EX-10.11B 10 ex-10_11b.txt EXHIBIT 10.11B Exhibit 10.11b 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 John A. Burgess, Esq., Hale and Dorr LLP, 60 State Street, Boston, Massachusetts 02109." 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/ Kevin Elop ----------------------------------------------------- Name: Kevin 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/ Robert Pfeffer ----------------------------------------------------- Name: Robert Pfeffer 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/ David J. Malat ----------------------------------------------------- Name: David J. Malat Title: Chief Financial Officer PEQUOT OFFSHORE PRIVATE EQUITY FUND, INC. By: Pequot Capital Management, Inc., Investment Advisor By: /s/ David J. Malat ----------------------------------------------------- Name: David J. Malat Title: Chief Financial Officer PEQUOT VENTURE PARTNERS, L.P. By: Pequot Capital Management, Inc., Investment Manager By: /s/ David J. Malat ----------------------------------------------------- Name: David J. Malat Title: Chief Financial Officer TEXAS INSTRUMENTS INCORPORATED By: /s/ Charles D. Tobin ----------------------------------------------------- Name: Charles D. Tobin 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/ Pierre F. Brais ----------------------------------------------------- Name: Pierre F. Brais 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/ William P. Jones, Jr. ----------------------------------------------------- Name: William P. Jones, Jr. Title: Chairman of WILLIAMS, JONES & 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/ Stephen M. Brackett ----------------------------------------------------- Name: Stephen M. Brackett Title: Managing Director By: /s/ David Z. Alpert ----------------------------------------------------- Name: David Z. Alpert Title: Managing Director JORDEX RESOURCES INC. By: /s/ John P. Fairchild ----------------------------------------------------- Name: John P. Fairchild Title: Vice-President Finance JIM MCMANUS 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: AARON WOLFSON By: ----------------------------------------------------- Aaron Wolfson ABRAHAM WOLFSON By: ----------------------------------------------------- Abraham Wolfson JORDEX RESOURCES INC. By: ----------------------------------------------------- Name: Title: JIM MCMANUS By: /s/ Jim McManus ----------------------------------------------------- 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: AARON WOLFSON By: ----------------------------------------------------- Aaron Wolfson ABRAHAM WOLFSON By: ----------------------------------------------------- Abraham Wolfson JORDEX RESOURCES INC. By: ----------------------------------------------------- Name: Title: JIM MCMANUS By: ----------------------------------------------------- PEQUOT PRIVATE EQUITY FUND, L.P. By: Pequot Capital Management, Inc., Investment Manager By: /s/ David J. Malat ----------------------------------------------------- Name: David J. Malat Title: Chief Financial Officer PEQUOT OFFSHORE PRIVATE EQUITY FUND, INC. By: Pequot Capital Management, Inc., Investment Advisor By: /s/ David J. Malat ----------------------------------------------------- Name: David J. Malat Title: Chief Financial Officer TEXAS INSTRUMENTS INCORPORATED By: ----------------------------------------------------- Name: Title: AARON WOLFSON By: ----------------------------------------------------- Aaron Wolfson ABRAHAM WOLFSON By: ----------------------------------------------------- Abraham Wolfson JORDEX RESOURCES INC. By: ----------------------------------------------------- Name: Title: JIM MCMANUS 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/ Charles D. Tobin ----------------------------------------------------- Name: Charles D. Tobin Title: Vice President Manager, Corporate Development AARON WOLFSON By: ----------------------------------------------------- Aaron Wolfson ABRAHAM WOLFSON By: ----------------------------------------------------- Abraham Wolfson JORDEX RESOURCES INC. By: ----------------------------------------------------- Name: Title: JIM MCMANUS 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: AARON WOLFSON By: /s/ Aaron Wolfson ----------------------------------------------------- Aaron Wolfson ABRAHAM WOLFSON By: /s/ Abraham Wolfson ----------------------------------------------------- Abraham Wolfson ELI LEVITIN By: /s/ Eli Levitin ----------------------------------------------------- Eli Levitin LEVITIN FAMILY CHARITABLE TRUST By: /s/ Eli Levitin ----------------------------------------------------- Name: Eli Levitin Title: Trustee MWDI PARTNERSHIP By: /s/ Morris Wolfson ----------------------------------------------------- Name: Morris Wolfson Title: General Partner JACOB SAFIER By: /s/ Jacob Safier ----------------------------------------------------- Jacob Safier STEVE SCHLAM By: /s/ Steve Schlam ----------------------------------------------------- Steve Schlam DANVILLE CAPITAL GROUP, LLC By: /s/ Michael Alpert ----------------------------------------------------- Michael Alpert, PRES. ZWD INVESTMENTS, LLC By: /s/ Chana Edelstein ----------------------------------------------------- Name: CHANA EDELSTEIN 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 William P. Jones Williams, Jones & Associates 717 Fifth Avenue, 24th Floor New York, NY 10022 Jordex Resources Inc. 281,479 $ 1,500,002.00 650 West Georgia Street Vancouver, British Columbia V6B 4N7 Canada Attn: John P. Fairchild Jim McManus 93,826 $ 499,999.00 2879 West Hearst Lane Oakton, VA 22124 Manufacturers Life Insurance Company 1,407,394 $ 7,500,003.00 (U.S.A.) c/o Stephen Brackett MF Private Capital, Inc. 45 Milk Street, Suite 600 Boston, MA 02109-5105 Pequot Private Equity Fund, L.P. 541,331 $ 2,884,752.90 500 Nyala Farm Road Westport, Connecticut 06880 Attention: Gerald A. Poch Pequot Offshore Private Equity Fund, Inc. 68,539 $ 365,244.33 c/o Hemisphere Management Limited Hemisphere House 9 Church Street Post Office Box HM951 Hamilton HM DX Bermuda Attention: Thomas L. Healy Pictet Global Sector Fund 234,566 $ 1,250,002.00 do Yves Martignier ComVentures 29 Bd. Georges-Favon Geneva 1204 Switzerland Telecom Venture Partners 1, L.P. 234,565 $ 1,249,997.00 c/o Yves Martignier ComVentures 29 Bd. Georges-Favon Geneva 1204 Switzerland Texas Instruments Incorporated 122,500 $ 652,802.50 Attn: Charles D. Tobin 7839 Churchill Way, MS 8658 Dallas, TX 75251 Aaron Wolfson 18,765 $ 100,000 One State Equities One State Street Plaza New York, N.Y. 10004 Abraham Wolfson 9,383 $ 50,000 One State Equities One State Street Plaza New York, N.Y. 10004 Eli Levitin 4,691 $ 25,000 One State Equities One State Street Plaza New York, N.Y. 10004 Levitin Family Charitable Tst 4,691 $ 25,000 One State Equities One State Street Plaza New York, N.Y. 10004 MWDI Partnership 9,383 $ 50,000 One State Equities One State Street Plaza New York, N.Y. 10004 Jacob Safier 18,765 $ 100,000 One State Equities One State Street Plaza New York, N.Y. 10004 Steve Schlam 18,765 $ 100,000 One State Equities One State Street Plaza New York, N.Y. 10004 Michael Alpert 9,383 $ 50,000 One State Equities One State Street Plaza New York, N.Y. 10004 ZWD Investments, LLC 187,653 $ 1,000,000 One State Equities One State Street Plaza New York, N.Y. 10004 TOTAL 3,922,463 $ 20,902,805 =====