EXCHANGE AGENT AGREEMENT
State Street Bank and Trust Company
of California, N.A.
000 Xxxx 0xx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxx, XX 00000
Ladies and Gentlemen:
Rhythms NetConnections Inc. (the "Company") proposes to make an
offer (the "Exchange Offer") to exchange its 14% Senior Notes due 2010, Series
A (the "Old Securities") for its 14% Senior Notes due 2010, Series B (the "New
Securities"). The terms and conditions of the Exchange Offer as currently
contemplated are set forth in a prospectus, dated May __, 2000 (the
"Prospectus"), proposed to be distributed to all record holders of the Old
Securities. The Old Securities and the New Securities are collectively
referred to herein as the "Securities."
The Company hereby appoints State Street Bank and Trust Company of
California, N.A. to act as exchange agent (the "Exchange Agent") in connection
with the Exchange Offer. References hereinafter to "you" shall refer to State
Street Bank and Trust Company of California, N.A.
The Exchange Offer is expected to be commenced by the Company on or
about May __, 2000. The Letter of Transmittal accompanying the Prospectus (or
in the case of book entry securities, the ATOP system) is to be used by the
holders of the Old Securities to accept the Exchange Offer and contains
instructions with respect to the delivery of certificates for Old Securities
tendered in connection therewith.
The Exchange Offer shall expire at 5:00 P.M., New York City time, on
__________ or on such later date or time to which the Company may extend the
Exchange Offer (the "Expiration Date"). Subject to the terms and conditions
set forth in the Prospectus, the Company expressly reserves the right to
extend the Exchange Offer from time to time and may extend the Exchange Offer
by giving oral (confirmed in writing) or written notice to you before 9:00
A.M., New York City time, on the business day following the previously
scheduled Expiration Date.
The Company expressly reserves the right to amend or terminate the
Exchange Offer, and not to accept for exchange any Old Securities not
theretofore accepted for exchange, upon the occurrence of any of the
conditions of the Exchange Offer specified in the Prospectus under the
caption "The Exchange Offer -- Conditions." The Company will give oral
(confirmed in writing) or written notice of any amendment, termination or
non-acceptance to you as promptly as practicable.
In carrying out your duties as Exchange Agent, you are to act in
accordance with the following instructions:
1. You will perform such duties and only such duties as are
specifically set forth in the section of the Prospectus captioned "The
Exchange Offer" or as specifically set forth
herein; PROVIDED, HOWEVER, that in no way will your general duty to act in
good faith be discharged by the foregoing.
2. You will establish an account with respect to the Old
Securities at The Depository Trust Company (the "Book-Entry Transfer
Facility") for purposes of the Exchange Offer within two business days after
the date of the Prospectus, or, if you have already established an account
with the Book-Entry Transfer Facility suitable for the Exchange Offer, you
will identify such pre-existing account to be used in the Exchange Offer, and
any financial institution that is a participant in the Book-Entry Transfer
Facility's systems may make book-entry delivery of the Old Securities by
causing the Book-Entry Transfer Facility to transfer such Old Securities into
your account in accordance with the Book-Entry Transfer Facility's procedure
for such transfer.
3. You are to examine each of the Letters of Transmittal and
certificates for Old Securities (or confirmation of book-entry transfer into
your account at the Book-Entry Transfer Facility) and any other documents
delivered or mailed to you by or for holders of the Old Securities to
ascertain whether: (i) the Letters of Transmittal and any such other documents
are duly executed and properly completed in accordance with instructions set
forth therein and (ii) the Old Securities have otherwise been properly
tendered. In each case where the Letter of Transmittal or any other document
has been improperly completed or executed or any of the certificates for Old
Securities are not in proper form for transfer or some other irregularity in
connection with the acceptance of the Exchange Offer exists, you will (unless
we have advised you that we waive such irregularity) endeavor to inform the
presenters of the need for fulfillment of all requirements and to take any
other action as may be necessary or advisable to cause such irregularity to be
corrected.
4. With the approval of the President, Senior Vice President,
Executive Vice President, or any Vice President of the Company (such approval,
if given orally, to be confirmed in writing) or any other party designated by
such an officer in writing, you are authorized to waive any irregularities in
connection with any tender of Old Securities pursuant to the Exchange Offer.
