<PAGE> 1
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------------------
SCHEDULE 13D/A
UNDER THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. 2)
RHYTHMS NETCONNECTIONS INC.
(Name of Issuer)
COMMON STOCK, PAR VALUE $0.001 PER SHARE
(Title of Class of Securities)
762430 10 6
(CUSIP Number)
THOMAS O. HICKS
C/O HICKS, MUSE, TATE & FURST INCORPORATED
200 CRESCENT COURT
SUITE 1600
DALLAS, TEXAS 75201
(214) 740-7300
(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications)
Copies to:
ERIC S. SHUBE
VINSON & ELKINS L.L.P.
1325 AVENUE OF THE AMERICAS, 17TH FLOOR
NEW YORK, NEW YORK 10019
(917) 206-8005
July 28, 2000
(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 that is the subject of this Schedule 13D, and is
filing this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the
following box. [ ]
(Continued on following pages)
================================================================================
<PAGE> 2
CUSIP NO. 762430 10 6
<TABLE>
<S> <C> <C> <C>
----------------------------------------------------------------------------------------------------
1 Name of Reporting Person
I.R.S. Identification No. of above person (entities only)
Mr. Thomas O. Hicks
----------------------------------------------------------------------------------------------------
2 Check the appropriate box if a member of a group* (a) [ ]
(b) [X]
----------------------------------------------------------------------------------------------------
3 SEC use only
----------------------------------------------------------------------------------------------------
4 Source of Funds N/A
----------------------------------------------------------------------------------------------------
5 Check if Disclosure of Legal Proceedings is Required Pursuant to
Items 2(d) or 2(e) [ ]
----------------------------------------------------------------------------------------------------
6 Citizenship or Place of Organization United States
----------------------------------------------------------------------------------------------------
7 Sole Voting Power 0
Number of Shares Beneficially ---------------------------------------------------------------
8 Shared Voting Power* 12,452,556
Owned by Each Reporting ---------------------------------------------------------------
9 Sole Dispositive Power 0
Person With ---------------------------------------------------------------
10 Shared Dispositive Power* 12,452,556
----------------------------------------------------------------------------------------------------
11 Aggregate Amount Beneficially Owned by each Reporting Person** 12,452,556
----------------------------------------------------------------------------------------------------
12 Check if the Aggregate Amount in Row (11) Excludes Certain Shares* [ ]
----------------------------------------------------------------------------------------------------
13 Percent of Class Represented by Amount in Row (11)** 13.68%
----------------------------------------------------------------------------------------------------
14 Type of Reporting Person IN
----------------------------------------------------------------------------------------------------
</TABLE>
* The Reporting Person expressly disclaims (a) the existence of any group
and (b) beneficial ownership with respect to any shares other than the
shares owned of record by such reporting person.
** Assuming (1) conversion of all 8 1/4% Series E Convertible Preferred
Stock beneficially owned by such reporting person, but without giving
effect to the conversion into Common Stock of any capital stock held by
other holders and (2) exercise of all three-year Common Stock warrants,
five-year Common Stock warrants and seven-year Common Stock warrants
beneficially owned by such reporting person, but without giving effect
to the exercise of any warrants held by other holders.
Page 3
<PAGE> 3
CUSIP NO. 762430 10 6
<TABLE>
<S> <C> <C> <C>
----------------------------------------------------------------------------------------------------
1 Name of Reporting Person
I.R.S. Identification No. of above person (entities only)
HM4 Rhythms Qualified Fund, LLC
----------------------------------------------------------------------------------------------------
2 Check the appropriate box if a member of a group* (a) [ ]
(b) [X]
----------------------------------------------------------------------------------------------------
3 SEC use only
----------------------------------------------------------------------------------------------------
4 Source of Funds OO
----------------------------------------------------------------------------------------------------
5 Check if Disclosure of Legal Proceedings is Required Pursuant
to Items 2(d) or 2(e) [ ]
----------------------------------------------------------------------------------------------------
6 Citizenship or Place of Organization Delaware
----------------------------------------------------------------------------------------------------
7 Sole Voting Power 0
Number of Shares Beneficially ---------------------------------------------------------------
8 Shared Voting Power* 11,331,153
Owned by Each Reporting ---------------------------------------------------------------
9 Sole Dispositive Power 0
Person With ---------------------------------------------------------------
10 Shared Dispositive Power* 11,331,153
----------------------------------------------------------------------------------------------------
11 Aggregate Amount Beneficially Owned by each Reporting Person** 11,331,153
----------------------------------------------------------------------------------------------------
12 Check if the Aggregate Amount in Row (11) Excludes Certain Shares* [ ]
----------------------------------------------------------------------------------------------------
13 Percent of Class Represented by Amount in Row (11)** 12.60%
----------------------------------------------------------------------------------------------------
14 Type of Reporting Person OO
----------------------------------------------------------------------------------------------------
</TABLE>
* The Reporting Person expressly disclaims (a) the existence of any group
and (b) beneficial ownership with respect to any shares other than the
shares owned of record by such reporting person.
** Assuming (1) conversion of all 8 1/4% Series E Convertible Preferred
Stock beneficially owned by such reporting person, but without giving
effect to the conversion into Common Stock of any capital stock held by
other holders and (2) exercise of all three-year Common Stock warrants,
five-year Common Stock warrants and seven-year Common Stock warrants
beneficially owned by such reporting person, but without giving effect
to the exercise of any warrants held by other holders.
Page 4
<PAGE> 4
CUSIP NO. 762430 10 6
<TABLE>
<S> <C> <C> <C>
----------------------------------------------------------------------------------------------------
1 Name of Reporting Person
I.R.S. Identification No. of above person (entities only)
HMTF Equity Fund IV (1999), L.P.
----------------------------------------------------------------------------------------------------
2 Check the appropriate box if a member of a group* (a) [ ]
(b) [X]
----------------------------------------------------------------------------------------------------
3 SEC use only
----------------------------------------------------------------------------------------------------
4 Source of Funds OO
----------------------------------------------------------------------------------------------------
5 Check if Disclosure of Legal Proceedings is Required Pursuant
to Items 2(d) or 2(e) [ ]
----------------------------------------------------------------------------------------------------
6 Citizenship or Place of Organization Texas
----------------------------------------------------------------------------------------------------
7 Sole Voting Power 0
Number of Shares Beneficially ---------------------------------------------------------------
8 Shared Voting Power* 11,331,153
Owned by Each Reporting ---------------------------------------------------------------
9 Sole Dispositive Power 0
Person With ---------------------------------------------------------------
10 Shared Dispositive Power* 11,331,153
----------------------------------------------------------------------------------------------------
11 Aggregate Amount Beneficially Owned by each Reporting Person** 11,331,153
----------------------------------------------------------------------------------------------------
12 Check if the Aggregate Amount in Row (11) Excludes Certain Shares* [ ]
----------------------------------------------------------------------------------------------------
13 Percent of Class Represented by Amount in Row (11)** 12.60%
----------------------------------------------------------------------------------------------------
14 Type of Reporting Person PN
----------------------------------------------------------------------------------------------------
</TABLE>
* The Reporting Person expressly disclaims (a) the existence of any group
and (b) beneficial ownership with respect to any shares other than the
shares owned of record by such reporting person.
** Assuming (1) conversion of all 8 1/4% Series E Convertible Preferred
Stock beneficially owned by such reporting person, but without giving
effect to the conversion into Common Stock of any capital stock held by
other holders and (2) exercise of all three-year Common Stock warrants,
five-year Common Stock warrants and seven-year Common Stock warrants
beneficially owned by such reporting person, but without giving effect
to the exercise of any warrants held by other holders.
Page 5
<PAGE> 5
CUSIP NO. 762430 10 6
<TABLE>
<S> <C> <C> <C>
----------------------------------------------------------------------------------------------------
1 Name of Reporting Person
I.R.S. Identification No. of above person (entities only)
HM4 Rhythms Private Fund, LLC
----------------------------------------------------------------------------------------------------
2 Check the appropriate box if a member of a group* (a) [ ]
(b) [X]
----------------------------------------------------------------------------------------------------
3 SEC use only
----------------------------------------------------------------------------------------------------
4 Source of Funds OO
----------------------------------------------------------------------------------------------------
5 Check if Disclosure of Legal Proceedings is Required
Pursuant to Items 2(d) or 2(e) [ ]
----------------------------------------------------------------------------------------------------
6 Citizenship or Place of Organization Delaware
----------------------------------------------------------------------------------------------------
7 Sole Voting Power 0
Number of Shares Beneficially ---------------------------------------------------------------
8 Shared Voting Power* 80,285
Owned by Each Reporting ---------------------------------------------------------------
9 Sole Dispositive Power 0
Person With ---------------------------------------------------------------
10 Shared Dispositive Power* 80,285
----------------------------------------------------------------------------------------------------
11 Aggregate Amount Beneficially Owned by each Reporting Person** 80,285
----------------------------------------------------------------------------------------------------
12 Check if the Aggregate Amount in Row (11) Excludes Certain Shares* [ ]
----------------------------------------------------------------------------------------------------
13 Percent of Class Represented by Amount in Row (11)** 0.10%
----------------------------------------------------------------------------------------------------
14 Type of Reporting Person OO
----------------------------------------------------------------------------------------------------
</TABLE>
* The Reporting Person expressly disclaims (a) the existence of any group
and (b) beneficial ownership with respect to any shares other than the
shares owned of record by such reporting person.
** Assuming (1) conversion of all 8 1/4% Series E Convertible Preferred
Stock beneficially owned by such reporting person, but without giving
effect to the conversion into Common Stock of any capital stock held by
other holders and (2) exercise of all three-year Common Stock warrants,
five-year Common Stock warrants and seven-year Common Stock warrants
beneficially owned by such reporting person, but without giving effect
to the exercise of any warrants held by other holders.
Page 6
<PAGE> 6
CUSIP NO. 762430 10 6
<TABLE>
<S> <C> <C> <C>
----------------------------------------------------------------------------------------------------
1 Name of Reporting Person
I.R.S. Identification No. of above person (entities only)
HMTF Private Equity Fund IV (1999), L.P.
----------------------------------------------------------------------------------------------------
2 Check the appropriate box if a member of a group* (a) [ ]
(b) [X]
----------------------------------------------------------------------------------------------------
3 SEC use only
----------------------------------------------------------------------------------------------------
4 Source of Funds OO
----------------------------------------------------------------------------------------------------
5 Check if Disclosure of Legal Proceedings is
Required Pursuant to Items 2(d) or 2(e) [ ]
----------------------------------------------------------------------------------------------------
6 Citizenship or Place of Organization Texas
----------------------------------------------------------------------------------------------------
7 Sole Voting Power 0
Number of Shares Beneficially ---------------------------------------------------------------
8 Shared Voting Power* 80,285
Owned by Each Reporting ---------------------------------------------------------------
9 Sole Dispositive Power 0
Person With ---------------------------------------------------------------
10 Shared Dispositive Power* 80,285
----------------------------------------------------------------------------------------------------
11 Aggregate Amount Beneficially Owned by each Reporting Person** 80,285
----------------------------------------------------------------------------------------------------
12 Check if the Aggregate Amount in Row (11) Excludes Certain Shares* [ ]
----------------------------------------------------------------------------------------------------
13 Percent of Class Represented by Amount in Row (11)** 0.10%
----------------------------------------------------------------------------------------------------
14 Type of Reporting Person PN
----------------------------------------------------------------------------------------------------
</TABLE>
* The Reporting Person expressly disclaims (a) the existence of any group
and (b) beneficial ownership with respect to any shares other than the
shares owned of record by such reporting person.
