Document:

EXHIBIT 10.3

                           RHYTHMS NETCONNECTIONS INC.
                    CERTIFICATE OF DESIGNATION OF THE POWERS,
                PREFERENCES AND RELATIVE, PARTICIPATING, OPTIONAL
                   AND OTHER SPECIAL RIGHTS OF 8.25% SERIES E
                         CONVERTIBLE PREFERRED STOCK AND
                           QUALIFICATIONS, LIMITATIONS
                            AND RESTRICTIONS THEREOF

                           8.25% Series E Convertible
                            Preferred Stock due 2015

     Rhythms  NetConnections  Inc.,  a  company organized and existing under the
General Corporation Law of the State of Delaware (the "Company"), certifies that
pursuant  to  the  authority  contained in its Certificate of Incorporation (the
"Certificate  of  Incorporation")  and  its  By-laws  (the  "By-laws"),  and  in
accordance  with  Section  151  of  the  General Corporation Law of the State of
Delaware,  the board of directors of the Company (the "Board of Directors") at a
meeting  duly called and held on February __, 2000 duly approved and adopted the
following  resolution,  which resolution remains in full force and effect on the
date  hereof:

     RESOLVED,  that  pursuant to the authority vested in the Board of Directors
by  the  Certificate  of  Incorporation and By-laws, the Board of Directors does
hereby  create,  authorize  and  provide  for the issue of a series of Preferred
Stock having the following designation, voting powers, preferences and relative,
participating,  optional  and  other  special  rights:

     Certain  capitalized  terms  used  herein  are  defined  in  Section  16.

     1.     Number  and  Designation.  The  Company  shall  have  a  series  of
Preferred  Stock,  which  shall  be designated as its 8.25% Series E Convertible
Preferred  Stock due 2015 (the "Series E Preferred Stock"), par value $0.001 per
share.  The  number of shares constituting the Series E Preferred Stock shall be
250,000.  Unless  otherwise  specified, references herein to any "Section" refer
to  the  Section  number  specified  in  this  Certificate  of  Designation.

     2.     Issuance.  The  Company  may  issue up to 250,000 shares of Series E
Preferred  Stock  in  accordance  with  the  Purchase  Agreement.

     3.     Registered  Form;  Liquidation  Preference; Registrar.  Certificates
for shares of Series E Preferred Stock shall be issuable only in registered form
and only with an initial liquidation preference of $1,000 per share plus accrued
and unpaid dividends.  The Company shall serve as initial Registrar and Transfer
Agent  (the  "Registrar")  for  the  Series  E  Preferred  Stock.

     4.     Registration; Transfer.  Shares of the Series E Preferred Stock have
not  been  registered  under  the  Securities  Act  of  1933,  as  amended  (the
"Securities  Act") and may not be resold, pledged or otherwise transferred prior
to  the  date  when they may be resold pursuant to Rule 144 under the Securities
Act  other  than  (i)  to  the  Company,  (ii)  pursuant  to  an  exemption from
registration  under  the  Securities  Act  or  (iii)  pursuant  to  an effective
registration statement under the Securities Act, in each case in accordance with
any  applicable  securities  laws of any state of the United States.  Until such
time  as  it  is no longer required pursuant to the Securities Act, certificates
evidencing  the Series E Preferred Stock shall contain a legend (the "Restricted
Shares  Legend") evidencing the foregoing restrictions in substantially the form
set  forth on the form of Series E Preferred Stock attached hereto as Exhibit A.

     5.     Paying  Agent  and  Conversion  Agent

     (a) The Company shall maintain (i)  an office or  agency  where  shares  of
Series E Preferred Stock may be presented for payment (the "Paying Agent"), (ii)
an  office  or  agency where shares of Series E Preferred Stock may be presented
for  conversion  (the "Conversion Agent"), and (iii) a Registrar, which shall be
an office or an agency where shares of Series E Preferred Stock may be presented
for  transfer.  The  Company may appoint the Registrar, the Paying Agent and the
Conversion Agent and may appoint one or more additional paying agents and one or
more additional conversion agents in such other locations as it shall determine.
The  term  "Paying  Agent"  includes  any  additional paying agent, and the term
"Conversion  Agent"  includes  any additional conversion agent.  The Company may
change  any Paying Agent or Conversion Agent without prior notice to any holder.

                                    PAGE   1
<PAGE>
The  Company  shall  notify  the Registrar of the name and address of any Paying
Agent  or  Conversion  Agent  appointed by the Company.  If the Company fails to
appoint  or  maintain  another  entity  as Paying Agent or Conversion Agent, the
Registrar  shall act as such.  Notwithstanding the foregoing, the Company or any
of  its Affiliates may act as Paying Agent, Registrar, coregistrar or Conversion
Agent.

     (b)     Neither  the  Company  nor  the  Registrar shall be required (A) to
issue, countersign or register the transfer of or exchange any share of Series E
Preferred  Stock  during  a  period beginning at the opening of business 15 days
before  any  Redemption  Date (as defined under Section 10(d)) and ending at the
close  of business on such Redemption Date or (B) to register the transfer of or
exchange  any  share  of  Series  E  Preferred Stock so selected for redemption.

     (c)     If shares of Series E Preferred Stock are issued upon the transfer,
exchange  or  replacement  of  shares  of  Series  E Preferred Stock bearing the
Restricted  Shares  Legend,  or  if  a request is made to remove such Restricted
Shares  Legend  on  shares  of  Series E Preferred Stock, the shares of Series E
Preferred  Stock  so  issued  shall  bear  the  Restricted Shares Legend, or the
Restricted  Shares  Legend  shall not be removed, as the case may be, unless the
holders of such shares shall request such Legend be removed, and outside counsel
for  such  holders  reasonably determines that the transfer of such shares is no
longer  restricted  by  the  Securities  Act and outside counsel for the Company
reasonably  concurs  in  such  determination.

     (d)     Each  holder  of  a  share  of  Series  E Preferred Stock agrees to
indemnify  the  Company  and the Registrar against any liability that may result
from  the transfer, exchange or assignment by such holder of such holder's share
of Series E Preferred Stock in violation of any provision of this Certificate of
Designation  and/or  applicable  Federal  or  state  securities  law;  provided,
however,  that  such  indemnity shall not apply to acts of willful misconduct or
gross  negligence  on  the part of the Company or the Registrar, as the case may
be.

     (e)     Payments  due  on  the  shares of Series E Preferred Stock shall be
payable  at the office or agency of the Paying Agent maintained for such purpose
in  The  City  of  New  York and at any other office or agency maintained by the
Paying  Agent  for  such  purpose.  If  any such payment is in cash, it shall be
payable  by United States dollar check drawn on, or wire transfer (provided that
appropriate wire instructions have been received by the Paying Agent at least 15
days  prior to the applicable date of payment) to a United States dollar account
maintained by the holder with, a bank located in New York City; provided that at
the  option  of  the  Company  payment of dividends in cash may be made by check
mailed  to  the  address  of  the  person entitled thereto as such address shall
appear  in  the  Series  E  Preferred  Share  Register.

     6.     Dividend  Rights.

     (a)     The  holders  of  Series  E  Preferred  Stock  shall be entitled to
participating  cumulative  dividends,  in  preference to dividends on any Junior
Shares, which shall accrue as provided herein. Dividends on each share of Series
E Preferred Stock will accrue on a daily basis at the rate of 8.25% per annum of
the  then  effective Liquidation Preference of such share from and including the
Closing  Date  to  the  first  to  occur  of (i) the date on which such share is
redeemed  in  accordance  with  Section 10, (ii) the date on which such share is
converted  in  accordance  with  Section  12  or  (iii)  the date the Company is
liquidated,  dissolved  or  wound up in accordance with Section 9(c).  Dividends
shall  accrue  as  provided  herein  whether  or  not  such  dividends have been
declared, whether or not there are any unrestricted funds of the Company legally
available  for  the  payment  of dividends and whether or not such dividends are
then  payable  in  cash  as  provided  in Section 11.  The Company will take all
actions required or permitted under the DGCL to permit the payment or accrual of
dividends  on  the  Series  E  Preferred  Stock.  On each Dividend Payment Date,
commencing  March 31, 2000, to and including the March 31, 2005 Dividend Payment
Date,  accrued  dividends  on  a  share  of the Series E 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 Payment Date, commencing on June 30,
2005,  to  the holders of record of the Series E 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 such 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.
Accrued  dividends  added  to  the Liquidation Preference of a share of Series E
Preferred Stock in accordance with the foregoing provisions of this Section 6(a)
are  sometimes  referred to in this Certificate as "Accumulated Dividends".  For
purposes  of  determining  the amount of dividends "accrued" (i) as of the first
Dividend  Payment  Date  and as of any date that is not a Dividend Payment Date,
such  amount  shall  be calculated on the basis of  the rate per annum specified
above in this paragraph for the actual number of days elapsed from and including
the  Closing Date (in case of the first Dividend Payment Date and any date prior
to  the first Dividend Payment Date) or the last preceding Dividend Payment Date
(in  case of any other date) to the date as of which such determination is to be

                                    PAGE   2
<PAGE>
made,  based  on  a 360-day year, and (ii) as of any Dividend Payment Date after
the first Dividend Payment Date, such amount shall be calculated on the basis of
such  rate  per  annum  based  on  a  360-day  year  of  twelve  30-day  months.

     (b)     If a Change of Control occurs prior to March 31, 2005 (the time and
date  such  Change  of  Control  occurs  being the "Change of Control Date"), an
amount  equal  to  the  Special  Dividend  shall  be  added  to  the Liquidation
Preference  of  each  share  of the Series E Preferred Stock as of the Change of
Control  Date  and  thereafter  remain  a  part  thereof.
In  addition  to  all  dividends  provided for above, whenever the Company shall
declare or pay any dividend in cash on any Common Stock, the holders of Series E
Preferred  Stock  shall  be entitled to receive such dividend on an as converted
basis.  Dividends  payable  pursuant  to  this Section 6(c) shall not reduce any
dividends  otherwise  payable  pursuant  to  Section  6(a)  or  6(b).

     7.     Payment   of  Dividend;  Mechanics  of   Payment;  Dividend   Rights
Preserved.

     (a)      Subject   to   Sections   6   and   11, dividends  on any share of
Series  E  Preferred  Stock  that  are  payable, and are punctually paid or duly
provided  for,  on any Dividend Payment Date shall be paid in cash to the person
in whose name such share of Series E Preferred Stock (or one or more predecessor
shares  of  Series  E Preferred Stock) is registered at the close of business on
the  next  preceding  March  15,  June 15, September 15 and December 15 (each, a
"Dividend  Record  Date").

     (b)     Unless  full  cumulative  dividends  on  all  outstanding shares of
Series  E Preferred Stock for all past Dividend Periods shall have been declared
and paid or declared and a sufficient sum for the payment thereof set apart (for
purposes of this Section 7, dividends on shares of Series E Preferred Stock that
are added to the Liquidation Preference of such shares through and including the
March  31,  2005 Dividend Payment Date shall be deemed declared and paid), then:

          (i)     no  dividend  (other than (A) with respect to Junior Shares, a
dividend payable solely in any Junior Shares, (B) with respect to Parity Shares,
a  dividend payable solely in Junior Shares or Parity Shares or (C) with respect
to  Parity Shares a partial dividend paid pro rata on such Parity Shares and the
shares  of  Series E Preferred Stock) shall be declared or paid upon, or any sum
set apart for the payment of dividends upon, any Junior Shares or Parity Shares,
respectively;

          (ii)     no  other distribution shall be declared or made upon, or any
sum  set  apart  for  the payment of any distribution upon, any Junior Shares or
Parity  Shares;

          (iii)     no  Junior  Shares or Parity Shares or any warrants, rights,
calls  or  options  (other than any cashless exercises of options or buybacks of
options  or  restricted  stock  from  present  or former employees, directors or
consultants)  exercisable  for  or  convertible  into any Parity Share or Junior
Share shall be purchased, redeemed or otherwise acquired (other than in exchange
for other Junior Shares or Parity Shares, respectively) by the Company or any of
its  subsidiaries;  and

          (iv)     no  monies  shall be paid into or set apart or made available
for  a  sinking  or  other  like  fund  for  the  purchase,  redemption or other
acquisition of any Junior Shares or Parity Shares or any warrants, rights, calls
or  options  exercisable  for  or  convertible  into any Parity Shares or Junior
Shares  by  the  Company  or  any  of  its subsidiaries (other than any cashless
exercises  of  options  or  option  buybacks).

          Except  as  provided  in  Sections  6,  12  or 13, holders  of  Series
Preferred  Stock will not be entitled to any dividends, whether payable in cash,
property  or  stock,  in  excess  of  the  full  cumulative  dividends as herein
described.

     (c)     The  Company  will  notify  the  Registrar  and  make  a  public
announcement no later than the close of business on the tenth Business Day prior
to  the  Record  Date for each dividend as to whether it will pay such dividend.

     (d)     Subject  to  the foregoing provisions of this Section 7, each share
of Series E Preferred Stock delivered under this Certificate of Designation upon
registration  of transfer of or in exchange for or in lieu of any other share of
Series  E  Preferred  Stock  shall carry the rights to dividends accumulated and
unpaid,  and  to  accrue,  that  were  carried  by such other shares of Series E
Preferred  Stock.

     (e)     The  holder of record of a share of Series E Preferred Stock at the
close  of  business  on  a  Dividend  Record Date with respect to the payment of
dividends  on the shares of Series E Preferred Stock will be entitled to receive
such  dividends  with  respect  to such share of Series E Preferred Stock on the
corresponding  Dividend  Payment  Date,  notwithstanding  the conversion of such
share  after  such Dividend Record Date and prior to such Dividend Payment Date.

                                    PAGE   3

<PAGE>
     8.     Voting  Rights.

     (a)     The  holders  of record of shares of Series E Preferred Stock shall
not  be  entitled  to  any  voting rights except as hereinafter provided in this
Section  8  or  as  otherwise  provided  by  law.

     (b)     The  holders  of record of shares of Series E Preferred Stock shall
be  entitled  to  vote  on  all matters that the holders of the Company's Common
Stock  are  entitled  to  vote  upon.

     (c)     In  addition  to the voting rights set forth above, the approval of
the  holders  of  at least a majority of the then Outstanding shares of Series E
Preferred  Stock voting or consenting, as the case may be, as one class, will be
required  for  the  Company  to:

     (i)     amend  the  Certificate  of  Incorporation,  this  Certificate   of
Designation or the By-Laws so as to (A) affect adversely the rights, preferences
(including,  without  limitation,  liquidation  preferences,  conversion  price,
dividend  rate  and Optional Redemption provisions), privileges or voting rights
of  holders  of  the  shares  of  Series  E  Preferred Stock, or (B) increase or
decrease  the  number  of  authorized  shares  of  Series  E  Preferred   Stock;

     (ii)     in  a  single  transaction  or  series  of  related  transactions,
consolidate  or  merge with or into, or sell, assign, transfer, lease, convey or
otherwise  dispose  of  all or substantially all of its assets to, any person or
adopt  a  plan  of  liquidation  or dissolution, except as expressly provided in
Section  14;

     (iii)     enter  into, or permit any of its subsidiaries to enter into, any
agreement  that  would  impose material restrictions on the Company's ability to
honor the exercise of any rights of the holders of the Series E Preferred Stock;

     (iv)     issue  any  shares of Series E Preferred Stock other than pursuant
to  the  terms  of  the  Purchase Agreement as in effect on the Closing Date; or

      (v)   issue   any  class  or  series of equity of the Company that   would
be  deemed  to be Parity Shares or Senior Shares with respect to rights relating
(a)  to  payments  of  dividends or (b) distribution of assets upon liquidation,
dissolution  or  winding-up.

     (d)     For  so  long as the members of the HMTF Group in the aggregate own
any  combination  of the shares of Series E Preferred Stock issued to members of
the  HMTF  Group  on  the  Closing  Date under the Purchase Agreement (the "HMTF
Issued  Series  E  Preferred  Shares")  and  shares  of Common Stock issued upon
conversion  of HMTF Issued Series E Preferred Shares that, taken together, would
represent  (if  all  HMTF  Issued  Series  E Preferred Shares were converted) an
amount  of  Common  Stock  issuable  upon  conversion of 40% or more of the HMTF
Issued  Series  E  Preferred Shares, the HMTF Holders, voting as a single class,
shall  be  entitled  to elect one director to serve on the Board of Directors at
any  annual meeting of stockholders or special meeting held in place thereof, or
at a special meeting of the HMTF Holders called as hereinafter provided.  At any
time  after  voting power to elect such director shall have become vested and be
continuing in the HMTF Holders pursuant to this paragraph, or if a vacancy shall
exist in the office of a director elected by the HMTF Holders at a time when the
HMTF  Holders  are  entitled  to  elect a director pursuant to this paragraph, a
proper  officer  of the Company may, and upon the written request of the holders
of  record  of  at  least  twenty-five percent (25%) of the HMTF Issued Series E
Preferred  Shares  then  outstanding  held  by the HMTF Holders addressed to the
Secretary  of  the Company shall, call a special meeting of the HMTF Holders for
the  sole  purpose  of  electing  the director that such holders are entitled to
elect.  If  such  meeting shall not be called by a proper officer of the Company
within  twenty (20) days after personal service of said written request upon the
Secretary  of  the  Company,  or  within twenty (20) days after mailing the same
within  the  United  States by certified mail, addressed to the Secretary of the
Company  at  its  principal  executive  offices,  then  the  holders of at least
twenty-five  percent  (25%)  of  the  HMTF Issued Series E Preferred Shares then
outstanding  held  by  the  HMTF  Holders  may designate in writing one of their
number to call such  meeting at the expense of the Company, and such meeting may
be  called  by  the person so designated upon the notice required for the annual
meeting  of  stockholders  of  the  Company  and  shall be held at the place for
holding  the  annual meetings of stockholders.  As used herein, (i) "HMTF Group"
means  Hicks,  Muse,  Tate  &  Furst  Incorporated, a Texas corporation, and its
Affiliates  and  their  respective  officers,  directors,  partners,  members,
stockholders  and employees (and members of their respective families and trusts
for  the primary benefit of such family members) and HM4 Rhythms Qualified Fund,
LLC;  HM4  Rhythms  Private  Fund,  LLC; HM PG-IV Rhythms, LLC; HM 4-SBS Rhythms
Coinvestors,  LLC; HM 4-EQ Rhythms Coinvestors LLC; and HMTF Bridge RHY, LLC and
their  respective  Affiliates  and (ii) "HMTF Holders" means members of the HMTF
Group that are holders of all or a portion of the HMTF Issued Series E Preferred
Shares or the Common Stock into which such HMTF Issued Series E Preferred Shares
are converted.  The action permitted or required to be taken by the HMTF Holders
pursuant  to this Section 8(d) may be taken (1) at any annual or special meeting
of  stockholders  or  at a special meeting of the HMTF Holders, or (2) without a
meeting,  without  prior  notice, and without a vote if a consent or consents in

                                    PAGE   4
<PAGE>
writing,  setting forth the action so taken, shall be signed by the HMTF Holders
having  not  less  than  the  minimum number of votes that would be necessary to
authorize  or take such action at a meeting at which all shares held by the HMTF
Holders  entitled  to vote thereon were present and voted and shall be delivered
to  the Company by delivery to its address listed in Section 8.2 of the Purchase
Agreement.

