EXHIBIT A-2
GADLINE, LTD.
FOUNDER/EXECUTIVE EMPLOYMENT AND NON-COMPETITION AGREEMENT
This Agreement is entered into as of the Closing Date (as such term is
defined in the Share Purchase Agreement referred to below) by and between
GADline, Ltd. (the "Company"), which upon the Closing shall become a
subsidiary of Com21, Inc. ("Parent"), and [________________], Israel
Identification Number [_______] (the "Employee"). Unless otherwise
defined herein, the terms defined in the Share Purchase Agreement shall
have the same defined meanings in this Agreement.
RECITALS
A. The Company, the Parent, each of the Sellers party thereto, and Ofir
Zemer, as Sellers' Representative, have entered into a Share Purchase
Agreement, dated as of April 18, 2000, as amended (the "Share Purchase
Agreement"), providing for the acquisition of the Ordinary Shares of the
Company held by the Sellers (the "Share Purchase").
B. The Company and Employee wish to enter into an employment
relationship on the terms and conditions contained in this Agreement.
C. The Parent and Company have spent significant time, effort, and
money to develop certain Proprietary Information (as defined in the
Invention Assignment Agreement referenced herein), which the Parent and
Company consider vital to their business and goodwill. The Proprietary
Information has been and will necessarily be communicated to or acquired
by Employee in the course of his employment with the Company, and the
Company wishes to hire Employee only if, in doing so, it can protect its
and the Parent's Proprietary Information and goodwill.
D. Employee is a founder and/or executive of the Company and has been
actively involved in the development and marketing of the Company's
business. In connection with the Share Purchase, the Parent will acquire
all of Employee's Ordinary Shares of the Company. The Parent intends to
continue the business of the Company after the Closing Date of the Share
Purchase as a business unit. To preserve and protect the assets of the
Company, including the Company's goodwill and customers, to preserve and
protect the Company's goodwill and business interests going forward, in
consideration for the Company entering into and performing its
obligations under the Share Purchase Agreement, and to induce the Parent
to enter into the Share Purchase Agreement and to acquire all of
Employee's Ordinary Shares of the Company, the Employee has agreed to
enter into this Agreement.
AGREEMENT
NOW, THEREFORE, based on the foregoing premises and in consideration of
the commitments set forth below, Employee and the Company, intending to
be legally bound, agree as follows:
1. Duties and Scope of Employment. As of the Closing Date, Employee
will serve as [position] of the Company, reporting to the Company's
[____________] and assuming and discharging such responsibilities as are
commensurate with Employee's position. Employee will perform his duties
faithfully and to the best of his ability and will devote his full
business efforts and time to the performance of his duties hereunder.
2. Term. This Agreement commences as of the Closing Date and shall
continue for an indefinite term until terminated in accordance with the
terms hereof (the "Employment Term"). The parties agree that the
Employee's employment with the Company may be terminated at any time with
or without cause or notice, subject to applicable law.
3. Work Hours. Employee's position is a "senior managerial position",
as defined in the Work and Rest Hours Law, 1951, and requires a high
level of loyalty and trust. Accordingly, the provisions of such law
shall not apply to Employee and Employee agrees that he may be required
to work beyond the regular working hours of the Company, for no
additional compensation other than as specified in this Agreement.
4. Foreign Travel. Employee's employment with the Company may require
frequent travel outside of Israel, and Employee agrees to such travel as
may be necessary in order to fulfill his duties to the Company.
5. Compensation and Benefits.
(a) Base Salary. For all services to be rendered by Employee pursuant
to this Agreement, Employee shall receive Employee's monthly salary of
NIS ________ (the "Base Salary"). The Base Salary shall be paid no later
than the ninth day of the following month, and shall be subject to such
additional annual increases as the Company deems appropriate in
accordance with the Company's customary salary guidelines.
(b) Automobile. During the Employment Term, Employee shall continue to
have use of the automobile, if any, which is currently provided by the
Company subject to and in accordance with the terms and conditions in
effect immediately prior to the Closing Date.
(c) Telephone. During the Employment Term, Employee shall continue to
have use of any telephone which is currently provided by the Company
subject to and in accordance with the terms and conditions in effect
immediately prior to the Closing Date.
