1
PATHNET, INC.
SOLICITATION OF CONSENTS FOR $25.00 IN CASH
PER $1,000 PRINCIPAL AMOUNT OF
12 1/4% SENIOR NOTES DUE 2008
To Our Clients:
Enclosed for your consideration is a Prospectus issued by Pathnet
Telecommunications, Inc. ("Pathnet Telecom") dated November 22, 1999 (as the
same may be amended from time to time, the "Preliminary Prospectus"), and a
form of Consent and Letter of Transmittal and instructions thereto (the
"Consent and Letter of Transmittal") relating to the solicitation (the
"Solicitation") by Pathnet, Inc. ("Pathnet") and Pathnet Telecom of consents
(the "Consents") from holders of the 12 1/4% Senior Notes due 2008 of Pathnet
(the "Notes") to the following:
(1) the waiver of Pathnet's obligations under certain provisions of
the Indenture, dated as of April 8, 1998 (the "Indenture"), among Pathnet
and The Bank of New York, as Trustee ("Trustee"), namely the Change of
Control Offer obligation under Section 1010 of the Indenture and the Excess
Proceeds Offer obligation under Section 017 of the Indenture, and
(2) the adoption of a Supplemental Indenture among Pathnet, Pathnet
Telecom and the Trustee, pursuant to which (a) Pathnet Telecom will become
bound by substantially the same covenants and other obligations as are
currently imposed on Pathnet under the Indenture, and (b) transactions
between Pathnet and Pathnet Telecom or Pathnet and certain other
subsidiaries of Pathnet Telecom will be permitted to the same extent that
such transactions are currently permitted between Pathnet and its
Restricted Subsidiaries under the Indenture;
in each case as more fully described under the caption "The Pathnet Senior
Noteholder Waivers and Other Proposed Indenture Amendments" in the Preliminary
Prospectus.
As described in, and subject to the terms and conditions of, the
Preliminary Prospectus, Pathnet Telecom is offering a guarantee of Pathnet's
obligations under the Notes in exchange for the Consents. In addition, upon the
terms and subject to the conditions set forth in the Preliminary Prospectus and
the Consent and Letter of Transmittal, Pathnet will make a Consent Payment at
the rate of $25.00 in cash for each $1,000 principal amount of Notes for which
validly delivered and unrevoked Consents have been received by the Depository
on or prior to the Initial Expiration Date (as defined below), unless extended
(the "Expiration Date").
Pathnet and Pathnet Telecom intend to cause the execution of a supplemental
indenture to accommodate the issuance by Pathnet Telecom of the Guarantees and
the addition of Pathnet Telecom to the Indenture on substantially the same terms
as Pathnet (the "Proposed Amendments") to occur on the Initial Expiration Date
if, as of such date, Requisite Consents have been obtained or, if later,
promptly upon obtaining the Requisite Consents. The Initial Expiration Date will
be the date that is 10 business days after the effective date of the
Registration Statement and Pathnet Telecom will issue a press release confirming
the effective date of the Registration Statement and the Initial Expiration Date
promptly after the Registration Statement is declared effective by the
Securities and Exchange Commission. Pathnet and Pathnet Telecom will deliver to
all Holders a copy of the final Prospectus not less than five business days
prior to the Initial Expiration Date.
The term "Record Holder" as used herein shall mean the registered holders
of Notes outstanding at the close of business in New York on the date of
effectiveness of the Registration Statement (the "Record Date"). The
Preliminary Prospectus describes the requested waivers, the Guarantee, the
Proposed Amendments and the consent solicitation process.
The material is being forwarded to you as the beneficial owner of Notes
carried by us or our affiliates for your account or benefit but not registered
in your name. A delivery of Consents
2
with respect thereto may only be made by us as the registered holder and
pursuant to your instructions. Therefore, Pathnet and Pathnet Telecom urge
beneficial owners of Notes registered in the name of a broker, dealer,
commercial bank, trust company or other nominee to contact such registered
holder promptly if they wish to deliver Consents in the Solicitation.
Accordingly, we request instructions as to whether you wish us or our
affiliates to deliver Consents with respect to your Notes, pursuant to the
terms and conditions set forth in the Preliminary Prospectus and the Consent
and Letter of Transmittal. We urge you to read carefully the Preliminary
Prospectus and the Consent before instructing us or our affiliates to deliver
Consents with respect to your Notes.
Your instructions to us should be forwarded as promptly as possible in
order to permit us or our affiliates to deliver Consents with respect to your
Notes on your behalf in accordance with the provisions of the Solicitation. The
Solicitation will expire at 5:00 P.M., New York City time, on the Initial
Expiration Date, unless extended. Consents delivered pursuant to the
Solicitation may be revoked, subject to the procedures described in the
Preliminary Prospectus, at any time prior to the Expiration Date.
Your attention is directed to the following:
1. A consenting holder whose Consent is delivered and not revoked on or prior
to the Expiration Date will receive, upon the terms and subject to the
conditions in the Prospectus, $25.00 in cash for each $1,000 principal
amount of Notes for which a Consent is validly delivered and not revoked.
2. Pathnet's obligation to make Consent Payments is conditioned upon, among
other things, (1) receipt by Pathnet, Pathnet Telecom and the Trustee of
validly delivered and unrevoked Consents from the Record Holders of at
least a majority of the aggregate outstanding principal amount of the Notes
outstanding on the Record Date, and (2) execution by the Trustee of a
Supplemental Indenture providing for the Proposed Amendments, all of which
conditions Pathnet and Pathnet Telecom reserve the right to waive.
