This Termination Severance Agreement involves
Title: SEPARATION AND CONSULTING AGREEMENT
Governing Law: New York Date: 2/28/2011
Industry: Software and Programming Sector: Technology
SEPARATION AND CONSULTING AGREEMENT
This Separation and Consulting Agreement (this “Agreement”) dated as of February 25, 2011 (the “Effective Date”) is entered into by and between Comverse Technology, Inc., a New York corporation (the “Company”) and Andre Dahan (the “Executive”) to set forth the terms and conditions of the Executive’s separation from the Company on March 4, 2011 (the “Separation Date”) and the terms and conditions of the Executive’s consultancy with the Company immediately following the Separation Date.
A. The Company and the Executive previously entered into an employment agreement on April 10, 2007, effective as of April 30, 2007, which was amended and restated as of December 2, 2008 under which the Executive was employed to serve as the Company’s President and Chief Executive Officer (the “Employment Agreement”).
B. The Company and the Executive wish to enter into this Agreement to supersede and replace the Employment Agreement, except where otherwise specifically noted herein.
C. The Executive has been employed by the Company as its President and Chief Executive Officer and will remain as its President and Chief Executive Officer in accordance with the terms of this Agreement through the Separation Date.
D. The Executive’s position and employment with the Company is hereby terminated effective on the Separation Date. In connection with such separation from the Company, the Executive shall be entitled to the payments described herein in lieu of any and all other payments under the Employment Agreement or otherwise.
E. The Company wishes to retain the Executive as an independent contractor Consultant to the Company for a period of ninety (90) days beginning upon the day after the Separation Date (the “Consulting Period”) pursuant to the terms and conditions of this Agreement and the Executive wishes to accept such position.
F. The Executive and the Company agree that this Agreement is expressly conditioned upon the execution and non-revocation of the Release Agreement attached hereto as Appendix A as of March 4, 2011, provided that, if the Release Agreement is not executed or is executed and revoked, then this Agreement shall be null and void ab initio and all other rights of the parties under the Employment Agreement and otherwise shall remain in full force and effect.
To provide the Executive with severance pay and to fully and finally resolve any and all issues the Executive may have regarding his prior employment with the Company, including the termination of that employment, to provide the terms of the Executive’s position as a Consultant with the Company for the Consulting Period, the Executive and the Company hereby agree as follows:
1. Separation Date. The Executive’s employment with the Company and his position as the Company’s President and Chief Executive Officer and as an officer of any subsidiaries of the Company, shall terminate immediately upon the Separation Date.
(i) Base Salary . The Executive shall be paid a Base Salary at the rate of one-million dollars ($1,000,000) per annum, less applicable deductions through the Separation Date, in accordance with the Company’s usual payroll practices.
(ii) Employee Benefit Programs . Through the Separation Date, the Executive shall be entitled to participate in all employee welfare and pension benefit plans, programs and/or arrangements applicable to senior-level executives, in accordance with the terms of such plans and policies, as in effect from time to time.
(iii) Incentive Compensation Arrangements . The Executive shall not be entitled to any bonus or other incentive compensation with respect to the fiscal year or any part thereof ending January 31, 2012. The Executive is entitled to an annual bonus earned pursuant to Section 5 of the Employment Agreement with respect to the fiscal year ending January 31, 2011, payable as soon as practicable but not later than the April 15, 2011 (the “FY2010 Bonus”). The FY2010 Bonus has been determined to be $800,000 (80% percent of the Executive’s target annual bonus for such fiscal year).
(iv) Reimbursement of Business Expenses . Through the Separation Date, 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 and payable in accordance with the Company’s policies relating thereto.
(v) Perquisites . Through the Separation Date, the Executive shall be entitled to participate in the Company’s executive fringe benefit and perquisite programs applicable to the Executive as of immediately prior to the date hereof in accordance with the terms and conditions of such programs as in effect from time to time.
(iv) Board Resignation . The Executive hereby resigns his positions as a member of the Boards of the Company and its subsidiaries and as a fiduciary of any benefit plans of the Company and its subsidiaries, effective upon the Separation Date.
