<PAGE>
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K/A
AMENDMENT NO. 1 TO
Annual Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
for the Fiscal Year ended December 31, 1995
Commission File Number 0-15502
COMVERSE TECHNOLOGY, INC.
(Exact name of registrant as specified in its charter)
NEW YORK 13-3238402
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
170 CROSSWAYS PARK DRIVE
WOODBURY, NY 11797
(Address of principal executive offices)
Registrant's telephone number, including area code: 516-677-7200
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
------------------- --------------------
Not applicable Not applicable
Securities registered pursuant to Section 12(g) of the Act:
COMMON STOCK, $.10 PAR VALUE PER SHARE
(Title of Class)
-----------------
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes: [X] No: [_]
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<PAGE>
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.
[X]
The aggregate market value of the voting stock held by non-affiliates of the
registrant on April 23, 1996 was approximately $508,000,000. The closing price
of the registrant's common stock on the NASDAQ National Market System on April
23, 1996 was $23-7/8 per share.
There were 21,484,525 shares of the registrant's common stock outstanding on
April 23, 1996.
DOCUMENTS INCORPORATED BY REFERENCE
None.
____________________________
TRILOGUE is a registered trademark and TRILOGUE INfinity and AUDIODISK are
trademarks of the Company.
ii
<PAGE>
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
The following table sets forth certain information regarding the
directors and executive officers of the Company. Each director has been elected
to serve until the next annual meeting of shareholders and each executive
officer serves at the discretion of the Board of Directors.
<TABLE>
<CAPTION>
NAME AGE POSITION WITH THE COMPANY
- ------------------------------ --- -----------------------------------
<S> <C> <C>
Kobi Alexander(1)(2) 43 President, Chairman of the Board of
Directors, Chief Executive Officer and
Director
Carmel Vernia 43 Chief Operating Officer; Managing
Director of Efrat Future Technology Ltd.
Igal Nissim 40 Vice President-Finance and Chief
Financial Officer
Zvi Alexander 73 Director
John H. Friedman(2)(3)(4) 42 Director
Sam Oolie(1)(2)(3)(4) 59 Director
William F. Sorin(1)(4) 47 Secretary and Director
Yechiam Yemini(1)(3) 48 Director
</TABLE>
---------------------
(1) Member of Executive Committee of the Board of Directors.
(2) Member of Audit Committee of the Board of Directors.
(3) Member of Remuneration and Stock Option Committee of the Board of
Directors.
(4) Member of Corporate Planning and Structure Committee of the Board of
Directors.
BACKGROUND OF DIRECTORS AND EXECUTIVE OFFICERS
Kobi Alexander. Mr. Alexander has served as Chairman of the Board of
--------------
Directors of the Corporation since September 1986, as President and Chief
Executive Officer since April 1987 and as a director of the Corporation since
its formation. Mr. Alexander also served as Co-Managing Director of the
Corporation's wholly-owned Israeli subsidiary, Efrat Future Technology Ltd.
("Efrat") from its formation in 1982 until October 1986, and currently serves as
Chairman of the Board of Directors of Efrat. From October 1984 to September
1986, Mr. Alexander served as Co-Chairman and Co-Chief Executive Officer of the
Corporation. Prior to the formation of Efrat, in 1980 and 1981, Mr. Alexander
served as an independent financial and business consultant to a number of
multinational corporations. Between 1978 and 1980, Mr. Alexander worked in the
Corporate Finance Department of Shearson Loeb Rhoades (currently Smith Barney
Shearson). Mr. Alexander received a B.A., magna cum laude, in Economics from
the Hebrew University of Jerusalem in 1977, and an M.B.A. in Finance from New
York University in 1980. He has served as the Chairman of the High-Tech
Research and Development Section of the Israeli Association of Industrialists.
Carmel Vernia. Mr. Vernia serves as Chief Operating Officer of the
-------------
Corporation and as Managing Director of Efrat, where he has been employed since
1984 in various capacities, including Vice President, Manager of the Government
Systems Division and Manager of the Research and Development Division. Prior to
joining Efrat, he was employed by Elco Ltd. in Israel, where he headed the
development of advanced perimeter intrusion detection systems. Between 1980 and
1982, Mr. Vernia was employed by
<PAGE>
Intel Corporation in Santa Clara, California, where he served as applications
engineer for digital signal processing, digital telephony and data
communications products. He received a B.Sc. in Electrical Engineering from the
Technion, Israel Institute of Technology, in 1974 and a M.Sc. in Electrical and
Computer Engineering from the University of California at Davis in 1980.
