EXHIBIT 10.3
------------
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement") is made and entered into as
of the 13th day of July, 2006, by and between Comverse Technology, Inc., a New
York corporation (together with its successors and assigns permitted under this
Agreement, the "Company"), and Mr. Xxxx Xxxxxxxx (the "Executive").
W I T N E S S E T H
WHEREAS, the Executive is currently serving as Executive Vice
President, Chief Administrative Officer and General Counsel of the Company;
WHEREAS, the Company desires to continue to employ the Executive as its
Executive Vice President, Chief Administrative Officer and General Counsel and
to enter into an employment agreement embodying the terms of such employment;
WHEREAS, the Company desires to assure itself of the continued
availability of the Executive's services at a time when extraordinary time,
effort and commitment may be required of the Executive and shall therefore
provide the Executive with additional incentives as set forth in Section 5(b)
below; and
WHEREAS, the Executive desires to enter into this Agreement and to
accept such continued employment, subject to the terms and provisions of this
Agreement;
NOW, THEREFORE, in consideration of the premises and mutual covenants
contained herein and for other good and valuable consideration, the receipt and
sufficiency of which is mutually acknowledged, the Company and the Executive
(individually a "Party" and together the "Parties"), intending to be legally
bound, agree as follows:
1. Definitions.
(a) "Base Salary" shall mean the Executive's base salary as
determined in accordance with Section 4 below, including any applicable
increases.
(b) "Board" shall mean the Board of Directors of the Company.
(c) "Bonus Opportunity" shall mean the annual bonus for which the
Executive is eligible, as described in Section 5(a) below and Exhibit A hereto.
(d) "Cause" shall mean a good faith finding by the Company of:
(i) a conviction of the Executive of, or a plea of nolo
contendere by the Executive to, any felony;
(ii) a material violation by the Executive of federal or state
securities laws, as determined by a court or other
governmental body of competent jurisdiction;
1
(iii) willful misconduct or gross negligence by the Executive
resulting in material and demonstrable harm to the Company;
(iv) a material violation by the Executive of any Company policy
or procedure provided to the Executive resulting in material
and demonstrable harm to the Company including, without
limitation, a material violation of the Company's Code of
Business Conduct and Ethics;
(v) the repeated and continued failure by the Executive to carry
out, in all material respects, the reasonable and lawful
directions of the Chief Executive Officer or the Board that
are within the Executive's individual control and consistent
with the Executive's status as a senior executive of the
Company and his duties and responsibilities hereunder,
except for a failure that is attributable to the Executive's
illness, injury or Disability; or
(vi) fraud, embezzlement, theft or material dishonesty by the
Executive against the Company,
provided that no finding of Cause pursuant to subsections (iii), (iv) or (v)
hereof shall be effective unless and until the Company has provided the
Executive with written notice thereof in accordance with Section 24 below
stating with specificity the facts and circumstances underlying the finding of
Cause and, if the basis for such finding of Cause is capable of being cured by
the Executive, providing the Executive with an opportunity to cure the same
within thirty (30) calendar days after receipt of such notice in accordance with
Section 24 below.
(e) "Change in Control" shall occur upon:
(i) any person, entity or affiliated group becoming the
beneficial owner or owners of more than fifty percent (50%)
of the outstanding equity securities of the Company, or
otherwise becoming entitled to vote shares representing more
than fifty percent (50%) of the undiluted total voting power
of the Company's then-outstanding securities eligible to
vote to elect members of the Board (the "Voting
Securities");
(ii) a consolidation or merger (in one transaction or a series of
related transactions) of the Company pursuant to which the
holders of the Company's equity securities immediately prior
to such transaction or series of related transactions would
not be the holders immediately after such transaction or
series of related transactions of more than fifty percent
(50%) of the Voting Securities of the entity surviving such
transaction or series of related transactions;
(iii) the sale, lease, exchange or other transfer (in one
transaction or a series of related transactions) of all or
substantially all of the assets of the Company; or
2
(iv) a change in the composition of the Board occurring within a
one (1) year period, as a result of which fewer than a
majority of the directors are Incumbent Directors.
"Incumbent Directors" will mean directors who either (A) are members of the
Board as of the Effective Date, or (B) are elected or nominated for election to
the Board with the affirmative votes of at least a majority of the Board at the
time of such election or nomination.
(f) "Code" shall mean the Internal Revenue Code of 1986, as amended
from time to time.
(g) "Compensation Committee" shall mean the Compensation Committee of
the Board or another committee of the Board that performs the functions
typically associated with a compensation committee.
