Document:

EXHIBIT 4.1

                                 LIMITED WAIVER
                                       TO
                           REVOLVING CREDIT AGREEMENT

      This LIMITED WAIVER TO CREDIT AGREEMENT is made and entered into as of
February 13, 2001 (this "WAIVER"), among (a) ITEQ, INC., a Delaware corporation
(the "BORROWER"), (b) THE GUARANTORS signatories hereto as guarantors, (c) FLEET
NATIONAL BANK (f/k/a/ BankBoston, N.A.), a national banking association having
its principal place of business at 100 Federal Street, Boston, Massachusetts
02110 (acting in its individual capacity, "Fleet"), and the other lending
institutions which are or become parties to the Credit Agreement defined below
(together with Fleet, the "BANKS"), (D) DEUTSCHE BANK AG, as documentation agent
(the "DOCUMENTATION AGENT"), and (e) FLEET NATIONAL BANK, as agent for the Banks
(acting in such capacity, the "AGENT"). Capitalized terms used herein without
definition shall have the meanings assigned to such terms in the Credit
Agreement defined below.

      WHEREAS, the Borrower, the Guarantors, the Banks, the Documentation Agent
and the Agent have entered into the Revolving Credit Agreement, dated as of
October 28, 1997 (as amended and in effect from time to time, the "CREDIT
AGREEMENT"), pursuant to which the Banks have extended credit to the Borrower on
the terms set forth therein;

      WHEREAS, the Borrower has requested that the Banks and the Agent suspend
or waive certain covenants and other provisions contained in the Credit
Agreement and other Loan Documents; and

      WHEREAS, the Banks and the Agent have agreed to honor such requests upon
the terms and subject to the conditions contained herein;

      NOW, THEREFORE, in consideration of the foregoing, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows:

      SS.1. DEFINITIONS. As used in this Waiver, the following terms have the
meanings set forth below:

      AMEREX. Amerex Industries, Inc., a Delaware corporation.

      AMEREX ASSETS. The assets of Amerex to be sold.

      AMEREX SALE. The sale by the Borrower or one or more of its Subsidiaries
of the Amerex Assets.

      HOULIHAN. Houlihan Lokey Howard & Zukin LLP.

      HOULIHAN ENGAGEMENT LETTER. The letter agreement dated May 3, 2000,
between the Borrower and Houlihan, as modified by the addendum letter dated June
14, 2000, between the Borrower and Houlihan,
<PAGE>
                                      -2-

and without giving effect to any further amendments thereto unless approved by
the Agent and the Majority Banks.

      NET CASH PROCEEDS. For the Amerex Sale, the gross cash proceeds of the
Amerex Sale MINUS, the sum of (a) the amount of the transaction fee payable by
the Borrower to Houlihan under the Houlihan Engagement Letter for the Amerex
Sale, and (b) the reasonable amount of any other fees and expenses charged to
the Borrower and constituting the direct transaction costs of the Amerex Sale.

      NINTH AMENDMENT. The Limited Waiver and Ninth Amendment dated as of July
7, 2000 entered into by the Borrower, the Guarantors, the Banks and the Agent.

      REQUISITE BANKS. For the purposes ofss.ss.2 and 4, the Requisite Banks are
the Majority Banks. For purposes ofss.3, the Requisite Banks are all of the
Banks.

      SS.2. LIMITED SUSPENSION OF CERTAIN FINANCIAL COVENANTS.

      (a) Subject to the satisfaction of the conditions precedent set forth in
ss.5 and in consideration and reliance upon the agreements of the Borrower and
the Guarantors contained herein, the Banks and the Agent hereby agree
temporarily to suspend the Borrower's obligation to comply with Sections 8.1,
8.2, 8.3, 8.4, 8.5, 8.6 and 8.7 of the Credit Agreement and Section 2(a)(ii) of
the Ninth Amendment (the "SPECIFIED COVENANTS") from February 15, 2001 until 5
p.m., Boston time, on March 15, 2001 (or such earlier date as this Waiver may
expire pursuant to ss.2(b) hereof); PROVIDED, that each of the following
conditions are satisfied throughout such period:

            (i) the Borrower will not make or permit any Subsidiary to make,
      Capital Expenditures or enter into Capitalized Leases and operating leases
      with rental obligations, in an aggregate amount greater than $750,000 for
      all such Capital Expenditures, Capitalized Leases and rental obligations
      for the period from June 29, 2000 to March 15, 2001,

            (ii) the Borrower shall have provided to the Banks and the Agent,
      within 10 days following the end of each month, a certificate signed by
      the Borrower's chief financial officer certifying as to the Borrower's
      compliance with each of the conditions for such month as set forth herein,
      together with the details thereof as reasonably requested by the Agent.

      (b) At the earliest of (i) 5:00 p.m., Boston time, on March 15, 2001, (ii)
any condition set forth in ss.2(a) not being met, (iii) the occurrence of any
other Event of Default (other than the Borrower's failure to comply with the
Specified Covenants through March 15, 2001), and (iv) the Agent, at any time on
or after March 5, 2001, giving written notice to the Borrower and
<PAGE>
                                      -3-

the Guarantors of the termination of the suspension of the Borrower's
obligations to comply with the Specified Covenants, the provisions of ss.2(a)
shall expire and be of no further force or effect, and the Banks and the Agent
shall thereupon have all of the rights and remedies set forth in the Credit
Agreement and the other Loan Documents as if the Borrower's compliance with the
Specified Covenants of the Credit Agreement and the Ninth Amendment had never
been suspended. Such rights and remedies include the right to declare all of the
Obligations due and payable by reason of the Borrower's failure to comply with
the Specified Covenants and to exercise all rights and remedies against the
Borrower, the Guarantors and the Collateral.

      (c) The waiver set forth in ss.2(a) shall apply only to the Specified
Covenants. No waiver with respect to any other Default or Event of Default,
whether presently existing or hereafter arising, is granted hereby. Any
obligation to make Swing Line Loans, to make Revolving Credit Loans or to issue,
extend or renew Letters of Credit shall, at all times, be subject to the
satisfaction of all of the terms and conditions of the Credit Agreement,
including, without limitation, the conditions precedent set forth in the Credit
Agreement. The Banks and the Agent shall, at all times, retain all of the rights
and remedies in respect of any Default or Event of Default under the Credit
Agreement other than, during the limited period described in ss.2(a), with
respect to the Specified Covenants.

      SS.3. LIMITED WAIVER REGARDING SALES OF CERTAIN ASSETS.

      (a) The Banks and the Agent hereby consent to the Amerex Sale, to the
release by the Agent of the Agent's security interest in the Amerex Assets
applicable to the Amerex Sale, PROVIDED that, for the Amerex Sale, each of the
following conditions are met:

            (i) 100% of the Net Cash Proceeds of the Amerex Sale, if not paid
      directly to the Agent by the buyer, shall, upon receipt by the Borrower or
      any Subsidiary of such Net Cash Proceeds, be forthwith paid to the Agent
      for application to the Obligations;

            (ii) the gross cash proceeds of the Amerex Sale shall be no less
      than $2,850,000 for the Amerex Sale and the Net Cash Proceeds shall be no
      less than $2,285,000;

            (iii) the Agent is released (or other arrangements completely
      satisfactory to the Agent are made by which the Banks are released from
      their participations therein) from any Letter of Credit issued for the
      benefit of Amerex and the then Letter of Credit Commitment shall be
      permanently and automatically reduced pursuant to ss.3.1(d) of the Credit
      Agreement, such reduction to be effective at the time of such release;
<PAGE>
                                      -4-

            (iv) each of the then Total Commitment and the then Revolver
      Commitment (and if applicable, the then Letter of Credit Commitment),
      shall be permanently and automatically reduced pursuant to ss.2.12 of the
      Credit Agreement, such reduction to be effective at the time at which such
      Net Cash Proceeds are first received by the Borrower or any Subsidiary (or
      by the Agent on its or their behalf);

            (v) the Agent's security interest under the Security Documents shall
      attach, on a first perfected basis, to any non-cash proceeds of the Amerex
      Sale, the Borrower hereby agreeing to, and to cause any applicable
      Subsidiary to:

                  (A) deliver any such non-cash proceeds consisting of
            instruments or investment property, together with indorsements and
            stock powers executed in blank, to the Agent to hold as Collateral
            under the Security Documents,

                  (B) permit the Agent to notify any escrow agent of the Agent's
            security interest, for the benefit of the Banks and the Agent, in
            any Escrow Funds (as defined in the Eighth Amendment), and cause the
            escrow agent to agree, at the time of the establishment of the
            escrow, using irrevocable instructions satisfactory to the Agent, to
            deliver the Escrow Funds, to the Agent, without further consent of
            the Borrower or such Subsidiary, for application to the Obligations,
            to such extent and at such time as delivery would otherwise be
            available to the Borrower or such Subsidiary under the terms of the
            escrow; and

                  (C) take any other action as may be necessary or, in the
            opinion of the Agent, advisable for the Agent to perfect and to
            maintain its perfection and priority of such security interest,

            (vi) the Agent and its counsel shall have reviewed and shall be
      reasonably satisfied with the terms and conditions of the purchase and
      sale agreement for the Amerex Sale, any escrow arrangements, and all
      related documents as well as the identity of the buyer thereunder to the
      extent not previously disclosed to the Banks and the Agent; and

            (vii) unless otherwise waived in writing by the Majority Banks,
      after otherwise giving effect to this Waiver, no Default or Event of
      Default shall have occurred and shall be continuing at the time of
      completion of the Amerex Sale or would occur as a result thereof.

      (b) Upon satisfaction of the conditions set forth in ss.3(a) for the
Amerex Sale, the Agent is instructed by the Banks to provide such Uniform
Commercial Code or other releases and confirmations of releases of the
<PAGE>
                                      -5-

Agent's security interest in the Amerex Assets sold under the Amerex Sale. The
Agent shall be entitled to assume that any factual condition set forth in
ss.3(a), not evident from the Agent's own books and records, has been met unless
the officers of the Agent active upon the Borrower's account have actual
knowledge that such condition has not been met.

      (c) Solely with respect to provisions concerning the Amerex Sale, the
provisions of this ss.3 supersede ss.3 of the Limited Waiver dated as of
December 28, 2000 entered into by the Borrower, the Guarantors, the Banks and
the Agent.

      SS.4. LIMITED SUSPENSION OF CLOSING FEE. Subject to the satisfaction of
the conditions precedent set forth in ss.5 and in consideration and reliance
upon the agreements of the Borrower and the Guarantors contained herein, the
Banks and the Agent hereby agree temporarily to suspend the Borrower's
obligation to make the Second Payment (as defined in the Ninth Amendment) of the
Closing Fee (as defined in the Ninth Amendment) from February 15, 2001 until 5
p.m., Boston time, on March 15, 2001; PROVIDED, that each of the conditions set
forth in ss.2(a) are satisfied throughout such period.

      SS.5. CONDITIONS TO EFFECTIVENESS. This Waiver shall not become effective
unless on or prior to 5:00 p.m., Boston time, on February 15, 2001:

      (a) this Waiver shall have been executed and delivered by the Borrower,
the Guarantors, the Requisite Banks and the Agent;

      (b) the Agent shall have received evidence satisfactory to it of
appropriate corporate or other entity actions approving the terms and conditions
set forth herein; and

      (c) the Borrower shall have reimbursed the Agent for, or paid directly,
all fees, costs, and expenses incurred by the Agent, its counsel and their
professional advisors and for which invoices have been delivered.

      SS.6.   REPRESENTATIONS AND WARRANTIES.