(d) Discretionary Bonuses. The Company will review Employee's
performance on an annual basis, and may, in its reasonable discretion,
award the Employee a performance bonus.
(e) Existing Share Options. As of the Closing, each outstanding option
to purchase Ordinary Shares of the Company held by Employee, whether or
not vested, shall be assumed by the Parent in accordance with the terms
and conditions of the Share Purchase Agreement. Employee acknowledges
that the value of Parent's options which shall replace Employee's options
as set out herein are of a value equal to or greater than the options
currently held by Employee.
(f) Parent Stock Options. [FOR LARRY RUBIN'S AGREEMENT ONLY: Employee
will receive "Purchaser Options" pursuant to Section 6.9 of the Share
Purchase Agreement.] While employed hereunder, Employee may be granted
additional stock options in such amounts as shall be determined by the
Parent's Compensation Committee. Each stock option granted hereunder
shall have an exercise price equal to the fair market value of the
Parent's Common Stock on the date of its grant and shall be subject to
the terms, definitions and provisions of the Parent's 1998 Stock
Incentive Plan as supplemented for Israeli employees and any option
agreement entered into by Purchaser and Employee pursuant to any such
grant.
(g) Managers Insurance. During the Employment Term, Employee shall be
entitled to Managers Insurance in an amount equal to 13.33% of the Base
Salary, which shall be paid monthly to the Managers Insurance Plan
directly by the Company. Employee shall contribute an additional 5% of
his Base Salary to the Managers Insurance Plan. The Company shall
contribute up to a maximum of an additional 2.5% of the Base Salary to
the Employee's Managers Insurance Plan in respect of disability
insurance. Employee's Managers Insurance Plan shall continue in effect
and shall continue to be apportioned in such manner as was in effect
immediately prior to the Closing Date.
(h) Vacation. Employee will be entitled to paid vacation in accordance
with the Company's vacation policy, with the timing and duration of
specific vacations mutually and reasonably agreed to by the parties
hereto. Notwithstanding the foregoing, in no event shall Employee be
entitled to fewer vacation days than he was entitled to immediately prior
to the Closing Date. Employee may not accrue his vacation days for more
than twelve (12) months and at the end of each calendar year during the
Employment Term, the Company shall redeem any accrued, unused vacation
days by paying Employee an amount equal to his per diem salary for each
day of vacation which is not used by Employee during the year.
(i) Military Reserve Duty. Employee shall receive his full salary for
any periods of active military reserve duty. Employee shall furnish the
Company with all certificates evidencing his service in active military
reserve duty as may be requested by the Company from time to time.
(j) Expenses. The Company will reimburse Employee for reasonable
travel, entertainment or other expenses incurred by Employee in the
furtherance of or in connection with the performance of Employee's duties
hereunder, in accordance with the Company's expense reimbursement policy
as in effect from time to time.
(k) Continuing Education Fund. The Company shall contribute to
Employee's current Continuing Education Fund. The amount of such
contribution shall equal 7.5% of Employee's Base Salary per month and
shall be subject to Employee's contribution of an additional 2.5% of his
Base Salary per month.
6. Termination.If Employee's employment with the Company terminates
at any time and for any reason, then (i) all vesting of any non-vested
equity awards made by the Company or Parent to Employee will immediately
terminate, (ii) all payments of compensation by the Company to Employee
hereunder will immediately terminate (except as to amounts already
earned), and (iii) Employee shall not be entitled to receive any
severance or other benefits hereunder except to the extent provided by
applicable law. Notwithstanding the foregoing, the termination of
Employee's employment shall not affect the Employee's vested options,
except as set forth in the terms of Employee's option grant.
Notwithstanding the foregoing, any amounts paid by the Company into
Managers Insurance on the Employee's behalf in respect of severance pay
shall be credited against any Company obligation for statutory severance
pay.
7. Assignment of Inventions: Electronic Policy. If Employee has not
previously done so, Employee agrees to enter into the Invention
Assignment Agreement, the form of which is attached as Exhibit F-1 to the
Share Purchase Agreement (the "Invention Assignment Agreement"), and the
Electronic and Telephonic Communications System Policy Agreement, the
form of which is attached as Exhibit F-2 to the Share Purchase Agreement,
which documents are incorporated herein by reference, as a condition of
employment hereunder.
