EXHIBIT 4.12


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


                         SUPPLEMENTAL WARRANT AGREEMENT

                           Dated as of March 30, 2000


                                 By and Between

                        PATHNET TELECOMMUNICATIONS, INC.

                                       and

                              The Bank of New York,

                                  Warrant Agent

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

                        Warrants to Purchase Common Stock
                            Par Value $0.01 Per Share
      =====================================================================


<PAGE>



                                TABLE OF CONTENTS
<TABLE>
<CAPTION>
                                                                                                               PAGE
                                    ARTICLE I

                     ISSUANCE, FORM, EXECUTION, DELIVERY AND
                      REGISTRATION OF WARRANT CERTIFICATES

<S>             <C>                                                                                              <C>

SECTION 1.01.   Issuance of Warrants..............................................................................2
SECTION 1.02.   Form of Warrant Certificates......................................................................2
SECTION 1.03.   Execution of Warrant Certificates.................................................................2
SECTION 1.04.   Authentication and Delivery.......................................................................3
SECTION 1.05.   [Intentionally Omitted]...........................................................................4
SECTION 1.06.   Separation of Warrants and Notes..................................................................4
SECTION 1.07.   Registration......................................................................................4
SECTION 1.08.   Registration of Transfers or Exchanges............................................................4
SECTION 1.09.   Lost, Stolen, Destroyed, Defaced or Mutilated Warrant Certificates................................9
SECTION 1.10.   Offices for Exercise, etc........................................................................10

                                   ARTICLE II

                 DURATION, EXERCISE OF WARRANTS; EXERCISE PRICE
                           AND REPURCHASE OF WARRANTS

SECTION 2.01.   Duration of Warrants.............................................................................10
SECTION 2.02.   Exercise, Exercise Price, Settlement and Delivery................................................10
SECTION 2.03.   Cancellation of Warrant Certificates.............................................................13
SECTION 2.04.   Notice of an Exercise Event......................................................................14

                                   ARTICLE III

                          OTHER PROVISIONS RELATING TO
                          RIGHTS OF HOLDERS OF WARRANTS

SECTION 3.01.   Enforcement of Rights............................................................................14
SECTION 3.02.   Obtaining Stock Exchange Listings................................................................14

                                   ARTICLE IV

                        CERTAIN COVENANTS OF THE COMPANY

SECTION 4.01.   Payment of Taxes.................................................................................14
SECTION 4.02.   Rules 144 and 144A...............................................................................15
SECTION 4.03.   Form of Initial Public Equity Offering...........................................................15
SECTION 4.04.   Securities Act and Applicable State Securities Laws..............................................15
SECTION 4.05.   Resolution of Preemptive Rights, If Any..........................................................15

                                    ARTICLE V

                                   ADJUSTMENTS

SECTION 5.01.   Adjustment of Exercise Rate; Notices.............................................................16
SECTION 5.02.   Fractional Shares................................................................................23
SECTION 5.03.   Certain Distributions............................................................................23

                                   ARTICLE VI

                          CONCERNING THE WARRANT AGENT

SECTION 6.01.   Warrant Agent....................................................................................23
SECTION 6.02.   Conditions of Warrant Agent's Obligations........................................................24
SECTION 6.03.   Resignation and Appointment of Successor.........................................................27

                                   ARTICLE VII

                                  MISCELLANEOUS

SECTION 7.01.   Amendment........................................................................................29
SECTION 7.02.   Notices and Demands to the Company and Warrant Agent.............................................29
SECTION 7.03.   Addresses for Notices to Parties and for Transmission of Documents...............................30
SECTION 7.04.   Notices to Holders...............................................................................30
SECTION 7.05.   Applicable Law...................................................................................30
SECTION 7.06.   Persons Having Rights Under Agreement............................................................30
SECTION 7.07.   Headings.........................................................................................31
SECTION 7.08.   Counterparts.....................................................................................31
SECTION 7.09.   Inspection of Agreement..........................................................................31
SECTION 7.10.   Availability of Equitable Remedies...............................................................31
SECTION 7.11.   Obtaining of Governmental Approvals..............................................................31



EXHIBIT A - Form of Warrant Certificate EXHIBIT B - Form of Legend for Global  Warrant
EXHIBIT C -  Certificate To Be Delivered upon Exchange or Registration of Transfer of Warrants
EXHIBIT D -  Form of Certificate to be Delivered in Connection with Regulation S Transfers

</TABLE>


<PAGE>


                             INDEX OF DEFINED TERMS
<TABLE>
<CAPTION>
<S>                                                                                                           <C>

DEFINED TERM...................................................................................................PAGE
------------                                                                                                   ----

Affiliate........................................................................................................18
Agreement..................................................................................................Preamble
Business Day.....................................................................................................10
Capital Stock....................................................................................................21
Cashless Exercise................................................................................................12
Cashless Exercise Ratio..........................................................................................12
CEO...............................................................................................................3
Common Stock......................................................................................................2
Company....................................................................................................Preamble
Convertible Preferred Stock......................................................................................21
Current Market Value.............................................................................................21
Definitive Warrants...............................................................................................2
Depositary .......................................................................................................2
Distribution.....................................................................................................23
Distribution Rights..............................................................................................23
Election to Exercise.............................................................................................11
Exercisability Date..............................................................................................11
Exercise Date....................................................................................................12
Exercise Event...................................................................................................11
Exercise Price...................................................................................................11
Exercise Rate....................................................................................................11
Expiration Date..................................................................................................10
Fair Market Value................................................................................................22
Fundamental Transaction..........................................................................................19
Global Shares....................................................................................................13
Global Warrants...................................................................................................2
Indenture..................................................................................................Recitals
Independent Financial Expert.....................................................................................22
Initial Public Equity Offering...................................................................................11
Initial Purchasers.........................................................................................Recitals
Notes......................................................................................................Recitals
Officers' Certificate.............................................................................................7
Pathnet....................................................................................................Recitals
Pathnet Warrant............................................................................................Recitals
Pathnet Warrant Agreement..................................................................................Recitals
Pathnet Warrant Registration Rights Agreement..............................................................Recitals
Person...........................................................................................................11
Private Placement Legend..........................................................................................8
Purchase Agreement.........................................................................................Recitals
QIB.............................................................................................................. 5
Registrar.........................................................................................................4

</TABLE>

<PAGE>
<TABLE>
<CAPTION>
<S>                                                                                                        <C>


DEFINED TERM...................................................................................................PAGE
------------                                                                                                   ----

Regulation S......................................................................................................5
Related Parties..................................................................................................24
Reorganization.............................................................................................Recitals
Requisite Warrant Holders........................................................................................29
Resale Restriction Termination Date...............................................................................5
Securities Act....................................................................................................5
Subject Class....................................................................................................15
Surviving Person.................................................................................................19
Time of Determination............................................................................................22
Triggering Date..................................................................................................11
Trustee....................................................................................................Recitals
Units......................................................................................................Recitals
Warrant....................................................................................................Recitals
Warrant Agent..............................................................................................Recitals
Warrant Agent Office.............................................................................................10
Warrant Certificates.......................................................................................Recitals
Warrant Exercise Office..........................................................................................11
Warrant Register..................................................................................................4
Warrant Registration Rights Agreement......................................................................Recitals
Warrant Shares.......................................................................................Recitals and 2

</TABLE>


<PAGE>







                         SUPPLEMENTAL WARRANT AGREEMENT


                  SUPPLEMENTAL  WARRANT  AGREEMENT  dated as of March  30,  2000
("AGREEMENT"), by and between PATHNET TELECOMMUNICATIONS,  INC. (the "COMPANY"),
a  Delaware  corporation,  and THE BANK OF NEW  YORK,  warrant  agent  (with any
successor warrant agent, the "WARRANT AGENT").

                  WHEREAS,  Pathnet,  Inc.  ("PATHNET")  entered into a purchase
agreement (the "PURCHASE  AGREEMENT")  dated April 1, 1998,  with, among others,
Merrill Lynch & Co., in which Pathnet  agreed to sell to the Initial  Purchasers
(as  defined in the  Purchase  Agreement)  an  aggregate  of 350,000  units (the
"UNITS"), each consisting of (i) $1,000 principal amount of 12-1/4% Senior Notes
due 2008 (the  "NOTES") of Pathnet to be issued under an  indenture  dated as of
April 8, 1998, as amended (the "INDENTURE"), between Pathnet and The Bank of New
York,  trustee  (the  "TRUSTEE")  and (ii) one  warrant (a  "PATHNET  WARRANT"),
initially entitling the holder thereof to purchase 1.1 shares of common stock of
Pathnet; and

                  WHEREAS,  the holders of the Pathnet Warrants were entitled to
the  benefits  of a Warrant  Agreement  dated as of April 8, 1998 (the  "PATHNET
WARRANT AGREEMENT")  between Pathnet and the Trustee and a Warrant  Registration
Rights  Agreement dated as of April 8, 1998 (the "PATHNET  WARRANT  REGISTRATION
RIGHTS  AGREEMENT"),  among Pathnet,  the Permitted Holders (as defined therein)
and the Initial Purchasers; and

                  WHEREAS,   in   conjunction   with   a   reorganization   (the
"REORGANIZATION")  involving,  among  others,  the Company,  Pathnet,  three new
investors,  Pathnet's  shareholders and holders of the Notes, Pathnet sought and
received the consent of the  Requisite  Warrant  Holders (as defined  herein) to
certain  amendments  to  the  Pathnet  Warrant  Agreement  and  Pathnet  Warrant
Registration Rights Agreement (as so amended,  the "WARRANT  REGISTRATION RIGHTS
AGREEMENT"); and

                  WHEREAS,   the   Reorganization   constituted   a  Fundamental
Transaction  (as  defined  in  the  Pathnet  Warrant   Agreement,   as  amended)
culminating in the substitution of this  Supplemental  Warrant Agreement in lieu
of the Pathnet  Warrant  Agreement  (which,  as of such  substitution,  shall be
terminated)  and the conversion of each Pathnet Warrant into a warrant issued by
the Company (a  "WARRANT")  which,  as of the date  hereof,  entitles the holder
thereof to purchase 3.19 shares (the "WARRANT  SHARES") of Company  Common Stock
(as  defined  herein),  subject to  adjustments  as  provided  herein and in the
Warrant.  Upon such  conversion,  each of the Pathnet Warrants shall cease to be
outstanding, and any certificate evidencing a Pathnet Warrant shall evidence the
right to secure certificates  evidencing Warrants.  The certificates  evidencing
the Warrants are herein referred to collectively as the "WARRANT  CERTIFICATES";
and

                  WHEREAS,  the Company  desires the Warrant Agent to assist the
Company in connection with the issuance, exchange, cancellation, replacement and
exercise of the Warrants, and in this Agreement wishes to set forth, among other
things, the terms and conditions on which the Warrants may be issued, exchanged,
cancelled, replaced and exercised;

                  NOW, THEREFORE, the parties hereto agree as follows:


<PAGE>


                                    ARTICLE I
                     ISSUANCE, FORM, EXECUTION, DELIVERY AND
                      REGISTRATION OF WARRANT CERTIFICATES

                  SECTION 1.01. ISSUANCE OF WARRANTS.  The Company hereby issues
Warrants to holders of Pathnet Warrants in exchange for such Pathnet Warrants at
the rate of one Warrant for each Pathnet Warrant.

                  Each Warrant Certificate shall evidence the number of Warrants
specified  therein.  Each Warrant  evidenced by a Warrant  Certificate,  when it
becomes  exercisable as provided herein and therein,  shall represent the right,
subject to the  provisions  contained  herein and therein,  to purchase from the
Company  (and the Company  shall  issue and sell to the holder of such  Warrant)
3.19 fully paid,  registered  and  non-assessable  Warrant Shares at an exercise
price of $0.01 per share. The number of Warrant Shares issuable upon exercise of
a Warrant is subject to  adjustment as provided  herein and in the Warrant.  The
number of shares of the Company's  common stock,  par value $0.01 per share, and
any other class or series of common equity equivalent shares of the Company into
which such common stock may be reclassified and sold to the Public in an Initial
Public Equity Offering (the "COMMON STOCK")  issuable upon exercise of a Warrant
is subject to  adjustment  as  provided  herein and in the  Warrant.  Unless the
context  otherwise  requires,  the term "WARRANT  SHARES" shall also include any
other securities or property issuable and deliverable upon exercise of a Warrant
as provided in Article V, subject to  adjustment  as provided  herein and in the
Warrant.

                  From  and  after  the  date  hereof,   any  certificate   that
previously  evidenced a Pathnet Warrant shall evidence only the right to receive
a Warrant  Certificate  evidencing a Warrant and to secure the rights,  benefits
and obligations of such Warrant and of this Warrant Agreement.

                  SECTION  1.02.  FORM  OF  WARRANT  CERTIFICATES.  The  Warrant
Certificates  will  initially  be  issued  either in  global  form (the  "GLOBAL
WARRANTS")  or in  registered  form  as  definitive  Warrant  Certificates  (the
"DEFINITIVE  WARRANTS"),  in either case  substantially in the form of EXHIBIT A
attached hereto.  Any Global Warrants to be delivered pursuant to this Agreement
shall  bear the  legend set forth in  EXHIBIT B  attached  hereto.  Such  Global
Warrants shall represent such of the outstanding  Warrants as shall be specified
therein and each shall provide that it shall  represent the aggregate  amount of
outstanding  Warrants from time to time endorsed  thereon and that the aggregate
amount of  outstanding  Warrants  represented  thereby  may from time to time be
reduced or increased,  as  appropriate.  Any  endorsement of a Global Warrant to
reflect the amount of any  increase  or  decrease  in the amount of  outstanding
Warrants  represented  thereby  shall  be  made  by the  Warrant  Agent  and the
Depositary  (as defined  below) in  accordance  with  instructions  given by the
holder thereof.  The Depository  Trust Company shall act as the depositary (with
any successor depositary,  the "DEPOSITARY") with respect to the Global Warrants
until a successor shall be appointed by the Company and the Warrant Agent. Under
the  circumstances  set forth in Section 1.08  hereof,  a holder of Warrants may
receive  from the  Warrant  Agent or the  Depository  Definitive  Warrants  upon
written request.

                  SECTION 1.03. EXECUTION OF WARRANT  CERTIFICATES.  The Warrant
Certificates  shall be executed on behalf of the Company by the  Chairman of its
Board of Directors,  its Chief Executive  Officer  ("CEO"),  its President,  its
Chief  Financial  Officer or any executive  vice president or vice president and
attested by its Secretary or any Assistant Secretary. Such signatures may be the
manual or facsimile  signatures of the present or any future such officers.  The
seal  of the  Company  may be in the  form  of a  facsimile  thereof  and may be
impressed,   affixed,   imprinted  or  otherwise   reproduced   on  the  Warrant
Certificates.  Typographical  and  other  minor  errors or  defects  in any such
reproduction   of  any  such   signature   shall  not  affect  the  validity  or
enforceability of any Warrant  Certificate that has been duly  countersigned and
delivered by the Warrant Agent.

                  In case any  officer of the  Company who shall have signed any
of the Warrant  Certificates  shall cease to be such officer  before the Warrant
Certificate so signed shall be authenticated  and delivered by the Warrant Agent
or disposed of by the Company,  such  Warrant  Certificate  nevertheless  may be
countersigned  and delivered or disposed of as though the person who signed such
Warrant  Certificate  had not  ceased to be such  officer  of the  Company.  Any
Warrant  Certificate  may be signed on behalf of the Company by such persons as,
at the actual date of the  execution of such Warrant  Certificate,  shall be the
proper  officers  of the  Company,  although  at the date of the  execution  and
delivery of this Agreement any such person was not such an officer.

                  SECTION  1.04.  AUTHENTICATION  AND  DELIVERY.  Subject to the
immediately following paragraph,  Warrant Certificates shall be authenticated by
manual signature and dated the date of  authentication  by the Warrant Agent and
shall not be valid  for any  purpose  unless so  authenticated  and  dated.  The
Warrant  Certificates  shall be numbered and shall be  registered in the Warrant
Register (as defined in Section 1.07 hereof).

                  Upon the  receipt by the Warrant  Agent of a written  order of
the  Company,  which  order  shall be  signed  by the  Chairman  of its Board of
Directors,  its President, its CEO, its Chief Financial Officer or any executive
vice  president or vice president and attested by its Secretary or any Assistant
Secretary, and shall specify the amount of Warrants to be authenticated, whether
the Warrants are to be Global Warrants or Definitive Warrants,  the date of such
Warrants and such other information as the Warrant Agent may reasonably request,
without any further action by the Company, the Warrant Agent is authorized, upon
receipt  from the  Company  at any time  and  from  time to time of the  Warrant
Certificates,  duly executed as provided in Section 1.03 hereof, to authenticate
the Warrant  Certificates  and deliver  them upon the  Company's  request.  Such
authentication  shall be by a duly  authorized  signatory  of the Warrant  Agent
(although it shall not be necessary  for the same  signatory to sign all Warrant
Certificates).

