UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D/A
Under the Securities Exchange Act of 1934
(Amendment No.1)*
ALLEGIANCE TELECOM, INC.
(Name of Issuer)
COMMON STOCK
(Title of Class of Securities)
01747T102
(CUSIP Number)
William D. Savoy Gail J. Gordon
Vulcan Ventures Incorporated Foster Pepper & Shefelman PLLC
110-110th Avenue N.E., Suite 550 1111 Third Avenue, Suite 3400
Bellevue, WA 98004 Seattle, WA 98101
(206) 453-1940 (206) 447-4400
(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications)
November 1, 1999
(Date of Event which Requires Filing of This Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of ss.ss. 240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the
following box.
Note: Schedules filed in paper format shall include a signed original and five
copies of the schedule, including all exhibits. See ss. 240.13d-7 for other
parties to whom copies are to be sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
Potential persons who are to respond to the collection of information
contained in this form are not required to respond unless the form displays
a currently valid OMB control number.
<PAGE>
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CUSIP NO. 01747T102 13D Page 2 of 8 Pages
- - ------------------------------------------------------------------------------
- - -------- --------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Vulcan Ventures Incorporated
- - -------- ---------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) |_|
(b) |_|
- - -------- ---------------------------------------------------------------------
3 SEC USE ONLY
- - -------- ---------------------------------------------------------------------
4 SOURCE OF FUNDS*
WC
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(E)
- - -------- ---------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
State of Washington
- - -------- ---------------------------------------------------------------------
----- --------------------------------
NUMBER OF SHARES BENEFICIALLY OWNED BY 7 SOLE VOTING POWER
EACH REPORTING PERSON WITH
-0- shares
----- --------------------------------
8 SHARED VOTING POWER
4,000,000 shares (1)
----- --------------------------------
9 SOLE DISPOSITIVE POWER
-0- shares
----- --------------------------------
10 SHARED DISPOSITIVE POWER
4,000,000 shares (1)
- - ---------------------------------------- ----- -------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
4,000,000 shares (1)
- - -------- ---------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
- - -------- ---------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 11
6.2%
- - ------- ----------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
CO
- - -------- ---------------------------------------------------------------------
(1) Directly owned by Vulcan Ventures Incorporated. Paul G. Allen is the sole
shareholder of Vulcan Ventures Incorporated and may be deemed to have shared
voting and dispositive power with respect to such shares.
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
- - ------------------------------------------------------------------------------
CUSIP NO. 01747T102 13D Page 3 of 8 Pages
- - ------------------------------------------------------------------------------
- - -------- ---------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Paul G. Allen
- - -------- ---------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) |_|
(b) |_|
- - -------- ---------------------------------------------------------------------
3 SEC USE ONLY
- - -------- ---------------------------------------------------------------------
4 SOURCE OF FUNDS*
AF
- - -------- ---------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(E)
- - -------- ---------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States of America
- - -------- ---------------------------------------------------------------------
------ -------------------------------
NUMBER OF SHARES BENEFICIALLY OWNED BY 7 SOLE VOTING POWER
EACH REPORTING PERSON WITH
-0- shares
------ -------------------------------
8 SHARED VOTING POWER
4,000,000 shares (2)
------ -------------------------------
9 SOLE DISPOSITIVE POWER
-0- shares
------ -------------------------------
10 SHARED DISPOSITIVE POWER
4,000,000 shares(2)
- - ------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
4,000,000 shares(2)
- - -------- ---------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
- - -------- ---------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 11
6.2%
- - -------- ---------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
IN
- - -------- ---------------------------------------------------------------------
(2) Directly owned by Vulcan Ventures Incorporated. Paul G. Allen is the sole
shareholder of Vulcan Ventures Incorporated and may be deemed to have shared
voting and dispositive power with respect to such shares.
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
SCHEDULE 13D
Item 1. Security and Issuer.
This statement relates to the Common Stock, $.01 Par value per share,
of Allegiance Telecom, Inc., a Delaware corporation (the "Issuer"). The Issuer's
principal executive officers are located at 1950 Stemmons Freeway, Suite 3026,
Dallas, Texas 75207. The Issuer's telephone number is (214) 261-7100.
Item 2. Identity and Background.
The persons filing this statement are Vulcan Ventures Incorporated
("Vulcan Ventures") and Paul G. Allen. Vulcan Ventures is a Washington
corporation whose principal business is investing in various companies. Paul G.