      SS.6.1. REPRESENTATIONS AND WARRANTIES IN CREDIT AGREEMENT. The Borrower
hereby represents and warrants to the Banks and the Agent that each of the
representations and warranties of the Borrower contained in the Credit Agreement
as modified hereby or in any document or instrument delivered pursuant to or in
connection with the Credit Agreement as modified hereby are true as of the date
hereof (except to the extent of changes resulting from transactions contemplated
or permitted by the Credit Agreement and changes occurring in the ordinary
course of business which singly or in the aggregate are not materially adverse,
or to the extent that such representations and warranties relate solely and
expressly to an earlier date) and, taking into account this Waiver, no Default
or Event of Default has occurred and is continuing.
<PAGE>
                                      -6-

      SS.6.2. AUTHORITY, NO CONFLICTS, ETC. The Borrower hereby represents and
warrants to the Banks and the Agent that the execution, delivery and performance
of this Waiver and the transactions contemplated hereby (i) are within the
corporate authority of the Borrower and the Guarantors, (ii) have been duly
authorized by all necessary corporate proceedings, (iii) do not conflict with or
result in any material breach or contravention of any provision of law, statute,
rule or regulation to which the Borrower or any Guarantor is subject or any
judgment, order, writ, injunction, license or permit applicable to the Borrower
or Guarantors so as to materially adversely affect the assets, business or any
activity of the Borrower or Guarantors, and (iv) do not conflict with any
provision of the corporate charter or bylaws of the Borrower or Guarantors or
any agreement or other instrument binding upon them. The execution, delivery and
performance of this Waiver will result in valid and legally binding obligations
of the Borrower and Guarantors enforceable against each in accordance with the
respective terms and provisions hereof.

      SS.6.3. CERTAIN SUBSIDIARIES. The Borrower hereby represents, warrants and
covenants to the Banks and the Agent that its Subsidiaries ITEQ Management, LLC,
ITEQ Tank, LLC and ITEQ Tank Construction, LLC have no assets and are not
conducting any business and will not acquire any assets or conduct any business
other than assets or operations of a DE MINIMIS value that are in the process of
being liquidated or wound down.

      SS.7. RATIFICATION, ETC. This Waiver is limited to the waivers and
amendments to the Credit Agreement set forth herein and upon the terms and
subject to the conditions contained herein. Except as expressly stated herein,
the Credit Agreement, the other Loan Documents and all documents, instruments
and agreements related thereto are hereby ratified and confirmed in all respects
and shall continue in full force and effect. This Waiver is a Loan Document.

      SS.8. RELEASE. In order to induce the Agent and the Banks to enter into
this Waiver, each of the Borrower and the Guarantors acknowledges and agrees
that: (i) neither the Borrower nor any Guarantor has any claim or cause of
action against the Agent or any Bank (or any of its respective directors,
officers, employees or agents); (ii) neither the Borrower nor any Guarantor has
any offset right, counterclaim or defense of any kind against any of their
respective obligations, indebtedness or liabilities to the Agent or any Bank;
and (iii) each of the Agent and the Banks has heretofore properly performed and
satisfied in a timely manner all of its obligations to the Borrower and each
Guarantor. The Borrower and the Guarantors wish to eliminate any possibility
that any past conditions, acts, omissions, events, circumstances or matters
would impair or otherwise adversely affect any of the Agent's and the Banks'
rights, interests, contracts, collateral security or remedies. Therefore, each
of the Borrower and the Guarantors unconditionally releases, waives and forever
discharges (A) any and all liabilities, obligations, duties, promises or
indebtedness of any kind of the Agent or any Bank to either the Borrower and any
Guarantor, except the
<PAGE>
                                      -7-

obligations to be performed by the Agent or any Bank on or after the date hereof
as expressly stated in this Waiver, the Credit Agreement and the other Loan
Documents, and (B) all claims, offsets, causes of action, suits or defenses of
any kind whatsoever (if any), whether arising at law or in equity, whether known
or unknown, which the Borrower or any Guarantor might otherwise have against the
Agent, any Bank or any of its directors, officers, employees or agents, in
either case (A) or (B), on account of any past or presently existing condition,
act, omission, event, contract, liability, obligation, indebtedness, claim,
cause of action, defense, circumstance or matter of any kind.

      SS.9. COUNTERPARTS. This Waiver may be executed in any number of
counterparts, which together shall constitute one instrument.

      SS.10. GOVERNING LAW. THIS WAIVER SHALL BE A CONTRACT UNDER THE LAWS OF
THE COMMONWEALTH OF MASSACHUSETTS, SHALL FOR ALL PURPOSES BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE INTERNAL LAWS OF SAID JURISDICTION, WITHOUT
REFERENCE TO CONFLICTS OF LAW, AND IS INTENDED TO TAKE EFFECT AS A SEALED
INSTRUMENT.
<PAGE>
      IN WITNESS WHEREOF, the parties hereto have executed this Waiver as an
instrument under seal to be effective as of the date first above written.

THE BORROWER:

ITEQ, INC.

By:/S/ WILLIAM P. REID
   Name: William P. Reid
   Title: President and CEO
<PAGE>

THE GUARANTORS:

ITEQ MANAGEMENT COMPANY
 EXELL, INC. (a Delaware corporation which is
  successor by merger to EXELL. INC., a Texas
  corporation)
 ITEQ TANK SERVICES, INC. (successor by
  merger to HMT TANK SERVICE, INC.)
 RELIABLE STEEL, INC.
 AIR-CURE DYNAMICS, INC.
 AMEREX INDUSTRIES, INC.
 OHMSTEDE, INC.
 INTEREL ENVIRONMENTAL
  TECHNOLOGIES, INC.
 ALLIED INDUSTRIES, INC.
 ITEQ CONSTRUCTION SERVICES, INC.
  (f/k/a HMT CONSTRUCTION SERVICES,
  INC.)
 ITEQ INTELLECTUAL PROPERTIES, INC.
  (f/x/a AIX INTELLECTUAL PROPERTIES,
  INC.)
 ITEQ INVESTMENTS, INC. (f/k/a
  ASTROTECH INVESTMENTS, INC.)
 TEXOMA TANK COMPANY, INC.
 ITEQ STORAGE SYSTEMS, INC. (f/k/a
  BROWN-MINNEAPOLIS TANK &
  FABRICATING CO., successor by merger to
  HMT, INC., HMT SENTRY SYSTEMS, INC.
  and TRUSCO TANK, INC.)
 G.L.M. ACQUISITION, L.L.C.
 AIR-CURE (CANADA) TECHNOLOGIES, LTC.
 G.L.M. TANKS & EQUIPMENT LTD.

 By: /S/ WILLIAM P. REID
   Name: William P. Reid
   Title: President
<PAGE>
THE LENDERS:

FLEET NATIONAL BANK,
(f/k/a BankBoston, N.A.)
  individually and as Agent

By: /S/ RICHARD E. LYNCH
   Name: Richard E. Lynch
   Title: Vice President

DEUTSCHE BANK AG,
  individually and as Documentation Agent

By: /S/ MARK COHEN
   Name:  Mark Cohen
   Title: Managing Director

By: /S/ CLARK PETERSON
   Name:  Clark Peterson
   Title: Associate

BANK OF SCOTLAND

By: /S/ JOSEPH FRATUS
   Name: Joseph Fratus
   Title: Vice President

BANK ONE, TEXAS, N.A.

By: /S/ C. DIANNE WODLEY
   Name: C. Dianne Wodley
   Title: First Vice President
<PAGE>
BNP PARIBAS (f/k/a Paribas f/k/a Banque Paribas)

By: /S/ EDWARD V. CANALE
   Name: Edward V. Canale
   Title: Managing Director

By: /S/ KATHRYN B. QUINN
   Name: Kathryn B. Quinn
   Title: Vice President

COMERICA BANK

By: /S/ HENRY HAJDAS
   Name: Henry Hajdas
   Title: Senior Vice President

THE FUJI BANK, LIMITED

By: /S/ YUJI TANAKA
   Name: Yugi Tanaka
   Title: Vice President & Manager

HIBERNIA NATIONAL BANK

By: /S/ TAMMY ANGELETY
   Name: Tammy Angelety
   Title: Vice President

BANK OF AMERICA, N.A. (f/k/a NationsBank, N.A.)

By: /S/ MICHAEL W. COLON
   Name: Michael W. Colon
   Title: Principal

<PAGE>
UNION BANK OF CALIFORNIA, N.A.

By: /S/ JOEL STEINER
   Name: Joel Steiner
   Title: Vice President

CHASE MANHATTAN BANK
  (f/k/a Chase Bank of Texas, N.A. f/k/a Texas Commerce Bank, N.A.)

By: /S/ BRUCE A. SHILCUTT
   Name: Bruce A. Shilcutt
   Title: Vice President<PAGE>   1

                                                                   Exhibit 10.15

                                    AGREEMENT

                               BETWEEN COM21, INC.

                        AND FLETCHER INTERNATIONAL, LTD.

                          DATED AS OF FEBRUARY 28, 2001

<PAGE>   2

                             INDEX OF DEFINED TERMS

<TABLE>
<CAPTION>
                                                                                   PAGE
                                                                                   ----
<S>                                                                                <C>
65 Day Notice ......................................................................13
Acquirer      ......................................................................18
Agreement     .....................................................................1-1
Audit Report  .......................................................................6
Average Price ......................................................................12
Benefit Plans .......................................................................5
Blackout Period......................................................................9
Blackout Violation...................................................................9
Claim         .......................................................................6
Closing       .......................................................................1
Closing Date  .......................................................................1
Com21         .......................................................................1
Com21 Indemnified Party.............................................................21
Combination   ......................................................................18
Common Shares .......................................................................1
Common Stock  ..............................................................1, 25, B-1
Covered Security.....................................................................7
Debt          .......................................................................6
Excess Notice Date..................................................................12
Excess Rights ......................................................................12
Excess Rights Notice................................................................12
Exchange Act  .......................................................................1
Exercisable Number..................................................................13
First Refusal Stockholders..........................................................14
Fletcher      .....................................................................1-1
Fletcher Indemnified Party..........................................................20
Increase      ......................................................................13
Increase Notice.....................................................................13
Indemnification Amount..............................................................10
Indemnified Party...................................................................22
Indemnifying Party..................................................................22
Investment Securities................................................................1
Issuance Blockage...................................................................11
Maximum Number......................................................................13
NASDAQ        ......................................................................17
Notice Period ......................................................................13
Offer Notice  ......................................................................15
</TABLE>

                                        i

<PAGE>   3

<TABLE>
<S>                                                                                <C>
Offered Shares......................................................................14
Original Number.....................................................................11
Preferred Stock......................................................................5
Proceeding    ......................................................................21
Prospectus    .......................................................................7
Registrable Number...................................................................7
Registration Requirement.............................................................7
Registration Statement...............................................................7
Related Proceeding..................................................................26
Required Consent....................................................................11
Required Registration Date...........................................................7
Rule 144      .......................................................................7
Sales Contract.......................................................................9
SEC           .......................................................................4
SEC Filing    .......................................................................4
Securities Act.......................................................................4
Trading Day   .......................................................................1
Trigger Date  ......................................................................11
Warrant       .......................................................................1
Warrant Exercise Delivery Notice....................................................11
Warrant Exercise Notice.............................................................11
</TABLE>

                                       ii

<PAGE>   4

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                            PAGE
                                                                            ----
<S>                                                                         <C>
       1.     Purchase and Sale...............................................1

       2.     Closing.........................................................2

       3.     Representations and Warranties of Com21.........................2

       4.     Registration Provisions.........................................6

       5.     "Market Stand-Off" Agreement...................................10

       6.     Exercise of Warrant............................................11

       7.     Representations and Warranties of Fletcher.....................13

       8.     Right of First Refusal.........................................14

       9.     Covenants of Com21.............................................17

       10.    Consolidation, Merger, Etc.....................................18

       11.    Covenants of Fletcher..........................................18

       12.    Legend.........................................................19

       13.    Conditions Precedent to Fletcher's Obligations.................19

       14.    Conditions Precedent to Com21's Obligations....................20

       15.    Fees and Expenses..............................................20

       16.    Non-Performance................................................20

       17.    Indemnification................................................20

       18.    Survival of the Representations, Warranties, etc...............23

       19.    Notices........................................................23
</TABLE>

                                       iii

<PAGE>   5

<TABLE>
<S>                                                                         <C>
       20.    Miscellaneous..................................................25

       21.    Com21's Obligations............................................27

       22.    Time of Essence................................................27

ANNEX A.....................................................................A-1

ANNEX B.....................................................................B-1

ANNEX C.....................................................................C-1

ANNEX D.....................................................................D-1
</TABLE>

                                       iv

<PAGE>   6

                                    AGREEMENT

               This Agreement (this "Agreement") dated as of February 28, 2001
is entered into by and between Com21, Inc., a corporation organized under the
laws of Delaware (together with its successors, "Com21"), and Fletcher
International, Ltd., a company domiciled in Bermuda (together with its
successors, "Fletcher").

