Document:

3,000,000 TRUST CONVERTIBLE PREFERRED SECURITIES

                            VIATEL FINANCING TRUST I

                  7 3/4% TRUST CONVERTIBLE PREFERRED SECURITIES
           (LIQUIDATION AMOUNT $50 PER CONVERTIBLE PREFERRED SECURITY)
        GUARANTEED TO THE EXTENT SET FORTH IN THE GUARANTEE AGREEMENT BY,
                    AND CONVERTIBLE INTO THE COMMON STOCK OF,

                                  VIATEL, INC.

                               PLACEMENT AGREEMENT

                                  APRIL 6, 2000

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                                                PLACEMENT AGREEMENT

                                                                April 6, 2000

Morgan Stanley & Co. Incorporated
Solomon Smith Barney Inc.
Banc of America Securities LLC
c/o Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York  10036-8293

Dear Sirs and Mesdames:

                  Viatel Financing Trust I, a special purpose statutory business
trust formed under the laws of the State of Delaware (the "TRUST"),  proposes to
issue and sell to the several  placement  agents named in Schedule I hereto (the
"PLACEMENT  AGENTS")  3,000,000  of  its  7  3/4%  Trust  Convertible  Preferred
Securities, liquidation amount $50 per convertible preferred security (the "FIRM
SECURITIES"). The Trust also proposes to issue and sell to the several Placement
Agents  not more than an  additional  600,000  of its 7 3/4%  Trust  Convertible
Preferred  Securities,  liquidation  preference  $50 per  convertible  preferred
security (the "ADDITIONAL SECURITIES"),  if and to the extent that the Placement
Agents shall have  determined to exercise the right to purchase such  additional
securities granted to the several Placement Agents in Section 2 hereof. The Firm
Securities and the Additional  Securities are hereinafter  collectively referred
to as the "CONVERTIBLE PREFERRED SECURITIES."

                  The Convertible  Preferred  Securities will be guaranteed (the
"GUARANTEE") by Viatel, Inc. a Delaware corporation ("VIATEL" or the "COMPANY"),
to the extent  provided in the Preferred  Securities  Guarantee  Agreement to be
dated as of April 12,  2000 (the  "PREFERRED  SECURITIES  GUARANTEE  AGREEMENT")
between the Company and The Bank of New York,  as  preferred  guarantee  trustee
(the "GUARANTEE  TRUSTEE"),  and will be convertible  into the common stock, par
value $0.01 per share, of Viatel ("VIATEL COMMON STOCK" or the "COMMON  STOCK").
The  Trust  will use the  proceeds  from the sale of the  Convertible  Preferred
Securities  and the sale of the Trust Common  Securities  (as defined  below) to
purchase from the Company $154,639,175  aggregate principal amount of its 7 3/4%
Convertible  Junior  Subordinated   Debentures  due  2015  (up  to  $185,567,010
aggregate principal amount, if and to the extent that the Placement Agents shall
have determined to exercise the right to purchase Additional  Securities granted
to the  Placement  Agents in Section 2 hereof)  (the  "CONVERTIBLE  DEBENTURES")
pursuant to a Debenture Purchase Agreement to be dated as of April 12, 2000 (the
"DEBENTURE  PURCHASE   AGREEMENT")  between  the  Trust  and  the  Company.  The
Convertible Debentures will be issued under an Indenture to be dated as of April
12, 2000 (the  "INDENTURE")  between  the  Company and The Bank of New York,  as
trustee (the "INDENTURE TRUSTEE"). The Company will also be the holder

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of  one  hundred  percent  of  the  common  securities   representing  undivided
beneficial interests in the assets of the Trust (the "TRUST COMMON SECURITIES"),
which the Company will purchase from the Trust  pursuant to a Common  Securities
Purchase  Agreement  to be dated as of April 12,  2000 (the  "COMMON  SECURITIES
PURCHASE  AGREEMENT" and, together with the Debenture  Purchase  Agreement,  the
"PURCHASE  AGREEMENTS")  between  the Company  and the Trust.  The Trust  Common
Securities  will be  guaranteed  by the  Company to the extent  provided  in the
Common  Securities  Guarantee  Agreement  to be dated as of April 12,  2000 (the
"COMMON SECURITIES  GUARANTEE AGREEMENT" and, together with Preferred Securities
Guarantee  Agreement,  the  "GUARANTEE  AGREEMENTS")  to be entered  into by the
Company.

                  The Trust has been formed  under  Delaware  law  pursuant to a
Declaration  of Trust,  dated as of March 31, 2000, as amended by an Amended and
Restated  Declaration  of Trust to be dated as of April 12,  2000 (as so amended
and restated,  the "DECLARATION"),  executed by the Company, as sponsor,  and by
the trustees of the Trust (the "VFT  TRUSTEE"),  all of whom have been appointed
by the Company as holder of one hundred percent of the Trust Common  Securities.
A majority of the VFT  Trustees  (the  "REGULAR  TRUSTEES")  are persons who are
employees or officers of the Company.  One VFT Trustee, The Bank of New York, is
unaffiliated  with the  Company  and shall  act as  institutional  trustee  (the
"INSTITUTIONAL  TRUSTEE") and as indenture trustee under the Declaration for the
purposes of the Trust  Indenture Act of 1939,  as amended (the "TRUST  INDENTURE
ACT").  The  Bank of New  York  (Delaware)  will act as  Delaware  trustee  (the
"DELAWARE TRUSTEE") under the Declaration.

                  The Company and the Trust will be  obligated  to file with the
Securities  and  Exchange  Commission  (the  "COMMISSION"),  and  to  use  their
reasonable  best efforts to cause the Commission to declare  effective,  a shelf
registration  statement  covering  certain resales of the Convertible  Preferred
Securities,  Convertible  Debentures,  the  Guarantee  and Viatel  Common  Stock
pursuant to the  Registration  Rights  Agreement to be dated as of April 6, 2000
(the  "REGISTRATION  RIGHTS  AGREEMENT")  among the Trust,  the  Company and the
Placement  Agents and to be substantially in the form attached hereto as EXHIBIT
A.

                  The Declaration,  the Convertible  Preferred  Securities,  the
Trust Common Securities, the Indenture, the Convertible Debentures, the Purchase
Agreements, the Guarantee Agreements, the Registration Rights Agreement and this
Agreement are hereinafter called, collectively, the "OPERATIVE INSTRUMENTS."

                  The Convertible  Preferred  Securities will be offered without
being  registered  under the Securities Act of 1933, as amended (the "SECURITIES
ACT"),  to "qualified  institutional  buyers" (as defined in Rule 144A under the
Securities Act) in compliance with the exemption from  registration  provided by
Rule 144A under the Securities Act.

                  In  connection  with  the  sale of the  Convertible  Preferred
Securities, the Company has prepared a preliminary Offering Memorandum issued on
March 31, 2000 (the  "PRELIMINARY  MEMORANDUM") and a final Offering  Memorandum
dated April 6, 2000 (the "FINAL

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MEMORANDUM" and,  together with the Preliminary  Memorandum,  the  "MEMORANDUM")
setting  forth or  including  a  description  of the  terms  of the  Convertible
Preferred Securities,  the Convertible Debentures,  the Guarantee and the Viatel
Common  Stock,  the  terms of the  offering,  a  description  of the Trust and a
description of the Company and its business.

                  1.  REPRESENTATIONS AND WARRANTIES.  The Trust and the Company
jointly and  severally  represent  and  warrant to, and agree with,  each of the
Placement Agents that as of the date hereof:

                  (a) The  Company  has been duly  incorporated  and is  validly
         existing as a corporation  in good standing under the laws of the State
         of Delaware with full  corporate  power and corporate  authority to own
         its  properties  and to conduct its  business as described in the Final
         Memorandum  and is duly  qualified  to  transact  business as a foreign
         corporation  and is in good standing in each  jurisdiction in which the
         conduct  of its  business  or its  ownership  or  leasing  of  property
         requires such  qualification,  except to the extent that the failure to
         be so  qualified  or be in good  standing  would  not  have a  Material
         Adverse Effect (as defined  below) on the Company and its  Subsidiaries
         (as defined below), taken as a whole.

                  (b) Each  subsidiary  of the  Company  is listed on  EXHIBIT B
         hereto (each a "SUBSIDIARY" and, collectively, the "SUBSIDIARIES") and,
         if applicable to such country,  each of the  Subsidiaries  operating in
         such  country has been duly  incorporated  or otherwise  organized,  is
         validly existing in good standing under the laws of the jurisdiction of
         its  incorporation  or  organization,  with  full  corporate  power and
         corporate  authority to own its  properties and to conduct its business
         as described in the Final  Memorandum and is duly qualified to transact
         business  and is in good  standing  in each  jurisdiction  in which the
         conduct  of its  business  or its  ownership  or  leasing  of  property
         requires such  qualification,  except to the extent that the failure to
         be so  qualified  or be in good  standing  would  not  have a  Material
         Adverse  Effect  (defined  below) on the Company and the  Subsidiaries,
         taken as a whole.

                  (c) The Trust has been duly created and is validly existing in
         good standing as a business  trust under the Business  Trust Act of the
         State of Delaware (the "DELAWARE ACT"), is classified for United States
         federal  income  tax  purposes  as  a  grantor  trust  and  not  as  an
         association taxable as a corporation,  has the business trust power and
         authority  to  conduct  its  business  as  presently  conducted  and as
         described in the Final Memorandum, and is not required to be authorized
         or qualified to do business in any other jurisdiction;  the Company and
         the Trust will treat the Convertible  Debentures as indebtedness of the
         Company for United States federal income tax purposes; and the Trust is
         and  will  be  treated  as a  consolidated  subsidiary  of the  Company
         pursuant to generally accepted accounting principles.

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                  (d) All of the issued  shares of capital stock or other equity
         interests,  as the case may be, of each  Subsidiary of the Company have
         been  duly   authorized  and  are  validly   issued,   fully  paid  and
         non-assessable  and are owned,  either  directly or indirectly,  by the
         Company, free and clear of all liens, encumbrances, equities or claims,
         other than those indicated in the Final Memorandum.

                  (e) This  Agreement  has been duly  authorized,  executed  and
         delivered by each of the Trust and the Company.

                  (f) The Indenture has been duly authorized by the Company and,
         when duly executed and delivered by the Company,  will constitute valid
         and binding obligation of the Company  enforceable  against the Company
         in accordance with its terms, except as the enforceability  thereof may
         be limited by applicable bankruptcy, insolvency, fraudulent conveyance,
         reorganization,  moratorium and other similar laws affecting creditors'
         rights generally and subject to general equitable  principles  (whether
         considered  in a proceeding  in equity or at law) (the  "ENFORCEABILITY
         EXCEPTIONS"),   except   that  (x)   rights  to   indemnification   and
         contribution  may be limited by public policy and (y) provisions of the
         Indenture,  if any,  requiring  any waiver of stay or  extension  laws,
         diligent performance or other acts on the part of the Indenture Trustee
         may be unenforceable under principles of public policy.

                  (g) The  Convertible  Debentures  have been duly authorized by
         the  Company  and,  when  duly  executed,  authenticated,   issued  and
         delivered in the manner provided for in the Indenture and sold and paid
         for as provided in the Debenture Purchase Agreement,  will be valid and
         binding  obligations  of the Company  entitled  to the  benefits of the
         Indenture,  enforceable  against the Company in  accordance  with their
         terms, subject to the Enforceability  Exceptions and except that rights
         to indemnification and contribution may be limited by public policy.

                  (h) The Preferred Securities Guarantee Agreement has been duly
         authorized  by the Company and, when duly executed and delivered by the
         Company, will constitute a valid and binding obligation of the Company,
         enforceable  against the Company in accordance with its terms,  subject
         to  the   Enforceability   Exceptions   and  except   that   rights  to
         indemnification and contribution may be limited by public policy.

                  (i) The Registration Rights Agreement has been duly authorized
         by each of the Trust  and the  Company  and,  when  duly  executed  and
         delivered by each of the Trust and the Company, will constitute a valid
         and  binding   obligation  of  each  of  the  Trust  and  the  Company,
         enforceable  against  each of the Trust and the  Company in  accordance
         with its terms,  subject to the  Enforceability  Exceptions  and except
         that  rights to  indemnification  and  contribution  may be  limited by
         public policy.

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                  (j) The  Declaration  has been duly  authorized by the Company
         and, when duly executed and delivered by the Company, will constitute a
         valid and binding  obligation of the Company,  enforceable  against the
         Company in  accordance  with its terms,  subject to the  Enforceability
         Exceptions and except that rights to  indemnification  and contribution
         may be limited by public policy.

                  (k)  The  Convertible  Preferred  Securities  have  been  duly
         authorized by the  Declaration  and, when issued and  authenticated  in
         accordance  with the  Declaration  and delivered to and paid for by the
         Placement  Agents in accordance with the terms of this Agreement,  will
         be validly issued,  fully paid and non-assessable  undivided beneficial
         interests  in the  assets  of  Trust  the and will be  entitled  to the
         benefits of the Declaration;  the issuance of the Convertible Preferred
         Securities  is not subject to any  preemptive  or similar  rights;  and
         holders of the Convertible Preferred Securities will be entitled to the
         same  limitation  of  liability  extended  to  stockholders  of private
         corporations for profit under Delaware law.

                  (l) The Trust Common  Securities  have been duly authorized by
         the  Declaration  and, when issued and executed in accordance  with the
         provisions  of the  Declaration  and  delivered to the Company  against
         payment  of  the  consideration   therefor  set  forth  in  the  Common
         Securities Purchase Agreement,  will be validly issued,  fully paid and
         non-assessable  undivided  beneficial  interests  in the  assets of the
         Trust;  the issuance of the Trust Common  Securities  is not subject to
         any preemptive or similar  rights;  and at the Closing Date, all of the
         issued and  outstanding  Trust  Common  Securities  will be owed by the
         Company, directly or through wholly owned subsidiaries,  free and clear
         of any security interest, mortgage, pledge, lien, encumbrance, claim or
         equity.

                  (m) The Purchase  Agreements  have been duly authorized by the
         Company and the Trust and, at the Closing Date, the Purchase Agreements
         will have been duly executed and delivered.

                  (n) The Final  Memorandum  does not,  and on the Closing  Date
         will not,  contain any untrue  statement of a material  fact or omit to
         state a material fact necessary to make the statements  therein, in the
         light of the circumstances  under which they were made, not misleading,
         except  that  the  representations  and  warranties  set  forth in this
         paragraph do not apply to  statements  in or  omissions  from the Final
         Memorandum  (or  any  supplement  or  amendment   thereto)  based  upon
         information relating to any Placement Agent furnished to the Company in
         writing by such Placement Agent expressly for use therein.