                  In case any  authorized  signatory  of the  Warrant  Agent who
shall have  authenticated any of the Warrant  Certificates  shall cease to be an
authorized  signatory before the Warrant Certificate shall be disposed of by the
Company or the Warrant  Agent,  such  Warrant  Certificate  nevertheless  may be
delivered  or  disposed  of as though the person  who  authenticated  an Warrant
Certificate  had not ceased to be an authorized  signatory of the Warrant Agent.
Any Warrant  Certificate may be  authenticated on behalf of the Warrant Agent by
such  persons  as,  at  the  actual  time  of  authentication  of  such  Warrant
Certificates,  shall be the duly  authorized  signatories  of the Warrant Agent,
although at the time of the  execution  and delivery of this  Agreement any such
person is not an authorized signatory.

                  The Warrant Agent's authentication on all Warrant Certificates
shall be in substantially the form set forth in EXHIBIT A hereto.

                  SECTION 1.05. [Intentionally omitted].

                  SECTION 1.06.  SEPARATION OF WARRANTS AND NOTES. The Notes and
                                 --------------------------------
the Warrants to which they initially related now are separately transferable.

                  SECTION  1.07.  REGISTRATION.  The Company  will keep,  at the
office or agency  maintained  by the  Company  for such  purpose,  a register or
registers in which, subject to such reasonable  regulations as it may prescribe,
the Company shall provide for the  registration of, and registration of transfer
and exchange of, Warrants as provided in this Article. Each person designated by
the Company  from time to time as a person  authorized  to register the transfer
and  exchange  of  the  Warrants  is  hereinafter   called,   individually   and
collectively, the "REGISTRAR." The Company hereby initially appoints the Warrant
Agent as  Registrar.  Upon  written  notice to the Warrant  Agent and any acting
Registrar, the Company may appoint a successor Registrar for such purposes.

                  The Company will at all times designate one person (who may be
the Company and who need not be a Registrar)  to act as  repository  of a master
list of names and addresses of the holders of Warrants (the "WARRANT REGISTER").
The Warrant Agent will act as such repository unless and until some other person
is, by written  notice from the Company to the Warrant Agent and the  Registrar,
designated by the Company to act as such. The Company shall cause each Registrar
to furnish to such  repository,  on a current basis,  such information as to all
registrations  of transfer and exchanges  effected by such Registrar,  as may be
necessary  to enable  such  repository  to maintain  the Warrant  Register on as
current a basis as is practicable.

                  SECTION 1.08. REGISTRATION OF TRANSFERS OR EXCHANGES.
                                --------------------------------------

                  (a)      TRANSFER OR EXCHANGE OF DEFINITIVE WARRANTS. When
                           -------------------------------------------
Definitive Warrants are presented to the Warrant Agent with a request from the
holder:

                  (i)      to register the transfer of the Definitive  Warrants;
                           or

                  (ii)     to exchange  such  Definitive  Warrants  for an equal
                           number of  Definitive  Warrants  of other  authorized
                           denominations,

the Warrant Agent shall  register the transfer or make the exchange as requested
if the  requirements  for such  transactions  set forth in this Section 1.08 are
met; provided, however, that the Definitive Warrants presented or surrendered by
a holder for registration of transfer or exchange:

         (x)      shall be duly endorsed or accompanied by a written instruction
                  of transfer or  exchange in form  satisfactory  to the Company
                  and the Warrant Agent,  duly executed by such holder or by his
                  attorney, duly authorized in writing; and

         (y)      in the case of  Warrants  the offer and sale of which have not
                  been registered under the Securities Act and are presented for
                  transfer or exchange  prior to (1) the date which is two years
                  (or such  shorter  period as may be  permitted  by Rule 144(k)
                  under the Securities Act (or any successor provision thereto))
                  after  the  later  of the  date of  original  issuance  of the
                  Warrants  and  the  last  date on  which  the  Company  or any
                  affiliate of the Company (or any predecessor  thereto) was the
                  owner of such Warrants, or (2) such later date, if any, as may
                  be required by any  applicable  law (the  "RESALE  RESTRICTION
                  TERMINATION  DATE"), such Warrants shall be accompanied by the
                  following additional information and documents, as applicable:

                  (A)      if such  Warrants are being  delivered to the Warrant
                           Agent by a  holder  for  registration  in the name of
                           such holder,  without transfer,  a certification from
                           such holder to that effect (in substantially the form
                           of EXHIBIT C hereto); or
                  (B)      if such Warrants are being transferred to a qualified
                           institutional  buyer (as  defined  in Rule 144A under
                           the  Securities  Act), (a "QIB") in  accordance  with
                           Rule 144A under the Securities  Act, a  certification
                           from the transferor to that effect (in  substantially
                           the form of EXHIBIT C hereto);

                  (C)      if such Warrants are being transferred in reliance on
                           Regulation S  ("REGULATION  S") under the  Securities
                           Act of  1933,  as  amended  (the  "SECURITIES  ACT"),
                           delivery by the transferor of a certification to that
                           effect  (in  substantially  the  form  of  EXHIBIT  C
                           hereto), and a Certificate for Regulation S Transfers
                           in the form of EXHIBIT D hereto; or

                  (D)      if such Warrants are being transferred in reliance on
                           Rule 144 under the  Securities  Act,  delivery by the
                           transferor of (i) a certification from the transferor
                           to that effect (in  substantially the form of EXHIBIT
                           C hereto),  and (ii) an opinion of counsel reasonably
                           satisfactory  to the  Company to the effect that such
                           transfer is in compliance with the Securities Act; or

                  (E)      if such Warrants are being transferred in reliance on
                           another exemption from the registration  requirements
                           of the  Securities  Act,  a  certification  from  the
                           transferor to that effect (in  substantially the form
                           of  EXHIBIT  C  hereto)  and an  opinion  of  counsel
                           reasonably  satisfactory to the Company to the effect
                           that  such  transfer  is  in   compliance   with  the
                           Securities Act;  PROVIDED that the Company may, based
                           upon  the  views  of its own  counsel,  instruct  the
                           Warrant  Agent not to register  such  transfer in any
                           case where the  proposed  transferee  is not a QIB or
                           Non-U.S. Person.

                  (b)  RESTRICTIONS  ON TRANSFER OF A  DEFINITIVE  WARRANT FOR A
BENEFICIAL  INTEREST  IN A  GLOBAL  WARRANT.  A  Definitive  Warrant  may not be
transferred  by a holder for a beneficial  interest in a Global  Warrant  except
upon  satisfaction  of the  requirements  set forth  below.  Upon receipt by the
Warrant  Agent  of  a  Definitive  Warrant,  duly  endorsed  or  accompanied  by
appropriate  instruments of transfer, in form satisfactory to the Warrant Agent,
together with

                  (A)      certification  from such holder (in substantially the
                           form  of  EXHIBIT  C  hereto)  that  such  Definitive
                           Warrant is being  transferred  to a QIB in accordance
                           with Rule 144A under the Securities Act; and

                  (B)      written  instructions  directing the Warrant Agent to
                           make,  or  to  direct  the  Depositary  to  make,  an
                           endorsement  on the  Global  Warrant  to  reflect  an
                           increase  in the  aggregate  amount  of the  Warrants
                           represented by the Global Warrant,

then the Warrant Agent shall cancel such Definitive Warrant and cause, or direct
the  Depositary  to cause,  in  accordance  with the standing  instructions  and
procedures  existing between the Depositary and the Warrant Agent, the number of
Warrants  represented by the Global Warrant to be increased  accordingly.  If no
Global  Warrant is then  outstanding,  the Company shall issue,  and the Warrant
Agent upon written instructions from the Company shall authenticate a new Global
Warrant in the appropriate amount.

                  (c) TRANSFER OR EXCHANGE OF GLOBAL  WARRANTS.  The transfer or
exchange of Global  Warrants or beneficial  interests  therein shall be effected
through the  Depositary,  in  accordance  with this  Section  1.08,  the Private
Placement Legend (as defined herein), this Agreement (including the restrictions
on transfer set forth herein) and the procedures of the Depositary therefor.

                  (d)      TRANSFER OR EXCHANGE OF A BENEFICIAL INTEREST IN A
                           --------------------------------------------------
GLOBAL WARRANT FOR A DEFINITIVE WARRANT.
----------------------------------------

         (i)      Any person  having a beneficial  interest in a Global  Warrant
                  may  transfer  or  exchange  such  beneficial  interest  for a
                  Definitive  Warrant  upon  receipt  by the  Warrant  Agent  of
                  written  instructions or such other form of instructions as is
                  customary  for  the  Depositary  from  the  Depositary  or its
                  nominee on behalf of any person  having a beneficial  interest
                  in a Global  Warrant,  including  a written  order  containing
                  registration  instructions  and,  in  the  case  of  any  such
                  transfer   or  exchange   prior  to  the  Resale   Restriction
                  Termination  Date, the following  additional  information  and
                  documents:

                  (A)      if such beneficial  interest is being  transferred to
                           the person  designated by the Depositary as being the
                           beneficial owner, a certification from such person to
                           that effect (in  substantially  the form of EXHIBIT C
                           hereto); or

                  (B)      if such beneficial interest is being transferred to a
                           QIB in accordance with Rule 144A under the Securities
                           Act,  a  certification  from the  transferor  to that
                           effect  (in  substantially  the  form  of  EXHIBIT  C
                           hereto); or

                  (C)      if such beneficial  interest is being  transferred in
                           reliance on  Regulation S under the  Securities  Act,
                           delivery by the transferor if (i) a certification  to
                           that effect (in  substantially in the form of EXHIBIT
                           C hereto),  and (ii) a Certificate  for  Regulation S
                           Transfers  (in  substantially  the form of  EXHIBIT D
                           hereto); or

                  (D)      if such beneficial  interest is being  transferred in
                           reliance  on  Rule  144  under  the  Securities  Act,
                           delivery by the transferor of (i) a certification  to
                           that effect (in  substantially  the form of EXHIBIT C
                           hereto)  and (ii) an opinion  of  counsel  reasonably
                           satisfactory  to the  Company to the effect that such
                           transfer is in compliance with the Securities Act; or

                  (E)      if such beneficial  interest is being  transferred in
                           reliance on another  exemption from the  registration
                           requirements  of the Securities  Act, a certification
                           from the transferor to that effect (in  substantially
                           the form of  EXHIBIT  C  hereto)  and an  opinion  of
                           counsel reasonably satisfactory to the Company to the
                           effect that such transfer is in  compliance  with the
                           Securities   Act;   provided  that  the  Company  may
                           instruct  the  Warrant  Agent  not to  register  such
                           transfer in any case where the proposed transferee is
                           not a QIB or Non-U.S.  Person, then the Warrant Agent
                           will  cause,   in   accordance   with  the   standing
                           instructions  and  procedures  existing  between  the
                           Depositary  and  the  Warrant  Agent,  the  aggregate
                           amount  of the  Global  Warrant  to be  reduced  and,
                           following  such  reduction,  the Company will execute
                           and, upon receipt of an  authentication  order in the
                           form  of  an  officers'  certificate  (a  certificate
                           signed by two officers of such  company,  one of whom
                           must be the principal  executive  officer,  principal
                           financial  officer or principal  accounting  officer)
                           (an "OFFICERS' Certificate"),  the Warrant Agent will
                           authenticate   and  deliver  to  the   transferee   a
                           Definitive Warrant.

         (ii)     Definitive  Warrants  issued  in  exchange  for  a  beneficial
                  interest in a Global Warrant  pursuant to this Section 1.08(d)
                  shall  be  registered  in such  names  and in such  authorized
                  denominations as the Depositary, pursuant to instructions from
                  its  direct  or  indirect  participants  or  otherwise,  shall
                  instruct the Warrant Agent in writing. The Warrant Agent shall
                  deliver such Definitive Warrants to the persons in whose names
                  such Warrants are so registered  and adjust the Global Warrant
                  pursuant to paragraph (h) of this Section 1.08.

                  (e)  RESTRICTIONS ON TRANSFER OR EXCHANGE OF GLOBAL  WARRANTS.
Notwithstanding   any  other  provisions  of  this  Agreement  (other  than  the
provisions  set forth in subsection  (f) of this Section 1.08), a Global Warrant
may not be  transferred  or exchanged as a whole except by the  Depositary  to a
nominee of the Depositary or by a nominee of the Depositary to the Depositary or
another  nominee of the Depositary or by the Depositary or any such nominee to a
successor Depositary or a nominee of such successor Depositary.

                  (f)      AUTHENTICATION OF DEFINITIVE WARRANTS IN ABSENCE OF
                           ---------------------------------------------------
DEPOSITARY.  If at any time:
----------
         (i)      the  Depositary for the Global  Warrants  notifies the Company
                  that the  Depositary  is  unwilling  or unable to  continue as
                  Depositary for the Global  Warrant and a successor  Depositary
                  for the Global  Warrant is not appointed by the Company within
                  90 days after delivery of such notice; or

         (ii)     the  Company,  at its sole  discretion,  notifies  the Warrant
                  Agent in  writing  that it  elects to cause  the  issuance  of
                  Definitive   Warrants  for  all  Global  Warrants  under  this
                  Agreement,

then the Company will execute,  and the Warrant  Agent will,  upon receipt of an
Officers'  Certificate  requesting the authentication and delivery of Definitive
Warrants,  authenticate and deliver Definitive Warrants,  in an aggregate number
equal to the aggregate number of warrants  represented by the Global Warrant, in
exchange for such Global Warrant.

                  (g) PRIVATE PLACEMENT LEGEND. Upon the transfer or exchange of
Warrant  Certificates  not  bearing  the  legend set forth on EXHIBIT A attached
hereto (the "PRIVATE PLACEMENT LEGEND"), the Warrant Agent shall deliver Warrant
Certificates that do not bear the Private  Placement Legend.  Upon the transfer,
exchange or replacement of Warrant  Certificates  bearing the Private  Placement
Legend,  the Warrant  Agent shall  deliver  Warrant  Certificates  that bear the
Private  Placement Legend unless,  and the Warrant Agent is hereby authorized to
deliver Warrant  Certificates without the Private Placement Legend if, (i) there
is delivered to the Warrant Agent an opinion of counsel reasonably  satisfactory
to the Company and the Warrant  Agent to the effect that neither such legend nor
the  related  restrictions  on  transfer  are  required  in  order  to  maintain
compliance  with the provisions of the Securities Act or (ii) the Warrants to be
transferred  or exchanged  represented  by such Warrant  Certificates  are being
transferred or exchanged pursuant to an effective  registration  statement under
the Securities Act.

                  (h)  CANCELLATION OR ADJUSTMENT OF A GLOBAL  WARRANT.  At such
time as all beneficial  interests in a Global Warrant have either been exchanged
for Definitive Warrants, redeemed,  repurchased or canceled, such Global Warrant
shall be returned to the Company or, upon written  order to the Warrant Agent in
the form of an Officers' Certificate from the Company,  retained and canceled by
the Warrant  Agent.  At any time prior to such  cancellation,  if any beneficial
interest in a Global  Warrant is exchanged for  Definitive  Warrants,  redeemed,
repurchased  or  canceled,  the number of  Warrants  represented  by such Global
Warrant shall be reduced and an endorsement shall be made on such Global Warrant
by the Warrant Agent to reflect such reduction.

                  (i)      OBLIGATIONS WITH RESPECT TO TRANSFERS OR EXCHANGES OF
                           -----------------------------------------------------
 DEFINITIVE WARRANTS.
 -------------------

         (i)      To permit registrations of transfers or exchanges, the Company
                  shall  execute,  and the  Warrant  Agent  shall  authenticate,
                  Definitive Warrants and Global Warrants.

         (ii)     All Definitive  Warrants and Global  Warrants  issued upon any
                  registration,  transfer or exchange of Definitive  Warrants or
                  Global Warrants shall be the valid obligations of the Company,
                  entitled to the same benefits under this Warrant  Agreement as
                  the Definitive  Warrants or Global Warrants  surrendered  upon
                  the registration of transfer or exchange.

         (iii)    Prior to due presentment  for  registration of transfer of any
                  Warrant,  the Warrant Agent and the Company may deem and treat
                  the person in whose  name any  Warrant  is  registered  as the
                  absolute owner of such Warrant,  and neither the Warrant Agent
                  nor the Company shall be affected by notice to the contrary.

                  SECTION 1.09. LOST,  STOLEN,  DESTROYED,  DEFACED OR MUTILATED
WARRANT CERTIFICATES.  Upon receipt by the Company and the Warrant Agent (or any
agent of the Company or the  Warrant  Agent,  if  requested  by the  Company) of
evidence satisfactory to them of the loss, theft,  destruction,  defacement,  or
mutilation of any Warrant Certificate and of indemnity satisfactory to them and,
in the  case of  mutilation  or  defacement,  upon  surrender  of  such  Warrant
Certificate  to the  Warrant  Agent for  cancellation,  then,  in the absence of
notice to the Company or the Warrant  Agent that such  Warrant  Certificate  has
been  acquired by a BONA FIDE  purchaser  or holder in due  course,  the Company
shall execute,  and an authorized  signatory of the Warrant Agent shall manually
authenticate  and  deliver,  in  exchange  for or in lieu of the  lost,  stolen,
destroyed,  defaced or mutilated Warrant Certificate,  a new Warrant Certificate
representing a like number of Warrants, bearing a number or other distinguishing
symbol not contemporaneously  outstanding.  Upon the issuance of any new Warrant
Certificate  under this Section in a name other than the prior registered holder
of the lost, stolen,  destroyed,  defaced or mutilated Warrant Certificate,  the
Company may require the payment from the holder of such Warrant Certificate of a
sum  sufficient to cover any tax, stamp tax or other  governmental  charges that
may be imposed in relation  thereto and any other  expenses  (including the fees
and expenses of the Warrant Agent and the Registrar) in connection therewith.

