As filed with the Securities and Exchange Commission on August 30, 2002
Registration No. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------------
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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VERINT SYSTEMS INC.
(Exact name of registrant as specified in its charter)
DELAWARE 11-3200514
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
--------------------------
234 CROSSWAYS PARK DRIVE
WOODBURY, NEW YORK 11797
(516) 677-7300
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
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VERINT SYSTEMS INC. STOCK INCENTIVE COMPENSATION PLAN
(Full Title of Plans)
--------------------------
MR. DAN BODNER
PRESIDENT AND CHIEF EXECUTIVE OFFICER
VERINT SYSTEMS INC.
234 CROSSWAYS PARK DRIVE
WOODBURY, NEW YORK 11797
(516) 677-7300
(Name and address, including zip code,
and telephone number, including area code, of agent for service)
--------------------------
Copies to:
MATTHEW D. BLOCH, ESQ. WILLIAM F. SORIN, ESQ.
JEFFREY NADLER, ESQ. SECRETARY
WEIL, GOTSHAL & MANGES LLP VERINT SYSTEMS INC.
767 FIFTH AVENUE 234 CROSSWAYS PARK DRIVE
NEW YORK, NEW YORK 10153 WOODBURY, NEW YORK 11797
(212) 310-8000 (516) 677-7300
--------------------------
CALCULATION OF REGISTRATION FEE
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Title of Each Class of Securities to be Amount to be Proposed Maximum Proposed Maximum Amount of
Registered Registered (1) Offering Price Per Share Aggregate Offering Price Registration Fee(5)
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Common Stock, par value $0.001, per share 3,091,925 (2) $8.44 $26,102,916 $2,410
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Common Stock, par value $0.001, per share 1,595,281 (3) $8.91 (4) $14,213,954 (4) $1,320
====================================================================================================================================
(1) Plus such indeterminate number of shares of common stock of the registrant
as may be issued to prevent dilution resulting from stock dividends, stock
splits or similar transactions in accordance with Rule 416 under the Securities
Act of 1933. In addition, pursuant to Rule 416(c) under the Securities Act of
1933, this registration statement also covers an indeterminate amount of
interests to be offered or sold pursuant to the Verint Systems Inc. Stock
Incentive Compensation Plan.
(2) Represents the registration of 3,091,925 shares of common stock of the
registrant issued or issuable upon exercise of options granted under the Verint
Systems Inc. Stock Incentive Compensation Plan with a weighted average exercise
price of $8.44 per share.
(3) Represents the registration of 1,595,281 shares of common stock of the
registrant issuable upon exercise of options reserved for grant under the Verint
Systems Inc. Stock Incentive Compensation Plan
(4) Pursuant to Rule 457(h)(1) under the Securities Act of 1933, as amended, for
the purpose of calculating the estimated maximum aggregate offering price and
the registration fee, the proposed maximum offering price per share was
determined based upon the average of the high and low prices of the registrant's
common stock as reported by the Nasdaq National Market on August 28, 2002. In
addition, pursuant to Rule 416(c) under the Securities Act of 1995, this
registration statement also covers an indeterminate amount of interests to be
offered or sold pursuant to the Verint Systems Inc. Stock Incentive Compensation
Plan.
(5) The registration fee was paid on August 29, 2002.
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PART I
INFORMATION REQUIRED IN THE SECTION 10(A) PROSPECTUS
ITEM 1. PLAN INFORMATION
The documents containing the information specified in Part I of this
Registration Statement on Form S-8 will be sent or given to the plan
participants as specified by Rule 428(b)(1) of the Securities Act of 1933, as
amended (the "Securities Act"). Such documents are not required to be and are
not filed with Securities and Exchange Commission (the "Commission") either as a
part of this Registration Statement or as prospectuses or prospectus supplements
pursuant to Rule 424. These documents and the documents incorporated by
reference in this Registration Statement pursuant to Item 3 of Part II of this
Form S-8, taken together, constitute a prospectus that meets the requirements of
Section 10(a) of the Securities Act.
ITEM 2. REGISTRANT INFORMATION AND EMPLOYEE STOCK OPTION PLAN INFORMATION
Upon written or oral request, any of the documents incorporated by
reference in Item 3 of Part II of this Registration Statement (which documents
are incorporated by reference in this Section 10(a) Prospectus), other documents
required to be delivered to eligible employees pursuant to Rule 428(b) of the
Securities Act or additional information about the Verint Systems Inc. Stock
Incentive Compensation Plan and its administrators are available without charge
by contacting:
Verint Systems Inc.
