Quarterly Report (10-q)

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended April 30, 2015

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

COMVERSE, INC.

(Exact name of registrant as specified in its charter)



Delaware	001-35572	04-3398741
(State or other jurisdiction of incorporation or organization)	(Commission File Number)	(I.R.S. Employer Identification No.)

200 Quannapowitt Parkway

Wakefield, MA

01880

(Address of Principal Executive Offices)

(Zip Code)

(781) 246-9000

(Registrant’s telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report)

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. x Yes ¨ No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). x Yes ¨ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.



Large accelerated filer	¨	Accelerated filer	x

Non-accelerated filer	¨ (Do not check if a smaller reporting company)	Smaller reporting company	¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ¨ Yes x No

There were 22,705,657 shares of the registrant’s common stock outstanding on June 1, 2015.

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FORWARD-LOOKING STATEMENTS			i

PART I	FINANCIAL INFORMATION		1

	ITEM 1.	FINANCIAL STATEMENTS (UNAUDITED)	1

		CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE MONTHS ENDED APRIL 30, 2015 AND 2014	1

		CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS FOR THE THREE MONTHS ENDED APRIL 30, 2015 AND 2014	2

		CONDENSED CONSOLIDATED BALANCE SHEETS AS OF APRIL 30, 2015 AND JANUARY 31, 2015	3

		CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE THREE MONTHS ENDED APRIL 30, 2015 AND 2014	4

		NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS	5

	ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	32

	ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	49

	ITEM 4.	CONTROLS AND PROCEDURES	49

PART II	OTHER INFORMATION		50

	ITEM 1.	LEGAL PROCEEDINGS	50

	ITEM 1A.	RISK FACTORS	50

	ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	51

	ITEM 3.	DEFAULTS UPON SENIOR SECURITIES	51

	ITEM 4.	MINE SAFETY DISCLOSURES	51

	ITEM 5.	OTHER INFORMATION	52

	ITEM 6.	EXHIBITS	53

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FORWARD-LOOKING STATEMENTS

Certain statements contained in this Quarterly Report on Form 10-Q for the quarter ended April 30, 2015 are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements. Forward-looking statements include financial projections, statements of plans and objectives for future operations, statements of future economic performance, and statements of assumptions relating thereto. In some cases, forward-looking statements can be identified by the use of terminology such as “may,” “expects,” “plans,” “anticipates,” “estimates,” “believes,” “potential,” “projects,” “forecasts,” “intends,” or the negative thereof or other comparable terminology. By their very nature, forward-looking statements involve known and unknown risks, uncertainties and other important factors that could cause actual results, performance and the timing of events to differ materially from those anticipated, expressed or implied by the forward-looking statements in this Quarterly Report. Such risks or uncertainties may give rise to future claims and increase exposure to contingent liabilities.

In particular, we recently announced three material transactions:


•	the pending sale of our BSS business to Amdocs Limited;


•	execution of a master services agreement with Tech Mahindra pursuant to which Tech Mahindra will perform certain services for us on a global basis; and


•	The acquisition of Acision Global Limited (or Acision).

These transactions are subject to numerous risks and uncertainties, which include:


•	General disruption of the business and allocation of resources to completion of these transactions rather than sales and fulfillment efforts;


•	Loss of customers or delays in orders until the transactions are completed and operations normalize; and


•	Loss of key employees, employee unrest or distraction, or employee litigation or union or work council-related actions, including strikes or litigation.

The Tech Mahindra transaction poses additional risks such as:


•	Inability to transfer employees in certain jurisdictions immediately or at any time;


•	Failure to achieve the cost savings and other benefits anticipated; and


•	Material dependence on Tech Mahindra for critical functions and operations (including research and development, project deployment, delivery, maintenance, and support services).

The BSS sale transaction poses additional risks such as:


•	Delays in the transaction and anticipated benefits;


•	Termination of the transaction and loss of all anticipated benefits if closing conditions, such as third party consents, cannot be satisfied or other termination events occur, such as injunction preventing closure by or before a governmental authority;


•	Reduction in the purchase price as a result of breaches of representation, warranties or covenants, including those relating to certain third party consents to be achieved after closing;


•	Failure to meet performance standards under the post-closing Transition Services Agreement and/or losses from the fulfillment of our requirements under such agreement;


•	Difficulties in implementing restructuring initiatives necessary to reduce costs and expenses following the completion of the BSS sale transaction; and


•	Inability to re-invest the proceeds of the sale in our Digital Services or new businesses that are profitable or otherwise successful.

The Acision acquisition poses additional risks such as:

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•	conditions to the closing of the transaction may not be satisfied, including receipt of the consent of the lenders under Acision’s $157 million senior credit facility;


•	problems may arise in successfully integrating the Acision business into our current business, which may result in our not operating as effectively and efficiently as expected;


•	we may be unable to achieve expected synergies or it may take longer than expected to achieve such synergies;


•	the transaction may involve unexpected costs or unexpected liabilities;


•	our business may suffer as a result of uncertainty surrounding the transaction; and


•	our industry may be subject to future regulatory or legislative actions that could adversely affect us.

In addition, we generally face the following operating and legal risks:


•	possible inability to stem declines in customer sales and related cash flows, and then begin to achieve growth in sales and cash flows;


•	possible inability to develop, produce and sell products and services that satisfy customer demands, that operate in their particular technology environments, and that comply with constantly changing standards, laws and regulations;


•	the generation of a significant portion of our revenue from two major customers could materially adversely affect our revenue, profitability and cash flows if we are unable to maintain or develop relationships with these customers, or if these customers reduce demand for our products;


•	pricing pressure on products and services arising out of customer demand for lower capital and operating costs;


•	competition from larger and more well capitalized businesses that have greater ability to lower their pricing to secure business;


•	the difficulty in reducing costs to match revenues (and in forecasting quarterly and annual product bookings), because a high percentage of orders are typically placed late in fiscal quarters or fiscal years, sales cycles are lengthy and unpredictable, and we are dependent on large projects that require material upfront investment for a large portion of our revenues;


•	any failure to timely implement restructuring alternatives designed to reduce costs when and as required to align with revenues;


•	costs associated with product or service implementation delays, performance issues, warranty claims and other liabilities (which may result in material quarter to quarter fluctuations especially in projects accounted for using the percentage-of-completion method);


•	decline or weakness in the global economy;


•	adverse conditions in the telecommunications industry that result in reduced spending or demand for our products and services;


•	our reliance on third-party subcontractors for important company functions;


•	supply shortage and/or interruptions in product supply due to our dependence on a limited number of suppliers and manufacturers for certain components and third-party software:


•	the risk that natural disasters, environmental issues or other force majeure events may harm our business;


•	the cost to comply with, and the consequences if we fail to comply with, the Sarbanes-Oxley Act of 2002, Dodd-Frank Wall Street Reform and Consumer Protection Act, environmental laws, and other laws or regulations that govern our business;


•	the loss of revenues and any costs to assert any infringement of our proprietary technology by a third party;


•	costs associated with (including potential loss of sales revenue) any infringement by us of the intellectual property of third parties, including through the use of free or open source software;


•	contractual obligations, including intellectual property indemnity provisions, that in some cases expose us to significant or uncapped liabilities;

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•	our dependence upon hiring and retaining highly qualified employees;


•	labor disruptions, union or work council actions, or similar events;


•	security breaches and other disruptions that could compromise our confidential information (whether at our facilities or those of third party providers or other business partners), or customer or supplier information;

•

risks associated with significant foreign operations and international sales, including the impact of geopolitical, economic and military conditions in foreign countries, operations in countries with a history of corruption or which are on various restricted lists, entering into transactions with foreign governments, compliance with laws that prohibit improper payments, and adverse fluctuations of currency exchange rates;


•	in particular, risks relating to our significant operations in Israel, including economic, political and/or military conditions in Israel and the Middle East, and uncertainties and restrictions relating to research and development grants and tax benefits;


•	risks related to the Share Distribution (defined below) including our obligation to indemnify Verint Systems Inc. in connection with the distribution; taxes of the prior consolidated group for periods ending on or before the Share Distribution date; and any legal infirmities related to the Share Distribution; and


•	limitations on our ability to use our net operating loss carryforwards, which would reduce our future cash flows, that could arise out of changes in ownership we cannot prevent.

Any of these risks could result in adverse effects to our operations and financial conditions, which would likely result in a decline in our stock price.

These risks and uncertainties discussed above, as well as others, are discussed in greater detail in Part I, Item 1A, “Risk Factors” of our Annual Report on Form 10-K filed by us with the SEC on April 16, 2015 and Part II, Item 1A "Risk Factors" of this Quarterly Report. The documents and reports we file with the SEC are available through Comverse, or our website, www.comverse.com, or through the SEC's Electronic Data Gathering, Analysis, and Retrieval system (EDGAR) at www.sec.gov. We undertake no commitment to update or revise any forward-looking statements except as required by law.

iii

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PART I.	FINANCIAL INFORMATION


ITEM 1.	FINANCIAL STATEMENTS

COMVERSE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

(In thousands, except share and per share data)



	Three Months Ended April 30,
	2015			2014
Revenue:
Product revenue	$	10,107		$	17,010
Service revenue	35,598			48,072
Total revenue	45,705			65,082
Costs and expenses:
Product costs	12,953			9,895
Service costs	30,804			40,990
Research and development, net	8,280			8,359
Selling, general and administrative	19,873			25,560
Other operating expenses:
Restructuring expenses	3,408			1,872
Total other operating expenses	3,408			1,872
Total costs and expenses	75,318			86,676
Loss from operations	(29,613		)	(21,594		)
Interest income	84			115
Interest expense	(193		)	(123		)
Foreign currency transaction (loss) gain, net	(5,573		)	2,019
Other income (expense), net	102			(52		)
Loss before income tax expense	(35,193		)	(19,635		)
Income tax expense	(4,787		)	(2,460		)
Loss from continuing operations	(39,980		)	(22,095		)
Income from discontinued operations	13,319			5,964
Net loss	$	(26,661	)	$	(16,131	)
Weighted average common shares outstanding:
Basic & Diluted	21,865,326			22,293,980
(Loss) earnings per share - basic & diluted:
Continuing operations	$	(1.83	)	$	(0.99	)
Discontinued operations	0.61			0.27
	$	(1.22	)	$	(0.72	)

The accompanying notes are an integral part of these condensed consolidated financial statements.

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COMVERSE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(UNAUDITED)

(In thousands)



	Three Months Ended April 30,
	2015			2014
Net loss	$	(26,661	)	$	(16,131	)
Other comprehensive income ("OCI"), net of tax:
Foreign currency translation adjustments	2,695			(2,462		)
Changes in accumulated OCI on cash flow hedges, net of tax	429			123
Other comprehensive income (loss), net of tax	3,124			(2,339		)
Comprehensive loss	$	(23,537	)	$	(18,470	)

The accompanying notes are an integral part of these condensed consolidated financial statements.

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COMVERSE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

(In thousands, except share and per share data)



	April 30, 2015			January 31, 2015
ASSETS
Current assets:
Cash and cash equivalents	$	136,096		$	158,121
Restricted cash and bank deposits	36,054			35,802
Accounts receivable, net of allowance of $2,952 and $4,403, respectively	33,914			71,670
Inventories	17,550			17,817
Deferred cost of revenue	3,481			7,059
Deferred income taxes	14,314			13,781
Prepaid expenses	12,635			15,156
Other current assets	13,758			10,570
Assets held for sale	154,829			—
Total current assets	422,631			329,976
Property and equipment, net	39,825			49,230
Goodwill	67,585			151,217
Intangible assets, net	1,561			4,049
Deferred cost of revenue	20,305			30,437
Deferred income taxes	2,875			3,064
Long-term restricted cash	7,714			7,940
Other assets	15,365			30,439
Total assets	$	577,861		$	606,352
LIABILITIES AND (DEFICIT) EQUITY
Current liabilities:
Accounts payable and accrued expenses	$	106,074		$	121,720
Deferred revenue	116,738			185,323
Deferred income taxes	1,575			1,491
Income taxes payable	4,339			2,166
Liabilities held for sale	134,013			—
Total current liabilities	362,739			310,700
Deferred revenue	56,729			89,999
Deferred income taxes	51,034			56,815
Other long-term liabilities	114,539			135,456
Total liabilities	585,041			592,970
Commitments and contingencies
(Deficit) equity:
Common stock, $0.01 par value - authorized, 100,000,000 shares; issued 22,695,729 and 22,591,411 shares, respectively; outstanding, 21,930,512 and 21,830,081 shares, respectively	227			226
Preferred stock, $0.01 par value - authorized, 100,000 shares	—			—
Treasury stock, at cost, 765,217 and 761,330 shares, respectively	(17,292		)	(17,211		)
Accumulated deficit	(73,051		)	(46,390		)
Additional paid in capital	48,990			45,935
Accumulated other comprehensive income	33,946			30,822
Total (deficit) equity	(7,180		)	13,382
Total liabilities and (deficit) equity	$	577,861		$	606,352

The accompanying notes are an integral part of these condensed consolidated financial statements.

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COMVERSE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

(In thousands)



	Three Months Ended April 30,
	2015			2014
Cash flows from operating activities:
Net loss	$	(26,661	)	$	(16,131	)
Non-cash operating items:
Depreciation and amortization	4,927			4,739
Provision for doubtful accounts	86			254
Stock-based compensation expense	3,056			2,938
Deferred income taxes	(6,039		)	1,150
Inventory write-downs	625			868
Other non-cash items, net	325			71
Changes in assets and liabilities:
Accounts receivable	(296		)	(17,720		)
Inventories	(475		)	(2,652		)
Deferred cost of revenue	2,554			5,822
Prepaid expense and other current assets	(8,603		)	(11,173		)
Accounts payable and accrued expense	13,280			(9,755		)
Income taxes	2,122			(267		)
Deferred revenue	2,757			3,404
Tax contingencies	(721		)	2,479
Other assets and liabilities	(4,641		)	374
Net cash used in operating activities	(17,704		)	(35,599		)
Cash flows from investing activities:
Purchases of property and equipment	(4,999		)	(3,309		)
Net change in restricted cash and bank deposits	(710		)	(4,774		)
Proceeds from asset sales	97			9
Net cash used in investing activities	(5,612		)	(8,074		)
Cash flows from financing activities:
Payment for repurchase of common stock in connection with tax liabilities upon settlement of stock awards	(81		)	(386		)
Proceeds from exercises of stock options	—			40
Net cash used in financing activities	(81		)	(346		)
Effects of exchange rates on cash and cash equivalents	1,372			(465		)
Net decrease in cash and cash equivalents	(22,025		)	(44,484		)
Cash and cash equivalents, beginning of period	158,121			254,580
Cash and cash equivalents, end of period	$	136,096		$	210,096
Non-cash investing transactions:
Accrued but unpaid purchases of property and equipment	$	1,220		$	3,887
Inventory transfers to property and equipment	$	179		$	1,020

The accompanying notes are an integral part of these condensed consolidated financial statements.

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COMVERSE, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)


1.	ORGANIZATION, BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Company Background

Prior to October 31, 2012, the date of the Share Distribution (as defined below), Comverse, Inc. (the “Company”) was a wholly-owned subsidiary of Comverse Technology, Inc. (“CTI”). The Company was organized as a Delaware corporation in November 1997.

The Company is a global provider of cloud-based and in-network services enablement and monetization software solutions for communication service providers (“CSPs”) and growing enterprises. The Company offers a suite of software solutions designed to support users’ connected lifestyles, and help its customers simplify and differentiate their offerings with faster time to value and less complexity.

The Company's Digital Services products are designed to help CSPs evolve to become Digital Service Providers and future-proof their offerings by monetizing the digital lifestyle of their subscribers. In addition, the Company continues to offer traditional VAS solutions, including voice and messaging services (including voicemail, visual voicemail, call completion, short messaging service (“SMS”), and multimedia picture and video messaging (“MMS”), and digital lifestyle services and Internet Protocol (“IP”) based rich communication services (including group chat, file transfer, video share, social, presence and geo-location information).

Amdocs Asset Purchase Agreement

On April 29, 2015, the Company entered into an Asset Purchase Agreement (the “Amdocs Purchase Agreement”) with Amdocs Limited, a Guernsey company (the “Purchaser”). Pursuant to the Amdocs Purchase Agreement, the Company agreed to sell substantially all of its assets required for operating the Company’s converged, prepaid and postpaid billing and active customer management systems for wireless, wireline, cable and multi-play communication service providers (the “BSS Business”) to the Purchaser, and the Purchaser has agreed to assume certain liabilities of the Company, in exchange for a cash purchase price of $272 million, subject to various purchase price adjustments (the “Asset Sale”).

The Amdocs Purchase Agreement contains customary representations and warranties of the parties and covenants of the Company. Under the terms of the Amdocs Purchase Agreement, upon the closing of the Asset Sale, $26 million of the purchase price will be deposited into escrow to fund potential indemnification claims and certain adjustments for a period of twelve (12) months following the closing. The Company and the Purchaser will also enter into other ancillary transaction documents at closing. The closing of the Asset Sale is subject to the applicable regulatory approvals and other closing conditions.

The Amdocs Purchase Agreement may be terminated prior to the closing of the Asset Sale upon certain events, including by written agreement of the Company and the Purchaser, or by either the Company or the Purchaser if the Asset Sale has not closed by August 29, 2015 or if a permanent injunction or other order prohibiting the closing has been issued by a governmental entity.

Pursuant to the Amdocs Purchase Agreement, the Company has agreed generally, but with some enumerated exceptions, to carry on its BSS Business in the ordinary course during the period from the date of the Amdocs Purchase Agreement to the completion of the Asset Sale.

In connection with the Amdocs Purchase Agreement, the Company and the Purchaser have also entered into a Transition Services Agreement (the “TSA”), which provides for several support services between the Company and the Purchaser in connection with the transition of the BSS Business to the Purchaser, and for various periods up to 12 months of services following the closing of the Asset Sale. Either party may terminate the TSA if the Amdocs Purchase Agreement is terminated. (see Note 18, Commitments and Contingencies)

Basis of Presentation

The condensed consolidated financial statements included herein have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and on the same basis as the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended January 31, 2015 (the “2014 Form 10-K”) (see Note 14, Discontinued Operations).

The condensed consolidated statements of operations, comprehensive income (loss) and cash flows for the periods ended April 30, 2015 and 2014, and the condensed consolidated balance sheet as of April 30, 2015 are not audited but in the opinion of management reflect all adjustments that are of a normal recurring nature and that are considered necessary for a fair

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COMVERSE, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

statement of the results of the periods presented. Certain information and disclosures normally included in audited financial statements have been omitted in these condensed consolidated financial statements pursuant to the rules and regulations of the SEC. Because the condensed consolidated financial statements do not include all of the information and disclosures required by U.S. GAAP for annual financial statements, they should be read in conjunction with the audited consolidated financial statements and notes included in the 2014 Form 10-K. The results for the three months ended April 30, 2015 are not necessarily indicative of the results for the full fiscal year ending January 31, 2016.

Intercompany accounts and transactions within the Company have been eliminated.

Discontinued Operations

The BSS Business met the criteria to be classified as held for sale as well as discontinued operations. As such, the BSS Business has been reclassified and reflected as discontinued operations on the consolidated statements of operations for all periods presented. The estimated assets and liabilities related to BSS Business were reclassified and reflected as available for sale on the consolidated balance sheet at April 30, 2015.

Segment Information

Prior to entering into the Amdocs Purchase Agreement, the Company’s reportable segments consisted of BSS and Digital Services. As a result of entering into the Amdocs Purchase Agreement, the results of operations of the former BSS Business segment are classified as discontinued operations. Therefore, with the reported divestiture, the Company now operates as a single business segment the results of which are included in the Company's income statement from continuing operations.

The Share Distribution

On October 31, 2012, CTI completed the spin-off of the Company as an independent, publicly-traded company, accomplished by means of a pro rata distribution of 100% of the Company's outstanding common shares to CTI's shareholders (the “Share Distribution”). Following the Share Distribution, CTI no longer holds any of the Company's outstanding capital stock, and the Company is an independent publicly-traded company.

In order to govern certain ongoing relationships between CTI and the Company after the Share Distribution and to provide mechanisms for an orderly transition, CTI and the Company entered into agreements pursuant to which certain services and rights are provided for following the Share Distribution, and CTI and the Company agreed to indemnify each other against certain liabilities that may rise from their respective businesses and the services that are provided under such agreements. Following the completion of CTI's merger with Verint Systems Inc. (“Verint”) discussed below, these obligations continue to apply between the Company and Verint (see Note 3, Share Distribution Agreements).

Upon completion of the Share Distribution, the Company's shares were listed, and began trading, on NASDAQ under the symbol “CNSI.” On November 1, 2012 in connection with the Share Distribution, CTI's equity-based compensation awards held by the Company's employees were replaced with the Company's equity-based compensation awards.

Merger of CTI and Verint

On August 12, 2012, CTI entered into an agreement and plan of merger (the “Verint Merger Agreement”) with Verint, its then majority-owned publicly-traded subsidiary, providing for the merger of CTI with and into a subsidiary of Verint to become a wholly-owned subsidiary of Verint (the “Verint Merger”). The Verint Merger was completed on February 4, 2013. The Company agreed to indemnify CTI and its affiliates (including Verint after the Verint Merger) against certain losses that may arise as a result of the Verint Merger and the Share Distribution (see Note 3, Share Distribution Agreements). On February 4, 2013, in connection with the closing of the Verint Merger Agreement, CTI placed $25.0 million in escrow to support indemnification claims to the extent made against the Company by Verint and any cash balance remaining in such escrow fund 18 months after the closing of the Verint Merger (the "Escrow Release Date"), less any claims made on or prior to such date, to be released to the Company. On August 6, 2014, the escrow was released in accordance with its terms and the Company received the escrow amount of approximately $25.0 million. As of the closing of the Verint Merger, the Company recognized the estimated fair value of the potential indemnification liability of $4.0 million with the remaining $21.0 million as an additional contribution from CTI. As of April 30, 2015, the indemnification liability is $3.7 million.

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COMVERSE, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

Acquisition of Acision

On June 15, 2015, the Company entered into an agreement (the “Acision Purchase Agreement”) with Bergkamp Coöperatief U.A., a cooperative with excluded liability formed under the laws of the Netherlands (the “Seller”) relating to the sale and purchase of Acision Global Limited, a private company formed under the laws of the United Kingdom (“Acision”). Pursuant to the Acision Purchase Agreement, the Company will acquire Acision for a purchase price consisting of approximately $135 million in cash (including certain earnout payments) and 3.13 million shares of the Company’s common stock, par value $0.01 per share (the “Consideration Shares”), subject to certain adjustments (the “Transaction”). The Transaction includes arrangements relating to the retention of funds in escrow to support any indemnification claims to the extent made by the Company. In addition, Acision, in consultation with the Company, will seek an amendment and waiver (the “Amendment”) to the credit agreement (the “Acision Credit Agreement”) governing Acision’s existing approximately $157 million senior credit facility (the “Acision Senior Debt”), pursuant to which the Acision Senior Debt will remain in place during the pendency of and following completion of the Transaction. Subject to provisions allowing the Company to secure alternative financing, both the Company and the Seller are permitted to terminate the Acision Purchase Agreement in the event the requisite lenders under the Acision Credit Agreement do not consent to the Amendment.

Each party has agreed to indemnify the other for certain potential liabilities and claims, subject to certain exceptions and limitations. (See Note 19, Subsequent Events)

Acquisition of Solaiemes

On August 1, 2014, the Company acquired 100% of the outstanding equity of Spain-based Solaiemes, S.L. (“Solaiemes”) for approximately $2.7 million and the assumption of $1.4 million of debt. Solaiemes is an innovator focused on enabling the creation and monetization of CSPs’ digital services. Solutions from Solaiemes complement the Company's Evolved Communication Suite offering and the combined portfolio creates an end-to-end platform for service monetization of IP-based digital services.

At the time of the acquisition, Solaiemes had 15 employees. Results of the most recent periods for Solaiemes were not material to the Company. The results of operations of Solaiemes have been included in our consolidated financial statements beginning on the acquisition date. Revenue and earnings of Solaiemes since the acquisition date were not material.

The acquisition of Solaiemes has been accounted for as a business combination. Assets acquired and liabilities assumed have been recorded at their estimated fair values as of the August 1, 2014 acquisition date. The fair values of intangible asset were based on valuations using a cost approach.

The excess of the purchase price over the tangible assets, identifiable intangible assets and assumed liabilities was recorded as goodwill.

Agreement with Tech Mahindra

On April 14, 2015, the Company entered into a Master Service Agreement (the “MSA”) with Tech Mahindra Limited (“Tech Mahindra”) pursuant to which Tech Mahindra will perform certain services for the Company’s Digital Services business on a global basis. The services include research and development, project deployment and delivery and maintenance and support for customers of the Company’s Digital Service business. In connection with the transaction, up to approximately 570 employees of the Company and its subsidiaries may be rehired by Tech Mahindra or its affiliates. However, under the terms of the MSA, where applicable, Tech Mahindra’s provision of such services (and any employee rehire) is contingent upon local decisions for Company entities to enter into the agreement on a country-by-country basis after the completion of all regulatory and compliance requirements under applicable law. Under the MSA, the Company is obligated to pay to Tech Mahindra in the aggregate approximately $211 million in base fees for services to be provided pursuant to the MSA for a term of six years, renewable at the Company’s option. The services under the MSA started on June 1, 2015. For more information, see Note 18, Commitments and Contingencies.

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will provide reverse transition services to transition the services being provided by Tech Mahindra pursuant to the MSA back to the Company or its designee. The MSA contains certain indemnification provisions by both Comverse and Tech Mahindra.

Use of Estimates

The preparation of the condensed consolidated financial statements and the accompanying notes in conformity with U.S. GAAP requires the Company to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue and expenses.

The most significant estimates among others include:


•	Estimates relating to the recognition of revenue, including the determination of vendor specific objective evidence (“VSOE”) of fair value and the determination of best estimate of selling price for multiple element arrangements;


•	Fair value of stock-based compensation;


•	Fair value of reporting unit for the purpose of goodwill impairment testing;


•	Fair value of long-lived assets and asset groups;


•	Realization of deferred tax assets;


•	The identification and measurement of uncertain tax positions;


•	Contingencies and litigation;


•	Total estimates to complete on percentage-of-completion (“POC”) projects;


•	Valuation of inventory;


•	Israel employees severance pay;


•	Allowance for doubtful accounts; and


•	Valuation of other intangible assets.

The Company’s actual results may differ from its estimates.

Recoverability of Long-Lived Assets

The Company periodically evaluates its long-lived assets for potential impairment. In accordance with the relevant accounting guidance, the Company reviews the carrying value of our long-lived assets or asset group that is held and used for impairment whenever circumstances occur that indicate that those carrying values are not recoverable. Under the held and used approach, assets are grouped at the lowest level for which identifiable cash flows are largely independent of the cash flows of other groups of assets and liabilities. The identification of asset groups involves judgment, assumptions, and estimates. The lowest level of cash flows which are largely independent of one another was determined to be at the BSS and Digital Services reporting units.

The Company makes judgments about the recoverability of long-lived assets, including fixed assets and purchased finite-lived intangible assets whenever events or changes in circumstances indicate that impairment may exist. Each period we evaluate the estimated remaining useful lives of long-lived assets and whether events or changes in circumstances warrant a revision to the remaining periods of depreciation or amortization. If circumstances arise that indicate an impairment may exist, we use an estimate of the undiscounted value of expected future operating cash flows over the primary asset’s remaining useful life and salvage value to determine whether the long-lived assets are impaired. If the aggregate undiscounted cash flows and salvage values are less than the carrying amount of the assets, the resulting impairment charge to be recorded is calculated based on the excess of the carrying amount of the assets over the fair value of such assets, with the fair value generally determined using the discounted cash flow ("DCF") method. Application of the DCF method for long-lived assets requires judgment and assumptions related to the amount and timing of future expected cash flows, salvage value assumptions, and appropriate discount rates. Different judgments or assumptions could result in materially different fair value estimates. During the three months ended April 30, 2015, the Company assessed its Digital Services asset group for impairment and determined no impairment was indicated.

Goodwill

Goodwill represents the excess of the fair value of consideration transferred in a business combination over the fair value of tangible and intangible assets acquired net of the fair value of liabilities assumed and the fair value of any noncontrolling interest in the acquiree. The Company has no indefinite-lived intangible assets other than goodwill. The carrying amount of

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goodwill is reviewed annually for impairment on November 1 and whenever events or changes in circumstances indicate that the carrying value may not be recoverable.

The Company applies the FASB's guidance when testing goodwill for impairment which permits the Company to make a qualitative assessment of whether goodwill is impaired, or opt to bypass the qualitative assessment, and proceed directly to performing the first step of the two-step impairment test. If the Company performs a qualitative assessment and concludes it is more-likely-than-not that the fair value of a reporting unit exceeds its carrying value, goodwill is not considered impaired and the two-step impairment test is unnecessary. However, if the Company concludes otherwise, it is then required to perform the first step of the two-step impairment test.

The Company has the unconditional option to bypass the qualitative assessment for any reporting unit and proceed directly to performing the first step of the goodwill impairment test. The Company may resume performing the qualitative assessment in any subsequent period.

For reporting units where the Company decides to perform a qualitative assessment, the Company's management assesses and makes judgments regarding a variety of factors which potentially impact the fair value of a reporting unit, including general economic conditions, industry and market-specific conditions, customer behavior, cost factors, financial performance and trends, strategies and business plans, capital requirements, management and personnel issues, and stock price, among others. Management then considers the totality of these and other factors, placing more weight on the events and circumstances that are judged to most affect a reporting unit's fair value or the carrying amount of its net assets, to reach a qualitative conclusion regarding whether it is more-likely-than-not that the fair value of a reporting unit exceeds its carrying amount.

For reporting units where the Company performs the two-step goodwill impairment test, the first step requires the Company to compare the fair value of each reporting unit to the carrying value of its net assets. The Company considers both an income-based approach using projected discounted cash flows and a market-based approach using multiples of comparable companies to determine the fair value of its reporting units. The Company's estimate of fair value of each reporting unit is based on a number of subjective factors, including: (i) the appropriate weighting of valuation approaches (income-based approach and market-based approach), (ii) estimates of the future revenue and cash flows, (iii) discount rate for estimated cash flows, (iv) selection of peer group companies for the market-based approach, (v) required levels of working capital, (vi) assumed terminal value, (vii) the time horizon of cash flow forecasts; and (viii) control premium.

If the fair value of the reporting unit exceeds its carrying value, goodwill is not considered impaired and no further evaluation is necessary. If the carrying value of the reporting unit is greater than the estimated fair value of the reporting unit, there is an indication that impairment may exist and the second step is required. In the second step, the implied fair value of goodwill is calculated as the excess of the fair value of a reporting unit over the fair value assigned to its assets and liabilities. If the implied fair value of goodwill is less than the carrying value of the reporting unit's goodwill, the difference is recognized as an impairment charge.

The Company's forecasts and estimates are based on assumptions that are consistent with the plans and estimates used to manage the business. Changes in these estimates could change the conclusion regarding an impairment of goodwill.

As a result of the Amdocs Purchase Agreement for the sale the BSS Business, the Company performed an interim goodwill test in conjunction with the preparation of its financial statements for the three months ended April 30, 2015 which did not result in an impairment (see Note 5, Goodwill).

Revenue Recognition

Management is required to make judgments to estimate the total estimated costs and progress to completion. Changes to such estimates can impact the timing of the revenue recognition period to period. The Company uses historical experience, project plans, and an assessment of the risks and uncertainties inherent in the arrangement to establish these estimates. Uncertainties in these arrangements include implementation delays or performance issues that may or may not be within the Company's control. If some level of profitability is assured, but the related revenue and costs cannot be reasonably estimated, then revenue is recognized to the extent of costs incurred until such time that the project's profitability can be estimated or the services have been completed. If the Company determines that based on its estimates its costs exceed the sales price, the entire amount of the estimated loss is accrued in the period that such losses become known.

The change in profit estimate for those projects accounted for under the percentage of completion method where a loss provision was recorded, negatively impacted income from operations by $0.1 million and $1.5 million during the three months ended April 30, 2015 and 2014, respectively.

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2.	RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

The Company is currently classified as an emerging growth company as defined under the JOBS Act. Emerging growth companies can delay adopting new or revised accounting standards that have different effective dates for public and private companies until such time as those standards apply to private companies. The Company has elected to follow the required adoption dates for private companies. Therefore, the adoption dates below reflect the Company's current classification.

Standards To Be Implemented

In April 2014, the FASB issued and Accounting Standards update for Presentation of Financial Statements, Property, Plant, and Equipment and Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity. Under the new guidance, raises the threshold for a disposal to qualify as a discontinued operation and requires new disclosures of both discontinued operations and certain other disposals that do not meet the definition of a discontinued operation. The guidance will be effective for the Company for the annual reporting period fiscal year ended January 31, 2016 and interim periods thereafter. The Company is currently following the previous guidance and is evaluating the impact of the adoption of this accounting standard update on its financial statements.

In May 2014, the FASB issued new accounting guidance on revenue recognition. This topic requires entities to recognize revenue in a way that depicts the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled to in exchange for those goods or services. The guidance will be effective for the Company beginning January 31, 2018. The Company is currently evaluating the impact of the adoption of this accounting standard update on its financial statements.

In August 2014, the FASB issued new guidance on going concern. Under the new guidance, management will be required to assess an entity’s ability to continue as a going concern, and to provide related footnote disclosures in certain circumstances. The provisions of this guidance are effective for annual periods beginning after December 15, 2016, and for interim periods therein. This guidance is not expected to have an impact on the Company’s financial statements or disclosures.

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3.	SHARE DISTRIBUTION AGREEMENTS

Share Distribution Agreements

The Company entered into a distribution agreement (the “Distribution Agreement”), transition services agreement, tax disaffiliation agreement and employee matters agreement (collectively, the “Share Distribution Agreements”) with CTI in connection with the Share Distribution. In particular, the Distribution Agreement, among other things, provides for the allocation between the Company and CTI of various assets, liabilities and obligations attributable to periods prior to the Share Distribution. Under the Distribution Agreement, the Company agreed to indemnify CTI and its affiliates (including Verint following the Verint Merger) against certain losses that may arise as a result of the Verint Merger and the Share Distribution. Certain of the Company's indemnification obligations are capped at $25.0 million and certain are uncapped. Specifically, the capped indemnification obligations include indemnifying CTI and its affiliates (including Verint after the Verint Merger) against losses stemming from breaches by CTI of representations, warranties and covenants in the Verint Merger Agreement and for any liabilities of CTI that were known by CTI but not included on the net worth statement delivered by CTI at the closing of the Verint Merger. The Company's uncapped indemnification obligations include indemnifying CTI and its affiliates (including Verint after the Verint Merger) against liabilities relating to the Company's business; claims by any shareholder or creditor of CTI related to the Share Distribution, the Verint Merger or related transactions or disclosure documents; certain claims made by employees or former employees of CTI and any claims made by employees and former employees of the Company (including but not limited to the Israeli optionholder suits discussed in Note 18, Commitments and Contingencies); any failure by the Company to perform under any of the agreements entered into in connection with the Share Distribution; claims related to CTI's ownership or operation of the Company; claims related to the Starhome Disposition (as defined in Note 18, Commitments and Contingencies); certain retained liabilities of CTI that are not reflected on or reserved against on the net worth statement delivered by CTI at the closing of the Verint Merger; and claims arising out of the exercise of appraisal rights by a CTI shareholder in connection with the Share Distribution. On February 4, 2013, in connection with the closing of the Verint Merger Agreement, CTI placed $25.0 million in escrow to support indemnification claims to the extent made against the Company by Verint and any cash balance remaining in such escrow fund 18 months after the closing of the Verint Merger, less any claims made on or prior to such date, to be released to the Company. The escrow funds could not be used for claims related to the Israeli optionholder suits. On August 6, 2014, the escrow was released in accordance with its terms and the Company received the escrow amount of approximately $25.0 million. The Company also assumed all pre-Share Distribution tax obligations of each of the Company and CTI.

The Company and CTI entered into a tax disaffiliation agreement that governs their respective rights, responsibilities and obligations after the Share Distribution with respect to tax liabilities and benefits, tax attributes, tax contests and other tax matters regarding income taxes, other taxes and related tax returns. The Company and CTI also entered into an employee matters agreement, which allocates liabilities and responsibilities relating to employee compensation and benefit plans and programs.


4.	INVENTORIES

Inventories consist of the following:



	April 30,		January 31,
	2015		2015
	(In thousands)
Raw materials	$	8,153	$	10,455
Work in process	9,397		7,362
	$	17,550	$	17,817

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5.	GOODWILL

The changes in the carrying amount of goodwill for the three months ended April 30, 2015 are as follows:



	(In thousands)
Goodwill, gross, at January 31, 2015	$	313,277
Accumulated impairment losses at January 31, 2015	(162,060		)
Goodwill, net, at January 31, 2015	151,217
BSS Business Goodwill reclassified to available for sale⁽¹⁾	(83,699		)
Effect of changes in foreign currencies and other	67
Goodwill, net, at April 30, 2015	$	67,585
Balance at April 30, 2015
Goodwill, gross, at April 30, 2015	$	224,040
Accumulated impairment losses at April 30, 2015	(156,455		)
Goodwill, net, at April 30, 2015	$	67,585

(1) The BSS Business Goodwill was reclassified and reflected as available for sale on the consolidated balance sheet at April 30, 2015 (see Note 14, Discontinued Operations).

The Company tests goodwill for impairment annually as of November 1 or more frequently if events or circumstances indicate the potential for an impairment exists. Under the Company's current segment structure, the BSS and Digital Services segments have been evaluated and it has been determined that for each segment the fair value significantly exceeds the book value.

The determination of whether or not goodwill is impaired involves a significant level of judgment in the assumptions underlying the approaches used to determine the estimated fair value of the Company’s reporting units as well as the allocation of the carrying value of the assets and liabilities to each of the reporting units which has historically been based on headcount. Management believes the analysis included sufficient tolerance for sensitivity in key assumptions. The determination of the fair value of the Company’s reporting units include a market-based approach using multiples of comparable companies to determine the fair value of its reporting units and an income-based approach using projected discounted cash flows based on the Company’s internal forecasts and projections. Management believes the assumptions and rates used in the Company’s impairment assessment are reasonable, but they are judgmental, and variations in any assumptions could result in materially different calculations of fair value and potentially result in impairment of assets.

BSS Reporting Unit

Step one of the quantitative goodwill interim impairment test for the three months ended April 30, 2015 resulted in the determination that the estimated fair value of BSS significantly exceeded its carrying amount, including goodwill. Accordingly, the second step was not required for this reporting unit.

Digital Services Reporting Unit

Step one of the quantitative goodwill impairment interim test resulted in the determination that the estimated fair value of Digital Services exceeded its carrying amount, including goodwill; however a step two analysis was performed on the reporting unit due to the negative carrying value of continuing assets and liabilities following the classification of BSS as an asset held for sale. The fair value of the goodwill as calculated under Step two of the impairment test exceeded the carrying value as recorded.

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6.	INTANGIBLE ASSETS, NET

Intangible assets, net are as follows:



	April 30,		January 31,
	2015		2015
	(In thousands)
Acquired technology
Gross carrying amount	$	1,822	$	99,833
Customer relationships	—		35,499
Trade names	—		3,400
Total intangible assets	1,822		138,732

Accumulated amortization	261		98,175
Customer relationships	—		33,108
Trade names	—		3,400
	261		134,683
Total ⁽¹⁾	$	1,561	$	4,049

(1) The BSS Business intangible assets were reclassified and reflected as available for sale on the consolidated balance sheet at April 30, 2015 (see Note 14, Discontinued Operations).

Amortization of intangible assets was $0.1 million for the three months ended April 30, 2015. There were no impairments of intangible assets for the three months ended April 30, 2015 and 2014.

Estimated future amortization expense on finite-lived acquisition-related assets for each of the succeeding fiscal years is as follows:



Fiscal Years Ending January 31,	(In thousands)
2016 (remainder of fiscal year)	$	264
2017	349
2018	316
2019	316
2020 and thereafter	316
	$	1,561


7.	OTHER ASSETS

Other assets consisted of the following:



	April 30,		January 31,
	2015		2015
	(In thousands)
Severance pay fund⁽¹⁾	$	11,614	$	25,759
Deposits	2,448		2,776
Other ⁽²⁾	1,303		1,904
	$	15,365	$	30,439


(1)	Represents deposits into insurance policies to fund severance liability of the Company's Israeli employees (see Note 12, Other Long-Term Liabilities). As a result of entering into a MSA with Tech Mahindra, the Company has re-classified $11.9 million in severance pay long-term assets to Other current assets as of April 30, 2015.

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(2)	Includes a $1.2 million cost-method investment in a subsidiary of a significant customer at each of April 30, 2015 and January 31, 2015.


8.	RESTRUCTURING

The Company reviews its business, manages costs and aligns resources with market demand and in conjunction with various acquisitions. As a result, the Company has taken several actions to improve its cash position, reduce fixed costs, eliminate redundancies, strengthen operational focus and better position itself to respond to market pressures or unfavorable economic conditions. Restructuring expenses are recorded within Other operating expenses in the consolidated statements of operations.

2015 Initiatives

During the three months ended April 30, 2015, the Company approved the commencement of a restructuring plan primarily in connection with the MSA with Tech Mahindra which is expected to include a reduction of workforce included in cost of revenue, research and development and selling, general and administrative expenses. The aggregate cost of the plan is currently estimated at $15 million in severance-related costs, which is expected to be accrued and paid by January 2017. During the three months ended April 30, 2015, the Company recorded severance-related costs of $4.1 million and paid $0.5 million.

2014 Initiatives

During the fiscal year ended January 31, 2015, the Company commenced certain initiatives with a plan to further restructure its operations towards aligning operating costs and expenses with anticipated revenue. On September 9, 2014, the Company commenced an expansion of its previously disclosed 2014 restructuring plan. The restructuring plan has been facilitated by efficiencies gained through initiatives implemented in recent fiscal periods and the expectation that software will account for a higher portion of the Company's revenue in future periods. The restructuring is designed to align operating costs and expenses with currently anticipated revenue. The restructuring plan (as expanded) includes a reduction of workforce included in cost of revenue, research and development and selling, general and administrative expenses. In relation to this restructuring plan, the Company recorded severance-related and facilities-related costs of $13.0 million and $2.4 million, respectively, for the fiscal year ended January 31, 2015. During the three months ended April 30, 2015, the Company paid severance and facilities-related costs of $1.2 million and $0.4 million, respectively. The remaining severance-related and facilities-related costs accrued under the plan are expected to be paid by July, 2015 and December, 2024, respectively.

During the fiscal year ended January 31, 2015, the Company recognized a write-off of $1.5 million in property and equipment in connection with the 2014 restructuring initiatives.

Fourth Quarter 2012 Initiatives

During the fourth quarter of the fiscal year ended January 31, 2013, following the Share Distribution, the Company commenced certain initiatives to restructure its operations and reorganize its activities and go-to-market strategy, including a plan to restructure the operations of the Company with a view towards aligning operating costs and expenses with anticipated revenue and the new go-to-market strategy. During the three months ended April 30, 2015, the Company paid facilities-related costs of $0.3 million. The remaining facilities-related costs accrued under this plan are expected to be paid by October 2019.

Third Quarter 2010 Restructuring Initiatives and Business Transformation

During the fiscal year ended January 31, 2011, the Company commenced certain initiatives to improve its cash position, including a plan to restructure its operations with a view towards aligning operating costs and expenses with anticipated revenue, reducing its annualized operating costs. During the fiscal year ended January 31, 2012, the Company implemented a second phase of measures (the “Phase II Business Transformation”) that focuses on process reengineering to maximize business performance, productivity and operational efficiency. As part of the Phase II Business Transformation, the Company restructured its operations into new business units that are designed to improve operational efficiency and business performance. One of the primary purposes of the Phase II Business Transformation is to solidify the Company’s leadership in BSS and leverage the growth in mobile data usage, while maintaining its leading market position in Digital Services and implementing further cost savings through operational efficiencies and strategic focus. The remaining facilities-related costs accrued under this plan are expected to be paid by April 2016.

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Netcentrex 2010 and 2011 Initiatives

During the fiscal years ended January 31, 2011 and 2012, management, as part of initiatives to improve focus on the Company’s core business and to maintain its ability to face intense competitive pressures in its markets, approved the first phase of a restructuring plan to eliminate staff positions primarily located in France.

The following tables represent a roll forward of the workforce reduction and restructuring activities noted above for the three months ended April 30, 2015 and 2014:



	2015 Initiative						2014 Initiative						Fourth Quarter 2012 Initiative			Third Quarter 2010 Initiative
	Severance Related			Facilities Related			Severance Related			Facilities Related			Facilities Related			Facilities Related			Total
	(In thousands)
January 31, 2015	$	—		$	—		$	2,843		$	1,837		$	2,872		$	214		$	7,766
Expenses ⁽¹⁾	4,097			161			23			40			19			6			4,346
Change in assumptions	—			—			(482		)	93			18			—			(371		)
Translation and other adjustments	(1		)	—			—			—			—			—			(1		)
Paid or utilized	(508		)	(130		)	(1,217		)	(374		)	(284		)	(49		)	(2,562		)
April 30, 2015	$	3,588		$	31		$	1,167		$	1,596		$	2,625		$	171		$	9,178

(1) Includes restructuring expense associated with BSS employees of $0.6 million for the three months ended April 30, 2015.



	2014 Initiative			Fourth Quarter 2012 Initiative						Third Quarter 2010 Initiative			Netcentrex 2010 and 2011 Initiative
	Severance Related			Severance Related			Facilities Related			Facilities Related			Severance Related			Facilities Related		Total
	(In thousands)
January 31, 2014	$	—		$	1,062		$	5,728		$	390		$	50		$	15	$	7,245
Expenses ⁽¹⁾	2,751			38			25			6			—			—		2,820
Change in assumptions	—			(18		)	(59		)	—			—			—		(77		)
Translation and other adjustments	—			—			—			—			—			—		—
Paid or utilized	(1,657		)	(892		)	(307		)	(49		)	(2		)	—		(2,907		)
April 30, 2014	$	1,094		$	190		$	5,387		$	347		$	48		$	15	$	7,081

(1) Includes restructuring expense associated with BSS employees of $0.9 million for the three months ended April 30, 2014.


9.	DEBT

Spain Government Sponsored Loans

On August 1, 2014, the Company assumed in connection with the acquisition of Solaiemes approximately $1.4 million of debt. The debt consists of Spain government sponsored loans extended for research and development projects. The loans are subject to certain acceleration clauses which are not considered probable of being triggered. As of April 30, 2015 and January 31, 2015, the balance of outstanding debt classified in accounts payable and accrued expense and long-term liabilities are as follows:

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(In thousands)	April 30, 2015		January 31, 2015
3.98% note due 2017	$	215	$	216
0.53% note due 2018	310		312
2.48% notes due 2018	118		118
3.95% note due 2020	84		84
0% note due 2022	397		400
	1,124		1,130
Less: current portion	132		132
Long-term debt	$	992	$	998

Aggregate debt maturities for each of the succeeding fiscal years are as follows:



Fiscal Years Ending January 31,	(In thousands)
2016 (remainder of fiscal year)	$	132
2017	257
2018	260
2019	247
2020 and thereafter	228
	$	1,124

Comverse Ltd. Lines of Credit

As of April 30, 2015 and January 31, 2015, Comverse Ltd., the Company’s wholly-owned Israeli subsidiary, had a $25.0 million line of credit with a bank to be used for various performance guarantees to customers and vendors, letters of credit and foreign currency transactions in the ordinary course of business. This line of credit is not available for borrowings. The line of credit bears no interest and is subject to renewal on an annual basis. Comverse Ltd. is required to maintain cash balances with the bank of no less than the capacity under the line of credit at all times regardless of amounts utilized under the line of credit. As of April 30, 2015 and January 31, 2015, Comverse Ltd. had utilized $15.3 million and $19.5 million, respectively, of capacity under the line of credit for guarantees and foreign currency transactions.

As of April 30, 2015 and January 31, 2015, Comverse Ltd. had an additional line of credit with a bank for $10.0 million, to be used for borrowings, various performance guarantees to customers and vendors, letters of credit and foreign currency transactions in the ordinary course of business. The line of credit bears no interest other than on borrowings thereunder and is subject to renewal on an annual basis. Borrowings under the line of credit bear interest at an annual rate of London Interbank Offered Rate plus a variable margin determined based on the bank’s underlying cost of capital. Comverse Ltd. is required to maintain cash balances with the bank of no less than the capacity under the line of credit at all times regardless of amounts borrowed or utilized under the line of credit. As of April 30, 2015 and January 31, 2015, Comverse Ltd. had no outstanding borrowings under the line of credit. As of April 30, 2015 and January 31, 2015, Comverse Ltd. had utilized $6.5 million and $6.8 million, respectively, of capacity under the line of credit for guarantees and foreign currency transactions.

Other than Comverse Ltd.’s requirement to maintain cash balances with the banks as discussed above, the lines of credit have no financial covenants. These cash balances required to be maintained with the banks were classified as “Restricted cash and bank deposits” and “Long-term restricted cash” included within the condensed consolidated balance sheets as of April 30, 2015 and January 31, 2015.


10.	DERIVATIVES AND FINANCIAL INSTRUMENTS

The Company entered into derivative arrangements to manage a variety of risk exposures during the three months ended April 30, 2015 and 2014, including foreign currency risk related to forecasted foreign currency denominated payroll costs. The Company assesses the counterparty credit risk for each party prior to entering into its derivative financial instruments and in valuing the derivative instruments for the periods presented.

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Forward Contracts

During the three months ended April 30, 2015 and 2014, the Company entered into a series of short-term foreign currency forward contracts to limit the variability in exchange rates between the U.S. dollar and the new Israeli shekel to hedge probable cash flow exposure from expected future payroll expense. The transactions qualified for cash flow hedge accounting under the FASB’s guidance and there was no hedge ineffectiveness. Accordingly, the Company recorded all changes in fair value of the forward contracts as part of other comprehensive income (loss) in the condensed consolidated statements of comprehensive income (loss). Such amounts are reclassified to the statements of operations when the effects of the item being hedged are recognized. The Company’s derivatives outstanding as of April 30, 2015 are short-term in nature and are due to contractually settle within the next twelve months.

The following tables summarize the Company’s derivative positions and their respective fair values:



	April 30, 2015
Type of Derivative	Notional Amount		Balance Sheet Classification	Fair Value
	(In thousands)
Assets
Derivatives designated as hedging instruments
Short-term foreign currency forward	$	25,362	Prepaid expenses and other current assets	$	312
Total assets				$	312



	January 31, 2015
Type of Derivative	Notional Amount		Balance Sheet Classification	Fair Value
	(In thousands)
Liabilities
Derivatives designated as hedging instruments
Short-term foreign currency forward	$	31,123	Other current liabilities	$	117
Total liabilities				$	117

The following tables summarize the Company’s classification of gains and losses on derivative instruments:



	Three Months Ended April 30, 2015
	Gain (Loss)
Type of Derivative	Recognized in Other Comprehensive Income (Loss)		Reclassified from Accumulated Other Comprehensive Income into Statement of Operations			Recognized in foreign currency transaction gain (loss), net
	(In thousands)
Derivatives designated as hedging instruments
Foreign currency forward	$	322	$	(107	)	$	—
Total	$	322	$	(107	)	$	—

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(UNAUDITED)



	Three Months Ended April 30, 2014
	Gain (Loss)
Type of Derivative	Recognized in Other Comprehensive Income (Loss)		Reclassified from Accumulated Other Comprehensive Income into Statement of Operations		Recognized in foreign currency transaction gain (loss), net
	(In thousands)
Derivatives designated as hedging instruments
Foreign currency forward	$	251	$	128	$	—
Total	$	251	$	128	$	—

There were no gains or losses from ineffectiveness of these hedges recorded for the three months ended April 30, 2015 and 2014.


11.	FAIR VALUE MEASUREMENTS

Under the FASB’s guidance, fair value is defined as the price that would be received in the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (i.e., “the exit price”).

In determining fair value, the Company uses various valuation approaches, including quoted market prices and discounted cash flows. The FASB's guidance also establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs that market participants would use in pricing the asset or liability developed based on market data obtained from independent sources. Unobservable inputs are inputs that reflect a company's judgment concerning the assumptions that market participants would use in pricing the asset or liability developed based on the best information available under the circumstances. The fair value hierarchy is broken down into three levels based on the reliability of inputs as follows:


•	Level 1 – Valuations based on quoted prices in active markets for identical instruments that the Company is able to access. Since valuations are based on quoted prices that are readily and regularly available in an active market, valuation of these instruments does not entail a significant degree of judgment.


•	Level 2 – Valuations based on quoted prices in active markets for instruments that are similar, or quoted prices in markets that are not active for identical or similar instruments, and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets.


•	Level 3 – Valuations based on inputs that are unobservable and significant to the overall fair value measurement.

Assets and liabilities are classified based on the lowest level of input that is significant to the fair value measurements. Changes in the observability of valuation inputs may result in transfers within fair value measurement hierarchy. All transfers into and/or out of all levels are assumed to occur at the end of the reporting period. The Company did not have any transfers between levels of the fair value measurement hierarchy during the three months ended April 30, 2015 and 2014.

Assets and Liabilities Measured at Fair Value on a Recurring Basis

The fair value of financial instruments is estimated by the Company, using available market information and appropriate valuation methodologies. However, considerable judgment is required in interpreting market data to develop the estimates of fair value. Accordingly, the estimates presented herein are not necessarily indicative of the amounts that the Company could realize in a market exchange. The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts.

Money Market Funds. The Company values these assets using quoted market prices for such funds.

Derivative assets and liabilities. The fair value of derivative instruments is based on quotes or data received from counterparties and third party financial institutions. These quotes are reviewed for reasonableness by discounting the future estimated cash flows under the contracts, considering the terms and maturities of the contracts and market rates for similar contracts using readily observable market prices thereof.

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The following tables present financial instruments according to the fair value hierarchy as defined by the FASB’s guidance:

Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis as of:



	April 30, 2015
	Quoted Prices to Active Markets for Identical Instruments (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Fair Value
	(In thousands)
Financial Assets:
Money market funds ⁽¹⁾	$	15,401	$	—	$	—	$	15,401
Derivative assets	—		312		—		312
	$	15,401	$	312	$	—	$	15,713



	January 31, 2015
	Quoted Prices to Active Markets for Identical Instruments (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Fair Value
	(In thousands)
Financial Assets:
Money market funds ⁽¹⁾	$	20,401	$	—	$	—	$	20,401
	$	20,401	$	—	$	—	$	20,401
Financial Liabilities:
Embedded derivatives	$	—	$	117	$	—	$	117
	$	—	$	117	$	—	$	117


(1)	Money market funds are classified in “Cash and cash equivalents” within the condensed consolidated balance sheets.

Assets and Liabilities Not Measured at Fair Value on a Recurring Basis

In addition to assets and liabilities that are measured at fair value on a recurring basis, the Company also measures certain assets and liabilities at fair value on a nonrecurring basis. The Company measures non-financial assets, classified within Level 3 of the fair value hierarchy, including goodwill, intangible assets and property and equipment, at fair value when there is an indication of impairment. These assets are recorded at fair value only when an impairment expense is recognized. The Company has elected not to apply the fair value option for non-financial assets and non-financial liabilities.

The carrying amounts of cash and cash equivalents, restricted cash and bank deposits, accounts receivable and accounts payable are reasonable estimates of their fair value.

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12.	OTHER LONG-TERM LIABILITIES

Other long-term liabilities consisted of the following:



	April 30,		January 31,
	2015		2015
	(In thousands)
Liability for severance pay⁽¹⁾	$	17,235	$	36,166
Tax contingencies	85,803		85,782
Long-term debt	992		998
Other long-term liabilities	10,509		12,510
Total	$	114,539	$	135,456

(1) As a result of entering into a MSA with Tech Mahindra, the Company has re-classified $15.6 million in severance pay long-term liabilities to Accounts payable and accrued expense as of April 30, 2015.

Under Israeli law, the Company is obligated to make severance payments under certain circumstances to employees of its Israeli subsidiaries on the basis of each individual’s current salary and length of employment. The Company’s liability for severance pay is calculated pursuant to Israel’s Severance Pay Law based on the most recent monthly salary of the employee multiplied by the number of years of employment, as of the balance sheet date. The liability for severance pay is recognized as compensation benefits in the condensed consolidated statements of operations. Employees are entitled to one month’s salary for each year of employment or a portion thereof. The Company records the obligation as if it was payable at each balance sheet date. A portion of such severance liability is funded by monthly deposits into insurance policies, which are restricted to only be used to satisfy such severance payments. Any change in the fair value of the asset is recognized as an adjustment to compensation expense in the condensed consolidated statements of operations. The asset and liability are recognized gross and not offset on the condensed consolidated balance sheet. Upon involuntary termination, employees will receive the balance from deposited funds from the insurance policies with the remaining balance paid by the Company. For voluntarily termination the employees are entitled, based on Company's policy, to the balance in the deposited funds. Any remaining net liability balance is reversed as compensation benefits in the condensed consolidated statements of operations.

For employees in Israel hired after January 2011, the Company makes regular deposits with certain insurance companies for accounts controlled by each applicable employee in order to secure the employee's rights upon termination. The Company is relieved from any severance pay liability with respect to deposits made on behalf of each employee. As such, the severance plan is only defined by the monthly contributions made by the Company, the liability accrued in respect of these employees and the amounts funded are not reflected in the Company's condensed balance sheets. The portion of liability not funded is included in Other liabilities in the condensed consolidated balance sheets.

A portion of such severance liability is funded by monthly deposits into insurance policies, which are restricted to only be used to satisfy such severance payments. The amount of deposits is classified in “Other assets” within the condensed consolidated balance sheets as severance pay fund in the amounts of $11.6 million and $25.8 million as of April 30, 2015 and January 31, 2015, respectively.

Severance pay expenses pursuant to Israel’s Severance Pay Law were as follows:



	Three Months Ended April 30,
	2015			2014
	(In thousands)
Increase due to passage of time	$	754		$	1,034
Increase due to salary increase	126			227
Reversal due to voluntary termination of employee	(105		)	(147		)
Loss (gain) from change in fund value	(23		)	25
Total operating expense due to Israeli Severance Law	$	752		$	1,139

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13.STOCK-BASED COMPENSATION

2012 Stock Incentive Compensation Plan

In October 2012, in connection with the Share Distribution the Company adopted the Comverse, Inc. 2012 Stock Incentive Compensation Plan (the "2012 Incentive Plan"). The 2012 Incentive Plan provides for the issuance of non-qualified stock options, incentive stock options, stock appreciation rights, restricted stock, performance-based compensation awards and other stock-based awards (referred to collectively as the "Awards") based on shares of the Company's common stock (referred to as "Shares"). The Company's employees, non-employee directors and consultants as well as employees and consultants of its subsidiaries and affiliates are eligible to receive Awards.

A total of 2.5 million Shares are reserved for issuance under future Awards to be granted under the 2012 Incentive Plan following the effective date of the plan (referred to as the "Future Awards").

As of April 30, 2015, stock options to purchase 1,048,211 Shares and additional Awards covering 470,577 Shares were outstanding. As of April 30, 2015, an aggregate of 1,202,768 Future Awards are available for future grant under the 2012 Incentive Plan.

Share-Based Awards

Stock-based compensation expense associated with awards for the three months ended April 30, 2015 and 2014 included in the condensed consolidated statements of operations is as follows:



	Three Months Ended April 30,
	2015		2014
	(In thousands)
Stock options:
Service costs	$	21	$	41
Research and development	49		39
Selling, general and administrative	617		383
	687		463
Restricted/Deferred stock awards:
Service costs	762		929
Research and development	216		318
Selling, general and administrative	1,391		1,228
	2,369		2,475
Total ⁽¹⁾	$	3,056	$	2,938

(1) Includes stock-based compensation expense associated with awards granted to BSS employees of $0.7 million and $0.8 million, respectively, for the three months ended April 30, 2015 and 2014.

Restricted Awards and Stock Options

The Company grants restricted stock unit awards subject to vesting provisions (“RSUs”) and stock options to certain key employees and director stock unit awards (“DSUs”) to non-employee directors (such RSUs and DSUs collectively referred to as “Restricted Awards”). For the three months ended April 30, 2015 and 2014, the Company did not grant any Restricted Awards or stock options.

During the three months ended April 30, 2014, 1,365 were issued upon exercise of stock options under the 2012 Incentive Plan. Total proceeds from these Shares were negligible. For the three months ended April 30, 2015, there were no shares issued upon exercise of stock options under the 2012 Incentive Plan.

The fair market value of the Company's Restricted Awards that vested during the three months ended April 30, 2015 and 2014, was $2.2 million and $6.1 million, respectively.

As of April 30, 2015, the unrecognized Company compensation expense, net of estimated forfeitures, related to unvested Restricted Awards was $7.0 million, which is expected to be recognized over a weighted-average period of 1.78 years.

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The Company's outstanding stock options as of April 30, 2015 include unvested stock options to purchase 669,151 Shares with a weighted-average grant date fair value of $9.19, an expected term of 4.0 years and a total fair value of $6.1 million. The unrecognized compensation expenses related to the remaining unvested stock options to purchase Shares was $3.7 million, which is expected to be recognized over a weighted-average period of 1.78 years.


14.	DISCONTINUED OPERATIONS

Amdocs Asset Purchase Agreement

The Company decided to sell its BSS Business in order to focus on its existing Digital Services business including IP communication which is expected to experience growth.

On April 29, 2015, the Company entered into a Amdocs Purchase Agreement with Amdocs Limited, a Guernsey company (the “Purchaser”). Pursuant to the Amdocs Purchase Agreement, the Company agreed to sell substantially all of its assets required for operating the Company’s converged, prepaid and postpaid billing and active customer management systems for wireless, wireline, cable and multi-play communication service providers (the “BSS Business”) to the Purchaser, and the Purchaser has agreed to assume certain liabilities of the Company, in exchange for a cash purchase price of $272 million, subject to various purchase price adjustments.

Upon completion of the sale, the Company will pay a commission of approximately $4.0 million to its advisors.

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The table below provides a breakout of the discontinued operations statements of operations.



	Three Months Ended April 30,
	2015		2014
Revenue:
Product revenue	$	9,473	$	10,346
Service revenue	39,115		43,703
Total revenue	48,588		54,049
Costs and expenses:
Product costs	5,833		4,910
Service costs	22,676		24,669
Research and development, net	4,150		7,173
Selling, general and administrative	7,154		8,584
Other operating expenses:
Restructuring expenses	567		871
Total other operating expenses	567		871
Total costs and expenses	40,380		46,207
Income from operations	8,208		7,842
Benefit (provision) for income taxes	5,111		(1,878		)
Net income from discontinued operations	$	13,319	$	5,964

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Components of assets and liabilities held for sale (in thousands):



	April 30, 2015
ASSETS
Current assets:
Accounts receivable, net of allowance of $653	$	38,315
Deferred cost of revenue	4,042
Other current assets	8,345
Total current assets	50,702
Property and equipment, net	8,794
Goodwill	83,797
Intangible assets, net	1,700
Deferred cost of revenue	7,114
Other assets	2,722
Total assets	$	154,829
LIABILITIES AND (DEFICIT) EQUITY
Current liabilities:
Accounts payable and accrued expenses	$	28,725
Deferred revenue	73,334
Total current liabilities	102,059
Deferred revenue	27,738
Other long-term liabilities	3,549
Total liabilities	$	133,346

Stock-based compensation expense associated with awards for the three months ended April 30, 2015 and 2014 included in the discontinued operations statements of operations is as follows:



	Three Months Ended April 30,
	2015		2014
	(In thousands)
Stock options:
Service costs	$	5	$	1
Research and development	—		4
Selling, general and administrative	43		25
	48		30
Restricted/Deferred stock awards:
Service costs	376		419
Research and development	49		149
Selling, general and administrative	206		187
	631		755
Total ⁽¹⁾	$	679	$	785

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15.	(DEFICIT) EQUITY AND ACCUMULATED OTHER COMPREHENSIVE INCOME

Components of (deficit) equity are as follows:



	Three Months Ended April 30,
	2015			2014
	(In thousands)
Balance, January 31	$	13,382		$	32,810
Net loss	(26,661		)	(16,131		)
Unrealized gain for cash flow hedge positions, net of reclassification adjustments and net of zero tax	429			123
Foreign currency translation adjustment	2,695			(2,462		)
Stock-based compensation expense	3,056			2,938
Exercises of stock options	—			40
Repurchase of common stock in connection with tax liabilities upon settlement of stock awards	(81		)	(386		)
Balance, April 30	$	(7,180	)	$	16,932

Accumulated Other Comprehensive Income

The components of Accumulated Other Comprehensive Income (“AOCI”), net of zero tax, were as follows (in thousands, unaudited):



	Foreign Currency Translation Adjustments		Unrealized Gains on Cash Flow Hedges			Total
Balance as of January 31, 2015	$	30,939	$	(117	)	$	30,822
Other comprehensive income before reclassifications	2,695		322			3,017
Amounts reclassified from AOCI	—		107			107
Other comprehensive income	2,695		429			3,124
Balance as of April 30, 2015	$	33,634	$	312		$	33,946



	Foreign Currency Translation Adjustments			Unrealized Gains on Cash Flow Hedges			Total
Balance as of January 31, 2014	$	23,274		$	58		$	23,332
Other comprehensive (loss) income before reclassifications	(2,462		)	251			(2,211		)
Amounts reclassified from AOCI	—			(128		)	(128		)
Other comprehensive (loss) income	(2,462		)	123			(2,339		)
Balance as of April 30, 2014	$	20,812		$	181		$	20,993

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The amounts of unrealized losses (gains) on cash flow hedges reclassified out of accumulated other comprehensive income (loss) into the condensed consolidated condensed statements of operations, with presentation location, were as follows:



	Three Months Ended April 30,
	2015		2014
	(In thousands)
Cost of revenue	$	47	$	(62	)
Research and development, net	20		(19		)
Selling, general and administrative	40		(47		)
Total	$	107	$	(128	)

Net Operating Loss Rights Agreement

Effective April 29, 2015, the Company's Board of Directors adopted a rights plan (the “Rights Plan”) and declared a dividend of one preferred share purchase right for each outstanding share of common stock. The dividend is payable to our stockholders of record as of May 11, 2015.

The Company's Board of Directors adopted the Rights Plan in an effort to protect stockholder value by attempting to diminish the risk that the Company's ability to use its net operating losses and unrealized losses (collectively, the “NOLs”) to reduce potential future federal income tax obligations may become substantially limited. The Company has experienced and may continue to experience substantial operating losses, including realized losses for tax purposes from sales inventory previously written down for financial statement purposes, which would produce NOLs. Under the Internal Revenue Code and regulations promulgated by the U.S. Treasury Department, the Company may “carry forward” these NOLs in certain circumstances to offset any current and future taxable income and thus reduce our federal income tax liability, subject to certain requirements and restrictions. To the extent that the NOLs do not otherwise become limited, the Company projects to be able to carry forward a significant amount of NOLs, and therefore these NOLs could be a substantial asset to the Company. However, if the Company experiences an “Ownership Change,” as defined in Section 382 of the Internal Revenue Code, the ability to use the NOLs, including NOLs later arising from sales inventory previously written down, will be substantially limited, and the timing of the usage of the NOLs could be substantially delayed, which could therefore significantly impair the value of that asset.

The Rights Plan is intended to act as a deterrent to any person or group acquiring 4.9% or more of our outstanding common stock (an “Acquiring Person”) without the approval of the Company's Board of Directors. Stockholders who own 4.9% or more of our outstanding common stock as of the close of business on May 11, 2015 will not trigger the Rights Plan so long as they do not (i) acquire any additional shares of common stock or (ii) fall under 4.9% ownership of common stock and then re-acquire 4.9% or more of the common stock of the Company. The Rights Plan does not exempt any future acquisitions of common stock by such persons. Any rights held by an Acquiring Person are void and may not be exercised. The Board of Directors may, in its sole discretion, exempt any person or group from being deemed an Acquiring Person for purposes of the Rights Plan.

The Company's Board of Directors authorized the issuance of one right per each outstanding share of our common stock payable to our stockholders of record as of May 11, 2015. Subject to the terms, provisions and conditions of the Rights Plan, if the rights become exercisable, each right would initially represent the right to purchase from us one one-thousandth of a share of our Series A Junior Participating Preferred Stock (the “Series A Preferred Stock”) for a purchase price of $100.00 (the “Purchase Price”). If issued, each fractional share of preferred stock would give the stockholder approximately the same dividend, voting and liquidation rights as does one share of our common stock. However, prior to exercise, a right does not give its holder any rights as a stockholder of the Company, including without limitation any dividend, voting or liquidation rights.

The rights and the Rights Plan will expire on the earliest of (i) April 29, 2018, (ii) the time at which the rights are redeemed pursuant to the Rights Agreement, (iii) the time at which the rights are exchanged pursuant to the Rights Agreement, (iv) the repeal of Section 382 of the Code or any successor statute if the Board of Directors determines that the Rights Agreement is no longer necessary for the preservation of Tax Benefits, (v) the beginning of a taxable year of the Company to which the Board of Directors determines that no Tax Benefits may be carried forward and (vi) April 29, 2016 if Stockholder Approval has not been obtained.

The Company submitted the Rights Plan for stockholder approval at the 2015 Annual Meeting of Stockholders scheduled for June 24, 2015.

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16.	LOSS PER SHARE

Basic loss per share is computed using the weighted average number of shares of common stock outstanding. For purposes of computing diluted loss per share attributable to the Company's stockholders, shares issuable upon exercise of stock options and deliverable in settlement of unvested Restricted Awards are included in the weighted average number of shares of common stock outstanding, except when the effect would be antidilutive.

The calculation of loss per share is as follows:



	Three Months Ended April 30,
	2015			2014
	(In thousands, except per share data)
Numerator:
Net loss attributable to continuing operations	$	(39,980	)	$	(22,095	)
Net earnings attributable to discontinued operations	13,319			5,964
Denominator:
Basic & diluted weighted average common shares outstanding	21,865			22,294
(Loss) earnings per share basic and diluted:
Loss per share from continuing operations	$	(1.83	)	$	(0.99	)
Earnings per share from discontinued operations	0.61			0.27
Basic and diluted loss per share	$	(1.22	)	$	(0.72	)

As a result of the Company’s net loss during the three months ended April 30, 2015 and 2014, the diluted earnings per share computation excludes 0.1 million and 0.3 million shares, respectively, of stock-based awards from the calculations because their inclusion would have been anti-dilutive.


17.	INCOME TAXES

The Company's quarterly provision for income taxes is measured using an annual effective tax rate, adjusted for discrete items that occur within the periods presented. The significant differences that impact the effective tax rate relate to the difference between the U.S. federal statutory rate and the rates in foreign tax jurisdictions, withholding taxes, incremental valuation allowances and tax contingencies.

The Company recorded an income tax expense from operations of $4.8 million for the three months ended April 30, 2015, representing an effective tax rate of (13.6)% compared with an income tax expense from operations of $2.5 million, representing an effective tax rate of (12.5)% for the three months ended April 30, 2014. During the three months ended April 30, 2015 and 2014, the effective tax rates were different from the U.S. statutory rate primarily due to the fact that the Company did not record an income tax benefit on losses incurred in certain of the Company's U.S. and foreign tax jurisdictions in which the Company maintains valuation allowances against the Company's net deferred tax assets. The income tax provisions from operations are comprised of income tax expense recorded in non-loss tax jurisdictions, withholding taxes, incremental valuation allowances and certain tax contingencies. The change in the Company's effective tax rate for the three months ended April 30, 2015, compared to the three months ended April 30, 2014 was primarily attributable to changes in the relative mix of income and losses across various tax jurisdictions, and the fact that the Company has to compute a separate effective tax rate for certain tax jurisdictions incurring losses.

As required by the authoritative guidance on accounting for income taxes, the Company evaluates the realizability of deferred tax assets on a tax jurisdictional basis at each reporting date. Accounting for income taxes requires that a valuation allowance be established when it is more-likely-than-not that all or a portion of the deferred tax assets will not be realized. In circumstances where there is sufficient negative evidence indicating that the deferred tax assets are not more-likely-than-not realizable, the Company establishes a valuation allowance. The Company determined that there is sufficient negative evidence to maintain valuation allowances against certain of the Company's federal, state and foreign deferred tax assets as a result of historical losses in the most recent three-year period in the U.S. and certain state and foreign tax jurisdictions. During the three months ended April 30, 2015, the Company reassessed its valuation allowance requirements taking into consideration the Share

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Distribution and concluded that it intends to maintain its valuation allowance until sufficient positive evidence exists to support its reversal. When we complete the disposition of the BSS business, which met the held-for-sale criteria in ASC 360 as of April 30, 2015, we will reevaluate whether, based on the existing positive and negative evidence at that time, a portion or all of the valuation allowance maintained against our deferred tax assets may be released.

The Company regularly assesses the adequacy of the Company's provisions for income tax contingencies in accordance with the applicable authoritative guidance on accounting for income taxes. As a result, the Company may adjust the reserves for unrecognized tax benefits for the impact of new facts and developments, such as changes to interpretations of relevant tax law, assessments from taxing authorities, settlements with taxing authorities, and lapses of statutes of limitation. As of April 30, 2015, the total amount of unrecognized tax benefits that, if recognized, would impact the Company's effective tax rate were approximately $85.8 million (see Note 12, Other Long-Term Liabilities). The Company believes that it is reasonably possible that the total amount of unrecognized tax benefits as of April 30, 2015 could decrease by approximately $36.0 million within the next twelve months as a result of settlements of certain tax audits or lapses of statutes of limitation. Such decreases may involve the payment of additional taxes, the adjustment of deferred taxes, including the need for additional valuation allowances and the recognition of tax benefits.

The Company's policy is to include interest and penalties related to unrecognized tax benefits as a component of the provision for income taxes in the condensed consolidated statements of operations. Accrued interest and penalties was $39.4 million as of April 30, 2015.

As of January 31, 2015, the Company operated in Israel under a “Preferred Enterprise” program pursuant to the Law for Encouragement of Capital Investments, 1959, subject to an alternative income tax rate of 16%. In the first quarter of the fiscal year ended January 31, 2016, the Company entered into a master service agreement with Tech Mahindra (India). Following this agreement, the company is not expected to fulfill the direct local manufacturing employment requirement of the program. Accordingly, the alternative income tax rate of 16% no longer applies and the general corporate income tax rate of 26.5% is applicable for the entire fiscal year ended January 31, 2016. The change in corporate income tax rate results in a $48.5 million increase to the fiscal year ended January 31, 2016 opening net deferred tax assets and to offsetting valuation allowance, with no net impact on income tax expense.


18.	COMMITMENTS AND CONTINGENCIES

Indemnifications

In the normal course of business, the Company provides indemnifications of varying scopes to customers against claims of intellectual property infringement made by third parties arising from the use of the Company's products. The Company evaluates its indemnifications for potential losses and in its evaluation considers such factors as the degree of probability of an unfavorable outcome and the ability to make a reasonable estimate of the amount of loss. Generally, the Company has not encountered significant expenses as a result of such indemnification provisions.

To the extent permitted under state laws or other applicable laws, the Company has agreements in which it agreed to indemnify its directors and officers for certain events or occurrences while the director or officer is, or was, serving at the Company's request in such capacity. The indemnification period covers all pertinent events and occurrences during the Company's director's or officer's lifetime. The maximum potential amount of future payments that the Company could be required to make under these indemnification agreements is unlimited; however, the Company has certain director and officer insurance coverage that limits the Company's exposure and enables the Company to recover a portion of any future amounts paid. The Company is not able to estimate the fair value of these indemnification agreements in excess of applicable insurance coverage, if any.

In addition, under the Share Distribution Agreements the Company entered into in connection with the Share Distribution, the Company has agreed to indemnify CTI and its affiliates (including Verint following the Verint Merger) against certain losses that may arise as a result of the Verint Merger and the Share Distribution (see Note 3, Share Distribution Agreements). On February 4, 2013, in connection with the closing of the Verint Merger Agreement, CTI placed $25.0 million in escrow to support indemnification claims to the extent made against the Company by Verint and any cash balance remaining in such escrow fund 18 months after the closing of the Verint Merger, less any claims made on or prior to such date, to be released to the Company. On August 6, 2014, the escrow was released in accordance with its terms and the Company received the escrow amount of approximately $25.0 million.

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As a result of the Verint Merger, Verint assumed certain rights and liabilities of CTI, including any liability of CTI arising out of the actions discussed below. Under the terms of the Distribution Agreement between CTI and us relating to the Share Distribution, Verint, as successor to CTI, is entitled to indemnification from us for any losses it suffers in its capacity as successor-in-interest to CTI in connection with these actions. As of the closing of the Verint Merger, the Company recognized the estimated fair value of the potential indemnification liability (see Note 1, Organization, Business and Summary of Significant Accounting Policies).

Israeli Optionholder Class Action

CTI and certain of its former subsidiaries, including Comverse Ltd. (a subsidiary of the Company), were named as defendants in four potential class action litigations in the State of Israel involving claims to recover damages incurred as a result of purported negligence or breach of contract due to previously-settled allegations regarding illegal backdating of CTI options that allegedly prevented certain current or former employees from exercising certain stock options. The Company intends to vigorously defend these actions.

Two cases were filed in the Tel Aviv District Court against CTI on March 26, 2009, by plaintiffs Katriel (a former Comverse Ltd. employee) and Deutsch (a former Verint Systems Ltd. employee). The Katriel case (Case Number 1334/09) and the Deutsch case (Case Number 1335/09) both seek to approve class actions to recover damages that are claimed to have been incurred as a result of CTI’s negligence in reporting and filing its financial statements, which allegedly prevented the exercise of certain stock options by certain employees and former employees. By stipulation of the parties, on September 30, 2009, the court ordered that these cases, including all claims against CTI in Israel and the motion to approve the class action, be stayed until resolution of the actions pending in the United States regarding stock option accounting, without prejudice to the parties’ ability to investigate and assert the unique facts, claims and defenses in these cases. On May 7, 2012, the court lifted the stay, and the plaintiffs have filed an amended complaint and motion to certify a class of plaintiffs in a single consolidated class action. The defendants responded to this amended complaint on November 11, 2012, and the plaintiffs filed a further reply on December 20, 2012. A pre-trial hearing for the case was held on December 25, 2012, during which all parties agreed to attempt to settle the dispute through mediation.

The mediation process ended without success. According to the parties’ consent to submit summations in the motion to certify the claims as a class action, including the certification of the class of plaintiffs, the court held the following dates for submission of summations: Summations on behalf of the plaintiffs were submitted on August 31, 2014; Summations on behalf of the defendants were submitted on November 20, 2014; and summations of response by the plaintiffs were submitted on December 30, 2014. On February 9, 2015, the Judge presiding over the case recused herself due to a conflict of interests. On March 30, 2015, the plaintiffs filed a motion to the Court seeking to have the case assigned to a new presiding Judge and as a result on April 4, 2015 a new presiding judge was assigned to the case. The parties are now awaiting for the Court’s decision.

Separately, on July 13, 2012, plaintiffs filed a motion seeking an order that CTI hold back $150 million in assets as a reserve to satisfy any potential damage awards that may be awarded in this case, but did not seek to enjoin the Share Distribution. On July 25, 2012, the court decided that it will not rule on the motion until after it rules on plaintiffs’ motion to certify a class of plaintiffs. On August 16, 2012, plaintiffs filed a motion for leave to appeal the court’s decision to the Israeli Supreme Court (the “Appeal”) and on November 11, 2012, CTI responded to plaintiff's motion.

On July 1, 2014, the plaintiffs filed a motion to the Supreme Court to withdraw the Appeal and accordingly the Appeal was dismissed.

Two cases were also filed in the Tel Aviv Labor Court by plaintiffs Katriel and Deutsch, and both sought to approve class actions to recover damages that are claimed to have been incurred as a result of breached employment contracts, which allegedly prevented the exercise by certain employees and former employees of certain CTI and Verint stock options, respectively. The Katriel litigation (Case Number 3444/09) was filed on March 16, 2009, against Comverse Ltd., and the Deutsch litigation (Case Number 4186/09) was filed on March 26, 2009, against Verint Systems Ltd. The Tel Aviv Labor Court has ruled that it lacks jurisdiction, and both cases have been transferred to the Tel Aviv District Court. These cases have been consolidated with the Tel Aviv District Court cases discussed above.

The Company has not accrued for these matters as the potential loss is currently not probable or estimable.