                  (o) The  execution  and  delivery  by the  Company of, and the
         performance  by the Company of its  obligations  under,  the  Operative
         Instruments to which the Company is a party, the execution and delivery
         by the Trust of, and the  performance  by the Trust of its  obligations
         under, the Operative Instruments to which the Trust is a party, the

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         performance by the Trust of its obligations under the Declaration,  and
         the issuance, sale and delivery of the Convertible Preferred Securities
         in accordance with their terms,  Trust Common  Securities,  Convertible
         Debentures and the shares of Common Stock  issuable upon  conversion of
         the Convertible Debentures and the Convertible Preferred Securities (A)
         will not  contravene  (i) any  provision of  applicable  law,  (ii) the
         Declaration  or the  certificate  of  incorporation  or  by-laws of the
         Company,  (iii) any material agreement or other instrument binding upon
         the Company or any of its Subsidiaries,  (iv) any material agreement or
         other instrument binding upon the Trust, or (v) any judgment,  order or
         decree of any governmental  body,  agency or court having  jurisdiction
         over (x) the Company or any  Subsidiary  or (y) the Trust,  except with
         respect  to  clauses  (A)(i)  and  (A)(iii)  to  the  extent  that  any
         contravention  would not have a Material  Adverse Effect on the Company
         and its  Subsidiaries,  taken as a whole,  and except  with  respect to
         clauses  (A)(i) and (A)(iv) to the extent  that any such  contravention
         would not have a Material  Adverse Effect on the Trust,  (B) do not and
         will not result in the  imposition of any lien,  charge or  encumbrance
         upon any assets of (i) the Company or any of its  Subsidiaries  or (ii)
         the Trust,  pursuant to the terms of any  agreement  or  instrument  to
         which the Company or any of its Subsidiaries or the Trust is a party or
         by which any of them or any of their  respective  properties  is bound,
         except for any liens,  charges or  encumbrances  which would not have a
         material  adverse effect on the condition,  financial or otherwise,  or
         the earnings or business affairs of, with respect to clause (B)(i), the
         Company  and its  Subsidiaries  taken as a whole or,  with  respect  to
         clause (B)(ii), the Trust, and (C) no consent, approval, authorization,
         exemption  or  order  of,  or   qualification   or  filing  with,   any
         governmental  body or agency is  required  for the  performance  by the
         Company  or  the  Trust  of  their  respective  obligations  under  the
         Operative    Instruments   (other   than   such   consent,    approval,
         authorization,   exemption,  order  or  other  action  which  has  been
         obtained), except (x) such as may be required by the securities or Blue
         Sky laws of the various states in connection with the offer and sale of
         the  Convertible  Preferred  Shares,  (y)  such as may be  required  by
         federal  and  state  securities  laws  with  respect  to the  Company's
         obligations  under the  Registration  Rights  Agreement and (z) for any
         consents,  approvals,  authorizations,  orders or  qualifications,  the
         failure to obtain which would not have a Material Adverse Effect on the
         ability  of the  Company  or the  Trust  to  perform  their  respective
         obligations under the Operative Instruments.

                  (p) Any Company  document  incorporated  by  reference  in the
         Final Memorandum,  or filed with the Securities and Exchange Commission
         after the date hereof,  or from which information is so incorporated by
         reference when filed or becoming  effective,  as the case may be, shall
         comply in all material respects with the requirements of the Securities
         Act and the Securities  Exchange Act of 1934 (the "EXCHANGE  ACT"),  as
         applicable, and the rules and regulations promulgated thereunder.

                  (q) The  authorized  capital stock of the Company  conforms in
         all  material  respects to the  descriptions  thereof  contained in the
         Final Memorandum.

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                  (r) The  shares  of  Viatel  Common  Stock  issuable  upon the
         conversion of the Convertible  Debentures and the Convertible Preferred
         Securities  have been duly  authorized  and reserved for issuance  upon
         such conversion and, when issued upon such conversion,  will be validly
         issued, fully paid and non-assessable,  and the issuance of such shares
         upon such  conversion is not and will not be subject to any  preemptive
         or similar rights.

                  (s) The  shares of  outstanding  Common  Stock  have been duly
         authorized and validly  issued,  and are fully paid and  non-assessable
         and are not subject to any preemptive or similar rights.

                  (t)   Assuming   the   accuracy  of  the   Placement   Agents'
         representations  contained herein and the Placement Agents'  compliance
         with their  agreements  hereunder,  it is not necessary to register the
         Convertible  Preferred  Securities,   the  Guarantee,  the  Convertible
         Debentures or the shares of Common Stock  issuable  upon  conversion of
         the  Convertible  Debentures and the Convertible  Preferred  Securities
         (collectively, the "OFFERED SECURITIES") under the Securities Act or to
         qualify the Declaration,  the Preferred  Securities Guarantee Agreement
         or the Indenture under the Trust Indenture Act.

                  (u) There has not occurred any material adverse change, or any
         development  involving a prospective  material  adverse change,  in the
         condition,  financial or  otherwise,  or in the  earnings,  business or
         operations  (a "MATERIAL  ADVERSE  EFFECT") of (A) the Trust or (B) the
         Company and its Subsidiaries,  taken as a whole, from that set forth in
         the Final  Memorandum,  attached as EXHIBIT C;  furthermore,  (i) other
         than  the  transactions   contemplated  hereby,  the  Company  and  its
         Subsidiaries  or the Trust have not incurred any material  liability or
         obligation,  direct  or  contingent,  nor  entered  into  any  material
         transaction  not in the ordinary  course of business;  (ii) the Company
         has not purchased any of its outstanding  capital stock,  nor declared,
         paid or otherwise made any dividend or  distribution of any kind on its
         capital stock other than ordinary and  customary  dividends;  and (iii)
         there has not been any material change in the capital stock, short-term
         debt  or   long-term   debt  of  the  Company   and  its   consolidated
         Subsidiaries, taken as a whole, except in each case as described in the
         Final Memorandum.

                  (v) There are no legal or governmental proceedings pending or,
         to the knowledge of the Trust and the Company,  threatened to which the
         Trust or the Company or any of its  Subsidiaries  is or may be a party,
         or to which any of the properties of the Trust or the Company or any of
         its Subsidiaries is or may be subject other than proceedings accurately
         described  in  all  material  respects  in  the  Final  Memorandum  and
         proceedings  that are not reasonably  likely to have a Material Adverse
         Effect on Company  and its  Subsidiaries,  taken as a whole,  or on the
         power or ability of the Trust or the Company to perform its  respective
         obligations under any of the Operative Instruments or to consummate the
         transactions contemplated by the Final Memorandum.

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                  (w) Each of the Trust and the Company is not, and after giving
         effect to the issuance of the Convertible  Preferred Securities and the
         Convertible  Debentures,  and the  application  of the  proceeds of the
         Convertible  Preferred  Securities as described in the Final Memorandum
         under  the  caption  "Use  of  Proceeds,"  will  not be an  "investment
         company" as such term is defined in the Investment Company Act of 1940,
         as amended.

                  (x) Neither the Company nor any  affiliate  of the Company (as
         defined in Rule 501(b) of  Regulation  D under the  Securities  Act, an
         "AFFILIATE") has directly,  or through any agent, (i) sold, offered for
         sale,  solicited  offers to buy or otherwise  negotiated in respect of,
         any  security  (as defined in the  Securities  Act) which is or will be
         integrated  with the sale of any of the Offered  Securities in a manner
         that would require the registration  under the Securities Act of any of
         the  Offered  Securities  or  (ii)  engaged  in  any  form  of  general
         solicitation  or  general  advertising  (as  those  terms  are  used in
         Regulation D under the Securities  Act) in connection with the offering
         of any of the  Offered  Securities  in any  manner  involving  a public
         offering within the meaning of Section 4(2) of the Securities Act.

                  (y) The Company  and its  Subsidiaries  (i) are in  compliance
         with any and all applicable foreign,  federal, state and local laws and
         regulations  relating to the protection of human health and safety, the
         environment or hazardous or toxic  substances or wastes,  pollutants or
         contaminants  ("ENVIRONMENTAL  LAWS"),  (ii) have received all permits,
         licenses  or  other  approvals   required  of  them  under   applicable
         Environmental Laws to conduct their respective businesses and (iii) are
         in compliance with all terms and conditions of any such permit, license
         or approval,  except where such noncompliance with Environmental  Laws,
         failure to receive  required  permits,  licenses or other  approvals or
         failure  to  comply  with the  terms and  conditions  of such  permits,
         licenses or approvals  would not,  singly or in the  aggregate,  have a
         Material Adverse Effect on the Company and its Subsidiaries, taken as a
         whole.

                  (z)  There  are  no  costs  and  liabilities  associated  with
         Environmental  Laws  (including,  without  limitation,  any  capital or
         operating expenditures required for clean-up,  closure of properties or
         compliance with Environmental Laws or any permit,  license or approval,
         any related  constraints  on  operating  activities  and any  potential
         liabilities to third parties) which would,  singly or in the aggregate,
         have a Material  Adverse  Effect on the Company  and its  Subsidiaries,
         taken as a whole.

                  (aa) The Convertible  Preferred Securities and the Convertible
         Debentures  satisfy the requirements set forth in Rule 144A(d)(3) under
         the Securities Act.

                  (bb) Except as described in the Final Memorandum,  the Company
         and its Subsidiaries (i) have all necessary  consents,  authorizations,
         approvals,  orders, certificates and permits of and from, and have made
         all declarations and filings with, all federal,  state, local and other
         governmental, administrative or regulatory authorities, all

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         self-regulatory  organizations  and all courts and other tribunals,  to
         own, lease,  license and use their properties and assets and to conduct
         their business in the manner described in the Final Memorandum,  except
         to the extent that the failure to obtain such consents, authorizations,
         approvals, orders, certificates or permits or make such declarations or
         filings would not have a Material Adverse Effect on the Company and its
         Subsidiaries,  taken as a whole;  and (ii) have not received any notice
         of proceedings relating to the violation, revocation or modification of
         any such license, consent, authorization,  approval, order, certificate
         or permit  which,  singly or in the  aggregate,  if the  subject  of an
         unfavorable decision,  ruling or finding,  would reasonably be expected
         to have a Material Adverse Effect on the Company and its  Subsidiaries,
         taken as a whole.

                  (cc) The Company and its Subsidiaries have good and marketable
         title in fee simple to all real property and good and marketable  title
         to all  personal  property  owned  by them  which  is  material  to the
         business of the Company and its Subsidiaries, taken as a whole, in each
         case free and clear of all liens,  encumbrances  and defects except (i)
         such as are  reflected in the  Company's  financial  statements  or are
         described  in the  Final  Memorandum;  (ii)  such as do not  materially
         affect the value of such  property  and do not  interfere  with the use
         made and  proposed  to be made of such  property by the Company and its
         Subsidiaries; or (iii) such as do not have a Material Adverse Effect on
         the  Company  and its  Subsidiaries,  taken  as a  whole;  and any real
         property  and  buildings  held  under  lease  by the  Company  and  its
         Subsidiaries  are held by them under  valid,  binding  and  enforceable
         leases with such  exceptions as are not material and do not  materially
         interfere  with the use made and  proposed to be made of such  property
         and buildings by the Company and its Subsidiaries,  in each case except
         as described in or contemplated by the Final  Memorandum and subject to
         the Enforceability Exceptions.

                  (dd) The Company and its Subsidiaries  own or possess,  or can
         acquire on  reasonable  terms,  all material  patents,  patent  rights,
         licenses, inventions, copyrights, know-how (including trade secrets and
         other  unpatented  and/or  unpatentable   proprietary  or  confidential
         information,  systems or  procedures),  trademarks,  service  marks and
         trade names currently  employed by them in connection with the business
         now operated by them, and, except as set forth in the Final Memorandum,
         neither the Company nor any of its Subsidiaries has received any notice
         of  infringement  of or conflict  with  asserted  rights of others with
         respect to any of the foregoing which,  singly or in the aggregate,  if
         the subject of an  unfavorable  decision,  ruling or finding,  would be
         reasonably  likely to have a Material Adverse Effect on the Company and
         its Subsidiaries, taken as a whole.

                  (ee) No  material  labor  dispute  with the  employees  of the
         Company or any of its  Subsidiaries  exists,  except as described in or
         contemplated  by the  Final  Memorandum,  or, to the  knowledge  of the
         Company,  is  imminent;  and the Company is not aware of any  existing,
         threatened or imminent labor disturbance by the employees of any of its
         principal suppliers, manufacturers or contractors that might reasonably
         be  expected to have a Material  Adverse  Effect on the Company and its
         Subsidiaries, taken as a whole.

                                        9

<PAGE>

                  (ff) (i) The Company and its  Subsidiaries are insured against
         such  losses and risks and in such  amounts as the  Company  reasonably
         believes are prudent and customary in the  businesses in which they are
         engaged;  (ii)  neither the Company  nor any such  Subsidiary  has been
         refused any insurance coverage sought or applied for; and (iii) neither
         the Company nor any such  Subsidiary  has any reason to believe that it
         will not be able to renew its existing  insurance  coverage as and when
         such  coverage  expires  or to obtain  similar  coverage  from  similar
         insurers as may be  necessary  to continue  its business at a cost that
         would  not  have a  Material  Adverse  Effect  on the  Company  and its
         Subsidiaries,  taken as a whole, except as described in or contemplated
         by the Final Memorandum.

                  (gg) The  Company  and its  Subsidiaries  maintain a system of
         internal accounting controls sufficient to provide reasonable assurance
         that (i)  transactions  are executed in  accordance  with  management's
         general or specific  authorizations;  (ii) transactions are recorded as
         necessary to permit  preparation of financial  statements in conformity
         with  generally  accepted  accounting  principles and to maintain asset
         accountability;  (iii) access to assets is permitted only in accordance
         with  management's  general  or  specific  authorization;  and (iv) the
         recorded accountability for assets is compared with the existing assets
         at reasonable intervals and appropriate action is taken with respect to
         any differences.

                  2. AGREEMENTS TO SELL AND PURCHASE. The Trust hereby agrees to
sell to the several Placement Agents, and each Placement Agent upon the basis of
the  representations  and  warranties  herein  contained,  but  subject  to  the
conditions  hereinafter stated,  agrees,  severally and not jointly, to purchase
the respective  number of Firm  Securities set forth in Schedule II opposite its
name from the Trust,  at a purchase  price of $50.00 per  Convertible  Preferred
Security (the "PURCHASE PRICE").

                  On the  basis of the  representations  and  warranties  of the
Trust and the Company contained in this Agreement,  and subject to its terms and
conditions,  the Trust  agrees to sell to the  Placement  Agents the  Additional
Securities,  and the Placement Agents shall have a right to purchase,  severally
and not jointly, up to 600,000 Additional Securities at the Purchase Price, plus
accrued  dividends,  if any. If the  Placements  Agents  elect to exercise  such
option,  the  Placements  Agents  shall so notify  the Trust and the  Company in
writing not later than 30 days after the date of this  Agreement,  which  notice
shall  specify  the  number of  Additional  Securities  to be  purchased  by the
Placement  Agents and the date on which  such  Additional  Securities  are to be
purchased.  Such date may be the same as the Closing  Date but not earlier  than
the Closing Date nor later than ten business days after the date of such notice.
If any Additional  Securities are to be purchased,  each Placement Agent agrees,
severally  and not  jointly,  to purchase  the number of  Additional  Securities
(subject to such  adjustments to eliminate  fractional  securities the Placement
Agents may  determine)  that bears the same  proportion  to the total  number of
Additional Securities to be purchased as the number of Firm Securities set forth
in  Schedule I hereto  opposite  the name of such  Placement  Agent bears to the
total number of Firm Securities.

                                       10

<PAGE>

                  In  view  of the  fact  that  proceeds  from  the  sale of the
Convertible   Preferred  Securities  will  be  invested  by  the  Trust  in  the
Convertible Debentures, the Company hereby agrees to pay the Placement Agents as
compensation (the "PLACEMENT  AGENTS'  COMPENSATION")  for the Placement Agents'
arranging for the  investment  therein of such proceeds,  $1.75 per  Convertible
Preferred Security purchased by the Placement Agents on the Closing Date and the
Option  Closing Date (as defined  below),  if any  ($5,250,000  in the aggregate
assuming  no exercise  of the  Placement  Agents'  option or  $6,300,000  in the
aggregate  assuming  exercise of such  option in full).  The  Placement  Agents'
Compensation  shall be  payable  to the  Placement  Agents by wire  transfer  of
immediately  available funds on the Closing Date and on the Option Closing Date,
if any.

