EXHIBIT 10.18
EFFICIENT NETWORKS, INC.
AMENDMENT NO. 9 TO THE INVESTORS' RIGHTS AGREEMENT
[This is the eighth amendment to the Investors' Rights Agreement and was titled
Amendment No. 9 in error.] This Amendment No. 9 ("Amendment") to the Investors'
Rights Agreement dated as of July 30, 1993, as previously amended by Amendments
No. 1 through 8 [7] thereof (together the "Agreement"), is made as of this 28th
day of June, 1999, by and among Efficient Networks, Inc., a Delaware corporation
(the "Company"), each of the entities listed on Schedule I hereto (the "Existing
Investors"), and Covad Communications Investment Corp. ("CCIC"). Capitalized
terms used herein which are not defined herein shall have the definition
ascribed to them in the Agreement.
RECITALS
A. The Company has entered into an agreement to issue and sell to CCIC a
$5.0 million (five million dollars) principal amount subordinated note,
convertible into shares of the Company's Series I Preferred Stock.
B. The Company and CCIC desire that CCIC (and its permitted successors as
set forth in Section 1 below) be added to the Agreement as an "Investor" as
defined therein.
The parties hereto agree as follows:
1. ADDITIONAL PARTIES TO THE AGREEMENT.
CCIC hereby enters into and becomes a party to the Agreement. Schedule A to
the Agreement is amended to include CCIC; provided, however, that CCIC may
assign its rights hereunder to Covad Communications Group, Inc. ("CCG") or any
other wholly-owned subsidiary of CCG (and any such assignee agrees to be bound
by the terms of this Agreement). CCIC or its permitted transferee, as
applicable, is referred to herein as "Covad." Covad, as a holder of Series I
Preferred Stock or a note purchased (or a replacement note hereafter acquired,
either referred to herein as a "Note") pursuant to that certain Note Purchase
Agreement dated June 22, 1999 between the Company and CCIC, shall have the
rights (without regard to the 750,000 share ownership requirement) set forth in
Sections 2.1 (Delivery of Financial Statements) and 2.2 (Inspection), subject to
termination in Section 2.3 (Termination of Financial Information and Inspection
Covenants), and the rights set forth as follows:
1.1 Board Participation.
(a) Observer. Covad shall have the right to designate one
person (an "Observer") to attend meetings of the Company's Board of Directors.
The Observer shall not be entitled to vote at the meetings of the Company's
Board of Directors. The Company will provide the Observer with notice of its
Board of Directors meetings to the same extent it provides notice of such
meetings to members of its Board of Directors. The Observer shall recuse himself
or herself from the Board discussions upon the bona fide good faith reasonable
request that the
Board intends to discuss matters of a nature which are confidential to the
Company and its fiduciaries.
(b) Termination. The rights granted in this Section 1.1 shall
terminate upon the earlier of (i) Covad owning fewer than 200,000 shares of
Series I Preferred Stock and Covad no longer holding a Note in the principal
amount [not] less than $2.5 million, or (ii) immediately prior to the closing of
an initial public offering of the Company's Common Stock pursuant to the
Securities Act of 1933, as amended.
(c) Transfer of Rights. The rights granted to Covad under this
Section 1.1 may not be transferred or assigned by Covad.
1.2 Market Standoff Obligations of Covad.
Covad shall be obligated by the Market Standoff set forth in
Section 1.15 of this Agreement only to the extent the Company's officers and
directors and 5% stockholders are and remain similarly bound.
2. AMENDMENTS TO AGREEMENT.
Covad and the Existing Investors are collectively referred to as
"Investors" for the purposes of the Agreement, as amended.
3. WAIVER AND CONSENT.
Each Existing Investor, pursuant to any rights such Existing Investor may
have under the Agreement, hereby, on behalf of himself and the other Investors
under the Agreement, (a) waives all rights under, and any notice required by,
Section 2.4 of the Agreement relating to any rights to purchase or rights of
first refusal with respect to the Note and any Series I Preferred Stock of the
Company into which such Note is convertible, or the issuance of shares of common
stock upon conversion of the Series I Preferred Stock, (b) consents to adding
Covad as a party to the Agreement and (c) consents to the registration rights
hereby provided to Covad, which consent is given pursuant to Section 1.14 of the
Agreement. Any amendment to this Agreement adversely affecting the rights of
Covad will require the written consent of Covad.
4. EFFECT OF AMENDMENT.
Except as amended and set forth above, the Agreement shall continue in full
force and effect.