     (e)     In  exercising  the  voting  rights set forth in Section 8(b), each
share  of  Series E Preferred Stock shall be entitled to vote on an as-converted
basis  with  the  holders of the Company's Common Stock.  Except as set forth in
Section  8(d),  exercising  the other voting rights set forth in this Section 8,
each  share of Series E Preferred Stock entitled to vote shall have one vote per
share, except that when any other series of preferred stock shall have the right
to  vote with the Series E Preferred Stock as a single class on any matter, then
the Series E Preferred Stock and such other series of preferred stock shall have
with  respect  to  such matters one vote per $1,000 of the aggregate liquidation
preference  of  all  shares  of  Series E Preferred Stock and all shares of such
other series of preferred stock.  Except as otherwise required by applicable law
or  as  set  forth herein, the shares of Series E Preferred Stock shall not have
any  relative, participating, optional or other special voting rights and powers
and  the  consent of the holders thereof shall not be required for the taking of
any  corporate  action.

     9.     Ranking

     (a)     The  shares  of  Series  E  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 (whether issued in one or more classes) and
to each other class of capital stock or series of Preferred Stock of the Company
(including  without  limitation  the  Series  1  Junior  Participating Preferred
Stock),  the  terms of which do not expressly provide that it ranks senior to or
on  a  parity  with the shares of Series E Preferred Stock as to dividend rights
and  rights  on  liquidation,  winding-up  and  dissolution  of  the  Company
(collectively  referred  to,  together  with all shares of Common Stock (whether
issued  in  one  or more classes) of the Company, as "Junior Shares"); (ii) on a
parity  with (A) the 6 % Series F Cumulative Convertible Preferred Stock and (B)
each  other  class  of capital stock or series of Preferred Stock of the Company
issued by the Company in compliance with Section 8, the terms of which expressly
provide  that  such  class  or  series  will rank on a parity with the shares of
Series  E  Preferred  Stock  as  to  dividend  rights and rights on liquidation,
winding-up  and  dissolution of the Company (collectively referred to as "Parity
Shares"); and (iii) junior to each class of capital stock or series of Preferred
Stock  of  the  Company, the terms of which expressly provide that such class or
series will rank senior to the shares of Series E Preferred Stock as to dividend
rights  and  rights  upon liquidation, winding-up and dissolution of the Company
(collectively  referred  to  as  "Senior  Shares").

     (b)     No  dividend  whatsoever shall be declared or paid upon, or any sum
set  apart for the payment of dividends upon, any outstanding shares of Series E
Preferred Stock with respect to any dividend period unless all dividends for all
preceding  dividend  periods  have  been  declared  and  paid, or declared and a
sufficient  sum  set  apart  for  the payment of such dividends, or declared and
added  to the Liquidation Value as described herein, upon all outstanding Senior
Shares.

     (c)     In  the  event of any liquidation, dissolution or winding-up of the
Company, whether voluntary or involuntary, the holders of the shares of Series E
Preferred  Stock  then  Outstanding  shall  be entitled to receive, prior and in
preference  to  any  distribution  of  any  of  the assets of the Company to the
holders  of shares of Common Stock or Junior Shares by reason of their ownership
thereof,  an  amount  equal to the greater of (i) the then effective Liquidation
Preference,  plus  an  amount  equal to all dividends accrued and unpaid thereon
from  the  last  Dividend  Payment  Date  to  the  date  fixed  for liquidation,
dissolution  or winding-up or (ii) the amount such holders would receive if such
holders  converted  their  shares  of Series E Preferred Stock into Common Stock
immediately  prior  to such liquidation, dissolution or winding up.  If upon the
occurrence  of  such  event  the  assets of the Company shall be insufficient to
permit  the  payment  to  such  holders  of the full preferential amount and all
liquidating  payments on all Parity Securities, the entire assets of the Company
legally available for distribution shall be distributed among the holders of the
shares  of Series E Preferred Stock and the holders of all Parity Shares ratably
in  accordance  with the respective amounts that would be payable on such shares
of  Series  E  Preferred  Stock  and  any  such Parity Securities if all amounts
payable  thereon  were  paid  in  full.  After  payment of the full preferential
amount  (and,  if  applicable,  an  amount  equal  to a pro rata dividend to the
holders  of  Outstanding shares of Series E Preferred Stock), such holders shall
not  be  entitled  to  any  additional  distribution  of  assets of the Company.

     10.     Redemption

     (a)     The  shares  of  Series  E  Preferred  Stock may be redeemed by the
Company  at  any  time  commencing  on  or  after March 31, 2005 (or earlier, in
accordance  with  the  provisions  of  Section 13(d) if a Change of Control Date
shall  have  occurred,  but  only  as to shares of Series E Preferred Stock with

                                    PAGE   5
<PAGE>
respect to which the Remarketing Option has been elected), in whole or from time
to time in part, at the election of the Company (an "Optional Redemption"), at a
redemption price (the "Redemption Price") payable in cash equal to 100% (or 101%
if  a Change of Control shall have occurred prior to March 31, 2005) of the then
effective  Liquidation  Preference (after giving effect to the Special Dividend,
if applicable), plus accrued and unpaid dividends thereon from the last Dividend
Payment  Date  to  the  date  of  redemption  (the  "Optional Redemption Date").

     (b)     Shares  of  Series  E  Preferred  Stock (if not earlier redeemed or
converted)  shall  be mandatorily redeemed by the Company on March 31, 2015 (the
"Mandatory  Redemption  Date");  provided,  however,  that if such date is not a
Business  Day,  then  the  Mandatory  Redemption Date shall be the next Business
Day),  at  a  Redemption  Price  per  share  in cash equal to the then effective
Liquidation  Preference  (after  giving  effect  to  the  Special  Dividend,  if
applicable),  plus  accrued  and unpaid dividends thereon from the last Dividend
Payment  Date  to  the  Mandatory  Redemption  Date.

     (c)     In the event of a redemption of fewer than all the shares of Series
E  Preferred  Stock,  the  shares of Series E Preferred Stock will be chosen for
redemption  by  the  Registrar from the Outstanding shares of Series E Preferred
Stock  not previously called for redemption, pro rata or by lot or by such other
method  as  the  Registrar  shall  deem fair and appropriate; provided, that the
Company may redeem (an "Odd-lot Redemption") all shares held by holders of fewer
than 100 shares of Series E Preferred Stock (or by holders that would hold fewer
than  100 shares of Series E Preferred Stock following such redemption) prior to
its  redemption  of other shares of Series E Preferred Stock; provided, further,
that  the  Company  may  not redeem a portion of any share without redeeming the
entire  share.  If  fewer  than  all  the  shares  of  Series  E Preferred Stock
represented  by  any  share  certificate  are so to be redeemed, (i) the Company
shall issue a new certificate for the shares not redeemed and (ii) if any shares
represented  thereby  are  converted  before termination of the conversion right
with  respect  to  such shares, such converted shares shall be deemed (so far as
may be) to be the shares represented by such share certificate that was selected
for  redemption.  Shares  of  Series  E Preferred Stock that have been converted
during a selection of shares of Series E Preferred Stock to be redeemed shall be
treated  by  the  Registrar as outstanding for the purpose of such selection but
not  for  the  purpose  of  the  payment  of  the  Redemption  Price.

     (d)     In  the  event the Company elects to effect an Optional Redemption,
the Company shall (i) make a public announcement of the redemption and (ii) give
a  redemption  notice (the "Redemption Notice") to the holders not fewer than 30
days  nor  more than 60 days before the redemption date (the "Redemption Date").
Whenever  a  Redemption  Notice is required to be delivered to the holders, such
notice shall provide the information set forth below and be given by first class
mail, postage prepaid to each holder of shares of Series E Preferred Stock to be
redeemed,  at  such  holder's  address appearing in the Series E Preferred Share
Register.  All  Redemption  Notices  shall  identify  the  shares  of  Series  E
Preferred  Stock  to  be  redeemed  (including  CUSIP  number)  and shall state:

     (i)     the  Redemption  Date;

     (ii)     the  applicable  Redemption  Price;

     (iii)     if  fewer  than  all the outstanding shares of Series E Preferred
Stock  are  to  be  redeemed,  the  identification  (and, in the case of partial
redemption,  the  certificate  number,  the  total  number of shares represented
thereby  and the number of such shares being redeemed on the Redemption Date) of
the  particular  shares  of  Series  E  Preferred  Stock  to  be  redeemed;

     (iv)     that  on  the  Redemption Date the Redemption Price, together with
all  accrued  and  unpaid  dividends  from the last Dividend Payment Date to the
Redemption  Date,  will  become due and payable upon each such share of Series E
Preferred  Stock  to be redeemed and that dividends thereon will cease to accrue
on  and  after  said  date;

     (v)     the conversion price, the date on which the right to convert shares
of  Series  E  Preferred  Stock  to  be redeemed will terminate and the place or
places  where  such  shares  of  Series E Preferred Stock may be surrendered for
conversion;  and

     (vi)     the  place or places where such shares of Series E Preferred Stock
are  to be surrendered for payment of the Redemption Price and the other amounts
which  are  then  payable.

     The  Redemption  Notice  shall be given by the Company or, at the Company's
request,  by  the  Registrar  in  the  name  and  at the expense of the Company;
provided  that  if  the  Company  so  requests,  it  shall provide the Registrar
adequate  time,  as  reasonably  determined  by  the  Registrar, to deliver such
notices  in  a  timely  fashion.

     (e)     Prior  to  any  Redemption Date, the Company shall deposit with the
Registrar or with a Paying Agent (or, if the Company is acting as its own Paying
Agent, segregate and hold in trust) an amount of consideration sufficient to pay
the  Redemption  Price of all the shares of Series E Preferred Stock that are to

                                    PAGE   6
<PAGE>
be  redeemed on that date plus all accrued and unpaid dividends thereon from the
last  Dividend  Payment  Date  to the Redemption Date.  If any share of Series E
Preferred  Stock called for redemption is converted, any consideration deposited
with  the  Registrar or with any Paying Agent or so segregated and held in trust
for  the  redemption  of such share of Series E Preferred Stock shall be paid or
delivered  to  the  Company  upon Company Order or, if then held by the Company,
shall  be  discharged  from  such  trust.

     (f)     Notice  of redemption having been given as aforesaid, the shares of
Series E Preferred Stock so to be redeemed shall, on the Redemption Date, become
due  and  payable at the Redemption Price therein specified plus all accrued and
unpaid  dividends  thereon from the last Dividend Payment Date to the Redemption
Date,  and  from  and  after  such date (unless the Company shall default in the
payment  of  the Redemption Price and accrued but unpaid dividends) dividends on
such  shares  of  Series E Preferred Stock shall cease to accrue and such shares
shall  cease  to  be convertible into shares of Common Stock.  Upon surrender of
any  such  shares  of Series E Preferred Stock for redemption in accordance with
said  notice,  such  shares of Series E Preferred Stock shall be redeemed by the
Company at the applicable Redemption Price, together with all accrued and unpaid
dividends  thereon  from  the last Dividend Payment Date to the Redemption Date.
If  any  share of Series E Preferred Stock called for redemption shall not be so
paid  upon  surrender  thereof for redemption, the Redemption Price thereof, and
all  accrued and unpaid dividends thereon from the last Dividend Payment Date to
the  Redemption  Date, shall, until paid, bear interest from the Redemption Date
at  the dividend rate payable on the shares of Series E Preferred Stock and such
shares  shall  remain  convertible.

     (g)     Any  certificate  that  represents  more than one share of Series E
Preferred  Stock  and is to be redeemed only in part shall be surrendered at any
office  or  agency  of  the  Company  designated  for that purpose (with, if the
Company  or  the  Registrar  so  requires,  due  endorsement  by,  or  a written
instrument  of  transfer  in  form satisfactory to the Company and the Registrar
duly  executed  by,  the  holder  thereof  or  his  attorney  duly authorized in
writing), and the Company shall execute, and the Registrar shall countersign and
deliver  to the holder of such share of Series E Preferred Stock without service
charge, a new Series E Preferred Stock certificate or certificates, representing
any number of shares of Series E Preferred Stock as requested by such holder, in
aggregate  amount equal to and in exchange for the number of shares not redeemed
and  represented  by  the  Series  E Preferred Stock certificate so surrendered.

     (h)     If  a share of Series E Preferred Stock is redeemed subsequent to a
Dividend  Record  Date with respect to any Dividend Payment Date and on or prior
to  such  Dividend  Payment  Date,  then  the  accrued dividends payable on such
Dividend  Payment  Date  will  be paid to the person in whose name such share of
Series E Preferred Stock is registered at the close of business on such Dividend
Record  Date.

     11.     Method  of  Payments

     The  Company  may  make  any  dividend payments in cash with respect to any
Dividend  Period  beginning after March 31, 2005; provided that no payment shall
be  made  in cash that would violate the provisions of the Indenture dated as of
May  5,  1998  between  the  Company  and State Street Bank and Trust Company of
California, N.A. or the Indenture dated April 23, 1999 between the same parties,
if  and to the extent those Indentures are in effect.  Any dividends not paid in
cash  on a current basis on the applicable Dividend Payment Date with respect to
all  periods  after  March  31,  2005, and all dividends with respect to periods
prior  to  March 31, 2005, shall not be paid in cash but rather shall constitute
Accumulated  Dividends  as  dividends.  No  payment  may  be  made in respect of
Accumulated  Dividends  as  dividends.  Rather,  Accumulated  Dividends shall be
added  to  the Liquidation Preference.  Dividends may not be paid by delivery of
shares  of  Series  E  Preferred  Stock.

     12.     Conversion

     (a)     Subject  to  and  upon  compliance  with  the  provisions  of  this
Certificate  of  Designation,  at the option of the holder thereof, any share of
Series  E  Preferred  Stock  may be converted at any time into a number of fully
paid  and nonassessable shares of Common Stock (calculated as to each conversion
to  the  nearest  1/100  of a share) equal to (i) the then effective Liquidation
Preference  thereof  plus accrued and unpaid dividends to the date of conversion
divided  by (ii) the Conversion Price in effect at the time of conversion.  Such
conversion  right shall expire at the close of business on the Business Day next
preceding  the Mandatory Redemption Date.  In case a share of Series E Preferred
Stock is called for redemption, such conversion right in respect of the share so
called  shall expire at the close of business on the Business Day next preceding
the  Redemption Date, unless the Company defaults in making the payment due upon
redemption.

     The  Conversion  Price shall be initially $37.50 per share of Common Stock.
The  Conversion  Price  shall  be  adjusted  in certain instances as provided in
Section  12(d)  and  Section  12(e).

     (b)     In  order  to  exercise the conversion privilege, the holder of any

                                    PAGE   7
<PAGE>
share  of  Series  E  Preferred  Stock  to  be  converted  shall  surrender  the
certificate  for  such  share,  duly  endorsed  or assigned to the Company or in
blank,  at  any  office  or  agency  of the Company maintained for that purpose,
accompanied  by  written notice to the Company at such office or agency that the
holder elects to convert such share or, if fewer than all the shares of Series E
Preferred  Stock  represented by a single share certificate are to be converted,
the  number  of  shares  represented  thereby  to  be  converted.

     Shares  of  Series E Preferred Stock shall be deemed to have been converted
immediately  prior  to  the  close  of  business on the day of surrender of such
shares  for  conversion in accordance with the foregoing provisions, and at such
time  the  rights  of the holders of such shares as holders shall cease, and the
person  or  persons entitled to receive the shares of Common Stock issuable upon
conversion  shall be treated for all purposes as the record holder or holders of
such  shares  of  Common  Stock  at such time.  As promptly as practicable on or
after  the  conversion  date,  the Company shall issue and shall deliver at such
office  or agency a certificate or certificates for the number of full shares of
Common  Stock  issuable  upon  conversion,  together with payment in lieu of any
fraction  of  a  share,  as  provided  in  Section  12(c).

