ELASTIC NETWORKS INC.
AMENDMENT TO INVESTOR RIGHTS AGREEMENT
This Amendment to that certain Investor Rights Agreement dated as of May
12, 1999, among Elastic Networks Inc., a Delaware corporation (the "Company"),
Nortel Networks Inc., a Delaware corporation ("Nortel Networks"), and the
individuals and entities listed on Exhibit A to that agreement (the
"Agreement"), is made as of February 14, 2000, among the Company, Nortel
Networks, the individuals and entities listed on Exhibit A to the Agreement and
the individuals and entities who are parties to this Amendment, including each
of the counterparts of this Amendment.
RECITALS
WHEREAS, the Company and certain individuals and entities have entered
into the Series B Redeemable Convertible Participating Preferred Stock Purchase
Agreement, dated as of the date hereof (the "Series B Purchase Agreement"); and
WHEREAS, the Company, Nortel Networks and the Purchasers (as defined in
the Agreement as amended by this Amendment) desire to amend the Agreement as set
forth herein;
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained in this Amendment, the parties hereto agree as follows:
1. The individuals and entities executing this Amendment, including each
of the counterparts of this Amendment, are parties to the Agreement as amended
by this Amendment.
2. The definition of "Purchasers" set forth in the initial paragraph of
the Agreement is amended by adding the words "and the individuals and entities
purchasing Series B Preferred (as defined hereinafter) directly from the Company
and their successors and assigns," in the fourth line between the punctuation
and words "listed on Exhibit A hereto" and "(such individuals and entities and
their successors and assigns, the "Purchasers")".
3. The first line of the first WHEREAS clause shall be amended by adding
the words "certain of" immediately following the word "and" and immediately
prior to the words "the Purchasers" and the third line of the first WHEREAS
clause shall be amended by deleting the word "and".
4. The Agreement shall be amended by inserting immediately following the
first WHEREAS clause the following words:
WHEREAS, the Company and certain of the Purchasers have entered into a
Series B Redeemable Convertible Participating Preferred Stock Purchase Agreement
dated as of February 14, 2000 (the "Series B Purchase Agreement"); and
5. The definition of "Initial Public Offering" set forth in Section 1 of
the Agreement is amended by deleting the amount "$6.50" and inserting in lieu
thereof "$8.00".
6. The definition of "Shares" set forth in Section 1 of the Agreement is
amended by adding the phrase "and in Subsection 1.2 of the Series B Purchase
Agreement" after the words "Subsection 1.2 of the Purchase Agreement" and before
the period at the end of that definition.
7. Section 3.1(a) of the Agreement is hereby deleted in its entirety and
replaced with the following provision:
(a) The Company shall not issue, sell or exchange, agree to issue,
sell or exchange, or reserve or set aside for issuance, sale
or exchange, (i) any shares of its Common Stock, (ii) any
other equity securities of the Company, including, without
limitation, shares of preferred stock, (iii) any option,
warrant or other right to subscribe for, purchase or otherwise
acquire any equity securities of the Company, or (iv) any debt
securities convertible into capital stock of the Company
(collectively, the "Offered Securities"), unless in each such
case the Company shall have first complied with this Section
3.1. The Company shall deliver to each Purchaser a written
notice of any proposed or intended issuance, sale or exchange
of Offered Securities (the "Offer"), which Offer shall (i)
identify and describe the Offered Securities, (ii) describe
the price and other terms upon which they are to be issued,
sold or exchanged, and the number or amount of Offered
Securities to be issued, sold or exchanged, (iii) identify the
persons or entities (if known) to which or with which the
Offered Securities are to be offered, issued, sold or
exchanged and (iv) offer to issue and sell to or exchange with
such Purchaser (A) a pro-rata portion of the Offered
Securities determined by dividing (X) in the case of a
Purchaser holding Series A Redeemable Participating
Convertible Preferred Stock (the "Series A Preferred"): the
aggregate number of shares of Common Stock then held by such
Purchaser with respect to the Series A Preferred (giving
effect to the conversion of all shares of Series A Preferred
then held by such Purchaser and assuming the issuance of