** Assuming (1) conversion of all 8 1/4% Series E Convertible Preferred
Stock beneficially owned by such reporting person, but without giving
effect to the conversion into Common Stock of any capital stock held by
other holders and (2) exercise of all three-year Common Stock warrants,
five-year Common Stock warrants and seven-year Common Stock warrants
beneficially owned by such reporting person, but without giving effect
to the exercise of any warrants held by other holders.
Page 7
<PAGE> 7
CUSIP NO. 762430 10 6
<TABLE>
<S> <C> <C> <C>
----------------------------------------------------------------------------------------------------
1 Name of Reporting Person
I.R.S. Identification No. of above person (entities only)
HM4/GP (1999) Partners, L.P.
----------------------------------------------------------------------------------------------------
2 Check the appropriate box if a member of a group* (a) [ ]
(b) [X]
----------------------------------------------------------------------------------------------------
3 SEC use only
----------------------------------------------------------------------------------------------------
4 Source of Funds OO
----------------------------------------------------------------------------------------------------
5 Check if Disclosure of Legal Proceedings is
Required Pursuant to Items 2(d) or 2(e) [ ]
----------------------------------------------------------------------------------------------------
6 Citizenship or Place of Organization Texas
----------------------------------------------------------------------------------------------------
7 Sole Voting Power 0
Number of Shares Beneficially ---------------------------------------------------------------
8 Shared Voting Power* 11,411,438
Owned by Each Reporting ---------------------------------------------------------------
9 Sole Dispositive Power 0
Person With ---------------------------------------------------------------
10 Shared Dispositive Power* 11,411,438
----------------------------------------------------------------------------------------------------
11 Aggregate Amount Beneficially Owned by each Reporting Person** 11,411,438
----------------------------------------------------------------------------------------------------
12 Check if the Aggregate Amount in Row (11) Excludes Certain Shares* [ ]
----------------------------------------------------------------------------------------------------
13 Percent of Class Represented by Amount in Row (11)** 12.68%
----------------------------------------------------------------------------------------------------
14 Type of Reporting Person PN
----------------------------------------------------------------------------------------------------
</TABLE>
* The Reporting Person expressly disclaims (a) the existence of any group
and (b) beneficial ownership with respect to any shares other than the
shares owned of record by such reporting person.
** Assuming (1) conversion of all 8 1/4% Series E Convertible Preferred
Stock beneficially owned by such reporting person, but without giving
effect to the conversion into Common Stock of any capital stock held by
other holders and (2) exercise of all three-year Common Stock warrants,
five-year Common Stock warrants and seven-year Common Stock warrants
beneficially owned by such reporting person, but without giving effect
to the exercise of any warrants held by other holders.
Page 8
<PAGE> 8
CUSIP NO. 762430 10 6
<TABLE>
<S> <C> <C> <C>
----------------------------------------------------------------------------------------------------
1 Name of Reporting Person
I.R.S. Identification No. of above person (entities only)
HM 4-EQ Rhythms Coinvestors, LLC
----------------------------------------------------------------------------------------------------
2 Check the appropriate box if a member of a group* (a) [ ]
(b) [X]
----------------------------------------------------------------------------------------------------
3 SEC use only
----------------------------------------------------------------------------------------------------
4 Source of Funds OO
----------------------------------------------------------------------------------------------------
5 Check if Disclosure of Legal Proceedings is
Required Pursuant to Items 2(d) or 2(e) [ ]
----------------------------------------------------------------------------------------------------
6 Citizenship or Place of Organization Delaware
----------------------------------------------------------------------------------------------------
7 Sole Voting Power 0
Number of Shares Beneficially ---------------------------------------------------------------
8 Shared Voting Power* 166,481
Owned by Each Reporting ---------------------------------------------------------------
9 Sole Dispositive Power 0
Person With ---------------------------------------------------------------
10 Shared Dispositive Power* 166,481
----------------------------------------------------------------------------------------------------
11 Aggregate Amount Beneficially Owned by each Reporting Person** 166,481
----------------------------------------------------------------------------------------------------
12 Check if the Aggregate Amount in Row (11) Excludes Certain Shares* [ ]
----------------------------------------------------------------------------------------------------
13 Percent of Class Represented by Amount in Row (11)** 0.21%
----------------------------------------------------------------------------------------------------
14 Type of Reporting Person OO
----------------------------------------------------------------------------------------------------
</TABLE>
* The Reporting Person expressly disclaims (a) the existence of any group
and (b) beneficial ownership with respect to any shares other than the
shares owned of record by such reporting person.
** Assuming (1) conversion of all 8 1/4% Series E Convertible Preferred
Stock beneficially owned by such reporting person, but without giving
effect to the conversion into Common Stock of any capital stock held by
other holders and (2) exercise of all three-year Common Stock warrants,
five-year Common Stock warrants and seven-year Common Stock warrants
beneficially owned by such reporting person, but without giving effect
to the exercise of any warrants held by other holders.
Page 9
<PAGE> 9
CUSIP NO. 762430 10 6
<TABLE>
<S> <C> <C> <C>
----------------------------------------------------------------------------------------------------
1 Name of Reporting Person
I.R.S. Identification No. of above person (entities only)
HM 4-EQ (1999) Coinvestors, L.P.
----------------------------------------------------------------------------------------------------
2 Check the appropriate box if a member of a group* (a) [ ]
(b) [X]
----------------------------------------------------------------------------------------------------
3 SEC use only
----------------------------------------------------------------------------------------------------
4 Source of Funds OO
----------------------------------------------------------------------------------------------------
5 Check if Disclosure of Legal Proceedings is
Required Pursuant to Items 2(d) or 2(e) [ ]
----------------------------------------------------------------------------------------------------
6 Citizenship or Place of Organization Texas
----------------------------------------------------------------------------------------------------
7 Sole Voting Power 0
Number of Shares Beneficially ---------------------------------------------------------------
8 Shared Voting Power* 166,481
Owned by Each Reporting ---------------------------------------------------------------
9 Sole Dispositive Power 0
Person With ---------------------------------------------------------------
10 Shared Dispositive Power* 166,481
----------------------------------------------------------------------------------------------------
11 Aggregate Amount Beneficially Owned by each Reporting Person** 166,481
----------------------------------------------------------------------------------------------------
12 Check if the Aggregate Amount in Row (11) Excludes Certain Shares* [ ]
----------------------------------------------------------------------------------------------------
13 Percent of Class Represented by Amount in Row (11)** 0.21%
----------------------------------------------------------------------------------------------------
14 Type of Reporting Person PN
----------------------------------------------------------------------------------------------------
</TABLE>
* The Reporting Person expressly disclaims (a) the existence of any group
and (b) beneficial ownership with respect to any shares other than the
shares owned of record by such reporting person.
** Assuming (1) conversion of all 8 1/4% Series E Convertible Preferred
Stock beneficially owned by such reporting person, but without giving
effect to the conversion into Common Stock of any capital stock held by
other holders and (2) exercise of all three-year Common Stock warrants,
five-year Common Stock warrants and seven-year Common Stock warrants
beneficially owned by such reporting person, but without giving effect
to the exercise of any warrants held by other holders.
Page 10
<PAGE> 10
CUSIP NO. 762430 10 6
<TABLE>
<S> <C> <C> <C>
----------------------------------------------------------------------------------------------------
1 Name of Reporting Person
I.R.S. Identification No. of above person (entities only)
HM 4-SBS Rhythms Coinvestors, LLC
----------------------------------------------------------------------------------------------------
2 Check the appropriate box if a member of a group* (a) [ ]
(b) [X]
----------------------------------------------------------------------------------------------------
3 SEC use only
----------------------------------------------------------------------------------------------------
4 Source of Funds OO
----------------------------------------------------------------------------------------------------
5 Check if Disclosure of Legal Proceedings is
Required Pursuant to Items 2(d) or 2(e) [ ]
----------------------------------------------------------------------------------------------------
6 Citizenship or Place of Organization Delaware
----------------------------------------------------------------------------------------------------
7 Sole Voting Power 0
Number of Shares Beneficially ---------------------------------------------------------------
8 Shared Voting Power* 271,360
Owned by Each Reporting ---------------------------------------------------------------
9 Sole Dispositive Power 0
Person With ---------------------------------------------------------------
10 Shared Dispositive Power* 271,360
----------------------------------------------------------------------------------------------------
11 Aggregate Amount Beneficially Owned by each Reporting Person** 271,360
----------------------------------------------------------------------------------------------------
12 Check if the Aggregate Amount in Row (11) Excludes Certain Shares* [ ]
----------------------------------------------------------------------------------------------------
13 Percent of Class Represented by Amount in Row (11)** 0.34%
----------------------------------------------------------------------------------------------------
14 Type of Reporting Person OO
----------------------------------------------------------------------------------------------------
</TABLE>
* The Reporting Person expressly disclaims (a) the existence of any group
and (b) beneficial ownership with respect to any shares other than the
shares owned of record by such reporting person.
** Assuming (1) conversion of all 8 1/4% Series E Convertible Preferred
Stock beneficially owned by such reporting person, but without giving
effect to the conversion into Common Stock of any capital stock held by
other holders and (2) exercise of all three-year Common Stock warrants,
five-year Common Stock warrants and seven-year Common Stock warrants
beneficially owned by such reporting person, but without giving effect
to the exercise of any warrants held by other holders.
Page 11
<PAGE> 11
CUSIP NO. 762430 10 6
<TABLE>
<S> <C> <C> <C>
----------------------------------------------------------------------------------------------------
1 Name of Reporting Person
I.R.S. Identification No. of above person (entities only)
HM 4-SBS (1999) Coinvestors, L.P.
----------------------------------------------------------------------------------------------------
2 Check the appropriate box if a member of a group* (a) [ ]
(b) [X]
----------------------------------------------------------------------------------------------------
3 SEC use only
----------------------------------------------------------------------------------------------------
4 Source of Funds OO
----------------------------------------------------------------------------------------------------
5 Check if Disclosure of Legal Proceedings is
Required Pursuant to Items 2(d) or 2(e) [ ]
----------------------------------------------------------------------------------------------------
6 Citizenship or Place of Organization Texas
----------------------------------------------------------------------------------------------------
7 Sole Voting Power 0
Number of Shares Beneficially ---------------------------------------------------------------
8 Shared Voting Power* 271,360
Owned by Each Reporting ---------------------------------------------------------------
9 Sole Dispositive Power 0
Person With ---------------------------------------------------------------
10 Shared Dispositive Power* 271,360
----------------------------------------------------------------------------------------------------
11 Aggregate Amount Beneficially Owned by each Reporting Person** 271,360
----------------------------------------------------------------------------------------------------
12 Check if the Aggregate Amount in Row (11) Excludes Certain Shares* [ ]
----------------------------------------------------------------------------------------------------
13 Percent of Class Represented by Amount in Row (11)** 0.34%
----------------------------------------------------------------------------------------------------
14 Type of Reporting Person PN
----------------------------------------------------------------------------------------------------
</TABLE>
* The Reporting Person expressly disclaims (a) the existence of any group
and (b) beneficial ownership with respect to any shares other than the
shares owned of record by such reporting person.