5. Tenders of Old Securities may be made only as set forth in the
Letter of Transmittal and in the section of the Prospectus captioned "The
Exchange Offer -- Terms of the Exchange Offer", and Old Securities
shall be considered properly tendered to you only when tendered in accordance
with the procedures set forth therein.
Notwithstanding the provisions of this paragraph 5, Old Securities
which the President, Senior Vice President, Executive Vice President, or any
Vice President of the Company shall approve as having been properly tendered
shall be considered to be properly tendered (such approval, if given orally,
shall be confirmed in writing).
6. You shall advise the Company with respect to any Old Securities
received subsequent to the Expiration Date and accept its instructions with
respect to disposition of such Old Securities.
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7. You shall accept tenders:
a. in cases where the Old Securities are registered in two or
more names only if signed by all named holders;
b. in cases where the signing person (as indicated on the
Letter of Transmittal) is acting in a fiduciary or a representative capacity
only when proper evidence of his or her authority so to act is submitted; and
c. from persons other than the registered holder of Old
Securities provided that customary transfer requirements, including any
applicable transfer taxes, are fulfilled.
You shall accept partial tenders of Old Securities where so
indicated and as permitted in the Letter of Transmittal and deliver
certificates for Old Securities to the transfer agent for split-up and return
any untendered Old Securities to the holder (or such other person as may be
designated in the Letter of Transmittal) as promptly as practicable after
expiration or termination of the Exchange Offer.
8. Upon satisfaction or waiver of all of the conditions to the
Exchange Offer, the Company will notify you (such notice, if given orally, to
be confirmed in writing) of its acceptance, promptly after the Expiration
Date, of all Old Securities properly tendered and you, on behalf of the
Company, will exchange such Old Securities for New Securities and cause such
Old Securities to be cancelled. Delivery of New Securities will be made on
behalf of the Company by you at the rate of $1,000 principal amount of New
Securities for each $1,000 principal amount of the corresponding series of Old
Securities tendered promptly after notice (such notice if given orally, to be
confirmed in writing) of acceptance of said Old Securities by the Company;
provided, however, that in all cases, Old Securities tendered pursuant to the
Exchange Offer will be exchanged only after timely receipt by you of
certificates for such Old Securities (or confirmation of book-entry transfer
into your account at the Book-Entry Transfer Facility), a properly completed
and duly executed Letter of Transmittal (or facsimile thereof) with any
required signature guarantees and any other required documents. You shall
issue New Securities only in denominations of $1,000 or any integral multiple
thereof.
9. Tenders pursuant to the Exchange Offer are irrevocable, except
that, subject to the terms and upon the conditions set forth in the Prospectus
and the Letter of Transmittal, Old Securities tendered pursuant to the
Exchange Offer may be withdrawn at any time prior to the Expiration Date.
10. The Company shall not be required to exchange any Old
Securities tendered if any of the conditions set forth in the Exchange Offer
are not met. Notice of any decision by the Company not to exchange any Old
Securities tendered shall be given (and confirmed in writing) by the Company
to you.
11. If, pursuant to the Exchange Offer, the Company does not
accept for exchange all or part of the Old Securities tendered because of an
invalid tender, the occurrence of certain other events set forth in the
Prospectus under the caption "The Exchange Offer -- Conditions" or otherwise,
you shall as soon as practicable after the
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expiration or termination of the Exchange Offer return those certificates for
unaccepted Old Securities (or effect appropriate book-entry transfer),
together with any related required documents and the Letters of Transmittal
relating thereto that are in your possession, to the persons who deposited
them.
12. All certificates for reissued Old Securities, unaccepted Old
Securities or for New Securities shall be forwarded by first-class mail.
13. You are not authorized to pay or offer to pay any concessions,
commissions or solicitation fees to any broker, dealer, bank or other persons
or to engage or utilize any person to solicit tenders.