(h) "Disability" shall mean the Executive's inability to
substantially perform his duties and responsibilities under this Agreement for a
period of six (6) consecutive months or nine (9) out of twelve (12)
nonconsecutive months due to a physical or mental disability, as the term
"physical or mental disability" is defined in the Company's long-term disability
insurance plan then in effect (or would be so found if the Executive applied for
coverage or benefits under such plan).
(i) "Effective Date" shall mean June 1, 2006.
(j) "Good Reason" shall mean, without the Executive's prior written
consent, the occurrence of any of the following events or actions, provided that
no finding of Good Reason shall be effective unless and until the Executive has
provided the Company, within sixty (60) calendar days of becoming aware of the
facts and circumstances underlying the finding of Good Reason, with written
notice thereof in accordance with Section 24 below stating with specificity the
facts and circumstances underlying the finding of Good Reason and, if the basis
for such finding of Good Reason is capable of being cured by the Company,
providing the Company with an opportunity to cure the same within thirty (30)
calendar days after receipt of such notice in accordance with Section 24 below:
(i) any reduction in the Executive's Base Salary or Bonus
Opportunity, other than as part of an across-the-board
reduction applicable to all senior executives of Comverse
Technology, Inc.;
(ii) an actual relocation of the Executive's principal office
from the Company's office location as of the Effective Date
to outside the borough of Manhattan;
(iii) any change in the Executive's title, position or reporting
status, unless the Executive is provided with a comparable
title, position or reporting status, or any diminution of
the Executive's duties or responsibilities;
(iv) a failure of the Company to obtain the assumption in writing
of its obligations under this Agreement by any successor to
all or substantially
3
all of the assets of the Company within ten (10) calendar
days after completion of a merger, consolidation, sale or
similar transaction; or
(v) a material breach by the Company of any provision of this
Agreement.
(k) "Nonsolicitation Period" shall mean the period commencing on the
Effective Date and ending on the first anniversary of the date of termination.
(l) "Term of Employment" shall mean the period specified in Section 2
below, as such period may be extended.
2. Term of Employment.
The Company hereby continues to employ the Executive, and the
Executive hereby accepts such continued employment, for the period commencing on
the Effective Date and ending on May 31, 2008, subject to earlier termination of
the Term of Employment in accordance with the terms of this Agreement. This
Agreement shall be automatically renewed for additional one (1) year periods on
each anniversary of the Effective Date thereafter, unless either Party notifies
the other Party in writing of his or its intention not to renew this Agreement
not less than thirty (30) calendar days prior to such expiration date or
anniversary, as the case may be.
3. Position, Duties and Responsibilities; Reporting.
As of the Effective Date and continuing for the remainder of the Term
of Employment, the Executive shall be employed as the Executive Vice President,
Chief Administrative Officer and General Counsel of the Company. In this
capacity, the Executive shall be assigned only such duties and responsibilities
as are appropriate for a person holding the offices set forth in this section.
The Executive shall serve the Company faithfully, conscientiously and to the
best of the Executive's ability and shall promote the interests and reputation
of the Company. Unless prevented by illness, injury or Disability, the Executive
shall devote all of the Executive's time, attention, knowledge, energy and
skills during normal working hours, and at such other times as the Executive's
duties may reasonably require, to the duties of the Executive's employment;
provided, however, that the Executive may (a) serve on civic or charitable
boards or committees; or (b) with the approval of the Chief Executive Officer of
the Company or the Board, serve on corporate boards or committees. The Executive
shall report to the Board in carrying out his duties under this Agreement.
4. Base Salary.
As of the Effective Date and for the remainder of fiscal year 2006,
the Executive shall be paid a Base Salary of five hundred fifty thousand dollars
($550,000), payable in accordance with the regular payroll practices of the
Company. For fiscal year 2007, the Executive shall be paid a Base Salary of no
less than four hundred twenty-five thousand dollars ($425,000), payable in
accordance with the regular payroll practices of the Company. Thereafter, the
Base Salary shall be reviewed and increased no less frequently than annually,
though the amount of such increase shall be determined in the discretion of the
Board or the Compensation Committee. After giving effect to the preceding two
4
sentences, the Base Salary may not be decreased from such increased amount
unless the Executive provides his prior written consent to such decrease.
