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Employment Agreement - Comverse Technology Inc. and Kobi Alexander

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 AGREEMENT OF EMPLOYMENT, effective as of July 1, 1994, by and between COMVERSE
TECHNOLOGY, INC., a New York corporation (the "Company"), and KOBI ALEXANDER
(the "Executive").

 WHEREAS, the Executive has heretofore served as a senior executive officer and
director of the Company pursuant to an agreement dated as of July 1, 1993; and

 WHEREAS, the Company and the Executive desire to amend, modify and supersede
such prior agreement and to provide for the continuing services of the Executive
to the Company upon the terms and subject to the conditions hereinafter set
forth;

 NOW, THEREFORE, in consideration of the premises and of the mutual covenants
and agreements hereinafter set forth, the parties hereto hereby agree as
follows:

Section 1.
--------- 

 1.1  Upon the terms and subject to the conditions of this Agreement, the
Company hereby agrees to engage the Executive in the capacities hereinafter
described, and the Executive hereby accepts such engagement.

 1.2  The Executive shall serve as President, Chairman of the Board and Chief
Executive Officer of the Company and shall have the authority and
responsibilities normally associated with the position of Chief Executive
Officer.

 1.3  The Company shall nominate, and shall use its best efforts to cause the
shareholders of the Company to elect, the Executive to the Board of Directors of
the Company, and the Executive agrees to serve as a director of the Company
during the term of his engagement hereunder.  The Executive shall also serve as
the Chairman of the Board of Directors of each subsidiary of the Company and as
Chairman of any Executive Committee of the Board of Directors of the Company.

 1.4  The Executive's services shall be rendered with due regard by the
Executive for the prompt, efficient and economical operation of the Company's
business to the end of achieving the objectives set forth in the Company's
business plans.  The Executive shall separately render services in Israel to the
Company's wholly-owned subsidiary Efrat Future Technology Ltd. ("Efrat")
pursuant to agreement between the Executive and Efrat.

 1.5  In the event that the Executive shall request a change is his position
with the Company, the Company will try to provide the Executive with another
position of senior managerial authority reasonably acceptable to the Executive,
and such request by the Executive will not constitute a breach of this
Agreement.

 1.6  The Executive shall be entitled to cumulative paid vacations of 30
business days per year.  In the event that the demands of his activities on
behalf of the Company preclude or limit the ability of the Executive to take all
or part of such vacation in any year, the Executive shall be entitled to the
balance of such vacation in any succeeding year or, at his election, to receive
a payment (in addition to the compensation otherwise due in respect of such
vacation period) equal to the Executive's then current base salary under
subsection 3.1 applied to the vacation time not taken during such year.

Section 2.
--------- 

 2.1  The term of this Agreement and the  Executive's engagement hereunder shall
be deemed effective as of July 1, 1994 (the "Effective Date") and, except as
hereinafter otherwise 
<PAGE>
 
provided, shall terminate on June 30, 1999. This Agreement, and the term of the
Executive's engagement hereunder, shall be automatically renewed for a two-year
period at the expiration of the stated term hereof unless either party, by
written notice to the other at least 30 days prior to such expiration, elects
not to renew this Agreement.

 2.2  The Executive shall be entitled to terminate his engagement hereunder at
any time with prior written notice to the Company of at least 90 days, and the
Executive's engagement hereunder shall terminate in the event of the physical
incapacity or inability of the Executive to perform his duties for a consecutive
period of l50 days or a non-consecutive period of l80 days during any twelve
month period, or upon the death of the Executive.

 2.3  In the event of the termination or expiration of this Agreement, pursuant
to the foregoing provisions or otherwise, except as otherwise provided in
Subsection 2.4, and in consideration of the past services of the Executive and
his continuing services hereunder through the date of such termination or
expiration, the Company shall pay to the Executive an amount (the "Basic
Severance Payment") determined in accordance with the provisions hereof.  The
Basic Severance Payment shall equal the the sum of (i) the amount determined by
multiplying (a) the number of years (plus any partial years) of employment of
the Executive by the Company and any of its subsidiaries from January 1, 1983
through the earlier of the date of termination or December 31, 1994 by (b)
$60,000 plus (ii) the amount determined by multiplying (a) the number of years
(plus any partial years) of employment of the Executive by the Company and any
of its subsidiaries from January 1, 1995 through the earlier of the date of
termination or the date of expiration of this Agreement by (b) $60,000 increased
by the rate of 5% per annum compounded for each year of the Executive's
employment commencing with 1995.  The Basic Severance Payment shall be paid in a
lump sum not later than 30 days following the date of termination or expiration.