                  The Trust and the Company hereby agree, jointly and severally,
that, without the prior written consent of Morgan Stanley & Co.  Incorporated on
behalf of the Placement Agents,  they will not, during the period ending 90 days
after the date of this Agreement,  (i) offer,  pledge,  sell,  contract to sell,
sell any option or  contract  to  purchase,  purchase  any option or contract to
sell, grant any option,  right or warrant to purchase,  or otherwise transfer or
dispose of, directly or indirectly,  any equity  securities of the Company,  the
Trust or any similar trust or any securities  convertible into or exercisable or
exchangeable  for any equity  security of the Company,  the Trust or any similar
trust  or (ii)  enter  into  any swap or other  agreement  or  arrangement  that
transfers to another,  in whole or in part,  directly or indirectly,  any of the
economic  consequences of ownership of any equity securities of the Company, the
Trust or any similar trust, whether any such transaction described in clause (i)
or (ii) above is to be settled by delivery of equity  securities of the Company,
the Trust or any similar  trust,  other  securities,  in cash or otherwise.  The
foregoing sentence shall not apply to (A) the Convertible  Preferred  Securities
to be sold  hereunder,  (B)  the  issuance  by the  Company  of the  Convertible
Debentures pursuant to the Debenture Purchase Agreement, (C) the issuance by the
Trust of the Trust Common Securities  pursuant to the Common Securities Purchase
Agreement,  (D) the  issuance  by the  Company  of shares of Common  Stock  upon
conversion  of the  Convertible  Preferred  Securities  sold  hereunder  and the
related  Convertible  Debentures,  (E) the  issuance by the Company of shares of
Common Stock or options to purchase  Common Stock  pursuant to employee  benefit
plans described in the Final  Memorandum or (F)  transactions by an person other
than the  Company  or the Trust  pertaining  to shares of Common  Stock or other
securities  acquired in open market  transactions  after the  completion  of the
offering of Convertible Preferred Securities.

                  3. TERMS OF OFFERING.  The  Placement  Agents have advised the
Trust and the  Company  that the  Placement  Agents will make an offering of the
Convertible  Preferred Securities purchased by the Placement Agents hereunder on
the terms set forth in the Final  Memorandum,  as soon as practicable after this
Agreement  is  entered  into  as in the  judgment  of the  Placement  Agents  is
advisable.

                  4. PAYMENT AND DELIVERY. Payment for the Firm Securities shall
be made in federal or other funds immediately available in New York City against
delivery  of such Firm  Securities  for the  respective  accounts of the several
Placement Agents at the closing to be held at

                                       11

<PAGE>

the office of Shearman & Sterling,  599 Lexington Avenue, New York, NY 10022, at
9:00 A.M.,  local time,  on April 12, 2000, or at such other time on the same or
such other  date,  not later than April 22,  2000,  as shall be agreed to by the
Company and Morgan Stanley & Co. Incorporated. The time and date of such payment
are herein referred to as the "CLOSING DATE."

                  Payment for any Additional Securities shall be made in federal
or  other  immediately  available  funds  against  delivery  of such  Additional
Securities for the respective accounts of the Placement Agents at 9:00 A.M., New
York City time, on the date specified in the notice described in Section 2 or on
such other date, in any event not later than May 8, 2000, as shall be designated
in  writing  by the  Placement  Agents.  The time and date of such  payment  are
hereinafter referred to as the "OPTION CLOSING DATE."

                  Certificates for the Firm Securities and Additional Securities
shall be in  definitive  form or global  form,  as  specified  by the  Placement
Agents,  and registered in such names and in such denominations as the Placement
Agents shall  request in writing not later than two full  business days prior to
the  Closing  Date  or  the  Option  Closing  Date,  as the  case  may  be.  The
certificates  evidencing the Firm Securities and Additional  Securities shall be
delivered  to the  Placement  Agents on the Closing  Date or the Option  Closing
Date, as the case may be, with any transfer taxes payable in connection with the
transfer of the Convertible  Preferred  Securities to the Placement  Agents duly
paid, against payment of the Purchase Price therefor.

                  5.  CONDITIONS  TO  THE  PLACEMENT  AGENTS'  OBLIGATION.   The
obligations  of the  Placement  Agents to purchase  and pay for the  Convertible
Preferred Securities on the Closing Date is subject to the following conditions:

                  (a) Subsequent to the execution and delivery of this Agreement
         and prior to the Closing Date,

                           (i) there shall not have  occurred  any  downgrading,
                  nor  shall  any  notice  have been  given of any  intended  or
                  potential  downgrading or of any review for a possible  change
                  that does not indicate the  direction of the possible  change,
                  other than any notice  which shall  already have been given as
                  of the date hereof,  in the rating  accorded to the Company or
                  any of the Company's  securities or in the rating  outlook for
                  the Company by any "nationally  recognized  statistical rating
                  organization,"  as such term is defined  for  purposes of Rule
                  436(g)(2) under the Securities Act; and

                           (ii) there shall not have occurred any change, or any
                  development  involving a prospective change, in the condition,
                  financial  or  otherwise,  or in  the  earnings,  business  or
                  operations,  of the Company,  its  Subsidiaries  or the Trust,
                  taken as a whole,  from that set forth in the Final Memorandum
                  (exclusive of any amendments or supplements thereto subsequent
                  to the  date  of  this  Agreement)  that,  in  the  reasonable
                  judgment of the Placement Agents, is material and adverse

                                       12

<PAGE>

                  and that makes it, in the reasonable judgment of the Placement
                  Agents,  impracticable  to market  the  Convertible  Preferred
                  Securities on the terms and in the manner  contemplated in the
                  Final Memorandum.

                  (b) The  Placement  Agents shall have  received on the Closing
         Date a  certificate,  dated the Closing Date and signed by an executive
         officer of the  Company  and a Regular  Trustee  of the  Trust,  to the
         effect set forth in Section 5(a)(i) of this Agreement and to the effect
         that the  representations  and  warranties of the Company and the Trust
         contained in this Agreement are true and correct as of the Closing Date
         and that each of the Company and the Trust has complied with all of the
         agreements and satisfied all of the conditions  contained herein on its
         part to be performed  or  satisfied  hereunder on or before the Closing
         Date.  The  officer of the  Company  and  Regular  Trustee  signing and
         delivering  such  certificate  may  rely  upon  the  best of his or her
         knowledge as to any proceedings threatened.

                  (c) The Placement  Agents shall have received,  (A) on each of
         the date hereof and the Closing Date, a letter dated the date hereof or
         the  Closing   Date,  as  the  case  may  be,  in  form  and  substance
         satisfactory to the Placement Agents, from KPMG LLP, independent public
         accountants,   containing   statements  and  information  of  the  type
         ordinarily  included in accountants'  "comfort letters" to underwriters
         with  respect  to  the  financial   statements  and  certain  financial
         information  contained  in the  Final  Memorandum  and (B) on the  date
         hereof,   letters  dated  the  date  hereof,   in  form  and  substance
         satisfactory to the Placement Agents, from KPMG LLP, independent public
         accountants,  with respect to  agreed-upon  procedures to be applied to
         information  contained in the Final Memorandum with respect to billable
         minutes, revenue per billable minute and number of customers;  PROVIDED
         THAT the  letters  delivered  pursuant  to Section  5(c)(A) and Section
         5(c)(B)  shall use a "cut-off  date" not earlier  than 2 business  days
         prior to the date hereof.

                  (d) The  Placement  Agents shall have  received on the Closing
         Date an opinion of Kelley  Drye & Warren  LLP,  outside  counsel to the
         Company,  dated the Closing Date, to the effect set forth in EXHIBIT D.
         Such opinion shall be rendered to the  Placement  Agents at the request
         of the Company and the Trust and shall so state therein.

                  (e) The  Placement  Agents shall have  received on the Closing
         Date opinions of foreign local counsel in Germany, Switzerland,  Italy,
         France,  Belgium,  Spain, The Netherlands and the United Kingdom, dated
         the  Closing  Date,  each to the effect set forth in EXHIBIT E or as to
         such other form as agreed to by the  Placement  Agents.  Such  opinions
         shall be rendered to the Placement Agents at the request of the Company
         and the Trust and shall so state therein.

                  (f) The  Placement  Agents shall have  received on the Closing
         Date  an  opinion  of   Morrison  &   Forester,   LLP,   special   U.S.
         communications counsel to the Company,

                                       13

<PAGE>

         together  with an opinion of Nebraska  counsel,  each dated the Closing
         Date, substantially to the effect set forth in EXHIBIT F. Such opinions
         shall be rendered to the Placement Agents at the request of the Company
         and the Trust and shall so state therein.

                  (g) The  Placement  Agents shall have  received on the Closing
         Date an  opinion  of  Emmet,  Marvin  &  Martin,  LLP,  counsel  to the
         Institutional  Trustee  and the  Guarantee  Trustee,  dated the Closing
         Date, substantially to the effect set forth in EXHIBIT G.

                  (h) The  Placement  Agents shall have  received on the Closing
         Date an opinion of Richards,  Layton & Finger,  counsel to the Delaware
         Trustee, dated the Closing Date,  substantially to the effect set forth
         in EXHIBIT H.

                  (i) The  Placement  Agents shall have  received on the Closing
         Date an  opinion  of  Shearman &  Sterling,  counsel  to the  Placement
         Agents,  dated the Closing Date, in form and substance  satisfactory to
         you.

                  (j) The Registration Rights Agreement shall be executed and in
         full force and effect.

                  (k) On or prior to the close of  business on the day after the
         date of this  Agreement,  the  Placement  Agents shall have  received a
         lock-up agreement, substantially in the form attached hereto as EXHIBIT
         I,  from  each of the  persons  listed  in  EXHIBIT  J, and  each  such
         agreement shall be in full force and effect on the Closing Date.

                  (l) The  Placement  Agents  shall  have  received  such  other
         documents and  certificates as are reasonably  requested by you or your
         counsel.

                  The obligation of the Placement Agents to purchase  Additional
Securities  hereunder is subject to the delivery to the Placement  Agents on the
Option  Closing  Date of such  documents  as they may  reasonably  request  with
respect to the good standing of the Company and the Trust, the due authorization
and  issuance of the  Additional  Securities  and other  matters  related to the
issuance of the Additional Securities.

                  6.  COVENANTS  OF  THE  COMPANY  AND  THE  TRUST.  In  further
consideration  of the  agreements  of the  Placement  Agents  contained  in this
Agreement, each of the Company and the Trust covenants with each Placement Agent
as follows:

                  (a) To use its best efforts to furnish to each Placement Agent
         in New York City, without charge, prior to 9:00 a.m. New York City time
         on April 10, 2000 and during the period  mentioned in Section  6(c), as
         many copies of the Final  Memorandum,  any  supplements  and amendments
         thereto and any  documents  incorporated  by reference  therein as such
         Placement Agent may reasonably request.

                                       14

<PAGE>

                  (b) Before amending or supplementing the Final Memorandum,  to
         furnish to each Placement Agent a copy of each such proposed  amendment
         or supplement and not to use any such proposed  amendment or supplement
         without the consent of Morgan Stanley & Co. Incorporated, which consent
         shall not be unreasonably withheld or delayed.

                  (c) If,  during such period after the date hereof and prior to
         the date on which all of the  Convertible  Preferred  Securities  shall
         have been  sold by the  Placement  Agents,  any  event  shall  occur or
         condition  exist as a  result  of  which  it is  necessary  to amend or
         supplement  the  Final  Memorandum  in  order  to make  the  statements
         therein, in the light of the circumstances when the Final Memorandum is
         delivered  to a  purchaser,  not  misleading,  or if, in the opinion of
         counsel to the Placement  Agents it is necessary to amend or supplement
         the Final  Memorandum  to comply  with  applicable  law,  forthwith  to
         prepare and  furnish,  at its own  expense,  to the  Placement  Agents,
         either  amendments or supplements  to the Final  Memorandum so that the
         statements in the Final  Memorandum as so amended or supplemented  will
         not, in the light of the  circumstances  when the Final  Memorandum  is
         delivered  to  a  purchaser,   be  misleading  or  so  that  the  Final
         Memorandum, as so amended or supplemented,  will comply with applicable
         law.

                  (d) To endeavor to qualify  the Offered  Securities  for offer
         and sale under the securities or Blue Sky laws of such jurisdictions as
         the  Placement  Agents shall  reasonably  request;  PROVIDED THAT in no
         event shall the Company be  obligated  to qualify to do business in any
         jurisdiction  in which it is not now so qualified or to take any action
         which would subject it to taxation in any  jurisdiction  in which it is
         not now so subject or to service or process in suits,  other than those
         arising out of the  offering or sale of the Offered  Securities  in any
         jurisdiction in which it is not now so subject.

                  (e) To  reserve  and  keep  available  at all  times,  free of
         preemptive  and similar  rights,  shares of Viatel Common Stock for the
         purpose of enabling  the Company to satisfy  any  obligations  to issue
         shares of Viatel Common Stock upon the  conversion  of the  Convertible
         Debentures and the Convertible Preferred Securities.

                  (f)  Whether  or not  the  transactions  contemplated  in this
         Agreement are  consummated or this  Agreement is terminated,  to pay or
         cause to be paid all reasonable expenses incident to the performance of
         its obligations under this Agreement, including: (i) the preparation of
         each  Memorandum and all amendments and supplements  thereto,  (ii) the
         preparation, issuance and delivery of the Offered Securities, (iii) the
         fees and  disbursements  of the Company's  and the Trust's  counsel and
         accountants and the  Institutional  Trustee,  the Guarantee Trustee and
         the  Indenture   Trustee  and  their  respective   counsel,   (iv)  the
         qualification  of such Offered  Securities under securities or Blue Sky
         laws in  accordance  with the  provisions  of Section  6(d),  including
         filing  fees and the  fees and  disbursements  of one  counsel  for the
         Placement  Agents in connection  therewith  and in connection  with the
         preparation  of any  Blue Sky or legal  investment  memoranda,  (v) the
         printing and delivery to the  Placement  Agents in quantities as herein
         above stated

                                       15

<PAGE>

         of copies of each Memorandum and any amendments or supplements thereto,
         (vi) any fees charged by rating agencies, (vii) all reasonable document
         production  charges and expenses of one counsel to the Placement Agents
         (but not including their fees for professional  services) in connection
         with the preparation of this  Agreement,  (viii) the fees and expenses,
         if any,  incurred in  connection  with the  admission  of such  Offered
         Securities  for trading in the Private  Offerings,  Resales and Trading
         through Automatic  Linkages  ("PORTAL") Market or any other appropriate
         market system,  (ix) the costs and expenses of the Company  relating to
         investor presentations on any "road show" undertaken in connection with
         the marketing of the  offering,  whether by  traditional  or electronic
         means,  including,  without  limitation,  expenses  associated with the
         production of road show slides and  graphics,  fees and expenses of any
         consultants engaged in connection with the road show presentations with
         the prior approval of the Company,  travel and lodging  expenses of the
         representatives  and officers of the Company and any such  consultants,
         and the cost of any aircraft chartered in connection with the road show
         with the  prior  approval  of the  Company,  (x) all fees and  expenses
         incident to listing the shares of Common Stock issuable upon conversion
         of the Convertible Preferred Securities and the Convertible  Debentures
         on the  Nasdaq  National  Market,  (xi) the  costs and  charges  of any
         transfer  agents,  registrars  and  depositaries,  and (xii) such other
         reasonable  costs  and  expenses  incident  to the  performance  of the
         obligations  of  the  Company  hereunder  for  which  provision  is not
         otherwise made in this Section. It is understood,  however, that except
         as provided in this Section 6, Section 8 and Section 10, the  Placement
         Agents will pay all of their  costs and  expenses,  including  fees and
         disbursements of their counsel, transfer taxes payable on resale of any
         of the  Convertible  Preferred  Securities by them and any  advertising
         expenses connected with any offers they may make.

                  (g)  Neither  the  Company  nor the  Trust  nor  any of  their
         respective  Affiliates  will sell,  offer for sale or solicit offers to
         buy or  otherwise  negotiate  in respect of any security (as defined in
         the Securities  Act) which would be integrated  with the sale of any of
         the Offered Securities in a manner which would require the registration
         under the Securities Act of any of such Offered Securities.

                  (h) Neither the Company nor any  Subsidiary  will  solicit any
         offer to buy or offer or sell any of the Offered Securities by means of
         any form of general  solicitation  or general  advertising  (within the
         meaning  of Rule  502(c)  under the  Securities  Act) or in any  manner
         involving a public  offering  within the meaning of Section 4(2) of the
         Securities  Act,  except  as may be  contemplated  by the  Registration
         Rights Agreement.

