Exhibit 10.1
EXECUTION COPY
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement") is made and entered
into as
of the 10th day of April, 2007, by and between Comverse Technology,
Inc., a New
York corporation (together with its successors and assigns
permitted under this
Agreement, the "Company"), and Andre Dahan (the "Executive").
W I T N E S S E T H
WHEREAS, the Company desires to employ the Executive as its
President
and Chief Executive 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; or
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(v) 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 26
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 26 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.
The cessation
of employment of the Executive shall not be deemed to be for Cause
unless and
until there shall have been delivered to the Executive a copy of a
resolution
adopted by the affirmative vote of not less than a majority of the
entire
membership of the Board of Directors (other than the Executive) at
a meeting of
the Board of Directors called and held for such purpose (after at
least ten days
notice is provided to Executive and Executive is given the
opportunity, together
with counsel, to be heard before the Board of Directors), finding
that, in the
good faith opinion of the Board of Directors, the Executive is
guilty of the
conduct described in clause above, specifying the particulars
thereof in detail
and directing that the Executive should be terminated for Cause,
subject to the
aforementioned right to cure.
(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);
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(iii) a
change in the composition of the Board occurring
within a two (2) year period, as a result of which
fewer than a majority of the directors are Incumbent
Directors; or
(iv)
a sale of all or substantially all of the Company's
assets.
"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.
(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 has been unable to
substantially perform his material 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.
(h) "Effective Date" shall mean April 30, 2007.
(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 26 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 26 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 but no more than ten (10) percent of the
level hereunder;
(ii)
an actual relocation of the Executive's principal
office to another location more than 35 miles from
Manhattan, New York City, New York;
(iii) any
diminution in the Executive's title as Chief
Executive Officer of the Company or any material
diminution in the Executive's position, duties or
responsibilities;
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(iv)
any failure to elect the Executive to the Board or
removal of the Executive from the Board (other than
for cause or because of legal or regulatory
requirements);
(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 Executive's written request; or
(vi)
a material breach by the Company of any provision of
this
Agreement;
provided, however, that no Good Reason shall exist solely as a
result
of (i) the Company's equity securities ceasing to be publicly
traded other than
by reason of a transaction where the Company becomes a subsidiary
of a company
(public or private) where the executive is not the chief executive
officer of
the public company if public or the ultimate parent noninvestment
company if
private or (ii) the Board's determination from time to time that
Executive shall
cease to be an executive officer or member of the board of
directors of any of
the Company's subsidiaries or affiliates.
(j) "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 employs the Executive, and the Executive
hereby
accepts such employment, for the period commencing on the Effective
Date and
ending on the third anniversary thereof, 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, in accordance with Section 26, 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.
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
President and Chief
Executive Officer of the Company. 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 Board.
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) continue to serve on the Board of Redbend
Software, Inc.;
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(b) serve on civic or charitable boards or committees; or (c) with
the approval
of the Corporate Governance and Nominating Committee of the Board,
serve on
other corporate boards or committees; provided, further, in each
case of (a),
(b) and (c) 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 14. The Executive shall report to the Board in
carrying out his
duties under this Agreement. As of the Effective Date, the Company
shall cause
the Executive to be appointed or elected as a member of the Board.
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
2007, the Executive shall be paid a Base Salary at the rate of
one-million
dollars ($1,000,000) 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, 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 but no more than ten (10) percent of the level
hereunder.
5. Incentive Compensation Arrangements.
The Executive's annual on-target bonus for each fiscal year
shall
be one hundred-percent (100%) of the Executive's Base Salary (the
"Target
Bonus"), and the Executive's annual bonus shall not exceed two
hundred-percent
(200%) of the Executive's Base Salary for any fiscal year. The
Parties agree
that the performance criteria applicable to the Executive's annual
on-target
bonus for fiscal year 2007 shall be developed by the Operations and
Strategy
Committee of the Board, in consultation with the Executive, within
forty-five
days (45) days after the Effective Date, subject to review and
approval by the
entire Board. The bonus for 2007 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 Executive shall be granted a deferred stock award for a
number of shares of the Company's common stock ("Common Stock")
equal to the
quotient obtained by dividing $4,000,000 by the average of the
closing prices
per share of the Common Stock on the "Pink Sheets" for the ten
consecutive
trading days commencing on the fifth trading day following the
Company's
issuance of a press release announcing its unaudited financial
results for the
fiscal year ended January 31, 2007, pursuant to the Comverse
Technology, Inc.
2005 Stock Incentive Compensation Plan. Such deferred stock award
shall be made
on the Effective Date and shall vest as to one-third (1/3) of the
original
number of shares subject thereto on each of the next three
anniversaries of the
date of grant, subject to accelerated vesting as otherwise provided
herein. The
Parties shall enter into the Company's documentation to evidence
the deferred
stock award substantially in the form attached hereto as Exhibit
B.
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(b) During the Term of Employment, 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,
determined in
the good faith discretion of the Board, and consistent with the
Executive's role
and responsibilities as President and Chief Executive 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.
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.
10. Vacation.
The Executive shall be entitled to an amount of paid vacation
established by the Company's vacation policy, but in no event less
than four (4)
weeks per year. 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 in accordance with the Company's
policy.
11. Legal Fees
The Company shall pay all reasonable attorneys' fees and
disbursements incurred by Executive in connection with the
negotiation of this
Agreement and related documents, up to a maximum of $25,000.
