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Exhibit 10.9
STOCK REPURCHASE AGREEMENT
This Stock Repurchase Agreement (the "AGREEMENT") is made and
entered
into effective as of June 4, 2002, by and between Passave Inc.,
a Delaware
corporation (separately or collectively with its subsidiary,
Passave Ltd., as
applicable, "PASSAVE" or the "COMPANY"), Ariel Maislos ("AM")
and Blue Orange
Ventures, LLC ("BLUE Orange" or the "SHAREHOLDER").
RECITALS
A. Passave and certain investors (the "INVESTORS"), have entered
into a
Stock Purchase Agreement and related agreements (the "INVESTMENT
AGREEMENTS"),
pursuant to which the Investors shall purchase Series B
Preferred Stock of the
Company (the "INVESTMENT"), under the terms set forth
therein.
B. Following the consummation of the Investment (the "CLOSING"),
AM
(holding his Shares via Blue Orange will be the beneficial owner
of such amount
of shares of Common Stock of Passave as set forth opposite his
signature herein
(the "SHARES").
C. Following the Closing, AM will continue to be employed by
Passave.
D. As an inducement for the Investors to consummate the
Investment, the
Investors desire AM to, and AM is willing to, subject the
Unvested Shares (as
defined below) to repurchase by the Company, subject to the
terms and conditions
provided herein.
NOW, THEREFORE, in consideration of the premises and mutual
covenants
and agreements hereinafter set forth, the parties hereto,
intending to be
legally bound, hereby agree as follows:
1. VESTING; COMPANY RIGHT TO REPURCHASE.
1.1 VESTING. Upon the Closing, twenty-five percent (25%) of the
Shares
will be deemed "Vested" and fully owned by the Shareholder, and
the Company
shall have no right with respect thereto. The remaining
seventy-five percent
(75%) of the Shares will be deemed "Unvested." Although all of
the Shares
(whether Vested or Unvested) will entitle the Shareholder to all
of the rights
accorded to a holder of Common Stock of Passave Inc. (including
the right to
cash dividends, if any, and the right to vote such Shares), the
Unvested Shares
(as defined in Section 1.5 below) will remain subject to
repurchase pursuant to
Section 1.3. The Unvested Shares shall become Vested Shares in
equal portions on
a quarterly basis over the forty-eight (48) month period
following the Closing,
beginning on June 4, 2002.
1.2 ESCROW. As security for the faithful performance of this
Agreement,
Shareholder agrees to deliver such certificate(s) together with
stock power in
the form attached hereto as EXHIBIT A, executed by Stockholder
(with the date
and number of Shares left blank), to Naschitz, Brandes &
Co., Israeli counsel to
the Company ("ESCROW AGENT"); said documents are to be held by
the Escrow Agent
pursuant to the Joint Escrow Instructions of the Company and the
Stockholder as
set forth in EXHIBIT B hereto and incorporated herein by this
reference, which
instructions shall also be delivered to the Escrow Agent.
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1.3 PASSAVE'S RIGHT TO REPURCHASE UNVESTED SHARES.
(a) In the event that (i) The Company terminates AM's
employment with the Company for Cause; or (ii) AM resigns or
voluntarily departs
from his employment with Passave for any reason other than Good
Reason (each, a
"TRIGGER EVENT"), then, for a period of thirty (30) days after
the Trigger
Event, the Company shall have the right, but not an obligation,
to repurchase
all of the Shares owned or held by AM and/or the Shareholder or
any Permitted
Transferee thereof that remain Unvested as of the date of such
Trigger Event,
for a price equal to the par value of such Unvested Shares.
(b) In the event that the Company terminates AM's employment
with the Company for any reason other than for Cause, then, for
a period of
thirty (30) days after the date of termination of employment,
the Company shall
have a right, but not an obligation, to repurchase fifty percent
(50%) of the
Unvested Shares owned or held by the Shareholder, and/or AM, or
any Permitted
Transferee thereof, that remain Unvested on the date of such
termination, for a
price equal to the par value of such Unvested Shares (such
exercise by the
Company of its right to repurchase Shares pursuant to this
Sections 1.3(a) and
1.3.(b) herein, a "REPURCHASE") and the balance of the shares
(i.e., the Shares
that are not subject to a Repurchase) shall immediately and
automatically vest,
PROVIDED that the Repurchase right granted under this Subsection
1.3(b) is
approved by at least five (5) out of the six (6) members of the
Board of
Directors of the Company.
(c) The Repurchase shall be performed by the Company by
written notice to AM. The Company shall become the legal and
beneficial owner of
the Shares being repurchased and all rights and interest therein
or related
thereto, and the Company shall have the right to transfer to its
own name the
number of Unvested Shares being repurchased by the Company,
without further
action by AM.
1.4 ACCELERATED VESTING OF SHARES. All of AM's Unvested Shares
shall
immediately and automatically Vest and no longer be subject to
repurchase by the
Company pursuant to Section 1.3 of this Agreement, upon the
termination of AM's
employment with the Company (i) by the Company, for any reason
other than for
Cause, and other than as set forth in Section 1.3(b), (ii) by AM
for Good
Reason, at any time within thirty (30) days of the occurrence of
the event that
constitutes such Good Reason, or (iii) due to death or
disability.