                  Every substitute  Warrant  Certificate  executed and delivered
pursuant  to this  Section  in lieu of any  lost,  stolen or  destroyed  Warrant
Certificate  shall  constitute  an  additional  contractual  obligation  of  the
Company,  whether or not the lost, stolen or destroyed Warrant Certificate shall
be at any time  enforceable by anyone,  and shall be entitled to the benefits of
(but  shall be  subject  to all the  limitations  of  rights  set forth in) this
Agreement   equally  and   proportionately   with  any  and  all  other  Warrant
Certificates  duly  executed and  delivered  hereunder.  The  provisions of this
Section 1.09 are  exclusive  with respect to the  replacement  of lost,  stolen,
destroyed,  defaced or mutilated Warrant Certificates and shall preclude (to the
extent lawful) any and all other rights or remedies  notwithstanding  any law or
statute  existing  or  hereafter  enacted to the  contrary  with  respect to the
replacement  of  lost,   stolen,   destroyed,   defaced  or  mutilated   Warrant
Certificates.

                  The Warrant  Agent is hereby  authorized  to  authenticate  in
accordance  with the provisions of this  Agreement,  and deliver the new Warrant
Certificates required pursuant to the provisions of this Section.

                  SECTION 1.10. OFFICES FOR EXERCISE, ETC. So long as any of the
Warrants  remain  outstanding,  the Company will  designate  and maintain in the
Borough of  Manhattan,  The City of New York:  (a) an office or agency where the
Warrant  Certificates  may be presented  for  exercise,  (b) an office or agency
where the Warrant Certificates may be presented for registration of transfer and
for  exchange,  and (c) an office or agency where notices and demands to or upon
the Company in respect of the Warrants or of this  Agreement may be served.  The
Company may from time to time change or rescind such designation, as it may deem
desirable or expedient; provided, however, that an office or agency shall at all
times be  maintained  in the  Borough  of  Manhattan,  The City of New York,  as
provided in the first  sentence of this  Section.  In addition to such office or
offices or agency or agencies,  the Company may from time to time  designate and
maintain one or more  additional  offices or agencies within or outside The City
of New York,  where  Warrant  Certificates  may be presented for exercise or for
registration of transfer or for exchange,  and the Company may from time to time
change or rescind such designation,  as it may deem desirable or expedient.  The
Company  will give to the Warrant  Agent  written  notice of the location of any
such office or agency and of any change of location thereof.  The Company hereby
designates the Warrant Agent at its principal  corporate trust office identified
in Section 7.03 in the Borough of Manhattan,  The City of New York (the "WARRANT
AGENT OFFICE"),  as the initial agency maintained for each such purpose. In case
the Company  shall fail to  maintain  any such office or agency or shall fail to
give such  notice of the  location  or of any  change in the  location  thereof,
presentations  and  demands  may be made and notice may be served at the Warrant
Agent Office and the Company  appoints the Warrant Agent as its agent to receive
all such presentations, surrenders, notices and demands.

                                   ARTICLE II
                 DURATION, EXERCISE OF WARRANTS; EXERCISE PRICE
                           AND REPURCHASE OF WARRANTS

                  SECTION 2.01.  DURATION OF WARRANTS.  Subject to the terms and
conditions  established herein, the Warrants shall expire at 5:00 p.m., New York
City time, on April 15, 2008. The applicable  date of expiration of a particular
Warrant is referred to herein as the  "EXPIRATION  DATE" of such  Warrant.  Each
Warrant may be exercised on any Business Day (as defined  below) on or after the
Exercisability Date (as defined in Section 2.02) and on or prior to the close of
business on the Expiration Date.

                  Any Warrant not exercised  before the close of business on the
Expiration  Date shall  become  void,  and all  rights of the  holder  under the
Warrant  Certificate  evidencing  such  Warrant and under this  Agreement  shall
cease.

                  "BUSINESS  DAY"  shall  mean any day on which (i) banks in The
City of New York, (ii) the principal U.S. securities exchange or market, if any,
on which any  Common  Stock is  listed  or  admitted  to  trading  and (iii) the
principal U.S.  securities exchange or market, if any, on which the Warrants are
listed or admitted to trading are open for business.

                  SECTION  2.02.  EXERCISE,   EXERCISE  PRICE,   SETTLEMENT  AND
DELIVERY.  (a) Subject to the  provisions  of this  Agreement,  each holder of a
Warrant  shall  have the  right to  purchase  from the  Company  on or after the
Exercisability  Date and on or prior to the close of business on the  Expiration
Date the number of fully paid, registered and non-assessable Warrant Shares (and
any other  securities or property  purchasable or  deliverable  upon exercise of
such  Warrant  as  provided  in  Article  V) which the holder may at the time be
entitled  to receive on  exercise  of such  Warrant,  subject to  adjustment  in
accordance  with  Article  V  hereof,  at the  purchase  price of $0.01 for each
Warrant Share purchased (the "EXERCISE PRICE"). The number and amount of Warrant
Shares for which a particular  Warrant may be exercised  (the  "EXERCISE  RATE")
shall be  subject  to  adjustment  from time to time as set  forth in  Article V
hereof.

                  "EXERCISABILITY DATE" means the first day on or after the date
hereof on which there will have occurred an Exercise Event.

                  "EXERCISE  EVENT"  means  the  date of the  occurrence  of the
earliest of: (i) the time  immediately  prior to the  occurrence  of a Change of
Control (as defined in the  Indenture),  (ii) (a) the 180th day (or such earlier
date as determined by the Company in its sole discretion)  following the closing
of an Initial Public Equity Offering (as defined herein) or (b) upon the closing
of an Initial  Public Equity  Offering but only in respect of Warrants,  if any,
required to be  exercised to permit the holders  thereof to sell Warrant  Shares
pursuant to their respective registration rights, (iii) the time when a class of
equity securities of the Company is listed on a national  securities exchange or
authorized for quotation on the Nasdaq National  Market or is otherwise  subject
to registration under the Exchange Act, or (iv) April 30, 2001.

                  "INITIAL  PUBLIC  EQUITY  OFFERING"  means  a  primary  public
offering  (whether or not  underwritten,  but excluding any offering pursuant to
Form S-8 under the  Securities  Act or any other  publicly  registered  offering
pursuant to the  Securities  Act  pertaining  to an issuance of shares of Common
Stock or  securities  exercisable  therefor  under any  benefit  plan,  employee
compensation  plan, or employee or director stock purchase plan) of Common Stock
pursuant to an effective registration statement under the Securities Act.

                  "PERSON"  means  any  individual,  corporation,   partnership,
limited liability company, partnership, joint venture, association,  joint-stock
company, trust, business trust, unincorporated  organization,  government or any
agency or  political  subdivision  thereof or any other  entity,  including  any
predecessor of any such entity.

                  "TRIGGERING DATE" means the date of the consummation of a bona
fide underwritten public offering of Common Stock, as a result of which at least
20% of the  outstanding  shares of Common  Stock are  listed on a United  States
national securities exchange or the Nasdaq National Market.

                  (b)  Warrants  may be  exercised on or after the date they are
exercisable hereunder by (i) surrendering at any office or agency maintained for
that purpose by the Company  pursuant to Section 1.10 (each a "WARRANT  EXERCISE
OFFICE")  the Warrant  Certificate  evidencing  such  Warrants  with the form of
election to purchase Warrant Shares set forth on the reverse side of the Warrant
Certificate  (the  "ELECTION  TO  EXERCISE")  duly  completed  and signed by the
registered   holder  or  holders   thereof  or  by  the  duly  appointed   legal
representative  thereof or by a duly authorized  attorney,  and in the case of a
transfer,   such  signature  shall  be  guaranteed  by  an  eligible   guarantor
institution,  and (ii) paying in full the  Exercise  Price for each such Warrant
exercised. Each Warrant may be exercised only in whole.

                  (c) Simultaneously with the exercise of each Warrant,  payment
in full of the  aggregate  Exercise  Price  may be made,  at the  option  of the
holder,  (i) in cash in United  States  dollars or by certified or official bank
check,  (ii)  by a  Cashless  Exercise  (as  defined  below)  or  (iii)  by  any
combination  of (i) and (ii), to the Warrant  Exercise  Office where the Warrant
Certificate is being surrendered.  A "CASHLESS  EXERCISE" shall mean an exercise
of a Warrant in accordance  with the  immediately  following two  sentences.  To
effect a  Cashless  Exercise,  the holder  may  exercise  a Warrant or  Warrants
without  payment of the Exercise Price in cash by  surrendering  such Warrant or
Warrants  (represented  by one or more Warrant  Certificates  ) and, in exchange
therefor,  receiving  such number of shares of Common Stock equal to the product
of (1) that  number  of  shares of Common  Stock  for  which  such  Warrant  are
exercisable and which would be issuable in the event of an exercise with payment
in cash of the Exercise  Price and (2) the Cashless  Exercise  Ratio (as defined
below). The "CASHLESS  EXERCISE RATIO" shall equal a fraction,  the numerator of
which is the excess of the Current Market Value (calculated as set forth in this
Agreement)  per share of Common Stock on the date of exercise  over the Exercise
Price per share of Common Stock as of the date of exercise  and the  denominator
of which is the Current  Market  Value per share of Common  Stock on the date of
exercise.  Upon surrender of a Warrant  Certificate  representing  more than one
Warrant in connection with a holder's option to elect a Cashless Exercise,  such
holder must specify the number of Warrants for which such Warrant Certificate is
to  be  exercised  (without  giving  effect  to  such  Cashless  Exercise).  All
provisions  of this  Agreement  shall be  applicable  with respect to a Cashless
Exercise  of a Warrant  Certificate  for less than the full  number of  Warrants
represented  thereby.  No payment or adjustment  shall be made on account of any
distributions  of  dividends  on the Common  Stock  issued  upon  exercise  of a
Warrant.

                  If the Company has not  effected  the  registration  under the
Securities Act of the offer and sale of the Warrant Shares by the Company to the
holders of the  Warrants on or prior to the EXERCISE  DATE (as defined  herein),
the Company may elect to require  that the  holders of the  Warrants  effect the
exercise  thereof solely pursuant to the Cashless  Exercise option and may amend
the  Warrants and this  Agreement  to  eliminate  the option to pay the Exercise
Price in cash.  The Company shall  calculate and transmit to the Warrant  Agent,
and the Warrant Agent shall have no obligation  under this section to calculate,
the Cashless Exercise Ratio.

                  (d) Upon  surrender of a Warrant  Certificate  and payment and
collection of the Exercise Price at any Warrant  Exercise Office (other than any
Warrant  Exercise  Office  that also is an office of the  Warrant  Agent),  such
Warrant  Certificate  and  payment  shall be promptly  delivered  to the Warrant
Agent.  The "EXERCISE  DATE" shall be the date when all of the items referred to
in the first sentence of each of paragraphs (b) and (c) of this Section 2.02 are
received by the Warrant Agent at or prior to 11:00 a.m.,  New York City time, on
a Business  Day and the  exercise of the  Warrants  will be effective as of such
Exercise  Date.  If any  items  referred  to in the  first  sentence  of each of
paragraphs  (b) and (c) are received  after 11:00 a.m., New York City time, on a
Business  Day,  the  exercise of the Warrants to which such item relates will be
effective on the next succeeding Business Day. Notwithstanding the foregoing, in
the case of an exercise of Warrants on the Expiration  Date, if all of the items
referred to in the first sentence of each of paragraphs (b) and (c) are received
by the  Warrant  Agent at or prior to 5:00  p.m.,  New York  City  time,  on the
Expiration Date, the exercise of the Warrants to which such items relate will be
effective on the Expiration Date.

                  (e) Upon the  exercise  of a Warrant  in  accordance  with the
terms hereof,  the receipt of a Warrant  Certificate and payment of the Exercise
Price (or election of the Cashless  Exercise  option),  the Warrant Agent shall:
(i) except to the extent  exercise  of the  Warrant  has been  effected  through
Cashless  Exercise,  cause an amount equal to the aggregate Exercise Price to be
paid to the  Company by  crediting  the same to the  account  designated  by the
Company  in writing  to the  Warrant  Agent for that  purpose;  (ii)  advise the
Company  promptly  by  telephone  of the amount so  deposited  to the  Company's
account and promptly  confirm such  telephonic  advice in writing;  and (iii) as
soon as  practicable,  advise the  Company in writing of the number of  Warrants
exercised in accordance  with the terms and conditions of this Agreement and the
Warrant Certificates,  the instructions of each exercising holder of the Warrant
Certificates with respect to delivery of the Warrant Shares to which such holder
is entitled upon such exercise,  and such other information as the Company shall
reasonably request.

                  (f) Subject to Section  5.02  hereof,  as soon as  practicable
after the  exercise  of any Warrant or  Warrants  in  accordance  with the terms
hereof,  the  Company  shall issue or cause to be issued to, or upon the written
order of, the  registered  holder of the  Warrant  Certificate  evidencing  such
exercised  Warrant or Warrants,  a certificate  or  certificates  evidencing the
Warrant  Shares to which such  holder is  entitled,  in fully  registered  form,
registered  in such name or names as may be directed by such holder  pursuant to
the  Election  to  Exercise,  as  set  forth  on  the  reverse  of  the  Warrant
Certificate.  Such  certificate  or  certificates  evidencing the Warrant Shares
shall be deemed to have been  issued and any persons  who are  designated  to be
named herein shall be deemed to have become the holder of record of such Warrant
Shares as of the close of business on the Exercise  Date, the Warrant Shares may
initially be issued in global form (the  "GLOBAL  SHARES").  Such Global  Shares
shall  represent  such of the  outstanding  Warrant Shares as shall be specified
therein and each shall provide that it shall  represent the aggregate  amount of
outstanding  Warrant  Shares  from time to time  endorsed  thereon  and that the
aggregate amount of outstanding Warrant Shares represented thereby may from time
to time be reduced or increased,  as  appropriate.  Any  endorsement of a Global
Share to  reflect  the  amount of any  increase  or  decrease  in the  amount of
outstanding  Shares  represented  thereby shall be made by the registrar for the
Warrant Shares and the Depositary in accordance with  instructions  given by the
holder  thereof.  The  Depository  Trust  Company  (or its  nominee)  shall  (if
possible)  act as the  Depositary  with  respect  to the Global  Shares  until a
successor  shall be appointed by the Company and the  registrar  for the Warrant
Shares.  After such exercise of any Warrant or Warrant Shares, the Company shall
also issue or cause to be issued to or upon the written order of the  registered
holder of such Warrant Certificate, a new Warrant Certificate,  countersigned by
the Warrant  Agent  pursuant to written  instruction,  evidencing  the number of
Warrants, if any, remaining unexercised unless such Warrants shall have expired.

                  SECTION 2.03.  CANCELLATION  OF WARRANT  CERTIFICATES.  In the
event the Company  shall  purchase or otherwise  acquire  Warrants,  the Warrant
Certificates  evidencing such Warrants may thereupon be delivered to the Warrant
Agent,  and if so  delivered,  shall at the  Company's  written  instruction  be
canceled  by it  and  retired.  The  Warrant  Agent  shall  cancel  all  Warrant
Certificates  properly  surrendered  for  exchange,  substitution,  transfer  or
exercise.  Upon the Company's  written request,  the Warrant Agent shall deliver
such canceled Warrant Certificates to the Company.

                  SECTION  2.04.  NOTICE  OF  AN  EXERCISE  EVENT.  As  soon  as
practicable after the occurrence of an Exercise Event, the Company shall send or
cause to be sent to each holder of Warrants  with respect to which such Exercise
Event has  occurred,  to the extent  that the  Warrants  are held of record by a
depositary  or other agent (with a copy to the Warrant  Agent),  by  first-class
mail, at the addresses  appearing on the Warrant Register,  a notice prepared by
the Company advising such holder of the Exercise Event which has occurred, which
notice shall  describe the type of Exercise Event and the date of the occurrence
thereof, as applicable, and, in either case, the date of expiration of the right
to exercise the Warrants prominently set forth in the face of such notice.

                                   ARTICLE III

                          OTHER PROVISIONS RELATING TO
                          RIGHTS OF HOLDERS OF WARRANTS

                  SECTION 3.01.  ENFORCEMENT OF RIGHTS. (a)  Notwithstanding any
of the  provisions  of this  Agreement,  any holder of any Warrant  Certificate,
without the consent of the Warrant  Agent,  the holder of any Warrant  Shares or
the holder of any other  Warrant  Certificate,  may,  in and for his own behalf,
enforce,  and may institute and maintain any suit, action or proceeding  against
the Company  suitable to enforce,  his right to exercise the Warrant or Warrants
evidenced  by his Warrant  Certificate  in the manner  provided in such  Warrant
Certificate and in this Agreement.