If you wish to have us deliver your Consent to (1) the waiver of Pathnet's
Change of Control Offer obligation and the Excess Proceeds Offer obligation in
connection with the Contribution and Reorganization Transaction; and (2) the
adoption of the Supplemental Indenture and the Proposed Amendments contained
therein, please so instruct us by completing, executing and returning to us the
instruction form that appears below. The accompanying Consent and Letter of
Transmittal is furnished to you for informational purposes only and may not be
used by you to deliver Consents with respect to Notes held by us and registered
in our name for your account or benefit.
2
3
INSTRUCTIONS
THE UNDERSIGNED ACKNOWLEDGE(S) RECEIPT OF YOUR LETTER AND THE
ENCLOSED MATERIAL REFERRED TO THEREIN RELATING TO THE SOLICITATION OF
PATHNET, INC. AND PATHNET TELECOMMUNICATIONS, INC.
This will instruct you to deliver my Consent to (1) the waiver
of Pathnet's Change of Control Offer obligation and the Excess
Proceeds Offer obligation in connection with the Contribution and
Reorganization Transaction; and (2) the adoption of the Supplemental
Indenture and the Proposed Amendments contained therein, with respect
to my Notes, pursuant to the terms of and conditions set forth in the
Prospectus and the Consent and Letter of Transmittal.
Box 1 / / Please deliver my Consent to (1) the waiver of Pathnet's Change of
Control Offer obligation and the Excess Proceeds Offer obligation
with respect to the Contribution and Reorganization Transaction; and
(2) the adoption of a Supplemental Indenture and the Proposed
Amendments contained therein, in each case with respect to my Notes.
I have identified on a signed schedule attached hereto the principal
amount for which Consents regarding such Notes are to be delivered,
if I wish to consent with regard to less than all of such Notes.
Box 2 / / Please do not deliver my Consent to (1) the waiver of Pathnet's
Change of Control Offer obligation and the Excess Proceeds Offer
obligation; and (2) the adoption of the Supplemental Indenture and
the Proposed Amendments contained therein.
Date: ______
----------------------------------------
----------------------------------------
Signatures
----------------------------------------
----------------------------------------
Please print name(s) here
UNLESS A SPECIFIC CONTRARY INSTRUCTION IS GIVEN IN A SIGNED SCHEDULE
ATTACHED HERETO, YOUR SIGNATURE(S) HEREON SHALL CONSTITUTE AN
INSTRUCTION TO US TO CONSENT TO (1) THE WAIVER OF PATHNET'S CHANGE OF
CONTROL OFFER OBLIGATION AND THE EXCESS PROCEEDS OFFER OBLIGATION IN
CONNECTION WITH THIS CONTRIBUTION AND REORGANIZATION TRANSACTION; AND
(2) THE ADOPTION OF THE SUPPLEMENTAL INDENTURE AND THE PROPOSED
AMENDMENTS CONTAINED THEREIN, IN EACH CASE, WITH RESPECT TO ALL OF
YOUR NOTES.
3
4
PATHNET, INC.
SOLICITATION OF CONSENTS
FOR $25.00 IN CASH PER $1,000 PRINCIPAL AMOUNT
OF 12-1/4% SENIOR NOTES DUE 2008
To Securities Dealers, Commercial Banks,
Trust Companies and Other Nominees:
Enclosed for your consideration is a Prospectus issued by Pathnet
Telecommunications, Inc. ("Pathnet Telecom") dated November 22, 1999 (as the
same may be amended from time to time, the "Preliminary Prospectus"), and a form
of Consent and Letter of Transmittal and instructions thereto (the "Consent and
Letter of Transmittal") relating to the solicitation (the "Solicitation") by
Pathnet, Inc. ("Pathnet") and Pathnet Telecom of consents (the "Consents") from
holders of the 12-1/4% Senior Notes due 2008 of Pathnet (the "Notes") to the
following:
(1) The waiver of Pathnet's obligations under certain provisions of
the Indenture, dated as of April 8, 1998 (the "Indenture"), among Pathnet
and The Bank of New York, as Trustee ("Trustee"), namely the Change of
Control Offer obligation under Section 1010 of the Indenture and the
Excess Proceeds Offer obligation under Section 1017 of the Indenture, and
(2) The adoption of a Supplemental Indenture among Pathnet, Pathnet
Telecom and the Trustee, pursuant to which (a) Pathnet Telecom will become
bound by substantially the same covenants and other obligations as are
currently imposed on Pathnet under the Indenture, and (b) transactions
between Pathnet and Pathnet Telecom or Pathnet and certain other
subsidiaries of Pathnet Telecom will be permitted to the same extent that
such transactions are currently permitted between Pathnet and its
Restricted Subsidiaries under the Indenture;
in each case as more fully described under the caption "The Pathnet Senior
Noteholder Waivers and Other Proposed Indenture Amendments" in the Preliminary
Prospectus.
As described in, and subject to the terms and conditions of, the
Preliminary Prospectus, Pathnet Telecom is offering a guarantee of Pathnet's
obligations under the Notes in exchange for the Consents. In addition, upon the
terms and subject to the conditions set forth in the Preliminary Prospectus and
the Consent and Letter of Transmittal, Pathnet will make a Consent Payment at
the rate of $25.00 in cash for each $1,000 principal amount of Notes for which
validly delivered and unrevoked Consents have been received by the Depository on
or prior to the Initial Expiration Date (as defined below), unless extended (the
"Expiration Date").