               The parties hereto agree as follows:

               1. Purchase and Sale. In consideration of and upon the basis of
the representations, warranties and agreements and subject to the terms and
conditions set forth in this Agreement:

                      a. Fletcher agrees to purchase from Com21, and Com21
        agrees to sell to Fletcher on the Closing Date (as defined below), in
        accordance with Section 2 below, 2,450,000 shares of Com21's common
        stock, par value $.001 per share (the "Common Stock"), at a per share
        purchase price equal to $3.1227. In addition, Com21 shall issue to
        Fletcher on the Closing Date one warrant in the form attached hereto as
        Annex A (a "Warrant") to purchase from time to time up to an aggregate
        of 2,450,000 shares (subject to the adjustments contained in the Warrant
        and this Agreement) at a per share purchase price equal to $9.0951 per
        share. Fletcher shall have the right to exercise the Warrant in the
        manner, and subject to the terms, specified in this Agreement and in the
        Warrant.

                      b. The closing (the "Closing") of the sale of the shares
        of Common Stock to be issued hereunder shall occur on the Trading Day
        following the satisfaction or, if applicable, waiver of the conditions
        set forth in Sections 13 and 14 hereof, but in no event later than March
        5, 2001, or at such other date and time as Fletcher and Com21 shall
        mutually agree (the "Closing Date"). As used herein, the term "Common
        Shares" means all shares of Common Stock issued and/or issuable under
        any provision of this Agreement or upon exercise of the Warrant; the
        term "Investment Securities" means the Warrant and all Common Shares;
        the term "Trading Day" means any day on which the Common Stock may be
        traded on the NASDAQ; and the term "NASDAQ" means the NASDAQ National
        Market, provided, however, that if the NASDAQ is not then the principal
        U.S. trading market for the Common Stock, then "NASDAQ" shall be deemed
        to mean the principal U.S. national securities exchange (as defined in
        the Securities Exchange Act of 1934, as amended (the "Exchange Act")) on
        which the Common Stock is then traded, or if such Common Stock is not
        then listed or admitted to trading on any national securities exchange
        but is designated as a national market system security or a Nasdaq
        SmallCap Market Security by the NASD, then such market system, or if
        such

<PAGE>   7

        Common Stock is not listed or quoted on any of the foregoing, then the
        OTC Bulletin Board.

               2. Closing. The Closing shall take place initially via facsimile
on the Closing Date in the manner set forth below; provided that original
certificates representing the Common Shares sold and purchased on the Closing
Date shall be delivered via Federal Express on the second Trading Day following
the Closing Date to Fletcher as Fletcher instructs in writing. At the Closing,
the following deliveries shall be made:

                      a. Common Stock and Warrant. Com21 shall deliver to
        Fletcher twenty-four (24) stock certificates, each representing 100,000
        shares of Common Stock and one (1) stock certificate representing 50,000
        shares of Common Stock, together with one Warrant duly executed by Com21
        in definitive form, in each case duly registered on the books of Com21
        as instructed by Fletcher.

                      b. Purchase Price. Fletcher shall cause to be wire
        transferred to Com21, in accordance with the instructions set forth in
        Section 19, the aggregate purchase price of $7,650,615.00 in immediately
        available United States dollars.

                      c. Closing Documents. The closing documents required by
        Sections 13 and 14 shall be delivered to Fletcher and Com21,
        respectively.

                      d. Delivery Notice. An executed copy of the delivery
        notice in the form attached hereto as Annex B shall be delivered to
        Fletcher.

The deliveries specified in this Section 2 shall be deemed to occur
simultaneously as part of a single transaction, and no delivery shall be deemed
to have been made until all such deliveries have been made.

               3. Representations and Warranties of Com21. Except as set forth
on the Schedule of Exceptions attached hereto, Com21 hereby represents and
warrants to Fletcher on the Closing Date and on each Warrant Date (as defined in
the Warrant), as follows:

                      a. Com21 has been duly incorporated and is validly
        existing in good standing under the laws of Delaware or, after the
        Closing Date, if another entity has succeeded Com21 in accordance with
        the terms hereof, under the laws of one of the states of the United
        States.

                      b. The execution, delivery and performance of this
        Agreement and the Warrant by Com21 (including the issuance of the
        Investment Securities) have been duly authorized by all requisite
        corporate action and no further consent or authorization of Com21, its
        Board of Directors or its stockholders is required.

                                        2

<PAGE>   8

                      c. This Agreement has been duly executed and delivered by
        Com21 and, when this Agreement is duly authorized, executed and
        delivered by Fletcher, will be a valid and binding agreement enforceable
        against Com21 in accordance with its terms, subject to bankruptcy,
        insolvency, reorganization, moratorium and similar laws of general
        applicability relating to or affecting creditors' rights generally and
        to general principles of equity.

                      d. Com21 has full corporate power and authority necessary
        to execute and deliver this Agreement and to perform its obligations
        hereunder and under the Warrant (including the issuance of the
        Investment Securities).

                      e. No consent, approval, authorization or order of any
        court, governmental agency or other body is required for execution and
        delivery by Com21 of this Agreement or the performance by Com21 of any
        of its obligations hereunder and under the Warrant other than such as
        may already have been received.

                      f. Neither the execution and delivery by Com21 of this
        Agreement nor the performance by Com21 of any of its obligations
        hereunder and under the Warrant:

                             (i) violates, conflicts with, results in a breach
               of, or constitutes a default (or an event which with the giving
               of notice or the lapse of time or both would be reasonably likely
               to constitute a default) under (A) the certificates of
               incorporation or by-laws of Com21 or any of its subsidiaries, (B)
               any decree, judgment, order, law, treaty, rule, regulation or
               determination of which Com21 is aware (or would be aware after
               due inquiry) of any court, governmental agency or body, or
               arbitrator having jurisdiction over Com21 or any of its
               subsidiaries or any of their respective properties or assets, (C)
               the terms of any bond, debenture, note or any other evidence of
               indebtedness, or any agreement, stock option or other similar
               plan, indenture, lease, mortgage, deed of trust or other
               instrument to which Com21 or any of its subsidiaries is a party,
               by which Com21 or any of its subsidiaries is bound, or to which
               any of the properties or assets of Com21 or any of its
               subsidiaries is subject, (D) the terms of any "lock-up" or
               similar provision of any underwriting or similar agreement to
               which Com21 or any of its subsidiaries is a party or (E) any rule
               or regulation of the National Association of Securities Dealers,
               Inc. or the NASDAQ (subject to obtaining any Required Consent
               under circumstances contemplated by Section 6(b) of this
               Agreement) or any rule or regulation of the markets where Com21's
               securities are publicly traded applicable to Com21 or the
               transactions contemplated hereby; or

                             (ii) results in the creation or imposition of any
               lien, charge or encumbrance upon any Investment Securities or
               upon any of the properties or assets of Com21 or any of its
               subsidiaries.

                                        3

<PAGE>   9

                      g. Com21 has validly reserved for issuance to Fletcher
        2,450,000 shares of Common Stock pursuant to this Agreement and
        2,450,000 shares of Common Stock for issuance upon exercise of the
        Warrant. When issued to Fletcher against payment therefor, each
        Investment Security:

                             (1) will have been duly and validly authorized,
               duly and validly issued, fully paid and non-assessable;

                             (2) will be free and clear of any security
               interests, liens, claims or other encumbrances; and

                             (3) will not have been issued or sold in violation
               of any preemptive or other similar rights of the holders of any
               securities of Com21.

                      h. Com21 satisfies all listing and maintenance criteria of
        the NASDAQ or, after the Closing Date, has a valid exemption from such
        criteria of which it has previously notified Fletcher in writing. To the
        Company's knowledge, no present set of facts or circumstances as of the
        date hereof that would (with the passage of time or the giving of notice
        or both or neither) cause any of the Common Stock to be delisted from
        the NASDAQ. As of the date hereof, the Company knows of no reason that
        would prevent all of the Covered Securities (as defined in Section
        4(b)), when issued, from being duly listed and admitted for trading on
        all of the markets where shares of Common Stock are traded, including
        the NASDAQ.

                      i. There is no pending or, to the best knowledge of Com21,
        threatened action, suit, proceeding or investigation before any court,
        governmental agency or body, or arbitrator having jurisdiction over
        Com21 or any of its affiliates that would affect the execution by Com21
        of, or the performance by Com21 of its obligations under, this Agreement
        or the Warrant.

                      j. Since December 31, 1997, none of Com21's filings with
        the United States Securities and Exchange Commission (the "SEC") under
        the Securities Act of 1933, as amended (the "Securities Act") or under
        Section 13(a) or 15(d) of the Exchange Act (each an "SEC Filing")
        contained any untrue statement of a material fact or omitted to state
        any material fact necessary in order to make the statements, in the
        light of the circumstances under which they were made, not misleading.
        Since the date of Com21's most recent SEC Filing, there has not been,
        and Com21 is not aware of, any development that is reasonably likely to
        result in any material adverse change in the condition, financial or
        otherwise, or in the business affairs or prospects of Com21, whether or
        not arising in the ordinary course of business.

                                        4

<PAGE>   10

                      k. The offer and sale of the Investment Securities to
        Fletcher pursuant to this Agreement will, subject to compliance by
        Fletcher with the applicable represen tations and warranties contained
        in Section 7 hereof and with the applicable covenants and agreements
        contained in Section 11 hereof, be made in accordance with the
        provisions and requirements of Securities Act Section 4(2) or Regulation
        D promulgated under the Securities Act and any applicable state law.

                      l. As of the date hereof, the authorized capital stock of
        Com21 consists of 160,000,000 shares of Common Stock and 5,000,000
        shares of preferred stock, par value $.001 ("Preferred Stock"). As of
        February 28, 2001, (A) 24,947,696 shares of Common Stock and no shares
        of Preferred Stock were issued and outstanding, (B) 6,079,115 shares of
        Common Stock are currently reserved and subject to issuance upon the
        exercise of outstanding stock options, warrants or other convertible
        rights, (C) no shares of Common Stock are held in the treasury of Com21,
        (D) up to 1,287,356 additional shares of Common Stock may be issued
        under the 1998 Stock Option/Stock Issuance Plan and the 2000 Stock
        Option/Stock Issuance Plan (collectively, the "Benefit Plans"), and (E)
        up to 469,134 shares of Common Stock may be issued under the 1998
        Employee Stock Purchase Plan. As of the Closing Date, before the
        transactions contemplated hereby no less than 24,500,000 shares of
        Common Stock are issued and outstanding. All of the outstanding shares
        of Common Stock are, and all shares of capital stock which may be issued
        pursuant to stock options, warrants or other convertible rights will be,
        when issued and paid for in accordance with the respective terms
        thereof, duly authorized, validly issued, fully paid and non-assessable
        and free of any preemptive rights in respect thereof. As of the date
        hereof, except as set forth above, and except for shares of Common Stock
        or other securities issued upon conversion, exchange, exercise or
        purchase associated with the securities, options, warrants, rights and
        other instruments referenced above, no shares of capital stock or other
        voting securities of Com21 were outstanding, no equity equivalents,
        interests in the ownership or earnings of Com21 or other similar rights
        were outstanding, and there were no existing options, warrants, calls,
        subscriptions or other rights or agreements or commitments relating to
        the capital stock of Com21 or any of its subsidiaries or obligating
        Com21 or any of its subsidiaries to issue, transfer, sell or redeem any
        shares of capital stock, or other equity interest in, Com21 or any of
        its subsidiaries or obligating Com21 or any of its subsidiaries to
        grant, extend or enter into any such option, warrant, call, subscription
        or other right, agreement or commitment. Attached hereto as Schedule
        3(l) is a true and correct list as of the date of this Agreement of all
        outstanding options, warrants, calls, subscriptions and other rights or
        agreements or commitments relating to the issuance of additional shares
        of capital stock of Com21 and with respect to each a description of the
        number and class of securities and the exercise price thereof; provided
        that with respect to options or shares issued or issuable under the
        Benefit Plans, such schedule may summarize the total number of shares
        subject to, the range of exercise prices under and the average exercise
        prices of such options, warrants, calls, or other rights issued under
        the Benefit Plans.