Allen is its sole shareholder. The principal office of Vulcan Ventures is
located at 110-110th Avenue N.E., Suite 550, Bellevue, Washington 98004. All of
Vulcan Ventures' executive officers and directors are U.S. citizens. Their
names, business addresses and principal occupations are as follows:
Paul G. Allen, Vulcan Ventures Incorporated, 110 - 110th
Avenue N.E., Suite 550, Bellevue, Washington 98004. Mr. Allen is
Chairman, President and sole shareholder of Vulcan Ventures and a
Director and sole shareholder of Vulcan Northwest Inc.
William D. Savoy, Vulcan Northwest Inc., 110-110th Avenue
N.E., Suite 550, Bellevue, Washington 98004. Mr. Savoy is Vice
President and a Director of Vulcan Ventures and Chairman and President
of Vulcan Northwest Inc.
Bert E. Kolde, Vulcan Ventures Incorporated, 110-110th Avenue
N.E., Suite 550, Bellevue, Washington 98004. Mr. Kolde is a Vice
President, Secretary, Treasurer and a Director of Vulcan Ventures and a
Vice President of Vulcan Northwest Inc.
Jo Allen Patton, Vulcan Northwest Inc., 110-110th Avenue N.E.,
Suite 550, Bellevue, Washington 98004. Ms. Patton is Vice Chairman and
a Vice President of Vulcan Ventures and Vulcan Northwest Inc.
During the last five years, Mr. Allen and Vulcan Ventures have not,
nor, to the best knowledge of Vulcan Ventures, has any other person named in
this Item 2, been convicted in a criminal proceeding (excluding traffic
violations or similar misdemeanors) or been a party to a civil proceeding of a
judicial or administrative body of competent jurisdiction as a result of which
he is or was subject to a judgment, decree or final order enjoining future
violations of, or prohibiting or mandating activities subject to, federal or
state securities laws or finding any violation with respect to such laws.
Item 3: Source and Amount of Funds or Other Consideration.
On September 13, 1999, Vulcan Ventures purchased 1,500,000 shares of the
Issuer's common stock, $.01 par value ("Common Stock") from existing
stockholders in a private transaction pursuant to a Common Stock Purchase and
Option Agreement dated August 3, 1999 (the "Purchase Agreement") and a
Counterpart Agreement dated as of September 13, 1999. Vulcan Ventures paid
$50.00 per share for aggregate cash consideration of $75,000,000. The Purchase
Agreement also granted Vulcan Ventures an option to purchase up to 5,000,000
shares of the Issuer's Common Stock at an exercise price of $56.00 per share
(the "Option") from existing stockholders. Vulcan Ventures exercised the Option
for 2,500,000 shares on November 1, 1999, for aggregate cash consideration of
$140,000,000. The balance of the Option expired unexercised.
Vulcan Ventures funded its purchase of the Common Stock from its own
working capital. None of the funds used to purchase the shares of Common Stock
consisted of funds or other consideration borrowed or otherwise obtained for the
purpose of acquiring, holding, trading or voting the shares of Common Stock.
Item 4: Purpose of Transaction.
Vulcan Ventures purchased the 1,500,000 shares of Common Stock in the
transaction described in Item 3 above from Madison Dearborn Capital Partners II.
L.P., Frontenac VII Limited Partnership, Frontenac Masters VII Limited
Partnership, Battery Ventures IV, L.P., Battery Investment Partners IV, LLC
(collectively, the "Sellers"), Reed E. Hundt (a director of the Issuer) and
Gregory E. Lawler. The Option entitled Vulcan Ventures to purchase up to an
additional 5,000,000 shares of Common Stock, consisting of 4,147,001 shares from
the Sellers and 852,999 shares (the "Management Shares") from certain management
stockholders other than the Issuer's Chairman and Chief Executive Officer.
Vulcan Ventures exercised the Option on November 1, 1999, for 2,500,000 shares,
and the balance of the Option expired unexercised.
Page 4 of 8
<PAGE>
As consideration for the Option, the Issuer and Go2Net, Inc., a Delaware
corporation ("Go2Net") agreed to enter good faith negotiations with a view
toward establishing a mutually acceptable strategic alliance. Vulcan Ventures
and Mr. Allen share beneficial ownership of 11,922,406 shares of the common
stock, $.01 par value of Go2Net, Inc., representing approximately 33.7% of the
total number of outstanding shares of Go2Net's common stock as reported by
Go2Net in its Quarterly Report on Form 10-Q filed on August 16, 1999.
