THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR ANY STATE SECURITIES LAWS. IT MAY NOT BE SOLD OR OFFERED FOR
SALE IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THE
SECURITIES UNDER SAID ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR THE
AVAILABILITY OF AN EXEMPTION FROM REGISTRATION UNDER SAID ACT AND ANY
APPLICABLE STATE SECURITIES LAWS.
STOCK SUBSCRIPTION WARRANT
TO PURCHASE COMMON STOCK OF
RHYTHMS NETCONNECTIONS, INC. (THE "COMPANY")
NUMBER OF SHARES 75,000
OF WARRANT ------
PRICE PER SHARE $10.55
------
EXPIRATION DATE APRIL 5, 2002
-------------
THIS CERTIFIES THAT for value received, CISCO SYSTEMS CAPITAL
CORPORATION, a Nevada corporation, or its registered assigns (hereinafter
called the "Holder"), is entitled to purchase from the Company, at any time
during the Term of this Warrant, seventy-five thousand (75,000) shares of
common stock, $0.001 par value, of the Company (the "Common Stock"), at the
Warrant Price, payable as provided herein. The exercise of this Warrant
shall be subject to the provisions, limitations and restrictions herein
contained, and may be exercised in whole or in part.
SECTION 1. DEFINITIONS.
For all purposes of this Warrant, the following terms shall have the
meanings indicated:
"AGREEMENT" shall mean the Master Agreement to Lease Equipment, dated as
of April 5, 1999, between the Company, as lessee, and the Holder, as lessor.
"COMMON STOCK" shall mean and include the Company's authorized common
stock, $0.001 par value, as constituted at the date hereof.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended from time to time.
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended.
"TERM OF THIS WARRANT" shall mean the period beginning on the date of
initial issuance hereof and ending on the third anniversary of such date of
initial issuance.
"WARRANT PRICE" shall mean $10.55 per share, subject to adjustment in
accordance with Section 5 hereof.
"WARRANTS" shall mean this Warrant and any other Warrant or Warrants
issued in connection with the Agreement to the original holder of this
Warrant, or any transferees from such original holder or this Holder.
"WARRANT SHARES" shall mean shares of Common Stock purchased or
purchasable by the Holder of this Warrant upon the exercise hereof.
SECTION 2. EXERCISE OF WARRANT.
2.1 PROCEDURE FOR EXERCISE OF WARRANT. To exercise this Warrant in
whole or in part (but not as to any fractional share of Common Stock), the
Holder shall deliver to the Company at its office referred to in Section 13
hereof at any time and from time to time during the Term of this Warrant: (i)
the Notice of Exercise in the form attached hereto, (ii) cash, certified or
official bank check payable to the order of the Company, wire transfer of
funds to the Company's account, or cancellation of any indebtedness of the
Company to the Holder (or any combination of any of the foregoing) in the
amount of the Warrant Price for each share being purchased, and (iii) this
Warrant. Notwithstanding any provisions herein to the contrary, if the
Current Market Price (as defined in Section 5) is greater than the Warrant
Price (at the date of calculation, as set forth below), in lieu of exercising
this Warrant as hereinabove permitted, the Holder may elect to receive shares
of Common Stock equal to the value (as determined below) of this Warrant (or
the portion thereof being canceled) by surrender of this Warrant at the
office of the Company referred to in Section 13 hereof, together with the
Notice of Exercise, in which event the Company shall issue to the Holder that
number of shares of Common Stock computed using the following formula:
CS = WCS x (CMP-WP)
--------------
CMP
Where
CS equals the number of shares of Common Stock to be issued to the
Holder
WCS equals the number of shares of Common Stock purchasable under the
Warrant or, if only a portion of the Warrant is being exercised,
the portion of the Warrant being exercised (at the date of such
calculation)
CMP equals the Current Market Price (at the date of such calculation)
WP equals the Warrant Price (as adjusted to the date of such
calculation)
In the event of any exercise of the rights represented by this Warrant, a
certificate or certificates for the shares of Common Stock so purchased,
registered in the name of the Holder or such other name or names as may be
designated by the Holder, shall be delivered to the Holder hereof within a
reasonable time, not exceeding twenty (20) days, after the rights represented
by this Warrant shall have been so exercised; and, unless this Warrant has
expired, a new Warrant representing the number
of shares (except a remaining fractional share), if any, with respect to
which this Warrant shall not then have been exercised shall also be issued to
the Holder hereof within such time. The person in whose name any certificate
for shares of Common Stock is issued upon exercise of this Warrant shall for
all purposes be deemed to have become the holder of record of such shares on
the date on which the Warrant was surrendered and payment of the Warrant
Price and any applicable taxes was made, irrespective of the date of delivery
of such certificate, except that, if the date of such surrender and payment
is a date when the stock transfer books of the Company are closed, such
person shall be deemed to have become the holder of such shares at the close
of business on the next succeeding date on which the stock transfer books are
open.
