VIATEL INC
10-Q, EX-4.16, 2000-08-14
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                          AMENDMENT TO RIGHTS AGREEMENT

      This AMENDMENT,  dated as of February 1, 2000, is between VIATEL,  INC., a
Delaware  corporation  (the  "Company"),  and THE BANK OF NEW  YORK,  a New York
banking corporation (the "Rights Agent").

                                    RECITALS

      A. The  Company  and the Rights  Agent are  parties to a Rights  Agreement
dated December 6, 1999 (the "Rights Agreement").

      B. HMTF Europe Acquisition Corp., a Delaware  corporation ("HMTF Europe"),
Chase Equity  Associates,  LLC, a Delaware  limited  liability  company  ("Chase
Equity") and the Company have  entered  into that  certain  Securities  Purchase
Agreement,  dated February 1, 2000 (the "Securities Purchase Agreement").  It is
contemplated  that HMTF  Europe  will  assign  its rights  under the  Securities
Purchase  Agreement to HMTF Bridge  Viatel,  LLC, HMEU Viatel I-EQ  Coinvestors,
LLC, HMEU Viatel I-SBS Coinvestors,  LLC, HM Viatel PG Europe,  LLC, HMEU Viatel
Qualified   Fund,  LLC  and  HMEU  Viatel  Private  Fund,  LLC  (each,  a  "HMTF
Purchaser").

      C. Pursuant to the Securities Purchase  Agreement,  the Company has agreed
to issue and sell,  and HMTF Europe and Chase  Equity  have agreed to  purchase,
shares of Series B Preferred  Stock and Series C Preferred Stock and Warrants to
purchase shares of Common Stock.

      D. Pursuant to Section 27 of the Rights Agreement,  the Board of Directors
of the Company has determined that the amendment to the Rights Agreement, as set
forth herein,  is necessary and  desirable to reflect the  Transactions  and the
Company and the Rights Agent desire to evidence such amendment in writing.

      E. Terms used but not defined  herein  have the  meaning  ascribed to such
terms in the Rights  Agreement  or, if not defined  therein,  in the  Securities
Purchase Agreement.

      NOW, THEREFORE, the parties agree as follows:

1.    AMENDMENT OF SECTION 1(A).  Section 1(a) of the Rights Agreement is hereby
      amended to add the following  clause  immediately  after the end of clause
      (iii) of Section 1(a) and immediately prior to the penultimate sentence of
      Section 1(a):

                  "; (iv)  notwithstanding  anything  contained  in this  Rights
            Agreement  (other  than the  following  clauses (v) and (vi) of this
            Section 1(a)) to the contrary,  no HMTF  Purchaser nor any Affiliate
            thereof,  and no Chase Purchaser nor any Affiliate  thereof,  shall,
            for purposes of this Rights Agreement, be deemed to Beneficially Own
            any  Common  Shares  by reason of its  Beneficial  Ownership  of any
            securities  acquired,  directly or indirectly,  upon consummation of
            the  Transactions  (including,  without  limitation,  the  Series  B
            Preferred  Stock,  the Series C Stock,  the Conversion  Shares,  the


<PAGE>

            Warrants,   the  Warrant  Shares  or  any  Common  Shares  or  other
            securities that may be received as a result of dividends or payments
            on, or the exercise of preemptive rights with respect to, the Series
            B Preferred Stock, the Series C Stock,  Warrant Shares or Conversion
            Shares; the foregoing securities are referred to collectively herein
            as the "Excluded Shares"); (v) notwithstanding anything contained in
            the Rights Agreement to the contrary,  (A) no HMTF Purchaser nor any
            Affiliate thereof shall be deemed to be an "ACQUIRING PERSON" unless
            and  until  the  Common  Shares   Beneficially  Owned  by  all  HMTF
            Purchasers  and their  Affiliates  exceed 7.5% of the Common  Shares
            then outstanding  (and, for purposes of any calculation with respect
            thereto,  the Excluded Shares (whether owned by an HMTF Purchaser or
            an Affiliate  or by a Chase  Purchaser  or an  Affiliate)  shall not
            otherwise be deemed to be Beneficially Owned for purposes hereof and
            thus shall not be included in any such calculation  unless and until
            the Common  Shares  Beneficially  Owned by all HMTF  Purchasers  and
            their  Affiliates  (other than the Excluded  Shares) exceeds 7.5% of
            the Common  Shares  then  outstanding,  at which  time all  Excluded
            Shares shall be deemed Beneficially Owned by such HMTF Purchaser and
            each of its Affiliates) and (B) no Chase Purchaser nor any Affiliate
            thereof shall be deemed to be an "ACQUIRING PERSON" unless and until
            the Common Shares  Beneficially  Owned by all Chase  Purchasers  and
            their  Affiliates  exceed 7.5% of the Common Shares then outstanding
            (and,  for purposes of any  calculation  with respect  thereto,  the
            Excluded  Shares (whether owned by an HMTF Purchaser or an Affiliate
            or by a Chase  Purchaser  or an  Affiliate)  shall not  otherwise be
            deemed to be  Beneficially  Owned for purposes hereof and thus shall
            not be included in any such calculation  unless and until the Common
            Shares   Beneficially  Owned  by  all  Chase  Purchasers  and  their
            Affiliates  (other  than the  Excluded  Shares)  exceed  7.5% of the
            Common Shares then  outstanding,  at which time all Excluded  Shares
            shall be deemed  Beneficially Owned by such Chase Purchaser and each
            of its Affiliates);  or (vi)  notwithstanding  anything contained in
            the Rights  Agreement to the  contrary,  no Purchaser nor any of its
            Affiliates shall be deemed to be an "ACQUIRING  PERSON" if it or its
            Affiliates or both shall acquire more than 7.5% of the Common Shares
            (other than the  Excluded  Shares) and it shall have  divested  such
            number of Common  Shares as shall be  required so that the number of
            Common  Shares   Beneficially   Owned  by  such  Purchaser  and  its
            Affiliates  (other than the Excluded  Shares) after giving effect to
            such  divestiture  is less  than  7.5%  of the  Common  Shares  then
            outstanding  within ten  business  days  following  delivery  of any
            written notice from the Company requesting such divestiture."