5. Incentive Compensation Arrangements.
(a) During the Term of Employment, the Executive shall be entitled to
participate in any Company incentive compensation plans, programs and/or
arrangements applicable to senior-level executives as established and modified
from time to time by the Board or the Compensation Committee in its sole
discretion. In addition, the Executive shall receive a bonus of no less than one
hundred fifty thousand dollars ($150,000) annually (the "Bonus Compensation"),
payable each February on the first payroll date after the close of the
applicable fiscal year. The first Bonus Compensation payment shall be due and
payable in February 2007. The formula to be used to calculate the Bonus
Compensation payable to the Executive will be set out in Exhibit A hereto and
mutually agreed upon annually. In the event such formula changes by mutual
agreement of the Parties, the Parties will sign and attach such revised
formulae, if any, to Exhibit A (e.g., Exhibit A-1, etc.).
(b) In view of the fact that the Executive is entering into this
Agreement at a time when extraordinary time, effort and commitment may be
required of the Executive, the Company shall pay the Executive a special
retention bonus (the "Special Retention Bonus") equal to four hundred thousand
dollars ($400,000), which shall be due and payable on May 15, 2007, provided
that the Executive remains employed by the Company on a continuous basis through
such date.
6. Long-Term Incentive Compensation Programs.
(a) The Parties acknowledge that, pursuant to the Company's 2005
Stock Incentive Compensation Plan (the "2005 Plan") and a Deferred Stock Award
Agreement dated the date hereof (the "Deferred Stock Award Agreement"), the
Compensation Committee awarded to the Executive forty thousand (40,000) shares
of common stock of the Company in the form of deferred stock (the "Deferred
Stock"), which shall vest as to twenty-five percent (25%) of the original number
of shares subject thereto on each of May 31, 2007, May 31, 2008, May 31, 2009
and May 31, 2010, subject to accelerated vesting as otherwise provided herein.
Shares of common stock in settlement of the Deferred Stock award (or, at the
Company's election, cash in lieu of shares based on the fair market value
thereof on the Settlement Date (as defined in the Deferred Stock Award
Agreement)) shall be delivered to the Executive in accordance with the
provisions of the Deferred Stock Award Agreement.
(b) The Executive shall be granted options to purchase a total of ten
thousand (10,000) shares of common stock of the Company within ten (10) calendar
days after the first date on which the Company is eligible to use a registration
statement on Form S-8 (or any successor form) under the Securities Act of 1933,
as amended, to register such options (and the shares issuable upon the exercise
thereof) and is under no legal prohibition against granting such options. The
exercise price of the options shall equal the fair market value of the shares of
the Company's common stock on the date of grant. Such options shall vest and
become exercisable as to twenty-five percent (25%) of the original number of
shares subject thereto on each of May 31, 2007, May 31, 2008, May 31, 2009 and
May 31, 2010, subject to accelerated vesting as otherwise provided herein. The
5
options shall be granted under, and in accordance with the terms of, the 2005
Plan.
(c) During the Term of Employment, the Executive shall be entitled to
participate in any other Company plans, programs and/or arrangements (including
any equity-based plans, programs or arrangements) applicable to senior-level
executives as established, modified and administered from time to time by the
Board or the Compensation Committee in its sole discretion.
(d) In approving the grants of the Deferred Stock and options, the
Compensation Committee will also be asked to give its advance, irrevocable
approval of any election that the Executive may choose to make under Section
14.2 of the 2005 Plan (or any successor provision or plan) with respect to
causing the Company to withhold shares of Common Stock to pay the "Withholding
Tax," as such term is defined in that Section 14.2.
7. Employee Benefit Programs.
During the Term of Employment, the Executive shall be entitled to
participate in all employee welfare and pension benefit plans, programs and/or
arrangements applicable to senior-level executives.
8. Reimbursement of Business Expenses.
During the Term of Employment, the Executive is authorized to incur
reasonable business expenses in carrying out his duties and responsibilities
under this Agreement, and the Company shall reimburse him for all such
reasonable business expenses, subject to documentation in accordance with the
Company's policy.
9. Perquisites.
(a) During the Term of Employment, the Executive shall be entitled to
participate in the Company's executive fringe benefit programs applicable to the
Company's senior-level executives (if any) in accordance with the terms and
conditions of such programs as in effect from time to time.
(b) The Company shall lease an automobile of the Executive's choice
for the benefit of the Executive during the Term of Employment that is
comparable in quality to that leased by the Executive before the Effective Date.
In addition, the Company shall continue to reimburse the Executive for insurance
of his choice on such automobile.
(c) The Company shall pay for reasonable legal fees and expenses
incurred by the Executive in connection with the negotiation and drafting of
this Agreement.
(d) The Company shall continue to reimburse the Executive for the
annual membership fee and any monthly membership fees for a membership at an
area health club of his choice.