Vulcan Ventures and Mr. Allen acquired the securities reported in this
statement for investment purposes. Vulcan Ventures and Mr. Allen may acquire
additional shares of Common Stock, except as otherwise agreed in the Investors
Agreement or Registration Agreement described in Item 6 below, Vulcan Ventures
and/or Mr. Allen may acquire additional shares from time to time in open market
or private transactions, depending on various factors, including, without
limitation, the price of the Common Stock, stock market conditions and the
business prospects of the Issuer. Except as otherwise agreed in the Investors
Agreement or Registration Agreement, Vulcan Ventures or Mr. Allen may determine
to dispose of some or all of their beneficial holdings of the Issuer's
securities. Each reserves the right to increase or decrease its or his holdings
on such terms and at such times as each may decide, subject to the terms and
conditions of the Investors Agreement and the Registration Agreement.
Except as set forth in this statement, Vulcan Ventures and Mr. Allen
have no present plan or proposal that relates to or would result in (i) the
acquisition of additional securities or the disposition of securities of the
Issuer by any person, (ii) an extraordinary corporate transaction, such as a
merger, reorganization, liquidation, or sale or transfer of a material amount of
assets involving the Issuer or any of its subsidiaries, (iii) any change in the
Issuer's present Board of Directors or, (iv) any material change in the Issuer's
present capitalization or dividend policy or any other material change in the
Issuer's business or corporate structure, (v) any change in the Issuer's charter
or by-laws or other actions that may impede the acquisition of control of the
Issuer by any person, (vi) any change that would result in any class of the
Issuer's equity securities becoming eligible for termination of its registration
pursuant to Section 12(g)(4) of the Securities Exchange Act of 1934, as amended,
or to cease to be authorized to be quoted in Nasdaq, or (vii) any similar
action. However, Vulcan Ventures and Mr. Allen reserve the right to formulate
plans or proposals specified in clauses (a) through (j) of Item 4 of Schedule
13D, subject to the Investors Agreement and the Registration Agreement.
Item 5. Interest in Securities of the Issuer.
Vulcan Ventures and Mr. Allen each beneficially owns 4,000,000 shares of
the Issuer's Common Stock. Vulcan Ventures' and Mr. Allen's stockholdings
represent approximately 6.2% of the shares of the class outstanding based upon
64,811,690 shares outstanding as of June 30, 1999, as reported by the Issuer in
its Quarterly Report, on Form 10-Q filed on August 10, 1999. Vulcan Ventures and
Mr. Allen have shared voting and dispositive power with respect to the Common
Stock.
To the best knowledge of Vulcan Ventures and Mr. Allen, none of the
other parties named in Item 2 owns any of the Issuer's Common Stock.
Except as set forth in Item 4 of this statement, Vulcan Ventures and
Mr. Allen have not, nor to the knowledge of Vulcan Ventures, has any of its
executive officers, directors or controlling persons named in Item 2, effected
any transactions in the Issuer's Common Stock during the past sixty days.
Neither Vulcan Ventures nor Mr. Allen knows any other person who has
the right to receive or the power to direct the receipt of dividends from or the
proceeds from the sale of any Common Stock beneficially owned by Vulcan Ventures
or Mr. Allen.
Item 6. Contracts, Arrangements, Understandings or Relationships with
Respect to Securities of the Issuer.
Concurrently with the Purchase Agreement, the Issuer and Vulcan Ventures
entered into an Investors Agreement (the "Investors Agreement") pursuant to
which the Issuer has agreed to use its best efforts to cause (a) one designee
nominated by Vulcan Ventures to be appointed to the Issuer's board (the
"Board"), for so long as Vulcan Ventures continues to hold at least 1,200,000
shares (as adjusted for stock dividends, stock splits and other
recapitalizations) of Common Stock, and (b) two designees nominated by Vulcan
Ventures to be appointed to the Board, if Vulcan Ventures acquires at least
2,500,000 or more shares under the Option, and so long as Vulcan Ventures
continues to hold at least 4,000,000 shares (as adjusted for stock dividends,
stock splits and other recapitalizations). Vulcan Ventures may not assign its
right to nominate a director or directors under the Investors Agreement. At the
closing of its initial purchase of Common Stock, Vulcan Ventures nominated Dino
Vendetti to the Board. As a result of its exercise of the Option for 2,500,000
shares, Vulcan Ventures became entitled to nominate a second director to the
Board.