 2.4  In the event that (i) this Agreement is unilaterally terminated by the
Company over the objections of the Executive and not as a result of a
fundamental breach of his obligations hereunder, (ii) this Agreement is
terminated by the Executive as a result of a fundamental breach by the Company
of its obligations hereunder (including any breach which shall materially affect
the terms and conditions of the Executive's services hereunder, such as, without
limitation, the removal of the Executive, without his consent, from any of the
positions specified in section 1, the involuntary relocation of the site of the
Executive's activities or a diminution in the Executive's authority or in the
level of the Executive's employment-related benefits) or (iii) the Executive
shall resign from his engagement by the Company hereunder within six months
following a change in control of the Company (as hereinafter defined) to which
the Executive shall not have given his approval in his capacity as a director of
the Company, the Executive shall be entitled to payment of the sum of (A) the
the applicable Basic Severance Payment determined under subsection 2.3 hereof
plus (B) 299% of the average annual cash compensation, including salary and any
bonus payments, received by the Executive from the Company and Efrat during the
three completed fiscal years of the Company immediately preceding the date of
such termination or expiration.  Such amount shall be paid in a lump sum not
later than 30 days following the date of termination.  For the purposes of this
subsection 2.4, a change in control of the Company shall be deemed to occur upon
(a) the consummation of any merger or consolidation to which the Company is a
party and in which the Company either is not the resulting or surviving entity
or, if the Company is the resulting or surviving entity, the shareholders of the
Company immediately prior to the effective date of such merger or consolidation
shall hold less than a majority of the voting shares of the resulting or
surviving entity immediately after the effective date of such merger or
consolidation, (b) the sale, transfer or other disposition in any single
transaction or series of related transactions of all or substantially all of the
business and assets of the Company otherwise than in the ordinary course of
business, (c) the acquisition by any person, or affiliated group of persons
within the meaning of Section 13 of the Securities Exchange Act of 1934, as
amended, in any single transaction or series of related transactions, of
beneficial ownership of more than 15% of the issued and outstanding voting
shares of the Company, or (d) the change in the composition of a majority of the
members of the Board of Directors of the Company during any period of 12
consecutive months.

                                      -2-
<PAGE>
 
 2.5  The Company shall pay into a trust account to be established by the
Company for the purposes hereof such amounts as shall be required from time to
time to provide for the full payment of then current amount that would be
payable to the Executive under subsection 2.3 upon the termination of his
employment in accordance with the provisions thereof.  Such trust account shall
be established with a bank or trust company in New York City designated by the
Executive, or such other trustee or escrow agent as the Company and the
Executive shall mutually agree upon, and shall provide for the payment of the
balance in such account to the Executive upon the termination of his engagement
hereunder in partial satisfaction of the obligations of the Company pursuant to
subsection 2.3 or subsection 2.4, as the case may be.  The costs of such trust
arrangement shall be born by the Company.  The provisions hereof shall not be
deemed discharged by the participation of the Executive in any pension plan or
similar arrangement providing for the payment of retirement benefits to the
Company's executives or employees.

 2.6  In the event of the termination or expiration of this Agreement, pursuant
to the foregoing provisions or otherwise, in consideration of the past services
of the Executive and his continuing services hereunder through the date of such
termination or expiration, the Executive shall be entitled during the ensuing
period of 36 months to continue to receive all fringe benefits (including,
without limitation, those provided for under subsections 3.4 through 3.7 hereof)
which the Executive was receiving or eligible to receive at the date of such
termination or expiration.

 2.7  None of the payments or other benefits due to the Executive under this
section 2 shall be reduced or diminished by other severance payments or benefits
due to the Executive under any other arrangements, whether established by law or
by agreement, in effect with respect to the Executive's employment with the
Company or any of its subsidiaries.