Pathnet and Pathnet Telecom intend to cause the execution of a
supplemental indenture to accommodate the issuance by Pathnet Telecom of the
Guarantees and the addition of Pathnet Telecom to the Indenture on substantially
the same terms as Pathnet (the "Proposed Amendments") to occur on the Initial
Expiration Date if, as of such date Requisite Consents have been obtained or, if
later, promptly upon obtaining the Requisite Consents. The Initial Expiration
Date will be the date that is 10 business days after the effective date of the
Registration Statement and Pathnet Telecom will issue a press release confirming
the effective date of the Registration Statement and the Initial Expiration Date
promptly after the Registration Statement is declared effective by the
Securities and Exchange Commission. Pathnet and Pathnet Telecom will deliver to
all Holders a copy of the final Prospectus not less than five business days
prior to the Initial Expiration Date.
The term "Record Holder" as used herein shall mean the registered holders
of Notes outstanding at the close of business in New York on the date of
effectiveness of the Registration Statement (the "Record Date"). The Preliminary
Prospectus describes the requested waivers, the Guarantee, the Proposed
Amendments and the consent solicitation process.
5
We are asking you to contact your clients for whom you hold Notes
registered in your name or in the name of your nominee. In addition, we ask you
to contact your clients who, to your knowledge, hold Notes registered in their
own name. You will be reimbursed by Pathnet and Pathnet Telecom for customary
mailing and handling expenses incurred by you in forwarding any of the enclosed
materials to your clients.
Enclosed is a copy of each of the following documents:
1. The Preliminary Prospectus.
2. A Consent and Letter of Transmittal for your use in connection with
the Solicitation relating to the Notes and for the information of
your clients.
3. A form of letter that may be sent to your clients for whose accounts
you hold Notes registered in your name or the name of your nominee
with space provided for obtaining the clients' instructions with
regard to the Solicitation.
4. A letter from Richard A. Jalkut to the holders of Notes.
5. Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9.
6. A return envelope addressed to the Depositary.
Your prompt action is requested. The Solicitation will expire at 5:00 P.M.,
New York City time, on the Initial Expiration Date, unless extended. Consents
delivered pursuant to the Solicitation may be revoked, subject to the procedures
described in the Consent and Letter of Transmittal, at any time prior to the
Expiration Date.
To deliver Consents in the Solicitation, a duly executed and properly
completed Consent and Letter of Transmittal or a facsimile thereof, together
with a copy of any other required documents, must be received by the Depositary
as indicated in the Consent and Letter of Transmittal.
Additional copies of the enclosed material may be obtained from the
Information Agent, by calling MacKenzie Partners, Inc. on (212) 929-5500.
NOTHING HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU OR ANY PERSON
AS AN AGENT OF PATHNET, PATHNET TELECOM, THE TRUSTEE, THE SOLICITATION AGENT,
THE INFORMATION AGENT OR THE DEPOSITARY, OR AUTHORIZE YOU OR ANY OTHER PERSON TO
MAKE ANY STATEMENT ON BEHALF OF ANY OF THEM WITH RESPECT TO THE SOLICITATION,
EXCEPT FOR STATEMENTS EXPRESSLY MADE IN THE PRELIMINARY PROSPECTUS OR THE
CONSENT AND LETTER OF TRANSMITTAL.
_________________________________
Pathnet, Inc.
Pathnet Telecommunications, Inc.
2
6
CONSENT AND LETTER OF TRANSMITTAL
FOR
12-1/4% SENIOR NOTES DUE 2008
OF
PATHNET, INC.
SOLICITATION OF CONSENTS
FOR $25.00 IN CASH PER $1,000 PRINCIPAL AMOUNT
PURSUANT TO THE PRELIMINARY PROSPECTUS OF
PATHNET TELECOMMUNICATIONS, INC., DATED
NOVEMBER 22, 1999.
THE SOLICITATION WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON THE DATE THAT
IS TEN BUSINESS DAYS AFTER THE EFFECTIVE DATE OF THE REGISTRATION STATEMENT
REFERRED TO BELOW (THE "INITIAL EXPIRATION DATE"), UNLESS EXTENDED (THE
"EXPIRATION DATE"). PATHNET, INC. AND PATHNET TELECOMMUNICATIONS, INC. INTEND TO
PUBLICLY ANNOUNCE THE PRECISE INITIAL EXPIRATION DATE AFTER THE REGISTRATION
STATEMENT IS DECLARED EFFECTIVE BY THE SECURITIES AND EXCHANGE COMMISSION.
CONSENTS MAY BE REVOKED AT ANY TIME UNTIL THE EXPIRATION DATE .
The Depositary:
The Bank of New York
101 Barclay Street, 7th Floor
New York, New York 10286
By Hand/Overnight Courier: By Facsimile: By Mail:
(212) 815-6339
The Bank of New York The Bank of New York
101 Barclay Street, 7th Floor 101 Barclay Street, 7th Floor
New York, New York 10286 Confirm by Telephone: New York, New York 10286
ATTENTION: Reorganization (212) 815-6331 ATTENTION: Reorganization
Section, Santino Ginocchitti Section, Santino Ginocchitti
DELIVERY OF THIS CONSENT AND LETTER OF TRANSMITTAL TO AN ADDRESS, OR
TRANSMISSION VIA FACSIMILE, OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A
VALID DELIVERY.
HOLDERS (PARTICIPANTS IN THE DEPOSITARY TRUST COMPANY) WHO WISH TO BE
ELIGIBLE TO RECEIVE THE CONSENT PAYMENT PURSUANT TO THE SOLICITATION MUST
VALIDLY DELIVER (AND NOT REVOKE) THEIR CONSENTS TO THE DEPOSITARY PRIOR TO THE
EXPIRATION DATE.
THE INSTRUCTIONS CONTAINED HEREIN SHOULD BE READ CAREFULLY BEFORE THIS
CONSENT AND LETTER OF TRANSMITTAL IS COMPLETED.
