EXHIBIT B
AMENDED AND RESTATED PRINCIPAL SELLER SHAREHOLDER AGREEMENT
THIS AMENDED AND RESTATED PRINCIPAL SELLER SHAREHOLDER AGREEMENT (this
"Agreement") is entered into as of June 28, 2000 by and among Com21, Inc.,
a Delaware corporation ("Purchaser"), and Xxxxx Xxxxx, an Israeli citizen
("Shareholder").
RECITALS
A. Purchaser and GADline, Ltd. (the "Company") entered into a Share
Purchase Agreement, dated as of April 18, 2000, among Purchaser, Company,
certain Sellers, and Xxxx Xxxxx, as the Sellers' Representative (the "Share
Purchase Agreement"), pursuant to which Purchaser will acquire Ordinary
Shares of the Company held by the Sellers (the "Share Purchase").
B. By virtue of the Share Purchase, and in accordance with the Share
Purchase Agreement, Shareholder will receive shares of Purchaser Common
Stock (the "Founder's Shares") in exchange for the Ordinary Shares of the
Company held by him immediately prior to the Share Purchase.
C. As an inducement to Purchaser to enter into the Share Purchase
Agreement, Shareholder has entered into a Principal Seller Shareholder
Agreement with Purchaser (the "Original Agreement"), pursuant to which
Shareholder agreed to grant Purchaser a right of repurchase with respect to
certain of the Founder's Shares as set forth therein.
D. The parties hereto desire to amend and restate the Original Agreement
in its entirety as set forth herein.
NOW, THEREFORE, in consideration of the covenants and representations set
forth herein, and for other good and valuable consideration, the parties
hereto agree as follows:
1. Forfeiture. If Shareholder ceases to provide full-time services to
the Company or Purchaser, as the case may be, whether as a director,
officer, employee or consultant, at any time prior to the date that is
twenty-four (24) months after the Closing Date (a "Termination Event"),
fifteen percent (15%) of the shares of Purchaser Common Stock issued to
Shareholder at the Closing of the Share Purchase (equal to 59,103 shares of
Purchaser Common Stock) (as adjusted for any stock split, reverse stock
split or stock dividend) shall be forfeited to Purchaser without the
payment of any consideration and shall be cancelled and extinguished upon
the terms and conditions set forth herein (the "Forfeiture"); provided,
however, that in no event shall any of the following events constitute a
Termination Event: (i) any termination by the Company or Purchaser of such
Shareholder's services other than for Cause (as defined below), (ii) any
termination or material interruption of such Shareholder's services
resulting from the death or physical or mental incapacity or disability of
Shareholder and (iii) the voluntary termination by the Shareholder of such
Shareholder's services for Good Reason (as defined below). For purposes of
applying the Forfeiture, (x) the term "Purchaser" includes any parent or
subsidiary of Purchaser, as such terms are used in Sections 424(e) and
424(f) of the Internal Revenue Code of 1986, as amended, (y) the term
"Cause" is defined as (i) any act of personal dishonesty taken by
Shareholder in connection with his responsibilities as a director, officer,
employee or consultant of the Company, as applicable, which is intended to
result in substantial personal enrichment of Shareholder, (ii)
Shareholder's conviction of, or plea of nolo contendre to, a felony which
the Board of Directors of the Company or Purchaser reasonably believes has
had or will have a material detrimental effect on the Company's or
Purchaser's reputation or business, (iii) a willful act by Shareholder
which constitutes gross misconduct and is injurious to the Company or
Purchaser, and (iv) continued willful violations by Shareholder of
Shareholder's obligations to the Company or Purchaser (other than
obligations arising under the indemnification provisions of the Share
Purchase Agreement) after there has been delivered to Shareholder a written
demand for performance from the Company or Purchaser which describes the
basis for the Company's or Purchaser's belief that Shareholder has not
substantially performed his duties and (z) the term "Good Reason" shall
mean the termination of employment by Shareholder as a result of (i) a
material breach by the Company of the Founder/Executive Employment and Non-
Competition Agreement entered into between the Company and Shareholder in
connection with the Share Purchase Agreement, as such agreement may be
amended, modified or supplemented from time to time (the "Employment
Agreement"), (ii) the announcement or occurrence of any event in which
Purchaser disposes of 50% or more of its interest in the business of the
Company pursuant to a merger or asset or stock sale or similar transaction
or group of related transactions involving the Company, (iii) any
assignment to Shareholder of any duties materially inconsistent with the
duties he and the Company have agreed in writing shall be associated with
his position as set forth in the Employment Agreement following
consummation of the transactions contemplated by the Share Purchase
Agreement, (iv) the Company having made it a condition to his continued
employment that the Shareholder permanently relocate from Israel or (v) a
material reduction in Shareholder's compensation or benefits he and
Purchaser have agreed in writing will be in effect immediately following
consummation of the transactions contemplated by the Share Purchase
Agreement. The Founder's Shares which are subject to the Forfeiture are
referred to herein as the "Forfeiture Shares" until such shares shall
become "Release Shares" (as defined below) in accordance with the terms
hereof.
