16\plain\cf1\f50\fs16\ql services to NextWave. NextWave plans to deploy a wireless telecommunications \par\pard\plain\fs16\plain\cf1\f50\fs16\ql network specifically designed to prov ide next generation wireless services, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql including Internet access. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Telergy. We have entered into an ag reement with Telergy, Inc., under which \par\pard\plain\fs16\plain\cf1\f50\fs16\ql we have acquired 96 strands of fiber throughout the New York area on Telergy's \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 100-mile New York City network. In ad dition, the agreement provides us with an \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ownership position in Telergy and rep resentation on its board of directors. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Global Crossing and Telergy have also agreed to explore co-build opportunities

\par\pard\plain\fs16\plain\cf1\f50\fs16\ql to seek to utilize the Telergy network \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ion of Global Crossing traffic in certain \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql o provide marine operations and to act as \par\pard\plain\fs16\plain\cf1\f50\fs16\ql imated $1.6 billion cable system \par\pard\plain\fs16\plain\cf1\f50\fs16\ql und the continent of Africa. We do not \par\pard\plain\fs16\plain\cf1\f50\fs16\ql n this system. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql he number of products and services that \par\pard\plain\fs16\plain\cf1\f50\fs16\ql pal customers to date have been licensed \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ng post, telephone and telegraph \par\pard\plain\fs16\plain\cf1\f50\fs16\ql and established and emerging \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ve purchased significant amounts of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql gnificant customers in our \par\pard\plain\fs16\plain\cf1\f50\fs16\ql nclude Deutsche Telekom, MCI Worldcom, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql leglobe, Telia, British Telecom, Viatel \par\pard\plain\fs16\plain\cf1\f50\fs16\ql our web hosting customers include \par\pard\plain\fs16\plain\cf1\f50\fs16\ql MP3.com and eToys. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql panies that are constructing the various \par\pard\plain\fs16\plain\cf1\f50\fs16\ql l Crossing Network. Tyco Submarine \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ruction of AC-1; is responsible for the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql her with Alcatel, is responsible for \par\pard\plain\fs16\plain\cf1\f50\fs16\ql together with Kokusai Denshin Denwa\par\pard\plain\fs16\plain\cf1\f50\fs16\ql as a subcontractor), is responsible for \par\pard\plain\fs16\plain\cf1\f50\fs16\ql tel is responsible for the design and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql responsible for the design and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql C. We utilize multiple suppliers for \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16

in the northeastern United States and as needed for redundancy and terminat areas. Africa ONE. We have been selected t project manager of Africa ONE, an est consisting of a self-healing ring aro intend to make an equity investment i Principal Customers Although we have greatly expanded t we offer to our customers, our princi telecommunications providers, includi companies, Internet service providers telecommunications companies, that ha capacity on our systems worldwide. Si telecommunications services segment i Level 3 Communications, KPN Qwest, Te and AT&T. In addition, the largest of Yahoo!, The Motley Fool, Ziff-Davis, Principal Suppliers Our principal suppliers are the com cable systems that comprise the Globa Systems Ltd. ("TSSL") completed const design and installation of PAC; toget design and installation of MAC; and, Submarine Cable Systems ("KDD-SCS") ( design and installation of PC-1. Alca construction of SAC, while KDD-SCS is construction of the first phase of EA terrestrial systems.

\par\pard\plain\fs16\plain\cf1\f50\fs16\ql Competition \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Telecommunications Services \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql The telecommunications industry is highly competitive. Many of our existing \par\pard\plain\fs16\plain\cf1\f50\fs16\ql and potential competitors, particular ly in our telecommunications services \par\pard\plain\fs16\plain\cf1\f50\fs16\ql markets, compete with significantly g reater financial, personnel, marketing \par\pard\plain\fs16\plain\cf1\f50\fs16\ql and other resources, and have other c ompetitive advantages. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql The telecommunications industry is in a period of rapid technological \par\pard\plain\fs16\plain\cf1\f50\fs16\ql evolution, marked by increasing fiber and satellite transmission capacity, new \par\pard\plain\fs16\plain\cf1\f50\fs16\ql technologies and the introduction of new products and services. For instance, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql recent technological advances enable substantial increases in transmission \par\pard\plain\fs16\plain\cf1\f50\fs16\ql capacity of both new and existing fib er, which could affect capacity supply \par\pard\plain\fs16\plain\cf1\f50\fs16\ql and demand. Also, the introduction of new products or emergence of new \par\pard\plain\fs16\plain\cf1\f50\fs16\ql technologies may reduce the cost or i ncrease the supply of certain services \par\pard\plain\fs16\plain\cf1\f50\fs16\ql similar to those we provide. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 9 \par\pard\plain\fs16 \page \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql High initial network cost and lo w marginal costs of carrying long distance \par\pard\plain\fs16\plain\cf1\f50\fs16\ql traffic have led to a trend among non -facilities-based carriers to consolidate \par\pard\plain\fs16\plain\cf1\f50\fs16\ql in order to achieve economies of scal e. Such consolidation could result in \par\pard\plain\fs16\plain\cf1\f50\fs16\ql larger, better-capitalized competitor s. However, we believe that owning our \par\pard\plain\fs16\plain\cf1\f50\fs16\ql own network will offer an advantage o ver carriers that lease network capacity. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Increased consolidation and strateg ic alliances in the industry resulting \par\pard\plain\fs16\plain\cf1\f50\fs16\ql from the Telecommunications Act of 19 96 (the "Telecom Act") have allowed \par\pard\plain\fs16\plain\cf1\f50\fs16\ql significant new competitors to enter the industry, including local exchange \par\pard\plain\fs16\plain\cf1\f50\fs16\ql carriers, previously prohibited from the inter-state market. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql In recent years, competition has in creased dramatically in all areas of our \par\pard\plain\fs16\plain\cf1\f50\fs16\ql communications services market. Our p rimary competitors include Qwest, AT&T, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Sprint and MCI WorldCom and foreign P TTs, all of whom have extensive \par\pard\plain\fs16\plain\cf1\f50\fs16\ql experience in the long distance marke

t. The impact of continuing consolidation \par\pard\plain\fs16\plain\cf1\f50\fs16\ql tion, pursuant to the Telecom Act, local \par\pard\plain\fs16\plain\cf1\f50\fs16\ql antic, have begun to enter the long \par\pard\plain\fs16\plain\cf1\f50\fs16\ql areas. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql rnet protocol services, we are also \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ies that provide web hosting, Internet \par\pard\plain\fs16\plain\cf1\f50\fs16\ql oducts and services. Significant \par\pard\plain\fs16\plain\cf1\f50\fs16\ql a subsidiary of MCI WorldCom), Digex and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql panies have entered the market for web\par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql are currently served by several cable \par\pard\plain\fs16\plain\cf1\f50\fs16\ql y future sources of transatlantic \par\pard\plain\fs16\plain\cf1\f50\fs16\ql mong others, (1) TAT-14, a transatlantic \par\pard\plain\fs16\plain\cf1\f50\fs16\ql by its consortium members, including \par\pard\plain\fs16\plain\cf1\f50\fs16\ql and Deutsche Telekom, (2) Flag Atlantic\par\pard\plain\fs16\plain\cf1\f50\fs16\ql ing developed by Flag Telecom and Global \par\pard\plain\fs16\plain\cf1\f50\fs16\ql lantic cable system being developed by \par\pard\plain\fs16\plain\cf1\f50\fs16\ql we are co-building as AC-2); and (4) \par\pard\plain\fs16\plain\cf1\f50\fs16\ql m being developed by Worldwide Fiber Inc. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ition in the transpacific market from, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql e Network, a transpacific system being \par\pard\plain\fs16\plain\cf1\f50\fs16\ql by fourteen large carriers, including \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Inc., AT&T and Sprint, most of which \par\pard\plain\fs16\plain\cf1\f50\fs16\ql um cables and (2) the Japan-U.S. Cable \par\pard\plain\fs16\plain\cf1\f50\fs16\ql developed by a consortium of major \par\pard\plain\fs16\plain\cf1\f50\fs16\ql g MCI WorldCom Inc., AT&T, Kokusai \par\pard\plain\fs16\plain\cf1\f50\fs16\ql aph and Telephone Corp., Cable & Wireless \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ion on PEC, our trans-European network. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql

in the industry is uncertain. In addi exchange carriers, including Bell Atl distance market in their home service As we expand our business into Inte competing with a wide range of compan access and other Internet protocol pr competitors include IBM, GTE, UUNet ( Exodus. In addition, many smaller com based services. The routes addressed by our systems systems as well as satellites. Primar competition for us may result from, a cable system which is being developed British Telecom, AT&T, France Telecom 1, a transatlantic system which is be Telesystems Group Inc., (3) a transat Level 3 (the other half of the cable Hibernia, a transatlantic cable syste Similarly, we expect to face compet among others, (1) the China-U.S. Cabl developed as a "private cable system" SBC Communications Inc., MCI WorldCom have traditionally sponsored consorti Network, a transpacific system being telecommunications carriers, includin Denshin Denwa Co. Ltd., Nippon Telegr and GTE. In addition, we will face competit There are several carriers, including

Viatel, KPN-Qwest, MCI WorldCom, Inc., a \par\pard\plain\fs16\plain\cf1\f50\fs16\ql joint venture between Deutsche Teleko m and France Telecom, British Telecom, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Global Telesystems Group and a joint venture between Level 3 and COLT Telecom \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Group plc, which are currently planni ng or building trans-European network \par\pard\plain\fs16\plain\cf1\f50\fs16\ql assets. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql We also face competition for our SA C network in South America. At least six \par\pard\plain\fs16\plain\cf1\f50\fs16\ql other systems are planned to be compl eted in the region by the third quarter \par\pard\plain\fs16\plain\cf1\f50\fs16\ql of 2001, including two consortium cab les (Americas-2 and Atlantis-2); \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Atlantica-1, a ring network being con structed by GlobeNet connecting \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Venezuela, Brazil, and (through terre strial cables) Argentina to North \par\pard\plain\fs16\plain\cf1\f50\fs16\ql America; and SAm-1, a ring system bei ng constructed by Telefonica S.A. and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql TSSL connecting Brazil, Argentina, Ch ile, Peru and Colombia to the United \par\pard\plain\fs16\plain\cf1\f50\fs16\ql States. In addition, we may face comp etition from existing and planned \par\pard\plain\fs16\plain\cf1\f50\fs16\ql regional systems and satellites on ou r MAC and PAC routes, where entrants are \par\pard\plain\fs16\plain\cf1\f50\fs16\ql vying for purchases from a small but rapidly growing customer base. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql In addition to the systems mentione d above, several other regional and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql global systems are being developed, m ost notably by TSSL, which has recently \par\pard\plain\fs16\plain\cf1\f50\fs16\ql announced its plans to build a worldw ide cable network, and Project Oxygen, a \par\pard\plain\fs16\plain\cf1\f50\fs16\ql global system being evaluated by the CTR Group, Ltd. \par\pard\plain\fs16 \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 10 \par\pard\plain\fs16 \page \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql In the United States, there are several facilities-based long distance fiber \par\pard\plain\fs16\plain\cf1\f50\fs16\ql optic networks competing with our NAC cable system, including those of AT&T, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Sprint, MCI WorldCom, Qwest, GTE, Bro adwing Communications, Level 3 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Communications and Williams Communica tions. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Installation and Maintenance Service s \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Although Global Marine Systems is t he world's largest undersea cable \par\pard\plain\fs16\plain\cf1\f50\fs16\ql installation and maintenance company, with approximately 25% of the industry's

\par\pard\plain\fs16\plain\cf1\f50\fs16\ql petition not only from existing market \par\pard\plain\fs16\plain\cf1\f50\fs16\ql new entrants. There are currently three \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ndersea cable industry: TSSL, Alcatel and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql in the industry, and there are a number \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ed primarily on regional routes or non\par\pard\plain\fs16\plain\cf1\f50\fs16\ql ther TSSL will continue to provide \par\pard\plain\fs16\plain\cf1\f50\fs16\ql nce services to others following its \par\pard\plain\fs16\plain\cf1\f50\fs16\ql its own worldwide cable network. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql vision of equipment and facilities used \par\pard\plain\fs16\plain\cf1\f50\fs16\ql networks, as this market has become \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ars. The market for the provision of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ive in Rochester, New York, as a result \par\pard\plain\fs16\plain\cf1\f50\fs16\ql com Act is likely to result in \par\pard\plain\fs16\plain\cf1\f50\fs16\ql other markets. The Company's telephone \par\pard\plain\fs16\plain\cf1\f50\fs16\ql York, area are experiencing competition \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ess their end user customers through \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ompanies. These long distance companies \par\pard\plain\fs16\plain\cf1\f50\fs16\ql companies for these services. The \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ster and elsewhere by our ILEC services \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ve. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql optic cable systems and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ct to regulation at the federal, state, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql , as well as regulation by regulatory \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ries in which we have facilities or \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16

total vessels, it faces potential com participants but also from potential other major supply companies in the u KDD-SCS. Pirelli also has a presence of smaller suppliers which have focus repeatered systems. It is unclear whe significant installation and maintena announcement that it is constructing ILEC Services We face many competitors in the pro in connection with our local exchange increasingly competitive in recent ye local services itself is now competit of the Open Market Plan, and the Tele significantly greater competition in properties outside the Rochester, New in limited areas. Long distance companies largely acc interconnection with local exchange c pay access fees to the local exchange provision of access services in Roche segment is considered to be competiti Regulation Our submarine and terrestrial fiber telecommunications services are subje and local levels in the United States agencies in the various foreign count operations. REGULATION IN THE UNITED STATES

\par\pard\plain\fs16\plain\cf1\f50\fs16\ql Federal Regulation \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql The Federal Communications Commissi on ("FCC") regulates the interstate and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql international telecommunications faci lities and services of telecommunications \par\pard\plain\fs16\plain\cf1\f50\fs16\ql common carriers. Specifically, common carriers must comply with the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql requirements of the Communications Ac t of 1934, as amended by the Telecom Act. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Implementation of the Telecom Act is subject to various federal and state \par\pard\plain\fs16\plain\cf1\f50\fs16\ql rulemaking and judicial procedures; t herefore, the effects of the Telecom Act \par\pard\plain\fs16\plain\cf1\f50\fs16\ql on us cannot be accurately predicted. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql We have obtained authority from the FCC to provide international \par\pard\plain\fs16\plain\cf1\f50\fs16\ql telecommunications services as a nondominant carrier on a facilities-based \par\pard\plain\fs16\plain\cf1\f50\fs16\ql and resale basis. We also have obtain ed cable landing licenses that permit us \par\pard\plain\fs16\plain\cf1\f50\fs16\ql to land and operate submarine cable s ystems in U.S. territory. Domestically, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql our subsidiaries provide local servic es as authorized CLECs in 34 states \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (including Washington D.C.). Other su bsidiaries are certificated as ILECs in \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 13 states. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql The scope of our activities in the United States makes us subject to \par\pard\plain\fs16\plain\cf1\f50\fs16\ql varying, and sometimes conflicting, r egulation. We are treated as non-dominant \par\pard\plain\fs16\plain\cf1\f50\fs16\ql for our interstate and international operations. For local exchange services, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql some of our subsidiaries are treated as ILECs and others as CLECs. Generally \par\pard\plain\fs16\plain\cf1\f50\fs16\ql speaking, the FCC imposes a greater d egree of regulation on ILECs and other \par\pard\plain\fs16\plain\cf1\f50\fs16\ql dominant providers and less regulatio n on CLECs \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 11 \par\pard\plain\fs16 \page \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql and other carriers without marke t power. The issues discussed below may have \par\pard\plain\fs16\plain\cf1\f50\fs16\ql positive effects on certain of our su bsidiaries and negative effects on other \par\pard\plain\fs16\plain\cf1\f50\fs16\ql subsidiaries, and, thus, the net effe ct on us cannot be accurately predicted. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql The intent of the Telecom Act is to increase competition in the U.S. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql telecommunications market. To achieve this goal, the Telecom Act seeks to open \par\pard\plain\fs16\plain\cf1\f50\fs16\ql local access markets to competition b y requiring ILECs to permit

\par\pard\plain\fs16\plain\cf1\f50\fs16\ql imposing various other obligations on \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql e FCC released its First Report and Order \par\pard\plain\fs16\plain\cf1\f50\fs16\ql rules for the implementation of the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 97, the U.S. Circuit Court of Appeals for \par\pard\plain\fs16\plain\cf1\f50\fs16\ql f the FCC's decision. On January 25, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql reversed, and affirmed the FCC's \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ng pricing, found that the FCC had \par\pard\plain\fs16\plain\cf1\f50\fs16\ql hoose" rule for interconnection, and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ing access to unbundled network elements. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ue of which network elements must be \par\pard\plain\fs16\plain\cf1\f50\fs16\ql C retained most of its original list of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql eliminated the requirements that ILECs \par\pard\plain\fs16\plain\cf1\f50\fs16\ql switching for customers with four or \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ted parts of the top 50 Metropolitan \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ices, and (iii) directory assistance. The \par\pard\plain\fs16\plain\cf1\f50\fs16\ql nd conditions of interconnection \par\pard\plain\fs16\plain\cf1\f50\fs16\ql scope of our interconnection rights and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql EC, may change in ways that are not \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql h 1999, the FCC required ILECs to offer \par\pard\plain\fs16\plain\cf1\f50\fs16\ql re favorable terms than were available \par\pard\plain\fs16\plain\cf1\f50\fs16\ql location of equipment that can be used to \par\pard\plain\fs16\plain\cf1\f50\fs16\ql as Digital Subscriber Line services, and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ollocation by CLECs. The FCC deferred \par\pard\plain\fs16\plain\cf1\f50\fs16\ql s to offer advanced data services through \par\pard\plain\fs16\plain\cf1\f50\fs16\ql affiliates from some of the obligations \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql required the FCC to restructure the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql d payments are established and

interconnection to their networks and them. Interconnection. In August 1996, th on interconnection, which established Telecom Act's obligations. In July 19 the Eighth Circuit vacated portions o 1999, the United States Supreme Court authority to promulgate rules governi authority to promulgate a "pick and c upheld most of the FCC's rules govern The Court remanded to the FCC the iss unbundled by ILECs. On remand, the FC network elements to be unbundled, but provide unbundled access to (i) local more lines in the most densely popula Statistical Areas, (ii) operator serv rules governing the pricing, terms, a agreements remain unsettled, and the obligations, both as an ILEC and a CL foreseeable. Unbundling and Collocation. In Marc unbundled loops and collocation on mo previously. The FCC order permits col provide advanced data services, such requires ILECs to permit "cageless" c action on its proposal to permit ILEC separate affiliates and to free those of the Telecom Act. Universal Service. The Telecom Act manner in which universal service fun

\par\pard\plain\fs16\plain\cf1\f50\fs16\ql antly expanded the federal universal \par\pard\plain\fs16\plain\cf1\f50\fs16\ql -income consumers. We are required to \par\pard\plain\fs16\plain\cf1\f50\fs16\ql our interstate and international revenue \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ices. Contribution rates change \par\pard\plain\fs16\plain\cf1\f50\fs16\ql n rate is 5.877% of interstate and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ions revenue. We are unable to specify \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ontributions that we will be required to \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Telecom Act, a local exchange carrier \par\pard\plain\fs16\plain\cf1\f50\fs16\ql its network is entitled to be \par\pard\plain\fs16\plain\cf1\f50\fs16\ql rier of the originating customer. Some \par\pard\plain\fs16\plain\cf1\f50\fs16\ql mpensation is not owed for inbound calls \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ) on the grounds that this type of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql overed by the terms of existing \par\pard\plain\fs16\plain\cf1\f50\fs16\ql lt, some ILECs have threatened to \par\pard\plain\fs16\plain\cf1\f50\fs16\ql held, compensation to CLECs for such \par\pard\plain\fs16\plain\cf1\f50\fs16\ql on the rules that it should adopt to \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ffic. Comments have been filed by \par\pard\plain\fs16\plain\cf1\f50\fs16\ql expected in the first quarter of 2000. We \par\pard\plain\fs16\plain\cf1\f50\fs16\ql will rule or what impact that rule may \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ations. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql y are required to pay significant \par\pard\plain\fs16\plain\cf1\f50\fs16\ql inbound calls to ISPs. The state public \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ylvania, Illinois, and Minnesota, states \par\pard\plain\fs16\plain\cf1\f50\fs16\ql have concluded that reciprocal \par\pard\plain\fs16\plain\cf1\f50\fs16\ql lls. Any reciprocal compensation payments \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ur operations. We cannot predict whether \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ation payments in these or other states \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16 \par\pard\plain\fs16

distributed, and the FCC has signific service subsidy regime to include low contribute to these programs based on from end-user telecommunications serv quarterly. Currently, the contributio international end-user telecommunicat the amount of any universal service c make in future years. Reciprocal Compensation. Under the that terminates calls to customers on compensated by the local exchange car ILECs have taken the position that co to Internet Service Providers ("ISPs" traffic is not local and, thus, not c interconnection agreements. As a resu withhold, and in some cases have with calls. The FCC has requested comments govern compensation for ISP-bound tra interested parties and a decision is cannot accurately predict how the FCC have on future interconnection negoti As an ILEC in New York, we currentl reciprocal compensation payments for utility commissions ("PUCs") of Penns in which we also operate ILECs, also compensation is owed for ISP-bound ca in those states are not material to o the amounts of our reciprocal compens will change in the future.

\par\pard\plain\fs16\plain\cf1\f50\fs16\ql 12 \par\pard\plain\fs16 \page \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql Access Charges. Our costs to pro vide long distance services and our revenue \par\pard\plain\fs16\plain\cf1\f50\fs16\ql from providing local services are aff ected by ongoing substantial changes in \par\pard\plain\fs16\plain\cf1\f50\fs16\ql the "access charge" rates imposed by ILECs on long distance carriers for \par\pard\plain\fs16\plain\cf1\f50\fs16\ql origination and termination of long d istance calls over local facilities. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql The increased pricing flexibility o f "price cap ILECs" (i.e. ILECs subject \par\pard\plain\fs16\plain\cf1\f50\fs16\ql to the FCC's access charge price cap rules), such as our Frontier ILEC \par\pard\plain\fs16\plain\cf1\f50\fs16\ql subsidiaries, may have an adverse imp act on our interstate access costs if not \par\pard\plain\fs16\plain\cf1\f50\fs16\ql properly implemented by ILECs and enf orced by the FCC, but could also make it \par\pard\plain\fs16\plain\cf1\f50\fs16\ql easier for price cap ILECs to offer r educed access charge rates in markets \par\pard\plain\fs16\plain\cf1\f50\fs16\ql subject to competition. The FCC is co ntinuing to examine further access charge \par\pard\plain\fs16\plain\cf1\f50\fs16\ql changes, including granting further p ricing flexibility to price cap ILECs. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Tariffing and Filing Requirements. Non-dominant carriers must file tariffs \par\pard\plain\fs16\plain\cf1\f50\fs16\ql with the FCC stating the rates, terms , and conditions of their interstate and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql international services. The FCC also imposes reporting and filing requirements \par\pard\plain\fs16\plain\cf1\f50\fs16\ql on such carriers. We must file period ic reports regarding our interstate and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql international circuits and the deploy ment of network facilities. Traffic and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql revenue reports and universal service contribution worksheets also must be \par\pard\plain\fs16\plain\cf1\f50\fs16\ql filed. Carriers also must obtain prio r approval from or give notice to the FCC \par\pard\plain\fs16\plain\cf1\f50\fs16\ql of certain transfers of control and a ssignments of operating authorizations, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql as well as certain affiliations with foreign carriers. In addition, certain \par\pard\plain\fs16\plain\cf1\f50\fs16\ql operating and services agreements wit h dominant foreign carriers must be filed \par\pard\plain\fs16\plain\cf1\f50\fs16\ql with the FCC. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Submarine Cables. In connection wit h the construction and operation of our \par\pard\plain\fs16\plain\cf1\f50\fs16\ql submarine cable systems, we have obta ined cable landing licenses for the AC-1, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql PC-1, MAC, PAC and SAC systems. These licenses give us authority to construct \par\pard\plain\fs16\plain\cf1\f50\fs16\ql and land our submarine cables in the United States. In each case, the license \par\pard\plain\fs16\plain\cf1\f50\fs16\ql permits the operation of the cable on a non-common carrier basis. Each of our

\par\pard\plain\fs16\plain\cf1\f50\fs16\ql period of 25 years from its grant. We \par\pard\plain\fs16\plain\cf1\f50\fs16\ql and filing requirements as the result of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql censes. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql C, the intrastate services of each of our \par\pard\plain\fs16\plain\cf1\f50\fs16\ql regulated by the PUCs of the respective \par\pard\plain\fs16\plain\cf1\f50\fs16\ql tes with respect to such issues as \par\pard\plain\fs16\plain\cf1\f50\fs16\ql of securities, and the construction of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql vices, we generally must obtain a \par\pard\plain\fs16\plain\cf1\f50\fs16\ql necessity from the appropriate PUC and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql lecommunications utilities. The level of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql es. Generally, however, ILECs are \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ve providers. Our subsidiaries are \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ew York, Alabama, Florida, Georgia, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql nnesota, Mississippi, Ohio, Pennsylvania, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql vide competitive local services in 34 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql local or long distance operations are \par\pard\plain\fs16\plain\cf1\f50\fs16\ql rules under which carriers may operate \par\pard\plain\fs16\plain\cf1\f50\fs16\ql nment. The issues that the PUCs are \par\pard\plain\fs16\plain\cf1\f50\fs16\ql network elements, local interconnection \par\pard\plain\fs16\plain\cf1\f50\fs16\ql -LATA (or short-haul) toll traffic, local \par\pard\plain\fs16\plain\cf1\f50\fs16\ql xchange service and universal service. We \par\pard\plain\fs16\plain\cf1\f50\fs16\ql will ultimately be resolved, nor when \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql idiary in Rochester, New York began its \par\pard\plain\fs16\plain\cf1\f50\fs16\ql en Market Plan in January 2000. The Open \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ns competition in the Rochester, New York \par\pard\plain\fs16\plain\cf1\f50\fs16\ql rconnection of competing local networks \par\pard\plain\fs16\plain\cf1\f50\fs16\ql

cable landing licenses is valid for a are subject to various FCC reporting our holding of these cable landing li State Regulation In addition to regulation by the FC local telephone service companies are states in which each subsidiary opera prices, service quality, the issuance facilities. To provide intrastate ser certificate of public convenience and comply with state requirements for te regulation imposed by state PUCs vari regulated more heavily than competiti certificated as ILECs in 13 states: N Illinois, Indiana, Iowa, Michigan, Mi and Wisconsin. Other subsidiaries pro states (including Washington D.C.). A number of states in which we have conducting proceedings related to the in an increasingly competitive enviro examining include unbundling of local obligations, dialing parity for intra number portability, resale of local e cannot predict how these proceedings decisions will be issued. Open Market Plan. Our Frontier subs sixth year of operations under the Op Market Plan promotes telecommunicatio marketplace by providing for (i) inte including reciprocal compensation for

terminating traffic, (ii) equal access \par\pard\plain\fs16\plain\cf1\f50\fs16\ql to network databases, (iii) access to local telephone numbers, (iv) service \par\pard\plain\fs16\plain\cf1\f50\fs16\ql provider telephone number portability , and (v) certain wholesale discounts to \par\pard\plain\fs16\plain\cf1\f50\fs16\ql resellers of local services. \par\pard\plain\fs16 \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 13 \par\pard\plain\fs16 \page \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql During the operation of the Open Market Plan, we are regulated under pure \par\pard\plain\fs16\plain\cf1\f50\fs16\ql price cap regulation rather than rate -of-return regulation. Planned rate \par\pard\plain\fs16\plain\cf1\f50\fs16\ql reductions of $21.0 million (the "Rat e Stabilization Plan") are being \par\pard\plain\fs16\plain\cf1\f50\fs16\ql implemented for Rochester area consum ers, including $18.0 million of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql reductions that occurred through 1999 , and an additional $1.5 million which \par\pard\plain\fs16\plain\cf1\f50\fs16\ql commenced in January 2000. Rates char ged for basic residential and business \par\pard\plain\fs16\plain\cf1\f50\fs16\ql telephone service may not be increase d during the seven-year period of the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Plan. We are allowed to raise prices on certain enhanced products such as \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Caller ID and call forwarding. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql On August 25, 1999, the New York St ate Public Service Commission ("NYSPSC") \par\pard\plain\fs16\plain\cf1\f50\fs16\ql solicited comments regarding our Roch ester local exchange subsidiary's \par\pard\plain\fs16\plain\cf1\f50\fs16\ql financial condition, earnings and ser vice quality, competition in the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Rochester market, and the terms and c onditions of the Open Market Plan. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Settlement discussions in this NYSPSC proceeding have resulted in a Joint \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Proposal for Open Market Plan Continu ation and Modification (the "Joint \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Proposal"), which is subject to NYSPS C review and approval. If approved, our \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Frontier ILEC subsidiary in New York will (i) remain under "price cap" \par\pard\plain\fs16\plain\cf1\f50\fs16\ql regulation through 2002 (and possibly for an additional two years); (ii) be \par\pard\plain\fs16\plain\cf1\f50\fs16\ql required to improve specified element s of service quality and to offer certain \par\pard\plain\fs16\plain\cf1\f50\fs16\ql additional services; (iii) be subject to increased potential penalties related \par\pard\plain\fs16\plain\cf1\f50\fs16\ql to service targets; and (iv) be requi red to lower certain residential and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql commercial service rates. The impact of the Joint Proposal, if adopted, will \par\pard\plain\fs16\plain\cf1\f50\fs16\ql not have a material adverse effect on Global Crossing as a whole. The NYSPSC \par\pard\plain\fs16\plain\cf1\f50\fs16\ql also has issued orders on other regul atory issues that affect our New York

\par\pard\plain\fs16\plain\cf1\f50\fs16\ql vice quality, staff allocations, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql carriers. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql an prohibits the payment of dividends by \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ("FTR"), to Frontier Corporation ("FRO") \par\pard\plain\fs16\plain\cf1\f50\fs16\ql d to "BBB" by Standard & Poor's ("S&P"), \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ing agencies, or is placed on credit \par\pard\plain\fs16\plain\cf1\f50\fs16\ql service quality penalty is imposed under \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ts to FRO also require FTR's directors to \par\pard\plain\fs16\plain\cf1\f50\fs16\ql impair FTR's service quality or its \par\pard\plain\fs16\plain\cf1\f50\fs16\ql -term capital needs on reasonable terms \par\pard\plain\fs16\plain\cf1\f50\fs16\ql target of "A". \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql service levels, but a previously imposed \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ments from FTR to FRO will remain in \par\pard\plain\fs16\plain\cf1\f50\fs16\ql hat FTR's service levels demonstrate that \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ncy. In addition, on June 2, 1999, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql or debt ratings from A1/AA- to Baa2/BBB, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ere a result of the announced merger \par\pard\plain\fs16\plain\cf1\f50\fs16\ql and did not reflect any change in the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ss of FTR. These actions triggered an \par\pard\plain\fs16\plain\cf1\f50\fs16\ql TR, which will be in effect until either \par\pard\plain\fs16\plain\cf1\f50\fs16\ql vidends or FTR's senior debt rating rises \par\pard\plain\fs16\plain\cf1\f50\fs16\ql for other rating agencies. On December \par\pard\plain\fs16\plain\cf1\f50\fs16\ql debt rating to BB+ and, on January 18, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql senior debt rating to A. Both rating \par\pard\plain\fs16\plain\cf1\f50\fs16\ql flected their views that a large \par\pard\plain\fs16\plain\cf1\f50\fs16\ql intained between an operating subsidiary \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ns uncertain when the restriction on \par\pard\plain\fs16\plain\cf1\f50\fs16\ql will be lifted. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql

Frontier subsidiaries, related to ser provisions, and relations with other Dividend Policy. The Open Market Pl Frontier Telephone of Rochester, Inc. if (i) FTR's senior debt is downgrade or the equivalent rating by other rat watch for such a downgrade, or (ii) a the Open Market Plan. Dividend paymen certify that such dividends will not ability to finance its short and long while maintaining an S&P debt rating In 1999, FTR achieved the required temporary restriction on dividend pay place until the NYSPSC is satisfied t FTR has rectified the service deficie Moody's and S&P downgraded FTR's seni respectively. These ratings actions w between FRO and Global Crossing Ltd., financial condition or creditworthine additional dividend restriction for F the NYSPSC approves the payment of di above BBB (for S&P) or the equivalent 22, 1999, S&P downgraded FTR's senior 2000, Duff & Phelps downgraded FTR's agencies stated that their actions re separation in ratings could not be ma and its parent. Accordingly, it remai payment of dividends from FTR to FRO Local Regulation

\par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Our activities also are subject to local regulation, including compliance \par\pard\plain\fs16\plain\cf1\f50\fs16\ql with franchise obligations, building codes, and local licensing requirements. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Such regulations vary widely by juris diction. To construct and install \par\pard\plain\fs16\plain\cf1\f50\fs16\ql transmission facilities, we may need to obtain rights-of-way over public and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql privately owned land. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql INTERNATIONAL REGULATION \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Our construction and operation of t elecommunications networks and our \par\pard\plain\fs16\plain\cf1\f50\fs16\ql provision of telecommunications servi ces in foreign countries require us to \par\pard\plain\fs16\plain\cf1\f50\fs16\ql obtain a variety of permits, licenses , and authorizations in the ordinary \par\pard\plain\fs16\plain\cf1\f50\fs16\ql course of business. In addition to te lecommunications licenses and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql authorizations, we may be required to obtain environmental, construction, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql zoning and other permits, licenses, a nd authorizations. The construction and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql operation of our facilities and our p rovision of telecommunications services \par\pard\plain\fs16\plain\cf1\f50\fs16\ql may subject us to regulation in other countries at the national, state, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql provincial, and local levels. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 14 \par\pard\plain\fs16 \page \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql Europe \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql In connection with the construction and operation of the PEC network, we \par\pard\plain\fs16\plain\cf1\f50\fs16\ql have obtained telecommunications lice nses and authorizations in Belgium, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql France, Germany, Ireland, Italy, the Netherlands, Spain, Sweden, Switzerland \par\pard\plain\fs16\plain\cf1\f50\fs16\ql and the United Kingdom. No telecommun ications authorization is required for us \par\pard\plain\fs16\plain\cf1\f50\fs16\ql to construct and operate facilities o r provide services in Denmark. We expect \par\pard\plain\fs16\plain\cf1\f50\fs16\ql to obtain additional telecommunicatio ns licenses and authorizations in Europe \par\pard\plain\fs16\plain\cf1\f50\fs16\ql in the ordinary course of business. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Our activities in Europe are subjec t to regulation by the European Union and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql national regulatory authorities. The level of regulation and the regulatory \par\pard\plain\fs16\plain\cf1\f50\fs16\ql obligations and rights that attach to us as a licensee in each country vary. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql In all countries, we, as a competitiv e entrant, are currently considered to \par\pard\plain\fs16\plain\cf1\f50\fs16\ql lack significant market power ("SMP")

, which generally subjects us to less \par\pard\plain\fs16\plain\cf1\f50\fs16\ql emed to possess SMP. As we complete \par\pard\plain\fs16\plain\cf1\f50\fs16\ql egin providing services in Europe, we \par\pard\plain\fs16\plain\cf1\f50\fs16\ql tions imposed on us will increase. In \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ss many of the "local competition" issues \par\pard\plain\fs16\plain\cf1\f50\fs16\ql r in the United States, such as \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ing, reciprocal compensation, and resale. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql r States of the EU on these issues vary. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ned or concluded public consultations \par\pard\plain\fs16\plain\cf1\f50\fs16\ql mpetition" issues. We cannot predict what \par\pard\plain\fs16\plain\cf1\f50\fs16\ql the Member States in these ongoing \par\pard\plain\fs16\plain\cf1\f50\fs16\ql se decisions on our operations. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql activities in Asia. In connection with \par\pard\plain\fs16\plain\cf1\f50\fs16\ql GAL network in Japan, GAL has received a \par\pard\plain\fs16\plain\cf1\f50\fs16\ql cense. In addition, on February 18, 2000, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql , received a Special Type II license in \par\pard\plain\fs16\plain\cf1\f50\fs16\ql a variety of international \par\pard\plain\fs16\plain\cf1\f50\fs16\ql As a Japanese telecommunications \par\pard\plain\fs16\plain\cf1\f50\fs16\ql f regulatory requirements. In late 1999, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql munications (the "MPT") opened a public \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ommunications regulatory process. We have \par\pard\plain\fs16\plain\cf1\f50\fs16\ql . We cannot accurately predict whether or \par\pard\plain\fs16\plain\cf1\f50\fs16\ql er the MPT will simplify the regulatory \par\pard\plain\fs16\plain\cf1\f50\fs16\ql uch an action. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ossing Hong Kong Ltd. ("AGC-HK") was \par\pard\plain\fs16\plain\cf1\f50\fs16\ql e Hong Kong telecommunications regulator \par\pard\plain\fs16\plain\cf1\f50\fs16\ql n conditions, AGC-HK will be issued an \par\pard\plain\fs16\plain\cf1\f50\fs16\ql work Services ("EFTNS") license to land \par\pard\plain\fs16\plain\cf1\f50\fs16\ql

regulation than providers that are de construction of the PEC network and b anticipate that the regulatory obliga addition, we may be required to addre that we face as a competitive provide interconnection, collocation, unbundl The laws and regulations of the Membe Various of the Member States have ope relating to these and other "local co decisions will be made by the EU and proceedings or the effects of any tho Asia We are increasing the scope of our the construction and operation of the Japanese Type I telecommunications li our subsidiary, Global Crossing Japan Japan, which authorizes us to provide telecommunications services in Japan. licensee, we are subject to a range o the Japanese Ministry of Post and Com consultation on simplifying the telec submitted comments in that proceeding when a decision will be issued, wheth regime, or the potential effects of s On February 1, 2000, Asia Global Cr advised by a Letter of Intent from th that, upon the satisfaction of certai External Fixed Telecommunications Net the EAC cable and to provide internat

ional telecommunications facilities and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql services in Hong Kong. Our Hutchison Global Crossing ("HGC") joint venture is \par\pard\plain\fs16\plain\cf1\f50\fs16\ql authorized to construct and operate l ocal and international fixed-line \par\pard\plain\fs16\plain\cf1\f50\fs16\ql telecommunications networks and to pr ovide domestic and international \par\pard\plain\fs16\plain\cf1\f50\fs16\ql telecommunications services in Hong K ong. As a result of the HGC venture and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql our EFTNS license, we are subject to regulatory oversight and supervision in \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Hong Kong. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql The status of liberalization of the telecommunications regulatory regimes of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql the Asian countries in which we inten d to operate varies. Some countries allow \par\pard\plain\fs16\plain\cf1\f50\fs16\ql full competition in the telecommunica tions sector, while others limit \par\pard\plain\fs16\plain\cf1\f50\fs16\ql competition for most services. Most o f the countries in the region have \par\pard\plain\fs16\plain\cf1\f50\fs16\ql committed to liberalizing their telec ommunications regimes and opening their \par\pard\plain\fs16\plain\cf1\f50\fs16\ql telecommunications markets to foreign investment as part of the World Trade \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Organization ("WTO") Agreement on Tel ecommunications. China also has committed \par\pard\plain\fs16\plain\cf1\f50\fs16\ql to liberalizing its telecommunication s markets and reducing foreign ownership \par\pard\plain\fs16\plain\cf1\f50\fs16\ql limitations if it is admitted to the WTO. We cannot be certain whether this \par\pard\plain\fs16\plain\cf1\f50\fs16\ql liberalizing trend will continue or a ccurately predict the pace and scope of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql liberalization. It is possible that o ne or more of the countries in which we \par\pard\plain\fs16\plain\cf1\f50\fs16\ql operate will slow or halt the liberal ization of its telecommunications \par\pard\plain\fs16\plain\cf1\f50\fs16\ql markets. The effect of such an action on us cannot be accurately predicted. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 15 \par\pard\plain\fs16 \page \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql Latin America \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql In Latin America, we currently are constructing the MAC, PAC and SAC \par\pard\plain\fs16\plain\cf1\f50\fs16\ql systems. In connection with the const ruction of these cable systems, we have \par\pard\plain\fs16\plain\cf1\f50\fs16\ql obtained cable landing licenses and/o r telecommunications licenses in \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Argentina, Panama, and the United Sta tes. Applications have been filed in \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Mexico, Venezuela and Brazil and we e xpect to file applications in additional \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Latin American countries in the ordin ary course of business. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql As in Asia, the status of liberaliz

ation of the telecommunications markets \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ountries in which we currently plan to \par\pard\plain\fs16\plain\cf1\f50\fs16\ql O and have committed to liberalizing \par\pard\plain\fs16\plain\cf1\f50\fs16\ql lifting foreign ownership restrictions. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql for all telecommunications facilities \par\pard\plain\fs16\plain\cf1\f50\fs16\ql etition for some facilities and services, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql rvices. Some countries in which we \par\pard\plain\fs16\plain\cf1\f50\fs16\ql y impose limits on foreign ownership of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ipate that we will be granted authority \par\pard\plain\fs16\plain\cf1\f50\fs16\ql le systems in each of the countries in \par\pard\plain\fs16\plain\cf1\f50\fs16\ql land. It is possible, however, that one \par\pard\plain\fs16\plain\cf1\f50\fs16\ql rant authority to land a submarine cable \par\pard\plain\fs16\plain\cf1\f50\fs16\ql anding and operating the cable \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql egimes of many Latin American countries \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ny issues, such as regulation of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql unbundling of local loops, resale of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ing have not been addressed fully or at \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ther or how these issues will be resolved \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Latin America. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql roximately 12,400 employees. We consider \par\pard\plain\fs16\plain\cf1\f50\fs16\ql e good. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql actors \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ort on Form 10-K forward-looking \par\pard\plain\fs16\plain\cf1\f50\fs16\ql management's intentions, beliefs, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql uture. Forward-looking statements are \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ions and uncertainties which could cause \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ly from those projected in the forward-

of Latin America varies. All of the c have operations are members of the WT their telecommunications markets and Some countries now permit competition and services, while others allow comp but restrict competition for other se operate or intend to operate currentl telecommunications carriers. We antic to land and operate our submarine cab which they currently are expected to or more of these countries will not g or will impose conditions that make l commercially unfeasible. The telecommunications regulatory r are in the process of development. Ma incumbent providers, interconnection, telecommunications services, and pric all. We cannot accurately predict whe and their impact on our operations in Employees As of December 31, 1999, we had app our relations with our employees to b Forward Looking Statements and Risk F We have included in this Annual Rep statements that state our own or our expectations or predictions for the f subject to a number of risks, assumpt our actual results to differ material

\par\pard\plain\fs16\plain\cf1\f50\fs16\ql looking statements. The discussions s et forth below constitute cautionary \par\pard\plain\fs16\plain\cf1\f50\fs16\ql statements identifying important fact ors with respect to such forward-looking \par\pard\plain\fs16\plain\cf1\f50\fs16\ql statements, including risks and uncer tainties, that could cause actual results \par\pard\plain\fs16\plain\cf1\f50\fs16\ql to differ materially from results ref erred to in the forward-looking \par\pard\plain\fs16\plain\cf1\f50\fs16\ql statements. There can be no assurance that our expectations regarding any of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql these matters will be fulfilled. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql We cannot assure you of the success ful integration of newly acquired \par\pard\plain\fs16\plain\cf1\f50\fs16\ql businesses. We cannot assure you th at the expected benefits will be \par\pard\plain\fs16\plain\cf1\f50\fs16\ql achieved. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Part of our growth strategy is to m ake selective strategic acquisitions of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql businesses operated by others. Achiev ing the benefits of these acquisitions \par\pard\plain\fs16\plain\cf1\f50\fs16\ql will depend in part on the integratio n of those businesses with our business \par\pard\plain\fs16\plain\cf1\f50\fs16\ql in an efficient manner. We cannot ass ure you that this will happen or that it \par\pard\plain\fs16\plain\cf1\f50\fs16\ql will happen in a timely manner. The c onsolidation of operations following \par\pard\plain\fs16\plain\cf1\f50\fs16\ql these acquisitions will often require substantial attention from management. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql The diversion of management attention and any difficulties encountered in the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql transition and integration process co uld have a material adverse effect on the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql revenue, levels of expenses and opera ting results of the combined company. We \par\pard\plain\fs16\plain\cf1\f50\fs16\ql cannot assure you that the combined c ompany will realize any of the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql anticipated benefits of any acquisiti on. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 16 \par\pard\plain\fs16 \page \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql It may be difficult to evaluate our business because we have a limited \par\pard\plain\fs16\plain\cf1\f50\fs16\ql operating history. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql We were organized in March 1997 and , with the exception of our Frontier, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Global Marine Systems and Racal Telec om subsidiaries, have a limited operating \par\pard\plain\fs16\plain\cf1\f50\fs16\ql history. Because of this limited hist ory and our rapid growth though \par\pard\plain\fs16\plain\cf1\f50\fs16\ql successive acquisitions, it may be di fficult for potential investors to \par\pard\plain\fs16\plain\cf1\f50\fs16\ql evaluate the performance of our opera tions. In particular, comparisons of our \par\pard\plain\fs16\plain\cf1\f50\fs16\ql results of operations from one period

to another may not be fully indicative \par\pard\plain\fs16\plain\cf1\f50\fs16\ql business. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql mpleting our cable systems currently \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql c objectives will depend in large part \par\pard\plain\fs16\plain\cf1\f50\fs16\ql effective completion of our cable systems \par\pard\plain\fs16\plain\cf1\f50\fs16\ql as on achieving substantial capacity \par\pard\plain\fs16\plain\cf1\f50\fs16\ql me operational and on our other \par\pard\plain\fs16\plain\cf1\f50\fs16\ql of these systems will be affected by a \par\pard\plain\fs16\plain\cf1\f50\fs16\ql contingencies, many of which are beyond \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql truction effectively; \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql uction and operating permits and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ng their obligations on schedule; and \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ble construction contracts with a \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ay or prevent completion of one or more \par\pard\plain\fs16\plain\cf1\f50\fs16\ql pment, which could have a material \par\pard\plain\fs16\plain\cf1\f50\fs16\ql cial condition and results of operations. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql hese systems will be completed at the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql estimated by us, or even at all. Although \par\pard\plain\fs16\plain\cf1\f50\fs16\ql f our systems to suppliers who in most \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ixed-price construction cost schedule and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ompletion dates and system design \par\pard\plain\fs16\plain\cf1\f50\fs16\ql that the actual construction costs or the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ms will not exceed our current estimates. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql rial adverse effect on our business, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql

of our current ability to conduct our We may encounter difficulties in co under development. Our ability to achieve our strategi upon the successful, timely and costcurrently under development, as well sales on these systems once they beco operational systems. The construction variety of factors, uncertainties and our control, including: . our ability to manage their cons . our ability to obtain all constr licenses; . third-party contractors performi . our ability to enter into favora limited number of suppliers. These factors may significantly del of our systems currently under develo adverse effect on our business, finan We cannot assure you that each of t cost and in the time frame currently we award contracts for construction o cases are expected to be bound by a f to provide guarantees in respect of c specifications, we cannot assure you time required to complete these syste These circumstances could have a mate financial condition and results of op

erations. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Our revenue growth plan depends on product and service expansion. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql We intend to grow revenue and profi ts by: \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql . introducing new services and pro ducts; \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql . developing or acquiring addition al cable systems; and \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql . upgrading capacity on our planne d systems. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Our inability to effect these expan sions of our products and services could \par\pard\plain\fs16\plain\cf1\f50\fs16\ql have a material adverse effect on our business, financial condition and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql results of operations. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql We face competition which may reduc e demand for our products and services. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql The international telecommunication s industry is highly competitive. We \par\pard\plain\fs16\plain\cf1\f50\fs16\ql compete primarily on the basis of pri ce, availability, service quality and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql reliability, customer service and the location of our systems and services. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql The ability of our competitors to pro vide comparable products and services at \par\pard\plain\fs16\plain\cf1\f50\fs16\ql similar prices could have a material adverse effect on demand for our products \par\pard\plain\fs16\plain\cf1\f50\fs16\ql and services. In addition, much of ou r planned growth is predicated upon the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql growth in demand for international te lecommunications capacity and services. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql We cannot assure you that this antici pated demand growth will occur. \par\pard\plain\fs16 \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 17 \par\pard\plain\fs16 \page \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql We are growing rapidly in a chan ging industry. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Our strategy is to be the premier p rovider of global broadband \par\pard\plain\fs16\plain\cf1\f50\fs16\ql telecommunication services for both w holesale and retail customers. As a \par\pard\plain\fs16\plain\cf1\f50\fs16\ql result of this aggressive strategy, w e are experiencing rapid expansion and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql expect it to continue for the foresee able future. This growth has increased \par\pard\plain\fs16\plain\cf1\f50\fs16\ql our operating complexity. At the same

time, the international \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ng rapidly due to, among other things: \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ints; \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql carriers; \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ons infrastructure; \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql th caused by expansion of Internet and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql economies; and \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql d, wireless and satellite communication. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ucceed in adapting to the rapid changes \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ns industry. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql the additional financing required to \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ggressive growth strategy, we anticipate \par\pard\plain\fs16\plain\cf1\f50\fs16\ql tional equity and debt financing. Under \par\pard\plain\fs16\plain\cf1\f50\fs16\ql tes expect to require significant \par\pard\plain\fs16\plain\cf1\f50\fs16\ql out the Global Crossing Network and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql stomers. Obtaining additional financing \par\pard\plain\fs16\plain\cf1\f50\fs16\ql s, including, without limitation, the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ompany; \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql s of operations, financial condition and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql nies with substantial international \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql itions. \par\pard\plain\fs16

telecommunications industry is changi . the easing of regulatory constra . the privatization of established . the expansion of telecommunicati . the growth in demand for bandwid data transmissions; . the globalization of the world's . the changing technology for wire We cannot assure you that we will s in the international telecommunicatio We may have difficulty in obtaining develop our business. In order to further implement our a that we will require substantial addi our business plan, we and our affilia financing by the end of 2000 to build provide additional services to our cu will be subject to a number of factor following: . the state of operations of our c . our actual or anticipated result cash flows; . investor sentiment towards compa operations; and . generally prevailing market cond

\par\pard\plain\fs16\plain\cf1\f50\fs16\ql ugh the issuance of equity securities, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql current shareholders will be reduced, and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ghts, preferences or privileges senior to \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ock. If additional funds are raised \par\pard\plain\fs16\plain\cf1\f50\fs16\ql es, these securities would have some \par\pard\plain\fs16\plain\cf1\f50\fs16\ql nior to those of the holders of our \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ebt could impose restrictions on our \par\pard\plain\fs16\plain\cf1\f50\fs16\ql interest expense to us. In the event that \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ancing on satisfactory terms and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql would be adversely affected. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql dversely affect our business. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql have resulted in significant per circuit \par\pard\plain\fs16\plain\cf1\f50\fs16\ql le transmission industry. Recent changes \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ommunications capacity and services to go \par\pard\plain\fs16\plain\cf1\f50\fs16\ql emand than we project or a bigger drop in \par\pard\plain\fs16\plain\cf1\f50\fs16\ql e a material adverse effect on our \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ults of operations. We cannot assure you, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql to those factors are realized, that we \par\pard\plain\fs16\plain\cf1\f50\fs16\ql y or that our strategy will be successful \par\pard\plain\fs16\plain\cf1\f50\fs16\ql tions market. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql at could affect our operations. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql subject to the risks inherent in a large\par\pard\plain\fs16\plain\cf1\f50\fs16\ql ications system. The operation, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql r of our systems requires the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql sticated and highly specialized hardware \par\pard\plain\fs16\plain\cf1\f50\fs16\ql nt located throughout the world. We \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ll continue to function as expected in a \par\pard\plain\fs16\plain\cf1\f50\fs16\ql the hardware or software to function as

If additional funds are raised thro the percentage ownership of our then the new equity securities may have ri those of the holders of our common st through the issuance of debt securiti rights, preferences and privileges se common stock, and the terms of this d operations and result in significant we are unable to raise sufficient fin conditions in the future, our company We face price declines that could a Advances in fiber optic technology price declines in the fiber optic cab in technology caused prices for telec down even further. If there is less d prices than we project, there could b business, financial condition and res even if our projections with respect will be able to implement our strateg in the rapidly evolving telecommunica We confront several system risks th Each of our systems is and will be scale, complex fiber optic telecommun administration, maintenance and repai coordination and integration of sophi and software technologies and equipme cannot assure you that our systems wi cost-effective manner. The failure of

\par\pard\plain\fs16\plain\cf1\f50\fs16\ql required could render a cable system unable to perform at design \par\pard\plain\fs16\plain\cf1\f50\fs16\ql specifications. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 18 \par\pard\plain\fs16 \page \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql Each of our undersea systems eit her has or is expected to have a design life \par\pard\plain\fs16\plain\cf1\f50\fs16\ql of generally 25 years, while each of our terrestrial systems either has or is \par\pard\plain\fs16\plain\cf1\f50\fs16\ql expected to have a design life of at least 20 years. The economic lives of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql these systems, however, are expected to be shorter than their design lives, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql and we cannot assure you of the actua l useful life of any of these systems. A \par\pard\plain\fs16\plain\cf1\f50\fs16\ql number of factors will ultimately aff ect the useful life of each of our \par\pard\plain\fs16\plain\cf1\f50\fs16\ql systems, including, among other thing s: \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql . quality of construction; \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql . unexpected damage or deteriorati on; and \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql . technological or economic obsole scence. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Failure of any of our systems to op erate for its full design life could have \par\pard\plain\fs16\plain\cf1\f50\fs16\ql a material adverse effect on our busi ness, financial condition and results of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql operations. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Our success depends on our ability to maintain, hire and successfully \par\pard\plain\fs16\plain\cf1\f50\fs16\ql integrate key personnel. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Our future success depends on the s kills, experience and efforts of our \par\pard\plain\fs16\plain\cf1\f50\fs16\ql officers and key technical and sales employees. In particular, our senior \par\pard\plain\fs16\plain\cf1\f50\fs16\ql management has significant experience in the telecommunications and Internet \par\pard\plain\fs16\plain\cf1\f50\fs16\ql industries, and the loss of any of th em could negatively affect our ability to \par\pard\plain\fs16\plain\cf1\f50\fs16\ql execute our business strategy. In add ition, we cannot assure you that we will \par\pard\plain\fs16\plain\cf1\f50\fs16\ql be able to integrate new management i nto our existing operations. Competition \par\pard\plain\fs16\plain\cf1\f50\fs16\ql for these individuals is intense, and we may not be able to attract, motivate \par\pard\plain\fs16\plain\cf1\f50\fs16\ql and retain highly skilled qualified p ersonnel. We do not have "key person" \par\pard\plain\fs16\plain\cf1\f50\fs16\ql life insurance policies covering any of our employees. \par\pard\plain\fs16

\par\pard\plain\fs16\plain\cf1\f50\fs16\ql national operations. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql revenue from international operations and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ssets in several jurisdictions along our \par\pard\plain\fs16\plain\cf1\f50\fs16\ql sks inherent in international operations, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql s; \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql environments; \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql dards; and \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql aging operations. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql l adverse effects with respect to our \par\pard\plain\fs16\plain\cf1\f50\fs16\ql factors. However, problems associated \par\pard\plain\fs16\plain\cf1\f50\fs16\ql uture. Finally, managing operations in \par\pard\plain\fs16\plain\cf1\f50\fs16\ql her strain on our ability to manage our \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql predominantly in foreign currencies, we \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ks and our net income may suffer due to \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql es in U.S. dollars; however, most of our \par\pard\plain\fs16\plain\cf1\f50\fs16\ql customers derive their revenue in \par\pard\plain\fs16\plain\cf1\f50\fs16\ql he obligations of customers with \par\pard\plain\fs16\plain\cf1\f50\fs16\ql cies may be subject to unpredictable and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql that such currencies devalue relative to \par\pard\plain\fs16\plain\cf1\f50\fs16\ql stomers may become subject to exchange \par\pard\plain\fs16\plain\cf1\f50\fs16\ql onversion of their revenue currencies \par\pard\plain\fs16\plain\cf1\f50\fs16\ql affected customers may not be able to \par\pard\plain\fs16\plain\cf1\f50\fs16\ql where we invoice for our services in \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ur net income may suffer due to currency \par\pard\plain\fs16\plain\cf1\f50\fs16\ql

We face risks associated with inter Because we will derive substantial intend to have substantial physical a routes, our business is subject to ri including: . political and economic condition . unexpected changes in regulatory . exposure to different legal stan . difficulties in staffing and man We have not experienced any materia foreign operations arising from these with these risks could arise in the f multiple jurisdictions may place furt overall growth. Because many of our customers deal may be exposed to exchange rate ris currency translations. We primarily invoice for our servic customers and many of our prospective currencies other than U.S. dollars. T substantial revenue in foreign curren indeterminate increases in the event the U.S. dollar. Furthermore, such cu control regulations restricting the c into U.S. dollars. In such event, the pay us in U.S. dollars. In addition, currencies other than U.S. dollars, o translations in the event that such c

urrencies devalue relative to the U.S. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql dollar and we do not elect to enter i nto currency hedging arrangements in \par\pard\plain\fs16\plain\cf1\f50\fs16\ql respect of those payment obligations. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 19 \par\pard\plain\fs16 \page \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql Our operations are subject to re gulation in the United States and abroad \par\pard\plain\fs16\plain\cf1\f50\fs16\ql and require us to obtain and mainta in a number of governmental licenses and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql permits. If we fail to comply with those regulatory requirements or obtain \par\pard\plain\fs16\plain\cf1\f50\fs16\ql and maintain those licenses and per mits, we may not be able to conduct our \par\pard\plain\fs16\plain\cf1\f50\fs16\ql business. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql In the United States, our intrastat e, interstate, and international \par\pard\plain\fs16\plain\cf1\f50\fs16\ql telecommunications networks and servi ces are subject to regulation at the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql federal, state, and local levels. We also have facilities and provide services \par\pard\plain\fs16\plain\cf1\f50\fs16\ql in numerous countries in Europe, Lati n America, and Asia. Our operations in \par\pard\plain\fs16\plain\cf1\f50\fs16\ql those countries are subject to regula tion at the national level and, in some \par\pard\plain\fs16\plain\cf1\f50\fs16\ql cases, at the state, provincial, and local levels. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql . Our interstate and international operations in the United States are \par\pard\plain\fs16\plain\cf1\f50\fs16\ql governed by the Communications A ct of 1934, as amended by the Telecom \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Act. There are several ongoing p roceedings at the FCC and in the federal \par\pard\plain\fs16\plain\cf1\f50\fs16\ql courts regarding the implementat ion of various aspects of the Telecom \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Act. The outcomes of these proce edings may affect the manner in which we \par\pard\plain\fs16\plain\cf1\f50\fs16\ql are permitted to provide our ser vices in the United States and may have \par\pard\plain\fs16\plain\cf1\f50\fs16\ql a material adverse effect on our operations. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql . The intrastate activities of our local telephone service companies are \par\pard\plain\fs16\plain\cf1\f50\fs16\ql regulated by the states in which they do business. A number of states in \par\pard\plain\fs16\plain\cf1\f50\fs16\ql which we operate are conducting proceedings related to the provision of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql services in a competitive teleco mmunications environment. These \par\pard\plain\fs16\plain\cf1\f50\fs16\ql proceedings may affect the manne r in which we are permitted to provide \par\pard\plain\fs16\plain\cf1\f50\fs16\ql our services in one or more stat es and may have a material adverse \par\pard\plain\fs16\plain\cf1\f50\fs16\ql effect on our operations.

\par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql d States are governed by the laws of the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql he regulation of telecommunications \par\pard\plain\fs16\plain\cf1\f50\fs16\ql e United States varies widely. In some \par\pard\plain\fs16\plain\cf1\f50\fs16\ql that we are legally permitted to \par\pard\plain\fs16\plain\cf1\f50\fs16\ql countries, existing telecommunications \par\pard\plain\fs16\plain\cf1\f50\fs16\ql development, is unclear or \par\pard\plain\fs16\plain\cf1\f50\fs16\ql n unequal or discriminatory fashion. Our \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ith the telecommunications laws and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql e countries in which we operate could \par\pard\plain\fs16\plain\cf1\f50\fs16\ql nent suspension of operations in one or \par\pard\plain\fs16\plain\cf1\f50\fs16\ql rohibited from entering certain \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ng all of our services in one or more \par\pard\plain\fs16\plain\cf1\f50\fs16\ql the countries in which we operate are \par\pard\plain\fs16\plain\cf1\f50\fs16\ql affect the implementation of their \par\pard\plain\fs16\plain\cf1\f50\fs16\ql We cannot be certain of the outcome of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ings may affect the manner in which we \par\pard\plain\fs16\plain\cf1\f50\fs16\ql vices in these countries and may have a \par\pard\plain\fs16\plain\cf1\f50\fs16\ql perations. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ucting our networks and providing our \par\pard\plain\fs16\plain\cf1\f50\fs16\ql in and maintain a variety of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql enses and authorizations in the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql e also must comply with a variety of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ure to obtain or maintain necessary \par\pard\plain\fs16\plain\cf1\f50\fs16\ql to comply with the obligations imposed \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ore countries, may result in sanctions, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ority to provide services in one or more \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql functions. If the services of those \par\pard\plain\fs16\plain\cf1\f50\fs16\ql us, we may not be able to conduct our

. Our operations outside the Unite countries in which we operate. T networks and services outside th countries, the range of services provide may be limited. In other legislation is in the process of inconsistent, or is applied in a inability or failure to comply w regulations of one or more of th result in the temporary or perma more countries. We also may be p countries at all or from providi countries. In addition, many of conducting proceedings that will telecommunications legislation. these proceedings. These proceed are permitted to provide our ser material adverse effect on our o . In the ordinary course of constr services we are required to obta telecommunications and other lic countries in which we operate. W regulatory obligations. Our fail licenses and authorizations, or upon license-holders in one or m including the revocation of auth countries. We depend on third parties for many third parties are not available to

\par\pard\plain\fs16\plain\cf1\f50\fs16\ql business. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql We depend and will continue to depe nd upon third parties to: \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql . construct some of our systems an d provide equipment and maintenance; \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql . provide access to a number of or igination and termination points of our \par\pard\plain\fs16\plain\cf1\f50\fs16\ql systems in various jurisdictions ; \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql . construct and operate landing st ations in a number of those \par\pard\plain\fs16\plain\cf1\f50\fs16\ql jurisdictions; \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql . acquire rights of way; \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql . provide terrestrial capacity to our customers through contractual \par\pard\plain\fs16\plain\cf1\f50\fs16\ql arrangements; and \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql . act as joint venture participant s with regard to some of our current and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql potential future systems. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 20 \par\pard\plain\fs16 \page \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql We cannot assure you that third parties will perform their contractual \par\pard\plain\fs16\plain\cf1\f50\fs16\ql obligations or that they will not be subject to political or economic events \par\pard\plain\fs16\plain\cf1\f50\fs16\ql which may have a material adverse eff ect on our business, financial condition \par\pard\plain\fs16\plain\cf1\f50\fs16\ql and results of operations. If they fa il to perform their obligations, we may \par\pard\plain\fs16\plain\cf1\f50\fs16\ql not be able to conduct our business. If any of our joint venture participants \par\pard\plain\fs16\plain\cf1\f50\fs16\ql experiences a change in strategic dir ection such that their strategy regarding \par\pard\plain\fs16\plain\cf1\f50\fs16\ql our mutual joint venture diverges fro m our own, we may not be able to realize \par\pard\plain\fs16\plain\cf1\f50\fs16\ql the benefits anticipated to be derive d from the joint venture. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql We have substantial leverage which may limit our ability to comply with the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql terms of our indebtedness and may r estrict our ability to operate. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Our significant indebtedness could adversely affect us by leaving us with \par\pard\plain\fs16\plain\cf1\f50\fs16\ql insufficient cash to fund operations and impairing our ability to obtain \par\pard\plain\fs16\plain\cf1\f50\fs16\ql additional financing. The amount of o ur debt could have important consequences \par\pard\plain\fs16\plain\cf1\f50\fs16\ql for our future, including, among othe

r things: \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql fficient to meet the principal and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql it becomes due; \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql st on borrowings may leave us with \par\pard\plain\fs16\plain\cf1\f50\fs16\ql our operations; and \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql mpair our ability to obtain additional \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql bt. As of December 31, 1999, we and our \par\pard\plain\fs16\plain\cf1\f50\fs16\ql of $8,051 million of total liabilities, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql n in senior indebtedness, of which $1,295 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Global Crossing Ltd. additionally had \par\pard\plain\fs16\plain\cf1\f50\fs16\ql eferred stock with a face value of $1,650 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ing Holdings, also has mandatorily \par\pard\plain\fs16\plain\cf1\f50\fs16\ql g with a face value of $500 million. In \par\pard\plain\fs16\plain\cf1\f50\fs16\ql venture entered into an $850 million non\par\pard\plain\fs16\plain\cf1\f50\fs16\ql it had incurred $750 million of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ds upon a number of factors, many of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql tion, we rely on dividends, loan \par\pard\plain\fs16\plain\cf1\f50\fs16\ql h flows from our subsidiaries to repay \par\pard\plain\fs16\plain\cf1\f50\fs16\ql iaries have entered into a senior secured \par\pard\plain\fs16\plain\cf1\f50\fs16\ql y, the payment of dividends from these \par\pard\plain\fs16\plain\cf1\f50\fs16\ql and repayments of loans and advances are \par\pard\plain\fs16\plain\cf1\f50\fs16\ql other restrictions. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql nerate sufficient cash flow to meet our \par\pard\plain\fs16\plain\cf1\f50\fs16\ql e to renegotiate the terms of our long\par\pard\plain\fs16\plain\cf1\f50\fs16\ql we would be able to renegotiate \par\pard\plain\fs16\plain\cf1\f50\fs16\ql our indebtedness when required or that \par\pard\plain\fs16\plain\cf1\f50\fs16\ql

. cash from operations may be insu interest on our indebtedness as . payments of principal and intere insufficient cash resources for . restrictive debt covenants may i financing. We have incurred a high level of de consolidated subsidiaries had a total including approximately $5,056 millio million was secured. As of such date, outstanding cumulative convertible pr million. Our subsidiary, Global Cross redeemable preferred stock outstandin addition, our Pacific Crossing joint recourse credit facility, under which indebtedness as of December 31, 1999. Our ability to repay our debt depen which are beyond our control. In addi repayments and other intercompany cas our obligations. Our operating subsid corporate credit facility. Accordingl operating subsidiaries and the making subject to statutory, contractual and In addition, if we are unable to ge debt service requirements, we may hav term debt. We cannot assure you that successfully those terms or refinance satisfactory terms of any refinancing

would be available. If we were not able \par\pard\plain\fs16\plain\cf1\f50\fs16\ql to refinance our indebtedness or obta in new financing under these \par\pard\plain\fs16\plain\cf1\f50\fs16\ql circumstances, we would have to consi der other options, such as: \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql . sales of some assets; \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql . sales of equity; \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql . negotiations with our lenders to restructure applicable indebtedness; or \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql . other options available to us un der applicable law. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Our principal shareholders may be a ble to influence materially the outcome \par\pard\plain\fs16\plain\cf1\f50\fs16\ql of shareholder votes. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql As of March 3, 2000, Pacific Capita l Group had an 11.98% beneficial \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ownership interest in us. We have ent ered into various transactions with \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Pacific Capital Group and its affilia tes and assumed the on-going development \par\pard\plain\fs16\plain\cf1\f50\fs16\ql of some of our systems from an affili ate of Pacific Capital Group. Mr. Gary \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Winnick, chairman of our board of dir ectors, controls Pacific Capital Group \par\pard\plain\fs16\plain\cf1\f50\fs16\ql and its subsidiaries. In addition, se veral of our other officers and directors \par\pard\plain\fs16\plain\cf1\f50\fs16\ql are affiliated with Pacific Capital G roup. Furthermore, as of March 3, 2000, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Canadian Imperial \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 21 \par\pard\plain\fs16 \page \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql Bank of Commerce had a 9.69% ben eficial ownership interest in us. Canadian \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Imperial Bank of Commerce and its aff iliates have acted as underwriter, lender \par\pard\plain\fs16\plain\cf1\f50\fs16\ql or initial purchaser in several of ou r financial transactions in connection \par\pard\plain\fs16\plain\cf1\f50\fs16\ql with the development and construction of our systems. Several members of our \par\pard\plain\fs16\plain\cf1\f50\fs16\ql board of directors are employees of a n affiliate of Canadian Imperial Bank of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Commerce. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql As of March 3, 2000, Pacific Capita l Group and Canadian Imperial Bank of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Commerce collectively beneficially ow ned 21.67% of the outstanding shares of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql our common stock. Accordingly, Pacifi c Capital Group and Canadian Imperial \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Bank of Commerce may be able to influ ence materially the outcome of matters

\par\pard\plain\fs16\plain\cf1\f50\fs16\ql rs, including the election of directors. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ntial portion of us and may have \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql s have substantial equity interests in \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ctors and executive officers as a group \par\pard\plain\fs16\plain\cf1\f50\fs16\ql % of our outstanding common stock, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql y Pacific Capital Group and certain \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Imperial Bank of Commerce. Some of these \par\pard\plain\fs16\plain\cf1\f50\fs16\ql s from us due to advisory services fees \par\pard\plain\fs16\plain\cf1\f50\fs16\ql affiliates. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql officers also serve as officers and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql nally, some of our officers and directors \par\pard\plain\fs16\plain\cf1\f50\fs16\ql nications industry. Service as one of our \par\pard\plain\fs16\plain\cf1\f50\fs16\ql or or officer of another company could \par\pard\plain\fs16\plain\cf1\f50\fs16\ql director or officer is faced with \par\pard\plain\fs16\plain\cf1\f50\fs16\ql mplications for us and the other company. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql st with respect to allocation of time and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ctors or officers and directors and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql uit of these other business interests \par\pard\plain\fs16\plain\cf1\f50\fs16\ql rsuing opportunities on our behalf. These \par\pard\plain\fs16\plain\cf1\f50\fs16\ql terial adverse effect on our business, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql erations. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql abilities. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql on of the income derived from our \par\pard\plain\fs16\plain\cf1\f50\fs16\ql to tax by any of (1) Bermuda, which \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ncome tax, or (2) some other countries in \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ch our customers are located. However, we \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16

submitted to a vote of our shareholde Officers and directors own a substa conflicts of interest. Our executive officers and director us. As of March 3, 2000, all our dire collectively beneficially owned 24.72 including shares beneficially owned b shares beneficially owned by Canadian individuals have also received amount paid to Pacific Capital Group and its Some of our directors and executive directors of other companies. Additio are active investors in the telecommu directors or officers and as a direct create conflicts of interest when the decisions that could have different i A conflict of interest could also exi attention of persons who are our dire officers of another company. The purs could distract these officers from pu conflicts of interest could have a ma financial condition and results of op We cannot predict our future tax li We believe that a significant porti undersea systems will not be subject currently does not have a corporate i which we conduct activities or in whi base this belief upon:

\par\pard\plain\fs16\plain\cf1\f50\fs16\ql . the anticipated nature and condu ct of our business, which may change; \par\pard\plain\fs16\plain\cf1\f50\fs16\ql and \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql . our understanding of our positio n under the tax laws of the various \par\pard\plain\fs16\plain\cf1\f50\fs16\ql countries in which we have asset s or conduct activities, which position \par\pard\plain\fs16\plain\cf1\f50\fs16\ql is subject to review and possibl e challenge by taxing authorities and to \par\pard\plain\fs16\plain\cf1\f50\fs16\ql possible changes in law, which m ay have retroactive effect. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql We cannot predict the amount of tax to which we may become subject and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql cannot be certain that any of these f actors would not have a material adverse \par\pard\plain\fs16\plain\cf1\f50\fs16\ql effect on our business, financial con dition and results of operations. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Our shareholders may be subject to Foreign Personal Holding Company, Passive \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Foreign Investment Company, Control led Foreign Corporation and Personal \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Holding Company rules. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql We believe that neither we nor any of our non-United States subsidiaries are \par\pard\plain\fs16\plain\cf1\f50\fs16\ql a foreign personal holding company an d do not expect that either we or any of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql our affiliates will become a foreign personal holding company. However, we \par\pard\plain\fs16\plain\cf1\f50\fs16\ql cannot assure you in this regard. If one of our shareholders is a United \par\pard\plain\fs16\plain\cf1\f50\fs16\ql States person and we or one of our no n-United States subsidiaries are \par\pard\plain\fs16\plain\cf1\f50\fs16\ql classified as a foreign personal hold ing company, then that shareholder would \par\pard\plain\fs16\plain\cf1\f50\fs16\ql be required to pay tax on its pro rat a share of our or our relevant non-United \par\pard\plain\fs16\plain\cf1\f50\fs16\ql States subsidiary's undistributed for eign personal holding income. We intend \par\pard\plain\fs16\plain\cf1\f50\fs16\ql to manage our affairs so as to attemp t to avoid or minimize having income \par\pard\plain\fs16\plain\cf1\f50\fs16\ql imputed to United States persons unde r these rules, to the extent this \par\pard\plain\fs16\plain\cf1\f50\fs16\ql management of our affairs would be co nsistent with our business goals, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql although we cannot assure you in this regard. \par\pard\plain\fs16 \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 22 \par\pard\plain\fs16 \page \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql We believe that we are not a pas sive foreign investment company and do not \par\pard\plain\fs16\plain\cf1\f50\fs16\ql expect to become a passive foreign in vestment company in the future. However,

\par\pard\plain\fs16\plain\cf1\f50\fs16\ql we cannot assure you in this regard. In addition, our expectations are based, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql in part, on interpretations of existi ng law that we believe are reasonable, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql but which have not been approved by a ny taxing authority. If we were a passive \par\pard\plain\fs16\plain\cf1\f50\fs16\ql foreign investment company, then any of our shareholders that is a United \par\pard\plain\fs16\plain\cf1\f50\fs16\ql States person could be liable to pay tax at the then prevailing rates on \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ordinary income plus an interest char ge upon some distributions by us or when \par\pard\plain\fs16\plain\cf1\f50\fs16\ql that shareholder sold our capital sto ck at a gain. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Furthermore, additional tax conside rations would apply if we or any of our \par\pard\plain\fs16\plain\cf1\f50\fs16\ql affiliates were a controlled foreign corporation or a personal holding \par\pard\plain\fs16\plain\cf1\f50\fs16\ql company. \par\pard\plain\fs16 \par\pard\plain\fs16{\*\bkmkstart item_1_3_17}{\*\bkmkend item_1_3_17}\plain\cf1 \f50\fs16\ql ITEM 2. PROPERTIES \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Our principal offices are located i n leased premises in Hamilton, Bermuda, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql with corporate offices under lease in Beverly Hills, California; Morristown, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql New Jersey; and Rochester, New York. We also own or lease sales, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql administrative and support offices wo rldwide. In addition, our \par\pard\plain\fs16\plain\cf1\f50\fs16\ql telecommunication services segment ow ns undersea cables crossing the Atlantic \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Ocean (AC-1 and AC-2); Pacific Ocean (58% economic interest in PC-1); Eastern \par\pard\plain\fs16\plain\cf1\f50\fs16\ql United States and Caribbean (MAC); So uth America (SAC); eastern Asia (EAC); \par\pard\plain\fs16\plain\cf1\f50\fs16\ql and Western United States, Mexico, Ce ntral & South America and Caribbean \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (PAC); and primarily terrestrial cabl e systems connecting various cities \par\pard\plain\fs16\plain\cf1\f50\fs16\ql within the United States (NAC), Europ e (PEC), Japan (GAL) and Hong Kong (HGC). \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Our telecommunications services segme nt also owns or leases numerous cable \par\pard\plain\fs16\plain\cf1\f50\fs16\ql landing stations throughout the world related to these undersea and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql terrestrial cable systems. GlobalCent er media distribution centers incorporate \par\pard\plain\fs16\plain\cf1\f50\fs16\ql web hosting infrastructure and are co nnected to the Company's international \par\pard\plain\fs16\plain\cf1\f50\fs16\ql fiber optic network. Media distributi on centers are currently operational in \par\pard\plain\fs16\plain\cf1\f50\fs16\ql leased premises in Sunnyvale and Anah eim, California; London, England; South \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Melbourne, Australia; Herndon, Virgin ia; and New York, New York. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Our installation and maintenance se

rvices segment owns, leases and operates \par\pard\plain\fs16\plain\cf1\f50\fs16\ql a fleet of vessels and submersible/re motely operated vehicles used in the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql planning, installation and maintenanc e of undersea fiber optic cable systems. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Our ILEC services segment owns tele phone properties which include: \par\pard\plain\fs16\plain\cf1\f50\fs16\ql connecting lines between customers' p remises and the central offices; central \par\pard\plain\fs16\plain\cf1\f50\fs16\ql office switching equipment; buildings and land; and customer premise \par\pard\plain\fs16\plain\cf1\f50\fs16\ql equipment. The connecting lines, incl uding aerial and underground cable, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql conduit, poles, wires and microwave e quipment, are located on public streets \par\pard\plain\fs16\plain\cf1\f50\fs16\ql and highways or on privately owned la nd. We have permission to use these lands \par\pard\plain\fs16\plain\cf1\f50\fs16\ql pursuant to local governmental consen t or lease, permit, franchise, easement \par\pard\plain\fs16\plain\cf1\f50\fs16\ql or other agreement. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql We believe that substantially all o f our existing properties are in good \par\pard\plain\fs16\plain\cf1\f50\fs16\ql condition and are suitable for the co nduct of our business. A security \par\pard\plain\fs16\plain\cf1\f50\fs16\ql interest in some of these properties, in particular some of our undersea \par\pard\plain\fs16\plain\cf1\f50\fs16\ql cables, has been granted to lenders p roviding financing for those systems \par\pard\plain\fs16\plain\cf1\f50\fs16\ql under non-recourse facilities or to G lobal Crossing generally under our \par\pard\plain\fs16\plain\cf1\f50\fs16\ql corporate credit facility. \par\pard\plain\fs16 \par\pard\plain\fs16{\*\bkmkstart item_1_3_18}{\*\bkmkend item_1_3_18}\plain\cf1 \f50\fs16\ql ITEM 3. LEGAL PROCEEDINGS \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql On June 25, 1999, Frontier Corporat ion, a wholly-owned subsidiary of Global \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Crossing Ltd., was served with a summ ons and complaint in a lawsuit commenced \par\pard\plain\fs16\plain\cf1\f50\fs16\ql in the New York State Supreme Court, Monroe County by a Frontier shareholder \par\pard\plain\fs16\plain\cf1\f50\fs16\ql alleging that Frontier and its Board of Directors had breached their fiduciary \par\pard\plain\fs16\plain\cf1\f50\fs16\ql duties to shareholders by endorsing a definitive merger agreement with the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Company without having adequately con sidered an alternative merger proposal \par\pard\plain\fs16\plain\cf1\f50\fs16\ql made by Qwest Communications Internat ional, Inc. The lawsuit was framed as a \par\pard\plain\fs16\plain\cf1\f50\fs16\ql purported class action brought on beh alf of all shareholders of Frontier and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql sought unstated compensatory damages and injunctive relief compelling \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Frontier's board to evaluate Frontier 's suitability as a merger partner, to \par\pard\plain\fs16\plain\cf1\f50\fs16\ql enhance Frontier's value as a merger candidate, to engage in discussions with \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Qwest about possible business combina

tions, to act independently to protect \par\pard\plain\fs16\plain\cf1\f50\fs16\ql the interests of Frontier shareholder s, and to ensure that no conflicts of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql interest exist which would prevent ma ximizing value to shareholders. In July \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 1999, \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 23 \par\pard\plain\fs16 \page \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql three additional lawsuits were c ommenced against Frontier in the New York \par\pard\plain\fs16\plain\cf1\f50\fs16\ql State Supreme Court on behalf of a nu mber of individual shareholders seeking \par\pard\plain\fs16\plain\cf1\f50\fs16\ql essentially identical relief. All fou r lawsuits were consolidated into a \par\pard\plain\fs16\plain\cf1\f50\fs16\ql single proceeding pending in Rocheste r, New York. In February 2000, all four \par\pard\plain\fs16\plain\cf1\f50\fs16\ql lawsuits were voluntarily withdrawn. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql On July 12, 1999 Frontier was serve d with a summons and complaint in a \par\pard\plain\fs16\plain\cf1\f50\fs16\ql lawsuit commenced in New York State S upreme Court, New York County by a \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Frontier shareholder alleging that Fr ontier and its board breached their \par\pard\plain\fs16\plain\cf1\f50\fs16\ql fiduciary duties by failing to obtain the highest possible acquisition price \par\pard\plain\fs16\plain\cf1\f50\fs16\ql for Frontier in the definitive merger agreement with Global Crossing. The \par\pard\plain\fs16\plain\cf1\f50\fs16\ql action has been framed as a purported class action and seeks compensatory \par\pard\plain\fs16\plain\cf1\f50\fs16\ql damages and injunctive relief. The cl aims against Frontier were originally \par\pard\plain\fs16\plain\cf1\f50\fs16\ql asserted in the same action as simila r but separate claims against US WEST, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Inc. However, the claims against Fron tier have been severed from the US WEST \par\pard\plain\fs16\plain\cf1\f50\fs16\ql claims. Global Crossing believes the asserted claims are without merit and is \par\pard\plain\fs16\plain\cf1\f50\fs16\ql defending itself vigorously. \par\pard\plain\fs16 \par\pard\plain\fs16{\*\bkmkstart item_1_3_19}{\*\bkmkend item_1_3_19}\plain\cf1 \f50\fs16\ql ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Not applicable. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 24 \par\pard\plain\fs16 \page \par\pard\plain\fs16{\*\bkmkstart part_1_2_17}{\*\bkmkend part_1_2_17}\pard\plai n\cf1\f50\fs16\ql PART II \par\pard\plain\fs16 \par\pard\plain\fs16{\*\bkmkstart item_1_3_20}{\*\bkmkend item_1_3_20}\plain\cf1 \f50\fs16\ql ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED SHAREH OLDER \par\pard\plain\fs16\plain\cf1\f50\fs16\ql MATTERS \par\pard\plain\fs16

\par\pard\plain\fs16\plain\cf1\f50\fs16\ql Price Range of Common Stock \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Our common stock began to trade on both the Nasdaq National Market ("NNM") \par\pard\plain\fs16\plain\cf1\f50\fs16\ql and the Bermuda Stock Exchange under the symbol "GBLX" following our Initial \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Public Offering ("IPO") of common sto ck on August 14, 1998 at a per share \par\pard\plain\fs16\plain\cf1\f50\fs16\ql price of $9.50. The table below sets forth, on a per share basis for the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql periods indicated, the high and low c losing sales prices for the common stock \par\pard\plain\fs16\plain\cf1\f50\fs16\ql as reported by the NNM. \par\pard\plain\fs16 \par\pard\plain\fs16 \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql Price Range \par\pard\plain\fs16\plain\cf1\f50\fs16\ql -------------------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql 1999 1998 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ------------- -----------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql High Low High Low \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ------ ------ ------ ----\par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql First Quarter................... ............... $56.75 $19.25 $ -- $ -\par\pard\plain\fs16\plain\cf1\f50\fs16\ql Second Quarter.................. ............... $64.25 $39.05 $ -- $ -\par\pard\plain\fs16\plain\cf1\f50\fs16\ql Third Quarter (from August 14, 1 998)........... $41.88 $20.25 $12.75 $8.00 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Fourth Quarter.................. ............... $55.75 $24.81 $23.50 $8.63 \par\pard\plain\fs16 \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql The closing sale price of the co mmon stock as reported by the NNM on March \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 3, 2000 was $56 7/16. As of March 3, 2000, there were 29,665 holders of record \par\pard\plain\fs16\plain\cf1\f50\fs16\ql of our common stock. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Dividend Policy; Restriction on Payme nt of Dividends \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql The Company does not anticipate pay ing cash dividends on our common stock in \par\pard\plain\fs16\plain\cf1\f50\fs16\ql the foreseeable future. The terms of certain of our debt instruments also \par\pard\plain\fs16\plain\cf1\f50\fs16\ql place limitations on our ability to p ay dividends. Future dividends, if any, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql will be at the discretion of the Boar d of Directors and will depend upon, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql among other things, our operations, c apital requirements and surplus, general \par\pard\plain\fs16\plain\cf1\f50\fs16\ql financial condition, contractual rest rictions and such other factors as the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Board of Directors may deem relevant. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Recent Sales of Unregistered Securiti

es \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql In 1999, the Company issued the fol lowing equity securities that were not \par\pard\plain\fs16\plain\cf1\f50\fs16\ql registered under the Securities Act o f 1933, as amended: \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (a) 2,600,000 shares of 7% Cumulati ve Convertible Preferred Stock at a \par\pard\plain\fs16\plain\cf1\f50\fs16\ql liquidation preference of $250.00 p er share were issued on December 15, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 1999 by GCL for net proceeds of app roximately $630 million and sold to \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Salomon Smith Barney, Merrill Lynch & Co., Goldman, Sachs & Co., Chase \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Securities Inc., Morgan Stanley Dea n Witter, CIBC World Markets, Donald, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Lufkin & Jenrette and Credit Suisse First Boston as initial purchasers. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Each share of preferred stock is co nvertible into 4.6948 shares of GCL \par\pard\plain\fs16\plain\cf1\f50\fs16\ql common stock, based on a conversion price of $53.25 per share; and \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (b) 10,000,000 shares of 6 3/8% Cum ulative Convertible Preferred Stock at a \par\pard\plain\fs16\plain\cf1\f50\fs16\ql liquidation preference of $100.00 p er share were issued on November 5, 1999 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql by GCL for net proceeds of approxim ately $969 million and sold to Merrill \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Lynch & Co., Goldman, Sachs & Co. a nd Salomon Smith Barney as initial \par\pard\plain\fs16\plain\cf1\f50\fs16\ql purchasers. Each share of preferred stock is convertible into 2.2222 shares \par\pard\plain\fs16\plain\cf1\f50\fs16\ql of GCL common stock, based on a con version price of $45.00 per share. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Each series of GCL preferred stock issued during 1999 was resold only to \par\pard\plain\fs16\plain\cf1\f50\fs16\ql institutional investors that are "qua lified institutional buyers" within the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql meaning of Rule 144A under the Securi ties Act of 1933, as amended (the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql "Securities Act"), and was issued in reliance upon an exemption from the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql registration provisions of the Securi ties Act set forth in Section 4(2) \par\pard\plain\fs16\plain\cf1\f50\fs16\ql thereof relative to transactions by a n issuer not involving any public \par\pard\plain\fs16\plain\cf1\f50\fs16\ql offering or the rules ad regulations thereunder. \par\pard\plain\fs16 \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 25 \par\pard\plain\fs16 \page \par\pard\plain\fs16{\*\bkmkstart item_1_3_21}{\*\bkmkend item_1_3_21}\pard\plai n\cf1\f50\fs16\ql ITEM 6. SELECTED FINANCIAL DATA \par\pard\plain\fs16

\par\pard\plain\fs16\plain\cf1\f50\fs16\ql inancial information \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql orical financial information for Global \par\pard\plain\fs16\plain\cf1\f50\fs16\ql repared using the consolidated financial \par\pard\plain\fs16\plain\cf1\f50\fs16\ql he dates indicated and for each of the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 8 and for the period from March 19, 1997 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 997. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql istorical financial information, please \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql for the year ended December 31, 1999 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql arine Systems for the period from July \par\pard\plain\fs16\plain\cf1\f50\fs16\ql rough December 31, 1999; the results of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql tember 30, 1999, date of acquisition, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql he results of Racal Telecom for the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ate of acquisition, through December 31, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql heet as of December 31, 1999 includes \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Systems, Frontier and Racal Telecom. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 1, 1999, Global Crossing recorded a $15 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql fit, due to the adoption of Statement of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Cost of Start-Up Activities". See the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql accounting principles" item in the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 31, 1999 and 1998, Global Crossing \par\pard\plain\fs16\plain\cf1\f50\fs16\ql illion, respectively, of stock-related \par\pard\plain\fs16\plain\cf1\f50\fs16\ql s and rights to purchase stock issued \par\pard\plain\fs16\plain\cf1\f50\fs16\ql the holders to purchase common stock. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql item in the Statement of Operations \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 2,600,000 shares of 7% cumulative \par\pard\plain\fs16\plain\cf1\f50\fs16\ql

Global Crossing selected historical f The table below shows selected hist Crossing. This information has been p statements of Global Crossing as of t years ended December 31, 1999 and 199 (Date of Inception) to December 31, 1 In reading the following selected h note the following: . The statement of operations data includes the results of Global M 2, 1999, date of acquisition, th Frontier for the period from Sep through December 31, 1999; and t period from November 24, 1999, d 1999. The Consolidated Balance S amounts related to Global Marine . During the year ended December 3 million expense, net of tax bene Position 98-5, "Reporting on the "Cumulative effect of change in Statement of Operations Data. . During the years ended December recognized $51 million and $39 m expense relating to stock option during that period which entitle See the "Stock-related expense" Data. . On December 15, 1999, GCL issued convertible preferred stock at a

liquidation preference of $250.00 for \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ch share of preferred stock is \par\pard\plain\fs16\plain\cf1\f50\fs16\ql f common stock based on a conversion \par\pard\plain\fs16\plain\cf1\f50\fs16\ql e preferred stock are cumulative from \par\pard\plain\fs16\plain\cf1\f50\fs16\ql yable on February 1, May 1, August 1 and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ng on February 1, 2000, at the annual \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ed our acquisition of Racal Telecom, a \par\pard\plain\fs16\plain\cf1\f50\fs16\ql es of Racal Electronics plc, for \par\pard\plain\fs16\plain\cf1\f50\fs16\ql sh. Racal Telecom owns one of the most \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ns networks in the United Kingdom, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 0 route miles of fiber and reaching more \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ssing Holdings Ltd. ("GCH"), a wholly\par\pard\plain\fs16\plain\cf1\f50\fs16\ql two series of senior unsecured notes \par\pard\plain\fs16\plain\cf1\f50\fs16\ql senior notes are due November 15, 2006 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql n and the 9 1/2% senior notes are due \par\pard\plain\fs16\plain\cf1\f50\fs16\ql lue of $1,100 million. The New Senior \par\pard\plain\fs16\plain\cf1\f50\fs16\ql erest will be paid on the notes on May \par\pard\plain\fs16\plain\cf1\f50\fs16\ql beginning on May 15, 2000. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 10,000,000 shares of 6 3/8% cumulative \par\pard\plain\fs16\plain\cf1\f50\fs16\ql liquidation preference of $100.00 for \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 69 million. Each share of preferred \par\pard\plain\fs16\plain\cf1\f50\fs16\ql shares of common stock, based on a \par\pard\plain\fs16\plain\cf1\f50\fs16\ql dends on the preferred stock are \par\pard\plain\fs16\plain\cf1\f50\fs16\ql e and will be payable on February 1, May \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ch year, beginning on February 1, 2000, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 26 \par\pard\plain\fs16 \page

net proceeds of $630 million. Ea convertible into 4.6948 shares o price of $53.25. Dividends on th the date of issue and will be pa November 1 of each year, beginni rate of 7%. . On November 24, 1999, we complet group of wholly owned subsidiari approximately $1.6 billion in ca extensive fiber telecommunicatio consisting of approximately 4,65 than 2,000 cities and towns. . On November 12, 1999, Global Cro owned subsidiary of GCL, issued ("New Senior Notes"). The 9 1/8% with a face value of $900 millio November 15, 2009 with a face va Notes are guaranteed by GCL. Int 15 and November 15 of each year, . On November 5, 1999, GCL issued convertible preferred stock at a net proceeds of approximately $9 stock is convertible into 2.2222 conversion price of $45.00. Divi cumulative from the date of issu 1, August 1 and November 1 of ea at the annual rate of 6 3/8%.