234 Crossways Park Drive
Woodbury, New York 11797
(516) 677-7300
1
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
The following documents filed with the Commission by Verint Systems
Inc. (the "Company") (File No. 000-49790) are incorporated herein by reference
and made a part hereof:
(a) The Company's 424(b) Prospectus filed with the Commission on
May 15, 2002.
(b) The Company's Quarterly Report on Form 10-Q for the quarter
ended April 30, 2002.
(c) The description of the Company's common stock, par value
$0.001, per share, contained in the Registrant's Registration
Statement on Form 8-A, filed with the Commission on May 1,
2002.
All documents subsequently filed by the Company with the Commission
pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Securities Exchange Act
of 1934 (the "Exchange Act") prior to the filing of a post-effective amendment
to this Registration Statement which indicates that all securities covered by
this Registration Statement have been sold or which deregisters all of the
securities then remaining unsold, will be deemed to be incorporated by reference
in this Registration Statement and to be a part of this document from the date
of filing of such documents. Any statement contained in a document incorporated
or deemed to be incorporated by reference in this document will be deemed to be
modified or superseded for purposes of this Registration Statement to the extent
that a statement contained in this document or in any other subsequently filed
document which also is or is deemed to be incorporated by reference in this
document modifies or supersedes such statement. Any such statement so modified
or superseded will not be deemed, except as so modified or superseded, to
constitute a part of this Registration Statement.
ITEM 4. DESCRIPTION OF SECURITIES.
Not applicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
The validity of the shares of common stock being offered hereby will
be passed upon for Verint Systems Inc. by Weil, Gotshal & Manges LLP, New York,
New York.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 102 of the Delaware General Corporation Law, or DGCL, as
amended, allows a corporation to eliminate the personal liability of directors
of a corporation to the corporation or its stockholders for monetary damages for
2
breach of fiduciary duty as a director, except where the director breached the
duty of loyalty, failed to act in good faith, engaged in intentional misconduct
or knowingly violated a law, authorized the payment of a dividend or approved a
stock repurchase in violation of the DGCL or obtained an improper personal
benefit.
Section 145 of the DGCL provides, among other things, that the
Company may indemnify any person who was or is a party or is threatened to be
made a party to any threatened, pending or completed action, suit or proceeding
other than an action by or in the right of the Company, by reason of the fact
that the person is or was a director, officer, agent or employee of the Company,
or is or was serving at the Company's request as a director, officer, agent or
employee of another corporation, partnership, joint venture, trust or other
enterprise, against expenses, including attorneys' fees, judgments, fines and
amounts paid in settlement actually and reasonably incurred by the person in
connection with such action, suit or proceeding, if such person acting in good
faith and in a manner he or she reasonably believed to be in the best interest,
or not opposed to the best interest, of the Company, and with respect to any
criminal action or proceeding had no reasonable cause to believe his or her
conduct was unlawful. The power to indemnify applies to actions brought by or in
the right of the Company as well, but only to the extent of defense expenses,
including attorneys' fees but excluding amounts paid in settlement, actually and
reasonably incurred and not to any satisfaction of judgment or settlement of the
claim itself, and with the further limitation that in such actions no
indemnification shall be made in the event of any adjudication of liability to
the Company, unless the court believes that in light of all the circumstances
indemnification should apply. Furthermore, under the DGCL, if such person is
successful on the merits or otherwise in the defense of any action referred to
above, or in the defense of any claim, issue or matter therein, such person
shall be indemnified against expenses (including attorneys' fees) actually and
reasonably incurred by such person in connection herewith.
Section 174 of the DGCL provides, among other things, that a
director, who willfully or negligently approves of an unlawful payment of
dividends or an unlawful purchase or redemption of stock, may be held liable for
such actions. A director who was either absent when the unlawful actions were
approved or dissented at the time, may avoid liability by causing his or her
dissent to such actions to be entered in the books containing minutes of the
meetings of the board of directors at the time such action occurred or
immediately after such absent director receives notice of the unlawful acts.