Under the Investors Agreement, Vulcan Ventures has agreed that until
September 13, 2000, neither it nor its affiliates may offer, sell, transfer or
otherwise dispose of any of the shares of Common Stock acquired pursuant to the
Purchase Agreement without the prior written consent of the Board, except by
pledge or to an affiliate of Vulcan Ventures.
Under the Investors Agreement, Vulcan Ventures is subject to a
standstill provision for a period beginning on September 13, 1999 and ending on
the earlier of (i) the closing of a Sale of the Company, as defined in the
Investors Agreement, and (ii) the date
Page 5 of 8
<PAGE>
after September 13, 2002 on which Vulcan Ventures has not had a representative
sitting on the Board for 180 days (the "Standstill Period"). During the
Standstill Period, Vulcan Ventures has agreed that it and its affiliates and
associates will not, directly or indirectly, among other things: (i) acquire any
of the voting securities (or securities convertible or exchangeable into or
exercisable for any voting securities) of the Issuer or any of its affiliates,
(ii) acquire any assets of the Issuer or any of its affiliates, or (iii)
participate in any tender offer, exchange offer, merger, or other extraordinary
transaction involving the Issuer or any of its affiliates; provided that with
respect to the foregoing clauses (i) through (iii), Vulcan Ventures may take any
of such actions within 60 days after another person that is not an affiliate or
associate of Vulcan Ventures has made a publicly announced proposal to take any
such action that would result in a Sale of the Issuer, so long as Vulcan
Venture's actions are not in concert with such other person. In addition, during
the Standstill Period, Vulcan Ventures has agreed that it and its affiliates and
associates will not, directly or indirectly, among other things: (i) become a
member of a group with respect to the Common Stock or other equity securities or
assets of the Issuer; (ii) call or seek to call any special meeting of or
initiate a stockholder vote or action by written consent of the Issuer's
stockholders; (iii) participate in any solicitation of proxies to vote, or seek
to influence any person or entity with respect to the Issuer, in opposition to
any matter which has been recommended by the Board or in favor of any matter
which has not been approved by the Board; or (iv) enter into any discussions,
negotiations, arrangements or understandings with any third party with respect
to any of the foregoing. Notwithstanding the foregoing, Vulcan Ventures and its
affiliates and associates may acquire additional shares of Common Stock as long
as their aggregate beneficial ownership does not exceed 20% of the outstanding
securities of the Issuer entitled to vote generally in the election of
directors. Under the Investors Agreement, if the Issuer adopts a stockholder
rights plan, the percentage of beneficial ownership of Common Stock the
acquisition of which will trigger the provisions of the plan shall not be less
than 20% for Vulcan Ventures.
Also concurrently with the Purchase Agreement, Vulcan Ventures entered
into an Amended and Restated Registration Agreement (the "Registration
Agreement") with the Issuer, the Sellers and certain other stockholders with
respect to the registration of the Issuer's securities under the Securities Act
of 1933, as amended. After September 13, 2000, the Registration Agreement
entitles Vulcan Ventures to demand one long-form registration, such as
registration on Form S-1, and two short-form registrations, such as registration
on Form S-3, with respect to the shares of Common Stock purchased by Vulcan
Ventures under the Purchase Agreement. In addition, Vulcan Ventures may
"piggyback" on primary or secondary registered public offerings of the Issuer's
securities. The Issuer has agreed to pay the registration expenses in connection
with these demand and "piggyback" registrations.
Vulcan Ventures has agreed not to make a public sale or distribution of
any of the Issuer's equity securities or any securities convertible into or
exchangeable or exercisable for the Issuer's equity during the seven days prior
to, and the 90-day period following, the effective date of any other
underwritten demand registration or underwritten piggyback registration, unless
the managing underwriters otherwise agree.
Item 7. Material to be Filed as Exhibits.
Exhibit Description
99.1 Common Stock Purchase and Option Agreement dated
August 3, 1999 among Madison Dearborn Capital
Partners II L.P., Frontenac VII Limited Partnership,
Frontenac Masters VII Limited Partnership, Battery
Ventures IV L.P., Battery Investment Partners IV,
LLC, Allegiance Telecom, Inc. and Vulcan Ventures
Incorporated. (Incorporated by reference to Exhibit
99.1 to the Issuer's Current Report on Form 8-K filed
on September 22, 1999, File No. 0-24509.)