2.2 TRANSFER RESTRICTION LEGEND. Each certificate for Warrant Shares
shall bear the following legend (and any additional legend required by (i)
any applicable state securities laws and (ii) any securities exchange upon
which such Warrant Shares may, at the time of such exercise, be listed) on
the face thereof unless at the time of exercise such Warrant Shares shall be
registered under the Securities Act:
"The shares represented by this certificate have not been
registered under the Securities Act of 1933, as amended, and
may not be sold or transferred in the absence of such
registration or an exemption therefrom under said Act."
Any certificate issued at any time in exchange or substitution for any
certificate bearing such legend (except a new certificate issued upon
completion of a public distribution under a registration statement of the
securities represented thereby) shall also bear such legend unless, in the
opinion of counsel for the holder thereof (which counsel shall be reasonably
satisfactory to counsel for the Company) the securities represented thereby
are not, at such time, required by law to bear such legend.
SECTION 3. COVENANTS AS TO COMMON STOCK. The Company covenants and agrees
that all shares of Common Stock that may be issued upon the exercise of the
rights represented by this Warrant shall, upon issuance, be validly issued,
fully paid and nonassessable, and free from all taxes, liens and charges with
respect to the issue thereof. The Company further covenants and agrees that
it shall pay when due and payable any and all federal and state taxes (other
than any income taxes applicable to the Holder) which may be payable in
respect of the issue of this Warrant or any Common Stock or certificates
therefor issuable upon the exercise of this Warrant. The Company further
covenants and agrees that the Company shall at all times have authorized and
reserved, free from preemptive rights, a sufficient number of shares of
Common Stock to provide for the exercise of the rights represented by this
Warrant. The Company further covenants and agrees that if any shares of
capital stock to be reserved for the purpose of the issuance of shares upon
the exercise of this Warrant require registration with or approval of any
governmental authority under any federal or state law before such shares may
be validly issued or delivered upon exercise, then the Company shall in good
faith and as expeditiously as possible endeavor to secure such registration
or approval, as the case may be. If and so long as the Common Stock issuable
upon the exercise of this Warrant is listed on any national securities
exchange, the Company shall, if permitted by the rules of such exchange, use
its best efforts to list and keep listed on such exchange, upon official
notice of issuance, all shares of such Common Stock issuable upon exercise of
this Warrant.
SECTION 4. ADJUSTMENT OF NUMBER OF SHARES. Upon each adjustment of the
Warrant Price as provided in Section 5, the Holder shall thereafter be
entitled to purchase, at the Warrant Price resulting from such adjustment,
the number of shares (calculated to the nearest tenth of a share) obtained by
multiplying the Warrant Price in effect immediately prior to such adjustment
by the number of shares purchasable pursuant hereto immediately prior to such
adjustment and dividing the product thereof by the Warrant Price resulting
from such adjustment.
SECTION 5. ADJUSTMENT OF WARRANT PRICE. The Warrant Price shall be subject
to adjustment from time to time as follows
(i) If, at any time during the Term of this Warrant, the number of
shares of Common Stock outstanding is increased by a stock dividend payable
in shares of Common Stock or by a subdivision or split-up of shares of Common
Stock, then, following the record date fixed for the determination of holders
of Common Stock entitled to receive such stock dividend, subdivision or
split-up, the Warrant Price shall be appropriately decreased so that the
number of shares of Common Stock issuable upon the exercise hereof shall be
increased in proportion to such increase in outstanding shares.