                  (i) While any of the  Offered  Securities  remain  "restricted
         securities" within the meaning of Rule 144 under the Securities Act, to
         make  available,  upon  request,  to any seller of any of such  Offered
         Securities  the  information  concerning  the  Company  and  the  Trust
         specified  in Rule  144A(d)(4)  under the  Securities  Act,  unless the
         Company is then subject to and in  compliance  with Section 13 or 15(d)
         of the Exchange Act.

                                       16

<PAGE>

                  (j)  To  use  its  reasonable   best  efforts  to  permit  the
         Convertible Preferred Securities and, if the Convertible Debentures are
         at any time  distributed to holders,  the Convertible  Debentures to be
         designated   PORTAL   securities  in  accordance  with  the  rules  and
         regulations adopted by the National  Association of Securities Dealers,
         Inc. relating to trading in the PORTAL Market.

                  (k) The Company  shall not,  and shall use its best efforts to
         cause its  Affiliates  not to,  purchase  and then resell or  otherwise
         transfer any of the Offered Securities.

                  7. OFFERING OF CONVERTIBLE PREFERRED SECURITIES;  RESTRICTIONS
ON TRANSFER. (a) Each Placement Agent, severally and not jointly, represents and
warrants that such Placement Agent is a qualified institutional buyer as defined
in Rule 144A under the Securities Act (a "QIB"). Each Placement Agent, severally
and not  jointly,  agrees  with the  Company  and the Trust that (i) it will not
solicit offers for, or offer or sell,  Convertible  Preferred  Securities by any
form of general  solicitation or general advertising (as those terms are used in
Rule  502(c)  under the  Securities  Act) or in any  manner  involving  a public
offering  within the meaning of Section 4(2) of the  Securities  Act and (ii) it
will solicit offers for  Convertible  Preferred  Securities  only from, and will
offer such Convertible  Preferred Securities only to, persons that it reasonably
believes  to be  other  QIBs  who,  in  purchasing  such  Convertible  Preferred
Securities  are  deemed to have  represented  and agreed as  provided  in either
Memorandum under the caption "Transfer Restrictions."

                  (b)  Each   Placement   Agent,   severally  and  not  jointly,
represents,  warrants,  and agrees with respect to offers and sales  outside the
United States that:

                  (i) it understands that no action has been or will be taken in
         any jurisdiction by the Company or the Trust that would permit a public
         offering of the  Convertible  Preferred  Securities,  or  possession or
         distribution  of either  Memorandum or any other  offering or publicity
         material  relating  to the  Convertible  Preferred  Securities,  in any
         country or jurisdiction where action for that purpose is required;

                  (ii) such Placement Agent will comply with all applicable laws
         and  regulations  in each  jurisdiction  in which it acquires,  offers,
         sells  or  delivers  Convertible  Preferred  Securities  or  has in its
         possession or distributes either Memorandum or any such other material,
         in all cases at its own expense;

                  (iii) such  Placement  Agent has (A) not  offered or sold and,
         prior to the date six months after the Closing Date,  will not offer or
         sell any  Convertible  Preferred  Securities  to  persons in the United
         Kingdom  except to persons whose  ordinary  activities  involve them in
         acquiring,  holding, managing or disposing of investments (as principal
         or  agent)  for the  purposes  of  their  businesses  or  otherwise  in
         circumstances  which have not  resulted and will not result in an offer
         to the public in the United  Kingdom  within the  meaning of the Public
         Offers of  Securities  Regulations  1995;  (B) complied and will comply
         with all

                                       17

<PAGE>

         applicable  provisions of the Financial  Services Act 1986 with respect
         to  anything  done  by it in  relation  to  the  Convertible  Preferred
         Securities in, from or otherwise involving the United Kingdom;  and (C)
         only  issued or passed on and will only  issue or pass on in the United
         Kingdom any document received by it in connection with the issue of the
         Convertible Preferred Securities to a person who is of a kind described
         in  Article  11(3)  of the  Financial  Services  Act  1986  (Investment
         Advertisements)  (Exemptions)  Order 1996,  or is a person to whom such
         document may otherwise lawfully be issued or passed on; and

                  (iv) such Placement  Agent  understands  that the  Convertible
         Preferred Securities have not been and will not be registered under the
         Securities and Exchange Law of Japan,  and  represents  that it has not
         offered  or  sold,  and  agrees  that it will not  offer  or sell,  any
         Convertible Preferred Securities directly or indirectly in Japan or for
         the account of any resident  thereof  except  pursuant to any exemption
         from the  registration  requirements of the Securities and Exchange Law
         of Japan and  otherwise in  compliance  with  applicable  provisions of
         Japanese law.

                  8. INDEMNIFICATION AND CONTRIBUTION. (a) The Company agrees to
indemnify and hold harmless each Placement Agent,  and each person,  if any, who
controls  any  Placement  Agent  within the meaning of either  Section 15 of the
Securities  Act or Section 20 of the  Exchange  Act from and against any and all
losses,  claims,  damages and liabilities  (including,  without limitation,  any
legal or other  expenses  reasonably  incurred in connection  with  defending or
investigating  any such  action or  claim)  caused by any  untrue  statement  or
alleged  untrue  statement of a material fact  contained in each  Memorandum (as
amended or  supplemented  if the Company shall have  furnished any amendments or
supplements  thereto),  or caused by any  omission or alleged  omission to state
therein a material fact necessary to make the statements  therein,  in the light
of the  circumstances  under  which they were made,  not  misleading;  PROVIDED,
HOWEVER,  that the foregoing indemnity agreement with respect to any Preliminary
Memorandum  shall not inure to the benefit of any Placement  Agent from whom the
person  asserting  any such losses,  claims,  damages or  liabilities  purchased
Convertible  Preferred  Securities,  or any person  controlling  such  Placement
Agent, if a copy of the Final Memorandum (as then amended or supplemented if the
Company shall have furnished any amendments or supplements thereto) was not sent
or given by or on behalf of such  Placement  Agent to such person at or prior to
the written confirmation of the sale of the Convertible  Preferred Securities to
such person,  and if the Final Memorandum (as so amended or supplemented)  would
have  cured  the  defect  giving  rise  to  such  losses,   claims,  damages  or
liabilities,  unless such failure is the result of  noncompliance by the Company
with Section 6(a) hereof;  PROVIDED FURTHER that each of the Company will not be
liable in any such case to the  extent,  but only to the  extent,  that any such
losses,  claims,  damages or liabilities are caused by any such untrue statement
or omission or alleged  untrue  statement  or  omission  based upon  information
relating  to any  Placement  Agent  furnished  to the Company in writing by such
Placement Agent expressly for use therein.

                                       18

<PAGE>

                  (b) Each Placement Agent agrees, severally and not jointly, to
indemnify and hold harmless the Company,  its  directors,  its officers and each
person, if any, who controls the Company within the meaning of either Section 15
of the  Securities  Act or Section 20 of the  Exchange Act to the same extent as
the foregoing  indemnity from the Company to such Placement Agent, but only with
reference  to  information  relating to such  Placement  Agent  furnished to the
Company  in  writing  by  such  Placement  Agent  expressly  for  use in  either
Memorandum or any amendments or supplements thereto.

                  (c)  In  case  any  proceeding   (including  any  governmental
investigation)  shall be  instituted  involving  any  person in respect of which
indemnity  may be sought  pursuant to any  provision  of Section 8(a) or Section
8(b),  such person (the  "INDEMNIFIED  PARTY") shall promptly  notify the person
against whom such indemnity may be sought (the "INDEMNIFYING  PARTY") in writing
(but the  failure to so notify an  indemnifying  party shall not relieve it from
any liability  which it may have under this Section 8, except to the extent that
it has been  prejudiced  in any material  respect by such  failure,  or from any
liability it may otherwise have) and the indemnifying party, upon request of the
indemnified  party,   shall  retain  counsel  reasonably   satisfactory  to  the
indemnified  party  to  represent  the  indemnified  party  and any  others  the
indemnifying  party may designate in such  proceeding and shall pay the fees and
disbursements  of  such  counsel  related  to  such  proceeding.   In  any  such
proceeding,  any  indemnified  party  shall  have the  right to  retain  its own
counsel,  but the fees and expenses of such  counsel  shall be at the expense of
such  indemnified  party unless (i) the  indemnifying  party and the indemnified
party shall have  mutually  agreed to the  retention of such counsel or (ii) the
named parties to any such proceeding  (including any impleaded  parties) include
both the indemnifying party and the indemnified party and representation of both
parties by the same counsel  would be  inappropriate  due to actual or potential
differing  interests between them. It is understood that the indemnifying  party
shall  not,  in  respect  of the  legal  expenses  of any  indemnified  party in
connection with any proceeding or related  proceedings in the same jurisdiction,
be liable for the  reasonable  fees and expenses of more than one separate  firm
(in addition to any local counsel) for all such indemnified parties and that all
such fees and expenses shall be reimbursed as they are incurred. Such firm shall
be designated  in writing by Morgan  Stanley & Co.  Incorporated  in the case of
parties  indemnified  pursuant to Section 8(a) and by the Company in the case of
parties  indemnified  pursuant to Section 8(b). The indemnifying party shall not
be liable for any  settlement  of any  proceeding  effected  without its written
consent,  but if settled with such  consent or if there be a final  judgment for
the plaintiff,  the indemnifying party agrees to indemnify the indemnified party
from and against any loss or liability by reason of such settlement or judgment.
Notwithstanding  the foregoing  sentence,  if at any time an  indemnified  party
shall have requested an indemnifying  party to reimburse the  indemnified  party
for fees and  expenses  of  counsel  as  contemplated  by the  second  and third
sentences  of this  paragraph,  the  indemnifying  party agrees that it shall be
liable for any settlement of any proceeding effected without its written consent
if (i) such  settlement  is entered into more than 60 days after receipt by such
indemnifying  party of the aforesaid  request and (ii) such  indemnifying  party
shall not have reimbursed the indemnified  party in accordance with such request
prior to the date of such settlement.  No indemnifying party shall,  without the
prior written consent of the indemnified party, which consent may not be

                                       19

<PAGE>

unreasonably  withheld,  effect any  settlement  of any  pending  or  threatened
proceeding  in  respect of which any  indemnified  party is or could have been a
party  and  indemnity  could  have been  sought  hereunder  (whether  or not any
indemnified  party is an actual or potential  party to such  proceeding) by such
indemnified party, unless such settlement  includes an unconditional  release of
such indemnified  party from all liability on claims that are the subject matter
of such proceeding.

                  (d) To the  extent  the  indemnification  provided  for in any
provision of Section 8(a) or Section 8(b) is unavailable to an indemnified party
or  insufficient  in  respect of any  losses,  claims,  damages  or  liabilities
referred to therein, then each indemnifying party under such section, in lieu of
indemnifying such indemnified  party thereunder,  shall contribute to the amount
paid or payable by such  indemnified  party as a result of such losses,  claims,
damages or liabilities  (i) in such  proportion as is appropriate to reflect the
relative  benefits  received by the Company and the Trust,  on the one hand, and
Placement  Agents,  on the other hand,  from the  offering  of such  Convertible
Preferred Securities, or (ii) if the allocation provided by clause 8(d)(i) above
is not permitted by applicable  law, in such  proportion  as is  appropriate  to
reflect not only the relative  benefits  referred to in clause 8(d)(i) above but
also the relative fault of the Company and the Trust and the Placement Agents in
connection  with the  statements  or  omissions  that  resulted in such  losses,
claims,  damages  or  liabilities,  as  well  as any  other  relevant  equitable
considerations.  The relative benefits received by the Company and the Trust, on
the one hand, and the Placement  Agents,  on the other hand, in connection  with
the offering of the Convertible  Preferred  Securities  shall be deemed to be in
the same  respective  proportions  as the net proceeds  from the offering of the
Convertible  Preferred  Securities  (net of discounts and commissions but before
deducting  expenses)  received  by the  Company  and the  Trust  and  the  total
discounts and  commissions  received by the Placement  Agents in respect thereof
bear to the aggregate offering price of $50 per Convertible  Preferred Security.
The  relative  fault of the  Company  and the  Trust,  on the one hand,  and the
Placement  Agents, on the other hand, shall be determined by reference to, among
other things,  whether the untrue or alleged untrue statement of a material fact
or the  omission  or  alleged  omission  to state a  material  fact  relates  to
information  supplied by the Company and the Trust or the  Placement  Agents and
the parties' relative intent,  knowledge,  access to information and opportunity
to correct  or  prevent  such  statement  or  omission.  The  Placement  Agents'
respective  obligations to contribute  pursuant to this Section 8 are several in
proportion to the respective  number of Convertible  Preferred  Securities  they
have purchased hereunder and not joint.

                  (e) The Company, the Trust and the Placement Agents agree that
it would not be just or  equitable  if  contribution  pursuant to this Section 8
were determined by PRO RATA allocation or by any other method of allocation that
does not take  account of the  equitable  considerations  referred to in Section
8(d).  The amount  paid or payable  by an  indemnified  party as a result of the
losses,  claims, damages and liabilities referred to in Section 8(d) above shall
be deemed to include,  subject to the limitations set forth above,  any legal or
other expenses  reasonably incurred by such indemnified party in connection with
investigating  or  defending  any such  action  or  claim.  Notwithstanding  the
provisions of this Section 8, the Placement Agents

                                       20

<PAGE>

shall not be required to contribute  any amount in excess of the amount by which
the total price at which the Convertible  Preferred  Securities  resold by it in
the initial placement of such Convertible  Preferred  Securities were offered to
investors  exceeds  the amount of any  damages  that the  Placement  Agents have
otherwise  been  required  to pay by reason of such  untrue  or  alleged  untrue
statement  or  omission  or alleged  omission.  No person  guilty of  fraudulent
misrepresentation  (within the meaning of Section 11(f) of the  Securities  Act)
shall be  entitled  to  contribution  from any person who was not guilty of such
fraudulent  misrepresentation.  The remedies  provided for in this Section 8 are
not exclusive and shall not limit any rights or remedies  which may otherwise be
available to any indemnified party at law or in equity.

                  (f) The indemnity  and  contribution  provisions  contained in
this Section 8 and the  representations,  warranties and other statements of the
Company and the Trust contained in this Agreement shall remain  operative and in
full force and effect regardless of (i) any termination of this Agreement,  (ii)
any  investigation  made by or on behalf of any  Placement  Agent or any  person
controlling  any  Placement  Agent  or by or on  behalf  of the  Trust,  the VFT
Trustees,  the  Company,  or any of its  officers  or  directors  or any  person
controlling  the Company or the Trust,  and (iii)  acceptance of and payment for
any of the Convertible Preferred Securities.

                  9. TERMINATION. This Agreement shall be subject to termination
by  notice  given by the  Placement  Agents  to the  Company,  if (a)  after the
execution  and  delivery of this  Agreement  and prior to the  Closing  Date (i)
trading  generally shall have been suspended or materially  limited on or by, as
the  case  may be,  any of the New  York  Stock  Exchange,  the  American  Stock
Exchange,  the National  Association  of Securities  Dealers,  Inc., the Chicago
Board of Options Exchange,  the Chicago Mercantile Exchange or the Chicago Board
of  Trade,  (ii)  trading  of any  securities  of the  Company  shall  have been
suspended on any  exchange or in any  over-the-counter  market,  (iii) a general
moratorium on commercial banking activities in New York shall have been declared
by either  Federal  or New York  State  authorities  or (iv)  there  shall  have
occurred any outbreak or  escalation of  hostilities  or any change in financial
markets or any  calamity or crisis  that,  in your  judgment,  is  material  and
adverse and (b) in the case of any of the events  specified  in clauses  9(a)(i)
through  9(a)(iv)  above,  such event,  singly or  together  with any other such
event,  makes it, in your  judgment,  impracticable  to market  the  Convertible
Preferred  Securities on the terms and in the manner  contemplated  in the Final
Memorandum.

                  10. EFFECTIVENESS; DEFAULTING PLACEMENT AGENTS. This Agreement
shall become  effective  upon the execution  and delivery  hereof by the parties
hereto.