** Assuming (1) conversion of all 8 1/4% Series E Convertible Preferred
Stock beneficially owned by such reporting person, but without giving
effect to the conversion into Common Stock of any capital stock held by
other holders and (2) exercise of all three-year Common Stock warrants,
five-year Common Stock warrants and seven-year Common Stock warrants
beneficially owned by such reporting person, but without giving effect
to the exercise of any warrants held by other holders.
Page 12
<PAGE> 12
CUSIP NO. 762430 10 6
<TABLE>
<S> <C> <C> <C>
----------------------------------------------------------------------------------------------------
1 Name of Reporting Person
I.R.S. Identification No. of above person (entities only)
Hicks, Muse GP (1999) Partners IV, L.P.
----------------------------------------------------------------------------------------------------
2 Check the appropriate box if a member of a group* (a) [ ]
(b) [X]
----------------------------------------------------------------------------------------------------
3 SEC use only
----------------------------------------------------------------------------------------------------
4 Source of Funds OO
----------------------------------------------------------------------------------------------------
5 Check if Disclosure of Legal Proceedings is
Required Pursuant to Items 2(d) or 2(e) [ ]
----------------------------------------------------------------------------------------------------
6 Citizenship or Place of Organization Texas
----------------------------------------------------------------------------------------------------
7 Sole Voting Power 0
Number of Shares Beneficially ---------------------------------------------------------------
8 Shared Voting Power* 11,849,279
Owned by Each Reporting ---------------------------------------------------------------
9 Sole Dispositive Power 0
Person With ---------------------------------------------------------------
10 Shared Dispositive Power* 11,849,279
----------------------------------------------------------------------------------------------------
11 Aggregate Amount Beneficially Owned by each Reporting Person** 11,849,279
----------------------------------------------------------------------------------------------------
12 Check if the Aggregate Amount in Row (11) Excludes Certain Shares* [ ]
----------------------------------------------------------------------------------------------------
13 Percent of Class Represented by Amount in Row (11)** 13.10%
----------------------------------------------------------------------------------------------------
14 Type of Reporting Person PN
----------------------------------------------------------------------------------------------------
</TABLE>
* The Reporting Person expressly disclaims (a) the existence of any group
and (b) beneficial ownership with respect to any shares other than the
shares owned of record by such reporting person.
** Assuming (1) conversion of all 8 1/4% Series E Convertible Preferred
Stock beneficially owned by such reporting person, but without giving
effect to the conversion into Common Stock of any capital stock held by
other holders and (2) exercise of all three-year Common Stock warrants,
five-year Common Stock warrants and seven-year Common Stock warrants
beneficially owned by such reporting person, but without giving effect
to the exercise of any warrants held by other holders.
Page 13
<PAGE> 13
CUSIP NO. 762430 10 6
<TABLE>
<S> <C> <C> <C>
----------------------------------------------------------------------------------------------------
1 Name of Reporting Person
I.R.S. Identification No. of above person (entities only)
Hicks, Muse (1999) Fund IV, LLC
----------------------------------------------------------------------------------------------------
2 Check the appropriate box if a member of a group* (a) [ ]
(b) [X]
----------------------------------------------------------------------------------------------------
3 SEC use only
----------------------------------------------------------------------------------------------------
4 Source of Funds OO
----------------------------------------------------------------------------------------------------
5 Check if Disclosure of Legal Proceedings is Required Pursuant to Items 2(d) or 2(e) [ ]
----------------------------------------------------------------------------------------------------
6 Citizenship or Place of Organization Texas
----------------------------------------------------------------------------------------------------
7 Sole Voting Power 0
Number of Shares Beneficially ---------------------------------------------------------------
8 Shared Voting Power* 11,849,279
Owned by Each Reporting ---------------------------------------------------------------
9 Sole Dispositive Power 0
Person With ---------------------------------------------------------------
10 Shared Dispositive Power* 11,849,279
----------------------------------------------------------------------------------------------------
11 Aggregate Amount Beneficially Owned by each Reporting Person** 11,849,279
----------------------------------------------------------------------------------------------------
12 Check if the Aggregate Amount in Row (11) Excludes Certain Shares* [ ]
----------------------------------------------------------------------------------------------------
13 Percent of Class Represented by Amount in Row (11)** 13.10%
----------------------------------------------------------------------------------------------------
14 Type of Reporting Person OO
----------------------------------------------------------------------------------------------------
</TABLE>
* The Reporting Person expressly disclaims (a) the existence of any group
and (b) beneficial ownership with respect to any shares other than the
shares owned of record by such reporting person.
** Assuming (1) conversion of all 8 1/4% Series E Convertible Preferred
Stock beneficially owned by such reporting person, but without giving
effect to the conversion into Common Stock of any capital stock held by
other holders and (2) exercise of all three-year Common Stock warrants,
five-year Common Stock warrants and seven-year Common Stock warrants
beneficially owned by such reporting person, but without giving effect
to the exercise of any warrants held by other holders.
Page 14
<PAGE> 14
CUSIP NO. 762430 10 6
<TABLE>
<S> <C> <C> <C>
----------------------------------------------------------------------------------------------------
1 Name of Reporting Person
I.R.S. Identification No. of above person (entities only)
HM PG-IV Rhythms, LLC
----------------------------------------------------------------------------------------------------
2 Check the appropriate box if a member of a group* (a) [ ]
(b) [X]
----------------------------------------------------------------------------------------------------
3 SEC use only
----------------------------------------------------------------------------------------------------
4 Source of Funds OO
----------------------------------------------------------------------------------------------------
5 Check if Disclosure of Legal Proceedings is Required Pursuant to Items 2(d) or 2(e) [ ]
----------------------------------------------------------------------------------------------------
6 Citizenship or Place of Organization Delaware
----------------------------------------------------------------------------------------------------
7 Sole Voting Power 0
Number of Shares Beneficially ---------------------------------------------------------------
8 Shared Voting Power* 603,277
Owned by Each Reporting ---------------------------------------------------------------
9 Sole Dispositive Power 0
Person With ---------------------------------------------------------------
10 Shared Dispositive Power* 603,277
----------------------------------------------------------------------------------------------------
11 Aggregate Amount Beneficially Owned by each Reporting Person** 603,277
----------------------------------------------------------------------------------------------------
12 Check if the Aggregate Amount in Row (11) Excludes Certain Shares* [ ]
----------------------------------------------------------------------------------------------------
13 Percent of Class Represented by Amount in Row (11)** 0.76%
----------------------------------------------------------------------------------------------------
14 Type of Reporting Person OO
----------------------------------------------------------------------------------------------------
</TABLE>
* The Reporting Person expressly disclaims (a) the existence of any group
and (b) beneficial ownership with respect to any shares other than the
shares owned of record by such reporting person.
** Assuming (1) conversion of all 8 1/4% Series E Convertible Preferred
Stock beneficially owned by such reporting person, but without giving
effect to the conversion into Common Stock of any capital stock held by
other holders and (2) exercise of all three-year Common Stock warrants,
five-year Common Stock warrants and seven-year Common Stock warrants
beneficially owned by such reporting person, but without giving effect
to the exercise of any warrants held by other holders.
Page 15
<PAGE> 15
CUSIP NO. 762430 10 6
<TABLE>
<S> <C> <C> <C>
----------------------------------------------------------------------------------------------------
1 Name of Reporting Person
I.R.S. Identification No. of above person (entities only)
Hicks, Muse PG-IV (1999), C.V.
----------------------------------------------------------------------------------------------------
2 Check the appropriate box if a member of a group* (a) [ ]
(b) [X]
----------------------------------------------------------------------------------------------------
3 SEC use only
----------------------------------------------------------------------------------------------------
4 Source of Funds OO
----------------------------------------------------------------------------------------------------
5 Check if Disclosure of Legal Proceedings is Required Pursuant to Items 2(d) or 2(e) [ ]
----------------------------------------------------------------------------------------------------
6 Citizenship or Place of Organization Netherlands
----------------------------------------------------------------------------------------------------
7 Sole Voting Power 0
Number of Shares Beneficially ---------------------------------------------------------------
8 Shared Voting Power* 603,277
Owned by Each Reporting ---------------------------------------------------------------
9 Sole Dispositive Power 0
Person With ---------------------------------------------------------------
10 Shared Dispositive Power* 603,277
----------------------------------------------------------------------------------------------------
11 Aggregate Amount Beneficially Owned by each Reporting Person** 603,277
----------------------------------------------------------------------------------------------------
12 Check if the Aggregate Amount in Row (11) Excludes Certain Shares* [ ]
----------------------------------------------------------------------------------------------------
13 Percent of Class Represented by Amount in Row (11)** 0.76%
----------------------------------------------------------------------------------------------------
14 Type of Reporting Person PN
----------------------------------------------------------------------------------------------------
</TABLE>
* The Reporting Person expressly disclaims (a) the existence of any group
and (b) beneficial ownership with respect to any shares other than the
shares owned of record by such reporting person.
** Assuming (1) conversion of all 8 1/4% Series E Convertible Preferred
Stock beneficially owned by such reporting person, but without giving
effect to the conversion into Common Stock of any capital stock held by
other holders and (2) exercise of all three-year Common Stock warrants,
five-year Common Stock warrants and seven-year Common Stock warrants
beneficially owned by such reporting person, but without giving effect
to the exercise of any warrants held by other holders.
Page 16
<PAGE> 16
CUSIP NO. 762430 10 6
<TABLE>
<S> <C> <C> <C>
----------------------------------------------------------------------------------------------------
1 Name of Reporting Person
I.R.S. Identification No. of above person (entities only)
HM Equity Fund IV/GP Partners (1999), C.V.
----------------------------------------------------------------------------------------------------
2 Check the appropriate box if a member of a group* (a) [ ]
(b) [X]
----------------------------------------------------------------------------------------------------
3 SEC use only
----------------------------------------------------------------------------------------------------
4 Source of Funds OO
----------------------------------------------------------------------------------------------------
5 Check if Disclosure of Legal Proceedings is Required Pursuant to Items 2(d) or 2(e) [ ]
----------------------------------------------------------------------------------------------------
6 Citizenship or Place of Organization Netherlands
----------------------------------------------------------------------------------------------------
7 Sole Voting Power 0
Number of Shares Beneficially ---------------------------------------------------------------
8 Shared Voting Power* 603,277
Owned by Each Reporting ---------------------------------------------------------------
9 Sole Dispositive Power 0
Person With ---------------------------------------------------------------
10 Shared Dispositive Power* 603,277
----------------------------------------------------------------------------------------------------
11 Aggregate Amount Beneficially Owned by each Reporting Person** 603,277
----------------------------------------------------------------------------------------------------
12 Check if the Aggregate Amount in Row (11) Excludes Certain Shares* [ ]
----------------------------------------------------------------------------------------------------
13 Percent of Class Represented by Amount in Row (11)** 0.76%
----------------------------------------------------------------------------------------------------
14 Type of Reporting Person PN
----------------------------------------------------------------------------------------------------
</TABLE>
* The Reporting Person expressly disclaims (a) the existence of any group
and (b) beneficial ownership with respect to any shares other than the
shares owned of record by such reporting person.