Igal Nissim. Mr. Nissim has been employed by the Corporation since May
-----------
1986 and has served as Vice President-Finance and Chief Financial Officer of the
Corporation since January 1993. He previously served as Chief Financial Officer
of Efrat. Prior to joining the Corporation, he was employed by Gadot Industrial
Enterprises Ltd. for a period of two years as deputy controller, responsible for
financial and cost accounting. Mr. Nissim is a Certified Public Accountant in
Israel and was employed for four years with Kesselman & Kesselman, one of the
largest accounting firms in Israel. He received a B.A. in Economics and
Accounting from Tel Aviv University in 1981.
Zvi Alexander. Mr. Alexander has been a director of the Corporation since
-------------
August 1989. Mr. Alexander has been actively engaged in the energy industry for
more than 30 years. He served as Chief Executive Officer of the Israeli
National Oil Company and its successor from 1966 through 1976, and subsequently
engaged in activities in the energy industry as a consultant and independent
entrepreneur. He is currently Chairman of A&T Exploration Company Ltd. Zvi
Alexander is the father of Kobi Alexander and the father-in-law of Yechiam
Yemini.
John H. Friedman. Mr. Friedman has been a director of the Corporation
----------------
since June 1994. He is the Managing Director of Easton Capital Corporation, a
private investment firm founded by Mr. Friedman in 1991. From 1989 to 1991, Mr.
Friedman was a Managing Director of Security Pacific Capital Investors. Prior
to joining that firm, he was a Managing Director of E. M. Warburg, Pincus & Co.,
Inc., where he was employed from 1981 to 1989. From 1978 to 1980, Mr. Friedman
practiced law with the firm of Sullivan & Cromwell in New York City. Mr.
Friedman is also a director of Alliance Entertainment Corporation. Mr. Friedman
received a B.A., magna cum laude, from Yale University and a J.D. from Yale Law
School.
Sam Oolie. Mr. Oolie has been a director of the Corporation since May
---------
1986. He has been Chairman and Chief Executive Officer of NoFire Technologies,
Inc., a manufacturer of high performance fire retardant products which offer
protection against heat and fire for many applications in the automotive,
construction, telecommunications, utility, marine, military and other markets,
since August 1995. He has also been Chairman of Oolie Enterprises, an
investment company, since July 1985. He also has served as a director of CFC
Associates, a venture capital firm, since January 1984 and as Chairman of New
Thermal Corp., an extruder of plastic profiles for the window industry, since
January 1991. He was Chairman of The Nostalgia Network, a cable television
network, from April 1987 to January 1990 and was Vice Chairman and director of
American Mobile Communications, Inc., a cellular telephone company, from
February 1987 to July 1989. From February 1962 to July 1985, Mr. Oolie was
Chairman, Chief Executive Officer and a director of Food Concepts, Inc., a
provider of food services to institutions and hospitals. Mr. Oolie also serves
as a director of Avesis, Inc., NoFire Technologies, Inc., Wayfinder, Inc. and
Noise Cancellation Technologies, Inc. Mr. Oolie received a B.S. from
Massachusetts Institute of Technology in 1958 and an M.B.A. from Harvard
Business School in 1961.
William F. Sorin. Mr. Sorin, who has served as a director and the
----------------
Corporate Secretary of the Corporation since its formation, is an attorney
engaged in private practice and is general counsel to the Corporation. Mr.
Sorin received a B.A. from Trinity College in 1970 and a J.D., cum laude, from
Harvard Law School in 1973.
Yechiam Yemini. Professor Yemini, a director of the Corporation from
--------------
October 1984 to May 1986 and since May 1987, has been Chief Scientific Advisor
to the Corporation since its formation. He has been a professor in the computer
science department of Columbia University since 1980, where he is leading
research projects in the areas of distributed computing and communications and
network management systems. Professor Yemini received a Ph.D. in Computer
Science from UCLA in 1978 in the area of computer networking. Professor Yemini
is the brother-in-law of Kobi Alexander and the son-in-law of Zvi Alexander.