8. Non-Competition and Non-Solicitation.
(a) Beginning on the Closing Date and ending on the later to occur of
(i) the first (1st) anniversary of the Employee's termination of
employment with the Company and (ii) the second (2nd) anniversary of the
Closing Date (the "Non-Compete Period"), Employee shall not, other than
on behalf of the Company, Parent or any of their subsidiaries, directly
or indirectly, without the prior written consent of Company or Parent,
engage in anywhere in the "Geographic Area" (as defined below) in
(whether as an employee, agent, consultant, advisor, independent
contractor, proprietor, partner, officer, director or otherwise), have
any ownership interest in (except for passive ownership of one percent
(1%) or less of any entity whose securities have been registered under
the Securities Act of 1933 or Section 12 of the Securities Exchange Act
of 1934) or the securities laws of any other jurisdiction, or participate
in the financing, operation, management or control of, any firm,
partnership, corporation, entity or business that engages or participates
in a "competing business purpose." The term "competing business purpose"
shall mean the design, development, marketing and sale of advanced cable
broadband solutions, including but not limited to, voice-over IP
technologies and circuit switched technologies.
(b) During the Non-Compete Period, Employee shall not, directly or
indirectly, without the prior written consent of the Company or Parent,
solicit, encourage or take any other action which is intended to induce
or encourage, or has the effect of inducing or encouraging, any employee
or customer of the Parent, Company, or any subsidiary of Company to
terminate his or her employment with or customer relationship with
Parent, the Company, or any subsidiary of the Company.
(c) The Geographic Area shall mean anywhere in the world where the
Parent, Company or any subsidiary of the Company conducts business
including, without limitation, the United States and Israel.
(d) The covenants contained in the preceding paragraphs shall be
construed as a series of separate covenants, one for each county, city,
state, or any similar subdivision in any Geographic Area. Except for
geographic coverage, each such separate covenant shall be deemed
identical in terms to the covenant contained in the preceding paragraphs.
If, in any judicial proceeding, a court refuses to enforce any of such
separate covenants (or any part thereof), then such unenforceable
covenant (or such part) shall be eliminated from this Agreement to the
extent necessary to permit the remaining separate covenants (or portions
thereof) to be enforced. In the event that the provisions of this
Section are deemed to exceed the time, geographic or scope limitations
permitted by applicable law, then such provisions shall be reformed to
the maximum time, geographic or scope limitations, as the case may be,
permitted by applicable laws.
(e) Employee acknowledges that the nature of the Parent's and Company's
business is such that if Employee were to become employed by, or
substantially involved in, the business of a competitor of the Parent or
the Company soon following the termination of Employee's employment with
the Company, it might be difficult for the Employee not to rely on or use
the Parent's and Company's trade secrets and confidential information.
The Employee has agreed to enter into this Agreement to reduce the
likelihood of disclosure of the Parent's and the Company's trade secrets
and confidential information.
(f) Employee also acknowledges that the limitations of time, geography,
and scope of activity agreed to in this Agreement are reasonable because,
among other things, (i) the Parent and Company are engaged in a highly
competitive industry, (ii) the Employee has had unique access to, and
acknowledges that he will continue to have access to, the trade secrets
and know how of the Parent and Company, including without limitation the
plans and strategy (and in particular the competitive strategy) of the
Parent and Company, (iii) the Employee is receiving significant
compensation in connection with the Share Purchase and pursuant to this
Agreement, and (iv) the Employee believes that in the event the
Employee's employment with the Company ended, Employee would be able to
obtain suitable and satisfactory employment without violation of this
Agreement.
(g) Employee agrees that it would be impossible or inadequate to measure
and calculate the Parent's or Company's damages from any breach of the
covenants set forth in this Section. Accordingly, Employee agrees that
if he breaches any provision of this Section, the Parent or Company will
have available, in addition to any other right or remedy otherwise
available, the right to obtain an injunction from a court of competent
jurisdiction restraining such breach or threatened breach and to specific
performance of any such provision of this Agreement. Employee further
agrees that no bond or other security shall be required in obtaining such
equitable relief, nor will proof of actual damages be required for such
equitable relief. Employee hereby expressly consents to the issuance of
such injunction and to the ordering of such specific performance.