An additional case has been filed by an individual plaintiff in the Tel Aviv District Court similarly seeking to recover damages up to an aggregate of $3.3 million allegedly incurred as a result of the inability to exercise certain stock options. The case generally alleges the same causes of actions alleged in the potential class action discussed above. The parties conducted a mediation process that ended without success. On June 26, 2014 the Court ordered the plaintiff to notify it why not to transfer the claim to the Labor Court. On July 10, 2014, the plaintiff filed a notice to court according to which the subject-matter jurisdiction is reserved to the District Court. The Court did not accept the plaintiff's argument and has assigned the case to the

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COMVERSE, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

Labor Court. A preliminary hearing at the Labor court is scheduled for July 8, 2015. The Company has not accrued for this matter as the potential loss is currently not probable or estimable.

Starhome Sale and Indemnification

Starhome was a CTI subsidiary (66.5% owned prior to the disposition). On September 19, 2012, CTI, in order to ensure it could meet the conditions of the Verint Merger, contributed to the Company its interest in Starhome, including its rights and obligations under the Starhome Share Purchase Agreement discussed below. The Starhome Disposition was completed on October 19, 2012.

Under the terms of the Starhome Share Purchase Agreement, Starhome’s shareholders received aggregate cash proceeds of approximately $81.3 million, subject to adjustment for fees, transaction expenses and certain taxes. Of this amount, $10.5 million is held in escrow to cover potential post-closing indemnification claims, with $5.5 million being released after 18 months and the remainder released after 24 months, in each case, less any claims made on or prior to such dates. The Company received aggregate net cash consideration (including $4.9 million deposited in escrow at closing) of approximately $37.2 million, after payments that CTI agreed to make to certain other Starhome shareholders of up to $4.5 million. The escrow funds were available to satisfy certain indemnification claims under the Starhome Share Purchase Agreement to the extent that such claims exceeded $1.0 million. During the fiscal year ended January 31, 2015, the Company received approximately $4.7 million in settlement of escrow.

Amdocs Asset Purchase Agreement

On April 29, 2015, the Company entered into a Purchase Agreement with Amdocs Limited, a Guernsey company (the “Purchaser”). Pursuant to the Amdocs Purchase Agreement, the Company agreed to sell substantially all of its assets required for operating the Company’s BSS Business to the Purchaser, and the Purchaser has agreed to assume certain liabilities of the Company, in exchange for a cash purchase price of $272 million, subject to various purchase price adjustments.

Agreement with Tech Mahindra

On April 14, 2015, the Company entered into a MSA with Tech Mahindra pursuant to which Tech Mahindra will perform certain services for the Company’s Digital Services business on a global basis. The services include research and development, project deployment and delivery and maintenance and support for customers of the Company’s Digital Service business. In connection with the transaction, up to approximately 570 employees of the Company and its subsidiaries may be rehired by Tech Mahindra or its affiliates. However, under the terms of the MSA, where applicable, Tech Mahindra’s provision of such services (and any employee rehire) is contingent upon local decisions for Company entities to enter into the agreement on a country-by-country basis after the completion of all regulatory and compliance requirements under applicable law. Under the MSA, the Company is obligated to pay to Tech Mahindra in the aggregate approximately $211 million in base fees for services to be provided pursuant to the MSA for a term of six years, renewable at the Company’s option. The Company's expected obligation is $23 million, $40 million, $39 million, $36 million, $32 million, $29 million and $12 million, for fiscal years ended January 31, 2016, 2017, 2018, 2019, 2020, 2021 and 2022, respectively. The services under the MSA started on June 1, 2015.

The Company has the right to terminate the MSA for convenience subject to the payment of certain termination fees. The Company may terminate the MSA upon certain material breaches, certain material performance failures or violations of applicable law by Tech Mahindra without termination fees. Tech Mahindra may terminate the MSA upon certain material breaches by the Company, including the failure to pay undisputed amounts. Upon any termination or expiration, Tech Mahindra will provide reverse transition services to transition the services being provided by Tech Mahindra pursuant to the MSA back to the Company or its designee. The MSA contains certain customary indemnification provisions by both Comverse and Tech Mahindra.

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COMVERSE, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

Guarantees

The Company provides certain customers in the ordinary course of business with financial performance guarantees, which in certain cases are backed by standby letters of credit or surety bonds, the majority of which are cash collateralized and accounted for as restricted cash and bank deposits. The Company is only liable for the amounts of those guarantees in the event of its nonperformance, which would permit the customer to exercise the guarantee. As of April 30, 2015 and January 31, 2015, the Company believes that it was in compliance with its performance obligations under all contracts for which there is a financial performance guarantee, and that any liabilities arising in connection with these guarantees will not have a material adverse effect on the Company’s condensed consolidated results of operations, financial position or cash flows. The Company also obtained bank guarantees primarily to provide customer assurance relating to the performance of certain obligations required by customer agreements for the guarantee of certain payment obligations. These guarantees, which aggregated $24.5 million and $29.0 million as of April 30, 2015 and January 31, 2015, respectively, are generally scheduled to be released upon the Company’s performance of specified contract milestones, a majority of which are scheduled to be completed at various dates through May 30, 2016.

Legal Proceedings

From time to time, the Company and its subsidiaries are subject to claims in legal proceedings arising in the normal course of business. The Company does not believe that it or its subsidiaries are currently party to any pending legal action not described herein or disclosed in the consolidated financial statements that could reasonably be expected to have a material adverse effect on its business, financial condition or results of operations.

Brazil Tax and Labor Contingencies

The Company's operations in Brazil are involved in various litigation matters and have received or been the subject of numerous governmental assessments related to indirect and other taxes, as well as disputes associated with former Company employees. The tax matters, which comprise a significant portion of the contingencies, principally relate to claims for taxes on the transfers of inventory, municipal service taxes on rentals and gross revenue taxes. The Company is disputing these tax matters and intends to vigorously defend its positions. The labor matters principally relate to claims made by former Company employees for pay wages, social security and other related labor benefits, as well as related tax obligations. As of April 30, 2015, the total amounts related to the reserved portion of the tax and labor contingencies was $0.1 million and the unreserved portion of the tax and labor contingencies totaled approximately $7.6 million. With respect to the unreserved balance, these have been assessed by management as being either remote or possible as to the likelihood of ultimately resulting in a loss to the Company. Local laws and regulations often require that the Company make deposits or post other security in connection with such proceedings. As of April 30, 2015, the Company had $5.4 million of deposits, included in Long-term restricted cash, with the government in Brazil for claims that the Company is disputing which provides security with respect to these matters. Generally, any deposits would be refundable to the extent the matters are resolved in the Company's favor. Management routinely assesses these matters as to probability of ultimately incurring a liability against the Company's Brazilian operations and the Company records its best estimate of the ultimate loss in situations where management assesses the likelihood of an ultimate loss as probable.


19.	SUBSEQUENT EVENTS

Pursuant to the Acision Purchase Agreement, the Company will acquire all of the equity securities of and voting interests in Acision for a purchase price consisting of approximately $135 million in cash, certain earnout payments (as discussed below) and 3.13 million shares of the Company’s common stock, par value $0.01 per share (the “Consideration Shares”) which will be issued in a private placement transaction conducted pursuant to Section 4(a)(2) or Regulation S under the Securities Act of 1933, as amended, subject to certain adjustments (the “Transaction”). The Company expects to finance the cash portion of the purchase price with cash-on-hand. The parties have further agreed that an amount up to $35 million of cash

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

consideration will be subject to an earnout, contingent on the achievement of certain revenue objectives by certain of the Acision’s business lines. To secure claims the Company may have under the Acision Purchase Agreement, $10 million of the initial cash consideration will be retained in escrow, which amount will be increased in the event that further consideration is triggered under the earnout, up to a total maximum aggregate escrow retention of $25 million. Such funds will be released to the Seller two years after completion of the Transaction, subject to any claims. In addition, Acision, in consultation with the Company will seek an amendment and waiver (the “Amendment”) to Acision’s credit agreement (the “Acision Credit Agreement”) governing Acision’s existing $157 million senior credit facility (the “Acision Senior Debt”), pursuant to which the Acision Senior Debt will remain in place during the pendency of and following completion of the Transaction. Subject to provisions allowing the Company to secure alternative financing, both the Company and the Seller are permitted to terminate the Purchase Agreement in the event the requisite lenders under the Acision Credit Agreement do not consent to the Amendment. Pursuant to the terms of the Acision Credit Agreement the Acision Senior Debt bears interest at a rate per annum, at the option of the Acision, of either (i) a customary adjusted Eurocurrency interest rate plus 9.75% or (ii) a customary base rate plus 8.75%, and matures, subject to the terms and conditions of the Acision Credit Agreement, on December 15, 2018. In connection with the Amendment, the Company has agreed to pay certain costs imposed on Acision by its lenders under the Acision Senior Debt.

The Acision Purchase Agreement contains customary representations, warranties and covenants, by the parties thereto and completion of the Transaction as set forth therein is subject to certain closing conditions including (i) the completion of the sale of the substantial majority of the Company’s BSS business to Amdocs Limited in accordance with the Amdocs Purchase Agreement and (ii) the receipt of the requisite approvals and consents of certain local regulatory authorities in respect of the Transaction. Assuming the satisfaction or waiver of the closing conditions, the Transaction is expected to close no later than the end of the third calendar quarter in 2015.

Each party has agreed to indemnify the other for certain potential liabilities and claims, subject to certain exceptions and limitations.


ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of our financial condition and results of operations should be read together with the audited consolidated financial statements and related notes included in Part IV, Item 15 of our Annual Report on Form 10-K for the fiscal year ended January 31, 2015 (or the 2014 Form 10-K) and the condensed consolidated financial statements and related notes included in this Quarterly Report. This discussion and analysis contains forward-looking statements based on current expectations relating to future events and our future financial performance that involve risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of many factors, including those set forth under “Forward-Looking Statements” on page i of this Quarterly Report. Percentages and amounts within this section may not calculate due to rounding differences.

EXECUTIVE SUMMARY

Overview

We are a global provider of cloud-based and in-network services enablement and monetization software solutions for communication service providers (or CSPs) and growing enterprises. We offer a suite of software solutions designed to support users’ connected lifestyles, and help our customers simplify and differentiate their offerings with faster time to value and less complexity.

Our Digital Services products are designed to help CSPs evolve to become Digital Service Providers and future-proof their offerings by monetizing the digital lifestyle of their subscribers. In addition, we continue to offer traditional VAS solutions, including voice and messaging services (including voicemail, visual voicemail, call completion, short messaging service (or SMS), and multimedia picture and video messaging (or MMS), and digital lifestyle services and Internet Protocol (or IP) based rich communication services (including group chat, file transfer, video share, social, presence and geo-location information).

Amdocs Asset Purchase Agreement

On April 29, 2015, we entered into an Asset Purchase Agreement (or the Amdocs Purchase Agreement) with Amdocs Limited, a Guernsey company (or Purchaser). Pursuant to the Amdocs Purchase Agreement, we agreed to sell substantially all of our assets required for operating our converged, prepaid and postpaid billing and active customer management systems for

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wireless, wireline, cable and multi-play communication service providers (or BSS Business) to the Purchaser, and the Purchaser has agreed to assume certain liabilities of ours, in exchange for a cash purchase price of $272 million, subject to various purchase price adjustments (or the Asset Sale).

The Amdocs Purchase Agreement contains customary representations and warranties of the parties and covenants of ours. Under the terms of the Amdocs Purchase Agreement, upon the closing of the Asset Sale, $26 million of the purchase price will be deposited into escrow to fund potential indemnification claims and certain adjustments for a period of twelve (12) months following the closing. We and the Purchaser will also enter into other ancillary transaction documents at closing. The closing of the Asset Sale is subject to the applicable regulatory approvals and other closing conditions.

The Amdocs Purchase Agreement may be terminated prior to the closing of the Asset Sale upon certain events, including by written agreement of ours and the Purchaser, or by either us or the Purchaser if the Asset Sale has not closed by August 29, 2015 or if a permanent injunction or other order prohibiting the closing has been issued by a governmental entity.

Pursuant to the Amdocs Purchase Agreement, we have agreed generally, but with some enumerated exceptions, to carry on its BSS Business in the ordinary course during the period from the date of the Amdocs Purchase Agreement to the completion of the Asset Sale.

In connection with the Amdocs Purchase Agreement, we and the Purchaser have also entered into a Transition Services Agreement (or the TSA), which provides for several support services between us and the Purchaser in connection with the transition of the BSS Business to the Purchaser, and for various periods up to 12 months of services following the closing of the Asset Sale. Either party may terminate the TSA if the Amdocs Purchase Agreement is terminated.

Discontinued Operations

The BSS Business met the criteria to be classified as held for sale. As such, the BSS Business have been reclassified and reflected as discontinued operations on the consolidated statements of earnings for all periods presented. The assets and liabilities related to BSS Business were reclassified and reflected as available for sale on the consolidated balance sheet at April 30, 2015 (see Note 14, Discontinued Operations).

Segment Information

Prior to entering into the Amdocs Purchase Agreement, our reportable segments consisted of BSS and Digital Services. As a result of entering into the Amdocs Purchase Agreement, the results of operations of the former BSS Business segment are classified as discontinued operations. Therefore, with the reported divestiture we now operate as a single business segment the results of which are included in the Company's income statement from continuing operations.

Other Significant Events

During the three months ended April 30, 2015 and subsequent thereto, the following significant events occurred:

Acquisition of Acision. On June 15, 2015, we entered into an agreement (referred to as the Acision Purchase Agreement”) with Bergkamp Coöperatief U.A., a cooperative with excluded liability formed under the laws of the Netherlands (or the Seller) relating to the sale and purchase of Acision Global Limited, a private company formed under the laws of the United Kingdom (or Acision). Pursuant to the Acision Purchase Agreement we will acquire Acision for a purchase price consisting of approximately $135 million in cash (including certain earnout payments) and 3.13 million shares of our common stock, par value $0.01 per share (referred to as the Consideration Shares), subject to certain adjustments (or the Transaction). The Transaction includes arrangements relating to the retention of funds in escrow to support any indemnification claims to the extent made by us. In addition, Acision, in consultation with us, will seek an amendment and waiver (referred to as the Amendment) to the credit agreement (the “Acision Credit Agreement”) governing Acision’s existing approximately $157 million senior credit facility (the “Acision Senior Debt”), pursuant to which the Acision Senior Debt will remain in place during the pendency of and following completion of the Transaction. Subject to provisions allowing us to secure alternative financing, both we and the Seller are permitted to terminate the Acision Purchase Agreement in the event the requisite lenders under the Acision Credit Agreement do not consent to the Amendment.

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Each party has agreed to indemnify the other for certain potential liabilities and claims, subject to certain exceptions and limitations. Assuming the satisfaction or waiver of the closing conditions, the Transaction is expected to close no later than the end of the third calendar quarter in 2015. For additional information, see Note 19 to our condensed consolidated financial statements included in this Quarterly Report.

Master Services Agreement with Tech Mahindra. On April 14, 2015, we entered into a Master Service Agreement (or the MSA) with Tech Mahindra Limited (or Tech Mahindra) pursuant to which Tech Mahindra will perform certain services for our Digital Services business on a global basis. The services include research and development, project deployment and delivery, and maintenance and support for customers of our Digital Service business. In connection with the transaction, up to 570 employees of our company and our subsidiaries may be rehired by Tech Mahindra or its affiliates. However, under the terms of the MSA, where applicable, Tech Mahindra’s provision of such services (and any employee rehire) is contingent upon local decisions for our entities to enter into the agreement on a country-by-country basis after the completion of all regulatory and compliance requirements under applicable law.

Under the MSA, we are required to pay to Tech Mahindra in the aggregate approximately $211 million in base fees for services to be provided pursuant to the MSA for a term of six years, renewable at the Company’s option. The services under the MSA started on June 1, 2015. We expect to realize gross savings in excess of $70 million over the term of the MSA.

We have the right to terminate the MSA for convenience subject to the payment of certain termination fees. We may terminate the MSA upon certain material breaches, certain material performance failures or violations of applicable law by Tech Mahindra without termination fees. Tech Mahindra may terminate the MSA upon certain material breaches by us, including the failure to pay undisputed amounts. Upon any termination or expiration, Tech Mahindra will provide reverse transition services to transition the services being provided by Tech Mahindra pursuant to the MSA back to us or our designee.

Net Operating Loss Rights Agreement. Effective April 29, 2015, our Board of Directors adopted a rights plan (or the Rights Plan) and declared a dividend of one preferred share purchase right for each outstanding share of common stock. The dividend is payable to our stockholders of record as of May 11, 2015.

Our Board of Directors adopted the Rights Plan in an effort to protect stockholder value by attempting to diminish the risk of our ability to use its net operating losses and unrealized losses (collectively, the “NOLs”) to reduce potential future federal income tax obligations may become substantially limited. We have experienced and may continue to experience substantial operating losses, including realized losses for tax purposes from sales inventory previously written down for financial statement purposes, which would produce NOLs. Under the Internal Revenue Code and regulations promulgated by the U.S. Treasury Department, we may “carry forward” these NOLs in certain circumstances to offset any current and future taxable income and thus reduce our federal income tax liability, subject to certain requirements and restrictions. To the extent that the NOLs do not otherwise become limited, we project to be able to carry forward a significant amount of NOLs, and therefore these NOLs could be a substantial asset to us. However, if we experience an “Ownership Change,” as defined in Section 382 of the Internal Revenue Code, the ability to use the NOLs, including NOLs later arising from sales inventory previously written down, will be substantially limited, and the timing of the usage of the NOLs could be substantially delayed, which could therefore significantly impair the value of that asset.

The Rights Plan is intended to act as a deterrent to any person or group acquiring 4.9% or more of our outstanding common stock (an “Acquiring Person”) without the approval of our Board of Directors. Stockholders who own 4.9% or more of our outstanding common stock as of the close of business on May 11, 2015 will not trigger the Rights Plan so long as they do not (i) acquire any additional shares of common stock or (ii) fall under 4.9% ownership of common stock and then re-acquire 4.9% or more of our common stock. The Rights Plan does not exempt any future acquisitions of common stock by such persons. Any rights held by an Acquiring Person are void and may not be exercised. The Board of Directors may, in its sole discretion, exempt any person or group from being deemed an Acquiring Person for purposes of the Rights Plan.

Our Board of Directors authorized the issuance of one right per each outstanding share of our common stock payable to our stockholders of record as of May 11, 2015. Subject to the terms, provisions and conditions of the Rights Plan, if the rights become exercisable, each right would initially represent the right to purchase from us one one-thousandth of a share of our Series A Junior Participating Preferred Stock (the “Series A Preferred Stock”) for a purchase price of $100.00 (the “Purchase

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Price”). If issued, each fractional share of preferred stock would give the stockholder approximately the same dividend, voting and liquidation rights as does one share of our common stock. However, prior to exercise, a right does not give its holder any rights as a stockholder of ours, including without limitation any dividend, voting or liquidation rights.

We submitted the Rights Plan for stockholder approval at the 2015 Annual Meeting of Stockholders scheduled for June 24, 2015.

Separation agreement with Thomas Sabol. On April 30, 2015, we entered into a separation agreement with Thomas Sabol, our former Senior Vice President, Chief Financial Officer, pursuant to which Mr. Sabol ceased to serve as Senior Vice President and Chief Financial Officer on April 30, 2015 and his employment with us will terminate on July 1, 2015.

Resignation of Board Member. On May 9, 2015, Neil Montefiore informed us that he will not stand for re-election at the upcoming 2015 annual meeting of stockholders (or Annual Meeting) and will be resigning from our Board of Directors effective the date of the 2015 Annual Meeting of Stockholders. Mr. Montefiore, whose primary expertise lies with our BSS Business, advised us that his resignation was prompted by the recently announced pending sale of our business to Amdocs Limited.

Extension of Employment Terms of Executive Officers. On May 14, 2015, the Company entered into amendment to employments agreements with each of Philippe Tartavull, its President, Chief Executive Officer and Director, and Nassrin Tavakoli, its Senior Vice President and Chief Technology Officer pursuant to which the term of employment of Mr. Tartavull and Ms. Tavakoli was extended for a year through May 21, 2016 and October 1, 2016, respectively. The term of each executive’s employment will automatically renew for one year increments, unless either the executive of the Company provides the other party with a prior written notice of non-renewal at least 60 days prior to the renewal date.

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Condensed Consolidated Financial Highlights

The following table presents certain financial highlights for the three months ended April 30, 2015 and 2014, including Comverse performance, Comverse performance margin (reflecting Comverse performance as a percentage of revenue), Adjusted EBITDA and Adjusted EBITDA loss per share - basic & diluted, non-GAAP financial measures, for our company on a consolidated basis:



	Three Months Ended April 30,
	2015			2014
	(Dollars in thousands)
Total revenue	$	45,705		$	65,082
Gross margin	4.3		%	21.8		%
Loss from operations	(29,613		)	(21,594		)
Operating margin	(64.8		)%	(33.2		)%
Loss from continuing operations	(39,980		)	(22,095		)
Income from discontinued operations	13,319			5,964
Net loss	(26,661		)	(16,131		)
Net cash used in operating activities	(17,704		)	(35,599		)
Non-GAAP Financial Measures
Comverse performance	$	(21,849	)	$	(15,717	)
Comverse performance margin	(47.8		)%	(24.1		)%
Adjusted EBITDA	(21,849		)	(15,717		)
Adjusted EBITDA loss per share - basic & diluted	$	(0.85	)	$	(0.56	)

Reconciliation of Loss from Operations to Comverse Performance and Adjusted EBITDA

We provide Comverse performance Adjusted EBITDA and Adjusted EBITDA per share, non-GAAP financial measures, as additional information for our operating results. These measure are not in accordance with, or alternatives for, GAAP financial measures and may be different from, or not comparable to similarly titled or other non-GAAP financial measures used by other companies. We believe that the presentation of these non-GAAP financial measure provides useful information to investors regarding certain additional financial and business trends relating to our results of operations as viewed by management in monitoring our businesses, reviewing our financial results and for planning purposes.

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The following table provides a reconciliation of loss from operations to Comverse performance and Adjusted EBITDA for the three months ended April 30, 2015 and 2014:



	Three Months Ended April 30,
	2015			2014
	(Dollars in thousands)
Loss from operations	$	(29,613	)	$	(21,594	)
Expense Adjustments:
Stock-based compensation expense	2,376			2,153
Amortization of intangible assets	86			—
Compliance-related professional fees	51			369
Compliance-related compensation and other expenses	8			(70		)
Strategic related costs	1,716			1,290
Write-off of property and equipment	26			9
Certain litigation settlements and related costs	42			(36		)
Restructuring expenses	3,408			1,872
Gain on sale of fixed assets	(2		)	(5		)
Other	53			295
Total expense adjustments	7,764			5,877
Comverse performance	$	(21,849	)	$	(15,717	)
Depreciation	3,367			3,161
Adjusted EBITDA	(18,482		)	(12,556		)
Adjusted EBITDA loss per share - basic & diluted	$	(0.85	)	$	(0.56	)

Comverse Performance and Adjusted EBITDA

Our Chief Executive Officer is our chief operating decision maker (or CODM). The CODM uses Comverse performance, as defined below, as the primary basis for assessing our financial results. Comverse performance is not necessarily comparable to other similarly titled captions of other companies.

Comverse performance is computed by management as loss from operations adjusted for the following: (i) stock-based compensation expense; (ii) amortization of intangible assets; (iii) compliance-related professional fees; (iv) compliance-related compensation and other expenses; (v) strategic-related costs (vi) write-off of property and equipment; (vii) certain litigation settlements and related costs; (viii) restructuring expenses; and (ix) certain other gains and expenses. Compliance-related professional fees relate to fees and expenses recorded in connection with our efforts to remediate material weaknesses in internal control over financial reporting. Strategic related costs include business strategy evaluation and mergers and acquisition efforts.

Adjusted EBITDA is computed by management by adding depreciation to Comverse performance.

Business Trends and Uncertainties

For the three months ended April 30, 2015 compared to the three months ended April 30, 2014 our consolidated revenue decreased and our costs and operating expenses decreased. The decrease in revenue exceeded the decrease in our costs and operating expenses.

Revenue from customer solutions for the three months ended April 30, 2015 decreased compared to the three months ended April 30, 2014. The decrease was primarily attributable to a lower volume of projects in the current period resulting from lower bookings.

Revenue from maintenance revenue for the three months ended April 30, 2015 decreased compared to the three months ended April 30, 2014. The decrease was primarily attributable to a $2.3 million decrease from the timing of entering into renewals of maintenance contracts, the termination of certain maintenance contracts and reduction in maintenance fees charged to certain customers.

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Our costs and operating expenses for the three months ended April 30, 2015 decreased compared to the three months ended April 30, 2014, primarily due to a decrease in cost of revenue due to lower revenue and a decrease in selling, general and administrative expenses decrease due to support department costs and agent and employee commissions due to a reduction in and mix of bookings. The decreases were partially offset by an increase in project loss accruals during the three months ended April 30, 2015.

During the three months ended April 30, 2015, our cash and cash equivalents and restricted cash decreased primarily due to negative operating cash flow, payments made in connection with restructuring activities and purchases of property and equipment.

Our costs, operating expenses and disbursements decreased during the three months ended April 30, 2015 primarily due to our continued focus on closely monitoring our costs and operating expenses as part of our efforts to improve our cash position and achieve long-term improved operating performance and positive operating cash flows. As part of our efforts to reduce costs and expenses, improve our cash position and achieve long-term improved operating performance and positive operating cash flows, we continued to implement initiatives to reduce costs and expenses during the three months ended April 30, 2015, including the relocation of certain delivery and research and development activities to low cost centers of excellence in Eastern Europe and Asia.

In connection with the MSA, on April 14, 2015, we commenced a restructuring plan for a reduction of workforce included in cost of revenue, research and development and selling, general and administrative expenses. The aggregate cost of the plan is currently estimated to be approximately $15 million in severance-related costs, which is expected to be accrued and paid by January 31, 2017.

We continue to maintain our market leadership in the traditional value added services (or VAS) market by providing solutions to CSPs based on voice and messaging services, such as voicemail, call completion, SMS and MMS. However, CSPs face increasing competition from both Internet players and mobile device manufacturers, using new technologies that may provide alternatives to CSP products and services. For example, the introduction of IP-based applications on wireless devices by OTT providers, allows end users to utilize IP-based services, such as Facebook, Facetime, Google, Whatsapp, Line or Skype, to access, among other things, IP communications free of charge rather than use similar services provided by CSPs. Furthermore, these CSP services continue to face competition from low-cost competitors from emerging markets. We believe these changes have reduced demand for traditional communication products and services and increased pricing pressures, which have in turn adversely impacted our revenue and margins and we expect this trend to continue.

At the same time, the growth in global wireless subscriptions, and high growth wireless segments, such as data services and Internet browsing are pushing CSPs to evolve to 4G/LTE IP-based network technologies, supporting the demand for several of our products. In addition, a key need for CSPs is to increase their relevance in the digital lifestyle of their subscribers. We believe that leveraging our IP-based solutions, CSPs will be able to launch and offer applications and services that service subscribers’ digital lifestyle and that will create new revenue streams to CSPs.

To address these market trends and the needs of our customers, we are implementing our strategy in respect of traditional VAS, IP-based solutions and unified communications. The key elements to our Digital Services strategy include:


•	Continuing to leverage our leading market position in traditional VAS. As a market leader in the traditional VAS market we plan to focus on the following initiatives:


◦	Leveraging existing customer base. We continue to maintain our existing VAS customer base by enhancing our existing products and services and offering new products and services that facilitate total cost reduction of CSPs system operations and allow CSPs to launch new services;


◦	Gain market share through virtualization and cloud-based offering. We are currently aggressively pursuing new opportunities with new and existing customers by offering virtualized and cloud-based solutions which are designed to simplify CSPs’ current systems, improve efficiencies and reduce total cost of ownership; and

◦

Centralize the systems of multi-country large CSPs. We are currently pursuing and intend to continue to pursue opportunities to consolidate the systems of large, multi-country CSPs by moving their traditional VAS deployments from a per-country operation to a centralized cloud infrastructure that either they can operate or we could operate for them. This proposition is designed to create a significant reduction in the total cost of ownership for CSPs and also provides them with a platform for launching new digital services for their markets.

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•

Focusing on IP-Based Evolved Communication Services (or ECS): Our ECS solution is designed to modernize the Traditional VAS deployments by extending current services to IP endpoints, as well as upgrade the CSP’s voice and messaging offer to a comprehensive communication package that is based on Rich Communication Standards (or RCS), including voice, multi-device visual voicemail, messaging to IP-based devices, video, presence and chat. Our connectivity layer uses multiple access technologies to bridge traditional endpoints, web endpoints, and IP Multimedia System Session Initiation Protocol (SIP) endpoints. In order to enhance our solution, we recently acquired Solaiemes, whose WebRTC, RCS Monetization API Gateway and Presence solutions complement our ECS offering, with the combined portfolio creating a platform for service monetization of IP-based digital services. We plan to continue to enhance our ECS solution internally and through acquisitions or third party engagements; and

•

Pursuing Enterprise Unified Communications Opportunities. We offer a portfolio of IP Trunking and Unified Communications services that CSPs can extend to their enterprise customers. Our objective is to sell these solutions through the CSP, and become the CSP’s Unified Communication solution of choice. The strength of our portfolio lies in its ability to provide convergence between the “at-work” Unified Communication experience and the “outside-work” ECS experience for CSPs’ end customers. This capability leverages our existing broad customer base which we believe provides us with a competitive advantage.

Uncertainties Impacting Future Performance

Mix of Revenue in Digital Services

It is unclear whether our advanced Digital Services offerings will be widely adopted by existing and potential customers. Currently, we are unable to predict whether sales of advanced offerings will fully offset declines in the sale of traditional VAS solutions in subsequent fiscal periods. If sales of advanced offerings do not increase or if increases in sales of advanced offerings do not exceed or fully offset any declines in sales of traditional solutions, due to adverse market trends, changes in consumer preferences or otherwise, our revenue, profitability and cash flows would likely be materially adversely affected.

Difficulty in Forecasting Product Bookings

Our product bookings are difficult to predict. A high percentage of our product bookings have typically been generated late in fiscal quarters. In addition, based on historical industry spending patterns of CSPs, we typically forecast our highest product booking levels in our fourth fiscal quarter. This trend makes it difficult for us to forecast our annual product bookings and to implement effective measures to cover any shortfalls of prior fiscal quarters if product bookings for the fourth fiscal quarter fail to meet our expectations. Furthermore, we continue to emphasize large capacity systems in our product development and marketing strategies. Contracts for installations typically involve a lengthy, complex and highly competitive bidding and selection process, and our ability to obtain particular contracts is inherently difficult to predict. A delay, cancellation or other factor resulting in the postponement or cancellation of significant orders may cause us to miss our projections.

Share Distribution

In connection with the Share Distribution, we entered into the Distribution Agreement with CTI pursuant to which, among other things, we agreed to indemnify CTI and its affiliates (including Verint after the Verint Merger) against certain losses that may arise as a result of the Verint Merger and the Share Distribution. To the extent that we are required to make payments to satisfy these indemnification obligations, our liquidity could be impacted. For additional information, see Note 3 to our condensed consolidated financial statements included in this Quarterly Report.

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RESULTS OF OPERATIONS

Segment Information

The expenses that qualify for inclusion in discontinued operations are only the direct operating expenses incurred by the disposed component. As a result of the reported divestiture, certain previously allocated corporate overhead costs (indirect BSS costs) charged to the BSS Segment are excluded from discontinued operations and included in continuing operations.

Under the prior segment structure, our global corporate functions, that provided common support to its segments, were included in a column captioned “All Other” as part of our business segment presentation. All Other included sales, marketing, finance, legal, and management as they provided services to both the BSS and Digital Services segments. In addition, there were certain delivery, support, and research and development groups that provided common support to the BSS and Digital Services segments, and therefore the costs of these common groups were included in All Other. The majority of the costs included in All Other are indirect costs that did not qualify for the inclusion in discontinued operations. As a result of reported divestiture, included in continuing operations are all unallocated indirect shared costs (unallocated indirect costs) of ours previously included in All Other.

The following discussion provides an analysis of our condensed consolidated results of operations.

Three Months Ended April 30, 2015 Compared to Three Months Ended April 30, 2014

Condensed Consolidated Results



	Three Months Ended April 30,						Change
	2015			2014			Amount			Percent
	(Dollars in thousands, except per share data)
Total revenue	$	45,705		$	65,082		$	(19,377	)	(29.8	)%
Costs and expenses
Cost of revenue	43,757			50,885			(7,128		)	(14.0	)%
Research and development, net	8,280			8,359			(79		)	(0.9	)%
Selling, general and administrative	19,873			25,560			(5,687		)	(22.2	)%
Other operating expenses	3,408			1,872			1,536			82.1	%
Total costs and expenses	75,318			86,676			(11,358		)	(13.1	)%
Loss from operations	(29,613		)	(21,594		)	(8,019		)	37.1	%
Interest income	84			115			(31		)	(27.0	)%
Interest expense	(193		)	(123		)	(70		)	(56.9	)%
Foreign currency transaction (loss) gain, net	(5,573		)	2,019			(7,592		)	N/M
Other income (expense), net	102			(52		)	154			N/M
Income tax expense	(4,787		)	(2,460		)	(2,327		)	94.6	%
Loss from continuing operations	(39,980		)	(22,095		)	(17,885		)	(80.9	)%
Income from discontinued operations	13,319			5,964			7,355			(123.3	)%
Net loss	$	(26,661	)	$	(16,131	)	$	(10,530	)	(65.3	)%
(Loss) earnings per share - basic & diluted:
Continuing operations	$	(1.83	)	$	(0.99	)	$	(0.84	)
Discontinued operations	0.61			0.27			0.34
	$	(1.22	)	$	(0.72	)	$	(0.50	)

Total Revenue

Management analyzes our revenue by: (i) revenue generated from customer solutions, and (ii) maintenance revenue. Revenue generated from customer solutions consists primarily of the licensing of our customer solutions, hardware and related

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professional services and training. Professional services primarily include installation, customization and consulting services. Certain revenue arrangements that require significant customization of a product to meet the particular requirements of a customer are recognized under the percentage-of-completion method. The vast majority of the percentage-of-completion method arrangements are fixed-fee contracts. Maintenance revenue consists of post-contract customer support (or PCS), including technical software support services, unspecified software updates or upgrades to customers on a when-and-if-available basis.

Revenue from customer solutions was $24.6 million for the three months ended April 30, 2015, a decrease of $11.6 million, or 32.1%, compared to the three months ended April 30, 2014. The decrease was primarily attributable to a lower volume of projects in the current period resulting from lower bookings. Revenue recognized using the percentage-of-completion method was $13.7 million and $20.1 million for the three months ended April 30, 2015 and 2014, respectively.

Maintenance revenue was $21.1 million for the three months ended April 30, 2015, a decrease of $7.7 million, or 26.9%, compared to the three months ended April 30, 2014. This decrease was primarily attributable to an approximate $2.7 million decrease from the termination of certain maintenance contracts, a $2.3 million decrease due to the timing of entering into renewals of maintenance contracts and a reduction in maintenance fees charged to certain customers.

Revenue by Geographic Region

The presentation of revenue by geographic region is based on the location of customers.

Revenue in the Americas, Asia-Pacific and Europe, Middle East and Africa represented approximately 46%, 27% and 27% of our revenue, respectively, for the three months ended April 30, 2015 compared to approximately 48%, 29% and 23% of our revenue, respectively, for the three months ended April 30, 2014.

Foreign Currency Impact on Revenue

Our currency for financial reporting purposes is the U.S. dollar. The majority of our revenue for the three months ended April 30, 2015 was derived from transactions denominated in U.S. dollars. All other revenue was derived from transactions denominated in various foreign currencies, primarily the euro and Japanese yen. Fluctuations in the U.S. dollar relative to foreign currencies in which we conducted business for the three months ended April 30, 2015 compared to the three months ended April 30, 2014 had unfavorably impacted revenue by $1.9 million primary related to that euro and Japanese yen.

Foreign Currency Impact on Costs

A significant portion of our expenses, principally personnel-related costs, is incurred in new Israeli shekel (or NIS), whereas our currency for financial reporting purposes is the U.S. dollar. A strengthening of the NIS against the U.S. dollar would increase the U.S. dollar value of our expenses in Israel. In order to mitigate this risk we enter into foreign currency forward contracts to hedge foreign currency exchange rate fluctuations.

For the three months ended April 30, 2015, fluctuations in the U.S. dollar relative to all foreign currencies in which we conducted business favorably impacted costs by $3.3 million compared to the three months ended April 30, 2014, primarily due to a favorable impact of the NIS.

Cost of Revenue

Cost of revenue primarily consists of (i) material costs, (ii) compensation and related overhead expenses for personnel involved in the customization of our products, customer delivery and maintenance and professional services, (iii) contractor costs, (iv) royalties and license fees, (v) depreciation of equipment used in operations, and (vi) amortization of capitalized software costs and certain purchased intangible assets.

Cost of revenue was $43.8 million for the three months ended April 30, 2015, a decrease of $7.1 million, or 14.0%, compared to the three months ended April 30, 2014. The decrease was attributable to a decrease in revenue offset by an increase of $4.8 million in project loss accruals.

Cost of revenue includes previously unallocated indirect corporate costs and indirect BSS costs of $8.9 million and $12.1 million for the three months ended April 30, 2015 and 2014.

Research and Development, Net

Research and development expenses, net, primarily consist of personnel-related costs involved in product development and third party development and programming costs.

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Research and development expenses, net, were $8.3 million for the three months ended April 30, 2015, a decrease of 0.9%, compared to the three months ended April 30, 2014.

Research and development expenses, net, includes previously unallocated indirect corporate costs and indirect BSS costs of $2.5 million and $3.6 million for the three months ended April 30, 2015 and 2014, respectively.

Selling, General and Administrative

Selling, general and administrative expenses consist primarily of compensation and related expenses of personnel involved in sales, marketing, finance, legal and management and professional fees related to such functions.

Sales and marketing costs were $7.0 million for the three months ended April 30, 2015, a decrease of $3.1 million or 31.1%, compared to the three months ended April 30, 2014. The decrease was primarily attributable to a $2.0 million decrease in agent and employee commissions due to a reduction in and mix of bookings with varying commission fee arrangements and a $0.5 million decrease in personnel-related costs.

General and administrative expenses were $12.8 million for the three months ended April 30, 2015, a decrease of $2.5 million or 31.1%, compared to the three months ended April 30, 2014. The decrease was primarily attributable to a decrease in legal and personnel-related costs.

Selling, general and administrative expenses include previously unallocated indirect corporate costs and indirect BSS costs of $16.9 million and $23.8 million for the three months ended April 30, 2015 and 2014.

Other Operating Expenses

Other operating expenses consist of operating expenses not included in research and development, net and selling, general and administrative expenses and for the fiscal periods presented consist of restructuring expenses.

Other operating expenses were $3.4 million for the three months ended April 30, 2015, an increase of $1.5 million, compared to the three months ended April 30, 2014. The increase was attributable to an increase in restructuring expenses during the three months ended April 30, 2015 compared to the three months ended April 30, 2014. See Note 14 of the condensed consolidated financial statements included in this Quarterly Report.

Other operating expenses include previously unallocated indirect costs of $3.4 million and $1.9 million for the three months ended April 30, 2015 and 2014.

Loss from Operations

Loss from operations was $29.6 million for the three months ended April 30, 2015, an increase in loss of $8.0 million, or 37.1% compared to the three months ended April 30, 2014.

Interest Income

Interest income was $0.1 million for the three months ended April 30, 2015, a decrease of 27.0%, compared to the three months ended April 30, 2014.

Interest Expense

Interest expense was $0.2 million for the three months ended April 30, 2014, an increase of $0.1 million, compared to the three months ended April 30, 2014.

Foreign Currency Transaction (Loss) Gain, Net

Foreign currency transaction loss, net, was $5.6 million for the three months ended April 30, 2015, a change of $7.6 million compared to a foreign currency transaction gain, net, of $2.0 million for the three months ended April 30, 2014. The change was attributable to exchange rate volatility primarily related to the Brazilian real, euro and the British pound.

Other Income (Expense), Net

Other income, net, was $0.1 million for the three months ended April 30, 2015, a change of $0.2 million compared to Other expense, net of $0.1 million for the three months ended April 30, 2014.

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Income Tax Expense

We recorded income tax expense of $4.8 million for the three months ended April 30, 2015, representing an effective tax rate of (13.6)%, compared with income tax expense of $2.5 million, representing an effective tax rate of (12.5)% for the three months ended April 30, 2014. During the three months ended April 30, 2015 and 2014, the effective tax rates were different than the U.S. statutory rate primarily due to the fact that we did not record an income tax benefit on losses incurred in certain of our U.S. and foreign tax jurisdictions in which we maintain valuation allowances against our net deferred tax assets. The income tax provisions from operations are comprised of income tax expense recorded in non-loss tax jurisdictions, withholding taxes, incremental valuation allowances and certain tax contingencies. The change in our effective tax rate for the three months ended April 30, 2015, compared to the three months ended April 30, 2014, was primarily attributable to changes in the relative mix of income and losses across various tax jurisdictions, the timing of when that mix of income occurs during the year and because we compute a separate effective tax rate for tax jurisdictions incurring losses.

Discontinued Operations

Revenue from BSS customer solutions was $26.9 million for the three months ended April 30, 2015, a decrease of $1.6 million, or 5.4%, compared to the three months ended April 30, 2014. The decrease in revenue from BSS customer solutions was primarily attributable to a lower volume of BSS projects in the current period resulting from lower bookings in the past year.

BSS maintenance revenue was $21.7 million for the three months ended April 30, 2014, a decrease of $3.9 million, or 15.3%, compared to the three months ended April 30, 2014. The decrease was primarily attributable to a decrease in product bookings which resulted in a decrease in related maintenance services.

Cost of revenue was $28.5 million for the three months ended April 30, 2015, a decrease of $1.1 million, or 3.6%, compared to the three months ended April 30, 2014. The decrease was primarily attributable to a decrease in revenue.

Research and development expenses, net, were $4.2 million for the three months ended April 30, 2015, a decrease of $3.0 million, or 42.1%, compared to the three months ended April 30, 2014. The decrease was primarily attributable to a decrease in personnel related due to the relocation of certain delivery and research and development activities to low cost centers of excellence and overall reduction in headcount.

Selling, general and administrative expenses were $7.2 million for the three months ended April 30, 2015, a decrease of $1.4 million, or 16.7%, compared to the three months ended April 30, 2014. The decrease was primarily attributable to a reduction in sales personnel and commissions.

Other operating expenses were $0.6 million for the three months ended April 30, 2015, a decrease of $0.3 million, compared to the three months ended April 30, 2014.

We recorded income tax benefit of $5.1 million for the three months ended April 30, 2015, representing an effective tax rate of (62.3)%, compared with income tax expense of $1.9 million, representing an effective tax rate of 23.9% for the three months ended April 30, 2014. During the three months ended April 30, 2015, a valuation reserve of $6.4 million was released since the pending sale of discontinued operations allows the deferred tax liability associated with goodwill to be used as a source of income for the realization of deferred tax assets. Due to this pending disposition, which meets the held-for-sale criteria as of April 30, 2015, we will continue to reevaluate whether, based on the existing positive and negative evidence at that time, a portion or all of the valuation allowance maintained against our deferred tax assets should be released in future quarters.

Net loss was $26.7 million for the three months ended April 30, 2015, an increase in loss of $10.5 million, or 65.3%, compared to the three months ended April 30, 2014, due primarily to the reasons discussed above.

LIQUIDITY AND CAPITAL RESOURCES

Overview

Our principal sources of liquidity historically have consisted of cash and cash equivalents, cash flows from operations, including changes in working capital, borrowings from CTI, and the sale of investments and assets. We believe that our future sources of liquidity will include cash and cash equivalents, cash flows from operations, proceeds from the sale of assets and may include new borrowings or proceeds from the issuance of equity or debt securities.

During the three months ended April 30, 2015, our principal uses of liquidity were to fund operating expenses, implement restructuring initiatives and make capital expenditures. We expect that our future principal uses of liquidity will also include funding of acquisitions, primarily the acquisition of Acision.

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Financial Condition

Cash and Cash Equivalents and Restricted Cash

As of April 30, 2015, we had cash, cash equivalents, bank time deposits and restricted cash of approximately $179.9 million, compared to approximately $201.9 million as of January 31, 2015. During the fiscal year ended January 31, 2015 in connection with our restructuring initiatives we made approximately $2.6 million in restructuring payments, which were primarily severance-related.

Restricted Cash

Restricted cash aggregated $43.8 million and $43.7 million as of April 30, 2015 and January 31, 2015, respectively. Restricted cash includes compensating cash balances related to existing lines of credit and deposits that are pledged as collateral or restricted for use specified performance guarantees to customers and vendors, letters of credit, foreign currency transactions in the ordinary course of business and pending tax judgments.

Liquidity Forecast

We currently forecast that available cash and cash equivalents will be sufficient to meet our liquidity needs, including capital expenditures, for at least the next 12 months.

Management's current forecast is based upon a number of assumptions including, among others: assumed levels of customer order activity, revenue and collections; continued implementation of initiatives to reduce operating costs; no significant degradation in operating margins; increased spending on certain investments in the business; slight reductions in the unrestricted cash levels required to support the working capital needs of the business and other professional fees; successful integration of the Acision business; intra-quarter working capital fluctuations consistent with historical trends. Management believes that the above-noted assumptions are reasonable. However, should one or more of the assumptions prove incorrect, or should one or more of the risks or uncertainties described in Part I, Item 1A, “Risk Factors” of the 2014 Form 10-K, filed with the SEC on April 16, 2015, or in Part II, Item 1A, “Risk Factors” of this Quarterly Report materialize, we may experience a shortfall in the cash required to support working capital needs.

Sources of Liquidity

The following is a discussion that highlights our primary sources of liquidity, cash and cash equivalents, and changes in those amounts due to operations, financing, and investing activities and the liquidity of our investments.

Cash Flows

Three Months Ended April 30, 2015 Compared to Three Months Ended April 30, 2014



	Three Months Ended April 30,
	2015			2014
	(In thousands)
Net cash used in operating activities	$	(17,704	)	$	(35,599	)
Net cash used in investing activities	(5,612		)	(8,074		)
Net cash used in financing activities	(81		)	(346		)
Effects of exchange rates on cash and cash equivalents	1,372			(465		)
Net decrease in cash and cash equivalents	(22,025		)	(44,484		)
Cash and cash equivalents, beginning of period	158,121			254,580
Cash and cash equivalents, end of period	$	136,096		$	210,096

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Operating Cash Flows

Net cash used in operating activities from operations was $17.7 million during the three months ended April 30, 2015, a decrease in cash used of $17.9 million, compared to the three months ended April 30, 2014. The change was primarily attributable to the decreases in revenue, which was partially offset by a decrease in costs and operating expenses. The cash used in operating activities from operations during the three months ended April 30, 2014 was partially attributable to an increase of $17.7 million in accounts receivable due to higher invoicing than collections.

Investing Cash Flows

Net cash used in investing activities was $5.6 million during the three months ended April 30, 2015, a decrease of $2.5 million, compared to the three months ended April 30, 2014.

The decrease was primarily attributable to a decrease in restricted cash used of $4.1 million during the three months ended April 30, 2015, compared to the three months ended April 30, 2014. The cash used by restricted cash during the three months ended April 30, 2014 includes $2.6 million in return of escrow funds following the sale of Starhome.

This decrease was partially offset by an increase in cash used of $1.7 million for purchases of property and equipment during the three months ended April 30, 2015 compared to the three months ended April 30, 2014.

Financing Cash Flows

Net cash used in financing activities was $0.1 million during the three months ended April 30, 2015, a decrease of $0.3 million, compared to the three months ended April 30, 2014. The decrease was attributable to a decrease of $0.3 million in cash used to repurchase common stock in connection with tax liabilities upon settlement of awards during the three months ended April 30, 2015.

Effects of Exchange Rates on Cash and Cash Equivalents

The majority of our cash and cash equivalents are denominated in U.S. dollars. However, due to the nature of our global business, we also hold cash denominated in other currencies, primarily the euro, British pound, and the NIS. For the three months ended April 30, 2015, the fluctuation in foreign currency exchange rates had an unfavorable impact of $1.4 million on cash and cash equivalents.

Common Stock Repurchase

As previously disclosed, our Board of Directors adopted a program to repurchase from time to time at management’s discretion up to $30.0 million in shares of our common stock on the open market during the 18-month period ending October 9, 2015 at prevailing market prices. In early September 2014, as part of this program, our Board approved a $5.0 million committed repurchase plan to be implemented in accordance with Rule 10b5-1 of the Exchange Act. Repurchases were made under the program using our own cash resources. During the fiscal year ended January 31, 2015, we repurchased in the open market under this program 688,642 shares of common stock for an aggregate purchase price of approximately $15.1 million and a weighted average purchase price of $21.98 per share. During the three months ended April 30, 2015, there were no repurchases made under the program.

Indebtedness

Spain Government Sponsored Loans

As of April 30, 2015 and January 31, 2015, we had approximately $1.1 million of debt which we assumed in connection with the acquisition of Solaiemes on August 1, 2014. The debt consists of Spain government sponsored loans extended for research and development projects. For additional information, see Note 9 to the condensed consolidated financial statements included in this Quarterly Report.

Comverse Ltd. Lines of Credit

As of April 30, 2015 and January 31, 2015, Comverse Ltd., our wholly-owned Israeli subsidiary, had a $25.0 million line of credit with a bank to be used for various performance guarantees to customers and vendors, letters of credit and foreign currency transactions in the ordinary course of business. This line of credit is not available for borrowings. The line of credit

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bears no interest and is subject to renewal on an annual basis. Comverse Ltd. is required to maintain cash balances with the bank of no less than the capacity under the line of credit at all times regardless of amounts utilized under the line of credit. As of April 30, 2015 and January 31, 2015, Comverse Ltd. had utilized $15.3 million and $19.5 million, respectively, of capacity under the line of credit for guarantees and foreign currency transactions.

As of April 30, 2015 and January 31, 2015, Comverse Ltd. had an additional line of credit with a bank for $10.0 million, to be used for borrowings, various performance guarantees to customers and vendors, letters of credit and foreign currency transactions in the ordinary course of business. The line of credit bears no interest other than on borrowings thereunder and is subject to renewal on an annual basis. Borrowings under the line of credit bear interest at an annual rate of the London Interbank Offered Rate plus a variable margin determined based on the bank’s underlying cost of capital. Comverse Ltd. is required to maintain cash balances with the bank of no less than the capacity under the line of credit at all times regardless of amounts borrowed or utilized under the line of credit. As of April 30, 2015 and January 31, 2015, Comverse Ltd. had no outstanding borrowings under the line of credit. As of April 30, 2015 and January 31, 2015, Comverse Ltd. had utilized $6.5 million and $6.8 million, respectively, of capacity under the line of credit for guarantees and foreign currency transactions.

Other than Comverse Ltd.’s requirement to maintain cash balances with the banks as discussed above, the lines of credit have no financial covenants. These cash balances required to be maintained with the banks were classified as “Restricted cash and bank deposits” and “Long-term restricted cash” included within the consolidated balance sheets as of April 30, 2015 and January 31, 2015.

Restructuring Initiatives

We review our business, manage costs and align resources with market demand and in connection with acquisitions. As a result, we have taken several actions to improve our cash position, reduce fixed costs, eliminate redundancies, strengthen operational focus and better position us to respond to market pressures or unfavorable economic conditions. While such restructuring initiatives are expected to have positive impact on our operating cash flows in the long term, they also have led and will lead to some expenses. During the three months ended April 30, 2015 and 2014, we recorded severance and facility-related costs attributable to existing restructuring initiatives of $4.0 million and $2.7 million, respectively, and paid $2.6 million and $2.9 million, respectively. The remaining severance and facility-related costs relating to existing restructuring initiatives of $4.8 million and $4.4 million are expected to be substantially paid by January 31, 2017 and December 2024, respectively.

For additional information relating to our financial obligations in respect of restructuring initiatives, see "-Overview-Business Trends and Uncertainties" and Note 8 to the condensed consolidated financial statements included in this Quarterly Report.

Amdocs Asset Purchase Agreement

On April 29, 2015, we entered into a Purchase Agreement with Amdocs Limited, a Guernsey company (or Purchaser). Pursuant to the Amdocs Purchase Agreement, we agreed to sell substantially all of our assets required for operating our BSS Business to the Purchaser, and the Purchaser has agreed to assume certain liabilities of ours, in exchange for a cash purchase price of $272 million, subject to various purchase price adjustments.

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transition of the BSS Business to the Purchaser, and for various periods up to 12 months of services following the closing of the Asset Sale. Either party may terminate the TSA if the Amdocs Purchase Agreement is terminated.

Acquisition of Acision

On June 15, 2015, we entered into an agreement (referred to as the Acision Purchase Agreement) with Bergkamp Coöperatief U.A., a cooperative with excluded liability formed under the laws of the Netherlands (or the Seller) relating to the sale and purchase of Acision Global Limited, a private company formed under the laws of the United Kingdom (or Acision). Pursuant to the Acision Purchase Agreement we will acquire Acision for a purchase price consisting of approximately $135 million in cash (including certain earnout payments) and 3.13 million shares of our common stock, par value $0.01 per share (referred to as the Consideration Shares), subject to certain adjustments (or the Transaction). The Transaction includes arrangements relating to the retention of funds in escrow to support any indemnification claims to the extent made by us. In addition, Acision, in consultation with us, will seek an amendment and waiver (referred to as the Amendment) to the credit agreement (the “Acision Credit Agreement”) governing Acision’s existing approximately $157 million senior credit facility (the “Acision Senior Debt”), pursuant to which the Acision Senior Debt will remain in place during the pendency of and following completion of the Transaction. Subject to provisions allowing us to secure alternative financing, both we and the Seller are permitted to terminate the Acision Purchase Agreement in the event the requisite lenders under the Acision Credit Agreement do not consent to the Amendment.

Contractual Obligations

On April 14, 2015, we entered into a MSA with Tech Mahindra pursuant to which Tech Mahindra will perform certain services for our Digital Services business on a global basis. Under the MSA, we are obligated to pay to Tech Mahindra in the aggregate approximately $211 million in base fees for services to be provided pursuant to the MSA for a term of six years, renewable at our option. As a result of the MSA, we expect approximately $12 million in annual cost savings. For additional information relating to our contractual obligations see "Contractual Obligations" included in this Quarterly Report.

Guarantees and Restrictions on Access to Subsidiary Cash

Guarantees

We provide certain customers in the ordinary course of business with financial performance guarantees, which in certain cases are backed by standby letters of credit or surety bonds, the majority of which are cash collateralized and accounted for as restricted cash and bank time deposits. We are only liable for the amounts of those guarantees in the event of our nonperformance, which would permit the customer to exercise the guarantee. As of April 30, 2015 and January 31, 2015, we believe that we were in compliance with our performance obligations under all contracts for which there is a financial performance guarantee, and that any liabilities arising in connection with these guarantees will not have a material adverse effect on our condensed consolidated results of operations, financial position or cash flows. We also obtained bank guarantees primarily to provide customer assurance relating to the performance of certain obligations required by customer agreements for the guarantee of certain payment obligations. These guarantees, which aggregated $24.5 million and $29.0 million as of April 30, 2015 and January 31, 2015, respectively, are generally scheduled to be released upon our performance of specified contract milestones, a majority of which are scheduled to be completed at various dates through May 30, 2016.

Dividends from Subsidiaries

The ability of our Israeli subsidiaries to pay dividends is governed by Israeli law, which provides that dividends may be paid by an Israeli corporation only out of earnings as defined in accordance with the Israeli Companies Law of 1999, provided that there is no reasonable concern that such payment will cause such subsidiary to fail to meet its current and expected liabilities as they come due.

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Cash and cash equivalents held by foreign subsidiaries

We operate our business internationally. A significant portion of our cash and cash equivalents are held by various foreign subsidiaries. As of April 30, 2015 and January 31, 2015, we had $79.9 million and $88.0 million or 59% and 56% respectively, of our cash and cash equivalents held by our foreign subsidiaries. If cash and cash equivalents held outside the United States are distributed to the United States resident corporate parents in the form of dividends or otherwise, we may be subject to additional U.S. income taxes (subject to an adjustment for foreign tax credits) and foreign withholding taxes. We may incur substantial withholding taxes if we repatriate our cash from certain foreign subsidiaries. We expect a portion of our foreign subsidiaries cash to be repatriated to the U.S. As this amount has been previously subject to U.S. tax, the non-U.S. withholding taxes that would be imposed on an actual triggering of a dividend of $149.0 million has been accrued in the amount of $20.1 million. At April 30, 2015, the Company had approximately $83.0 million of undistributed earnings in its foreign subsidiaries which are considered to be indefinitely reinvested, and the determination of the amount of unrecognized deferred tax liability on unremitted foreign earnings is not practicable because of the complexities of the calculation.

OFF-BALANCE SHEET ARRANGEMENTS

As of April 30, 2015, we had no material off-balance sheet arrangements, other than performance guarantees disclosed in “—Liquidity and Capital Resources—Guarantees and Restrictions on Access to Subsidiary Cash—Guarantees.” There were no material changes in our off-balance sheet arrangements since January 31, 2015. For a more comprehensive discussion of our off-balance sheet arrangements as of January 31, 2015, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in Part II, Item 7 of our 2014 Form 10-K.

CONTRACTUAL OBLIGATIONS

On April 14, 2015, we entered into a MSA with Tech Mahindra pursuant to which Tech Mahindra will perform certain services for our Digital Services business on a global basis. The services include research and development, project deployment and delivery and maintenance and support for customers of our Digital Service business. In connection with the transaction, up to approximately 570 of our employees and its subsidiaries may be rehired by Tech Mahindra or its affiliates. However, under the terms of the MSA, where applicable, Tech Mahindra’s provision of such services (and any employee rehire) is contingent upon local decisions for our entities to enter into the agreement on a country-by-country basis after the completion of all regulatory and compliance requirements under applicable law. Under the MSA, we are obligated to pay to Tech Mahindra in the aggregate approximately $211 million in base fees for services to be provided pursuant to the MSA for a term of six years, renewable at our option. Of this obligation, $23 million are due in the next twelve months, $79 million are due in one to three years, $68 million are due in three to five years and $41 million are due in more than five years. The services under the MSA started on June 1, 2015.

Except as disclosed herein, there were no other material changes in our contractual obligations from January 31, 2015. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in Part II, Item 7 of our 2014 Form 10-K.

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CRITICAL ACCOUNTING POLICIES AND ESTIMATES

We described the significant accounting policies and methods used in the preparation of our consolidated financial statements in Note 1 to the consolidated financial statements included in Part IV, Item 15 of our 2014 Form 10-K. The accounting policies that reflect our more significant estimates, judgments and assumptions in the preparation of our consolidated financial statements are described in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in Part II, Item 7 of our 2014 Form 10-K, and include the following:


•	revenue recognition;


•	extended payment terms;


•	percentage-of-completion accounting;


•	stock-based compensation;


•	recoverability of goodwill;


•	recoverability of long-lived assets;


•	income taxes;


•	litigation and contingencies; and


•	Israel employees severance pay.

We do not believe that there were any significant changes in our critical accounting policies during the three months ended April 30, 2015.

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

For information related to recently issued accounting pronouncements, see Note 2 to the condensed consolidated financial statements included in this Quarterly Report.


ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Our 2014 Form 10-K, filed with the SEC on April 16, 2015, provides a detailed discussion of the market risks affecting our operations. We believe our exposure to these market risks did not materially change during the three months ended April 30, 2015.


ITEM 4.	CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Our management evaluated, with the participation of our principal executive officer and principal financial officer, the effectiveness of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the Exchange Act) for the fiscal quarter ended April 30, 2015. Based on this evaluation, our principal executive officer and principal financial officer have concluded that our disclosure controls and procedures were effective as of April 30, 2015 to provide reasonable assurance that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms, and is accumulated and communicated to management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

In connection with the evaluation required by paragraph (d) of Rule 13a-15 under the Exchange Act, there was no change identified in our internal control over financial reporting that occurred during the fiscal quarter ended April 30, 2015 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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PART II.	OTHER INFORMATION


ITEM 1.	LEGAL PROCEEDINGS

For a description of our legal proceedings, see Note 19 to the condensed consolidated financial statements included in this Quarterly Report. Except as disclosed in such note, there have been no material developments in the legal proceedings previously reported in our 2014 Form 10-K, filed with the SEC on April 16, 2015.


ITEM 1A.	RISK FACTORS

Except as noted below, there are no material changes to the risk factors previously disclosed in our 2014 Form 10-K, filed with the SEC on April 16, 2015.

We are subject to various risks and uncertainties arising out of the recently announced master services agreement pursuant to which a substantial portion of the employee base in our Digital Services will transfer to a third party, Tech Mahindra, and the pending sale of our Business Support Systems to Amdocs Limited, any of which could materially and adversely affect our business and operations, and our stock price.

We have been focused on the recently announced planned transfer of employees and related functions of our Digital Services and pending sale of our BSS business. Allocation of material resources to these matters affects our normal operations, including sales and fulfillments efforts. These circumstances could result in the loss of customers or delays in orders. In addition, we may lose key employees or be faced with employee unrest, distraction or litigation, or union or work council-related actions, including strikes or litigation.

Specifically with respect to the master services agreement with Tech Mahindra, we may be unable to transfer employees in certain jurisdictions timely or at any time. Further, we will be materially dependent on Tech Mahindra for certain critical functions and operations, including research and development, project deployment, delivery, maintenance, and support services. Any failure on Tech Mahindra’s part could materially affect our business and financial results.

The sale of our BSS business poses additional risks. There may be delays in the transaction itself or delays in the realization of anticipated benefits of the sale. The transaction is subject to termination if we fail to satisfy closing conditions, such as secure third party consents, or if other termination events occur, such as injunction or similar governmental action. In such case, we would bear the material costs associated with this effort, and lose all anticipated benefits of the transaction. Even if closed, the purchase price is subject to various post-closing adjustment provisions relating to compliance with our representations, warranties and covenants, including post-closing covenants relating to the procurement of various third party consents, over which we will have no meaningful control. In addition, we could bear losses under our post-closing Transition Services Agreement, whether due to pricing versus cost variances, or in the case of any breach of or failure to meet performance standards under the agreement. In addition, we may be unable to re-invest the proceeds of the sale in our Digital Services business or new businesses that are profitable or otherwise successful.

As a result of the reported divestiture of the BSS business, certain previously allocated corporate overhead costs (indirect BSS costs) charged to the BSS Segment are excluded from discontinued operations and included in continuing operations. Accordingly, following the closing of the sale of the BSS business, we will need to reduce our costs and expenses, including through restructuring initiatives. We may encounter difficulties in implementing restructuring initiatives in certain countries in a timely manner or at all and restructuring costs may ultimately exceed our initial estimates. There is no assurance that these initiatives will reduce costs and the costs to implement them may not offset any savings for a period of time.

Future changes in stock ownership could limit our use of net operating loss carryforwards.

As of January 31, 2015, we had net operating loss carryforwards and other tax benefits totaling approximately $451.0 million available to offset future federal taxable income. Similarly, we had net operating loss carryforwards to offset state taxable income in varying amounts. As a result of future changes in stock ownership, we may become subject to limitations on our ability to use our net operating loss carryforwards, which could result in loss of these benefits altogether, or payment of federal or state income taxes earlier than otherwise would be required. We recently implemented a shareholder rights plan intended to provide a meaningful deterrent effect against acquisitions that could cause a change in ownership. However, the plan does not guarantee against such a change in ownership.

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Our pending acquisition of Acision may not close in a timely manner or at all and we may not realize all of the anticipated benefits of the anticipated acquisition transaction with Acision or those benefits may take longer to realize than expected. We may also encounter significant unexpected difficulties in integrating the two businesses.

Our pending acquisition of Acision is subject to closing conditions including the completion of the Amdocs transaction and the receipt of requisite regulatory approvals. There can be no assurance that these conditions will be met and that the transaction will close in a timely manner or at all. If the transaction closes, the success of the acquisition transaction with Acision will depend, in part, on our ability to realize the anticipated benefits and cost savings from combining our business with the business of Acision. Our business and Acision have operated and, until the completion of the transaction, will continue to operate, independently. It is possible that the integration process could result in the loss of key employees, the disruption of each company’s ongoing businesses or inconsistencies in standards, controls, procedures and policies that could adversely affect the combined company’s ability to achieve the anticipated benefits of the transaction. If we experience difficulties with the integration process, the anticipated synergies and other benefits of the transaction may not be realized fully or at all, or may take longer to realize than expected. Integration efforts between the two companies may also divert management attention and resources. These integration matters could have an adverse effect on us and Acision during this transition period and for an undetermined period after completion of the transaction. In addition, even if we successfully integrate Acision’s business operations with our own, we may not realize the full expected benefits of transaction, including the synergies, cost savings, sales and growth opportunities that we expect. These benefits may not be achieved within the anticipated time frame, or at all. Additional unanticipated costs may also be incurred in the integration of the companies’ businesses. As a result, we cannot assure you that the combination of our business and the business of Acision will result in the realization of the full synergies and other benefits anticipated from the transaction.


ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Issuer Purchases of Equity Securities

In the three months ended April 30, 2015, we purchased an aggregate of 3,887 shares of our common stock from certain of our directors, executive officers and employees to cover tax liabilities in connection with the delivery of shares in settlement of stock awards. The shares purchased by the Company are deposited in its treasury.

Common Stock Repurchase Program

As previously disclosed, our Board of Directors adopted a program to repurchase from time to time at management’s discretion up to $30.0 million in shares of our common stock on the open market during the 18-month period ending October 9, 2015 at prevailing market prices. In early September 2014, as part of this program, our Board approved a $5.0 million committed repurchase plan to be implemented in accordance with Rule 10b5-1 of the Exchange Act. During the fiscal year ended January 31, 2015, we repurchased in the open market under this program 688,642 shares of common stock for an aggregate purchase price of approximately $15.1 million and a weighted average purchase price of $21.98 per share. Repurchases are made under the program using our own cash resources. During the three months ended April 30, 2015, there were no repurchases made under the program.



Period	Total Number of Shares (or Units) Purchased	Average Price Paid Per Share (or Unit)		Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs	Maximum Number (or Approximate Dollar Value) of Shares (or Units) That May Yet Be Purchased Under the Plans or Programs
February 1, 2015 – February 28, 2015	—	$	—	—	$	14,865,329
March 1, 2015 – March 31, 2015	—	—		—	14,865,329
April 1, 2015 – April 30, 2015	3,887	20.67		—	14,865,329
Total	3,887	$	20.67	—	$	14,865,329

Sales of Unregistered Securities

In connection with the Acision Purchase Agreement, we agreed to pay at closing part of the consideration through the issuance of 3.13 million shares of our common stock, which will be issued in a private placement transaction conducted pursuant to Section 4(a)(2) or Regulation S under the Securities Act of 1933, as amended.


ITEM 3.	DEFAULTS UPON SENIOR SECURITIES

None


ITEM 4.	MINE SAFETY DISCLOSURES

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Not applicable.


ITEM 5.	OTHER INFORMATION

Not applicable.

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ITEM 6.	EXHIBITS



Exhibit No.		Exhibit Description

2.1*		Asset Purchase Agreement, dated as of April 29, 2015, by and between Comverse, Inc. and Amdocs Limited.

3.1		Certificate of Designation of the Series A Junior Participating Preferred Stock (incorporated herein by reference to Exhibit 3.1 of the Registrant's Current Report on Form 8-K filed with the SEC on May 1, 2015).

4.1		Form of Rights Agreement, dated as of April 29, 2015, between Comverse, Inc. and American Stock Transfer & Trust Company, LLC, as Rights Agent, which includes the Form of Certificate of Designation of the Series A Junior Participating Preferred Stock as Exhibit A, Form of Rights Certificate as Exhibit B and the Summary of Rights as Exhibit C (incorporated herein by reference to Exhibit 4.1 of the Registrant's Current Report on Form 8-K filed with the SEC on May 1, 2015).

10.1*#		Master Services Agreement, dated as of April 14, 2015, by and between Comverse, Inc. and Tech Mahindra Limited.

10.2*†		Amendment to Employment Agreement, dated as of May 14, 2015, by and between Comverse, Inc. and Philippe Tartavull.

10.3*†		Amendment to Employment Letter, dated as of May 14, 2015, by and between Comverse, Inc. and Nassrin Tavakoli.

10.4*†		Employment Agreement, dated as of March 12, 2015, by and between Comverse, Inc. and Jacky Wu.

10.5*†		Separation Agreement, dated as of April 30, 2015, by and between Comverse, Inc. and Thomas Sabol.

31.1*		Certification of the Chief Executive Officer pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as amended.

31.2*		Certification of the Chief Financial Officer pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as amended.

32.1**		Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2**		Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101*		The following materials from the Registrant’s Quarterly Report on Form 10-Q for the three months ended April 30, 2015, formatted in XBRL (eXtensible Business Reporting Language), include: (i) the Condensed Consolidated Statements of Operations, (ii) the Condensed Consolidated Comprehensive Income (Loss), (iii) the Condensed Consolidated Balance Sheets, (iv) the Condensed Consolidated Statements of Cash Flows, and (iv) the Notes to the Condensed Consolidated Financial Statements.



*	Filed herewith.

**	This exhibit is being “furnished” pursuant to Item 601(b)(32) of SEC Regulation S-K and is not deemed “filed” with the Securities and Exchange Commission and is not incorporated by reference in any filing of the Registrant under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended.

†	Constitutes a management contract or compensatory plan or arrangement.

#	Confidential treatment was requested for certain provisions of this exhibit pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended. These provisions have been omitted from the filing and submitted separately to the Securities and Exchange Commission. The location of the confidential information is indicated in the exhibit with brackets and an asterisk ([*]).

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SIGNATURES

Pursuant to the requirements 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, INC.

June 15, 2015	/s/ Philippe Tartavull
	Philippe Tartavull President and Chief Executive Officer (Principal Executive Officer)

June 15, 2015	/s/ Jacky Wu
	Jacky Wu Senior Vice President, Chief Financial Officer (Principal Financial Officer)

Exhibit 2.1

Execution Version

ASSET PURCHASE AGREEMENT

by and among

COMVERSE, INC.

and

AMDOCS LIMITED

and

THE OTHER SELLERS NAMED HEREIN

dated as of

April 29, 2015

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Page


Article I	Definitions.......................................................................................................................1


Section 1.1	Terms...................................................................................................................1


Section 1.2	Terms Generally.................................................................................................16


Article II	Purchase and Sale..........................................................................................................16


Section 2.1	Purchase and Sale of Assets...............................................................................16


Section 2.2	Excluded Assets.................................................................................................19


Section 2.3	Assumed Liabilities...........................................................................................20


Section 2.4	Excluded Liabilities...........................................................................................20


Section 2.5	Further Conveyances and Assumptions; Consents............................................23


Section 2.6	Purchase Price....................................................................................................27


Section 2.7	Payment Terms...................................................................................................27


Section 2.8	Purchase Price Adjustment.................................................................................27


Section 2.9	Allocation of Purchase Price..............................................................................30


Section 2.10	Buyer Identity.....................................................................................................31


Section 2.11	Additional Agreements; Deferred Closings.......................................................31


Section 2.12	Withholding.......................................................................................................32


Article III	Closing...........................................................................................................................32


Section 3.1	Closing...............................................................................................................32


Section 3.2	Conditions to Obligations of Sellers..................................................................32


Section 3.3	Conditions to Obligations of Buyer....................................................................34


Section 3.4	Express Absence of Certain Conditions.............................................................37


Article IV	Representations and Warranties of Sellers.....................................................................37


Section 4.1	Organization.......................................................................................................37


Section 4.2	Authorization......................................................................................................37


Section 4.3	Non-Contravention; Consents............................................................................38


Section 4.4	Title to Purchased Assets....................................................................................39


Section 4.5	Sufficiency of Assets..........................................................................................39


Section 4.6	Encryption and Other Restricted Technology.....................................................39


Section 4.7	Financial Statements...........................................................................................39


Section 4.8	No Changes.........................................................................................................41


Section 4.9	Surety Obligations..............................................................................................44


Section 4.10	Real Property......................................................................................................44


Section 4.11	Tax Matters.........................................................................................................45


Section 4.12	Intellectual Property............................................................................................46


Section 4.13	Contracts.............................................................................................................50


Section 4.14	Employee Benefits..............................................................................................53


Section 4.15	Employee Matters................................................................................................................54


Section 4.16	Environmental Matters.......................................................................................57


Section 4.17	Litigation............................................................................................................58


Section 4.18	Public Filings......................................................................................................58


Section 4.19	Compliance with Laws; Permits.........................................................................59


Section 4.20	Absence of Questionable Payments...................................................................60


Section 4.21	Export Control Laws..........................................................................................60


Section 4.22	Anti-Money Laundering.....................................................................................60


Section 4.23	Insurance.............................................................................................................61


Section 4.24	Related-Party Transactions.................................................................................61


Section 4.25	Governmental Funding.......................................................................................61


Section 4.26	Brokers................................................................................................................62


Section 4.27	Full Disclosure....................................................................................................62


Article V	Representations and Warranties of Buyer.......................................................................62


Section 5.1	Organization and Standing of Buyer..................................................................62


Section 5.2	Authority of Buyer..............................................................................................62


Section 5.3	No Conflicts; Consents.......................................................................................63


Section 5.4	Sufficiency of Funds...........................................................................................63


Section 5.5	Legal Proceedings.........................................................................................................63


Section 5.6	Brokers................................................................................................................63


Article VI	Covenants.......................................................................................................................63


Section 6.1	Advice of Changes..............................................................................................63


Section 6.2	Conduct of Business...........................................................................................64


Section 6.3	Access to Information.........................................................................................67


Section 6.4	Satisfaction of Conditions Precedent..................................................................67


Section 6.5	Regulatory Filings; Consents; Best Efforts........................................................68


Section 6.6	Third Party Consents and Notices......................................................................69


Section 6.7	Changes to Purchased Assets/Excluded Assets..................................................70


Section 6.8	Separation of Agreements...................................................................................70


Section 6.9	Further Assurances.............................................................................................70


Section 6.10	Confidentiality....................................................................................................71


Section 6.11	Books and Records.............................................................................................71


Section 6.12	Public Announcements.......................................................................................71


Section 6.13	Bulk Sales Laws.................................................................................................71


Section 6.14	Employees and Employee Benefits....................................................................71


Section 6.15	Tax Matters.........................................................................................................75


Section 6.16	Surety Obligations..............................................................................................77


Section 6.17	Non-Competition; Non-Solicitation...................................................................77


Section 6.18	Business Confidential Information....................................................................78


Section 6.19	Exclusivity..........................................................................................................79


Section 6.20	Waiver and Release............................................................................................80


Section 6.21	Leases.................................................................................................................81


Section 6.22	Information Security...........................................................................................81


Section 6.23	Use of Trademarks..............................................................................................81


Section 6.24	OCS....................................................................................................................81


Section 6.25	Financial Information and Financial Statements................................................82


Section 6.26	Senior Employees...............................................................................................82


Section 6.27	Delivery of Purchased Assets.............................................................................82


Article VII	Indemnification...............................................................................................................83


Section 7.1	Survival...............................................................................................................83


Section 7.2	Indemnification By Sellers.................................................................................83


Section 7.3	Escrow Fund.......................................................................................................84


Section 7.4	Indemnification By Buyer ..................................................................................84


Section 7.5	Certain Limitations.............................................................................................85


Section 7.6	Indemnification Procedures................................................................................86


Section 7.7	Tax Treatment of Indemnification Payments......................................................89


Section 7.8	Exclusive Remedies............................................................................................89


Article VIII	Termination.....................................................................................................................89


Section 8.1	Termination.........................................................................................................89


Section 8.2	Effect of Termination..........................................................................................90


Section 8.3	Expenses.............................................................................................................90


Article IX	Miscellaneous.................................................................................................................91


Section 9.1	Notices................................................................................................................91


Section 9.2	Interpretation......................................................................................................92

iii


Section 9.3	Headings.............................................................................................................92


Section 9.4	Severability.........................................................................................................92


Section 9.5	Entire Agreement................................................................................................92


Section 9.6	Successors and Assigns......................................................................................92


Section 9.7	Assignment.........................................................................................................93


Section 9.8	No Third Party Beneficiaries..............................................................................93


Section 9.9	Amendment and Modification; Waiver..............................................................93


Section 9.10	Governing Law; Submission to Jurisdiction; Waiver of Jury Trial....................93


Section 9.11	Specific Performance..........................................................................................94


Section 9.12	Non-recourse......................................................................................................94


Section 9.13	Sellers Provisions...............................................................................................94


Section 9.14	Counterparts........................................................................................................95

ASSET PURCHASE AGREEMENT

This Asset Purchase Agreement (this “Agreement”), dated as of April 29, 2015, is entered into by and among Comverse, Inc., a Delaware corporation (“Comverse”), the entities listed on Schedule 1 of this Agreement (each of Comverse and such Subsidiaries being individually referred to herein as a “Seller” and, collectively, as the “Sellers”), and Amdocs Limited, a Guernsey company (“Buyer”).

RECITALS

WHEREAS, Sellers are engaged in the business of researching, developing, producing, marketing, selling, distributing, maintaining, servicing and providing converged, prepaid and postpaid billing and active customer management systems, and associated products and services and technologies, ideas and inventions related thereto, for various uses, including for wireless, wireline, cable and multi play communication service providers, as well as to business to business and consumer oriented enterprises (the “Business”, which term shall include all previous, existing and potential commercial uses of the same); and

WHEREAS, Sellers wish to sell and assign to Buyer, and Buyer wishes to purchase and assume from Sellers, the assets and certain liabilities of the Business set forth herein, subject to the terms and conditions set forth herein (the “Transaction”);

NOW, THEREFORE, in consideration of the mutual covenants and agreements hereinafter set forth and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

ARTICLE I

DEFINITIONS

Section 1.1 Terms. The following terms have the meanings specified or referred to in this Article I:

“Accounting Principles” has the meaning set forth in Section 4.7(a).

“Accounts Receivable” means all accounts, notes and billed and unbilled receivable related to or arising out of the Business or the Purchased Assets held by the Seller or its Subsidiaries.

“Accounts Receivable, net” means all accounts, notes and billed and unbilled receivable related to or arising out of the Business or the Purchased Assets held by the Sellers or its Subsidiaries, as set forth in the public financial statement of the Seller.

“Acquisition Proposal” has the meaning set forth Section 6.19.

“Additional Agreement(s)” has the meaning set forth in Section 2.10.

“Additional Asset” has the meaning set forth in Section 2.5(f).

“Adjustment Amount” has the meaning set forth in Section 2.8(f).

“Affiliate” of a Person means any other Person that directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, such Person. The term “control” (including the terms “controlled by” and “under common control with”) means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise.

“Agreed Allocation” has the meaning set forth in Section 2.9.

“Agreement” has the meaning set forth in the preamble.

“Antitrust Laws” means any federal, state or foreign Law relating to antitrust or competition.

“Antitrust Restraint” has the meaning set forth in Section 6.5(e).

“Assigned Contracts” has the meaning set forth in Section 2.1(c).

“Assignment and Assumption Agreement” has the meaning set forth in Section 3.3(h)(ii).

“Assignment and Assumption of Lease” has the meaning set forth in Section 3.3(h)(vi).

“Assignment and Assumption of Leased Tangible Personal Property” has the meaning set forth in Section 3.3(h)(vii).

“Assumed Liabilities” has the meaning set forth in Section 2.3.

“Assumed Surety Documents” has the meaning set forth in Section 6.16.

“Balance Sheet Date” means January 31, 2015.

“Base Purchase Price” has the meaning set forth in Section 2.6.

“Basket” has the meaning set forth in Section 7.5(a).

“Bill of Sale” has the meaning set forth in Section 3.3(h)(i).

“BSS Employees” means all those Persons who support the Business (direct Business and shared employees) as of the signing date of this Agreement, listed on the Employee Exhibit provided to Buyer by Sellers on the execution date hereof, designated as shared employees or direct BSS employees in such document.

“BSS Transaction Employees” means those Persons who are:

(a) designated as TUPE Transferring Employees (to include only direct BSS employees in such territories) (the “TUPE Transferring Employees”) as agreed between the parties at signing, and

(b) (i) employees identified as Non-TUPE Transferring Employees as agreed between the parties at signing, and

(ii) additional employees (for avoidance of doubt, including certain employees in France) to be designated by the Buyer and notified to Sellers in writing and within two weeks from the signing date of this Agreement (all such employees under b(i) and b(ii)the “Non-TUPE Transferring Employees”).

