Exhibit 10.2
EXECUTION COPY
EMPLOYMENT AGREEMENT
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This Employment
Agreement (the "Agreement") is made and entered into as
of the 21st day of May, 2009, by and between Comverse Technology,
Inc., a New
York corporation (together with its successors and assigns
permitted under this
Agreement, the "Company"), and Stephen M. Swad (the
"Executive").
W
I T N E S S E T H
WHEREAS, the
Company desires to employ the Executive as its Executive
Vice President and Chief Financial Officer and to enter into an
employment
agreement embodying the terms of such employment; and
WHEREAS, the
Executive desires to enter into this Agreement and to
accept such 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 and
permitted decreases.
(b) "Board" shall
mean the Board of Directors of the Company.
(c) "Cause" shall
mean:
(i) an indictment or 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;
(iii) willful misconduct or gross negligence by the Executive
with
regard to the Company resulting in material and
demonstrable harm to the Company;
(iv) a material violation by the Executive of any
material
Company policy or procedure provided to the Executive,
including without limitation a material violation of the
Company's Code of Business Conduct and Ethics, resulting
in material and demonstrable harm to the Company;
(v) the repeated and continued failure by the Executive
to
carry out, in all material respects, the reasonable and
lawful directions of the Company's Chief Executive
Officer
and President and/or 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; provided
such failure has continued after it has been brought to
the Executive's attention by the Chief Executive Officer
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and President and/or Board, except, in all cases, 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 (other than good faith
immaterial expense account disputes);
provided, however, that no finding of Cause pursuant to subsections
(iii) or
(iv) hereof shall be effective unless and until the Company has
provided the
Executive with written notice thereof in accordance with Section 25
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 25 below.
For purposes of this Agreement, no act or failure to act, on the
part of the
Executive, shall be considered "willful" unless it is done, or
omitted to be
done, by the Executive in bad faith and without reasonable belief
that the
Executive's action or omission was in the best interests of the
Company. Any
act, or failure to act, based upon specific direction given
pursuant to a
resolution adopted by the Board of Directors or on the advice of
Company counsel
shall be conclusively presumed to be done, or omitted to be done,
by the
Executive in good faith and in the best interests of the
Company.
Notwithstanding the above, any termination of Executive's
employment based on
Cause shall not be deemed to be for Cause unless and until
Executive has been
provided with (i) written notice specifying in detail the basis for
such action
and (ii) on at least (10) days prior notice, an opportunity,
together with legal
counsel, to be heard on such proposed determination with the
Company's Chief
Executive Officer and Chairman of the Company's Audit
Committee.
(d) "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 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) during any period of two consecutive years, individuals
who at the beginning of such period constituted the
entire Board ceased for any reason to constitute a
majority
thereof unless the election, or the nomination
for election by the Company's shareholders, of each new
director was approved by a vote of at least two-thirds
of the directors then still in office who were directors
at the beginning of the period; or
(iv) a sale of all or substantially all of the Company's
assets.
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(e) "Code" shall
mean the Internal Revenue Code of 1986, as amended
from time to time.
(f) "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.
(g) "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).
(h) "Effective
Date" shall mean May 26, 2009.
(i) "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 25 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 25 below:
(i) any reduction in the Executive's Base Salary or
Target
Bonus, other than as part of an across-the-board
reduction applicable to all senior executives of the
Company that results in a reduction to the Executive
proportional to that of other executives, provided,
however,
that an across-the-board reduction of
Executive's compensation in excess of 10% of Base Salary
or 20% of Target Bonus shall constitute Good Reason;
(ii) an actual relocation of the Executive's principal
office
to another location more than 35 miles from Washington,
D.C.;
(iii) any material diminution in the Executive's title,
position or reporting status, or any material diminution
of the Executive's duties or responsibilities;
(iv) notice to Executive of the Company's intention not
to
renew this Agreement pursuant to Section 2 below;
(v) a failure of the Company to obtain the assumption
in
writing of its obligations under this Agreement by any
successor to all or substantially all of the assets of
the Company within ten (10) calendar days after
completion of a merger, consolidation, sale or similar
transaction and the failure to deliver a copy of the
document effecting such assumption to the Executive upon
the Executive's written request; or
(vi) a material breach by the Company of any provision of
this Agreement.
(j) "Term of
Employment" shall mean the period specified in Section 2
below, as such period may be extended.
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2. Term of
Employment.
The Company hereby employs the Executive, and the Executive
hereby
accepts such employment, for the period commencing on the Effective
Date and
ending January 31, 2011, subject to earlier termination of the Term
of
Employment in accordance with the terms of this Agreement (the
"Initial Term").
This Agreement shall be automatically renewed for additional one
(1) year
periods at the end of the Initial Term and on each anniversary
thereafter,
unless either Party notifies the other Party in writing, in
accordance with
Section 25, of his or its intention not to renew this Agreement not
less than
sixty (60) calendar days prior to such expiration date or
anniversary, as the
case may be. Executive shall be based in the Company's offices
located in
Washington, D.C. with such travel within and outside of the United
States as may
be reasonably required in the performance of Executive's
duties.