2. Terms of Consultancy.
(i) Term of Consultancy; Duties and Responsibilities; Reporting . The Executive will act as an independent contractor consultant to the Company during the Consulting Period. The Executive shall advise and assist as reasonably requested by the Chairman (the “Chairman”) of the Board of Directors of the Company (the “Board”) and the Executive shall report to the Chairman in carrying out such duties, provided however, that in no event shall the Executive be expected to perform, or perform, services that exceed twenty percent (20%) of the average level of bona fide services he provided to the Company during the final thirty-six (36) months of his term as the President and Chief Executive Officer of the Company. The Executive shall not provide services not requested by the Chairman. The intent of the foregoing is that Executive shall have incurred a “separation
from service, within the meaning of Section 409A, from the Company on the Separation Date and shall be interpreted accordingly. The Executive shall not be required to perform any request requiring travel or communications expense unless the Chairman also approves, as required by Section 2(iii) below, the reasonable expense thereof in accordance with Company policy (at a level commensurate with that of Executive).
(ii) Consulting Fee . The Executive shall be paid a fee for his services as an independent contractor Consultant during the Consulting Period equal to $246,575 (“Consulting Fees”) payable in six equal installments on March 11, 2011, and March 25, 2011, April 8, 2011, April 22, 2011, May 6, 2011, May 20, 2011, and June 3, 2011 of $41,095.83. Except as otherwise set forth herein, the Executive shall not be entitled to any other rights, entitlements, compensation or benefits with respect to the consulting services from the Company.
(iii) Reimbursement of Expenses; Indemnification . Company shall reimburse the Executive pursuant to the Company’s reimbursement policies for such reasonable business expenses incurred by the Executive in connection with the performance of the consulting services described in this Section 2 to the extent expressly agreed upon in writing by the Chairman prior to the incurrence of such expenses by the Executive, subject to documentation and payable in accordance with the Company’s policies relating thereto. The Executive shall have no liability to the Company as a result of his services provided as a consultant except for any action taken in bad faith or due to his negligence. In addition, the Company shall indemnify the Executive for any claims or liability he incurs arising from his good faith performance of the consulting services in the course of his consultancy to the fullest extent permitted by law, other than with respect to such claims or liability that arise as the result of his bad faith or negligence.
(iv) Status as an Independent Contractor. The Company and the Executive acknowledge and agree that in performing consulting services pursuant to this Agreement the Company shall not exercise general supervision or control over the time, place or manner in which the Executive provides consulting services hereunder and the Executive shall be acting and shall act at all times during the Consulting Period as an independent contractor only and not as an employee, agent, partner or joint venturer of or with the Company or any entity for which the Company provides services. The Executive acknowledges that he is solely responsible for the payment of all Federal, state, local and foreign taxes that are required of him by applicable laws or regulations to be paid with respect to the Consulting Fees payable hereunder.
3. Severance Pay. (a) In lieu of any other rights, entitlements or benefits he may have had under the Employment Agreement (except as expressly provided otherwise herein), the Executive will be entitled to the following:
(i) his Base Salary earned but not paid prior to the Separation Date, to be paid in accordance with the Company’s regular payroll practices;
(ii) $1,500,000 (an amount equal to one hundred fifty percent of the Base Salary), payable on the date that is six (6) months plus one (1) day after the Separation Date (the “New Payment Date”);
(iii) $1,500,000 (an amount equal to one hundred fifty percent (150%) of the Target Bonus as defined in Section 5 of the Employment Agreement), payable on the New Payment Date;
(iv) the full monthly premiums (employer and employee portions) for the Executive’s and any covered beneficiary’s coverage under COBRA health continuation benefits on a monthly basis over the eighteen (18) month period immediately following the Separation Date, and which premiums will be treated as taxable income to the Executive;
(v) the immediate vesting as of the Separation Date of all of the Executive’s outstanding unvested deferred stock awards that were granted to the Executive pursuant to the Employment Agreement and under the Company’s 2005 Stock Incentive Compensation Plan or otherwise (the “Deferred Stock Awards”), which Deferred Stock Awards shall be settled in accordance with the terms of the applicable long-term incentive plan and award agreement by the Company’s delivery of shares of Company Common Stock on the New Payment Date, net of a sufficient number of shares to enable the Company to satisfy the minimum withholding requirements with respect to the settlement of such Deferred Stock Awards. Exhibit A hereto sets forth a complete list of all of the Executive’s Deferred Stock Awards that are currently outstanding, indicating the date of grant of such Deferred Stock Units and the number of shares of Company Common Stock to be issued in settlement of such Deferred Stock Awards pursuant to this Section 2(v); and
(vi) any amounts earned, accrued or owing to the Executive prior to the Separation Date but not yet paid under Sections 7, 8, or 9 of the Employment Agreement or Sections 1(i) –(v) of this Agreement. In addition, the Executive will be paid $128,000 in a lump sum in cash with respect to all his accrued, unused vacation of 32 days as of the Separation Date, which was earned prior to the Effective Date, to be paid in accordance with the Company’s regular payroll practices.