** Assuming (1) conversion of all 8 1/4% Series E Convertible Preferred
Stock beneficially owned by such reporting person, but without giving
effect to the conversion into Common Stock of any capital stock held by
other holders and (2) exercise of all three-year Common Stock warrants,
five-year Common Stock warrants and seven-year Common Stock warrants
beneficially owned by such reporting person, but without giving effect
to the exercise of any warrants held by other holders.
Page 17
<PAGE> 17
CUSIP NO. 762430 10 6
<TABLE>
<S> <C> <C> <C>
----------------------------------------------------------------------------------------------------
1 Name of Reporting Person
I.R.S. Identification No. of above person (entities only)
HM GP Partners IV Cayman, L.P.
----------------------------------------------------------------------------------------------------
2 Check the appropriate box if a member of a group* (a) [ ]
(b) [X]
----------------------------------------------------------------------------------------------------
3 SEC use only
----------------------------------------------------------------------------------------------------
4 Source of Funds OO
----------------------------------------------------------------------------------------------------
5 Check if Disclosure of Legal Proceedings is Required Pursuant to Items 2(d) or 2(e) [ ]
----------------------------------------------------------------------------------------------------
6 Citizenship or Place of Organization Cayman Islands
----------------------------------------------------------------------------------------------------
7 Sole Voting Power 0
Number of Shares Beneficially ---------------------------------------------------------------
8 Shared Voting Power* 603,277
Owned by Each Reporting ---------------------------------------------------------------
9 Sole Dispositive Power 0
Person With ---------------------------------------------------------------
10 Shared Dispositive Power* 603,277
----------------------------------------------------------------------------------------------------
11 Aggregate Amount Beneficially Owned by each Reporting Person** 603,277
----------------------------------------------------------------------------------------------------
12 Check if the Aggregate Amount in Row (11) Excludes Certain Shares* [ ]
----------------------------------------------------------------------------------------------------
13 Percent of Class Represented by Amount in Row (11)** 0.76%
----------------------------------------------------------------------------------------------------
14 Type of Reporting Person PN
----------------------------------------------------------------------------------------------------
</TABLE>
* The Reporting Person expressly disclaims (a) the existence of any group
and (b) beneficial ownership with respect to any shares other than the
shares owned of record by such reporting person.
** Assuming (1) conversion of all 8 1/4% Series E Convertible Preferred
Stock beneficially owned by such reporting person, but without giving
effect to the conversion into Common Stock of any capital stock held by
other holders and (2) exercise of all three-year Common Stock warrants,
five-year Common Stock warrants and seven-year Common Stock warrants
beneficially owned by such reporting person, but without giving effect
to the exercise of any warrants held by other holders.
Page 18
<PAGE> 18
CUSIP NO. 762430 10 6
<TABLE>
<S> <C> <C> <C>
----------------------------------------------------------------------------------------------------
1 Name of Reporting Person
I.R.S. Identification No. of above person (entities only)
HM Fund IV Cayman LLC
----------------------------------------------------------------------------------------------------
2 Check the appropriate box if a member of a group* (a) [ ]
(b) [X]
----------------------------------------------------------------------------------------------------
3 SEC use only
----------------------------------------------------------------------------------------------------
4 Source of Funds OO
----------------------------------------------------------------------------------------------------
5 Check if Disclosure of Legal Proceedings is Required Pursuant to Items 2(d) or 2(e) [ ]
----------------------------------------------------------------------------------------------------
6 Citizenship or Place of Organization Cayman Islands
----------------------------------------------------------------------------------------------------
7 Sole Voting Power 0
Number of Shares Beneficially ---------------------------------------------------------------
8 Shared Voting Power* 603,277
Owned by Each Reporting ---------------------------------------------------------------
9 Sole Dispositive Power 0
Person With ---------------------------------------------------------------
10 Shared Dispositive Power* 603,277
----------------------------------------------------------------------------------------------------
11 Aggregate Amount Beneficially Owned by each Reporting Person** 603,277
----------------------------------------------------------------------------------------------------
12 Check if the Aggregate Amount in Row (11) Excludes Certain Shares* [ ]
----------------------------------------------------------------------------------------------------
13 Percent of Class Represented by Amount in Row (11)** 0.76%
----------------------------------------------------------------------------------------------------
14 Type of Reporting Person OO
----------------------------------------------------------------------------------------------------
</TABLE>
* The Reporting Person expressly disclaims (a) the existence of any group
and (b) beneficial ownership with respect to any shares other than the
shares owned of record by such reporting person.
** Assuming (1) conversion of all 8 1/4% Series E Convertible Preferred
Stock beneficially owned by such reporting person, but without giving
effect to the conversion into Common Stock of any capital stock held by
other holders and (2) exercise of all three-year Common Stock warrants,
five-year Common Stock warrants and seven-year Common Stock warrants
beneficially owned by such reporting person, but without giving effect
to the exercise of any warrants held by other holders.
Page 19
<PAGE> 19
CUSIP NO. 762430 10 6
<TABLE>
<S> <C> <C> <C>
----------------------------------------------------------------------------------------------------
1 Name of Reporting Person
I.R.S. Identification No. of above person (entities only)
HMTF Bridge RHY, LLC
----------------------------------------------------------------------------------------------------
2 Check the appropriate box if a member of a group* (a) [ ]
(b) [X]
----------------------------------------------------------------------------------------------------
3 SEC use only
----------------------------------------------------------------------------------------------------
4 Source of Funds OO
----------------------------------------------------------------------------------------------------
5 Check if Disclosure of Legal Proceedings is Required Pursuant to Items 2(d) or 2(e) [ ]
----------------------------------------------------------------------------------------------------
6 Citizenship or Place of Organization Delaware
----------------------------------------------------------------------------------------------------
7 Sole Voting Power 0
Number of Shares Beneficially ---------------------------------------------------------------
8 Shared Voting Power* 0
Owned by Each Reporting ---------------------------------------------------------------
9 Sole Dispositive Power 0
Person With ---------------------------------------------------------------
10 Shared Dispositive Power* 0
----------------------------------------------------------------------------------------------------
11 Aggregate Amount Beneficially Owned by each Reporting Person** 0
----------------------------------------------------------------------------------------------------
12 Check if the Aggregate Amount in Row (11) Excludes Certain Shares* [ ]
----------------------------------------------------------------------------------------------------
13 Percent of Class Represented by Amount in Row (11)** 0%
----------------------------------------------------------------------------------------------------
14 Type of Reporting Person OO
----------------------------------------------------------------------------------------------------
</TABLE>
* The Reporting Person expressly disclaims (a) the existence of any group
and (b) beneficial ownership with respect to any shares other than the
shares owned of record by such reporting person.
** Assuming (1) conversion of all 8 1/4% Series E Convertible Preferred
Stock beneficially owned by such reporting person, but without giving
effect to the conversion into Common Stock of any capital stock held by
other holders and (2) exercise of all three-year Common Stock warrants,
five-year Common Stock warrants and seven-year Common Stock warrants
beneficially owned by such reporting person, but without giving effect
to the exercise of any warrants held by other holders.
Page 20
<PAGE> 20
CUSIP NO. 762430 10 6
<TABLE>
<S> <C> <C> <C>
----------------------------------------------------------------------------------------------------
1 Name of Reporting Person
I.R.S. Identification No. of above person (entities only)
HMTF Bridge Partners, L.P.
----------------------------------------------------------------------------------------------------
2 Check the appropriate box if a member of a group* (a) [ ]
(b) [X]
----------------------------------------------------------------------------------------------------
3 SEC use only
----------------------------------------------------------------------------------------------------
4 Source of Funds OO
----------------------------------------------------------------------------------------------------
5 Check if Disclosure of Legal Proceedings is Required Pursuant to Items 2(d) or 2(e) [ ]
----------------------------------------------------------------------------------------------------
6 Citizenship or Place of Organization Delaware
----------------------------------------------------------------------------------------------------
7 Sole Voting Power 0
Number of Shares Beneficially ---------------------------------------------------------------
8 Shared Voting Power* 0
Owned by Each Reporting ---------------------------------------------------------------
9 Sole Dispositive Power 0
Person With ---------------------------------------------------------------
10 Shared Dispositive Power* 0
----------------------------------------------------------------------------------------------------
11 Aggregate Amount Beneficially Owned by each Reporting Person** 0
----------------------------------------------------------------------------------------------------
12 Check if the Aggregate Amount in Row (11) Excludes Certain Shares* [ ]
----------------------------------------------------------------------------------------------------
13 Percent of Class Represented by Amount in Row (11)** 0%
----------------------------------------------------------------------------------------------------
14 Type of Reporting Person PN
----------------------------------------------------------------------------------------------------
</TABLE>
* The Reporting Person expressly disclaims (a) the existence of any group
and (b) beneficial ownership with respect to any shares other than the
shares owned of record by such reporting person.
** Assuming (1) conversion of all 8 1/4% Series E Convertible Preferred
Stock beneficially owned by such reporting person, but without giving
effect to the conversion into Common Stock of any capital stock held by
other holders and (2) exercise of all three-year Common Stock warrants,
five-year Common Stock warrants and seven-year Common Stock warrants
beneficially owned by such reporting person, but without giving effect
to the exercise of any warrants held by other holders.
Page 21
<PAGE> 21
CUSIP NO. 762430 10 6
<TABLE>
<S> <C> <C> <C>
----------------------------------------------------------------------------------------------------
1 Name of Reporting Person
I.R.S. Identification No. of above person (entities only)
HMTF Bridge Partners, LLC
----------------------------------------------------------------------------------------------------
2 Check the appropriate box if a member of a group* (a) [ ]
(b) [X]
----------------------------------------------------------------------------------------------------
3 SEC use only
----------------------------------------------------------------------------------------------------
4 Source of Funds OO
----------------------------------------------------------------------------------------------------
5 Check if Disclosure of Legal Proceedings is Required Pursuant to Items 2(d) or 2(e) [ ]
----------------------------------------------------------------------------------------------------
6 Citizenship or Place of Organization Texas
----------------------------------------------------------------------------------------------------
7 Sole Voting Power 0
Number of Shares Beneficially ---------------------------------------------------------------
8 Shared Voting Power* 0
Owned by Each Reporting ---------------------------------------------------------------
9 Sole Dispositive Power 0
Person With ---------------------------------------------------------------
10 Shared Dispositive Power* 0
----------------------------------------------------------------------------------------------------
11 Aggregate Amount Beneficially Owned by each Reporting Person** 0
----------------------------------------------------------------------------------------------------
12 Check if the Aggregate Amount in Row (11) Excludes Certain Shares* [ ]
----------------------------------------------------------------------------------------------------
13 Percent of Class Represented by Amount in Row (11)** 0%
----------------------------------------------------------------------------------------------------
14 Type of Reporting Person OO
----------------------------------------------------------------------------------------------------
</TABLE>
* The Reporting Person expressly disclaims (a) the existence of any group
and (b) beneficial ownership with respect to any shares other than the
shares owned of record by such reporting person.