6
(e) The Company shall continue to reimburse the Executive for
premiums he incurs on term life insurance of his choice, not to exceed three
thousand five hundred dollars ($3,500) per year.
10. Vacation.
The Executive shall be entitled to an amount of paid vacation
established by the Company's vacation policy. The Executive may carry over any
unused vacation from year to year and will receive payment for any accrued,
unused vacation upon termination of employment for any reason.
11. Termination of Employment.
(a) Termination of Employment Due to Death. In the event of the
Executive's death during the Term of Employment, the Term of Employment shall
end as of the date of the Executive's death and his estate and/or beneficiaries,
as the case may be, shall be entitled to the following:
(i) Base Salary earned but not paid prior to the date of his
death;
(ii) a pro-rata share of the maximum Bonus Compensation the
Executive would have earned if he had remained employed
through the end of the fiscal year in which his death
occurred and met all requirements and goals set forth on
Exhibit A, payable in a lump sum within thirty (30) calendar
days of the date of termination in accordance with the
Company's regular payroll practice;
(iii) the immediate vesting of all stock options and deferred
stock awarded to the Executive (whenever granted), with any
options granted after the Effective Date having a minimum
exercise period of one (1) year from the date of death or,
if less, the maximum amount permitted by Section 409A of the
Internal Revenue Code of 1986 ("Section 409A"), subject to
any option plan provisions relating to a change in control
or similar event and to the initial ten (10) year term of
the options; provided, however, that, if necessary, such
exercise period shall be extended if permitted by Section
409A until the exercise of the options would cease to
violate any federal or state securities laws subject to the
initial ten (10) year term of the options;
(iv) any amounts earned, accrued or owing to the Executive but
not yet paid under Sections 7, 8, 9 or 10 above prior to the
date of his death; and
(v) such other or additional benefits, including equity
compensation, if any, as may be provided under applicable
plans, programs and/or arrangements of the Company.
(b) Termination of Employment Due to Disability. If the Executive's
employment is terminated due to Disability during the Term of Employment, either
7
by the Company or by the Executive, the Term of Employment shall end as of the
date of termination and the Executive shall be entitled to the following:
(i) Base Salary earned but not paid prior to the date of
termination;
(ii) a pro-rata share of the maximum Bonus Compensation the
Executive would have earned if he had remained employed
through the end of the fiscal year in which his employment
terminated and met all requirements and goals set forth on
Exhibit A, payable in a lump sum within thirty (30) calendar
days of the date of termination in accordance with the
Company's regular payroll practice;
(iii) the immediate vesting of all stock options and deferred
stock awarded to the Executive (whenever granted), with any
options granted after the Effective Date having a minimum
exercise period of one (1) year from the date of termination
or, if less, the maximum amount permitted by Section 409A,
subject to any option plan provisions relating to a change
in control or similar event and to the initial ten (10) year
term of the options; provided, however, that, if necessary,
such exercise period shall be extended if permitted by
Section 409A until the exercise of the options would cease
to violate any federal or state securities laws subject to
the initial ten (10) year term of the options;
(iv) any amounts earned, accrued or owing to the Executive but
not yet paid under Sections 7, 8, 9 or 10 above prior to the
date of termination; and
(v) such other or additional benefits, including equity
compensation, if any, as may be provided under applicable
plans, programs and/or arrangements of the Company.
In no event shall a termination of the Executive's employment for Disability
occur unless the Party terminating the Executive's employment provides written
notice to the other Party in accordance with Section 24 below.
(c) Termination of Employment by the Company for Cause. If the
Company terminates the Executive's employment for Cause during the Term of
Employment, the Term of Employment shall end as of the date of termination and
the Executive shall be entitled to the following:
(i) Base Salary earned but not paid prior to the date of
termination;
(ii) any amounts earned, accrued or owing to the Executive but
not yet paid under Sections 7, 8, 9 or 10 above prior to the
date of termination; and
(iii) such other or additional benefits, including equity
compensation, if any, as may be provided under applicable
plans, programs and/or arrangements of the Company.
8
In no event shall a termination of the Executive's employment for Cause occur
pursuant to Sections 1(d)(iii), (iv) or (v) hereof unless and until the Company
provides written notice thereof to the Executive in accordance with Section 24
below stating with specificity the facts and circumstances underlying the
finding of Cause and, if the basis for such finding of Cause is capable of being
cured by the Executive, providing the Executive with an opportunity to cure the
same within thirty (30) calendar days after receipt of such notice in accordance
with Section 24 below.