\par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql pleted the acquisition of Frontier \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ion valued at over $10 billion, with \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 2.05 shares of our common stock for each \par\pard\plain\fs16\plain\cf1\f50\fs16\ql eld. Frontier is one of the largest long \par\pard\plain\fs16\plain\cf1\f50\fs16\ql anies in the United States and one of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ies-based integrated communications and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql . r acquisition of the Global Marine \par\pard\plain\fs16\plain\cf1\f50\fs16\ql less Plc for approximately $908 million \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Global Marine Systems owns the largest \par\pard\plain\fs16\plain\cf1\f50\fs16\ql nance vessels in the world and currently \par\pard\plain\fs16\plain\cf1\f50\fs16\ql e world's undersea cable miles. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql . entered into a definitive agreement to \par\pard\plain\fs16\plain\cf1\f50\fs16\ql y 18, 1999, Global Crossing and U S WEST \par\pard\plain\fs16\plain\cf1\f50\fs16\ql agreement, and U S WEST agreed to merge \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ational Inc. As a result, U S WEST paid \par\pard\plain\fs16\plain\cf1\f50\fs16\ql e of $140 million in cash and returned \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ing common stock purchased in a related \par\pard\plain\fs16\plain\cf1\f50\fs16\ql d to purchase capacity on the Global \par\pard\plain\fs16\plain\cf1\f50\fs16\ql market unit prices for delivery over the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql make purchase price payments to Global \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 40 million over the nest two years. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 1, 1999, Global Crossing recognized $210 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql xpenses, of other income in connection \par\pard\plain\fs16\plain\cf1\f50\fs16\ql WEST merger agreement. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql . vices agreement" item in the Statements \par\pard\plain\fs16\plain\cf1\f50\fs16\ql arge for the termination of the advisory \par\pard\plain\fs16\plain\cf1\f50\fs16\ql , 1998. Global Crossing acquired the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql es payable under the advisory services

. On September 28, 1999, we com Corporation in a merger transact Frontier shareholders receiving share of Frontier common stock h distance telecommunications comp the leading providers of facilit Internet services. On July 2, 1999, we completed ou Systems division of Cable & Wire in cash and assumed liabilities. fleet of cable laying and mainte services more than a third of th On May 16, 1999, Global Crossing merge with U S WEST, Inc. On Jul agreed to terminate their merger with Qwest Communications Intern Global Crossing a termination fe 2,231,076 shares of Global Cross tender offer, and Qwest committe Crossing network at established next four years and committed to Crossing for this capacity of $1 During the year ended December 3 million, net of merger related e with the termination of the U S The "Termination of advisory ser of Operations Data includes a ch services agreement as of June 30 rights from those entitled to fe

\par\pard\plain\fs16\plain\cf1\f50\fs16\ql the issuance of common stock having an \par\pard\plain\fs16\plain\cf1\f50\fs16\ql and the cancellation of approximately $3 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql under a related advance agreement. As a \par\pard\plain\fs16\plain\cf1\f50\fs16\ql al Crossing recorded a non-recurring \par\pard\plain\fs16\plain\cf1\f50\fs16\ql of $138 million during the year ended \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Global Crossing recognized as an expense \par\pard\plain\fs16\plain\cf1\f50\fs16\ql sory fees incurred prior to termination \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql to Pacific Capital Group, Inc., a \par\pard\plain\fs16\plain\cf1\f50\fs16\ql iliates for the Pacific Crossing, Mid\par\pard\plain\fs16\plain\cf1\f50\fs16\ql an Crossing systems and related rights. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql mmon stock was originally allocated to \par\pard\plain\fs16\plain\cf1\f50\fs16\ql e amount of $112 million and as \par\pard\plain\fs16\plain\cf1\f50\fs16\ql rom affiliates" in the amount of $163 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql quipment" item in the Balance Sheet \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ance to/from affiliates" item in the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql million as of December 31, 1999 and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql the value of the warrants described in \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ve applicable to the Pacific Crossing \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql erating income (loss), plus goodwill \par\pard\plain\fs16\plain\cf1\f50\fs16\ql mortization, non-cash cost of capacity \par\pard\plain\fs16\plain\cf1\f50\fs16\ql cremental cash deferred revenue and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ion of the advisory services agreement. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql th financial covenants contained in the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ents. This information should not be \par\pard\plain\fs16\plain\cf1\f50\fs16\ql any measure of performance as \par\pard\plain\fs16\plain\cf1\f50\fs16\ql any's calculation of adjusted EBITDA may \par\pard\plain\fs16\plain\cf1\f50\fs16\ql n used by other companies and, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql limited.

agreement in consideration from aggregate value of $135 million million owed to Global Crossing result of this transaction, Glob charge in the approximate amount December 31, 1998. In addition, approximately $2 million of advi of the contract. . Global Crossing granted warrants shareholder, and some of its aff Atlantic Crossing and Pan Americ The $275 million value of the co "Construction in progress" in th "Investment in and advances to/f million. See the "property and e Data. The "Investment in and adv Balance Sheet Date includes $163 1998, respectively, representing the bullet point immediately abo system. . Adjusted EBITDA is defined as op amortization, depreciation and a sold, stock related expenses, in amounts relating to the terminat This definition is consistent wi Company's major financial agreem considered as an alternative to promulgated under GAAP. The Comp be different from the calculatio therefore, comparability may be

\par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 27 \par\pard\plain\fs16 \page \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql The selected consolidated financ ial data as of December 31, 1999, 1998 and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 1997, for the years ended December 31 , 1999 and 1998 and for the period from \par\pard\plain\fs16\plain\cf1\f50\fs16\ql March 19, 1997 (Date of Inception) to December 31, 1997, respectively, are \par\pard\plain\fs16\plain\cf1\f50\fs16\ql derived from our audited consolidated financial statements and should be read \par\pard\plain\fs16\plain\cf1\f50\fs16\ql in conjunction with the audited conso lidated financial statements and notes \par\pard\plain\fs16\plain\cf1\f50\fs16\ql included in this Annual Report on For m 10-K. \par\pard\plain\fs16 \par\pard\plain\fs16 \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql Period from \par\pard\plain\fs16\plain\cf1\f50\fs16\ql March 19, 1997 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Year End ed Year Ended (Date of Inception) \par\pard\plain\fs16\plain\cf1\f50\fs16\ql December 31 , 1999 December 31, 1998 to December 31, 1997 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ---------------- ----------------- -------------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql (In thousa nds, except share and per share information) \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Statement of Operations \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Data: \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Revenue................. $ 1,664, 824 $ 419,866 $ -\par\pard\plain\fs16\plain\cf1\f50\fs16\ql -----------------------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql Expenses: \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Cost of sales.......... 850, 483 178,492 -\par\pard\plain\fs16\plain\cf1\f50\fs16\ql Operations, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql administration and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql maintenance........... 133, 202 18,056 -\par\pard\plain\fs16\plain\cf1\f50\fs16\ql Sales and marketing.... 149, 119 26,194 1,366 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Network development.... 26, 153 10,962 78 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql General and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql administrative........ 210, 107 26,303 1,618 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Stock related expense . 51, 306 39,374 -\par\pard\plain\fs16\plain\cf1\f50\fs16\ql Depreciation and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql amortization.......... 124, 294 541 39 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Goodwill and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql intangibles \par\pard\plain\fs16\plain\cf1\f50\fs16\ql amortization.......... 127, 621 ---

\par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16\plain\cf1\f50\fs16\ql -139,669 -\par\pard\plain\fs16\plain\cf1\f50\fs16\ql ----------------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql 285 439,591 3,101 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ----------------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql 461) (19,725) (3,101) \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 708 (2,508) -\par\pard\plain\fs16\plain\cf1\f50\fs16\ql 338) --\par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 407 29,986 2,941 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 077) (42,880) -\par\pard\plain\fs16\plain\cf1\f50\fs16\ql 765 --\par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 539) (33,067) -\par\pard\plain\fs16\plain\cf1\f50\fs16\ql ----------------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 535) (68,194) (160) \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 681) (19,709) -\par\pard\plain\fs16\plain\cf1\f50\fs16\ql ----------------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 216) (87,903) (160) \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 710) --\par\pard\plain\fs16\plain\cf1\f50\fs16\ql ----------------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql 926) (87,903) (160) \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 642) (12,681) (12,690) \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16\plain\cf1\f50\fs16\ql -(34,140) -\par\pard\plain\fs16\plain\cf1\f50\fs16\ql

Termination of advisory services agreement ... -------1,672, -------Operating loss.......... Equity in income (loss) of affiliates.......... Minority interest....... Other income (expense): Interest income........ Interest expense....... Other income, net...... Provision for income taxes.................. (7, 15, (1, 67, (139, 180, (126, -------Loss before extraordinary item and cumulative effect of change in accounting principle.............. Extraordinary loss on retirement of debt.....

(10, (45, --------

Loss before cumulative effect of change in accounting principle... Cumulative effect of change in accounting principle, net of income tax benefit of $1,400.................

(56,

(14, --------

Net loss................ Preferred stock dividends.............. Redemption of preferred stock..................

(70, (66,

--------

----------------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql Net loss applicable to \par\pard\plain\fs16\plain\cf1\f50\fs16\ql common shareholders.... 568) $ (134,724) $ (12,850) \par\pard\plain\fs16\plain\cf1\f50\fs16\ql === =========== =========== \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Net Loss Per Common \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Share: \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Loss applicable to \par\pard\plain\fs16\plain\cf1\f50\fs16\ql common shareholders \par\pard\plain\fs16\plain\cf1\f50\fs16\ql before extraordinary \par\pard\plain\fs16\plain\cf1\f50\fs16\ql item and cumulative \par\pard\plain\fs16\plain\cf1\f50\fs16\ql effect of change in \par\pard\plain\fs16\plain\cf1\f50\fs16\ql accounting principle \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Basic and diluted....... .15) $ (0.32) $ (0.04) \par\pard\plain\fs16\plain\cf1\f50\fs16\ql === =========== =========== \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Extraordinary item \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Basic and diluted....... .09) $ (0.06) $ -\par\pard\plain\fs16\plain\cf1\f50\fs16\ql === =========== =========== \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Cumulative effect of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql change in accounting \par\pard\plain\fs16\plain\cf1\f50\fs16\ql principle \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Basic and diluted....... .03) $ -$ -\par\pard\plain\fs16\plain\cf1\f50\fs16\ql === =========== =========== \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Net loss applicable to \par\pard\plain\fs16\plain\cf1\f50\fs16\ql common shareholders \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Basic and diluted....... .27) $ (0.38) $ (0.04) \par\pard\plain\fs16\plain\cf1\f50\fs16\ql === =========== =========== \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Shares used in computing \par\pard\plain\fs16\plain\cf1\f50\fs16\ql basic and diluted loss \par\pard\plain\fs16\plain\cf1\f50\fs16\ql per share.............. 851 358,735,340 325,773,934 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql === =========== =========== \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Operating Data: \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Cash from operating \par\pard\plain\fs16\plain\cf1\f50\fs16\ql activities............. 084 $ 208,727 $ 5,121 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Cash used for investing \par\pard\plain\fs16\plain\cf1\f50\fs16\ql activities............. 977) (430,697) (428,743) \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Cash from financing \par\pard\plain\fs16\plain\cf1\f50\fs16\ql activities............. 799 1,027,110 425,075 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Adjusted EBITDA ........ 181 $ 364,948 $ 343,233 \par\pard\plain\fs16 \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql 28 \par\pard\plain\fs16 \page \par\pard\plain\fs16 \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql December 31,

$ (137, ========

$

(0

======== $ (0

========

$

(0

========

$

(0

========

502,400, ========

$

506, (4,009, 4,330,

$

708,

\par\pard\plain\fs16\plain\cf1\f50\fs16\ql --------------------------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql 1999 1998 1997 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ----------- ---------- -------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql (In thousands) \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16\plain\cf1\f50\fs16\ql h \par\pard\plain\fs16\plain\cf1\f50\fs16\ql cash \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ....... $ 2,946,533 $ 976,615 $ 27,744 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ....... 138,118 367,600 -\par\pard\plain\fs16\plain\cf1\f50\fs16\ql ....... 52,052 43,315 -\par\pard\plain\fs16\plain\cf1\f50\fs16\ql ....... -574,849 -\par\pard\plain\fs16\plain\cf1\f50\fs16\ql ....... 6,026,053 433,707 518,519 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ....... 661,442 65,757 25,934 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ....... 323,960 177,334 -\par\pard\plain\fs16\plain\cf1\f50\fs16\ql ....... 9,557,422 --\par\pard\plain\fs16\plain\cf1\f50\fs16\ql ----------- ---------- -------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql ....... $19,705,580 $2,639,177 $572,197 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql =========== ========== ======== \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ....... $ 1,852,593 $ 256,265 $ 90,817 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ....... 5,018,544 1,066,093 312,325 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ....... 383,287 25,325 -\par\pard\plain\fs16\plain\cf1\f50\fs16\ql ....... 796,606 34,174 3,009 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ----------- ---------- -------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql ....... 8,051,030 1,381,857 406,151 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ....... 351,338 --\par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ....... 2,084,697 483,000 91,925 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ....... 7,992 4,328 3,258 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ....... (209,415) (209,415) --

Balance sheet data: Current assets including cash and cas equivalents and restricted cash and equivalents......................... Long term restricted cash and cash equivalents......................... Long term accounts receivable........ Capacity available for sale.......... Property and equipment, net ......... Other assets......................... Investment in and advances to/from affiliates, net..................... Goodwill and intangibles, net........

Total assets........................

Current liabilities.................. Long term debt....................... Deferred revenue..................... Deferred credits and other...........

Total Liabilities.................... Minority interest.................... Mandatorily redeemable and cumulative convertible preferred stock ........ Shareholders' equity Common stock........................ Treasury stock......................

\par\pard\plain\fs16\plain\cf1\f50\fs16\ql Other shareholders' equity.......... ....... 9,578,927 1,067,470 71,023 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Accumulated deficit................. ....... (158,989) (88,063) (160) \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ----------- ---------- -------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql Total shareholders' equity........... ....... 9,218,515 774,320 74,121 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ----------- ---------- -------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql Total liabilities and shareholders' e quity.. $19,705,580 $2,639,177 $572,197 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql =========== ========== ======== \par\pard\plain\fs16 \par\pard\plain\fs16{\*\bkmkstart item_1_3_22}{\*\bkmkend item_1_3_22}\pard\plai n\cf1\f50\fs16\ql ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL COND ITION AND \par\pard\plain\fs16\plain\cf1\f50\fs16\ql RESULTS OF OPERATIONS \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Accounting Matters \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql During the third and fourth quarter s of 1999, changes in the business \par\pard\plain\fs16\plain\cf1\f50\fs16\ql activities of the Company, together w ith a newly effective accounting \par\pard\plain\fs16\plain\cf1\f50\fs16\ql standard, caused the Company to modif y certain of its practices regarding \par\pard\plain\fs16\plain\cf1\f50\fs16\ql recognition of revenue and costs rela ted to sales of capacity. None of the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql accounting practices described below affect the cash flows of the Company. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql As a result of Financial Accounting Standards Board (FASB) Interpretation \par\pard\plain\fs16\plain\cf1\f50\fs16\ql No. 43, "Real Estate Sales, an interp retation of FASB Statement No. 66" (FIN \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 43), which became effective July 1, 1 999, revenue from terrestrial circuits \par\pard\plain\fs16\plain\cf1\f50\fs16\ql sold after that date has been account ed for as operating leases and amortized \par\pard\plain\fs16\plain\cf1\f50\fs16\ql over the terms of the related contrac ts. Previously, these sales had been \par\pard\plain\fs16\plain\cf1\f50\fs16\ql recognized as current revenue upon ac tivation of the circuits. This deferral \par\pard\plain\fs16\plain\cf1\f50\fs16\ql in revenue recognition has no impact on cash flow. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql With the consummation of the Fronti er acquisition on September 28, 1999, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql service offerings became a significan t source of revenue. Consequently, the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Company initiated service contract ac counting for its subsea systems during \par\pard\plain\fs16\plain\cf1\f50\fs16\ql the fourth quarter, because the Compa ny, since that date, no longer holds \par\pard\plain\fs16\plain\cf1\f50\fs16\ql subsea capacity exclusively for sale. As a result, since the beginning of the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql fourth quarter, investments in both s ubsea and terrestrial systems have been

\par\pard\plain\fs16\plain\cf1\f50\fs16\ql depreciated over their remaining econ omic lives, and revenue related to \par\pard\plain\fs16\plain\cf1\f50\fs16\ql service contracts have been recognize d over the terms of the contracts. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Revenue and costs related to the sale of subsea circuits have been recognized \par\pard\plain\fs16\plain\cf1\f50\fs16\ql upon activation if the criteria of sa les-type lease accounting have been \par\pard\plain\fs16\plain\cf1\f50\fs16\ql satisfied with respect to those circu its. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql During the fourth quarter, the Comp any's global network service capabilities \par\pard\plain\fs16\plain\cf1\f50\fs16\ql were significantly expanded by the ac tivation of several previously announced \par\pard\plain\fs16\plain\cf1\f50\fs16\ql systems, and by the integration of ot her networks obtained through acquisition \par\pard\plain\fs16\plain\cf1\f50\fs16\ql and joint venture agreements. With th is network expansion, the Company began \par\pard\plain\fs16\plain\cf1\f50\fs16\ql offering its \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 29 \par\pard\plain\fs16 \page \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql customers flexible bandwidth pro ducts to multiple destinations, which makes \par\pard\plain\fs16\plain\cf1\f50\fs16\ql the historical practice of fixed, poi nt-to-point routing of traffic and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql restoration capacity both impractical and inefficient. To ensure the required \par\pard\plain\fs16\plain\cf1\f50\fs16\ql network flexibility, the Company is m odifying its standard capacity purchase \par\pard\plain\fs16\plain\cf1\f50\fs16\ql agreement forms and its network manag ement in a manner that will preclude the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql use of sales-type lease accounting. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Because of these contract changes, and the network management required to \par\pard\plain\fs16\plain\cf1\f50\fs16\ql meet customer demands for flexible ba ndwidth, multiple destinations, and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql system performance, the Company antic ipates that most of the contracts for \par\pard\plain\fs16\plain\cf1\f50\fs16\ql subsea circuits entered into after Ja nuary 1, 2000 will be part of a service \par\pard\plain\fs16\plain\cf1\f50\fs16\ql offering, and therefore will not meet the criteria of sales-type lease \par\pard\plain\fs16\plain\cf1\f50\fs16\ql accounting and will be accounted for as operating leases. Consequently, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql revenue related to those circuits wil l be deferred and amortized over the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql appropriate term of the contract. In certain circumstances, should a contract \par\pard\plain\fs16\plain\cf1\f50\fs16\ql meet all of the requirements of sales -type lease accounting, revenue will be \par\pard\plain\fs16\plain\cf1\f50\fs16\ql recognized without deferral upon paym ent and activation. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql The Company notes that accounting p ractice and authoritative guidance

\par\pard\plain\fs16\plain\cf1\f50\fs16\ql type lease accounting to the sale of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql the accounting practices described above, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql changes, if any, in accounting practice \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ales of capacity would have little or no \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql nded December 31, 1999 and December 31, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql merger with Frontier and its acquisitions \par\pard\plain\fs16\plain\cf1\f50\fs16\ql lecom. Results for 1999 include \par\pard\plain\fs16\plain\cf1\f50\fs16\ql rom July 2, 1999, Frontier from October \par\pard\plain\fs16\plain\cf1\f50\fs16\ql er 24, 1999. Due to these transactions, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql sults of operations for the years ended \par\pard\plain\fs16\plain\cf1\f50\fs16\ql . \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 296% to $1,665 million as compared to \par\pard\plain\fs16\plain\cf1\f50\fs16\ql n revenue is attributable to the Frontier \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Marine Systems and Racal Telecom, as \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ness. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 1999 was $850 million (51% of revenue) \par\pard\plain\fs16\plain\cf1\f50\fs16\ql nue) in 1998. This increase is primarily \par\pard\plain\fs16\plain\cf1\f50\fs16\ql nd the Global Marine Systems and Racal \par\pard\plain\fs16\plain\cf1\f50\fs16\ql re partially due to lower prices of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ale cost of capacity purchased from \par\pard\plain\fs16\plain\cf1\f50\fs16\ql d PC-1), the Company's profit on which is \par\pard\plain\fs16\plain\cf1\f50\fs16\ql iates. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql sold was $292 million and $141 million \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 999 and 1998, respectively. For 1998 and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ed December 31, 1999, the Company \par\pard\plain\fs16\plain\cf1\f50\fs16\ql

regarding the applicability of salescapacity is still evolving. Based on the Company believes that additional or authoritative guidance affecting s impact on its results of operations. Results of Operations for the Years E 1998 HISTORICAL In 1999, the Company completed its of Global Marine Systems and Racal Te operations of Global Marine Systems f 1, 1999 and Racal Telecom from Novemb the comparability of the Company's re December 31, 1999 and 1998 is limited Revenue. Revenue for 1999 increased $420 million for 1998. The increase i merger and the acquisitions of Global well as growth from our existing busi Cost of sales. Cost of sales during compared to $178 million (43% of reve attributable to the Frontier merger a Telecom acquisitions. Lower margins a capacity sold to customers and wholes unconsolidated joint ventures (GAL an included in equity in income of affil Non-cash cost of undersea capacity during the years ended December 31, 1 the first nine months of the year end calculated costs of undersea capacity

sold for AC-1 based on the ratio of the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql period's actual revenue to total expe cted future revenues given a minimum \par\pard\plain\fs16\plain\cf1\f50\fs16\ql projected sales capacity of 1024 circ uits (512 circuits in 1998) times the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql construction cost of the system. Begi nning in the fourth quarter of 1999, the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Company began to depreciate its under sea capacity and calculate cost of sales \par\pard\plain\fs16\plain\cf1\f50\fs16\ql based on the estimated net book value of the circuit at the time of sale. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Operations, administration and main tenance ("OA&M"). OA&M for the year ended \par\pard\plain\fs16\plain\cf1\f50\fs16\ql December 31, 1999 was $133 million (8 % of revenue), compared to $18 million \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (4% of revenue) for the year ended De cember 31, 1998. The increase is \par\pard\plain\fs16\plain\cf1\f50\fs16\ql primarily the result of costs incurre d in connection with the development of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql the Global Network Operations Center, expansion of the Global Crossing Network \par\pard\plain\fs16\plain\cf1\f50\fs16\ql and the expenses of acquired companie s. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Sales and marketing. Sales and mark eting costs for the year ended December \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 31, 1999 were $149 million (9% of rev enue), compared to $26 million (6% of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql revenue) for the year ended December 31, 1998. The increase is primarily \par\pard\plain\fs16\plain\cf1\f50\fs16\ql attributable to additions in headcoun t, occupancy costs, plus marketing costs, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql commissions paid and other promotiona l expenses to support the Company's rapid \par\pard\plain\fs16\plain\cf1\f50\fs16\ql growth and the expenses of acquired c ompanies. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 30 \par\pard\plain\fs16 \page \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql Network development. Network dev elopment costs for the year ended December \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 31, 1999 were $26 million (2% of reve nue), compared to $11 million (3% of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql revenue) for the year ended December 31, 1998. The increase is primarily \par\pard\plain\fs16\plain\cf1\f50\fs16\ql attributable to the additional salari es, employee benefits, travel and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql professional fees associated with the construction of the Global Crossing \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Network. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql General and administrative. General and administrative expenses for the year \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ended December 31, 1999 were $210 mil lion (13% of revenue), compared to $26 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql million (6% of revenue) for the year ended December 31, 1998. Such charges are

\par\pard\plain\fs16\plain\cf1\f50\fs16\ql ployee benefits and recruiting fees \par\pard\plain\fs16\plain\cf1\f50\fs16\ql multiple systems, travel, professional \par\pard\plain\fs16\plain\cf1\f50\fs16\ql osts. The increase in general and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql attributable to the Frontier merger and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql tems and Racal Telecom. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql d expenses for the year ended December \par\pard\plain\fs16\plain\cf1\f50\fs16\ql nue), which increased by $12 million from \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ear ended December 31, 1998. The increase \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ranted in-the-money options. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql eciation and amortization for the year \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ion (8% as a percentage of revenue), \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ended December 31, 1998. This increase \par\pard\plain\fs16\plain\cf1\f50\fs16\ql acquired companies and depreciation of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql rtization for the year ended December 31, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql resulted from the Company's merger with \par\pard\plain\fs16\plain\cf1\f50\fs16\ql arine Systems and Racal Telecom during \par\pard\plain\fs16\plain\cf1\f50\fs16\ql re was no goodwill amortization for the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql d an operating loss for the year ended \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ared to a loss of $20 million (5% of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 31, 1998. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql e. Interest income for the year ended \par\pard\plain\fs16\plain\cf1\f50\fs16\ql mpared to $30 million for the year ended \par\pard\plain\fs16\plain\cf1\f50\fs16\ql e to earnings on investments of funds \par\pard\plain\fs16\plain\cf1\f50\fs16\ql e year ended December 31 1999. Interest \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 1, 1999 was $139 million, compared to $43 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 1, 1998, due to the merger with Frontier \par\pard\plain\fs16\plain\cf1\f50\fs16\ql

comprised principally of salaries, em reflecting the Company's staffing for fees, insurance costs and occupancy c administrative expenses is primarily the acquisitions of Global Marine Sys Stock related expense. Stock relate 31, 1999 were $51 million (3% of reve $39 million (9% of revenue) for the y is due to the addition of employees g Depreciation and amortization. Depr ended December 31, 1999 was $124 mill compared to $.54 million for the year was driven by charges from the newly subsea systems as of October 1, 1999. Goodwill amortization. Goodwill amo 1999 of $128 million (8% of revenue) Frontier and acquisitions of Global M the year ended December 31, 1999. The year ended December 31, 1998. Operating loss. The Company incurre December 31, 1999 of $7 million, comp revenue) for the year ended December Interest income and Interest expens December 31, 1999 was $67 million, co December 31, 1998. The increase is du from financings and operations for th expense for the year ended December 3 million for the year ended December 3 and the acquisitions of Global Marine

Systems and Racal Telecom and increases \par\pard\plain\fs16\plain\cf1\f50\fs16\ql in debt outstanding to support capita l spending. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Other income, net. Other income, ne t for the year ended December 31, 1999 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql resulted primarily from a $210 millio n payment by US West, Inc. in connection \par\pard\plain\fs16\plain\cf1\f50\fs16\ql with the termination of its merger ag reement with the Company, less related \par\pard\plain\fs16\plain\cf1\f50\fs16\ql expenses. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Provision for income taxes. The inc ome tax provision of $127 million and $33 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql million for the years ended December 31, 1999 and 1998, respectively, provide \par\pard\plain\fs16\plain\cf1\f50\fs16\ql for taxes on profits earned from tele communications services, installation and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql maintenance services, ILEC services a nd other income where subsidiaries of the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Company have a presence in taxable ju risdictions. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Extraordinary loss from retirement of debt. Extraordinary loss from \par\pard\plain\fs16\plain\cf1\f50\fs16\ql retirement of debt of $46 million for the year ended December 31, 1999 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql compared to $20 million for the year ended December 31, 1998. During 1999, we \par\pard\plain\fs16\plain\cf1\f50\fs16\ql recognized an extraordinary loss of $ 15 million in connection with the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql prepayment of existing debt in connec tion with the issuance of our $3 billion \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Senior Secured Credit Facility and an additional $31 million for the early \par\pard\plain\fs16\plain\cf1\f50\fs16\ql extinguishment of $2 billion, in prin cipal value, under the Senior Secured \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Credit Facility. During 1998, we reco gnized an extraordinary loss of $20 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql million in connection with the repurc hase of GTH's outstanding senior notes \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ("GTH Senior Notes"), comprising a pr emium of $10 million and a write-off of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql $10 million of unamortized deferred f inancing costs. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 31 \par\pard\plain\fs16 \page \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql Cumulative effect of change in a ccounting principle. The Company adopted \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Statement of Position 98-5 (SOP 98-5) , "Reporting on the Cost of Start-Up \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Activities," issued by the American I nstitute of Certified Public Accountants, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql during the year ended December 31, 19 99. SOP 98-5 requires that certain start\par\pard\plain\fs16\plain\cf1\f50\fs16\ql up expenditures previously capitalize d during system development must now be

\par\pard\plain\fs16\plain\cf1\f50\fs16\ql expensed. The Company incurred a onetime charge during the first quarter of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql $15 million, net of tax benefit, that represents start-up costs incurred and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql capitalized during previous periods. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Net loss. During the year ended Dec ember 31, 1999, the Company reported a \par\pard\plain\fs16\plain\cf1\f50\fs16\ql net loss of $71 million compared to a net loss of $88 million for the prior \par\pard\plain\fs16\plain\cf1\f50\fs16\ql year. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Net loss applicable to common share holders. During the years ended December \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 31, 1999 and 1998, the Company report ed a net loss applicable to common \par\pard\plain\fs16\plain\cf1\f50\fs16\ql shareholders of $138 million and $135 million, respectively. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Adjusted EBITDA. Adjusted EBITDA of $708 million in 1999 increased 94% from \par\pard\plain\fs16\plain\cf1\f50\fs16\ql $365 million for the year ended Decem ber 31, 1998. The increase is primarily \par\pard\plain\fs16\plain\cf1\f50\fs16\ql due to the inclusion of Frontier, Glo bal Marine Systems and Racal as well as \par\pard\plain\fs16\plain\cf1\f50\fs16\ql growth from our existing businesses f or the year ended December 31, 1999. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 32 \par\pard\plain\fs16 \page \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql PRO FORMA \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql This section of Management's Discus sion and Analysis of Financial Condition \par\pard\plain\fs16\plain\cf1\f50\fs16\ql and Results of Operations focuses on pro forma information for the periods \par\pard\plain\fs16\plain\cf1\f50\fs16\ql covered giving effect to the acquisit ions from the beginning of each period. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql The Company's management believes tha t the pro forma results provide the most \par\pard\plain\fs16\plain\cf1\f50\fs16\ql meaningful comparability among period s presented, since historical results \par\pard\plain\fs16\plain\cf1\f50\fs16\ql reflect full-company operations only after the close of the Frontier merger \par\pard\plain\fs16\plain\cf1\f50\fs16\ql and the acquisitions of Racal Telecom and Global Marine Systems. However, the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql pro forma data are not necessarily in dicative of the results that would have \par\pard\plain\fs16\plain\cf1\f50\fs16\ql been achieved had such transactions a ctually occurred at the beginning of each \par\pard\plain\fs16\plain\cf1\f50\fs16\ql period, nor are they necessarily indi cative of the Company's future results. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql The following reflects the pro form a results of operations for the years \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ended December 31, 1999 and 1998. \par\pard\plain\fs16 \par\pard\plain\fs16

\par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql For the year ended \par\pard\plain\fs16\plain\cf1\f50\fs16\ql December 31, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ---------------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql 1999 1998 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ---------- ---------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql (In thousands) \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql REVENUE: \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Telecommunications services ....... .................. $3,071,553 $2,591,066 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Installation and maintenance servic es................ 334,153 322,017 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Incumbent local exchange carrier se rvices............ 729,231 701,935 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Corporate and other................ .................. 4,960 28,503 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ---------- ---------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql 4,139,897 3,643,521 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ---------- ---------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql EXPENSES: \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Operating, selling, general and adm inistrative....... 3,433,024 2,807,671 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Stock related expense.............. .................. 51,306 39,374 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Depreciation and amortization...... .................. 363,427 262,847 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Goodwill amortization.............. .................. 506,928 506,928 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Termination of Advisory Services Ag reement........... -139,669 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ---------- ---------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql 4,354,685 3,756,489 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ---------- ---------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql OPERATING LOSS....................... .................. (214,788) (112,968) \par\pard\plain\fs16\plain\cf1\f50\fs16\ql EQUITY IN LOSS OF AFFILIATES......... .................. (747) (21,180) \par\pard\plain\fs16\plain\cf1\f50\fs16\ql MINORITY INTEREST.................... .................. (1,338) -\par\pard\plain\fs16\plain\cf1\f50\fs16\ql OTHER INCOME (EXPENSE): \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Interest income.................... .................. 76,528 42,877 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Interest expense................... .................. (345,956) (283,984) \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Other income, net.................. .................. 178,931 23,641 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ---------- ---------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql LOSS BEFORE PROVISION FOR INCOME TAXE

S, EXTRAORDINARY \par\pard\plain\fs16\par\pard\plain\f0\fs16\par\pard\plain\cf1\f50\fs16\ql ITEM AND CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING \par\pard\plain\fs16\plain\cf1\f50\fs16\ql PRINCIPLE........................... .................. (307,370) (351,614) \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Provision for income taxes......... .................. (155,174) (123,268) \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ---------- ---------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql LOSS BEFORE EXTRAORDINARY ITEM AND CU MULATIVE EFFECT OF \par\pard\plain\fs16\plain\cf1\f50\fs16\ql CHANGE IN ACCOUNTING PRINCIPLE...... .................. (462,544) (474,882) \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Preferred stock dividends ......... .................. (92,171) (38,181) \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ---------- ---------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql LOSS APPLICABLE TO COMMON SHAREHOLDER S BEFORE \par\pard\plain\fs16\plain\cf1\f50\fs16\ql EXTRAORDINARY ITEM AND CUMULATIVE EF FECT OF CHANGE IN \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ACCOUNTING PRINCIPLE................ .................. $ (554,715) $ (513,063) \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ========== ========== \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Adjusted EBITDA...................... .................. $1,150,644 $1,071,969 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ========== ========== \par\pard\plain\fs16 \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql 33 \par\pard\plain\fs16 \page \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql Pro forma revenue--Telecommunica tions services. Pro forma revenue for the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql telecommunications services segment f or the years ended December 31, 1999 and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 1998 resulted from sales of the follo wing products: \par\pard\plain\fs16 \par\pard\plain\fs16 \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql For the year ended \par\pard\plain\fs16\plain\cf1\f50\fs16\ql December 31, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ----------------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql 1999 1998 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ----------- ----------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql (In thousands, except \par\pard\plain\fs16\plain\cf1\f50\fs16\ql minutes) \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql PRODUCT REVENUE: \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Switched Voice..................... .................. $ 1,386,124 $ 1,416,088 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql CLEC (Local and LD)................ .................. 223,021 153,109

\par\pard\plain\fs16\plain\cf1\f50\fs16\ql ----------- ----------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql Total Business Voice Products.... .................. 1,609,145 1,569,197 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Data............................... .................. 1,274,689 782,087 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Consumer long distance............. .................. 187,719 239,782 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ----------- ----------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql TOTAL PRODUCT REVENUE................ .................. $ 3,071,553 $ 2,591,066 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql =========== =========== \par\pard\plain\fs16\plain\cf1\f50\fs16\ql MINUTES.............................. .................. 20,472,178 14,481,697 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql =========== =========== \par\pard\plain\fs16 \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql In North America, data products continued to grow at triple digit rates-\par\pard\plain\fs16\plain\cf1\f50\fs16\ql data product revenue (primarily priva te line) from telecommunication carrier \par\pard\plain\fs16\plain\cf1\f50\fs16\ql customers grew 588% for the full year . Frame relay revenue, sales from \par\pard\plain\fs16\plain\cf1\f50\fs16\ql dedicated internet and web hosting re venue increased 304%, 159% and 187%, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql respectively, over the prior year. Co mpetitive Local Exchange Carrier (CLEC) \par\pard\plain\fs16\plain\cf1\f50\fs16\ql revenue increased 46% year-on-year. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Revenue from telecommunication comm ercial customers increased to $1.27 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql billion for the year ended December 3 1, 1999 from $1.26 billion for the year \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ended December 31, 1998. Revenue from telecommunication consumer customers \par\pard\plain\fs16\plain\cf1\f50\fs16\ql fell to $188 million for the year end ed December 31, 1999 from $240 million \par\pard\plain\fs16\plain\cf1\f50\fs16\ql for the year ended December 31, 1998. Revenue from telecommunication carrier \par\pard\plain\fs16\plain\cf1\f50\fs16\ql customers experienced a 48% increase in revenue year-on-year, from $1.09 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql billion to $1.61 billion, driven by s trong growth in international city to \par\pard\plain\fs16\plain\cf1\f50\fs16\ql city circuit activations and an 87% i ncrease in wholesale minutes sold on a \par\pard\plain\fs16\plain\cf1\f50\fs16\ql year-on-year basis. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Pro forma revenue--Installation and maintenance services. Pro forma revenue \par\pard\plain\fs16\plain\cf1\f50\fs16\ql increased by 4% year-on-year, despite delays in the installation of TAT-14 and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql U.S.-Japan cables, which had been sch eduled for installation during the fourth \par\pard\plain\fs16\plain\cf1\f50\fs16\ql quarter of 1999. Global Marine System s added three ships to their fleet during \par\pard\plain\fs16\plain\cf1\f50\fs16\ql the year to service the Company's gro wth in subsea cable installations. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Revenue from maintenance increased fr

om $117 million to $139 million, while \par\pard\plain\fs16\plain\cf1\f50\fs16\ql revenue from installation decreased f rom $205 million to $195 million. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Pro forma revenue--ILEC services. T he following table provides supplemental \par\pard\plain\fs16\plain\cf1\f50\fs16\ql pro forma detail for the ILEC segment : \par\pard\plain\fs16 \par\pard\plain\fs16 \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql December \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 31, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ----------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql 1999 1998 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ----- ----\par\pard\plain\fs16\plain\cf1\f50\fs16\ql (In \par\pard\plain\fs16\plain\cf1\f50\fs16\ql thousands) \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ACCESS LINES: \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Commercial......................... ............................... 335 327 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Consumer........................... ............................... 737 718 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ----- ----\par\pard\plain\fs16\plain\cf1\f50\fs16\ql TOTAL ACCESS LINES................... ............................... 1,072 1,045 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ===== ===== \par\pard\plain\fs16 \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql The ILEC segment continued to ex ceed service metrics required by the New \par\pard\plain\fs16\plain\cf1\f50\fs16\ql York State Public Service Commission. Revenue increased by 4% year-on-year. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Market deployment of the consumer ADS L product, Lightning Link, was initiated \par\pard\plain\fs16\plain\cf1\f50\fs16\ql in selected markets in the fourth qua rter. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Operating, selling, general and adm inistrative. Operating, selling, general \par\pard\plain\fs16\plain\cf1\f50\fs16\ql and administrative expenses of $3,433 million for the year ended December 31, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 1999 increased by 22% from $2,808 mil lion for the year ended December 31, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 1998. This change resulted from costs of new systems being activated, cost of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql sales relating to increased revenues, occupancy costs, marketing costs, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql commissions paid and overall Company growth and staffing for multiple systems. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 34

\par\pard\plain\fs16 \page \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql Non-cash cost of undersea capaci ty sold, included in operating, selling, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql general and administrative expenses, was $292 million and $141 million during \par\pard\plain\fs16\plain\cf1\f50\fs16\ql the years ended December 31, 1999 and 1998, respectively. For 1998 and the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql first nine months of 1999, the Compan y calculated costs of undersea capacity \par\pard\plain\fs16\plain\cf1\f50\fs16\ql sold based on the ratio of the period 's actual revenue to total expected \par\pard\plain\fs16\plain\cf1\f50\fs16\ql future revenues given a minimum proje cted sales capacity multiplied by the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql construction cost of the system. Begi nning in the fourth quarter of 1999, the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Company began to depreciate the under sea capacity and calculate cost of sales \par\pard\plain\fs16\plain\cf1\f50\fs16\ql based on the estimated net book value of the circuit at the time of sale. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Stock related expense. Stock relate d expense of $51 million for the year \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ended December 31, 1999, increased 30 % from $39 million for the year ended \par\pard\plain\fs16\plain\cf1\f50\fs16\ql December 31, 1998 as a result of addi tional stock options issued below fair \par\pard\plain\fs16\plain\cf1\f50\fs16\ql market value. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Depreciation and amortization. Depr eciation and amortization of $363 million \par\pard\plain\fs16\plain\cf1\f50\fs16\ql for the year ended December 31, 1999 increased 38% from $263 million for the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql year ended December 31, 1998. This in crease was primarily due to the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql depreciation of subsea and terrestria l systems during 1999. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Operating loss. The Company incurre d an operating loss for the year ended \par\pard\plain\fs16\plain\cf1\f50\fs16\ql December 31, 1999 of $215 million com pared to a loss of $113 million for the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql year ended December 31, 1998. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Equity in loss of affiliates. Equit y in loss of affiliates of $0.7 million \par\pard\plain\fs16\plain\cf1\f50\fs16\ql for the year ended December 31, 1999 compared to a loss of $21 million for the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql year ended December 31, 1998. The dec rease in the net loss is primarily due to \par\pard\plain\fs16\plain\cf1\f50\fs16\ql sales of capacity on certain segments of PC-1 which became available for sale \par\pard\plain\fs16\plain\cf1\f50\fs16\ql in 1999. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Interest income and Interest expens e. Interest income of $77 million for the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql year ended December 31, 1999 compared to $43 million for the year ended \par\pard\plain\fs16\plain\cf1\f50\fs16\ql December 31, 1998, due to earnings on investments of additional funds from

\par\pard\plain\fs16\plain\cf1\f50\fs16\ql year ended December 31, 1999. Interest \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ended December 31, 1999 compared to \par\pard\plain\fs16\plain\cf1\f50\fs16\ql the year ended December 31, 1998, due to \par\pard\plain\fs16\plain\cf1\f50\fs16\ql isition of Global Marine Systems and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql utstanding to support capital spending. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql $179 million for the year ended December \par\pard\plain\fs16\plain\cf1\f50\fs16\ql the year ended December 31, 1998. The \par\pard\plain\fs16\plain\cf1\f50\fs16\ql receipt of a $210 million payment by US \par\pard\plain\fs16\plain\cf1\f50\fs16\ql mination of its merger agreement with the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ome tax provision of $155 million and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql mber 31, 1999 and 1998, respectively, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql from telecommunications services, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql rvices and other income where \par\pard\plain\fs16\plain\cf1\f50\fs16\ql esence in taxable jurisdictions. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql d stock dividends of $92 million for the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql to $38 million in 1998. The increase was \par\pard\plain\fs16\plain\cf1\f50\fs16\ql on $1.5 billion of preferred shares \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 31, 1999. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql $1,151 million for the years ended \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 1,072 in 1998. The increase was primarily \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ther data products, partially off-set by \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ugment its sales force, add network and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql t of installation and maintenance \par\pard\plain\fs16\plain\cf1\f50\fs16\ql tems, and consummate and integrate its \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16 \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 35 \par\pard\plain\fs16 \page

financings and operations during the expense of $346 million for the year interest expense of $284 million for the merger with Frontier and the acqu Racal Telecom and increases in debt o Other income, net. Other income of 31, 1999 compared to $24 million for increase is primarily a result of the West, Inc. in connection with the ter Company, less related expenses. Provision for income taxes. The inc $123 million for the years ended Dece provides for taxes on profits earned installation and maintenance, ILEC Se subsidiaries of the Company have a pr Preferred stock dividends. Preferre year ended December 31, 1999 compared attributable to payment of dividends issued during the year ended December Adjusted EBITDA. Adjusted EBITDA of December 31, 1999 increased 7% from $ due to increased capacity sales and o the Company's increased spending to a web hosting capacity, add to its flee vessels, activate new fiber optic sys acquisitions.

\par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql Historical Results of Operations for the Year Ended December 31, 1998 and the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Period from March 19, 1997 (Date of I nception) to December 31, 1997 \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Revenue. During the year ended Dece mber 31, 1998, the Company executed firm \par\pard\plain\fs16\plain\cf1\f50\fs16\ql commitments to sell capacity on our s ystems plus the sale of dark fiber on PEC \par\pard\plain\fs16\plain\cf1\f50\fs16\ql totaling $911 million. Of this amount , the Company recognized revenue of $418 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql million on sales of capacity relating to AC-1 for the year ended December 31, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 1998, in addition to revenue from ope rations and maintenance services of $6 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql million. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Cost of sales. For the year ended D ecember 31, 1998, the Company recognized \par\pard\plain\fs16\plain\cf1\f50\fs16\ql $178 million in cost of capacity sold , resulting in a gross margin on capacity \par\pard\plain\fs16\plain\cf1\f50\fs16\ql sales of 57%. Cost of capacity sold f or the year ended December 31, 1998 also \par\pard\plain\fs16\plain\cf1\f50\fs16\ql includes $38 million relating to terr estrial capacity sold which the Company \par\pard\plain\fs16\plain\cf1\f50\fs16\ql had purchased from third parties. The Company calculated undersea cost of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql capacity sold for AC-1 based on the r atio of the period's actual revenue to \par\pard\plain\fs16\plain\cf1\f50\fs16\ql total expected revenue, assuming mini mum projected sales capacity of 512 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql circuits, multiplied by the construct ion cost of the system. This calculation \par\pard\plain\fs16\plain\cf1\f50\fs16\ql of cost of sales matches costs with t he relative value of each sale. There \par\pard\plain\fs16\plain\cf1\f50\fs16\ql were no sales or related costs recogn ized during the period from March 19, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 1997 (Date of Inception) to December 31, 1997, as the Company was in our \par\pard\plain\fs16\plain\cf1\f50\fs16\ql development stage. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Operations, administration and main tenance ("OA&M"). The Company incurred \par\pard\plain\fs16\plain\cf1\f50\fs16\ql OA&M costs of $18 million during the year ended December 31, 1998. The Company \par\pard\plain\fs16\plain\cf1\f50\fs16\ql entered into an agreement with TSSL r elating to operations, administration and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql maintenance of AC-1, which limits our total OA&M expense for the system. The \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Company anticipates that our OA&M cos ts will be largely recovered through \par\pard\plain\fs16\plain\cf1\f50\fs16\ql charges to our customers under the te rms of CPAs. There were no OA&M costs \par\pard\plain\fs16\plain\cf1\f50\fs16\ql during the period from March 19, 1997 (Date of Inception) to December 31, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 1997, as the Company was in its devel opment stage. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Sales and marketing. During the yea r ended December 31, 1998, the Company

\par\pard\plain\fs16\plain\cf1\f50\fs16\ql of $26 million, including selling \par\pard\plain\fs16\plain\cf1\f50\fs16\ql n capacity sales recognized during this \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 19, 1997 (Date of Inception) to December \par\pard\plain\fs16\plain\cf1\f50\fs16\ql and marketing costs of approximately $1 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ue to additions in personnel and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql issions paid and other promotional \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql curred network development costs during \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 11 million relating to the development of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 19, 1997 (Date of Inception) to December \par\pard\plain\fs16\plain\cf1\f50\fs16\ql on. The increase from 1997 was due to \par\pard\plain\fs16\plain\cf1\f50\fs16\ql plore new projects. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql and administrative expenses totaled $26 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql r 31, 1998 and were comprised principally \par\pard\plain\fs16\plain\cf1\f50\fs16\ql cruiting fees for staffing of multiple \par\pard\plain\fs16\plain\cf1\f50\fs16\ql rent expenses, plus depreciation and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql March 19, 1997 (Date of Inception) to \par\pard\plain\fs16\plain\cf1\f50\fs16\ql l and administrative costs of $2 million. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql reement with PCG Telecom Services LLC. In \par\pard\plain\fs16\plain\cf1\f50\fs16\ql onstruction of AC-1, the Company entered \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ith PCG Telecom Services LLC, an \par\pard\plain\fs16\plain\cf1\f50\fs16\ql by us of an advisory fee of 2% of the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql erm. Our Board of Directors also approved \par\pard\plain\fs16\plain\cf1\f50\fs16\ql us to enter into similar agreements with \par\pard\plain\fs16\plain\cf1\f50\fs16\ql development by us. The Company has \par\pard\plain\fs16\plain\cf1\f50\fs16\ql titled to the fees payable under these \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ssuance to such persons of shares of our \par\pard\plain\fs16\plain\cf1\f50\fs16\ql f issuance an aggregate value of $135 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql oximately $3 million owed to us under a

incurred sales and marketing expenses commissions of $20 million incurred o period. During the period from March 31, 1997, the Company incurred sales million. The increase from 1997 was d occupancy costs, plus marketing, comm expenses to support our rapid growth. Network development. The Company in the year ended December 31, 1998 of $ systems. During the period from March 31, 1997, these costs were $0.1 milli additional personnel, and costs to ex General and administrative. General million during the year ended Decembe of salaries, employee benefits and re systems, travel, insurance costs and amortization. During the period from December 31, 1997, we incurred genera Termination of Advisory Services Ag connection with the development and c into an Advisory Services Agreement w affiliate, providing for the payment gross revenue of ACL over a 25 year t similar advisory fees and authorized respect to other cable systems under acquired the rights of the persons en agreements in consideration for the i common stock, which had at the time o million, and the cancellation of appr

\par\pard\plain\fs16\plain\cf1\f50\fs16\ql related advance agreement. In additio n, the Company recognized approximately \par\pard\plain\fs16\plain\cf1\f50\fs16\ql $2 million of advisory fees incurred prior to termination of the contract. \par\pard\plain\fs16 \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 36 \par\pard\plain\fs16 \page \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql Stock related expense. Through D ecember 31, 1998, the Company recorded as a \par\pard\plain\fs16\plain\cf1\f50\fs16\ql charge to paid-in capital $94 million of unearned compensation relating to \par\pard\plain\fs16\plain\cf1\f50\fs16\ql awards under our stock incentive plan plus the grant of certain economic \par\pard\plain\fs16\plain\cf1\f50\fs16\ql rights and options to purchase common stock granted to a senior executive. The \par\pard\plain\fs16\plain\cf1\f50\fs16\ql unearned compensation is being recogn ized as an expense over the vesting \par\pard\plain\fs16\plain\cf1\f50\fs16\ql period of these options and economic rights. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql For the year ended December 31, 199 8, the Company recognized as an expense \par\pard\plain\fs16\plain\cf1\f50\fs16\ql $31 million of stock related compensa tion relating to our stock incentive plan \par\pard\plain\fs16\plain\cf1\f50\fs16\ql and $6 million for the vested economi c rights to purchase common stock and $2 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql million in respect of shares of commo n stock issued during the year. The \par\pard\plain\fs16\plain\cf1\f50\fs16\ql remaining $57 million of unearned com pensation will be recognized as follows: \par\pard\plain\fs16\plain\cf1\f50\fs16\ql $28 million in 1999, $21 million in 2 000 and $8 million in 2001. Our stock \par\pard\plain\fs16\plain\cf1\f50\fs16\ql incentive plan commenced in January 1 998, and therefore no issuances were made \par\pard\plain\fs16\plain\cf1\f50\fs16\ql during the period from March 19, 1997 (Date of Inception) to December 31, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 1997. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Equity in loss of affiliates. Durin g 1998, the Company entered into joint \par\pard\plain\fs16\plain\cf1\f50\fs16\ql venture agreements to construct and o perate PC-1 and GAL. PC-1 is owned and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql operated by PCL. The Company has an e conomic interest in PCL represented by a \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 50% direct voting interest and, throu gh one of the joint venture partners, a \par\pard\plain\fs16\plain\cf1\f50\fs16\ql further 8% economic non-voting intere st. The Company has a 49% interest in \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Global Access Ltd., which operates GA L. Our equity in the loss of PC-1 for the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql year ended December 31, 1998 was $3 m illion. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Interest income. The Company report ed interest income of $30 million during \par\pard\plain\fs16\plain\cf1\f50\fs16\ql the year ended December 31, 1998 and $3 million during the period from March

\par\pard\plain\fs16\plain\cf1\f50\fs16\ql ber 31, 1997. Such interest income \par\pard\plain\fs16\plain\cf1\f50\fs16\ql om financing, the IPO, the issuance of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql nd CPA deposits. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql nded December 31, 1998, the Company \par\pard\plain\fs16\plain\cf1\f50\fs16\ql s, including the amortization of finance \par\pard\plain\fs16\plain\cf1\f50\fs16\ql nt, the Company capitalized to \par\pard\plain\fs16\plain\cf1\f50\fs16\ql $50 million and expensed $43 million. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (Date of Inception) to December 31, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql xpense of $10 million, which was \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ss. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ome tax provision of $33 million for the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql for taxes on profits earned from \par\pard\plain\fs16\plain\cf1\f50\fs16\ql our subsidiaries have a presence in \par\pard\plain\fs16\plain\cf1\f50\fs16\ql iod from March 19, 1997 (Date of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Company incurred operating losses, which \par\pard\plain\fs16\plain\cf1\f50\fs16\ql nd therefore cannot be applied against \par\pard\plain\fs16\plain\cf1\f50\fs16\ql no tax provision or deferred tax benefit \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql , the Company recognized an extraordinary \par\pard\plain\fs16\plain\cf1\f50\fs16\ql h the repurchase of GTH's outstanding \par\pard\plain\fs16\plain\cf1\f50\fs16\ql mprising a premium of $10 million and a \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ed deferred financing costs. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql t loss of $88 million for the year ended \par\pard\plain\fs16\plain\cf1\f50\fs16\ql loss of $0.2 million in the period from \par\pard\plain\fs16\plain\cf1\f50\fs16\ql December 31, 1997. The net loss for the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql an extraordinary loss on retirement of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql nd a non-recurring charge of $140 million \par\pard\plain\fs16\plain\cf1\f50\fs16\ql visory Services Agreement. Our net income \par\pard\plain\fs16\plain\cf1\f50\fs16\ql

19, 1997 (Date of Inception) to Decem represents earnings on cash raised fr the GCH Preferred Stock, operations a Interest expense. During the year e incurred $93 million in interest cost costs and debt discount. Of this amou construction in progress interest of During the period from March 19, 1997 1997, the Company incurred interest e capitalized to construction in progre Provision for income taxes. The inc year ended December 31, 1998 provides capacity sales and OA&M revenue where taxable jurisdictions. During the per Inception) to December 31, 1997, the relate to non-taxable jurisdictions a future taxable earnings. Accordingly, was recorded as of December 31, 1997. Extraordinary item. During May 1998 loss of $20 million in connection wit senior notes ("GTH Senior Notes"), co write-off of $10 million of unamortiz Net loss. The Company incurred a ne December 31, 1998, compared to a net March 19, 1997 (Date of Inception) to year ended December 31, 1998 reflects the GTH Senior Notes of $20 million a relating to the termination of the Ad before these items was $72 million.

\par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Preferred stock dividends. During t he year ended December 31, 1998, the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Company recorded preferred stock divi dends of approximately $13 million. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Preferred stock dividends for the per iod from March 19, 1997 (Date of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Inception) to December 31, 1997 were $13 million. Of the $13 million recorded \par\pard\plain\fs16\plain\cf1\f50\fs16\ql in 1998, $4 million relates to the GC H Preferred Stock issued during December \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 1998. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Redemption of preferred stock. The redemption of GTH's outstanding preferred \par\pard\plain\fs16\plain\cf1\f50\fs16\ql stock ("GTH Preferred Stock") occurre d in June 1998 and resulted in a $34 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql million charge against equity. This a mount was comprised \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 37 \par\pard\plain\fs16 \page \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql of a $16 million redemption prem ium and a write-off of $18 million of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql unamortized discount and issuance cos ts. The redemption premium and write-off \par\pard\plain\fs16\plain\cf1\f50\fs16\ql of unamortized discount and issuance costs are treated as a deduction to \par\pard\plain\fs16\plain\cf1\f50\fs16\ql arrive at net loss applicable to comm on shareholders in the consolidated \par\pard\plain\fs16\plain\cf1\f50\fs16\ql statements of operations. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Net loss applicable to common share holders. During the year ended December \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 31, 1998, the Company reported a net loss applicable to common shareholders of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql $135 million. This loss reflects pref erred stock dividends of $13 million and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql the redemption cost of GTH Preferred Stock of $34 million. During the period \par\pard\plain\fs16\plain\cf1\f50\fs16\ql from March 19, 1997 (Date of Inceptio n) to December 31, 1997, the Company \par\pard\plain\fs16\plain\cf1\f50\fs16\ql incurred a net loss applicable to com mon shareholders of $13 million after GTH \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Preferred Stock dividends of $13 mill ion. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Liquidity and Capital Resources \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql On December 15, 1999, Global Crossi ng issued $650 million aggregate \par\pard\plain\fs16\plain\cf1\f50\fs16\ql liquidation preference of 7% cumulati ve convertible preferred stock. The \par\pard\plain\fs16\plain\cf1\f50\fs16\ql preferred stock is convertible into c ommon stock of Global Crossing based upon \par\pard\plain\fs16\plain\cf1\f50\fs16\ql a conversion price of $53.25 per shar e. \par\pard\plain\fs16

\par\pard\plain\fs16\plain\cf1\f50\fs16\ql ntered into a GBP 675 million \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ecember 31, 1999) credit facility to \par\pard\plain\fs16\plain\cf1\f50\fs16\ql com. As of December 31, 1999, the Company \par\pard\plain\fs16\plain\cf1\f50\fs16\ql llion under the Racal Term Loan A. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ng Holdings Ltd. issued $1.1 billion in \par\pard\plain\fs16\plain\cf1\f50\fs16\ql /2% Senior Notes Due 2009, and $0.9 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql of its 9 1/8% Senior Notes Due 2006. The \par\pard\plain\fs16\plain\cf1\f50\fs16\ql own the term loans under the Company's \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql g issued $1.0 billion aggregate \par\pard\plain\fs16\plain\cf1\f50\fs16\ql lative convertible preferred stock. The \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ommon stock of Global Crossing based upon \par\pard\plain\fs16\plain\cf1\f50\fs16\ql e. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql tered into a $3 billion senior secured \par\pard\plain\fs16\plain\cf1\f50\fs16\ql p of several lenders and The Chase \par\pard\plain\fs16\plain\cf1\f50\fs16\ql t. The initial proceeds under the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql anding balances under the AC-1 and MAC \par\pard\plain\fs16\plain\cf1\f50\fs16\ql nce balances under a vendor financing \par\pard\plain\fs16\plain\cf1\f50\fs16\ql debt used for the purchase of the Global \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ss and for general corporate purposes. As \par\pard\plain\fs16\plain\cf1\f50\fs16\ql a remaining available balance of $308 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql orate credit facility. In connection with \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 2006 and the Senior Notes Due 2009, a \par\pard\plain\fs16\plain\cf1\f50\fs16\ql pay down the term loans under the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql the approximately $908 million Global \par\pard\plain\fs16\plain\cf1\f50\fs16\ql completed in July 1999, with \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ed bank financing and the remainder with \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ss was refinanced through borrowings

On November 24, 1999, the Company e (approximately $1,091 million as of D finance the acquisition of Racal Tele had an outstanding balance of $646 mi On November 12, 1999, Global Crossi aggregate principal amount of its 9 1 billion in aggregate principal amount proceeds were partially used to pay d Corporate Credit Facility. On November 5, 1999, Global Crossin liquidation preference of 6 3/8% cumu preferred stock is convertible into c a conversion price of $45.00 per shar On July 2, 1999, Global Crossing en corporate credit facility with a grou Manhattan Bank as administrative agen facility were used to refinance outst project finance facilities, to refina arrangement with Lucent, to refinance Marine business from Cable and Wirele of December 31, 1999, the Company had million under the senior secured corp the issuance of the Senior Notes Due portion of the proceeds were used to Corporate Credit Facility. Global Crossing initially financed Marine Systems acquisition, which was approximately $600 million in committ cash on hand. This initial indebtedne

\par\pard\plain\fs16\plain\cf1\f50\fs16\ql under Global Crossing's senior secure d corporate credit facility. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql After giving effect to the financin gs listed above, as of December 31, 1999, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql the Company had $1,865 million of bot h restricted and unrestricted cash and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql cash equivalents. As of December 31, 1999, the Company had $8,051 million of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql total liabilities, including $5,056 m illion in senior indebtedness, of which \par\pard\plain\fs16\plain\cf1\f50\fs16\ql $1,295 million was secured. As of suc h date, Global Crossing Ltd. additionally \par\pard\plain\fs16\plain\cf1\f50\fs16\ql had outstanding cumulative convertibl e preferred stock with a face value of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql $1,650 million. Our subsidiary, Globa l Crossing Holdings, also has mandatorily \par\pard\plain\fs16\plain\cf1\f50\fs16\ql redeemable preferred stock outstandin g with a face value of $500 million. In \par\pard\plain\fs16\plain\cf1\f50\fs16\ql addition, our unconsolidated Pacific Crossing joint venture entered into an \par\pard\plain\fs16\plain\cf1\f50\fs16\ql $850 million non-recourse credit faci lity, under which it had incurred $750 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql million of indebtedness as of Decembe r 31, 1999. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Global Crossing estimates the remai ning total cost of developing and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql deploying the announced systems on th e Global Crossing Network to be \par\pard\plain\fs16\plain\cf1\f50\fs16\ql approximately $5 billion, excluding c osts of potential future upgrades and \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 38 \par\pard\plain\fs16 \page \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql the amounts capitalized with res pect to warrants issued in exchange for the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql rights to construct MAC and PAC. Fina ncing to complete the Global Crossing \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Network is expected to be obtained fr om common stock, preferred stock, bank \par\pard\plain\fs16\plain\cf1\f50\fs16\ql financing or through other corporate financing. Some of this financing is \par\pard\plain\fs16\plain\cf1\f50\fs16\ql expected to be incurred by wholly-own ed subsidiaries or joint venture \par\pard\plain\fs16\plain\cf1\f50\fs16\ql companies, as well as by GCL. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql The Company has extended limited am ounts of financing to customers in \par\pard\plain\fs16\plain\cf1\f50\fs16\ql connection with certain capacity sale s. The financing terms provide for \par\pard\plain\fs16\plain\cf1\f50\fs16\ql installment payments of up to four ye ars. The Company believes that its \par\pard\plain\fs16\plain\cf1\f50\fs16\ql extension of financing to its custome rs will not have a material effect on the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Company's liquidity. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Cash provided by operating activiti

es was $506 million and $209 million for \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 1998, respectively. The balances \par\pard\plain\fs16\plain\cf1\f50\fs16\ql rom capacity sales, and interest income \par\pard\plain\fs16\plain\cf1\f50\fs16\ql etwork development, general and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql paid. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql as $4,010 million and $431 million for \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 1998, respectively, and represents cash \par\pard\plain\fs16\plain\cf1\f50\fs16\ql quisitions (net of cash acquired), \par\pard\plain\fs16\plain\cf1\f50\fs16\ql pment and cash investments in affiliates. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql es was $4,331 million for the year ended \par\pard\plain\fs16\plain\cf1\f50\fs16\ql sents borrowings under the senior secured \par\pard\plain\fs16\plain\cf1\f50\fs16\ql r notes and proceeds from the issuance of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql repayments of borrowings under long term \par\pard\plain\fs16\plain\cf1\f50\fs16\ql vities was $1,027 million for the year \par\pard\plain\fs16\plain\cf1\f50\fs16\ql relates to proceeds from borrowings \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ies, proceeds from the issuance of GCH \par\pard\plain\fs16\plain\cf1\f50\fs16\ql and our IPO, less amounts paid for \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ssuance of common preferred stock, the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql mption of the GTH Preferred Stock, the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql d the increase in amounts held in \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql mount of indebtedness. Based upon the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql nt believes that the Company's cash flows \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ble borrowings under its credit facility, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql pital, will be adequate to meet the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql r working capital, capital expenditures, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql investments, interest payments and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql foreseeable future. There can be no \par\pard\plain\fs16\plain\cf1\f50\fs16\ql s business will continue to generate cash \par\pard\plain\fs16\plain\cf1\f50\fs16\ql

the years ended December 31, 1999 and principally represent cash received f received, less sales and marketing, n administrative and interest expenses Cash used in investing activities w the years ended December 31, 1999 and paid for construction in progress, ac purchases of property, plant and equi Cash provided by financing activiti December 31, 1999 and primarily repre corporate facility, issuance of senio preferred stock, partially offset by debt. Cash provided by financing acti ended December 31, 1998 and primarily under the AC-1 and MAC Credit Facilit Senior Notes, the GCH Preferred Stock finance and organization costs, the i repayment of long term debt, the rede retirement of the GTH Senior Notes an restricted cash and cash equivalents. Global Crossing has a substantial a current level of operations, manageme from operations, together with availa and its continued ability to raise ca Company's anticipated requirements fo acquisitions and other discretionary scheduled principal payments for the assurance, however, that the Company' flow at or above current levels or th

at currently anticipated improvements \par\pard\plain\fs16\plain\cf1\f50\fs16\ql will be achieved. If the Company is u nable to generate sufficient cash flow \par\pard\plain\fs16\plain\cf1\f50\fs16\ql and raise capital to service the Comp any's debt, the Company may be required \par\pard\plain\fs16\plain\cf1\f50\fs16\ql to reduce capital expenditures, refin ance all or a portion of its existing \par\pard\plain\fs16\plain\cf1\f50\fs16\ql debt or obtain additional financing. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Inflation \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Management does not believe that it s business is impacted by inflation to a \par\pard\plain\fs16\plain\cf1\f50\fs16\ql significantly different extent than t he general economy. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Year 2000 Compliance \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Prior to December 31, 1999, the Com pany took all actions that it believed to \par\pard\plain\fs16\plain\cf1\f50\fs16\ql be necessary to insure that its busin ess operations would be Year 2000 ("Y2K") \par\pard\plain\fs16\plain\cf1\f50\fs16\ql compliant. In particular, the Company established a Y2K compliance task force, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql reviewed the status of the Company's systems, submitted information requests \par\pard\plain\fs16\plain\cf1\f50\fs16\ql to third party service providers, rec eived assurances regarding Y2K compliance \par\pard\plain\fs16\plain\cf1\f50\fs16\ql from its major suppliers and develope d contingency plans to address any \par\pard\plain\fs16\plain\cf1\f50\fs16\ql potential Y2K compliance failure. The Company expended approximately $40 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql million on a pro forma basis through December 31, 1999 on its Y2K readiness \par\pard\plain\fs16\plain\cf1\f50\fs16\ql efforts, principally relating to reme diation efforts made in the businesses \par\pard\plain\fs16\plain\cf1\f50\fs16\ql operated by Frontier Corporation. \par\pard\plain\fs16 \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 39 \par\pard\plain\fs16 \page \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql The Company did not experience a ny significant malfunctions or errors in its \par\pard\plain\fs16\plain\cf1\f50\fs16\ql operating or business systems when th e date changed from 1999 to 2000. Based \par\pard\plain\fs16\plain\cf1\f50\fs16\ql on operations since January 1, 2000, the Company does not expect any \par\pard\plain\fs16\plain\cf1\f50\fs16\ql significant impact to its ongoing bus iness as a result of the Y2K issue. In \par\pard\plain\fs16\plain\cf1\f50\fs16\ql addition, the Company is not aware of any significant Y2K issues or problems \par\pard\plain\fs16\plain\cf1\f50\fs16\ql that may have arisen for its signific ant customers and suppliers. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Euro Conversion \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql On January 1, 1999, a single curren cy called the Euro was introduced in

\par\pard\plain\fs16\plain\cf1\f50\fs16\ql Europe. Eleven of the fifteen member countries of the European Union agreed to \par\pard\plain\fs16\plain\cf1\f50\fs16\ql adopt the Euro as their common legal currency on that date. Fixed conversion \par\pard\plain\fs16\plain\cf1\f50\fs16\ql rates between these countries' existi ng currencies (legacy currencies) and the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Euro were established as of that date . The legacy currencies are scheduled to \par\pard\plain\fs16\plain\cf1\f50\fs16\ql remain legal tender in these particip ating countries between January 1, 1999 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql and January 1, 2002 (not later than J uly 1, 2002). During this transition \par\pard\plain\fs16\plain\cf1\f50\fs16\ql period, parties may settle transactio ns using either the Euro or a \par\pard\plain\fs16\plain\cf1\f50\fs16\ql participating country's legacy curren cy. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Transition to the Euro creates a nu mber of issues for the Company. Business \par\pard\plain\fs16\plain\cf1\f50\fs16\ql issues that must be addressed include product pricing policies and ensuring \par\pard\plain\fs16\plain\cf1\f50\fs16\ql the continuity of business and financ ial contracts. Finance and accounting \par\pard\plain\fs16\plain\cf1\f50\fs16\ql issues include the conversion of bank accounts and other treasury and cash \par\pard\plain\fs16\plain\cf1\f50\fs16\ql management activities. The Company ha s not yet set conversion dates for \par\pard\plain\fs16\plain\cf1\f50\fs16\ql certain of its accounting systems, st atutory reporting and tax books, but will \par\pard\plain\fs16\plain\cf1\f50\fs16\ql do so during 2000. The financial inst itutions with which the Company has \par\pard\plain\fs16\plain\cf1\f50\fs16\ql relationships have transitioned to th e Euro successfully and are issuing \par\pard\plain\fs16\plain\cf1\f50\fs16\ql statements in dual currencies. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql The Company continues to address th ese transition issues and does not expect \par\pard\plain\fs16\plain\cf1\f50\fs16\ql the transition to the Euro to have a material effect on the results of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql operations or financial condition of the Company. The Company does not expect \par\pard\plain\fs16\plain\cf1\f50\fs16\ql the cost of system modifications to b e material and the Company will continue \par\pard\plain\fs16\plain\cf1\f50\fs16\ql to evaluate the impact of the Euro co nversion. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 40 \par\pard\plain\fs16 \page \par\pard\plain\fs16{\*\bkmkstart item_1_3_23}{\*\bkmkend item_1_3_23}\pard\plai n\cf1\f50\fs16\ql ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Interest Rate Risk \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql The table below provides informatio n about our market sensitive financial \par\pard\plain\fs16\plain\cf1\f50\fs16\ql instruments and constitutes a "forwar d-looking statement." Our major market

\par\pard\plain\fs16\plain\cf1\f50\fs16\ql risk exposure is changing interest ra tes. Our policy is to manage interest \par\pard\plain\fs16\plain\cf1\f50\fs16\ql rates through use of a combination of fixed and floating rate debt. Interest \par\pard\plain\fs16\plain\cf1\f50\fs16\ql rate swaps may be used to adjust inte rest rate exposures when appropriate, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql based upon market conditions, and the Company does not engage in such \par\pard\plain\fs16\plain\cf1\f50\fs16\ql transactions for speculative purposes . \par\pard\plain\fs16 \par\pard\plain\fs16 \par\pard\plain\fs16\pard\plain\cf1\f50\fs14\ql Fair Value \par\pard\plain\fs16\plain\cf1\f50\fs14\ql --------------------\par\pard\plain\fs16\plain\cf1\f50\fs14\ql Expected maturity dates 2000 20 01 2002 2003 2004 Thereafter Total 12/31/1999 12/31/1998 \par\pard\plain\fs16\plain\cf1\f50\fs14\ql ----------------------- ------ ------ ------- ------- -------- ---------- ---------- ---------- ---------\par\pard\plain\fs16\plain\cf1\f50\fs14\ql (in thousands) \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs14\ql DEBT \par\pard\plain\fs16\plain\cf1\f50\fs14\ql 9 1/2% Senior Notes due \par\pard\plain\fs16\plain\cf1\f50\fs14\ql 2009................... ------ $1,100,000 $1,100,000 $1,086,937 N/A \par\pard\plain\fs16\plain\cf1\f50\fs14\ql Average interest \par\pard\plain\fs16\plain\cf1\f50\fs14\ql rates--fixed.......... 9.5% \par\pard\plain\fs16\plain\cf1\f50\fs14\ql 9 1/8% Senior Notes due \par\pard\plain\fs16\plain\cf1\f50\fs14\ql 2006................... -----900,000 900,000 889,313 N/A \par\pard\plain\fs16\plain\cf1\f50\fs14\ql Average interest \par\pard\plain\fs16\plain\cf1\f50\fs14\ql rates--fixed.......... 9.1% \par\pard\plain\fs16\plain\cf1\f50\fs14\ql 9 5/8% Senior Notes due \par\pard\plain\fs16\plain\cf1\f50\fs14\ql 2008................... -----800,000 800,000 798,000 $834,000 \par\pard\plain\fs16\plain\cf1\f50\fs14\ql Average interest \par\pard\plain\fs16\plain\cf1\f50\fs14\ql rates--fixed.......... 9.6% \par\pard\plain\fs16\plain\cf1\f50\fs14\ql Senior Secured Revolving \par\pard\plain\fs16\plain\cf1\f50\fs14\ql Credit Facility........ ----- $648,597 -648,597 648,597 N/A \par\pard\plain\fs16\plain\cf1\f50\fs14\ql Average interest \par\pard\plain\fs16\plain\cf1\f50\fs14\ql rates--variable....... (1) \par\pard\plain\fs16\plain\cf1\f50\fs14\ql Racal Term Loan A....... ----97,000 549,130 646,130 646,130 N/A \par\pard\plain\fs16\plain\cf1\f50\fs14\ql Average interest \par\pard\plain\fs16\plain\cf1\f50\fs14\ql rates--variable....... (2) \par\pard\plain\fs16\plain\cf1\f50\fs14\ql Medium-Term Notes, \par\pard\plain\fs16\plain\cf1\f50\fs14\ql 7.51%-9.3%, due 2000 to \par\pard\plain\fs16\plain\cf1\f50\fs14\ql 2004................... -- $71 ,500 $40,000 -- 107,500 -219,000 219,892 N/A \par\pard\plain\fs16\plain\cf1\f50\fs14\ql Average interest \par\pard\plain\fs16\plain\cf1\f50\fs14\ql rates--fixed.......... -8.9% 7.5% 9.3% 9.0% \par\pard\plain\fs16\plain\cf1\f50\fs14\ql 7 1/4% Senior Notes due

\par\pard\plain\fs16\plain\cf1\f50\fs14\ql 2004................... ----- 300,000 -300,000 282,220 N/A \par\pard\plain\fs16\plain\cf1\f50\fs14\ql Average interest \par\pard\plain\fs16\plain\cf1\f50\fs14\ql rates--fixed.......... 7.3% \par\pard\plain\fs16\plain\cf1\f50\fs14\ql 6% Dealer Remarketable \par\pard\plain\fs16\plain\cf1\f50\fs14\ql Securities (DRS) due \par\pard\plain\fs16\plain\cf1\f50\fs14\ql 2013................... -----200,000 200,000 187,182 N/A \par\pard\plain\fs16\plain\cf1\f50\fs14\ql Average interest \par\pard\plain\fs16\plain\cf1\f50\fs14\ql rates--fixed.......... (3) \par\pard\plain\fs16\plain\cf1\f50\fs14\ql Other................... $5,496 $49 ,911 $ 3,618 $38,336 14,158 $ 130,509 242,028 234,926 N/A \par\pard\plain\fs16\plain\cf1\f50\fs14\ql Average interest \par\pard\plain\fs16\plain\cf1\f50\fs14\ql rates--fixed.......... (4) \par\pard\plain\fs16\plain\cf1\f50\fs14\ql DERIVATIVE INSTRUMENTS \par\pard\plain\fs16\plain\cf1\f50\fs14\ql Interest rate swap \par\pard\plain\fs16\plain\cf1\f50\fs14\ql floating for fixed \par\pard\plain\fs16\plain\cf1\f50\fs14\ql Contract notional \par\pard\plain\fs16\plain\cf1\f50\fs14\ql amount................. ----- $200,000 -- $ 200,000 $ 206,602 N/A \par\pard\plain\fs16\plain\cf1\f50\fs14\ql Fixed rate paid by \par\pard\plain\fs16\plain\cf1\f50\fs14\ql counterparty.......... 7.3% \par\pard\plain\fs16\plain\cf1\f50\fs14\ql Floating rate paid by \par\pard\plain\fs16\plain\cf1\f50\fs14\ql GCL................... (5) \par\pard\plain\fs16\par\pard\plain\cf1\f50\fs16\ql -------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql (1) The interest rate is US dollar LI BOR + 2.25% which was 8.4% as of December \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 31, 1999. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (2) The interest rate is British poun d LIBOR + 2.5% which was 8.4% as of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql December 31, 1999. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (3) The interest rate is fixed at 6.0 % until October 2003. At that time, the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql remarketing dealer (J.P. Morgan) has the option to remarket the notes at \par\pard\plain\fs16\plain\cf1\f50\fs16\ql prevailing interest rates or tend er the notes for redemption. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (4) Includes $58,557 of fixed rate de bt with interest rates ranging from 2.0% \par\pard\plain\fs16\plain\cf1\f50\fs16\ql to 9.0%. $48,460 of floating rate debt with an interest rate of British \par\pard\plain\fs16\plain\cf1\f50\fs16\ql pound LIBOR + 2.5%, which was 8.4 % as of December 31, 1999. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (5) The interest rate is US dollar LI BOR + 1.26%, which is set in arrears. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Foreign Currency Risk \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql For those subsidiaries using the U. S. dollar as their functional currency, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql translation adjustments are recorded in the accompanying condensed \par\pard\plain\fs16\plain\cf1\f50\fs16\ql consolidated statements of operations . None of the Company's translation \par\pard\plain\fs16\plain\cf1\f50\fs16\ql adjustments were material as of and f

or the years ended December 31, 1999 and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 1998. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql For those subsidiaries not using th e U.S. Dollar as their functional \par\pard\plain\fs16\plain\cf1\f50\fs16\ql currency, assets and liabilities are translated at exchange rates in effect at \par\pard\plain\fs16\plain\cf1\f50\fs16\ql the balance sheet date and income and expense accounts at average exchange \par\pard\plain\fs16\plain\cf1\f50\fs16\ql rates during the period. Resulting tr anslation adjustments are recorded \par\pard\plain\fs16\plain\cf1\f50\fs16\ql directly to a separate component of s hareholders' equity. As of and for the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql year ended December 31, 1999, the Com pany incurred a foreign currency \par\pard\plain\fs16\plain\cf1\f50\fs16\ql translation adjustment of $21 million . For the year ended December 31, 1998, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql the translation adjustments were imma terial. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Foreign currency forward transactio ns are used by the Company to hedge \par\pard\plain\fs16\plain\cf1\f50\fs16\ql exposure to foreign currency exchange rate fluctuations. The Euro was the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql principal currency hedged by the Comp any. Changes in the value of forward \par\pard\plain\fs16\plain\cf1\f50\fs16\ql foreign exchange contracts, which are designated as hedges of foreign currency \par\pard\plain\fs16\plain\cf1\f50\fs16\ql denominated assets and liabilities, a re classified in the same manner as \par\pard\plain\fs16\plain\cf1\f50\fs16\ql changes in the underlying assets and liabilities. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 41 \par\pard\plain\fs16 \page \par\pard\plain\fs16{\*\bkmkstart item_1_3_24}{\*\bkmkend item_1_3_24}\pard\plai n\cf1\f50\fs16\ql ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql See the index included on page F-1, Index to Consolidated Financial \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Statements and Schedule. \par\pard\plain\fs16 \par\pard\plain\fs16{\*\bkmkstart item_1_3_25}{\*\bkmkend item_1_3_25}\plain\cf1 \f50\fs16\ql ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND \par\pard\plain\fs16\plain\cf1\f50\fs16\ql FINANCIAL DISCLOSURE \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql None. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 42 \par\pard\plain\fs16 \page \par\pard\plain\fs16{\*\bkmkstart part_1_2_18}{\*\bkmkend part_1_2_18}\pard\plai n\cf1\f50\fs16\ql PART III \par\pard\plain\fs16 \par\pard\plain\fs16{\*\bkmkstart item_1_3_26}{\*\bkmkend item_1_3_26}\plain\cf1 \f50\fs16\ql ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

\par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql The following table sets forth the names, ages and positions of the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql directors and executive officers of G CL. The Bye-laws of GCL provide for a \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Board of Directors consisting of up t o 20 members divided into three classes \par\pard\plain\fs16\plain\cf1\f50\fs16\ql with terms of three years each. At th e 1999 Annual General Meeting of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Shareholders, Messrs. Brown, Casey, C onway, McDonald and Porter were elected \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Class A Directors with a term expirin g in 2000; Messrs. Annunziata, Cook, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Hippeau, Kent, Lee, Raben and Scanlon were elected Class B Directors with a \par\pard\plain\fs16\plain\cf1\f50\fs16\ql term expiring in 2001; and Messrs. Bl oom, Clayton, Kehler, McCorkindale, Steed \par\pard\plain\fs16\plain\cf1\f50\fs16\ql and Winnick were elected Class C Dire ctors with a term expiring in 2002. Mr. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Hindery was appointed a Class A Direc tor by the Board effective February 9, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 2000. Mr. Fok was appointed a Class A Director by the Board effective February \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 28, 2000. \par\pard\plain\fs16 \par\pard\plain\fs16 \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql Name Age Position \par\pard\plain\fs16\plain\cf1\f50\fs16\ql -----------\par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Gary Winnick................... 5 2 Chairman of the Board and Director \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Lodwrick M. Cook............... 7 1 Co-Chairman of the Board and Director \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Leo J. Hindery, Jr. ........... 5 2 Chief Executive Officer and Director; \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Chairman and Chief Executive Officer, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql GlobalCenter Inc. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Thomas J. Casey................ 4 8 Vice Chairman of the Board and Director \par\pard\plain\fs16\plain\cf1\f50\fs16\ql David L. Lee................... 5 0 President, Chief Operating Officer and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Director \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Joseph P. Clayton.............. 5 0 Director; President, Global Crossing \par\pard\plain\fs16\plain\cf1\f50\fs16\ql North America \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Jack M. Scanlon................ 5 8 Director; Vice Chairman of the Board, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Asia Global Crossing \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Abbott L. Brown................ 5 6 Senior Vice President and Director \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Barry Porter................... 4 2 Senior Vice President and Director \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Dan J. Cohrs................... 4

7 Senior Vice President and Chief \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Financial Officer \par\pard\plain\fs16\plain\cf1\f50\fs16\ql John L. Comparin............... 4 7 Senior Vice President, Human Resources \par\pard\plain\fs16\plain\cf1\f50\fs16\ql James C. Gorton................ 3 8 Senior Vice President and General \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Counsel \par\pard\plain\fs16\plain\cf1\f50\fs16\ql John A. Scarpati............... 4 8 Chief Administrative Officer \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Robert B. Sheh................. 6 0 Executive Vice President, Construction \par\pard\plain\fs16\plain\cf1\f50\fs16\ql and Operations \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Edward Mulligan................ 4 4 Senior Vice President, Network \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Operations \par\pard\plain\fs16\plain\cf1\f50\fs16\ql William B. Carter.............. 5 5 President, Global Crossing Development \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Co.; Chief Executive Officer, Global \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Marine Systems \par\pard\plain\fs16\plain\cf1\f50\fs16\ql S. Wallace Dawson, Jr. ........ 5 4 President, Atlantic Crossing \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Robert Annunziata.............. 5 2 Director \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Jay R. Bloom................... 4 4 Director \par\pard\plain\fs16\plain\cf1\f50\fs16\ql William E. Conway, Jr. ........ 5 0 Director \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Eric Hippeau................... 4 8 Director \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Dean C. Kehler................. 4 3 Director \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Geoffrey J.W. Kent............. 5 7 Director \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Canning Fok Kin-ning........... 4 8 Director \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Douglas H. McCorkindale........ 6 0 Director \par\pard\plain\fs16\plain\cf1\f50\fs16\ql James F. McDonald.............. 6 0 Director \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Bruce Raben.................... 4 6 Director \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Michael R. Steed............... 5 0 Director \par\pard\plain\fs16 \par\pard\plain\fs16 \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql 43 \par\pard\plain\fs16 \page \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql Gary Winnick--Mr. Winnick, found er of GCL, has been Chairman of the Board \par\pard\plain\fs16\plain\cf1\f50\fs16\ql of GCL since March 1997. Mr. Winnick is the founder and has been the Chairman \par\pard\plain\fs16\plain\cf1\f50\fs16\ql and Chief Executive Officer of Pacifi c Capital Group, Inc. ("PCG"), a leading

