EXECUTION COPY
COMMON SECURITIES GUARANTEE AGREEMENT
Viatel, Inc
Dated as of April 12, 2000
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS AND INTERPRETATION
SECTION 1.1. Definitions Interpretation.............................2
ARTICLE II
GUARANTEE
SECTION 2.1. Guarantee..............................................3
SECTION 2.2. Subordination..........................................4
SECTION 2.3. Waiver of Notice and Demand............................4
SECTION 2.4. Obligations Not Affected...............................4
SECTION 2.5. Rights of Holders......................................5
SECTION 2.6. Guarantee of Payment...................................5
SECTION 2.7. Subrogation............................................5
SECTION 2.8. Independent Obligations................................6
SECTION 2.9. Acknowledgment by Guarantor............................6
ARTICLE III
LIMITATION OF TRANSACTIONS; SUBORDINATION
SECTION 3.1. Limitation of Transactions.............................6
SECTION 3.2. Ranking................................................7
ARTICLE IV
TERMINATION
SECTION 4.1. Termination............................................7
ARTICLE V
MISCELLANEOUS
SECTION 5.1. Successors and Assigns.................................8
SECTION 5.2. Amendments.............................................8
SECTION 5.3. Notices................................................8
SECTION 5.4. Benefit................................................9
SECTION 5.5. Governing Law..........................................9
NYDOCS01/689470 2
COMMON SECURITIES GUARANTEE AGREEMENT
This COMMON SECURITIES Guarantee Agreement (the "Common
Securities Guarantee"), dated as of April 12, 2000, is executed and delivered by
VIATEL, INC., a Delaware corporation (the "Guarantor"), for the benefit of the
Holders (as defined herein) from time to time of the Common Securities (as
defined herein) of Viatel Financing Trust I, a Delaware statutory business trust
(the "Trust").
WHEREAS, pursuant to an Amended and Restated Declaration of
Trust (the "Declaration"), dated as of April 12, 2000, among the trustees of the
Trust named therein, the Guarantor, as sponsor, and the holders from time to
time of undivided beneficial interests in the assets of the Trust, the Trust is
issuing on the date hereof 92,783.5 common securities, having an aggregate
stated liquidation amount of $4,639,175 designated the 7 3/4% Trust Common
Securities (the "Common Securities") (plus up to an additional 18,556.7 Common
Securities, having an aggregate liquidation amount of $927,835, to meet capital
requirements of the Trust in the event of an issuance of Additional Securities
(as defined in the Placement Agreement dated April 6, 2000 among Xxxxxx Xxxxxxx
& Co., Incorporated, Xxxxxxx Xxxxx Barney Inc., Banc of America Securities LLC,
the Trust and the Guarantor)), designated the 7 3/4% Convertible Common
Securities;
WHEREAS, as incentive for the Holders to purchase the Common
Securities, the Guarantor desires irrevocably and unconditionally to agree, to
the extent set forth in this Common Securities Guarantee, to guarantee the
obligations of the Trust to the Holders of Common Securities on the terms and
conditions set forth herein; and
WHEREAS, the Guarantor is also executing and delivering a
guarantee agreement (the "Preferred Securities Guarantee") in substantially
identical terms to this Common Securities Guarantee for the benefit of the
holders of the Convertible Preferred Securities (as defined herein), except that
if an Event of Default (as defined in the Indenture), has occurred and is
continuing, the rights of Holders of the Common Securities to receive Guarantee
Payments (as defined herein) under this Common Securities Guarantee shall be
subordinated to the rights of Holders of Preferred Securities to receive
Guarantee Payments (as defined in the Preferred Securities Guarantee) under the
Preferred Securities Guarantee;
NOW, THEREFORE, in consideration of the purchase by each
Holder of Common Securities, which purchase the Guarantor hereby agrees shall
benefit the Guarantor, the Guarantor executes and delivers this Common
Securities Guarantee for the benefit of the Holders.
ARTICLE I
DEFINITIONS AND INTERPRETATION
SECTION 1.1. DEFINITIONS INTERPRETATION
In this Common Securities Guarantee, unless the context
otherwise requires:
(a) capitalized terms used in this Common Securities Guarantee
but not defined in the preamble above have the respective meanings
assigned to them in this Section 1.1;
(b) terms defined in the Declaration as at the date hereof
have the same meaning when used in this Common Securities Guarantee
unless otherwise defined in the Common Securities Guarantee;
(c) a term defined anywhere in this Common Securities
Guarantee has the same meaning throughout;
(d) all references to "the Common Securities Guarantee" or
"this Common Securities Guarantee" are to this Common Securities
Guarantees as modified, supplemented or amended from time to time;
(e) all references in this Common Securities Guarantee to
Articles and Sections are to Articles and Sections of this Common
Securities Guarantee unless otherwise specified;
(f) a term defined in the Trust Indenture Act has the same
meaning when used in this Common Securities Guarantee, unless otherwise
defined in this Common Securities Guarantee or unless the context
otherwise requires;
(g) a reference to the singular includes the plural and vice
versa;
(h) a reference to any person shall include its successors and
assigns;
(i) a reference to any agreement or instrument shall mean such
agreement or instrument as supplemented, modified, amended, or amended
and restated, and in effect from time to time; and
(j) a reference to any statute, law, rule or regulation, shall
include any amendments thereto applicable to relevant Person, and any
successor statute, law, rule or regulation.
