Exhibit 10.35
AMENDMENT TO RIGHTS AGREEMENT
THIS AMENDMENT, DATED AS OF FEBRUARY 6, 2000, IS BETWEEN RHYTHMS
NETCONNECTIONS INC. (THE "COMPANY") AND COMPUTERSHARE TRUST CO., INC. (THE
"RIGHTS AGENT").
RECITALS
A. The Company and the Rights Agent are parties to a Rights
Agreement dated April 2, 1999 (the "Rights Agreement").
B. The Company has entered into a Preferred Stock and Warrant
Purchase Agreement, dated February 6, 2000 with HMTF Bridge RHY, LLC (the
"Securities Purchase Agreement"). It is contemplated that HMTF Bridge RHY, LLC
will assign its rights under the Securities Purchase Agreement to entities
affiliated with Hicks, Muse, Xxxx & Xxxxx Incorporated (each, a "HMTF
Purchaser").
C. Pursuant to the Securities Purchase Agreement and the
transactions contemplated thereby, the Company has agreed to issue and sell,
and the HMTF Purchasers have agreed to purchase, shares of the Series E
Preferred Stock and Warrants to purchase shares of the Company's common stock
(the "Common Stock").
D. Pursuant to Section 27 of the Rights Agreement, the Board of
Directors of the Company has determined that the amendment to the Rights
Agreement, as set forth herein, is necessary and desirable to reflect the
Transactions and the Company and the Rights Agent desire to evidence such
amendment in writing.
E. Terms used but not defined herein have the meaning ascribed
to such terms in the Securities Purchase Agreement.
NOW, THEREFORE, the parties agree as follows:
1. AMENDMENT OF SECTION 1, DEFINITION OF "ACQUIRING PERSON."
The definition of "Acquiring Person" in Section 1 of the Rights Agreement is
hereby amended to add the following clause immediately after the end of
subsection (ii) of the definition of "Acquiring Person" and immediately prior
to the beginning of the definition of "Adjustment Shares";
(iii) the HMTF Purchasers and their Affiliates (the
"Purchasers") shall not be deemed to be Acquiring Persons with
respect to the Purchasers' beneficial ownership of (x) the
Company's Series E Convertible Preferred Stock and warrants to
purchase the Company's Common Stock (the "Original
Securities") acquired pursuant to the terms and conditions of
the Securities Purchase Agreement (defined below) or pursuant
to a subsequent transfer of such Original Securities from
another Purchaser or any shares of Common Stock issued or
issuable pursuant to any conversion rights, exercise rights or
purchase rights (including preemptive rights) associated with
the Original Securities (including as
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a result of dividends received on the Original Securities) or
(y) any shares of Common Stock or other securities
convertible into or exchangeable for Common Stock issued to
the Purchasers as a dividend, distribution, stock split or
other action taken by the Company with respect to shares of
Common Stock generally or the Original Securities
(collectively, the "Excluded Securities"), no matter what
percentage of the outstanding Common Stock the Excluded
Securities constitute. However, nothing herein shall prevent
any Purchaser from being deemed to be an "Acquiring Person"
if, other than the Excluded Securities, such Purchaser,
together with all Affiliates and Associates of such
Purchaser, shall be the Beneficial Owner of 5% or more of
the shares of Common Stock of the Company then outstanding.
2. ADDITION OF SECTION 1. Language in Section 1 immediately
prior to the definition of "Shares Acquisition Date" shall be inserted into
the Rights Agreement as follows:
" 'Securities Purchase Agreement' shall mean the
Securities Purchase Agreement dated as of February 6, 2000, by
and among the Company and each of the Purchasers listed on
Schedule I thereto."
3. AMENDMENT OF SECTION 27. Section 27 of the Rights Agreement
is hereby amended by inserting the following sentence at the end thereof.
"No further amendment of the Rights Agreement that is
inconsistent with this Amendment and materially adversely
affects any Purchaser shall be valid unless approved in
writing by such Purchaser."
4. ADDITION OF SECTION 35. Section 35 shall be inserted into
the Rights Agreement as follows:
"Section 35. Certain Capitalized Terms. All terms
which are capitalized and used herein (which are not otherwise
specifically defined herein) and which are defined in the
Securities Purchase Agreement shall be used in the Rights
Agreement as defined in the Securities Purchase Agreement."
5. GOVERNING LAW. This Amendment shall be governed by,
interpreted under, and construed in accordance with the laws of the State of
California, regardless of the laws that might otherwise govern under
applicable principles of conflicts of law.
6. COUNTERPARTS. This Amendment may be executed in
counterparts, each of which shall be deemed an original, but all of which
taken together shall constitute one and the same instrument.
7. THIRD-PARTY BENEFICIARIES. The HMTF Purchasers shall be
third-party beneficiaries of the Rights Agreement to the extent specifically
set forth herein.
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8. TERMINATION. This Agreement shall automatically terminate
and be null and void upon termination of the Securities Purchase Agreement
pursuant to Section 8.4(a) thereof.
IN WITNESS WHEREOF, the parties hereto have executed this
Amendment as of the date first set forth above.
RHYTHMS NETCONNECTIONS INC.
By:
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Name: Xxxxxxxxx Xxxxx
Title: Chairman and Chief Executive Officer
COMPUTERSHARE TRUST CO., INC.
By:
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Name:
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Title:
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COMPUTERSHARE TRUST CO., INC.
By:
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Name:
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Title:
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[SIGNATURE PAGE FOR AMENDMENT TO RIGHTS AGREEMENT]
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