                  If, on the Closing  Date or the Option  Closing  Date,  as the
case may be,  any one or more of the  Placement  Agents  shall fail or refuse to
purchase  Convertible  Preferred  Securities  that it has or they have agreed to
purchase  hereunder  on such  date,  and the  aggregate  number  of  Convertible
Preferred  Securities which such defaulting  Placement Agent or Placement Agents
agreed  but  failed or refused to  purchase  is not more than  one-tenth  of the
aggregate number of the Convertible Preferred Securities to be purchased on such
date, the other Placement Agents shall be obligated severally in the proportions
that the number of Firm Securities set forth opposite

                                       21

<PAGE>

their  respective  names in  Schedule  I bears to the  aggregate  number of Firm
Securities  set forth  opposite the names of all such  non-defaulting  Placement
Agents,  or in such  other  proportions  as you may  specify,  to  purchase  the
Convertible  Preferred  Securities  which  such  defaulting  Placement  Agent or
Placement Agents agreed but failed or refused to purchase on such date; PROVIDED
that in no event shall the number of Convertible  Preferred  Securities that any
Placement  Agent has agreed to purchase  pursuant to this Agreement be increased
pursuant to this  Section 10 by an amount in excess of  one-ninth of such number
of  Convertible  Preferred  Securities  without  the  written  consent  of  such
Placement  Agent.  If, on the Closing  Date,  any  Placement  Agent or Placement
Agents shall fail or refuse to purchase Firm Securities and the aggregate number
of Firm  Securities  with  respect  to which  such  default  occurs is more than
one-tenth  of the  aggregate  number of Firm  Securities  to be  purchased,  and
arrangements  satisfactory to you, the Trust and the Company for the purchase of
such Firm  Securities  are not made  within 36 hours  after such  default,  this
Agreement shall terminate  without  liability on the part of any  non-defaulting
Placement  Agent,  the Trust or the Company.  In any such case either you or the
Trust shall have the right to postpone  the  Closing  Date,  but in no event for
longer than seven days, in order that the required changes, if any, in the Final
Memorandum or in any other documents or arrangements may be effected. If, on the
Option  Closing  Date,  any  Placement  Agent or Placement  Agents shall fail or
refuse to purchase Additional  Securities and the aggregate number of Additional
Securities  with respect to which such default  occurs is more than one-tenth of
the   aggregate   number  of  Additional   Securities   to  be  purchased,   the
non-defaulting  Placement  Agents shall have the option to (i)  terminate  their
obligation hereunder to purchase Additional Securities or (ii) purchase not less
than the number of  Additional  Securities  that such  non-defaulting  Placement
Agents would have been obligated to purchase in the absence of such default. Any
action taken under this  paragraph  shall not relieve any  defaulting  Placement
Agent from  liability  in respect of any default of such  Placement  Agent under
this Agreement.

                  If this Agreement shall be terminated by the Placement Agents,
or any of them,  because of any failure or refusal on the part of the Company or
the Trust to comply with the terms or to fulfill any of the  conditions  of this
Agreement,  or if for any  reason the  Company  or the Trust  shall be unable to
perform its obligations  under this Agreement  (other than by reason of a breach
of this  Agreement by any of the  Placement  Agents),  the Company and the Trust
will  reimburse  the  Placement  Agent  or  such  Placement  Agents  as  have so
terminated  this  Agreement  with  respect  to  themselves,  severally,  for all
out-of-pocket  expenses  (including the fees and  disbursements  of its counsel)
reasonably  incurred by such Placement  Agents in connection with this Agreement
or the offering contemplated hereunder.

                  11. NOTICES. All notices and other communications  required or
permitted  to be given  under this  Agreement  shall be in writing  and shall be
deemed to have been duly given if delivered  personally to the parties hereto as
follows:

                                       22

<PAGE>

                           (a)   If to the Placement Agents:

                                 Morgan Stanley & Co. Incorporated
                                 1585 Broadway
                                 New York, New York  10036
                                 Attention: James D. Allen

                           (b)   If to the Company or the Trust:

                                 Viatel, Inc.
                                 685 Third Avenue
                                 New York, New York  10017
                                 Attention:  James P. Prenetta
                                             Vice President and General Counsel

                                 with a copy to:

                                 Kelley Drye & Warren LLP
                                 101 Park Avenue
                                 New York, New York  10178
                                 Attention:  Patricia M. Lee

                  12.  COUNTERPARTS.  This Agreement may be signed in any number
of counterparts,  each of which shall be an original, with the same effect as if
the signatures thereto and hereto were upon the same instrument.

                  13.  APPLICABLE  LAW. This Agreement  shall be governed by and
construed in accordance with the internal laws of the State of New York.

                  14.  HEADINGS.  The headings of the sections of this Agreement
have been inserted for  convenience  of reference only and shall not be deemed a
part of this Agreement.

              [THE REST OF THIS PAGE IS INTENTIONALLY LEFT BLANK.]

                                       23

<PAGE>

                  Please  confirm your  agreement to the foregoing by signing in
the space  provided  below for that  purpose and  returning to us a copy hereof,
whereupon this Agreement shall  constitute a binding  agreement  between Viatel,
Inc., Viatel Financing Trust I and the Placement Agents.

                                        Very truly yours,

                                        VIATEL, INC.

                                        By: /s/ Allan L. Shaw
                                           -------------------------------------
                                           Name:  Allan L. Shaw
                                           Title: Chief Financial Officer

                                        VIATEL FINANCING TRUST I

                                        By:   VIATEL, INC., as Sponsor

                                              By:  /s/ Allan L. Shaw
                                                 -------------------------------
                                                 Name:  Allan L. Shaw
                                                 Title: Chief Financial Officer

<PAGE>

Agreed, April 6, 2000

MORGAN STANLEY & CO. INCORPORATED
SALOMON SMITH-BARNEY INC.
BANC OF AMERICA SECURITIES LLC

Acting severally on behalf of themselves
and the several Placement Agents named
in Schedule I hereto

By: MORGAN STANLEY & CO. INCORPORATED

By: /s/ James D. Allen
   --------------------------------------------
Name:  James D. Allen
Title: Principal

<PAGE>

                                   SCHEDULE I

    PLACEMENT AGENT                      NUMBER OF CONVERTIBLE PREFERRED
                                          SECURITIES TO BE PURCHASED

Morgan Stanley & Co. Incorporated                 1,950,000
Salomon Smith Barney Inc.                           675,000
Banc of America Securities LLC                      375,000

Total:............................................3,000,000

<PAGE>

                                                                      EXHIBIT A

                      FORM OF REGISTRATION RIGHTS AGREEMENT

<PAGE>

                                                                       EXHIBIT B

                          SUBSIDIARIES OF VIATEL, INC.

<TABLE>
<CAPTION>
NAME OF SUBSIDIARY                               JURISDICTION OF INCORPORATION
                                                        OR ORGANIZATION
<S>                                                        <C>
Viatel Cable Assets, Inc.                                  Delaware
Viatel Financing Trust I                                   Delaware
Viatel Services, Inc.                                      Delaware
VYTL LLC                                                   Delaware
Destia Communications                                      Delaware
Destia.com, Inc.                                           Delaware
Off the Mall Advertising Inc.                              Delaware
Voicenet Corporation                                       New York

Viatel (Bermuda) Cable Assets Limited                      Bermuda

Viatel Cable Assets Limited                                United Kingdom
Viatel Global Communications (UK) Limited                  United Kingdom
Viatel Communications, Ltd.                                United Kingdom
Destia Communications Holdings, Ltd.                       United Kingdom
Destia Communications, Ltd.                                United Kingdom
Wavetech, Ltd.                                             United Kingdom
America 1st                                                United Kingdom
Destia Network Services Ltd.                               United Kingdom
AmberHold Ltd.                                             United Kingdom
Econophone, Ltd.                                           United Kingdom

Viatel Ltd.                                                Ireland
Destia Communications Limited                              Ireland
Destia Communications Services Ltd.                        Ireland

Econophone GmbH                                            Austria

Econophone N.V.                                            Belgium
Call BVBA                                                  Belgium

Destia Communications S.A.                                 France

Viatel German Holding GmbH                                 Germany
Viatel Global Communications GmbH                          Germany
Econophone GmbH                                            Germany
Teleriffic Global Communications GmbH                      Germany

Econophone (Hellas) S.A.                                   Greece

Viaphon N.V./S.A.                                          Netherlands

Viatel European Holding S.R.L.                             Spain

Econophone AG                                              Switzerland
Phonecentre GmbH                                           Switzerland

</TABLE>

<PAGE>

                                                                       EXHIBIT C

                           FINAL OFFERING MEMORANDUM,
                               DATED APRIL 6, 2000

<PAGE>

                                    EXHIBIT D

                               FORM OF OPINION OF
                            KELLEY DRYE & WARREN LLP

<PAGE>

                                  ATTACHMENT A

                                       TO

                    FORM OF KELLEY DRYE & WARREN LLP OPINION

                  In the course of the  preparation by the Trust and the Company
of the Final  Memorandum,  we have  participated  in conferences  with officers,
directors  and  representatives  of the Trust and the Company,  its  independent
auditors,  officers,  directors and your  representatives and representatives of
counsel for the Placement Agents at which  conferences the contents of the Final
Memorandum   and  related   matters  were   discussed.   Although  we  have  not
independently  verified the accuracy or completeness  of, or otherwise  verified
the statements made in the Final  Memorandum  (other than as expressly  provided
above),  nothing has come to our  attention  that has led us to believe that the
Final  Memorandum,  as of its  date or the  date  hereof,  contained  an  untrue
statement of a material  fact or omitted to state a material  fact  necessary in
order the make the statements  therein,  in the light of the circumstances under
which they were made, not misleading.  Notwithstanding the foregoing, we are not
expressing any belief as to the financial  statements  and supporting  notes and
schedules and other financial data contained in the Final Memorandum.

<PAGE>

                                                                       EXHIBIT E

                      FORM OF FOREIGN LOCAL COUNSEL OPINION

                  (A) [________] (the "Company") has been duly incorporated,  is
validly  existing  as a  company  under the laws of [Name of  Country],  has the
corporate power and authority to own its property and to conduct its business as
described in the Offering Memorandum of Viatel Financing Trust I dated April __,
2000 (the "Final Memorandum") and is duly qualified to transact business in each
jurisdiction in which the conduct of its business or its ownership or leasing of
property requires such  qualification  (except to the extent that the failure to
be so  qualified  would not in our view have a  Material  Adverse  Effect on the
Company and its subsidiaries taken as a whole).

                  (B) The Company has no subsidiaries.

                  (C) The Company  has all  materially  necessary  certificates,
orders, permits, licenses,  authorizations,  consents and approvals of and from,
and has  made all  declarations  and  filings  with  all  relevant  governmental
authorities,  all  self-regulatory  organizations  and all  relevant  courts and
tribunals,  to own,  lease,  license  and use its  properties  and assets and to
conduct its business in the manner  described in the Final  Memorandum,  and, to
the best of our  knowledge,  after due  inquiry has not  received  any notice of
proceedings  relating to revocation or  modification  of any such  certificates,
orders, permits,  licenses,  authorizations,  consents or approvals,  nor is the
Company in  violation  of, or in  default  under,  any  federal,  state,  local,
national or regional law, regulation, rule, decree, order or judgment applicable
to the Company,  the effect of which,  singly or in the aggregate,  would have a
material adverse effect on the prospects,  condition, financial or otherwise, or
in the  earnings,  business or  operations  of the Company,  except as described
herein or in the Final Memorandum.

                  (D) The statements in the Final  Memorandum  under the caption
"Business  --  [_______]"  are  accurate  in all  material  respects  and fairly
summarize all matters referred to therein.

                  (E)  There  are  no   restrictions   (legal,   contractual  or
otherwise) on the ability of the Company to declare and pay any dividend or make
any payment or transfer  of  property or assets to its  stockholders  other than
those described in the Final Memorandum and such  restrictions as would not have
a material adverse effect on the prospects,  condition,  financial or otherwise,
or in the earnings, business or operations of the Company and such descriptions,
if any, fairly summarize such restrictions.

                                * * * * * * * * *

<PAGE>

                                       F-1

                                                                       EXHIBIT F

                     FORM OF U.S. REGULATORY COUNSEL OPINION

         Pursuant  to  Section  5(f)  of the  Placement  Agreement,  Morrison  &
Foerster LLP,  regulatory  counsel for the Company,  shall furnish an opinion to
the effect that:

                  (A) (1) the execution and delivery of the Placement  Agreement
         by the Trust and the Company and the  consummation of the  transactions
         contemplated thereby do not violate (i) the federal  Communications Act
         of 1934, as amended, and the  Telecommunications Act of 1996, any rules
         or  regulations  of  the  Federal  Communications   Commission  ("FCC")
         applicable to the Company  (collectively,  the  "Communications  Act"),
         (ii) any state  telecommunications  law, rules or  regulations  ("State
         Law")  applicable  to the  Company,  and  (iii)  to the  best  of  such
         counsel's  knowledge,  any decree  from any court,  and (2) no consent,
         approval, authorization or order of or filing with the FCC or any state
         authority overseeing telecommunications matters ("State Authority"), is
         necessary for the execution and delivery of the Placement  Agreement by
         the  Company and the Trust and except to the extent that the failure to
         obtain such consents,  approvals,  authorizations  or orders or to make
         filings with, the FCC or any State Authority would not, individually or
         in the  aggregate,  have a material  adverse  effect on the  prospects,
         condition  (financial or  otherwise)  or in the  earnings,  business or
         operations of the Trust and the Company and the subsidiaries  listed in
         Schedule B to the Placement Agreement (the  "Subsidiaries")  taken as a
         whole;

                  (B) except as  indicated  in this  paragraph B, to the best of
         our  knowledge,  (1) the  Company  and its  Subsidiaries  have made all
         reports  and  filings,  and paid all fees,  required by the FCC and the
         State  Authorities,   and  have  all  certificates,   orders,  permits,
         licenses, authorizations,  consents and approvals of and from, and have
         made  all  filings  and  registrations,  with  the FCC  and  the  State
         Authorities necessary to own, lease, license and use its properties and
         assets and to conduct its respective  business in the manner  described
         in the Final Memorandum,  except for those filings, fees, and approvals
         the failure to obtain or file of which would not have material  adverse
         effect on the financial  condition,  or on the earnings,  business,  or
         operations of the Company and its  Subsidiaries,  taken as a whole; (2)
         has not received any notice of  proceedings  relating to the violation,
         revocation or modification of any such certificates,  orders,  permits,
         licenses,  authorizations,  consents or approvals, or the qualification
         or rejection of any such filing or  registration,  the effect of which,
         singly or in the aggregate, would have a material adverse effect on the
         prospects,  condition,  financial  or  otherwise,  or in the  earnings,
         business  or  operations  of the  Company,  taken as a  whole;  and (3)
         neither the  Company nor its  Subsidiaries  is in  violation  of, or in
         default  under,  the  Communications  Act or State  Law,  the effect of
         which, singly or in the aggregate, would have a material

<PAGE>

                                       F-2

          adverse effect on the prospects, condition, financial or otherwise, or
          in the  earnings,  business  or  operations  of the  Company  and  its
          Subsidiaries, taken as a whole;

                  (C) to the best of such counsel's  knowledge after due inquiry
         (i) no  adverse  judgment,  decree  or  order  of the FCC or any  State
         Authority has been issued against the Company or its  Subsidiaries  and
         (ii) no  litigation,  proceeding,  inquiry  or  investigation  has been
         commenced or threatened against the Company or its Subsidiaries  before
         or by the FCC or any State Authority which, if decided adversely to the
         interests  of the  Company  or its  Subsidiaries  would have a material
         adverse effect on the Company and its  Subsidiaries,  taken as a whole;
         and

                  (D) the statements in the Final  Memorandum under the captions
         "Risk Factors -- Competition," "Risk Factors -- Substantial  Government
         Regulation,"  "Business  --  Government  Regulation,"  insofar  as such
         statements  constitute  a summary of the legal  matters,  documents  or
         proceedings  of  the  FCC  and  State   Authorities   with  respect  to
         telecommunications regulation referred to therein, fairly summarize the
         matters referred to therein.