2
"Convertible Debentures" means the 7 3/4% Convertible Junior
Subordinated Debentures due April 15, 2015 of the Guarantor held by the
Institutional Trustee (as defined in the Declaration).
"Convertible Preferred Securities" means the securities
representing preferred undivided beneficial interests in the assets of the
Trust.
"Guarantee Payments" means the following payments or
distributions, without duplication, with respect to the Common Securities, to
the extent not paid or made by the Trust: (i) any accrued and unpaid
Distributions as defined in the Declaration that are required to be paid on such
Common Securities to the extent the Trust shall have funds available therefor,
(ii) the redemption price, including all accrued and unpaid Distributions to the
date of redemption (the "Redemption Price") to the extent the Trust has funds
available therefor, with respect to any Common Securities called for redemption
by the Trust, and (iii) upon a voluntary or involuntary dissolution, winding-up
or termination of the Trust (other than in connection with the distribution of
Convertible Debentures to the Holders in exchange for Common Securities as
provided in the Declaration or the redemption of all the Common Securities), the
lesser of (a) the aggregate of the liquidation amount and all accrued and unpaid
Distributions on the Common Securities to the date of payment to the extent the
Trust has funds available therefor, and (b) the amount of assets of the Trust
remaining available for distribution to Holders upon liquidation of the Trust
(in either case, the "Liquidation Distribution"). If an Event of Default (as
defined in the Indenture), has occurred and is continuing, the rights of Holders
of the Common Securities to receive Guarantee Payments under this Common
Securities Guarantee are subordinated to the rights of Holders of Convertible
Preferred Securities to receive Guarantee Payments.
"Holder" shall mean any holder, as registered on the books and
records of the Trust, of any Common Securities.
"Indenture" means the Indenture dated as of April 12, 2000
among the Guarantor and The Bank of New York, a New York banking corporation, as
trustee, pursuant to which the Convertible Debentures are to be issued to the
Institutional Trustee (as defined in the Indenture) of the Trust.
ARTICLE II
GUARANTEE
SECTION 2.1. GUARANTEE
The Guarantor irrevocably and unconditionally agrees to pay in
full to the Holders the Guarantee Payments (without duplication of amounts
theretofore paid by the Trust), as and when due, regardless of any defense,
right of set-off or counterclaim which the Trust may have or assert. The
Guarantor's obligation to make a Guarantee Payment may be satisfied by direct
3
payment of the required amounts by the Guarantor to the Holders or by causing
the Trust to pay such amounts to the Holders.
SECTION 2.2. SUBORDINATION
If an event of default under the Indenture has occurred and is
continuing, the rights of Holders of the Common Securities to receive Guarantee
Payments under this Common Securities Guarantee are subordinated to the rights
of Holders of Convertible Preferred Securities to receive Guarantee Payments
under the Preferred Securities Guarantee.
SECTION 2.3. WAIVER OF NOTICE AND DEMAND
The Guarantor hereby waives notice of acceptance of this
Common Securities Guarantee and of any liability to which it applies or may
apply, presentment, demand for payment, any right to require a proceeding first
against the Trust or any other Person before proceeding against the Guarantor,
protest, notice of nonpayment, notice of dishonor, notice of redemption and all
other notices and demands.