\par\pard\plain\fs16\plain\cf1\f50\fs16\ql munications, media and technology, which \par\pard\plain\fs16\plain\cf1\f50\fs16\ql n GCL, since 1985. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql n Co-Chairman of the Board of GCL since \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Managing Director of PCG since 1997. He \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ems, a wholly-owned subsidiary of GCL, in \par\pard\plain\fs16\plain\cf1\f50\fs16\ql spent 39 years at Atlantic Richfield Co., \par\pard\plain\fs16\plain\cf1\f50\fs16\ql of Directors from 1986 to 1995, when he \par\pard\plain\fs16\plain\cf1\f50\fs16\ql also a member of the Board of Directors \par\pard\plain\fs16\plain\cf1\f50\fs16\ql and 911Notify.com. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 000, Mr. Hindery was named CEO of GCL. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ince February 2000 and Chairman and Chief \par\pard\plain\fs16\plain\cf1\f50\fs16\ql er Inc. subsidiary since December 1999. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql and Chief Executive Officer of AT&T's \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ion since March 1999. From March 1997 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql sident of Tele-Communications, Inc., a \par\pard\plain\fs16\plain\cf1\f50\fs16\ql any. Prior thereto, he was Managing \par\pard\plain\fs16\plain\cf1\f50\fs16\ql s, a cable television operation that he \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql n Vice Chairman and a Director since \par\pard\plain\fs16\plain\cf1\f50\fs16\ql inted Managing Director of GCL in \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Mr. Casey was co-head of Merrill Lynch & \par\pard\plain\fs16\plain\cf1\f50\fs16\ql t Banking Group for three years. From \par\pard\plain\fs16\plain\cf1\f50\fs16\ql and co-head of the telecommunications \par\pard\plain\fs16\plain\cf1\f50\fs16\ql adden, Arps, Slate, Meagher and Flom. Mr. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql . \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql sident and Chief Operating Officer and a \par\pard\plain\fs16\plain\cf1\f50\fs16\ql has also been a managing director of PCG \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql

merchant bank specializing in telecom has a substantial equity investment i Lodwrick M. Cook--Mr. Cook has bee September 1997 and Vice Chairman and became Chairman of Global Marine Syst 1999. Prior to joining PCG, Mr. Cook last serving as Chairman of the Board became Chairman Emeritus. Mr.Cook is of Castle & Cooke, Inc., Litex, Inc. Leo J. Hindery, Jr.--In February 2 Mr. Hindery has been a GCL Director s Executive Officer of GCL's GlobalCent Prior thereto, he had been President Broadband and Internet Services divis until March 1999, Mr. Hindery was Pre cable television and programming comp General Partner of InterMedia Partner founded in 1988. Thomas J. Casey--Mr. Casey has bee December 1998, after having been appo September 1998. Prior to joining GCL, Co.'s Global Communications Investmen 1990 to 1995, Mr. Casey was a partner and media group of the law firm of Sk Casey also serves as president of PCG David L. Lee--Mr. Lee has been Pre Director of GCL since March 1997. He since 1989. Joseph P. Clayton--Mr. Clayton has

been a Director of GCL since September \par\pard\plain\fs16\plain\cf1\f50\fs16\ql , Global Crossing North America since \par\pard\plain\fs16\plain\cf1\f50\fs16\ql man of GCL from September 1999 to March \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Crossing, Mr. Clayton was Chief \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ugust 1997 having served as Frontier's \par\pard\plain\fs16\plain\cf1\f50\fs16\ql from June 1997 to August 1997. Prior \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ent, Marketing and Sales--Americas and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql worldwide leader in the consumer \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql een a Director since April 1998 and Vice\par\pard\plain\fs16\plain\cf1\f50\fs16\ql e 1999. Mr. Scanlon was Chief Executive \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ch 1999 and Vice Chairman of GCL from \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ining GCL, Mr. Scanlon was President and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql rks and Space Sector of Motorola Inc. and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql . since 1990. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql n a Senior Vice President and a Director \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ging director and Chief Financial Officer \par\pard\plain\fs16\plain\cf1\f50\fs16\ql hrough 1994, Mr. Brown was Executive Vice \par\pard\plain\fs16\plain\cf1\f50\fs16\ql d a member of the board of directors of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql subsidiary of Sony Corporation. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql a Senior Vice President and a director of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql naging director of PCG since 1993. Prior \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Managing Director in the investment \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Co., Inc. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql enior Vice President and Chief Financial \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 993 to 1998, Mr. Cohrs was affiliated \par\pard\plain\fs16\plain\cf1\f50\fs16\ql osition of Vice President and Chief \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 997. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql

1999. He has also served as President that time. Mr. Clayton was Vice-Chair 2000. Prior to the Merger with Global Executive Officer of Frontier since A President and Chief Operating Officer thereto, he was Executive Vice Presid Asia, Thomson Consumer Electronics, a electronics industry. Jack M. Scanlon--Mr. Scanlon has b Chairman of Asia Global Crossing sinc Officer of GCL from April 1998 to Mar March 1999 to March 2000. Prior to jo General Manager of the Cellular Netwo had been affiliated with Motorola Inc Abbott L. Brown--Mr. Brown has bee of GCL since 1997. He had been a mana of PCG from 1994 to 1998. From 1990 t President, Chief Financial Officer an Sony Pictures Entertainment, Inc., a Barry Porter--Mr. Porter has been GCL since 1997. He has also been a ma thereto, Mr. Porter had been a Senior banking department of Bear, Stearns & Dan J. Cohrs--Mr. Cohrs has been S Officer of GCL since May 1998. From 1 with GTE Corporation, rising to the p Planning and Development Officer in 1 John L. Comparin--Mr. Comparin has

been Senior Vice President, Human \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Resources of GCL since August 1999. P rior thereto, Mr. Comparin had been \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Senior Vice President--Human Resource s of ALLTEL Corporation, an information \par\pard\plain\fs16\plain\cf1\f50\fs16\ql technology company that provides wire line and wireless communications and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql information services. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 44 \par\pard\plain\fs16 \page \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql James C. Gorton--Mr. Gorton has been Senior Vice President and General \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Counsel of GCL since July 1998, and a lso served as Secretary of GCL from \par\pard\plain\fs16\plain\cf1\f50\fs16\ql August 1998 through September 1999. F rom 1994 to 1998, Mr. Gorton was a \par\pard\plain\fs16\plain\cf1\f50\fs16\ql partner in the New York law firm of S impson Thacher & Bartlett. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql John A. Scarpati--Mr. Scarpati was appointed Chief Administrative Officer \par\pard\plain\fs16\plain\cf1\f50\fs16\ql of GCL in December 1999. He previousl y served as Vice President and Chief \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Financial Officer at AT&T Business Se rvices Group from 1998 to 1999. Prior \par\pard\plain\fs16\plain\cf1\f50\fs16\ql thereto, Mr. Scarpati served since 19 84 in various executive officer positions \par\pard\plain\fs16\plain\cf1\f50\fs16\ql for the Teleport Communications Group , including Senior Vice President and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Chief Financial Officer. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Robert B. Sheh--Mr. Sheh has been Executive Vice President, Construction \par\pard\plain\fs16\plain\cf1\f50\fs16\ql and Operations since February 1999. F rom 1992 to 1998, Mr. Sheh served as \par\pard\plain\fs16\plain\cf1\f50\fs16\ql President and Chief Executive Officer of International Technology Corporation, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql an environmental management services firm, and as Chairman and Chief Executive \par\pard\plain\fs16\plain\cf1\f50\fs16\ql of Air & Water Technologies, an envir onmental management services firm. From \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 1989 to 1992 Mr. Sheh served as Presi dent of The Ralph M. Parsons Company, a \par\pard\plain\fs16\plain\cf1\f50\fs16\ql worldwide engineering and constructio n company. Mr. Sheh held positions of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql increasing responsibility at Parsons over a period of 20 years. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Edward Mulligan--Mr. Mulligan join ed Global Crossing Ltd. in November 1999 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql as Senior Vice President for Engineer ing and Operations. In July 1973, Mr. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Mulligan began his career with AT&T. In 1990 he joined Teleport Communications \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Group ("TCG") and rose within the org anization to head the Product Lines-of\par\pard\plain\fs16\plain\cf1\f50\fs16\ql Business. In 1998 he rejoined AT&T wh

en TCG was acquired by AT&T. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql served as President of Global Crossing \par\pard\plain\fs16\plain\cf1\f50\fs16\ql since September 1997. Since July 1999, he \par\pard\plain\fs16\plain\cf1\f50\fs16\ql e Systems subsidiary of GCL. Prior to \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ef executive officer of AT&T Submarine \par\pard\plain\fs16\plain\cf1\f50\fs16\ql h and development, planning, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql tion, and integration of their \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ilities. Mr. Carter previously served as \par\pard\plain\fs16\plain\cf1\f50\fs16\ql rations for AT&T. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql joined GCL in September 1997 and was \par\pard\plain\fs16\plain\cf1\f50\fs16\ql lantic Crossing Ltd. in August 1998. He \par\pard\plain\fs16\plain\cf1\f50\fs16\ql subsequently became associated with AT&T \par\pard\plain\fs16\plain\cf1\f50\fs16\ql for AT&T Packet Switched Services and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql marine Systems, Inc., he had overall \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ation of all submarine cable projects. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql a Director of GCL since March 1999, was \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ebruary 1999 through March 2000. From \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Annunziata was President of AT&T's \par\pard\plain\fs16\plain\cf1\f50\fs16\ql for the AT&T global network. Prior \par\pard\plain\fs16\plain\cf1\f50\fs16\ql and Chief Executive Officer of the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql etitive local exchange carrier, from 1983 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql r of GCL since March 1997, is a managing \par\pard\plain\fs16\plain\cf1\f50\fs16\ql and co-head of its Leveraged Finance \par\pard\plain\fs16\plain\cf1\f50\fs16\ql mber of CIBC's U.S. Management Committee; \par\pard\plain\fs16\plain\cf1\f50\fs16\ql eld Merchant Banking Funds; and a \par\pard\plain\fs16\plain\cf1\f50\fs16\ql rs, L.L.C., the investment advisor to \par\pard\plain\fs16\plain\cf1\f50\fs16\ql entity that owns shares of Global \par\pard\plain\fs16\plain\cf1\f50\fs16\ql lso a managing director and member of

William B. Carter--Mr. Carter has Development Co., a subsidiary of GCL has served as CEO of the Global Marin joining GCL, he was president and chi Systems, Inc., overseeing the researc negotiations, engineering, implementa international cable and satellite fac director of international network ope S. Wallace Dawson, Jr.--Mr. Dawson appointed Chief Executive Officer, At joined Bell Laboratories in 1968 and Long Lines, where he was responsible Data Networking Services. At AT&T Sub delivery responsibility for implement Robert Annunziata--Mr. Annunziata, Chief Executive Officer of GCL from F September 1998 to February 1999, Mr. business services group, responsible thereto, Mr. Annunziata was Chairman Teleport Communications Group, a comp to 1998. Jay R. Bloom--Mr. Bloom, a Directo director of CIBC World Markets Corp. Group. In addition, Mr. Bloom is a me co-head of CIBC World Markets High Yi managing director of Caravelle Adviso Caravelle Investment Fund, L.L.C., an Crossing common stock. Mr. Bloom is a

\par\pard\plain\fs16\plain\cf1\f50\fs16\ql Trimaran Fund II, L.L.C., Trimaran Fu nd Management, L.L.C., and Trimaran \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Investments II, L.L.C. Prior to joini ng CIBC World Markets in 1995, Mr. Bloom \par\pard\plain\fs16\plain\cf1\f50\fs16\ql was a founder and managing director o f The Argosy Group L.P. Mr. Bloom also \par\pard\plain\fs16\plain\cf1\f50\fs16\ql serves as a director of CIBC World Ma rkets Corp., Heating Oil Partners, L.P., \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Consolidated Advisers Limited, L.L.C. , Argosy Heating Partners, Inc., Dominos, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Inc., IASIS Healthcare Corporation an d Morris Material Handling, Inc. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql William E. Conway, Jr.--Mr. Conway , a Director of GCL since August 1998, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql has been a managing director of The C arlyle Group, a private global investment \par\pard\plain\fs16\plain\cf1\f50\fs16\ql firm, since 1987. Prior thereto, Mr. Conway had been Senior Vice President and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Chief Financial Officer of MCI Commun ications Corporation. Mr. Conway also \par\pard\plain\fs16\plain\cf1\f50\fs16\ql serves as director of Nextel Communic ations, Inc. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 45 \par\pard\plain\fs16 \page \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql Eric Hippeau--Mr. Hippeau, a Dir ector of GCL since September 1999, is \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Chairman and Chief Executive Officer of Ziff-Davis Inc., a publicly-listed \par\pard\plain\fs16\plain\cf1\f50\fs16\ql company whose majority shareholder is Softbank, Corp. Ziff-Davis Inc. is a \par\pard\plain\fs16\plain\cf1\f50\fs16\ql leading integrated media and marketin g company focused on computing and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql internet-related technology. Mr. Hipp eau has held this position since December \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 1993, prior to which he held other se nior executive positions within Ziff\par\pard\plain\fs16\plain\cf1\f50\fs16\ql Davis. He is also a director of ZiffDavis Inc., Yahoo!, Inc., and Starwood \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Hotels and Resorts Worldwide, Inc. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Dean C. Kehler--Mr. Kehler, a Dire ctor of GCL since March 1997, is a \par\pard\plain\fs16\plain\cf1\f50\fs16\ql managing director of CIBC World Marke ts Corp. and co-head of its Leveraged \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Finance Group. In addition, Mr. Kehle r is a member of CIBC's U.S. Management \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Committee; co-head of CIBC World Mark ets High Yield Merchant Banking Funds; \par\pard\plain\fs16\plain\cf1\f50\fs16\ql and a managing director of Caravelle Advisors, L.L.C., the investment advisor \par\pard\plain\fs16\plain\cf1\f50\fs16\ql to Caravelle Investment Fund, L.L.C., an entity that owns shares of Global \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Crossing common stock. Mr. Kehler is also a managing director and member of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Trimaran Fund II, L.L.C., Trimaran Fu nd Management, L.L.C., and Trimaran

\par\pard\plain\fs16\plain\cf1\f50\fs16\ql ng CIBC World Markets in 1995, Mr. Kehler \par\pard\plain\fs16\plain\cf1\f50\fs16\ql f The Argosy Group L.P. Mr. Kehler also \par\pard\plain\fs16\plain\cf1\f50\fs16\ql rkets Corp., Booth Creek Group, Inc. and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql rector of GCL since August 1998, is \par\pard\plain\fs16\plain\cf1\f50\fs16\ql of the Abercrombie & Kent group of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ces industry, and has been associated \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql been a Director of GCL since February \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Director of Hutchison Whampoa Limited \par\pard\plain\fs16\plain\cf1\f50\fs16\ql hison, part of the Li Ka-shing group of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql conglomerate based in Hong Kong. In \par\pard\plain\fs16\plain\cf1\f50\fs16\ql t venture with GCL to pursue fixed-line \par\pard\plain\fs16\plain\cf1\f50\fs16\ql tunities in the Hong Kong Special \par\pard\plain\fs16\plain\cf1\f50\fs16\ql is the Chairman of Hutchison \par\pard\plain\fs16\plain\cf1\f50\fs16\ql d and Partner Communications Company Ltd. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql frastructure Holdings Limited and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql e is also a director of Cheung Kong \par\pard\plain\fs16\plain\cf1\f50\fs16\ql reless Corporation. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql kindale, a Director of GCL since \par\pard\plain\fs16\plain\cf1\f50\fs16\ql President of Gannett Co., Inc., a \par\pard\plain\fs16\plain\cf1\f50\fs16\ql company, and has held that position \par\pard\plain\fs16\plain\cf1\f50\fs16\ql he was Gannett's Vice Chairman and Chief \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Mr. McCorkindale is also a director of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql a director or trustee of a number of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Prudential Mutual Funds. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Director of GCL since September 1999, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql e Officer of Scientific-Atlanta, Inc., a \par\pard\plain\fs16\plain\cf1\f50\fs16\ql cations systems, satellite-based video,

Investments II, L.L.C. Prior to joini was a founder and managing director o serves as a director of CIBC World Ma Heating Oil Partners, L.P. Geoffrey J.W. Kent--Mr. Kent, a Di Chairman and Chief Executive Officer companies in the travel-related servi with these companies since 1967. Canning Fok Kin-ning--Mr. Fok has 2000. He has served as Group Managing ("Hutchison") since August 1993. Hutc companies, is a large multi-national January 2000, Hutchison formed a join telecommunications and internet oppor Administrative Region, China. Mr. Fok Telecommunications (Australia) Limite and Deputy Chairman of Cheung Kong In Hongkong Electric Holdings Limited. H (Holdings) Limited and VoiceStream Wi Douglas H. McCorkindale--Mr. McCor September 1999, is Vice Chairman and nationwide diversified communications since September 1997. Prior thereto, Financial and Administrative Officer. Gannett and Continental Airlines and investment companies in the family of James F. McDonald--Mr. McDonald, a has been President and Chief Executiv leading supplier of broadband communi

\par\pard\plain\fs16\plain\cf1\f50\fs16\ql voice and data communications network s and world-wide customer service and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql support, since 1993. He is also a dir ector of Scientific-Atlanta and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Burlington Resources, Inc. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Bruce Raben--Mr. Raben, a Director of GCL since March 1997, is a managing \par\pard\plain\fs16\plain\cf1\f50\fs16\ql director of CIBC Oppenheimer. Prior t o joining CIBC Oppenheimer in January \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 1996, Mr. Raben was a founder, managi ng director and co-head of the Corporate \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Finance Department of Jefferies & Co. , Inc. since 1990. Mr. Raben also serves \par\pard\plain\fs16\plain\cf1\f50\fs16\ql as a director of Optical Security, In c., Evercom, Inc., Terex Corporation and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Equity Marketing, Inc. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Michael R. Steed--Mr. Steed, a Dire ctor of GCL since March 1997, has been a \par\pard\plain\fs16\plain\cf1\f50\fs16\ql managing director of PCG since Decemb er 1999. Prior thereto, Mr. Steed had \par\pard\plain\fs16\plain\cf1\f50\fs16\ql been Senior Vice President of Investm ents for the Union Labor Life Insurance \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Company, ULLICO Inc. ("ULLICO") and i ts family of companies and President of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Trust Fund Advisors, ULLICO's investm ent management subsidiary, since 1992. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Mr. Steed also serves as a director o f Value America and VR-1. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql SECTION 16(a) BENEFICIAL OWNERSHIP RE PORTING COMPLIANCE \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Under the federal securities laws, our directors, executive officers and 10% \par\pard\plain\fs16\plain\cf1\f50\fs16\ql shareholders are required within a pr escribed period of time to report to the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Securities and Exchange Commission tr ansactions and holdings in \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 46 \par\pard\plain\fs16 \page \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql Global Crossing's common stock. Based solely on a review of the copies of such \par\pard\plain\fs16\plain\cf1\f50\fs16\ql forms received by us and on written r epresentations from certain reporting \par\pard\plain\fs16\plain\cf1\f50\fs16\ql persons that no annual corrective fil ings were required for those persons, we \par\pard\plain\fs16\plain\cf1\f50\fs16\ql believe that during fiscal year 1999 all these filing requirements were timely \par\pard\plain\fs16\plain\cf1\f50\fs16\ql satisfied, with the exception of one Form 4 relating to a single transaction \par\pard\plain\fs16\plain\cf1\f50\fs16\ql in Global Crossing common stock which was filed late by Lodwrick Cook. \par\pard\plain\fs16 \par\pard\plain\fs16{\*\bkmkstart item_1_3_27}{\*\bkmkend item_1_3_27}\plain\cf1 \f50\fs16\ql ITEM 11. EXECUTIVE COMPENSATION

\par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql osophy is to relate the compensation of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql to measures of company performance that \par\pard\plain\fs16\plain\cf1\f50\fs16\ql bal Crossing's shareholders. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql s are appropriately aligned with the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql reholders, Global Crossing's compensation \par\pard\plain\fs16\plain\cf1\f50\fs16\ql es into account the following goals: \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql erformance-oriented environment that \par\pard\plain\fs16\plain\cf1\f50\fs16\ql achieve a high level of individual, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql lts in the business environment in which \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ation to the performance of each \par\pard\plain\fs16\plain\cf1\f50\fs16\ql y financial and strategic performance \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql act and retain top quality management. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql oard of directors, which we will refer to \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ews the components of compensation for \par\pard\plain\fs16\plain\cf1\f50\fs16\ql on the basis of this philosophy and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql eness of its executive officer \par\pard\plain\fs16\plain\cf1\f50\fs16\ql arable companies. When the Committee \par\pard\plain\fs16\plain\cf1\f50\fs16\ql pensation adjustments or bonus awards are \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ch modifications as it deems appropriate. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ole authority to modify the compensation \par\pard\plain\fs16\plain\cf1\f50\fs16\ql the Chief Executive Officer ("CEO"), \par\pard\plain\fs16\plain\cf1\f50\fs16\ql dations to the board in this regard. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql

Compensation Committee Report Compensation Philosophy Global Crossing's compensation phil Global Crossing's executive officers contribute to increased value for Glo To assure that compensation policie value Global Crossing creates for sha philosophy for executive officers tak . enhancing shareholder value; . representing a competitive and p motivates executive officers to business unit and corporate resu they operate; . relating incentive-based compens executive officer, as measured b goals; and . enabling Global Crossing to attr The Compensation Committee of the b as the "Committee," periodically revi Global Crossing's executive officers periodically evaluates the competitiv compensation program relative to comp determines that executive officer com necessary or appropriate, it makes su However, the board of directors has s of the Chairman, the Co-Chairman and although the Committee makes recommen Section 162(m) of the Internal Reve

nue Code of 1986 limits the deductibility \par\pard\plain\fs16\plain\cf1\f50\fs16\ql of certain annual compensation paymen ts in excess of $1 million to a company's \par\pard\plain\fs16\plain\cf1\f50\fs16\ql executive officers. It is the objecti ve of the Compensation Committee to \par\pard\plain\fs16\plain\cf1\f50\fs16\ql administer compensation plans in comp liance with the provisions of Section \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 162(m) where feasible and where consi stent with Global Crossing's compensation \par\pard\plain\fs16\plain\cf1\f50\fs16\ql philosophy as stated above. In that c onnection, at the 2000 Annual General \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Meeting of Shareholders, the Company intends to recommend the adoption of an \par\pard\plain\fs16\plain\cf1\f50\fs16\ql annual bonus plan meeting the require ments of Section 162(m). The Company \par\pard\plain\fs16\plain\cf1\f50\fs16\ql already has in place a stock incentiv e plan pursuant to which stock-based \par\pard\plain\fs16\plain\cf1\f50\fs16\ql incentives may be awarded in complian ce with Section 162(m). \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Executive Compensation Components \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql The major components of compensatio n for executive officers, including the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql CEO, are base salary, annual bonuses and stock option grants. Each component \par\pard\plain\fs16\plain\cf1\f50\fs16\ql of the total executive officer compen sation package emphasizes a different \par\pard\plain\fs16\plain\cf1\f50\fs16\ql aspect of Global Crossing's compensat ion philosophy. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql . Base Salary. Base salaries for e xecutive officers are initially set upon \par\pard\plain\fs16\plain\cf1\f50\fs16\ql hiring by the Committee (or, in the case of the Chairman, the Co\par\pard\plain\fs16\plain\cf1\f50\fs16\ql Chairman and the CEO, by the boa rd of directors upon the Committee's \par\pard\plain\fs16\plain\cf1\f50\fs16\ql recommendation) based on recruit ing requirements (i.e., market demand), \par\pard\plain\fs16\plain\cf1\f50\fs16\ql competitive pay practices, indiv idual experience and breadth of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql knowledge, internal equity consi derations and other objective and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql subjective factors. Increases to base salary are also determined by the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Committee or the board of direct ors, as applicable. Increases are \par\pard\plain\fs16\plain\cf1\f50\fs16\ql determined primarily on an evalu ation of competitive \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 47 \par\pard\plain\fs16 \page \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql data, the individual's performan ce and contribution to Global Crossing, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql and Global Crossing's overall pe rformance. Base salaries are \par\pard\plain\fs16\plain\cf1\f50\fs16\ql periodically reviewed by the Com pensation Committee.

\par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ossing relies to a large degree on \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ract, retain and reward executives of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ivate them to perform to the full extent \par\pard\plain\fs16\plain\cf1\f50\fs16\ql es for executive officers, including the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql of competitive bonus levels, level of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ence results on a corporate or business \par\pard\plain\fs16\plain\cf1\f50\fs16\ql jective factors. Target annual bonuses \par\pard\plain\fs16\plain\cf1\f50\fs16\ql n and the CEO are determined by the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql dation by the Compensation Committee. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql executive officers are determined by the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql rrent long-term incentive opportunity \par\pard\plain\fs16\plain\cf1\f50\fs16\ql g the CEO, is the award of stock option \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ssing Ltd. Stock Incentive Plan. In \par\pard\plain\fs16\plain\cf1\f50\fs16\ql d for prior year accomplishments, stock \par\pard\plain\fs16\plain\cf1\f50\fs16\ql es tied to future stock appreciation. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql cutive officers with a direct incentive \par\pard\plain\fs16\plain\cf1\f50\fs16\ql tions generally vest over a three-year \par\pard\plain\fs16\plain\cf1\f50\fs16\ql n years. Option grants are awarded at \par\pard\plain\fs16\plain\cf1\f50\fs16\ql primarily based on an evaluation of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ated contribution that the executive \par\pard\plain\fs16\plain\cf1\f50\fs16\ql sing. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ull review of the performance of Global \par\pard\plain\fs16\plain\cf1\f50\fs16\ql n assessing compensation levels. The \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ve and quantitative indicators of both \par\pard\plain\fs16\plain\cf1\f50\fs16\ql rformance of its executive officers. This \par\pard\plain\fs16\plain\cf1\f50\fs16\ql rformance both on a short- and long-term \par\pard\plain\fs16\plain\cf1\f50\fs16\ql h quantitative measures as Total \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Shareholder's Equity ("ROSE"), Return on

. Target Annual Bonuses. Global Cr annual bonus compensation to att outstanding abilities and to mot of their abilities. Target bonus CEO, are determined on the basis responsibility, ability to influ unit level and, on occasion, sub for the Chairman, the Co-Chairma board of directors upon recommen Target annual bonuses for other Committee. . Stock Option Grants. The only cu for executive officers, includin grants under the 1998 Global Cro contrast to bonuses that are pai option grants represent incentiv They are intended to provide exe to enhance shareholder value. Op period with a maximum term of te the discretion of the Committee competitive data and the anticip officer will make to Global Cros The Committee conducts annually a f Crossing and its executive officers i Committee considers various qualitati Global Crossing and the individual pe review evaluates Global Crossing's pe basis. The Committee may consider suc Shareholder Return ("TSR"), Return on

\par\pard\plain\fs16\plain\cf1\f50\fs16\ql owth, and growth in Adjusted EBITDA and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Committee may also consider qualitative \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ce, strategic direction and overall \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql s compensation in light of the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql nies in the telecommunications industry \par\pard\plain\fs16\plain\cf1\f50\fs16\ql termined by the Committee. These \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ndard for establishing levels of base \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 1999, executive officer compensation was \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ive to peer group companies in the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql e, the Committee approved (or, in the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql CEO, recommended that the board of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql nd 1999 bonus awards for all executive \par\pard\plain\fs16\plain\cf1\f50\fs16\ql approved approximately 11,000,000 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ecutive officers during 1999. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql in February 1999. Jack Scanlon held the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 1999 through February 1999. In \par\pard\plain\fs16\plain\cf1\f50\fs16\ql bonus awards for Messrs. Annunziata and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql erformance of Global Crossing against its \par\pard\plain\fs16\plain\cf1\f50\fs16\ql creased from $420 million to $1.7 billion \par\pard\plain\fs16\plain\cf1\f50\fs16\ql quisitions completed during the year. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql on grew from $10 billion to $43 billion \par\pard\plain\fs16\plain\cf1\f50\fs16\ql was a key member of the team that \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Frontier Corporation, and the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql bal Marine Systems. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql THE COMPENSATION COMMITTEE \par\pard\plain\fs16\plain\cf1\f50\fs16\ql James F. McDonald, Chairman

Capital Employed ("ROCE"), revenue gr other measures of profitability. The measures such as leadership, experien contribution to Global Crossing. In addition, the Committee evaluate compensation practices of other compa and peer group companies as may be de companies are used as a reference sta salary, bonus and stock options. For targeted at the 75th percentile relat telecom industry. 2000 Executive Compensation Review Based on the factors set forth abov case of the Chairman, Co-Chairman and directors approve) salary increases a officers. In addition, the Committee additional stock options grants to ex Robert Annunziata was appointed CEO position of CEO from the beginning of determining salary increases and 1999 Scanlon, the Committee reviewed the p goals. During 1999, annual revenue in as a result of internal growth and ac Global Crossing's market capitalizati or 330%. In addition, Mr. Annunziata completed the successful merger with acquisitions of Racal Telecom and Glo

\par\pard\plain\fs16\plain\cf1\f50\fs16\ql Geoffrey J.W. Kent \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Douglas McCorkindale \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 48 \par\pard\plain\fs16 \page \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql Summary Compensation Table \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql The table below sets forth informat ion concerning compensation paid to \par\pard\plain\fs16\plain\cf1\f50\fs16\ql certain executive officers during the last fiscal year. \par\pard\plain\fs16 \par\pard\plain\fs16 \par\pard\plain\fs16\pard\plain\cf1\f50\fs14\ql Annual Compensation Long Term Compensation \par\pard\plain\fs16\plain\cf1\f50\fs14\ql ---------------------------------------- ----------------------------------------------\par\pard\plain\fs16\plain\cf1\f50\fs14\ql Other Restricted Securities \par\pard\plain\fs16\plain\cf1\f50\fs14\ql Annual Stock Underlying LTIP All Other \par\pard\plain\fs16\plain\cf1\f50\fs14\ql Year Salary Bonus(1) Compensation(2) Award(s) Options/SARs Payouts Compensation(3) \par\pard\plain\fs16\plain\cf1\f50\fs14\ql ---- ------- ----------- --------------- ---------- ------------ ------- --------------\par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs14\ql Gary Winnick............ 1999 $169,61 5 $ 785,000 $ 94,097 ----\par\pard\plain\fs16\plain\cf1\f50\fs14\ql Chairman \par\pard\plain\fs16\plain\cf1\f50\fs14\ql Robert Annunziata*...... 1999 464,67 9 11,000,000 --7,500,000 --\par\pard\plain\fs16\plain\cf1\f50\fs14\ql Former Chief \par\pard\plain\fs16\plain\cf1\f50\fs14\ql Executive Officer \par\pard\plain\fs16\plain\cf1\f50\fs14\ql Jack M. Scanlon*........ 1999 622,50 0 504,000 ----$ 5,000 \par\pard\plain\fs16\plain\cf1\f50\fs14\ql Vice Chairman, Asia 1998 450,00 0 480,000 $213,569 -3,600,000 --\par\pard\plain\fs16\plain\cf1\f50\fs14\ql Global Crossing \par\pard\plain\fs16\plain\cf1\f50\fs14\ql Thomas J. Casey......... 1999 925,00 0 625,000 --1,600,000 --\par\pard\plain\fs16\plain\cf1\f50\fs14\ql Vice Chairman 1998 266,66 7 533,333 --2,000,000 --\par\pard\plain\fs16\plain\cf1\f50\fs14\ql John A. Scarpati........ 1999 36,21 7 2,000,000 --1,000,000 -222,222 \par\pard\plain\fs16\plain\cf1\f50\fs14\ql Chief Administrative \par\pard\plain\fs16\plain\cf1\f50\fs14\ql Officer \par\pard\plain\fs16\plain\cf1\f50\fs14\ql William B. Carter....... 1999 622,50 0 395,000 ----5,000 \par\pard\plain\fs16\plain\cf1\f50\fs14\ql President, Global 1998 600,00 0 1,050,000 --3,000,000 -$ 5,000 \par\pard\plain\fs16\plain\cf1\f50\fs14\ql Crossing Development 1997 $200,00 0 $ 750,000 -----\par\pard\plain\fs16\plain\cf1\f50\fs14\ql Co.; Chief Executive \par\pard\plain\fs16\plain\cf1\f50\fs14\ql Officer, Global Marine \par\pard\plain\fs16\plain\cf1\f50\fs14\ql Systems \par\pard\plain\fs16\par\pard\plain\cf1\f50\fs16\ql --------

\par\pard\plain\fs16\plain\cf1\f50\fs16\ql ve Officer in February 1999 and Mr. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql bruary 1999. Mr. Scanlon is still one of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ficers of Global Crossing other than the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ent annual bonuses, except that Mr. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 0,000,000 signing bonus and a $1,000,000 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql amount reflects a $2,000,000 signing \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16\plain\cf1\f50\fs16\ql me for the personal use of corporate \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ed matching company contributions on \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Scarpati is to receive an $8,000,000 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ars of service, of which 1/36th was \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Incentive Plan (the "1998 Plan") \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ded in the specific award agreement, upon \par\pard\plain\fs16\plain\cf1\f50\fs16\ql granted under the 1998 Plan may, in the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ommittee, be deemed to vest immediately. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql e for accelerated vesting upon a change \par\pard\plain\fs16\plain\cf1\f50\fs16\ql defined under the 1998 Plan in general as \par\pard\plain\fs16\plain\cf1\f50\fs16\ql g: (1) any person or entity, other than \par\pard\plain\fs16\plain\cf1\f50\fs16\ql e "beneficial owner," as defined under \par\pard\plain\fs16\plain\cf1\f50\fs16\ql rities Exchange Act of 1934, of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql nting 30% or more of the combined voting \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ies; (2) during any period of 24 months, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql uch period constituted the board of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql than any directors who meet certain \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ) whose election was approved in advance \par\pard\plain\fs16\plain\cf1\f50\fs16\ql he directors then still in office cease \par\pard\plain\fs16\plain\cf1\f50\fs16\ql a majority of the board; (3) our \par\pard\plain\fs16\plain\cf1\f50\fs16\ql

* Mr. Annunziata became Chief Executi Scanlon resigned the position in Fe the four most highly compensated of CEO. (1) The amounts in this column repres Annunziata's amount reflects a $1 annual bonus; and Mr. Scarpati's bonus. (2) Mr. Winnick received imputed inco aircraft in 1999. (3) Messrs. Scanlon and Carter receiv their 401(k) plan deferrals. Mr. bonus upon the completion of 3 ye accrued in 1999. Certain Compensation Arrangements The 1998 Global Crossing Ltd. Stock provides that, unless otherwise provi a "change in control," certain awards sole discretion of the Compensation C The award agreements generally provid in control. A "change in control" is the occurrence of any of the followin certain of our affiliates, becomes th Rule 13d-3 promulgated under the Secu securities of Global Crossing represe power of our then outstanding securit individuals who at the beginning of s directors and any new director (other exceptions specified in the 1998 Plan by a vote of at least two-thirds of t for any reason to constitute at least shareholders approve any transaction

pursuant to which Global Crossing is \par\pard\plain\fs16\plain\cf1\f50\fs16\ql merged or consolidated with any other company, other than a merger or \par\pard\plain\fs16\plain\cf1\f50\fs16\ql consolidation which would result in o ur shareholders immediately prior thereto \par\pard\plain\fs16\plain\cf1\f50\fs16\ql continuing to own more than 65% of th e combined voting power of the voting \par\pard\plain\fs16\plain\cf1\f50\fs16\ql securities of the surviving entity ou tstanding after such transaction; or (4) \par\pard\plain\fs16\plain\cf1\f50\fs16\ql our shareholders approve a plan of co mplete liquidation of Global Crossing or \par\pard\plain\fs16\plain\cf1\f50\fs16\ql an agreement for the sale or disposit ion by Global Crossing of all or \par\pard\plain\fs16\plain\cf1\f50\fs16\ql substantially all of our assets, othe r than the liquidation of Global Crossing \par\pard\plain\fs16\plain\cf1\f50\fs16\ql into a wholly owned subsidiary. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 49 \par\pard\plain\fs16 \page \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql In January 2000, the board of di rectors authorized Global Crossing to enter \par\pard\plain\fs16\plain\cf1\f50\fs16\ql into change in control agreements wit h our executive officers and certain of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql our other key executives. These agree ments provide for certain benefits upon \par\pard\plain\fs16\plain\cf1\f50\fs16\ql actual or constructive termination of employment in the event of a "Change in \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Control" (as defined below). With res pect to the executive officers named in \par\pard\plain\fs16\plain\cf1\f50\fs16\ql the Summary Compensation Table above, if, within 24 months of the month in \par\pard\plain\fs16\plain\cf1\f50\fs16\ql which a Change in Control occurs, his employment is terminated by us (other \par\pard\plain\fs16\plain\cf1\f50\fs16\ql than for cause or by reason of death or disability), or he terminates \par\pard\plain\fs16\plain\cf1\f50\fs16\ql employment for "good reason" (general ly, an unfavorable change in employment \par\pard\plain\fs16\plain\cf1\f50\fs16\ql status, compensation or benefits or a required relocation), he shall be \par\pard\plain\fs16\plain\cf1\f50\fs16\ql entitled to receive (i) a lump sum pa yment equal to three times the sum of his \par\pard\plain\fs16\plain\cf1\f50\fs16\ql annual base salary plus guideline bon us opportunity (reduced by any cash \par\pard\plain\fs16\plain\cf1\f50\fs16\ql severance benefit otherwise paid to t he executive under any applicable \par\pard\plain\fs16\plain\cf1\f50\fs16\ql severance plan or other severance arr angement), (ii) a prorated annual target \par\pard\plain\fs16\plain\cf1\f50\fs16\ql bonus for the year in which the Chang e in Control occurs, (iii) continuation \par\pard\plain\fs16\plain\cf1\f50\fs16\ql of his life and health insurance cove rages for three years and (iv) payment of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql any excise taxes due in respect of th e foregoing benefits and of any other \par\pard\plain\fs16\plain\cf1\f50\fs16\ql payments made to the executive as a r esult of the Change in Control. The term \par\pard\plain\fs16\plain\cf1\f50\fs16\ql of each of these agreements will cont inue through December 31, 2001, after \par\pard\plain\fs16\plain\cf1\f50\fs16\ql which it will be automatically extend

ed for additional one-year terms subject \par\pard\plain\fs16\plain\cf1\f50\fs16\ql year's prior notice. There is an \par\pard\plain\fs16\plain\cf1\f50\fs16\ql g any Change in Control. A Change in \par\pard\plain\fs16\plain\cf1\f50\fs16\ql if: (1) any person or entity, other than \par\pard\plain\fs16\plain\cf1\f50\fs16\ql e "beneficial owner" of securities of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ore of the combined voting power of our \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ng any period of 24 months, individuals \par\pard\plain\fs16\plain\cf1\f50\fs16\ql onstituted the board of directors and any \par\pard\plain\fs16\plain\cf1\f50\fs16\ql s who meet certain exceptions specified \par\pard\plain\fs16\plain\cf1\f50\fs16\ql hose election was approved in advance by \par\pard\plain\fs16\plain\cf1\f50\fs16\ql directors then still in office cease for \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ajority of the board; (3) any transaction \par\pard\plain\fs16\plain\cf1\f50\fs16\ql al Crossing is merged or consolidated \par\pard\plain\fs16\plain\cf1\f50\fs16\ql merger or consolidation which would \par\pard\plain\fs16\plain\cf1\f50\fs16\ql y prior thereto continuing to own more \par\pard\plain\fs16\plain\cf1\f50\fs16\ql of the voting securities of the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ch transaction; or (4) Global Crossing is \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ispose of all or substantially all of our \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Global Crossing into a wholly owned \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql n employment agreement with Leo J. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql y's employment as Chairman and Chief \par\pard\plain\fs16\plain\cf1\f50\fs16\ql subsidiary for an initial term of three \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ded for a base annual salary of not less \par\pard\plain\fs16\plain\cf1\f50\fs16\ql of not less than $500,000. Mr. Hindery \par\pard\plain\fs16\plain\cf1\f50\fs16\ql se 500,000 shares of Global Crossing \par\pard\plain\fs16\plain\cf1\f50\fs16\ql $45 per share. These stock options vest \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ployment and the balance in 22% \par\pard\plain\fs16\plain\cf1\f50\fs16\ql nd and third anniversaries of such date. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Mr. Hindery is also entitled to receive \par\pard\plain\fs16\plain\cf1\f50\fs16\ql

to termination by either party on one automatic 24-month extension followin Control generally is deemed to occur certain of our affiliates, becomes th Global Crossing representing 20% or m then outstanding securities; (2) duri who at the beginning of such period c new director (other than any director in the change in control agreement) w a vote of at least two-thirds of the any reason to constitute at least a m is consummated pursuant to which Glob with any other company, other than a result in our shareholders immediatel than 65% of the combined voting power surviving entity outstanding after su completely liquidated or we sell or d assets, other than the liquidation of subsidiary. In December 1999, we entered into a Hindery, Jr. providing for Mr. Hinder Executive Officer of our GlobalCenter years. The employment agreement provi than $500,000 and a guaranteed bonus also received stock options to purcha common stock at an exercise price of 34% on Mr. Hindery's first date of em increments on each of the first, seco Pursuant to the employment agreement, stock options covering 5.5% of the co

mmon stock of our GlobalCenter subsidiary \par\pard\plain\fs16\plain\cf1\f50\fs16\ql or of a tracking stock designed to re flect the performance of the GlobalCenter \par\pard\plain\fs16\plain\cf1\f50\fs16\ql business. Such GlobalCenter stock opt ions will have an aggregate exercise \par\pard\plain\fs16\plain\cf1\f50\fs16\ql price of $110 million and will vest 3 4% immediately and the balance in 22% \par\pard\plain\fs16\plain\cf1\f50\fs16\ql increments on each of the first, seco nd and third anniversaries of Mr. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Hindery's employment start date. In M arch 2000, Mr. Hindery's compensation \par\pard\plain\fs16\plain\cf1\f50\fs16\ql arrangements were changed to reflect his new responsibilities as CEO of Global \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Crossing Ltd. At that time, Mr. Hinde ry's annual base salary was increased to \par\pard\plain\fs16\plain\cf1\f50\fs16\ql $995,000 and he received an additiona l 2,000,000 Global Crossing Ltd. stock \par\pard\plain\fs16\plain\cf1\f50\fs16\ql options at an exercise price of $54.3 75 per share, such options to vest \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ratably over three years. Upon a "cha nge in control" or upon the actual or \par\pard\plain\fs16\plain\cf1\f50\fs16\ql constructive discharge of Mr. Hindery without "cause" (as defined in Mr. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Hindery's agreement), all of his opti ons will immediately vest in full, and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Mr. Hindery will be entitled to recei ve a lump sum payment equal to the sum of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql his annual base salary and bonus thro ugh the end of the term of the agreement. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql In February 1999, we entered into a n employment agreement with Robert \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Annunziata providing for Mr. Annunzia ta's employment as Chief Executive \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Officer of Global Crossing for an ini tial term of three years. The employment \par\pard\plain\fs16\plain\cf1\f50\fs16\ql agreement provided for a base annual salary of not less than $500,000 and a \par\pard\plain\fs16\plain\cf1\f50\fs16\ql target annual bonus of not less than $500,000. In addition, Mr. Annunziata was \par\pard\plain\fs16\plain\cf1\f50\fs16\ql provided a $10 million signing bonus, subject to partial repayment in certain \par\pard\plain\fs16\plain\cf1\f50\fs16\ql circumstances, as well as a $5 millio n fully recourse loan facility to be used \par\pard\plain\fs16\plain\cf1\f50\fs16\ql to purchase \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 50 \par\pard\plain\fs16 \page \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql shares of Global Crossing common stock to the extent Mr. Annunziata used a \par\pard\plain\fs16\plain\cf1\f50\fs16\ql like amount of his own funds for such purpose. Mr. Annunziata did not elect to \par\pard\plain\fs16\plain\cf1\f50\fs16\ql make use of this loan facility. Mr. A nnunziata also received stock options to \par\pard\plain\fs16\plain\cf1\f50\fs16\ql purchase 4,000,000 (after giving effe ct to the March 9, 1999 stock split) \par\pard\plain\fs16\plain\cf1\f50\fs16\ql shares of Global Crossing common stoc k at a split-adjusted exercise price of

\par\pard\plain\fs16\plain\cf1\f50\fs16\ql were to vest in 25% increments starting \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 22 of each of the first three years of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql e employment agreement, Mr. Annunziata \par\pard\plain\fs16\plain\cf1\f50\fs16\ql six months following the initial term of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql to purchase from him any shares of the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql a result of the exercise of the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql price equal to $49.625 per share. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Mr. Annunziata also received stock \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 00,000 (post-split) shares of Global \par\pard\plain\fs16\plain\cf1\f50\fs16\ql usted exercise price of $24.81 per share, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql unziata's first day of employment. Upon \par\pard\plain\fs16\plain\cf1\f50\fs16\ql n March 2, 2000, all of Mr. Annunziata's \par\pard\plain\fs16\plain\cf1\f50\fs16\ql nder the agreement became immediately \par\pard\plain\fs16\plain\cf1\f50\fs16\ql tled to receive a lump sum payment equal \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ary and bonus. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql loyment agreement, dated as of April 1, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql r Mr. Scanlon's employment as Global \par\pard\plain\fs16\plain\cf1\f50\fs16\ql r an initial term of two years. The \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ase annual salary of not less than \par\pard\plain\fs16\plain\cf1\f50\fs16\ql t less than $400,000. In addition, Mr. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql e a total of 3,600,000 (after adjusting \par\pard\plain\fs16\plain\cf1\f50\fs16\ql f Global Crossing common stock at a \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 35 per share. These options vest in 25% \par\pard\plain\fs16\plain\cf1\f50\fs16\ql of employment and on each of the first \par\pard\plain\fs16\plain\cf1\f50\fs16\ql n a "change in control" of Global \par\pard\plain\fs16\plain\cf1\f50\fs16\ql , all of these options will immediately \par\pard\plain\fs16\plain\cf1\f50\fs16\ql d to terminate the agreement and receive \par\pard\plain\fs16\plain\cf1\f50\fs16\ql his then annual base salary and bonus. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql such lump sum payment if he is actually \par\pard\plain\fs16\plain\cf1\f50\fs16\ql

$19.81 per share. These stock options on February 19, 1999 and on February Mr. Annunziata's employment. Under th was given the right, for a period of the agreement, to require the Company Company's common stock held by him as 4,000,000 stock options at a purchase Pursuant to the employment agreement, options to purchase an aggregate of 5 Crossing common stock, at a split-adj all of which became vested on Mr. Ann Mr. Annunziata's resignation as CEO o then unvested stock options granted u vested and Mr. Annunziata became enti to two times his then annual base sal Global Crossing entered into an emp 1998, with Jack Scanlon, providing fo Crossing's Chief Executive Officer fo employment agreement provided for a b $600,000 and a guaranteed bonus of no Scanlon was issued options to purchas for subsequent stock splits) shares o split-adjusted exercise price of $0.8 increments on Mr. Scanlon's first day three anniversaries of that date. Upo Crossing, as defined in the 1998 Plan vest, and Mr. Scanlon will be entitle a lump sum payment equal to two times Mr. Scanlon will also be entitled to or constructively discharged without

"cause" (as defined in the agreement). \par\pard\plain\fs16\plain\cf1\f50\fs16\ql hief Executive Officer of Global Crossing \par\pard\plain\fs16\plain\cf1\f50\fs16\ql man of Global Crossing. His employment \par\pard\plain\fs16\plain\cf1\f50\fs16\ql onal year at that time but otherwise was \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql was hired by Pacific Capital Group as \par\pard\plain\fs16\plain\cf1\f50\fs16\ql lso agreed among Pacific Capital Group, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql n addition to Mr. Casey's role as \par\pard\plain\fs16\plain\cf1\f50\fs16\ql r. Casey would also serve as Managing \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ction with such employment, Mr. Casey \par\pard\plain\fs16\plain\cf1\f50\fs16\ql shares of the Global Crossing common \par\pard\plain\fs16\plain\cf1\f50\fs16\ql per share. Such rights vest in 33% \par\pard\plain\fs16\plain\cf1\f50\fs16\ql sey's employment and on each of the first \par\pard\plain\fs16\plain\cf1\f50\fs16\ql day of Mr. Casey's employment. In \par\pard\plain\fs16\plain\cf1\f50\fs16\ql oyment, Global Crossing and Pacific \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ent whereby each entity would be \par\pard\plain\fs16\plain\cf1\f50\fs16\ql y's salary and long-term compensation \par\pard\plain\fs16\plain\cf1\f50\fs16\ql e spent by Mr. Casey on matters \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 80% of Mr. Casey's salary and long-term \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Crossing and 20% of such amounts was \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ubject to adjustment and re-allocation on \par\pard\plain\fs16\plain\cf1\f50\fs16\ql n recognition of the time spent by Mr. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql uch date and his expected ongoing \par\pard\plain\fs16\plain\cf1\f50\fs16\ql , the Global Crossing board of directors \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ent agreement, including the full amount \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ompensation, with Mr. Casey serving full \par\pard\plain\fs16\plain\cf1\f50\fs16\ql as Managing Director and Vice Chairman \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ntered into an employment agreement with \par\pard\plain\fs16\plain\cf1\f50\fs16\ql arpati's employment as Chief \par\pard\plain\fs16\plain\cf1\f50\fs16\ql

Mr. Scanlon voluntarily resigned as C in February 1999 to become Vice Chair agreement was extended for one additi left substantially unchanged. In September 1998, Mr. Thomas Casey its President. At such time, it was a Global Crossing and Mr. Casey that, i President of Pacific Capital Group, M Director of Global Crossing. In conne received economic rights to 2,000,000 stock at an effective price of $2.00 increments on the first day of Mr. Ca and second anniversaries of the first connection with Mr. Casey's dual empl Capital Group established an arrangem responsible for a portion of Mr. Case based upon the relative amount of tim pertaining to such entity. Initially, compensation was allocated to Global allocated to Pacific Capital Group, s an annual basis. On March 18, 1999, i Casey on Global Crossing matters to s responsibilities with Global Crossing elected to assume Mr. Casey's employm of Mr. Casey's salary and long-term c time in his role with Global Crossing of the board of directors. In December 1999, Global Crossing e John A. Scarpati providing for Mr. Sc Administrative Officer of Global Cros

sing for an initial term of three years. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql The employment agreement provides for a base salary of not less than $500,000 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql and a target annual bonus of 100% of his base annual salary. In addition, Mr. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Scarpati was provided a $2 million si gning bonus, subject to partial repayment \par\pard\plain\fs16\plain\cf1\f50\fs16\ql in certain circumstances, as well as the right to an $8 million payment in the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql event he remains employed by Global C rossing for three years or is actually or \par\pard\plain\fs16\plain\cf1\f50\fs16\ql constructively discharged without "ca use" (as defined in the agreement). In \par\pard\plain\fs16\plain\cf1\f50\fs16\ql connection with his employment, Mr. S carpati received stock options to \par\pard\plain\fs16\plain\cf1\f50\fs16\ql purchase \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 51 \par\pard\plain\fs16 \page \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql 1,000,000 shares of Global Cross ing common stock at an exercise price of $53 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql per share. These stock options vest i n 25% increments on the date Mr. Scarpati \par\pard\plain\fs16\plain\cf1\f50\fs16\ql commenced employment with the Company and on each of the first three \par\pard\plain\fs16\plain\cf1\f50\fs16\ql anniversaries thereof. Upon a "change in control" (as defined in the 1998 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Plan) or upon the actual or construct ive discharge of Mr. Scarpati without \par\pard\plain\fs16\plain\cf1\f50\fs16\ql "cause" (as defined in the agreement) , these options will immediately vest in \par\pard\plain\fs16\plain\cf1\f50\fs16\ql full, and Mr. Scarpati will be entitl ed to terminate the agreement and receive \par\pard\plain\fs16\plain\cf1\f50\fs16\ql a lump sum payment equal to the sum o f his then annual base salary and bonus. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Compensation of Outside Directors \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Each director who is not an employe e of Global Crossing receives cash \par\pard\plain\fs16\plain\cf1\f50\fs16\ql compensation of $2,500 for each meeti ng of the board of directors attended and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql $1,500 for each attended meeting of a committee of the board of which he or \par\pard\plain\fs16\plain\cf1\f50\fs16\ql she is a member. In addition, each no n-employee chairman of a board committee \par\pard\plain\fs16\plain\cf1\f50\fs16\ql also receives an annual retainer of $ 5,000. During 1999, each non-employee \par\pard\plain\fs16\plain\cf1\f50\fs16\ql director commencing service on the bo ard received options to purchase 120,000 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql shares of Global Crossing common stoc k at an exercise price equal to the fair \par\pard\plain\fs16\plain\cf1\f50\fs16\ql market value of Global Crossing commo n stock on the date of grant. Each such \par\pard\plain\fs16\plain\cf1\f50\fs16\ql option has a term of 10 years, became exercisable immediately with respect to \par\pard\plain\fs16\plain\cf1\f50\fs16\ql the first 30,000 shares, and will bec ome exercisable with respect to the

\par\pard\plain\fs16\plain\cf1\f50\fs16\ql remaining 90,000 shares in two equal installments on each of the first and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql second anniversaries of the date of g rant, in each case so long as such \par\pard\plain\fs16\plain\cf1\f50\fs16\ql director continues to be a director o f Global Crossing on such date. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Commencing in 2000, the board of dire ctors adjusted the level of initial stock \par\pard\plain\fs16\plain\cf1\f50\fs16\ql option grants such that new non-emplo yee directors now receive 40,000 option \par\pard\plain\fs16\plain\cf1\f50\fs16\ql shares (subject to adjustment in the event of a stock split) on the date on \par\pard\plain\fs16\plain\cf1\f50\fs16\ql which they commence board service. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Option Grants in Last Fiscal Year \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql The table below sets forth informat ion concerning options granted to certain \par\pard\plain\fs16\plain\cf1\f50\fs16\ql executive officers during the last fi scal year. \par\pard\plain\fs16 \par\pard\plain\fs16 \par\pard\plain\fs16\pard\plain\cf1\f50\fs14\ql Potential Realizable Value At \par\pard\plain\fs16\plain\cf1\f50\fs14\ql Assorted Annual Rates of Stock Pr ice \par\pard\plain\fs16\plain\cf1\f50\fs14\ql Individual Grants Appreciation for Option Term \par\pard\plain\fs16\plain\cf1\f50\fs14\ql ---------------------------------------------------------- -----------------------------------\par\pard\plain\fs16\plain\cf1\f50\fs14\ql Number of % of Total \par\pard\plain\fs16\plain\cf1\f50\fs14\ql Securities Options Market Price \par\pard\plain\fs16\plain\cf1\f50\fs14\ql Underlying G ranted to of Common \par\pard\plain\fs16\plain\cf1\f50\fs14\ql Options Em ployees in Exercise or Stock on Expiration \par\pard\plain\fs16\plain\cf1\f50\fs14\ql Name Granted Fi scal Year Base Price Grant Date Date 0% 5% 10% \par\pard\plain\fs16\plain\cf1\f50\fs14\ql ------------- ----------- ----------- ------------ ---------- ----------- ----------- ----------\par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs14\ql Gary Winnick........... --------\par\pard\plain\fs16\plain\cf1\f50\fs14\ql Chairman \par\pard\plain\fs16\plain\cf1\f50\fs14\ql Robert Annunziata...... 4,000,000 11.16% $19.813 $24.812 2/22/09 $19,996,000 $82,412,534 $178,171 ,752 \par\pard\plain\fs16\plain\cf1\f50\fs14\ql Former Chief Executive 500,000 1.40% 24.812 24.812 2/22/09 -7,802,067 19,771 ,969 \par\pard\plain\fs16\plain\cf1\f50\fs14\ql Officer 3,000,000 8.37% 45.000 45.000 12/3/09 -84,900,775 215,155 ,232 \par\pard\plain\fs16\plain\cf1\f50\fs14\ql Jack M. Scanlon........ --------

-\par\pard\plain\fs16\plain\cf1\f50\fs14\ql Vice Chairman, Asia \par\pard\plain\fs16\plain\cf1\f50\fs14\ql Global Crossing \par\pard\plain\fs16\plain\cf1\f50\fs14\ql Thomas J. Casey........ 300,000 0.84% 61.375 61.375 5/16/09 -11,579,522 29,344 ,783 \par\pard\plain\fs16\plain\cf1\f50\fs14\ql Vice Chairman 300,000 0.84% 25.000 25.000 9/24/09 -4,716,710 11,953 ,068 \par\pard\plain\fs16\plain\cf1\f50\fs14\ql 1,000,000 2.79% 45.000 45.000 12/3/09 -28,300,258 71,718 ,411 \par\pard\plain\fs16\plain\cf1\f50\fs14\ql John A. Scarpati....... 1,000,000 2.79% $53.000 $45.000 12/3/09 $(8,000,000) $20,300,258 $ 63,718 ,411 \par\pard\plain\fs16\plain\cf1\f50\fs14\ql Chief Administrative \par\pard\plain\fs16\plain\cf1\f50\fs14\ql Officer \par\pard\plain\fs16\plain\cf1\f50\fs14\ql William B. Carter...... --------\par\pard\plain\fs16\plain\cf1\f50\fs14\ql President, Global \par\pard\plain\fs16\plain\cf1\f50\fs14\ql Crossing Development \par\pard\plain\fs16\plain\cf1\f50\fs14\ql Co.; Chief Executive \par\pard\plain\fs16\plain\cf1\f50\fs14\ql Officer, Global \par\pard\plain\fs16\plain\cf1\f50\fs14\ql Marine Systems \par\pard\plain\fs16 \par\pard\plain\fs16 \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql 52 \par\pard\plain\fs16 \page \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql Aggregated Option Exercises in L ast Fiscal Year and Fiscal Year-End Option \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Values \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql The table below sets forth informat ion concerning exercises of stock options \par\pard\plain\fs16\plain\cf1\f50\fs16\ql by certain executive officers during the last fiscal year and the fiscal year\par\pard\plain\fs16\plain\cf1\f50\fs16\ql end value of such executive officers' unexercised options. \par\pard\plain\fs16 \par\pard\plain\fs16 \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql Number of Securities \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Underlying Unexercised Value of Unexercised \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Options In-The-Money Options(2) \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ------------------------- ------------------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql Shares Acqui red Value \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Name On Exercis e Realized(1) Exercisable Unexercisable Exercisable Unexercisable \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ----------------- ----------- ----------- ------------- ----------- ------------\par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Gary Winnick............ --- 1,200,000 600,000 $58,998,000 $ 29,499,000 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Chairman \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Robert Annunziata....... 81,576

$ 2,243,340 1,500,000 6,000,000 42,781,000 105,561,000 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Former Chief Executive \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Officer \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Jack M. Scanlon......... 345,680 12,525,410 1,334,560 1,800,000 65,613,642 88,497,000 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Vice Chairman, Asia \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Global Crossing \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Thomas J. Casey......... --- 1,006,666 1,926,666 33,699,968 42,799,968 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Vice Chairman \par\pard\plain\fs16\plain\cf1\f50\fs16\ql John A. Scarpati........ --333,334 666,666 --\par\pard\plain\fs16\plain\cf1\f50\fs16\ql Chief Administrative \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Officer \par\pard\plain\fs16\plain\cf1\f50\fs16\ql William B. Carter....... 174,144 4,860,345 1,706,096 1,000,000 83,880,210 49,165,000 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql President, Global \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Crossing Development \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Co., Chief Executive \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Office Global Marine \par\pard\plain\fs16\par\pard\plain\cf1\f50\fs16\ql -------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql (1) Amounts indicated are based upon the difference between the exercise price \par\pard\plain\fs16\plain\cf1\f50\fs16\ql and the closing market price on t he exercise date. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (2) Amounts indicated are based upon the difference between the exercise price \par\pard\plain\fs16\plain\cf1\f50\fs16\ql and the closing market price per share of the common stock of $50.00 on \par\pard\plain\fs16\plain\cf1\f50\fs16\ql December 31, 1999. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Compensation Committee Interlocks and Insider Participation \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql The Compensation Committee of the G lobal Crossing board of directors \par\pard\plain\fs16\plain\cf1\f50\fs16\ql consists of Messrs. McDonald, Kent an d McCorkindale, none of whom had any \par\pard\plain\fs16\plain\cf1\f50\fs16\ql relationships with Global Crossing re quiring disclosure under Securities and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Exchange Commission rules. However, p rior to November 4, 1999, the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Compensation Committee consisted of L odwrick M. Cook, Michael R. Steed and Jay \par\pard\plain\fs16\plain\cf1\f50\fs16\ql R. Levine (an employee of an affiliat e of Canadian Imperial Bank of Commerce), \par\pard\plain\fs16\plain\cf1\f50\fs16\ql who were involved in certain transact ions described in Item 13 below. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 53 \par\pard\plain\fs16 \page \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql Comparison of Cumulative Total R eturns \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql The graph below compares the cumula tive total shareholder return on Global \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Crossing common stock for the period from August 14, 1998, the initial date of

\par\pard\plain\fs16\plain\cf1\f50\fs16\ql ck, to December 31, 1999 with the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql rd & Poor's 500 Stock Index and the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql riod. The graph assumes $100 invested on \par\pard\plain\fs16\plain\cf1\f50\fs16\ql mmon stock and $100 invested on such date \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Stock Index and the NASDAQ Telecom Index, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql xy statement provided to shareholders in \par\pard\plain\fs16\plain\cf1\f50\fs16\ql al Meeting of Shareholders, we used a \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ders comprised of Qwest, Level 3 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql r Network, Inc., IXC Communications, Inc. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql We have decided to replace the Old Peer \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ndex because we believe the latter index \par\pard\plain\fs16\plain\cf1\f50\fs16\ql holders and more representative of the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql n accordance with SEC rules, the graph \par\pard\plain\fs16\plain\cf1\f50\fs16\ql total shareholder return of the Old Peer \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Performance \par\pard\plain\fs16\plain\cf1\f50\fs16\ql E GRAPH] \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 0 NASDAQ \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ex Telecom Index Old Peer Group \par\pard\plain\fs16\plain\cf1\f50\fs16\ql --------------------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql 100 100 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 91.16 83.51 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 125.6 124.49 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 155.04 178.48 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 164.27 175.77 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 156.67 151.07 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 254.61 230.11 \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql t is worth: \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16\plain\cf1\f50\fs16\ql

trading of Global Crossing common sto cumulative total return of the Standa NASDAQ Telecom Index over the same pe August 14, 1998 in Global Crossing co in each of the Standard & Poor's 500 with dividends reinvested. In the pro connection with our 1999 Annual Gener peer group of fiber optic cable provi Communications, Inc., Metromedia Fibe and Equant NV (the "Old Peer Group"). Group index with the NASDAQ Telecom I to be readily accessible to our Share industries in which we now compete. I below also illustrates the cumulative Group over the relevant period. Stock [LIN S&P 50 GBLX -----08/14/1998 09/30/1998 12/31/1998 03/31/1999 06/30/1999 09/30/1999 12/31/1999 100 81.86 176.96 362.75 334.31 207.84 392.16 Stock Ind --------100 95.7 115.67 121.04 129.17 120.7 138.25

At 12/31/99, a $100 initial investmen GBLX S&P 500 Stock Index $392.16 $138.25

\par\pard\plain\fs16\plain\cf1\f50\fs16\ql NASDAQ Telecom Index $254.61 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Old Peer Group $230.11 \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 54 \par\pard\plain\fs16 \page \par\pard\plain\fs16{\*\bkmkstart item_1_3_28}{\*\bkmkend item_1_3_28}\pard\plai n\cf1\f50\fs16\ql ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND M ANAGEMENT \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql The following table sets forth, as of March 3, 2000, certain information \par\pard\plain\fs16\plain\cf1\f50\fs16\ql regarding the beneficial ownership of our common stock by (i) each person or \par\pard\plain\fs16\plain\cf1\f50\fs16\ql entity who is known by us to own bene ficially 5% or more of our voting common \par\pard\plain\fs16\plain\cf1\f50\fs16\ql stock, (ii) each of our directors and executive officers and (iii) all of our \par\pard\plain\fs16\plain\cf1\f50\fs16\ql directors and executive officers as a group. To our knowledge, each such \par\pard\plain\fs16\plain\cf1\f50\fs16\ql shareholder has sole voting and inves tment power with respect to the shares \par\pard\plain\fs16\plain\cf1\f50\fs16\ql shown, unless otherwise noted. For pu rposes of this table, an individual is \par\pard\plain\fs16\plain\cf1\f50\fs16\ql deemed to have sole beneficial owners hip of securities owned jointly with such \par\pard\plain\fs16\plain\cf1\f50\fs16\ql individual's spouse. Amounts appearin g in the table below include (i) all \par\pard\plain\fs16\plain\cf1\f50\fs16\ql shares of common stock outstanding as of March 3, 2000, (ii) all shares of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql common stock issuable upon the exerci se of options within 60 days of March 3, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 2000 and (iii) all shares of common s tock issuable upon the exercise of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql warrants within 60 days of March 3, 2 000. The warrants designated below as \par\pard\plain\fs16\plain\cf1\f50\fs16\ql "New PCG Warrants" and "GCL Warrants" each represent the right to immediately \par\pard\plain\fs16\plain\cf1\f50\fs16\ql purchase shares of GCL common stock a t an exercise price of $9.50 per share. \par\pard\plain\fs16 \par\pard\plain\fs16 \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql Beneficial Ownership of Common S tock \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ----------------------------------------------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql Shares Shares \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Subject to Subject Shares \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Number of New PCG to GCL Subject to Percentage \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Shares(1) Warrants Warrants Options(2) of Class \par\pard\plain\fs16\plain\cf1\f50\fs16\ql -------------------- --------- ---------- ---------\par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Pacific Capital Group, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Inc.(3)................ 85,861,172

6,050,004 2,515,788 0 11.98% \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 0 0 240,000 9.69% \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 6,050,004 2,515,788 1,800,000 12.36% \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 950,002 0 362,240 * \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 0 0 170,000 * \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 0 0 1,006,666 * \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 1,450,002 367,666 900,000 1.68% \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 0 0 1,640,000 * \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 0 0 708,668 * \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 0 0 0 * \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 0 0 709,606 * \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 1,825,002 663,456 900,000 2.80% \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 1,825,002 610,266 900,000 2.60% \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 0 0 2,234,560 * \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 0 0 333,334 * \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 0 0 583,685 * \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 0 0 1,706,096 * \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 0 0 530,400 * \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 0 0 50,000 * \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 0 0 5,438,424 * \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 0 0 128,533 1.81% \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 0 0 75,000 * \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 0 0 8,898,889 1.13% \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 0 0 42,300 * \par\pard\plain\fs16\plain\cf1\f50\fs16\ql

360 North Crescent Drive Beverly Hills, California 90210 Canadian Imperial Bank of Commerce(4)......... 161 Bay Street, 8th Floor--BCE Place P.P. Box 500 M5J258, Toronto, Canada Gary Winnick(5)......... Lodwrick M. Cook........ Leo J. Hindery, Jr...... Thomas J. Casey(6)...... Abbott L. Brown(7)...... Joseph Clayton.......... Dan J. Cohrs............ John Comparin........... James C. Gorton......... David L. Lee(8)......... Barry Porter............ John M. Scanlon......... John A. Scarpati........ Robert Sheh............. William B. Carter....... Wallace S. Dawson....... Edward Mulligan......... Robert Annunziata....... Jay R. Bloom(9)......... William E. Conway, Jr.(10)................ Canning Fok Kin-ning.... Eric Hippeau............ Dean C. Kehler(9)....... 87,301,383 3,443,929 0 630,412 10,386,029 542,396 10,000 5,000 15,000 18,559,028 17,063,809 363,748 900 0 239,520 108,958 6,012 0 13,993,966 2,247,640 0 35,895 14,848,648 75,297,827

0 0 128,533 1.92% \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Geoffrey J.W. Kent...... 0 0 0 75,000 * \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Douglas McCorkindale.... 38,855 0 0 87,400 * \par\pard\plain\fs16\plain\cf1\f50\fs16\ql James McDonald.......... 5,351 0 0 40,932 * \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Bruce Raben............. 0 0 0 120,000 * \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Michael R. Steed........ 0 0 0 120,000 * \par\pard\plain\fs16\plain\cf1\f50\fs16\ql All Directors and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Executive Officers as a \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Group.................. 158,157,917 12,100,012 4,157,176 29,690,266 24.72% \par\pard\plain\fs16\par\pard\plain\cf1\f50\fs16\ql -------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql * Percentage of shares beneficially owned does not exceed one percent. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (1) As of March 3, 2000, 779,714,47 0 shares of common stock were issued and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql outstanding. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (2) Represents stock options issued under stock option plans of Global \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Crossing, except that Mr. Fok's amount includes 8,888,889 shares of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql common stock issuable upon conv ersion of the 400,000 shares of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql convertible preferred stock iss ued to Hutchison Whampoa in connection \par\pard\plain\fs16\plain\cf1\f50\fs16\ql with the formation of the Hutch ison Global Crossing joint venture. As \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Managing Director of Hutchison Whampoa, Mr. Fok may be deemed to share \par\pard\plain\fs16\plain\cf1\f50\fs16\ql investment and voting control o ver these shares. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 55 \par\pard\plain\fs16 \page \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql (3) Includes 70,107,766 shares of common stock and common stock warrants \par\pard\plain\fs16\plain\cf1\f50\fs16\ql owned or managed by GKW Unified Holdings, a company formed for the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql benefit of Gary Winnick and mem bers of his family and managed by Pacific \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Capital Group, which thereby sh ares investment and voting power over \par\pard\plain\fs16\plain\cf1\f50\fs16\ql such shares. Also includes 25,1 33 shares of common stock owned by Casey \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Pacific Holdings LLC for the be nefit of Thomas J. Casey and managed by \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Pacific Capital Group, which th ereby shares investment and voting power \par\pard\plain\fs16\plain\cf1\f50\fs16\ql over such shares. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (4) These share amounts, which are effective as of March 9, 2000, include \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 11,453,529 shares held by certa in affiliates of Canadian Imperial Bank \par\pard\plain\fs16\plain\cf1\f50\fs16\ql of Commerce in such a manner th

at CIBC shares investment power over such \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ave been assigned to CIBC by CIBC \par\pard\plain\fs16\plain\cf1\f50\fs16\ql on the GCL board of directors. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql on stock beneficially owned by Pacific \par\pard\plain\fs16\plain\cf1\f50\fs16\ql lled by Mr. Winnick, and (b) 1,440,211 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ly Foundation, a non-profit organization \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Mr. Winnick shares investment and voting \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16\plain\cf1\f50\fs16\ql on stock owned by Casey Global Holdings \par\pard\plain\fs16\plain\cf1\f50\fs16\ql stock owned by Casey Pacific Holdings \par\pard\plain\fs16\plain\cf1\f50\fs16\ql d by GCL and Pacific Capital Group, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql that Mr. Casey shares investment and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ommon stock held by the Ridgestone \par\pard\plain\fs16\plain\cf1\f50\fs16\ql zation of which Mr. Brown is trustee and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ock held by the Abbott and Linda Brown \par\pard\plain\fs16\plain\cf1\f50\fs16\ql organization of which Mr. Brown is \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16\plain\cf1\f50\fs16\ql es of common stock and 513,156 shares of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql exercise of warrants owned by San Pasqual \par\pard\plain\fs16\plain\cf1\f50\fs16\ql r. Lee and his family are the sole \par\pard\plain\fs16\plain\cf1\f50\fs16\ql tfolio securities Mr. Lee shares \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (b) all 3,988,242 shares of common stock \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ock issuable upon the exercise of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Ellen Lee Family Trust, of which Mr. Lee \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ty shares investment and voting power \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16\plain\cf1\f50\fs16\ql held by certain affiliates of Canadian \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ch a manner that Messrs. Bloom and Kehler \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ng power over such shares and (b) 218,434 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ment Fund, LLC, for whose investment \par\pard\plain\fs16\plain\cf1\f50\fs16\ql r serve as managing directors. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql

shares. The indicated options h employees who previously served (5) Includes (a) all shares of comm Capital Group, a company contro shares held by The Winnick Fami over whose portfolio securities power. (6) Includes 605,279 shares of comm LLC and 25,133 shares of common LLC, which companies are manage respectively, in such a manner voting power over such shares. (7) Includes (a) 75,350 shares of c Foundation, a non-profit organi (b) 150,000 shares of common st Family Foundation, a non-profit trustee. (8) Includes (a) all 9,900,822 shar common stock issuable upon the Corp., a corporation of which M shareholders and over whose por investment and voting power and and 150,300 shares of common st warrants owned by the David and is a trustee and in such capaci over such shares. (9) Includes (a) 11,453,529 shares Imperial Bank of Commerce in su have shared investment and voti shares held by Caravelle Invest advisor Messrs. Bloom and Kehle (10) Includes 2,239,640 shares of co

mmon stock beneficially owned by the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Carlyle Group, of which Mr. Con way is managing director and in such \par\pard\plain\fs16\plain\cf1\f50\fs16\ql capacity shares voting and inve stment control over such shares. \par\pard\plain\fs16 \par\pard\plain\fs16{\*\bkmkstart item_1_3_29}{\*\bkmkend item_1_3_29}\plain\cf1 \f50\fs16\ql ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql During 1999, we entered into the tr ansactions described below with certain \par\pard\plain\fs16\plain\cf1\f50\fs16\ql of our directors, executive officers and affiliates. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Transactions with Pacific Capital Gro up and its Affiliates \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Prior to 1999, Global Crossing ente red into certain transactions with \par\pard\plain\fs16\plain\cf1\f50\fs16\ql affiliates of Pacific Capital Group ( "PCG"), including the acquisition of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql development rights to certain of the Company's fiber optic cable systems. PCG \par\pard\plain\fs16\plain\cf1\f50\fs16\ql is controlled by Gary Winnick, Chairm an of the Board of the Company, and some \par\pard\plain\fs16\plain\cf1\f50\fs16\ql other officers and directors of Globa l Crossing either currently are or at one \par\pard\plain\fs16\plain\cf1\f50\fs16\ql time were affiliated with PCG, includ ing Messrs. Cook, Casey, Lee, Porter and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Brown. During 1999, Global Crossing s ubleased from PCG two suites in an office \par\pard\plain\fs16\plain\cf1\f50\fs16\ql building in Beverly Hills, California for payments aggregating approximately \par\pard\plain\fs16\plain\cf1\f50\fs16\ql $287,000 over the year. In October 19 99, Global Crossing consolidated its \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Beverly Hills offices into approximat ely 87,000 square feet of office space at \par\pard\plain\fs16\plain\cf1\f50\fs16\ql its present headquarters building at 360 North Crescent Drive. Global Crossing \par\pard\plain\fs16\plain\cf1\f50\fs16\ql leases this space from North Crescent Realty V, LLC, which is managed by and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql affiliated with PCG, for an aggregate monthly cost of approximately $400,000. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql North Crescent Realty V, LLC paid app roximately $7.5 million to improve the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 360 North Crescent property to meet G lobal Crossing's specifications and was \par\pard\plain\fs16\plain\cf1\f50\fs16\ql reimbursed approximately $3.2 million of this amount by Global Crossing. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Global Crossing engaged an independen t real estate consultant to review the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql terms of Global Crossing's occupancy of the 360 North Crescent building, which \par\pard\plain\fs16\plain\cf1\f50\fs16\ql terms were found by the consultant to be consistent with market terms and the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql product of an arm's length negotiatio n. Global Crossing \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 56

\par\pard\plain\fs16 \page \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql subleases approximately 12,000 s quare feet of the building to PCG for an \par\pard\plain\fs16\plain\cf1\f50\fs16\ql aggregate monthly cost of approximate ly $53,000. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql PCG has fractional ownership intere sts in respect of four aircraft used by \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Global Crossing during 1999. Global C rossing reimburses PCG for PCG's cost of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql maintaining these ownership interests such that PCG realizes no profit from \par\pard\plain\fs16\plain\cf1\f50\fs16\ql the relationship. During 1999, PCG bi lled Global Crossing approximately $2 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql million in aggregate under this arran gement. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql In March 2000, Global Crossing inte nds to enter into an approximately ten \par\pard\plain\fs16\plain\cf1\f50\fs16\ql year lease of an aircraft that is cur rently owned by WINCO Aviation, a company \par\pard\plain\fs16\plain\cf1\f50\fs16\ql controlled by Gary Winnick (through P CG) and Lodwrick Cook. It is anticipated \par\pard\plain\fs16\plain\cf1\f50\fs16\ql that a commercial equipment financing company will purchase the aircraft from \par\pard\plain\fs16\plain\cf1\f50\fs16\ql WINCO Aviation and then lease the air craft to Global Crossing on standard \par\pard\plain\fs16\plain\cf1\f50\fs16\ql commercial terms. The purchase price of the aircraft will be approximately \par\pard\plain\fs16\plain\cf1\f50\fs16\ql $12.5 million, which is the amount WI NCO Aviation paid for the aircraft, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql before transactions costs, when WINCO Aviation first acquired the aircraft in \par\pard\plain\fs16\plain\cf1\f50\fs16\ql August 1999. As supported by two inde pendent appraisals obtained by Global \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Crossing, the fair market value of th e aircraft is in excess of the proposed \par\pard\plain\fs16\plain\cf1\f50\fs16\ql purchase price. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Relationship to Crescent Wireless Ltd . \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql In January 2000, Crescent Wireless Ltd. ("Crescent Wireless") was formed for \par\pard\plain\fs16\plain\cf1\f50\fs16\ql the purpose of participating in the s pectrum auctions being held in the United \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Kingdom to provide "third generation" wireless telecommunications services. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Crescent Wireless is controlled by Ga ry Winnick, David Lee and Barry Porter, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql each a director and executive officer of the Company. In connection with the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql performance by Crescent Wireless of i ts business operations, the Company has \par\pard\plain\fs16\plain\cf1\f50\fs16\ql made available to Crescent Wireless o n a consultancy basis certain of the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Company's personnel. In consideration for these services, the shareholders of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Crescent Wireless have granted to the

Company an option to purchase any or all \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ireless owned by those shareholders. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql c. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql n agreement with NextWave Telecom Inc. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql minority investment in NextWave through \par\pard\plain\fs16\plain\cf1\f50\fs16\ql rred stock, subject to certain conditions \par\pard\plain\fs16\plain\cf1\f50\fs16\ql PCS licenses. NextWave's goal is to \par\pard\plain\fs16\plain\cf1\f50\fs16\ql lecommunications network specifically \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ireless services. We also entered into a \par\pard\plain\fs16\plain\cf1\f50\fs16\ql to which we are to be the preferred \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ackbone, web-hosting, and other \par\pard\plain\fs16\plain\cf1\f50\fs16\ql PCG and CIBC both also committed to \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ible preferred stock, subject to \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ing to the status of NextWave's PCS \par\pard\plain\fs16\plain\cf1\f50\fs16\ql nditions relating to NextWave's PCS \par\pard\plain\fs16\plain\cf1\f50\fs16\ql none of Global Crossing, PCG or CIBC has \par\pard\plain\fs16\plain\cf1\f50\fs16\ql extWave. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ank of Commerce and its affiliates \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql of Commerce and its affiliates ("CIBC") \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ctions with Global Crossing. In \par\pard\plain\fs16\plain\cf1\f50\fs16\ql anger for the $600 million ten-day demand \par\pard\plain\fs16\plain\cf1\f50\fs16\ql in July, (2) acted as an arranger for the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql lity entered into by Global Crossing \par\pard\plain\fs16\plain\cf1\f50\fs16\ql tial purchaser of the $2 billion \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ed senior notes issued by Global Crossing \par\pard\plain\fs16\plain\cf1\f50\fs16\ql initial purchaser of Global Crossing \par\pard\plain\fs16\plain\cf1\f50\fs16\ql tion preference 7% cumulative convertible \par\pard\plain\fs16\plain\cf1\f50\fs16\ql uring 1999, Global Crossing paid CIBC \par\pard\plain\fs16\plain\cf1\f50\fs16\ql

of the equity ownership of Crescent W Relationship with NextWave Telecom In In December 1999, we entered into a pursuant to which we agreed to make a the purchase of its convertible prefe relating to the status of NextWave's deploy a state-of-the-art wireless te designed to provide next-generation w Strategic Services Agreement pursuant provider of backhaul, long distance b communications services to NextWave. purchase shares of NextWave's convert essentially the same conditions relat licenses. As of March 3, 2000, the co licenses have not been satisfied, and consummated an equity investment in N Transactions with Canadian Imperial B During 1999, Canadian Imperial Bank entered into certain financing transa particular, CIBC: (1) acted as an arr note issued by Global Marine Systems $3 billion senior secured credit faci Holdings Ltd. in July, (3) was an ini aggregate principal amount of unsecur Holdings in November, and (4) was an Ltd.'s $650 million aggregate liquida preferred stock issued in December. D approximately $5.6 million in fees in

connection with these transactions. CIBC \par\pard\plain\fs16\plain\cf1\f50\fs16\ql has a substantial beneficial ownershi p interest in Global Crossing, and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Messrs. Bloom, Kehler and Raben, dire ctors of Global Crossing, are employees \par\pard\plain\fs16\plain\cf1\f50\fs16\ql of an affiliate of CIBC. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 57 \par\pard\plain\fs16 \page \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql Relationship to Ziff-Davis Inc. and Affiliates \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Eric Hippeau, a director of Global Crossing, is the chairman and chief \par\pard\plain\fs16\plain\cf1\f50\fs16\ql executive officer of Ziff-Davis Inc., a majority of the common stock of which \par\pard\plain\fs16\plain\cf1\f50\fs16\ql is beneficially owned by Softbank Cor p. Softbank is a party to the Asia Global \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Crossing joint venture established to provide advanced network-based \par\pard\plain\fs16\plain\cf1\f50\fs16\ql telecommunications services to busine sses and consumers throughout Asia. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Global Crossing, which is responsible for the management and operation of the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql network, contributed to the venture i ts 57.75% share of the Pacific Crossing \par\pard\plain\fs16\plain\cf1\f50\fs16\ql cable system and its development righ ts in East Asia Crossing. Softbank and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Microsoft each contributed $175 milli on in cash to Asia Global Crossing and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql also committed to make a total of at least $200 million in Global Crossing \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Network capacity purchases over a thr ee-year period, expected to be utilized \par\pard\plain\fs16\plain\cf1\f50\fs16\ql primarily on the Pacific Crossing sys tem and East Asia Crossing. Softbank and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Microsoft also agreed to use Asia Glo bal Crossing's network in the region. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Global Crossing currently owns 93% of Asia Global Crossing, with Softbank and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Microsoft each owning 3.5%. When the fair market value of Asia Global Crossing \par\pard\plain\fs16\plain\cf1\f50\fs16\ql is determined to exceed $5 billion, t he ownership interest of Softbank and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Microsoft will increase to a maximum of 19% each at a valuation of $7.5 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql billion and above. Mr. Hippeau is Sof tbank's representative on the Asia Global \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Crossing board of directors. In addit ion, Ziff-Davis is one of the largest \par\pard\plain\fs16\plain\cf1\f50\fs16\ql web-hosting customers of our GlobalCe nter subsidiary. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Relationship to Hutchison Whampoa Lim ited \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Canning Fok Kin-ning, managing dire ctor of Hutchison Whampoa Limited

\par\pard\plain\fs16\plain\cf1\f50\fs16\ql a director of Global Crossing. In \par\pard\plain\fs16\plain\cf1\f50\fs16\ql rossing entered into an agreement to form \par\pard\plain\fs16\plain\cf1\f50\fs16\ql -line telecommunications and Internet \par\pard\plain\fs16\plain\cf1\f50\fs16\ql l Administrative Region, China. The joint \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ompleted in January 2000, combines \par\pard\plain\fs16\plain\cf1\f50\fs16\ql building-to-building fixed-line fiber \par\pard\plain\fs16\plain\cf1\f50\fs16\ql certain Internet-related assets in Hong \par\pard\plain\fs16\plain\cf1\f50\fs16\ql onal fiber optic broadband cable capacity \par\pard\plain\fs16\plain\cf1\f50\fs16\ql s and data services. For its 50% share, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql $400 million in Global Crossing \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ally, Global Crossing committed to \par\pard\plain\fs16\plain\cf1\f50\fs16\ql national telecommunications capacity \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ork and data center related capabilities \par\pard\plain\fs16\plain\cf1\f50\fs16\ql lion, as well as $50 million in cash. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql holders \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ldings (an affiliate of Gary Winnick and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql sing and some of our other shareholders, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql rectors and their affiliates, entered \par\pard\plain\fs16\plain\cf1\f50\fs16\ql egistration Rights Agreement. Under the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ng has been granted a right of first \par\pard\plain\fs16\plain\cf1\f50\fs16\ql s by these shareholders during the first \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ur initial public offering on August \par\pard\plain\fs16\plain\cf1\f50\fs16\ql exceptions in the Stockholders Agreement, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql s, which are referred to as tag-along \par\pard\plain\fs16\plain\cf1\f50\fs16\ql to participate, on the same terms and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql es by any other of these shareholders as \par\pard\plain\fs16\plain\cf1\f50\fs16\ql s and CIBC and their affiliates and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql to participate in any transaction \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 5% or more of our outstanding securities;

("Hutchison"), was recently appointed November 1999, Hutchison and Global C a 50/50 joint venture to pursue fixed opportunities in the Hong Kong Specia venture, the formation of which was c Hutchison's existing territory-wide, optic telecommunications network and Kong with Global Crossing's internati and web hosting, Internet application Global Crossing provided to Hutchison convertible preferred stock. Addition contribute to the joint venture inter rights on its global fiber optic netw which together are valued at $350 mil Agreements with Global Crossing Stock In August 1998, PCG, GKW Unified Ho PCG), affiliates of CIBC, Global Cros including some of our officers and di into a Stockholders Agreement and a R Stockholders Agreement, Global Crossi refusal on specified private transfer two years after the consummation of o 14,1998. In addition, subject to the some of these shareholders have right rights, permitting these shareholders conditions, in some transfers of shar follows: (1) PCG, GKW Unified Holding permitted transferees have the right initiated by any of them to transfer

\par\pard\plain\fs16\plain\cf1\f50\fs16\ql and (2) PCG, GKW Unified Holdings, CI BC and their affiliates and permitted \par\pard\plain\fs16\plain\cf1\f50\fs16\ql transferees have the right to partici pate in any transaction initiated by any \par\pard\plain\fs16\plain\cf1\f50\fs16\ql of them to transfer any of our securi ties if that transaction would result in \par\pard\plain\fs16\plain\cf1\f50\fs16\ql a change of control of Global Crossin g. Under the Registration Rights \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Agreement, our shareholders who are p arties to that agreement and a number of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql their transferees have demand and pig gyback registration rights and will \par\pard\plain\fs16\plain\cf1\f50\fs16\ql receive indemnification and, in some circumstances, reimbursement for expenses \par\pard\plain\fs16\plain\cf1\f50\fs16\ql from us in connection with an applica ble registration. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Principal shareholders of Global Cr ossing representing at that time over a \par\pard\plain\fs16\plain\cf1\f50\fs16\ql majority of the voting power of our c ommon stock entered into a Voting \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Agreement with Frontier Corporation i n March 1999 in connection with the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Frontier merger. These Global Crossin g shareholders reaffirmed their voting \par\pard\plain\fs16\plain\cf1\f50\fs16\ql obligations under the Voting \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 58 \par\pard\plain\fs16 \page \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql Agreement in connection with sub sequent amendments made to the merger \par\pard\plain\fs16\plain\cf1\f50\fs16\ql agreement during 1999. Pursuant to th e Second Reaffirmation of Voting \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Agreement and Share Transfer Restrict ion Agreement dated September 2, 1999, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql the Global Crossing shareholders that are parties to the Voting Agreement also \par\pard\plain\fs16\plain\cf1\f50\fs16\ql agreed, from September 2, 1999 until March 28, 2000, not to transfer record or \par\pard\plain\fs16\plain\cf1\f50\fs16\ql beneficial ownership of any shares of Global Crossing common stock held by \par\pard\plain\fs16\plain\cf1\f50\fs16\ql such shareholders, other than transfe rs to charities, transfers made with the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql consent of the Company and other limi ted exceptions, and to work in good faith \par\pard\plain\fs16\plain\cf1\f50\fs16\ql toward implementing a program with th e purpose that, if the Global Crossing \par\pard\plain\fs16\plain\cf1\f50\fs16\ql shareholders that are parties to the Voting Agreement wish to sell or transfer \par\pard\plain\fs16\plain\cf1\f50\fs16\ql their shares after March 28, 2000, th ese sales or transfers would be completed \par\pard\plain\fs16\plain\cf1\f50\fs16\ql in a manner that would provide for an orderly trading market for the shares of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Global Crossing common stock. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Also on September 2, 1999, fourteen of our executive officers and three \par\pard\plain\fs16\plain\cf1\f50\fs16\ql executive officers of Frontier entere

d into a Share Transfer Restriction \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Agreement with Global Crossing. Under this agreement, the Global Crossing \par\pard\plain\fs16\plain\cf1\f50\fs16\ql executive officers agreed not to sell or transfer shares of our common stock, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql and the Frontier executive officers a greed not to sell or transfer shares of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Frontier common stock and the shares of Global Crossing common stock they \par\pard\plain\fs16\plain\cf1\f50\fs16\ql would receive in exchange for their F rontier common stock in the merger, until \par\pard\plain\fs16\plain\cf1\f50\fs16\ql March 28, 2000, subject in each case to substantially the same exceptions as \par\pard\plain\fs16\plain\cf1\f50\fs16\ql are applicable to the Second Reaffirm ation of Voting Agreement and Share \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Transfer Restriction Agreement descri bed in the immediately preceding \par\pard\plain\fs16\plain\cf1\f50\fs16\ql paragraph. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Loan to Executive Officer \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql In May 1998, Dan J. Cohrs, an execu tive officer of the Company, received an \par\pard\plain\fs16\plain\cf1\f50\fs16\ql interest-free relocation loan in the aggregate principal amount of $250,000. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql This loan is repayable in full on May 18, 2001. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 59 \par\pard\plain\fs16 \page \par\pard\plain\fs16{\*\bkmkstart part_1_2_19}{\*\bkmkend part_1_2_19}\pard\plai n\cf1\f50\fs16\ql PART IV \par\pard\plain\fs16 \par\pard\plain\fs16{\*\bkmkstart item_1_3_30}{\*\bkmkend item_1_3_30}\plain\cf1 \f50\fs16\ql ITEM 14. EXHIBITS, FINANCIAL STATEMENTS SCHEDULES, AND REPORTS ON F ORM 10-K \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (a) List of documents filed as part of this report: \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 1. Financial Statements-Included in Part II of this Form 10-K: \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Consolidated Balance Sheets as of December 31, 1999 and 1998 \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Consolidated Statements of Oper ations for the years ended December \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 31, 1999 and 1998 and period f rom March 19, 1997 (Date of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Inception) to December 31, 199 7. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Consolidated Statements of Shar eholders' Equity for the years ended \par\pard\plain\fs16\plain\cf1\f50\fs16\ql December 31, 1999 and 1998 and period from March 19, 1997 (Date of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Inception) to December 31, 199

7. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Consolidated Statements of Cash Flows for the years ended December \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 31, 1999 and 1998 and period f rom March 19, 1997 (Date of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Inception) to December 31, 199 7. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Consolidated Statements of Comp rehensive Income for the years ended \par\pard\plain\fs16\plain\cf1\f50\fs16\ql December 31, 1999 and 1998 and period from March 19, 1997 (Date of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Inception) to December 31, 199 7. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Notes to Consolidated Financial Statements \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 2. Financial Statement Schedules--I ncluded in Part II of this Form 10-K: \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Schedule II--Valuation and Qual ifying Accounts \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 3. Exhibit Index: \par\pard\plain\fs16 \par\pard\plain\fs16 \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql Exhibit \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Number Exhibit \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ------------\par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 2.1 Agreement and Plan of Merger , dated as of March 16, 1999 (the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql "Frontier Merger Agreement") , among the Registrant, Frontier \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Corporation and GCF Acquisit ion Corp. (incorporated by reference to \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Exhibit 2 to the Registrant' s Current Report on Form 8-K filed on \par\pard\plain\fs16\plain\cf1\f50\fs16\ql March 19, 1999 (the "March 1 9, 1999 8-K")). \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 2.2 Consent and Amendment No. 1 to the Frontier Merger Agreement, dated as \par\pard\plain\fs16\plain\cf1\f50\fs16\ql of May 16, 1999, among the R egistrant, GCF Acquisition Corp. and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Frontier Corporation (incorp orated by reference to Exhibit 2 to the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Registrant's Current Report on Form 8-K filed on May 18, 1999 (the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql "May 18, 1999 8-K")). \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 2.3 Amendment No. 2 to the Front ier Merger Agreement, dated as of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql September 2, 1999, among the Registrant, GCF Acquisition Corp. and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Frontier Corporation (incorp

orated by reference to Exhibit 2 to the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Registrant's Current Report on Form 8-K filed on September 3, 1999 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (the "September 3, 1999 8-K" )). \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 2.4 Sale and Purchase Agreement, dated as of April 26, 1999, between Cable \par\pard\plain\fs16\plain\cf1\f50\fs16\ql & Wireless plc and the Regis trant (incorporated by reference to \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Exhibit 2.1 to the Registran t's Current Report on Form 8-K filed on \par\pard\plain\fs16\plain\cf1\f50\fs16\ql July 16, 1999 (the "July 16, 1999 8-K")). \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 2.5 Amendment to the Sale and Pu rchase Agreement, dated as of June 25, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 1999, between Cable & Wirele ss plc and the Registrant (incorporated by \par\pard\plain\fs16\plain\cf1\f50\fs16\ql reference to Exhibit 2.2 to the July 16, 1999 8-K). \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 2.6 Agreement and Plan of Merger , dated as of May 16, 1999, between the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Registrant and U S West, Inc . (incorporated by reference to Exhibit 2 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql to the Registrant's Current Report on Form 8-K filed on May 21, 1999 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (the "May 21, 1999 8-K")). \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 2.7 Letter Agreement, dated as o f May 16, 1999, between the Registrant and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql U S West, Inc. (incorporated by reference to Exhibit 99 to the May 21, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 1999 8-K). \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 2.8 Termination Agreement, dated as of July 18, 1999, between the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Registrant and U S West, Inc . (incorporated by reference to Exhibit \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 10.1 to the Registrant's Cur rent Report on Form 8-K filed on July 20, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 1999 (the "July 20, 1999 8-K ")). \par\pard\plain\fs16 \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql 60 \par\pard\plain\fs16 \page \par\pard\plain\fs16 \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql Exhibit \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Number Exhibit \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ------------\par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 2.9 Sale Agreement, made on Octo ber 10, 1999, between Controls and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Communications Limited, The Racal Corporation, Racal Electronics Plc \par\pard\plain\fs16\plain\cf1\f50\fs16\ql and the Registrant (incorpor

ated by reference to Exhibit 2.1 to the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql on Form 8-K filed on October 21, 1999 (the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql , dated as of February 22, 2000, among the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ub Corporation, IPC Communications, Inc., \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ., Idaho Merger Sub Corporation and IXnet, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql nce to Exhibit 2.1 to the Registrant's \par\pard\plain\fs16\plain\cf1\f50\fs16\ql iled on March 2, 2000 (the "March 2, 2000 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql the Registrant (incorporated by reference \par\pard\plain\fs16\plain\cf1\f50\fs16\ql rant's Registration Statement on Form S\par\pard\plain\fs16\plain\cf1\f50\fs16\ql he "July 2, 1998 S-1/A")). \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql of Change of Name of the Registrant dated \par\pard\plain\fs16\plain\cf1\f50\fs16\ql by reference to Exhibit 3.3 to the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql atement on Form S-1/A filed on July 23, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql /A")). \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql are Capital of the Registrant dated July \par\pard\plain\fs16\plain\cf1\f50\fs16\ql erence to Exhibit 3.4 to the July 23, 1998 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql are Capital of the Registrant dated \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ated by reference to Exhibit 3.1 to the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql t on Form 10-Q filed on November 15, 1999 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ")). \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql s in effect on October 14, 1999 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql o Exhibit 3.2 to the November 15, 1999 10\par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql of 6 3/8% Cumulative Convertible Preferred \par\pard\plain\fs16\plain\cf1\f50\fs16\ql d November 5, 1999 (incorporated by \par\pard\plain\fs16\plain\cf1\f50\fs16\ql the November 15, 1999 10-Q).