14. As Exchange Agent hereunder you:
a. shall have no duties or obligations other than those
specifically set forth herein or as may be subsequently agreed to in writing
by you and the Company;
b. will be regarded as making no representations and having
no responsibilities as to the validity, sufficiency, value or genuineness of
any of the certificates or the Old Securities represented thereby deposited
with you pursuant to the Exchange Offer, and will not be required to and will
make no representation as to the validity, value or genuineness of the
Exchange Offer;
c. shall not be obligated to take any legal action hereunder
which might in your reasonable judgment involve any expense or liability,
unless you shall have been furnished with reasonable indemnity;
d. may reasonably rely on and shall be protected in acting in
reliance upon any certificate, instrument, opinion, notice, letter, telegram
or other document or security delivered to you and reasonably believed by you
to be genuine and to have been signed by the proper party or parties;
e. may reasonably act upon any tender, statement, request,
comment, agreement or other instrument whatsoever not only as to its due
execution and validity and effectiveness of its provisions, but also as to the
truth and accuracy of any information contained therein, which you shall in
good faith believe to be genuine or to have been signed or represented by a
proper person or persons;
f. may rely on and shall be protected in acting upon written
or oral instructions from any officer of the Company;
g. may consult with your counsel with respect to any
questions relating to your duties and responsibilities and the advice or
reasonable written opinion of such counsel shall be full and complete
authorization and protection in respect of any action taken, suffered or
omitted to be taken by you hereunder in good faith and in accordance with the
advice or opinion of such counsel; and
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h. shall not advise any person tendering Old Securities
pursuant to the Exchange Offer as to the wisdom of making such tender or as to
the market value or decline or appreciation in market value of any Old
Securities.
15. You shall take such action as may from time to time be
requested by the Company or its counsel (and such other action as you may
reasonably deem appropriate) to furnish copies of the Prospectus, Letter of
Transmittal and the Notice of Guaranteed Delivery (as defined in the
Prospectus) or such other forms as may be approved from time to time by the
Company, to all persons requesting such documents and to accept and comply
with telephone requests for information relating to the Exchange Offer,
provided that such information shall relate only to the procedures for
accepting (or withdrawing from) the Exchange Offer. The Company will furnish
you with copies of such documents at your request. All other requests for
information relating to the Exchange Offer shall be directed to the Company,
Attention: Xxxxx Xxxxxxxxx.
16. You shall advise by facsimile transmission, e-mail, or
telephone, and promptly thereafter confirm in writing to Xxxxxxx Xxxxxxxxx, of
Xxxxxxx, Xxxxxxx & Xxxxxxxx LLP, and Xxxxx Xxxxxxxxx of the Company and such
other person or persons as it may request, weekly (and more frequently during
the week immediately preceding the Expiration Date and if otherwise reasonably
requested) up to and including the Expiration Date, as to the number of Old
Securities which have been tendered pursuant to the Exchange Offer and the
items received by you pursuant to this Agreement, separately reporting and
giving cumulative totals as to items properly received and items improperly
received. In addition, you will also inform, and cooperate in making
available to, the Company or any such other person or persons upon oral
request made from time to time prior to the Expiration Date of such other
information as it or he or she reasonably requests. Such cooperation shall
include, without limitation, the granting by you to the Company and such
person as the Company may request of access to those persons on your staff who
are responsible for receiving tenders, in order to ensure that immediately
prior to the Expiration Date the Company shall have received information in
sufficient detail to enable it to decide whether to extend the Exchange Offer.
You shall prepare a final list of all persons whose tenders were accepted,
the aggregate principal amount of Old Securities tendered, the aggregate
principal amount of Old Securities accepted and deliver said list to the
Company.
17. Letters of Transmittal and Notices of Guaranteed Delivery shall
be stamped by you as to the date and the time of receipt thereof and shall be
preserved by you for a period of time at least equal to the period of time you
preserve other records pertaining to the transfer of securities. You shall
dispose of unused Letters of Transmittal and other surplus materials by
returning them to the Company.
18. You hereby expressly waive any lien, encumbrance or right of
set-off whatsoever that you may have with respect to funds deposited with you
for the payment of transfer taxes by reasons of amounts, if any, borrowed by
the Company, or any of its subsidiaries or affiliates pursuant to any loan or
credit agreement with you or for compensation owed to you hereunder.
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19. For services rendered as Exchange Agent hereunder, you shall be
entitled to such compensation and to reimbursement for your reasonable
expenses (including reasonable fees and expenses of your counsel) as set forth
on Schedule I attached hereto.