2. Transfer of Forfeiture Shares. Shareholder will not directly or
indirectly, (i) offer, sell, assign, transfer, encumber, pledge, contract
to sell, sell any options or contract to purchase, purchase any option or
contract to sell, grant any option, right or warrant to purchase, lend, or
otherwise dispose of, other than by operation of law, any Forfeiture
Shares; or (ii) enter into any swap or other arrangement that transfers to
another, in whole or in part, any of the economic consequences of ownership
of the Forfeiture Shares, whether any such transaction described in clause
(i) or (ii) above is to be settled by delivery of Forfeiture Shares, such
other securities, in cash or otherwise.
3. Release of Shares From Forfeiture. Unless a Termination Event shall
have occurred prior to such date, twenty-five percent (25%) of the initial
amount of Forfeiture Shares shall cease to be Forfeiture Shares and shall
be released from the Forfeiture on each of the six, twelve, eighteen and
twenty-four month anniversaries of the Closing Date (the "Release Shares").
All Forfeiture Shares which become Release Shares on any such anniversary
date shall be transferred to Shareholder within three (3) days of such
anniversary date. If a Termination Event shall have occurred, no
Forfeiture Shares which have not previously become Release Shares shall
become Release Shares.
4. Escrow of Forfeiture Shares. For purposes of facilitating the
enforcement of the provisions of the Forfeiture, Shareholder agrees,
immediately upon receipt of the certificate(s) for Forfeiture Shares, to
deliver such certificate(s), together with an Assignment Separate from
Certificate in the form attached hereto as Exhibit A, executed in blank by
Shareholder, with respect to each such stock certificate, to the Secretary
or Assistant Secretary of Purchaser, or their designee, to hold in escrow
for so long as such Forfeiture Shares remain subject to the Forfeiture,
with the authority to take all such actions and to effectuate all such
transfers and/or releases as may be necessary or appropriate to accomplish
the objectives of this Agreement in accordance with the terms hereof.
Shareholder hereby acknowledges that the appointment of the Secretary or
Assistant Secretary of Purchaser (or their designee) as the escrow holder
hereunder with the stated authorities is a material inducement to Purchaser
to make this Agreement and that such appointment is coupled with an
interest and is accordingly irrevocable. Shareholder agrees that such
escrow holder shall not be liable to any party hereto (or to any other
party) for any actions or omissions unless such escrow holder is negligent
relative thereto or failed to act in good faith . The escrow holder may
rely upon any letter, notice or other document executed by any signature
purported to be genuine and may resign at any time.
5. Miscellaneous.
(a) Capitalized terms used in this Agreement and not otherwise defined
herein shall have the meanings ascribed to them in the Share Purchase
Agreement and the related transaction documents.
(b) Any term of this Agreement may be amended only with the written
consent of all of the parties hereto.
(c) This Agreement amends and restates the Original Agreement and
supersedes and replaces such Original Agreement in its entirety, and every
reference in the Share Purchase Agreement, and in every other agreement
entered into in connection herewith or referred to therein, and in every
certificate, opinion, document, schedule or other instrument delivered
pursuant thereto, such reference shall be to this Agreement.
(d) This Agreement may be executed in any number of counterparts and
delivered by facsimile, each of which shall be an original, but all of
which together shall constitute one instrument.
(e) This Agreement shall be construed in accordance with, and governed in
all respects by, the internal laws of the State of New York. Except as
otherwise set forth herein, all claims between the parties hereto regarding
the subject matter of this Agreement shall be finally settled by a board of
three (3) arbitrators under the rules then in effect of the American
Arbitration Association. Judgment upon any award rendered by the
arbitrator(s) may be entered in any court having jurisdiction. Any such
arbitration shall be conducted in the English language and held in Tel
Aviv, Israel. Any arbitration award shall be based on and accompanied by
findings of fact and conclusions of law and shall be conclusive as to the
facts so found. Each party shall be responsible for its respective costs
incurred in arbitration, except that costs and fees of each arbitrator and
the administrative fee of the American Arbitration Association shall be
borne equally by the parties. For purposes of Israeli law, the provisions
of this Agreement regarding arbitration shall be deemed a binding
arbitration agreement in accordance with the Arbitration Law, 5728-1968.
Each of the parties irrevocably waives the right to a jury trial in
connection with any legal proceeding relating to this Agreement or the
enforcement of any provision of this Agreement.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
COM21, INC.
By: _________________________
______________________________
SHAREHOLDER
SIGNATURE PAGE TO AMENDED AND RESTATED PRINCIPAL SELLER SHAREHOLDER
AGREEMENT
EXHIBIT A
ASSIGNMENT SEPARATE FROM CERTIFICATE
FOR VALUE RECEIVED, ___________________ transfers unto Com21, Inc., a
Delaware corporation ("Purchaser"), __________ (_________) shares of the
Common Stock of Purchaser, represented by Certificate Number ________
herewith, and does hereby irrevocably constitute and appoint
___________________ to transfer the said stock on the books of the said
corporation with full power of substitution in the premises.
Date: ________________
______________________________
