COM21 INC, DEF 14A, 2000-04-19

COM21 INC
DEF 14A, 2000-04-19
COMPUTER PROGRAMMING, DATA PROCESSING, ETC.

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SCHEDULE 14A
(RULE 14a-101)

INFORMATION REQUIRED IN PROXY STATEMENT

SCHEDULE 14A INFORMATION

PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934

Filed by the Registrant [X]

Filed by a Party other than the Registrant [ ]

Check the appropriate box:

[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12

COM21, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)

- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)

Payment of Filing Fee (Check the appropriate box):

[X] No fee required.

[ ] Fee computed on table below per Exchange Act Rules 14a-6(1)(1) and 0-11.

(1) Title of each class of securities to which transaction applies:
N/A
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(2) Aggregate number of securities to which transaction applies:
N/A
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
N/A
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials:

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[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.

(1) Amount previously paid:
N/A
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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[COM21 Logo]

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 25, 2000

TO THE STOCKHOLDERS OF COM21:

NOTICE IS HEREBY GIVEN that the 2000 Annual Meeting of Stockholders of
Com21, Inc. ("Com21") will be held on May 25, 2000 at 11:00 a.m. at 750 Tasman
Drive, Milpitas, California 95035, for the following purposes, as more fully
described in the Proxy Statement accompanying this Notice:

1. To elect eight directors to serve for a one-year term and until their
successors are duly elected and qualified;

2. To approve an amendment to Com21's Certificate of Incorporation to
increase the authorized number of shares of Common Stock from 40,000,000
to 160,000,000 shares;

3. To approve the implementation of the Com21, Inc. 2000 Stock Option Plan
pursuant to which 1,500,000 shares of Com21's Common Stock will be
reserved for issuance to individuals in Com21's service, including
officers, employees, Board members, and independent consultants;

4. To approve an additional 450,000 shares authorized for issuance under
Com21's Employee Stock Purchase Plan;

5. To ratify the appointment of Deloitte & Touche LLP as Com21's
independent public accountants for the fiscal year ending December 31,
2000; and

6. To transact such other business as may properly come before the meeting,
or any adjournment or adjournments thereof.

Only stockholders of record at the close of business on March 31, 2000 are
entitled to notice of, and to vote at, the Annual Meeting. The stock transfer
books of Com21 will remain open between the record date and the date of the
meeting. A list of stockholders entitled to vote at the Annual Meeting will be
available for inspection at the executive offices of Com21.

All stockholders are cordially invited to attend the meeting in person.
Whether or not you plan to attend, please sign and return the proxy in the
envelope enclosed for your convenience. Should you receive more than one proxy
because your shares are registered in different names and addresses, each proxy
should be signed and returned to assure that all of your shares will be voted.
You may revoke your proxy at any time prior to the Annual Meeting and vote. If
you attend the Annual Meeting and vote by ballot, your proxy will be revoked
automatically and only your vote at the Annual Meeting will be counted.

Sincerely,

/s/ David L. Robertson
David L. Robertson
Vice President, Finance,
Chief Financial Officer and
Corporate Secretary
Milpitas, California

April 17, 2000

YOUR VOTE IS VERY IMPORTANT, REGARDLESS OF THE NUMBER OF SHARES YOU OWN.
PLEASE READ THE ATTACHED PROXY STATEMENT CAREFULLY, COMPLETE, SIGN AND DATE THE
ENCLOSED PROXY CARD AS PROMPTLY AS POSSIBLE AND RETURN IT IN THE ENCLOSED
ENVELOPE.
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COM21, INC.
750 TASMAN DRIVE
MILPITAS, CALIFORNIA 95035
------------------------

PROXY STATEMENT
------------------------

FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 25, 2000

GENERAL

The enclosed proxy ("Proxy") is solicited on behalf of the Board of Com21,
Inc., (the "Board") a Delaware corporation, for use at the 2000 Annual Meeting
of Stockholders (the "Annual Meeting") to be held at 11:00 a.m. local time, on
Thursday, May 25, 2000, or any adjournment thereof, at 750 Tasman Drive,
Milpitas, California 95035 for the purposes set forth in this Proxy Statement
and the accompanying Notice of Annual Meeting. These proxy solicitation
materials were mailed on or about April 17, 2000 to all stockholders entitled to
vote at the Annual Meeting.

PROXIES

If the enclosed form of proxy is properly signed and returned, the shares
represented thereby will be voted at the Annual Meeting in accordance with the
instructions specified thereon. If the proxy does not specify how the shares
represented thereby are to be voted, the proxy will be voted FOR the election of
the directors proposed by the Board unless the authority to vote for the
election of such directors is withheld and, if no contrary instructions are
given, the proxy will be voted FOR the approval of Proposals 2, 3, 4 and 5
described in the accompanying Notice and Proxy Statement. You may revoke or
change your Proxy at any time before the Annual Meeting by filing with the Chief
Financial Officer of Com21 at Com21's principal executive offices at 750 Tasman
Drive, Milpitas, California 95035, a notice of revocation or another signed
Proxy with a later date. You may also revoke your Proxy by attending the Annual
Meeting and voting in person.

SOLICITATION

Com21 will bear the entire cost of solicitation, including the preparation,
assembly, printing and mailing of this Proxy Statement, the Proxy and any
additional solicitation materials furnished to the stockholders. Copies of
solicitation materials will be furnished to brokerage houses, fiduciaries and
custodians holding shares in their names that are beneficially owned by others
so that they may forward this solicitation material to such beneficial owners.
In addition, Com21 may reimburse such persons for their costs in forwarding the
solicitation materials to such beneficial owners. Common Stockholders can agree
to access the electronic versions of Com21's proxy materials, via the Internet,
rather than receiving printed versions. The original solicitation of proxies by
mail may be supplemented by a solicitation by telephone, telegram or other means
by directors, officers or employees of Com21. Com21 may retain the services of
one or more firms to assist with solicitation of proxies, for an estimated cost
of $5,500 plus reimbursement of expenses.

VOTING

The specific proposals to be considered and acted upon at the Annual
Meeting are summarized in the accompanying Notice and are described in more
detail in this Proxy Statement. On March 31, 2000, the record date for
determination of stockholders entitled to notice of and to vote at the Annual
Meeting, 21,871,242 shares of Com21's Common Stock, par value $0.001, were
issued and outstanding. No shares of Com21's preferred stock, par value $0.001,
were outstanding. Each stockholder is entitled to one vote for each share of
Common Stock held by such stockholder on March 31, 2000. Stockholders may not
cumulate votes in the election of directors.

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All votes will be tabulated by the inspector of election appointed for the
meeting, who will separately tabulate affirmative and negative votes,
abstentions and broker non-votes. Abstentions and broker non-votes are counted
as present for purposes of determining the presence or absence of a quorum for
the transaction of business. Abstentions will be counted towards the tabulations
of votes cast on proposals presented to the stockholders and will have the same
effect as negative votes, whereas broker non-votes will not be counted for
purposes of determining whether a proposal has been approved.

DEADLINE FOR RECEIPT OF STOCKHOLDER PROPOSALS

Proposals of stockholders of Com21 that are intended to be presented by
such stockholders at Com21's 2001 Annual Meeting must be received no later than
December 1, 2000, in order that they may be included in the proxy statement and
form of proxy relating to that meeting. Such stockholder proposals should be
submitted to Com21, Inc. at 750 Tasman Drive, Milpitas, California 95035,
Attention: Corporate Secretary.

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MATTERS TO BE CONSIDERED AT ANNUAL MEETING

PROPOSAL ONE

ELECTION OF DIRECTORS

GENERAL

Com21's bylaws have authorized eight directors. Each director is elected
for a period of one year at Com21's annual meeting of stockholders and serves
until the next annual meeting or until his successor is duly elected and
qualified. The executive officers serve at the discretion of the Board. There
are no family relationships among any of Com21's directors or executive
officers. Com21's Amended and Restated Certificate of Incorporation provides for
a Board. The Board currently consists of eight persons. The directors nominated
will have a term of one year, expiring at the 2001 Annual Meeting of
stockholders or until each successor has been duly elected and qualified. The
nominees listed below, are currently directors of Com21. If this proposal is
approved, the Board will consist of eight persons.

The nominees for election have agreed to serve if elected, and management
has no reason to believe that such nominee will be unavailable to serve. In the
event the nominee is unable or declines to serve as a director at the time of
the Annual Meeting, the proxies will be voted for any nominee who may be
designated by the present Board to fill the vacancy. Unless otherwise
instructed, the proxy holders will vote the proxies received by them FOR the
nominee named below.

NOMINEES FOR TERM ENDING UPON THE 2001 ANNUAL MEETING OF STOCKHOLDERS

PETER D. FENNER. Mr. Fenner has been President, Chief Executive Officer and
a Director of Com21 since February 1996. From January 1989 through April 1992,
he served as President of the Transmission Systems Business Unit of AT&T Network
Systems (Lucent) and Corporate Officer at AT&T. From April 1992 to February
1996, Mr. Fenner was an independent consultant. From February 1986 through
December 1988, Mr. Fenner was Vice President, Product Planning for AT&T's
Network Systems Division. Mr. Fenner is Director of CorNet Information Ltd. Mr.
Fenner received an S.M. from the Sloan School of Management at the Massachusetts
Institute of Technology, where he was a Sloan Fellow, and a B.S. in Industrial
Engineering from Lehigh University.

PAUL BARAN. Mr. Baran has been the Chairman of the Board since Com21's
inception in June 1992. He is presently retired. Mr. Baran was awarded the 1999
Business Journal Entrepreneurial Award in Technology and was recipient of the
Electronic Frontier Foundation Pioneer Award (1993), the Marconi International
Fellowship Award (1991), the Institute of Electronics and Electrical
Engineering, Inc. ("IEEE") Alexander Graham Bell Medal (1990), the ACM
SIG/Communications Award (1989) and the IEEE Communications Society Edwin
Armstrong Award (1987). He co-founded Equatorial Communications, Packet
Technologies, Telebit Corporation and Metricom, Inc. Mr. Baran is a Life Fellow
of the IEEE, a Fellow of the AAAS and a member of the U.S. National Academy of
Engineers. Mr. Baran received an M.S. in Computers from the University of
California, Los Angeles, a B.S. in Electrical Engineering and a Dr.Sci. in
Engineering (Hon.) from Drexel University.

C. RICHARD KRAMLICH. Mr. Kramlich has been a Director of Com21 since May
1994. Mr. Kramlich is the co-founder and has been General Partner of New
Enterprise Associates since 1978. He is a Director of Chalone, Inc., Juniper
Networks, Lumisys, Inc., Netsolve and Silicon Graphics, Inc. Mr. Kramlich
received a B.S. from Northwestern University and a M.B.A. from Harvard Business
School.

JERALD L. KENT. Mr. Kent has been a Director of Com21 since May 1999. Mr.
Kent co-founded Charter Communications, Inc. and, from 1992 to the present has
served in various executive capacities at Charter. He has served as President
since 1996 and as Chief Executive Officer since 1997. Previously, Mr. Kent
served in various executive capacities with Cencom Cable Associates, Inc. He
joined Cencom in 1983 as Senior Vice President of Corporate Development and
served as Executive Vice President and Chief Financial Officer from 1987 to
1992. Mr. Kent serves as a director of Charter Communications, Inc., High Speed
Access Corp. and

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Cable Television Laboratories, Inc. Mr. Kent received a B.A. and a M.B.A. from
Washington University and is a certified public accountant.

ROBERT C. HAWK. Mr. Hawk has been a Director of Com21 since January 1997.
Mr. Hawk has been an independent business consultant since April 1997. From
April 1996 through March 1997, he was President of U.S. West Multimedia, a cable
company. From April 1986 through March 1996, he was the President of Carrier
Division, U.S. West Communications, a telecommunications company. He is a
Director of PairGain Technologies, COVAD Communications, Inc., Xylan Corp.,
Concord Corp., and RADCom Corp. Mr. Hawk received a M.B.A. from the University
of San Francisco and a B.B.A. from the University of Iowa.

DANIEL J. PIKE. Mr. Pike has been a Director of Com21 since March 2000. Mr.
Pike has been a Senior Vice President of Science and Technology at Prime Cable,
since 1982. He has authored six papers and co-authored three papers published in
the NCTA Transcript and one paper on engineering management for AMA
Communication publication. Mr. Pike was the recipient of the 1994 Communications
Technology Service in Technology Award and received the NCTA Vanguard Award for
Science and Technology in 1991. He is a Senior Member of the IEEE and SCTE while
holding membership on the CableLabs Board of Directors, NCTA Engineering
Committee, Cable Television Pioneers, Society of Motion Picture and Television
Engineers and the Advisory Board of Communications Technology. Mr. Pike received
a B.S. and a M.S. from Oklahoma State University.

JAMES SPILKER, JR. Dr. Spilker, has been a Director of Com21 since February
2000. Dr. Spilker is a co-founder of Stanford Telecommunications, Inc., where he
was Chairman of the Board from 1973 through 1999 and Principal Scientist from
June 1995 through 1999. He served as President and Chief Executive Officer of
Stanford Telecommunications, Inc., from August 1981 to June 1995. Dr. Spilker is
a member of the National Academy of Engineering of the United States and a Life
Fellow of the IEEE. Dr. Spilker received a B.S., M.S. and Ph.D. in electrical
engineering from Stanford University.

ROBERT W. WILMOT. Dr. Wilmot has been a Director of Com21 since April 1995.
Dr. Wilmot has been Chairman at Wilmot Consulting Inc. since May 1995. From
April 1994 to May 1995, Dr. Wilmot was an independent consultant and investor.
From May 1985 through April 1994, he was Chairman at Wilmot Enterprises Ltd. His
other prior positions include Vice President and Managing Director of Texas
Instruments and CEO of International Computers PLC, a computer company. He is a
limited partner in four venture funds, and Chairs the Supervisory Board of
EuroVentures BV, a $400 million venture fund operating in 9 European countries.
He is a Director of FVC.COM and @POS.COM. Dr. Wilmot received a B.S. in
Electrical Engineering from Nottingham University.

BOARD AND COMMITTEE MEETINGS

The Board held five (5) meetings and acted by written consent six (6) times
during the fiscal year ended December 31, 1999. The Board has an audit committee
and a compensation committee. Each of the directors attended 75% or more of the
aggregate of (i) the total number of meetings of the Board and (ii) the total
number of meetings held by all committees of the Board on which such director
served during the fiscal year ended December 31, 1999.

Audit Committee. The audit committee is primarily responsible for approving
the services performed by Com21's independent auditors and reviewing the
auditor's reports regarding Com21's accounting practices and systems of internal
accounting controls. The committee currently consists of two directors, Dr.
Wilmot and Mr. Kramlich. The audit committee held two (2) meetings during the
fiscal year ended December 31, 1999.

Compensation Committee. The compensation committee is primarily responsible
for reviewing and approving Com21's general compensation policy and setting
compensation levels for Com21's executive officers. The committee also
administers Com21's incentive compensation plans. During 1999, the committee
consisted of two directors, Mr. Kramlich and Mr. Hoff. The compensation
committee formally met three (3) times and acted by written consent four (4)
times during the fiscal year ended December 31, 1999. Mr. Hoff resigned
effective March 1, 2000, and Dr. Spilker was selected as his replacement
effective March 1, 2000.

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DIRECTOR COMPENSATION

Com21 currently does not provide cash compensation to any member of Com21's
Board. Under the Automatic Option Grant Program in effect under Com21's 1998
Stock Incentive Plan, each individual who first joins the Board as a
non-employee director any time after April 1, 1998 will also receive, at the
time of such initial election or appointment, an automatic option grant, to
purchase 15,000 shares of Common Stock, provided such person has not previously
been in Com21's employ. In addition, on the date of each annual stockholders
meeting, beginning with the 1999 Annual Meeting, each individual who is to
continue to serve as a non-employee Board member will automatically be granted
an option to purchase 5,000 shares of Common Stock, provided that such
individual has been on the Board for at least six months. Each automatic grant
for the non-employee Board members will have a term of 10 years, subject to
earlier termination following the optionee's cessation of Board service. Each
automatic option will be immediately exercisable for all of the option shares;
however, any unvested shares purchased under the option will be subject to
repurchase by Com21, at the exercise price paid per share, should the optionee
cease Board service prior to vesting in those shares. The shares subject to each
initial 15,000-share automatic option grant will vest over a four-year period in
successive equal annual installments upon the individual's completion of each
year of Board service measured from the option grant date. Each 5,000-share
automatic option grant will vest over a two-year period in successive equal
annual installments upon the individual's completion of each year of Board
service measured from the option grant date. However, the shares subject to each
automatic grant will immediately vest in full upon certain changes in control or
ownership of Com21 or upon the optionee's death or disability while a Board
member. Each grant under the Automatic Option Grant Program will have an
exercise price per share equal to the fair market value per share of Com21's
Common Stock on the grant date.

The following Board members received an option to purchase 5,000 shares
pursuant to Com21's Automatic Option Grant Program at the time of the 1999
Annual Meeting: Paul Baran, Robert C. Hawk, William Hearst, C. Richard Kramlich,
Robert Hoff, and Robert W. Wilmot at an exercise price of $30.44. Each
5,000-share automatic option grant will vest over a two-year period in
successive equal annual installments upon the individual's completion of each
year of Board service measured from the option grant date.

Dr. Spilker and Mr. Pike each received an option to purchase 15,000 shares
pursuant to Com21's Automatic Option Grant Program. The shares subject to each
initial 15,000-share automatic option grant will vest over a four-year period in
successive equal annual installments upon the individual's completion of each
year of Board service measured from the option grant date.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

During 1999, the members of the compensation committee of Com21's Board
were Mr. Kramlich and Mr. Hoff. Mr. Hoff resigned effective March 1, 2000, and
Dr. Spilker was selected as his replacement effective March 1, 2000. No
executive officer of Com21 serves on the Board or compensation committee of any
entity which has one or more executive officers serving as a member of Com21's
Board or compensation committee.

RECOMMENDATION OF THE BOARD

THE BOARD RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" THE ELECTION OF ALL
NOMINEES LISTED ABOVE.

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PROPOSAL TWO

APPROVAL OF INCREASE IN NUMBER OF AUTHORIZED
SHARES OF COMMON STOCK

The Board has adopted, subject to stockholder approval, an amendment to
Com21's Amended and Restated Certificate of Incorporation to increase Com21's
authorized number of shares of Common Stock from 40,000,000 shares to
160,000,000 shares.

The additional Common Stock to be authorized by adoption of the amendment
would have rights identical to the currently outstanding Common Stock of Com21.
Adoption of the proposed amendment and issuance of the Common Stock would not
affect the rights of the holders of currently outstanding Common Stock of Com21,
except for effects incidental to increasing the number of shares of Com21's
Common Stock outstanding, such as dilution of the earnings per share and voting
rights of current holders of Common Stock. If the amendment is adopted, it will
become effective upon filing of a Certificate of Amendment of Com21's Amended
and Restated Certificate of Incorporation with the Secretary of State of the
State of Delaware, a form of which is attached hereto as Exhibit A.

In addition to the 21,816,460 shares of Common Stock outstanding at
February 29, 2000, as of February 29, 2000, the Board had reserved (i) 3,795,750
shares for issuance upon exercise of outstanding options granted and heretofore
unexercised under Com21's 1998 Stock Incentive Plan; (ii) 1,047,317 shares for
future issuance under Com21's 1998 Stock Incentive Plan; (iii) 1,500,000 shares
of Common Stock for future issuance under Com21's 2000 Stock Option Plan,
assuming approval of Proposal No. Three; (iv) 561,689 shares for future issuance
under the 1998 Employee Stock Purchase Plan, assuming approval of Proposal No.
Four.