                  (b) Neither the  Warrants  nor any Warrant  Certificate  shall
entitle the holders thereof to any of the rights of a holder of shares of Common
Stock,  including,  without  limitation,  the  right to vote or to  receive  any
dividends or other payments or to consent or to receive  notice as  stockholders
in respect of the meetings of  stockholders  or for the election of directors of
the Company or any other matter,  or any rights whatsoever as a holder of shares
of Common Stock,  except as expressly  provided herein  (including  Section 5.03
hereof).

                  SECTION 3.02.  OBTAINING STOCK EXCHANGE LISTINGS.  The Company
will from  time to time  take all  action  which  may be  necessary  so that the
Warrant Shares,  immediately  upon their issuance upon the exercise of Warrants,
will be listed on the  principal  securities  exchanges  and markets  within the
United States or Canada (including the Nasdaq National Market), if any, on which
other shares of Common Stock are then listed or quoted.

                                   ARTICLE IV

                        CERTAIN COVENANTS OF THE COMPANY

                  SECTION  4.01.  PAYMENT  OF TAXES.  The  Company  will pay all
documentary stamp taxes  attributable to the initial issuance of Warrants and of
the Warrant Shares upon the exercise of Warrants;  provided,  however,  that the
Company shall not be required to pay any tax or other governmental  charge which
may  be  payable  in  respect  of  any  transfer  or  exchange  of  any  Warrant
Certificates  or any  certificates  for Warrant  Shares in a name other than the
registered  holder of a Warrant  Certificate  surrendered upon the exercise of a
Warrant. In any such case, no transfer or exchange shall be made unless or until
the person or persons requesting issuance thereof shall have paid to the Company
the amount of such tax or other governmental charge or shall have established to
the satisfaction of the Company that such tax or other  governmental  charge has
been paid or an exemption is available therefrom.

                  SECTION 4.02.  RULES 144 AND 144A.  While any Warrants  remain
outstanding, the Company covenants that it shall file the reports required to be
filed by it under the Exchange Act, and the rules and regulations adopted by the
Securities and Exchange Commission thereunder,  in a timely manner in accordance
with the  requirements  of the  Exchange  Act. If at any time the Company is not
required to file such reports,  it will  distribute to each holder or beneficial
owner of Warrants that are  "restricted  securities"  within the meaning of Rule
144  and  are not  saleable  in full  under  paragraph  (k) of  Rule  144,  such
information  as is  necessary  to permit  sales  pursuant to Rule 144A under the
Securities Act.

                  SECTION  4.03.  FORM OF INITIAL  PUBLIC EQUITY  OFFERING.  The
Company agrees that it shall not make an Initial  Public Equity  Offering of any
class of its Capital Stock (other than the class of Capital Stock into which the
Warrants are  exercisable)  without adopting such amendments to the terms of the
Company's  Articles of  Incorporation  as may be  necessary  to provide that the
Warrant  Shares are  convertible  into the class of Capital Stock subject to the
Initial Public Equity  Offering (the "SUBJECT  CLASS") on a  share-for-share  or
other  equitable  basis;  PROVIDED that the rights,  conditions  and  privileges
attaching  to the  Subject  Class as  compared  to the  rights,  conditions  and
privileges  attaching  to the Common  Stock into  which such  Warrants  would be
convertible  on the date hereof (if the Warrants were  immediately  exercisable)
would not adversely  affect holders of the Warrant Shares;  it being  understood
that the Capital Stock into which the Warrants  shall be  convertible  (a) shall
represent the same economic interests,  but may not have the same voting rights,
in the Company as the Common Stock  outstanding on the date hereof and (b) shall
be identical to the class of Capital Stock issued and sold by the Company in the
Initial Public Equity Offering, if any.

                  SECTION 4.04.  SECURITIES ACT AND APPLICABLE  STATE SECURITIES
LAWS.  The  Company  shall  comply  with  all  applicable  laws,  including  the
Securities Act and any applicable  state securities laws, in connection with the
offer and sale of Common Stock (and other securities and property  deliverable )
upon exercise of the Warrants.

                  SECTION 4.05.  RESOLUTION OF PREEMPTIVE RIGHTS, IF ANY.
                                 ---------------------------------------
Neither the Warrants or the Warrant Shares shall be subject to any preemptive or
similar rights.

                                    ARTICLE V

                                   ADJUSTMENTS

                  SECTION 5.01.  ADJUSTMENT OF EXERCISE RATE; NOTICES.  The
                                 ------------------------------------
Exercise Rate is subject to adjustment from time to time as provided in this
Section.

                  (a)      ADJUSTMENT FOR CHANGE IN CAPITAL STOCK.  If,after the
                           --------------------------------------
 date hereof, the Company:

                  (i) pays a  dividend  or makes a  distribution  on  shares  of
         Common Stock in shares of Common Stock (other than any such dividend to
         the extent covered by Section 5.03);

                  (ii) subdivides any of its outstanding  shares of Common Stock
         into a greater number of shares;

                  (iii) combines any of its  outstanding  shares of Common Stock
         into a smaller number of shares;

                  (iv)  pays a  dividend  or makes a  distribution  on shares of
         Common Stock in shares of Capital Stock (as defined  below) (other than
         Common  Stock or rights,  warrants,  or options for its Common Stock to
         the extent such issuance or  distribution  is covered by Section 5.03);
         or

                  (v) issues by  reclassification  of any of its Common Stock or
         any shares of any of its Capital Stock;

then the Company shall adjust the Exercise Rate in effect  immediately  prior to
such action for each  Warrant then  outstanding  so that the holder of a Warrant
thereafter  exercised  may receive the number of shares of Capital  Stock of the
Company which such holder would have owned immediately  following such action if
such  holder had  exercised  the  Warrant  immediately  prior to such  action or
immediately prior to the record date applicable  thereto,  if any (regardless of
whether the Warrants then  outstanding  are then  exercisable and without giving
effect to the Cashless Exercise option).  If there are no outstanding  shares of
Common Stock that are of the same class as the Warrant Shares at the time of any
such action and such action has  therefore  been taken only in respect of Common
Stock, the adjustment shall relate to the Warrant Shares in their same form (and
not in the form of Common  Shares)  if it would not  frustrate  the  intent  and
purposes of this Section 5.01.

                  The adjustment  shall become effective  immediately  after the
record date in the case of a dividend or distribution and immediately  after the
effective date in the case of a subdivision, combination or reclassification. In
the event  that such  dividend  or  distribution  is not so paid or made or such
subdivision,  combination or reclassification is not effected, the Exercise Rate
shall again be adjusted to be the Exercise Rate which would then be in effect if
such record date or effective date had not been so fixed.

                  If after an  adjustment a holder of a Warrant upon exercise of
such Warrant may receive  shares of two or more classes of Capital  Stock of the
Company,  the Exercise Rate shall  thereafter be subject to adjustment  upon the
occurrence of an action taken with respect to any such class of Capital Stock as
is  contemplated  by this Article V with respect to the Common  Stock,  on terms
comparable to those applicable to Common Stock in this Article V.

                  Nothing in this Section  5.01(a) shall require any  adjustment
in the Exercise Rate upon (i) the issuance, conversion,  exchange or exercise of
options to acquire  shares of Common  Stock by, or the  issuance  of  restricted
stock  or  other  similar  equity-based  payments  to,  officers,  directors  or
employees of the Company;  provided  that the exercise  price of such options or
the purchase price of such restricted  stock, as the case may be, at the time of
issuance  thereof,  is at least equal to the then  Current  Market  Value of the
Common  Stock   underlying  such  options  or  restricted   stock  or  (ii)  the
reclassification of the Company's Common Stock into two or more series of common
stock with different voting powers but otherwise  representing the same economic
interests;  PROVIDED that such series of common stock will automatically convert
into  shares of Common  Stock  when the holder  sells,  exchanges  or  otherwise
transfers such shares to any person other than an affiliate of the holder.

                  (b)     ADJUSTMENT FOR SALE OF COMMON STOCK BELOW CURRENT
                          -------------------------------------------------
MARKET VALUE.
-------------

If,  after the date hereof,  the Company  grants or sells to an Affiliate of the
Company (other than a wholly-owned  subsidiary) any shares of Common Stock or of
securities  convertible  into or  exchangeable  or exercisable for any shares of
Common  Stock at a price below the then  Current  Market  Value  (other than (1)
pursuant to the exercise of the Warrants,  (2) upon the conversion,  exchange or
exercise of any security convertible, exchangeable or exercisable for, shares of
Common Stock  outstanding on the date hereof,  (3) upon conversion,  exchange or
exercise of convertible,  exchangeable or exercisable security as to which, upon
the issuance thereof, has previously been the subject of any required adjustment
pursuant to this Section 5 or (4) upon the  conversion,  exchange or exercise of
convertible,  exchangeable or exercisable  securities of the Company outstanding
on the date hereof (to the extent  permitted by the terms of such  securities as
in effect on the date of this  Agreement))  (calculated  as set forth in Section
5.01(l) hereof),  the Exercise Rate for each Warrant then  outstanding  shall be
adjusted in accordance with the formula:

                              E1 = E          (O + N)____
                                   ----------------------
                                           (O + (N x P/M))

where:

E1       =........the adjusted Exercise Rate for each Warrant then outstanding;

E        =........the then current Exercise Rate for each Warrant then
                  outstanding;

O        =        the number of shares of Common Stock outstanding immediately
                  prior to the sale of Common Stock or issuance of securities
                  convertible, exchangeable or exercisable for Common Stock;

N                 = the number of shares of Common  Stock so sold or the maximum
                  stated  number of shares of  Common  Stock  issuable  upon the
                  conversion,  exchange  or  exercise  of any such  convertible,
                  exchangeable or exercisable securities, as the case may be;

P        =        the  proceeds  per share of  Common  Stock  received  by the
                  Company,  which (i) in the case of  shares of Common  Stock is
                  the amount  received by the Company in  consideration  for the
                  sale  and  issuance  of such  shares;  and (ii) in the case of
                  securities convertible into or exchangeable or exercisable for
                  shares of Common  Stock is the amount  received by the Company
                  in consideration for the sale and issuance of such convertible
                  or  exchangeable or exercisable  securities,  plus the minimum
                  aggregate amount of additional  consideration,  other than the
                  surrender  of such  convertible  or  exchangeable  securities,
                  payable to the Company upon  exercise,  conversion or exchange
                  thereof; and

M         =       the Current Market Value as of the Time of  Determination or
                  at the time of sale,  as the  case may be  (calculated  as set
                  forth in Section 5.01(l) hereof).

                  The adjustment  shall become effective  immediately  after the
record  date for the  determination  of  stockholders  entitled  to receive  the
rights,  warrants  or  options  to which  this  paragraph  (b)  applies  or upon
consummation of the sale of Common Stock, as the case may be. To the extent that
shares of Common Stock are not delivered  after the expiration of such rights or
warrants,  the  Exercise  Rate  for  each  Warrant  then  outstanding  shall  be
readjusted  to the  Exercise  Rate which  would  otherwise  be in effect had the
adjustment  made upon the  issuance of such rights or warrants  been made on the
basis of  delivery  of only the  number  of  shares  of  Common  Stock  actually
delivered.  In the event that such  rights or  warrants  are not so issued,  the
Exercise  Rate for each Warrant then  outstanding  shall again be adjusted to be
the  Exercise  Rate  which  would  then be in  effect  if such  date  fixed  for
determination  of  stockholders  entitled to receive such rights or warrants had
not been so fixed.

                  No  adjustment  shall be made under this  paragraph (b) if the
application  of the formula stated above in this paragraph (b) would result in a
value of E1 that is lower than the value of E.

                  No adjustment  shall be made under this  paragraph (b) for any
adjustment  which is the subject of  paragraph  (c),  (d) or (e) of this Section
5.01.

                  "AFFILIATE"  means, with respect to any specified Person,  (i)
any other Person  directly or indirectly  controlling  or controlled by or under
direct or indirect  common control with such specified  Person or (ii) any other
Person that owns, directly or indirectly, 10% or more of such specified Person's
Voting Stock or any executive  officer or director of any such specified  Person
or other Person or, with respect to any natural Person, any other Person in such
Person's immediate family. For the purposes of this definition,  "control," when
used with  respect  to any  specified  Person,  means  the  power to direct  the
management and policies of such Person, directly or indirectly,  whether through
the  ownership of voting  securities,  by contract or  otherwise;  and the terms
"controlling"  and  "controlled"  have meanings  correlative  to the  foregoing.
Notwithstanding the foregoing,  no individual shall be deemed to be an Affiliate
of a Person  solely by reason of (a) such Person  being a party to an  Incumbent
Agreement (as defined in the Indenture) or (b) such Person owning an interest in
a  Restricted  Subsidiary  (as defined in the  Indenture)  pursuant  to, or as a
result of, an Incumbent Agreement (as defined in the Indenture).

                  (c)  NOTICE  OF  ADJUSTMENT.  Whenever  the  Exercise  Rate is
adjusted,   the  Company  shall  promptly  mail  to  holders  of  Warrants  then
outstanding at the addresses  appearing on the Warrant  Register a notice of the
adjustment.  The  Company  shall  file  with the  Warrant  Agent  and any  other
Registrar such notice and a certificate  from the Company's  independent  public
accountants briefly stating the facts requiring the adjustment and the manner of
computing it. The certificate  shall be conclusive  evidence that the adjustment
is correct.  Neither the Warrant Agent nor any such Registrar shall be under any
duty or  responsibility  with respect to any such certificate  except to exhibit
the same during normal business hours to any holder desiring inspection thereof.

                  (d) REORGANIZATION OF COMPANY;  SPECIAL DISTRIBUTIONS.  (i) If
the  Company,   in  a  single   transaction  or  through  a  series  of  related
transactions,  consolidates  with or  merges  with or into any  other  person or
sells,  assigns,  transfers,  leases,  conveys or  otherwise  disposes of all or
substantially  all of its  properties  and assets to another  person or group of
affiliated  persons or is a party to a merger or binding  share  exchange  which
reclassifies   or  changes  its   outstanding   Common  Stock  (a   "FUNDAMENTAL
TRANSACTION"),  (it  being  understood  that a single  transaction  or series of
related transactions  pursuant to which not less than ninety-five percent of the
outstanding shares of capital stock of the Company are exchanged for shares in a
single Affiliate (or any Person who, pursuant to such  transaction,  will become
such an  Affiliate)  shall be deemed to be a  Fundamental  Transaction,  and the
Affiliate acquiring such shares shall, for purposes of this clause, be deemed to
be the Surviving Person (as defined below)),  as a condition to consummating any
such  transaction  the person formed by or surviving any such  consolidation  or
merger if other than the  Company or the person to whom such  transfer  has been
made (the "SURVIVING PERSON") shall enter into a supplemental warrant agreement.
The  supplemental  warrant  agreement  shall  provide  (a) that the  holder of a
Warrant then  outstanding may exercise it for the kind and amount of securities,
cash or other assets which such holder would have received immediately after the
Fundamental  Transaction  if such holder had exercised  the Warrant  immediately
before the effective date of the  transaction  (whether or not the Warrants were
then exercisable and without giving effect to the Cashless  Exercise option) (it
being  understood that the Warrants will remain  exercisable  only in accordance
with their terms and that  conditions  to exercise,  such as payment of Exercise
Price, will remain  applicable),  assuming (to the extent  applicable) that such
holder (i) was not a constituent  person or an affiliate of a constituent person
to such transaction,  (ii) made no election with respect thereto,  and (iii) was
treated  alike with the  plurality  of  non-electing  holders,  and (b) that the
Surviving  Person  shall  succeed  to and be  substituted  to  every  right  and
obligation of the Company in respect of this  Agreement  and the  Warrants.  The
supplemental  warrant  agreement shall provide for adjustments which shall be as
nearly equivalent as may be practicable to the adjustments  provided for in this
Article  V. The  Surviving  Person  shall mail to  holders  of  Warrants  at the
addresses  appearing on the Warrant  Register a notice  briefly  describing  the
supplemental  warrant  agreement.  If the issuer of securities  deliverable upon
exercise of Warrants is an affiliate of the Surviving Person,  that issuer shall
join in the supplemental warrant agreement.

                  (ii) Notwithstanding the foregoing, if the Company enters into
a Fundamental  Transaction  with another  Person (other than a subsidiary of the
Company) and  consideration is payable to holders of the shares of Capital Stock
(or other  securities or property)  issuable or deliverable upon exercise of the
Warrants in exchange for such shares of Capital  Stock in  connection  with such
Fundamental  Transaction  which  consists  solely of cash,  then the  holders of
Warrants shall be entitled to receive distributions on the date of such event on
an equal basis with holders of such shares of Capital Stock (or other securities
issuable upon  exercise of the  Warrants) as if the Warrants had been  exercised
immediately prior to such event, less the aggregate Exercise Price. Upon receipt
of such payment, if any, the rights of a holder of a Warrant shall terminate and
cease and such holder's Warrants shall expire.