1,285,527 shares or 2,147,616 shares, as the case may be
(subject to appropriate adjustments for stock splits, stock
dividends, combinations or other similar recapitalizations
effecting the Common Stock) in accordance with the Exit
Special Adjustment provision of Article Fourth B.4(i)(i) of
the Company's Amended and Restated Certificate of
Incorporation), and in the case of a Purchaser holding Series
B Redeemable Participating Convertible Preferred Stock (the
"Series B Preferred"): the aggregate number of shares of
Common Stock then held by such Purchaser with respect to the
Series B Preferred (giving effect to the conversion of all
shares of Series B Preferred Stock then held by such
Purchaser) (subject to appropriate adjustments for stock
splits, stock dividends, combinations or other similar
recapitalizations effecting the Common Stock), by (Y) the
total number of shares of Common Stock then outstanding
(giving effect to the conversion of all outstanding shares of
the convertible preferred stock and assuming the issuance of
1,285,527 shares or 2,147,616 shares, as the case may be
(subject to appropriate adjustments for stock splits, stock
dividends, combinations or other similar recapitalizations
effecting the Common Stock) in accordance with the Exit
Special Adjustment provision of Article Fourth, B.4(i)(i) of
the Company's Amended and Restated Certificate of
Incorporation), and assuming, further, the issuance of all
authorized shares under the Company's 1999 Stock Incentive
Plan, as amended (such pro-rata portion of the Offered
Securities, the "Basic Amount"), and (B) any additional
portion of the Offered Securities attributable to the Basic
Amounts of other Purchasers as such Purchaser shall indicate
it will purchase or acquire should the other Purchaser
subscribe for less than their Basic Amounts (the
"Undersubscription Amount")."
8. Section 4 of the Agreement shall be amended by deleting the word "or"
in the fourth line between the word "Stockholder" and the number "(iii)" and
adding immediately following the word "hereby" the following:
or (iv) any venture capital fund, investment entity or
investment account for which Manufacturers Life Insurance
Company (U.S.A.) or its successors or assigns is the
investment manager or investment advisor, and such transferee
shall be deemed a "Stockholder" and, if applicable, a
"Purchaser" for purposes of this Agreement; provided that the
transferee provides written notice of such assignment to the
Company and agrees in writing to be bound hereby.
9. Section 5(a) of the Agreement is amended by deleting the words
"Commonwealth of Massachusetts" in both the second and third lines of such
section and replacing it with the words "State of Georgia."
10. The second paragraph of Section 5(d) of the Agreement is amended by
deleting the punctuation and words "with a copy to Xxxx X. Xxxxxxx, Esq., Xxxx
and Xxxx LLP, 00 Xxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000."
11. Section 5 of the Agreement is amended by adding a new Subsection (k)
as follows:
(k) Coordination of definitions between the Amendment and this
Agreement. Except as otherwise specifically defined and
provided in the Amendment to Investor Rights Agreement dated
as of February 14, 2000 by and among the Company, Nortel
Networks and the individuals and entities named therein (the
"Amendment"), all capitalized terms used in the Amendment
shall have and retain the same meaning as set forth for such
terms in this Agreement.
12. Section 5 of the Agreement is amended by adding a new Subsection (l)
as follows:
(l) Addition of Purchasers as Parties to the Agreement. This
Agreement as amended by the Amendment may be executed in one
or more counterparts in order to add additional individuals
and entities purchasing the Series B Preferred directly from
the Company as "Purchasers" hereunder. The parties to this
Agreement as amended by the Amendment agree that such
purchasers of the Series B Preferred may be added as
"Purchasers" and parties to this Agreement as amended by the
Amendment, by the execution of a counterpart copy of the
Amendment executed by the Company and one or more individuals
and/or entities purchasing the Series B Preferred directly
from the Company. This Agreement and the Amendment, including
all counterparts of the Amendment signed by individuals or
entities purchasing the Series B Preferred directly from the
Company, shall be considered one agreement which shall be
enforceable by all parties to those documents. This Agreement
may be executed by facsimile signatures.