(ii) If, at any time during the Term of this Warrant, the number of
shares of Common Stock outstanding is decreased by a combination of the
outstanding shares of Common Stock, then, following the record date for such
combination, the Warrant Price shall appropriately increase so that the
number of shares of Common Stock issuable upon the exercise hereof shall be
decreased in proportion to such decrease in outstanding shares.
(iii) In case, at any time during the Term of this Warrant, the Company
shall declare a cash dividend upon its Common Stock payable otherwise than
out of earnings or earned surplus or shall distribute to holders of its
Common Stock shares of its capital stock (other than Common Stock), stock or
other securities of other persons, evidences of indebtedness issued by the
Company or other persons, assets (excluding cash dividends and distributions)
or options or rights (excluding options to purchase and rights to subscribe
for Common Stock or other securities of the Company convertible into or
exchangeable for Common Stock), then, in each such case, immediately
following the record date fixed for the determination of the holders of
Common Stock entitled to receive such dividend or distribution, the Warrant
Price in effect thereafter shall be determined by multiplying the Warrant
Price in effect immediately prior to such record date by a fraction of which
the numerator shall be an amount equal to the difference of (x) the Current
Market Price of one share of Common Stock minus (y) the fair market value (as
determined by the Board of Directors of the Company, whose determination
shall be conclusive) of the amount of cash, stock, securities, evidences of
indebtedness, assets, options or rights, as the case may be, so distributed
in respect of one share of Common Stock, and of which the denominator shall
be such Current Market Price.
(iv) All calculations under this Section 5 shall be made to the
nearest cent or to the nearest one-tenth (1/10) of a share, as the case may
be.
(v) For the purpose of any computation pursuant to this Section 5,
the Current Market Price at any date of one share of Common Stock shall be
deemed to be the average of the daily closing prices for the 10 consecutive
business days ending on the last business day before the day in
question (as adjusted for any stock dividend, split, combination or
reclassification that took effect during such 10 business day period). The
closing price for each day shall be the last reported sales price or, in case
no such reported sales took place on such day, the average of the last
reported bid and asked prices, in either case on the principal national
securities exchange on which the Common Stock is listed or admitted to
trading or as reported by Nasdaq (or if the Common Stock is not at the time
listed or admitted for trading on any such exchange or if prices of the
Common Stock are not reported by Nasdaq then such price shall be equal to the
average of the last reported bid and asked prices on such day as reported by
The National Quotation Bureau Incorporated or any similar reputable quotation
and reporting service, if such quotation is not reported by The National
Quotation Bureau Incorporated); provided, however, that if the Common Stock
is not traded in such manner that the quotations referred to in this clause
(v) are available for the period required hereunder, the Current Market Price
shall be determined in good faith by the Board of Directors of the Company
or, if such determination cannot be made, by a nationally recognized
independent investment banking firm selected by the Board of Directors of the
Company (or if such selection cannot be made, by a nationally recognized
independent investment banking firm selected by the American Arbitration
Association in accordance with its rules).
(vi) Whenever the Warrant Price shall be adjusted as provided in this
Section 5, the Company shall prepare a statement showing the facts requiring
such adjustment and the Warrant Price that shall be in effect after such
adjustment. The Company shall cause a copy of such statement to be sent by
mail, first class postage prepaid, to each Holder of this Warrant at its, his
or her address appearing on the Company's records. Where appropriate, such
copy may be given in advance and may be included as part of the notice
required to be mailed under the provisions of subsection (viii) of this
Section 5.
(vii) Adjustments made pursuant to clauses (i), (ii) and (iii) above
shall be made on the date such dividend, subdivision, split-up, combination
or distribution, as the case may be, is made, and shall become effective at
the opening of business on the business day next following the record date
for the determination of stockholders entitled to such dividend, subdivision,
split-up, combination or distribution.
(viii) In the event the Company shall propose to take any action of the
types described in clauses (i), (ii), or (iii) of this Section 5, the Company
shall forward, at the same time and in the same manner, to the Holder of this
Warrant such notice, if any, which the Company shall give to the holders of
capital stock of the Company.