5. COUNTERPARTS.
This Amendment may be executed in any number of counterparts, each which
will be deemed an original, and all of which together shall constitute one
instrument.
6. SEVERABILITY.
-2-
If one or more provisions of this Amendment are held to be unenforceable
under applicable law, such provision shall be excluded from this Amendment and
the balance of the Amendment shall be interpreted as if such provision were so
excluded and shall be enforceable in accordance with its terms.
7. ENTIRE AGREEMENT.
This Amendment, together with the Agreement, constitutes the full and
entire understanding and agreement between the parties with regard to the
subjects hereof and thereof.
-3-
8. GOVERNING LAW.
This Amendment shall be governed by and construed under the laws of the
State of Delaware.
9. LEGAL REPRESENTATION. EACH OF COVAD, THE EXISTING INVESTORS AND THE
COMMON HOLDERS ACKNOWLEDGES AND UNDERSTANDS THAT (A) THE COMPANY HAS BEEN
REPRESENTED BY XXXXXX XXXXXXX XXXXXXXX & XXXXXX, PROFESSIONAL CORPORATION, (THE
"REPRESENTATION") (B) IT OR HE OR SHE HAS READ AND UNDERSTANDS THE AGREEMENT AND
THIS AMENDMENT, (C) IT OR HE OR SHE HAS BE REPRESENTED IN THE PREPARATION,
NEGOTIATION AND EXECUTION OF THIS AGREEMENT BY OTHER LEGAL COUNSEL OR HAS
VOLUNTARILY DECLINED TO SEEK SUCH REPRESENTATION, AND (D) HE, SHE OR IT
EXPRESSLY WAIVES ANY CONFLICT BY VIRTUE OF THE REPRESENTATION IN THE EVENT THAT
HE, SHE, OR IT HAS BEEN, OR PRESENTLY IS, A CLIENT OF XXXXXX XXXXXXX XXXXXXXX &
XXXXXX, PROFESSIONAL CORPORATION.
This Amendment is hereby executed as of the date first above written.
EFFICIENT NETWORKS, INC.,
a Delaware corporation
By: /s/ Xxxx X. Xxxxx
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Xxxx X. Xxxxx, President
COVAD INVESTMENT CORP.,
a Delaware corporation
By: /s/ Xxxxx Xxxxxx
---------------------------------------
Name: Xxxxx Xxxxxx
-------------------------------------
Title: Vice President
------------------------------------
CROSSPOINT VENTURE PARTNERS 1993
By: /s/ Xxxxxx X. Xxxx
-----------------------------------------
Name: Xxxxxx X. Xxxx
---------------------------------------
Title: General Partner
--------------------------------------
CROSSPOINT 1993 ENTREPRENEURS FUND
By: /s/ Xxxxxx X. Xxxx
-----------------------------------------
Name: Xxxxxx X. Xxxx
---------------------------------------
Title: General Partner
--------------------------------------
CROSSPOINT VENTURES LS 1997, L.P.
By: /s/ Xxxxxx X. Xxxx
-----------------------------------------
Name: Xxxxxx X. Xxxx
---------------------------------------
Title: General Partner
--------------------------------------
ENTERPRISE PARTNERS II L.P.
By: Enterprise Management Partners II, L.P.,
Its General Partner
By: /s/ Xxxxx X. Xxxxxxxx
-----------------------------------------
Name: Xxxxx X. Xxxxxxxx
---------------------------------------
Title: General Partner
--------------------------------------
ENTERPRISE PARTNERS II ASSOCIATES, L.P.
By: Enterprise Management Partners II, L.P.,
Its General Partner
By: /s/ Xxxxx X. Xxxxxxxx
-----------------------------------------
Name: Xxxxx X. Xxxxxxxx
---------------------------------------
Title: General Partner
--------------------------------------
OCEAN PARK VENTURES, L.P.
By: /s/ Xxx Xxxxx
-----------------------------------------
Name: Xxx Xxxxx
---------------------------------------
Title: General Partner
--------------------------------------
EL DORADO VENTURES III, L.P.
By: El Dorado Venture Partners III,
Its General Partner
By: /s/ Xxxxxx X. Xxxxxxxx
-----------------------------------------
Name: Xxxxxx X. Xxxxxxxx
---------------------------------------
Title: General Partner
--------------------------------------
EL DORADO C & L FUND, L.P.