Section 3.
--------- 

 3.1  The Executive shall receive during his engagement hereunder, in accordance
with the terms hereof, a base salary, commencing on the Effective Date, payable
at the rate of $293,600 per annum.  Such base salary shall be subject to
increase based on annual good faith review by the Remuneration and Stock Option
Committee of the Board of Directors of the Company, to be conducted not later
than June 30 of each year during the term hereof.  The Company hereby
acknowledges its intention to provide an appropriate increase in such base
annual salary.  In no event shall the Executive's base salary at any time be
less than that of any other officer or employee of the Company or any of its
subsidiaries.

 3.2  The compensation provided pursuant to subsection 3.1 shall be paid during
any year, as to all or any portion thereof, at such time or times as may be
requested by the Executive; provided, that the amount of such compensation that
may be prepaid at any one time shall not exceed the compensation due for the
ensuing six months.

 3.3  For each of the calendar years 1994 through 1999, the Executive shall be
entitled to bonus compensation in an amount to be negotiated annually, but not
less than three percent of the Company's consolidated after tax net income in
each year.  The final amount of the bonus for each such year shall be determined
and paid not later than April 15 of the immediately succeeding year.  The
Executive shall be entitled to receive, not later than 45 days after the close
of each calendar quarter, a prepayment of bonus compensation based on the then
applicable percentage rate of bonus compensation times 70% of the consolidated
after tax net income of the Company for such quarter, subject to adjustment upon
the final determination of bonus compensation for the year.

 3.4  The Company will reimburse the Executive for expenses, reasonably incurred
by the Executive in connection with his engagement hereunder, including, without
limitation, all expenses of telephone, business entertainment, travel (including
the regular use of an automobile owned or leased by the Company), lodging and
board while the Executive is performing services for and on 

                                      -3-
<PAGE>
 
behalf of the Company, all in a manner and style commensurate with the
Executive's position with the Company.

 3.5  The Company shall furnish to the Executive and shall pay the cost of legal
and accounting, administrative and similar services and charges incurred by the
Executive on his own behalf, and the cost of medical and dental care and
treatment for the Executive and his wife and children.

 3.6  In the event that any of the benefits provided the Executive under
subsections 2.4, 3.4, 3.5 and/or 3.7 shall be subject to income tax in the
United States, the Company shall pay the Executive such additional sums as shall
equal the tax payable in respect of such benefits (including any tax
attributable to additional amounts payable under this subsection 3.6) at the
highest marginal rate of taxation then applicable to the Executive.

 3.7  The Company shall provide the Executive with insurance coverage and
pension benefits, through participation of the Executive in the disability,
pension, group insurance, hospitalization, or other arrangements of the Company
in effect with respect to its employees, or otherwise, on a basis commensurate
with the Executive's position and level of  compensation, and such other fringe
benefits, to be determined from time to time by the Board of Directors of the
Company, as are made available to its senior management generally.  Without
limitation of the foregoing, the Company will maintain on behalf of the
Executive during the term of his engagement hereunder, with sound and reputable
insurance carriers (i) whole life insurance providing death benefits in the
amount of $1,000,000, payable to the Executive's estate or named beneficiary,
(ii) disability insurance providing for lifetime disability payments at a level
not less than the Executive's annual salary pursuant to Section 3.1 and (iii) at
the request of the Executive, if such insurance is available to other directors
of the Company, director's liability insurance in an amount comparable to such
insurance normally provided by corporations similarly situated.

 3.8  The Company will provide the Executive with the option to purchase shares
of the capital stock of each subsidiary of the Company organized or acquired
during the term of this Agreement.  For the purposes hereof, the term
"subsidiary" shall include any corporation, partnership, joint venture or other
entity of which the Company shall hold at least 50% of the outstanding equity
interest.  Except as hereinafter provided, each such option shall be granted
within three months of the organization or acquisition of such subsidiary and
shall entitle the Executive, during the period of 10 years from the date of
option grant, to purchase, from the Company or from such subsidiary, as the
Executive may determine, such number of shares of the capital stock of such
subsidiary ("Option Shares") as shall equal 7.5% of the total number of such
shares issued and outstanding (including the Option Shares issuable upon
exercise of such option) as at the date of option grant for a price equal to the
higher of the fair market value of such shares or the book value of such shares
determined as at the date of grant.  If such fair market value shall not be
determinable from an arms length transaction with a third party, it shall be
determined by the Remuneration and Stock Option Committee of the Board of
Directors in consultation with the legal counsel for the Company; provided that
if the Executive disputes such determination of fair market value and the
Company and the Executive are unable to otherwise agree within 45 days after
such determination, such fair market value shall be determined by a recognized
investment banking firm selected in good faith by the Board of Directors of the
Company.  In the event of the organization or acquisition by the Company of a
subsidiary (an "intermediate subsidiary") that is the parent organization of one
or more other subsidiaries ('junior subsidiaries" and, together with such
intermediate subsidiary and its other direct and indirect junior subsidiaries,
the "subsidiary group"), or the organization or acquisition of one or more
junior subsidiaries by an entity which is an intermediate subsidiary of the
Company, the Executive may elect, within three months after such organization or
acquisition, to convert the option rights hereunder that would otherwise apply
to the equity securities of such intermediate subsidiary into an option on
equivalent terms to purchase, for the fair market value thereof at the time of
such organization or acquisition, up to 7.5% of the equity securities
(determined as provided in subsection 3.8) of any one or more of the junior