13. Nortel Networks and the individuals and entities listed on Exhibit A
to the Agreement hereby consent to the grant to the holders of the Company's
Series B Redeemable Convertible Participating Preferred Stock, $0.01 par value
per share, of the registration rights pursuant to this Amendment and hereby
waive the limitation contained in Section 2.9(b) of the Agreement for the
limited purpose of entering into this Amendment.
14. This Amendment shall be governed by and construed in accordance with
the internal laws of the State of Georgia without giving effect to any choice or
conflict of law provision or rule (whether of the State of Georgia or any other
jurisdiction) that would cause the application of laws of any other
jurisdiction.
[Remainder of page intentionally left blank]
IN WITNESS WHEREOF, this Agreement has been executed by the patties hereto as of
the day and year above first written.
ELASTIC NETWORKS INC.
By: /s/ Xxxxx Elop
-----------------------------------------------------
Name: Xxxxx Elop
Title: Secretary and Treasurer
NORTEL NETWORKS INC.
By:
-----------------------------------------------------
Name:
Title:
PEQUOT PRIVATE EQUITY FUND, L.P.
By: Pequot Capital Management, Inc., Investment Manager
Name:
Title:
PEQUOT OFFSHORE PRIVATE EQUITY FUND, INC.
By: Pequot Capital Management, Inc., Investment Advisor
Name:
Title:
PEQUOT VENTURE PARTNERS, L.P.
By: Pequot Capital Management, Inc., Investment Manager
Name:
Title:
IN WITNESS WHEREOF, this Agreement has been executed by the parties hereto as of
the day and year above first written.
ELASTIC NETWORKS INC.
By:
-----------------------------------------------------
Name:
Title:
NORTEL NETWORKS INC.
By: /s/ Xxxxxx Xxxxxxx
-----------------------------------------------------
Name: Xxxxxx Xxxxxxx
Title: President, Service Provider & Carrier Portfolio
PEQUOT PRIVATE EQUITY FUND, L.P.
By: Pequot Capital Management, Inc., Investment Manager
By:
-----------------------------------------------------
Name:
Title:
PEQUOT OFFSHORE PRIVATE EQUITY FUND, INC.
By: Pequot Capital Management, Inc., Investment Advisor
By:
-----------------------------------------------------
Name:
Title:
PEQUOT VENTURE PARTNERS, L.P.
By: Pequot Capital Management, Inc., Investment Manager
By:
-----------------------------------------------------
Name:
Title:
IN WITNESS WHEREOF, this Agreement has been executed by the parties hereto as of
the day and year above first written.
ELASTIC NETWORKS INC.
By:
-----------------------------------------------------
Name:
Title:
NORTEL NETWORKS INC.
By:
-----------------------------------------------------
Name:
Title:
PEQUOT PRIVATE EQUITY FUND, L.P.
By: Pequot Capital Management, Inc., Investment Manager
By: /s/ Xxxxx X. Xxxxx
-----------------------------------------------------
Name: Xxxxx X. Xxxxx
Title: Chief Financial Officer
PEQUOT OFFSHORE PRIVATE EQUITY FUND, INC.
By: Pequot Capital Management, Inc., Investment Advisor
By: /s/ Xxxxx X. Xxxxx
-----------------------------------------------------
Name: Xxxxx X. Xxxxx
Title: Chief Financial Officer
PEQUOT VENTURE PARTNERS, L.P.
By: Pequot Capital Management, Inc., Investment Manager
By: /s/ Xxxxx X. Xxxxx
-----------------------------------------------------
Name: Xxxxx X. Xxxxx
Title: Chief Financial Officer
TEXAS INSTRUMENTS INCORPORATED
By: /s/ Xxxxxxx X. Xxxxx
-----------------------------------------------------
Name: Xxxxxxx X. Xxxxx
Title: Vice President Manager, Corporate Development
SERIES B PREFERRED PARTIES
PICTET GLOBAL SECTOR FUND
By:
-----------------------------------------------------
Name:
Title:
TELECOM VENTURE PARTNERS 1, L.P.
By:
-----------------------------------------------------
Name:
Title:
ELANET FUND
By:
-----------------------------------------------------
Name:
Title:
MANUFACTURERS LIFE INSURANCE COMPANY (U.S.A.)