** Assuming (1) conversion of all 8 1/4% Series E Convertible Preferred
Stock beneficially owned by such reporting person, but without giving
effect to the conversion into Common Stock of any capital stock held by
other holders and (2) exercise of all three-year Common Stock warrants,
five-year Common Stock warrants and seven-year Common Stock warrants
beneficially owned by such reporting person, but without giving effect
to the exercise of any warrants held by other holders.
Page 22
<PAGE> 22
SCHEDULE 13D
This Statement constitutes Amendment No. 2 to the Schedule 13D
originally filed with the Securities and Exchange Commission on March 27, 2000
(the "Schedule 13D"). The Schedule 13D relates to the Common Stock, par value
$0.001 per share ("Common Stock") of Rhythms NetConnections Inc., a Delaware
corporation (the "Issuer"). The item numbers and responses thereto below are in
accordance with the requirements of Schedule 13D. Capitalized terms used herein
and not defined have the meaning set forth in the Schedule 13D.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
Item 3 of the Schedule 13D is hereby amended and restated in its
entirety to read as follows:
As more fully described in Item 6 below, on March 16, 2000, Bridge LLC,
Qualified LLC, Private LLC, PG-IV LLC, 4-SBS LLC and 4-EQ LLC each purchased
from the Issuer the number of shares of Preferred Stock and the number of
Warrants set forth opposite their respective names below at the purchase price
set forth opposite their respective names below.
<TABLE>
<CAPTION>
NUMBER OF NUMBER OF NUMBER OF NUMBER OF
NAME OF ENTITY SHARES A-1 A-2 A-3 PURCHASE PRICE
PURCHASED WARRANTS WARRANTS WARRANTS
PURCHASED PURCHASED PURCHASED
-------------- --------- --------- --------- --------- --------------
<S> <C> <C> <C> <C> <C>
Bridge LLC 125,000 937,500 937,500 937,500 $125,000,000
Qualified LLC 113,743 853,077 853,077 853,077 113,743,000
Private LLC 806 6,043 6,043 6,043 806,000
PG-IV LLC 6,056 45,416 45,416 45,416 6,056,000
4-SBS LLC 2,724 20,429 20,429 20,429 2,724,000
4-EQ LLC 1,671 12,535 12,535 12,535 1,671,000
</TABLE>
As more fully described in Item 4 below, on July 28, 2000, Bridge LLC
sold its shares of Preferred Stock and Warrants to Qualified LLC, Private LLC,
4-EQ LLC, 4-SBS LLC and PG-IV LLC.
Qualified LLC obtained funds for the purchase price of its shares of
Preferred Stock and its Warrants (including the shares of Preferred Stock and
Warrants subsequently purchased from Bridge LLC) from capital contributions
provided by Equity L.P.; Equity L.P. obtained such funds from capital
contributions provided by its limited partners and HM4/GP Partners; HM4/GP
Partners obtained such funds from capital contributions provided by its limited
partners and Hicks GP Partners; and Hicks GP Partners obtained such funds from
capital contributions provided by its limited partners and Fund IV LLC. Fund IV
LLC obtained such funds from capital contributions provided by Mr. Thomas O.
Hicks, who obtained such funds from personal funds.
Private LLC obtained funds for the purchase price of its shares of
Preferred Stock and its Warrants (including the shares of Preferred Stock and
Warrants subsequently purchased from Bridge LLC) from capital contributions
provided by Private L.P.; Private L.P. obtained such funds from capital
contributions provided by its limited partners and HM4/GP Partners; HM4/GP
Partners obtained such funds from capital contributions provided by its limited
partners and Hicks GP Partners; and Hicks GP Partners obtained such funds from
capital contributions provided by its limited
Page 23
<PAGE> 23
partners and Fund IV LLC. Fund IV LLC obtained such funds from capital
contributions provided by Mr. Thomas O. Hicks, who obtained such funds from
personal funds.
4-EQ LLC obtained funds for the purchase price of its shares of
Preferred Stock and its Warrants (including the shares of Preferred Stock and
Warrants subsequently purchased from Bridge LLC) from capital contributions
provided by 4-EQ L.P.; 4-EQ L.P. obtained such funds from capital contributions
provided by its limited partners and Hicks GP Partners, and Hicks GP Partners
obtained such funds from capital contributions provided by its limited partners
and Fund IV LLC. Fund IV LLC obtained such funds from capital contributions
provided by Mr. Thomas O. Hicks, who obtained such funds from personal funds.
4-SBS LLC obtained funds for the purchase price of its shares of
Preferred Stock and its Warrants (including the shares of Preferred Stock and
Warrants subsequently purchased from Bridge LLC) from capital contributions
provided by 4-SBS L.P.; 4-SBS L.P. obtained such funds from capital
contributions provided by its limited partners and Hicks GP Partners, and Hicks
GP Partners obtained such funds from capital contributions provided by its
limited partners and Fund IV LLC. Fund IV LLC obtained such funds from capital
contributions provided by Mr. Thomas O. Hicks, who obtained such funds from
personal funds.
PG-IV LLC obtained funds for the purchase price of its shares of
Preferred Stock and its Warrants (including the shares of Preferred Stock and
Warrants subsequently purchased from Bridge LLC) from capital contributions
provided by PG-IV C.V.; PG-IV C.V. obtained such funds from capital
contributions provided by its limited partners and HM Equity C.V.; HM Equity
C.V. obtained such funds from capital contributions provided by its limited
partners and G.P. Cayman L.P.; and G.P. Cayman L.P. obtained such funds from
capital contributions provided by its limited partners and Fund IV Cayman LLC.
Fund IV Cayman LLC obtained such funds from capital contributions provided by
Mr. Thomas O. Hicks, who obtained such funds from personal funds.
Bridge LLC obtained funds for the purchase price of its shares of
Preferred Stock and its Warrants from capital contributions provided by Bridge
Partners L.P.; Bridge Partners L.P. obtained $3,779,757.50 of such funds from
capital contributions provided by its general partner, Bridge Partners LLC, and
its limited partners, and it obtained the remainder of the funds,
$124,288,319.93, from borrowing under a credit agreement dated December 28,
1999, among HMTF Bridge Partners, L.P. and HM/Europe Coinvestors, C.V., as
Initial Borrowers, and any Future Borrowers from time to time parties thereto,
the Lenders from time to time parties thereto, the Issuing Bank, The Chase
Manhattan Bank, as Administrative Agent, and Bank of America, N.A., as
Syndication Agent ("Credit Agreement"). On June 29, 2000, Bridge Partners L.P.
repaid the borrowing under the Credit Agreement with the proceeds of loans
provided by Qualified LLC, Private LLC, 4-EQ LLC, 4-SBS LLC and PG-IV LLC.
Demand notes issued by Bridge LLC in connection with such loans (the "Demand
Notes") were filed as Exhibit 10.8 to Amendment No. 1 to the Schedule 13D and
are incorporated herein by reference. On July 27, 2000, Bridge LLC repaid the
borrowing under the Demand Notes with the proceeds from the sale of its shares
of Preferred Stock and Warrants to Qualified LLC, Private LLC, 4-EQ LLC, 4-SBS
LLC and PG-IV LLC.
Bridge Partners LLC obtained the funds it contributed to Bridge
Partners L.P. from capital contributions provided by Mr. Thomas O. Hicks, who
obtained such funds from personal funds.
ITEM 4. PURPOSE OF THE TRANSACTION.
Item 4 of the Schedule 13D is hereby amended and restated in its
entirety to read as follows:
The Reporting Persons consummated the transactions described herein in
order to acquire an interest in the Issuer for investment purposes. The
Reporting Persons intend to review continuously their position in the Issuer.
Depending upon future evaluations of the business prospects of the Issuer and
upon other developments, including, but not limited to, general economic and
business conditions and stock market conditions, the Reporting Persons may
retain or from time to time increase their holdings or dispose of all or a
portion of their holdings, subject to any applicable legal and contractual
restrictions on their ability to do so.
Page 24
<PAGE> 24
In addition, the matters set forth in Item 6 are incorporated in this
Item 4 by reference as if fully set forth herein.
On July 27, 2000, Bridge LLC sold its shares of Preferred Stock and
Warrants to Qualified LLC, Private LLC, 4-EQ LLC, 4-SBS LLC and PG-IV LLC, and
such entities purchased such securities, as set forth below:
<TABLE>
<CAPTION>
NUMBER OF NUMBER OF NUMBER OF NUMBER OF
NAME OF ENTITY SHARES A-1 WARRANTS A-2 WARRANTS A-3 WARRANTS
PURCHASED PURCHASED PURCHASED PURCHASED
--------------- ----------------- ------------- -------------- -------------
<S> <C> <C> <C> <C>
Qualified LLC 113,743 853,076 853,076 853,076
Private LLC 806 6,044 6,044 6,044
PG-IV LLC 6,056 45,416 45,416 45,416
4-SBS LLC 2,724 20,429 20,429 20,429
4-EQ LLC 1,671 12,535 12,535 12,535
</TABLE>
The purchase price for the shares of Preferred Stock and Warrants sold
by Bridge LLC was equal to the original purchase price paid therefor by Bridge
LLC together with an allocable portion of the interest and other expenses
incurred by Bridge LLC under the Credit Agreement referred to in Item 3 and
together with an amount in respect of accrued dividends.
Except as set forth in this Item 4 (including the matters described in
Item 6 below which are incorporated in this Item 4 by reference), the Reporting
Persons have no present plans or proposals that relate to or that would result
in any of the actions specified in clauses (a) through (j) of Item 4 of Schedule
13D of the Exchange Act.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
Item 5 of the Schedule 13D is hereby amended and restated in its
entirety to read as follows:
All beneficial ownership amounts set forth below give effect to the
accretion of dividends on the Preferred Stock through June 30, 2000.
(a) (1) Qualified LLC is the record and beneficial owner of 227,486
shares of Preferred Stock, 1,706,153 A-1 Warrants, 1,706,153 A-2 Warrants and
1,706,153 A-3 Warrants. Assuming conversion of all such shares of Preferred
Stock and exercise of all such Warrants, Qualified LLC is the beneficial owner
of 11,331,153 shares of Common Stock, which, based on calculations made in
accordance with Rule 13d-3 of the Exchange Act and, as at May 11, 2000, there
being 78,576,991 shares of Common Stock outstanding, represents approximately
12.60% of the outstanding shares of Common Stock.
Page 25
<PAGE> 25
(2) Assuming conversion of all 227,486 shares of Preferred Stock
and exercise of all 5,118,459 Warrants owned of record by Qualified LLC, Equity
L.P., in its capacity as sole member of Qualified LLC, may, pursuant to Rule
13d-3 of the Exchange Act, be deemed to be the beneficial owner of 11,331,153
shares of Common Stock, which, based on calculations made in accordance with
Rule 13d-3 of the Exchange Act and, as at May 11, 2000, there being 78,576,991
shares of Common Stock outstanding, represents approximately 12.60% of the
outstanding shares of Common Stock.
