Employment Agreement - Comverse Technology Inc. and Avi Aronovitz
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement") is made and entered into as
of the 13th day of July, 2006, by and between Comverse Technology, Inc., a New
York corporation (together with its successors and assigns permitted under this
Agreement, the "Company"), and Mr. Avi Aronovitz (the "Executive").
W I T N E S S E T H
WHEREAS, the Executive is currently serving as Vice President of
Finance, Treasurer and Interim Chief Financial Officer of the Company;
WHEREAS, the Company desires to continue to employ the Executive as its
Vice President of Finance and Treasurer, as well as its Interim Chief Financial
Officer until such time as the Company appoints a permanent Chief Financial
Officer, and to enter into an employment agreement embodying the terms of such
employment;
WHEREAS, the Company desires to assure itself of the continued
availability of the Executive's services at a time when extraordinary time,
effort and commitment may be required of the Executive and shall therefore
provide the Executive with additional incentives as set forth in Section 5(b)
below; and
WHEREAS, the Executive desires to enter into this Agreement and to
accept such continued 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.
(b) "Board" shall mean the Board of Directors of the Company.
(c) "Bonus Opportunity" shall mean the annual bonus for which the
Executive is eligible, as described in Section 5(a) below and Exhibit A hereto.
(d) "Cause" shall mean a good faith finding by the Company of:
(i) a conviction of the Executive of, or a plea of nolo
contendere by the Executive to, any felony;
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(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 resulting in material and demonstrable harm
to the Company;
(iv) a material violation by the Executive of any Company
policy or procedure provided to the Executive resulting
in material and demonstrable harm to the Company
including, without limitation, a material violation of
the Company's Code of Business Conduct and Ethics;
(v) the repeated and continued failure by the Executive to
carry out, in all material respects, the reasonable and
lawful directions of the Chief Executive Officer or the
Board that are within the Executive's individual
control and consistent with the Executive's status as a
senior executive of the Company and his duties and
responsibilities hereunder, 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,
provided that no finding of Cause pursuant to subsections (iii), (iv) or (v)
hereof shall be effective unless and until the Company has provided the
Executive with written notice thereof in accordance with Section 24 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 24 below.
(e) "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
undiluted 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) the sale, lease, exchange or other transfer (in one
transaction or a series of related transactions) of all
or substantially all of the assets of the Company; or
(iv) a change in the composition of the Board occurring
within a one (1) year period, as a result of which
fewer than a majority of the directors are Incumbent
Directors.
"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.
(f) "Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time.
(g) "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.
(h) "Competitive Activity" shall mean the Executive's engaging in
an activity, whether as an employee, consultant, principal, member, agent,
officer, director, partner or shareholder (except for a passive investment as a
less than three percent (3%) shareholder of a publicly-traded company), that is
competitive with any business of the Company at any time during the Executive's
employment with the Company; provided, however, that the Executive may be
employed by or otherwise associated with a business of which a subsidiary,
division, segment, unit, etc. is in competition with the Company but as to which
such subsidiary, division, segment, unit, etc. the Executive has absolutely no
direct or indirect responsibilities or involvement.
(i) "Disability" shall mean the Executive's inability to
substantially perform his duties and responsibilities under this Agreement for a
period of six (6) consecutive months or nine (9) out of twelve (12)
nonconsecutive months due to a physical or mental disability, as the term
"physical or mental disability" is defined in the Company's long-term disability
insurance plan then in effect (or would be so found if the Executive applied for
coverage or benefits under such plan).
(j) "Effective Date" shall mean June 1, 2006.
(k) "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 24 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 24 below:
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(i) any reduction in the Executive's Base Salary or Bonus
Opportunity, other than as part of an across-the-board
reduction applicable to all senior executives of
Comverse Technology, Inc.;
(ii) an actual relocation of the Executive's principal
office from the Company's office location as of the
Effective Date to outside the borough of Manhattan;
(iii) any change in the Executive's title, position or
reporting status as Vice President of Finance and
Treasurer, unless the Executive is provided with a
comparable title, position or reporting status, or any
diminution of the Executive's duties or
responsibilities as Vice President of Finance and
Treasurer;
(iv) 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; or
(v) a material breach by the Company of any provision of
this Agreement.