By: El Dorado Venture Partners III,
Its General Partner
By: /s/ Xxxxxx X. Xxxxxxxx
-----------------------------------------
Name: Xxxxxx X. Xxxxxxxx
---------------------------------------
Title: General Partner
--------------------------------------
EL DORADO TECHNOLOGY IV, L.P.
By: El Dorado Venture Partners III,
Its General Partner
By: /s/ Xxxxxx X. Xxxxxxxx
-----------------------------------------
Name: Xxxxxx X. Xxxxxxxx
---------------------------------------
Title: General Partner
--------------------------------------
EL DORADO VENTURES IV, L.P.
By: El Dorado Venture Partners IV, LLC,
Its General Partner
By: /s/ Xxxxxx X. Xxxxxxxx
-----------------------------------------
Name: Xxxxxx X. Xxxxxxxx
---------------------------------------
Title: Managing Member
--------------------------------------
EL DORADO TECHNOLOGY 98, L.P.
By: El Dorado Venture Partners IV, LLC,
Its General Partner
By: /s/ Xxxxxx X. Xxxxxxxx
-----------------------------------------
Name: Xxxxxx X. Xxxxxxxx
---------------------------------------
Title: Managing Member
--------------------------------------
PALOMAR VENTURES I, L.P.
By: /s/ Xxx Xxxxx
-----------------------------------------
Name: Xxx Xxxxx
---------------------------------------
Title: General Partner
--------------------------------------
ADC TELECOMMUNICATIONS, INC.
By: /s/ Xxxxxxx X. Xxxxxx III
-----------------------------------------
Name: Xxxxxxx X. Xxxxxx III
---------------------------------------
Title: President ADC/BBG
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SCHEDULE I
SCHEDULE OF EXISTING INVESTORS
Name and Address Name and Address
---------------- ----------------
Crosspoint Venture Partners 0000 Xx Xxxxxx Technology IV, L.P.
00000 XxxXxxxxx Xxxx., Xxxxx 000 0000 Xxxx Xxxx Xxxx, Xxxxx 000
Xxxxxx, XX 00000 Xxxxx Xxxx, XX 00000
Crosspoint 1993 Entrepreneurs Fund Menlo Ventures VI, L.P.
00000 XxxXxxxxx Xxxx., Xxxxx 000 0000 Xxxx Xxxx Xxxx
Xxxxxx, XX 00000 Xxxx. 0, Xxxxx 000
Xxxxx Xxxx, XX 00000
Crosspoint Ventures LS 1997, L.P.
00000 XxxXxxxxx Xxxx., Xxxxx 000 Menlo Entrepreneurs Fund VI, L.P.
Xxxxxx, XX 00000 0000 Xxxx Xxxx Xxxx
Xxxx. 0, Xxxxx 000
Enterprise Partners II, L.P. Xxxxx Xxxx, XX 00000
0000 Xxxxxxx Xxxxxx, Xxxxx 000
Xx Xxxxx, XX 00000 Siemens Aktiengesellschaft
Xxxxxxxxxxxxxx 00
Enterprise Partners II Associates, X.X. 00000 Xxxxxx Xxxxxxx
0000 Xxxxxxx Xxxxxx, Xxxxx 000
Xx Xxxxx, XX 00000 Aperture Associates, L.P.
000 Xxxxxxxxxx Xxxxxx
Xxxxx Xxxx Ventures, L.P. Xxx Xxxxxxxxx, XX 00000
000 Xxxxxxxx Xxxxxxxxx, Xxxxx 000
Xxxxx Xxxxxx, XX 00000 Texas Instruments Incorporated
0000 Xxxxxxxxx Xxx
Xx Xxxxxx Ventures III, L.P. Attn: Corporate Development
0000 Xxxx Xxxx Xxxx, Xxxxx 000 Mail Stop 0000
Xxxxx Xxxx, XX 00000 Xxxxxx, Xxxxx 00000
El Dorado Ventures IV, L.P. ADC Telecommunications, Inc.
0000 Xxxx Xxxx Xxxx, Xxxxx 000 0000 Xxxx 00xx Xxxxxx
Xxxxx Xxxx, XX 00000 Xxxxxxxxxxx, Xxxxxxxxx 00000
El Dorado C & L Fund, L.P. Palomar Ventures I, L.P.
0000 Xxxx Xxxx Xxxx, Xxxxx 000 000 Xxxxxxxx Xxxxxxxxx, Xxxxx 000
Xxxxx Xxxx, XX 00000 Xxxxx Xxxxxx, XX 00000