Registrant's Current Report "October 21, 1999 8-K")). 2.10 Agreement and Plan of Merger Registrant, Georgia Merger S IPC Information Systems, Inc Inc. (incorporated by refere Current Report on Form 8-K f 8-K")). 3.1 Memorandum of Association of to Exhibit 3.1 to the Regist 1/A filed on July 2, 1998 (t 3.2 Certificate of Incorporation April 30, 1998 (incorporated Registrant's Registration St 1998 (the "July 23, 1998 S-1 3.3 Memorandum of Increase of Sh 9, 1998 (incorporated by ref S-1/A). 3.4 Memorandum of Increase of Sh September 27, 1999 (incorpor Registrant's Quarterly Repor (the "November 15, 1999 10-Q 3.5 Bye-laws of the Registrant a (incorporated by reference t Q). 3.6 Certificate of Designations Stock of the Registrant date reference to Exhibit 3.3 to

\par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Global Crossing Holdings Ltd. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql o Exhibit 3.1 of Global Crossing Holdings \par\pard\plain\fs16\plain\cf1\f50\fs16\ql t on Form S-4 (File No. 333-61457)). \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Holdings Ltd. (incorporated by reference \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ssing Holdings Ltd.'s Registration \par\pard\plain\fs16\plain\cf1\f50\fs16\ql No. 333-61457)). \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql of 7% Cumulative Convertible Preferred \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ed December 15, 1999 (incorporated by \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Global Crossing Holdings Ltd.'s \par\pard\plain\fs16\plain\cf1\f50\fs16\ql rm S-4 (File No. 333-61457)). \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql of 6 3/8% Cumulative Convertible Preferred \par\pard\plain\fs16\plain\cf1\f50\fs16\ql trant, dated January 12, 2000 (filed \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql of 10 1/2% Senior Exchangeable Preferred \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ssing Holdings Ltd. dated December 1, 1998 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql o Schedule A to Exhibit 3.2 to the Global \par\pard\plain\fs16\plain\cf1\f50\fs16\ql tration Statement on Form S-4 filed on \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 8, 1998, between Global Crossing Holdings \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Company of New York, as Trustee \par\pard\plain\fs16\plain\cf1\f50\fs16\ql o Exhibit 4.2 to the Global Crossing \par\pard\plain\fs16\plain\cf1\f50\fs16\ql tatement on Form S-4 filed on December 22, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql d as of June 25, 1999, between Global \par\pard\plain\fs16\plain\cf1\f50\fs16\ql nited States Trust Company of New York, to \par\pard\plain\fs16\plain\cf1\f50\fs16\ql y 18, 1998 (incorporated by reference to \par\pard\plain\fs16\plain\cf1\f50\fs16\ql t's Registration Statement on Form S-4 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16

3.7

Memorandum of Association of (incorporated by reference t Ltd.'s Registration Statemen

3.8

Bye-laws of Global Crossing to Exhibit 3.2 to Global Cro Statement on Form S-4 (File

3.9

Certificate of Designations Stock of the Registrant, dat reference to Exhibit 3.2 to Registration Statement on Fo

3.10

Certificate of Designations Stock, Series B of the Regis herewith).

4.1

Certificate of Designations Stock Due 2008 of Global Cro (incorporated by reference t Crossing Holdings Ltd. Regis December 22, 1998).

4.2

Indenture, dated as of May 1 Ltd. and United States Trust (incorporated by reference t Holdings Ltd. Registration S 1998).

4.3

Supplemental Indenture, date Crossing Holdings Ltd. and U the Indenture dated as of Ma Exhibit 4.4 to the Registran filed on July 12, 1999).

\par\pard\plain\fs16\plain\cf1\f50\fs16\ql 4.4 Credit Agreement, dated as o f July 2, 1999, among the Registrant, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Global Crossing Holdings Ltd ., the Lenders party thereto and The Chase \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Manhattan Bank as Administra tive Agent (incorporated by reference to \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Exhibit 10.7 to the Registra nt's Registration Statement on Form S-4/A \par\pard\plain\fs16\plain\cf1\f50\fs16\ql filed on August 5, 1999). \par\pard\plain\fs16 \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql 61 \par\pard\plain\fs16 \page \par\pard\plain\fs16 \par\pard\plain\fs16 \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql Exhibit \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Number Exhibit \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ------------\par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 4.5 Indenture, dated as of Novem ber 19, 1999, among the Registrant., \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Global Crossing Holdings Ltd . and United States Trust Company of New \par\pard\plain\fs16\plain\cf1\f50\fs16\ql York (i ncorporated by refer ence to Exhibit 4.5 to the Global Crossing \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Holdings Ltd. Registration S tatement on Form S-4 filed on January 11, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 2000 (File No. 333-94449)). \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Except as hereinabove provided, the re is no instrument with respect to long\par\pard\plain\fs16\plain\cf1\f50\fs16\ql term debt of the Registrant and its c onsolidated subsidiaries under which the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql total authorized amount exceeds 10 pe rcent of the total consolidated assets of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql the Registrant. The Registrant agrees to furnish to the SEC upon its request a \par\pard\plain\fs16\plain\cf1\f50\fs16\ql copy of any instrument relating to lo ng-term debt. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 10.1 Project Development and Cons truction Contract, dated as of March 18, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 1997, among AT&T Submarine S ystems, Inc. and Atlantic Crossing Ltd. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (formerly Global Telesystems Ltd.) (incorporated by reference to \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Exhibit 10.2 to the July 23, 1998 S-1/A). \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 10.2 Project Development and Cons truction Contract, dated as of April 21, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 1998, among Tyco Submarine S ystems, Ltd. and Pacific Crossing Ltd. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (incorporated by reference t o Exhibit 10.3 to the July 23, 1998 S\par\pard\plain\fs16\plain\cf1\f50\fs16\ql 1/A). \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 10.3 Project Development and Cons

truction Contract, dated as of June 2, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql e Networks and Mid-Atlantic Crossing Ltd. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql o Exhibit 10.4 to the July 23, 1998 S\par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql truction Contract, dated as of July 21, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ystems, Ltd. and Pan American Crossing \par\pard\plain\fs16\plain\cf1\f50\fs16\ql nce to Exhibit 10.5 to the Registrant's \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Q filed on November 16, 1998). \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql truction Contract, dated as of July 30, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql e Networks and South American Crossing \par\pard\plain\fs16\plain\cf1\f50\fs16\ql nce to Exhibit 10.5 to the Global Crossing \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ent on Form S-4 filed on January 11, 2000 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ons have been omitted pursuant to a \par\pard\plain\fs16\plain\cf1\f50\fs16\ql atment). \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 1999 between North Crescent Realty V, LLC \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ent Company (incorporated by reference to \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 15, 1999 10-Q). \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql nt dated as of August 12, 1998 among the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql named therein (incorporated by reference \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 3, 1998 S-1/A). \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Agreement dated as of August 12, 1998 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql investors named therein (incorporated by \par\pard\plain\fs16\plain\cf1\f50\fs16\ql the July 23, 1998 S-1/A). \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql f March 16, 1999, among certain \par\pard\plain\fs16\plain\cf1\f50\fs16\ql nt parties thereto, Frontier Corporation \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ly, the Registrant (incorporated by \par\pard\plain\fs16\plain\cf1\f50\fs16\ql the March 19, 1999 8-K). \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql

1998, among Alcatel Submarin (incorporated by reference t 1/A). 10.4 Project Development and Cons 1998, among Tyco Submarine S Ltd. (incorporated by refere Quarterly Report on Form 1010.5 Project Development and Cons 1999, among Alcatel Submarin Ltd. (incorporated by refere Holdings Registration Statem (File No. 333-94449)) (porti request for confidential tre 10.6 Lease made as of October 1, and Global Crossing Developm Exhibit 10.1 to the November 10.7 Form of Stockholders Agreeme Registrant and the investors to Exhibit 9.1 to the July 2 10.8 Form of Registration Rights among the Registrant and the reference to Exhibit 4.4 to 10.9 Voting Agreement, dated as o shareholders of the Registra and, for certain purposes on reference to Exhibit 10.2 to 10.10 Second Reaffirmation of Voti

ng Agreement and Share Transfer \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Restriction Agreement, dated as of September 2, 1999 (incorporated by \par\pard\plain\fs16\plain\cf1\f50\fs16\ql reference to Annex S-B to th e joint proxy statement/prospectus \par\pard\plain\fs16\plain\cf1\f50\fs16\ql supplement included in the R egistrant's Registration Statement on Form \par\pard\plain\fs16\plain\cf1\f50\fs16\ql S-4 filed on September 8, 19 99 (the "September 8, 1999 S-4"). \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 10.11 Share Transfer Restriction A greement, dated as of September 2, 1999, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql among certain shareholders o f Global Crossing Ltd., certain \par\pard\plain\fs16\plain\cf1\f50\fs16\ql shareholders of Frontier Cor poration and Global Crossing Ltd. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (incorporated by reference t o Annex S-C to the joint proxy \par\pard\plain\fs16\plain\cf1\f50\fs16\ql statement/prospectus supplem ent included in the September 8, 1999 S\par\pard\plain\fs16\plain\cf1\f50\fs16\ql 4). \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 10.12 Tender Offer and Purchase Ag reement, dated as of May 16, 1999, between \par\pard\plain\fs16\plain\cf1\f50\fs16\ql the Registrant and U S WEST, Inc. (incorporated by reference to \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Exhibit (c)(2) to U S WEST, Inc.'s Schedule 14D-1 filed on May 21, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 1999). \par\pard\plain\fs16 \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql 62 \par\pard\plain\fs16 \page \par\pard\plain\fs16 \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql Exhibit \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Number Exhibit \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ------------\par\pard\plain\fs16 \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 10.13 Standstill Agreement dated a s of May 16, 1999 between U S WEST, Inc. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql and the Registrant (incorpor ated by reference to Exhibit (c)(4) to U S \par\pard\plain\fs16\plain\cf1\f50\fs16\ql WEST, Inc.'s Schedule 14D-1 filed on May 21, 1999). \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 10.14 Voting Agreement dated as of May 16, 1999 between U S WEST, Inc. and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql the Registrant (incorporated by reference to Exhibit (c)(3) to U S \par\pard\plain\fs16\plain\cf1\f50\fs16\ql WEST, Inc.'s Schedule 14D-1 filed on May 21, 1999). \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 10.15 Tender and Voting Agreement dated as of May 16, 1999 among U S WEST, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Inc., the Registrant and the shareholders party thereto (incorporated \par\pard\plain\fs16\plain\cf1\f50\fs16\ql by reference to Exhibit (c)(

5) to U S WEST, Inc.'s Schedule 14D-1 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql , 1999 among the Registrant and the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql incorporated by reference to Exhibit \par\pard\plain\fs16\plain\cf1\f50\fs16\ql chedule 14D-1 filed on May 21, 1999). \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql of May 16, 1999 among the Registrant and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql to (incorporated by reference to Exhibit \par\pard\plain\fs16\plain\cf1\f50\fs16\ql chedule 14D-1 filed on May 21, 1999). \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql July 18, 1999 to Tender Offer and Purchase \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 1999 between the Registrant and U S WEST, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql nce to Exhibit 10.2 to the July 20, 1999 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 18, 1999, between Qwest Communications \par\pard\plain\fs16\plain\cf1\f50\fs16\ql egistrant (incorporated by reference to \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 1999 8-K). \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 18, 1999, between Global Crossing Holdings \par\pard\plain\fs16\plain\cf1\f50\fs16\ql s International Inc. (incorporated by \par\pard\plain\fs16\plain\cf1\f50\fs16\ql the July 20, 1999 8-K). \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql t dated as of November 5, 1999 among the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql urchasers of the Registrant's 6-3/8% \par\pard\plain\fs16\plain\cf1\f50\fs16\ql rred Stock named therein (incorporated by \par\pard\plain\fs16\plain\cf1\f50\fs16\ql s Registration Statement on Form S-3 filed \par\pard\plain\fs16\plain\cf1\f50\fs16\ql to such securities). \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql t dated as of November 5, 1999 among the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql urchasers of the Registrant's 7% \par\pard\plain\fs16\plain\cf1\f50\fs16\ql rred Stock named therein (incorporated by \par\pard\plain\fs16\plain\cf1\f50\fs16\ql s Registration Statement on Form S-3 filed \par\pard\plain\fs16\plain\cf1\f50\fs16\ql to such securities).

filed on May 21, 1999). 10.16 Agreement dated as of May 16 shareholders party thereto ( (c)(6) to U S WEST, Inc.'s S 10.17 Transfer Agreement dated as the shareholders party there (c)(8) to U S WEST, Inc.'s S 10.18 Amendment No. 1 dated as of Agreement dated as of May 16 Inc. (incorporated by refere 8-K). 10.19 Agreement, dated as of July International Inc. and the R Exhibit 10.3 to the July 20, 10.20 Agreement, dated as of July Ltd. and Qwest Communication reference to Exhibit 10.4 to 10.21 Registration Rights Agreemen Registrant and the initial p Cumulative Convertible Prefe reference to the Registrant' on January 18, 2000 relating 10.22 Registration Rights Agreemen Registrant and the initial p Cumulative Convertible Prefe reference to the Registrant' on January 18, 2000 relating

\par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 10.23 1998 Global Crossing Ltd. St ock Incentive Plan as amended and restated \par\pard\plain\fs16\plain\cf1\f50\fs16\ql effective December 7, 1999 ( incorporated by reference to Exhibit 10.21 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql to the Global Crossing Holdi ngs Ltd. Registration Statement on Form S\par\pard\plain\fs16\plain\cf1\f50\fs16\ql 4 filed on January 11, 2000 (File No. 333-94449). \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 10.24 Form of Non-Qualified Stock Option Agreement as in effect on September \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 30, 1999 (incorporated by re ference to Exhibit 10.2 to the November \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 15, 1999 10-Q). \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 10.25 Frontier Corporation Supplem ental Retirement Savings Plan as amended \par\pard\plain\fs16\plain\cf1\f50\fs16\ql and restated effective Janua ry 1, 1996 (incorporated by reference to \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Exhibit 10.13 to Frontier Co rporation's Annual Report on Form 10-K \par\pard\plain\fs16\plain\cf1\f50\fs16\ql filed March 28, 1997). \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 10.26 Amendment No. 1, effective M arch 16, 1999, to Frontier Corporation \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Supplemental Retirement Savi ngs Plan (incorporated by reference to \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Exhibit 10.2 to Frontier Cor poration's Quarterly Report on Form 10-Q \par\pard\plain\fs16\plain\cf1\f50\fs16\ql filed August 3, 1999). \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 10.27 Amendment No. 2, dated Septe mber 21, 1999, to Frontier Corporation \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Supplemental Retirement Savi ngs Plan (incorporated by reference to \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Exhibit 10.5 to the November 15, 1999 10-Q). \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 10.28 Employment Agreement dated a s of February 19, 1999 between the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Registrant and Robert Annunz iata (incorporated by reference to Exhibit \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 10.8 to the Registrant's Qua rterly Report on Form 10-Q filed on May \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 10, 1999). \par\pard\plain\fs16 \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql 63 \par\pard\plain\fs16 \page \par\pard\plain\fs16 \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql Exhibit \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Number Exhibit \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ------------\par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 10.29 Executive Contract dated Mar ch 25, 1996 between Robert L. Barrett and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Frontier Corporation (incorp

orated by reference to Exhibit 10.25 to \par\pard\plain\fs16\plain\cf1\f50\fs16\ql erly Report on Form 10-Q filed May 14, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql to Executive Contract between Robert L. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql tion (incorporated by reference to Exhibit \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 9 10-Q). \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql uary 1, 1998 between Joseph P. Clayton and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql orated by reference to Exhibit 10.22 to \par\pard\plain\fs16\plain\cf1\f50\fs16\ql l Report on Form 10-K filed March 26, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql to Executive Contract between Joseph P. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql tion (incorporated by reference to Exhibit \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 9 10-Q). \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql s of December 5, 1999 between the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql y, Jr. (filed herewith). \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql reement between the Registrant and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql gistrant approved by the Board of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql iled herewith). \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql rchase Agreement, dated November 15, 1999, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ted, Hutchison Telecommunications Limited, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ngs Limited (incorporated by reference to \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Crossing Holdings Ltd. Registration \par\pard\plain\fs16\plain\cf1\f50\fs16\ql on January 11, 2000 (File No. 333-94449)). \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql s of December 3, 1999 between the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ati (filed herewith). \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ings to Fixed Charges (filed herewith). \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql nt (filed herewith).

Frontier Corporation's Quart 1996). 10.30 Amendment dated May 1, 1999 Barrett and Frontier Corpora 10.7 to the November 15, 199 10.31 Executive Contract dated Jan Frontier Corporation (incorp Frontier Corporation's Annua 1998). 10.32 Amendment dated May 1, 1999 Clayton and Frontier Corpora 10.9 to the November 15, 199 10.33 Employment Agreement dated a Registrant and Leo J. Hinder 10.34 Form of Change in Control Ag Executive Officers of the Re Directors in January 2000 (f 10.35 Subscription and Sale and Pu among Hutchison Whampoa Limi the Registrant and HCL Holdi Exhibit 10.33 to the Global Statement on Form S-4 filed 10.36 Employment Agreement dated a Registrant and John A. Scarp 12.1 21.1 Computation of Ratio of Earn Subsidiaries of the Registra

\par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 23.1 Consent of Arthur Andersen ( filed herewith). \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 27.1 Financial Data Schedule (fil ed herewith). \par\pard\plain\fs16 \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql (b) Reports on Form 8-K. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql During the quarter ended December 3 1, 1999, the following reports on Form 8\par\pard\plain\fs16\plain\cf1\f50\fs16\ql K were filed by the Registrant: \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 1. Current Report on Form 8-K dat ed October 11, 1999 (date of earliest \par\pard\plain\fs16\plain\cf1\f50\fs16\ql event reported), filed on Octo ber 12, 1999, for the purpose of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql reporting, under Item 5, the e xecution of an agreement to acquire \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Racal Telecom. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 2. Current Report on Form 8-K dat ed October 11, 1999 (date of earliest \par\pard\plain\fs16\plain\cf1\f50\fs16\ql event reported), filed on Octo ber 21, 1999, for the purpose of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql filing, under Item 2, the agre ement governing the acquisition of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Racal Telecom. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 3. Current Report on Form 8-K dat ed October 29, 1999 (date of earliest \par\pard\plain\fs16\plain\cf1\f50\fs16\ql event reported), filed on Dece mber 8, 1999, for the purpose of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql reporting, under Item 5, recen t issuances by Global Crossing Ltd. of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql unregistered securities. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 4. Current Report on Form 8-K dat ed November 24, 1999 (date of earliest \par\pard\plain\fs16\plain\cf1\f50\fs16\ql event reported), filed on Dece mber 3, 1999, for the purpose of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql reporting, under Item 2, the a cquisition of Racal Telecom. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (c) See Item 14(a)(3) above. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (d) See Item 14(a)(2) above. \par\pard\plain\fs16 \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 64 \par\pard\plain\fs16 \page \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql GLOBAL CROSSING LTD. AND SUBSIDI ARIES \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql INDEX TO CONSOLIDATED FIN ANCIAL STATEMENTS AND SCHEDULE \par\pard\plain\fs16 \par\pard\plain\fs16

\par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql Page \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ---\par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Report of Independent Public Accounta nts................................... F-2 \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Consolidated Balance Sheets as of Dec ember 31, 1999 and 1998............... F-3 \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Consolidated Statements of Operations for the years ended December 31, 1999 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql and 1998 and for the period March 19 , 1997 (Date of Inception) to December \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 31, 1997............................ ...................................... F-4 \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Consolidated Statements of Shareholde rs' Equity for the years ended \par\pard\plain\fs16\plain\cf1\f50\fs16\ql December 31, 1999 and 1998 and for t he period March 19, 1997 (Date of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Inception) to December 31, 1997..... ...................................... F-5 \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Consolidated Statements of Cash Flows for the years ended December 31, 1999 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql and 1998 and for the period March 19 , 1997 (Date of Inception) to December \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 31, 1997............................ ...................................... F-6 \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Consolidated Statements of Comprehens ive Income for the years ended \par\pard\plain\fs16\plain\cf1\f50\fs16\ql December 31, 1999 and 1998 and for t he period March 19, 1997 (Date of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Inception) to December 31, 1997..... ...................................... F-8 \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Notes to Consolidated Financial State ments................................. F-9 \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Schedule: \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Schedule II--Valuation and Qualifyi ng Accounts........................... F-42 \par\pard\plain\fs16 \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql F-1 \par\pard\plain\fs16 \page \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql REPORT OF INDEPENDENT PUBLIC ACC OUNTANTS \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql To Global Crossing Ltd.: \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql We have audited the accompanying co nsolidated balance sheets of Global \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Crossing Ltd. (a Bermuda company) and subsidiaries as of December 31, 1999 and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 1998, and the related consolidated st atements of operations, shareholders' \par\pard\plain\fs16\plain\cf1\f50\fs16\ql equity, cash flows and comprehensive

income for the years ended December 31, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql h 19, 1997 (Date of Inception) to \par\pard\plain\fs16\plain\cf1\f50\fs16\ql atements and schedule are the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ement. Our responsibility is to express \par\pard\plain\fs16\plain\cf1\f50\fs16\ql nts based on our audits. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ce with auditing standards generally \par\pard\plain\fs16\plain\cf1\f50\fs16\ql standards require that we plan and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql e assurance about whether the financial \par\pard\plain\fs16\plain\cf1\f50\fs16\ql atement. An audit includes examining, on \par\pard\plain\fs16\plain\cf1\f50\fs16\ql amounts and disclosures in the financial \par\pard\plain\fs16\plain\cf1\f50\fs16\ql sessing the accounting principles used \par\pard\plain\fs16\plain\cf1\f50\fs16\ql agement, as well as evaluating the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ion. We believe that our audits provide a \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ments referred to above present fairly, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql al position of Global Crossing Ltd. and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql and 1998, and the results of their \par\pard\plain\fs16\plain\cf1\f50\fs16\ql he years ended December 31, 1999 and 1998 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql te of Inception) to December 31, 1997, in \par\pard\plain\fs16\plain\cf1\f50\fs16\ql generally accepted in the United States. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql nsolidated financial statements, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql y changed its method of accounting for \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql e of forming an opinion on the basic \par\pard\plain\fs16\plain\cf1\f50\fs16\ql . The schedule listed in the Index to \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Schedule is presented for purposes of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql hange Commission's rules and regulations \par\pard\plain\fs16\plain\cf1\f50\fs16\ql l statements. This schedule has been \par\pard\plain\fs16\plain\cf1\f50\fs16\ql applied in the audits of the basic \par\pard\plain\fs16\plain\cf1\f50\fs16\ql

1999 and 1998 and for the period Marc December 31, 1997. These financial st responsibility of the Company's manag an opinion on these financial stateme We conducted our audits in accordan accepted in the United States. Those perform the audit to obtain reasonabl statements are free of material misst a test basis, evidence supporting the statements. An audit also includes as and significant estimates made by man overall financial statement presentat reasonable basis for our opinion. In our opinion, the financial state in all material respects, the financi subsidiaries as of December 31, 1999 operations and their cash flows for t and for the period March 19, 1997 (Da conformity with accounting principles As explained in the Notes to the co effective January 1, 1999, the Compan start-up costs. Our audits were made for the purpos financial statements taken as a whole Consolidated Financial Statements and complying with the Securities and Exc and is not part of the basic financia subjected to the auditing procedures financial statements and, in our opin

ion, fairly states in all material \par\pard\plain\fs16\plain\cf1\f50\fs16\ql respects the financial data required to be set forth therein in relation to \par\pard\plain\fs16\plain\cf1\f50\fs16\ql the basic financial statements taken as a whole. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql /s/ Arthur Andersen \par\pard\plain\fs16\plain\cf1\f50\fs16\ql _____________________________________ \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Arthur Andersen \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Hamilton, Bermuda \par\pard\plain\fs16\plain\cf1\f50\fs16\ql February 23, 2000 \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql F-2 \par\pard\plain\fs16 \page \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql GLOBAL CROSSING LTD. AND SUBSIDI ARIES \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql CONSOLIDATE D BALANCE SHEETS \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (In thousands, except sh are and per share information) \par\pard\plain\fs16 \par\pard\plain\fs16 \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql December 31, 1999 December 31, 1 998 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ----------------- ----------------\par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ASSETS: \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Current assets: \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Cash and cash equivalents........... ...... $ 1,633,499 $ 806,593 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Restricted cash and cash equivalents ...... 93,294 77,190 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Accounts receivable, net............ ...... 966,973 71,195 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Other assets and prepaid costs...... ...... 252,767 21,637 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql -------------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql Total current assets................ ...... 2,946,533 976,615 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Restricted cash and cash equivalents ...... 138,118 367,600 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Accounts receivable................. ...... 52,052 43,315 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Capacity available for sale......... ...... -574,849 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Property and equipment, net......... ...... 6,026,053 433,707 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Goodwill and intangibles, net....... ...... 9,557,422 -\par\pard\plain\fs16\plain\cf1\f50\fs16\ql Investment in and advances to/from \par\pard\plain\fs16\plain\cf1\f50\fs16\ql affiliates, net.................... ...... 323,960 177,334 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Other assets........................ ...... 661,442 65,757

\par\pard\plain\fs16\plain\cf1\f50\fs16\ql -------------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql ...... $19,705,580 $2,639,177 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql =========== ========== \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ...... $ 275,361 $ 129,081 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ...... 509,866 2,018 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ...... 154,285 -\par\pard\plain\fs16\plain\cf1\f50\fs16\ql ...... 280,629 29,972 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ends.. 66,745 14,428 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ...... 127,367 44,197 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ...... 140,034 15,604 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ...... 5,496 6,393 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ...... 292,810 14,572 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql -------------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql ...... 1,852,593 256,265 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ...... 5,018,544 1,066,093 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ...... 383,287 25,325 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ...... 796,606 34,174 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql -------------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql ...... 8,051,030 1,381,857 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql -------------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql ...... 351,338 -\par\pard\plain\fs16\plain\cf1\f50\fs16\ql -------------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16\plain\cf1\f50\fs16\ql rred \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16\plain\cf1\f50\fs16\ql and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql er \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ...... 485,947 483,000 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql -------------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql

Total assets........................

LIABILITIES: Current liabilities: Accrued construction costs.......... Accounts payable.................... Accrued cost of access.............. Accrued liabilities................. Accrued interest and preferred divid Deferred revenue.................... Income taxes payable................ Current portion of long term debt... Other current liabilities...........

Total current liabilities........... Long-term debt...................... Deferred revenue.................... Deferred credits and other..........

Total liabilities...................

MINORITY INTEREST....................

MANDATORILY REDEEMABLE AND CUMULATIVE CONVERTIBLE PREFERRED STOCK: 10 1/2% Mandatorily Redeemable Prefe Stock, 5,000,000 shares issued and outstanding as of December 31, 1999 1998, $100 liquidation preference p share..............................

6 3/8% Cumulative Convertible Prefer

red \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Stock, 10,000,000 and 0 shares issu ed and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql outstanding as of December 31, 1999 and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 1998, respectively, $100 liquidatio n \par\pard\plain\fs16\plain\cf1\f50\fs16\ql preference per share............... ...... 969,000 -\par\pard\plain\fs16\plain\cf1\f50\fs16\ql -------------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql 7% Cumulative Convertible Preferred Stock, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 2,600,000 and 0 shares issued and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql outstanding as of December 31, 1999 and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 1998, $250 liquidation preference p er \par\pard\plain\fs16\plain\cf1\f50\fs16\ql share.............................. ...... 629,750 -\par\pard\plain\fs16\plain\cf1\f50\fs16\ql -------------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql SHAREHOLDERS' EQUITY: \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Common stock, 3,000,000,000 shares \par\pard\plain\fs16\plain\cf1\f50\fs16\ql authorized, par value $.01, 799,137 ,142 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql and 432,776,246 shares issued as of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql December 31, 1999 and 1998, respect ively. 7,992 4,328 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Treasury stock, 22,033,758 shares... ...... (209,415) (209,415) \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Additional paid-in capital and other \par\pard\plain\fs16\plain\cf1\f50\fs16\ql shareholders' equity............... ...... 9,578,927 1,067,470 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Accumulated deficit................. ...... (158,989) (88,063) \par\pard\plain\fs16\plain\cf1\f50\fs16\ql -------------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql 9,218,515 774,320 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql -------------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql Total liabilities and shareholders' \par\pard\plain\fs16\plain\cf1\f50\fs16\ql equity............................. ...... $19,705,580 $2,639,177 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql =========== ========== \par\pard\plain\fs16 \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql See accompanying notes. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql F-3 \par\pard\plain\fs16 \page \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql GLOBAL CROSSING LTD. AND SUBSIDI ARIES \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql CONSOLIDATED STA TEMENTS OF OPERATIONS \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (In thousands, except sh

are and per share information) \par\pard\plain\fs16 \par\pard\plain\fs16 \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql Period from \par\pard\plain\fs16\plain\cf1\f50\fs16\ql March 19, 1997 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Year Ende d Year Ended (Date of Inception) \par\pard\plain\fs16\plain\cf1\f50\fs16\ql December 31, 1999 December 31, 1998 to December 31, 1997 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ---------------- ----------------- -------------------\par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql REVENUE................. $ 1,664,8 24 $ 419,866 $ -\par\pard\plain\fs16\plain\cf1\f50\fs16\ql -----------------------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql EXPENSES: \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Cost of sales.......... 850,4 83 178,492 -\par\pard\plain\fs16\plain\cf1\f50\fs16\ql Operations, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql administration and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql maintenance........... 133,2 02 18,056 -\par\pard\plain\fs16\plain\cf1\f50\fs16\ql Sales and marketing.... 149,1 19 26,194 1,366 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Network development.... 26,1 53 10,962 78 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql General and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql administrative........ 210,1 07 26,303 1,618 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Stock related expense.. 51,3 06 39,374 -\par\pard\plain\fs16\plain\cf1\f50\fs16\ql Depreciation and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql amortization.......... 124,2 94 541 39 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Goodwill and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql intangibles \par\pard\plain\fs16\plain\cf1\f50\fs16\ql amortization.......... 127,6 21 --\par\pard\plain\fs16\plain\cf1\f50\fs16\ql Termination of advisory \par\pard\plain\fs16\plain\cf1\f50\fs16\ql services agreement.... 139,669 -\par\pard\plain\fs16\plain\cf1\f50\fs16\ql -----------------------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql 1,672,2 85 439,591 3,101 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql -----------------------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql OPERATING LOSS.......... (7,4 61) (19,725) (3,101) \par\pard\plain\fs16\plain\cf1\f50\fs16\ql EQUITY IN INCOME (LOSS) \par\pard\plain\fs16\plain\cf1\f50\fs16\ql OF AFFILIATES.......... 15,7 08 (2,508) -\par\pard\plain\fs16\plain\cf1\f50\fs16\ql MINORITY INTEREST....... (1,3 38) --\par\pard\plain\fs16\plain\cf1\f50\fs16\ql OTHER INCOME (EXPENSE): \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Interest income........ 67,4 07 29,986 2,941 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Interest expense....... (139,0

77) (42,880) -\par\pard\plain\fs16\plain\cf1\f50\fs16\ql 65 --\par\pard\plain\fs16\plain\cf1\f50\fs16\ql ---------------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 04 (35,127) (160) \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 39) (33,067) -\par\pard\plain\fs16\plain\cf1\f50\fs16\ql ---------------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 35) (68,194) (160) \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 81) (19,709) -\par\pard\plain\fs16\plain\cf1\f50\fs16\ql ---------------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 16) (87,903) (160) \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 10) --\par\pard\plain\fs16\plain\cf1\f50\fs16\ql ---------------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql 26) (87,903) (160) \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 42) (12,681) (12,690) \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (34,140) -\par\pard\plain\fs16\plain\cf1\f50\fs16\ql ---------------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 68) $ (134,724) $ (12,850) \par\pard\plain\fs16\plain\cf1\f50\fs16\ql == =========== =========== \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16\plain\cf1\f50\fs16\ql

Other income, net......

180,7 ---------

INCOME (LOSS) BEFORE PROVISION FOR INCOME TAXES, EXTRAORDINARY ITEM AND CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE... Provision for income taxes.................

116,0 (126,5 ---------

LOSS BEFORE EXTRAORDINARY ITEM AND CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE.............. Extraordinary loss on retirement of debt....

(10,5 (45,6 ---------

LOSS BEFORE CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE... Cumulative effect of change in accounting principle, net of income tax benefit of $1,400................

(56,2

(14,7 ---------

NET LOSS................ Preferred stock dividends............. Redemption of preferred stock.................

(70,9 (66,6 ---------

LOSS APPLICABLE TO COMMON SHAREHOLDERS....

$ (137,5 =========

NET LOSS PER COMMON SHARE: Loss applicable to common shareholders before extraordinary

\par\pard\plain\fs16\plain\cf1\f50\fs16\ql item and cumulative \par\pard\plain\fs16\plain\cf1\f50\fs16\ql effect of change in \par\pard\plain\fs16\plain\cf1\f50\fs16\ql accounting principle, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql basic and diluted..... $ (0. 15) $ (0.32) $ (0.04) \par\pard\plain\fs16\plain\cf1\f50\fs16\ql -----------------------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql Extraordinary item, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql basic and diluted..... (0. 09) (0.06) -\par\pard\plain\fs16\plain\cf1\f50\fs16\ql -----------------------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql Cumulative effect of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql change in accounting \par\pard\plain\fs16\plain\cf1\f50\fs16\ql principle, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql basic and diluted..... (0. 03) --\par\pard\plain\fs16\plain\cf1\f50\fs16\ql -----------------------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql Net loss applicable to \par\pard\plain\fs16\plain\cf1\f50\fs16\ql common shareholders, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql basic and diluted..... $ (0. 27) $ (0.38) $ (0.04) \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ========= == =========== =========== \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Shares used in \par\pard\plain\fs16\plain\cf1\f50\fs16\ql computing basic and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql diluted loss per \par\pard\plain\fs16\plain\cf1\f50\fs16\ql share................. 502,400,8 51 358,735,340 325,773,934 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ========= == =========== =========== \par\pard\plain\fs16 \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql See accompanying notes. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql F-4 \par\pard\plain\fs16 \page \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql GLOBAL CROSSING LTD. AND SUBSIDI ARIES \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql CONSOLIDATED STATEMEN TS OF SHAREHOLDERS' EQUITY \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (In thousands, except sha re and per share information) \par\pard\plain\fs16 \par\pard\plain\fs16 \par\pard\plain\fs16\pard\plain\cf1\f50\fs14\ql Other Shareholders' \par\pard\plain\fs16\plain\cf1\f50\fs14\ql Common S tock Treasury Stock Equity \par\pard\plain\fs16\plain\cf1\f50\fs14\ql ------------------ -------------------- -------------------\par\pard\plain\fs16\plain\cf1\f50\fs14\ql Additional Total \par\pard\plain\fs16\plain\cf1\f50\fs14\ql Paid-in Accumulated Shareholders' \par\pard\plain\fs16\plain\cf1\f50\fs14\ql Shares Amount Shares Amount Capital(a) Other Deficit Equity \par\pard\plain\fs16\plain\cf1\f50\fs14\ql -----------

------ ---------- --------- ---------- -------- ----------- ------------\par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs14\ql Issuance of common stock \par\pard\plain\fs16\plain\cf1\f50\fs14\ql for cash in March 1997 \par\pard\plain\fs16\plain\cf1\f50\fs14\ql (Date of Inception), \par\pard\plain\fs16\plain\cf1\f50\fs14\ql net of $1,264 issuance \par\pard\plain\fs16\plain\cf1\f50\fs14\ql costs................. 325,773,934 $3,258 -- $ -- $ 83,713 $ -$ -$ 86,971 \par\pard\plain\fs16\plain\cf1\f50\fs14\ql Preferred stock \par\pard\plain\fs16\plain\cf1\f50\fs14\ql dividends............. ----(12,690) --(12,690) \par\pard\plain\fs16\plain\cf1\f50\fs14\ql Net loss for the \par\pard\plain\fs16\plain\cf1\f50\fs14\ql period................ (160) (160) \par\pard\plain\fs16\plain\cf1\f50\fs14\ql ---------------- ---------- --------- ---------- -------- --------- ---------\par\pard\plain\fs16\plain\cf1\f50\fs14\ql Balance, December 31, \par\pard\plain\fs16\plain\cf1\f50\fs14\ql 1997................... 325,773,934 3,258 --71,023 -(160) 74,121 \par\pard\plain\fs16\plain\cf1\f50\fs14\ql Issuance of common \par\pard\plain\fs16\plain\cf1\f50\fs14\ql stock for cash........ 1,575,000 16 --2,772 --2,788 \par\pard\plain\fs16\plain\cf1\f50\fs14\ql Cash reimbursement to \par\pard\plain\fs16\plain\cf1\f50\fs14\ql certain shareholders.. ----(7,047) --(7,047) \par\pard\plain\fs16\plain\cf1\f50\fs14\ql Unearned compensation.. ----93,758 (93,758) --\par\pard\plain\fs16\plain\cf1\f50\fs14\ql Amortization of \par\pard\plain\fs16\plain\cf1\f50\fs14\ql compensation expense.. -----37,111 -37,111 \par\pard\plain\fs16\plain\cf1\f50\fs14\ql PCG Warrants........... 24,406,340 244 --275,054 --275,298 \par\pard\plain\fs16\plain\cf1\f50\fs14\ql Issuance of common \par\pard\plain\fs16\plain\cf1\f50\fs14\ql stock in exchange for \par\pard\plain\fs16\plain\cf1\f50\fs14\ql termination of \par\pard\plain\fs16\plain\cf1\f50\fs14\ql advisory services \par\pard\plain\fs16\plain\cf1\f50\fs14\ql agreement............. 14,210,526 142 --134,858 --135,000 \par\pard\plain\fs16\plain\cf1\f50\fs14\ql Preferred stock \par\pard\plain\fs16\plain\cf1\f50\fs14\ql dividends............. ----(12,681) --(12,681) \par\pard\plain\fs16\plain\cf1\f50\fs14\ql Premium on redemption \par\pard\plain\fs16\plain\cf1\f50\fs14\ql of preferred stock.... ----(34,140) --(34,140) \par\pard\plain\fs16\plain\cf1\f50\fs14\ql Common stock \par\pard\plain\fs16\plain\cf1\f50\fs14\ql transactions with \par\pard\plain\fs16\plain\cf1\f50\fs14\ql certain shareholders.. 21,733,758 217 22,033,758 (209,415) 209,198 ---\par\pard\plain\fs16\plain\cf1\f50\fs14\ql Issuance of common \par\pard\plain\fs16\plain\cf1\f50\fs14\ql stock in connection \par\pard\plain\fs16\plain\cf1\f50\fs14\ql with initial public \par\pard\plain\fs16\plain\cf1\f50\fs14\ql offering, net of \par\pard\plain\fs16\plain\cf1\f50\fs14\ql $30,916 issuance \par\pard\plain\fs16\plain\cf1\f50\fs14\ql costs................. 44,420,000 444 --390,630 --391,074 \par\pard\plain\fs16\plain\cf1\f50\fs14\ql Issuance of common \par\pard\plain\fs16\plain\cf1\f50\fs14\ql stock from exercise of \par\pard\plain\fs16\plain\cf1\f50\fs14\ql stock options......... 656,688 7 --692 --699 \par\pard\plain\fs16\plain\cf1\f50\fs14\ql Net loss............... --

-----(87,903) (87,903) \par\pard\plain\fs16\plain\cf1\f50\fs14\ql ---------------- ---------- --------- ---------- -------- --------- ---------\par\pard\plain\fs16\plain\cf1\f50\fs14\ql Balance, December 31, \par\pard\plain\fs16\plain\cf1\f50\fs14\ql 1998................... 432,776,246 4,328 22,033,758 (209,415) 1,124,117 (56,647) (88,063) 774,320 \par\pard\plain\fs16\plain\cf1\f50\fs14\ql Issuance of common \par\pard\plain\fs16\plain\cf1\f50\fs14\ql stock from exercise of \par\pard\plain\fs16\plain\cf1\f50\fs14\ql stock options......... 10,058,073 101 --111,263 --111,364 \par\pard\plain\fs16\plain\cf1\f50\fs14\ql Income tax benefit from \par\pard\plain\fs16\plain\cf1\f50\fs14\ql exercise of stock \par\pard\plain\fs16\plain\cf1\f50\fs14\ql options............... ----9,368 --9,368 \par\pard\plain\fs16\plain\cf1\f50\fs14\ql Unearned compensation.. ----55,066 (55,066) --\par\pard\plain\fs16\plain\cf1\f50\fs14\ql Amortization of \par\pard\plain\fs16\plain\cf1\f50\fs14\ql compensation expense.. -----51,306 -51,306 \par\pard\plain\fs16\plain\cf1\f50\fs14\ql Issuance of common \par\pard\plain\fs16\plain\cf1\f50\fs14\ql stock in exchange for \par\pard\plain\fs16\plain\cf1\f50\fs14\ql non-compete rights and \par\pard\plain\fs16\plain\cf1\f50\fs14\ql licenses.............. 2,239,632 22 --19,978 --20,000 \par\pard\plain\fs16\plain\cf1\f50\fs14\ql Cancellation of shares \par\pard\plain\fs16\plain\cf1\f50\fs14\ql issued in connection \par\pard\plain\fs16\plain\cf1\f50\fs14\ql with terminated merger \par\pard\plain\fs16\plain\cf1\f50\fs14\ql with US West.......... (2,231,076 ) (22) --(103,362) --(103,384) \par\pard\plain\fs16\plain\cf1\f50\fs14\ql Preferred stock \par\pard\plain\fs16\plain\cf1\f50\fs14\ql dividends............. ----(66,642) --(66,642) \par\pard\plain\fs16\plain\cf1\f50\fs14\ql Shares issued in \par\pard\plain\fs16\plain\cf1\f50\fs14\ql connection with \par\pard\plain\fs16\plain\cf1\f50\fs14\ql Frontier acquisition.. 355,263,135 3,553 --8,503,974 --8,507,527 \par\pard\plain\fs16\plain\cf1\f50\fs14\ql Shares issued for \par\pard\plain\fs16\plain\cf1\f50\fs14\ql retirement of debt.... 1,031,132 10 --5,290 --5,300 \par\pard\plain\fs16\plain\cf1\f50\fs14\ql Foreign currency \par\pard\plain\fs16\plain\cf1\f50\fs14\ql translation \par\pard\plain\fs16\plain\cf1\f50\fs14\ql adjustment............ -----(20,698) -(20,698) \par\pard\plain\fs16\plain\cf1\f50\fs14\ql Unrealized gain on \par\pard\plain\fs16\plain\cf1\f50\fs14\ql securities............ -----980 -980 \par\pard\plain\fs16\plain\cf1\f50\fs14\ql Net loss............... ------(70,926) (70,926) \par\pard\plain\fs16\plain\cf1\f50\fs14\ql ---------------- ---------- --------- ---------- -------- --------- ---------\par\pard\plain\fs16\plain\cf1\f50\fs14\ql Balance, December 31, \par\pard\plain\fs16\plain\cf1\f50\fs14\ql 1999................... 799,137,142 $7,992 22,033,758 $(209,415) $9,659,052 $(80,125) $(158,989) $9,218,515 \par\pard\plain\fs16\plain\cf1\f50\fs14\ql =========== ====== ========== ========= ========== ======== ========= ========== \par\pard\plain\fs16\par\pard\plain\cf1\f50\fs16\ql -------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql (a) Additional Paid-in-Capital has be en charged retroactively for the par \par\pard\plain\fs16\plain\cf1\f50\fs16\ql value of the shares issued as a r esult of the 2-for-1 stock split effected

\par\pard\plain\fs16\plain\cf1\f50\fs16\ql in the form of a stock dividend e ffective on March 9, 1999. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql See accom panying notes. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql F-5 \par\pard\plain\fs16 \page \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql GLOBAL CROSSING LTD. AND SUBSIDI ARIES \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql CONSOLIDATED STA TEMENTS OF CASH FLOWS \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (In thousands) \par\pard\plain\fs16 \par\pard\plain\fs16 \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql Period From \par\pard\plain\fs16\plain\cf1\f50\fs16\ql March 19, 1997 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Year End ed Year Ended (Date of Inception) \par\pard\plain\fs16\plain\cf1\f50\fs16\ql December 31 , 1999 December 31, 1998 to December 31, 1997 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ---------------- ----------------- -------------------\par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql CASH FLOWS PROVIDED BY \par\pard\plain\fs16\plain\cf1\f50\fs16\ql OPERATING ACTIVITIES: \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Net loss............... $ (70,9 26) $ (87,903) $ (160) \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Adjustments to \par\pard\plain\fs16\plain\cf1\f50\fs16\ql reconcile net loss to \par\pard\plain\fs16\plain\cf1\f50\fs16\ql net cash provided by \par\pard\plain\fs16\plain\cf1\f50\fs16\ql operating activities: \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Extraordinary loss on \par\pard\plain\fs16\plain\cf1\f50\fs16\ql retirement of senior \par\pard\plain\fs16\plain\cf1\f50\fs16\ql notes................. 45,6 81 19,709 -\par\pard\plain\fs16\plain\cf1\f50\fs16\ql Cumulative effect of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql change in accounting \par\pard\plain\fs16\plain\cf1\f50\fs16\ql principle............. 14,7 10 --\par\pard\plain\fs16\plain\cf1\f50\fs16\ql Non-cash portion of US \par\pard\plain\fs16\plain\cf1\f50\fs16\ql West termination \par\pard\plain\fs16\plain\cf1\f50\fs16\ql agreement............. (103,3 84) --\par\pard\plain\fs16\plain\cf1\f50\fs16\ql Stock related expenses. 51,3 06 39,374 -\par\pard\plain\fs16\plain\cf1\f50\fs16\ql Termination of advisory \par\pard\plain\fs16\plain\cf1\f50\fs16\ql services agreement.... 135,000 -\par\pard\plain\fs16\plain\cf1\f50\fs16\ql Equity in (income) loss \par\pard\plain\fs16\plain\cf1\f50\fs16\ql of affiliates......... (15,7 08) 2,508 -\par\pard\plain\fs16\plain\cf1\f50\fs16\ql Depreciation and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql amortization.......... 251,9 15 541 39

\par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 57 4,233 -\par\pard\plain\fs16\plain\cf1\f50\fs16\ql 74 9,654 -\par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 123,329 (21,200) \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 26 --\par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 33 (37,718) 26,442 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ----------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 84 208,727 5,121 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ----------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 44) (413,996) (428,743) \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 11) --\par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 86 --\par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 71) --\par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 37) (16,701) -\par\pard\plain\fs16\plain\cf1\f50\fs16\ql ----------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 77) (430,697) (428,743) \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ----------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 64 392,298 73,736 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 50 483,000 92,470

Provision for doubtful accounts.............. Deferred income taxes.. Capacity available for sale excluding cash expenditures for investing activities.. Other.................. Changes in operating assets and liabilities...........

37,1 35,2

7,7

252,3 --------

Net cash provided by operating activities.

506,0 --------

CASH FLOWS USED IN INVESTING ACTIVITIES: Cash paid for construction in progress and capacity available for sale.... Acquisitions, net of cash acquired......... Proceeds from sale of unconsolidated subsidiary............ Purchases of property and equipment......... Investments in and advances to affiliates............

(1,577,0 (2,456,8

379,0 (193,8

(161,3 --------

Net cash used in investing activities.

(4,009,9 --------

CASH FLOWS PROVIDED BY FINANCING ACTIVITIES: Proceeds from issuance of common stock, net.. Proceeds from issuance of preferred stock, net...................

111,3

1,598,7

\par\pard\plain\fs16\plain\cf1\f50\fs16\ql Proceeds from issuance \par\pard\plain\fs16\plain\cf1\f50\fs16\ql of senior notes....... 2,000,0 00 796,495 150,000 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Proceeds from long-term \par\pard\plain\fs16\plain\cf1\f50\fs16\ql debt.................. 3,544,0 83 290,556 162,325 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Repayment of long-term \par\pard\plain\fs16\plain\cf1\f50\fs16\ql debt.................. (3,351,7 32) (176,890) -\par\pard\plain\fs16\plain\cf1\f50\fs16\ql Retirement of 1997 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql issued senior notes... (159,750) -\par\pard\plain\fs16\plain\cf1\f50\fs16\ql Redemption of 1997 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql issued preferred \par\pard\plain\fs16\plain\cf1\f50\fs16\ql stock................. (134,372) -\par\pard\plain\fs16\plain\cf1\f50\fs16\ql Finance costs incurred. (141,0 27) (37,665) (28,181) \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Cash reimbursement to \par\pard\plain\fs16\plain\cf1\f50\fs16\ql certain shareholders.. (7,047) -\par\pard\plain\fs16\plain\cf1\f50\fs16\ql Minority interest \par\pard\plain\fs16\plain\cf1\f50\fs16\ql investment in \par\pard\plain\fs16\plain\cf1\f50\fs16\ql subsidiary............ 350,0 00 --\par\pard\plain\fs16\plain\cf1\f50\fs16\ql Preferred dividends.... (52,4 29) --\par\pard\plain\fs16\plain\cf1\f50\fs16\ql Decrease (increase) in \par\pard\plain\fs16\plain\cf1\f50\fs16\ql restricted cash and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql cash equivalents...... 271,7 90 (419,515) (25,275) \par\pard\plain\fs16\plain\cf1\f50\fs16\ql -----------------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql Net cash provided by \par\pard\plain\fs16\plain\cf1\f50\fs16\ql financing activities. 4,330,7 99 1,027,110 425,075 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql -----------------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql NET INCREASE IN CASH AND \par\pard\plain\fs16\plain\cf1\f50\fs16\ql CASH EQUIVALENTS....... 826,9 06 805,140 1,453 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql CASH AND CASH \par\pard\plain\fs16\plain\cf1\f50\fs16\ql EQUIVALENTS, beginning \par\pard\plain\fs16\plain\cf1\f50\fs16\ql of period.............. 806,5 93 1,453 -\par\pard\plain\fs16\plain\cf1\f50\fs16\ql -----------------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql CASH AND CASH \par\pard\plain\fs16\plain\cf1\f50\fs16\ql EQUIVALENTS, end of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql period................. $1,633,4 99 $ 806,593 $ 1,453 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ======== == ========= ======== \par\pard\plain\fs16 \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql F-6 \par\pard\plain\fs16 \page \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql GLOBAL CROSSING LTD. AND SUBSIDI ARIES \par\pard\plain\fs16

\par\pard\plain\fs16\plain\cf1\f50\fs16\ql CONSOLIDATED STATEMENT S OF CASH FLOWS--(Continued) \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (In thousands) \par\pard\plain\fs16 \par\pard\plain\fs16 \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql Period From \par\pard\plain\fs16\plain\cf1\f50\fs16\ql March 19, 1997 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Year End ed Year Ended (Date of Inception) \par\pard\plain\fs16\plain\cf1\f50\fs16\ql December 31 , 1999 December 31, 1998 to December 31, 1997 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ---------------- ----------------- -------------------\par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql SUPPLEMENTAL INFORMATION \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ON NON-CASH FINANCING \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ACTIVITIES: \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Common stock issued to \par\pard\plain\fs16\plain\cf1\f50\fs16\ql holders of preferred \par\pard\plain\fs16\plain\cf1\f50\fs16\ql stock................. $ -$ -$ 13,325 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ======== === ========= ======== \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Common stock issued \par\pard\plain\fs16\plain\cf1\f50\fs16\ql upon conversion of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql debt.................. $ 5, 300 $ -$ -\par\pard\plain\fs16\plain\cf1\f50\fs16\ql ======== === ========= ======== \par\pard\plain\fs16\plain\cf1\f50\fs16\ql SUPPLEMENTAL INFORMATION \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ON NON-CASH INVESTING \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ACTIVITIES: \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Costs incurred for \par\pard\plain\fs16\plain\cf1\f50\fs16\ql construction in \par\pard\plain\fs16\plain\cf1\f50\fs16\ql progress and capacity \par\pard\plain\fs16\plain\cf1\f50\fs16\ql available for sale.... $ 1,704, 258 $ 607,865 $497,319 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Increase in accrued \par\pard\plain\fs16\plain\cf1\f50\fs16\ql construction costs.... (119, 405) (77,077) (52,414) \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Increase in accrued \par\pard\plain\fs16\plain\cf1\f50\fs16\ql interest.............. -(8,412) (1,641) \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Amortization of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql deferred finance \par\pard\plain\fs16\plain\cf1\f50\fs16\ql costs................. (7, 809) (7,883) (2,223) \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (Increase) decrease in \par\pard\plain\fs16\plain\cf1\f50\fs16\ql obligations under \par\pard\plain\fs16\plain\cf1\f50\fs16\ql capital leases........ -11,660 (12,298) \par\pard\plain\fs16\plain\cf1\f50\fs16\ql PCG Warrants........... -(112,157) -\par\pard\plain\fs16\plain\cf1\f50\fs16\ql ------------------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql Cash paid for \par\pard\plain\fs16\plain\cf1\f50\fs16\ql construction in \par\pard\plain\fs16\plain\cf1\f50\fs16\ql progress and capacity

\par\pard\plain\fs16\plain\cf1\f50\fs16\ql 044 $ 413,996 $428,743 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql === ========= ======== \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 300 $ -$ -\par\pard\plain\fs16\plain\cf1\f50\fs16\ql === ========= ======== \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 849 $ -$ -\par\pard\plain\fs16\plain\cf1\f50\fs16\ql === ========= ======== \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 000 $ -$ -\par\pard\plain\fs16\plain\cf1\f50\fs16\ql === ========= ======== \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 467) $(118,743) $ -\par\pard\plain\fs16\plain\cf1\f50\fs16\ql 915) (46,662) (1,032) \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 029) --\par\pard\plain\fs16\plain\cf1\f50\fs16\ql 475 64,197 5,325 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 739 30,332 1,249 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 650 15,604 -\par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 994) 17,554 20,900 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 874 --\par\pard\plain\fs16\plain\cf1\f50\fs16\ql -----------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql 333 $ (37,718) $ 26,442 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql === ========= ======== \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 676 $ -$ -\par\pard\plain\fs16\plain\cf1\f50\fs16\ql 149) --\par\pard\plain\fs16\plain\cf1\f50\fs16\ql

available for sale....

$ 1,577, ========

Non-cash purchases of property and equipment.............

$

38,

======== Transfer of capacity available for sale to property and equipment.............

$

574,

======== Common stock issued for non-compete rights.... $ 20,

======== SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Changes in operating assets and liabilities: Accounts receivable.... Other current assets... Other Long-Term Assets. Deferred revenue....... Accounts payable and accrued liabilities... Income taxes payable... Obligations under inland services agreement............. Deferred credits and other.................

$ (296, (47, (98, 331, 258, 73,

(21, 52, -------$ 252,

======== Detail of acquisitions: Assets acquired........ Liabilities assumed.... $11,120, (2,613, --------

-----------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql Common stock issued.... $ 8,507, 527 $ -$ -\par\pard\plain\fs16\plain\cf1\f50\fs16\ql ======== === ========= ======== \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Net cash paid for \par\pard\plain\fs16\plain\cf1\f50\fs16\ql acquisitions.......... $ 2,456, 811 $ -$ -\par\pard\plain\fs16\plain\cf1\f50\fs16\ql Cash acquired in \par\pard\plain\fs16\plain\cf1\f50\fs16\ql acquisitions.......... 123, 855 --\par\pard\plain\fs16\plain\cf1\f50\fs16\ql ------------------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql Cash paid for \par\pard\plain\fs16\plain\cf1\f50\fs16\ql acquisition, including \par\pard\plain\fs16\plain\cf1\f50\fs16\ql transaction fees...... $ 2,580, 666 $ -$ -\par\pard\plain\fs16\plain\cf1\f50\fs16\ql ======== === ========= ======== \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Investments in \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Affiliates: \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Cost of investments in \par\pard\plain\fs16\plain\cf1\f50\fs16\ql affiliates............ $ (161, 337) $(179,842) $ -\par\pard\plain\fs16\plain\cf1\f50\fs16\ql PCG Warrants........... -163,141 -\par\pard\plain\fs16\plain\cf1\f50\fs16\ql ======== === ========= ======== \par\pard\plain\fs16\plain\cf1\f50\fs16\ql $ (161, 337) $ (16,701) $ -\par\pard\plain\fs16\plain\cf1\f50\fs16\ql ======== === ========= ======== \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Cash paid for interest \par\pard\plain\fs16\plain\cf1\f50\fs16\ql and income taxes: \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Interest paid and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql capitalized........... $ 219, 289 $ 39,424 $ 8,136 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ======== === ========= ======== \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Interest paid (net of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql capitalized interest). $ 141, 230 $ 33,854 $ -\par\pard\plain\fs16\plain\cf1\f50\fs16\ql ======== === ========= ======== \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Cash paid for taxes.... $ 14, 589 $ 7,809 $ -\par\pard\plain\fs16\plain\cf1\f50\fs16\ql ======== === ========= ======== \par\pard\plain\fs16 \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql See accompanying notes. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql F-7 \par\pard\plain\fs16 \page \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql GLOBAL CROSSING LTD. AND SUBSIDI ARIES \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql CONSOLIDATED STATEMEN TS OF COMPREHENSIVE INCOME

\par\pard\plain\fs16\plain\cf1\f50\fs16\ql (In thousands) \par\pard\plain\fs16 \par\pard\plain\fs16 \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql Period from \par\pard\plain\fs16\plain\cf1\f50\fs16\ql March 19, 1997 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Year Ende d Year Ended (Date of Inception) \par\pard\plain\fs16\plain\cf1\f50\fs16\ql December 31, 1999 December 31, 1998 to December 31, 1997 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ---------------- ----------------- -------------------\par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Net loss................ $(70,926 ) $(87,903) $(160) \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Foreign currency \par\pard\plain\fs16\plain\cf1\f50\fs16\ql translation \par\pard\plain\fs16\plain\cf1\f50\fs16\ql adjustment............ (20,698 ) --\par\pard\plain\fs16\plain\cf1\f50\fs16\ql Unrealized gain on \par\pard\plain\fs16\plain\cf1\f50\fs16\ql securities............ 980 --\par\pard\plain\fs16\plain\cf1\f50\fs16\ql ------------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql Comprehensive loss...... $(90,644 ) $(87,903) $(160) \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ======== ======== ===== \par\pard\plain\fs16 \par\pard\plain\fs16 \par\pard\plain\fs16 \par\pard\plain\fs16 \par\pard\plain\fs16 \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql See accompanying notes. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql F-8 \par\pard\plain\fs16 \page \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql GLOBAL CROSSING LTD. AND SUBSIDI ARIES \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql NOTES TO CONSOLIDAT ED FINANCIAL STATEMENTS \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 1. BACKGROUND AND ORGANIZATION \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Global Crossing Ltd. (a Bermuda com pany, together with its consolidated \par\pard\plain\fs16\plain\cf1\f50\fs16\ql subsidiaries, "GCL" or the "Company") is building and offering services over \par\pard\plain\fs16\plain\cf1\f50\fs16\ql the world's first independent global fiber optic network, consisting of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 101,000 announced route miles and ser ving five continents, 27 countries and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql more than 200 major cities. Upon comp letion of our currently announced \par\pard\plain\fs16\plain\cf1\f50\fs16\ql systems, our network and our telecomm unications and Internet product offerings

\par\pard\plain\fs16\plain\cf1\f50\fs16\ql ting over 80% of the world's \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql premier provider of global broadband \par\pard\plain\fs16\plain\cf1\f50\fs16\ql vices for both wholesale and retail \par\pard\plain\fs16\plain\cf1\f50\fs16\ql state-of-the-art fiber optic network that \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ented global scope and scale to serve as \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ement believes that the Company's network \par\pard\plain\fs16\plain\cf1\f50\fs16\ql vice provider in most of its addressable \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql re with Softbank Corp. and Microsoft \par\pard\plain\fs16\plain\cf1\f50\fs16\ql st truly pan-Asian carrier to offer \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ations. The Asia Global Crossing joint \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 4, 1999. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql iary of GCL, will expand its product set \par\pard\plain\fs16\plain\cf1\f50\fs16\ql service solution that will provide web\par\pard\plain\fs16\plain\cf1\f50\fs16\ql lability, flexibility and scalability \par\pard\plain\fs16\plain\cf1\f50\fs16\ql xpanding digital economy. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql lding company for its subsidiaries' \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ystems (acquired July 2, 1999), Frontier \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 999), and Racal Telecom (acquired \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql rd of Directors declared a 2-for-1 split \par\pard\plain\fs16\plain\cf1\f50\fs16\ql form of a stock dividend which was \par\pard\plain\fs16\plain\cf1\f50\fs16\ql information presented in these \par\pard\plain\fs16\plain\cf1\f50\fs16\ql es retroactive effect to the 100-for-1 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 1 stock dividend in August 1998 and 2\par\pard\plain\fs16\plain\cf1\f50\fs16\ql . \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql

will be available in markets constitu international communications traffic. The Company's strategy is to be the Internet Protocol ("IP") and data ser customers. The Company is building a management believes to be of unpreced the backbone for this strategy. Manag will enable it to be the low cost ser markets. Asia Global Crossing, a joint ventu Corporation intends to become the fir worldwide bandwidth and data communic venture was established on November 2 GlobalCenter, a wholly-owned subsid to become a single-source e-commerce centric businesses with the high avai necessary to compete in the rapidly e Global Crossing Ltd. serves as a ho operations, including Global Marine S Corporation (acquired September 28, 1 November 24, 1999). In February 1999, the Company's Boa of the Company's common stock in the effective on March 9, 1999. All share consolidated financial statements giv stock split in January 1998, 1.5-forfor-1 stock dividend on March 9, 1999 2. SIGNIFICANT ACCOUNTING POLICIES These consolidated financial statem

ents have been prepared in accordance \par\pard\plain\fs16\plain\cf1\f50\fs16\ql with accounting principles generally accepted in the United States. The \par\pard\plain\fs16\plain\cf1\f50\fs16\ql significant accounting policies are s ummarized as follows: \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql a) Principles of Consolidation \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql The consolidated financial statemen ts include the accounts of GCL and its \par\pard\plain\fs16\plain\cf1\f50\fs16\ql wholly-owned subsidiaries. All signif icant intercompany transactions have been \par\pard\plain\fs16\plain\cf1\f50\fs16\ql eliminated. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql As described in Note 3, the Company completed the acquisitions of Global \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Marine Systems, Frontier and Racal Te lecom during 1999. These acquisitions \par\pard\plain\fs16\plain\cf1\f50\fs16\ql have had a major impact on the compar ability of the Company's financial \par\pard\plain\fs16\plain\cf1\f50\fs16\ql statements. To assist the reader of t hese financial statements and related \par\pard\plain\fs16\plain\cf1\f50\fs16\ql notes, the Company has disclosed cert ain financial information in Note 3 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql including the pro forma impact of the se acquisitions. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql b) Use of Estimates \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql The preparation of financial statem ents in conformity with generally \par\pard\plain\fs16\plain\cf1\f50\fs16\ql accepted accounting principles requir es management to make estimates and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql assumptions that affect the reported amounts of assets and liabilities and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql disclosure of contingent assets and l iabilities at the date of the financial \par\pard\plain\fs16\plain\cf1\f50\fs16\ql statements, as well as the reported a mounts of revenue and expenses during the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql reporting period. Actual amounts and results could differ from those \par\pard\plain\fs16\plain\cf1\f50\fs16\ql estimates. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql F-9 \par\pard\plain\fs16 \page \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql GLOBAL CROSSING LTD. AND SUBSIDI ARIES \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql NOTES TO CONSOLIDATED FIN ANCIAL STATEMENTS--(Continued) \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql The Company's operations and abilit y to grow may be affected by numerous \par\pard\plain\fs16\plain\cf1\f50\fs16\ql factors, including changes in custome r requirements, new laws and governmental \par\pard\plain\fs16\plain\cf1\f50\fs16\ql regulations and policies, technologic al advances, entry of new competitors and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql changes in the willingness of financi

al institutions and other lenders to \par\pard\plain\fs16\plain\cf1\f50\fs16\ql The Company cannot predict which, if any, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql a significant impact on the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ture, nor can it predict what impact, if \par\pard\plain\fs16\plain\cf1\f50\fs16\ql events might have on the Company's \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql stage until May 1998 when the United \par\pard\plain\fs16\plain\cf1\f50\fs16\ql he AC-1 system was placed into service, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ificant amounts of revenue. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql luding sales of capacity under operating \par\pard\plain\fs16\plain\cf1\f50\fs16\ql estimate for uncollectible accounts. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql re the relevant criteria for revenue \par\pard\plain\fs16\plain\cf1\f50\fs16\ql d in deferred revenue in the accompanying \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ements ("CPAs") that meet the criteria of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql nized in the period that the rights and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql the purchaser, which occurs when (i) the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql e capacity, which can only be suspended \par\pard\plain\fs16\plain\cf1\f50\fs16\ql l purchase price or fulfill its \par\pard\plain\fs16\plain\cf1\f50\fs16\ql chaser is obligated to pay Operations, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ") costs and (iii) the segment of a \par\pard\plain\fs16\plain\cf1\f50\fs16\ql sed is available for service. Certain \par\pard\plain\fs16\plain\cf1\f50\fs16\ql for capacity have paid deposits toward \par\pard\plain\fs16\plain\cf1\f50\fs16\ql cluded as deferred revenue in the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ets. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql

finance acquisitions and operations. of these or other factors might have telecommunications industry in the fu any, the occurrence of these or other operations. c) Development Stage Company The Company was in its development States to United Kingdom segment of t and the Company began generating sign d) Revenue Recognition Services Revenue recognized as services, inc type leases, are provided, net of an Payments received from customers befo recognition are satisfied are include consolidated balance sheets. Sales-Type Leases Revenue from Capacity Purchase Agre sales-type lease accounting are recog obligations of ownership transfer to purchaser obtains the right to use th if the purchaser fails to pay the ful contractual obligations, (ii) the pur Administration and Maintenance ("OA&M system related to the capacity purcha customers who have entered into CPAs the purchase price which have been in accompanying consolidated balance she Prior to July 1, 1999, substantiall

y all CPAs were treated as sales-type \par\pard\plain\fs16\plain\cf1\f50\fs16\ql leases as described in Statement of F inancial Accounting Standards No. 13, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql "Accounting for Leases" ("SFAS 13"). On July 1, 1999, the Company adopted \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Financial Accounting Standards Board Interpretation No. 43, "Real Estate \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Sales, an interpretation of FASB Stat ement No. 66" ("FIN 43"), which requires \par\pard\plain\fs16\plain\cf1\f50\fs16\ql prospective transactions to meet the criteria set forth in Statement of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Financial Accounting Standards No. 66 , "Accounting for Sales of Real Estate" \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ("SFAS 66") to qualify for sales-type lease accounting. Since sales of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql terrestrial capacity did not meet the new criteria, the terrestrial portion of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql CPAs executed subsequent to June 30, 1999 were recognized over the terms of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql the contracts, as services. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Percentage-of-Completion \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Revenues and estimated profits unde r long-term contracts for undersea \par\pard\plain\fs16\plain\cf1\f50\fs16\ql telecommunication installation by Glo bal Marine Systems are recognized under \par\pard\plain\fs16\plain\cf1\f50\fs16\ql the percentage-of-completion method o f accounting. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql e) Cost of Sales \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Services \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Costs of the network relating to ca pacity contracts accounted for as \par\pard\plain\fs16\plain\cf1\f50\fs16\ql operating leases are treated as fixed assets and, accordingly, are depreciated \par\pard\plain\fs16\plain\cf1\f50\fs16\ql over the estimated useful life of the capacity. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql F-10 \par\pard\plain\fs16 \page \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql GLOBAL CROSSING LTD. AND SUBSIDI ARIES \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql NOTES TO CONSOLIDATED FIN ANCIAL STATEMENTS--(Continued) \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Sales-Type Leases \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Prior to October 1, 1999, the effec tive date of the Frontier merger, cost of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql sales for subsea circuits was calcula ted based on the ratio of capacity \par\pard\plain\fs16\plain\cf1\f50\fs16\ql revenue recognized in the period to t otal expected capacity revenue over the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql life of the network system, multiplie

d by the total remaining costs of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql calculation of cost of sales matches \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ative to total expected revenue. Until \par\pard\plain\fs16\plain\cf1\f50\fs16\ql purposes of calculating cost of sales, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ded an estimate of remaining costs to be \par\pard\plain\fs16\plain\cf1\f50\fs16\ql m plus the cost of system upgrades that \par\pard\plain\fs16\plain\cf1\f50\fs16\ql to complete, provided the need for such \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ty consultant's independent revenue \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql any initiated service contract accounting \par\pard\plain\fs16\plain\cf1\f50\fs16\ql of its systems; however, certain \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ype lease accounting. For these \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ovided for recording cost of sales in the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql as recognized, in addition to the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql see Property and Equipment and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ice contract accounting, the amount \par\pard\plain\fs16\plain\cf1\f50\fs16\ql subsea capacity was calculated by \par\pard\plain\fs16\plain\cf1\f50\fs16\ql lue of the specific subsea capacity at \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ook value includes expected costs of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql nd ability to add through upgrades of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ch upgrades is supported by a third-party \par\pard\plain\fs16\plain\cf1\f50\fs16\ql cast. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Fees \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ales commissions and advisory fee \par\pard\plain\fs16\plain\cf1\f50\fs16\ql e recognition of revenue so as to \par\pard\plain\fs16\plain\cf1\f50\fs16\ql the related revenue. Under the Advisory \par\pard\plain\fs16\plain\cf1\f50\fs16\ql terminated by December 31, 1998, the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ("PCG Telecom") and its affiliates 2% of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ed. Under the Sales Agency Agreement, the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql

constructing the network system. This costs with the value of each sale rel the entire system was completed, for the total system costs incurred inclu incurred to complete the entire syste management had the intent and ability upgrades was supported by a third par forecast. Beginning October 1, 1999, the Comp and therefore began depreciating all contracts still qualified for sales-t transactions, the Company's policy pr period in which the related revenue w depreciation charge described below ( Construction in Progress). Under serv charged to cost of sales relating to determining the estimated net book va the time of the sale. The estimated b capacity the Company has the intent a that system, provided the need for su consultant's independent revenue fore f) Commissions and Advisory Services The Company's policy is to record s expenses and related payables upon th appropriately match these costs with Services Agreement ("ASA"), which was Company paid PCG Telecom Services LLC revenue for advisory services perform Company paid Tyco Submarine Systems L

td. ("TSSL") a commission based on a \par\pard\plain\fs16\plain\cf1\f50\fs16\ql f capacity on certain of the Company's \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql cted Cash and Cash Equivalents (Current \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql and short term highly liquid investments \par\pard\plain\fs16\plain\cf1\f50\fs16\ql nths or less at the date of purchase to \par\pard\plain\fs16\plain\cf1\f50\fs16\ql uivalents and restricted cash and cash \par\pard\plain\fs16\plain\cf1\f50\fs16\ql approximates fair value. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql uction in Progress \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql des capitalized leases, are stated at \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ation. Major enhancements are \par\pard\plain\fs16\plain\cf1\f50\fs16\ql epairs and maintenance are expensed when \par\pard\plain\fs16\plain\cf1\f50\fs16\ql egment's completion are reflected as \par\pard\plain\fs16\plain\cf1\f50\fs16\ql panying consolidated balance sheets and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql the date each segment of the applicable \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql irect expenditures for construction of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql . Capitalized costs include costs \par\pard\plain\fs16\plain\cf1\f50\fs16\ql act; advisory, consulting and legal fees; \par\pard\plain\fs16\plain\cf1\f50\fs16\ql incurred during the construction phase. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql em will be constructed, costs directly \par\pard\plain\fs16\plain\cf1\f50\fs16\ql der development are capitalized. Costs \par\pard\plain\fs16\plain\cf1\f50\fs16\ql jects incurred prior to the date the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql omes probable are expensed as incurred. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql of the Global Crossing network, the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ements to sell or exchange dark fiber, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql pacity. These non-monetary exchanges are \par\pard\plain\fs16\plain\cf1\f50\fs16\ql nsferred or, if applicable, the fair

percentage of revenue from the sale o systems. g) Cash and Cash Equivalents, Restri and Long Term) The Company considers cash in banks with an original maturity of three mo be cash equivalents. Cash and cash eq equivalents are stated at cost which h) Property and Equipment and Constr Property and equipment, which inclu cost, net of depreciation and amortiz capitalized, while expenditures for r incurred. Costs incurred prior to a s construction in progress in the accom recorded as property and equipment at system becomes operational. Construction in progress includes d network systems and is stated at cost incurred under the construction contr interest; and amortized finance costs Once it is probable that a cable syst identifiable with the cable system un relating to the evaluation of new pro development of the network system bec In connection with the construction Company has entered into various agre ducts, rights of ways, and certain ca recorded at the cost of the asset tra

\par\pard\plain\fs16\plain\cf1\f50\fs16\ql value of the asset received. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql F-11 \par\pard\plain\fs16 \page \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql GLOBAL CROSSING LTD. AND SUBSIDI ARIES \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql NOTES TO CONSOLIDATED FIN ANCIAL STATEMENTS--(Continued) \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Interest incurred, which includes t he amortization of deferred finance fees \par\pard\plain\fs16\plain\cf1\f50\fs16\ql and issuance discount ("interest cost "), are capitalized to construction in \par\pard\plain\fs16\plain\cf1\f50\fs16\ql progress. Total interest cost incurre d and interest capitalized to \par\pard\plain\fs16\plain\cf1\f50\fs16\ql construction in progress during the p eriods presented were: \par\pard\plain\fs16 \par\pard\plain\fs16 \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql For the period \par\pard\plain\fs16\plain\cf1\f50\fs16\ql March 31, 1997 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Year E nded Year Ended (Date of Inception) \par\pard\plain\fs16\plain\cf1\f50\fs16\ql December 31, 1999 December 31, 1998 to December 31, 1997 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ---------------- ----------------- -------------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql (In thousands) \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Interest cost incurred.. $217, 136 $92,813 $9,777 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ===== === ======= ====== \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Interest cost \par\pard\plain\fs16\plain\cf1\f50\fs16\ql capitalized to \par\pard\plain\fs16\plain\cf1\f50\fs16\ql construction in \par\pard\plain\fs16\plain\cf1\f50\fs16\ql progress............... $ 78, 059 $49,933 $9,777 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ===== === ======= ====== \par\pard\plain\fs16 \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql Depreciation is provided on a st raight-line basis over the estimated useful \par\pard\plain\fs16\plain\cf1\f50\fs16\ql lives of the assets, with the excepti on of leasehold improvements and assets \par\pard\plain\fs16\plain\cf1\f50\fs16\ql acquired through capital leases, whic h are depreciated over the lesser of the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql estimated useful lives or the term of the lease. Estimated useful lives are as \par\pard\plain\fs16\plain\cf1\f50\fs16\ql follows: \par\pard\plain\fs16 \par\pard\plain\fs16 \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql Buildings....................... ............................... 10-40 years \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Leasehold improvements..........