                                * * * * * * * * *

<PAGE>

                                                                      EXHIBIT G

                               FORM OF OPINION OF
                           EMMET, MARVIN & MARTIN, LLP

              [Attach form provided by Emmet, Marvin & Martin, LLP]

<PAGE>

                                                                       EXHIBIT H

                               FORM OF OPINION OF
                            RICHARDS, LAYTON & FINGER

               [Attach form provided by Richards, Layton & Finger]

                                       H-1

<PAGE>

                                       I-1

                                                                       EXHIBIT I

                            Form of Lock-Up Agreement

                                                                   April 6, 2000

Morgan Stanley & Co. Incorporated
Salomon Smith Barney Inc.
Banc of America Securities LLC
c/o Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York  10036

         Re:  VIATEL FINANCING TRUST I

Ladies and Gentlemen:

         The undersigned, an officer and/or director of Viatel, Inc., a Delaware
corporation (the "Company"),  understands that Morgan Stanley & Co. Incorporated
("Morgan  Stanley") intends to enter into a Placement  Agreement (the "Placement
Agreement") with the Company and Viatel Financing Trust I, a statutory  business
trust formed under the laws of the State of Delaware  (the  "Trust"),  providing
for the offering by the several Placement Agents,  including Morgan Stanley (the
"Placement  Agents")  of  convertible   preferred   securities  (the  "Preferred
Securities") of the Trust.

         To induce the Placement  Agents to enter into the Placement  Agreement,
and in recognition of the benefit that the offering of the Preferred  Securities
will confer upon the  undersigned as an officer and/or  director of the Company,
and for other good and valuable  consideration,  the receipt and  sufficiency of
which are hereby  acknowledged,  the undersigned hereby agrees that, without the
prior written consent of Morgan Stanley on behalf of the Placement  Agents,  the
undersigned will not, during the period commencing on the date hereof and ending
90 days after the date of the  Placement  Agreement,  (i) offer,  pledge,  sell,
contract to sell,  sell any option or contract to purchase,  purchase any option
or  contract  to sell,  grant any  option,  right or  warrant  to  purchase,  or
otherwise transfer or dispose of, directly or indirectly,  any equity securities
of the Company,  the Trust or any similar  trust or any  securities  convertible
into or exchangeable  or exercisable  for any equity  securities of the Company,
the Trust or any similar trust,  whether now owned or hereafter  acquired by the
undersigned or with respect to which the undersigned  has or hereafter  acquires
the power of disposition,  or (ii) enter into any swap or any other agreement or
arrangement  that  transfers  to  another,  in  whole or in  part,  directly  or
indirectly,  any  of the  economic  consequences  of  ownership  of  any  equity
securities  of the  Company,  the Trust or any similar  trust,  whether any such
transaction described in clause (i) or

<PAGE>

                                       I-2

(ii) above is to be settled by delivery of any equity securities of the Company,
the Trust or any similar  trust,  other  securities,  in cash or otherwise.  The
foregoing  sentence shall not apply to (a) the sale of any equity  securities to
the Placement  Agents pursuant to the Placement  Agreement,  or (b) transactions
relating to equity  securities  acquired in open market  transactions  after the
completion of the offering of the Preferred Securities.

         The  undersigned  recognizes  that  whether or not the  offering of the
Preferred  Securities actually occurs depends on a number of factors,  including
market  conditions.  Any such offering will only be made pursuant to a Placement
Agreement,  the terms of which are subject to  negotiation  between the Company,
the Trust and the Placement Agents.

         In the event the Closing Date (as defined in the  Placement  Agreement)
does not occur by April 17, 2000,  this  lock-up  agreement  will  automatically
expire and be of no further effect.

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

                                                    Very truly yours,

                                                    Signature:

                                                    Print Name:

<PAGE>

                                                                      EXHIBIT J

                      Persons to Deliver Lock-Up Agreements

<TABLE>
<CAPTION>
EXECUTIVE OFFICER                  TITLE
<S>                           <C>
Michael J. Mahoney            Chairman of the Board and Chief Executive
                              Officer
Alfred West                   Vice Chairman of the Board
William C. Murphy             President and Director
Allan L. Shaw                 Chief Financial Officer and Director
Sheldon M. Goldman            Executive Vice President, Corporate
                                 Development and Director
Francis J. Mount              Chief Technology Officer and Director
Lawrence G. Malone            Executive Vice President, Wholesale Sales and
                                Marketing
</TABLE>

                                                           Draft: April 3, 2000EXECUTION COPY

                    PREFERRED SECURITIES GUARANTEE AGREEMENT

                                   Viatel, Inc

                           Dated as of April 12, 2000

<PAGE>

                                TABLE OF CONTENTS

                                                                            Page

                                    ARTICLE I
                         DEFINITIONS AND INTERPRETATION

SECTION 1.1           Definitions and Interpretation...........................1

                                   ARTICLE II
                               TRUST INDENTURE ACT

SECTION 2.1           Trust Indenture Act; Application.........................5
SECTION 2.2           Lists of Holders of Securities...........................5
SECTION 2.3           Reports by the Preferred Guarantee Trustee...............6
SECTION 2.4           Periodic Reports to Preferred Guarantee Trustee..........6
SECTION 2.5           Evidence of Compliance with Conditions Precedent.........6
SECTION 2.6           Events of Default; Waiver................................6
SECTION 2.7           Event of Default; Notice.................................6
SECTION 2.8           Conflicting Interests....................................7

                                   ARTICLE III
            POWERS, DUTIES AND RIGHTS OF PREFERRED GUARANTEE TRUSTEE

SECTION 3.1           Powers and Duties of the Preferred Guarantee Trustee.....7
SECTION 3.2           Certain Rights of Preferred Guarantee Trustee............9
SECTION 3.3           Not Responsible for Recitals or Issuance of Guarantee...11

                                   ARTICLE IV
                           PREFERRED GUARANTEE TRUSTEE

SECTION 4.1           Preferred Guarantee Trustee; Eligibility................11
SECTION 4.2           Appointment, Removal and Resignation of Preferred
                      Guarantee Trustees......................................12

                                    ARTICLE V
                                    GUARANTEE

SECTION 5.1           Guarantee...............................................12
SECTION 5.2           Subordination...........................................13
SECTION 5.3           Waiver of Notice and Demand.............................13
SECTION 5.4           Obligations Not Affected................................13
SECTION 5.5           Rights of Holders.......................................14
SECTION 5.6           Guarantee of Payment....................................15
SECTION 5.7           Subrogation.............................................15

<PAGE>

SECTION 5.8           Independent Obligations.................................15
SECTION 5.9           Conversion..............................................15

                                   ARTICLE VI
                    LIMITATION OF TRANSACTIONS; SUBORDINATION

SECTION 6.1           Limitation of Transactions..............................15
SECTION 6.2           Ranking.................................................16

                                   ARTICLE VII
                                   TERMINATION

SECTION 7.1           Termination.............................................17

                                  ARTICLE VIII
                                 INDEMNIFICATION

SECTION 8.1           Exculpation.............................................17
SECTION 8.2           Indemnification.........................................18

                                   ARTICLE IX
                                  MISCELLANEOUS

SECTION 9.1           Successors and Assigns..................................18
SECTION 9.2           Amendments..............................................18
SECTION 9.3           Notices.................................................18
SECTION 9.4           Benefit.................................................19
SECTION 9.5           Governing Law...........................................19

<PAGE>

                    PREFERRED SECURITIES GUARANTEE AGREEMENT

                  This PREFERRED  SECURITIES GUARANTEE AGREEMENT (the "Preferred
Securities Guarantee"), dated as of April 12, 2000, is executed and delivered by
Viatel,  Inc., a Delaware  corporation  (the  "Guarantor"),  and The Bank of New
York, a New York State banking corporation, as trustee (the "Preferred Guarantee
Trustee"),  for the benefit of the Holders (as defined herein) from time to time
of the Preferred  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 3,000,000 preferred  securities,  having an aggregate
liquidation  amount of $150,000,000  (plus up to an additional 600,000 preferred
securities,  having an aggregate  liquidation  amount of  $30,000,000,  to cover
over-allotments),  designated the 7 3/4% Trust Convertible  Preferred Securities
(the "Preferred Securities").

                  WHEREAS,   as  incentive  for  the  Holders  to  purchase  the
Preferred  Securities,  the Guarantor desires irrevocably and unconditionally to
agree,  to the  extent  set forth in this  preferred  Securities  Guarantee,  to
guarantee  the  obligations  of the  Trust  to  the  Holders  of  the  Preferred
Securities on the terms and conditions set forth herein.

                  WHEREAS,  the  Guarantor is also  executing  and  delivering a
guarantee  agreement  (the  "Common  Securities   Guarantee")  in  substantially
identical  terms to this Preferred  Securities  Guarantee for the benefit of the
holders of the Common Securities (as defined herein), except that if an event of
default (as defined in the Indenture (as defined  herein)),  has occurred and is
continuing,  the rights of holders of the Common Securities to receive Guarantee
Payments  (as  defined  in the  Common  Securities  Guarantee)  under the Common
Securities Guarantee shall be subordinated to the rights of Holders of Preferred
Securities  to  receive  Guarantee  Payments  (as  defined  herein)  under  this
Preferred Securities Guarantee.

                  NOW THEREFORE, in consideration of the purchase by each Holder
of Preferred  Securities,  which  purchase  the  Guarantor  hereby  agrees shall
benefit the  Guarantor,  the  Guarantor  executes  and delivers  this  Preferred
Securities Guarantee for the benefit of the Holders.

                                    ARTICLE I
                         DEFINITIONS AND INTERPRETATION

SECTION 1.1       Definitions and Interpretation

                  In this  Preferred  Securities  Guarantee,  unless the context
otherwise requires:

                                        1

<PAGE>

                  (a)  Capitalized  terms  used  in  this  Preferred  Securities
         Guarantee  but not defined in the  preamble  above have the  respective
         meanings assigned to them in this Section 1.1;

                  (b) a term  defined  anywhere  in  this  Preferred  Securities
         Guarantee has the same meaning throughout;

                  (c) all references to "the Preferred Securities  Guarantee" or
         "this Preferred Securities  Guarantee" are to this Preferred Securities
         Guarantee as modified, supplemented or amended from time to time;

                  (d) all references in this Preferred  Securities  Guarantee to
         Articles and  Sections  are to Articles and Sections of this  Preferred
         Securities Guarantee, unless otherwise specified;

                  (e) a term  defined  in the Trust  Indenture  Act has the same
         meaning  when  used  in this  Preferred  Securities  Guarantee,  unless
         otherwise defined in this Preferred  Securities Guarantee or unless the
         context otherwise requires;

                  (f) a reference to the singular includes the plural and vice
         versa;

                  (g) a reference to any Person shall include its successors and
         assigns;

                  (h) 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

                  (i) a reference to any statute, law, rule or regulation, shall
         include any amendments  thereto  applicable to the relevant Person, and
         any successor statute, law, rule or regulation.

                  "Affiliate" has the same meaning as given to that term in Rule
405 of the Securities Act of 1933, as amended, or any successor rule thereunder.

                  "Business Day" means any day other than a day on which banking
institutions in New York, New York or in Wilmington,  Delaware are authorized or
required by any applicable law or executive order to close.

                  "Common  Securities" means the securities  representing common
undivided beneficial interests in the assets of the Trust.

                  "Corporate  Trust  Office"  means the office of the  Preferred
Guarantee  Trustee  at which  the  corporate  trust  business  of the  Preferred
Guarantee Trustee shall, at any particular

                                        2

<PAGE>

time, be principally administered, which office at the date of execution of this
Agreement is located at 101 Barclay  Street,  Floor 21 West,  New York, New York
10286, Attention: Corporate Trust Administration.

                  "Covered  Person"  means  any  Holder or  beneficial  owner of
Preferred Securities.

                  "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).

                  "Event of Default"  means a default by the Guarantor on any of
its payment or other  obligations under this Preferred  Securities  Guarantee or
the failure of the Guarantor to convert the Preferred  Securities into shares of
common stock of the Guarantor pursuant to the terms of the Declaration.

                  "Guarantee   Payments"   means  the   following   payments  or
distributions, without duplication, with respect to the Preferred 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  Preferred  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"),  with respect
to any Preferred Securities called for redemption by the Trust to the extent the
Trust has funds  available  therefor,  and (iii) upon a voluntary or involuntary
dissolution,  winding-up or  termination  of the Trust (other than in connection
with a  distribution  of the Debentures to the Holders in exchange for Preferred
Securities or the  redemption of all of the Preferred  Securities as provided in
the Declaration),  the lesser of (a) the aggregate of the liquidation amount and
all accrued and unpaid  Distributions on the Preferred Securities to the date of
payment,  to the extent the Trust shall have 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").

                  "Holder" shall mean any holder, as registered on the books and
records of the Trust of any Preferred  Securities;  provided,  however,  that in
determining  whether  the  holders  of the  requisite  percentage  of  Preferred
Securities have given any request, notice, consent or waiver hereunder, "Holder"
shall not include the Guarantor or any Affiliate of the Guarantor.

                  "Indemnified  Person" means the Preferred  Guarantee  Trustee,
any Affiliate of the Preferred  Guarantee Trustee,  or any officers,  directors,
shareholders,   members,   partners,   employees,   representatives,   nominees,
custodians or agents of the Preferred Guarantee Trustee.

                  "Indenture"  means the  Indenture  dated as of April 12, 2000,
among the Guarantor  (the  "Convertible  Debenture  Issuer") and The Bank of New
York,  as  trustee,  pursuant  to which the  Debentures  are to be issued to the
Property Trustee of the Trust.

                                        3

<PAGE>

                  "Indenture  Trustee"  means the Person acting as trustee under
the Indenture, initially The Bank of New York.

                  "Majority in liquidation  amount of the Preferred  Securities"
means,  except as provided by the Trust  Indenture  Act, a vote by  Holder(s) of
Preferred  Securities,  voting  separately  as a class,  of more than 50% of the
liquidation   amount  (including  the  stated  amount  that  would  be  paid  on
redemption,  liquidation or otherwise,  plus accrued and unpaid Distributions to
the date upon which the voting  percentages  are  determined)  of all  Preferred
Securities.

                  "Officers'  Certificate"  means, with respect to any Person, a
certificate  signed by two  Authorized  Officers of such Person.  Any  Officers'
Certificate  delivered  with respect to compliance  with a condition or covenant
provided for in this Preferred Securities Guarantee shall include:

                  (a) a  statement  that  each  officer  signing  the  Officers'
         Certificate  has read the  covenant  or  condition  and the  definition
         relating thereto;

                  (b)  a  brief  statement  of  the  nature  and  scope  of  the
         examination  or  investigation  undertaken by each officer in rendering
         the Officers' Certificate;

                  (c)  a  statement   that  each  such  officer  has  made  such
         examination  or  investigation  as,  in  such  officer's  opinion,   is
         necessary to enable such  officer to express an informed  opinion as to
         whether or not such covenant or condition has been complied with; and

                  (d) a  statement  as to  whether,  in the opinion of each such
         officer, such condition or covenant has been complied with.

                  "Person"  means  a legal  person,  including  any  individual,
corporation,  estate,  partnership,  joint  venture,  association,  joint  stock
company,  limited  liability  company,  trust,  unincorporated  association,  or
government or any agency or political  subdivision  thereof, or any other entity
of whatever nature.

                  "Preferred Guarantee Trustee" mean The Bank of New York, until
a Successor Preferred Guarantee Trustee has been appointed and has accepted such
appointment  pursuant to the terms of this  Preferred  Securities  Guarantee and
thereafter means each such Successor Preferred Guarantee Trustee.