                  (iii) If this  paragraph (d) applies,  it shall  supersede the
application of paragraph (a) of this Section 5.01.

                  (e)  COMPANY DETERMINATION FINAL. Any determination that the
                       ---------------------------
Company or the board of directors of the Company must make pursuant to this
Article V is conclusive.

                  (f) WARRANT AGENT'S ADJUSTMENT  DISCLAIMER.  The Warrant Agent
shall have no duty to determine  when an adjustment  under this Article V should
be made,  how it should be made or what it should be. The  Warrant  Agent  shall
have no  duty to  determine  whether  a  supplemental  warrant  agreement  under
paragraph (d) need be entered into or whether any provisions of any supplemental
warrant  agreement are correct.  The Warrant Agent shall not be accountable  for
and makes no  representation  as to the validity or value of any  securities  or
assets  issued  upon  exercise  of  Warrants.  The  Warrant  Agent  shall not be
responsible for the Company's failure to comply with this Article V.

                  (g)  ADJUSTMENT  FOR TAX  PURPOSES.  In the event of a taxable
distribution to holders of shares of Common Stock which results in an adjustment
to the  number  of shares of  Common  Stock or other  consideration  for which a
Warrant  may  be  exercised,  the  holders  of  the  Warrants  may,  in  certain
circumstances,  be deemed to have  received  a  distribution  subject  to United
States federal income tax as a dividend.  The Company may make such increases in
the Exercise Rate, in addition to those otherwise  required by this Section,  as
it considers to be advisable in order that any event treated for federal  income
tax  purposes as a dividend of stock or stock rights shall not be taxable to the
recipients.

                  (h) UNDERLYING  SHARES. The Company shall at all times reserve
and keep  available,  free from  preemptive  rights,  out of its  authorized but
unissued  Common Stock or Common Stock held in the treasury of the Company,  for
the purpose of effecting  the  exercise of Warrants,  the full number of Warrant
Shares then  deliverable  upon the exercise of all Warrants then outstanding and
payment of the exercise price, and the shares so deliverable shall be fully paid
and nonassessable and free from all liens and security interests.

                  (i)  SPECIFICITY OF ADJUSTMENT.  Regardless of any adjustments
in the number or kind of shares  purchasable  upon the exercise of the Warrants,
Warrant  Certificates  theretofore or thereafter  issued may continue to express
the same  number  and kind of Shares per  Warrant  as are stated on the  Warrant
Certificates initially issuable pursuant to this Agreement.

                  (j)  VOLUNTARY  ADJUSTMENT.  The Company from time to time may
increase  the Exercise  Rate by any number and for any period of time  (provided
that such period shall not be less than 20 Business Days). Whenever the Exercise
Rate is so  increased,  the  Company  shall  mail to  holders  at the  addresses
appearing on the Warrant  Register  and file with the Warrant  Agent a notice of
the increase. The Company shall give the notice at least 15 days before the date
the increased  Exercise Rate takes effect.  The notice shall state the increased
Exercise Rate and the period it will be in effect.  A voluntary  increase in the
Exercise Rate does not change or adjust the Exercise Rate otherwise in effect as
determined by this Section 5.01.

                  (k) MULTIPLE ADJUSTMENTS.  After an adjustment to the Exercise
Rate for  outstanding  Warrants  under  this  Article  V, any  subsequent  event
requiring an  adjustment  under this Article V shall cause an  adjustment to the
Exercise Rate for outstanding Warrants as so adjusted.

                  (l)  DEFINITIONS.
                       -----------

                  "CAPITAL STOCK" means, with respect to any Person, any and all
shares,  interests,  partnership interests,  participations,  rights in or other
equivalents  (however  designated  and whether  voting or  non-voting)  of, such
Person's capital stock,  and any rights (other than debt securities  convertible
into Capital Stock),  warrants or options  exchangeable  for or convertible into
such capital stock, whether outstanding on the date hereof or issued hereafter.

                  "CONVERTIBLE PREFERRED STOCK" means any securities convertible
or exercisable or  exchangeable  into Common Stock,  whether  outstanding on the
date hereof or hereafter issued.

                  "CURRENT  MARKET VALUE" per share of Common Stock or any other
security  at any date  means (i) if the  security  is not  registered  under the
Exchange  Act, (a) the value of the  security,  determined  in good faith by the
board of directors of the Company and certified in a board resolution,  based on
the most recently completed  arm's-length  transaction between the Company and a
person other than an Affiliate of the Company and the closing of which occurs on
such date or shall have occurred  within the  six-month  period  preceding  such
date, or (b) if no such  transaction  shall have occurred on such date or within
such  six-month  period or if the board of  directors  of the Company  otherwise
elects,  the Fair Market Value of the security as  determined by a nationally or
regionally  recognized  independent financial expert (provided that, in the case
of the  calculation  of Current Market Value for  determining  the cash value of
fractional shares, any such determination within six months that is, in the good
faith  judgment  of  the  board  or  directors  of  the  Company,  a  reasonable
determination  of  value,  may be  utilized)  or  (ii)  (a) if the  security  is
registered under the Exchange Act, the average of the daily closing sales prices
of the securities for the 20 consecutive trading days immediately preceding such
date, or (b) if the security has been registered under the Exchange Act for less
than 20  consecutive  trading  days  before such date,  then the  average  daily
closing  sales  prices for all of the  trading  days  before such date for which
closing  sales  prices are  available,  in the case of each of (ii) (a) and (ii)
(b), as certified to the Warrant Agent by the President or any vice president or
the Chief  Financial  Officer of the Company.  The closing  sales price for each
such  trading day shall be: (A) in the case of a security  listed or admitted to
trading on any United States national  securities  exchange or quotation system,
the closing sales price,  regular way, on such day, or if no sale takes place on
such day,  the average of the closing bid and asked  prices on such day,  (B) in
the case of a security  not then listed or  admitted to trading on any  national
securities  exchange or quotation  system,  the last reported sale price on such
day, or if no sale takes  place on such day,  the average of the closing bid and
asked prices on such day, as reported by a reputable quotation source designated
by the  Company,  (C) in the case of a security  not then  listed or admitted to
trading on any national  securities exchange or quotation system and as to which
no such reported sale price or bid and asked prices are  available,  the average
of the  reported  high bid and low asked  prices on such day,  as  reported by a
reputable  quotation  service,  or a  newspaper  of general  circulation  in the
Borough of Manhattan,  The City and State of New York,  customarily published on
each business day,  designated by the Company,  or, if there shall be no bid and
asked prices on such day, the average of the high bid and low asked  prices,  as
so reported,  on the most recent day (not more than 30 days prior to the date in
question)  for which  prices have been so reported  and (D) if there are not bid
and asked prices reported during the 30 days prior to the date in question,  the
Current  Market  Value  shall  be  determined  as if  the  securities  were  not
registered under the Exchange Act.

                  "FAIR  MARKET  VALUE"  means,  with  respect  to any  asset or
property,  the sale value that would be obtained in an arm's length  transaction
between an  informed  and  willing  seller  under no  compulsion  to sell and an
informed  and  willing  buyer  under  no  compulsion  to buy.  Unless  otherwise
specified in this Agreement,  Fair Market Value shall be determined by the board
of  directors  of the  Company  acting in good faith and as of the date on which
such determination is made.

                  "INDEPENDENT   FINANCIAL   EXPERT"   means  a  nationally   or
regionally recognized investment banking or public accounting firm in the United
States  or,  if the  Company  believes  that an  investment  banking  or  public
accounting firm is generally not qualified to give such an opinion, a nationally
recognized  appraisal firm, in any case (i) which does not, and whose directors,
officers and employees or Affiliates do not, have a direct or indirect  material
financial  interest  for its  proprietary  account in the  Company or any of its
Affiliates  and (ii) which,  in the  judgment of the Board of  Directors  of the
Company, is otherwise independent with respect to the Company and its Affiliates
and qualified to perform the task for which it is to be engaged.

                  "TIME  OF  DETERMINATION"  means,  (i)  in  the  case  of  any
distribution  of securities or other property to existing  stockholders to which
paragraph (b) applies,  the time and date of the  determination  of stockholders
entitled to receive such securities or property or (ii) in the case of any other
issuance  and sale to which  paragraph  (b)  applies,  the time and date of such
issuance or sale.

                  (m) WHEN DE MINIMIS ADJUSTMENT MAY BE DEFERRED.  No adjustment
in the  Exercise  Rate need be made  unless  the  adjustment  would  require  an
increase of at least 1% in the Exercise Rate. Any adjustments  that are not made
shall be carried  forward and taken into account in any subsequent  adjustments.
All calculations under this Section 5 shall be made to the nearest 1/1000th of a
share, as the case may be.

                  SECTION  5.02.  FRACTIONAL  SHARES.  The  Company  will not be
required to issue  fractional  Warrant  Shares upon  exercise of the Warrants or
distribute Warrant Share  certificates that evidence  fractional Warrant Shares.
In the  event a  holder  is  required  by  Section  2.02(c)  to make a  Cashless
Exercise,  the  number of  Warrant  Shares  issuable  shall be rounded up to the
nearest whole number.  In addition,  in no event shall any holder of Warrants be
required to make any payment of a fractional cent. In lieu of fractional Warrant
Shares, there shall be paid to the registered holders of Warrant Certificates at
the time Warrants  evidenced  thereby are exercised as herein provided an amount
in cash equal to the same fraction of the Current  Market  Value,  as defined in
paragraph  (l) of  Section  5.01 of this  Agreement  per  Warrant  Share  on the
Business  Day  preceding  the  date the  Warrant  Certificates  evidencing  such
Warrants are surrendered for exercise. Such payments will be made by check or by
transfer to an account  maintained by such registered  holder with a bank in The
City of New York.  If any holder  surrenders  for exercise more than one Warrant
Certificate, the number of Warrant Shares deliverable to such holder may, at the
option of the Company,  be computed on the basis of the aggregate  amount of all
the Warrants exercised by such holder.

                  SECTION 5.03. CERTAIN DISTRIBUTIONS.  If at any time after the
Exercisability  Date, the Company grants,  issues or sells options,  convertible
securities,  or rights to purchase  Capital Stock,  warrants or other securities
pro rata to the record holders of any Common Stock  ("DISTRIBUTION  RIGHTS") or,
without  duplication,  makes any dividend or otherwise  makes any  distribution,
including (subject to applicable law) pursuant to any plan of liquidation (each,
a "DISTRIBUTION"),  on the Common Stock (whether in cash, property, evidences of
indebtedness or otherwise), then the Company shall grant, issue, sell or make to
each registered  holder of Warrants then outstanding the aggregate  Distribution
Rights  or  Distribution,  as the case may be,  which  such  holder  would  have
acquired if such holder had held the  maximum  number of shares of Common  Stock
acquirable  upon complete  exercise of such  holder's  Warrants  (regardless  of
whether the exercise of the Warrants is then suspended and without giving effect
to the  Cashless  Exercise  option)  immediately  before the record date for the
grant, issuance or sale of such Distribution Rights or Distribution, as the case
may be,  or, if there is no such  record  date,  the date as of which the record
holders of Common  Stock are to be  determined  for the grant,  issue or sale of
such Distribution Rights or Distribution, as the case may be.

                                   ARTICLE VI

                          CONCERNING THE WARRANT AGENT

                  SECTION 6.01.  WARRANT AGENT.  The Company hereby appoints The
Bank of New York as Warrant  Agent of the Company in respect of the Warrants and
the Warrant  Certificates upon the terms and subject to the conditions set forth
herein and in the Warrant Certificates;  and The Bank of New York hereby accepts
such  appointment.  The  Warrant  Agent  shall  have the  powers  and  authority
specifically  granted to and conferred upon it in the Warrant  Certificates  and
hereby and such further  powers and authority to act on behalf of the Company as
the Company  may  hereafter  grant to or confer  upon it and it shall  accept in
writing.  All of the  terms and  provisions  with  respect  to such  powers  and
authority  contained in the Warrant  Certificates are subject to and governed by
the terms and  provisions  hereof.  The Warrant Agent may act through agents and
shall not be  responsible  for the  misconduct  or  negligence of any such agent
appointed with due care.

                  SECTION 6.02.  CONDITIONS OF WARRANT AGENT'S OBLIGATIONS.  The
Warrant  Agent  accepts  its  obligations  set forth  herein  upon the terms and
conditions hereof and in the Warrant Certificates,  including the following,  to
all of which the Company agrees and to all of which the rights  hereunder of the
holders from time to time of the Warrant Certificates shall be subject:

                  (a) The Warrant Agent shall be entitled to  compensation to be
         agreed upon with the Company in writing for all services rendered by it
         and  the  Company  agrees  promptly  to pay  such  compensation  and to
         reimburse the Warrant Agent for its reasonable  out-of-pocket  expenses
         (including  reasonable fees and expenses of counsel)  incurred  without
         gross  negligence or willful  misconduct on its part in connection with
         the  services  rendered by it  hereunder.  The  Company  also agrees to
         indemnify the Warrant Agent and any  predecessor  Warrant Agent,  their
         directors,  officers, affiliates, agents and employees for, and to hold
         them and their directors,  officers,  affiliates,  agents and employees
         harmless  against,  any  loss,  liability  or  expense  of  any  nature
         whatsoever (including, without limitation, reasonable fees and expenses
         of counsel) incurred without gross negligence or willful  misconduct on
         the part of the Warrant Agent, arising out of or in connection with its
         acting as such Warrant  Agent  hereunder and its exercise of its rights
         and  performance of its obligations  hereunder.  The obligations of the
         Company  under this  Section  6.02 shall  survive the  exercise and the
         expiration of the Warrant  Certificates and the resignation and removal
         of the Warrant Agent.

                  (b) In acting under this Agreement and in connection  with the
         Warrant  Certificates,  the Warrant  Agent is acting solely as agent of
         the  Company  and does not assume any  obligation  or  relationship  of
         agency or trust for or with any of the owners or holders of the Warrant
         Certificates.

                  (c)  The  Warrant  Agent  may  consult  with  counsel  of  its
         selection  and any advice or written  opinion of such counsel  shall be
         full and complete authorization and protection in respect of any action
         taken,  suffered  or  omitted  by it  hereunder  in good  faith  and in
         accordance with such advice or opinion.

                  (d) The Warrant Agent shall be fully protected and shall incur
         no  liability  for or in respect  of any action  taken or omitted to be
         taken or thing suffered by it in reliance upon any Warrant Certificate,
         notice, direction, consent, certificate, affidavit, opinion of counsel,
         instruction,  statement or other paper or document  reasonably believed
         by it to be genuine and to have been  presented or signed by the proper
         parties.

                  (e) The Warrant Agent, and its officers, directors, affiliates
         and employees ("RELATED PARTIES"), may become the owners of, or acquire
         any Interest in, Warrant  certificates,  shares or other obligations of
         the Company  with the same rights that it or they would have if it were
         not the  Warrant  Agent  hereunder  and,  to the  extent  permitted  by
         applicable law, it or they may engage or be interested in any financial
         or other transaction with the Company and may act on, or as depositary,
         trustee or agent  for,  any  committee  or body of holders of shares or
         other  obligations  of the  Company  as  freely  as if it were  not the
         Warrant Agent  hereunder.  Nothing in this Agreement shall be deemed to
         prevent the Warrant  Agent or such  Related  Parties from acting in any
         other capacity for the Company.

                  (f) The  Warrant  Agent shall not be under any  liability  for
         interest  on, and shall not be  required  to invest,  any monies at any
         time received by it pursuant to any of the provisions of this Agreement
         or of the Warrant Certificates.

                  (g) The Warrant Agent shall not be under any responsibility in
         respect of the  validity of this  Agreement  (or any term or  provision
         hereof) or the execution and delivery  hereof (except the due execution
         and delivery hereof by the Warrant Agent) or in respect of the validity
         or  execution  of any Warrant  Certificate  (except its  authentication
         thereof).

                  (h) The recitals and other statements  contained herein and in
         the   Warrant   Certificates   (except  as  to  the   Warrant   Agent's
         authentication thereon) shall be taken as the statements of the Company
         and the Warrant Agent assumes no responsibility  for the correctness of
         the same. The Warrant Agent does not make any  representation as to the
         validity or sufficiency of this Agreement or the Warrant  Certificates,
         except for its due execution and delivery of this Agreement;  provided,
         however,  that the  Warrant  Agent shall not be relieved of its duty to
         authenticate the Warrant  Certificates as authorized by this Agreement.
         The Warrant Agent shall not be  accountable  for the use or application
         by the Company of the Proceeds of the exercise of any Warrant.