Such number of TUPE Transferring Employees and Non-TUPE Transferring Employees totaling in the aggregate the “Agreed Number of TUPE and Non-TUPE Employees”, as such number was agreed between the parties at the signing of this Agreement.

“Business” has the meaning set forth in the recitals.

“Business Contract” shall mean any customer or vendor Contract relating to the Business.

“Business Day” means any day except Saturday, Sunday or any other day on which commercial banks located in New York, New York are authorized or required by Law to be closed for business.

“Buyer” has the meaning set forth in the preamble.

“Buyer Affiliate” means any Affiliate of the Buyer designated by the Buyer to, prior to the Closing, (i) purchase, acquire and accept from any Seller any Purchased Asset and/or (ii) assume any Assumed Liability.

“Buyer Benefit Plans” has the meaning set forth in Section 6.14(r).

“Buyer Compliance Certificate” has the meaning set forth in Section 3.2(a)(iii).

“Cap” has the meaning set forth in section 7.5(b) .

“Claims” has the meaning set forth in Section 6.20.

“Closing” has the meaning set forth in Section 3.1.

“Closing Adjustment Certificate” has the meaning set forth in Section 2.8(a)(i).

“Closing Amount” means an amount equal to the Base Purchase Price, less the Escrow Amount, less the Estimated Working Capital Deficit (if any), plus the Estimated Working Capital Excess (if any).

“Closing Balance Sheet” has the meaning set forth in Section 2.8(a)(i).

“Closing Date” has the meaning set forth in Section 3.1.

“Closing Working Capital” means Current Assets less Current Liabilities, determined as of the Closing Date.

“Closing Working Capital Statement” has the meaning set forth in Section 2.8(b)(i).

“COBRA” has the meaning set forth in Section 6.14(e).

“Code” means the Internal Revenue Code of 1986, as amended.

“Collective Group” means any labor union, works council, or other organizations or groups representing or purporting or attempting to represent any TUPE Transferring Employees.

“Confidentiality Agreement” means that certain Confidentiality Agreement by and between Comverse and Amdocs Management Ltd. dated as of October 29, 2014.

“Consents” means consents, approvals, requirements, exemptions, orders, waivers, allowances, novations, authorizations, declarations, filings, registrations and notifications.

“Contract” means any legally binding contract, lease, mortgage, license, instrument, note, commitment, undertaking, obligation, indenture or other agreement, whether written or oral.

“Current Assets” means the current assets of the Business included in the line items set forth on Section 2.8(a)(i) of the Disclosure Schedules and acquired pursuant to the terms of this Agreement.

“Current Liabilities” means the current liabilities of the Business included in the line items set forth on Section 2.8(b)(i) of the Disclosure Schedules and assumed pursuant to the terms of this Agreement.

“Customers Transition Services Agreement” has the meaning set forth in Section 2.5(d).

“Disclosure Schedules” means the Disclosure Schedules delivered by the Sellers and the Buyer concurrently with the execution and delivery of this Agreement.

“Disputed Amounts” has the meaning set forth in Section 2.8(c)(iii).

“Draft Allocation” has the meaning set forth in Section 2.9.

“Employee Benefit Plan” means (i) each “employee benefit plan” (as such term is defined in ERISA § 3(3)), that any Seller participates in, is a party or contributes to, or with respect to which any Seller could reasonably be expected to have any material liability with respect to the BSS Employees; and (ii) each other plan, program, understanding or arrangement including any pension, retirement, deferred compensation, severance, termination, cash balance, money purchase, savings, profit sharing plan, unemployment compensation plan, annuity, deferred compensation, bonus, incentive (including, without limitation, cash, share option, share bonus, equity-based benefit, share appreciation, phantom shares, restricted share, restricted share unit and share purchase), medical, dental, vision, hospitalization, long-term care, prescription drug and other health, employee assistance, cafeteria, flexible benefits, life insurance, labor insurance, short and long term disability, vacation pay, working hours, over time, on-call, stand by, other welfare and fringe benefit and similar plans, or work rules (mandatory or otherwise) for any current or former employee or director that does not constitute an “employee benefit plan” (as defined in ERISA § 3(3)), that any Seller presently participates in, is a party or contributes to, or with respect to which any Seller could reasonably be expected to have any material liability with respect to the BSS Employees.

"Employment Claims" means any claims, whether made or threatened by an individual, a Collective Group, or any Governmental Authority arising out of, in relation to or in connection with (a) the employment of any TUPE Transferring Employee or Non TUPE Transferring Employee prior to Closing; (b) the termination of any Non-TUPE Transferring Employees by the Sellers or their Affiliates (c) any act or omission of the Sellers or their Affiliates in relation to any TUPE-Transferring Employee or Non-TUPE Transferring Employee; (d) any failure by a Seller or its Affiliates to comply in full with its or their obligations under the Transfer Regulations including but not limited to any obligations to provide information to and/or consult with any TUPE-Transferring Employees or their representatives; and (e) an allegation made by any employee or worker or former employee or worker of a Seller or its Affiliates who is not a TUPE-Transferring Employee that he or she has rights against the Buyer or any of its Affiliates by reason of the Transfer Regulations.

“Encumbrance” means any lien, pledge, hypothecation, mortgage, deed of trust, security interest, charge, claim, easement, encroachment, defect in title, option, right of first refusal, restriction or rights of third parties of any nature or other similar encumbrance existing or known to be pending restricting the right to sell, dispose of or otherwise use any asset or the possession, exercise or transfer of any attribute of ownership of any asset, or any claim with respect to any of the foregoing.

“Environmental Claim” means any Governmental Order, action, suit, claim, investigation or other legal proceeding by any Person alleging liability of whatever kind or nature (including liability or responsibility for the costs of enforcement proceedings, investigations, cleanup, governmental response, removal or remediation, natural resources damages, property damages, personal injuries, medical monitoring, penalties, contribution, indemnification and injunctive relief) arising out of, based on or resulting from: (a) the Release or threatened Release of Hazardous Materials into the environment, (b) or exposure to any Hazardous Materials; or (c) any actual or alleged non-compliance with any Environmental Law or term or condition of any Environmental Permit.

“Environmental Law” means any applicable Law, and any Governmental Order or binding agreement with any Governmental Authority relating to pollution or the protection of the environment, natural resources, endangered or threatened species, or relating to human health or safety in respect of Hazardous Materials, including those concerning exposure to, or the use, storage, recycling, reclamation, treatment, generation, discharge, transportation, processing, production, disposal or remediation of any Hazardous Materials.

“Environmental Notice” means any written directive or notice of violation or infraction or respecting any Environmental Claim relating to actual or alleged non-compliance with any Environmental Law or any term or condition of any Environmental Permit.

“Environmental Permit” means any Permit, required under or issued, granted, or authorized pursuant to Environmental Law.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended, and the regulations promulgated thereunder.

“Escrow Agent” means the escrow agent agreed between the Buyer and Comverse between signing and Closing.

“Escrow Agreement” means an escrow agreement by and among the Buyer, the Sellers and the Escrow Agent in the form agreed between the parties between signing and Closing.

“Escrow Amount” means US$26 million.

“Escrow Fund” has the meaning set forth in Section 2.7(c).

“Estimated Working Capital” has the meaning set forth in Section 2.8(a)(i).

“Estimated Working Capital Deficit” means the amount by which the Target Working Capital exceeds the Estimated Working Capital.

“Estimated Working Capital Excess” means the amount by which the Estimated Working Capital exceeds the Target Working Capital.

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

“Excluded Assets” has the meaning set forth in Section 2.2.

“Excluded Intellectual Property” means the Intellectual Property listed in Section 2.2(g) of the Disclosure Schedules which shall not include, for the avoidance of doubt, any Intellectual Property used in the Business.

“Excluded Liabilities” has the meaning set forth in Section 2.4.

“Financial Statements” has the meaning set forth in Section 4.7(a).

“Final Closing Working Capital” means: (i) if the Sellers accept the Buyer’s calculation of the Closing Working Capital as set forth in the Closing Working Capital Statement, or the Sellers fail to deliver a Statement of Objections before the expiration of the Review Period as set forth in Section 2.8(c)(ii), the Final Closing Working Capital shall be the Closing Working Capital set forth in the Closing Working Capital Statement, (ii) if there is a dispute between the Sellers and the Buyer with respect to the calculation of the Closing Working Capital as set forth in Section 2.8(c)(iii), the Final Closing Working Capital shall be the Closing Working Capital as determined by the Independent Accountant in accordance with Section 2.8(c)(iii), and (iii) otherwise, if agreed between the Buyer and the Sellers, the Final Closing Working Capital shall be such amount of Closing Working Capital as is agreed between the Buyer and the Sellers.

“FOSS” means any software that is distributed as open source software (e.g., Linux), including, without limitation, Software licensed or distributed under any of the following licenses or distribution models, or licenses or distribution models similar to any of the following (regardless of Software license version): GNU’s General Public License (GPL), Lesser/Library GPL (LGPL), Affero General Public License (AGPL), the Artistic License (e.g., PERL), the Mozilla Public License, the Netscape Public License, the Sun Community Source License (SCSL), the Sun Industry Standards License (SISL), the BSD License, and the Apache License.

“Fundamental Buyer Representations” means the representations contained in Section 5.1 (Organization and Standing of Buyer) and Section 5.2 (Authority of Buyer).

“Fundamental Seller Representations” means the representations contained in Section 4.1 (Organization); Section 4.2 (Authorization); Section 4.4 (Title to Purchased Assets); Section 4.11 (Tax Matters); Section 4.12 (Intellectual Property) and Section 4.20 (Absence of Questionable Payments) hereof.

“GAAP” means U.S. generally accepted accounting principles.

“Governmental Approval” has the meaning set forth in Section 4.3.

“Governmental Authority” means any federal, state, or local government or political subdivision thereof, whether in the United States or any other jurisdiction, or any agency or instrumentality of such government or political subdivision, or any self-regulated organization or other non-governmental regulatory authority or quasi-governmental authority (to the extent that the rules, regulations or orders of such organization or authority have the force of Law), or any arbitrator, court or tribunal of competent jurisdiction.

“Governmental Order” means any order, writ, judgment, injunction, decree, stipulation, determination or award entered by or with any Governmental Authority.

“Grant" has the meaning set forth in Section 4.25.

“Hazardous Materials” means any material, substance, or waste, regardless of physical form or concentration, that is defined, designated or otherwise regulated under Environmental Laws due to its toxic or hazardous effect on human health or the environment, including; any petroleum or petroleum products, radioactive materials or wastes, asbestos in any form, lead or lead-containing materials, urea formaldehyde and polychlorinated biphenyls.

“Indebtedness” means, without duplication, all obligations or liabilities, whether contingent or otherwise and including all obligations for principal, interest, premiums, penalties, fees and breakage costs, (i) in respect of money borrowed (whether current, short-term or long-term, secured or unsecured, and including all overdrafts and negative cash balances); (ii) evidenced by notes, debentures, bonds or other similar instruments for the payment of which a Seller is responsible or liable; (iii) issued or assumed as the deferred purchase price of property or services; (iv) in respect of conditional sales or under any title retention agreement, (v) under leases required to be capitalized in accordance with GAAP; (vi) secured by an Encumbrance against any of Sellers’ properties or assets; (vii) for bankers’ acceptances or similar credit transactions issued for the account of Sellers; (viii) under any currency or interest rate swap, hedge or similar protection device; (ix) under any letters of credit, performance bonds or surety obligations (including under the Surety Documents); (x) that would be classified as indebtedness on a balance sheet under GAAP; and (xi) in respect of all obligations of other Persons of the type referred to in clauses (i)-(x) the payment of which any Seller is responsible or liable, directly or indirectly, as obligor, guarantor, surety or similar capacity, including guarantees of any such obligations.

“Indemnification Judgment” has the meaning set forth in Section 7.6(b)(iv).

“Indemnified Party” has the meaning set forth in Section 7.5.

“Indemnifying Party” has the meaning set forth in Section 7.5.

“Independent Accountant” means a mutually acceptable nationally or regionally recognized independent accounting firm.

“Intellectual Property” means any and all industrial and intellectual property rights throughout the world and all rights associated therewith, including (a) all inventions (whether patentable or unpatentable and whether or not reduced to practice), invention disclosures, discoveries and improvements, including those that (i) are included in any Patent claim, and/or (ii) are subject matter capable of being reduced to a Patent claim in a reissue or reexamination proceedings brought on a Patent, and/or (iii) could have been included as a claim in a Patent; and all patents (including utility and design patents, industrial designs and utility models), patent applications, and all other rights of inventorship, worldwide, together with all reissuances, renewals, extensions, provisionals, continuations, continuations-in-part, continuing prosecution applications, requests for continuing examinations, divisions, supplementary protection certificates, extensions and re-examinations thereof; and any registrations of any of the foregoing, worldwide, including all priority rights (collectively, "Patents"); (b) trademarks, common law trademarks, service marks, trade names, service names, brand names, trade dress rights, logos, Internet domain names and URL addresses and general-use e-mail addresses, together with the goodwill associated with any of the foregoing throughout

the world, and all applications, registrations and renewals thereof (collectively, "Marks"); (c) copyrights and registrations and applications therefor, including in and to works of authorship, Moral Rights, mask works, mask work registrations and applications therefor, and any equivalent or similar rights in semiconductor masks, layouts, architectures or topology, and all other rights corresponding thereto throughout the world, whether published or unpublished, including rights to prepare, reproduce, perform, display and distribute copyrighted works and copies, compilations, collective works, and derivative works thereof (collectively, "Copyrights"); (d) all trade secrets and confidential business and technical information (including ideas, research and development, know-how, formulas, technology, compositions, manufacturing and production processes and techniques, technical data, engineering, production and other designs, plans, drawings, engineering notebooks, industrial models, software and specifications), in each case, that are not publicly known and whether or not they constitute a "trade secret" as defined under applicable Law (collectively, "Trade Secrets"); (e) all (i) software, computer programs, including any and all software implementations of algorithms, models flow charts, diagrams, descriptive text and programs and methodologies, whether in Source Code or object code, (ii) computer-based databases and compilations, (iii) descriptions, flow-charts and other work product used to design, plan, organize and develop any of the foregoing, screens, user interfaces, report formats, firmware, development tools, templates, menus, buttons and icons, (iv) all versions, updates, corrections, enhancements and modifications related to any of the foregoing, and (v) all documents (including, user manuals, training documentation, developer notes, comments and annotations) related to any of the foregoing; (collectively, "Software"); (f) all computer and electronic data, data processing programs, documentation computer print-outs, underlying tapes, computer databases and similar items), computer applications and operating programs and network identifiers; (g) all rights to sue for and remedies against past, present and future infringement, misappropriation or dilution of any or all of the foregoing and rights of priority and protection of interests therein under the Laws of any jurisdiction worldwide; (h) all copies and tangible embodiments of any or all of the foregoing (in whatever form or medium, including electronic media); and (i) all other proprietary, intellectual property and other rights relating to any or all of the foregoing.

“Intellectual Property Assets” has the meaning set forth in Section 2.1(h).

“Intellectual Property Assignments” has the meaning set forth in Section 3.3(h)(iii).

“Intellectual Property Licenses” means all licenses, sublicenses and other agreements by or through which other Persons, including Sellers’ Affiliates, grant any Seller exclusive or non-exclusive rights or interests in or to any Intellectual Property that is used in connection with the Business.

“Intellectual Property Registrations” means all Intellectual Property Assets that are subject to any issuance, registration, application or other filing by, to or with any Governmental Authority or authorized private registrar in any jurisdiction, including registered trademarks, domain names, and copyrights, issued and reissued patents and pending applications for any of the foregoing.

“Key Employees” means those Persons designated as key employees as agreed between the parties.

“Knowledge of Seller(s)” or “Seller(s)’ Knowledge” (and expressions of similar import) means the knowledge of each of the directors and officers of the Sellers, and each of persons listed on Section 1.2 of the Disclosure Schedule. An individual will be deemed to have “Knowledge” of a particular fact or matter if such individual is actually aware of such fact or matter or if such individual should have become aware of such fact or matter after making due inquiry or otherwise in the course of performing his or her duties (including, without limitation, to the extent required, inquiry of such Persons who may be reasonably expected to have knowledge of the fact or matter asserted).

“Law” means any statute, law, ordinance, regulation, rule, code, order, constitution, treaty, common law, judgment, decree, other requirement or rule of law of any Governmental Authority.

“Leased Real Property” has the meaning set forth in Section 4.10(a).

“Leases” has the meaning set forth in Section 4.10(a).

“Legal Proceedings” means any judicial, administrative or arbitral action, suit, litigation or proceeding (including civil, criminal, administrative, investigative or appellate proceeding), at law or in equity by or before any Governmental Authority.

“Liability” means any and all claims, debts, liabilities, obligations and commitments of whatever nature, fixed, absolute or contingent, matured or unmatured, accrued or unaccrued, liquidated or unliquidated or due or to become due, and whenever or however arising (including those arising out of any Contract or tort, whether based on negligence, strict liability or otherwise and including with respect to royalty and other payment obligations to the OCS).

“Losses” means losses, damages, Liabilities, deficiencies, actions, judgments, interest, awards, penalties, fines, Taxes costs or expenses of whatever kind, including reasonable attorneys' fees and the cost of enforcing any right to indemnification hereunder and the cost of pursuing any insurance providers; provided, however, that "Losses" shall not include punitive damages, except in the case of fraud or to the extent actually awarded to a Governmental Authority or other third party.

“Major Customers” has the meaning set forth in Section 4.13(a).

“Major Vendors” has the meaning set forth in Section 4.13(a).

“Material Adverse Effect” means any event, occurrence, fact, condition or change, when taken individually or together with any other events, changes, conditions, circumstances of effects, that is, or could reasonably be expected to become, individually or in the aggregate, materially adverse to (a) the business, results of operations, prospects, condition (financial or otherwise) or assets of the Business, (b) the value of the Purchased Assets or Assumed Liabilities, or (c) the ability of Sellers to consummate the transactions contemplated hereby on a timely basis; provided, however, that "Material Adverse Effect" shall not include any event, occurrence, fact, condition or change, directly or indirectly, arising out of or attributable to: (i) general economic or political conditions; (ii) conditions generally affecting the industries in which the Business operates; (iii) any changes in financial, banking or securities markets in general; (iv) acts of war (whether or not declared), armed hostilities or terrorism, or the escalation or worsening thereof; (v) any failure by the Business to meet any internal or published projections, forecasts or revenue or earnings predictions in and of itself (provided that the underlying causes of such failures shall not be excluded) (vi) any action required or permitted by Buyer under this Agreement; provided, however, that the underlying event, change, effect, condition or circumstance giving rise to such written consent by Buyer may constitute a Material Adverse Effect; (vii) any changes in applicable Laws or accounting rules, including GAAP; provided further, however, that any event, occurrence, fact, condition or change referred to in clauses (i) through (vii) immediately above shall be taken into account in determining whether a Material Adverse Effect has occurred or could reasonably be expected to occur to the extent that such event, occurrence, fact, condition or change has a disproportionate effect on the Business compared to other participants in the industries in which the Business operates.

“Material Contracts” has the meaning set forth in Section 4.13(a).

“Moral Rights” means any rights of paternity, integrity, disclosure, attribution, any right to claim authorship of an invention or work of authorship, the right to prevent others from making derogatory changes in the authors' work in a manner that reflects negatively on or would be prejudicial to the author's professional standing, his/her goodwill, dignity, honor or reputation, the right to object to any distortion, mutilation or other modification of, or other derogatory action in relation to any invention, work of authorship, or any other intellectual property right, and any similar right, existing under judicial or statutory law of any country in the world, or under any treaty regardless of whether or not such right is denominated or generally referred to as a “moral right,” including under Sections 45-46 of the Israeli Copyright Law - 2007.

“Non-Compete Period” has the meaning set forth in Section 6.17.

“OCS" means the Office of the Chief Scientist of the Israeli Ministry of Economy (formerly the Ministry of Industry, Trade and Labor).

“OCS Buyer Reimbursement” has the meaning set forth in Section 2.4(j).

"OCS Transfer Amount" means the amount that is or may become payable to the OCS upon the transfer of the Purchased Assets (including the Scheduled 2.5 IP) and any rights thereto, outside of Israel at or after the Closing free of any restrictions and conditions (including any royalty payments) other than the payment of the OCS Transfer Amount.

“Open Source Software” has the meaning set forth in Section 12(f).

"Order" means any temporary, preliminary or permanent writ, order, decree, decision, injunction, finding, award or judgment that is or has been issued, made, entered, rendered or otherwise put into effect by or under the authority of any Governmental Authority.

“Paying Agent” has the meaning set forth in Section 2.7(b).

“Permits” means all permits, licenses, franchises, approvals, authorizations and consents of a Governmental Authority.

“Permitted Encumbrances” means any (a) liens for Taxes not yet due and payable or being contested in good faith by appropriate procedures; (b) mechanics’, carriers’, workmen’s, repairmen’s or other like liens arising or incurred as a matter of Law in the ordinary course of business; and (c) easements, rights of way, zoning, entitlement, building and other land use laws regulating the use or occupancy of Leased Real Property, and other similar encumbrances affecting Leased Real Property, in each case created as a matter of law and which do not, individually or in the aggregate, impair or interfere with the use or operation of such Leased Real Property and do not render title to such Leased Real Property unmarketable.

“Person” means an individual, corporation, partnership, joint venture, limited liability company, Governmental Authority, unincorporated organization, trust, association or other entity.

“Post-Closing Adjustment” has the meaning set forth in Section 2.8(b)(ii).

“Post-Closing Tax Period” means any taxable period (or portion thereof) beginning after the Closing Date.

“PPA Independent Accountant” has the meaning set forth in Section 2.9.

“Pre-Closing Tax Period” means any taxable period (or portion thereof) ending on or before the Closing Date.

“Products” has the meaning set forth in Section 4.12(a).

“Property Taxes” has the meaning set forth in Section 6.15(c).

“Purchase Price” has the meaning set forth in Section 2.6.

“Purchased Assets” has the meaning set forth in Section 2.1.

“R&D Law” has the meaning set forth in Section 6.24.

“RE Guarantees” has the meaning set forth in Section 4.10(a).

“Release” means any releasing, spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, dumping, or disposing, including abandonment.

“Released Entities” has the meaning set forth in Section 6.20.

“Representative” means, with respect to any Person, any and all shareholders, directors, officers, employees, consultants, financial advisors, investment balances, counsel, accountants and other agents of such Person.

“Resolution Period” has the meaning set forth in Section 2.8(c)(ii).

“Retained Lease” has the meaning set forth in Section 6.21.

“Review Period” has the meaning set forth in Section 2.8(c)(i).

“Schedule 2.5 License” has the meaning set forth in Section 2.5(e).

“Schedule 6.7(a) Contracts” has the meaning set forth in Section 6.7(a).

“Schedule 6.7(b) Assets” has the meaning set forth in Section 6.7(b).

“Scheduled 2.5 IP” has the meaning set forth in Section 2.5(e)

“Securities Act” means the Securities Act of 1933, as amended.

“Seller” and “Sellers” have the meaning set forth in the preamble.

“Sellers Compliance Certificate” has the meaning set forth in Section 3.3(a)(iii).

"Sellers Designated Representative" means Comverse, Inc.

“SOWs” has the meaning set forth in Section 2.1(c).

“Specified Assets” has the meaning set forth in Section 2.10.

“Statement of Objections” has the meaning set forth in Section 2.8(c)(ii).

“Straddle Period” means any taxable period beginning on or before and ending after the Closing Date.

“Subsidiary” means, with respect to any Person, any other Person controlled by such first Person, directly or indirectly, through one or more intermediaries.

“Surety Documents” has the meaning set forth in Section 6.16.

“Surety Obligations” shall mean all obligations under any outstanding bonds (including surety, bid, completion and performance bonds), letters of credit, bank guarantees and other surety arrangements issued or entered into in connection with the Assigned Contracts..

“Survival Period” has the meaning set forth in Section 7.1.

“Tangible Personal Property” has the meaning set forth in Section 2.1(i).

“Target Working Capital” means US$27.5 million.

“Tax” or “Taxes” means any and all taxes, charges, duties, levies, imposts or other assessments, reassessments, or mandatory payments of any kind whatsoever in the nature of a tax, imposed by or payable to any Taxing Authority and/or any other Governmental Authority, including gross income, net income, gross receipts, license, payroll, employment, workers’ compensation, excise, severance, stamp, occupation, premium, windfall profits, environmental, customs duties, capital stock, franchise, profits, withholding, social security (or similar), unemployment, disability, property, personal property, alternative or add-on minimum, estimated, sales, use, transfer, registration, value added, business, ad valorem, duties, occupancy, utility, services, municipal, real property, capital gain or other taxes, including any interest, penalty, or addition thereto.

“Tax Return” means any return, declaration, report, claim for refund, information return or statement or other document required to be filed with respect to Taxes, including any schedule or attachment thereto, and including any amendment thereof.

“Taxing Authority” means any relevant tax authority and any other Governmental Authority responsible for the imposition, assessment, collection or administration of any Tax, whether federal, state or local.

“Termination Date” has the meaning set forth in Section 8.1(f).

“Third Party Claim” has the meaning set forth in Section 7.6(a).

“Transaction” has the meaning set forth in the recitals.

“Transaction Documents” means this Agreement, the Bills of Sale, the Assignment and Assumption Agreements, the Assignment and Assumption of Leases, the Assignment and Assumption of Leased Tangible Personal Property, Escrow Agreement, Paying Agent Agreement, if any, Additional Agreements, the Transition Services Agreement and the other agreements, instruments and documents required to be delivered at the Closing.

"Transfer Regulations" means (a) the TUPE Regulations; (b) any other Law implementing the EU Acquired Rights Directive (77/187/EEC); and (c) any other Law in any applicable jurisdiction worldwide providing for the automatic transfer of employees

“Transfer Taxes” has the meaning set forth in Section 6.15(a).

“Transferred Employee” has the meaning set forth in Section 6.14(q).

“Transferred Lease” means the leases set forth on Section 1.1 of the Disclosure Schedule.

“Transition Services Agreement” has the meaning set forth in Section 3.3(h)(v).

“TUPE Claims” means (a) a claim made by a TUPE Transferring Employee or Collective Group before or after Closing for a failure or alleged failure by the Sellers or their Affiliates to comply with their obligation to provide information and to inform and consult under the Transfer Regulations arising by reason of either a refusal or failure or omission (including an innocent omission) by the Buyer or its Affiliates to provide the Sellers or their Affiliates with details of any measures or actions that the Buyer or any Affiliate of the Buyer proposes to take with regard to the TUPE Transferring Employees following Closing, (b) a claim made before or after Closing by a TUPE Transferring Employee by reason of a substantial change proposed or made by the Buyer or any Affiliate of the Buyer to the working conditions or terms of employment of that TUPE Transferring Employee to the material detriment of the TUPE Transferring Employee, and for purposes of this definition, the expressions “substantial change” and “material detriment” shall have the same meaning as for the purposes of regulation 4(9) of the TUPE Regulations, and (c) a claim related to the employment or termination of employment of any TUPE Transferring Employee by the Buyer or any Affiliate of the Buyer following the Closing.

“TUPE Liabilities” means all Liabilities that transfer to the Buyer or its Affiliates by operation of the Transfer Regulations but not any other Liabilities.

“TUPE Regulations” means the Transfer of Undertakings (Protection of Employment) Regulations 2006, as amended by the Collective Redundancies and Transfer of Undertakings (Protection of Employment) (Amendment) Regulations 2014, currently in force in the United Kingdom.

“Undisputed Amounts” has the meaning set forth in Section 2.8(c)(iii).

“US$” means the lawful currency of the United States.

“Used Names” has the meaning set forth in Section 6.23(a).

“VAT Benefit” has the meaning set forth in Section 6.15(c).

Section 1.2 Terms Generally. The definitions in this Article I shall apply equally to both the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words “include”, “includes” and “including” shall be deemed to be followed by the phrase “without limitation”. The words “herein”, “hereof” and “hereunder” and words of similar import refer to this Agreement (including the Exhibits and Schedules to this Agreement) in its entirety and not to any part hereof unless the context shall otherwise require. The Disclosure Schedules and Exhibits referred to herein shall be construed with, and as an integral part of, this Agreement to the same extent as if they were set forth verbatim herein. All references herein to Articles, Sections, Exhibits and Schedules shall be deemed references to Articles and Sections of, and Exhibits and Schedules to, this Agreement unless the context shall otherwise require. Unless the context shall otherwise require, any references to any agreement or other instrument or statute (which shall be construed to include regulations promulgated thereunder) or regulation are to it as amended and supplemented from time to time (and, in the case of a statute or regulation, to any successor provisions). Any reference to any supranational, national, federal, state, local, or foreign statute or law shall be deemed also to refer to all rules and regulations promulgated thereunder, unless the context requires otherwise. Any reference in this Agreement to a “day” or a number of “days” (without explicit reference to “Business Days”) shall be interpreted as a reference to a calendar day or number of calendar days. This Agreement shall be construed without regard to any presumption or rule requiring construction or interpretation against the party drafting an instrument or causing any instrument to be drafted. If any action is to be taken or given on or by a particular calendar day, and such calendar day is not a Business Day, then such action may be deferred until the next Business Day.

ARTICLE II

PURCHASE AND SALE

Section 2.1 Purchase and Sale of Assets. Subject to the terms and conditions set forth herein, effective as of the Closing Date, each Seller agrees to sell, assign, transfer, convey and deliver to Buyer (or any Buyer Affiliate designated by Buyer), and Buyer (or any Buyer Affiliate, if applicable) shall purchase from each Seller, free and clear of any Encumbrances other than Permitted Encumbrances and without any Liability of any kind or nature, other than those specifically included in the Assumed Liabilities (and in the event that the assignment, transfer, conveyance or delivery of any Purchased Asset to the Buyer or any Buyer Affiliate involves or gives rise to any Liability other than a Liability specifically included in the Assumed Liabilities, then such Liability shall be an Excluded Liability hereunder), all of such Seller’s right, title and interest in and to all of the Purchased Assets. "Purchased Assets" shall mean the following, to the extent that such assets, properties and rights relate to or are used or held for use in connection with, the Business (whether or not also used by a Seller, or relate also to businesses or operations of a Seller outside of the Business), including all assets set forth on Section 2.1(a) through (s) of the Disclosure Schedules:

(a)Accounts Receivable. All Accounts Receivable of the Business (whether or not deferred, and whether or not current) and all rights in, to and under claims for refunds, rebates or other discounts due from suppliers or vendors, including as a result of prepaying expenses, and rights to offset in respect thereof under Assigned Contracts.

(b)Inventory. All inventory, finished goods, raw materials, work in progress, packaging, supplies, parts and other inventories of the Business.

(c)Customer Contracts. (i) The Contracts (except for statements of work ("SOWs"), change requests and ongoing projects) listed on Section 2.1(c)(i) of the Disclosure Schedules, being the effective Contracts with the twenty five (25) customers that generated the highest revenues of the Business in fiscal year 2014, copies of which were delivered to Buyer, (ii) the Contracts listed on the schedule entitled Project Exhibit delivered to the Buyer by Sellers on the date hereof, being all existing SOWs, purchase orders and change requests relating to all ongoing projects (excluding maintenance) of the Sellers, copies of which were delivered to Buyer, (iii) all maintenance and license Contracts with any of the customers listed on Section 2.1(c)(iii) of the Disclosure Schedules (except for SOWs, purchase orders and change requests relating to all ongoing projects and except for any such Contract that includes an exclusivity or most favored nation pricing provision on the Business that may have an adverse effect on the Business and which an exclusivity or most favored nation pricing provision was not disclosed under the Disclosure Schedules, copies of which were delivered to Buyer, and (iv) all customer Contracts relating to the Business entered into after the date hereof and prior to the Closing in compliance with Section 6.2.

(d)Other Contracts. (i) Only the agent Contracts designed by the Buyer to Sellers prior to Closing in accordance with Section 6.7(a) of this Agreement, (ii) the Contracts listed on Section 2.1(ii) of the Disclosure Schedules with suppliers, sub-contractors and vendors, and (iii) all the Intellectual Property Licenses related to the Business, including those set forth on Section 2.1(d)(iii) of the Disclosure Schedules, and (iv) the Transferred Leases and the replaced Surety Obligations (the items in Section 2.1(c) and (d) collectively, the “Assigned Contracts”).

(e)Current Assets. The Current Assets, including, without limitation, all deposits and prepaid expenses, other than Excluded Assets

(f) Customer Proposals. Any proposals submitted by any Seller (or such Seller's Subsidiary) prior to the date hereof to potential customers of the Business and any proposals submitted by any Seller after the date hereof to potential customers of the Business in compliance with Section 6.2 in the ordinary course of business hereafter and consistent with past practices.

(g)Documents. All documents (including Contracts) that are used or held for use in, or are necessary for the conduct of, the Business or any of the Purchased Assets or Assumed Liabilities.

(h)Intellectual Property. All Intellectual Property owned by each Seller and used in connection with or necessary for the conduct of the Business (whether or not also used by a Seller, or related also to business or operations of a Seller, outside of the Business), including the Intellectual Property Registrations set forth on Section 2.1(h) of the Disclosure Schedules (the “Intellectual Property Assets”).

(i)Intellectual Property Registration. All rights to apply in any or all countries and regions of the world for patents or other Intellectual Property Registrations for or related to the Intellectual Property Assets.

(j)Tangible Personal Property. All furniture, fixtures, equipment (including research and development equipment), telecom equipment, machinery, tools, vehicles, office equipment, furnishings, leasehold improvements, vehicles, computers and computer related hardware, supplies and other tangible personal property owned or leased by a Seller, or used for the conduct of the Business, including those set forth on Section 2.1(j) of the Disclosure Schedules, but excluding those furniture, fixtures and non computer equipment in the real properties subject to the Retained Leases (the “Tangible Personal Property”).

(k)Acquired Leases. All Transferred Leases.

(l)Permits. All Permits, including Environmental Permits, held by each Seller and related to the Business, including those listed on Section 2.1(l) of the Disclosure Schedules, but only to the extent such Permits may be transferred under applicable Law.

(m)Rights against Third Parties. All rights of the Sellers under or pursuant to all warranties, representations and guarantees made by suppliers, manufacturers and contractors, customers, vendors, partners, system integrators and agents to the extent relating to or affecting any Purchased Assets or the Business, including without limitation rights to receive indemnification with respect to Intellectual Property of any third party that is embedded or used in (or with) any Purchased Assets or the Business, if any.

(n)Backlog. Any backlog relating to the Business (being the amount of specified products and services that are scheduled to be delivered by the Sellers in connection with the Business after the Closing pursuant to, and calculated in accordance with, valid and binding agreements or firm purchase orders, all as set forth in the schedule entitled Backlog Information provided by Sellers to Buyer on the date hereof.

(o)Causes of Action. All past, present and future causes of action (whether known or unknown, whether currently pending, filed or otherwise including, without limitation, rights under the confidentiality, invention, assignment and noncompete provisions) and other enforcement rights under or on account of the Business or any Purchased Assets or Assumed Liabilities.

(p)Insurance. All third party property and casualty insurance proceeds in respect of any of the Purchased Assets and/or the Business or Assumed Liabilities.

(q)Books and Records. To the extent maintained by a Seller or any of its Affiliates and not otherwise addressed in this Section 2.1, originals, or where not available, copies, of all books and records, including books of account, ledgers and general, financial and accounting records, machinery and equipment maintenance files, customer lists, customer purchasing histories, price lists, distribution lists, supplier lists, production data, quality control records and procedures, customer complaints and inquiry files, research and development files, records and data (including all correspondence with any Governmental Authority), sales material and records, strategic plans, internal financial statements and marketing and promotional surveys, material and research, that relate to the Business or the Purchased Assets (provided that Sellers shall be permitted to retain a copy of such materials and information), excluding though, for the avoidance of doubt, materials to the extent related to the Excluded Assets or the Excluded Liabilities.

(r)Goodwill. All goodwill associated with any of the Business and/or any Purchased Assets or Assumed Liabilities.

(s)Other Assets. All other rights, Contracts, assets, properties and business not included in Section 2.1(a) through (r), of every kind and description, wherever located, real, personal or mixed, tangible or intangible, purported to be or owned, held for use or used in the conduct of the Business by any Seller or its Subsidiary as the same existed prior to or will exist on the Closing Date; provided that the Buyer requests in writing for them to be included in the Purchased Assets before or after the Closing.

Section 2.2 Excluded Assets. Notwithstanding anything herein to the contrary, each Seller shall retain and shall not sell, transfer, assign or deliver to Buyer (or any Buyer Affiliate), and neither Buyer nor any Buyer Affiliate shall acquire, and the Purchased Assets shall not include, any of the rights, properties, assets, whether tangible or intangible, real, personal or mixed (or any title or interest therein) which are not defined as Purchased Assets under this Agreement (the “Excluded Assets”). Without limiting the generality of the foregoing, the Excluded Assets shall include the assets listed on Section 2.2(a) through (k) of the Disclosure Schedules, and the following assets:

(a)Cash and Cash Equivalents. All cash and cash equivalents, restricted cash, bank accounts, inter-company balances and securities of any Seller.

(b)Contracts and Offers. All Contracts and offers not assumed under Section 2.1, and all offers, proposals, indications of interest, or confidentiality agreements or standstill agreements relating to the sale of the Business, directly or indirectly, to or from any party.

(c)Excluded Leases. All Retained Leases.

(d)Corporate Organization Documents. The corporate seals, organizational documents, minute books, stock books, Tax Returns, books of account or other records having to do with the corporate organization of each Seller.

(e)Employee Benefit Plans and Files. All Employee Benefit Plans and trusts or other assets attributable thereto and all employee-related or employee benefit-related files or records, other than personnel files of Transferred Employees, to the extent permitted by Law.

(f)Tax Assets. All Tax assets (including duty and Tax refunds and prepayments) and Tax attributes of any Seller or any of its Affiliates.

(g)Excluded Intellectual Property. Excluded Intellectual Property

(h)Certain Contracts. All Contracts with entities in sanctioned countries, if any.

(i) Certain Stock. All capital stock of each Seller and any Subsidiary of any Seller.

(j)Specific Assets. The assets, properties and rights specifically set forth on Section 2.2(j) of the Disclosure Schedules.

(k)Transaction Documents. The rights which accrue or will accrue to each Seller under the Transaction Documents.

Section 2.3 Assumed Liabilities. On the terms and subject to the conditions set forth in this Agreement, at the Closing, the Buyer shall assume and acquire, effective as of the Closing, only such Liabilities that relate to the Purchased Assets and/or the Business and that, in each case are (i) included in the Assigned Contracts (that are assigned to Buyer at Closing) and which are due to be performed pursuant to the terms thereof after the Closing, (ii) incurred after the Closing and that arise out of facts or circumstances occurring after the Closing, (iii) the OCS Buyer Reimbursement, if applicable, and (iv) Transfer Taxes, to the extent to be borne by Buyer in accordance with Section 6.15(a) but in all cases, excluding the Excluded Liabilities specifically listed under Section 2.4(a) through (r ) below (collectively, the “Assumed Liabilities”). The Buyer will not assume or be otherwise liable for Liabilities of the Sellers or any Sellers Subsidiary or otherwise relating to the Business, or the Purchased Assets, except for the Assumed Liabilities.

Section 2.4 Excluded Liabilities. Notwithstanding anything to the contrary contained in this Agreement or any other Transaction Document, Buyer (or any Buyer Affiliate) shall not assume and shall not be responsible to pay, perform or discharge any Liabilities or obligations of any Seller (regardless of whether such liability or obligation is disclosed herein or on any schedule or exhibit hereto or is transferred due to operation of any Law) other than the Assumed Liabilities (collectively, the “Excluded Liabilities”), and the Sellers (or any such other Person) shall remain solely and exclusively liable for the Excluded Liabilities. The Excluded Liabilities include, without limitation, the following:

(a)General. Any Liabilities, which exist or will be incurred in the future, whether arising under any Contract, commitment, verbal understanding, agreement, tort or otherwise, which arise from facts or circumstances occurring on or prior to the Closing Date or relating to or arising out of the Excluded Assets or in connection with any activity or matter which is not a part of the Business.

(b)Ongoing Projects. Any Liabilities relating to ongoing projects not set forth on Section 2.1(c)(ii) of the Disclosure Schedules.

(c)Deal Expenses and Liabilities. Any and all of the Sellers’ Liabilities, costs and expenses arising or incurred in connection with the preparation, negotiation, execution, delivery and performance of this Agreement and the other Transaction Documents and the transactions contemplated hereby and thereby (including fees and expenses of counsel, accountants, consultants, investment bankers advisers and others) and all Liabilities due to the transfer of the Purchased Assets and Assumed Liabilities to the Buyer (including the costs and expenses required for, or related to, the transfer of any Contract, Purchased Asset or the receipt of any Consent).

(d)Employee Liabilities. Any Liability to any employee or independent contractor of a Seller including, without limitation, Liabilities arising out of or based upon (i) any promise or agreement to pay such individual any portion of the proceeds of the purchase contemplated by this Agreement, or to pay or grant any such individual a bonus, commission or any other benefit with respect to events or periods prior to or as of the Closing and after Closing and during the complete transition period under the Transition Services Agreement or based on the purchase contemplated by this Agreement, (ii) the employment, services, or termination of employment or service, including in connection with this Agreement (including all change of control, remuneration of any kind, salaries, profit sharing, participations, overtime, sales commissions, bonus, termination, severance and Employee Benefit Plan, or similar payments relating to or arising from the transaction contemplated herein), together with any employer-paid portion of any employment and payroll taxes related thereto), of such Person with a Seller (including through companies that supply services such as "man power" or similar services) on or prior to the Closing and after Closing and during the complete transition period under the Transition Services Agreement, (iii) workers’ compensation claims which relate to events occurring on or prior to the Closing Date and after Closing and during the complete transition period under the Transition Services Agreement or (iv) employment laws, regulations, collective bargaining agreements, extension orders, case laws or otherwise owed to any employee or independent contractor of a Seller. Buyer shall not assume or have any Liability with respect to any Liabilities of any kind or type related to employees or independent contractor of any Seller with respect to any period prior to the Closing and after Closing and during the complete transition period under the Transition Services Agreement.

(e)Lease Related Liabilities. Any Liabilities of Sellers with respect to Retained Leases and, with respect to the period prior to Closing, also Transferred Leases.

(f)Subsidiaries Liabilities. Any Liabilities of any of the Subsidiaries of the Sellers or of any shareholder thereof, whether arising prior to, at or after the Closing.

(g)Royalties. Any royalties or other Liabilities to any third party due to the involvement of any current or former agent or reseller of the Sellers in the Business, whether arising or incurred on or prior to or after the Closing.

(h)Legal Proceedings. Any Liabilities in respect of any pending or threatened Legal Proceeding against the Sellers, their Affiliates or any Person on their behalf (including, without limitation, the Liabilities listed on Section 2.4(h) of the Disclosure Schedules).

(i)Indebtedness. All Indebtedness (subject to Section 6.16).

(j)OCS Payments. The OCS Transfer Amount, if any; provided that to the extent a Seller becomes liable to pay an OCS Transfer Amount with respect to the items listed on Section 2.5(d) of the Disclosure Schedules, Buyer shall reimburse such Seller with the lower of (i) 30% of the amount of the OCS Transfer Amount with respect to such item, and (b) US$700,000 (such lower amount, the “OCS Buyer Reimbursement”) provided, further, that, Buyer shall provide notice to the Sellers prior to removing the any Intellectual Property listed on Section 2.4(j) of the Disclosure Schedules from Israel.

(k)Tax Liabilities. Any Liabilities or obligations for (i) Taxes of or due by any Seller or any Subsidiary of any Seller (including as a result of this Agreement, the transactions contemplated hereby, income Taxes and employment related Taxes), (ii) Taxes that relate to the Business, Purchased Assets or the Assumed Liabilities for the Pre-Closing Tax Period, (iii) Taxes of the Sellers or any Subsidiary relating to the Excluded Assets or Excluded Liabilities, (iv) payroll Taxes of any Seller or any Subsidiary of any Seller due with respect to the Pre-Closing Tax Period (whether accrued, for financial accounting purposes, before or after the Closing Date), (v) payments under any Tax allocation, sharing or similar agreement entered into by any Seller or any Subsidiary of any Seller (whether oral or written) and (vi) with respect to any receivable taken into account in the Estimated Working Capital or Post-Closing Adjustment, any Taxes of Buyer or any of its Affiliates (including due to any withholding by any payer of such receivables) with respect to such receivables (hereinafter referred to collectively as “Excluded Taxes”).

(l)Pre-Closing Liabilities. Any Liabilities arising out of, under or in connection with the Assigned Contracts or any other Purchased Asset which arise from facts or circumstances occurring on or prior to the Closing Date (including any Liability arising from any of the Sellers' or any of their Subsidiaries’ breach, default or failure to comply with any term of an Assigned Contract (or other Purchased Asset) or failure to complete any deliverable or otherwise perform any obligation pursuant to a Contract prior to the Closing).

(m)Shareholder Actions. Any Liability to, or, any action or threatened action by or on behalf of any current or prior shareholder, holders of options (or similar instruments) or Representative of Sellers whether or not in connection with this Agreement and any Transaction Documents or the transactions contemplated hereby and thereby.

(n)Contracts not Assigned. Any Liabilities arising out of, under or in connection with any of the Sellers’ or any Subsidiary’s Contracts that are not Assigned Contracts, including those set forth on Section 2.5(d) of the Disclosure Schedules (subject to Section 6.7 below).

(o)Transfer Payments. Any Liabilities for stamp duty, registration fees or other fees, duties or Taxes payable in any jurisdiction in connection with the transfer of the Business or the Purchased Assets, whether as a transfer of assets or of a business.

(p)Operation of Business. Any Liabilities arising out of, relating to or otherwise in respect of (i) the operation of the Business on or prior to the Closing Date, (ii) any Excluded Asset, and (iii) any and all Liabilities for or in connection with compliance or failure to comply, prior to Closing, with any Laws applicable to the Business.

(q)Intellectual Property Breaches. Notwithstanding anything to the contrary in the Disclosure Schedule, any Liabilities and Losses that may arise from third party claims relating to the use or breach by a Seller, prior to Closing, of Intellectual Property of any third- party, Intellectual Property Licenses, Intellectual Property Assets, or any Open Source Software.

(r)Affiliate Liability. Any Liability between the Sellers and an Affiliate of Sellers.

Section 2.5 Further Conveyances and Assumptions; Consents.

(a)Effective at the Closing, the Sellers hereby, jointly and severally, irrevocably constitute and appoint the Buyer as their true and lawful attorney, with full power of substitution, in their name, but on behalf of and for the benefit of the Buyer and without additional consideration and in Buyer’s sole discretion (and without obligation on Buyer): (i) to demand and receive from time to time any and all the Purchased Assets and to make endorsements and give receipts and releases for and with respect to the same and any part thereof; (ii) to institute, prosecute and settle any and all actions or proceedings that Buyer may deem proper in order to collect, assert or enforce any claim, right or title of any kind in or to the Purchased Assets; (iii) to defend or settle any or all actions or proceedings with respect to any of the Purchased Assets; and (iv) to do all such acts and things in relation thereto as shall be deemed necessary or appropriate by Buyer. The Sellers hereby acknowledge that the appointment hereby made and the powers hereby granted are coupled with an interest and are not and shall not be revocable by them.

(b)Without derogating from anything in Section 2.5(a), from time to time following the Closing and without additional consideration to the Sellers, the Sellers (and Sellers shall cause each of their Subsidiaries) and Buyer shall execute, acknowledge and deliver in a reasonably prompt manner, all such further conveyances, notices, assumptions, releases and such other instruments, and shall take such further actions, in each case, as may be necessary or appropriate to assure fully to Buyer and its respective successors or assigns, all of the properties, rights, titles, interests, remedies, powers and privileges intended to be conveyed to Buyer under this Agreement and the Transaction Documents, including with respect to the Purchased Assets, and to assure fully to the Sellers the assumption of the Assumed Liabilities, and to otherwise make effective the transactions contemplated hereby and thereby.

(c)Notwithstanding anything to the contrary contained in this Agreement, to the extent the sale, assignment, transfer, conveyance or delivery or attempted sale, assignment, transfer, conveyance or delivery to the Buyer of any Purchased Asset is prohibited by any applicable Law or would require any Consent or Permit of any Governmental Authority or any Person, and such Consents or Permits shall not have been obtained prior to the Closing Date and the obtaining thereof is not a condition to the Closing, or that Closing has occurred irrespective that such condition was not met or such Purchased Asset has not transferred for any other reason, then to the extent that such Purchased Asset or any claim or right or any benefit arising thereunder or resulting therefrom has not been duly transferred to the Buyer, then following the Closing, the Sellers shall be deemed to hold the Purchased Asset and all rights, benefits and privileges with respect thereto as a trustee for the sole benefit of the Buyer (or the applicable Buyer Affiliate) and shall manage such Purchased Asset solely in accordance with instructions of the Buyer, and the parties shall use their respective reasonable best efforts, and cooperate with each other, to obtain promptly such Consents or Permits. Pending such Consent or Permit, the parties shall cooperate with each other in any reasonable and lawful arrangements designed to provide to the Buyer the full benefits of use of such Purchased Asset; provided that to the extent of an Assigned Contract until such Consent or Permit is received, Sellers shall provide the services or products covered by such Assigned Contract or the equivalent thereof to Buyer without any additional consideration (except for the respective cost under the Assigned Agreement). Once such Consent or Permit for the sale, assignment, transfer, conveyance or delivery of a Purchased Asset not sold, assigned, transferred, conveyed or delivered at the Closing is obtained, the Sellers shall promptly assign, transfer convey or deliver, or cause to be assigned, transferred, conveyed and delivered, and to fullest extent possible under applicable Law, does (as of the time of and subject to the occurrence of such condition) hereby assign, transfer, and convey, such Purchased Asset to the Buyer for no additional consideration. To the extent that any such Purchased Asset cannot be transferred or the full benefits of use of any such Purchased Asset cannot be provided to the Buyer following the Closing, the Buyer and the Sellers shall enter into such arrangements for no additional consideration from the Buyer, to provide to the Buyer the operational equivalent of obtaining such Consent or Permit. Without limitation of the foregoing, in the event that at the Closing the registration of any Intellectual Property Assets in the name of the Buyer with the relevant Governmental Authority was not yet completed and perfected and/or if for any reason any Intellectual Property Asset (included in the Purchased Assets) is not transferred to the Buyer, then without limitation of any other rights of the Buyer, to the extent necessary to grant to the Buyer full and unrestricted use of such Intellectual Property Assets, the Sellers hereby grants to the Buyer, effective as of the Closing, an irrevocable, perpetual, royalty free, fully paid, worldwide, unrestricted, assignable, sub-licensable, exclusive license to make or have made any use or exploitation with respect thereto, and to copy, modify, reproduce, decompile, distribute, market, sell, export, import, license, modify such Intellectual Property Assets and create derivative works in respect thereof.

(d)With respect to any of the Contracts listed on Section 2.5(d) of the Disclosure Schedules and any other customer Contracts that are or may be Excluded Assets in accordance with Section 6.7(b) below, which are not assumed by Buyer or an Affiliate thereof at the Closing, following the Closing Buyer shall, on behalf of Sellers, provide the products and services under such customer Contracts for the duration of such customer Contracts under a customer transition services agreement (the “Customers Transition Services Agreement”), which shall be based on the following principles: (i) the Sellers shall continue to be the party to such customer Contracts at no additional cost to Buyer, (ii) the Sellers shall manage such customer Contracts solely in accordance with instructions of the Buyer (including with respect to any extensions, change requests, amendments, concessions any other changes), and (iii) the Buyer shall provide the Business products and services and be liable for the products delivered and services performed by Buyer under and in accordance with such customer Contracts and the Buyer shall be entitled to all rights, revenues, profits, benefits and privileges with respect thereto, and such amounts received by any Seller from such customers with respect thereto shall be received as a trustee for the sole benefit of the Buyer (or the applicable Buyer Affiliate) and transferred to the Buyer under such Customers Transition Services Agreement.

(e)Each Seller hereby grants to Buyer, and each Buyer Affiliate, an irrevocable, perpetual, royalty free, fully paid, worldwide, unrestricted, assignable, sub-licensable, exclusive with respect to the Business and non-exclusive with respect to any other use license (the “Schedule 2.5 License”) to the Intellectual Property listed on Section 2.5(e) of the Disclosure Schedules (the “Scheduled 2.5 IP”), including the license to make or have made any use or exploitation with respect thereto, and to copy, modify, reproduce, decompile, distribute, market, sell, export, import, license, modify such Intellectual Property and create derivative works in respect thereof, anywhere in the world; provided, however, that Buyer shall not use such Scheduled 2.5 IP to compete with Sellers in the digital services and Sellers shall not license or grant right of use in such Scheduled 2.5 IP to any Person that will allow such Person to compete with Buyer in connection with the Business. The Comverse One mark is owned by Seller, and Buyer will not challenge Seller’s rights in the Comverse One mark. Seller shall have the right to review the use of the Comverse One mark by the Buyer and to request modification of such use. To the extent Buyer, or any Buyer Affiliate requires, at any time, in connection with the Business, the use of Intellectual Property owned by a Seller which is not transferred hereunder and is not part of the Purchased Assets (but is currently being used by the Business), such Seller hereby grants to the Buyer, effective as of the Closing, an irrevocable, perpetual, royalty free, fully paid, worldwide, unrestricted, assignable, sub-licensable, non-exclusive license to make or have made any use or exploitation with respect thereto, and to copy, modify, reproduce, decompile, distribute, market, sell, export, import, license, modify such Intellectual Property and create derivative works in respect thereof. The Buyer shall have the right to require Sellers to transfer all its ownership rights in the Policy product including all its models as set forth in Section 2.2(g) of the Disclosure Schedules at any time until the expiration of the Transition Services Agreement. If Buyer exercises its right hereunder, Buyer will be obligated to grant Sellers an irrevocable, perpetual, royalty free, fully paid, worldwide, unrestricted, assignable, sub-licensable, exclusive license with respect to the Sellers’ digital services business related to the Policy product. Buyer shall bear the cost, if any, incurred by the Sellers due to such transfer, if effective after the Closing.

(f) In the event that the Buyer discovers any Contract, Software, any item of Intellectual Property or other asset or right (including, any account receivable) owned, held or received by a Seller or a Subsidiary thereof as of the Closing and necessary or relevant to the Business (an “Additional Asset”), which was either not covered by the definition of any of the Purchased Assets or that was included in the Purchased Assets but was not transferred to the Buyer for any reason, then such Additional Asset shall be deemed, at the election of the Buyer, a Purchased Asset that has been transferred to the Buyer under this Agreement at Closing, for no additional consideration and each Seller undertakes (and undertakes to cause each Subsidiary thereof to), if so elected by the Buyer, to take any necessary action to effect the transfer of such Additional Asset under this Section, to the Buyer in accordance with this Agreement, or as otherwise designated in writing by the Buyer. The Sellers and their Subsidiaries shall provide upon the Buyer's request, written confirmation and, such item shall be transferred, and in any event, at the election of Buyer, shall be deemed a part of the Purchased Assets; provided that all Liabilities arising out of or relating to such Additional Asset shall be Excluded Liabilities unless otherwise determined in writing by Buyer. If a Seller or a Subsidiary thereof so discovers any such Additional Asset, it shall notify the Buyer, and such Seller shall be deemed, at the election of Buyer, to have licensed or transferred such Additional Asset to Buyer in accordance with the terms of this Section on the same basis as described in the previous Section, pending the completion of the transfer.

(g)The Buyer shall be entitled to benefit, for no additional consideration, from the rights of any Seller under all non-disclosure, non-competition, non-solicitation and assignment (or non-assignment) agreements (not including the exhibits attached to this Agreement), provisions and arrangements to which any of them is a party (including all non-disclosure, non-competition, non-solicitation and assignment (or non-assignment) provisions included in any Excluded Contracts), which are related to the Business and/or the Purchased Assets (the “NDA Agreements”). In case of a claimed infringement or breach by any person under an NDA Agreement, at the request of the Buyer, the applicable party to such NDA Agreement shall institute Legal Proceedings and take any other reasonable actions, at the reasonable direction of the Buyer, against such infringing or breaching party. Nothing herein shall restrict Buyer’ rights to pursue any action to which they are legally entitled independently of the Sellers. Sellers shall be responsible for all expenses incurred as a result of such Legal Proceedings, and no settlement or compromise shall be entered (including by default or consent to entry of any judgment) without the consent of the Buyer.

(h)To the extent any Seller receives, after the Closing, payments under any Assigned Contract, such Seller shall immediately remit such funds to the Buyer.

(i)Without additional consideration to the Sellers, the Sellers shall maintain all errors and omissions insurance policies covering the Purchased Assets, Intellectual Property, and existing insurance claims in full force and effect following the Closing Date; the Buyer shall be added as an additional beneficiary to the above detailed policies.

(j)To the extent an asset intended to be transferred hereunder is not so transferred, including by operation of Section 3.3(c) or the waiver by the Buyer of any condition set forth in Section 3.3, the Sellers shall use commercially best efforts to transfer such assets and secure the applicable Consents, if necessary, as soon as reasonably practicable following the Closing.

Section 2.6 Purchase Price. The purchase price for the Purchased Assets shall be two hundred and seventy-two million dollars ($272,000,000) (the “Base Purchase Price”), plus the assumption of the Assumed Liabilities. The Purchase Price is inclusive of all value added taxes, if and as applicable. The Base Purchase Price shall be subject to increase or decrease in accordance with Section 2.8 (the Base Purchase Price, following such adjustment, being the “Purchase Price”). The Purchase Price shall be paid in accordance with Section 2.7 against a tax invoice, as applicable under the relevant legislation.

Section 2.7 Payment Terms.

(a)Payment of Closing Amount. On the Closing Date, the Buyer and the Buyer Affiliates, as applicable, shall pay the Sellers by wire transfer in immediately available funds to accounts provided by the Sellers no less than four (4) Business Days prior to the Closing Date, an aggregate amount equal to the Closing Amount, allocated among such entities in accordance with the allocation reasonably estimated by the Buyer as of the Closing, which allocation will be adjusted thereafter based on the Agreed Allocation.

(b)Paying Agent. The Buyer may designate a paying agent (the “Paying Agent”) to which the Closing Amount, and any Post-Closing Adjustment will be transferred. If so designated, payment the Closing Amount and any Post-Closing Adjustment will be effected through such Paying Agent.

(c)Escrow Fund. At the Closing, Buyer will deliver the Escrow Amount to the Escrow Agent to be held by the Escrow Agent pursuant to the Escrow Agreement (together with all income and interest earned or accrued thereon, the "Escrow Fund"). The Escrow Fund will be available to secure the Indemnifying Parties' indemnification obligations pursuant hereto and be held and distributed in accordance with the terms of this Agreement and the Escrow Agreement.

Section 2.8 Purchase Price Adjustment.

(a)Closing Date Adjustment.

(i)At least five (5) Business Days prior to the Closing, the Sellers shall deliver to Buyer a certificate substantially in the form of Section 2.8(a)(i) of the Disclosure Schedules (the “Closing Adjustment Certificate”) signed by Comverse's Chief Financial Officer, that contains (i) a good faith and reasonable best estimate of the Closing Working Capital (the “Estimated Working Capital”), determined in accordance with the Accounting Principles and (ii) an unaudited consolidated balance sheet of the Business as of the Closing Date (the “Closing Balance Sheet”).

(ii)The Closing Adjustment Certificate shall be subject to the prior review and approval of the Buyer, which approval shall not derogate from any right or remedy available to the Buyer pursuant to this Agreement.

(iii)Together with such Closing Adjustment Certificate, the Sellers shall make available to Buyer all information and documents that are necessary or otherwise reasonably requested by the Buyer in order to facilitate a review and examination of the information that is included in the Closing Adjustment Certificate. The Closing Balance Sheet shall be prepared in accordance with the Accounting Principles. At the Closing, the Purchase Price shall be adjusted and the Closing Amount shall be determined in accordance with the Closing Adjustment Certificate.

(b)Post-Closing Adjustment.

(i)Within one hundred twenty (120) days after the Closing Date, Buyer may prepare and deliver to Sellers a statement setting forth its calculation of Closing Working Capital which statement shall be substantially in the form agreed between the parties (the “Closing Working Capital Statement”). Such statement shall be prepared in accordance with the Accounting Principles.

(ii)If the Buyer delivers the Closing Working Capital Statement as set forth above, the Purchase Price shall be, retroactively, adjusted by making such adjustments as are required pursuant to the following provisions (the “Post-Closing Adjustment”):

(1)If the Final Closing Working Capital is greater than the Estimated Working Capital, then the Buyer shall be required to pay to the Sellers an amount equal to the magnitude of the amount by which the Closing Working Capital exceeds the Estimated Working Capital.

(2)If the Final Closing Working Capital is lower than the Estimated Working Capital, then the Sellers shall be required to pay to the Buyer an amount equal to the magnitude of the amount by which the Estimated Working Capital exceeds the Closing Working Capital.

(c)Examination and Review.

(i)Examination. After receipt of the Closing Working Capital Statement Sellers shall have thirty (30) days (the “Review Period”) to review the Closing Working Capital Statement . During the Review Period, Sellers and Sellers’ accountants shall have access to the relevant personnel of, and work papers prepared by, Buyer and/or Buyer’s accountants to the extent that they relate to the Closing Working Capital Statement and to such historical financial information (to the extent in Buyer’s possession) relating to the Closing Working Capital Statement as Sellers may reasonably request for the purpose of reviewing the Closing Working Capital Statement and to prepare a Statement of Objections (defined below), provided, that such access shall be in a manner that does not interfere with the normal business operations of Buyer.

(ii)Objection. On or prior to the last day of the Review Period, Sellers may object to the Closing Working Capital Statement by delivering to Buyer a written statement setting forth Sellers’ objections in reasonable detail, indicating each disputed item or amount and the basis for Sellers’ disagreement therewith (the “Statement of Objections”). If Sellers fail to deliver the Statement of Objections before the expiration of the Review Period, the Closing Working Capital Statement and the Post-Closing Adjustment, as the case may be, reflected in the Closing Working Capital Statement shall be deemed to have been accepted by Sellers. If Sellers deliver the Statement of Objections before the expiration of the Review Period, Buyer and Sellers shall negotiate in good faith to resolve such objections within thirty (30) days after the delivery of the Statement of Objections (the “Resolution Period”), and, if the same are so resolved within the Resolution Period, the Post-Closing Adjustment and the Closing Working Capital Statement with such changes as may have been previously agreed in writing by Buyer and Sellers, shall be final and binding.

(iii)Resolution of Disputes. If Sellers and Buyer fail to reach an agreement with respect to all of the matters set forth in the Statement of Objections before expiration of the Resolution Period, then any amounts remaining in dispute (“Disputed Amounts” and any amounts not so disputed, the “Undisputed Amounts”) shall be submitted for resolution to the office of an Independent Accountant agreed upon by the parties between signing and Closing , and who, acting as an expert and not arbitrator, shall resolve the Disputed Amounts only and make any adjustments to the Post-Closing Adjustment, as the case may be, and the Closing Working Capital Statement. The parties hereto agree that all adjustments shall be made without regard to materiality. The Independent Accountant (i) shall only decide the specific items under dispute by the parties; (ii) shall only determine an amount for each Disputed Amount within the range of values assigned to each such item in the Closing Working Capital and the Statement of Objections, respectively; (iii) shall have no right, authority or discretion to employ any accounting standard or principles except for those used in the preparation of the Closing Balance Sheets and the Closing Adjustment Certificate; (iv) shall not be bound by procedure law or rules of evidence; and (v) shall have no authority to issue any injunctions, orders or other interlocutory remedies.

(iv)Fees of the Independent Accountant. The fees and expenses of the Independent Accountant arising out of disputes related to this Section 2.8 shall be paid by Sellers, on the one hand, and Buyer, on the other hand, based upon the percentage that the amount actually contested but not awarded to Sellers or Buyer, respectively, bears to the aggregate amount actually contested by Sellers and Buyer.

(v)Determination by Independent Accountant. The Independent Accountant shall make a determination as soon as practicable within thirty (30) days (or such other time as the parties hereto shall agree in writing) after its engagement, and its resolution of the Disputed Amounts and its adjustments to the Closing Working Capital Statement and/or the Post-Closing Adjustment shall be conclusive and binding upon the parties hereto.

(d)Payments of Post-Closing Adjustment. Except as otherwise provided herein, any payment of the Post-Closing Adjustment, shall (A) be due (x) within five (5) Business Days of the expiration of the Review Period or (y) if there are Disputed Amounts, then within five (5) Business Days of the resolution described in clause (v) above; and (B) be paid by wire transfer of immediately available funds to such account as is directed by Buyer or Sellers, as the case may be (or through a Paying Agent, if so designated). To the extent such amounts are not paid by Sellers, Buyer shall be entitled to receive such payments from the Escrow Fund.

(e)Adjustments for Tax Purposes. Any payments made pursuant to Section 2.8 shall be treated as an adjustment to the Purchase Price by the parties for Tax purposes, unless otherwise required by Law.

(f)Further Post-Closing Adjustments. To the extent Sellers do not secure, prior to Closing or within twelve (12) months thereafter, the Consent of any customer listed on subsection (i) or (ii) of Section S3.3(f) to the Disclosure Schedules to the assignment of the applicable Contract (that by its terms would extend more than twelve (12) months from Closing) to Buyer, the Purchase Price shall be adjusted retroactively by the Adjustment Amount (as defined below) , and such Adjustment Amount shall be remitted by Sellers to Buyer within thirty (30) days following the expiration of such twelve (12)- month period and, at Buyer's discretion, Buyer shall be entitled to receive such Adjustment Amount from the Escrow Fund. The "Adjustment Amount" shall be equal to the amount that would have been paid under the applicable Contract after the twelve (12)-month period and until its expiration.

Section 2.9 Allocation of Purchase Price. By the time that is ten (10) Business Days after the date of the final determination of Final Closing Working Capital under Section 2.8(b), the Buyer shall provide to the Sellers an allocation of the Purchase Price and the Assumed Liabilities (and any other relevant items) among the Purchased Assets and the statutory jurisdictions in which the Purchased Assets reside as of the Closing Date (the “Draft Allocation”). The Sellers shall have the right to present to the Buyer their objections to the Draft Allocation no later than ten (10) Business Days after Sellers' receipt of the Draft Allocation. In the event of any such objection, the Buyer and the Sellers agree to negotiate in good faith to resolve such dispute. If the Sellers do not provide notice of any objection, or if the Buyer and the Sellers are able to agree, in whole, on a revision of the Draft Allocation, the resulting allocation shall be deemed final (the “Agreed Allocation”). If the Buyer and the Sellers are unable to agree on an allocation within ten (10) days after the Sellers' objection, such dispute shall be finally resolved by the PPA Independent Accountant based on GAAP. The fees and expenses of such accounting firm shall be borne equally by Seller and Buyer and the decision of the PPA Independent Accountant (based on GAAP) shall become the Agreed Allocation. In the event that the relevant consideration, as determined for Tax purposes, is subsequently adjusted, the Agreed Allocation

shall be adjusted in a manner consistent with the foregoing procedures of this Section 2.9. The Buyer shall (and the Buyer shall cause each relevant Buyer Affiliate to), and each Seller shall (and each Seller shall cause each of its Subsidiaries to), report the federal, state and local income and other Tax consequences of the transactions contemplated by this Agreement in a manner consistent with the Agreed Allocation. Except as otherwise required by Law, neither the Buyer nor the Sellers (nor any relevant Subsidiary of Buyer or Sellers) shall take a position inconsistent with the Agreed Allocation on any Tax Return or otherwise. “PPA Independent Accountant” shall mean the U.S. office of one of the Big 4 accounting firms, as shall be agreed between the Seller and Buyer.

Section 2.10 Buyer Identity. Buyer may, at any time prior to Closing, notify Sellers that (a) the purchaser of all or any of the Purchased Assets or Assumed Liabilities (“Specified Assets”) shall be an Affiliate thereof, or (b) that certain Specified Assets shall also be specified (in addition to this Agreement which shall continue to apply to all assets and liabilities) in another agreement (being an asset purchase agreement or a share purchase agreement, as applicable), in which case the Buyer or the Affiliate, as applicable, and the relevant Sellers shall (if so requested by the Buyer) execute an additional asset purchase agreement or share purchase agreement with respect to the Specified Assets on terms and conditions mutatis mutandis to this Agreement (the "Additional Agreement(s)").

Section 2.11 Additional Agreements; Deferred Closings. Buyer may elect to accelerate the Closing and/or to have multiple closings with respect to any Specified Assets under the Additional Agreement(s) or with respect to any assets due to be transferred hereunder and not so transferred at the initial Closing, at various dates; provided that to the extent such Additional Agreement refers to a purchase price or any amount to be paid thereunder, such amount shall be reduced from the definition of Base Purchase Price hereunder solely for the purpose of the amount to be paid to the Sellers hereunder (i.e., so any such amount shall only be paid by the Buyer once) (and not for any other purpose including, without limitation, Section 7.5(b)) and provided, further, that all adjustments hereunder shall be performed as if the Base Purchase Price has not been changed. Notwithstanding any such Additional Agreement, the provisions of this Agreement shall apply to all assets sold to Buyer by Sellers and all liabilities assumed by Buyer hereunder and under such Additional Agreement(s) as if all the Business was sold hereunder, including, without limitations with respect to the representations and warranties, covenants and indemnity. All Additional Agreements shall terminate upon the termination of this Agreement in accordance with Article VIII. Notwithstanding anything to the contrary in any Additional Agreement, as between the parties: (a) all assets and liabilities which, if covered hereunder would be Excluded Assets or Excluded Liabilities, would be so excluded, and (b) the indemnity provisions of this Agreement shall govern, apply and prevail with respect to all assets and liabilities transferred under any Additional Agreement. For the avoidance of doubt, the use of any Additional Agreement and its provisions shall not derogate from any Buyer's or Sellers’ rights under this Agreement, including Buyer's and Sellers’ respective indemnification rights under this Agreement, including with respect to all Purchased Assets and Excluded Assets, and Assumed Liabilities and Excluded Liabilities, regardless of such Additional Agreement provisions.

Section 2.12 Withholding. Notwithstanding any other provision in this Agreement, the Buyer (or any Buyer Affiliate) , the Paying Agent (if applicable) and the Escrow Agent, or their respective Representatives, shall have the right to deduct and withhold Taxes from any payments to be made hereunder if such withholding is required by any applicable Law. To the extent that amounts are so withheld and remitted to the relevant Taxing Authority, such withheld amounts shall be treated for all purposes of this Agreement as having been delivered and paid to the Sellers (or the applicable Subsidiary) or other recipient of payments in respect of which such deduction and withholding was made. Any amounts deducted and withheld pursuant to this Section 2.12 shall be remitted to the relevant Taxing Authority in accordance with applicable Law.

ARTICLE III

CLOSING

Section 3.1 Closing. Subject to the terms and conditions of this Agreement, the consummation of the Transaction (the “Closing”) will take place on the date five (5) Business Days after all conditions (other than the respective delivery obligations of the parties) hereto have been satisfied or waived, or at such other time or date as may be agreed to by the parties to this Agreement (the “Closing Date”). The Buyer and Sellers shall cooperate in joint efforts to effect a Closing as soon as possible following the signing date of this Agreement with the goal of effecting a Closing not later than two (2) months from the signing date of this Agreement or as soon as possible thereafter.

Section 3.2 Conditions to Obligations of Sellers. The obligations of each Seller to effect the transactions to be performed by it at the Closing are subject to the satisfaction at or prior to the Closing of the following conditions (it being understood that each such condition is solely for the benefit of Sellers and may be waived by the Seller Designated Representative in writing in its sole discretion):

(a)Representations and Warranties; Performance.

(i)All of the Buyer representations and warranties shall be true and correct in all material respects as of the signing date of this Agreement and as of the Closing Date with the same force and effect as if such representations and warranties had been made at the Closing (except to the extent such representations and warranties expressly relate to an earlier date, in which case such representations and warranties shall be true and correct on and as of such earlier date and except for matters permitted or required hereunder), disregarding materiality or lack of Material Adverse Effect or similar qualifiers contained therein.

(ii)All of the covenants and conditions of this Agreement and the Transaction Documents to be complied with and performed by Buyer at or prior to the Closing shall have been duly complied with and performed in all material respects.

(iii)Buyer shall have delivered to Sellers a certificate (the “Buyer Compliance Certificate”) to such effect covered by (i) and (ii) above dated as of the Closing Date and signed by the President of Buyer.

(b)Purchase Price Consideration. Buyer shall have delivered the Closing Amount by wire transfer of immediately available funds to an account or accounts designated by Sellers prior to the Closing (or to the Paying Agent, if so designated).

(c)Closing Deliverables. At the Closing, Buyer shall deliver to Sellers the following:

(i)each Assignment and Assumption Agreement (for contracts that consents were received) duly executed by Buyer;

(ii)each Intellectual Property Assignment duly executed by the Buyer;

(iii)with respect to each Transferred Lease for which consent to assign was received (or is not required), an Assignment and Assumption of Lease duly executed by Buyer and in each case, if necessary, Buyer’s signature shall be witnessed and/or notarized;

(iv)the Transition Services Agreement duly executed by Buyer;

(v)The Escrow Agreement and if applicable, the agreement with the Paying Agent (the “Paying Agent Agreement”) duly executed by Buyer;

(vi)with respect to any Tangible Personal Property in which any Seller has a valid leasehold interest, an Assignment and Assumption of Leased Tangible Personal Property duly executed by Buyer;

(vii)the Buyer Compliance Certificate;

(viii)a certificate of the Secretary or an Assistant Secretary (or equivalent officer) of Buyer certifying that attached thereto are true and complete copies of all resolutions adopted by the board of directors of Buyer authorizing the execution, delivery and performance of this Agreement and the other Transaction Documents and the consummation of the transactions contemplated hereby and thereby, and that all such resolutions are in full force and effect and are all the resolutions adopted in connection with the transactions contemplated hereby and thereby; and

(ix)such other customary instruments or documents reasonably requested by Sellers, in form and substance reasonably satisfactory to Sellers, as may be required to give effect to this Agreement.

Section 3.3 Conditions to Obligations of Buyer. The obligations of Buyer to effect the transactions to be performed by it at the Closing are subject to the satisfaction at or prior to the Closing of the following additional conditions (it being understood that each such condition is solely for the benefit of Buyer and may be waived by the Buyer in writing in its sole discretion).

(a)Representations and Warranties; Performance.

(i)All of the Sellers representations and warranties hereunder and under any Additional Agreement shall be true and correct in all material respect as of the signing date of this Agreement and as of the Closing Date with the same force and effect as if such representations and warranties had been made at the Closing (except to the extent such representations and warranties expressly relate to an earlier date, in which case such representations and warranties shall be true and correct on and as of such earlier date and except for matters permitted or required hereunder), disregarding materiality or lack of Material Adverse Effect or similar qualifiers contained therein.

(ii)All of the terms, covenants and conditions of this Agreement and the Transaction Documents to be complied with and performed by each Seller at or prior to the Closing shall have been duly complied with and performed in all material respects.

(iii)Sellers shall have delivered to the Buyer a certificate (the “Sellers Compliance Certificate”) to such effect covered by (i) and (ii) above dated as of the Closing Date and signed by the President of Comverse.

(b)No Legal Proceedings. (i) There shall be no Legal Proceedings against any Seller or Buyer which has or could have the effect of either temporarily or permanently making the transactions contemplated by this Agreement or any Transaction Document illegal, or otherwise restraining, prohibiting or preventing the consummation thereof, (ii) there shall not be in effect any Order, nor shall any action have been taken, by any Governmental Authority threatening or restraining, prohibiting or preventing the consummation of transactions contemplated by this Agreement or other Transaction Documents, and (iii) no Law or Order shall have been enacted, entered, enforced or deemed applicable to the transactions contemplated by this Agreement, which makes the consummation thereof illegal.

(c)Governmental Approvals. The Governmental Approvals, if any, necessary for the consummation of, or in connection with, the transactions contemplated hereby, or in order to operate the Business following the Closing, have been obtained on terms acceptable to Buyer, or the applicable waiting periods under the Antitrust Laws (if any) shall have expired or terminated and no extension to the waiting period shall have been granted to any Governmental Authority; provided that to the extent any antitrust approval is not obtained with respect to the countries listed on Section 3.3(c) of the Disclosure Schedules, any Purchased Assets in such countries shall be treated under a Customer Transition Services Agreement until transferred to Buyer.

(d)Material Adverse Effect. There shall have been no Material Adverse Effect.

(e)Additional Conditions. The conditions set forth in Section 3.3(e) of the Disclosure Schedules have been fulfilled.

(f)Consents. The Consents listed on Section 3.3(f) of the Disclosure Schedules shall have been obtained as provided therein.

(g)No Injunctions or Restraints on Conduct of Business. No temporary, preliminary or permanent Legal Proceedings or Order which has or could have the effect of limiting or restricting the Buyer’s ownership of the Purchased Assets or conduct or operation of the Business following the Closing shall be in effect, nor shall there be pending or threatened any Legal Proceeding seeking any of the foregoing or any other Antitrust Restraint.

(h)Closing Deliverables. At the Closing, Sellers shall deliver to Buyer the following:

(i)a bill of sale in the form to be agreed between the parties (the “Bill of Sale”) for each applicable Seller, duly executed by such Seller, transferring the Tangible Personal Property to Buyer in which such Seller has title;

(ii)an assignment and assumption agreement in the form to be agreed between the parties (the “Assignment and Assumption Agreement”) for each applicable Seller, duly executed by such Seller, effecting the assignment to and assumption by Buyer of all the Assigned Contracts (except the Leases) and a copy of notices provided to each relevant counterparty advising such Person of the assignment, in form and substance acceptable to Buyer;

(iii)an assignment in the form to be agreed between the parties (the “Intellectual Property Assignments”) for each applicable Seller, duly executed by such Seller, transferring all of such Seller’s right, title and interest in and to the Intellectual Property Assets to Buyer, including powers of attorney with respect to any and all registrable Intellectual Property Assets and all the applications to register Intellectual Property Assets in forms suitable for recordation with the U.S. Patent and Trademark Office and all counterparts in all foreign jurisdictions;

(iv)with respect to each Transferred Lease, an Assignment and Assumption of Lease in form to be agreed between the parties (each, an “Assignment and Assumption of Lease”) and in each case, if necessary, such Seller’s signature shall be witnessed and/or notarized;

(v)the transition services agreement in the form of Schedule 2 hereto, which will be updated in accordance with its terms (the “Transition Services Agreement”), for each applicable Seller, duly executed by such Seller and/or its Affiliates;

(vi)an intellectual property license agreement with respect to the Intellectual Property listed on Section 2.5(d) of the Disclosure Schedules and the source code related thereto;

(vii)with respect to any Tangible Personal Property in which any Seller has a leasehold interest, an assignment and assumption of such lease(s) in the form to be agreed between the parties (the “Assignment and Assumption of Leased Tangible Personal Property”), for each applicable Seller, duly executed by such Seller, effecting the assignment to and assumption by Buyer of the leased Tangible Personal Property;

(viii)physical possession (whether by way of actual delivery or, if more appropriate, by confirmation of handing over of possession to the control of a representative of Buyer) of Purchased Assets identified by Buyer, including all Assigned Contracts, Documents and information related to the Business and the Purchased Assets and Assumed Liabilities set forth in Section 6.24;

(ix)a certificate of the Secretary or an Assistant Secretary (or equivalent officer) of each Seller certifying that attached thereto are true and complete copies of all resolutions adopted by the board of directors of such Seller authorizing the execution, delivery and performance of this Agreement and the other Transaction Documents and the consummation of the transactions contemplated hereby and thereby, and that all such resolutions are in full force and effect and are all the resolutions adopted in connection with the transactions contemplated hereby and thereby;

(x)a written confirmation and Consent from each Person having any Encumbrance over any Purchased Asset and any Person who, as of the Closing Date, has any such Encumbrance, that such Encumbrance has been removed and is no longer in effect, together with certificates for such removals from the applicable Governmental Authority.

(xi)a certificate of good standing with respect to each Seller, issued by the Secretary of State or equivalent official of such Seller’s jurisdictions of organization as of a date no more than ten (10) days prior to the Closing Date;

(xii)the Escrow Agreement; and

(xiii)such other customary instruments, agreements, certificates, affidavits or documents, in form and substance reasonably satisfactory to Buyer, as may be required to give effect to this Agreement.