As permitted by the DGCL, our certificate of incorporation includes a
provision to eliminate the personal liability of our directors for monetary
damages for breach or alleged breach of their fiduciary duties as directors,
subject to limited exceptions. Our certificate of incorporation also provides
that every person who is or was our director, officer, employee or agent or is
or was a director, officer, trustee, employee or agent of any other enterprise,
serving as such at our request, shall be indemnified to the fullest extent
permitted by law for all expenses and liabilities in connection with any
proceeding involving such person in this capacity. The Company entered into an
indemnification agreement with each of its directors and officers under which
3
the Company agreed to provide indemnification and expense reimbursement as
outlined above.
The Company has agreed to indemnify Comverse Technology, Inc.
("Comverse") and its directors, officers, employees and agents against any
liabilities arising out of any claim that any provision of the business
opportunities agreement, entered into by the Company and Comverse, breaches any
duty that may be owed to the Company by or any such person.
Under a Corporate Services Agreement entered into by the Company and
Comverse, Comverse obtained directors' and officers' liability insurance which
also provides coverage for the Company's officers and directors.
Each of the Company's directors who is also a director and/or officer
of Comverse has an indemnification agreement with Comverse. Under this agreement
Comverse has agreed to indemnify such person against losses and expenses, to the
extent permitted by law, incurred by such person in connection with his service
as director and/or officer of Comverse or any of its subsidiaries, including the
Company.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
Not applicable.
4
ITEM 8. EXHIBITS.
Exhibit
Number Description
- ------ -----------
4.1 Amended and Restated Certificate of Incorporation of the Company
(incorporated by reference to Exhibit 3.1 of Amendment No. 2 to
the Registrant's Registration Statement on Form S-1 (File No.
333-82300), filed on April 22, 2002, as amended).
4.2 Amended and Restated Bylaws of the Company (incorporated by
reference to Exhibit 3.2 of Amendment No. 3 to the Registrant's
Registration Statement on Form S-1 (File No. 333-82300), filed
on April 26, 2002, as amended).
4.3 Specimen Stock Certificate (incorporated by reference to Exhibit
4.1 of Amendment No. 2 to the Registrant's Registration
Statement on Form S-1 (File No. 333-82300), filed on April 22,
2002, as amended).
4.4* Verint Systems Inc. Stock Incentive Compensation Plan.
5.1* Opinion of Weil, Gotshal & Manges LLP.
23.1* Consent of Deloitte & Touche LLP
23.2* Consent of KPMG LLP
23.3* Consent of Weil, Gotshal & Manges LLP (contained in exhibit
5.1).
24.1* Powers of Attorney (included in the signature pages of this
Registration Statement).
- --------------------------------
* filed herewith
5
ITEM 9. UNDERTAKINGS.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales
are being made, a post-effective amendment to this
registration statement:
(i) to include any prospectus required by
Section 10(a)(3) of the Securities Act;
(ii) to reflect in the prospectus any facts or
events arising after the effective date of
the registration statement (or the most
recent post-effective amendment thereof)
which, individually or in the aggregate,
represent a fundamental change in the
information set forth in the registration
statement; and
(iii) to include any material information with
respect to the plan of distribution not
previously disclosed in the registration
statement or any material change to such
information in the registration statement;
provided, however, that the undertakings in paragraph
(a)(1)(i) and (a)(1)(ii) do not apply if the information
required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed, with or
furnished to the Commission by the Company pursuant to Section
13 or Section 15(d) of the Exchange Act, that are incorporated
by reference in the registration statement.
(2) That, for the purpose of determining any liability
under the Securities Act, each such post-effective
amendment shall be deemed to be a new registration
statement relating to the securities offered therein,
and the offering of such securities at that time
shall be deemed to be the initial bona fide offering
thereof.
(3) To remove from registration by means of a
post-effective amendment any of the securities being
registered which remain unsold at the termination of
the offering.
(b) The undersigned registrant hereby undertakes that, for
purposes of determining any liability under the Securities
Act, each filing of the registrant's annual report pursuant to
Section 13(a) or Section 15(d) of the Exchange Act (and, where
applicable, each filing of an employee benefit plan's annual
6
report pursuant to Section 15(d) of the Exchange Act) that is
incorporated by reference in the registration statement shall
be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona
fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and
controlling persons of the registrant pursuant to the
foregoing provisions, or otherwise, the registrant has been
advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities
(other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the
registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or
controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question
whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the
final adjudication of such issue.
7
SIGNATURE
Pursuant to the requirements of the Securities Act of 1933, as
amended, the registrant certifies that it has reasonable grounds to believe that
it meets all of the requirements for filing on Form S-8 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, duly
authorized, as of August 28, 2002.