The undersigned is a Record Holder (as defined below) of 12-1/4% Senior
Notes (the "Notes") of Pathnet, Inc., a Delaware corporation ("Pathnet"). By
execution hereof, the undersigned acknowledges receipt of the Preliminary
Prospectus of Pathnet Telecommunications, Inc. ("Pathnet Telecom") dated
November 22, 1999 (as may be amended from time to time, the "Preliminary
Prospectus"), and of this Consent and Letter of Transmittal and the instructions
hereto (the "Consent and Letter of Transmittal"), which together constitute the
solicitation by Pathnet and Pathnet Telecom (the "Solicitation"), in connection
with the Contribution and Reorganization Transaction described in the
Preliminary Prospectus, of consents (the "Consents") from Record Holders of the
Notes to:
(1) the waiver of Pathnet's obligations under certain provisions of the
Indenture, dated as of April 8, 1998 (the "Indenture"), among Pathnet and The
Bank of New York, as Trustee ("Trustee"), namely the Change of Control Offer
7
obligation under Section 1010 of the Indenture and the Excess Proceeds Offer
obligation under Section 1017 of the Indenture, and
(2) the adoption of a Supplemental Indenture among Pathnet, Pathnet
Telecom and the Trustee, pursuant to which (a) Pathnet Telecom will become bound
by substantially the same covenants and other obligations as are currently
imposed on Pathnet under the Indenture, and (b) transactions between Pathnet and
Pathnet Telecom or Pathnet and certain other subsidiaries of Pathnet Telecom
will be permitted to the same extent that such transactions are currently
permitted between Pathnet and its Restricted Subsidiaries under the Indenture;
in each case as more fully described under the caption "The Pathnet Senior
Noteholder Waivers and Other Proposed Indenture Amendments" in the Preliminary
Prospectus.
As described in, and subject to the terms and conditions of, the
Preliminary Prospectus, Pathnet Telecom is offering a guarantee of Pathnet's
obligations under the Notes in exchange for the Consents. In addition, subject
to the terms and conditions of this Consent and Letter of Transmittal and the
Preliminary Prospectus, Holders of Notes who validly deliver (and do not revoke)
their Consents to the Depositary prior to the Expiration Date will receive a
consent payment of $25 per $1,000 in principal amount of the Notes (the "Consent
Payments").
Pathnet's obligation to make Consent Payments to Record Holders of Notes
pursuant to the solicitation is conditioned upon, among other things, (i)
receipt by Pathnet and the Trustee of validly delivered and unrevoked Consents
from Record Holders of a majority in aggregate principal amount of the Notes
outstanding on the Record Date (the "Requisite Consents"); and (ii) execution
and delivery by the Trustee of a supplemental indenture providing for the
amendments to the Indenture necessary to accommodate the issuance by Pathnet
Telecom of the Guarantees and the addition of Pathnet Telecom to the Indenture
on substantially the same terms as Pathnet (the "Proposed Amendments"). The
Preliminary Prospectus describes the requested waivers, the Proposed Amendments,
the form of the guarantees offered by Pathnet Telecom (the "Guarantees") and the
solicitation of consents to the adoption of the Supplemental Indenture and the
Proposed Amendments contained therein.
Forms of the Guarantees, the Indenture and the Supplemental Indenture are
filed or incorporated by reference as exhibits to the Registration Statement of
which the Preliminary Prospectus is a part (Registration No. 333-91469) (the
"Registration Statement"). Copies of these documents may be obtained as
described in the Preliminary Prospectus under the caption "Where you can find
more information" and also from the Depositary at its address set forth above.
Pathnet and Pathnet Telecom undertake to deliver to all Holders a copy of the
final Prospectus not less than five business days prior to the Initial
Expiration Date.
The Solicitation is made only to Record Holders of Notes. The term "Record
Holder" as used herein shall mean the registered holders of Notes outstanding at
the close of business in New York on the effective date of the Registration
Statement (the "Record Date").
The undersigned has completed, executed and delivered this Consent to
indicate the action the undersigned desires to take with respect to the
Solicitation.
All capitalized terms used herein and not defined herein shall have the
meanings ascribed to them in the Preliminary Prospectus.
Your bank or broker can assist you in completing this form. The
instructions included with this Consent and Letter of Transmittal must be
followed. Questions and requests for assistance or for additional copies of the
Preliminary Prospectus or this Consent and Letter of Transmittal may be directed
to the Information Agent. See Instruction 11 herein.
2
8
TABLE FOR USE IF CONSENT RELATES TO LESS THAN THE TOTAL
PRINCIPAL AMOUNT OF ALL NOTES HELD BY RECORD HOLDER
- --------------------------------------------------------------------------------
DESCRIPTION OF NOTES
- --------------------------------------------------------------------------------
NAME(S) AND ADDRESS(ES) OF RECORD HOLDER(S) CERTIFICATE(S) AS TO WHICH CONSENT
(PLEASE FILL IN, IF BLANK) IS GIVEN (ATTACH ADDITIONAL LIST,
IF NECESSARY)
- --------------------------------------------------------------------------------
PRINCIPAL
AMOUNT AS TO
WHICH
CONSENTS
ARE GIVEN
AGGREGATE (MUST BE AN
PRINCIPAL INTEGRAL
CERTIFICATE AMOUNT MULTIPLE OF
NUMBER(S)* REPRESENTED $1,000)*
-------------------------------------------
-------------------------------------------
-------------------------------------------
-------------------------------------------
- --------------------------------------------------------------------------------
TOTAL PRINCIPAL AMOUNT OF NOTES
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
* If this Consent relates to less than (i) the total principal amount of Notes
registered in the name of the Record Holder(s) on the Record Date or (ii) if
this Consent is being executed by proxy, the total principal amount of Notes
to which such proxy relates, then the Record Holder(s) or proxy, as the case
may be, must list the certificate numbers and principal amounts of the Notes
as to which this Consent relates. Otherwise, this Consent will be deemed to
relate to the total principal amount of Notes registered in the name(s) of
such Record Holder(s) on the Record Date or to which such proxy relates, as
the case may be.