(l) "Noncompetition/Nonsolicitation Period" shall mean the period
commencing on the Effective Date and ending on the first anniversary of the date
of termination.
(m) "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 continues to employ the Executive, and the
Executive hereby accepts such continued employment, for the period commencing on
the Effective Date and ending on May 31, 2008, 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 of his or its intention not to renew this Agreement
not less than thirty (30) 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 Vice President of
Finance and Treasurer. The Executive shall also be employed as the Interim Chief
Financial Officer until such time as the Company appoints a permanent Chief
Financial Officer. In this capacity, the Executive shall be assigned only such
duties and responsibilities as are appropriate for a person holding the offices
set forth in this section. The Executive shall serve the Company faithfully,
conscientiously and to the best of the Executive's ability and shall promote the
interests and reputation of the Company. Unless prevented by illness, injury or
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Disability, the Executive shall devote all of the Executive's time, attention,
knowledge, energy and skills 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 Chief
Executive Officer of the Company or the Board, serve on corporate boards or
committees. The Executive shall report to the Chief Executive Officer in
carrying out his duties under this Agreement.
4. Base Salary.
As of the Effective Date and for the remainder of fiscal year
2006, the Executive shall be paid a Base Salary of three hundred ten thousand
dollars ($310,000), payable in accordance with the regular payroll practices of
the Company. Thereafter, the Base Salary shall be reviewed and increased no less
frequently than annually, though the amount of such increase shall be determined
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 from
such increased amount unless the Executive provides his prior written consent to
such decrease.
5. Incentive Compensation Arrangements.
(a) During the Term of Employment, the Executive shall be entitled
to participate in any Company incentive compensation plans, programs and/or
arrangements applicable to senior-level executives as established and modified
from time to time by the Board or the Compensation Committee in its sole
discretion. In addition, the Executive shall receive a bonus of no less than one
hundred fifty thousand dollars ($150,000) annually (the "Bonus Compensation"),
payable each February on the first payroll date after the close of the
applicable fiscal year. The first Bonus Compensation payment shall be due and
payable in February 2007. The formula to be used to calculate the Bonus
Compensation payable to the Executive will be set out in Exhibit A hereto and
mutually agreed upon annually. In the event such formula changes by mutual
agreement of the Parties, the Parties will sign and attach such revised
formulae, if any, to Exhibit A (e.g., Exhibit A-1, etc.).
(b) In view of the fact that the Executive is entering into this
Agreement at a time when extraordinary time, effort and commitment may be
required of the Executive, the Company shall pay the Executive a special
retention bonus (the "Special Retention Bonus") equal to four hundred thirty
thousand dollars ($430,000), which shall be due and payable as follows: $250,000
on May 15, 2007 and the balance of $180,000 in three (3) equal installments on
each of July 31, 2006, January 31, 2007 and June 1, 2007, provided that the
Executive remains employed by the Company on a continuous basis through each
such date.
6. Long-Term Incentive Compensation Programs.
(a) The Parties acknowledge that, pursuant to the Company's 2005
Stock Incentive Compensation Plan (the "2005 Plan") and a Deferred Stock Award
Agreement dated the date hereof (the "Deferred Stock Award Agreement"), the
Compensation Committee awarded to the Executive forty thousand (40,000) shares
of common stock of the Company in the form of deferred stock (the "Deferred
Stock"), which shall vest as to twenty-five percent (25%) of the original number
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of shares subject thereto on each of May 31, 2007, May 31, 2008, May 31, 2009
and May 31, 2010, subject to accelerated vesting as otherwise provided herein.
Shares of common stock in settlement of the Deferred Stock award (or, at the
Company's election, cash in lieu of shares based on the fair market value
thereof on the Settlement Date (as defined in the Deferred Stock Award
Agreement)) shall be delivered to the Executive in accordance with the
provisions of the Deferred Stock Award Agreement.