(ix) In any case in which the provisions of this Section 5 shall
require that an adjustment shall become effective immediately after a record
date for an event, the Company may defer until the occurrence of such event
issuing to the Holder of all or any part of this Warrant which is exercised
after such record date and before the occurrence of such event the additional
shares of capital stock issuable upon such exercise by reason of the
adjustment required by such event over and above the shares of capital stock
issuable upon such exercise before giving effect to such adjustment exercise;
provided, however, that the Company shall deliver to such Holder a due bill
or other appropriate instrument evidencing such Holder's right to receive
such additional shares upon the occurrence of the event requiring such
adjustment.
SECTION 6. OWNERSHIP.
6.1 OWNERSHIP OF THIS WARRANT. The Company may deem and treat the
person in whose name this Warrant is registered as the holder and owner
hereof (notwithstanding any notations of ownership or writing hereon made by
anyone other than the Company) for all purposes and shall not be affected by
any notice to the contrary until presentation of this Warrant for
registration of transfer as provided in this Section 6.
6.2 TRANSFER AND REPLACEMENT. This Warrant and all rights hereunder
are transferable in whole or in part upon the books of the Company by the
Holder hereof in person or by duly authorized attorney, and a new Warrant or
Warrants, of the same tenor as this Warrant but registered in the name of the
transferee or transferees (and in the name of the Holder, if a partial
transfer is effected) shall be made and delivered by the Company upon
surrender of this Warrant duly endorsed, at the office of the Company
referred to in Section 13 hereof. Upon receipt by the Company of evidence
reasonably satisfactory to it of the loss, theft or destruction, and, in such
case, of indemnity or security reasonably satisfactory to it, and upon
surrender of this Warrant if mutilated, the Company shall make and deliver a
new Warrant of like tenor, in lieu of this Warrant; provided that if the
Holder hereof is an instrumentality of a state or local government or an
institutional holder or a nominee for such an instrumentality or
institutional holder an irrevocable agreement of indemnity by such Holder
shall be sufficient for all purposes of this Section 6, and no evidence of
loss or theft or destruction shall be necessary. This Warrant shall be
promptly cancelled by the Company upon the surrender hereof in connection
with any transfer or replacement. Holder shall not transfer this Warrant and
the rights hereunder except in compliance with federal and state securities
laws.
SECTION 7. MERGERS, CONSOLIDATION, SALES. In the case of any proposed
consolidation or merger of the Company with another entity, or the proposed
sale of all or substantially all of its assets to another person or entity,
or any proposed reorganization or reclassification of the capital stock of
the Company, then, as a condition of such consolidation, merger, sale,
reorganization or reclassification, the Company shall give 20 days' prior
written notice thereof to the Holder hereof and lawful and adequate provision
shall be made whereby the Holder of this Warrant shall thereafter have the
right to receive upon the basis and upon the terms and conditions specified
herein, in lieu of the shares of the Common Stock of the Company immediately
theretofore purchasable hereunder, such shares of stock, securities or assets
as may (by virtue of such consolidation, merger, sale, reorganization or
reclassification) be issued or payable with respect to or in exchange for the
number of shares of such Common Stock purchasable hereunder immediately
before such consolidation, merger, sale, reorganization or reclassification.
In any such case appropriate provision shall be made with respect to the
rights and interests of the Holder of this Warrant to the end that the
provisions hereof shall thereafter be applicable as nearly as may be, in
relation to any shares of stock, securities or assets thereafter deliverable
upon the exercise of this Warrant.
SECTION 8. NOTICE OF DISSOLUTION OR LIQUIDATION. In case of any
distribution of the assets of the Company in dissolution or liquidation
(except under circumstances when the foregoing Section 7 shall be
applicable), the Company shall give notice thereof to the Holder hereof and
shall make no distribution to shareholders until the expiration of thirty
(30) days from the date of mailing of the aforesaid notice and, in any case,
the Holder hereof may exercise this Warrant within thirty (30) days
from the date of the giving of such notice, and all rights herein granted not
so exercised within such thirty-day period shall thereafter become null and
void.