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 and Chief Financial Officer. In this capacity, the
Executive shall be
have the duties, responsibilities and authority commensurate with
the position
and such other duties and responsibilities as are appropriate for a
person
holding the offices set forth in this section and assigned by the
Company's
Chief Executive Officer. Unless prevented by illness, injury or
Disability, the
Executive shall devote substantially all of the Executive's time,
attention and
efforts 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 Company's
Chief Executive
Officer, serve on other corporate boards or committees; provided,
in each case
of (a) and (b) and in the aggregate, that such activities do not
conflict or
interfere with the performance of the Executive's duties hereunder
or conflict
with Section 13. The Executive shall report to the Company's Chief
Executive
Officer in carrying out his duties under this Agreement. If
requested, the
Executive shall also serve as an executive officer and/or member of
the board of
directors of any of the Company's subsidiaries or affiliates
without additional
compensation.
4. Base
Salary.
As of the Effective Date and for the remainder of fiscal year
2009, the Executive shall be paid a Base Salary at the rate of not
less than six
hundred and twenty-five thousand dollars ($625,000) per annum,
payable in
accordance with the regular payroll practices of the Company.
Thereafter, the
Base Salary shall be reviewed no less frequently than annually,
including in
respect of fiscal year 2010, and the amount thereof may be
increased in the
discretion of the Board or the Compensation Committee. After giving
effect to
the preceding two sentences, the Base Salary may not be decreased
unless the
Executive provides his prior written consent to such decrease or it
is part of
an across-the-board reduction applicable to all senior executive
officers of the
Company that results in a reduction to the Executive proportional
to that of
other executives (subject to the exception set forth in Section
1(i)(i)).
5. Incentive
Compensation Arrangements.
The Executive's maximum annual bonus opportunity for each
fiscal
year shall be $1,025,000 (and shall be adjusted based on future
increases in
Base Salary) and will be payable based upon the achievement of
performance
criteria developed by the Company's Chief Executive Officer;
provided, however,
that the Executive's bonus for fiscal year 2009 shall not be less
than Two
Hundred and Seventh-Five Thousand Dollars ($275,000). For purposes
of this
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Agreement, Executive's target bonus opportunity ("Target Bonus")
shall be
$625,000 (subject to achievement of the requisite performance
criteria). Any
bonuses shall be payable in the fiscal year following the
applicable fiscal year
when bonuses are customarily payable under the Company's regular
payroll
practices, but in no event later than 2 and 1/2 months following
the end of the
applicable fiscal year. The bonus for fiscal year 2009 shall be
based on the
full year and not prorated as a result of the Effective Date.
6. Long-Term
Incentive Compensation Programs.
(a) The
Compensation Committee and the Company's management will
recommend that the Board approve, at its first scheduled meeting
after the date
hereof, a grant to the Executive of 210,000 deferred stock units
representing
the right to receive, upon vesting, shares of Company common stock
("Common
Stock") in accordance with the terms and conditions of the
Company's 2005 Stock
Incentive Compensation Plan. One-third (1/3) of the award would be
scheduled to
vest, and shares of Common Stock in respect thereof delivered, on
each of the
first, second and third anniversary of the Effective Date.
Notwithstanding the
foregoing, the vesting and delivery of 70,000 of the deferred stock
units will
be conditioned upon the achievement by the Company and Comverse,
Inc. of a
specified performance criterion based on pro forma operating income
for fiscal
year 2009, and such shares will be forfeited if such performance
criterion is
not achieved. The deferred stock award would be documented using
the form of the
Company's Deferred Stock Award Agreement.
(b) During the
Term of Employment (including fiscal year 2009), the
Executive will be eligible to receive equity awards under the
Company's stock
incentive plans based on the performance of the Company and the
performance of
the Executive, as recommended by the Company's Chief Executive
Officer and
determined in the good faith discretion of the Board and/or
Compensation
Committee, as applicable, and consistent with the Executive's role
and
responsibilities as Executive Vice President and Chief Financial
Officer of the
Company, with such awards to be assessed on an annual basis.
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 other than those
relating to
cash bonuses or equity awards (as to which Sections 5 and 6 hereof
shall
govern).
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 policies relating thereto. In addition, the Company shall
pay for
reasonable legal fees and expenses up to an amount of $15,000
incurred by the
Executive in connection with the negotiation and drafting of this
Agreement.
9.
Perquisites.
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. During
the term of
employment, the Executive shall be entitled to an annual additional
supplemental
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payment of $25,000 payable as additional salary during the course
of the year in
accordance with the regular payroll practices of the Company.
10. Vacation.
The Executive be
entitled to four (4) weeks paid vacation in each
calendar year and seven (7) personal days administered in
accordance with the
Company's policies in place from time to time.
11.
Relocation.
In the event that
the Executive is required to relocate to New York,
New York, the Company will extend to the Executive relocation
assistance on
terms consistent with that available to other senior level
executives and to be
agreed upon at such time.
12. Termination of
Employment.