The Board desires to have additional authorized shares for future business
and financial purposes. The additional shares may be used, without further
stockholder approval, for various purposes including, without limitation, stock
dividends, raising capital, providing equity incentives to employees, officers
or directors, establishing certain strategic relationships with other companies
and expanding Com21's business or product lines through acquisitions of other
businesses or products. Com21 currently has no definitive plans, proposals or
understandings for the use of the additional shares.

The proposed increase in the authorized number of shares of Common Stock
could have a number of effects on Com21's stockholders depending upon the exact
nature and circumstances of any actual issuances of authorized but unissued
shares. The increase could have an anti-takeover effect, in that additional
shares could be issued (within the limits imposed by applicable law) in one or
more transactions that could make a change in control or takeover of Com21 more
difficult. For example, additional shares could be issued by Com21 so as to
dilute the stock ownership or voting rights of persons seeking to obtain control
of Com21. Similarly, the issuance of additional shares to certain persons allied
with Com21's management could have the effect of making it more difficult to
remove Com21's current management by diluting the stock ownership or voting
rights of persons seeking to cause such removal. In addition, an issuance of
additional shares by Com21 could have an effect on the potential realizable
value of a stockholder's investment. In the absence of a proportionate increase
in Com21's earnings and book value, an increase in the aggregate number of
outstanding shares of Com21 caused by the issuance of the additional shares
would dilute the earnings per share and book value per share of all outstanding
shares of Com21's Common Stock. If such favors were reflected in the price per
share of Common Stock, the potential realizable value of a stockholder's
investment could be adversely affected. The Common Stock carries no preemptive
rights to purchase additional shares.

In addition, certain existing provisions of our Certificate of
Incorporation and Bylaws and Delaware law may discourage, delay or prevent a
merger or acquisition that a stockholder may consider favorable. These
provisions include:

- having classified Board;

- requiring a two-thirds majority vote of stockholders to remove the
directors without cause;

- authorizing the Board to issue additional preferred stock;
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- prohibiting cumulative voting in the election of the directors;

- limiting the persons who may call special meetings of stockholders;

- prohibiting stockholder action by written consent; and

- establishing advance notice requirements for nominations for the election
of the Board or for proposing matters that can be acted on by
stockholders at stockholder meetings.

We are also subject to certain provisions of Delaware law which could
delay, deter or prevent us from entering into an acquisition, including Section
203 of the Delaware General Corporation Law, which prohibits a Delaware
corporation from engaging in a business combination with an interested
stockholder unless specific conditions are met.

VOTE REQUIRED

The affirmative vote of the holders of a majority of the outstanding shares
of the Common Stock will be required to approve this amendment to Com21's
Amended and Restated Certificate of Incorporation.

RECOMMENDATION OF THE BOARD

THE BOARD DEEMS THIS PROPOSAL TO BE IN THE BEST INTERESTS OF COM21 AND ITS
STOCKHOLDERS AND RECOMMENDS A VOTE "FOR" APPROVAL OF SUCH PROPOSAL. UNLESS
AUTHORITY TO DO SO IS WITHHELD, THE PERSON(S) NAMED IN EACH PROXY WILL VOTE THE
SHARES REPRESENTED THEREBY FOR THE APPROVAL OF THE INCREASE IN THE NUMBER OF
SHARES AUTHORIZED FOR ISSUANCE BY COM21.

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PROPOSAL THREE

APPROVAL OF THE COM21, INC. 2000 STOCK OPTION PLAN

Com21's stockholders are being asked to approve the implementation of the
2000 Stock Incentive Plan pursuant to which 1,500,000 shares of Com21's Common
Stock will be reserved for issuance to individuals in Com21's service, including
officers, employees, Board members and independent consultants.

The new plan will assure that a sufficient reserve of Com21's Common Stock
is available to allow Com21 to continue to utilize equity incentives to attract
and retain the services of key individuals essential to Com21's long-term growth
and financial success. Equity incentives play a significant role in Com21's
efforts to remain competitive in the market for talented individuals, and Com21
relies on such incentives as a means to attract and retain highly qualified
individuals in the positions vital to Com21's success.

The following is a summary of the principal features of the new plan. Any
stockholder who wishes to obtain a copy of the actual plan document may do so
upon written request to Com21 at 750 Tasman Drive, Milpitas, California 95035.

The new plan was adopted by the Board on January 12, 2000, subject to
stockholder approval at the Annual Meeting.

PLAN ADMINISTRATION

The compensation committee of Com21's Board will have the exclusive
authority to administer the plan with respect to option grants made to Com21's
executive officers and non-employee Board members and will also have the
authority to make option grants under the new plan to all other eligible
individuals. However, the Board may at any time appoint a secondary committee of
one or more Board members to have separate but concurrent authority with the
compensation committee to make option grants under the new plan to individuals
other than executive officers and non-employee Board members.

The term plan administrator, as used in this summary, will mean the
compensation committee and any secondary committee, to the extent each such
entity is acting within the scope of its administrative authority under the
plan.

SHARE RESERVE

1,500,000 shares of Com21's Common Stock will be reserved for future
issuance over the term of the new plan. Such share reserve will be in addition
to the 1,047,317 shares of Com21's Common Stock which have already been reserved
for future issuance under Com21's 1998 Stock Incentive Plan.

The 1998 Stock Incentive Plan is divided into five separate components: (i)
the discretionary option grant program under which eligible individuals in
Com21's service may be granted options to purchase shares of Com21's Common
Stock at an exercise price not less than 100% of the fair market value of such
shares on the grant date, (ii) the salary investment option grant program under
which Com21's officers and other key executives may be provided with an
opportunity to invest a portion of their base salary each year on pre-tax basis
in special below-market options which will allow them to purchase shares of
Common Stock at an aggregate discount from current fair market value equal to
the amount of their salary investment, (iii) the stock issuance program under
which eligible individuals in Com21's service may be issued shares of the Common
Stock directly, either through the immediate purchase of the shares at not less
than 100% of their fair market value or as a bonus tied to the performance of
services or the attainment of prescribed milestones, (iv) the automatic option
grant program under which option grants will automatically be made to the non-
employee members of the Board at fixed intervals over their period of continued
Board service, and (v) the director fee option grant program under which the
non-employee Board members will have the opportunity, once Com21 establishes a
cash retainer fee for them, to apply all or a portion of that fee on a pre-tax
basis to the acquisition of a special below-market option grant to purchase
shares of Common Stock at an aggregate discount from current fair market value
equal to the portion of the fee so applied. In no event may any

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participant in the 1998 Stock Incentive Plan receive option grants or direct
stock issuances for more than 500,000 shares of Common Stock in the aggregate
per calendar year.

As of February 29, 2000, 3,795,750 shares of Common Stock were subject to
outstanding options under the 1998 Stock Incentive Plan, 746,630 shares had been
issued under that plan, and 1,047,317 shares remained available for future
issuance.

No participant in the new plan may receive option grants for more than
300,000 shares of Com21's Common Stock per calendar year, subject to adjustment
for subsequent stock splits, stock dividends and similar transactions.
Stockholder approval of this Proposal No. Three will also constitute approval of
that 300,000-share limitation for purposes of Internal Revenue Code Section
162(m).

The shares of Common Stock issuable under the new plan may be drawn from
shares of Com21's authorized but unissued Common Stock or from shares of Common
Stock which Com21 acquires, including shares purchased on the open market.

Shares subject to any outstanding options under the new plan which expire
or otherwise terminate prior to exercise will be available for subsequent
issuance. Unvested shares issued under the new plan which Com21 subsequently
repurchases, at the option exercise price paid per share, pursuant to Com21's
repurchase rights under the plan will be added back to the number of shares
reserved for issuance under the plan and will accordingly be available for
subsequent issuance.

ELIGIBILITY

Officers and employees, non-employee Board members and independent
consultants in Com21's service or in the service of its parent and subsidiaries
(whether now existing or subsequently established) will be eligible to
participate in the new plan.

As of February 29, 2000, approximately 241 employees, including eight
executive officers and seven non-employee Board members, were eligible to
participate in the new plan. Such individuals were also eligible to participate
in Com21's 1998 Stock Incentive Plan.

VALUATION

The fair market value per share of Com21's Common Stock on any relevant
date under the new plan will be deemed to be equal to the closing selling price
per share on that date on the Nasdaq National Market. On February 29, 2000, the
fair market value per share of Com21's Common Stock determined on such basis was
$70.00.

OPTION GRANTS

The plan administrator will have complete discretion under the new plan to
determine which eligible individuals are to receive option grants, the time or
times when those grants are to be made, the number of shares subject to each
such grant, the status of any granted option as either an incentive stock option
or a non-statutory option under the federal tax laws, the vesting schedule (if
any) to be in effect for the option grant and the maximum term for which any
granted option is to remain outstanding.

Each granted option will have an exercise price per share determined by the
plan administrator, but the exercise price will not be less than one hundred
percent of the fair market value of the option shares on the grant date. No
granted option will have a term in excess of ten years. The shares subject to
each option will generally vest in one or more installments over a specified
period of service measured from the grant date. However, one or more options may
be structured so that they will be immediately exercisable for any or all of the
option shares. The shares acquired under such immediately exercisable options
will be subject to repurchase by Com21, at the exercise price paid per share, if
the optionee ceases service prior to vesting in those shares.

Upon cessation of service, the optionee will have a limited period of time
in which to exercise his or her outstanding options to the extent exercisable
for vested shares. The plan administrator will have complete
9
<PAGE> 13

discretion to extend the period following the optionee's cessation of service
during which his or her outstanding options may be exercised and/or to
accelerate the exercisability or vesting of such options in whole or in part.
Such discretion may be exercised at any time while the options remain
outstanding, whether before or after the optionee's actual cessation of service.

STOCK AWARDS

The table below shows, as to Com21's Chief Executive Officer ("CEO"), the
four other most highly compensated executive officers of Com21 (with base salary
and bonus for the 1999 fiscal year in excess of $100,000) and the other
individuals and groups indicated, the number of shares of Common Stock subject
to option grants made in the aggregate under the 1998 Stock Incentive Plan,
together with the weighted average exercise price payable per share. Com21 has
not made any direct stock issuances to date under the 1998 Stock Incentive Plan.

OPTION TRANSACTIONS

<TABLE>
<CAPTION>
NUMBER OF SHARES WEIGHTED AVERAGE
UNDERLYING OPTIONS EXERCISE PRICE
NAME AND POSITION GRANTED (#) PER SHARE ($)
----------------- ------------------- ----------------
<S> <C> <C>
Peter D. Fenner............................................ 100,000 25.25
President and Chief Executive Officer
William J. Gallagher....................................... 50,000 25.25
Vice President, Sales
Buck J. Gee................................................ 50,000 25.25
Vice President, Marketing
Timothy J. Miller.......................................... 50,000 25.25
Vice President, Manufacturing
David L. Robertson......................................... 50,000 25.25
Vice President, Finance and Chief Financial Officer
Paul Baran................................................. 5,000 30.44
C. Richard Kramlich........................................ 5,000 30.44
Robert C. Hawk............................................. 5,000 30.44
Jerald L. Kent............................................. 15,000 31.38
Robert A. Hoff(1).......................................... 5,000 30.44
William R. Hearst(2)....................................... 5,000 30.44
Robert W. Wilmot........................................... 5,000 30.44
James J. Spilker, Jr.(3)................................... 15,000 28.00
Daniel J. Pike(4).......................................... 5,000 13.56
All current executive officers as a group (8 persons)(5)... 548,000 23.05
All current non-employee directors as a group (7
persons)(6).............................................. 55,000 28.50
All employees, including current officers who are not
executive officers, as a group (226 persons)............. 1,996,450 17.08
</TABLE>

- ---------------
(1) Mr. Hoff resigned from the Board in March 2000.

(2) Mr. Hearst resigned from the Board in February 2000.

(3) Dr. Spilker joined the Board in February 2000. Options for Dr. Spilker
received in 1999 consisted of options granted in connection with membership
on Com21's Advisory Board.

(4) Mr. Pike joined the Board in March 2000. Options for Mr. Pike received in
1999 consisted of options granted in connection with membership on Com21's
Advisory Board.

(5) Current executive officers include all executive officers of Com21 as of
March 1, 2000.

(6) Current non-employee directors as a group includes Dr. Spilker and Mr. Pike
but excludes Mr. Hoff and Mr. Hearst who resigned from the Board in March
2000 and February 2000, respectively.

10
<PAGE> 14

As of February 29, 2000, no shares of Common Stock were subject to
outstanding options under the new plan, no shares had actually been issued under
the new plan, and 1,500,000 shares remained available for future issuance.

NEW PLAN BENEFITS

No options have been granted to date under the new plan.

GENERAL PROVISIONS

ACCELERATION

Upon a change in control of Com21, each outstanding option under the new
plan will automatically accelerate in full, unless assumed or otherwise
continued in effect by the successor corporation or replaced with a cash
incentive program which preserves the spread existing on the unvested option
shares (the excess of the fair market value of those shares over the option
exercise price payable for such shares) and provides for subsequent payout in
accordance with the same vesting schedule in effect for those option shares. In
addition, all unvested shares outstanding under the plan will immediately vest,
except to the extent Com21's repurchase rights with respect to those shares are
to be assigned to the successor corporation or otherwise continued in effect.
The plan administrator will have complete discretion to grant one or more
options under the plan which will become exercisable for all the option shares
in the event the optionee's service with Com21 or the successor entity is
terminated (actually or constructively) within a designated period following a
change in control transaction in which those options are assumed or otherwise
continued in effect. The vesting of outstanding shares under the plan may also
be structured to accelerate upon similar terms and conditions.

The plan administrator will have the discretion to structure one or more
option grants under the new plan so that those options will vest immediately
upon a change in control, whether or not the options are to be assumed or
otherwise continued in effect. The new plan administrator may also structure any
unvested shares issued under the plan so that those shares will immediately vest
upon a change in control.

A change in control will be deemed to occur upon (i) an acquisition of
Com21 by merger or asset sale, (ii) the successful completion of a tender offer
for more than 50% of Com21's outstanding voting stock or (iii) a change in the
majority of the Board effected through one or more contested elections for Board
membership.

The acceleration of vesting in the event of a change in the ownership or
control of Com21 may be seen as an anti-takeover provision and may have the
effect of discouraging a merger proposal, a takeover attempt or other efforts to
gain control of Com21.

STOCKHOLDER RIGHTS AND OPTION TRANSFERABILITY

No optionee will have any stockholder rights with respect to the option
shares until such optionee has exercised the option and paid the exercise price
for the purchased shares. Options are not assignable or transferable other than
by will or the laws of inheritance following optionee's death, and during the
optionee's lifetime, the option may only be exercised by the optionee. However,
non-statutory options may be transferred or assigned during optionee's lifetime
to one or more members of the optionee's family or to a trust established for
one or more such family members or to the optionee's former spouse, to the
extent such transfer is in connection with the optionee's estate or pursuant to
a domestic relations order.

CHANGES IN CAPITALIZATION

In the event any change is made to the outstanding shares of Common Stock
by reason of any recapitalization, stock dividend, stock split, combination of
shares, exchange of shares or other change in corporate structure effected
without Com21's receipt of consideration, appropriate adjustments will be made
to (i) the maximum number and/or class of securities issuable under the new
plan, (ii) the maximum number and/or class of securities for which any one
person may be granted stock options under the plan per calendar year and (iii)
the number and/or class of securities and the exercise price per share in effect
under each

11
<PAGE> 15

outstanding option. Such adjustments will be designed to preclude any dilution
or enlargement of benefits under the 1998 plan or the outstanding options
thereunder.

AMENDMENT AND TERMINATION

The Board may amend or modify the new plan at any time, subject to any
required stockholder approval pursuant to applicable laws and regulations.
Unless sooner terminated by the Board, the new plan will terminate on the
earliest of (i) January 11, 2010, (ii) the date on which all shares available
for issuance under the new plan have been issued as fully-vested shares or (iii)
the termination of all outstanding options in connection with certain changes in
control or ownership of Com21.

FEDERAL INCOME TAX CONSEQUENCES

OPTION GRANTS

Options granted under the new plan may be either incentive stock options
which satisfy the requirements of Section 422 of the Internal Revenue Code or
non-statutory options which are not intended to meet such requirements. The
Federal income tax treatment for the two types of options differs as follows:

Incentive Options. No taxable income is recognized by the optionee at the
time of the option grant, and no taxable income is generally recognized at the
time the option is exercised. The optionee will, however, recognize taxable
income in the year in which the purchased shares are sold or otherwise made the
subject of a taxable disposition. For Federal tax purposes, dispositions are
divided into two categories: (i) qualifying and (ii) disqualifying. A qualifying
disposition occurs if the sale or other disposition is made more than two (2)
years after the date the option for the shares involved in such sale or
disposition is granted and more than one (1) year after the date the option is
exercised for those shares. If the sale or disposition occurs before these two
periods are satisfied, then a disqualifying disposition will result.

Upon a qualifying disposition, the optionee will recognize long-term
capital gain in an amount equal to the excess of (i) the amount realized upon
the sale or other disposition of the purchased shares over (ii) the exercise
price paid for the shares. If there is a disqualifying disposition of the
shares, then the excess of (i) the fair market value of those shares on the
exercise date over (ii) the exercise price paid for the shares will be taxable
as ordinary income to the optionee. Any additional gain or loss recognized upon
the disposition will be recognized as a capital gain or loss by the optionee.

If the optionee makes a disqualifying disposition of the purchased shares,
then Com21 will be entitled to an income tax deduction, for the taxable year in
which such disposition occurs, equal to the excess of (i) the fair market value
of such shares on the option exercise date over (ii) the exercise price paid for
the shares. If the optionee makes a qualifying disposition, Com21 will not be
entitled to any income tax deduction.

Non-Statutory Options. No taxable income is recognized by an optionee upon
the grant of a non-statutory option. The optionee will in general recognize
ordinary income, in the year in which the option is exercised, equal to the
excess of the fair market value of the purchased shares on the exercise date
over the exercise price paid for the shares, and the optionee will be required
to satisfy the tax withholding requirements applicable to such income.

If the shares acquired upon exercise of the non-statutory option are
unvested and subject to repurchase by Com21 in the event of the optionee's
termination of service prior to vesting in those shares, then the optionee will
not recognize any taxable income at the time of exercise but will have to report
as ordinary income, as and when Com21's repurchase right lapses, an amount equal
to the excess of (i) the fair market value of the shares on the date the
repurchase right lapses over (ii) the exercise price paid for the shares. The
optionee may, however, elect under Section 83(b) of the Internal Revenue Code to
include as ordinary income in the year of exercise of the option an amount equal
to the excess of (i) the fair market value of the purchased shares on the
exercise date over (ii) the exercise price paid for such shares. If the Section
83(b) election is made, the optionee will not recognize any additional income as
and when the repurchase right lapses.

12
<PAGE> 16

Com21 will be entitled to an income tax deduction equal to the amount of
ordinary income recognized by the optionee with respect to the exercised
non-statutory option. The deduction will in general be allowed for the taxable
year of Com21 in which such ordinary income is recognized by the optionee.

DEDUCTIBILITY OF EXECUTIVE COMPENSATION

Com21 anticipates that any compensation deemed paid by it in connection
with the disqualifying disposition of incentive stock option shares or the
exercise of non-statutory options under the new plan will qualify as
performance-based compensation for purposes of Code Section 162(m) and will not
have to be taken into account for purposes of the $1 million limitation per
covered individual on the deductibility of the compensation paid to certain
executive officers of Com21. Accordingly, all compensation deemed paid with
respect to those options will remain deductible by Com21 without limitation
under Code Section 162(m).

ACCOUNTING TREATMENT

Option grants under the plan will not result in any direct charge to
Com21's reported earnings. However, the fair value of those options is required
to be disclosed in the notes to Com21's financial statements, and Com21 must
also disclose, in footnotes to its financial statements, the pro-forma impact
those options would have upon its reported earnings were the fair value of those
options at the time of grant treated as a compensation expense. In addition, the
number of outstanding options may be a factor in determining Com21's earnings
per share on a fully-diluted basis.