SECTION 9. NOTICE OF EXTRAORDINARY DIVIDENDS. If the Board of Directors of
the Company shall declare any dividend or other distribution on its Common
Stock except out of earned surplus or by way of a stock dividend payable in
shares of its Common Stock, the Company shall mail notice thereof to the
Holder hereof not less than thirty (30) days prior to the record date fixed
for determining shareholders entitled to participate in such dividend or
other distribution, and the Holder hereof shall not participate in such
dividend or other distribution unless this Warrant is exercised prior to such
record date. The provisions of this Section 9 shall not apply to
distributions made in connection with transactions covered by Section 7.
SECTION 10. FRACTIONAL SHARES. Fractional shares shall not be issued upon
the exercise of this Warrant but in any case where the Holder would, except
for the provisions of this Section 10, be entitled under the terms hereof to
receive a fractional share upon the complete exercise of this Warrant, the
Company shall, upon the exercise of this Warrant for the largest number of
whole shares then called for, pay a sum in cash equal to the excess of the
value of such fractional share (determined in such reasonable manner as may
be prescribed in good faith by the Board of Directors of the Company) over
the Warrant Price for such fractional share.
SECTION 11. SPECIAL ARRANGEMENTS OF THE COMPANY. The Company covenants and
agrees that during the Term of this Warrant, unless otherwise approved by the
Holder of this Warrant, this Warrant shall be binding upon any corporation or
other person or entity succeeding to the Company by merger, consolidation or
acquisition of all or substantially all of the Company's assets.
SECTION 12. REGISTRATION RIGHTS; ETC. The Company grants registration rights
to the Holder of this Warrant for the Common Stock issuable upon exercise
hereof, comparable to the registration rights granted to holders under
Section 2.1 of the Warrant Registration Rights Agreement, dated as of May 5,
1998 (the "Warrant Registration Rights Agreement") among the Company and the
Initial Purchasers (as defined therein), except that the Holder's
"piggy-back" registration rights shall be junior in priority to any
"piggyback" registration rights granted to the holders under the Warrant
Registration Rights Agreement and any securities of other persons entitled to
"piggy'back" registration rights pursuant to contractual commitments of the
Company existing on or prior to the date hereof.
SECTION 13. NOTICES. Any notice or other document required or permitted to
be given or delivered to the Holder shall be delivered at, or sent by
certified or registered mail to, the Holder at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, attn: Worldwide Financial Services/Loan
Administration or to such other address as shall have been furnished to the
Company in writing by the Holder. Any notice or other document required or
permitted to be given or delivered to the Company shall be delivered at, or
sent by certified or registered mail to, the Company at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ or to such other address as shall have
been furnished in writing to the Holder by the Company. Any notice so
addressed and mailed by registered or certified mail shall be deemed to be
given when so mailed. Any notice so addressed and otherwise delivered shall
be deemed to be given when actually received by the addressee.
SECTION 14. NO RIGHTS AS STOCKHOLDER; LIMITATION OF LIABILITY. This Warrant
shall not entitle the Holder to any of the rights of a shareholder of the
Company except upon exercise in accordance with the terms hereof. No
provision hereof, in the absence of affirmative action by the Holder to
purchase shares of Common Stock, and no mere enumeration herein of the rights
or privileges of the Holder, shall give rise to any liability of the Holder
for the Warrant Price hereunder or as a shareholder of the Company, whether
such liability is asserted by the Company or by creditors of the Company.
SECTION 15. LAW GOVERNING. THE VALIDITY, INTERPRETATION, AND ENFORCEMENT OF
THIS WARRANT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS
OF THE STATE OF STATE OF DELAWARE WITHOUT GIVING EFFECT TO THE CONFLICT OF
LAW PRINCIPLES THEREOF.
SECTION 16. COMPLIANCE WITH ACT; DISPOSITION OF WARRANT OR WARRANT SHARES.