                  (i) Before the Warrant Agent acts or refrains from acting with
         respect  to  any  matter  contemplated  by  this  Supplemental  Warrant
         Agreement, it may require:

(1)               an Officers' Certificate (as defined in the Indenture) stating
                  on behalf of the Company  that, in the opinion of the signers,
                  all  conditions  precedent,  if  any,  provided  for  in  this
                  Supplemental Warrant Agreement relating to the proposed action
                  have been complied with; and

                           (2) if  reasonably  necessary in the sole judgment of
                  the  Warrant  Agent,  an opinion of  counsel  for the  Company
                  stating  that,  in the  opinion  of  such  counsel,  all  such
                  conditions  precedent  have been  complied  with provided that
                  such matter is one customarily opined on by counsel.

                  Each  Officers'  Certificate  or, if requested,  an opinion of
counsel with respect to compliance with a condition or covenant  provided for in
this Supplemental Warrant Agreement shall include:

                  (1) a statement  that the person  making such  certificate  or
         opinion has read such covenant or condition;

                  (2) a  brief  statement  as to the  nature  and  scope  of the
         examination  or  investigation  upon which the  statements  or opinions
         contained in such certificate or opinion are based;

                  (3) a statement that, in the opinion of such person, he or she
         has made such  examination or  investigation  as is necessary to enable
         him or her to  express  an  informed  opinion as to whether or not such
         covenant or condition has been complied with; and

                  (4) a  statement  as to whether or not, in the opinion of such
         person, such condition or covenant has been complied with.

                  (j) The  Warrant  Agent  shall be  obligated  to perform  such
duties as are specifically set forth herein and in the Warrant Certificates, and
no  implied  duties or  obligations  shall be read into  this  Agreement  or the
Warrant  Certificates  against the Warrant Agent. The Warrant Agent shall not be
accountable or be under any duty or responsibility for the use by the Company of
any of the Warrant Certificates authenticated by the Warrant Agent and delivered
by it to the Company pursuant to this Agreement. The Warrant Agent shall have no
duty or  responsibility in case of any default by the Company in the performance
of its covenants or agreements  contained in the Warrant  Certificates or in the
case of the receipt of any written demand from a holder of a Warrant Certificate
with respect to such default, including,  without limiting the generality of the
foregoing,  any duty or  responsibility  to initiate or attempt to initiate  any
proceedings  at law or otherwise  or, except as provided in Section 7.02 hereof,
to make any demand upon the Company.

                  (k) Unless otherwise  specifically provided herein, any order,
certificate,  notice, request, direction or other communication from the Company
made or given under any  provision  of this  Agreement  shall be  sufficient  if
signed by its chairman of the board of directors,  its president, its treasurer,
its  controller  or any  vice  president  or  its  secretary  or  any  assistant
secretary.

                  (l) The Warrant Agent shall have no  responsibility in respect
         of any adjustment pursuant to Article V hereof.

                  (m)  The  Company  agrees  that  it  will  perform,   execute,
acknowledge and deliver,  or cause to be performed,  executed,  acknowledged and
delivered,  all such further and other acts,  instruments  and assurances as may
reasonably  be required by the Warrant  Agent for the carrying out or performing
by the Warrant Agent of the provisions of this Agreement.

                  (n) The Warrant  Agent is hereby  authorized  and  directed to
accept  written  instructions  with  respect  to the  performance  of its duties
hereunder from any one of the chairman of the board of directors, the president,
the treasurer, the controller,  any vice president or the secretary or assistant
secretary  of the  Company  or any other  officer  or  official  of the  Company
reasonably  believed to be authorized to give such  instructions and to apply to
such officers or officials  for advice or  instructions  in connection  with its
duties,  and it shall not be liable for any action taken or suffered to be taken
by it in good faith in accordance with  instructions  with respect to any matter
arising in connection with the Warrant  Agent's duties and  obligations  arising
under  this  Agreement.  Such  application  by the  Warrant  Agent  for  written
instructions from the Company may, at the option of the Warrant Agent, set forth
in writing any action  proposed to be taken or omitted by the Warrant Agent with
respect to its duties or  obligations  under this  Agreement  and the date on or
after which such action shall be taken and the Warrant Agent shall not be liable
for any action taken or omitted in  accordance  with a proposal  included in any
such application on or after the date specified therein (which date shall be not
less than 10 Business Days after the Company  receives such  application  unless
the Company  consents to a shorter  period),  provided that (i) such application
includes a  statement  to the  effect  that it is being  made  pursuant  to this
paragraph  (n) and that unless  objected to prior to such date  specified in the
application,  the  Warrant  Agent  will not be  liable  for any such  action  or
omission to the extent set forth in this  paragraph (n) and (ii) prior to taking
or  omitting  any such  action,  the  Warrant  Agent  has not  received  written
instructions objecting to such proposed action or omission.

                  (o)  Whenever  in the  performance  of its  duties  under this
Agreement the Warrant  Agent shall deem it necessary or desirable  that any fact
or matter be proved or  established  by the Company prior to taking or suffering
any action  hereunder,  such fact or matter  (unless  other  evidence in respect
thereof  be herein  specifically  prescribed)  may be deemed to be  conclusively
proved and  established by a certificate  signed on behalf of the Company by any
one of  the  chairman  of the  board  of  directors,  CEO,  the  president,  the
treasurer,  the controller,  any executive vice president, any vice president or
the secretary or any assistant  secretary of the Company or any other officer or
official  of the  Company  reasonably  believed  to be  authorized  to give such
instructions and delivered to the Warrant Agent;  and such certificate  shall be
full authorization to the Warrant Agent for any action taken or suffered in good
faith by it under  the  provisions  of this  Agreement  in  reliance  upon  such
certificate.

                  (p) The Warrant  Agent shall not be required to risk or expend
         its  own  funds  in the  performance  of  its  obligations  and  duties
         hereunder.

                  SECTION 6.03.  RESIGNATION AND APPOINTMENT OF SUCCESSOR.
                                 ----------------------------------------

                  (a) The Company  agrees,  for the benefit of the holders  from
time to time of the  Warrant  Certificates,  that there  shall at all times be a
Warrant Agent hereunder.

                  (b) The Warrant  Agent may at any time resign as Warrant Agent
by  giving  written  notice  to the  Company  of  such  intention  on its  part,
specifying  the date on which its desired  resignation  shall become  effective;
provided,  however,  that such date  shall be at least 60 days after the date on
which such notice is given unless the Company agrees to accept less notice. Upon
receiving  such notice of  resignation,  the Company  shall  promptly  appoint a
successor  Warrant Agent,  qualified as provided in Section 6.03(d)  hereof,  by
written  instrument  in duplicate  signed on behalf of the Company,  one copy of
which shall be  delivered  to the  resigning  Warrant  Agent and one copy to the
successor Warrant Agent. As provided in Section 6.03(d) hereof, such resignation
shall become effective upon the earlier of (x) the acceptance of the appointment
by the  successor  Warrant  Agent or (y) 60 days after receipt by the Company of
notice of such resignation. The Company may, at any time and for any reason, and
shall,  upon any event set forth in the next  succeeding  sentence,  remove  the
Warrant  Agent and appoint a successor  Warrant  Agent by written  instrument in
duplicate,  specifying  such  removal  and the date on which it is  intended  to
become  effective,  signed on behalf of the Company,  one copy of which shall be
delivered  to the  Warrant  Agent being  removed  and one copy to the  successor
Warrant  Agent.  The  Warrant  Agent shall be removed as  aforesaid  if it shall
become incapable of acting,  or shall be adjudged a bankrupt or insolvent,  or a
receiver of the Warrant  Agent or of its  property  shall be  appointed,  or any
public  officer shall take charge or control of it or of its property or affairs
for the purpose of rehabilitation,  conservation or liquidation.  Any removal of
the Warrant Agent and any appointment of a successor  Warrant Agent shall become
effective  upon  acceptance of  appointment  by the  successor  Warrant Agent as
provided in Section  6.03(d).  As soon as practicable  after  appointment of the
successor Warrant Agent, the Company shall cause written notice of the change in
the Warrant Agent to be given to each of the registered  holders of the Warrants
in the manner provided for in Section 7.04 hereof.

                  (c) Upon  resignation or removal of the Warrant Agent,  if the
Company  shall fail to appoint a successor  Warrant  Agent within a period of 60
days after receipt of such notice of resignation or removal,  then the holder of
any Warrant  Certificate  or the retiring  Warrant Agent may apply to a court of
competent  jurisdiction for the appointment of a successor to the Warrant Agent.
Pending  appointment of a successor to the Warrant Agent,  either by the Company
or by such a court,  the duties of the Warrant Agent shall be carried out by the
Company.

                  (d) Any  successor  Warrant  Agent,  whether  appointed by the
Company  or by a  court,  shall  be a bank or trust  company  in good  standing,
incorporated under the laws of the United States of America or any State thereof
and having,  at the time of its  appointment,  a combined  capital surplus of at
least $50 million. Such successor Warrant Agent shall execute and deliver to its
predecessor  and  to  the  Company  an  instrument  accepting  such  appointment
hereunder and all the provisions of this Agreement, and thereupon such successor
Warrant Agent, without any further act, deed or conveyance,  shall become vested
with  all  the  rights,  powers,  duties  and  obligations  of  its  predecessor
hereunder,  with like effect as if originally  named as Warrant Agent hereunder,
and such  predecessor  shall  thereupon  become  obligated  to (i)  transfer and
deliver,  and such  successor  Warrant  Agent shall be entitled to receive,  all
securities,  records  or  other  property  on  deposit  with  or  held  by  such
predecessor as Warrant Agent hereunder and (ii) upon payment of the amounts then
due it pursuant to Section 6.02(a) hereof,  pay over, and such successor Warrant
Agent shall be entitled to  receive,  all monies  deposited  with or held by any
predecessor Warrant Agent hereunder.

                  (e) Any  corporation  or bank  into  which the  Warrant  Agent
hereunder may be merged or converted,  or any corporation or bank with which the
Warrant Agent may be consolidated, or any corporation or bank resulting from any
merger, conversion or consolidation to which the Warrant Agent shall be a party,
or any  corporation  or bank to which the Warrant  Agent shall sell or otherwise
transfer all or substantially all of its corporate trust business,  shall be the
successor  to the  Warrant  Agent  under  this  Agreement  (provided  that  such
corporation  or bank shall be qualified as  aforesaid)  without the execution or
filing of any  document  or any  further  act on the part of any of the  parties
hereto.

                  (f) No Warrant Agent under this Supplemental Warrant Agreement
shall be personally  liable for any action or omission of any successor  Warrant
Agent.

                                   ARTICLE VII

                                  MISCELLANEOUS

                  SECTION 7.01.  AMENDMENT.  This Agreement and the terms of the
Warrants  may be amended by the  Company  and the  Warrant  Agent,  without  the
consent of the holder of any Warrant Certificate,  for the purpose of curing any
ambiguity,   or  of  curing,   correcting  or  supplementing  any  defective  or
inconsistent provision contained herein or therein, or to effect any assumptions
of the Company's obligations hereunder and thereunder by a successor corporation
under the  circumstances  described  in Section  5.01(d)  hereof or in any other
manner which the Company may deem  necessary  or  desirable  and which shall not
adversely affect the interests of the holders of the Warrant Certificates.

                  The  Company  and the  Warrant  Agent  may  amend,  modify  or
supplement  this  Agreement  and the  terms  of the  Warrants,  and  waivers  to
departures  from the terms hereof and thereof may be given,  with the consent of
the Requisite  Warrant  Holders (as defined below) for the purpose of adding any
provision to or changing in any manner or  eliminating  any of the provisions of
this  Agreement  or  modifying  in any manner  the rights of the  holders of the
outstanding  Warrants.  "REQUISITE WARRANT HOLDERS" means (i) in the case of any
amendment, modification,  supplement or waiver affecting only Warrant Holders as
such,  holders  of a  majority  in number of the  outstanding  Warrants,  voting
separately  as a  class,  or (ii) in the  case of any  amendment,  modification,
supplement or waiver affecting Warrant Holders,  a majority in number of Warrant
Shares  represented  by the Warrants  that would be issuable  assuming  exercise
thereof at the time such amendment, modification,  supplement or waiver is voted
upon. Notwithstanding any other provision of this Agreement, the Warrant Agent's
consent must be obtained  regarding any supplement or amendment which alters the
Warrant  Agent's  rights  or  duties  (it being  expressly  understood  that the
foregoing  shall not be in  derogation of the right of the Company to remove the
Warrant  Agent in  accordance  with  Section 6.03  hereof).  For purposes of any
amendment, modification or waiver hereunder, Warrants held by the Company or any
of its Affiliates shall be disregarded.

                  Any  modification  or amendment  made in accordance  with this
Agreement  will be conclusive  and binding on all present and future  holders of
Warrant  Certificates whether or not they have consented to such modification or
amendment  or  waiver  and  whether  or not  notation  of such  modification  or
amendment is made upon such Warrant Certificates.  Any instrument given by or on
behalf of any holder of a Warrant  Certificate in connection with any consent to
any  modification  or amendment will be conclusive and binding on all subsequent
holders of such Warrant Certificate.

                  SECTION  7.02.  NOTICES AND DEMANDS TO THE COMPANY AND WARRANT
AGENT. If the Warrant Agent shall receive any notice or demand  addressed to the
Company by the holder of a Warrant Certificate pursuant to the provisions hereof
or of the Warrant  Certificates,  the Warrant Agent shall promptly  forward such
notice or demand to the Company.

                  SECTION  7.03.  ADDRESSES  FOR  NOTICES  TO  PARTIES  AND  FOR
TRANSMISSION OF DOCUMENTS.  All notices hereunder to the parties hereto shall be
deemed to have been given when sent by certified  or  registered  mail,  postage
prepaid,  or by facsimile  transmission,  confirmed by first class mail, postage
prepaid, addressed to any party hereto as follows:

         To the Company:

                     Pathnet Telecommunications, Inc.
                     1015 31st Street, N.W.
                     Washington, D.C.  20007
                  Facsimile:  (202) 625-7369
                     Attention: General Counsel

         with copies to:

                     Covington & Burling
                     1201 Pennsylvania Avenue, N.W.
                     Washington, D.C. 20004
                     Facsimile:  202-662-6291
                     Attention:  Bruce S. Wilson

         To the Warrant Agent:

                     The Bank of New York
                     101 Barclay Street
                     Floor 21 West
                     New York, New York  10286
                     Facsimile No.:  (212) 815-5915
                     Attention:  Corporate Trust Trustee Administration

or at any other address of which either of the foregoing shall have notified the
other in writing.

                  SECTION  7.04.  NOTICES  TO  HOLDERS.  Notices  to  holders of
Warrants  shall be mailed to such  holders at the  addresses  of such holders as
they appear in the Warrant Register. Any such notice shall be sufficiently given
if sent by first-class mail, postage prepaid.

                  SECTION 7.05.  APPLICABLE LAW. THIS AGREEMENT AND EACH WARRANT
                                 --------------
CERTIFICATE ISSUED HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK.

                  SECTION 7.06.  PERSONS HAVING RIGHTS UNDER AGREEMENT.  Nothing
in this Agreement expressed or implied and nothing that may be inferred from any
of the provisions hereof is intended, or shall be construed,  to confer upon, or
give to, any person or  corporation  other than the Company,  the Warrant Agent,
the holders of the Warrant Certificates and, with respect to Sections 4.03, 4.04
and 4.05, the holders of Warrant Shares issued pursuant to Warrants,  any right,
remedy  or claim  under  or by  reason  of this  Agreement  or of any  covenant,
condition,  stipulation,  promise or agreement hereof; and all covenants (except
for Section 4.03 which shall be for the benefit of all holders of Warrant Shares
issued pursuant to Warrants), conditions,  stipulations, promises and agreements
in this Agreement  contained shall be for the sole and exclusive  benefit of the
Company and the  Warrant  Agent and their  successors  and of the holders of the
Warrant Certificates.

                  SECTION 7.07.  HEADINGS. The descriptive headings of the
                                 --------
several  Articles and Sections of this  Agreement  are inserted for  convenience
only and shall not control or affect the meaning or  construction  of any of the
provisions hereof.

                  SECTION 7.08.  COUNTERPARTS. This Agreement may be executed in
                                 ------------
any number of  counterparts,  each of which so executed shall be deemed to be an
original;  but such counterparts shall together  constitute but one and the same
instrument.

                  SECTION  7.09.  INSPECTION  OF  AGREEMENT.   A  copy  of  this
Agreement  shall be available  during  regular  business  hours at the principal
corporate trust office of the Warrant Agent, for inspection by the holder of any
Warrant  Certificate.  The Warrant  Agent may require  such holder to submit his
Warrant Certificate for inspection by it.

                  SECTION  7.10.  AVAILABILITY  OF EQUITABLE  REMEDIES.  Since a
breach of the provisions of this  Agreement  could not adequately be compensated
by money  damages,  holders of Warrants  shall be  entitled,  in addition to any
other right or remedy  available  to them,  to an  injunction  restraining  such
breach or a threatened breach and to specific  performance of any such provision
of this  Agreement,  and in  either  case no bond or  other  security  shall  be
required  in  connection  therewith,  and the  parties  hereby  consent  to such
injunction and to the ordering of specific performance.