(b) The Executive and the Company acknowledge and agree that the provisions set forth in Sections 12(j) and 14 of the Employment Agreement are hereby incorporated herein and shall continue to apply in accordance with the terms thereof and that the termination is a termination without Cause (as defined in the Employment Agreement). For the avoidance of doubt, the Executive shall not be entitled to any payments or benefits under Section 12(d) of the Employment Agreement but instead shall be entitled to the payments and benefits specified herein.
4. No Additional Compensation . The Executive and the Company agree that, except as expressly set forth in this Agreement, the Executive shall not be entitled to receive any additional compensation, bonuses, incentive compensation, Executive benefits or other consideration from the Company in connection with or in any way related to his termination from, or prior employment by, the Company.
5. Release Agreement . The Executive and the Company agree that this Agreement (including the payments and benefits contained in Sections 3(ii) – (v) hereof) is expressly conditioned upon the execution and non-revocation of the Release Agreement attached hereto as Appendix A, provided that, if the Release Agreement is not executed or is executed and revoked, this Agreement shall be null and void ab initio and all other rights of the parties under the Employment Agreement and otherwise shall remain in full force and effect.
6. Restrictive Covenants . The Executive acknowledges and agrees that the covenants set forth in Section 14 of the Employment Agreement are hereby incorporated herein and shall continue to apply in accordance with the terms thereof; provided, however, that at the Executive’s request the Chairman will consider in good faith whether a company for which the Executive desires to work is a Competitive Business and the Chairman will respond within a reasonable time following Executive’s request.
7. Return of Company Property; Cooperation . The Executive will promptly following March 4, 2011 return to the Company all Company property he is aware of or reasonably should be aware of being in his possession, including, without limitation, any keys, access cards, credit cards, books, manuals, files, computer software, disks and the like, as well as all paper and electronic copies of materials and documents in his possession or under his direct or indirect control relating to the Company, its business, Executives, and customers, and that he has not retained copies, in whatever form, of any such materials or documents; provided, that to the extent he later becomes aware of Company property in his possession, the Executive shall promptly upon discovery return to the Company all such Company property. If Executive, or his counsel in the case of litigation, reasonably believe that certain property or other information is reasonably required or necessary in connection with the legal action related to Maverick Fund L.D.C. or any other legal action commenced against the Executive (other than a non-derivative action by the Company), then the Company shall provide such property or other information to Executive’s counsel (and Company may retain the original) to be used solely in connection with such legal action, but such property or other information may not be used for business or personal purposes, and such property or information shall be returned or destroyed after it is no longer required for such authorized purposes. Notwithstanding anything to the contrary set forth herein, the Company hereby acknowledges and agrees that the Executive (a) may retain, as his own property, his copies of his individual personnel documents, such as his payroll and tax records, and similar personal records, his rolodex and address book so long as they contain only contact type information and a copy is left at the Company, his blackberry and his mobile number; and (b) may purchase for a price of $300 his Company-provided computer, after providing the Company with a reasonable time to review and “scrub” such computer for Company property of the type described in this Section 7. Notwithstanding anything to the contrary contained herein, the Executive’s u