Section 3.4 Express Absence of Certain Conditions. Without limitation of the conditions set forth herein, the receipt of any proceeds of any financing by Buyer is expressly not a condition precedent to the consummation of the Transaction by Buyer.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF SELLERS

Subject to the disclosures set forth in the Disclosure Schedules (each section of which qualifies the correspondingly numbered representation and warranty or covenant to the extent specified therein, provided that any disclosure set forth with respect to any particular section shall be deemed to be disclosed in reference to all other applicable sections of this Agreement to the extent a specific cross reference thereto is provided), the Sellers jointly and severally represent and warrant to Buyer as of the signing date of this Agreement the representations and warranties set forth below, which shall apply to all assets purchased hereunder and under any Additional Agreement:

Section 4.1 Organization. Each Seller is a corporation or limited liability company duly organized and validly existing and in good standing under the laws of its respective state of incorporation, and each has all necessary corporate or limited liability company power and authority to own, lease and operate the properties and assets now owned, operated or leased by it and to carry on their respective businesses as conducted. Each Seller is duly qualified, licensed or authorized to do business and is in good standing in the place it conducts its business and under the laws of each jurisdiction in which the conduct of the Business or ownership of assets requires such qualification, license or authorization, except where the failure to be so qualified, licensed, authorized or in good standing would not materially adversely affect the Seller’s ability to consummate the transactions hereunder or the Business. Each Seller is not in violation of any of the provisions of its articles of association, by laws, certificate of incorporation or other incorporation or organizational documents as in effect on the date hereof.

Section 4.2 Authorization.

(a)Each Seller has all necessary power and authority and legal capacity to execute and deliver this Agreement and any Transaction Documents to which it is a party, to carry and perform its obligations hereunder and thereunder and to consummate the transactions contemplated hereby and thereby. The execution and delivery of this Agreement and any other Transaction Documents to which it is a party, the performance by such Seller of its obligations hereunder and thereunder and the consummation of the transactions contemplated hereby and thereby have been duly authorized by all requisite corporate or limited liability company action on the part of each Seller. This Agreement and each other Transaction Document to which it is a party has been duly and validly executed and delivered by each Seller and this Agreement constitutes, and each of the Transaction Documents when so executed and delivered will constitute (assuming due authorization, execution and delivery by Buyer), legal, valid and binding obligations of each Seller, enforceable against it in accordance with its respective terms, except as such enforceability may be limited (i) by bankruptcy, insolvency, reorganization, moratorium or similar Laws affecting creditors’ rights generally and by general principles of equity and (ii) rules of Law governing specific performance, injunctive relief and other equitable remedies.

(b)The board of directors of each Seller, by resolutions duly adopted (and not thereafter modified or rescinded), has approved and adopted this Agreement and each of the other Transaction Documents, in each case in accordance with its articles of association, by laws, certificate of incorporation or other incorporation or organizational documents as in effect on the date hereof.

(c)No Seller has: (i) received any notice from any applicable Governmental Authority that its registration may be revoked, stricken or erased; (ii) admitted an inability to pay its debts generally as they become due, filed or consented to the filing against it of a petition in bankruptcy, liquidation winding up, stay of proceedings, plan of arrangement or any similar proceeding; or (iii) consented to the appointment of a receiver, liquidator, trustee or special manager for itself or for any substantial part of its properties, or made any determination in respect of the distribution of its assets. No notice has been received of any action for, or the intent of any Person to request to seek or pursue, any remedy under or in connection with any action set forth in (i) through (iii) and to the Sellers’ Knowledge, there is no reasonable basis for (ii) or (iii) above.

Section 4.3 Non-Contravention; Consents. Except as set forth in Section 4.3 of the Disclosure Schedules, the execution, delivery and performance by each Seller of this Agreement and the Transaction Documents to which it is a party, does not and the consummation by each Seller of the transactions contemplated by this Agreement and the Transaction Documents will not, with or without the giving of notice or the lapse of time or both conflict with, or result in a breach or violation of, or a default under, or give rise to any other right which may adversely affect the Transaction or the Transaction Documents under (i) its articles of association, by laws, certificate of incorporation or other incorporation or any other organizational document of such Seller; (ii) any Order by which a Seller is bound, or applicable to the Business and/or the Purchased Assets or the Assumed Liabilities; (iii) any Law applicable to a Seller, the Business and/or the Purchased Assets or Assumed Liabilities; (iv) result in any breach of, or constitute a default (or event which with the giving of notice or lapse of time, or both, would become a default) under, or give to any Person any rights of termination, amendment, acceleration or cancellation of any right or obligation under any Contract (including triggering of any rights under any Contract to change its terms, increase or decrease prices or similar provisions) or Permit or other instrument to which a Seller is a party or to which any Business and/or the Purchased Assets is subject; (v) require any consent, approval, Permit, Governmental Order, declaration or filing with, or notice to, any Governmental Authority (each under this sub-section (v), a “Governmental Approval”) to be obtained or made by Sellers, or (vi) result in the creation of any Encumbrance on the Purchased Assets or assets licensed hereunder, including any Encumbrance for any Taxes, other than a Permitted Encumbrance, or cause the Buyer to be under any Liabilities, except for Assumed Liabilities, and require any Consent or other action by, or filing or registration with or notification to, any Governmental Authority or any other Person. It is noted that to assign the Assigned Contracts, consent is required.

Section 4.4 Title to Purchased Assets. Each Seller holds good, valid and marketable ownership title to, and has valid sole and exclusive interest in and ownership of all Purchased Assets, free and clear of any Encumbrances other than Permitted Encumbrances. Upon the sale, transfer, assignment and delivery of the Purchased Assets pursuant to this Agreement, the Buyer will receive good and marketable ownership title to and valid interests in and ownership of all of the Purchased Assets free and clear of any and all Encumbrance and shall have the right to use them without payment to any Person. It is noted that to assign the Assigned Contracts, consent is required. Each Seller holds a valid ownership, leasehold or licensed interest in the Purchased Assets not outright owned by it. Except as set forth in Section 4.4 of the Disclosure Schedules, the Buyer shall be subject to no limitations, obligations or restrictions with regard to the sale, license, distribution or other transfer or exploitation of the Purchased Assets or operation of the Business, except for any such limitation, obligations or restrictions that are created by the Buyer or which apply in general by applicable Law. The Purchased Assets are in good operating condition and repair, reasonable wear and tear accepted, and conform in all material respects with all applicable Laws. The Business has been conducted exclusively by the Sellers and, no Person has been involved in the conduct of the Business other than or in the place of the Sellers. It is noted that to assign the Assigned Contracts, consent is required.

Section 4.5 Sufficiency of Assets. Except as set forth in Section 4.5 of the Disclosure Schedules, the Purchased Assets include all assets, rights, properties, licenses and Permits, Contracts and other benefits that are necessary in order to allow the Buyer to continue after the Closing to conduct the Business as conducted prior to Closing. It is acknowledged that certain services, such as IT, will, for a limited period of time, be provided under the Transition Services Agreement.

Section 4.6 Encryption and Other Restricted Technology. The majority of products relating to the Business contain encryption capabilities derived from publicly available and industry standard Open Source Software and used by such products for 1) secure file transfer; 2) user authentication; 3) password protection; and 4) Secure Shell (or SSH) network encryption protocol for system administration and provisioning. The Sellers’ use of such encryption capabilities received all applicable Permits and is in compliance, in all material respects, therewith and with all applicable Law.

Section 4.7 Financial Statements.

(a)Attached as Section 4.7(a) of the Disclosure Schedules are copies of the financial statements of the Business consisting of (a) an income statement for the twelve (12)-month period ended January 31, 2015, and (ii) a balance sheet as of January 31, 2015 (collectively, the “Financial Statements”). The Financial Statements (i) are true, correct and complete in all material respects, (ii) were derived from audited financial statements which were prepared in accordance with GAAP, consistently applied through the period covered thereby, and the items included therein reflect GAAP, except for a carve out methodology believed by management to be a reasonable allocation of the current structure of the transaction (the “Accounting Principles”), and (iii) fairly and accurately present in all material respect the assets, Liabilities (including all reserves), financial position and results of operation of the Business as at the respective dates for which they were prepared and the for the period indicated, but have not been audited or prepared in accordance with GAAP.

(b)The books of account and other financial records used in the Business have been kept accurately in the ordinary course of business consistent in all material respects with applicable Laws, the transactions entered therein represent bona fide transactions, and the revenues, expenses assets and Liabilities of the Sellers with respect to the Business have been property recorded therein. No Seller has any Liabilities with respect to the Business, except for Liabilities (i) set forth, reflected in, reserved against and disclosed in all material respects in the Financial Statements, (ii) disclosed on Section 4.7(b) of the Disclosure Schedules, or (iii) incurred since January 31, 2015 in the ordinary course of such Sellers' business consistent with past practice.

(c)Without derogating from the generality of Section 4.7(a) hereof, each Seller maintains a standard system of accounting established and administered in accordance with GAAP.

(d)Each Seller has established and maintains a system of internal accounting controls sufficient to provide reasonable assurances (i) that transactions, receipts and expenditures of such Seller and its Subsidiaries are being executed and made only in accordance with appropriate authorizations of management and the respective Board of Directors of the Seller, and (ii) that transactions are recorded as necessary (A) to permit preparation of financial statements in accordance with the Accounting Principles, consistently applied and (B) to maintain accountability for assets. Each Seller has made available to the Buyer complete and correct copies of all written descriptions of, and all policies, manuals and other documents promulgating, such internal accounting controls. No Seller, nor any Subsidiary of a Seller, nor to the Sellers' Knowledge, its independent auditors or any current or former employee, consultant or director of a Seller or any of its respective Subsidiaries, has identified or obtained knowledge of any fraud or fraudulent concealment, whether or not material, that involves a Seller's management or other current or former employees, consultants or directors of a Seller or any of its Subsidiaries who had a role in the preparation of the Financial Statements or the internal accounting controls utilized by such Seller or its Subsidiaries, or any claim or allegation regarding any of the foregoing. No Seller or Subsidiary thereof nor, to the Sellers' Knowledge, any director, officer, employee, auditor, accountant or Representative has received or otherwise had or obtained knowledge of any material complaint, allegation, assertion or claim, whether written or oral, in each case, regarding deficient accounting or auditing practices, procedures, methodologies or methods of a Seller or any of its Subsidiaries or their respective internal accounting controls that resulted in any material inaccuracy in the Financial Statements. No attorney representing a Seller or any of its Subsidiaries, whether or not employed by a Seller or any of its Subsidiaries, has reported to the Board of Directors of a Seller or the Subsidiaries or any committee of any of the foregoing or to any director or officer thereof of a material violation of securities laws, breach of fiduciary duty or similar violation by a Seller, its Subsidiaries or any of their respective officers, directors, employees or agents.

(e)All the Accounts Receivable have arisen from bona fide transactions in the ordinary course of business. All the Accounts Receivable reflected on the Financial Statements were recorded in a manner consistent with past practice and in accordance with GAAP (except with respect to shared Accounts Receivables) consistently applied, are valid receivables in accordance with GAAP (except with respect to shared Accounts Receivables) and, except as set forth in Section 4.7(e) of the Disclosure Schedules or as reserved for in the Financial Statements, are not subject to setoffs, credits, allowances, discounts, charge-backs, charge-ups, delays, acceleration or counterclaims and are collectible in accordance with their terms. No Seller has taken any action to cause the Accounts Receivable not to be collectible in accordance with their terms, such as waiver. All goods and services to be delivered underlying the Accounts Receivable have been delivered in accordance with their respective billing terms in all material respects.

(f)Section 4.7(f) of the Disclosure Schedules lists all assets related to the Business which are loaned from another Person.

Section 4.8 No Changes. Since the Balance Sheet Date, except as set forth in Section 4.8 of the Disclosure Schedules, (i) there has been no change in the financial condition or operating results of the Business or any event or condition of any kind or nature whatsoever which has, or is reasonably likely to be materially adverse to the Business, and (ii) the Sellers have operated the Business in the ordinary course consistent with past practice. Without derogating from the foregoing, since the Balance Sheet Date, the Sellers have not, in each case solely with respect to the Business:

(a)mortgaged, pledged, subjected to a lien, or granted any Encumbrance in, or suffered to exist or otherwise encumbered, any of the Purchased Assets, other than Permitted Encumbrances and excluding guarantees and letters of credit provided to customers in the ordinary course of business, consistent with past practice;

(b)sold, disposed or licensed any of the Purchased Assets or any asset directly related to the Business to any Person, except inventory in the ordinary course of business, consistent with past practice;

(c)acquired any properties or assets in connection with the Business, except in the ordinary course of business consistent with past practice in an amount which does not exceed US$400,000;

(d)performed any other transaction with respect to the Purchased Assets or the Business (directly or indirectly) by any Seller not specifically addressed herein, except in the ordinary course of business consistent with past practice;

(e)made capital expenditures or entered into any commitment for capital expenditures relating to the Business not in the ordinary course of business consistent with past practice or exceeding US$150,000 per single commitment or US$500,000 in the aggregate;

(f)entered into any Contract that restrains, restricts, limits or impedes the ability of the Business or the Sellers to compete or conduct any business in any manner and in any geographic area;

(g)failed to maintain the Tangible Personal Property in good working condition and repair according to the standards it has maintained up to the Balance Sheet Date, subject to ordinary wear and tear;

(h)failed to pay and discharge any trade payables relating to the Purchased Assets or the Business in the ordinary course of business consistent with past practice;

(i)failed to pay maintenance, renewals and similar fees if and when due or failed to take all other appropriate actions as necessary in the ordinary course of business consistent with past practice to prevent the abandonment, loss or impairment of Intellectual Property Registrations included in the Intellectual Property Assets;

(j)experienced any work stoppage, labor strike or other labor trouble, or any action, suit, claim, labor dispute or grievance, whether pending or threatened, relating to any labor, safety or discrimination matter involving Sellers, including, without limitation, charges of wrongful termination of employment or other unlawful labor practices or actions;

(k)changed the accounting methods or practices relating to or affecting the Purchased Assets, the Assumed Liabilities or the Business;

(l)suffered any destruction of, damage to, or loss of any Purchased Asset (whether or not covered by insurance);

(m)done a material revaluation of any of the Purchased Assets;

(n)written up, written down or written off the book value of any Purchased Asset, except for depreciation and amortization in accordance with GAAP consistently applied;

(o)(A) accelerated collection of any Accounts Receivable of a Seller (as much as such relate to the Business), (B) accelerated billing or receipt of funds prior to the provision of goods and services by a Seller or any Subsidiary thereof (as much as such relate to the Business), (C) reduced prices of products (as much as such relate to the Business) except in the ordinary course of business consistent with past practice, or (D) deferred payment of any accounts payable (as much as such relate to the Business);

(p)amended, terminated, modified, extended or waived any rights under any Assigned Contract or any breach or default with respect thereto;

(q)waived, released or settled any right or claim relating to any Purchased Assets or Assumed Liabilities or any Legal Proceedings related to the Business or the transactions contemplated by this Agreement, except in the ordinary course of business consistent with past practices;

(r)(A) other than in the ordinary course of business consistent with past practice and in any case in a manner that did not increase the total size of the Business' workforce (i.e., only replacement of departing employees), hired or deployed any employee or consultant to serve in the Business or, except as required or allowed under this Agreement, terminated any BSS Employee or assigned any BSS Employee out of the Business, or (B) hired or deployed any senior employee or consultant to serve in the Business or, except as required or allowed under this Agreement;

(s)(i) sold any Intellectual Property related to the Business or entered into of any license agreement, security agreement, assignment or other conveyance or option, with respect to the Intellectual Property related directly or indirectly to the Business with any person or entity (other than Contracts with customers entered into in the ordinary course of business consistent with past practice), or (ii) purchased or acquired any Intellectual Property related to the Business or entered into of any license agreement, security agreement, assignment or other conveyance or option with respect to the Intellectual Property related directly or indirectly to the Business of any Person;

(t)(i) increased the level of compensation or fees of or paid any bonus or provided benefits to any BSS Employee or consultant other than pursuant to the terms of engagement existing as of the Balance Sheet Date, (ii) increased the coverage or benefits available under any (or created any new) Employee Benefit Plan made to, for, or with any of the BSS Employees or otherwise modified, amended or terminated any such Employee Benefit Plan, (ii) granted any BSS Employee or other person any change of control, severance, retention or termination compensation or benefits, or any increase therein, (iv) granted new equity grants (options, RSUs or similar grants) or change any terms of any equity grants (options, RSUs or similar grants) of any BSS Employee, (v) granted or increased any severance or termination pay to (or amended any existing arrangement with) any director, manager, officer, advisor, consultant or employee of the Business, or (vi) enter into any kind of agreement or collective agreement with any Collective Group;

(u)taken any action to terminate or modify, or permitted the lapse or termination of, the present insurance policies and coverages of Sellers relating to or applicable to Sellers, the Business or the Purchased Assets;

(v)failed to comply in all material respects with all applicable Laws;

(w)failed to maintain all material Permits relating to the Business in full force and effect;

(x)incurred, with respect to the Business or the Purchased Assets, any Liabilities other than Liabilities incurred in the ordinary course of business, consistent with past practice;

(y)waived or released any material right or claim of any Seller with respect to the Business, including any material write-off or other compromise of any Account Receivable of any Seller;

(z)taken any action that would adversely affect the ability of the parties to consummate the transactions contemplated by this Agreement or the other Transaction Documents;

(aa)applied for any Grant;

(bb) entered into, amended or renewed any Contract with agents, resellers, distributors, partners, system integrators, outsourcing contracts, contractors performing services relating to the Business, or similar capacities (or amend any such existing Contract);

(cc) entered into or amended (including via renewals, change requests, purchase orders or statements of work) any Contract with a customer relating to the Business, except for such Contracts (including via renewals, change requests, purchase orders or SOWs) entered into in the ordinary course of business consistent with past practices and involving an amount not exceeding US$2,000,000;

(dd) entered into any Contract with a competitor of the business;^;

(ee) other than Liabilities that have arisen in the ordinary course of business consistent with past practice, incurred Liabilities that are not reflected in or reserved against in the Financial Statements; or

(ff) agreed to do any of the things described in the preceding clauses of this Section 4.8.

Section 4.9 Surety Obligations. Section 6.16 of the Disclosure Schedules contains a full and complete list of all Surety Obligations. The Sellers have not received any notice of a claim under any Surety Obligation, nor, to Sellers’ Knowledge, is there a reasonable basis for such claim. Other than the Surety Obligations set forth in Section 6.16 of the Disclosure Schedules, there is no surety obligation which was provided with respect to the obligations of Seller relating to the Business and any other business of a Seller.

Section 4.10 Real Property.

(a)Section 4.10(a) of the Disclosure Schedules sets forth all real property leased by each Seller and used in connection with the Business (collectively, the “Leased Real Property”), and a list, as of the date of this Agreement, of all leases for each Leased Real Property (collectively, the “Leases” and each a “Lease”). Sellers have made available to Buyer information regarding the term of each Lease, any extension and expansion options, the rent and fees payable thereunder and any guarantees provided thereunder (the “RE Guarantees”). Sellers have made available to Buyer complete and accurate copies of all Leases. The Sellers do not own any real property used in connection with the Business. The Sellers have not received any notice of a claim under any RE Guarantee.

(b)Each Lease is a legal, valid, binding and enforceable obligation of a Seller. No Seller, nor to the Knowledge of the Sellers, any other party, is in breach or violation of, or default under, any Lease, and no event has occurred, is pending or, to the Knowledge of the Sellers, is threatened, which, after the giving of notice, with the lapse of time, or otherwise, would constitute a breach or default by a Seller or, to the Knowledge of the Sellers, by any other party under such Lease. No Seller has received any written notice of existing, pending or threatened (i) condemnation proceedings affecting the Leased Real Property, or (ii) zoning, building code or other moratorium proceedings, or similar matters which would reasonably be expected to materially and adversely affect the ability to operate the Leased Real Property as currently operated. Neither the whole nor any material portion of any Leased Real Property has been damaged or destroyed by fire or other casualty. No Seller has assigned, transferred, conveyed, mortgaged, deeded in trust or placed an Encumbrance of any interest in a Lease, other than Permitted Encumbrances.

Section 4.11 Tax Matters.

(a)Except as set forth in Section 4.11(a) of the Disclosure Schedules, each Seller is registered and a resident for Tax purposes in the state of its incorporation and does not have any other requirement to register for Taxes in any other jurisdiction(s). No claim has ever been made by a Governmental Authority in a jurisdiction where a Seller does not file Tax Returns that such Seller is or may be subject to taxation by that jurisdiction with respect to the Business or the Purchased Assets, and no Seller has ever had any nexus with any jurisdiction where it does not pay Taxes, which nexus could reasonably be expected to subject it to Tax in such jurisdiction with respect to the Business or the Purchased Assets.

(b)Except as set forth in Section 4.11(b) of the Disclosure Schedules, each of the Tax Returns with respect to the Purchased Assets required to be filed by or on behalf of each Seller with any Governmental Authority with respect to any taxable period before the date hereof has been duly and timely filed and paid (taking into account any valid extensions) and was true and correct in all material respects.

(c)No audit, investigation or other proceeding by any Governmental Authority is currently pending or, to the Knowledge of Sellers, threatened with respect to any amount of Taxes due from or with respect to any Seller in connection with the Business. Since October 31, 2012, no Governmental Authority has given written notice of its intention to assert any deficiency or claim for additional amounts of Taxes against any Seller with respect to the Business.

(d)There are no Encumbrances for Taxes on any of the Purchased Assets other than Permitted Encumbrances.

(e)Each Seller has withheld Taxes to the extent required under applicable Law from payments to its BSS Employees and third parties, and timely paid to the appropriate Taxing Authority, proper and accurate amounts which were due prior to the date hereof for all periods ending on or before the date hereof in compliance with all Tax withholding and remitting provisions of applicable Laws.

(f)Each Seller has complied in all material respects with all Tax information reporting provisions under applicable Laws relating to the Purchased Assets, the Assumed Liabilities and the Business.

(g)Except as set forth in Section 4.11(g) of the Disclosure Schedules, there are no Tax rulings or Contracts with a Taxing Authority (whether by written agreement or not), issued to or agreed by a Seller, relating to the Business, the Purchased Assets and/or the Assumed Liabilities.

Section 4.12 Intellectual Property.

(a)Section 4.12(a) of the Disclosure Schedules sets forth an accurate and complete list of (i) all Intellectual Property Assets including all Intellectual Property Registrations owned by a Seller, and (ii) all Intellectual Property licensed to a Seller, in each case used by or relating to the Business and in each case the Seller which is the owner or licensee thereof. Except as set forth in Section 4.12(a) of the Disclosure Schedules, the Sellers own and have independently developed or acquired and are the sole and exclusive owner of all right, title and interest in and to or, with respect to the licenses, as of the Closing shall have a valid license to use, all Intellectual Property necessary to conduct the Business as currently conducted (including any component of, and Intellectual Property embedded in or sold with the products made available in connection with the Business, including all works-in-progress and in development (the “Products")) and the Intellectual Property Assets are sufficient for the conduct of the Business as conducted. Except as set forth in Section 4.12(a) of the Disclosure Schedules, the operation of the Business as conducted, including the use of the Intellectual Property Assets, does not infringe, misappropriate or constitute the unauthorized use of any Intellectual Property of any Person under applicable Laws and to Sellers’ Knowledge there is no basis for or any indication of any kind from any Person relating to a claim that the operation of the Business as conducted is infringing or has infringed any Intellectual Property of any Person. No Person is infringing, violating, misusing or misappropriating any Intellectual Property Assets, and except as set forth in Section 4.12(a) of the Disclosure Schedules, no such claims have been made against any Person by the Sellers.

(b)Except as set forth in Section 4.12(b) of the Disclosure Schedules, all Intellectual Property Assets either (i) were invented or created by current and former employees of the Sellers acting within the scope of their employment, or by third parties (including current and former consultants, independent contractors, Representatives or agents of the Sellers), all of which employees and third parties have validly and irrevocably assigned all of their rights, title and interest, including Intellectual Property rights therein, to the Sellers, and no third party (including any current or former employee of a Seller) owns or has any rights, title and interest to any of such Intellectual Property Assets, or (ii) are or will be, as of Closing will be duly and validly licensed to the Sellers for use, license or sale in the manner currently used, licensed or sold by the Sellers in the operation of the Business, as it is conducted, free and clear of all Encumbrances (except, in the case of licenses, restrictions contained in the applicable license agreements with such third parties and that were made available to the Buyer which Sellers do not breach in the manner the Business is conducted). No Seller has transferred ownership of any Intellectual Property that is or would have been Intellectual Property Assets to any third party. No current or former employee has any rights, including any economic rights, under Section 134 of Israeli Patents Law in the Intellectual Property Assets. Except as set forth on Section 4.12(b) of the Disclosure Schedules, each current and former employee of Sellers in Israel has expressly and irrevocably waived the right to receive compensation in connection with "Service Inventions under Section 134 of the Israeli Patent Law, 1967” or any similar provision under any Law of any applicable jurisdiction, in the standard form of waiver which is used by Sellers, and each consultant, independent contractor, third party employee or former employee has waived any and all Moral Rights as applicable, with respect to the Intellectual Property Assets. No Seller, nor to the Knowledge of the Sellers, any other party, is in breach or violation of, or default under, any Licensed Intellectual Property, and no event has occurred, is pending or, to the Knowledge of the Sellers, is threatened, which, after the giving of notice, with the lapse of time, or otherwise, would constitute a breach thereof.

(c)Section 4.12(c) of the Disclosure Schedules sets forth a complete and accurate list of all Contracts currently in effect to which any Seller is a party which are related to or necessary for the Business as conducted as of Closing: (i) consisting of any licenses included in the Intellectual Property Assets, (ii) pursuant to which any Seller has granted to any third party any right to use, license or sell any of the Intellectual Property Assets, except for non exclusive licenses to customers in the ordinary course of business, (iii) containing a covenant limiting the ability of any Seller to exploit any of the Intellectual Property Assets contrary to the manner in which the Business is conducted, or (iv) containing an agreement to indemnify any Person against any claim that the use or other exploitation of the Intellectual Property Assets by such third party violates, infringes, misappropriates or constitutes an unauthorized use of any Intellectual Property rights or any other rights of any Person, except for non exclusive licenses to customers in the ordinary course of business which do not include indemnity for consequential and loss of profit damages.

(d)No Trade Secret relating to the Business as conducted has been authorized to be disclosed or has been actually disclosed by any Seller to any employee, consultant, service provider, or any third party, other than pursuant to a non-disclosure agreement restricting the disclosure and use of such Trade Secret. Each current and former employee, consultant, independent contractor, representative and agent of any Seller has entered into a customary written non-disclosure and invention assignment agreement with such Seller in a standard form used by such Seller and which was made available to Buyer.

(e)Section 4.12(e) of the Disclosure Schedules includes (i) a list of all products of a Seller relating to the Business, and (ii) a list of all Intellectual Property not owned by the Seller embedded or sold with or in such products.

(f)Except as set forth in Section 4.12(f) of the Disclosure Schedules, to the Sellers’ Knowledge, the products sold or otherwise distributed by the Sellers in connection with the Business do not incorporate or link to and are not distributed with or derived from any Open Source Software that requires any of Sellers’ proprietary Software to be (i) disclosed or distributed in source code form, (ii) licensed for the purpose of making derivative works or (iii) redistributed at no charge. All Open Source Software listed on Section 4.12(f) of the Disclosure Schedules, which is licensed under the LGPL license terms, or any similar license, is, to Sellers’ Knowledge, dynamically linked to such proprietary Software of Sellers with which it is used. For the purpose of this section, a dynamic link will be interpreted as a link that will be loaded into computer memory when it is requested by the program, and erased from memory when it is no longer needed. To Sellers’ Knowledge, each Seller is in material compliance with any license governing Open Source Software used in any products sold or otherwise distributed by the Sellers in connection with the Business.

“Open Source Software” means any Software that is distributed in source code form under a license or distribution terms which are approved by the Open Source Initiative, Free Software Foundation (FSF), or Creative Commons, including, without limitation, Software licensed or distributed under any of the following licenses or distribution terms (regardless of Software license version): GNU’s General Public License (GPL), Lesser/Library GPL (LGPL), Affero General Public License (AGPL), the Artistic License (e.g., PERL), the Mozilla Public License, the Netscape Public License, the Sun nBSD License, and the Apache License.

(g)Each Seller, and its respective Subsidiaries are in material compliance with all licenses governing third party components utilized in or in connection with the Intellectual Property Assets, including material compliance with (i) all flow-through provisions of third party licenses (e.g., a requirement to include a specific notice or disclaimer), and (ii) the requirements of all Open Source Software.

(h)Following the Closing, except as set forth in any Transaction Document or the Transition Services Agreement, no Seller shall own or have a license to or otherwise have any rights of whatever kind or nature to use any Intellectual Property related to the Business or the Purchased Assets whatsoever (to the extent such Person owned, had a license to or otherwise had any rights to such Intellectual Property prior to Closing).

(i)Except as set forth in Section 4.12(g) 4.12(i) of the Disclosure Schedules, no (i) facilities, personnel, or equipment of a university, college, other educational institution or research center (or any entity vested with commercialization of Intellectual Property on their behalf), or (ii) funding from any Governmental Authority, university, college, other educational institution or research center or similar entity (or any entity vested with commercialization of Intellectual Property on their behalf) were or was used in the development of the Intellectual Property Assets, other than Grants. No Governmental Authority, university, college, other educational institution or current or former employee, consultant, Representative, agent research center (or any entity vested with commercialization of Intellectual Property on their behalf) has any basis to claim any rights, interests or entitlements with respect to the Intellectual Property Assets or any of the Purchased Assets. No employee or contractor of any Seller, who was involved in, or who contributed to, the creation or development of any Intellectual Property Assets, (a) was, is or will be under restrictions or limitations resulting from his/her relations with any Governmental Authority, university, college or other educational institution or research center, arising in connection with such involvement or contribution, or (b) otherwise has performed services for any Governmental Authority, university, college or other educational institution or research center during a period of time during which employee, consultant, Representative, agent or contractor of a Seller was also performing services for a Seller or conducting any development or research activity with respect to the Intellectual Property Assets. All information and documents made available by any Seller to any university or any research institute (or any entity vested with commercialization of Intellectual Property on their behalf) in connection with any filing, reporting or application submitted by such person in connection with the Intellectual Property Assets, has been true, correct and complete in all material respects, did not omit any material information, and complied in all material respects with all applicable rules and regulations. Any Consent or Permit obtained by a Seller in this respect is valid and in full force and effect, was not amended, supplemented or cancelled and there are no proceedings or discussions currently in place or currently contemplated for the amendment, supplement or cancellation of such Consents and Permits. The Sellers have made available to the Buyer true and complete copies of all such filings, reports and applications, and made available to the Buyer all information which is, in Sellers’ reasonable opinion, relevant to or necessary for an evaluation of such filings, reports, applications, Consents and Permits and all such information is true, correct and complete. Any and all representations and warranties included in this Section 4.12(i), including all representations concerning title, rights or interests to any of the Purchased Assets, shall not be deemed to be qualified, limited or conditioned in any way, by the delivery to Buyer of any Consents or Permits from any university or research institute or the content thereof, whether or not such Consents or Permits are a condition to Closing.

(j)No Seller nor any other Person then acting on its behalf has disclosed, delivered or licensed to any Person, agreed to disclose, deliver or license to any Person, or permitted the disclosure or delivery to any escrow agent or other Person of, any source code that is part of the Intellectual Property Assets, except as set forth in Section 4.12(j) of the Disclosure Schedules. No event has occurred, and no circumstance or condition exists, that (with or without notice or lapse of time, or both) will, or would reasonably be expected to, result in the disclosure, delivery or license by a Seller or any Person then acting on its behalf to any Person of any such source code. Section 4.12(j) of the Disclosure Schedules identifies each Contract pursuant to which a Seller has deposited, or is or may be required to deposit, with an escrow holder or any other Person, source code and describes whether the execution of this Agreement or any of the transactions contemplated by this Agreement, in and of itself, would reasonably be expected to result in the release from escrow of any such source code.

(k)Section 4.12(k) of the Disclosure Schedules sets forth all royalty payment obligations relating to the Intellectual Property Assets.

Section 4.13 Contracts.

(a)Section 4.13(a) of the Disclosure Schedules sets forth (i) all Contracts with the twenty five (25) customers of the Business that generated the highest revenues in fiscal year 2014 (the “Major Customers”), (ii) all Contracts with the twenty (20) vendors representing the Business’ highest expense in fiscal year 2014, and all Contracts with vendors relating to the manufacturing of the Products (“Major Vendors”), (iii) all Contracts with system integrators or agents currently in effect (being Contracts concerning the marketing or distribution by third parties of any Products and services of the Business, and all Contracts requiring the payment of any sales or marketing or distribution commissions to any third party shall name the parties to each such Contract, the identity of the third party eligible to any payment in connection with its execution, delivery or performance, and the amount, terms and condition of payment to such third party in connection with such Contract) of the Business during the period, (vi) all statements of work, change requests and projects of the Sellers which are in effect and with respect to which payment was received in fiscal 2014, and (v) each of the following Contracts: (x) by which any of the Purchased Assets are bound or affected or (y) to which a Seller is a party or by which it is bound in connection with the Business or the Purchased Asset (all the contracts on Section 4.13(a) of the Disclosure Schedules, all Leases listed in Section 4.10(a) of the Disclosure Schedules and all Intellectual Property Licenses listed in Section 4.12(a) of the Disclosure Schedules, together with any other Contract that involves Intellectual Property Assets or Intellectual Property Assets of a third party relating to the Business, collectively, the “Material Contracts”), each in effect (whether written or oral) as of the date hereof:

(i)all Contracts that relate to the acquisition of any business, a material amount of stock or assets of any other Person or any real property (whether by merger, sale of stock, sale of assets or otherwise);

(ii)except for agreements relating to trade receivables or Surety Obligations, all Contracts relating to Indebtedness (including guarantees);

(iii)joint venture or partnership agreements, joint research and development Contracts involving the Business; and Contracts providing for the formation of a joint venture, long-term alliance or partnership or involving an equity investment or sharing of profits by a Seller, with respect to any portion of the Business;

(iv)Contracts that affect or limit the freedom in any material manner of the Business or any portion thereof or any of the Purchased Assets or Assumed Liabilities (including most favored nations provisions), to compete in any line of business or with any Person or in any geographic area, including any exclusivity agreements or provisions, or which contain, create or imply any restriction or limitation of any kind or nature on the ownership of or the exclusive and unrestricted right of a Seller to use, exploit or transfer the Purchased Assets or the Intellectual Property which are the subject matter of such Contracts;

(v)Contracts (or a group of related Contracts) under which a Seller (in each case, with respect to any portion of the Business or any of the Purchased Assets) (i) has created, incurred, assumed, or guaranteed any indebtedness or that relates to the lending of amounts, or which provide for the creation of any Encumbrance upon any Purchased Asset, (ii) has guaranteed the performance of any other Person, or (iii) other than in the ordinary course of business, undertook to indemnify any Person or to share in or contribute to the Liability of any Person;

(vi)all Contracts between or among a Seller on the one hand and any Affiliate of a Seller on the other hand, other than intercompany agreements between Comverse and its Subsidiaries or between Comverse’s Subsidiaries;

(vii)Contracts involving the obligation of any Seller with respect to any portion of the Business to purchase products, materials, supplies, advertising, equipment or services, other than in the ordinary course of business; any Contract with any Government Authority relating to the Business or Purchased Assets; and

(viii)all Contracts that are otherwise material to the Business and are not described in any of the other categories of this Section 4.13(a).

(b)All Material Contracts are in writing. The Sellers have made available to the Buyer true and complete copies of all Material Contracts.

(c)Except as set forth in Section 4.13(c) of the Disclosure Schedules, each Business Contract is in full force and effect, and represents a valid and binding obligation of the parties thereto, enforceable in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other similar Laws affecting the enforcement of creditors’ rights generally, and general principles of equity (regardless of whether such enforceability is considered in a proceeding in Law or equity). Each Seller (and, to the Knowledge of each Seller, each of the other party or parties thereto), has performed in all material respects all obligations required to be performed by them under each Business Contract. Except as set forth in Section 4.13(c) of the Disclosure Schedules, no Seller is in material breach of or default under any Business Contract (or any breach under a Material Contract), nor, to the Sellers’ Knowledge, is any other party to such Business Contract in breach thereof, and no event or circumstance has occurred that, with notice or lapse of time or both, would materially contravene, conflict with or result in a material violation or breach of, or constitute an event of default under, any Business Contract or a violation, breach or event of default under any Material Contract or result in a termination thereof or give a Seller or the other party thereof the right to declare a default or exercise any remedy under, or to accelerate the maturity of, or to cancel, terminate or modify, any such Business Contract.

(d)Each Seller has and does maintain good relations with each party to a Business Contract and no party to a Business Contract has terminated its relationship with the relevant Seller or materially reduced or changed the pricing or other terms of its business with a Seller and no such Person has notified a Seller that it intends to terminate or materially reduce the scope or pricing terms of its business with such Seller.

(e)Except as set forth in Section 4.13(e) of the Disclosure Schedules, since February 1, 2014: (i) there are no disputes with any customer (including written or oral claims), or any requirements by a customer which are in dispute, and no Seller has Knowledge of a basis for such dispute or requirements, (ii) no customer of the Business (including any System Integrator) has notified the Sellers of any non-performance of Seller's obligations, or required any refund, credits, penalties or other financial benefits due to failure of a product or service in connection with the Business to meet specifications or service standards; and (iii) a product or service was not returned by a purchaser thereof or replaced by a Seller nor has a Seller received any notice claiming that any product or service is not in conformity with applicable contractual commitments or warranties.

(f)Sellers provided to Buyer an exhibit entitled Projects Exhibit including a list of all the Sellers’ ongoing installations and implementations, upgrade and changes and ongoing or uncompleted projects of any kind, by customer, including location of each system, the nature of the project, the total amount of the project is US dollars, contemplated date of, and approximate effort required for completion of such project. Other than as detailed therein, no Seller has undertaken any oral or written commitment to provide any customer of the Business with any development work or customized specification. Except as set forth therein, each Seller is not in any material delay with respect to delivery of any ongoing projects, change requests, or other implementation projects, nor is there a basis for such delay, and no customer has indicated to a Seller that such delay in the delivery or performance in such delivery exists or may exist.

(g)Section 4.13(g) of the Disclosure Schedules, no agent or other Person listed on Section 4.13(a)(iii) of the Disclosure Schedules is or may be entitled to any compensation under any such Business Contract that has not already been paid to such agent or such Person, nor is there any Liability to pay which is not correctly reflected in the Financial Statements.

(h)Other than in the ordinary course of business with respect to customer contracts, there are no pending renegotiations of, or requests to renegotiate, any Material Contract with any Person.

(i)Buyer has been provided with all main and/or material Contract of the customers listed on Section 2.1(c)(iii) of the Disclosure Schedules, and there are no Contracts with such customers, the Liabilities or exposure therewith exceeds UD$500,000 in the aggregate, which were not provided to Buyer. The Contracts with the customers listed on Section 2.1(c)(iii) of the Disclosure Schedules do not contain any provision which may restrict the Business in any manner (including exclusivity, non compete and the like) or effect future discussions with the customer (such as most favored nations provisions). With respect to Business Contracts that are not reflected in written instruments, Sellers have made available to Buyer a descriptive summary of such Business Contracts and their main terms.

(j)Section 4.13(j) of the Disclosure Schedules sets forth all Business Contracts with vendors or customers that reference any business or a Seller other than the Business in an amount exceeding US$1,000,000.

Section 4.14 Employee Benefits.

(a)Section 4.14(a) of the Disclosure Schedules contains an accurate and complete list of all the Employee Benefit Plans.

(b)Each Employee Benefit Plan has been established and maintained in accordance with, and complies in form and operation with, its terms and all applicable Laws. Each Seller has performed all material obligations required of it under each Employee Benefit Plan and no Seller has received any notice issued by any Governmental Authority questioning or challenging such compliance. All amounts that each Seller is legally or contractually required either: (i) to deduct from its BSS Employees’ salaries or to transfer to such BSS Employees’ pension or provident, life insurance, severance or incapacity insurance funds, advance study fund or other similar funds; or (ii) to withhold from its BSS Employees’ salaries and benefits and to pay to any governmental entity, fund or insurance policy, as required by the applicable Law or tax regulations, have, in each case, been duly deducted, transferred, withheld and paid in all respects in accordance with applicable Laws, and no Seller has any obligation to make any such deduction, transfer, withholding or payment (other than outstanding obligations with respect to routine payments, deductions or withholdings that are not yet due and which will be timely made on or prior to their due date in the normal course of business and consistent with past practice). Except as set forth on Section 4.14(b) of the Disclosure Schedules, each Employee Benefit Plan is fully funded based upon applicable Law and generally accepted local actuarial and accounting practices and procedures for each Employee Benefit Plan. There are no judicial, administrative, regulatory, arbitration or similar proceedings, inquiries, investigations or audits pending, or, to the Sellers’ Knowledge, threatened (other than routine claims for benefits) against any Employee Benefit Plan or against the assets thereof, and (iii) no Sellers is subject to any penalty or Tax with respect to any Employee Benefit Plan.

(c)Each Employee Benefit Plan that is intended to be qualified under §401(a) of the Code has received an opinion or determination letter from the Internal Revenue Service to the effect that it meets the requirements of §401(a) of the Code. No event has occurred that could reasonably be expected to give rise to disqualification of any Employee Benefit Plan or to a Tax under § 511 of the Code or could result in payment or assessment against any Seller of any material excise tax.

(d)No Seller contributes to or has any Liability with respect to a plan subject to Title IV of ERISA.

Section 4.15 Employee Matters.

(a)The Exhibit entitled Employee Exhibit provided to Buyer on the date hereof includes a list all BSS Employees (which disclosure shall be by employee number, rather than name, if disclosure by name would not be permitted by applicable Law and designates each employee as a shared employee or direct BSS Employee). Sellers have made available to Buyer a schedule including each BSS Employee's employee number, title, applicable employer, location of assigned worksite, employment/engagement start date, actual scope of employment (e.g., full, part-time or temporary), overtime classification (e.g., exempt or non-exempt), date of commencement of employment, seniority date that is different from the commencement date (and its purpose), prior notice entitlement, salary and any other compensation or benefit payable, maintained or contributed to or with respect to which any potential liability is borne by the Sellers to each of the listed BSS Employees and including, but not limited to, the following entitlements (except to the extent such disclosure would not be permitted by applicable Law): remuneration of any kind, salaries, profit sharing, participations, overtime, bonus (including type of bonus, calculation method and amounts received in the past two years), deferred compensation, commissions (including calculation method and amounts received in the past two years), vacation entitlement and accrued vacation, progressive vacation, travel entitlement (e.g. travel pay, car, leased car arrangement and car maintenance payments), sick leave entitlement and accrual, shares and any other incentive payments, recuperation pay entitlement and accrual, pension arrangement and/or any other provident fund (including managers' insurance and education fund), their respective contribution rates (by percentage) and the salary basis for such contributions, whether such BSS Employee, is subject to the Section 14 Arrangement in Israel (and, to the extent such BSS Employee is subject to the Section 14 Arrangement in Israel, an indication of whether such arrangement has been applied to such person from the commencement date of his employment and on the basis of his entire salary), last compensation increase to date including the amount thereof, and whether the BSS Employee is on leave (and if so, the category of leave, the date on which such leave commenced and the date of expected return to work).

(b)No proposal or commitment has been communicated to any BSS Employee regarding the introduction, increase or improvement of any material benefit.

(c)Except as set forth in Section 4.15(c) of the Disclosure Schedules, no Seller is party to or is bound by any collective bargaining agreement that pertains to any of the BSS Employees or any extension order. Except as set forth on Section 15(h) of the Disclosure Schedules, there are no organizing activities pending or under discussion with any labor organization or group of BSS Employees, and no representation or certification proceedings or petitions seeking a representation or certification proceeding pending or threatened to be brought or filed with any labor relations tribunal involving any of the BSS Employees. Except as set forth in Section 4.15(c) of the Disclosure Schedules, there has not been, nor to Sellers’ Knowledge has there been any threat of, any facts and circumstances that could reasonably lead to, any strike, slowdown, work stoppage, lockout, concerted refusal to work overtime, anti-union practice claim, or other similar labor activity or dispute affecting any Seller with respect to the BSS Employees. Except as set forth in Section 4.15(c) of the Disclosure Schedules, no Seller has paid or had been asked to pay any payment (including professional organizational handling charges) to any employers' association or organization.

(d)Except as set forth in Section 4.15(d) of the Disclosure Schedules, no BSS Employee, consultant or independent contractor of any Seller (in each case who worked for or supported the Business immediately prior to the Closing) is in material violation of any term of any employment, consulting, independent contractor, non-disclosure, non-competition, inventions assignment or any other contract relating to their relationship with the Sellers.

(e)Each BSS Employee is legally permitted to be employed in the jurisdiction in which such BSS Employee is employed in his or her current job capacity for the maximum period permitted by Law. Each Person providing services to a Seller that has been characterized as a consultant or independent contractor or as service provider and not as an employee has been properly characterized as such, and no Seller, nor the Buyer (or their respective Affiliates) has or will have any Liability, arising out of the hiring or retention of such Persons as consultants or independent contractors or as service providers and not as employees. All fixed-term and indefinite-term employment agreements of a Seller with BSS Employees were properly classified as such in accordance with applicable Laws, and there is no basis for re-characterizing of such agreements and no Seller has, and the Buyer will not have any Liability with respect thereto.

(f)Except as set forth in Section 4.15(f) of the Disclosure Schedules, there are no complaints or claims of any BSS Employees against any Seller that are either pending, or, to Sellers’ Knowledge, threatened to be brought before any Governmental Authority. Except as set forth in Section 4.15(f) of the Disclosure Schedules, no Seller is now, nor within the two-year period prior to the date of this Agreement has been, the subject of any complaint, charge, suit or other legal process with respect to any of its BSS Employees. Except as set forth in Section 4.15(f) of the Disclosure Schedules, there hasn't been any investigation, of any kind, initiated by any Governmental Authority, domestic or foreign, against any Seller in connection with any material deficiency in its labor practices with respect to BSS Employees.

(g)Except as set forth in Section 4.15(g) of the Disclosure Schedules, each Seller is, and has been at all times, with respect to each BSS Employee, in compliance with all applicable Laws, as well as any national, industry or company collective agreement, order or award, respecting employment, notice to employees regarding employment terms, termination of employment, enforcement of labor laws, pension and social security, employment practices, benefits, terms and conditions of employment, wages and hours, hours of work, payment of wages, meal and rest periods, working during rest days non-retaliation, provision of correct wage statements, worker classification (including the proper classification of workers as contractors), engagement of contractors (including catering, security and cleaning services), immigration, overtime compensation, sexual harassment and other harassments, non-discrimination and workplace safety. No Seller is liable for any arrears of wages, compensation, Taxes, penalties or other sums for failure to comply with any of the foregoing.

(h)Except as set forth in Section 4.15(h) of the Disclosure Schedules and the information made available to Buyer prior to the date hereof in relation to severance and notice entitlements, no BSS Employee is or will be entitled to any compensation, bonus, severance pay or any other benefits or entitlements on account of or resulting from any action taken by any Seller in connection with any of the transactions contemplated under this Agreement or on account of or resulting from the termination of any BSS Employees or their recruitment by the Buyer . Except as set forth in Section 4.15(h) of the Disclosure Schedules, none of the execution, delivery and performance of this Agreement, the consummation of the Transactions, any termination of employment or service and any other event in connection therewith or subsequent thereto will, individually or together or with the occurrence of some other event (whether contingent or otherwise), (i) result in any payment or benefit (including severance (other than the payment of statutory severance pay when it is required under applicable Law), unemployment compensation, golden parachute, bonus or otherwise) becoming due or payable, or required to be provided, to any BSS Employee, (ii) increase the amount or value of any benefit or compensation otherwise payable or required to be provided to any BSS Employee, (iii) result in the acceleration of the time of payment, vesting or funding of any such benefit or compensation, (iv) increase the amount of compensation due to any Person or (v) result in the forgiveness in whole or in part of any outstanding loans made by a Seller to any Person. There are no circumstance that is reasonably expected to give rise to any valid claim by any BSS Employee for compensation on termination of employment or services (beyond the contractual and the statutory severance pay to which they may be entitled to under applicable Law) or change of control contractual provisions, other than pursuant to any retention program implemented in connection with the transactions contemplated by this Agreement; provided that the retention plan shall be applicable only until the Closing, and no such retention plan would, in any way, impose any obligation or Liability on Buyer after the Closing Date or increase the Liability or the employee compensation or payments due from Buyer after Closing (compared to such compensation or payment prior to such retention plan implemented.

(i)All amounts that any Seller is legally or contractually required either (i) to deduct from any BSS Employee’s salary, commissions, bonuses, benefits and other material compensation or to transfer to such BSS Employee’s pension or provident, life insurance, incapacity insurance, continuing education fund or other similar fund, or (ii) to withhold from any BSS Employee’s salary, commissions, bonuses, benefits and other material compensation and pay to any Governmental Authority as required by applicable Laws have, in each case, been duly deducted, transferred, withheld and paid, and no Seller has any outstanding obligation which is currently due to make any such deduction, transfer, withholding or payment. All employment agreements of all BSS Employees pertaining to non-competition, non-solicitation and confidentiality (a) with respect to employees that are being transferred to the Buyer are duly assignable and transferable without any additional consents, or the consents therefor have been obtained, and (b) are enforceable in accordance with their terms except to the extent a court in equity may decline to enforce the same based on equitable principles as opposed to a finding that they are overbroad as drafted. Except as set forth in Section 4.15(i) of the Disclosure Schedules, no former Employee currently is, to the Knowledge of Seller, in violation of any contract or agreement concerning employment, non competition, non solicitation, confidentiality, and/or intellectual property.

(j)The Sellers have made available to Buyer the most up to date and complete copies of each of the following in relation to the BSS Employees (to the extent that the same are available and not restricted by Law from disclosure): (i) all forms of offer letters with BSS Employees, (ii) all forms of employment agreements with current BSS Employees, and (iii) accurate and complete copies of all employee manuals and handbooks, policies and guidelines with regard to engagement terms and procedures and other material documents relating to the engagement of the BSS Employees (if in existence). All BSS Employees are employed under an offer letter or employment agreement form made available to Buyer and no BSS Employee is employed on terms and conditions that are materially different from the terms and conditions included in such forms.

(k)Except as set forth in Section 4.15(k) of the Disclosure Schedules, no BSS Employee has currently given written notice of resignation or other separation of employment, and to the Knowledge of Sellers, no BSS Employee intends to terminate his or her employment with a Seller. Each Seller has good employment relations with its respective BSS Employees. Except as set forth in Section 4.15(k) of the Disclosure Schedules, the employment of each of the U.S. Employees is “at will” and Sellers do not have any obligation to provide a written prior notice prior to terminating the employment of any of their respective BSS Employees that is longer than one month or such longer notice required by applicable Law. No Seller has promised or otherwise provided any assurances (contingent or otherwise, whether written or not) to any present BSS Employee regarding any terms or conditions of employment with Buyer following the Closing.

Section 4.16 Environmental Matters.

(a)Except as set forth in Section 4.16(a) of the Disclosure Schedules, to Sellers’ Knowledge, the operations of each Seller with respect to the Business and the Purchased Assets are in compliance with all applicable Environmental Laws. No Seller has received from any Person, with respect to the Business or the Purchased Assets, any: (i) Environmental Notice or Environmental Claim; or (ii) written request for information pursuant to Environmental Law, which, in each case, either remains pending or unresolved, or is the source of ongoing obligations or requirements as of the Closing Date.

(b)Except as set forth in Section 4.16(b) of the Disclosure Schedules, to Sellers’ Knowledge each Seller has obtained and is in compliance with all material Environmental Permits (each of which is disclosed in Section 4.16(b) of the Disclosure Schedules) necessary for the conduct of the Business as currently conducted or the ownership, lease, operation or use of the Purchased Assets.

(c)Except as set forth in Section 4.16(c) of the Disclosure Schedules, to Sellers’ Knowledge there has been no Release of Hazardous Materials in violation of Environmental Law with respect to the Business, the Purchased Assets or any Leased Real Property, and no Seller has received any Environmental Notice that the Business or any of the Purchased Assets or Leased Real Property has been contaminated with any Hazardous Material which would reasonably be expected to result in an Environmental Claim against, or a violation of Environmental Law or term of any Environmental Permit by, any Seller.

(d)Sellers have previously made available to Buyer all material environmental reports, studies, audits, site assessments and other similar documents with respect to the Business, the Purchased Assets or any Leased Real Property which are in the possession or reasonable control of any Seller, if any.

Section 4.17 Litigation.

(a)Except as set forth in Section 4.17(a) of the Disclosure Schedules, there is no Legal Proceeding or governmental investigation pending or, to the Knowledge of any Seller, threatened by or against any Seller or any Subsidiary thereof or any officer, director, equity holder or employee of a Seller in its capacity as such (i) relating to the Business or affecting the Purchased Assets (including any claims for assessment or collection of Taxes on any Purchased Assets and any claims of vendors, customers and agents, service providers or contractors) or (ii) that questions the validity or seeks to impair, prohibit, delay or restrain the ability of a Seller to enter into this Agreement or any Transaction Document, as applicable, or to consummate any of the transactions contemplated hereby or thereby.

(b)Except as set forth in Section 4.17(b) of the Disclosure Schedules, neither any Seller nor any Subsidiary thereof is subject to any Order and there are not unsatisfied judgments, penalties or awards with respect to, against or affecting the Business or the Purchased Assets.

Section 4.18 Public Filings. The forms, statements, reports and documents prepared by a Seller and filed with or furnished to the SEC since October 31, 2012 (the "Seller Reports"), solely as to the Business and Purchased Assets and Assumed Liabilities, did not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements made therein, in light of the circumstances in which they were made, not misleading, except to the extent that the information in such Seller Report has been amended or superseded by a later Seller Report filed prior to the date of this Agreement. The Seller Reports were prepared in all material respects in accordance with the applicable requirements of applicable Law and the rules and regulations thereunder and complied in all material respects with then applicable accounting standards. Each Seller Report, at the time of its filing or being furnished complied, in all material respects, with the applicable requirements of the Securities Act, the Exchange Act and the Sarbanes-Oxley Act of 2002 and any rules and regulations promulgated thereunder applicable to the Seller Reports. As of their respective dates (or, if amended prior to the date of this Agreement, as of the date of such amendment). Nothing herein shall constitute a representation or warranty as to any statistical information relating to the industry in which the Business competes, as to any third-party information or data in respect of the Business or such industry.

Section 4.19 Compliance with Laws; Permits.

(a)Except as set forth in Section 4.19(a) of the Disclosure Schedules, each of the Sellers, their Subsidiaries, and to the Knowledge of each Seller, all Persons acting on behalf of or at the direction of any of them are, and at all times have been, in compliance with all Laws that are applicable to the Business or the Purchased Assets.

(b)Except as set forth in Section 4.19(a) of the Disclosure Schedules, neither the Sellers, any Subsidiary of the Sellers, nor to the Knowledge of each Seller, any Persons acting on behalf of or at the direction of any of them, has received any written notice concerning non-compliance with any Laws applicable to the conduct of the Business as currently conducted or the ownership and use of the Purchased Assets, or has been charged or otherwise served with a notice of alleged violation of any such Laws. To the Sellers’ Knowledge, neither any Sellers, Subsidiaries or Persons acting on behalf of or at the direction of any of them is under investigation with respect to a violation of any Laws applicable to or relating to the conduct of the Business as currently conducted or the ownership and use of the Purchased Assets.

(c)All Permits required for each Seller and Subsidiary to conduct the Business as currently conducted or for the ownership and use of the Purchased Assets, which are listed on Section 4.19(c) of the Disclosure Schedules have been obtained and are valid and in full force and effect. Such Permits include but are not limited to those issued by the U.S. Office of Foreign Assets Control, the U.S. Bureau of Industry and Security, the U.S. Directorate of Defense Trade Controls and any other governmental agency from which a Permit is necessary to conduct any transaction or any other related business function (such as the opening and maintaining of accounts at financial institutions). No Seller or Subsidiary has received written notice that any Permit required to conduct or relating to the Business as currently conducted or for the ownership and use of the Purchased Assets is subject to termination, revocation, modification or non-renewal. No Seller or Subsidiary is in default or violation (and no event has occurred which, with notice or the lapse of time or both, would constitute a default or violation) of any term, condition or provision of any such Permit.

(d)Each Seller has (i) complied with its published privacy policies, internal privacy policies and guidelines, and with all applicable Laws relating to data privacy, data protection and data security, including with respect to the collection, storage, process, transmission, transfer (including cross-border transfers), disclosure and use of personally identifiable information or other regulated data, (ii) taken commercially reasonable measures, including operational, managerial, physical and technical measures, to ensure that personally identifiable information and other regulated data is protected against loss, damage and unauthorized and unlawful access, use, modification or other misuse and (iii) cooperated with all Government Authorities in administrative inspection relating to data protection and data security, and complied with the demand of any correction required by any such Government Authority. No Person (including any Governmental Authority) has made any claim or commenced any action with respect to loss, damage or unauthorized access, use, modification or other misuse of any information or data by a Seller, or any of its employees or contractors and, to the Knowledge of the Sellers, there is no reasonable basis for any such claim or action. The execution, delivery and performance of this Agreement and the transactions contemplated hereby comply with the applicable privacy policies of each Seller.

Section 4.20 Absence of Questionable Payments. The activities of the Sellers, their Subsidiaries, and, the respective officers, directors, employees and agents of each of them, in each case with respect to the Business, have complied, and the operations of the Business has complied with all applicable Laws governing corrupt or illicit business practices, including, without limitation, the U.S. Foreign Corrupt Practices Act, the U.K. Bribery Act, the Israeli Penal Code- 1977, the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions and all other laws and regulations dealing with maintaining books and records, maintaining internal controls for executing and recording transactions and concerning improper or illegal offers, payments, gifts or gratuities, the payment or receipt of money or anything of value directly or indirectly to any person (whether a government official or private individual) for the purpose of illegally or improperly inducing any person or government official, or political party or official thereof, or any candidate for any such position, in making any decision or improperly assisting any person in obtaining or retaining business or taking any other action or inaction favorable to such person, or dealing with business practices. None of the Sellers, their Subsidiaries or any director, officer, or employee of any of them, or any other Person acting on behalf of or at the direction of Sellers or their Subsidiaries has violated any of the aforementioned Laws or otherwise used any corporate or other funds for unlawful contributions, payments, gifts, or entertainment, or made any unlawful expenditures relating to political activity to government officials or others or established or maintained any unlawful or unrecorded funds. None of the Sellers or their Subsidiaries, nor any director, officer employee of any of them, or any other Person acting on behalf of or at the direction of any of them, has offered, given, accepted or received any unlawful contributions, payments, gifts or expenditure.

Section 4.21 Export Control Laws. All sales, purchases, imports, reimports, exports, reexports, deemed exports, deemed reexports, sales, transfers, retransfers, know-how, and releases (including in-country releases) of products or services related to the Business or Intellectual Property Assets by a Seller have been effected in accordance in all with all applicable export control, sanctions, and customs Laws, including but not limited to the U.S. Export Administration Regulations, the International Traffic in Arms Regulations, economic and trade sanctions administered by the U.S. Department of the Treasury’s Office of Foreign Assets Control, U.S. customs Laws, and export, sanctions, and customs Laws administered by other countries.

Section 4.22 Anti-Money Laundering. No Seller has Knowledge of, has not been advised of, and has no reason to believe that any facts or circumstances exist that would cause the Buyer or its Subsidiaries to be operating the Business in violation in any respect of any anti-money laundering Laws or any Order. No Seller or a Subsidiary thereof is under investigation with respect to, or has been threatened to be charged with or given notice of any violation of any of the foregoing.

Section 4.23 Insurance. All insurance policies by which any or all of the Purchased Assets are covered are in full force and effect, all premiums with respect thereto have been duly paid and no Seller is aware of any reason that such policies shall not be extended on similar terms upon their expiration. No Seller has received written notice under any such insurance policy denying or disputing any claim (or coverage with respect thereto) made by such Seller or regarding the termination, cancellation or material amendment of, or material premium increase with respect to, any such policy, in each case, at any time during the five (5) year period prior to the date hereof. There are no known claims or circumstances that could lead to a claim, under the seller’s policies.

Section 4.24 Related-Party Transactions.

(a)Except as set forth in the Transition Services Agreement, (a) no Contracts or liabilities exist between any of the Sellers, on the one hand, and any of their Affiliates, on the other hand, that will continue in effect after the Closing with respect to the Business, other than intercompany agreements between Comverse and its Subsidiaries or Comverse’s Subsidiaries, and (b) except for the Employee Benefit Plans and employment agreements otherwise disclosed in the Disclosure Schedules, none of the shareholders, members, partners, directors, managers or officers of any Seller or any of their Affiliates, or, to the Sellers’ Knowledge, any Affiliate of the foregoing Persons, is a party to any Contract or transaction with any of the Sellers relating to the Business or has any interest in any of the Purchased Assets or any other material property used in the Business.

(b)Neither a Seller, nor any Subsidiary thereof, nor any of their respective officers, directors or, to the Knowledge of the Sellers, any employee thereof, (i) owns any direct or indirect interest of any kind in, or controls or is a director, officer, employee or partner of, or consultant to, or lender to, or borrower from, or has the right to participate in the profits of, any Person which is (A) a competitor, supplier, customer, creditor or debtor of the Business, or (B) a participant in any transaction to which a Seller is a party in connection with the Business.

Section 4.25 Governmental Funding. Except as set forth in Section 4.25 of the Disclosure Schedules, the Sellers have not applied for or received any direct financial assistance, grants, Tax benefits, incentives and subsidies from any Governmental Authority, including the OCS (“Grants”) with respect to the Purchased Assets and Assumed Liabilities, and no funding from a Governmental Authority was used in the development of the Intellectual Property Assets or its products and services. Section 4.25 of the Disclosure Schedules also details all material undertakings of the Sellers given in connection with the Grants. Each Seller is in compliance, in all material respects, with the terms and conditions of its Grants (including, without limitation, the Law for the Encouragement of Industrial Research and Development 5744-1984, as amended from time to time) and, except as disclosed in Section 4.25 of the Disclosure Schedules, has duly fulfilled, in all material respects, all the undertakings relating thereto. The Sellers have not received any notice of termination or revocation of any Grants granted to a Seller and to any Subsidiary or for which the Sellers have an outstanding application from the OCS, in each case solely with respect to the Business and to the Knowledge of the Sellers, no event has occurred and no circumstances exist which is reasonably likely to lead to the revocation or material modification of any of the Grant.

Section 4.26 Brokers. Except as set forth Section 4.26 of the Disclosure Schedules, no Person has acted, directly or indirectly, as a broker, finder, investment banker or financial advisor for any Seller in connection with the transactions contemplated by this Agreement and no Person is entitled to any brokerage, finder’s or other fee or commission in connection with the transactions contemplated by this Agreement or any other Transaction Document based upon arrangements made by or on behalf of a Seller.

Section 4.27 Full Disclosure. Neither this Agreement and the Transaction Documents, nor any certificates made or delivered by a Seller in connection herewith contains or, at the Closing Date, will contain, any untrue statement of a material fact or omits or will, at the Closing Date, omit to state a material fact necessary to make the statements herein or therein not misleading, in view of the circumstances in which they were made.

ARTICLE V

REPRESENTATIONS AND WARRANTES OF BUYER

Except as set forth in the Disclosure Schedules, Buyer represents and warrants to the Sellers that the statements contained in this Article V are true and correct as of the date hereof.

Section 5.1 Organization and Standing of Buyer. Buyer is a limited liability company duly organized, validly existing and in good standing under the Laws of Guernsey.

Section 5.2 Authority of Buyer. Buyer has all necessary corporate power and authority to enter into this Agreement and the other Transaction Documents to which Buyer is a party, to carry out its obligations hereunder and thereunder and to consummate the transactions contemplated hereby and thereby. The execution and delivery by Buyer of this Agreement and any other Transaction Document to which Buyer is a party, the performance by Buyer of its obligations hereunder and thereunder and the consummation by Buyer of the transactions contemplated hereby and thereby have been duly authorized by all requisite corporate action on the part of Buyer. This Agreement and each other Transaction Document to which it is party has been duly executed and delivered by Buyer, and (assuming due authorization, execution and delivery by each Seller) this Agreement and each other Transaction Document to which it is a party constitutes a legal, valid and binding obligation of Buyer enforceable against Buyer in accordance with its terms, except as such enforceability may be limited (i) by bankruptcy, insolvency, reorganization, moratorium or similar Laws affecting creditors’ rights generally and by general principles of equity and (ii) rules of law governing specific performance, injunctive relief and other equitable remedies.

Section 5.3 No Conflicts; Consents. The execution, delivery and performance by Buyer of this Agreement and the other Transaction Documents to which it is a party, and the consummation of the transactions contemplated hereby and thereby, do not and will not: (a) result in a violation or breach of any provision of the certificate of incorporation, certificate of formation or by-laws of Buyer, as applicable; (b) result in a violation or breach of any provision of any Law or Governmental Order applicable to Buyer; or (c) except as set forth in Section 5.3 of the Disclosure Schedules and subject to the accuracy of the information provided by the Sellers to the Buyer, require the consent, notice or other action by any Person under, conflict with, result in a violation or breach of, constitute a default under or result in the acceleration of any agreement to which Buyer is a party, in each case above, only to the extent such conflict or violation would impair or impede the ability of the Buyer to consummate the transactions contemplated by this Agreement, all except as set forth in Section 5.3 of the Disclosure Schedules. Based on the information provided to the Buyer by the Sellers, no consent, approval, Permit, Governmental Order, declaration or filing with, or notice to, any Governmental Authority is required by or with respect to Buyer in connection with the execution and delivery of this Agreement and the other Transaction Documents and the consummation of the transactions contemplated hereby and thereby.

Section 5.4 Sufficiency of Funds. Buyer has sufficient cash on hand or other sources of immediately available funds to enable it to make payment of the Purchase Price and consummate the transactions contemplated by this Agreement.

Section 5.5 Legal Proceedings. There are no Legal Proceedings, claims or other actions pending or, to Buyer's knowledge, threatened against or by Buyer or any Affiliate of Buyer that challenge or seek to prevent, enjoin or otherwise delay the transactions contemplated by this Agreement or that could impair or impede the ability of the Buyer to consummate the transactions contemplated by this Agreement.

Section 5.6 Brokers. No broker, finder or investment banker is entitled to any brokerage, finder’s or other fee or commission in connection with the transactions contemplated by this Agreement or any other Transaction Document based upon arrangements made by or on behalf of Buyer.

ARTICLE VI

CONVENANTS

Section 6.1 Advice of Changes. Sellers will promptly notify Buyer in writing of (i) any facts and circumstances that render, or could reasonably be expected to render, any representation or warranty of Sellers contained in this Agreement or any other Transaction Document, if made on or as of the date of that event or the Closing Date, untrue or inaccurate or that would be reasonably likely to impede or impair Sellers’ ability to consummate the transactions contemplated by this Agreement or that may constitute a Material Adverse Effect, (ii) any material failure by Sellers to comply with or satisfy in any material respect any covenant condition or agreement to be complied with or satisfied by it hereunder or any other Transaction Document;

(iii) any material notice or other material communication of which Sellers has knowledge from any Governmental Authority or other Person in connection with the transactions contemplated by this Agreement or any Transaction Document; (iv) any event, change, effect, condition or circumstance that occurred or to the knowledge of Sellers are threatened or are reasonably likely to occur, which would reasonably be expected to result in any Legal Proceedings involving any Purchased Asset; and (v) any new Assigned Contracts, together with copies thereof and any change in an Assigned Contract, or any notice of breach, penalties, damages, termination thereof. Buyer will also promptly notify Sellers in writing of any event occurring subsequent to the date of this Agreement that would be reasonably likely to impede or impair Buyer’s ability to consummate the transactions contemplated by this Agreement or any other Transaction Document. No notice provided under this Section 6.1 shall qualify, amend or supplement the representations and warranties hereunder. The delivery of any notice pursuant to this Section 6.1 shall not cure such breach or non-compliance or limit or otherwise affect the remedies available hereunder to the party receiving such notice.

Section 6.2 Conduct of Business. During the period on and from the date of this Agreement through and including the Closing, Sellers will conduct the Business in the ordinary course consistent with past practices and will use their reasonable commercial efforts to retain the BSS Employees, protect and preserve the Purchased Assets, and maintain and preserve intact Sellers’ relationships with the consultants, independent contractors, licensors, suppliers, vendors, representatives, distributors and customers of the Business. Without derogating from the foregoing, during the period on and from the date of this Agreement through and including the Closing Date, Sellers will not, without the prior written consent of Buyer, not to be unreasonably withheld, in each case solely with respect to the Business:

(a)mortgage, pledge, subject to a lien, or grant any Encumbrance in, or suffer to exist or otherwise encumber, any of the Purchased Assets, excluding guarantees and letters of credit provided to customers in the ordinary course of business, consistent with past practices;

(b)sell, dispose of or license any of the Purchased Assets to any Person, except inventory in the ordinary course of business, consistent with past practices;

(c)acquire any furniture, fixtures, equipment or supplies; except in the ordinary course of business consistent with past practices;

(d)except as agreed by both parties under the Transition Services Agreement, enter into any commitment for capital expenditures relating to the Business exceeding US$150,000 per single commitment of US$500,000 in the aggregate;

(e)enter into any Contract that restrains, restricts, limits or impedes the ability of the Business or the Buyer to compete or conduct any business in any manner and in any geographic area;

(f)fail to consult with Buyer prior to entering into (no approval required) any long term commitment beyond 1 year;

(g)Purchase inventory except in the ordinary course of business consistent with past practices, in an amount not to exceed US$150,000;

(h)fail to maintain the Tangible Personal Property in good working condition and repair according to the standards it has maintained up to the date of this Agreement, subject to ordinary wear and tear;

(i)fail to pay and discharge any trade payables relating to the Purchased Assets or the Business in accordance with Sellers’ customary business practices as of the date of execution hereof;

(j)fail to pay maintenance, renewals and similar fees if and when due and take all other appropriate actions as necessary in the ordinary course of business consistent with past practices to prevent the abandonment, loss or impairment of Intellectual Property Registrations included in the Intellectual Property Assets;

(k)change accounting methods relating to or affecting the Purchased Assets, the Assumed Liabilities or the Business;

(l)write up, write down or write off the book value of any Purchased Asset, except for depreciation and amortization in accordance with GAAP consistently applied;

(m)(A) accelerate collection of any accounts receivable of a Seller or any Subsidiary thereof (as much as such relate to the Business), (B) accelerate billing or receipt of funds prior to the provision of goods and services by the Sellers or any Subsidiary thereof (as much as such relate to the Business), (C) reduce prices of products (as much as such relate to the Business) in effect as of the date hereof except in the ordinary course of business consistent with past practice or as set forth in Section 3.3(f)(iv)(B) of the Disclosure Schedules or, (D) defer payment of any accounts payable (as much as such relate to the Business);

(n)take any action that would render untrue any representation of the Sellers pursuant to this Agreement or prevent from any Seller the performance of any obligations thereof under this Agreement;

(o)amend, terminate or waive any rights under any Assigned Contract, except in the ordinary course of business consistent with past practices;

(p)waive, release or settle any right or claim relating to any Purchased Assets or Assumed Liabilities or any Legal Proceedings related to the Business or the transactions contemplated by this Agreement, except for an aggregate amount (for all such waivers, releases or settlement) of US$ 250,000;

(q)(A) other than in the ordinary course of business consistent with past practices and in any case in a manner that does not increase the total size of the Business' workforce (i.e., only replacement of departing employees), hire or deploy any employee or consultant to serve in the Business or, except as required or allowed under this Agreement, terminate any BSS Employee or assign any BSS Employee out of the Business, or (B) fire, hire or deploy any senior employee or senior consultant to serve in the Business, except as required or allowed under this Agreement, or (C) relocate BSS Employees;

(r)(A) increase the level of compensation or fees of or pay any bonus or provide benefits to any BSS Employee or consultant other than pursuant to the terms of engagement existing as of the date hereof, (B) increase the coverage or benefits available under any (or create any new) Employee Benefit Plan made to, for, or with any of the BSS Employees or otherwise modify or amend or terminate any such Employee Benefit Plan, (C) grant any BSS Employee or other person any change of control, severance, retention or termination compensation or benefits, or any increase therein, or (D) grant new equity grants (options, RSUs or similar grants) or change any terms of any equity grants (options, RSUs or similar grants) of any BSS Employee, (E) grant or increase any severance or termination pay to (or amend any existing arrangement with) any director, manager, officer, advisor, consultant or employee of the Business except pursuant to arrangements in place on the date hereof, or (F) subject to applicable Laws, enter into any kind of agreement or collective agreement with any Collective Group;

(s)take any action to terminate or modify, or permit the lapse or termination of, the present insurance policies and coverages of Sellers relating to or applicable to Sellers, the Business or the Purchased Assets;

(t)fail to comply in all material respects with all applicable Laws;

(u)fail to maintain all material Permits relating to the Business in full force and effect;

(v)incur, with respect to the Business or the Purchased Assets, any Liabilities other than Liabilities incurred in the ordinary course of business, consistent with past practices;

(w)take any action that would adversely affect the ability of the parties to consummate the transactions contemplated by this Agreement or the other Transaction Documents;

(x)apply for any Grant;

(y)enter into, amend or renew any Contract with agents, resellers, distributors, partners, system integrators, outsourcing contracts, contractors performing services relating to the Business, or similar capacities (or amend any such existing Contract);

(z)enter into or amend (including via renewals, change requests, purchase orders or SOWs) any Contract with a customer relating to the Business, except for such Contracts (including via renewals, change requests, purchase orders or SOWs) entered into in the ordinary course of business consistent with past practices and involving an amount not exceeding US$2,000,000 but provided that with respect to any such Contracts (or material changes thereto) involving up to USD$2,000,000 Sellers shall consult with Buyer in advance;

(aa)enter into any Contract with a competitor of Business;

(bb) conduct the Business other than in the ordinary course of Business, consistent with past practices; or

(cc) agree to do any of the things described in the preceding clauses of this Section 6.2.

Section 6.3 Access to Information. Each Seller agrees that until the earlier of the Closing Date and the termination of this Agreement, the Buyer shall be entitled, through its Representatives, to have reasonable access, upon reasonable notice and during normal working hours, to review and discuss with the Sellers and their officers, the properties, and operations of such Seller and such books and records relating to the Business or the Purchased Assets, including without limitation, revenue recognition materials, including related checklists, correspondence with contacts or potential customers of the Business, all the foregoing for the purpose of consummating the transactions contemplated hereunder, ensuring compliance by the parties with the provisions of this Agreement and ensuring a smooth transition for the Business, its customers and the Transferred Employees. From the date hereof until the earlier of the termination of this Agreement and the Closing, each Seller shall confer from time to time as requested by the Buyer with its Representative(s) to discuss any material changes or developments in the Business and the general status of the ongoing operations and conduct of the Business. No information or knowledge obtained pursuant to this Section 6.3 or otherwise shall affect or be deemed to modify any representation or warranty contained herein or the Transaction Documents, or the conditions to the obligations of the parties to consummate the Closing in accordance with the terms and provisions hereof. All information referred to in this Section 6.3 shall be subject to the NDA. Each Seller shall cause its independent accounting firm, as well as its employees to cooperate with Buyer and its agents in making available and discussing all financial information with respect to the Business and the Business. In addition the Sellers shall perform the tasked and deliver the deliverables set forth in Section 6.3 of the Disclosure Schedules.

Section 6.4 Satisfaction of Conditions Precedent. Each of Seller and Buyer will, from and after the date of this Agreement, (a) execute and deliver, or shall cause to be executed and delivered, such documents and other papers and shall take, or shall cause to be taken, such further actions as may be reasonably required to carry out the provisions of this Agreement and give effect to the transactions contemplated by this Agreement in the most expeditious manner possible, (b) refrain from taking any actions that could reasonably be expected to impair, delay or impede the Closing and (c) without limiting any other provision of this Agreement, use its respective reasonable best efforts to cause all the conditions to the obligations of the other party to consummate the transactions contemplated by this Agreement to be met as soon as reasonably practicable.

Section 6.5 Regulatory Filings; Consents; Best Efforts. With respect to the period between the date of this Agreement and the Closing Date:

(a)Each of Sellers and Buyer shall use its commercially reasonable efforts to obtain as promptly as practicable all Governmental Approvals and to timely provide all material notices to Governmental Authorities that may be or may become reasonably necessary, proper or advisable under this Agreement and applicable Law to consummate and make effective the transactions contemplated by this Agreement. Each of the parties shall use commercially reasonable efforts to obtain, and to cooperate with the other to promptly obtain, all such Governmental Approvals. In furtherance of the foregoing, the parties shall each instruct their respective counsels to cooperate with each other and use commercially reasonable efforts to facilitate and expedite the identification and resolution of any antitrust issues and shall use commercially reasonable efforts to assure that the respective waiting periods required by the Antitrust Laws have expired or been terminated at the earliest practicable dates.

(b)The Buyer and the Seller, (i) as promptly as reasonably practicable (but in no event later than fourteen (14) Business Days after the date of this Agreement) shall make an appropriate filing of a Notification and Report Form pursuant to the HSR Act (if applicable) with respect to the Transaction.

(c) Sellers shall provide Buyer with those services set forth in Section 6.5(c) of the Disclosure Schedules hereto, which shall be provided free of charge. Sellers shall cooperate with Buyer in filing and securing the approvals required by the Israeli Ministry of Defense for the transactions contemplated by this Agreement.

(d)Notwithstanding anything in this Agreement to the contrary, neither this Section 6.5 nor the “commercially reasonable efforts” standard shall require Buyer or its Affiliates to propose or agree to accept any undertaking or condition, to enter into any consent decree, to make any divestiture, to accept any operational restriction, commit to alter their businesses or commercial practices in any way, bear any cost or expense (including future costs and expenses and price reductions) or take any other action that, in the reasonable judgment of Buyer, could be expected to limit the right of Buyer or its Affiliates to own or operate all or any portion of their respective existing businesses or assets or any of the businesses, product lines or assets of the Business or otherwise receive the full benefits of this Agreement. With regard to any Governmental Authority, neither the Sellers nor any of their respective Affiliates shall, without Buyer's prior written consent, in Buyer's sole discretion, discuss or commit to any divestiture transaction, or discuss or commit to alter their businesses or commercial practices in any way, or otherwise take or commit to take any action that limits Buyer's or its Affiliates' freedom of action with respect to, or Buyer's or its Affiliates'' ability to retain any of the businesses, product lines or assets of, the Business or otherwise receive the full benefits of this Agreement.

(e)Notwithstanding anything in this Agreement to the contrary, if any administrative, judicial action or other Legal Proceeding is instituted (or threatened to be instituted) challenging any transaction contemplated by this Agreement as violative of any Antitrust Laws, it is expressly understood and agreed that: (i) Buyer shall not have any obligation to litigate or contest any administrative, judicial action or other Legal Proceeding or any Order, whether temporary, preliminary or permanent; and (ii) Buyer shall be under no obligation to make proposals, execute or carry out agreements or submit to Orders providing for (A) the sale, license or other disposition or holding separate (through the establishment of a trust or otherwise) of any assets or categories of assets of the Buyer or any of its affiliates or the Business or any Purchased Assets, (B) the imposition of any limitation or regulation on the ability of Buyer or any of its affiliates to freely conduct their business or the Business or own such assets or the Purchased Assets, or (C) the holding separate of the Business and/or any Purchased Assets or any limitation or regulation on the ability of the Buyer or any of its affiliates to exercise full rights of ownership thereon or to conduct their business or the Business; (any of the foregoing, an “Antitrust Restraint”). Subject to the foregoing, the parties shall each instruct their respective counsels to cooperate with each other and use reasonable best efforts to facilitate and expedite the identification and resolution of any antitrust issues and shall use reasonable best efforts to assure that the respective waiting periods required by the Antitrust Laws have expired or been terminated at the earliest practicable dates. Nothing in this Section 6.5 shall limit a party’s right to terminate this Agreement pursuant to ARTICLE 8.