............................... 2-25 years \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Furniture, fixtures and equipmen t.............................. 2-30 years \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Transmission equipment.......... ............................... 3-25 years \par\pard\plain\fs16 \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql Beginning October 1, 1999, the C ompany commenced service contract \par\pard\plain\fs16\plain\cf1\f50\fs16\ql accounting. Carrying amounts related to completed subsea systems were \par\pard\plain\fs16\plain\cf1\f50\fs16\ql reclassified from capacity available for sale to depreciable assets, and are \par\pard\plain\fs16\plain\cf1\f50\fs16\ql being depreciated over their remainin g economic useful lives. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql When property or equipment is retir ed or otherwise disposed of, the cost and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql accumulated depreciation are relieved from the accounts, and resulting gains \par\pard\plain\fs16\plain\cf1\f50\fs16\ql or losses are reflected in the determ ination of current net income. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql The Company reviews the carrying va lue of property and equipment for \par\pard\plain\fs16\plain\cf1\f50\fs16\ql impairment whenever events and circum stances indicate that the carrying value \par\pard\plain\fs16\plain\cf1\f50\fs16\ql of an asset may not be recoverable fr om the estimated future cash flows \par\pard\plain\fs16\plain\cf1\f50\fs16\ql expected to result from its use and e ventual disposition. In cases where \par\pard\plain\fs16\plain\cf1\f50\fs16\ql undiscounted expected future cash flo ws are less than the carrying value, an \par\pard\plain\fs16\plain\cf1\f50\fs16\ql impairment loss would be recognized e qual to an amount by which the carrying \par\pard\plain\fs16\plain\cf1\f50\fs16\ql value exceeds the fair value of the a ssets. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql i) Goodwill and Intangibles \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Costs in excess of net assets of ac quired businesses are amortized on the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql straight-line method over 3 to 25 yea rs. In cases where undiscounted expected \par\pard\plain\fs16\plain\cf1\f50\fs16\ql future cash flows are less than the c arrying value, the impairment loss would \par\pard\plain\fs16\plain\cf1\f50\fs16\ql be included in the determination of c urrent net income. Subsequent to \par\pard\plain\fs16\plain\cf1\f50\fs16\ql acquisitions, the Company continually evaluates whether later events and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql circumstances have occurred which ind icate that the remaining estimated useful \par\pard\plain\fs16\plain\cf1\f50\fs16\ql life of intangible assets may warrant revision or that the remaining balance \par\pard\plain\fs16\plain\cf1\f50\fs16\ql of such assets may not be recoverable . When factors indicate that intangible \par\pard\plain\fs16\plain\cf1\f50\fs16\ql assets should be evaluated for possib le impairment, the Company uses an \par\pard\plain\fs16\plain\cf1\f50\fs16\ql estimate of the undiscounted operatin g income over the remaining life of the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql intangible assets in measuring whethe

r the intangible assets are recoverable. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql j) Deferred Finance Costs \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Costs incurred to obtain financing through the issuance of senior notes and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql long-term debt have been reflected as an asset included in other assets in the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql accompanying consolidated balance she ets. Costs incurred to obtain financing \par\pard\plain\fs16\plain\cf1\f50\fs16\ql through the issuance of preferred sto ck have been reflected as a reduction in \par\pard\plain\fs16\plain\cf1\f50\fs16\ql the carrying value \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql F-12 \par\pard\plain\fs16 \page \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql GLOBAL CROSSING LTD. AND SUBSIDI ARIES \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql NOTES TO CONSOLIDATED FIN ANCIAL STATEMENTS--(Continued) \par\pard\plain\fs16\plain\cf1\f50\fs16\ql of the issued preferred stock. The fi nancing costs relating to the debt are \par\pard\plain\fs16\plain\cf1\f50\fs16\ql amortized over the lesser of the term of the related debt agreements or the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql expected payment date of the debt obl igation. In 1998, certain preferred stock \par\pard\plain\fs16\plain\cf1\f50\fs16\ql was redeemed at which time the remain ing balance of unamortized discount and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql offering costs was charged against ad ditional paid-in capital. In 1999 and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 1998, certain long-term debt was exti nguished, at which time the remaining \par\pard\plain\fs16\plain\cf1\f50\fs16\ql balance of unamortized discount and o ffering costs was written off and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql included in extraordinary loss on ret irement of debt. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql During the construction period, the amortized portion of deferred financing \par\pard\plain\fs16\plain\cf1\f50\fs16\ql costs relating to the senior notes an d the long-term debt are included in \par\pard\plain\fs16\plain\cf1\f50\fs16\ql construction in progress as a compone nt of interest capitalized or recorded as \par\pard\plain\fs16\plain\cf1\f50\fs16\ql interest expense in accordance with S tatement of Financial Accounting \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Standards (SFAS) No. 34, "Capitalizat ion of Interest Cost". The amortized \par\pard\plain\fs16\plain\cf1\f50\fs16\ql portion of the deferred financing cos ts relating to the preferred stock is \par\pard\plain\fs16\plain\cf1\f50\fs16\ql included as a component of preferred stock dividends. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql k) Investments \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Investments in which the Company do es not have significant influence or in \par\pard\plain\fs16\plain\cf1\f50\fs16\ql which the Company holds an ownership

interest of less than 20% are recorded \par\pard\plain\fs16\plain\cf1\f50\fs16\ql The equity method of accounting is \par\pard\plain\fs16\plain\cf1\f50\fs16\ql , if the Company owns an aggregate of 20% \par\pard\plain\fs16\plain\cf1\f50\fs16\ql mpany exercises significant influence \par\pard\plain\fs16\plain\cf1\f50\fs16\ql is also applied for entities in which \par\pard\plain\fs16\plain\cf1\f50\fs16\ql of 50% but over which the Company is \par\pard\plain\fs16\plain\cf1\f50\fs16\ql If the Company holds more than 50% of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql effective control, the owned entity's \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ate deductions for minority interest are \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ated financial statements. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql al instruments to reduce its exposure to \par\pard\plain\fs16\plain\cf1\f50\fs16\ql s and foreign currency exchange rates. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql and procedures for risk assessment and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql g of derivative financial instrument \par\pard\plain\fs16\plain\cf1\f50\fs16\ql r into financial instruments for trading \par\pard\plain\fs16\plain\cf1\f50\fs16\ql they are presented on the accompanying \par\pard\plain\fs16\plain\cf1\f50\fs16\ql arrying values, which approximates their \par\pard\plain\fs16\plain\cf1\f50\fs16\ql market quotes, current interest rates or \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql d currency contracts, hedging the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql rrency transactions. Gains and losses on \par\pard\plain\fs16\plain\cf1\f50\fs16\ql time the underlying transaction is \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql y has entered into an interest rate swap \par\pard\plain\fs16\plain\cf1\f50\fs16\ql est-rate exposure on debt. Hedge \par\pard\plain\fs16\plain\cf1\f50\fs16\ql these instruments; accordingly, the net \par\pard\plain\fs16\plain\cf1\f50\fs16\ql n the agreement are accrued and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql st expense on the related debt. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql

using the cost method of accounting. applied for investments in affiliates to 50% of the affiliate and if the Co over the affiliate. The equity method the Company's ownership is in excess unable to exercise effective control. the ownership and is able to exercise financial statements and the appropri included in the accompanying consolid l) Financial Instruments The Company uses derivative financi adverse fluctuations in interest rate The Company has established policies the approval, reporting and monitorin activities. The Company does not ente or speculative purposes. Accordingly, consolidated balance sheet at their c fair values. Fair values are based on management estimates, as appropriate. The Company has entered into forwar exchange risk on committed foreign cu these contracts are recognized at the completed. As discussed in Note 15, the Compan agreement to hedge its variable inter accounting was applied in respect of cash amounts to be paid or received o recognized as an adjustment to intere m) Income Taxes

\par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql The Company recognizes current and deferred income tax assets and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql liabilities based upon all events tha t have been recognized in the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql consolidated financial statements as measured by the enacted tax laws. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql n) Effect of Foreign Currencies \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql For those subsidiaries using the U. S. Dollar as their functional currency, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql transaction loss is recorded in the a ccompanying consolidated statements of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql operations. The Company's foreign tra nsaction loss was $26.9 million \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql F-13 \par\pard\plain\fs16 \page \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql GLOBAL CROSSING LTD. AND SUBSIDI ARIES \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql NOTES TO CONSOLIDATED FIN ANCIAL STATEMENTS--(Continued) \par\pard\plain\fs16\plain\cf1\f50\fs16\ql for the year ended December 31, 1999. The effect of foreign currency \par\pard\plain\fs16\plain\cf1\f50\fs16\ql transactions in all periods prior to the year ended December 31, 1999 were \par\pard\plain\fs16\plain\cf1\f50\fs16\ql immaterial. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql For those subsidiaries not using th e U.S. Dollar as their functional \par\pard\plain\fs16\plain\cf1\f50\fs16\ql currency, assets and liabilities are translated at exchange rates in effect at \par\pard\plain\fs16\plain\cf1\f50\fs16\ql the balance sheet date and income and expense accounts are translated at \par\pard\plain\fs16\plain\cf1\f50\fs16\ql average exchange rates during the per iod. Resulting translation adjustments \par\pard\plain\fs16\plain\cf1\f50\fs16\ql are recorded directly to a separate c omponent of shareholders' equity. For the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql year ended December 31, 1999, the Com pany incurred a foreign currency \par\pard\plain\fs16\plain\cf1\f50\fs16\ql translation loss of $20.7 million. Fo r all periods prior to December 31, 1999, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql the translation adjustments were imma terial. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql o) Stock Option Plan \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql The Company accounts for stock opti on grants in accordance with Accounting \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Principles Board Opinion No. 25, "Acc ounting for Stock Issued to Employees" \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ("APB 25"), and, accordingly, recogni zes compensation expense for stock option \par\pard\plain\fs16\plain\cf1\f50\fs16\ql grants to the extent that the estimat ed fair value of the stock exceeds the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql exercise price of the option at the m

easurement date. The compensation expense \par\pard\plain\fs16\plain\cf1\f50\fs16\ql over the vesting period of the options. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql of credit risk among its customer base. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql valuations of its larger customer's \par\pard\plain\fs16\plain\cf1\f50\fs16\ql e year ended December 31, 1999, five \par\pard\plain\fs16\plain\cf1\f50\fs16\ql the Company's receivables and revenue, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql sition 98-5, "Reporting on the Costs of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql the first quarter of 1999. Accordingly, a \par\pard\plain\fs16\plain\cf1\f50\fs16\ql f tax benefit), representing start-up \par\pard\plain\fs16\plain\cf1\f50\fs16\ql previous periods, was charged against \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql No. 137, "Accounting for Derivative \par\pard\plain\fs16\plain\cf1\f50\fs16\ql eferral of the Effective Date of SFAS No. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ffective date to fiscal quarters \par\pard\plain\fs16\plain\cf1\f50\fs16\ql tatement standardizes the accounting for \par\pard\plain\fs16\plain\cf1\f50\fs16\ql d requires that all derivatives be \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ial position as either assets or \par\pard\plain\fs16\plain\cf1\f50\fs16\ql the fair value of derivatives that do \par\pard\plain\fs16\plain\cf1\f50\fs16\ql a are to be reported in earnings. The \par\pard\plain\fs16\plain\cf1\f50\fs16\ql rd has not been quantified. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql n reclassified in the consolidated \par\pard\plain\fs16\plain\cf1\f50\fs16\ql rrent year presentation. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ons occurred during 1999 and have been

is charged against operations ratably p) Concentration of Credit Risk The Company has some concentration The Company performs ongoing credit e financial condition. As of and for th customers represented 14% and 29% of respectively. q) Change in Accounting Policy The Company adopted Statement of Po Start-Up Activities" ("SOP 98-5") in one-time charge of $15 million (net o costs incurred and capitalized during net income. r) Pending Accounting Standards In June 1999, the FASB issued SFAS Instruments and Hedging Activities--D 133", which deferred SFAS No. 133's e beginning after June 15, 2000. This s derivatives and hedging activities an recognized in the statement of financ liabilities at fair value. Changes in not meet the hedge accounting criteri impact of the adoption of this standa s) Reclassifications Certain prior year amounts have bee financial statements to conform to cu 3. MERGERS AND ACQUISITIONS The following mergers and acquisiti

\par\pard\plain\fs16\plain\cf1\f50\fs16\ql accounted for in the accompanying con solidated financial statements under the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql purchase method of accounting for bus iness combinations. The purchase price \par\pard\plain\fs16\plain\cf1\f50\fs16\ql was allocated based on the estimated fair value of acquired assets and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql liabilities at the date of acquisitio n. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql F-14 \par\pard\plain\fs16 \page \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql GLOBAL CROSSING LTD. AND SUBSIDI ARIES \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql NOTES TO CONSOLIDATED FIN ANCIAL STATEMENTS--(Continued) \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Global Marine Systems Acquisition \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql On July 2, 1999, the Company acquir ed the Global Marine business of Cable & \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Wireless Plc for approximately $908 m illion, consisting of a combination of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql cash and assumed indebtedness. This r esulted in an excess of purchase price \par\pard\plain\fs16\plain\cf1\f50\fs16\ql over net assets acquired of $693 mill ion, which was allocated to goodwill and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql other intangible assets and are being amortized on the straight-line method \par\pard\plain\fs16\plain\cf1\f50\fs16\ql over 3-25 years. Global Marine System s provides services, including \par\pard\plain\fs16\plain\cf1\f50\fs16\ql maintenance under a number of long-te rm contracts, to cables built by carriers \par\pard\plain\fs16\plain\cf1\f50\fs16\ql and is the world's largest undersea c able installation and maintenance \par\pard\plain\fs16\plain\cf1\f50\fs16\ql company. The Company initially financ ed the acquisition with committed bank \par\pard\plain\fs16\plain\cf1\f50\fs16\ql financing in the amount of $600 milli on and the remainder with cash on hand. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Frontier Corporation Merger \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql On September 28, 1999, the Company completed its merger with Frontier \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Corporation, resulting in Frontier be coming a wholly owned subsidiary of the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Company. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Frontier shareholders received 2.05 shares of the Company's common stock for \par\pard\plain\fs16\plain\cf1\f50\fs16\ql each outstanding share of common stoc k of Frontier Corporation, for a total of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 355 million shares of Global Crossing common stock, including outstanding and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql unexercised stock options. The purcha se price of $10.3 billion reflects a \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Global Crossing stock price of $22 15 /16 per share, the average closing price

\par\pard\plain\fs16\plain\cf1\f50\fs16\ql September 1, 1999 through September 3, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Frontier stock options assumed by Global \par\pard\plain\fs16\plain\cf1\f50\fs16\ql e merger with the Company is deemed to \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ness on September 30, 1999. The excess of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ed of $7.7 billion was allocated to \par\pard\plain\fs16\plain\cf1\f50\fs16\ql goodwill and intangible assets are being \par\pard\plain\fs16\plain\cf1\f50\fs16\ql over 6-25 years \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql cquired Racal Telecom for approximately \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ered into a (Pounds)675 million \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ecember 31, 1999) credit facility to \par\pard\plain\fs16\plain\cf1\f50\fs16\ql f purchase price over net assets acquired \par\pard\plain\fs16\plain\cf1\f50\fs16\ql will and is being amortized on the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Racal Telecom owns one of the most \par\pard\plain\fs16\plain\cf1\f50\fs16\ql tworks in the United Kingdom. For \par\pard\plain\fs16\plain\cf1\f50\fs16\ql is deemed to have occurred as of the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 9. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql al Crossing joint venture was \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ty interest, the Company contributed to \par\pard\plain\fs16\plain\cf1\f50\fs16\ql hts in East Asia Crossing ("EAC") and its \par\pard\plain\fs16\plain\cf1\f50\fs16\ql -1"). Softbank Corp. and Microsoft \par\pard\plain\fs16\plain\cf1\f50\fs16\ql lion in cash to Asia Global Crossing. In \par\pard\plain\fs16\plain\cf1\f50\fs16\ql itted to make a total of at least $200 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql network over a three-year period, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql PC-1 and EAC. Softbank and Microsoft have \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ng's network in the region, subject to \par\pard\plain\fs16\plain\cf1\f50\fs16\ql st of $351 million was recorded in 1999 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql .

of Global Crossing common stock from 1999, and includes long term debt and Crossing. For accounting purposes, th have occurred as of the close of busi purchase price over net assets acquir goodwill and other intangible assets; amortized on the straight-line method Racal Telecom Acquisition On November 24, 1999, the Company a $1.6 billion in cash. The Company ent (approximately $1,091 million as of D finance the acquisition. The excess o of $1.6 billion was allocated to good straight-line method over 6-25 years. extensive fiber telecommunications ne accounting purposes, the acquisition close of business on November 30, 199 Asia Global Crossing On November 24, 1999, the Asia Glob established. In exchange for a majori the joint venture its development rig 58% interest in Pacific Crossing ("PC Corporation each contributed $175 mil addition, Softbank and Microsoft comm million in capacity purchases on our expected to be utilized primarily on also agreed to use Asia Global Crossi specified conditions. Minority intere in connection with this joint venture

\par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Hutchison Global Crossing \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql On November 15, 1999, the Company e ntered into an agreement with Hutchison \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Whampoa Limited ("Hutchison") to form a joint venture called Hutchison Global \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Crossing, which began operations on J anuary 12, 2000. The joint venture is \par\pard\plain\fs16\plain\cf1\f50\fs16\ql owned in equal parts by the Company a nd Hutchison. In exchange for its 50 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql percent interest, the Company will co ntribute certain assets and services to \par\pard\plain\fs16\plain\cf1\f50\fs16\ql the joint venture and, in January 200 0, issued to Hutchison $400 million \par\pard\plain\fs16\plain\cf1\f50\fs16\ql aggregate liquidation preference of i ts 6 3/8% cumulative convertible \par\pard\plain\fs16\plain\cf1\f50\fs16\ql preferred stock, series B, convertibl e into its common stock. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql F-15 \par\pard\plain\fs16 \page \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql GLOBAL CROSSING LTD. AND SUBSIDI ARIES \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql NOTES TO CONSOLIDATED FIN ANCIAL STATEMENTS--(Continued) \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql The initial purchase price allocati ons for the 1999 business combinations \par\pard\plain\fs16\plain\cf1\f50\fs16\ql are based on current estimates. The C ompany will make final purchase price \par\pard\plain\fs16\plain\cf1\f50\fs16\ql allocations based upon final values f or certain assets and liabilities. As a \par\pard\plain\fs16\plain\cf1\f50\fs16\ql result, the final purchase price allo cation may differ from the presented \par\pard\plain\fs16\plain\cf1\f50\fs16\ql estimate. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql The following unaudited pro forma c ondensed combined financial information \par\pard\plain\fs16\plain\cf1\f50\fs16\ql of Global Crossing, Global Marine Sys tems, Frontier, Racal Telecom and the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Hutchison Global Crossing joint ventu re demonstrates the results of operations \par\pard\plain\fs16\plain\cf1\f50\fs16\ql had the merger and acquisitions relat ed transactions been completed at the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql beginning of the periods presented. \par\pard\plain\fs16 \par\pard\plain\fs16 \par\pard\plain\fs16 \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql December 31, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql -------------------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql 1999 1998 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ------------ -----------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql

(unaudited) \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (In thousands, except \par\pard\plain\fs16\plain\cf1\f50\fs16\ql share and per share data) \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Revenue........................... .............. $ 4,139,897 $ 3,643,521 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ============ ============ \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Net loss before extraordinary item s and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql cumulative effect of change in ac counting \par\pard\plain\fs16\plain\cf1\f50\fs16\ql principles....................... .............. $ (462,544) $ (474,882) \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ============ ============ \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Net loss.......................... .............. $ (522,935) $ (496,346) \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ============ ============ \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Loss applicable to common sharehol ders before \par\pard\plain\fs16\plain\cf1\f50\fs16\ql extraordinary items and cumulativ e effect of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql change in accounting principles.. .............. $ (554,715) $ (513,063) \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ============ ============ \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Loss applicable to common sharehol ders.......... $ (614,986) $ (568,487) \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ============ ============ \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Loss per common share: \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Loss applicable to common shareh olders \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Basic and diluted............... .............. $ (0.80) $ (0.80) \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ============ ============ \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Loss applicable to common sharehol ders before \par\pard\plain\fs16\plain\cf1\f50\fs16\ql extraordinary items and cumulativ e effect of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql change in accounting principles \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Basic and diluted............... .............. $ (0.72) $ (0.72) \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ============ ============ \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Shares used in computing loss per share \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Basic and diluted............... .............. 767,355,151 708,518,640 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ============ ============ \par\pard\plain\fs16 \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql 4. RESTRICTED CASH AND CASH EQUI VALENTS \par\pard\plain\fs16

\par\pard\plain\fs16\plain\cf1\f50\fs16\ql Current and long term restricted ca sh and cash equivalents include the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql following: \par\pard\plain\fs16 \par\pard\plain\fs16 \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql December 31, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ----------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql 1999 1998 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql -------- -------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql (In thousands) \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Funds restricted for PC-1 construc tion.................... $138,118 $231,790 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Funds restricted under the AC-1 Cr edit Facility........... -89,000 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Funds restricted for MAC construct ion..................... -65,000 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Funds restricted for dividends pay ments to parent company. 76,202 -\par\pard\plain\fs16\plain\cf1\f50\fs16\ql Funding for future interest on sen ior notes............... -38,000 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Other............................. ........................ 17,092 21,000 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql -------- -------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql $231,412 $444,790 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ======== ======== \par\pard\plain\fs16 \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql Under the Open Market Plan, divi dend payments to the parent company are \par\pard\plain\fs16\plain\cf1\f50\fs16\ql temporarily prohibited until Frontier Telephone of Rochester, Inc. ("FTR") \par\pard\plain\fs16\plain\cf1\f50\fs16\ql receives clearance from the New York State Public Service Commission that \par\pard\plain\fs16\plain\cf1\f50\fs16\ql service requirements are being met. C ash restricted for dividend payments by \par\pard\plain\fs16\plain\cf1\f50\fs16\ql FTR, as of December 31, 1999, was app roximately $76.2 million. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql F-16 \par\pard\plain\fs16 \page \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql GLOBAL CROSSING LTD. AND SUBSIDI ARIES \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql NOTES TO CONSOLIDATED FIN ANCIAL STATEMENTS--(Continued) \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 5. ACCOUNTS RECEIVABLE \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Current and long term accounts rece ivable are comprised of: \par\pard\plain\fs16

\par\pard\plain\fs16 \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql December 31, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql -------------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql 1999 1998 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ---------- -------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql (In thousands) \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Accounts receivable............... ..................... $1,114,135 $118,743 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Allowance for doubtful accounts... ..................... (95,110) (4,233) \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ---------- -------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql Accounts receivable, net.......... ..................... $1,019,025 $114,510 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ========== ======== \par\pard\plain\fs16 \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql 6. PROPERTY AND EQUIPMENT \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Property and equipment consist of t he following: \par\pard\plain\fs16 \par\pard\plain\fs16 \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql December 31, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql -------------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql 1999 1998 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ---------- -------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql (In thousands) \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Land.............................. ..................... $ 14,886 $ -\par\pard\plain\fs16\plain\cf1\f50\fs16\ql Buildings......................... ..................... 184,827 -\par\pard\plain\fs16\plain\cf1\f50\fs16\ql Leasehold improvements............ ..................... 29,096 774 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Furniture, fixtures and equipment. ..................... 771,585 5,306 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Transmission equipment............ ..................... 2,544,903 -\par\pard\plain\fs16\plain\cf1\f50\fs16\ql ---------- -------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql 3,545,297 6,080 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Accumulated depreciation.......... ..................... (124,874) (580) \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ---------- -------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql 3,420,423 5,500 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Construction in progress.......... ..................... 2,605,630 428,207

\par\pard\plain\fs16\plain\cf1\f50\fs16\ql ---------- -------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql Total property and equipment, net. ..................... $6,026,053 $433,707 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ========== ======== \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Depreciation and amortization expen se for the year ended December 31, 1999 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql was approximately $124 million. Depre ciation expense for December 31, 1998 and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql for the period ended March 19, 1997 ( date of inception) to December 31, 1997 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql was insignificant. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 7. GOODWILL AND INTANGIBLES \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql The Company acquired three companie s in 1999 as described in Note 3. All \par\pard\plain\fs16\plain\cf1\f50\fs16\ql companies acquired have been accounte d for as purchases with the excess of the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql purchase price over the estimated fai r value of the net assets acquired \par\pard\plain\fs16\plain\cf1\f50\fs16\ql recorded as goodwill. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Goodwill and intangibles are as fol lows: \par\pard\plain\fs16 \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql December 31, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql -------------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql 1999 1998 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ---------- -------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql (In thousands) \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Goodwill and intangibles.......... ..................... $9,685,043 $ -\par\pard\plain\fs16\plain\cf1\f50\fs16\ql Accumulated amortization.......... ..................... (127,621) -\par\pard\plain\fs16\plain\cf1\f50\fs16\ql ---------- -------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql Goodwill and intangibles, net..... ..................... $9,557,422 $ -\par\pard\plain\fs16\plain\cf1\f50\fs16\ql ========== ======== \par\pard\plain\fs16 \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql F-17 \par\pard\plain\fs16 \page \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql GLOBAL CROSSING LTD. AND SUBSIDI ARIES \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql NOTES TO CONSOLIDATED FIN ANCIAL STATEMENTS--(Continued) \par\pard\plain\fs16

\par\pard\plain\fs16\plain\cf1\f50\fs16\ql 8. INVESTMENT IN AND ADVANCES TO/FROM AFFILIATES \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Investment in Pacific Crossing Ltd. ("PCL") \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql In April 1998, the Company entered into a joint venture to construct the PC\par\pard\plain\fs16\plain\cf1\f50\fs16\ql 1 cable system which is owned and ope rated by PCL. The Company has an economic \par\pard\plain\fs16\plain\cf1\f50\fs16\ql interest in PCL represented by a 50% direct voting interest and, through one \par\pard\plain\fs16\plain\cf1\f50\fs16\ql of the joint venture partners, owns a further 8% economic non-voting interest. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Investment in Global Access Ltd. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql In December 1998, the Company enter ed into a joint venture, Global Access \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Ltd., to construct and operate GAL, a terrestrial cable system connecting \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Tokyo, Osaka and Nagoya with PC-1. Th e Company has a 49% interest in Global \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Access Ltd. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql The Company's investments in PCL an d GAL are accounted for as interest in \par\pard\plain\fs16\plain\cf1\f50\fs16\ql affiliates under the equity method be cause the Company is not able to exercise \par\pard\plain\fs16\plain\cf1\f50\fs16\ql effective control over their operatio ns. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql The Company's investment in affilia tes consists of the following: \par\pard\plain\fs16 \par\pard\plain\fs16 \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql December 31, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ----------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql 1999 1998 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql -------- -------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql (In thousands) \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Investment in Pacific Crossing Ltd ........................ $266,068 $160,639 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Investment in Global Access Ltd... ........................ 22,693 16,695 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Other investments and advances to/ from affiliates......... 35,199 -\par\pard\plain\fs16\plain\cf1\f50\fs16\ql -------- -------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql Investment in and advances to/from affiliates............. $323,960 $177,334 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ======== ======== \par\pard\plain\fs16 \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql 9. TAXES

\par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql The Company accounts for income tax es in accordance with SFAS No. 109, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql "Accounting for Income Taxes" ("SFAS 109"). The provision for income taxes is \par\pard\plain\fs16\plain\cf1\f50\fs16\ql comprised of the following: \par\pard\plain\fs16 \par\pard\plain\fs16 \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql December 31, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ----------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql 1999 1998 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql -------- ------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql (In thousands) \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Current........................... ........................ $144,906 $23,413 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Deferred.......................... ........................ (18,367) 9,654 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql -------- ------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql Total income tax expense.......... ........................ $126,539 $33,067 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ======== ======= \par\pard\plain\fs16 \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql Deferred income taxes reflect th e net tax effect of temporary differences \par\pard\plain\fs16\plain\cf1\f50\fs16\ql between the carrying amounts of asset s and liabilities for financial reporting \par\pard\plain\fs16\plain\cf1\f50\fs16\ql purposes and amounts used for income tax purposes. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Bermuda does not impose a statutory income tax and consequently the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql provision for income taxes recorded r elates to income earned by certain \par\pard\plain\fs16\plain\cf1\f50\fs16\ql subsidiaries of the Company which are located in jurisdictions which impose \par\pard\plain\fs16\plain\cf1\f50\fs16\ql income taxes. \par\pard\plain\fs16 \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql F-18 \par\pard\plain\fs16 \page \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql GLOBAL CROSSING LTD. AND SUBSIDI ARIES \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql NOTES TO CONSOLIDATED FIN ANCIAL STATEMENTS--(Continued) \par\pard\plain\fs16\plain\cf1\f50\fs16\ql The following is a summary of the s ignificant items giving rise to \par\pard\plain\fs16\plain\cf1\f50\fs16\ql components of the Company's deferred tax assets and liabilities: \par\pard\plain\fs16 \par\pard\plain\fs16

\par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql December 31, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql -----------------------------------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql 1999 1998 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql --------------------- -------------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql Assets Liabilities Assets Liabilities \par\pard\plain\fs16\plain\cf1\f50\fs16\ql -------- ----------- -------- ----------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql (In thousands) (In thousands) \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Bad debt reserve................. $ 11,199 $ -- $ -- $ -\par\pard\plain\fs16\plain\cf1\f50\fs16\ql Research and development costs... -(41,018) --\par\pard\plain\fs16\plain\cf1\f50\fs16\ql Depreciation..................... -(380,893) -(4,042) \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Basis adjustment to purchased \par\pard\plain\fs16\plain\cf1\f50\fs16\ql companies....................... -(9,282) --\par\pard\plain\fs16\plain\cf1\f50\fs16\ql Employee benefits obligation..... -(32,918) --\par\pard\plain\fs16\plain\cf1\f50\fs16\ql Net operating loss (NOL) \par\pard\plain\fs16\plain\cf1\f50\fs16\ql carryforwards................... 58,865 ---\par\pard\plain\fs16\plain\cf1\f50\fs16\ql Deferred and stock related \par\pard\plain\fs16\plain\cf1\f50\fs16\ql compensation.................... 11,066 -504 -\par\pard\plain\fs16\plain\cf1\f50\fs16\ql Other............................ 35,156 (15,235) -(6,116) \par\pard\plain\fs16\plain\cf1\f50\fs16\ql -------- --------- -------- -------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql 116,286 (479,346) 504 (10,158) \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Valuation allowance.............. (54,780) ---\par\pard\plain\fs16\plain\cf1\f50\fs16\ql -------- --------- -------- -------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql $ 61,506 $(479,346) $ 504 $(10,158) \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ======== ========= ======== ======== \par\pard\plain\fs16 \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql The Company established a valuat ion allowance of $54,780 as of December 31, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 1999. The valuation allowance is rela ted to deferred tax assets due to the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql uncertainty of realizing the full ben efit of the NOL carryforwards. In \par\pard\plain\fs16\plain\cf1\f50\fs16\ql evaluating the amount of valuation al lowance needed, the Company considers the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql acquired companies' prior operating r esults and future plans and expectations. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql The utilization period of the NOL car ryforwards and the turnaround period of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql other temporary differences are also considered. The Company's NOLs begin to

\par\pard\plain\fs16\plain\cf1\f50\fs16\ql expire in 2004. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 10. LONG-TERM DEBT \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Outstanding debt consists of the fo llowing: \par\pard\plain\fs16 \par\pard\plain\fs16 \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql December 31, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ---------------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql 1999 1998 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ---------- ---------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql (In thousands) \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 9 1/2% Senior Notes due 2009...... ................... $1,100,000 $ -\par\pard\plain\fs16\plain\cf1\f50\fs16\ql 9 1/8% Senior Notes due 2006...... ................... 900,000 -\par\pard\plain\fs16\plain\cf1\f50\fs16\ql 9 5/8% Senior Notes due 2008...... ................... 800,000 800,000 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Senior Secured Revolving Credit Fa cility............. 648,597 -\par\pard\plain\fs16\plain\cf1\f50\fs16\ql Racal Telecom Term Loan A......... ................... 646,130 -\par\pard\plain\fs16\plain\cf1\f50\fs16\ql Medium-Term Notes, 7.51%--9.3%, du e 2000 to 2004..... 219,000 -\par\pard\plain\fs16\plain\cf1\f50\fs16\ql 7 1/4% Senior Notes due 2004...... ................... 300,000 -\par\pard\plain\fs16\plain\cf1\f50\fs16\ql 6% Dealer Remarketable Securities (DRS) due 2013..... 200,000 -\par\pard\plain\fs16\plain\cf1\f50\fs16\ql AC-1 Credit Facility.............. ................... -266,799 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Other............................. ................... 242,028 9,192 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ---------- ---------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql Total debt........................ ................... 5,055,755 1,075,991 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Less: discount on long-term debt, net................ (31,715) (3,505) \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Less: current portion of long-term debt.............. (5,496) (6,393) \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ---------- ---------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql Long-term debt.................... ................... $5,018,544 $1,066,093 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ========== ========== \par\pard\plain\fs16 \par\pard\plain\fs16 \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql F-19 \par\pard\plain\fs16 \page \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql GLOBAL CROSSING LTD. AND SUBSIDI ARIES \par\pard\plain\fs16

\par\pard\plain\fs16\plain\cf1\f50\fs16\ql NOTES TO CONSOLIDATED FIN ANCIAL STATEMENTS--(Continued) \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Maturities of long-term debt are as follows (in thousands): \par\pard\plain\fs16 \par\pard\plain\fs16 \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql Year Ending December 31, \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 2000............................ .............................. $ 5,496 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 2001............................ .............................. 121,411 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 2002............................ .............................. 43,618 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 2003............................ .............................. 38,336 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 2004............................ .............................. 1,167,256 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Thereafter...................... .............................. 3,679,638 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ---------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql Total........................... .............................. $5,055,755 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ========== \par\pard\plain\fs16 \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql Senior Notes \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql On November 12, 1999, Global Crossi ng Holdings Ltd. ("GCH"), a wholly-owned \par\pard\plain\fs16\plain\cf1\f50\fs16\ql subsidiary of GCL, issued two series of senior unsecured notes ("New Senior \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Notes"). The 9 1/8% senior notes are due November 15, 2006 with a face value \par\pard\plain\fs16\plain\cf1\f50\fs16\ql of $900 million and the 9 1/2% senior notes are due November 15, 2009 with a \par\pard\plain\fs16\plain\cf1\f50\fs16\ql face value of $1.1 billion. The New S enior Notes are guaranteed by GCL. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Interest will be paid on the notes on May 15 and November 15 of each year, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql beginning on May 15, 2000. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql On May 18, 1998, GCH also issued 9 5/8% senior notes due May 15, 2008, with \par\pard\plain\fs16\plain\cf1\f50\fs16\ql a face value of $800 million ("9 5/8% Senior Notes"). The 9 5/8% Senior Notes \par\pard\plain\fs16\plain\cf1\f50\fs16\ql are guaranteed by GCL. Interest will be paid on the notes on May 15 and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql November 15 of each year. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql The 12% senior notes issued by Glob al Telesystems Holdings Ltd. ("GTH"), now \par\pard\plain\fs16\plain\cf1\f50\fs16\ql known as Atlantic Crossing Holdings L td., with a face value of $150 million, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql due March 31, 2004 ("Old Senior Notes "), were repurchased in May 1998 with the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql proceeds from the issuance of the 9 5 /8% Senior Notes. The Company recognized

\par\pard\plain\fs16\plain\cf1\f50\fs16\ql y $20 million on repurchase comprised of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql n and a write-off of approximately $10 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql cing costs during 1998. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql lity \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql gh GCH, entered into a $3 billion senior \par\pard\plain\fs16\plain\cf1\f50\fs16\ql orporate Credit Facility") with several \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ate Credit Facility were used to repay \par\pard\plain\fs16\plain\cf1\f50\fs16\ql l expenditures. The Corporate Credit \par\pard\plain\fs16\plain\cf1\f50\fs16\ql and a revolving credit facility, which \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ns were paid in full during fiscal year \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ng credit facility is approximately $350 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql rest is payable at LIBOR plus 2.25 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 1999). \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql an extraordinary loss resulting from the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql with the issuance of the Corporate \par\pard\plain\fs16\plain\cf1\f50\fs16\ql -off of $15 million of unamortized \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql from the issuance of the New Senior Notes \par\pard\plain\fs16\plain\cf1\f50\fs16\ql portion of the Corporate Credit Facility, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql on of unamortized deferred financing \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql wned subsidiary, Atlantic Crossing Ltd. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql aggregate senior secured non-recourse \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ity") with a group of banks led by CIBC \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ction and financing costs of AC-1. The \par\pard\plain\fs16\plain\cf1\f50\fs16\ql in July 1999. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql F-20

an extraordinary loss of approximatel a premium of approximately $10 millio million of unamortized deferred finan Senior Secured Revolving Credit Faci On July 2, 1999, the Company, throu secured corporate credit facility ("C lenders. The proceeds from the Corpor existing indebtedness and fund capita Facility consisted of two term loans matures on July 2, 2004. The term loa 1999. Unused credit under the revolvi million as of December 31, 1999. Inte percent (8.44 percent at December 31, During 1999, the Company recognized payoff of existing debt in connection Credit Facility, comprised of a write deferred financing costs. On November 12, 1999, the proceeds were used to pay down the fixed term resulting in a write-off of $31 milli costs. AC-1 Credit Facility During 1997, the Company's wholly-o ("ACL"), entered into a $482 million loan facility (the "AC-1 Credit Facil and Deutsche Bank AG, for the constru AC-1 Credit Facility was paid in full

\par\pard\plain\fs16 \page \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql GLOBAL CROSSING LTD. AND SUBSIDI ARIES \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql NOTES TO CONSOLIDATED FIN ANCIAL STATEMENTS--(Continued) \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql MAC Credit Facility \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql During November 1998, the Company's wholly-owned subsidiary, Mid-Atlantic \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Crossing Ltd. ("MACL"), entered into a $260 million aggregate senior secured \par\pard\plain\fs16\plain\cf1\f50\fs16\ql non-recourse loan facility (the "MAC Credit Facility"). As of December 31, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 1998, the outstanding balance was $9 million. The MAC Credit Facility was paid \par\pard\plain\fs16\plain\cf1\f50\fs16\ql in full in July 1999. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 6% Dealer Remarketable Securities \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql The 6% DRS were issued by Frontier Corporation and were outstanding at the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql date of acquisition. The 6% DRS are d ue on October 15, 2013. Interest will be \par\pard\plain\fs16\plain\cf1\f50\fs16\ql paid on April 15 and October 15 each year. These notes may be put back to the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Company in October 2003, depending on the interest rate environment at that \par\pard\plain\fs16\plain\cf1\f50\fs16\ql time. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 7 1/4% Senior Notes \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql The 7 1/4% Senior Notes were issued by Frontier Corporation and were \par\pard\plain\fs16\plain\cf1\f50\fs16\ql outstanding at the date of acquisitio n. The 7 1/4% Senior Notes are due May \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 14, 2004. Interest will be paid on Ma y 15 and November 15 each year. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql In December 1997, the Company enter ed into an interest rate hedge agreement \par\pard\plain\fs16\plain\cf1\f50\fs16\ql that effectively converts $200 millio n of the Company's 7.25% fixed-rate notes \par\pard\plain\fs16\plain\cf1\f50\fs16\ql due May 2004 into a floating rate bas ed on the US dollar London Interbank \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Offered Rate ("LIBOR") index rate plu s 1.26%. The agreement expires in May \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 2004. Interest expense and the relate d cash flows under the agreement are \par\pard\plain\fs16\plain\cf1\f50\fs16\ql accounted for on an accrual basis. Th e Company periodically enters into such \par\pard\plain\fs16\plain\cf1\f50\fs16\ql agreements to balance its floating ra te and fixed rate obligations to insulate \par\pard\plain\fs16\plain\cf1\f50\fs16\ql against interest rate risk and minimi ze interest expense. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Racal Telecom Term Loan A \par\pard\plain\fs16

\par\pard\plain\fs16\plain\cf1\f50\fs16\ql On November 24, 1999, the Company e ntered into a GBP 675 million \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (approximately $1,091 million as of D ecember 31, 1999) credit facility to \par\pard\plain\fs16\plain\cf1\f50\fs16\ql finance the acquisition of Racal Tele com. The facility consists of two term \par\pard\plain\fs16\plain\cf1\f50\fs16\ql loans due November 24, 2007. Interest is payable at LIBOR plus 2.5 percent \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (8.44 percent at December 31, 1999). \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Medium Term Notes \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql The Medium Term Notes were issued b y Frontier Corporation and were \par\pard\plain\fs16\plain\cf1\f50\fs16\ql outstanding at the date of acquisitio n. The Company intends to refinance the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql notes due in fiscal 2000 with proceed s from the other available debt \par\pard\plain\fs16\plain\cf1\f50\fs16\ql facilities. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Certain of the debt facilities ment ioned above contain various financial and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql non financial restrictive covenants a nd limitations, including, among other \par\pard\plain\fs16\plain\cf1\f50\fs16\ql things, the satisfaction of tests of "consolidated cash flow", as defined. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Additionally, certain ILEC assets are pledged as security. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 11. OBLIGATIONS UNDER INLAND SERVICES AGREEMENT, CAPITAL LEASES AND OPERATING \par\pard\plain\fs16\plain\cf1\f50\fs16\ql LEASES \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql The Company has capitalized the min imum lease payment of property and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql equipment under leases that qualify a s capital leases. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql F-21 \par\pard\plain\fs16 \page \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql GLOBAL CROSSING LTD. AND SUBSIDI ARIES \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql NOTES TO CONSOLIDATED FIN ANCIAL STATEMENTS--(Continued) \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql At December 31, 1999, future minimu m payments under these capital leases are \par\pard\plain\fs16\plain\cf1\f50\fs16\ql as follows (in thousands) and are inc luded in Deferred credits and other in \par\pard\plain\fs16\plain\cf1\f50\fs16\ql the accompanying Consolidated Balance Sheet: \par\pard\plain\fs16 \par\pard\plain\fs16 \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql Year Ending December 31, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 2000.............................. ................................ $ 53,235 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 2001..............................

................................ 43,279 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 2002.............................. ................................ 38,390 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 2003.............................. ................................ 36,486 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 2004.............................. ................................ 53,195 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Thereafter........................ ................................ 436,580 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql --------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql Total minimum lease payments...... ................................ 661,165 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Less: Amount representing maintena nce payments.................... (133,240) \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Less: Amount representing interest ................................ (272,358) \par\pard\plain\fs16\plain\cf1\f50\fs16\ql --------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql Present value of minimum lease pay ments........................... $ 255,567 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ========= \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql The Company has commitments under v arious non-cancelable operating leases. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Estimated future minimum lease paymen ts on operating leases are approximately \par\pard\plain\fs16\plain\cf1\f50\fs16\ql as follows (in thousands): \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Year Ending December 31, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 2000.............................. ................................ $ 131,569 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 2001.............................. ................................ 79,932 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 2002.............................. ................................ 77,646 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 2003.............................. ................................ 70,678 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 2004.............................. ................................ 65,908 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Thereafter........................ ................................ 347,924 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql --------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql Total............................. ................................ $ 773,657 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ========= \par\pard\plain\fs16 \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql Rental expense for the years Dec ember 31, 1999 and 1998 and period from \par\pard\plain\fs16\plain\cf1\f50\fs16\ql March 19, 1997 (Date of Inception) to December 31, 1997 is $74,249, $754 and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql none, respectively (in thousands). \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 12. COMMITMENTS, CONTINGENCIES AND OT HER \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql As of December 31, 1999, ACL was co

mmitted under contracts with Tyco \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Submarine Systems Ltd. ("TSSL") for A C-1 upgrades totaling approximately $59 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql million and is committed under the OA &M contract with TSSL to quarterly \par\pard\plain\fs16\plain\cf1\f50\fs16\ql payments, over the next eight years, totaling approximately $247 million which \par\pard\plain\fs16\plain\cf1\f50\fs16\ql will be borne by the Company's custom ers or by the Company to the extent there \par\pard\plain\fs16\plain\cf1\f50\fs16\ql is unsold capacity. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ACL was committed to paying TSSL co mmissions ranging from 3% to 7% on \par\pard\plain\fs16\plain\cf1\f50\fs16\ql revenue received until 2002, subject to certain reductions. The Company also \par\pard\plain\fs16\plain\cf1\f50\fs16\ql had a commission sharing agreement wi th TSSL whereby GCL had primary \par\pard\plain\fs16\plain\cf1\f50\fs16\ql responsibility for the marketing and sale of capacity of AC-1 and PC-1 and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql shared a percentage of commissions pa yable to TSSL as consideration for \par\pard\plain\fs16\plain\cf1\f50\fs16\ql assuming primary responsibility for t he sales effort and marketing of the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Company's projects. The Sales Agency Agreement with TSSL will terminate in \par\pard\plain\fs16\plain\cf1\f50\fs16\ql March 2002 with an option by the Comp any to extend it until March 2005. The \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Company provided TSSL with a notice o f termination with respect to these \par\pard\plain\fs16\plain\cf1\f50\fs16\ql agreements effective February 22, 200 0. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql As of December 31, 1999, the Compan y was committed under the contracts to \par\pard\plain\fs16\plain\cf1\f50\fs16\ql construct its Mid-Atlantic Crossing, Pan American Crossing, South American \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Crossing, Pan European Crossing and E ast Asia Crossing systems for future \par\pard\plain\fs16\plain\cf1\f50\fs16\ql construction costs totaling approxima tely $2 billion. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql F-22 \par\pard\plain\fs16 \page \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql GLOBAL CROSSING LTD. AND SUBSIDI ARIES \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql NOTES TO CONSOLIDATED FIN ANCIAL STATEMENTS--(Continued) \par\pard\plain\fs16 \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql In addition, as of December 31, 199 9, the Company was committed to make \par\pard\plain\fs16\plain\cf1\f50\fs16\ql future equity contributions to PCL in the amount of $240 million. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql The Company and a number of its sub sidiaries in the normal course of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql business are party to a number of jud

icial, regulatory and administrative \par\pard\plain\fs16\plain\cf1\f50\fs16\ql does not believe that any material \par\pard\plain\fs16\plain\cf1\f50\fs16\ql of any of these matters. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ck \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 0,000,000 shares of preferred stock on \par\pard\plain\fs16\plain\cf1\f50\fs16\ql d from time to time at the discretion of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 000 shares of 7% cumulative convertible \par\pard\plain\fs16\plain\cf1\f50\fs16\ql erence of $250.00 per share for net \par\pard\plain\fs16\plain\cf1\f50\fs16\ql of preferred stock is convertible into \par\pard\plain\fs16\plain\cf1\f50\fs16\ql n a conversion price of $53.25. Dividends \par\pard\plain\fs16\plain\cf1\f50\fs16\ql from the date of issue and will be \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 1 and November 1 of each year, beginning \par\pard\plain\fs16\plain\cf1\f50\fs16\ql te of 7%. Dividends accrued as of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ,000 shares of 6 3/8% cumulative \par\pard\plain\fs16\plain\cf1\f50\fs16\ql idation preference of $100.00 per share \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 9 million. Each share of preferred stock \par\pard\plain\fs16\plain\cf1\f50\fs16\ql common stock, based on a conversion price \par\pard\plain\fs16\plain\cf1\f50\fs16\ql stock are cumulative from the date of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 1, May 1, August 1 and November 1 of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 000, at the annual rate of 6 3/8%. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 1999 were $9.7 million. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ks junior to each other class of capital \par\pard\plain\fs16\plain\cf1\f50\fs16\ql with respect to dividend rights, rights \par\pard\plain\fs16\plain\cf1\f50\fs16\ql n and on a parity with any future \par\pard\plain\fs16\plain\cf1\f50\fs16\ql le preferred stock is junior in right of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql d its subsidiaries. The preferred stock

proceedings. The Company's management liability will be imposed as a result 13. PREFERRED STOCK Cumulative Convertible Preferred Sto In September 1999, GCL authorized 2 terms and conditions to be establishe the Board of Directors. In December 1999, GCL issued 2,600, preferred stock at a liquidation pref proceeds of $630 million. Each share 4.6948 shares of common stock based o on the preferred stock are cumulative payable on February 1, May 1, August on February 1, 2000, at the annual ra December 31, 1999 were $1.9 million. In November 1999, GCL issued 10,000 convertible preferred stock at a liqu for net proceeds of approximately $96 is convertible into 2.2222 shares of of $45.00. Dividends on the preferred issue and will be payable on February each year, beginning on February 1, 2 Dividends accrued as of December 31, The convertible preferred stock ran stock other than common stock of GCL of redemption or rights on liquidatio preferred stock of GCL. The convertib payment of all indebtedness of GCL an

\par\pard\plain\fs16\plain\cf1\f50\fs16\ql is non-voting unless the accumulation of unpaid dividends on the outstanding \par\pard\plain\fs16\plain\cf1\f50\fs16\ql preferred stock is an amount equal to six quarterly dividend payments. The \par\pard\plain\fs16\plain\cf1\f50\fs16\ql preferred stock can be redeemed, at t he Company's option, starting in 2004 at \par\pard\plain\fs16\plain\cf1\f50\fs16\ql specified premiums declining to par i n 2009. Holders of preferred stock have \par\pard\plain\fs16\plain\cf1\f50\fs16\ql the right to require the Company to r epurchase shares of the preferred stock \par\pard\plain\fs16\plain\cf1\f50\fs16\ql at par following the occurrence of ce rtain change of control transactions. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 10 1/2% Mandatorily Redeemable Prefe rred Stock \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql In December 1998, GCH authorized th e issuance of 7,500,000 shares of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql preferred stock ("GCH Preferred Stock ") at a liquidation preference of $100.00 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql per share plus accumulated and unpaid dividends. In December 1998, 5,000,000 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql shares of GCH Preferred Stock were is sued for $500 million in cash. The \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Company reserved for future issuances up to 2,500,000 shares to pay dividends. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Dividends accrued as of December 31, 1999 and 1998 were $4 million. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Unamortized issuance costs were $14.1 million and $17 million as of December \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 31, 1999 and 1998, respectively. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql The holders of the GCH Preferred St ock are entitled to receive cumulative, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql semi-annual compounding dividends at an annual rate of 10 1/2% of the $100 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql liquidation preference per share. At the Company's option, accrued dividends \par\pard\plain\fs16\plain\cf1\f50\fs16\ql may be paid in cash or paid by issuin g additional preferred stock (i.e. pay\par\pard\plain\fs16\plain\cf1\f50\fs16\ql in-kind) until June 1, 2002, at which time they must be paid in cash. As of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql December 31, 1999, all dividends had been paid in cash. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql F-23 \par\pard\plain\fs16 \page \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql GLOBAL CROSSING LTD. AND SUBSIDI ARIES \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql NOTES TO CONSOLIDATED FIN ANCIAL STATEMENTS--(Continued) \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Dividends are payable semi-annually i n arrears on each June 1 and December 1. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql The preferred stock ranks senior to a ll common stock of GCH with respect to \par\pard\plain\fs16\plain\cf1\f50\fs16\ql dividend rights, rights of redemption or rights on liquidation and on a parity

\par\pard\plain\fs16\plain\cf1\f50\fs16\ql H. The preferred stock is junior in right \par\pard\plain\fs16\plain\cf1\f50\fs16\ql and its subsidiaries. The preferred \par\pard\plain\fs16\plain\cf1\f50\fs16\ql lation of unpaid dividends (or if, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ends are not paid in cash) on the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql unt equal to three semi-annual dividend \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql redemption on December 1, 2008 at a \par\pard\plain\fs16\plain\cf1\f50\fs16\ql tive liquidation preference thereof, plus \par\pard\plain\fs16\plain\cf1\f50\fs16\ql thereon to the date of redemption. The \par\pard\plain\fs16\plain\cf1\f50\fs16\ql hole or in part, at the Company's option \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 25% of the liquidation preference in \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 1.75% in 2005 and 100% thereafter. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql rning the preferred stock imposes certain \par\pard\plain\fs16\plain\cf1\f50\fs16\ql pany to, among other things, (i) incur \par\pard\plain\fs16\plain\cf1\f50\fs16\ql certain dividends and make certain other \par\pard\plain\fs16\plain\cf1\f50\fs16\ql which limitations are in part based upon \par\pard\plain\fs16\plain\cf1\f50\fs16\ql d cash flow," as defined. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Stock \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ssued 500,000 shares of preferred stock \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ion preference of $1,000 per share. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql uance of the 9 5/8% Senior Notes were \par\pard\plain\fs16\plain\cf1\f50\fs16\ql The redemption resulted in a $34 million \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ital comprised of a $16 million \par\pard\plain\fs16\plain\cf1\f50\fs16\ql unamortized discount and issuance cost \par\pard\plain\fs16\plain\cf1\f50\fs16\ql the redemption. The redemption premium \par\pard\plain\fs16\plain\cf1\f50\fs16\ql and issuance costs on the preferred \par\pard\plain\fs16\plain\cf1\f50\fs16\ql arrive at the net loss applicable to \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ed statement of operations.

with any future preferred stock of GC of payment of all indebtedness of GCH stock is non-voting unless the accumu beginning on June 1, 2002, such divid outstanding preferred stock is an amo payments. The preferred stock has a mandatory price in cash equal to the then effec all accumulated and unpaid dividends preferred stock can be redeemed, in w at redemption prices starting at 105. 2003, declining to 103.5% in 2004, 10 The certificate of designation gove limitations on the ability of the Com additional indebtedness and (ii) pay restricted payments and investments, satisfaction of tests of "consolidate 14% Mandatorily Redeemable Preferred In March 1997, GTH authorized and i ("GTH Preferred Stock") at a liquidat In June 1998, proceeds from the iss used to redeem this preferred stock. charge against additional paid-in cap redemption premium and $18 million of on the preferred stock on the date of and write-off of unamortized discount stock were treated as a deduction to common shareholders in the consolidat

\par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Preferred stock dividends included the following: \par\pard\plain\fs16 \par\pard\plain\fs16 \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql December 31, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql --------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql 1999 1998 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ------- ------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql (In thousands) \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Preferred stock dividends....... .......................... $63,742 $11,712 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Amortization of discount on pref erred stock............... -618 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Amortization of preferred stock issuance costs............ 2,900 351 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ------- ------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql $66,642 $12,681 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ======= ======= \par\pard\plain\fs16 \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql F-24 \par\pard\plain\fs16 \page \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql GLOBAL CROSSING LTD. AND SUBSIDI ARIES \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql NOTES TO CONSOLIDATED FIN ANCIAL STATEMENTS--(Continued) \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 14. NET LOSS PER SHARE \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Losses per share are calculated in accordance with SFAS No. 128, "Earnings \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Per Share." Share and per share data presented reflects all stock dividends \par\pard\plain\fs16\plain\cf1\f50\fs16\ql and stock splits. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql The following is a reconciliation o f the numerators and the denominators of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql the basic and diluted loss per share: \par\pard\plain\fs16 \par\pard\plain\fs16 \par\pard\plain\fs16\pard\plain\cf1\f50\fs18\ql For the period \par\pard\plain\fs16\plain\cf1\f50\fs18\ql Dec ember 31, March 31, 1997 \par\pard\plain\fs16\plain\cf1\f50\fs18\ql ------------------------------- (Date of Inception) \par\pard\plain\fs16\plain\cf1\f50\fs18\ql 1999 1998 to December 31, 1997 \par\pard\plain\fs16\plain\cf1\f50\fs18\ql -------------- --------------- -------------------------\par\pard\plain\fs16\plain\cf1\f50\fs18\ql (In thous

ands, except share and per share data) \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs18\ql Loss before \par\pard\plain\fs16\plain\cf1\f50\fs18\ql extraordinary item and \par\pard\plain\fs16\plain\cf1\f50\fs18\ql cumulative effect of \par\pard\plain\fs16\plain\cf1\f50\fs18\ql change in accounting \par\pard\plain\fs16\plain\cf1\f50\fs18\ql principle.............. $ ( 10,535) $ (68,194) $ (160) \par\pard\plain\fs16\plain\cf1\f50\fs18\ql Preferred stock \par\pard\plain\fs16\plain\cf1\f50\fs18\ql dividends.............. ( 66,642) (12,681) (12,690) \par\pard\plain\fs16\plain\cf1\f50\fs18\ql Redemption of preferred \par\pard\plain\fs16\plain\cf1\f50\fs18\ql stock.................. -(34,140) -\par\pard\plain\fs16\plain\cf1\f50\fs18\ql -------------- ----------------------------\par\pard\plain\fs16\plain\cf1\f50\fs18\ql Loss applicable to \par\pard\plain\fs16\plain\cf1\f50\fs18\ql common shareholders \par\pard\plain\fs16\plain\cf1\f50\fs18\ql before extraordinary \par\pard\plain\fs16\plain\cf1\f50\fs18\ql item and cumulative \par\pard\plain\fs16\plain\cf1\f50\fs18\ql effect of change in \par\pard\plain\fs16\plain\cf1\f50\fs18\ql accounting principle... $ ( 77,177) $ (115,015) $ (12,850) \par\pard\plain\fs16\plain\cf1\f50\fs18\ql ========= ====== =============== =============== \par\pard\plain\fs16\plain\cf1\f50\fs18\ql Weighted average share \par\pard\plain\fs16\plain\cf1\f50\fs18\ql outstanding: \par\pard\plain\fs16\plain\cf1\f50\fs18\ql Basic and diluted..... 502,4 00,851 358,735,340 325,773,934 \par\pard\plain\fs16\plain\cf1\f50\fs18\ql ========= ====== =============== =============== \par\pard\plain\fs16\plain\cf1\f50\fs18\ql Loss applicable to \par\pard\plain\fs16\plain\cf1\f50\fs18\ql common shareholders \par\pard\plain\fs16\plain\cf1\f50\fs18\ql before extraordinary \par\pard\plain\fs16\plain\cf1\f50\fs18\ql items and cumulative \par\pard\plain\fs16\plain\cf1\f50\fs18\ql effect of change in \par\pard\plain\fs16\plain\cf1\f50\fs18\ql accounting principle \par\pard\plain\fs16\plain\cf1\f50\fs18\ql Basic and diluted..... $ (0.15) $ (0.32) $ (0.04) \par\pard\plain\fs16\plain\cf1\f50\fs18\ql ========= ====== =============== =============== \par\pard\plain\fs16 \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql Dilutive options and warrants di d not have an effect on the computation of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql diluted loss per share in 1999 and 19 98 since they were anti-dilutive. The \par\pard\plain\fs16\plain\cf1\f50\fs16\ql impact of dilutive options and warran ts increases the weighted average shares \par\pard\plain\fs16\plain\cf1\f50\fs16\ql outstanding to 552,466,665 shares as of December 31, 1999. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 15. FINANCIAL INSTRUMENTS \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql The carrying amounts for cash and c ash equivalents, restricted cash and cash \par\pard\plain\fs16\plain\cf1\f50\fs16\ql equivalents, accounts receivable, acc rued construction costs, accounts payable \par\pard\plain\fs16\plain\cf1\f50\fs16\ql and accrued liabilities, accrued inte rest, obligations under inland services \par\pard\plain\fs16\plain\cf1\f50\fs16\ql agreements and capital leases and lon

g term debt approximate their fair value. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql The fair value of the senior notes (t he New Senior Notes and 9 5/8% Senior \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Notes), mandatorily redeemable prefer red stock, cumulative convertible \par\pard\plain\fs16\plain\cf1\f50\fs16\ql preferred stock and the interest rate swap are based on market quotes and the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql fair values are as follows: \par\pard\plain\fs16 \par\pard\plain\fs16 \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql December 31, 1999 Decem ber 31, 1998 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ------------------------- -------------------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql Carrying Am ount Fair Value Carrying Amount Fair Value \par\pard\plain\fs16\plain\cf1\f50\fs16\ql -------------- ---------- --------------- ---------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql (In t housands) (In thousands) \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Senior notes............. $3,135,00 0 $3,090,294 $796,495 $834,000 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Mandatorily redeemable \par\pard\plain\fs16\plain\cf1\f50\fs16\ql preferred stock......... 485,94 7 498,750 483,000 480,000 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Cumulative convertible \par\pard\plain\fs16\plain\cf1\f50\fs16\ql preferred stock......... 1,598,75 0 1,975,300 --\par\pard\plain\fs16\plain\cf1\f50\fs16\ql Interest rate swap....... $ -$ 6,602 $ -$ 26 \par\pard\plain\fs16 \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql F-25 \par\pard\plain\fs16 \page \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql GLOBAL CROSSING LTD. AND SUBSIDI ARIES \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql NOTES TO CONSOLIDATED FIN ANCIAL STATEMENTS--(Continued) \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 16. STOCK OPTION PLAN \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql GCL maintains a stock option plan u nder which options to acquire shares may \par\pard\plain\fs16\plain\cf1\f50\fs16\ql be granted to directors, officers, em ployees and consultants of the Company. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql The Company accounts for this plan un der APB Opinion No. 25, under which \par\pard\plain\fs16\plain\cf1\f50\fs16\ql compensation cost is recognized only to the extent that the market price of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql the stock exceeds the exercise price. Terms and conditions of the Company's \par\pard\plain\fs16\plain\cf1\f50\fs16\ql options, including exercise price and the period in which options are \par\pard\plain\fs16\plain\cf1\f50\fs16\ql exercisable, generally are at the dis cretion of the Compensation Committee of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql the Board of Directors; however, no o ptions are exercisable more than ten \par\pard\plain\fs16\plain\cf1\f50\fs16\ql years after date of grant.

\par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Prior to its merger with the Compan y, Frontier maintained stock option plans \par\pard\plain\fs16\plain\cf1\f50\fs16\ql for its directors, executives and cer tain employees. The exercise price for \par\pard\plain\fs16\plain\cf1\f50\fs16\ql options under all Frontier plans was the fair market value of the stock on the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql date of the grant. The stock options expire ten years from the date of the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql grant and vest over a period from one to three years. The Frontier plans \par\pard\plain\fs16\plain\cf1\f50\fs16\ql provided for discretionary grants of stock options which were subject to the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql passage of time and continued employm ent restrictions. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql In connection with the Frontier mer ger, the Company exchanged all of the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql outstanding Frontier stock options fo r 25.3 million Global Crossing stock \par\pard\plain\fs16\plain\cf1\f50\fs16\ql options which vested immediately at t he date of the merger. As of December 31, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 1999, 17.7 million stock options unde r the Frontier plans remained vested and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql outstanding. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Additional information regarding op tions granted and outstanding for the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql years ended December 31, 1998 and 199 9 are summarized below: \par\pard\plain\fs16 \par\pard\plain\fs16 \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql Weighted \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Options Number of Average \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Available Options Exercise \par\pard\plain\fs16\plain\cf1\f50\fs16\ql For Grant Outstanding Price \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ----------- ----------- -------\par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Balance as of December 31, 1997... ........ ---\par\pard\plain\fs16\plain\cf1\f50\fs16\ql Authorized...................... ........ 33,215,730 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Granted......................... ........ (30,762,466) 30,762,466 $ 2.85 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Exercised....................... ........ (656,688) 1.06 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Cancelled....................... ........ 3,253,000 (3,253,000) 1.11 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ----------- ----------- -----\par\pard\plain\fs16\plain\cf1\f50\fs16\ql Balance as of December 31, 1998... ........ 5,706,264 26,852,778 3.11 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Authorized...................... ........ 82,010,014 --\par\pard\plain\fs16\plain\cf1\f50\fs16\ql Granted......................... ........ (65,019,955) 65,019,955 24.20

\par\pard\plain\fs16\plain\cf1\f50\fs16\ql Exercised....................... ........ (10,058,073) 11.07 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Cancelled....................... ........ 3,175,154 (3,175,154) 22.17 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ----------- ----------- -----\par\pard\plain\fs16\plain\cf1\f50\fs16\ql Balance as of December 31, 1999... ........ 25,871,477 78,639,506 $18.76 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql =========== =========== ====== \par\pard\plain\fs16 \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql F-26 \par\pard\plain\fs16 \page \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql GLOBAL CROSSING LTD. AND SUBSIDI ARIES \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql NOTES TO CONSOLIDATED FIN ANCIAL STATEMENTS--(Continued) \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql The following tables summarize info rmation concerning outstanding and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql exercisable options: \par\pard\plain\fs16 \par\pard\plain\fs16 \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql December 31, 1999 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ----------------------------------------------------------------------------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql Options Outstanding Options Exercisable \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ------------------------------------------------------ ---------------------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql Weighted Average Weighted Average Weighted Average Weighted Average \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Range of Number Remaining Contractual Exercise Price Number Exercise Price \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Exercise Prices Outstanding Life (in years) per Share Exercisable per Share \par\pard\plain\fs16\plain\cf1\f50\fs16\ql --------------- ------------------------------------ ---------------- ----------- ---------------\par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql $ 0.35 to $ 1.43 14,153,480 7.79 $ 0.83 7,871,980 $ 0.83 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 2.00 to 9.00 7,157,036 8.18 3.14 3,635,345 3.29 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 9.30 to 13.80 12,539,297 7.71 11.61 10,207,026 11.60 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 13.96 to 19.82 11,961,988 8.54 17.15 8,961,988 16.26 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 20.60 to 23.44 19,975,778 9.65 25.82 1,175,228 24.48 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql $33.00 to $61.38 12,851,927 9.73 44.68 1,741,334 46.15 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ---------------- ------------------------------------ ---------------- ----------- ---------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql Total 78,639,506 8.73 $18.76 33,592,901 $11.66 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ================ ===================== ================ =========== ================ \par\pard\plain\fs16

\par\pard\plain\fs16 \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql December 31, 1998 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ----------------------------------------------------------------------------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql Options Outstanding Options Exercisable \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ------------------------------------------------------ ---------------------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql Weighted Average Weighted Average Weighted Average Weighted Average \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Range of Number Remaining Contractual Exercise Price Number Exercise Price \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Exercise Prices Outstanding Life (in years) per Share Exercisable per Share \par\pard\plain\fs16\plain\cf1\f50\fs16\ql --------------- ------------------------------------ ---------------- ----------- ---------------\par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql $0.35 to $0.83 15,717,280 9.2 $ 0.83 4,803,833 $ 0.83 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 2.00 to 3.33 6,844,598 9.5 3.13 1,625,000 3.33 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 9.50 to 13.26 4,290,900 9.7 11.44 302,834 11.34 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql --------------- ------------------------------------ ---------------- ----------- ---------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql Total 26,852,778 9.3 $ 3.11 6,731,667 $ 1.91 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ================ ===================== ================ =========== ================ \par\pard\plain\fs16 \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql During the years ended December 31, 1999 and 1998, the Company recorded in \par\pard\plain\fs16\plain\cf1\f50\fs16\ql additional paid-in capital $55 millio n and $94 million, respectively, of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql unearned compensation, relating to aw ards under the stock incentive plan plus \par\pard\plain\fs16\plain\cf1\f50\fs16\ql the grant of certain economic rights and options to purchase common stock. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql During 1999 and 1998 the Company reco gnized expense of $51 million and $39 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql million, respectively, of stock relat ed compensation relating to the stock \par\pard\plain\fs16\plain\cf1\f50\fs16\ql incentive plan and the vested economi c rights to purchase common stock. The \par\pard\plain\fs16\plain\cf1\f50\fs16\ql remaining $60 million of unearned com pensation will be recognized as follows: \par\pard\plain\fs16\plain\cf1\f50\fs16\ql $36 million in 2000, $20 million in 2 001 and $4 million in 2002. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql The Company entered into an employm ent arrangement with a key executive, and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql granted him economic rights to purcha se two million shares of common stock at \par\pard\plain\fs16\plain\cf1\f50\fs16\ql $2.00 per share. One-third of these e conomic rights vested immediately and the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql balance vests over two years. The Com pany recorded the excess of the fair \par\pard\plain\fs16\plain\cf1\f50\fs16\ql market value of these options and rig hts over the purchase price as unearned \par\pard\plain\fs16\plain\cf1\f50\fs16\ql stock compensation in the amount of $

15 million during the year ended December \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 31, 1998. The unearned compensation i s being recognized as expense over the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql vesting period of the economic right. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql F-27 \par\pard\plain\fs16 \page \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql GLOBAL CROSSING LTD. AND SUBSIDI ARIES \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql NOTES TO CONSOLIDATED FIN ANCIAL STATEMENTS--(Continued) \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql As permitted by SFAS No. 123, "Acco unting for Stock-Based Compensation" \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ("SFAS 123"), the Company accounted f or employee stock options under APB 25 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql and is recognizing compensation expen se over the vesting period to the extent \par\pard\plain\fs16\plain\cf1\f50\fs16\ql that the fair value of the stock on t he date the options were granted exceeded \par\pard\plain\fs16\plain\cf1\f50\fs16\ql the exercise price. Had compensation cost for the Company's stock-based \par\pard\plain\fs16\plain\cf1\f50\fs16\ql compensation plans been determined co nsistent with the SFAS 123 fair value \par\pard\plain\fs16\plain\cf1\f50\fs16\ql approach, the impact on the Company's loss applicable to common shareholders \par\pard\plain\fs16\plain\cf1\f50\fs16\ql and loss per share would be as follow s: \par\pard\plain\fs16 \par\pard\plain\fs16 \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql Period from \par\pard\plain\fs16\plain\cf1\f50\fs16\ql March 19, 1997 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Year E nded Year Ended (Date of Inception) \par\pard\plain\fs16\plain\cf1\f50\fs16\ql December 31, 1999 December 31, 1998 to December 31, 1997 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ---------------- ----------------- -------------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql (In thousands, except per share information) \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Net loss applicable to \par\pard\plain\fs16\plain\cf1\f50\fs16\ql common shareholders: \par\pard\plain\fs16\plain\cf1\f50\fs16\ql As reported........... $(137 ,568) $(134,724) $(12,850) \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Pro forma............. $(236 ,184) $(141,585) $(12,850) \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Basic and diluted net \par\pard\plain\fs16\plain\cf1\f50\fs16\ql loss per share: \par\pard\plain\fs16\plain\cf1\f50\fs16\ql As reported........... $ ( 0.27) $ (0.38) $ (0.04) \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Pro forma............. $ ( 0.47) $ (0.39) $ (0.04) \par\pard\plain\fs16 \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql Under SFAS 123, the fair value o f each option is estimated on the date of

\par\pard\plain\fs16\plain\cf1\f50\fs16\ql pricing model assuming the following \par\pard\plain\fs16\plain\cf1\f50\fs16\ql the year ended December 31, 1999; zero \par\pard\plain\fs16\plain\cf1\f50\fs16\ql f 40.00, weighted average risk free rate \par\pard\plain\fs16\plain\cf1\f50\fs16\ql of 4 years. For the year ended December \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ed volatility of 0% to 42%, weighted \par\pard\plain\fs16\plain\cf1\f50\fs16\ql .45% and expected life of 4 years. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql red its qualified employees the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ed contribution retirement plan \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ction 401(k) of the Internal Revenue \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ribute on a tax-deferred basis a portion \par\pard\plain\fs16\plain\cf1\f50\fs16\ql d certain limits. The Company matches \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ibutions up to a maximum level not to \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ation. The Company's contributions to the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ded by the Company relating to its 401(k) \par\pard\plain\fs16\plain\cf1\f50\fs16\ql and $0.2 million for the years ended \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ely. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql of defined contribution plans for \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ant plan covers non-bargaining employees, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql hrough payroll deduction. The Company \par\pard\plain\fs16\plain\cf1\f50\fs16\ql of gross compensation in common stock \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ipate in the plan. The common stock used \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ed on the open market by the plan's \par\pard\plain\fs16\plain\cf1\f50\fs16\ql e hundred percent matching contributions \par\pard\plain\fs16\plain\cf1\f50\fs16\ql nt of gross compensation, and may, at the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Committee, provide additional matching \par\pard\plain\fs16\plain\cf1\f50\fs16\ql inancial results. The total cost \par\pard\plain\fs16\plain\cf1\f50\fs16\ql on plans was $2.6 million from the date

grant using the Black-Scholes optionweighted average assumptions used for dividend yield, expected volatility o of return of 6.56% and expected life 31, 1998; zero dividend yield, expect average risk free rate of return of 5 17. EMPLOYEE BENEFIT PLANS 401(k) Plan Beginning in 1998, the Company offe opportunity to participate in a defin qualifying under the provisions of Se Code. Each eligible employee may cont of their annual earnings not to excee one-half of individual employee contr exceed 7.5% of the employee's compens plan vest immediately. Expenses recor plan were approximately $0.6 million December 31, 1999 and 1998, respectiv The Company also sponsors a number Frontier employees. The most signific who can elect to make contributions t provides a contribution of .5 percent for every employee eligible to partic for matching contributions is purchas trustee. The Company also provides on in its common stock up to three perce discretion of the Management Benefit contributions based upon Frontier's f recognized for all defined contributi

\par\pard\plain\fs16\plain\cf1\f50\fs16\ql of the merger through December 31, 19 99. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Pension Plan \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql As a result of the merger with Fron tier, the Company has noncontributory \par\pard\plain\fs16\plain\cf1\f50\fs16\ql plans which have been frozen, providi ng for service pensions and certain death \par\pard\plain\fs16\plain\cf1\f50\fs16\ql benefits for substantially all Fronti er employees. The assets and \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql F-28 \par\pard\plain\fs16 \page \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql GLOBAL CROSSING LTD. AND SUBSIDI ARIES \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql NOTES TO CONSOLIDATED FIN ANCIAL STATEMENTS--(Continued) \par\pard\plain\fs16\plain\cf1\f50\fs16\ql liabilities related to these plans we re recorded at fair market value at the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql date of the merger. In 1995 and 1996, these defined benefit plans were frozen. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql On an annual basis, contributions are remitted to the trustees to ensure \par\pard\plain\fs16\plain\cf1\f50\fs16\ql proper funding of the plans. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql The majority of the Company's pensi on plans have plan assets that exceed \par\pard\plain\fs16\plain\cf1\f50\fs16\ql accumulated benefit obligations. Ther e are certain plans, however, with \par\pard\plain\fs16\plain\cf1\f50\fs16\ql accumulated benefit obligations which exceed plan assets. The following table \par\pard\plain\fs16\plain\cf1\f50\fs16\ql summarizes the funded status of the C ompany's pension plans and the related \par\pard\plain\fs16\plain\cf1\f50\fs16\ql amounts that are included in "Other a ssets" in the Consolidated Balance Sheet \par\pard\plain\fs16\plain\cf1\f50\fs16\ql of the Company as of December 31, 199 9 (in thousands): \par\pard\plain\fs16 \par\pard\plain\fs16 \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql CHANGE IN BENEFIT OBLIGATION \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Benefit obligation at September 30, 1999........................ $451,600 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Service cost.................... ................................ 14 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Interest cost................... ................................ 8,397 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Actuarial gain.................. ................................ (11,025) \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Benefits paid................... ................................ (9,151) \par\pard\plain\fs16\plain\cf1\f50\fs16\ql -------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql Benefit obligation at December 3 1, 1999......................... $439,835 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ========

\par\pard\plain\fs16\plain\cf1\f50\fs16\ql CHANGE IN PLAN ASSETS \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Fair value of plan assets at Sep tember 30, 1999................. $621,100 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Actual return on plan assets.... ................................ 86,516 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Employer contribution........... ................................ 550 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Benefits paid................... ................................ (9,151) \par\pard\plain\fs16\plain\cf1\f50\fs16\ql -------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql Fair value of plan assets at Dec ember 31, 1999.................. $699,015 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ======== \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Funded status................... ................................ $259,180 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Unrecognized net gain........... ................................ (83,192) \par\pard\plain\fs16\plain\cf1\f50\fs16\ql -------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql Prepaid benefit cost, net....... ................................ $175,988 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ======== \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql The net periodic pension cost consi sts of the following for the three month \par\pard\plain\fs16\plain\cf1\f50\fs16\ql period ended December 31, 1999 (in th ousands): \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Service cost...................... ................................ $ 14 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Interest cost on projected benefit obligation..................... 8,397 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Return on plan assets............. ................................ (14,349) \par\pard\plain\fs16\plain\cf1\f50\fs16\ql -------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql Net periodic pension benefit...... ................................ $ (5,938) \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ======== \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql The following rates and assumptions were used to calculate the projected \par\pard\plain\fs16\plain\cf1\f50\fs16\ql benefit obligation as of December 31, 1999: \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Weighted average discount rate.... ................................ 8.00% \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Rate of salary increase........... ................................ 5.00% \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Expected return on plan assets.... ................................ 9.50% \par\pard\plain\fs16 \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql The Company's policy is to make contributions for pension benefits based on \par\pard\plain\fs16\plain\cf1\f50\fs16\ql actuarial computations which reflect the long-term nature of the pension plan.

\par\pard\plain\fs16\plain\cf1\f50\fs16\ql However, under SFAS No. 87, "Employer s' Accounting for Pensions," the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql development of the projected benefit obligation essentially is computed for \par\pard\plain\fs16\plain\cf1\f50\fs16\ql financial reporting purposes and may differ from the actuarial determination \par\pard\plain\fs16\plain\cf1\f50\fs16\ql for funding due to varying assumption s and methods of computation. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql F-29 \par\pard\plain\fs16 \page \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql GLOBAL CROSSING LTD. AND SUBSIDI ARIES \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql NOTES TO CONSOLIDATED FIN ANCIAL STATEMENTS--(Continued) \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Postretirement Benefit Other Than Pe nsions \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql The Company provides postretirement health care and life insurance benefits, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql which have been frozen, to most of it s employees. Plan assets consist \par\pard\plain\fs16\plain\cf1\f50\fs16\ql principally of life insurance policie s and money market instruments. In 1996, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Frontier amended its healthcare benef its plan to cap the cost absorbed by the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Company for healthcare and life insur ance for its bargaining employees who \par\pard\plain\fs16\plain\cf1\f50\fs16\ql retire after December 31, 1996. The a ssets and liabilities related to these \par\pard\plain\fs16\plain\cf1\f50\fs16\ql plans were recorded at fair market va lue at the date of the merger. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql The following table summarizes the funded status of the plan (in thousands) \par\pard\plain\fs16\plain\cf1\f50\fs16\ql and the related amounts included in " Deferred credits and other" in the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Consolidated Balance Sheet of the Com pany as of December 31, 1999 (in \par\pard\plain\fs16\plain\cf1\f50\fs16\ql thousands): \par\pard\plain\fs16 \par\pard\plain\fs16 \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql CHANGE IN BENEFIT OBLIGATION \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Benefit obligation at September 30, 1999....................... $ 114,305 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Service cost.................... ............................... 135 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Interest cost................... ............................... 2,134 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Actuarial gain.................. ............................... (2,970) \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Benefits paid................... ............................... (2,016) \par\pard\plain\fs16\plain\cf1\f50\fs16\ql --------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql Benefit obligation at December 3

1, 1999........................ $ 111,588 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ========= \par\pard\plain\fs16\plain\cf1\f50\fs16\ql CHANGE IN PLAN ASSETS \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Fair value of plan assets at Sep tember 30, 1999................ $ 2,989 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Actual return on plan assets.... ............................... 180 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Employer contribution........... ............................... 1,902 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Benefits paid................... ............................... (2,016) \par\pard\plain\fs16\plain\cf1\f50\fs16\ql --------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql Fair value of plan assets at Dec ember 31, 1999................. $ 3,055 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ========= \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Funded status................... ............................... $(108,533) \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Unrecognized net loss........... ............................... (2,133) \par\pard\plain\fs16\plain\cf1\f50\fs16\ql --------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql Accrued benefit cost, net....... ............................... $(110,666) \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ========= \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql The components of the estimated pos tretirement benefit cost are as follows \par\pard\plain\fs16\plain\cf1\f50\fs16\ql for the three month period ended Dece mber 31, 1999 (in thousands): \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Service cost...................... ............................... $ 135 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Interest cost on projected benefit obligation.................... 2,134 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Expected return on plan assets.... ............................... (67) \par\pard\plain\fs16\plain\cf1\f50\fs16\ql --------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql Net periodic pension cost (benefit ).............................. $ 2,202 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ========= \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql The following rates and assumptions were used to calculate the projected \par\pard\plain\fs16\plain\cf1\f50\fs16\ql benefit obligation as of December 31, 1999: \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Weighted average discount rate.... ............................... 8.00% \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Rate of salary increase........... ............................... 5.00% \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Expected return on plan assets.... ............................... 9.50% \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Assumed rate of increase in cost o f covered health care benefits. 6.17%

\par\pard\plain\fs16 \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql Increases in health care costs w ere assumed to decline consistently to a \par\pard\plain\fs16\plain\cf1\f50\fs16\ql rate of 5.0% by 2006 and remain at th at level thereafter. If the health care \par\pard\plain\fs16\plain\cf1\f50\fs16\ql cost trend rates were increased by on e percentage point, the accumulated \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql F-30 \par\pard\plain\fs16 \page \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql GLOBAL CROSSING LTD. AND SUBSIDI ARIES \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql NOTES TO CONSOLIDATED FIN ANCIAL STATEMENTS--(Continued) \par\pard\plain\fs16\plain\cf1\f50\fs16\ql postretirement benefit health care ob ligation as of December 31, 1999 would \par\pard\plain\fs16\plain\cf1\f50\fs16\ql increase by $8.2 million while the su m of the service and interest cost \par\pard\plain\fs16\plain\cf1\f50\fs16\ql components of the net postretirement benefit health care costs for 1999 would \par\pard\plain\fs16\plain\cf1\f50\fs16\ql increase by $191,000. If the health c are cost trend rates were decreased by \par\pard\plain\fs16\plain\cf1\f50\fs16\ql one percentage point, the accumulated postretirement benefit health care \par\pard\plain\fs16\plain\cf1\f50\fs16\ql obligations as of December 31, 1999 w ould decrease by $7.3 million while the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql sum of the service interest cost comp onents of the net postretirement benefit \par\pard\plain\fs16\plain\cf1\f50\fs16\ql health care cost for 1999 would decre ase by $168,000. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 18. RELATED PARTY TRANSACTIONS \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Transactions with Global Access Ltd. and Pacific Crossing Ltd. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql During 1999, Global Crossing entere d into certain transactions with GAL and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql PCL to purchase $101.4 million of ter restrial and subsea capacity. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Transactions with Pacific Capital Gr oup and its Affiliates \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Prior to 1999, Global Crossing ente red into certain transactions with \par\pard\plain\fs16\plain\cf1\f50\fs16\ql affiliates of Pacific Capital Group ( "PCG"), including the acquisition of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql development rights to certain of the Company's fiber optic cable systems. PCG \par\pard\plain\fs16\plain\cf1\f50\fs16\ql is controlled by certain officers and directors of Global Crossing who either \par\pard\plain\fs16\plain\cf1\f50\fs16\ql currently are or at one time were aff iliated with PCG. During 1999, Global \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Crossing subleased from PCG two suite s of offices in Beverly Hills for \par\pard\plain\fs16\plain\cf1\f50\fs16\ql payments aggregating approximately $2

87,000 over the year. In October 1999, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql with North Crescent Realty V, LLC, which \par\pard\plain\fs16\plain\cf1\f50\fs16\ql , for an aggregate monthly cost of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Realty, LLC paid approximately $7.5 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql et Global Crossing's specifications and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql lion of this amount by Global Crossing. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql t real estate consultant to review the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql of the building, which terms were found \par\pard\plain\fs16\plain\cf1\f50\fs16\ql th market terms and conditions and the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql n. Global Crossing subleases \par\pard\plain\fs16\plain\cf1\f50\fs16\ql he building to PCG for an aggregate \par\pard\plain\fs16\plain\cf1\f50\fs16\ql . \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql sts in aircrafts used by Global Crossing \par\pard\plain\fs16\plain\cf1\f50\fs16\ql es PCG for PCG's cost of maintaining \par\pard\plain\fs16\plain\cf1\f50\fs16\ql CG realizes no profit from the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Global Crossing approximately $2 million \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql n in fees to PCG and certain of its key \par\pard\plain\fs16\plain\cf1\f50\fs16\ql CL, and another shareholder for services \par\pard\plain\fs16\plain\cf1\f50\fs16\ql AC-1 Credit Facility, Old Senior Notes \par\pard\plain\fs16\plain\cf1\f50\fs16\ql . Of the fees paid, $5 million was \par\pard\plain\fs16\plain\cf1\f50\fs16\ql and Old Senior Notes and recorded as \par\pard\plain\fs16\plain\cf1\f50\fs16\ql s allocated to the GCH Preferred Stock \par\pard\plain\fs16\plain\cf1\f50\fs16\ql rrying value of the preferred stock and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ck issuance costs. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Bank of Commerce and its affiliates \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql of Commerce and its affiliates ("CIBC") \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ctions with Global Crossing. In \par\pard\plain\fs16\plain\cf1\f50\fs16\ql anger for the $600 million ten-day demand

Global Crossing entered into a lease is managed by and affiliated with PCG approximately $400,000. North Cresent million to improve the property to me was reimbursed approximately $3.2 mil Global Crossing engaged an independen terms of Global Crossing's occupancy by the consultant to be consistent wi product of an arm's length negotiatio approximately 12,000 square feet of t monthly cost of approximately $53,000 PCG has fractional ownership intere during 1999. Global Crossing reimburs these ownership interests such that P relationship. During 1999, PCG billed in aggregate under this arrangement. In 1997, the Company paid $7 millio executives, who are shareholders of G provided in respect of obtaining the and the GTH Preferred Stock financing allocated to the AC-1 Credit Facility deferred finance costs, $1 million wa and recorded as a reduction in the ca $1 million was recorded as common sto Transactions with Canadian Imperial During 1999, Canadian Imperial Bank entered into certain financing transa particular, CIBC: (1) acted as an arr

\par\pard\plain\fs16\plain\cf1\f50\fs16\ql note issued by Global Marine Systems in July, (2) acted as an arranger for the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql $3 billion senior secured credit faci lity entered into by GCH in July, (3) was \par\pard\plain\fs16\plain\cf1\f50\fs16\ql an initial purchaser of the $2 billio n aggregate principal amount of unsecured \par\pard\plain\fs16\plain\cf1\f50\fs16\ql senior notes issued by GCH in Novembe r, and (4) was an initial purchaser of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql GCL's $650 million aggregate liquidat ion preference 7% cumulative convertible \par\pard\plain\fs16\plain\cf1\f50\fs16\ql preferred stock issued in December. D uring 1999, Global Crossing paid CIBC \par\pard\plain\fs16\plain\cf1\f50\fs16\ql approximately $5.6 million in fees in connection with these transactions. CIBC \par\pard\plain\fs16\plain\cf1\f50\fs16\ql has a substantial beneficial ownershi p interest in Global Crossing, and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql certain directors of Global Crossing are employees of an affiliate of CIBC. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql F-31 \par\pard\plain\fs16 \page \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql GLOBAL CROSSING LTD. AND SUBSIDI ARIES \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql NOTES TO CONSOLIDATED FIN ANCIAL STATEMENTS--(Continued) \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql In 1998, CIBC was one of the initia l purchasers of the New Senior Notes and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql GCH Preferred Stock, a member of the PC-1 and MAC credit facility syndicates, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql and was also one of the underwriters of the Company's initial public offering \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ("IPO"). CIBC was paid $19 million in fees and credit facility interest during \par\pard\plain\fs16\plain\cf1\f50\fs16\ql the year ended December 31, 1998. In 1997, GCL paid CIBC approximately $25 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql million in fees related to the financ ing obtained under the Old Senior Notes, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql the AC-1 Credit Facility, and the iss uance of the GTH Preferred Stock. Of the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql fees incurred, approximately $6 milli on related to underwriting and commitment \par\pard\plain\fs16\plain\cf1\f50\fs16\ql fees pertaining to the issuance of th e GTH Preferred Stock and was recorded as \par\pard\plain\fs16\plain\cf1\f50\fs16\ql a reduction in the carrying value of the GTH Preferred Stock, approximately $9 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql million related to underwriting, comm itment and advisory fees in connection \par\pard\plain\fs16\plain\cf1\f50\fs16\ql with the issuance of the Old Senior N otes and approximately $10 million \par\pard\plain\fs16\plain\cf1\f50\fs16\ql related to fees associated with obtai ning the AC-1 Credit Facility which was \par\pard\plain\fs16\plain\cf1\f50\fs16\ql recorded as deferred finance costs. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Relationship to Ziff-Davis Inc. and Affiliates \par\pard\plain\fs16

\par\pard\plain\fs16\plain\cf1\f50\fs16\ql e chairman and chief executive officer of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql mmon stock of which is beneficially owned \par\pard\plain\fs16\plain\cf1\f50\fs16\ql to the Asia Global Crossing joint \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ed network-based telecommunications \par\pard\plain\fs16\plain\cf1\f50\fs16\ql throughout Asia. Global Crossing, which \par\pard\plain\fs16\plain\cf1\f50\fs16\ql operation of the network, contributed to \par\pard\plain\fs16\plain\cf1\f50\fs16\ql acific Crossing system and its \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ing. Softbank and Microsoft each \par\pard\plain\fs16\plain\cf1\f50\fs16\ql sia Global Crossing and also committed to \par\pard\plain\fs16\plain\cf1\f50\fs16\ql in Global Crossing Network capacity \par\pard\plain\fs16\plain\cf1\f50\fs16\ql xpected to be utilized primarily on the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Crossing. Softbank and Microsoft also \par\pard\plain\fs16\plain\cf1\f50\fs16\ql network in the region. Global Crossing \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ssing, with Softbank and Microsoft each \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ue of Asia Global Crossing is determined \par\pard\plain\fs16\plain\cf1\f50\fs16\ql nterest of Softbank and Microsoft will \par\pard\plain\fs16\plain\cf1\f50\fs16\ql a valuation of $7.5 billion and above. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ank's representative on the Asia Global \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ion, Ziff-Davis is one of the largest \par\pard\plain\fs16\plain\cf1\f50\fs16\ql nter subsidiary. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql mited \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql was recently appointed a director of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql tchison and Global Crossing entered into \par\pard\plain\fs16\plain\cf1\f50\fs16\ql nture to pursue fixed-line \par\pard\plain\fs16\plain\cf1\f50\fs16\ql tunities in the Hong Kong Special \par\pard\plain\fs16\plain\cf1\f50\fs16\ql nt venture, the formation of which was \par\pard\plain\fs16\plain\cf1\f50\fs16\ql utchison's existing territory-wide, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql optic telecommunications network and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ng Kong with Global Crossing's

A director of Global Crossing is th Ziff-Davis Inc., a majority of the co by Softbank Corp. Softbank is a party venture established to provide advanc services to businesses and consumers is responsible for the management and the venture its 57.75% share of the P development rights in East Asia Cross contributed $175 million in cash to A make a total of at least $200 million purchases over a three-year period, e Pacific Crossing system and East Asia agreed to use Asia Global Crossing's currently owns 93% of Asia Global Cro owning 3.5%. When the fair market val to exceed $5 billion, the ownership i increase to a maximum of 19% each at The Global Crossing director is Softb Crossing board of directors. In addit web-hosting customers of our GlobalCe Relationship to Hutchison Whampoa Li The managing director of Hutchison Global Crossing. In November 1999, Hu an agreement to form a 50/50 joint ve telecommunications and Internet oppor Administrative Region, China. The joi completed in January 2000, combines H building-to-building fixed-line fiber certain Internet-related assets in Ho

\par\pard\plain\fs16\plain\cf1\f50\fs16\ql international fiber optic broadband c able capacity and web hosting, Internet \par\pard\plain\fs16\plain\cf1\f50\fs16\ql applications and data services. For i ts 50% share, Global Crossing provided to \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Hutchison $400 million in Global Cros sing 6 3/8% cumulative convertible \par\pard\plain\fs16\plain\cf1\f50\fs16\ql preferred stock. Additionally, Global Crossing committed to contribute to the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql joint venture international telecommu nications capacity rights on its global \par\pard\plain\fs16\plain\cf1\f50\fs16\ql fiber optic network and data center r elated capabilities which together are \par\pard\plain\fs16\plain\cf1\f50\fs16\ql valued at $350 million, as well as $5 0 million in cash. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Agreements with Global Crossing Stoc kholders \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql In August 1998, PCG, GKW Unified Ho ldings (an affiliate of PCG), affiliates \par\pard\plain\fs16\plain\cf1\f50\fs16\ql of CIBC, Global Crossing and some oth er Global Crossing shareholders, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql including some officers and directors and their affiliates, entered into a \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Stockholders Agreement and a Registra tion Rights Agreement. Under the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Stockholders Agreement, Global Crossi ng has been granted a right of first \par\pard\plain\fs16\plain\cf1\f50\fs16\ql refusal on specified private transfer s by these shareholders during the first \par\pard\plain\fs16\plain\cf1\f50\fs16\ql two years after the consummation of t he IPO on August 14, 1998. In addition, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql subject to the exceptions in the Stoc kholders Agreement, some of these \par\pard\plain\fs16\plain\cf1\f50\fs16\ql shareholders have rights, which are r eferred to as tag-along rights, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql permitting these shareholders to part icipate, on the same terms and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql conditions, in some transfers of shar es by \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql F-32 \par\pard\plain\fs16 \page \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql GLOBAL CROSSING LTD. AND SUBSIDI ARIES \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql NOTES TO CONSOLIDATED FIN ANCIAL STATEMENTS--(Continued) \par\pard\plain\fs16\plain\cf1\f50\fs16\ql any other of these shareholders as fo llows: (1) PCG, GKW Unified Holdings and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql CIBC and their affiliates and permitt ed transferees have the right to \par\pard\plain\fs16\plain\cf1\f50\fs16\ql participate in any transaction initia ted by any of them to transfer 5% or more \par\pard\plain\fs16\plain\cf1\f50\fs16\ql of our outstanding securities; and (2 ) PCG, GKW Unified Holdings, CIBC and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql their affiliates and permitted transf erees have the right to participate in

\par\pard\plain\fs16\plain\cf1\f50\fs16\ql hem to transfer any Global Crossing \par\pard\plain\fs16\plain\cf1\f50\fs16\ql result in a change of control of Global \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ts Agreement, Global Crossing \par\pard\plain\fs16\plain\cf1\f50\fs16\ql agreement and a number of their \par\pard\plain\fs16\plain\cf1\f50\fs16\ql registration rights and will receive \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ances, reimbursement for expenses from \par\pard\plain\fs16\plain\cf1\f50\fs16\ql licable registration. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ossing, representing at that time over a \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ompany's common stock, entered into a \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ation in March 1999 in connection with \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ssing shareholders reaffirmed their \par\pard\plain\fs16\plain\cf1\f50\fs16\ql greement in connection with subsequent \par\pard\plain\fs16\plain\cf1\f50\fs16\ql nt during 1999. Pursuant to the Second \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Share Transfer Restriction Agreement \par\pard\plain\fs16\plain\cf1\f50\fs16\ql rossing shareholders that are parties to \par\pard\plain\fs16\plain\cf1\f50\fs16\ql m September 2, 1999 until March 28, 2000, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ownership of any shares of Global \par\pard\plain\fs16\plain\cf1\f50\fs16\ql areholders, other than transfers to \par\pard\plain\fs16\plain\cf1\f50\fs16\ql nsent of the Company and other limited \par\pard\plain\fs16\plain\cf1\f50\fs16\ql toward implementing a program with the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql shareholders that are parties to the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql sfer their shares after March 28, 2000, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql pleted in a manner that would provide for \par\pard\plain\fs16\plain\cf1\f50\fs16\ql res of Global Crossing common stock. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql of the Company's executive officers and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql entered into a Share Transfer Restriction \par\pard\plain\fs16\plain\cf1\f50\fs16\ql this agreement, the Global Crossing \par\pard\plain\fs16\plain\cf1\f50\fs16\ql or transfer shares of the Company's \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ive officers agreed not to sell or

any transaction initiated by any of t securities if that transaction would Crossing. Under the Registration Righ shareholders who are parties to that transferees have demand and piggyback indemnification and, in some circumst the Company in connection with an app Principal shareholders of Global Cr majority of the voting power of the C Voting Agreement with Frontier Corpor the Frontier merger. These Global Cro voting obligations under the Voting A amendments made to the merger agreeme Reaffirmation of Voting Agreement and dated September 2, 1999, the Global C the Voting Agreement also agreed, fro not to transfer record or beneficial Crossing common stock held by such sh charities, transfers made with the co exceptions, and to work in good faith purpose that, if the Global Crossing Voting Agreement wish to sell or tran these sales or transfers would be com an orderly trading market for the sha Also on September 2, 1999, fourteen three executive officers of Frontier Agreement with Global Crossing. Under executive officers agreed not to sell common stock, and the Frontier execut

