Exhibit 10.10
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"), Victor Vaisleib ("VV") and
Pshoo, LLC ("PSHOO" 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 terns set forth therein.
B. Following the consummation of the Investment (the
"CLOSING"),
VV (holding his Shares via Pshoo 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, VV will continue to be employed by
Passave.
D. As an inducement for the Investors to consummate the
Investment, the Investors desire VV to, and
VV 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 VV's
employment
with the Company for Cause; or (ii) VV
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 VV 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 VV'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 VV, 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 VV. 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 VV.
1.4 ACCELERATED VESTING OF SHARES. All of VV'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 VV's
employment with the Company (i) by the
Company, for any reason other than for
Cause, and other than as set forth in
Section 13(b), (ii) by VV 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
VV'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 VV'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
VV'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 VV 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
VV'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),
VV 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) VV'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) VV's willful breach of his fiduciary duties to Passave
(it being understood that an action taken
by VV which VV 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 VV; or
(3) any material breach by VV of his Confidentiality and Non
Disclosure Agreement that is capable of
being cured and is not so cure