On March 31, 1999, the Financial Accounting Standards Board issued an
Exposure Draft of a proposed interpretation of APB Opinion No. 25, "Accounting
for Stock Issued to Employees." Under the proposed interpretation, as modified
on August 11, 1999, option grants made to non-employee consultants (but not non-
employee Board members) after December 15, 1998 will result in a direct charge
to Com21's reported earnings based upon the fair value of the option measured
initially as of the grant date and then subsequently on the vesting date of each
installment of the underlying option shares. This charge will accordingly
include the appreciation in the value of the option shares over the period
between the grant date of the option (or, if later, the effective date of the
final interpretation) and the vesting date of each installment of the option
shares.

VOTE REQUIRED

The affirmative vote of at least a majority of the shares of Common Stock
present in person or by proxy at the Annual Meeting and entitled to vote is
required for approval of the new 2000 Stock Option Plan. Should such stockholder
approval not be obtained, then the new plan will not be implemented, and any
options granted under the plan will terminate without ever becoming exercisable
for any of the option shares. However, Com21's 1998 Stock Incentive Plan will
continue in effect whether or not the new plan is approved, and option grants
and direct stock issuances may continue to be made under the 1998 Stock
Incentive Plan until all the shares of Common Stock available for issuance under
the 1998 Stock Incentive Plan have been issued pursuant to such option grants
and direct stock issuances.

RECOMMENDATION OF THE BOARD OF DIRECTORS

THE BOARD OF DIRECTORS DEEMS THIS PROPOSAL TO BE IN THE BEST INTERESTS OF
COM21 AND ITS STOCKHOLDERS BECAUSE IT WILL ALLOW COM21 TO CONTINUE TO UTILIZE
EQUITY INCENTIVES TO ATTRACT AND RETAIN THE SERVICES OF KEY INDIVIDUALS
ESSENTIAL TO COM21'S LONG-TERM GROWTH AND FINANCIAL SUCCESS. THE BOARD
RECOMMENDS A VOTE "FOR" APPROVAL OF SUCH PROPOSAL. UNLESS AUTHORITY TO DO SO IS
WITHHELD, THE PERSON(S) NAMED IN EACH PROXY WILL VOTE THE SHARES REPRESENTED
THEREBY FOR THE APPROVAL OF THE COM 21, INC. 2000 STOCK OPTION PLAN.

13
<PAGE> 17

PROPOSAL FOUR

APPROVAL OF AMENDMENT TO THE 1998 EMPLOYEE STOCK PURCHASE PLAN

Com21's stockholders are being asked to approve an amendment to Com21
Employee Stock Purchase Plan that will increase the maximum number of shares of
Common Stock available for issuance over the term of the Purchase Plan by an
additional 450,000 shares of Common Stock to 700,000 shares.

The Purchase Plan was adopted by the Board in March 1998. The Purchase Plan
became effective on May 21, 1998. On January 12, 2000, the Board adopted the
amendment to the Purchase Plan which is the subject of this Proposal No. Four.

The following is a summary of the principal features of the Purchase Plan,
as amended. The summary, however, does not purport to be a complete description
of all the provisions of the Purchase Plan. Any stockholder who wishes to obtain
a copy of the actual plan document may do so by written request to Com21's Chief
Financial Officer at Com21's executive offices in Milpitas, California.

Administration

The Purchase Plan is currently administered by the Compensation Committee
of the Board. Such committee, as Plan Administrator, has full authority to adopt
administrative rules and procedures and to interpret the provisions of the
Purchase Plan. All costs and expenses incurred in plan administration are paid
by Com21 without charge to participants.

Securities Subject to the Purchase Plan

700,000 shares of Common Stock have been reserved for issuance over the ten
(10)-year term of the Purchase Plan, including the 450,000-share increase for
which stockholder approval is sought under this Proposal No. Four. The shares
may be made available from authorized but unissued shares of Com21's Common
Stock or from shares of Common Stock repurchased by Com21, including shares
repurchased on the open market.

In the event that any change is made to Com21's outstanding Common Stock
(whether by reason of any recapitalization, stock dividend, stock split,
exchange or combination of shares or other change in corporate structure
effected without Com21's receipt of consideration), appropriate adjustments will
be made to (i) the class and maximum number of securities issuable over the term
of the Purchase Plan, (ii) the class and maximum number of securities
purchasable per participant on any one semi-annual purchase date and (iii) the
class and number of securities and the price per share in effect under each
outstanding purchase right.

Offering Periods and Purchase Rights

Shares of Common Stock will be offered under the Purchase Plan through a
series of successive offering periods, each with a maximum duration of
twenty-four (24) months. The first offering period began on May 21, 1998, in
connection with the initial public offering of the Common Stock, and will end on
the last business day in April 2000. The next offering period will start on the
first business day of the first pay period after the 2000 Annual Meeting and
will end on the last business day of April 2002. Subsequent offering periods
will begin as designated by the Plan Administrator.

At the time the participant joins the offering period, he or she will be
granted a purchase right to acquire shares of Common Stock at semi-annual
intervals over the remainder of that offering period. The purchase dates will
occur on the last business day in April and October each year, and all payroll
deductions collected from the participant for the period ending with each such
semi-annual purchase date will automatically be applied to the purchase of
Common Stock.

Eligibility and Participation

Any individual who is employed on a basis under which he or she is expected
to work for more than 20 hours per week for more than five (5) months per
calendar year in the employ of Com21 or any participating
14
<PAGE> 18

parent or subsidiary corporation (including any corporation which subsequently
becomes such at any time during the term of the Purchase Plan) is eligible to
participate in the Purchase Plan.

An individual who is an eligible employee on the start date of any offering
period may join that offering period at that time or on any subsequent
semi-annual entry date (the first business day in May or November each year)
within that offering period. An individual who first becomes an eligible
employee after such start date may join the offering period on any semi-annual
entry date within that offering period on which he or she is an eligible
employee.

As of February 29, 2000, 138,311 shares of Common Stock had been issued
under the Purchase Plan, and 561,689 shares were available for future issuance,
assuming approval of this Proposal No. Four. As of February 29, 2000, Com21
estimates that approximately 234 employees, including eight executive officers,
were eligible to participate in the Purchase Plan.

Purchase Price

The purchase price of the Common Stock acquired on each semi-annual
purchase date will be equal to 85% of the lower of (i) the fair market value per
share of Common Stock on the participant's entry date into the offering period
or (ii) the fair market value on the semi-annual purchase date. However, the
clause (i) amount for any participant whose entry date is other than the start
date of the offering period will not be less than the fair market value per
share of Common Stock on that start date.

The fair market value of the Common Stock on any relevant date under the
Purchase Plan will be deemed to be equal to the closing selling price per share
on such date on the Nasdaq National Market. On February 29, 2000, the fair
market value per share of Common Stock determined on such basis was $70.00 per
share.

Payroll Deductions and Stock Purchases

Each participant may authorize periodic payroll deductions in any multiple
of 1% (up to a maximum of 10%) of his or her base salary each offering period to
be applied to the acquisition of Common Stock on each semi-annual purchase date.
The payroll deductions of each participant will automatically be applied on each
semi-annual purchase date (the last business day in April and October of each
year) to the purchase of whole shares of Common Stock at the purchase price in
effect for the participant for that purchase date.

Special Limitations

The Purchase Plan imposes certain limitations upon a participant's right to
acquire Common Stock, including the following:

- Purchase rights may not be granted to any individual who owns stock
(including stock purchasable under any outstanding purchase rights)
possessing 5% or more of the total combined voting power or value of all
classes of stock of Com21 or any of its affiliates.

- Purchase rights granted to a participant may not permit such individual
to purchase more than $25,000 worth of Common Stock (valued at the time
each purchase right is granted) for each calendar year those purchase
rights are outstanding at any time.

- No participant may purchase more than 1,500 shares of Common Stock on any
semi-annual purchase date.

Termination of Purchase Rights

The participant may withdraw from the Purchase Plan at any time, and his or
her accumulated payroll deductions will, at the participant's election, either
be refunded immediately or applied to the purchase of Common Stock on the next
semi-annual purchase date.

15
<PAGE> 19

The participant's purchase right will immediately terminate upon his or her
cessation of employment or loss of eligible employee status. Any payroll
deductions which the participant may have made for the semi-annual period in
which such cessation of employment or loss of eligibility occurs will be
refunded and will not be applied to the purchase of Common Stock.

Stockholder Rights

No participant will have any stockholder rights with respect to the shares
covered by his or her purchase rights until the shares are actually purchased on
the participant's behalf. No adjustment will be made for dividends,
distributions or other rights for which the record date is prior to the date of
such purchase.

Assignability

No purchase rights will be assignable or transferable by the participant,
and the purchase rights will be exercisable only by the participant.

Change in Control

In the event Com21 is acquired by merger or asset sale, all outstanding
purchase rights will automatically be exercised immediately prior to the
effective date of such acquisition. The purchase price will be equal to 85% of
the lower of (i) the fair market value per share of Common Stock on the
participant's entry date into the offering period in which such acquisition
occurs or (ii) the fair market value per share of Common Stock immediately prior
to the effective date of such acquisition, but in no event will the clause (i)
fair market value be less than the fair market value per share of Common Stock
on the start date of the offering period in which such acquisition occurs.

Share Pro-ration

Should the total number of shares of Common Stock to be purchased pursuant
to outstanding purchase rights on any particular date exceed the number of
shares at the time available for issuance under the Purchase Plan, then the Plan
Administrator will make a pro-rata allocation of the available shares on a
uniform and nondiscriminatory basis, and the payroll deductions of each
participant, to the extent in excess of the aggregate purchase price payable for
the Common Stock allocated to such individual, will be refunded.

Amendment and Termination

The Purchase Plan will terminate upon the earliest of (i) the last business
day in April 2008, (ii) the date on which all shares available for issuance
thereunder are sold pursuant to exercised purchase rights or (iii) the date on
which all purchase rights are exercised in connection with an acquisition of
Com21.

The Board may at any time alter, suspend or discontinue the Purchase Plan.
However, the Board may not, without stockholder approval, (i) increase the
number of shares issuable under the Purchase Plan or the maximum number of
shares purchasable per participant on any one semi-annual purchase date, except
in connection with certain changes in Com21's capital structure, (ii) alter the
purchase price formula so as to reduce the purchase price or (iii) modify the
requirements for eligibility to participate in the Purchase Plan.

Federal Tax Consequences

The Purchase Plan is intended to be an "employee stock purchase plan"
within the meaning of Section 423 of the Internal Revenue Code. Under a plan
which so qualifies, no taxable income will be recognized by a participant, and
no deductions will be allowable to Com21, upon either the grant or the exercise
of the purchase rights. Taxable income will not be recognized until there is a
sale or other disposition of the shares acquired under the Purchase Plan or in
the event the participant should die while still owning the purchased shares.

If the participant sells or otherwise disposes of the purchased shares
within two (2) years after his or her entry date into the offering period in
which such shares were acquired or within one (1) year after the semi-
16
<PAGE> 20

annual purchase date on which those shares were actually acquired, then the
participant will recognize ordinary income in the year of sale or disposition
equal to the amount by which the fair market value of the shares on the purchase
date exceeded the purchase price paid for those shares, and Com21 will be
entitled to an income tax deduction, for the taxable year in which such
disposition occurs, equal in amount to such excess.

If the participant sells or disposes of the purchased shares more than two
(2) years after his or her entry date into the offering period in which the
shares were acquired and more than one (1) year after the semi-annual purchase
date of those shares, then the participant will recognize ordinary income in the
year of sale or disposition equal to the lower of (i) the amount by which the
fair market value of the shares on the sale or disposition date exceeded the
purchase price paid for those shares or (ii) fifteen percent (15%) of the fair
market value of the shares on the participant's entry date into that offering
period. Any additional gain upon the disposition will be taxed as a long-term
capital gain. Com21 will not be entitled to an income tax deduction with respect
to such disposition.

If the participant still owns the purchased shares at the time of death,
his or her estate will recognize ordinary income in the year of death equal to
the lower of (i) the amount by which the fair market value of the shares on the
date of death exceeds the purchase price or (ii) fifteen percent (15%) of the
fair market value of the shares on his or her entry date into the offering
period in which those shares were acquired.

Accounting Treatment

The issuance of Common Stock under the Purchase Plan will not result in a
direct compensation expense chargeable against Com21's reported earnings.
However, Com21 must disclose, in pro-forma statements to Com21's financial
statements, the impact the purchase rights granted under the Purchase Plan would
have upon Com21's reported earnings were the value of those purchase rights
treated as compensation expense.

Stock Issuances

The table below shows, as to each of Com21's executive officers named in
the Summary Compensation Table of the Executive Compensation and Related
Information section of this Proxy Statement and the various indicated groups,
the number of shares of Common Stock purchased under the Purchase Plan between
the May 21, 1998 effective date of the Purchase Plan and February 29, 2000
together with the weighted average purchase price paid per share.

PURCHASE PLAN TRANSACTIONS

<TABLE>
<CAPTION>
NUMBER OF
PURCHASED WEIGHTED AVERAGE
NAME AND POSITION SHARES PURCHASE PRICE
----------------- --------- ----------------
<S> <C> <C>
Peter D. Fenner......................................... -- --
President and Chief Executive Officer
William J. Gallagher.................................... 2,138 $10.20
Vice President, Sales
Buck J. Gee............................................. 2,337 $10.20
Vice President, Marketing
Timothy I. Miller....................................... 1,612 $10.20
Vice President, Manufacturing
David L. Robertson...................................... 2,337 $10.20
Vice President, Finance and Chief Financial Officer
All current executive officers as a group (8 persons)... 10,651 $10.20
All employees, including current officers who are not
executive officers, as a group (226 persons).......... 127,660 $10.40
</TABLE>

17
<PAGE> 21

New Plan Benefits

No purchase rights have been granted, and no shares of Common Stock have
been issued, under the Purchase Plan on the basis of the 450,000-share increase
for which stockholder approval is sought under this Proposal No. Four.

VOTE REQUIRED

The affirmative vote of a majority of the outstanding voting shares of
Com21 present or represented and entitled to vote at the 2000 Annual Meeting is
required for approval of the 450,000-share increase to the Purchase Plan. Should
such stockholder approval not be obtained, then the 450,000-share increase will
not be implemented, and any purchase rights granted on the basis of the
450,000-share increase to the Purchase Plan will immediately terminate. No
additional purchase rights will be granted on the basis of such share increase,
and the Purchase Plan will terminate once the existing share reserve has been
issued.

RECOMMENDATION OF THE BOARD

THE BOARD BELIEVES THAT THE AMENDMENT TO THE PURCHASE PLAN IS NECESSARY IN
ORDER TO CONTINUE TO PROVIDE EQUITY INCENTIVES TO ATTRACT AND RETAIN THE
SERVICES OF HIGH QUALITY EMPLOYEES INCLUDING THROUGH ACQUISITIONS. FOR THIS
REASON, THE BOARD RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE AMENDMENT TO THE
PURCHASE PLAN.

18
<PAGE> 22

PROPOSAL FIVE

RATIFICATION OF APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS

The Board has appointed Deloitte & Touche LLP, independent public auditors
for Com21 for the 1999 fiscal year, to serve in the same capacity for the year
ending December 31, 2000. The affirmative vote of a majority of the shares
represented and voting at the Annual Meeting is required to ratify the selection
of Deloitte & Touche LLP.

In the event the stockholders fail to ratify the appointment, the Board
will reconsider its selection. Even if the selection is ratified, the Board in
its discretion may direct the appointment of a different independent auditing
firm at any time during the year if the Board believes that such a change would
be in the best interest of Com21 and its stockholders.

A representative of Deloitte & Touche LLP is expected to be at the Annual
Meeting, will have the opportunity to make a statement if he or she decides to
do so, and will be available to respond to appropriate questions.

RECOMMENDATION OF THE BOARD

THE BOARD RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE RATIFICATION OF THE
SELECTION OF DELOITTE & TOUCHE LLP TO SERVE AS COM21'S INDEPENDENT AUDITORS FOR
THE FISCAL YEAR ENDING DECEMBER 31, 2000.

OTHER MATTERS

Com21 knows of no other matters that will be presented for consideration at
the Annual Meeting. If any other matters properly come before the Annual
Meeting, it is the intention of the persons named in the enclosed form of Proxy
to vote the shares they represent as the Board may recommend. Discretionary
authority with respect to such other matters is granted by the execution of the
enclosed Proxy.

19
<PAGE> 23

MANAGEMENT

The following table sets forth certain information regarding the executive
officers and directors of Com21 as of March 1, 2000:

<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
Peter D. Fenner...................... 63 President, Chief Executive Officer and Director
Paul Baran........................... 73 Chairman of the Board
Stanley R. Foster.................... 54 Vice President, Chief Operating Officer
David L. Robertson................... 58 Chief Financial Officer, Vice President, Finance and
Administration and Corporate Secretary
William J. Gallagher................. 56 Vice President, Sales
Buck J. Gee.......................... 50 Vice President, Marketing
Michael F. Gordon.................... 50 Vice President, Wireless Business Unit
Timothy I. Miller.................... 45 Vice President, Manufacturing
John Pickens......................... 53 Vice President, Technology, Chief Technology Officer
C. Richard Kramlich(1)(2)............ 64 Director
Robert C. Hawk....................... 59 Director
Jerald Kent.......................... 43 Director
Daniel J. Pike....................... 48 Director
Robert W. Wilmot(1).................. 54 Director
James J. Spilker, Jr.(2)............. 66 Director
</TABLE>

- ---------------
(1) Member of audit committee.

(2) Member of compensation committee.

PAUL BARAN. Mr. Baran has been the Chairman of the Board since Com21's
inception in June 1992. He is presently retired. Mr. Baran was awarded the 1999
Business Journal Entrepreneurial Award in Technology, and was recipient of the
Electronic Frontier Foundation Pioneer Award (1993), the Marconi International
Fellowship Award (1991), the Institute of Electronics and Electrical
Engineering, Inc. ("IEEE") Alexander Graham Bell Medal (1990), the ACM
SIG/Communications Award (1989) and the IEEE Communications Society Edwin
Armstrong Award (1987). He co-founded Equatorial Communications, Packet
Technologies, Telebit Corporation and Metricom, Inc. Mr. Baran is a Life Fellow
of the IEEE and a Fellow of the AAAS and a member of the U.S. National Academy
of Engineers. Mr. Baran received an M.S. in Computers from the University of
California, Los Angeles, and a B.S. in Electrical Engineering and a Dr.Sci. in
Engineering (Hon.) from Drexel University.

STANLEY R. FOSTER. Mr. Foster has been Vice President, Chief Operating
Officer since December 1999. From August 1998 through December 1999, Mr. Foster
was the Vice President -- Global Account Manager at Benchmark Electronics, Inc.
(formerly AVEX Electronics, Inc.). From July 1996 through April 1998 he was the
Vice President, Network Systems and Support at GTECH Holdings Corp. From July
1992 through July 1996 Mr. Foster was the Vice President, Marketing and Business
Development at Scientific Atlanta. He began his career as a designer for General
Dynamics and then Xerox. He was also the general manager of two transmission
products divisions of Digital Switch Corporation, and President and CEO of
Licom. Mr. Foster received a B.S. in Electrical Engineering from Pennsylvania
State University.

20
<PAGE> 24

DAVID L. ROBERTSON. Mr. Robertson has been Chief Financial Officer and Vice
President, Finance of Com21 since April 1995. From March 1993 through April
1995, Mr. Robertson was the Vice President of Finance and Chief Financial
Officer at Endosonics Corporation, a medical device company. From December 1992
to March 1993, Mr. Robertson was an independent consultant. From November 1990
through December 1992, Mr. Robertson was the Vice President and Chief Financial
Officer at Circadian, Inc., a medical device company. He also participated in
the founding of StrataCom, Inc. and served as a Director of StrataCom for two
years during its early stages. Mr. Robertson is a Certified Public Accountant,
and received a B.A. in economics from the University of Washington and a M.B.A.
from the University of California, Berkeley.