Verint Systems Inc.
By: /s/ Dan Bodner
---------------------------------------
Dan Bodner
President and Chief Executive Officer
POWER OF ATTORNEY
We, the undersigned directors and officers of Verint Systems Inc.
(the "Company") and each of us, do hereby constitute and appoint Dan Bodner and
Igal Nissim, or either of them, our true and lawful attorneys-in-fact and
agents, each with full power of substitution and resubstitution, to do any and
all acts and things in our names and on our behalf in our capacities as
directors and officers and to execute any and all instruments for us and in our
names in the capacities indicated above, which said attorneys or agents, or
either of them, may deem necessary or advisable to enable the Company to comply
with the Securities Act of 1933, as amended, and any rules, regulations and
requirements of the Securities and Exchange Commission, and any and all
amendments (including post-effective amendments) to this Registration Statement,
in connection with the public offering of the common stock of the Company,
including specifically but without limitation, power and authority to sign for
us or any of us in our names in the capacities indicated below, any and all
amendments (including post-effective amendments) to such Registration Statement;
and we do hereby ratify and confirm all that the said attorneys and agents, or
their substitute or substitutes, or either of them, shall do or cause to be done
by virtue hereof.
8
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated:
SIGNATURE TITLE DATE
--------- ----- ----
/s/ Kobi Alexander Chairman of the Board and Director August 28, 2002
- -----------------------------
Kobi Alexander
/s/ Dan Bodner President and Chief Executive Officer and Director August 28, 2002
- -----------------------------
Dan Bodner
/s/ Igal Nissim Chief Financial Officer and Director August 28, 2002
- ----------------------------- (Principal Financial and Accounting Officer)
Igal Nissim
/s/ William F. Sorin Director August 28, 2002
- -----------------------------
William F. Sorin
/s/David Kreinberg Director August 28, 2002
- -----------------------------
David Kreinberg
/s/ David T. Ledwell Director August 28, 2002
- -----------------------------
David T. Ledwell
/s/ Paul D. Baker Director August 28, 2002
- -----------------------------
Paul D. Baker
Director August 28, 2002
- -----------------------------
Paul L. Robinson
/s/ Harris T. Oliner Director August 28, 2002
- -----------------------------
Harris T. Oliner
/s/ Victor De Marines Director August 28, 2002
- -----------------------------
Victor De Marines
/s/Kenneth A. Minihan Director August 28, 2002
- -----------------------------
Kenneth A. Minihan
/s/ Howard Safir Director August 28, 2002
- -----------------------------
Howard Safir
9
Exhibits Index
- --------------
Exhibit
Number Description
- ------ -----------
4.1 Amended and Restated Certificate of Incorporation of the Company
(incorporated by reference to Exhibit 3.1 of Amendment No. 2 to
the Registrant's Registration Statement on Form S-1 (File No.
333-82300), filed on April 22, 2002, as amended).
4.2 Amended and Restated Bylaws of the Company (incorporated by
reference to Exhibit 3.2 of Amendment No. 3 to the Registrant's
Registration Statement on Form S-1 (File No. 333-82300), filed
on April 26, 2002, as amended).
4.3 Specimen Stock Certificate (incorporated by reference to Exhibit
4.1 of Amendment No. 2 to the Registrant's Registration
Statement on Form S-1 (File No. 333-82300), filed on April 22,
2002, as amended).
4.4* Verint Systems Inc. Stock Incentive Compensation Plan.
5.1* Opinion of Weil, Gotshal & Manges LLP.
23.1* Consent of Deloitte & Touche LLP
23.2* Consent of KPMG LLP
23.3* Consent of Weil, Gotshal & Manges LLP (contained in exhibit
5.1).
24.1* Powers of Attorney (included in the signature pages of this
Registration Statement).