     In  the  case  of  any  conversion of fewer than all the shares of Series E
Preferred  Stock  evidenced  by  a certificate, upon such conversion the Company
shall  execute  and  the  Registrar  shall countersign and deliver to the holder
thereof,  at  the  expense  of  the  Company,  a new certificate or certificates
representing  the  number  of  unconverted  shares  of Series E Preferred Stock.

     (c)     No  fractional  shares  of  Common  Stock  shall be issued upon the
conversion  of  a  share of Series E Preferred Stock.  If more than one share of
Series  E Preferred Stock shall be surrendered for conversion at one time by the
same  holder,  the number of full shares of Common Stock which shall be issuable
upon  conversion  thereof shall be computed on the basis of the aggregate number
of shares of Series E Preferred Stock so surrendered.  Instead of any fractional
shares  of Common Stock which would otherwise be issuable upon conversion of any
share  of  Series  E Preferred Stock, the Company shall pay a cash adjustment in
respect  of such fraction in an amount equal to the same fraction of the Closing
Price (as defined in Section 12(d)(vi) per Common Share at the close of business
on  the  Business  Day  prior  to  the  day  of  conversion.

     (d)     The  Conversion  Price  shall  be adjusted from time to time by the
Company  as  follows:

     (i)     If  the  Company  shall  hereafter  pay  a  dividend  or  make  a
distribution  to all holders of the outstanding shares of Common Stock in shares
of  Common  Stock,  the Conversion Price in effect at the opening of business on
the date following the date fixed for the determination of shareholders entitled
to  receive  such dividend or other distribution shall be reduced by multiplying
such  Conversion  Price by a fraction of which the numerator shall be the number
of  shares  of  Common  Stock outstanding at the close of business on the Common
Stock Record Date (as defined in Section 12(d)(vi)) fixed for such determination
and  the  denominator  shall  be  the sum of such number of shares and the total
number  of  shares  constituting  such  dividend  or  other  distribution,  such
reduction  to  become effective immediately after the opening of business on the
day  following the Common Stock Record Date.  If any dividend or distribution of
the type described in this Section 12(d)(i) is declared but not so paid or made,
the Conversion Price shall again be adjusted to the Conversion Price which would
then  be  in  effect  if  such  dividend  or distribution had not been declared.

     (ii)     (a)  In case the Company shall issue or sell any Common Stock in a
financing  conducted  as  an underwritten public offering or a private placement
(in each case for cash and other than transactions with strategic investors) for
a  consideration  per share that is 90% or less than the Current Market Price on
the  date  of  such  issuance, or shall issue securities convertible into Common
Stock  having  a conversion price per share that is 90% or less than the Current
Market  Price  at  the  date  of  issuance  of  such  convertible  security, the
Conversion Price to be in effect after such issuance or sale shall be determined
by multiplying the Conversion Price in effect immediately prior to such issuance
or  sale  by  a fraction, (1) the numerator of which shall be the sum of (x) the
number  of shares of Common Stock outstanding immediately prior to such issuance
or  sale  and  (y)  the  number  of  shares  of Common Stock which the aggregate
consideration  receivable  by  the  Company  for  the total number of additional
shares  of  Common  Stock  so  issued  or sold (or issuable on conversion) would
purchase  at  the  Current  Market  Price  in  effect  immediately prior to such
issuance or sale and (2) the denominator of which shall be the sum of the number
of shares of Common Stock outstanding immediately prior to such issuance or sale
and the number of additional shares of Common Stock to be issued or sold (or, in
the  case of convertible securities, issued on conversion).  Notwithstanding the
foregoing,  the  Conversion  Price  shall  not  be  adjusted  as a result of the
circumstances  described  in this Section 12(d)(ii)(a) if the HMTF Holders shall
be  offered  the  opportunity  to  purchase their pro rata portion (based on the
percentage of the outstanding shares of Common Stock represented by the Series E
Preferred  Stock then held by the HMTF Holders on an as-converted basis) of such
offering.  The  preemptive  right  set  forth in the preceding sentence shall be
deemed  waived  as  to  an HMTF Holder if such HMTF Holder does not respond in a
timely  fashion  to notice of the pricing of an offering to which the preemptive

                                    PAGE   8
<PAGE>
right  would  otherwise  apply.

          (b)  If  the  Company  shall  offer or issue rights or warrants to all
holders  of  its  outstanding shares of Common Stock entitling them to subscribe
for  or  purchase  shares  of  Common  Stock  at a price per share less than the
Current  Market  Price  (as  defined  in  Section 12(d)(vi)) on the Common Stock
Record Date fixed for the determination of shareholders entitled to receive such
rights  or  warrants,  the  Conversion  Price shall be adjusted so that the same
shall  equal  the price determined by multiplying the Conversion Price in effect
at  the opening of business on the date after such Common Stock Record Date by a
fraction  of  which  the numerator shall be the number of shares of Common Stock
outstanding  at  the  close of business on the Common Stock Record Date plus the
number of shares of Common Stock which the aggregate offering price of the total
number  of  shares  of  Common  Stock  subject  to such rights or warrants would
purchase  at such Current Market Price and of which the denominator shall be the
number  of  shares  of  Common Stock outstanding at the close of business on the
Common  Stock  Record  Date plus the total number of additional shares of Common
Stock  subject  to  such  rights or warrants for subscription or purchase.  Such
adjustment  shall  become effective immediately after the opening of business on
the  day  following  the  Common  Stock  Record  Date fixed for determination of
shareholders  entitled  to  purchase or receive such rights or warrants.  To the
extent  that shares of Common Stock are not delivered pursuant to such rights or
warrants,  upon  the  expiration  or  termination of such rights or warrants the
Conversion  Price shall again be adjusted to be the Conversion Price which would
then  be  in effect had the adjustments made upon the issuance of such rights or
warrants  been  made  on  the  basis of delivery of only the number of shares of
Common  Stock actually delivered.  If such rights or warrants are not so issued,
the  Conversion  Price  shall again be adjusted to be the Conversion Price which
would then be in effect if such date fixed for the determination of shareholders
entitled  to receive such rights or warrants had not been fixed.  In determining
whether  any rights or warrants entitle the holders to subscribe for or purchase
shares  of  Common  Stock  at  less  than  such  Current  Market  Price,  and in
determining  the  aggregate offering price of such shares of Common Stock, there
shall  be  taken  into account (x) any consideration received for such rights or
warrants,  with  the value of such consideration and the amount of such exercise
or  subscription  price,  if  other  than cash, to be determined by the Board of
Directors  and  (y)  the  amount  of  any  exercise  price or subscription price
required  to  be  paid  upon  exercise  of  such  warrants  or  rights.

     (iii)     If  the  outstanding  shares  of Common Stock shall be subdivided
into  a greater number of shares of Common Stock, the Conversion Price in effect
at  the  opening  of  business  on  the  day  following  the day upon which such
subdivision becomes effective shall be proportionately reduced, and, conversely,
if  the  outstanding  shares  of  Common  Stock shall be combined into a smaller
number  of shares of Common Stock, the Conversion Price in effect at the opening
of  business  on  the  day following the day upon which such combination becomes
effective shall be proportionately increased, such reduction or increase, as the
case  may  be,  to become effective immediately after the opening of business on
the  day  following  the  day upon which such subdivision or combination becomes
effective.

     (iv)     If  the Company shall, by dividend or otherwise, distribute to all
holders  of its shares of Common Stock any class of capital stock of the Company
(other than any dividends or distributions to which Section 12(d)(i) applies) or
evidences  of  its indebtedness, cash or other assets (including securities, but
excluding  any  rights or warrants of a type referred to in Section 12(d)(ii)(b)
and  dividends  and  distributions  paid  exclusively  in cash and excluding any
capital  stock,  evidences  of  indebtedness,  cash or assets distributed upon a
merger  or  consolidation  to  which  Section  12(e)  applies)  (the  foregoing
hereinafter  in  this  Section  12(d)(iv)  called the "Distributed Securities"),
then,  in each such case, the Conversion Price shall be reduced so that the same
shall  be  equal  to the price determined by multiplying the Conversion Price in
effect  immediately  prior  to  the close of business on the Common Stock Record
Date  (as  defined  in  Section 12(d)(vi) with respect to such distribution by a
fraction of which the numerator shall be the Current Market Price (determined as
provided  in  Section  12(d)(vi)  on  such  date  less the fair market value (as
determined  by  the  Board of Directors, whose good faith determination shall be
conclusive and described in a resolution of the Board of Directors) on such date
of  the  portion  of the Distributed Securities so distributed applicable to one
share  of  Common  Stock and the denominator shall be such Current Market Price,
such  reduction to become effective immediately prior to the opening of business
on  the  day following the Common Stock Record Date; provided, however, that, in
the  event  the  then fair market value (as so determined) of the portion of the
Distributed Securities so distributed applicable to one share of Common Stock is
equal  to  or  greater  than the Current Market Price on the Common Stock Record
Date,  in  lieu of the foregoing adjustment, adequate provision shall be made so
that  each  holder of shares of Series E Preferred Stock shall have the right to
receive  upon  conversion of a share of Series E Preferred Stock (or any portion
thereof)  the  amount  of Distributed Securities such holder would have received
had  such  holder  converted  such share of Series E Preferred Stock (or portion
thereof)  immediately  prior to such Common Stock Record Date.  If such dividend
or  distribution  is  not  so  paid or made, the Conversion Price shall again be
adjusted  to  be  the  Conversion  Price  which  would then be in effect if such
dividend  or  distribution  had  not  been  declared.  If the Board of Directors

                                    PAGE   9
<PAGE>
determines  the  fair  market  value  of  any  distribution for purposes of this
Section  12(d)(iv)  by reference to the actual or when issued trading market for
any  securities  constituting all or part of such distribution, it must in doing
so consider the prices in such market over the same period used in computing the
Current  Market  Price  pursuant  to  Section  12(d)(vi) to the extent possible.

     Rights  or  warrants distributed by the Company to all holders of shares of
Common  Stock  entitling the holders thereof to subscribe for or purchase shares
of   the   Company's  capital   stock  (either   initially  or   under   certain
circumstances),  which  rights  or warrants, until the occurrence of a specified
event  or  events  ("Dilution  Trigger Event"): (A) are deemed to be transferred
with  such  shares  of  Common  Stock; (B) are not exercisable; and (C) are also
issued in respect of future issuances of shares of Common Stock, shall be deemed
not  to  have  been  distributed  for purposes of this Section 12(d)(iv) (and no
adjustment  to  the  Conversion  Price  under  this  Section  12(d)(iv) shall be
required) until the occurrence of the earliest Dilution Trigger Event, whereupon
such  rights  and  warrants  shall  be  deemed  to  have been distributed and an
appropriate  adjustment  to  the  Conversion  Price under this Section 12(d)(iv)
shall  be  made.  If  any  such  rights or warrants, including any such existing
rights or warrants distributed prior to the first issuance of shares of Series E
Preferred  Stock,  are subject to subsequent events, upon the occurrence of each
of  which such rights or warrants shall become exercisable to purchase different
securities,  evidences  of  indebtedness or other assets, then the occurrence of
each such event shall be deemed to be such date of issuance and record date with
respect  to  new  rights  or  warrants  (and  a termination or expiration of the
existing  rights  or  warrants,  without  exercise  by  the holder thereof).  In
addition, in the event of any distribution (or deemed distribution) of rights or
warrants,  or  any Dilution Trigger Event with respect thereto, that was counted
for purposes of calculating a distribution amount for which an adjustment to the
Conversion  Price under this Section 12(d) was made, (1) in the case of any such
rights  or  warrants  which  shall all have been redeemed or repurchased without
exercise  by  any holders thereof, the Conversion Price shall be readjusted upon
such  final  redemption  or  repurchase  to  give effect to such distribution or
Dilution  Trigger  Event,  as  the  case  may  be,  as  though  it  were  a cash
distribution,  equal to the per share redemption or repurchase price received by
a  holder  or  holders  of shares of Common Stock with respect to such rights or
warrants  (assuming  such  holder had retained such rights or warrants), made to
all  holders  of  shares  of  Common  Stock as of the date of such redemption or
repurchase,  and  (2)  in  the  case of such rights or warrants which shall have
expired  or  been  terminated  without  exercise  by  any  holders  thereof, the
Conversion Price shall be readjusted as if such rights and warrants had not been
issued.

     Notwithstanding  any  other  provision  of  this  Section  12(d)(iv) to the
contrary, rights, warrants, evidences of indebtedness, other securities, cash or
other  assets (including, without limitation, any rights distributed pursuant to
any  shareholder  rights  plan) shall be deemed not to have been distributed for
purposes of this Section 12(d)(iv) if the Company makes proper provision so that
each holder of shares of Series E Preferred Stock who converts a share of Series
E  Preferred  Stock  (or  any  portion  thereof)  after  the  date  fixed  for
determination  of  shareholders  entitled  to receive such distribution shall be
entitled  to  receive  upon such conversion, in addition to the shares of Common
Stock  issuable  upon such conversion, the amount and kind of such distributions
that  such  holder  would  have  been  entitled  to  receive if such holder had,
immediately  prior  to such determination date, converted such share of Series E
Preferred  Stock  into  a  share  of  Common  Stock.

     For  purposes of this Section 12(d)(iv) and Sections 12(d)(i) and (ii), any
dividend or distribution to which this Section 12(d)(iv) is applicable that also
includes  shares  of  Common  Stock,  or  rights or warrants to subscribe for or
purchase  shares  of  Common Stock to which Section 12(d)(ii) applies (or both),
shall be deemed instead to be (A) a dividend or distribution of the evidences of
indebtedness,  assets,  shares  of  capital stock, rights or warrants other than
such  shares  of  Common  Stock or rights or warrants to which Section 12(d)(ii)
applies  (and  any Conversion Price reduction required by this Section 12(d)(iv)
with  respect  to  such dividend or distribution shall then be made) immediately
followed  by  (B)  a  dividend or distribution of such shares of Common Stock or
such  rights or warrants (and any further Conversion Price reduction required by
Sections  12(d)(i)  or  12(d)(ii)  with respect to such dividend or distribution
shall  then  be  made),  except  that  (1)  the Common Stock Record Date of such
dividend  or  distribution  shall  be  substituted  as  "the  date fixed for the
determination  of  stockholders  entitled  to  receive  such  dividend  or other
distribution",  "the  Common Stock Record Date fixed for such determination" and
"the  Common  Stock  Record  Date" within the meaning of Section 12(d)(i) and as
"the  date  fixed for the determination of shareholders entitled to receive such
rights  or  warrants", "the Common Stock Record Date fixed for the determination
of  the  share  holders  entitled  to receive such rights or warrants" and "such
Common  Stock Record Date" for purposes of Section 12(d)(ii), and (2) any shares
of  Common  Stock  included in such dividend or distribution shall not be deemed
"outstanding  at the close of business on the date fixed for such determination"
for  the  purposes  of  Section  12(d)(i).

     (v)     If  a  tender  offer made by the Company or any of its subsidiaries
for  all  or  any  portion of the Common Stock expires and such tender offer (as

                                    PAGE   10
<PAGE>
amended upon the expiration thereof) requires the payment to shareholders (based
on the acceptance (up to any maximum specified in the terms of the tender offer)
of  Purchased  Shares)  of an aggregate consideration having a fair market value
(as  determined  by the Board of Directors, whose good faith determination shall
be  conclusive  and  described  in a resolution of the Board of Directors) that,
combined  together with the aggregate of the cash plus the fair market value (as
determined  by  the  Board of Directors, whose good faith determination shall be
conclusive  and  described  in a resolution of the Board of Directors) as of the
expiration  of  such  tender  offer,  of consideration payable in respect of any
other  tender  offers  by  the Company or any of its subsidiaries for all or any
portion  of  the  shares of Common Stock expiring within the 12 months preceding
the  expiration  of  such  tender  offer  and  in respect of which no adjustment
pursuant to this Section 12(d)(v) has been made, exceeds 5% of the net income of
the Company reported for the 12 month period ending with the fiscal quarter next
preceding  such  payment  (the "12 Month Net Income") (determined as of the last
time  (the  "Expiration  Time")  tenders  could  have been made pursuant to such
tender  offer  (as  it  may be amended) then, and in each such case, immediately
prior  to  the  opening  of business on the day after the date of the Expiration
Time,  the  Conversion  Price shall be adjusted so that the same shall equal the
price determined by multiplying the Conversion Price in effect immediately prior
to  the  close  of  business on the date of the Expiration Time by a fraction of
which  the  numerator  shall be the number of shares of Common Stock outstanding
(including any tendered shares) at the Expiration Time multiplied by the Current
Market  Price  of a share of Common Stock on the trading day next succeeding the
Expiration  Time  and  the  denominator  shall be the sum of (x) the fair market
value  (determined  as  aforesaid)  of  the  aggregate  consideration payable to
shareholders  based  on the acceptance (up to any maximum specified in the terms
of  the tender offer) of all shares validly tendered and not withdrawn as of the
Expiration  Time  (the  shares deemed so accepted, up to any such maximum, being
referred  to  as  the  "Purchased  Shares") and (y) the product of the number of
shares of Common Stock outstanding (less any Purchased Shares) at the Expiration
Time  and  the Current Market Price of the shares of Common Stock on the trading
day  next  succeeding  the  Expiration  Time,  such reduction (if any) to become
effective  immediately prior to the opening of business on the day following the
Expiration Time.  If the Company is obligated to purchase shares pursuant to any
such  tender  offer,  but the Company is permanently prevented by applicable law
from  effecting  any  such  purchases  or  all such purchases are rescinded, the
Conversion  Price shall again be adjusted to be the Conversion Price which would
then be in effect if such tender offer had not been made.  If the application of
this  Section  12(d)(v)  to  any tender offer would result in an increase in the
Conversion  Price,  no adjustment shall be made for such tender offer under this
Section  12(d)(v).