(3) Private LLC is the record and beneficial owner of 1,612 shares
of Preferred Stock, 12,087 A-1 Warrants, 12,087 A-2 Warrants and 12,087 A-3
Warrants. Assuming conversion of all such shares of Preferred Stock and assuming
exercise of all such Warrants, Private LLC is the beneficial owner of 80,285
shares of Common Stock, which, based on calculations made in accordance with
Rule 13d-3 of the Exchange Act and, as at May 11, 2000, there being 78,576,991
shares of Common Stock outstanding, represents approximately 0.10% of the
outstanding shares of Common Stock.
(4) Assuming conversion of all 1,612 shares of Preferred Stock and
exercise of all 36,261 Warrants owned of record by Private LLC, Private L.P., in
its capacity as sole member of Private LLC, may, pursuant to Rule 13d-3 of the
Exchange Act, be deemed to be the beneficial owner of 80,285 shares of Common
Stock, which, based on calculations made in accordance with Rule 13d-3 of the
Exchange Act and, as at May 11, 2000, there being 78,576,991 shares of Common
Stock outstanding, represents approximately 0.10% of the outstanding shares of
Common Stock.
(5) Assuming conversion of all 229,098 shares of Preferred Stock
and exercise of all 5,154,720 Warrants owned of record by Qualified LLC and
Private LLC, HM4/GP Partners, in its capacity as the sole general partner of
each of Equity L.P. and Private L.P., may, pursuant to Rule 13d-3 of the
Exchange Act, be deemed to be the beneficial owner of 11,411,438 shares of
Common Stock, which, based on calculations made in accordance with Rule 13d-3 of
the Exchange Act and, as at May 11, 2000, there being 78,576,991 shares of
Common Stock outstanding, represents approximately 12.68% of the outstanding
shares of Common Stock.
(6) 4-EQ LLC is the record and beneficial owner of 3,342 shares of
Preferred Stock, 25,070 A-1 Warrants, 25,070 A-2 Warrants and 25,070 A-3
Warrants. Assuming conversion of all such shares of Preferred Stock and assuming
exercise of all such Warrants, 4-EQ LLC is the beneficial owner of 166,481
shares of Common Stock, which, based on calculations made in accordance with
Rule 13d-3 of the Exchange Act and, as at May 11, 2000, there being 78,576,991
shares of Common Stock outstanding, represents approximately 0.21% of the
outstanding shares of Common Stock.
(7) Assuming conversion of all 3,342 shares of Preferred Stock and
exercise of all 75,210 Warrants owned of record by 4-EQ LLC, 4-EQ L.P., in its
capacity as sole member of 4-EQ LLC, may, pursuant to Rule 13d-3 of the Exchange
Act, be deemed to be the beneficial owner of 166,481 shares of Common Stock,
which, based on calculations made in accordance with Rule 13d-3 of the Exchange
Act and, as at May 11, 2000, there being 78,576,991 shares of Common Stock
outstanding, represents approximately 0.21% of the outstanding shares of Common
Stock.
(8) 4-SBS LLC is the record and beneficial owner of 5,448 shares of
Preferred Stock, 40,858 A-1 Warrants, 40,858 A-2 Warrants and 40,858 A-3
Warrants. Assuming conversion of all such shares of Preferred Stock and exercise
of all such Warrants, 4-SBS LLC is the beneficial owner of 271,360 shares of
Common Stock, which, based on calculations made in accordance with Rule 13d-3 of
the Exchange Act and, as at May 11, 2000, there being 78,576,991 shares of
Common Stock outstanding, represents approximately 0.34% of the outstanding
shares of Common Stock.
(9) Assuming conversion of all 5,448 shares of Preferred Stock and
exercise of all 122,574 Warrants owned of record by 4-SBS LLC, 4-SBS L.P., in
its capacity as sole member of 4-SBS LLC, may, pursuant to Rule 13d-3 of the
Exchange Act, be deemed to be the beneficial owner of 271,360 shares of Common
Stock, which, based on calculations made in accordance with Rule 13d-3 of the
Exchange Act and, as at May 11, 2000, there being 78,576,991 shares of Common
Stock outstanding, represents approximately 0.34% of the outstanding shares of
Common Stock.
Page 26
<PAGE> 26
(10) Assuming conversion of all 237,888 shares of Preferred Stock
and exercise of all 5,352,504 Warrants owned of record by Qualified LLC, Private
LLC, 4-EQ LLC and 4-SBS LLC, Hicks GP Partners, in its capacity as sole general
partner of each of HM4/GP Partners, 4-EQ L.P. and 4-SBS L.P., may, pursuant to
Rule 13d-3 of the Exchange Act, be deemed to be the beneficial owner of
11,849,279 shares of Common Stock, which, based on calculations made in
accordance with Rule 13d-3 of the Exchange Act and, as at May 11, 2000, there
being 78,576,991 shares of Common Stock outstanding, represents approximately
13.10% of the outstanding shares of Common Stock.
(11) Assuming conversion of all 237,888 shares of Preferred Stock
and exercise of all 5,352,504 Warrants owned of record by Qualified LLC, Private
LLC, 4-EQ LLC and 4-SBS LLC, Fund IV LLC, in its capacity as the sole general
partner of Hicks GP Partners, may, pursuant to Rule 13d-3 of the Exchange Act,
be deemed to be the beneficial owner of 11,849,279 shares of Common Stock,
which, based on calculations made in accordance with Rule 13d-3 of the Exchange
Act and, as at May 11, 2000, there being 78,576,991 shares of Common Stock
outstanding, represents approximately 13.10% of the outstanding shares of Common
Stock.
(12) PG-IV LLC is the record and beneficial owner of 12,112 shares
of Preferred Stock, 90,832 A-1 Warrants, 90,832 A-2 Warrants and 90,832 A-3
Warrants. Assuming conversion of all such shares of Preferred Stock and exercise
of all such Warrants, PG-IV LLC is the beneficial owner of 603,277 shares of
Common Stock, which, based on calculations made in accordance with Rule 13d-3 of
the Exchange Act and, as at May 11, 2000, there being 78,576,991 shares of
Common Stock outstanding, represents approximately 0.76% of the outstanding
shares of Common Stock.
(13) Assuming conversion of all 12,112 shares of Preferred Stock
and exercise of all 272,496 Warrants owned of record by PG-IV LLC, PG-IV C.V.,
in its capacity as sole member of PG-IV LLC, may, pursuant to Rule 13d-3 of the
Exchange Act, be deemed to be the beneficial owner of 603,277 shares of Common
Stock, which, based on calculations made in accordance with Rule 13d-3 of the
Exchange Act and, as at May 11, 2000, there being 78,576,991 shares of Common
Stock outstanding, represents approximately 0.76% of the outstanding shares of
Common Stock.
(14) Assuming conversion of all 12,112 shares of Preferred Stock
and exercise of all 272,496 Warrants owned of record by PG-IV LLC, HM Equity
C.V., in its capacity as sole general partner of PG-IV C.V., may, pursuant to
Rule 13d-3 of the Exchange Act, be deemed to be the beneficial owner of 603,277
shares of Common Stock, which, based on calculations made in accordance with
Rule 13d-3 of the Exchange Act and, as at May 11, 2000, there being 78,576,991
shares of Common Stock outstanding, represents approximately 0.76% of the
outstanding shares of Common Stock.
(15) Assuming conversion of all 12,112 shares of Preferred Stock
and exercise of all 272,496 Warrants owned of record by PG-IV LLC, GP Cayman
L.P., in its capacity as sole general partner of HM Equity C.V., may, pursuant
to Rule 13d-3 of the Exchange Act, be deemed to be the beneficial owner of
603,277 shares of Common Stock, which, based on calculations made in accordance
with Rule 13d-3 of the Exchange Act and, as at May 11, 2000, there being
78,576,991 shares of Common Stock outstanding, represents approximately 0.76% of
the outstanding shares of Common Stock.
(16) Assuming conversion of all 12,112 shares of Preferred Stock
and exercise of all 272,496 Warrants owned of record by PG-IV LLC, Fund IV
Cayman LLC, in its capacity as the sole general partner of GP Cayman L.P. may,
pursuant to Rule 13d-3 of the Exchange Act, be deemed to be the beneficial owner
of 603,277 shares of Common Stock, which, based on calculations made in
accordance with Rule 13d-3 of the Exchange Act and, as at May 11, 2000, there
being 78,576,991 shares of Common Stock outstanding, represents approximately
0.76% of the outstanding shares of Common Stock.
(17) As a result of the sale by Bridge LLC of its Preferred Stock
and Warrants to Qualified LLC, Private LLC, 4-EQ LLC, 4-SBS LLC and PG-IV LLC,
Bridge LLC is no longer the record and beneficial owner of any shares of
Preferred Stock or Warrants.
Page 27
<PAGE> 27
(18) As a result of the sale by Bridge LLC of its Preferred Stock
and Warrants to Qualified LLC, Private LLC, 4-EQ LLC, 4-SBS LLC and PG-IV LLC,
Bridge Partners L.P., in its capacity as the sole member of Bridge LLC, may no
longer be, pursuant to Rule 13d-3 of the Exchange Act, deemed to be the
beneficial owner of any shares of Common Stock, upon any conversion of such
shares of Preferred Stock or exercise of such Warrants.
(19) As a result of the sale by Bridge LLC of its Preferred Stock
and Warrants to Qualified LLC, Private LLC, 4-EQ LLC, 4-SBS LLC and PG-IV LLC,
Bridge Partners LLC, in its capacity as general partner of Bridge Partners L.P.,
may no longer be deemed, pursuant to Rule 13d-3 of the Exchange Act, to be the
beneficial owner of any shares of Common Stock, upon any conversion of such
shares of Preferred Stock or exercise of such Warrants.
(20) Assuming conversion of all 250,000 shares of Preferred Stock
and exercise of all 5,625,000 Warrants owned of record by Qualified LLC, Private
LLC, 4-EQ LLC, 4-SBS LLC and PG-IV LLC, Mr. Thomas O. Hicks, in his capacity as
sole member of Fund IV LLC and Fund IV Cayman LLC, may, pursuant to Rule 13d-3
of the Exchange Act, be deemed to be the beneficial owner of 12,452,556 shares
of Common Stock, which, based on calculations made in accordance with Rule 13d-3
of the Exchange Act and, as at May 11, 2000, there being 78,576,991 shares of
Common Stock outstanding, represents approximately 13.68% of the outstanding
shares of Common Stock.
The Reporting Persons expressly disclaim (a) the existence of any group
and (b) beneficial ownership with respect to any shares other than the shares
owned of record by such Reporting Person.
(b) The information set forth in Items 7 through 11 of the cover pages
hereto is incorporated herein by reference.
(c) Except as set forth herein, none of the persons named in response
to paragraph (a) has effected any transactions in shares of Common Stock during
the past 60 days.
(d) The right to receive dividends on, and proceeds from the sale of,
the shares of Common Stock which may be beneficially owned by the persons
described in (a) and (b) above is governed by the limited liability company
agreements and limited partnership agreements of each such entity, and such
dividends or proceeds may be distributed with respect to numerous member
interests and general and limited partnership interests.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO
SECURITIES OF THE ISSUER.
