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NAME: Dhruv Khanna TITLE: Executive vice president and general counsel of Covad Communications Group Inc. AGE: 41 CHIEF RESPONSIBILITIES: Dhruv Khanna is in charge of litigation, regulatory matters, lobbying Congress and state legislatures and corporate housekeeping, such as helping to organize annual shareholders meetings and company filings with the U.S. Securities and Exchange Commission (SEC). He also spends a lot of time outside the department, playing a quasi-human resources, quasi-corporate executive role, he says, “boosting people’s morale, [and telling them] why the company will succeed in the long run.” CREATING A NEW COMPANY: Khanna’s role as company cheerleader stems from the fact that he co-founded Covad. He was among the first people to recognize that the 1996 Telecommunications Act created an opportunity for new businesses to compete against the Baby Bells. He, Covad Chairman Chuck McMinn and Chuck Haas, senior vice president of sales development, launched Covad shortly after the law was enacted. Messrs. Khanna and McMinn spent the first half of 1997 negotiating contracts with Pacific Bell and GTE in California to rent space in their central offices and lease their phone lines, which Covad needs to provide its digital subscriber line (DSL) service. Those first two contracts enabled them to raise $8.5 million to start their company. Covad began providing DSL service in December 1997, becoming the first business to sell it commercially in the U.S. “I invested $62,000 of my own money in Covad [and] went without a salary for six months other than what I could hustle on the side — while trying to establish the company,” Khanna says. His investment paid off. He made between $30 million and $40 million from the sale of about one million shares of Covad stock, he says, and he still owns about 5.3 million shares, although its value has dipped to only about $5 million as the stock price has plummeted. TOUGH TIMES: The dot-com crash has taken a heavy toll on Covad. More than a dozen of its Internet service provider (ISP) resellers have stopped paying the company, and its stock price has fallen 98 percent from its all-time high last year of $66. Covad has laid off 800 workers and scaled back its expansion plans. In early April, the company filed for a one-month extension of the March 31 deadline for submitting its annual 10-K report with the SEC. Covad’s fourth-quarter earnings report has also been delayed as auditors finish reviewing last year’s restructuring charges and the impact of resellers’ unpaid bills, as well as a new SEC accounting rule. Khanna says that his “role is to provide counsel on what the requirements are with regard to the Securities and Exchange Commission’s rules and regulations … and to make sure the appropriate information is disclosed to the public at the appropriate time.” BANKRUPTCIES: Covad has had some success in salvaging what it could from four former ISP resellers now in bankruptcy proceedings. In February, the U.S. Bankruptcy Court in Santa Ana, Calif., approved Covad’s offer to buy some 24,500 customers from the biggest reseller, Huntington, Calif.-based Flashcom, for $3.5 million in cash and debt forgiveness. In April, the U.S. Bankruptcy Court in Los Angeles approved Covad’s offer to purchase 11,000 customers from Zyan Communications for an undisclosed amount. Khanna oversees the work of the two in-house attorneys who are handling the bankruptcies. ANTITRUST BATTLES: The Baby Bells must by law sell Covad and others access to their phone lines and rent them space in their central offices. But the Baby Bells also are in the business of providing DSL service themselves. Thus, the Baby Bells are both suppliers and competitors of Covad. “I had to fight the Bell companies every step of the way over our legal rights to lease phone lines and provide DSL,” Khanna says. As a result, the company now has two antitrust cases against Baby Bells to recover excess charges for phone lines and central office space. Covad also is involved in more than a dozen administrative rate proceedings with state public utility commissions that were initiated after negotiations between Covad and Baby Bells had failed. SBC SETTLEMENT: Years of fighting between Covad and its main Baby Bell supplier/competitor, San Antonio, Texas-based SBC Communications Inc., ended last September with the settlement of two lawsuits. Covad, claiming antitrust violations, had accused SBC of denying Covad space for its equipment in SBC’s central offices, which prevented Covad from providing DSL service to much of California. Under the settlement, SBC agreed to pay Covad $150 million for a 6 percent stake in the company. SBC also agreed to resell $600 million worth of Covad’s DSL service over the next six years. Khanna initiated the litigation and helped design and negotiate the settlement. “Another (in-house) lawyer did the nitty-gritty negotiations. I was more behind the scenes,” he says. LOBBYING: Khanna spends a lot of time in Washington, D.C., leading Covad’s campaign against proposals in Congress to help the Baby Bells enter the long-distance data service business. Under current law, the Baby Bells must show that they have opened up their local markets to competition before they can offer any long-distance service. The Baby Bells are seeking an exemption so they can provide long-distance data services without meeting that requirement. The Baby Bell proposal, the Internet Freedom and Broadband Deployment Act, was reintroduced in the House on April 24. Such a change in the law would make it even harder for Covad to get timely access to the local phone companies’ lines, Khanna says. SECURITY CLASS ACTION: Covad is a defendant in its first shareholder securities class action cases, which are being consolidated in U.S. District Court in the Northern District of California. The lawsuits allege that the company misrepresented its revenues last September so as to inflate its stock price artificially. The cases were filed after Covad’s third-quarter earnings announcement in October 2000 sent the company’s stock price down sharply, resulting in huge losses for investors. Khanna says the lawsuits are without merit and that the company’s earnings simply came in below analysts’ expectations because of the unpaid bills of a number of its ISP resellers. Khanna is supervising the litigation defense. OUTSIDE COUNSEL: San Francisco’s Morrison & Foerster is representing Covad in the securities litigation. Other key firms: San Francisco’s McCutchen, Doyle, Brown & Enerson and Washington, D.C.’s Ross, Dixon & Bell, antitrust; Irell & Manella, in Century City, Calif., corporate ; and L.A.’s Munger, Tolles & Olsen, bankruptcy matters. ROUTE TO THE TOP: Khanna grew up in India and went to both Dartmouth College and Stanford Law School on scholarships. After receiving his law degree in 1986, he went to work at Pettit & Martin in San Francisco. One year later he joined Morrison & Foerster, where he specialized in telecommunications regulation and litigation. In 1993, he joined Intel Corporation, where he was the senior telecommunications attorney. He left Intel at the end of 1996 to work on getting Covad off the ground. FAMILY: Khanna’s wife, Surita, is a self-employed architect. The couple have two daughters, Vrinda, 9, and Mira, 7. LAST BOOKS READ: “The Darling Buds of May: A Comedy,” by H.E. Bates, and “U.S. v. Microsoft: The Inside Story of the Landmark Case,” by Joel Brinkley and Steve Lohr.

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