WILLIAM J. GALLAGHER. Mr. Gallagher has been Vice President of Sales since
August 1995. From October 1994 to July 1995 he was Vice President of Marketing
at Pacific Gas & Electric Com21 ("PG&E"), a utility company. From October 1993
to September 1994, Mr. Gallagher was with MCI Telecommunications Corp. as Vice
President, Carrier Services. From August 1991 to September 1994, Mr. Gallagher
was a Vice President and Consultant at San Francisco Consulting Group. He
received a B.A. from the University of New Mexico.

BUCK J. GEE. Mr. Gee has been Vice President of Marketing since November
1994. From September 1993 through October 1994, Mr. Gee was the Manager of the
FDDI Adapters Group at Cisco. From December 1990 through September 1993 he was
Director of Marketing and Director of Business Development for Crescendo
Communications, Inc., a computer networking company. Mr. Gee has also held
engineering and marketing positions at Hewlett-Packard Com21, 3Com and National
Semiconductor Corp. He received both a B.S. and a M.S. in Electrical Engineering
from Stanford University and a M.B.A. from Harvard Business School.

MICHAEL F. GORDON. Mr. Gordon has been Vice President, Wireless Business
Unit since September 3, 1999. Prior to that Mr. Gordon served as Vice President
of Field Services and Customer Support since July 1997. From December 1995
through June 1997, he was an independent technical and management consultant.
From February 1992 through December 1997, Mr. Gordon was the President and Chief
Operating Officer of Telecoupon Network, Inc. a coupon delivery kiosk company.
Mr. Gordon received a B.S. in Computer Science from the University of Michigan.

TIMOTHY I. MILLER. Mr. Miller has been Vice President of Manufacturing
since November 1996 and has been employed by Com21 since October 1994. From
November 1990 to September 1994, he was Director of Manufacturing and Materials
at Coactive Computers, a computer software company, where he was responsible for
scheduling and production. Mr. Miller has also held senior management positions
with Tidewater Associates and Morrison Design. Mr. Miller received both a B.S.
in Business Administration and a B.A. from San Jose State University.

JOHN R. PICKENS. Dr. Pickens has been Vice President of Technology, CTO,
since May 1999, previously serving as director of technology development since
November 1996. Prior to joining Com21, Dr. Pickens was chief technology officer
for SBE Network Systems where he was responsible for product development and
management of SBE's technology programs. Prior to his work at SBE, Dr. Pickens
was an entrepreneur residence at the Mayfield Fund and held several engineering
and architecture management positions at 3Com Corporation. He received a B.S. in
Electrical Engineering and a Ph.D. in Electrical Engineering and Computer
Science from the University of California, Santa Barbara.

C. RICHARD KRAMLICH. Mr. Kramlich has been a Director of Com21 since May
1994. Mr. Kramlich is the co-founder and has been General Partner of New
Enterprise Associates since 1978. He is a Director of Chalone, Inc., Juniper
Networks, Lumisys, Inc., Netsolve and Silicon Graphics, Inc. Mr. Kramlich
received a M.B.A. from Harvard Business School and a B.S. from Northwestern
University.

21
<PAGE> 25

Cable Television Laboratories, Inc. Mr. Kent received a B.A. and a M.B.A. from
Washington University and is a certified public accountant.

ROBERT C. HAWK. Mr. Hawk has been a Director of Com21 since January 1997.
Mr. Hawk has been an independent business consultant since April 1997. From
April 1996 through March 1997, he was President of U.S. West Multimedia, a cable
company. From April 1986 through March 1996, he was the President of Carrier
Division, U.S. West Communications, a telecommunications company. He is a
Director of PairGain Technologies, COVAD Communications, Inc., Xylan Corp.,
Concord Corp., and RADCom Corp. Mr. Hawk received an M.B.A. from the University
of San Francisco and a B.B.A. from the University of Iowa.

JAMES J. SPILKER, JR. Dr. Spilker, has been a Director of Com21 since
February 2000. Dr. Spilker is a co-founder of Stanford Telecommunications, Inc.,
where he was Chairman of the Board from 1973 through 1999 and Principal
Scientist from June 1995 through 1999. He served as President and Chief
Executive Officer of Stanford Telecommunications, Inc., from August 1981 to June
1995. Dr. Spilker received a B.S., M.S. and Ph.D. in electrical engineering from
Stanford University.

Com21 has authorized eight directors. Each director is elected for a period
of one year at Com21's annual meeting of stockholders and serves until the next
annual meeting or until his successor is duly elected and qualified. The
executive officers serve at the discretion of the Board. There are no family
relationships among any of Com21's directors or executive officers.

COMMITTEES OF THE BOARD

Compensation Committee. The compensation committee is primarily responsible
for reviewing and approving Com21's general compensation policies and setting
compensation levels for Com21's executive officers. The committee also
administers Com21's incentive compensation plans. In 1999, the committee
consisted of two directors, Mr. Kramlich and Mr. Hoff. On March 1, 2000, Mr.
Hoff resigned from the Board and Dr. Spilker was selected as his replacement
effective March 1, 2000.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

In 1999, the committee consisted of two directors, Mr. Kramlich and Mr.
Hoff. On March 1, 2000, Mr. Hoff resigned from the Board and Dr. Spilker was
selected as his replacement effective March 1, 2000.

22
<PAGE> 26

No executive officer of Com21 serves on the Board or compensation committee of
any entity which has one or more executive officers serving as a member of
Com21's Board or compensation committee.

DIRECTOR COMPENSATION

Com21 currently does not provide cash compensation to any member of Com21's
Board. Members of the Board are eligible to receive discretionary option grants
and stock issuances under the 1998 Stock Incentive Plan. In addition, under the
1998 Stock Incentive Plan non-employee directors will receive automatic option
grants upon becoming directors and on the date of each annual meeting of
stockholders. The 1998 Stock Incentive Plan also contains a director fee option
grant program. Should this program be activated in the future, each non-employee
Board member will have the opportunity to apply all or a portion of any annual
retainer fee otherwise payable in cash to the acquisition of a below-market
option grant.

EXECUTIVE COMPENSATION

The following table sets forth certain information with respect to the
compensation of Com21's Chief Executive Officer and each of the four other most
highly compensated executive officers of Com21 who were serving as executive
officers of Com21 during fiscal year 1999 (the "Last Fiscal Year") and whose
total annual salary and bonus during such fiscal year exceeded $100,000
(collectively, the "Named Executive Officers").

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION ------------------
---------------------------- UNDERLYING OPTIONS
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS GRANTED(#)(1)
--------------------------- ---- -------- -------- ------------------
<S> <C> <C> <C> <C>
Peter D. Fenner................................ 1999 $300,742 $ 99,000 100,000
President and Chief Executive Officer 1998 $311,580 $120,000 100,000
William J. Gallagher........................... 1999 $157,006 $224,673 50,000
Vice President, Sales 1998 $149,443 $235,018 22,505
Buck J. Gee.................................... 1999 $170,940 $ 60,000 50,000
Vice President, Marketing 1998 $170,100 $ 70,000 36,425
Timothy I. Miller.............................. 1999 $152,000 $ 60,000 50,000
Vice President, Manufacturing 1998 $139,073 $ 53,400 32,700
David L. Robertson............................. 1999 $170,940 $ 62,000 50,000
Vice President, Finance and Chief Financial 1998 $170,100 $ 80,000 36,425
Officer
</TABLE>

- ---------------
(1) The options listed in the table were granted under Com21's 1998 Stock
Incentive Plan. See "-- Option Grants in Last Fiscal Year" for a description
of these options.

OPTION GRANTS IN LAST FISCAL YEAR

<TABLE>
<CAPTION>
PERCENT OF
TOTAL POTENTIAL REALIZABLE VALUE AT
NUMBER OF OPTIONS ASSUMED ANNUAL RATES OF STOCK
SECURITIES GRANTED TO PRICE APPRECIATION FOR OPTION
UNDERLYING EMPLOYEES IN TERM($)(4)
OPTIONS FISCAL YEAR EXERCISE EXPIRATION ------------------------------
NAME GRANTED(#)(1) (%)(2) PRICE(3) DATE 5% 10%
---- ------------- -------------- --------- ---------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Peter D. Fenner.................... 100,000 3.93 $25.25 12/8/2009 $1,587,959 $4,024,200
William J. Gallagher............... 50,000 1.97 $25.25 12/8/2009 $ 793,979 $2,012,100
Buck J. Gee........................ 50,000 1.97 $25.25 12/8/2009 $ 793,979 $2,012,100
Timothy I. Miller.................. 50,000 1.97 $25.25 12/8/2009 $ 793,979 $2,012,100
David L. Robertson................. 50,000 1.97 $25.25 12/8/2009 $ 793,979 $2,012,100
</TABLE>

- ---------------
(1) All options granted to the Named Executive Officers in the Last Fiscal Year
vest in forty-eight (48) equal monthly installments upon the optionee's
continued service at the completion of each month following the date of the
grant. The date of Mr. Fenner's 100,000 share option grant, Mr. Gallagher's
50,000 share option

23
<PAGE> 27

grant, Mr. Gee's 50,000 share option grant, Mr. Miller's 50,000 share option
grant and Mr. Robertson's 50,000 share option grant was December 9, 1999.
Each option has a maximum term of ten (10) years, subject to earlier
termination in the event of the optionee's cessation of service with Com21.

(2) Based on an aggregate of 2,544,450 options granted to employees, consultants
and directors, including the Named Executive Officers of Com21 during the
fiscal year ended December 31, 1999.

(3) The exercise price per share of each option was equal to the fair market
value of the Common Stock on the date of grant as determined by the price at
the close of market as reported by Nasdaq.

(4) The potential realizable value is calculated based on the term of the option
at its time of grant, which is ten years. It is calculated assuming that the
fair market value of Com21's Common Stock on the date of grant appreciates
at the indicated annual rate compounded annually for the entire term of the
option and that the option is exercised and sold on the last day of its term
for the appreciated stock price.

AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND LAST FISCAL YEAR-END OPTION VALUES

The following table sets forth information concerning option exercises and
option holdings for the Last Fiscal Year with respect to the Named Executive
Officers. Except as set forth below, no options or stock appreciation rights
were exercised by any such individual during such year, and no stock
appreciation rights were outstanding on December 31, 1999.

<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS AT
SHARES OPTIONS AT FISCAL YEAR-END(#) FISCAL YEAR-END($)(5)
ACQUIRED ON VALUE --------------------------------- ---------------------------
NAME EXERCISE(#)(1) REALIZED($)(2) EXERCISABLE(3) UNEXERCISABLE(4) EXERCISABLE UNEXERCISABLE
---- -------------- -------------- -------------- ---------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Peter D. Fenner............. 8,382 $ 192,193 342,867 156,251 $7,179,690 $755,873
William J. Gallagher........ 57,000 $1,340,200 46,953 62,052 $ 935,831 $161,949
Buck J. Gee................. -- -- 24,373 62,052 $ 357,512 $161,949
Timothy I. Miller........... -- -- 27,942 62,066 $ 457,896 $162,137
David L. Robertson.......... -- -- 39,373 62,052 $ 682,075 $161,949
</TABLE>

- ---------------
(1) As of December 31, 1999, Mr. Fenner was vested in all of the shares
exercised and Mr. Gallagher was vested in all of the shares exercised.

(2) Based on the fair market value of the purchased option shares at the time of
exercise less the option exercise price paid for those shares.

(3) Each of the options was granted either under Com21's 1995 Stock Option Plan
which was incorporated into Com21's 1998 Stock Incentive Plan or under the
Com21 1998 Stock Incentive Plan. Each of the options granted under the Com21
1995 Stock Option Plan is immediately exercisable, but all shares purchased
under the options are subject to vesting requirements and may be repurchased
by Com21 at the original exercise price paid per share upon the optionee's
cessation of service prior to vesting in such shares. For those options
granted under the Com21 1995 Stock Option Plan, the repurchase right lapses
with respect to 25% of the option shares upon completion of one year of
service from the vesting commencement date and the balance in a series of
equal monthly installments over the next 36 months of service thereafter.
Options granted under both plans have a maximum term of ten years, subject
to earlier termination in the event of the optionee's cessation of service
with Com21. As of December 31, 1999, Mr. Fenner was vested in 322,028 shares
of his outstanding options, Mr. Gallagher was vested in 42,576 shares of his
outstanding options Mr. Gee was vested in 11,975 of his outstanding options,
Mr. Miller was vested in 20,775 of his outstanding options and Mr. Robertson
was vested in 27,809 shares of his outstanding options.

(4) Mr. Fenner's 100,000-share option grant, Mr. Gallagher's 50,000-share option
grant, Mr. Gee's 50,000-share option grant, Mr. Miller's 50,000-share option
grant and Mr. Robertson's 50,000-share option grant were granted under
Com21's 1998 Stock Incentive Plan, and these options vest in forty-eight
(48) equal installments upon the optionee's continued service at the
completion of each month following the date of the grant. Each option has a
maximum term of ten years, subject to earlier termination in the event of
the optionee's cessation of service with Com21. For the remaining options
granted under the Com21 1995 Stock Option Plan, the repurchase right lapses
with respect to 25% of the option shares upon completion

24
<PAGE> 28

of one year of service from the vesting commencement date and the balance in
a series of equal monthly installments over the next 36 months of service
thereafter. Options granted under both plans have a maximum term of ten
years, subject to earlier termination in the event of the optionee's
cessation of service with Com21.

(5) Based on $22.44 per share, the fair market value of the Common Stock on
December 31, 1999, less the exercise price payable for those shares.

25
<PAGE> 29

PRINCIPAL STOCKHOLDERS

The following table sets forth certain information known to Com21 with
respect to the beneficial ownership of Com21's Common Stock as of March 1, 2000,
except as noted in the footnotes below by (i) all persons who are beneficial
owners of five percent (5%) or more of Com21's Common Stock; (ii) each director;
(iii) Com21's Named Executive Officers; and (iv) all directors and executive
officers as a group. Unless otherwise indicated, each of the stockholders has
sole voting and investment power with respect to the shares beneficially owned,
subject to community property laws, where applicable.

<TABLE>
<CAPTION>
SHARES BENEFICIALLY
OWNED(2)
--------------------
NAME AND ADDRESS OF BENEFICIAL OWNER(1) NUMBER PERCENT
--------------------------------------- --------- -------
<S> <C> <C>
Peter D. Fenner(3).......................................... 485,415 2.2%
Paul Baran(4)............................................... 685,025 3.1
David L. Robertson(5)....................................... 87,131 *
William J. Gallagher(6)..................................... 98,042 *
Buck J. Gee(7).............................................. 82,661 *
Timothy Miller(8)........................................... 51,559 *
C. Richard Kramlich(9)...................................... 374,941 1.7
New Enterprise Associates
2490 Sand Hill Road
Menlo Park, CA 94025
Robert C. Hawk(10).......................................... 11,582 *
Jerald Kent(11)............................................. 15,000 *
Daniel J. Pike (12)......................................... 21,000 *
Robert W. Wilmot(13)........................................ 92,500 *
James Spilker, Jr.(14)...................................... 17,000 *
All directors and officers as a group (15 persons)(15)...... 2,108,108 9.4%
</TABLE>

- ---------------
* Less than one percent.

(1) Except as otherwise noted above, the address of each person listed on the
table is c/o Com21, Inc., 750 Tasman Drive, Milpitas, California 95035.

(2) Number of shares beneficially owned and the percentage of shares
beneficially owned are based on shares outstanding as of March 1, 2000.
Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and includes voting and investment power
with respect to such shares. All shares of Common Stock subject to options
currently exercisable or exercisable within 60 days after March 1, 2000 are
deemed to be outstanding and to be beneficially owned by the person holding
such options for the purpose of computing the number of shares beneficially
owned and the percentage ownership of such person, but are not deemed to be
outstanding and to be beneficially owned for the purpose of computing the
percentage ownership of any other person. Except as indicated in the
footnotes to the table and subject to applicable community property laws,
based on information provided by the persons named in the table, such
persons have sole voting and investment power with respect to all shares of
Common Stock shown as beneficially owned by them.

(3) Includes 333,533 shares of Common Stock issuable upon exercise of
immediately exercisable options, none of which are subject to Com21's right
of repurchase.

(4) Represents 400,000 shares held by the Baran Family Limited Partnership and
280,025 shares held in the name of the Paul and Evelyn Baran Trust
Agreement dated May 23, 1984. Mr. Baran is a General Partner of the Baran
Family Limited Partnership, and as such he may be deemed to share voting
and investment power with respect to such shares. However, Mr. Baran
disclaims beneficial ownership of 360,000 of such shares. Includes 5,000
shares of immediately exercisable options, all of which are subject to
Com21's right of repurchase

(5) Includes 5,951 shares of Common Stock issuable upon exercise of options.
Also includes 9,064 shares which are subject to Com21's right of
repurchase.
26
<PAGE> 30

(6) Includes 52,904 shares of Common Stock issuable upon exercise of
immediately exercisable options, 2,501 shares of which are subject to
Com21's right of repurchase.

(7) Includes 25,324 shares of Common Stock issuable upon exercise of
immediately exercisable options, 9,064 of which are subject to Com21's
right of repurchase.

(8) Includes 30,895 shares of Common Stock issuable upon exercise of
immediately exercisable options, 5,376 of which are subject to Com21's
right of repurchase.

(9) Represents 369,521 shares held by New Enterprise Associates VII, and 5,420
shares beneficially owned by Mr. Kramlich. Voting and dispositive power
over the 369,521 shares held by New Enterprise Associates VII is held among
all the general partners of New Enterprise Associates. Mr. Kramlich is a
General Partner at New Enterprise Associates, and as such, he may be deemed
to share voting and investment power with respect to such shares. However,
Mr. Kramlich disclaims beneficial ownership of all such shares. Of the
5,420 shares, 5,000 are shares of Common Stock issuable upon exercise of
immediately exercisable options, all of which are subject to repurchase by
Com21.

(10) Includes 6,582 shares of Common Stock acquired pursuant to a stock option
exercise, 3,126 of which are subject to Com21's right of repurchase.
Includes 5,000 shares of immediately exercisable options, all of which are
subject to Com21's right of repurchase.

(11) Includes 15,000 shares of Common Stock issuable upon exercise of
immediately exercisable options, 11,250 of which are subject to Com21's
right of repurchase.

(12) Includes 20,000 shares of Common Stock issuable upon exercise of
immediately exercisable options, 15,000 of which are subject to Com21's
right of repurchase

(13) Includes 5,000 shares of Common Stock issuable upon exercise of immediately
exercisable options, all of which are subject to Com21's right of
repurchase.

(14) Includes 15,000 shares of Common Stock issuable upon exercise of
immediately exercisable options, all of which are subject to Com21's right
of repurchase. Includes 2,000 shares of Common Stock owned by Dr. Spilker's
wife.

(15) Includes 595,776 shares of Common Stock issuable upon exercise of
immediately exercisable options, of which 107,085 are subject to Com21's
right of repurchase.

BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION

It is the duty of the Compensation Committee to review and determine the
salaries and bonuses of executive officers of Com21, including the Chief
Executive Officer, and to establish the general compensation policies for such
individuals. The compensation committee also has the sole and exclusive
authority to make discretionary option grants to Com21's executive officers
under Com21's 1998 Stock Incentive Plan.