     (vi)     For purposes of this Section 12(d), the following terms shall have
the  meaning  indicated:

     "closing price" with respect to any securities on any day means the closing
sale price as of 4:00 p.m. Eastern Time on such day or any earlier final closing
on  such  day  or,  if  no such sale takes place on such day, the average of the
reported  high  and  low  bid  prices  on  such  day, in each case on the Nasdaq
National  Market,  or  the  New  York Stock Exchange, as applicable, or, if such
security  is  not  listed  or  admitted  to  trading  on such national market or
exchange, on the national stock exchange or Commission recognized trading market
in  the  United States on which such security is quoted or listed or admitted to
trading,  or,  if  not  quoted  or listed or admitted to trading on any national
stock exchange or Commission recognized trading market in the United States, the
average  of the high and low bid prices of such security on the over-the-counter
market  on  the  day  in  question  as reported by the National Quotation Bureau
Incorporated  or  a  similar  generally accepted reporting service in the United
States,  or,  if  not  so available, in such manner as furnished by any New York
Stock  Exchange member firm selected from time to time by the Board of Directors
for that purpose, or a price determined in good faith by the Board of Directors,
whose  determination  shall  be  conclusive and described in a resolution of the
Board  of  Directors.

     "Common  Stock  Record  Date"  means,  with  respect  to  any  dividend,
distribution  or other transaction or event in which the holders of Common Stock
have the right to receive any cash, securities or other property or in which the
Common  Stock  (or other applicable security) is exchanged for or converted into
any  combination  of  cash,  securities  or  other  property, the date fixed for
determination of shareholders entitled to receive such cash, securities or other
property  (whether  such  date is fixed by the Board of Directors or by statute,
contract  or  otherwise).

     "Current  Market  Price"  means the average of the daily closing prices per
share  of  Common Stock for the 10 consecutive trading days immediately prior to
the  date  in  question;  provided,  however,  that  (A)  if  the  "ex" date (as
hereinafter  defined)  for  any  event  (other than the issuance or distribution
requiring  such computation) that requires an adjustment to the Conversion Price
pursuant  to  Section  12(d)(i),  (ii), (iii), (iv) or (v) occurs during such 10
consecutive  trading  days,  the closing price for each trading day prior to the
"ex"  date  for  such  other event shall be adjusted by multiplying such closing
price  by  the  same fraction by which the Conversion Price is so required to be
adjusted  as  a  result  of such other event, (B) if the "ex" date for any event

                                    PAGE   11
<PAGE>
(other  than  the  issuance  or  distribution  requiring  such computation) that
requires  an  adjustment  to  the Conversion Price pursuant to Section 12(d)(i),
(ii),  (iii),  (iv)  or (v) occurs on or after the "ex" date for the issuance or
distribution  requiring  such  computation and prior to the day in question, the
closing  price  for  each  trading day on and after the "ex" date for such other
event  shall  be adjusted by multiplying such closing price by the reciprocal of
the  fraction  by  which the Conversion Price is so required to be adjusted as a
result  of  such  other  event  and  (C)  if  the  "ex" date for the issuance or
distribution  requiring  such computation is prior to the day in question, after
taking  into  account  any  adjustment required pursuant to clause (A) or (B) of
this  proviso, the closing price for each trading day on or after such "ex" date
shall  be  adjusted by adding thereto the amount of any cash and the fair market
value  (as  determined by the Board of Directors in a manner consistent with any
good  faith determination of such value for purposes of Section 12(d)(iv), whose
good  faith  determination  shall be conclusive and described in a resolution of
the  Board  of  Directors)  of  the evidences of indebtedness, shares of capital
stock  or assets being distributed applicable to one share of Common Stock as of
the  close  of  business  on the day before such "ex" date.  For purposes of any
computation  under  Section 12(d)(v), the Current Market Price on any date shall
be  deemed  to  be  the  average of the daily closing prices per share of Common
Stock  for such day and the next two succeeding trading days; provided, however,
that, if the "ex" date for any event (other than the tender offer requiring such
computation)  that  requires  an  adjustment to the Conversion Price pursuant to
Section  12(d)(i),  (ii),  (iii),  (iv) or (v) occurs on or after the Expiration
Time  for  the  tender or exchange offer requiring such computation and prior to
the  day  in  question,  the closing price for each trading day on and after the
"ex"  date  for  such  other event shall be adjusted by multiplying such closing
price  by  the  reciprocal  of  the fraction by which the Conversion Price is so
required  to  be adjusted as a result of such other event.  For purposes of this
paragraph,  the  term  "ex"  date  (1) when used with respect to any issuance or
distribution,  means  the  first  date on which the shares of Common Stock trade
regular  way  on  the relevant exchange or in the relevant market from which the
closing  price  was  obtained  without  the  right  to  receive such issuance or
distribution,  (2)  when  used with respect to any subdivision or combination of
shares of Common Stock, means the first date on which the shares of Common Stock
trade  regular  way  on  such exchange or in such market after the time at which
such subdivision or combination becomes effective and (3) when used with respect
to  any  tender  or  exchange  offer means the first date on which the shares of
Common  Stock  trade  regular  way  on such exchange or in such market after the
Expiration  Time  of  such  offer.  Notwithstanding  the  foregoing,  whenever
successive  adjustments  to the Conversion Price are called for pursuant to this
Section 12(d), such adjustments shall be made to the Current Market Price as may
be  necessary  or appropriate to effectuate the intent of this Section 12(d) and
to avoid unjust or inequitable results, as determined in good faith by the Board
of  Directors.

     "Fair  Market  Value"  means  the  amount which a willing buyer would pay a
willing  seller  in  an  arm's-length  transaction.

     (vii)     No  adjustment  in  the Conversion Price shall be required unless
such  adjustment  would  require  an increase or decrease of at least 1% in such
price;  provided,  however, that any adjustments which by reason of this Section
12(d)(vii)  are  not required to be made shall be carried forward and taken into
account  in  any  subsequent adjustment.  All calculations under this Section 12
shall  be  made  by  the  Company  and  shall  be  made to the nearest cent.  No
adjustment  need  be  made  for a change in the par value or no par value of the
Common  Stock.

     (viii)     Whenever  the  Conversion  Price is adjusted as herein provided,
the  Company  shall  promptly  file  with the Registrar an Officers' Certificate
setting  forth  the  Conversion  Price after such adjustment and setting forth a
brief statement of the facts requiring such adjustment.  Promptly after delivery
of  such  certificate,  the Company shall prepare a notice of such adjustment of
the Conversion Price setting forth the adjusted Conversion Price and the date on
which  each  adjustment  becomes  effective  and  shall mail such notice of such
adjustment  of  the  Conversion  Price  to  each  holder  of  shares of Series E
Preferred  Stock  at  such  holder's  last  address appearing on the register of
holders maintained for that purpose within 20 days of the effective date of such
adjustment.  Failure  to  deliver  such  notice shall not affect the legality or
validity  of  any  such  adjustment.

     (ix)     In  any  case  in  which  this  Section  12(d)  provides  that  an
adjustment  shall  become effective immediately after a Common Stock Record Date
for  an  event, the Company may defer until the occurrence of such event issuing
to  the  holder  of  any  share of Series E Preferred Stock converted after such
Common  Stock Record Date and before the occurrence of such event the additional
shares of Common Stock issuable upon such conversion by reason of the adjustment
required  by  such event over and above the shares of Common Stock issuable upon
such  conversion  before  giving  effect  to  such  adjustment.

     (x)     For  purposes of this Section 12(d), the number of shares of Common
Stock  at  any time outstanding shall not include shares held in the treasury of
the Company.  The Company shall not pay any dividend or make any distribution on
shares  of  Common  Stock  held  in  the  treasury  of  the  Company.

                                    PAGE   12
<PAGE>
     (e)     Subject  to Section 13, in case of any consolidation of the Company
with,  or  merger  of the Company into, any other corporation, or in case of any
merger  of  another  corporation into the Company (other than a merger that does
not  result  in  any  reclassification,  conversion, exchange or cancellation of
outstanding  shares  of  Common  Stock  of the Company), or in case of any sale,
conveyance  or  transfer  of all or substantially all the assets of the Company,
the  holder  of  each  share  of  Series  E Preferred Stock shall have the right
thereafter,  during  the  period such share of Series E Preferred Stock shall be
convertible  as  specified  in  Section 12(a), to convert such share of Series E
Preferred  Stock into the kind and amount of securities, cash and other property
receivable  upon  such consolidation, merger, conveyance or transfer by a holder
of  the number of shares of Common Stock of the Company into which such share of
Series  E  Preferred  Stock  might have been converted immediately prior to such
consolidation, merger, conveyance or transfer, assuming such holder of shares of
Common  Stock  of the Company failed to exercise his rights of election, if any,
as  to the kind or amount of securities, cash and other property receivable upon
such  consolidation,  merger, conveyance or transfer (provided that, if the kind
or  amount  of  securities,  cash  and  other  property  receivable  upon  such
consolidation,  merger, conveyance or transfer is not the same for each share of
Common  Stock  of  the Company in respect of which such rights of election shall
not  have  been  exercised  ("nonelecting  share"), then for the purpose of this
Section 12 the kind and amount of securities, cash and other property receivable
upon  such  consolidation,  merger,  conveyance  or transfer by each nonelecting
share  shall  be  deemed  to be the kind and amount so receivable per share by a
plurality  of  the  nonelecting  shares).  Such  securities  shall  provide  for
adjustments which, for events subsequent to the effective date of the triggering
event,  shall  be  as nearly equivalent as may be practicable to the adjustments
provided  for in this Section 12.  The above provisions of this Section 12 shall
similarly apply to successive consolidations, mergers, conveyances or transfers.

     (f)     In  case:

     (i)     the Company shall declare a dividend (or any other distribution) on
its  Common  Stock  payable otherwise than in cash out of its earned surplus; or

     (ii)     the  Company  shall  authorize  the granting to all holders of its
shares  of  Common  Stock of rights or warrants to subscribe for or purchase any
shares  of  capital  stock  of  any  class  or  of  any  other  rights;  or

     (iii)     of  any  reclassification  of  the  Common  Stock  (other  than a
subdivision or combination of the Company's outstanding shares of Common Stock),
or  of any consolidation or merger to which the Company is a party and for which
approval of any shareholders of the Company is required, or the sale, conveyance
or  transfer  of  all  or  substantially  all  the  assets  of  the  Company; or

     (iv)     of  the  voluntary  or  involuntary  dissolution,  liquidation  or
winding-up  of  the  Company;

     then  the  Company shall cause to be filed with the Registrar  and  at each
office or agency maintained for the purpose of  conversion  of shares of  Series
Preferred  Stock,  and  shall  cause  to  be mailed to all holders at their last
addresses  as  they  shall  appear  in  the  shares  of Series E Preferred Stock
Register,  at  least 20 Business Days (or 10 Business Days in any case specified
in clause (i) or (ii) above) prior to the applicable date hereinafter specified,
a  notice  stating (x) the date on which a record is to be taken for the purpose
of such dividend, distribution, rights or warrants, or, if a record is not to be
taken,  the  date as of which the holders of shares of Common Stock of record to
be  entitled  to  such  dividend,  distribution,  rights  or  warrants are to be
determined  or  (y)  the  date  on  which  such reclassification, consolidation,
merger,  sale,  transfer,  dissolution, liquidation or winding-up is expected to
become effective, and the date as of which it is expected that holders of shares
of  Common  Stock of record shall be entitled to exchange their shares of Common
Stock  for   securities,   cash   or  other  property  deliverable   upon   such
reclassification,   consolidation,   merger,     sale,   transfer,  dissolution,
liquidation  or winding-up.  Failure to give the notice required by this Section
12(f)  or  any  defect  therein shall not affect the legality or validity of any
dividend, distribution, right, warrant, reclassification, consolidation, merger,
sale,  transfer,  dissolution,  liquidation  or winding-up, or the vote upon any
such  action.

     (g)     The  Company  shall  at  all times reserve and keep available, free
from  preemptive  rights,  out  of  its authorized but unissued shares of Common
Stock,  for  the  purpose  of  effecting  the  conversion  of shares of Series E
Preferred  Stock,  the  full number of shares of Common Stock then issuable upon
the  conversion  of  all  outstanding  shares  of  Series  E  Preferred   Stock.

     (h)     The  Company  will  pay  any  and  all taxes that may be payable in
respect  of  the  issue  or  delivery of shares of Common Stock on conversion of
shares  of  Series  E  Preferred  Stock pursuant hereto.  The Company shall not,
however,  be  required  to  pay  any  tax which may be payable in respect of any
transfer  involved in the issue and delivery of shares of Common Stock in a name
other than that of the holder of the share of Series E Preferred Stock or shares
of Series E Preferred Stock to be converted, and no such issue or delivery shall
be  made  unless  and  until  the  Person  requesting such issue has paid to the

                                    PAGE   13
<PAGE>
Company  the  amount  of any such tax, or has established to the satisfaction of
the  Company  that  such  tax  has  been  paid  or  is  not  payable.

     13.  Change  of  Control

     (a)     If a Change of Control shall have occurred, the Company shall cause
to  be  filed with the Registrar and at each office or agency maintained for the
purpose  of conversion of shares of Series E Preferred Stock, and shall cause to
be  mailed  to  all  holders at their last addresses as they shall appear in the
Series  E  Preferred Stock Register, in any case within 10 days after the Change
of  Control  Date, a notice stating (1) the Change of Control Date, (2) the fact
that if the Change of Control Date is prior to March 31, 2005, the holders shall
receive the Special Dividend as a result of such Change of Control, (3) the fact
that holders shall have the right to either (a) continue to hold their shares of
Series  E  Preferred  Stock  (or the shares of preferred stock issued in respect
thereof  pursuant to Section 14) (the "Hold Option"), (b) convert such shares in
accordance  with  Section  12  or  (c)  elect the Remarketing Option (as defined
below),  (4)  the  relevant  circumstances  and  facts  regarding such Change of
Control  and  (5)  the  instructions  that  such  holder must follow in order to
exercise  the  rights identified above.  The holders of Series E Preferred Stock
shall  receive  the  Special  Dividend  as  of the Change of Control Date if the
Change  of  Control  Date occurs prior to March 31, 2005, whether they elect the
Hold  Option  or  the  Remarketing Option or whether they elect to convert their
shares  in  accordance  with  Section  12.

     (b)     Within  30  days  after  delivery  by  the  Company  of  the notice
described  in  Section  13(a), each holder of shares of Series E Preferred Stock
(or  the shares of preferred stock issued in respect thereof pursuant to Section
14) who wishes to exercise the Hold Option or the Remarketing Option must submit
written notice (a "COC Response Notice") to the Company setting forth the option
such  holder  wishes  to  elect (and if no option is selected within such 30 day
period  such  holder  shall  be  deemed  to  have  selected  the  Hold  Option).

     (c)     If  the Hold Option is selected with respect to a share of Series E
Preferred  Stock, or if no notice from a holder is received by the date referred
to  in  the  preceding paragraph, such holder shall be deemed to have elected to
waive  such  holder's right to elect the Remarketing Option with respect to such
Change  of  Control (but not the continuing right to convert pursuant to Section
12) and such share of Series E Preferred Stock (or the shares of preferred stock
issued  in  respect  thereof pursuant to Section 14) shall remain outstanding in
accordance  with  its  current terms after giving effect to the Special Dividend
(if  applicable).

     (d)     If  the  Remarketing  Option is selected with respect to a share of
Series  E  Preferred Stock, such holder shall be deemed to have elected to waive
such  holder's right to elect the Hold Option or to convert such holder's shares
pursuant  to  Section  12  during  the  Remarketing Period and the Company shall
thereafter  have  the  option (the "Remarketing Option") to either (a) have such
share  redeemed  in accordance with the optional redemption procedures set forth
in  Section 10 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 in
cash  equal  to  101%  of the Liquidation Preference of such share (after giving
effect  to the Special Dividend if applicable) plus accrued and unpaid dividends
thereon  from  the  last  Dividend  Payment  Date to the date payment in full is
received  by such holder in respect of such share (the "Remarketing Price"), the
Company  shall  issue  to  and  sell for the account of such holder a sufficient
number  of shares of Common Stock to make up such shortfall; i.e., such that the
holder  receives  a  net  amount  in  cash  in respect of such share of Series E
Preferred Stock as to which the Remarketing Option has been selected which, when
taken  together  with  the  net  proceeds  received  by  such  holder  in  such
remarketing,  is equal to the Remarketing Price.  Written notice of the election
by the Company to either redeem or remarket such share shall be provided to such
holder  within  10  days  after  receipt of a COC Response Notice specifying the
Remarketing  Option.

     (e)     In  order to accomplish the remarketing, the Company shall take all
actions  that  may  be  necessary,  including  without limitation, preparing and
filing  a registration statement under the Securities Act of 1933, and shall pay
all  expenses  (including without limitation, underwriting discounts) associated
with  the  remarketing  and issuance and shall provide customary indemnification
for  the  benefit of the holder against securities law liabilities in connection
therewith.  Without  limiting the generality of the foregoing, the Company shall
use  its  best  efforts  to  remarket  the  shares  with  respect  to  which the
Remarketing  Option has been elected as expeditiously as reasonably practicable.
If  the  Remarketing Option has been selected and the Company has not elected to
redeem  such  share,  payment  of  the  full Remarketing Price in respect of the
remarketed  share  shall be made at a single settlement against surrender of the
share.  Such  settlement shall take place as soon as reasonably practicable.  If
such  settlement  does  not  take  place  within  180 days after the date of the
Company's  written  notice  pursuant  to  paragraph  (d) above (the "Remarketing
Period"), the Company shall give written notice to the Holders that have elected
the Remarketing Option that such 180 day period has elapsed and each such Holder
shall  have the option, for a period of 10 Business Days following the giving of
such  notice,  of  terminating  the  remarketing  process  with  respect to such

                                    PAGE   14
<PAGE>
Holder's shares and electing to convert such Holder's shares pursuant to Section
12  or  the  Hold  Option.  If  such  Holder does not so elect, the Company will
continue  to  effect  the  remarketing.