(f)Subject to applicable Laws, each of Buyer and Comverse shall consult with the other and receive its consent with regard to the exchange of information relating to Buyer or Sellers, as the case may be, and any of their respective Affiliates or Representatives which appear in any filing made with, or written materials submitted to, any third party or any Governmental Authority in connection with the transactions contemplated by this Agreement. Without limiting the foregoing, subject to applicable Laws, each of Sellers and Buyer shall notify the other party promptly of the receipt of comments or requests from any Governmental Authority relating to any Governmental Approval, shall coordinate the response therewith to the extent practicable and shall supply the other party with copies of all correspondence between the notifying party or any of its Representatives or Affiliates and the Governmental Authority with respect to such Governmental Approval.

Section 6.6 Third Party Consents and Notices. The Sellers shall, prior to and after Closing (i) file, provide notification or register any notifications, filings or registrations described on Section 6.6(a) of the Disclosure Schedules (and any such notification, filings or registrations that would have been required to be listed or described on Section 6.6(a) of the Disclosure Schedules if entered into prior to the date hereof), and (ii) request and use their commercially reasonable efforts to secure the Consent of any third party to the extent required to consummate the transactions hereunder, including any party to an Assigned Contract, (iii) request the consent of any counterparty to a Significant Joint Contracts or Other Joint Contracts (as such terms are defined in Section 3.3(f) of Disclosure Schedules) to separate the benefits and obligations related to the Business in favor of the Buyer and the other business in favor of Sellers, on terms Reasonably Acceptable to Buyer (as such term is defined in Section 3.3(f) of the Disclosure Schedules) so that following the Closing the Buyer shall have a separate Contract with such customer that relates solely to the Business and is not dependent at all on the Sellers’ business, products, services or performance, and (iv) use their commercially reasonable efforts to complete such filing, registration or notification, or, as applicable obtain and deliver to the Buyer at or prior to the Closing, all Consents specified in (i) through (iii). All such Consents and notification, filings or registrations shall be in form and content approved in advance by the Buyer.

Section 6.7 Changes to Purchased Assets/Excluded Assets.

(a)The Buyer shall notify the Sellers, no later than five (5) days prior to Closing, which of the Contracts listed on Section 6.7(a) of the Disclosure Schedules (the “Schedule 6.7(a) Contracts”) it wishes to assume as an Assigned Contract. In the event that Buyer notifies the Sellers that Buyer shall not assume any such Schedule 6.7(a) Contract, then such Contract shall be an Excluded Asset and Excluded Liability.

(b)Buyer may, no later than five (5) days prior to Closing, notify Sellers that any of the assets and Contracts listed on Section 6.7(b) of the Disclosure Schedules (the “Schedule 6.7(b) Assets”) (i) will be an Excluded Assets and Excluded Liability hereunder, as applicable, and (ii) will not be assumed by the Buyer at Closing but would be serviced through a transition services agreement until Seller is notified by Buyer of its request to assume such Contract or terminate the services provided under such transition services agreement.

(c) With respect to the Contracts set forth on Section 6.7(c) of the Disclosure Schedules upon written notice prior to the Closing from Buyer to the Sellers, Buyer may include such Contracts as Purchased Assets and Assigned Contracts hereunder.

Section 6.8 Separation of Agreements. To the extent an Assigned Contract or purchase order or statement of work refers to any businesses of the Sellers which is not the Business, the Sellers (at their own cost and expense) shall use best efforts to separate (at no further cost to the Buyer and on same terms and conditions) such Assigned Contracts to include only services and products that relate to the Business to the satisfaction of the Buyer, so that as of the Closing none of the Assigned Contracts shall cover services or products that are not solely the Business or refer to (or is otherwise dependent upon or conditional on) any businesses of the Sellers which is not the Business transferred to Buyer; all without any change adverse to the Buyer in the terms or cost thereunder.

Section 6.9 Further Assurances. Following the Closing, each of the parties hereto shall, and shall cause their respective Affiliates to, execute and deliver such additional documents, instruments, conveyances and assurances and take such further actions as may be reasonably required to carry out the provisions hereof and give effect to the transactions contemplated by this Agreement and the other Transaction Documents.

Section 6.10 Confidentiality. The parties acknowledge and agree that the Confidentiality Agreement (except with respect to any non solicitation provisions) is binding upon the parties hereto and in full force and effect, except to the extent that the provisions hereof supersede provisions of similar effect contained in the Confidentiality Agreement.

Section 6.11 Books and Records. From and after the Closing, Buyer shall provide the Sellers and their authorized representatives with reasonable access upon reasonable notice (for the purpose of examining and copying), during normal business hours, to the books and records of the Business with respect to periods prior to and including the Closing Date for any reasonable purpose. Unless otherwise consented to in writing by the Sellers or any of their Affiliates, Buyer shall not, for a period of seven (7) years following the Closing Date, destroy, alter or otherwise dispose of any books and records of the Business, or any portions thereof, relating to periods prior to and including the Closing Date without first giving reasonable prior written notice to the Sellers or any of their Affiliates and offering to surrender to the Sellers or any of their Affiliates such books and records or such portions thereof.

Section 6.12 Public Announcements. Unless otherwise required by applicable Law or stock exchange requirements, no party to this Agreement shall make any public announcements in respect of this Agreement or the transactions contemplated hereby or otherwise communicate with any news media without the prior written consent of the other parties (which consent shall not be unreasonably withheld or delayed). The parties shall cooperate as to the timing and contents of any such announcement.

Section 6.13 Bulk Sales Laws. The parties hereby waive compliance with the provisions of any bulk sales, bulk transfer or similar Laws of any jurisdiction that may otherwise be applicable with respect to the sale of any or all of the Purchased Assets to Buyer.

Section 6.14 Employees and Employee Benefits.

Non-TUPE Transferring Employees

(a)No later than as agreed between the parties the Buyer shall, or shall cause the applicable Buyer Affiliate to, extend offers of employment effective as the date designated by the Buyer as a transfer date and notified by the Buyer in writing (which date shall be on the Closing Date unless otherwise provided in the Transition Services Agreement) (the "Transfer Date") to the Non-TUPE Transferring Employees. It is clarified and agreed that the Buyer shall not be required or obliged, under any circumstances, to extend offers of employment to more than the number of Non-TUPE Transferring Employees as agreed between the parties or to any Seller or Seller Affiliate employee who is not a BSS Transaction Employee.

(b)The terms and conditions offered by the Buyer to each respective Non-TUPE Transferring Employee shall include: (i) base salary or hourly wages which are no less than the base salary or hourly wages disclosed in the Employee Exhibit as provided to such Non-TUPE Transferring Employee by the applicable Seller immediately prior to the Closing and (ii) benefits that are substantially similar in the aggregate to the benefits provided by the Buyer and its Affiliates to its employees generally (excluding the Transferred Employees) who are similarly situated to such Non-TUPE Transferring Employees. Buyer shall enable Non-TUPE Transferring Employees to participate in Buyer’s bonus plan on terms that are substantially similar to those provided to similarly situated employees of Buyer, on a pro-rata basis to their service with the Buyer.

(c)Effective as of the Transfer Date, Buyer shall recognize service by the Non-TUPE Transferring Employees for Sellers and any of Sellers' Affiliates or any such service that Sellers or Sellers' Affiliates recognized prior to the Transfer Date as if such service were with Buyer and the applicable Buyer Affiliates, as long as such recognition of service shall not result in entitlement for payment or benefit already provided to any Non-TUPE Transferring Employee by the Sellers.

(d)The Sellers shall terminate the employment of each Non TUPE Transferring Employee to which Buyer or any of its Affiliates extend an employment offer and which the Non-TUPE Transferring Employee accepted, effective one (1) day prior to the Transfer Date. The termination of the Non-TUPE Transferring Employee shall be on the basis of a written mutually agreed termination agreement or termination letter to each Non-TUPE Transferring Employee (in a form and substance to be provided by the Sellers).

(e)The Sellers and any Seller Affiliate shall pay, release and discharge all its obligations, as the case may be, to any of the following: each Transferred Employee (as defined below), the Tax authorities, administrative authority, all union authority or any applicable funds (as applicable, as and when due in accordance with applicable Law), with respect to each Transferred Employee's employment or engagement with a Seller and the termination thereof (if applicable), including but not limited to: all benefits, funds and payments that such Transferred Employee is eligible to receive under their respective Employee Benefit Plans, applicable Law or otherwise, including, all wages, prior notice period (or payment in lieu thereof), accumulated redeemable unused vacation days, remuneration of any kind, such as salaries, profit sharing, participations bonuses, commissions, overtime pay, pay for other compensated absences, retirement payment, severance pay, labor insurance, national insurance, other welfare, social or fringe benefit plans or policies, other remuneration (including mandatory or discretionary benefits) due to such Transferred Employee, and any related payroll deductions (such as Employee Benefit Plan contributions and employment Taxes which shall be paid when due).

Sellers shall be responsible for satisfying the continuation coverage requirements for group health plans under Part 6 of Subtitle B of Title I of ERISA and Section 4980B of the Code ("COBRA") (without regard to Sellers’ ability to terminate its obligation to provide COBRA by terminating its group health plans) with respect to the employees whose COBRA qualifying event occurred on or prior to the closing date.

(f)The Buyer shall not pay or be liable for any payment, benefit or entitlement of any kind with respect to any Transferred Employee employment or engagement with a Seller prior to the Transfer Date and the termination thereof, including but not limited to the benefits, entitlements or obligations mentioned in Section 6.14(e).

(g)The Sellers shall make commercially reasonable efforts to cooperate in securing the engagement of the Non-TUPE Transferring Employee to whom the Buyer extend offer of employment.

(h)On and after the Transfer Date, the Buyer or an Affiliate shall permit the U.S. based Non-TUPE Transferring Employees to make rollover contributions of their account balances, excluding rollovers of any outstanding loans, under the Employee Benefit Plan that is a Section 401(k) plan, to a plan maintained by the Buyer or Buyer Affiliate that is intended to satisfy the requirements of Section 401(k) of the Code; provided that such rollover is permitted under the planned applicable law and to the extent that a Transferred Employee satisfies the requirements under the Buyer's plan.

(i)The Sellers and the Buyer shall, with respect to the U.S. based Transferring Employees, adopt the “alternative procedure” for preparing and filing IRS Forms W-2 (Wage and Tax Statements), as described in Revenue Procedure 2004-53. Under this procedure, the Buyer as the successor employer shall provide all required Forms W-2 to all Transferred Employees reflecting all wages paid and taxes withheld by a Seller as the predecessor and the Buyer as the successor employer for the entire year during which the Closing occurs. The Sellers and the Buyer shall adopt the alternative procedure of Rev. Proc. 2004-53 for purposes of filing IRS Forms W-4 (Employee’s Withholding Allowance Certificate) and W-5 (Earned Income Credit Advance Payment Certificate). Under this procedure, the Sellers shall provide to Buyer all IRS Forms W-4 and W-5 on file with respect to each Transferred Employee, and the Buyer will honor these forms until such time, if any, that such Transferred Employee submits a revised form.

TUPE Transferring Employees

(j)The parties acknowledge and agree that with respect to the TUPE Transferring Employees, the transactions contemplated by this Agreement may constitute a business transfer for the purposes of the Transfer Regulations and, accordingly, they will not operate so as to terminate the contracts of employment of any of TUPE Transferring Employee who is mainly or wholly assigned to the Business to whom Transfer Regulations apply. Instead, the contracts of employment of such TUPE Transferring Employees shall be transferred to the Buyer or its Affiliates by operation of the Transfer Regulations with effect from Transfer Date.

(k)Each Seller warrants and undertakes that, as at the date of this Agreement, it has provided Buyer with full and accurate employee liability information as specified in Regulation 11 of the TUPE Regulations and any similar Transfer Regulation (as applicable) in respect of all TUPE Transferring Employees and it will promptly notify Buyer of any changes to that information prior to the Transfer Date.

(l)Within twenty eight (28) days of Closing, Sellers shall or shall procure that its Affiliates shall deliver to Buyer the personnel records of all TUPE Transferring Employee who did not refuse to become Transferred Employees.

(m)Each Seller warrants and undertakes that it shall and its Affiliates shall comply in full with its or their obligations under the Transfer Regulations, including but not limited to any obligations to provide information to and/or consult with any TUPE Transferring Employees or their representatives.

(n)Each Seller shall, and shall procure that its respective Affiliates shall, if requested by the Buyer, include the Buyer and any representative of the Buyer in any consultation process with any anticipated TUPE Transferring Employee and/or any negotiations with any relevant employee representations body which are required by Law in the scope of the execution of the Transaction. The Sellers shall not, and shall procure that its respective Affiliates shall not, without prior written consent by the Buyer, enter into agreement with any employee representation body which will grant the anticipated TUPE Transferring Employees any rights and claims beyond the rights and claims already existing under their employment agreements.

(o)Between execution of this Agreement and Transfer Date, Sellers shall not and shall procure that its Affiliates shall not, without Buyer's prior written consent: (i) reassign or redeploy any employee or contractor from his or her current role or duties so that his or her employment might transfer to the Buyer or any Buyer Affiliate; (ii) otherwise increase the number of TUPE Transferring Employees; (iii) increase or amend or propose to increase or amend any salary, emolument, fee or contractual benefit or entitlement provided to or afforded to any BSS Employee; or (iv) vary or propose to vary the terms and conditions of employment or engagement of any BSS Employee.

(p)The Buyer will as soon as reasonably practicable following the execution of this Agreement provide the Sellers with all information as may be requested and necessary to enable the Sellers to comply with its duty to inform and consult under the Transfer Regulations and otherwise provide the Sellers with such assistance and cooperation as the Sellers may reasonably require to fulfill their obligations to the relevant TUPE Transferring Employees under the Transfer Regulations.

(q)Those TUPE Transferring Employees who their employment transferred to the Buyer or Buyer Affiliate according to the Transfer Regulations or Non TUPE Transferring Employees who accept the Buyer’s offers of employment, and commence employment with the Buyer, shall be referred to as the “Transferred Employees”).

(r)With respect to any Employee Benefit Plan maintained by Buyer or an Affiliate of Buyer (collectively, “Buyer Benefit Plans”) for the benefit of any Transferred Employee, effective as of the Closing, to the extent possible under each Buyer Benefit Plan, Buyer shall, or shall cause its Affiliate to, recognize all service of the Transferred Employees with the applicable Seller (and service recognized by such Seller), as if such service were with Buyer, for vesting, eligibility and accrual purposes; provided, however, such service shall not be recognized to the extent that (x) such recognition would result in a duplication of benefits or (y) such service was not recognized under the corresponding Employee Benefit Plan. Each applicable Buyer Benefit Plan shall waive eligibility waiting periods, evidence of insurability requirements and pre-existing condition limitations. To the extent possible under each applicable Buyer Benefit Plan, the Transferred Employees shall be given credit under the applicable Buyer Benefit Plans for amounts paid prior to the Transfer Date during the plan year in which the Closing occurs, under a corresponding benefit plan for the purposes of applying deductibles, co-payments, co-insurance and out-of-pocket maximums, as though such amounts had been paid in accordance with the terms and conditions of such Buyer Benefit Plans.

(s)Nothing in any agreements between any Transferred Employee and any Seller shall, as of the Transfer Date, limit or restrict such employee retained by Buyer from serving as an employee or consultant of Buyer or any of its Affiliates, and the Sellers shall waive or release any such obligations or restrictions. As of the Transfer Date, the Transferred Employees shall be relieved and released from the confidentiality and non-compete obligations owed to a Seller only to such extent required to perform the obligations and duties under their respective employment or engagement agreements with Buyer or any of its Affiliates; provided that Sellers shall assign to Buyer any and all causes of action with respect to employees’ breaches of confidentiality and non-compete obligations.

(t)Unless otherwise required by the Transfer Regulations, nothing herein, express or implied, shall: (i) be construed to establish, amend or modify any benefit plan, program, agreement or arrangement; (ii) confer upon any BSS Employee of a Seller, or legal representative or beneficiary thereof or any other Person, any rights or remedies, including any right to employment or continued employment for any specified period, or compensation or benefits of any nature or kind whatsoever under this Agreement; or (iii) to the extent not prohibited by applicable Law, require Buyer or any of its Affiliates to maintain any specific plan, compensation or benefit, or prohibit Buyer or any of its Affiliates from changing, modifying, discontinuing or terminating any or all of the Transferred Employees or any agreement entered into with them at any time following the Transfer Date. Notwithstanding the foregoing, from and after the Closing, Buyer shall assume the rights and obligations with respect to the immigration status of the Transferred Employees.

Section 6.15 Tax Matters.

(a)Transfer Taxes. All transfer, documentary, sales, use, stamp, registration, and other similar Taxes and fees (including any penalties and interest) incurred in connection with this Agreement and the other Transaction Documents (including any real property transfer Tax and any other similar Tax but excluding value added tax) (collectively, the “Transfer Taxes”) shall be the responsibility of the party designated by applicable Law. Such party shall, at its own expense, timely file any Tax Return or other document with respect to such Transfer Taxes (and Sellers shall cooperate with respect thereto as necessary).

(b)Cooperation on Tax Matters. Each Seller and the Buyer shall cooperate with each other and with each other’s agents, including accounting firms and legal counsel, in connection with Tax matters relating to the Purchased Assets including: (i) preparation and filing of Tax Returns; (ii) examinations of Tax Returns; and (iii) any administrative or judicial proceeding in respect of Taxes assessed or proposed to be assessed. Each Seller and the Buyer shall provide timely written notices to the other parties hereto of any pending or threatened audits or other Tax proceedings relating to the Business or the Purchased Assets for taxable periods for which any other party hereto may have a responsibility under this Agreement or otherwise, and shall furnish the other parties hereto with copies of all correspondence received from any Taxing Authority in connection with any audit or other Tax proceeding or information request with respect to any taxable period for which any other party hereto may have a responsibility under this Agreement or otherwise. Any information or documents provided under this Section 6.15(b) shall be kept confidential by the party receiving the information or documents, except as may otherwise be necessary in connection with the filing of Tax Returns or in connection with any administrative or judicial proceedings relating to Taxes. In the event that the Buyer, on the one hand, and the Sellers, on the other hand, disagree as to the amount or calculation of any payment to be made under this Section 6.15, the parties shall attempt in good faith to resolve such dispute. If such dispute is not resolved within sixty (60) days following the commencement of the dispute, the Buyer, on the one hand, and the Sellers, on the other hand, shall jointly retain the Independent Accountant to resolve the dispute. The Independent Accountant shall act as an arbitrator to resolve all points of disagreement and its decision shall be final and binding upon all parties involved. Following the decision of the Independent Accountant, the Buyer and the Sellers shall each take or cause to be taken any action necessary to implement the decision of the Independent Accountant. The fees and expenses relating to the Independent Accountant relating to any disputes in connection with this Section 6.15 shall be borne fifty percent (50%) by the Buyer, and fifty percent (50%) by the Sellers.

(c)In the case of any Straddle Period, (i) real property, personal property, intangible property and similar Taxes ("Property Taxes") for the Pre-Closing Tax Period shall be equal to the amount of such Property Taxes for the entire Straddle Period multiplied by a fraction, the numerator of which is the number of days during the Straddle Period that are in the Pre-Closing Tax Period and the denominator of which is the number of days in the Straddle Period and (ii) Taxes (other than Property Taxes) for the Pre-Closing Tax Period shall be computed as if the Straddle Period ended as of the close of business on the Closing Date.

The price payable for any Purchased Asset or Assumed Liability (including under an Additional Agreement) is inclusive of any value added taxes, to extent applicable to such Purchased Asset or Assumed Liability. With respect to any such value added taxes in the residence country of the respective Seller, the specified Buyer of such Purchased Asset or Assumed Liability shall use its commercially reasonable efforts to claim such value added taxes as “input value added taxes” and to the extent that such claim of input value added taxes actually reduces the value added tax liability of such specified buyer or results in a refund to such Buyer (the “VAT Benefit”), such specified buyer shall refund the VAT Benefit to the Sellers. Notwithstanding the foregoing, if the specified buyer is audited or examined by any taxing authority and the VAT Benefit is denied thereto (in whole or in part) after the refund of the VAT Benefit took place, than the amount so denied shall be refunded back to the specified Buyer.

Section 6.16 Surety Obligations. Section 6.16 of the Disclosure Schedules contains a full and complete list of Sellers’ outstanding bonds (including surety, bid, completion and performance bonds), letters of credit, bank guarantees and other surety arrangements issued or entered into in connection with the Business (collectively, the “Surety Documents”). Buyer shall use its commercially reasonable efforts to replace the Surety Documents set forth on Section 6.16 of the Disclosure Schedules (the "Assumed Surety Documents") effective as of the Closing and take, or shall cause to be taken, such further actions as may be reasonably required for Sellers to be released from such Assumed Surety Documents effective as of the Closing. To the extent any such Assumed Surety Documents are not so replaced or any Seller is not so released as of the Closing, Buyer shall make available to the bank providing the relevant Assumed Surety Obligation a cash deposit in the amount of the existing cash deposit provided by the relevant Seller as security to the Bank for the Assumed Surety Obligations. Buyer shall not assume any other Surety Documents of Sellers.

Section 6.17 Non-Competition; Non-Solicitation.

(a)In further consideration for the consideration hereunder and in order to protect the value of the Business (including the goodwill inherent therein), and so that Buyer may have and enjoy the full benefit of the Business and the Purchased Assets, upon the Closing:

(b)The Sellers shall, and each of them shall cause their subsidiaries and the Representatives of each of the foregoing Persons to, not, directly or indirectly, from the Closing Date hereof until the expiration of thirty six (36) months after the Closing (the “Non-Compete Period”): (i) own any equity interest in, manage, operate, finance, control, consult to, render services for, be employed by, permit his name to be used in or otherwise be involved in any way in any business or Person anywhere in the world that (a) engages or is intended to engage in the research, developing, producing, offering, distributing, selling, marketing, maintaining or supporting of technologies, products or services similar to, substitute to, in whole or in part, or directly or indirectly competitive with, the products and services that are included in the Business, as conducted and as proposed to be conducted or (b) is otherwise directly or indirectly competing or is intended to compete with the Business as conducted and as proposed to be conducted; or (ii) initiate or maintain any contact with any Person associated with any of the Sellers in the past and/or the present regarding all matters relating to the Purchased Assets in a manner that interferes with the use of the Purchased Assets and the Business; provided that the foregoing restricted activities shall not include (A) passive ownership of less than one percent (1%) of the share capital of a publicly held corporation whose shares are traded on a securities exchange or in the over the counter market, and (B) any activities which are taken by a Seller at the written direction of Buyer and in connection with any transition services provided to Buyer. From the Closing Date hereof until the expiration of thirty six (36) months after the Closing, the Sellers shall not, and each of them shall cause their subsidiaries and the representatives of each of the foregoing Persons not to : (i) solicit, induce or encourage any Transferred Employees to leave their employment or engagement with Buyer or any of its Affiliates, or otherwise engage such Person; (ii) solicit, induce or encourage any actual or prospective client, customer, system integrator, partner, agent, supplier, distributor, reseller, licensee, or licensor of the Business (including any existing customer of a Seller and any Person that becomes a client or customer of the Business after the Closing) or any other Person who has a business relationship with the Business, to terminate or adversely modify any such actual or prospective relationship.

(c)From the Closing Date hereof until the expiration of twenty four (24) months after the Closing, Buyer or Buyer Affiliates shall not, and each of them shall cause their subsidiaries and the Representatives of each of the foregoing Persons not to solicit, induce or encourage any employee of the Sellers to leave their employment or engagement with a Seller or any of its Affiliates, or otherwise engage such Person, except for any solicitation, inducement or encouragement (i) permitted under this Agreement or the Transition Services Agreement, (ii) at any time to any Person that works for or supported solely the Business as of the Closing or under the Transition Services Agreement (for which purposes, any person investing at least ninety-five percent (95%) of its time to the Business shall be deemed to solely support it), or (iii) to persons terminated by a Seller. This Section 6.18(c) shall not apply, and the Buyer or any Affiliate of the Buyer may solicit after the Closing any employees of any Seller or Affiliate of a Seller, in the event an Employee Qualifying Event (as such term is defined in Section 8.1(c) of the Disclosure Schedules) occurs.

Section 6.18 Business Confidential Information.

(a)From and after the date hereof, each Seller shall, and shall cause its respective Representatives, not to, directly or indirectly, disclose, reveal, divulge or communicate to any Person, or use or otherwise exploit for its own benefit or for the benefit of anyone other than Buyer, any Business Confidential Information. For purposes of this Section 6.18, “Business Confidential Information” shall mean any Trade Secrets (if any) or other confidential information with respect to the Purchased Assets or the Business. “Business Confidential Information” does not include information that (i) is in the public domain at the Closing Date or at the time of disclosure by Sellers, or subsequently becomes so through no fault of any Seller; (ii) is furnished to a Seller and/or each of its Representatives (as the case may be) by a third party having a lawful right to do so; or (iii) was explicitly approved for release by written authorization of Buyer. Each Seller, and each of its Representatives, shall be permitted to disclose Business Confidential Information if such disclosure is in response to a valid order of a court or other Governmental Authority, but only to the extent of and for the purposes of such order, provided, however, that such Seller, or any its Representatives (as the case may be) shall first, to the extent lawfully permitted, notify the Buyer in writing of the order, and permit Buyer to seek an appropriate protective order. Each Seller undertakes, and shall cause its respective Representatives, not to cause any harm to the Business or to the reputation thereof in the market and not to make, whether directly or indirectly, any negative or disparaging remarks about the Business, the Buyer, its Affiliates and its respective officers, employees, directors, shareholders, products, services or business.

(b)The parties hereto agree that, if any court of competent jurisdiction in a final non-appealable judgment or Order determines that the restrictions in this Section 6.18 are unreasonable under circumstances, or that a specified time period, a specified geographical area, a specified business limitation or any other relevant feature of this Section 6.18 is unreasonable, arbitrary or against public policy, then the parties hereto agree that the maximum period, scope or geographical area reasonable under such circumstances shall be substituted for the stated period, scope or area or any other relevant feature which is determined to be reasonable, not arbitrary and not against public policy may be enforced against the applicable party.

(c)Each Seller acknowledges and represents on its behalf and on behalf of its Representatives that: (i) sufficient consideration has been given as it relates such party's obligations under Section 6.18; (ii) such party has consulted with independent legal counsel regarding such party's rights and obligations under this Section 6.18; (iii) such party fully understands the terms and conditions contained herein; (iv) the scope of the Business is independent of location (such that it is not practical to limit the restrictions contained in this Section 6.18 to a specified country, city or part thereof); (v) the restrictions and agreements in this Section 6.18 are reasonable in all respects and necessary for the protection of the Business and the Purchased Assets, including, any confidential information and goodwill related thereof, and that, without such protection, the customer and client relationship and competitive advantage of the Buyer would be materially adversely affected; and (vi) the agreements in this Section 6.18 are an essential inducement to the Buyer to enter into this Agreement and they are in addition to, rather than in lieu of, any similar or related covenants to which such party is party to or by which such party is bound (whether under Contract or by Law). Each party that is an individual further acknowledges that the restrictions contained in this Section 6.18 do not impose an undue hardship on such party and, since such party has general skills which may be used in other industries and do not deprive such party of livelihood or business.

Section 6.19 Exclusivity. From and after the date of this Agreement until the earlier of the Closing or the termination of this Agreement pursuant to Article VIII, the Sellers will not, and will not authorize or permit any of their respective Subsidiaries, Affiliates or Representatives to, directly or indirectly, (i) solicit, initiate, seek, entertain, encourage, facilitate, support, respond or induce the making, submission or announcement of any inquiry, expression of interest, proposal or offer that constitutes, or would reasonably be expected to lead to, an Acquisition Proposal (as hereinafter defined), (ii) enter into, participate in, maintain or continue any communications or negotiations regarding, or take any other action regarding, any inquiry, expression of interest, proposal or offer that constitutes, or would reasonably be expected to lead to, an Acquisition Proposal, (iii) disclose, deliver or make available to any Person any with respect to the Sellers, their business or affairs (including the existence of this Agreement), for the purpose of facilitating or encouraging any effort or attempt to pursue a possible Acquisition Proposal, (iv) agree to, accept, approve, endorse or recommend (or publicly propose or announce any intention or desire to agree to, accept, approve, endorse or recommend) any Acquisition Proposal, (v) enter into any agreement, term sheet, letter of intent or any other Contract (whether or not binding) contemplating or otherwise relating to any Acquisition Proposal, or (vi) submit any Acquisition Proposal to the vote of any security holders of the Sellers. The Sellers will, and shall cause each of its Representatives to, immediately cease and cause to be terminated any and all existing activities, discussions or negotiations with any Persons with respect to any Acquisition Proposal and request the return or destruction of all confidential information regarding the Sellers or pertaining to any Acquisition Proposal provided to any such Person prior to the date hereof pursuant to the terms of any confidentiality agreement or otherwise. If any Seller’s Representative, in any capacity, takes any action that the Sellers are obligated pursuant to this Section to cause such Representative not to take, then the Sellers shall be deemed for all purposes of this Agreement to have breached this Section.

“Acquisition Proposal” shall mean, with respect to any Seller, any oral or written agreement, offer, proposal or bona fide indication of interest (other than this Agreement or the other Transaction Documents or any other offer, proposal or indication of interest by Buyer), or any public announcement of intention to enter into any such agreement or of (or intention to make) any offer, proposal or bona fide indication of interest relating to, or involving: (A) any acquisition, purchase or transfer from any Seller or equity holders of any Seller, by any Person (or a group of Persons acting in concert) of equity securities (including any security convertible into or redeemable for equity securities) of any Seller or any equity securities therein, any tender offer or exchange offer for equity securities of any Seller or any merger, spin-off, consolidation, business combination, tender offer, plan of arrangement, joint venture, share exchange, reorganization, recapitalization or similar transaction involving any Seller, the Business, or Purchased Assets; (B) any sale of any equity interests in any Seller (including any option, right to acquire or other security convertible, exercisable or exchangeable into equity); (C) any sale, lease, mortgage, pledge, exchange, transfer, license, acquisition, or disposition of assets from the Business or rights of any Seller relating to the Business or the Purchased Assets in any single transaction or series of related transactions; or (D) any liquidation, dissolution, recapitalization or other significant corporate reorganization of any Seller.

Section 6.20 Waiver and Release. In consideration for the amounts payable under this Agreement, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, effective as of the Closing, each Seller, on behalf of itself, and on behalf of its respective Affiliates and respective Representatives, hereby irrevocably and unconditionally waives, releases, acquits, indemnifies, holds harmless and forever discharges Buyer and its past, present and future Affiliates, shareholders, officers, directors, Employees and agents, and each of its heirs, executors, administrators, successors and assigns, in such capacities (the persons so released, collectively, the “Released Entities”), of and from any and all Claims (as defined below) that any of them or their respective Representatives ever had, now has, or may have against any of the Released Entities, whether arising prior to or after the Closing, with respect to the Business or any of the Purchased Assets or Assumed Liabilities or any holding of interests therein, including with respect to any assignment or grant of any rights with respect to the Purchased Assets or the Intellectual Property Assets. For purposes of this Section 6.20, “Claims” shall mean any and all actions or causes of action, suits, claims, Liabilities, losses, obligations, agreements, promises, debts, damages, diminutions in value, costs and expenses, judgments, rights and demands, whether fixed or contingent, known or unknown, suspected or unsuspected, in law or in equity, provided, however, that nothing contained herein shall operate to release any obligation of Buyer arising under this Agreement or any other Transaction Document.

Section 6.21 Leases. Effective as of the Closing, Buyer shall assume (or bear the cost of) all Transferred Leases and Sellers shall retain all other Leases relating to Leased Real Property (the “Retained Leases”); provided, however, that (i) Sellers shall bear certain cost of the Transferred Leases and (ii) Buyer shall bear certain costs of the Retained Leases (except with respect to France and Israel), all as set forth on Section 6.21 of the Disclosure Schedules. As of the Closing, unless otherwise agreed to in writing by Buyer and Sellers, the Sellers shall have transferred out of all of the Transferred Leases all of the Sellers employees that are not transferred to Buyer upon the Closing.

Section 6.22 Information Security. Sellers shall use their best efforts to implement information security methods between a Seller employees or any person providing services to a Seller and Buyer employees, to ensure such Persons will not have access to any Intellectual Property, IT or information relating to the Business, except as required under the Transition Services Agreement; provided that Sellers shall not permit Tech Mahindra access to its systems prior to such information security as provided in this Section 6.22 is being implemented.

Section 6.23 Use of Trademarks.

(a)From and after the Closing, the Sellers and any Subsidiary shall, and shall cause any Person using its name to, immediately cease using any names, trademarks, trade-names and domain names included in the Intellectual Property Assets (collectively, the “Used Names”). At Closing, the Sellers shall, and shall cause any Person using the Used Names to, cease to do business under the Used Names or any trade names or domain names that incorporate such terms, names or marks included in the Used Names, or terms, names or marks substantially similar or that may be deemed confusingly similar thereto. Within 10 days of the Buyer's request, the Sellers shall, and cause any Affiliates thereof to, change the terms, names or marks included in the Used Names, to names which are not similar in any way to any of the Used Names and, where applicable, record such change with the applicable Governmental Authorities. Each Seller acknowledges and agrees that Buyer and its Affiliates shall be entitled to fully and exclusively use such terms, names or marks included in the Used Names, including by way of granting rights to others to use such terms, names or marks.

(b)From and after the Closing, the Sellers shall immediately cease using the Used Names, and shall as of the Closing, cease to do business under any trade name that incorporates such trademarks, or trade names or any marks or names substantially similar or confusingly similar thereto and Buyer shall be entitled to fully use such Used Names.

Section 6.24 OCS. Buyer shall, within reasonable time after signing, notify Sellers whether it elects (at its sole and absolute discretion) to remove, dismiss and/or withdraw any constraints, restrictions, and/or limitations imposed by the OCS relating to transfer of the Sellers’ Intellectual Property outside of the State of Israel (including, without limitation, if such transfer of the Sellers Intellectual Property outside of Israel pursuant to Section 19B of the Encouragement of Research and Development in Industry Law - 1984 (the "R&D Law") is effected via the Schedule 2.5 License that would be considered under Section 19B of the R&D Law as a transfer of Intellectual Property outside of Israel). In the event that the Buyer shall so notify the Sellers in writing that it wishes to extract out of Israel and any of the Purchased Assets and/or the Schedule 2.5 License, then to the extent such Purchased Assets were developed or derived, in whole or in part, from grants provided by, or are subject to restrictions, constraint, control, supervision, or limitation imposed by, the OCS under the R&D Law with respect to "know-how" developed using a grant provided by the OCS, the Sellers shall apply to the OCS in order to effect such transfer in accordance with the R&D Law and shall pay all sums required in order to effect such transfer except for the OCS Buyer Reimbursement.

Section 6.25 Financial Information and Financial Statements. Sellers shall provide the services, information and/or documents set forth on Section 6.25 of the Disclosure Schedules.

Section 6.26 Senior Employees. The Sellers shall perform the covenants set forth in Section 6.26 of the Disclosure Schedules.

Section 6.27 Delivery of Purchased Assets. At the Closing Date, the Sellers shall deliver (or shall cause its respective representatives to deliver) all Purchased Assets physically to Buyer's offices (or to such other location as agreed between Buyer and the Sellers), including without limitation:

(a)The Tangible Personal Property;

(b)all documents, files, instruments, correspondence, papers, books, reports, records, tapes, photographs, letters and lists, relating to the Purchased Assets, Intellectual Property Assets, Products or otherwise related to or that arise out of the Business, including those listed in Section 6.24 of the Disclosure Schedules including, without limitation:

(i)executed originals or copies of all Assigned Contracts;

(ii)all product, business and marketing plans, operating manuals, technical documents (design specifications, functional requirements, operating instructions, logic manuals, flow charts, etc.), user documentation (installation guides, user manuals, training materials, release notes, working papers, etc.), sales and product brochures and catalogs and other sales and advertising literature and materials (sales brochures, flyers, pamphlets, promotional materials, web pages, etc.), historical sales data;

(iii)all Permits and regulatory filings and correspondence; and

(iv)all financial, accounting and Tax records and files, insurance policies, books, ledgers and business records relating to the Business;

in each case, whether in hard copy, electronic form or otherwise.

ARTICLE VII

INDEMNIFICATION

Section 7.1 Survival. The representations and warranties contained in this Agreement and any Transaction Document (including the Disclosure Schedule) shall survive the Closing and shall remain in full force and effect through and until the date that is twelve (12) months from the Closing Date; provided, that (a) the Fundamental Seller Representations (except as provided in (iii) below) and any similar representations in any Additional Agreement shall remain in full force and effect until the date that is three (3) years from the Closing Date, (ii) representations with respect to Financial Statements shall remain in full force and effect until the end of the following full financial year of financial audit by Buyer ultimate parent company (i.e., for the financial year 2016 of Buyer ultimate parent, being end of January 2017) and (iii) the representations and warranties under Section 4.1 (Organization), Section 4.2 (Authorization), Section 4.4 (Title to Purchased Assets) and Section 4.11 (Tax Matters), and any similar representations in any Additional Agreement relating to tax matters, organization and authorization, title and capitalization, and claims for fraud, willful misconduct or intentional misrepresentation shall remain in full force and effect until the date that is five (5) years from the Closing Date (the “Survival Period”). The covenants and agreements contained herein shall survive the Closing without limitation as to time unless the covenant or agreement specifies a term, in which case such covenant or agreement shall survive for such specified term. Notwithstanding the foregoing, any claims asserted in writing by notice form a party to the other party prior to the expiration date of the applicable survival period shall not thereafter be barred by the expiration of such Survival Period and such claims shall survive until finally resolved.

Section 7.2 Indemnification By Sellers. Subject to the other terms and conditions of this Article VII, the Sellers shall jointly and severally indemnify and defend Buyer and its Affiliates and their respective Representatives and successor and assignees (collectively, the “Buyer Indemnitees”) against, and shall hold each of them harmless from and against, any and all Losses incurred, accrued, paid or sustained by, or imposed upon, the Buyer Indemnitees based upon, arising out of, with respect of any one of the following:

(a)any failure of any representation or warranty made by any Seller in this Agreement or in any Transaction Document to be true and correct as of the date of this Agreement and as of the Closing Date as though such representation or warranty were made as of the Closing Date (except in the case of representations and warranties which specifically relate to an earlier date, which representations and warranties shall be true and correct as of such date);

(b)any breach or non-fulfillment of any covenant, agreement or obligation to be performed by a Seller pursuant to this Agreement or any Transaction Document;

(c)any Excluded Asset or any Excluded Liability; provided that the indemnification under this subsection (c) shall apply even if under or as a matter of law under applicable Law the asset or Liability is assumed;

(d)any Excluded Taxes;

(e)any claim, allegation or assertion that the development, manufacture, marketing, distribution or sale of any of the Purchased Assets by Buyer infringes, violates or misappropriates any Intellectual Property or other proprietary rights of any third party (including, any claim relating to the Intellectual Property Assets resulting from or relating to the disclosure on Section 4.12 of the Disclosure Schedules);

(f)any Employment Claims;

(g)any Third Party Claim based upon, resulting from or arising out of the business, operations, properties, assets or obligations of a Seller or any of its Affiliates (other than Assumed Liabilities) conducted, existing or arising on or prior to the Closing Date.

(h)the FOSS linked to (or that were linked to), or incorporated in (or that were incorporated in) the Sellers products or services, or distributed (or that were distributed) by the Sellers, and/or the Buyer’s (or its Affiliates’) use of the FOSS (including, without limitation, Losses due to a demand to reveal any part of Sellers’ or Buyer’s proprietary commercial source code and/or a demand to distribute any part of Buyer’s and/ or Sellers’ proprietary commercial software at no charge and/or a demand to license any part of Buyer’s and/ or Sellers’ proprietary commercial software under an open source license; or

(i)any claim by any third party alleging, constituting or involving a breach, default or violation in connection with any of the foregoing.

Section 7.3 Escrow Fund. The Escrow Fund shall be in existence immediately following the Closing Date and shall terminate at 5:00 EST on the date that is twelve (12) months following the Closing Date, except if such period has been extended in accordance with the terms of this Agreement and the Escrow Agreement.

Section 7.4 Indemnification By Buyer. Subject to the other terms and conditions of this Article VII, Buyer shall indemnify and defend the Sellers and their Affiliates and their respective Representatives and successor and assignees (collectively, the “Seller Indemnitees”) against, and shall hold each of them harmless from and against, any and all Losses incurred, accrued, paid or sustained by, or imposed upon, the Seller Indemnitees based upon, arising out of, with respect to or by reason of:

(a)any failure of any representation or warranty made by the Buyer in this Agreement or in any Transaction Document to be true and correct as of the date of this Agreement and as of the Closing Date as though such representation or warranty were made as of the Closing Date (except in the case of representations and warranties which specifically relate to an earlier date, which representations and warranties shall be true and correct as of such date);

(b)any breach or non-fulfillment of any covenant, agreement or obligation to be performed by a Buyer pursuant to this Agreement; or

(c)any Assumed Liability.

Section 7.5 Certain Limitations. The party making a claim under this Article VII is referred to as the “Indemnified Party”, and the party against whom such claims are asserted under this Article VII is referred to as the “Indemnifying Party.” The indemnification provided for in Section 7.2 and Section 7.3 shall be subject to the following limitations:

(a)The Indemnifying Party shall not be liable to the Indemnified Party for (i) indemnification under Section 7.2(a) and 7.4(a), as the case may be, or (ii) indemnification under Section 7.2(c) resulting solely from breaches or non fulfillment of Assigned Contracts occurring prior to the Closing Date until the aggregate amount of all Losses claimed in respect of indemnification under such sections (with respect to each party in the aggregate), as the case may be, exceeds US$2.6 million (the “Basket”), in which event the Indemnifying Party shall only be required to pay or be liable for Losses in excess of the Basket.

(b)The amount of all Losses for which an Indemnifying Party shall be liable pursuant to Section 7.2(a) (breach of representation by Sellers) and Section 7.4(a) (breach of representations by Buyer) shall not exceed: (i) with respect to representations of warranties under Section 4.1 (Organization), Section 4.2 (Authorization), Section 4.3 (Non-Contravention; Consents), Section 4.4 (Title to Purchased Assets), Section 4.5 (Sufficiency of Assets) and Section 4.20 (Absence of Questionable Payments) - the Base Purchase Price, (ii) with respect to representations of warranties under Section 4.11 (Tax Matters) and Section 4.12 (Intellectual Property)- fifty percent (50%) of the Base Purchase Price, and (iii) with respect to all other representations and warranties- fifteen percent (15%) of the Base Purchase Price (the “Cap”). For avoidance of doubt, the aggregate amount of all Losses for which an Indemnifying Party may be liable pursuant to subsections (i), (ii) and (iii) of this Section 7.5(b) shall not exceed together the Base Purchase Price.

(c)The Indemnifying Parties' liability for Losses shall be reduced, if and to the extent by insurance proceeds, if any, actually received by the Indemnified Party(ies) with respect thereto, if any; provided, however, that in no event shall any Indemnified Party have any obligation to maintain any insurance policy or otherwise be required to seek recovery by way of insurance proceeds, and provided further that if the Indemnified Party at its sole discretion elects to recover from insurance, than the Losses shall include the costs and expenses incurred by the Indemnified Party(ies) acquiring such insurance, the costs and expenses incurred in recovery of such insurance proceeds (including, any future increase of premiums on such account, and any deductibles payable). The Indemnifying Party's liability for Losses shall be increased to take account of any Tax incurred (grossed up for such increase) by the Indemnified Party(ies) arising from the receipt of indemnity hereunder, insurance proceeds or proceeds from third parties.

(d)No investigation made by or on behalf of any party hereto or its Representatives or the knowledge of any such party (or its Representatives) shall affect or limit any indemnification rights hereunder.

(e)Notwithstanding anything to the contrary herein, all references in this Agreement and the exhibits and schedules attached hereto to "material", "material respects", "Material Adverse Effect" and similar materiality qualifiers shall be excluded with regard to determining the amount of any Losses that are the subject of indemnification hereunder.

(f)Anything to the contrary notwithstanding, the limitations set forth in Section 7.5(a) and Section 7.5(b) shall not apply to any Losses arising from fraud, intentional misrepresentation or willful misconduct on the part of the Indemnifying Party in connection with the transactions contemplated by this Agreement.

Section 7.6 Indemnification Procedures. Subject to Section 6.15, which shall govern certain Tax disputes described therein, the following provisions shall apply:

(a)Third Party Claims.

(i)In the event that a Seller or the Buyer becomes aware of an assertion, demand, proceeding or claim (a “Third Party Claim”), by any Person, that may give rise to indemnification hereunder, then such party shall promptly notify the Buyer or Seller Designated Representative, as applicable in writing and in reasonable detail; provided that no delay in providing such notification shall affect the Indemnified Parties’ right to indemnification hereunder. The Buyer shall have the right (but not the obligation) in its sole discretion to assume and conduct the defense of, and to settle or resolve, any such Third Party Claim. Each Seller (i) shall cooperate with the Buyer in the defense of such Third Party Claim and make available to the Buyer any documents, materials and other information in its possession or control that may be necessary for the defense of such Third Party Claim, (ii) shall have the right to receive copies of all material pleadings, notices and communications with respect to the Third Party Claim to the extent that receipt of such documents does not affect any privilege or trade secrets relating to any Indemnified Party and (iii) shall be entitled, at its expense, to participate in, but not to determine or conduct, any defense of the Third Party Claim or settlement negotiations with respect to the third-party claim. However, except with the consent of the Seller Designated Representative (which consent shall not be unreasonably withheld, conditioned or delayed and which shall be deemed to have been given unless the Seller Designated Representative shall have objected within 15 days after a written request for such consent by the Buyer), no settlement of any such claim with any third-party claimant shall be determinative of the existence of or amount of Losses relating to such matter. In the event that the Seller Designated Representative has consented to any such settlement, no Seller shall have any power or authority to object (including pursuant to Section 6.15) to the amount of any claim for indemnity with respect to such settlement. Each Seller hereby irrevocably constitutes and appoints the Seller Designated Representative as its true and lawful agent and attorney-in-fact with full power and authority to act, including full power of substitution, in its name or on its behalf with respect to any and all matters arising from or in any way relating to this Agreement or the transactions contemplated hereby, including, to do all things and perform all acts required or deemed advisable, in the opinion of the Seller Designated Representative in its sole discretion, in connection with the transactions contemplated by this Agreement and the Escrow Agreement. The Seller Designated Representative shall have the power to enforce the obligations, covenants and agreements of each Seller under this Agreement and the Escrow Agreement. Without limiting the generality of the foregoing, (a) any communication or other delivery validly delivered to the Seller Designated Representative shall be deemed to have been validly delivered by or to each of the

Sellers, (b) any waiver of any provision of this Agreement or consent, or compromise of any claim arising from or relating to this Agreement and the Escrow Agreement, by the Seller Designated Representative shall be binding upon each and every Seller, and (c) the Seller Designated Representative is hereby authorized to execute for and on behalf of each Seller (i) any amendment to this Agreement and the Escrow Agreement or (ii) any agreement, certificate, document or instrument contemplated hereby or thereby. The Buyer shall be entitled to rely (without investigation) on any action taken by the Seller Designated Representative as being taken by the Seller Designated Representative for itself and on behalf of each of the Sellers, and fully authorized by each of the Sellers. The Sellers or the Seller Designated Representative may not, under any circumstances whatsoever, settle, adjust or compromise any such Third Party Claim without the prior written consent of Buyer (which consent shall not be unreasonably withheld, conditioned or delayed).

(ii)If Buyer does not elect to proceed with the defense of any such Third Party Claim, the Seller Designated Representative may proceed with the defense of such Third Party Claim with counsel reasonably satisfactory to Buyer; provided, however, that the Seller Designated Representative may not, under any circumstances whatsoever, settle, adjust or compromise any such proceeding or claim without the prior written consent of Buyer (which consent shall not be unreasonably withheld, conditioned or delayed). Sellers and Buyer shall cooperate with each other in all reasonable respects in connection with the defense of any Third Party Claim, including making available records relating to such Third Party Claim and furnishing, without expense (other than reimbursement of actual out-of-pocket expenses) to the defending party, management employees of the non-defending party as may be reasonably necessary for the preparation of the defense of such Third Party Claim.

(b)Direct Claims.

(i)On or before the last day of the applicable Survival Period, any Indemnified Party may deliver to the Indemnifying Party a certificate signed by any officer of the Indemnified Party (a "Notice of Claim"):

(1)stating that an Indemnified Party has incurred or paid, reserved or accrued, or reasonably anticipates that it may incur, pay, reserve or accrue, Loss (or that with respect to any Tax matters, that any Taxing Authority may raise such matter in audit of such party or its Representatives, which could give rise to Losses); and

(2)stating the amount of such Losses (which, in the case of Losses not yet incurred, paid, reserved or accrued, may be the amount in good faith anticipated by the Indemnified Party to be incurred, paid, reserved or accrued).

No delay in providing such Notice of Claim within the applicable Survival Period shall affect an Indemnified Party's rights hereunder, unless (and then only to the extent that) the Indemnifying Party is materially prejudiced thereby.

(ii)In case of a delivery of a Notice of Claim by a Buyer Indemnitee during the Escrow Period, a duplicate copy thereof shall be delivered to the Escrow Agent and for a period of fifteen (15) days after such delivery to the Escrow Agent the Escrow Agent shall make no payment pursuant hereto, unless the Escrow Agent shall have received written authorization from the Seller Designated Representative to make such delivery. After the expiration of such fifteen (15)-day period, the Escrow Agent shall make delivery of cash from the Escrow Fund to the Buyer Indemnitee to satisfy such claim; provided, however, that no such delivery may be made if and to the extent the Seller Designated Representative shall in good faith object in a written statement (which statement shall set forth in reasonable detail the basis for such objection and the amount which the Seller Designated Representative objects to being claimed by the Buyer Indemnitee(s) in respect of the Notice of Claim) to any claim or claims made in the Notice of Claim, and such statement shall have been delivered to the Escrow Agent and to the Buyer prior to the expiration of such fifteen (15)-day period.

(iii)If the Seller Designated Representative in good faith objects in writing to any claim or claims by Buyer Indemnitee(s) made in any Notice of Claim within fifteen (15) days from the date of Notice of Claim, the Buyer (by and on behalf of the Buyer Indemnitee(s)) and the Seller Designated Representative shall attempt in good faith for twenty (20) days after receipt of such written objection to resolve such objection. If they shall so agree, a written memorandum setting forth such agreement shall be prepared and signed by both parties and shall be binding upon the parties and the Buyer Indemnitee(s) shall be entitled to conclusively rely on any such memorandum and the agreed upon amount of Losses set forth in such memorandum.

(iv)If no such agreement can be reached during the fifteen (15)-day period for good faith negotiation, either the Buyer Indemnitee or the Seller Designated Representative may bring suit in the competent courts having jurisdiction in accordance with Section 9.10 hereof to resolve the matter. The decision of a final non-appealable judgment or order as to the validity and amount of any claim in such Notice of Claim (the “Indemnification Judgment”) shall be binding and conclusive upon the parties to this Agreement and the Buyer Indemnitee(s) shall be entitled to act in accordance with such Indemnification Judgment.

(v)Notwithstanding the receipt of one or more objection notices from the Seller Designated Representative, the Escrow Agent will be authorized to disburse out of the Escrow Fund to the Buyer Indemnitee(s) such amounts specified in one or more Notices of Claim for which no objections have been timely received by it (regardless of whether such disbursal would reduce the value of the Escrow Fund to an amount less than the amount subject to objections which have been timely received by the Escrow Agent).

(vi)Such portion of the Escrow Fund at the conclusion of the Escrow Period as may be necessary to satisfy any unresolved or unsatisfied claims for Losses specified in any Notice of Claim or Third Party Claim delivered to the Seller Designated Representative and the Escrow Agent prior to expiration of the Escrow Period shall remain in the Escrow Fund until such claims for Losses have been resolved or satisfied as set forth above. The remainder of the Escrow Fund, if any, shall be paid to the Seller Designated Representative promptly after the expiration of the Escrow Period.

Section 7.7 Tax Treatment of Indemnification Payments. All indemnification payments made under this Agreement shall be in United States dollars and shall be treated by the parties as an adjustment to the Purchase Price for Tax purposes, unless otherwise required by Law.

Section 7.8 Exclusive Remedies. Subject to Section 9.11, the parties acknowledge and agree that their sole and exclusive remedy with respect to any and all claims (other than claims arising from fraud, intentional misrepresentation or willful misconduct on the part of a party hereto in connection with the transactions contemplated by this Agreement) for any breach of any representation, warranty, covenant, agreement or obligation set forth in this Agreement or otherwise relating to the subject matter of this Agreement, shall be pursuant to the indemnification provisions set forth in this Article VII.

ARTICLE VIII

TERMINATION

Section 8.1 Termination. This Agreement may be terminated prior to the Closing:

(a)by mutual written consent of Buyer and Sellers;

(b)by Buyer in writing, if (i) any of Sellers’ representations and warranties contained in this Agreement shall be inaccurate as of the date of this Agreement, or shall have become inaccurate as of a date subsequent to the date of this Agreement (as if made on such subsequent date), such that the condition set forth in Section 3.3(a)(ii) would not be satisfied, or (ii) any of Sellers’ covenants or agreements contained in this Agreement shall have been breached such that the condition set forth in Section 3.3(a)(i) would not be satisfied; provided, however, that if an inaccuracy in Sellers’ representations and warranties or a breach of a covenant or agreements by Sellers is curable by Sellers and Sellers are continuing to exercise reasonable efforts to cure such inaccuracy or breach, then Buyer may not terminate this Agreement on account of such inaccuracy or breach if cured within thirty (30) days;

(c)By Buyer in writing if the events specified in Section 8.1(c) of the Disclosure Schedules shall occur.

(d)by Sellers in writing, if (i) any of Buyer’s representations and warranties contained in this Agreement shall be inaccurate as of the date of this Agreement, or shall have become inaccurate as of a date subsequent to the date of this Agreement (as if made on such subsequent date), such that the condition set forth in Section 3.2(a)(i) would not be satisfied, or (ii) if any of Buyer’s covenants or agreements contained in this Agreement shall have been breached such that the condition set forth in Section 3.2(a)(ii) would not be satisfied; provided, however, that if an inaccuracy in Buyer’s representations and warranties or a breach of a covenant or agreements by Buyer is curable by Buyer and Buyer is continuing to exercise reasonable efforts to cure such inaccuracy or breach, then Sellers may not terminate this Agreement on account of such inaccuracy or breach if cured within thirty (30) days;

(e)by either Buyer or Sellers in writing, if a court of competent jurisdiction or other Governmental Authority shall have issued a final and nonappealable Order, or shall have taken any other action, having the effect of making the transactions contemplated by this Agreement illegal;

(f)by either Buyer or Sellers, on or after the expiration of four (4) months following the signing date of this Agreement (the “Termination Date”), if the Closing shall not have occurred by the close of business on such date; provided that the right to terminate this Agreement under this Section shall not be available to a party if such party’s (or such party’s Affiliates’) breach of this Agreement has resulted in the failure of the Closing hereunder to occur on or before such date or that has caused any of the conditions set forth in Section 3 not to have been satisfied on or before such date.

Section 8.2 Effect of Termination. In the event of the termination of this Agreement as provided in Section 8.1, this Agreement shall be of no further force or effect, each of the parties shall be relieved of their duties and obligations arising under this Agreement after the date of such termination and such termination shall be without any liability to any of the parties and their respective Representatives; provided, however, that (i) this Section 8.2, Section 8.3, and Article VIII and the Confidentiality Agreement shall survive the termination of this Agreement and shall remain in full force and effect, and (ii) the termination of this Agreement shall not relieve any party from any liability for any breach of any representation, warranty or covenant contained in this Agreement.

Section 8.3 Expenses. All fees and expenses incurred in connection with this Agreement and the transactions contemplated by this Agreement shall be paid by the party incurring such expenses, whether or not the Transaction is consummated.

ARTICLE IX

MISCELLANEOUS

Section 9.1 Notices. All notices, requests, consents, claims, demands, waivers and other communications hereunder shall be in writing and shall be deemed to have been given (a) when delivered by hand (with written confirmation of receipt); (b) when received by the addressee if sent by a nationally recognized overnight courier (receipt requested); (c) on the date sent by e-mail of a PDF document (with confirmation of transmission) if sent during normal business hours of the recipient, and on the next Business Day if sent after normal business hours of the recipient or (d) on the third day after the date mailed, by certified or registered mail, return receipt requested, postage prepaid. Such communications must be sent to the respective parties at the following addresses (or at such other address for a party as shall be specified in a notice given in accordance with this Section 9.1):



If to Sellers:	Comverse, Inc. 200 Quannapowitt Parkway Wakefield, MA 01880 E-mail: roy.luria@comverse.com Attention:Senior Vice President, General Counsel

with a copy to:	DLA Piper LLP (US) 2525 E. Camelback Rd, Suite 1000 Phoenix, AZ 85016 E-mail: steven.pidgeon@dlapiper.com Attention: Steven Pidgeon, Esq.

If to Buyer:	PO Box 263, Hirzel House, Smith Street, St. Peter Port, Guernsey GY1 2NG E-mail: masmith@amdocs.com Attention:Matthew E. Smith - Company Secretary

with a copy to:	Meitar Liquornik Geva Leshem Tal 16 Abba Hillel Road Ramat Gan, Israel E-mail: dan@meitar.com; rbezalel@meitar.com Attention:Dan Geva; Ronen Bezalel

Any notice to Seller Designated Representative shall be deemed notice to all Sellers.

Section 9.2 Interpretation. For purposes of this Agreement, (a) the words “include,” “includes” and “including” shall be deemed to be followed by the words “without limitation”; (b) the word “or” is not exclusive; and (c) the words “herein,” “hereof,” “hereby,” “hereto” and “hereunder” refer to this Agreement as a whole. Unless the context otherwise requires, references herein: (x) to Articles, Sections, Disclosure Schedules and Exhibits mean the Articles and Sections of, and Disclosure Schedules and Exhibits attached to, this Agreement; (y) to an agreement, instrument or other document means such agreement, instrument or other document as amended, supplemented and modified from time to time to the extent permitted by the provisions thereof and (z) to a statute means such statute as amended from time to time and includes any successor legislation thereto and any regulations promulgated thereunder. This Agreement shall be construed without regard to any presumption or rule requiring construction or interpretation against the party drafting an instrument or causing any instrument to be drafted. This Agreement shall be construed and interpreted without regard to any prior drafts by and between the parties which shall have no effect for purposes hereof. The Disclosure Schedules and Exhibits referred to herein shall be construed with, and as an integral part of, this Agreement to the same extent as if they were set forth verbatim herein.

Section 9.3 Headings. The headings in this Agreement are for reference only and shall not affect the interpretation of this Agreement.

Section 9.4 Severability. If any term or provision of this Agreement is invalid, illegal or unenforceable in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other term or provision of this Agreement or invalidate or render unenforceable such term or provision in any other jurisdiction. Upon such determination that any term or other provision is invalid, illegal or unenforceable, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in a mutually acceptable manner in order that the transactions contemplated hereby be consummated as originally contemplated to the greatest extent possible.

Section 9.5 Entire Agreement. This Agreement, the Confidentiality Agreement and the other Transaction Documents constitute the sole and entire agreement of the parties to this Agreement with respect to the subject matter contained herein and therein, and supersede all prior and contemporaneous representations, warranties, understandings and agreements, both written and oral, with respect to such subject matter.

Section 9.6 Successors and Assigns. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and permitted assigns. Without limiting the foregoing, this Agreement and the provisions herein regarding indemnity shall bind any future buyer of the shares or assets of the Sellers and any such sale shall be subject to the purchaser thereunder committing to be bound by this Agreement.

Section 9.7 Assignment. No party may assign its rights or obligations hereunder without the prior written consent of the other parties, provided, that Buyer may authorize any of its Affiliates to purchase any Purchased Asset, or to assume any Assumed Liability, upon prior notice to the Sellers.

Section 9.8 No Third Party Beneficiaries. Except as provided in Article VII, this Agreement is for the sole benefit of the parties hereto and their respective successors and permitted assigns and nothing herein, express or implied, is intended to or shall confer upon any other Person or entity any legal or equitable right, benefit or remedy of any nature whatsoever under or by reason of this Agreement.

Section 9.9 Amendment and Modification; Waiver. This Agreement may only be amended, modified or supplemented by an agreement in writing signed by each party hereto. No waiver by any party of any of the provisions hereof shall be effective unless explicitly set forth in writing and signed by the party so waiving. No waiver by any party shall operate or be construed as a waiver in respect of any failure, breach or default not expressly identified by such written waiver, whether of a similar or different character, and whether occurring before or after that waiver. No failure to exercise, or delay in exercising, any right, remedy, power or privilege arising from this Agreement shall operate or be construed as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege.

Section 9.10 Governing Law; Submission to Jurisdiction; Waiver of Jury Trial.

(a)This Agreement shall be governed by and construed in accordance with the internal laws of the State of Delaware without giving effect to any choice or conflict of law provision or rule (whether of the State of Delaware or any other jurisdiction) that would cause the application of the Laws of another jurisdiction.

(b)ANY LEGAL SUIT, ACTION OR PROCEEDING ARISING OUT OF OR BASED UPON THIS AGREEMENT, THE OTHER TRANSACTION DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY MAY BE INSTITUTED SOLELY AND EXCLUSIVELY IN THE FEDERAL COURTS OF THE UNITED STATES OF AMERICA OR THE COURTS OF THE STATE OF DELAWARE, IN EACH CASE LOCATED IN THE STATE OF DELAWARE, AND EACH PARTY IRREVOCABLY SUBMITS TO THE SOLE AND EXCLUSIVE JURISDICTION OF SUCH COURTS IN ANY SUCH SUIT, ACTION OR PROCEEDING. SERVICE OF PROCESS, SUMMONS, NOTICE OR OTHER DOCUMENT BY MAIL TO SUCH PARTY’S ADDRESS SET FORTH HEREIN SHALL BE EFFECTIVE SERVICE OF PROCESS FOR ANY SUIT, ACTION OR OTHER PROCEEDING BROUGHT IN ANY SUCH COURT. THE PARTIES IRREVOCABLY AND UNCONDITIONALLY WAIVE ANY OBJECTION TO THE LAYING OF VENUE OF ANY SUIT, ACTION OR ANY PROCEEDING IN SUCH COURTS AND IRREVOCABLY WAIVE AND AGREE NOT TO PLEAD OR CLAIM IN ANY SUCH COURT THAT ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. NOTWITHSTANDING THE FOREGOING, NOTHING CONTAINED HEREIN SHALL PREVENT ANY PARTY FROM APPLYING TO ANY COURT OF LAW IN ORDER TO OBTAIN EMERGENCY RELIEF (SUCH AS TEMPORARY INJUNCTIONS, ATTACHMENTS OR ANY EQUIVALENT REMEDY), AGAINST ANY OTHER PARTY AS WELL AS TO FILE A CLAIM, IF FILING A CLAIM IS NECESSARY IN ORDER TO OBTAIN TEMPORARY RELIEF. HOWEVER, IF TEMPORARY RELIEF IS NOT GRANTED, THE FILING PARTY MUST IMMEDIATELY DISMISS THE RELATED ACTION.

(c)EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT OR THE OTHER TRANSACTION DOCUMENTS IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES AND, THEREFORE, EACH SUCH PARTY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LEGAL ACTION ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE OTHER TRANSACTION DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. EACH PARTY TO THIS AGREEMENT CERTIFIES AND ACKNOWLEDGES THAT (A) NO REPRESENTATIVE OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT SEEK TO ENFORCE THE FOREGOING WAIVER IN THE EVENT OF A LEGAL ACTION, (B) SUCH PARTY HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (C) SUCH PARTY MAKES THIS WAIVER VOLUNTARILY, AND (D) SUCH PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 9.10(c).

Section 9.11 Specific Performance. The parties agree that irreparable damage would occur if any provision of this Agreement were not performed in accordance with the terms hereof and that the parties shall be entitled to specific performance of the terms hereof, in addition to any other remedy to which they are entitled at law or in equity.

Section 9.12 Non-recourse. This Agreement may only be enforced against, and any claim, action, suit or other legal proceeding based upon, arising out of, or related to this Agreement, or the negotiation, execution or performance of this Agreement, may only be brought against the entities that are expressly named as parties hereto and then only with respect to the specific obligations set forth herein with respect to such party. No past, present or future director, officer, employee, incorporator, manager, member, partner, stockholder, Affiliate, agent, attorney or other Representative of any party hereto or of any Affiliate of any party hereto, or any of their successors or permitted assigns, shall have any liability for any obligations or liabilities of any party hereto under this Agreement or for any claim, action, suit or other legal proceeding based on, in respect of or by reason of the transactions contemplated hereby.

Section 9.13 Sellers Provisions. The Sellers’ obligations, Liabilities and representations hereunder shall all be joint and several and Buyer may, in its sole discretion, bring any claim against any of the Sellers or some of them with respect thereto and may, without limiting the generality of the foregoing, bring a claim against Comverse with respect to any breach of any Seller. Comverse hereby irrevocably and unconditionally guarantees to the Buyer and its Affiliates the prompt and complete payment and performance when due of all the covenants, agreements, promises, liabilities and obligations of each Seller and its respective Affiliates under this Agreement in accordance with its terms, whether now existing or hereafter arising (including in respect of any indemnification obligations of Sellers hereunder). Comverse hereby agrees that its guarantee constitutes a guarantee of payment (and not of collection) and waives all suretyship and guarantor rights and defenses that would otherwise be available to Comverse with respect to the Sellers’ obligations hereunder, except for any defenses available to the applicable Seller hereunder. Comverse further agrees that its obligations hereunder shall continue to be effective or reinstated if at any time payment (or any part thereof) hereunder is rescinded or must otherwise be restored by Buyer upon the bankruptcy or reorganization of a Seller or otherwise. The transfer of the Purchased Assets and Assumed Liabilities, and various other obligations under this Agreement shall be performed by Comverse and its Subsidiaries listed on Schedule 1 hereto. As soon as reasonably practicable Comverse shall cause each such Subsidiary listed on Schedule 1 to execute a joinder to this Agreement and to become a party to this Agreement and a “Seller” hereunder. This provision shall be a material covenant under this Agreement.

Section 9.14 Counterparts. This Agreement may be executed in two (2) or more counterparts, each of which shall be deemed an original but all of which together shall be considered one and the same agreement and shall become effective when counterparts have been signed by each of the parties hereto and delivered to the other parties, it being understood that all parties need not sign the same counterpart. This Agreement may be executed and delivered by facsimile transmission, by electronic mail in “portable document format” (“.pdf”) form, or by any other electronic means intended to preserve the original graphic and pictorial appearance of a document, or by combination of such means.

[SIGNATURE PAGE FOLLOWS]

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the date first written above by their respective officers thereunto duly authorized.

COMVERSE:



	COMVERSE, INC.
	By: /s/ Philippe Tartavull__________ Name: Philippe Tartavull Title: Chief Executive Officer

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the date first written above by their respective officers thereunto duly authorized.

BUYER:



	AMDOCS LIMITED
	By: /s/ Matthew Smith____________ Name: Matthew Smith Title: Secretary

Exhibit 10.1

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO CERTAIN PORTIONS OF THIS AGREEMENT. CONFIDENTIAL PORTIONS HAVE BEEN OMITTED AND FILED SEPARATELY WITH THE U.S. SECURITIES AND EXCHANGE COMMISSION.

MASTER SERVICE AGREEMENT

FOR OUTSOURCING SERVICES

BY AND BETWEEN

CUSTOMER

AND

SERVICE PROVIDER

CUSTOMER CONFIDENTIAL

[*] Confidential Treatment Requested

Table of Contents

Page


1.	INTERPRETATION........................................................................................................................ 1


2.	AGREEMENT STRUCTURE......................................................................................................... 2


3.	SCOPE OF SERVICES................................................................................................................. 3


4.	TRANSITION................................................................................................................................. 8


5.	OPERATION.................................................................................................................................. 9


6.	HUMAN RESOURCES.................................................................................................................. 12


7.	SERVICE PROVIDER STAFF........................................................................................................ 12


8.	FACILITIES USE............................................................................................................................ 17


9.	MANAGED AND ASSIGNED AGREEMENTS............................................................................... 18


10.	SERVICE LEVELS......................................................................................................................... 20


11.	PAYMENT TERMS........................................................................................................................ 21


12.	Intentionally Omitted...................................................................................................................... 23


13.	BENCHMARKING.......................................................................................................................... 23


14.	COMPLIANCE AND AUDIT............................................................................................................ 24


15.	TERM AND TERMINATION........................................................................................................... 30


16.	INTELLECTUAL PROPERTY RIGHTS......................................................................................... 34


17.	CUSTOMER DATA AND INTANGIBLE PROPERTY..................................................................... 37


18.	SECURITY AND CONFIDENTIALITY........................................................................................... 38


19.	REPRESENTATIONS WARRANTIES, AND COVENANTS......................................................... 41


20.	ADDITIONAL COVENANTS......................................................................................................... 42


21.	GOVERNANCE............................................................................................................................ 43


22.	INDEMNIFICATION ............................................................................................................... 46


23.	DAMAGES.................................................................................................................................... 47


24.	INSURANCE................................................................................................................................. 48


25.	FORCE MAJEURE........................................................................................................................ 50


26.	NOTICES...................................................................................................................................... 52


27.	NON-SOLICITATION AND [*]........................................................................................................ 52


28.	RELATIONSHIP............................................................................................................................. 53


29.	Intentionally Left Blank.................................................................................................................. 53


30.	SEVERABILITY.............................................................................................................................. 53


31.	WAIVER......................................................................................................................................... 53

CUSTOMER CONFIDENTIAL

[*] Confidential Treatment Requested

Table of Contents

Page


32.	PUBLICITY..................................................................................................................................... 53


33.	GOVERNING LAW......................................................................................................................... 54


34.	ASSIGNMENT AND DIVESTITURE.............................................................................................. 54


35.	GOOD FAITH................................................................................................................................ 54


36.	FURTHER ASSURANCES............................................................................................................ 54


37.	NO THIRD PARTY BENEFICIARIES............................................................................................ 55


38.	COUNTERPARTS......................................................................................................................... 55


39.	ENTIRE AGREEMENT.................................................................................................................. 55

CUSTOMER CONFIDENTIAL

[*] Confidential Treatment Requested

DOCUMENT INDEX

Master Service Agreement

Schedule 1 Definitions

Schedule 2 Parent Guaranty

Schedule 3 Commercial Terms

Schedule 4 Rates

Schedule 5 Travel and Expense Reimbursement Policy

Schedule 6 Companion Agreement

Schedule 7 Security Protocol

Schedule 8 Data Protection and Privacy

Schedule 9 Change Control Procedures

Schedule 10 Reverse Transition

Schedule 11 Governance Model

Schedule 12 Approved Subcontractors

Schedule 13 Approved Benchmarkers

Schedule 14 Service Provider and Customer Competitors

Schedule 15 Reports

CUSTOMER CONFIDENTIAL

[*] Confidential Treatment Requested

THIS MASTER SERVICE AGREEMENT ("Agreement") is made as of April, 14, 2015 ("Effective Date") by and between Comverse, Inc., a Delaware company ("Customer"); and Tech Mahindra Limited ("Service Provider") a Company registered under the laws of India having its corporate office at Corporate Block, 3rd Floor, Plot No. 1, Phase III, Rajiv Gandhi Infotech Park, Hinjewadi, Pune 411057, India.

WHEREAS, in response to Customer's request for proposals to provide certain outsourcing services to Customer ("Request for Proposal"), Service Provider submitted to Customer its proposal to provide outsourcing services to Customer ("Proposal"); and

WHEREAS, based on the Proposal, Customer and Service Provider have engaged in extensive negotiations and discussions that have culminated in the formation of the relationship described in this Agreement with respect to the outsourcing services in order to:

Create competitive advantage for Customer through the outsourcing of the Services (as defined below), achieve best-in-class standards and sustain and enhance such standards through continuous improvement;

Reduce Customer's current expenditure on the outsourced services by obtaining competitive market prices and cost reductions from Service Provider through the provision of the Services ;

Achieve and improve Service Levels through continuous assessment and reviews of all processes and procedures for the performance of the Services, and improve Customer's overall productivity to provide significant value to Customer; and

Provide a prompt and smooth Transition (as defined below) of the Services in accordance with the Transition Plan (as defined below) without disruption to Customer's business.

NOW THEREFORE, the Parties hereby agree as follows:


1.	INTERPRETATION

1.1 Defined Terms. The capitalized terms used in this Agreement will have the meanings set forth in Schedule 1 or stated where they first appear, unless the context clearly requires otherwise.

1.2 Reference to Statutes. A reference to any statute, enactment, order, regulation or other similar instrument will be construed as a reference to the statute, enactment, order, regulation or instrument as amended by any subsequent statute, enactment, order, regulation or instrument or as contained in any subsequent re-enactment thereof.

1.3 Headings. Headings are included in this Agreement for ease of reference only and will not affect the interpretation or construction of this Agreement.

1.4 Interpretation. The recitals above are (i) intended as a general statement of purposes for this Agreement; and (ii) are not intended to expand or contract the scope of the Parties’ obligations or to alter the plain meaning of this Agreement’s terms and conditions. However, the Parties do intend that the Agreement be interpreted and performed in a manner consistent with these objectives.

1.5 Section References. References to Articles, Sections, Schedules and Appendices are, unless otherwise provided, references to articles, sections, schedules and appendices to this Agreement and any applicable Companion Agreements.

1.6 Group Members. As Services are to be provided and paid for by Service Provider Group Members and Customer Group Members, respectively, all references to Service Provider will be construed to include the applicable Service Provider Group Members providing the Services, and all references to Customer will be construed to include the applicable Customer Group Members receiving and paying for Services, in each case whenever the context so requires or admits.

1.7 Waiver of Presumption. The Parties are sophisticated and have been represented by counsel during the negotiation of this Agreement. As a result, any presumption or rules of construction relating to the interpretation of contracts against the drafter thereof should not apply. The Parties hereby waive any such presumption or rule.

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2.AGREEMENT STRUCTURE

2.1 General. This Agreement sets out the Parties' agreement as to the provision of Services from Service Provider or a Service Provider Group Member to Customer or a Customer Group Member.

2.2 Intentionally omitted.

2.3 Companion Agreements. If a Customer Group Member wishes to purchase Services or a Service Provider Group Member(s) will provide Services with respect to a particular Country or Region, or in respect of a customer or a group of customers, or in cases where any supplementary or modified provisions are either (a) required by Local Laws ("Local Law Matters") or (b) appropriate due to local practice ("Approved Local Provisions"), the Parties will cause, subject to Section 2.8, a mutually agreed companion agreement (“Companion Agreement”), containing any Local Law Matter or Approved Local Provisions, as applicable, to be signed by the appropriate parties. Each Companion Agreement will be substantially in the form set forth in Schedule 6. Each Companion Agreement executed pursuant to the terms of this Agreement will be subject to this Agreement, as modified by the Companion Agreement, and effective no later than the date for commencement of the provision of Services by Service Provider or Service Provider Group Member in such Country or Region.

2.3.1 The Parties to this Agreement will cause their respective Group Members that enter into any Companion Agreement to observe and perform the obligations of such Party as set forth in the Companion Agreement. Each Party will be liable for all obligations and liabilities accepted or incurred by its Group Members under each Companion Agreement.

2.3.2 Each Companion Agreement will be deemed to be a separate divisible contract both in respect of this Agreement and in the case of other Companion Agreements, except to the extent specified in this Agreement.

2.3.3 The Companion Agreement template annexed hereto as Schedule 6 will be interpreted in accordance with New York law and practice and in contemplation of New York law applying, except in respect of personnel and pension issues relating to Transferring Personnel and other Local Law Matters. Any Companion Agreement and related schedules, including changes to the Agreement and related Schedules, as incorporated or copied into the Companion Agreement, will be amended only in a written document signed by authorized representatives of each Party and as necessary to reflect the specific legal requirements and business practices from time to time applicable in the relevant jurisdiction in order to produce the legal and business result intended by the Parties.

2.4 Order of Precedence. This Agreement, all Schedules thereto, the Companion Agreements, and all Schedules thereto will be construed to be consistent, insofar as reasonably possible. In the event of any conflict between the provisions of this Agreement, the Schedules hereto, and the Companion Agreement and the Schedules thereto, the conflict will be resolved in accordance with the following order of precedence: first, the Companion Agreement; second, the Companion Agreement

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Schedules; third, this Agreement; and last, the Schedules hereto; provided, however, that (i) any provision of any Companion Agreement that changes or is inconsistent with this Agreement must be approved in writing by both the Customer Contract Executive and the Service Provider Contract Executive, and (ii) any specific description of any service or other performance obligation in the Statement of Work will supersede any inconsistent general reference in this Agreement.

2.5 Amendment, Modification. This Agreement and its Schedules may only be amended, varied or modified by further written agreement of authorized representatives of Service Provider and Customer. Unless otherwise agreed in such further written agreement, any such amendment, variation or modification will be binding upon each Service Provider Group Member and each Customer Group Member to the extent that the provisions of this Agreement apply to the business arrangements entered into by those Parties pursuant to the Companion Agreement, whether such Companion Agreement was entered into before or after said amendment, variation or modification came into effect.

2.6 Primary Liability. The liabilities and obligations of Service Provider hereunder are primary and enforceable either before, simultaneously with, or after proceeding against any Service Provider Group Member or any property or security available to Customer. Service Provider may be joined in any action against any Service Provider Group Member. The liabilities and obligations of Customer hereunder are primary and enforceable either before, simultaneously with, or after proceeding against any Customer Group Member or any property or security available to Service Provider. The Parties' commitments in this Section 2.6 will remain in full force and effect as to any renewal, modification or extension of the Agreement and the Companion Agreements, and will survive the expiration or termination of any such Agreement and Companion Agreement until the expiration of all applicable statutes of limitations for claims that could be made by the claiming Party.

2.7 Bankruptcy of Group Member. In the event any Companion Agreement is avoided, reduced, set aside, rendered unenforceable by virtue of any provision, requirement or enactment relating to bankruptcy, insolvency, liquidation or the rights of creditors generally, the Party whose Group Member is the subject of such proceedings will, and does hereby (without the necessity of any further agreement or act) assume the obligations and liabilities of the relevant Group Member under such Companion Agreement to the same extent as if such Party were originally named as a party under the relevant Companion Agreement and there had been no avoidance, reduction, set aside or unenforceability.

2.8 Reserved Countries. With respect to each Reserved Country, the Parties will decide whether or not to enter into a Companion Agreement after the Parties have undertaken all information and consultation processes and obtained all governmental or third party authorizations, approvals, consents or waivers in relation to the proposed Companion Agreement that, if not obtained prior to the decision having been taken, would result in any violation of applicable law. If the conditions set out in this Section are complied with, a decision is taken to enter into a Companion Agreement, and a Companion Agreement is signed by the applicable Parties, the terms of Section 2.3 will apply to that Companion Agreement.

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3.SCOPE OF SERVICES

3.1 Services. Commencing on the effective date of each Service, whether under this Agreement and its Schedules or each Companion Agreement and its Schedules, and continuing throughout the term of said agreements, Service Provider will be responsible for providing to Customer:

3.1.1 the services, functions and responsibilities described in this Agreement and the applicable Companion Agreement (including without limitation the services, functions and responsibilities described in the Commercial Terms and any applicable Statement of Work) and any supplementary Statement of Works attached to the Companion Agreements or this Agreement;

3.1.2 the services, functions and responsibilities being performed within the twelve (12)-month period prior to the Effective Date by Customer's personnel or contractors whose services, functions or responsibilities are displaced or transitioned as a result of the Commercial Terms or applicable Statement of Work, and as documented in the Procedure Manual by Customer;

3.1.3 any services, functions or responsibilities not specifically described in this Agreement, the Commercial Terms or the applicable Statement of Work but which are inherent in and reasonably related to and necessary for the proper performance and delivery of the Services and not otherwise expressly excluded by the Parties; and

3.1.4 other miscellaneous activities that Customer may request from time to time that do not require additional resources or affect Service Levels or other agreed performance standards.

3.2 Project Services. The Services include certain Project Services, as contemplated by the applicable Statement of Work. Personnel assigned to perform Project Services will possess the training, education, skills and competence necessary to perform their assigned responsibility, and unless Customer otherwise agrees, will not be chosen from personnel ordinarily assigned to the performance of Services for Customer. There will be no additional charge for Project management performed by Contract Staff ordinarily assigned to performance of Services for Customer.