The Compensation Committee believes that the compensation programs for
Com21's executive officers should reflect Com21's performance and the value
created for Com21's stockholders. In addition, the compensation programs should
support the short-term and long-term strategic goals and values of Com21 and
should reward individual contribution to Com21's success. Com21 is engaged in a
very competitive industry, and Com21's success depends upon its ability to
attract and retain qualified executives through the competitive compensation
packages it offers to such individuals.

General Compensation Policy. The compensation committee's policy is to
provide Com21's executive officers with compensation opportunities which are
based upon their personal performance, the financial performance of Com21 and
their contribution to that performance and which are competitive enough to
attract and retain highly skilled individuals. Each executive officer's
compensation package is comprised of three elements: (i) base salary that is
competitive with the market and reflects individual performance, (ii) annual
variable performance awards payable in cash and tied to Com21's achievement of
annual financial performance goals and (iii) long-term stock-based incentive
awards designed to strengthen the mutuality of interests between the executive
officers and Com21's stockholders. As an officer's level of responsibility
increases, a greater proportion of his or her total compensation will be
dependent upon Com21's financial performance and stock price appreciation rather
than base salary.

27
<PAGE> 31

Com21 used outside executive compensation studies to advise the
Compensation Committee as to how Com21's executive compensation levels compare
to those of companies within and outside of the industry.

Factors. The principal factors that were taken into account in establishing
each executive officer's compensation package for the 1999 fiscal year are
described below. However, the Compensation Committee may in its discretion apply
entirely different factors, such as different measures of financial performance,
for future fiscal years.

Base Salary. In setting base salaries, the compensation committee reviewed
published compensation survey data for its industry. The base salary for each
officer reflects the salary levels for comparable positions in the published
surveys and the comparative group of companies, as well as the individual's
personal performance and internal alignment considerations. The relative weight
given to each factor varies with each individual in the sole discretion of the
Compensation Committee. Each executive officer's base salary is adjusted each
year on the basis of (i) the Compensation Committee's evaluation of the
officer's personal performance for the year and (ii) the competitive marketplace
for persons in comparable positions. Com21's performance and profitability may
also be a factor in determining the base salaries of executive officers. For the
1999 fiscal year, the base salary of Com21's executive officers ranged from the
40th percentile to the 80th percentile of the base salary levels in effect for
comparable positions in the surveyed compensation data.

Annual Incentives. The annual incentive bonus for the Chief Executive
Officer is based on a percentage of his base pay (approximately 33% for the 1999
fiscal year) and was tied to reflect the actual financial performance of Com21
in comparison to Com21's business plan. The other executive officers of Com21
are also awarded annual incentive bonuses equal to a percentage of base salary
(approximately 35% for fiscal 1999) on the basis of Com21's performance.

CEO Compensation. In setting the total compensation payable to Com21's
Chief Executive Officer for the 1999 fiscal year, the Compensation Committee
sought to make that compensation competitive with the compensation paid to the
chief executive officers of the companies in the surveyed group, while at the
same time assuring that a significant percentage of compensation was tied to
Com21's performance and stock price appreciation.

The Compensation Committee did not adjust Mr. Fenner's base salary for the
1999 fiscal year. With respect to Mr. Fenner's base salary, it is the
Compensation Committee's intent to provide him with a level of stability and
certainty each year and not have this particular component of compensation
affected to any significant degree by Com21's performance factors. For the 1999
fiscal year, Mr. Fenner's base salary was approximately at the median of the
base salary levels of other chief executive officers at the surveyed companies.

The remaining components of Mr. Fenner's 1999 fiscal year compensation,
however, were primarily dependent upon corporate performance. Mr. Fenner was
eligible for a cash bonus for the 1999 fiscal year based on business plan
objectives. A $99,000 bonus was paid to him for fiscal year 1999 because Com21
attained its objectives. The Compensation Committee awarded a stock option grant
to Mr. Fenner in fiscal 1999 in order to provide him with an equity incentive to
continue contributing to the financial success of Com21. The option will have
value for Mr. Fenner only if the market price of the underlying option shares
appreciates over the market price in effect on the date the grant was made.

Compliance with Internal Revenue Code Section 162(m). Section 162(m) of the
Internal Revenue Code disallows a tax deduction to publicly held companies for
compensation paid to certain of their executive officers, to the extent that
compensation exceeds $1 million per covered officer in any fiscal year. The
limitation applies only to compensation which is not considered to be
performance-based. Non-performance based compensation paid to Com21's executive
officers for the 1999 fiscal year did not exceed the $1 million limit per
officer, and the Compensation Committee does not anticipate that the
non-performance based compensation to be paid to Com21's executive officers for
fiscal 1999 will exceed that limit. Com21's 1998 Stock Incentive Plan has been
structured so that any compensation deemed paid in connection with the exercise
of option grants made under that plan with an exercise price equal to the fair
market value of the option shares on the grant date will qualify as
performance-based compensation which will not be subject to

28
<PAGE> 32

the $1 million limitation. Because it is unlikely that the cash compensation
payable to any of Com21's executive officers in the foreseeable future will
approach the $1 million limit, the Compensation Committee has decided at this
time not to take any action to limit or restructure the elements of cash
compensation payable to Com21's executive officers. The compensation committee
will reconsider this decision should the individual cash compensation of any
executive officer ever approach the $1 million level.

It is the opinion of the compensation committee that the executive
compensation policies and plans provide the necessary total remuneration program
to properly align Com21's performance and the interests of Com21's stockholders
through the use of competitive and equitable executive compensation in a
balanced and reasonable manner, for both the short and long-term.

Submitted by the compensation committee of Com21's Board:

C. Richard Kramlich
Robert A. Hoff

29
<PAGE> 33

STOCK PERFORMANCE GRAPH

The graph depicted below shows a comparison of cumulative total stockholder
returns for Com21, the Standard and Poor's 500 Index and the Nasdaq
Telecommunications Index.

<TABLE>
<CAPTION>
COM21 S&P 500 NASDAQ-TELECOM
----- ------- --------------
<S> <C> <C> <C>
5/21/98 100 100.00 100
6/30/98 177 101.93 108
9/30/98 149 91.89 96
12/31/98 175 111.49 132
3/31/99 219 117.01 164
6/30/99 142 125.03 175
9/30/99 108 117.60 162
12/31/99 187 135.15 230
</TABLE>

- ---------------

(1) The graph covers the period from May 21, 1998, the commencement date of
Com21's initial public offering of shares of its Common Stock to December
31, 1999.

(2) The graph assumes that on May 21, 1998, $100 was invested in Com21's Common
Stock and in each index, and that all dividends were reinvested. No cash
dividends have been declared on Com21's Common Stock.

(3) Stockholder returns over the indicated period should not be considered
indicative of future stockholder returns.

Notwithstanding anything to the contrary set forth in any of Com21's
previous filings made under the Securities Act of 1933, as amended, or the
Securities Exchange Act of 1934, as amended, that might incorporate future
filings made by Com21 under those statutes, neither the preceding Stock
Performance Graph nor the Compensation Committee Report is to be incorporated by
reference into any such prior filings, nor shall such graph or report be
incorporated by reference into any future filings made by Com21 under those
statutes.

30
<PAGE> 34

CERTAIN TRANSACTIONS

In addition to the indemnification provisions contained in Com21's Amended
and Restated Certificate of Incorporation and Bylaws, Com21 has entered into
separate indemnification agreements with each of its directors and officers.
These agreements require Com21, among other things, to indemnify such director
or officer against expenses (including attorneys' fees), judgments, fines and
settlements (collectively, "Liabilities") paid by such individual in connection
with any action, suit or proceeding arising out of such individual's status or
service as a director or officer of Com21 (other than Liabilities arising from
willful misconduct or conduct that is knowingly fraudulent or deliberately
dishonest) and to advance expenses incurred by such individual in connection
with any proceeding against such individual with respect to which such
individual may be entitled to indemnification by Com21.

All future transactions between Com21 and its officers, directors,
principal stockholders and affiliates will be approved by a majority of the
independent and disinterested members of the Board, and will be on terms no less
favorable to Com21 than could be obtained from unaffiliated third parties.

COMPLIANCE WITH SECTION 16(a)
OF THE SECURITIES EXCHANGE ACT OF 1934

The members of the Board, the executive officers of Com21 and persons who
hold more than 10% of Com21's outstanding Common Stock are subject to the
reporting requirements of Section 16(a) of the Securities Exchange Act of 1934
which require them to file reports with respect to their ownership of the Common
Stock and their transactions in such Common Stock. Based upon (i) the copies of
Section 16(a) reports which Com21 received from such persons for their 1999
Fiscal Year transactions in the Common Stock and their Common Stock holdings,
and (ii) the written representations received from one or more of such persons
that no annual Form 5 reports were required to be filed by them for the 1999
Fiscal Year, Com21 believes that all reporting requirements under Section 16(a)
for such fiscal year were met in a timely manner by its directors, executive
officers and greater than ten percent beneficial owners except as set forth
below.

Messrs. Fenner and Gallagher each filed an untimely Form 4 in connection
with an option exercise. Mr. Gordon filed a Form 5 because he inadvertently
failed to report shares that are beneficially held by his wife.

ANNUAL REPORT

A copy of the Annual Report of Com21 for the 1999 Fiscal Year has been
mailed concurrently with this Proxy Statement to all stockholders entitled to
notice of and to vote at the Annual Meeting. The Annual Report is not
incorporated into this Proxy Statement and is not considered proxy solicitation
material.

FORM 10-K

Com21 filed an Annual Report on Form 10-K with the Securities and Exchange
Commission on March 24, 2000. Stockholders may obtain a copy of this report,
without charge, by writing to David L. Robertson, Vice President, Finance, Chief
Financial Officer and Corporate Secretary of Com21, at Com21's principal
executive offices located at 750 Tasman Drive, Milpitas, California 95035, or
from Com21's Website address at http://www.Com21.com.

THE BOARD OF DIRECTORS OF COM21, INC.

Dated: April 17, 2000

31
<PAGE> 35

1739 PS-00

<PAGE> 36

AMENDED AND RESTATED

CERTIFICATE OF INCORPORATION

COM21, INC.

Com21, Inc., (the "Corporation") a corporation organized and existing under
and by virtue of the general Corporation Law of the State of Delaware, hereby
certifies as follows:

FIRST: The name of the corporation is Com21, Inc. and that corporation was
originally incorporated on June 29, 1992 pursuant to the General Corporation
Law.

SECOND: This Amended and Restated Certificate of Incorporation has been
duly adopted in accordance with the provisions of Sections 245 and 242 of the
General Corporation Law of the State of Delaware by the directors and
stockholders of the Corporation and is set forth in its entirety as follows:

ARTICLE I

The name of the corporation is Com21, Inc.

ARTICLE II

The address of the Corporation's registered office in the State of Delaware
is 1013 Centre Road, Wilmington, County of New Castle, Delaware 19805. The name
of its registered agent at such address is The Prentice-Hall Corporation System,
Inc.

ARTICLE III

The purpose of the Corporation is to engage in any lawful act or activity
for which corporations may be organized under the General Corporation Law of the
State of Delaware (the "GCL").

ARTICLE IV

A. Classes of Stock. The Corporation is authorized to issue two classes of
stock, to be designated, respectively, "Common Stock" and "Preferred Stock." The
total number of shares that the Corporation is authorized to issue is One
Hundred Sixty Five Million (165,000,000) shares. One Hundred Sixty Million
(160,000,000) shares shall be Common Stock, par value $0.001 per share and Five
Million (5,000,000) shares shall be Preferred Stock, par value $0.001 per share.

B. Rights, Preferences and Restrictions of Preferred Stock. Without further
stockholder approval, the Preferred Stock authorized by this Amended and
Restated Certificate of Incorporation may be issued from time to time in one or
more series. The Board of Directors is hereby authorized to fix or alter the
powers, preferences, rights and restrictions granted to or imposed upon each
series of Preferred Stock, and the number of shares constituting any such series
and the designation thereof, or of any of them. The powers, preferences, rights
and restrictions of any such additional series may be subordinated to, pari
passu with (including, without limitation, inclusion in provisions with respect
to liquidation and acquisition preferences, redemption and/or approval of
matters by vote), or senior to any of those of any present or future class or
series of Preferred Stock or Common Stock. The Board of Directors is also
authorized to increase or decrease the number of shares of any series prior or
subsequent to the issue of that series, but not below the number of shares of
such series then outstanding. In case the number of shares of any series shall
be so decreased, the shares constituting such decrease shall resume the status
which they had prior to the adoption of the resolution originally fixing the
number of shares of such series.

C. Common Stock.

1. Dividend Rights. Subject to the prior rights of holders of all
classes of stock at the time outstanding having prior rights as to
dividends, the holders of the Common Stock shall be entitled to

-1-
<PAGE> 37

receive, when and as declared by the Board of Directors, out of any assets
of the Corporation legally available therefor, such dividends as may be
declared from time to time by the Board of Directors.

2. Liquidation Rights. In the event of any voluntary or involuntary
liquidation, dissolution or winding up of the Corporation, after
distribution of the preferential amounts to be distributed to the holders
of shares of the Preferred Stock, the holders of shares of the Common Stock
shall be entitled to receive all of the remaining assets of the Corporation
available for distribution to its stockholders, ratably in proportion to
the number of shares of the Common Stock held by them.

3. Redemption. The Common Stock is not redeemable.

4. Voting Rights. The holder of each share of Common Stock shall have
the right to one vote, and shall be entitled to notice of any stockholders'
meeting in accordance with the Bylaws of this Corporation, and shall be
entitled to vote upon such matters and in such manner as may be provided by
law.

ARTICLE V

Except as otherwise provided in this Amended and Restated Certificate of
Incorporation, in furtherance and not in limitation of the powers conferred by
statute, the Board of Directors is expressly authorized to make, repeal, alter,
amend and rescind any or all of the Bylaws of the Corporation.

ARTICLE VI

In furtherance and not in limitation of the powers conferred by statute and
subject to the provisions of Article VII:

A. The Board of Directors of the Corporation is expressly authorized to
adopt, amend, alter, or repeal the Bylaws of the Corporation.

B. Elections of directors need not be by written ballot unless the Bylaws
of the Corporation shall so provide.

C. Meetings of stockholders may be held within or without the State of
Delaware as the Bylaws may provide. The books of the Corporation may be kept at
such place within or without the State of Delaware as the Bylaws of the
Corporation may provide or as may be designated from time to time by the Board
of Directors of the Corporation.

ARTICLE VII

A director of this Corporation, to the full extent permitted by the GCL as
it now exists or as it may hereafter be amended, shall not be personally liable
to the Corporation or its stockholders for monetary damages for breach of
fiduciary duty as a director. Neither any amendment nor repeal of this Article
SEVENTH, nor the adoption of any provision of this Amended and Restated
Certificate of Incorporation inconsistent with this Article SEVENTH, shall
eliminate or reduce the effect of this Article SEVENTH in respect of any matter
occurring, or any cause of action, suit or claim that, but for this Article
SEVENTH, would accrue or arise, prior to such amendment, repeal or adoption of
an inconsistent provision. If the GCL is amended after approval by the
stockholders of this Article SEVENTH to authorize corporate action further
eliminating or limiting the personal liability of directors, then the liability
of a director of the Corporation shall be eliminated or limited to the fullest
extent permitted by the GCL as so amended.

Any repeal or modification of the foregoing provisions of this Article
SEVENTH by the stockholders of the Corporation shall not adversely affect any
right or protection of a director of the Corporation existing at the time of
such repeal or modification.

-2-
<PAGE> 38

ARTICLE VIII

To the full extent permitted by the GCL and any other applicable law, this
Corporation is also authorized to provide indemnification of, and advancement of
expenses to, such directors, officers, employees and agents through Bylaw
provisions, agreements with such persons, vote of stockholders or disinterested
directors or otherwise, in excess of the indemnification and advancement
otherwise permitted by Section 145 of the GCL, subject only to limits created by
applicable Delaware law (statutory or non-statutory), with respect to actions
for breach of duty to this Corporation, its stockholders, and others.

Any repeal or modification of any of the foregoing provisions of this
Article EIGHTH shall not adversely affect any right or protection of a director,
officer, agent or other person existing at the time of, or increase the
liability of any director of this Corporation with respect to any acts or
omissions of such director, officer or agent occurring prior to such repeal or
modification.

ARTICLE IX

The Corporation reserves the right to amend, alter, change or repeal any
provision contained in this Amended and Restated Certificate of Incorporation,
in the manner now or hereafter prescribed by statute, and all rights conferred
upon stockholders herein are granted subject to this reservation.

-3-
<PAGE> 39

IN WITNESS WHEREOF, the Corporation has caused this Amended and Restated
Certificate of Incorporation to be signed by Peter D. Fenner, its President, and
attested to by David L. Robertson, its Chief Financial Officer and Secretary, on
this day of , 2000.

COM21,INC.

By:

------------------------------------

Peter D. Fenner

President and Chief Executive
Officer

Attest:

David L. Robertson,

Chief Financial Officer and Secretary

-4-
<PAGE> 40
COM21, INC.

2000 STOCK OPTION PLAN

ARTICLE ONE

GENERAL PROVISIONS

I. PURPOSE OF THE PLAN

This 2000 Stock Option Plan is intended to promote the interests of
Com21, Inc., a Delaware corporation, by providing eligible persons in the
Corporation's service with the opportunity to acquire a proprietary interest, or
otherwise increase their proprietary interest, in the Corporation as an
incentive for them to remain in such service.

Capitalized terms shall have the meanings assigned to such terms in
the attached Appendix.

II. ADMINISTRATION OF THE PLAN

A. The Primary Committee shall have sole and exclusive authority to
administer the Plan with respect to Section 16 Insiders. Administration of the
Plan with respect to all other persons eligible to participate in that program
may, at the Board's discretion, be vested in the Primary Committee or a
Secondary Committee, or the Board may retain the power to administer that
program with respect to all such persons. However, any option grants for members
of the Primary Committee must be authorized by a disinterested majority of the
Board.

B. Members of the Primary Committee or any Secondary Committee shall
serve for such period of time as the Board may determine and may be removed by
the Board at any time. The Board may also at any time terminate the functions of
any Secondary Committee and reassume all powers and authority previously
delegated to such committee.

C. Each Plan Administrator shall, within the scope of its
administrative functions under the Plan, have full power and authority (subject
to the provisions of the Plan) to establish such rules and regulations as it may
deem appropriate for proper administration of the Plan and to make such
determinations under, and issue such interpretations of, the provisions of that
program and any outstanding options thereunder as it may deem necessary or
advisable. Decisions of the Plan Administrator within the scope of its
administrative functions under the Plan shall be final and binding on all
parties who have an interest in the Plan under its jurisdiction or any stock
option thereunder.

<PAGE> 41

D. Service on the Primary Committee or the Secondary Committee shall
constitute service as a Board member, and members of each such committee shall
accordingly be entitled to full indemnification and reimbursement as Board
members for their service on such committee. No member of the Primary Committee
or the Secondary Committee shall be liable for any act or omission made in good
faith with respect to the Plan or any option grants under the Plan.

III. ELIGIBILITY

A. The persons eligible to participate in the Plan are as follows:

(i) Employees,

(ii) non-employee members of the Board or the board of directors
of any Parent or Subsidiary, and

(iii) consultants and other independent advisors who provide
services to the Corporation (or any Parent or Subsidiary).

B. Each Plan Administrator shall, within the scope of its
administrative jurisdiction under the Plan, have full authority to determine,
with respect to the option grants under the Plan, which eligible persons are to
receive such grants, the time or times when those grants are to be made, the
number of shares to be covered by each such grant, the status of the granted
option as either an Incentive Option or a Non-Statutory Option, the time or
times when each option is to become exercisable, the vesting schedule (if any)
applicable to the option shares and the maximum term for which the option is to
remain outstanding.

IV. STOCK SUBJECT TO THE PLAN

A. The stock issuable under the Plan shall be shares of authorized
but unissued or reacquired Common Stock, including shares repurchased by the
Corporation on the open market. The number of shares of Common Stock initially
reserved for issuance over the term of the Plan shall not exceed one million
five hundred thousand (1,500,000) shares.