     (f)     The Company shall have the right to institute reasonable procedures
in order to implement this Section 13 and, to the extent reasonably practicable,
will  make  proper  provision prior to the Change of Control Date to ensure that
the  holders  of  shares of Series E Preferred Stock will be entitled to receive
the  benefits  intended  to  be  afforded  by  this Section 13.  Nothing in this
Section  13  shall  affect the rights of the holders of Series E Preferred Stock
set  forth  in  Section  14  hereof.

     14.     Consolidation,  Merger,  Conveyance  or  Transfer

 .  Without  the  vote  or  consent  of  the  holders  of  a majority of the then
Outstanding  shares of Series E Preferred Stock, the Company may not consolidate
or  merge  with  or  into, or sell, assign, transfer, lease, convey or otherwise
dispose  of  all or substantially all of its assets to, any person unless (i) if
the  Company is the surviving or continuing person, the Series E Preferred Stock
shall  remain  outstanding without any amendment that would adversely affect the
preferences,  rights  or  powers  of  the  Series E Preferred Stock, (ii) if the
Company is not the surviving or continuing person, (a) the entity formed by such
consolidation  or  merger  or  to  which such sale, assignment, transfer, lease,
conveyance  or  other  disposition  shall  have been made (in any such case, the
"resulting  entity")  is  a corporation organized and existing under the laws of
Bermuda, the United States or any State thereof or the District of Columbia; and
(b)  the  shares of Series E Preferred Stock are converted into or exchanged for
and  become shares of such resulting entity, having in respect of such resulting
entity  the  same  (or  more   favorable)   powers,  preferences  and  relative,
participating,  optional  or  other  special  rights that the shares of Series E
Preferred Stock had immediately prior to such transaction; and (iii) the Company
shall have delivered to the Registrar an Officers' Certificate and an opinion of
counsel,  reasonably  satisfactory  in  form and content, each stating that such
consolidation,  merger, conveyance or transfer complies with this Section 14 and
that  all  conditions precedent herein provided for relating to such transaction
have  been  complied  with.

     15. SEC  Reports;  Reports  by  Company

 .  So  long  as  any  shares  of  Series  E Preferred Stock are outstanding, the
Company shall file with the SEC and, within 15 days after it files them with the
SEC,  with  the Registrar and, if requested, furnish to each holder of shares of
Series  E  Preferred Stock all annual and quarterly reports and the information,
documents,  and  other reports that the Company is required to file with the SEC
pursuant  to Section 13(a) or 15(d) of the Exchange Act ("SEC Reports").  In the
event  the  Company  is  not  required or shall cease to be required to file SEC
Reports,  pursuant  to the Exchange Act, the Company will nevertheless file such
reports with the SEC (unless the SEC will not accept such a filing).  Whether or
not  required  by  the Exchange Act to file SEC Reports with the SEC, so long as
any shares of Series E Preferred Stock are Outstanding, the Company will furnish
or  cause  to be furnished copies of the SEC Reports to the holders of shares of
Series  E  Preferred  Stock  at  the  time  the Company is required to make such
information  available to the Registrar and to prospective investors who request
it  in  writing.

     16.Definitions.  For  purposes  of  this  Certificate  of  Designation, the
following  terms  shall  have  the  meaning  set  forth  below:

     "Accumulated  Dividends"  has  the  meaning  set  forth  in  Section  6.

     "Affiliate" means, with respect to any Person, any other Person directly or
indirectly  controlling,  controlled  by,  or  under  direct  or indirect common
control  with, such Person.  For the purposes of this definition, "control" when
used  with  respect  to  any Person means the power to direct the management and
policies  of  such Person, directly or indirectly, whether through the ownership
of  voting securities, by contract or otherwise; and the terms "controlling" and
"controlled"  have  meanings  correlative  to  the  foregoing.

     "Board  of  Directors"  has  the  meaning  set  forth  in  the  Recitals.

     "Business  Day"  means each Monday, Tuesday, Wednesday, Thursday and Friday
which  is  not  a  day on which banking institutions in The City of New York are
authorized  or  obligated  by  law  or  executive  order  to  be  closed.

     "By-laws"  has  the  meaning  set  forth  in  the  Recitals.

     "COC  Response  Notice"  has  the  meaning  set  forth  in  Section  13(b).

     "Capital  Stock"  means,  with  respect  to any person, any and all shares,
interests,  participations,  rights in, or other equivalents (however designated
and  whether  voting  and/or non-voting) of such person's capital stock, whether
outstanding  on  the  Closing Date or issued after the Closing Date, and any and
all  rights  (other  than  any  evidence  of  indebtedness), warrants or options
exchangeable  for  or  convertible  into  such  capital  stock.

                                    PAGE   15
<PAGE>
     "Certificate  of  Incorporation" has the meaning set forth in the recitals.

     "Change  of  Control"  means the occurrence of any of the following events:
(a)  any "person" or "group" (as such terms are used in Sections 13(d) and 14(d)
of  the  Exchange  Act) is or becomes the "beneficial owner" (as defined in Rule
13d-3  and 13d-5 under the Exchange Act, except that a person shall be deemed to
have  "beneficial ownership" of all securities that such person has the right to
acquire, whether such right is exercisable immediately or only after the passage
of  time),  directly or indirectly, of more than 50% of the total Voting Capital
Stock  of  the  Company  or (b) the Company consolidates with, or merges with or
into,  another person or sells, assigns, conveys, transfers, leases or otherwise
disposes  of all or substantially all of its assets to any person, or any person
consolidates  with,  or  merges  with  or  into  the  Company, in any such event
pursuant to a transaction in which the holders of the outstanding Voting Capital
Stock of the Company immediately prior to such transaction hold less than 50% of
the  outstanding  Voting Capital Stock of the surviving or transferee company or
its  parent company immediately after such transaction or immediately after such
transaction  any  "person"  or "group" (as such terms are used in Sections 13(d)
and  14(d)  of the Exchange Act), is the "beneficial owner" (as defined in Rules
13d-3  and 13d-5 under the Exchange Act, except that a person shall be deemed to
have  "beneficial ownership" of all securities that such person has the right to
acquire, whether such right is exercisable immediately or only after the passage
of  time),  directly or indirectly, of more than 50% of the total Voting Capital
Stock of the surviving or transferee company or its parent company or (c) during
any consecutive two-year period, individuals who at the beginning of such period
constituted  the  Board  of  Directors  (together  with  any new directors whose
election  by  the  Board  of  Directors  or whose nomination for election by the
stockholders  of  the  Company  was  approved  by  a  vote  of a majority of the
directors  then  still  in  office who were either directors at the beginning of
such  period  or  whose  election  or  nomination for election was previously so
approved)  cease  for  any  reason  to  constitute  a  majority  of the Board of
Directors  then in office or (d) any transaction subject to Rule 13e-3 under the
Exchange Act if following such Rule 13e-3 transaction a person or group (as such
terms  are  used  in Section 13(d) and 14(d) of the Exchange Act) owns more than
50%  of  the  total  Voting  Capital  Stock  of  the  Company.

     "Change  of  Control  Date"  has  the  meaning  set  forth in Section 6(b).

     "Closing  Date"  means  any  Closing  Date  under  the  Purchase Agreement.

     "Closing  Price"  has  the  meaning  set  forth  in  Section  12(d)(vi).

     "Common  Stock Record Date" has the meaning set forth in Section 12(d)(vi).

     "Common  Stock"  means the common stock of the Company, par value $.001 per
share and capital stock of any other class or series into which the common stock
may  hereafter  be  changed.

     "Company"  has  the  meaning  set  forth  in  the Recitals and includes any
successor  to  the  Company  hereunder.

     "Company  Order" means a written request or order signed in the name of the
Company  by  its Chairman of the Board, its President or a Vice President and by
its  Treasurer, an Assistant Treasurer, its Secretary or an Assistant Secretary.

     "Conversion  Agent"  has  the  meaning  set  forth  in  Section  5(a).

     "Conversion Price" means the price at which shares of Common Stock shall be
delivered  upon  conversion.

     "Current  Market  Value"  of the Common Stock means the average of the high
and  low  sale  prices  of  the shares of Common Stock as reported on the Nasdaq
National  Market or any national stock exchange or Commission recognized trading
market  in  the  United  States  upon  which the shares of Common Stock are then
listed  or  admitted  to  trading,  for  the  trading  day  in  question.

     "Current  Market  Price"  has  the  meaning set forth in Section 12(d)(vi).

     "Dilution  Trigger  Event"  has the meaning set forth in Section 12(d)(iv).

     "Distributed  Securities"  has  the meaning set forth in Section 12(d)(iv).

     "Dividend  Payment  Date" shall mean the last day of March, June, September

and  December  of  each  year, commencing March 31, 2000, or the next succeeding
Business  Day  if  any  such  day  is  not  a  Business  Day.

     "Dividend Period" shall mean the period from and including the Closing Date
to  but  excluding the first Dividend Payment Date and thereafter each quarterly
period  from  and  including  a  Dividend Payment Date to but excluding the next
Dividend  Payment  Date.

     "Dividend  Record  Date"  has  the  meaning  set  forth  in  Section  7(a).

                                    PAGE   16

<PAGE>
     "Expiration  Time"  has  the  meaning  set  forth  in  Section  12(d)(v).

     "Fair  Market  Value"  has  the  meaning  set  forth  in Section 12(d)(vi).

     "Junior  Shares"  has  the  meaning  set  forth  in  Section  9(a).

     "Liquidation  Preference"  means  an  amount  initially equal to $1,000 per
share  of  Series  E  Preferred  Stock,  subject  to increase in accordance with
Section  6,  Section  7 and Section 11 hereof, including, without limitation, by
the  addition of Accumulated Dividends and, if applicable, the Special Dividend.

     "Mandatory  Redemption  Date"  has  the meaning set forth in Section 10(b);
provided, however, that if such date shall not be a Business Day, then such date
shall  be  the  next  Business  Day.

     "Nonelecting  Share"  has  the  meaning  set  forth  in  Section  12(e).

     "Odd-lot  Redemption"  has  the  meaning  set  forth  in  Section  10(c).

     "Officers'  Certificate"  means  a certificate of the Company signed in the
name  of  the  Company  by  its  Chairman  of the Board, its President or a Vice
President  and  by  its  Treasurer,  an Assistant Treasurer, its Secretary or an
Assistant  Secretary.

     "Optional  Redemption"  has  the  meaning  set  forth  in  Section  10(a).

     "Optional  Redemption  Date"  has  the  meaning set forth in Section 10(a).

     "Outstanding"  means when used with respect to shares of Series E Preferred
Stock,  as  of the date of determination, all shares of Series E Preferred Stock
theretofore  authenticated  and delivered under this Certificate of Designation,
except  (a) shares of Series E Preferred Stock theretofore converted into shares
of  Common  Stock in accordance with Section 12 and shares of Series E Preferred
Stock  theretofore  canceled  by the Registrar or delivered to the Registrar for
cancellation;  (b)  shares  of  Series  E  Preferred  Stock for whose payment or
redemption money in the necessary amount has been theretofore deposited with the
Registrar or any Paying Agent (other than the Company) in trust or set aside and
segregated  in  trust by the Company (if the Company shall act as its own Paying
Agent)  for  the  holders  of  such shares of Series E Preferred Stock; provided
that,  if  such shares of Series E Preferred Stock are to be redeemed, notice of
such  redemption has been duly given pursuant to this Certificate of Designation
or  provision  therefor  satisfactory  to  the  Registrar has been made; and (c)
shares  of  Series  E Preferred Stock (x) that are mutilated, destroyed, lost or
stolen which the Company has decided to pay or (y) in exchange for or in lieu of
which  other  shares  of  Series  E  Preferred Stock have been authenticated and
delivered  pursuant to this Certificate of Designation; provided, however, that,
in  determining  whether  the  holders of the shares of Series E Preferred Stock
have  given  any  request,  demand, authorization, direction, notice, consent or
waiver  or  taken any other action hereunder, shares of Series E Preferred Stock
owned  by the Company or any other obligor upon the shares of Series E Preferred
Stock  or  any  Affiliate  of  the  Company  or  of  such other obligor shall be
disregarded  and  deemed  not  to  be  Outstanding,  except that, in determining
whether  the  Registrar  shall  be  protected  in relying upon any such request,
demand,  authorization, direction, notice, consent, waiver or other action, only
shares  of  Series E Preferred Stock which the Registrar has actual knowledge of
being  so  owned shall be so disregarded.  Shares of Series E Preferred Stock so
owned  which  have  been pledged in good faith may be regarded as Outstanding if
the pledgee establishes to the satisfaction of the Registrar the pledgee's right
so  to  act with respect to such shares of Series E Preferred Stock and that the
pledgee  is  not  the  Company  or any other obligor upon the shares of Series E
Preferred  Stock  or  any  Affiliate  of  the  Company or of such other obligor.

     "Parity  Shares"  has  the  meaning  set  forth  in  Section  9(a).

     "Paying  Agent"  has  the  meaning  set  forth  in  Section  5(a).

     "Person"  means  an individual, partnership, corporation, limited liability
company, business trust, joint stock company, trust, unincorporated association,
joint  venture,  governmental  authority  or  other  entity  of whatever nature.

     "Preferred  Stock"  means,  with respect to any person, any and all shares,
interests,  participations  or  other  equivalents  (however designated, whether
voting  or  non-voting)  of such person's preferred or preference stock, whether
now  outstanding  or  issued  after  the  date  hereof, including all Series End
classes  of  such  preferred  or  preference  stock.

     "Purchase  Agreement"  means  the  Preferred  Stock  and  Warrant  Purchase
Agreement  dated  as  of  February 6, 2000, among the Company and the Purchasers
named  therein,  as  it  may  be  amended  from  time  to  time.

     "Purchased  Shares"  has  the  meaning  set  forth  in  Section  12(d)(v).

     "Redemption  Date"  has  the  meaning  set  forth  in  Section  10(d).

                                    PAGE   17

<PAGE>
     "Redemption  Notice"  has  the  meaning  set  forth  in  Section  10(d).

     "Redemption  Price"  has  the  meaning  set  forth  in  Section  10(a).

     "Registrar"  has  the  meaning  set  forth  in  Section  3.

     "Registration  Rights  Agreement"  means  the Registration Rights Agreement
dated  as  of  March  16,  2000,  among  the  Company  and  the  Purchasers.

     "Remarketing  Option"  has  the  meaning  set  forth  in  Section  13(d).

     "Restricted  Shares  Legend"  has  the  meaning  set forth in Section 4(a).

     "Resulting  Entity"  has  the  meaning  set  forth  in  Section  14.

     "SEC"  means  the  Securities and Exchange Commission, as from time to time
constituted,  created  under  the Securities Exchange Act of 1934, or, if at any
time  after  the  adoption of this Certificate of Designation such commission is
not  existing  and  performing  the  duties  now  assigned  to it, then the body
performing  such  duties  at  such  time.

     "SEC  Reports"  has  the  meaning  set  forth  in  Section  15.

     "Securities  Act"  has  the  meaning  set  forth  in  Section  4(a).

     "Senior  Shares"  has  the  meaning  set  forth  in  Section  9(a).

     "Series  E  Preferred  Stock"  has  the  meaning  set  forth  in Section 1.

     "Special  Dividend" means, with respect to each share of Series E Preferred
Stock,  the  difference  between  (i)  $1,504.26  (as  such  number  shall  be
appropriately  adjusted  for  stock  splits,  stock  dividends or similar events
affecting  the  Series  E  Preferred  Stock)  and  (ii) the amount of the actual
Liquidation  Preference of such share immediately prior to the Change of Control
Date.

     "Voting  Capital Stock" means with respect to any Person, securities of any
class  or  classes  of  Capital  Stock  in  such Person ordinarily entitling the
holders thereof (whether at all times or at the times that such class of Capital
Stock has voting power by reason of the happening of any contingency) to vote in
the  election  of members of the board of directors or comparable governing body
of  such  Person.

     IN  WITNESS WHEREOF, the Company has caused this Certificate of Designation
to  be duly executed by Catherine Hapka, Chairman and Chief Executive Officer of
the  Company,  this  16th  day  of  March,  2000.

                                           RHYTHMS  NETCONNECTIONS  INC.,
                                           By:
                                                    /s/ Catherine Hapka
                                           Name:    Catherine  Hapka
                                           Title:   Chief Executive Officer

                                                                       EXHIBIT A
                                FACE OF SECURITY

Restricted  Legend  "THESE  SECURITIES  HAVE  NOT  BEEN  REGISTERED  UNDER  THE
SECURITIES  ACT  OF  1933  OR  THE  SECURITIES  LAWS  OF  ANY  STATE  OR  OTHER
JURISDICTION, AND, UNLESS SO REGISTERED, THEY MAY NOT BE SOLD, OFFERED FOR SALE,
TRANSFERRED,  ASSIGNED,  PLEDGED OR HYPOTHECATED EXCEPT PURSUANT TO AN EXEMPTION
FROM,  OR  IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE
ACT  AND  APPLICABLE  SECURITIES  LAWS  OF  ANY  STATE  OR  OTHER JURISDICTION."