(d) Termination of Employment by the Company Without Cause. If the
Executive's employment is terminated by the Company without Cause, other than
due to death or Disability, the Term of Employment shall end as of the date of
termination and the Executive shall be entitled to the following:
(i) Base Salary earned but not paid prior to the date of
termination;
(ii) a pro-rata share of the maximum Bonus Compensation the
Executive would have earned if he had remained employed
through the end of the fiscal year in which his employment
terminated and met all requirements and goals set forth on
Exhibit A, payable in a lump sum within thirty (30) calendar
days of the date of termination in accordance with the
Company's regular payroll practice;
(iii) one hundred percent (100%) of the greater of (A) the Base
Salary in effect on the date of termination or (B) the Base
Salary in effect immediately prior to any reduction that
would constitute Good Reason, payable in a lump sum within
thirty (30) calendar days of the date of termination in
accordance with the Company's regular payroll practice;
(iv) one hundred percent (100%) of the greater of (A) the maximum
Bonus Compensation the Executive would have earned if he had
remained employed through the end of the fiscal year in
which his employment terminated and met all requirements and
goals set forth on Exhibit A or (B) three hundred thousand
dollars ($300,000), payable in a lump sum within thirty (30)
calendar days of the date of termination in accordance with
the Company's regular payroll practice;
(v) any unpaid portion of the Special Retention Bonus, payable
in a lump sum within thirty (30) calendar days of the date
of termination in accordance with the Company's regular
payroll practice;
(vi) to have the Company pay the full premiums (employer and
employee portions) for the Executive's and any covered
beneficiary's coverage under COBRA health continuation
benefits over the eighteen (18) month period immediately
following the date of termination;
(vii) the immediate vesting of all stock options and deferred
stock awarded to the Executive (whenever granted), with any
options granted after the Effective Date having a minimum
9
exercise period of one (1) year from the date of termination
or, if less, the maximum amount permitted by Section 409A,
subject to any option plan provisions relating to a change
in control or similar event and to the initial ten (10) year
term of the options; provided, however, that, if necessary,
such exercise period shall be extended if permitted by
Section 409A until the exercise of the options would cease
to violate any federal or state securities laws subject to
the initial ten (10) year term of the options;
(viii) any amounts earned, accrued or owing to the Executive but
not yet paid under Sections 7, 8, 9 or 10 above prior to the
date of termination; and
(ix) such other or additional benefits, including equity
compensation, if any, as may be provided under applicable
plans, programs and/or arrangements of the Company.
In no event shall a termination of the Executive's employment without Cause
occur unless the Company gives written notice to the Executive in accordance
with Section 24 below at least thirty (30) calendar days prior to the actual
date of termination.
(e) Termination of Employment by the Executive for Good Reason. The
Executive may terminate his employment for Good Reason. Upon a termination by
the Executive of his employment for Good Reason, the Executive shall be entitled
to the same payments and benefits as provided in Section 11(d) above. In no
event shall a termination of the Executive's employment for Good Reason occur
unless and until the Executive provides the Company, within sixty (60) calendar
days of becoming aware of the facts and circumstances underlying the finding of
Good Reason, with written notice thereof in accordance with Section 24 below
stating with specificity the facts and circumstances underlying the finding of
Good Reason and, if the basis for such finding of Good Reason is capable of
being cured by the Company, providing the Company with an opportunity to cure
the same within thirty (30) calendar days after receipt of such notice in
accordance with Section 24 below.
(f) Termination of Employment by the Executive Without Good Reason.
If the Executive terminates his employment without Good Reason, other than a
termination of employment due to death or Disability, the Executive shall be
entitled to the same payments and benefits as provided in Section 11(c) above.
In no event shall a termination of the Executive's employment without Good
Reason occur unless the Executive gives written notice to the Company in
accordance with Section 24 below at least thirty (30) calendar days prior to the
actual date of termination.
(g) Termination of Employment Due to a Change in Control. If the
Executive's employment is terminated by the Company without Cause or by the
Executive for Good Reason in connection with or within one (1) year after a
Change in Control, the Executive shall be entitled to the same payments and
benefits as provided in Sections 11(d)(i), (ii) and (v) through (ix) and two (2)
times the payments provided in Sections 11(d)(iii) and (iv) above.
10
(h) Termination by Notice of Nonrenewal by the Company. If the
Company terminates the Executive's employment by providing a notice of
nonrenewal in accordance with Section 2 above, the Executive shall be entitled
to the same payments and benefits as provided in Section 11(d) above.