B. No one person participating in the Plan may receive stock options
for more than three hundred thousand (300,000) shares of Common Stock in the
aggregate per calendar year.

C. Shares of Common Stock subject to outstanding options shall be
available for subsequent issuance under the Plan to the extent those options
expire or terminate for any reason prior to exercise in full. Unvested shares
issued under the Plan and subsequently cancelled or repurchased by the
Corporation at the original issue price paid per share, pursuant to the
Corporation's repurchase rights under the Plan shall be added back to the number
of shares of Common Stock reserved for issuance under the Plan and shall
accordingly be available for reissuance through one or more subsequent option
grants under the Plan. However, should the exercise price of an option under the
Plan be paid with shares of Common Stock, then the

2
<PAGE> 42

number of shares of Common Stock available for issuance under the Plan shall be
reduced by the gross number of shares for which the option is exercised, and not
by the net number of shares of Common Stock issued to the holder of such option.
Shares of Common Stock underlying one or more stock appreciation rights
exercised under Section IV of Article Two shall NOT be available for subsequent
issuance under the Plan.

D. If any change is made to the Common Stock by reason of any stock
split, stock dividend, recapitalization, combination of shares, exchange of
shares or other change affecting the outstanding Common Stock as a class without
the Corporation's receipt of consideration, appropriate adjustments shall be
made by the Plan Administrator to (i) the maximum number and/or class of
securities issuable under the Plan, (ii) the maximum number and/or class of
securities for which any one person may be granted stock options and separately
exercisable stock appreciation rights under the Plan per calendar year, (iii)
the number and/or class of securities and the exercise price per share in effect
under each outstanding option under the Plan, (iv) the number and/or class of
securities and exercise price per share in effect under each outstanding option
incorporated into this Plan from the Predecessor Plan and (v) the maximum number
and/or class of securities by which the share reserve is to increase
automatically each calendar year pursuant to the provisions of Section V.B of
this Article One. Such adjustments to the outstanding options are to be effected
in a manner which shall preclude the enlargement or dilution of rights and
benefits under such options. The adjustments determined by the Plan
Administrator shall be final, binding and conclusive.

<PAGE> 43

ARTICLE TWO

OPTION GRANT PROGRAM

I. OPTION TERMS

Each option shall be evidenced by one or more documents in the form
approved by the Plan Administrator; provided, however, that each such document
shall comply with the terms specified below. Each document evidencing an
Incentive Option shall, in addition, be subject to the provisions of the Plan
applicable to such options.

A. EXERCISE PRICE.

1. The exercise price per share shall be fixed by the Plan
Administrator but shall not be less than one hundred percent (100%) of the Fair
Market Value per share of Common Stock on the option grant date.

2. The exercise price shall become immediately due upon exercise
of the option and shall be payable in one or more of the forms specified below:

(i) cash or check made payable to the Corporation,

(ii) shares of Common Stock held for the requisite period
necessary to avoid a charge to the Corporation's earnings for
financial reporting purposes and valued at Fair Market Value on the
Exercise Date, or

(iii) to the extent the option is exercised for vested
shares, through a special sale and remittance procedure pursuant to
which the Optionee shall concurrently provide irrevocable
instructions to (a) a Corporation-designated brokerage firm to effect
the immediate sale of the purchased shares and remit to the
Corporation, out of the sale proceeds available on the settlement
date, sufficient funds to cover the aggregate exercise price payable
for the purchased shares plus all applicable Federal, state and local
income and employment taxes required to be withheld by the
Corporation by reason of such exercise and (b) the Corporation to
deliver the certificates for the purchased shares directly to such
brokerage firm in order to complete the sale.

Except to the extent such sale and remittance procedure is utilized,
payment of the exercise price for the purchased shares must be made on the
Exercise Date.

4
<PAGE> 44

B. EXERCISE AND TERM OF OPTIONS. Each option shall be exercisable at
such time or times, during such period and for such number of shares as shall be
determined by the Plan Administrator and set forth in the documents evidencing
the option. However, no option shall have a term in excess of ten (10) years
measured from the option grant date.

C. EFFECT OF TERMINATION OF SERVICE.

1. The following provisions shall govern the exercise of any
options held by the Optionee at the time of cessation of Service or death:

(i) Any option outstanding at the time of the Optionee's
cessation of Service for any reason shall remain exercisable for such
period of time thereafter as shall be determined by the Plan
Administrator and set forth in the documents evidencing the option,
but no such option shall be exercisable after the expiration of the
option term.

(ii) Any option held by the Optionee at the time of death
and exercisable in whole or in part at that time may be subsequently
exercised by the personal representative of the Optionee's estate or
by the person or persons to whom the option is transferred pursuant
to the Optionee's will or the laws of inheritance or by the
Optionee's designated beneficiary or beneficiaries of that option.

(iii) Should the Optionee's Service be terminated for
Misconduct or should the Optionee otherwise engage in Misconduct
while holding one or more outstanding options under this Article Two,
then all those options shall terminate immediately and cease to be
outstanding.

(iv) During the applicable post-Service exercise period,
the option may not be exercised in the aggregate for more than the
number of vested shares for which the option is exercisable on the
date of the Optionee's cessation of Service. Upon the expiration of
the applicable exercise period or (if earlier) upon the expiration of
the option term, the option shall terminate and cease to be
outstanding for any vested shares for which the option has not been
exercised. However, the option shall, immediately upon the Optionee's
cessation of Service, terminate and cease to be outstanding to the
extent the option is not otherwise at that time exercisable for
vested shares.

2. The Plan Administrator shall have complete discretion,
exercisable either at the time an option is granted or at any time while the
option remains outstanding, to:

(i) extend the period of time for which the option is to
remain exercisable following the Optionee's cessation of Service from
the limited exercise period otherwise in effect for that option to
such greater period of time as the Plan Administrator shall deem
appropriate, but in no event beyond the expiration of the option
term, and/or

5
<PAGE> 45

(ii) permit the option to be exercised, during the
applicable post-Service exercise period, not only with respect to the
number of vested shares of Common Stock for which such option is
exercisable at the time of the Optionee's cessation of Service but
also with respect to one or more additional installments in which the
Optionee would have vested had the Optionee continued in Service.

D. STOCKHOLDER RIGHTS. The holder of an option shall have no
stockholder rights with respect to the shares subject to the option until such
person shall have exercised the option, paid the exercise price and become a
holder of record of the purchased shares.

E. REPURCHASE RIGHTS. The Plan Administrator shall have the
discretion to grant options which are exercisable for unvested shares of Common
Stock. Should the Optionee cease Service while holding such unvested shares, the
Corporation shall have the right to repurchase, at the exercise price paid per
share, any or all of those unvested shares. The terms upon which such repurchase
right shall be exercisable (including the period and procedure for exercise and
the appropriate vesting schedule for the purchased shares) shall be established
by the Plan Administrator and set forth in the document evidencing such
repurchase right.

F. LIMITED TRANSFERABILITY OF OPTIONS. During the lifetime of the
Optionee, Incentive Options shall be exercisable only by the Optionee and shall
not be assignable or transferable other than by will or the laws of inheritance
following the Optionee's death. Non-Statutory Options shall be subject to the
same restriction, except that a Non-Statutory Option may be assigned in whole or
in part during the Optionee's lifetime to one or more members of the Optionee's
family or to a trust established exclusively for one or more such family members
or to Optionee's former spouse, to the extent such assignment is in connection
with the Optionee's estate plan or pursuant to a domestic relations order. The
assigned portion may only be exercised by the person or persons who acquire a
proprietary interest in the option pursuant to the assignment. The terms
applicable to the assigned portion shall be the same as those in effect for the
option immediately prior to such assignment and shall be set forth in such
documents issued to the assignee as the Plan Administrator may deem appropriate.
Notwithstanding the foregoing, the Optionee may also designate one or more
persons as the beneficiary or beneficiaries of his or her outstanding options
under this Article Two, and those options shall, in accordance with such
designation, automatically be transferred to such beneficiary or beneficiaries
upon the Optionee's death while holding those options. Such beneficiary or
beneficiaries shall take the transferred options subject to all the terms and
conditions of the applicable agreement evidencing each such transferred option,
including (without limitation) the limited time period during which the option
may be exercised following the Optionee's death.

II. INCENTIVE OPTIONS

The terms specified below shall be applicable to all Incentive
Options. Except as modified by the provisions of this Section II, all the
provisions of Articles One, Two and Three shall be applicable to Incentive
Options. Options which are specifically designated as Non-Statutory Options when
issued under the Plan shall not be subject to the terms of this Section II.

6
<PAGE> 46

A. ELIGIBILITY. Incentive Options may only be granted to Employees.

B. DOLLAR LIMITATION. The aggregate Fair Market Value of the shares
of Common Stock (determined as of the respective date or dates of grant) for
which one or more options granted to any Employee under the Plan (or any other
option plan of the Corporation or any Parent or Subsidiary) may for the first
time become exercisable as Incentive Options during any one calendar year shall
not exceed the sum of One Hundred Thousand Dollars ($100,000). To the extent the
Employee holds two (2) or more such options which become exercisable for the
first time in the same calendar year, the foregoing limitation on the
exercisability of such options as Incentive Options shall be applied on the
basis of the order in which such options are granted.

C. 10% STOCKHOLDER. If any Employee to whom an Incentive Option is
granted is a 10% Stockholder, then the exercise price per share shall not be
less than one hundred ten percent (110%) of the Fair Market Value per share of
Common Stock on the option grant date, and the option term shall not exceed five
(5) years measured from the option grant date.

III. CORPORATE TRANSACTION/CHANGE IN CONTROL

A. In the event of any Corporate Transaction, each outstanding option
shall automatically accelerate so that each such option shall, immediately prior
to the effective date of the Corporate Transaction, become exercisable for all
the shares of Common Stock at the time subject to such option and may be
exercised for any or all of those shares as fully vested shares of Common Stock.
However, an outstanding option shall NOT become exercisable on such an
accelerated basis if and to the extent: (i) such option is, in connection with
the Corporate Transaction, to be assumed by the successor corporation (or parent
thereof) or (ii) such option is to be replaced with a cash incentive program of
the successor corporation which preserves the spread existing at the time of the
Corporate Transaction on any shares for which the option is not otherwise at
that time exercisable and provides for subsequent payout in accordance with the
same exercise/vesting schedule applicable to those option shares or (iii) the
acceleration of such option is subject to other limitations imposed by the Plan
Administrator at the time of the option grant.

B. All outstanding repurchase rights shall automatically terminate,
and the shares of Common Stock subject to those terminated rights shall
immediately vest in full, in the event of any Corporate Transaction, except to
the extent: (i) those repurchase rights are to be assigned to the successor
corporation (or parent thereof) in connection with such Corporate Transaction or
(ii) such accelerated vesting is precluded by other limitations imposed by the
Plan Administrator at the time the repurchase right is issued.

C. Immediately following the consummation of the Corporate
Transaction, all outstanding options shall terminate and cease to be
outstanding, except to the extent assumed by the successor corporation (or
parent thereof).

7
<PAGE> 47

D. Each option which is assumed in connection with a Corporate
Transaction shall be appropriately adjusted, immediately after such Corporate
Transaction, to apply to the number and class of securities which would have
been issuable to the Optionee in consummation of such Corporate Transaction had
the option been exercised immediately prior to such Corporate Transaction.
Appropriate adjustments to reflect such Corporate Transaction shall also be made
to (i) the exercise price payable per share under each outstanding option,
provided the aggregate exercise price payable for such securities shall remain
the same, (ii) the maximum number and/or class of securities available for
issuance over the remaining term of the Plan and (iii) the maximum number and/or
class of securities for which any one person may be granted stock options under
the Plan per calendar year and (iv) the maximum number and/or class of
securities by which the share reserve is to increase automatically each calendar
year. To the extent the actual holders of the Corporation's outstanding Common
Stock receive cash consideration for their Common Stock in consummation of the
Corporate Transaction, the successor corporation may, in connection with the
assumption of the outstanding options under the Discretionary Option Grant
Program, substitute one or more shares of its own common stock with a fair
market value equivalent to the cash consideration paid per share of Common Stock
in such Corporate Transaction.

E. The Plan Administrator shall have the discretionary authority to
structure one or more outstanding options under the Plan so that those options
shall, immediately prior to the effective date of such Corporate Transaction,
become exercisable for all the shares of Common Stock at the time subject to
those options and may be exercised for any or all of those shares as fully
vested shares of Common Stock, whether or not those options are to be assumed in
the Corporate Transaction. In addition, the Plan Administrator shall have the
discretionary authority to structure one or more of the Corporation's repurchase
rights under the Plan so that those rights shall not be assignable in connection
with such Corporate Transaction and shall accordingly terminate upon the
consummation of such Corporate Transaction, and the shares subject to those
terminated rights shall thereupon vest in full.

F. The Plan Administrator shall have full power and authority to
structure one or more outstanding options under the Plan so that those options
shall become exercisable for all the shares of Common Stock at the time subject
to those options in the event the Optionee's Service is subsequently terminated
by reason of an Involuntary Termination within a designated period (not to
exceed eighteen (18) months) following the effective date of any Corporate
Transaction in which those options are assumed and do not otherwise accelerate.
In addition, the Plan Administrator may structure one or more of the
Corporation's repurchase rights so that those rights shall immediately terminate
with respect to any shares held by the Optionee at the time of his or her
Involuntary Termination, and the shares subject to those terminated repurchase
rights shall accordingly vest in full at that time.

8
<PAGE> 48

G. The Plan Administrator shall have the discretionary authority to
structure one or more outstanding options under the Plan so that those options
shall, immediately prior to the effective date of a Change in Control, become
exercisable for all the shares of Common Stock at the time subject to those
options and may be exercised for any or all of those shares as fully vested
shares of Common Stock. In addition, the Plan Administrator shall have the
discretionary authority to structure one or more of the Corporation's repurchase
rights under the Plan so that those rights shall terminate automatically upon
the consummation of such Change in Control, and the shares subject to those
terminated rights shall thereupon vest in full. Alternatively, the Plan
Administrator may condition the automatic acceleration of one or more
outstanding options under the Plan and the termination of one or more of the
Corporation's outstanding repurchase rights under such program upon the
subsequent termination of the Optionee's Service by reason of an Involuntary
Termination within a designated period (not to exceed eighteen (18) months)
following the effective date of such Change in Control.

H. The portion of any Incentive Option accelerated in connection with
a Corporate Transaction or Change in Control shall remain exercisable as an
Incentive Option only to the extent the applicable One Hundred Thousand Dollar
($100,000) limitation is not exceeded. To the extent such dollar limitation is
exceeded, the accelerated portion of such option shall be exercisable as a
Nonstatutory Option under the Federal tax laws.

I. The outstanding options shall in no way affect the right of the
Corporation to adjust, reclassify, reorganize or otherwise change its capital or
business structure or to merge, consolidate, dissolve, liquidate or sell or
transfer all or any part of its business or assets.

9
<PAGE> 49

ARTICLE THREE

MISCELLANEOUS

I. TAX WITHHOLDING

The Corporation's obligation to deliver shares of Common Stock upon
the exercise of options under the Plan shall be subject to the satisfaction of
all applicable Federal, state and local income and employment tax withholding
requirements.

II. EFFECTIVE DATE AND TERM OF THE PLAN

A. The Plan shall become effective immediately on the Plan Effective
Date. Options may be granted under the Plan at any time on or after the Plan
Effective Date. However, no options granted under the Plan may be exercised, and
no shares shall be issued under the Plan, until the Plan is approved by the
Corporation's stockholders at the 2000 Annual Meeting. If such stockholder
approval is not obtained, then all options previously granted under this Plan
shall terminate and cease to be outstanding, and no further options shall be
granted and no shares shall be issued under the Plan.

B. The Plan shall terminate upon the earliest to occur of (i) March
1, 2010, (ii) the date on which all shares available for issuance under the Plan
shall have been issued as fully vested shares or (iii) the termination of all
outstanding options in connection with a Corporate Transaction. Should the Plan
terminate on March 1, 2010, then all option grants outstanding at that time
shall continue to have force and effect in accordance with the provisions of the
documents evidencing such grants.

III. AMENDMENT OF THE PLAN

A. The Board shall have complete and exclusive power and authority to
amend or modify the Plan in any or all respects. However, no such amendment or
modification shall adversely affect the rights and obligations with respect to
stock options at the time outstanding under the Plan unless the Optionee
consents to such amendment or modification. In addition, certain amendments may
require stockholder approval pursuant to applicable laws or regulations.

B. Options to purchase shares of Common Stock may be granted under
the Plan that are in excess of the number of shares then available for issuance
under the Plan, provided any excess shares actually issued under that program
shall be held in escrow until there is obtained stockholder approval of an
amendment sufficiently increasing the number of shares of Common Stock available
for issuance under the Plan. If such stockholder approval is not obtained within
twelve (12) months after the date the first such excess issuances are made, then

10
<PAGE> 50

(i) any unexercised options granted on the basis of such excess shares shall
terminate and cease to be outstanding and (ii) the Corporation shall promptly
refund to the Optionees the exercise price paid for any excess shares issued
under the Plan and held in escrow, together with interest (at the applicable
Short Term Federal Rate) for the period the shares were held in escrow, and such
shares shall thereupon be automatically cancelled and cease to be outstanding.

IV. USE OF PROCEEDS

Any cash proceeds received by the Corporation from the sale of shares
of Common Stock under the Plan shall be used for general corporate purposes.

V. REGULATORY APPROVALS

A. The implementation of the Plan, the granting of any stock option
under the Plan and the issuance of any shares of Common Stock upon the exercise
of any granted option shall be subject to the Corporation's procurement of all
approvals and permits required by regulatory authorities having jurisdiction
over the Plan, the stock options granted under it and the shares of Common Stock
issued pursuant to it.

B. No shares of Common Stock or other assets shall be issued or
delivered under the Plan unless and until there shall have been compliance with
all applicable requirements of Federal and state securities laws, including the
filing and effectiveness of the Form S-8 registration statement for the shares
of Common Stock issuable under the Plan, and all applicable listing requirements
of any stock exchange (or the Nasdaq National Market, if applicable) on which
Common Stock is then listed for trading.

VI. NO EMPLOYMENT/SERVICE RIGHTS

Nothing in the Plan shall confer upon the Optionee any right to
continue in Service for any period of specific duration or interfere with or
otherwise restrict in any way the rights of the Corporation (or any Parent or
Subsidiary employing or retaining such person) or of the Optionee, which rights
are hereby expressly reserved by each, to terminate such person's Service at any
time for any reason, with or without cause.

11
<PAGE> 51

APPENDIX

The following definitions shall be in effect under the Plan:

A. BOARD shall mean the Corporation's Board of Directors.

B. CHANGE IN CONTROL shall mean a change in ownership or control of the
Corporation effected through either of the following transactions:

(i) the acquisition, directly or indirectly by any person or
related group of persons (other than the Corporation or a person that
directly or indirectly controls, is controlled by, or is under common
control with, the Corporation), of beneficial ownership (within the
meaning of Rule 13d-3 of the 1934 Act) of securities possessing more
than fifty percent (50%) of the total combined voting power of the
Corporation's outstanding securities pursuant to a tender or exchange
offer made directly to the Corporation's stockholders, or

(ii) a change in the composition of the Board over a period of
thirty-six (36) consecutive months or less such that a majority of the
Board members ceases, by reason of one or more contested elections for
Board membership, to be comprised of individuals who either (A) have
been Board members continuously since the beginning of such period or
(B) have been elected or nominated for election as Board members during
such period by at least a majority of the Board members described in
clause (A) who were still in office at the time the Board approved such
election or nomination.

