Document:

EXECUTION COPY

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                                  VIATEL, INC.

                                       and

                              THE BANK OF NEW YORK,
                                   as Trustee

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

             7 3/4% CONVERTIBLE JUNIOR SUBORDINATED DEBENTURES

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

                                    INDENTURE

                           Dated as of April 12, 2000

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<PAGE>
                                  VIATEL, INC.

               Reconciliation  and tie between  Trust  Indenture Act of 1939 and
Indenture dated as of April 12, 2000

Trust Indenture
ACT SECTION                                                 INDENTURE SECTION
310(a)(1)...................................................6.10
     (a)(2).................................................6.10
     (a)(3).................................................Not Applicable
     (a)(4).................................................Not Applicable
     (a)(5).................................................6.10
     (b)....................................................6.8, 6.10
311(a)......................................................6.11
     (b)....................................................6.11
312(a)......................................................4.1 and 4.2
     (b)....................................................4.2
     (c)....................................................4.2
313(a)(1)-(5) & (7)(8)......................................6.6
     (a)(6).................................................Not Applicable
     (b)(1).................................................Not Applicable
     (b)(2).................................................6.6
     (c)....................................................6.6
     (d)....................................................6.6
314(a)(1)-(3)............................................... 4.3
     (a)(4).................................................3.4
     (b)....................................................Not Applicable
     (c)(1).................................................11.5
     (c)(2).................................................11.5
     (c)(3).................................................Not Applicable
     (d)....................................................Not Applicable
     (e)....................................................11.5
     (f)....................................................Not Applicable
  315(a)....................................................Not Applicable
     (b)....................................................6.5
     (c)....................................................6.1
     (d)....................................................6.1
     (d)(1).................................................6.1
     (d)(2).................................................6.1
     (d)(3).................................................6.1
     (e)....................................................5.10
316(a)......................................................7.4
       (a)(1)(A)............................................5.8
       (a)(1)(B)............................................5.1, 5.9
       (a)(2)...............................................Not Applicable

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       (b)..................................................5.6
       (c)..................................................7.1
     317(a)(1)..............................................5.2
       (a)(2)...............................................5.2
       (b)..................................................3.3
     318(a).................................................11.7

Note:  This reconciliation and tie shall not, for any purpose, be deemed to
be part of the Indenture.

<PAGE>

                                TABLE OF CONTENTS

                                    ARTICLE I

                                   DEFINITIONS

  Section 1.1  Certain Terms Defined..........................................1

                                   ARTICLE II

                           THE CONVERTIBLE DEBENTURES

  Section 2.1  Designation and Principal Amount..............................11
  Section 2.2  Maturity......................................................11
  Section 2.3  Form and Payment..............................................11
  Section 2.4  Exchange and Registration of Transfer of Convertible
               Debentures; Restrictions on Transfers; Depositary.............12
  Section 2.5  Interest......................................................15
  Section 2.6  Authentication and Delivery of Convertible Debentures.........16
  Section 2.7  Execution of Convertible Debentures...........................18
  Section 2.8  Certificate of Authentication.................................18
  Section 2.9  Denomination and Date of Convertible Debentures;
               Payments of Interest..........................................19
  Section 2.10  Registration, Transfer and Exchange..........................20
  Section 2.11  Mutilated, Defaced, Destroyed, Lost and Stolen Convertible
                Debentures...................................................23
  Section 2.12  Cancellation of Convertible Debentures.......................24
  Section 2.13  Temporary Convertible Debentures.............................24
  Section 2.14  CUSIP Numbers................................................24

                                   ARTICLE III

                            COVENANTS OF THE COMPANY

  Section 3.1  Payment of Principal and Interest.............................25
  Section 3.2  Offices for Payment, etc......................................25
  Section 3.3  Paying Agents.................................................25
  Section 3.4  Written Statement to Trustee..................................26
  Section 3.5  Limitation on Dividends; Transactions with Affiliates.........26
  Section 3.6  Covenants as to Viatel Trust..................................27
  Section 3.7  Existence.....................................................27

                                   ARTICLE IV

  HOLDERS OF CONVERTIBLE DEBENTURES LISTS AND REPORTS BY THE COMPANY AND THE
                                     TRUSTEE

  Section 4.1  Company to Furnish Trustee Information as to Names and
               Addresses of Holders of Convertible Debentures................27
  Section 4.2  Preservation and Disclosure of Holders of Convertible
               Debentures' Lists.............................................28
  Section 4.3  Reports by the Company........................................29

                                       i
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                                    ARTICLE V

  REMEDIES OF THE TRUSTEE AND HOLDERS OF CONVERTIBLE DEBENTURES ON EVENT OF
                                     DEFAULT

  Section 5.1  Event of Default Defined; Acceleration of Maturity;
               Waiver of Default.............................................30
  Section 5.2  Collection of Indebtedness by Trustee; Trustee May Prove Debt.32
  Section 5.3  Application of Proceeds.......................................34
  Section 5.4  Restoration of Rights on Abandonment of Proceedings...........34
  Section 5.5  Limitations on Suits by Holders of Convertible Debentures.....34
  Section 5.6  Unconditional Right of Holders of Convertible Debentures
               to Institute Certain Suits....................................35
  Section 5.7  Powers and Remedies Cumulative; Delay or Omission Not Waiver
               of Default....................................................35
  Section 5.8  Control by Holders of Convertible Debentures..................35
  Section 5.9  Waiver of Past Defaults.......................................36
  Section 5.10  Right of Court to Require Filing of Undertaking to Pay Costs.36
  Section 5.11  Suits for Enforcement........................................37

                                   ARTICLE VI

                             CONCERNING THE TRUSTEE

  Section 6.1  Duties of the Trustee.........................................37
  Section 6.2  Rights of Trustee.............................................38
  Section 6.3  Individual Rights of Trustee..................................39
  Section 6.4  Trustee's Disclaimer..........................................39
  Section 6.5  Notice of Defaults............................................39
  Section 6.6  Reports by Trustee to Holders.................................39
  Section 6.7  Compensation and Indemnity....................................40
  Section 6.8  Replacement of Trustee........................................40
  Section 6.9  Successor Trustee by Merger...................................42
  Section 6.10  Eligibility; Disqualification................................42
  Section 6.11  Preferential Collection of Claims Against Company............42
  Section 6.12  Trustee's Application for Instructions from the Company......42

                                   ARTICLE VII

               CONCERNING THE HOLDERS OF CONVERTIBLE DEBENTURES

  Section 7.1  Evidence of Action Taken by Holders of Convertible Debentures.42
  Section 7.2  Proof of Execution of Instruments.............................43
  Section 7.3  Holders to be Treated as Owners...............................43
  Section 7.4  Convertible Debentures Owned by Company Deemed Not
               Outstanding...................................................43
  Section 7.5  Right of Revocation of Action Taken...........................43

                                  ARTICLE VIII

                             SUPPLEMENTAL INDENTURES

  Section 8.1  Supplemental Indentures Without Consent of Holders of
               Convertible Debentures........................................44

                                       ii
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  Section 8.2  Supplemental Indentures With Consent of Holders of
               Convertible Debentures........................................45
  Section 8.3  Effect of Supplemental Indenture..............................45
  Section 8.4  Documents to Be Given to Trustee..............................46
  Section 8.5  Notation on Convertible Debentures in Respect of
               Supplemental Indentures.......................................46

                                   ARTICLE IX

                  CONSOLIDATION, MERGER, SALE OR CONVEYANCE

  Section 9.1  Company May Consolidate, etc., on Certain Terms...............46
  Section 9.2  Successor Corporation Substituted.............................47
  Section 9.3  Opinion of Counsel to Trustee.................................47

                                    ARTICLE X

                   REDEMPTION OF THE CONVERTIBLE DEBENTURES

  Section 10.1  Tax Event Redemption.........................................47
  Section 10.2  Optional Redemption by Company...............................48
  Section 10.3  No Sinking Fund..............................................49
  Section 10.4  Election to Redeem; Notice of Redemption; Partial
                Redemptions..................................................49
  Section 10.5  Payment of Convertible Debentures Called for Redemption......51
  Section 10.6  Exclusion of Certain Convertible Debentures from Eligibility
                for Selection for Redemption.................................51

                                   ARTICLE XI

                      EXTENSION OF INTEREST PAYMENT PERIOD

  Section 11.1  Extension of Interest Payment Period.........................51
  Section 11.2  Notice of Extension..........................................52

                                   ARTICLE XII

                      CONVERSION OF CONVERTIBLE DEBENTURES

  Section 12.1  Conversion Rights............................................53
  Section 12.2  Conversion Procedures........................................53
  Section 12.3  Conversion Price Adjustments.................................55
  Section 12.4  Merger, Consolidation or Sale of Assets......................60
  Section 12.5  Notice of Adjustments of Conversion Price....................61
  Section 12.6  Prior Notice of Certain Events...............................62
  Section 12.7  Certain Additional Rights....................................64
  Section 12.8  Trustee Not Responsible for Determining Conversion Price or
                Adjustments..................................................63
  Section 12.9  Reservation of Shares of Common Stock........................63
  Section 12.10  Payment of Certain Taxes upon Conversion....................65
  Section 12.11  Nonassessability............................................64

                                  ARTICLE XIII

                     SUBORDINATION OF CONVERTIBLE DEBENTURES

  Section 13.1  Convertible Debentures Subordinate to Senior Indebtedness.. .64

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  Section 13.2  Payment Over of Proceeds upon Dissolution, Etc...............64
  Section 13.3  Prior Payment to Senior Indebtedness upon Acceleration
                of Convertible Debentures....................................65
  Section 13.4  No Payment When Senior Indebtedness in Default...............66
  Section 13.5  Payment Permitted in Certain Situations......................66
  Section 13.6  Subrogation to Rights of Holders of Senior Indebtedness......66
  Section 13.7  Provisions Solely to Define Relative Rights..................67
  Section 13.8  Trustee to Effectuate Subordination..........................67
  Section 13.9  No Waiver of Subordination Provisions........................67
  Section 13.10  Notice to Trustee...........................................68
  Section 13.11  Reliance on Judicial Order or Certificate of Liquidating
                 Agent.......................................................68
  Section 13.12  Trustee Not Fiduciary for Holders of Senior Indebtedness....69
  Section 13.13  Rights of Trustee as Holder of Senior Indebtedness;
                 Preservation of Trustee's Rights............................69
  Section 13.14  Article Applicable to Paying Agents.........................69
  Section 13.15  Certain Conversions Deemed Payment..........................69

                                   ARTICLE XIV

                                    EXPENSES

  Section 14.1  Payment of Expenses..........................................70
  Section 14.2  Payment Upon Resignation or Removal..........................70

                                   ARTICLE XV

                            MISCELLANEOUS PROVISIONS

  Section 15.1  Incorporators, Stockholders, Officers and Directors of
                Company Exempt from Individual Liability.....................71
  Section 15.2  Provisions of Indenture for the Sole Benefit of Parties and
                Holders of Convertible Debentures............................71
  Section 15.3  Right to Assign; Successors and Assigns Bound by Indenture...71
  Section 15.4  Notices and Demands on Company, Trustee and Holders of
                Convertible Debentures.......................................71
  Section 15.5  Officers' Certificates and Opinions of Counsel; Statements to
                Be Contained Therein.........................................72
  Section 15.6  Payments Due on Saturdays, Sundays and Holidays..............73
  Section 15.7  Conflict of Any Provision of Indenture with Trust Indenture
                Act..........................................................73
  Section 15.8  New York Law to Govern.......................................73
  Section 15.9  Counterparts.................................................73
  Section 15.10 Effect of Headings; Gender...................................74
  Exhibit A     Form of Convertible Debenture...............................A-1

                                       iv

<PAGE>

               THIS INDENTURE,  dated as of April 12, 2000 between VIATEL, INC.,
a Delaware  corporation  (the  "Company")  and The Bank of New York,  a New York
banking corporation, as trustee (the "Trustee").

                             W I T N E S S E T H:

               WHEREAS,  the Company  desires and has  requested  the Trustee to
join it in the  execution  and delivery of this  Indenture in order to establish
and provide for the issuance by the Company of Convertible Debentures designated
as its 7 3/4%  Convertible  Junior  Subordinated  Debentures  (the  "Convertible
Debentures"),  a specimen copy of which is attached  hereto as Exhibit A, on the
terms set forth herein;

               WHEREAS,  Viatel Financing Trust I, a Delaware statutory business
trust  ("Viatel  Trust" or the  "Trust"),  has  offered to Morgan  Stanley & Co.
Incorporated,  Salomon Smith Barney Inc. and Banc of America Securities LLC (the
"Initial Purchasers") in a private placement  $180,000,000 aggregate liquidation
amount of its 7 3/4% Trust  Convertible  Preferred  Securities (the "Convertible
Preferred  Securities"),  representing  undivided  beneficial  interests  in the
assets of the Trust,  and  proposes to invest the proceeds  from such  offering,
together  with the proceeds of the issuance and sale by the Trust to the Company
of 111,340.2 Common Securities,  liquidation amount $50 per Common Security,  in
$185,567,010 aggregate principal amount of the Convertible Debentures; and

               WHEREAS,  all things necessary to make this Indenture a valid and
legally binding agreement of the Company and the Trustee, in accordance with its
terms, have been done.

               NOW, THEREFORE:

               There  is  hereby   established  the  terms  of  the  Convertible
Debentures to be issued under this Indenture, which shall be as set forth herein
and in the form of Convertible  Debentures  attached hereto as Exhibit A, and in
consideration of the premises and the purchase and acceptance of the Convertible
Debentures by the holders  thereof,  the Company  mutually  covenants and agrees
with the Trustee, for the equal and proportionate  benefit of all holders of the
Convertible Debentures, as follows:

                                    ARTICLE I

                                   DEFINITIONS

               Section 1.1 CERTAIN TERMS DEFINED. The following terms (except as
otherwise  expressly  provided or unless the context otherwise clearly requires)
for all purposes of this  Indenture  and of any  indenture  supplemental  hereto
shall have the respective  meanings  specified in this Section.  All other terms
used in this Indenture  that are defined in the Trust  Indenture Act of 1939, as
amended  (the  "Trust  Indenture  Act"),  or the  definitions  of  which  in the
Securities Act of 1933, as amended (the  "Securities  Act"),  are referred to in
the Trust  Indenture Act,  including  terms defined  therein by reference to the
Securities  Act  (except as herein  otherwise  expressly  provided or unless the
context  otherwise clearly  requires),  shall have the meanings assigned to such
terms in the Trust  Indenture Act and in the  Securities  Act as in force at the

<PAGE>
                                       2

date of this  Indenture.  All  accounting  terms used  herein and not  expressly
defined  shall  have the  meanings  assigned  to such terms in  accordance  with
generally  accepted  accounting  principles,  and the term  "generally  accepted
accounting  principles"  means  such  accounting  principles  as  are  generally
accepted  at the time of any  computation.  The  words  "herein,"  "hereof"  and
"hereunder"  and other  words of similar  import  refer to this  Indenture  as a
whole, as supplemented  and amended from time to time, and not to any particular
Article,  Section or other  subdivision.  The terms defined in this Article have
the meanings  assigned to them in this Article and include the plural as well as
the singular.

               "Additional  Sums"  shall have the  meaning  set forth in Section
2.5(c).

               "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.

               "Applicable  Price"  means  (i)  in  the  event  of  a  Non-Stock
Fundamental  Change in which the holders of the Common Stock  receive only cash,
the amount of cash received by a holder of one share of Common Stock and (ii) in
the event of any other  Fundamental  Change,  the  average of the daily  Closing
Price for one share of Common Stock during the 10 Trading Days immediately prior
to the record date for the determination of the holders of Common Stock entitled
to receive cash,  securities,  property or other assets in connection  with such
Fundamental  Change or, if there is no such record date,  prior to the date upon
which the holders of the Common Stock shall have the right to receive such cash,
securities, property or other assets.

               "Board of  Directors"  means either the Board of Directors of the
Company or any duly authorized committee of that Board.

               "Board Resolution" means a copy of a resolution  certified by the
Secretary or an Assistant  Secretary of the Company to have been duly adopted by
the Board of  Directors  and to be in full  force and effect on the date of such
certification, and delivered to the Trustee.

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

               "Capital  Stock" means,  with respect to any Person,  any and all
shares, interests,  units representing interests,  participations,  rights in or
other  equivalents   (however   designated)  of  such  Person's  capital  stock,
including, with respect to partnerships,  partnership interests (whether general
or limited) and any other interest or  participation  that confers upon a Person
the right to receive a share of the profits and losses of, or  distributions  of
assets  of,  such  partnership,  and any  rights  (other  than  debt  securities
convertible  into  capital  stock),  warrants  or  options  exchangeable  for or
convertible into such capital stock.

               "Certificated Convertible Preferred Securities" means Convertible
Preferred Securities issued in definitive registered form.

               "Clearing Agent" means an organization  registered as a "Clearing
Agency"  pursuant  to  Section  17A of the  Exchange  Act  that is  acting  as a
depositary for the Convertible  Debentures and in whose name or in the name of a

<PAGE>
                                       3

nominee of that  organization  shall be registered one or more Global Debentures
and which  shall  undertake  to effect book entry  transfers  and pledges of the
Convertible Debentures.

               "Closing Price" with respect to any security on any day means the
last reported sale price, regular way on such day, or, if no sale takes place on
such day, the average of the reported  closing bid and asked prices on such day,
regular way, in either case as reported on the NYSE Composite  Tape, or, if such
security is not listed or admitted to trading on the New York Stock Exchange, on
the principal national  securities  exchange on which such security is listed or
admitted to trading,  or, if such  security is not listed or admitted to trading
on a national securities exchange, on the National Market System of the National
Association of Securities  Dealers,  Inc., or, if such security is not quoted or
admitted to trading on such quotation system, on the principal  quotation system
on which such  security is listed or  admitted to trading or quoted,  or, if not
listed or admitted to trading or quoted on any national  securities  exchange or
quotation  system,  the  average  of the  closing  bid and asked  prices of such
security  in the  over-the-counter  market on the day in question as reported by
the National  Quotation Bureau  Incorporated,  or a similar  generally  accepted
reporting  service,  or, if not so available in such manner, as furnished by any
New York Stock  Exchange  member firm selected from time to time by the Board of
Directors  (or any committee  duly  authorized by the Board of Directors) of the
Company for that purpose or, if not so  available  in such manner,  as otherwise
determined  in good  faith by the  Board of  Directors  (or any  committee  duly
authorized by the Board of Directors) of the Company.

               "Commission"  means the  Securities and Exchange  Commission,  as
from time to time constituted, created under the Exchange Act, as amended, or if
at any time after the execution and delivery of this Indenture  such  Commission
is not  existing  and  performing  the duties now assigned to it under the Trust
Indenture Act, then the body performing such duties on such date.

               "Common Securities" means undivided  beneficial  interests in the
assets of the Viatel  Trust  which rank PARI  PASSU with  Convertible  Preferred
Securities  issued  by the  Viatel  Trust;  provided,  however,  that  upon  the
occurrence of an Event of Default, the rights of holders of Common Securities to
payment in respect to distributions  and payments upon  liquidation,  redemption
and otherwise are subordinated to the rights of holders of Convertible Preferred
Securities.

               "Common   Securities   Guarantee"  means  the  Common  Securities
Guarantee Agreement dated as of April 12, 2000 by the Guarantor.

               "Common  Stock"  includes  any stock of any class of the  Company
which has no  preference  in respect of dividends  or of amounts  payable in the
event of any voluntary or involuntary liquidation,  dissolution or winding-up of
the Company and which is not subject to redemption by the Company.

               "Common Stock Fundamental Change" means any Fundamental Change in
which  more than 50% of the value (as  determined  in good faith by the Board of
Directors  of the  Company) of the  consideration  received by holders of Common
Stock consists of common stock that, for the 10 Trading Days  immediately  prior
to such  Fundamental  Change,  has been  admitted  for listing or  admitted  for
listing  subject to notice of  issuance  on a national  securities  exchange  or

<PAGE>
                                       4

quoted on The Nasdaq  National  Market;  provided,  however,  that a Fundamental
Change  shall not be a Common Stock  Fundamental  Change  unless  either (i) the
Company  continues to exist after the occurrence of such Fundamental  Change and
the  outstanding   Convertible   Preferred   Securities  continue  to  exist  as
outstanding  Convertible  Preferred  Securities,  or (ii)  not  later  than  the
occurrence of such Fundamental  Change,  the outstanding  Convertible  Preferred
Securities are converted into or exchanged for  convertible  preferred  stock or
debentures  of a corporation  succeeding  to the business of the Company,  which
convertible preferred stock has powers, preferences and relative, participating,
optional or other  rights,  and  qualifications,  limitations  and  restrictions
substantially similar to those of the Convertible Preferred Securities and which
debentures  have  terms  substantially  similar  to  those  of  the  Convertible
Debentures.

               "Company"  means Viatel,  Inc., a Delaware  corporation,  until a
successor  corporation  shall  have  become  such  pursuant  to  the  applicable
provisions of this Indenture, and thereafter "Company" shall mean such successor
corporation.

               "Compound  Interest" shall have the meaning  specified in Section
11.1.

               "Convertible  Debenture"  or  "Convertible  Debentures"  has  the
meaning  stated in the first  recital of this  Indenture  and more  particularly
means  any  Convertible  Debentures   authenticated  and  delivered  under  this
Indenture.

               "Convertible  Preferred  Securities" has the meaning specified in
the recitals to this Indenture.

               "Conversion  Agent"  has  the  meaning  assigned  thereto  in the
Declaration.

               "Conversion Price" has the meaning set forth in Section 12.1.

               "Corporate  Trust  Office" means the  principal  corporate  trust
office  of the  Trustee  at which at any  particular  time its  corporate  trust
business  shall be  administered,  which office at the date of execution of this
Indenture is located at 101 Barclay  Street,  Floor 21 West,  New York, New York
10286, Attention: Corporate Trust Administration.

               "Declaration" means the Amended and Restated Declaration of Trust
of Viatel Financing Trust I, a Delaware  statutory  business trust,  dated as of
April 12, 2000.

               "Debt" of a Person means,  all  indebtedness of such Person which
is for money borrowed.

               "defaulted interest" has the meaning specified in Section 2.9.

               "Deferred Interest" has the meaning specified in Section 11.1.

               "Delaware Trustee" has the meaning specified in the Declaration.

               "Depositary"  means,  with respect to the Convertible  Debentures
issuable  or issued in the form of one or more  Global  Debentures,  the  Person
designated as Depositary by the Company until a successor  Depositary shall have

<PAGE>
                                       5

become  such  pursuant  to the  applicable  provisions  of this  Indenture,  and
thereafter  "Depositary"  shall  mean  or  include  each  Person  who is  then a
Depositary  hereunder,  and if at any time  there is more than one such  person,
"Depositary" as used with respect to the Convertible  Debentures  shall mean the
Depositary with respect to the Global Debentures.

               "Depositary  Convertible Debenture" means a Convertible Debenture
executed by the Company and  authenticated  and  delivered by the Trustee to the
Depositary or pursuant to the Depositary's  instruction,  all in accordance with
this  Indenture,  which (i) shall be  registered as to principal and interest in
the name of the Depositary or its nominee and (ii) shall represent, and shall be
denominated  in an amount equal to the aggregate  principal  amount of, all or a
portion of the Outstanding Convertible Debentures.

               "Dissolution Event" means that, as a result of the occurrence and
continuation of a Special Event (as described in the Declaration),  the Trust is
to be  dissolved  in  accordance  with  the  Declaration,  and  the  Convertible
Debentures  held  by the  Institutional  Trustee  are to be  distributed  to the
holders of the Trust Securities  issued by the Trust pro rata in accordance with
the Declaration.

               "Dollar"  means  the coin or  currency  of the  United  States of
America  which as of the time of  payment  is legal  tender  for the  payment of
public and private debts.

               "Event of Default" has the meaning specified in Section 5.1.

               "Exchange  Act" means the  Securities  Exchange  Act of 1934,  as
amended.

               "Extension Period" has the meaning specified in Section 11.1.

               "Fundamental  Change" means the occurrence of any  transaction or
event or series of transactions or events pursuant to which all or substantially
all of the Common Stock shall be exchanged for, converted into,  acquired for or
shall constitute solely the right to receive cash, securities, property or other
assets  (whether  by means of an  exchange  offer,  liquidation,  tender  offer,
consolidation,  merger,  combination,   reclassification,   recapitalization  or
otherwise); provided, however, in the case of any such series of transactions or
events,  for purposes of adjustment of the Conversion  Price,  such  Fundamental
Change shall be deemed to have  occurred  when  substantially  all of the Common
Stock shall have been  exchanged  for,  converted into or acquired for, or shall
constitute solely the right to receive, such cash, securities, property or other
assets,  but the  adjustment  shall be based  upon  the  consideration  that the
holders of Common  Stock  received  in the  transaction  or event as a result of
which more than 50% of the Common Stock shall have been exchanged for, converted
into or acquired  for,  or shall  constitute  solely the right to receive,  such
cash, securities, property or other assets.

               "Global Debenture" has the meaning specified in Section 2.4(a).

               "Government  Obligations"  means  securities which are (i) direct
obligations of the United States  government for which its full faith and credit
is pledged or (ii)  obligations  of a Person  controlled  or  supervised  by, or
acting as an agency or  instrumentality  of, the United States  government,  the
payment of which obligations is unconditionally  guaranteed by the United States
government,  and which, in either case, are full faith and credit obligations of

<PAGE>
                                       6

the United  States  government,  and which are not callable or redeemable at the
option of the issuer thereof prior to their stated maturity.

               "Guarantor"  means the Company in its capacity as guarantor under
any Trust Securities Guarantees.

               "Holder" or "Holder of  Convertible  Debentures" or other similar
terms mean the person in whose name such Convertible  Debenture is registered in
the Security Register.

               "incur" means to issue, incur, assume, guarantee,  become liable,
contingently or otherwise,  with respect to, or otherwise become responsible for
the payment of, any Debt.

               "Indenture"  means this  instrument  as  originally  executed and
delivered  or as it may from time to time be amended or  supplemented  as herein
provided, as so amended or supplemented or both, and shall include the forms and
terms of the Convertible Debentures appearing as Exhibit A to this instrument.

               "Institutional   Trustee"  has  the  meaning   specified  in  the
Declaration.

               "Interest   Payment   Date,"  when  used  with   respect  to  any
Convertible  Debenture,  means the Stated Maturity of an installment of interest
on such Convertible Debenture.

               "Lien" means any mortgage or deed of trust,  pledge,  assignment,
security   interest,   lien,   charge,  or  other  encumbrance  or  preferential
arrangement (including,  without limitation, any conditional sale or other title
retention agreement having  substantially the same economic effect as any of the
foregoing).

               "Maturity"  when used with respect to any  Convertible  Debenture
means  the date on which  the  principal  of such  Convertible  Debenture  or an
installment of principal  becomes due and payable as therein or herein provided,
whether  at  Stated  Maturity  or  by  declaration  of  acceleration,  call  for
redemption or otherwise.

               "Maturity   Date"  means  the  date  on  which  the   Convertible
Debentures  mature and on which the principal shall be due and payable  together
with all accrued and unpaid interest thereon including  Additional Sums, if any,
and (to the extent permitted by applicable law) Compound Interest, if any.

               "Non-Stock Fundamental Change" means any Fundamental Change other
than a Common Stock Fundamental Change.

               "Officers'  Certificate"  means a certificate signed on behalf of
the Company by the Chairman of the Board of  Directors  or the vice  chairman or
the president or any vice president and by the treasurer,  the  controller,  any
assistant treasurer, the secretary or any assistant secretary of the Company and
delivered to the Trustee.  Each such  certificate  shall include the  statements
provided for in Section 15.5.

<PAGE>
                                       7

         "Opinion of Counsel"  means a written  opinion of legal  counsel,
who may be an employee  of or counsel to the  Company.  Each  Opinion of Counsel
shall include the statements provided for in Section 15.5.

               "Optional  Redemption Price" has the meaning specified in Section
10.2.

               "Outstanding" when used with reference to Convertible Debentures,
subject to the provisions of Section 7.4, means, as of any particular  time, all
Convertible Debentures authenticated and delivered under this Indenture, except

               (a) Convertible  Debentures  theretofore cancelled by the Trustee
          or delivered to the Trustee for cancellation;

               (b) Convertible Debentures,  or portions thereof, for the payment
          or  redemption  of which  moneys in the  necessary  amount  and in the
          required  currency shall have been deposited in trust with the Trustee
          or with any Paying  Agent  (other than the Company) or shall have been
          set aside, segregated and held in trust by the Company for the Holders
          of such  Convertible  Debentures  (if the Company shall act as its own
          Paying  Agent),  provided  that if  such  Convertible  Debentures,  or
          portions  thereof,  are to be redeemed prior to the Maturity  thereof,
          notice of such redemption shall have been given as herein provided, or
          provision  satisfactory to the Trustee shall have been made for giving
          such notice; and

               (c)  Convertible  Debentures  that  have been  paid  pursuant  to
          Section 2.11,  converted into Common Stock pursuant to Article XII, or
          in exchange for or in lieu of which other Convertible  Debentures have
          been  authenticated  and delivered  pursuant to the Indenture  (except
          with  respect  to any such  Convertible  Debenture  as to which  proof
          satisfactory  to the Trustee and the  Company is  presented  that such
          Convertible  Debenture  is  held  by a  person  in  whose  hands  such
          Convertible  Debenture is a legal, valid and binding obligation of the
          Company).

               "Paying  Agent" means any Person  (which may include the Company)
authorized  by the Company to pay the  principal of or interest,  if any, on any
Convertible Debenture on behalf of the Company.

               "Persons"  or  "Person"   means  any   individual,   corporation,
partnership,  joint venture, limited liability company, association, joint stock
company,  trust,  unincorporated  organization  or  government  or any agency or
political subdivision thereof.

               "Place of  Payment",  when used with  respect to the  Convertible
Debentures,  means the place or places where the principal of and  interest,  if
any, on the Convertible  Debentures are payable as specified pursuant to Section
3.2.

               "Placement  Agreement" means the Placement  Agreement dated April
6, 2000 among the Company, the Trust, Morgan Stanley & Co. Incorporated, Salomon
Smith Barney Inc. and Banc of America Securities LLC.

<PAGE>
                                       8

               "Predecessor  Convertible  Debenture" of a Convertible  Debenture
means every previous  Convertible  Debenture  evidencing all or a portion of the
same debt as that evidenced by such Convertible Debenture; and, for the purposes
of this definition,  a Convertible  Debenture  authenticated and delivered under
Section  2.11 in  exchange  for or in lieu of a  mutilated,  destroyed,  lost or
stolen  Convertible  Debenture  shall be deemed to evidence the same debt as the
mutilated, destroyed, lost or stolen Convertible Debenture.

               "Preferred  Securities  Guarantee" means the Preferred Securities
Guarantee  Agreement  dated as of April 12, 2000 between the  Guarantor  and The
Bank of New York, as Preferred Guarantee Trustee.

               "Preferred  Securities  Registration  Rights Agreement" means the
Registration  Rights Agreement dated as of April 6, 2000 among the Company,  the
Trust and Morgan Stanley & Co. Incorporated,  Salomon Smith Barney Inc. and Banc
of America Securities LLC as the Initial Purchasers, relating to the Convertible
Preferred Securities.

               "Preferred Stock", as applied to the Capital Stock of any Person,
means Capital Stock of such Person of any class or classes (however  designated)
that ranks prior,  as to the payment of dividends or as to the  distribution  of
assets upon any voluntary or involuntary liquidation,  dissolution or winding up
of such Person, to shares of Capital Stock of any other class of such Person.

               "principal"  whenever  used  with  reference  to the  Convertible
Debentures or any Convertible Debenture or any portion thereof,  shall be deemed
to include "and premium, if any."

               "Purchaser  Stock Price" means,  with respect to any Common Stock
Fundamental  Change, the average of the daily Closing Price for one share of the
common stock received by holders of Common Stock (determined as provided herein)
in such Common Stock  Fundamental  Change during the 10 Trading Days immediately
prior to the date fixed for the  determination  of the  holders of Common  Stock
entitled to receive such common stock or, if there is no such date, prior to the
date upon which the holders of Common Stock shall have the right to receive such
common stock.

               "QIB" or "Qualified  Institutional  Buyer" shall mean  "Qualified
Institutional  Buyer" as such term is defined in Rule 144A under the  Securities
Act.

               "record date" has the meaning specified in Section 2.9.

               "Registrar" has the meaning specified in Section 2.10.

               "Representative"   means  the  (a)  indenture  trustee  or  other
trustee, agent or representative for any Senior Indebtedness or (b) with respect
to any Senior  Indebtedness that does not have any such trustee,  agent or other
representative (i) in the case of such Senior Indebtedness issued pursuant to an
agreement  providing for voting  arrangements  as among the holders or owners of
such Senior Indebtedness, any holder or owner of such Senior Indebtedness acting
with the  consent of the  required  persons  necessary  to bind such  holders or
owners of such Senior Indebtedness and (ii) in the case of all other such Senior
Indebtedness, the holder or owner of such Senior Indebtedness.

<PAGE>
                                       9

               "Responsible Officer" when used with respect to the Trustee means
any officer within the corporate trust department (or any successor  department)
of the Trustee including any vice president, assistant vice president, assistant
treasurer, senior trust officer, trust officer or any other officer or assistant
officer  of the  Trustee  customarily  performing  functions  similar  to  those
performed by the persons who at the time shall be such  officers,  respectively,
or to whom any corporate  trust matter is referred at the Corporate Trust Office
because of his or her knowledge of and familiarity  with the particular  subject
and who has direct responsibility for the administration of this Indenture.

               "Rule 144" means Rule 144 under the Securities Act.

               "Rule 144A" means Rule 144A under the Securities Act.

               "Securities Act" means the Securities Act of 1933, as amended.

               "Security Register" has the meaning specified in Section 2.10.

               "Senior Indebtedness" means, with respect to the Company, (i) the
principal,  premium,  if any, and interest in respect of (a) indebtedness of the
Company for money borrowed (but excluding trade accounts  payable arising in the
ordinary course of business) under any credit agreements,  notes,  guarantees or
similar  documents and (b)  indebtedness  evidenced by  securities,  debentures,
bonds or other similar instruments issued by the Company; (ii) all capital lease
obligations  of the  Company;  (iii) all  obligations  of the Company  issued or
assumed  as the  deferred  purchase  price of  property,  all  conditional  sale
obligations  of the Company and all  obligations  of the Company under any title
retention  agreement  (but  excluding  trade  accounts  payable  arising  in the
ordinary  course of  business);  (iv) all  obligations  of the  Company  for the
reimbursement on any letter of credit,  banker's  acceptance,  security purchase
facility  or similar  credit  transaction;  (v) all  obligations  of the Company
(contingent or otherwise) with respect to an interest rate or other swap, cap or
collar agreements or other similar instruments or agreements or foreign currency
hedge,  exchange,  purchase  or  similar  instruments  or  agreements;  (vi) all
obligations of the types referred to in clauses (i) through (v) of other Persons
for the  payment  of which the  Company  is  responsible  or liable as  obligor,
guarantor or otherwise;  and (vii) all  obligations  of the types referred to in
clauses  (i)  through  (vi)  above of other  Persons  secured by any lien on any
property or asset of the Company  (whether or not such  obligation is assumed by
the Company),  whether  outstanding  on the date of this Indenture or thereafter
created, incurred,  assumed,  guaranteed or in effect guaranteed by the Company,
except for any such  indebtedness  that is by its terms  subordinated to or PARI
PASSU with the Convertible  Debentures.  Such Senior Indebtedness shall continue
to be Senior Indebtedness irrespective of any deferrals, renewals, extensions or
refundings of, or amendments, modifications,  supplements or waivers of any term
of such Senior Indebtedness.

               "Stated  Maturity"  when used  with  respect  to any  Convertible
Debenture or any installment of principal thereof or interest thereon, means the
date on which the principal of such Convertible Debenture or such installment of
principal or interest is due and payable in accordance with the terms thereof.

<PAGE>
                                       10

               "Subsidiary" means any corporation,  association,  partnership or
other  business  entity of which more than 50% of the total  voting power of the
outstanding  Capital Stock (or other interests  entitled  (without regard to the
occurrence of any  contingency)  to vote in the election of  directors,  general
partners,  managers, managing members, managing partners or trustees thereof or,
if such persons are not elected,  to vote on any matter that is submitted to the
vote of all persons holding  ownership  interests in such entity) is at the time
owned or  controlled,  directly  or  indirectly,  by (i) the  Company,  (ii) the
Company and one or more Subsidiaries or (iii) one or more Subsidiaries.

               "Trading Day" shall mean a day on which any securities are traded
on the national  securities  exchange or quotation  system used to determine the
Closing  Price  or any day on  which  the New York  Stock  Exchange  is open for
trading.

               "Transfer Restriction  Termination Date" means the earlier of the
first date on which (i) the Convertible  Preferred  Securities,  the Convertible
Debentures  and any Common  Stock  issued or  issuable  upon the  conversion  or
exchange thereof (other than (A) such securities  acquired by the Company or any
Affiliate thereof since the Issue Date of the Convertible  Preferred  Securities
and (B) Common Stock issued upon the conversion or exchange of any such security
described  in clause  (A)  above) may be sold  pursuant  to Rule  144(k) (or any
successor provision) and (ii) all the Offered Securities have been sold pursuant
to an effective registration statement.

               "Trust" or  "Viatel  Trust"  means  Viatel  Financing  Trust I, a
Delaware statutory business trust.

               "Trust  Indenture Act" or "TIA" (except as otherwise  provided in
Sections 8.1 and 8.2) means the Trust  Indenture Act of 1939, as amended,  as in
force at the date as of which this Indenture was originally executed.

               "Trust   Securities"   means  the  Common   Securities   and  the
Convertible Preferred Securities of Viatel Trust.

               "Trust   Securities   Guarantees"  means  the  Common  Securities
Guarantee and the Preferred Securities Guarantee.

               "Trustee"  means the Person  identified as "Trustee" in the first
paragraph  hereof until a successor  Trustee  shall have become such pursuant to
the provisions  hereof,  and  thereafter,  "Trustee"  shall mean or include each
Person who is then a Trustee hereunder.

               "United  States of America" or "United  States"  means the United
States of America  (including  the states and the  District  of  Columbia),  its
territories,  possessions,  the  Commonwealth  of Puerto  Rico and  other  areas
subject to its jurisdiction.

               "U.S.  Person"  means (i) a citizen  or  resident  of the  United
States, (ii) a corporation,  partnership or other entity created or organized in
or under the laws of the  United  States or any state or  political  subdivision
thereof, (iii) an estate the income of which is subject to United States federal
income taxation  regardless of its sources or (iv) a trust whose  administration
is subject to the primary supervision of a United States court and which has one

<PAGE>
                                       11

or more  United  States  fiduciaries  who  have the  authority  to  control  all
substantial decisions of the Trust.

               "vice  president"  when used with  respect to the  Company or the
Trustee,  means any vice  president,  whether or not designated by a number or a
word or words added before or after the title of "vice president."

                                   ARTICLE II

                           THE CONVERTIBLE DEBENTURES

               Section 2.1 DESIGNATION AND PRINCIPAL AMOUNT.

               There  are  hereby authorized  Debentures  designated the "7 3/4%
Junior  Convertible  Subordinated  Debentures,"  limited in aggregate  principal
amount to  $185,567,010  which amount shall be as set forth in any written order
of the Company for the  authentication  and delivery of  Convertible  Debentures
pursuant to Section 2.6 of this Indenture.

               Section 2.2 MATURITY. The Maturity Date is April 15, 2015.