                                        5

<PAGE>   11

                      m. Solvency. The sum of the assets of Com21, both at a
        fair valuation and at present fair salable value, exceeds its
        liabilities, including contingent liabilities, Com21 has sufficient
        capital with which to conduct its business as presently conducted and as
        proposed to be conducted and Com21 has not incurred debts, and does not
        intend to incur debts, beyond its ability to pay such debts as they
        mature. For purposes of this paragraph, "debt" means any liability on a
        claim, and "claim" means (x) a right to payment, whether or not such
        right is reduced to judgment, liquidated, unliquidated, fixed,
        contingent, matured, unmatured, disputed, undisputed, legal, equitable,
        secured, or unsecured, or (y) a right to an equitable remedy for breach
        of performance if such breach gives rise to a payment, whether or not
        such right to an equitable remedy is reduced to judgment, fixed,
        contingent, matured, unmatured, disputed, undisputed, secured, or
        unsecured. With respect to any such contingent liabilities, such
        liabilities are computed at the amount which, in light of all the facts
        and circumstances existing at the time, represents the amount which can
        reasonably be expected to become an actual or matured liability.

                      n. Audited Financials. Attached hereto as Annex C is a
        true, correct and complete copy of (i) the report of Deloitte & Touche
        to the board of directors and stockholders of Com21, dated January 21,
        2000, together with the consolidated statements of operations and
        comprehensive loss, stockholders' equity and cash flows for the fiscal
        years ended December 31, 1997, December 31, 1998, and December 31, 1999,
        and the consolidated balance sheets at December 31, 1998 and at December
        31, 1999, as such report appears in the Annual Report on Form 10-K for
        the fiscal year ended December 31, 1999 (the "Audit Report"), and (ii)
        the condensed consolidated statements of operations, and the pro forma
        condensed consolidated statements of operations for each of the three
        month and twelve month periods ending December 31, 1999 and December 31,
        2000, and the condensed consolidated balance sheets as at December 31,
        1999 and December 31, 2000, in each case as contained in its press
        release filed on February 15, 2001 on Form 8-K with the SEC. To the best
        of Com21's knowledge, the unaudited financials attached at subsection
        (ii) hereof: (x) were prepared in accordance with the books of account
        and other financial records of Com21 and its subsidiaries, (y) present
        fairly in all material respects the consolidated financial condition,
        results of operations and pro forma results of operations of Com21 and
        its subsidiaries as of the dates thereof or for the periods covered
        thereby and (z) have been prepared in accordance with U.S. generally
        accepted accounting principles applied on a basis consistent with the
        past practices of Com21.

                      o. No Non-Public Information. Fletcher has not requested
        from Com21, and Com21 has not furnished to Fletcher, any material
        non-public information concerning Com21 or its subsidiaries.

               4. Registration Provisions.

                                        6

<PAGE>   12

                      a. Com21 shall as soon as practicable and at its own
        expense, but in no event later than thirty (30) days after the Closing
        Date, file a Registration Statement (as defined below) under the
        Securities Act covering the resale of all of the Common Shares and shall
        use its best efforts to cause such Registration Statement to be declared
        effective as soon as practicable, but not later than the ninetieth
        (90th) day following the Closing Date (the "Required Registration
        Date"). The obligations to have the Registration Statement declared
        effective and to maintain such effectiveness as provided in this Section
        4 (subject to any Blackout Period that does not constitute a Blackout
        Violation) are referred to herein as the "Registration Requirement."
        Pursuant to the preceding sentence, Com21 shall register pursuant to
        such Registration Statement not less than the number of shares of Common
        Stock equal at least to the sum of (x) the Common Shares issuable under
        the Warrant plus (y) 2,450,000 (as of any given date, the "Registrable
        Number"). Com21 shall promptly amend such Registration Statement (or, if
        necessary, file a new Registration Statement) at any time that the
        number of Common Shares issued and issuable under this Agreement and the
        Warrant exceeds the number of shares then registered so that the
        Registrable Number (as determined on such date) of Common Shares shall
        be registered and freely tradable.

                      b. Each Common Share is a "Covered Security" and the
        registration statement filed or required to be filed under the
        Securities Act in accordance with Section 4.a hereof is referred to as
        the "Registration Statement". Com21 shall provide prompt written notice
        to Fletcher when the Registration Statement has been declared effective
        by the SEC.

                      c. Com21 will use its best efforts to: (A) keep the
        Registration Statement effective until the earlier of (x) the later of
        (i) the second anniversary of the issuance of the last Covered Security
        that may be issued, or (ii) such time as all of the Covered Securities
        issued or issuable to Fletcher can be sold by Fletcher or any of its
        affiliates within a three (3)-month period without compliance with the
        registration requirements of the Securities Act pursuant to Rule 144
        under the Securities Act ("Rule 144") or (y) the date all of the Covered
        Securities issued or issuable shall have been sold by Fletcher; (B)
        prepare and file with the SEC such amendments and supple ments to the
        Registration Statement and the prospectus used in connection with the
        Registration Statement (as so amended and supplemented from time to
        time, the "Prospectus") as may be necessary to comply with the
        provisions of the Securities Act with respect to the disposition of all
        Covered Securities by Fletcher or any of its affiliates; (C) furnish
        such number of Prospectuses and other documents incident thereto,
        including any amendment of or supplement to the Prospectus, as Fletcher
        from time to time may reasonably request; (D) cause all Covered
        Securities to be listed on each securities exchange and quoted on each
        quotation service on which similar securities issued by Com21 are then
        listed or quoted; (E) provide a transfer agent and registrar for all
        Covered Securities and a CUSIP number for all Covered Securities; (F)
        otherwise comply with all applicable rules and regulations of the SEC,
        the NASDAQ and any other exchange or

                                        7

<PAGE>   13

        quotation service on which the Covered Securities are obligated to be
        listed or quoted under this Agreement; and (G) file the documents
        required of Com21, if any, and otherwise obtain and maintain requisite
        blue sky clearance in (x) New York, Delaware and all other jurisdictions
        in which any of the shares of Common Stock were originally sold and (y)
        all other states specified in writing by Fletcher, provided, however,
        that as to this clause (y), Com21 shall not be required to qualify to do
        business or consent to service of process in any state in which it is
        not now so qualified or has not so consented. Fletcher shall have the
        right to approve the description of the plan of distribution and all
        other references to Fletcher contained in any Registration Statement and
        any Prospectus; provided, however, that Fletcher shall approve or reject
        such descriptions or references within two (2) Trading Days after being
        provided with the final forms of such descriptions and references, and
        if such approval or rejection is not given within two Trading Days,
        Fletcher shall be deemed to have given such approval.

                      d. Com21 shall furnish to Fletcher upon request a
        reasonable number of copies of a supplement to or an amendment of any
        Prospectus as may be necessary in order to facilitate the public sale or
        other disposition of all or any of the Covered Securities by Fletcher or
        any of its affiliates pursuant to the Registration Statement.

                      e. With a view to making available to Fletcher and its
        affiliates the benefits of Rule 144 and Form S-3 under the Securities
        Act, Com21 covenants and agrees to: (A) make and keep available adequate
        current public information (within the meaning of Rule 144(c))
        concerning Com21, until the earlier of (x) the second anniversary of the
        issuance of the last Covered Security to be issued or (y) such date as
        all of the Covered Securities shall have been resold by Fletcher or any
        of its affiliates; and (B) furnish to Fletcher upon request, as long as
        Fletcher owns any Covered Securities, (x) a written statement by Com21
        that it has complied with the reporting requirements of the Securities
        Act and the Exchange Act, (y) a copy of the most recent annual or
        quarterly report of Com21, and (z) such other information as may be
        reasonably requested in order to avail Fletcher and its affiliates of
        Rule 144 or Form S-3 with respect to such Covered Securities.

                      f. Notwithstanding anything else in this Section 4, if, at
        any time during which a Prospectus is required to be delivered in
        connection with the sale of any Covered Security, Com21 determines in
        good faith that a development has occurred or a condition exists as a
        result of which the Registration Statement or the Prospectus contains a
        material misstatement or omission, or that a material transaction in
        which Com21 is engaged or proposes to engage would require an amendment
        to the Registration Statement or a supplement to the Prospectus and the
        disclosure of such transaction would be premature or injurious to the
        consummation of the transaction, Com21 will immediately notify Fletcher
        thereof by telephone and in writing. Upon receipt of such notification,
        Fletcher and its affiliates will immediately suspend all offers and
        sales of any Covered Security pursuant to the Registration Statement. In
        such event, Com21 will

                                        8

<PAGE>   14

        amend or supplement the Registration Statement as promptly as
        practicable and will use its best efforts to take such other steps as
        may be required to permit sales of the Covered Securities thereunder by
        Fletcher and its affiliates in accordance with applicable federal and
        state securities laws. Com21 will promptly notify Fletcher after it has
        determined in good faith that such sales have become permissible in such
        manner and will promptly deliver copies of the Registration Statement
        and the Prospectus (as so amended or supplemented) to Fletcher in
        accordance with paragraphs (c) and (d) of this Section 4.
        Notwithstanding the foregoing, (A) under no circumstances shall Com21 be
        entitled to exercise its right to suspend sales of any Covered
        Securities pursuant to the Registration Statement more than twice in any
        twelve (12)-month period, (B) the period during which such sales may be
        suspended (each a "Blackout Period") shall not exceed thirty (30) days,
        and (C) no Blackout Period may commence less than thirty (30) days after
        the end of the preceding Blackout Period. If any Blackout Period shall
        exceed the duration or frequency limits set forth in clause (A), (B) or
        (C) (a "Blackout Violation"), then on each such occasion the number of
        shares issuable pursuant to the Warrant shall be increased by an amount
        equal to five percent (5%) of the sum of the number of outstanding
        Common Shares held by Fletcher at that time and the number of Common
        Shares then issuable pursuant to the Warrant at that time. If the
        Blackout Violation continues for more than thirty (30) days beyond the
        first day of the Blackout Violation, or if a second Blackout Violation
        occurs before the first anniversary of the first day of the original
        Blackout Violation, then the number of shares issuable pursuant to the
        Warrant shall again be increased by an amount equal to five percent (5%)
        of the sum of the number of outstanding Common Shares held by Fletcher
        at that time and the number of Common Shares then issuable pursuant to
        the Warrant at that time, provided that not more than one such
        additional increase shall take effect in any twelve (12)-month period
        and provided further that a Blackout Violation that continues on the
        anniversary of the first day of such Blackout Violation shall be treated
        as a new Blackout Violation hereunder. The provisions of this section
        shall be in addition to any other remedies that may be available to
        Fletcher under law or under this Agreement.