                  "Responsible  Officer"  means,  with respect to the  Preferred
Guarantee  Trustee,  any  officer  within  the  Corporate  Trust  Office  of the
Preferred  Guarantee Trustee,  including any vice president,  any assistant vice
president,  the  treasurer,  any  assistant  treasurer  or other  officer of the
Corporate Trust Office of the Preferred Guarantee Trustee customarily performing
functions

                                        4

<PAGE>

similar  to those  performed  by any of the above  designated  offices  and also
means, with respect to a particular corporate trust matter, any other officer to
whom  such  matter  is  referred  because  of that  officer's  knowledge  of and
familiarity with the particular  subject and who has direct  responsibility  for
the administration of this Preferred Securities Guarantee.

                  "Successor  Preferred  Guarantee  Trustee"  means a  successor
Preferred  Guarantee Trustee  possessing the  qualifications to act as Preferred
Guarantee Trustee under Section 4.1.

                  "Trust  Indenture Act" means the Trust  Indenture Act of 1939,
as amended.

                                   ARTICLE II
                               TRUST INDENTURE ACT

SECTION 2.1       Trust Indenture Act; Application

                  (a) This  Preferred  Securities  Guarantee  is  subject to the
provisions  of the  Trust  Indenture  Act that are  required  to be part of this
Preferred Securities Guarantee and shall, to the extent applicable,  be governed
by such provisions; and

                  (b) if and to the extent that any provision of this  Preferred
Securities  Guarantee limits,  qualifies or conflicts with the duties imposed by
Sections 310 to 317, inclusive,  of the Trust Indenture Act, such imposed duties
shall control.

SECTION 2.2       Lists of Holders of Securities

                  (a)  The  Guarantor  shall  provide  the  Preferred  Guarantee
Trustee  with a  list,  in such  form as the  Preferred  Guarantee  Trustee  may
reasonably  require,  of the names and addresses of the Holders of the Preferred
Securities  ("List of  Holders")  as of such date,  (i) within one  Business Day
after  January 1 and June 30 of each year,  and (ii) at any other time within 30
days of receipt by the  Guarantor of a written  request for a List of Holders as
of a date no more  that 14 days  before  such  List of  Holders  is given to the
Preferred Guarantee Trustee,  PROVIDED that the Guarantor shall not be obligated
to provide  such List of Holders at any time the List of Holders does not differ
from the most recent List of Holders given to the Preferred Guarantee Trustee by
the Guarantor or the Preferred  Securities are represented by one or more Global
Securities (as defined it the Indenture).  The Preferred  Guarantee  Trustee may
destroy any List of Holders  previously  given to it on receipt of a new List of
Holders.

                  (b) The  Preferred  Guarantee  Trustee  shall  comply with its
obligations  under  Section  311(a),  311(b)  and  Section  312(b)  of the Trust
Indenture Act.

                                        5

<PAGE>

SECTION 2.3       Reports by the Preferred Guarantee Trustee

                  Within  60 days  after  May 15 of  each  year,  the  Preferred
Guarantee Trustee shall provide to the Holders of the Preferred  Securities such
reports as are  required by Section 313 of the Trust  Indenture  Act, if any, in
the form and in the manner  provided by Section 313 of the Trust  Indenture Act.
The  Preferred  Guarantee  Trustee  shall also comply with the  requirements  of
Section 313(d) of the Trust Indenture Act.

SECTION 2.4       Periodic Reports to Preferred Guarantee Trustee

                  The Guarantor shall provide to the Preferred Guarantee Trustee
such documents,  reports and information as required by Section 314 (if any) and
the compliance certificate required by Section 314 of the Trust Indenture Act in
the form,  in the manner and at the times  required  by Section 314 of the Trust
Indenture Act.

SECTION 2.5       Evidence of Compliance with Conditions Precedent

                  The Guarantor shall provide to the Preferred Guarantee Trustee
such evidence of compliance with any conditions precedent,  if any, provided for
in this  Preferred  Securities  Guarantee  that relate to any of the matters set
forth in Section 314(c) of the Trust  Indenture Act. Any  certificate or opinion
required to be given by an officer pursuant to Section 314(c)(1) may be given in
the form of an Officers' Certificate.

SECTION 2.6       Events of Default; Waiver

                  The Holders of a Majority in  liquidation  amount of Preferred
Securities  may,  by vote,  on behalf  of the  Holders  of all of the  Preferred
Securities,  waive any past Event of  Default  and its  consequences.  Upon such
waiver, any such Event of Default shall cease to exist, and any Event of Default
arising  therefrom shall be deemed to have been cured, for every purpose of this
Preferred  Securities  Guarantee,  but  no  such  waiver  shall  extend  to  any
subsequent or other  default or Event of Default or impair any right  consequent
thereon.

SECTION 2.7       Event of Default; Notice

                  (a) The  Preferred  Guarantee  Trustee  shall,  within 90 days
after the  occurrence  of an Event of  Default,  transmit  by mail,  first class
postage  prepaid,  to the Holders of the  Preferred  Securities,  notices of all
Events of Default  actually  known to a  Responsible  Officer  of the  Preferred
Guarantee  Trustee,  unless such  defaults  have been cured before the giving of
such notice; PROVIDED that the Preferred Guarantee Trustee shall be protected in
withholding such notice if and so long as a Responsible Officer of the Preferred
Guarantee  Trustee in good faith  determines that the withholding of such notice
is in the interests of the Holders of the Preferred Securities.

                                        6

<PAGE>

                  (b) The  Preferred  Guarantee  Trustee  shall not be deemed to
have  knowledge of any Event of Default unless the Preferred  Guarantee  Trustee
shall have received  written  notice,  or of which a Responsible  Officer of the
Preferred  Guarantee Trustee charged with the  administration of the Declaration
shall have obtained actual knowledge.

SECTION 2.8       Conflicting Interests

                  The Declaration  shall be deemed to be specifically  described
in this  preferred  Securities  Guarantee  for the purposes of clause (i) of the
first proviso contained in Section 310(b) of the Trust Indenture Act.

                                   ARTICLE III
            POWERS, DUTIES AND RIGHTS OF PREFERRED GUARANTEE TRUSTEE

SECTION 3.1       Powers and Duties of the Preferred Guarantee Trustee

                  (a) This Preferred  Securities  Guarantee shall be held by the
Preferred  Guarantee  Trustee for the  benefit of the  Holders of the  Preferred
Securities,  and  the  Preferred  Guarantee  Trustee  shall  not  transfer  this
Preferred  Securities  Guarantee  to any  Person  except a Holder  of  Preferred
Securities  exercising  his or her rights  pursuant  to  Section  5.5(b) or to a
Successor  Preferred Guarantee Trustee on acceptance by such Successor Preferred
Guarantee  Trustee of its  appointment to act as Successor  Preferred  Guarantee
Trustee.  The right, title and interest of the Preferred Guarantee Trustee shall
automatically  vest in any  Successor  Preferred  Guarantee  Trustee,  and  such
vesting and  cessation of title shall be effective  whether or not  conveyancing
documents have been executed and delivered  pursuant to the  appointment of such
Successor Preferred Guarantee Trustee.

                  (b) If an Event of  Default  actually  known to a  Responsible
Officer of the Preferred  Guarantee Trustee has occurred and is continuing,  the
Preferred  Guarantee Trustee shall enforce this Preferred  Securities  Guarantee
for the benefit of the Holders of the Preferred Securities.

                  (c) The Preferred Guarantee Trustee,  before the occurrence of
any Event of Default and after the curing of all Events of Default that may have
occurred,  shall undertake to perform only such duties as are  specifically  set
forth in this Preferred Securities Guarantee,  and no implied covenants shall be
read into this Preferred  Securities  Guarantee against the Preferred  Guarantee
Trustee.  In case an Event of Default has  occurred  (that has not been cured or
waived  pursuant to Section 2.6) and is actually known to a Responsible  Officer
of the  Preferred  Guarantee  Trustee,  the  Preferred  Guarantee  Trustee shall
exercise such of the rights and powers vested in it by this Preferred Securities
Guarantee, and use the same degree of care and skill in its exercise thereof, as
a prudent man would  exercise or use under the  circumstances  in the conduct of
his own affairs.

                                        7

<PAGE>

                  (d) No provision of this Preferred  Securities Guarantee shall
be construed to relieve the Preferred  Guarantee  Trustee from liability for its
own  negligent  action,  its own  negligent  failure to act,  or its own willful
misconduct, except that:

                  (i) prior to the  occurrence of any Event of Default and after
         the  curing or  waiving  of all such  Events of  Default  that may have
         occurred:

                           (A)  the  duties  and  obligations  of the  Preferred
                  Guarantee  Trustee shall be  determined  solely by the express
                  provisions of this  Preferred  Securities  Guarantee,  and the
                  Preferred Guarantee Trustee shall not be liable except for the
                  performance of such duties and obligations as are specifically
                  set  forth  in this  Preferred  Securities  Guarantee,  and no
                  implied  covenants  or  obligations  shall be read  into  this
                  Preferred Securities Guarantee against the Preferred Guarantee
                  Trustee; and

                           (B) in the  absence  of bad  faith on the part of the
                  Preferred  Guarantee Trustee,  the Preferred Guarantee Trustee
                  may  conclusively  rely, as to the truth of the statements and
                  the correctness of the opinions  expressed  therein,  upon any
                  certificates or opinions furnished to the Preferred  Guarantee
                  Trustee and conforming to the  requirements  of this Preferred
                  Securities Guarantee; but in the case of any such certificates
                  or  opinions  that by any  provision  hereof are  specifically
                  required to be furnished to the Preferred  Guarantee  Trustee,
                  the  Preferred  Guarantee  Trustee  shall  be  under a duty to
                  examine the same to  determine  whether or not they conform to
                  the requirements of this Preferred Securities Guarantee;

                  (ii) the Preferred  Guarantee  Trustee shall not be liable for
         any error of judgment  made in good faith by a  Responsible  Officer of
         the  Preferred  Guarantee  Trustee,  unless it shall be proved that the
         Preferred Guarantee Trustee was negligent in ascertaining the pertinent
         facts upon which such judgment was made;

                  (iii) the Preferred Guarantee Trustee shall not be liable with
         respect to any action  taken or omitted to be taken by it in good faith
         in  accordance  with the  direction  of the  Holders of not less than a
         Majority in liquidation amount of the Preferred  Securities relating to
         the time,  method and place of conducting any proceeding for any remedy
         available to the Preferred  Guarantee Trustee,  or exercising any trust
         or power  conferred  upon the  Preferred  Guarantee  Trustee under this
         Preferred Securities Guarantee; and

                  (iv) no provision of this Preferred Securities Guarantee shall
         require the Preferred Guarantee Trustee to expend or risk its own funds
         or otherwise incur personal  financial  liability it the performance of
         any of its duties or in the exercise of any of its rights or powers, if
         the  Preferred  Guarantee  Trustee  shall have  reasonable  grounds for
         believing  that  the  repayment  of  such  funds  or  liability  is not
         reasonably assured to it under

                                        8

<PAGE>

         the  terms  of  this  Preferred   Securities  Guarantee  or  indemnity,
         reasonably  satisfactory to the Preferred  Guarantee  Trustee,  against
         such risk or liability is not reasonably assured to it.

SECTION 3.2       Certain Rights of Preferred Guarantee Trustee

                  (a)      Subject to the provisions of Section 3.1:

                  (i) The Preferred Guarantee Trustee may conclusively rely, and
         shall be fully  protected in acting or refraining from acting upon, any
         resolution,   certificate,   statement,  instrument,  opinion,  report,
         notice,  request,  direction,  consent,  order, bond, debenture,  note,
         other evidence of indebtedness  or other paper or document  believed by
         it to be genuine  and to have been  signed,  sent or  presented  by the
         proper party or parties.

                  (ii) Any  direction or act of the  Guarantor  contemplated  by
         this Preferred Securities Guarantee shall be sufficiently  evidenced by
         an Officers' Certificate.

                  (iii)  Whenever,  in  the  administration  of  this  Preferred
         Securities  Guarantee,  the Preferred  Guarantee  Trustee shall deem it
         desirable  that a  matter  be  proved  or  established  before  taking,
         suffering or omitting any action  hereunder,  the  Preferred  Guarantee
         Trustee (unless other evidence is herein specifically  prescribed) may,
         in the absence of bad faith on its part,  request and conclusively rely
         upon an Officers'  Certificate  which,  upon  receipt of such  request,
         shall be promptly delivered by the Guarantor.

                  (iv) The Preferred Guarantee Trustee shall have no duty to see
         to any  recording,  filing or  registration  of any  instrument (or any
         rerecording, refiling or registration thereof).

                  (v) The Preferred  Guarantee  Trustee may consult with counsel
         of its  selection,  and the written  advice or opinion of such  counsel
         with respect to legal matters shall be full and complete  authorization
         and  protection in respect of any action taken,  suffered or omitted by
         it  hereunder  in good  faith and in  accordance  with  such  advise or
         opinion.  Such  counsel may be counsel to the  Guarantor  or any of its
         Affiliates  and  may  include  any  of  its  employees.  The  Preferred
         Guarantee Trustee shall have the right at any time to seek instructions
         concerning the  administration of this Preferred  Securities  Guarantee
         from any court of competent jurisdiction.

                  (vi)  The  Preferred  Guarantee  Trustee  shall  be  under  no
         obligation to exercise any of the rights or powers vested in it by this
         Preferred  Securities  Guarantee  at the  request or  direction  of any
         Holder,  unless  such  Holder  shall  have  provided  to the  Preferred
         Guarantee Trustee such security and indemnity,  reasonably satisfactory
         to  the  Preferred  Guarantee  Trustee,  against  the  costs,  expenses
         (including  attorneys' fees and expenses) and liabilities that might be
         incurred by it in complying with such request or

                                        9

<PAGE>

         direction,  including such  reasonable  advances as may be requested by
         the Preferred  Guarantee  Trustee;  PROVIDED that nothing  contained in
         this  Section  3.2(a)(vi)  shall  be  taken to  relieve  the  Preferred
         Guarantee Trustee,  upon the occurrence of an Event of Default,  of its
         obligation  to  exercise  the rights  and  powers  vested in it by this
         Preferred Securities Guarantee.

                  (vii) The  Preferred  Guarantee  Trustee shall not be bound to
         make  any  investigation  into  the  facts  or  matters  stated  in any
         resolution,   certificate,   statement,  instrument,  opinion,  report,
         notice,  request,  direction,  consent,  order, bond, debenture,  note,
         other  evidence of  indebtedness  or other paper or  document,  but the
         Preferred Guarantee Trustee,  in its discretion,  may make such further
         inquiry or investigation into such facts or matters as it may see fit.

                  (viii) The Preferred  Guarantee Trustee may execute any of the
         trusts or powers  hereunder  or  perform  any duties  hereunder  either
         directly or by or through  agents,  nominees,  custodians or attorneys,
         and the Preferred  Guarantee  Trustee shall not be responsible  for any
         misconduct or negligence on the part of any agent or attorney appointed
         with due care by it hereunder.

                  (ix) Any action taken by the  Preferred  Guarantee  Trustee or
         its  agents   hereunder   shall  bind  the  Holders  of  the  Preferred
         Securities, and the signature of the Preferred Guarantee Trustee or its
         agents  alone shall be  sufficient  and  effective  to perform any such
         action. No third party shall be required to inquire as to the authority
         of the Preferred  Guarantee  Trustee to so act or as to its  compliance
         with any of the  terms  and  provisions  of this  Preferred  Securities
         Guarantee,  both  of  which  shall  be  conclusively  evidenced  by the
         Preferred Guarantee Trustee's or its agent's taking such action.

                  (x)  Whenever  in  the   administration   of  this   Preferred
         Securities  Guarantee  the  Preferred  Guarantee  Trustee shall deem it
         desirable to receive  instructions with respect to enforcing any remedy
         or right or taking any other action hereunder,  the Preferred Guarantee
         Trustee (i) may request  instructions from the Holders of a Majority in
         liquidation amount of the Preferred  Securities,  (ii) may refrain from
         enforcing  such remedy or right or taking such other  action until such
         instructions are received, and (iii) shall be protected in conclusively
         relying on or acting in accordance with such instructions.