                                                                Number of Shares

Number: ____                                                         ____ Shares

                                                           CUSIP NO.: {        }

                   8.25% SERIES E CONVERTIBLE PREFERRED STOCK
                                    DUE 2015
                                       OF
                           RHYTHMS NETCONNECTIONS INC.

                                    PAGE   18
<PAGE>
     RHYTHMS NETCONNECTIONS INC., a company organized under the laws of Delaware
(the "Company"), hereby certifies that {HOLDER} (the "Holder") is the registered
owner  of  fully  paid  and  non-assessable preference securities of the Company
designated  the  8.25%  Series E Convertible Preferred Stock due 2015, par value
U.S.$0.001  and  initial  liquidation  preference  U.S.$1,000  per  share  (the
"Preferred Stock").  The shares of Preferred Stock are transferable on the books
and  records  of the Registrar, in person or by a duly authorized attorney, upon
surrender  of  this  certificate  duly endorsed and in proper form for transfer.
The  designation,  rights, privileges, restrictions, preferences and other terms
and provisions of the Preferred Stock represented hereby are issued and shall in
all  respects  be subject to the provisions of the Certificate of Designation of
the  Company  dated March __, 2000, as the same may be amended from time to time
in accordance with its terms (the "Preferred Stock Certificate of Designation").
Capitalized  terms used herein but not defined shall have the meaning given them
in  the  Preferred Stock Certificate of Designation.  The Company will provide a
copy  of  the  Preferred  Stock  Certificate  of Designation to a Holder without
charge  upon  written request to the Company at its principal place of business.

     Reference  is  hereby  made to select provisions of the Preferred Stock set
forth  on  the  reverse  hereof,  and  to  the  Preferred  Stock  Certificate of
Designation,  which  select  provisions  and  the Preferred Stock Certificate of
Designation  shall for all purposes have the same effect as if set forth at this
place.

     Upon  receipt  of  this  certificate,  the Holder is bound by the Preferred
Stock  Certificate  of  Designation  and is entitled to the benefits thereunder.

     Unless  the  Transfer  Agent's  valid counter-signature appears hereon, the
shares  of Preferred Stock evidenced hereby shall not be entitled to any benefit
under  the  Preferred Stock Certificate of Designation or be valid or obligatory
for  any  purpose.

     IN  WITNESS  WHEREOF,  the  Company has executed this certificate as of the
date  set  forth  below.

                                            RHYTHMS  NETCONNECTIONS  INC.,
                                            By:
                                                --------------------------------
                                            Name:
                                            Title:
{Seal}

                                            By:
                                               ---------------------------------
                                            Name:
                                            Title:
Dated:

COUNTERSIGNED  AND  REGISTERED
{            }
as  Transfer  Agent,
By:
   -------------------------------
     Authorized  Signatory
Dated:

                               REVERSE OF SECURITY

                           RHYTHM NETCONNECTIONS INC.

                   8.25% Series E Convertible Preferred Stock

                                    due 2015

     Dividends  on  each share of Preferred Stock shall be payable at a rate per
annum  set  forth  on  the  face  hereof  or  as provided in the Preferred Stock
Certificate  of Designation.  Subject to the limitations set forth in Section 11
of the Preferred Stock Certificate of Designation, dividends may be paid, at the
option  of the Company, in cash or as otherwise set forth in the Preferred Stock
Certificate  of  Designation.

     The  shares  of  Preferred  Stock  shall  be  redeemable as provided in the
Preferred Stock Certificate of Designation.  The shares of Preferred Stock shall
be  convertible  into  the Company's Common Stock in the manner and according to
the  terms  set  forth  in  the  Preferred  Stock  Certification of Designation.

                                    PAGE   19
<PAGE>
     The  Company shall furnish to any Holder upon request and without charge, a
copy  of  the  voting  rights preferences, limitations and special rights of the
shares  of  each class or Series E authorized to be issued by the Company so far
as  they  have  been  fixed  and  determined  and  the authority of the Board of
Directors  to  fix  and  determine the designations, voting rights, preferences,
limitations and special rights of the class and series of shares of the Company.

                                   ASSIGNMENT

     FOR  VALUE  RECEIVED,  the  undersigned assigns and transfers the shares of
Preferred  Stock  evidenced  hereby  to:

(Insert  assignee's  social  security  or  tax  identification  number)

(Insert  address  and  zip  code  of  assignee)

and  irrevocably  appoints:

agent to transfer the shares of Preferred Stock evidenced hereby on the books of
the  Transfer  Agent and Registrar.  The agent may substitute another to act for
him  or  her.

Date:--------------------------------Signature:---------------------------------
(Sign  exactly  as  your  name  appears  on  the  other side of this Convertible
Preferred  Stock  Certificate)

Signature  Guarantee:*
                      ---------------------------------

     *  Signature  must  be  guaranteed  by  an "eligible guarantor institution"
(i.e.,  a  bank,  stockbroker,  savings  and  loan  association or credit union)
meeting the requirements of the Registrar, which requirements include membership
or  participation  in the Securities Transfer Agents Medallion Program ("STAMP")
or  such  other  "signature  guarantee  program"  as  may  be  determined by the
Registrar  in addition to, or in substitution for, STAMP, all in accordance with
the  Securities  Exchange  Act  of  1934.

                              NOTICE OF CONVERSION

                    (To be Executed by the Registered Holder

                    in order to Convert the Preferred Stock)

The  undersigned  hereby  irrevocably  elects  to   convert  (the  "Conversion")
---------  shares  of  8.25%  Series E Convertible Preferred Stock due 2015 (the
"Preferred  Stock"), represented by stock certificate No(s). -------------- (the
"Preferred  Stock  Certificates")  into  shares  of common stock, par value U.S.
$.001 per share ("Common Stock"), of Rhythms NetConnections Inc. (the "Company")
according  to  the conditions of the Certificate of Designation establishing the
terms of the Preferred Stock (the "Preferred Stock Certificate of Designation"),
as  of  the  date  written  below.  If  shares are to be issued in the name of a
person  other  than the undersigned, the undersigned will pay all transfer taxes
payable  with  respect thereto and is delivering herewith such certificates.  No
fee will be charged to the holder for any conversion, except for transfer taxes,
if  any.  A  copy  of  each  Preferred  Stock Certificate is attached hereto (or
evidence  of  loss,  theft  or  destruction  thereof).*

The  undersigned  represents  and  warrants  that  all  offers  and sales by the
undersigned  of  the  shares  of  Common  Stock issuable to the undersigned upon
conversion  of the Preferred Stock shall be made pursuant to registration of the
Common  Stock  under  the  Securities Act of 1933 (the "Act"), or pursuant to an
exemption  from  registration  under  the  Act.

Capitalized  terms  used but not defined herein shall have the meanings ascribed
thereto  in  or  pursuant  to  the  Preferred  Stock Certificate of Designation.

Date  of  Conversion:

Applicable  Conversion  Price:

Number  of  shares  of  Preferred  Stock  to  be  Converted:

Number  of  shares  of  Common  Stock  to  be  Issued:

Signature:
          ---------------------------
Name:
          ---------------------------

Address:
          ---------------------------
Fax  No.:
          ---------------------------

                                    PAGE   20
<PAGE>
     *  The  Company  is  not required to issue shares of Common Stock until the
original  Preferred  Stock  Certificate(s)   (or  evidence  of  loss,  theft  or
destruction thereof) to be converted are received by the Company or its Transfer
Agent.  The  Company  shall  issue  and  deliver  shares  of  Common Stock to an
overnight  courier  not  later than three business days following receipt of the
original  Preferred  Stock  Certificate(s)  to  be  converted.

     **  Address  where  shares  of  Common  Stock  and  any  other  payments or
certificates  shall  be  sent  by  the  Company.

                                    PAGE   21

<PAGE>EXHIBIT 10.4

THE  SECURITIES  REPRESENTED  BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE  SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR THE SECURITIES
LAWS  OF  ANY  STATE  OF  THE UNITED STATES. SUCH SECURITIES MAY NOT BE OFFERED,
SOLD, TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF IN THE ABSENCE
OF  SUCH REGISTRATION OTHER THAN PURSUANT TO AN EXEMPTION FROM SUCH REGISTRATION
REQUIREMENTS.

                                   [Form of]

                              COMMON STOCK WARRANT

                            Void after March 16, 2003

Warrant  No.  A-1-[ ]

This  certifies  that, for value received, [                  ] or its permitted
assigns  is  entitled,  subject  to  the  terms  and conditions set forth herein
(including  the  exercise  conditions  of  Section  2), to purchase from Rhythms
NetConnections  Inc  (the "Company"), a Delaware corporation, up to [
                                                ] fully  paid and nonassessable
shares (the "Shares") of Common Stock (as defined herein) at the exercise  price
of  $45.00  per  share (the "Exercise Price").  The Exercise Price and number of
Shares is subject to adjustment as provided in this Warrant.  The term "Warrant"
as  used  herein  shall  include  this  Warrant  and  any  warrants delivered in
substitution  or  exchange  therefor  as  provided  herein.

     1.     Definitions.  As  used  in this Warrant, the following terms, unless
the  context  otherwise  requires,  have  the  following  meanings:

          (a)     "Affiliate" means with respect to any Person, any other Person
directly  or  indirectly controlling, controlled by, or under direct or indirect
common control with, such Person. For the purposes of this definition, "control"
when  used  with  respect to any Person means the power to direct the management
and  policies  of  such  Person,  directly  or  indirectly,  whether through the
ownership  of  voting  securities,  by  contract  or  otherwise;  and  the terms
"controlling"  and  "controlled"  have  meanings  correlative  to the foregoing.

          (b)     "Business Day" means each Monday, Tuesday, Wednesday, Thursday
and  Friday  that  is not a day on which banking institutions in the City of New
York  are  authorized  or  obligated  by  law  or  executive order to be closed.
          (c)     "Capital  Stock" or "capital stock" means, with respect to any
Person,  any  and  all  shares,  interests,  participations, rights in, or other
equivalents  (however  designated  and whether voting and/or non-voting) of such
Person's capital stock, whether outstanding on the date of the Warrant or issued
after  the  date of the Warrant, and any and all rights (other than any evidence
of indebtedness) or warrants exercisable or exchangeable for or convertible into
such  capital  stock.

          (d)     "Common Stock" means shares of the Company's common stock, par
value $0.001 per share and capital stock of any other class or series into which
the  Common  Stock  may  hereafter  by  changed.

          (e)     "Company"  means  Rhythms  NetConnections  Inc. and any Person
that  shall  succeed  to  or  assume  the  obligations of the Company under this
Warrant.

          (f)     "HMTF  Group"  means Hicks, Muse, Tate & Furst Incorporated, a
Texas  corporation, and its Affiliates and their respective officers, directors,
partners,  members,  stockholders and employees (and members of their respective
families  and  trusts  for  the  primary benefit of such family members) and HM4
Rhythms  Qualified  Fund,  LLC; HM4 Rhythms Private Fund, LLC; HM PG-IV Rhythms,
LLC;  HM  4-SBS  Rhythms  Coinvestors, LLC, HM 4-EQ Rhythms Coinvestors, LLC and
HMTF  Bridge  RHY,  LLC  and  their  respective  Affiliates.

          (g)     "HMTF  Holders"  means  members  of  the  HMTF  Group that are
holders  of  all or a portion of this Warrant and the shares of the Common Stock
issuable  upon  exercise  of  this  Warrant.

          (h)     "Person"  means  any  individual,  partnership,  corporation,
limited  liability  company,  joint  venture,  association, joint-stock company,
trust,  unincorporated  organization,  government  or  agency  or  political
subdivision  thereof,  or  other  entity.

          (i)     "Public  Offering" shall mean a public offering by the Company
of  its  Common  Stock  registered under the Securities Act of 1933, as amended.

                                    PAGE   1
<PAGE>
          (j)     "Warrantholder",  "holder  of  Warrant",  "holder", or similar
terms  refers  to  the  holder  of  this  Warrant.

     2.     Exercise  Provisions.

          (a)     Exercisability.  The holder of this Warrant may exercise it in
whole  or  in  part to the extent then exercisable by surrender of this Warrant,
with  the  form  of subscription at the end of this Warrant duly executed by the
holder,  to the Company at its principal office (or to the office of the Warrant
Agent  as  contemplated in Section 6(b), if applicable), accompanied by payment,
in  lawful money of the United States, of the amount obtained by multiplying the
Exercise  Price  (as  adjusted  from  time to time pursuant to the terms of this
Warrant)  by  the  number of shares of Common Stock designated in such completed
subscription  form.  This  Warrant  shall  be  deemed  to  have  been  exercised
immediately  prior  to  the  close  of  business on the day of surrender of such
Warrant,  and  the  person or persons entitled to receive shares of Common Stock
issuable  upon exercise of this Warrant shall be treated for all purposes as the
record  holder  or  holders  of  such  shares  of  Common  Stock  at  such time.

     (b)     Payment  of  Exercise Price  Payment shall be made by check payable
to  the  Company.

     (c)     Restrictions  on Exercise.  This Warrant is exercisable at any time
and  from  time  to  time  from  the  date hereof, provided this Warrant has not
terminated  pursuant  to  Section  10.

     3.     Delivery  of  Stock Certificates.  As soon as possible after full or
partial  exercise of this Warrant in accordance with the terms hereof and in any
event  within  ten  (10)  days after such exercise, the Company, at its expense,
will  cause  to  be  issued  in  the name of and delivered to the holder of this
Warrant,  a  certificate  or  certificates  for  the  number  of  fully paid and
nonassessable shares of Common Stock to which that holder shall be entitled upon
such exercise.  In the event that this Warrant is exercised in part, the Company
at  its  expense  will  also  execute  and  deliver  a new Warrant of like tenor
exercisable  for  the  number  of  Shares  for  which  this  Warrant may then be
exercised.  No fractional shares or scrip representing fractional shares will be
issued  upon  exercise  of this Warrant.  If upon any exercise of this Warrant a
fraction  of  a share would otherwise be issuable, the Company will pay the cash
value of that fractional share, calculated on the basis of the fair market value
as  of  the  date  of  exercise.

     4.     Adjustment  Provisions

     The  Exercise  Price  shall be adjusted from time to time by the Company as
follows:

          (a)     If  the  Company  shall  hereafter  pay  a  dividend or make a
distribution  to all holders of the outstanding shares of Common Stock in shares
of  Common Stock, the Exercise Price in effect at the opening of business on the
date  following the date fixed for the determination of shareholders entitled to
receive such dividend or other distribution shall be reduced by multiplying such
Exercise  Price  by  a  fraction  the  numerator of which shall be the number of
shares  of Common Stock outstanding at the close of business on the Common Stock
Record  Date  (as  defined in Section 4(f)(ii)) fixed for such determination and
the denominator of which shall be the sum of such number of shares and the total
number  of  shares  constituting  such  dividend  or  other  distribution,  such
reduction  to  become effective immediately after the opening of business on the
day  following  the Common Stock Record Date. If any dividend or distribution of
the type described in this Section 4(a) is declared but not so paid or made, the
Exercise Price shall again be adjusted to the Exercise Price which would then be
in  effect  if  such  dividend  or  distribution  had  not  been  declared.

     (b)     (i)    In  case the Company shall issue or sell any Common Stock in
a  financing conducted as an underwritten public offering or a private placement
(in each case for cash and other than transactions with strategic investors) for
a  consideration per share that is 90% or  less than the Current Market Price on
the  date  of  such  issuance, or shall issue securities convertible into Common
Stock  having  an  Exercise Price per share that is 90% or less than the Current
Market  Price at the date of issuance of such convertible security, the Exercise
Price  to  be  in  effect  after  such  issuance  or sale shall be determined by
multiplying  the  Exercise Price in effect immediately prior to such issuance or
sale  by  a  fraction,  (1)  the  numerator of which shall be the sum of (x) the
number  of shares of Common Stock outstanding immediately prior to such issuance
or  sale  and  (y)  the  number  of  shares  of Common Stock which the aggregate
consideration  receivable  by  the  Company  for  the total number of additional
shares  of  Common  Stock  so  issued  or sold (or issuable on conversion) would
purchase  at  the  Current  Market  Price  in  effect  immediately prior to such
issuance or sale and (2) the denominator of which shall be the sum of the number
of shares of Common Stock outstanding immediately prior to such issuance or sale
and the number of additional shares of Common Stock to be issued or sold (or, in
the  case of convertible securities, issued on conversion).  Notwithstanding the
foregoing,  the  Exercise  Price  shall  not  be  adjusted  as  a  result of the
circumstances  described  in  this  Section 4(b)(i) if the HMTF Holders shall be
offered  the  opportunity  to  purchase  their  pro  rata  portion (based on the

                                    PAGE   2
<PAGE>
percentage of the outstanding shares of Common Stock represented by the Warrants
then  held by such HMTF Holders on an as-exercised basis) of such offering.  The
preemptive  right  set forth in the preceding sentence shall be deemed waived as
to  an  HMTF  Holder if such HMTF Holder does not respond in a timely fashion to
notice  of  the  pricing  of  the  offering  to which the preemptive right would
otherwise  apply.