- --------------------------------------------------------------------------------
3
9
NOTE - SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
By signing and returning this Consent and Letter of Transmittal in
accordance with the instructions hereto, the undersigned hereby (1) waives
Pathnet's compliance with the Change of Control Offer obligation and the Excess
Proceeds Offer obligation (as those terms are described in the Preliminary
Prospectus) for the purpose of effecting the Contribution and Reorganization
Transaction; and (2) consents to the adoption of the Supplemental Indenture and
the Proposed Amendments contained therein. Unless otherwise specified by the
undersigned, this Consent relates to the total principal amount of Notes
registered in the undersigned's name on the Record Date or, if this consent form
is being executed by proxy, the total principal amount of Notes to which such
proxy relates. If this Consent relates to less than the total principal amount
of Notes registered in the undersigned's name on the Record Date or to which
such proxy relates, as the case may be, the undersigned has listed on the table
herein the certificate numbers and principal amounts for which this Consent is
given.
The undersigned hereby irrevocably constitutes and appoints the Depositary
the true and lawful agent and attorney-in-fact of the undersigned (with full
knowledge that the Depositary also acts as the agent of the Trustee, Pathnet and
Pathnet Telecom) with respect to this Consent, with full power of substitution
(such power-of-attorney being deemed to be an irrevocable power coupled with an
interest) to deliver to the Trustee this Consent and Letter of Transmittal as
evidence of the undersigned's Consent to (1) waiver of Pathnet's compliance with
the Change of Control Offer obligation and the Excess Proceeds Offer obligation
in connection with the Contribution and Reorganization Transaction; and (2) the
adoption of the Supplemental Indenture and the Proposed Amendments contained
therein and as certification that Requisite Consents, duly executed by Record
Holders, have been received, in accordance with the terms of and conditions to
the Solicitation. The undersigned acknowledges that Pathnet and Pathnet Telecom
have nominated the Trustee to receive the Consent on its behalf and that
delivery to the Trustee of this Consent will be deemed for the purposes of this
consent solicitation to be delivery to the Trustee and to Pathnet and Pathnet
Telecom.
Pathnet and Pathnet Telecom intend to cause the execution of the
Supplemental Indenture providing for the Proposed Amendments to occur on the
Initial Expiration Date if, as of such date, Requisite Consents have been
obtained or, if later, promptly upon obtaining the Requisite Consents. The time
and date on which such supplemental indenture is executed is hereinafter
referred to as the "Consent Date". Pathnet and Pathnet Telecom undertake to
deliver to all Holders a copy of the final Prospectus not less than ten business
days prior to the Initial Expiration Date.
The undersigned agrees and acknowledges that, by the execution and
delivery hereof, the undersigned makes and provides (1) the written waiver of
Pathnet's compliance with the Change of Control Offer obligation and the Excess
Proceeds Offer obligation as permitted by Section 1019 of the Indenture; and (2)
the written consent to the adoption of the Supplemental Indenture and the
Proposed Amendments as permitted by Section 902(2) of the Indenture. The
undersigned understands that any Consent provided hereby shall remain in full
force and effect unless and until such Consent is revoked in accordance with the
procedures set forth in the Preliminary Prospectus and this Consent and Letter
of Transmittal. The undersigned understands that a revocation of such Consent
will not be effective following the time and date on which the supplemental
indenture providing for the Proposed Amendments is executed. The undersigned
hereby represents and warrants that the undersigned has full power and authority
to deliver this Consent. The undersigned will, upon request, execute and deliver
any additional documents deemed by the Depositary, Pathnet, Pathnet Telecom, or
the Trustee to be necessary or desirable to perfect the undersigned's Consent
and to complete the execution of the supplemental indenture to the Indenture
reflecting the Proposed Amendments.
The undersigned understands that delivery of Consents pursuant to any of
the procedures described in the Preliminary Prospectus under the caption
"Description of the Consent Solicitation Process" and in the instructions hereto
and acceptance thereof by Pathnet and Pathnet Telecom will constitute a binding
agreement among the undersigned, Pathnet and Pathnet Telecom upon the terms and
subject to the conditions of the Solicitation.
The undersigned understands that deliveries of Consents may be revoked by
written notice of revocation received by the Depositary at any time prior to the
Expiration Date. Any Record Holder who revokes a Consent prior to the Expiration
Date shall not be entitled to receive the Consent Payment, unless such Record
Holder subsequently redelivers a valid Consent prior to the Expiration Date.
4
10
The undersigned understands that notice of revocation of a Consent, to be
effective, must (i) contain the name of the person who delivered the Consent and
the description of the Notes to which it relates, the certificate number or
numbers of such Notes and the aggregate principal amount represented thereby,
(ii) be signed by the Registered Holder thereof in the same manner as the
original signature on this Consent and Letter of Transmittal or be accompanied
by evidence, satisfactory to Pathnet, Pathnet Telecom, the Trustee and the
Depositary, that the Record Holder of Notes revoking the Consent has succeeded
to ownership of the Notes, and (iii), be received by the Depositary at its
address set forth herein prior to the Expiration Date. A purported notice of
revocation that lacks any of the required information or is dispatched to any
other address will not be effective to revoke a Consent previously given.