16.1 COMPLIANCE WITH ACT. The Holder of this Warrant, by acceptance
hereof, agrees that this Warrant, and the Warrant Shares to be issued upon
exercise hereof are being acquired for investment and that such Holder will
not offer, sell or otherwise dispose of this Warrant, or any Warrant Shares
except under circumstances which will not result in a violation of the
Securities Act or any applicable state securities laws. Upon exercise of
this Warrant, unless the Warrant Shares being acquired are registered under
the Securities Act and any applicable state securities laws or an exemption
from such registration is available, the Holder hereof shall confirm in
writing that the Warrant Shares so purchased are being acquired for
investment and not with a view toward distribution or resale in violation of
the Securities Act and shall confirm such other matters related thereto as
may be reasonably requested by the Company. This Warrant and all Warrant
Shares issued upon exercise of this Warrant (unless registered under the
Securities Act and any applicable state securities laws) shall be stamped or
imprinted with a legend in substantially the following form set forth in
Section 2.2 above.
Said legend shall be removed by the Company, upon the request of a
Holder, at such time as the restrictions on the transfer of the applicable
security shall have terminated. In addition, in connection with the issuance
of this Warrant, the holder specifically represents to the Company by
acceptance of this Warrant as follows:
(1) The Holder is aware of the Company's business affairs and financial
condition, and has acquired information about the Company sufficient to reach
an informed and knowledgeable decision to acquire this Warrant. The Holder
is acquiring this Warrant for its own account for investment purposes only
and not with a view to, or for the resale in connection with, any
"distribution" thereof in violation of the Securities Act.
(2) The Holder understands that this Warrant has not been registered
under the Securities Act in reliance upon a specific exemption therefrom,
which exemption depends upon, among other things, the bona fide nature of the
holder's investment intent as expressed herein.
(3) The Holder further understands that this Warrant must be held
indefinitely unless subsequently registered under the Securities Act and
qualified under any applicable state securities laws, or unless exemptions
from registration and qualification are otherwise available. The Holder is
aware of the provisions of Rule 144, promulgated under the Securities Act.
16.2 DISPOSITION OF WARRANT OR WARRANT SHARES. With respect to any
offer, sale or other disposition of this Warrant or any Warrant Shares
acquired pursuant to the exercise of this Warrant prior to registration of
such Warrant or Warrant Shares, the Holder hereof agrees to give written
notice to the Company prior thereto, describing briefly the manner thereof,
together with a written opinion of such ▇▇▇▇▇▇'s counsel, or other evidence,
if reasonably requested by the Company, to the effect that such offer, sale
or other disposition may be effected without registration or qualification
(under the Securities Act as then in effect or any federal or state
securities law then in effect) of this Warrant or the Warrant Shares and
indicating whether or not under the Securities Act certificates for this
Warrant or the Warrant Shares to be sold or otherwise disposed of require any
restrictive legend as to applicable restrictions on transferability in order
to ensure compliance with such law. Promptly upon receiving such written
notice and reasonably satisfactory opinion or other evidence, if so
requested, the Company, as promptly as practicable but no later than fifteen
(15) days after receipt of the written notice, shall notify such Holder that
such Holder may sell or otherwise dispose of this Warrant or such Warrant
Shares, all in accordance with the terms of the notice delivered to the
Company. If a determination has been made pursuant to this Section 16.2 that
the opinion of counsel for the Holder or other evidence is not reasonably
satisfactory to the Company, the Company shall so notify the Holder promptly
with details thereof after such determination has been made. Notwithstanding
the foregoing, this Warrant or such Warrant Shares may, as to such federal
laws, be offered, sold or otherwise disposed of in accordance with Rule 144
or 144A under the Securities Act, provided that the Company shall have been
furnished with such information as the Company may reasonably request to
provide a reasonable assurance that the provisions of Rule 144 or 144A have
been satisfied. Each certificate representing this Warrant or the Warrant
Shares thus transferred (except a transfer pursuant to Rule 144 or 144A)
shall bear a legend as to the applicable restrictions on transferability in
order to ensure compliance with such laws, unless in the aforesaid opinion of
counsel for the Holder, such legend is not required in order to ensure
compliance with such laws. The Company may issue stop transfer instructions
to its transfer agent in connection with such restrictions.