20. You hereby acknowledge receipt of the Prospectus and the Letter
of Transmittal and further acknowledge that you have examined each of them.
Any inconsistency between this Agreement, on the one hand, and the Prospectus
and the Letter of Transmittal (as they may be amended from time to time), on
the other hand, shall be resolved in favor of the latter two documents, except
with respect to the duties, liabilities and indemnification of you as Exchange
Agent, which shall be controlled by this Agreement.
21. The Company covenants and agrees to indemnify and hold you
harmless in your capacity as Exchange Agent hereunder against any loss,
liability, cost or expense, including reasonable attorneys' fees and expenses,
arising out of or in connection with the acceptance or administration of your
duties hereunder, including, without limitation, in connection with any act,
omission, delay or refusal made by you in reliance upon any signature,
endorsement, assignment, certificate, order, request, notice, instruction or
other instrument or document reasonably believed by you in good faith to be
valid, genuine and sufficient and in accepting any tender or effecting any
transfer of Old Securities reasonably believed by you in good faith to be
authorized, and in delaying or refusing in good faith to accept any tenders or
effect any transfer of Old Securities; provided, however, that the Company
shall not be liable for indemnification or otherwise for any loss, liability,
cost or expense to the extent arising out of your gross negligence or willful
misconduct. You shall promptly notify the Company of any action, proceeding,
suit or claim by letter or by facsimile confirmed by letter, but failure to so
notify the Company shall not relieve the Company of any liability hereunder
except to the extent that the Company is materially adversely affected
thereby. The Company shall be entitled to participate at its own expense in
the defense of any such claim or other action, and, if the Company so elects,
the Company shall assume the defense of any suit brought to enforce any such
claim. In the event that the Company shall assume the defense of any such
suit, the Company shall not be liable for the fees and expenses of any
additional counsel thereafter retained by you so long as the Company shall
retain counsel reasonably satisfactory to you to defend such suit, and so long
as you have not determined, in your reasonable judgment, that a conflict of
interest exists between you and the Company.
22. This Agreement and your appointment as Exchange Agent hereunder
shall be construed and enforced in accordance with the laws of the State of
California applicable to agreements made and to be performed entirely within
such state, and without regard to conflicts of law principles, and shall inure
to the benefit of, and the obligations created hereby shall be binding upon,
the successors and assigns of each of the parties hereto.
23. This Agreement may be executed in two or more counterparts,
each of which shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
24. In case any provision of this Agreement shall be invalid,
illegal or unenforceable, the validity, legality and enforceability of the
remaining provisions shall not in any way be affected or impaired thereby.
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25. This Agreement shall not be deemed or construed to be modified,
amended, rescinded, cancelled or waived, in whole or in part, except by a
written instrument signed by a duly authorized representative of the party to
be charged. This Agreement may not be modified orally.
26. Unless otherwise provided herein, all notices, requests and
other communications to any party hereunder shall be in writing (including
facsimile or similar writing) and shall be given to such party, addressed to
it, at its address or telecopy number set forth below:
If to the Company:
Rhythms NetConnections Inc.
0000 Xxxxx Xxxxxx Xxxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxx Xxxxxxxxx
If to the Exchange Agent:
State Street Bank and Trust Company of California, N.A.
000 Xxxx 0xx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Corporate Trust Administration
(Rhythms NetConnections, Inc. 14% Senior Notes due 2010/2000 exchange)
27. Unless terminated earlier by the parties hereto, this Agreement
shall terminate 90 days following the Expiration Date. Notwithstanding the
foregoing, Paragraphs 19 and 21 shall survive the termination of this
Agreement. Upon any termination of this Agreement, you shall promptly deliver
to the Company any certificates for Securities, funds or property then held by
you as Exchange Agent under this Agreement.
28. This Agreement shall be binding and effective as of the date
hereof.
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Please acknowledge receipt of this Agreement and confirm the
arrangements herein provided by signing and returning the enclosed copy.
Rhythms NetConnections Inc.
By:
--------------------
Xxxxx Xxxxxxxxx
ASSISTANT GENERAL COUNSEL
Accepted as of the date first above written:
STATE STREET BANK AND TRUST
OF CALIFORNIA, N.A.,
as Exchange Agent
By:
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Name:
---------------------
Title:
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