- 2 -
<PAGE>
COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors has four standing committees. The Executive
Committee is empowered to exercise the full authority of the Board of Directors
in circumstances when convening the full board is not practicable. The Audit
Committee is responsible for reviewing audit procedures and supervising the
relationship between the Company and its independent auditors. The Remuneration
and Stock Option Committee is responsible for approving compensation
arrangements for senior management of the Company and administering the
Company's stock option plans. The Corporate Planning and Structure Committee
reviews and makes recommendations to the board concerning issues of corporate
structure and planning, including the formation and capitalization of
subsidiaries of the Company, the structure of acquisition transactions, the
terms of any stock options and other compensation arrangements in respect of
subsidiaries of the Company, situations that might involve conflicts of interest
relative to the Company and its subsidiaries and the terms of significant
transactions between the Company and its subsidiaries.
ITEM 11. EXECUTIVE COMPENSATION.
The following table presents summary information regarding the
compensation paid or accrued by the Company for services rendered during the
years 1993, 1994 and 1995 by those of its executive officers whose salary and
bonus compensation during 1995 exceeded $100,000:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION STOCK
NAME AND -------------------------- OPTION ALL OTHER
PRINCIPAL POSITION YEAR SALARY(1) BONUS(2) GRANTS(3) COMPENSATION(4)
- ---------------------------- ---- --------- -------- ------------ --------------
<S> <C> <C> <C> <C> <C>
Kobi Alexander 1995 $342,950 $526,845 - $324,454
President, Chief Executive 1994 $348,643 $364,020 500,000 $102,877
Officer and Chairman of 1993 $339,683 $425,000 - $238,247
the Board of Directors
Carmel Vernia 1995 $130,394 $100,000 - $ 29,921
Chief Operating Officer(5) 1994 $121,436 $100,000 200,000 $ 30,973
Managing Director, Efrat 1993 $100,513 $ 40,000 25,000 $ 23,065
Igal Nissim 1995 $ 98,988 $ 15,000 10,000 -
Chief Financial Officer 1994 $101,480 $ 17,500 10,000 -
1993 $ 90,000 $ 15,000 10,000 -
</TABLE>
- -------------------
(1) Includes salary and payments in lieu of earned vacation.
(2) Includes bonuses accrued for services performed in the year indicated,
regardless of the year of payment.
(3) See also "Security Ownership of Certain Beneficial Owners and Management -
Options to Purchase Subsidiary Shares."
(4) Consists of miscellaneous items not exceeding $10,000 in the aggregate for
any individual, premium payments and contributions under executive insurance
and training plans and, in the case of Mr. Alexander, $281,000, $60,000 and
$211,000 accrued in 1995, 1994 and 1993, respectively, for payments due on
termination of employment pursuant to the terms of his employment agreements
with the Company.
(5) Mr. Vernia was appointed Chief Operating Officer of the Company effective
January 1, 1994.
- 3 -
<PAGE>
The following table sets forth information concerning options granted
during 1995 to the executive officers of the Company under its employee stock
option plans:
STOCK OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE
ASSUMED ANNUAL RATES OF
STOCK PRICE APPRECIATION
INDIVIDUAL GRANTS FOR OPTION TERM*
-------------------------------------------------- ---------------------------
PERCENT OF
TOTAL
OPTIONS
NUMBER OF GRANTED TO EXERCISE
SHARES EMPLOYEES PRICE
SUBJECT TO IN FISCAL PER EXPIRATION
NAME OPTION YEAR SHARE DATE 5% 10%
- ---------------- ---------- ---------- -------- ---------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
Igal Nissim 10,000 1.5% $13.50 May 25, 2005 $84,901 $215,155
</TABLE>
- ------------------------
* Represents the gain that would be realized if the option were held for its
entire ten-year term and the value of the underlying shares increased at
compounded annual rates of 5% and 10% from the fair market value at the
date of option grant.