(b) During the Term of Employment, the Executive shall be entitled
to participate in any other Company plans, programs and/or arrangements
(including any equity-based plans, programs or arrangements) applicable to
senior-level executives as established, modified and administered from time to
time by the Board or the Compensation Committee in its sole discretion.
(c) In approving the grant of the Deferred Stock, the Compensation
Committee will also be asked to give its advance, irrevocable approval of any
election that the Executive may choose to make under Section 14.2 of the 2005
Plan (or any successor provision or plan) with respect to causing the Company to
withhold shares of Common Stock to pay the "Withholding Tax," as such term is
defined in that Section 14.2.
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.
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 policy.
9. 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) The Company shall lease an automobile of the Executive's
choice for the benefit of the Executive during the Term of Employment that is
comparable in quality to that leased by other senior-level executives. In
addition, the Company shall reimburse the Executive for insurance of his choice
on such automobile.
(c) The Company shall pay for reasonable legal fees and expenses
incurred by the Executive in connection with the negotiation and drafting of
this Agreement.
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(d) The Company shall reimburse the Executive for the annual
membership fee and any monthly membership fees for a membership at an area
health club of his choice.
10. Vacation.
The Executive shall be entitled to an amount of paid vacation
established by the Company's vacation policy. 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.
11. 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:
(i) Base Salary earned but not paid prior to the date of
his death;
(ii) a pro-rata share of the maximum Bonus Compensation the
Executive would have earned if he had remained employed
through the end of the fiscal year in which his death
occurred and met all requirements and goals set forth
on Exhibit A, payable in a lump sum within thirty (30)
calendar days of the date of termination in accordance
with the Company's regular payroll practice;
(iii) the immediate vesting of all stock options and
deferred stock awarded to the Executive (whenever
granted), with any options granted after the Effective
Date having a minimum exercise period of one (1) year
from the date of death or, if less, the maximum amount
permitted by Section 409A of the Internal Revenue Code
of 1986 ("Section 409A"), subject to any option plan
provisions relating to a change in control or similar
event and to the initial ten (10) year term of the
options; provided, however, that, if necessary, such
exercise period shall be extended if permitted by
Section 409A until the exercise of the options would
cease to violate any federal or state securities laws
subject to the initial ten (10) year term of the
options;
(iv) any amounts earned, accrued or owing to the Executive
but not yet paid under Sections 7, 8, 9 or 10 above
prior to the date of his death; and
(v) such other or additional benefits, including equity
compensation, 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
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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) a pro-rata share of the maximum Bonus Compensation the
Executive would have earned if he had remained employed
through the end of the fiscal year in which his
employment terminated and met all requirements and
goals set forth on Exhibit A, payable in a lump sum
within thirty (30) calendar days of the date of
termination in accordance with the Company's regular
payroll practice;
(iii) the immediate vesting of all stock options and
deferred stock awarded to the Executive (whenever
granted), with any options granted after the Effective
Date having a minimum exercise period of one (1) year
from the date of termination or, if less, the maximum
amount permitted by Section 409A, subject to any option
plan provisions relating to a change in control or
similar event and to the initial ten (10) year term of
the options; provided, however, that, if necessary,
such exercise period shall be extended if permitted by
Section 409A until the exercise of the options would
cease to violate any federal or state securities laws
subject to the initial ten (10) year term of the
options;
(iv) any amounts earned, accrued or owing to the Executive
but not yet paid under Sections 7, 8, 9 or 10 above
prior to the date of termination; and
(v) such other or additional benefits, including equity
compensation, if any, as may be provided under
applicable plans, programs and/or arrangements of the
Company.
In no event shall a termination of the Executive's employment for Disability
occur unless the Party terminating the Executive's employment provides written
notice to the other Party in accordance with Section 24 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
but not yet paid under Sections 7, 8, 9 or 10 above
prior to the date of termination; and
(iii) such other or additional benefits, including equity
compensation, 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 Cause occur
pursuant to Sections 1(d)(iii), (iv) or (v) hereof unless and until the Company
provides written notice thereof to the Executive in accordance with Section 24
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 24 below.