                  SECTION 7.11. OBTAINING OF GOVERNMENTAL APPROVALS. The Company
will from time to time take all action  required  to be taken by it which may be
necessary  to  obtain  and keep  effective  any and all  permits,  consents  and
approvals of  governmental  agencies and authorities and securities acts filings
under United  States  Federal and state laws, if  applicable,  and the rules and
regulations of all stock exchanges on which the Warrants are listed which may be
or become  requisite in connection with (i) the issuance,  sale,  transfer,  and
delivery to the Company of the Warrant  Certificates,  (ii) the  exercise of the
Warrants or (iii) the  issuance,  sale,  transfer and delivery by the Company of
the Warrant Shares issued to the holders of the Warrants, each upon the exercise
of the Warrants by the holders of Warrants.


<PAGE>


                  IN WITNESS  WHEREOF,  this Agreement has been duly executed by
the parties hereto as of the day and year first above written.

                                    PATHNET TELECOMMUNICATIONS, INC.


                                    By: /s/ W. R. Smedberg V
                                       ---------------------------------------
                                       Name:
                                       Title:


                                    THE BANK OF NEW YORK,
                                      Warrant Agent


                                     By:/s/ Terence Rawlins
                                        -------------------------------------
                                        Name: Terence Rawlins
                                        Title: Assistant Vice President






<PAGE>


                                      A-12
                                       A-1
                                                                       EXHIBIT A

                          [FORM OF WARRANT CERTIFICATE]

                                     [FACE]

THE SECURITIES  EVIDENCED  HEREBY HAVE NOT BEEN REGISTERED  UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE OR OTHER SECURITIES
LAWS.  NEITHER THIS  SECURITY NOR ANY  INTEREST OR  PARTICIPATION  HEREIN MAY BE
REOFFERED,  SOLD,  ASSIGNED,  TRANSFERRED,   PLEDGED,  ENCUMBERED  OR  OTHERWISE
DISPOSED OF IN THE ABSENCE OF SUCH  REGISTRATION  OR UNLESS SUCH  TRANSACTION IS
EXEMPT FROM, OR NOT SUBJECT TO, THE REGISTRATION  REQUIREMENTS OF THE SECURITIES
ACT.  HEDGING  TRANSACTIONS  INVOLVING THIS SECURITY MAY NOT BE CONDUCTED UNLESS
SUCH  TRANSACTIONS  ARE CONDUCTED IN  COMPLIANCE  WITH THE  SECURITIES  ACT. THE
HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF (1) REPRESENTS THAT (A) IT IS A
"QUALIFIED  INSTITUTIONAL  BUYER" (AS DEFINED IN RULE 144A UNDER THE  SECURITIES
ACT)  OR (B) IT IS NOT A U.S.  PERSON  AND  IS  ACQUIRING  THIS  SECURITY  IN AN
"OFFSHORE  TRANSACTION"  PURSUANT TO REGULATION S UNDER THE SECURITIES  ACT, (2)
AGREES  THAT IT WILL NOT PRIOR TO (X) THE DATE  WHICH IS TWO YEARS (OR A SHORTER
PERIOD AS MAY BE PRESCRIBED BY RULE 144(K) (OR ANY SUCCESSOR  PROVISION THEREOF)
UNDER THE SECURITIES  ACT) AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF (OR
OF  ANY  PREDECESSOR  OF  THIS  SECURITY)  OR THE  LAST  DAY  ON  WHICH  PATHNET
TELECOMMUNICATIONS, INC. OR ANY OF ITS AFFILIATES WAS THE OWNER OF THIS SECURITY
OR ANY  PREDECESSOR  OF THIS SECURITY AND (Y) SUCH LATER DATE, IF ANY, AS MAY BE
REQUIRED BY APPLICABLE LAW (THE "RESALE RESTRICTION  TERMINATION DATE"),  OFFER,
SELL   OR   OTHERWISE   TRANSFER   THIS   SECURITY   EXCEPT   (A)   TO   PATHNET
TELECOMMUNICATIONS,  INC.  OR  ANY  OF  ITS  SUBSIDIARIES,  (B)  PURSUANT  TO  A
REGISTRATION  STATEMENT  WHICH HAS BEEN DECLARED  EFFECTIVE UNDER THE SECURITIES
ACT, (C) FOR SO LONG AS THE SECURITIES ARE ELIGIBLE FOR RESALE  PURSUANT TO RULE
144A, TO A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS
DEFINED IN RULE 144A UNDER THE SECURITIES ACT THAT PURCHASES FOR ITS OWN ACCOUNT
OR FOR THE  ACCOUNT OF A QUALIFIED  INSTITUTIONAL  BUYER TO WHOM NOTICE IS GIVEN
THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS
AND SALES TO NON-U.S.  PERSONS THAT OCCUR  OUTSIDE THE UNITED  STATES WITHIN THE
MEANING  OF  REGULATION  S UNDER THE  SECURITIES  ACT,  PURSUANT  TO RULE 904 OF
REGULATION  S,  OR  (E)  PURSUANT  TO  ANOTHER  AVAILABLE   EXEMPTION  FROM  THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND (3) AGREES THAT IT WILL GIVE
TO EACH PERSON TO WHOM THIS SECURITY IS  TRANSFERRED A NOTICE  SUBSTANTIALLY  TO
THE EFFECT OF THIS LEGEND; PROVIDED THAT THE COMPANY AND THE WARRANT AGENT SHALL
HAVE THE RIGHT PRIOR TO ANY SUCH OFFER,  SALE OR TRANSFER PURSUANT TO CLAUSE (E)
TO REQUIRE THE  DELIVERY OF AN OPINION OF COUNSEL,  CERTIFICATION  AND/OR  OTHER
INFORMATION  SATISFACTORY  TO EACH OF THEM. IN  CONNECTION  WITH ANY TRANSFER OF
THESE SECURITIES WITHIN THE TIME PERIOD REFERRED TO ABOVE, THE HOLDER MUST CHECK
THE  APPROPRIATE  BOX SET FORTH ON THE REVERSE HEREOF  RELATING TO THE MANNER OF
SUCH TRANSFER AND SUBMIT THIS CERTIFICATE TO THE WARRANT AGENT. THIS LEGEND WILL
BE  REMOVED  UPON  THE  REQUEST  OF THE  HOLDER  AFTER  THE  RESALE  RESTRICTION
TERMINATION  DATE. AS USED HEREIN,  THE TERMS  "OFFSHORE  TRANSACTION,"  "UNITED
STATES"  AND  "U.S.  PERSON"  HAVE  THE  RESPECTIVE  MEANINGS  GIVEN  TO THEM BY
REGULATION S UNDER THE SECURITIES ACT.


<PAGE>


                                                                      CUSIP #[ ]

No.  [      ]                                                   [     ] Warrants

                               WARRANT CERTIFICATE

                        PATHNET TELECOMMUNICATIONS, INC.

                  This Warrant  Certificate  certifies  that [ ], or  registered
assigns,  is the registered  holder of [ ] Warrants (the "WARRANTS") to purchase
shares of Common Stock, par value $0.01 per share, issuable upon exercise of the
Warrants (the "WARRANT SHARES") of PATHNET TELECOMMUNICATIONS,  INC., a Delaware
corporation  (the  "COMPANY,"  which term includes its  successors and assigns).
Each Warrant  entitles the holder to purchase  from the Company at any time from
9:00 a.m.  New York City time on or after the  Exercisability  Date  until  5:00
p.m., New York City time, on April 15, 2008 (the "EXPIRATION  DATE"), 3.19 fully
paid,  registered and  non-assessable  Warrant Shares,  subject to adjustment as
provided  in Article V of the  Supplemental  Warrant  Agreement,  at an exercise
price of $0.01 for each share purchased (the "EXERCISE  PRICE");  upon surrender
of this Warrant  Certificate and payment of the Exercise Price (i) in cash or by
certified or official  bank check,  (ii) by a Cashless  Exercise or (iii) by any
combination of (i) and (ii), at any office or agency maintained for that purpose
by the Company (the "WARRANT  EXERCISE  OFFICE"),  subject to the conditions set
forth herein and in the  Supplemental  Warrant  Agreement.  For purposes of this
Warrant, a "CASHLESS EXERCISE" shall mean an exercise of a Warrant in accordance
with the immediately following two sentences. To effect a Cashless Exercise, the
holder may exercise a Warrant or Warrants  without payment of the Exercise Price
in cash by  surrendering  such Warrant or Warrants  (represented  by one or more
Warrant Certificates) and in exchange therefor,  receiving such number of shares
of Common  Stock  equal to the  product  of (1) that  number of shares of Common
Stock for which such  Warrant or  Warrants  are  exercisable  and which would be
issuable in the event of an exercise with payment of the Exercise  Price and (2)
the  Cashless  Exercise  Ratio.  The  "CASHLESS  EXERCISE  RATIO"  shall equal a
fraction,  the  numerator  of which is the excess of the  Current  Market  Value
(calculated  as set forth in this Warrant) per share of Common Stock on the date
of exercise over the Exercise  Price per share of Common Stock as of the date of
exercise and the  denominator  of which is the Current Market Value per share of
Common Stock on the date of exercise.  Upon  surrender of a Warrant  Certificate
representing  more than one Warrant in  connection  with the holder's  option to
elect a Cashless  Exercise,  the holder must  specify the number of Warrants for
which such Warrant  Certificate is to be exercised (without giving effect to the
Cashless Exercise).  All provisions of the Supplemental  Warrant Agreement shall
be applicable with respect to a Cashless  Exercise of a Warrant  Certificate for
less than the full number of Warrants  represented  thereby.  Capitalized  terms
used herein without being defined herein shall have the definitions  ascribed to
such terms in the Supplemental Warrant Agreement.

                  "CURRENT  MARKET VALUE" per share of Common Stock or any other
security  at any date  means (i) if the  security  is not  registered  under the
Exchange  Act, (a) the value of the  security,  determined  in good faith by the
board of directors of the Company and certified in a board resolution,  based on
the most recently completed  arm's-length  transaction between the Company and a
person other than an Affiliate of the Company and the closing of which occurs on
such date or shall have occurred  within the  six-month  period  preceding  such
date, or (b) if no such  transaction  shall have occurred on such date or within
such  six-month  period or if the board of  directors  of the Company  otherwise
elects,  the Fair Market Value of the security as  determined by a nationally or
regionally recognized Independent Financial Expert (as defined herein) (PROVIDED
that, in the case of the calculation of Current Market Value for determining the
cash value of fractional shares,  any such determination  within six months that
is, in the good faith  judgment  of the board of  directors  of the  Company,  a
reasonable  determination of value, may be utilized) or (ii) (a) if the security
is  registered  under the Exchange  Act, the average of the daily  closing sales
prices  of the  securities  for  the 20  consecutive  trading  days  immediately
preceding  such  date,  or (b) if the  security  has been  registered  under the
Exchange Act for less than 20  consecutive  trading days before such date,  then
the average  daily  closing sales prices for all of the trading days before such
date for which closing sales prices are  available,  in the case of each of (ii)
(a) and (ii) (b), as certified to the Warrant Agent by the President or any vice
president or the Chief Financial Officer of the Company. The closing sales price
for each such  trading  day shall be:  (A) in the case of a  security  listed or
admitted  to  trading on any  United  States  national  securities  exchange  or
quotation  system,  the closing sales price,  regular way, on such day, or if no
sale takes place on such day, the average of the closing bid and asked prices on
such day,  (B) in the case of a security  not then listed or admitted to trading
on any national  securities exchange or quotation system, the last reported sale
price on such day,  or if no sale takes  place on such day,  the  average of the
closing bid and asked  prices on such day, as reported by a reputable  quotation
source designated by the Company,  (C) in the case of a security not then listed
or admitted to trading on any national  securities  exchange or quotation system
and as to  which  no such  reported  sale  price  or bid and  asked  prices  are
available,  the average of the  reported  high bid and low asked  prices on such
day, as reported by a reputable  quotation  service,  or a newspaper  of general
circulation  in the  Borough  of  Manhattan,  The  City and  State of New  York,
customarily  published on each Business Day,  designated by the Company,  or, if
there shall be no bid and asked  prices on such day, the average of the high bid
and low asked prices,  as so reported,  on the most recent day (not more than 30
days prior to the date in  question)  for which prices have been so reported and
(D) if there are not bid and asked prices  reported  during the 30 days prior to
the date in question,  the Current  Market Value shall be  determined  as if the
securities were not registered under the Exchange Act.

                  "EXERCISE EVENT" means, with respect to each Warrant, the date
of the occurrence of the earliest of: (i) the time immediately prior to a Change
of Control (as such term is defined in the Indenture); (ii)(a) the 180th day (or
such earlier date as determined by the Company in its sole discretion) following
the closing of an Initial Public Equity Offering (as defined herein) or (b) upon
the  closing  of an  Initial  Public  Equity  Offering,  but only in  respect of
Warrants, if any, required to be exercised to permit the holders thereof to sell
Warrant Shares pursuant to their respective  registration rights, (iii) the time
when a class of  equity  securities  of the  Company  is  listed  on a  national
securities exchange or authorized for quotation on the Nasdaq National Market or
is otherwise  subject to registration  under the Exchange Act, or (iv) April 30,
2001.

                  "INDEPENDENT   FINANCIAL   EXPERT"   means  a  nationally   or
regionally recognized investment banking or public accounting firm in the United
States  or,  if the  Company  believes  that an  investment  banking  or  public
accounting firm is generally not qualified to give such an opinion, a nationally
recognized  appraisal firm, in any case (i) which does not, and whose directors,
officers and employees or Affiliates do not, have a direct or indirect  material
financial  interest  for its  proprietary  account in the  Company or any of its
Affiliates  and (ii) which,  in the  judgment of the Board of  Directors  of the
Company, is otherwise independent with respect to the Company and its Affiliates
and qualified to perform the task for which it is to be engaged.

                  The Company has initially  designated the principal  corporate
trust office of the Warrant Agent in the Borough of  Manhattan,  The City of New
York, as the initial Warrant Agent Office.  The number of shares of Common Stock
issuable  upon  exercise  of  the  Warrants  ("Exercise  Rate")  is  subject  to
adjustment  upon the occurrence of certain events set forth in the  Supplemental
Warrant Agreement.

                  Any Warrants not exercised on or prior to 5:00 p.m.,  New York
City time, on April 15, 2008 shall thereafter be void.

                  If the Company, in a single transaction or through a series of
related transactions,  consolidates with or merges with or into, or sells all or
substantially  all of its property and assets to,  another  Person (other than a
subsidiary of the Company)  solely for cash,  the holders of Warrants  which are
then exercisable shall be entitled to receive  distributions on the date of such
event on an equal  basis  with  holders  of  shares of  Capital  Stock (or other
securities  issuable  upon exercise of the Warrants) as if the Warrants had been
exercised  immediately  prior to such event less the  aggregate  Exercise  Price
therefor.

                  Reference  is hereby  made to the  further  provisions  on the
reverse hereof which  provisions  shall for all purposes have the same effect as
though fully set forth at this place.

                  This   Warrant   Certificate   shall   not  be  valid   unless
authenticated  by the Warrant  Agent,  as such term is used in the  Supplemental
Warrant Agreement.

                  THIS WARRANT CERTIFICATE SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.



<PAGE>


                  WITNESS  the  facsimile  seal  of the  Company  and  facsimile
signatures of its duly authorized officers.


                                           PATHNET TELECOMMUNICATIONS, INC.



                                          By:_________________________________
                                             Name:
                                             Title:

Attest:


By:_________________________________
     Name:
     Title:

Certificate of Authentication:
This is one of the Warrants
referred to in the within
mentioned Supplemental Warrant Agreement:

Dated:

THE BANK OF NEW YORK,
         Warrant Agent


By:__________________________________
     Authorized Signatory





<PAGE>


                          [FORM OF WARRANT CERTIFICATE]

                                    [REVERSE]

                        PATHNET TELECOMMUNICATIONS, INC.

                  The Warrants evidenced by this Warrant Certificate are part of
a duly authorized  issue of Warrants  expiring at 5:00 p.m., New York City time,
on April 15, 2008 (the "EXPIRATION DATE"), each of which represents the right to
purchase  at any time on or after the  Exercisability  Date (as  defined  in the
Supplemental  Warrant  Agreement)  and on or prior to the  Expiration  Date 3.19
Shares,  subject  to  adjustment  as  set  forth  in  the  Supplemental  Warrant
Agreement.  The Warrants are issued pursuant to a Supplemental Warrant Agreement
dated as of March 30, 2000 (the "SUPPLEMENTAL WARRANT AGREEMENT"), duly executed
and  delivered  by the  Company  to The Bank of New  York,  Warrant  Agent  (the
"WARRANT AGENT"), which Supplemental Warrant Agreement is hereby incorporated by
reference in and made a part of this  instrument and is hereby referred to for a
description  of the  rights,  limitation  of  rights,  obligations,  duties  and
immunities  thereunder  of the Warrant  Agent,  the Company and the holders (the
words "HOLDERS" or "HOLDER" meaning the registered holders or registered holder)
of the Warrants.