1.5 CHANGE OF CONTROL.
1.5.1 In the event of a Change of Control, in which the
consideration received by the stockholders of the Company is
OTHER THAN (i)
cash, or (ii) stock of a corporation which is actively traded on
an active
public market, any Unvested Shares which are assumed or
substituted by shares
covering the stock of a successor entity, or a parent or
subsidiary thereof,
with appropriate adjustments as to the number and kinds of
shares or units and
exercise prices, shall continue in the manner and under the
terms so provided.
The Unvested Shares shall be considered assumed if, the
surviving entity assumes
this agreement and if following consummation of the Change of
Control, the
Unvested Shares immediately prior to the consummation of the
Change of Control,
are replaced by the consideration (whether shares, or other
securities or
property) received in the transaction by the Shareholder of the
Company for
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each share held on the effective date of the transaction (and if
shareholders
were offered a choice of consideration, the type of
consideration chosen by the
holders of a majority of the outstanding shares);
1.5.2 In the event of a Change of Control in which the
consideration received by the stockholders of the Company is
OTHER THAN (i)
cash, or (ii) stock of a corporation which is actively traded on
an active
public market, AND AM's employment is terminated by the Company
for any reason
other than Cause within nine (9) months after the Change of
Control, then All of
AM's Unvested Shares shall immediately and automatically Vest
and no longer be
subject to repurchase by the Company pursuant to Section 1.3 of
this Agreement.
1.5.3 In the event of a Change of Control in which the
consideration received by the stockholders of the Company is (i)
cash, or (ii)
stock of a corporation which is actively traded on an active
public market, then
All of AM's Unvested Shares shall immediately and automatically
Vest and no
longer be subject to repurchase by the Company pursuant to
Section 1.3 of this
Agreement.
1.5.4 "Change of Control" shall mean (A) the acquisition of
the Company by another entity by means of any transaction or
series of related
transactions (including, without limitation, any reorganization,
merger or
consolidation); or (B) a sale of all or substantially all of the
assets of the
Corporation; unless in each case, the Company's stockholders of
record as
constituted immediately prior to such acquisition or sale will,
immediately
after such acquisition or sale (by virtue of securities issued
as consideration
for the Corporation's acquisition or sale or otherwise) hold at
least fifty
percent (50%) of the voting power of the surviving or acquiring
entity.
1.6 STOCK SPLITS, STOCK DIVIDENDS, ETC. Any shares of capital
stock of
Passave received by AM with respect to the Unvested Shares as
the result of any
stock dividend, stock split, recapitalization or other similar
event, shall be
considered "Unvested Shares" for all purposes of this Agreement
and shall be
subject to the same vesting schedule as AM's Unvested Shares
with respect to
which they were received.
2. TRANSFER OF UNVESTED SHARES.
2.1 PROHIBITED AND PERMITTED TRANSFERS. In addition to any
other
limitation on Transfer (as defined below), AM may not Transfer
any Unvested
Shares, or any interest therein, except to a Permitted
Transferee and as
expressly provided in this Section 2, and in any event only
after compliance
with the specific limitations and conditions set forth in this
Section 2 and all
applicable securities laws. Any purported Transfer other than a
Permitted
Transfer is void and is of no effect, and no purported
transferee thereof will
be recognized as a holder of the Unvested Shares for any purpose
whatsoever.
Should such a Transfer purport to occur, Passave may refuse to
carry out the
Transfer on its books, set aside the Transfer, or exercise any
other legal or
equitable remedy.
2.2 CONDITIONS TO TRANSFER. It shall be a condition to any
Permitted
Transfer that:
(1) The transferee of the Unvested Shares shall execute all
such documents as Passave reasonably may require to ensure
that
Passave's rights under this
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Agreement are adequately protected with respect to such
Unvested
Shares, including, without limitation, the transferee's
agreement to
be bound by all terms and conditions of this Agreement, as if
he, she
or it were the original holder of such Unvested Shares; and
(2) Passave is reasonably satisfied that such Transfer
complies in all respects with the requirements imposed by
applicable
securities laws and regulations.
3. CERTAIN DEFINITIONS. For purposes of this Agreement:
3.1 "Cause" shall mean the existence of:
(1) AM's conviction of or pleading guilty to any felony
which the board of directors of the Company reasonably believes
had or
will have a material detrimental effect on the company's
reputation or
business; or
(2) AM's willful breach of his fiduciary duties to Passave
(it being understood that an action taken by AM which AM
reasonably
believes is in the best interests of Passave shall not be deemed
a
"willful breach") or any act of personal dishonesty in
connection with
his responsibilities to the Company that is intended to result
in
substantial, direct or indirect, personal enrichment of AM;
or
(3) any material breach by AM of his Confidentiality and Non
Disclosure Agreement that is capable of being cured and is not
so
cured within 30 days following written notice by the Company
specifying the br
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