3.3 Pass Through Services. The Services may consist of software and technology development, design, project delivery and/deployment, maintenance and support, training, quality assurance, professional services, managed services or other services that Customer is contractually obligated to perform for its customers (the "Pass Through Services") under service agreements that Customer has entered or may enter into with its customers (the "Pass Through Services Contracts"). Service Provider agrees to perform such Pass Through Services in accordance with the requirements of the applicable Statement of Work describing such Pass Through Services any and all terms of the Pass Through Services Contracts that are applicable to the performance of such Pass Through Services.

3.3.1 Notwithstanding any other provisions of this Agreement to the contrary, the scope of work applicable to the Pass Through Services shall include any and all of the work described in the Pass Through Services Contract, whether or not specifically set out in the applicable Statement of Work.

3.3.2 Notwithstanding any other provisions of this Agreement to the contrary, Service Provider shall meet or exceed any and all milestone delivery obligations and other obligations and requirements applicable to the Pass Through Services set out in the applicable Statement of Work or in the Pass Through Services Contract. If and to the extent Service Provider fails to meet or exceed such milestone delivery obligations or other obligations or requirements, Service Provider shall be liable for service level credits, liquidated damages, fines, penalties or other amounts as set forth in the SOW. Service Provider shall also (i) take all actions necessary to remediate and/or mitigate the delay or failure, and (ii) cooperate with Customer to investigate the root cause of such failure and

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take any and all actions necessary to correct the cause of such failures in order to prevent such failure from recurring.

3.3.3 Notwithstanding any other provisions of this Agreement to the contrary, Service Provider shall meet or exceed any and all service levels and key performance measurements and other commitments and requirements applicable to the Pass Through Services, set out in the applicable Statement of Work or in the Pass Through Services Contract. If and to the extent Service Provider fails to meet or exceed such service levels or key performance measurements or other commitments or requirements, Service Provider shall be liable for service level credits, liquidated damages, fines, penalties or other amounts as set forth in the SOW. Service Provider shall also (i) take all reasonable actions necessary to remediate and/or mitigate the delay or failure, and (ii) cooperate with Customer to investigate the root cause of such failure and take any and all actions necessary to correct the cause of such failure in order to prevent such failure from recurring.

3.3.4 Notwithstanding any other provisions of this Agreement to the contrary, Service Provider shall meet any and all minimum qualifications, conditions, and any and all other requirements for performance of the Pass Through Services, whether set out in the Statement of Work or the applicable Pass Through Services Contract.

3.3.5 Upon Customer's request from time to time and to the extent required by Customer's customer, Service Provider shall at its own expense conduct background security screening and/or drug testing of the Contract Staff as is currently done by Service Provider as permitted by applicable law and provide certified reports to Customer of the results thereof.

3.3.6 To the extent Service Provider incurs costs due to any delays or failures in project deployment or failure to meet service levels or key performance measurements, Service Provider shall not be entitled to increase or otherwise adjust the pricing under the applicable Statement of Work or Companion Agreement.

3.4 Location of Services. Service Provider make the Services available in any countries requested by Customer in accordance with the terms of this Agreement. At Customer's request, Service Provider will cause its local Service Provider Group Member to enter into the applicable Companion Agreement to provide the Services to Customer or the applicable Customer Group Member, as appropriate. Each Service will be performed from the Service Provider Service Location specified in the applicable Statement of Work and, if no Service Provider Service Location is specified, the Service Provider Service Location will be in the country in which Customer will receive the Service. Customer shall provide Customer Materials and Customer Software at no charge to Service Provider.

3.5 Knowledge Repository. At all times during the term of each Statement of Work, Service Provider shall work collaboratively with Customer to develop, and thereafter Service Provider shall maintain and update on a regular basis an electronic repository of information, data and knowledge relating to the Services for which Service Provider is responsible (e.g. training materials, reports, process documentation, standard operating procedures, documentation and performance metrics), any Deliverables associated with the Services and a list, by name and function, of the Service Provider Personnel that are involved in or are expected to be involved in and that were involved in the Services under that Statement of Work (the “Knowledge Repository”). The Knowledge Repository will reside on Customer's systems behind the Customer's firewall to provide Customer with real time access to the Knowledge Repository.

3.6 Acceptance of Deliverables. Customer will designate one or more persons ("Acceptor") to (i) accept or reject Deliverables (in whole or in part) and (ii) communicate Customer's comments, objections or responses concerning any Deliverable, testing, review or prototype demonstration. The following procedures will apply upon delivery of a Deliverable for which acceptance criteria or acceptance tests are specified in the Project documents or otherwise agreed to in writing or in any applicable SOW:

3.6.1 Completion criteria for Deliverables will be mutually developed and agreed to in the Project documents or relevant Statement of Works or Statement(s) of Work. To the extent practicable, acceptance criteria will be

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objective, measurable and repeatable tests that are based upon Customer's anticipated production use of the Deliverables.

3.6.2 In the case of components of a Deliverable consisting of documentation ("Documentary Deliverables"), the Acceptor will review the Deliverable and make any comments, objection or responses prior to the expiration of the applicable Review Period. In the case of hardware, software or infrastructure components of a Deliverable, Service Provider will conduct the acceptance tests as prescribed in the relevant documents (approved by Customer) after giving Customer appropriate notice and an opportunity to observe the acceptance tests. Service Provider will provide the Acceptor with any documentation or other record of the results of such acceptance tests.

3.6.3 The Acceptor will review the Documentary Deliverables and the record or results of acceptance tests for other Deliverables within the periods after receipt specified in the relevant documents ("Review Periods"), or, if no such Review Period has been specified, within ten (10) business days after receipt failing which acceptance shall be deemed . Prior to the end of the relevant Review Period, the Acceptor will deliver to Service Provider either (i) written acceptance of the relevant Deliverable or (ii) a written response specifying in detail how the Deliverable fails to conform to the applicable acceptance criteria.

3.6.4 In the event the Acceptor notifies Service Provider in writing that all or any part of a Deliverable is unacceptable, Service Provider will modify and return to Customer the entire Deliverable for review of the modified portions within thirty (30) business days (or such longer or shorter period as may be agreed for a particular Project). If and to the extent that any deficiencies remain, these procedures may be repeated as necessary to correct the deficiencies that remain (or others revealed by further testing or review after corrective work). Upon review and approval of the corrected Deliverable by the Acceptor, the Deliverable will be considered accepted.

3.7 Out-of-Scope Services. Customer may from time to time request that Service Provider perform an Out-of-Scope Service. Except as otherwise agreed by Customer in writing, within 5 days of Service Provider’s receipt of Customer’s request, Service Provider will provide Customer with a written proposal for such Out-of-Scope Service that will include (i) a description of the services, functions and responsibilities Service Provider anticipates performing in connection with such Out-of-Scope Service; (ii) a schedule for commencing and completing such Out-of-Scope Service; (iii) Service Provider's prospective Fees for such Out-of-Scope Service, including a detailed breakdown of such Fees; (iv) a description of any new software or hardware to be provided by Service Provider in connection with such Out-of-Scope Service; and (v) such other information as may be requested by Customer.

3.7.1 Service Provider will not begin performing any Out-of-Scope Service unless and until the Change has been approved in accordance with the Change Control Procedures (as defined in Section 5.6).

3.7.2 If Changes can be effected or Out-of-Scope Services performed with the resources available for performance of the Services, there will be no adjustment in Service Provider's Fees (other than through normal operation of charging metrics for additional or reduced consumption of chargeable resources). Service Provider's Fees for Out-of-Scope Services involving net additional resources will be at the rates specified in Schedule 4, Rates, unless there is no applicable rate specified for the type of Out-of-Scope Service requested and the Fees specified cannot reasonably be applied, in

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which case Service Provider's Fees for Out-of-Scope Services will be mutually agreed between the Parties.

3.7.3 The Parties will consider in good faith opportunities for gain-sharing with respect to Out-of-Scope Services.

3.8 Customer Performance of Services. This Agreement shall be a non-exclusive Agreement. Customer has the right to perform itself, or retain third parties to perform, any of the Services or the Out-of-Scope Services. To the extent Customer performs any of the Services or the Out-of-Scope Services itself, or retains third parties to do so, Service Provider will cooperate with Customer or such third parties as reasonably required to perform such Services. Service Provider's obligation to cooperate is subject to the confidentiality restrictions that this Agreement imposes on Customer. Notwithstanding the foregoing, Customer agrees that Service Provider has made substantial investments under this Agreement. Pursuant to such investment, Customer agrees that notwithstanding any other provision in this Agreement or any Managed Agreements, Assigned Agreements or Pass Through Agreements, to provide a minimum business volume commitment (the "Committed Volume") as indicated in Schedule 3 (Commercial Terms) over the initial Term. Such Committed Volume shall be for the Services rendered under the applicable Statement(s) of Work or for work comprising similar skill sets to the tasks and activities comprising the Services. Additionally, Customer agrees that in case of a failure to meet such Committed Volumes/shortfall, the Service Provider shall be entailed to recover such differential/shortfall as stated in Schedule 3 (Commercial Terms), subject to the carry forward and business volume adjustment provisions set forth in Schedule 3.

3.9 Business Continuity and Disaster Recovery. Service Provider will provide the business continuity services and disaster recovery services as specified in the applicable Statement of Work, and that are specified in the applicable Procedures Manual. In the event of a disaster, personnel ordinarily assigned to the performance of Services for Customer under this Agreement will, at Customer’s request, be made available to perform business continuity and disaster recovery services in cooperation with Customer.

3.10 Excuse from Performance. In addition to the excused performance contemplated under Section 25 (Force Majeure), Service Provider will be excused from failures to achieve the Critical Transition Milestones, to perform the Services, and to meet or exceed the Service Levels in this Agreement and its Schedules to the extent that Customer fails to perform the retained services identified in the applicable Statement of Work or other provisions of this Agreement and such failure or other acts or omissions of Customer or its agents (not undertaken at Service Provider’s direction or with Service Provider’s consent) directly causes Service Provider's failure to perform; provided, however, that Service Provider must (a) give Customer prompt notice of Customer's failure to perform such retained services resulting in such performance failure, (b) use its reasonable efforts to continue to perform despite Customer's failure to perform retained services and (c) use its reasonable efforts to mitigate the adverse consequences of Customer's failure to perform such retained services. To the extent that Service Provider requires additional resources or will incur additional out of pocket expenses beyond using commercially reasonable efforts to overcome Customer’s failure under this Section 3.10, Service Provider will notify Customer of such requirements, and such additional resources and expense shall be addressed through the Change Control Procedure.

3.11 Assets. If the Parties agree that Service Provider will, in connection with the performance of the Services, acquire Assets from Customer that may be used in providing the Services to Customer, then the Parties will list those Assets and the corresponding acquisition prices in the applicable Statement of Work. Service Provider will acquire such Assets from Customer on the date specified in the applicable Statement of Work and shall remit payment for such Assets to Customer in accordance with the provisions of the applicable Statement of Work.

3.12 Reports. In addition to any reports identified in the applicable Statement of Work, Service Provider will provide Customer with the financial, performance, utilization and status reports described in

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Schedule 15, Reports and such other reports as Customer may request from time to time related to the Services, the Service Levels, the Fees, the relationship between the Parties or other aspects of this Agreement.

4.TRANSITION

4.1 General. Service Provider will perform or cause its Subcontractors to perform (as the case may be) all functions and services set forth in the Transition Plan applicable to the Statement of Work and as otherwise necessary to accomplish the Transition of the Services from Customer and the Customer Group Members to Service Provider and the Service Provider Group Members, and will complete the Critical Transition Milestones on or before the dates set forth in the applicable Statement of Work ("Transition Services").

4.1.1 The Transition Services will be performed in accordance with the Transition Plan, in a manner intended to minimize any adverse impact on Customer's business and without causing a material disruption to Customer’s business or operations.

4.1.2 Customer will perform or cause its agents and subcontractors (as the case may be) to perform all of its obligations set forth in the Transition Plan in a timely manner that will not prevent or delay the Transition or Service Provider's timely completion of the Critical Transition Milestones. In the event Service Provider fails to meet any Critical Transition Milestone, Customer shall be entitled to the Milestone Credit set forth in the Transition Plan for each day that Service Provider delays proper completion of the Critical Transition Milestones. In the event that action or inaction of Customer or any Customer agent or subcontractor (other than action or inaction undertaken at Service Provider’s direction or with its consent) prevents or delays Transition or any Transition Milestone, Service Provider's performance will be excused as provided under and subject to the provisions of Section 3.10 for the period of the delay caused by Customer.

4.1.3 Service Provider will designate an individual for each of Customer's facilities and functions being transitioned who will be responsible for managing and implementing the Transition Services with respect to such functions or services, as well as an overall manager for all Transition related activities and Services (the “Transition Manager”). Until the Transition has been completed, each such individual and/or the Transition Manager will review with the Customer Contract Executive or designated Transition Manager the status of the Transition Services for which that individual is responsible as often as may be reasonably requested by the Customer Contract Executive or Transition Manager.

4.2 Relocation of Service Provider Operations. Any relocation of a material portion of Service Provider's operations related to any Services will be conducted pursuant to a formal, written migration plan for orderly transition and uninterrupted Service prepared by Service Provider and approved by Customer. Relocation of Service Provider's operations to countries other than those where such operations are then performed will be conditioned upon mutual agreement, which may depend upon reductions in applicable fees for Services related to those operations. Without limiting the foregoing, any relocation of Service Provider's operations related to any Services shall require Customer’s prior written approval, and may require the execution of a Companion Agreement with respect thereto.

4.3 Extension of Commencement Date. The following terms will apply to an extension of a Service Commencement Date.

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4.3.1 Upon notice from Customer that Customer desires Service Provider to delay a Service Commencement Date by more than sixty (60) days, Service Provider will extend the Transition Schedule for the applicable period of time Customer has requested, and Customer will reimburse Service Provider for any documented and supported resource charges and additional verifiable direct costs or expenses reasonably incurred by Service Provider as a result of such delay not contemplated in the Base Fees and that are pre-approved by Customer in writing.

4.3.2 If a Service Commencement Date is delayed for more than sixty (60) days as a result of delays caused by Service Provider, then in addition to Customer receiving the Milestone Credits specified in the applicable Statement of Work due for failure to meet the Critical Transition Milestones, and in addition to any other remedies that Customer may have against Service Provider: (i) Service Provider will reimburse Customer for any verifiable direct costs or expenses incurred by Customer as a result of such delay; and (ii) Customer may terminate this Agreement for cause in accordance with the provisions of this Agreement.

4.3.3 If either Party incurs costs in connection with the extension of the Transition Schedule for which the other Party is responsible pursuant to this Section, the Party incurring the costs will be obligated to use all commercially reasonable efforts to minimize such costs.

4.4 Consents. Service Provider will appropriately (i) identify, define the scope and nature of, and comply with (at Service Provider's expense) and (ii) assist Customer in obtaining and maintaining (at Customer's expense), all necessary Consents. Service Provider will cooperate with Customer in Customer’s obtaining the Consents. At Customer's request, Service Provider will obtain the Consents to allow Customer to continue to use the Service Provider Third Party Software after expiration or termination of this Agreement, unless the Statement of Work specifies that Service Provider will acquire a perpetual use license for Customer at no additional cost to Customer. Without limiting the generality of the foregoing, Customer shall have the right to determine when it may be necessary or desirable to acquire a license to a substitute product, at Customer’s expense, if Service Provider is unable to obtain a Consent on commercially reasonable terms and in a commercially reasonable time. In no event will Service Provider use any Customer Software in the absence of an appropriate Consent.

5. OPERATION

5.1 Service Locations. The Services will be provided to Customer from the Service Locations as specified in the applicable Statement of Work, and any other location for which Service Provider has received Customer's approval. In the event that there is any change in Law or public policy directed to Customer’s industry that would require a relocation of one or more Service Locations, or that imposes an adverse impact on the business of Customer absent a relocation of one or more Service Locations, at the request of Customer, Service Provider will as expeditiously as is possible under the circumstances relocate the Service Locations specified by Customer to a location designated by Customer. In such case, the Parties will negotiate a change in the Fees, if costs will be increased or decreased as a result of the relocation, but not to exceed Service Provider's reasonable, actual and verifiable increased cost of providing such Services, as well as reasonable, actual transition costs pre-approved by Customer in writing and incurred by Service Provider as a result of such change. Service Provider will use diligent efforts to minimize and mitigate any such transition costs and increased costs of providing the Services and to spread any increased costs over all of Service Provider’s other customers benefited by such relocation, to the maximum extent possible. Service Provider will bear any costs of transition occasioned by Service Provider's relocation of Services as a result of changes in Law where the change in location is not requested by Customer. Any other change in the location where the Services are performed during the Term of this Agreement must be approved in advance and in writing by Customer.

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5.2 English Language. All records and invoices will be maintained in and all oral and written communications (including without limitation meetings, telephone calls, reports, notices and conferences) will be conducted exclusively in the English language, except as otherwise specified in the applicable Companion Agreement or Statement of Work, or agreed in writing. Unless otherwise agreed in writing, all Contract Staff, including Key Personnel, will be fluent in the English language or the language of Customer personnel, customers and vendors with whom they interact, and those who interact with Customer employees, customers and vendors must be readily understandable to those employees.

5.3 Customer Architecture, Policies and Procedures. In providing the Services to Customer, Service Provider must adhere to Customer's information management technical architecture, standards, guidelines, policies and procedures and Customer’s applicable internal controls applicable to the Services as they may be modified and communicated in writing to Service Provider by Customer from time to time; provided, however, that if Customer modifies its technical architecture in a manner that requires Service Provider to acquire new hardware, software or other resources that materially increases Service Provider's costs above what had been planned and such is not a scheduled update or upgrade to the existing Software or hardware used to provide the Services, the modification will be considered a Change that is subject to the Change Control Procedure. Adjustments in Services in accordance with this Section will be done through change control process to include such Services within the scope of the Services to the same extent and in the same manner as if expressly described in this Agreement.

5.4 Currency of Services, Technology. Service Provider will reasonably cause the Services, as approved by Customer, to evolve and to be modified, enhanced, supplemented and replaced as necessary for the Services to keep pace with technological advances and advances in the methods of delivering services. In particular, and without limiting the generality of the preceding sentence, Service Provider's tools, utilities, methodologies, processes and other normal procedures for performing Services will be upgraded and enhanced as and when upgraded or enhanced for Service Provider's own business and the support of its customers generally; Service Provider will keep material Software on current supported releases as reasonably determined by Customer; Service Provider will keep material hardware and Software for which Service Provider has financial responsibility, as designated in the Financial Responsibility Matrix set out in the applicable Statement of Work, under warranty and/or manufacturer’s service contracts; and Service Provider will refresh material hardware and Software for which Service Provider has financial responsibility, as designated in the Financial Responsibility Matrix set out in the applicable Statement of Work, at reasonable intervals, consistent with good industry practice and as required to achieve agreed performance standards. Third party tools and utilities used to perform Services will be maintained on current supported releases. Adjustments in Services in accordance with this Section will be deemed to be included within the scope of the Services to the same extent and in the same manner as if expressly described in this Agreement.

5.5 Procedures Manual. Unless otherwise stated in a Statement of Work, within ninety (90) days after the Effective Date of each Statement of Work, with Customer's input and cooperation, Service Provider will prepare a procedures manual in the form and scope specified by Customer and will deliver the procedures manual to Customer, for Customer's approval ("Procedures Manual").

5.5.1 The Procedures Manual will contain Service Provider's procedures for performing the Services so that the Services are performed accurately and in a timely manner, and will include all operations manuals, support plans and user guides necessary and sufficient to document such procedures to Customer's satisfaction. Service Provider will perform the Services in accordance with the Procedures Manual.

5.5.2 Following Customer's review of the Procedures Manual, Service Provider will revise the Procedures Manual as requested by Customer and will resubmit the Procedures Manual for Customer’s approval. Service Provider will periodically update the Procedures Manual to reflect any changes in the operations or procedures described within a reasonable time after such changes are made.

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5.6 Change Control Procedures. Customer or Service Provider may propose Changes, including any changes occasioned by an acquisition or divestiture by or of Customer. All such Changes will be implemented pursuant to the procedures set forth in Schedule 9 ("Change Control Procedures").

5.6.1 Routine changes, including all Changes that do not require material, net additional cost, effort or resources, or that can be accommodated with the resources ordinarily available for performance of the Services, will not result in any increase or decrease to the Fees. Charges for changes that do require material, net additional cost, effort or resources, or that cannot be so accommodated, will be determined in accordance with Section 3.7.2, above.

5.6.2 If Service Provider and Customer are not able to agree on (i) the effect of the Change, if any, on the Fees and the manner in which such effect was calculated, (ii) the effect of the Change, if any, on Service Levels and any necessary revisions thereto, or (iii) the anticipated time schedule for implementing the Change, then the issue will be resolved in accordance with the dispute resolution procedure set forth in the Governance Model and Article 21 of this Agreement; provided, however, Service Provider will proceed with any Change as directed by Customer's Contract Executive while the Parties seek to resolve such disagreement. Service Provider shall not implement any change in its performance of Services that would have a material, adverse effect upon Customer’s use or receipt of the Services, or increase Service Provider’s Fees or Customer’s other costs, without Customer’s written approval, which Customer may give or withhold in its sole discretion. Service Provider may make temporary changes in its operations required by an emergency if prior approval is impractical, but in such cases shall promptly document and report such emergency changes to Customer.

5.6.3 Service Provider will not be required to comply with any such Change request if its compliance will violate applicable Law. Service Provider will immediately inform Customer if it determines it cannot implement the Change mandated by Customer and comply with applicable Law.

5.6.4 Service Provider will not invoice, and Customer will not be liable for, any Change or Out-of-Scope work performed by Service Provider unless a Change has been approved in accordance with the Change Control Procedures. The Fees for such work will be specified in the applicable Change request form.

5.7 Update Meetings. Upon thirty (30) days' notice from Customer and no more than two (2) times per Contract Year, Service Provider will meet with representatives of Customer at Customer's facilities in order to (i) explain how the Services are provided and (ii) provide such training and documentation as Customer may require for Customer to understand and use the Services. Service Provider will provide Customer with a reasonable number of copies of appropriate documentation describing and reflecting the means of performing the Services, including revised or updated versions of such documentation as and when available. Any documentation provided by Service Provider to Customer pursuant to this Section will be complete and of a quality satisfactory to Customer.

5.8 Prioritization of Scheduling. Service Provider agrees that Customer will be entitled to establish the priorities for Service Provider's scheduling of its performance of Projects and other Services and change the priorities from time to time on reasonable prior notice. If a change in priorities by Customer will adversely affect any Service Level, Service Provider will notify Customer's Contract Executive of the expected impact ("Impact Assessment") of the change in priorities. If Customer's Contract Executive approves the change in priorities, and there is a failure to meet a Service Level that Service Provider notified Customer may occur in the Impact Assessment, then the failure to meet the Service Level will be excused to the extent caused by the change in priorities.

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Customer acknowledges that changes in priorities may affect ongoing performance of Services and Fees and other costs to Customer. Service Provider agrees to cooperate with Customer and use diligent efforts to minimize additional costs, Fees or other adverse effects. Service Provider further agrees that Customer may adjust priorities, temporarily relieve Service Provider from Service Level or other obligations or authorize additional staff, Services or other resources in Customer’s sole discretion.

5.9 ITIL Compliance. Service Provider will perform all Services in compliance with the then-current version of the Information Technology Infrastructure Library (“ITIL”), where applicable. Service Provider will ensure that it is assessed as compliant with ITIL as of the Effective Date and will maintain such level of compliance throughout the Term. At Customer's request, Service Provider will provide Customer with a copy of Service Provider's then-current certificate of compliance with such ITIL standards.

5.10 Shared Environment. Service Provider shall not, without Customer's prior written consent, provide any Services on a shared basis with any third party(ies) (including other Service Provider customers). Service Provider will not migrate or relocate any of the Services or any Confidential Information of Customer to a shared hardware or software environment without Customer's prior written consent and without ensuring the physical and electronic security of such Services and/or Confidential Information of Customer.

6. HUMAN RESOURCES

The treatment of Customer Personnel is specified in the Commercial Terms. Neither Party's personnel will be eligible to participate in any of the employee benefits or similar programs of the other Party. Service Provider will inform the Contract Staff that they will not be considered employees of Customer for any purpose, and that Customer will not be liable to any of them as an employer in any amount for any claims or causes of action arising out of or relating to their assignment in connection with this Agreement or release therefrom. Customer has no authority to supervise, discipline, direct, control or instruct any of Service Provider’s personnel. Service Provider shall at all times comply with any and all obligations imposed by all Laws and Regulatory Requirements , including without limitation, all applicable labor, social security, health and safety, health insurance, vacation, sick leave, working hours and similar laws and regulations, related to Service Provider's employment or engagement of the Contract Staff.

7. SERVICE PROVIDER STAFF

7.1 Service Provider Contract Executive. Service Provider will appoint the individual specified in the Statement of Work to be the Service Provider Contract Executive. The Service Provider Contract Executive will from the date of this Agreement serve, on a full-time basis, as Service Provider's primary representative under this Agreement.

7.1.1 Service Provider's appointment of any Service Provider Contract Executive will be subject to Customer's approval.

7.1.2 The Service Provider Contract Executive will (i) serve as Service Provider's single point of accountability for the Services, (ii) have day-to-day authority for ensuring Customer satisfaction and (iii) be authorized to act for and on behalf of Service Provider with respect to all operational matters relating to this Agreement.

7.1.3 Service Provider will not, for a period of at least [*] after the last day that the person was the Service Provider Contract Executive, assign that person to perform similar services for any Customer Competitor, without Customer's prior written consent, which Customer may give or withhold in its sole but reasonable discretion.

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7.1.4 Service Provider agrees that Customer satisfaction will be a key performance incentive for the compensation of the Service Provider Contract Executive. Customer may provide recommendations to Service Provider regarding the criteria to be used in evaluating the Service Provider Contract Executive's eligibility for incentive-based compensation. Service Provider will (i) consider such recommendations in good faith, (ii) implement such recommendations, to the extent consistent with Service Provider's policies regarding incentive-based compensation, (iii) notify Customer if Service Provider is not able to implement any such recommendations and (iv) at Customer's request, provide any and all information regarding the amount and basis for any incentive-based compensation that it pays to the Service Provider Contract Executive.

7.2 Key Service Provider Personnel. The individuals specified in the Statement of Work will be the initial Key Service Provider Personnel. All Key Service Provider Personnel will be dedicated to the Customer account on a full-time basis.

7.2.1 Before assigning any new individual to a Key Service Provider Personnel position, Service Provider will (i) consult with Customer regarding the proposed assignment, (ii) introduce the individual to appropriate representatives of Customer and provide Customer the opportunity to interview such individual, (iii) subject to applicable Law, provide Customer with any information regarding the individual that may be reasonably requested by Customer and (iv) obtain Customer's approval for the proposed assignment.

7.2.2 Service Provider will not, for a period of at least [*] after the last day that a person was one of the Key Service Provider Personnel, assign that person to perform similar services for any Customer Competitor, without Customer's prior written consent, which Customer may give or withhold in its sole but reasonable discretion.

7.2.3 Service Provider agrees that Customer satisfaction will be a key performance incentive for the compensation of the Key Service Provider Personnel. Customer may provide recommendations to Service Provider regarding the criteria to be used in evaluating the Key Service Provider Personnel's eligibility for incentive-based compensation. Service Provider will (i) consider such recommendations in good faith, (ii) implement such recommendations, to the extent consistent with Service Provider's policies regarding incentive-based compensation, (iii) notify Customer if Service Provider is not able to implement any such recommendations and (iv) at Customer's request, provide any and all information regarding the amount and basis for any incentive-based compensation that it pays to the Key Service Provider Personnel.

7.3 Replacement. Service Provider will replace or reassign the Service Provider Contract Executive and Service Provider Key Personnel only in accordance with this Section.

7.3.1 Service Provider will not replace or reassign the Service Provider Contract Executive or any of the Key Service Provider Personnel, without Customer's prior written consent, which Customer may give or withhold in its sole discretion, for [*] from the Effective Date (in the case of those initially assigned), or the date of an individual’s first assignment to the Customer account, as applicable, unless such person (i) voluntarily resigns from Service Provider, (ii) is dismissed by Service Provider for cause, (iii) fails to perform his or her duties and responsibilities pursuant to this Agreement or (iv) dies or is

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unable to work due to his or her disability. Service Provider will, as soon as reasonably practicable, replace such person with qualified personnel.

7.3.2 After the initial [*] period, Service Provider will not reassign the Service Provider Contract Executive or any of the Key Service Provider Personnel without prior consultation with Customer.

7.3.3 If Customer decides that the Service Provider Contract Executive or any of the Key Service Provider Personnel should not continue in that position, then Customer may, in its sole discretion and upon notice to Service Provider, require removal of the Service Provider Contract Executive or Key Service Provider Personnel from the Contract Staff. Service Provider will, as soon as reasonably practicable, replace such person with qualified personnel. Customer will generally provide at least two (2) months notification to allow Service Provider time to identify and transition new personnel in the event of a removal request, unless such Key Personnel’s continued performance is not acceptable to Customer or Customer reasonably believes that immediate removal is warranted.

7.4 Contract Staff. Service Provider will appoint a sufficient number of individuals to the Contract Staff so that the Services are provided in a proper, good and workmanlike, and timely manner in accordance with generally accepted industry practices and the provisions of this Agreement and its Schedules. Only individuals with proper education and experience and with suitable training and qualifications to perform the Services may be appointed to the Contract Staff. Contract Staff may only provide Services that support Customer's operations and will not provide services for other Service Provider customers, unless otherwise agreed in the applicable Statement of Work. Service Provider will notify Customer as soon as possible after dismissing or reassigning any member of the Contract Staff whose normal work location is at a Customer Service Location.

7.4.1 Service Provider warrants that all Contract Staff assigned to perform any of Service Provider’s obligations hereunder are employees of Service Provider or its Affiliates and possess the necessary skills to perform the Services assigned to each specific Contract Staff. Service Provider warrants that all Contract Staff are legally authorized and qualified to work and receive compensation in the country where they are employed and that Service Provider’s assignment of all Contract Staff is in compliance with all applicable laws.

7.4.2 Service Provider shall, at its sole cost and expense and subject to applicable laws, maintain a program to perform a pre-assignment seven (7) year criminal background check. Service Provider warrants that all Contract Staff have successfully complied with such program and that Service Provider shall not assign any employees as Contract Staff that have a record of conviction for a misdemeanor or felony crime. Subject to applicable laws, Service Provider shall provide to Customer information regarding whether any personnel of Service Provider that Service Provider proposes to be Contract Staff has a record of conviction of a misdemeanor or felony crime (such may include pass/fail only and not actual background check results). In addition, upon Customer's request from time to time and to the extent required by Customer's customers, Service Provider shall at its own expense conduct background security screening and/or drug testing of the Contract Staff as permitted by applicable law and provide certified reports to Customer of the results thereof.

7.4.3 Service Provider agrees to provide Customer such other information regarding the qualifications of such proposed Contract Staff which

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Customer may reasonably request (at no additional cost to Customer), and no Contract Staff shall be assigned by Service Provider to perform any of its obligations or the Services under this Agreement or an applicable SOW without the prior written approval of Customer, which approval shall not be unreasonably withheld, unless such approval is restricted in the applicable SOW to Key Personnel. Except as may be otherwise provided in an SOW, Customer reserves the right to interview and approve of specific Contract Staff that are proposed to perform the Services. In addition, Service Provider agrees that it will comply with all legally-required pre-employment obligations for all Contract Staff prior to their assignment to perform Services under a SOW, including ascertaining that each individual Contract Staff is authorized to work in the country of their assignment without any sponsorship or assistance from Customer. Service Provider shall properly complete and update I-9 forms for all Contract Staff working in the United States.

7.5 Loyalty.

7.5.1 During the term of the performance of the Services by an of the Contract Staff and for a period of [*] following termination of such performance for any reason, Service Provider shall ensure that such Contract Staff will not, directly or indirectly, provide service to or be employed by a Customer Competitor or otherwise develop or sell products or services that compete with Customer's product or services or any work product delivered to Customer, unless Customer provides prior written consent to the contrary. Service Provider shall execute and enforce appropriate written non-compete agreements with Contract Staff that meet or exceed this non-compete obligation and shall designate Customer as an intended third party beneficiary of such agreements. Such agreements shall also include appropriate terms and conditions to (i) assign and cause the assignment of intellectual property rights from such Contract Staff to Customer in accordance with Section 16 and (ii) protect the confidentiality of Customer's Confidential Information. At Customer's request, Service Provider shall make such non-compete agreements available to Customer for review.

7.5.2 Service Provider shall not directly or indirectly, develop or sell any product that competes with any Customer product that was the subject of any Services or is otherwise similar to any work product delivered to Customer.

7.6 [*]

7.7 Unacceptable Contract Staff. Subject to applicable Laws, Customer may inform Service Provider if Customer determines that any member of the Contract Staff is unacceptable for any reason, including Customer's determination that such individual (i) is not qualified to perform the responsibilities required for the position held by such individual, (ii) is not performing his or her responsibilities to Customer's reasonable satisfaction in accordance with this Agreement, or (iii) has violated any term or condition of this Agreement, including the security obligations set forth in this Agreement. Within five (5) days following Customer's request, the Parties will review the matters, and if, after such review, the Parties do not otherwise agree, Service Provider will remove the individual from the Contract Staff. Customer shall have no responsibility for any termination of employment or other disciplinary action that Service Provider or its subcontractors may take in respect of any of their personnel. In urgent cases (including without limitation incidents involving dishonesty, serious misconduct or danger to others), Customer reserves the right to require the Service Provider to remove, and Service Provider shall immediately remove, the relevant member(s) of the Contract Staff.

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7.8 Training. To the extent Customer determines from time to time that it requires any Contract Staff to undergo specialized Customer training in order to enable such Contract Staff to work on Customer products or projects, Service Provider shall make such Contract Staff available for such additional and specialized training (“Customer Training”). At the request of Customer from time to time, Service Provider agrees that Contract Staff shall undergo such Customer Training at a training facility in Israel, India, U.S., Europe or any other locations designated by Customer. Any out of pocket expenses with respect to traveling to the Customer training facility shall be on the account of Customer .

7.9 Subcontractors. Service Provider may subcontract the performance of Services only in accordance with this Section.

7.9.1 Other than with respect to performance of Services by Service Provider Group Members, prior to subcontracting any of the Services, Service Provider must first notify Customer of the proposed subcontract and the Subcontractor name and other information reasonably requested by Customer and obtain Customer's prior written approval.

7.9.2 Service Provider must include in any subcontract with a Subcontractor: (i) terms and conditions at least as protective of Customer and its confidential and proprietary information as the terms and conditions of this Agreement, (ii) the terms in Schedule 8 on Data Protection and Privacy, (iii) Article 14, Compliance and Audit, (iv) third party beneficiary rights approved by Customer in its favor, (v) waivers of any lien rights, (vi) an acknowledgment that Customer will have no liability to Subcontractor for amounts that are owed to Subcontractor arising out of the Services, and (vii) provisions for transfer of the subcontract to Customer or a successor service provider upon expiration or termination of this Agreement. Upon reasonable notice, at the request of Customer, Service Provider will allow Customer to review the non-financial terms of any subcontract for Services to the extent necessary to verify that the subcontract complies with the terms of this Agreement. Service Provider will indemnify Customer for any and all liability suffered or incurred by Customer to the extent that Service Provider's Subcontractors' agreements with their subcontractors are not as protective of Customer as Service Provider's agreements with Subcontractors are required to be under this Agreement.

7.9.3 Prior to materially amending, modifying or otherwise supplementing any subcontract relating to the Services that requires Customer approval and that affects Customer, Service Provider must notify Customer of the proposed amendment, modification or supplement and must obtain Customer's approval.

7.9.4 No subcontracting will release Service Provider from its responsibility for its obligations under this Agreement. Service Provider will be responsible for the work and activities of any Subcontractor, including compliance with the terms of this Agreement.

7.9.5 Customer may revoke its approval of any subcontractor whose performance Customer reasonably believes to be deficient or that is acquired by a Customer Competitor, and in such cases Service Provider shall discontinue use of the subcontractor’s products and/or services and provide substitutes therefor.

7.9.6 Service Provider will be responsible for all payments to its Subcontractors and will indemnify, defend and hold Customer harmless from and against all Claims by its Subcontractors pursuant to Section 22.

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8. FACILITIES USE

8.1 Customer Facilities. Unless otherwise specified in an applicable Statement of Work, Customer will make available at no extra cost to Service Provider furnished space, Customer Materials, infrastructure and Customer Software in the Customer Service Location specified in such Statement of Work for the purpose of allowing Service Provider to perform the Services. Customer will provide the Customer Service Location with normal office resources (e.g., fax, telephone services, utility services, office supplies, and copier support) [*].

8.2 Relocation of Customer Service Location. If Customer directs Service Provider to relocate from one Customer Service Location to another Customer Service Location, Service Provider will do so; provided, however, that (i) Customer will provide reasonable advance notice to Service Provider of any such relocation, (ii) Customer will (A) provide comparable space and facilities in such relocated Customer Service Location in accordance with the applicable terms of this Agreement or a Statement of Work, (B) reimburse the reasonable, actual cost of substitute space; and (iii) Customer will reimburse Service Provider for any direct out-of-pocket costs that are pre-approved by Customer in writing and incurred by Service Provider as a result of such relocation that are accompanied by supporting documentation. Prior to the relocation, Service Provider will provide Customer with an Impact Assessment of any such relocation. In the event such move impairs Service Provider's ability to meet Service Levels as Service Provider notified Customer in the Impact Assessment, Service Provider will be relieved from its obligation to meet those Service Levels for a reasonable period of time to the extent impairment is caused by the relocation. Service Provider shall relocate affected operations in an orderly manner, pursuant to a plan approved by Customer, so as to minimize any interruption in affected Services or other adverse effects upon Customer, its business, operations or affairs.

8.3 Service Provider Use of Facilities. Service Provider will: (i) use the space in the Customer Service Location for the sole purpose of providing the Services and otherwise meeting its obligations under this Agreement; (ii) comply with the leases and other agreements applicable to the Customer Service Location; and (iii) comply with all policies and procedures governing access to and use of Customer Service Location, which policies and procedures will be provided to Service Provider prior to its access and use of the Customer Service Location.

8.3.1 Use of such facilities by Service Provider does not constitute a leasehold or subleasehold interest in favor of Service Provider, but is instead a license, revocable by Customer at its sole discretion at any time and without any prior notice requirements.

8.3.2 Service Provider will use the Customer Service Locations in a reasonably efficient manner. To the extent that Service Provider operates the space in a manner that increases facility costs incurred by Customer disproportionate to that reasonably required for Service Provider's provision of Services to Customer, Service Provider will reimburse Customer for such additional costs.

8.3.3 Service Provider will keep the Customer Service Locations in good order, not commit or permit waste or damage to such facilities and not use such facilities for any unlawful purpose.

8.3.4 When the Customer Service Locations are no longer required for performance of the Services, Service Provider will return such locations to Customer in substantially the same condition as when Service Provider began using such locations, ordinary wear and tear excepted.

8.4 Facilities-Related Services. Service Provider will permit Customer and Customer agents to enter into those portions of the Customer Service Locations including Customer Laboratories whenever required occupied by Service Provider's staff at any time to perform facilities-related services (such as,

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for example, repairs to the building) at no extra cost to Service Provider. Prior to the facilities-related services, Service Provider will provide Customer with an Impact Assessment of such facilities-related services. In the event such entrance or presence impairs Service Provider's ability to meet one or more Service Levels as notified to Customer in the Impact Assessment, Service Provider will be relieved from its obligation to meet those Service Levels for a reasonable period of time to the extent impairment is caused by the Customer's performance of the facilities-related services.

8.5 Improvements. Service Provider will not make any improvements or changes involving structural, mechanical or electrical alterations to the Customer Service Locations without Customer's prior written approval, which Customer will not unreasonably withhold if Service Provider demonstrates that such improvements or changes are reasonably necessary to provide the Services and to meet Service Provider's other obligations under this Agreement. Approved improvements will become Customer's property, or that of Customer's lessor, if so required under applicable leases. Service Provider shall keep Customer’s property, and that of its lessors, free from mechanic’s, materialmen’s and other liens of every kind and take all reasonable measures that Customer or its lessors may require (such as posting of bonds and obtaining releases of claims of lien).

9. MANAGED AND ASSIGNED AGREEMENTS

9.1 Managed Agreements. Service Provider will manage, administer and maintain the Managed Agreements, if any, specified in the applicable Statement of Work. Service Provider will provide Customer with reasonable notice of any option, renewal, termination or cancellation dates and fees with respect to the Managed Agreements. Service Provider will not renew, modify, terminate or cancel, or request or grant any consents or waivers under any Managed Agreements without the written consent of the appropriate entity or unit of Customer.

9.2 Invoices. Unless otherwise instructed by Customer, Service Provider will (i) receive all Managed Agreement Invoices, (ii) review and correct any errors in any such Managed Agreement Invoices in a timely manner and (iii) submit such Managed Agreement Invoices to Customer within a reasonable period of time prior to the due date or, if a discount for payment is offered, the date on which Customer may reasonably specify in order to pay such Managed Agreement Invoice with a discount.

9.2.1 Customer will be responsible for paying the Managed Agreement Invoices after processing by Service Provider. Customer will be responsible for any late fees in respect of the Managed Agreement Invoices if Service Provider submits the applicable Managed Agreement Invoices to Customer for payment within a reasonable period of time following receipt.

9.2.2 If Service Provider fails to submit a Managed Agreement Invoice to Customer, Service Provider shall be responsible for payment of such Managed Agreement Invoices, without reimbursement from Customer, that Service Provider fails to submit to Customer within [*] of receipt by Service Provider.

9.2.3 Customer will not be responsible to Service Provider for any additional management, administration or maintenance fees of Service Provider in connection with the Managed Agreement Invoices.

9.3 Assigned Agreements. As of the applicable Service Commencement Date, Service Provider will assume all responsibility for the Assigned Agreements, if any, specified in in the applicable Statement of Work.

9.3.1 Charges relating to Assigned Agreements will be pro-rated as of the relevant Service Commencement Date or the date of assignment, as

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appropriate. Service Provider will be solely responsible for paying all charges under such Assigned Agreements that may become payable after such date.

9.3.2 Service Provider will consult with Customer prior to taking any action to renew, modify, terminate or cancel, or request or grant any consents or waivers under any Assigned Agreement.

9.4 Breach of Agreements. Service Provider will promptly notify Customer of any breach of, misuse or fraud in connection with, any Managed Agreements or Assigned Agreements that Service Provider knows occurred or reasonably should know has occurred. Service Provider will cooperate with Customer to prevent or stay any such breach, misuse or fraud. Service Provider will, subject to Section 10.5, pay all amounts due for any penalties, liquidated damages, late charges or other similar charges (including amounts due to a third party) as a result of (i) Service Provider's sole non-performance or breach of its obligations under the Assigned Agreements or (ii) Service Provider's sole breach of its assumed obligations with respect to the Managed Agreements,.

9.5 Improved Terms. Service Provider will use its commercially reasonable efforts to:

9.5.1 introduce service levels which reflect industry accepted practices for services provided under the Managed Agreements and Assigned Agreements, respectively, upon renewal of any such Managed Agreements and Assigned Agreements; and

9.5.2 at Customer’s request, effect savings, pricing reductions and improved services in all Managed Agreements at the earliest possible date by renegotiation and using its purchasing power to obtain discounts, improved services, improved service levels and better overall pricing.

9.6 Replacement of Providers. Service Provider will be entitled upon notification to Customer and prior written consent by Customer, which consent will not be unreasonably withheld, to replace and substitute service providers under Assigned Agreements, either on renewal of such agreements, or prior to renewal upon the default of the service provider under the Assigned Agreement or other similar reason for early termination of an Assigned Agreement by Service Provider. All contracts with replacement providers shall be freely transferable to Customer. Customer may replace or substitute service providers under Managed Agreements at any time, in its discretion.

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10. SERVICE LEVELS

10.1 General. Service Provider will perform the Services in accordance with the Service Levels set forth in the applicable Statement of Work, as may be modified or supplemented in a Companion Agreement. With respect to those Services for which a Service Level is not specified in the Statement of Work or attached to the applicable Companion Agreement, Service Provider's performance will meet [*].

10.2 Adjustment. The Customer Contract Executive and the Service Provider Contract Executive will review the Service Levels for the preceding twelve (12) months during the last calendar quarter of every Contract Year. They will adjust the Service Levels, for the following Contract Year, that (i) require periodic adjustment pursuant to the Statement of Work or the applicable Companion Agreement to reflect any improved performance capabilities associated with advances in the technology and methods used to perform the Services, or (ii) are no longer appropriate because of an increase, decrease or change to the Services.

10.3 Measurement and Monitoring Tools. As of the applicable Service Commencement Date, Service Provider will implement, at Service Provider's expense, the measurement and monitoring tools and procedures necessary or required by Customer to measure and report Service Provider's performance of the Services against the applicable Service Levels. Such measurement and monitoring tools and procedures will (i) permit reporting at a level of detail sufficient to verify compliance with the Service Levels and (ii) be subject to audit by Customer or its designee, which designee will not be a Service Provider Competitor. Service Provider will provide Customer and such designees with information concerning and access to such measurement and monitoring tools and procedures upon request for verification.

10.4 Root Cause Analyses. In the event of any failure to provide the Services in accordance with the applicable Service Levels (whether or not excused), Service Provider will within three (3) business days of such failure, or such other time period as may be specified in the applicable Statement of Work or as may be mutually agreed, (i) perform a root-cause analysis to identify the cause of such failure, and (ii) provide Customer with a report detailing the cause of, and procedure for correcting such failure. Upon Customer's approval of such procedure, Service Provider shall implement such procedure as per mutually agreed timeframe, and provide Customer with assurance satisfactory to Customer that such failure will not recur following the completion of the implementation of the procedure.

10.5 Service Credits. The Customer and the Service Provider agree upon Service Level commitments to be achieved through a set of specific Key Performance Indicators/Service Levels applicable to the SOW along with the percentage distribution of the Service Credits and liquidated damages that can be levied. The Parties will review the Service Provider’s performance against Service Level commitments formally once per month. If Service Provider fails to provide the Services in accordance with the applicable Service Levels, Customer will receive the Service Credits set forth in the Statement of Work or attached to any applicable Companion Agreement. The Service Credits will not limit or preclude Customer's right to recover, in accordance with this Agreement, other damages incurred by Customer, or to seek other remedies to which it may be entitled as a result of such failure; provided, however, that the amount of any damages that Customer is entitled to receive for such failure will be offset by the amount of Service Credits paid to Customer by Service Provider for such non-compliant Services. [*].

10.6 Continuous Improvement. Service Provider will, as part of its total quality management process, provide continuous quality assurance and quality improvement through (i) the identification and application of proven techniques and tools from other installations within its operations and (ii) the implementation of demonstrable programs, practices and measures designed to improve performance standards.

10.6.1 Such procedures will include checkpoint reviews, testing, user acceptance and other procedures that enable Customer to confirm the quality of Service Provider's performance, which will be incorporated into the Procedures Manual.

10.6.2 Service Provider will utilize project management tools, including productivity aids and project management systems, as appropriate in performing the Services.

10.6.3 Service Provider will review all systems, Services, practices and procedures not less than once per calendar year and will use reasonable efforts to ensure on-going productivity gains, best practice flow-through and early identification of developing problems in all such areas.

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10.6.4 Service Provider will communicate such activities to Customer in an annual productivity and improvement report, which the Customer Contract Executive and Service Provider Contract Executive will review as part of the Governance Model described in Schedule 11.

10.7 Satisfaction Survey. Service Provider will conduct Customer satisfaction surveys during the Term, in substantially the form set forth in the Statement of Work or, if no such form is set forth in the Statement of Work, in accordance with a mutually agreed form. Such surveys and all related processes shall be designed, developed, and implemented by Service Provider as directed by Customer, in such a manner as to solicit feedback from Customer's users on the Services. Service Provider shall gather, analyze, evaluate and document the results of such surveys, and provide such results, analysis and evaluation to Customer. Additionally, within forty-five (45) days of each Customer satisfaction survey with results of less than eighty percent (80%) in any survey category, if Customer deems it necessary, Service Provider shall develop and submit a Service improvement plan to Customer, for Customer's review and approval. Such plan shall be updated on a periodic basis (as such results and information are obtained and analyzed) to include, at a minimum, changes to Service Provider's policies and practices that incorporate the results of, and reflect information learned from, the customer satisfaction surveys and the charges associated with any proposed changes. Such improvement plans, and the results achieved through the use thereof, shall be reviewed by the Parties, and such plans modified as appropriate, not less frequently than once each quarter.

11. PAYMENT TERMS

11.1 Fees. In consideration of Service Provider providing the Services, Customer will pay to Service Provider the Fees as set forth in the Commercial Terms. Except as expressly set forth in this Agreement, including any Companion Agreement, there will be no other charges or Fees payable by Customer in respect of Service Provider's performance of its obligations under or in connection with this Agreement, a Companion Agreement, or a Statement of Work, other than retained or pass-through costs expressly identified in the Financial Responsibility Matrix to the applicable Statement of Work or Companion Agreements, which shall, to the extent possible, identify and estimate all third party costs to be retained by or passed through to Customer. Except as specifically set forth in the Financial Responsibility Matrix as a Customer responsibility, Service Provider shall bear any and all costs related to the performance of the Services. Customer shall not pay any administrative charge or markup on any pass-through cost or cost reimbursement. Customer may set-off against the Fees any amounts owed to Customer by Service Provider, including fully loaded costs for Customer Personnel following the Effective Date that have not been hired by or transferred to Service Provider, as provided below. Further, Customer shall have no obligation to pay or reimburse any pass-through or other expense of any kind except to the extent required by the express terms of the Agreement or from time to time agreed in writing by the Parties’ authorized representatives. Any reimbursement of pass through or other expenses of any kind are subject to Service Provider's compliance with the requirements of Schedule 5, Travel and Expense Reimbursement Policy.

11.2 Invoicing. [*]

11.2.1 Unless otherwise specified in the Statement of Work or any Companion Agreement, Service Provider will invoice the Fees in United States Dollars. Unless otherwise agreed by Customer or provided for in any Companion Agreement, any currency conversion necessary to invoice Customer in United States Dollars for amounts reimbursable to Service Provider under this Agreement will be made at the prevailing rate of exchange for purchases of United States Dollars as published in the Wall Street Journal on the date of the invoice.

11.2.2 Each of Service Provider's invoices will (i) set forth (a) any pass-through expenses incurred and billable under the express terms of this Agreement and (b) any discounts, credits or charges issued during the period to which such invoice relates, and (ii) reflect any adjustment to or change in the Fees implemented during the period to which such invoice relates. Service Provider's invoices will be in the form attached to the Statement of Work, will include or be accompanied by all relevant calculations, and allocate Service Provider's charges in a manner consistent with Customer's reasonable chargeback requirements.

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11.2.3 All invoices must be presented within [*] after the end of the relevant month in which the Service was performed or the relevant milestone was completed. [*].

11.3 Payment. The undisputed Fees will be due and payable to Service Provider within [*] of receipt of Service Provider's invoice for the first Contract Year and within [*] from receipt of Service Provider's invoice for the subsequent Contract Year.

11.3.1 Credits and Refunds. Service Provider will promptly credit to Customer any payment made to which Service Provider is not entitled under this Agreement and refund to Customer any such payment for which there are not sufficient Additional Resource Charges under the then-current invoice against which to credit the overpayment. If Service Provider receives any refund, credit or other rebate (including deposits) in connection with any Managed Agreement or Assigned Agreement or the Assets that is attributable to periods prior to the Effective Date or for which Customer retained financial responsibility after the Effective Date, then Service Provider will promptly (i) notify Customer of such refund, credit or rebate and (ii) pay to Customer the full amount of such refund, credit or rebate. Service Provider will reimburse Customer for all prepaid amounts related to the Services to the extent that Service Provider receives the benefit of any such pre-payment.

11.3.2 Taxes. Customer and Service Provider will each bear sole responsibility for (i) all taxes, assessments and other real property-related levies on its owned or leased real property and (ii) any withholding or other tax assessable on inter-company payments or reimbursements to, from or among their respective Group Members or payments to Subcontractors as a result of or in connection with this Agreement. The Fees correctly invoiced in accordance with this Agreement and payable to Service Provider under this Agreement are exclusive of all sales, service, use, gross receipts, excise, value-added, and other transactional taxes that are imposed by a competent taxing authority on Service Provider or the applicable Service Provider Group Member for Services provided by the Service Provider or applicable Service Provider Group Member to or on behalf of, and on payments received from, Customer or the applicable Customer Group Member under applicable Law as of the Effective Date. The Fees exclude such taxes. The Service Provider represents that to its knowledge no such taxes are due for the Services, between Comverse Inc, a company registered in US and Tech Mahindra Ltd, a company registered in India, as of the Effective Date. The Service Provider or Service Provider Group Member receiving the Fees will remit all applicable taxes to the appropriate taxing authority in a timely manner. The Parties will otherwise reasonably cooperate with each other to minimize all applicable taxes to the extent legally permissible.

11.4 Disputed Amounts. Customer may reasonably dispute an amount on an invoice and may withhold payment of such disputed amount. In such event, Customer will promptly notify Service Provider in writing of the disputed amount, with an explanation of the reasons therefor. Following notification of a disputed invoice charge, the Parties will use their reasonable endeavors to resolve the disputed amount within fifteen (15) days. If the Parties cannot resolve the disputed amounts within fifteen (15) days, then the matter will be escalated to the representatives of the Parties specified in Article 21 for resolution. Upon resolution, the amount, if any, payable will be paid to Service Provider.

11.5 [*]

CUSTOMER CONFIDENTIAL [*] Confidential Treatment Requested

12. Intentionally Omitted.

13. BENCHMARKING

13.1 General. After [*], Customer may request a benchmark of the cost and performance of some or all of the Services; provided on rates (as indicated in Schedule 4) based additional business.

13.2 Benchmarker. Within twenty (20) days after the date Customer notifies Service Provider that Customer wishes to conduct a benchmark of the Services, Customer will select one of the entities specified in Schedule 13, Approved Benchmarkers. Customer will engage the Benchmarker and will bear the costs and expense of hiring the Benchmarker Customer. In the event an Approved Benchmarker acquires or is merged with a Service Provider Competitor, such Approved Benchmarker will be removed from Schedule 13 and replaced with a mutually acceptable substitute.

13.3 Process. The Benchmarker may convene meetings of the Parties, obtain documents and information and require or permit such presentations, as it deems appropriate. Customer and Service Provider will each provide the Benchmarker with any documents or other information reasonably requested and necessary for the Benchmarker to perform services as described in this Article. Such information may include, (i) a profile of the Services used by Customer, (ii) the volume of each Service, (iii) the Fees paid by Customer for each Service, (iv) the Service Levels (v) the complexity, scale, global coverage, start-up costs incurred at the time such costs were incurred, (vi) deferred revenue flow, if any, under this Agreement and (vii) any other special considerations relating to the Services.

13.4 Results. The Benchmarker will be required to include a report in the Benchmarking Results that states, with specificity by type of Service, its opinion of the fees and charges (taking into account Service Levels) that the Benchmarker believes Customer would be able to obtain through competitive procurement of a package of services comparable to those provided under this Agreement.

13.4.1 Customer will cause the Benchmarker to base its conclusions on the top quartile (i.e., lowest cost) of the rates and charges actually available in the marketplace.

13.4.2 Comparisons will be normalized to account for differences in volumes of service, complexity, service levels, investments in assets, transfers of personnel, start up costs, variations in configurations, unique or unusual requirements, terms of this Agreement and other appropriate criteria.

13.4.3 For any Benchmarking Result requiring an adjustment as described in Section 13.5, the Parties will be entitled to review the draft version of the Benchmarking Results and discuss such Benchmarking Results with the Benchmarker for a period of no more than thirty (30) days, prior to the Benchmarker's delivery of the final version of the Benchmarking Results. During the thirty (30)-day period following the Benchmarker's delivery of the final version of the Benchmarking Results requiring an adjustment as described in Section 13.5, Customer and Service Provider will review the Benchmarking Results.

13.5 [*]

CUSTOMER CONFIDENTIAL [*] Confidential Treatment Requested

14. COMPLIANCE AND AUDIT

14.1 Compliance with Laws. Each Party will obtain and maintain all Authorizations applicable to such Party at its own expense. Service Provider will comply with all Laws, including Regulatory Requirements, applicable to Service Provider's delivery of the Services and its performance of this Agreement, including, without limitation, those imposed on Customer but applicable to activities or tasks that Service Provider undertakes pursuant to this Agreement. Customer will comply with all Laws applicable to Customer's receipt of Services and its performance of this Agreement. In particular, and without limiting the generality of the foregoing, Service Provider will (i) comply with applicable privacy laws in all relevant jurisdictions as a processor of Customer’s data or as set forth in the relevant Statement of Work and (ii) enter into model processor or other, similar agreements concerning transfers of personally identifiable data within and without the member states of the European Union, when reasonably required by Customer, and also cause its Subcontractors to do so.

14.2 Compliance as Directed by Customer. To the extent necessary for Service Provider to provide the Services under this Agreement, and except as may be otherwise provided in a Statement of Work, Customer shall provide Service Provider with direction and interpretation with regard to Laws imposed on Customer but applicable to activities or tasks that Service Provider undertakes pursuant to this Agreement. Customer shall be responsible for making such directions and interpretations in compliance with all applicable Laws, and Service Provider shall perform the Services in accordance with such direction or interpretation. To the extent such compliance requires an interpretation of any Laws applicable to Customer and/or Customer’s operations, and there is any doubt or dispute as to such interpretation, Service Provider shall immediately consult with Customer on such interpretation and follow Customer’s interpretation, provided, that, if Service Provider has a good faith belief that Customer’s interpretation is incorrect, then Service Provider shall escalate its disagreement to the governance organization in accordance with Schedule 11. To the extent such Service Provider obligations are not dependent upon obligations of Customer, nothing in this paragraph shall be construed as limiting Service Provider’s obligations to comply with all applicable Laws, requiring Service Provider to act in a manner inconsistent with the foregoing obligation, or making Customer responsible for any failure by Service Provider to comply with all applicable Laws. The Services to be provided by Service Provider are not of a legal, tax or accounting nature, and Service Provider shall in no event give, or be required to give, any legal opinion or provide any legal, tax or accounting representation to Customer.

14.3 Changes in Laws. Service Provider will be responsible for identifying and becoming familiar with any changes in Laws that are related to Service Provider's delivery or performance of the Services.

14.3.1 Service Provider will promptly notify Customer of any such changes in Laws and will advise Customer of what actions, if any, Customer must take and when those actions must be taken related to the Services to remain compliant with Laws.

14.3.2 Service Provider and Customer will work together to identify the impact of such changes on how Customer uses, and Service Provider delivers, the Services.

14.3.3 Service Provider will perform the Services at no additional charge to Customer and will bear the costs associated with (i) regulatory changes affecting its business as a provider of the Services, (ii) changes in Service Provider’s standards, methods, practices and procedures for customers generally, (iii) changes in Laws or regulatory changes affecting its customers generally, unless such changes and Service Provider's compliance with such changes will result in material cost increases to Service Provider above and beyond those necessary to effect changes affecting Service Provider's other customers and operations generally. Costs associated with changes in Laws affecting Customer and other Service Provider customers in the Customer's industry will not exceed Customer's reasonable share of such costs, as apportioned among all such customers operating in such market. Costs specific to Customer's unique compliance measures will be determined and compensated in accordance with the Change Control Procedures.

CUSTOMER CONFIDENTIAL [*] Confidential Treatment Requested

14.3.4 If a change in Laws impacting the Services prevents Service Provider from performing its obligations under this Agreement, Service Provider will develop and, upon Customer's approval, implement a suitable workaround until such time as Service Provider can perform its obligations under this Agreement in compliance with Laws without such workaround. The cost for such workaround shall be borne by the appropriate Party in accordance with Clause 14.3.3

14.4 Fines and Penalties. Subject to the foregoing, Service Provider will be responsible for and bear any fine or penalty that Service Provider or Customer may suffer or incur for any non-compliance with Laws relating to the delivery, performance, use or receipt of the Services; provided, however, that Customer will be responsible and bear any such fine or penalty if (i) Service Provider has complied with its obligations under Section 14.3 and (ii) (a) Customer has failed to accept or implement any changes in how Customer uses, and Service Provider delivers, the Services resulting from such changes in Laws identified by Service Provider, and (b) the fine or penalty is directly attributable to Customer's failure to accept or implement any such change in how Customer uses, and Service Provider delivers, the Services.

14.5 Export Controls. Service Provider acknowledges that the Customer Software and Customer Materials and all related technical information, documents and materials are subject to United States of America and foreign export control laws and regulations. Service Provider will (i) comply strictly with all legal requirements established under these controls, (ii) cooperate fully with Customer in any official or unofficial audit or inspection that relates to these controls and (iii) not export, re-export, divert or transfer, directly or indirectly, any such item or direct products thereof to any country or national thereof that is embargoed by executive order, unless Service Provider has obtained the prior written authorization of Customer and the applicable government authority. Service Provider will not conduct business with customers located in any country or region subject to U.S. export embargo. Service Provider shall also obtain all export licenses and other authorizations, and will make all submissions, filings and registrations, required under the export control laws and regulations of each country for which such licenses or authorizations are necessary for Service Provider to perform any of the Services and in order for Service provider to furnish the Deliverables to Customer in accordance with Customer's delivery instructions.

14.6 Restricted Party List. Service Provider, its shareholders, directors, executive managers and all Service Provider Personnel performing the Services and/or who are directly supporting Service Provider's performance of Services under this Agreement, regardless of their location, shall be validated every quarter by Service Provider to not be on any list of persons or entities with whom any U.S. person or entity is prohibited from conducting business (“Restricted Parties List”). Such validation shall be conducted by Service Provider on a quarterly basis. Service Provider shall report to Customer immediately if Service Provider, its shareholders, directors, executive managers or any Service Provider Personnel performing or supporting the Services is listed on any list of persons or entities with whom any US person or entity is prohibited from conducting business. In the event of Service Provider or Customer becoming aware of Service Provider, its shareholders, directors, executive managers or any Service Provider Personnel involved in providing or supporting any Services being included on any Restricted Parties List, Service Provider shall promptly notify Customer, and, at Service Provider’s expense, remove such personnel from any involvement in or in support of the Services and shall take such other actions as Customer may require. Service Provider also confirms that no person that may have access to any Customer Software or Customer Materials (including Customer Software in source code form) is a citizen or permanent resident of an embargoed country. In addition, to the extent that Service Provider proposes to engage Subcontractors to perform any development work on the Customer Software or Customer Materials, the Service Provider shall (i) screen those Subcontractors, and their employees and agents, against the Restricted Parties List; (ii) confirm that none of those Subcontractors, or their employees or agents, is a citizen or national of an embargoed country; and (iii) if the Subcontractor is located in another country, have and maintain appropriate export licenses or other authorizations necessary to procure such subcontracted Services from such Subcontractor.

CUSTOMER CONFIDENTIAL [*] Confidential Treatment Requested

14.7 Unlawful Payments. Service Provider has not and will not directly or indirectly through a third-party intermediary pay or provide, or offer to pay or provide, any monies, bribes, kick-back or other items of value (including, for example, gifts, meals, contracts, entertainment, employment, hospitalities, and sponsorships that are not permitted by Service Provider) to (i) an officer or employee of a governmental department, agency, instrumentality (including a government-owned commercial enterprise) or public international organization, or any person acting on behalf of any such entity; (ii) any political party or official thereof or any candidate for political office, or (iii) any employees, officer, consultants, contractors or other personnel of any customer of Customer, in order to obtain, retain or direct business to any person.

14.8 Ethics Policies. Service Provider will comply, and cause its officers, directors, employees, agents and subcontractors to comply, with ethical standards and corporate social responsibility policies at least as stringent as Customer’s own standards and policies, as such standards and policies may be updated from time to time and are disclosed in writing to Service Provider.

14.9 Service Provider Internal Audits. Service Provider will make available promptly to Customer the results of any internal or external review or audit conducted by Service Provider and its internal and external auditors, relating to Service Provider's operating practices and procedures to the extent relevant to the Services, including, without limitation, Schedule 7, Security Protocol and the Statement of Work. Upon request, Service Provider will make available copies of pertinent portions of such reviews or audits, but excluding information concerning Service Provider's other customers, and legally privileged materials. Customer acknowledges that Service Provider’s audits, reviews, audit results and other related information are Confidential Information hereunder.

14.10 Service Provider Certifications. Upon request, and at such reasonable intervals as Customer or its auditors may specify, the Service Provider Contract Executive will certify to Customer that, to the best of his or her knowledge, after reasonable inquiry: (i) its charges and reports are accurate and complete in all material respects; (ii) there are no material unbilled charges or known material unasserted claims; (iii) Service Provider has reported all known material breaches of security, suspected fraud or other irregularities or reportable incidents that may constitute violations of law, breaches of this Agreement or Customer's or Service Provider's ethics or corporate social responsibility policies; (iv) Service Provider has reported to Customer all apparent material weaknesses and deficiencies in the Customer Controls of which Service Provider is aware (including, without limitation, any such controls contained in or related to the supported applications); and (v) make such other factual certifications concerning its Services and performance as Customer or its auditors may reasonably request. For purposes of these certifications, reasonable materiality standards may be reasonably specified by Customer or its auditors.

14.11 Audit. Upon thirty (30) days' prior notice from Customer, unless shorter notice is required by exigent circumstances, at the Customer's cost and subject to the confidentiality obligations in Article 18, Service Provider will provide, and will cause its Subcontractors to provide, Customer or any Customer representative (other than a Service Provider Competitor), with access to such facilities, systems, records(excluding internal cost records) and supporting documentation as may be reasonably requested by Customer in order to audit Service Provider's compliance with its obligations under or related to this Agreement, including, without limitation, those pertaining to Fees, Service Levels, the Security Protocol, the Customer Controls, information technology systems and any applicable Authorization, Consent, Assigned Agreement, Managed Agreement or ethics or corporate social responsibility policies. Audits shall be conducted in a manner that minimizes, to the extent possible, any disruption of Service Provider’s performance of Services and other normal operations.

14.11.1 Service Provider will, and will cause its Subcontractors to, (i) assist Customer and its designees in the performance of the audits described in this Section and (ii) cooperate fully with Customer and its designees in the performance of the audits described in this Section. Upon Customer's request, Service Provider will provide a reasonable level of resources to support the performance of the audits described in this Section, at no additional cost to Customer. Customer, in its sole discretion and at its expense, may perform the audits described in this Section through its internal personnel and/or external auditors.

CUSTOMER CONFIDENTIAL [*] Confidential Treatment Requested

14.11.2 If an audit of Fees charged discloses that Service Provider has overcharged Customer, Customer will notify Service Provider of the amount of such overcharge and Service Provider will promptly pay to Customer the amount of the overcharge,. If such audit reveals any other deficiencies in Service Provider's performance of its obligations under this Agreement, including any Schedules, Service Provider will immediately take steps to rectify all such deficiencies. At Service Provider’s request, Customer will make the audit report available to Service Provider and provide Service Provider an opportunity to explain any apparent discrepancies.

14.11.3 If, as and when regulatory authorities with jurisdiction over Customer so request, Service Provider will cooperate with regulatory agencies, including their auditors and examiners, in the same manner contemplated by this Section for audits conducted by Customer.

14.11.4 Service Provider shall immediately provide Customer with complete details of any breach or process/system weakness mentioned in its internal audit reports. Thereafter, Service Provider shall submit to Customer, an acceptable plan to cure any such breaches and process/system weakness within thirty (30) days (unless a shorter period is required by exigent circumstances) and thereafter diligently complete the cure within the said period.

14.11.5 Customer, its auditors and other representatives shall observe Service Provider’s reasonable confidentiality and security arrangements, and shall have no access to Service Provider’s internal cost data (except to the limited extent that costs may have been reimbursed by Customer). Service Provider Competitors shall not be engaged to audit Service Provider.

14.12 Control Rules. Without limiting the generality of the foregoing and subject to this Section and the confidentiality provisions of this Agreement, Service Provider will provide, or cause its auditor to provide, Customer and its internal and external auditors with all descriptions of controls, tests of controls, audit reports and any other information that Customer or its auditor deem appropriate or necessary to enable Customer and its auditor to fulfill their legal obligations under the Securities Act of 1933; the Securities Exchange Act of 1934; the Sarbanes Oxley Act of 2002; related rules and regulations of the Securities and Exchange Commission, including Regulation S-X; the rules, regulations and listing standards of the Nasdaq Stock Exchange; the rules, regulations and standards of the Public Company Accounting Oversight Board; and any other financial control or disclosure requirement imposed by law on public companies, as such legal requirements may be amended or modified from time to time (the "Control Rules").

CUSTOMER CONFIDENTIAL [*] Confidential Treatment Requested

14.12.1 Service Provider will assist Customer to comply with the Control Rules by, without limitation, (i) placing in operation as of the Commencement Date and thereafter maintaining the internal controls and procedures related to the Services and described in the Statement of Work (the “Customer Controls”); (ii) documenting such internal controls and procedures; (iii) conducting regular internal assessments to test whether internal controls and procedures are operating effectively, (iv) cooperating with Customer and its auditor in connection with testing the effectiveness of such controls and procedures; Service Provider advising Customer in advance of any significant proposed change in such controls and procedures; (vi) issuing such interim or annual certifications as Customer may reasonably request pursuant to Section 14.10; (vii) implementing the additional or alternative controls that Customer has in place or from time to time requires (or such superior controls as Service Provider may from time to time recommend, and Customer may approve in its sole discretion); and (viii) correcting any material weakness or exception as defined by the Control Rules or any other deficiency that would prevent Customer from complying with the Control Rules.

CUSTOMER CONFIDENTIAL [*] Confidential Treatment Requested

14.12.2 Upon Customer's request, but not more than once per year and at a time or with an effective date of preparation appropriate to allow Customer to meet its legal compliance requirements, Service Provider will cause its auditor to provide Customer and its auditor with a SOC 1 SSAE 16/ISAE 3402 audit report described in the Statement of Work on internal controls placed in operation and tests of operating effectiveness of those controls for Service Provider, Service Provider Group Members and any Subcontractors (the “Service Provider SSAE 16 Report”). Service Provider will solicit in a timely manner and consider in good faith Customer’s opinions in connection with (i) Service Provider’s selection of such auditor, (ii) the nature, timing and extent of tests of control to be conducted, and (iii) the coverage and format of such reports. Service Provider will provide Customer and its auditor with the Service Provider SSAE 16 Reports contemplated under this Section at actual cost and without any markup. Prior to initiating such audit, Service Provider will obtain Customer's approval of such cost. Service Provider will use every reasonable effort to minimize such preparation costs.

14.12.3 Customer may require that Service Provider provide Customer and its auditor, at a time and with an effective date of preparation appropriate to allow Customer to meet its legal compliance requirements, with a SOC 1 SSAE 16/ISAE 3402 audit report on any or all of the Customer Controls described in the Statement of Work (the “Customer Specific SSAE 16 Report”). Customer will be entitled to (i) review and approve Service Provider’s selection of the auditor, (ii) specify the nature, timing and extent of tests of controls to be conducted, (iii) define the coverage and format of such reports and (iv) review and approve the Service Provider’s fee arrangement with the auditor. Customer will pay or reimburse Service Provider for the reasonable, actual cost of preparing any such Customer Specific SSAE 16 Report. Service Provider will use every reasonable effort to minimize such preparation costs.

14.12.4 If any report or audit contemplated under this Section reveals a material weakness or exception in the internal controls placed in operation at Service Provider, or any Service Provider Group Member or Subcontractor, or otherwise at Customer’s request, Service Provider will promptly take such corrective action as Customer and its auditor may require. Service Provider will perform the corrective action at no additional charge to Customer, unless such action (i) will result in material cost increases to Service Provider above and beyond those necessary to effect changes affecting Service Provider's other customers and operations general and (ii) is unique to the Customer’s industry, in which case Service Provider shall apportion such costs among all such affected customers in the Customer’s industry. Costs specific to Customer's unique compliance measures will be determined and compensated in accordance with the Change Control Procedures.

14.12.5 With ten (10) days notice (unless shorter notice is required by exigent circumstances), Customer and its auditor will further be entitled to conduct audits and tests of control at Service Provider Service Locations in order to obtain any additional evidence of effective internal control that Customer or its auditor deem appropriate or necessary. Service Provider will grant, and cause Service Provider Group Members and Subcontractors to grant, reasonable access by Customer and its auditor to employees, facilities, data, records, systems, controls, processes and procedures in connection with any such audit.

CUSTOMER CONFIDENTIAL [*] Confidential Treatment Requested

14.13 Records. Service Provider will maintain and provide access, upon Customer's request, to those records (excluding internal cost records), documents and other information relating to this Agreement and the provision of the Services until the latest to occur of (i) the duration of the Agreement , (ii) the expiration of such longer period as may be required under Customer’s record retention policies for those records, and (iii) the resolution of all pending matters relating to this Agreement have become final and non-appealable. Service Provider's financial records shall be maintained in accordance with generally accepted accounting principles. At any time after expiration or termination of this Agreement, Service Provider may retire its retention obligation under this Section by providing a copy of such documents and records to Customer in a mutually agreed format. Upon notice from Customer, Service Provider will suspend any document destruction policy for any period of time reasonably requested by Customer.

14.14 ISO27k Review. Service Provider shall engage on an annual basis an external examiner to conduct an end-to-end International Organization for Standardization and International Electrotechnical Commission 27000-series (“ISO27k”) review of Service Provider’s provision of the Services (including, as directed by Customer, for each Service Provider subcontractor and at each Site). Each such annual review shall (i) be of scope approved by Customer in advance, (ii) cover a minimum period of twelve (12) months, and (iii) be issued by such auditor to Customer by such date as Customer may determine. Promptly after the completion of any such review, Service Provider shall provide Customer with the resulting report of each such review in writing. In the event that any such ISO27k review or other form of independently reviewed certification results in a finding that Service Provider is not in compliance with the Security Plan, Service Provider shall promptly, at Service Provider’s cost and expense, (i) prepare a remediation plan, (ii) provide such plan to Customer for Customer’s review, revision and approval, and (iii) implement such remediation plan, as reviewed, revised and approved by Customer.

14.15 Confidential Information. Notwithstanding any provisions of this Agreement any such compliance audit under Section 14 will not entail Customer any access to Service Providers other customers or confidential information or personnel information or internal cost records of Service Provider.

15. TERM AND TERMINATION

15.1 Initial Term. The term of this Agreement will commence on the Effective Date and will continue until the later of six (6) years from the Commencement Date or the expiration or termination of the last Companion Agreement or Statement of Work remaining in effect (the "Initial Term"), subject to Section 15.8, unless this Agreement is (i) sooner terminated in accordance with this Article 15 or (ii) extended in accordance with its terms or by mutually agreed amendment.

15.2 Companion Agreements. The term of any Companion Agreement or Statement of Work will be from the effective date of the Companion Agreement or Statement of Work until the termination date specified in the Companion Agreement or Statement of Work, or, if no termination date is specified, then the expiration or termination date of this Agreement or any extension of such date, unless sooner terminated under the provisions of this Agreement or the applicable Companion Agreement.

15.3 Renewal. Customer, at its option, may renew the Term of this Agreement, any Statements of Work and/or any Companion Agreements upon sixty (60) days prior notice . Unless Customer exercises such renewal right by providing written notice of its intent to renew this Agreement or the applicable Statement of Work, this Agreement and any Statement of Work will expire at the end of its then current Term. Renewal will be at the revised Fees / rates as set forth in the applicable Statement of Work.

CUSTOMER CONFIDENTIAL [*] Confidential Treatment Requested

15.4 Termination by Customer. Unless otherwise agreed by the Parties, Customer (or the applicable Customer Group Member in the case of a Companion Agreement only) may terminate, without further liability to Service Provider, this Agreement or any Statement of Work or Companion Agreement, in whole or in part:

15.4.1 by not less than [*] notice to cure to Service Provider, for all causes arising under this Section if Service Provider (i) is responsible for any failure or combination of failures defined as Unacceptable Service, or (ii) (a) breaches any warranty or representation in this Agreement in any material respect and fails to cure within such [*] period or (b) fails to perform any material obligation, and such material breach is not remedied within such [*] period, (iv) fails to execute a disaster recovery plan in accordance with the Statement of Work in all material respects (unless execution of such plan is itself prevented by an event of Force Majeure) within such [*] period, (v) commits multiple breaches of its obligations of which Customer has provided at least [*] notice and that may be immaterial if considered individually, but are material in the aggregate and fails to cure such breach. No termination under this Section shall be subject to a Termination Fee. [*]. SLA/KPIs shall continue to be reviewed and revised during the Term of the Agreement in accordance with the governance process;

15.4.2 immediately if Service Provider materially violates applicable Law or Service Provider's compliance obligations set forth in this Agreement or any Pass Through Services Contract, including without limitation any violation of Sections 14.5 (Export Controls), 14.6 (Restricted Party Lists), 14.7 (Unlawful Payments) or 14.8 (Ethics Policies). No termination under this Section shall be subject to a Termination Fee;

15.4.3 by not less than thirty (30) days’ notice to Service Provider if Service Provider becomes insolvent or makes an assignment for the benefit of creditors, or if a receiver or similar officer will be appointed to take charge of all or part of the assets of Service Provider. No termination under this Section shall be subject to a Termination Fee;

15.4.4 by not less than thirty (30) days’ notice to Service Provider, if Service Provider, without the prior written consent of Customer, merges with or is acquired, directly or indirectly, by a Customer Competitor. No termination under this Section shall be subject to a Termination Fee;

15.4.5 by not less than thirty (30) days' notice to Service Provider, with liability for any Termination Fee, if Customer merges with or is acquired, directly or indirectly, by a third party, provided that Customer gives notice of termination within sixty (60) days of such event;

15.4.6 by not less than ten (10) days' notice to Service Provider, and without paying any termination charges, if (i) a Force Majeure Event is either incurable or has continued for at least ten (10) days that renders impracticable the performance of the Services (or any material portion of the Services) by Service Provider substantially as contemplated by this Agreement after all alternatives have failed (including Step-in, Governance mechanism) or (ii) Service Provider fails to provide the disaster recovery or business continuity services as set forth in the Statement of Work, unless such disaster recovery obligations were themselves prevented by a Force Majeure event); or

15.4.7 by not less than ninety (90) days' notice to Service Provider for convenience and without cause. In the event that Customer terminates this Agreement, any Companion Agreement or any Statement of Work for convenience prior to the end of the Initial Term, Customer will pay Service Provider the corresponding Termination Fee specified in the applicable Companion Agreement or Statement of Work, if any, and have no other liability to Service Provider, other than payment for Services performed in accordance with the terms of the Agreement. If a purported termination for cause by Customer is determined pursuant to Article 21 not to be a proper termination for cause, that termination shall be deemed a termination for convenience subject to this Section 15.4.7, and the exclusive remedy shall be payment of the Termination Fee.

CUSTOMER CONFIDENTIAL [*] Confidential Treatment Requested

15.5 Termination by Service Provider. Service Provider may terminate the applicable Companion Agreement or Statement of Work by not less than (i) [*] prior written notice to Customer, if Customer or a Customer Group Member commits a material intentional infringement or misappropriation of Service Provider’s proprietary rights and fails to cure such infringement or misappropriation of rights within [*] after receipt of written notice specifying such breach and Service Provider's intention to terminate the applicable Companion Agreement or Statement Work, (ii) [*] notice if Customer is acquired by a Service Provider Competitor, provided Service Provider gives notice of such intent to terminate within [*] of such event or (iii) [*] (unless Customer commences payment of undisputed amounts during such [*] period in which case the notice period will extend to [*] if Customer or a Customer Group Member fails to make undisputed payments in an amount in excess of [*] of Fees required to be paid under the terms of the applicable Companion Agreement or Statement of Work, and fails to remedy such failure to make such undisputed payments within [*] after receipt of written notice specifying such breach and Service Provider's intention to terminate the applicable Companion Agreement or Statement of Work; provided, however, should the unpaid undisputed invoices have been issued to a Customer Group Member under a Companion Agreement and such Customer Group Member has failed to remedy its failure to pay such undisputed amount as provided above, that Service Provider has first notified Customer in writing of the non-payment and failure to remedy of the Customer Group Member, together with a copy of the invoice, and affords Customer a reasonable period of not less than [*] to pay the undisputed invoice on behalf of the Customer Group Member. In the event that Service Provider rightfully gives notice of termination pursuant to this Section 15.5, Service Provider may require Customer to pay in advance the Fees and, if applicable, a reasonable estimate of the variable fees for the next month(s) and for Reverse Transition under Section 15.7. In the event that Customer enters into bankruptcy, Service Provider shall have the right to terminate on [*] notice if Customer fails to pay undisputed Fees when due and fails to cure such failure to pay undisputed Fees within [*] of notice of such failure to pay such Fees. Except as provided in this Section 15.5, Service Provider will have no right to terminate this Agreement, any Companion Agreement or any Statement of Work as the result of Customer's breach of this Agreement, the applicable Companion Agreement or the applicable Statement of Work. (For purposes of this paragraph “intentional” shall mean infringement or misappropriation undertaken at the direction of or with express approval from, or the actual knowledge of, Customer’s responsible management). No termination fee shall be due for a Service Provider initiated termination.