All authority conferred or agreed to be conferred by this Consent and
Letter of Transmittal shall survive the death or incapacity of the undersigned
and every obligation of the undersigned under this Consent shall be binding upon
the undersigned's heirs, personal representatives, executors, administrators,
successors, assigns, trustees in bankruptcy and other legal representatives.
The undersigned acknowledges and agrees that receipt of Consents from the
Record Holders (and their proxies) of at least a majority in principal amount of
the outstanding Notes, among other things, is required to waive Pathnet's
compliance with the Change of Control Offer obligation and the Excess Proceeds
Offer obligation and to approve the Proposed Amendments. The waiver of Pathnet's
compliance with the Change of Control Offer obligation, the waiver of Pathnet's
compliance with the Excess Proceeds Offer obligation, and the Proposed
Amendments will become effective on the Consent Date, as described in the
Preliminary Prospectus.
The undersigned further acknowledges and agrees that by executing and
delivering this Consent and Letter of Transmittal, the undersigned (1) waives
Pathnet's compliance with the Change of Control Offer Obligation and the Excess
Proceeds Offer obligation for the purpose of effecting the Contribution and
Reorganization Transaction; and (2) consents to the adoption of the Supplemental
Indenture and the Proposed Amendments contained therein and that it is not
possible for the undersigned to grant such waivers and consents with respect to
some but not all of such items.
5
11
- --------------------------------------------------------------------------------
PLEASE SIGN HERE
(TO BE COMPLETED BY ALL CONSENTING RECORD HOLDERS (OR PROXY
HOLDERS) OF NOTES)
This Consent and Letter of Transmittal must be signed by the Record
Holder(s) of Notes in exactly the same manner as the name(s) appear(s) on the
certificate(s) for Notes to which this Consent relates. If signature is by a
trustee, executor, administrator, guardian, attorney-in-fact, officer of a
corporation or other person acting in a fiduciary or representative capacity,
such person must set forth his or her full title below under "Capacity" and
submit proper evidence satisfactory to Pathnet, Pathnet Telecom and to the
Trustee of such person's authority so to act. See Instruction 4 herein.
If this Consent and Letter of Transmittal is signed by a person other than
the Record Holder(s) of the Notes, the Consent and Letter of Transmittal must
be accompanied by the proxy substantially in the form attached hereto duly
executed by such Record Holders.
X...........................................................
X...........................................................
SIGNATURE(S) OF RECORD HOLDER(S) OR AUTHORIZED SIGNATORY
Date:........
Name(s): ..................................................
..................................................
(PLEASE PRINT)
Capacity: ..................................................
Address: ..................................................
..................................................
(INCLUDING ZIP CODE)
Area Code and Telephone No.: ...............................
PLEASE COMPLETE SUBSTITUTE FORM W-9 HEREIN
- --------------------------------------------------------------------------------
6
12
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE SOLICITATION
1. DELIVERY OF THIS CONSENT AND LETTER OF TRANSMITTAL. To deliver Consents
in the Solicitation, a properly completed and duly executed copy or facsimile of
this Consent and Letter of Transmittal and a copy of any other documents
required by this Consent and Letter of Transmittal must be received by the
Depositary at its address set forth herein prior to the Expiration Date. The
method of delivery of this Consent and Letter of Transmittal and all other
required documents to the Depositary is at the election and risk of Record
Holders. If such delivery is by mail, it is suggested that Record Holders use
properly insured registered mail with return receipt requested, and that the
mailing be made sufficiently in advance of the Expiration Date to permit
delivery to the Depositary prior to such date. Except as otherwise provided
below, the delivery will be deemed made only when actually received by the
Depositary at the address listed on the cover. This Consent and Letter of
Transmittal should be sent only to the Depositary, not to Pathnet, Pathnet
Telecom, the Trustee, the Information Agent or the Solicitation Agent.
PATHNET AND PATHNET TELECOM INTEND TO CAUSE THE EXECUTION OF A
SUPPLEMENTAL INDENTURE PROVIDING FOR THE PROPOSED AMENDMENTS ON THE INITIAL
EXPIRATION DATE IF, AS OF SUCH DATE, THE REQUISITE CONSENTS HAVE BEEN OBTAINED
OR, IF LATER, PROMPTLY UPON OBTAINING THE REQUISITE CONSENTS. SUCH SUPPLEMENTAL
INDENTURE WILL BE BINDING UPON EACH RECORD HOLDER WHETHER OR NOT SUCH RECORD
HOLDER GIVES A CONSENT WITH RESPECT THERETO.
2. CONSENT TO WAIVERS AND PROPOSED AMENDMENTS; REVOCATION OF CONSENT. In
accordance with the Preliminary Prospectus, all properly completed and executed
Consents and Letters of Transmittal (1) waiving Pathnet's compliance with the
Change of Control Offer obligation and the Excess Proceeds Offer obligation and
(2) consenting to the adoption of the Supplemental Indenture and the Proposed
Amendments contained therein that are received by the Depositary will be counted
as Consents with respect to the waiver of the Change of Control Offer
obligation, the waiver of the Excess Proceeds Offer obligation and the adoption
of the Supplemental Indenture and the Proposed Amendments contained therein
unless the Depositary receives, prior to the Expiration Date, a written notice
of revocation of such Consent as described in the Preliminary Prospectus.