               Section  2.3 FORM AND  PAYMENT.(a)  Except as provided in Section
2.6, the Convertible Debentures shall be issued in fully registered certificated
form without coupons in  denominations  of $10 in principal  amount and integral
multiples thereof.  Principal and interest on the Convertible  Debentures issued
in  certificated  form  will  be  payable,  the  transfer  of  such  Convertible
Debentures  will  be  registrable  and  such  Convertible   Debentures  will  be
exchangeable for Convertible  Debentures  bearing identical terms and provisions
at the  office or agency of the  Trustee;  provided,  however,  that  payment of
interest  may be made at the option of the Company by check mailed to the Holder
at such address as shall appear in the Security  Register.  Notwithstanding  the
foregoing,  so  long  as  the  Holder  of  any  Convertible  Debentures  is  the
Institutional  Trustee,  the payment of the principal of and interest (including
Compound  Interest and Additional Sums, if any) on such  Convertible  Debentures
held by the Institutional Trustee will be made at such place and to such account
as may be designated by the Institutional Trustee.

               (b) The Convertible Debentures are subject to the terms set forth
in this Indenture including, without limitation,  Exhibit A hereto, the terms of
which are hereby incorporated in their entirety by reference.

               (c) The Convertible  Debentures and the Trustee's  Certificate of
Authentication  to be endorsed  thereon are to be  substantially  in the form of
Exhibit A to this Indenture.

<PAGE>
                                       12

               Section 2.4 EXCHANGE AND  REGISTRATION OF TRANSFER OF CONVERTIBLE
DEBENTURES;  RESTRICTIONS ON TRANSFERS;  DEPOSITARY.If distributed to holders of
Trust Securities,  the Convertible  Debentures will be issued to such holders in
the same form as the Trust Securities that such Convertible  Debentures  replace
in accordance with the following procedures:

               (a) So long as Convertible Debentures are eligible for book-entry
settlement  with the  Depositary,  or  unless  otherwise  required  by law,  all
Convertible  Debentures  that are so eligible may be  represented by one or more
Convertible  Debentures in global form  registered in the name of the Depositary
or the nominee of the  Depositary,  except as  otherwise  specified  below.  The
transfer and exchange of beneficial interests in any such Convertible  Debenture
in global form shall be effected  through the Depositary in accordance with this
Indenture and the procedures of the Depositary therefor.

               Convertible   Debentures   that  are   distributed   to  QIBs  in
replacement  of  Convertible  Preferred  Securities   represented  by  a  global
Convertible  Preferred  Security  will be  represented  by a global  Convertible
Debenture  (the "144A Global  Debenture").  The 144A Global  Debenture  shall be
referred  to  herein  as a Global  Debenture.  Convertible  Debentures  that are
distributed  to  QIBs  in  replacement  of  Certificated  Convertible  Preferred
Securities will be represented by definitive Convertible Debentures as set forth
in Section 2.4(b).

               Except as  provided  below,  beneficial  owners of a  Convertible
Debenture in global form shall not be entitled to have  certificates  registered
in their names,  will not receive or be entitled to receive physical delivery of
certificates  in  definitive  form and will not be  considered  Holders  of such
Convertible Debentures in global form.

               (b) Convertible Preferred Securities held in certificated form,
except for certificates  representing  Convertible  Preferred Securities held by
the Depositary or its nominee (or any successor Clearing Agency or its nominee),
shall upon  presentation to the Trustee by the  Institutional  Trustee or by the
holder thereof or by the Institutional Trustee on behalf of such holder shall be
exchanged for Convertible  Debentures in fully registered  certificated  form of
like aggregate principal amount and tenor.

               (c) So  long  as the  Convertible  Debentures  are  eligible  for
book-entry settlement, and to the extent that Convertible Debentures are held by
QIBs in a Global  Debenture,  or  unless  otherwise  required  by law,  upon any
transfer of a definitive  Convertible Debenture to a QIB in accordance with Rule
144A,  unless  otherwise  requested by the  transferor,  and upon receipt of the
definitive Convertible Debenture or Convertible Debentures being so transferred,
together with a  certification  from the  transferor  that the transfer is being
made in  compliance  with  Rule  144A (or  other  evidence  satisfactory  to the
Trustee),  the Trustee shall make an endorsement on any 144A Global Debenture to
reflect  an  increase  in the  aggregate  principal  amount  of the  Convertible
Debentures  represented by such Global  Debenture,  and the Trustee shall cancel
such definitive  Convertible  Debenture or Convertible  Debentures in accordance
with the standing  instructions and procedures of the Depositary,  the aggregate
principal amount of Convertible  Debentures represented by such Global Debenture
to be increased accordingly;  provided that no definitive Convertible Debenture,
or  portion  thereof,  in respect of which the  Company or an  Affiliate  of the
Company held any beneficial  interest shall be included in such Global Debenture
until such  definitive  Convertible  Debenture is freely  tradable in accordance

<PAGE>
                                       13

with Rule  144(k);  provided  further  that the  Trustee  shall,  at the written
request of the Company, issue Convertible Debentures in definitive form upon any
transfer of a beneficial  interest in the Global Debenture to the Company or any
Affiliate of the Company.

               Any Global Debenture may be endorsed with or have incorporated in
the text thereof such legends or recitals or changes not  inconsistent  with the
provisions of this  Indenture as may be required by the  Depositary,  by the New
York Stock Exchange or by the National  Association of Securities Dealers,  Inc.
in order for the Convertible  Debentures to be tradeable on the PORTAL Market or
as may be required for the  Convertible  Debentures to be tradeable on any other
market developed for trading of securities  pursuant to Rule 144A or required to
comply with any applicable  law or any  regulation  thereunder or with the rules
and regulations of any securities exchange upon which the Convertible Debentures
may be listed or traded or to conform with any usage with respect thereto, or to
indicate  any  special  limitations  or  restrictions  to which  any  particular
Convertible Debentures are subject.

               (d) Each Convertible  Debenture that bears or is required to bear
the  legend  set  forth  in  this  Section  2.4(d)  (a  "Restricted  Convertible
Debenture")  shall be subject to the  restrictions  on transfer  provided in the
legend set forth in this Section  2.4(d),  unless such  restrictions on transfer
shall be waived by the written  consent of the  Company,  and the Holder of each
Restricted Convertible Debenture, by such Holder's acceptance thereof, agrees to
be bound by such restrictions on transfer. As used in this Section 2.4(d) and in
Section 2.4(e), the term "transfer"  encompasses any sale,  pledge,  transfer or
other disposition of any Restricted Convertible Debenture.

               Prior  to  the  Transfer   Restriction   Termination   Date,  any
certificate   evidencing  a  Convertible   Debenture  shall  bear  a  legend  in
substantially  the following form,  unless otherwise agreed by the Company (with
written notice thereof to the Trustee):

               THE SECURITY  EVIDENCED  HEREBY HAS NOT BEEN REGISTERED UNDER THE
U.S.   SECURITIES  ACT  OF  1933,  AS  AMENDED  (THE  "SECURITIES   ACT"),  AND,
ACCORDINGLY,  MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED  STATES OR TO, OR FOR
THE  ACCOUNT OR BENEFIT OF, U.S.  PERSONS  EXCEPT AS SET FORTH IN THE  FOLLOWING
SENTENCE.  BY ITS  ACQUISITION  HEREOF,  THE HOLDER (1) REPRESENTS  THAT IT IS A
"QUALIFIED  INSTITUTIONAL  BUYER" (AS DEFINED IN RULE 144A UNDER THE  SECURITIES
ACT),  (2) AGREES THAT IT WILL NOT PRIOR TO THE EXPIRATION OF THE HOLDING PERIOD
APPLICABLE TO SALES OF THE SECURITY EVIDENCED HEREBY UNDER RULE 144(K) UNDER THE
SECURITIES  ACT (OR ANY SUCCESSOR  PROVISION)  RESELL OR OTHERWISE  TRANSFER THE
SECURITY EVIDENCED HEREBY OR, IF THIS SECURITY IS CONVERTIBLE INTO COMMON STOCK,
THE COMMON STOCK  ISSUABLE UPON  CONVERSION OR EXCHANGE OF THIS SECURITY  EXCEPT
(A) TO VIATEL, INC. (THE "COMPANY") OR ANY SUBSIDIARY  THEREOF,  (B) PURSUANT TO
AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, (C) TO A QUALIFIED
INSTITUTIONAL  BUYER IN COMPLIANCE  WITH RULE 144A UNDER THE SECURITIES ACT, (D)
TO AN INSTITUTIONAL  "ACCREDITED  INVESTOR" (AS DEFINED IN RULE 501(A)(1),  (2),
(3) OR (7) UNDER THE SECURITIES ACT) THAT, PRIOR TO SUCH TRANSFER,  FURNISHES TO

<PAGE>
                                       14

THE  TRUSTEE  FOR  THE  CONVERTIBLE  PREFERRED  SECURITIES  OR  THE  CONVERTIBLE
DEBENTURES,  AS THE CASE MAY BE (OR, IF THIS CERTIFICATE EVIDENCES COMMON STOCK,
THE TRANSFER AGENT FOR THE COMMON  STOCK),  A SIGNED LETTER  CONTAINING  CERTAIN
REPRESENTATIONS  AND AGREEMENTS  RELATING TO THE RESTRICTIONS ON TRANSFER OF THE
SECURITY  EVIDENCED  HEREBY (THE FORM OF WHICH LETTER CAN BE OBTAINED  FROM SUCH
TRUSTEE OR TRANSFER  AGENT),  (E) OUTSIDE THE UNITED STATES IN  COMPLIANCE  WITH
RULE  904  UNDER  THE  SECURITIES  ACT OR (F)  PURSUANT  TO THE  EXEMPTION  FROM
REGISTRATION  PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE),  AND
(3) AGREES THAT IT WILL  DELIVER TO EACH PERSON TO WHOM THE  SECURITY  EVIDENCED
HEREBY IS TRANSFERRED A NOTICE  SUBSTANTIALLY  TO THE EFFECT OF THIS LEGEND.  IN
CONNECTION  WITH ANY  TRANSFER OF THE  SECURITY  EVIDENCED  HEREBY  PRIOR TO THE
EXPIRATION OF THE HOLDING PERIOD  APPLICABLE TO SALES OF THE SECURITY  EVIDENCED
HEREBY UNDER RULE 144(K) UNDER THE SECURITIES ACT (OR ANY SUCCESSOR  PROVISION),
THE  HOLDER  MUST  CHECK THE  APPROPRIATE  BOX SET FORTH ON THE  REVERSE  HEREOF
RELATING  TO THE MANNER OF SUCH  TRANSFER  AND SUBMIT  THIS  CERTIFICATE  TO THE
TRUSTEE FOR THE CONVERTIBLE PREFERRED SECURITIES OR THE CONVERTIBLE  DEBENTURES,
AS THE CASE MAY BE (OR, IF THIS CERTIFICATE  EVIDENCES COMMON STOCK, SUCH HOLDER
MUST FURNISH TO THE TRANSFER AGENT SUCH CERTIFICATIONS,  LEGAL OPINIONS OR OTHER
INFORMATION  AS THE  COMPANY  OR  VIATEL  FINANCING  TRUST I (THE  "TRUST")  MAY
REASONABLY  REQUIRE TO CONFIRM THAT SUCH  TRANSFER IS BEING MADE  PURSUANT TO AN
EXEMPTION  FROM,  OR  IN  A  TRANSACTION   NOT  SUBJECT  TO,  THE   REGISTRATION
REQUIREMENTS  OF THE  SECURITIES  ACT).  IF THIS  CERTIFICATE  DOES NOT EVIDENCE
COMMON  STOCK AND IF THE  PROPOSED  TRANSFEREE  IS AN  INSTITUTIONAL  ACCREDITED
INVESTOR OR A PURCHASER WHO IS NOT A U.S. PERSON, THE HOLDER MUST, PRIOR TO SUCH
TRANSFER, FURNISH TO THE TRUSTEE FOR THE CONVERTIBLE PREFERRED SECURITIES OR THE
CONVERTIBLE DEBENTURES, AS THE CASE MAY BE, SUCH CERTIFICATIONS,  LEGAL OPINIONS
OR OTHER  INFORMATION  AS THE  COMPANY  OR THE TRUST MAY  REASONABLY  REQUIRE TO
CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION  FROM, OR IN A
TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.
THIS  LEGEND  WILL  BE  REMOVED  AFTER  THE  EXPIRATION  OF THE  HOLDING  PERIOD
APPLICABLE TO SALES OF THE SECURITY EVIDENCED HEREBY UNDER RULE 144(K) UNDER THE
SECURITIES  ACT.  AS USED  HEREIN,  THE TERMS  "OFFSHORE  TRANSACTION,"  "UNITED
STATES" AND "U.S.  PERSON" HAVE THE MEANINGS GIVEN TO THEM BY REGULATION S UNDER
THE SECURITIES ACT.

               Following  the  Transfer   Restriction   Termination   Date,  any
Convertible  Debenture or security issued in exchange or  substitution  therefor
(other than (i) Convertible  Debentures acquired by the Company or any Affiliate
thereof since the issue date of the  Convertible  Preferred  Securities and (ii)
Common Stock issued upon the conversion or exchange of any Convertible Debenture
described in clause (i) above) may upon surrender of such Convertible  Debenture
for exchange to the Registrar in accordance  with the provisions of this Section
2.4, be exchanged for a new Convertible Debenture or Convertible Debentures,  of

<PAGE>
                                       15

like tenor and aggregate principal amount,  which shall not bear the restrictive
legend required by this Section 2.4(d).

               Notwithstanding  any other  provisions of this  Indenture  (other
than the provisions set forth in this Section  2.4(d)),  a Global  Debenture may
not be  transferred  as a whole  except by the  Depositary  to a nominee  of the
Depositary  or by a nominee  of the  Depositary  to the  Depositary  or  another
nominee to a successor Depositary or a nominee of such successor Depositary.

               The Depositary  shall be a clearing agency  registered  under the
Exchange Act. The Company initially appoints The Depository Trust Company to act
as Depositary with respect to all or a portion of the Convertible  Debentures in
global form. Initially, the Global Debentures shall be issued to the Depositary,
registered  in the name of Cede & Co.,  as the  nominee of the  Depositary,  and
deposited with the Trustee as custodian for Cede & Co.

               Definitive Convertible Debentures issued in exchange for all or a
part of a Global  Debenture  pursuant to this Section 2.4(d) shall be registered
in such names and in such authorized  denominations as the Depositary,  pursuant
to instructions  from its direct or indirect  participants  or otherwise,  shall
instruct the Trustee.  Upon  execution  and  authentication,  the Trustee  shall
deliver such definitive Convertible Debentures to the person in whose names such
definitive Convertible Debentures are so registered.

               At such time as all  interests  in a Global  Debenture  have been
redeemed, converted,  exchanged,  repurchased or canceled, such Global Debenture
shall be, upon  receipt  thereof,  canceled by the  Trustee in  accordance  with
standing  procedures and  instructions of the  Depositary.  At any time prior to
such  cancellation,  if any  interest in a Global  Debenture  is  exchanged  for
definitive Convertible Debentures, redeemed, converted, exchanged or repurchased
by the Company  pursuant to Article X or canceled,  or transferred for part of a
Global  Debenture,  the  principal  amount of such Global  Debenture  shall,  in
accordance  with the standing  procedures and  instructions of the Depositary be
reduced or increased,  as the case may be, and an  endorsement  shall be made on
such Global  Debenture  by, or at the  direction of, the Trustee to reflect such
reduction or increase.

               (e) Any  Convertible  Debenture  or Common  Stock issued upon the
conversion or exchange of a Convertible  Debenture  that,  prior to the Transfer
Restriction  Termination  Date,  is  purchased  or owned by the  Company  or any
Affiliate  thereof  may not be resold by the  Company or such  Affiliate  unless
registered  under the Securities Act or resold pursuant to an exemption from the
registration  requirements of the Securities Act in a transaction  which results
in such  Convertible  Debentures or Common Stock,  as the case may be, no longer
being "restricted securities" (as defined under Rule 144).

               Section 2.5 INTEREST.

               (a) Each Convertible  Debenture will bear interest at the rate of
7:% per annum  (the  "Coupon  Rate")  from April 12,  2000  until the  principal
thereof becomes due and payable, and on any overdue principal and (to the extent
that  payment of such  interest  is  enforceable  under  applicable  law) on any
overdue  installment  of  interest  at the Coupon  Rate,  compounded  quarterly,

<PAGE>
                                       16

payable  (subject  to the  provisions  of Article  XI)  quarterly  in arrears on
January 15,  April 15, July 15 and October 15 of each year (each,  an  "Interest
Payment  Date"),  commencing  on July 15, 2000, to the Person in whose name such
Convertible Debenture or any Predecessor Convertible Debenture is registered, at
the close of business on the record date for such  interest  installment,  which
shall be the close of  business  on the  fifteenth  day  prior to that  Interest
Payment Date.

               (b)  The  amount  of  interest  payable  for any  period  will be
computed on the basis of a 360-day year of twelve 30-day  months.  The amount of
interest  payable for any period shorter than a full quarterly  period for which
interest is computed, will be computed on the basis of the actual number of days
elapsed  per  30-day  month.  In the event  that any date on which  interest  is
payable on the  Convertible  Debentures  is not a Business  Day, then payment of
interest  payable on such date will be made on the next succeeding day that is a
Business Day (and  without any interest or other  payment in respect of any such
delay),  except that,  if such Business Day is in the next  succeeding  calendar
year, such payment shall be made on the immediately  preceding  Business Day, in
each case with the same force and effect as if made on such date.

               (c) If at any  time  the  Trust  is  required  to pay any  taxes,
duties,  assessments  or  governmental  charges of whatever  nature  (other than
withholding  taxes) imposed by the United States, or any other taxing authority,
then,  in any such case,  the Company will pay as additional  sums  ("Additional
Sums")  such  additional  amounts as shall be  required  so that the net amounts
received  and  retained  by the  Trust  after  paying  any such  taxes,  duties,
assessments or other governmental  charges will not be less than the amounts the
Trust  would have  received  had no such  taxes,  duties,  assessments  or other
government  charges  been  imposed  so long as the  Trust is the  holder  of the
Convertible Debentures.

               The   definitive   Convertible   Debentures   shall  be  printed,
lithographed  or  engraved on steel  engraved  borders or may be produced in any
other  manner,  all as  determined by the officers  executing  such  Convertible
Debentures, as evidenced by their execution of such Convertible Debentures.

               Section  2.6   AUTHENTICATION   AND   DELIVERY   OF   CONVERTIBLE
Debentures.

               At any  time  and  from  time to time  after  the  execution  and
delivery of this Indenture,  the Company may deliver  Convertible  Debentures in
the aggregate principal amount of up to $185,567,010  executed by the Company to
the Trustee for authentication, and the Trustee shall thereupon authenticate and
make available for delivery such  Convertible  Debentures to or upon the written
order of the Company, signed by both (i) the chairman of its Board of Directors,
or any vice  chairman of its Board of  Directors,  or its  president or any vice
president and (ii) its treasurer or any assistant  treasurer or its secretary or
any  assistant  secretary,  without  any  further  action  by  the  Company.  In
authenticating   such  Convertible   Debentures  and  accepting  the  additional
responsibilities   under  this   Indenture  in  relation  to  such   Convertible
Debentures,  the Trustee  shall be provided  with and  (subject to Section  6.1)
shall be fully protected in relying upon:

<PAGE>
                                       17

               (a) a copy of any  resolution  or  resolutions  of the  Board  of
          Directors relating to the issuance of such Convertible Debentures,  in
          each case certified by the secretary or an assistant  secretary of the
          Company;

               (b) a supplemental indenture, if any;

               (c) an Opinion of Counsel,  prepared in  accordance  with Section
          15.5, which shall state that the Convertible Debentures have been duly
          authorized,  and, when  authenticated and delivered by the Trustee and
          issued by the  Company  in the manner  and  subject to any  conditions
          specified  in such  Opinion  of  Counsel,  will  constitute  valid and
          legally binding  obligations of the Company  enforceable in accordance
          with  their  terms,  subject  to  applicable  bankruptcy,  insolvency,
          fraudulent  conveyance,  reorganization  or other laws  relating to or
          affecting  the  enforcement  of  creditors'  rights  generally  and by
          general   equitable    principles,    regardless   of   whether   such
          enforceability is considered in a proceeding in equity or at law.

               Notwithstanding the provisions of the preceding paragraph, if the
Convertible Debentures are not to be originally issued at one time, it shall not
be necessary to deliver the  resolution of the Board of Directors and Opinion of
Counsel otherwise  required pursuant to such preceding  paragraph at or prior to
the time of authentication  of each Convertible  Debenture if such documents are
delivered at or prior to the time of  authentication  upon original  issuance of
the first  Convertible  Debentures to be issued.  After the original issuance of
the first  Convertible  Debenture to be issued,  any separate written request by
the Company that the Trustee  authenticate  Convertible  Debentures for original
issuance  will be  deemed to be a  certification  by the  Company  that it is in
compliance with all conditions precedent provided for in this Indenture relating
to the authentication and delivery of such Convertible Debentures.

               The Trustee shall have the right to decline to  authenticate  and
deliver any Convertible  Debentures under this Section if the Trustee is advised
by counsel in good faith that the issuance of such Convertible  Debentures would
expose the Trustee to personal liability or is unlawful.

               If the Convertible Debentures are to be issued in the form of one
or more Global Debentures, then the Company shall execute and the Trustee shall,
in  accordance  with this Section,  authenticate  and deliver one or more Global
Debentures  that (i) shall represent and shall be denominated in an amount equal
to the aggregate  principal amount of all of the Convertible  Debentures  issued
and not yet  cancelled,  (ii) shall be registered in the name of the  Depositary
for such  Global  Debenture  or  Convertible  Debentures  or the nominee of such
Depositary,  (iii)  shall be  delivered  by the  Trustee to such  Depositary  or
pursuant  to  such  Depositary's  instructions  and  (iv)  shall  bear a  legend
substantially  to the  following  effect:  "Unless and until it is  exchanged in
whole or in part for Convertible  Debentures in definitive registered form, this
Convertible Debenture may not be transferred except as a whole by the Depositary
to the  nominee  of the  Depositary  or by a nominee  of the  Depositary  to the
Depositary or another nominee of the Depositary or by the Depositary or any such
nominee to a successor Depositary or a nominee of such successor Depositary."

<PAGE>
                                       18

               Each  Depositary  must, at the time of its designation and at all
times while it serves as Depositary,  be a clearing agency  registered under the
Exchange Act and any other applicable  statute or regulation to be so registered
to act as such depositary.

               Section 2.7 EXECUTION OF CONVERTIBLE DEBENTURES.  The Convertible
Debentures shall be signed on behalf of the Company by the chairman of its Board
of Directors,  or any vice chairman of its Board of Directors,  or its president
or any vice  president and attested by its treasurer or any assistant  treasurer
or its secretary or any assistant  secretary,  under its  corporate  seal.  Such
signatures may be the manual or facsimile signatures of such officers.  The seal
of the Company may be in the form of a facsimile  thereof and may be  impressed,
affixed,  imprinted  or  otherwise  reproduced  on the  Convertible  Debentures.
Typographical  and other minor errors or defects in any such reproduction of the
seal or any such signature  shall not affect the validity or  enforceability  of
any Convertible  Debenture that has been duly authenticated and delivered by the
Trustee.

               In case any  officer of the  Company who shall have signed any of
the Convertible Debentures shall cease to be such officer before the Convertible
Debenture  so signed  shall be  authenticated  and  delivered  by the Trustee or
disposed of by the  Company,  such  Convertible  Debenture  nevertheless  may be
authenticated  and delivered or disposed of as though the person who signed such
Convertible  Debenture had not ceased to be such officer of the Company; and any
Convertible Debenture may be signed on behalf of the Company by such persons as,
at the actual date of the execution of such Convertible Debenture,  shall be the
proper  officers  of the  Company,  although  at the date of the  execution  and
delivery of this Indenture any such person was not such an officer.

               Section 2.8 CERTIFICATE OF AUTHENTICATION.  Only such Convertible
Debentures as shall bear thereon a certificate of  authentication  substantially
in the form  attached  hereto as a part of Exhibit A and executed by the Trustee
by the manual signature of one of its authorized  signatories  shall be entitled
to the benefits of this Indenture or be valid or obligatory for any purpose. The
execution  of such  certificate  by the Trustee upon any  Convertible  Debenture
executed  by the  Company  shall be  conclusive  evidence  that the  Convertible
Debenture so authenticated has been duly  authenticated and delivered  hereunder
and that the Holder is entitled to the benefits of this Indenture.

               Notwithstanding the foregoing, if any Convertible Debenture shall
have been duly  authenticated and delivered  hereunder but never issued and sold
by the Company,  the Company  shall  deliver such  Convertible  Debenture to the
Trustee for  cancellation  as provided in Section 2.12  together  with a written
statement  (which need not comply with Section 15.5 and need not be  accompanied
by an Opinion of Counsel) stating that such Convertible Debenture has never been
issued  and  sold by the  Company,  for all  purposes  of  this  Indenture  such
Convertible  Debenture  shall be  deemed  never to have been  authenticated  and
delivered  hereunder  and  shall  never  be  entitled  to the  benefits  of this
Indenture.

<PAGE>
                                       19

               Section  2.9  DENOMINATION  AND DATE OF  CONVERTIBLE  DEBENTURES;
PAYMENTS OF INTEREST.

               Convertible  Debentures shall be issuable in denominations of $10
and any integral multiple thereof. The Convertible Debentures shall be numbered,
lettered,  or otherwise  distinguished in such manner or in accordance with such
plans as the officers of the Company  executing the same may determine  with the
approval  of the  Trustee  as  evidenced  by the  execution  and  authentication
thereof.

               Each  Convertible  Debenture  shall  be  dated  the  date  of its
authentication.

               The term  "record  date" as used  with  respect  to any  interest
payment date (except for payment of defaulted  interest) shall mean the close of
business on the fifteenth day preceding such interest  payment date,  whether or
not such record date is a Business Day.

               Any interest on any Convertible  Debenture which is payable,  but
is not  punctually  paid or duly  provided  for, on any interest  payment  date,
subject  to the  provisions  of  Article XI  (called  "defaulted  interest"  for
purposes of this Section) shall  forthwith  cease to be payable to the Holder on
the  relevant  record  date by virtue of his having been such  Holder;  and such
defaulted interest may be paid by the Company,  at its election in each case, as
provided in clause (1) or clause (2) below:

               (1) The  Company  may  elect  to make  payment  of any  defaulted
          interest to the persons in whose names any such Convertible Debentures
          (or  their   respective   predecessor   Convertible   Debentures)  are
          registered  at the close of business on a special  record date for the
          payment  of such  defaulted  interest,  which  shall  be  fixed in the
          following  manner.  The Company shall notify the Trustee in writing of
          the  amount  of  defaulted  interest  proposed  to  be  paid  on  each
          Convertible  Debentures and the date of the proposed  payment,  and at
          the same time the Company  shall deposit with the Trustee an amount of
          money equal to the aggregate  amount proposed to be paid in respect of
          such defaulted interest or shall make arrangements satisfactory to the
          Trustee for such deposit  prior to the date of the  proposed  payment,
          such money when  deposited  to be held in trust for the benefit of the
          persons  entitled  to  such  defaulted  interest  as  in  this  clause
          provided.  Thereupon the Trustee  shall fix a special  record date for
          the  payment of such  defaulted  interest  in  respect of  Convertible
          Debentures which shall not be more than 15 nor less than 10 days prior
          to the date of the  proposed  payment  and not less than 10 days after
          the receipt by the Trustee of the notice of the proposed payment.  The
          Trustee shall promptly  notify the Company of such special record date
          and, in the name and at the expense of the Company  shall cause notice
          of the  proposed  payment of such  defaulted  interest and the special
          record date thereof to be mailed, first class postage prepaid, to each
          Holder at his address as it appears in the Security Register, not less
          than 10 days prior to such special record date. Notice of the proposed
          payment  of such  defaulted  interest  and  the  special  record  date
          therefor having been mailed as aforesaid,  such defaulted  interest in
          respect of Convertible Debentures shall be paid to the person in whose
          names such  Convertible  Debentures (or their  respective  predecessor
          Convertible Debentures) are registered on such special record date and
          such  defaulted  interest  shall no longer be payable  pursuant to the
          following  clause  (2).  (2)  The  Company  may  make  payment  of any

<PAGE>
                                       20

          defaulted  interest on the Convertible  Debentures in any other lawful
          manner  not  inconsistent  with  the  requirements  of any  securities
          exchange on which the Convertible  Debentures may be listed,  and upon
          such notice as may be  required by such  exchange,  if,  after  notice
          given by the Company to the Trustee of the proposed  payment  pursuant
          to this clause,  such manner of payment shall be deemed practicable by
          the Trustee.

               Subject  to  the  foregoing  provisions  of  this  Section,  each
Convertible  Debenture  delivered  under this  Indenture  upon transfer of or in
exchange  for or in lieu of any  other  Convertible  Debenture  shall  carry the
rights to interest accrued and unpaid, and to accrue, which were carried by such
other Convertible Debenture.

               In the case of any Convertible  Debenture which is converted into
Common  Stock of the  Company  after any record date and on or prior to the next
succeeding  Interest  Payment Date (other than any  Convertible  Debenture whose
Maturity is prior to such Interest Payment Date), interest whose Stated Maturity
is on such Interest  Payment Date shall be payable on such Interest Payment Date
notwithstanding  such conversion,  and such interest  (whether or not punctually
paid or duly  provided  for)  shall be paid to the  Person  in whose  name  that
Convertible  Debenture (or one or more  Predecessor  Convertible  Debentures) is
registered  at the  close  of  business  on  such  record  date.  However,  if a
redemption date falls between a record date and the subsequent  Interest Payment
Date, the amount of such payment shall include  accumulated  and unpaid interest
accrued to, but excluding,  such redemption date. Except as otherwise  expressly
provided  in the  first  two  sentences  of this  paragraph,  in the case of any
Convertible  Debenture  which is converted,  interest  whose Stated  Maturity is
after the date of conversion of such Convertible Debenture shall not be payable.

               Section 2.10 REGISTRATION,  TRANSFER AND EXCHANGE.The  provisions
of this Section  2.10 shall be subject in their  entirety to the  provisions  of
Section  2.4.  The Company  will cause to be kept at each office or agency to be
maintained  for the purpose as  provided in Section 3.2 a register or  registers
(herein sometimes referred to as the "Security  Register") in which,  subject to
such  reasonable  regulations as it may prescribe,  the Company will provide for
the  registration  and the  registration  of the  transfer  or  exchange  of the
Convertible  Debentures.  The  Trustee  is  hereby  appointed  and  accepts  the
appointment  as Registrar (the  "Registrar")  for purposes of  registering,  and
registering  transfers  of,  the  Convertible  Debentures.  Upon  surrender  for
registration  of transfer  of any  Convertible  Debenture  at any such office or
agency to be maintained  for the purpose as provided in Section 3.2, the Company
shall execute and the Trustee shall authenticate and make available for delivery
in the name of the  transferee  or  transferees a new  Convertible  Debenture or
Convertible  Debentures and of a like tenor and containing the same terms (other
than the principal  amount thereof,  if more than one  Convertible  Debenture is
executed, authenticated and delivered in respect to any Convertible Debenture so
presented,  in which  case  the  aggregate  principal  amount  of the  executed,
authenticated  and delivered  Convertible  Debentures  shall equal the principal
amount  of  the  Convertible   Debenture   presented  in  respect  thereof)  and
conditions.

               At the  option  of the  Holder  thereof,  Convertible  Debentures
(other than a Global Debenture,  except as set forth below) may be exchanged for
a   Convertible   Debenture  or   Convertible   Debentures   having   authorized
denominations and an equal aggregate  principal  amount,  upon surrender of such
Convertible  Debentures  to be exchanged at the agency of the Company that shall

<PAGE>
                                       21

be maintained for such purpose in accordance  with Section 3.2 and upon payment,
if the Company shall so require,  of the charge hereinafter  provided.  Whenever
any Convertible  Debentures are so surrendered  for exchange,  the Company shall
execute,  and the  Trustee  shall  authenticate  and  deliver,  the  Convertible
Debentures  which the Holder  making the  exchange is  entitled to receive.  All
Convertible Debentures surrendered upon any exchange or transfer provided for in
this Indenture shall be promptly  cancelled by the Trustee and the Trustee shall
dispose of such  cancelled  Convertible  Debentures in its customary  manner and
will deliver a certificate of cancellation thereof to the Company.

               All Convertible  Debentures  issued upon any transfer or exchange
of Convertible  Debentures shall be the valid and legally binding obligations of
the Company,  evidencing  the same debt, and entitled to the same benefits under
this Indenture,  as the Convertible Debentures surrendered upon such transfer or
exchange.

               Every   Convertible   Debenture   presented  or  surrendered  for
registration of transfer or exchange shall (if so required by the Company or the
Trustee) be duly endorsed, or be accompanied by a written instrument of transfer
in form  satisfactory to the Company and the Trustee duly executed by the Holder
thereof or his attorney duly authorized in writing.

               No  service   charge   shall  be  made  to  the  Holder  for  any
registration of transfer or exchange of Convertible Debentures,  but the company
may require  payment of a sum sufficient to cover any tax or other  governmental
charge  that may be imposed in  connection  with any  transfer  or  exchange  of
Convertible  Debentures,  other than exchanges pursuant to Sections 2.13, 8.5 or
12.5 not involving any transfer.

               The Company  shall not be  required  (i) to issue,  register  the
transfer of or exchange any Convertible  Debenture  during a 15-day period prior
to the day of mailing of the relevant  notice of  redemption or (ii) to register
the transfer of or exchange any Convertible Debenture so selected for redemption
in whole or in part,  except,  in the case of any  Convertible  Debenture  to be
redeemed in part, the portion thereof not redeemed.

               Notwithstanding any other provisions of this Section 2.10, unless
and until it is  exchanged  in whole or in part for  Convertible  Debentures  in
definitive registered form, a Global Debenture  representing all or a portion of
the  Convertible  Debentures  may not be  transferred  except  as a whole by the
Depositary to a nominee of such Depositary or by a nominee of such Depositary to
such  Depositary or another  nominee of such Depositary or by such Depositary or
any such  nominee  to a  successor  Depositary  or a nominee  of such  successor
Depositary.

               If at any  time the  Depositary  for any  Convertible  Debentures
represented  by one or more Global  Debentures  notifies  the Company that it is
unwilling or unable to continue as Depositary for such Convertible Debentures or
if at any time the Depositary for such Convertible Debentures shall no longer be
eligible  under Section 2.6, the Company  shall  appoint a successor  Depositary
with respect to such Convertible Debentures.  If a successor Depositary for such
Convertible  Debentures is not appointed by the Company within 90 days after the
Company receives such notice or becomes aware of such ineligibility, as the case
may be, the Company's  election that such Convertible  Debentures be represented
by one or more Global  Debentures  shall no longer be effective  and the Company
will execute, and the Trustee,  upon receipt of an Officers' Certificate for the

<PAGE>
                                       22

authentication  and  delivery  of  definitive   Convertible   Debentures,   will
authenticate and deliver,  Convertible Debentures in definitive registered form,
in any authorized  denominations,  in an aggregate principal amount equal to the
principal amount of the Global Debenture or Convertible Debentures  representing
such Convertible Debentures in exchange for such Global Debenture or Convertible
Debentures.

               The Company may at any time and in its sole discretion  determine
that  the  Convertible  Debentures  issued  in the  form of one or  more  Global
Debentures shall no longer be represented by a Global  Debenture.  In such event
the  Company  will  execute,  and the  Trustee,  upon  receipt  of an  Officers'
Certificate  for the  authentication  and  delivery  of  definitive  Convertible
Debentures, will authenticate and deliver,  Convertible Debentures in definitive
registered  form, in any  authorized  denominations,  in an aggregate  principal
amount equal to the principal  amount of the Global  Debenture,  in exchange for
such Global Debenture.

               If an Event of Default  occurs and is continuing  with respect to
Convertible Debentures issued in the form of one or more Global Debentures, upon
written notice from the Depositary,  the Company will execute,  and the Trustee,
upon receipt of an Officers'  Certificate for the authentication and delivery of
definitive Convertible  Debentures,  will authenticate and deliver,  Convertible
Debentures in definitive registered form, in any authorized denominations, in an
aggregate principal amount equal to the principal amount of the Global Debenture
or Convertible Debentures, representing such Convertible Debentures, in exchange
for such Global Debenture or Convertible Debentures.

               If  specified  by the  Company,  the  Depositary  for such Global
Debenture  may surrender  such Global  Debenture in exchange in whole or in part
for  Convertible  Debentures in definitive  registered form on such terms as are
acceptable  to the Company and such  Depositary.  Thereupon,  the Company  shall
execute, and the Trustee shall authenticate and deliver,  without service charge
to the Holder:

               (i) to the Person  specified by such Depositary a new Convertible
          Debenture or Convertible Debentures,  of any authorized  denominations
          as requested by such Person, in an aggregate principal amount equal to
          and in exchange for such  Person's  beneficial  interest in the Global
          Debenture; and

               (ii) to such Depositary a new Global  Debenture in a denomination
          equal to the difference,  if any,  between the principal amount of the
          surrendered  Global  Debenture and the aggregate  principal  amount of
          Convertible Debentures  authenticated and delivered pursuant to clause
          (i) above.

               Upon  the  exchange  of  a  Global   Debenture  for   Convertible
Debentures in definitive  registered  form,  in authorized  denominations,  such
Global Debenture shall be cancelled by the Trustee or an agent of the Company or
the Trustee.  Convertible  Debentures  in definitive  registered  form issued in
exchange  for a  Global  Debenture  pursuant  to  this  Section  2.10  shall  be
registered in such names and in such authorized  denominations as the Depositary
for such Global Debenture,  pursuant to instructions from its direct or indirect
participants or otherwise, shall instruct the Trustee or agent of the Company or
the Trustee. The Trustee or such agent shall deliver such Convertible Debentures

<PAGE>
                                       23

to or as directed by the Persons in whose names such Convertible  Debentures are
so registered.

               Section  2.11  MUTILATED,  DEFACED,  DESTROYED,  LOST AND  STOLEN
CONVERTIBLE  DEBENTURES.   In  case  any  temporary  or  definitive  Convertible
Debenture  shall become  mutilated or defaced or be  destroyed,  lost or stolen,
then,  in  the  absence  of  notice  to the  Company  or the  Trustee  that  the
Convertible  Debenture has been acquired by a bona fide  purchaser,  the Company
shall execute,  and upon the written request of any officer of the Company,  the
Trustee shall  authenticate  and make  available for delivery a new  Convertible
Debenture  and of like  tenor and  principal  amount and with the same terms and
conditions,  bearing a number not contemporaneously outstanding, in exchange and
substitution  for the mutilated or defaced  Convertible  Debenture or in lieu of
and substitution for the Convertible Debenture so destroyed,  lost or stolen. In
every case the applicant for a substitute Convertible Debenture shall furnish to
the  Company  and to the  Trustee and to any agent of the Company or the Trustee
such  security or indemnity  as may be required by them to indemnify  and defend
and to save each of them  harmless  and, in every case of  destruction,  loss or
theft, evidence to their satisfaction of the destruction,  loss or theft of such
Convertible Debenture and of the ownership thereof and in the case of mutilation
or defacement  shall surrender the Convertible  Debenture to the Trustee or such
agent.

               Upon the issuance of any substitute  Convertible  Debenture,  the
Company may require  the payment of a sum  sufficient  to cover any tax or other
governmental  charge  that may be  imposed  in  relation  thereto  and any other
expenses (including the fees and expenses of the Trustee or its agent) connected
therewith.  In case any  Convertible  Debenture which has matured or is about to
mature or has been  called for  redemption  in full shall  become  mutilated  or
defaced or be destroyed,  lost or stolen,  the Company may, instead of issuing a
substitute  Convertible  Debenture,  pay or  authorize,  the payment of the same
(without  surrender  thereof  except  in the  case  of a  mutilated  or  defaced
Convertible Debenture);  provided,  however, that the applicant for such payment
shall  furnish to the Company and to the Trustee and any agent of the Company or
the Trustee  such  security or indemnity as any of them may require to save each
of them  harmless,  and,  in  every  case of  destruction,  loss or  theft,  the
applicant shall also furnish to the Company and the Trustee and any agent of the
Company or the Trustee evidence to their  satisfaction of the destruction,  loss
or theft of such Convertible Debenture and of the ownership thereof.