15.6 Continued Performance. During any period commencing upon notice of termination and continuing until the effective date of termination specified in any such notice, Service Provider will perform the Services in accordance with terms and conditions and performance standards in effect as of the date on which notice of termination is given. In addition, upon Customer's request, Service Provider will provide to Customer such information and other cooperation as may be reasonably necessary for (i) Customer and/or its outside advisers to prepare requests for proposals or other, similar, documentation related to selection of a successor to Service Provider and (ii) a third party to prepare a reasonably informed, non-qualified offer to perform similar services. The types of information and of cooperation to be provided by Service Provider will be at least as comprehensive as those initially provided by Customer to Service Provider prior to the Effective Date. Service Provider will not be required to produce information concerning its costs (other than any costs from time to time reimbursed by Customer). [*].

CUSTOMER CONFIDENTIAL [*] Confidential Treatment Requested

15.7 Reverse Transition. In connection with expiration or any termination of this Agreement, any Companion Agreement or any Statement of Work, or in connection with the expiration of this Agreement, any Companion Agreement or any Statement of Work in accordance with its terms, the Parties will, commencing promptly after the giving of any notice of termination or at least [*] prior to expiration of this Agreement, the applicable Statement of Work or Companion Agreement, jointly develop a plan, in accordance with Schedule 10, Reverse Transition, to effect the orderly transition to Customer or its designee from Service Provider the Services then being performed or managed by Service Provider. Such plan will be completed by the Parties within [*] and will set forth the tasks and actions to be performed by Service Provider and Customer (including those set forth in Schedule 10), the time for completing such tasks and actions, and the criteria for declaring the transition completed. The Parties and their employees and agents will cooperate in good faith to execute such plan and each Party will perform those tasks and actions assigned to it in such plan. In any event, Service Provider will assist and support Customer in the reverse transition of the Service back to Customer or to an alternative provider (the "Reverse Transition"). If Service Provider terminates this Agreement under Section 15.5(ii), and such termination is not disputed by Customer in good faith, then Service Provider may require payment for Reverse Transition in advance. At Customer's request, Service Provider shall have and maintain a shadow organization comprised of the Contract Staff to ensure that Services continue to be provided during the term of the reverse transition without interruption and that reverse knowledge transfer is effectively provided to Customer or its designee. Service Provider shall continue to be responsible for meeting Service Levels during the reverse transition period and shall be liable for Service Credits accrued during the reverse transition until such time as the Services are fully transitioned back to Customer or to its designee. The Service Provider will continue to provide reverse transition for so long as Customer requires such service (the "Reverse Transition Assistance Period"). During each Reverse Transition Assistance Period, Service Provider will continue to provide, at Customer’s request, Reverse Transition Assistance at separate rates mutually agrees by the Parties . Actions by Service Provider under this Section will be subject to the other provisions of this Agreement or the applicable Statement of Work. Fees for such activities by Service Provider will be at the same agreed Fees as paid during the Term of the Agreement unless a different rate is set forth in Schedule 4(Rates). In the event this Agreement or any Statement of Work is terminated by Service Provider for non-payment of Fees due to Service Provider as per Section 15.5(iii) , then Service Provider shall have no obligation to provide any Reverse Transition Assistance, unless Customer prepays each month the estimated monthly Fees for providing the Reverse Transition during the Reverse Transition Assistance Period, with the actual monthly Fees being determined and finalized at the end of the applicable month.

15.8 Phased or Partial Termination. Cessation of particular Services may be scheduled in phases (by business unit, Statement of Work, location or otherwise) as Customer may reasonably direct in order to accommodate its business needs, and Fees will be reduced proportionally as such Services are phased out and discontinued. In the event of a partial termination of Services, Service Provider will, if requested by Customer, provide Reverse Transition related to the affected Services. In such event, the scope of particular Services (including affected Fees and Service Levels) will be equitably adjusted to the extent necessary to allow for operational dependencies, and phased reduction of Service (or introduction of new service from Service Provider or other sources) all in order to assure orderly, continuous operations with consistent quality of service. Pro-rata Termination Fees will apply due for a partial termination for convenience and any Committed Volume and Fees will be reduced commensurately to the pro-rata scope of the partial termination.

15.9 Extension of Services. At Customer's request, Service Provider will provide to Customer for up to [*] after the expiration date of the Term or, if applicable, the effective date of termination, any or all of the Services being performed by Service Provider prior to such date, including, without limitation, Reverse Transition. Thereafter, Service Provider will provide such support and service related to termination and transition as Customer may reasonably request at Service Provider's then-current standard rates. This Agreement will continue to govern the performance of all such Services during such period.

15.10 Specific Performance. Service Provider acknowledges that, if it were to breach, or threaten to breach, its obligation to provide Customer with Reverse Transition, then (i) Customer would be irreparably harmed, (ii) money damages would not be an adequate remedy, and (iii) continuing performance of Reverse Transition, other Services and the Parties' other respective obligations would best preserve the status quo pending resolution of any disputes then pending. Accordingly, Service Provider's obligation to provide Reverse Transition may be enforced by a preliminary or permanent mandatory injunction, decree of specific performance or other appropriate equitable remedy. Service Provider irrevocably waives any requirement that Customer post any bond or undertaking, or demonstrate irreparable harm or the inadequacy of money damages.

CUSTOMER CONFIDENTIAL [*] Confidential Treatment Requested

15.11 Survival. The provisions of Article 1 (Interpretation), Section 7.5 (Loyalty), Article 14 (Compliance and Audit), Article 15 (Term and Termination), Article 16 (Intellectual Property), Article 17 and Schedule 8 (Data Protection and Privacy), Article 18 (Security and Confidentiality) and Schedule 7 (Security Protocol), Article 19 (Representations, Warranties and Covenants), Article 20 (Additional Covenants), Article 21 (Governance), Article 22 (Indemnification), Article 23 (Damages), Article 26 (Notices), Article 27 (Non-Solicitation and Non-Competition), Article 29 (Build, Operate and Transfer), Article 30 (Severability), Article 32 (Publicity), Article 33 (Governing Law) and Article 37 (No Third Party Beneficiaries) will survive termination or expiration of this Agreement. Corresponding provisions of each Companion Agreement will also survive the termination or expiration of each Companion Agreement, together with any provision of this Agreement or a Companion Agreement that contemplates performance or observance after termination or expiration of the relevant agreement.

16. INTELLECTUAL PROPERTY RIGHTS

16.1 Customer Software and Materials. Neither Service Provider nor any Subcontractor shall have any ownership interest in any Customer Software, Customer Materials or other intellectual property that Customer provides to Service Provider, discloses to Service Provider or allows Service Provider to Use in any way. Subject to Customer obtaining all applicable Consents and to any restrictions contemplated in such Consents (including payment of applicable fees), Customer grants to Service Provider a limited, non-exclusive and non-transferable right to Use the Customer Software and Customer Materials, directly or through permitted Subcontractors, solely in and for performing the Services pursuant to this Agreement and to the extent permitted under any applicable Third Party Agreements.

16.2 Rights in Deliverables. Customer shall have all right, title and interest in the ownership of Customer’s intellectual property, including Customer’s products and solutions as those exist prior to the date hereof. Customer shall have “All Rights” in all Deliverables unless a Statement of Work specifies that Customer will have "Limited Rights" or "Licensed Rights" in a particular Deliverable. Service Provider shall also cause all of its employees and subcontractors engaged in the development of any Deliverables to enter into appropriate agreements with Service Provider and/or Customer, acceptable to Customer, assigning and releasing to Service Provider and/or Customer any intellectual property rights they may otherwise assert in any work in any medium created or modified in the course of performing Services.

16.2.1 "All Rights" means that Customer will own all right, title and interest in and to the Deliverable and that neither Service Provider nor its employees or subcontractors will have no rights in the Deliverable. Service Provider will create the All Rights Deliverables as "works made for hire" or "commissioned works" owned by Customer. To the extent that any All Rights Deliverable is not a "work made for hire" or "commissioned work" owned by Customer, Service Provider hereby irrevocably assigns, and agrees to assign, and will cause Subcontractors and its and their employees to assign, and agree to assign, to Customer without further consideration all of its and their right, title and interest in and to such All Rights Deliverable, and to cause its employees and those of its Subcontractors engaged in the preparation of the All Rights Deliverable to waive and agree not to assert any moral rights or reversionary rights. If and to the extent such waivers are deemed invalid, Service Provider will, and will cause its employees and those of its Subcontractors engaged in the preparation of the All Rights Deliverable, to grant to Customer the exclusive, perpetual, irrevocable, worldwide and royalty-free right to use, modify and distribute such items without any requirement of attribution or prior consent. Customer grants to Service Provider, during the Term of this Agreement, a limited, non-exclusive and non-transferable right to Use the All Rights Deliverable, directly or through permitted Subcontractors, solely in and for and if and to the extent needed for providing the Services to Customer.

CUSTOMER CONFIDENTIAL [*] Confidential Treatment Requested

16.2.2 "Limited Rights" means that, unless otherwise specified in the applicable Statement of Work, Customer will own all right, title and interest in and to the Deliverable and Service Provider will have the perpetual, irrevocable, paid-up, royalty-free, worldwide, non-exclusive, sub-licensable but otherwise non-transferable right to Use the Deliverable, in whole or in part; provided, however, that Service Provider (and any sub-licensee) may not Use any such Deliverable for the benefit of any Customer Competitor. Service Provider will create the Limited Rights Deliverables as "works made for hire" or "commissioned works" owned by Customer. To the extent that any Limited Rights Deliverable is not a "work made for hire" or "commissioned work" owned by Customer, Service Provider hereby irrevocably assigns, and agrees to assign, and will cause Subcontractors and its and their employees to assign, and agree to assign, to Customer without further consideration all of its and their right, title and interest in and to such Limited Rights Deliverable, and to cause its employees and those of its Subcontractors engaged in the preparation of the Limited Rights Deliverable to waive and agree not to assert any moral rights or reversionary rights. If and to the extent such waivers are deemed invalid, Service Provider will, and will cause its employees and those of its Subcontractors engaged in the preparation of the All Rights Deliverable, to grant to Customer the exclusive, perpetual, irrevocable, worldwide and royalty-free right to use, modify and distribute such items without any requirement of attribution or prior consent.

16.2.3 "Licensed Rights" means that Service Provider grants to Customer a perpetual, irrevocable, paid-up, royalty-free, worldwide, non-exclusive, sub-licensable and transferable right to Use the Deliverable.

16.3 Service Provider Software and Materials. Unless otherwise specified in the applicable Statement of Work, Service Provider grants to Customer a perpetual, irrevocable, paid-up, royalty-free, worldwide, non-exclusive, sub-licensable but otherwise non-transferable (except to a successor) right to Use the Service Provider Owned Software and Service Provider Materials that may be incorporated or embedded in any Deliverable. Service Provider will provide Customer with reasonable prior written notice before providing, disclosing or allowing Customer to Use any Service Provider Owned Software or Service Provider Materials that Customer will not be entitled to Use after the termination or expiration of this Agreement on the foregoing license terms. Customer may object to the use of any such Service Provider Owned Software or Service Provider Materials in providing Services pursuant to this Agreement, in which case Service Provider will use such alternative software, materials or other items as may be reasonably acceptable to Customer. Service Provider shall not use any Service Provider Third Party Software in performing the Services unless either (i) the license therefor is assignable to Customer or a new license is available to Customer at Customer’s request without transfer, upgrade or similar charges, or (ii) Service Provider Third Party Software is a standard commercial product, available to Customer or a successor service provider, on commercially reasonable terms; and, in either case, the Service Provider Third Party Software is expressly approved in writing by Customer prior to its said use. Upon termination or expiration of this Agreement and if requested by Customer, Service Provider will be required to obtain consents, at a reasonable and reimbursable cost, that allow Customer to continue to use Service Provider Third Party Software after the termination or expiration.

CUSTOMER CONFIDENTIAL [*] Confidential Treatment Requested

16.4 Commissioned Work. Neither Service Provider nor any of its Subcontractors (or any of its or their employees) shall have any ownership interest in any non-Software literary works or other works of authorship that may be created pursuant to or in connection with this Agreement, including any procedures manuals, specifications, product descriptions, knowledge bases, training materials and other items and any translations and derivative works thereof that are created or compiled for Customer ("Commissioned Work"), other than Service Provider's continuing rights in and to any Service Provider Materials that may be incorporated or embedded in such Commissioned Work. All Commissioned Works will be considered "works made for hire" or "commissioned works" owned by Customer and, to the extent that any such Commissioned Work may not constitute a "work made for hire" or "commissioned work" owned by Customer, Service Provider hereby irrevocably assigns, and agrees to assign, and will cause Subcontractors and its and their employees to assign, and agree to assign, to Customer without further consideration all of its and their right, title and interest in and to the Commissioned Work, and to cause its employees and those of its Subcontractors engaged in the preparation of the Commissioned Work to waive and agree not to assert any moral rights or reversionary rights excluding any pre-existing Service Provider Materials incorporated or embodied in such Commissioned Work. Service Provider grants to Customer a perpetual, irrevocable, paid-up, royalty-free, worldwide, non-exclusive, sub-licensable and transferable right to Use any such pre-existing Service Provider Materials as part of the Commissioned Work; provided, however, such license shall not extend to separating such pre-existing Service Provider Materials from the Commissioned Work to develop any stand alone product for marketing to third parties.

16.5 Service Provider Responsibilities. Service Provider covenants that all software Deliverables will include source code and documentation sufficient to allow a reasonably knowledgeable and experienced programmer to compile, maintain and support the software. Customer may make such filings and registrations as it deems advisable to obtain patent, copyright or other protection for Full Rights and Limited Rights Deliverables, Commissioned Works and other Customer intellectual property in all countries. Service Provider will provide such assurances, take such action, and execute such further documents and instruments as Customer may reasonably request (at no material cost to Service Provider) in order to carry out the purposes of this Article and, in particular, to register or otherwise secure patent, copyright, trademark, service mark or other intellectual property protection in all countries for Customer's intellectual property.

CUSTOMER CONFIDENTIAL [*] Confidential Treatment Requested

17. CUSTOMER DATA AND INTANGIBLE PROPERTY

17.1 Customer Data. Neither Service Provider nor any Subcontractor will have any right, title or interest in or to any Customer Data.

17.1.1 Without Customer's approval, Customer Data will not be (i) used by Service Provider or Subcontractors other than in connection with providing the Services or otherwise complying with Service Provider's obligations under this Agreement, (ii) disclosed, sold, assigned, leased or otherwise provided to third parties by Service Provider or Subcontractors or (iii) commercially exploited by or on behalf of Service Provider or Subcontractors.

17.1.2 Service Provider will (i) abide by and properly execute the additional undertakings set forth in Schedule 8 related to certain Customer Data that constitutes personally identifiable information and (ii) prior to any disclosure of such Customer Data to any Subcontractor, cause such Subcontractor to agree to abide by and properly execute such additional undertakings.

17.1.3 Service Provider hereby irrevocably assigns, transfers and conveys, and will cause Subcontractors and its and their employees to assign, transfer and convey, to Customer, without further consideration, any right, title and interest that it or they may possess or claim in and to Customer Data, and to cause its employees and those of its Subcontractors to waive and agree not to assert any moral rights or reversionary rights they may posses in the Customer Data. If and to the extent such waivers are deemed invalid, Service Provider will, and will cause its employees and those of its Subcontractors engaged in the use of Customer Data to grant to Customer the exclusive, perpetual, irrevocable, worldwide and royalty-free right to use, modify and distribute such items without any requirement of attribution or prior consent. Upon request by Customer, Service Provider will execute and deliver, and will cause Subcontractors, and its and their employees, to execute and deliver, any instruments or other documents that may be necessary or desirable under any Law to preserve, or enable Customer to enforce, its rights with respect to Customer Data.

17.2 Customer Intangible Property. Upon Customer's request at any time, and without prejudice to any additional requirements specified in this Agreement, a Statement of Work or otherwise, Service Provider will (i) provide Customer with physical and electronic access to all or any part of the Customer Data, Customer Software, related documentation or other intangible property of Customer, including all work-in-progress (collectively, "Customer Intangible Property") in Service Provider's possession or control, (ii) promptly return to Customer, in the format and on the media requested by Customer, all or any part of such Customer Intangible Property and (iii) erase or destroy all or any part of such Customer Intangible Property, in each case to the extent so requested by Customer; provided, however, that Service Provider may retain a copy thereof to the extent, and for so long as, reasonably necessary to perform the Services, Reverse Transition or other activities reasonably related to termination or expiration, unless otherwise instructed by Customer. Service Provider has no right to retain, encrypt, corrupt or destroy any Customer Intangible Property (other than retaining archival copies, if any, authorized by Customer), and waives any and all statutory or common law liens, claims of lien or similar rights, remedies or encumbrances that may now or hereafter exist and might limit or condition Service Provider's unconditional obligations to return Customer Intangible Property. The foregoing requirement is in addition to any other requirements contained in applicable Statement of Works, Procedures Manuals or other documentation concerning periodic deliveries of Customer Intangible Property.

CUSTOMER CONFIDENTIAL [*] Confidential Treatment Requested

18. SECURITY AND CONFIDENTIALITY

18.1 Security Protocol. Service Provider will develop and implement, or satisfy Customer that Service Provider has developed and implemented, and maintain throughout the Term a comprehensive Security Plan that meets or exceeds Customer's Security Protocol as set forth in Schedule 7 or as may be required under any Pass Through Services Contract.

18.1.1 Customer may revise the Security Protocol from time to time during the Term.

18.1.2 If Customer changes such Security Protocol in a manner that results in substantial cost increases to Service Provider, Service Provider's compliance with the new Security Protocol will be subject to the Change Control Procedures. Customer will give Service Provider reasonable advance notice of changes in the Security Protocol.

18.1.3 If Service Provider intends to implement a Change to the Service Provider’s Security Plan (including pursuant to Customer's request), Service Provider will notify Customer. Service Provider will not, without Customer's prior written approval, implement any such Change if, in Customer’s reasonable judgment, such Change would cause the Service Provider’s Security Plan to fail to meet the standards set forth in the Security Protocol.

18.1.4 If Service Provider or Subcontractors discover or are notified of a breach or potential breach of security relating to the Security Protocol, Service Provider will immediately (i) notify the Customer Contract Executive of such breach or potential breach, (ii) cooperate with Customer, at Service Provider's expense, to remedy the effects of the breach or potential breach and (iii) take such measures as may be necessary to prevent the recurrence of such breach.

18.2 Confidentiality. Without prejudice to any additional requirements contemplated under the Security Protocol, the recipient of Confidential Information will maintain its confidentiality at least to the same extent and manner as the recipient protects its own Confidential Information using not less than a reasonable degree of care.

18.2.1 Neither Customer nor Service Provider will disclose, publish, release, transfer or otherwise make available Confidential Information of, or obtained from, the other Party in any form to, or for the use or benefit of, any person or entity without such other Party's written consent.

18.2.2 Notwithstanding the foregoing, Customer and Service Provider will be permitted to disclose relevant aspects of the other's Confidential Information to its officers, directors, agents, professional advisors, contractors, subcontractors and employees and to the officers, directors, agents, professional advisors, contractors, subcontractors and employees of its Affiliates, to the extent such disclosure is not restricted under any Authorization, Consent, Assigned Agreement or Managed Agreement, but only to the extent that such disclosure is reasonably necessary for the performance of its duties and obligations or the determination, preservation or exercise of its rights and remedies under this Agreement.

CUSTOMER CONFIDENTIAL [*] Confidential Treatment Requested

18.2.3 The recipient of any Confidential Information will take all reasonable measures to ensure that Confidential Information of the disclosing Party is not disclosed or duplicated in contravention of the provisions of this Agreement by such officers, directors, agents, professional advisors, contractors, subcontractors and employees, whether during or after the term of their employment or engagement by the recipient.

18.2.4 When Service Provider provides Customer's Confidential Information to any such person or entity, including any employee or Affiliate, Service Provider will require such person or entity to sign, or confirm that it has signed, a confidentiality agreement with terms substantially the same as those described in this Article. Unless otherwise agreed, Customer will be named as a third party beneficiary in such confidentiality agreement.

18.2.5 Upon expiration or termination of the Agreement or any Companion Agreement, and completion of any Transition Services, each Party will return or destroy (if requested by the disclosing Party) the other Party’s Confidential Information.

18.2.6 The obligations in this Article will not restrict any disclosure made pursuant to any Law. The recipient will give prompt notice to the disclosing Party of any demand for such disclosure and at the request and expense of the Disclosing Party, uses reasonable efforts to limit such disclosure to the extent requested.

18.3 Unauthorized Use or Disclosure. Without limiting either Party's rights in respect of a breach of this Article, each Party will (i) promptly notify the other Party of any attempted or actual unauthorized possession, use or knowledge of the other Party's Confidential Information by any person or entity that may become known to such Party; (ii) promptly furnish to the other Party full details of the attempted or actual unauthorized possession, use or knowledge; and (iii) assist the other Party in investigating or preventing the recurrence of any attempted or actual unauthorized possession, use or knowledge of Confidential Information. Each Party will cooperate with the other Party in any investigation or litigation deemed necessary by the other Party to protect its confidentiality or proprietary rights. Unless otherwise agreed, the Party responsible for the unauthorized possession, use or knowledge of the other Party's Confidential Information will bear the costs incurred in any such investigation or litigation.

18.4 Facilities Segregation. Service Provider agrees to segregate Customer Data and information logically and physically from its other customers’ data and information. Service Provider agrees to establish and maintain separate and secure areas within its facilities for the delivery of Services to Customer. Service Provider shall establish and maintain commercially reasonable and appropriate technical, organizational and physical safeguards at least consistent with the same degree of care with which it treats its own such data as well as then-current industry standards and in accordance with Laws for which Customer is responsible under Article 14, to protect against the unauthorized access, disclosure, destruction, loss or alteration of Customer Data to which Service Provider has access or which is in the possession of Service Provider. Service Provider shall not permit its personnel to provide services to Customer Competitors while assigned to the Customer account. This restriction will not apply to general, non-material, indirect infrastructure supporting services such as mailroom services.

CUSTOMER CONFIDENTIAL [*] Confidential Treatment Requested

18.5 Data Privacy Policy.

18.5.1 Service Provider shall comply with Customer's then-current data privacy policy, and all other Customer policies (provided to Service Provider in within a reasonable time in advance, in writing and subject to agreement) regarding (i) the destruction, loss or alteration of data, (ii) the encryption of data, (iii) the security of internet transactions and Customer Data, and the integrity and privacy of the users’ interaction with Service Provider’s system, and (iv) unauthorized electronic access to Customer Data. When and as required by Customer in its reasonable judgment, Service Provider, Service Provider Group Members and/or subcontractors shall execute supplemental privacy and security terms, including but not limited to the Standard Contractual Clauses for the Transfer of Personal Data to Processors established in Third Countries, dated 5 February 2010 (2010/87/EU) as amended from time to time ("Model Processor Agreement") (a form of which is attached here to as Attachment 1 to Schedule 8), with Customer or Customer Group Members that receive Services under the Agreement. In addition, if any country outside of the European Union where the Services are to be rendered under the Agreement has or enacts a data protection-related law that Customer concludes, in its reasonable judgment, requires the execution of any supplemental privacy and security terms, then Service Provider, its Affiliates and/or subcontractors shall execute such supplemental privacy and security terms promptly with Customer or Customer Group Members receiving Services under the Agreement; provided, however, that the parties shall make reasonable efforts to leverage existing supplemental privacy and security terms that have been executed with respect to the European Union to fulfill any such requirement, so as to minimize the cost and effort involved in achieving compliance with such requirement.

18.5.2 In addition, and notwithstanding any provisions in the Agreement to the contrary, in the event that (i) any Customer Personal Data is disclosed by Service Provider (including by Service Provider Group Members or subcontractors) in violation of this Agreement or applicable laws pertaining to privacy or data security, or (ii) Service Provider (including Service Provider Group Members or Subcontractors) discovers, is notified of, or suspects that unauthorized access, acquisition, disclosure or use of Customer Personal Data has occurred (“Privacy Incident”), Service Provider shall notify Customer immediately in writing of any such Privacy Incident. Service Provider shall cooperate fully in the investigation of the Privacy Incident.

18.5.3 To the extent that a Privacy Incident gives rise to a need, in Customer's sole judgment to provide (A) notification to public authorities, individuals, or other persons, or (B) undertake other remedial measures (including, without limitation, notice, credit monitoring services and the establishment of a call center to respond to inquiries (each of the foregoing a "Remedial Action")), at Customer's request, Service Provider shall, at Service Provider's cost, undertake such Remedial Action. The timing, content and manner of effectuating any notices shall be determined by Customer in its sole discretion.

CUSTOMER CONFIDENTIAL [*] Confidential Treatment Requested

19. REPRESENTATIONS WARRANTIES, AND COVENANTS

19.1 Customer. Customer represents, warrants and covenants that:

19.1.1 Customer is a corporation, duly organized, validly existing and in good standing under the Laws of the State of Delaware;

19.1.2 Customer has all requisite corporate power and authority to execute, deliver and perform its obligations under this Agreement;

19.1.3 the execution, delivery and performance of this Agreement by Customer (i) has been duly authorized by Customer and (ii) subject to obtaining applicable Consents, will not conflict with, result in a breach of or constitute a default under any other agreement to which Customer is a party or by which Customer is bound; and

19.1.4 Customer is duly licensed, authorized or qualified to do business and is in good standing in every jurisdiction in which a license, authorization or qualification is required for the ownership or leasing of its assets or the transaction of business of the character transacted by it, except where the failure to be so licensed, authorized or qualified would not have a material adverse effect on Customer's ability to fulfill its obligations under this Agreement.

19.1.5 Intentionally Omitted.

19.1.6 Customer agrees to be responsible for all Customer Personnel’s past liabilities including but not limited to severance pay, leave benefits etc.

19.2 Service Provider. Service Provider represents, warrants and covenants that:

19.2.1 Service Provider is a corporation duly organized, validly existing and in good standing under the Laws of the State of Maharashtra ,India ;

19.2.2 Service Provider has all requisite corporate power and authority to execute, deliver and perform its obligations under this Agreement;

19.2.3 The execution, delivery and performance of this Agreement by Service Provider (i) has been duly authorized by Service Provider and (ii) will not conflict with, result in a breach of or constitute a default under any other agreement to which Service Provider is a party or by which Service Provider is bound;

CUSTOMER CONFIDENTIAL [*] Confidential Treatment Requested

19.2.4 Service Provider is duly licensed, authorized or qualified to do business and is in good standing in every jurisdiction in which a license, authorization or qualification is required for the ownership or leasing of its assets or the transaction of business of the character transacted by it;

19.2.5 Service Provider is in compliance with all Laws, including Regulatory Requirements, applicable to Service Provider, and Service Provider is not subject to any existing or threatened investigation by any government agency that may impact Service Provider's ability to fulfill its obligations under this Agreement;

19.2.6 Service Provider shall comply with its obligations under Sections 14.5 (Export Controls), 14.6 (Restricted Party Lists), 14.7 (Unlawful Payments) and 14.8 (Ethics Policies) and any compliance obligations under any Pass Through Services Contracts.

19.2.7 There is no outstanding litigation, arbitrated matter or other dispute to which Service Provider is a party which, if decided unfavorably to Service Provider, would reasonably be expected to have a material adverse effect on Service Provider's ability to fulfill its obligations under this Agreement;

19.2.8 Service Provider is authorized to provide services to telecommunications companies and is not subject to any governmental or industry restrictions that would prevent it or its customers from providing services to telecommunication companies; and

19.2.9 Service Provider’s proposed solutions shall comply with any and all applicable telecommunications industry requirements and standards.

19.3 EXCEPT AS EXPRESSLY PROVIDED IN THIS AGREEMENT, A COMPANION AGREEMENT OR A STATEMENT OF WORK, ALL IMPLIED AND STATUTORY WARRANTIES AND CONDITIONS, INCLUDING, BUT NOT LIMITED TO, ANY IMPLIED OR STATUTORY WARRANTY OR CONDITION OF MERCHANTABILITY, FITNESS FOR PARTICULAR PURPOSE OR SATISFACTORY QUALITY ARE HEREBY OVERRIDDEN, EXCLUDED AND DISCLAIMED.

19.4 Notwithstanding Section 15.11, and unless a separate warranty term is specified, the representations and warranties of the Parties under this Article 19 shall survive expiration or termination of this Agreement only with respect to claims that accrued during the Term (including the provision of Reverse Transition and extension of Services under Section 15.8).

20. ADDITIONAL COVENANTS

Service Provider covenants that:

20.1 Intentionally Left Blank;

20.2 The Service Provider Software and Service Provider Materials will be fully interoperable with the software, equipment and systems used by Customer to (i) provide the same or similar services; and/or (ii) receive the Services by delivering records to, receiving records from, or otherwise interacting with the software, equipment and systems used by or on behalf of Service Provider to provide the Services;

CUSTOMER CONFIDENTIAL [*] Confidential Treatment Requested

20.3 The Service Provider Software and Service Provider Materials used to provide the Services will be able to receive, transmit, process, store, archive, maintain and support all applicable currencies, including those currencies of which Customer provides Service Provider notice from time to time.

20.4 Service Provider will take all commercially reasonable measures to prevent the introduction into or proliferation of any Malicious Code in the Deliverables, Customer Software or Customer's operating systems or environment. If Service Provider fails to take all commercially reasonable measures to prevent the introduction into or proliferation of Malicious Code and any Malicious Code occurs or is introduced by Service Provider, Service Provider will remove such Malicious Code at its expense;

20.5 Without the consent of Customer, Service Provider will not insert into the Deliverables, Customer Software or any Service Provider Software or Service Provider Materials used to provide the Services any code (other than code supplied by Customer) that would have the effect of disabling or otherwise shutting down all or any portion of Customer's or its customers’ operating systems or environment, the Deliverables or Customer Software;

20.6 Upon Customer’s request, or promptly following its own discovery, Service Provider shall, as part of the Services, correct any errors in reports, transactions, Customer Data, processing or other Services attributable to errors and omissions of Service Provider, its employees and subcontractors, or to failures of computers, networks, systems or other resources provided by Service Provider

20.7 Except to the extent done in compliance with Customer's open source usage policy, Service Provider will not insert into any Deliverables, Customer Software or Customer's operating systems or environment any code that is made generally available to the public on open source code licensing terms or on other terms that would require Customer to make the source code thereof publicly available;

20.8 Service Provider will have and maintain adequate facilities, equipment and a duly qualified staff as necessary to perform the Services in an efficient, professional and timely manner and as described in each Statement of Work;

20.9 Service Provider will perform the Services in a timely, efficient and professional manner in accordance with currently accepted industry standards for first tier providers as stated in the SOW , without prejudice to Service Provider's obligation to meet any applicable Service Levels;

20.10 Service Provider will develop and implement quality assurance processes and procedures acceptable to Customer to ensure that the Services are performed in an accurate and timely manner and in accordance with the terms, conditions and specifications of this Agreement. No less than once annually, Service Provider shall review its internal quality assurance practices with Customer;

20.11 All work product shall be original work (except to the extent that derivative works incorporate prior work, except as otherwise expressly agreed by Customer in writing); and

20.12 The Deliverables and any and all fixes, updates, enhancements and modifications thereto provided by Service Provider, will function in accordance with their Specifications prior to implementation and for the lesser of one (1) year or the period specified in the applicable Statement of Work or other commissioning document, unless such malfunction or non-conformance with Specifications is caused by (i) a modification made by Customer, (ii) a use contra-indicated in the Statement of Work or Service Provider provided documentation or (iii) defects in Customer supplied components or materials in which case this Covenant shall not apply. During the warranty period (i) services shall be performed by designated Contract Staff in such number as ratified through a benchmarking process within three (3) months from the Commencement Date shall be agreed by the parties in the Statement of Work and (ii) to the extent any additional Contract Staff are required to be assigned in order to complete the warranty services timely.

21. GOVERNANCE

21.1 Customer Contract Executive. Customer will appoint an individual ("Customer Contract Executive") who from the date of this Agreement will serve as the primary Customer representative under this Agreement. The Customer Contract Executive will have overall responsibility for managing and coordinating the performance of Customer's obligations under this Agreement and will be authorized to act for and on behalf of Customer with respect

CUSTOMER CONFIDENTIAL [*] Confidential Treatment Requested

to all operational matters relating to this Agreement. Notwithstanding the foregoing, the Customer Contract Executive may, upon notice to Service Provider, delegate such of his or her responsibilities to other Customer employees, as the Customer Contract Executive deems appropriate. Customer may change the Customer Contract Executive upon notice to Service Provider.

21.2 Governance. The Parties will govern their relationship in accordance with the Governance Model set forth in Schedule 11. Each Party will appoint duly qualified employees to represent the Party in the applicable governance positions set forth in the Governance Model in accordance with the provisions of Schedule 11. Each Party will cause its representatives to devote the time necessary to meet their respective responsibilities (including at a minimum, such time as may be specified by the Agreement or Schedule 11) and meet regularly in accordance with Schedule 11. Each Party will be responsible for its representatives’ execution of their respective obligations and responsibilities under the Governance Model. The Governance Model will include the processes and procedures that the Parties will use to review and verify Service Provider's compliance with Law.

21.3 Informal Dispute Resolution Procedures. Any dispute, controversy or claim of any kind or nature arising under or in connection with this Agreement or any Companion Agreement (including, but not limited to, disputes as to the creation, validity, interpretation, breach or termination of this Agreement or any Companion Agreement) (a "Dispute") will be considered in accordance with the dispute resolution procedures set forth in this Article 21 and in the Governance Model. The dispute resolution process will be initiated upon receipt by a Party of a notice from the other Party specifying the nature of the Dispute. Unless the Customer Contract Executive and Service Provider Contract Executive otherwise agree in writing, either Party may pursue its rights and remedies under this Article 21 after the earlier of (i) the exhaustion of the negotiation and escalation procedures set forth in this Article and the Governance Model and (ii) the date that is forty-five (45) days after the receipt of the dispute notice. Notwithstanding the foregoing, either Party may commence proceedings if delay in doing so would be prejudicial, because of the need for immediate provisional remedies, imminent expiration of applicable statutes of limitation, or other good cause.

21.4 Resolution Without Proceedings. Service Provider and Customer intend to use reasonable measures to avoid the litigation of any dispute under this Agreement or any Companion Agreement. As a result, the Parties mutually agree that any Dispute arising under or in connection with this Agreement or any Companion Agreement will be resolved using the alternative dispute resolution provisions and procedures described in the Sections below and in the Governance Model.

21.4.1 Except as otherwise agreed, Service Provider and Customer will each bear all of their own expenses incurred during the procedures and will pay one-half of any applicable fees of any mediator or third party agency engaged to assist in resolution of disputes short of legal or arbitral proceedings.

21.4.2 All negotiations pursuant to this Article 21 are confidential and will be treated as compromise and settlement negotiations for purposes of applicable rules of evidence. No proposals, offers, counter-offers or other communications will be admissible in evidence in any proceeding for any purpose; provided, however, that this will not be construed to render confidential, inadmissible or non-discoverable any otherwise admissible documents or other evidence merely because they were referred to, transmitted or otherwise used in any such settlement negotiations.

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21.5 Negotiation. Upon the written notice by either Party, a Dispute will be submitted to the Customer Contract Executive and Service Provider Contract Executive, who will meet and employ their best efforts to negotiate an amicable resolution of the Dispute. Unless the Parties otherwise agree, this meeting and negotiation will occur not later than ten (10) days from the date of submission of the Dispute to the Customer Contract Executive and Service Provider Contract Executive, whichever occurs last. If the Contract Executives fail to resolve the dispute by negotiation, the Dispute will be escalated within the Customer and Service Provider organizations in accordance with the Governance Model.

21.6 Arbitration. Except as otherwise expressly provided below, any dispute that Service Provider and Customer are unable to resolve through negotiation or mediation will be submitted to binding arbitration in [*], in accordance with the Commercial Arbitration Rules and Mediation Procedures (including Procedures for Large, Complex Commercial Disputes) of the American Arbitration Association (the “Rules”) then in effect, except to the extent that the Rules conflict with this Article 21 in which case this Article shall apply. In any dispute in which the amount in controversy is less than [*], there shall be one (1) arbitrator agreed to by the Parties or, if the Parties are unable to agree within [*] after demand for arbitration is made, selected in accordance with the Rules. In all other cases there shall be three (3) arbitrators, one (1) of whom shall be selected by each Party within [*] after delivery of the demand for arbitration to the respondent. The remaining arbitrator shall chair the panel and be selected by the nominated arbitrators within [*] after their selection. If one or more arbitrator(s) is not selected within the permitted time periods, the missing arbitrator(s) shall be selected in accordance with the Rules. The arbitrator(s) shall issue a decision in writing, stating reasons therefor, including both findings of fact and conclusions of law, and may award any remedy available at law or in equity (consistent with the terms of this Agreement). The arbitrator(s) shall have no power to amend or supplement this Agreement or reinstate this Agreement, to award damages other than as permitted by this Agreement, or to fail to follow applicable law. Any award rendered by the arbitrator(s) shall be final and binding on the Parties, and may be confirmed by the judgment of a court of competent jurisdiction.

21.7 Certain Legal Proceedings. Notwithstanding the foregoing, the Parties agree that:

21.7.1 If a controversy or claim relates in any way to a lawsuit brought by a third party against one or both of the Parties, either Party may, at its option, file a cross-complaint against the other Party in such lawsuit with respect to the controversy or claim, in which case the controversy or claim will be resolved by such court in lieu of arbitration.

21.7.2 If a controversy or claim relates in any way to the interpretation, breach or threatened breach of provisions of this Agreement concerning Confidential Information or intellectual property, it may, at either Party's option, be resolved by a court of competent jurisdiction.

21.7.3 Upon commencement of any proceeding contemplated by the foregoing subparagraphs, any arbitration then pending will be stayed, insofar as it concerns such issues.

21.7.4 The Parties reserve the right to seek provisional remedies in aid of arbitration from and to enforce arbitral awards through proceedings in courts of competent jurisdiction.

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21.8 Continued Performance. Service Provider will continue to provide the Services during the pendency of any of the proceedings commenced pursuant to this Article 21, and Customer will continue to perform its obligations (including but not limited to the making of payments to Service Provider), all in accordance with this Agreement and the relevant Companion Agreements.

21.9 Jurisdiction. The Parties hereby submit and consent to the sole and exclusive jurisdiction of competent courts within the State of New York, U.S.A. The Parties irrevocably agree that all actions or proceedings relating to and permitted by this Agreement (other than any action or proceeding required to be submitted to arbitration, and proceedings to obtain provisional remedies or to enforce arbitral awards) will be litigated in those courts and hereby irrevocably submit themselves to the sole and exclusive jurisdiction of such courts.. Each of the Parties irrevocably waives any objection which it may have based on improper venue or forum non conveniens to the conduct of any such action or proceeding. Each Party hereby irrevocably waives any right to a trial by jury.

21.10 Fees and Costs. In any proceeding, the prevailing Party will be entitled to recover, in addition to its damages (which are subject to limitations stated elsewhere in this Agreement), its reasonable attorneys' fees, expert witness fees, and other ordinary and necessary costs of litigation or arbitration, as determined by the arbitrators or court. Those costs include, without limitation, costs of arbitrators and arbitration, attorneys' fees and costs of any legal proceedings brought to enforce a judgment or decree.

21.11 Injunctive Relief. The Parties agree that in the event of any breach or threatened breach of any provision of this Agreement concerning (i) Confidential Information, (ii) intellectual property rights or (iii) other matters for which equitable rights are expressly provided in this Agreement, money damages would be an inadequate remedy. Accordingly, those provisions may be enforced by the preliminary or permanent, mandatory or prohibitory injunction or other order of the arbitrator(s) or a court of competent jurisdiction.

22. INDEMNIFICATION

Service Provider will indemnify, defend and hold Customer, its officers, directors, employees, agents and Affiliates, and their respective officers, directors, employees and agents (collectively, the "Customer Indemnitees"), harmless from and against, any third party Claims resulting from, arising out of or relating to Service Provider's negligence or willful misconduct or any Claims resulting from, arising out of, or relating to:

22.1 Intentionally Omitted;

22.2 [*];

22.3 Intentionally Omitted;

22.4 a violation of Law by Service Provider for which Service Provider is responsible under this Agreement or Service Provider's failure to comply with any Customer compliance directive or any requirements of a Pass Through Services Contract;

22.5 (a) a work-related injury of Service Provider employees or its agents not caused by Customer, (b) except as otherwise specifically provided in the Statement of Work, (i) employee benefits of Service Provider or any Subcontractor employees, including any employee liabilities arising on or after the date that Customer Personnel are employed by or transitioned to Service Provider, (ii) any representations, oral or written, made by Service Provider to any Customer Personnel, or other action by Service Provider with respect to any Customer Personnel that would be a violation of Law if done with respect to Service Provider's own employees or (iii) any aspect of the Contract Staff’s employment relationship with Service Provider or the termination of the employment relationship with Service Provider, including but not limited to any claims for co-employment of the Contract Staff with Customer; (c) any claims asserted by its Subcontractors or its Subcontractors subcontractors; (d) any contracts, relationships and dealings between Service Provider and any third party that relate to the Service Provider’s obligations pursuant to this Agreement in performance of the Services;

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22.6 any amounts, including taxes, interest and penalties, assessed against Customer that are the obligation of Service Provider;

22.7 any breach by Service Provider of its obligation with respect to Confidential Information;

22.8 the Services, the Deliverables, the Service Provider Software or Service Provider Materials or any Confidential Information provided by Service Provider infringes or allegedly infringes any United States or foreign copyright, patent, trademark or other intellectual property right, misappropriates any trade secrets or violates any other intellectual property right provided that Service Provider shall be relieved of its obligation to indemnify if such infringement claim arises out of (a) any use of the Services or Deliverables by Customer in a manner or purpose not intended by the Statement Of Work or against specific instructions of Service Provider (b) use of the Services or Deliverables in conjunction with third party materials or services if the claim of infringement would not have arisen in the absence of such use; , or ( c) if the infringement is occasioned by modification to the Services or Deliverables not authorized by Service Provider (d) compliance with design , specification or instruction provided by Customer or claim of infringement arising from any data , software , material , process or intellectual property provided by Customer;

22.9 personal injury (including death) or property loss or damage resulting from Service Provider's acts or omissions.

Service Provider will indemnify Customer from any actual costs and expenses reasonably incurred in connection with the enforcement of this Section.

22.10 Customer agrees to indemnify Service Provider for (a) the Customer Software or Customer Materials or any Confidential Information provided by Customer infringes or allegedly infringes any United States or foreign copyright, patent, trademark or other intellectual property right, misappropriates any trade secrets or violates any other intellectual property right provided that Customer shall be relieved of its obligation to indemnify if such infringement claim arises out of (1) any use of the Customer Software or Customer Materials or any Confidential Information by Service Provider in a manner or purpose not intended by the Statement Of Work or against specific instructions of Customer (2) use of the Services or Deliverables in conjunction with third party materials or services if the claim of infringement would not have arisen in the absence of such use, or (3) if the infringement is occasioned by modification to the Customer Software or Customer Materials or any Confidential Information not authorized by Customer,: (b) for any employment liabilities of Customer Personnel that arise under applicable Law prior to their employment by or transfer to Service Provider under Agreement, (c) a violation of Law by Customer for which Customer is responsible under this Agreement or Service Provider's compliance with any Customer compliance directive , (d) any amounts, including taxes, interest and penalties, assessed against Service Provider that are the obligation of Customer, (e) any breach by Customer of its obligation with respect to Confidential Information or (f) personal injury (including death) or property loss or damage resulting from Customer's acts or omissions.

22.11 Indemnitee Responsibilities. If any third party claim is commenced against a Party entitled to indemnification under this Article, the indemnitee will provide notice of the claim and copies of all related documentation to the indemnitor. Such notice and documentation will be provided as promptly as possible. The indemnitee will cooperate, at the cost of the indemnitor, in all reasonable respects with the indemnitor and its attorneys in the investigation, trial and defense of such claim and any appeal. The indemnitee may, at its own cost and expense, participate, through its attorneys or otherwise, in such investigation, trial and defense of such claim and any appeal. An indemnitor will have no liability with respect to any settlement reached without its prior written consent. Settlements of indemnified claims will be subject to the indemnitee's approval, which will not be unreasonably withheld or delayed; provided, however, that such consent may be given or withheld in the indemnitee's sole discretion to the extent the settlement admits liability, stipulates to any declaratory or equitable remedy, or affects the indemnitee's intellectual property or Confidential Information. The indemnitor's liability to pay or reimburse amounts owed with respect to any indemnified claim will be limited to the extent of the indemnitor's proportional contribution to the relevant Claim. No indemnitor will be liable for any amounts owed with respect to Claims suffered by the indemnitee to the extent attributable to the indemnitee's negligence or willful misconduct.

23. DAMAGES

23.1 [*]

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23.2 Disclaimer of Consequential Damages. Subject to (i) any right Customer may have to repudiate, rescind or otherwise terminate this Agreement that may arise hereunder or otherwise at law or in equity; and (ii) [*], both Parties' liability hereunder will be for actual direct damages only and the Parties hereby disclaim liability to the other for any punitive, special, incidental or consequential damages or lost profits or lost revenue .:

23.3 Limitation on Service Provider Liability. Subject to [*], Service Provider's aggregate liability for all damages or losses under or arising out of this Agreement to Customer during the Term of this Agreement and any and all applicable Statements of Work and Companion Agreements will not exceed the lesser of [*].

23.4 Intentionally Omitted.

23.5 Limitation on Customer Liability. Customer's aggregate liability for all damages or losses under or arising out of this Agreement to Service Provider during the entire Term of the Agreement will not exceed the lesser of [*].

23.5 Negotiated Risk Allocation. The Parties expressly acknowledge that the limitations and exclusions set forth in this Article have been the subject of active and complete negotiation between the Parties and represent the Parties' agreement based upon the level of risk to the Parties associated with their respective obligations under this Agreement and the Companion Agreements and the payments provided hereunder to Service Provider for its performance of the Services.

24. INSURANCE

24.1 General. Service Provider will maintain the following insurance during the Term of this Agreement. Service Provider will also cause its Subcontractors who perform Services at Customer Service Locations to maintain, or will maintain for such Subcontractors, the following insurance:

24.1.1 Workers' Compensation insurance as prescribed by the law of the state(s) or nation(s) in which the Services are performed, or any alternative plan of coverage as permitted or required by applicable law;

24.1.2 employer's liability insurance with limits of at least [*] for each occurrence with a minimum aggregate limit of [*];

24.1.3 automobile liability insurance, if the use of motor vehicles is required, with limits of at least [*] combined single limit for bodily injury and property damage per occurrence;

24.1.4 Commercial General Liability ("CGL") insurance, ISO 1996 or later occurrence form of insurance, including Blanket Contractual Liability and Broad Form Property Damage, with limits of at least [*] combined single limit for bodily injury and property damage per occurrence;

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24.1.5 if the furnishing to Customer (by sale or otherwise) of products, material or construction, installation, maintenance or repair services is involved, CGL insurance endorsed to include products liability and completed operations coverage in the amount of [*] per occurrence, which will be maintained for at least [*] following the expiration or termination of this Agreement;

24.1.6 Commercial crime insurance providing coverage in the amount of [*] for each loss for direct losses of money, securities and other property of Customer (owned or leased) caused by the unlawful taking by any employee of Service Provider, acting alone or in collusion with others, which will name Customer as a loss payee as its interests may appear; and

24.1.7 Error and Omission Liability Insurance (e.g. professional liability, IT support and services) appropriate to Service Provider's profession, inclusive of the Services contemplated by this Agreement, in an amount not less than [*] for each wrongful act and policy aggregate, to include coverage for liability arising from any actual or alleged breach of duty, negligent act, error or omission in the conduct of Service Provider's performance of the Services.

24.2 Policy Requirements. The insurance provided under Section 24.1 will comply with the following requirements:

24.2.1 If the insurance policy is written on a claims-made basis, Service Provider warrants that any retroactive date applicable to the policy precedes the Effective Date and that continuous coverage will be maintained or, an extended discovery period will be exercised, for a period of at least two (2) years beginning from the time that work under this Agreement is completed.

24.2.2 All CGL and automobile liability insurance will designate Customer, its Affiliates, and each of their directors, officers and employees (all referred to in this clause as "Customer") as additional insureds.

24.2.3 All the foregoing insurance must be primary and non-contributory and required to respond and pay prior to any other insurance or self-insurance available.

24.2.4 Customer will be notified in writing at least thirty (30) days prior to cancellation of or any material change in the required policies.

24.2.5 Insurance companies providing coverage under this Agreement must be rated by A.M. Best with at least an A- rating and a financial size category of at least Class VII.

24.3 Damage to Property. Service Provider is responsible for the risk of loss of, or damage to, any property of Customer at a Service Provider Service Location, unless such loss or damage was caused by the acts or omissions of Customer or an agent of Customer. Customer is responsible for the risk of loss of, or damage to, any property of Service Provider at a Customer Service Location, unless such loss or damage was caused by the acts or omissions of Service Provider or a Subcontractor.

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25. FORCE MAJEURE

25.1 Excuse from Performance. If and to the extent that a Party's performance of any of its obligations pursuant to this Agreement is prevented, hindered or delayed by fire, flood, earthquake, elements of nature or acts of God, acts of war, acts of a public enemy, acts of a nation or any state, territory, province or other political division, terrorism, riots, civil disorders, rebellions or revolutions, epidemics, theft, quarantine restrictions, freight embargoes or any other similar cause beyond the reasonable control and without the fault or negligence of such Party (each, a "Force Majeure Event"), and such non-performance, hindrance or delay could not have been prevented by reasonable precautions, then the non-performing, hindered or delayed Party will be excused for such non-performance, hindrance or delay, as applicable, of those obligations affected by the Force Majeure Event for as long as such Force Majeure Event continues.

25.1.1 The foregoing excuse from non-performance is conditioned upon such Party continuing to use its best efforts to recommence performance whenever and to whatever extent possible without delay, including through the use of alternate sources, workaround plans, backup or emergency power, redundant telecommunications circuits, or other means.

25.1.2 Notwithstanding the foregoing, the acts or omissions of a Party's agents, Subcontractors, representatives, materialmen, suppliers or other third parties providing products or services to such Party will not constitute a Force Majeure Event (unless such acts or omissions are themselves the product of a Force Majeure Event).

25.1.3 The occurrence of a Force Majeure Event does not excuse, limit or otherwise affect Service Provider's obligation to provide either normal recovery procedures or any other Disaster Recovery services specified in this Agreement or in any Statement of Work unless such Disaster Recovery services are themselves hindered by the Force Majeure Event.

25.2 Responsibilities of Parties. The Party whose performance is prevented, hindered or delayed by a Force Majeure Event will:

25.2.1 immediately notify the other Party of the occurrence of the Force Majeure Event and describe in reasonable detail the nature of the Force Majeure Event and such Party's good faith estimate of the likely duration of such Force Majeure Event.

25.2.2 with the cooperation of the other Party, exercise all reasonable efforts to mitigate the extent of any non-performance, hindrance or delay caused by a Force Majeure Event and any adverse consequences of such Force Majeure Event, including, in the case of Service Provider, (i) performance of required work or the provision of the Services with the use of Service Provider's qualified management or other employees or Subcontractors, as permitted by this Agreement, and (ii) cooperating with Customer's efforts to secure necessary replacement services from third party vendors and suppliers.

25.2.3 immediately notify the other Party of the cessation of such Force Majeure Event.

25.3 Alternative Sources. Within seventy two (72) working hours of the occurrence of a Force Majeure Event, Customer and Service Provider will conduct a root cause analysis to determine the extent to which, and the duration that, the Force Majeure Event is likely to prevent Service Provider from performing its obligations in accordance with this Agreement and whether Service Provider is likely to promptly procure a suitable temporary alternate source for the affected Services.

25.3.1 If any Force Majeure Event prevents, hinders or delays performance of any of the Services, and Service Provider is unable to promptly (but in no event later than 48 hours) provide a suitable temporary workaround acceptable to Customer, Service Provider shall procure such Services from a reasonably acceptable alternate source in lieu of Service Provider's provision of such Services for the duration of the agreement executed between

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Service Provider and such alternate source in respect of the provision of such services provided that (i) subject to Section 25.3.2 below, Service Provider shall not be required to obtain such affected Services from such alternate source at its expense for more than one hundred and eighty (180) consecutive days and (ii) Customer shall be entitled to terminate this Agreement, in whole or in part, immediately upon the cessation of the provision of such affected Services from the alternate source if Service Provider has not fully resumed performance of all Services.

25.3.2 Subject in all cases to Section 15.4.6, in the event that Service Provider reasonably believes it will be unable to recover its performance of the Services within six (6) months of the Force Majeure Event, Customer will either (i) exercise its right to terminate under Section 15.4.6 or (ii) discontinue payment to Service Provider for the affected Services and Service Provider will reimburse Customer for the difference between the Base Charges that would have been payable to Service Provider for the disrupted Services and Customer’s cost of cover for any Services that must be procured from such alternate source until the earlier of (a) Service Provider’s demonstrating to Customer’s reasonable satisfaction Service Provider’s ability to immediately recommence the Services in accordance with this Agreement and (b) Customer’s ability to complete a competitive down-selection process with third parties to select a provider to succeed Service Provider, but in no event more than six (6) months. Customer will exercise commercially reasonable efforts under the circumstances to mitigate the additional costs for which Service Provider is responsible under this Section 25.3.2.

25.3.3 Allocation of Resources. Whenever a Force Majeure Event or a Disaster causes Service Provider to allocate limited resources between or among Service Provider's customers, Service Provider will treat Customer (including restoration of Services to Customer) as well or better than every other Service Provider customer. In addition, in no event will Service Provider redeploy or reassign any Key Service Provider Personnel to another account in the event of a Force Majeure Event.

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26. NOTICES

26.1 General. Any notice or other communication which either Party hereto is required or authorized by this Agreement to give or make to the other will be given or made either by reputable air courier service, or by facsimile transmission confirmed by electronic confirmation, addressed to the other Party in the manner referred to below and, if that notice is not returned as being undelivered within seven (7) days of dispatch of that notice or communication in the case of reputable air courier service, or is electronically confirmed in the case of facsimile transmission, such communication will be deemed for the purposes of this Agreement to have been given or made after three (3) days, if sent by reputable air courier service, or (four) 4 hours, for a facsimile transmission.

26.2 Addresses. For the purposes of Section 26.1 above, the address of each Party will be:

For Service Provider:

Karthikeyan Natarajan

Site no.44(p), 46(p), Kiadb I

Industrial area, Electronic City, Phase - II,Bangalore

India, Karnataka

561229

India

Phone: +91 (806) 780-8301 extn:8301

Cell: +919611105241

Email : karthikeyan.natarajan@techmahindra.com

With a CC to

Santosh Kumar Nair,

Assistant General Counsel,

Tech Mahindra Limited,

TMLW Building, Plot No.22 to 25 & 27 to 34,

Hitech City, Madhapur, Hyderabad - 500 081.

Board: +91 40 3063 6363 |Ext: 76530

For Customer:

Comverse, Inc.

200 Quannapowitt Parkway

Wakefield, MA 01880

Telephone: (781) 224-9000

Fax: (781) 224-8118

Attention: General Counsel

Either Party may change its address for service by notice as provided in this Article.

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27. NON-SOLICITATION [*]

27.1 General. Except as otherwise agreed, during the Term and for the period of one (1) year after the expiration or termination of this Agreement (and any Reverse Transition or extension of Services), neither Party will not, without the prior written consent of other party , directly or through a third party, intentionally solicit or entice away (or seek or attempt to entice away) from the employment of employing party any person(s) employed (or any person(s) who have been so involved in providing Services under this Agreement . This Article 27 will not apply to unsolicited responses by employees to general recruitment advertising.

27.2 [*]

28. RELATIONSHIP

28.1 Independent Parties. Service Provider and Customer are independent entities. Neither this Agreement nor any Companion Agreement will constitute, create or give effect to a joint venture, pooling arrangement, principal/agency relationship, partnership relationship, employer/employee or formal business organization of any kind and neither Service Provider nor Customer will have the right to bind the other without the other's express prior written consent.

28.2 Third Party Agreements. Unless otherwise agreed, Service Provider will ensure that all Third Party Agreements that are to be assigned or transferred to Customer pursuant to Article 15, will be freely assignable to Customer without any modification or consent, subject only to Customer agreeing to assume Service Provider's obligations thereunder from and after the effective date of the assignment.

29. Intentionally Left Blank

30. SEVERABILITY

If any provision of this Agreement is held invalid, illegal or unenforceable for any reason by any court of competent jurisdiction, such provision will be separable from the remainder of the provisions hereof which will continue in full force and effect as if this Agreement had been executed with the invalid provisions eliminated.

31. WAIVER

The failure of either Party to insist upon strict performance of any provision of this Agreement or any Companion Agreement, or the failure of either Party to exercise any right or remedy to which it is entitled hereunder or thereunder, will not constitute a waiver thereof and will not cause a diminution of the obligations established by this Agreement or any Companion Agreement. A waiver of any default will not constitute a waiver of any subsequent default. No waiver of any of the provisions of this Agreement or any Companion Agreement will be effective unless it is expressly stated to be a waiver and communicated by the waiving Party to the other Party in writing.

32. PUBLICITY

32.1 Customer Publicity. Customer may in its discretion make any press announcements or publicize this Agreement or any matters relating to any of the transactions contemplated hereby.

32.2 Service Provider Publicity. Except with the written consent of Customer, Service Provider will not make any press announcements or publicize this Agreement or any matters relating to any of the transactions contemplated hereby or use any Customer name or trademark in any way whatsoever.

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33. GOVERNING LAW

33.1 General. This Agreement will be governed by and construed in accordance with the laws of the state of [*] and applicable U.S. federal laws, without giving effect to its principles of conflict of laws.

33.2 Companion Agreements. Unless otherwise agreed in a Companion Agreement and approved by the Customer Contract Executive, each Companion Agreement will be governed by and construed in accordance with the laws of the state of [*] and applicable U.S. federal laws, without giving effect to principles of conflict of laws; provided, however, that Local Law Matters under Companion Agreements will in each such case be governed by appropriate Local Laws.

33.3 UN Convention. The 1980 United Nations Convention on Contracts for the International Sale of Goods will not apply to this Agreement or any Companion Agreement.

33.4 Binding Nature. This Agreement is binding on Service Provider and Customer and their respective successors and permitted assignees.

34. ASSIGNMENT AND DIVESTITURE

34.1 Assignment. Service Provider may not assign this Agreement without the prior written consent of Customer. Any such assignment will be void. Customer may assign or transfer this Agreement, upon notice to Service Provider, to a related party or unrelated party pursuant to a sale, merger or other business reorganization of Customer or any of its operating units. However this assignment will be subject to the Volume Commitment under Section 3.8.

34.2 Customer Divestiture. From time to time, Customer may divest lines of business and/or entities. In such cases, for up to twenty-four (24) months after the closing date of such divestiture and as a Change requested by Customer, Service Provider will provide to the divested line of business and/or entity all of the Services Service Provider is obligated to provide to Customer under this Agreement in accordance with the terms of this Agreement. Such obligation will be reflected in a Change. The cumulative Fees to provide the Services to Customer and the divested entity will be equal to the Fees that would have been charged without the divestiture, unless provision of such Services require material, net additional cost, effort or resources that cannot be accommodated with the resources ordinarily available for performance of the Services, in which case the Parties will negotiate the additional Fees to be paid to Service Provider as a result of such Change. Services provided to a divested entity will be included in the Volume Commitment under Section 3.8 and clause 4 of schedule 3.

35. GOOD FAITH

Whenever this Agreement requires or contemplates any action, consent or approval, each Party will act reasonably and in good faith and will not unreasonably withhold or delay such action, consent or approval, unless the Agreement expressly establishes some other standard, such as exercise of a Party's sole discretion.

36. FURTHER ASSURANCES

Each party will provide such further documents or instruments required by the other Party as may be reasonably necessary or desirable to give effect to this Agreement and to carry out its provisions.

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37. NO THIRD PARTY BENEFICIARIES

Nothing in this Agreement, express or implied, is intended to confer rights, benefits, remedies, obligations or liabilities on any person (including, without limitation, any employees of the Parties) other than the Parties or their respective successors or permitted assigns.

38. COUNTERPARTS

This Agreement may be executed in one or more counterparts, each of which will be deemed an original, but all of which taken together will constitute one and the same instrument.

39. ENTIRE AGREEMENT

This Agreement constitutes the entire agreement between the Parties in connection with its subject matter and supersedes all prior communications and agreements between the Parties relating to its subject matter.

IN WITNESS WHEREOF, this Agreement is hereby executed by the duly authorized representatives of the Parties, as set forth below.

CUSTOMER SERVICE PROVIDER



By:/s/ Philippe Tartavull Print Name: Philippe Tartavull Title:President and CEO Date:April 14, 2015	By:/s/ Milind Pendse Print Name: Milind Pendse Title:Assistant General Counsel Date:April 14, 2015

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SCHEDULE 1

DEFINITIONS

Master Service Agreement

BETWEEN

CUSTOMER

AND

SERVICE PROVIDER

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SCHEDULE 1

DEFINITIONS



TERM	DEFINITION
"Acceptor"	As defined in Section 3.5.
“Affiliate”	Means, with respect to an entity, any other entity Controlling, Controlled by or under common Control with that entity.
"Agreement"	Means the Agreement, as defined in the introductory paragraph, and its Schedules and Exhibits.
“All Rights”	As defined in Section 16.2.1.
“Approved Benchmarker”	Means an entity selected by Customer from the set of approved Benchmarkers and engaged to compare the price and quality of the Services against the market for similar services.
“Approved Local Provisions”	As defined in Section 2.3.
"Assets"	Means the items listed in Schedule 25, and as further described in Section 3.10.
"Assigned Agreements"	Means the agreements specified in Schedule 8.
“Authorizations”	Means any notice, consent, license or authorization from any regulatory, governmental or other authority necessary, required or customary for a Party to enter into or perform its obligations under this Agreement.
“Benchmarker”	Means an entity retained to compare the price and quality of the Services against the market for similar services.
“Benchmarking Process”	Means the process that the Benchmarker employs to compare the price and quality of the Services against the market for similar services.
“Benchmarking Results”	Means the results of the Benchmarker’s review of the price and quality of the Services against the market for similar services.
“Change”	Means any change with respect to the scope or performance of the Services.
“Change Control Procedures”	As defined in Section 5.6 and as set forth in Schedule 9.
“Claim”	Means all claims for Losses asserted by third parties.
"Commercial Terms"	Means Schedule 3 to the Agreement.
"Commissioned Work"	As defined in Section 16.4.
“Companion Agreement”	Means the agreement executed by Service Provider Group Member(s), and Customer Group Member(s) to (i) provide and pay for Services (for a particular Country, Countries or Region) pursuant to this Agreement, respectively and (ii) set forth any Local Law Matters or Approved Local Provisions, as referenced in Section 2.3.
“Confidential Information”	Means all information that relates to the business, affairs, products, developments, trade secrets, know how, personnel, customers and suppliers of either Party that has been designated as “confidential information” by a Party and disclosed under circumstances sufficient to place the recipient on reasonable notice of the confidentiality of the information, together with all information derived from the foregoing, but excluding any information (i) independently developed by the receiving Party, (ii) publicly disclosed by an entity other than the receiving Party under no duty of confidentiality (other than Customer Data, which shall be treated confidentially, even if publicly available) or (iii) already in the possession of the receiving Party, without a confidentiality obligation, prior to the receipt of such information. In particular, and without limiting the generality of the foregoing, information concerning Customer’s operations, employees, customers, products, designs, research and development, methods, processes, procedures, policies, prices, budgets, costs and other financial information, business plans and service offerings constitute or incorporate Confidential Information of Customer.

CUSTOMER CONFIDENTIAL [*] Confidential Treatment Requested



“Consents”	Means any notice or consent required for Customer to (i) transfer or assign any Assigned Agreements to Service Provider, (ii) permit Service Provider to Use any Customer Software, (iii) permit Customer to use Service Provider Software after the expiration or termination of the Agreement, (iv) permit Service Provider to manage any Managed Agreements under this Agreement, or (v) subcontract performance or delivery obligations to Service Provider.
"Contract Executives"	Means the executives responsible for managing the performance of the Agreement.
“Contract Staff”	Means the Service Provider personnel that perform the Services.
“Contract Year”	Means during the Term, the twelve (12) calendar month period from the Effective Date and each anniversary of the Effective Date.
“Control” (and derivatives)	Means, with respect to an entity, the legal, beneficial, or equitable ownership, directly or indirectly, of fifty percent (50%) or more of the capital stock (or other ownership interest ordinarily having voting rights), or the direct or indirect power to direct the management and policies of the entity.
“Control Rules”	As defined in Section 14.9.
“Country” or “Countries”	Means any or all of those countries for which Customer receives Services from Service Provider.
“Critical Transition Milestones”	Transition milestones or toll gates, if any, identified in the Transition Plan.
"Customer"	As defined in the first paragraph of this Agreement.
“Customer Competitor”	Means those entities and their successors listed in Schedule 14, which Customer may amend on notice to Service Provider from time to time, by adding, deleting or substituting one or more entities whose products and/or services compete with Customer.
“Customer Contract Executive”	As defined in Section 21.1.
"Customer Controls"	As defined in Section14.12.1.
“Customer Data”	Means any and all data provided to Service Provider by Customer, its agents or its customers, including any data concerning any of Customer’s customers.
“Customer Group Member”	Means a company or operating entity within the Customer Group.
“Customer Group”	Means Customer and its Affiliates.
“Customer Indemnitees”	As defined in Section 22.
"Customer Intangible Property"	As defined in Section 17.2.
"Customer Materials"	Means any materials, documentation, manuals, guidelines, business processes, methodologies, database rights, inventions, designs, drawings, Confidential Information or other items or information licensed or owned by Customer and made available by Customer to Service Provider for use in performing the Services.
"Customer Personnel"	Means Customer employees that may be impacted by the Commercial Terms or any proposed Statement of Work.
“Customer Service Locations”	Means the Service Locations owned or leased by Customer or made available to Customer under license from its customers.
“Customer Software”	Means any Software provided by Customer to Service Provider, including, without limitation, the Software identified in the applicable Statement of Work as Customer Software. For the avoidance of any doubt, Customer Software may include both Software owned by and licensed to Customer.
"Customer Specific SSAE 16 Report"	As defined in Section 14.12.3.
"Customer Training"	As defined in Section 7.8.
"Data Privacy Policy"	Means the policy regarding data privacy attached to Schedule 8.

CUSTOMER CONFIDENTIAL [*] Confidential Treatment Requested



“Deliverable(s)”	Means all Software, hardware and related documentation, manuals or other items that Service Provider may develop, or have developed, for Customer pursuant to or in connection with this Agreement, including, without limitation, (i) any modification or enhancement of, or derivative work based upon, the Customer Software or Customer Materials, and (ii) any third party Software or related documentation, manuals or other materials licensed to Customer or Service Provider, or any of Service Provider’s Affiliates, Subcontractors or other agents, and developed by Service Provider or any of its Affiliates, Subcontractors or other agents as part of the Service.
"Disaster"	Means any unplanned interruption or disruption of the Services that at a minimum materially impairs the ability of Service Provider to deliver the Services in the manner specified in the applicable Service Description. Such events may include, but are not limited to, loss of a Service Provider Service Location, loss of power to a Service Provider Service Location that results in an inability to provide the Services, or inability to access a Service Provider Service Location that results in an inability to provide the Services.
"Disaster Recovery"	Means the restoration by Service Provider of the critical processing functions as identified in a Disaster Recovery/Business Recovery Plan.
“Dispute”	As defined in Section 21.3.
"Documentary Deliverables"	As defined in Section 3.6.2.
"Early Termination Fee"	Means the Fee payable, if any, by Customer if Customer terminates this Agreement for convenience, and without cause, under Section 15.4.6 prior to its expiration or termination.
“Effective Date”	As defined in the first paragraph of this Agreement.
"Exempt Personnel"	As defined in Section 29.1.
"Facilities"	Means space or equipment.
“Fees”	As set forth in Schedule 5, Fees.
Financial Responsibility Matrix"	Means the matrix attached to the Statement of Work identifying the Parties respective financial liability for required resources.
“Force Majeure” or “Force Majeure Event”	As defined in Section 25.1.
“Governance Model”	As set forth in Schedule 11, Governance Model.
"Grace Period"	As set forth in the Commercial Terms.
“Group Member”	Means, with respect to Customer, a Customer Group Member, and, with respect to Service Provider, a Service Provider Group Member.
"Impact Assessment"	As defined in Section 5.8.
“Initial Term”	As defined in Section 15.1. Means the time period agreed upon by the Parties as the initial term.
"Interest"	Means money paid regularly at a particular rate for the use of money lent, or for delaying the repayment of a debt.
"ISO27k"	As defined in Section 14.14.
"ITIL"	As defined in Section 5.9.
“Key Personnel” or "Key Service Provider Personnel"	Means the Service Provider personnel that fill the key Service Provider positions identified in the applicable Statement of Work.
"Knowledge Repository"	As defined in Section 3.4.
“Law” or “Laws”	Means any treaty, directive, statute, legislation or other law enacted by any federal, state or local government in a relevant jurisdiction, including any Regulatory Requirement contemplated thereunder.
“Licensed Rights”	As defined in Section 16.2.3.
“Limited Rights”	As defined in Section 16.2.2.
"Local Laws"	Means Laws enacted by the relevant local jurisdiction.
“Local Law Matters”	As defined in Section 2.3.

CUSTOMER CONFIDENTIAL [*] Confidential Treatment Requested



“Losses”	Means any and all loss, liability, damage or expense, including without limitation interest, penalties, reasonable attorneys’ fees, court costs, and costs of arbitration.
“Malicious Code”	Means any virus, worm, Trojan horse, time bomb, spyware or other malicious code intended to interrupt, corrupt, disable or damage computer programs, systems, environments or data, or to permit unauthorized access thereto.
"Managed Agreements"	Means the agreements specified in the Statement of Work that Service Provider manages as part of the Services.
"Managed Agreement Invoices"	Means invoices related to a Managed Agreement.
“Master Service Agreement”	Means this Agreement and its Schedules.
"Model Processor Agreement"	As defined in Section 18.5.1.
“Out-of-Scope Service”	Means a service that is not within the scope of the Services prior to the execution of a Change.
“Parent Guaranty”	Means the form of guaranty referred to in Section 2 and attached as Schedule 2, Parent Guaranty.
“Party” or “Parties”	Means either or both of Service Provider or Customer or its or their Group Members, as appropriate.
"Pass Through Services"	As defined in Section 3.3.
"Pass Through Services Contract"	As defined in Section 3.3
"Privacy Incident"	As defined in Section 18.5.2.
“Procedures Manual”	As defined in Section 5.5.
“Project”	Means discrete, non-recurring tasks that are not included in the scope of the Services.
"Project Services"	Means Services related to Projects.
“Proposal”	As defined in the recitals.
"Purchase Option"	As defined in Section 29.1.
“Regulatory Requirement”	Means any applicable regulation, ordinance, government decree or other government requirement with respect to a Party’s performance of its obligations under this Agreement.
"Remedial Action"	As defined in Section 18.5.3.
“Renewal Terms”	Means the one-year periods for which the Agreement and any Companion Agreements will be automatically renewed in accordance with the terms of the Agreement.
“Request for Proposal”	As defined in the recitals.
“Reserved Country”	Means any of the following countries, as applicable, where (i) after the Effective Date, Customer or a Customer Group Member may desire Service Provider to provide Services and (ii) applicable Law requires that Customer or the Customer Group Member consult with potentially affected employees or their representatives before making any such request., [*]."
"Restricted Parties List"	As defined in Section 14.6.
"Review Period(s)"	As defined in Section 3.5.3.
"Reverse Transition"	As defined in Section 15.7.
“Rules”	As defined in Section 21.6.
“Schedule”	Means the Schedules attached to this Agreement.
“Security Plan”	Means a comprehensive security protocol and security plan developed and implemented by Service Provider that is reasonably acceptable to Customer and that satisfies the standards set forth in Schedule 10.
“Security Protocol”	As defined in Schedule 10, Security Protocol.
“Service(s)”	Means the services described in Section 3.1 and 3.2 of the Agreement.

CUSTOMER CONFIDENTIAL [*] Confidential Treatment Requested



"Service Commencement Date"	Means the date that Services will begin, as set forth in the Commercial Terms or the applicable Statement of Work.
“Service Credits”	Means the credits payable for failure to meet or exceed Service Levels.
“Service Level”	Means the standards prescribed for the performance and quality of the Services pursuant to this Agreement as defined in the applicable Statement of Work.
"Service Location"	Means the location from which Services will be provided.
“Service Provider”	As defined in the first paragraph of this Agreement.
“Service Provider Competitor”	Means those entities and their successors listed in Schedule 14.
“Service Provider Contract Executive”	Means Service Provider’s primary contact for the management and administration of this Agreement.
“Service Provider Group Member”	Means a company or operating entity within the Service Provider Group.
“Service Provider Group”	Means Service Provider and any or all Affiliates of Service Provider engaged in performance of Services.
"Service Provider Materials"	Means any materials, documentation, manuals, guidelines, business processes, methodologies, database rights, inventions, designs, drawings, Confidential Information or other items licensed or owned by Service Provider and used by Service Provider to perform the Services, excluding Service Provider Software and the Customer Software and Customer Materials.
“Service Provider Owned Software”	Means any Service Provider Software owned by Service Provider or any of its Affiliates.
“Service Provider Software”	Means Software that is owned or licensed by Service Provider or any of its Affiliates, Subcontractors or other agents and used by Service Provider or any of its Affiliates, Subcontractors or other agents to provide the Services.
"Service Provider SSAE 16 Report"	As defined in Section 14.12.2.
“Service Provider Third Party Software”	Means any Service Provider Software licensed by Service Provider or any of its Affiliates, Subcontractors or other agents from a third party.
“Statement of Work” or "SOW"	Means any Statement of Work that the Parties mutually agree to add to this Agreement or a Companion Agreement for new or additional Services.
“Subcontractor”	Means any agent or contractor retained by Service Provider to perform Services on behalf of Service Provider.
“Software”	Means any application, operating system, middleware component, tools, utilities or other computer program, in object and source code form as applicable in the circumstances.
“Specifications”	Means technical and functional documentation describing the Applications or Deliverables, as approved by Customer.
“Term”	Means the Initial Term or a Renewal Term, as applicable.
“Termination Assistance”	Means Services required to effect orderly transition upon expiration or termination of the Agreement.
"Termination Fee"	Means the Fee payable, if any, by Customer under Schedule 3 (Commercial Terms) if required under the Agreement.
“Third Party”	Means an entity other than Service Provider and its Affiliates and other than Customer and its Affiliates.
“Third Party Agreements”	Means any Third Party license agreements, support agreements and other third party contract rights utilized by Service Provider in connection with the performance of the Services.
“Transition”	Means the set of tasks and activities to complete in order to transfer Service performance from Customer to Service Provider.
"Transition Credits"	As set forth in the Transition Plan.
"Transition Manager"	As set forth in Section 4.1.3.
"Transition Milestone"	Means those milestones identified in the Transition Plan.

CUSTOMER CONFIDENTIAL [*] Confidential Treatment Requested



“Transition Plan”	Means the plan agreed to by the Parties to effectuate the Transition.
“Transition Services”	As defined in Section 4.1.
“Unacceptable Service”	Means Service performance that is chronically below agreed Service Levels.
"Unit"	As defined in Section 29.1
“Use”	Means to make, reproduce, copy, distribute, adapt, modify, make derivative works of, perform, display, transmit and otherwise use, and to sublicense any or all of such rights to third parties.

CUSTOMER CONFIDENTIAL [*] Confidential Treatment Requested

SCHEDULE 2

INTENTIONALLY OMITTED

CUSTOMER CONFIDENTIAL [*] Confidential Treatment Requested

SCHEDULE 3

COMMERCIAL TERMS

MASTER SERVICE AGREEMENT

BY AND BETWEEN

CUSTOMER

AND

SERVICE PROVIDER

CUSTOMER CONFIDENTIAL [*] Confidential Treatment Requested

1.0 Definitions

Terms used in this Schedule with initial capital letters shall have the respective meanings set forth in this Schedule or, if not defined herein, shall have the respective meanings set forth in the Master Service Agreement, Schedule 1 to the Master Services Agreement or other Schedules to the Master Service Agreement. Unless otherwise specified, references to "Article" or "Section" refer to the applicable Article or Section of this Schedule.


2.0	Services

The "Services" means all the research and development, project delivery and deployment, support and maintenance and testing activities currently performed by Customer, which shall be separately identified in Statements of Work to be executed by the Parties.


3.0	Personnel

3.1 This Section is subject to execution of Companion Agreements for the Reserved Countries.

3.2 For Customer Personnel subject to transfer collective redundancy regulations or other laws providing for consultation , Customer shall (to the extent that such steps have not been completed prior to the Effective Date) as soon as practicable following the Effective Date, and in connection with the outsourcing of the Services, enter into consultation with the Customer Personnel and their Representatives as necessary under local legislation and the terms of any applicable agreement or arrangement with a trade union, a works council or an employee representative body applicable to the transfer of employees and/or redundancies, whether on a collective or an individual basis. The Service Provider shall provide Customer with such assistance as Customer may reasonably request in carrying out such consultation, including without limitation providing information and attending consultation meetings with Customer if requested.

3.3 For Customer Personnel subject to regulations safeguarding the employee's rights in the event of transfer of undertakings, any Customer Personnel that do not object to transferring to the Service Provider shall transfer employment to Service Provider or its Affiliates in accordance with applicable law or shall be offered employment with Service Provider or its Affiliates. The contracts of employment for such Customer Personnel shall have effect from the Relevant Transfer Date as if originally made between the Service Provider and such Customer Personnel. Relevant Transfer Date means the date when an Customer Personnel becomes an employee of Service Provider If any Customer Personnel objects to transfer to the Service Provider, Customer will use reasonable endeavors to continue to employ such Customer Personnel during the transition period and to procure that they provide assistance in respect of the transition process. If such Customer Personnel indicates that they wish to transfer to the Service Provider the Service Provider will accept that transfer on the same terms as though that employee transferred in accordance with this Agreement and Statement of Work. All liability to pay wages, salaries, tax, and national insurance (or equivalent social security) contributions, and to pay or confer benefits to or in relation to the Customer Personnel will be discharged by Customer in respect of the period to the close of business on the day immediately prior to the Relevant Transfer Date and will be discharged by the Service Provider from the Relevant Transfer Date onwards.

3.4 For all other Customer Personnel within the scope of Services, Service Provider will make an offer of employment containing a total compensation package (excluding stock options) that will be, at a minimum, the same or better in the aggregate than the total compensation package for the applicable individual as of the effective date of the Master Services Agreement and will comply with all applicable law. The Customer Personnel within the scope of Services will commence employment with Service Provider or its Affiliates upon acceptance of such offer of employment and as agreed in the country specific addendums and/or statement of work, but no earlier than at a time that any requisite notice under applicable law has expired. If any Customer Personnel rejects the offer of employment from the Service Provider, Customer will use reasonable endeavors to continue to employ such Customer Personnel during the transition period and to procure that they provide assistance in respect of the transition process. The offer of employment shall remain open during such offer acceptance period. All liability to pay wages, salaries, tax, and national insurance (or equivalent social security) contributions, and to pay or confer benefits to or in relation to the Customer Personnel will be discharged by Customer in respect of the period to the close of business on the day immediately prior to the Relevant Transfer Date and will be discharged by the Service Provider from the Relevant Transfer Date onwards.