\par\pard\plain\fs16\plain\cf1\f50\fs16\ql ock and the shares of Global Crossing \par\pard\plain\fs16\plain\cf1\f50\fs16\ql change for their Frontier common stock in \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ject in each case to substantially the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql the Second Reaffirmation of Voting \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ion Agreement described in the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql elecom, an affiliate of PCG which is a \par\pard\plain\fs16\plain\cf1\f50\fs16\ql G Telecom provided ACL with advice in \par\pard\plain\fs16\plain\cf1\f50\fs16\ql nance of AC-1, development and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ng strategies and the preparation of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql sation for its advisory services, PCG \par\pard\plain\fs16\plain\cf1\f50\fs16\ql s revenue of the Company over a 25 year \par\pard\plain\fs16\plain\cf1\f50\fs16\ql , with the first such payment to occur at \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ayable under the ASA were being paid to \par\pard\plain\fs16\plain\cf1\f50\fs16\ql CPAs until the ASA was terminated, as \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ASA to PCG Telecom were shared amongst \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ULLICO"), PCG, CIBC, and certain \par\pard\plain\fs16\plain\cf1\f50\fs16\ql , all of whom are shareholders of GCL. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql rights under the ASA on behalf of the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ted such rights to the Company as the ASA \par\pard\plain\fs16\plain\cf1\f50\fs16\ql recorded in the consolidated financial \par\pard\plain\fs16\plain\cf1\f50\fs16\ql al paid-in capital of $135 million and a \par\pard\plain\fs16\plain\cf1\f50\fs16\ql nt of $138 million. The $138 million is \par\pard\plain\fs16\plain\cf1\f50\fs16\ql t of the fees that would have been \par\pard\plain\fs16\plain\cf1\f50\fs16\ql llion owed to the Company under a related \par\pard\plain\fs16\plain\cf1\f50\fs16\ql mount was calculated by applying the 2% \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ture revenue and discounting the amount \par\pard\plain\fs16\plain\cf1\f50\fs16\ql he amount relating to all other system's \par\pard\plain\fs16\plain\cf1\f50\fs16\ql lculation was $156 million, which amount

transfer shares of Frontier common st common stock they would receive in ex the merger, until March 28, 2000, sub same exceptions as are applicable to Agreement and Share Transfer Restrict immediately preceding paragraph. Advisory Services Agreement ("ASA") ACL entered into the ASA with PCG T shareholder of GCL. Under the ASA, PC respect of the development and mainte implementation of marketing and prici business plans and budgets. As compen Telecom received a 2% fee on the gros term, subject to certain restrictions the AC-1 RFS date. Advances on fees p PCG Telecom at a rate of 1% on signed described below. Fees paid under the Union Labor Life Insurance Company (" directors and officers of the Company Effective June 1998, GCL acquired the Company for common stock and contribu was terminated. This transaction was statements as an increase in addition charge against operations in the amou comprised of a $135 million settlemen payable and the cancellation of $3 mi advance agreement. The $135 million a advisory services fee to projected fu relating to AC-1 revenue by 12% and t revenue by 15%. The result of this ca

\par\pard\plain\fs16\plain\cf1\f50\fs16\ql was subsequently reduced to $135 mill ion. Both the discount rates and the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ultimate \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql F-33 \par\pard\plain\fs16 \page \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql GLOBAL CROSSING LTD. AND SUBSIDI ARIES \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql NOTES TO CONSOLIDATED FIN ANCIAL STATEMENTS--(Continued) \par\pard\plain\fs16\plain\cf1\f50\fs16\ql valuation were determined as a result of a negotiation process including a non \par\pard\plain\fs16\plain\cf1\f50\fs16\ql management director of the Company an d the various persons entitled to fees \par\pard\plain\fs16\plain\cf1\f50\fs16\ql under the ASA. The Company obtained a fairness opinion from an independent \par\pard\plain\fs16\plain\cf1\f50\fs16\ql financial advisor in connection with this transaction. In addition, the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Company incurred approximately $2 mil lion of advisory fees prior to \par\pard\plain\fs16\plain\cf1\f50\fs16\ql termination of the contract, for a to tal expense of $140 million for the year \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ended December 31, 1998. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql PCG Warrants \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql PCG Warrants, issued in 1998 by the Company's predecessor, Global Crossing \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Ltd., LDL ("Old GCL") became exercisa ble upon the completion of the IPO. The \par\pard\plain\fs16\plain\cf1\f50\fs16\ql PCG Warrants gave each holder the opt ion to convert each share under warrant \par\pard\plain\fs16\plain\cf1\f50\fs16\ql into a fraction of a Class B of Old G CL share based upon the ratio of the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql current per share valuation at the ti me of conversion less the per share \par\pard\plain\fs16\plain\cf1\f50\fs16\ql exercise price of the warrant divided by the current per share valuation at \par\pard\plain\fs16\plain\cf1\f50\fs16\ql the time of conversion multiplied by the 36,906,372 shares available under the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql PCG Warrants, together with a new war rant ("New PCG Warrants") to purchase the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql remaining fraction of such Class B sh are at an exercise price equal to the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql then current per share valuation. Pri or to the IPO, the holders of the PCG \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Warrants exercised their warrants to acquire Class B of Old GCL shares by way \par\pard\plain\fs16\plain\cf1\f50\fs16\ql of the cashless conversion and the Ne w PCG Warrants were issued with an \par\pard\plain\fs16\plain\cf1\f50\fs16\ql exercise price based on the per share valuation at the conversion date, the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql obligation on which were assumed by G CL. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql The Company accounted for the cashl ess conversion of the PCG Warrants, which

\par\pard\plain\fs16\plain\cf1\f50\fs16\ql urrent estimated per share valuation at \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ied by the number of Class B shares of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql exchange for the PCG Warrants. The \par\pard\plain\fs16\plain\cf1\f50\fs16\ql n is approximately $213 million, which \par\pard\plain\fs16\plain\cf1\f50\fs16\ql xchange for the PCG Warrants. In \par\pard\plain\fs16\plain\cf1\f50\fs16\ql the Company agreed to make available to \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Company in connection with the grant of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql $231 million cash investment made by the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ded an increase in its investment in PCL \par\pard\plain\fs16\plain\cf1\f50\fs16\ql illion and an increase in construction in \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ts of approximately $50 million and $36 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql onding increase of $213 million in \par\pard\plain\fs16\plain\cf1\f50\fs16\ql million was allocated on a pro rata basis \par\pard\plain\fs16\plain\cf1\f50\fs16\ql e estimated cost of each system. The \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ants is pursuant to Emerging Issues Task \par\pard\plain\fs16\plain\cf1\f50\fs16\ql nstruments with Variable Terms that are \par\pard\plain\fs16\plain\cf1\f50\fs16\ql mployee Services under FASB Statement No. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql , the fair value of equity instruments \par\pard\plain\fs16\plain\cf1\f50\fs16\ql mployee services should be measured using \par\pard\plain\fs16\plain\cf1\f50\fs16\ql assumptions as of the date at which a \par\pard\plain\fs16\plain\cf1\f50\fs16\ql has been reached. The Company has \par\pard\plain\fs16\plain\cf1\f50\fs16\ql CG Warrants as of June 1998, since the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 13 million value attributed to the PCG \par\pard\plain\fs16\plain\cf1\f50\fs16\ql to the actual value of $275 million on \par\pard\plain\fs16\plain\cf1\f50\fs16\ql .50 price per share of the IPO. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql tion for the New PCG Warrants on the date \par\pard\plain\fs16\plain\cf1\f50\fs16\ql the date of the IPO. The Company valued \par\pard\plain\fs16\plain\cf1\f50\fs16\ql based on an independent valuation based \par\pard\plain\fs16\plain\cf1\f50\fs16\ql The New PCG Warrants had a total value of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql

occurred as of June 1998, using the c the expected conversion date, multipl Old GCL estimated to be converted in resulting value under this calculatio was allocated to the new systems in e connection with the formation of PCL, PCL the consideration received by the the PCG Warrants, in addition to the Company. Therefore, the Company recor in the amount of approximately $127 m progress for PAC and MAC in the amoun million, respectively, with a corresp additional paid-in capital. The $213 to the three projects according to th Company's accounting for the PCG Warr Force 96-18, "Accounting for Equity I Issued for Consideration other than E 123" ("EITF 96-18"). Under EITF 96-18 issued for consideration other than e the stock price or other measurement firm commitment for performance level recorded the estimated value of the P IPO was probable at that date. The $2 Warrants as of June 1998 was adjusted the date of the IPO based upon the $9 The Company gave accounting recogni these warrants were issued, which was each of the New PCG Warrants at $3.48 on the IPO price of $9.50 per share. approximately $43 million. The Compan

y recorded the actual value of the New \par\pard\plain\fs16\plain\cf1\f50\fs16\ql PCG Warrants in a manner similar to t hat described above whereby the total \par\pard\plain\fs16\plain\cf1\f50\fs16\ql value was allocated to the investment in PC-1, MAC and PAC based on their \par\pard\plain\fs16\plain\cf1\f50\fs16\ql relative total contract costs. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Other transactions \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql In 1998, GCL purchased all common s hares owned by Telecommunications \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Development Corporation ("TDC") in th e Company in exchange for 300,000 fewer \par\pard\plain\fs16\plain\cf1\f50\fs16\ql newly issued shares of common stock b ased upon the \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql F-34 \par\pard\plain\fs16 \page \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql GLOBAL CROSSING LTD. AND SUBSIDI ARIES \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql NOTES TO CONSOLIDATED FIN ANCIAL STATEMENTS--(Continued) \par\pard\plain\fs16\plain\cf1\f50\fs16\ql per share value at the repurchase dat e. The transaction benefited GCL since \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 300,000 fewer shares were outstanding after the repurchase without any cost to \par\pard\plain\fs16\plain\cf1\f50\fs16\ql GCL. This transaction was accounted f or as the acquisition of treasury stock \par\pard\plain\fs16\plain\cf1\f50\fs16\ql and was recorded as $209 million, the fair value of the consideration given. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Certain officers and directors of the Company held direct or indirect equity \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ownership positions in TDC, resulting in these officers and directors having a \par\pard\plain\fs16\plain\cf1\f50\fs16\ql majority of the outstanding common st ock of TDC. Following this transaction, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql TDC distributed all of its shares of common stock and GCL warrants to the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql holders of its common stock and was t hen liquidated. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 19. SEGMENT REPORTING \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql The Company is a worldwide provider of Internet and long distance \par\pard\plain\fs16\plain\cf1\f50\fs16\ql telecommunications facilities and rel ated services supplying its customers \par\pard\plain\fs16\plain\cf1\f50\fs16\ql with global "point to point" connecti vity and, through its Global Marine \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Systems subsidiary, providing cable i nstallation and maintenance services. The \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Company's reportable segments include telecommunications services, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql installation and maintenance services , and incumbent local exchange carrier \par\pard\plain\fs16\plain\cf1\f50\fs16\ql services. There are other corporate r elated charges not attributable to a

\par\pard\plain\fs16\plain\cf1\f50\fs16\ql specific segment. While the Company's chief decision maker monitors the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql revenue streams of the various produc ts and geographic locations, operations \par\pard\plain\fs16\plain\cf1\f50\fs16\ql are managed and financial performance evaluated based on the delivery of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql multiple, integrated services to cust omers over a single network. As a result, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql there are many shared expenses genera ted by the various revenue streams and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql management believes that any allocati on of the expenses incurred to multiple \par\pard\plain\fs16\plain\cf1\f50\fs16\ql revenue streams would be impractical and arbitrary. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql F-35 \par\pard\plain\fs16 \page \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql GLOBAL CROSSING LTD. AND SUBSIDI ARIES \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql NOTES TO CONSOLIDATED FIN ANCIAL STATEMENTS--(Continued) \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql The information below summarizes cert ain financial data of the Company by \par\pard\plain\fs16\plain\cf1\f50\fs16\ql segment (in thousands): \par\pard\plain\fs16 \par\pard\plain\fs16 \par\pard\plain\fs16\pard\plain\cf1\f50\fs18\ql Period from \par\pard\plain\fs16\plain\cf1\f50\fs18\ql March 19, 1997 \par\pard\plain\fs16\plain\cf1\f50\fs18\ql Year Ended Year Ended (Date of Inception) \par\pard\plain\fs16\plain\cf1\f50\fs18\ql December 31, 1999 December 31, 1998 to December 31, 1997 \par\pard\plain\fs16\plain\cf1\f50\fs18\ql ---------------- ----------------- -------------------\par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs18\ql Telecommunication \par\pard\plain\fs16\plain\cf1\f50\fs18\ql Services \par\pard\plain\fs16\plain\cf1\f50\fs18\ql Revenue................ 1,3 18,248 419,866 -\par\pard\plain\fs16\plain\cf1\f50\fs18\ql Operating expenses..... 1,3 70,534 299,922 3,101 \par\pard\plain\fs16\plain\cf1\f50\fs18\ql -------------------------\par\pard\plain\fs16\plain\cf1\f50\fs18\ql Operating income \par\pard\plain\fs16\plain\cf1\f50\fs18\ql (loss)................ $ ( 52,286) $ 119,944 $ (3,101) \par\pard\plain\fs16\plain\cf1\f50\fs18\ql ===== ====== ========== ======== \par\pard\plain\fs16\plain\cf1\f50\fs18\ql Cash paid for capital \par\pard\plain\fs16\plain\cf1\f50\fs18\ql expenditures.......... $ 1,5 52,019 $ 413,996 $428,743 \par\pard\plain\fs16\plain\cf1\f50\fs18\ql ===== ====== ========== ======== \par\pard\plain\fs16\plain\cf1\f50\fs18\ql Total assets........... $16,8 13,242 $2,639,177 $572,197

\par\pard\plain\fs16\plain\cf1\f50\fs18\ql ====== ========== ======== \par\pard\plain\fs16\plain\cf1\f50\fs18\ql \par\pard\plain\fs16\plain\cf1\f50\fs18\ql \par\pard\plain\fs16\plain\cf1\f50\fs18\ql \par\pard\plain\fs16\plain\cf1\f50\fs18\ql 67,981 --\par\pard\plain\fs16\plain\cf1\f50\fs18\ql 92,674 --\par\pard\plain\fs16\plain\cf1\f50\fs18\ql ---------------------\par\pard\plain\fs16\plain\cf1\f50\fs18\ql 60,655 \par\pard\plain\fs16\plain\cf1\f50\fs18\ql 62,209 --\par\pard\plain\fs16\plain\cf1\f50\fs18\ql ---------------------\par\pard\plain\fs16\plain\cf1\f50\fs18\ql (1,554) $ -$ -\par\pard\plain\fs16\plain\cf1\f50\fs18\ql ====== ========== ======== \par\pard\plain\fs16\plain\cf1\f50\fs18\ql \par\pard\plain\fs16\plain\cf1\f50\fs18\ql 70,585 $ -$ -\par\pard\plain\fs16\plain\cf1\f50\fs18\ql ====== ========== ======== \par\pard\plain\fs16\plain\cf1\f50\fs18\ql 19,166 $ -$ -\par\pard\plain\fs16\plain\cf1\f50\fs18\ql ====== ========== ======== \par\pard\plain\fs16\plain\cf1\f50\fs18\ql \par\pard\plain\fs16\plain\cf1\f50\fs18\ql \par\pard\plain\fs16\plain\cf1\f50\fs18\ql 85,921 $ -$ -\par\pard\plain\fs16\plain\cf1\f50\fs18\ql 31,942 --\par\pard\plain\fs16\plain\cf1\f50\fs18\ql ---------------------\par\pard\plain\fs16\plain\cf1\f50\fs18\ql 53,979 $ --\par\pard\plain\fs16\plain\cf1\f50\fs18\ql ====== ========== ======== \par\pard\plain\fs16\plain\cf1\f50\fs18\ql \par\pard\plain\fs16\plain\cf1\f50\fs18\ql 48,311 $ -$ -\par\pard\plain\fs16\plain\cf1\f50\fs18\ql ====== ========== ======== \par\pard\plain\fs16\plain\cf1\f50\fs18\ql 73,172 $ --\par\pard\plain\fs16\plain\cf1\f50\fs18\ql ====== ========== ======== \par\pard\plain\fs16\plain\cf1\f50\fs18\ql \par\pard\plain\fs16\plain\cf1\f50\fs18\ql -$ -$ -\par\pard\plain\fs16\plain\cf1\f50\fs18\ql 7,600 139,669 -\par\pard\plain\fs16\plain\cf1\f50\fs18\ql ---------------------\par\pard\plain\fs16\plain\cf1\f50\fs18\ql (7,600) $ (139,669) $ --

===== Installation and Maintenance Services Revenue: Maintenance........... Installation.......... ----Total revenue.......... Operating expenses..... 1 1 ----Operating loss......... $ ===== Cash paid for capital expenditures.......... $ 1

===== Total assets........... $ 1,5 ===== Incumbent Local Exchange Carrier Services Revenue................ Operating expenses.....

$

1 1

----Operating income....... $ ===== Cash paid for capital expenditures.......... $ ===== Total assets........... $ 1,3 ===== Corporate and Other Revenue................ Operating expenses..... ----Operating loss......... $ $

\par\pard\plain\fs16\plain\cf1\f50\fs18\ql ===== ====== ========== ======== \par\pard\plain\fs16\plain\cf1\f50\fs18\ql Cash paid for capital \par\pard\plain\fs16\plain\cf1\f50\fs18\ql expenditures.......... $ -$ -$ -\par\pard\plain\fs16\plain\cf1\f50\fs18\ql ===== ====== ========== ======== \par\pard\plain\fs16\plain\cf1\f50\fs18\ql Total assets........... $ -$ -$ -\par\pard\plain\fs16\plain\cf1\f50\fs18\ql ===== ====== ========== ======== \par\pard\plain\fs16\plain\cf1\f50\fs18\ql Consolidated \par\pard\plain\fs16\plain\cf1\f50\fs18\ql Consolidated revenue... $ 1,6 64,824 $ 419,866 $ -\par\pard\plain\fs16\plain\cf1\f50\fs18\ql Consolidated operating \par\pard\plain\fs16\plain\cf1\f50\fs18\ql expense............... 1,6 72,285 439,591 3,101 \par\pard\plain\fs16\plain\cf1\f50\fs18\ql -------------------------\par\pard\plain\fs16\plain\cf1\f50\fs18\ql Consolidated operating \par\pard\plain\fs16\plain\cf1\f50\fs18\ql (loss)................ $ (7,461) $ (19,725) $ (3,101) \par\pard\plain\fs16\plain\cf1\f50\fs18\ql ===== ====== ========== ======== \par\pard\plain\fs16\plain\cf1\f50\fs18\ql Consolidated cash paid \par\pard\plain\fs16\plain\cf1\f50\fs18\ql for capital \par\pard\plain\fs16\plain\cf1\f50\fs18\ql expenditures.......... $ 1,7 70,915 $ 413,996 $428,743 \par\pard\plain\fs16\plain\cf1\f50\fs18\ql ===== ====== ========== ======== \par\pard\plain\fs16\plain\cf1\f50\fs18\ql Consolidated total \par\pard\plain\fs16\plain\cf1\f50\fs18\ql assets................ $19,7 05,580 $2,639,177 $572,197 \par\pard\plain\fs16\plain\cf1\f50\fs18\ql ===== ====== ========== ======== \par\pard\plain\fs16 \par\pard\plain\fs16 \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql F-36 \par\pard\plain\fs16 \page \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql GLOBAL CROSSING LTD. AND SUBSIDI ARIES \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql NOTES TO CONSOLIDATED FIN ANCIAL STATEMENTS--(Continued) \par\pard\plain\fs16 \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql 1999 1998 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql --------------------- --------------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql Long-Lived Long-Lived \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Revenue Assets Revenue(1) Assets(2) \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ---------- ---------- ---------- ---------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql (In thousands) \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql North America \par\pard\plain\fs16\plain\cf1\f50\fs16\ql United States..................

$ 997,025 $3,029,828 $193,142 $ 76,055 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Other.......................... 64,040 26,515 64,558 -\par\pard\plain\fs16\plain\cf1\f50\fs16\ql ---------- ---------- -------- ---------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql 1,061,065 3,056,343 257,700 76,055 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Europe \par\pard\plain\fs16\plain\cf1\f50\fs16\ql The Netherlands................ 89,600 92,251 46,770 82,433 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Germany........................ 145,289 204,564 36,047 30,021 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql England........................ 106,815 722,462 34,777 49,081 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Other.......................... 244,351 302,645 44,572 -\par\pard\plain\fs16\plain\cf1\f50\fs16\ql ---------- ---------- -------- ---------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql 586,055 1,321,922 162,166 161,535 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql International waters............. -- 1,339,614 -770,966 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Other............................ 17,704 308,174 --\par\pard\plain\fs16\plain\cf1\f50\fs16\ql ---------- ---------- -------- ---------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql Consolidated..................... $1,664,824 $6,026,053 $419,866 $1,008,556 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ========== ========== ======== ========== \par\pard\plain\fs16\par\pard\plain\cf1\f50\fs16\ql -------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql (1) During 1998, there was one custom er located in the United States that \par\pard\plain\fs16\plain\cf1\f50\fs16\ql accounted for 16% of consolidated revenue, another customer located in \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Canada that accounted for 16% of consolidated revenue, and one customer \par\pard\plain\fs16\plain\cf1\f50\fs16\ql located in the Netherlands that a ccounted for 11% of consolidated revenue. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql There were no individual customer s in 1999 that accounted for more than \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 10% of consolidated revenue. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (2) Long-lived assets include capacit y available for sale and construction in \par\pard\plain\fs16\plain\cf1\f50\fs16\ql progress as of December 31, 1999 and 1998. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 20. QUARTERLY FINANCIAL DATA (UNAUDIT ED) \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql The Company's unaudited quarterly r esults are as follows: \par\pard\plain\fs16 \par\pard\plain\fs16 \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql 1999 Quarter Ended \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ------------------------------------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql Mar ch 31 June 30 September 30 December 31 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ---

----- -------- ------------ ----------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql ( In thousands, except per share data) \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Revenue.......................... $17 6,319 $188,459 $234,582 $1,065,464 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Operating income (loss).......... 4 1,067 39,764 13,226 (101,518) \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Income (loss) before \par\pard\plain\fs16\plain\cf1\f50\fs16\ql extraordinary item and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql cumulative effect of change in \par\pard\plain\fs16\plain\cf1\f50\fs16\ql accounting principle............ 1 2,802 9,978 135,854 (169,169) \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Net income (loss)................ ( 1,908) 9,978 120,989 (199,985) \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Net income (loss) applicable to \par\pard\plain\fs16\plain\cf1\f50\fs16\ql common shareholders............. (1 4,952) (4,219) 106,918 (225,315) \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Income (loss) per common share \par\pard\plain\fs16\plain\cf1\f50\fs16\ql before extraordinary item and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql cumulative effect of change in \par\pard\plain\fs16\plain\cf1\f50\fs16\ql accounting principle, basic..... (0.00) (0.01) 0.30 (.25) \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Net income (loss) per common \par\pard\plain\fs16\plain\cf1\f50\fs16\ql share, basic.................... (0.04) (0.01) 0.26 (.29) \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Income (loss) per common share \par\pard\plain\fs16\plain\cf1\f50\fs16\ql before extraordinary item and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql cumulative effect of change in \par\pard\plain\fs16\plain\cf1\f50\fs16\ql accounting principle, diluted... (0.00) (0.01) 0.27 (.25) \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Net income (loss) per common \par\pard\plain\fs16\plain\cf1\f50\fs16\ql share, diluted.................. $ (0.04) $ (0.01) $ 0.24 $ (.29) \par\pard\plain\fs16 \par\pard\plain\fs16 \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql F-37 \par\pard\plain\fs16 \page \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql GLOBAL CROSSING LTD. AND SUBSIDI ARIES \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql NOTES TO CONSOLIDATED FIN ANCIAL STATEMENTS--(Continued) \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Significant 1999 interim events: \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql On December 15, 1999, the Company i ssued 2,600,000 shares of 7% cumulative \par\pard\plain\fs16\plain\cf1\f50\fs16\ql convertible preferred stock at a liqu idation preference of $250.00 for net \par\pard\plain\fs16\plain\cf1\f50\fs16\ql proceeds of $630 million. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql On November 24, 1999, the Company a cquired Racal Telecom, a group of wholly \par\pard\plain\fs16\plain\cf1\f50\fs16\ql owned subsidiaries of Racal Electroni cs plc, for approximately $1.6 billion in \par\pard\plain\fs16\plain\cf1\f50\fs16\ql cash. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql On November 12, 1999, GCH issued tw

o series of senior unsecured notes. The 9 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 1/8% senior notes are due November 15 , 2006 with a face value of $900 million, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql for net proceeds of $887 million and the 9 1/2% senior notes are due \par\pard\plain\fs16\plain\cf1\f50\fs16\ql November 15, 2009 with a face value o f $1,100 million, for net proceeds of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql $1,084 million. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql On November 5, 1999, the Company is sued 10,000,000 shares of 6 3/8% \par\pard\plain\fs16\plain\cf1\f50\fs16\ql cumulative convertible preferred stoc k at a liquidation preference of $100.00 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql for net proceeds of approximately $96 9 million. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql On September 28, 1999, the Company consummated its merger with Frontier \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Corporation in a transaction valued a t $10.3 billion. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql On July 2, 1999, the Company comple ted its acquisition of the Global Marine \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Systems division of Cable & Wireless Plc for approximately $908 million in \par\pard\plain\fs16\plain\cf1\f50\fs16\ql cash and assumed liabilities. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql During the third quarter, the Compa ny recognized $210 million, net of merger \par\pard\plain\fs16\plain\cf1\f50\fs16\ql related expenses, of other income in connection with the termination of the US \par\pard\plain\fs16\plain\cf1\f50\fs16\ql WEST merger agreement. \par\pard\plain\fs16 \par\pard\plain\fs16 \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql 1998 Quarter Ended \par\pard\plain\fs16\plain\cf1\f50\fs16\ql -------------------------------------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql M arch 31 June 30 September 30 December 31 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ------- --------- ------------ ----------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql (In thousands, except per share data) \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Revenue........................... $ -$ 100,244 $116,494 $203,128 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Operating income (loss)........... (3,794) (123,649) 31,994 75,724 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Income (loss) before extraordinary \par\pard\plain\fs16\plain\cf1\f50\fs16\ql loss............................. (3,722) (135,725) 15,229 56,024 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Net income (loss)................. (3,722) (155,434) 15,229 56,024 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Net income (loss) applicable to \par\pard\plain\fs16\plain\cf1\f50\fs16\ql common shareholders.............. (8,129) (193,473) 15,229 51,649 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Income (loss) per common share \par\pard\plain\fs16\plain\cf1\f50\fs16\ql before extraordinary item, basic. (0.02) (0.52) 0.04 0.13 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Net income (loss) per common

\par\pard\plain\fs16\plain\cf1\f50\fs16\ql share, basic..................... (0.02) (0.58) 0.04 0.13 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Income (loss) per common share \par\pard\plain\fs16\plain\cf1\f50\fs16\ql before extraordinary item, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql diluted.......................... (0.02) (0.52) 0.04 0.12 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Net income (loss) per common \par\pard\plain\fs16\plain\cf1\f50\fs16\ql share, diluted................... $ (0.02) $ (0.58) $ 0.04 $ 0.12 \par\pard\plain\fs16 \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql Significant 1998 interim events: \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql In December 1998, 5,000,000 shares of GCH 10 1/2% Preferred Stock were \par\pard\plain\fs16\plain\cf1\f50\fs16\ql issued for proceeds of $483 million. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql During August 1998, the Company com pleted an IPO for which the Company \par\pard\plain\fs16\plain\cf1\f50\fs16\ql received net proceeds of approximatel y $391 million. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql In May 1998, the first segment of A C-1, the United States to United Kingdom \par\pard\plain\fs16\plain\cf1\f50\fs16\ql route, was completed and commenced op erations. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql During the second quarter, the Comp any acquired the rights from those \par\pard\plain\fs16\plain\cf1\f50\fs16\ql entitled to fees payable under the ad visory services agreement in \par\pard\plain\fs16\plain\cf1\f50\fs16\ql consideration for the issuance of com mon stock having an aggregate value of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql $135 million and the cancellation of approximately $3 million owed to the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Company under a related advance \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql F-38 \par\pard\plain\fs16 \page \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql GLOBAL CROSSING LTD. AND SUBSIDI ARIES \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql NOTES TO CONSOLIDATED FIN ANCIAL STATEMENTS--(Continued) \par\pard\plain\fs16\plain\cf1\f50\fs16\ql agreement. As a result of this transa ction, the Company recorded a non\par\pard\plain\fs16\plain\cf1\f50\fs16\ql recurring charge in the approximate a mount of $138 million during the second \par\pard\plain\fs16\plain\cf1\f50\fs16\ql quarter. In addition, the Company rec ognized as an expense approximately $2 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql million of advisory fees incurred pri or to termination of the contract. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql On May 18, 1998, the Company issued 9 5/8% senior notes due May 15, 2008, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql with a face value of $800 million. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 21. SHAREHOLDERS' EQUITY \par\pard\plain\fs16

\par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ee received from US West, Inc. ("US \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 6 shares of its common stock from US West \par\pard\plain\fs16\plain\cf1\f50\fs16\ql For the year ended December 31, 1999, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ily of a $210 million termination fee \par\pard\plain\fs16\plain\cf1\f50\fs16\ql e termination of its merger agreement \par\pard\plain\fs16\plain\cf1\f50\fs16\ql nses. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql aid-in Capital \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql y GT Parent Holdings LDC, was \par\pard\plain\fs16\plain\cf1\f50\fs16\ql uration company in the Cayman Islands. In \par\pard\plain\fs16\plain\cf1\f50\fs16\ql as formed as a wholly-owned subsidiary of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql buted its investment in Global \par\pard\plain\fs16\plain\cf1\f50\fs16\ql GCL. During April 1998, GCL formed a \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ing Holdings Ltd. ("GCH"), a Bermuda \par\pard\plain\fs16\plain\cf1\f50\fs16\ql nt in GTH to GCH upon its formation. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 100-for-1 stock split of each of its \par\pard\plain\fs16\plain\cf1\f50\fs16\ql undesignated stock and amended the par \par\pard\plain\fs16\plain\cf1\f50\fs16\ql rom $.0001 per share to $.000001 per \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 998, GCL declared a stock dividend to Old \par\pard\plain\fs16\plain\cf1\f50\fs16\ql shares of common stock of GCL for each \par\pard\plain\fs16\plain\cf1\f50\fs16\ql tanding. Pursuant to the terms of the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql d prior to the Company's IPO, each holder \par\pard\plain\fs16\plain\cf1\f50\fs16\ql d such shares into a fraction of a Class \par\pard\plain\fs16\plain\cf1\f50\fs16\ql tion at the time of such conversion, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql he remaining fraction of such Class E \par\pard\plain\fs16\plain\cf1\f50\fs16\ql such market valuation. In addition, each \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ad such Class E shares converted into \par\pard\plain\fs16\plain\cf1\f50\fs16\ql y, each holder of Class D and Class E \par\pard\plain\fs16\plain\cf1\f50\fs16\ql

Share Cancellation As part of the Company's break-up f West"), the Company received 2,231,07 which were cancelled by the Company. other income, net was composed primar paid by US West in connection with th with the Company, net of related expe Old GCL Common Stock and Additional P During March 1997, Old GCL, formerl incorporated as an exempted limited d March 1998, GCL, a Bermuda company, w Old GCL. At that time, Old GCL contri Telesystems Holdings Ltd. ("GTH") to wholly-owned subsidiary, Global Cross company, and contributed its investme In January 1998, Old GCL effected a Class A, B, C and D common stock and value of each share of common stock f share. Prior to GCL's IPO in August 1 GCL resulting in Old GCL holding 1.5 share of common stock of Old GCL outs Articles of Association of Old GCL an of Class D shares of Old GCL converte E share of Old GCL based upon a valua together with a warrant to purchase t share at an exercise price based upon holder of Class E shares of Old GCL h Class B shares of Old GCL. Accordingl shares ultimately received Class B sh

ares, with the warrants to purchase Class \par\pard\plain\fs16\plain\cf1\f50\fs16\ql E shares received by former Class D s hareholders then cancelled in exchange \par\pard\plain\fs16\plain\cf1\f50\fs16\ql for warrants ("New GCL Warrants") to purchase shares of Common Stock of GCL at \par\pard\plain\fs16\plain\cf1\f50\fs16\ql an exercise price equal to the IPO pr ice of $9.50 per share. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Subsequent to the above transaction and prior to the Company's IPO, each \par\pard\plain\fs16\plain\cf1\f50\fs16\ql shareholder of Old GCL (other than CI BC) exchanged their interests in Old GCL \par\pard\plain\fs16\plain\cf1\f50\fs16\ql for shares of common stock of GCL hel d by Old GCL at a rate of 1.5 shares of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql common stock of GCL for each share of common stock of Old GCL ("Old GCL \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Exchange"). CIBC did not participate in the above mentioned transaction and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql continued to maintain its ownership o f GCL through Old GCL, which became a \par\pard\plain\fs16\plain\cf1\f50\fs16\ql wholly owned subsidiary of CIBC. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Because Old GCL, GCL and GCH were e ntities under common control, the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql transfers by Old GCL to GCL and GCL t o GCH and the Old GCL Exchange were \par\pard\plain\fs16\plain\cf1\f50\fs16\ql accounted for similar to a pooling of interests. The consolidated financial \par\pard\plain\fs16\plain\cf1\f50\fs16\ql statements presented have been retroa ctively restated to reflect these \par\pard\plain\fs16\plain\cf1\f50\fs16\ql transactions as if they had occurred as of March 19, 1997 (Date of Inception). \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql F-39 \par\pard\plain\fs16 \page \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql GLOBAL CROSSING LTD. AND SUBSIDI ARIES \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql NOTES TO CONSOLIDATED FIN ANCIAL STATEMENTS--(Continued) \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Information with respect to Old GCL common stock and additional paid-in \par\pard\plain\fs16\plain\cf1\f50\fs16\ql capital prior to the Old GCL Exchange is as follows: \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Common Stock: \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Authorized: \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 1,000,000,000 Class A common st ock of $.00000067 par value \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 1,000,000,000 Class B common st ock of $.00000067 par value \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 1,000,000,000 Class C common st ock of $.00000067 par value

\par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ock of $.00000067 par value \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ock of $.00000067 par value \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql mon stock of $.00000067 par value \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Class C shares all had voting rights. On \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ,000 Class A shares, 101,250,000 Class B \par\pard\plain\fs16\plain\cf1\f50\fs16\ql r $.33 per share, resulting in aggregate \par\pard\plain\fs16\plain\cf1\f50\fs16\ql to the 22,500,000 Class A shares issued \par\pard\plain\fs16\plain\cf1\f50\fs16\ql sh in connection with the issuance of the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 900 Class A shares were distributed to \par\pard\plain\fs16\plain\cf1\f50\fs16\ql presenting 15% of the aggregate number of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql In addition, warrants to acquire a \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ock of Old GCL were issued into escrow \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ferred stock. Effective January 21, 1998, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Class E non-voting shares. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql were issued a total of 66,176,400 Class \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 4 million of proceeds received from the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql n was allocated to the Class D shares \par\pard\plain\fs16\plain\cf1\f50\fs16\ql of the Class D shares based on an \par\pard\plain\fs16\plain\cf1\f50\fs16\ql were non-voting shares which carried \par\pard\plain\fs16\plain\cf1\f50\fs16\ql distributions made by Old GCL. Class D \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ash distributions to common shareholders \par\pard\plain\fs16\plain\cf1\f50\fs16\ql lass C shareholders exceeded 10%, and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql butions to common shareholders once the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql areholders exceeded 30%. Effective \par\pard\plain\fs16\plain\cf1\f50\fs16\ql re amended such that Class D shareholders \par\pard\plain\fs16\plain\cf1\f50\fs16\ql lass D share into one Class E share upon \par\pard\plain\fs16\plain\cf1\f50\fs16\ql or to a fraction of a Class E share based \par\pard\plain\fs16\plain\cf1\f50\fs16\ql

3,000,000,000 Class D common st 1,000,000,000 Class E common st 43,000,000,000 undesignated com Class A shares, Class B shares and March 25, 1997, Old GCL issued 22,500 shares, 101,250,000 Class C shares fo proceeds of $75 million. In addition to the preference shareholders for ca preference shares, a total of 39,705, the initial preference shareholder re Class A, B and C shares outstanding. maximum of 92,880 shares of common st for the benefit of the holders of pre Old GCL authorized 1,000,000,000 new Certain of the Class B shareholders D shares on March 25, 1997. Of the $3 issuance of Class B shares, $3 millio representing the estimated fair value independent valuation. Class D shares special preference rights on the cash shareholders were to receive 10% of c once the internal rate of return to C then increasing to 20% of cash distri internal rate of return to Class C sh January 1998, Class D share rights we received the option to convert each C payment to Old GCL of $.74 per share upon a valuation at the time of such

conversion, together with a warrant to \par\pard\plain\fs16\plain\cf1\f50\fs16\ql purchase the remaining fraction of su ch Class E share at an exercise price \par\pard\plain\fs16\plain\cf1\f50\fs16\ql based upon such market valuation. By granting to holders of the Class D shares \par\pard\plain\fs16\plain\cf1\f50\fs16\ql an option to convert such shares into Class E shares, the Company obtained \par\pard\plain\fs16\plain\cf1\f50\fs16\ql effective assurance that it could eff ect a change to a corporate structure in \par\pard\plain\fs16\plain\cf1\f50\fs16\ql the event of a major equity event, su ch as a merger or other business \par\pard\plain\fs16\plain\cf1\f50\fs16\ql combination or in the event of an IPO by GCL, of its common stock, since the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql holders of the Class D shares would n eed to exercise their options in order to \par\pard\plain\fs16\plain\cf1\f50\fs16\ql participate directly in benefits of a merger or acquisition of the Company or \par\pard\plain\fs16\plain\cf1\f50\fs16\ql in order to obtain the benefits of an y trading market for the common stock of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql the Company; no trading market was ex pected to develop for the Class D shares. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql The grant of the options to Class D s hareholders represents an equity \par\pard\plain\fs16\plain\cf1\f50\fs16\ql transaction since the Company granted these shareholders amended share rights \par\pard\plain\fs16\plain\cf1\f50\fs16\ql in the form of options with new warra nts. Since the Company had an accumulated \par\pard\plain\fs16\plain\cf1\f50\fs16\ql deficit, the charge was made against additional paid in capital, which had no \par\pard\plain\fs16\plain\cf1\f50\fs16\ql impact on the consolidated financial statements. The Company accounted for the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql new warrants as an equity transaction on the date the warrants were issued, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql which was the IPO date of August 13, 1998. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql In 1998, the Company issued, at a p rice of $0.33 per share, 900,000 Class B \par\pard\plain\fs16\plain\cf1\f50\fs16\ql shares and 675,000 Class E shares. Si nce the estimated fair value of shares \par\pard\plain\fs16\plain\cf1\f50\fs16\ql exceeded the issue price, the Company increased stock related expense and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql shareholders' equity by $2 million in 1998. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql F-40 \par\pard\plain\fs16 \page \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql GLOBAL CROSSING LTD. AND SUBSIDI ARIES \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql NOTES TO CONSOLIDATED FIN ANCIAL STATEMENTS--(Continued) \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 22. SUBSEQUENT EVENTS \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql IXnet and IPC Acquisitions \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql On February 22, 2000, the Company a

nnounced a definitive agreement to \par\pard\plain\fs16\plain\cf1\f50\fs16\ql er of specialized IP-based network \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ices community, and its parent company, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql for shares of common stock of Global \par\pard\plain\fs16\plain\cf1\f50\fs16\ql billion. Under the terms of the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql obal Crossing shares will be exchanged \par\pard\plain\fs16\plain\cf1\f50\fs16\ql and 5.417 Global Crossing shares will be \par\pard\plain\fs16\plain\cf1\f50\fs16\ql acquisition is expected to be completed \par\pard\plain\fs16\plain\cf1\f50\fs16\ql subject to regulatory approval and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Asia Global Crossing joint venture \par\pard\plain\fs16\plain\cf1\f50\fs16\ql alCenter Japan, a joint venture with \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Inc. ("IRI"). GlobalCenter Japan will \par\pard\plain\fs16\plain\cf1\f50\fs16\ql distribution center in Japan providing \par\pard\plain\fs16\plain\cf1\f50\fs16\ql obal Crossing Network. The joint venture \par\pard\plain\fs16\plain\cf1\f50\fs16\ql web hosting services, e-commerce support \par\pard\plain\fs16\plain\cf1\f50\fs16\ql sia Global Crossing will own 89 percent \par\pard\plain\fs16\plain\cf1\f50\fs16\ql g the remaining 11 percent. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ure \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql tablished a joint venture, called \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ison to pursue fixed-line \par\pard\plain\fs16\plain\cf1\f50\fs16\ql tunities in Hong Kong. For its 50% share, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql nture its building-to-building fixed-line \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ng and a number of Internet-related \par\pard\plain\fs16\plain\cf1\f50\fs16\ql reed that any fixed-line \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ues in China will be carried out by the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Company provided to Hutchison $400 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql e preferred stock (convertible into \par\pard\plain\fs16\plain\cf1\f50\fs16\ql

acquire IXnet, Inc., a leading provid services to the global financial serv IPC Communications, Inc., in exchange Crossing valued at approximately $3.8 definitive merger agreement, 1.184 Gl for each IXnet share not owned by IPC exchanged for each share of IPC. The in the second quarter of 2000 and is customary closing conditions. GlobalCenter Japan On January 26, 2000, the Company's announced an agreement to create Glob Japan's Internet Research Institute, design, develop and construct a media connectivity worldwide through the Gl will also develop and provide complex and applications hosting solutions. A of GlobalCenter Japan, with IRI ownin Hutchison Global Crossing Joint Vent On January 12, 2000, the Company es Hutchison Global Crossing, with Hutch telecommunications and Internet oppor Hutchison contributed to the joint ve telecommunications network in Hong Ko assets. In addition, Hutchison has ag telecommunications activities it purs joint venture. For its 50% share, the million in Global Crossing convertibl shares of Global Crossing common stoc

k at a rate of $45 per share) and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql committed to contribute to the joint venture international telecommunications \par\pard\plain\fs16\plain\cf1\f50\fs16\ql capacity rights on our network and gl obal media distribution center \par\pard\plain\fs16\plain\cf1\f50\fs16\ql capabilities which together are value d at $350 million, as well as $50 million \par\pard\plain\fs16\plain\cf1\f50\fs16\ql in cash. The Company intends to integ rate its interest in Hutchison Global \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Crossing into Asia Global Crossing. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql F-41 \par\pard\plain\fs16 \page \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql GLOBAL CROSSING LTD. AND SUBSIDI ARIES \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql SCH EDULE II \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql VALUATION AND QUALIFYING ACCOUNTS \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (in thousands) \par\pard\plain\fs16 \par\pard\plain\fs16 \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql Column A Column B Column C C olumn D Column E \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ------------------- -------- ---------- ---------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql Additions \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ------------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql Balance at Charged to Charged Balance at \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Dec 31, costs and to other Dec 31, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Description 1998 expenses accounts Deductions 1999 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ----------------------------- -------- ---------- ---------\par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Reserve for uncollectible \par\pard\plain\fs16\plain\cf1\f50\fs16\ql accounts................. $4,233 $37,157 $88,055 $(34,335) $95,110 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Deferred tax valuation \par\pard\plain\fs16\plain\cf1\f50\fs16\ql allowance................ $ -$ -$54,780 $ -$54,780 \par\pard\plain\fs16 \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql F-42 \par\pard\plain\fs16 \page \par\pard\plain\fs16{\*\bkmkstart part_1_2_20}{\*\bkmkend part_1_2_20}\pard\plai n\cf1\f50\fs16\ql SIGNATURES \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Pursuant to the requirements of Sec tion 13 or 15(d) of the Securities \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Exchange Act of 1934, the registrant

has duly caused this report to be signed \par\pard\plain\fs16\plain\cf1\f50\fs16\ql on its behalf on March 16, 2000 by th e undersigned, thereunto duly authorized. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Global Crossing Ltd. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql /s/ Dan J. Cohrs \par\pard\plain\fs16\plain\cf1\f50\fs16\ql By: _________________ \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Dan J. Cohrs \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Chief Financial Officer \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Pursuant to the requirements of the Securities Exchange Act of 1934, this \par\pard\plain\fs16\plain\cf1\f50\fs16\ql report has been signed below on March 16, 2000 by the following persons on \par\pard\plain\fs16\plain\cf1\f50\fs16\ql behalf of the registrant and in the c apacities indicated. \par\pard\plain\fs16 \par\pard\plain\fs16 \par\pard\plain\fs16\pard\plain\cf1\f50\fs18\ql Signatures Title \par\pard\plain\fs16\plain\cf1\f50\fs18\ql -------------\par\pard\plain\fs16 \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs18\ql /s/ Gary Winnick Chairman of the Board and Director \par\pard\plain\fs16\plain\cf1\f50\fs18\ql _____________________________________ ______ \par\pard\plain\fs16\plain\cf1\f50\fs18\ql Gary Winnick \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs18\ql /s/ Lodwrick M. Cook Co-Chairman of the Board and Director \par\pard\plain\fs16\plain\cf1\f50\fs18\ql _____________________________________ ______ \par\pard\plain\fs16\plain\cf1\f50\fs18\ql Lodwrick M. Cook \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs18\ql /s/ Leo J. Hindery, Jr. Chief Executive Officer and Director; \par\pard\plain\fs16\plain\cf1\f50\fs18\ql _____________________________________ ______ Chairman and Chief Executive Officer, \par\pard\plain\fs16\plain\cf1\f50\fs18\ql Leo J. Hindery, Jr. GlobalCenter Inc. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs18\ql /s/ Thomas J. Casey Vice Chairman of the Board and Director \par\pard\plain\fs16\plain\cf1\f50\fs18\ql _____________________________________ ______ \par\pard\plain\fs16\plain\cf1\f50\fs18\ql Thomas J. Casey \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs18\ql /s/ David L. Lee President, Chief Operating Officer and \par\pard\plain\fs16\plain\cf1\f50\fs18\ql _____________________________________ ______ Director \par\pard\plain\fs16\plain\cf1\f50\fs18\ql David L. Lee

\par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs18\ql /s/ Joseph P. Clayton Director; President, Global Crossing North \par\pard\plain\fs16\plain\cf1\f50\fs18\ql _____________________________________ ______ America \par\pard\plain\fs16\plain\cf1\f50\fs18\ql Joseph P. Clayton \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs18\ql /s/ Jack M. Scanlon Director; Vice Chairman of the Board, Asia \par\pard\plain\fs16\plain\cf1\f50\fs18\ql _____________________________________ ______ Global Crossing \par\pard\plain\fs16\plain\cf1\f50\fs18\ql Jack M. Scanlon \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs18\ql /s/ Abbott L. Brown Senior Vice President and Director \par\pard\plain\fs16\plain\cf1\f50\fs18\ql _____________________________________ ______ \par\pard\plain\fs16\plain\cf1\f50\fs18\ql Abbott L. Brown \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs18\ql /s/ Barry Porter Senior Vice President and Director \par\pard\plain\fs16\plain\cf1\f50\fs18\ql _____________________________________ ______ \par\pard\plain\fs16\plain\cf1\f50\fs18\ql Barry Porter \par\pard\plain\fs16 \par\pard\plain\fs16 \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql S-1 \par\pard\plain\fs16 \page \par\pard\plain\fs16 \par\pard\plain\fs16\pard\plain\cf1\f50\fs18\ql Signatures Title \par\pard\plain\fs16\plain\cf1\f50\fs18\ql -------------\par\pard\plain\fs16 \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs18\ql /s/ Dan J. Cohrs Senior Vice President and Chief Financial \par\pard\plain\fs16\plain\cf1\f50\fs18\ql _____________________________________ ______ Officer (principal accounting officer) \par\pard\plain\fs16\plain\cf1\f50\fs18\ql Dan J. Cohrs \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs18\ql /s/ Robert Annunziata Director \par\pard\plain\fs16\plain\cf1\f50\fs18\ql _____________________________________ ______ \par\pard\plain\fs16\plain\cf1\f50\fs18\ql Robert Annunziata \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs18\ql /s/ Jay R. Bloom Director \par\pard\plain\fs16\plain\cf1\f50\fs18\ql _____________________________________ ______ \par\pard\plain\fs16\plain\cf1\f50\fs18\ql Jay R. Bloom \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs18\ql /s/ William E. Conway Director \par\pard\plain\fs16\plain\cf1\f50\fs18\ql _____________________________________ ______ \par\pard\plain\fs16\plain\cf1\f50\fs18\ql William E. Conway \par\pard\plain\fs16

\par\pard\plain\fs16\plain\cf1\f50\fs18\ql /s/ Eric Hippeau Director \par\pard\plain\fs16\plain\cf1\f50\fs18\ql _____________________________________ ______ \par\pard\plain\fs16\plain\cf1\f50\fs18\ql Eric Hippeau \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs18\ql /s/ Dean C. Kehler Director \par\pard\plain\fs16\plain\cf1\f50\fs18\ql _____________________________________ ______ \par\pard\plain\fs16\plain\cf1\f50\fs18\ql Dean C. Kehler \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs18\ql /s/ Geoffrey J.W. Kent Director \par\pard\plain\fs16\plain\cf1\f50\fs18\ql _____________________________________ ______ \par\pard\plain\fs16\plain\cf1\f50\fs18\ql Geoffrey J.W. Kent \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs18\ql Director \par\pard\plain\fs16\plain\cf1\f50\fs18\ql _____________________________________ ______ \par\pard\plain\fs16\plain\cf1\f50\fs18\ql Canning Fok Kin-ning \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs18\ql /s/ Douglas H. McCorkindale Director \par\pard\plain\fs16\plain\cf1\f50\fs18\ql _____________________________________ ______ \par\pard\plain\fs16\plain\cf1\f50\fs18\ql Douglas H. McCorkindale \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs18\ql /s/ James F. McDonald Director \par\pard\plain\fs16\plain\cf1\f50\fs18\ql _____________________________________ ______ \par\pard\plain\fs16\plain\cf1\f50\fs18\ql James F. McDonald \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs18\ql /s/ Bruce Raben Director \par\pard\plain\fs16\plain\cf1\f50\fs18\ql _____________________________________ ______ \par\pard\plain\fs16\plain\cf1\f50\fs18\ql Bruce Raben \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs18\ql /s/ Michael R. Steed Director \par\pard\plain\fs16\plain\cf1\f50\fs18\ql _____________________________________ ______ \par\pard\plain\fs16\plain\cf1\f50\fs18\ql Michael R. Steed \par\pard\plain\fs16 \par\pard\plain\fs16 \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql S-2 \par\pard\plain\fs16 \par\pard\plain\fs16 \page{\*\bkmkstart doc_1_2}{\*\bkmkend doc_1_2} \par\pard\plain\fs16 \page \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql EXHIBIT 3.10 \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql EXECUTION COPY \par\pard\plain\fs16\plain\cf1\f50\fs16\ql

Schedule to the Bye-Laws \par\pard\plain\fs16\plain\cf1\f50\fs16\ql of Global Crossing Ltd. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql CERTIFICATE OF DESIGNATIONS \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql OF \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql SERIES B 6 3/8% CO NVERTIBLE PREFERRED STOCK \par\pard\plain\fs16 \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql The terms of the autho rized Series B 6 3/8% Convertible Preferred \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Stock (the "Preferred Stock") of Glob al Crossing Ltd., a company incorporated \par\pard\plain\fs16\plain\cf1\f50\fs16\ql under the laws of Bermuda (the "Compa ny"), shall be as set forth below in this \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Schedule to the Bye-Laws of the Compa ny (this "Schedule"). \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (a) Designation. (i) There are hereby authorized 400,000 shares \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ----------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql of Preferred Stock as designated by t he Board of Directors of the Company. Each \par\pard\plain\fs16\plain\cf1\f50\fs16\ql share of Preferred Stock will have a liquidation preference of $1,000 (the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql "Liquidation Preference"). \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (ii) All shares of Pre ferred Stock redeemed, purchased, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql exchanged, converted or otherwise acq uired by the Company shall be retired and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql canceled and, upon the taking of any action required by applicable law, shall be \par\pard\plain\fs16\plain\cf1\f50\fs16\ql restored to the status of authorized but unissued shares of preferred stock of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql the Company, without designation as t o series, and may thereafter be reissued. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (b) Currency. All sha res of Preferred Stock shall be denominated \par\pard\plain\fs16\plain\cf1\f50\fs16\ql -------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql in United States currency, and all pa yments and distributions thereon or with \par\pard\plain\fs16\plain\cf1\f50\fs16\ql respect thereto shall be made in Unit ed States currency. All references herein \par\pard\plain\fs16\plain\cf1\f50\fs16\ql to "$" or "dollars" refer to United S tates currency. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (c) Ranking. The Pref erred Stock shall, with respect to dividend \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql rights and rights upon liquidation, w inding up or dissolution, rank junior to \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (i) each other class or series of cap ital stock of the Company, other than (A)

\par\pard\plain\fs16\plain\cf1\f50\fs16\ql the Common Stock of the Company and a ny other class or series of capital stock \par\pard\plain\fs16\plain\cf1\f50\fs16\ql of the Company which by its terms ran ks junior to the Preferred Stock, as to \par\pard\plain\fs16\plain\cf1\f50\fs16\ql which the Preferred Stock shall rank prior and (B) the Company's 6 3/8% \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Cumulative Convertible Preferred Stoc k and any other class or series of capital \par\pard\plain\fs16\plain\cf1\f50\fs16\ql stock of the Company which by its ter ms ranks on a parity with the Preferred \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Stock, in each case as to which the P referred Stock shall rank on a parity or \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (ii) other equity interests in the Co mpany, in each case, including, without \par\pard\plain\fs16\plain\cf1\f50\fs16\ql limitation, warrants, rights, calls o r options exercisable for or convertible \par\pard\plain\fs16\plain\cf1\f50\fs16\ql into such capital stock or equity int erests, except as provided in the last \par\pard\plain\fs16\plain\cf1\f50\fs16\ql sentence of this paragraph (c). All e quity securities of the Company to which \par\pard\plain\fs16\plain\cf1\f50\fs16\ql the Preferred Stock ranks prior (whet her with respect to dividends or upon \par\pard\plain\fs16\plain\cf1\f50\fs16\ql liquidation, winding up, dissolution or otherwise), including the Common Stock \par\pard\plain\fs16\plain\cf1\f50\fs16\ql of the Company, are collectively refe rred to herein as the "Junior Stock". All \par\pard\plain\fs16\plain\cf1\f50\fs16\ql equity securities of the Company to w hich the Preferred Stock ranks on a parity \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (whether with respect to dividends or upon liquidation, \par\pard\plain\fs16 \page \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql winding up, dissolution or other wise) are collectively referred to herein as the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql "Parity Stock". All equity securities of the Company to which the Preferred \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Stock ranks junior (whether with resp ect to dividends or upon liquidation, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql winding up, dissolution or otherwise) are collectively referred to herein as the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql "Senior Stock". The respective defini tions of Junior Stock, Parity Stock and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Senior Stock shall also include any w arrants, rights, calls or options \par\pard\plain\fs16\plain\cf1\f50\fs16\ql exercisable for or convertible into a ny Junior Stock, Parity Stock or Senior \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Stock, as the case may be. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (d) Dividends. (i) Th e holders of shares of Preferred Stock \par\pard\plain\fs16\plain\cf1\f50\fs16\ql --------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql shall be entitled to receive, when, a s and if declared by the Board of Directors \par\pard\plain\fs16\plain\cf1\f50\fs16\ql of the Company out of funds legally a vailable therefor, dividends on the shares \par\pard\plain\fs16\plain\cf1\f50\fs16\ql of Preferred Stock, cumulative from t he first date of issuance of any such \par\pard\plain\fs16\plain\cf1\f50\fs16\ql shares (the "Initial Issuance Date"), at a rate per annum of 6 3/8% of the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Liquidation Preference per share, pay

able in cash. Dividends on the shares of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Preferred Stock shall be payable quar terly in equal amounts (subject to \par\pard\plain\fs16\plain\cf1\f50\fs16\ql paragraph (d)(v) hereunder with respe ct to shorter periods, including the first \par\pard\plain\fs16\plain\cf1\f50\fs16\ql such period with respect to newly iss ued shares of Preferred Stock) in arrears \par\pard\plain\fs16\plain\cf1\f50\fs16\ql on the first day of each February, Ma y, August and November of each year, or if \par\pard\plain\fs16\plain\cf1\f50\fs16\ql any such date is not a Business Day, on the next succeeding Business Day (each \par\pard\plain\fs16\plain\cf1\f50\fs16\ql such date, a "Dividend Payment Date", and each such quarterly period, a \par\pard\plain\fs16\plain\cf1\f50\fs16\ql "Dividend Period"), in preference to and in priority over dividends on any \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Junior Stock. Such dividends shall be paid to the holders of record of the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql shares of Preferred Stock as they app ear on the applicable Record Date. As used \par\pard\plain\fs16\plain\cf1\f50\fs16\ql herein, the term "Record Date" means, with respect to the dividends payable on \par\pard\plain\fs16\plain\cf1\f50\fs16\ql the first of February, May, August an d November, the fifteenth day of the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql immediately preceding January, April, July and October, respectively, or such \par\pard\plain\fs16\plain\cf1\f50\fs16\ql other record date, not more than 60 d ays and not less than 10 days preceding the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql applicable Dividend Payment Date, as shall be fixed by the Board of Directors of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql the Company. Dividends on the shares of Preferred Stock shall be fully \par\pard\plain\fs16\plain\cf1\f50\fs16\ql cumulative and shall accrue (whether or not declared and whether or not there \par\pard\plain\fs16\plain\cf1\f50\fs16\ql are funds of the Company legally avai lable for the payment of dividends) from \par\pard\plain\fs16\plain\cf1\f50\fs16\ql the Issuance Date (or the last Divide nd Payment Date for which dividends were \par\pard\plain\fs16\plain\cf1\f50\fs16\ql paid, as the case may be) based on a 360-day year comprised of twelve 30-day \par\pard\plain\fs16\plain\cf1\f50\fs16\ql months. Accrued and unpaid dividends for any past Dividend Period and dividends \par\pard\plain\fs16\plain\cf1\f50\fs16\ql in connection with any optional redem ption may be declared and paid at any time, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql without reference to any Dividend Pay ment Date, to holders of record on such \par\pard\plain\fs16\plain\cf1\f50\fs16\ql date, not more than 45 days prior to the payment thereof, as may be fixed by the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Board of Directors of the Company. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (ii) No dividend shall be declared or paid or set apart for \par\pard\plain\fs16\plain\cf1\f50\fs16\ql payment or other distribution declare d or made, whether in cash, obligations or \par\pard\plain\fs16\plain\cf1\f50\fs16\ql shares of capital stock of the Compan y or other property, directly or \par\pard\plain\fs16\plain\cf1\f50\fs16\ql indirectly, upon any shares of Junior Stock or Parity Stock, nor shall any \par\pard\plain\fs16\plain\cf1\f50\fs16\ql shares of Junior Stock or Parity Stoc k be redeemed, repurchased or otherwise \par\pard\plain\fs16\plain\cf1\f50\fs16\ql acquired for consideration by the Com

pany through a sinking fund or otherwise, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql unless all accrued and unpaid dividen ds through the most recent Dividend Payment \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Date (whether or not such dividends h ave been declared and whether or not there \par\pard\plain\fs16\plain\cf1\f50\fs16\ql are funds of the Company legally avai lable for the payment of dividends) on the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql shares of Preferred Stock and any Par ity Stock have been or contemporaneously \par\pard\plain\fs16\plain\cf1\f50\fs16\ql are declared and paid in full; provid ed, however, that, notwithstanding any \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ------- ------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql provisions in this subparagraph (ii) to the contrary, the Company shall be \par\pard\plain\fs16\plain\cf1\f50\fs16\ql entitled to (a) declare and pay divid ends on shares of Junior Stock payable \par\pard\plain\fs16\plain\cf1\f50\fs16\ql solely in shares of Junior Stock and on shares of Parity Stock payable \par\pard\plain\fs16 \page \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql 3 \par\pard\plain\fs16 \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql solely in shares of Parity Stock or J unior Stock (other than pursuant to \par\pard\plain\fs16\plain\cf1\f50\fs16\ql paragraph (d)(vi) of the Certificate of Designations for the Company's 6 3/8% \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Cumulative Convertible Preferred Stoc k), or in each case by an increase in the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql liquidation preference of the Junior Stock or Parity Stock and (b) redeem, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql repurchase or otherwise acquire Junio r Stock or Parity Stock in exchange for \par\pard\plain\fs16\plain\cf1\f50\fs16\ql consideration consisting of Parity St ock or Junior Stock, in the case of Parity \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Stock, or of Junior Stock, in the cas e of Junior Stock. When dividends are not \par\pard\plain\fs16\plain\cf1\f50\fs16\ql paid in full, as aforesaid, upon the shares of Preferred Stock, all dividends \par\pard\plain\fs16\plain\cf1\f50\fs16\ql declared on the Preferred Stock and a ny other Parity Stock shall be declared and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql paid either (A) pro rata so that the amount of dividends so declared on the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql shares of Preferred Stock and each su ch other class or series of Parity Stock \par\pard\plain\fs16\plain\cf1\f50\fs16\ql shall in all cases bear to each other the same ratio as accrued dividends on the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql shares of Preferred Stock and such cl ass or series of Parity Stock bear to each \par\pard\plain\fs16\plain\cf1\f50\fs16\ql other or (B) on another basis that is at least as favorable to the holders of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql the Preferred Stock entitled to recei ve such dividends. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (iii) Any dividend pay ment made on the Preferred Stock shall \par\pard\plain\fs16\plain\cf1\f50\fs16\ql first be credited against the dividen ds accrued with respect to the earliest \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Dividend Period for which dividends h

ave not been paid. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (iv) All dividends pa id with respect to shares of Preferred \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Stock pursuant to this paragraph (d) shall be paid pro rata to the holders \par\pard\plain\fs16\plain\cf1\f50\fs16\ql entitled thereto. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (v) Dividends (or ca sh amounts equal to accrued and unpaid \par\pard\plain\fs16\plain\cf1\f50\fs16\ql dividends) payable on the Preferred S tock for any period shorter than three \par\pard\plain\fs16\plain\cf1\f50\fs16\ql months shall be computed on the basis of the actual number of days elapsed (in a \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 30-day month) since the applicable Di vidend Payment Date or from the Issuance \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Date with respect to newly issued sha res, as applicable, and based on a 360-day \par\pard\plain\fs16\plain\cf1\f50\fs16\ql year of twelve 30-day months. No inte rest shall accrue or be payable in respect \par\pard\plain\fs16\plain\cf1\f50\fs16\ql of unpaid dividends. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (e) Liquidation Pref erence. (i) Upon any voluntary or \par\pard\plain\fs16\plain\cf1\f50\fs16\ql --------------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql involuntary liquidation, dissolution or winding up of the Company or a reduction \par\pard\plain\fs16\plain\cf1\f50\fs16\ql or decrease in the Company's capital stock resulting in a distribution of assets \par\pard\plain\fs16\plain\cf1\f50\fs16\ql to the holders of any class or series of the Company's capital stock, each \par\pard\plain\fs16\plain\cf1\f50\fs16\ql holder of shares of Preferred Stock s hall be entitled to payment out of the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql assets of the Company available for d istribution of an amount equal to the then \par\pard\plain\fs16\plain\cf1\f50\fs16\ql effective Liquidation Preference per share of Preferred Stock held by such \par\pard\plain\fs16\plain\cf1\f50\fs16\ql holder, plus all accumulated and unpa id dividends therein to the date of such \par\pard\plain\fs16\plain\cf1\f50\fs16\ql liquidation, dissolution, winding up or reduction or decrease in capital stock, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql before any distribution is made on an y Junior Stock, including, without \par\pard\plain\fs16\plain\cf1\f50\fs16\ql limitation, Common Stock of the Compa ny. After payment in full of the then \par\pard\plain\fs16\plain\cf1\f50\fs16\ql effective Liquidation Preference and all accumulated and unpaid dividends to \par\pard\plain\fs16\plain\cf1\f50\fs16\ql which holders of shares of Preferred Stock are entitled, such holders shall not \par\pard\plain\fs16\plain\cf1\f50\fs16\ql be entitled to any further participat ion in any distribution of assets of the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Company. If, upon any voluntary or in voluntary liquidation, dissolution or \par\pard\plain\fs16\plain\cf1\f50\fs16\ql winding up of the Company or a reduct ion or decrease in the Company's capital \par\pard\plain\fs16\plain\cf1\f50\fs16\ql stock, the amounts payable with respe ct to shares of Preferred Stock and all \par\pard\plain\fs16\plain\cf1\f50\fs16\ql other Parity Stock are not paid in fu ll, the holders of shares of Preferred

\par\pard\plain\fs16\plain\cf1\f50\fs16\ql Stock and the holders of the Parity S tock shall share equally and ratably in any \par\pard\plain\fs16\plain\cf1\f50\fs16\ql distribution of assets \par\pard\plain\fs16 \page \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql 4 \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql of the Company in proportion to the f ull liquidation preference and all \par\pard\plain\fs16\plain\cf1\f50\fs16\ql accumulated and unpaid dividends to w hich each such holder is entitled. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (ii) Neither the volu ntary sale, conveyance, exchange or \par\pard\plain\fs16\plain\cf1\f50\fs16\ql transfer (for cash, shares of stock, securities or other consideration) of all \par\pard\plain\fs16\plain\cf1\f50\fs16\ql or substantially all of the property or assets of the Company nor the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql consolidation, merger or amalgamation of the Company with or into any \par\pard\plain\fs16\plain\cf1\f50\fs16\ql corporation or the consolidation, mer ger or amalgamation of any corporation with \par\pard\plain\fs16\plain\cf1\f50\fs16\ql or into the Company shall be deemed t o be a voluntary or involuntary \par\pard\plain\fs16\plain\cf1\f50\fs16\ql liquidation, dissolution or winding u p of the Company or a reduction or decrease \par\pard\plain\fs16\plain\cf1\f50\fs16\ql in the capital stock of the Company. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (iii) No funds are req uired to be set aside to protect the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Liquidation Preference of the shares of Preferred Stock, although such \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Liquidation Preference will be substa ntially in excess of the par value of the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql shares of the Preferred Stock. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (f) Redemption. Shar es of Preferred Stock shall be redeemable \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ---------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql by the Company as provided below. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (i) Optional Redempt ion After the Initial Redemption Date. The \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ---------------------------------------------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql shares of Preferred Stock shall not b e redeemable prior to January 12, 2005 (the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql "Initial Redemption Date"). After the Initial Redemption Date, the shares of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Preferred Stock shall be subject to r edemption at any time at the option of the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Company, in whole or in part, at a pr ice (the "Redemption Price"), payable in \par\pard\plain\fs16\plain\cf1\f50\fs16\ql cash, equal to the percentage set for th below of the Liquidation Preference per \par\pard\plain\fs16\plain\cf1\f50\fs16\ql share for redemption during the 12-mo nth periods beginning on the Initial \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Redemption Date or the annual anniver saries thereof indicated below, plus in \par\pard\plain\fs16\plain\cf1\f50\fs16\ql each case an amount equal to accrued

and unpaid dividends thereon (whether or \par\pard\plain\fs16\plain\cf1\f50\fs16\ql not declared and whether or not there are funds of the Company legally available \par\pard\plain\fs16\plain\cf1\f50\fs16\ql for the payment of dividends) to the date fixed for redemption. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Period Redemption Price \par\pard\plain\fs16\plain\cf1\f50\fs16\ql --------------------\par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 2005............................ ... 103.1875% \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 2006............................ ... 102.5500% \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 2007............................ ... 101.9125% \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 2008............................ ... 101.2750% \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 2009............................ ... 100.6375% \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 2010 and thereafter............. ... 100.0000% \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (ii) Optional Tax Red emption. The shares of Preferred Stock \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ---------------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql shall be subject to \par\pard\plain\fs16 \page \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql 5 \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql redemption at the option of the Compa ny or a successor corporation at any time, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql in whole or in part, at a Redemption Price equal to 100% of the then effective \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Liquidation Preference thereof, plus all accumulated and unpaid dividends \par\pard\plain\fs16\plain\cf1\f50\fs16\ql thereon to the redemption date if, as a result of any change in or amendment to \par\pard\plain\fs16\plain\cf1\f50\fs16\ql any laws, regulations or rulings prom ulgated thereunder of (A) Bermuda or any \par\pard\plain\fs16\plain\cf1\f50\fs16\ql political subdivision or governmental authority thereof or therein having the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql power to tax, (B) any jurisdiction, o ther than the United States, from or \par\pard\plain\fs16\plain\cf1\f50\fs16\ql through which payment on the shares o f Preferred Stock is made by the Company or \par\pard\plain\fs16\plain\cf1\f50\fs16\ql a successor corporation or its paying agent in its capacity as such or any \par\pard\plain\fs16\plain\cf1\f50\fs16\ql political subdivision or governmental authority thereof or therein having the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql power to tax or (C) any other jurisdi ction, other than the United States, in

\par\pard\plain\fs16\plain\cf1\f50\fs16\ql which the Company or a successor corp oration is organized or any political \par\pard\plain\fs16\plain\cf1\f50\fs16\ql subdivision or governmental authority thereof or therein having the power to tax \par\pard\plain\fs16\plain\cf1\f50\fs16\ql or any change in the official applica tion or interpretation of such laws, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql regulations or rulings or any change in the official application or \par\pard\plain\fs16\plain\cf1\f50\fs16\ql interpretation of, or any execution o f or amendment to, any treaty or treaties \par\pard\plain\fs16\plain\cf1\f50\fs16\ql affecting taxation to which such juri sdiction (or such political subdivision or \par\pard\plain\fs16\plain\cf1\f50\fs16\ql taxing authority) is party (each, a " Change in Tax Law"), which becomes \par\pard\plain\fs16\plain\cf1\f50\fs16\ql effective on or after the date hereof , the Company or a successor corporation is \par\pard\plain\fs16\plain\cf1\f50\fs16\ql or would be required on the next succ eeding Dividend Payment Date to pay \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Additional Amounts (as defined below) with respect to the shares of Preferred \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Stock, and the payment of such Additi onal Amounts cannot be avoided by the use \par\pard\plain\fs16\plain\cf1\f50\fs16\ql of any reasonable measures available to the Company or a successor corporation. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql In addition, the share s of Preferred Stock shall be subject to \par\pard\plain\fs16\plain\cf1\f50\fs16\ql redemption at the option of the Compa ny at any time, in whole or in part, at a \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Redemption Price equal to 100% of the then effective Liquidation Preference \par\pard\plain\fs16\plain\cf1\f50\fs16\ql thereof, plus all accumulated and unp aid dividends thereon to the redemption \par\pard\plain\fs16\plain\cf1\f50\fs16\ql date, if the person formed by a conso lidation, merger or amalgamation of the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Company or into which the Company is consolidated, merged or amalgamated or to \par\pard\plain\fs16\plain\cf1\f50\fs16\ql which the Company conveys, transfers or leases its properties and assets \par\pard\plain\fs16\plain\cf1\f50\fs16\ql substantially as an entirety is requi red, as a consequence of such \par\pard\plain\fs16\plain\cf1\f50\fs16\ql consolidation, merger, amalgamation, conveyance, transfer or lease and as a \par\pard\plain\fs16\plain\cf1\f50\fs16\ql consequence of a Change in Tax Law oc curring after the date of such \par\pard\plain\fs16\plain\cf1\f50\fs16\ql consolidation, merger, amalgamation, conveyance, transfer or lease, to pay \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Additional Amounts in respect of any tax, assessment or governmental charge \par\pard\plain\fs16\plain\cf1\f50\fs16\ql imposed on any holder of shares of Pr eferred Stock. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (iii) Payment of Addit ional Amounts. If any deduction or \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ---------------------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql withholding for any present or future taxes, assessments or other governmental \par\pard\plain\fs16\plain\cf1\f50\fs16\ql charges of (x) Bermuda or any politic al subdivision or governmental authority

\par\pard\plain\fs16\plain\cf1\f50\fs16\ql thereof or therein having power to ta x, (y) any jurisdiction, other than the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql United States, from or through which payment on the shares of Preferred Stock is \par\pard\plain\fs16\plain\cf1\f50\fs16\ql made by the Company or a successor co rporation, or its paying agent in its \par\pard\plain\fs16\plain\cf1\f50\fs16\ql capacity as such or any political sub division or governmental authority thereof \par\pard\plain\fs16\plain\cf1\f50\fs16\ql or therein having the power to tax or (z) any other jurisdiction, other than the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql United States, in which the Company o r a successor corporation is organized, or \par\pard\plain\fs16\plain\cf1\f50\fs16\ql any political subdivision or governme ntal authority thereof or therein having \par\pard\plain\fs16\plain\cf1\f50\fs16\ql the power to tax shall at any time be required by such jurisdiction (or any such \par\pard\plain\fs16\plain\cf1\f50\fs16\ql political subdivision or taxing autho rity) in respect of any amounts to be paid \par\pard\plain\fs16\plain\cf1\f50\fs16\ql by the Company or a successor corpora tion with respect to the shares of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Preferred Stock, the Company or a suc cessor corporation will pay to each \par\pard\plain\fs16 \page \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql 6 \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql holder of shares of Preferred Stock a s additional dividends, such additional \par\pard\plain\fs16\plain\cf1\f50\fs16\ql amounts (collectively, the "Additiona l Amounts") as may be necessary in order \par\pard\plain\fs16\plain\cf1\f50\fs16\ql that the net amounts paid to such hol der of such shares of Preferred Stock who, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql with respect to any such tax, assessm ent or other governmental charge, is not \par\pard\plain\fs16\plain\cf1\f50\fs16\ql resident in, or a citizen of, such ju risdiction, after such deduction or \par\pard\plain\fs16\plain\cf1\f50\fs16\ql withholding, shall be not less than t he amount specified in such shares of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Preferred Stock to which such holder is entitled; provided, however, that the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql -------- ------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql Company or a successor corporation sh all not be required to make any payment of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Additional Amounts for or on account of: \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (A) any tax, assessmen t or other governmental charge that would \par\pard\plain\fs16\plain\cf1\f50\fs16\ql not have been imposed but f or (a) the existence of any present or \par\pard\plain\fs16\plain\cf1\f50\fs16\ql former connection between s uch holder (or between a fiduciary, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql settlor, beneficiary, membe r or shareholder of, or possessor of a \par\pard\plain\fs16\plain\cf1\f50\fs16\ql power over, such holder, if such holder is an estate, trust, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql partnership, limited liabil ity company or corporation) and the taxing \par\pard\plain\fs16\plain\cf1\f50\fs16\ql jurisdiction or any politic

al subdivision or territory or possession \par\pard\plain\fs16\plain\cf1\f50\fs16\ql its jurisdiction, including, without \par\pard\plain\fs16\plain\cf1\f50\fs16\ql such fiduciary, settlor, beneficiary, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql essor) being or having been a citizen or \par\pard\plain\fs16\plain\cf1\f50\fs16\ql r having been present or engaged in a trade \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ng or having had a permanent establishment \par\pard\plain\fs16\plain\cf1\f50\fs16\ql on of shares of Preferred Stock (where \par\pard\plain\fs16\plain\cf1\f50\fs16\ql or payment on a date more than 30 days \par\pard\plain\fs16\plain\cf1\f50\fs16\ql such payment became due and payable or (y) \par\pard\plain\fs16\plain\cf1\f50\fs16\ql hereof is duly provided for, whichever \par\pard\plain\fs16\plain\cf1\f50\fs16\ql esentation of shares of Preferred Stock for \par\pard\plain\fs16\plain\cf1\f50\fs16\ql olitical subdivision thereof or therein, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql rred Stock could not have been presented \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql tance, gift, sales, transfer, personal \par\pard\plain\fs16\plain\cf1\f50\fs16\ql sessment or other governmental charge; \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql t or other governmental charge that is \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ithholding from payment of the Liquidation \par\pard\plain\fs16\plain\cf1\f50\fs16\ql nds on the shares of Preferred Stock; \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql t or other governmental charge that is \par\pard\plain\fs16\plain\cf1\f50\fs16\ql on of the failure by the holder or the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql res of Preferred Stock to comply with a \par\pard\plain\fs16\plain\cf1\f50\fs16\ql essed to the holder (a) to provide \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ther evidence concerning the nationality, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql e holder or such beneficial owner or (b) to \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ation or other similar claim (other than a \par\pard\plain\fs16\plain\cf1\f50\fs16\ql assessment or other governmental charge \par\pard\plain\fs16\plain\cf1\f50\fs16\ql satisfy any information or reporting \par\pard\plain\fs16\plain\cf1\f50\fs16\ql case of (a) or (b), is required or imposed \par\pard\plain\fs16\plain\cf1\f50\fs16\ql

thereof or area subject to limitation, such holder (or member, shareholder or poss resident thereof or being o or business therein or havi therein, (b) the presentati presentation is required) f after (x) the date on which the date on which payment t occurs later, or (c) the pr payment in Bermuda or any p unless such shares of Prefe for payment elsewhere; (B) any estate, inheri property or similar tax, as (C) any tax, assessmen payable otherwise than by w Preference of or any divide (D) any tax, assessmen imposed or withheld by reas beneficial owner of the sha request of the Company addr information, documents or o residence or identity of th make and deliver any declar claim for refund of a tax, withheld by the Company) or requirements, which, in the by a statute, treaty, regul

ation or administrative practice of the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql taxing jurisdiction as a pr econdition to exemption from all or part of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql such tax, assessment or oth er governmental charge; or \par\pard\plain\fs16 \page \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql 7 \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (E) any combination of items (A), (B), (C) and (D) above; \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql nor shall Additional Amounts be paid with respect to any payment of the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Liquidation Preference of or dividend s on any shares of Preferred Stock to any \par\pard\plain\fs16\plain\cf1\f50\fs16\ql holder who is a fiduciary or partners hip or limited liability company or other \par\pard\plain\fs16\plain\cf1\f50\fs16\ql beneficial owner of shares of Preferr ed Stock to the extent such payment would \par\pard\plain\fs16\plain\cf1\f50\fs16\ql be required by the laws of (x) Bermud a or any political subdivision or \par\pard\plain\fs16\plain\cf1\f50\fs16\ql governmental authority thereof or the rein having the power to tax, (y) any \par\pard\plain\fs16\plain\cf1\f50\fs16\ql jurisdiction, other than the United S tates, from or through which payment on the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql shares of Preferred Stock is made by the Company or a successor corporation, or \par\pard\plain\fs16\plain\cf1\f50\fs16\ql its paying agent in its capacity as s uch or any political subdivision or \par\pard\plain\fs16\plain\cf1\f50\fs16\ql governmental authority thereof or the rein having the power to tax or (z) any \par\pard\plain\fs16\plain\cf1\f50\fs16\ql other jurisdiction, other than the Un ited States, in which the Company or a \par\pard\plain\fs16\plain\cf1\f50\fs16\ql successor corporation is organized, o r any political subdivision or governmental \par\pard\plain\fs16\plain\cf1\f50\fs16\ql authority thereof or therein having t he power to tax to be included in the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql income for tax purposes of a benefici ary or settlor with respect to such \par\pard\plain\fs16\plain\cf1\f50\fs16\ql fiduciary or a member of such partner ship, limited liability company or \par\pard\plain\fs16\plain\cf1\f50\fs16\ql beneficial owner who would not have b een entitled to such Additional Amounts had \par\pard\plain\fs16\plain\cf1\f50\fs16\ql it been the holder of such shares of Preferred Stock. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql The Company shall prov ide the Transfer Agent with the official \par\pard\plain\fs16\plain\cf1\f50\fs16\ql acknowledgment of the relevant taxing authority (or, if such acknowledgment is \par\pard\plain\fs16\plain\cf1\f50\fs16\ql not available, a certified copy there of) evidencing the payment of the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql withholding taxes, if any, by the Com pany. Copies of such documentation shall be \par\pard\plain\fs16\plain\cf1\f50\fs16\ql made available to the holders of the shares of Preferred Stock or the Transfer \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Agent, as applicable, upon request th erefor. \par\pard\plain\fs16

\par\pard\plain\fs16\plain\cf1\f50\fs16\ql All references herein to dividends on the shares of Preferred \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Stock shall include any Additional Am ounts payable by the Company in respect of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql such shares of Preferred Stock. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (iv) Whenever shares o f Preferred Stock are to be redeemed \par\pard\plain\fs16\plain\cf1\f50\fs16\ql pursuant to this paragraph (f), a not ice of such redemption shall be mailed, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql addressed to each holder, by overnigh t mail, postage prepaid, or delivered to \par\pard\plain\fs16\plain\cf1\f50\fs16\ql each holder of the shares to be redee med at such holder's address as the same \par\pard\plain\fs16\plain\cf1\f50\fs16\ql appears on the stock transfer books o f the company. Such notice shall be mailed \par\pard\plain\fs16\plain\cf1\f50\fs16\ql to be delivered not less than 30 days and nor more than 60 days prior to the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql date fixed for redemption. Each such notice shall state: (A) the date fixed for \par\pard\plain\fs16\plain\cf1\f50\fs16\ql redemption; (B) the number of shares of Preferred Stock to be redeemed; (C) the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Redemption Price and the amount of di vidends accrued and unpaid through the date \par\pard\plain\fs16\plain\cf1\f50\fs16\ql fixed for redemption; (D) the place o r places where such shares of Preferred \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Stock are to be surrendered for payme nt of the Redemption Price; and (E) that \par\pard\plain\fs16\plain\cf1\f50\fs16\ql dividends on the shares to be redeeme d will cease to accrue on such date fixed \par\pard\plain\fs16\plain\cf1\f50\fs16\ql for redemption unless the Company sha ll default in the payment of the Redemption \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Price. If fewer than all shares of Pr eferred Stock held by a holder are to be \par\pard\plain\fs16\plain\cf1\f50\fs16\ql redeemed, the notice mailed to such h older shall specify the number of shares to \par\pard\plain\fs16\plain\cf1\f50\fs16\ql be redeemed from such holder. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Notice having been giv en as provided in the preceding paragraph, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql and if on or before \par\pard\plain\fs16 \page \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql 8 \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql the redemption date specified in such notice, an amount in cash sufficient to \par\pard\plain\fs16\plain\cf1\f50\fs16\ql redeem in full on the redemption date and at the applicable Redemption Price \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (together with an amount equal to acc rued and unpaid dividends thereon (whether \par\pard\plain\fs16\plain\cf1\f50\fs16\ql or not declared and whether or not th ere are funds of the Company legally \par\pard\plain\fs16\plain\cf1\f50\fs16\ql available for the payment of dividend s) to such redemption date) and all shares \par\pard\plain\fs16\plain\cf1\f50\fs16\ql of Preferred Stock called for redempt ion shall have been set apart and deposited \par\pard\plain\fs16\plain\cf1\f50\fs16\ql in trust so as to be available for su ch purpose and only for such purpose, or \par\pard\plain\fs16\plain\cf1\f50\fs16\ql shall have been paid to the holders t

hereof then effective as of the close of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql business on such redemption date, and unless there shall be a subsequent default \par\pard\plain\fs16\plain\cf1\f50\fs16\ql in the payment of the Redemption Pric e plus accrued and unpaid dividends, the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql shares of Preferred Stock so called f or redemption shall cease to accrue \par\pard\plain\fs16\plain\cf1\f50\fs16\ql dividends, and such shares shall no l onger be deemed to be outstanding and shall \par\pard\plain\fs16\plain\cf1\f50\fs16\ql have the status of authorized but uni ssued shares of preferred stock of the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Company, undesignated as to series, a nd all rights of the holders thereof, as \par\pard\plain\fs16\plain\cf1\f50\fs16\ql such, as shareholders of the Company (except the right to receive from the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Company the Redemption Price and an a mount equal to any accrued and unpaid \par\pard\plain\fs16\plain\cf1\f50\fs16\ql dividends (whether or not declared an d whether or not there are funds of the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Company legally available for the pay ment of dividends) to such redemption date) \par\pard\plain\fs16\plain\cf1\f50\fs16\ql shall cease. Upon surrender in accord ance with such notice of the certificates \par\pard\plain\fs16\plain\cf1\f50\fs16\ql for any shares so redeemed (properly endorsed or assigned for transfer, if the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql notice shall so state), such shares s hall be redeemed by the Company at the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Redemption Price as set forth above. In case fewer than all of the shares \par\pard\plain\fs16\plain\cf1\f50\fs16\ql represented by any such certificate a re redeemed, a new certificate of like \par\pard\plain\fs16\plain\cf1\f50\fs16\ql terms and having the same date of ori ginal issuance shall be issued representing \par\pard\plain\fs16\plain\cf1\f50\fs16\ql the unredeemed shares without cost to the holder thereof. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (v) In the event that fewer than all of the shares of Preferred \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Stock are to be redeemed pursuant to this paragraph (f), the Company shall call \par\pard\plain\fs16\plain\cf1\f50\fs16\ql for redemption shares of Preferred St ock pro rata among the holders, based on \par\pard\plain\fs16\plain\cf1\f50\fs16\ql the number of shares of Preferred Sto ck held by each holder (with adjustments to \par\pard\plain\fs16\plain\cf1\f50\fs16\ql avoid fractional shares), except that the Company may redeem all of the shares \par\pard\plain\fs16\plain\cf1\f50\fs16\ql of Preferred Stock held by any holder s of fewer than 100 shares of Preferred \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Stock (or all the shares of Preferred Stock held by holders who would hold less \par\pard\plain\fs16\plain\cf1\f50\fs16\ql than 100 shares of Preferred Stock as a result of such redemption). Any \par\pard\plain\fs16\plain\cf1\f50\fs16\ql redemption for which shares are calle d for redemption on a pro rata basis shall \par\pard\plain\fs16\plain\cf1\f50\fs16\ql comply with this subparagraph (v). \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (g) Voting Rights. Exc ept as required by applicable Bermuda law \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql and as may otherwise be provided here

in or in any amendment hereto, the holders \par\pard\plain\fs16\plain\cf1\f50\fs16\ql of shares of Preferred Stock shall no t be entitled to any voting rights as \par\pard\plain\fs16\plain\cf1\f50\fs16\ql shareholders of the Company except as follows: \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (i) The affirmative vo te of the holders of at least a majority of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql the outstanding shares of P referred Stock, voting with holders of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql shares of all other series of preferred stock of the Company affected \par\pard\plain\fs16\plain\cf1\f50\fs16\ql in the same way as a single class, in person or by proxy, at a special \par\pard\plain\fs16\plain\cf1\f50\fs16\ql or annual meeting called fo r the purpose, or by written consent in \par\pard\plain\fs16\plain\cf1\f50\fs16\ql lieu of a meeting, shall be required to amend, repeal or change any \par\pard\plain\fs16\plain\cf1\f50\fs16\ql provisions of this Schedule in any manner which would adversely \par\pard\plain\fs16\plain\cf1\f50\fs16\ql affect, alter or change the powers, preferences or special rights of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql the Preferred Stock and any such securities affected in the same way; \par\pard\plain\fs16\plain\cf1\f50\fs16\ql provided, however, that \par\pard\plain\fs16\plain\cf1\f50\fs16\ql -------- ------\par\pard\plain\fs16 \page \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql 9 \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql the affirmative vote of the holders of at least a majority of the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql outstanding shares of Prefe rred Stock, voting as a single class, in \par\pard\plain\fs16\plain\cf1\f50\fs16\ql person or by proxy, at a sp ecial or annual meeting called for the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql purpose, or by written cons ent in lieu of a meeting, shall be required \par\pard\plain\fs16\plain\cf1\f50\fs16\ql to amend, repeal or change the Liquidation Preference set forth in \par\pard\plain\fs16\plain\cf1\f50\fs16\ql paragraph (a)(i) or the pro visions set forth in paragraphs (c), (d), \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (e), (f), (h) or (k) hereof , in any such case in a manner which would \par\pard\plain\fs16\plain\cf1\f50\fs16\ql adversely affect, alter or change the powers, preferences or special \par\pard\plain\fs16\plain\cf1\f50\fs16\ql rights of the Preferred Sto ck set forth in such paragraph; provided, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql -------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql further, that the creation, authorization or issuance of any other \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql class or series of capital stock or the increase or decrease in the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql amount of authorized capita l stock of any such class or series or of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql the Preferred Stock, or any increase, decrease or change in the par \par\pard\plain\fs16\plain\cf1\f50\fs16\ql value of any class or serie

s of capital stock (including the Preferred \par\pard\plain\fs16\plain\cf1\f50\fs16\ql he consent of the holders of the Preferred \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ed to affect adversely, alter or change the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql cial rights of the shares of Preferred \par\pard\plain\fs16\plain\cf1\f50\fs16\ql matter on which the holders are entitled to \par\pard\plain\fs16\plain\cf1\f50\fs16\ql of all other series of preferred stock of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql same way as a single class, (i) each share \par\pard\plain\fs16\plain\cf1\f50\fs16\ql entitled to a number of votes equal to the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Preference divided by 100 and (ii) so long \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Stock are outstanding, no other series of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql any so voting shall be entitled to a number \par\pard\plain\fs16\plain\cf1\f50\fs16\ql than the quotient of the liquidation \par\pard\plain\fs16\plain\cf1\f50\fs16\ql h other series divided by 100. With respect \par\pard\plain\fs16\plain\cf1\f50\fs16\ql holders are entitled to vote as a separate \par\pard\plain\fs16\plain\cf1\f50\fs16\ql red Stock shall be entitled to one vote. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql e equivalent of six quarterly dividends \par\pard\plain\fs16\plain\cf1\f50\fs16\ql eferred Stock are accrued and unpaid \par\pard\plain\fs16\plain\cf1\f50\fs16\ql and whether or not declared), the holders \par\pard\plain\fs16\plain\cf1\f50\fs16\ql f Preferred Stock and any Parity Stock or \par\pard\plain\fs16\plain\cf1\f50\fs16\ql voting rights then exercisable, voting \par\pard\plain\fs16\plain\cf1\f50\fs16\ql s without regard to series, shall be \par\pard\plain\fs16\plain\cf1\f50\fs16\ql xt annual meeting of the shareholders of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql o serve until all dividends accumulated and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql hares have been paid or declared and funds \par\pard\plain\fs16\plain\cf1\f50\fs16\ql yment in full. In exercising any such vote, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql of Preferred Stock shall be entitled to a \par\pard\plain\fs16\plain\cf1\f50\fs16\ql e quotient of the Liquidation Preference \par\pard\plain\fs16\plain\cf1\f50\fs16\ql hares held by the Company or any entity \par\pard\plain\fs16\plain\cf1\f50\fs16\ql which shares shall have no vote and (ii) so \par\pard\plain\fs16\plain\cf1\f50\fs16\ql rred Stock are outstanding, no other series