               Upon the commencement of a Blackout Period pursuant to this
        Section 4, Fletcher will notify Com21 of any contract to sell, assign,
        deliver or otherwise transfer any Covered Security (each a "Sales
        Contract") that Fletcher or any of its affiliates has entered into prior
        to the commencement of such Blackout Period and that would require
        delivery of such Covered Securities during such Blackout Period, which
        notice will contain the aggregate sale price and volume of Covered
        Securities pursuant to such Sales Contract. Upon receipt of such notice,
        Com21 will notify Fletcher by the close of business on the next Trading
        Day of its election either (i) to terminate the Blackout Period and, as
        promptly as practicable, amend or supplement the Registration Statement
        or the Prospectus in order to correct the material misstatement or
        omission and deliver to Fletcher copies of such amended or supplemented
        Registration Statement and Prospectus in accordance with paragraphs (c)
        and (d) of this Section 4, or (ii) to continue the Black out Period in
        accordance with this paragraph. If Com21 elects to continue the Blackout

                                        9

<PAGE>   15

        Period (and, in any case, if a Blackout Violation occurs), and Fletcher
        or any of its affiliates are therefore unable to consummate the sale of
        Covered Securities pursuant to the Sales Contract (such unsold Covered
        Securities being the "Unsold Securities"), Com21 will promptly indemnify
        each Fletcher Indemnified Party (as such term is defined in Section
        17(a) below) against any Proceeding (as such term is defined in Section
        17(a) below) that each Fletcher Indemnified Party may incur arising out
        of or in connection with Fletcher's breach or alleged breach of any such
        Sales Contract, and Com21 shall reimburse each Fletcher Indemnified
        Party for any reasonable costs or expenses (includ ing reasonable legal
        fees) incurred by such party in investigating or defending any such
        Proceeding (collectively, the "Indemnification Amount"); provided,
        however, that the Indemnification Amount shall be reduced by an amount
        equal to the number of Unsold Securities multiplied by the positive
        difference, if any, between (x) the actual per share price received by
        Fletcher or any of its affiliates upon the sale of the Unsold Securities
        (if such sale occurs within three Trading Days of the end of the
        Blackout Period) or the closing sale price of the Common Stock on NASDAQ
        or other national securities exchange on which the Common Stock is then
        listed on the third Trading Day after the end of the Blackout Period (if
        the unsold Securities are not sold by Fletcher or any of its affiliates
        within three Trading Days of the end of the Blackout Period) and (y) the
        per share sales price for the Unsold Securities provided in such Sales
        Contract.

                      g. In addition to any other remedies available to Fletcher
        under this Agreement, if the Registration Statement has not been
        declared effective by the Required Registration Date or such
        Registration Statement is not available with respect to all Covered
        Securities (except during a Blackout Period or a Blackout Violation),
        then the number of shares issuable pursuant to the Warrant shall be
        increased by an amount equal to five percent (5%) of the sum of the
        number of outstanding Common Shares held by Fletcher at that time and
        the number of Common Shares then issuable pursuant to the Warrant at
        that time for each month (or portion thereof), compounded monthly, that
        such Registration Statement shall not have been declared effective or
        such Registration Statement is not available with respect to all Covered
        Securities (except during a Blackout Period or a Blackout Violation).

               5. "Market Stand-Off" Agreement. If requested by Com21 and an
underwriter in a firm commitment underwritten public offering of Common Stock
with net proceeds of at least $25,000,000 to Com21, after underwriter's
discounts or commissions and other fees or expenses, Fletcher shall not sell or
otherwise transfer or dispose of any Common Stock (other than Common Stock
included in the registration) during the ninety (90) day period (or such shorter
period, if so notified by Com21 in writing) following the effective date of a
registration statement of Com21 filed under the Securities Act, provided that:

                      a. such agreement shall only apply to registration
        statements of Com21 including securities to be sold on its behalf to the
        public in an underwritten offering where the effective date of any such
        registration statement shall not occur before

                                       10

<PAGE>   16

        the first anniversary of the effective date of the immediately prior
        registration statement with respect to which Fletcher was required to
        provide such agreement;

                      b. all officers and directors of Com21 have entered into
        similar agreements;

                      c. all other purchasers of Common Stock (other than
        subsequent holders who acquire such securities through bona fide
        purchases in the public markets or holders that, individually or
        together as part of an affiliated group, hold less than 100,000 shares
        of Common Stock) or Preferred Stock (or any securities or other
        instruments convertible into Common Stock) have entered into agreements
        substantially similar to this section;

                      d. Com21 shall (and shall cause such underwriter to) use
        best efforts to cause such stand-off period not to exist or, if it does
        exist, to terminate at the earliest practicable date;

                      e. Fletcher shall own more than 100,000 shares on the
        effective date of such registration statement; and

                      f. the Warrant shall have not expired. . The obligations
        described in this Section 5 shall not apply to a registration relating
        solely to employee benefit plans on Form S-1 or Form S-8 or similar
        forms that may be promulgated in the future, or a registration relating
        solely to a transaction on Form S-4 or similar forms that may be
        promulgated in the future.

               6. Exercise of Warrant.

                      a. The Warrant is exercisable into Common Shares in
        accordance with the terms and conditions set forth in the Warrant. The
        form of the "Warrant Exercise Notice" to be executed and delivered by
        Fletcher to Com21 as specified therein is attached as Exhibit 1 to the
        Warrant and the form of the "Warrant Exercise Delivery Notice" to be
        executed and delivered by Com21 to Fletcher as specified therein is
        attached as Exhibit 2 to the Warrant.

                      b. In the event the number of Common Shares issued and/or
        issuable on any date (a "Trigger Date") without regard to any 65 Day
        Notice requirements, would result in Fletcher receiving more than
        seventeen and one-half percent (17.5%) of the shares of Common Stock
        outstanding as of the date of this Agreement (the "Original Number"),
        Com21 (A) shall not issue Common Shares (the "Issuance Blockage") to the
        extent that the total number of Common Shares issued hereunder would
        exceed nineteen and ninety-nine one-hundredths percent (19.99%) of the
        Original Number and such circumstance would require the approval (the
        "Required Consent") of the holders of

                                       11

<PAGE>   17
        Common Stock pursuant to the listing requirements or rules of the NASDAQ
        (whether or not listed on NASDAQ) (or such other U.S. national
        securities exchange on which Common Stock is then listed), (B) shall
        notify Com21's stockholders of a stockholder meeting for the purpose of
        voting on the Required Consent within twenty (20) Trading Days from the
        Trigger Date, which meeting shall be held on or before the sixtieth
        (60th) calendar day after the Trigger Date, and (C) shall otherwise use
        its best efforts to obtain, on or before the sixtieth (60th) day after
        the Trigger Date, the Required Consent for the issuance of all Common
        Shares issued or issuable under this Agreement (including, but not
        limited to, all previously issued Common Shares and any unexercised
        rights under the Warrant) including, but not limited to, recommending to
        Com21's stockholders that such stockholders give the Required Consent
        and not withdrawing such recommendation. If the Required Consent has not
        been obtained within such sixty (60)-day period, or Com21 otherwise does
        not have sufficient authorized shares to fulfill its obligation,
        Fletcher shall have the right to:

                (x) instruct Com21 to apply to the payment required by Section 1
                of the Warrant such number of the shares of Common Stock
                otherwise issuable to Fletcher upon such exercise as shall be
                specified by Fletcher, in which case an amount equal to the
                excess of (i) (A) the daily volume-weighted average price on the
                NASDAQ or, if no such sale takes place on such date, the average
                of the closing bid and asked prices on the NASDAQ thereof on
                such date, in each case as reported by Bloomberg, L.P. (or by
                such other entity as Fletcher and Com21 may agree), or (B) if
                such Common Stock is not then listed or admitted to trading on
                the NASDAQ, the higher of (1) the book value thereof as
                determined by any firm of independent public accountants of
                recognized standing selected by the Board of Directors of the
                Issuer as of the last day of any month ending within sixty (60)
                days preceding the date as of which the determination is to be
                made or (2) the fair value thereof determined in good faith by
                the Board of Directors of the Issuer as of a date which is
                within eighteen (18) days of the date as of which the
                determination is to be made (the "Average Price") over (ii) the
                portion of the payment required by Section 1 of the Warrant
                attributable to such shares shall be deemed to have been paid to
                Com21 and the number of Common Shares issuable upon such
                exercise shall be reduced by such specified number, provided,
                however, that such instructions shall not be honored and shall
                have no effect to the extent that as a result of following such
                instructions, the total number of Common Shares issued hereunder
                would cause a Required Consent to be required;

                (y) exercise any portion of the Warrant, the exercise of which
                would result in the total number of shares issued hereunder
                exceeding nineteen and ninety-nine one-hundredths percent
                (19.99%) of the Original Number or that number which is
                unavailable for issuance, as the case may be, into the rights
                described herein (the "Excess Rights"). Fletcher shall exercise
                such right to obtain Excess Rights by delivering one or more
                written notices in the form attached hereto as Annex D (an

                                       12

<PAGE>   18

                "Excess Rights Notice") to Com21 from time to time. The date an
                Excess Rights Notice is delivered shall be an "Excess Notice
                Date." The stated value of the Excess Rights shall be an amount
                equal to the product of (A) the positive excess of the Average
                Price on the Excess Notice Date over the Warrant Price (as
                defined in the Warrant) per Common Share and (B) the number of
                Common Shares that would be issuable in respect of such exercise
                but for the Issuance Blockage (without regard to any requirement
                to deliver a 65 Day Notice). From creation until the first
                anniversary of the date on which the Required Consent is
                obtained, Excess Rights may, in whole or in part, from time to
                time, in any combination be applied in lieu of payment, with
                each dollar of stated value of Excess Rights applied as a dollar
                of payment, of the Warrant Price under Section 1 of the Warrant,
                or

                (z) any combination of clauses (x) and (y).

                      c. The aggregate number of Common Shares issuable upon
        exercise of the Warrant shall not exceed the Maximum Number of shares of
        Common Stock. The "Maximum Number" equals the sum of zero plus the
        Exercisable Number. The "Exercisable Number" is initially zero and
        thereafter may be increased upon expiration of a sixty-five (65) day
        period (the "Notice Period") after Fletcher delivers a notice (a"65 Day
        Notice") to Com21 designating an aggregate number of Common Shares in
        excess of the Maximum Number which shall be issuable upon exercise of
        the Warrant. Com21 shall deliver a notice (an "Increase Notice") stating
        the aggregate number of Common Shares outstanding as of the last day of
        the preceding month, the second preceding month and the increase, if any
        (the "Increase"), from the second preceding month (or in the case of the
        last day of the month immediately following the Closing Date, the number
        of shares outstanding specified in Section 3(l)) to the preceding month.
        A 65 Day Notice may be given at any time. Unless expressly waived by
        Fletcher, Com21 shall deliver an Increase Notice to Fletcher on or
        before the 10th day of every calendar month from and including the
        Closing Date. From time to time following the Notice Period, Common
        Stock may be issued to Fletcher on any Business Day for any quantity of
        Common Stock, such that the aggregate number of shares of Common Stock
        issued hereunder is less than or equal to the Maximum Number. Nothing in
        this Section 6(d) shall limit or apply to the creation or conversion of
        Excess Rights under Section 6(c)(y).

                      d. Com21 shall use best efforts to obtain from the Com21
        stockholders, if required, the requisite authority to issue Common
        Shares to Fletcher in accordance with the terms of this Agreement.