C. CODE shall mean the Internal Revenue Code of 1986, as amended.

D. COMMON STOCK shall mean the Corporation's common stock.

E. CORPORATE TRANSACTION shall mean either of the following
stockholder-approved transactions to which the Corporation is a party:

(i) a merger or consolidation in which securities possessing
more than fifty percent (50%) of the total combined voting power of the
Corporation's outstanding securities are transferred to a person or
persons different from the persons holding those securities immediately
prior to such transaction, or

(ii) the sale, transfer or other disposition of all or
substantially all of the Corporation's assets in complete liquidation or
dissolution of the Corporation.

A-1.
<PAGE> 52

F. CORPORATION shall mean Com21, Inc., a Delaware corporation, and any
corporate successor to all or substantially all of the assets or voting stock of
Com21, Inc. which shall by appropriate action adopt the Plan.

G. EMPLOYEE shall mean an individual who is in the employ of the
Corporation (or any Parent or Subsidiary), subject to the control and direction
of the employer entity as to both the work to be performed and the manner and
method of performance.

H. EXERCISE DATE shall mean the date on which the Corporation shall have
received written notice of the option exercise.

I. FAIR MARKET VALUE per share of Common Stock on any relevant date
shall be determined in accordance with the following provisions:

(i) If the Common Stock is at the time traded on the Nasdaq
National Market, then the Fair Market Value shall be the closing selling
price per share of Common Stock on the date in question, as such price
is reported by the National Association of Securities Dealers on the
Nasdaq National Market and published in The Wall Street Journal. If
there is no closing selling price for the Common Stock on the date in
question, then the Fair Market Value shall be the closing selling price
on the last preceding date for which such quotation exists.

(ii) If the Common Stock is at the time listed on any Stock
Exchange, then the Fair Market Value shall be the closing selling price
per share of Common Stock on the date in question on the Stock Exchange
determined by the Plan Administrator to be the primary market for the
Common Stock, as such price is officially quoted in the composite tape
of transactions on such exchange and published in The Wall Street
Journal. If there is no closing selling price for the Common Stock on
the date in question, then the Fair Market Value shall be the closing
selling price on the last preceding date for which such quotation
exists.

J. INCENTIVE OPTION shall mean an option which satisfies the
requirements of Code Section 422.

K. INVOLUNTARY TERMINATION shall mean the termination of the Service of
any individual which occurs by reason of:

(i) such individual's involuntary dismissal or discharge by the
Corporation for reasons other than Misconduct, or

(ii) such individual's voluntary resignation following (A) a
change in his or her position with the Corporation which materially
reduces his or her duties and responsibilities or the level of
management to which he or she reports, (B) a reduction in his or her
level of compensation (including base

A-2.
<PAGE> 53

salary, fringe benefits and target bonus under any corporate-performance
based bonus or incentive programs) by more than fifteen percent (15%) or
(C) a relocation of such individual's place of employment by more than
fifty (50) miles, provided and only if such change, reduction or
relocation is effected by the Corporation without the individual's
consent.

L. MISCONDUCT shall mean the commission of any act of fraud,
embezzlement or dishonesty by the Optionee or Participant, any unauthorized use
or disclosure by such person of confidential information or trade secrets of the
Corporation (or any Parent or Subsidiary), or any other intentional misconduct
by such person adversely affecting the business or affairs of the Corporation
(or any Parent or Subsidiary) in a material manner. The foregoing definition
shall not be deemed to be inclusive of all the acts or omissions which the
Corporation (or any Parent or Subsidiary) may consider as grounds for the
dismissal or discharge of any Optionee, Participant or other person in the
Service of the Corporation (or any Parent or Subsidiary).

M. 1934 ACT shall mean the Securities Exchange Act of 1934, as amended.

N. NON-STATUTORY OPTION shall mean an option not intended to satisfy the
requirements of Code Section 422.

O. OPTIONEE shall mean any person to whom an option is granted under the
Plan.

P. PARENT shall mean any corporation (other than the Corporation) in an
unbroken chain of corporations ending with the Corporation, provided each
corporation in the unbroken chain (other than the Corporation) owns, at the time
of the determination, stock possessing fifty percent (50%) or more of the total
combined voting power of all classes of stock in one of the other corporations
in such chain.

Q. PERMANENT DISABILITY OR PERMANENTLY DISABLED shall mean the inability
of the Optionee or the Participant to engage in any substantial gainful activity
by reason of any medically determinable physical or mental impairment expected
to result in death or to be of continuous duration of twelve (12) months or
more.

R. PLAN shall mean the Corporation's 2000 Stock Option Plan, as set
forth in this document.

S. PLAN ADMINISTRATOR shall mean the particular entity, whether the
Primary Committee, the Board or the Secondary Committee, which is authorized to
administer the Plan with respect to one or more classes of eligible persons, to
the extent such entity is carrying out its administrative functions under that
program with respect to the persons under its jurisdiction.

T. PLAN EFFECTIVE DATE shall mean the date the Plan shall become
effective and shall be coincident with the date the Plan is adopted by the
Board.

A-3.
<PAGE> 54

U. PRIMARY COMMITTEE shall mean the committee of two (2) or more
non-employee Board members appointed by the Board to administer the
Discretionary Option Grant Program with respect to Section 16 Insiders solely
with respect to the selection of the eligible individuals who may participate in
such program.

V. SECONDARY COMMITTEE shall mean a committee of one or more Board
members appointed by the Board to administer the Plan with respect to eligible
persons other than Section 16 Insiders.

W. SECTION 16 INSIDER shall mean an officer or director of the
Corporation subject to the short-swing profit liabilities of Section 16 of the
1934 Act.

X. SERVICE shall mean the performance of services for the Corporation
(or any Parent or Subsidiary) by a person in the capacity of an Employee, a
non-employee member of the board of directors or a consultant or independent
advisor, except to the extent otherwise specifically provided in the documents
evidencing the option grant.

Y. STOCK EXCHANGE shall mean either the American Stock Exchange or the
New York Stock Exchange.

Z. SUBSIDIARY shall mean any corporation (other than the Corporation) in
an unbroken chain of corporations beginning with the Corporation, provided each
corporation (other than the last corporation) in the unbroken chain owns, at the
time of the determination, stock possessing fifty percent (50%) or more of the
total combined voting power of all classes of stock in one of the other
corporations in such chain.

AA. 10% STOCKHOLDER shall mean the owner of stock (as determined under
Code Section 424(d)) possessing more than ten percent (10%) of the total
combined voting power of all classes of stock of the Corporation (or any Parent
or Subsidiary).

A-4.
<PAGE> 55
COM21, INC.
1998 EMPLOYEE STOCK PURCHASE PLAN

I. PURPOSE OF THE PLAN

This Employee Stock Purchase Plan is intended to promote the
interests of Com21, Inc. by providing eligible employees with the opportunity to
acquire a proprietary interest in the Corporation through participation in a
payroll-deduction based employee stock purchase plan designed to qualify under
Section 423 of the Code.

Capitalized terms herein shall have the meanings assigned to such
terms in the attached Appendix.

II. ADMINISTRATION OF THE PLAN

The Plan Administrator shall have full authority to interpret and
construe any provision of the Plan and to adopt such rules and regulations for
administering the Plan as it may deem necessary in order to comply with the
requirements of Code Section 423. Decisions of the Plan Administrator shall be
final and binding on all parties having an interest in the Plan.

III. STOCK SUBJECT TO PLAN

A. The stock purchasable under the Plan shall be shares of
authorized but unissued or reacquired Common Stock, including shares of Common
Stock purchased on the open market. The maximum number of shares of Common Stock
which may be issued over the term of the Plan shall not exceed Two Hundred Fifty
Thousand (700,000) shares.

B. Should any change be made to the Common Stock by reason of any
stock split, stock dividend, recapitalization, combination of shares, exchange
of shares or other change affecting the outstanding Common Stock as a class
without the Corporation's receipt of consideration, appropriate adjustments
shall be made to (i) the maximum number and class of securities issuable under
the Plan, (ii) the maximum number and class of securities purchasable per
Participant on any one Purchase Date and (iii) the number and class of
securities and the price per share in effect under each outstanding purchase
right in order to prevent the dilution or enlargement of benefits thereunder.

IV. OFFERING PERIODS

A. Shares of Common Stock shall be offered for purchase under the
Plan through a series of successive offering periods until such time as (i) the
maximum number of shares of Common Stock available for issuance under the Plan
shall have been purchased or (ii) the Plan shall have been sooner terminated.

B. Each offering period shall be of such duration (not to exceed
twenty-four (24) months) as determined by the Plan Administrator prior to the
start date of such offering

<PAGE> 56

period. However, the initial offering period shall commence at the Effective
Time and terminate on the last business day in April 2000. The next offering
period shall commence on the first business day in November 2000, and subsequent
offering periods shall commence as designated by the Plan Administrator.

C. Each offering period shall be comprised of a series of one or
more successive Purchase Intervals. Purchase Intervals shall generally run from
the first business day in May each year to the last business day in October of
the same year and from the first business day in November each year to the last
business day in April of the following year. However, the first Purchase
Interval in effect under the initial offering period shall commence at the
Effective Time and terminate on the last business day in October 1998.

D. Should the Fair Market Value per share of Common Stock on any
Purchase Date within an offering period be less than the Fair Market Value per
share of Common Stock on the start date of that offering period, then that
offering period shall automatically terminate immediately after the purchase of
shares of Common Stock on such Purchase Date, and a new offering period shall
commence on the next business day following such Purchase Date. The new offering
period shall have a duration of twenty (24) months, unless a shorter duration is
established by the Plan Administrator within five (5) business days following
the start date of that offering period.

V. ELIGIBILITY

A. Each individual who is an Eligible Employee on the start date of
any offering period under the Plan may enter that offering period on such start
date or on any subsequent Semi-Annual Entry Date within that offering period,
provided he or she remains an Eligible Employee.

B. Each individual who first becomes an Eligible Employee after the
start date of an offering period may enter that offering period on any
subsequent Semi-Annual Entry Date within that offering period on which he or she
is an Eligible Employee.

C. The date an individual enters an offering period shall be
designated his or her Entry Date for purposes of that offering period.

D. To participate in the Plan for a particular offering period, the
Eligible Employee must complete the enrollment forms prescribed by the Plan
Administrator (including a stock purchase agreement and a payroll deduction
authorization) and file such forms with the Plan Administrator (or its
designate) on or before his or her scheduled Entry Date.

VI. PAYROLL DEDUCTIONS

A. The payroll deduction authorized by the Participant for purposes
of acquiring shares of Common Stock during an offering period may be any
multiple of one percent (1%) of the Base Salary paid to the Participant during
each Purchase Interval within that offering period, up to a maximum of ten
percent (10%). The deduction rate so authorized shall continue in effect
throughout the offering period, except to the extent such rate is changed in
accordance with the following guidelines:

<PAGE> 57

(i) The Participant may, at any time during the offering period,
reduce his or her rate of payroll deduction to become effective as soon
as possible after filing the appropriate form with the Plan
Administrator. The Participant may not, however, effect more than one
(1) such reduction per Purchase Interval.

(ii) The Participant may, prior to the commencement of any new
Purchase Interval within the offering period, increase the rate of his
or her payroll deduction by filing the appropriate form with the Plan
Administrator. The new rate (which may not exceed the ten percent (10%)
maximum) shall become effective on the start date of the first Purchase
Interval following the filing of such form.

B. Payroll deductions shall begin on the first pay day
administratively feasible following the Participant's Entry Date into the
offering period and shall (unless sooner terminated by the Participant) continue
through the pay day ending with or immediately prior to the last day of that
offering period. The amounts so collected shall be credited to the Participant's
book account under the Plan, but no interest shall be paid on the balance from
time to time outstanding in such account. The amounts collected from the
Participant shall not be required to be held in any segregated account or trust
fund and may be commingled with the general assets of the Corporation and used
for general corporate purposes.

C. Payroll deductions shall automatically cease upon the termination
of the Participant's purchase right in accordance with the provisions of the
Plan.

D. The Participant's acquisition of Common Stock under the Plan on
any Purchase Date shall neither limit nor require the Participant's acquisition
of Common Stock on any subsequent Purchase Date, whether within the same or a
different offering period.

<PAGE> 58

VII. PURCHASE RIGHTS

A. GRANT OF PURCHASE RIGHT. A Participant shall be granted a
separate purchase right for each offering period in which he or she
participates. The purchase right shall be granted on the Participant's Entry
Date into the offering period and shall provide the Participant with the right
to purchase shares of Common Stock, in a series of successive installments over
the remainder of such offering period, upon the terms set forth below. The
Participant shall execute a stock purchase agreement embodying such terms and
such other provisions (not inconsistent with the Plan) as the Plan Administrator
may deem advisable.

Under no circumstances shall purchase rights be granted under the
Plan to any Eligible Employee if such individual would, immediately after the
grant, own (within the meaning of Code Section 424(d)) or hold outstanding
options or other rights to purchase, stock possessing five percent (5%) or more
of the total combined voting power or value of all classes of stock of the
Corporation or any Corporate Affiliate.

B. EXERCISE OF THE PURCHASE RIGHT. Each purchase right shall be
automatically exercised in installments on each successive Purchase Date within
the offering period, and shares of Common Stock shall accordingly be purchased
on behalf of each Participant (other than Participants whose payroll deductions
have previously been refunded pursuant to the Termination of Purchase Right
provisions below) on each such Purchase Date. The purchase shall be effected by
applying the Participant's payroll deductions for the Purchase Interval ending
on such Purchase Date to the purchase of whole shares of Common Stock at the
purchase price in effect for the Participant for that Purchase Date.

C. PURCHASE PRICE. The purchase price per share at which Common
Stock will be purchased on the Participant's behalf on each Purchase Date within
the offering period shall be equal to eighty-five percent (85%) of the lower of
(i) the Fair Market Value per share of Common Stock on the Participant's Entry
Date into that offering period or (ii) the Fair Market Value per share of Common
Stock on that Purchase Date.

D. NUMBER OF PURCHASABLE SHARES. The number of shares of Common
Stock purchasable by a Participant on each Purchase Date during the offering
period shall be the number of whole shares obtained by dividing the amount
collected from the Participant through payroll deductions during the Purchase
Interval ending with that Purchase Date by the purchase price in effect for the
Participant for that Purchase Date. However, the maximum number of shares of
Common Stock purchasable per Participant on any one Purchase Date shall not
exceed One Thousand Five Hundred (1,500) shares, subject to periodic adjustments
in the event of certain changes in the Corporation's capitalization. In
addition, the maximum aggregate number of shares of Common Stock purchasable by
all Participants on any one Purchase Date shall not exceed Sixty Thousand
(60,000) shares, subject to periodic adjustments in the event of certain changes
in the Corporation's capitalization.

E. EXCESS PAYROLL DEDUCTIONS. Any payroll deductions not applied to
the purchase of shares of Common Stock on any Purchase Date because they are not
sufficient to purchase a whole share of Common Stock shall be held for the
purchase of Common Stock on the next Purchase Date. However, any payroll
deductions not applied to the purchase of

<PAGE> 59

Common Stock by reason of the limitation on the maximum number of shares
purchasable on the Purchase Date shall be promptly refunded.

F. TERMINATION OF PURCHASE RIGHT. The following provisions shall
govern the termination of outstanding purchase rights:

(i) A Participant may, at any time prior to the next
scheduled Purchase Date in the offering period, terminate his or
her outstanding purchase right by filing the appropriate form
with the Plan Administrator (or its designate), and no further
payroll deductions shall be collected from the Participant with
respect to the terminated purchase right. Any payroll deductions
collected during the Purchase Interval in which such termination
occurs shall, at the Participant's election, be immediately
refunded or held for the purchase of shares on the next Purchase
Date. If no such election is made at the time such purchase
right is terminated, then the payroll deductions collected with
respect to the terminated right shall be refunded as soon as
possible.

(ii) The termination of such purchase right shall be
irrevocable, and the Participant may not subsequently rejoin the
offering period for which the terminated purchase right was
granted. In order to resume participation in any subsequent
offering period, such individual must re-enroll in the Plan (by
making a timely filing of the prescribed enrollment forms) on or
before his or her scheduled Entry Date into that offering
period.

(iii) Should the Participant cease to remain an Eligible
Employee for any reason (including death, disability or change
in status) while his or her purchase right remains outstanding,
then that purchase right shall immediately terminate, and all of
the Participant's payroll deductions for the Purchase Interval
in which the purchase right so terminates shall be immediately
refunded. However, should the Participant cease to remain in
active service by reason of an approved unpaid leave of absence,
then the Participant shall have the right, exercisable up until
the last business day of the Purchase Interval in which such
leave commences, to (a) withdraw all the payroll deductions
collected to date on his or her behalf for that Purchase
Interval or (b) have such funds held for the purchase of shares
on his or her behalf on the next scheduled Purchase Date. In no
event, however, shall any further payroll deductions be
collected on the Participant's behalf during such leave. Upon
the Participant's return to active service within (i) ninety
(90) days following the commencement of such leave or, if
longer, the period during which such Participant's right to
reemployment with the Corporation is guaranteed by either
statute or contract, his or her payroll deductions under the
Plan shall automatically resume at the rate in effect at the
time the leave began, unless the Participant withdraws from the
Plan prior to his or her return. If the Participant's leave of
absence, whether paid or unpaid, (i) exceeds ninety (90) days
and (ii) is not guaranteed by either statute or contract, then
the Participant's status as an Eligible Employee will be deemed
to have terminated on the ninety-first (91st) day of such leave,
and such Participant's purchase right for the offering period in
which such leave began shall thereupon

<PAGE> 60

terminate. An individual who returns to active employment
following such a leave will be treated as a new employee for
purposes of participating in the Plan and will accordingly have
a new Entry Date. Such an individual must re-enroll in the Plan
(by making a timely filing of the prescribed enrollment forms)
on or before his or her scheduled Entry Date into the offering
period.

G. CORPORATE TRANSACTION. Each outstanding purchase right shall
automatically be exercised, immediately prior to the effective date of any
Corporate Transaction, by applying the payroll deductions of each Participant
for the Purchase Interval in which such Corporate Transaction occurs to the
purchase of whole shares of Common Stock at a purchase price per share equal to
eighty-five percent (85%) of the lower of (i) the Fair Market Value per share of
Common Stock on the Participant's Entry Date into the offering period in which
such Corporate Transaction occurs or (ii) the Fair Market Value per share of
Common Stock immediately prior to the effective date of such Corporate
Transaction. However, the applicable limitation on the number of shares of
Common Stock purchasable per Participant and in the aggregate shall continue to
apply to any such purchase.

The Corporation shall use its best efforts to provide at least ten
(10)-days prior written notice of the occurrence of any Corporate Transaction,
and Participants shall, following the receipt of such notice, have the right to
terminate their outstanding purchase rights prior to the effective date of the
Corporate Transaction.

H. PRORATION OF PURCHASE RIGHTS. Should the total number of shares of
Common Stock to be purchased pursuant to outstanding purchase rights on any
particular date exceed the number of shares then available for issuance under
the Plan, the Plan Administrator shall make a pro-rata allocation of the
available shares on a uniform and nondiscriminatory basis, and the payroll
deductions of each Participant, to the extent in excess of the aggregate
purchase price payable for the Common Stock pro-rated to such individual, shall
be refunded.

I. ASSIGNABILITY. The purchase right shall be exercisable only by the
Participant and shall not be assignable or transferable by the Participant.

J. STOCKHOLDER RIGHTS. A Participant shall have no stockholder rights
with respect to the shares subject to his or her outstanding purchase right
until the shares are purchased on the Participant's behalf in accordance with
the provisions of the Plan and the Participant has become a holder of record of
the purchased shares.