Item 6 of the Schedule 13D is hereby amended and restated in its
entirety to read as follows:
The matters set forth in Item 2 are incorporated in this Item 6 by
reference as if fully set forth herein.
Securities Purchase Agreement
Pursuant to the Preferred Stock and Warrant Purchase Agreement (the
"Securities Purchase Agreement"), dated as of February 6, 2000 between the
Issuer and Bridge LLC, the Issuer agreed to sell to Bridge LLC, and Bridge LLC
agreed to purchase from the Issuer, 250,000 shares of Preferred Stock, 1,875,000
A-1 Warrants, 1,875,000 A-2 Warrants and 1,875,000 A-3 Warrants for a purchase
price of $250,000,000. In addition, the Issuer agreed to form a subsidiary for
the purpose of entering business relationships in Latin America and to grant to
Bridge LLC and the Assignees (as defined below) a 25% equity ownership in that
subsidiary.
Prior to the issuance of the shares of Preferred Stock at the Closing
(as defined below), pursuant to an Assignment of Rights Under Preferred Stock
and Warrant Purchase Agreement dated February 16, 2000 (the "Assignment
Agreement"), Bridge LLC assigned 50% of its rights, titles, interests and
obligations in, to and under the Securities Purchase Agreement to Qualified LLC,
Private LLC, 4-EQ LLC, 4-SBS LLC and PG-IV LLC (the "Assignees").
Page 28
<PAGE> 28
On March 16, 2000 at the closing held pursuant to the Purchase
Agreement (the "Closing"), the Issuer sold to each of the persons listed below
(the "HMTF Holders") the number of shares of Preferred Stock and the number of
Warrants set forth opposite each person's name below in exchange for the
purchase price set forth opposite such person's name below.
<TABLE>
<CAPTION>
NUMBER OF NUMBER OF NUMBER OF NUMBER OF
NAME OF ENTITY SHARES A-1 A-2 A-3 PURCHASE PRICE
PURCHASED WARRANTS WARRANTS WARRANTS
PURCHASED PURCHASED PURCHASED
-------------- --------- ---------- ---------- --------- --------------
<S> <C> <C> <C> <C> <C>
Bridge LLC 125,000 937,500 937,500 937,500 $125,000,000
Qualified LLC 113,743 853,077 853,077 853,077 113,743,000
Private LLC 806 6,043 6,043 6,043 806,000
PG-IV LLC 6,056 45,416 45,416 45,416 6,056,000
4-SBS LLC 2,724 20,429 20,429 20,429 2,724,000
4-EQ LLC 1,671 12,535 12,535 12,535 1,671,000
</TABLE>
The foregoing description of the Securities Purchase Agreement is not,
and does not purport to be, complete and is qualified in its entirety by
reference to the Securities Purchase Agreement, a copy of which is filed as
Exhibit 10.1 to the Schedule 13D and is incorporated herein by reference.
On July 27, 2000, Bridge LLC sold its shares of Preferred Stock and
Warrants to Qualified LLC, Private LLC, 4-EQ LLC, 4-SBS LLC and PG-IV LLC, and
such entities purchased such securities, as set forth below:
<TABLE>
<CAPTION>
NUMBER OF NUMBER OF NUMBER OF NUMBER OF
NAME OF ENTITY SHARES A-1 WARRANTS A-2 WARRANTS A-3 WARRANTS
PURCHASED PURCHASED PURCHASED PURCHASED
-------------- --------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
Qualified LLC 113,743 853,076 853,076 853,076
Private LLC 806 6,044 6,044 6,044
PG-IV LLC 6,056 45,416 45,416 45,416
4-SBS LLC 2,724 20,429 20,429 20,429
4-EQ LLC 1,671 12,535 12,535 12,535
</TABLE>
On July 27, 2000, Bridge LLC repaid the borrowing under the Demand
Notes referred to in Item 3 with the proceeds from the sale of its shares of
Preferred Stock and Warrants to Qualified LLC, Private LLC, 4-EQ LLC, 4-SBS LLC
and PG-IV LLC, as set forth above.
Page 29
<PAGE> 29
Registration Rights
At Closing, the Issuer and the holders of Preferred Stock entered into
a Registration Rights Agreement (the "Registration Rights Agreement"), pursuant
to which the Issuer has agreed to effect four "demand" registrations at the
request of the holders of a majority of the Registrable Securities held by the
HMTF Holders and any direct or indirect transferee of any Registrable Securities
held by the HMTF Holders, provided that each such demand registration must be in
respect of Registrable Securities (as defined below) with a fair market value of
at least $50,000,000 and provided that certain other restrictions are met. In
addition, the Purchasers have certain piggyback registration rights in
connection with registrations of the Issuer's securities under the Securities
Act of 1933 (the "Securities Act") as well as rights to request a shelf
registration of portions of the Registrable Securities.
"Registrable Securities" means (a) the Preferred Stock purchased
pursuant to the Securities Purchase Agreement, plus any additional shares of
Preferred Stock issued in respect thereof in connection with any stock split,
stock dividend or similar event with respect to the Preferred Stock, (b) the
Common Stock issued upon conversion of such Preferred Stock or upon exercise of
the Warrants, plus any additional shares of Common Stock issued in respect
thereof in connection with any stock split, stock dividend or similar event with
respect to the Common Stock and (c) any securities that the Issuer or any
successor entity into which such Common Stock or such Preferred Stock may be
converted or changed.
The foregoing description of the Registration Rights Agreement is not,
and does not purport to be, complete and is qualified in its entirety by
reference to the Registration Rights Agreement, a copy of which is filed as
Exhibit 10.2 to the Schedule 13D and is incorporated herein by reference.
Certificate of Designation
As contemplated by the Securities Purchase Agreement, the Board of
Directors of the Issuer approved and adopted the Certificate of Designation of
the Powers, Preferences and Relative, Participating, Optional and Other Special
Rights of 8 1/4% Series E Convertible Preferred Stock and Qualifications,
Limitations and Restrictions Thereof (the "Certificate of Designation") to
create the series of Preferred Stock. Under the Certificate of Designation, the
shares of Preferred Stock will, with respect to dividend rights and rights on
liquidation, winding-up and dissolution, rank (i) senior to all shares of Common
Stock and to each other class of capital stock or preferred stock of the Issuer,
the terms of which do not expressly provide that it ranks senior to or on a
parity with the shares of the Preferred Stock as to dividend rights and rights
on liquidation, winding-up and dissolution of the Issuer; (ii) on a parity with
additional shares of Preferred Stock issued by the Issuer and each other class
of capital stock or series of preferred stock of the Issuer issued by Issuer,
the terms of which expressly provide that such class or series will rank on a
parity with the shares of the Preferred Stock as to dividend rights and rights
on liquidation, winding-up and dissolution, if the Issuer, in issuing the
shares, complies with applicable provisions in the Certificate of Designation;
and (iii) junior to each class of capital stock or series of preferred stock of
the Issuer issued by the Issuer, the terms of which expressly provide that such
class or series will rank senior to the shares of Preferred Stock as to dividend
rights and rights upon liquidation, winding-up and dissolution, if the Issuer,
in issuing the shares, complies with applicable provisions in the Certificate of
Designation.
The holders of the shares of Preferred Stock will be entitled to
receive with respect to each share of Preferred Stock, out of funds legally
available for the payment of dividends, dividends at a rate per annum of 8 1/4%
of the then-effective Liquidation Preference (as defined below). Such dividends
shall be cumulative from the date of issuance of the Preferred Stock and shall
be payable quarterly in arrears. On each Dividend Payment Date, commencing the
March 31, 2000 Dividend Payment Date, to and including the March 31, 2005
Dividend Payment Date, accrued dividends on a share of Preferred Stock for the
preceding Dividend Period shall be added cumulatively to and thereafter remain a
part of the Liquidation Preference of such share. Thereafter, accrued dividends
shall be payable quarterly on each Dividend
Page 30
<PAGE> 30
Payment Date, commencing on June 30, 2005, to the holders of record of Preferred
Stock as of the close of business on the applicable Dividend Record Date.
Accrued Dividends that are not paid in full in cash on any Dividend Payment Date
(whether or not declared and whether or not there are sufficient funds legally
available for the payment thereof) shall be added cumulatively to the
Liquidation Preference on the applicable Dividend Payment Date and thereafter
remain a part thereof.
The holders of shares of Preferred Stock will have the right,
generally, at any time, to convert any or all their shares of Preferred Stock
into a number of fully paid and nonassessable shares of Common Stock equal to
the then effective Liquidation Preference thereof plus accrued and unpaid
dividends to the date of conversion divided by the Conversion Price in effect at
the time of conversion. The initial Conversion Price is $37.50 per share.
The shares of Preferred Stock may be redeemed at any time commencing on
or after March 31, 2005 (or earlier, if, under the Certificate of Designation,
certain conditions relating to a Change of Control (as defined in the
Certificate of Designation) shall have occurred), in whole or from time to time
in part, at the election of the Issuer, at a redemption price payable in cash
equal to 100% (or, under certain conditions described below relating to a Change
of Control, 101%) of the then effective Liquidation Preference plus accrued and
unpaid dividends from the last dividend payment date to the date fixed for
redemption. Shares of Preferred Stock (if not earlier redeemed or converted)
shall be mandatorily redeemed by the Issuer on March 31, 2015, at a redemption
price per share in cash equal to the then effective Liquidation Preference, plus
accrued and unpaid dividends thereon from the last Dividend Payment Date to the
date of mandatory redemption.
Upon occurrence of a "Change of Control" (as defined in the Certificate
of Designation), the holders of Preferred Stock shall be entitled to receive, if
the change of control occurs prior to March 31, 2005, the Special Dividend (as
defined in the Certificate of Designation) and shall have the right to either
(a) continue to hold their shares of Preferred Stock (or the shares of preferred
stock issued in respect thereof pursuant to consolidation, merger, conveyance or
transfer as provided in the Certificate of Designation (the "Hold Option")), (b)
convert their shares of Preferred Stock (including shares received as a Special
Dividend) or (c) elect to have their shares of Preferred Stock remarketed as
described below (the "Remarketing Option").
If the Remarketing Option is selected with respect to a share of
Preferred Stock, such holder shall be deemed to have elected to waive such
holder's right to convert such share for a specified period of time and the
Issuer shall thereafter have the option either to (a) have such share redeemed
in accordance with the provisions of optional redemption contained in the
Certificate of Designation, or (b) remarket such share for the account of such
holder and, if the net proceeds to such holder of such remarketing are less than
an amount equal to 101% of the Liquidation Preference (after giving effect to
the Special Dividend (if applicable)) of such share plus accrued and unpaid
dividends thereon from the last dividend payment date to the date payment is
received by such holder in respect of such share, the Issuer shall issue to and
sell for the account of such holder a sufficient number of shares of Common
Stock to make up for such shortfall. If the Issuer does not, within 180 days
after the date of the Issuer's giving written notice of its election of (a) or
(b) above, settle the claim with the holder pursuant to (a) or (b) above, then
the holder shall have the option, for a period of 10 business days, of electing
the Hold Option or electing to convert such holder's share of Preferred Stock.