By:
-----------------------------------------------------
Name:
Title:
By:
-----------------------------------------------------
Name:
Title:
TEXAS INSTRUMENTS INCORPORATED
By:
-----------------------------------------------------
Name:
Title:
SERIES B PREFERRED PARTIES
PICTET GLOBAL SECTOR FUND
By: /s/ Yves Martignier
-----------------------------------------------------
Name: Yves Martignier
Title:
TELECOM PARTNERS 1, L.P.
By: /s/ Xxxxxx X. Xxxxx
-----------------------------------------------------
Name: Xxxxxx X. Xxxxx
Title: General Partner
ELANET FUND
By:
-----------------------------------------------------
Name:
Title:
MANUFACTURERS LIFE INSURANCE COMPANY (U.S.A.)
By:
-----------------------------------------------------
Name:
Title:
By:
-----------------------------------------------------
Name:
Title:
TEXAS INSTRUMENTS INCORPORATED
By:
-----------------------------------------------------
Name:
Title:
SERIES B PREFERRED PARTIES
PICTET GLOBAL SECTOR FUND
By:
-----------------------------------------------------
Name:
Title:
TELECOM VENTURE PARTNERS 1, L.P.
By:
-----------------------------------------------------
Name:
Title:
ELANET FUND
By: /s/ Xxxxxxx X. Xxxxx, Xx.
-----------------------------------------------------
Name: Xxxxxxx X. Xxxxx, Xx.
Title: Chairman of XXXXXXXX, XXXXX & ASSOC. INC. as
Discretionary Manager of ELANET FUND
MANUFACTURERS LIFE INSURANCE COMPANY (U.S.A.)
By:
-----------------------------------------------------
Name:
Title:
By:
-----------------------------------------------------
Name:
Title:
TEXAS INSTRUMENTS INCORPORATED
By:
-----------------------------------------------------
Name:
Title:
SERIES B PREFERRED PARTIES
PICTET GLOBAL SECTOR FUND
By:
-----------------------------------------------------
Name:
Title:
TELECOM VENTURE PARTNERS 1, L.P.
By:
-----------------------------------------------------
Name:
Title:
ELANET FUND
By:
-----------------------------------------------------
Name:
Title:
MANUFACTURERS LIFE INSURANCE COMPANY (U.S.A.)
By: /s/ Xxxxxxx X. Xxxxxxxx
-----------------------------------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: Managing Director
By: /s/ Xxxxx X. Xxxxxx
-----------------------------------------------------
Name: Xxxxx X. Xxxxxx
Title: Managing Director
JORDEX RESOURCES INC.
By: /s/ Xxxx X. Xxxxxxxxx
-----------------------------------------------------
Name: Xxxx X. Xxxxxxxxx
Title: Vice-President Finance
XXX XXXXXXX
By:
-----------------------------------------------------
PEQUOT PRIVATE EQUITY FUND, L.P.
By: Pequot Capital Management, Inc., Investment Manager
By:
-----------------------------------------------------
Name:
Title:
PEQUOT OFFSHORE PRIVATE EQUITY FUND, INC.
By: Pequot Capital Management, Inc., Investment Advisor
By:
-----------------------------------------------------
Name:
Title:
TEXAS INSTRUMENTS INCORPORATED
By:
-----------------------------------------------------
Name:
Title:
XXXXX XXXXXXX
By:
-----------------------------------------------------
Xxxxx Xxxxxxx
XXXXXXX XXXXXXX
By:
-----------------------------------------------------
Xxxxxxx Xxxxxxx
JORDEX RESOURCES INC.
By:
-----------------------------------------------------
Name:
Title:
XXX XXXXXXX
By: /s/ Xxx XxXxxxx
-----------------------------------------------------
PEQUOT PRIVATE EQUITY FUND, L.P.
By: Pequot Capital Management, Inc., Investment Manager
By:
-----------------------------------------------------
Name:
Title:
PEQUOT OFFSHORE PRIVATE EQUITY FUND, INC.
By: Pequot Capital Management, Inc., Investment Advisor
By:
-----------------------------------------------------
Name:
Title:
TEXAS INSTRUMENTS INCORPORATED
By:
-----------------------------------------------------
Name:
Title:
XXXXX XXXXXXX
By:
-----------------------------------------------------
Xxxxx Xxxxxxx
XXXXXXX XXXXXXX
By:
-----------------------------------------------------
Xxxxxxx Xxxxxxx
JORDEX RESOURCES INC.