- --------------------------------
* filed herewith
10
Exhibit 4.4
VERINT SYSTEMS INC. STOCK INCENTIVE COMPENSATION PLAN
Amended as of April 19, 2002
(formerly Comverse Infosys, Inc. Stock Option Plan)
1. Purpose.
The purpose of this Stock Incentive Compensation Plan (the "Plan") is
to induce key personnel, including employees, directors, independent
contractors, and other persons rendering valued services, to remain in the
employ or service of Verint Systems Inc. (the "Company"), and its present and
future subsidiary corporations, sister and parent corporations, and other
affiliated companies (each of which is hereinafter referred to as an
"Affiliate"), to attract new personnel and to encourage such personnel to secure
or increase on reasonable terms their stock ownership in the Company. The Board
of Directors of the Company (the "Board") believes that the granting of options
(the "Options"), stock appreciation rights (the "SARs"), restricted stock and
deferred stock awards (collectively, the Options, the SARs, restricted stock and
deferred stock are referred to as "Awards") under the Plan will promote
continuity of management and increased incentive and personal interest in the
welfare of the Company by those who are or may become primarily responsible for
shaping and carrying out the long range plans of the Company and securing its
continued growth and financial success. Options granted hereunder are intended
to be either (a) "incentive stock options" (which term, when used herein, shall
have the meaning ascribed thereto by the provisions of Section 422(b) of the
Internal Revenue Code of 1986, as amended (the "Code")) or (b) options which are
not incentive stock options or (c) a combination thereof, as determined by the
Committee (the "Committee") (referred to in Section 5 hereof) at the time of the
grant thereof.
2. Effective Date of the Plan.
The Plan became effective on September 10, 1996, by resolution of the
Board, subject to ratification of the Plan by the vote of the holders of a
majority of the outstanding shares of the common stock of the Company present in
person or by proxy at the 1996 Annual Meeting of Shareholders of the Company.
The Plan was amended on May 5, 1999, February 1, 2001, and by this amendment on
April 19, 2002.
3. Stock Subject to Plan.
Five million (5,000,000) of the authorized but unissued shares of the
Company's common stock, par value $.001 per share (the "Common Stock") are
hereby reserved for issuance pursuant to Awards granted hereunder; provided,
however, that the number of shares so reserved may from time to time be reduced
to the extent that a corresponding number of issued and outstanding shares of
the Common Stock are purchased by the Company and set aside for issuance
pursuant to Awards. The maximum number of shares of Common Stock subject to an
Award that may be awarded to any Employee shall not exceed 5,000,000 during any
calendar year (the "Individual Limit"). If any Awards expire or terminate for
any reason without having been exercised in full, the outstanding shares subject
thereto shall again be available for the purposes of the Plan.
4. Administration.
The Plan shall be administered by the Committee referred to in
Section 5 hereof. If a Committee shall not be so established, the Board shall
perform the duties and functions ascribed herein to the Committee. Subject to
the express provisions of the Plan, the Committee shall have complete authority,
in its discretion, to interpret the Plan, to prescribe, amend and rescind rules
and regulations relating to it, to determine the terms and provisions of the
respective Award agreements (which need not be identical), to determine the
individuals (the "Participants") to whom and the times and the prices at which
Awards shall be granted, to establish the option periods, the number of shares
of the Common Stock to be subject to each Award, whether each Award shall be
exercisable or otherwise vest immediately or in installments and, if in
installments, the time and size thereof, whether each Option shall be an
incentive stock option or an Option which is not an incentive stock option, and
to make all other determinations necessary or advisable for the administration
of the Plan. In making such determinations, the Committee may take into account
the nature of the services rendered by the respective Participants, their
present and potential contributions to the success of the Company and the
Subsidiaries and such other factors as the Committee, in its discretion, shall
deem relevant. The Committee's determination on all of the matters referred to
in this Section 4 shall be conclusive.
5. Committee.
The Committee shall consist of at least three individuals who may,
but need not, be members of the Board and all of whom shall be "disinterested
persons" within the meaning of Rule 16b-3(c)(2)(i) promulgated under the
Securities Exchange Act of 1934, as amended (the "34 Act"). The Committee shall
be appointed by the Board, which may at any time and from time to time remove
any member of the Committee, with or without cause, appoint additional members
of the Committee and fill vacancies, however caused, in the Committee. A
majority of the members of the Committee shall constitute a quorum. All
determinations of the Committee shall be made by a majority of its members. Any
decision or determination of the Committee reduced to writing and signed by all
of the members of the Committee shall be fully as effective as if it had been
made at a meeting duly called and held. If at any time no Committee has been
appointed, the Board shall act as the Committee.
6. Eligibility.
A. An Option that is an incentive stock option may be granted only to
key employees of the Company or an Affiliate.
2
B. An Option that is not an incentive stock option and other Awards
may be granted to key employees of the Company or an Affiliate, non-employee
directors and to independent contractors rendering services to the Company or an
Affiliate.
