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