Consents may be revoked by delivery of a written notice of revocation in
accordance with the following procedures. To be effective, a notice of
revocation of Consent must (i) contain the name of the person who delivered the
Consent and the description of the Notes to which it relates, the certificate
number or numbers of such Notes and the aggregate principal amount represented
by such Notes, (ii) be signed by the Record Holder thereof in the same manner as
the original signature on this Consent and Letter of Transmittal or be
accompanied by evidence, satisfactory to Pathnet, Pathnet Telecom, the Trustee
and the Depositary that the holder of the Notes revoking the Consent has
succeeded to the beneficial ownership of the Notes, and (iii) be received prior
to the Expiration Date by the Depositary at one of the addresses set forth
herein. A purported notice of revocation that lacks any of the required
information or is dispatched to any other address will not be effective to
revoke a Consent previously given.
3. PARTIAL CONSENTS. Consents will be accepted only in principal amounts
equal to $1,000 or integral multiples thereof. If Consents with respect to less
than the entire principal amount of Notes registered in the name of the Record
Holder are delivered, the Holder must complete the table relating to partial
Consents contained herein. The entire principal amount of Notes registered in
the name of the Record Holder will be deemed to have consented unless otherwise
accurately indicated.
4. RECORD HOLDERS ENTITLED TO CONSENT. Only a Record Holder (or his or her
duly authorized proxy) may deliver a Consent. Any beneficial owner whose Notes
are registered in the name of a broker, dealer, commercial bank, trust company
or other nominee and who wishes to deliver a Consent should contact such Record
Holder promptly and instruct such Record Holder to execute and deliver this
Consent on such beneficial owner's behalf.
5. SIGNATURES ON THIS CONSENT AND LETTER OF TRANSMITTAL. If this Consent
and Letter of Transmittal is signed by the Record Holder(s) of the Notes with
respect to which Consents are given, the signature(s) must correspond with the
name(s) as written on the face of the certificate(s) representing the Notes for
which Consents are given without alteration, enlargement or any change
whatsoever.
8
13
IF THIS CONSENT AND LETTER OF TRANSMITTAL IS EXECUTED BY A HOLDER OF NOTES
OTHER THAN THE RECORD HOLDER(S), A VALID PROXY (SUBSTANTIALLY IN THE FORM
ATTACHED HERETO) MUST BE OBTAINED FROM SUCH RECORD HOLDER(S).
If any of the Notes with respect to which this Consent is given are owned
by two or more joint Record Holders, all such Record Holders must sign this
Consent and Letter of Transmittal. If any Notes with respect to which this
Consent is given are held in different names on several certificates, it will be
necessary to complete, sign and submit as many separate copies of this Consent
and Letter of Transmittal and any necessary accompanying documents as there are
different names in which certificates are held.
If this Consent and Letter of Transmittal is signed by trustees,
executors, administrators, guardians, attorneys-in-fact, officers of
corporations or others acting in a fiduciary or representative capacity, such
persons should so indicate when signing, and proper evidence satisfactory to
Pathnet, Pathnet Telecom and the Trustee of their authority so to act must be
submitted with this Consent and Letter of Transmittal.
6. TAXPAYER IDENTIFICATION NUMBER. Each consenting Record Holder is
required to provide the Depositary with the Record Holder's correct taxpayer
identification number ("TIN"), generally the Record Holder's social security or
federal employer identification number, on Substitute Form W-9, which is
provided under "Important Tax Information" below, and to certify that the Record
Holder (or other payee) is not subject to backup withholding. A Record Holder
must cross out item (2) in the Certification box on Substitute Form W-9 if such
Record Holder is subject to backup withholding. Failure to provide the
information on the form may subject the consenting Record Holder to a $50
penalty imposed by the Internal Revenue Service and 31% federal income tax
backup withholding on any Consent Payments made to the Record Holder or other
payee pursuant to the Solicitation. The box in Part 3 of the form should be
checked if the consenting Record Holder has not been issued a TIN and has
applied for a TIN or intends to apply for a TIN in the near future. If the box
in Part 3 is checked and the Depositary is not provided with a TIN by the time
of payment, thereafter the Depositary will withhold 31% on all Consent Payments
to such Record Holder (or other payee) until a TIN is provided to the
Depositary.
7. TRANSFER TAXES. Pathnet will pay all transfer taxes, if any, applicable
to the Solicitation of Consents of holders of Notes pursuant to the
Solicitation.
8. IRREGULARITIES. All questions as to the form of all documents and the
validity (including time of receipt) of deliveries and revocations of Consents
will be determined by Pathnet and Pathnet Telecom, in their sole discretion,
which determination shall be final and binding. Alternative, conditional or
contingent Consents will not be considered valid. Pathnet and Pathnet Telecom
reserve the absolute right to reject any or all Consents that are not in proper
form or the acceptance of which would, in Pathnet's and Pathnet Telecom's
opinion, be unlawful. Pathnet and Pathnet Telecom also reserve the right to
waive any defects, irregularities or conditions of delivery as to particular
Consents. Pathnet's and Pathnet Telecom's interpretations of the terms and
conditions of the Solicitation (including the instructions in this Consent and
Letter of Transmittal) will be final and binding. Any defect or irregularity in
connection with deliveries of Consents must be cured within such time as Pathnet
and Pathnet Telecom determine, unless waived by Pathnet and Pathnet Telecom.
Deliveries of Consents shall not be deemed to have been made until all defects
and irregularities have been waived by Pathnet and Pathnet Telecom or cured.
None of Pathnet, Pathnet Telecom, the Trustee, the Depositary, the Information
Agent, the Solicitation Agent or any other person will be under any duty to give
notice of any defects or irregularities in deliveries of Consents, or will incur
any liability to Record Holders for failure to give any such notice.