By:
-----------------------------------------------------
Name:
Title:
XXX XXXXXXX
By:
-----------------------------------------------------
PEQUOT PRIVATE EQUITY FUND, L.P.
By: Pequot Capital Management, Inc., Investment Manager
By: /s/ Xxxxx X. Xxxxx
-----------------------------------------------------
Name: Xxxxx X. Xxxxx
Title: Chief Financial Officer
PEQUOT OFFSHORE PRIVATE EQUITY FUND, INC.
By: Pequot Capital Management, Inc., Investment Advisor
By: /s/ Xxxxx X. Xxxxx
-----------------------------------------------------
Name: Xxxxx X. Xxxxx
Title: Chief Financial Officer
TEXAS INSTRUMENTS INCORPORATED
By:
-----------------------------------------------------
Name:
Title:
XXXXX XXXXXXX
By:
-----------------------------------------------------
Xxxxx Xxxxxxx
XXXXXXX XXXXXXX
By:
-----------------------------------------------------
Xxxxxxx Xxxxxxx
JORDEX RESOURCES INC.
By:
-----------------------------------------------------
Name:
Title:
XXX XXXXXXX
By:
-----------------------------------------------------
PEQUOT PRIVATE EQUITY FUND, L.P.
By: Pequot Capital Management, Inc., Investment Manager
By:
-----------------------------------------------------
Name:
Title:
PEQUOT OFFSHORE PRIVATE EQUITY FUND, INC.
By: Pequot Capital Management, Inc., Investment Advisor
By:
-----------------------------------------------------
Name:
Title:
TEXAS INSTRUMENTS INCORPORATED
By: /s/ Xxxxxxx X. Xxxxx
-----------------------------------------------------
Name: Xxxxxxx X. Xxxxx
Title: Vice President Manager, Corporate Development
XXXXX XXXXXXX
By:
-----------------------------------------------------
Xxxxx Xxxxxxx
XXXXXXX XXXXXXX
By:
-----------------------------------------------------
Xxxxxxx Xxxxxxx
JORDEX RESOURCES INC.
By:
-----------------------------------------------------
Name:
Title:
XXX XXXXXXX
By:
-----------------------------------------------------
PEQUOT PRIVATE EQUITY FUND, L.P.
By: Pequot Capital Management, Inc., Investment Manager
By:
-----------------------------------------------------
Name:
Title:
PEQUOT OFFSHORE PRIVATE EQUITY FUND, INC.
By: Pequot Capital Management, Inc., Investment Advisor
By:
-----------------------------------------------------
Name:
Title:
TEXAS INSTRUMENTS INCORPORATED
By:
-----------------------------------------------------
Name:
Title:
XXXXX XXXXXXX
By: /s/ Xxxxx Xxxxxxx
-----------------------------------------------------
Xxxxx Xxxxxxx
XXXXXXX XXXXXXX
By: /s/ Xxxxxxx Xxxxxxx
-----------------------------------------------------
Xxxxxxx Xxxxxxx
XXX XXXXXXX
By: /s/ Xxx Xxxxxxx
-----------------------------------------------------
Xxx Xxxxxxx
LEVITIN FAMILY CHARITABLE TRUST
By: /s/ Xxx Xxxxxxx
-----------------------------------------------------
Name: Xxx Xxxxxxx
Title: Trustee
MWDI PARTNERSHIP
By: /s/ Xxxxxx Xxxxxxx
-----------------------------------------------------
Name: Xxxxxx Xxxxxxx
Title: General Partner
XXXXX XXXXXX
By: /s/ Xxxxx Xxxxxx
-----------------------------------------------------
Xxxxx Xxxxxx
XXXXX XXXXXX
By: /s/ Xxxxx Xxxxxx
-----------------------------------------------------
Xxxxx Xxxxxx
DANVILLE CAPITAL GROUP, LLC
By: /s/ Xxxxxxx Xxxxxx
-----------------------------------------------------
Xxxxxxx Xxxxxx, PRES.