               Every  substitute  Convertible  Debenture  issued pursuant to the
provisions of this Section by virtue of the fact that any Convertible  Debenture
is  destroyed,  lost  or  stolen  shall  constitute  an  additional  contractual
obligation  of the  Company,  whether  or not  the  destroyed,  lost  or  stolen
Convertible  Debenture  shall be at any time  enforceable by anyone and shall be
entitled to all the benefits of (but shall be subject to all the  limitations of
rights set forth in) this Indenture equally and proportionately with any and all
other Convertible  Debentures duly  authenticated and delivered  hereunder.  All
Convertible  Debentures  shall be held upon the express  condition  that, to the
extent permitted by law, the foregoing  provisions are exclusive with respect to
the  replacement  or payment of mutilated,  defaced,  destroyed,  lost or stolen
Convertible  Debentures  and shall preclude any and all other rights or remedies
notwithstanding any law or statute existing or hereafter enacted to the contrary
with respect to the  replacement  or payment of negotiable  instruments or other
securities without their surrender.

<PAGE>
                                       24

               Section   2.12   CANCELLATION  OF  CONVERTIBLE   DEBENTURES.  All
Convertible   Debentures  surrendered  for  payment,   redemption,   conversion,
registration  of  transfer  or  exchange,  or for credit  against any payment in
respect of a sinking or analogous fund,  shall, if surrendered to the Company or
any agent of the  Company  or the  Trustee,  be  delivered  to the  Trustee  for
cancellation or, if surrendered to the Trustee, shall be cancelled by it; and no
Convertible  Debentures  shall be issued in lieu  thereof,  except as  expressly
permitted by any of the  provisions  of this  Indenture.  The Company may at any
time  deliver  to  the  Trustee  for  cancellation  any  Convertible  Debentures
previously authenticated hereunder which the Company has not issued and sold and
all  Convertible  Debentures  so  delivered  shall be promptly  cancelled by the
Trustee.  If the Company shall acquire any of the Convertible  Debentures,  such
acquisition   shall  not  operate  as  a  redemption  or   satisfaction  of  the
indebtedness  represented by such  Convertible  Debentures  unless and until the
same are delivered to the Trustee for  cancellation.  All cancelled  Convertible
Debentures  shall be  disposed of in  accordance  with the  Trustee's  customary
practices.

               Section  2.13  TEMPORARY   CONVERTIBLE   DEBENTURES. Pending  the
preparation of definitive  Convertible  Debentures,  the Company may execute and
the  Trustee  shall  authenticate  and make  available  for  delivery  temporary
Convertible   Debentures  (printed,   lithographed,   typewritten  or  otherwise
reproduced,  in  each  case  in  form  reasonably  acceptable  to the  Trustee).
Temporary   Convertible   Debentures   shall  be  issuable  in  any   authorized
denomination,  and  substantially  in the  form  of the  definitive  Convertible
Debentures  but  with  such  omissions,  insertions  and  variations  as  may be
appropriate for temporary  Convertible  Debentures,  all as may be determined by
the  Company  with  the  reasonable   concurrence  of  the  Trustee.   Temporary
Convertible  Debentures  may contain such  reference to any  provisions  of this
Indenture as may be appropriate.  Every temporary Convertible Debenture shall be
executed  by the  Company  and be  authenticated  by the  Trustee  upon the same
conditions and in substantially  the same manner,  and with like effect,  as the
definitive Convertible Debentures.  Without unreasonable delay the Company shall
execute  and shall  furnish  definitive  Convertible  Debentures  and  thereupon
temporary Convertible Debentures may be surrendered in exchange therefor without
charge to the Holder at each  office or agency to be  maintained  by the Company
for that purpose pursuant to Section 3.2, and the Trustee shall authenticate and
make  available  for  delivery  in  exchange  for  such  temporary   Convertible
Debentures  an  equal  aggregate  principal  amount  of  definitive  Convertible
Debentures  of  authorized  denominations.  Until so  exchanged,  the  temporary
Convertible  Debentures  shall be  entitled  to the  same  benefits  under  this
Indenture as definitive Convertible Debentures.

               Section 2.14 CUSIP NUMBERS.

               The Company in issuing the Convertible Debentures may use "CUSIP"
numbers (if then  generally in use),  and, if so, the Trustee  shall use "CUSIP"
numbers in notices of redemption as a convenience to Holders;  PROVIDED that any
such notice may state that no  representation  is made as to the  correctness of
such numbers either as printed on the Convertible  Debentures or as contained in
any notice of a  redemption  and that  reliance  may be placed only on the other
identification  numbers  printed  on the  Convertible  Debentures,  and any such
redemption  shall not be affected by any defect in or omission of such  numbers.
The  Company  will  promptly  notify the  Trustee  of any change in the  "CUSIP"
numbers.

<PAGE>
                                       25

                                   ARTICLE III

                            COVENANTS OF THE COMPANY

               Section 3.1 PAYMENT OF PRINCIPAL AND INTEREST.

               The  Company   covenants  and  agrees  for  the  benefit  of  the
Convertible  Debentures that it will duly and punctually pay or cause to be paid
the  principal  of, and  interest  on,  each of the  Convertible  Debentures  in
accordance with the terms of such Convertible  Debentures and of this Indenture.
The interest on Convertible  Debentures  (together  with any additional  amounts
payable pursuant to the terms of such Convertible  Debentures)  shall be payable
only to or upon the written  order of the  Holders  thereof and at the option of
the Company may be paid by wire transfer or by mailing  checks for such interest
payable to or upon the written order of such Holders at their last  addresses as
they appear on the Security Register.

               Payment  of  principal  of and any  interest  on any  Convertible
Debenture  in  definitive  global  form  shall be made to the  Person or Persons
specified therein.  Except as provided in the preceding paragraph,  the Company,
the Trustee and any agent of the Company and the Trustee shall treat a Person as
the  Holder of such  principal  amount  of  Outstanding  Convertible  Debentures
represented by a Global  Debenture as shall be specified in a written  statement
of the Holder of such Global Debenture.

               Section  3.2  OFFICES  FOR  PAYMENT,  ETC.  So long as any of the
Convertible  Debentures  remain  outstanding,  the  Company  will  maintain  the
following: an office or agency in the Borough of Manhattan, City of New York (a)
where the  Convertible  Debentures  may be presented for payment,  (b) where the
Convertible  Debentures  may be presented for  registration  of transfer and for
exchange as provided in this Indenture, and (c) where notices and demands may be
served  upon the  Company  in  respect of the  Convertible  Debentures,  or this
Indenture.

               The  Company  will  give to the  Trustee  written  notice  of the
location of any such office or agency and of any change of location thereof.  In
case the  Company  shall fail to so  designate  or  maintain  any such office or
agency or shall fail to give such notice of the location or of any change in the
location  thereof,  presentations  and  demands  may be made and  notices may be
served at the  Corporate  Trust  Office.  The Trustee is hereby  appointed,  and
accepts its appointment as, Paying Agent.

               Section 3.3 PAYING AGENTS. Whenever  the Company  shall appoint a
Paying Agent other than the Trustee with respect to the Convertible  Debentures,
it will  cause  such  Paying  Agent to execute  and  deliver  to the  Trustee an
instrument  in which such Paying Agent shall agree with the Trustee,  subject to
the provisions of this Section:

               (a)  that it will  hold all sums  received  by it as such  Paying
          Agent  for  the  payment  of  the  principal  of or  interest  on  the
          Convertible  Debentures (whether such sums have been paid to it by the
          Company or by any other  obligor  on the  Convertible  Debentures)  in
          trust for the benefit of the Holders of the Convertible  Debentures or

<PAGE>
                                       26

          of the  Trustee,  and upon the  occurrence  of an Event of Default and
          upon the  written  request  of the  Trustee,  pay  over all such  sums
          received by it to the Trustee; and

               (b) that it will give the Trustee  written  notice of any failure
          by the Company (or by any other obligor on the Convertible Debentures)
          to make any payment of the principal of or interest on the Convertible
          Debentures  when the same shall be due and payable.  The Company will,
          on or prior to each due date of the  principal  of or  interest on the
          Convertible  Debentures,  deposit in a timely  manner  with the Paying
          Agent a sum  sufficient to pay such  principal or interest so becoming
          due,  and (unless  such Paying  Agent is the Trustee) the Company will
          promptly notify the Trustee of any failure to take such action.

               If the Company  shall act as its own Paying Agent with respect to
the Convertible Debentures, it will, on or before each due date of the principal
of or interest on the Convertible  Debentures,  set aside, segregate and hold in
trust  for the  benefit  of the  holders  of the  Convertible  Debentures  a sum
sufficient  to pay such  principal or interest so becoming due. The Company will
promptly notify the Trustee of any failure to take such action.

               Section  3.4 WRITTEN  STATEMENT  TO  TRUSTEE.  The  Company  will
deliver to the Trustee, within 120 days after the end of each fiscal year of the
Company ending after the date hereof, a brief certificate (which need not comply
with Section 15.5) from the principal executive, financial or accounting officer
of the Company as to his or her knowledge,  after due inquiry,  of the Company's
compliance  with  all  conditions  and  covenants  under  this  Indenture  (such
compliance to be determined without regard to any period of grace or requirement
of notice  provided  under this  Indenture),  and if the Company shall not be in
compliance,  specifying all such defaults or  non-compliance  and the nature and
status  thereof.  The Company  shall deliver to the Trustee  promptly  after the
Company  becomes  aware of the  occurrence  of any Event of  Default or an event
which,  with notice or the lapse of time or both,  would  constitute an Event of
Default,  an Officers'  Certificate  setting  forth the details of such Event of
Default  or default  and the  action  which the  Company  proposes  to take with
respect thereto.

               Section  3.5   LIMITATION   ON   DIVIDENDS;   TRANSACTIONS   WITH
AFFILIATES. If  any  Convertible  Debentures are outstanding and (i) there shall
have occurred any Event of Default or any event that,  with the giving of notice
or lapse of time or  both,  would  constitute  an  Event  of  Default,  (ii) the
Guarantor  shall be in default with respect to its payment or other  obligations
under the Preferred Securities Guarantee or the Common Securities Guarantee,  or
(iii) the Company  shall have given notice of its election to defer  payments of
interest on Convertible  Debentures by extending the interest  payment period as
provided  in Article XI and such  period,  or any  extension  thereof,  shall be
continuing,  then the Company shall not (a) declare or pay any dividend on, make
any  distribution  with  respect to, or redeem,  purchase or make a  liquidation
payment  with  respect to, any of its  Capital  Stock or (b) make any payment of
interest,  principal or premium,  if any, on or repay,  repurchase or redeem any
debt  securities  issued by the  Company  that rank pari passu with or junior in
interest to the  Convertible  Debentures  or make any  guarantee  payments  with
respect to any guarantee by the Company of the debt securities of any subsidiary
of the Company if such guarantee  ranks pari passu with or junior in interest to
the Convertible  Debentures (other than (i) as a result of a reclassification of
the Capital  Stock of the Company or the exchange or  conversion of one class or
series of the Capital  Stock of the  Company for another  class or series of the

<PAGE>
                                       27

Capital  Stock of the  Company,  (ii) the  purchase of  fractional  interests in
shares  of the  Capital  Stock of the  Company  pursuant  to the  conversion  or
exchange  provisions of such Capital Stock or the security being  converted into
or exchanged for such Capital Stock,  (iii) dividends or distributions in Common
Stock of the Company,  (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 the Trust  Securities  Guarantees,  (vi)
purchases of Common Stock of the Company related to the issuance of Common Stock
of the  Company  or rights  under  any of the  Company's  benefit  plans for its
directors,  officers  or  employees  and (vii)  obligations  under any  dividend
reinvestment and stock purchase plans).

               Section  3.6  COVENANTS  AS TO VIATEL  TRUST.  For so long as the
Trust Securities remain  outstanding,  the Company will (a) maintain 100% direct
or  indirect  ownership  of the Common  Securities  of Viatel  Trust;  provided,
however,  that any permitted  successor of the Company under this  Indenture may
succeed  to the  Company's  ownership  of the  Common  Securities,  (b)  use its
reasonable  efforts to cause  Viatel  Trust (i) to remain a  statutory  business
trust,  except in connection with the distribution of Convertible  Debentures to
the holders of Trust  Securities in liquidation of Viatel Trust,  the redemption
of  all  of  the  Trust   Securities  of  Viatel  Trust,  or  certain   mergers,
consolidations or amalgamations,  each as permitted by the Declaration, and (ii)
to continue to be classified as a grantor trust for United States federal income
tax purposes and (c) to use its reasonable efforts to cause each holder of Trust
Securities  to be  treated as owning an  undivided  beneficial  interest  in the
Convertible Debentures.

               Section 3.7  EXISTENCE.Subject to Article IX, the Company will do
or cause to be done all things  necessary to preserve and keep in full force and
effect its existence,  rights (charter and statutory) and franchises;  provided,
however,  that the Company  shall not be required to preserve  any such right or
franchise  if the  Board of  Directors  shall  determine  that the  preservation
thereof is no longer desirable in the conduct of the business of the Company and
that the loss  thereof is not  disadvantageous  in any  material  respect to the
Holders.

                                   ARTICLE IV

             HOLDERS OF CONVERTIBLE DEBENTURES LISTS AND REPORTS
                         BY THE COMPANY AND THE TRUSTEE

               Section 4.1 COMPANY TO FURNISH  TRUSTEE  INFORMATION  AS TO NAMES
AND ADDRESSES OF HOLDERS OF CONVERTIBLE  DEBENTURES.  The Company  covenants and
agrees that it will  furnish or cause to be  furnished  to the Trustee a list in
such form as the Trustee may  reasonably  require of the names and  addresses of
the Holders of the Convertible Debentures:

               (a) semiannually and not more than 15 days after each record date
          for the  payment  of  interest  on  such  Convertible  Debentures,  as
          hereinabove specified, as of such record date, and

<PAGE>
                                       28

               (b) at such other times as the Trustee may reasonably  request in
          writing,  within 30 days  after  receipt  by the  Company  of any such
          request,  such list to be as of a date not more than 15 days  prior to
          the time such  information is furnished,  provided that if and so long
          as the Trustee shall be the Registrar, such list shall not be required
          to be furnished.

               Section 4.2 PRESERVATION AND DISCLOSURE OF HOLDERS OF CONVERTIBLE
DEBENTURES'  LISTS.  (a) The Trustee shall preserve,  in as current a form as is
reasonably  practicable,  all  information  as to the names and addresses of the
Holders of Convertible Debentures contained in the most recent list furnished to
it as provided in Section 4.1 or  maintained  by the Trustee in its  capacity as
Registrar,  if so acting.  The Trustee may destroy any list  furnished  to it as
provided in Section 4.1 upon receipt of a new list so furnished.

               (b) In case  three  or more  Holders  of  Convertible  Debentures
(hereinafter  referred to as  "applicants")  apply in writing to the Trustee and
furnish to the Trustee  reasonable  proof that each such  applicant  has owned a
Convertible  Debenture for a period of at least six months preceding the date of
such  application,  and such  application  states that the applicants  desire to
communicate  with other  Holders of  Convertible  Debentures  (in which case the
applicants  must  all  hold  Convertible  Debentures)  or  with  Holders  of all
Convertible  Debentures  with respect to their  rights  under this  Indenture or
under such Convertible  Debentures and such application is accompanied by a copy
of the form of proxy or other  communication  which such  applicants  propose to
transmit, then the Trustee shall, within five business days after the receipt of
such application, at is election, either

               (i) afford to such applicants access to the information preserved
          at the  time by the  Trustee  in  accordance  with the  provisions  of
          subsection (a) of this Section, or

               (ii)  inform  such  applicants  as to the  approximate  number of
          Holders of Convertible Debentures or of all Convertible Debentures, as
          the case may be, whose names and addresses  appear in the  information
          preserved  at  the  time  by  the  Trustee,  in  accordance  with  the
          provisions of subsection  (a) of this Section,  as to the  approximate
          cost of mailing to such Holders of Convertible  Debentures the form of
          proxy or other  communication,  if any, specified in such application.
          If the Trustee shall elect not to afford to such applicants  access to
          such information,  the Trustee shall, upon the written request of such
          applicants,  mail to each  Holder  of  Convertible  Debentures  or all
          Holders of Convertible Debentures,  as the case may be, whose name and
          address  appears  in the  information  preserved  at the  time  by the
          Trustee in accordance  with the  provisions of subsection  (a) of this
          Section, a copy of the form of proxy or other  communication  which is
          specified in such request,  with reasonable  promptness after a tender
          to the  Trustee  of the  material  to be  mailed  and of  payment,  or
          provision  for the  payment,  of the  reasonable  expenses of mailing,
          unless  within five days after such tender,  the Trustee shall mail to
          such  applicants and file with the Commission  together with a copy of
          the material to be mailed, a written  statement to the effect that, in
          the opinion of the Trustee, such mailing would be contrary to the best
          interests  of the  Holders of  Convertible  Debentures  or could be in
          violation of applicable law. Such written  statement shall specify the
          basis of such opinion.  If the  Commission,  after  opportunity  for a
          hearing  upon the  objections  specified  in the written  statement so
          filed, shall enter an order refusing to sustain any of such objections

<PAGE>
                                       29

          or if,  after the entry of such order  sustaining  one or more of such
          objections,  the Commission  shall find,  after notice and opportunity
          for hearing,  that all the  objections so sustained have been met, and
          shall enter an order so  declaring,  the Trustee  shall mail copies of
          such  material  to all such  Holders of  Convertible  Debentures  with
          reasonable promptness after the entry of such order and the renewal of
          such tender; otherwise the Trustee shall be relieved of any obligation
          or duty to such applicants respecting their application.

               (c) Each and every Holder of Convertible Debentures, by receiving
and holding the same,  agrees with the Company and the Trustee  that neither the
Company nor the  Trustee  nor any agent of the  Company or the Trustee  shall be
held  accountable by reason of the disclosure of any such  information as to the
names and addresses of the Holders of Convertible  Debentures in accordance with
the provisions of subsection (b) of this Section,  regardless of the source from
which such  information  was  derived,  and that the  Trustee  shall not be held
accountable  by reason of mailing any material  pursuant to a request made under
such subsection (b).

               Section 4.3 REPORTS BY THE COMPANY. The Company covenants: (a) to
file with the Trustee,  within 15 days after the Company is required to file the
same with the Commission,  copies of the annual reports and of the  information,
documents,  and  other  reports  (or  copies  of  such  portions  and any of the
foregoing  as the  Commission  may from  time to time by rules  and  regulations
prescribe)  which  the  Company  may be  required  to file  with the  Commission
pursuant to Section 13 or Section  15(d) of the Exchange  Act, or if the Company
is not required to file information, documents, or reports pursuant to either of
such  Sections,  then to file with the Trustee and the  Commission to the extent
permitted, in accordance with rules and regulations prescribed from time to time
by  the  Commission,   such  of  the  supplementary  and  periodic  information,
documents,  and  reports  which may be  required  pursuant  to Section 13 of the
Exchange  Act,  in  respect of a security  listed and  registered  on a national
securities  exchange  as may be  prescribed  from time to time in such rules and
regulations;

               (b) to file with the Trustee and the  Commission,  in  accordance
with rules and regulations prescribed from time to time by the Commission,  such
additional information, documents, and reports with respect to compliance by the
Company with the conditions and covenants  provided for in this Indenture as may
be required from time to time by such rules and regulations; and

               (c) to transmit by mail to the Holders of Convertible  Debentures
in the manner and to the extent  required  by Sections  6.6 and 15.4,  within 30
days  after  the  filing  thereof  with  the  Trustee,  such  summaries  of  any
information, documents, and reports required to be filed by the Company pursuant
to subsections  (a) and (b) of this Section as may be required to be transmitted
to such  Holders by rules and  regulations  prescribed  from time to time by the
Commission.

<PAGE>
                                       30

                                    ARTICLE V

  REMEDIES OF THE TRUSTEE AND HOLDERS OF CONVERTIBLE DEBENTURES ON EVENT OF
                                     DEFAULT

               Section 5.1 EVENT OF DEFAULT  DEFINED;  ACCELERATION OF MATURITY;
WAIVER OF DEFAULT. "Event of Default" with respect to the Convertible Debentures
wherever used herein,  means any one or more of the following events which shall
have occurred and be  continuing  (whatever the reason for such Event of Default
and whether it shall be voluntary or  involuntary or be effected by operation of
law or pursuant to any judgment, decree or order of any court or any order, rule
or regulation of any administrative or governmental body):

               (a)  default  in the  payment  of  any  interest  (including  any
          Additional Sums and Compound Interest) upon or any additional amounts,
          including any  Liquidated  Damages Amount (as defined in the Preferred
          Securities  Registration Rights Agreement),  payable in respect of any
          Convertible   Debentures   when  it  becomes  due  and  payable,   and
          continuance  of  such  default  for a  period  of 30  days;  provided,
          however,  that a valid extension of an interest  payment period by the
          Company  in  accordance  with the  terms of this  Indenture  shall not
          constitute a default in the payment of interest for this purpose; or

               (b) default in the payment of the  principal  of, or premium,  if
          any, on, any Convertible  Debentures as and when the same shall become
          due and payable whether at maturity,  upon redemption,  by declaration
          or otherwise; or

               (c)  default in the  performance,  or breach of any  covenant  or
          warranty of the Company contained in the Convertible  Debentures or in
          this  Indenture  (other than a covenant or warranty a default in whose
          performance or whose breach is elsewhere in this Section  specifically
          dealt with), and continuance of such default or breach for a period of
          30 days after there has been given,  by registered or certified  mail,
          to the Company by the Trustee or to the Company and the Trustee by the
          Holders  of  at  least  25%  in  aggregate  principal  amount  of  the
          Outstanding  Convertible  Debentures a written notice  specifying such
          default or breach and  requiring  it to be remedied  and stating  that
          such notice is a "Notice of Default" hereunder; or

               (d) the entry by a court having  jurisdiction  in the premises of
          (A) a decree  or order for  relief in  respect  of the  Company  in an
          involuntary case or proceeding  under any applicable  federal or state
          bankruptcy,  insolvency,  reorganization or other similar law or (B) a
          decree or order  adjudging  the  Company a bankrupt or  insolvent,  or
          approving  as  properly  filed  a  petition  seeking   reorganization,
          arrangement, adjustment or composition of or in respect of the Company
          under any applicable  federal or state law, or appointing a custodian,
          receiver, liquidator, assignee, trustee, sequestrator or other similar
          official  of the  Company  or of all or any  substantial  part  of its
          property,  or ordering the winding up or  liquidation  of its affairs,
          and the continuance of any such decree or order for relief or any such
          other  decree  or order  unstayed  and in  effect  for a period  of 90
          consecutive days; or

<PAGE>
                                       31

               (e)  the  commencement  by the  Company  of a  voluntary  case or
          proceeding   under  any  applicable   federal  or  state   bankruptcy,
          insolvency,  reorganization  or other similar law or of any other case
          or  proceeding  to be  adjudicated  a bankrupt  or  insolvent,  or the
          consent  by it to the entry of a decree or order for relief in respect
          of  the  Company  in an  involuntary  case  or  proceeding  under  any
          applicable federal or state bankruptcy, insolvency,  reorganization or
          other  similar  law  or to  the  commencement  of  any  bankruptcy  or
          insolvency  case or  proceeding  against  it, or the filing by it of a
          petition or answer or consent seeking  reorganization  or relief under
          any  applicable  federal  or state  law,  or the  consent by it to the
          filing of such petition or to the appointment of or taking  possession
          by a custodian, receiver, liquidator,  assignee, trustee, sequestrator
          or similar  official of the Company or of all or any substantial  part
          of its property,  or the making by it of an assignment for the benefit
          of  creditors,  or the  admission by it in writing of its inability to
          pay its debts generally as they become due, or the taking of corporate
          action by the Company in furtherance of any such action; or

               (f) failure by the Company to convert Convertible Debentures into
          shares of Common Stock of the Company upon an appropriate  election by
          a holder of Trust Securities or Convertible Debentures to convert such
          Trust Securities or Convertible  Debentures,  as the case may be, into
          such Common Stock (whether or not conversion or exchange is prohibited
          by the subordination provisions set forth herein); or

               (g) the Viatel  Trust  shall have  voluntarily  or  involuntarily
          dissolved, wound up its business or otherwise terminated its existence
          except  in  connection  with  (i)  the   distribution  of  Convertible
          Debentures  to holders of Trust  Securities  in  liquidation  of their
          interest in the Viatel Trust upon the occurrence of a Special Event or
          upon the  occurrence of events as described in Section 3 of Annex I to
          the Declaration,  (ii) the redemption of all of the outstanding  Trust
          Securities  of  the  Viatel  Trust,   (iii)  the   conversion  of  all
          outstanding  Convertible Preferred Securities into Common Stock of the
          Company or (iv) certain mergers, consolidations or amalgamations, each
          as permitted by the Declaration.

               If an Event of Default occurs and is continuing, then and in each
and every such case,  unless the principal of all Convertible  Debentures  shall
have already  become due and  payable,  either the Trustee or the Holders of not
less than 25% in aggregate  principal amount of the Convertible  Debentures then
Outstanding  hereunder,  by notice in writing to the Company (and to the Trustee
if given by such Holders), may declare the entire principal of, plus accrued and
unpaid interest on, all the Convertible  Debentures  (including Additional Sums,
if any, and, to the extent permitted by applicable law,  Compound  Interest,  if
any) and any other amounts  payable  under this  Indenture to be due and payable
immediately,  and upon any such  declaration  the same shall become and shall be
immediately  due and  payable.  These  provisions,  however,  are subject to the
condition  that if at any time after the  principal and other amounts due on the
Convertible  Debentures shall have been so declared due and payable,  and before
any  judgment  or decree  for the  payment  of the  moneys  due shall  have been
obtained or entered as  hereinafter  provided,  the  Company  shall pay or shall
deposit with the Trustee a sum  sufficient  to pay all matured  installments  of
interest,  if any, upon all the Convertible  Debentures and the principal of any
and all  Convertible  Debentures  which shall have become due otherwise  than by
such  acceleration  (with  interest upon such  principal and, to the extent that

<PAGE>
                                       32

payment of such interest is enforceable  under applicable law, Compound Interest
to the date of such  payment)  or  deposit in  Dollars  such  amount as shall be
sufficient  to  cover  reasonable  compensation  to  the  Trustee,  its  agents,
attorneys and counsel and all other expenses and liabilities  incurred,  and all
advances with interest made, by the Trustee, its agents,  attorneys and counsel,
and if any and all defaults under this  Indenture,  other than the nonpayment of
the principal and interest of Convertible Debentures which shall have become due
by such acceleration,  shall have been cured or waived as provided herein,  then
and in every such case the Holders of a majority in aggregate  principal  amount
of the Convertible Debentures then Outstanding, by written notice to the Company
and to the Trustee for the  Convertible  Debentures,  may waive all defaults and
rescind and annul such declaration and its  consequences;  but no such waiver or
rescission and annulment shall extend to or shall affect any subsequent  default
or shall impair any right consequent thereon.

               Section 5.2 COLLECTION OF  INDEBTEDNESS  BY TRUSTEE;  TRUSTEE MAY
PROVE DEBT.The  Company  covenants that (a) in case default shall be made in the
payment of any installment of interest on any of the Convertible Debentures when
such  interest  shall have become due and payable,  and such default  shall have
continued  for a period of 30 days,  or (b) in case default shall be made in the
payment of all or any part of the principal of any of the Convertible Debentures
when the same shall have become due and payable,  whether upon  Maturity or upon
any redemption or by  declaration or otherwise,  then upon demand of the Trustee
for the  Convertible  Debentures,  the  Company  will pay to the Trustee for the
benefit of the Holders of the Convertible  Debentures the whole amount that then
shall have become due and payable on all Convertible Debentures for principal of
or interest,  as the case may be (with interest to the date of such payment upon
the  overdue  principal  and,  to the extent  that  payment of such  interest is
enforceable  under  applicable  law, on overdue  installments of interest at the
same rate as the rate of interest specified in the Convertible Debentures);  and
in addition  thereto,  such further  amount as shall be  sufficient to cover the
costs and expenses of collection,  including reasonable compensation to, and all
expenses and  liabilities  incurred and all advances  with interest made by, the
Trustee and each predecessor Trustee except as a result of its negligence or bad
faith.

               Until such demand is made by the Trustee, the Company may pay the
principal of and interest on the Convertible  Debentures to the persons entitled
thereto,  whether  or not  the  principal  of and  interest  on the  Convertible
Debentures are overdue.

               In case the Company shall fail forthwith to pay such amounts upon
such demand, the Trustee for the Convertible Debentures,  in its own name and as
trustee of an express  trust,  shall be entitled and  empowered to institute any
action or  proceedings at law or in equity for the collection of the sums so due
and unpaid,  and may  prosecute  any such action or  proceedings  to judgment or
final  decree,  and may enforce any such  judgment or final  decree  against the
Company or other  obligor upon such  Convertible  Debentures  and collect in the
manner  provided by law out of the property of the Company or other obligor upon
such Convertible  Debentures,  wherever situated, the moneys adjudged or decreed
to be payable.

               In case  there  shall  be  pending  proceedings  relative  to the
Company or any other  obligor upon the  securities  under Title 11 of the United
States Code or any other applicable  federal or state bankruptcy,  insolvency or
other  similar law, or in case a receiver,  assignee or trustee in bankruptcy or
reorganization,  liquidator,  sequestrator  or similar  official shall have been
appointed  for or taken  possession of the Company or its property or such other

<PAGE>
                                       33

obligor, or in case of any other comparable judicial proceedings relative to the
Company or other obligor under the Convertible Debentures, or to the property of
the Company or such other  obligor,  the  Trustee,  irrespective  of whether the
principal of any Convertible Debentures shall then be due and payable as therein
expressed or by declaration or otherwise and irrespective of whether the Trustee
shall have made any demand pursuant to the provisions of this Section,  shall be
entitled and empowered, by intervention in such proceeding or otherwise:

               (a) to file and prove a claim or claims  for the whole  amount of
          principal and interest owing and unpaid in respect of the  Convertible
          Debentures,  and to file  such  other  papers or  documents  as may be
          necessary  or  advisable  in order to have the  claims of the  Trustee
          (including any claim for reasonable  compensation to, and all expenses
          and  liabilities  incurred and all advances with interest made by, the
          Trustee and each predecessor  Trustee,  and their  respective  agents,
          attorneys and counsel,  except as a result of negligence or bad faith)
          and of the Holders of Convertible  Debentures  allowed in any judicial
          proceedings  relative  to  the  Company  or  other  obligor  upon  all
          Convertible  Debentures,  or to the  property  of the  Company or such
          obligor, and

               (b) to collect and receive any moneys or other  property  payable
          or deliver  able on any such  claims,  and to  distribute  all amounts
          received  with  respect  to the claims of the  Holders of  Convertible
          Debentures  and of the  Trustee  on  their  behalf;  and any  trustee,
          receiver,  liquidator,  custodian or other similar  official is hereby
          authorized  by each of the Holders of  Convertible  Debentures to make
          payments to the Trustee for the  Convertible  Debentures,  and, in the
          event  that such  Trustee  shall  consent  to the  making of  payments
          directly  to the  Holders of  Convertible  Debentures,  to pay to such
          Trustee  such  amounts  as shall  be  sufficient  to cover  reasonable
          compensation  to, and all  expenses and  liabilities  incurred and all
          advances with interest made by, such Trustee, each predecessor Trustee
          and their  respective  agents,  attorneys  and  counsel  and all other
          amounts due to such  Trustee or any  predecessor  Trustee  pursuant to
          Section 6.7, except as a result of Trustee's negligence or bad faith.

               Nothing herein contained shall be deemed to authorize the Trustee
to  authorize  or  consent  to or accept  or adopt on  behalf  of any  Holder of
Convertible  Debentures any plan of reorganization,  arrangement,  adjustment or
composition  affecting  the  Convertible  Debentures or the rights of any Holder
thereof,  or to  authorize  the  Trustee  to vote in respect of the claim of any
Holder of Convertible Debentures in any such proceeding.

               All  rights  of  action  and  of  asserting   claims  under  this
Indenture,  or under any of the Convertible  Debentures,  may be enforced by the

<PAGE>
                                       34

Trustee for the  Convertible  Debentures  without the  possession  of any of the
Convertible  Debentures  or  the  production  thereof  at  any  trial  or  other
proceedings relative thereto,  any such action or proceedings  instituted by the
Trustee shall be brought in its own name as trustee of an express trust, and any
recovery of judgment, subject to the payment of the expenses,  disbursements and
compensation  of the  Trustee,  each  predecessor  Trustee and their  respective
agents and  attorneys,  shall be for the  ratable  benefit of the Holders of the
Convertible Debentures in respect of which such action was taken.

               In any  proceedings  brought by the Trustee  for the  Convertible
Debentures  (and  also  any  proceedings  involving  the  interpretation  of any
provision of this Indenture to which the Trustee shall be a party),  the Trustee
shall be held to  represent  all the Holders of the  Convertible  Debentures  in
respect to which such action was taken,  and it shall not be  necessary  to make
any Holders of such Convertible Debentures parties to any such proceedings.

               Section 5.3 APPLICATION OF PROCEEDS. Any  moneys collected by the
Trustee for the  Convertible  Debentures  pursuant to this Article in respect of
the Convertible  Debentures  shall be applied in the following order at the date
or dates fixed by such Trustee and, in case of the  distribution  of such moneys
on  account  of  principal  or  interest,   upon  presentation  of  the  several
Convertible  Debentures  in  respect of which  moneys  have been  collected  and
stamping  (or  otherwise  noting)  thereon the payment,  or issuing  Convertible
Debentures  in  reduced   principal   amounts  in  exchange  for  the  presented
Convertible  Debentures if only  partially  paid, or upon  surrender  thereof if
fully paid:

               FIRST: To the payment of costs and expenses applicable in respect
          of which moneys have been collected, including reasonable compensation
          to, and all expenses and  liabilities  incurred and all advances  with
          interest made by, the Trustee and each  predecessor  Trustee and their
          respective  agents  and  attorneys  and all other  amounts  due to the
          Trustee or any predecessor  Trustee pursuant to Section 6.7, except as
          a result of Trustee's negligence or bad faith;

               SECOND:  To the  payment of the  amounts  then due and unpaid for
          interest on the Convertible  Debentures for which principal is not yet
          due and payable in respect of which moneys have been  collected,  such
          payments to be made ratably to the persons entitled  thereto,  without
          discrimination  or  preference,  according to the amounts then due and
          payable on such Convertible Debentures for interest;

               THIRD:  To the  payment  of the  amounts  then due and unpaid for
          principal  of and  interest on the  Convertible  Debentures  for which
          principal  is due and  payable in respect  of which  moneys  have been
          collected,  such  payments to be made ratably to the persons  entitled
          thereto,  without  discrimination  or  preference,  according  to  the
          amounts  then  due and  payable  on  such  Convertible  Debentures  of
          principal and interest, respectively; and

               FOURTH: To the payment of the remainder, if any, to the Company.

               Section   5.4   RESTORATION   OF   RIGHTS   ON   ABANDONMENT   OF
PROCEEDINGS. In  case the Trustee for the Convertible  Debentures  or any Holder
shall  have  proceeded  to  enforce  any right  under  this  Indenture  and such
proceedings  shall have been  discontinued or abandoned for any reason, or shall
have been  determined  adversely to the Trustee or to such  Holder,  then and in
every  such case,  subject  to the  determination  in any such  proceeding,  the
Company,  the Trustee and the Holders  shall be restored  respectively  to their
former positions and rights  hereunder,  and all rights,  remedies and powers of
the  Company,  the  Trustee  and the  Holders of  Convertible  Debentures  shall
continue as though no such proceedings had been taken.

               Section  5.5  LIMITATIONS  ON SUITS  BY  HOLDERS  OF  CONVERTIBLE
DEBENTURES.

               No Holder of any  Convertible  Debenture  shall have any right by
virtue or by availing of any provision of this Indenture to institute any action
or proceeding  at law or in equity or in  bankruptcy or otherwise  upon or under

<PAGE>
                                       35

with respect to this Indenture,  or for the appointment of a trustee,  receiver,
liquidator,  custodian  or  other  similar  official  or for  any  other  remedy
hereunder, unless such Holder previously shall have given to the Trustee written
notice of any Event of Default and of the continuance  thereof,  as hereinbefore
provided,  and, if the Viatel  Trust is not the sole  Holder of the  Convertible
Debentures,  unless also the Holders of not less than 25% in aggregate principal
amount of the Convertible  Debentures then  Outstanding  shall have made written
request upon the Trustee to institute such action or proceedings in its own name
as trustee  hereunder  and shall have  offered to the  Trustee  such  reasonable
indemnity, as it may require,  against the costs, expenses and liabilities to be
incurred  therein or thereby  and the  Trustee  for 60 days after its receipt of
such notice,  request and offer of indemnity  shall have failed to institute any
such  action or  proceeding  and no  direction  inconsistent  with such  written
request  shall  have been  given to the  Trustee  during  such 60 day  period by
Holders of a majority in principal  amount of the  Convertible  Debentures  then
Outstanding; it being understood and intended, and being expressly covenanted by
the taker and Holder of every  Convertible  Debenture with every other taker and
Holder of a Convertible  Debenture and the Trustee,  that no one or more Holders
of Convertible Debentures shall have any right in any manner whatever, by virtue
or by  availing  of any  provision  of this  Indenture  to  affect,  disturb  or
prejudice the rights of any other such Holder of Convertible  Debentures,  or to
obtain or seek to obtain priority over or preference to any other such Holder or
to enforce any right under this Indenture,  except in the manner herein provided
and for the equal,  ratable  and common  benefit of all  Holders of  Convertible
Debentures.

               Section  5.6  UNCONDITIONAL   RIGHT  OF  HOLDERS  OF  CONVERTIBLE
DEBENTURES TO INSTITUTE  CERTAIN  SUITS.  Notwithstanding  any provision in this
Indenture  and any  provision  of any  Convertible  Debenture,  the right of any
Holder of any  Convertible  Debenture to receive payment of the principal of and
(subject to Section 2.9 and Article XI) interest on such  Convertible  Debenture
at the respective rates, in the respective amount on or after the respective due
dates  expressed in such  Convertible  Debenture,  and to institute suit for the
enforcement of any such payment on or after such respective dates,  shall not be
impaired or affected without the consent of such Holder.

               Section 5.7 POWERS AND REMEDIES CUMULATIVE; DELAY OR OMISSION NOT
WAIVER OF DEFAULT.  Except as provided in Section 2.11 and Section 5.5, no right
or remedy herein  conferred upon or reserved to the Trustee or to the Holders of
Convertible Debentures is intended to be exclusive of any other right or remedy,
and every right and remedy shall, to the extent  permitted by law, be cumulative
and in  addition  to every  other  right and remedy  given  hereunder  or now or
hereafter existing at law or in equity or otherwise. The assertion or employment
of any right or remedy hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other appropriate right or remedy.

               No  delay  or  omission  of  the  Trustee  or of  any  Holder  of
Convertible Debentures to exercise any right or power accruing upon any Event of
Default  occurring and  continuing  as aforesaid  shall impair any such right or
power or shall be  construed  to be a waiver of any such  Event of Default or an
acquiescence  therein; and, subject to Section 5.5, every power and remedy given
by this  Indenture  or by law to the  Trustee or to the  Holders of  Convertible
Debentures  may be exercised  from time to time, and as often as shall be deemed
expedient, by the Trustee or the Holders of Convertible Debentures.