                                      -4-
<PAGE>
 
subsidiaries of such intermediate subsidiary, in such proportions as the
Executive may specify by notice to the Company.  As soon as practicable after
the Company's receipt of such notice, the Corporate Planning and Structure
Committee of the Board of Directors of the Company (or, in its absence, the
Board of Directors of the Company or any other committee that it may designate)
shall determine the relative fair market values of the intermediate subsidiary
and all junior subsidiaries comprising the applicable subsidiary group.  As a
condition of the grant of the Executive's option rights hereunder to purchase
the equity securities of any junior subsidiary, the option to acquire equity
securities of its parent intermediate subsidiary shall be reduced, as to number
of shares and aggregate exercise price, by the same proportion as the fair
market value of such junior subsidiaries bears to the fair market value of its
subsidiary group, as determined in good faith by such committee or the Board of
Directors.

 3.9  The exercise of any option granted pursuant to subsection 3.8 shall be
subject to the condition that the voting rights pertaining to the Option Shares
shall be exercisable by the Company, pursuant to proxy granted to the Company by
the Executive, which proxy shall be deemed to be coupled with an interest and
irrevocable until the occurrence of the earliest of the following events: (i)
the reduction of the voting rights represented by the shares held by the Company
(including any voting rights pertaining to the Option Shares) to less than 50%
of the total vote represented by all issued and outstanding shares of the
subsidiary, (ii) the sale or other disposition of all or substantially all of
the assets of the subsidiary, (iii) the sale of the Option Shares by the
Executive to any unaffiliated third party, provided that the Executive shall
have first offered to sell the Option Shares to the Company on the same or
equivalent terms and conditions, or (iv) the expiration of three years after the
termination of the Executive's employment with the Company.

 3.10  All options granted to the Executive pursuant to subsection 3.8, as well
as any options to purchase shares of the Company held by the Executive under any
stock option plan or arrangement, shall become immediately vested, fully
exercisable and non-forfeitable upon the occurrence or continuance of any of the
events that would entitle the Executive to the payments specified in subsection
2.4.

 3.11  The Company shall be liable for all payments due to the Executive under
his employment agreement with Efrat if and to the extent that such payments are
not made by Efrat, as and when the same become due and payable, including,
without limitation, past and future payments of salary, severance payments,
employment-related benefits and other amounts owed or to be owed by Efrat to the
Executive.

Section 4.
--------- 

 4.1  The Executive hereby assigns to the Company all right, title and interest
in and to inventions, patents or patent applications conceived or developed, in
whole or in part, by the Executive, alone or with others, at any time during the
term of his association with the Company and its subsidiaries which relate to
the business of the Company or its subsidiaries.

 4.2  The Executive agrees that, during his engagement with the Company and for
a period of two years after the termination of his engagement with the Company
(for any reason whatsoever), except to the extent approved by the Board of
Directors of the Company he shall not (otherwise than in the good faith
performance of his duties on behalf of the Company) disclose to any person,
corporation, firm, partnership or other entity whatsoever (except the Company)
or any officer, director, stockholder, partner, associate, employee, agent or
representative of any such partnership, firm or corporation, any confidential,
proprietary information and trade secrets received by him during the course of
his association with the Company,  except only information which is otherwise
generally available to the public.