99.2 Counterpart Agreement, dated as of September 13,
1999, among Madison Dearborn Capital Partners II,
L.P., Frontenac VII Limited Partnership, Frontenac
Masters VII Limited Partnership, Battery Ventures IV,
L.P., Battery Investment Partners IV, LLC, Reed E.
Hundt and Gregory E. Lawler. (Incorporated by
reference to Exhibit 99.2 to the Issuer's Current
Report on Form 8-K filed on September 22, 1999, File
No. 0-24509.)
99.3 Investors Agreement dated September 13, 1999 between
Allegiance Telecom, Inc. and Vulcan Ventures
Incorporated. (Incorporated by reference to Exhibit
99.3 to the Issuer's Current Report on Form 8-K filed
on September 22, 1999, File No. 0-24509.)
99.4 Amended and Restated Registration Agreement dated
September 13, 1999 among Allegiance Telecom, Inc.,
Battery Ventures IV L.P., Battery Investment Partners
IV, LLC, Frontenac VII Limited Partnership, Frontenac
Masters VII Limited Partnership, Madison Dearborn
Capital Partners II L.P., Morgan Stanley Capital
Partners III, L.P., MSCP III 892 Investors, L.P.,
Morgan Stanley Capital Investors, L.P., Vulcan
Ventures Incorporated and certain other stockholders
listed therein. (Incorporated by reference to Exhibit
99.4 to the Issuer's Current Report on Form 8-K filed
on September 22, 1999, File No. 0-24509.)
99.5 Joint Filing Statement filed on September 23, 1999.
99.6 Power of Attorney (Incorporated by reference to the
Reporting Persons' Schedule 13G for Pathogenesis
Corporation filed August 30, 1999.)
Page 6 of 8
<PAGE>
SIGNATURES
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
VULCAN VENTURES INCORPORATED
November 4, 1999 By: /s/ William D. Savoy
----------------------------------
William D. Savoy, Vice President
November 4, 1999 *
----------------------------------------
Paul G. Allen
*By: /s/ Paul G. Allen by William D. Savoy
----------------------------------
William D. Savoy, Attorney-in-Fact
Page 7 of 8
<PAGE>
EXHIBIT INDEX
Exhibit Description
99.1 Common Stock Purchase and Option Agreement dated
August 3, 1999 among Madison Dearborn Capital
Partners II L.P., Frontenac VII Limited Partnership,
Frontenac Masters VII Limited Partnership, Battery
Ventures IV L.P., and Battery Investment Partners IV,
LLC, Allegiance Telecom, Inc. and Vulcan Ventures
Incorporated. (Incorporated by reference to Exhibit
99.1 to the Issuer's Current Report on Form 8-K filed
on September 22, 1999, File No. 0-24509.)
99.2 Counterpart Agreement, dated as of September 13,
1999, among Madison Dearborn Capital Partners II,
L.P., Frontenac VII Limited Partnership, Frontenac
Masters VII Limited Partnership, Battery Ventures IV,
L.P., Battery Investment Partners IV, LLC, Reed E.
Hundt and Gregory E. Lawler. (Incorporated by
reference to Exhibit 99.2 to the Issuer's Current
Report on Form 8-K filed on September 22, 1999, File
No. 0-24509.)
99.3 Investors Agreement dated September 13, 1999 between
Allegiance Telecom, Inc. and Vulcan Ventures
Incorporated. (Incorporated by reference to Exhibit
99.3 to the Issuer's Current Report on Form 8-K filed
on September 22, 1999, File No. 0-24509.)
99.4 Amended and Restated Registration Agreement dated
September 13, 1999 among Allegiance Telecom, Inc.,
Battery Ventures IV L.P., Battery Investment Partners
IV, LLC, Frontenac VII Limited Partnership, Frontenac
Masters VII Limited Partnership, Madison Dearborn
Capital Partners II L.P., Morgan Stanley Capital
Partners III, L.P., MSCP III 892 Investors, L.P.,
Morgan Stanley Capital Investors, L.P., Vulcan
Ventures Incorporated and certain other stockholders
listed therein. (Incorporated by reference to Exhibit
99.4 to the Issuer's Current Report on Form 8-K filed
on September 22, 1999, File No. 0-24509.)
99.5 Joint Filing Statement (Previously filed on September
23, 1999.)
99.6 Power of Attorney (Incorporated by reference to the
Reporting Persons' Schedule 13G for Pathogenesis
Corporation filed August 30, 1999.)
Page 8 of 8