          (ii)     If the Company shall offer or issue rights or warrants to all
holders  of  its  outstanding shares of Common Stock entitling them to subscribe
for  or  purchase  shares  of  Common  Stock  at a price per share less than the
Current  Market  Price  (as  defined  in Section 4(f) (iii)) on the Common Stock
Record Date fixed for the determination of shareholders entitled to receive such
rights  or warrants, the Exercise Price shall be adjusted so that the same shall
equal  the  price  determined by multiplying the Exercise Price in effect at the
opening  of  business  on  the  date  after  such  Common Stock Record Date by a
fraction  of  which  the numerator shall be the number of shares of Common Stock
outstanding  at  the  close of business on the Common Stock Record Date plus the
number of shares of Common Stock which the aggregate offering price of the total
number  of  shares  of  Common  Stock  subject  to such rights or warrants would
purchase  at such Current Market Price and of which the denominator shall be the
number  of  shares  of  Common Stock outstanding at the close of business on the
Common  Stock  Record  Date plus the total number of additional shares of Common
Stock  subject  to  such  rights or warrants for subscription or purchase.  Such
adjustment  shall  become effective immediately after the opening of business on
the  day  following  the  Common  Stock  Record  Date fixed for determination of
shareholders  entitled  to  purchase or receive such rights or warrants.  To the
extent  that shares of Common Stock are not delivered pursuant to such rights or
warrants,  upon  the  expiration  or  termination of such rights or warrants the
Exercise Price shall again be adjusted to be the Exercise Price which would then
be  in  effect  had  the  adjustments  made  upon the issuance of such rights or
warrants  been  made  on  the  basis of delivery of only the number of shares of
Common  Stock actually delivered.  If such rights or warrants are not so issued,
the  Exercise Price shall again be adjusted to be the Exercise Price which would
then  be  in  effect  if  such  date fixed for the determination of shareholders
entitled  to receive such rights or warrants had not been fixed.  In determining
whether  any rights or warrants entitle the holders to subscribe for or purchase
shares  of  Common  Stock  at  less  than  such  Current  Market  Price,  and in
determining  the  aggregate offering price of such shares of Common Stock, there
shall  be  taken  into account (x) any consideration received for such rights or
warrants,  with  the value of such consideration and the amount of such exercise
or  subscription  price,  if  other  than cash, to be determined by the Board of
Directors  and  (y)  the  amount  of  any  exercise  price or subscription price
required  to  be  paid  upon  exercise  of  such  warrants  or  rights.

          (c)     If  the outstanding shares of Common Stock shall be subdivided
into a greater number of shares of Common Stock, the Exercise Price in effect at
the opening of business on the day following the day upon which such subdivision
becomes  effective  shall  be  proportionately  reduced, and, conversely, if the
outstanding  shares  of  Common Stock shall be combined into a smaller number of
shares  of Common Stock, the Exercise Price in effect at the opening of business
on the day following the day upon which such combination becomes effective shall
be proportionately increased, such reduction or increase, as the case may be, to
become  effective immediately after the opening of business on the day following
the  day  upon  which  such  subdivision  or  combination  becomes  effective.

     (d)     (i)  If  the Company shall, by dividend or otherwise, distribute to
all  holders  of  its  shares  of Common Stock any class of capital stock of the
Company  (other  than  any  dividends  or  distributions  to  which Section 4(a)
applies)  or  evidences  of  its  indebtedness,  cash or other assets (including
securities,  but  excluding  any  rights  or  warrants  of a type referred to in
Section  4(b)(ii)  and  dividends and distributions paid exclusively in cash and
excluding  any  capital  stock,  evidences  of  indebtedness,  cash  or  assets
distributed  upon  a merger or consolidation to which Section 4(k) applies) (the
foregoing hereinafter in this Section 4(d) called the "Distributed Securities"),
then,  in  each  such case, the Exercise Price shall be reduced so that the same
shall  be  equal  to  the  price determined by multiplying the Exercise Price in
effect  immediately  prior  to  the close of business on the Common Stock Record
Date  with  respect  to  such  distribution by a fraction of which the numerator
shall  be the Current Market Price (determined as provided in Section 4(f)(iii))
on  such  date  less  the  fair  market  value  (as  determined  by the Board of
Directors, whose good faith determination shall be conclusive and described in a
resolution  of  the  Board  of  Directors)  on  such  date of the portion of the
Distributed  Securities  so  distributed applicable to one share of Common Stock
and the denominator shall be such Current Market Price, such reduction to become
effective  immediately prior to the opening of business on the day following the
Common  Stock  Record  Date; provided, however, that, in the event the then fair
market  value (as so determined) of the portion of the Distributed Securities so
distributed  applicable to one share of Common Stock is equal to or greater than
the  Current  Market  Price  on  the  Common  Stock  Record Date, in lieu of the
foregoing  adjustment,  adequate  provision  shall  be  made  so  that  each
Warrantholder  shall have the right to receive upon exercise of such Warrant (or
any portion thereof) the amount of Distributed Securities such holder would have
received had such holder exercised such Warrant (or portion thereof) immediately
prior  to such Common Stock Record Date. If such dividend or distribution is not

                                    PAGE   3
<PAGE>
so  paid  or made, the Exercise Price shall again be adjusted to be the Exercise
Price  which  would  then  be in effect if such dividend or distribution had not
been declared. If the Board of Directors determines the fair market value of any
distribution  for  purposes  of  this Section 4(d) by reference to the actual or
when  issued  trading market for any securities constituting all or part of such
distribution,  it  must  in doing so consider the prices in such market over the
same  period  used  in  computing  the  Current Market Price pursuant to Section
4(f)(iii)  to  the  extent  possible.

          (ii)     Options, rights or warrants distributed by the Company to all
holders of shares of Common Stock entitling the holders thereof to subscribe for
or  purchase  shares  of  the Company's capital stock (either initially or under
certain  circumstances), which options, rights or warrants, until the occurrence
of  a specified event or events ("Dilution Trigger Event"): (A) are deemed to be
transferred  with  such shares of Common Stock; (B) are not exercisable; and (C)
are  also issued in respect of future issuances of shares of Common Stock, shall
be  deemed  not  to  have been distributed for purposes of this Section 4(d)(ii)
(and  no  adjustment  to the Exercise Price under this Section 4(d)(ii) shall be
required) until the occurrence of the earliest Dilution Trigger Event, whereupon
such  options,  rights and warrants shall be deemed to have been distributed and
an  appropriate  adjustment  to  the  Exercise Price under this Section 4(d)(ii)
shall  be  made.  If  any  such  options, rights or warrants, including any such
existing  options, rights or warrants distributed prior to the first issuance of
the  Warrants,  are subject to subsequent events, upon the occurrence of each of
which  such  options,  rights  or  warrants shall become exercisable to purchase
different  securities,  evidences  of  indebtedness  or  other  assets, then the
occurrence  of  each  such event shall be deemed to be such date of issuance and
record  date  with respect to new options, rights or warrants (and a termination
or  expiration  of the existing options, rights or warrants, without exercise by
the  holder  thereof).  In addition, in the event of any distribution (or deemed
distribution) of options, rights or warrants, or any Dilution Trigger Event with
respect  thereto,  that  was  counted for purposes of calculating a distribution
amount  for  which  an adjustment to the Exercise Price under this Section 4 was
made,  (1)  in  the case of any such options, rights or warrants which shall all
have  been  redeemed or repurchased without exercise by any holders thereof, the
Exercise  Price  shall be readjusted upon such final redemption or repurchase to
give  effect to such distribution or Dilution Trigger Event, as the case may be,
as  though  it  were  a  cash distribution, equal to the per share redemption or
repurchase  price received by a holder or holders of shares of Common Stock with
respect  to  such options, rights or warrants (assuming such holder had retained
such options, rights or warrants), made to all holders of shares of Common Stock
as  of  the  date  of such redemption or repurchase, and (2) in the case of such
options,  rights or warrants which shall have expired or been terminated without
exercise  by  any  holders thereof, the Exercise Price shall be readjusted as if
such  options,  rights  and  warrants  had  not  been  issued.

          (iii)     Notwithstanding  any other provision of this Section 4(d) to
the  contrary,  options,  rights,  warrants,  evidences  of  indebtedness, other
securities,  cash  or  other  assets  (including, without limitation, any rights
distributed pursuant to any shareholder rights plan) shall be deemed not to have
been  distributed  for purposes of this Section 4(d) if the Company makes proper
provision so that each Warrantholder who exercises such Warrants (or any portion
thereof)  after  the  date  fixed  for determination of shareholders entitled to
receive  such  distribution  shall be entitled to receive upon such exercise, in
addition  to  the shares of Common Stock issuable upon such exercise, the amount
and  kind  of  such  distributions  that such holder would have been entitled to
receive  if  such  holder  had,  immediately  prior  to such determination date,
exercised  such  Warrants.

          (iv)     For purposes of this Section 4(d) and Sections 4(a) and 4(b),
any  dividend or distribution to which this Section 4(d) is applicable that also
includes shares of Common Stock, or options, rights or warrants to subscribe for
or  purchase  shares  of  Common Stock to which 4(b) applies (or both), shall be
deemed  instead  to  be  (A)  a  dividend  or  distribution  of the evidences of
indebtedness,  assets,  shares  of  capital stock, rights or warrants other than
such shares of Common Stock or options, rights or warrants to which Section 4(b)
applies (and any Exercise Price reduction required by this Section 4(d)(iv) with
respect  to  such  dividend  or  distribution  shall  then  be made) immediately
followed  by  (B)  a  dividend or distribution of such shares of Common Stock or
such  options,  rights  or  warrants  (and  any further Exercise Price reduction
required  by Sections 4(a) or 4(b) with respect to such dividend or distribution
shall  then  be  made),  except  that  (1)  the Common Stock Record Date of such
dividend  or  distribution  shall  be  substituted  as  "the  date fixed for the
determination  of  stockholders  entitled  to  receive  such  dividend  or other
distribution",  "the  Common Stock Record Date fixed for such determination" and
"the  Common  Stock  Record Date" within the meaning of Section 4(a) and as "the
date fixed for the determination of shareholders entitled to receive such rights
or  warrants",  "the Common Stock Record Date fixed for the determination of the
stockholders entitled to receive such rights or warrants" and "such Common Stock
Record  Date"  for  purposes of Section 4(b), and (2) any shares of Common Stock
included  in  such  dividend or distribution shall not be deemed "outstanding at
the close of business on the date fixed for such determination" for the purposes
of  Section  4(a).

                                    PAGE   4
<PAGE>
          (e)     If  a  tender  offer  made  by  the  Company  or  any  of  its
subsidiaries  for all or any portion of the Common Stock expires and such tender
offer  (as  amended  upon  the  expiration  thereof)  requires  the  payment  to
shareholders  (based on the acceptance (up to any maximum specified in the terms
of the tender offer) of Purchased Shares) of an aggregate consideration having a
fair  market  value  (as  determined by the Board of Directors, whose good faith
determination  shall be conclusive and described in a resolution of the Board of
Directors)  that, combined together with the aggregate of the cash plus the fair
market  value  (as  determined  by  the  Board  of  Directors,  whose good faith
determination  shall be conclusive and described in a resolution of the Board of
Directors)  as  of the expiration of such tender offer, of consideration payable
in  respect of any other tender offers by the Company or any of its subsidiaries
for  all  or  any  portion  of the shares of Common Stock expiring within the 12
months  preceding the expiration of such tender offer and in respect of which no
adjustment pursuant to this Section 4(e) has been made, exceeds 5% of the income
of  the  Company reported for the 12 month period ending with the fiscal quarter
next  preceding  such  payment (the "12 Month Net Income") (determined as of the
last  time (the "Expiration Time") tenders could have been made pursuant to such
tender  offer  (as it may be amended)), then, and in each such case, immediately
prior  to  the  opening  of business on the day after the date of the Expiration
Time,  the  Exercise  Price  shall  be adjusted so that the same shall equal the
price  determined  by multiplying the Exercise Price in effect immediately prior
to  the  close  of  business on the date of the Expiration Time by a fraction of
which  the  numerator  shall be the number of shares of Common Stock outstanding
(including any tendered shares) at the Expiration Time multiplied by the Current
Market  Price  of a share of Common Stock on the trading day next succeeding the
Expiration  Time  and  the  denominator  shall be the sum of (x) the fair market
value  (determined  as  aforesaid)  of  the  aggregate  consideration payable to
shareholders  based  on the acceptance (up to any maximum specified in the terms
of  the tender offer) of all shares validly tendered and not withdrawn as of the
Expiration  Time  (the  shares deemed so accepted, up to any such maximum, being
referred  to  as  the  "Purchased  Shares") and (y) the product of the number of
shares of Common Stock outstanding (less any Purchased Shares) at the Expiration
Time  and  the Current Market Price of the shares of Common Stock on the trading
day  next  succeeding  the  Expiration  Time,  such reduction (if any) to become
effective  immediately prior to the opening of business on the day following the
Expiration  Time. If the Company is obligated to purchase shares pursuant to any
such  tender  offer,  but the Company is permanently prevented by applicable law
from  effecting  any  such  purchases  or  all such purchases are rescinded, the
Exercise Price shall again be adjusted to be the Exercise Price which would then
be  in effect if such tender offer had not been made. If the application of this
Section  4(e)  to  any  tender offer would result in an increase in the Exercise
Price,  no  adjustment  shall  be  made for such tender offer under this Section
4(e).
          (f)     For purposes of this Section 4, the following terms shall have
the  meaning  indicated:
               (i)     "closing price" with respect to any securities on any day
means  the  closing  sale  price as of 4:00 p.m. Eastern Time on such day or any
earlier  final  closing on such day or, if no such sale takes place on such day,
the average of the reported high and low bid prices on such day, in each case on
the  Nasdaq  National Market, or the New York Stock Exchange, as applicable, or,
if such security is not listed or admitted to trading on such national market or
exchange, on the national stock exchange or Commission recognized trading market
in  the  United States on which such security is quoted or listed or admitted to
trading,  or,  if  not  quoted  or listed or admitted to trading on any national
stock exchange or Commission recognized trading market in the United States, the
average  of the high and low bid prices of such security on the over-the-counter
market  on  the  day  in  question  as reported by the National Quotation Bureau
Incorporated  or  a  similar  generally accepted reporting service in the United
States,  or,  if  not  so available, in such manner as furnished by any New York
Stock  Exchange member firm selected from time to time by the Board of Directors
for that purpose, or a price determined in good faith by the Board of Directors,
whose  determination  shall  be  conclusive and described in a resolution of the
Board  of  Directors.
               (ii)     "Common  Stock  Record  Date" means, with respect to any
dividend,  distribution  or  other  transaction or event in which the holders of
Common Stock have the right to receive any cash, securities or other property or
in  which  the  Common  Stock (or other applicable security) is exchanged for or
converted  into  any combination of cash, securities or other property, the date
fixed  for  determination  of  shareholders  entitled  to  receive  such  cash,
securities  or  other  property  (whether  such  date  is  fixed by the Board of
Directors  or  by  statute,  contract  or  otherwise).
               (iii)     "Current  Market  Price" means the average of the daily
closing  prices  per  share  of Common Stock for the 10 consecutive trading days
immediately  prior  to  the date in question; provided, however, that (A) if the
"ex"  date  (as  hereinafter  defined) for any event (other than the issuance or
distribution  requiring  such  computation)  that  requires an adjustment to the
Exercise  Price pursuant to Section 4(a), 4(b), 4(c), 4(d) or 4(e) occurs during
such  10  consecutive trading days, the closing price for each trading day prior
to  the  "ex"  date  for  such other event shall be adjusted by multiplying such
closing price by the same fraction by which the Exercise Price is so required to
be  adjusted as a result of such other event, (B) if the "ex" date for any event
(other  than  the  issuance  or  distribution  requiring  such computation) that
requires  an  adjustment  to  the Exercise Price pursuant to Section 4(a), 4(b),

                                    PAGE   5
<PAGE>
4(c),  4(d)  or  4(e)  occurs  on  or  after  the  "ex" date for the issuance or
distribution  requiring  such  computation and prior to the day in question, the
closing  price  for  each  trading day on and after the "ex" date for such other
event  shall  be adjusted by multiplying such closing price by the reciprocal of
the  fraction  by  which  the  Exercise Price is so required to be adjusted as a
result  of  such  other  event  and  (C)  if  the  "ex" date for the issuance or
distribution  requiring  such computation is prior to the day in question, after
taking  into  account  any  adjustment required pursuant to clause (A) or (B) of
this  proviso, the closing price for each trading day on or after such "ex" date
shall  be  adjusted by adding thereto the amount of any cash and the fair market
value  (as  determined by the Board of Directors in a manner consistent with any
good  faith determination of such value for purposes of Section 4(d), whose good
faith  determination  shall  be  conclusive and described in a resolution of the
Board of Directors) of the evidences of indebtedness, shares of capital stock or
assets being distributed applicable to one share of Common Stock as of the close
of  business  on the day before such "ex" date.  For purposes of any computation
under  Section  4(e), the Current Market Price on any date shall be deemed to be
the  average  of the daily closing prices per share of Common Stock for such day
and  the  next two succeeding trading days; provided, however, that, if the "ex"
date for any event (other than the tender offer requiring such computation) that
requires  an  adjustment  to  the Exercise Price pursuant to Section 4(a), 4(b),
4(c),  4(d)  or  4(e),  occurs on or after the Expiration Time for the tender or
exchange  offer requiring such computation and prior to the day in question, the
closing  price  for  each  trading day on and after the "ex" date for such other
event  shall  be adjusted by multiplying such closing price by the reciprocal of
the  fraction  by  which  the  Exercise Price is so required to be adjusted as a
result  of such other event.  For purposes of this paragraph, the term "ex" date
(1) when used with respect to any issuance or distribution, means the first date
on  which  the shares of Common Stock trade regular way on the relevant exchange
or  in the relevant market from which the closing price was obtained without the
right  to  receive  such issuance or distribution, (2) when used with respect to
any  subdivision  or combination of shares of Common Stock, means the first date
on  which  the  shares  of Common Stock trade regular way on such exchange or in
such  market  after  the  time  at which such subdivision or combination becomes
effective  and  (3) when used with respect to any tender or exchange offer means
the  first  date  on  which the shares of Common Stock trade regular way on such
exchange  or  in  such  market  after  the  Expiration  Time  of  such  offer.
Notwithstanding  the  foregoing, whenever successive adjustments to the Exercise
Price  are called for pursuant to this Section 4, such adjustments shall be made
to the Current Market Price as may be necessary or appropriate to effectuate the
intent  of  this  Section  4  and  to  avoid  unjust  or inequitable results, as
determined  in  good  faith  by  the  Board  of  Directors.
               (iv)     "Fair  Market  Value"  means  the amount which a willing
buyer  would  pay  a  willing  seller  in  an  arm's-length  transaction.