SECTION 2.4. OBLIGATIONS NOT AFFECTED
The obligations, covenants, agreements and duties of the
Guarantor under this Common Securities Guarantee shall in no way be affected or
impaired by reason of the happening from time to time of any of the following:
(a) the release or waiver, by operation of law or otherwise,
of the performance or observance by the Trust of any express or implied
agreement, covenant, term or condition relating to the Common
Securities to be performed or observed by the Trust;
(b) the extension of time for the payment by the Trust of all
or any portion of the Distributions, Redemption Price, Liquidation
Distribution or any other sums payable under the terms of the Common
Securities or the extension of time for the performance of any other
obligation under, arising out of, or in connection with, the Common
Securities (other than an extension of time for payment of
Distributions, Redemption Price, Liquidation Distribution or other sum
payable that results from the extension of any interest payment period
on the Convertible Debentures or any extension of the maturity date of
the Convertible Debentures permitted by the Indenture);
(c) any failure, omission, delay or lack of diligence on the
part of the Holders to enforce, assert or exercise any right,
privilege, power or remedy conferred on the Holders pursuant to the
terms of the Common Securities, or any action on the part of the Trust
granting indulgence or extension of any kind;
4
(d) the voluntary or involuntary liquidation, dissolution,
sale of any collateral, receivership, insolvency, bankruptcy,
assignment for the benefit of creditors, reorganization, arrangement,
composition or readjustment of debt of, or other similar proceedings
affecting, the Trust or any of the assets of the Trust;
(e) any invalidity of, or defect or deficiency in, the
Common Securities;
(f) the settlement or compromise of any obligation
guaranteed hereby or hereby incurred; or
(g) any other circumstance whatsoever that might otherwise
constitute a legal or equitable discharge or defense of a guarantor, it
being the intent of this Section 2.4 that the obligations of the
Guarantor hereunder shall be absolute and unconditional under any and
all circumstances.
There shall be no obligation of the Holders or any other
Persons to give notice to, or obtain consent of, the Guarantor with respect to
the happening of any of the foregoing.
SECTION 2.5. RIGHTS OF HOLDERS
The Guarantor expressly acknowledges that any Holder of Common
Securities may institute a legal proceeding directly against the Guarantor to
enforce its rights under this Common Securities Guarantee, without first
instituting a legal proceeding against the Trust or any other Person.
SECTION 2.6. GUARANTEE OF PAYMENT
This Common Securities Guarantee creates a guarantee of
payment and not of collection.
SECTION 2.7. SUBROGATION
The Guarantor shall be subrogated to all (if any) rights of
the Holders of Common Securities against the Trust in respect of any amounts
paid to such Holders by the Guarantor under this Common Securities Guarantee;
PROVIDED, HOWEVER, that the Guarantor shall not (except to the extent required
by mandatory provisions of law) be entitled to enforce or exercise any rights
that it may acquire by way of subrogation or any indemnity, reimbursement or
other agreement, in all cases as a result of payment under this Common
Securities Guarantee, if, at the time of any such payment, any amounts are due
and unpaid under this Common Securities Guarantee. If any amount shall be paid
to the Guarantor in violation of the preceding sentence, the Guarantor agrees to
hold such amount in trust for the Holders and to pay over such amount to the
Holders.
5
SECTION 2.8. INDEPENDENT OBLIGATIONS
The Guarantor acknowledges that its obligations hereunder are
independent of the obligations of the Trust with respect to the Common
Securities and that the Guarantor shall be liable as principal and as debtor
hereunder to make Guarantee Payments pursuant to the terms of this Common
Securities Guarantee notwithstanding the occurrence of any event referred to in
subsections (a) through (g), inclusive, of Section 2.4 hereof.
SECTION 2.9. ACKNOWLEDGMENT BY GUARANTOR
The Guarantor acknowledges its obligation to issue and deliver
common stock, par value $0.01 per share, of the Guarantor (the "Common Stock"),
upon the conversion of the Common Securities.
ARTICLE III
LIMITATION OF TRANSACTIONS; SUBORDINATION
SECTION 3.1. LIMITATION OF TRANSACTIONS
So long as any Common Securities remain outstanding, if (i)
the Guarantor has exercised its option to defer interest payments on the
Convertible Debentures by extending the interest payment period and such period
or extension thereof, shall be continuing, (ii) there shall have occurred any
default by the Guarantor on any of its payment or other obligations under this
Common Securities Guarantee or (iii) there shall have occurred and be continuing
any event that, with the giving of notice or the lapse of time or both, would
constitute an event of default under the Declaration, then the Guarantor (a)
shall not declare or pay dividends on, make distributions with respect to, or
redeem, purchase or acquire, or make a liquidation payment with respect to, any
of its capital stock, (b) shall not make any payment of interest, principal or
premium, if any, on or repay, repurchase or redeem any debt securities of the
Guarantor that rank PARI PASSU with or junior in interest to the Convertible
Debentures and (c) shall not make any guarantee payments with respect to any
guarantee by the Guarantor of the debt securities of any subsidiary of the
Guarantor if such guarantee ranks PARI PASSU with or junior in interest to the
Convertible Debentures (other than (i) a reclassification of the Guarantor's
capital stock or the exchange or conversion of one class or series of the
Guarantor's capital stock for another class or series of the Guarantor's capital
stock; (ii) the purchase of fractional interests in shares of the Guarantor's
capital stock pursuant to the conversion or exchange provisions of such capital
stock or the security being converted into or exchanged for the Guarantor's
capital stock; (iii) the payment of dividends or distributions in common stock
of the Guarantor; (iv) any declaration of a dividend in connection with the
implementation of a stockholders' rights plan, or the issuance of stock under
any such plan in the future, or the redemption or repurchase of any such rights
pursuant thereto; (v) payments under this Common Securities Guarantee and the
Preferred Securities Guarantee; (vi) purchases of the Guarantor's common stock
related to the issuance of the
6
Guarantor's common stock or rights under any of the Guarantor's benefit plans
for the Guarantor's directors, officers or employees; or (vii) obligations of
the Guarantor under any dividend reinvestment and stock purchase plans).