<PAGE>
                                       36

               Section 5.8  CONTROL BY HOLDERS OF  CONVERTIBLE  DEBENTURES.  The
Holders  of  a  majority  in  aggregate  principal  amount  of  the  Convertible
Debentures  at the time  Outstanding  shall  have the right to direct  the time,
method and place of conducting any  proceeding  for any remedy  available to the
Trustee,  or exercising any trust or power conferred on the Trustee with respect
to the Convertible  Debentures by this  Indenture;  provided that such direction
shall  not be in  conflict  with  any  rule  of law or the  provisions  of  this
Indenture;  and provided  further that the  Trustee,  being  advised by counsel,
shall  have the right to decline to follow  any such  direction  if the  Trustee
shall  determine  that the action or  proceedings  so directed would involve the
Trustee in personal liability or if the Trustee in good faith shall so determine
that the actions or forbearance specified in or pursuant to such direction would
be unduly  prejudicial to the interest of Holders of the Convertible  Debentures
not joining in the giving of said direction.

               Section 5.9 WAIVER OF PAST DEFAULTS. The Holders of not less than
a majority in aggregate  principal  amount of the Convertible  Debentures at the
time Outstanding may on behalf of the Holders of all the Convertible  Debentures
waive any past default hereunder or its consequences, except a default:

               (a) in the payment of the  principal of (or  premium,  if any) or
          any interest on any  Convertible  Debenture as and when the same shall
          become due by the terms of  Convertible  Debentures  otherwise than by
          acceleration  (unless such default has been cured and sums  sufficient
          to pay all matured  installments  of interest  and  principal  and any
          premium  has been  deposited  with the  Trustee  (in  accordance  with
          Section 5.1)), or

               (b) in respect of a covenant  or  provision  hereof  which  under
          Article VIII cannot be modified or amended  without the consent of the
          Holder of each Outstanding Convertible Debenture affected;

provided,  however,  that if the  Convertible  Debentures are held by the Viatel
Trust or the Institutional Trustee of such Trust, such waiver or modification to
such waiver shall not be effective  until the holders of a majority in aggregate
liquidation  amount of Trust Securities of the Viatel Trust shall have consented
to such waiver or modification  to such waiver;  provided  further,  that if the
consent of the Holder of each  Outstanding  Convertible  Debenture  is required,
such waiver shall not be effective until each holder of the Trust  Securities of
the Viatel Trust shall have consented to such waiver.

               Upon any such waiver,  such  default  shall cease to exist and be
deemed to have been  cured and not to have  occurred,  and any Event of  Default
arising  therefrom  shall be deemed to have been cured and not to have  occurred
for every  purpose of this  Indenture;  but no such waiver  shall  extend to any
subsequent or other  default or Event of Default or impair any right  consequent
thereon.

               Section 5.10 RIGHT OF COURT TO REQUIRE  FILING OF  UNDERTAKING TO
PAY  COSTS. All  parties  to  this  Indenture  agree, and  each  Holder  of  any
Convertible  Debenture,  by his  acceptance  thereof,  shall be  deemed  to have
agreed,  that  any  court  may in its  discretion  require,  in any suit for the
enforcement  of any right or remedy under this  Indenture or in any suit against
the Trustee  for any action  taken,  suffered  or omitted by it as Trustee,  the
filing by any party  litigant in such suit of an undertaking to pay the costs of

<PAGE>
                                       37

such suit, and that such court may in its discretion  assess  reasonable  costs,
including reasonable attorneys' fees and expenses, against any party litigant in
such  suit,  having  due  regard to the  merits  and good faith of the claims or
defenses made by such party  litigant;  but the provisions of this Section shall
not apply to any suit  instituted by the Trustee,  to any suit instituted by any
Holder of Convertible  Debentures or group of Holders of Convertible  Debentures
holding in the aggregate  more than 10% in principal  amount of the  Outstanding
Convertible  Debentures,  or to any suit  instituted by a Holder of  Convertible
Debentures for the enforcement of the payment of the principal of or interest on
any Convertible Debenture on or after the due date expressed in such Convertible
Debenture or any date fixed for redemption.

               Section 5.11 SUITS FOR ENFORCEMENT.

               In case an Event of Default has occurred, has not been waived and
is continuing,  the Trustee may in its discretion proceed to protect and enforce
the  rights  vested  in  it by  this  Indenture  by  such  appropriate  judicial
proceedings  as the Trustee shall deem most effectual to protect and enforce any
of such  rights,  either  at law or in  equity or in  bankruptcy  or  otherwise,
whether for the specific  enforcement of any covenant or agreement  contained in
this  Indenture or in aid of the exercise of any power granted in this Indenture
or to enforce any other legal or  equitable  right vested in the Trustee by this
Indenture or by law.

                                   ARTICLE VI

                             CONCERNING THE TRUSTEE

               Section 6.1 DUTIES OF THE TRUSTEE. (a) If an Event of Default has
occurred and is  continuing  with  respect to the  Convertible  Debentures,  the
Trustee shall  exercise the rights and powers vested in it by this Indenture and
use the same degree of care and skill in its exercise as a prudent  person would
exercise  or use  under  the  circumstances  in the  conduct  of his or her  own
affairs.

               (b) Except  during the  continuance  of an Event of Default  with
respect to the Convertible Debentures:

               (i)  the  Trustee   need  perform  only  those  duties  that  are
          specifically  set forth in this Indenture and no other duties shall be
          inferred or implied against the Trustee; and

               (ii) in the  absence of bad faith on its part,  the  Trustee  may
          conclusively  rely,  as  to  the  truth  of  the  statements  and  the
          correctness of the opinions  expressed  therein,  upon certificates or
          opinions  furnished to the Trustee and conforming on their face to the
          requirements  of this  Indenture.  However,  in the  case of any  such
          certificates   or  opinions   which  by  any   provision   hereof  are
          specifically  required to be  furnished  to the  Trustee,  the Trustee
          shall examine the  certificates  and opinions to determine  whether or
          not they conform on their face to the requirements of this Indenture.

               (c) The Trustee may not be relieved  from  liability  for its own
negligent failure to act or its own willful misconduct, except that:

<PAGE>
                                       38

               (i) this paragraph (c) does not limit the effect of paragraph (b)
          of this Section 6.1;

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

               (iii) the Trustee  shall not be liable with respect to any action
          it takes or omits to take in good faith in accordance with a direction
          received by it pursuant to Section 5.8.

               (d) Every  provision of this Indenture that in any way relates to
the Trustee is subject to paragraphs (a), (b), (c) and (e) of this Section 6.1.

               (e) No provision of this  Indenture  shall require the Trustee to
expend or risk its own funds or otherwise  incur any financial  liability in the
performance  of any of its duties  hereunder,  or in the  exercise of any of its
rights or powers  hereunder,  if it shall have reasonable  grounds for believing
that the  repayment  of such funds or adequate  indemnity  against  such risk or
liability is not reasonably assured to it.

               (f) Money  held by the  Trustee  in trust  hereunder  need not be
segregated  from other funds  except to the extent  required by law. The Trustee
shall be under no liability  for interest on any money  received by it hereunder
except as otherwise agreed in writing with the Company.

               Section  6.2 RIGHTS OF TRUSTEE. Subject  to  Section  6.1 and the
provisions of the Trust Indenture Act:

               (a) The Trustee may conclusively rely on any document (whether in
its  original or facsimile  form)  believed by it to be genuine and to have been
signed or presented by the proper person.  The Trustee need not  investigate any
fact or matter stated in the document,  but the Trustee, in its discretion,  may
make such further inquiry or investigation  into such facts or matters as it may
see fit,  and, if the Trustee  shall  determine to make such further  inquiry or
investigation,  it shall be entitled to examine the books,  records and premises
of the  Company,  personally  or by agent or  attorney  at the sole  cost of the
Company.

               (b) Before the  Trustee  acts or  refrains  from  acting,  it may
require an Officers' Certificate or an Opinion of Counsel. The Trustee shall not
be liable for any action it takes or omits to take in good faith in  reliance on
such Officers' Certificate or Opinion of Counsel.

               (c)  Subject to the  provisions  of Section  6.1(c),  the Trustee
shall not be liable for any action it takes or omits to take in good faith which
it believes to be authorized or within its rights or powers.

               (d) The Trustee may consult with counsel of its selection and the
advice of such  counsel or any  Opinion of  Counsel  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 reliance  thereon in  accordance  with such
advice or Opinion of Counsel.

<PAGE>
                                       39

               (e) The Trustee  shall be under no  obligation to exercise any of
the rights or powers vested in it by this  Indenture at the request or direction
of any of the Holders pursuant to this Indenture, unless such Holders shall have
offered to the  Trustee  reasonable  security  or  indemnity  against the costs,
expenses and  liabilities  which might be incurred by it in compliance with such
request or direction.

               (f) The Trustee may execute any of the trusts or powers hereunder
or perform  any duties  hereunder  either  directly  or by or through  agents or
attorneys  and the  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.

               (g) The rights, privileges,  protections, immunities and benefits
given  to  the  Trustee,   including,   without  limitation,  its  right  to  be
indemnified,  are extended to, and shall be enforceable  by, the Trustee in each
of its  capacities  hereunder,  and to each agent,  custodian  and other  Person
employed by the Trustee with due care to act hereunder.

               Section  6.3  INDIVIDUAL  RIGHTS OF  TRUSTEE. The  Trustee in its
individual or any other  capacity may become the owner or pledgee of Convertible
Debentures and may otherwise  deal with the Company or its  affiliates  with the
same rights it would have if it were not Trustee. Any Paying Agent, Registrar or
co- Registrar may do the same with like rights. However, the Trustee must comply
with Sections 6.10 and 6.11.

               Section   6.4   TRUSTEE'S   DISCLAIMER. The  Trustee   makes   no
representation  as to  the  validity  or  adequacy  of  this  Indenture  or  the
Convertible Debentures, it shall not be accountable for the Company's use of the
proceeds from the  Convertible  Debentures,  it shall not be responsible for any
statement in the registration statement for the Convertible Debentures under the
Securities Act or in the Indenture or the Convertible Debentures (other than its
certificate of authentication).

               Section  6.5  NOTICE  OF  DEFAULTS. If a  default  occurs  and is
continuing with respect to any Convertible  Debentures and if it is known to the
Trustee  through oral or written  notice to a Responsible  Officer,  the Trustee
shall give to each Holder of Convertible Debentures notice of the default within
90 days after such default occurs.  Except in the case of a default described in
Section  5.1(a) or (b),  the Trustee may withhold the notice if and so long as a
committee of its Responsible  Officers in good faith determines that withholding
the notice is in the interest of Holders of Convertible Debentures.

               Section  6.6 REPORTS BY TRUSTEE TO  HOLDERS. Within 60 days after
each May 15, beginning with the May 15 following the date of this Indenture, the
Trustee  shall  mail to each  Holder of  Convertible  Debentures  and each other
person  specified  in TIA Section  313(c) a brief report dated as of such May 15
that  complies  with TIA  Section  313(a) to the extent  required  thereby.  The
Trustee also shall comply with TIA Section 313(b).

               A copy of each  report at the time of its  mailing  to Holders of
Convertible  Debentures  shall be filed with the Commission and each  securities
exchange on which the  Convertible  Debentures  are listed.  The Company  agrees

<PAGE>
                                       40

promptly to notify the Trustee whenever the Convertible Debentures become listed
on any securities exchange and of any delisting thereof.

               Section 6.7 COMPENSATION AND INDEMNITY. The Company agrees:

               (a) to pay to the  Trustee  from  time to time  in  Dollars  such
compensation  as shall be agreed  to in  writing  between  the  Company  and the
Trustee for all services rendered by it hereunder (which  compensation shall not
be limited by any provision of law in regard to the compensation of a trustee of
an express trust);

               (b) to reimburse the Trustee upon its request for all  reasonable
expenses,  disbursements  and advances with interest thereon incurred or made by
the Trustee in accordance  with any provision of this  Indenture  (including the
reasonable  compensation  and the expenses,  advances with interest  thereon and
disbursements of its agents and counsel), except to the extent any such expense,
disbursement or advance may be attributable to its negligence or bad faith; and

               (c) to fully indemnify the Trustee and any predecessor Trustee in
Dollars for, and to hold it harmless against, any loss, liability, claim, damage
or expense arising out of or in connection with the acceptance or administration
of this trust or the  performance of its duties  hereunder,  including the costs
and expenses of defending  itself  against any claim or liability in  connection
with the  exercise  or  performance  of any of its  powers or  duties  hereunder
(including the reasonable compensation and the expenses,  advances with interest
thereon and disbursements of its agents and counsel),  except to the extent that
any such loss,  liability,  claim,  damage or expense may be attributable to its
negligence or bad faith.

               As security for the performance of the obligations of the Company
in this  Section  6.7,  the Trustee  shall have a lien prior to the  Convertible
Debentures  on all money or property  held or collected  by the Trustee,  except
that held in trust to pay the  principal of or interest,  if any, on  particular
Convertible Debentures.

               "Trustee"   for   purposes  of  this  Section  6.7  includes  any
predecessor  Trustee,  provided that the  negligence or bad faith of any Trustee
shall not be attributable to any other Trustee.

               The Company's  payment  obligations  pursuant to this Section 6.7
shall survive the discharge of this Indenture.  When the Trustee incurs expenses
after the occurrence of a default specified in Sections 5.1(d) and 5.1(e),  such
expenses are intended to constitute expenses of administration  under bankruptcy
law.

               Section 6.8 REPLACEMENT OF TRUSTEE. The Trustee may resign at any
time with  respect  to  Convertible  Debentures  by so  notifying  the  Company;
provided,  however,  no such  resignation  shall be effective  until a successor
Trustee has accepted its  appointment  pursuant to this Section 6.8. The Holders
of a majority  in  aggregate  principal  amount of the  Outstanding  Convertible
Debentures  may remove the Trustee at the time  outstanding  by so notifying the
Trustee and the Company. The Company shall remove the Trustee if:

<PAGE>
                                       41

               (1) the Trustee fails to comply with Section 6.10;

               (2) the Trustee is adjudged bankrupt or insolvent;

               (3) a receiver or public  officer  takes charge of the Trustee or
          its property; or

               (4) the Trustee otherwise becomes incapable of acting.

               If the  Trustee  resigns or is removed or if a vacancy  exists in
the  office  of  Trustee  for  any  reason,  with  respect  to  the  Convertible
Debentures,  the Company shall promptly  appoint,  by resolution of its Board of
Directors, a successor Trustee with respect to the Convertible Debentures.

               A successor  Trustee  shall  deliver a written  acceptance of its
appointment  to  the  retiring  Trustee  and  to  the  Company.   Thereupon  the
resignation or removal of the retiring Trustee shall become  effective,  and the
successor  Trustee  shall have all the rights,  powers and duties of the Trustee
under this Indenture with respect to the Convertible  Debentures.  The successor
Trustee  shall  mail a  notice  of its  succession  to  Holders  of  Convertible
Debentures  so  affected.  The  retiring  Trustee  shall  promptly  transfer all
property  held by it as Trustee to the  successor  Trustee,  subject to the lien
provided for in Section 6.7.

               If a successor  Trustee does not take office within 30 days after
the retiring Trustee resigns or is removed, the retiring Trustee, the Company or
the  Holders of a majority  in  aggregate  principal  amount of the  Convertible
Debentures  at the time  Outstanding  may petition at the expense of the Company
any court of competent jurisdiction for the appointment of a successor Trustee.

               If the Trustee fails to comply with Section  6.10,  any Holder of
Convertible  Debentures may petition any court of competent jurisdiction for the
removal of the Trustee and the appointment of a successor Trustee.

<PAGE>
                                       42

               Section  6.9  SUCCESSOR   TRUSTEE  BY  MERGER.   If  the  Trustee
consolidates  with,  merges or converts into, or transfers all or  substantially
all its  corporate  trust  business  or  assets  to,  another  corporation,  the
resulting,  surviving or transferee corporation without any further act shall be
the successor Trustee.

               Section 6.10 ELIGIBILITY;  DISQUALIFICATION. The Trustee shall at
all  times  satisfy  the  requirements  of TIA  Section  310(a)(1)  and  Section
310(a)(5).  The  Trustee  shall have  combined  capital  and surplus of at least
$50,000,000  as  set  forth  in its  most  recent  published  annual  report  of
condition. The Trustee shall comply with TIA Section 310(b).

               Section 6.11  PREFERENTIAL  COLLECTION OF CLAIMS AGAINST COMPANY.
The Trustee  shall  comply  with TIA  Section  311(a),  excluding  any  creditor
relationship  listed in TIA Section  311(b).  A Trustee who has resigned or been
removed shall be subject to TIA Section 311(a) to the extent indicated therein.

               Section 6.12  TRUSTEE'S  APPLICATION  FOR  INSTRUCTIONS  FROM THE
COMPANY.

               Any application by the Trustee for written  instructions from the
Company  may,  at the option of the  Trustee,  set forth in  writing  any action
proposed to be taken or omitted by the Trustee under this Indenture and the date
on and/or  after  which such  action  shall be taken or such  omission  shall be
effective.  The Trustee shall not be liable for any action taken by, or omission
of, the Trustee in accordance with a proposal included in such application on or
after the date specified in such application  (which date shall not be less than
five Business Days after the date any officer of the Company  actually  receives
such application,  unless an such officer shall have consented in writing to any
earlier date) unless prior to taking any such action (or the  effective  date in
the case of an omission),  the Trustee shall have received written  instructions
in response to such application specifying the action to be taken or omitted.

                                   ARTICLE VII

               CONCERNING THE HOLDERS OF CONVERTIBLE DEBENTURES

               Section 7.1  EVIDENCE OF ACTION  TAKEN BY HOLDERS OF  CONVERTIBLE
DEBENTURES.(a) Any request, demand,  authorization,  direction, notice, consent,
waiver or other  action  provided  in this  Indenture  to be given or taken by a
specified   percentage  in  principal  amount  of  the  Holders  of  Convertible
Debentures  may be  embodied  in and  evidenced  by one or more  instruments  or
substantially  similar tenor signed by such  specified  percentage of Holders of
Convertible  Debentures  in person or by agent duly  appointed in writing;  and,
except  as  herein  otherwise  expressly  provided,  such  action  shall  become
effective  when such  instrument  or  instruments  are delivered to the Trustee.
Proof of execution of any  instrument or of a writing  appointing any such agent
shall be sufficient  for any purpose of this  Indenture and (subject to Sections
6.1 and 6.2) conclusive in favor of the Trustee and the Company,  if made in the
manner provided in this Article.

               (b)  The  ownership  of  such  Convertible  Debentures  shall  be
provided by the Security Register.

<PAGE>
                                       43

               Section  7.2  PROOF  OF  EXECUTION  OF  INSTRUMENTS.  Subject  to
Sections 6.1 and 6.2, the execution of any instrument by a Holder of Convertible
Debentures  or his  agent  or  proxy  may be  proved  in  accordance  with  such
reasonable  rules and regulations as may be prescribed by the Trustee or in such
manner as shall be satisfactory to the Trustee.

               Section  7.3  HOLDERS TO BE TREATED AS  OWNERS. The  Company, the
Trustee  and any  agent of the  Company  or the  Trustee  may deem and treat the
person in whose name any  Convertible  Debenture  shall be  registered  upon the
Security Register as the absolute owner of such Convertible  Debenture  (whether
or not such  Convertible  Debenture  shall be overdue  and  notwithstanding  any
notification of ownership or other writing thereon) for the purpose of receiving
payment  of or on account  of the  principal  of and  (subject  to Section  2.9)
interest on such Convertible  Debenture and for all other purposes;  and neither
the Company nor the Trustee nor any agent of the Company or the Trustee shall be
affected by any notice to the contrary.

               Section 7.4  CONVERTIBLE  DEBENTURES  OWNED BY COMPANY DEEMED NOT
OUTSTANDING. In determining  whether  the  Holders  of the  requisite  aggregate
principal  amount of Outstanding  Convertible  Debentures  have concurred in any
direction, consent or waiver under this Indenture,  Convertible Debentures which
are owned by the Company or any other obligor on the Convertible Debentures with
respect to which such  determination  is being made or by any person directly or
indirectly  controlling  or  controlled  by or under  direct or indirect  common
control with the Company or any other obligor on the Convertible Debentures with
respect to which such  determination  is being  made  shall be  disregarded  and
deemed not to be Outstanding for the purpose of any such  determination,  except
that for the purpose of  determining  whether the Trustee  shall be protected in
relying on any such  direction,  consent or waiver only  Convertible  Debentures
which a Responsible  Officer of the Trustee actually knows are so owned shall be
so disregarded.  Convertible Debentures so owned which have been pledged in good
faith  may  be  regarded  as  Outstanding  if  the  pledgee  establishes  to the
satisfaction  of the Trustee the pledgee's  right so to act with respect to such
Convertible  Debentures  and that the  pledgee  is not the  Company or any other
obligor upon the  Convertible  Debentures  or any person  directly or indirectly
controlling or controlled by or under direct or indirect common control with the
Company or any other obligor on the Convertible Debentures.

               Section 7.5 RIGHT OF REVOCATION OF ACTION TAKEN.

               At any time  prior  to (but  not  after)  the  evidencing  to the
Trustee,  as provided in Section 7.1, of the taking of any action by the Holders
of the percentage in aggregate  principal amount of the Convertible  Debentures,
as the case may be,  specified in this Indenture in connection with such action,
any Holder of a Convertible Debenture the serial number of which is shown by the
evidence to be included among the serial numbers of the  Convertible  Debentures
the Holders of which have consented to such action may, by filing written notice
at the  Corporate  Trust  Office and upon proof of holding as  provided  in this
Article,  revoke  such  action so far as concerns  such  Convertible  Debenture.
Except as  aforesaid  any such  action  taken by the  Holder of any  Convertible
Debentures  shall be conclusive and binding upon such Holder and upon all future
Holders  and  owners  of  such  Convertible  Debenture  and of  any  Convertible
Debentures issued in exchange or substitution therefor,  irrespective of whether
or not any  notation  in  regard  thereto  is made  upon  any  such  Convertible
Debenture.  Any action  taken by the  Holders  of the  percentage  in  aggregate

<PAGE>
                                       44

principal amount of the Convertible Debentures, as the case may be, specified in
this Indenture in connection with such action shall be conclusively binding upon
the  Company,  the  Trustee and the  Holders of all the  Convertible  Debentures
affected by such action.

                                  ARTICLE VIII

                             SUPPLEMENTAL INDENTURES

               Section 8.1 SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF HOLDERS OF
CONVERTIBLE  DEBENTURES.  The Company,  when  authorized  by a resolution of its
Board of Directors, and the Trustee for the Convertible Debentures may from time
to time and at any time  enter  into an  indenture  or  indentures  supplemental
hereto (which shall conform to the  provisions of the Trust  Indenture Act as in
force  at the  date of the  execution  thereof),  in form  satisfactory  to such
Trustee, for one or more of the following purposes:

               (a) to  convey,  transfer,  assign,  mortgage  or  pledge  to the
          Trustee as security  for the  Convertible  Debentures  any property or
          assets;

               (b) to evidence  the  succession  of another  corporation  to the
          Company,  or  successive  successions,   and  the  assumption  by  the
          successor corporation of the covenants,  agreements and obligations of
          the Company pursuant to Article IX;

               (c)  to  add  to  the  covenants  of  the  Company  such  further
          covenants,  restrictions,  conditions or provisions for the protection
          of the Holders of Convertible Debentures;

               (d) to  cure  any  ambiguity  or to  correct  or  supplement  any
          provision contained herein or in any supplemental  indenture which may
          be defective or inconsistent with any other provision contained herein
          or in any supplemental  indenture; or to make such other provisions in
          regard to matters or questions  arising under this  Indenture or under
          any  supplemental  indenture  as  the  Board  of  Directors  may  deem
          necessary or desirable  and which shall not  materially  and adversely
          affect the interests of the Holders of the Convertible Debentures; or

               (e) to evidence  and provide for the  acceptance  of  appointment
          hereunder  by a  successor  Trustee  with  respect to the  Convertible
          Debentures.

               The Trustee is hereby  authorized to join with the Company in the
execution of any such supplemental  indenture,  to make any further  appropriate
agreements  and  stipulations  which may be therein  contained and to accept the
conveyance, transfer, assignment, mortgage or pledge of any property thereunder,
but the  Trustee  shall not be  obligated  to enter  into any such  supplemental
indenture  which affects the Trustee's  own rights,  duties or immunities  under
this Indenture or otherwise.

               Any supplemental  indenture  authorized by the provisions of this
Section  may be  executed  without  the  consent  of the  Holders  of any of the
Convertible  Debentures  at the  time  Outstanding,  notwithstanding  any of the
provisions of Section 8.2.

<PAGE>
                                       45

               Section 8.2  SUPPLEMENTAL  INDENTURES  WITH CONSENT OF HOLDERS OF
CONVERTIBLE  DEBENTURES. With the consent (evidenced as provided in Article VII)
of the Holders of not less than a majority in aggregate  principal amount of the
Convertible  Debentures  at the time  Outstanding  (voting  as one  class),  the
Company,  when  authorized by a resolution  of its Board of  Directors,  and the
Trustee  may,  from time to time and at any time,  enter  into an  indenture  or
indentures  supplemental  hereto (which shall  conform to the  provisions of the
Trust  Indenture  Act as in  force  at the date of  execution  thereof)  for the
purpose of adding any provisions to or changing in any manner or eliminating any
of the  provisions  of this  Indenture  or of any  supplemental  indenture or of
modifying in any manner the rights of the Holders of the Convertible Debentures;
provided,  however, that no such supplemental  indenture shall (a) except to the
extent  permitted by Article XI, extend the Stated  Maturity of any  Convertible
Debenture,  or reduce the principal  amount thereof or any premium  thereon,  or
reduce the rate or extend the time of payment of interest thereon, or reduce any
amount payable on redemption  thereof, or make the principal thereof or interest
thereon  payable  in any  coin or  currency  other  than  that  provided  in the
Convertible  Debentures or in accordance  with the terms  thereof,  or impair or
affect the right of any Holder of  Convertible  Debentures to institute suit for
payment  thereof,   or  adversely  affect  the  right  to  convert   Convertible
Debentures,  or modify the  subordination  provisions  of this  Indenture in any
manner adverse to the Holders of Convertible  Debentures  without the consent of
the  Holders  of each  Convertible  Debenture  so  affected,  or (b)  reduce the
aforesaid  percentage of Convertible  Debentures,  the consent of the Holders of
which is required for any such  supplemental  indenture,  without the consent of
the Holders of each Convertible Debenture so affected.

               Upon  the  request  of the  Company,  accompanied  by a copy of a
resolution  of the Board of Directors  certified  by the  secretary or assistant
secretary of the Company  authorizing  the  execution  of any such  supplemental
indenture,  and upon the filing  with the  Trustee of evidence of the consent of
Holders of  Convertible  Debentures  as aforesaid and other  documents,  if any,
required  by  Section  7.1,  the  Trustee  shall  join with the  Company  in the
execution  of such  supplemental  indenture  or  otherwise,  in which  case such
Trustee may in its  discretion,  but shall not be obligated  to, enter into such
supplemental  indenture  which  affects  the  Trustee's  own  rights,  duties or
immunities under this Indenture or otherwise.

               It shall not be  necessary  for the  consent  of the  Holders  of
Convertible  Debentures under this Section to approve the particular form of any
proposed  supplemental  indenture,  but it shall be  sufficient  if such consent
shall approve the substance thereof.

               Promptly  after the  execution  by the Company and the Trustee of
any  supplemental  indenture  pursuant to the  provisions of this  Section,  the
Company shall give notice thereof to the Holders of then Outstanding Convertible
Debentures,  by mailing a notice thereof by first-class  mail to such Holders at
their addresses as they shall appear on the Security Register,  and in each case
such notice shall set forth in general terms the substance of such  supplemental
indenture.  Any  failure  of the  Company  to give such  notice,  or any  defect
therein,  shall not,  however,  in any way impair or affect the  validity of any
such supplemental indenture.

               Section 8.3 EFFECT OF SUPPLEMENTAL INDENTURE. Every  supplemental
indenture   executed  pursuant  to  this  Article  VIII  shall  conform  to  the
requirements of the Trust Indenture Act. Upon the execution of any  supplemental
indenture  pursuant to the provisions  hereof,  this  Indenture  shall be and be

<PAGE>
                                       46

deemed to be modified and amended in  accordance  therewith  and the  respective
rights,  limitations of rights,  obligations,  duties and immunities  under this
Indenture of the Trustee, the Company and the Holders of Convertible  Debentures
shall thereafter be determined,  exercised and enforced hereunder subject in all
respects to such modifications and amendments,  and all the terms and conditions
of any such  supplemental  indenture  shall be and be deemed to be a part of the
terms and conditions of this Indenture for any and all purposes.

               Section  8.4  DOCUMENTS  TO BE GIVEN  TO  TRUSTEE.  The  Trustee,
subject to the  provisions  of Section 6.1 and 6.2,  shall  receive an Officers'
Certificate  and  an  Opinion  of  Counsel  as  conclusive   evidence  that  any
supplemental  indenture executed pursuant to this Article VIII complies with the
applicable provisions of this Indenture.

               Section 8.5  NOTATION  ON  CONVERTIBLE  DEBENTURES  IN RESPECT OF
SUPPLEMENTAL  INDENTURES.  Convertible  Debentures  authenticated  and delivered
after the execution of any supplemental  indenture pursuant to the provisions of
this Article  VIII may bear,  upon the  direction of the Company,  a notation in
form satisfactory to the Trustee for the Convertible Debentures as to any matter
provided for by such supplemental indenture. If the Company or the Trustee shall
so  determine,  new  Convertible  Debentures  so modified as to conform,  in the
opinion of the Trustee and the Company,  to any  modification  of this Indenture
contained  in any such  supplemental  indenture  may be prepared by the Company,
authenticated  by the Trustee and  delivered  in  exchange  for the  Convertible
Debentures then Outstanding.

                                   ARTICLE IX

                  CONSOLIDATION, MERGER, SALE OR CONVEYANCE

               Section 9.1 COMPANY MAY CONSOLIDATE,  ETC., ON CERTAIN TERMS. The
Company may sell,  transfer,  lease or otherwise convey all or substantially all
of its assets on a  consolidated  basis to any Person,  or  consolidate or merge
with or into,  any other Person,  provided that in any such case, (a) either (i)
the Company shall be the continuing  corporation,  or (ii) if the Company is not
the continuing  corporation,  the successor corporation or Person which acquires
by sale,  transfer,  lease or other conveyance all or  substantially  all of the
assets of the Company,  shall be a corporation  organized  and validly  existing
under the laws of the  United  States of  America  or any state  thereof  or the
District of Columbia and shall expressly  assume the due and punctual payment of
the principal of, premium, if any, and interest  (including  Additional Sums and
Compound  Interest)  on all of the  Convertible  Debentures  according  to their
tenor,  and  the due  and  punctual  performance  and  observance  of all of the
covenants,  agreements  and  conditions (A) of this Indenture to be performed or
observed by the Company by supplemental  indenture  satisfactory to the Trustee,
executed and delivered to the Trustee by such corporation or entity,  and (B) of
the Preferred  Securities  Registration Rights Agreement,  by amendment thereto,
(b)  immediately  after such merger or  consolidation,  or such sale,  transfer,
lease or other conveyance, no Event of Default, and no event which, after notice
or lapse of time or both, would become an Event of Default,  shall have occurred
and be continuing, and (c) the Company has delivered to the Trustee an Officers'
Certificate  and an Opinion of Counsel,  each stating that the  requirements  of
this Section have been complied with.

<PAGE>
                                       47

               Section 9.2  SUCCESSOR  CORPORATION  SUBSTITUTED.  In case of any
such consolidation,  merger, sale, transfer, lease or conveyance,  and following
such an assumption  by the successor  corporation,  such  successor  corporation
shall succeed to and be substituted for the Company,  with the same effect as if
it had been named herein,  and (except in the case of a lease) the Company shall
be discharged  from all  obligations  and covenants  under this  Indenture,  the
Convertible   Debentures  and  the  Preferred  Securities   Registration  Rights
Agreement and may be liquidated and dissolved.  Such successor  corporation  may
cause to be signed,  and may issue  either in its own name or in the name of the
Company  any or  all of the  Convertible  Debentures  issuable  hereunder  which
theretofore  shall not have been signed by the Company and be  delivered  to the
Trustee;  and,  upon the  order of such  successor  corporation  instead  of the
Company  and  subject  to all the  terms,  conditions  and  limitations  in this
Indenture  prescribed,  the Trustee shall  authenticate and shall make available
for delivery any Convertible  Debentures which previously shall have been signed
and delivered by the officers of the Company to the Trustee for  authentication,
and any  Convertible  Debentures,  which such successor  corporation  thereafter
shall cause to be signed and delivered to the Trustee for that  purpose.  All of
the  Convertible  Debentures so issued shall in all respects have the same legal
rank and benefit under this Indenture as the Convertible  Debentures theretofore
or thereafter  issued in accordance  with the terms of this  Indenture as though
all of such Convertible  Debentures had been issued at the date of the execution
hereof.

               In case of any such consolidation,  merger, sale, transfer, lease
or conveyance such changes in phraseology and form (but not in substance) may be
made  in  the  Convertible   Debentures  thereafter  to  be  issued  as  may  be
appropriate.

               Section 9.3 OPINION OF COUNSEL TO TRUSTEE.  The Trustee,  subject
to the  provisions  of Section  6.1 and 6.2,  may receive an Opinion of Counsel,
prepared in accordance  with Section 15.5, as conclusive  evidence that any such
consolidation,  merger, sale, lease or conveyance,  and any such assumption, and
any such liquidation or dissolution,  complies with the applicable provisions of
this Indenture.

                                    ARTICLE X

                   REDEMPTION OF THE CONVERTIBLE DEBENTURES

               Section 10.1 TAX EVENT REDEMPTION.

               If a Tax Event (as defined in the  Declaration)  has occurred and
is continuing and:

               (a) the Company has received a Redemption Tax Opinion (as defined
          in the Declaration); or

               (b) after  receiving a Dissolution Tax Opinion (as defined in the
          Declaration),  the Regular  Trustees  shall have been  informed by tax
          counsel  rendering the Dissolution  Tax Opinion that a  No-Recognition
          Opinion (as defined in the  Declaration)  cannot be  delivered  to the
          Trust,  then,  notwithstanding  Section 10.2(a) but subject to Section
          10.2(b),  the Company  shall have the right upon not less than 30 days
          nor  more  than 60  days  notice  to the  Holders  of the  Convertible
          Debentures to redeem the Convertible Debentures,  in whole or in part,

<PAGE>
                                       48

          for cash within 90 days  following  the  occurrence  of such Tax Event
          (the  "90-Day  Period")  at a  redemption  price  equal to 100% of the
          principal  amount to be redeemed plus any accrued and unpaid  interest
          thereon  (including  Additional  Sums,  if  any,  and,  to the  extent
          permitted by applicable law, Compound Interest, if any) to the date of
          such redemption (the "Redemption Price"), provided that if at the time
          there is  available  to the  Company or the Trust the  opportunity  to
          eliminate,  within the  90-Day  Period,  the Tax Event by taking  some
          ministerial action  ("Ministerial  Action"),  such as filing a form or
          making an election,  or pursuing some other similar reasonable measure
          which has no adverse  effect on the Company,  the Trust or the Holders
          of the Trust Securities  issued by the Trust, the Company shall pursue
          such  Ministerial  Action in lieu of redemption.  The Redemption Price
          shall be paid prior to 12:00 noon,  New York time, on the date of such
          redemption  or such earlier time as the Company  determines,  provided
          that the Company shall  deposit with the Trustee an amount  sufficient
          to pay the Redemption Price prior to the redemption date.

               Section 10.2 OPTIONAL  REDEMPTION BY  COMPANY.(a)  Subject to the
provisions of Section 10.2(b) and to the provisions of this Article X generally,
except as  otherwise  may be  specified  in Section  10.1 or  elsewhere  in this
Indenture,   the  Company  shall  have  the  right  to  redeem  the  Convertible
Debentures,  in whole or in part, from time to time, on or after April 18, 2003.
Any  redemption  pursuant to this  paragraph  will be made upon not less than 30
days nor more than 60 days notice to the Holders of the Convertible  Debentures,
at the following prices (expressed as percentages of the principal amount of the
Convertible  Debentures) (the "Optional Redemption Price") together with accrued
and unpaid  interest  (including  Additional  Sums,  if any,  and, to the extent
permitted by applicable law, Compound Interest,  if any) to, but excluding,  the
redemption  date, if redeemed during the 12-month period  beginning April 18, of
the applicable year set forth below:

                --------------------------------------
                YEAR               REDEMPTION PRICE
                --------------------------------------
                2003                    105.43%
                --------------------------------------
                2004                    104.65%
                --------------------------------------
                2005                    103.88%
                --------------------------------------
                2006                    103.10%
                --------------------------------------
                2007                    102.33%
                --------------------------------------
                2008                    101.55%
                --------------------------------------
                2009                    100.78%
                --------------------------------------

and 100% if redeemed on or after April `8, 2010.

               If  Convertible  Debentures are redeemed on any January 15, April
15,  July 15 and October 15,  accrued  and unpaid  interest  shall be payable to
holders of record on the relevant record date.

               The  Company  may not redeem  fewer  than all of the  outstanding
Convertible  Debentures  unless all accrued and unpaid interest has been paid on
all  Convertible   Debentures  for  all  quarterly   interest   payment  periods
terminating on or prior to the date of redemption.

<PAGE>
                                       49

               So long as the  corresponding  Trust  Securities are outstanding,
the proceeds from the redemption of the  Convertible  Debentures will be used to
redeem the Trust  Securities.  If the Convertible  Debentures are only partially
redeemed  pursuant to this Section  10.2,  the  Convertible  Debentures  will be
redeemed pro rata.  The Optional  Redemption  Price,  together with any required
interest  payment,  shall be paid prior to 12:00  noon,  New York  time,  on the
redemption date or at such earlier time as the Company determines  provided that
the  Company  shall  deposit  with the Trustee an amount  sufficient  to pay the
Optional Redemption Price, together with any required interest payment, by 10:00
a.m.,  New  York  time,  on  the  date  such  amounts  are to be  paid.  Partial
redemptions  must be in an  amount  not less  than  $1,000  principal  amount of
Convertible Debentures.

               If  Convertible  Debentures  selected for partial  redemption are
converted in part before termination of the conversion right with respect to the
portion of the Convertible  Debentures so selected, the converted portion of the
Convertible  Debentures  shall be  deemed  (so far as may be) to be the  portion
selected for redemption. Convertible Debentures (or portions thereof) which have
been converted during a selection of Convertible Debentures to be redeemed shall
be treated by the Trustee as Outstanding for the purpose of such  selection.  In
any case where more than one  Convertible  Debenture is  registered  in the same
name, the Trustee in its discretion may treat the aggregate  principal amount so
registered as if it were represented by one Convertible Debenture.

               If any Convertible  Debenture  called for redemption is converted
into Common Stock of the Company,  any money  deposited with the Trustee or with
any Paying Agent or so segregated  and held in trust for the  redemption of such
Convertible  Debenture  shall  (subject  to any  right  of the  Holder  of  such
Convertible  Debenture  or any  Predecessor  Convertible  Debenture  to  receive
interest  as  provided  in the last  paragraph  of  Section  2.9) be paid to the
Company upon the  Company's  request or, if then held by the  Company,  shall be
discharged from such trust.

               (b) If a partial  redemption of the Convertible  Debentures would
result in the delisting of the Convertible  Preferred  Securities  issued by the
Trust from any national  securities  exchange or other organization on which the
Convertible  Preferred  Securities  are then  listed,  the Company  shall not be
permitted to effect such partial  redemption and may only redeem the Convertible
Debentures in whole.

               Section 10.3 NO SINKING FUND. The Convertible  Debentures are not
entitled to the benefit of any sinking fund or subject to any sinking fund.