(i) Termination by Notice of Nonrenewal by the Executive. If the
Executive terminates his employment by providing a notice of nonrenewal in
accordance with Section 2 above, the Executive shall be entitled to the same
payments and benefits as provided in Section 11(c) above.
(j) No Mitigation; No Offset. In the event of a termination of the
Executive's employment for any reason under this Section 11, the Executive shall
be under no obligation to seek other employment and there shall be no offset
against amounts due to the Executive under this Agreement on account of any
compensation attributable to any subsequent compensation he may receive.
(k) Gross-Up Payment. If during or after the Term of Employment, the
Executive becomes subject to the excise tax imposed by Code Section 4999 (the
"Parachute Excise Tax"), the Company and the Executive agree that the Company
shall pay to the Executive a tax gross-up payment so that after payment by the
Executive of all federal, state and local excise, income, employment, Medicare
and any other taxes (including any related penalties and interest) resulting
from the payment of the parachute payments and the tax gross-up payments to the
Executive by the Company, the Executive retains on an after-tax basis an amount
equal to the amount that the Executive would have retained if he had not been
subject to the Parachute Excise Tax.
12. Confidentiality: Assignment of Rights.
(a) During the Term of Employment and thereafter, the Executive shall
not disclose to anyone or make use of any trade secret or proprietary or
confidential information of the Company, including such trade secret or
proprietary or confidential information of any customer or other entity to which
the Company owes an obligation not to disclose such information, which he
acquires during the Term of Employment, including, without limitation, records
kept in the ordinary course of business, except (i) as such disclosure or use
may be required or appropriate in connection with his work as an employee of the
Company, (ii) when required to do so by a court of law, governmental agency or
administrative or legislative body (including a committee thereof) with apparent
jurisdiction to order him to divulge, disclose or make accessible such
information or (iii) as to such confidential information that becomes generally
known to the public or trade without his violation of this Section 12(a).
(b) The Executive hereby sells, assigns and transfers to the Company
all of his right, title and interest in and to all inventions, discoveries,
improvements and copyrightable subject matter (the "Rights") that, during the
Term of Employment, are made or conceived by him, alone or with others, and that
relate to the Company's present business or arise out of any work he performs or
information he receives regarding the business of the Company while employed by
the Company. The Executive shall fully disclose to the Company as promptly as
possible all information known or possessed by him concerning the Rights, and
upon request by the Company and without any further compensation in any form to
11
him by the Company, but at the expense of the Company, execute all applications
for patents and copyright registrations, assignments thereof and other
applicable instruments and do all things that the Company may reasonably deem
necessary to vest and maintain in it the entire right, title and interest in and
to all such Rights.
13. Indemnification.
The Company confirms and acknowledges that the Company is obligated
to indemnify the Executive pursuant to the terms of the Indemnification
Agreement between the Company and the Executive dated November 18, 2003 and the
Bylaws of Comverse Technology, Inc., and that the Executive shall in any event
be indemnified to the fullest extent permitted by law.
14. Assignability; Binding Nature.
This Agreement shall be binding upon and inure to the benefit of the
Parties and their respective successors, agents, heirs (in the case of the
Executive) and assigns. No rights or obligations of the Company under this
Agreement may be assigned or transferred by the Company; provided, however, that
such rights or obligations may be assigned or transferred pursuant to the
transactions contemplated by clauses (ii) or (iii) of the definition of a Change
in Control merger or consolidation in which the Company is not the continuing
entity, or the sale or liquidation of all or substantially all of the assets of
the Company; provided further, however, that the assignee or transferee is the
successor to all or substantially all of the assets of the Company and such
assignee or transferee assumes the liabilities, obligations and duties of the
Company, as contained in this Agreement, either contractually or as a matter of
law.
15. Representation.
The Company represents and warrants that it is fully authorized and
empowered to enter into this Agreement and that the performance of its
obligations under this Agreement will not violate any agreement between it and
any other person, firm or organization. The Executive represents and warrants
that no agreement exists between him and any other person, firm or organization
that would be violated by the performance of his obligations under this
Agreement.
16. Entire Agreement.
This Agreement contains the entire understanding and agreement
between the Parties concerning the subject matter hereof and supersedes all
prior agreements, understandings, discussions, negotiations and undertakings,
whether written or oral, with respect thereto including, without limitation, any
offer letters or employment agreements and any nondisclosure, nonsolicitation,
inventions and/or noncompetition agreements between the Parties; provided,
however, that any rights to indemnification under Section 13, all stock options
or other equity granted to the Executive prior to the Effective Date, and all
agreements relating thereto shall remain in full force and effect in accordance
with their terms except as otherwise modified herein.