SECTION 3.2. RANKING
(a) This Common Securities Guarantee will constitute an
unsecured obligation of the Guarantor and will rank (i) subordinate and
junior in right of payment to all other liabilities of the Guarantor,
except any liabilities that may be made PARI PASSU expressly by their
terms, (ii) PARI PASSU with the most senior preferred or preference
stock now or hereafter issued by the Guarantor and with any guarantee
now or hereafter entered into by the Guarantor in respect of any
preferred or preference stock of any Affiliate of the Guarantor, and
(iii) senior to the Common Stock.
(b) The holders of any obligations of the Guarantor that are
senior in priority to the obligations under this Common Securities
Guarantee will be entitled to all of the rights inuring to the holders
of "Senior Indebtedness" under Article 12 of the Indenture, and the
Holders of the Common Securities will be subject to all of the terms
and conditions of such Article 12 with respect to any claims or rights
hereunder with the same effect as though fully set forth herein.
ARTICLE IV
TERMINATION
SECTION 4.1. TERMINATION
This Common Securities Guarantee shall terminate upon (i) full
payment of the amount payable upon redemption of the Common Securities, (ii) the
distribution of the Guarantor's Common Stock to the Holders in respect of the
conversion of the Convertible Preferred Securities into the Common Stock or the
distribution of the Convertible Debentures (as defined in the Declaration) to
the Holders of all of the Common Securities or (iii) full payment of the amounts
payable in accordance with the Declaration upon liquidation of the Trust.
Notwithstanding the foregoing, this Common Securities Guarantee will continue to
be effective or will be reinstated, as the case may be, if at any time any
Holder of Common Securities must restore payment of any sums paid under the
Common Securities or under this Common Securities Guarantee.
7
ARTICLE V
MISCELLANEOUS
SECTION 5.1. SUCCESSORS AND ASSIGNS
All guarantees and agreements contained in this Common
Securities Guarantee shall bind the successors, assigns, receivers, trustees and
representatives of the Guarantor and shall inure to the benefit of the Holders
of the Common Securities then outstanding.
SECTION 5.2. AMENDMENTS
Except with respect to any changes which do not adversely
affect the rights of Holders (in which case no consent of Holders will be
required), this Common Securities Guarantee may only be amended with the prior
approval of the Holders of at least a majority in liquidation amount of all the
outstanding Common Securities. The provisions of Section 12.2 of the Declaration
with respect to meetings of Holders of the Securities apply to the giving of
such approval.
SECTION 5.3. NOTICES
All notices provided for in this Common Securities Guarantee
shall be in writing, duly signed by the party giving such notice, and shall be
delivered, sent by facsimile or mailed by registered or certified mail or
overnight courier, as follows:
(a) if given to the Trust, in care of the Regular Trustees at
the Trust's mailing address set forth below (or such other address as
the Trust may give notice of to the Holders of the Common Securities):
c/o Viatel, Inc.
000 Xxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: General Counsel
(b) if given to the Guarantor, at the Guarantor's mailing
address set forth below (or such other address as the Guarantor may
give notice of to the Holders of the Common Securities):
Viatel, Inc.
000 Xxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: General Counsel
8
(c) if given to any Holder of Common Securities, at the
address set forth on the books and records of the Trust.
All such notices shall be deemed to have been given when
received in person, telecopied with receipt confirmed, or mailed by first class
mail, postage prepaid except that if a notice or other document is refused
delivery or cannot be delivered because of a changed address of which no notice
was given, such notice or other document shall be deemed to have been delivered
on the date of such refusal or inability to deliver.
SECTION 5.4. BENEFIT
This Common Securities Guarantee is solely for the benefit of
the Holders of the Common Securities and is not separately transferable from the
Common Securities.
SECTION 5.5. GOVERNING LAW
THIS COMMON SECURITIES GUARANTEE SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF
NEW YORK.
9
THIS COMMON SECURITIES GUARANTEE AGREEMENT is executed as of
the day and year first above written.
VIATEL, INC.,
as Guarantor
By: /s/ Xxxxx X. Xxxxxxxx
------------------------------
Name: Xxxxx X.Xxxxxxxx
Title: Senior Vice President and
General Counsel
10