(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:
(i) Base Salary earned but not paid prior to the date of
termination;
(ii) a pro-rata share of the maximum Bonus Compensation the
Executive would have earned if he had remained employed
through the end of the fiscal year in which his
employment t erminated and met all requirements and
goals set forth on Exhibit A, payable in a lump sum
within thirty (30) calendar days of the date of
termination in accordance with the Company's regular
payroll practice;
(iii) 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 in
a lump sum within thirty (30) calendar days of the date
of termination in accordance with the Company's regular
payroll practice;
(iv) one hundred percent (100%) of the greater of (A) the
maximum Bonus Compensation the Executive would have
earned if he had remained employed through the end of
the fiscal year in which his employment terminated and
met all requirements and goals set forth on Exhibit A
or (B) three hundred thousand dollars ($300,000),
payable in a lump sum within thirty (30) calendar days
of the date of termination in accordance with the
Company's regular payroll practice;
(v) any unpaid portion of the Special Retention Bonus,
payable in a lump sum within thirty (30) calendar days
of the date of termination in accordance with the
Company's regular payroll practice;
(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 stock options and
deferred stock awarded to the Executive (whenever
granted), with any options granted after the Effective
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Date having a minimum exercise period of one (1) year
from the date of termination or, if less, the maximum
amount permitted by Section 409A, subject to any option
plan provisions relating to a change in control or
similar event and to the initial ten (10) year term of
the options; provided, however, that, if necessary,
such exercise period shall be extended if permitted by
Section 409A until the exercise of the options would
cease to violate any federal or state securities laws
subject to the initial ten (10) year term of the
options;
(viii) any amounts earned, accrued or owing to the Executive
but not yet paid under Sections 7, 8, 9 or 10 above
prior to the date of termination; and
(ix) such other or additional benefits, including equity
compensation, 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 24 below at least thirty (30) calendar days prior to the actual
date of termination.
(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 11(d) above.
In no event shall a termination of the Executive's employment for Good Reason
occur unless and until the Executive provides 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
24 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 24 below.
(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 11(c)
above. In no event shall a termination of the Executive's employment without
Good Reason occur unless the Executive gives written notice to the Company in
accordance with Section 24 below at least thirty (30) calendar days prior to the
actual date of termination.
(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 same payments and
benefits as provided in Sections 11(d)(i), (ii) and (v) through (ix) and two (2)
times the payments provided in Sections 11(d)(iii) and (iv) above.
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(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 11(d) above.
(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 11(c) above.
(j) No Mitigation; No Offset. In the event of a termination of the
Executive's employment for any reason under this Section 11, 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.
(k) Gross-Up Payment. If during or after the Term of Employment,
the Executive becomes subject to the excise tax imposed by Code Section 4999
(the "Parachute Excise Tax"), the Company and the Executive agree that the
Company shall pay to the Executive a tax gross-up payment so that after payment
by the Executive of all federal, state and local excise, income, employment,
Medicare and any other taxes (including any related penalties and interest)
resulting from the payment of the parachute payments and the tax gross-up
payments to the Executive by the Company, the Executive retains on an after-tax
basis an amount equal to the amount that the Executive would have retained if he
had not been subject to the Parachute Excise Tax.
12. Confidentiality: Assignment of Rights.
(a) During the Term of Employment and thereafter, the Executive
shall not disclose to anyone or make use of any trade secret or proprietary or
confidential information of the Company, including such trade secret or
proprietary or confidential information of any customer or other entity to which
the Company owes an obligation not to disclose such information, which he
acquires during the Term of Employment, including, without limitation, records
kept in the ordinary course of business, except (i) as such disclosure or use
may be required or appropriate in connection with his work as an employee of the
Company, (ii) when required to do so by a court of law, governmental agency or
administrative or legislative body (including a committee thereof) with apparent
jurisdiction to order him to divulge, disclose or make accessible such
information or (iii) as to such confidential information that becomes generally
known to the public or trade without his violation of this Section 12(a).
