1
EXHIBIT 99.2
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 PROSPECTUS OF
PATHNET TELECOMMUNICATIONS, INC., DATED
MARCH __, 2000.
- --------------------------------------------------------------------------------
THE SOLICITATION WILL EXPIRE AT 5:00P.M., NEW YORK CITY TIME, ON MARCH , 2000
(THE "INITIAL EXPIRATION DATE"), UNLESS EXTENDED (THE "EXPIRATION DATE").
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 Confirm by Telephone: New York, New York 10286
New York, New York 10286 (212) 815-6331 ATTENTION: Reorganization Section,
ATTENTION: Reorganization Section, Santino Ginocchitti
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 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 Prospectus of
Pathnet Telecommunications, Inc. ("Pathnet Telecom") dated March __, 2000 (the
"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 reorganization described in the 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
obligation under Section 1010 of the Indenture and the Excess Proceeds Offer
obligation under Section 1017 of the Indenture, and
2
(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
Prospectus.
As described in, and subject to the terms and conditions of, the
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 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 is
also agreeing, subject to the terms of a pledge agreement to be executed and
delivered upon the consummation of the reorganization, to purchase and pledge
for the benefit of the holders of the Notes additional United States Treasury
securities sufficient to cover the October 16, 2000 interest payment on the
Notes.
Pathnet's obligation to make Consent Payments to Record Holders of Notes
and to purchase and pledge additional security on the 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 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 Prospectus is a part (Registration No. 333-91469) (the
"Registration Statement"). Copies of these documents may be obtained as
described in the Prospectus under the caption "Where you can find more
information" and also from the Depositary at its address set forth above.
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 5.00 p.m., New York city time, on March , 2000 (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 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
Prospectus or this Consent and Letter of Transmittal may be directed to the
Information Agent. See Instruction 10 herein.
2
3
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 IS GIVEN
(PLEASE FILL IN, IF BLANK) (ATTACH ADDITIONAL LIST, IF NECESSARY)
- ------------------------------------------------------------------------------- -------------- ---------------
PRINCIPAL
AMOUNT AS TO
WHICH
CONSENTS ARE
GIVEN (MUST
AGGREGATE 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 the total principal amount of Notes
registered in the name of the Record Holder(s) on the Record Date, then the
Record Holder(s) 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.
- --------------------------------------------------------------------------------
3
4
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 Prospectus) for
the purpose of effecting the reorganization; 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. If this Consent relates to less than the total principal amount of Notes
registered in the undersigned's name on the Record Date, 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 reorganization; 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 their 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 immediately prior
to the reorganization if, as of the Expiration Date, the Requisite Consents have
been obtained.
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 Prospectus and this Consent and Letter of
Transmittal. The undersigned understands that a revocation of such Consent will
not be effective following the Expiration Date . 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 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.
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
4
5
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 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 at the time and on the date on which the Supplemental Indenture is
executed.
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 reorganization; 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
6
- --------------------------------------------------------------------------------
PLEASE SIGN HERE
(TO BE COMPLETED BY ALL CONSENTING RECORD 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 5 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
7
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 IMMEDIATELY PRIOR
TO THE REORGANIZATION IF, AS OF THE EXPIRATION DATE, THE REQUISITE CONSENTS HAVE
BEEN OBTAINED. 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 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 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 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.
7
8
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 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.
10. 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 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.
8
9
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 of Taxpayer 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.
9
10
PAYER'S NAME:
- -------------------------------------------------------------------------------------------------------------
SUBSTITUTE ----------------------------
Form W-9 Social Security Number
OR
PART 1-PLEASE PROVIDE YOUR TIN IN THE ----------------------------
BOX AT RIGHT AND CERTIFY BY SIGNING AND Employer Identification
DATING BELOW Number
------------------------------------------------------------ ------------------
PART 2-Certification-Under Penalties of Perjury, I PART 3-
certify that:
Department of the Treasury Awaiting TIN [ ]
Internal Revenue Service (1) The number shown on this form is my correct
Taxpayer Identification Number (or I am
Payer's Request for Taxpayer waiting for a number to be issued to me) 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
Number (TIN) 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
- --------------------------------------------------------------------------------
10
11
The Information Agent for 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
12
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 March __, 2000 (the
"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
Prospectus.
As described in, and subject to the terms and conditions of, the
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 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 is also agreeing, subject
to the terms of a pledge agreement to be executed and delivered upon the
consummation of the reorganization (as described in the Prospectus), to
purchase and pledge for the benefit of the holders of the Notes additional
United States Treasury securities sufficient to cover the October 16, 2000
interest payment on the Notes.
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, 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") have been obtained or,
if later, promptly upon obtaining the Requisite Consents. The Initial Expiration
Date will be at 5.00 p.m., New York city time on March , 2000.
The term "Record Holder" as used herein shall mean the registered holders of
Notes outstanding at 5.00 p.m., New York city time on March , 2000 (the "Record
Date"). The Prospectus describes the requested waivers, the Guarantees, the
Proposed Amendments and the consent solicitation process.
13
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 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 Prospectus and the Consent
and Letter of Transmittal. We urge you to read carefully the Prospectus
and the Consent and Letter of Transmittal 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 March , 2000
unless extended. Consents delivered pursuant to the Solicitation may be revoked,
subject to the procedures described in the 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 reorganization; 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
14
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 reorganization; 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.
[ ] 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 reorganization; 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.
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 REORGANIZATION; 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
15
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 March __, 2000 (the
"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 Prospectus.
As described in, and subject to the terms and conditions of, the 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 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 Depositary on or prior to the
Initial Expiration Date (as defined below), unless extended (the "Expiration
Date"). Pathnet is also agreeing, subject to the terms of a pledge agreement to
be executed and delivered upon the consummation of the reorganization (as
described in the Prospectus), to purchase and pledge for the benefit of the
holders of the Notes additional United States Treasury securities sufficient to
cover the October 16, 2000 interest payment on the Notes.
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 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") have been obtained or,
if later, promptly upon obtaining the Requisite Consents. The Initial Expiration
Date will be at 5.00 p.m., New York city time, on March , 2000.
The term "Record Holder" as used herein shall mean the registered
holders of Notes outstanding at 5.00 p.m., New York city time, on March , 2000
(the "Record Date"). The Prospectus describes the requested waivers, the
Guarantees, the Proposed Amendments and the consent solicitation process.
16
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 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 March , 2000 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 PROSPECTUS OR THE CONSENT AND LETTER
OF TRANSMITTAL.
--------------------------------
Pathnet, Inc.
Pathnet Telecommunications, Inc.
2