Stock), shall not require t Stock and shall not be deem powers, preferences and spe Stock. With respect to any vote together with holders the Company affected in the of Preferred Stock shall be quotient of the Liquidation as any shares of Preferred preferred stock of the Comp of votes per share greater preference per share of suc to any matter on which the class, each share of Prefer (ii) If at any time th payable on the shares of Pr (whether or not consecutive of all outstanding shares o Senior Stock having similar separately as a single clas entitled to elect at the ne the Company two directors t unpaid on any such voting s set aside to provide for pa (i) each outstanding share number of votes equal to th divided by 100, excluding s controlled by the Company, long as any shares of Prefe

\par\pard\plain\fs16\plain\cf1\f50\fs16\ql ompany so voting shall be entitled to a \par\pard\plain\fs16\plain\cf1\f50\fs16\ql reater than the quotient of the liquidation \par\pard\plain\fs16\plain\cf1\f50\fs16\ql h other series divided by 100. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ch share of Preferred Stock shall be \par\pard\plain\fs16\plain\cf1\f50\fs16\ql

of preferred stock of the C number of votes per share g preference per share of suc (h) Conversion. (i) Ea ----------

\par\pard\plain\fs16\plain\cf1\f50\fs16\ql convertible at any time and from time to time at the option of the holder \par\pard\plain\fs16\plain\cf1\f50\fs16\ql thereof into fully paid and nonassess able shares of Common Stock of the Company, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql par value $0.01 per share (the "Commo n Stock"). The number of shares of Common \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Stock deliverable upon conversion of a share of Preferred Stock, adjusted as \par\pard\plain\fs16 \page \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql 10 \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql hereinafter provided, is referred to herein as the "Conversion Ratio". The \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Conversion Ratio as of the Issuance D ate shall be 22.2222 and shall equal the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ratio the nominator of which shall be the Liquidation Preference and the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql denominator of which shall be the Con version Price. The Conversion Price shall \par\pard\plain\fs16\plain\cf1\f50\fs16\ql be $45.00, subject to adjustment from time to time as provided in paragraph (i). \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (ii) Conversion of sh ares of Preferred Stock may be effected by \par\pard\plain\fs16\plain\cf1\f50\fs16\ql any holder upon the surrender to the Company at the principal office of the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Company or at the office of any agent or agents of the company (the "Transfer \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Agent"), as may be designated by the Board of Directors of the Company, of the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql certificate or certificates for such shares of Preferred Stock to be converted \par\pard\plain\fs16\plain\cf1\f50\fs16\ql accompanied by a written notice stati ng that such holder elects to convert all \par\pard\plain\fs16\plain\cf1\f50\fs16\ql or a specified whole number of such s hares in accordance with the provisions of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql this paragraph (h) and specifying the name or names in which such holder wishes \par\pard\plain\fs16\plain\cf1\f50\fs16\ql the certificate or certificates for s hares of Common Stock to be issued. In case \par\pard\plain\fs16\plain\cf1\f50\fs16\ql such notice shall specify a name or n ames other than that of such holder, such \par\pard\plain\fs16\plain\cf1\f50\fs16\ql notice shall be accompanied by paymen t of all transfer taxes payable upon the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql issuance of shares of Common Stock in such name or names. Other than such taxes, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql the Company shall pay any documentary , stamp or similar issue or transfer taxes

\par\pard\plain\fs16\plain\cf1\f50\fs16\ql that may be payable in respect of any issuance or delivery of shares of Common \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Stock upon conversion of shares of Pr eferred Stock pursuant hereto. As promptly \par\pard\plain\fs16\plain\cf1\f50\fs16\ql as practicable after the surrender of such certificate or certificates and the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql receipt of such notice relating there to and, if applicable, payment of all \par\pard\plain\fs16\plain\cf1\f50\fs16\ql required transfer taxes (or the demon stration to the satisfaction of the Company \par\pard\plain\fs16\plain\cf1\f50\fs16\ql that such taxes have been paid), the Company shall deliver or cause to be \par\pard\plain\fs16\plain\cf1\f50\fs16\ql delivered (x) certificates representi ng the number of validly issued, fully paid \par\pard\plain\fs16\plain\cf1\f50\fs16\ql and nonassessable full shares of Comm on Stock to which the holder (or the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql holder's transferee) of shares of Pre ferred Stock being converted shall be \par\pard\plain\fs16\plain\cf1\f50\fs16\ql entitled and (y) if less than the ful l number of shares of Preferred Stock \par\pard\plain\fs16\plain\cf1\f50\fs16\ql evidenced by the surrendered certific ate or certificates is being converted, a \par\pard\plain\fs16\plain\cf1\f50\fs16\ql new certificate or certificates, of l ike tenor, for the number of shares \par\pard\plain\fs16\plain\cf1\f50\fs16\ql evidenced by such surrendered certifi cate or certificates less the number of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql shares being converted. Such conversi on shall be deemed to have been made at the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql close of business on the date of givi ng such notice and of such surrender of the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql certificate or certificates represent ing the shares of Preferred Stock to be \par\pard\plain\fs16\plain\cf1\f50\fs16\ql converted so that the rights of the h older thereof as to the shares being \par\pard\plain\fs16\plain\cf1\f50\fs16\ql converted shall cease except for the right to receive shares of Common Stock and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql accrued and unpaid dividends with res pect to the shares of Preferred Stock being \par\pard\plain\fs16\plain\cf1\f50\fs16\ql converted, in each case in accordance herewith, and the person entitled to \par\pard\plain\fs16\plain\cf1\f50\fs16\ql receive the shares of Common Stock sh all be treated for all purposes as having \par\pard\plain\fs16\plain\cf1\f50\fs16\ql become the record holder of such shar es of Common Stock at such time. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (iii) If a holder of s hares of Preferred Stock exercises \par\pard\plain\fs16\plain\cf1\f50\fs16\ql conversion rights under paragraph (h) (i), upon delivery of the shares for \par\pard\plain\fs16\plain\cf1\f50\fs16\ql conversion, such shares shall cease t o accrue dividends pursuant to paragraph \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (d) as of the end of the day immediat ely preceding the date of such delivery, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql but such shares shall continue to be entitled to receive all accrued dividends \par\pard\plain\fs16\plain\cf1\f50\fs16\ql which such holder is entitled to rece ive through the last preceding Dividend \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Payment Date unless such conversion f ollows a call for redemption by the Company \par\pard\plain\fs16\plain\cf1\f50\fs16\ql in which case pro rata dividends shal

l also be payable through the date \par\pard\plain\fs16\plain\cf1\f50\fs16\ql immediately preceding such delivery, in each case as if such holder \par\pard\plain\fs16 \page \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql 11 \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql continued to hold such shares of Pref erred Stock. Any such accrued and unpaid \par\pard\plain\fs16\plain\cf1\f50\fs16\ql dividends shall be payable by the Com pany as and when such dividends are paid to \par\pard\plain\fs16\plain\cf1\f50\fs16\ql any remaining holders or, if none, on the date which would have been the next \par\pard\plain\fs16\plain\cf1\f50\fs16\ql succeeding Dividend Payment Date had there been remaining holders or such later \par\pard\plain\fs16\plain\cf1\f50\fs16\ql time at which the Company believes it has adequate available capital under \par\pard\plain\fs16\plain\cf1\f50\fs16\ql applicable law to make such a payment . Notwithstanding the foregoing, shares of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Preferred Stock surrendered for conve rsion (other than after notice of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql redemption has been given with respec t to such shares) after the close of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql business on any record date for the p ayment of dividends declared and prior to \par\pard\plain\fs16\plain\cf1\f50\fs16\ql the opening of business on the Divide nd Payment Date relating thereto must be \par\pard\plain\fs16\plain\cf1\f50\fs16\ql accompanied by a payment in cash of a n amount equal to the dividend declared in \par\pard\plain\fs16\plain\cf1\f50\fs16\ql respect of such shares. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (iv) In case any sha res of Preferred Stock are to be redeemed \par\pard\plain\fs16\plain\cf1\f50\fs16\ql pursuant to paragraph (f), such right of conversion shall cease and terminate, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql as to the shares of Preferred Stock t o be redeemed, at the close of business on \par\pard\plain\fs16\plain\cf1\f50\fs16\ql the Business Day immediately precedin g the date fixed for redemption unless the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Company shall default in the payment of the Redemption Price therefor, as \par\pard\plain\fs16\plain\cf1\f50\fs16\ql provided herein. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (v) Notwithstanding anything herein to the contrary, but \par\pard\plain\fs16\plain\cf1\f50\fs16\ql subject to the provisions of paragrap h (h)(iii) and to paragraph (i), upon \par\pard\plain\fs16\plain\cf1\f50\fs16\ql conversion, no payment or adjustment shall be made by the Company to any holder \par\pard\plain\fs16\plain\cf1\f50\fs16\ql of shares of Preferred Stock surrende red for conversion in respect of any \par\pard\plain\fs16\plain\cf1\f50\fs16\ql accrued and unpaid dividends on the s hares of Preferred Stock surrendered for \par\pard\plain\fs16\plain\cf1\f50\fs16\ql conversion. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (vi) In connection w ith the conversion of any shares of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Preferred Stock, no fractions of shar es of Common Stock shall be issued, but in \par\pard\plain\fs16\plain\cf1\f50\fs16\ql lieu thereof, the Company shall pay a

cash adjustment in respect of such \par\pard\plain\fs16\plain\cf1\f50\fs16\ql fractional interest in an amount equa l to (x) such fractional interest \par\pard\plain\fs16\plain\cf1\f50\fs16\ql multiplied by the Liquidation Prefere nce per share, divided by (y) the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Conversion Price. If more than one sh are of Preferred Stock shall be surrendered \par\pard\plain\fs16\plain\cf1\f50\fs16\ql for conversion by the same holder at the same time, the number of full shares of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Common Stock issuable on conversion t hereof shall be computed on the basis of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql the total number of shares of Preferr ed Stock so surrendered. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (vii) The Company sha ll at all times reserve and keep available, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql free from preemptive rights, for issu ance upon the conversion of shares of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Preferred Stock such number of its au thorized but unissued shares of Common \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Stock as will from time to time be su fficient to permit the conversion of all \par\pard\plain\fs16\plain\cf1\f50\fs16\ql outstanding shares of Common Stock if necessary to permit the conversion of all \par\pard\plain\fs16\plain\cf1\f50\fs16\ql outstanding shares of Preferred Stock . Prior to the delivery of any securities \par\pard\plain\fs16\plain\cf1\f50\fs16\ql which the Company shall be obligated to deliver upon conversion of the Preferred \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Stock, the Company shall comply with all applicable federal and state laws and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql regulations which require action to b e taken by the Company. All shares of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Common Stock delivered upon conversio n of the Preferred Stock will upon delivery \par\pard\plain\fs16\plain\cf1\f50\fs16\ql be duly and validly issued and fully paid and nonassessable, free of all liens \par\pard\plain\fs16\plain\cf1\f50\fs16\ql and charges and not subject to any pr eemptive rights. \par\pard\plain\fs16 \page \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql 12 \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (i)(i) The Conversion Price shall be subject to adjustment from \par\pard\plain\fs16\plain\cf1\f50\fs16\ql time to time as follows: \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (A) Stock Splits and C ombinations. In case the Company shall at \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ---------------------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql any time or from time to time after t he Issuance Date (a) subdivide or split the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql outstanding shares of Common Stock, ( b) combine or reclassify the outstanding \par\pard\plain\fs16\plain\cf1\f50\fs16\ql shares of Common Stock into a smaller number of shares or (c) issue by \par\pard\plain\fs16\plain\cf1\f50\fs16\ql reclassification of the shares of Com mon Stock any shares of capital stock of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql the Company, then, and in each such c ase, the Conversion Price in effect

\par\pard\plain\fs16\plain\cf1\f50\fs16\ql immediately prior to such event or th e record date therefor, whichever is \par\pard\plain\fs16\plain\cf1\f50\fs16\ql earlier, shall be adjusted so that th e holder of any shares of Preferred Stock \par\pard\plain\fs16\plain\cf1\f50\fs16\ql thereafter surrendered for conversion shall be entitled to receive the number of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql shares of Common Stock or other secur ities of the Company which such holder \par\pard\plain\fs16\plain\cf1\f50\fs16\ql would have owned or have been entitle d to receive after the occurrence of any of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql the events described above, had such shares of Preferred Stock been surrendered \par\pard\plain\fs16\plain\cf1\f50\fs16\ql for conversion immediately prior to t he occurrence of such event or the record \par\pard\plain\fs16\plain\cf1\f50\fs16\ql date therefor, whichever is earlier. An adjustment made pursuant to this \par\pard\plain\fs16\plain\cf1\f50\fs16\ql subparagraph (A) shall become effecti ve at the close of business on the day upon \par\pard\plain\fs16\plain\cf1\f50\fs16\ql which such corporate action becomes e ffective. Such adjustment shall be made \par\pard\plain\fs16\plain\cf1\f50\fs16\ql successively whenever any event liste d above shall occur. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (B) Stock Dividends in Common Stock. In case the Company shall \par\pard\plain\fs16\plain\cf1\f50\fs16\ql -----------------------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql at any time or from time to time afte r the Issuance Date pay a dividend or make \par\pard\plain\fs16\plain\cf1\f50\fs16\ql a distribution in shares of Common St ock on any class of capital stock of the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Company other than dividends or distr ibutions of shares of Common Stock or other \par\pard\plain\fs16\plain\cf1\f50\fs16\ql securities with respect to which adju stments are provided in paragraph (i)(A) \par\pard\plain\fs16\plain\cf1\f50\fs16\ql above, and the total number of shares constituting such dividend or distribution \par\pard\plain\fs16\plain\cf1\f50\fs16\ql shall exceed 25% of the total number of shares of Common Stock outstanding at \par\pard\plain\fs16\plain\cf1\f50\fs16\ql the close of business on the record d ate fixed for determination of shareholders \par\pard\plain\fs16\plain\cf1\f50\fs16\ql entitled to receive such dividend or distribution, the Conversion Price shall be \par\pard\plain\fs16\plain\cf1\f50\fs16\ql adjusted so that the holder of each s hare of Preferred Stock shall be entitled \par\pard\plain\fs16\plain\cf1\f50\fs16\ql to receive upon conversion thereof, t he number of shares of Common Stock \par\pard\plain\fs16\plain\cf1\f50\fs16\ql determined by multiplying (1) the app licable Conversion Price by (2) a fraction, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql the numerator of which shall be the n umber of shares of Common Stock theretofore \par\pard\plain\fs16\plain\cf1\f50\fs16\ql outstanding and the denominator of wh ich shall be the sum of such number of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql shares and the total number of shares issued in such dividend or distribution. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql In case the total number of shares co nstituting such dividend or distribution \par\pard\plain\fs16\plain\cf1\f50\fs16\ql shall not exceed 25% of the total num ber of shares of Common Stock outstanding \par\pard\plain\fs16\plain\cf1\f50\fs16\ql at the close of business on the recor

d date fixed for such dividend or \par\pard\plain\fs16\plain\cf1\f50\fs16\ql distribution, such shares of Common S tock shall be considered to be issued at \par\pard\plain\fs16\plain\cf1\f50\fs16\ql the time of any such next succeeding dividend or other distribution in which the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql number of shares of Common Stock issu ed, together with the number of shares \par\pard\plain\fs16\plain\cf1\f50\fs16\ql issued in all previous such dividends and distributions, shall exceed such 25%. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (C) Issuance of Rights or Warrants. In case the Company shall \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ----------------------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql issue to all holders of Common Stock rights or warrants expiring within 45 days \par\pard\plain\fs16\plain\cf1\f50\fs16\ql entitling such holders to subscribe f or or purchase Common Stock at a price per \par\pard\plain\fs16\plain\cf1\f50\fs16\ql share less than the Current Market Pr ice (as defined below), the Conversion \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Price in effect immediately prior to the close of business on the record date \par\pard\plain\fs16 \page \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql 13 \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql fixed for determination of shareholde rs entitled to receive such rights or \par\pard\plain\fs16\plain\cf1\f50\fs16\ql warrants shall be reduced by multiply ing such Conversion Price by a fraction, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql the numerator of which is the sum of the number of shares of Common Stock \par\pard\plain\fs16\plain\cf1\f50\fs16\ql outstanding at the close of business on such record date and the number of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql shares of Common Stock that the aggre gate offering price of the total number of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql shares of Common Stock so offered for subscription or purchase would purchase at \par\pard\plain\fs16\plain\cf1\f50\fs16\ql such Current Market Price and the den ominator of which is the sum of the number \par\pard\plain\fs16\plain\cf1\f50\fs16\ql of shares of Common Stock outstanding at the close of business on such record \par\pard\plain\fs16\plain\cf1\f50\fs16\ql date and the number of additional sha res of Common Stock so offered for \par\pard\plain\fs16\plain\cf1\f50\fs16\ql subscription or purchase. For purpose s of this subparagraph (C), the issuance of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql rights or warrants to subscribe for o r purchase securities convertible into \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Common Stock shall be deemed to be th e issuance of rights or warrants to \par\pard\plain\fs16\plain\cf1\f50\fs16\ql purchase the Common Stock into which such securities are convertible at an \par\pard\plain\fs16\plain\cf1\f50\fs16\ql aggregate offering price equal to the sum of the aggregate offering price of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql such securities and the minimum aggre gate amount (if any) payable upon \par\pard\plain\fs16\plain\cf1\f50\fs16\ql conversion of such securities into Co mmon Stock. Such adjustment shall be made \par\pard\plain\fs16\plain\cf1\f50\fs16\ql successively whenever any such event shall occur.

\par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (D) Distribution of In debtedness, Securities or Assets. In case \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ------------------------------------------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql the Company shall distribute to all h olders of Common Stock (whether by dividend \par\pard\plain\fs16\plain\cf1\f50\fs16\ql or in a merger, amalgamation or conso lidation or otherwise) evidences of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql indebtedness, shares of capital stock of any class or series, other securities, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql cash or assets (other than Common Sto ck, rights or warrants referred to in \par\pard\plain\fs16\plain\cf1\f50\fs16\ql subparagraph (C) above or a dividend payable exclusively in cash and other than \par\pard\plain\fs16\plain\cf1\f50\fs16\ql as a result of a Fundamental Change ( as defined below)), the Conversion Price in \par\pard\plain\fs16\plain\cf1\f50\fs16\ql effect immediately prior to the close of business on the record date fixed for \par\pard\plain\fs16\plain\cf1\f50\fs16\ql determination of shareholders entitle d to receive such distribution shall be \par\pard\plain\fs16\plain\cf1\f50\fs16\ql reduced by multiplying such Conversio n Price by a fraction, the numerator of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql which is the Current Market Price on such record date less the fair market value \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (as determined by the Board of Direct ors of the Company, whose determination in \par\pard\plain\fs16\plain\cf1\f50\fs16\ql good faith shall be conclusive) of th e portion of such evidences of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql indebtedness, shares of capital stock , other securities, cash and assets so \par\pard\plain\fs16\plain\cf1\f50\fs16\ql distributed applicable to one share o f Common Stock and the denominator of which \par\pard\plain\fs16\plain\cf1\f50\fs16\ql is the Current Market Price. Such adj ustment shall be made successively whenever \par\pard\plain\fs16\plain\cf1\f50\fs16\ql any such event shall occur. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (E) Fundamental Change s. In case any transaction or event \par\pard\plain\fs16\plain\cf1\f50\fs16\ql -----------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql (including, without limitation, any m erger, consolidation, sale of assets, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql tender or exchange offer, reclassific ation, compulsory share exchange or \par\pard\plain\fs16\plain\cf1\f50\fs16\ql liquidation) shall occur in which all or substantially all outstanding Common \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Stock is converted into or exchanged for stock, other securities, cash or assets \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (each, a "Fundamental Change"), the h older of each share of Preferred Stock \par\pard\plain\fs16\plain\cf1\f50\fs16\ql outstanding immediately prior to the occurrence of such Fundamental Change shall \par\pard\plain\fs16\plain\cf1\f50\fs16\ql have the right upon any subsequent co nversion to receive (but only out of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql legally available funds, to the exten t required by applicable law) the kind and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql amount of stock, other securities, ca sh and assets that such holder would have \par\pard\plain\fs16\plain\cf1\f50\fs16\ql received if such share had been conve

rted immediately prior thereto. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (ii) Anything in this section (i) to the contrary \par\pard\plain\fs16\plain\cf1\f50\fs16\ql notwithstanding, the Company shall \par\pard\plain\fs16 \page \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql 14 \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql not be required to give effect to any adjustment in the Conversion Price unless \par\pard\plain\fs16\plain\cf1\f50\fs16\ql and until the net effect of one or mo re adjustments (each of which shall be \par\pard\plain\fs16\plain\cf1\f50\fs16\ql carried forward until counted toward adjustment), determined as above provided, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql shall have resulted in a change of th e Conversion Price by at least 1%, and when \par\pard\plain\fs16\plain\cf1\f50\fs16\ql the cumulative net effect of more tha n one adjustment so determined shall be to \par\pard\plain\fs16\plain\cf1\f50\fs16\ql change the Conversion Price by at lea st 1%, such change in the Conversion Price \par\pard\plain\fs16\plain\cf1\f50\fs16\ql shall thereupon be given effect. In t he event that, at any time as a result of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql the provisions of this paragraph (i), the holder of shares of Preferred Stock \par\pard\plain\fs16\plain\cf1\f50\fs16\ql upon subsequent conversion shall beco me entitled to receive any shares of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql capital stock of the Company other th an Common Stock, the number of such other \par\pard\plain\fs16\plain\cf1\f50\fs16\ql shares so receivable upon conversion of shares of Preferred Stock shall \par\pard\plain\fs16\plain\cf1\f50\fs16\ql thereafter be subject to adjustment f rom time to time in a manner and on terms \par\pard\plain\fs16\plain\cf1\f50\fs16\ql as nearly equivalent as practicable t o the provisions contained herein. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (iii) There shall be n o adjustment of the Conversion Price in \par\pard\plain\fs16\plain\cf1\f50\fs16\ql case of the issuance of any stock of the Company in a merger, reorganization, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql acquisition, reclassification, recapi talization or other similar transaction \par\pard\plain\fs16\plain\cf1\f50\fs16\ql except as set forth in this paragraph (i). \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (iv) In any case in w hich this paragraph (i) requires that an \par\pard\plain\fs16\plain\cf1\f50\fs16\ql adjustment as a result of any event b ecome effective from and after a record \par\pard\plain\fs16\plain\cf1\f50\fs16\ql date, the Company may elect to defer until after the occurrence of such event \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (A) issuing to the holder of any shar es of Preferred Stock converted after such \par\pard\plain\fs16\plain\cf1\f50\fs16\ql record date and before the occurrence of such event the additional shares of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Common Stock issuable upon such conve rsion over and above the shares issuable on \par\pard\plain\fs16\plain\cf1\f50\fs16\ql the basis of the conversion price in effect immediately prior to adjustment and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (B) paying to such holder any amount

in cash in lieu of a fractional share of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Common Stock. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (v) If the Company s hall take a record of the holders of its \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Common Stock for the purpose of entit ling them to receive a dividend or other \par\pard\plain\fs16\plain\cf1\f50\fs16\ql distribution, and shall thereafter an d before the distribution to shareholders \par\pard\plain\fs16\plain\cf1\f50\fs16\ql thereof legally abandon its plan to p ay or deliver such dividend or \par\pard\plain\fs16\plain\cf1\f50\fs16\ql distribution, then thereafter no adju stment in the number of shares of Common \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Stock issuable upon exercise of the r ight of conversion granted by this \par\pard\plain\fs16\plain\cf1\f50\fs16\ql paragraph (i) or in the Conversion Pr ice then in effect shall be required by \par\pard\plain\fs16\plain\cf1\f50\fs16\ql reason of the taking of such record. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (vi) The Board of Dir ectors of the Company shall have the power \par\pard\plain\fs16\plain\cf1\f50\fs16\ql to resolve any ambiguity or correct a ny error in this paragraph (i), and its \par\pard\plain\fs16\plain\cf1\f50\fs16\ql action in so doing shall be final and conclusive. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (j) Notwithstanding anything herein to the contrary, if the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Company is reorganized such that the Common Stock is exchanged for the Common \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Stock of a new entity ("Newco"), the Common Stock of which is traded on the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql National Association of Securities De alers, Inc. Automated Quotation System or \par\pard\plain\fs16\plain\cf1\f50\fs16\ql another recognized securities exchang e, then the Company, by notice to the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql holders of the Preferred Stock but wi thout any required consent on their part, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql shall have the option to cause the ex change of the shares of Preferred Stock for \par\pard\plain\fs16\plain\cf1\f50\fs16\ql preferred stock of Newco having the s ame \par\pard\plain\fs16 \page \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql 15 \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql terms and conditions as set forth her ein, provided that, in the event that Newco \par\pard\plain\fs16\plain\cf1\f50\fs16\ql -------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql is not solely incorporated as a Bermu da company or in the event the Newco share \par\pard\plain\fs16\plain\cf1\f50\fs16\ql structure is not identical to that of the Company, the rights attaching to the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql preferred stock of Newco may be adjus ted so as to comply with the local law of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql the country of incorporation of Newco or the new share structure of Newco. If \par\pard\plain\fs16\plain\cf1\f50\fs16\ql the Company exercises such option, th e Company shall indemnify each holder of

\par\pard\plain\fs16\plain\cf1\f50\fs16\ql shares of Preferred Stock if an excha nge described in this paragraph (j) would, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql under then applicable United States F ederal income tax law, result in the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql recognition of tax by such holder; pr ovided, however, that the Company shall not \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ------- ------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql be obligated to indemnify any holder for any payments described under \par\pard\plain\fs16\plain\cf1\f50\fs16\ql subparagraphs (f)(ii) and (f)(iii), u nless and to the extent provided in such \par\pard\plain\fs16\plain\cf1\f50\fs16\ql subparagraphs. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (k) Change in Contro l Put Right. (i) If a Change in Control \par\pard\plain\fs16\plain\cf1\f50\fs16\ql -------------------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql occurs with respect to the Company, e ach holder of shares of Preferred Stock \par\pard\plain\fs16\plain\cf1\f50\fs16\ql shall have the right to require the C ompany to purchase all or any part of such \par\pard\plain\fs16\plain\cf1\f50\fs16\ql holder's shares of Preferred Stock at a purchase price in cash equal to 100% of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql the Liquidation Preference of such sh ares, plus all accumulated and unpaid \par\pard\plain\fs16\plain\cf1\f50\fs16\ql dividends on such shares to the date of purchase. Within 30 days following such \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Change in Control, the Company shall mail a notice to each holder of shares of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql preferred stock describing the transa ction or transactions that constitute such \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Change in Control and offering to pur chase such holder's shares of Preferred \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Stock on the date specified in such n otice, which date shall be no earlier than \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 30 days and no later than 60 days fro m the date such notice is mailed. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (ii) The Company shal l comply with the requirements of Rule 14e\par\pard\plain\fs16\plain\cf1\f50\fs16\ql 1 under the Securities Exchange Act o f 1934, as amended, and any other \par\pard\plain\fs16\plain\cf1\f50\fs16\ql securities laws and regulations to th e extent such laws and regulations are \par\pard\plain\fs16\plain\cf1\f50\fs16\ql applicable in connection with the pur chase of Preferred Stock as a result of a \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Change in Control with respect to the Company. To the extent that the provisions \par\pard\plain\fs16\plain\cf1\f50\fs16\ql of any securities laws or regulations conflict with any of the provisions of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql this paragraph (k), the Company shall comply with the applicable securities laws \par\pard\plain\fs16\plain\cf1\f50\fs16\ql and regulations and shall be deemed n ot to have breached its obligations under \par\pard\plain\fs16\plain\cf1\f50\fs16\ql this paragraph (k). \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (iii) On the date sche duled for payment of shares of Preferred \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Stock tendered to the Company for rep

urchase as provided in this paragraph (k), \par\pard\plain\fs16\plain\cf1\f50\fs16\ql the Company shall, to the extent lawf ul, (a) accept for payment all shares of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Preferred Stock properly tendered, (b ) deposit with the Transfer Agent an amount \par\pard\plain\fs16\plain\cf1\f50\fs16\ql equal to the purchase price of the sh ares of Preferred Stock so tendered and (c) \par\pard\plain\fs16\plain\cf1\f50\fs16\ql deliver or cause to be delivered to t he Transfer Agent shares of Preferred Stock \par\pard\plain\fs16\plain\cf1\f50\fs16\ql so accepted together with an officers ' certificate stating the aggregate \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Liquidation Preference of the shares of Preferred Stock being purchased by the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Company. The Transfer Agent shall pro mptly mail or deliver to each holder of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql shares of Preferred Stock so tendered the applicable payment for such shares of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Preferred Stock, and the Transfer Age nt shall promptly countersign and mail or \par\pard\plain\fs16\plain\cf1\f50\fs16\ql deliver, or cause to be transferred b y book-entry, to each holder new shares of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Preferred Stock equal in Liquidation Preference to any unpurchased portion of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql the shares of Preferred Stock surrend ered, if any. The Company shall publicly \par\pard\plain\fs16\plain\cf1\f50\fs16\ql announce the results of its offer on or as soon as practicable after the payment \par\pard\plain\fs16\plain\cf1\f50\fs16\ql date for the purchase of shares of Pr eferred Stock \par\pard\plain\fs16 \page \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql 16 \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql in connection with a Change in Contro l of the Company. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (iv) The Company shall not be required to make an offer to \par\pard\plain\fs16\plain\cf1\f50\fs16\ql purchase any shares of Preferred Stoc k upon the occurrence of a Change in \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Control of the Company if a third par ty makes such offer in the manner, at the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql times and otherwise in compliance wit h the requirements described in this \par\pard\plain\fs16\plain\cf1\f50\fs16\ql paragraph (k) and purchases all share s of Preferred Stock validly tendered and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql not withdrawn. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (v) The right of the holders of shares of Preferred Stock \par\pard\plain\fs16\plain\cf1\f50\fs16\ql described in this paragraph (k) shall be subject to the obligation of Global \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Crossing Holdings Ltd., a company inc orporated under the laws of Bermuda \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ("Global Crossing Holdings"), to: \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (a) repay its debt obligat ions in full under the Credit Agreement, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql dated as of July 2, 1999, among the Company, Global Crossing Holdings, The

\par\pard\plain\fs16\plain\cf1\f50\fs16\ql Chase Manhattan Bank and the oth er parties named therein, as amended or \par\pard\plain\fs16\plain\cf1\f50\fs16\ql supplemented from time to time; and \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (b) offer to purchase and purchase all of its outstanding 9e% Senior \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Notes Due 2008 that have been te ndered for purchase in connection with a \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Change in Control of the Company . \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql In addition, the right of the holders of shares of Preferred \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Stock described in this paragraph (k) shall be subject to the repurchase or \par\pard\plain\fs16\plain\cf1\f50\fs16\ql repayment of the Company's future ind ebtedness, which the Company shall be \par\pard\plain\fs16\plain\cf1\f50\fs16\ql required to repurchase or repay in co nnection with a Change in Control of the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Company. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql When the Company shall have satisfied the obligations set forth \par\pard\plain\fs16\plain\cf1\f50\fs16\ql above in this subparagraph (v) and, s ubject to the legal availability of funds \par\pard\plain\fs16\plain\cf1\f50\fs16\ql for such purpose, the Company shall p urchase all shares of Preferred Stock \par\pard\plain\fs16\plain\cf1\f50\fs16\ql tendered for purchase by the Company upon a Change in Control of the Company \par\pard\plain\fs16\plain\cf1\f50\fs16\ql pursuant to this paragraph (k). \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (l) The shares of Pre ferred Stock and the shares of Common Stock \par\pard\plain\fs16\plain\cf1\f50\fs16\ql into which the shares of Preferred St ock shall be convertible shall have the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql registration rights set forth in the Registration Rights Agreement, dated \par\pard\plain\fs16\plain\cf1\f50\fs16\ql January 12, 2000, between the Company and Hutchison Telecommunications Limited. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (m) Transfer Restrict ions. (i) The shares of Preferred Stock \par\pard\plain\fs16\plain\cf1\f50\fs16\ql -------------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql shall bear the following legend: \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql "THE SHARES OF PREFERR ED STOCK, WITH LIQUIDATION PREFERENCE \par\pard\plain\fs16\plain\cf1\f50\fs16\ql $1,000 PER SHARE, OF T HE COMPANY REPRESENTED BY THIS CERTIFICATE \par\pard\plain\fs16\plain\cf1\f50\fs16\ql MAY NOT BE OFFERED OR SOLD ABSENT REGISTRATION UNDER THE \par\pard\plain\fs16\plain\cf1\f50\fs16\ql SECURITIES ACT OF 1933 , AS AMENDED (THE "ACT"), AND \par\pard\plain\fs16 \page \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql 17 \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ANY APPLICABLE STATE S

ECURITIES LAWS OR AN APPLICABLE EXEMPTION \par\pard\plain\fs16\plain\cf1\f50\fs16\ql FROM THE REGISTRATION REQUIREMENTS UNDER THE ACT. THE SHARES \par\pard\plain\fs16\plain\cf1\f50\fs16\ql REPRESENTED BY THIS CE RTIFICATE ARE SUBJECT TO AND TRANSFERABLE \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ONLY IN COMPLIANCE WIT H THE PROVISIONS OF THE SUBSCRIPTION AND \par\pard\plain\fs16\plain\cf1\f50\fs16\ql SALE AND PURCHASE AGRE EMENT, DATED 15/TH/ NOVEMBER, 1999, AMONG \par\pard\plain\fs16\plain\cf1\f50\fs16\ql HUTCHISON WHAMPOA LIMI TED, HUTCHISON TELECOMMUNICATIONS LIMITED, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql GLOBAL CROSSING LTD. A ND HCL HOLDINGS LIMITED. A COPY OF SUCH \par\pard\plain\fs16\plain\cf1\f50\fs16\ql SUBSCRIPTION AND SALE AND PURCHASE AGREEMENT IS ON FILE AT THE \par\pard\plain\fs16\plain\cf1\f50\fs16\ql REGISTERED OFFICE OF G LOBAL CROSSING LTD. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (ii) The shares of Com mon Stock issuable upon conversion of the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql shares of Preferred Stock shall bear the following legend: \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql "THE SHARES OF COMMON STOCK, PAR VALUE $.01 PER SHARE, OF THE \par\pard\plain\fs16\plain\cf1\f50\fs16\ql COMPANY REPRESENTED BY THIS CERTIFICATE MAY NOT BE OFFERED OR \par\pard\plain\fs16\plain\cf1\f50\fs16\ql SOLD ABSENT REGISTRATI ON UNDER THE SECURITIES ACT OF 1933, AS \par\pard\plain\fs16\plain\cf1\f50\fs16\ql AMENDED (THE "ACT"), A ND ANY APPLICABLE STATE SECURITIES LAWS OR \par\pard\plain\fs16\plain\cf1\f50\fs16\ql AN APPLICABLE EXEMPTIO N FROM THE REGISTRATION REQUIREMENTS UNDER \par\pard\plain\fs16\plain\cf1\f50\fs16\ql THE ACT. THE SHARES RE PRESENTED BY THIS CERTIFICATE ARE SUBJECT \par\pard\plain\fs16\plain\cf1\f50\fs16\ql TO AND TRANSFERABLE ON LY IN COMPLIANCE WITH THE PROVISIONS OF THE \par\pard\plain\fs16\plain\cf1\f50\fs16\ql SUBSCRIPTION AND SALE AND PURCHASE AGREEMENT, DATED 15/TH/ \par\pard\plain\fs16\plain\cf1\f50\fs16\ql NOVEMBER, 1999, AMONG HUTCHISON WHAMPOA LIMITED, HUTCHISON \par\pard\plain\fs16\plain\cf1\f50\fs16\ql TELECOMMUNICATIONS LIM ITED, GLOBAL CROSSING LTD. AND HCL HOLDINGS \par\pard\plain\fs16\plain\cf1\f50\fs16\ql LIMITED. A COPY OF SUC H SUBSCRIPTION AND SALE AND PURCHASE \par\pard\plain\fs16\plain\cf1\f50\fs16\ql AGREEMENT IS ON FILE A T THE REGISTERED OFFICE OF GLOBAL CROSSING \par\pard\plain\fs16\plain\cf1\f50\fs16\ql LTD. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (n) Certain Definitio ns. As used in this Schedule, the following \par\pard\plain\fs16\plain\cf1\f50\fs16\ql -----------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql terms shall have the following meanin gs, unless the context otherwise requires: \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql "Affiliate" of any per son means any other person who, directly or \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ---------

\par\pard\plain\fs16\plain\cf1\f50\fs16\ql indirectly, Controls, is under common Control or is Controlled by such other \par\pard\plain\fs16\plain\cf1\f50\fs16\ql person. For purposes of this definiti on, "Control" (including, with correlative \par\pard\plain\fs16\plain\cf1\f50\fs16\ql meanings, the terms "controlling," "C ontrolled by" and "under common control \par\pard\plain\fs16\plain\cf1\f50\fs16\ql with"), as used with respect to any p erson, shall mean the power, directly or \par\pard\plain\fs16\plain\cf1\f50\fs16\ql indirectly, to direct or cause the di rection of the management or policies of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql such person, whether through the owne rship of voting securities, by contract or \par\pard\plain\fs16\plain\cf1\f50\fs16\ql otherwise; provided that beneficial o wnership of 10% or more of the Voting Stock \par\pard\plain\fs16\plain\cf1\f50\fs16\ql -------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql of a person shall be deemed to be Con trol. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql "Business Day" means a ny day other than a Saturday, Sunday or a \par\pard\plain\fs16\plain\cf1\f50\fs16\ql -----------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql United States federal or Bermuda holi day. \par\pard\plain\fs16 \page \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql 18 \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql "Change in Control" me ans, with respect to the Company, the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ----------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql occurrence of any of the following: ( i) any "person" (as such term is unused in \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Section 13(d)(3) of the Securities Ex change Act of 1934, as amended (the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql "Exchange Act")), other than a Permit ted Holder, is or becomes the beneficial \par\pard\plain\fs16\plain\cf1\f50\fs16\ql owner, directly or indirectly, of 35% or more of the Voting Stock (measured by \par\pard\plain\fs16\plain\cf1\f50\fs16\ql voting power rather than number of sh ares) of the Company, and the Permitted \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Holders own, in the aggregate, a less er percentage of the total Voting Stock \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (measured by voting power rather than by number of shares) of the Company than \par\pard\plain\fs16\plain\cf1\f50\fs16\ql such person and do not have the right or ability by voting power, contract or \par\pard\plain\fs16\plain\cf1\f50\fs16\ql otherwise to elect or designate for e lection a majority of the board of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql directors of the Company (for the pur poses of this clause, such other person \par\pard\plain\fs16\plain\cf1\f50\fs16\ql shall be deemed to "beneficially own" any Voting Stock of a specified \par\pard\plain\fs16\plain\cf1\f50\fs16\ql corporation held by a parent corporat ion if such other person beneficially owns, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql directly or indirectly, more than 35% of the Voting Stock (measured by voting \par\pard\plain\fs16\plain\cf1\f50\fs16\ql power rather than by number of shares ) of such parent corporation and the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Permitted Holders beneficially own, d

irectly or indirectly, in the aggregate a \par\pard\plain\fs16\plain\cf1\f50\fs16\ql lesser percentage of Voting Stock (me asured by voting power rather than by \par\pard\plain\fs16\plain\cf1\f50\fs16\ql number of shares) of such parent corp oration and do not have the right or \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ability by voting power, contract or otherwise to elect or designate for \par\pard\plain\fs16\plain\cf1\f50\fs16\ql election a majority of the board of d irectors of such parent corporation), (ii) \par\pard\plain\fs16\plain\cf1\f50\fs16\ql during any period of two consecutive years, Continuing Directors cease for any \par\pard\plain\fs16\plain\cf1\f50\fs16\ql reason to constitute a majority of th e Board of Directors of the Company, (iii) \par\pard\plain\fs16\plain\cf1\f50\fs16\ql the Company consolidates or merges wi th or into any other person, other than a \par\pard\plain\fs16\plain\cf1\f50\fs16\ql consolidation or merger (a) of the Co mpany into Global Crossing Holdings or \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Global Crossing Holdings into the Com pany, or the Company with or into a \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Subsidiary of the Company or (b) purs uant to a transaction in which the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql outstanding Voting Stock of the Compa ny is changed into or exchanged for cash, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql securities or other property with the effect that the beneficial owners of the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql outstanding Voting Stock of the Compa ny immediately prior to such transaction, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql beneficially own, directly or indirec tly, more than 35% of the Voting Stock \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (measured by voting power rather than number of shares) of the surviving \par\pard\plain\fs16\plain\cf1\f50\fs16\ql corporation immediately following suc h transaction or (iv) the sale, transfer, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql conveyance or other disposition (othe r than by way of merger or consolidation), \par\pard\plain\fs16\plain\cf1\f50\fs16\ql in one or a series of related transac tions, of all or substantially all of the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql assets of the Company and its Subsidi aries, taken as a whole, to any person \par\pard\plain\fs16\plain\cf1\f50\fs16\ql other than a Subsidiary of the Compan y or a Permitted Holder or a person more \par\pard\plain\fs16\plain\cf1\f50\fs16\ql than 50% of the Voting Stock (measure d by voting power rather than by number of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql shares) of which is owned, directly o r indirectly, following such transaction or \par\pard\plain\fs16\plain\cf1\f50\fs16\ql transactions by the Permitted Holders ; provided, however, that sales, transfers, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql -------- ------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql conveyances or other dispositions in the ordinary course of business of capacity \par\pard\plain\fs16\plain\cf1\f50\fs16\ql on cable systems owned, controlled or operated by the Company or any Subsidiary \par\pard\plain\fs16\plain\cf1\f50\fs16\ql or of telecommunications capacity or transmission rights acquired by the Company \par\pard\plain\fs16\plain\cf1\f50\fs16\ql or any Subsidiary for use in its busi ness, including, without limitation, for \par\pard\plain\fs16\plain\cf1\f50\fs16\ql sale, lease, transfer, conveyance or other disposition to any customer of the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Company or any Subsidiary shall not b

e deemed a disposition of assets for \par\pard\plain\fs16\plain\cf1\f50\fs16\ql purposes of this clause (iv). \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql "Continuing Directors" means individuals who at the beginning of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql -------------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql the period of determination constitut ed the Board of Directors of the Company, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql together with any new directors \par\pard\plain\fs16 \page \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql 19 \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql whose election by such Board of Direc tors or whose nomination for election by \par\pard\plain\fs16\plain\cf1\f50\fs16\ql the shareholders of the Company was a pproved by a vote of at least a majority of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql the directors of the Company then sti ll in office who were either directors at \par\pard\plain\fs16\plain\cf1\f50\fs16\ql the beginning of such period or whose election or nomination for election was \par\pard\plain\fs16\plain\cf1\f50\fs16\ql previously so approved or is designee of any one of the Permitted Holders or any \par\pard\plain\fs16\plain\cf1\f50\fs16\ql combination thereof or was nominated or elected by any such Permitted Holder(s) \par\pard\plain\fs16\plain\cf1\f50\fs16\ql or any of their designees. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql "Current Market Price" means, with respect to any event set forth \par\pard\plain\fs16\plain\cf1\f50\fs16\ql -------------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql in paragraph (i) herein, as applicabl e, the average of the daily closing prices \par\pard\plain\fs16\plain\cf1\f50\fs16\ql for the five consecutive trading days selected by the Board of Directors of the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Company commencing not more than 20 t rading days before, and ending not later \par\pard\plain\fs16\plain\cf1\f50\fs16\ql than the date of such event and the d ate immediately preceding the record date \par\pard\plain\fs16\plain\cf1\f50\fs16\ql fixed in connection with such event. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql "Permitted Holder" mea ns Pacific Capital Group, Inc. and CIBC \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ---------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql Oppenheimer Corp., and their respecti ve Affiliates. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql "Subsidiary" means, wi th respect to any person, (i) any \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ---------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql corporation, association or other bus iness entity of which more than 50% of the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql total voting power of shares of capit al stock entitled (without regard to the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql occurrence of any contingency) to vot e in the election of directors, managers or \par\pard\plain\fs16\plain\cf1\f50\fs16\ql trustees thereof is at the time owned or controlled, directly or indirectly, by \par\pard\plain\fs16\plain\cf1\f50\fs16\ql such person or one or more of the oth

er Subsidiaries of that person (or a \par\pard\plain\fs16\plain\cf1\f50\fs16\ql combination thereof) and (ii) any par tnership (a) the sole general partner or \par\pard\plain\fs16\plain\cf1\f50\fs16\ql the managing general partner of which is such person or a Subsidiary of such \par\pard\plain\fs16\plain\cf1\f50\fs16\ql person or (b) the only general partne rs of which are such person or of one or \par\pard\plain\fs16\plain\cf1\f50\fs16\ql more Subsidiaries of such person (or any combination thereof). \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql "Voting Stock" of any person as of any date means the capital \par\pard\plain\fs16\plain\cf1\f50\fs16\ql -----------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql stock of such person that is at the t ime entitled to vote in the election of the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Board of Directors of such person. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (o) Headings. The hea dings of the paragraphs of this Schedule \par\pard\plain\fs16\plain\cf1\f50\fs16\ql -------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql are for convenience of reference only and hall not define, limit or affect any \par\pard\plain\fs16\plain\cf1\f50\fs16\ql of the provisions hereof. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (p) Bye-Laws. This Sc hedule shall be attached to the Bye-Laws \par\pard\plain\fs16\plain\cf1\f50\fs16\ql -------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql of the Company and shall become incor porated in such Bye-Laws. \par\pard\plain\fs16 \page \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql 20 \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql IN WITNESS WHEREOF, th e Company has caused this Certificate of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Designation to be duly signed on its behalf on this 12th day of January, 2000. \par\pard\plain\fs16 \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql GLOBAL CROSSING LTD., a company incorporated \par\pard\plain\fs16\plain\cf1\f50\fs16\ql under t he laws of Bermuda, \par\pard\plain\fs16 \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql By: /s/ James C. Gorton \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ---------------------------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql Nam e: James C. Gorton \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Tit le: Sr. Vice President \par\pard\plain\fs16\plain\cf1\f50\fs16\ql and General Counsel \par\pard\plain\fs16 \page{\*\bkmkstart doc_1_3}{\*\bkmkend doc_1_3} \par\pard\plain\fs16 \page \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql EXHIBIT 10.33

\par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql EMPLOYME NT AGREEMENT \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ------------------\par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql THIS AGREEMENT, is made as of the fifth day of December, 1999 (this \par\pard\plain\fs16\plain\cf1\f50\fs16\ql "Agreement"), between GlobalCenter In c., a Delaware corporation ("GC"), and Leo \par\pard\plain\fs16\plain\cf1\f50\fs16\ql J. Hindery, Jr. ("Executive"). \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql For good and valuable consi deration, the receipt and sufficiency of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql which is hereby acknowledged, GC and Executive hereby agree as follows: \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 1. Employment. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ---------\par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Subject to the terms and co nditions hereinafter contained, GC hereby \par\pard\plain\fs16\plain\cf1\f50\fs16\ql employs Executive and Executive accep ts the employment by GC. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (a) Executive shall perfor m such duties and exercise such powers in \par\pard\plain\fs16\plain\cf1\f50\fs16\ql relation to the business of the GC as may from time to time be assigned to or \par\pard\plain\fs16\plain\cf1\f50\fs16\ql vested in him by the Board of Directo rs of GC and shall at all times and in all \par\pard\plain\fs16\plain\cf1\f50\fs16\ql respects comply with the reasonable d irections and regulations made by the Board \par\pard\plain\fs16\plain\cf1\f50\fs16\ql of Directors of GC. Without limiting the foregoing, Executive shall hold the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql title of Chairman and CEO of GC and s hall be immediately elected as a member of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql the GC Board. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (b) Executive shall faithf ully serve GC to the utmost of his ability \par\pard\plain\fs16\plain\cf1\f50\fs16\ql and shall use his best efforts to pro mote the interests thereof and shall devote \par\pard\plain\fs16\plain\cf1\f50\fs16\ql all of his time and attention during the normal working hours of GC (and, for no \par\pard\plain\fs16\plain\cf1\f50\fs16\ql further remuneration, during such add itional hours as shall be necessary for the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql proper performance thereof) to the sa id duties, except insofar as he has the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql consent of the GC Board of Directors in writing to do otherwise. The foregoing \par\pard\plain\fs16\plain\cf1\f50\fs16\ql shall not preclude Executive from eng aging in appropriate civic, charitable or \par\pard\plain\fs16\plain\cf1\f50\fs16\ql religious activities or from devoting a reasonable amount of time to private \par\pard\plain\fs16\plain\cf1\f50\fs16\ql investments or from serving on the bo ards of directors of other entities or \par\pard\plain\fs16\plain\cf1\f50\fs16\ql engaging in Executive's car racing av ocation, as long as such activities and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql service do not materially interfere o

r conflict with Executive's \par\pard\plain\fs16\plain\cf1\f50\fs16\ql responsibilities to GC. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (c) Executive shall comply with such directives and manuals as GC may \par\pard\plain\fs16\plain\cf1\f50\fs16\ql issue from time to time to its office rs and executives. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (d) Executive's office sha ll be based in the San Francisco Bay Area. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 2. Board Membership \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ---------------\par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Executive shall be recommen ded as a candidate for director of Global \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Crossing Ltd. The Global Crossing Ltd . Board of Directors currently has no open \par\pard\plain\fs16\plain\cf1\f50\fs16\ql positions; however, an opening is ant icipated on or before March 31, 2000. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql During the Term (as defined in Paragraph 3), Executive shall have the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql right to nominate one less than a maj ority (including Executive) of the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql directors of the \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql -1\par\pard\plain\fs16 \page \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql GC Board of Directors. Election of such nominees to the GC Board of Directors \par\pard\plain\fs16\plain\cf1\f50\fs16\ql shall not be unreasonably denied. GC shall have eleven Board members. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 3. Term. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ---\par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Subject to the provisions of Par agraph 9 below, the term of this Agreement \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (the "Term") shall be 3 years, commen cing on December 5, 1999 (the "Commencement \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Date"). The Term and provisions of th is Agreement shall automatically extend for \par\pard\plain\fs16\plain\cf1\f50\fs16\ql additional one-year periods if Execut ive remains employed on and after the third \par\pard\plain\fs16\plain\cf1\f50\fs16\ql anniversary of the Commencement Date, unless either party notifies the other in \par\pard\plain\fs16\plain\cf1\f50\fs16\ql writing at least 30 days prior to the applicable anniversary date that it, or \par\pard\plain\fs16\plain\cf1\f50\fs16\ql he, does not want the term to so exte nd. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 4. Remuneration. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql -----------\par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (a) Base Salary. GC agree s to pay and Executive agrees to accept as \par\pard\plain\fs16\plain\cf1\f50\fs16\ql -----------

\par\pard\plain\fs16\plain\cf1\f50\fs16\ql compensation for the services rendere d by Executive during his Employment \par\pard\plain\fs16\plain\cf1\f50\fs16\ql hereunder an annualized salary of $50 0,000, less withholding taxes and other \par\pard\plain\fs16\plain\cf1\f50\fs16\ql amounts required by applicable laws, to be paid in semi-monthly installments. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (b) Guaranteed Minimum Bon us. Executive shall receive a guaranteed \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ----------------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql minimum bonus (the "Guaranteed Minimu m Bonus") of $500,000 per year during the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Term. The GC Board of Directors in it s sole discretion may award an annual bonus \par\pard\plain\fs16\plain\cf1\f50\fs16\ql greater than the Guaranteed Minimum B onus. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (c) Global Crossing Ltd. S tock Options. Pursuant to the 1998 Global \par\pard\plain\fs16\plain\cf1\f50\fs16\ql --------------------------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql Crossing Ltd., Stock Incentive Plan ( the "Plan"), Executive shall receive \par\pard\plain\fs16\plain\cf1\f50\fs16\ql options to purchase 500,000 shares of common stock of Global Crossing Ltd. (the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql "Global Crossing Ltd. Stock Options") . The strike price shall equal $45 per \par\pard\plain\fs16\plain\cf1\f50\fs16\ql share. The Global Crossing Ltd. Stock Options shall vest as follows: 34% on the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Commencement Date and 22% on the firs t, second and third anniversary of the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Commencement Date. The stock options shall be subject to the additional terms \par\pard\plain\fs16\plain\cf1\f50\fs16\ql and conditions as set forth in the Pl an and a non-qualified stock option \par\pard\plain\fs16\plain\cf1\f50\fs16\ql agreement. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (d) GC Stock Options. Exe cutive shall receive options to purchase a \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ---------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql number of shares of GC common stock ( the "GC Stock Options") equal to 5.5% of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql the currently outstanding common stoc k of GC at an aggregate strike price of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql $100,000,000. The options shall vest 34% on the Commencement Date and 22% on the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql first, second and third anniversary o f the Commencement Date. The GC Stock \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Options shall be subject to additiona l terms and conditions as may be determined \par\pard\plain\fs16\plain\cf1\f50\fs16\ql by the GC Board of Directors; provide d, however, that any terms and conditions \par\pard\plain\fs16\plain\cf1\f50\fs16\ql which materially deviate from the ter ms and conditions of the Global Crossing \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Ltd. Stock Options are subject to Exe cutive's prior approval. In the event that \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Global Crossing Ltd. issues a Trackin

g Stock (as defined below), the GC Stock \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Options shall be equitably converted into options for the Tracking Stock or \par\pard\plain\fs16\plain\cf1\f50\fs16\ql otherwise dealt with in a manner that minimizes adverse accounting treatment \par\pard\plain\fs16\plain\cf1\f50\fs16\ql without adverse effect upon Executive . \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql -2\par\pard\plain\fs16 \page \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql (e) Recommended Stock Options. In addition to the GC Stock Options, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql -----------------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql Executive shall have the right to rec ommend that the GC Compensation Committee, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql whose members shall be nominated by t he Chairman of the GC Board of Directors, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql grant options to purchase GC common s tock (the "Recommended Stock Options") to \par\pard\plain\fs16\plain\cf1\f50\fs16\ql one or more GC employees Executive hi res or desires to retain. The GC Board of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Directors shall not unreasonably with hold approval of the Recommended Stock \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Options. In the event that Global Cro ssing Ltd. issues a Tracking Stock (as \par\pard\plain\fs16\plain\cf1\f50\fs16\ql defined below), the Recommended Stock Options shall be equitably converted into \par\pard\plain\fs16\plain\cf1\f50\fs16\ql options for the Tracking Stock or oth erwise dealt with in a manner that \par\pard\plain\fs16\plain\cf1\f50\fs16\ql minimizes adverse accounting treatmen t without adverse effect upon the optionee. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (f) Global Crossing Tracki ng Stock. Global Crossing, Ltd. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ----------------------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql anticipates establishing a tracking s tock (the "Tracking Stock") for its \par\pard\plain\fs16\plain\cf1\f50\fs16\ql existing digital distribution, Intern et and data services business, currently \par\pard\plain\fs16\plain\cf1\f50\fs16\ql owned and operated by GC (the "Tracke d Business"). Subject to market conditions, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql it is anticipated that between 10% an d 20% of the equity value of the Tracked \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Business will be issued in an initial public offering in the first half of 2000. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Issuance of Tracking Stock is subject to approval of the holders of Global \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Crossing Ltd. common stock pursuant t o Bermuda law. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 5. Insurance and 401(k) S avings Plan. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql -------------------------------\par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (a) Executive shall be ent

itled to participate, subject to any rules \par\pard\plain\fs16\plain\cf1\f50\fs16\ql and conditions and applicable laws an d regulations, in any medical, dental, life \par\pard\plain\fs16\plain\cf1\f50\fs16\ql insurance and/or disability insurance plan established and operated by GC, for \par\pard\plain\fs16\plain\cf1\f50\fs16\ql the benefit of executives of GC and t heir dependents. Any such plan may be \par\pard\plain\fs16\plain\cf1\f50\fs16\ql changed from time to time in the sole discretion of GC. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (b) GC shall cover Executi ve at GC's expense for workers' \par\pard\plain\fs16\plain\cf1\f50\fs16\ql compensation and disability insurance as required by law. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (c) Subject to the terms a nd conditions of the GC 401(k) Plan and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql applicable law, Executive shall be en titled to participate in any 401(k) savings \par\pard\plain\fs16\plain\cf1\f50\fs16\ql plan adopted by GC. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 6. Vacation. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql -------\par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (a) Executive shall be ent itled to four weeks of paid vacation per \par\pard\plain\fs16\plain\cf1\f50\fs16\ql year, to be taken in such period and at such time as requirements of GC's \par\pard\plain\fs16\plain\cf1\f50\fs16\ql business permit. Executive shall not accrue more than four weeks paid vacation. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (b) On termination of Exec utive's employment for whatever reason, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Executive shall be entitled to accrue d vacation pay through the date of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql termination. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql -3\par\pard\plain\fs16 \page \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql 7. Expense Reimbursements. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ---------------------\par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Executive shall be reimburs ed for business expenses incurred by \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Executive on behalf of GC, including but not limited to, travel and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql entertainment expenses. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 8. Business Travel. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql --------------\par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Limousine service shall be available for all business travel. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 9. Termination/Resignatio n. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ----------------------

\par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Subject to the provisions b elow, Executive may be terminated by GC at \par\pard\plain\fs16\plain\cf1\f50\fs16\ql any time for cause by a vote of the m ajority of the GC Board of Directors, or at \par\pard\plain\fs16\plain\cf1\f50\fs16\ql any time without cause by a vote of t he majority plus one of the GC Board of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Directors. Executive may resign from employment at any time. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (a) Termination For Cause. Actions or omissions which will entitle \par\pard\plain\fs16\plain\cf1\f50\fs16\ql --------------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql hall be limited to the following: \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql felony; or \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql of the Proprietary Information Agreement \par\pard\plain\fs16\plain\cf1\f50\fs16\ql as Exhibit "A" and incorporated herein by \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ---------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ble to perform his duties under this \par\pard\plain\fs16\plain\cf1\f50\fs16\ql son of a final, non-appealable \par\pard\plain\fs16\plain\cf1\f50\fs16\ql a court or arbitration board. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql occurrence of a termination for cause \par\pard\plain\fs16\plain\cf1\f50\fs16\ql pursuant to subparagraph 9(a), the GC \par\pard\plain\fs16\plain\cf1\f50\fs16\ql to Executive detailing the specific \par\pard\plain\fs16\plain\cf1\f50\fs16\ql C Board reasonably determines that the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql rable, then the Board shall have the right \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ation. If the GC Board reasonably \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ause Event is curable, then it shall \par\pard\plain\fs16\plain\cf1\f50\fs16\ql days to cure. In the event that Executive \par\pard\plain\fs16\plain\cf1\f50\fs16\ql se Event within 60 days after receipt of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql have 10 days to deliver notice of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql t is terminating Executive for cause, the GC to terminate Executive for cause s (i) conviction of a

(ii) material breach attached hereto

reference; or (iii) Executive is una Agreement by rea determination by For a period within 60 days after the event ("Termination For Cause Event") Board shall deliver a written notice Termination For Cause Event. If the G Termination For Cause Event is not cu to deliver immediate notice of termin determines that the Termination For C provide Executive with a period of 60 does not cure the Termination For Cau such notice, then the GC Board shall termination to the Executive. Upon notice by GC to Executive that i

\par\pard\plain\fs16\plain\cf1\f50\fs16\ql Termination Date shall be the date on which such notice is received by Executive \par\pard\plain\fs16\plain\cf1\f50\fs16\ql pursuant to Paragraph 11(a), or any l ater date specified in the notice of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql termination to Executive. If such ter mination is pursuant to subparagraph \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 9(a)(i) or 9(a)(iii), then \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql -4\par\pard\plain\fs16 \page \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql Executive shall not be entitled to receive any further compensation or payments \par\pard\plain\fs16\plain\cf1\f50\fs16\ql hereunder (except such Base Salary an d Guaranteed Minimum Bonus relating to \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Executive's services prior to the Ter mination Date). If such termination is \par\pard\plain\fs16\plain\cf1\f50\fs16\ql pursuant to subparagraph 9(a)(ii), th en Executive shall be entitled to any \par\pard\plain\fs16\plain\cf1\f50\fs16\ql remaining compensation and payments h ereunder (including the continued vesting \par\pard\plain\fs16\plain\cf1\f50\fs16\ql of the Global Crossing Ltd. Stock Opt ions and the GC Stock Options) except to \par\pard\plain\fs16\plain\cf1\f50\fs16\ql the extent of any damages to GC cause d by such breach as determined by a final \par\pard\plain\fs16\plain\cf1\f50\fs16\ql settlement of the parties or a final judgment or determination in any judicial \par\pard\plain\fs16\plain\cf1\f50\fs16\ql or administrative proceeding that is no longer appealable. Nothing contained in \par\pard\plain\fs16\plain\cf1\f50\fs16\ql this Paragraph shall limit the remedi es available to GC at law or as otherwise \par\pard\plain\fs16\plain\cf1\f50\fs16\ql provided in the Proprietary Informati on Agreement. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (b) Termination Due to Dea th or Disability. During the Term, in the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ------------------------------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql event that Executive's employment is terminated due to death of Executive or in \par\pard\plain\fs16\plain\cf1\f50\fs16\ql the event that GC terminates Executiv e's employment due to illness or disability \par\pard\plain\fs16\plain\cf1\f50\fs16\ql which has rendered him unable to perf orm on a full-time basis the duties of his \par\pard\plain\fs16\plain\cf1\f50\fs16\ql employment for a period of more than four months during any twelve-month period, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql then all of Executive's Global Crossi ng Ltd. Stock Options and GC Stock Options \par\pard\plain\fs16\plain\cf1\f50\fs16\ql shall immediately become vested and e xercisable. Executive shall not be entitled \par\pard\plain\fs16\plain\cf1\f50\fs16\ql to receive any further compensation o r payments hereunder (except such Base \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Salary and Guaranteed Minimum Bonus r elating to Executive's services prior to \par\pard\plain\fs16\plain\cf1\f50\fs16\ql the Termination Date). \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (c) Termination Other Than For Cause. Executive may be terminated by \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ----------------------

---------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql ason, upon the giving of notice by GC to \par\pard\plain\fs16\plain\cf1\f50\fs16\ql an cause, death or disability. In such \par\pard\plain\fs16\plain\cf1\f50\fs16\ql nation, discharge Executive immediately or \par\pard\plain\fs16\plain\cf1\f50\fs16\ql one month, as GC may determine to be \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ive is terminated pursuant to this \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Stock Options and GC Stock Options shall \par\pard\plain\fs16\plain\cf1\f50\fs16\ql able and Executive shall receive his Base \par\pard\plain\fs16\plain\cf1\f50\fs16\ql less such deductions as may be required by \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql hich shall entitle Executive to resign for \par\pard\plain\fs16\plain\cf1\f50\fs16\ql

GC at any time and for any (or no) re Executive of termination for other th event, GC may, in the notice of termi as of such future date, not to exceed appropriate. In the event that Execut subsection, all Global Crossing Ltd. become immediately vested and exercis Salary and Guaranteed Minimum Bonus, law, for the remainder of the Term. (d) Resignation. Events w -----------

\par\pard\plain\fs16\plain\cf1\f50\fs16\ql cause ("For Cause Event") shall inclu de the following: \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (i) Executi ve is not elected or retained as Chairman, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql CEO and director of GC; or \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (ii) there i s a significant change in the nature or \par\pard\plain\fs16\plain\cf1\f50\fs16\ql scope of Executi ve's authority, powers, functions, duties \par\pard\plain\fs16\plain\cf1\f50\fs16\ql or responsibilit ies; or \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (iii) there i s a substantial and continued reduction in \par\pard\plain\fs16\plain\cf1\f50\fs16\ql support service, staff, secretarial assistance or office \par\pard\plain\fs16\plain\cf1\f50\fs16\ql space to a level at which Executive is unable to perform \par\pard\plain\fs16\plain\cf1\f50\fs16\ql his duties; or \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql -5\par\pard\plain\fs16 \page \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql (iv) GC or Global Cros sing Ltd. shall fail to grant the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql stock options req uired under this Agreement or GC shall fail \par\pard\plain\fs16\plain\cf1\f50\fs16\ql to make any payme nts due under this Agreement; or \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (v) A Chang e in Control (as defined in the Plan) shall \par\pard\plain\fs16\plain\cf1\f50\fs16\ql occur; or

\par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (vi) Any mat erial breach of this Agreement by GC. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Failure on the pa rt of GC or Global Crossing Ltd. to satisfy \par\pard\plain\fs16\plain\cf1\f50\fs16\ql the requirements of Paragraph 2 hereof shall be deemed a \par\pard\plain\fs16\plain\cf1\f50\fs16\ql material breach o f this Agreement by GC. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql For a period of 60 days after the occ urrence of a For Cause Event, Executive \par\pard\plain\fs16\plain\cf1\f50\fs16\ql shall have the right to deliver a not ice of breach to GC detailing the specific \par\pard\plain\fs16\plain\cf1\f50\fs16\ql For Cause Event that has occurred. In the event that GC does not cure the breach \par\pard\plain\fs16\plain\cf1\f50\fs16\ql within 60 days after receipt of notic e, then Executive shall have 10 days to \par\pard\plain\fs16\plain\cf1\f50\fs16\ql deliver notice of resignation. Upon s uch resignation, all Global Crossing Ltd. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Stock Options and GC Stock Options sh all become immediately vested and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql exercisable and Executive shall be en titled to receive his Base Salary and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Guaranteed Minimum Bonus, less such d eductions as may be required by law, for \par\pard\plain\fs16\plain\cf1\f50\fs16\ql the remainder of the Term. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 10. Confidentiality and Pr oprietary Information. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql -----------------------------------------\par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Executive shall comply in a ll respects with the terms and conditions \par\pard\plain\fs16\plain\cf1\f50\fs16\ql of the Proprietary Information Agreem ent. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 11. Miscellaneous. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ------------\par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (a) Notices. Any notice or other communications provided for in this \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql Agreement shall be in writing and dee med received upon receipt after delivery by \par\pard\plain\fs16\plain\cf1\f50\fs16\ql certified mail, return receipt reques ted, or by hand as follows: in the case of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql GC, to the CEO of Global Crossing Ltd . at 360 North Crescent Drive, Beverly \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Hills, California 90210 or such other address at which the office of the CEO of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Global Crossing Ltd. may be located i n the case of Executive, Suite 420, 235 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Montgomery Street, San Francisco, Cal ifornia 94104. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (b) Waiver. No waiver or modification in whole or in part of this

\par\pard\plain\fs16\plain\cf1\f50\fs16\ql

------

\par\pard\plain\fs16\plain\cf1\f50\fs16\ql Agreement, or any term or condition h ereof, shall be effective against any party \par\pard\plain\fs16\plain\cf1\f50\fs16\ql unless in writing and duly signed by the party sought to be bound. Any waiver or \par\pard\plain\fs16\plain\cf1\f50\fs16\ql any breach of any provision hereof, o r of any right or power by any party on one \par\pard\plain\fs16\plain\cf1\f50\fs16\ql or more occasions shall not be constr ued as a waiver of, or a bar to, the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql exercise of such right or power on an y other occasion or as a waiver of any \par\pard\plain\fs16\plain\cf1\f50\fs16\ql subsequent breach. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql -6\par\pard\plain\fs16 \page \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql (c) Severability. Each provisi on of this Agreement shall be \par\pard\plain\fs16\plain\cf1\f50\fs16\ql -----------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql interpreted so as to be effective and valid under applicable law, but if any \par\pard\plain\fs16\plain\cf1\f50\fs16\ql provision of this Agreement shall be held to be prohibited by or invalid under \par\pard\plain\fs16\plain\cf1\f50\fs16\ql applicable law, such provision shall be ineffective only to the extent of such \par\pard\plain\fs16\plain\cf1\f50\fs16\ql prohibition or invalidity, without in validating the remainder of such provision \par\pard\plain\fs16\plain\cf1\f50\fs16\ql of the remaining provisions of this A greement. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (d) Binding Effect; Succes sors. This Agreement shall inure to the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ------------------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql benefit of and shall be binding upon GC and its successors and assigns and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Executive and his heirs. Executive ma y not assign, transfer, or otherwise \par\pard\plain\fs16\plain\cf1\f50\fs16\ql dispose of this Agreement, or any of his other rights hereunder, without prior \par\pard\plain\fs16\plain\cf1\f50\fs16\ql written consent of GC, and any such a ttempted assignment, transfer or other \par\pard\plain\fs16\plain\cf1\f50\fs16\ql disposition without such consent shal l be null and void. GC shall be entitled to \par\pard\plain\fs16\plain\cf1\f50\fs16\ql assign this Agreement, without the pr ior written consent of Executive, in \par\pard\plain\fs16\plain\cf1\f50\fs16\ql connection with the merger or consoli dation of GC with another corporation, or \par\pard\plain\fs16\plain\cf1\f50\fs16\ql the sale of all or substantially all of the assets and business of GC to another \par\pard\plain\fs16\plain\cf1\f50\fs16\ql corporation or entity. The surviving or acquiring entity, or the purchaser of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql all or substantially all of the asset s and business of GC, shall assume all of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql the obligations of GC hereunder and t his Agreement shall continue in full force \par\pard\plain\fs16\plain\cf1\f50\fs16\ql and effect.

\par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql s Agreement sets forth the entire \par\pard\plain\fs16\plain\cf1\f50\fs16\ql

(e) Entire Agreement. Thi ----------------

\par\pard\plain\fs16\plain\cf1\f50\fs16\ql agreement between the parties hereto with respect to the subject matter hereof, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql and supersedes all other agreements a nd understandings, written or oral, between \par\pard\plain\fs16\plain\cf1\f50\fs16\ql the parties hereto with respect to th e subject matter hereof. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (f) Controlling Law. This Agreement shall be governed by, and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql --------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql construed and enforced in accordance with, the laws of the State of California. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (g) Executive Not Otherwis e Bound. Executive represents and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ---------------------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql warrants to GC that he is not bound b y any agreement or understanding, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql contractual, or otherwise (including but not limited to restrictions implied in \par\pard\plain\fs16\plain\cf1\f50\fs16\ql law), that would disallow or conflict in any way with Executive fulfilling his \par\pard\plain\fs16\plain\cf1\f50\fs16\ql obligations as expressed in this Agre ement, or his entering into the employment \par\pard\plain\fs16\plain\cf1\f50\fs16\ql relationship contemplated in the Agre ement. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (h) Post-Termination Oblig ation. After the termination or \par\pard\plain\fs16\plain\cf1\f50\fs16\ql -------------------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql resignation of Executive, Executive s hall not, either directly or indirectly, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql expressly or impliedly, at any time d uring a period of two years following such \par\pard\plain\fs16\plain\cf1\f50\fs16\ql termination or resignation, solicit i n any manner whatsoever the employment or \par\pard\plain\fs16\plain\cf1\f50\fs16\ql engagement of, either for his own acc ount or for any other person or entity, any \par\pard\plain\fs16\plain\cf1\f50\fs16\ql person who is employed by GC or an af filiated company. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (i) Binding Arbitration. Any controversy arising out of or relating \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ------------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql f shall be settled by binding arbitration \par\pard\plain\fs16\plain\cf1\f50\fs16\ql pute Resolution Rules of the American \par\pard\plain\fs16\plain\cf1\f50\fs16\ql eption that there will be a panel of three \par\pard\plain\fs16\plain\cf1\f50\fs16\ql to this Agreement or the breach hereo in accordance with the Employment Dis Arbitration Association (with the exc arbitrators rather than a single arbi

trator) and judgement upon the award \par\pard\plain\fs16\plain\cf1\f50\fs16\ql rendered may be entered in any court having \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql -7\par\pard\plain\fs16 \page \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql jurisdiction thereof. The costs of any such arbitration proceedings shall be \par\pard\plain\fs16\plain\cf1\f50\fs16\ql borne equally by GC and Executive. Ne ither party shall be entitled to recover \par\pard\plain\fs16\plain\cf1\f50\fs16\ql attorney's fee or costs expended in t he course of such arbitration or \par\pard\plain\fs16\plain\cf1\f50\fs16\ql enforcement of the awarded rendered t hereunder. The location for the arbitration \par\pard\plain\fs16\plain\cf1\f50\fs16\ql shall be San Francisco, California. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (j) Excise Tax. In the eve nt that any amounts you receive or are \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ---------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql deemed to receive in connection with a Change in Control or a termination or \par\pard\plain\fs16\plain\cf1\f50\fs16\ql resignation pursuant to subparagraph 9(b)(c) or (d) hereof (whether in respect \par\pard\plain\fs16\plain\cf1\f50\fs16\ql of stock options, severance or otherw ise) would give rise to any excise tax \par\pard\plain\fs16\plain\cf1\f50\fs16\ql under Section 4999 of the Internal Re venue Code, the Company shall make payment \par\pard\plain\fs16\plain\cf1\f50\fs16\ql to Executive of such amounts as are n ecessary for Executive to be wholly \par\pard\plain\fs16\plain\cf1\f50\fs16\ql protected from the costs of any such excise tax (and any attendant income taxes, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql penalties and/or interest charges). \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (k) Attorney Fees. GC sha ll reimburse Executive for reasonable \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql d $30,000, associated with the negotiation \par\pard\plain\fs16\plain\cf1\f50\fs16\ql any related agreements. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Executive have executed this Agreement as \par\pard\plain\fs16\plain\cf1\f50\fs16\ql en. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql TE: December 5, 1999 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql -------------------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16\plain\cf1\f50\fs16\ql attorney fees and costs, not to excee and preparation of this Agreement and IN WITNESS WHEREOF, GC and of the day and year first above writt GLOBALCENTER INC., a Delaware corporation By: /s/ Gary Winnick -------------------------Name: Gary Winnick -------------------------Title: Chairman DA

\par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql AGREED AND ACCEPTED: \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql /s/ Leo J. Hindery, Jr. DA TE: December 5, 1999 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql -------------------------------------------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql Leo J. Hindery, Jr. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql -8\par\pard\plain\fs16 \page{\*\bkmkstart doc_1_4}{\*\bkmkend doc_1_4} \par\pard\plain\fs16 \page \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql EXHIBIT 10.34 \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql CHANGE IN C ONTROL AGREEMENT \par\pard\plain\fs16 \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql This Agreement, dated _____ _____________________, 2000, is made by \par\pard\plain\fs16\plain\cf1\f50\fs16\ql and between Global Crossing Ltd., a B ermuda Corporation (as hereinafter defined, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql the "Corporation"), and _____________ __________ (the "Executive"). \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql WHEREAS, the Board (as here inafter defined) recognizes that the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql possibility of a Change in Control (a s hereinafter defined) of the Corporation \par\pard\plain\fs16\plain\cf1\f50\fs16\ql exists and that such possibility, and the uncertainty it may cause, may result \par\pard\plain\fs16\plain\cf1\f50\fs16\ql in the departure or distraction of ke y management employees of the Corporation; \par\pard\plain\fs16\plain\cf1\f50\fs16\ql and \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql WHEREAS, the Executive is a key management employee of the Corporation \par\pard\plain\fs16\plain\cf1\f50\fs16\ql or of a Subsidiary; and \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql WHEREAS, the Board has dete rmined that the Corporation should \par\pard\plain\fs16\plain\cf1\f50\fs16\ql encourage the continued employment of the Executive by the Corporation or a \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Subsidiary and the continued dedicati on of the Executive to his assigned duties \par\pard\plain\fs16\plain\cf1\f50\fs16\ql without distraction as a result of th e circumstances arising from the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql possibility of a Change in Control; \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql NOW THEREFORE, in considera tion of the premises and the mutual \par\pard\plain\fs16\plain\cf1\f50\fs16\ql covenants herein contained, the Corpo ration and the Executive hereby agree as \par\pard\plain\fs16\plain\cf1\f50\fs16\ql follows: \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 1. Defined Terms. For pu rposes of this Agreement, the following

\par\pard\plain\fs16\plain\cf1\f50\fs16\ql

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

\par\pard\plain\fs16\plain\cf1\f50\fs16\ql terms shall have the meanings indicat ed below: \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (A) "Board" shall mean the Board of Directors of the Corporation, as \par\pard\plain\fs16\plain\cf1\f50\fs16\ql constituted from time to time. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (B) "Cause" for terminatio n by the Corporation of the Executive's \par\pard\plain\fs16\plain\cf1\f50\fs16\ql employment shall mean (i) the wi llful failure by the Executive \par\pard\plain\fs16\plain\cf1\f50\fs16\ql substantially to perform the Exe cutive's duties with the Corporation or a \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Subsidiary, other than any failu re resulting from the Executive's \par\pard\plain\fs16\plain\cf1\f50\fs16\ql incapacity due to physical or me ntal illness or any actual or anticipated \par\pard\plain\fs16\plain\cf1\f50\fs16\ql failure after the issuance of a Notice of Termination for Good Reason by \par\pard\plain\fs16\plain\cf1\f50\fs16\ql the Executive in accordance with paragraph (A) of Section 6, that continues \par\pard\plain\fs16\plain\cf1\f50\fs16\ql for at least 30 days after the B oard delivers to the Executive a written \par\pard\plain\fs16\plain\cf1\f50\fs16\ql demand for performance that iden tifies specifically and in detail the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql manner in which the Board believ es that the Executive willfully has failed \par\pard\plain\fs16\plain\cf1\f50\fs16\ql substantially to perform the Exe cutive's duties, (ii) the willful engaging \par\pard\plain\fs16\plain\cf1\f50\fs16\ql by the Executive in misconduct t hat is demonstrably and materially \par\pard\plain\fs16\plain\cf1\f50\fs16\ql injurious to the Corporation or any Subsidiary, monetarily or otherwise or \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (iii) an act or acts on Executiv e's part constituting (x) a felony under \par\pard\plain\fs16\plain\cf1\f50\fs16\ql the laws of the United States or any state thereof or (y) a misdemeanor \par\pard\plain\fs16\plain\cf1\f50\fs16\ql involving moral turpitude. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (C) A "Change in Control" shall mean, if subsequent to the date of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql this Agreement: \par\pard\plain\fs16 \page \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql 2 \par\pard\plain\fs16 \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (i) any Person (other than a Person holding securities \par\pard\plain\fs16\plain\cf1\f50\fs16\ql representing 10% or more of the combined voting power of the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Corporation's outstanding s ecurities as of July 1, 1998, the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Corporation, any trustee or other fiduciary holding securities under \par\pard\plain\fs16\plain\cf1\f50\fs16\ql any of the Corporation's em ployee benefit plans, or any company owned, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql directly or indirectly, by

the Corporation's shareholders in \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ortions as their ownership of the stock of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql e Beneficial Owner (as such term is defined \par\pard\plain\fs16\plain\cf1\f50\fs16\ql urities Exchange Act of 1934, as amended), \par\pard\plain\fs16\plain\cf1\f50\fs16\ql the securities of the Corporation \par\pard\plain\fs16\plain\cf1\f50\fs16\ql the combined voting power of then \par\pard\plain\fs16\plain\cf1\f50\fs16\ql he Corporation (the "Voting Securities"), \par\pard\plain\fs16\plain\cf1\f50\fs16\ql of this Section 1(C)(i), the Voting \par\pard\plain\fs16\plain\cf1\f50\fs16\ql y from the Corporation by any Person shall \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ination of such Person's Beneficial \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ies (but such Voting Securities shall be \par\pard\plain\fs16\plain\cf1\f50\fs16\ql of the total number of Voting Securities \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql period of twenty-four months (not including \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 1998), individuals who at the beginning of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Board, and any new director (other than (A) \par\pard\plain\fs16\plain\cf1\f50\fs16\ql erson who has entered into an agreement \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ect a transaction described in clause (i), \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ition, (B) a director nominated by a Person \par\pard\plain\fs16\plain\cf1\f50\fs16\ql who publicly announces an intention to \par\pard\plain\fs16\plain\cf1\f50\fs16\ql actions (including, but not limited to, an \par\pard\plain\fs16\plain\cf1\f50\fs16\ql contest) which if consummated would \par\pard\plain\fs16\plain\cf1\f50\fs16\ql rol or (C) a director nominated by any \par\pard\plain\fs16\plain\cf1\f50\fs16\ql l Owner, directly or indirectly, of the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql on representing 10% or more of the combined \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ies of the Corporation) whose election by \par\pard\plain\fs16\plain\cf1\f50\fs16\ql election by the Corporation's shareholders \par\pard\plain\fs16\plain\cf1\f50\fs16\ql a vote of at least two-thirds (2/3) of the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ice who either were directors at the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql whose election or nomination for election \par\pard\plain\fs16\plain\cf1\f50\fs16\ql

substantially the same prop the Corporation) becomes th in Rule 13d-3 under the Sec directly or indirectly, of representing 20% or more of outstanding securities of t provided that for purposes Securities acquired directl be excluded from the determ Ownership of Voting Securit included in the calculation then outstanding), (ii) during any any period prior to July 1, such period constitute the a director nominated by a P with the Corporation to eff (iii) or (iv) of this defin (including the Corporation) take or to consider taking actual or threatened proxy constitute a Change in Cont Person who is the Beneficia securities of the Corporati voting power of the securit the Board or nomination for was approved in advance by directors then still in off beginning of the period or was previously so approved,

cease for any reason to constitute at \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ation of any transaction or series of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql e Corporation is merged or consolidated \par\pard\plain\fs16\plain\cf1\f50\fs16\ql er than a merger or consolidation which \par\pard\plain\fs16\plain\cf1\f50\fs16\ql tion's shareholders immediately prior \par\pard\plain\fs16\plain\cf1\f50\fs16\ql either by remaining outstanding or by being \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ities of the surviving entity) more than \par\pard\plain\fs16\plain\cf1\f50\fs16\ql power of the voting securities of the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ng entity outstanding immediately after \par\pard\plain\fs16\plain\cf1\f50\fs16\ql n in the same proportion such shareholders \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16 \page \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql e Corporation immediately prior to the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ion's complete liquidation or the sale or \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ion of all or substantially all of the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql than the Corporation's liquidation into a \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Internal Revenue Code of 1986, as amended \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql an Global Crossing, Ltd. and any successor \par\pard\plain\fs16\plain\cf1\f50\fs16\ql eration of law or otherwise. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql shall have the meaning stated in paragraph \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql deemed the reason for the termination by \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 's employment, if the Executive is unable \par\pard\plain\fs16\plain\cf1\f50\fs16\ql nful activity by reason of a medically \par\pard\plain\fs16\plain\cf1\f50\fs16\ql impairment which constitutes a permanent \par\pard\plain\fs16\plain\cf1\f50\fs16\ql

least a majority thereof, (iii) the consumm transactions under which th with any other company, oth would result in the Corpora thereto continuing to own ( converted into voting secur 65% of the combined voting Corporation or such survivi such merger or consolidatio held 3 the voting securities of th merger or consolidation, or (iv) the Corporat disposition by the Corporat Corporation's assets, other wholly--owned subsidiary. (D) "Code" shall mean the from time to time. (E) "Corporation" shall me to its business or assets, by op (F) "Date of Termination" (B) of Section 6 hereof. (G) "Disability" shall be the Corporation of the Executive to engage in any substantial gai determinable physical or mental and total disability, as defined

in Section 22(e)(3) of the Code (or any \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql the individual named in the first \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ination by the Executive of the Executive's \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ence, without the Executive's express \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ollowing: \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql nt to the Executive of any duties \par\pard\plain\fs16\plain\cf1\f50\fs16\ql tive's status as a key management employee \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Subsidiary or a substantial adverse \par\pard\plain\fs16\plain\cf1\f50\fs16\ql status of the Executive's responsibilities \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ately prior to the Change in Control; \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql in the Executive's annual base salary, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql g-term incentive opportunity to any amount \par\pard\plain\fs16\plain\cf1\f50\fs16\ql nnual base salary, target bonus, or long\par\pard\plain\fs16\plain\cf1\f50\fs16\ql respectively, as in effect immediately \par\pard\plain\fs16\plain\cf1\f50\fs16\ql rol. For this purpose, long-term incentive \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ured as of the date of grant using a \par\pard\plain\fs16\plain\cf1\f50\fs16\ql prior long-term incentive grant practices. \par\pard\plain\fs16 \page \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ion of the Executive's principal place of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql re than 35 miles from the location of such \par\pard\plain\fs16\plain\cf1\f50\fs16\ql nt immediately prior to the Change in \par\pard\plain\fs16\plain\cf1\f50\fs16\ql d business travel to an extent \par\pard\plain\fs16\plain\cf1\f50\fs16\ql th the Executive's business travel \par\pard\plain\fs16\plain\cf1\f50\fs16\ql or to the Change in Control; \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql to pay the Executive any portion of the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ation, or to pay or reimburse the Executive

successor section thereto). (H) "Executive" shall mean paragraph of this Agreement. (I) "Good Reason" for term employment shall mean the occurr written consent, of any of the f (i) the assignme inconsistent with the Execu of the Corporation or of a alteration in the nature or from those in effect immedi (ii) a reduction target annual bonus, or lon less than the Executive's a term incentive opportunity, prior to the Change in Cont opportunities shall be meas methodology consistent with

4 (iii) the relocat employment to a location mo principal place of employme Control, except for require substantially consistent wi obligations immediately pri (iv) the failure Executive's current compens