(a) Termination of
Employment Due to Death or Disability. In the event
of the Executive's death or Disability during the Term of
Employment, the Term
of Employment shall end as of the date of the Executive's death or
Disability
and he, his estate and/or beneficiaries, as the case may be, shall
be entitled
to the following, subject to Section 27 below:
(i) Base Salary earned but not paid prior to the date
of his
death
or Disability, and any annual bonus earned
pursuant to Section 5, but unpaid, as of the date of
death or Disability for the immediately preceding fiscal
year, payable to Executive in a lump sum less applicable
tax withholdings when bonuses are paid by the Company to
its senior-level executives in respect of such fiscal
year after the end of the applicable fiscal year (but
not later than 2-1/2 months after the end of such fiscal
year);
(ii) a pro-rata share of the annual bonus the Executive
would
have earned pursuant to Section 5 if he had remained
employed through the end of the fiscal year in which the
termination occurred based on the number of days the
Executive is employed during the year of termination and
based on the Company's actual performance against the
goals set by the Compensation Committee for such fiscal
year, payable when bonuses are paid by the Company to
its senior-level executives in respect of such fiscal
year after the end of the applicable fiscal year (but
not later than 2-1/2 months after the end of such fiscal
year);
(iii) any amounts earned, accrued or owing to the Executive
prior to the date of his death but not yet paid under
Sections 7, 8, 9, 10 or 11 above in accordance with the
terms thereof payable to Executive in a lump sum less
applicable tax withholdings; and
(iv) such other or additional benefits, 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 within ten (10) business days to the other Party in
accordance with
Section 25 below.
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(b) 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 payable to Executive in a lump sum less
applicable tax withholdings;
(ii) any amounts earned, accrued or owing to the
Executive
prior to the date of termination but not yet paid under
Sections 7, 8, 9, 10 or 11 above in accordance with the
terms thereof payable to Executive in a lump sum less
applicable tax withholdings; and
(iii) such other or additional benefits, if any, as may be
provided under applicable plans, programs and/or
arrangements of the Company.
(c) Termination of
Employment by the Company without Cause or by the
Executive for Good Reason. If the Executive's employment is
terminated by the
Company without Cause (other than due to death or Disability) or by
the
Executive for Good Reason, the Term of Employment shall end as of
the date of
termination and the Executive shall be entitled to the following,
subject to
Section 27:
(i) Base Salary earned but not paid prior to the date
of
termination payable to Executive in a lump sum less
applicable tax withholdings;
(ii)
any annual bonus earned pursuant to Section 5, but
unpaid, as of the date of termination for the
immediately preceding fiscal year, payable to Executive
in a lump sum less applicable tax withholdings when
bonuses are paid by the Company to its senior-level
executives in respect of such fiscal year after the end
of the applicable fiscal year (but not later than 2-1/2
months after the end of such fiscal year);
(iii) a pro-rata share of the annual bonus the Executive would
have earned pursuant to Section 5 if he had remained
employed
through the end of the fiscal year in which the
termination occurred based on the number of days the
Executive is employed during the year of termination and
based on the Company's actual performance against the
goals set by the Compensation Committee for such fiscal
year, payable when bonuses are paid by the Company to
its senior-level executives in respect of such fiscal
year after the end of the applicable fiscal year (but
not later than 2-1/2 months after the end of such fiscal
year);
(iv) 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 to
Executive in a lump sum less applicable tax withholdings
within the later of (i) 30 calendar days after the date
of termination or (ii) the seventh day after the
expiration of the revocation period, if applicable,
under the release contemplated by Section 12(i) below,
in accordance with the Company's regular payroll
practice;
(v) one hundred percent (100%) of the Target Bonus
(regardless of any performance requirements), payable to
Executive in a lump sum less applicable withholdings
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within the later of (i) 30 calendar days after the date
of termination or (ii) the seventh day after the
expiration of the revocation period, if applicable,
under the release contemplated by Section 12(i) below;
(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 twelve (12) month period immediately
following the date of termination;
(vii) any amounts earned, accrued or owing to the Executive
prior to the date of termination but not yet paid under
Sections 7, 8, 9, 10 or 11 in accordance with the terms
thereof payable to Executive in a lump sum less
applicable tax withholdings; and
(viii) such other or additional benefits, 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 25 below.
(d) 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
following, subject to
Section 27:
(i)
Base Salary earned but not paid prior to the date of
termination payable to Executive in a lump sum less
applicable tax withholdings;
(ii) any annual bonus earned pursuant to Section 5, but
unpaid, as of the date of termination for the
immediately preceding fiscal year, payable to Executive
in a lump sum less applicable tax withholdings when
bonuses
are paid by the Company to its senior-level
executives in respect of such fiscal year after the end
of the applicable fiscal year (but not later than 2-1/2
months after the end of such fiscal year);
(iii) a pro-rata share of the annual bonus the Executive would
have earned pursuant to Section 5 if he had remained
employed through the end of the fiscal year in which the
termination occurred based on the number of days the
Executive is employed during the year of termination and
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