                  (xi) The Preferred  Guarantee  Trustee shall not be liable for
         any action taken,  suffered, or omitted to be taken by it in good faith
         and reasonably believed by it to be authorized or within the discretion
         or rights  or powers  conferred  upon it by this  Preferred  Securities
         Guarantee.

                  (b) No provision of this Preferred  Securities Guarantee shall
be deemed to impose any duty or obligation on the Preferred Guarantee Trustee to
perform any act or acts or

                                       10

<PAGE>

exercise any right, power, duty or obligation  conferred or imposed on it in any
jurisdiction in which it shall be illegal,  or in which the Preferred  Guarantee
Trustee shall be unqualified or incompetent in accordance  with  applicable law,
to perform any such act or acts or to exercise  any such right,  power,  duty or
obligation.  No  permissive  power  or  authority  available  to  the  Preferred
Guarantee Trustee shall be construed to be a duty.

SECTION 3.3       Not Responsible for Recitals or Issuance of Guarantee

                  The recitals contained in this Preferred  Securities Guarantee
shall be taken as the statements of the Guarantor,  and the Preferred  Guarantee
Trustee does not assume any responsibility for their correctness.  The Preferred
Guarantee  Trustee makes no  representation as to the validity or sufficiency of
this Preferred Securities Guarantee.

                                   ARTICLE IV
                           PREFERRED GUARANTEE TRUSTEE

SECTION 4.1       Preferred Guarantee Trustee; Eligibility

                  (a) There shall at all times be a Preferred  Guarantee Trustee
which shall:

                  (i)      not be an Affiliate of the Guarantor; and

                  (ii) be a corporation  organized and doing  business under the
         laws of the United States of America or any State or Territory  thereof
         or of the District of Columbia, or a corporation or Person permitted by
         Securities and Exchange  commission to act as an institutional  trustee
         under the Trust Indenture Act,  authorized  under such laws to exercise
         corporate  trust  powers,  having a combined  capital and surplus of at
         least 50 million U.S. dollars ($50,000,000), and subject to supervision
         or examination by Federal,  State,  Territorial or District of Columbia
         authority.  If such corporation publishes reports of condition at least
         annually,  pursuant to law or to the requirements of the supervising or
         examining  authority  referred to above, then, for the purposes of this
         Section   4.1(a)(ii),   the  combined   capital  and  surplus  of  such
         corporation  shall be deemed to be its combined  capital and surplus as
         set forth in its most recent report of condition so published.

                  (b) If at any time the Preferred Guarantee Trustee shall cease
to be eligible to so act under Section 4.1(a),  the Preferred  Guarantee Trustee
shall  immediately  resign in the  manner and with the effect set out in Section
4.2(c).

                  (c) If the  Preferred  Guarantee  Trustee has or shall acquire
any  "conflicting  interest"  within the meaning of Section  310(b) of the Trust
Indenture  Act,  the  Preferred  Guarantee  Trustee and  Guarantor  shall in all
respects  comply with the  provisions of Section  310(b) of the Trust  Indenture
Act.

                                       11

<PAGE>

SECTION 4.2       Appointment, Removal and Resignation of Preferred Guarantee
                  Trustees

                  (a) Subject to Section 4.2(b), the Preferred Guarantee Trustee
may be appointed or removed without cause at any time by the Guarantor.

                  (b) The  Preferred  Guarantee  Trustee shall not be removed in
accordance with Section 4.2(a) until a Successor Preferred Guarantee Trustee has
been appointed and has accepted such appointment by written instrument  executed
by such Successor Preferred Guarantee Trustee and delivered to the Guarantor.

                  (c) The Preferred  Guarantee Trustee appointed to office shall
hold  office  until a  Successor  Preferred  Guarantee  Trustee  shall have been
appointed or until its removal or resignation.  The Preferred  Guarantee Trustee
may resign from office  (without need for prior or subsequent  accounting) by an
instrument in writing executed by the Preferred  Guarantee Trustee and delivered
to the  Guarantor,  which  resignation  shall not take effect  until a Successor
Preferred Guarantee Trustee has been appointed and has accepted such appointment
by instrument in writing executed by such Successor  Preferred Guarantee Trustee
and delivered to the Guarantor and the resigning Preferred Guarantee Trustee.

                  (d) If no Successor  Preferred  Guarantee  Trustee  shall have
been  appointed and accepted  appointment as provided in this Section 4.2 within
60  days  after  delivery  to the  Guarantor  of an  instrument  of  removal  or
resignation,  the resigning or removed Preferred  Guarantee Trustee may petition
any court of competent  jurisdiction  for  appointment of a Successor  Preferred
Guarantee Trustee.  Such court may thereupon,  after prescribing such notice, if
any, as it may deem proper, appoint a Successor Preferred Guarantee Trustee.

                  (e) No  Preferred  Guarantee  Trustee  shall be liable for the
acts or omissions to act of any Successor Preferred Guarantee Trustee.

                  (f) Upon termination of this Preferred Securities Guarantee or
removal or  resignation  of the  Preferred  Guarantee  Trustee  pursuant to this
Section 4.2, the Guarantor shall pay to the Preferred Guarantee Trustee all fees
accrued to the date of such termination, removal or resignation.

                                    ARTICLE V
                                    GUARANTEE

SECTION 5.1       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 that the Trust may have or

                                       12

<PAGE>

assert. The Guarantor's  obligation to make a Guarantee Payment may be satisfied
by direct payment of the required  amounts by the Guarantor to the Holders or by
causing the Trust to pay such amounts to the Holders.

SECTION 5.2       Subordination

                  If an Event of  Default  (as  defined in the  Indenture),  has
occurred  and is  continuing,  the  rights of Holders  of Common  Securities  to
receive Guarantee Payments under the Common Securities Guarantee are subordinate
to the rights of Preferred  Securities to receive Guarantee  Payments under this
Preferred Securities Guarantee.

SECTION 5.3       Waiver of Notice and Demand

                  The  Guarantor  hereby  waives  notice of  acceptance  of this
Preferred  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 5.4       Obligations Not Affected

                  The  obligations,  covenants,  agreements  and  duties  of the
Guarantor under this Preferred  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  Preferred
         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 Preferred
         Securities  or the extension of time for the  performance  of any other
         obligation under,  arising out of, or in connection with, the Preferred
         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  Debentures  or  any  extension  of the  maturity  date  of the
         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  Preferred  Securities,  or any  action on the part of the
         Trust granting indulgence or extension of any kind;

                                       13

<PAGE>

                  (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
         Preferred 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  5.4 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 to give notice to,
or obtain  consent of, the Guarantor with respect to the happening of any of the
foregoing.

SECTION 5.5       Rights of Holders

                  (a) The  Holders of a Majority  in  liquidation  amount of the
Preferred  Securities  have the right to direct  the time,  method  and place of
conducting of any proceeding for any remedy available to the Preferred Guarantee
Trustee in respect of this  Preferred  Securities  Guarantee or  exercising  any
trust or power  conferred  upon  the  Preferred  Guarantee  Trustee  under  this
Preferred Securities Guarantee.

                  (b) Any Holder of Preferred  Securities may directly institute
a legal  proceeding  against the  Guarantor  to enforce the  obligations  of the
Guarantor under this Preferred  Securities Guarantee without first instituting a
legal proceeding against the Trust, the Preferred Guarantee Trustee or any other
Person to the fullest extent permitted by law.

                  (c) If an Event of Default with respect to the  Debentures (an
"Indenture  Event of  Default"),  constituting  the  failure to pay  interest or
principal on the  Debentures on the date such interest or principal is otherwise
payable has occurred and is  continuing,  then a Holder of Preferred  Securities
may directly,  at any time, institute a proceeding for enforcement of payment to
such Holder of the principal of or interest on the Debentures having a principal
amount equal to the aggregate  liquidation amount of the Preferred Securities of
such Holder on or after the respective due date specified in the Debentures. The
Holders of Preferred  Securities will not be able to exercise directly any other
remedy  available  to the  holders of the  Debentures  unless the  Institutional
Trustee (as defined in the Indenture) fails to do so.

                                       14

<PAGE>

SECTION 5.6       Guarantee of Payment

                  This  Preferred  Securities  Guarantee  creates a guarantee of
payment and not of collection.

SECTION 5.7       Subrogation

         The Guarantor shall be subrogated to all (if any) rights of the Holders
of Preferred Securities against the Trust in respect of any amounts paid to such
Holders by the Guarantor under this Preferred  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 right 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 Preferred  Securities
Guarantee,  if, at the time of any such payment,  any amounts are due and unpaid
under this Preferred  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.

SECTION 5.8       Independent Obligations

                  The Guarantor  acknowledges that its obligations hereunder are
independent  of the  obligations  of the Trust  with  respect  to the  Preferred
Securities,  and that the  Guarantor  shall be liable as principal and as debtor
hereunder to make  Guarantee  Payments  pursuant to the terms of this  Preferred
Securities Guarantee  notwithstanding the occurrence of any event referred to in
subsections (a) through (g), inclusive, of Section 5.4 hereof.

SECTION 5.9       Conversion

                  The Guarantor acknowledges its obligation to issue and deliver
common stock of the Guarantor upon the conversion of the Preferred Securities.

                                   ARTICLE VI
                    LIMITATION OF TRANSACTIONS; SUBORDINATION

SECTION 6.1       Limitation of Transactions

                  So long as any Preferred Securities remain outstanding, if (i)
the  Guarantor  has  exercised  its  option to defer  interest  payments  on the
Debentures by extending the interest payment period and such period or extension
thereof,  shall be  continuing,  (ii)  there  shall have  occurred  any Event of
Default 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

                                       15

<PAGE>

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 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
Debentures (other than (i) as a result of 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 Preferred Securities Guarantee and the
Common  Securities  Guarantee;  (vi) purchases of the  Guarantor's  common stock
related to the issuance of the  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 6.2       Ranking

                  (a) This Preferred  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 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  or  preferred
securities  of  any  Affiliate  of  the  Guarantor,  and  (iii)  senior  to  the
Guarantor's common stock.

                  (b) The holders of any  obligations  of the Guarantor that are
senior in priority to the obligations under this Preferred  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
Preferred  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.

                                       16

<PAGE>

                                   ARTICLE VII
                                   TERMINATION

SECTION 7.1       Termination

                  This Preferred Securities Guarantee shall terminate as to each
Holder of Preferred  Securities upon (i) full payment of the Redemption Price of
all Preferred  Securities,  (ii) upon the distribution of the Debentures held by
the Trust to the Holders of all of the Preferred  Securities of the Trust, (iii)
upon the distribution of the Guarantor's  common stock to such Holder in respect
of the conversion of such Holder's Preferred Securities into common stock of the
Guarantor and (iv) upon full payment of the amounts  payable in accordance  with
the Declaration  upon liquidation of the Trust.  Notwithstanding  the foregoing,
this  Preferred  Securities  Guarantee  will continue to be effective or will be
reinstated,  as the  case  may  be,  if at any  time  any  Holder  of  Preferred
Securities must restore payment of any sums paid under the Preferred  Securities
or under this Preferred Securities Guarantee.

                                  ARTICLE VIII
                                 INDEMNIFICATION

SECTION 8.1       Exculpation

                  (a) No  Indemnified  Person  shall be liable,  responsible  or
accountable  in damages or otherwise to the Guarantor or any Covered  Person for
any loss, damage or claim incurred by reason of any act or omission performed or
omitted  by such  Indemnified  Person  in good  faith in  accordance  with  this
Preferred  Securities  Guarantee  and in a manner that such  Indemnified  Person
reasonably  believed to be within the scope of the  authority  conferred on such
Indemnified Person by this Preferred Securities Guarantee or by law, except that
an  Indemnified  Person  shall be  liable  for any such  loss,  damage  or claim
incurred by reason of such Indemnified Person's negligence or willful misconduct
with respect to such acts or omissions.

                  (b) An Indemnified  Person shall be fully protected in relying
in good  faith  upon the  records of the  Guarantor  and upon such  information,
opinions,  reports or statements  presented to the Guarantor by any Person as to
matters  the  Indemnified  Person  reasonably  believes  are  within  such other
Person's  professional  or  expert  competence  and who has been  selected  with
reasonable  care  by or on  behalf  of  the  Guarantor,  including  information,
opinions,  reports  or  statements  as to the  value and  amount of the  assets,
liabilities,  profits, losses, or any other facts pertinent to the existence and
amount of assets from which  Distributions  to Holders of  Preferred  Securities
might properly be paid.

                                       17

<PAGE>

SECTION 8.2       Indemnification

                  The Guarantor agrees to indemnify each Indemnified Person for,
and to hold each Indemnified  Person harmless  against,  any loss,  liability or
expense incurred without  negligence or bad faith on its part, arising out of or
in  connection  with the  acceptance  or  administration  of the trust or trusts
hereunder, including the costs and expenses (including reasonable legal fees and
expenses) of defending itself against, or investigating,  any claim or liability
in connection  with the exercise or  performance  of any of its powers or duties
hereunder.  The  obligation  to indemnify as set forth in this Section 8.2 shall
survive the termination of this Preferred Securities Guarantee.

                                   ARTICLE IX
                                  MISCELLANEOUS

SECTION 9.1       Successors and Assigns

                  All  guarantees  and  agreements  contained in this  Preferred
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 Preferred  Securities  the  outstanding.  Except in  connection  with any
merger or  consolidation  of the  Guarantor  with or into another  entity or any
sale,  transfer or lease of the Guarantor's  assets to another  entity,  each as
permitted by the Indenture,  the Guarantor may not assign its rights or delegate
its  obligations  under this Preferred  Securities  Guarantee  without the prior
approval  of the  Holders of at least a Majority  in  liquidation  amount of the
Preferred Securities.

SECTION 9.2       Amendments

                  Except  with  respect to any  changes  that do not  materially
adversely affect the rights of Holders (in which case no consent of Holders will
be required),  this Preferred  Securities Guarantee may be amended only with the
prior  approval of the Holders of at least a Majority in  liquidation  amount of
the Preferred Securities. The provisions of Section 12.2 of the Declaration with
respect to meetings of Holders of the Preferred  Securities  apply to the giving
of such approval.

SECTION 9.3       Notices

                  All  notices   provided  for  in  this  Preferred   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:

                                       18

<PAGE>

                  (a)  If  given  to the  Preferred  Guarantee  Trustee,  at the
         Preferred  Guarantee Trustee's mailing address set forth below (or such
         other address as the Preferred  Guarantee Trustee may give notice of to
         the Holders of the Preferred Securities):

                           The Bank of New York
                           101 Barclay Street, Floor 21 West
                           New York, New York  10286
                           Attention:  Corporate Trust Administration

                  (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 Preferred Securities):

                           Viatel, Inc.
                           685 Third Avenue, 24th Floor
                           New York, New York  10017
                           Attention:  General Counsel

                  (c) If given to any  Holder of  Preferred  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 9.4       Benefit

                  This Preferred  Securities Guarantee is solely for the benefit
of the Holders of the Preferred  Securities and,  subject to Section 3.1(a),  is
not separately transferable from the Preferred Securities.

SECTION 9.5       Governing Law

                  THIS PREFERRED SECURITIES GUARANTEE SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF
NEW YORK.

                                       19

<PAGE>

                  THIS PREFERRED  SECURITIES GUARANTEE IS EXECUTED AS OF THE DAY
AND YEAR FIRST ABOVE WRITTEN.

                                     VIATEL, INC., as Guarantor

                                     By: /s/ James P. Prenetta
                                        --------------------------------------
                                           Name:  James P. Prenetta
                                           Title: Senior Vice President and
                                                    General Counsel

                                     THE BANK OF NEW YORK, as Preferred
                                     Guarantee Trustee

                                     By:  /s/ Ming J. Shiang
                                        --------------------------------------
                                           Name:  Ming J. Shiang
                                           Title: Vice President

                                       20

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