The option has a term of ten years and becomes exercisable and vests in
annual increments over the period of four years from the year of grant. The
exercise price of the option is equal to the fair market value of the underlying
shares at the date of grant.
The following table sets forth certain information concerning options
granted during the past three fiscal years to the executive officers of the
Company under its employee stock option plans:
STOCK OPTION GRANTS IN LAST THREE FISCAL YEARS
<TABLE>
<CAPTION>
PERCENT OF
TOTAL
OPTIONS
NUMBER OF GRANTED TO EXERCISE
SHARES EMPLOYEES PRICE
YEAR OF SUBJECT TO IN FISCAL PER EXPIRATION
GRANT NAME OPTION YEAR SHARE DATE
- ------- -------------- ---------- ----------- -------- ----------
<S> <C> <C> <C> <C> <C>
1995: Kobi Alexander - - - -
Carmel Vernia - - - -
Igal Nissim 10,000 1.5% $ 13.50 May 25, 2005
1994: Kobi Alexander 500,000 42.5% $ 10.00 September 22, 2004
Carmel Vernia 200,000 17.0% $ 10.00 September 22, 2004
Igal Nissim 10,000 0.9% $ 10.00 September 22, 2004
1993: Kobi Alexander - - - -
Carmel Vernia 25,000 6.1% $13.375 September 15, 2003
Igal Nissim 10,000 2.4% $13.375 September 15, 2003
</TABLE>
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<PAGE>
The following table sets forth, as to each executive officer identified
above, the shares acquired on exercise of options, value realized, number of
unexercised options held at December 31, 1995, currently exercisable and subject
to future vesting, and the value of such options based on the closing price of
the underlying shares on the NASDAQ National Market System at that date, net of
the associated exercise price.
OPTION EXERCISES AND YEAR-END VALUE TABLE
AGGREGATE OPTION EXERCISES IN 1995 AND
VALUE OF UNEXERCISED OPTIONS AT DECEMBER 31, 1995
<TABLE>
<CAPTION>
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
SHARES OPTIONS HELD IN-THE-MONEY OPTIONS
ACQUIRED AT DECEMBER 31, 1995 HELD AT DECEMBER 31, 1995
ON VALUE ----------------------------- ----------------------------------------
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---------------- -------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Kobi Alexander 44,500 $826,031 519,250 500,000 $9,113,425 $5,000,000
Carmel Vernia 10,000 $183,035 202,500 62,500 $2,281,000 $ 582,500
Igal Nissim - - 7,000 25,000 $ 68,600 $ 198,000
</TABLE>
See "Security Ownership of Certain Beneficial Owners and Management -
Options to Purchase Subsidiary Shares" for information regarding the grant to
certain executive officers of options to purchase shares of subsidiaries of the
Company.
EMPLOYMENT AGREEMENTS
Mr. Alexander serves as Chairman of the Board, President and Chief
Executive Officer of the Company under an agreement extending through June 30,
2000 at a current base annual salary of $308,300. Pursuant to the agreement,
Mr. Alexander received bonus compensation of $526,845 for services rendered
during 1995 and is entitled to receive bonus compensation in 1996 and succeeding
years in an amount to be negotiated annually, but not less than 3% of the
Company's consolidated after tax net income in each year. Mr. Alexander also
receives various supplemental medical, insurance and other personal benefits
from the Company under the terms of his employment, including the use of an
automobile leased by the Company.
Upon the termination of his employment with the Company for any reason, Mr.
Alexander is entitled to receive a severance payment in an amount equal to
$77,000 times the number of years (plus any partial years) of his employment by
the Company commencing with 1983, increased by 10% per annum starting in
December 1996, plus continued employment-related benefits for the period of 36
months following termination. In the event that Mr. Alexander's employment is
terminated by the Company without cause, by Mr. Alexander as a result of a
material breach by the Company of its obligations under the agreement or by his
resignation within the period of six months following a change in control of the
Company, Mr. Alexander is entitled to an additional severance payment equal to
299% of the average annual cash compensation (including salary and any bonus
payments) received by him from the Company during the most recent three fiscal
years plus an amount equal to the income tax liability to Mr. Alexander
resulting from such payment. The agreement also requires the Company to grant
to Mr. Alexander an option to purchase up to 7.5% of the shares of each
subsidiary of the Company, other than Efrat, for a price equal to the greater of
the fair market value or the book value of such shares at the date of option
grant.