ZWD INVESTMENTS, LLC
By: /s/ Xxxxx Xxxxxxxxx
-----------------------------------------------------
Name: XXXXX XXXXXXXXX
Title: MEMBER
EXHIBIT A
List of Purchasers
No. of Shares of
Name and Address Series B Preferred Aggregate
of Purchaser @ $5.329/Share Purchase Price
------------ -------------- --------------
Elanet Fund 656,784 $ 3,500,002.00
c/o Xxxxxxx X. Xxxxx
Xxxxxxxx, Xxxxx & Associates
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Jordex Resources Inc. 281,479 $ 1,500,002.00
000 Xxxx Xxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxx Xxxxxxxx X0X 0X0
Xxxxxx
Attn: Xxxx X. Xxxxxxxxx
Xxx XxXxxxx 93,826 $ 499,999.00
0000 Xxxx Xxxxxx Xxxx
Xxxxxx, XX 00000
Manufacturers Life Insurance Company 1,407,394 $ 7,500,003.00
(U.S.A.)
c/o Xxxxxxx Xxxxxxxx
MF Private Capital, Inc.
00 Xxxx Xxxxxx, Xxxxx 000
Xxxxxx, XX 00000-0000
Pequot Private Equity Fund, L.P. 541,331 $ 2,884,752.90
000 Xxxxx Xxxx Xxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxx
Pequot Offshore Private Equity Fund, Inc. 68,539 $ 365,244.33
c/o Hemisphere Management Limited
Xxxxxxxxxx Xxxxx
0 Xxxxxx Xxxxxx
Post Office Box HM951
Xxxxxxxx XX DX
Bermuda
Attention: Xxxxxx X. Xxxxx
Pictet Global Sector Fund 234,566 $ 1,250,002.00
do Yves Martignier
ComVentures
00 Xx. Xxxxxxx-Xxxxx
Xxxxxx 0000 Xxxxxxxxxxx
Telecom Venture Partners 1, L.P. 234,565 $ 1,249,997.00
x/x Xxxx Xxxxxxxxxx
XxxXxxxxxxx
00 Xx. Xxxxxxx-Xxxxx
Xxxxxx 0000 Xxxxxxxxxxx
Texas Instruments Incorporated 122,500 $ 652,802.50
Attn: Xxxxxxx X. Xxxxx
0000 Xxxxxxxxx Xxx, XX 0000
Xxxxxx, XX 00000
Xxxxx Xxxxxxx 18,765 $ 100,000
One State Equities
Xxx Xxxxx Xxxxxx Xxxxx
Xxx Xxxx, X.X. 00000
Xxxxxxx Xxxxxxx 9,383 $ 50,000
One State Equities
Xxx Xxxxx Xxxxxx Xxxxx
Xxx Xxxx, X.X. 00000
Xxx Xxxxxxx 4,691 $ 25,000
One State Equities
Xxx Xxxxx Xxxxxx Xxxxx
Xxx Xxxx, X.X. 00000
Levitin Family Charitable Tst 4,691 $ 25,000
One State Equities
Xxx Xxxxx Xxxxxx Xxxxx
Xxx Xxxx, X.X. 00000
MWDI Partnership 9,383 $ 50,000
One State Equities
Xxx Xxxxx Xxxxxx Xxxxx
Xxx Xxxx, X.X. 00000
Xxxxx Xxxxxx 18,765 $ 100,000
One State Equities
Xxx Xxxxx Xxxxxx Xxxxx
Xxx Xxxx, X.X. 00000
Xxxxx Xxxxxx 18,765 $ 100,000
One State Equities
Xxx Xxxxx Xxxxxx Xxxxx
Xxx Xxxx, X.X. 00000
Xxxxxxx Xxxxxx 9,383 $ 50,000
One State Equities
Xxx Xxxxx Xxxxxx Xxxxx
Xxx Xxxx, X.X. 00000
ZWD Investments, LLC 187,653 $ 1,000,000
One State Equities
Xxx Xxxxx Xxxxxx Xxxxx
Xxx Xxxx, X.X. 00000
TOTAL 3,922,463 $ 20,902,805
=====