(b) The Executive hereby sells, assigns and transfers to the
Company all of his right, title and interest in and to all inventions,
discoveries, improvements and copyrightable subject matter (the "Rights") that,
during the Term of Employment, are made or conceived by him, alone or with
others, and that relate to the Company's present business or arise out of any
work he performs or information he receives regarding the business of the
Company while employed by the Company. The Executive shall fully disclose to the
Company as promptly as possible all information known or possessed by him
concerning the Rights, and upon request by the Company and without any further
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compensation in any form to him by the Company, but at the expense of the
Company, execute all applications for patents and copyright registrations,
assignments thereof and other applicable instruments and do all things that the
Company may reasonably deem necessary to vest and maintain in it the entire
right, title and interest in and to all such Rights.
13. Indemnification.
The Company confirms and acknowledges that the Company is
obligated to indemnify the Executive pursuant to the terms of the
Indemnification Agreement between the Company and the Executive dated April 6,
2006 and the Bylaws of Comverse Technology, Inc., and that the Executive shall
in any event be indemnified to the fullest extent permitted by law.
14. Assignability; Binding Nature.
This Agreement shall be binding upon and inure to the benefit of
the Parties and their respective successors, agents, heirs (in the case of the
Executive) and assigns. No rights or obligations of the Company under this
Agreement may be assigned or transferred by the Company; provided, however, that
such rights or obligations may be assigned or transferred pursuant to the
transactions contemplated by clauses (ii) or (iii) of the definition of a Change
in Control merger or consolidation in which the Company is not the continuing
entity, or the sale or liquidation of all or substantially all of the assets of
the Company; provided further, however, that the assignee or transferee is the
successor to all or substantially all of the assets of the Company and such
assignee or transferee assumes the liabilities, obligations and duties of the
Company, as contained in this Agreement, either contractually or as a matter of
law.
15. Representation.
The Company represents and warrants that it is fully authorized
and empowered to enter into this Agreement and that the performance of its
obligations under this Agreement will not violate any agreement between it and
any other person, firm or organization. The Executive represents and warrants
that no agreement exists between him and any other person, firm or organization
that would be violated by the performance of his obligations under this
Agreement.
16. Entire Agreement.
This Agreement contains the entire understanding and agreement
between the Parties concerning the subject matter hereof and supersedes all
prior agreements, understandings, discussions, negotiations and undertakings,
whether written or oral, with respect thereto including, without limitation, any
offer letters or employment agreements and any nondisclosure, nonsolicitation,
inventions and/or noncompetition agreements between the Parties; provided,
however, that any rights to indemnification under Section 13, all stock options
or other equity granted to the Executive prior to the Effective Date, and all
agreements relating thereto shall remain in full force and effect in accordance
with their terms except as otherwise modified herein.
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17. Amendment or Waiver.
No provision in this Agreement may be amended unless such
amendment is agreed to in writing and signed by the Executive and an authorized
officer of the Company. No waiver by either Party of any breach by the other
Party of any condition or provision contained in this Agreement to be performed
by such other Party shall be deemed a waiver of a similar or dissimilar
condition or provision at the same or any prior or subsequent time. Any waiver
must be in writing and signed by the Executive or an authorized officer of the
Company, as the case may be.
18. Withholding.
The Company may withhold from any amounts payable under this
Agreement such federal, state and local taxes as may be required to be withheld
pursuant to any applicable law or regulation.
19. Severability.
In the event that any provision of this Agreement shall be
determined by a court of competent jurisdiction to be invalid or unenforceable
for any reason, in whole or in part, the remaining parts, terms or provisions of
this Agreement shall be unaffected thereby and shall remain in full force and
effect to the fullest extent permitted by law.
20. Survivorship.
The respective rights and obligations of the Parties hereunder
shall survive any termination of the Executive's employment to the extent
necessary to preserve such rights and obligations.
21. Controlling Document.
If any provision of any agreement, plan, program, policy,
arrangement or other written document between or relating to the Company and the
Executive conflicts with any provision of this Agreement, the provision of this
Agreement shall control and prevail.