7. Options. Options give a Participant the right to purchase a
specified number of shares of Common Stock, Deferred Stock or Restricted Stock
(as selected by the Committee) from the Company for a specified time period at a
fixed price. Options granted to Participants who are Employees may be either
incentive stock options or Options not intended to qualify as incentive stock
options. Option granted to Participants who are not employees shall be Options
not intended to qualify as incentive stock options. The grant of Options shall
be subject to the following terms and conditions:
A. The initial per share option price of any Option which is an
incentive stock option shall not be less than the Fair Market Value, defined
below, of a share of the Common Stock on the date of grant; provided, however,
that, in the case of a Participant who owns more than 10% of the total combined
voting power of the Common Stock at the time an incentive stock option is
granted to him, the initial per share option price shall not be less than 110%
of the fair market value of the Common Stock.
B. The initial per share option price of any Option which is not an
incentive stock option shall not be less than $0.001.
C. Participants shall be granted Options for such term as the
Committee shall determine, not in excess of ten (10) years from the date of the
granting thereof; provided, however, that in the case of a Participant who owns
more than 10% of the total combined voting power of the Common Stock at the time
an Option which is an incentive stock option is granted to him, the term with
respect to such Option shall not be in excess of five (5) years from the date of
the granting thereof.
D. The aggregate fair market value (determined at the date of grant)
of the shares of the Common Stock for which any Participant may be granted
incentive stock options which are exercisable for the first time in any calendar
year (whether under the terms of the Plan or any other stock option plan of the
Company) shall not exceed $100,000. To the extent that any Option which is
intended to be an incentive stock option fails to satisfy the requirements of
this Section, the Option shall be treated as an Option which is not an incentive
stock option. This Section shall be applied by taking Options into account in
the order in which they are granted.
E. For the purposes hereof, the "Fair Market Value" of a share of the
Common Stock on any date shall be equal to (i) in the case of Options granted
effective upon completion of an initial public offering of the Common Stock, the
initial public offering price of such Common Stock, and (ii) in all other cases,
the closing sale price of a share of the Common Stock as published by a national
securities exchange on which the shares of the Common Stock are traded on such
date or, if there is no sale of the Common Stock on such date, the average of
the bid and asked prices on such exchange at the close of trading on such date
or, if the shares of the Common Stock are not listed on a national securities
3
exchange on such date, the closing price in the over the counter market, or if
the Common Stock is not traded on a national securities exchange or the over the
counter market, the fair market value of a share of the Common Stock on such
date as shall be determined in good faith by the Committee in compliance with
Section 422(b)(4) of the Code and the applicable regulations promulgated
thereunder.
F. Options granted to employees of and consultants to the Company or
any Affiliate shall become exercisable at such times and in such installments as
the Committee shall determine at the time of the grant thereof.
G. Except as hereinbefore otherwise set forth, or as set forth in the
applicable Award agreement, an Option may be exercised either in whole or in
part at any time or from time to time.
H. An Option may be exercised only by a written notice of intent to
exercise such Option with respect to a specified number of shares of the Common
Stock and payment to the Company of the amount of the option price for the
number of shares of the Common Stock so specified; provided, however, that, if
the Committee shall in its sole discretion so determine at the time of the grant
of any Option, all or any portion of such payment may be made in kind by the
delivery of shares of the Common Stock having a Fair Market Value (as determined
in the manner set forth in paragraph E of Section 7 hereof) on the date of
delivery equal to the portion of the option price so paid; provided, however,
that any such determination shall not result in other than "fixed" accounting
for purposes of the Company's financial accounting.
I. No Option intended to qualify as an incentive stock option shall
be transferable otherwise than by will or the laws of descent and distribution
and, during the lifetime of the Participant, shall be exercisable only by the
Participant. Upon the death of a Participant, the person to whom the rights have
passed by will or by the laws of descent and distribution may exercise an Option
intended to qualify as an incentive stock option only in accordance with this
Section 7.
8. Deferred Stock.
An Award of Deferred Stock is an agreement by the Company to deliver
to the recipient a specified number of shares of Common Stock at the end of a
specified deferral period or periods. Such an Award shall be subject to the
following terms and conditions:
A. Deferred Stock Awards shall be evidenced by Deferred Stock
agreements. Such agreements shall conform to the requirements of the Plan and
may contain such other provisions as the Committee shall deem advisable.