               Section 10.4 ELECTION TO REDEEM;  NOTICE OF  REDEMPTION;  PARTIAL
REDEMPTIONS.

               The election of the Company to redeem any Convertible  Debentures
shall be evidenced  by, or pursuant to, a resolution  of the Board of Directors.
Notice of redemption  to the Holders of  Convertible  Debentures  required to be
redeemed  or to be  redeemed  as a whole or in part at the option of the Company
shall be given by giving notice of such  redemption as provided in Section 15.4,
at  least  30 days  and not  more  than 60 days  prior  to the  date  fixed  for
redemption to such Holders of Convertible Debentures. Any notice which is mailed
in the manner herein provided shall be  conclusively  presumed to have been duly
given,  whether or not the Holder  receives  the notice.  Neither the failure to

<PAGE>
                                       50

give notice by mail, nor any defect in the notice so mailed to the Holder of any
Convertible  Debenture  designated  for  redemption  as a whole or in part shall
affect the validity of the proceedings for such redemption.

               The notice of  redemption  to each such Holder shall  specify the
date fixed for  redemption,  the  "CUSIP"  number or numbers,  if any,  for such
Convertible  Debentures,  the redemption  price, the Place or Places of Payment,
that payment will be made upon  presentation  and surrender of such  Convertible
Debentures,  that interest accrued to the date fixed for redemption will be paid
as specified in such notice and that on and after said date interest  thereon or
on the portions thereof to be redeemed will cease to accrue, the conversion rate
or price,  the date on which the right to convert the Convertible  Debentures to
be  redeemed  will  terminate  and the place or places  where  such  Convertible
Debentures  may  be  surrendered  for  conversion.  If  less  than  all  of  the
Convertible  Debentures  are to be  redeemed,  the  notice of  redemption  shall
specify the number of the  Convertible  Debentures  to be redeemed.  In case any
Convertible  Debenture is to be redeemed in part, the notice of redemption shall
state the portion of the principal amount thereof to be redeemed and shall state
that on and  after  the  date  fixed  for  redemption,  upon  surrender  of such
Convertible  Debenture, a new Convertible Debenture or Convertible Debentures in
principal amount equal to the unredeemed portion thereof will be issued.

               The notice of redemption of Convertible Debentures to be redeemed
at the option of the Company  shall be given by the Company or, at the Company's
request,  by the Trustee in the name and at the expense of the Company.  If such
notice is to be given by the Trustee,  the Company shall provide  notice of such
redemption  to the  Trustee  at  least  60 days  prior  to the  date  fixed  for
redemption  (unless a shorter notice shall be satisfactory  to the Trustee).  If
such notice is given by the Company,  the Company  shall  provide a copy of such
notice  given to the Holders of such  redemption  to the Trustee at least 2 days
prior to the date  such  notice  is given to such  Holders,  but in any event at
least 30 days and not more than 60 days prior to the date fixed for redemption.

               The  Company or the Trust  shall give  public  notice of any such
redemption  by the issuance of a press  release  through the services of the Dow
Jones Broad Tape, Reuters News Service and Bloomberg News Service.

               Not later than the  redemption  date  specified  in the notice of
redemption  given as provided in this Section,  the Company will have on deposit
with the Trustee or with one or more Paying Agents (or, if the Company is acting
as its own Paying Agent,  set aside,  segregate and hold in trust as provided in
Section 3.3) in funds  available on such date an amount of money  sufficient  to
redeem on the  redemption  date all the  Convertible  Debentures  so called  for
redemption at the appropriate  redemption price,  together with accrued interest
to the  date  fixed  for  redemption.  If  less  than  all  of  the  Outstanding
Convertible  Debentures  are to be redeemed at the election of the Company,  the
Company will deliver to the Trustee at least 60 days prior to the date fixed for
redemption  (unless a shorter  notice shall be  satisfactory  to the Trustee) an
Officers'  Certificate  stating the aggregate  principal  amount of  Convertible
Debentures to be redeemed.

               For all purposes of this Indenture,  unless the context otherwise
requires,  all provisions  relating to the redemption of Convertible  Debentures

<PAGE>
                                       51

shall  relate,  in the  case  of any  Convertible  Debenture  redeemed  or to be
redeemed  only  in  part,  to  the  portion  of the  principal  amount  of  such
Convertible Debenture which has been or is to be redeemed.

               Section  10.5  PAYMENT  OF  CONVERTIBLE   DEBENTURES  CALLED  FOR
REDEMPTION. If  notice of  redemption  has been  given as  above  provided,  the
Convertible  Debentures or portions of Convertible  Debentures specified in such
notice  shall become due and payable on the date and at the place stated in such
notice at the applicable redemption price, together with interest accrued to the
date fixed for redemption,  and on and after said date (unless the Company shall
default in the payment of such Convertible  Debentures at the redemption  price,
together  with  interest  accrued  to said  date)  interest  on the  Convertible
Debentures or portions of Convertible  Debentures so called for redemption shall
cease to accrue,  and,  except as  provided  in Section  6.1,  such  Convertible
Debentures  shall  cease  from and after the date  fixed  for  redemption  to be
entitled  to any  benefit or  security  under this  Indenture,  and the  Holders
thereof shall have no right in respect of such Convertible Debentures except the
right to receive the  redemption  price thereof and unpaid  interest to the date
fixed  for  redemption.  On  presentation  and  surrender  of  such  Convertible
Debentures  at a Place of Payment  specified  in said notice,  said  Convertible
Debentures or the specified  portions  thereof shall be paid and redeemed by the
Company at the  applicable  redemption  price,  together with  interest  accrued
thereon to the date fixed for  redemption;  provided  that,  payment of interest
becoming  due on or prior to the date fixed for  redemption  shall be payable to
the Holders of such  Convertible  Debentures  registered as such on the relevant
record date subject to the terms and provisions of Section 2.9 hereof.

               If any Convertible  Debenture  called for redemption shall not be
so paid upon surrender thereof for redemption,  the principal shall,  until paid
or duly provided  for,  bear interest from the date fixed for  redemption at the
Coupon Rate.

               Upon presentation of any Convertible  Debenture  redeemed in part
only,  the Company  shall execute and the Trustee  shall  authenticate  and make
available for delivery to or on the order of the Holder thereof,  at the expense
of the Company,  a new  Convertible  Debenture  or  Convertible  Debentures,  of
authorized denominations, in principal amount equal to the unredeemed portion of
the Convertible Debenture so presented.

               Section 10.6  EXCLUSION OF CERTAIN  CONVERTIBLE  DEBENTURES  FROM
ELIGIBILITY  FOR  SELECTION  FOR  REDEMPTION.  Convertible  Debentures  shall be
excluded from eligibility for selection for redemption if they are identified by
registration  and  certificate  number  in a  written  statement  signed  by  an
authorized  officer of the Company and delivered to the Trustee at least 30 days
prior to the last date on which notice of redemption may be given as being owned
of record and  beneficially  by, and not pledged or hypothecated  by, either (a)
the Company or (b) an entity  specifically  identified in such written statement
as  directly or  indirectly  controlling  or  controlled  by or under  direct or
indirect common control with the Company.

                                   ARTICLE XI

                      EXTENSION OF INTEREST PAYMENT PERIOD

<PAGE>
                                       52

               Section 11.1 EXTENSION OF INTEREST PAYMENT PERIOD.

               As long as an Event  of  Default  under  Section  5.1(a)  of this
Indenture shall not have occurred and be continuing,  the Company shall have the
right,  at any time and from  time to time  during  the term of the  Convertible
Debentures,  to defer  payments of interest by extending  the  interest  payment
period of such Convertible  Debentures for a period not exceeding 20 consecutive
quarters (the "Extension  Period"),  during which  Extension  Period no interest
shall be due and payable;  provided  that no Extension  Period may extend beyond
the Maturity Date or any earlier  redemption  date.  To the extent  permitted by
applicable law, interest,  the payment of which has been deferred because of the
extension of the interest  payment  period  pursuant to this Section 11.1,  will
bear interest  thereon at the Coupon Rate compounded  quarterly for each quarter
of the Extension Period  ("Compound  Interest").  Each Extension Period, if any,
will end on an Interest  Payment Date. At the end of the Extension  Period,  the
Company shall pay all interest accrued and unpaid on the Convertible Debentures,
including  any  Additional  Sums and, to the extent  permitted by law,  Compound
Interest (together, "Deferred Interest") that shall be payable to the Holders of
the  Convertible  Debentures  in whose  names  the  Convertible  Debentures  are
registered in the Security  Register at the close of business on the record date
next  preceding  such  Interest  Payment  Date.  Before the  termination  of any
Extension Period, the Company may further extend such period, provided that such
period  together  with all previous  and further  extensions  thereof  shall not
exceed 20  consecutive  quarters,  or extend  beyond  the  Maturity  Date or any
earlier  redemption  date. Upon the termination of any Extension Period and upon
the payment of all  Deferred  Interest  then due, the Company may commence a new
Extension Period,  subject to the foregoing  requirements.  No interest shall be
due and payable during an Extension Period,  except at the end thereof,  but the
Company may prepay at any time all or any portion of the interest accrued during
an Extension Period.

               Section 11.2 NOTICE OF EXTENSION.(a) If the Institutional Trustee
is the only  registered  Holder of the  Convertible  Debentures  at the time the
Company  selects an Extension  Period,  the Company shall give written notice to
the Regular Trustees, the Institutional Trustee and the Trustee of its selection
of such Extension Period at least one Business Day before the earlier of (i) the
next succeeding date on which  Distributions on the Trust  Securities  issued by
the Trust are  payable,  or (ii) the date the Regular  Trustees  are required to
give notice of the record date, or the date such  Distributions are payable,  to
the New York Stock Exchange or other applicable self-regulatory  organization or
to holders of the Convertible  Preferred  Securities issued by the Trust, but in
any event at least ten Business Days before such record date.  The Company shall
cause the Trust to give  notice of the  Company's  selection  of such  Extension
Period to holders of the Convertible Preferred Securities.

               (b) If the  Institutional  Trustee is not the only  Holder of the
Convertible  Debentures at the time the Company selects an Extension Period, the
Company shall give the Holders of the Convertible Debentures,  the Institutional
Trustee and the Trustee written notice of its selection of such Extension Period
at least 10 Business Days before the earlier of (i) the next succeeding Interest
Payment  Date or (ii) the date the  Company is  required  to give  notice of the
record or payment date of such interest  payment to the New York Stock  Exchange
or  other  applicable  self-  regulatory  organization  or  to  Holders  of  the
Convertible  Debentures,  but in any event not less than two Business Days prior
to such record date.

<PAGE>
                                       53

               (c) The  quarter  in  which  any  notice  is  given  pursuant  to
paragraphs  (a) or (b) of this  Section  11.2  shall be counted as one of the 20
consecutive  quarters  permitted in the maximum Extension Period permitted under
Section 11.1.

                                   ARTICLE XII

                      CONVERSION OF CONVERTIBLE DEBENTURES

               Section 12.1  CONVERSION  RIGHTS. Subject to and upon  compliance
with  the  provisions  of this  Article  XII,  the  Convertible  Debentures  are
convertible,  at the option of the Holders,  at any time beginning July 11, 2000
through the close of business on April 14, 2015 (or, in the case of  Convertible
Debentures called for redemption, prior to the close of business on the Business
Day  prior  to  the   corresponding   redemption   date)  into  fully  paid  and
nonassessable  shares of Common  Stock of the  Company at an initial  conversion
rate of 1.048  shares  of  Common  Stock  for each $50 in  principal  amount  of
Convertible  Debentures (equivalent to a conversion price of $47.71 per share of
Common  Stock (the  "Conversion  Price")),  subject to  adjustment  and reset as
described in this Article XII. A Holder of  Convertible  Debentures  may convert
any portion of the  principal  amount of the  Convertible  Debentures  into that
number  of fully  paid and  nonassessable  shares of Common  Stock  obtained  by
dividing the principal  amount of the Convertible  Debentures to be converted by
such Conversion Price. All calculations  under this Article XII shall be made to
the nearest cent or to the nearest 1/100th of a share, as the case may be.

               Section 12.2 CONVERSION PROCEDURES.

               (a) In order  to  convert  all or a  portion  of the  Convertible
Debentures,  the  Holder  thereof  shall  deliver  to the  Conversion  Agent  an
irrevocable notice of conversion (the "Notice of Conversion")  setting forth the
principal  amount of Convertible  Debentures to be converted,  together with the
name or names,  if other than the  Holder,  in which the shares of Common  Stock
should be  issued  upon  conversion  and,  if such  Convertible  Debentures  are
definitive  Convertible  Debentures,  surrender  to  the  Conversion  Agent  the
Convertible Debentures to be converted, duly endorsed or assigned to the Company
or in blank.  In addition,  a holder of  Convertible  Preferred  Securities  may
exercise its right under the Declaration to convert such  Convertible  Preferred
Securities  into  Common  Stock  by  delivering  to  the  Conversion   Agent  an
irrevocable Notice of Conversion setting forth the information called for by the
preceding  sentence and  directing  the  Conversion  Agent (i) to exchange  such
Convertible Preferred Security for a portion of the Convertible  Debentures held
by the  Trust  (at an  exchange  rate of $50  principal  amount  of  Convertible
Debentures  for each  Convertible  Preferred  Security) and (ii) to  immediately
convert such Convertible Debentures, on behalf of such holder, into Common Stock
of the Company pursuant to this Article XII and, if such  Convertible  Preferred
Securities  are in definitive  form,  surrendering  such  Convertible  Preferred
Securities, duly endorsed or assigned to the Company or in blank. So long as any
Convertible  Preferred  Securities are outstanding,  the Trust shall not convert
any Convertible  Debentures except pursuant to a Notice of Conversion  delivered
to the Conversion Agent by a holder of Convertible Preferred Securities.

<PAGE>
                                       54

               If a Notice of  Conversion  is  delivered  on or after the record
date and prior to the  subsequent  Interest  Payment  Date,  the Holder  will be
entitled to receive the interest payable on the subsequent Interest Payment Date
on the portion of  Convertible  Debentures to be converted  notwithstanding  the
conversion thereof prior to such Interest Payment Date. However, if a redemption
date falls between a record date and the subsequent  Interest  Payment Date, the
Holder will be entitled to receive,  on such Interest Payment Date, the interest
accrued to, but excluding,  the redemption date. Except as otherwise provided in
the first and second sentences of this paragraph, in the case of any Convertible
Debenture  which is converted,  interest whose Stated Maturity is after the date
of  conversion  of such  Convertible  Debenture  shall not be  payable,  and the
Company shall not make nor be required to make any other payment,  adjustment or
allowance  with  respect  to  accrued  but unpaid  interest  on the  Convertible
Debentures  being  converted,  which  shall be deemed  to be paid in full.  Each
conversion shall be deemed to have been effected  immediately prior to the close
of  business  on the day on which the Notice of  Conversion  was  received  (the
"Conversion  Date") by the Conversion  Agent from the Holder or from a holder of
the Convertible  Preferred Securities effecting a conversion thereof pursuant to
its conversion  rights under the Declaration,  as the case may be. The Person or
Persons entitled to receive the Common Stock issuable upon such conversion shall
be treated for all purposes as the record holder or holders of such Common Stock
as of the Conversion Date. As promptly as practicable on or after the Conversion
Date, the Company shall issue and deliver at the office of the Conversion Agent,
unless  otherwise  directed  by  the  Holder  in the  Notice  of  Conversion,  a
certificate  or  certificates  for the  number of full  shares  of Common  Stock
issuable upon such conversion,  together with the cash payment,  if any, in lieu
of any  fraction  of any share to the Person or Persons  entitled to receive the
same. The Conversion  Agent shall deliver such  certificate or  certificates  to
such Person or Persons.

               (b) The Company's delivery upon conversion of the fixed number of
shares of Common Stock into which the  Convertible  Debentures  are  convertible
(together with the cash payment,  if any, in lieu of fractional shares) shall be
deemed to  satisfy  the  Company's  obligation  to pay the  principal  amount at
Maturity of the portion of  Convertible  Debentures  so converted and any unpaid
interest (including Compound Interest) accrued on such Convertible Debentures at
the time of such conversion.

               (c) No  fractional  shares  of Common  Stock  will be issued as a
result  of  conversion,  but in  lieu  thereof,  the  Company  shall  pay to the
Conversion  Agent a cash  adjustment  in an amount equal to the same fraction of
the  Closing  Price  of  such  fractional  interest  on the  date on  which  the
Convertible  Debentures  were  duly  surrendered  to the  Conversion  Agent  for
conversion,  or, if such day is not a Trading  Day, on the next Trading Day, and
the  Conversion  Agent in turn will make such payment,  if any, to the Holder of
the Convertible Debentures or the holder of the Convertible Preferred Securities
so converted.

               (d) In the event of the conversion of any  Convertible  Debenture
in part only, the Company shall execute and the Trustee shall  authenticate  and
make  available  for delivery to or on the order of the Holder  thereof,  at the
expense of the Company, a new Convertible Debenture or Convertible Debentures in
the aggregate principal amount equal to the unconverted portion thereof.

<PAGE>
                                       55

               (e) In effecting the  conversion  transactions  described in this
Section  12.2,  the  Conversion  Agent is  acting  as agent  of the  holders  of
Convertible  Preferred  Securities  (in the  exchange of  Convertible  Preferred
Securities  for  Convertible   Debentures)  and  as  agent  of  the  Holders  of
Convertible  Debentures (in the conversion of Convertible Debentures into Common
Stock),  as the case may be. The  Conversion  Agent is hereby  authorized (i) to
exchange  Convertible  Debentures  held by the  Trust  from  time  to  time  for
Convertible  Preferred  Securities  in  connection  with the  conversion of such
Convertible Preferred Securities in accordance with this Article XII and (ii) to
convert all or a portion of the  Convertible  Debentures  into Common  Stock and
thereupon  to  deliver  such  shares  of  Common  Stock in  accordance  with the
provisions  of this  Article  XII and to deliver to the Trust a new  Convertible
Debenture or  Convertible  Debentures  for any resulting  unconverted  principal
amount.

               Section 12.3 CONVERSION PRICE  ADJUSTMENTS.  The Conversion Price
shall be adjusted from time to time as follows:

               (a) In case  the  Company  shall,  while  any of the  Convertible
          Debentures are outstanding,  (i) pay a dividend or make a distribution
          with respect to Common Stock in shares of Common Stock, (ii) subdivide
          outstanding shares of Common Stock,  (iii) combine  outstanding shares
          of  Common  Stock  into a smaller  number  of shares or (iv)  issue by
          reclassification  of its shares of Common  Stock any shares of capital
          stock of the Company,  the  conversion  privilege  and the  Conversion
          Price for the  Convertible  Debentures  shall be  adjusted so that the
          Holder  of  any  Convertible  Debenture  thereafter   surrendered  for
          conversion  shall be  entitled  to  receive  the  number  of shares of
          capital  stock of the  Company  which  such  Holder  would  have owned
          immediately  following such action had such Convertible Debenture been
          converted  immediately  prior thereto.  An adjustment made pursuant to
          this  subsection  (a) shall  become  effective  immediately  after the
          record date in the case of a dividend or other  distribution and shall
          become  effective  immediately  after the effective  date in case of a
          subdivision, combination or reclassification (or immediately after the
          record  date if a record  date  shall have been  established  for such
          event).  If,  as a  result  of an  adjustment  made  pursuant  to this
          subsection  (a), the Holder of any  Convertible  Debenture  thereafter
          surrendered for conversion  shall become entitled to receive shares of
          two or more  classes or series of capital  stock of the  Company,  the
          Board of Directors (whose  determination shall be conclusive and shall
          be  evidenced  by a Board  Resolution  filed with the  Trustee)  shall
          determine  the  allocation  of the adjusted  Conversion  Price for the
          Convertible  Debentures  between  or among  shares of such  classes or
          series of capital stock.

               (b) In case  the  Company  shall,  while  any of the  Convertible
          Debentures are outstanding, issue rights or warrants to all holders of
          its Common Stock  entitling them (for a period expiring within 45 days
          after the record date  mentioned  below) to subscribe  for or purchase
          shares of Common  Stock at a price  per  share  less than the  current
          market  price per share of Common  Stock (as  determined  pursuant  to
          subsection  (g)  below)  on  the  record  date  mentioned  below,  the
          Conversion  Price for the Convertible  Debentures shall be adjusted so
          that the same shall  equal the price  determined  by  multiplying  the
          Conversion Price in effect  immediately  prior to the date of issuance
          of such rights or warrants by a fraction of which the numerator  shall
          be the  number of shares of Common  Stock  outstanding  on the date of
          issuance of such rights or  warrants  plus the number of shares  which

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                                       56

          the aggregate  offering price of the total number of shares so offered
          for  subscription  or purchase  would  purchase at such current market
          price,  and of which the denominator  shall be the number of shares of
          Common  Stock  outstanding  on the date of  issuance of such rights or
          warrants plus the number of additional  shares of Common Stock offered
          for  subscription or purchase.  Such adjustment shall become effective
          immediately   after  the  record   date  for  the   determination   of
          stockholders  entitled  to receive  such  rights or  warrants.  To the
          extent  that no  shares of Common  Stock  are so  delivered  after the
          expiration of such rights or warrants,  the Conversion  Price shall be
          readjusted  to the  Conversion  Price which would then be in effect if
          such date fixed for the  determination  of  stockholders  entitled  to
          receive such rights or warrants  had not been fixed.  For the purposes
          of this  subsection,  the number of shares of Common Stock at any time
          outstanding  shall not  include  shares  held in the  treasury  of the
          Company. In case any rights or warrants referred to in this subsection
          in respect of which an  adjustment  shall have been made shall  expire
          unexercised  within 45 days after the same shall have been distributed
          or issued by the Company,  the Conversion Price shall be readjusted at
          the time of such  expiration to the  Conversion  Price that would have
          been in  effect  if no  adjustment  had been  made on  account  of the
          distribution or issuance of such expired rights or warrants.

               (c) Subject to the last sentence of this  subsection (c), in case
          the Company shall, by dividend or otherwise, distribute to all holders
          of its Common Stock evidences of its indebtedness, shares of any class
          or series of capital  stock,  cash or assets or rights or  warrants to
          subscribe for or purchase any of its securities  (excluding any rights
          or  warrants   referred  to  in   subsection   (b),  any  dividend  or
          distribution paid exclusively in cash and any dividend or distribution
          referred to in subsection  (a) of this Section  12.3),  the Conversion
          Price  shall be  reduced  so that  the  same  shall  equal  the  price
          determined by multiplying the Conversion  Price in effect  immediately
          prior  to  the   effectiveness   of  the  Conversion  Price  reduction
          contemplated  by  this  subsection  (c) by a  fraction  of  which  the
          numerator  shall be the current market price per share  (determined as
          provided in subsection  (g)) of the Common Stock on the date fixed for
          the payment of such  distribution (the "Reference Date") less the fair
          market value (as  determined  in good faith by the Board of Directors,
          whose  determination shall be conclusive and evidenced by a resolution
          of the Board of Directors),  on the Reference  Date, of the portion of
          the  evidences  of  indebtedness,  shares of capital  stock,  cash and
          assets so  distributed  or of such  subscription  rights  or  warrants
          applicable to one share of Common Stock and the  denominator  shall be
          such  current  market  price  per  share  of the  Common  Stock,  such
          reduction  to become  effective  immediately  prior to the  opening of
          business on the day following the Reference Date;  provided,  however,
          that in the event the numerator shall be less than one, in lieu of the
          foregoing  adjustment,  adequate  provision shall be made so that each
          Holder of Convertible  Debentures shall have the right to receive upon
          conversion  the amount of such  distribution  such  Holder  would have
          received  had  such  Holder  converted  each   Convertible   Debenture
          immediately  prior to the  Reference  Date.  In the event that no such
          dividend or  distribution  is so paid or made,  the  Conversion  Price
          shall again be adjusted to be the Conversion Price which would then be
          in effect if such dividend or  distribution  had not occurred.  If the
          Board  of   Directors   determines   the  fair  market  value  of  any
          distribution  for purposes of this  subsection (c) by reference to the
          actual or when issued  trading  market for any  securities  comprising

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                                       57

          such  distribution,  it must in doing so  consider  the prices in such
          market over the same period used in computing the current market price
          per share of Common Stock  (determined as provided in subsection (g)).
          For purposes of this subsection (c), any dividend or distribution that
          includes  shares of Common  Stock,  or rights or  warrants of the type
          described in subsection  (b), shall be deemed instead to be a dividend
          or  distribution of the evidences of  indebtedness,  shares of capital
          stock,  cash or assets or rights or warrants other than such shares of
          Common  Stock,  or such rights or warrants  of the type  described  in
          subsection (b) (making any Conversion Price reduction required by this
          subsection (c)), immediately followed by a dividend or distribution of
          such  shares of Common  Stock or such  rights or  warrants of the type
          described  in  subsection  (b) (making any  further  Conversion  Price
          adjustment  required  by  subsection  (a)  or  (b)),  except  (A)  the
          Reference  Date of such  dividend or  distribution  as defined in this
          subsection  (c) shall be  substituted  as (1) "the  record date in the
          case of a dividend  or other  distribution,"  and (2) "the record date
          for the determination of stockholders  entitled to receive such rights
          or warrants"  and (3) "the date fixed for such  determination"  within
          the  meaning of  subsections  (a) and (b) and (B) any shares of Common
          Stock  included in such dividend or  distribution  shall not be deemed
          outstanding for purposes of computing any adjustment of the Conversion
          Price in subsection (b).

               (d) In case the  Company  shall pay or make a  dividend  or other
          distribution  on its Common Stock  exclusively in cash  (excluding any
          quarterly  cash  dividend  on  Common  Stock  to the  extent  that the
          aggregate  cash dividend per share of Common Stock in any quarter does
          not exceed the greater of (i) the amount per share of Common  Stock of
          the next  preceding  quarterly  dividend on Common Stock to the extent
          such preceding quarterly dividend did not require an adjustment of the
          Conversion  Price  pursuant  to this  subsection  (d) (as  adjusted to
          reflect  subdivisions or combinations of Common Stock), and (ii) 3.75%
          of the daily  Closing  Price  per  share  determined  as  provided  in
          subsection   (g),  and  excluding  any  dividend  or  distribution  in
          connection  with the  liquidation,  dissolution  or  winding-up of the
          Company), the Conversion Price shall be reduced so that the same shall
          equal the price  determined by  multiplying  the  Conversion  Price in
          effect  immediately prior to the effectiveness of the Conversion Price
          reduction  contemplated  by this subsection (d) by a fraction of which
          the numerator shall be the current market price per share  (determined
          as provided in  subsection  (g)) of the Common Stock on the date fixed
          for the  payment  of such  distribution  less  the  amount  of cash so
          distributed  (and not excluded as provided  above)  applicable  to one
          share of Common Stock and the denominator shall be such current market
          price  per  share of the  Common  Stock  (determined  as  provided  in
          subsection (g)), such reduction to become effective  immediately prior
          to the opening of business on the day following the date fixed for the
          payment of such distribution; provided, however, that in the event the
          portion of the cash so  distributed  applicable to one share of Common
          Stock is equal to or greater  than the current  market price per share
          (as defined in subsection  (g)) of the Common Stock on the record date
          mentioned  above,  in  lieu  of  the  foregoing  adjustment,  adequate
          provision  shall be made so that each Holder of shares of  Convertible
          Debentures  shall have the right to receive upon conversion the amount
          of cash such Holder would have received had such Holder converted each
          Convertible  Debenture  immediately  prior to the record  date for the
          distribution  of the cash.  If an  adjustment  is  required to be made
          pursuant to this subsection (d) as a result of a distribution  that is

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                                       58

          a quarterly  dividend,  such adjustment shall be based upon the amount
          by which such  distribution  exceeds the amount of the quarterly  cash
          dividend  permitted to be excluded as provided above. If an adjustment
          is required to be made pursuant to this  subsection (d) as a result of
          a distribution that is not a quarterly dividend, such adjustment shall
          be based upon the full amount of the  distribution.  In the event that
          no such dividend or  distribution  is so paid or made,  the Conversion
          Price shall again be adjusted to be the  Conversion  Price which would
          then be in effect if such Record Date had not been fixed.

               (e) In case a tender or  exchange  offer  (other  than an odd-lot
          offer) made by the Company or any Subsidiary of the Company for all or
          any portion of the Company's Common Stock shall expire and such tender
          or  exchange  offer  shall  involve the payment by the Company or such
          subsidiary  of  consideration  per share of Common Stock having a fair
          market value (as  determined  in good faith by the Board of Directors,
          whose  determination shall be conclusive and evidenced by a resolution
          of the Board of  Directors) at the last time (the  "Expiration  Time")
          tenders or exchanges  may be made  pursuant to such tender or exchange
          offer (as it shall have been  amended)  that exceeds the Closing Price
          of the Common Stock on the Trading Day next  succeeding the Expiration
          Time,  the  Conversion  Price  shall be reduced so that the same shall
          equal the price  determined by  multiplying  the  Conversion  Price in
          effect  immediately prior to the effectiveness of the Conversion Price
          reduction  contemplated  by this  subsection (e) by a fraction  (which
          shall not be  greater  than one) of which the  numerator  shall be the
          number of shares of Common Stock  outstanding  (including any tendered
          or exchanged  shares) at the Expiration Time multiplied by the Closing
          Price of the  Common  Stock on the  Trading  Day next  succeeding  the
          Expiration Time and the  denominator  shall be the sum of (i) the fair
          market value (determined as aforesaid) of the aggregate  consideration
          payable to  stockholders  based on the  acceptance  (up to any maximum
          specified in the terms of the tender or exchange  offer) of all shares
          validly  tendered or exchanged and not withdrawn as of the  Expiration
          Time (the shares  deemed so accepted,  up to any such  maximum,  being
          referred  to as the  "Purchased  Shares")  and (ii) the product of the
          number  of  shares of Common  Stock  outstanding  (less any  Purchased
          Shares) at the  Expiration  Time and the  Closing  Price of the Common
          Stock on the Trading Day next  succeeding  the Expiration  Time,  such
          reduction to become retroactively  effective  immediately prior to the
          opening of business on the day following the Expiration Time.

               (f) In case a tender or  exchange  offer  made by a Person  other
          than the  Company  or any  Subsidiary  of the  Company  for all or any
          portion of the Common  Stock shall  expire and such tender or exchange
          offer shall  involve the payment by a Person other than the Company or
          any  Subsidiary  of the Company of  consideration  per share of Common
          Stock having a fair market value (as  determined  in good faith by the
          Board  of  Directors,  whose  determination  shall be  conclusive  and
          evidenced by a resolution of the Board of Directors) at the applicable
          Expiration  Time that exceeds the Closing Price of the Common Stock on
          the Trading Day next  succeeding  the  applicable  Expiration  Time in
          which as of the closing  date of the offer the Board of  Directors  of
          the Company is not recommending rejection of the offer, the Conversion
          Price  shall be  reduced  so that  the  same  shall  equal  the  price
          determined by multiplying the Conversion  Price in effect  immediately
          prior  to  the   effectiveness   of  the  Conversion  Price  reduction
          contemplated  by this subsection (f) by a fraction (which shall not be

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                                       59

          greater than one) of which the numerator shall be the number of shares
          of Common  Stock  outstanding  (including  any  tendered or  exchanged
          shares) at the Expiration  Time multiplied by the Closing Price of the
          Common Stock on the Trading Day next  succeeding the  Expiration  Time
          and the  denominator  shall  be the sum of (i) the fair  market  value
          (determined  as aforesaid) of the aggregate  consideration  payable to
          stockholders  based on the acceptance (up to any maximum  specified in
          the terms of the tender or  exchange  offer) of the  Purchased  Shares
          and,  (ii) the  product  of the  number  of  shares  of  Common  Stock
          outstanding (less any Purchased Shares) at the Expiration Time and the
          Closing  Price of the Common Stock on the Trading Day next  succeeding
          the Expiration Time, such reduction to become retroactively  effective
          immediately  prior to the opening of business on the day following the
          Expiration  Time;  provided,   however,  that  the  reduction  of  the
          Conversion Price contemplated by this subsection (f) will only be made
          if the  tender  offer or  exchange  offer is made for an amount  which
          increases that Person's  ownership of Common Stock to more than 25% of
          the total shares of Common Stock  outstanding  and provided,  further,
          that  the  reduction  of the  Conversion  Price  contemplated  by this
          subsection  (f) will not be made if as of the close of the offer,  the
          offering  documents  with respect to such offer  disclose a plan or an
          intention to cause the Company to engage in a consolidation  or merger
          of the Company or a sale of all or substantially  all of the assets of
          the Company.

               (g) For the purpose of any computation  under subsection (b), (c)
          or (d), the current market price per share of Common Stock on any date
          in  question  shall be deemed to be the  average of the daily  Closing
          Prices for the ten Trading Day period ending on the earlier of the day
          in  question  and,  if  applicable,  the day before the "ex" date with
          respect to the issuance or  distribution  requiring such  computation;
          provided,  however,  that if more than one  event  occurs  that  would
          require  an  adjustment  pursuant  to  subsections  (a)  through  (f),
          inclusive,  the Board of Directors  may make such  adjustments  to the
          Closing  Prices  during  such  ten  Trading  Day  period  as it  deems
          appropriate  to  effectuate  the  intent  of the  adjustments  in this
          Section  12.3,  in which case any such  determination  by the Board of
          Directors  shall  be set  forth  in a Board  Resolution  and  shall be
          conclusive.  For purposes of this  paragraph,  the term "ex" date, (1)
          when used with  respect to any  issuance  or  distribution,  means the
          first date on which the Common  Stock  trades  regular  way on the New
          York Stock  Exchange or on such successor  securities  exchange as the
          Common  Stock may be listed or in the  relevant  market from which the
          Closing  Prices  were  obtained  without  the  right to  receive  such
          issuance or distribution, and (2) when used with respect to any tender
          or  exchange  offer  means the first  date on which the  Common  Stock
          trades regular way on such securities exchange or in such market after
          the Expiration Time of such offer.

               (h) The Company may make such reductions in the Conversion Price,
          in addition to those required by  subsections  (a) through (f), as the
          Board of Directors  considers to be advisable to avoid or diminish any
          income  tax to holders of Common  Stock or rights to  purchase  Common
          Stock  resulting from any dividend or distribution of stock (or rights
          to  acquire  stock) or from any event  treated  as such for income tax
          purposes.  The  Company  from time to time may reduce  the  Conversion
          Price by any  amount  for any period of time if the period is at least
          twenty (20) days. Whenever the Conversion Price is reduced pursuant to
          the preceding sentence, the Company shall mail to Holders of record of

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                                       60

          the Convertible  Debentures a notice of the reduction at least 15 days
          prior to the date the reduced  Conversion Price takes effect, and such
          notice shall state the reduced Conversion Price and the period it will
          be in effect.

               (i) No  adjustment  in the  Conversion  Price  shall be  required
          unless  such  adjustment  would  require an increase or decrease of at
          least  1%  in  the  Conversion  Price;  provided,  however,  that  any
          adjustments which by reason of this subsection (i) are not required to
          be made shall be carried forward and taken into account in determining
          whether any subsequent adjustment shall be required.

               (j) If any action  would  require  adjustment  of the  Conversion
          Price  pursuant to more than one of the  provisions  described  above,
          only one  adjustment  shall be made and such  adjustment  shall be the
          amount of adjustment that has the highest absolute value to the Holder
          of Convertible Debentures.

               (k)  Except  as stated  above,  the  Conversion  Rate will not be
          adjusted  for  the   issuance  of  Common  Stock  or  any   securities
          convertible  into, or exchangeable  for, Common Stock, or carrying the
          right to purchase any of the foregoing.

               Section 12.4 MERGER,  CONSOLIDATION OR SALE OF ASSETS. (a) In the
event that the Company shall be a party to any  transaction  (including  without
limitation  (i) any  recapitalization  or  reclassification  of the Common Stock
(other than a change in par value, or from par value to no par value, or from no
par value to par value,  or as a result of a subdivision  or  combination of the
Common  Stock),  (ii) any  consolidation  of the Company  with, or merger of the
Company into,  any other Person,  any merger of another  Person into the Company
(other than a merger  which does not result in a  reclassification,  conversion,
exchange or cancellation of outstanding  shares of Common Stock of the Company),
(iii) any sale or  transfer  of all or  substantially  all of the  assets of the
Company or (iv) any compulsory  share exchange)  pursuant to which either shares
of Common Stock shall be converted  into the right to receive other  securities,
cash  or  other  property,  or,  in the  case of a sale  or  transfer  of all or
substantially  all of the assets of the  Company,  the  holders of Common  Stock
shall be entitled to receive  other  securities,  cash or other  property,  then
lawful provision shall be made as part of the terms of such transaction  whereby
the Holder of each Convertible  Debenture then outstanding  shall have the right
thereafter to convert such Convertible Debenture only into:

               (i) in the case of any such  transaction that does not constitute
          a Common Stock  Fundamental  Change and subject to funds being legally
          available  for such purpose under  applicable  law at the time of such
          conversion,  the  kind and  amount  of the  securities,  cash or other
          property that would have been receivable  upon such  recapitalization,
          reclassification,  consolidation,  merger,  sale,  transfer  or  share
          exchange by a holder of the number of shares of Common Stock  issuable
          upon conversion of such  Convertible  Debenture  immediately  prior to
          such recapitalization,  reclassification, consolidation, merger, sale,
          transfer or share  exchange,  after giving effect,  in the case of any
          Non-Stock  Fundamental  Change,  to any  adjustment in the  Conversion
          Price in accordance  with clause (i) of subsection (c) of this Section
          12.4; and

               (ii) in the  case of any  such  transaction  that  constitutes  a
          Common Stock Fundamental Change,  common stock of the kind received by

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                                       61

          holders of Common Stock as a result of such Common  Stock  Fundamental
          Change in an amount  determined  in  accordance  with  clause  (ii) of
          subsection (c) of this Section 12.4.

               (b) The  Company or the Person  formed by such  consolidation  or
resulting  from such merger or which  acquired such assets or which acquires the
Company's shares, as the case may be, shall make provision in its certificate or
articles of incorporation or other constituent document to establish such right.
Such  certificate or articles of  incorporation  or other  constituent  document
shall provide for adjustments which, for events subsequent to the effective date
of such certificate or articles of incorporation or other constituent  document,
shall be as nearly equivalent as may be practicable to the adjustments  provided
for in  this  Article  XII.  The  above  provisions  shall  similarly  apply  to
successive transactions of the foregoing type.

               (c)  Notwithstanding  any other provision of this Section 12.4 to
the contrary,  if any Fundamental  Change occurs,  then the Conversion  Price in
effect will be adjusted immediately after such Fundamental Change as follows:

               (i) in the case of a Non-Stock Fundamental Change, the Conversion
          Price  of  the  Convertible   Debentures  immediately  following  such
          Non-Stock  Fundamental Change shall be the lower of (A) the Conversion
          Price  in  effect  immediately  prior  to such  Non-Stock  Fundamental
          Change,  but  after  giving  effect  to any  other  prior  adjustments
          effected pursuant to Section 12.3, and (B) the Applicable Price; and

               (ii) in the  case  of a  Common  Stock  Fundamental  Change,  the
          Conversion Price of the Convertible  Debentures  immediately following
          such Common Stock Fundamental  Change shall be the Conversion Price in
          effect immediately prior to such Common Stock Fundamental  Change, but
          after giving effect to any other prior  adjustments  effected pursuant
          to Section 12.3,  multiplied by a fraction,  the numerator of which is
          the  Purchaser  Stock  Price  and  the  denominator  of  which  is the
          Applicable  Price;  provided,  however,  that in the event of a Common
          Stock  Fundamental  Change  in  which  (A)  100% of the  value  of the
          consideration  received by a holder of Common Stock is common stock of
          the  successor,  acquiror or other third party (and cash, if any, paid
          with  respect  to  any  fractional  interests  in  such  common  stock
          resulting  from such Common Stock  Fundamental  Change) and (B) all of
          the Common  Stock shall have been  exchanged  for,  converted  into or
          acquired for,  common stock of the successor,  acquiror or other third
          party  (and  any cash  with  respect  to  fractional  interests),  the
          Conversion Price of the Convertible  Debentures  immediately following
          such Common Stock Fundamental  Change shall be the Conversion Price in
          effect  immediately  prior to such  Common  Stock  Fundamental  Change
          multiplied  by a fraction,  the  numerator of which is one (1) and the
          denominator  of which is the  number of shares of common  stock of the
          successor,  acquiror or other third party  received by a holder of one
          share of Common  Stock as a result of such  Common  Stock  Fundamental
          Change.