RECORD HOLDERS SHOULD USE THIS CONSENT AND LETTER OF TRANSMITTAL TO
DELIVER CONSENTS IN THE SOLICITATION.
9. WAIVER OF CONDITIONS. Pathnet and Pathnet Telecom expressly reserve
the absolute right, in their sole discretion, to amend or waive any of the
conditions to the Solicitation in the case of any Consents delivered, in whole
or in part, at any time and from time to time.
9
14
11. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions relating to
the procedure for consenting to the waivers described above and to the Proposed
Amendments and requests for assistance or additional copies of the Preliminary
Prospectus and this Consent and Letter of Transmittal and any other documents
related to the Solicitation may be directed to the Information Agent, whose
address and telephone number appear below. Additional information about the
Solicitation may be obtained from the Depositary, whose address and telephone
number appear below.
10
15
IMPORTANT TAX INFORMATION
Under federal tax law, a holder who receives a Consent Payment from
Pathnet is required to provide the Depositary (as payer) with such holder's
correct TIN on Substitute Form W-9 below or otherwise establish a basis for
exemption from backup withholding. If such holder is an individual, the TIN is
his or her social security number. If the Depositary is not provided with the
correct TIN, a $50 penalty may be imposed by the Internal Revenue Service, and
any Consent Payments, made with respect to validly delivered and unrevoked
Consents may be subject to backup withholding.
Certain holders (including, among others, all corporations and certain
foreign persons) are not subject to these backup withholding and reporting
requirements. Exempt holders should indicate their exempt status on Substitute
Form W-9. A foreign person may qualify as an exempt recipient by submitting to
the Depositary a properly completed Internal Revenue Service Form W-8, signed
under penalties of perjury, attesting to that holder's exempt status. A Form W-8
can be obtained from the Depositary. See the enclosed "Guidelines for
Certification Taxpayer of Identification Number on Substitute Form W-9" for
additional instructions.
If backup withholding applies, the Depositary is required to withhold 31%
of any Consent Payments made to the holder or other payee. Backup withholding is
not an additional federal income tax. Rather, the federal income tax liability
of persons subject to backup withholding will be reduced by the amount of tax
withheld. If withholding results in an overpayment of taxes, a refund may be
obtained from the Internal Revenue Service.
PURPOSE OF SUBSTITUTE FORM W-9
To prevent backup withholding on any Consent Payments paid to a Record
Holder or other payee in connection with the Consent, the holder is required to
provide the Depositary with the holder's correct TIN by completing the form
below, certifying that the TIN provided on Substitute Form W-9 is correct (or
that such holder is awaiting a TIN) and that (i) the holder has not been
notified by the Internal Revenue Service that the holder is subject to backup
withholding as a result of failure to report all interest or dividends or (ii)
the Internal Revenue Service has notified the holder that the holder is no
longer subject to backup withholding.
WHAT NUMBER TO GIVE THE DEPOSITARY
The holder is required to give the Depositary the TIN (e.g., social
security number or employer identification number) of the Record Holder(s) of
the Notes. If the Notes are held in more than one name or are not in the name of
the actual owner, consult the enclosed "Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9" for additional guidance on which
number to report.
11
16
PAYER'S NAME: [ ]
- -----------------------------------------------------------------------------------------------------
SUBSTITUTE PART 1 - PLEASE PROVIDE YOUR TIN ______________________
Form W-9 IN THE BOX AT RIGHT AND CERTIFY Social Security Number
BY SIGNING AND DATING BELOW OR
_______________________
Employer Identification
Number
---------------------------------------------------------------------------
----------------------------------------------------------------------------
PART 2 - Certification - Under Penalties of PART 3 -
Department of the Perjury, I certify that:
Treasury Internal Awaiting TIN [ ]
Revenue Service (1) The number shown on this form is my
correct Taxpayer Identification Number (or I
Payer's Request for am waiting for a number to be issued to me)
Taxpayer and
Identification Number
(TIN) (2) I am not subject to backup withholding
because (a) I am exempt from backup
withholding; (b) I have not been notified by
the Internal Revenue Service ("IRS") that I
am subject to backup withholding as a result
of failure to report all interest or
dividends, or (c) the IRS has notified me
that I am no longer subject to backup
withholding.
Certificate instructions - You must cross out item
(2)in Part 2 above if you have been notified by the
IRS that you are subject to backup withholding
because of underreporting interest or dividends on
your tax return.
SIGNATURE DATE
------------------------------------- -------------
- -----------------------------------------------------------------------------------------------------
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP
WITHHOLDING OF 31% OF THE CONSENT PAYMENTS MADE TO YOU PURSUANT TO
THE SOLICITATION. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR
CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM
W-9 FOR ADDITIONAL DETAILS.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX
IN PART 3 OF SUBSTITUTE FORM W-9.
- --------------------------------------------------------------------------------
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification number
has not been issued to me, and either (a) I have mailed or delivered an
application to receive a taxpayer identification number to the appropriate
Internal Revenue Service Center or Social Security Administration Office or (b)
I intend to mail or deliver an application in the near future. I understand that
if I do not provide a taxpayer identification number by the time of payment, 31
percent of all reportable payments made to me thereafter will be withheld until
I provide a taxpayer identification number.
- --------------------------------- ------------------------
Signature Date
- --------------------------------------------------------------------------------
12
17
The Information Agent for the Offer and the Solicitation is:
Mackenzie Partners, Inc.
156 Fifth Avenue
New York, New York 10010
Telephone: 212 929 5500
The Solicitation Agent for the Solicitation is:
Lazard Freres & Co. LLC
30 Rockerfeller Plaza
New York, New York 10020
Telephone: 212 632 6000