12. 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:
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(i) Base
Salary earned but not paid prior to the date of
his death, and any annual bonus earned pursuant to
Section 5, but unpaid, as of the date of death for
the immediately preceding fiscal year, payable when
bonuses are paid by the Company to its senior-level
executives in respect 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 his death occurred, 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;
(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 or 10 above in accordance with the
terms thereof; and
(iv)
such
other or additional benefits, 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
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,
subject to Section 29:
(i) Base
Salary earned but not paid prior to the date of
termination, and any annual bonus earned pursuant to
Section 5, but unpaid, as of the date of termination
for the immediately preceding fiscal year, payable
when bonuses are paid by the Company to its
senior-level executives in respect 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 his employment terminated, 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;
(iii) any
amounts earned, accrued or owing to the Executive
prior to the date of termination but not yet paid
under Sections 7, 8, 9 or 10 above in accordance with
the terms thereof; and
(iv)
such other or additional benefits, if any, as may be
provided under applicable plans, programs and/or
arrangements of the Company.
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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 26 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
prior to the date of termination but not yet paid
under Sections 7, 8, 9 or 10 above in accordance with
the terms thereof; and
(iii) such
other or additional benefits, if any, as may be
provided under applicable plans, programs and/or
arrangements of the Company.
(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,
subject to
Section 29:
(i) Base
Salary earned but not paid prior to the date of
termination;
(ii) any annual bonus
earned pursuant to Section 5, but
unpaid, as of the date of termination for the
immediately preceding fiscal year, payable when
bonuses are paid by the Company to its senior-level
executives in respect 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 his employment terminated, 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;
(iv)
one hundred fifty percent (150%) 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) days of the date of termination in
accordance with the Company's regular payroll
practice;
(v) one
hundred fifty percent (150%) of the Target Bonus,
payable in a lump sum within thirty (30) days of the
date of termination in accordance with the Company's
regular payroll practice;
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(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 deferred stock awarded
to the Executive under this Agreement;
(viii) any
amounts earned, accrued or owing to the Executive
prior to the date of termination but not yet paid
under Sections 7, 8, 9 or 10 in accordance with the
terms thereof; and
(ix)
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 26 below.
(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
12(d) above.
(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 12(c)
above. In no event shall a termination of the Executive's
employment without
Good Reason occur unless the Executive gives at least thirty (30)
calendar days
advance written notice to the Company in accordance with Section 26
below.
(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
following, subject to
Section 29:
(i) the same
payments and benefits as provided in clauses
(i), (ii), (iii), (vi), (vii) (viii) and (ix) of
Section 12(d);
(ii)
two hundred fifty percent (250%) 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; and
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(iii) two
hundred fifty percent (250%) of the Target Bonus,
payable in a lump sum within thirty (30) days of the
date of termination in accordance with the Company's
regular payroll practice.
(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 12(d) or
12(g), as
applicable.
(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 12(c) above.
(j) No Mitigation; No Offset. In the event of a termination of
the
Executive's employment for any reason under this Section 12, 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. The
Company's obligation to make the payments provided for in this
Agreement and
otherwise to perform its obligations hereunder shall not be
affected by any
set-off, counterclaim, recoupment, defense or other claim, right or
action which
the Company may have against the Executive or others; provided that
the
foregoing shall in no way limit the Company's remedies upon a
breach or
threatened breach of the restrictive covenants in Section 14.
(k) Waiver and Release. As a condition precedent to receiving
the
compensation and benefits provided under Sections 12(d) or 12(e) or
12(h), the
Executive shall execute a waiver and release substantially in the
form attached
to this Agreement as Exhibit A.
13. Certain Additional Payments by the Company
(a) Anything in this Agreement to the contrary notwithstanding,
with respect to a change in ownership or effective control of the
Company (as
those events are determined for purposes of Section 280G of the
Code) that
occurs prior to the second anniversary of the Effective Date, in
the event it
shall be determined that any payment, benefit or distribution by
the Company to
or for the benefit of the Executive (whether paid or payable or
distributed or
distributable pursuant to the terms of this Agreement or
otherwise), including
but not limited to for such determination acceleration of vesting
and benefits
as determined in regulations promulgated pursuant to Section 280G
of the Code,
but determined without regard to any additional payments required
under this
Section 13) (a "Payment") would be subject to the excise tax
imposed by Section
4999 of the Code or any successor provision, or any interest or
penalties are
incurred by the Executive with respect to any such excise tax (such
excise
taxes, together with any such interest and penalties, are
hereinafter
collectively referred to as the "Excise Tax"), then, unless the
next sentence
shall apply, the Executive shall be entitled to receive an
additional payment (a
"Gross-Up Payment") in an amount such that after payment by the
Executive of all
taxes (including any interest or penalties imposed with respect to
such taxes),
including, without limitation, any income taxes (and any interest
and penalties
imposed with respect thereto) and Excise Tax imposed upon the
Gross-Up Payment,
the Executive retains an amount of the Gross-Up Payment equal to
the Excise Tax
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imposed upon the Payments. Notwithstanding the foregoing, if it
shall be
determined that the Executive is entitled to a Gross-Up Payment,
but that if the
Payment is reduced by the amount necessary such that the receipt of
the Payment
would not give rise to any Excise Tax (the "Reduced Payment") and
the Reduced
Payment would not be less than 90% of the Payments, then no
Gross-Up Payment
shall be made to the Executive and the Payments, in the aggregate,
shall be
reduced to the Reduced Payments. If the Reduced Payment is to be
effective,
payments shall be reduced in the following order (i) any cash
severance based on
a multiple of Base Salary or annual bonus, (ii) any other cash
amounts payable
to the Executive, (iii) any benefits valued as parachute payments,
(iv)
acceleration of vesting of any stock options for which the exercise
price
e
