EXHIBIT 10.1
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EMPLOYMENT AGREEMENT
This
Employment Agreement (the "Agreement") is made and entered into as
of
the 4th day of September, 2007, by and between Comverse Technology,
Inc., a New
York corporation (together with its successors and assigns
permitted under this
Agreement, the "Company"), and Cynthia L. Shereda (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, General Counsel and Corporate Secretary 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
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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 her 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 (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.
(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) 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.
(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 her 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 October 15, 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 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 Manhattan,
New York City, New York;
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(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.
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 18 months thereafter, 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 her 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 headquarters
in New York,
New York 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, General Counsel and Corporate Secretary 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 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, further, in each case of (a) and (b) and in
the aggregate,
that such activities do not conflict or interfere with the
performance of the
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Executive's duties hereunder or conflict with Section 13. The
Executive shall
report to the Company's Chief Executive Officer in carrying out her
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
2007,
the Executive shall be paid a Base Salary at the rate of not less
than four
hundred and thirty-seven thousand ($437,000) 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 2008, 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 her 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 $425,000 (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 2007 shall not be less than Two
Hundred
Thousand Dollars ($200,000). For purposes of this Agreement,
Executive's target
bonus opportunity ("Target Bonus") shall be $300,000 (subject to
achievement of
the requisite performance criteria). Any bonuses shall be payable
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.
6.
Long-Term
Incentive Compensation Programs.
(a)
On the Effective
Date, there will be a grant to Executive of 25,000
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
and the form
of the Company's Deferred Stock Award Agreement that will vest
one-third on each
of the first, second and third anniversary of the Effective
Date.
(b)
During the Term
of Employment (including fiscal year 2008), 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, General Counsel and
Corporate
Secretary of the Company, with such awards to be assessed on an
annual basis.
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7.
Equity
Grant.
On the
Effective Date, there will be a one-time grant (in addition to
any
grant under Section 6 above) to Executive of 25,000 deferred stock
units
representing the right to receive, upon vesting, shares of Common
Stock in
accordance with the terms and conditions of the Company's 2005
Stock Incentive
Compensation Plan and the form of the Company's Deferred Stock
Award Agreement
in order to offset the loss of existing unvested equity incentive
rights that
Executive is or would have been entitled to at Executive's current
employer (the
"Special One-Time Equity Grant"). These deferred stock units will
vest one-third
on each of the first, second and third anniversary of the Effective
Date.
8.
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).
9.
Reimbursement of Business Expenses.
During the
Term of Employment, the Executive is authorized to incur
reasonable business expenses in carrying out her duties and
responsibilities
under this Agreement, and the Company shall reimburse her for all
such
reasonable business expenses, subject to documentation in
accordance with the
Company's policies relating thereto.
10.
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)
In addition to
any Company provided life insurance coverage
otherwise provided pursuant to Sections 8 or 10(a) above, the
Company shall,
during the period that the equity award under Section 7 above
remains unvested,
maintain for the benefit of Executive and her beneficiaries a term
insurance
policy on the life of Executive with a minimum death benefit equal
to the value
of the unvested portion of such equity award.
(c)
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.
11.
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.
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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 she or her estate and/or beneficiaries, as the case may be,
shall be
entitled to the following, subject to Section 28 below::
(i) Base Salary
earned but not paid prior to the date of her 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 when bonuses are
paid by the Company to its senior-level executives in respect
of such 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 she had remained employed
through the end of the fiscal year in which her death or
Disability termination 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 (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 her death but not yet paid under Sections 8, 9, 10
or 11 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.
In addition, in the event of a termination of Executive's
employment for
Disability, all unvested deferred stock units pursuant to the
Special One Time
Equity Grant under Section 7 above shall become fully vested on the
date of such
termination. 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 25 below.
(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;
(ii) any amounts
earned, accrued or owing to the Executive prior to
the date of termination but not yet paid under Sections 8, 9,
10 or 11 above in accordance with the terms thereof; and
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(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 28:
(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
(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 she had remained employed
through the end of the fiscal year in which her 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 (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