               Section 12.5 NOTICE OF ADJUSTMENTS OF CONVERSION PRICE.  Whenever
the Conversion Price is adjusted as herein provided:

               (a) the Company shall compute the adjusted  Conversion  Price and
          shall prepare a certificate  signed by the Chief Financial  Officer or

<PAGE>
                                       62

          the  Treasurer of the Company  setting  forth the adjusted  Conversion
          Price and  showing  in  reasonable  detail  the facts  upon which such
          adjustment is based,  and such  certificate  shall  forthwith be filed
          with the Trustee and the transfer agent for the Convertible  Preferred
          Securities and the Convertible Debentures; and

               (b) a notice stating the  Conversion  Price has been adjusted and
          setting  forth  the  adjusted   Conversion  Price  shall  as  soon  as
          practicable  be  mailed  by the  Company  to  all  record  holders  of
          Convertible  Preferred  Securities and the  Convertible  Debentures at
          their last  addresses  as they appear upon the  transfer  books of the
          Company and the Trust.

               Section 12.6 PRIOR NOTICE OF CERTAIN EVENTS. In case:

               (a) the  Company  shall (i) declare  any  dividend  (or any other
          distribution)  on its Common Stock,  other than (A) a dividend payable
          in shares of Common Stock or (B) a dividend payable in cash that would
          not require an adjustment  pursuant to Section  12.3(c) or (d) or (ii)
          authorize a tender or exchange  offer that would require an adjustment
          pursuant to Section 12.3(e);

               (b) the Company  shall  authorize  the granting to all holders of
          Common  Stock of rights or warrants to  subscribe  for or purchase any
          shares  of stock of any  class or  series  or of any  other  rights or
          warrants;

               (c)  of  any  reclassification  of  Common  Stock  (other  than a
          subdivision  or  combination  of the  outstanding  Common Stock,  or a
          change in par value, or from par value to no par value, or from no par
          value to par value),  or of any  consolidation  or merger to which the
          Company is a party and for which approval of any  stockholders  of the
          Company  shall  be  required,  or of the  sale or  transfer  of all or
          substantially  all of the assets of the  Company or of any  compulsory
          share  exchange  whereby  the  Common  Stock is  converted  into other
          securities, cash or other property; or

               (d) of the voluntary or involuntary  dissolution,  liquidation or
          winding up of the Company;

then  the  Company  shall  (i)  if  any  Convertible  Preferred  Securities  are
outstanding,  cause to be filed  with the  transfer  agent  for the  Convertible
Preferred  Securities,  and shall cause to be mailed to the holders of record of
the  Convertible  Preferred  Securities,  at their last  addresses as they shall
appear  upon the stock  transfer  books of the Trust or (ii)  shall  cause to be
mailed to all  Holders  at their  last  addresses  as they  shall  appear in the
Security Register,  at least 15 days prior to the applicable record or effective
date hereinafter  specified, a notice stating (A) the date on which a record (if
any) is to be taken for the purpose of such  dividend,  distribution,  rights or
warrants or, if a record is not to be taken, the date as of which the holders of
Common Stock of record to be entitled to such dividend, distribution,  rights or
warrants are to be  determined  or (B) the date on which such  reclassification,
consolidation,  merger, sale, transfer, share exchange, dissolution, liquidation
or winding up is expected to become  effec tive,  and the date as of which it is
expected  that  holders of Common  Stock of record shall be entitled to exchange
their shares of Common Stock for securities,  cash or other property deliverable
upon  such  reclassification,   consolidation,  merger,  sale,  transfer,  share

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                                       63

exchange,  dissolution,  liquidation  or winding up (but no failure to mail such
notice or any defect therein or in the mailing thereof shall affect the validity
of the corporate action required to be specified in such notice). If at any time
the Trustee shall not be the Conversion  Agent, a copy of such notice shall also
forthwith be filed by the Company with the Trustee.

<PAGE>
                                       64

               Section  12.7  CERTAIN  ADDITIONAL  RIGHTS.  In case the  Company
shall,  by dividend or otherwise,  declare or make a distribution  on the Common
Stock referred to in Section  12.3(c) or 12.3(d),  the Holder of the Convertible
Debentures,  upon the conversion  thereof subsequent to the close of business on
the date fixed for the  determination  of stockholders  entitled to receive such
distribution  and prior to the  effectiveness of the Conversion Price adjustment
in respect of such  distribution,  shall also be  entitled  to receive  for each
share of Common Stock into which the Convertible  Debentures are converted,  the
portion  of  the  shares  of  Common  Stock,  rights,  warrants,   evidences  of
indebtedness, shares of capital stock, cash and assets so distributed applicable
to one share of Common Stock;  provided,  however,  that, at the election of the
Company  (whose  election  shall be evidenced  by a  resolution  of the Board of
Directors)  with respect to all Holders so converting,  the Company may, in lieu
of distributing to such Holder any portion of such  distribution  not consisting
of cash or securities of the Company, pay such Holder an amount in cash equal to
the fair  market  value  thereof  (as  determined  in good faith by the Board of
Directors, whose determination shall be conclusive and evidenced by a resolution
of  the  Board  of  Directors).  If any  conversion  of  Convertible  Debentures
described in the immediately preceding sentence occurs prior to the payment date
for a  distribution  to holders of Common Stock which the Holder of  Convertible
Debentures  so  converted  is  entitled  to  receive  in  accordance   with  the
immediately  preceding  sentence,  the Company  may elect  (such  election to be
evidenced by a  resolution  of the Board of  Directors)  to  distribute  to such
Holder a due bill for the shares of Common Stock, rights, warrants, evidences of
indebtedness, shares of capital stock, cash or assets to which such Holder is so
entitled,  provided, that such due bill (a) meets any applicable requirements of
the principal national  securities  exchange or other market on which the Common
Stock is then  traded and (b)  requires  payment or  delivery  of such shares of
Common Stock,  rights,  warrants,  evidences of indebtedness,  shares of capital
stock,  cash or assets no later than the date of payment or delivery  thereof to
holders of shares of Common Stock receiving such distribution.

               Section 12.8 TRUSTEE NOT RESPONSIBLE  FOR DETERMINING  CONVERSION
PRICE OR  ADJUSTMENTS.Neither  the Trustee nor any Conversion Agent shall at any
time be under  any  duty or  responsibility  to any  Holder  of any  Convertible
Debenture to determine  whether any facts exist which may require any adjustment
of the  Conversion  Price,  or with  respect to the nature or extent of any such
adjustment  when  made,  or with  respect to the method  employed.  Neither  the
Trustee  nor any  Conversion  Agent  shall be  accountable  with  respect to the
validity  or value (or the kind or amount)  of any shares of Common  Stock or of
any  securities or property,  which may at any time be issued or delivered  upon
the  conversion of any  Convertible  Debenture;  and neither the Trustee nor any
Conversion  Agent makes any  representation  with respect  thereto.  Neither the
Trustee nor any  Conversion  Agent shall be  responsible  for any failure of the
Company to make any cash payment or to issue,  transfer or deliver any shares of
Common Stock or stock  certificates  or other  securities  or property  upon the
surrender  of any  Convertible  Debenture  for the  purpose of  conversion.  All
Convertible  Debentures  delivered  for  conversion  shall be  delivered  to the
Trustee to be cancelled  by or at the  discretion  of the  Trustee,  which shall
dispose of the same as provided in Section 2.12 of this Indenture.

               Section 12.9  RESERVATION OF SHARES OF COMMON  STOCK.The  Company
shall at all times reserve and keep available,  free from preemptive rights, out
of its authorized but unissued Common Stock or treasury shares,  for the purpose

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of effecting the conversion of Convertible Debentures, the full number of shares
of  Common  Stock  of the  Company  then  issuable  upon the  conversion  of all
outstanding Convertible Debentures.

               Section 12.10  PAYMENT  OF  CERTAIN  TAXES  UPON  CONVERSION. The
Company  will pay any and all taxes  that may be payable in respect of the issue
or  delivery  of  shares  of its  Common  Stock  on  conversion  of  Convertible
Debentures  pursuant hereto. The Company shall not, however,  be required to pay
any tax which may be payable in respect of any  transfer  involved  in the issue
and  delivery  of shares of its  Common  Stock in a name  other than that of the
Holder of the Convertible  Debenture or Convertible  Debentures to be converted,
and no such  issue or  delivery  shall  be made  unless  and  until  the  person
requesting such issue has paid to the Company the amount of any such tax, or has
established, to the satisfaction of the Company, that such tax has been paid.

               Section 12.11  NONASSESSABILITY.  The Company  covenants that all
shares  of Common  Stock  which may be issued  upon  conversion  of  Convertible
Debentures  will upon  issue in  accordance  with the  terms  hereof be duly and
validly issued and fully paid and nonassessable.

                                  ARTICLE XIII

                     SUBORDINATION OF CONVERTIBLE DEBENTURES

               Section  13.1  CONVERTIBLE   DEBENTURES   SUBORDINATE  TO  SENIOR
INDEBTEDNESS. The Company covenants and agrees, and each Holder of a Convertible
Debenture,  by the Holder's acceptance  thereof,  likewise covenants and agrees,
that, to the extent and in the manner hereinafter set forth in this Article, the
indebtedness  represented by the  Convertible  Debentures and the payment of the
principal  of  (and  premium,  if  any)  and  interest  on  each  and all of the
Convertible Debentures are hereby expressly made subordinate and junior in right
of  payment  to the prior  payment  in full of all  Senior  Indebtedness  of the
Company,  whether  outstanding  at the  date of  this  Indenture  or  thereafter
incurred.  No provision  of this Article  shall  prevent the  occurrence  of any
default or Event of Default hereunder.

               Section 13.2 PAYMENT OVER OF PROCEEDS  UPON  DISSOLUTION, ETC. In
the  event  of  (i)  any  insolvency,  bankruptcy,  receivership,   liquidation,
reorganization,  readjustment,  composition or other similar proceeding relating
to the Company,  its  creditors or its  property,  (ii) any  proceeding  for the
liquidation,  dissolution  or other  winding up of the  Company  voluntarily  or
involuntarily,  whether or not involving  insolvency or bankruptcy  proceedings,
(iii) any  assignment  by the Company for the benefit of  creditors  or (iv) any
other  marshalling  of assets of the  Company,  all  amounts due upon all Senior
Indebtedness of the Company  (including any interest  thereon accruing after the
commencement  of such  proceedings)  shall  first  be paid in full,  or  payment
thereof  provided for in money in accordance with its terms,  before any payment
is made by the  Company on account of the  principal  (and  premium,  if any) or
interest  on the  Convertible  Debentures;  and any payment by the  Company,  or
distribution of assets of the Company of any kind or character, whether in cash,
property or securities,  to which the Holders of the  Convertible  Debentures or
the  Trustee  would be  entitled  to receive  from the  Company,  except for the
provisions  of this  Article,  shall be paid by the Company or by any  receiver,
trustee in bankruptcy,  liquidation  trustee,  agent or other Person making such

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                                       66

payment or distribution,  or by the Holders of the Convertible  Debentures or by
the Trustee  under this  Indenture  if  received by them or it,  directly to the
holders of Senior  Indebtedness  of the Company (pro rata to such holders on the
basis of the respective amounts of Senior  Indebtedness held by such holders, as
calculated by the Company) or their representative or representatives, or to the
trustee  or  trustees  under any  indenture  pursuant  to which any  instruments
evidencing such Senior  Indebtedness  may have been issued,  as their respective
interests may appear,  to the extent  necessary to pay such Senior  Indebtedness
(including  any  interest  thereon  accruing  after  the  commencement  of  such
proceedings)  in  full,  after  giving  effect  to  any  concurrent  payment  or
distribution  to or for the  holders  of such  Senior  Indebtedness,  before any
payment or distribution is made to the Holders of the Convertible  Debentures or
to the Trustee.

               In the event that,  notwithstanding the foregoing, any payment or
distribution of assets of the Company of any kind or character, whether in cash,
property or securities,  prohibited by the  foregoing,  shall be received by the
Trustee  before  all Senior  Indebtedness  of the  Company  is paid in full,  or
provision is made for such payment,  such payment or distribution  shall be held
in trust for the benefit of and shall be paid over or  delivered  to the holders
of such Senior Indebtedness or their  representative or  representatives,  or to
the trustee or trustees  under any indenture  pursuant to which any  instruments
evidencing such Senior  Indebtedness may have been issued,  and their respective
interests  may appear,  as  calculated by the Company,  for  application  to the
payment of all Senior Indebtedness of the Company, as the case may be, remaining
unpaid to the extent  necessary to pay such Senior  Indebtedness in full,  after
giving effect to any concurrent payment or distribution to or for the benefit of
the holders of such Senior Indebtedness.

               For purposes of this Article only,  the words "cash,  property or
securities"  shall not be deemed to  include  shares of stock of the  Company as
reorganized or readjusted, or securities of the Company or any other corporation
provided for by a plan of reorganization or readjustment  which are subordinated
in  right  of  payment  to all  Senior  Indebtedness  which  may at the  time be
outstanding  to  substantially  the same extent as, or to a greater extent than,
the Convertible  Debentures are so subordinated as provided in this Article. The
consolidation  of the Company with,  or the merger of the Company into,  another
Person or the liquidation or dissolution of the Company following the conveyance
or transfer of its properties and assets substantially as an entirety to another
Person upon the terms and  conditions  set forth in Article IX of this Indenture
shall not be deemed a  dissolution,  winding  up,  liquidation,  reorganization,
readjustment,   composition,   assignment   for  the  benefit  of  creditors  or
marshalling  of assets and  liabilities  of the Company for the purposes of this
Section if the Person formed by such  consolidation or into which the Company is
merged or the Person which  acquires by conveyance  or transfer such  properties
and assets substantially as an entirety, as the case may be, shall, as a part of
such consolidation,  merger,  conveyance or transfer, comply with the conditions
set forth in Article IX of this Indenture.

               Section   13.3  PRIOR   PAYMENT  TO  SENIOR   INDEBTEDNESS   UPON
ACCELERATION  OF  CONVERTIBLE  DEBENTURES. In  the event  that  any  Convertible
Debentures are declared due and payable before their Stated  Maturity,  then and
in such event the  holders of Senior  Indebtedness  shall be entitled to receive
payment  in full of all  amounts  due or to become  due on or in  respect of all
Senior  Indebtedness or provision shall be made for such payment in cash, before
the Holders of the  Convertible  Debentures  are entitled to receive any payment

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                                       67

(including  any  payment  which may be payable  by reason of the  payment of any
other  indebtedness  of the  Company  being  subordinated  to the payment of the
Convertible  Debentures)  by the  Company  on account  of the  principal  of (or
premium, if any) or interest on the Convertible  Debentures or on account of the
purchase or other acquisition of Convertible Debentures.

               In the event that,  notwithstanding  the  foregoing,  the Company
shall make any payment to the Trustee or the Holder of any Convertible Debenture
prohibited by the foregoing  provisions of this Section, and if such fact shall,
at or prior to the time of such payment, have been made known to the Trustee or,
as the case may be, such Holder,  then and in such event such  payment  shall be
paid over and delivered forthwith to the Company. The provisions of this Section
shall not apply to any  payment  with  respect  to which  Section  13.2 would be
applicable.

               Section 13.4 NO PAYMENT WHEN SENIOR INDEBTEDNESS  IN  DEFAULT. In
the event and  during the  continuation  of any  default  by the  Company in the
payment of principal,  premium, if any, interest or any other payment due on any
Senior  Indebtedness  of the Company,  as the case may be, beyond any applicable
grace  period with  respect  thereto,  or in the event that the  maturity of any
Senior  Indebtedness of the Company has been  accelerated  because of a default,
then,  in any such case, no payment shall be made by the Company with respect to
the principal (including  redemption  payments,  if any) of, premium, if any, or
interest on the Convertible  Debentures until such default is cured or waived or
ceases  to  exist  or any such  acceleration  or  demand  for  payment  has been
rescinded.

               Section 13.5 PAYMENT  PERMITTED  IN CERTAIN  SITUATIONS.  Nothing
contained in this Article or elsewhere in this  Indenture or in the  Convertible
Debentures shall prevent (a) the Company, at any time except during the pendency
of any dissolution,  winding-up,  liquidation or  reorganization of the Company,
whether voluntary or involuntary or any bankruptcy, insolvency,  receivership or
other  proceedings  of the  Company  referred  to in  Section  13.2 or under the
conditions  described in Section 13.3 or 13.4,  from making payments at any time
of principal of or premium,  if any, or interest on the Convertible  Debentures,
or (b) the  application by the Trustee of any money  deposited with it hereunder
to the  payment of or on account of the  principal  of, or  premium,  if any, or
interest on the  Convertible  Debentures or the retention of such payment by the
Holders,  if, at the time of such  application  by the Trustee,  it did not have
knowledge that such payment would have been prohibited by the provisions of this
Article.

               Section  13.6   SUBROGATION   TO  RIGHTS  OF  HOLDERS  OF  SENIOR
INDEBTEDNESS. Subject  to the payment in full of all Senior  Indebtedness or the
provision for such payment in cash or cash  equivalents or otherwise in a manner
satisfactory to the holders of Senior Indebtedness, the rights of the Holders of
Convertible  Debentures  shall be  subrogated  to the extent of the  payments or
distributions  made to the holders of such Senior  Indebtedness  pursuant to the
provisions of this Article (equally and ratably with the holders of indebtedness
of the Company which by its express terms is subordinated to indebtedness of the
Company to  substantially  the same  extent as the  Convertible  Debentures  are
subordinated  to the  Senior  Indebtedness  and is  entitled  to like  rights of
subrogation) to the rights of the holders of such Senior Indebtedness to receive
payments and  distributions of cash,  property and securities  applicable to the
Senior Indebtedness until the principal of (and premium, if any) and interest on
the  Convertible  Debentures  shall  be  paid  in  full.  For  purposes  of such
subrogation,  no  payments  or  distributions  to  the  holders  of  the  Senior
Indebtedness  of any  cash,  property  or  securities  to which the  Holders  of

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                                       68

Convertible  Debentures  or  the  Trustee  would  be  entitled  except  for  the
provisions of this Article,  and no payments over pursuant to the  provisions of
this  Article to or for the  benefit of the  holders of Senior  Indebtedness  by
Holders of Convertible  Debentures or the Trustee,  shall, as among the Company,
its  creditors  other than  holders of Senior  Indebtedness  and the  Holders of
Convertible Debentures, be deemed to be a payment or distribution by the Company
to or on account of the Senior Indebtedness.

               Section 13.7  PROVISIONS  SOLELY TO DEFINE  RELATIVE  RIGHTS. The
provisions  of this  Article  are and are  intended  solely  for the  purpose of
defining the relative rights of the Holders of Convertible Debentures on the one
hand and the holders of Senior Indebtedness on the other hand. Nothing contained
in this Article or elsewhere in this Indenture or in the Convertible  Debentures
is intended to or shall (a) impair,  as among the Company,  its creditors  other
than holders of Senior  Indebtedness and the Holders of Convertible  Debentures,
the obligation of the Company,  which is absolute and unconditional  (and which,
subject to the rights under this Article of the holders of Senior  Indebtedness,
is intended to rank equally with all other general  obligations of the Company),
to pay to the Holders of  Convertible  Debentures the principal of (and premium,
if any) and interest on the  Convertible  Debentures  as and when the same shall
become  due and  payable  in  accordance  with  their  terms;  or (b) affect the
relative rights against the Company of the Holders of Convertible Debentures and
creditors of the  Company,  as the case may be, other than the holders of Senior
Indebtedness;  or (c)  prevent  the  Trustee  or the  Holder of any  Convertible
Debenture  from  exercising all remedies  otherwise  permitted by applicable law
upon default under this  Indenture,  subject to the rights,  if any,  under this
Article of the holders of Senior  Indebtedness  to receive  cash,  property  and
securities otherwise payable or deliverable to the Trustee or such Holder.

               Section 13.8 TRUSTEE TO EFFECTUATE SUBORDINATION.  Each Holder of
a  Convertible  Debenture by such Holder's  acceptance  thereof  authorizes  and
directs  the  Trustee  on such  Holder's  behalf to take  such  action as may be
necessary  or  appropriate  to  effectuate  the  subordination  provided in this
Article and appoints the Trustee such Holder's  attorney-in-fact for any and all
such purposes.

               Section 13.9 NO WAIVER OF  SUBORDINATION  PROVISIONS. No right of
any present or future holder of any Senior Indebtedness to enforce subordination
as herein provided shall at any time in any way be prejudiced or impaired by any
act or  failure  to act on the part of the  Company  or by any act or failure to
act, in good faith, by any such holder,  or by any  noncompliance by the Company
with the terms,  provisions and covenants of this  Indenture,  regardless of any
knowledge thereof any such holder may have or be otherwise charged with.

               Without  in any way  limiting  the  generality  of the  foregoing
paragraph,  the holders of Senior Indebtedness may, at any time and from time to
time,  without  the  consent of or notice to the  Trustee or the  Holders of the
Convertible  Debentures,  without  incurring  responsibility  to the  Holders of
Convertible  Debentures  and without  impairing or releasing  the  subordination
provided  in  this  Article  or the  obligations  hereunder  of the  Holders  of
Convertible  Debentures to the holders of Senior Indebtedness do any one or more
of the following (a) change the manner,  place or terms of payment or extend the
time of payment of, or renew or alter, Senior Indebtedness or otherwise amend or
supplement in any manner Senior  Indebtedness  or any instrument  evidencing the

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                                       69

same or any agreement under which Senior Indebtedness is outstanding;  (b) sell,
exchange,  release or  otherwise  deal with any property  pledged,  mortgaged or
otherwise  securing  Senior  Indebtedness;  (c) release any Person liable in any
manner for the  collection of Senior  Indebtedness;  and (d) exercise or refrain
from exercising any rights against the Company and any other Person.

               Section  13.10 NOTICE TO TRUSTEE.  The Company  shall give prompt
written notice to a Responsible  Officer of the Trustee of any fact known to the
Company  which would  prohibit the making of any payment to or by the Trustee in
respect  of the  Convertible  Debentures  pursuant  to the  provisions  of  this
Article.  Notwithstanding  the provisions of this Article or any other provision
of this  Indenture,  the  Trustee  shall not be charged  with  knowledge  of the
existence  of any facts which would  prohibit the making of any payment to or by
the Trustee in respect of the Convertible  Debentures pursuant to the provisions
of this  Article,  unless and until a  Responsible  Officer of the Trustee shall
have received  written notice thereof from the Company or a holder or holders of
Senior  Indebtedness or from any trustee therefor;  and, prior to the receipt of
any such written notice,  the Trustee,  subject to the provisions of Section 6.2
of this  Indenture,  shall be  entitled  in all  respects to assume that no such
facts exist; provided,  however, that if the Trustee shall have not received the
notice provided for in this Section at least two Business Days prior to the date
upon  which by the terms  hereof any money may become  payable  for any  purpose
(including,  without limitation, the payment of the principal of (or premium, if
any) or interest on any Convertible Debentures,  then, anything herein contained
to the contrary notwithstanding, the Trustee shall have full power and authority
to receive  such money and to apply the same to the purposes for which they were
received,  and shall not be affected by any notice to the  contrary  that may be
received by it within two Business Days prior to such date.

               Subject to the provisions of Section 6.2 of this  Indenture,  the
Trustee shall be entitled to rely on the delivery to it of a written notice by a
Person representing  himself to be a holder of Senior Indebtedness (or a trustee
therefor)  to  establish  that such  notice has been given by a holder of Senior
Indebtedness (or a trustee  therefor).  In the event that the Trustee determines
in good faith that further evidence is required with respect to the right of any
Person as a holder of Senior  Indebtedness  to  participate  in any  payment  or
distribution  pursuant to this  Article,  the Trustee may request such Person to
furnish evidence to the reasonable  satisfaction of the Trustee as to the amount
of Senior  Indebtedness held by such Person,  the extent to which such Person is
entitled to  participate  in such  payment or  distribution  and any other facts
pertinent to the rights of such Person under this Article,  and if such evidence
is not  furnished,  the Trustee  may defer any  payment to such  Person  pending
judicial determination as to the right of such Person to receive such payment.

               Section  13.11  RELIANCE  ON  JUDICIAL  ORDER OR  CERTIFICATE  OF
LIQUIDATING  AGENT. Upon  any  payment or distribution  of assets of the Company
referred to in this Article,  the Trustee,  subject to the provisions of Section
6.2 of this  Indenture,  and the  Holders  of  Convertible  Debentures  shall be
entitled to  conclusively  rely upon any order or decree entered by any court of
competent  jurisdiction  in which  such  insolvency,  bankruptcy,  receivership,
liquidation,  reorganization,   dissolution,  winding  up  or  similar  case  or
proceeding is pending, or a certificate of the trustee in bankruptcy,  receiver,
liquidating trustee, custodian,  assignee for the benefit of creditors, agent or
other Person making such payment or distribution, delivered to the Trustee or to
the  Holders of  Convertible  Debentures,  for the purpose of  ascertaining  the
Persons entitled to participate in such payment or distribution,  the holders of

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                                       70

Senior  Indebtedness and other indebtedness of the Company,  as the case may be,
the amount thereof or payable thereon, the amount or amounts paid or distributed
thereon and all other facts pertinent thereto or to this Article.

               Section  13.12  TRUSTEE  NOT  FIDUCIARY  FOR  HOLDERS  OF  SENIOR
INDEBTEDNESS. With  respect to the  holders of Senior Indebtedness,  the Trustee
undertakes to perform or to observe only such of its  covenants and  obligations
as are  specifically  set forth in this  Article,  and no implied  covenants  or
obligations  with  respect to the holders of such Senior  Indebtedness  shall be
read into this  Indenture  against the  Trustee.  Except with respect to Section
13.4,  the Trustee shall not be deemed to owe any fiduciary  duty to the holders
of Senior  Indebtedness and shall not be liable to any such holders or creditors
if it shall in good  faith pay over or  distribute  to  Holders  of  Convertible
Debentures or to the Company or to any other Person cash, property or securities
to which any holders of Senior  Indebtedness shall be entitled by virtue of this
Article or otherwise.

               Section 13.13 RIGHTS OF TRUSTEE AS HOLDER OF SENIOR INDEBTEDNESS;
PRESERVATION OF TRUSTEE'S RIGHTS.  The Trustee  in its individual capacity shall
be  entitled  to all the rights set forth in this  Article  with  respect to any
Senior  Indebtedness  which may at any time be held by it, to the same extent as
any other  holder of Senior  Indebtedness  and nothing in this  Indenture  shall
deprive the Trustee of any of its rights as such holder.

               Nothing  in this  Article  XIII  shall  apply to  claims  of,  or
payments to, the Trustee under or pursuant to Section 6.7 of this Indenture.

               Section 13.14 ARTICLE APPLICABLE TO PAYING AGENTS. In case at any
time any Paying  Agent other than the Trustee  shall have been  appointed by the
Company and be then acting hereunder, the term "Trustee" as used in this Article
shall in such case  (unless the context  otherwise  requires)  be  construed  as
extending to and including such Paying Agent within its meaning as fully for all
intents  and  purposes  as if such  Paying  Agent were named in this  Article in
addition to or in place of the Trustee;  provided,  however,  that Section 13.13
shall not apply to the  Company or any  Affiliate  of the  Company if it or such
Affiliate acts as Paying Agent.

               Section 13.15 CERTAIN CONVERSIONS DEEMED PAYMENT. For purposes of
this Article only,  (a) the issuance and delivery of junior  securities (or cash
paid in lieu of fractional shares) upon conversion of Convertible  Debentures in
accordance  with  Article  XII shall not be deemed to  constitute  a payment  or
distribution  on  account  of  the  principal  of  or  premium  or  interest  on
Convertible  Debentures  or on account of the purchase or other  acquisition  of
Convertible  Debentures,  and (b) the  payment,  issuance  or  delivery of cash,
property or securities  (other than junior  securities  and cash paid in lieu of
fractional shares) upon conversion of a Convertible Debenture shall be deemed to
constitute  payment on account of the principal of such  Convertible  Debenture.
For the purposes of this Section,  the term "junior securities" means (i) shares
of any stock of any class of the  Company  and (ii)  securities  of the  Company
which are subordinated in right of payment to all Senior  Indebtedness which may
be  outstanding  at the time of  issuance  or  delivery  of such  securities  to
substantially  the same extent as, or to a greater extent than, the  Convertible
Debentures are so subordinated as provided in this Article. Nothing contained in
this Article or elsewhere in this Indenture or in the Convertible  Debentures is
intended to or shall impair, as among the Company, its creditors other than

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                                       71

holders of Senior  Indebtedness and the Holders of Convertible  Debentures,  the
right,  which is absolute and  unconditional,  of the Holder of any  Convertible
Debenture to convert such Convertible Debenture in accordance with Article XII.

                                   ARTICLE XIV

                                    EXPENSES

               Section  14.1  PAYMENT  OF  EXPENSES.   In  connection  with  the
offering,  sale and issuance of the Convertible  Debentures to the Institutional
Trustee and in  connection  with the sale of the Trust  Securities by the Trust,
the  Company,  in its  capacity  as  borrower  with  respect to the  Convertible
Debentures, shall:

               (a) pay all costs and expenses  relating to the  offering,  sale,
          issuance and registration  under the Securities Act of the Convertible
          Debentures  and the Trust  Securities,  including  commissions  to the
          purchasers   payable   pursuant  to  the   Placement   Agreement   and
          compensation  of the Trustee under this  Indenture in accordance  with
          the provisions of Section 6.7 of this Indenture;

               (b) pay all costs and expenses of the Trust  (including,  but not
          limited to, costs and  expenses  relating to the  organization  of the
          Trust,  the fees and  expenses  of the  Institutional  Trustee and the
          Delaware Trustee,  the costs and expenses relating to the operation of
          the  Trust,  including  without  limitation,  costs  and  expenses  of
          accountants,  attorneys, statistical or bookkeeping services, expenses
          for printing and  engraving  and  computing or  accounting  equipment,
          paying agent(s), registrar(s),  transfer agent(s), duplicating, travel
          and  telephone  and other  telecommunications  expenses  and costs and
          expenses incurred in connection with the acquisition,  financing,  and
          disposition of Trust assets);

               (c) pay all costs and expenses  related to the enforcement by the
          Institutional  Trustee  of the  rights  of the  holders  of the  Trust
          Securities;

               (d) be  primarily  liable  for  any  indemnification  obligations
          arising with respect to the Declaration; and

               (e) pay any and all taxes (other than United  States  withholding
          taxes  attributable  to the Trust or its assets) and all  liabilities,
          costs and expenses with respect to such taxes of the Trust.

               Section   14.2  PAYMENT  UPON   RESIGNATION   OR  REMOVAL.   Upon
termination  of this  Indenture  or the  removal or  resignation  of the Trustee
pursuant to Section 6.8 of this Indenture,  the Company shall pay to the Trustee
all amounts  accrued to the date of such  termination,  removal or  resignation.
Upon  termination  of the  Declaration  or the  removal  or  resignation  of the
Delaware Trustee or the Institutional  Trustee,  as the case may be, pursuant to
Section 5.6 of the Declaration, the Company shall pay to the Delaware Trustee or

<PAGE>
                                       72

the Institutional Trustee, and their respective counsel, as the case may be, all
amounts accrued to the date of such termination, removal or resignation.

                                   ARTICLE XV

                            MISCELLANEOUS PROVISIONS

               Section 15.1 INCORPORATORS,  STOCKHOLDERS, OFFICERS AND DIRECTORS
OF  COMPANY  EXEMPT  FROM  INDIVIDUAL  LIABILITY. No recourse  under or upon any
obligations,   covenant  or  agreement  contained  in  this  Indenture,  in  any
Convertible  Debenture,  or because of any indebtedness evidenced thereby, shall
be had against any incorporator,  as such or against any past, present or future
stockholder,  officer or director,  as such, of the Company or of any successor,
either directly or through the Company or any successor,  under any rule of law,
statute or  constitutional  provision or by the enforcement of any assessment or
by any legal or equitable  proceeding or  otherwise,  all such  liability  being
expressly waived and released by the acceptance of the Convertible Debentures by
the  Holders  thereof  and as  part of the  consideration  of the  issue  of the
Convertible Debentures.

               Section  15.2  PROVISIONS  OF  INDENTURE  FOR THE SOLE BENEFIT OF
PARTIES AND HOLDERS OF  CONVERTIBLE  DEBENTURES. Nothing in this Indenture or in
the Convertible Debentures,  expressed or implied, shall give or be construed to
give to any Person,  firm or  corporation,  other than the parties  hereto,  any
Paying Agent and their successors hereunder, the holders of Senior Indebtedness,
the holders of Convertible  Preferred Securities (to the extent provided herein)
and the Holders of the  Convertible  Debentures  any legal or  equitable  right,
remedy or claim under this  Indenture or under any covenant or provision  herein
contained,  all such covenants and provisions  being for the sole benefit of the
parties  hereto  and their  successors  and of the  Holders  of the  Convertible
Debentures.

               Section  15.3 RIGHT TO ASSIGN;  SUCCESSORS  AND ASSIGNS  BOUND BY
INDENTURE. The Company  shall  have the right at all times to assign  any of its
respective  rights or  obligations  under this Indenture to a direct or indirect
wholly-owned Subsidiary of the Company;  provided that, in the event of any such
assignment,  the Company  shall remain liable for all of its  obligations  under
this  Indenture.  Subject to the foregoing,  this Indenture will be binding upon
and inure to the benefit of the parties hereto and their  respective  successors
and assigns.  The rights and obligations of the parties under this Indenture may
not otherwise be assigned by such parties.

               All the covenants, stipulations,  promises and agreements in this
Indenture  by the parties  hereto  shall bind their  respective  successors  and
assigns, whether so expressed or not.

               Section 15.4 NOTICES AND DEMANDS ON COMPANY,  TRUSTEE AND HOLDERS
OF  CONVERTIBLE DEBENTURES. Any  notice or demand which by any provision of this
Indenture  is required or  permitted  to be given or served by the Trustee or by
the  Holders of  Convertible  Debentures  to or on the  Company  may be given or
served by being deposited postage prepaid, first-class mail (except as otherwise
specifically  provided  herein);  via  overnight  courier;  or through  personal
delivery,  with such notice or demand  addressed  (until another  address of the

<PAGE>
                                       73

Company is filed by the Company  with the  Trustee) to Viatel,  Inc.,  685 Third
Avenue, 24th Floor, New York, New York, 10017,  Attention:  General Counsel. Any
notice, direction, request or demand by the Company or any Holder of Convertible
Debentures  to or upon the  Trustee  shall be deemed  to have been  sufficiently
given or made, for all purposes, if given or made at the Corporate Trust Office.

               Where  this   Indenture   provides   for  notice  to  Holders  of
Convertible  Debentures  of any event such notice  shall be  sufficiently  given
(unless  otherwise  herein  expressly  provided)  if in  writing  and  mailed by
first-class  mail,  postage prepaid to such Holders as their names and addresses
appear in the Convertible  Debenture register within the time prescribed.  Where
this Indenture  provides for notice in any manner,  such notice may be waived in
writing by the Person  entitled to receive such notice,  either  before or after
the event,  and such waiver shall be the  equivalent of such notice.  Waivers of
notice by Holders shall be filed with the Trustee,  but such filing shall not be
a condition  precedent to the validity of any action taken in reliance upon such
waiver.  In any case  where  notice to  Holders  is given by mail,  neither  the
failure to mail such  notice,  nor any  defect in any  notice so  mailed,  shall
affect the  sufficiency  of such  notice,  and any notice which is mailed in the
manner herein provided shall be conclusively presumed to have been duly given.

               In case,  by reason of the  suspension  of or  irregularities  in
regular mail service,  it shall be  impracticable  to mail notice to the Company
and Holders of Convertible  Debentures  when such notice is required to be given
pursuant  to any  provision  of this  Indenture,  then any manner of giving such
notice as shall be reasonably  acceptable to the Trustee shall be deemed to be a
sufficient giving of such notice.

               Section  15.5  OFFICERS'  CERTIFICATES  AND  OPINIONS OF COUNSEL;
STATEMENTS  TO BE  CONTAINED  THEREIN.  Upon any  application  or  demand by the
Company  to the  Trustee  to take  action  under any of the  provisions  of this
Indenture,  the Company  shall  furnish to the Trustee an Officers'  Certificate
stating that all conditions  precedent,  if any,  provided for in this Indenture
relating  to the  proposed  action  have been  complied  with and an  Opinion of
Counsel  stating  that  in the  opinion  of such  counsel  all  such  conditions
precedent,  if any, have been complied with, except that in the case of any such
application  or  demand  as  to  which  the  furnishing  of  such  documents  is
specifically  required  by any  provision  of this  Indenture  relating  to such
particular  application or demand, no additional  certificate or opinion need be
furnished.

               Each  certificate  or opinion  provided for in this Indenture and
delivered to the Trustee with respect to compliance with a condition or covenant
provided for in this  Indenture  shall  include (a) a statement  that the person
making such  certificate  or opinion has read such covenant or condition and the
definitions herein relating thereto,  (b) a brief statement as to the nature and
scope of the examination or investigation  upon which the statements or opinions
contained in such certificate or opinion are based, (c) a statement that, in the
opinion of such person,  he has made such  examination  or  investigation  as is
necessary to enable him 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
or not, in the  opinion of such  person,  such  condition  or covenant  has been
complied  with.  Any  certificate,  statement  or opinion of any  officer of the
Company may be based, insofar as it relates to legal matters, upon a certificate
or opinion of or representations by counsel,  unless such officer knows that the

<PAGE>
                                       74

certificate or opinion or representations with respect to the matters upon which
his  certificate,  statement or opinion may be based as aforesaid are erroneous,
or in the exercise of reasonable  care should know that the same are  erroneous.
Any  certificate,  statement  or opinion of counsel may be based,  insofar as it
relates  to  factual  matters  or  information  with  respect to which is in the
possession  of the  Company,  upon the  certificate,  statement or opinion of or
representations  by an officer or officers of the  Company,  unless such counsel
knows that the certificate, statement or opinion or representations with respect
to the matters upon which his certificate,  statement or opinion may be based as
aforesaid are erroneous,  or in the exercise of reasonable care should know that
the same are erroneous.

               Any  certificate,  statement  or  opinion  of an  officer  of the
Company or of counsel may be based, insofar as it relates to accounting matters,
upon a certificate or opinion of or  representations by an accountant or firm of
accountants in the employ of the Company, unless such officer or counsel, as the
case may be,  knows that the  certificate  or opinion  or  representations  with
respect to the  accounting  matters  upon which his  certificate,  statement  or
opinion  may  be  based  as  aforesaid  are  erroneous,  or in the  exercise  of
reasonable  care should know that the same are  erroneous.  Any  certificate  or
opinion of any independent firm of public accountants filed with and directed to
the Trustee shall contain a statement that such firm is independent.

               Section 15.6  PAYMENTS DUE ON  SATURDAYS,  SUNDAYS AND  HOLIDAYS.
Except as otherwise provided in Section 2.5, if the date of Maturity of interest
on or principal of the  Convertible  Debentures or the date fixed for redemption
or repayment of any such Convertible Debenture shall not be a Business Day, then
payment of interest or principal  need not be made on such date, but may be made
on the next  succeeding  Business  Day;  provided  that if such next  succeeding
Business Day falls in the next  succeeding  calendar year, such payment shall be
made on the immediately preceding Business Day, in each case with the same force
and effect as if made on the date of Maturity or the date fixed for  redemption,
and no interest shall accrue for the period after such date.