               7. Representations and Warranties of Fletcher. Fletcher hereby
represents and warrants to Com21 on the Closing Date:

                                       13

<PAGE>   19

                      a. Fletcher has been duly incorporated and is validly
        existing in good standing under the laws of Bermuda.

                      b. The execution, delivery and performance of this
        Agreement by Fletcher have been duly authorized by all requisite
        corporate action and no further consent or authorization of Fletcher,
        its Board of Directors or its shareholders is required. This Agreement
        has been duly executed and delivered by Fletcher and, when duly
        authorized, executed and delivered by Com21, will be a valid and binding
        agreement enforceable against Fletcher in accordance with its terms,
        subject to bankruptcy, insolvency, reorganization, moratorium and
        similar laws of general applicability relating to or affecting
        creditors' rights generally and to general principles of equity.

                      c. Fletcher understands that no United States federal or
        state agency has passed on, reviewed or made any recommendation or
        endorsement of the Investment Securities.

                      d. Subject to Section 4 hereof, Fletcher understands that
        the Investment Securities have not been registered under the Securities
        Act and may not be re-offered or resold in the United States other than
        pursuant to registration thereunder or an available exemption therefrom.

                      e. Fletcher is an "accredited investor" as such term is
        defined in Regulation D promulgated under the Securities Act.

                      f. Fletcher is purchasing the Investment Securities for
        its own account for investment only and not with a view to, or for
        resale in connection with, the public sale or distribution thereof in
        the United States, except pursuant to sales registered under the
        Securities Act or an exemption therefrom.

                      g. Fletcher understands that the Investment Securities are
        being or will be offered and sold to it in reliance on specific
        exemptions from the registration requirements of United States federal
        securities laws and that Com21 is relying on the truth and accuracy of,
        and Fletcher's compliance with, the representations, warranties,
        agreements, acknowledgments and understandings of Fletcher set forth
        herein in order to determine the availability of such exemptions and the
        eligibility of Fletcher to acquire the Investment Securities.

               8. Right of First Refusal. Subject to the terms and conditions
specified in this Section 8, Com21 hereby grants to (i) Fletcher, (ii) any
wholly-owned subsidiary or affiliate of Fletcher, or (iii) any of Fletcher's
designees, which designees, along with the entities in clauses (i) and (ii)
above, then hold not less than one-half of the number of shares of Common Stock
originally issued pursuant to this Agreement (the "First Refusal Stockholders"),
a right of first offer with respect to future sales by Com21 of its Offered
Shares (as hereinafter defined).

                                       14

<PAGE>   20

Each time Com21 has a bona fide proposal from a third party to acquire any
shares of, or securities convertible into or exercisable or exchangeable for any
shares of, any class of its capital stock ("Offered Shares") and Com21 wishes to
sell the Offered Shares to such third party, Com21 shall first offer such
Offered Shares to the First Refusal Stockholders in accordance with the
following provisions:

                      a. Com21 shall deliver a notice in accordance with Section
        19 of this Agreement ("Offer Notice") to Fletcher stating (i) its bona
        fide intention to offer such Offered Shares, (ii) the number of such
        Offered Shares to be offered, (iii) the price and terms, if any, upon
        which it proposes to offer such Offered Shares, and (iv) the identity of
        the proposed purchasers of such shares and, if requested by Fletcher,
        such purchasers' affiliates and associates.

                      b. For eight (8) Trading Days after delivery of the Offer
        Notice, Com21 shall negotiate exclusively and in good faith with the
        First Refusal Stockholders with respect to the proposed sale of Offered
        Shares and Com21 shall not enter into or continue negotiations with,
        respond to, furnish information to, or consummate any transaction with
        any person or entity concerning any transaction regarding any shares of,
        or securities convertible into or exercisable or exchangeable for any
        shares of, any class of its capital stock.

                      c. Within eight (8) Trading Days after delivery of the
        Offer Notice, the First Refusal Stockholders may elect by delivering a
        written notice to Com21, to purchase or obtain, at the price and on the
        terms specified in the Offer Notice (or on terms that are substantially
        similar to, or more favorable to Com21 than, the terms contained in the
        Offer Notice), all (and not less than all unless a third party agrees to
        purchase the remainder of such securities on terms that are
        substantially similar to, or more favorable to Com21 than, the terms
        contained in the Offer Notice) of the Offered Shares. If the Offer
        Notice specifies consideration other than cash is to be paid for the
        Offered Securities, the First Refusal Stockholders may, at their sole
        option, (if they choose to purchase such Offered Shares) deliver either
        of (i) such consideration or (ii) cash equal to the fair market value of
        such consideration on the date and at the time such offer is accepted.
        The closing of any such transaction shall occur not later than eight (8)
        Trading Days after Com21 receives written notice of such election. If
        the First Refusal Stockholders do not so elect within eight (8) Trading
        Days after delivery of the Offer Notice, then Com21 may sell the Offered
        Shares to any Person at the price and on terms that are no less
        favorable to Com21 than the terms contained in the Offer Notice within
        seventy (70) days after the date of the Offer Notice.

                      d. The right of first offer in this Section 8 shall not be
        applicable to any issuance or sale of any of the following securities:

                                       15

<PAGE>   21

                             (i) Common Stock issued as consideration for the
               acquisition of at least fifty percent (50%) of the voting capital
               stock or assets of a bona fide operating company in a similar or
               complementary line of business to that of Com21, as determined
               reasonably and in good faith by Com21's board of directors
               whether through purchase, merger, consolidation, tender offer or
               otherwise, provided that the purpose of Com21 entering into any
               such transaction shall not be to raise capital, directly or
               indirectly, or otherwise to avoid the requirements of this
               Section 8,

                             (ii) Common Stock issued pursuant to any stock
               split, dividend or distribution payable in additional shares of
               Common Stock or other securities or rights convertible into, or
               entitling the holder thereof to receive directly or indirectly,
               additional shares of Common Stock without payment of any
               consideration by such holder,

                             (iii) Common Stock issuable or issued to employees,
               consultants or directors of Com21 directly or pursuant to a stock
               option plan, employee stock purchase plan or restricted stock
               plan, or other similar arrangements related to compensation for
               services in effect on the date of this Agreement or approved by
               Com21's board of directors, in each case in the ordinary course
               of business consistent with Com21's past practice, provided that
               the purpose of Com21 entering into any such transaction shall not
               be to raise capital, directly or indirectly, or otherwise to
               avoid the requirements of this Section 8,

                             (iv) Common Stock issued in a bona fide firm
               commitment underwritten offering to the public with net proceeds
               of at least $25,000,000 to Com21, after underwriter's discounts
               or commissions and other fees or expenses,

                             (v) Common Stock issued in connection with a
               Combination,

                             (vi) Common Stock issued or issuable pursuant to a
               recapitalization or as a dividend or distribution on shares of
               equity securities, provided that the purpose of Com21 entering
               into any such transaction shall not be to raise capital, directly
               or indirectly, or otherwise to avoid the requirements of this
               Section 8, or

                             (vii) capital stock or convertible securities (or
               warrants or options therefor) issued or issuable to vendors,
               lessors, customer or suppliers or pursuant to any equipment
               leasing arrangement, provided that the aggregate amount of stock
               issued or issuable pursuant to this subsection (vii) shall not
               exceed 3% of the number of shares of Common Stock then
               outstanding on a fully diluted basis.

                                       16

<PAGE>   22

                      e. The right of first offer hereunder shall be of no
        further force or effect from and after the first day upon which the
        number of Common Shares held by Fletcher together with the number of
        Common Shares then issuable under the Warrant shall be less than five
        percent (5%) of the Original Number, as such numbers may be adjusted for
        stock splits, stock dividends, reverse stock splits, recapitalizations
        or other, similar adjustments.

               9. Covenants of Com21. Com21 covenants and agrees with Fletcher
as follows:

                      a. For so long as Fletcher owns any Investment Securities,
        and in any case for a period of one (1) year thereafter, Com21 will use
        its best efforts to (i) maintain the eligibility of the Common Stock for
        listing on the NASDAQ and (ii) regain the eligibility of the Common
        Stock for listing or quotation on all markets and exchanges including
        the NASDAQ in the event that the Common Stock is delisted by the NASDAQ
        or any other applicable market or exchange; and will use commercially
        reasonable efforts to (iii) cause the representations and warranties
        contained in Section 3 to be and remain true and correct.

                      b. Com21 will provide Fletcher with an opportunity to
        review and comment on any public disclosure by Com21 of information
        regarding this Agreement and the transactions contemplated hereby, prior
        to such public disclosure. No later than five (5) Trading Days following
        the Closing Date, Com21 shall make a public disclosure of the material
        terms of this Agreement in consultation with Fletcher. Beginning on the
        date hereof and for so long as Fletcher owns any Investment Securities
        and for a period of ninety (90) days thereafter, Com21 will (i) promptly
        notify Fletcher immediately following any public disclosure by Com21 of
        material information regarding Com21 or its financial condition,
        prospects or results of operation and (ii) provide Fletcher with copies
        of all SEC filings.

                      c. Com21 will make all filings required by law with
        respect to the transactions contemplated hereby.

                      d. Prior to or simultaneously with the filing of each of
        its quarterly reports on Form 10-Q with the SEC, Com21 shall cause
        Deloitte & Touche (or its auditor at the time) to deliver to Fletcher a
        review report relating to the final consolidated unaudited financial
        statements contained therein, prepared in accordance with Statements of
        Auditing Standard No. 71.

                      e. If on any date the Registrable Number exceeds the
        number of Common Shares then reserved for issuance, then Com21 shall
        reserve for issuance within

                                       17

<PAGE>   23

        three (3) Trading Days of such date a number of Common Shares not less
        than the Registrable Number.

                      f. Com21 shall use its best efforts to ensure that all
        Common Shares issued and issuable under this Agreement (including all
        shares issued or issuable under the Warrant) become listed as soon as
        practicable and thereafter remain listed and/or quoted. Moreover, Com21
        will immediately notify Fletcher in writing, pursuant to Section 19,
        upon approval of listing or in the event that any such shares are
        delisted from NASDAQ. If any such shares are delisted or removed from
        quotation, Com21 shall use its best efforts to cause such shares to
        again be listed or quoted at the earliest possible date.

                      g. Com21 shall use commercially reasonable efforts to
        cause the Common Shares to be eligible for book-entry transfer through
        The Depository Trust Company (or any successor thereto) as soon as
        practicable after the date of this Agreement and thereafter to use
        commercially reasonable efforts to maintain such eligibility.

               10. Consolidation, Merger, Etc. In case Com21 shall be a party to
any transaction with any other entity or entities (the "Acquirer") providing for
(i) any acquisition of Com21 by means of merger or other form of corporate
reorganization in which outstanding shares of Com21 are exchanged for securities
or other consideration issued, or caused to be issued, by the acquiring entity
or its subsidiary or (ii) a sale of all or substantially all of the assets of
Com21 (on a consolidated basis) in a single transaction or series of related
transactions or (iii) any other transaction or series of related transactions by
Com21 in which the power to cast the majority of the eligible votes at a meeting
of Com21's stockholders at which directors are elected is transferred to a
single entity or group acting in concert (each of the foregoing being referred
to as a "Combination"), Fletcher and its assigns shall have the rights set forth
in the Warrant regarding Combinations in addition to the rights contained in
this Agreement. Com21 agrees that it will not enter into an agreement with an
Acquirer for a Combination unless such agreement expressly obligates the
Acquirer to assume all of Com21's obligations under this Agreement and the
Warrant and to give Fletcher written notice that the Acquirer has assumed such
obligations. Com21 shall provide Fletcher with written notice of any proposed
Combination as soon as the existence of a proposed Combination is publicly
announced, and shall notify Fletcher promptly of any material developments with
respect to such Combination that are made public, including reasonable advance
notice of the date the Combination is expected to become effective.