The holders of the shares of Preferred Stock will be entitled to vote
on all matters that the holders of the Issuer's Common Stock are entitled to
vote upon. In exercising these voting rights, each share of Preferred Stock
shall be entitled to vote on an as-converted basis with the holders of the
Issuer's Common Stock. The approval of the holders of at least a majority of the
then-outstanding shares of Preferred Stock, voting as one class, will be
required for the Issuer to take certain actions. In addition, for so long as
members of the HMTF Group own any combination of the shares of Preferred Stock
issued to the HMTF Holders as of the Closing Date and shares of Common Stock
issued upon conversion of such Preferred Stock, which, taken together, would
represent (if all such shares of Preferred Stock were converted) an amount of
Common Stock issuable upon conversion of 40% or more of such Preferred Stock,
the holders of the HMTF Shares, voting as a class, may elect one director to
serve on the board of directors of the Issuer. Pursuant to this right, the HMTF
Holders have elected Michael Levitt for election to the board of directors of
the Issuer. The Securities Purchase Agreement contains a parallel provision for
the election of a director that is inoperative for so long as the above
described provision is in effect.
Page 31
<PAGE> 31
"Liquidation Preference" means an amount equal to $1,000 per share of
Preferred Stock, subject to change in accordance with the provisions of the
Certificate of Designation.
The foregoing description is not, and does not purport to be, complete
and is qualified in its entirety by reference to the Certificate of Designation,
a copy of which is filed as Exhibit 10.3 to the Schedule 13D and is incorporated
by reference.
Common Stock Warrant Certificate
As contemplated by the Securities Purchase Agreement, the Board of
Directors of the Issuer approved and adopted the Common Stock Warrant
Certificates for the A-1 Warrants (the "A-1 Warrant Certificates"), the A-2
Warrants (the "A-2 Warrant Certificates") and the A-3 Warrants (the "A-3 Warrant
Certificates"). The A-1 Warrants entitle the HMTF Holders or their permitted
assigns to purchase from the Issuer fully paid and nonassessable shares of
Common Stock at an exercise price of $45.00 per share, as adjusted from time to
time pursuant to the terms of the A-1 Warrant Certificate. The A-1 Warrants are
void after March 16, 2003. The A-2 Warrants entitle the HMTF Holders or their
permitted assigns to purchase from the Issuer fully paid and nonassessable
shares of Common Stock at an exercise price of $50.00 per share, as adjusted
from time to time pursuant to the terms of the A-2 Warrant Certificate. The A-2
Warrants are void after March 16, 2005. The A-3 Warrants entitle the HMTF
Holders or their permitted assigns to purchase from the Issuer fully paid and
nonassessable shares of Common Stock at an exercise price of $55.00 per share,
as adjusted from time to time pursuant to the terms of the A-3 Warrant
Certificate. The A-3 Warrants are void after March 16, 2007.
The foregoing description of the A-1 Warrant Certificate, A-2 Warrant
Certificate and A-3 Warrant Certificate is not, and does not purport to be,
complete and is qualified in its entirety by reference to the Form of Common
Stock Warrant A-1, Form of Common Stock Warrant A-2 and Form of Common Stock
Warrant A-3, copies of which are filed as Exhibit 10.4, Exhibit 10.5 and Exhibit
10.6 to the Schedule 13D, respectively, and are incorporated herein by
reference.
The purchase price for the shares of Preferred Stock and Warrants sold
by Bridge LLC will be equal to the original purchase price paid therefor by
Bridge LLC together with an allocable portion of the interest and other expenses
incurred by Bridge LLC under the Credit Agreement referred to in Item 3.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
Exhibit 10.9: Assignment of Securities by Bridge LLC to each of Qualified LLC,
Private LLC, 4-EQ LLC, 4-SBS LLC and PG-IV LLC.
Page 32
<PAGE> 32
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief,
the undersigned certifies that the information set forth in this statement is
true, complete and correct.
August 7, 2000 *
-------------------------------
Name: Thomas O. Hicks
* By: /s/ David Knickel
--------------------------
Name: David W. Knickel
Attorney-in-Fact
S-1
<PAGE> 33
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief,
the undersigned certifies that the information set forth in this statement is
true, complete and correct.
August 7, 2000 HM4 RHYTHMS QUALIFIED FUND, LLC
By: /s/ David Knickel
----------------------------
Name: David W. Knickel
Title: Vice President
S-2
<PAGE> 34
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief,
the undersigned certifies that the information set forth in this statement is
true, complete and correct.
August 7, 2000 HMTF EQUITY FUND IV (1999), L.P.
By: HM4/GP (1999) Partners, L.P.,
its General Partner
By: Hicks, Muse GP (1999) Partners IV, L.P.,
its General Partner
By: Hicks, Muse (1999) Fund IV, LLC,
its General Partner
By: /s/ David Knickel
-----------------------------------------
Name: David W. Knickel
Title: Vice President
S-3
<PAGE> 35
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief,
the undersigned certifies that the information set forth in this statement is
true, complete and correct.
August 7, 2000 HM4 RHYTHMS PRIVATE FUND, LLC
By: /s/ David Knickel
-------------------------------
Name: David W. Knickel
Title: Vice President
S-4
<PAGE> 36
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief,
the undersigned certifies that the information set forth in this statement is
true, complete and correct.
August 7, 2000 HMTF PRIVATE EQUITY FUND IV (1999), L.P.
By: HM4/GP (1999) Partners, L.P.,
its General Partner
By: Hicks, Muse GP (1999) Partners IV, L.P.,
its General Partner
By: Hicks, Muse (1999) Fund IV, LLC,
its General Partner
By: /s/ David Knickel
------------------------------------------
Name: David W. Knickel
Title: Vice President
S-5
<PAGE> 37
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief,
the undersigned certifies that the information set forth in this statement is
true, complete and correct.
August 7, 2000 HM4/GP (1999) PARTNERS, L.P.
By: Hicks, Muse GP (1999) Partners IV, L.P.,
its General Partner
By: Hicks, Muse (1999) Fund IV, LLC,
its General Partner
By: /s/ David Knickel
-----------------------------------------
Name: David W. Knickel
Title: Vice President
S-6
<PAGE> 38
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief,
the undersigned certifies that the information set forth in this statement is
true, complete and correct.
August 7, 2000 HM 4-EQ RHYTHMS COINVESTORS, LLC
By: /s/ David Knickel
---------------------------------
Name: David W. Knickel
Title: Vice President
S-7
<PAGE> 39
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief,
the undersigned certifies that the information set forth in this statement is
true, complete and correct.
August 7, 2000 HM 4-EQ (1999) COINVESTORS, L.P.
By: Hicks, Muse GP (1999) Partners IV, L.P.,
its General Partner
By: Hicks, Muse (1999) Fund IV, LLC,
its General Partner
By: /s/ David Knickel
-----------------------------------------
Name: David W. Knickel
Title: Vice President
S-8
<PAGE> 40
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief,
the undersigned certifies that the information set forth in this statement is
true, complete and correct.
August 7, 2000 HM 4-SBS RHYTHMS COINVESTORS, LLC
By: /s/ David Knickel
---------------------------------
Name: David W. Knickel
Title: Vice President
S-9
<PAGE> 41
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief,
the undersigned certifies that the information set forth in this statement is
true, complete and correct.
August 7, 2000 HM 4-SBS (1999) COINVESTORS, L.P.
By: Hicks, Muse GP (1999) Partners IV, L.P.,
its General Partner
By: Hicks, Muse (1999) Fund IV, LLC,
its General Partner
By: /s/ David Knickel
-----------------------------------------
Name: David W. Knickel
Title: Vice President
S-10
<PAGE> 42
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief,
the undersigned certifies that the information set forth in this statement is
true, complete and correct.
August 7, 2000 HICKS, MUSE GP (1999) PARTNERS IV, L.P.
By: Hicks, Muse (1999) Fund IV, LLC,
its General Partner
By: /s/ David Knickel
------------------------------------
Name: David W. Knickel
Title: Vice President
S-11
<PAGE> 43
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief,
the undersigned certifies that the information set forth in this statement is
true, complete and correct.
August 7, 2000 HICKS, MUSE (1999) FUND IV, LLC
By: /s/ David Knickel
---------------------------------
Name: David W. Knickel
Title: Vice President
S-12
<PAGE> 44
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief,
the undersigned certifies that the information set forth in this statement is
true, complete and correct.
August 7, 2000 HM PG-IV RHYTHMS, LLC
By: /s/ David Knickel
---------------------------------
Name: David W. Knickel
Title: Vice President
S-13
<PAGE> 45
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief,
the undersigned certifies that the information set forth in this statement is
true, complete and correct.
August 7, 2000 HICKS, MUSE PG-IV (1999), C.V.
By: HM Equity Fund IV/GP Partners (1999), C.V.,
its General Partner
By: HM GP Partners IV Cayman, L.P.,
its General Partner
By: HM Fund IV Cayman LLC,
its General Partner
By: /s/ David Knickel
--------------------------------------------
Name: David W. Knickel
Title: Vice President
S-14
<PAGE> 46
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief,
the undersigned certifies that the information set forth in this statement is
true, complete and correct.
August 7, 2000 HM EQUITY FUND IV/GP PARTNERS (1999), C.V.
By: HM GP Partners IV Cayman, L.P.,
its General Partner
By: HM Fund IV Cayman LLC,
its General Partner
By: /s/ David Knickel
---------------------------------------
Name: David W. Knickel
Title: Vice President
S-15
<PAGE> 47
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief,
the undersigned certifies that the information set forth in this statement is
true, complete and correct.
August 7, 2000 HM GP PARTNERS IV CAYMAN, L.P.
By: HM Fund IV Cayman LLC, its General Partner
By: /s/ David Knickel
-------------------------------------------
Name: David W. Knickel
Title: Vice President
S-16
<PAGE> 48
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief,
the undersigned certifies that the information set forth in this statement is
true, complete and correct.
August 7, 2000 HM FUND IV CAYMAN LLC
By: /s/ David Knickel
---------------------------------
Name: David W. Knickel
Title: Vice President
S-17
<PAGE> 49
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief,
the undersigned certifies that the information set forth in this statement is
true, complete and correct.
August 7, 2000 HMTF BRIDGE RHY, LLC
By: /s/ David Knickel
---------------------------------
Name: David W. Knickel
Title: Vice President
S-18
<PAGE> 50
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief,
the undersigned certifies that the information set forth in this statement is
true, complete and correct.
August 7, 2000 HMTF BRIDGE PARTNERS, L.P.
By: HMTF Bridge Partners, LLC,
its General Partner
By: /s/ David Knickel
---------------------------------
Name: David W. Knickel
Title: Vice President
S-19
<PAGE> 51
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief,
the undersigned certifies that the information set forth in this statement is
true, complete and correct.
August 7, 2000 HMTF BRIDGE PARTNERS, LLC
By: /s/ David Knickel
---------------------------------
Name: David W. Knickel
Title: Vice President
S-20
<PAGE> 52
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<S> <C>
10.9 Assignment of Securities by Bridge LLC to Qualified LLC,
Private LLC, 4-EQ LLC, 4-SBS LLC and PG-IV LLC.
</TABLE>