                  Warrants may be exercised by (i)  surrendering  at any Warrant
Agent Office this Warrant  Certificate with the form of Election to Exercise set
forth hereon duly completed and executed and (ii) to the extent such exercise is
not being  effected  through a Cashless  Exercise  by paying in full the Warrant
Exercise Price for each such Warrant exercised and any other amounts required to
be paid pursuant to the Supplemental Warrant Agreement.

                  If all of the items  referred  to in the last  sentence of the
preceding paragraph are received by the Warrant Agent at or prior to 11:00 a.m.,
New York City time, on a Business Day, the exercise of the Warrant to which such
items relate will be effective on such Business Day. If any items referred to in
the last sentence of the preceding  paragraph are received after 11:00 a.m., New
York City time,  on a Business  Day,  the exercise of the Warrants to which such
item relates will be deemed to be effective on the next succeeding Business Day.
Notwithstanding  the foregoing,  in the case of an exercise of Warrants on April
15, 2008, if all of the items  referred to in the last sentence of the preceding
paragraph are received by the Warrant  Agent at or prior to 5:00 p.m.,  New York
City time, on such  Expiration  Date, the exercise of the Warrants to which such
items relate will be effective on the Expiration Date.

                  As soon as  practicable  after the  exercise of any Warrant or
Warrants,  the Company  shall issue or cause to be issued to or upon the written
order of the  registered  holder of this Warrant  Certificate,  a certificate or
certificates evidencing the Warrant Share or Warrant Shares to which such holder
is entitled,  in fully registered form,  registered in such name or names as may
be directed by such holder pursuant to the Election to Exercise, as set forth on
the  face  of  this  Warrant  Certificate.   Such  certificate  or  certificates
evidencing  the  Warrant  Share or Warrant  Shares  shall be deemed to have been
issued and any persons who are designated to be named therein shall be deemed to
have become the holder of record of such Warrant  Share or Warrant  Shares as of
the close of  business on the date upon which the  exercise of this  Warrant was
deemed to be effective as provided in the preceding paragraph.

                  The Company  will not be required to issue  fractional  Shares
upon exercise of the Warrants or distribute  Warrant  Certificates that evidence
fractional Warrant Shares. In lieu of fractional Warrant Shares,  there shall be
paid to the  registered  Holder  of this  Warrant  Certificate  at the time such
Warrant Certificate is exercised an amount in cash equal to the same fraction of
the Current Market Value per share of Common Stock on the Business Day preceding
the date this Warrant Certificate is surrendered for exercise.

                  Warrant Certificates, when surrendered at any office or agency
maintained by the Company for that purpose by the  registered  holder thereof in
person or by legal representative or attorney duly authorized in writing, may be
exchanged for a new Warrant Certificate or new Warrant  Certificates  evidencing
in the  aggregate  a like number of  Warrants,  in the manner and subject to the
limitations  provided in the  Supplemental  Warrant  Agreement,  without  charge
except for any tax or other governmental charge imposed in connection therewith.

                  Upon due  presentment  for  registration  of  transfer of this
Warrant  Certificate at any office or agency  maintained by the Company for that
purpose, a new Warrant Certificate  evidencing in the aggregate a like number of
Warrants  shall be  issued  to the  transferee  in  exchange  for  this  Warrant
Certificate,  subject to the limitations  provided in the  Supplemental  Warrant
Agreement,  without  charge  except  for any tax or  other  governmental  charge
imposed in connection therewith.

                  The  Company  and the  Warrant  Agent  may deem and  treat the
registered  holder  hereof as the  absolute  owner of this  Warrant  Certificate
(notwithstanding  any  notation of  ownership  or other  writing  hereon made by
anyone) for the purpose of any exercise hereof and for all other  purposes,  and
neither the Company nor the Warrant Agent shall be affected by any notice to the
contrary.

                  The term  "BUSINESS DAY" shall mean any day on which (i) banks
in The City of New York, (ii) the principal U.S.  securities exchange or market,
if any, on which the Common Stock is listed or admitted to trading and (iii) the
principal U.S.  securities exchange or market, if any, on which the Warrants are
listed or admitted to trading are open for business.

                  The Warrants,  Warrant Shares and  Registrable  Securities (as
defined in the  Warrant  Registration  Rights  Agreement)  are  entitled  to the
benefits of a  registration  rights  agreement  relating to the Warrants and the
Warrant Shares (the "WARRANT REGISTRATION RIGHTS AGREEMENT"),  pursuant to which
the holders  representing  not less than 50% of Warrant  Shares and  Registrable
Securities  have, at any time and from time to time after (A) the  occurrence of
the earliest of (i) the time  immediately  prior to a Change of Control (as such
term is defined in the Indenture); (ii)(a) the180th day (or such earlier date as
determined by the Company in its sole discretion)  following the consummation of
an  Initial  Public  Equity  Offering  (as  defined  herein)  or  (b)  upon  the
consummation  of an  Initial  Public  Equity  Offering,  but only in  respect of
Warrants, if any, required to be exercised to permit the holders thereof to sell
Warrant Shares pursuant to their respective  registration rights, (iii) the time
when a class of  equity  securities  of the  Company  is  listed  on a  national
securities exchange or authorized for quotation on the Nasdaq National Market or
is otherwise  subject to registration  under the Exchange Act, or (iv) April 30,
2001, and (B) the completion of an Initial Public Equity Offering,  the right to
require the Company to effect one demand  registration of the Warrant Shares and
Registrable Securities.  The Warrant Registration Rights Agreement also provides
the holders of Registrable  Securities with the right, subject to the conditions
and limitations  contained  therein,  to include the  Registrable  Securities in
certain registration  statements filed by the Company for its account or for the
account of any of its securityholders.



<PAGE>


                         [FORM OF ELECTION TO EXERCISE]

         (To be executed upon exercise of Warrants on the Exercise Date)

                  The undersigned  hereby  irrevocably elects to exercise [ ] of
the  Warrants  represented  by this Warrant  Certificate  and purchase the whole
number of Shares  issuable  upon the  exercise  of such  Warrants  and  herewith
tenders payment for such Shares as follows:

                  $[ ] in cash or by  certified  or official  bank check;  or by
surrender  of  Warrants  pursuant  to a  Cashless  Exercise  (as  defined in the
Supplemental  Warrant Agreement) for [ ] shares of Stock at the current Cashless
Exercise Ratio.

                  The undersigned requests that a certificate  representing such
Shares  be  registered  in  the  name  of   _______________   whose  address  is
________________  and that such  shares be  delivered  to  _____________________
whose  address is  ________________.  Any cash  payments to be paid in lieu of a
fractional   Share  should  be  delivered   to   _________   whose   address  is
________________  and the check representing payment thereof should be delivered
to _____________ whose address is _____________________.

                  Dated ___________, ____

            Name of holder of
            Warrant Certificate:_______________________________________________
                                             (Please Print)

            Tax Identification or
            Social Security Number:_____________________________________________

            Address:  _________________________________________________________

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

           Signature:_________________________________________________________
                  Note:    The above  signature must correspond with the name as
                           written upon the face of this Warrant  Certificate in
                           every particular,  without  alteration or enlargement
                           or  any  change   whatever  and  if  the  certificate
                           representing  the Shares or any  Warrant  Certificate
                           representing   Warrants   not   exercised  is  to  be
                           registered  in a name  other  than that in which this
                           Warrant  Certificate  is  registered,  or if any cash
                           payment to be paid in lieu of a  fractional  share is
                           to be made to a  person  other  than  the  registered
                           holder of this Warrant Certificate,  the signature of
                           the holder  hereof must be  guaranteed as provided in
                           the Supplemental Warrant Agreement.



                  Dated ______________, ____

             Signature:_________________________________________________________
                           Note:    The above signature must correspond with the
                                    name  as  written  upon  the  face  of  this
                                    Warrant  Certificate  in  every  particular,
                                    without  alteration  or  enlargement  or any
                                    change whatever.

           Signature Guaranteed:________________________________________________
                                    Signatures   must   be   guaranteed   by  an
                                    "eligible guarantor institution" meeting the
                                    requirements   of   the   Registrar,   which
                                    requirements     include    membership    or
                                    participation in the Security Transfer Agent
                                    Medallion  Program  ("STAMP")  or such other
                                    "signature  guarantee  program"  as  may  be
                                    determined  by the Registrar in addition to,
                                    or  in  substitution   for,  STAMP,  all  in
                                    accordance with the Securities  Exchange Act
                                    of 1934, as amended.

                              [FORM OF ASSIGNMENT]

                  For value  received  __________________________  hereby sells,
assigns and  transfers  unto  _____________________________  the within  Warrant
Certificate,  together  with all right,  title and  interest  therein,  and does
hereby irrevocably constitute and appoint ___________ attorney, to transfer said
Warrant Certificate on the books of the within-named Company, with full power of
substitution in the premises.

Dated ________________, ____

             Signature:_________________________________________________________
                           Note:    The above signature must correspond with the
                                    name  as  written  upon  the  face  of  this
                                    Warrant  Certificate  in  every  particular,
                                    without  alteration  or  enlargement  or any
                                    change whatever.

           Signature Guaranteed:________________________________________________
                                    Signatures   must   be   guaranteed   by  an
                                    "eligible guarantor institution" meeting the
                                    requirements   of   the   Registrar,   which
                                    requirements     include    membership    or
                                    participation in the Security Transfer Agent
                                    Medallion  Program  ("STAMP")  or such other
                                    "signature  guarantee  program"  as  may  be
                                    determined  by the Registrar in addition to,
                                    or  in  substitution   for,  STAMP,  all  in
                                    accordance with the Securities  Exchange Act
                                    of 1934, as amended.





                SCHEDULE OF EXCHANGES OF CERTIFICATED WARRANTS*

The  following  exchanges  of a part of this  Global  Warrant  for  certificated
Warrants have been made:
<TABLE>
<CAPTION>

                                                                          Number of Warrants
                           Amount of decrease    Amount of increase in      of this Global
                              in Number of       Number of Warrants of     Warrant following        Signature of
                            Warrants of this      this GLOBAL WARRANT      such decrease (or     authorized officer
    Date of EXCHANGE         GLOBAL WARRANT                                     INCREASE)         of WARRANT AGENT
            --------         --------------       -------------------    ----------------------      -------------
    <S>                     <C>                  <C>                      <C>                      <C>




</TABLE>









<PAGE>


                                       B-1

                                       B-1
                                                                       EXHIBIT B

                        FORM OF LEGEND FOR GLOBAL WARRANT

                  Any Global Warrant authenticated and delivered hereunder shall
bear a legend in substantially the following form:

                  THIS  SECURITY IS A GLOBAL  WARRANT  WITHIN THE MEANING OF THE
SUPPLEMENTAL WARRANT AGREEMENT  HEREINAFTER REFERRED TO AND IS REGISTERED IN THE
NAME  OF  A  DEPOSITORY  OR  A  SUCCESSOR  DEPOSITORY.   THIS  SECURITY  IS  NOT
EXCHANGEABLE  FOR  SECURITIES  REGISTERED IN THE NAME OF A PERSON OTHER THAN THE
DEPOSITORY OR ITS NOMINEE EXCEPT IN THE LIMITED  CIRCUMSTANCES  DESCRIBED IN THE
SUPPLEMENTAL  WARRANT AGREEMENT,  AND NO TRANSFER OF THIS SECURITY (OTHER THAN A
TRANSFER  OF THIS  SECURITY  AS A WHOLE BY THE  DEPOSITORY  TO A NOMINEE  OF THE
DEPOSITORY  OR BY A NOMINEE  OF THE  DEPOSITORY  TO THE  DEPOSITORY  OR  ANOTHER
NOMINEE OF THE DEPOSITORY) MAY BE REGISTERED EXCEPT IN THE LIMITED CIRCUMSTANCES
DESCRIBED IN THE SUPPLEMENTAL WARRANT AGREEMENT.

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




<PAGE>



                                       C-1

                                       C-1
                                                                       EXHIBIT C

                    CERTIFICATE TO BE DELIVERED UPON EXCHANGE
                     OR REGISTRATION OF TRANSFER OF WARRANTS

Re:   Warrants   to  Purchase   Common   Stock  (the   "Warrants")   of  PATHNET
TELECOMMUNICATIONS, INC.

                  This  Certificate  relates  to  ____  Warrants  held  in*  ___
book-entry or* _______ certificated form by ______ (the "Transferor").

The Transferor:*

_____    has requested the Warrant Agent by written order to deliver in exchange
         for  its  beneficial  interest  in  the  Global  Warrant  held  by  the
         Depositary  a Warrant or Warrants  in  definitive,  registered  form of
         authorized   denominations   and  an  aggregate  number  equal  to  its
         beneficial  interest  in such Global  Warrant  (or the portion  thereof
         indicated above); or

_____    has  requested  the  Warrant  Agent by  written  order to  exchange  or
         register the transfer of a Warrant or Warrants.

                  In  connection  with such  request and in respect of each such
Warrant, the transferor does hereby certify that the Transferor is familiar with
the Supplemental Warrant Agreement,  dated as of March 30, 2000, relating to the
above captioned  Warrants and the restrictions on transfers  thereof as provided
in Section 1.08 of such Supplemental Warrant Agreement, and that the transfer of
this Warrant does not require  registration under the Securities Act of 1933, as
amended (the "Act") because:

_____    Such  Warrant  is being  acquired  for the  Transferor's  own  account,
         without  transfer (in satisfaction of Section 1.08 (a)(y)(A) or Section
         1.08 (d)(i)(A) of the Supplemental Warrant Agreement).

____     Such Warrant is being  transferred to a qualified  institutional  buyer
         (as defined in Rule 144A under the Act), in reliance on Rule 144A.

____     Such Warrant is being transferred in reliance on Regulation S under the
         Act.

____     Such Warrant is being transferred in accordance with Rule 144 under the
         Act.

____     Such Warrant is being transferred in reliance on and in compliance with
         an exemption from the registration requirements of the Act.


                                      ------------------------------------------
                                              [INSERT NAME OF TRANSFEROR]

                                      By: ______________________________________

Date:__________________

*Check applicable box.


                         Signature
                         Guaranteed:__________________________________________
                                    Signatures   must   be   guaranteed   by  an
                                    "eligible guarantor institution" meeting the
                                    requirements   of   the   Registrar,   which
                                    requirements     include    membership    or
                                    participation in the Security Transfer Agent
                                    Medallion  Program  ("STAMP")  or such other
                                    "signature  guarantee  program"  as  may  be
                                    determined  by the Registrar in addition to,
                                    or  in  substitution   for,  STAMP,  all  in
                                    accordance with the Securities  Exchange Act
                                    of 1934, as amended.



<PAGE>


                                       D-2

                                       D-1
                                                                       EXHIBIT D

                            Form of Certificate to be
                             Delivered in Connection
                           WITH REGULATION S TRANSFERS


                               ------------, ----



================
----------------

Attention:  __________________


Ladies and Gentlemen:

                  In  connection  with our proposed  sale of Warrants of Pathnet
Telecommunications,  Inc (the  "Company"),  we  confirm  that such sale has been
effected  pursuant to and in accordance  with  Regulation S under the Securities
Act of 1933, as amended (the "Securities Act"), and,  accordingly,  we represent
that:

                  (1) the offer of the  Warrants was not made to a person in the
United States;

                  (2) either (a) at the time the buy offer was  originated,  the
transferee  was  outside  the United  States or we and any person  acting on our
behalf reasonably believed that the transferee was outside the United States, or
(b)  the  transaction  was  executed  in,  on or  through  the  facilities  of a
designated  off-shore  securities market and neither we nor any person acting on
our behalf knows that the transaction has been  pre-arranged with a buyer in the
United States;

                  (3) no directed  selling  efforts have been made in the United
States in  contravention  of the  requirements  of Rule 903(b) or Rule 904(b) of
Regulation S under the Securities Act, as applicable;

                  (4) the  transaction  is not part of a plan or scheme to evade
the registration requirements of the Securities Act;

                  (5) if the  circumstances  set forth in Rule 904(c)  under the
Securities Act are applicable,  we have complied with the additional  conditions
therein,  including  (if  applicable)  sending a  confirmation  or other  notice
stating that the Warrants may be offered and sold during the  restricted  period
specified  in Rule  903(c)(2)  or (3), as  applicable,  in  accordance  with the
provisions of Regulation S; pursuant to  registration  of the Warrants under the
Securities  Act; or pursuant to an  available  exemption  from the  registration
requirements under the Act.

                  You and the Company are  entitled to rely upon this letter and
are  irrevocably  authorized  to  produce  this  letter or a copy  hereof to any
interested party in any  administrative or legal proceedings or official inquiry
with respect to the matters  covered  hereby.  Defined terms used herein without
definition  have the  respective  meanings  provided in  Regulation  S under the
Securities Act.


                                               Very truly yours,

                                               [Name of Transferor]


                                               By:______________________________
                                                         Authorized Signature]

                  Upon transfer the Warrants  would be registered in the name of
the new beneficial owner as
follows:

Name:_____________________________

Address:____________________________

Taxpayer ID Number:__________________



--------
* This is to be included only if the Warrant is in global form.