Mr. Alexander serves as Chairman of the Board of Efrat under an agreement
that extends through July 31, 1997 at a current basic salary (the "Basic
Salary") of $3,500 per month. Efrat has also agreed to reimburse Mr. Alexander
for certain business-related expenses, to provide him with the use of a company-
owned automobile and to pay certain amounts for his account into defined
contribution insurance
- 5 -
<PAGE>
and training funds in Israel. In addition, if Mr. Alexander conducts business
activities abroad, including in the United States, Efrat is required to bear his
reasonable lodging and living expenses, which shall in any event be not less
than the per diem allowance customarily provided to senior executive managers of
Israeli companies, and if the period of his stay abroad is in excess of eight
weeks, his Basic Salary during such period shall be increased to an amount which
will support a standard of living comparable to that provided in Israel by the
Basic Salary and other benefits afforded under the agreement. Efrat is also
required to pay any taxes incurred by Mr. Alexander in respect of benefits
provided to him under the agreement and certain professional fees incurred for
the benefit of Mr. Alexander. In the event that Efrat unilaterally terminates or
fundamentally breaches the agreement, it must pay, as liquidated damages, an
amount equal to the Basic Salary due for the remainder of the term of the
agreement plus an amount equal to the present value of all non-monetary benefits
under the agreement. The present value of the non-monetary benefits under the
agreement is not readily determinable but is estimated at approximately 25% of
such salary.
Mr. Vernia is employed as Managing Director of Efrat and Chief Operating
Officer of the Company under an agreement providing for a base monthly salary at
a current rate of 33,261 Israeli shekels, subject to Israeli statutory cost of
living adjustment (resulting in a current annual salary equal to approximately
$125,000) and an annual bonus in an amount to be determined. The agreement may
be terminated by either party only with prior notice of at least one year. Mr.
Vernia is entitled under the agreement to receive various insurance and
supplemental benefits and the use of an automobile owned or leased by Efrat.
Mr. Vernia has also been granted options to purchase between 2.5% and 3.75% of
the shares of certain subsidiaries of the Company for a price equal to the
greater of the fair market value or the book value of such shares at the date of
option grant. Mr. Nissim receives a base annual salary from the Company of
25,088 Israeli shekels, subject to Israeli statutory cost of living adjustment
(resulting in a current annual salary equal to approximately $94,000) and
incidental benefits, including the use of an automobile owned by the Company.
COMPENSATION OF DIRECTORS
Each director who is not an employee of the Company or otherwise
compensated by the Company for services rendered in another capacity, and whose
position on the Board of Directors is not attributable to any contract between
the Company and such director or any other entity with which such director is
affiliated, receives compensation in the amount of $2,250 for each meeting of
the Board of Directors and of certain committees of the Board of Directors
attended by him during the year. Each of such eligible directors is also
entitled to receive an annual stock option grant under the Company's Stock
Option Plans entitling him to purchase 6,000 shares of common stock at a price
per share equal to the fair market value of the common stock as reported on the
NASDAQ System on the date two business days after the publication of the audited
year-end financial statements of the Company. Such options are subject to
forfeiture to the extent of 1,200 shares per meeting in the event that the
option holder, during the year of grant, fails to attend at least five meetings
of the Board of Directors and any of its committees of which the option holder
is a member. Each director who resides outside of the United States and is not
an officer or employee of the Company is entitled to reimbursement of expenses
incurred for attendance at meetings of the Board, up to the amount of $2,000 for
each meeting attended.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The following table sets forth certain information concerning the
beneficial ownership of shares of common stock on the part of the executive
officers and directors of the Company and all persons known by the Company to be
beneficial owners of more than five percent of the outstanding common stock as
at April 23, 1996.