VIII. ACCRUAL LIMITATIONS

A. No Participant shall be entitled to accrue rights to acquire
Common Stock pursuant to any purchase right outstanding under this Plan if and
to the extent such accrual, when aggregated with (i) rights to purchase Common
Stock accrued under any other purchase right granted under this Plan and (ii)
similar rights accrued under other employee stock purchase plans (within the
meaning of Code Section 423) of the Corporation or any Corporate Affiliate,
would otherwise permit such Participant to purchase more than Twenty-Five
Thousand Dollars ($25,000) worth of stock of the Corporation or any Corporate
Affiliate (determined on the basis

<PAGE> 61

of the Fair Market Value per share on the date or dates such rights are granted)
for each calendar year such rights are at any time outstanding.

B. For purposes of applying such accrual limitations to the purchase
rights granted under the Plan, the following provisions shall be in effect:

(i) The right to acquire Common Stock under each
outstanding purchase right shall accrue in a series of installments
on each successive Purchase Date during the offering period on which
such right remains outstanding.

(ii) No right to acquire Common Stock under any
outstanding purchase right shall accrue to the extent the Participant
has already accrued in the same calendar year the right to acquire
Common Stock under one (1) or more other purchase rights at a rate
equal to Twenty-Five Thousand Dollars ($25,000) worth of Common Stock
(determined on the basis of the Fair Market Value per share on the
date or dates of grant) for each calendar year such rights were at
any time outstanding.

C. If by reason of such accrual limitations, any purchase right of a
Participant does not accrue for a particular Purchase Interval, then the payroll
deductions which the Participant made during that Purchase Interval with respect
to such purchase right shall be promptly refunded.

D. In the event there is any conflict between the provisions of this
Article and one or more provisions of the Plan or any instrument issued
thereunder, the provisions of this Article shall be controlling.

IX. EFFECTIVE DATE AND TERM OF THE PLAN

A. The Plan was adopted by the Board on March 10, 1998 and shall
become effective at the Effective Time, provided no purchase rights granted
under the Plan shall be exercised, and no shares of Common Stock shall be issued
hereunder, until (i) the Plan shall have been approved by the stockholders of
the Corporation and (ii) the Corporation shall have complied with all applicable
requirements of the 1933 Act (including the registration of the shares of Common
Stock issuable under the Plan on a Form S-8 registration statement filed with
the Securities and Exchange Commission), all applicable listing requirements of
any stock exchange (or the Nasdaq National Market, if applicable) on which the
Common Stock is listed for trading and all other applicable requirements
established by law or regulation. In the event such stockholder approval is not
obtained, or such compliance is not effected, within twelve (12) months after
the date on which the Plan is adopted by the Board, the Plan shall terminate and
have no further force or effect, and all sums collected from Participants during
the initial offering period hereunder shall be refunded.

B. Unless sooner terminated by the Board, the Plan shall terminate
upon the earliest of (i) the last business day in April 2008, (ii) the date on
which all shares available for issuance under the Plan shall have been sold
pursuant to purchase rights exercised under the Plan or (iii) the date on which
all purchase rights are exercised in connection with a Corporate

<PAGE> 62

Transaction. No further purchase rights shall be granted or exercised, and no
further payroll deductions shall be collected, under the Plan following such
termination.

X. AMENDMENT OF THE PLAN

A. The Board may alter, amend, suspend or terminate the Plan at any
time to become effective immediately following the close of any Purchase
Interval. However, the Plan may be amended or terminated immediately upon Board
action, if and to the extent necessary to assure that the Corporation will not
recognize, for financial reporting purposes, any compensation expense in
connection with the shares of Common Stock offered for purchase under the Plan,
should the financial accounting rules applicable to the Plan at the Effective
Time be subsequently revised so as to require the recognition of compensation
expense in the absence of such amendment or termination.

B. The Board amended the Plan, subject to approval of the
Corporation's stockholders at the Corporation's 2000 Annual Meeting, to increase
the shares reserved under the Plan by four hundred and fifty thousand (450,000)
shares, for a total share reserve of seven hundred thousand (700,000) shares.

C. In no event may the Board effect any of the following amendments
or revisions to the Plan without the approval of the Corporation's stockholders:
(i) increase the number of shares of Common Stock issuable under the Plan or the
maximum number of shares purchasable per Participant on any one Purchase Date,
except for permissible adjustments in the event of certain changes in the
Corporation's capitalization, (ii) alter the purchase price formula so as to
reduce the purchase price payable for the shares of Common Stock purchasable
under the Plan or (iii) modify eligibility requirements for participation in the
Plan.

XI. GENERAL PROVISIONS

A. All costs and expenses incurred in the administration of the Plan
shall be paid by the Corporation; however, each Plan Participant shall bear all
costs and expenses incurred by such individual in the sale or other disposition
of any shares purchased under the Plan.

B. Nothing in the Plan shall confer upon the Participant any right to
continue in the employ of the Corporation or any Corporate Affiliate for any
period of specific duration or interfere with or otherwise restrict in any way
the rights of the Corporation (or any Corporate Affiliate employing such person)
or of the Participant, which rights are hereby expressly reserved by each, to
terminate such person's employment at any time for any reason, with or without
cause.

C. The provisions of the Plan shall be governed by the laws of the
State of California without resort to that State's conflict-of-laws rules.

<PAGE> 63

SCHEDULE A

CORPORATIONS PARTICIPATING IN
EMPLOYEE STOCK PURCHASE PLAN
AS OF THE EFFECTIVE TIME

COM21, Inc.

<PAGE> 64

APPENDIX

The following definitions shall be in effect under the Plan:

A. BASE SALARY shall mean the (i) regular base salary paid to a
Participant by one or more Participating Companies during such individual's
period of participation in one or more offering periods under the Plan plus (ii)
any pre-tax contributions made by the Participant to any Code Section 401(k)
salary deferral plan or any Code Section 125 cafeteria benefit program now or
hereafter established by the Corporation or any Corporate Affiliate. The
following items of compensation shall NOT be included in Base Salary: (i) all
overtime payments, bonuses, commissions (other than those functioning as base
salary equivalents), profit-sharing distributions and other incentive-type
payments and (ii) any and all contributions (other than Code Section 401(k) or
Code Section 125 contributions) made on the Participant's behalf by the
Corporation or any Corporate Affiliate under any employee benefit or welfare
plan now or hereafter established.

B. BOARD shall mean the Corporation's Board of Directors.

C. CODE shall mean the Internal Revenue Code of 1986, as amended.

D. COMMON STOCK shall mean the Corporation's common stock.

E. CORPORATE AFFILIATE shall mean any parent or subsidiary corporation
of the Corporation (as determined in accordance with Code Section 424), whether
now existing or subsequently established.

F. CORPORATE TRANSACTION shall mean either of the following
stockholder-approved transactions to which the Corporation is a party:

(ii) the sale, transfer or other disposition of all or
substantially all of the assets of the Corporation in complete
liquidation or dissolution of the Corporation.

G. CORPORATION shall mean Com21, Inc., a Delaware corporation, and any
corporate successor to all or substantially all of the assets or voting stock of
Com21, Inc. which shall by appropriate action adopt the Plan.

H. EFFECTIVE TIME shall mean the time at which the Underwriting
Agreement is executed and finally priced. Any Corporate Affiliate which becomes
a Participating Corporation after such Effective Time shall designate a
subsequent Effective Time with respect to its employee-Participants.

<PAGE> 65

I. ELIGIBLE EMPLOYEE shall mean any person who is employed by a
Participating Corporation on a basis under which he or she is regularly expected
to render more than twenty (20) hours of service per week for more than five (5)
months per calendar year for earnings considered wages under Code Section
3401(a).

J. ENTRY DATE shall mean the date an Eligible Employee first commences
participation in the offering period in effect under the Plan. The earliest
Entry Date under the Plan shall be the Effective Time.

K. FAIR MARKET VALUE per share of Common Stock on any relevant date
shall be determined in accordance with the following provisions:

(i) If the Common Stock is at the time traded on the Nasdaq
National Market, then the Fair Market Value shall be the closing selling
price per share of Common Stock on the date in question, as such price
is reported by the National Association of Securities Dealers on the
Nasdaq National Market or any successor system. If there is no closing
selling price for the Common Stock on the date in question, then the
Fair Market Value shall be the closing selling price on the last
preceding date for which such quotation exists.

(ii) If the Common Stock is at the time listed on any Stock
Exchange, then the Fair Market Value shall be the closing selling price
per share of Common Stock on the date in question on the Stock Exchange
determined by the Plan Administrator to be the primary market for the
Common Stock, as such price is officially quoted in the composite tape
of transactions on such exchange. If there is no closing selling price
for the Common Stock on the date in question, then the Fair Market Value
shall be the closing selling price on the last preceding date for which
such quotation exists.

(iii) For purposes of the initial offering period which begins
at the Effective Time, the Fair Market Value shall be deemed to be equal
to the price per share at which the Common Stock is sold in the initial
public offering pursuant to the Underwriting Agreement.

L. 1933 ACT shall mean the Securities Act of 1933, as amended.

M. PARTICIPANT shall mean any Eligible Employee of a Participating
Corporation who is actively participating in the Plan.

N. PARTICIPATING CORPORATION shall mean the Corporation and such
Corporate Affiliate or Affiliates as may be authorized from time to time by the
Board to extend the benefits of the Plan to their Eligible Employees. The
Participating Corporations in the Plan are listed in attached Schedule A.

O. PLAN shall mean the Corporation's 1998 Employee Stock Purchase Plan,
as set forth in this document.

<PAGE> 66

P. PLAN ADMINISTRATOR shall mean the committee of two (2) or more Board
members appointed by the Board to administer the Plan.

Q. PURCHASE DATE shall mean the last business day of each Purchase
Interval. The initial Purchase Date shall be October 30, 1998.

R. PURCHASE INTERVAL shall mean each successive six (6)-month period
within the offering period at the end of which there shall be purchased shares
of Common Stock on behalf of each Participant.

S. SEMI-ANNUAL ENTRY DATE shall mean the first business day in November
and November each year on which an Eligible Employee may first enter an offering
period.

T. STOCK EXCHANGE shall mean either the American Stock Exchange or the
New York Stock Exchange.

U. UNDERWRITING AGREEMENT shall mean the agreement between the
Corporation and the underwriter or underwriters managing the initial public
offering of the Common Stock.

<PAGE> 67

AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
COM21, INC.

Com21, Inc., (the "Corporation") a corporation organized and
existing under and by virtue of the general Corporation Law of the State of
Delaware, hereby certifies as follows:

FIRST: The name of the corporation is Com21, Inc. and that
corporation was originally incorporated on June 29, 1992 pursuant to the General
Corporation Law.

SECOND:This Amended and Restated Certificate of Incorporation has
been duly adopted in accordance with the provisions of Sections 245 and 242 of
the General Corporation Law of the State of Delaware by the directors and
stockholders of the Corporation and is set forth in its entirety as follows:

ARTICLE I

The name of the corporation is Com21, Inc.

ARTICLE II

The address of the Corporation's registered office in the State of
Delaware is 1013 Centre Road, Wilimington, County of New Castle, Delaware 19805.
The name of its registered agent at such address is The Prentice-Hall
Corporation System, Inc.

ARTICLE III

The purpose of the Corporation is to engage in any lawful act or
activity for which corporations may be organized under the General Corporation
Law of the State of Delaware (the "GCL").

ARTICLE IV

A. Classes of Stock. The Corporation is authorized to issue two
classes of stock, to be designated, respectively, "Common Stock" and "Preferred
Stock." The total number of shares that the Corporation is authorized to issue
is One Hundred Sixty Five Million (165,000,000) shares. One Hundred Sixty
Million (160,000,000) shares shall be Common Stock, par value $0.001 per share
and Five Million (5,000,000) shares shall be Preferred Stock, par value $0.001
per share.

<PAGE> 68

is hereby authorized to fix or alter the powers, preferences, rights and
restrictions granted to or imposed upon each series of Preferred Stock, and the
number of shares constituting any such series and the designation thereof, or of
any of them. The powers, preferences, rights and restrictions of any such
additional series may be subordinated to, pari passu with (including, without
limitation, inclusion in provisions with respect to liquidation and acquisition
preferences, redemption and/or approval of matters by vote), or senior to any of
those of any present or future class or series of Preferred Stock or Common
Stock. The Board of Directors is also authorized to increase or decrease the
number of shares of any series prior or subsequent to the issue of that series,
but not below the number of shares of such series then outstanding. In case the
number of shares of any series shall be so decreased, the shares constituting
such decrease shall resume the status which they had prior to the adoption of
the resolution originally fixing the number of shares of such series.

C. Common Stock.

1. Dividend Rights. Subject to the prior rights of holders of
all classes of stock at the time outstanding having prior rights as to
dividends, the holders of the Common Stock shall be entitled to receive, when
and as declared by the Board of Directors, out of any assets of the Corporation
legally available therefor, such dividends as may be declared from time to time
by the Board of Directors.

2. Liquidation Rights. In the event of any voluntary or
involuntary liquidation, dissolution or winding up of the Corporation, after
distribution of the preferential amounts to be distributed to the holders of
shares of the Preferred Stock, the holders of shares of the Common Stock shall
be entitled to receive all of the remaining assets of the Corporation available
for distribution to its stockholders, ratably in proportion to the number of
shares of the Common Stock held by them.

3. Redemption. The Common Stock is not redeemable.

4. Voting Rights. The holder of each share of Common Stock shall
have the right to one vote, and shall be entitled to notice of any stockholders'
meeting in accordance with the Bylaws of this Corporation, and shall be entitled
to vote upon such matters and in such manner as may be provided by law.

ARTICLE V

Except as otherwise provided in this Amended and Restated
Certificate of Incorporation, in furtherance and not in limitation of the powers
conferred by statute, the Board of Directors is expressly authorized to make,
repeal, alter, amend and rescind any or all of the Bylaws of the Corporation.

ARTICLE VI

In furtherance and not in limitation of the powers conferred by
statute and subject to the provisions of Article VII:

<PAGE> 69

A. The Board of Directors of the Corporation is expressly authorized
to adopt, amend, alter, or repeal the Bylaws of the Corporation.

B. Elections of directors need not be by written ballot unless the
Bylaws of the Corporation shall so provide.

C. Meetings of stockholders may be held within or without the State
of Delaware as the Bylaws may provide. The books of the Corporation may be kept
at such place within or without the State of Delaware as the Bylaws of the
Corporation may provide or as may be designated from time to time by the Board
of Directors of the Corporation.

ARTICLE VII

A director of this Corporation, to the full extent permitted by the
GCL as it now exists or as it may hereafter be amended, shall not be personally
liable to the Corporation or its stockholders for monetary damages for breach of
fiduciary duty as a director. Neither any amendment nor repeal of this Article
NINTH, nor the adoption of any provision of this Amended and Restated
Certificate of Incorporation inconsistent with this Article NINTH, shall
eliminate or reduce the effect of this Article NINTH in respect of any matter
occurring, or any cause of action, suit or claim that, but for this Article
NINTH, would accrue or arise, prior to such amendment, repeal or adoption of an
inconsistent provision. If the GCL is amended after approval by the stockholders
of this Article NINTH to authorize corporate action further eliminating or
limiting the personal liability of directors, then the liability of a director
of the Corporation shall be eliminated or limited to the fullest extent
permitted by the GCL as so amended.

Any repeal or modification of the foregoing provisions of this
Article NINTH by the stockholders of the Corporation shall not adversely affect
any right or protection of a director of the Corporation existing at the time of
such repeal or modification.

ARTICLE VIII

To the full extent permitted by the GCL and any other applicable
law, this Corporation is also authorized to provide indemnification of, and
advancement of expenses to, such directors, officers, employees and agents
through Bylaw provisions, agreements with such persons, vote of stockholders or
disinterested directors or otherwise, in excess of the indemnification and
advancement otherwise permitted by Section 145 of the GCL, subject only to
limits created by applicable Delaware law (statutory or non-statutory), with
respect to actions for breach of duty to this Corporation, its stockholders, and
others.

Any repeal or modification of any of the foregoing provisions of
this Article TENTH shall not adversely affect any right or protection of a
director, officer, agent or other person existing at the time of, or increase
the liability of any director of this Corporation with

<PAGE> 70

respect to any acts or omissions of such director, officer or agent occurring
prior to such repeal or modification.

ARTICLE IX

The Corporation reserves the right to amend, alter, change or repeal
any provision contained in this Amended and Restated Certificate of
Incorporation, in the manner now or hereafter prescribed by statute, and all
rights conferred upon stockholders herein are granted subject to this
reservation.

<PAGE> 71

IN WITNESS WHEREOF, the Corporation has caused this Amended and
Restated Certificate of Incorporation to be signed by Peter D. Fenner, its
President, and attested to by David L. Robertson, its Chief Financial Officer
and Secretary, on this __ day of _________, 2000.

COM21,INC.

By:
Peter D. Fenner
President and Chief Executive Officer

ATTEST:

- -------------------------------------
David L. Robertson,
Chief Financial Officer and Secretary

<PAGE> 72

<TABLE>
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<S> <C>
COM21, INC.
PROXY
ANNUAL MEETING OF STOCKHOLDERS
MAY 25, 2000

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

The undersigned, hereby appoints Peter D. Fenner and David L. Robertson and each of them as Proxies of the undersigned, with
full power of substitution, and hereby authorizes them to represent and to vote, as designated below, all of the shares of Common
Stock of Com21, Inc. (the "Company"), held of record by the undersigned on March 31, 2000 at the Annual Meeting of Stockholders of
Com21, Inc. to be held on May 25, 2000, or at any adjournment or postponement thereof.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSAL NOS. 1, 2, 3, 4, 5 AND 6. THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE
VOTED AS SPECIFIED ON THE REVERSE SIDE. THIS PROXY WILL BE VOTED FOR PROPOSAL NOS. 1, 2, 3, 4, 5 AND 6 IF NO SPECIFICATION IS MADE.

1. To elect eight directors to serve for a one-year term ending or until their successors are duly elected and qualified.
FOR all nominees WITHHOLD AUTHORITY EXCEPTIONS
listed below

INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE MARK THE "EXCEPTIONS" BOX, AND STRIKE A LINE THROUGH THE
NOMINEE'S NAME IN THE LIST BELOW:

Peter D. Fenner Robert C. Hawk
Paul Baran Daniel J. Pike
C. Richard Kramlich James Spilker, Jr.
Jerald L. Kent Robert W. Wilmot

2. To approve an amendment to the Company's Amended and Restated Certificate of Incorporation to increase the number of shares
authorized for issuance.

FOR AGAINST ABSTAIN
(continued, and to be signed, on the other side)
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3. To approve the implementation of the Com21, Inc. 2000 Stock Option Plan pursuant to which 1,500,000 shares of Com21's common
stock will be reserved for issuance to individuals in Com21's service, including officers, employees, Board members and
independent consultants.

FOR AGAINST ABSTAIN

4. To approve an additional 450,000 shares authorized for issuance under Com21's Employee Stock Purchase Plan.

FOR AGAINST ABSTAIN

5. To ratify the appointment of Deloitte & Touche LLP as independent auditors of the Company for the fiscal year ending
December 31, 1999.

FOR AGAINST ABSTAIN

6. In their discretion, the Proxies are authorized to vote upon such other matters as may properly come before the meeting,
including the election of any director if any of the above nominees is unable to serve or for good cause will not serve.

Please sign exactly as your name(s) is (are) shown on the share certificate to which the Proxy applies. When shares are
held by joint tenants, both should sign. When signing as an attorney, executor, administrator, trustee or guardian, please give full
title as such. If a corporation, please sign in full corporate name by President or other authorized officer. If a partnership,
please sign in partnership name by authorized person.

DATED: , 1999
------------------------------------------------------------------

-----------------------------------------------------------------------------
Signature
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(Additional signature if held jointly)

PLEASE SIGN, DATE AND RETURN THIS PROXY PROMPTLY USING THE ENCLOSED ENVELOPE.

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