22. Beneficiaries/References.
The Executive shall be entitled, to the extent permitted under any
applicable law, to select and change a beneficiary or beneficiaries to receive
any compensation or benefit payable hereunder following the Executive's death by
giving the Company written notice thereof. In the event of the Executive's
death, reference in this Agreement to the Executive shall be deemed, where
appropriate, to refer to his beneficiary, estate or other legal representative.
23. Governing Law/Jurisdiction.
This Agreement shall be governed by and construed and interpreted
in accordance with the laws of the State of New York without reference to
principles of conflicts of law unless superseded by federal law. The Parties
agree that any suit, action or other legal proceeding that is commenced to
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resolve any matter arising under or relating to any provision of this Agreement
shall be commenced only in a court of the State of New York (or, if appropriate,
a federal court located within the State of New York), and the Parties consent
to the jurisdiction of such court.
24. Notices.
All notices shall be in writing, shall be sent to the following
addresses listed below using a reputable overnight express delivery service and
shall be deemed to be received one (1) calendar day after mailing.
If to the Company: 909 Third Avenue, 19th Floor
New York, New York 10022
Attention: Chief Executive Officer
with a copy to:
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, New York 10153
Attention: David Zeltner, Esq.
If to the Executive: 60 Meadow Drive
Woodsburgh, New York 11598
25. Headings.
The headings of the sections contained in this Agreement are for
convenience only and shall not be deemed to control or affect the meaning or
construction of any provision of this Agreement.
26. Cooperation.
The Executive agrees to cooperate with the Company in the
investigation, defense or prosecution of any claims or actions now in existence
or which may be brought in the future against or on behalf of the Company. Such
cooperation shall include meeting with representatives of the Company upon
reasonable notice at reasonable times and locations to prepare for discovery or
any mediation, arbitration, trial, administrative hearing or other proceeding or
to act as a witness. The Executive shall notify the Company if the Executive is
asked to assist, testify or provide information by or to any person, entity or
agency in any such proceeding or investigation.
In the event the Executive is not employed by the Company when
such cooperation is required, the Company shall pay the Executive his
then-applicable hourly rate or five hundred dollars ($500) per hour, whichever
is greater, plus reasonable out-of-pocket expenses, including legal fees and
expenses, in the event the Executive is required to provide such cooperation,
including preparing for and/or participating or testifying in any
administrative, judicial, legal, regulatory, internal or other proceeding or
retaining legal counsel for any reason in connection with such participation or
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testimony. Such payment or reimbursement shall be made to the Executive within
fourteen (14) calendar days after submission of the relevant statements or
invoices. Nothing contained in this section shall affect the Executive's rights
to indemnification as described in Section 13 herein. The Executive also agrees
to cooperate with the Company in the transitioning of his responsibilities after
the date of termination.
27. Noncompetition/Nonsolicitation.
(a) The Executive covenants and agrees that during the
Noncompetition/Nonsolicitation Period, he shall not at any time, without the
prior written consent of the Company, directly or indirectly, engage in a
Competitive Activity.
(b) The Executive covenants and agrees that during the
Noncompetition/Nonsolicitation Period, he shall not at any time, directly or
indirectly, solicit (x) any customer or client of the Company with respect to a
Competitive Activity; or (y) any employee of the Company for the purpose of
causing such employee to terminate his or her employment with the Company.
(c) The Parties acknowledge that in the event of a breach or
threatened breach of this Section 27, the Company shall not have an adequate
remedy at law. Accordingly, in the event of any breach or threatened breach of
this section, the Company shall be entitled to such equitable and injunctive
relief as may be available to restrain the Executive from violating the
provisions of this section.
28. Compliance with Code Section 409A.
(a) If any payment, compensation or other benefit provided to the
Executive in connection with his employment termination is determined, in whole
or in part, to constitute "nonqualified deferred compensation" within the
meaning of Section 409A and the Executive is a specified employee as defined in
Section 409A(2)(B)(i), no part of such payments shall be paid before the day
that is six (6) months plus one (1) day after the date of termination (the "New
Payment Date"). The aggregate of any payments that otherwise would have been
paid to the Executive during the period between the date of termination and the
New Payment Date shall be paid to the Executive in a lump sum on such New
Payment Date. Thereafter, any payments that remain outstanding as of the day
immediately following the New Payment Date shall be paid without delay over the
time period originally scheduled, in accordance with the terms of this
Agreement.