12
17. Amendment or Waiver.
No provision in this Agreement may be amended unless such amendment
is agreed to in writing and signed by the Executive and an authorized officer of
the Company. No waiver by either Party of any breach by the other Party of any
condition or provision contained in this Agreement to be performed by such other
Party shall be deemed a waiver of a similar or dissimilar condition or provision
at the same or any prior or subsequent time. Any waiver must be in writing and
signed by the Executive or an authorized officer of the Company, as the case may
be.
18. Withholding.
The Company may withhold from any amounts payable under this
Agreement such federal, state and local taxes as may be required to be withheld
pursuant to any applicable law or regulation.
19. Severability.
In the event that any provision of this Agreement shall be determined
by a court of competent jurisdiction to be invalid or unenforceable for any
reason, in whole or in part, the remaining parts, terms or provisions of this
Agreement shall be unaffected thereby and shall remain in full force and effect
to the fullest extent permitted by law.
20. Survivorship.
The respective rights and obligations of the Parties hereunder shall
survive any termination of the Executive's employment to the extent necessary to
preserve such rights and obligations.
21. Controlling Document.
If any provision of any agreement, plan, program, policy, arrangement
or other written document between or relating to the Company and the Executive
conflicts with any provision of this Agreement, the provision of this Agreement
shall control and prevail.
22. Beneficiaries/References.
The Executive shall be entitled, to the extent permitted under any
applicable law, to select and change a beneficiary or beneficiaries to receive
any compensation or benefit payable hereunder following the Executive's death by
giving the Company written notice thereof. In the event of the Executive's
death, reference in this Agreement to the Executive shall be deemed, where
appropriate, to refer to his beneficiary, estate or other legal representative.
23. Governing Law/Jurisdiction.
This Agreement shall be governed by and construed and interpreted in
accordance with the laws of the State of New York without reference to
principles of conflicts of law unless superseded by federal law. The Parties
agree that any suit, action or other legal proceeding that is commenced to
resolve any matter arising under or relating to any provision of this Agreement
13
shall be commenced only in a court of the State of New York (or, if appropriate,
a federal court located within the State of New York), and the Parties consent
to the jurisdiction of such court.
24. Notices.
All notices shall be in writing, shall be sent to the following
addresses listed below using a reputable overnight express delivery service and
shall be deemed to be received one (1) calendar day after mailing.
If to the Company: 000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Chief Executive Officer
with a copy to:
Weil, Gotshal & Xxxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx Xxxxxxx, Esq.
If to the Executive: 00 Xxxxxxxxx Xxxx
Xxxxxxxxx, Xxx Xxxx 00000
25. Headings.
The headings of the sections contained in this Agreement are for
convenience only and shall not be deemed to control or affect the meaning or
construction of any provision of this Agreement.
26. Cooperation.
The Executive agrees to cooperate with the Company in the
investigation, defense or prosecution of any claims or actions now in existence
or which may be brought in the future against or on behalf of the Company. Such
cooperation shall include meeting with representatives of the Company upon
reasonable notice at reasonable times and locations to prepare for discovery or
any mediation, arbitration, trial, administrative hearing or other proceeding or
to act as a witness. The Executive shall notify the Company if the Executive is
asked to assist, testify or provide information by or to any person, entity or
agency in any such proceeding or investigation.
In the event the Executive is not employed by the Company when such
cooperation is required, the Company shall pay the Executive his then-applicable
hourly rate or five hundred dollars ($500) per hour, whichever is greater, plus
reasonable out-of-pocket expenses, including legal fees and expenses, in the
event the Executive is required to provide such cooperation, including preparing
for and/or participating or testifying in any administrative, judicial, legal,
regulatory, internal or other proceeding or retaining legal counsel for any
reason in connection with such participation or testimony. Such payment or
14
reimbursement shall be made to the Executive within fourteen (14) calendar days
after submission of the relevant statements or invoices. Nothing contained in
this section shall affect the Executive's rights to indemnification as described
in Section 13 herein. The Executive also agrees to cooperate with the Company in
the transitioning of his responsibilities after the date of termination.
27. Nonsolicitation. The Executive covenants and agrees that during
the Nonsolicitation Period he shall not at any time, directly or indirectly,
solicit any employee of the Company for the purpose of causing such employee to
terminate his or her employment with the Company.