CUSTOMER CONFIDENTIAL [*] Confidential Treatment Requested

3.4 Pending any such employment or transfer or execution of such Companion Agreements, and subject to clause 3.4 of this schedule, Customer may take as a credit against the Base Fees, defined below, the fully loaded manpower costs(employee cost restricted to salary, benefit costs and social charges) of Customer Personnel performing the Services. Customer will be responsible for all employment claims (for both EU and non-EU personnel) related to the period of their employment prior to the personal transfer date agreed upon by the parties. Service Provider will be responsible for all employment claims (for both EU and non-EU personnel) related to the period of their employment after the personnel transfer date agreed upon by the parties except for payments which are accrued during the period of employment with Customer, but payable at a later date

[*]

4. Fees

4.1 The Fees for the Services, as per Contract Year, are given below in Table A, and will be divided equally into 12 months and invoiced monthly in accordance with the invoicing provisions of the Master Services Agreement ("Base Fees"). The Base Fees provide for an average capacity model as set forth below, [*]. The annual Base Fees is a commitment from Customer to Service Provider . The initial Contract Year shall commence June 1, 2015.



	Year 1	Year 2	Year 3	Year 4	Year 5	Year 6
Average Man Years	[*]	[*]	[*]	[*]	[*]	[*]

Table A: Base Fees Table (in USD million)



	Year 1	Year 2	Year 3	Year 4	Year 5	Year 6	Total
Gross	[*]	[*]	[*]	[*]	[*]	[*]	[*]
Signing Amount	[*]	[*]	[*]	[*]	[*]	[*]	[*]
Net	40.00	40.00	38.00	34.00	31.00	28.00	211.00

Service Provider commits sign-on amount of [*], for transition assistance, [*].

4.2 In case of decrease in work volume in any Contract Year, Customer will be allowed to carry forward Services of up-to [*] of annual Base Fees for use in the next Contract Year; provided that quarterly volume cannot be reduced by more than [*] from the prior Contract Year annual Base Fees. This roll-over services provision will lapse if such Services are not utilized by Customer within the successive Contract Year. For clarity, reduction in work volume does not mean reduction in monthly Fees to Service Provider, unless treated as a partial termination as discussed below. The roll-over service provision will be tracked by Service Provider and agreed with Customer on a monthly basis.

4.3 In case of increase in work volume, any additional Fees in any Contract Year will be allowed to offset revenue commitment in the subsequent Contract Years. Any increase in volume will be charged as per rate card set forth in Schedule 4 or any other mutually agreed manner.

4.4 In the case of any Customer product being taken out of market, which leads to a drop in spend by Customer, the Base Fees can be fulfilled by additional work as long as it is with the similar skill sets as covered in the Initial Statements of Work.

4.5 In case of revenue decline beyond [*] as given in Section 4.3 above, and Customer through the Governance process communicates a need for reduced Base Fees, Customer may reduce the scope of the Services and pay a pro-rata Termination Fee pursuant to Section 15.9 of the Master Services Agreement and the Base Fees and committed volume will be reduced commensurately to such partial termination. Service Provider will continue to provide reduced Services for the duration of the Master Services Agreement. Pro-rata Termination fee will be based on clause 6.1 of this schedule

CUSTOMER CONFIDENTIAL [*] Confidential Treatment Requested

4.6 Service Level Credits will be calculated quarterly and reported to Customer and any adjustments in the Fees will be made in the following month’s invoice. The Grace Period for Service Levels Credits is the earlier of [*] from the execution of the Companion Agreement for Israel or [*].

4.7 Service Provider represents and Customer acknowledges that Service Provider has represented that it is making substantial investments to transform the current business model for Customer. Broadly the investments made in Y1 are as follows (In USD Millions):



Sign -on amount	[*]
Transition	[*]
Addendum	[*]
Retention	[*]
Severance	[*]
Total	[*]


5.0	Joint Go to Market Agreement

5.1 Service Provider agrees that its sales force will be engaged in marketing and selling Customer's product and services with the objective of generating [*] of sales over the initial three Contract Years comprised of [*] in Contract Year 1, [*] in Contract Year 2 and [*] in Contract Year 3.


6.0	Termination Fee

6.1 If Customer terminates the Master Service Agreement and a Termination Fee is required under the Master Service Agreement for such termination, Service Provider will invoice Customer and Customer will pay the Termination Fee for the Contract Year at which the termination becomes effective as set forth below. (For example, the Termination Fee for a termination that becomes effective in the middle of Y2 would be [*]).

(In USD Millions)



Year	Y1	Y2	Y3	Y4	Y5	Y6
Fee	[*]	[*]	[*]	[*]	[*]	[*]

6.2 Termination Fee as per 6.1 on this schedule , and subject to clause 4 of this schedule, will be applicable for early termination of the contract or full/part spin-offs/sale of Customer that reduces Service volume, or business scale down as given in Section 4.5 without offset of additional work.

CUSTOMER CONFIDENTIAL [*] Confidential Treatment Requested

7.0 Responsibility matrix



Description	Responsibility
	Service Provider	Customer
Facilities for rebadged employees prior to migration to Service Provider facilities or otherwise as long as they are providing Services to Customer		P
Labs infrastructure and 3^rd party SW, HW tools CAPEX and maintenance OPEX		P
Project Specific expenses including Customer prior - approved travel, shift allowance, overtime.		P
Laptops and all other end-user equipment (including mobile phones, desktops, and IT support) for rebadged employees		P
Laptops and other end-user equipment (including mobile phones, desktops and IT support) for offshore or incremental resources (including 5.3 support)	P
Mobile contracts will be covered under opex	P
Upkeep/Refresh of laptops for rebadged employees and offshore or incremental resources	P
Travel and living expenses for any specific Customer requested travel		P
Offshore connectivity, utilizing ODC model, segregated facilities with site to site connectivity (short term connectivity to be covered by Customer VPN/other as possible)	P

It is assumed that rebadged / offshore resources in like quantities can utilize existing Customer software licenses, if not there will be a cost to Service Provider to acquire additional licenses. Such additional Customer specific licenses cost will be reimbursed by Customer.

CUSTOMER CONFIDENTIAL [*] Confidential Treatment Requested

SCHEDULE 4

RATES

MASTER SERVICE AGREEMENT

BY AND BETWEEN

CUSTOMER

AND

SERVICE PROVIDER

CUSTOMER CONFIDENTIAL [*] Confidential Treatment Requested

[*]

CUSTOMER CONFIDENTIAL [*] Confidential Treatment Requested

Exhibit 10.2

AMENDMENT TO EMPLOYMENT AGREEMENT

This Amendment (this “Amendment”) to an Employment Agreement dated April 26, 2012 (the “Employment Agreement”) is entered into by Comverse, Inc. and Philippe Tartavull (“Executive”) on May 14, 2015.

WHEREAS, Under the Employment Agreement Executive serves as the Chief Executive Officer of the Company;

WHEREAS, the Company and the Executive desire to amend and revise the terms of the Employment Agreement to the extent set forth herein in this Amendment;

NOW THEREFORE, in consideration of the mutual agreements and covenants contained herein and for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Executive and the Company hereby agree as follows:


1.	The Employment Agreement shall be amended to be between the Executive and Comverse, Inc. For the avoidance of doubt, Comverse Technology, Inc. shall not be a party to the Employment Agreement and shall not have any rights or obligations under the Employment Agreement.


2.	Any notices under the Employment Agreement to the Company as provided for in Section 11 should be delivered to the Company at the following address:

Comverse, Inc.

200 Quannapowitt Parkway

Wakefield, MA, 01880

Attention: General Counsel


3.	Section 1 of the Employment Agreement is hereby amended to provide as follows:

“Employment. The Company hereby agrees to employ Executive, and Executive hereby agrees to accept employment with the Company, upon the terms and conditions contained in this Agreement. Executive’s employment with the Company shall commence on the Effective Date and shall continue, subject to earlier termination of such employment pursuant to the terms hereof, until the fourth anniversary of the Effective Date (the “Term”). Thereafter, the Term will automatically renew on a year to year basis for an additional one-year period unless either the Company or the Executive provides at least 60 days advance notice of non-renewal. For the avoidance of doubt, and by way of example, notice must be given by March 22, 2016 if either the Executive or the Company desire not to renew the Employment Agreement for an additional year beyond May 21, 2016.”


4.	The language “during the Term” is hereby deleted from Section 6.1 and Section 6.4. For the avoidance of doubt, the Executive shall be entitled to the severance under Section 6.1 and Section 6.4 if the Executive’s employment is ended at the end of the Term, provided that the Executive otherwise qualifies under either Section 6.1 (termination without Cause or Resignation for Good

Reason in the Absence of a Change of Control) or Section 6.4 (termination without Cause or Resignation for Good Reason in Connection with a Change of Control).


5.	Section 6.5(b)(iv) is hereby deleted from the definition of “Good Reason”.


6.	The Company and the Executive hereby confirm that both parties have been in compliance with the Employment Agreement to date and that neither party has an existing claim for breach of the Employment Agreement.

[Remainder of the page intentionally left blank]

AGREED TO:

EXECUTIVE

/s/ Phillipe Tartavaull 5/14/15

Phillipe Tartavaull Date

COMVERSE, INC.

By: /s/ Kathleen Harris 5/14/15

Name: Kathleen Harris Date

Tile: SVP, Chief Talent and

Administrative Officer

Exhibit 10.3

AMENDMENT TO EMPLOYMENT LETTER

This Amendment (this “Amendment”) to an Employment Letter dated September 19, 2012 (the “Letter”) is entered into by Comverse, Inc. and Nassrin Tavakoli (“Executive”) on May 14, 2015.

WHEREAS, under the Letter, the Executive serves as the Senior Vice President, Chief Technology Officer and Research & Development of the Company;

WHEREAS, the Company and the Executive desire to amend and revise the terms of the Letter to the extent set forth herein in this Amendment;


1.	Any notices under the Letter to the Company as provided for in Section 11 should be delivered to the Company at the following address:

Comverse, Inc.

200 Quannapowitt Parkway

Wakefield, MA, 01880

Attention: General Counsel


2.	Section 1 of the Letter is hereby amended to provide as follows:

“Employment. The Company hereby agrees to employ Executive, and Executive hereby agrees to accept employment with the Company, upon the terms and conditions contained in this Letter. Executive’s employment with the Company shall commence on the Effective Date and shall continue, subject to earlier termination of such employment pursuant to the terms hereof, until the fourth anniversary of the Effective Date (the “Term”). Thereafter, the Term will automatically renew on a year to year basis for an additional one-year period unless either the Company or the Executive provides at least 60 days advance notice of non-renewal. For the avoidance of doubt, and by way of example, notice must be given by August 2, 2016 if either the Executive or the Company desire not to renew the Letter for an additional year beyond October 1, 2016.”

The language “during the Term” is hereby deleted from Section 6.1 and Section 6.4. For the avoidance of doubt, the Executive shall be entitled to the severance under Section 6.1 and Section 6.4 if the Executive’s employment is ended at the end of the Term, provided that the Executive otherwise qualifies under either Section 6.1 (termination without Cause or Resignation for Good Reason in the Absence of a Change of Control) or Section 6.4 (termination without Cause or Resignation for Good Reason in Connection with a Change of Control)


4.	Section 6.5(b)(iv) is hereby deleted from the definition of “Good Reason”.

AGREED TO:

EXECUTIVE

/s/ Nassrin Tavakoli 5/14/15

Nassrin Tavakoli Date

COMVERSE, INC.

By: /s/ Kathleen Harris 5/14/15

Name: Kathleen Harris Date

Tile: SVP, Chief Talent and

Administrative Officer

Exhibit 10.4

March 11, 2015

By Electronic Mail

Jacky Wu

9 West Broadway, #617

Boston, MA 02127

Dear Jacky,

We are pleased to extend an offer to you (the “Executive”) to join Comverse, Inc. (the “Company”) pursuant to the terms of this Employment Letter (this “Letter”).

WHEREAS, the Company desires that Executive become employed by, and Executive desires to be employed by, the Company effective as of March 30, 2015 (the “Effective Date”).

NOW, THEREFORE, in consideration of such employment and the mutual covenants and promises herein contained, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company and Executive agree as follows:

1.Employment. The Company hereby agrees to employ Executive, and Executive hereby agrees to accept employment with the Company, upon the terms and conditions contained in this Letter. Executive’s employment with the Company shall commence on the Effective Date and shall continue, subject to earlier termination of such employment pursuant to the terms hereof, until the third anniversary of the Effective Date (the “Term”). In the event Executive continues in employment after the expiration of the Term, unless the Company and Executive have mutually agreed in writing to extend the Term, such employment shall be “at will” employment and may be terminated at any time by either party on written notice, but without Sections 5 and 6 hereof applying thereto.

2.Duties. During the Term, Executive shall serve on a full-time basis and perform services in a capacity and in a manner consistent with Executive’s position for the Company and any entity that directly, or indirectly through one or more intermediaries, controls or is controlled by, or is under common control with, the Company (an “Affiliate”). Executive shall have the title of Senior Vice President of Financial Planning and Analysis and shall have such duties, authorities and responsibilities as are consistent with such position. Executive shall report directly to the Chief Executive Officer and Chief Financial Officer of the Company. Executive shall devote substantially all of Executive’s business time and attention and Executive’s best efforts (excepting vacation time, holidays, sick days and periods of disability) to Executive’s employment and service with the Company and its Affiliates; provided, however, that this Section 2 shall not be interpreted as prohibiting Executive from (i) managing Executive’s personal investments (so long as such investment activities are of a passive nature), or (ii) engaging in charitable or civic activities, or (iii) participating on boards of directors or similar bodies of non-profit organizations and the board of directors of any company on which Executive serves on the date hereof (other than a competitor of the Company), so long as (A) such activities do not (a) interfere with the performance of Executive’s duties and responsibilities hereunder,

(b) create a fiduciary conflict, or (c) with respect to (ii) and (iii) only, detrimentally affect the Company’s reputation as reasonably determined by the Company in good faith, and (B) Executive complies with the Code of Business Conduct and Ethics and Insider Trading Policy, each as amended from time to time. If

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requested, Executive shall also serve as an executive officer and/or member of the board of directors of any of the Company’s Affiliates without additional compensation.

1.Location Of Employment. Executive’s principal place of employment shall be at the Company’s corporate office in Wakefield, MA, subject to reasonable business travel consistent with Executive’s duties and responsibilities.

2.Compensation.

4.1 Base Salary.

(a)In consideration of all services rendered by Executive under this Letter, the Company shall pay Executive a base salary (the “Base Salary”) at an annual rate of $325,000 during the Term. Executive’s Base Salary will be reviewed annually and may be increased, but not decreased, at the discretion of the Compensation Committee of the Company (the “Compensation Committee”) based on market trends, internal considerations and Executive’s performance.

(b)The Base Salary shall be paid in such installments and at such times as the Company pays its regularly salaried employees and shall be subject to all required withholding taxes, FICA contributions and similar deductions legally required to be withheld.

4.2 Annual Cash Bonus. With respect to each fiscal year, which for clarity is currently February 1 to January 31 of the following calendar year, during the Term, commencing in 2015, Executive shall be eligible to receive an annual cash bonus award (the “Cash Bonus”). Executive’s target award opportunity (“Target Cash Bonus”) will be 50% of Executive’s Base Salary earned for the applicable fiscal year and Executive’s maximum award opportunity will be 200% of Executive’s Base Salary earned for the applicable fiscal year, provided, however, that actual bonus earned for fiscal year 2015 shall be pro-rated to reflect the actual term of service during fiscal year 2015. The amount of any Cash Bonus awarded to Executive shall be determined based upon performance against goals approved annually by the Compensation Committee. The Cash Bonus for each fiscal year shall be paid to Executive as soon as reasonably practicable following the end of such year and at the same time that other senior executives of the Company receive bonus payments, but in no event later than June 15th of the year following the fiscal year to which such Cash Bonus relates.

4.3 Sign On Restricted Stock Unit Awards. In the first meeting of the Company’s Board of Directors (the Board”) to be held following the Effective Date, management will recommend to the Board that the Company shall grant the Executive a one-time award of restricted stock units of the Company (the “Signing RSUs”) pursuant to the Comverse 2012 Stock Incentive Compensation Plan for 12,475 shares of the Company’s common stock (“Common Stock”). Management will recommend that the Signing RSUs shall vest in three (3) equal annual installments on each of the first three (3) anniversaries of the date of grant, subject to Executive’s continued employment on each such vesting date. The Signing RSUs shall be subject to the terms and conditions set forth in the Comverse 2012 Stock Incentive Plan and the Company’s standard restricted stock unit agreement, which shall not be inconsistent herewith. Upon termination of Executive’s employment, the unvested portion of the Signing RSUs shall be immediately forfeited unless otherwise stated in the applicable restricted stock unit agreement or in Section 6 hereof. In the event of a Change of Control, (i) to the extent that the continuing entity fails to assume or replace the Signing RSUs with a new award of equivalent value and substantially equivalent terms, the Signing RSUs shall vest immediately, and (ii) if the continuing entity assumes or replaces the Signing RSUs with a new award of equivalent value and substantially equivalent terms, the vesting schedule of the Signing RSUs shall not accelerate and the unvested portion of

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the Signing RSUs shall be immediately forfeited upon any subsequent termination of Executive’s employment unless otherwise stated in the applicable restricted stock unit agreement or in Section 6 hereof.

4.4 Sign On Option Awards.

(a)In the first meeting of the Company’s Board of Directors (the Board”) to be held following the Effective Date, management will recommend to the Board that the Company shall grant the Executive a one-time option (the “Signing Option”) to purchase Common Shares, with an exercise price per Common Share determined in accordance with the Comverse 2012 Stock Incentive Compensation Plan. Management will recommend that the Signing Option shall be an option to purchase 33,975 Common Shares. The Signing Option shall have a term of ten (10) years and shall vest in three (3) equal annual installments on the first three anniversaries of the date of grant, subject to Executive’s continued employment on each such vesting date. The Signing Option shall be subject to the terms and conditions, including the determination of the exercise price, set forth in the Comverse 2012 Stock Incentive Compensation Plan and the Company’s standard option agreement, which shall not be inconsistent herewith.

(b)Upon termination of Executive’s employment, the unvested portion of the Signing Option shall be immediately forfeited unless otherwise stated in the applicable option agreement or Section 6 hereof. Upon termination of Executive’s employment, the vested portion of the Signing Option shall remain exercisable until the earlier of (i) twelve (12) months following termination of Executive’s employment, and (ii) expiration of the original ten (10) year term; provided, however, that if Executive’s employment is terminated for Cause, the Signing Option shall be immediately forfeited in its entirety. In the event of a Change of Control, (i) if the continuing entity fails to assume or replace the Signing Option with a new award of equivalent value and substantially equivalent terms, the Signing Option shall vest immediately, and (ii) if the continuing entity assumes or replaces the Signing Option with a new award of equivalent value and substantially equivalent terms, the vesting schedule of the Signing Option shall not accelerate and the unvested portion of the Signing Option shall be immediately forfeited upon any subsequent termination of Executive’s employment unless otherwise stated in the applicable option agreement or in Section 6 hereof.

4.5 Annual Equity Awards. During the Term, Executive will be eligible to receive annual equity and equity-based awards under the Comverse 2012 Stock Incentive Compensation Plan (the “Annual Equity Awards”), based on market practice, affordability, the performance of the Company, the performance of Executive and such other factors as are determined to be relevant in the good faith discretion of the Compensation Committee or the Board, and consistent with the equity awards provided to other senior executives of the Company. The value and form of any Annual Equity Awards shall be determined by the Compensation Committee or the Board annually and are anticipated to be in the form of (i) restricted stock units of the Company, and (ii) options to purchase shares of the Company, in each case which may or may not include performance vesting requirements. The terms and conditions of any Annual Equity Awards shall generally be the same as those applicable to other senior executives of the Company, including, without limitation, the termination and change of control provisions.

4.6 Vacation. Executive shall be entitled to four (4) weeks of annual paid vacation days, which shall accrue and be useable by Executive in accordance with Company policy, as may be in effect from time to time.

4.7 Benefits. During the Term, Executive shall be entitled to participate in any benefit plans, including medical, disability and life insurance (but excluding any severance or bonus plans unless (i) specifically referenced in this Letter, or (ii) adopted subsequent to the Effective Date and intended to replace

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or serve in lieu of provisions set forth herein) offered by the Company as in effect from time to time (collectively, “Benefit Plans”), on the same basis as those generally made available to other senior executives of the Company, to the extent Executive may be eligible to do so under the terms of any such Benefit Plan Executive understands that any such Benefit Plans may be terminated or amended from time to time by the Company in its sole discretion.

3.Termination. Executive’s employment hereunder may be terminated as follows:

5.1 Automatically in the event of the death of Executive;

5.2 At the option of the Company, by written notice to Executive or Executive’s personal representative in the event of the Disability of Executive. As used herein, the term “Disability” shall mean a determination by an independent competent medical authority (selected by the Company) that Executive is unable to perform his duties under this Letter and in all reasonable medical likelihood such inability will continue for a period of 120 consecutive days or 180 days in any 365 day period. Executive shall fully cooperate in connection with the determination of whether Disability exists.

5.3 At the option of the Company for Cause (as defined in Section 6.5), on prior written notice to Executive;

5.4 At the option of the Company at any time without Cause on sixty (60) days prior written notice to Executive (provided that the assignment of this Letter to and assumption of this Letter by the purchaser of all or substantially all of the assets of the Company shall not be treated as a termination without Cause under this Section 5.4);

5.5 At the option of Executive for Good Reason; or

5.6 At the option of Executive for any or no reason, on sixty (60) days prior written notice to the Company (which the Company may, in its sole discretion, make effective as a resignation earlier than the termination date provided in such notice).

4.Severance Payments.

6.1 Termination Without Cause or Resignation for Good Reason in the Absence of a Change of Control. If Executive’s employment is terminated at any time during the Term by the Company without Cause (and not for death or Disability) or by Executive for Good Reason (as defined in Section 6.5), in each case in the absence of a Change of Control, subject to Section 6.6 hereof, Executive shall be entitled to:

(a)within ten (10) business days following such termination, payment of Executive’s accrued and unpaid Base Salary, and reimbursement of expenses under Section 7 hereof in each case accrued through the date of termination;

(b)an amount in cash equal to 150% of Executive’s Annual Base Salary as then in effect (without any reduction constituting Good Reason), which shall be payable in a lump sum on the sixtieth (60th) day following Executive’s termination of employment and shall include any amounts due prior thereto;

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(c)any Cash Bonus earned with respect to a fiscal year ending prior to the date of such termination but unpaid as of such date, payable at the same time in the year of termination as such payment would be made if Executive continued to be employed by the Company;

(d)a pro-rata portion of Executive’s Cash Bonus for the fiscal year in which Executive’s termination occurs (determined by multiplying the amount of the Cash Bonus Executive would have been entitled to receive for the full fiscal year based on actual performance if Executive’s employment had not been terminated, by a fraction, the numerator of which is the number of days during the fiscal year of termination that Executive is employed with the Company and the denominator of which is 365), payable at the same time as such payment would be made if Executive continued to be employed by the Company; provided it shall be paid no later than June 15^th of the fiscal year following the fiscal year in which the termination occurs;

(e)subject to Executive’s timely election of continuation coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”), the Company shall pay to Executive an amount equal to (i) the monthly amount of the COBRA continuation coverage premium under the Company’s group medical plans as in effect from time to time less the amount of Executive’s portion of the premium as if Executive was an active employee, multiplied by (ii) eighteen (18) , which shall be payable in a lump sum on the sixtieth (60th) day following Executive’s termination of employment and shall include any amounts due prior thereto;

(f)(i) if Executive’s employment is terminated by the Company without Cause, immediate vesting of any portion of the Signing RSUs, if any, that would have vested during the one (1) year period following Executive’s termination date (had Executive continued to be employed by the Company during such period), or (ii) if Executive’s employment is terminated by Executive for Good Reason, immediate vesting in full of the Signing RSUs;

(g)(i) if Executive’s employment is terminated by the Company without Cause, immediate vesting of any portion of the Signing Option, if any, that would have vested during the one (1) year period following Executive’s termination date (had Executive continued to be employed by the Company during such period), or (ii) if Executive’s employment is terminated by Executive for Good Reason, immediate vesting in full of the Signing Option;

(h)treatment of any Annual Equity Awards held by Executive in accordance with the standard policy applicable to other senior executive officers of the Company; and

(i)all other accrued or vested amounts or benefits due to Executive in accordance with the Company’s benefit plans, programs or policies including without limitation any accrued vacation earned during the year of termination (other than severance).

6.2 Termination due to Death or Disability. Upon the termination of Executive’s employment due to Executive’s death or Disability pursuant to Section 5.1 and Section 5.2 respectively, Executive or Executive’s legal representatives shall be entitled to receive:

(a) the payments and benefits described under Sections 6.1(a), (c), (h) and (i) hereof; and

(b)immediate vesting in full of the Signing RSUs and Signing Option.

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6.3 Termination by the Company for Cause or Termination by Executive other than for Good Reason. Except for the payments and benefits described in Sections 6.1(a), (c) (h) and (i), Executive shall not be entitled to receive severance payments or benefits after the last date of employment with the Company upon the termination of Executive’s employment hereunder by the Company for Cause pursuant to Section 5.3, or by Executive pursuant to Section 5.6 other than for Good Reason.

6.4 Termination Without Cause or Resignation for Good Reason in Connection with a Change of Control. If Executive’s employment is terminated at any time during the Term by the Company without Cause (and not for death or Disability) or by Executive for Good Reason (as defined in Section 6.4), in each case either (i) prior to a Change of Control but in contemplation thereof, or (ii) within twenty four (24) months following a Change of Control, subject to Section 6.6 hereof, Executive shall be entitled to:

(a)the payments and benefits described under Sections 6.1(a), (c), (d), (e), (h) and (i) hereof;

(b)an amount in cash equal to 150% of the sum of Executive’s (i) Annual Base Salary as in effect as of the date of the Change of Control (or the date of termination if such termination occurs prior to consummation of the Change of Control) but not less than the amount in effect immediately preceding such date (and without any reduction constituting Good Reason), and (ii) Target Cash Bonus determined on the basis of the Base Salary applicable for the purposes of clause (i) of this paragraph had Executive remained employed for the entire fiscal year of termination, which shall be payable in a lump sum on the sixtieth (60th) day following Executive’s termination of employment and shall include any amounts due prior thereto; and

(c)immediate vesting in full of the Signing RSUs and Signing Option.

6.5 Certain Definitions. For purposes of this Letter,

(a)“Cause” shall mean a good faith finding by the Company, as applicable, of: (i) commission by Executive of, or a plea of nolo contendere by Executive to, any felony; (ii) a material violation by Executive of federal or state securities laws; (iii) willful misconduct or gross negligence by Executive resulting in material and demonstrable harm to the Company; (iv) a material violation by Executive of any Company policy or procedure provided to 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 Executive to carry out, in all material respects, the reasonable and lawful directions of the Company that are within Executive’s individual control and consistent with Executive’s position and duties and responsibilities hereunder, except for a failure that is attributable to Executive’s illness, injury or Disability; (vi) fraud, embezzlement, theft or material dishonesty by Executive against the Company; (vii) material breach by Executive of any of the provisions of this Letter which (if curable) is not cured within thirty (30) days of written notice; or (viii) as provided in Section 3 and Section 12.1 hereof.

(b)“Good Reason” shall mean, without Executive’s prior written consent, the occurrence of any of the following events or actions: (i) any material reduction in Executive’s Base Salary; (ii) an actual relocation of Executive’s principal office to another location more than 50 miles from its location on the Effective Date; or (iii) a material and adverse reduction in the nature or scope of Executive’s responsibilities, duties or authorities; or (iv) the Company fails to adopt a severance policy, program or agreement at least ninety (90) days prior to expiration of the Term that will be applicable to Executive following expiration of the Term;

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provided, however, that no event described in clause (i), (ii) or (iii) shall constitute Good Reason unless (A) Executive has given the Company written notice of the termination, setting forth the conduct of the Company that is alleged to constitute Good Reason, within thirty (30) days of the first date on which Executive has knowledge of such conduct, and (B) Executive has provided the Company at least thirty (30) days following the date on which such notice is provided to cure such conduct and the Company has failed to do so. Failing such cure, a termination of employment by Executive for Good Reason shall be effective on the day following the expiration of such cure period.

(c)“Change of Control” shall mean the occurrence of any of the following events:

(i)any person, entity or affiliated group becoming the beneficial owner or owners of more than fifty percent (50%) of the outstanding equity securities of the Company, or otherwise becoming entitled to vote shares representing more than fifty percent (50%) of the total voting power of the Company’s then-outstanding securities eligible to vote to elect members of the Company’s Board (the “Voting Securities”);

(ii)a consolidation or merger (in one transaction or a series of related transactions during the twenty-four (24) month period ending on the date of the most recent acquisition) of the Company pursuant to which the holders of Company’s equity securities, as applicable, immediately prior to such transaction (or series of related transactions during the twenty-four (24) month period ending on the date of the most recent acquisition) would not be the holders immediately after such transaction (or series of related transactions during the twenty-four (24) month period ending on the date of the most recent acquisition) of more than fifty percent (50%) of the Voting Securities of the entity surviving such transaction (or series of related transactions during the twenty-four (24) month period ending on the date of the most recent acquisition) in substantially similar proportions that they held equity securities of the Company prior to such transaction (or series of related transactions during the twenty-four (24) month period ending on the date of the most recent acquisition);

(iii)the approval of the shareholders of the Company of (or if shareholder approval is not required, the occurrence of) the sale all or substantially all of the assets of the Company, as applicable, to any other person or entity, in one transaction or a series of related transactions during the twenty-four month period ending on the date of the most recent transaction (it being understood that a spin-off of shares of capital stock of any subsidiary of the Company or a distribution of other assets of the Company as a dividend to its shareholders does not constitute a sale thereof); or

(iv)during any period of twenty-four (24) consecutive months commencing on or after the Effective Date, individuals who as of the beginning of such period constituted the entire Comverse Board (together with any new directors (other than those new directors elected in connection with an actual or threatened proxy contest or any other actual or threatened solicitation of proxies) whose election by such Board or nomination for election by the Company’s shareholders was approved by a vote of at least a majority of the directors of the Company, then still in office, who were directors at the beginning of the period or whose election or nomination for election was previously so approved) cease for any reason to constitute a majority thereof;

(v)the approval of the shareholders of the Company of the liquidation or dissolution of the Company;

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provided, that to the extent necessary to comply with Section 409A with respect to the payment of deferred compensation, “Change of Control” shall be limited to a “change in control event” as defined under Section 409A; provided, further, that a transaction shall not constitute a Change of Control if its sole purpose is to change the state of the Company’s incorporation or to create a holding company that will be owned in substantially similar proportions by the persons or entities who hold the Company’s securities immediately before such transaction.

6.6 Conditions to Payment. All payments and benefits due to Executive under this Section 6 which are not otherwise required by law shall only be payable if Executive (or Executive’s beneficiary or estate) delivers to the Company and does not revoke (under the terms of applicable law) a general release of all claims, as set out in the Company’s standard general release for Executives and in the form attached hereto as Exhibit A, provided, if necessary, such general release may be updated and revised to comply with applicable law to achieve its intent. Such general release shall be executed and delivered (and no longer subject to revocation) within sixty (60) days following termination. Failure to timely execute and return such release or revocation thereof shall be a waiver by Executive of Executive’s right to severance. In addition, severance shall be conditioned on Executive’s compliance with Section 8 hereof as provided in Section 9 below.

6.7 No Other Severance. Executive hereby acknowledges and agrees that, other than the severance payments described in this Section 6, upon termination of employment Executive shall not be entitled to any other severance under any Company benefit plan or severance policy generally available to the Company’s employees or otherwise, unless such benefit plan or severance policy is adopted subsequent to the Effective Date and is intended to replace or serve in lieu of provisions set forth herein.

6.8 Section 280G Cutback.

(a)If it is determined that the aggregate of all Payments (as defined below) that would be subject to the Excise Tax (as defined below), reduced by all federal, state and local taxes applicable thereto, including the Excise Tax, is less than the amount Executive would receive, after all such applicable taxes, if Executive received Payments equal to an amount which is $1.00 less than three times Executive’s “base amount”, as defined in and determined under Section 280G of the Internal Revenue Code of 1986, as amended (the “Code”), then, in order to maximize Executive’s net after-tax return on the Payments, such Payments shall be automatically reduced or eliminated to the extent necessary so that the aggregate Payments received by Executive will not be subject to the Excise Tax. If a reduction in the Payments is necessary, reduction shall occur in the following order: (A) by first reducing or eliminating the portion of the Payments which are not payable in cash and are not attributable to equity awards (other than that portion of the Payments subject to clause (D) hereof), (B) then by reducing or eliminating cash payments (other than that portion of the Payments subject to clause (D) hereof), (C) then by reducing or eliminating the portion of the Payments which are not payable in cash and are attributable to equity awards (other than that portion of the Payments subject to clause (D) hereof) and (D) then by reducing or eliminating the portion of the Payments (whether payable in cash or not payable in cash) to which Treasury Regulation § 1.280G-1 Q/A 24(c) (or successor thereto) applies, in each case in reverse order beginning with payments or benefits which are to be paid the farthest in time.

(b)For purposes of this Section 6.8, “Payment” shall mean any payment or distribution by the Company or its Affiliates to or for the benefit of Executive, whether paid or payable or distributed or distributable pursuant to the terms of this Letter or otherwise pursuant to or by reason of any other agreement, policy, plan program or arrangement of the Company, including without limitation any restricted stock unit,

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stock option or similar right, or the lapse or termination of any restriction on or the vesting or exercisability of any of the foregoing. For purposes of this Section 6.7, the “Excise Tax” shall mean the excise tax imposed by Section 4999 of the Code (or any successor provision thereto), and any similar tax imposed by state or local law, and any interest or penalties with respect to such excise tax.

(c)The determination of whether the Payments shall be reduced as provided in this Section 6.8 hereof and the amount of such reduction shall be made at the Company's expense by an accounting firm selected by the Company from among the four (4) largest accounting firms in the United States (the “Accounting Firm”). The Accounting Firm shall provide its determination (the “Determination”), together with supporting calculations and documentation, to the Company and Executive no later than forty-five (45) days after Executive's final day of employment, which Determination, absent manifest error, shall be binding, final and conclusive upon the Company and Executive.

5.Reimbursement of Expenses. The Company shall reimburse Executive for (i) reasonable and necessary expenses actually incurred by Executive directly in connection with the business and affairs of the Company and the performance of Executive’s duties hereunder, and (ii) annual professional association dues upon presentation of proper receipts or other proof of expenditure and in accordance with the guidelines and limitations established by the Company policy, as in effect from time to time. Such reimbursement of expenses incurred by Executive to be submitted to the Chief Executive Officer for approval. Such reimbursement shall be made promptly upon presentation of reports and proper documentation but in any event no later than ninety (90) days after the date the expense was incurred. When traveling for Company business, Executive shall be subject to Company travel policies, as in effect and as amended from time to time.

6.Restrictions on Activities of Executive.

8.1 Non-Competition. During employment and for a one (1) year period after Executive’s employment is terminated for any reason (the “Restriction Period”), Executive covenants and agrees that Executive shall not directly or indirectly (whether for compensation or otherwise) engage in Competitive Business. For purposes of this Letter, “Competitive Business” shall mean any business or any activity related to the development, sale, production, manufacturing, marketing or distribution of products or services that are in competition with products or services that the Company or any of its subsidiaries produces, sells, manufactures, markets, distributes or has interest in, in any state or foreign country in which the Company or any of its subsidiaries then conducts business or reasonably has plans to conduct business, provided that after the end of Executive’s employment Competitive Business shall exclude product lines or services that account for less than 5% of the Company’s aggregate revenue as projected in the Company’s then current business plan for the three-year period following termination of employment. It is not the intent of this covenant to bar Executive from employment in any company whose general business is the manufacture of communications equipment or delivery of communications services, only to limit specific and direct competition with the Company as aforesaid. In furtherance thereof, it is acknowledged that it shall not be a breach of this Section 8.1 for Executive to provide services to an entity or person that is not itself a Competitive Business, but has a division, business unit or segment that is a Competitive Business, so long as Executive demonstrates to the Company’s reasonable satisfaction that Executive does not and will not, directly or indirectly, provide services or advice to such division, business unit or segment that is the Competitive Business. Notwithstanding the foregoing, nothing contained in this Letter shall prevent Executive from being an investor in securities of a competitor listed on a national securities exchange or actively traded over-the-counter so long as such investments are in amounts not significant as compared to his total investments or to the aggregate of the outstanding securities of the issuer of the same class or issue of the specific securities involved.

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8.2 Non-Solicitation. Executive covenants and agrees that during the Restriction Period, Executive shall not directly or indirectly (i) influence or attempt to influence or solicit any employees, or independent contractors of the Company or any of its Affiliates to restrict, reduce, sever or otherwise alter their relationship with the Company or such Affiliates or assist any other person to do so, (ii) hire any senior executives of the Company or any of its Affiliates or assist any other person in doing so, (iii) induce or attempt to induce or otherwise counsel, advise, encourage or solicit any client or customer or prospective client or customer of the Company or any of its Affiliates to terminate its relationship with the Company or its Affiliates or otherwise interfere in any way with such relationship, or (iv) assist any other person or entity in any way to do, or attempt to do, anything prohibited by Sections 8.2(i), (ii), or (iii). The restrictions in Section 8.2(i) and (ii) shall not apply with regard to (i) general solicitations that are not specifically directed to employees of the Company or any Affiliate, or (ii) serving as a reference at the request of an employee.

8.3 Confidentiality.

(a)Executive shall not, during the Term or at any time thereafter directly or indirectly, disclose, reveal, divulge or communicate to any person other than authorized officers, directors and employees of the Company or use or otherwise exploit for Executive’s own benefit or for the benefit of anyone other than the Company, any Confidential Information (as defined below). Executive shall not have any obligation to keep confidential any Confidential Information if and to the extent disclosure thereof is specifically required by applicable law, court order or other legal or regulatory process; provided, however, that in the event disclosure is required by applicable law, Executive shall provide the Company with prompt notice, to the extent reasonably possible, of such requirement prior to making any disclosure so that the Company may seek an appropriate protective order.

(b)“Confidential Information” means any information with respect to the Company or any of its Affiliates, including methods of operation, customer lists, products, prices, fees, costs, technology, formulas, inventions, trade secrets, know-how, software, marketing methods, plans, personnel, suppliers, competitors, markets or other specialized information or proprietary matters; provided, that, there shall be no obligation hereunder with respect to, information that (i) is generally available to the public on the Effective Date, (ii) becomes generally available to the public other than as a result of a disclosure not otherwise permissible hereunder, or (iii) is required to be disclosed by law, court order or other legal or regulatory process and Executive gives the Company prompt written notice and the opportunity to seek a protective order.

8.4 Assignment of Inventions.

(a)Executive agrees that during employment with the Company, any and all inventions, discoveries, innovations, writings, domain names, improvements, trade secrets, designs, drawings, formulas, business processes, secret processes and know-how, whether or not patentable or a copyright or trademark, which Executive may create, conceive, develop or make, either alone or in conjunction with others and related or in any way connected with the Company’s or its Affiliates’ strategic plans, products, processes or apparatus or business (collectively, “Inventions”), shall be fully and promptly disclosed to the Company and shall be the sole and exclusive property of the Company as against Executive or any of Executive’s assignees. Regardless of the status of Executive’s employment by the Company, Executive and Executive’s heirs, assigns and representatives shall promptly assign to the Company any and all right, title and interest in and to such Inventions made during employment with the Company.

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(b)Whether during or after the Term, Executive further agrees to execute and acknowledge all papers and to do, at the Company’s expense, any and all other things necessary for or incident to the applying for, obtaining and maintaining of such letters patent, copyrights, trademarks or other intellectual property rights, as the case may be, and to execute, on request, all papers necessary to assign and transfer such Inventions, copyrights, patents, patent applications and other intellectual property rights to the Company and its successors and assigns. In the event that the Company is unable, after reasonable efforts and, in any event, after ten (10) business days, to secure Executive’s signature on a written assignment to the Company, of any application for letters patent, trademark registration or to any common law or statutory copyright or other property right therein, whether because of Executive’s physical or mental incapacity, or for any other reason whatsoever, Executive irrevocably designates and appoints the Secretary of the Company as Executive’s attorney-in-fact to act on Executive’s behalf to execute and file any such applications and to do all lawfully permitted acts to further the prosecution or issuance of such assignments, letters patent, copyright or trademark.

8.5 Return of Company Property. Within ten (10) days following the date of any termination of Executive’s employment, Executive or Executive’s personal representative shall return all property of the Company and its Affiliates in Executive’s possession, including but not limited to all Company-owned computer equipment (hardware and software), telephones, facsimile machines, Blackberry, tablet computers and other communication devices, credit cards, office keys, security access cards, badges, identification cards and all copies (including drafts) of any documentation or information (however stored) relating to the business of the Company and its Affiliates, its customers and clients or its prospective customers and clients. Anything to the contrary notwithstanding, Executive shall be entitled to retain (i) personal papers and other materials of a personal nature, provided that such papers or materials do not include Confidential Information, (ii) information showing Executive’s compensation or relating to reimbursement of expenses, and (iii) copies of plans, programs and agreements relating to Executive’s employment, or termination thereof, with the Company and its Affiliates which Executive received in Executive’s capacity as a participant.

8.6 Resignation as an Officer and Director. Upon any termination of Executive’s employment, Executive shall be deemed to have resigned, to the extent applicable, if any, as an officer of the Company and any of its Affiliates, a member of the board of directors of any of the Company’s Affiliates and as a fiduciary of any Company or Affiliate benefit plan. On or immediately following the date of any termination of Executive’s employment, Executive shall confirm the foregoing by submitting to the Company in writing a confirmation of Executive’s resignation(s).

8.7 Cooperation. During and following the Term, Executive shall give Executive’s assistance and cooperation willingly, upon reasonable advance notice (which shall include due regard to the extent reasonably feasible for Executive’s employment obligations and prior commitments), in any matter relating to Executive’s position with the Company and its Affiliates, or Executive’s knowledge as a result thereof as the Company may reasonably request, including Executive’s attendance and truthful testimony where deemed appropriate by the Company, with respect to any investigation or the Company’s (or an Affiliate’s) defense or prosecution of any existing or future claims or litigations or other proceeding relating to matters in which Executive was involved or had knowledge by virtue of Executive’s employment with the Company. The Company will reimburse Executive for reasonable out-of-pocket travel costs and expenses incurred by him (in accordance with Company policy) as a result of providing such requested assistance, upon the submission of the appropriate documentation to the Company.

8.8 Non-Disparagement. During his employment with the Company and its Affiliates and at any time thereafter, Executive agrees not to disparage or encourage or induce others to disparage the Company,

200 Quannapowitt Parkway, Wakefield, MA 01880 Tel: 781-246-9000

www.comverse.com

any Affiliate, any of their respective employees that were employed during Executive’s employment with the Company or its affiliates or any of their respective past and present, officers, directors, products or services (the “Company Parties”). For purposes of this Section 8.8, the term “disparage” means making comments or statements to the press, to the Company’s or any Affiliate’s employees or to any individual or entity with whom the Company or any Affiliate has a business relationship (including, without limitation, any vendor, supplier, customer or distributor), or any public statement, that in each case is intended to, or can be reasonably expected to, materially damage any of the Company Parties. Notwithstanding the foregoing, nothing in this Section 8.8 shall prevent Executive from making any truthful statement that is (A) necessary with respect to any litigation, arbitration or mediation involving this Letter, including, but not limited to, the enforcement of this Letter, in the forum in which such litigation, arbitration or mediation properly takes place or (B) required by law, legal process or by any court, arbitrator, mediator or administrative or legislative body (including any committee thereof) with apparent jurisdiction over Executive.

8.9 Tolling. In the event of any violation of the provisions of this Section 8, Executive acknowledges and agrees that the post-termination restrictions contained in this Section 8 shall be extended by a period of time equal to the period of such violation, it being the intention of the parties hereto that the running of the applicable post-termination restriction period shall be tolled during any period of such violation.

8.10 Survival. This Section 8 shall survive any termination or expiration of this Letter or employment of Executive.

7.Remedies. It is specifically understood and agreed that any breach of the provisions of Section 8 of this Letter is likely to result in irreparable injury to the Company and that the remedy at law alone may be an inadequate remedy for such breach, and that in addition to any other remedy it may have in the event of a breach or threatened breach of Section 8 above, the Company shall be entitled to enforce the specific performance of this Letter by Executive and to seek both temporary and permanent injunctive relief (to the extent permitted by law) without bond and without liability should such relief be denied, modified or violated. Furthermore, in the event of any breach of the provisions of Section 8.1 or 8.2 above or a material and willful breach of any other provision in Section 8 above (the “Forfeiture Criteria”), the Company shall be entitled to cease making any severance payments being made hereunder, pending a final determination of damages that have ensured from such alleged breach.

8.Severable Provisions. The provisions of this Letter are severable and the invalidity of any one or more provisions shall not affect the validity of any other provision. In the event that a court of competent jurisdiction shall determine that any provision of this Letter or the application thereof is unenforceable in whole or in part because of the duration or scope thereof, the parties hereto agree that said court in making such determination shall have the power to reduce the duration and scope of such provision to the extent necessary to make it enforceable, and that the Letter in its reduced form shall be valid and enforceable to the full extent permitted by law.

9.Notices. All notices hereunder, to be effective, shall be in writing and shall be deemed effective when delivered by hand or mailed by (a) certified mail, postage and fees prepaid, or (b) nationally recognized overnight express mail service, as follows:

If to the Company:

Comverse, Inc.

200 Quannapowitt Parkway

200 Quannapowitt Parkway, Wakefield, MA 01880 Tel: 781-246-9000

www.comverse.com

Wakefield, MA 01880

Attention: General Counsel

If to Executive:

The last address shown on records of the Company or to such other address as a party may notify the other pursuant to a notice given in accordance with this Section 11.

10.Miscellaneous.

12.1 Executive Representation. Executive hereby represents to the Company that the execution and delivery of this Letter by Executive and the Company and the performance by Executive of Executive’s duties hereunder shall not constitute a breach of, or otherwise contravene, or be prevented, interfered with or hindered by, the terms of any employment letter or other agreement or policy to which Executive is a party or otherwise bound, and further that Executive is not subject to any limitation on his activities on behalf of the Company as a result of agreements into which Executive has entered except for obligations of confidentiality with former employers. To the extent this representation and warranty is not true and accurate, it shall be treated as a Cause event and the Company may terminate Executive for Cause or not permit Executive to commence employment.

12.2 No Mitigation or Offset. In the event of any termination of Executive’s employment hereunder, Executive shall be under no obligation to seek other employment or otherwise mitigate the obligations of the Company under this Letter, and there shall be no offset against amounts due Executive under this Letter on account of future earnings by Executive.

12.3 Entire Letter; Amendment. Except as otherwise expressly provided herein and as further set forth in the grant agreement of any equity awards, this Letter constitutes the entire Letter between the parties hereto with regard to the subject matter hereof, superseding all prior understandings and agreements, whether written or oral. This Letter may not be amended or revised except by a writing signed by the parties.

12.4 Assignment and Transfer. The provisions of this Letter shall be binding on and shall inure to the benefit of the Company and any successor in interest to the Company who acquires all or substantially all of the Company’s assets. The Company may assign this Letter to an Affiliate; provided, however, that, without Executive’s consent, no such assignment shall relieve the Company of its obligations hereunder. Neither this Letter nor any of the rights, duties or obligations of Executive shall be assignable by Executive, nor shall any of the payments required or permitted to be made to Executive by this Letter be encumbered, transferred or in any way anticipated, except as required by applicable laws. All rights of Executive under this Letter shall inure to the benefit of and be enforceable by Executive’s personal or legal representatives, estates, executors, administrators, heirs and beneficiaries.

12.5 Waiver of Breach. A waiver by either party of any breach of any provision of this Letter by the other party shall not operate or be construed as a waiver of any other or subsequent breach by the other party.

12.6 Withholding. The Company shall be entitled to withhold from any amounts to be paid or benefits provided to Executive hereunder any federal, state, local or foreign withholding, FICA contributions, or other taxes, charges or deductions which it is from time to time required to withhold. The Company shall

200 Quannapowitt Parkway, Wakefield, MA 01880 Tel: 781-246-9000

www.comverse.com

be entitled to rely on an opinion of counsel if any question as to the amount or requirement of any such withholding shall arise.

12.7 Code Section 409A.

(a)The parties agree that this Letter shall be interpreted to comply with or be exempt from Section 409A of the Code and the regulations and guidance promulgated thereunder to the extent applicable (collectively “Code Section 409A”), and all provisions of this Letter shall be construed in a manner consistent with the requirements for avoiding taxes or penalties under Code Section 409A. In no event whatsoever will the Company be liable for any additional tax, interest or penalties that may be imposed on Executive under Code Section 409A or any damages for failing to comply with Code Section 409A.

(b)A termination of employment shall not be deemed to have occurred for purposes of any provision of this Letter providing for the payment of any amounts or benefits considered “nonqualified deferred compensation” under Code Section 409A upon or following a termination of employment unless such termination is also a “separation from service” within the meaning of Code Section 409A and, for purposes of any such provision of this Letter, references to a “termination,” “termination of employment” or like terms shall mean “separation from service.” If Executive is deemed on the date of termination to be a “specified employee” within the meaning of that term under Code Section 409A(a)(2)(B), then with regard to any payment or the provision of any benefit that is considered nonqualified deferred compensation under Code Section 409A payable on account of a “separation from service,” such payment or benefit shall be made or provided at the date which is the earlier of (i) the expiration of the six (6)-month period measured from the date of such “separation from service” of Executive, and (ii) the date of Executive’s death (the “Delay Period”). Upon the expiration of the Delay Period, all payments and benefits delayed pursuant to this Section 12.7(b) (whether they would have otherwise been payable in a single sum or in installments in the absence of such delay) shall be paid or reimbursed on the first business day following the expiration of the Delay Period to Executive in a lump sum with interest during the Delay Period at the prime rate, and any remaining payments and benefits due under this Letter shall be paid or provided in accordance with the normal payment dates specified for them herein.

(c)With regard to any provision herein that provides for reimbursement of costs and expenses or in-kind benefits, except as permitted by Code Section 409A, (i) the right to reimbursement or in-kind benefits shall not be subject to liquidation or exchange for another benefit, (ii) the amount of expenses eligible for reimbursement, or in-kind benefits, provided during any taxable year shall not affect the expenses eligible for reimbursement, or in-kind benefits, to be provided in any other taxable year, provided, that, this clause (ii) shall not be violated with regard to expenses reimbursed under any arrangement covered by Internal Revenue Code Section 105(b) solely because such expenses are subject to a limit related to the period the arrangement is in effect and (iii) such payments shall be made on or before the last day of Executive’s taxable year following the taxable year in which the expense occurred.

(d)For purposes of Code Section 409A, Executive’s right to receive any installment payments pursuant to this Letter shall be treated as a right to receive a series of separate and distinct payments. Whenever a payment under this Letter specifies a payment period with reference to a number of days (e.g., “payment shall be made within thirty (30) days following the date of termination”), the actual date of payment within the specified period shall be within the sole discretion of the Company.

12.8 Arbitration. If any contest or dispute arises between the parties with respect to this Letter or Executive’s employment or termination thereof, other than injunctive and equitable relief with regard to

200 Quannapowitt Parkway, Wakefield, MA 01880 Tel: 781-246-9000

www.comverse.com

Section 9 hereof, such contest or dispute shall be submitted to binding arbitration for resolution in Boston, Massachusetts in accordance with the rules and procedures of the Employment Dispute Resolution Rules of the American Arbitration Association (“AAA”) then in effect. The decision of the arbitrator shall be final and binding on the parties and may be entered in any court of applicable jurisdiction. The parties shall bear their own legal fees in any arbitration; provided, however, that if Executive prevails on at least one material issue, the Company shall reimburse Executive for the legal fees and expenses incurred by Executive in connection with such arbitration, subject to Executive’s itemization and substantiation of such fees and expenses.

12.9 Indemnification; Liability Insurance. To the extent provided in the Company’s By-Laws and Certificate of Incorporation or, if greater, to the same extent as other senior executives of the Company, the Company shall indemnify Executive for losses or damages incurred by Executive as a result of all claims or causes of action arising from Executive's performance of duties for the benefit of the Company, whether or not the claim is asserted during the Term. Executive shall be covered under a directors and officers liability insurance policy to the extent provided to other senior executives or directors of the Company.

12.10 Governing Law. This Letter shall be construed under and enforced in accordance with the laws of the Commonwealth of Massachusetts, without regard to the conflicts of law provisions thereof.

12.11 Counterparts. This Letter may be executed in one or more counterparts, each of which shall be deemed an original and shall have the same effect as if the signatures hereto and thereto were on the same instrument.

12.12 Compliance with Dodd-Frank. All payments under this Letter, if and to the extent subject to the Dodd-Frank Wall Street Reform and Consumer Protection Act, shall be subject to any incentive compensation policy established from time to time by the Company to comply with such Act.

200 Quannapowitt Parkway, Wakefield, MA 01880 Tel: 781-246-9000

www.comverse.com

If you are in acceptance of this offer, please sign and date this Letter where indicated. Please return both original documents to the attention of the Employment Department at Comverse, Inc., Attention: Employment Department, 200 Quannapowitt Parkway, Wakefield, MA 01880. Please keep a copy of all of these documents for your files.

We look forward to welcoming you as part of our Comverse organization. The opportunities for personal and professional growth are great and we believe your contributions will greatly increase our likelihood of continued success.

Sincerely,

Philippe Tartavull

Comverse, Inc.

AGREED AND ACCEPTED:

Jacky Wu

Date: 3/12/15

200 Quannapowitt Parkway, Wakefield, MA 01880 Tel: 781-246-9000

www.comverse.com

EXHIBIT A

WAIVER AND RELEASE AGREEMENT

This Waiver and Release Agreement (hereinafter “Release”) is entered into between Jacky Wu (hereinafter “Executive”), and Comverse, Inc. (the “Company”).

The parties previously entered into an employment letter dated March 11, 2015 pursuant to which Executive is entitled to certain payments and benefits upon termination of employment subject to the execution and non-revocation of this Release. Executive has had a termination of employment pursuant to such employment letter.

NOW THEREFORE, in consideration of certain payments and benefits under his employment letter, Executive and the Company agree as follows:

Executive expressly waives and releases the Company, their respective affiliates and related entities, parent corporations and subsidiaries, and all current and former directors, administrators, supervisors, managers, agents, officers, partners, stockholders, attorneys, insurers and employees of the Company and their affiliates, related entities, parent corporations and subsidiaries, and their successors and assigns, from any and all claims, actions, and causes of action, at law or in equity, known or unknown, including those directly or indirectly relating to or connected with Executive’s employment with the company or termination of such employment including but not limited to any and all claims under the Employee Retirement Income Security act of 1972, Title VII of the Civil Rights Act of 1964, the Age of Discrimination in Employment Act (“ADEA”), the American with Disabilities Act, as such Acts have been amended, the Massachusetts Law Against Discrimination, G.L. c. 151B; the Massachusetts Wage Payment Statutes, G.L. c. 149, §§ 148, 148A, 148B, 149, 150, 150A-150C, 151, 152, 152A, et seq.; the Massachusetts Wage and Hour Laws, G.L. c. 151§1A et seq.; the Massachusetts Privacy Statute, G.L. c. 214, § 1B; the Massachusetts Sexual Harassment Statute, G.L. c. 214 § 1C; the Massachusetts Civil Rights Act, G.L. c. 12, § 11H, the Massachusetts Equal Rights Act, G.L. c. 93, § 102, and all other forms of employment discrimination whether under federal, state or local statute or ordinance, wrongful termination, retaliatory discharge, breach of express implied, or oral contact, interference with contractual relations, defamation, intentional infliction of emotional distress and any other tort or contract claim under common law of any state or for attorneys’ fees, based on any act, transaction, circumstance or event arising up to and including the date of executive’s execution of this Release; provided, however, nothing herein shall limit or impede Executive’s right to file or pursue an administrative charge with, or participate in, any investigation before the Equal Employment Opportunity Commission (“EEOC”), or any similar local, state or federal agency, or, to file a claim for unemployment compensation benefits, and/or any causes of action which by law Executive may not legally waive, Executive agrees, however, that if Executive or anyone acting on Executive’s behalf, brings any action concerning or related to any cause of action or liability released in this Agreement, Executive waives any right to, and will not accept, any payments, monies, damages, or other relief, awarded in connection therewith.


2.	Executive acknowledges: (a) that Executive has been advised in writing hereby to consult with any attorney before signing this Release, and (b) that Executive has had at least

200 Quannapowitt Parkway, Wakefield, MA 01880 Tel: 781-246-9000

www.comverse.com

twenty-one (21) days after receipt of this information and Release to consider whether to accept or reject this Release. Executive understands that Executive may sign this Release prior to the end of such twenty-one (21) day period, but is not required to do so. In addition, Executive has seven (7) days after Executive signs this Release to revoke it. Such revocation must be in writing and delivered either by hand or mailed and postmarked within the seven (7) day revocation period. If sent by mail, it is requested that it be sent by certified mail, return receipt requested to the Company, in care of the Legal Officer of the Company. If Executive revokes this Release as provided herein, it shall be null and void. If Executive does not revoke this Release within seven (7) days after signing it, this Release shall become enforceable and effective on the eight (8th) day after the Executive signs this Release (“Effective Date”).


3.	Executive and the Company agree that neither this Release nor the performance hereunder constitutes an admission by the Company of any violation of any federal, state or local law, regulation, or common law, or any breach of any contract or any other wrongdoing of any type.


4.	This Release shall be construed and enforced pursuant to the laws of the Commonwealth of Massachusetts as to substance and procedure, including all questions of conflicts of laws.

This Release constitutes the entire agreement between the parties concerning the subject matter hereof and supersedes all prior and contemporaneous agreements, if any, between the parties relating to the subject matter thereof; provided that this Release does not apply to: (a) any claims under employee benefit plans subject to the Employee Retirement Income Security Act of 1974 (“ERISA”) in accordance with the terms of the applicable employee benefit plan, or any option agreement or other agreement pursuant to which Executive may exercise rights after termination of employment to acquire stock or other equity of the Company, (b) any claim under or based on a breach of this Release or Sections 4, 5, 6, 7, 8 or 9 of the Employment Agreement after the date that Executive signs this release; (c) rights or claims that may arise under the Age Discrimination in Employment Act or otherwise after the date that Executive signs this Release; or (d) any right to indemnification or directions and officers liability insurance coverage to which the Executive is otherwise entitled.


6.	EXECUTIVE ACKNOWLEDGES THAT EXECUTIVE HAS FULLY READ AND FULLY UNDERSTANDS THIS RELEASE; AND THAT EXECUTIVE ENTERED INTO IT FREELY AND VOLUNTARILY AND WITHOUT COERCION OR PROMISES NOT CONTAINED IN THIS RELEASE.

EXECUTIVE

Jacky Wu

COMVERSE, INC.

By:

Name:

Title:

200 Quannapowitt Parkway, Wakefield, MA 01880 Tel: 781-246-9000

www.comverse.com

Exhibit 10.5

April 30, 2015

Thomas Sabol

By Electronic Delivery

Dear Tom,

This letter agreement and general release (this “Letter”) summarizes the terms of separation that Comverse, Inc., on behalf of itself and its subsidiaries (collectively, the “Company” or the “Group Companies”) is willing to offer you. You are referred in some instances in this Letter as the “Executive.” Please read this Letter, which includes a general release, carefully. If you agree to its terms, please sign in the space provided below where it indicates “Executive Acceptance” and return it to Kathleen Harris, Comverse, Inc., 200 Quannapowitt Parkway, Wakefield, MA 01880 within the time period set forth herein so that your separation benefits can begin.

Your employment terms under which you have been employed to date are set forth in an employment agreement dated July 1, 2012, between you and the Company (the “Employment Agreement”). Capitalized terms used but not otherwise defined herein, shall have the meaning ascribed thereto in the Employment Agreement.

1.Regardless of whether you sign this Letter, you will cease to serve as Senior Vice President and Chief Financial Officer on April 30, 2015 and your employment with the Company is terminated effective July 1, 2015 (the “Separation Date”). You will be paid for time worked through the Separation Date and for any unused and accrued PTO (if any) as of the Separation Date, less lawful deductions.

2.After the Separation Date, except as provided below, you will not be entitled to receive any benefits paid by, or participate in any benefit programs offered by, the Company to its employees. You will receive, under separate cover, information concerning your right to continue your health insurance benefits after that date in accordance with the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”).

3.In consideration for and in compliance with the representations and promises made herein, and in the event you sign this Letter and Exhibit A “Waiver and Release Agreement” and return it to the Company within the time period set forth in this Letter and do not revoke your acceptance of this Letter pursuant to section 10 below, the Company will pay you, subject to section 8, the following:

an aggregate gross amount of $560,000, less lawful deductions, payable as follows: (i) $90,000, less lawful deductions, on the first payroll date after the expiration of the seven (7) day revocation period described in Section 10, (ii) $225,000, less lawful deductions, payable on August 21, 2015, (iii) $95,000 on November 27, 2015, (vi) $60,000 on February 26, 2016, and (v) $90,000 on April 8, 2016.


b.	a pro-rata portion of your Cash Bonus for the fiscal year ending January 31, 2016 (determined by multiplying the amount of the Cash Bonus you would have been entitled to receive for the full fiscal year ending January 31, 2015 based on actual company and individual performance, by a fraction, the numerator of which is the number of days during the fiscal

year ending January 31, 2016 that you were employed with the Company and the denominator of which is 365), less lawful deduction, payable only if any annual bonus is paid to other Company executives. If payment of annual cash bonuses for the fiscal year ending January 31, 2016 is made to Company executives, any payment of a Cash Bonus to you will be made at the same time as such payment is made to executives of the Company, but in no event later than April 15, 2016.

in respect of equity, (i) shares to be issued to you upon vesting and settlement of certain of your restricted stock unit awards (“RSUs”) as of the Separation Date as set forth in Exhibit B hereto, and (ii) vesting as of the Separation Date of certain of your stock option awards as set forth in Exhibit B hereto. Any vested stock option may be exercised by you following the Separation Date subject to and in accordance with the terms of the Employment Agreement and the applicable stock option award agreement. For the avoidance of doubt, the number of vested RSUs and stock options set forth in Exhibit B shall be in addition to your RSUs and options (or other equity grants) that have vested, or shall be vested, prior to the Separation Date.

Provided that you properly elect to continue your health coverage under COBRA, the Company will contribute toward the cost of your COBRA premiums in the same amount as if you were actively employed (provided that you timely pay your portion of such COBRA premium), with such contribution ending on the earlier of (i) 12 months from the Separation Date; or (ii) the date on which you become eligible for coverage under the group health plan of another employer. Thereafter, you will be personally responsible for the full cost of any COBRA premiums. You agree to notify the Company immediately upon becoming eligible for coverage under the group health plan of another employer during the period in which the Company is contributing toward the cost of your COBRA coverage. Such payments by the Company will be treated as taxable income to you and amounts will be withheld from the severance payments under Section 3(a) to cover the Company’s tax withholding obligation with respect to these payments.

4.You understand and agree that you would not receive the funds and other consideration specified in section 3 above except in consideration for your execution of this Letter and Waiver and Release Agreement and the fulfillment of the promises contained herein.

5.By signing this Letter, you expressly affirm and acknowledge the following:

a. Nothing in this Letter (or Exhibit A) limits your right, where applicable, to file or participate in an investigative proceeding of any federal, state or local governmental agency, provided, however, that by signing this Letter, you waive the right to seek or receive any money damages based upon any claim that might be asserted arising out of your employment at the Company or separation therefrom; and

b. You have been paid and have received all leave (paid or unpaid), compensation, wages, bonuses, commissions, relocation costs, and/or benefits to which you may be entitled and that no other leave (paid or unpaid), compensation, wages, bonuses, commissions and/or benefits are due to you, except as provided in this Letter (including but not limited to continued payment and entitlement to all amounts, vesting and benefits to which you are entitled as an employee through the Separation Date); and

c. You have no known workplace injuries or occupational diseases; and

d. You have not been retaliated against for reporting any allegations of wrongdoing by the Company or its officers, including any allegations of corporate fraud; and

e. All decisions regarding your pay and benefits through the date of your execution of this Letter were not discriminatory based on age, disability, race, color, sex, religion, national origin or any other classification protected by law.

f. As of the date hereof, you are in full compliance with the obligations set forth in Section 8 of the Employment Agreement.

g. You are not entitled to receive any additional Severance Payments under Section 6 of the Employment Agreement.

6. You acknowledge that the Company will be required to publicly disclose this Letter and its terms in accordance with its reporting obligations under applicable securities laws.

7. You hereby acknowledge and reaffirm the validity of the post-employment obligations contained in any agreement you executed with the Company relating to non-competition, non-solicitation, confidentiality, assignment of inventions, and non-disparagement, including the provisions set forth in Section 8 of the Employment Agreement, which for the avoidance of any doubt, are incorporated herein by reference and continue to apply and be in full force and effect following the termination of Executive’s employment in accordance with their terms. You further agree that you shall abide by any and all common-law and statutory obligations relating to protection and non-disclosure of trade secrets and confidential and proprietary documents and information. You agree not to erase or destroy, and to return to the Company on or before the Separation Date, all documents (and any hard or computer copies thereof and including, without limitation, all confidential information of the Group Companies) and property of any kind or nature (including, without limitation, any and all personnel documents, employee or consumer lists, and personnel manuals) that belong to the Group Companies. You also agree to return all Company access cards, credit cards and/or equipment (except your iPhone5) to the Company on or before the Separation Date. You understand that the Company would not provide you with the monies and benefits under this Letter but for your reaffirmation of your post-employment obligations and your other representations contained in this Letter. Your expenses related to your participation in future investigations or cases on behalf of the Company will be reimbursed by the Company.

8. In further consideration for the monies and other benefits provided to you in this Letter, you agree to the following:


a.	You shall not, use or disclose to any third party any Confidential Information for any reason or purpose whatsoever without the express written consent of the Company; and

You agree that you shall observe in strict compliance the provisions of Section 8 of the Employment Agreement. For the sake of clarity and for removal of doubt, without derogating from Section 8 of the Employment Agreement, you agree that (i) Executive working for, or (ii) any involvement of the Executive with, or the provision of services or other engagement by the Executive with, a business unit or division of Metaswitch Networks, their respective affiliates, parents and subsidiaries, or any entity in such competitors’ group, which engages in a “Competitive Business” (as defined by the Employment Agreement) before the lapse of one (1) year from the Separation Date, shall be regarded as a breach of the Employment Agreement, this Letter and any agreement you executed with the Company relating to inventions, confidentiality, non-disclosure, non-solicitation and/or non-competition.

You agree that the limitations set forth in this section 8 (including Section 8 of the Employment Agreement) are reasonable given the highly competitive nature of the Company's business and are required for the Company's protection based upon numerous factors, including the knowledge and information to which you have had access during your employment with the Company. In the event that any court of competent jurisdiction determines that the duration or the geographic scope, or both, are unreasonable and that such provision is to that extent unenforceable, you agree that the provision shall remain in full force and effect for the greatest time period and in the greatest area that would not render it unenforceable. You acknowledge that a breach of this section 8 (including Section 8 of the Employment Agreement) will cause irreparable harm to the Company that would be difficult to quantify and for which money damages would be inadequate. As a result, you agree that in the event of such a breach or threat of such a breach the Company shall, in addition to any other remedies available to it, have the right to injunctive relief, without the necessity of posting a bond.

You further understand and agree that your foregoing obligations under this section 8 (including all subparts and Section 8 of the Employment Agreement) and the representation set forth in section 5.f. are material terms of this Letter, and that in the event you breach any of your obligations under section 8 of this Letter (including any of your obligations under Section 8 of the Employment Agreement which is incorporated herein by reference) or the representation set forth in section 5.f., (i) the Company shall have the right, in addition to any other damages, to cease making any payments due hereunder, and (ii) you shall be obligated to return to the Company the consideration paid hereunder (without impacting the validity or enforceability of the general release contained herein); provided, however, that prior to asserting any such rights under clauses (i) and (ii) of this paragraph, the Company shall provide you with written notice identifying with reasonable specificity the facts and circumstances alleged to constitute a violation of Section 8 of the Employment Agreement or this paragraph, and providing you not less than 10 days to cure or cease and desist from such alleged violation. Notwithstanding the forgoing, nothing herein shall serve or be deemed or construed to impede, hinder or delay the Company’s right to initiate legal proceedings in law or in equity (including injunctive relief). You acknowledge and agree that the Company’s subsidiaries and other affiliates are intended third party beneficiaries of this section 8.

9. You will have up to twenty-one (21) days from your receipt of this Letter signed by the Company to consider the meaning and effect of this Letter. You are advised to consult with an attorney and you acknowledge that you have had the opportunity to do so. You agree that any modifications to this Letter, material or otherwise, do not restart or affect in any manner the 21-day consideration period. If you do not sign and return this Letter within the 21-day consideration period, the Company’s offer to provide you with the monies and/or other benefits set forth in this Letter will expire and be deemed null and void.

10. You may revoke your acceptance of this Letter (including the general release contained in Exhibit A) for a period of seven (7) days following the day you execute and deliver this Letter to the Company. Any revocation within this period must be submitted, in writing, to Kathleen Harris, Senior Vice President, Human Resources and state, “I hereby revoke my acceptance of the Letter dated April 30, 2015” The revocation must be personally delivered to Kathleen Harris, Comverse, Inc., 200 Quannapowitt Parkway, Wakefield, MA 01880, and/or postmarked within seven (7) days of execution of this Letter. This Letter shall not become effective or enforceable until the applicable revocation period has expired. If the last day of the revocation period is a Saturday, Sunday, or legal holiday in Massachusetts or the state in which you are based, then the revocation period shall not expire until the next following day which is not a Saturday, Sunday, or legal holiday.

11. On the Separation Date, the unvested portion of any stock options, RSUs or any other equity securities previously awarded to you shall be immediately forfeited and canceled unless otherwise stated

herein or in the applicable award agreement. The treatment of the vested portion of your stock options, RSUs or other equity securities, if any, upon termination of your employment shall be subject to the terms of the applicable equity incentive plan and award agreements. Without derogating from the generality of the preceding sentence, tax withholding in the amount necessary to satisfy federal, state, and local taxes, domestic or foreign, required by law or regulation to be withheld with respect to the delivery of shares in settlement of RSUs shall be made by the Company withholding shares otherwise deliverable in settlement of the RSU having a fair market value on the vesting date equal to the minimum statutory total tax that could be imposed on the transaction.

12. This Letter (including Exhibit A) may not be modified, altered, or changed except upon express written consent of both parties wherein specific reference is made to this Letter. This Letter (including Exhibit A) shall in all respects be interpreted, governed and enforced by the laws of the Commonwealth of Massachusetts without reference to the principles of conflicts of law thereof. Any claims or causes of action which arise out of this Letter (including Exhibit A) shall be instituted and litigated only in, and you voluntarily submit to the jurisdiction over your person by a court of competent jurisdiction located within the Commonwealth of Massachusetts. Both you and the Company expressly waive the right, if any, to a trial by jury with respect to any dispute arising out of or relating to this Letter (including Exhibit A).

13. You agree that this Agreement will inure to the benefit of the Company, its successors and assigns. This Agreement may be assigned in whole or in part by the Company to a successor to all or substantially all of the business or assets of the Company; or to any parent, division or part of the Company; or to any subsidiary, affiliate or division or to any entity that is majority owned by the Company or its parent, subsidiaries, divisions or affiliates. It is agreed that a waiver by either party of a breach of any provisions of this Agreement must be in writing and signed by the waiving party and shall not operate or be construed as a waiver of any subsequent breach by the same party.

14. In case any one or more of the provisions contained in this Agreement shall, for any reason, be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provisions of this Agreement, but this Agreement shall be construed as if such invalid, illegal, or other unenforceable provision had never been contained herein. If, moreover, any one or more of the provisions contained in this Agreement shall for any reason be held to be excessively broad as to duration, geographical scope or subject, it shall be construed by limiting it and reducing it, so as to be enforceable to the extent compatible with the applicable law as it shall then appear.

15. This Letter represents the complete agreement between you and the Company, and fully supersedes any prior agreements or understandings between the parties including the Employment Agreement except (i) that your obligations under Section 8 (Restrictions on Activities of Executive) and Section 9 of the Employment Agreement as modified herein shall continue to apply, except that any references to Comverse Technology, Inc. or Parent in such section shall be eliminated or (ii) as specifically stated otherwise herein. You acknowledge that you have not relied on any representations, promises, or agreements of any kind made to you in connection with your decision to sign this Letter and general release, except those set forth herein.

Comverse would like to extend its appreciation to you for your past service, and its sincere hope for success in your future endeavors.

Very truly yours,

Comverse, Inc.

/s/ Kathleen Harris

SVP, Chief Talent & Administrative Officer

EXECUTIVE ACCEPTANCE:

Having elected to execute this Letter, which includes Exhibit A “Waiver and Release Agreement” to fulfill the promises set forth herein, and to receive thereby the sums and benefits set forth in section 3 above, you freely and knowingly, and after due consideration, enter into this Letter intending to waive, settle, and release all claims you have or might have against the Group Companies through the date hereof.

Date: April 30, 2015 /s/ Thomas Sabol

Thomas Sabol

EXHIBIT A

WAIVER AND RELEASE AGREEMENT

This Waiver and Release Agreement (hereinafter “Release”) is entered into among Thomas Sabol (hereinafter “Executive”), and Comverse, Inc. (the “Company”).

WHEREAS, the Company and the Executive previously entered into an employment letter dated July 1, 2012, between you and the Company (the “Employment Agreement”); and

WHEREAS, Executive’s employment with the Company will be terminated effective July 1, 2015.

NOW THEREFORE, in consideration of certain payments and benefits under his Employment Agreement and the letter agreement and general release between the parties dated April 30, 2015 to which this Release is attached (the “Letter”), Executive and the Company agree as follows:

Executive expressly waives and releases the Company and its affiliates, their respective affiliates and related entities, parent corporations and subsidiaries, and all current and former directors, administrators, supervisors, managers, agents, officers, partners, stockholders, attorneys, insurers and employees of the Company and their affiliates, related entities, parent corporations and subsidiaries, and their successors and assigns, from any and all claims, actions, and causes of action, at law or in equity, known or unknown, including those directly or indirectly relating to or connected with Executive’s employment with the Company or termination of such employment including but not limited to any claim related to additional compensation, any claim or right to receive equity securities of the Company (if any) and any and all claims under the National Labor Relations Act, as amended; Title VII of the Civil Rights Act of 1964, as amended; Sections 1981 through 1988 of Title 42 of the United States Code, as amended; the Age Discrimination in Employment Act of 1967, as amended; the Older Workers Benefit Protection Act; the Immigration Reform Control Act, as amended; the Employee Retirement Income Security Act of 1974, 29 U.S.C. § 1001, et seq.; the Occupational Safety and Health Act, as amended; the Civil Rights Act of 1866, 29 U.S.C. § 1981, et seq; the Rehabilitation Act of 1973, 29 U.S.C. § 701, et seq.; the Americans With Disabilities Act of 1990, as amended; the Civil Rights Act of 1991; the Family and Medical Leave Act; the Equal Pay Act; the Genetic Information Nondiscrimination Act (“GINA”); the Massachusetts Law Against Discrimination, G.L. c. 151B; the Massachusetts Wage Payment Statute, G.L. c. 149, §§ 148, 148A, 148B, 149, 150,150A-150C, 151, 152, 152A, et seq.; the Massachusetts Wage and Hour laws, G.L. c. 151§1A et seq.; the Massachusetts Privacy Statute, G.L. c. 214, § 1B; the Massachusetts Sexual Harassment Statute, G.L. c. 214 § 1C; the Massachusetts Civil Rights Act, G.L. c. 12, § 11H; the Massachusetts Equal Rights Act, G.L. c. 93, § 102;, as such Acts have been amended, and all other forms of employment claims whether under federal, state or local statute or ordinance, wrongful termination, retaliatory discharge, breach of express implied, or oral contact, interference with contractual relations, defamation, intentional infliction of emotional distress and any other tort or contact claim under common law of any state or for attorneys’ fees, based on any act, transaction, circumstance or event arising up to and including the date of Executive’s execution of this Release; provided, however, nothing herein shall limit or impede Executive’s right to file or pursue an administrative charge with, or participate in, any investigation before the Equal Employment Opportunity Commission (“EEOC”), or any similar local, state or federal agency. Executive agrees, however, that if Executive or

anyone acting on Executive’s behalf, brings any action concerning or related to any cause of action or liability released in this Release or the Letter, Executive waives any right to, and will not accept any payments, monies, damages, or other relief, awarded in connection therewith. Notwithstanding the foregoing, nothing in this paragraph is intended to act as a release of any claim you may have for workers’ compensation benefits, unemployment insurance benefits, any right to indemnification or directors’ and officers’ liability insurance coverage to which you are otherwise entitled, any right you may have under the Letter, as well as any other claims that cannot lawfully be released.

Executive acknowledges: (a) that Executive is advised in writing hereby to consult with any attorney before signing this Release, and (b) that Executive has had at least twenty-one (21) days after receipt to consider whether to accept or reject this Release. Executive understands that Executive may sign this Release prior to the end of such twenty-one (21) day period, but is not required to do so. In addition, Executive has seven (7) days after Executive signs this Release to revoke it as provided for in the Letter. If Executive revokes this Release as provided herein, it shall be null and void and Executive shall not be entitled to the monies and/or benefits provided for in the Letter.


3.	Executive and the Company agree that neither this Release nor the performance hereunder constitutes an admission by the Company of any violation of any federal, state or local law, regulation, or common law, or any breach of any contract or any other wrongdoing of any type.

EXECUTIVE ACKNOWLEDGES THAT EXECUTIVE HAS FULL READ AND FULLY UNDERSTANDS THIS RELEASE; AND THAT EXECUTIVE ENTERED INTO IT FREELY AND VOLUNTARILY AND WITHOUT COERCION OR PROMISES NOT CONTAINED IN THIS RELEASE.

EXECUTIVE

/s/ Thomas Sabol

Thomas Sabol

Comverse, Inc.


By:	/s/ Kathleen Harris

Name: Kathleen Harris

Title: SVP, Chief Talent & Administrative Officer

EXHIBIT B



Security	Date of Grant	No. of Securities to Vest on Separation Date
Stock Option	November 1, 2012	22,661
Stock Option	June 21, 2013	13,159
Stock Option	June 25, 2014	15,400

Restricted Stock Unit	November 1, 2013	3,776
Restricted Stock Unit	June 21, 2013	4,541
Restricted Stock Unit	June 25, 2014	5,330

Exhibit 31.1

CERTIFICATION BY THE CHIEF EXECUTIVE OFFICER PURSUANT TO RULES 13a-14(a)

AND 15d-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED

I, Philippe Tartavull, certify that:


1.	I have reviewed this Quarterly Report on Form 10-Q of Comverse, Inc.;


2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;


3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;


4.	The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:


a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;


b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;


c)	Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and


d)	Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and


5.	The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):


a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and


b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: June 15, 2015

/s/ Philippe Tartavull

Philippe Tartavull

President and Chief Executive Officer

(Principal Executive Officer)

Exhibit 31.2

CERTIFICATION BY THE CHIEF FINANCIAL OFFICER PURSUANT TO RULES 13a-14(a)

AND 15d-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED

I, Jacky Wu, certify that:


1.	I have reviewed this Quarterly Report on Form 10-Q of Comverse, Inc.;


2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;


3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;


4.	The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:


a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;


b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;


c)	Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and


d)	Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and


5.	The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):


a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and


b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: June 15, 2015

/s/ Jacky Wu

Jacky Wu

Senior Vice President and Chief Financial Officer

(Principal Financial Officer)

Exhibit 32.1

CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER PURSUANT TO

18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906

OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Comverse, Inc. (the “Company”) on Form 10-Q for the period ended April 30, 2015, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Philippe Tartavull, as Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:


(1)	The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and


(2)	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Philippe Tartavull

Philippe Tartavull

President and Chief Executive Officer

(Principal Executive Officer)

June 15, 2015

This certification accompanies this Quarterly Report on Form 10-Q pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by such Act, be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Such certification will not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except to the extent that the Company specifically incorporates it by reference.

Exhibit 32.2

CERTIFICATION OF THE CHIEF FINANCIAL OFFICER PURSUANT TO

18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906

OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Comverse, Inc. (the “Company”) on Form 10-Q for the period ended April 30, 2015, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Jacky Wu, as Senior Vice President and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:


(1)	The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and


(2)	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Jacky Wu

Jacky Wu

Senior Vice President and Chief Financial Officer

(Principal Financial Officer)

June 15, 2015

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