2.    AMENDMENT OF SECTION 1(C).  Section 1(c) of the Rights Agreement is hereby
      amended by inserting the following sentence at the end thereof.

                  "Notwithstanding  anything  contained in this Rights Agreement
            to the contrary,  the HMTF Purchasers and their  Affiliates,  on the
            one hand,  and the Chase  Purchasers  and their  Affiliates,  on the
            other  hand,  shall not  together be deemed to  constitute  a single
            person or group for any  purpose  hereunder  solely by reason of the
            Equity  Documents  and  the  Transactions,  their  ownership  of the
            Securities  (including  the  Warrants)  or any of  their  activities


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<PAGE>

            related thereto only, and the Common Shares  "BENEFICIALLY OWNED" by
            the HMTF Purchasers and their  Affiliates,  on the one hand, and the
            Chase Purchasers and their Affiliates,  on the other hand, shall not
            together be aggregated for any purpose hereunder solely by reason of
            the  Equity  Documents  and the  Transactions  or  their  activities
            related  thereto  (including,   without   limitation,   transactions
            involving the Excluded  Shares and any activities  pursuant to which
            the HMTF  Purchasers,  the Chase  Purchasers  and  their  respective
            Affiliates  vote  together  as a class on any  matter  or  otherwise
            cooperate in carrying out the Transactions)."

3.    ADDITION OF SECTION 1 (AA)(1). Section 1(aa)(1) shall be inserted into the
      Rights Agreement as follows:

                  "Securities  Purchase  Agreement"  shall  mean the  Securities
            Purchase  Agreement,  dated as of February 1, 2000, by and among the
            Company and each of the purchasers listed on Schedule I thereto."

4.    AMENDMENT  OF SECTION  27.  Section 27 of the Rights  Agreement  is hereby
      amended by inserting the following sentence at the end thereof.

                  "The  Company  shall not amend this Rights  Agreement in a way
            which would  materially  adversely  affect the rights granted to any
            HMTF  Purchaser or any Chase  Purchaser  or any of their  respective
            Affiliates  under the  terms of the  Amendment  to Rights  Agreement
            dated as of February 1, 2000,  unless such  amendment is approved in
            writing  by  such  HMTF  Purchaser,  such  Chase  Purchaser  or such
            Affiliate, as the case may be."

5.    ADDITION  OF  SECTION  35.  Section 35 shall be  inserted  into the Rights
      Agreement as follows:

                  "Section 35. CERTAIN  CAPITALIZED  TERMS.  All terms which are
            capitalized  and used herein (which are not  otherwise  specifically
            defined  herein)  and which are defined in the  Securities  Purchase
            Agreement  shall be used in the Rights  Agreement  as defined in the
            Securities Purchase Agreement."

6.    No Distribution  Date or Share Acquisition Date shall occur as a result of
      the Equity Documents and the Transactions.

7.    GOVERNING LAW. This Amendment shall be governed by, interpreted under, and
      construed in accordance with the laws of the State of New York, regardless
      of the laws that might  otherwise  govern under  applicable  principles of
      conflicts of law.

8.    COUNTERPARTS.  This Amendment may executed in counterparts,  each of which
      shall be  deemed  an  original,  but all of  which  taken  together  shall
      constitute one and the same instrument.

9.    THIRD-PARTY  BENEFICIARIES.  Each HMTF Purchaser, each Chase Purchaser and
      each of their respective  Affiliates shall be third party beneficiaries of
      this Amendment to the extent specifically set forth herein.

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<PAGE>

10.   TERMINATION.  This Amendment shall automatically terminate and be null and
      void upon  termination of the Securities  Purchase  Agreement  pursuant to
      Section 8.4(a) thereof.


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<PAGE>






            IN WITNESS  WHEREOF,  the parties have executed this Amendment as of
the date first set forth above.

VIATEL, INC.

BY:   /s/ James P. Prenetta
   --------------------------------------------
      Name:  James P. Prenetta, Jr.
      Title: Vice President and General Counsel



THE BANK OF NEW YORK

BY:    /s/ Diane Ajjan
   --------------------------------------------
      Name:    Diane Ajjan
      Title:   Vice President






               [SIGNATURE PAGE FOR AMENDMENT TO RIGHTS AGREEMENT]


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