9. Assignment. This Agreement will be binding upon and inure to the
benefit of (a) the heirs, executors and legal representatives of Employee
upon Employee's death and (b) any successor of the Company. Any such
successor of the Company will be deemed substituted for the Company under
the terms of this Agreement for purposes of enforcing the Company's
rights hereunder. The provisions of this Agreement will thereafter apply
only to the business of the Company and Parent and not the business of
such successor. For this purpose, "successor" means any person, firm,
corporation or other business entity which at any time, whether by
purchase, merger or otherwise, directly or indirectly acquires all or
substantially all of the assets or business of the Company. None of the
rights of Employee to receive any form of compensation payable pursuant
to this Agreement may be assigned or transferred except by will or the
laws of descent and distribution. Any other attempted assignment,
transfer, conveyance or other disposition of Employee's right to
compensation or other benefits will be null and void.
10. Notices. All notices, requests, demands and other communications
called for hereunder shall be in writing and shall be deemed given (i) on
the date of delivery if delivered personally, (ii) one (1) day after
being sent by a well established commercial overnight service, or (iii)
four (4) days after being mailed by registered or certified mail, return
receipt requested, prepaid and addressed to the parties or their
successors at the following addresses, or at such other addresses as the
parties may later designate in writing:
If to the Company:
GADline, Ltd.
Beit Rokar
Har Hotzvim
P.O. Box 45138
Jerusalem 91450 Israel
Attention: Chief Financial Officer
Facsimile No.: 972-2-586-7590
with a copy to:
Com21, Inc.
750 Tasman Drive
Milpitas, CA 95053
Attn: Chief Financial Officer
Facsimile No.: (408) 953-9110
If to Employee:
at the last residential address known by the Company.
11. Severability. In the event that any provision hereof becomes or is
declared by a court of competent jurisdiction to be illegal,
unenforceable or void, this Agreement will continue in full force and
effect without said provision.
12. Integration. This Agreement, together with the Invention Assignment
Agreement and any other documents incorporated herein by reference
represent the entire agreement and understanding between the parties as
to the subject matter herein and supersede all prior or contemporaneous
agreements whether written or oral. Employee acknowledges and agrees
that this Agreement replaces in their entirety any written or oral
employment agreement, offer letter or other compensatory or severance
agreement previously in effect between the Company and Employee. No
waiver, alteration, or modification of any of the provisions of this
Agreement will be binding unless in writing and signed by duly authorized
representatives of the parties hereto.
13. Waiver of Breach. The waiver of a breach of any term or provision
of this Agreement, which must be in writing, shall not operate as or be
construed to be a waiver of any other previous or subsequent breach of
this Agreement.
14. Headings. All captions and section headings used in this Agreement
are for convenient reference only and do not form a part of this
Agreement.
15. Tax Withholding. All payments made pursuant to this Agreement will
be subject to withholding of applicable taxes, National Insurance
Institute payments and other mandatory payments.
16. Governing Law. This Agreement will be governed by the laws of the
State of Israel (with the exception of its conflict of laws provisions).
17. Acknowledgment. Employee acknowledges that he has had the
opportunity to discuss this matter with and obtain advice from his
private attorney, has had sufficient time to, and has carefully read and
fully understands all the provisions of this Agreement, and is knowingly
and voluntarily entering into this Agreement.
18. Contingency of Agreement upon Share Purchase. This Agreement shall
be null and void and have no effect unless the Share Purchase
contemplated by the Share Purchase Agreement by and between Parent and
the Company is consummated.
19. Counterparts. This Agreement may be executed in counterparts, and
each counterpart shall have the same force and effect as an original and
shall constitute an effective, binding agreement on the part of each of
the undersigned.
IN WITNESS WHEREOF, each of the parties has executed this Agreement, in
the case of the Company by their duly authorized officers, as of the day
and year first above written.
GADLINE, LTD.
By: ___________________ Date: ___________________
Title: ________________
[EMPLOYEE]
_______________________ Date: ___________________
[Employee]