16.3 APPLICABILITY OF RESTRICTIONS. Neither any restrictions of any
legend described in this Warrant nor the requirements of Section 16.2 above
shall apply to any transfer or grant of a security interest in this Warrant
(or the Common Stock obtainable upon exercise thereof) or any part hereof (i)
to a partner of the Holder if the Holder is a partnership, (ii) to a
partnership of which the holder is a partner, or (iii) to any affiliate of
the Holder if the holder is a corporation; PROVIDED, HOWEVER, in any such
transfer, if applicable, the transferee shall on the Company's request agree
in writing to be bound by the terms of this Warrant as if the original Holder.
SECTION 17. MISCELLANEOUS.
17.1 AMENDMENTS. This Warrant and any provision hereof may be changed,
waived, discharged or terminated only by an instrument in writing signed by
both parties (or any respective predecessor in interest thereof). The
headings in this Warrant are for purposes of reference only and shall not
affect the meaning or construction of any of the provisions hereof
17.2 DEFINITIONS. All capitalized terms used herein and not otherwise
defined herein shall have the meanings ascribed to them in the Agreement.
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by its
duly authorized officer this 5th day of April, 1999.
Rhythms NetConnections, Inc.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-------------------------------
Title: Chief Financial Officer
----------------------------
-10-
FORM OF NOTICE OF EXERCISE
[To be signed only upon exercise of the Warrant]
TO BE EXECUTED BY THE REGISTERED HOLDER
TO EXERCISE THE WITHIN WARRANT
The undersigned hereby exercises the right to purchase _________ shares of
Common Stock which the undersigned is entitled to purchase by the terms of
the within Warrant according to the conditions thereof, and herewith
[check one]
/ / makes payment of $__________ therefor; or
/ / directs the Company to issue ______ shares, and to withhold ____ shares
in lieu of payment of the Warrant Price, as described in Section 2.1 of
the Warrant.
All shares to be issued pursuant hereto shall be issued in the name of and the
initial address of such person to be entered on the books of the Company shall
be:
The shares are to be issued in certificates of the following denominations:
-----------------------------------
[Type Name of Holder]
By:
-------------------------------
Title:
----------------------------
Dated:
----------------------------
FORM OF ASSIGNMENT
(ENTIRE)
[To be signed only upon transfer of entire Warrant]
TO BE EXECUTED BY THE REGISTERED HOLDER
TO TRANSFER THE WITHIN WARRANT
FOR VALUE RECEIVED ___________________________ hereby sells, assigns and
transfers unto _______________________________ all rights of the undersigned
under and pursuant to the within Warrant, and the undersigned does hereby
irrevocably constitute and appoint _____________________ Attorney to transfer
the said Warrant on the books of the Company, with full power of substitution.
-----------------------------------
[Type Name of Holder]
By:
-----------------------------------
Title:
-----------------------------------
Dated:
-----------------------------------
NOTICE
The signature to the foregoing Assignment must correspond to the name as written
upon the face of the within Warrant in every particular, without alteration or
enlargement or any change whatsoever.
FORM OF ASSIGNMENT
(PARTIAL)
[To be signed only upon partial transfer of Warrant]
TO BE EXECUTED BY THE REGISTERED HOLDER
TO TRANSFER THE WITHIN WARRANT
FOR VALUE RECEIVED _________________________ hereby sells, assigns and
transfers unto _______________________________ (i) the rights of the
undersigned to purchase ___ shares of Common Stock under and pursuant to the
within Warrant, and (ii) on a non-exclusive basis, all other rights of the
undersigned under and pursuant to the within Warrant, it being understood
that the undersigned shall retain, severally (and not jointly) with the
transferee(s) named herein, all rights assigned on such non-exclusive basis.
The undersigned does hereby irrevocably constitute and appoint
__________________________ Attorney to transfer the said Warrant on the books
of the Company, with full power of substitution.
-----------------------------------
[Type Name of Holder]
By:
-------------------------------
Title:
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Dated:
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NOTICE
The signature to the foregoing Assignment must correspond to the name as written
upon the face of the within Warrant in every particular, without alteration or
enlargement or any change whatsoever.