                                      -5-
<PAGE>
 
 4.3  During his engagement with the Company, the Executive shall exercise
reasonable precautions to protect the integrity of the Company's customer and
prospective customer lists, agreements, contracts or any other documents
embodying any information of the type described in subsection 4.2.

 4.4  During his engagement with the Company and (subject to the provisions of
subsection 4.5) for a period of 18 months after the termination of his
engagement with the Company for any reason whatsoever, the Executive shall not,
in any way, unless otherwise approved by the Board of Directors of the Company,
be engaged, directly or indirectly, in the United States or Canada, as an
employee, partner, proprietor, officer, director, consultant, agent, or
stockholder of any corporation, partnership, proprietorship or other form of
business entity, which is engaged in the business of creating, manufacturing or
marketing products substantially similar to or directly competitive with the
communications monitoring and message management products of the Company or its
subsidiaries, to the extent that such activity or association involves products
substantially similar to or directly competitive with such products of the
Company or its  subsidiaries.  Notwithstanding the foregoing, the Executive may
own, as an inactive investor, securities of any corporation of a class either
listed on any United States securities exchange or traded on the over-the-
counter market in the United States and listed on any generally accepted
quotation service, so long as his holdings in any one such corporation shall
not, in the aggregate, have a cost of more than $1,000,000 or constitute more
than 2-1/2% of the voting stock of such corporation.

 4.5  If any of the restrictions on competitive activities contained in this
Section 4 shall for any reason be held by a court of competent jurisdiction to
be excessively broad as to duration, geographical scope, activity or subject,
such restrictions shall be construed so as to thereafter be limited or reduced
to be enforceable to the extent compatible with applicable law as it shall then
appear; it being understood that by the execution of this Agreement the parties
hereto regard such restrictions as reasonable and compatible with their
respective rights.

Section 5.
--------- 

 5.1  This Agreement constitutes the entire agreement between the Company and
the Executive in any way relating to the engagement of the Executive and merges
all prior agreements and understandings between them.

 5.2  This Agreement may not be altered or amended except by a writing signed by
the party against whom such alteration or amendment is sought to be enforced.
No waiver by either party of any provision or condition of this Agreement by him
or it to be performed shall be deemed a waiver of similar or dissimilar
provisions or conditions at the same or any prior or subsequent time.

Section 6.
--------- 

 This Agreement is personal and non-assignable by the Executive.  It shall be
binding upon and inure to the benefit of any corporation or other entity with
which the Company shall merge or consolidate or to which the Company shall sell
or otherwise convey all or substantially all of its assets.  Any assignee must
assume all the obligations of the Company hereunder, but such assignment and
assumption shall not serve as a release of the Company.

Section 7.
--------- 

 Any notices or other communications required or permitted hereunder shall be in
writing and shall be duly given if personally delivered or sent by certified or
registered mail, return receipt requested, to the following addresses:

                                      -6-
<PAGE>
 
(i)  If to the Executive:               (ii)  If to the Company:

     Kobi Alexander                           Comverse Technology, Inc.
     177 Briarcliff Road                      170 Crossways Park Drive 
     Briarcliff Manor, NY 10510               Woodbury, New York 11797  

 Either party may alter the address for the sending of notices to such party by
a written notice sent in conformity with this Agreement.

Section 8.
--------- 

 This Agreement was negotiated in the State of New York and shall be governed by
and construed in accordance with the laws of the State of New York with respect
to agreements made and to be performed wholly therein.

Section 9.
--------- 

 If any of the provisions of this Agreement shall be held invalid, the remainder
of the Agreement shall not be affected thereby.

 IN WITNESS WHEREOF, each of the parties hereto has executed this Agreement as
of the day and year first above written.


COMVERSE TECHNOLOGY, INC.


By:  /s/ Igal Nissim                /s/ William F. Sorin
     ---------------               ---------------------
     Igal Nissim                   William F. Sorin
     Chief Financial Officer       Secretary


On behalf of the Remuneration Committee of the Board of Directors:


/s/ John H. Friedman      /s/ Sam Oolie        /s/ Yechiam Yemini
--------------------      -------------        ------------------
John H. Friedman          Sam Oolie            Yechiam Yemini


THE EXECUTIVE:

                /s/ Kobi Alexander
                ------------------
                Kobi Alexander

                                      -7-