               Section 15.7  CONFLICT OF ANY  PROVISION OF INDENTURE  WITH TRUST
INDENTURE ACT. If and to the extent that any provision of this Indenture limits,
qualifies or conflicts with another  provision  included in this Indenture which
is required by the Trust Indenture Act, such required provision shall control.

               Section  15.8  NEW  YORK  LAW TO  GOVERN. THIS INDENTURE  AND THE
CONVERTIBLE  DEBENTURES SHALL BE DEEMED TO BE CONTRACTS MADE AND TO BE PERFORMED
ENTIRELY IN THE STATE OF NEW YORK, AND FOR ALL PURPOSES SHALL BE GOVERNED BY AND
CONSTRUED  IN  ACCORDANCE  WITH THE LAWS OF SAID  STATE  WITHOUT  REGARD  TO THE
CONFLICTS OF LAW RULES OF SAID STATE.

               Section 15.9  COUNTERPARTS. This Indenture may be executed in any
number  of  counterparts,   each  of  which  shall  be  an  original;  but  such
counterparts shall together constitute but one and the same instrument.

<PAGE>
                                       75

               Section 15.10 EFFECT OF HEADINGS; GENDER. The Article and Section
headings herein and the Table of Contents are for convenience only and shall not
affect the  construction  hereof.  The use of the masculine,  feminine or neuter
gender  herein  shall  not  limit  in any way the  applicability  of any term or
provision hereof.

<PAGE>

               IN WITNESS WHEREOF, the parties hereto have caused this Indenture
to be duly executed all as of the day and year first above written.

                                                VIATEL, INC.

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

                                                THE BANK OF NEW YORK,
                                                as Trustee

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

<PAGE>

                                    EXHIBIT A

                  [(FORM OF FACE OF CONVERTIBLE DEBENTURE)]

               [IF  THE  DEBENTURE  IS  TO BE A  GLOBAL  DEBENTURE,  INSERT  THE
FOLLOWING - - THIS DEBENTURE IS A BOOK-ENTRY DEBENTURE WITHIN THE MEANING OF THE
INDENTURE  HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY
OR A NOMINEE OF A DEPOSITARY.  THIS DEBENTURE IS  EXCHANGEABLE  FOR  CONVERTIBLE
DEBENTURES  REGISTERED IN THE NAME OF A PERSON OTHER THAN THE  DEPOSITARY OR ITS
NOMINEE ONLY IN THE LIMITED  CIRCUMSTANCES  DESCRIBED IN THE  INDENTURE,  AND NO
TRANSFER OF THIS  DEBENTURE  (OTHER THAN A TRANSFER OF THIS DEBENTURE AS A WHOLE
BY  THE  DEPOSITARY  TO A  NOMINEE  OF THE  DEPOSITARY  OR BY A  NOMINEE  OF THE
DEPOSITARY  TO THE  DEPOSITARY  OR  ANOTHER  NOMINEE OF THE  DEPOSITARY)  MAY BE
REGISTERED EXCEPT IN SUCH LIMITED CIRCUMSTANCES.

               UNLESS   THIS   DEBENTURE   IS   PRESENTED   BY   AN   AUTHORIZED
REPRESENTATIVE  OF THE DEPOSITORY TRUST COMPANY (55 WATER STREET,  NEW YORK, NEW
YORK) TO THE  ISSUER OR ITS AGENT FOR  REGISTRATION  OF  TRANSFER,  EXCHANGE  OR
PAYMENT,  AND ANY  DEBENTURE  ISSUED IS  REGISTERED IN THE NAME OF CEDE & CO. OR
SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED  REPRESENTATIVE  OF THE DEPOSITORY
TRUST COMPANY AND ANY PAYMENT HEREON IS MADE TO CEDE & CO., ANY TRANSFER, PLEDGE
OR OTHER USE HEREOF FOR VALUE OR  OTHERWISE  BY A PERSON IS  WRONGFUL  SINCE THE
REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.]

No. __________                                            [CUSIP NO. __________]

                                  VIATEL, INC.

               [   % CONVERTIBLE JUNIOR SUBORDINATED DEBENTURE]

               [PRIOR  TO  THE  TRANSFER   RESTRICTION   TERMINATION  DATE,  ANY
CERTIFICATE   EVIDENCING  A  CONVERTIBLE   DEBENTURE  SHALL  BEAR  A  LEGEND  IN
SUBSTANTIALLY  THE FOLLOWING FORM,  UNLESS OTHERWISE AGREED BY THE COMPANY (WITH
WRITTEN NOTICE THEREOF TO THE TRUSTEE):  THE SECURITY  EVIDENCED  HEREBY HAS NOT
BEEN  REGISTERED  UNDER  THE  U.S.  SECURITIES  ACT OF  1933,  AS  AMENDED  (THE
"SECURITIES  ACT"),  AND,  ACCORDINGLY,  MAY NOT BE OFFERED  OR SOLD  WITHIN THE
UNITED  STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S.  PERSONS  EXCEPT AS
SET FORTH IN THE FOLLOWING  SENTENCE.  BY ITS ACQUISITION HEREOF, THE HOLDER (1)
REPRESENTS THAT (A) IT IS A "QUALIFIED  INSTITUTIONAL BUYER" (AS DEFINED IN RULE

                                      A-1
<PAGE>

144A  UNDER  THE  SECURITIES  ACT),  (2)  AGREES  THAT IT WILL NOT  PRIOR TO THE
EXPIRATION OF THE HOLDING PERIOD  APPLICABLE TO SALES OF THE SECURITY  EVIDENCED
HEREBY UNDER RULE 144(K) UNDER THE SECURITIES ACT (OR ANY SUCCESSOR  PROVISION),
RESELL OR OTHERWISE  TRANSFER THE SECURITY EVIDENCED HEREBY OR, IF THIS SECURITY
IS CONVERTIBLE  INTO COMMON STOCK,  THE COMMON STOCK ISSUABLE UPON CONVERSION OR
EXCHANGE OF THIS  SECURITY  EXCEPT (A) TO VIATEL,  INC.  (THE  "COMPANY") OR ANY
SUBSIDIARY THEREOF,  (B) PURSUANT TO AN EFFECTIVE  REGISTRATION  STATEMENT UNDER
THE SECURITIES  ACT, (C) TO A QUALIFIED  INSTITUTIONAL  BUYER IN COMPLIANCE WITH
RULE  144A  UNDER  THE  SECURITIES  ACT,  (D)  TO AN  "INSTITUTIONAL  ACCREDITED
INVESTOR" (AS DEFINED IN RULE  501(A)(1),  (2), (3) OR (7) UNDER THE  SECURITIES
ACT) THAT, PRIOR TO SUCH TRANSFER,  FURNISHES TO THE TRUSTEE FOR THE CONVERTIBLE
PREFERRED SECURITIES OR THE CONVERTIBLE  DEBENTURES,  AS THE CASE MAY BE (OR, IF
THIS  CERTIFICATE  EVIDENCES  COMMON  STOCK,  THE TRANSFER  AGENT FOR THE COMMON
STOCK),  A SIGNED  LETTER  CONTAINING  CERTAIN  REPRESENTATIONS  AND  AGREEMENTS
RELATING TO THE  RESTRICTIONS ON TRANSFER OF THE SECURITY  EVIDENCED HEREBY (THE
FORM OF WHICH LETTER CAN BE OBTAINED FROM SUCH TRUSTEE OR TRANSFER  AGENT),  (E)
OUTSIDE THE UNITED STATES IN COMPLIANCE  WITH RULE 904 UNDER THE  SECURITIES ACT
OR (F) PURSUANT TO THE EXEMPTION  FROM  REGISTRATION  PROVIDED BY RULE 144 UNDER
THE  SECURITIES  ACT (IF  AVAILABLE) AND (3) AGREES THAT IT WILL DELIVER TO EACH
PERSON  TO  WHOM  THE  SECURITY   EVIDENCED   HEREBY  IS  TRANSFERRED  A  NOTICE
SUBSTANTIALLY  TO THE EFFECT OF THIS LEGEND.  IN CONNECTION WITH ANY TRANSFER OF
THE SECURITY  EVIDENCED  HEREBY PRIOR TO THE  EXPIRATION  OF THE HOLDING  PERIOD
APPLICABLE TO SALES OF THE SECURITY EVIDENCED HEREBY UNDER RULE 144(K) UNDER THE
SECURITIES  ACT  (OR  ANY  SUCCESSOR  PROVISION),  THE  HOLDER  MUST  CHECK  THE
APPROPRIATE  BOX SET FORTH ON THE REVERSE HEREOF  RELATING TO THE MANNER OF SUCH
TRANSFER  AND  SUBMIT  THIS  CERTIFICATE  TO THE  TRUSTEE  FOR  THE  CONVERTIBLE
PREFERRED SECURITIES OR THE CONVERTIBLE  DEBENTURES,  AS THE CASE MAY BE (OR, IF
THIS  CERTIFICATE  EVIDENCES  COMMON  STOCK,  SUCH  HOLDER  MUST  FURNISH TO THE
TRANSFER AGENT SUCH  CERTIFICATIONS,  LEGAL OPINIONS OR OTHER INFORMATION AS THE
COMPANY OR VIATEL  FINANCING  TRUST I (THE  "TRUST") MAY  REASONABLY  REQUIRE TO
CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION  FROM, OR IN A
TRANSACTION  NOT SUBJECT TO, THE  REGISTRATION  REQUIREMENTS  OF THE  SECURITIES
ACT).  IF THIS  CERTIFICATE  DOES NOT EVIDENCE  COMMON STOCK AND IF THE PROPOSED
TRANSFEREE IS AN INSTITUTIONAL  ACCREDITED  INVESTOR OR A PURCHASER WHO IS NOT A
U.S. PERSON, THE HOLDER MUST, PRIOR TO SUCH TRANSFER, FURNISH TO THE TRUSTEE FOR
THE CONVERTIBLE PREFERRED SECURITIES OR THE CONVERTIBLE DEBENTURES,  AS THE CASE
MAY BE, SUCH CERTIFICATIONS,  LEGAL OPINIONS OR OTHER INFORMATION AS THE COMPANY
OR THE TRUST MAY REASONABLY  REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE
PURSUANT  TO AN  EXEMPTION  FROM,  OR  IN A  TRANSACTION  NOT  SUBJECT  TO,  THE

                                      A-2
<PAGE>

REGISTRATION  REQUIREMENTS  OF THE  SECURITIES  ACT. THIS LEGEND WILL BE REMOVED
AFTER THE EXPIRATION OF THE HOLDING  PERIOD  APPLICABLE TO SALES OF THE SECURITY
EVIDENCED HEREBY UNDER RULE 144(K) UNDER THE SECURITIES ACT. AS USED HEREIN, THE
TERMS  "OFFSHORE  TRANSACTION,"  "UNITED  STATES"  AND  "U.S.  PERSON"  HAVE THE
MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT.]

               Viatel, Inc., a Delaware  corporation (the "Company",  which term
includes any successor corporation under the Indenture hereinafter referred to),
for  value  received,  hereby  promises  to pay to,  The  Bank of New  York,  as
Institutional Trustee (the "Institutional Trustee") for Viatel Financing Trust I
or registered assigns, the principal sum of One Hundred Eighty-Five Million Five
Hundred Sixty-Seven Thousand Ten Dollars  ($185,567,010)]1 on April 15, 2015 and
to pay  interest on said  principal  sum from April 12,  2000,  or from the most
recent  interest  payment date to which  interest has been paid or duly provided
for,  quarterly  (subject to deferral as set forth herein) in arrears on January
15,  April 15,  July 15 and  October 15 (each such date,  an  "Interest  Payment
Date") of each year  commencing  July 15, 2000,  at the rate of 7 3/4% per annum
until the principal hereof shall have become due and payable, and on any overdue
principal and premium,  if any, and (without  duplication and to the extent that
payment of such interest is  enforceable  under  applicable  law) on any overdue
installment  of interest at the same rate per annum  compounded  quarterly.  The
amount of interest payable on any Interest Payment Date shall be computed on the
basis of a 360-day year of twelve 30-day months.  The amount of interest payable
for any  period  shorter  than a full  quarterly  period for which  interest  is
computed, will be computed on the basis of the actual number of days elapsed per
30-day  month.  In the event that any date on which  interest is payable on this
Convertible Debenture is not a Business Day, then payment of interest payable on
such date will be made on the next  succeeding  day that is a Business  Day (and
without any  interest  or other  payment in respect of any such  delay),  except
that, if such Business Day is in the next succeeding calendar year, such payment
shall be made on the immediately  preceding  Business Day, in each case with the
same force and  effect as if made on such  date.  The  interest  installment  so
payable,  and punctually paid or duly provided for, on any Interest Payment Date
will, as provided in the Indenture  (referred to on the reverse  hereof) be paid
to the  person  in  whose  name  this  Convertible  Debenture  (or  one or  more
Predecessor Convertible Debentures,  as defined in said Indenture) is registered
on the record date for such  interest  installment,  which shall be the close of
business on the  fifteenth day prior to such  Interest  Payment  Date.  Any such
interest  installment  not punctually  paid or duly provided for shall forthwith
cease to be payable to the  registered  Holders on such  record  date and may be
paid to the  Person in whose  name this  Convertible  Debenture  (or one or more
Predecessor  Convertible Debentures) is registered at the close of business on a
special record date to be fixed by the Trustee for the payment of such defaulted
interest,  notice  whereof  shall  be  given to the  registered  Holders  of the
Convertible  Debentures not less than 10 days prior to such special record date,
or may be paid at any time in any other lawful manner not inconsistent  with the
requirements of any securities exchange on which the Convertible  Debentures may
be listed, and upon such notice as may be required by such exchange, all as more
fully provided in the Indenture.  The principal of (and premium, if any) and the
interest on this Convertible Debenture shall be payable at the office or agency

                                      A-3
<PAGE>

of the Trustee maintained for that purpose in any coin or currency of the United
States of America  that at the time of payment  is legal  tender for  payment of
public and private  debts;  provided,  however,  that payment of interest may be
made at the option of the Company by check  mailed to the  registered  Holder at
such  address as shall  appear in the  Security  Register.  Notwithstanding  the
foregoing,  so  long  as  the  Holder  of  this  Convertible  Debenture  is  the
Institutional Trustee, the payment of the principal of (and premium, if any) and
interest on this  Convertible  Debenture  will be made at such place and to such
account as may be designated by the Institutional Trustee.

               The indebtedness  evidenced by this Convertible  Debenture is, to
the extent provided in the Indenture, subordinate and junior in right of payment
to the prior payment in full of all Senior  Indebtedness,  and this  Convertible
Debenture is issued  subject to the  provisions  of the  Indenture  with respect
thereto. Each Holder of this Convertible  Debenture,  by accepting the same, (a)
agrees to and shall be bound by such provisions,  (b) authorizes and directs the
Trustee  on his or her  behalf  to  take  such  action  as may be  necessary  or
appropriate to acknowledge or effectuate the  subordination  so provided and (c)
appoints the Trustee his or her  attorney-in-fact for any and all such purposes.
Each Holder hereof, by his or her acceptance hereof, hereby waives all notice of
the  acceptance  of the  subordination  provisions  contained  herein and in the
Indenture  by each holder of Senior  Indebtedness,  whether now  outstanding  or
hereafter  incurred,   and  waives  reliance  by  each  such  holder  upon  said
provisions.

               This  Convertible  Debenture shall not be entitled to any benefit
under the Indenture  hereinafter  referred to, be valid or become obligatory for
any purpose  until the  Certificate  of  Authentication  hereon  shall have been
signed by or on behalf of the Trustee.

               The provisions of this Convertible Debenture are continued on the
reverse side hereof and such  continued  provisions  shall for all purposes have
the same effect as though fully set forth at this place.

               Capitalized  terms  used but not  defined  herein  shall have the
meaning given them in the Indenture.

               IN WITNESS WHEREOF,  the Company has caused this instrument to be
executed.

                                                VIATEL, INC.

                                                By:_____________________________
                                                   Name:
                                                   Title:

Attest:

By:________________________________
   Name:
   Title:

                                      A-4
<PAGE>

                     [FORM OF CERTIFICATE OF AUTHENTICATION]

                          CERTIFICATE OF AUTHENTICATION

               This  is one  of  the  Convertible  Debentures  described  in the
within-mentioned Indenture.

Dated:

THE BANK OF NEW YORK
as Trustee

By:________________________________
   Authorized Signatory

                                      A-5
<PAGE>

                         [FORM OF REVERSE OF DEBENTURE]

               This  Convertible  Debenture  is one  of  the 7 3/4%  Convertible
Junior   Subordinated   Debentures  (herein  referred  to  as  the  "Convertible
Debentures"),  all issued or to be issued  under and  pursuant  to an  Indenture
dated as of April 12, 2000, duly executed and delivered  between the Company and
The Bank of New York, as Trustee (the  "Trustee")  (the  "Indenture"),  to which
Indenture and all indentures supplemental thereto reference is hereby made for a
description  of the  rights,  limitations  of  rights,  obligations,  duties and
immunities  thereunder  of the  Trustee,  the  Company  and the  Holders  of the
Convertible  Debentures.  The  Convertible  Debentures  are limited in aggregate
principal amount as specified in the Indenture.

               Because of the occurrence  and  continuation  of a Tax Event,  in
certain circumstances,  this Convertible Debenture may become due and payable at
the  principal  amount  specified on the face hereof  together with any interest
accrued thereon (the  "Redemption  Price").  The Redemption  Price shall be paid
prior to 12:00 noon,  New York City time,  on the date of such  redemption or at
such earlier time as the Company determines. The Company shall have the right to
redeem this  Convertible  Debenture at the option of the Company,  upon not less
than 30 nor more than 60 days notice, without premium or penalty, in whole or in
part at any time on or after April 18, 2003 (an  "Optional  Redemption")  at the
following  prices  (expressed  as  percentages  of the  principal  amount of the
Convertible  Debentures) (the "Optional Redemption Price") together with accrued
and unpaid  interest  (including  Additional  Sums,  if any,  and, to the extent
permitted by applicable law, Compound Interest,  if any) to, but excluding,  the
redemption  date, if redeemed during the 12-month  period  beginning April 18 of
the applicable year set forth below:

         YEAR               REDEMPTION PRICE
         -------            ----------------
         2003                    105.43%
         2004                    104.65%
         2005                    103.88%
         2006                    103.10%
         2007                    102.33%
         2008                    101.55%
         2009                    100.78%

and 100% if redeemed on or after April 18, 2010.

               If  Convertible  Debentures are redeemed on any January 15, April
15,  July 15 or October  15,  accrued  and unpaid  interest  shall be payable to
holders of record on the relevant record date.

               So long as the  corresponding  Trust  Securities are outstanding,
the proceeds from the redemption of any of the  Convertible  Debentures  will be
used to redeem Trust Securities.

               If the Convertible  Debentures are only partially redeemed by the
Company pursuant to an Optional Redemption,  the Convertible  Debentures will be
redeemed pro rata.

                                      A-6
<PAGE>

               In the event of redemption of this Convertible  Debenture in part
only, a new Convertible  Debenture or Convertible  Debentures for the unredeemed
portion  hereof  will be  issued  in the  name of the  Holder  hereof  upon  the
cancellation hereof.

               In case an Event of Default,  as defined in the Indenture,  shall
have  occurred  and be  continuing,  the  principal  of  all of the  Convertible
Debentures  and the  interest  accrued  thereon may be  declared,  and upon such
declaration shall become,  due and payable,  in the manner,  with the effect and
subject to the conditions provided in the Indenture.

               The Indenture contains provisions  permitting the Company and the
Trustee,  with  the  consent  of the  Holders  of a  majority  of the  aggregate
principal  amount  of  the  Convertible  Debentures  at  the  time  Outstanding,
evidenced  as  provided in the  Indenture,  to execute  supplemental  indentures
adding any  provisions  to or changing in any manner or  eliminating  any of the
provisions of the Indenture or of any supplemental indenture or modifying in any
manner  the  rights of the  Holders  of the  Convertible  Debentures;  provided,
however,  that no such  supplemental  indenture  shall  (i)  extend  the  Stated
Maturity of any Convertible Debenture, or reduce the principal amount thereof or
any  premium  thereon,  or reduce  the rate or  extend  the time of  payment  of
interest  thereon,  or reduce any amount  payable upon  redemption  thereof,  or
impair or affect  the right of any  Holder  to  institute  suit for the  payment
thereof,  without the  consent of the Holder of each  Convertible  Debenture  so
affected, or (ii) reduce the aforesaid percentage of Convertible Debentures, the
Holders of which are  required  to consent to any such  supplemental  indenture,
without  the  consent of the Holder of each  Convertible  Debenture.  It is also
provided in the Indenture  that,  with respect to certain  defaults or Events of
Default  regarding  the  Convertible   Debentures,   prior  to  any  declaration
accelerating  the  maturity  of  such  Convertible  Debentures,  or  after  such
declaration  and before any judgment or decree for the payment of the moneys due
is obtained or entered,  and provided the Company has paid or made provision for
payment of any  unaccelerated  amounts  then due,  the  Holders of a majority in
aggregate principal amount Outstanding of the Convertible Debentures (or, in the
case  of  certain  defaults  or  Events  of  Default,  all  of  the  Convertible
Debentures),  may on behalf of the  Holders  of all the  Convertible  Debentures
waive  any such past  default  or Event of  Default  and its  consequences.  The
preceding sentence shall not, however,  apply to a default in the payment of the
principal  of or  premium,  if  any,  or  interest  on any  of  the  Convertible
Debentures.  Any such  consent  or  waiver  by the  Holder  of this  Convertible
Debenture  (unless revoked as provided in the Indenture) shall be conclusive and
binding  upon  such  Holder  and upon all  future  Holders  and  owners  of this
Convertible  Debenture  and any  Convertible  Debenture  which  may be issued in
exchange or substitution  therefor,  irrespective of whether or not any notation
thereof  is made upon  this  Convertible  Debenture  or such  other  Convertible
Debenture.

               No  reference  herein to the  Indenture  and no provision of this
Convertible  Debenture or of the Indenture  shall alter or impair the obligation
of the Company, which is absolute and unconditional, to pay the principal of and
premium,  if any,  and  interest on this  Convertible  Debenture at the time and
place and at the rate and in the money herein prescribed.

               As long as an  Event  of  Default  under  Section  5.1(a)  of the
Indenture shall not have occurred and be continuing,  the Company shall have the
right at any time during the term of the Convertible Debentures and from time to
time to extend the interest payment period of such Convertible Debentures for up
to 20 consecutive quarters (an "Extension  Period"),  at the end of which period

                                      A-7
<PAGE>

the  Company  shall pay all  interest  then  accrued and unpaid  (together  with
interest  thereon at the rate  specified for the  Convertible  Debentures to the
extent that  payment of such  interest is  enforceable  under  applicable  law).
Before the  termination  of any such Extension  Period,  the Company may further
extend such Extension Period,  provided that such Extension Period together with
all such further extensions thereof shall not exceed 20 consecutive quarters. At
the termination of any such Extension Period and upon the payment of all accrued
and unpaid  interest  and any  additional  amounts  then due,  the  Company  may
commence a new Extension Period.

               As provided in the Indenture  and subject to certain  limitations
therein set forth, this Convertible  Debenture is transferable by the registered
Holder hereof on the Security  Register of the Company,  upon  surrender of this
Convertible  Debenture for  registration  of transfer at the office or agency of
the  Trustee  in the  City  and  State  of New  York  accompanied  by a  written
instrument or instruments of transfer in form satisfactory to the Company or the
Trustee duly  executed by the  registered  Holder  hereof or his  attorney  duly
authorized in writing,  and thereupon one or more new Convertible  Debentures of
authorized  denominations  and for the same aggregate  principal  amount will be
issued to the designated  transferee or  transferees.  No service charge will be
made for any  such  transfer,  but the  Company  may  require  payment  of a sum
sufficient  to cover any tax or other  governmental  charge  payable in relation
thereto.

               Prior to due  presentment  for  registration  of transfer of this
Convertible  Debenture,  the  Company,  the  Trustee,  any paying  agent and the
Registrar may deem and treat the registered  holder hereof as the absolute owner
hereof  (whether  or  not  this  Convertible  Debenture  shall  be  overdue  and
notwithstanding  any notice of ownership or writing  hereon made by anyone other
than the Registrar) for the purpose of receiving payment of or on account of the
principal hereof and premium,  if any, and interest due hereon and for all other
purposes,  and neither the Company nor the Trustee nor any paying  agent nor any
Registrar shall be affected by any notice to the contrary.

               No recourse  shall be had for the payment of the  principal of or
the interest on this Convertible  Debenture,  or for any claim based hereon,  or
otherwise in respect hereof, or based on or in respect of the Indenture, against
any incorporator,  stockholder, officer or director, past, present or future, as
such, of the Company or of any predecessor or successor corporation,  whether by
virtue of any constitution, statute or rule of law, or by the enforcement of any
assessment or penalty or otherwise,  all such liability being, by the acceptance
hereof  and as part of the  consideration  for the  issuance  hereof,  expressly
waived and released.

               The  Holder  of  any   Convertible   Debenture   has  the  right,
exercisable  at any time  beginning  July 11, 2000 through the close of business
(New York time) on April 14,  2015 (or, in the case of a  Convertible  Debenture
called for redemption,  prior to the close of business on the Business Day prior
to the  corresponding  redemption date), to convert the principal amount thereof
(or any  portion  thereof  that is an  integral  multiple of $50) into shares of
Common Stock at the initial  conversion rate of 1.048 shares of Common Stock for
each Convertible Debenture (equivalent to a Conversion Price of $47.71 per share
of Common Stock), subject to adjustment under certain circumstances.

                                      A-8
<PAGE>

               To convert a  Convertible  Debenture,  a Holder must (a) complete
and sign a conversion  notice  substantially  in the form attached  hereto,  (b)
surrender  the  Convertible   Debenture  to  a  Conversion  Agent,  (c)  furnish
appropriate  endorsements  or transfer  documents if required by the  Conversion
Agent and (d) pay any transfer or similar tax, if required. Upon conversion,  no
adjustment or payment will be made for interest or dividends,  but if any Holder
surrenders a Convertible  Debenture  for  conversion on or after the record date
for the  payment  of an  installment  of  interest  and prior to the  opening of
business  on  the  next  Interest  Payment  Date,  then,   notwithstanding  such
conversion,  the interest  payable on such Interest Payment Date will be paid to
the registered Holder of such Convertible Debenture on such record date. In such
event, such Convertible Debenture, when surrendered for conversion,  need not be
accompanied  by  payment  of an amount  equal to the  interest  payable  on such
Interest Payment Date on the portion so converted. However, if a redemption date
falls between a record date and the subsequent Interest Payment Date, the Holder
will be entitled to receive,  on such redemption  date, the interest accrued to,
but  excluding,  the  redemption  date.  The  number  of  shares  issuable  upon
conversion  of a  Convertible  Debenture is determined by dividing the principal
amount of the Convertible  Debenture converted by the Conversion Price in effect
on the Conversion Date. No fractional  shares will be issued upon conversion but
a cash  adjustment  will be made for any fractional  interest.  The  outstanding
principal amount of any Convertible Debenture shall be reduced by the portion of
the principal amount thereof converted into shares of Common Stock.

               The  Convertible  Debentures are issuable only in registered form
without coupons in denominations of $10 and any integral multiple thereof.2 This
Global Debenture is exchangeable  for Convertible  Debentures in definitive form
only under certain limited circumstances set forth in the Indenture. Convertible
Debentures  so issued are issuable only in  registered  form without  coupons in
denominations  of $10 and any  integral  multiple  thereof.3  As provided in the
Indenture  and subject to certain  limitations  therein  set forth,  Convertible
Debentures are exchangeable for a like aggregate principal amount of Convertible
Debentures of a different  authorized  denomination,  as requested by the Holder
surrendering the same.

               THE INDENTURE AND THE CONVERTIBLE  DEBENTURES  SHALL BE DEEMED TO
BE CONTRACTS MADE AND TO BE PERFORMED ENTIRELY IN THE STATE OF NEW YORK, AND FOR
ALL PURPOSES  SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE  WITH THE LAWS OF
SAID STATE WITHOUT REGARD TO THE CONFLICTS OF LAW RULES OF SAID STATE.

                                      A-9
<PAGE>

                          FORM OF ELECTION TO CONVERT]

                               ELECTION TO CONVERT

To:  Viatel, Inc.

The undersigned owner of this Convertible Debenture hereby irrevocably exercises
the  option  to  convert  this  Convertible  Debenture,  or  the  portion  below
designated,  into Common Stock of VIATEL,  INC. in accordance  with the terms of
the Indenture  referred to in this Convertible  Debenture,  and directs that the
shares  issuable and  deliverable  upon  conversion,  together with any check in
payment for  fractional  shares,  be issued in the name of and  delivered to the
undersigned, unless a different name has been indicated in the assignment below.
If shares are to be issued in the name of a person  other than the  undersigned,
the undersigned will pay all transfer taxes payable with respect thereto.

Date:  _______________, ____

in whole  _____  Portions  of  Convertible  Debenture  to be  converted  ($50 or
integral multiples-thereof): $________________

                           _____________________________________________________
                           Signature (for conversion only)

                           Please Print or Typewrite Name and Address, Including
                           Zip Code,  and Social  Security or Other  Identifying
                           Number

                           _____________________________________________________

                           _____________________________________________________

                           _____________________________________________________

                           Signature Guarantee:4 _______________________________
____________________

                                      A-10
<PAGE>

                                   ASSIGNMENT

                [FORM OF ASSIGNMENT FOR CONVERTIBLE DEBENTURES
                       THAT ARE NOT GLOBAL DEBENTURES]

               For value  received  __________________________  hereby  sell(s),
assign(s)  and  transfer(s)  unto
________________________________________________________________________________
(Please  insert  social  security  or other  taxpayer  identification  number of
assignee.) the within Convertible  Debenture and hereby irrevocably  constitutes
and appoints _______ attorney to transfer the said Convertible  Debenture on the
books of the Company, with full power of substitution in the premises.

               In  connection  with  any  transfer  of  the  within  Convertible
Debenture  occurring  prior to the Transfer  Restriction  Termination  Date, the
undersigned confirms that such Convertible Debenture is being transferred:

               [_] To Viatel, Inc. or a subsidiary thereof; or

               [_]  Pursuant  to and in  compliance  with  Rule  144A  under the
Securities Act of 1933, as amended; or

               [_] To an Institutional  Accredited  Investor  pursuant to and in
compliance with the Securities Act of 1933, as amended; or

               [_]  Pursuant to and in  compliance  with  Regulation S under the
Securities Act of 1933, as amended; or

               [_]  Pursuant  to and in  compliance  with  Rule  144  under  the
Securities Act of 1933, as amended; or

               [_] Pursuant to an effective registration statement.

and  unless  the box  below is  checked,  the  undersigned  confirms  that  such
Convertible  Debenture is not being transferred to an "affiliate" of the Company
as  defined  in Rule 144  under  the  Securities  Act of 1933,  as  amended  (an
"Affiliate"):

               [_] The transferee is an Affiliate of the Company.

Dated: _____________________________

                                                ________________________________

                                      A-11
<PAGE>

                                                ________________________________
                                                           Signature(s)

                                                ________________________________
                                                       Signature Guarantee5

               NOTICE:  The  above  signatures  of  the  holder(s)  hereof  must
correspond with the name as written upon the face of this Convertible  Debenture
in every particular without alteration or enlargement or any change whatever.

                                      A-12
<PAGE>

 [FORM OF SCHEDULE FOR ENDORSEMENTS ON GLOBAL DEBENTURES TO REFLECT CHANGES IN
                                PRINCIPAL AMOUNT]

                                   Schedule A

               Changes to Principal Amount of Global Debentures

                     Principal Amount of
                    Convertible Debentures
                     by which this Global
                      Debenture is to be
                    Reduced or Increased,  Remaining Principal
                        and Reason for       Amount of this
DATE                REDUCTION OR INCREASE   Global DEBENTURE   NOTATION MADE BY

                                      A-13
<PAGE>

---------------------
1 In the case of a Global Debenture the bracketed text will be replaced with the
following: "principal amount set forth on Schedule A hereto".

2 This text will appear in the case of registered definitive certificates issued
to Institutional Accredited Investors.

3 This text will appear in the case of a Global Debenture.

4 Signature must be guaranteed by an "eligible guarantor  institution" that is a
bank,  stockbroker,  savings and loan  association  or credit union  meeting the
requirements of the Conversion Agent, which  requirements  include membership or
participation in the Securities  Transfer Agents Medallion  Program ("STAMP") or
such other "signature  guarantee program" as may be determined by the Conversion
Agent in addition to, or in substitution  for, STAMP, all in accordance with the
Securities  Exchange Act of 1934, as amended.

5 (Signature must be guaranteed by an "eligible guarantor institution," that is,
a bank,  stockbroker,  savings and loan  association or credit union meeting the
requirements  of  the  Registrar,   which  requirements  include  membership  or
participation in the Securities  Transfer Agents Medallion  Program ("STAMP") or
such other "signature  guarantee  program" as may be determined by the Registrar
in addition  to, or in  substitution  for,  STAMP,  all in  accordance  with the
Securities Exchange Act of 1934, as amended.)Execution Copy

                          REGISTRATION RIGHTS AGREEMENT

                              Dated April 14, 2000

                                     between

                                  VIATEL, INC.

                                       and

                   MORGAN STANLEY & CO.  INTERNATIONAL LIMITED

                              CHASE SECURITIES INC.

                     CREDIT SUISSE FIRST BOSTON CORPORATION

<PAGE>

                         REGISTRATION RIGHTS AGREEMENT

          THIS  REGISTRATION  RIGHTS  AGREEMENT  (the  "AGREEMENT")  is made and
entered into on April 14, 2000 between VIATEL, INC., a Delaware corporation (the
"COMPANY"),  and MORGAN STANLEY & CO.  INCORPORATED,  CHASE  SECURITIES INC. and
CREDIT SUISSE FIRST BOSTON CORPORATION (the "PLACEMENT AGENTS").

          This Agreement is made pursuant to the Placement Agreement,  dated the
date  hereof,  between  the  Company and the  Placement  Agents (the  "PLACEMENT
AGREEMENT"),  which provides for the sale by the Company to the Placement Agents
of an  aggregate  of Euro  300,000,000  principal  amount of 12 3/4% Senior Euro
Notes Due 2008 of the Company (the  "NOTES").  In order to induce the  Placement
Agents to enter into the Placement Agreement,  the Company has agreed to provide
to  the  Placement  Agents,  and  their  direct  and  indirect  transferees  the
registration rights set forth in this Agreement. The execution of this Agreement
is a condition to the closing under the Placement Agreement.

          In  consideration  of the  foregoing,  the  parties  hereto  agree  as
follows:

          1. DEFINITIONS.

          As used in this  Agreement,  the following  capitalized  defined terms
shall have the following meanings:

          "CLOSING DATE" shall mean the Closing Date as defined in the Placement
     Agreement.

          "COMPANY"  shall have the  meaning  set forth in the  Preamble to this
     Agreement and shall also include the Company's successors.

          "EXCHANGE  DATES" shall have the meaning set forth in Section 2(a)(ii)
     hereof.

          "EXCHANGE  NOTES"  shall  mean  notes  issued  in the  Exchange  Offer
     pursuant to Section 2(a) hereof.

          "EXCHANGE  OFFER"  shall  mean the  exchange  offer by the  Company of
     Exchange Notes for Registrable Notes pursuant to Section 2(a) hereof.

          "EXCHANGE OFFER REGISTRATION" shall mean a registration under the 1933
     Act effected pursuant to Section 2(a) hereof.

          "EXCHANGE OFFER  REGISTRATION  STATEMENT" shall mean an exchange offer
     registration  statement  on  Form  S-4  (or,  if  applicable,   on  another
     appropriate form) and all amendments and supplements  to  such registration

<PAGE>

     statement,  in each case  including the Prospectus  contained  therein, all
     exhibits thereto and all material incorporated by reference therein.

          "HOLDER"  shall mean any Placement  Agent,  for so long as it owns any
     Registrable  Notes,  and the  successors,  assigns and direct and  indirect
     transferees  of any  Placement  Agent  who  become  a  registered  owner of
     Registrable  Notes  under the  Indenture;  PROVIDED  THAT for  purposes  of
     Sections  4 and 5 of  this  Agreement,  the  term  "Holder"  shall  include
     Participating Broker-Dealers (as defined in Section 4(a) hereof).

          "INDENTURE"  shall mean the indenture,  dated April 20, 2000,  between
     the  Company  and The  Bank of New  York,  as  trustee,  as the same may be
     amended from time to time in accordance with the terms thereof.

          "MAJORITY  HOLDERS"  shall  mean  the  Holders  of a  majority  of the
     aggregate principal amount of outstanding  Registrable Notes; PROVIDED that
     the principal amount of the Notes shall be calculated in dollars based upon
     an exchange rate of Euro 1.0417 per U.S.$1.00;  PROVIDED  FURTHER  whenever
     the consent or approval of Holders of a specified percentage of Registrable
     Notes is required  hereunder,  Registrable Notes held by the Company or any
     of its  affiliates (as such term is defined in Rule 405 under the 1933 Act)
     (other than the Placement Agents or subsequent holders of Registrable Notes
     if such  subsequent  holders  are  deemed to be such  affiliates  solely by
     reason of their holding of such Registrable  Notes) shall not be counted in
     determining  whether  such  consent or approval was given by the Holders of
     such required percentage or amount.

          "1934 ACT" shall mean the Securities  Exchange Act of 1934, as amended
     from time to time.

          "1933 ACT" shall mean the Securities Act of 1933, as amended from time
     to time.

          "NOTES"  shall  have the  meaning  set forth in the  Preamble  to this
     Agreement.

          "PERSON" shall mean an individual,  partnership,  corporation, limited
     liability company, joint venture,  association,  joint stock company, trust
     or  unincorporated  organization or other entity, or a government or agency
     or political subdivision thereof.

          "PLACEMENT AGENTS" shall have the meaning set forth in the Preamble to
     this Agreement.

          "PLACEMENT AGREEMENT" shall have the meaning set forth in the Preamble
     to this Agreement.

                                        2

<PAGE>

          "PROSPECTUS"  shall mean the  prospectus  included  in a  Registration
     Statement, including any preliminary prospectus, and any such prospectus as
     amended  or  supplemented  by  any  prospectus   supplement,   including  a
     prospectus  supplement  with  respect to the terms of the  offering  of any
     portion of the Registrable Notes covered by a Shelf Registration Statement,
     and by all other amendments and supplements to such prospectus, and in each
     case including all material incorporated by reference therein.

          "REGISTRABLE NOTES" shall mean the Notes; PROVIDED,  HOWEVER, that any
     particular  Note shall cease to be a Registrable  Note when the earliest of
     the following  events occurs (i) a  Registration  Statement with respect to
     such Note shall have been  declared  effective  under the 1933 Act and such
     Note shall have been disposed of pursuant to such  Registration  Statement,
     (ii)  such Note has been sold to the  public  pursuant  to Rule 144 (or any
     similar rule then in force,  but not Rule 144A) under the 1933 Act or (iii)
     such Note shall have ceased to be outstanding.