               11. Covenants of Fletcher. Fletcher hereby covenants and agrees
with Com21 that:

                      a. Neither Fletcher nor any of its affiliates nor any
        person acting on its or their behalf will at any time offer or sell any
        Investment Securities other than

                                       18

<PAGE>   24

        pursuant to registration under the Securities Act or pursuant to an
        available exemption therefrom.

                      b. Fletcher shall not engage an underwriter for an
        underwritten public offering of Common Shares, unless such underwriter
        shall be reasonably satisfactory to Com21.

               12. Legend. Subject to Section 4, Fletcher understands that the
certificates or other instruments representing the Investment Securities shall
bear a restrictive legend in the following form (and a stop transfer order may
be placed against transfer of such certificates or other instruments):

         THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
         UNDER THE SECURITIES ACT OF 1933 AND MAY NOT BE SOLD, ASSIGNED OR
         TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER
         SAID ACT OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT
         SUCH REGISTRATION IS NOT IN THE CIRCUMSTANCES REQUIRED.

               The legend set forth above shall be removed and Com21 shall issue
a certificate without such legend to any holder of Investment Securities if,
unless otherwise required by state securities laws, (a) such shares are sold
pursuant to an effective Registration Statement under the Securities Act, or (b)
such shares may be publicly sold pursuant to an exemption from such registration
requirements without restriction.

               13. Conditions Precedent to Fletcher's Obligations. The
obligations of Fletcher hereunder are subject to the performance by Com21 of its
obligations hereunder and to the satisfaction of the following additional
conditions precedent, unless expressly waived in writing by Fletcher:

                      a. On the Closing Date, (i) the representations and
        warranties made by Com21 in this Agreement shall be true and correct;
        (ii) Com21 shall have complied fully with all of the covenants and
        agreements in this Agreement; and (iii) Fletcher shall have received a
        certificate of the Chief Executive Officer and the Chief Financial
        Officer of Com21 dated such date and to such effect.

                      b. On the Closing Date, Com21 shall have delivered to
        Fletcher an opinion of Brobeck, Phleger & Harrison LLP reasonably
        satisfactory to Fletcher, dated the date of delivery, substantially in
        the form attached hereto.

                                       19

<PAGE>   25

                      c. On or before the Closing Date, Com21 shall have made an
        application to list and admit for trading the Registrable Number on the
        NASDAQ.

                      d. On the Closing Date, before the transactions
        contemplated hereby not less than 24,500,000 shares of Common Stock
        shall be issued and outstanding.

                      e. By the Closing Date, Com21 shall have filed a Form 8-K
        with the SEC with respect to any material and previously non-public
        information contained in the Schedule of Exceptions.

               14. Conditions Precedent to Com21's Obligations. The obligations
of Com21 hereunder are subject to the performance by Fletcher of its obligations
hereunder and to the satisfaction (unless expressly waived in writing by Com21)
of the additional conditions precedent that, on the Closing Date: (i) the
representations and warranties made by Fletcher in this Agreement shall be true
and correct; (ii) Fletcher shall have complied fully with all the covenants and
agreements in this Agreement; and (iii) Com21 shall have received on such date a
certificate of an appropriate officer of Fletcher dated such date and to such
effect.

               15. Fees and Expenses. Each of Fletcher and Com21 agrees to pay
its own expenses incident to the performance of its obligations hereunder,
including, but not limited to the fees, expenses and disbursements of such
party's counsel, except as is otherwise expressly provided in this Agreement.

               16. Non-Performance. If on the Closing Date Com21 shall fail to
deliver the Investment Securities to Fletcher required to be delivered pursuant
to this Agreement for any reason other than the failure of any condition
precedent to Com21's obligations hereunder or the failure by Fletcher to comply
with its obligations hereunder, then Com21 shall:

                      a. indemnify and hold Fletcher harmless against any loss,
        claim or damage (including without limitation, incidental and
        consequential damages) arising from or as a result of such failure by
        Com21; and

                      b. reimburse Fletcher for all of its reasonable
        out-of-pocket expenses, including fees and disbursements of its counsel,
        incurred by Fletcher in connection with this Agreement and the
        transactions contemplated herein and therein.

               17. Indemnification.

                      a. Indemnification of Fletcher. Com21 hereby agrees to
        indemnify Fletcher and each of its officers, directors, employees,
        agents and affiliates and each person that controls (within the meaning
        of Section 20 of the Exchange Act) any of the foregoing persons (each a
        "Fletcher Indemnified Party") against any claim, demand, action,
        liability, damages, loss, cost or expense (including, without
        limitation, reasonable

                                       20

<PAGE>   26

        legal fees and expenses) (a "Proceeding"), that it may incur in
        connection with any of the transactions contemplated hereby arising out
        of or based upon:

                                (1) any untrue or alleged untrue statement of a
                        material fact in any Registration Statement, the
                        Prospectus or any SEC Filing incorporated by reference
                        into a Registration Statement or any SEC Filing made
                        after the date of this Agreement and before any
                        Registration Statement is filed with the SEC or this
                        Agreement by Com21 or any of its affiliates or any
                        person acting on its or their behalf or omission or
                        alleged omission to state therein or herein any material
                        fact necessary in order to make the statements, in the
                        light of the circumstances under which they were made,
                        not misleading by Com21 or any of its affiliates or any
                        person acting on its or their behalf, provided that the
                        indemnity provided in this Section 17(a)(1) shall not
                        apply to any information both supplied by and approved
                        in its final form by Fletcher;

                                (2) any of the representations or warranties
                        made by Com21 herein or under the Warrant being untrue
                        or incorrect at the time such representation or warranty
                        was made; and

                                (3) any breach or non-performance by Com21 of
                        any of its covenants, agreements or obligations under
                        this Agreement;

        and Com21 hereby agrees to reimburse each Fletcher Indemnified Party for
        any reason able legal or other expenses incurred by such Fletcher
        Indemnified Party in investigating or defending any such Proceeding;
        provided, however, that the foregoing indemnity shall not apply to any
        Proceeding to the extent that it arises out of or is based upon the
        gross negligence or wilful misconduct of Fletcher in connection
        therewith.

                      b. Indemnification of Com21. Fletcher hereby agrees to
        indemnify Com21 and each of its officers, directors, employees, agents
        and affiliates and each person that controls (within the meaning of
        Section 20 of the Exchange Act) any of the foregoing persons (each a
        "Com21 Indemnified Party") against any Proceeding, that it may incur in
        connection with any of the transactions contemplated hereby arising out
        of or based upon:

                                (1) any untrue or alleged untrue statement of a
                        material fact by Fletcher or any of its affiliates or
                        any person acting on its or their behalf or omission or
                        alleged omission to state any material fact necessary in
                        order to make the statements, in the light of the
                        circumstances under which they were made, not misleading
                        by Fletcher or any of its affiliates or any person
                        acting on its or their behalf;

                                       21

<PAGE>   27

                                (2) any of the representations or warranties
                        made by Fletcher herein being untrue or incorrect at the
                        time such representation or warranty was made; and

                                (3) any breach or non-performance by Fletcher of
                        any of its covenants, agreements or obligations under
                        this Agreement;

        and Fletcher hereby agrees to reimburse each Com21 Indemnified Party for
        any reason able legal or other expenses incurred by such Com21
        Indemnified Party in investigating or defending any such Proceeding;
        provided, however, that the foregoing indemnity shall not apply to any
        Proceeding to the extent that it arises out of or is based upon the
        gross negligence or wilful misconduct of Com21 in connection therewith.

                      c. Conduct of Claims.

                                (1) Whenever a claim for indemnification shall
                        arise under this Section 17, the party seeking
                        indemnification (the "Indemnified Party"), shall notify
                        the party from whom such indemnification is sought (the
                        "Indemnifying Party") in writing of the Proceeding and
                        the facts constituting the basis for such claim in
                        reasonable detail;

                                (2) Upon delivery of such notice, such
                        Indemnified Party shall have a duty to take all
                        reasonable steps to mitigate any losses, liabilities,
                        costs, charges and expenses relating to any such
                        Proceeding;

                                (3) Such Indemnifying Party shall have the right
                        to retain the counsel of its choice in connection with
                        such Proceeding and to participate at its own expense in
                        the defense of any such Proceeding; provided, however,
                        that counsel to the Indemnifying Party shall not (except
                        with the consent of the relevant Indemnified Party) also
                        be counsel to such Indemnified Party. In no event shall
                        the Indemnifying Party be liable for fees and expenses
                        of more than one counsel (in addition to any local
                        counsel) separate from its own counsel for all
                        Indemnified Parties in connection with any one action or
                        separate but similar or related actions in the same
                        jurisdiction arising out of the same general allegations
                        or circum stances; and

                                (4) No Indemnifying Party shall, without the
                        prior written consent of the Indemnified Parties (which
                        consent shall not be unrea sonably withheld), settle or
                        compromise or consent to the entry of any judgment with
                        respect to any litigation, or any investigation or
                        proceeding by any governmental agency or body, commenced
                        or threatened, or any claim whatsoever in respect of
                        which indemnification could be sought

                                       22

<PAGE>   28

                        under this Section unless such settlement, compromise or
                        consent (A) includes an unconditional release of each
                        Indemnified Party from all liability arising out of such
                        litigation, investigation, proceeding or claim and (B)
                        does not include a statement as to or an admission of
                        fault, culpability or a failure to act by or on behalf
                        of any Indemnified Party.

               18. Survival of the Representations, Warranties, etc. The
respective representations, warranties, and agreements made herein by or on
behalf of the parties hereto shall remain in full force and effect, regardless
of any investigation made by or on behalf of the other party to this Agreement
or any officer, director or employee of, or person controlling or under common
control with, such party and will survive delivery of and payment for any
Investment Securities issuable hereunder.

               19. Notices. All communications hereunder shall be in writing and
delivered as set forth below.

                      a. If sent to Fletcher, all communications shall be
        delivered by hand, sent by reputable overnight courier or transmitted
        and confirmed by facsimile to Fletcher, unless otherwise notified in
        writing of a substitute address, at:

                        Fletcher International, Ltd.
                        c/o A. S. & K. Services Ltd.
                        Cedar House
                        41 Cedar Avenue
                        Hamilton HM EX
                        Bermuda
                        Attention:    Felicity Holmes, Corporate Administrator
                        Telephone:    441-295-2244
                        Facsimile:    441-292-8666

                        with a copy to:

                        Fletcher Asset Management, Inc.
                        22 East 67th Street
                        New York, NY 10021
                        Attention:   Peter Zayfert
                        Telephone:    (212) 284-4800
                        Facsimile:    (212) 284-4801

                        with a copy to:

                                       23

<PAGE>   29

                        Skadden, Arps, Slate, Meagher & Flom LLP
                        1440 New York Avenue, N.W.
                        Washington, D.C. 20005
                        Attention:  Stephen W. Hamilton, Esq.
                        Telephone:    (202) 371-7010
                        Facsimile:    (202) 393-5760

        To the extent that any funds shall be delivered to Fletcher by wire
        transfer, unless otherwise instructed by Fletcher, such funds should be
        delivered in accordance with the following wire instructions:

                        Fletcher International, Ltd.
                        Bank:     HSBC Bank USA, New York, NY
                        ABA Number:                         021-001-088
                        For the benefit of:       Lehman Brothers Inc.
                        Account Number:           140-094-221
                        For credit to:            Fletcher International, Ltd.
                        Account Number:           134-705-874

                      b. If sent to Com21, all communications shall be delivered
        by hand, sent by reputable overnight courier or transmitted and
        confirmed by facsimile to Com21, unless otherwise notified in writing of
        a substitute address, at:

                        Com21, Inc.
                        750 Tasman Drive
                        Milpitas, CA  95025
                        Attention:    Chief Financial Officer
                        Telephone:    (408) 953-9100
                        Facsimile:    (408) 953-9299

                    with a copy to:

                                       24

<PAGE>   30

                        Brobeck, Phleger & Harrison LLP
                        Two Embarcadero Place
                        2200 Geng Road
                        Palo Alto, CA  94303
                        Attention:     John Montgomery, Esq.
                        Telephone:     (650) 424-0160
                        Facsimile:     (650) 496-2921

        To the extent that any funds shall be delivered to Com21 by wire
        transfer, unless otherwise instructed by Com21, such funds should be
        delivered in accordance with the following wire instructions:

                        Bank: Citibank, F.S.B.
                        For the benefit of:
                        Brobeck, Phleger & Harrison LLP Client Trust Account
                        One Sansome Street, 24th Floor
                        San Francisco, CA 94104

                        ABA Number: 321171184
                        Account Number 200017747
                        SWIFT Number CITIUS33

                        CMID Number: 024077.0001
                        BPH Contact: Brian Covotta

               20. Miscellaneous.

                      a. This Agreement may be executed in one or more
        counterparts and it is not necessary that signatures of all parties
        appear on the same counterpart, but such counterparts together shall
        constitute but one and the same agreement.

                      b. This Agreement shall inure to the benefit of and be
        binding upon the parties hereto, their respective successors and assigns
        and, with respect to Section 17 hereof, shall inure to the benefit of
        their respective officers, directors, employees, agents, affiliates and
        controlling persons, and no other person shall have any right or
        obligation hereunder. Com21 may not assign this Agreement. Fletcher may
        assign, pledge, hypothecate or transfer any of the rights and associated
        obligations contemplated by this Agreement (including, but not limited
        to, the Warrant and the Common Shares), in whole or in part, at its sole
        discretion (including, but not limited to, assignments, pledges,
        hypothecations and transfers in connection with hedging transactions
        with respect to this Agreement, the Warrant and the Common Shares). No
        Person acquiring Common Stock

                                       25

<PAGE>   31

        from Fletcher pursuant to a public market purchase shall thereby obtain
        any of the rights contained in this Agreement.

                      c. This Agreement may not be amended except by an
        instrument in writing signed by each of the parties hereto.

                      d. This Agreement shall be governed by, and construed in
        accordance with, the internal laws of the State of New York, and each of
        the parties hereto hereby submits to the non-exclusive jurisdiction of
        any State or Federal court in the State of New York and any court
        hearing any appeal therefrom, over any suit, action or proceeding
        against it arising out of or based upon this Agreement (a "Related
        Proceeding"). Each of the parties hereto hereby waives any objection to
        any Related Proceeding in such courts whether on the grounds of venue,
        residence or domicile or on the ground that the Related Proceeding has
        been brought in an inconvenient forum.

                      e. The parties shall take all actions reasonably necessary
        to cause the transactions contemplated hereby to be consummated in
        accordance with the terms hereof.

                      f. The headings of the sections of this document have been
        inserted for convenience of reference only and shall not be deemed to be
        a part of this Agreement. This Agreement constitutes the entire
        agreement and supersedes all prior agreements and understandings, both
        written and oral, between the parties hereto with respect to the subject
        matter of this Agreement. Except as provided in Section 20(b), this
        Agreement is not intended to confer upon any person other than the
        parties hereto any rights or remedies hereunder.

                      g. Each party represents and acknowledges that, in the
        negotiation and drafting of this Agreement and the other instruments and
        documents required or contemplated hereby, it has been represented by
        and relied upon the advice of counsel of its choice. Each party hereby
        affirms that its counsel has had a substantial role in the drafting and
        negotiation of this Agreement and such other instruments and documents.
        Therefore, each party agrees that no rule of construction to the effect
        that any ambiguities are to be resolved against the drafter shall be
        employed in the interpretation of this Agreement and such other
        instruments and documents.

                      h. Without prejudice to other rights or remedies hereunder
        (including any specified interest rate), and except as otherwise
        expressly set forth herein, interest shall be due on any amount that is
        due pursuant to this Agreement and has not been paid when due,
        calculated for the period from and including the due date to but
        excluding the date on which such amount is paid at the prime rate of
        U.S. money center banks as published in The Wall Street Journal (or if
        The Wall Street Journal does not exist or

                                       26

<PAGE>   32

        publish such information, then the average of the prime rates of three
        U.S. money center banks agreed to by the parties) plus two percent (2%).

                      i. Fletcher and Com21 stipulate that the remedies at law
        of the parties hereto in the event of any default or threatened default
        by the either party in the performance of or compliance with any of the
        terms of this Agreement and the Warrant are not and will not be adequate
        and that, to the fullest extent permitted by law, such terms may be
        specifically enforced by a decree for the specific performance of any
        agreement contained herein or by an injunction against a violation of
        any of the terms hereof or otherwise.

                      j. Any and all remedies set forth in this Agreement and
        the Warrant: (i) shall be in addition to any and all other remedies
        Fletcher or Com21 may have at law or in equity, (ii) shall be
        cumulative, and (iii) may be pursued successively or concurrently as
        each of Fletcher and Com21 may elect. The exercise of any remedy by
        Fletcher or Com21 shall not be deemed an election of remedies or
        preclude Fletcher or Com21, respectively, from exercising any other
        remedies in the future.

                      k. Fletcher acknowledges that Dain Rauscher Wessels is
        acting as placement agent (the "Placement Agent") for the Investment
        Securities being offered hereby and will be compensated exclusively by
        Com21 for acting in such capacity. Fletcher further acknowledges that
        the Placement Agent has acted solely as placement agent in connection
        with the offering of the Investment Securities by Com21, that the
        information and data provided to Fletcher in connection with the
        transactions contemplated hereby have not been subjected to independent
        verification by the Placement Agent, and that the Placement Agent makes
        no representation or warranty with respect to the accuracy or
        completeness of such information, data or other related disclosure
        material.

               21. Com21's Obligations. Com21 agrees that the parties have
negotiated in good faith and at arms' length concerning the transactions
contemplated herein, and that Fletcher would not have agreed to the terms of
this Agreement without each and every of the terms, conditions, protections and
remedies provided herein and in the Warrant. Except as specifically provided
otherwise in this Agreement or in the Warrant, Com21's obligations to indemnify
and hold Fletcher harmless in accordance with Section 17 of this Agreement are
obligations of Com21 that Com21 promises to pay to Fletcher when and if they
become due. Com21 shall record any such obligations on its books and records in
accordance with Generally Accepted Accounting Principles.

               22. Time of Essence. Time shall be of the essence in this
Agreement.

                            [SIGNATURE PAGE FOLLOWS]

                                       27

<PAGE>   33
]
        IN WITNESS WHEREOF, the parties hereto have duly executed and delivered
this Agreement, all as of the day and year first above written.

                                        COM21, INC.

                                        By: /s/ DAVID L. ROBERTSON
                                           ------------------------------------
                                        Name:  David L. Robertson
                                        Title: CFO

                                        FLETCHER INTERNATIONAL, LTD., by its
                                        duly authorized investment
                                        advisor, FLETCHER ASSET MANAGEMENT, INC.

                                        By: /s/ DENIS J. KIELY
                                           ------------------------------------
                                        Name:   Denis J. Kiely
                                        Title:  Deputy Chief Executive Officer

                                        By: /s/ MEI-YING TSAI
                                           ------------------------------------
                                        Name:   Mei-Ying Tsai
                                        Title:  Chief Financial Officer

                           [AGREEMENT SIGNATURE PAGE]

                                       28

<PAGE>   34

                                     ANNEX A
                          [FORM OF WARRANT CERTIFICATE]

                                       A-1

<PAGE>   35

                                     ANNEX B
                            [FORM OF DELIVERY NOTICE]

                                     [date]

Fletcher International, Ltd.
c/o Fletcher Asset Management, Inc.
22 East 67th Street
New York, NY 10021
Attn:  Peter Zayfert
Telephone:    (212) 284-4800
Facsimile:    (212) 284-4801

Ladies and Gentlemen:

        Reference is made to the Agreement (the "Agreement") dated as of
February 28, 2001 by and between Com21, Inc. ("Com21") and Fletcher
International, Ltd. ("Fletcher"). Capitalized terms not otherwise defined herein
shall have the meanings ascribed thereto in the Agreement.

        Attached are copies of the front and back of (i) the ___ original stock
certificates, each representing ____ shares of Common Stock, purchased by
Fletcher on the date hereof and (ii) Warrant No. W-1 issued to Fletcher,
together with a copy of the overnight courier air bill which will be used to
ship such stock certificates and warrant. We have the executed original stock
certificates and the warrant and other documents required to be delivered in
connection with the Closing Date. Upon our confirmation of the payment of the
$______ aggregate purchase price therefor, we will send the original stock
certificates and the warrant by overnight courier to the following address:

                     Ms. Michelle Hogan
                     c/o Lehman Brothers Inc.
                     Three World Financial Center
                     New York, NY 10285

and we will send the other original documents by overnight courier to the
following address:

                     Fletcher International, Ltd.
                     c/o A. S. & K. Services Ltd.
                     Cedar House
                     41 Cedar Avenue
                     Hamilton HM EX
                     Bermuda

                                       B-1

<PAGE>   36

                     Attention:   Felicity Holmes, Corporate Administrator
                     Telephone:   441-295-2244
                     Facsimile:   441-292-8666

                     with a copy to:

                     Fletcher International, Ltd.
                     c/o Fletcher Asset Management, Inc.
                     22 East 67th Street
                     New York, NY 10021-5805
                     Attn:  Peter Zayfert

        Attached hereto as Exhibit 1 is a true, correct and complete copy of the
most recent report of Deloitte & Touche to the Board of Directors and
Shareholders of Com21, together with the accompanying consolidated financial
statements and schedules of Com21, as such report appears in the most recent
Annual Report on Form 10-K filed by Com21 with the SEC, as well as all Quarterly
Reports on Form 10-Q filed by Com21 with the SEC since the date of such Form
10-K, together with all amendments thereto.

                                            Com21, Inc.

                                            By:
                                               ---------------------------------
                                            Name:
                                            Title:

                                       B-2

<PAGE>   37

                                                                       Exhibit 1

                                 AUDITOR REPORT

                                 [see attached]

<PAGE>   38

                                     ANNEX C

                                 Auditor Report

                                       C-1

<PAGE>   39

                                     ANNEX D

                         [FORM OF EXCESS RIGHTS NOTICE]

                                                            -------------, --

Com21, Inc.
[      ]
[      ]
[      ]
Attention:  [Chief Financial Officer]

Ladies and Gentlemen:

               Fletcher International, Ltd. ("Fletcher") hereby elects to
exercise its right to convert some or all of its Warrant rights (as defined in
the Agreement (the "Agreement")) dated as of February 28, 2001 by and between
Com21, Inc. ("Com21") and Fletcher and, in lieu exercise of _______ Common
Shares on the face of the Warrant, hereby requests creation of Excess Rights
with a stated value of $________ in accordance with the terms of the Agreement.
Capitalized terms not otherwise defined herein shall have the meanings ascribed
thereto in the Agreement.

                                    FLETCHER INTERNATIONAL, LTD., by its
                                    duly authorized investment advisor,
                                    FLETCHER ASSET MANAGEMENT, INC.

                                    By:
                                       ---------------------------------------
                                    Name:
                                    Title:

                                    By:
                                       ---------------------------------------
                                    Name:
                                    Title:

AGREED AND ACKNOWLEDGED:
COM21, INC.

By:
   --------------------------------
Name:
Title:

                                       D-1

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