28. Compliance with Code Section 409A.
(a) If any payment, compensation or other benefit provided to the
Executive in connection with his employment termination is determined, in whole
or in part, to constitute "nonqualified deferred compensation" within the
meaning of Section 409A and the Executive is a specified employee as defined in
Section 409A(2)(B)(i), no part of such payments shall be paid before the day
that is six (6) months plus one (1) day after the date of termination (the "New
Payment Date"). The aggregate of any payments that otherwise would have been
paid to the Executive during the period between the date of termination and the
New Payment Date shall be paid to the Executive in a lump sum on such New
Payment Date. Thereafter, any payments that remain outstanding as of the day
immediately following the New Payment Date shall be paid without delay over the
time period originally scheduled, in accordance with the terms of this
Agreement.
(b) The Parties acknowledge and agree that the interpretation of
Section 409A and its application to the terms of this Agreement is uncertain and
may be subject to change as additional guidance and interpretations become
available. Anything to the contrary herein notwithstanding, all benefits or
payments provided by the Company to the Executive that would be deemed to
constitute "nonqualified deferred compensation" within the meaning of Section
409A are intended to comply with Section 409A. If, however, any such benefit or
payment is deemed to not comply with Section 409A, the Company and the Executive
agree to renegotiate in good faith any such benefit or payment (including,
without limitation, as to the timing of any severance payments payable hereof)
so that either (i) Section 409A will not apply or (ii) compliance with Section
409A will be achieved; provided, however, that any resulting renegotiated terms
shall provide to the Executive the after-tax economic equivalent of what
otherwise has been provided to the Executive pursuant to the terms of this
Agreement, and provided further, that any deferral of payments or other benefits
shall be only for such time period as may be required to comply with Section
409A.
(c) If, notwithstanding the preceding provisions of this Section 28,
any payment, award, benefit or distribution (or any acceleration of any payment,
award, benefit or distribution) (the "Payments") made or provided to the
Executive or for his benefit in connection with this Agreement or the
Executive's employment with the Company or the termination thereof, are
determined to be subject to the tax imposed by Section 409A(a)(1)(B) or any
interest or penalties with respect to such taxes (such taxes, together with any
such interest and penalties, are collectively referred to as the "Section 409A
Tax"), then the Company will promptly pay to the Executive an additional amount
15
(a "Gross-Up Payment") such that the net amount the Executive retains after
paying any applicable Section 409A Tax and any federal, state or local income or
FICA taxes on such Gross-Up Payment shall be equal to the amount the Executive
would have received if the Section 409A Tax were not applicable to the Payments.
All determinations of the Section 409A Tax and Gross-Up Payment, if any, will be
made by tax counsel or other tax advisers designated by or acceptable to the
Executive. For purposes of determining the amount of the Gross-Up Payment, if
any, the Executive will be deemed to pay federal income tax at the highest
marginal rate of federal income taxation in the calendar year in which the
Payments are made and state and local income taxes at the highest marginal rate
of taxation in the state and locality of the Executive's residence on the date
the Payments are made, net of the maximum reduction in federal income taxes that
could be obtained from deduction of such state and local taxes. If the Section
409A Tax is determined by the Internal Revenue Service, on audit or otherwise,
to exceed the amount taken into account hereunder in calculating the Gross-Up
Payment (including by reason of any payment the existence or amount of which
cannot be determined at the time of the Gross-Up Payment), the Company must make
another Gross-Up Payment with respect to such excess (plus any interest,
penalties or additions payable by the Executive with respect to such excess)
within ten (10) calendar days immediately following the date that the amount of
such excess is finally determined. The Company and the Executive must each
reasonably cooperate with the other in connection with any administrative or
judicial proceedings concerning the existence or amount of liability for Section
409A Tax with respect to the total Payments.
29. Counterparts.
This Agreement may be executed in two or more counterparts, and such
counterparts shall constitute one and the same instrument. Signatures delivered
by facsimile shall be deemed effective for all purposes to the extent permitted
under applicable law.
REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
16
IN WITNESS WHEREOF, the undersigned have executed this Agreement as
of the date first written above.
COMVERSE TECHNOLOGY, INC.
By: /s/ Name: Raz Alon
-----------------------------------
Name: Raz Alon
Title: Chief Executive Officer
THE EXECUTIVE
/s/ Xxxx Xxxxxxxx
-----------------------------------
Name: Mr. Xxxx Xxxxxxxx
EXHIBIT A
For the fiscal year ending January 31, 2007, the Executive shall be
entitled to a minimum bonus of $150,000 and, at the discretion of the
Compensation Committee, up to an additional $200,000 based on performance of
General Counsel duties, Chief Administrative Officer duties, other factors
relating to his performance and the Company's performance.