          (g)     No  adjustment  in the Exercise Price shall be required unless
such  adjustment  would  require  an increase or decrease of at least 1% in such
price;  provided,  however, that any adjustments which by reason of this Section
4(g) are not required to be made shall be carried forward and taken into account
in  any  subsequent  adjustment.  All calculations under this Section 4 shall be
made by the Company and shall be made to the nearest cent. No adjustment need be
made  for  a  change  in  the  par  value  or  no par value of the Common Stock.

          (h)     Whenever  the  Exercise  Price is adjusted as herein provided,
the  Company  shall  promptly  file  with the Registrar an Officers' Certificate
setting  forth the Exercise Price after such adjustment and the number of shares
of Common Stock for which this Warrant will be exercisable after such adjustment
pursuant  to  Section  4(e)  and  setting  forth  a brief statement of the facts
requiring  such  adjustment.  Promptly  after  delivery of such certificate, the
Company  shall prepare a notice of such adjustment of the Exercise Price setting
forth  the adjusted Exercise Price and the date on which each adjustment becomes
effective and shall mail such notice of such adjustment of the Exercise Price to
each  Warrantholder  at  such holder's last address appearing on the register of
holders maintained for that purpose within 20 days of the effective date of such
adjustment.  Failure  to  deliver  such  notice shall not affect the legality or
validity  of  any  such  adjustment.

          (i)     In  any  case  in  which  this  Section  4  provides  that  an
adjustment  shall  become effective immediately after a Common Stock Record Date
for  an  event, the Company may defer until the occurrence of such event issuing
to  the  holder of any Warrant exercised after such Common Stock Record Date and
before  the  occurrence  of  such  event  the  additional shares of Common Stock
issuable  upon  such exercise by reason of the adjustment required by such event
over  and  above  the  shares of Common Stock issuable upon such exercise before
giving  effect  to  such  adjustment.
          (j)     For purposes of this Section 4, the number of shares of Common
Stock  at  any time outstanding shall not include shares held in the treasury of
the  Company. The Company shall not pay any dividend or make any distribution on
shares  of  Common  Stock  held  in  the  treasury  of  the  Company.

          (k)     In case of any consolidation of the Company with, or merger of
the  Company  into, any other Person, or in case of any merger of another Person
into  the  Company  (other  than  a  merger  that  does  not  result  in  any
reclassification,  conversion,  exchange or cancelation of outstanding shares of

                                    PAGE   6
<PAGE>
Common  Stock of the Company), or in case of any sale, conveyance or transfer of
all  or  substantially  all  the assets of the Company, the Warrantholders shall
have  the  right thereafter, during the period such Warrant shall be exercisable
as  specified in Section 2(a), to convert such Warrants into the kind and amount
of  securities,  cash  and  other  property  receivable upon such consolidation,
merger,  conveyance  or  transfer  by a holder of the number of shares of Common
Stock  of  the  Company  for  which  the  Warrants  might  have  been  exercised
immediately  prior  to  such  consolidation,  merger,  conveyance  or  transfer,
assuming such holder of shares of Common Stock of the Company failed to exercise
his rights of election, if any, as to the kind or amount of securities, cash and
other  property  receivable  upon  such  consolidation,  merger,  conveyance  or
transfer  (provided  that,  if  the kind or amount of securities, cash and other
property  receivable  upon such consolidation, merger, conveyance or transfer is
not  the  same for each share of Common Stock of the Company in respect of which
such  rights  of  election  shall not have been exercised ("nonelecting share"),
then  for  the  purpose  of this Section 4(k) the kind and amount of securities,
cash  and  other property receivable upon such consolidation, merger, conveyance
or  transfer by each nonelecting share shall be deemed to be the kind and amount
so  receivable  per  share  by  a  plurality  of  the  nonelecting shares). Such
securities  shall  provide  for  adjustments which, for events subsequent to the
effective  date of the triggering event, shall be as nearly equivalent as may be
practicable  to  the  adjustments  provided  for in this Section 4(k). The above
provisions  of  this  Section  4(k)  shall  similarly  apply  to  successive
consolidations,  mergers,  conveyances  or  transfers.

          (l)     Upon  each adjustment of the Exercise Price as a result of the
operation of this Section 4, this Warrant shall thereafter evidence the right to
purchase,  at the adjusted Exercise Price, that number of shares of Common Stock
obtained by multiplying the number of shares covered by this Warrant immediately
prior  to  this  adjustment by the Exercise Price in effect immediately prior to
such  adjustment  and  dividing the product so obtained by the Exercise Price in
effect  immediately  after  such  adjustment  of  the  Exercise  Price.

     5.     Notice  of  Certain Events.  If at any time prior to the termination
or  full  exercise  of  this  Warrant:

          (a)     the  Company  shall declare any dividend payable in stock upon
its  Common  Stock,  make any distribution to the holders of its Common Stock or
offer for subscription pro rata to holders of Common Stock any additional shares
of  stock  of  any  class  or  other  rights;
          (b)     there shall be any reclassification of the Common Stock of the
Company;

          (c)     there shall be any consolidation or merger of the Company with
or  into,  or  sale  of  all  or  substantially  all  of  its assets to, another
corporation;

          (d)     there  shall  be  a  voluntary  or  involuntary  dissolution,
liquidation  or  winding  up  of  the  Company;  or

          (e)     there  shall  be  a  Public  Offering;
then,  in  any  one  or more of such cases, the Company shall give the holder at
least  10  days'  prior  written  notice  of  the date on which the books of the
Company  shall  close or a record shall be taken for such dividend, distribution
or  subscription rights or for determining rights to vote in respect to any such
reclassification,  consolidation,  merger,  sale,  dissolution,  liquidation  or
winding  up  or  of  the  date of a filing of a registration statement under the
Securities  Act  for  a  Public  Offering.  Such  notice  in accordance with the
foregoing  clause  shall  also  specify,  in  the  case  of  any  such dividend,
distribution  or  subscription  rights,  the  date on which the holders shall be
entitled  thereto, and such notice in accordance with the foregoing clause shall
also  specify  the date on which the holders shall be entitled to exchange their
Common  Stock  for  securities  or  other  property  deliverable  upon  such
reclassification,  consolidation,  merger,  sale,  dissolution,  liquidation  or
winding  up,  as  the  case  may be.  Each such written notice shall be given by
first-class  mail,  postage  prepared, addressed to the holder at the address of
the  holder  as  shown  on  the  books  of  the  Company.

     6.     Transfer  of  Warrants.

     (a)     Warrant  Register.  The  Company  shall  maintain  a  register (the
"Warrant Register") containing the names, addresses and facsimile numbers of the
holder(s).  Any  holder  of  this  Warrant or any portion thereof may change its
address  as  shown  on  the  Warrant  Register  by written notice to the Company
requesting  such  a  change.  Until  this  Warrant is transferred on the Warrant
Register,  the  Company may treat the holder as shown on the Warrant Register as
the  absolute owner of this Warrant for all purposes, notwithstanding any notice
to  the  contrary.

     (b)     Warrant  Agent.  The  Company may, by written notice to the holder,
appoint an agent for the purpose of maintaining the Warrant Register referred to
in  Section  6(a)  above,  issuing  any  other securities then issuable upon the
exercise of this Warrant, exchanging this Warrant, replacing this Warrant or any
or  all  of  the  foregoing.  Thereafter,  any  such  registration,  issuance or

                                    PAGE   7
<PAGE>
replacement,  as  the  case  may  be, shall be made at the office of such agent.

     (c)     Transferability  and  Negotiability  of  Warrant.  Title  to  this
Warrant  may  be  transferred  by  endorsement  (by  the  holder  executing  the
Assignment  Form  attached hereto) and delivery in the same manner as negotiable
instruments  transferable  by  endorsement  and  delivery.

     (d)     Exchange  of Warrant Upon a Transfer.  On surrender of this Warrant
for  exchange,  properly  endorsed  on  the  Assignment  Form and subject to the
provisions  of  this Warrant with respect to compliance with the Securities Act,
the  Company  at  its expense shall issue to or on the order of the holder a new
warrant  or  warrants of like tenor, in the name of the holder or as the holders
(on  payment  by  the  holder  of  any  applicable  transfer  taxes) may direct,
exercisable  for  the  number  of  Shares  issuable  upon  the  exercise hereof.

     7.     Registration  Rights.  If  the holder of this Warrant is a party to,
or  an  assignee  of  rights  under, that certain Registration Rights Agreement,
dated March 16, 2000 (the "Registration Rights Agreement"), such holder shall be
entitled to include any shares of Common Stock or other securities received upon
exercise  of the Warrant with such holder's Registrable Securities (as such term
is defined in the Registration Rights Agreement), on the terms and conditions as
set  forth  in  the  Registration  Rights  Agreement.

     8.     Amendment and Waivers.  No amendment, modification or termination of
this  Warrant shall be binding unless executed in writing by the Company and the
Warrantholder  intending  to  be  bound  thereby.

     9.     Waivers  and  Extensions.  Any  provision  of  this  Warrant  may be
amended, waived or modified only if such amendment, waiver or modification is in
writing,  is  signed by the party intending to be bound, and specifically refers
to  this  Warrant.  Waivers may be made in advance or after the right waived has
arisen  or  the  breach  or  default  waived  has  occurred.  Any  waiver may be
conditional.  No  waiver  of  any  breach  of  any agreement or provision herein
contained shall be deemed a waiver of any preceding or succeeding breach thereof
nor  of  any  other  agreement  or  provision  herein  contained.  No  waiver or
extension  of  time for performance of any obligations or acts shall be deemed a
waiver  or  extension  of  the  time for performance of any other obligations or
acts.

     10.     Termination.  The  right  to exercise this Warrant shall expire and
shall  be  void  at  5:00  p.m.  New  York  City  time  on  March  16,  2003.

     11.     Reservation  of  Stock.  The  Company covenants that it will at all
times  reserve  and  keep  available,  solely for issuance upon exercise of this
Warrant,  all  shares  of  Common  Stock  or  other securities from time to time
issuable  upon exercise of this Warrant and, subject to any existing contractual
limitations,  from  time  to  time,  will  take all steps necessary to amend its
Certificate  of Incorporation to provide sufficient reserves of shares of Common
Stock  or  other securities issuable upon exercise of this Warrant.  The Company
further covenants that all shares that may be issued upon the exercise of rights
represented  by  this  Warrant  and  payment of the Exercise Price, as set forth
herein, will be fully paid and non-assessable and free from all taxes, liens and
charges  in  respect  of  the  issue  thereof.  The Company also agrees that its
issuance of this Warrant shall constitute full authority to its officers who are
charged  with  the duty of executing stock certificates to execute and issue the
necessary certificates for shares of Common Stock upon exercise of this Warrant.

     12.     Replacement.  On receipt of evidence reasonably satisfactory to the
Company  of  the loss, theft, destruction, or mutilation of this Warrant and, in
the  case of loss, theft, or destruction, on delivery of any indemnity agreement
or  bond  reasonably  satisfactory  in form and amount to the Company or, in the
case  of  mutilation, on surrender and cancellation of this Warrant, the Company
at  its expense will execute and deliver, in lieu of this Warrant, a new Warrant
of  like  tenor.

     13.     No Rights as Stockholder.  Except as provided in Section 2 or 4, no
holder  of this Warrant, as such, shall be entitled to vote or receive dividends
or  be  considered  a  stockholder  of  the  Company  for any purpose, nor shall
anything in this Warrant be construed to confer on any holder of this Warrant as
such,  any  rights of a stockholder of the Company or any right to vote, give or
withhold  consent  to  any  corporate  action,  to  receive notice of meeting of
stockholders,  to  receive  dividends  or  subscription  rights  or  otherwise.

     14.     Miscellaneous  Provisions.

     (a)     Governing  Law.  This  Warrant  shall  be  governed by, interpreted
under,  and  construed  in  accordance  with  the laws of the State of New York,
regardless  of  the laws that might otherwise govern under applicable principles
of  conflicts  of  laws  thereof.

     (b)     Notices.  All  notices,  demands,  requests, consents, approvals or
other communications (collectively, "Notices") required or permitted to be given
hereunder  or  which  are given with respect to this Warrant shall be in writing
and  shall be personally served, delivered by reputable air courier service with

                                    PAGE   8
<PAGE>
charges  prepaid, or transmitted by hand delivery, telegram, telex or facsimile,
to  such  address  as  such  party shall have specified most recently by written
notice.  Notice  shall be deemed given on the date of service or transmission if
personally  served  or  transmitted  by  telegram,  telex  or facsimile.  Notice
otherwise sent as provided herein shall be deemed given on the next business day
following  delivery  of  such  notice  to  a  reputable  air  courier  service.

     (c)     Binding  Effect.  The  provisions  of this Warrant shall be binding
upon  the  Company  and  its  successors  and  assigns.

     (d)     Remedies.  In  the  event  of  a breach of this Warrant, the holder
shall  be  entitled  to injunctive relief and specific performance of its rights
under  this Warrant, in addition to all of its rights granted by law, including,
without  limitation,  recovery  of  damages.  The  Company  agrees that monetary
damages  would not be adequate compensation for any loss incurred by reason of a
breach  of  this  Warrant  by  the  Company and hereby waives any defense in any
action  for injunctive relief or specific performance that a remedy at law would
be  adequate.

     (e)     Headings.  Titles  and headings of sections of this Warrant are for
convenience  only and shall not affect the construction of any provision of this
Warrant.

Dated:  March  16,  2000
                                                 RHYTHMS  NETCONNECTIONS,  INC.

                                                 By:/s/ Catherine Hapka
                                                 Name:     Catherine  Hapka
                                                 Title: Chief Executive Officer

                                    PAGE   9
<PAGE>
                                SUBSCRIPTION FORM
                  (To be signed only upon exercise of Warrant)
To:          .
Attention:     Secretary

     (1)     The  undersigned,  the  holder  of  the  attached  Warrant,  hereby
irrevocably  elects  to [exercise the purchase right represented by that Warrant
for,  and to purchase under that Warrant, ___________  shares of Common Stock of
and  herewith tenders any necessary payment of the purchase price in such number
of  shares  in  full.]  [to  exercise  [all][a  portion]  of  the purchase right
represented by that Warrant by canceling the Warrant with respect to ___________
shares  of  Common Stock of . in exchange for a number of shares of Common Stock
equal  to  the  value [as determined pursuant to the Warrant] as the [portion of
the]  Warrant  [being  canceled].
     (2)     In  exercising  the  Warrant,  the  undersigned hereby confirms and
acknowledges  that  the shares of  Common Stock or other securities to be issued
upon  exercise  thereof  are  being  acquired  solely  for  the  account  of the
undersigned  and  not as a nominee for any other party, and that the undersigned
will  not  sell, offer for sale, pledge, hypothecate or otherwise dispose of any
shares  of  Common  Stock,  except under circumstances that will not result in a
violation  of  the  Securities  Act of 1933, as amended, or any applicable state
securities  laws.
     (3)     Please  issue  a  certificate(s) representing said shares of Common
Stock  in the name of the undersigned or in the name of the transferee specified
below.
     (4)     Please  issue a new Warrant for the unexercised portion in the name
of  the  undersigned or in the name of the permitted transferee specified below.
     (5)     Please  deliver  any  certificate(s)  or  Warrant  to the following
address.

Name:          ___________________________
Address:       ___________________________
Attention:     ___________________________

Dated:

                              By:___________________________
                                 Name

Footnote:

1.   Insert  here  the  number  of shares called for on the face of the Warrant
(or,  in  the  case  of partial exercise, the portion as to which the Warrant is
being  exercised), without making any adjustment for additional shares of Common
Stock or any other securities or property which, under the adjustment provisions
of  the  Warrant,  may  be  deliverable  upon  exercise.

                                    PAGE   10
<PAGE>

                                 ASSIGNMENT FORM
     FOR  VALUE RECEIVED the undersigned registered owner of this Warrant hereby
sells,  assigns and transfers unto the assignee named below all of the rights of
the  undersigned  under  this  Warrant,  with respect to the number of shares of
Common  Stock  set  forth  below:

                                            No.  of  Shares  of
Name  and  Address  of  Assignee             Common  Stock

and  does  hereby  irrevocably  constitute  and  appoint _______________________
attorney-in-fact  to  register such transfer onto the books of , Inc. maintained
for  the  purpose,  with  full  power  of  substitution  in  the  premises.

Date:_______________________          Print  Name:_______________________

                                      Signature:________________________
                                      Witness:  ________________________

NOTICE:     The  signature  on  this assignment must correspond with the name as
written  upon  the  face  of  the  within  Warrant  in every particular, without
alteration  or  enlargement  or  any  change  whatsoever.

                                    PAGE   11
<PAGE>

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00004-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00004-of-00352.parquet"}]]