(b) The Parties acknowledge and agree that the interpretation of
Section 409A and its application to the terms of this Agreement is uncertain and
may be subject to change as additional guidance and interpretations become
available. Anything to the contrary herein notwithstanding, all benefits or
payments provided by the Company to the Executive that would be deemed to
constitute "nonqualified deferred compensation" within the meaning of Section
409A are intended to comply with Section 409A. If, however, any such benefit or
payment is deemed to not comply with Section 409A, the Company and the Executive
agree to renegotiate in good faith any such benefit or payment (including,
without limitation, as to the timing of any severance payments payable hereof)
so that either (i) Section 409A will not apply or (ii) compliance with Section
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409A will be achieved; provided, however, that any resulting renegotiated terms
shall provide to the Executive the after-tax economic equivalent of what
otherwise has been provided to the Executive pursuant to the terms of this
Agreement, and provided further, that any deferral of payments or other benefits
shall be only for such time period as may be required to comply with Section
409A.
(c) If, notwithstanding the preceding provisions of this Section
28, any payment, award, benefit or distribution (or any acceleration of any
payment, award, benefit or distribution) (the "Payments") made or provided to
the Executive or for his benefit in connection with this Agreement or the
Executive's employment with the Company or the termination thereof, are
determined to be subject to the tax imposed by Section 409A(a)(1)(B) or any
interest or penalties with respect to such taxes (such taxes, together with any
such interest and penalties, are collectively referred to as the "Section 409A
Tax"), then the Company will promptly pay to the Executive an additional amount
(a "Gross-Up Payment") such that the net amount the Executive retains after
paying any applicable Section 409A Tax and any federal, state or local income or
FICA taxes on such Gross-Up Payment shall be equal to the amount the Executive
would have received if the Section 409A Tax were not applicable to the Payments.
All determinations of the Section 409A Tax and Gross-Up Payment, if any, will be
made by tax counsel or other tax advisers designated by or acceptable to the
Executive. For purposes of determining the amount of the Gross-Up Payment, if
any, the Executive will be deemed to pay federal income tax at the highest
marginal rate of federal income taxation in the calendar year in which the
Payments are made and state and local income taxes at the highest marginal rate
of taxation in the state and locality of the Executive's residence on the date
the Payments are made, net of the maximum reduction in federal income taxes that
could be obtained from deduction of such state and local taxes. If the Section
409A Tax is determined by the Internal Revenue Service, on audit or otherwise,
to exceed the amount taken into account hereunder in calculating the Gross-Up
Payment (including by reason of any payment the existence or amount of which
cannot be determined at the time of the Gross-Up Payment), the Company must make
another Gross-Up Payment with respect to such excess (plus any interest,
penalties or additions payable by the Executive with respect to such excess)
within ten (10) calendar days immediately following the date that the amount of
such excess is finally determined. The Company and the Executive must each
reasonably cooperate with the other in connection with any administrative or
judicial proceedings concerning the existence or amount of liability for Section
409A Tax with respect to the total Payments.
29. Counterparts.
This Agreement may be executed in two or more counterparts, and
such counterparts shall constitute one and the same instrument. Signatures
delivered by facsimile shall be deemed effective for all purposes to the extent
permitted under applicable law.
REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
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IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date first written above.
COMVERSE TECHNOLOGY, INC.
By: /s/ Raz Alon
--------------------------------------
Name: Raz Alon
Title: Chief Executive Officer
THE EXECUTIVE
/s/ Avi Aronovitz
--------------------------------------
Name: Mr. Avi Aronovitz
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EXHIBIT A
For the fiscal year ending January 31, 2007, the Executive shall be
entitled to a minimum bonus of $150,000 and, at the discretion of the
Compensation Committee, up to an additional $200,000 based on performance of his
duties as Vice President of Finance, Treasurer and Interim Chief Financial
Officer, other factors relating to his performance and the performance of the
Company.
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