- 6 -
<PAGE>
<TABLE>
<CAPTION>
NUMBER OF PERCENT
SHARES OF TOTAL
BENEFICIALLY OUTSTANDING
BENEFICIAL OWNER RELATIONSHIP WITH THE COMPANY OWNED SHARES(1)
- ---------------- -------------------------------- ------------ ------------
<S> <C> <C> <C>
Pilgrim Baxter & Associates Ltd. Shareholder 2,052,000 9.6%
1255 Drummers Lane
Wayne, PA 19087
Kobi Alexander President, Chairman of the Board,
Chief Executive Officer and Director 719,113(2) 3.3%
Carmel Vernia Chief Operating Officer 171,248(3) *
Igal Nissim Vice President-Finance and
Chief Financial Officer 5,000(4)(5) *
Zvi Alexander Director 20,000(4) *
John H. Friedman Director 6,000(4) *
Sam Oolie Director 5,000(4) *
William F. Sorin Secretary and Director 25,000(4) *
Yechiam Yemini Director 29,000(6) *
All directors and executive
officers as a group (8 persons) 980,361(7) 4.4%
- -----------------
</TABLE>
* Less than 1%.
(1) Based on 21,484,525 shares of common stock issued and outstanding on April
23, 1996, excluding, except as otherwise noted, shares of common stock
issuable upon the exercise of outstanding stock options.
(2) Includes 94,500 shares held directly by Mr. Alexander, 519,250 shares
issuable upon the exercise of stock options that were exercisable at or
within 60 days after April 23, 1996 and 105,363 shares held by other
persons, which Mr. Alexander has the sole right to vote pursuant to a proxy.
Does not include 500,000 shares issuable upon the exercise of options that
were not exercisable at or within 60 days after April 23, 1996.
(3) Includes 162,500 shares issuable upon the exercise of stock options that
were exercisable at or within 60 days after April 23, 1996. Does not
include 62,500 shares issuable upon the exercise of options that were not
exercisable at or within 60 days after April 23, 1996.
(4) Consists solely of shares issuable upon the exercise of stock options that
were exercisable at or within 60 days after April 23, 1996.
(5) Does not include 25,000 shares issuable upon the exercise of stock options
that were not exercisable at or within 60 days after April 23, 1996.
(6) Includes 22,000 shares issuable upon the exercise of stock options that were
exercisable at or within 60 days after April 23, 1996.
(7) Includes 764,750 shares issuable upon the exercise of stock options that
were exercisable at or within 60 days after April 23, 1996.
OPTIONS TO PURCHASE SUBSIDIARY SHARES
The Company has granted to certain key executives options to acquire
shares of certain subsidiaries, other than Efrat, as a means of providing
incentives directly tied to the performance of those subsidiaries for which
different executives have direct responsibility. Such options have been granted
to executive officers of the Company as set forth under "Employment Agreements".
Options have been
- 7 -
<PAGE>
granted to other key employees which, upon exercise, would represent in the
aggregate between approximately 2.5% and approximately 20% (subject in certain
instances to antidilution adjustment) of the outstanding shares of the relevant
subsidiaries. In general, these options have terms of up to ten years, become
exercisable and vest in equal ratable annual increments over periods ranging
from three to five years from the first anniversary of the date of initial
grant, and have exercise prices equal to the higher of the book value of the
underlying shares at the date of grant or the fair market value of such shares
at that date determined on the basis of an arms'-length transaction with a third
party or, if no such transactions have occurred, on a reasonable basis as
determined by the Board of Directors. Upon the exercise, in whole or in part, of
any option, Comverse will receive an irrevocable proxy to vote the underlying
shares and a right of first refusal to purchase the shares upon any proposed
sale, transfer or other disposition, until such time as the shares shall have
been sold in a bona fide open market transaction.
These options (and any shares received by the holders upon exercise)
provide the option holders with a potentially larger equity interest in the
respective subsidiaries than in the Company, which, under certain circumstances,
could cause the option holders' interests to conflict with those of the
Company's shareholders generally.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
The Company paid William F. Sorin, a director of the Company, an
aggregate of approximately $298,000 for legal services rendered to the Company
during the year ended December 31, 1995.
SIGNATURE
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
COMVERSE TECHNOLOGY, INC.
(Registrant)
By: S/ Kobi Alexander
--------------------------------
Kobi Alexander
President, Chairman of the Board
and Chief Executive Officer
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