\par\pard\plain\fs16\plain\cf1\f50\fs16\ql y him for required business travel and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql th reasonable Corporation policy; \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql by the Corporation to continue to provide \par\pard\plain\fs16\plain\cf1\f50\fs16\ql as favorable in the aggregate and in all \par\pard\plain\fs16\plain\cf1\f50\fs16\ql enjoyed by the Executive under the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ife insurance, medical, health and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql her employee benefit plans in which the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql immediately prior to the Change in \par\pard\plain\fs16\plain\cf1\f50\fs16\ql the Corporation to provide the Executive \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ation days to which the Executive was \par\pard\plain\fs16\plain\cf1\f50\fs16\ql the Corporation's normal vacation policy \par\pard\plain\fs16\plain\cf1\f50\fs16\ql to the Change in Control; or \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ed termination by the Corporation of the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql is not effected in accordance with a \par\pard\plain\fs16\plain\cf1\f50\fs16\ql fying the requirements of paragraph (A) of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql " shall have the meaning stated in \par\pard\plain\fs16\plain\cf1\f50\fs16\ql f. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql l mean the occurrence of both of (i) a \par\pard\plain\fs16\plain\cf1\f50\fs16\ql m of this Agreement and (ii) at any time on \par\pard\plain\fs16\plain\cf1\f50\fs16\ql but before the end of the Protected \par\pard\plain\fs16\plain\cf1\f50\fs16\ql xecutive's employment with the Corporation \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ther than (A) by the Executive without Good \par\pard\plain\fs16\plain\cf1\f50\fs16\ql or a Subsidiary) as a result of the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ith Cause or (C) as a result of the death \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ver, that if the Executive's employment is \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Control at the request of a Person engaged \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ansactions that would result in a Change in \par\pard\plain\fs16\plain\cf1\f50\fs16\ql

for any expenses incurred b documented in accordance wi (v) the failure

the Executive with benefits material respects as those Corporation's retirement, l accident, disability, or ot Executive was participating Control; or the failure by with the number of paid vac entitled in accordance with in effect immediately prior (vi) any purport Executive's employment that Notice of Termination satis Section 6 hereof. (J) "Notice of Termination paragraph (A) of Section 6 hereo (K) "Payment Trigger" shal Change in Control during the ter or after such Change in Control, Period, the termination of the E or a Subsidiary for any reason o Reason, (B) by the Corporation ( Disability of the Executive or w of the Executive; provided, howe terminated prior to a Change in in a transaction or series of tr Control, such termination shall

be deemed to occur during the Protected \par\pard\plain\fs16\plain\cf1\f50\fs16\ql utive's employment from the Corporation to \par\pard\plain\fs16\plain\cf1\f50\fs16\ql to the Corporation, or from one Subsidiary \par\pard\plain\fs16\plain\cf1\f50\fs16\ql by itself constitute a termination of the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ses of this Agreement. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql e meaning used in Sections 13(d) and 14(d) \par\pard\plain\fs16\plain\cf1\f50\fs16\ql f 1934, as amended from time to time. \par\pard\plain\fs16 \page \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ll mean the 24-month period immediately \par\pard\plain\fs16\plain\cf1\f50\fs16\ql hange in Control occurs. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql n any corporation or other entity or \par\pard\plain\fs16\plain\cf1\f50\fs16\ql or unincorporated, of which at least a \par\pard\plain\fs16\plain\cf1\f50\fs16\ql her interests having by their terms \par\pard\plain\fs16\plain\cf1\f50\fs16\ql majority of the board of directors or \par\pard\plain\fs16\plain\cf1\f50\fs16\ql with respect to such corporation or other \par\pard\plain\fs16\plain\cf1\f50\fs16\ql the Corporation, directly or indirectly. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql is Agreement will become effective on the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql

Period. Any transfer of the Exec a Subsidiary, from a Subsidiary to another Subsidiary shall not Executive's employment for purpo (L) "Person" shall have th of the Securities Exchange Act o

5 (M) "Protected Period" sha following the month in which a C (N) "Subsidiary" shall mea enterprise, whether incorporated majority of the securities or ot ordinary voting power to elect a others serving similar functions entity or enterprise is owned by 2. Term of Agreement. Th -----------------

\par\pard\plain\fs16\plain\cf1\f50\fs16\ql date hereof and shall continue in eff ect through December 31, 2001 (the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql "Initial Term"). \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql The Initial Term of this Ag reement automatically shall be extended for \par\pard\plain\fs16\plain\cf1\f50\fs16\ql one (1) additional year at the end of the Initial Term, and then again after \par\pard\plain\fs16\plain\cf1\f50\fs16\ql each successive one (1) year period t hereafter (each such one (1) year period \par\pard\plain\fs16\plain\cf1\f50\fs16\ql following the Initial Term a "Success ive Period"). However, either party may \par\pard\plain\fs16\plain\cf1\f50\fs16\ql terminate this Agreement at the end o f the Initial Term, or at the end of any \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Successive Period thereafter, by givi ng the other party written notice of intent \par\pard\plain\fs16\plain\cf1\f50\fs16\ql not to renew, delivered at least one (1) year prior to the end of such Initial \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Term or Successive Period. If such no tice is properly delivered by either party,

\par\pard\plain\fs16\plain\cf1\f50\fs16\ql this Agreement, along with all corres ponding rights, duties, and covenants shall \par\pard\plain\fs16\plain\cf1\f50\fs16\ql automatically expire at the end of th e Initial Term or Successive Period then in \par\pard\plain\fs16\plain\cf1\f50\fs16\ql progress. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql In the event that a Change in Control of the Corporation occurs (as \par\pard\plain\fs16\plain\cf1\f50\fs16\ql such term is herein defined) during t he Initial Term or any Successive Period, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql upon the effective date of such Chang e in Control, the term of this Agreement \par\pard\plain\fs16\plain\cf1\f50\fs16\ql shall automatically and irrevocably b e renewed for a period of twenty-four (24) \par\pard\plain\fs16\plain\cf1\f50\fs16\ql full calendar months from the effecti ve date of such Change in Control. This \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Agreement shall thereafter automatica lly terminate following the twenty-four \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (24) month Change-in-Control renewal period. Further, this Agreement shall be \par\pard\plain\fs16\plain\cf1\f50\fs16\ql assigned to, and shall be assumed by the purchaser in such Change in Control, as \par\pard\plain\fs16\plain\cf1\f50\fs16\ql further provided in Section 9 herein. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 3. General Provisions. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql -----------------\par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (A) The Corporation hereby represents and warrants to the Executive \par\pard\plain\fs16\plain\cf1\f50\fs16\ql as follows: The execution and deliver y of this Agreement and the performance by \par\pard\plain\fs16\plain\cf1\f50\fs16\ql the Corporation of the actions contem plated hereby have been duly authorized by \par\pard\plain\fs16\plain\cf1\f50\fs16\ql all necessary corporate action on the part of the Corporation. This Agreement is \par\pard\plain\fs16\plain\cf1\f50\fs16\ql a legal, valid and legally binding ob ligation of the Corporation enforceable in \par\pard\plain\fs16\plain\cf1\f50\fs16\ql accordance with its terms. Neither th e execution or delivery of this Agreement \par\pard\plain\fs16\plain\cf1\f50\fs16\ql nor the consummation by the Corporati on of the actions contemplated hereby (i) \par\pard\plain\fs16\plain\cf1\f50\fs16\ql will violate any provision of the cer tificate of incorporation or bye-laws (or \par\pard\plain\fs16\plain\cf1\f50\fs16\ql other charter documents) of the Corpo ration, (ii) will violate or be in conflict \par\pard\plain\fs16\plain\cf1\f50\fs16\ql with any applicable law or any judgme nt, decree, injunction or order of any \par\pard\plain\fs16\plain\cf1\f50\fs16\ql court or governmental agency or autho rity, or (iii) will violate or conflict \par\pard\plain\fs16\plain\cf1\f50\fs16\ql with or constitute a default (or an e vent which, with notice or lapse of time or \par\pard\plain\fs16\plain\cf1\f50\fs16\ql both, would constitute a default) und er or will result in the termination of, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql accelerate the performance \par\pard\plain\fs16 \page \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql 6 \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql required by, or result in the creatio n of any lien, security interest, charge or

\par\pard\plain\fs16\plain\cf1\f50\fs16\ql encumbrance upon any of the assets or properties of the Corporation under, any \par\pard\plain\fs16\plain\cf1\f50\fs16\ql term or provision of the certificate of incorporation or bye-laws (or other \par\pard\plain\fs16\plain\cf1\f50\fs16\ql charter documents) of the Corporation or of any contract, commitment, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql understanding, arrangement, agreement or restriction of any kind or character to \par\pard\plain\fs16\plain\cf1\f50\fs16\ql which the Corporation is a party or b y which the Corporation or any of its \par\pard\plain\fs16\plain\cf1\f50\fs16\ql properties or assets may be bound or affected. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (B) No amount or benefit s hall be payable under this Agreement unless \par\pard\plain\fs16\plain\cf1\f50\fs16\ql there shall have occurred a Payment T rigger during the term of this Agreement. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql In no event shall payments in accorda nce with this Agreement be made in respect \par\pard\plain\fs16\plain\cf1\f50\fs16\ql of more than one Payment Trigger. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (C) This Agreement shall n ot be constructed as creating an express or \par\pard\plain\fs16\plain\cf1\f50\fs16\ql implied contract of employment and, e xcept as otherwise agreed in writing \par\pard\plain\fs16\plain\cf1\f50\fs16\ql between the Executive and the Corpora tion, the Executive shall not have any \par\pard\plain\fs16\plain\cf1\f50\fs16\ql right to be retained in the employ of the Corporation or of a Subsidiary. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Notwithstanding the immediately prece ding sentence or any other provision of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql this Agreement, no purported terminat ion of the Executive's employment that is \par\pard\plain\fs16\plain\cf1\f50\fs16\ql not effected in accordance with a Not ice of Termination satisfying paragraph (A) \par\pard\plain\fs16\plain\cf1\f50\fs16\ql of Section 6 shall be effective for p urposes of this Agreement. The Executive's \par\pard\plain\fs16\plain\cf1\f50\fs16\ql right, following the occurrence of a Change in Control, to terminate his \par\pard\plain\fs16\plain\cf1\f50\fs16\ql employment under this Agreement for G ood Reason shall not be affected by the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Executive's Disability or incapacity. The Executive's continued employment shall \par\pard\plain\fs16\plain\cf1\f50\fs16\ql not constitute consent to, or a waive r of rights with respect to, any act or \par\pard\plain\fs16\plain\cf1\f50\fs16\ql failure to act constituting Good Reas on under this Agreement. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 4. Payments Due Upon a Pa yment Trigger. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ---------------------------------\par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (A) The Corporation shall pay to the Executive the payments described \par\pard\plain\fs16\plain\cf1\f50\fs16\ql in this Section 4 upon the occurrence of a Payment Trigger during the term of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql this Agreement. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (B) Upon the occurrence of

a Payment Trigger during the term of this \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Agreement, the Corporation shall pay to the Executive a lump sum payment, in \par\pard\plain\fs16\plain\cf1\f50\fs16\ql cash, equal to the product of: \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (i) three multip lied by \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (ii) the sum of \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (a) th e higher of the Executive's (1) annual base \par\pard\plain\fs16\plain\cf1\f50\fs16\ql salary in ef fect immediately prior to the occurrence of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql the Change i n Control or (2) the Executive's annual \par\pard\plain\fs16\plain\cf1\f50\fs16\ql base salary in effect immediately prior to the Payment \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Trigger, plu s \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (b) th e higher of (1) the Executive's target \par\pard\plain\fs16\plain\cf1\f50\fs16\ql annual bonus for the fiscal year (or other measuring \par\pard\plain\fs16\plain\cf1\f50\fs16\ql period) prio r to the fiscal \par\pard\plain\fs16 \page \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql 7 \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql year (or oth er measuring period) in which the Change in \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Control occu rs or (2) the Executive's target annual \par\pard\plain\fs16\plain\cf1\f50\fs16\ql bonus for th e fiscal year (or other measuring period) \par\pard\plain\fs16\plain\cf1\f50\fs16\ql in which the Payment Trigger occurs. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql The amount determined under the foregoing provisions of this paragraph \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (B) shall be reduced by any cash seve rance benefit otherwise paid to the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Executive under any applicable severa nce plan or other severance arrangement. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql For purposes of this paragraph (B), a mounts payable to the Executive pursuant to \par\pard\plain\fs16\plain\cf1\f50\fs16\ql an annual bonus plan for the fiscal y ear or other measuring period described in \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (1) or (2) above, as applicable (the "applicable year/period"), shall not \par\pard\plain\fs16\plain\cf1\f50\fs16\ql include amounts attributable to a fis cal year or other measuring period that \par\pard\plain\fs16\plain\cf1\f50\fs16\ql commenced prior to the applicable yea r/period and that become payable during the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql applicable year/period. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (C) Notwithstanding any pr

ovision of any incentive compensation plan, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql including, without limitation, any pr ovision of any incentive compensation plan \par\pard\plain\fs16\plain\cf1\f50\fs16\ql conditioning the receipt of any payme nt upon continued employment after the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql completed fiscal year or other measur ing period, the Corporation shall pay to \par\pard\plain\fs16\plain\cf1\f50\fs16\ql the Executive a lump sum amount, in c ash, equal to the amount of any incentive \par\pard\plain\fs16\plain\cf1\f50\fs16\ql compensation that has been allocated or awarded to the Executive for a completed \par\pard\plain\fs16\plain\cf1\f50\fs16\ql fiscal year or other measuring period , preceding the occurrence of a Payment \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Trigger under any incentive compensat ion plan but has not yet been paid to the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Executive. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (D) For the fiscal year or other measuring period during which the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Payment Trigger occurs, the Executive shall be entitled to a pro rata bonus \par\pard\plain\fs16\plain\cf1\f50\fs16\ql equal to the number of calendar days elapsed during the fiscal year or other \par\pard\plain\fs16\plain\cf1\f50\fs16\ql measuring period prior to the Date of Termination divided by the total days in \par\pard\plain\fs16\plain\cf1\f50\fs16\ql the fiscal year or measuring period, as the case may be, and multiplied by the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql target bonus payable for such period. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (E) The payments provided for in paragraphs (B), (C) and (D) of this \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Section 4 shall be made not later tha n the fifth day following the occurrence of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql a Payment Trigger, unless the amounts of such payments cannot be finally \par\pard\plain\fs16\plain\cf1\f50\fs16\ql determined on or before that day, in which case, the Corporation shall pay to \par\pard\plain\fs16\plain\cf1\f50\fs16\ql the Executive on that day an estimate , as reasonably determined in good faith by \par\pard\plain\fs16\plain\cf1\f50\fs16\ql the Corporation, of the minimum amoun t of the payments to which the Executive is \par\pard\plain\fs16\plain\cf1\f50\fs16\ql clearly entitled and shall pay the re mainder of the payments (together with \par\pard\plain\fs16\plain\cf1\f50\fs16\ql interest at the rate provided in sect ion 1274(b)(2)(B) of the Code) as soon as \par\pard\plain\fs16\plain\cf1\f50\fs16\ql the amount thereof can be determined but in no event later than the thirtieth \par\pard\plain\fs16\plain\cf1\f50\fs16\ql day after the occurrence of a Payment Trigger. In the event the amount of the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql estimated payments exceeds the amount subsequently determined to have been due, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql the excess shall constitute a loan by the Corporation to the Executive, payable \par\pard\plain\fs16\plain\cf1\f50\fs16\ql on the fifth business day after deman d by the Corporation (together with \par\pard\plain\fs16\plain\cf1\f50\fs16\ql interest at the rate provided in sect ion 1274(b)(2)(B) of the Code). At the time \par\pard\plain\fs16\plain\cf1\f50\fs16\ql that payments are made under this Sec tion 4, the Corporation shall provide the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Executive with a written statement se

tting forth the manner in which the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql payments were calculated and the basi s for the calculations including, without \par\pard\plain\fs16\plain\cf1\f50\fs16\ql limitation, any opinions or other adv ice the Corporation has received from any \par\pard\plain\fs16\plain\cf1\f50\fs16\ql outside counsel, auditors or consulta nts (and any opinions or advice that are in \par\pard\plain\fs16\plain\cf1\f50\fs16\ql writing shall be attached to the stat ement). \par\pard\plain\fs16 \page \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql 8 \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (F) (i) In addition to th e payments provided for above in this \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Section 4, the Corporation shall prov ide or arrange to provide, at the same cost \par\pard\plain\fs16\plain\cf1\f50\fs16\ql to the Executive, and at the same cov erage level as in effect as of the Date of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Termination (subject to changes in co verage levels applicable to all employees \par\pard\plain\fs16\plain\cf1\f50\fs16\ql who are similarly situated to the Exe cutive prior to the Date of Termination), a \par\pard\plain\fs16\plain\cf1\f50\fs16\ql continuation of the Executive's (and the Executive's eligible dependents') \par\pard\plain\fs16\plain\cf1\f50\fs16\ql health and life insurance coverages f or [thirty-six (36)] [twenty-four (24)] \par\pard\plain\fs16\plain\cf1\f50\fs16\ql months from the Date of Termination. The applicable COBRA health insurance \par\pard\plain\fs16\plain\cf1\f50\fs16\ql benefit continuation period shall com mence at the beginning of this [thirty-six \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (36)] [twenty-four (24)] month benefi t continuation period. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (ii) The providing of these health and life insurance benefits by the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Corporation shall be discontinued pri or to the end of the [thirty-six (36)] \par\pard\plain\fs16\plain\cf1\f50\fs16\ql [twenty-four (24)] month continuation period to the extent that the Executive \par\pard\plain\fs16\plain\cf1\f50\fs16\ql becomes covered under the health and/ or life insurance coverages of a subsequent \par\pard\plain\fs16\plain\cf1\f50\fs16\ql employer; provided that such subseque nt employer health insurance coverage does \par\pard\plain\fs16\plain\cf1\f50\fs16\ql not contain any exclusion or limitati on with respect to any preexisting \par\pard\plain\fs16\plain\cf1\f50\fs16\ql condition of the Executive or the Exe cutive's eligible dependents. For purposes \par\pard\plain\fs16\plain\cf1\f50\fs16\ql of enforcing this offset provision, t he Executive shall have a duty to promptly \par\pard\plain\fs16\plain\cf1\f50\fs16\ql inform the Corporation in writing if the Executive becomes covered under the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql health and/or life insurance coverage s of a subsequent employer. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 5. Gross-Up Payments. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ----------------\par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (A) In the event it shall b e determined that any payment or

\par\pard\plain\fs16\plain\cf1\f50\fs16\ql distribution by the Corporation or ot her amount with respect to the Corporation \par\pard\plain\fs16\plain\cf1\f50\fs16\ql to or for the benefit of the Executiv e, whether paid or payable or distributed \par\pard\plain\fs16\plain\cf1\f50\fs16\ql or distributable pursuant to the term s of this Agreement or otherwise, but \par\pard\plain\fs16\plain\cf1\f50\fs16\ql determined without regard to any addi tional payments required under this \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Section 5 (a "Payment"), is (or will be) subject to the excise tax imposed by \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Section 4999 of the Code or any inter est or penalties are (or will be) incurred \par\pard\plain\fs16\plain\cf1\f50\fs16\ql by the Executive with respect to the excise tax imposed by Section 4999 of the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Code with respect to the Corporation (the excise tax, together with any interest \par\pard\plain\fs16\plain\cf1\f50\fs16\ql and penalties, are hereinafter collec tively referred to as the "Excise Tax"), \par\pard\plain\fs16\plain\cf1\f50\fs16\ql the Executive shall be entitled to re ceive an additional cash payment (a "Gross\par\pard\plain\fs16\plain\cf1\f50\fs16\ql Up Payment") from the Corporation in an amount equal to the sum of the Excise \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Tax and an amount sufficient to pay t he cumulative Excise Tax and all cumulative \par\pard\plain\fs16\plain\cf1\f50\fs16\ql income taxes (including any interest and penalties imposed with respect to such \par\pard\plain\fs16\plain\cf1\f50\fs16\ql taxes) relating to the Gross-Up Payme nt so that the net amount retained by the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Executive is equal to all payments to which Executive is entitled pursuant to \par\pard\plain\fs16\plain\cf1\f50\fs16\ql the terms of this Agreement (excludin g the Gross-Up Payment) or otherwise less \par\pard\plain\fs16\plain\cf1\f50\fs16\ql income taxes (but not reduced by the Excise Tax or by income taxes attributable \par\pard\plain\fs16\plain\cf1\f50\fs16\ql to the Gross-Up Payment). \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (B) Subject to the provisi ons of paragraph (C) of this Section 5, all \par\pard\plain\fs16\plain\cf1\f50\fs16\ql determinations required to be made un der this Section 5, including whether and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql when a Gross-Up Payment is required a nd the amount of such Gross-Up Payment and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql the assumptions to be utilized in arr iving at the determination, shall be made \par\pard\plain\fs16\plain\cf1\f50\fs16\ql by a nationally recognized certified public accounting firm selected by the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Corporation with the consent of the E xecutive, which should not unreasonably be \par\pard\plain\fs16\plain\cf1\f50\fs16\ql withheld (the "Accounting Firm") whic h shall provide detailed supporting \par\pard\plain\fs16\plain\cf1\f50\fs16\ql calculations both to the Corporation and the Executive within 30 days after the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql receipt of notice \par\pard\plain\fs16 \page \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql 9 \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql from the Executive that there has bee n a Payment, or such earlier time as is \par\pard\plain\fs16\plain\cf1\f50\fs16\ql requested by the Corporation. All fee

s and expenses of the Accounting Firm shall \par\pard\plain\fs16\plain\cf1\f50\fs16\ql be borne solely by the Corporation. T he Corporation, as determined in accordance \par\pard\plain\fs16\plain\cf1\f50\fs16\ql with this Section 5, shall pay any Gr oss-Up Payment to the Executive within five \par\pard\plain\fs16\plain\cf1\f50\fs16\ql days after the receipt of the Account ing Firm's determination. If the Accounting \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Firm determines that no Excise Tax is payable by the Executive, it shall so \par\pard\plain\fs16\plain\cf1\f50\fs16\ql indicate to the Executive in writing. Any determination by the Accounting Firm \par\pard\plain\fs16\plain\cf1\f50\fs16\ql shall be binding upon the Corporation and the Executive. As a result of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql uncertainty in the application of Sec tion 4999 of the Code at the time of the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql initial determination by the Accounti ng Firm, it is possible that Gross-Up \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Payments that the Corporation should have made will not have been made (an \par\pard\plain\fs16\plain\cf1\f50\fs16\ql "Underpayment"), consistent with the calculations required to be made hereunder. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql In the event the Corporation exhausts its remedies in accordance with paragraph \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (C) of this Section 5 and the Executi ve thereafter is required to make a payment \par\pard\plain\fs16\plain\cf1\f50\fs16\ql of any Excise Tax, the Accounting Fir m shall determine the amount of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Underpayment that has occurred and th e Underpayment shall be promptly paid by \par\pard\plain\fs16\plain\cf1\f50\fs16\ql the Corporation to or for the benefit of the Executive. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (C) The Executive shall no tify the Corporation in writing of any \par\pard\plain\fs16\plain\cf1\f50\fs16\ql claim by the Internal Revenue Service that, if successful, would require a \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Gross-Up Payment (that has not alread y been paid by the Corporation). The \par\pard\plain\fs16\plain\cf1\f50\fs16\ql notification shall be given as soon a s practicable but no later than ten \par\pard\plain\fs16\plain\cf1\f50\fs16\ql business days after the Executive is informed in writing of the claim and shall \par\pard\plain\fs16\plain\cf1\f50\fs16\ql apprise the Corporation of the nature of the claim and the date on which the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql claim is requested to be paid. The Ex ecutive shall not pay the claim prior to \par\pard\plain\fs16\plain\cf1\f50\fs16\ql the expiration of the 30-day period f ollowing the date on which the Executive \par\pard\plain\fs16\plain\cf1\f50\fs16\ql gives notice to the Corporation or an y shorter period ending on the date that \par\pard\plain\fs16\plain\cf1\f50\fs16\ql any payment of taxes with respect to the claim is due. If the Corporation \par\pard\plain\fs16\plain\cf1\f50\fs16\ql notifies the Executive in writing pri or to the expiration of the 30-day period \par\pard\plain\fs16\plain\cf1\f50\fs16\ql that it desires to contest the claim, the Executive shall: \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (i) give the Co rporation any information reasonably \par\pard\plain\fs16\plain\cf1\f50\fs16\ql requested by the Corporatio

n relating to the claim; \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (ii) take any ac tion in connection with contesting the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql claim as the Corporation sh all reasonably request in writing from time \par\pard\plain\fs16\plain\cf1\f50\fs16\ql to time, including, without limitation, accepting legal representation \par\pard\plain\fs16\plain\cf1\f50\fs16\ql with respect to the claim b y an attorney reasonably selected by the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Corporation; \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (iii) cooperate w ith the Corporation in good faith in order \par\pard\plain\fs16\plain\cf1\f50\fs16\ql effectively to contest the claim; and \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (iv) permit the Corporation to participate in any \par\pard\plain\fs16\plain\cf1\f50\fs16\ql proceedings relating to the claim. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql The Corporation shall bear and pay directly all costs and expenses \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (including additional interest and pe nalties) incurred in connection with the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql contest and shall indemnify and hold the Executive harmless, on an after-tax \par\pard\plain\fs16\plain\cf1\f50\fs16\ql basis, for any Excise Tax or income t ax (including interest and penalties with \par\pard\plain\fs16\plain\cf1\f50\fs16\ql respect thereto) imposed as a result of the representation and payment \par\pard\plain\fs16 \page \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql 10 \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql of costs and expenses. Without limita tion of the forgoing provisions of this \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Section 5, the Corporation shall cont rol all proceedings taken in connection \par\pard\plain\fs16\plain\cf1\f50\fs16\ql with the contest and, at its sole opt ion, may pursue or forego any and all \par\pard\plain\fs16\plain\cf1\f50\fs16\ql administrative appeals, proceedings, hearings, and conferences with the taxing \par\pard\plain\fs16\plain\cf1\f50\fs16\ql authority in respect of the claim and may, at its sole option, either direct the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Executive to pay the tax claimed and sue for a refund or contest the claim in \par\pard\plain\fs16\plain\cf1\f50\fs16\ql any permissible manner, and the Execu tive agrees to prosecute the contest to a \par\pard\plain\fs16\plain\cf1\f50\fs16\ql determination before any administrati ve tribunal, in a court of initial \par\pard\plain\fs16\plain\cf1\f50\fs16\ql jurisdiction and in one or more appel late courts, as the Corporation shall \par\pard\plain\fs16\plain\cf1\f50\fs16\ql determine. If the Corporation directs the Executive to pay the claim and sue for \par\pard\plain\fs16\plain\cf1\f50\fs16\ql a refund, the Corporation shall advan ce the amount of the payment to the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Executive, on an interest-free basis, and shall indemnify and hold the Executive

\par\pard\plain\fs16\plain\cf1\f50\fs16\ql harmless, on an after-tax basis, from any Excise Tax or income tax (including \par\pard\plain\fs16\plain\cf1\f50\fs16\ql interest or penalties with respect th ereto) imposed with respect to the advance \par\pard\plain\fs16\plain\cf1\f50\fs16\ql or with respect to any imputed income with respect to the advance; and any \par\pard\plain\fs16\plain\cf1\f50\fs16\ql extension of the statute of limitatio ns relating to payment of taxes for the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql taxable year of the Executive with re spect to which the contested amount is \par\pard\plain\fs16\plain\cf1\f50\fs16\ql claimed to be due shall be limited so lely to the contested amount. The \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Corporation's control of the contest shall be limited to issues with respect to \par\pard\plain\fs16\plain\cf1\f50\fs16\ql which a Gross-Up Payment would be pay able hereunder and the Executive shall be \par\pard\plain\fs16\plain\cf1\f50\fs16\ql entitled to settle or contest, as the case may be, any other issue raised by the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Internal Revenue Service or any other taxing authority. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (D) If, after the receipt by the Executive of an amount advanced by \par\pard\plain\fs16\plain\cf1\f50\fs16\ql the Corporation pursuant to paragraph (C) of this Section 5, the Executive \par\pard\plain\fs16\plain\cf1\f50\fs16\ql becomes entitled to receive any refun d with respect to the claim, the Executive \par\pard\plain\fs16\plain\cf1\f50\fs16\ql shall, subject to the Corporation's c ompliance with the requirements of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql paragraph (C) of this Section 5, prom ptly pay to the Corporation the amount of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql the refund (together with any interes t paid or credited thereon after taxes \par\pard\plain\fs16\plain\cf1\f50\fs16\ql applicable thereto). If, after the re ceipt by the Executive of an amount \par\pard\plain\fs16\plain\cf1\f50\fs16\ql advanced by the Corporation pursuant to paragraph (C) of this Section 5, a \par\pard\plain\fs16\plain\cf1\f50\fs16\ql determination is made that the Execut ive shall not be entitled to any refund \par\pard\plain\fs16\plain\cf1\f50\fs16\ql with respect to the claim and the Cor poration does not notify the Executive in \par\pard\plain\fs16\plain\cf1\f50\fs16\ql writing of its intent to contest the denial of refund prior to the expiration of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 30 days after the determination, then the advance shall be forgiven and shall \par\pard\plain\fs16\plain\cf1\f50\fs16\ql not be required to be repaid and the amount of the advance shall offset, to the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql extent thereof, the amount of Gross-U p Payment required to be paid. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 6. Termination Procedures . \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ---------------------\par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (A) During the term of thi s Agreement, any purported termination of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql the Executive's employment (other tha n by reason of death) shall be communicated \par\pard\plain\fs16\plain\cf1\f50\fs16\ql by written Notice of Termination from

one party hereto to the other party hereto \par\pard\plain\fs16\plain\cf1\f50\fs16\ql in accordance with Section 10 hereof. For purposes of this Agreement, a "Notice \par\pard\plain\fs16\plain\cf1\f50\fs16\ql of Termination" shall mean a written notice that indicates the specific \par\pard\plain\fs16\plain\cf1\f50\fs16\ql termination provision in this Agreeme nt relied upon, and, if applicable, the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql notice shall set forth in reasonable detail the facts and circumstances claimed \par\pard\plain\fs16\plain\cf1\f50\fs16\ql to provide a basis for termination of the Executive's employment under the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql provision so indicated. Further, a No tice of Termination for Cause shall include \par\pard\plain\fs16\plain\cf1\f50\fs16\ql a copy of a resolution duly adopted b y the affirmative vote of not less than a \par\pard\plain\fs16\plain\cf1\f50\fs16\ql majority of the entire membership of the Board at a meeting of the Board finding \par\pard\plain\fs16\plain\cf1\f50\fs16\ql that, in the informed, reasonable, go od faith judgment of the Board, \par\pard\plain\fs16 \page \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql 11 \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql the Executive was guilty of conduct s et forth in the definition of Cause in \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Section 1(B), and specifying the part iculars thereof in detail. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (B) "Date of Termination" with respect to any purported termination \par\pard\plain\fs16\plain\cf1\f50\fs16\ql of the Executive's employment during the term of the Agreement (other than by \par\pard\plain\fs16\plain\cf1\f50\fs16\ql reason of death) shall mean (i) if th e Executive's employment is terminated for \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Disability, 20 business days after No tice of Termination is given (provided that \par\pard\plain\fs16\plain\cf1\f50\fs16\ql the Executive shall not have returned to the full-time performance of the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Executive's duties during that 20 bus iness day period) and (ii) if the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Executive's employment is terminated for any other reason, the date specified in \par\pard\plain\fs16\plain\cf1\f50\fs16\ql the Notice of Termination, which, in the case of a termination by the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Corporation, shall not be less than t en business days except in the case of a \par\pard\plain\fs16\plain\cf1\f50\fs16\ql termination for Cause, and, in the ca se of a termination by the Executive, shall \par\pard\plain\fs16\plain\cf1\f50\fs16\ql not be less than ten business days no r more than 20 business days, respectively, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql after the date such notice of Termina tion is given. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 7. No Mitigation. The Ex ecutive shall not be required to seek other \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql employment or to attempt in any way t o reduce any amounts payable to the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Executive by the Corporation pursuant

to this Agreement. Further, except as \par\pard\plain\fs16\plain\cf1\f50\fs16\ql provided in Section 4(E), the amount of any payment or benefit provided for in \par\pard\plain\fs16\plain\cf1\f50\fs16\ql this Agreement shall not be reduced b y any compensation earned by the Executive \par\pard\plain\fs16\plain\cf1\f50\fs16\ql as the result of employment by anothe r employer, by retirement benefits, by \par\pard\plain\fs16\plain\cf1\f50\fs16\ql offset against any amount claimed to be owed by the Executive to the Corporation \par\pard\plain\fs16\plain\cf1\f50\fs16\ql or a Subsidiary, or otherwise. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 8. Disputes. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql -------\par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (A) If a dispute or contro versy arises out of or in connection with \par\pard\plain\fs16\plain\cf1\f50\fs16\ql this Agreement, the parties shall fir st attempt in good faith to settle the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql dispute or controversy by mediation u nder the Commercial Mediation Rules of the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql American Arbitration Association befo re resorting to arbitration or litigation. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Thereafter, any remaining unresolved dispute or controversy arising out of or in \par\pard\plain\fs16\plain\cf1\f50\fs16\ql connection with this Agreement shall, upon a written notice from the Executive \par\pard\plain\fs16\plain\cf1\f50\fs16\ql to the Corporation either before suit thereupon is filed or within 20 business \par\pard\plain\fs16\plain\cf1\f50\fs16\ql days thereafter, be settled exclusive ly by arbitration in accordance with the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Commercial Arbitration Rules of the A merican Arbitration Association in a city \par\pard\plain\fs16\plain\cf1\f50\fs16\ql located within the continental United States designated by the Executive. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Judgment may be entered on the arbitr ator's award in any court having \par\pard\plain\fs16\plain\cf1\f50\fs16\ql jurisdiction. The Executive shall, ho wever, be entitled to seek specific \par\pard\plain\fs16\plain\cf1\f50\fs16\ql performance of the Corporation's obli gations hereunder during the pendency of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql any dispute or controversy arising un der or in connection with this Agreement. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (B) Any legal action conce rning this Agreement, other than a \par\pard\plain\fs16\plain\cf1\f50\fs16\ql mediation or an arbitration described in paragraph (A) of this Section 8, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql whether instituted by the Corporation or the Executive, shall be brought and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql resolved only in a state court of com petent jurisdiction located in the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql territory that encompasses the city, county, or parish in which the Executive's \par\pard\plain\fs16\plain\cf1\f50\fs16\ql principal residence is located at the time such action is commenced. The \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Corporation hereby irrevocably consen ts and submits to and shall take any action \par\pard\plain\fs16\plain\cf1\f50\fs16\ql necessary to subject itself to the pe rsonal jurisdiction of that court and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql hereby irrevocably agrees that all cl

aims in respect of the \par\pard\plain\fs16 \page \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql 12 \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql action shall be instituted, heard, an d determined in that court. The Corporation \par\pard\plain\fs16\plain\cf1\f50\fs16\ql agrees that such court is a convenien t forum, and hereby irrevocably agrees that \par\pard\plain\fs16\plain\cf1\f50\fs16\ql all claims in respect of the action s hall be instituted, heard, and determined \par\pard\plain\fs16\plain\cf1\f50\fs16\ql in that court, and hereby irrevocably waives, to the fullest extent it may \par\pard\plain\fs16\plain\cf1\f50\fs16\ql effectively do so, the defense of an inconvenient forum to the maintenance of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql the action. Any final judgment in the action may be enforced in other \par\pard\plain\fs16\plain\cf1\f50\fs16\ql jurisdictions by suit on the judgment or in any other manner provided by law. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (C) The Corporation shall pay all costs and expenses, including \par\pard\plain\fs16\plain\cf1\f50\fs16\ql attorneys' fees and disbursements, of the Corporation and, at least monthly, the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Executive in connection with any lega l proceeding (including arbitration), \par\pard\plain\fs16\plain\cf1\f50\fs16\ql whether or not instituted by the Corp oration or the Executive, relating to the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql interpretation or enforcement of any provision of this Agreement, provided that \par\pard\plain\fs16\plain\cf1\f50\fs16\ql if the Executive instituted the proce eding and the judge, arbitrator, or other \par\pard\plain\fs16\plain\cf1\f50\fs16\ql individual presiding over the proceed ing affirmatively finds that the Executive \par\pard\plain\fs16\plain\cf1\f50\fs16\ql instituted the proceeding in bad fait h, the Executive shall pay all costs and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql expenses, including attorneys' fees a nd disbursements, of Executive and the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Corporation. The Corporation shall pa y prejudgment interest on any money \par\pard\plain\fs16\plain\cf1\f50\fs16\ql judgment obtained by Executive as a r esult of such proceeding, calculated at the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql rate provided in Section 1274(b)(2) ( B) of the Code. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 9. Successors: Binding Agreeme nt. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ---------------------------\par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (A) In addition to any obl igations imposed by law upon any successor \par\pard\plain\fs16\plain\cf1\f50\fs16\ql to the Corporation, the Corporation s hall require any successor (whether direct \par\pard\plain\fs16\plain\cf1\f50\fs16\ql or indirect, by purchase, merger, con solidation, or otherwise) to all or \par\pard\plain\fs16\plain\cf1\f50\fs16\ql substantially all of the business or assets of the Corporation expressly to \par\pard\plain\fs16\plain\cf1\f50\fs16\ql assume and agree to perform this Agre ement in the same manner and to the same

\par\pard\plain\fs16\plain\cf1\f50\fs16\ql extent that the Corporation would be required to perform it if no such \par\pard\plain\fs16\plain\cf1\f50\fs16\ql succession had taken place. Failure o f the Corporation to obtain the assumption \par\pard\plain\fs16\plain\cf1\f50\fs16\ql and agreement prior to the effectiven ess of any succession shall be a breach of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql this Agreement and shall entitle the Executive to compensation from the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Corporation in the same amount and on the same terms as the Executive would be \par\pard\plain\fs16\plain\cf1\f50\fs16\ql entitled to hereunder if the Executiv e were to terminate his employment for Good \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Reason immediately after a Change in Control and during the term of this \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Agreement, except that, for purposes of implementing the foregoing, the date on \par\pard\plain\fs16\plain\cf1\f50\fs16\ql which any succession becomes effectiv e shall be deemed the Payment Trigger \par\pard\plain\fs16\plain\cf1\f50\fs16\ql occasioned by the foregoing deemed te rmination of employment for Good Reason \par\pard\plain\fs16\plain\cf1\f50\fs16\ql immediately following a Change in Con trol. The provisions of this Section 9 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql shall continue to apply to each subse quent employer of Executive bound by this \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Agreement in the event of any merger, consolidation, or transfer of all or \par\pard\plain\fs16\plain\cf1\f50\fs16\ql substantially all of the business or assets of that subsequent employer. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (B) This Agreement shall i nure to the benefit of and be enforceable \par\pard\plain\fs16\plain\cf1\f50\fs16\ql by the Executive's personal or legal representatives, executor, administrators, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql successors, heirs, distributees, devi sees, and legatees. If the Executive shall \par\pard\plain\fs16\plain\cf1\f50\fs16\ql die while any amount would be payable to the Executive hereunder (other than \par\pard\plain\fs16\plain\cf1\f50\fs16\ql amounts which, by their terms, termin ate upon the death of the Executive) if the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Executive had continued to live, the amount, unless otherwise provided herein, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql shall be paid in accordance with the terms of this Agreement to the executors, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql personal representatives, or administ rators of the Executive's estate. \par\pard\plain\fs16 \page \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql 13 \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 10. Notices. For the purp ose of this Agreement, notices and all \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql other communications provided for in the Agreement shall be in writing and shall \par\pard\plain\fs16\plain\cf1\f50\fs16\ql be deemed to have been duly given whe n delivered or mailed by United States \par\pard\plain\fs16\plain\cf1\f50\fs16\ql registered mail, return receipt reque sted, postage prepaid, addressed to the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql respective addressed set forth below,

or to such other address as either party \par\pard\plain\fs16\plain\cf1\f50\fs16\ql may have furnished to the other in wr iting in accordance herewith, except that \par\pard\plain\fs16\plain\cf1\f50\fs16\ql notice of change of address shall be effective only upon actual receipt: \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql To the Corporation: \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Global Crossing Ltd. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Wessex House \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 45 Reid Street \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Hamilton HM12, Bermuda \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Attn: Resident Represe ntative \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Copy to: \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Global Crossing Ltd. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 360 North Crescent Dri ve \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Beverly Hills, Califor nia 90210 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Attn: General Counsel \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql To the Executive: \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql To the most recent add ress of Executive set forth in the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql personnel records of t he Corporation. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 11. Miscellaneous . No pr ovision of this Agreement may be modified, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql waived, or discharged unless such wai ver, modification, or discharge is agreed \par\pard\plain\fs16\plain\cf1\f50\fs16\ql to in writing and signed by the Execu tive and an officer of the Corporation \par\pard\plain\fs16\plain\cf1\f50\fs16\ql specifically designated by the Board. No waiver by either party hereto at any \par\pard\plain\fs16\plain\cf1\f50\fs16\ql time of any breach by the other party hereto of, or compliance with, any \par\pard\plain\fs16\plain\cf1\f50\fs16\ql condition or provision of this Agreem ent to be performed by such other party \par\pard\plain\fs16\plain\cf1\f50\fs16\ql shall be deemed a waiver of similar o r dissimilar provisions or conditions at \par\pard\plain\fs16\plain\cf1\f50\fs16\ql the same or at any prior or subsequen t time. No agreements or representations, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql oral or otherwise, express or implied , with respect to the subject matter hereof \par\pard\plain\fs16\plain\cf1\f50\fs16\ql have been made by either party which are not expressly set forth in this \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Agreement. The validity, interpretati on, construction, and performance of this \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Agreement shall be governed by the la ws of the State of California. All \par\pard\plain\fs16\plain\cf1\f50\fs16\ql references to sections of the Securit ies Exchange Act of 1934 or the Code shall \par\pard\plain\fs16\plain\cf1\f50\fs16\ql be deemed also to refer to any succes

sor provisions to such sections. Any \par\pard\plain\fs16\plain\cf1\f50\fs16\ql payments provided for hereunder shall be paid net of any applicable withholding \par\pard\plain\fs16\plain\cf1\f50\fs16\ql required under federal, state, or loc al law and any additional withholding to \par\pard\plain\fs16\plain\cf1\f50\fs16\ql which the Executive has agreed. \par\pard\plain\fs16 \page \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql 14 \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 12. Validity. The invalid ity or unenforceability of any provision of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql -------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql this Agreement shall not affect the v alidity or enforceability of any other \par\pard\plain\fs16\plain\cf1\f50\fs16\ql provision of this Agreement, which sh all remain in full force and effect. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 13. Counterparts. This Ag reement may be executed in several \par\pard\plain\fs16\plain\cf1\f50\fs16\ql -----------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql counterparts, each of which shall be deemed to be an original but all of which \par\pard\plain\fs16\plain\cf1\f50\fs16\ql together will constitute one and the same instrument. \par\pard\plain\fs16 \page \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql 15 \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql IN WITNESS WHEREOF, the parties have signed this Agreement as of the date set \par\pard\plain\fs16\plain\cf1\f50\fs16\ql forth above. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Attest: GL OBAL CROSSING LTD. \par\pard\plain\fs16 \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ________________________ By :____________________________ \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Name: Name: \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Title: Title: \par\pard\plain\fs16 \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Witness: EX ECUTIVE: \par\pard\plain\fs16 \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql _________________________ __ _____________________________ \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Pr int Name: \par\pard\plain\fs16 \page{\*\bkmkstart doc_1_5}{\*\bkmkend doc_1_5} \par\pard\plain\fs16 \page \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql Exhibit 10.36

\par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql EMPLOYM ENT AGREEMENT \par\pard\plain\fs16\plain\cf1\f50\fs16\ql DATED AS OF DECEMBER 3, 1999 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql BETWEEN GLO BAL CROSSING LTD. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql AND \par\pard\plain\fs16\plain\cf1\f50\fs16\ql JOHN A. SCARPATI \par\pard\plain\fs16 \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql JOHN A. SCARPATI ("Executive") a nd Global Crossing Ltd. ("Company") hereby \par\pard\plain\fs16\plain\cf1\f50\fs16\ql agree as follows: \par\pard\plain\fs16 \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 1 . Term. The term of Executive 's employment by Company under this \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ----\par\pard\plain\fs16\plain\cf1\f50\fs16\ql Agreement (the "Term") shall commence on and as of December 3, 1999 for a three\par\pard\plain\fs16\plain\cf1\f50\fs16\ql year term ending December 3, 2002, an d continue thereafter for successive one\par\pard\plain\fs16\plain\cf1\f50\fs16\ql year terms (the initial three-year te rm and each one-year term thereafter, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql collectively the "Term"), unless eith er Company or Executive gives notice to the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql other at least six (6) months in adva nce of the expiration of the current term \par\pard\plain\fs16\plain\cf1\f50\fs16\ql that it wishes to terminate this Agre ement, in which event this Agreement shall \par\pard\plain\fs16\plain\cf1\f50\fs16\ql terminate as of the end of such term, unless earlier terminated as hereafter \par\pard\plain\fs16\plain\cf1\f50\fs16\ql provided. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 2. Title and Duties. During th e Term, Executive shall be employed by \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ---------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql Company as Chief Administrative Offic er ("CAO") world-wide reporting to the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Chief Executive Officer (the "CEO") o f the Company. Executive shall devote his \par\pard\plain\fs16\plain\cf1\f50\fs16\ql full-time attention and energies to t he business of the Company; provided, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql however, that the foregoing shall not preclude Executive from engaging in \par\pard\plain\fs16\plain\cf1\f50\fs16\ql charitable and community affairs, or participating as a director of a non \par\pard\plain\fs16\plain\cf1\f50\fs16\ql competing business company, or managi ng his personal passive investments so long \par\pard\plain\fs16\plain\cf1\f50\fs16\ql as such activities do not materially interfere with his obligations as CAO. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Executive shall perform such duties, which shall not be inconsistent with his \par\pard\plain\fs16\plain\cf1\f50\fs16\ql position as CAO of the Company, as ar e assigned to him from time to time by the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql CEO of the Company, and any other dut ies undertaken or accepted by Executive

\par\pard\plain\fs16\plain\cf1\f50\fs16\ql consistent with his position as CAO o f the Company. The Executive shall have \par\pard\plain\fs16\plain\cf1\f50\fs16\ql such officers of the Company report t o him as Executive and the CEO shall agree \par\pard\plain\fs16\plain\cf1\f50\fs16\ql from time to time. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 3. Salary; Additional Benefit. (a) Executive shall receive a salary of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql -------------------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql $500,000 per annum during the first t hree (3) years of the Term, payable as set \par\pard\plain\fs16\plain\cf1\f50\fs16\ql forth below. Executive's salary shal l be reviewed at least annually and may be \par\pard\plain\fs16\plain\cf1\f50\fs16\ql increased but not decreased during th e Term. Salary payments shall be made in \par\pard\plain\fs16\plain\cf1\f50\fs16\ql equal installments in accordance with Company's then prevailing payroll policy. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (b) If Executive is still emplo yed with the Company at the end of the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql initial three year Term (or, if earli er, upon termination of Executive's \par\pard\plain\fs16\plain\cf1\f50\fs16\ql employment with the Company under Sec tion 10 (a) (i) or Section 10 (a) (ii) or \par\pard\plain\fs16\plain\cf1\f50\fs16\ql any other Non-Fault Termination), Exe cutive shall be entitled to an $8 million \par\pard\plain\fs16\plain\cf1\f50\fs16\ql cash payment from the Company or in t he discretion of the Company, common stock \par\pard\plain\fs16\plain\cf1\f50\fs16\ql which shall be immediately available for sale or transfer. If stock is \par\pard\plain\fs16\plain\cf1\f50\fs16\ql utilized, the value for these purpose s shall be determined based upon the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql closing price of the common stock \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 1 \par\pard\plain\fs16 \page \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql on the NASDAQ market on the date on which the payment becomes due. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 4. Annual Bonus. (a) For eac h year of the Term, Executive will be \par\pard\plain\fs16\plain\cf1\f50\fs16\ql -----------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql eligible for an annual bonus which wi ll be determined by the Board of Directors, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql but which shall not be less than $500 ,000 for the first full year of the Term. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql The bonus will be determined thereaft er by the Board of Directors and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Executive's target bonus shall be one hundred percent (100 %) of his salary. In \par\pard\plain\fs16\plain\cf1\f50\fs16\ql determining the annual salary and bon us, the Board of Directors shall consider, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql among other things, Executive's perfo rmance in his capacity as CAO of the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Company. It is the intent of this Ag reement that Executive's total cash \par\pard\plain\fs16\plain\cf1\f50\fs16\ql compensation (salary and bonus) shall be appropriate for a CAO and that annual

\par\pard\plain\fs16\plain\cf1\f50\fs16\ql increases in salary and bonus shall b e made, in each event, assuming \par\pard\plain\fs16\plain\cf1\f50\fs16\ql satisfactory performance. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (b) Within 10 days from the da te of commencement of Executive's \par\pard\plain\fs16\plain\cf1\f50\fs16\ql employment with the Company, the Comp any shall pay to Executive a $2 Million \par\pard\plain\fs16\plain\cf1\f50\fs16\ql signing bonus, payable in cash. In t he event Executive voluntarily resigns or \par\pard\plain\fs16\plain\cf1\f50\fs16\ql his employment is terminated pursuant to Section 10 (a) (iii) or 10 (a) (iv) in \par\pard\plain\fs16\plain\cf1\f50\fs16\ql the first year of Executive's employm ent, Executive shall promptly return to the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Company a portion of such signing bon us equal to the sum of (i) one twelfth \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (1/12) of $1,000,000 for each full mo nth of employment Executive does not \par\pard\plain\fs16\plain\cf1\f50\fs16\ql complete during such twelve month per iod plus (ii) $1,000,000. In the event \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Executive's employment terminates pri or to the completion by Executive of five \par\pard\plain\fs16\plain\cf1\f50\fs16\ql years of employment with the Company (or earlier in the sole discretion of the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Board of Directors of the Company), E xecutive shall promptly return to the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Company a portion of such signing bon us equal to $1,000,000; provided that this \par\pard\plain\fs16\plain\cf1\f50\fs16\ql -------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql obligation shall not apply if Executi ve's termination of employment constitutes \par\pard\plain\fs16\plain\cf1\f50\fs16\ql a Non-Fault Termination or results fr om a Change in Control (as defined in the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Plan referred to below). \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 5. Stock Options. Executive sh all be granted stock options (the "One \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql Million Options") to purchase an aggr egate of One Million (1,000,000) shares of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql common stock of the Company. The One Million Options shall be granted in \par\pard\plain\fs16\plain\cf1\f50\fs16\ql accordance with, and subject to the f ollowing: \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (a) The exercise price of the O ne Million Options shall be equal to $8.00 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql plus the closing price of t he common stock of the Company on the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql effective date of the grant of the One Million Options by the Board of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Directors of the Company (w hich is the date hereof). The One Million \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Options may be exercised at any time after vesting but prior to \par\pard\plain\fs16\plain\cf1\f50\fs16\ql expiration. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (b) The One Million Options sha ll be subject to the terms and conditions

\par\pard\plain\fs16\plain\cf1\f50\fs16\ql Ltd. Stock Incentive Plan, a copy of which \par\pard\plain\fs16\plain\cf1\f50\fs16\ql rporated herein by reference as Exhibit A \par\pard\plain\fs16\plain\cf1\f50\fs16\ql d a Non-Qualified Stock Option Agreement, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ed and incorporated herein by reference as \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql l vest according to the following schedule: \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql o. of Shares Vesting \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 2 \par\pard\plain\fs16 \page \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql Immediately \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 223 December 3, 2000 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 223 December 3, 2001 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 220 December 3, 2002 \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql be accelerated in the event of a Non-Fault \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Section 12). \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql nge of Control at any time during the Term, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql e vesting schedule of the One Million \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ity of the One Million Options shall be \par\pard\plain\fs16\plain\cf1\f50\fs16\ql uch Change of Control. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ll expire on the earlier of ten years from \par\pard\plain\fs16\plain\cf1\f50\fs16\ql rmination date set forth in the Stock \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ination of Executive's employment with the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql g shares of common stock of the Company are \par\pard\plain\fs16\plain\cf1\f50\fs16\ql or a different number or kind of shares or \par\pard\plain\fs16\plain\cf1\f50\fs16\ql pany or of another corporation by reason of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql r reorganization, reclassification, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql

of the 1998 Global Crossing is attached hereto and inco (as amended, the "Plan") an the form of which is attach Exhibit B. (c) The One Million Options shal Tranche N

1 2 3 4

333,334 222, 222, 222,

The vesting schedule shall Termination (as defined in (d) In the event there is a Cha then the acceleration of th Options and the exercisibil governed by the Plan upon s (e) The One Million Options sha the date of grant or the te Option Agreement after term Company. (f) In the event the outstandin changed into or exchanged f other securities of the Com merger, consolidation, othe combination of shares, stoc

k split-up or stock dividend, the One \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Million Options granted her eunder, the number of subject shares and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql the exercise price (and oth er terms herein relating thereto) shall be \par\pard\plain\fs16\plain\cf1\f50\fs16\ql adjusted appropriately. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 6. Additional Stock Options. E xecutive shall be considered for additional \par\pard\plain\fs16\plain\cf1\f50\fs16\ql -----------------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql stock option grants at least annually and any such additional grants shall be \par\pard\plain\fs16\plain\cf1\f50\fs16\ql determined by the Board of Directors. In determining whether to award any \par\pard\plain\fs16\plain\cf1\f50\fs16\ql additional stock option grants, the B oard of Directors shall consider, among \par\pard\plain\fs16\plain\cf1\f50\fs16\ql other things, Executive's performance in his capacity as CAO of the Company. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 7. Benefits. Executive shall b e entitled to receive the following \par\pard\plain\fs16\plain\cf1\f50\fs16\ql --------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql benefits: \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (a) Health care coverage equiv alent to that provided to the Company's \par\pard\plain\fs16\plain\cf1\f50\fs16\ql other executive officers. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (b) First Class airfare and lim ousine service to/from residence and/or \par\pard\plain\fs16\plain\cf1\f50\fs16\ql office in connection with all company travel. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (c) Four (4) weeks paid vacatio n each year during the Term. The maximum \par\pard\plain\fs16\plain\cf1\f50\fs16\ql accrued vacation shall be 4 weeks. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (d) The Executive shall be trea ted in the same manner as, and shall be \par\pard\plain\fs16\plain\cf1\f50\fs16\ql entitled to such benefits a nd other perquisites and terms and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql conditions of employment as are \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 3 \par\pard\plain\fs16 \page \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql generally provided to senior off icers of the Company including an \par\pard\plain\fs16\plain\cf1\f50\fs16\ql appropriate moving allowanc e, if applicable. The Company shall \par\pard\plain\fs16\plain\cf1\f50\fs16\ql purchase a 2000 model of a recreational vehicle selected by the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Executive. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 8. Reimbursement for Expenses. Executive shall be expected to incur \par\pard\plain\fs16\plain\cf1\f50\fs16\ql --------------------------

\par\pard\plain\fs16\plain\cf1\f50\fs16\ql various business expenses customarily incurred by persons holding like position, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql including but not limited to travelin g, entertainment and similar expenses, all \par\pard\plain\fs16\plain\cf1\f50\fs16\ql of which are to be incurred by Execut ive in the belief that they will benefit \par\pard\plain\fs16\plain\cf1\f50\fs16\ql the Company. Subject to Company's po licy regarding the reimbursement and non\par\pard\plain\fs16\plain\cf1\f50\fs16\ql reimbursement of such expenses, Compa ny shall reimburse Executive for such \par\pard\plain\fs16\plain\cf1\f50\fs16\ql expenses from time to time, at Execut ive's request, and Executive shall account \par\pard\plain\fs16\plain\cf1\f50\fs16\ql to Company for such expenses. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 9. Protection of Company's Inte rests. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql -------------------------------\par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (a) During the Term of Executiv e's employment by Company, Executive will \par\pard\plain\fs16\plain\cf1\f50\fs16\ql not compete in any manner, directly or indirectly, whether as a \par\pard\plain\fs16\plain\cf1\f50\fs16\ql principal, employee, consul tant, agent, owner or otherwise, by Company \par\pard\plain\fs16\plain\cf1\f50\fs16\ql or any affiliate thereof ex cept that the foregoing will not prevent \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Executive from holding at a ny time less that 5% of the outstanding \par\pard\plain\fs16\plain\cf1\f50\fs16\ql capital stock of any compan y (other than as part of a control group) \par\pard\plain\fs16\plain\cf1\f50\fs16\ql whose stock is publicly tra ded. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (b) To the extent permitted by law, all rights worldwide with respect to \par\pard\plain\fs16\plain\cf1\f50\fs16\ql any and all intellectual or other property of any nature produced, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql created or suggested by Exe cutive during the Term of his employment or \par\pard\plain\fs16\plain\cf1\f50\fs16\ql resulting from his service shall be deemed to be a work for hire and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql shall be the sole and exclu sive property of Company. Executive agrees \par\pard\plain\fs16\plain\cf1\f50\fs16\ql to execute, acknowledge and deliver to Company, at Company's request, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql such further documents as C ompany finds appropriate to evidence \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Company's rights in such pr operty. Any confidential and/or proprietary \par\pard\plain\fs16\plain\cf1\f50\fs16\ql information of Company or a ny affiliate thereof (including, without \par\pard\plain\fs16\plain\cf1\f50\fs16\ql limitation, any information relating to the identities, capabilities, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql compensatory and contractua l arrangements and/or general personnel \par\pard\plain\fs16\plain\cf1\f50\fs16\ql data of employees of Compan y and its affiliates) shall not be used by \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Executive or disclosed or m ade available by Executive to any person

\par\pard\plain\fs16\plain\cf1\f50\fs16\ql ourse of his employment by the Company, and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql termination of the Term of this Agreement, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ompany all such information that exists in \par\pard\plain\fs16\plain\cf1\f50\fs16\ql orm (and all copies thereof under his \par\pard\plain\fs16\plain\cf1\f50\fs16\ql to sign the Company's standard form of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ontemporaneously with the execution and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql o any right to terminate Executive's \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16\plain\cf1\f50\fs16\ql r Section 1 above: \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql t to terminate Executive's employment with \par\pard\plain\fs16\plain\cf1\f50\fs16\ql wing circumstances: \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 4 \par\pard\plain\fs16 \page \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Company to Executive in the event of an \par\pard\plain\fs16\plain\cf1\f50\fs16\ql which has totally and permanently \par\pard\plain\fs16\plain\cf1\f50\fs16\ql orming his duties as Executive on a \par\pard\plain\fs16\plain\cf1\f50\fs16\ql is as described in the Company's long term \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql iately upon notice from Company. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql xecutive's employment for "Good Cause" as \par\pard\plain\fs16\plain\cf1\f50\fs16\ql l mean actual fraud, or embezzlement, or \par\pard\plain\fs16\plain\cf1\f50\fs16\ql h has caused demonstrable and serious \par\pard\plain\fs16\plain\cf1\f50\fs16\ql \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ny or crime of moral turpitude which has \par\pard\plain\fs16\plain\cf1\f50\fs16\ql e Company. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql s terminated pursuant to Section 10(a)(iii) \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ve's rights and Company's obligations

except as required in the c upon expiration or earlier Executive shall return to C written or other physical f control). Executive agrees confidentiality agreement c delivery of this Agreement. 10. Termination. In addition t ----------employment with the Company unde (a) Company shall have the righ the Company under the follo

(i)

Upon death of Executive; (ii) Upon notice from the

illness or other disability incapacitated him from perf substantially full-time bas disability plan; (iii) For good cause immed Termination by Company of E used in this Agreement shal intentional misconduct whic injury to the Company; or (iv) Conviction of a felo

caused serious injury to th (b) If Executive's employment i or 10(a)(iv) above, Executi

\par\pard\plain\fs16\plain\cf1\f50\fs16\ql hereunder, and all unvested stock options granted in accordance with \par\pard\plain\fs16\plain\cf1\f50\fs16\ql this Agreement which have n ot already vested shall forthwith terminate \par\pard\plain\fs16\plain\cf1\f50\fs16\ql in their entirety, except t hat, notwithstanding the foregoing, (i) the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql expiration date of any Opti ons which have already vested in accordance \par\pard\plain\fs16\plain\cf1\f50\fs16\ql with this Agreement shall b e ninety (90) days after the date of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql termination pursuant to Sec tion 10(a). \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (c) If Executive's employment i s terminated pursuant to this Section 10, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql no Termination Payment (as defined in Section 12) shall be payable (it \par\pard\plain\fs16\plain\cf1\f50\fs16\ql being understood that, notw ithstanding anything to the contrary \par\pard\plain\fs16\plain\cf1\f50\fs16\ql contained herein, the Compa ny shall have the right to terminate \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Executive's employment for any other reason, subject to Executive's \par\pard\plain\fs16\plain\cf1\f50\fs16\ql rights under Section 12). \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 11. Termination By Executive. Prior to the expiration of the Term, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql -----------------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql Executive shall have the right to ter minate his employment under this Agreement \par\pard\plain\fs16\plain\cf1\f50\fs16\ql upon 30 days notice to Company given within 60 days following the occurrence of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql any of the following events, provided that Company shall have 20 days after the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql date such notice has been given to Co mpany in which to cure the conduct or cause \par\pard\plain\fs16\plain\cf1\f50\fs16\ql specified in such notice: \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (a) Executive is not elected or retained in accordance with Section 2 as \par\pard\plain\fs16\plain\cf1\f50\fs16\ql CAO (reporting to Company's CEO); \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (b) There is a significant chan ge in the nature or scope of the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Executive's authority, powe rs, functions, duties or responsibilities \par\pard\plain\fs16\plain\cf1\f50\fs16\ql which are inconsistent with the authority, powers, functions, duties \par\pard\plain\fs16\plain\cf1\f50\fs16\ql or responsibilities of a CA O; \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (c) Company shall fail to issue stock pursuant to the One Million Options \par\pard\plain\fs16\plain\cf1\f50\fs16\ql provided \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 5 \par\pard\plain\fs16 \page

\par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql for herein in accordance with th e terms hereof or shall reduce his \par\pard\plain\fs16\plain\cf1\f50\fs16\ql salary, or the Company shal l fail to make any grant of options or \par\pard\plain\fs16\plain\cf1\f50\fs16\ql compensation payment requir ed hereunder; \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (d) A Change of Control shall o ccur; and \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (e) Any material breach of this Agreement by the Company including naming \par\pard\plain\fs16\plain\cf1\f50\fs16\ql the Executive's principal o ffice outside of the New York/ New Jersey/ \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Connecticut tri-state area. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 12. Termination Payment. If a Non-Fault Termination (as defined below) of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ------------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql Executive's employment with Company s hall occur other than by means of the death \par\pard\plain\fs16\plain\cf1\f50\fs16\ql or disability of Executive, Executive shall be entitled to receive a lump sum \par\pard\plain\fs16\plain\cf1\f50\fs16\ql payment equal to the sum of one times the sum of Executive's then annual base \par\pard\plain\fs16\plain\cf1\f50\fs16\ql salary and bonus (provided, however, that in no event shall the annual bonus for \par\pard\plain\fs16\plain\cf1\f50\fs16\ql this purpose be less than $500,000) ( "Termination Payment"). The Termination \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Payment shall be made to Executive no t later than 30 days after the date of such \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Non-Fault Termination. "Non-Fault Te rmination" shall mean Executive's \par\pard\plain\fs16\plain\cf1\f50\fs16\ql employment with Company shall be term inated (i) by the Company without cause, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (ii) by reason of death or total and permanent disability pursuant to Section \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 10(a)(i) or (ii) hereof, or (iii) Exe cutive shall validly terminate his \par\pard\plain\fs16\plain\cf1\f50\fs16\ql employment pursuant to Section 11 her eof. A voluntary termination of employment \par\pard\plain\fs16\plain\cf1\f50\fs16\ql by Executive (unless validly made pur suant to Section 11) shall not be a Non\par\pard\plain\fs16\plain\cf1\f50\fs16\ql Fault Termination. Except for Execut ive's rights under Sections 3 (b) and 5 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (c), which shall remain in full force and effect after any Non-Fault Termination \par\pard\plain\fs16\plain\cf1\f50\fs16\ql of this Agreement, and for the accele ration of the vesting of the One Million \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Options, the Termination Payment desc ribed Section 12 shall be Executive's sole \par\pard\plain\fs16\plain\cf1\f50\fs16\ql and exclusive remedy under this Agree ment in the event of a Non-Fault \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Termination. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 13. Assignment. Company may as sign this Agreement or all or any part of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ---------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql its rights hereunder to any entity th at succeeds to all or substantially all of

\par\pard\plain\fs16\plain\cf1\f50\fs16\ql Company's assets or that holds, direc tly or indirectly, all or substantially all \par\pard\plain\fs16\plain\cf1\f50\fs16\ql of the capital stock of the Company o r that is otherwise a successor in interest \par\pard\plain\fs16\plain\cf1\f50\fs16\ql to Company generally, and this Agreem ent shall inure to the benefit of, and be \par\pard\plain\fs16\plain\cf1\f50\fs16\ql binding upon, such assignee or succes sor in interest. This Agreement is \par\pard\plain\fs16\plain\cf1\f50\fs16\ql personal to Executive and Executive m ay not, without the express written \par\pard\plain\fs16\plain\cf1\f50\fs16\ql permission of Company, assign or pled ge any rights or obligations hereunder to \par\pard\plain\fs16\plain\cf1\f50\fs16\ql any person, firm, corporation or othe r entity. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 14. No Conflict With Prior Agre ements. Executive represents and warrants \par\pard\plain\fs16\plain\cf1\f50\fs16\ql -------------------------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql to Company that, to the best of his p ersonal knowledge and belief, neither the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql execution and delivery of this Agreem ent, his commencement of employment \par\pard\plain\fs16\plain\cf1\f50\fs16\ql hereunder nor the performance of his duties hereunder conflicts with any \par\pard\plain\fs16\plain\cf1\f50\fs16\ql contractual commitment on his part to any third party or violates or interferes \par\pard\plain\fs16\plain\cf1\f50\fs16\ql with any rights of any third party. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 15. Key Man Insurance. Company shall have the right to secure, in its own \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ----------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql name or otherwise, and at its own exp ense, life, disability, accident or other \par\pard\plain\fs16\plain\cf1\f50\fs16\ql insurance covering Executive \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 6 \par\pard\plain\fs16 \page \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql and Executive shall have no righ t, title or interest in or to such insurance. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Executive shall assist Company in pro curing such insurance by submitting to \par\pard\plain\fs16\plain\cf1\f50\fs16\ql reasonable examinations and signing s uch applications and other instruments as \par\pard\plain\fs16\plain\cf1\f50\fs16\ql may be required by the insurance carr iers to which application is made for any \par\pard\plain\fs16\plain\cf1\f50\fs16\ql such insurance. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 16. Post-Termination Obligation. After the expiration or earlier \par\pard\plain\fs16\plain\cf1\f50\fs16\ql --------------------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql termination of the Executive's employ ment hereunder for any reason whatsoever, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Executive shall not either alone or j ointly, with or on behalf of others, either \par\pard\plain\fs16\plain\cf1\f50\fs16\ql directly or indirectly, expressly or impliedly, whether as principal, partner, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql agent, shareholder, director, employe

e, consultant or otherwise, at any time \par\pard\plain\fs16\plain\cf1\f50\fs16\ql during a period of two years followin g such expiration or termination, solicit \par\pard\plain\fs16\plain\cf1\f50\fs16\ql in any manner whatsoever the employme nt or engagement of, either for his own \par\pard\plain\fs16\plain\cf1\f50\fs16\ql account or for any other person, firm , company or other entity, any person who \par\pard\plain\fs16\plain\cf1\f50\fs16\ql is employed by Company or any affilia ted entity, whether or not such person \par\pard\plain\fs16\plain\cf1\f50\fs16\ql would commit any breach of his contra ct of employment by reason of his leaving \par\pard\plain\fs16\plain\cf1\f50\fs16\ql the service of Company or any affilia ted entity. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 17. Reimbursement of Legal Expen ses. The Company agrees to reimburse \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ------------------------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql Executive for his reasonable out-of-p ocket legal expenses and costs incurred in \par\pard\plain\fs16\plain\cf1\f50\fs16\ql connection with the negotiation and p reparation of this Agreement. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 18. Entire Agreement, Amendment, Waiver, Etc. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql --------------------------------------\par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (a) This Agreement supersedes a ll prior and/or contemporaneous agreements \par\pard\plain\fs16\plain\cf1\f50\fs16\ql and/or statements, whether written or oral, concerning the terms of \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Executive's employment, and no amendment or modification of this \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Agreement shall be binding unless set forth in writing signed by \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Company and Executive. No waiver by either party of any breach by the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql other party of any provisio n or condition of this Agreement shall be \par\pard\plain\fs16\plain\cf1\f50\fs16\ql effective unless in writing and signed by the party effecting the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql waiver, and no such waiver shall be deemed a waiver of any similar or \par\pard\plain\fs16\plain\cf1\f50\fs16\ql dissimilar provision or con dition at the same or any prior or \par\pard\plain\fs16\plain\cf1\f50\fs16\ql subsequent time. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (b) All payments required to be made to Executive hereunder, whether \par\pard\plain\fs16\plain\cf1\f50\fs16\ql during the term of his empl oyment hereunder or otherwise, shall be \par\pard\plain\fs16\plain\cf1\f50\fs16\ql subject to all applicable f ederal, state and local tax withholding \par\pard\plain\fs16\plain\cf1\f50\fs16\ql laws. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (c) This Agreement shall be gov erned by and construed in accordance with \par\pard\plain\fs16\plain\cf1\f50\fs16\ql the laws of the State of Ca lifornia. In the event of any controversy

\par\pard\plain\fs16\plain\cf1\f50\fs16\ql or claim by either party he reunder, the prevailing party in any final \par\pard\plain\fs16\plain\cf1\f50\fs16\ql and legally binding adjudic ation (as to which all periods for the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql filing of any appeal have e xpired) with respect to such controversy or \par\pard\plain\fs16\plain\cf1\f50\fs16\ql claim shall be entitled to reimbursement from the losing party for \par\pard\plain\fs16\plain\cf1\f50\fs16\ql reasonable attorney's fees and costs and for all other reasonable \par\pard\plain\fs16\plain\cf1\f50\fs16\ql expenses of such adjudicati on. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 19. Notices. All notices that either party is required or may desire to \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql give the other shall be in writing an d shall be effective (i) upon personal \par\pard\plain\fs16\plain\cf1\f50\fs16\ql delivery or (ii) three business days after \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 7 \par\pard\plain\fs16 \page \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql deposit of the same with the Uni ted States Postal Service for delivery by \par\pard\plain\fs16\plain\cf1\f50\fs16\ql certified mail, return receipt reques ted, addressed to the party to be given \par\pard\plain\fs16\plain\cf1\f50\fs16\ql notice as follows: \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql To Company: Global Crossing Ltd. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 360 N. Crescent Drive \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Beverly Hills, California 90210 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Attn: General Counsel \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql To Executive: John A. Scarpati \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 26 Jefferson Court \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Freehold, NJ 07728 \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Either party may by written noti ce designate a different address for giving \par\pard\plain\fs16\plain\cf1\f50\fs16\ql notices. The date of mailing of any s uch notices shall be deemed to be the date \par\pard\plain\fs16\plain\cf1\f50\fs16\ql on which such notice is given. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 20. Arbitration. Any dispute a rising out of this Agreement shall be \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ----------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql determined by arbitration in Los Ange les, California, under the rules of the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql American Arbitration Association then in effect and judgement upon any award \par\pard\plain\fs16\plain\cf1\f50\fs16\ql pursuant to such arbitration may be e nforced in any court having jurisdiction \par\pard\plain\fs16\plain\cf1\f50\fs16\ql thereof, provided each of the parties to this Agreement will appoint one person \par\pard\plain\fs16\plain\cf1\f50\fs16\ql as an arbitrator to hear and determin e the dispute, and if they are unable to \par\pard\plain\fs16\plain\cf1\f50\fs16\ql agree, then the two arbitrators so ch

osen will select a third impartial \par\pard\plain\fs16\plain\cf1\f50\fs16\ql arbitrator whose decision will be fin al and conclusive upon the parties to this \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Agreement. Subject to Section 18(c), the expenses of the arbitration \par\pard\plain\fs16\plain\cf1\f50\fs16\ql proceedings concluded pursuant to thi s paragraph will be borne by the parties in \par\pard\plain\fs16\plain\cf1\f50\fs16\ql such proportions as the arbitrators d ecide. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 21. Certain Additional Payments by the Company. Anything in this \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ----------------------------------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql Agreement to the contrary notwithstan ding, in the event it shall be determined \par\pard\plain\fs16\plain\cf1\f50\fs16\ql that any payment, award, benefit or d istribution by the Company to or for the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql benefit of the Executive would be sub ject to the excise tax imposed by Section \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 4999 of the Internal Revenue Code or any corresponding provisions of state or \par\pard\plain\fs16\plain\cf1\f50\fs16\ql local tax laws as a result of payment upon a change of control, or any interest \par\pard\plain\fs16\plain\cf1\f50\fs16\ql or penalties are incurred by the Exec utive with respect to such excise tax (such \par\pard\plain\fs16\plain\cf1\f50\fs16\ql excise tax, together with any such in terest and penalties, are hereinafter \par\pard\plain\fs16\plain\cf1\f50\fs16\ql collectively referred to as the "Exci se Tax"), then the Executive shall be \par\pard\plain\fs16\plain\cf1\f50\fs16\ql entitled to receive an additional pay ment (a "Gross-Up Payment") in an amount \par\pard\plain\fs16\plain\cf1\f50\fs16\ql such that after payment by the Execut ive of all taxes (including any interest or \par\pard\plain\fs16\plain\cf1\f50\fs16\ql penalties imposed with respect to suc h taxes) imposed upon the Gross-Up Payment, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql the Executive retains an amount of th e Gross-Up Payment equal to the Excise Tax \par\pard\plain\fs16\plain\cf1\f50\fs16\ql imposed upon the payments. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 22. Headings. The headings set forth herein are included solely for the \par\pard\plain\fs16\plain\cf1\f50\fs16\ql -------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql purpose of identification and shall n ot be used for the purpose of construing \par\pard\plain\fs16\plain\cf1\f50\fs16\ql the meaning of the provisions of this Agreement. \par\pard\plain\fs16 \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql IN WITNESS WHEREOF, the parties have executed this Agreement as of the date \par\pard\plain\fs16\plain\cf1\f50\fs16\ql first written above. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 8 \par\pard\plain\fs16 \page \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql GLOBAL CROSSING LTD. \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql /s/ John Comparin

/s/ John A. Scarpati \par\pard\plain\fs16\plain\cf1\f50\fs16\ql -----------------------------------------------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql Name: John Comparin John A. Scarpati \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Title: Senior Vice President, Hu man \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Resources \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 9 \par\pard\plain\fs16 \page{\*\bkmkstart doc_1_6}{\*\bkmkend doc_1_6} \par\pard\plain\fs16 \page \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql EXHIBIT 12.1 \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql GLOBAL CROSSING LTD. AND SUBSIDIARIES \par\pard\plain\fs16\plain\cf1\f50\fs16\ql RATIO OF EARNINGS TO FIXED CHARGES AND PREFERRED DIVIDENDS \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (in thousands) \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (un audited) \par\pard\plain\fs16 \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql Historical \par\pard\plain\fs16\plain\cf1\f50\fs16\ql -------------------------------------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql For the Period \par\pard\plain\fs16\plain\cf1\f50\fs16\ql March 19, 1997 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Ye ar Ended Year Ended (Date of Inception) \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Dec ember 31, December 31, to December 31, \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 1999 1998 1997 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ----------- ------------ ------------------\par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql FIXED CHARGES: \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Interest on debt and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql capitalized leases and \par\pard\plain\fs16\plain\cf1\f50\fs16\ql amortization of deferred \par\pard\plain\fs16\plain\cf1\f50\fs16\ql finance fees................... $ 139,077 $ 42,880 $ -\par\pard\plain\fs16\plain\cf1\f50\fs16\ql Interest element of rentals..... 24,502 202 2 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Interest capitalized............ 78,059 49,933 -\par\pard\plain\fs16\plain\cf1\f50\fs16\ql --------------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql TOTAL......................... $ 241,638 $ 93,015 $ 2 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql = ======= ======== ======== \par\pard\plain\fs16\plain\cf1\f50\fs16\ql PREFERRED DIVIDENDS: \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Amount.......................... $ 66,642 $ 12,681 $ 12,690

\par\pard\plain\fs16\plain\cf1\f50\fs16\ql = ======= ======== ======== \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Gross up to pretax based on \par\pard\plain\fs16\plain\cf1\f50\fs16\ql 42.22% effective tax rate \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (except for 1997 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql information)................... $ 115,337 $ 21,947 $ 12,690 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql = ======= ======== ======== \par\pard\plain\fs16\plain\cf1\f50\fs16\ql EARNINGS: \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Income before cumulative effect \par\pard\plain\fs16\plain\cf1\f50\fs16\ql of change in accounting \par\pard\plain\fs16\plain\cf1\f50\fs16\ql principle and extraordinary \par\pard\plain\fs16\plain\cf1\f50\fs16\ql item........................... $ (10,535) $(68,194) $ (160) \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Add back: \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Provision for income taxes.... 126,539 33,067 -\par\pard\plain\fs16\plain\cf1\f50\fs16\ql Equity in loss of affiliates.. (15,708) 2,508 -\par\pard\plain\fs16\plain\cf1\f50\fs16\ql Capitalized interest included \par\pard\plain\fs16\plain\cf1\f50\fs16\ql in cost of capacity sold..... 43,493 9,128 -\par\pard\plain\fs16\plain\cf1\f50\fs16\ql Fixed charges less interest \par\pard\plain\fs16\plain\cf1\f50\fs16\ql capitalized.................. 163,579 43,082 2 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql --------------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql TOTAL....................... $ 307,368 $ 19,591 $ (158) \par\pard\plain\fs16\plain\cf1\f50\fs16\ql = ======= ======== ======== \par\pard\plain\fs16\plain\cf1\f50\fs16\ql RATIO OF EARNINGS TO FIXED \par\pard\plain\fs16\plain\cf1\f50\fs16\ql CHARGES......................... 1.27x \par\pard\plain\fs16\plain\cf1\f50\fs16\ql EXCESS OF FIXED CHARGES OVER \par\pard\plain\fs16\plain\cf1\f50\fs16\ql EARNINGS........................ $(73,424) $ (160) \par\pard\plain\fs16\plain\cf1\f50\fs16\ql RATIO OF EARNINGS TO FIXED \par\pard\plain\fs16\plain\cf1\f50\fs16\ql CHARGES AND PREFERRED \par\pard\plain\fs16\plain\cf1\f50\fs16\ql DIVIDENDS....................... \par\pard\plain\fs16\plain\cf1\f50\fs16\ql EXCESS FIXED CHARGES AND \par\pard\plain\fs16\plain\cf1\f50\fs16\ql PREFERRED DIVIDENDS OVER \par\pard\plain\fs16\plain\cf1\f50\fs16\ql EARNINGS........................\par \pard\plain\f0\fs16\par\pard\plain\cf1\f50\fs16\ql $(49,607) $(95,371) $(12,850) \par\pard\plain\fs16 \page{\*\bkmkstart doc_1_7}{\*\bkmkend doc_1_7} \par\pard\plain\fs16 \page \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql EXHIBIT 21.1 \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Global C rossing Ltd. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql Sub sidiaries \par\pard\plain\fs16 \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ------------------------------------------------------------------------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql Entity

\par\pard\plain\fs16\plain\cf1\f50\fs16\ql ------------------------------------------------------------------------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql ALC Communications Corporation \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (US) - Delaware \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ------------------------------------------------------------------------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql Ameritel Management, Inc. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (British Columbia) \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ------------------------------------------------------------------------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql Asia Global Crossing Asia Pacific Com mercial Ltd. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (Hong Kong) \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ------------------------------------------------------------------------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql Asia Global Crossing Asia Pacific Ltd . \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (Hong Kong) \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ------------------------------------------------------------------------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql Asia Global Crossing Development Comp any \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (US) - Delaware \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ------------------------------------------------------------------------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql Asia Global Crossing Holdings Ltd. (9 3%) \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (Bermuda) \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ------------------------------------------------------------------------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql Asia Global Crossing Hong Kong Limite d \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (Hong Kong) \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ------------------------------------------------------------------------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql Asia Global Crossing Ltd. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (Bermuda) \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ------------------------------------------------------------------------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql Atlantic Crossing Holdings Ltd. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (Bermuda) \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ------------------------------------------------------------------------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql Atlantic Crossing Holdings U.K. Ltd. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (UK) \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ------------------------------------------------------------------------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql Atlantic Crossing Ltd. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (Bermuda) \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ------------------------------------------------------------------------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql Budget Call Long Distance, Inc. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (US) - Delaware \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ------------------------------------------------------------------------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql Business Telemanagement, Inc. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (US) - California \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ------------------------------------------------------------------------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql Carmathen Ltd.

\par\pard\plain\fs16\plain\cf1\f50\fs16\ql (British Virgin Islands) \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ------------------------------------------------------------------------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql DePue Communications, Inc. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (US) - Illinois \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ------------------------------------------------------------------------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql Fairmount Cellular, Inc. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (US) - Georgia \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ------------------------------------------------------------------------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql Frontel Communications Limited \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (UK) \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ------------------------------------------------------------------------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql Frontier Cable of Indiana, Inc. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (US) - Indiana \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ------------------------------------------------------------------------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql Frontier Cable of Mississippi, Inc. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (US) - Mississippi \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ------------------------------------------------------------------------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql Frontier Cable of Wisconsin, Inc. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (US) - Wisconsin \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ------------------------------------------------------------------------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql Frontier Cellular of Alabama, Inc. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ------------------------------------------------------------------------------\par\pard\plain\fs16 \page \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql ------------------------------------------------------------------------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql Entity \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ------------------------------------------------------------------------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql (US) - Alabama \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ------------------------------------------------------------------------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql Frontier Communications of the South, Inc. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (US) - Alabama \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ------------------------------------------------------------------------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql Frontier Communications of Alabama, I nc. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (US) - Alabama \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ------------------------------------------------------------------------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql Frontier Communications of AuSable Va lley, Inc. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (US) - New York \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ------------------------------------------------------------------------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql Frontier Communications of Breezewood , Inc. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (US) - Pennsylvania \par\pard\plain\fs16\plain\cf1\f50\fs16\ql -------------------------------------------------------------------------------

\par\pard\plain\fs16\plain\cf1\f50\fs16\ql Frontier Communications of Canton, In c. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (US) - Pennsylvania \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ------------------------------------------------------------------------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql Frontier Communications of DePue, Inc . \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (US) - Illinois \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ------------------------------------------------------------------------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql Frontier Communications of Fairmount, Inc. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (US) - Georgia \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ------------------------------------------------------------------------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql Frontier Communications of Georgia, I nc. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (US) - Georgia \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ------------------------------------------------------------------------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql Frontier Communications of Illinois, Inc. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (US) - Illinois \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ------------------------------------------------------------------------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql Frontier Communications of Indiana, I nc. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (US) - Indiana \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ------------------------------------------------------------------------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql Frontier Communications of Iowa, Inc. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (US) - Iowa \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ------------------------------------------------------------------------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql Frontier Communications of Lakeside, Inc. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (US) - Illinois \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ------------------------------------------------------------------------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql Frontier Communications of Lakewood, Inc. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (US) - Pennsylvania \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ------------------------------------------------------------------------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql Frontier Communications of Lamar Coun ty, Inc. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (US) - Alabama \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ------------------------------------------------------------------------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql Frontier Communications of Michigan, Inc. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (US) - Michigan \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ------------------------------------------------------------------------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql Frontier Communications-Midland, Inc. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (US) - Illinois \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ------------------------------------------------------------------------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql Frontier Communications of Minnesota Inc.

\par\pard\plain\fs16\plain\cf1\f50\fs16\ql (US) - Minnesota \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ------------------------------------------------------------------------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql Frontier Communications of Mississipp i, Inc. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (US) - Mississippi \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ------------------------------------------------------------------------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql Frontier Communications of Mondovi In c. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (US) - Wisconsin \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ------------------------------------------------------------------------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql Frontier Communications of Mt. Pulask i, Inc. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (US) - Illinois \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ------------------------------------------------------------------------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql Frontier Communications of New York, Inc. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (US) - New York \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ------------------------------------------------------------------------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql Frontier Communications of Orion, Inc . \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ------------------------------------------------------------------------------\par\pard\plain\fs16 \page \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql ------------------------------------------------------------------------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql Entity \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ------------------------------------------------------------------------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql (US) - Illinois \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ------------------------------------------------------------------------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql Frontier Communications of Oswayo Riv er, Inc. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (US) - Pennsylvania \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ------------------------------------------------------------------------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql Frontier Communications of Pennsylvan ia, Inc. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (US) - Pennsylvania \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ------------------------------------------------------------------------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql Frontier Communications-Prairie, Inc. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (US) - Illinois \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ------------------------------------------------------------------------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql Frontier Communications of Rochester, Inc. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (US) - Delaware \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ------------------------------------------------------------------------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql Frontier Communications-Schuyler, Inc . \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (US) - Illinois \par\pard\plain\fs16\plain\cf1\f50\fs16\ql -------------------------------------

------------------------------------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql Frontier Communications of Seneca-Gor ham Inc. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (US) - New York \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ------------------------------------------------------------------------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql Frontier Communications-St. Croix, In c. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (US) - Wisconsin \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ------------------------------------------------------------------------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql Frontier Communications of Sylvan Lak e, Inc. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (US) - New York \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ------------------------------------------------------------------------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql Frontier Communications of Thorntown \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (US) - Indiana \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ------------------------------------------------------------------------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql Frontier Communications of Viroqua In c. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (US) - Wisconsin \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ------------------------------------------------------------------------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql Frontier Communications of Wisconsin, Inc. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (US) - Wisconsin \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ------------------------------------------------------------------------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql Frontier Corporation \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (US) - New York \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ------------------------------------------------------------------------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql Frontier Information Technologies Inc . \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (US) - Delaware \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ------------------------------------------------------------------------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql Frontier InfoServices, Inc. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (US) - Delaware \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ------------------------------------------------------------------------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql Frontier Long Distance of America, In c. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (US) - Delaware \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ------------------------------------------------------------------------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql Frontier Subsidiary Telco Inc. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (US) - Delaware \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ------------------------------------------------------------------------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql Frontier Telephone of Rochester, Inc. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (US) - New York \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ------------------------------------------------------------------------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql Galla Town Ltd. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (British Virgin Islands) \par\pard\plain\fs16\plain\cf1\f50\fs16\ql -------------------------------------------------------------------------------

\par\pard\plain\fs16\plain\cf1\f50\fs16\ql GC Dev. Co., Inc. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (US) - Delaware \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ------------------------------------------------------------------------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql GC Pacific Landing Corp. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (US) - Delaware \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ------------------------------------------------------------------------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql GC Pan European Crossing Belgie B.V.B .A. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (Belgium) \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ------------------------------------------------------------------------------\par\pard\plain\fs16 \page \par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql ------------------------------------------------------------------------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql Entity \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ------------------------------------------------------------------------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql GC Pan European Crossing Danmark ApS \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (Denmark) \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ------------------------------------------------------------------------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql GC Pan European Crossing Deutschland GmbH \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (Germany) \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ------------------------------------------------------------------------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql GC Pan European Crossing Espana S.L. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (Spain) \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ------------------------------------------------------------------------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql GC Pan European Crossing France S.A.R .L. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (France) \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ------------------------------------------------------------------------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql GC Pan European Crossing Holdings B.V . \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (Netherlands) \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ------------------------------------------------------------------------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql GC Pan European Crossing Italia S.R.L . \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (Italy) \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ------------------------------------------------------------------------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql GC Pan European Crossing Luxembourg I S.A.R.L. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (Luxembourg) \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ------------------------------------------------------------------------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql GC Pan European Crossing Luxembourg I I, S.R.L. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (Luxembourg) \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ------------------------------------------------------------------------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql GC Pan European Crossing Nederland B. V.

\par\pard\plain\fs16\plain\cf1\f50\fs16\ql (Netherlands) \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ------------------------------------------------------------------------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql GC Pan European Crossing Norge AS \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (Sweden) \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ------------------------------------------------------------------------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql GC Pan European Crossing Osterreich G mbH \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (Austria) \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ------------------------------------------------------------------------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql GC Pan European Crossing Sverige A.b. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (Sweden) \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ------------------------------------------------------------------------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql GC Pan European Crossing Switzerland GmbH \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (Switzerland) \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ------------------------------------------------------------------------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql GC Pan European Crossing UK Limited \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (UK) \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ------------------------------------------------------------------------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql GC SAC Argentina S.R.L. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (Argentina) \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ------------------------------------------------------------------------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql GC St. Croix Co. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (Virgin Islands) \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ------------------------------------------------------------------------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql GC UK Holding Ltd. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (UK) \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ------------------------------------------------------------------------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql GCT Pacific Holdings, Ltd. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (Bermuda) \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ------------------------------------------------------------------------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql General Offshore (UK) Limited \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (UK) \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ------------------------------------------------------------------------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql General Offshore Specialised Services Ltd. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (US) - Delaware \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ------------------------------------------------------------------------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql Georgia Merger Sub Corporation \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (US) - Delaware \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ------------------------------------------------------------------------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql Global Access Ltd. (49%) \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (Japan) \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ------------------------------------------------------------------------------\par\pard\plain\fs16 \page

\par\pard\plain\fs16\pard\plain\cf1\f50\fs16\ql ------------------------------------------------------------------------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql Entity \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ------------------------------------------------------------------------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql Global Crossing (BidCo) Ltd. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (UK) \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ------------------------------------------------------------------------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql Global Crossing (HoldCo) Ltd. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (UK) \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ------------------------------------------------------------------------------\par\pard\plain\fs16\plain\cf1\f50\fs16\ql Global Crossing Advanced Card Service s, Inc. \par\pard\plain\fs16\plain\cf1\f50\fs16\ql (US) - Iowa \par\pard\plain\fs16\plain\cf1\f50\fs16\ql ------------------------------------------------------------------------------\