EXHIBIT A-3
GADLINE, LTD.
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 key employee 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 Agreements, 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 and Termination. 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,
subject to applicable law, upon the provision of thirty (30) days
written notice to the Employee. Notwithstanding the aforesaid, in
the event that the Employee's employment is terminated for Good
Cause (as hereinafter defined), Employee shall not be entitled to
such notice period.
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. 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,
unless his employment was terminated by the Company otherwise than
for Good Cause (as hereinafter defined) or by the Employee for Good
Reason (as hereinafter defined), 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) "Good Cause" shall mean (i) a criminal conviction in respect
of a Felony (Pesha), (ii) material refusal to comply with
reasonable rules, regulations, policies directions and restrictions
as may be established from time to time by the Company and are not
cured within thirty days following notice from the Company, (iii)
repeated abuse (following at least one written warning from the
Company) of alcohol or any use of narcotics or other controlled
substances, (iv) conduct which the Company reasonably determines to
constitute insubordination, (v) conduct (A) involving dishonesty
against the Company or breach of fiduciary duty, or (B) materially
adversely affecting the reputation, goodwill or prospects of the
Company, (vi) any material breach of Employee's obligations under
this Agreement, other than this Section 8, which is not cured
within thirty days following notice from the Company, (vii) any
material breach of Employee's obligations under Section 8 of this
Agreement, or (viii) or any other conduct that has been deemed
"Cause" for the purposes of dismissal without Severance Pay under
the laws of the State of Israel, and "Good Reason" shall mean the
termination of employment by the Employee as a result of (i) a
material breach by the Company of this Agreement, (ii) any
assignment to the Employee of any duties materially inconsistent
with the duties he and the Company have agreed in writing shall be
associated with his position as set forth in Section 1 hereof,
(iii) the Company having made it a condition to his continued
employment that the Employee permanently relocate from Israel or
(iv) a material reduction in the Employee's compensation or
benefits he is entitled to hereunder as of the date hereof.
(e) 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.
(f) 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.
(g) 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.
(h) 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]