          "REGISTRATION  EXPENSES"  shall mean any and all expenses  incident to
     performance of or compliance by the Company with this Agreement,  including
     without limitation:  (i) all SEC, stock exchange or National Association of
     Securities  Dealers,  Inc.  registration and filing fees, (ii) all fees and
     expenses  incurred in connection with  compliance with state  securities or
     blue sky laws (including  reasonable fees and  disbursements of counsel for
     any  underwriters or Holders in connection with blue sky  qualification  of
     any of the Exchange Notes or Registrable Notes),  (iii) all expenses of any
     Persons in preparing or assisting in preparing,  word processing,  printing
     and distributing any Registration Statement, any Prospectus, any amendments
     or supplements  thereto,  any  underwriting  agreements,  securities  sales
     agreements  and  other  documents   relating  to  the  performance  of  and
     compliance with this  Agreement,  (iv) all rating agency fees, (v) all fees
     and  disbursements  relating to the  qualification  of the Indenture  under
     applicable  securities laws, (vi) the fees and disbursements of the Trustee
     and its  counsel,  (vii)  the fees and  disbursements  of  counsel  for the
     Company and, in the case of a Shelf Registration Statement,  the reasonable
     fees and  disbursements of one counsel for the Holders (which counsel shall
     be selected by the Majority  Holders and which  counsel may also be counsel
     for the  Placement  Agents)  and (viii) the fees and  disbursements  of the
     independent  public  accountants of the Company,  including the expenses of
     any special  audits or "cold  comfort"  letters  required by or incident to
     such performance and compliance, but excluding fees and expenses of counsel
     to the  underwriters  (other than reasonable fees and expenses set forth in
     clause  (ii)  above)  or  the  Holders  and   underwriting   discounts  and
     commissions and transfer taxes, if any, relating to the sale or disposition
     of Registrable Notes by a Holder.

          "REGISTRATION  STATEMENT" shall mean any registration statement of the
     Company that covers any of the Exchange Notes or Registrable Notes pursuant
     to the provisions of this  Agreement and all amendments and  supplements to
     any such Registration Statement,  including post-effective  amendments,  in
     each case including the Prospectus  contained therein, all exhibits thereto
     and all material incorporated by reference therein.

                                        3

<PAGE>

          "SEC" shall mean the Securities and Exchange Commission.

          "SHELF  REGISTRATION"  shall mean a registration  effected pursuant to
     Section 2(b) hereof.

          "SHELF  REGISTRATION  STATEMENT"  shall  mean a  "shelf"  registration
     statement of the Company pursuant to the provisions of Section 2(b) of this
     Agreement  which  covers  all  of  the  Registrable  Notes  (but  no  other
     securities  unless approved by the Majority Holders) on an appropriate form
     under Rule 415 under the 1933 Act, or any similar  rule that may be adopted
     by the SEC which will  accomplish a similar  objective,  and all amendments
     and supplements to such registration  statement,  including  post-effective
     amendments,  in each case including the Prospectus  contained therein,  all
     exhibits thereto and all material incorporated by reference therein.

          "TRUSTEE"  shall mean the trustee  with respect to the Notes under the
     Indenture.

          "UNDERWRITTEN  REGISTRATION" or  "UNDERWRITTEN  OFFERING" shall mean a
     registration  in which  Registrable  Notes are sold to an  Underwriter  (as
     hereinafter defined) for reoffering to the public.

          2. REGISTRATION UNDER THE 1933 ACT.

          (a) To the extent not  prohibited by any  applicable law or applicable
interpretation  of the staff of the SEC, the Company  shall use its best efforts
to cause to be filed an Exchange Offer Registration Statement covering the offer
by the  Company to the  Holders to  exchange  all of the  Registrable  Notes for
Exchange Notes and to have such  Registration  Statement  remain effective until
the closing of the Exchange Offer. The Company shall commence the Exchange Offer
promptly  after the Exchange  Offer  Registration  Statement  has been  declared
effective  by the SEC and  use its  best  efforts  to have  the  Exchange  Offer
consummated  not later than 60 days after such effective date. The Company shall
commence the Exchange Offer by mailing the related exchange offer Prospectus and
accompanying  documents  to each  Holder  stating,  in  addition  to such  other
disclosures as are required by applicable law:

          (i)  that  the  Exchange   Offer  is  being  made   pursuant  to  this
     Registration  Rights  Agreement  and that  all  Registrable  Notes  validly
     tendered will be accepted for exchange;

          (ii) the dates of acceptance for exchange  (which shall be a period of
     at least 20  business  days  from the date  such  notice  is  mailed)  (the
     "EXCHANGE DATES");

          (iii) that any Registrable  Note not tendered will remain  outstanding
     and continue to accrue interest,  but will not retain any rights under this
     Registration Rights Agreement;

                                        4

<PAGE>

          (iv)  that  Holders  electing  to have a  Registrable  Note  exchanged
     pursuant  to  the  Exchange  Offer  will  be  required  to  surrender  such
     Registrable Note, together with the enclosed letters of transmittal, to the
     institution  and at the address  (located in the Borough of Manhattan,  The
     City of New York) specified in the notice prior to the close of business on
     the last Exchange Date; and

          (v) that  Holders  will be entitled to withdraw  their  election,  not
     later than the close of business on the last  Exchange  Date, by sending to
     the  institution  and at the address  (located in the Borough of Manhattan,
     The City of New York) specified in the notice a telegram,  telex, facsimile
     transmission or letter setting forth the name of such Holder, the principal
     amount of  Registrable  Notes  delivered for exchange and a statement  that
     such Holder is  withdrawing  his or her  election to have such  Registrable
     Notes exchanged.

          As  soon  as  practicable  after  the  last Exchange Date, the Company
 shall:

          (i) accept for exchange Registrable Notes or portions thereof tendered
     and not validly withdrawn pursuant to the Exchange Offer; and

          (ii)  deliver,   or  cause  to  be  delivered,   to  the  Trustee  for
     cancellation  all  Registrable  Notes or portions  thereof so accepted  for
     exchange  by the  Company  and issue,  and cause the  Trustee  to  promptly
     authenticate  and mail to each Holder,  an Exchange Note equal in principal
     amount  and of like  terms to the  Registrable  Notes  surrendered  by such
     Holder.

The  Company  shall use its best  efforts  to  complete  the  Exchange  Offer as
provided  above and shall comply with the  applicable  requirements  of the 1933
Act, the 1934 Act and other  applicable  laws and regulations in connection with
the Exchange  Offer.  The Exchange Offer shall not be subject to any conditions,
other  than that the  Exchange  Offer  does not  violate  applicable  law or any
applicable  interpretation of the staff of the SEC. The Company shall inform the
Placement  Agents of the names and addresses of the Holders to whom the Exchange
Offer is made,  and the  Placement  Agents  shall  have the  right,  subject  to
applicable  law, to contact such Holders and otherwise  facilitate the tender of
Registrable Notes in the Exchange Offer.

          (b) In the event that (i) the  Company  determines  that the  Exchange
Offer  Registration  provided for in Section 2(a) above is not  available or may
not be consummated  as soon as practicable  after the last Exchange Date because
it would violate  applicable law or the applicable  interpretations of the staff
of the SEC, (ii) the Exchange  Offer is not for any other reason  consummated by
the date that is six months after the Closing  Date or (iii) the Exchange  Offer
has been  completed  and in the  opinion of counsel for the  Placement  Agents a
Registration  Statement must be filed and a Prospectus  must be delivered by the
Placement Agents in connection with any offering or sale of Registrable Notes by
such Placement  Agents, of Registrable Notes that were acquired by the Placement
Agents from the Company, the Company

                                        5

<PAGE>

shall use its best  efforts  to cause to be filed as soon as  practicable  after
such  determination,  date or notice of such  opinion of counsel is given to the
Company,  as the case may be, a Shelf Registration  Statement  providing for the
sale by the  Holders  of all of the  Registrable  Notes and to have  such  Shelf
Registration  Statement declared effective by the SEC. The Company agrees to use
its best efforts to keep the Shelf Registration Statement continuously effective
until the expiration of the period referred to in Rule 144(k) under the 1933 Act
with  respect  to  all  Registrable  Notes  covered  by the  Shelf  Registration
Statement,  or  such  shorter  period  that  will  terminate  when  all  of  the
Registrable  Notes covered by the Shelf  Registration  Statement  have been sold
pursuant to the Shelf  Registration  Statement  or as would be  permitted by the
current rules and regulations. The Company further agrees to supplement or amend
the Shelf  Registration  Statement  if  required  by the rules,  regulations  or
instructions  applicable to the  registration  form used by the Company for such
Shelf Registration Statement or by the 1933 Act or by any other applicable rules
and regulations  thereunder for shelf registration or if reasonably requested by
a Holder with respect to  information  relating to such  Holder,  and to use its
best  efforts to cause any such  amendment  to become  effective  and such Shelf
Registration Statement to become usable as soon as thereafter  practicable.  The
Company agrees to furnish to the Holders of Registrable Notes copies of any such
supplement or amendment promptly after its being used or filed with the SEC.

          (c) The Company shall pay all Registration Expenses in connection with
the registration pursuant to Section 2(a) or Section 2(b). Each Holder shall pay
all underwriting  discounts and commissions and transfer taxes, if any, relating
to the sale or  disposition of such Holder's  Registrable  Notes pursuant to the
Shelf Registration Statement.

          (d) An Exchange Offer Registration  Statement pursuant to Section 2(a)
hereof or a Shelf  Registration  Statement  pursuant to Section 2(b) hereof will
not be deemed to have become effective unless it has been declared  effective by
the SEC unless such action by the SEC is no longer required;  PROVIDED, HOWEVER,
that,  if, after it has been  declared  effective,  the offering of  Registrable
Notes pursuant to a Shelf Registration  Statement is interfered with by any stop
order,  injunction  or  other  order  or  requirement  of the  SEC or any  other
governmental agency or court, such Registration  Statement will be deemed not to
have become effective during the period of such interference  until the offering
of Registrable Notes pursuant to such Registration Statement may legally resume.
In the  event  that  the  Exchange  Offer  is not  consummated  and,  if a Shelf
Registration  Statement is required hereby, the Shelf Registration  Statement is
not  declared or  permitted  to go effective on or prior to the date that is six
months after the Closing Date, the annual  interest rate borne by the Notes will
increase by 0.5% per annum,  until the date the Exchange Offer is consummated or
a Shelf Registration Statement is declared effective.

          (e) Without  limiting the remedies  available to the Placement  Agents
and the  Holders,  the Company  acknowledges  that any failure by the Company to
comply with its  obligations  under  Section  2(a) and  Section  2(b) hereof may
result in material irreparable injury to the Placement Agents or the Holders for
which  there is no  adequate  remedy  at law,  that it will not be  possible  to
measure damages for such injuries precisely  and that, in  the event of any such

                                        6

<PAGE>

failure,  the  Placement  Agents or any Holder may obtain  such relief as may be
required to specifically  enforce the Company's  obligations  under Section 2(a)
and Section 2(b) hereof.

          3. REGISTRATION PROCEDURES.

          In connection  with the obligations of the Company with respect to the
Registration  Statements  pursuant to Section 2(a) and Section 2(b) hereof,  the
Company shall as expeditiously as possible:

          (a)  prepare  and file with the SEC a  Registration  Statement  on the
     appropriate  form under the 1933 Act,  which form (x) shall be  selected by
     the  Company  and  (y)  shall,  in the  case of a  Shelf  Registration,  be
     available  for the sale of the  Registrable  Notes by the  selling  Holders
     thereof and (z) shall comply as to form in all material  respects  with the
     requirements  of the applicable  form and include all financial  statements
     required  by the SEC to be filed  therewith,  and use its best  efforts  to
     cause such Registration  Statement to become effective and remain effective
     in accordance with Section 2 hereof;

          (b) prepare and file with the SEC such  amendments and  post-effective
     amendments to each Registration  Statement as may be necessary to keep such
     Registration  Statement  effective for the applicable period and cause each
     Prospectus to be supplemented by any required prospectus supplement and, as
     so  supplemented,  to be filed  pursuant to Rule 424 under the 1933 Act; to
     keep each Prospectus current during the period described under Section 4(3)
     and Rule 174  under  the 1933 Act that is  applicable  to  transactions  by
     brokers or dealers with respect to the Registrable Notes or Exchange Notes;

          (c) in the case of a Shelf  Registration,  furnish  to each  Holder of
     Registrable  Notes, to counsel for the Placement Agents, to counsel for the
     Holders and to each Underwriter of an Underwritten  Offering of Registrable
     Notes, if any, without charge, as many copies of each Prospectus, including
     each preliminary  Prospectus,  and any amendment or supplement  thereto and
     such other documents as such Holder or Underwriter may reasonably  request,
     in  order  to  facilitate  the  public  sale or  other  disposition  of the
     Registrable  Notes;  and the Company consents to the use of such Prospectus
     and any amendment or supplement  thereto in accordance  with applicable law
     by  each  of  the  selling  Holders  of  Registrable  Notes  and  any  such
     Underwriters  in connection  with the offering and sale of the  Registrable
     Notes  covered by and in the manner  described  in such  Prospectus  or any
     amendment or supplement thereto in accordance with applicable law;

          (d) use its  reasonable  best  efforts  to  register  or  qualify  the
     Registrable  Notes under all applicable state securities or "blue sky" laws
     of such  jurisdictions  as any  Holder of  Registrable  Notes  covered by a
     Registration  Statement shall reasonably request in writing by the time the
     applicable Registration Statement is declared effective by the SEC,

                                        7

<PAGE>

     to cooperate with  such  Holders  in  connection  with any filings required
     to be made with the National Association of Securities Dealers, Inc. and do
     any and all other  acts and things  which may be  reasonably  necessary  or
     advisable to enable such Holder to consummate the  disposition in each such
     jurisdiction  of such  Registrable  Notes owned by such  Holder;  PROVIDED,
     HOWEVER, that the Company shall not be required to (i) qualify as a foreign
     corporation or as a dealer in securities in any jurisdiction where it would
     not otherwise be required to qualify but for this Section  3(d),  (ii) file
     any  general  consent to service  of  process  or (iii)  subject  itself to
     taxation in any such jurisdiction if it is not so subject;

          (e) in the  case  of a  Shelf  Registration,  notify  each  Holder  of
     Registrable  Notes,  counsel for the Holders and counsel for the  Placement
     Agents  promptly  and, if requested by any such Holder or counsel,  confirm
     such  advice  in  writing  (i) when a  Registration  Statement  has  become
     effective and when any post-effective  amendment thereto has been filed and
     becomes  effective,  (ii) of any request by the SEC or any state securities
     authority for  amendments and  supplements to a Registration  Statement and
     Prospectus or for additional  information after the Registration  Statement
     has  become  effective,  (iii)  of the  issuance  by the  SEC or any  state
     securities  authority of any stop order  suspending the  effectiveness of a
     Registration  Statement  or the  initiation  of any  proceedings  for  that
     purpose,  (iv) if, between the effective  date of a Registration  Statement
     and the  closing of any sale of  Registrable  Notes  covered  thereby,  the
     representations and warranties of the Company contained in any underwriting
     agreement,  securities sales agreement or other similar agreement,  if any,
     relating  to the  offering  cease to be true and  correct  in all  material
     respects or if the Company  receives any  notification  with respect to the
     suspension of the  qualification  of the Registrable  Notes for sale in any
     jurisdiction  or the initiation of any proceeding for such purpose,  (v) of
     the happening of any event during the period a Shelf Registration Statement
     is effective which makes any statement made in such Registration  Statement
     or the related  Prospectus untrue in any material respect or which requires
     the making of any changes in such  Registration  Statement or Prospectus in
     order to make the statements therein not misleading in any material respect
     and  (vi)  of any  determination  by  the  Company  that  a  post-effective
     amendment to a Registration Statement would be appropriate;

          (f) make every reasonable effort to obtain the withdrawal of any order
     suspending the  effectiveness  of a Registration  Statement at the earliest
     possible  moment and provide prompt notice to each Holder of the withdrawal
     of any such order;

          (g) in the case of a Shelf  Registration,  furnish  to each  Holder of
     Registrable  Notes,  without  charge,  at least one conformed  copy of each
     Registration  Statement and any  post-effective  amendment thereto (without
     documents  incorporated  therein by reference or exhibits  thereto,  unless
     requested);

                                        8
<PAGE>

          (h) in the case of a Shelf  Registration,  cooperate  with the selling
     Holders of  Registrable  Notes to  facilitate  the timely  preparation  and
     delivery of certificates  representing Registrable Notes to be sold and not
     bearing any restrictive  legends and enable such Registrable Notes to be in
     such  denominations  (consistent  with the provisions of the Indenture) and
     registered in such names as the selling  Holders may reasonably  request at
     least two  business  days prior to the  closing of any sale of  Registrable
     Notes;

          (i) in the case of a Shelf  Registration,  upon the  occurrence of any
     event  contemplated  by Section  3(e)(v)  hereof,  use its best  efforts to
     prepare and file with the SEC a supplement or post-effective amendment to a
     Registration   Statement  or  the  related   Prospectus   or  any  document
     incorporated  therein by reference or file any other  required  document so
     that, as thereafter  delivered to the purchasers of the Registrable  Notes,
     such Prospectus 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.
     The Company  agrees to notify the Holders to suspend use of the  Prospectus
     as promptly as practicable  after the occurrence of such an event,  and the
     Holders hereby agree to suspend use of the Prospectus until the Company has
     amended or  supplemented  the  Prospectus to correct such  misstatement  or
     omission;

          (j) a  reasonable  time  prior  to  the  filing  of  any  Registration
     Statement,  any  Prospectus,  any amendment to a Registration  Statement or
     amendment  or  supplement  to a Prospectus  or any  document  that is to be
     incorporated  by reference  into a  Registration  Statement or a Prospectus
     after initial  filing of a Registration  Statement,  provide copies of such
     document to the  Placement  Agents and their counsel (and, in the case of a
     Shelf Registration Statement,  the Holders and their counsel) and make such
     of the  representatives of the Company as shall be reasonably  requested by
     the  Placement  Agents  or  their  counsel  (and,  in the  case  of a Shelf
     Registration  Statement,  the  Holders  or  their  counsel)  available  for
     discussion  of such  document,  and  shall not at any time file or make any
     amendment to the Registration Statement, any Prospectus or any amendment of
     or supplement to a  Registration  Statement or a Prospectus or any document
     (other than a document which the Company is legally  required to file under
     the  Exchange  Act)  which  is to  be  incorporated  by  reference  into  a
     Registration  Statement or a Prospectus,  of which the Placement Agents and
     their  counsel  (and, in the case of a Shelf  Registration  Statement,  the
     Holders  and their  counsel)  shall not have  previously  been  advised and
     furnished a copy or to which the Placement Agents or their counsel (and, in
     the case of a Shelf Registration  Statement,  the Holders or their counsel)
     shall reasonably object;

          (k) obtain a CUSIP and a Common Code number for all Exchange  Notes or
     Registrable Notes, as the case may be, not later than the effective date of
     a Registration Statement;

                                        9

<PAGE>

          (l) cause the Indenture to be qualified  under the Trust Indenture Act
     of 1939, as amended (the "TIA"), in connection with the registration of the
     Exchange Notes or Registrable Notes, as the case may be, cooperate with the
     Trustee and the Holders to effect such  changes to the  Indenture as may be
     required for the Indenture to be so qualified in accordance  with the terms
     of the TIA and execute,  and use its  reasonable  best efforts to cause the
     Trustee to execute, all documents as may be required to effect such changes
     and all other  forms and  documents  required  to be filed  with the SEC to
     enable the Indenture to be so qualified in a timely manner;

          (m) in the case of a Shelf  Registration,  upon execution of customary
     confidentiality  agreements reasonably  satisfactory to the Company and its
     counsel,  make available for inspection by a representative  of the Holders
     of the Registrable Notes, any Underwriter  participating in any disposition
     pursuant  to  such  Shelf   Registration   Statement,   and  attorneys  and
     accountants  designated  by  the  Holders,  at  reasonable  times  and in a
     reasonable manner, all financial and other records, pertinent documents and
     properties of the Company, and cause the respective officers, directors and
     employees of the Company to supply all information  reasonably requested by
     any such representative,  Underwriter, attorney or accountant in connection
     with a Shelf Registration Statement;

          (n) in the case of a Shelf  Registration,  if reasonably  requested by
     any Holder of Registrable Notes covered by such Registration Statement, (i)
     promptly incorporate in a Prospectus supplement or post-effective amendment
     such  information  with respect to such Holder as is legally required to be
     included  therein  and (ii) make all  required  filings of such  Prospectus
     supplement  or such  post-effective  amendment  as soon as the  Company has
     received notification of the matters to be incorporated in such filing; and

          (o) in the  case of a Shelf  Registration,  use  its  reasonable  best
     efforts to enter  into such  customary  agreements  and take all such other
     actions in connection  therewith  (including those requested by the Holders
     of a majority in principal  amount of the Registrable  Notes being sold) in
     order to expedite or facilitate the disposition of such  Registrable  Notes
     including,  but  not  limited  to,  an  Underwritten  Offering  and in such
     connection,  (i) to the  extent  possible,  make such  representations  and
     warranties to the Holders and any  Underwriters of such  Registrable  Notes
     with respect to the business of the Company and its subsidiaries, the Shelf
     Registration Statement,  Prospectus and documents incorporated by reference
     therein or deemed  incorporated by reference therein, if any, in each case,
     in  form,  substance  and  scope  as are  customarily  made by  issuers  to
     underwriters  in  underwritten  offerings  and confirm the same if and when
     requested,  (ii) use its  reasonable  best  efforts to obtain  opinions  of
     counsel to the Company  (which  counsel and  opinions,  in form,  scope and
     substance,  shall  be  reasonably  satisfactory  to the  Holders  and  such
     Underwriters and their respective counsel) addressed to each selling Holder
     and  Underwriter of  Registrable  Notes,  covering the matters  customarily
     covered in opinions  requested  in  underwritten  offerings,  (iii) use its
     reasonable  best  efforts  to  obtain  "cold  comfort"   letters  from  the
     independent certified public accountants of the Company

                                       10

<PAGE>

     (and, if necessary, any other certified public accountant of any subsidiary
     of the  Company,  or of any  business  acquired  by the  Company  for which
     financial  statements and financial data are or are required to be included
     in the Shelf Registration  Statement)  addressed to each selling Holder and
     Underwriter of Registrable  Notes, such letters to be in customary form and
     covering matters of the type customarily  covered in "cold comfort" letters
     in connection with underwritten offerings,  and (iv) deliver such documents
     and  certificates  as may be  reasonably  requested  by  the  Holders  of a
     majority in  principal  amount of the  Registrable  Notes being sold or the
     Underwriters,   and  which  are   customarily   delivered  in  underwritten
     offerings,  to evidence the continued validity of the  representations  and
     warranties of the Company made pursuant to clause (i) above and to evidence
     compliance  with any  customary  conditions  contained  in an  underwriting
     agreement.

          In the case of a Shelf Registration Statement, the Company may require
each  Holder of  Registrable  Notes to furnish to the Company  such  information
regarding  the  Holder  and the  proposed  distribution  by such  Holder of such
Registrable  Notes as the  Company may from time to time  reasonably  request in
writing.  No Holder of Registrable  Notes may include its  Registrable  Notes in
such Shelf  Registration  Statement  unless and until such Holder furnishes such
information to the Company.  Each Holder including  Registrable Notes in a Shelf
Registration  shall agree to furnish  promptly  to the  Company any  information
regarding  such  Holder and the  proposed  distribution  by such  Holder of such
Registrable Notes required to make any information  previously  furnished to the
Company by such Holder not materially misleading.

          In the case of a Shelf  Registration  Statement,  each  Holder  agrees
that,  upon receipt of any notice from the Company of the happening of any event
of the kind  described in Section  3(e)(v)  hereof,  such Holder will  forthwith
discontinue  disposition of Registrable  Notes pursuant to a Shelf  Registration
Statement  until such  Holder's  receipt of the  copies of the  supplemented  or
amended Prospectus  contemplated by Section 3(i) hereof,  and, if so directed by
the Company, such Holder will deliver to the Company (at its expense) all copies
in its  possession,  other than  permanent  file  copies  then in such  Holder's
possession,  of the Prospectus  covering such  Registrable  Notes current at the
time of receipt of such  notice.  If the  Company  shall give any such notice to
suspend the  disposition of Registrable  Notes pursuant to a Shelf  Registration
Statement,  the Company  shall extend the period  during which the  Registration
Statement shall be maintained effective pursuant to this Agreement by the number
of days  during the  period  from and  including  the date of the giving of such
notice to and including the date when the Holders shall have received  copies of
the supplemented or amended  Prospectus  necessary to resume such  dispositions.
There may not be more than two such  suspensions  during  any 365 day period and
any such suspensions may not exceed 30 days for each suspension.

          The  Holders of  Registrable  Notes  covered  by a Shelf  Registration
Statement who desire to do so may sell such Registrable Notes in an Underwritten
Offering; PROVIDED THAT the Company shall be required to use its reasonable best
efforts to effect an  underwritten  offering only upon the request of Holders of
at least 25% in aggregate  principal amount of the Registrable Notes outstanding
at the time such request is delivered to the Company. In any such

                                        11

<PAGE>

Underwritten  Offering,  the investment banker or investment bankers and manager
or managers  (the  "UNDERWRITERS")  that will  administer  the offering  will be
selected  by the  Majority  Holders of the  Registrable  Notes  included in such
offering,  subject  to  approval  by the  Company,  which  approval  will not be
unreasonably withheld.

          4. PARTICIPATION OF BROKER-DEALERS IN EXCHANGE OFFER.

          (a) The staff of the SEC has taken the position that any broker-dealer
that  receives  Exchange  Notes for its own  account  in the  Exchange  Offer in
exchange  for Notes  that were  acquired  by such  broker-dealer  as a result of
market-making or other trading activities (a "Participating  Broker-Dealer") may
be deemed to be an  "underwriter"  within  the  meaning of the 1933 Act and must
deliver a prospectus meeting the requirements of the 1933 Act in connection with
any resale of such Exchange Notes.

     The  Company  understands  that it is the  position of the staff of the SEC
that if the Prospectus  contained in the Exchange Offer  Registration  Statement
includes a plan of  distribution  containing a statement to the above effect and
the means by which  Participating  Broker-Dealers may resell the Exchange Notes,
without  naming the  Participating  Broker-Dealers  or specifying  the amount of
Exchange Notes owned by them, such Prospectus may be delivered by  Participating
Broker-Dealers  to satisfy their prospectus  delivery  obligation under the 1933
Act in connection with resales of Exchange Notes for their own accounts, so long
as the Prospectus otherwise meets the requirements of the 1933 Act.

          (b) In light of the above,  notwithstanding  the other  provisions  of
this Agreement, the Company agrees that the provisions of this Agreement as they
relate  to  a  Shelf   Registration  shall  also  apply  to  an  Exchange  Offer
Registration to the extent,  and with such reasonable  modifications  thereto as
may  be,  reasonably  requested  by the  Placement  Agents  or by  one  or  more
Participating Broker-Dealers,  in each case as provided in clause (ii) below, in
order to  expedite  or  facilitate  the  disposition  of any  Exchange  Notes by
Participating  Broker-Dealers  consistent with the positions of the staff of the
SEC recited in Section 4(a) above; provided that:

          (i) the  Company  shall not be  required  to amend or  supplement  the
     Prospectus contained in the Exchange Offer Registration Statement, as would
     otherwise be contemplated by Section 3(i), for a period  exceeding 180 days
     after the last  Exchange  Date (as such period may be extended  pursuant to
     the penultimate paragraph of Section 3 of this Agreement) and Participating
     Broker-Dealers  shall not be authorized by the Company to deliver and shall
     not  deliver  such  Prospectus  after such  period in  connection  with the
     resales contemplated by this Section 4; and

          (ii) the application of the Shelf Registration procedures set forth in
     Section 3 of this  Agreement  to an  Exchange  Offer  Registration,  to the
     extent not  required by the  positions  of the staff of the SEC or the 1933
     Act and the rules and  regulations  thereunder,  will be in conformity with
     the reasonable  request to the Company by the Placement  Agents or with the
     reasonable request in writing to the Company by

                                        12

<PAGE>

     one  or  more  broker-dealers  who  certify to the Placement Agents and the
     Company in writing  that they  anticipate  that they will be  Participating
     Broker-Dealers;   and  PROVIDED  FURTHER  that,  in  connection  with  such
     application of the Shelf Registration  procedures set forth in Section 3 to
     an Exchange Offer Registration,  the Company shall be obligated (x) to deal
     only with one entity representing the Participating  Broker-Dealers,  which
     shall be Morgan Stanley & Co.  Incorporated  unless it elects not to act as
     such  representative,  (y) to pay the fees and expenses of only one counsel
     representing the  Participating  Broker-Dealers,  which shall be counsel to
     the Placement  Agents unless such counsel  elects not to so act, and (z) to
     cause to be delivered only one, if any, "cold comfort"  letter with respect
     to the  Prospectus  in the form existing on the last Exchange Date and with
     respect to each subsequent amendment or supplement, if any, effected during
     the period specified in clause (i) above.

          (c) the Placement Agents shall have no liability to the Company or any
Holder with  respect to any request  that it may make  pursuant to Section  4(b)
above.

          5. INDEMNIFICATION AND CONTRIBUTION.

          (a) The Company  agrees to indemnify  and hold  harmless the Placement
Agents, each Holder and each person, if any, who controls any Placement Agent or
any Holder within the meaning of either Section 15 of the 1933 Act or Section 20
of the 1934 Act, or is under  common  control  with,  or is  controlled  by, any
Placement Agent or any Holder, from and against all losses,  claims, damages and
liabilities  (including,   without  limitation,  any  legal  or  other  expenses
reasonably  incurred by any Placement  Agent, any Holder or any such controlling
or affiliated  person 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 any Registration Statement (or any amendment thereto)
pursuant to which Exchange Notes or Registrable  Notes were registered under the
1933 Act, including all documents  incorporated therein by reference,  or caused
by any omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not misleading, or
caused by any untrue  statement or alleged  untrue  statement of a material fact
contained in any  Prospectus  (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,  except  insofar  as 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 or any Holder  furnished to the Company in writing by any Placement  Agent
or any selling  Holder  expressly  for use therein;  PROVIDED THAT the foregoing
indemnity  agreement  shall not inure to the benefit of any Holder or any Person
controlling such Holder,  with respect to any sale or disposition of Registrable
Notes by such Holder in violation of the  penultimate  paragraph of Section 3 of
this  Agreement.  In  connection  with any  Underwritten  Offering  permitted by
Section 3, the Company will also  indemnify the  Underwriters,  if any,  selling
brokers, dealers and similar securities industry professionals  participating in
the distribution, their officers

                                        13

<PAGE>

and directors  and each Person who controls such Persons  (within the meaning of
either  Section  15 of the 1933 Act or  Section  20 of the 1934 Act) to the same
extent as provided above with respect to the  indemnification of the Holders, if
requested in connection with any Registration Statement.

          (b) Each Holder  agrees,  severally and not jointly,  to indemnify and
hold harmless the Company,  each Placement Agent and the other selling  Holders,
and each of  their  respective  directors,  officers  who sign the  Registration
Statement and each Person, if any, who controls the Company, any Placement Agent
and any other selling Holder within the meaning of either Section 15 of the 1933
Act or Section 20 of the 1934 Act to the same extent as the foregoing  indemnity
from the  Company  to the  Placement  Agents  and the  Holders,  but  only  with
reference  to  information  relating to such Holder  furnished to the Company in
writing by such Holder expressly for use in any  Registration  Statement (or any
amendment thereto) or any Prospectus (or any amendment or supplement 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 either paragraph (a) or paragraph (b) above, 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, 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 (A) the  reasonable  fees and expenses of
more than one separate firm (in addition to any local counsel) for the Placement
Agents and all Persons,  if any,  who control the  Placement  Agents  within the
meaning of either  Section 15 of the 1933 Act or Section 20 of the 1934 Act, (B)
the reasonable  fees and expenses of more than one separate firm (in addition to
any local  counsel) for the Company,  its  directors,  its officers who sign the
Registration  Statement and each Person, if any, who controls the Company within
the meaning of either such Section and (C) the  reasonable  fees and expenses of
more than one separate  firm (in addition to any local  counsel) for all Holders
and all Persons,  if any,  who control any Holders  within the meaning of either
such  Section,  and that all such fees and expenses  shall be reimbursed as they
are  incurred.  In such case  involving  any  Placement  Agents and  Persons who
control such Placement Agent, such firm shall be designated in writing by Morgan
Stanley & Co. Incorporated. In such case involving the

                                           14

<PAGE>

Holders and such Persons who control  Holders,  such firm shall be designated in
writing  by the  Majority  Holders.  In all  other  cases,  such  firm  shall be
designated by the Company.  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 (x) such  settlement  is
entered into more than 60 days after receipt by such  indemnifying  party of the
aforesaid request and (y) such indemnifying  party shall not have reimbursed the
indemnified  party for such fees and expenses of counsel 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  unreasonably  withheld),  effect  any  settlement  of  any  pending  or
threatened  proceeding  in respect of which such  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 paragraph (a) or
paragraph  (b) of this  Section  5 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  paragraph,  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  in such  proportion  as is  appropriate  to reflect the
relative fault of the indemnifying party or parties, on the one hand, and of the
indemnified  party  or  parties,  on the  other  hand,  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  fault of the Company and the Holders  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  or by the  Holders  and the
parties'  relative intent,  knowledge,  access to information and opportunity to
correct  or  prevent  such  statement  or  omission.   The  Holders'  respective
obligations  to  contribute  pursuant  to  this  Section  5(d)  are  several  in
proportion  to the  respective  principal  amount of  Registrable  Notes of such
Holder that were registered pursuant to a Registration Statement.

          (e) The  Company  and each  Holder  agree that it would not be just or
equitable if contribution pursuant to this Section 5 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 paragraph (d) above. The amount paid
or payable by an indemnified  party as a result of the losses,  claims,  damages
and  liabilities  referred to in paragraph (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

                                        15

<PAGE>

or defending any such action or claim.  Notwithstanding  the  provisions of this
Section 5, no Holder shall be required to indemnify or contribute  any amount in
excess of the amount by which the total  price at which  Registrable  Notes were
sold by such  Holder  exceeds  the amount of any  damages  that such  Holder has
otherwise  been  required  to pay by reason of such  untrue  or  alleged  untrue
statement  or  omission  or alleged  omission.  No person  guilty of  fraudulent
misrepresentation (within the meaning of Section 11(f) of the 1933 Act) shall be
entitled to  contribution  from any person who was not guilty of such fraudulent
misrepresentation. The remedies provided for in this Section 5 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.

          The indemnity and contribution  provisions contained in this Section 5
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, any Holder or any Person controlling any Placement Agent or
any Holder, or by or on behalf of the Company,  its officers or directors or any
Person  controlling the Company,  (iii)  acceptance of any of the Exchange Notes
and  (iv)  any  sale of  Registrable  Notes  pursuant  to a  Shelf  Registration
Statement.

          6. MISCELLANEOUS.

          (a) NO INCONSISTENT AGREEMENTS.  The Company has not entered into, and
on or after the date of this Agreement will not enter into, any agreement  which
is inconsistent  with the rights granted to the Holders of Registrable  Notes in
this Agreement or otherwise  conflicts with the  provisions  hereof.  The rights
granted to the Holders  hereunder  do not in any way  conflict  with and are not
inconsistent  with the rights  granted to the  holders  of the  Company's  other
issued and outstanding securities under any such agreements.

          (b)  AMENDMENTS  AND  WAIVERS.   The  provisions  of  this  Agreement,
including  the  provisions  of this  sentence,  may not be amended,  modified or
supplemented,  and waivers or consents to departures from the provisions  hereof
may not be given unless the Company has obtained the written  consent of Holders
of at  least  a  majority  in  aggregate  principal  amount  of the  outstanding
Registrable   Notes  which  are  affected  by  such   amendment,   modification,
supplement,   waiver  or  consent;   PROVIDED,   HOWEVER,   that  no  amendment,
modification, supplement, waiver or consent to any departure from the provisions
of Section 5 hereof  shall be  effective  as against  any Holder of  Registrable
Notes unless consented to in writing by such Holder.

          (c)  NOTICES.  All notices and other  communications  provided  for or
permitted  hereunder  shall  be made in  writing  by hand  delivery,  registered
first-class  mail,  telex,  telecopier  or any  courier  guaranteeing  overnight
delivery (i) if to a Holder, at the most current address given by such Holder to
the Company by means of a notice given in accordance with the provisions of this
Section 6(c), which address  initially is, with respect to the Placement Agents,
the address set forth in the  Placement  Agreement;  and (ii) if to the Company,
initially at the Company's address set

                                        16

<PAGE>

forth in the Placement Agreement and thereafter at such other address, notice of
which is given in accordance with the provisions of this Section 6(c).

          All such notices and communications  shall be deemed to have been duly
given:  at the time  delivered by hand, if personally  delivered;  five business
days after  being  deposited  in the mail,  postage  prepaid,  if  mailed;  when
answered back, if telexed; when receipt is acknowledged,  if telecopied;  and on
the next  business  day,  if timely  delivered  to an air  courier  guaranteeing
overnight delivery.

          Copies of all such notices,  demands or other  communications shall be
concurrently  delivered  by the person  giving the same to the  Trustee,  at the
address specified in the Indenture.

          (d) SUCCESSORS AND ASSIGNS.  This Agreement shall inure to the benefit
of and be binding upon the  successors,  assigns and  transferees of each of the
parties,  including,  without  limitation  and  without  the need for an express
assignment,  subsequent Holders; PROVIDED THAT nothing herein shall be deemed to
permit any  assignment,  transfer or other  disposition of Registrable  Notes in
violation of the terms of the  Placement  Agreement.  If any  transferee  of any
Holder shall acquire  Registrable Notes, in any manner,  whether by operation of
law or  otherwise,  such  Registrable  Notes shall be held subject to all of the
terms of this Agreement,  and by taking and holding such Registrable  Notes such
person shall be conclusively deemed to have agreed to be bound by and to perform
all of the terms and  provisions  of this  Agreement  and such  person  shall be
entitled to receive the benefits hereof. The Placement Agents (in their capacity
as the  Placement  Agents)  shall have no liability or obligation to the Company
with  respect to any  failure by a Holder to comply  with,  or any breach by any
Holder of, any of the obligations of such Holder under this Agreement.

          (e) PURCHASES AND SALES OF NOTES. The Company shall not, and shall use
its best efforts to cause its  affiliates (as defined in Rule 405 under the 1933
Act) not to, purchase and then resell or otherwise transfer any Notes.

          (f)  THIRD  PARTY  BENEFICIARY.  The  Holders  shall  be  third  party
beneficiaries to the agreements made hereunder  between the Company,  on the one
hand, and the Placement  Agents,  on the other hand, and shall have the right to
enforce  such  agreements  directly  to the  extent  it deems  such  enforcement
necessary or advisable to protect its rights or the rights of Holders hereunder.

          (g)  COUNTERPARTS.  This  Agreement  may be  executed in any number of
counterparts and by the parties hereto in separate  counterparts,  each of which
when so  executed  shall be  deemed  to be an  original  and all of which  taken
together shall constitute one and the same agreement.

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

                                        17

<PAGE>

          (i) GOVERNING LAW. This  Agreement  shall be governed by and construed
in accordance with the internal laws of the State of New York.

          (j) SEVERABILITY.  In the event that any one or more of the provisions
contained  herein,  or the  application  thereof  in any  circumstance,  is held
invalid, illegal or unenforceable,  the validity, legality and enforceability of
any such  provision  in every  other  respect  and of the  remaining  provisions
contained herein shall not be affected or impaired thereby

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

                                       18

<PAGE>

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

                                     VIATEL, INC.

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

<PAGE>

Confirmed and accepted as of the date first above written:

MORGAN STANLEY & CO. INTERNATIONAL LIMITED
CHASE SECURITIES INC.
CREDIT SUISSE FIRST BOSTON CORPORATION

By: MORGAN STANLEY & CO. INTERNATIONAL LIMITED
    In its individual capacity and as representative of the other Placement
    Agents

    By: /s/ Alan Jones
       ____________________________
       Name:  Alan Jones
       Title: Managing Director

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