B. Upon determination of the number of shares of Deferred Stock to be
awarded to a Participant, the Committee shall direct that the same be credited
to the Participant's account on the books of the Company but that issuance and
delivery of the same shall be deferred until the date or dates provided in
Section 8(E) hereof. Prior to issuance and delivery hereunder the Participant
4
shall have no rights as a stockholder with respect to any shares of Deferred
Stock credited to the Participant's account.
C. Amounts equal to any dividends declared during the Deferral Period
with respect to the number of shares covered by a Deferred Stock Award will be
paid to the Participant currently, or deferred and deemed to be reinvested in
additional Deferred Stock, or otherwise reinvested on such terms as are
determined at the time of the Award by the Committee, in its sole discretion,
and specified in the Deferred Stock agreement.
D. The Committee may condition the grant of an Award of Deferred
Stock or the expiration of the Deferral Period upon the Participant's
achievement of one or more performance goal(s) specified in the Deferred Stock
agreement. If the Participant fails to achieve the specified performance
goal(s), either the Committee shall not grant the Deferred Stock Award to the
Participant or the Participant shall forfeit the Award and no Common Stock shall
be transferred to him pursuant to the Deferred Stock Award. Unless otherwise
determined by the Committee at the time of an Award, dividends paid during the
Deferral Period on Deferred Stock subject to a performance goal shall be
reinvested in additional Deferred Stock and the lapse of the Deferral Period for
such Deferred Stock shall be subject to the performance goal(s) previously
established by the Committee.
E. The Deferred Stock agreement shall specify the duration of the
Deferral Period taking into account termination of employment on account of
death, disability, retirement or other cause. The Deferral Period may consist of
one or more installments. At the end of the Deferral Period or any installment
thereof the shares of Deferred Stock applicable to such installment credited to
the account of a Participant shall be issued and delivered to the Participant
(or, where appropriate, the Participant's legal representative) in accordance
with the terms of the Deferred Stock agreement. The Committee may, in its sole
discretion, accelerate the delivery of all or any part of a Deferred Stock Award
or waive the deferral limitations for all or any part of a Deferred Stock Award.
9. Restricted Stock.
An Award of Restricted Stock is a grant by the Company of a specified
number of shares of Common Stock to the Participant, which shares are subject to
forfeiture upon the happening of specified events. Such an Award shall be
subject to the following terms and conditions:
A. Restricted Stock shall be evidenced by Restricted Stock
agreements. Such agreements shall conform to the requirements of the Plan and
may contain such other provisions as the Committee shall deem advisable.
B. Upon determination of the number of shares of Restricted Stock to
be granted to the Participant, the Committee shall direct that a certificate or
certificates representing the number of shares of Common Stock be issued to the
Participant with the Participant designated as the registered owner. The
certificate(s) representing such shares shall be legended as to sale, transfer,
assignment, pledge or other encumbrances during the restriction period and
5
deposited by the Participant, together with a stock power endorsed in blank,
with the Company, to be held in escrow during the restriction period.
C. Unless otherwise determined by the Committee at the time of an
Award, during the restriction period the Participant shall have the right to
receive dividends from and to vote the shares of Restricted Stock.
D. The Committee may condition the grant of an Award of Restricted
Stock or the expiration of the restriction period upon the Participant's
achievement of one or more performance goal(s) specified in the Restricted Stock
Agreement. If the Employee fails to achieve the specified performance goal(s),
either the Committee shall not grant the Restricted Stock to the Participant or
the Participant shall forfeit the Award of Restricted Stock and the Common Stock
shall be forfeited to the Company.
E. The Restricted Stock agreement shall specify the duration of the
restriction period and the performance, employment or other conditions
(including termination of employment on account of death, disability, retirement
or other cause) under which the Restricted Stock may be forfeited to the
Company. At the end of the restriction period the restrictions imposed hereunder
shall lapse with respect to the number of shares of Restricted Stock as
determined by the Committee, and the legend shall be removed and such number of
shares delivered to the Participant (or, where appropriate, the Participant's
legal representative). The Committee may, in its sole discretion, modify or
accelerate the vesting and delivery of shares of Restricted Stock.
10. Stock Appreciation Rights.
SARs are rights to receive a payment in cash, Common Stock,
Restricted Stock or Deferred Stock (as selected by the Committee) equal to the
increase in the Fair Market Value of a specified number of shares of Common
Stock from the date of grant of the SAR to the date of exercise. The grant of
SARs shall be subject to the following terms and conditions:
A. SARs shall be evidenced by SAR agreements. Such agreements shall
conform to the requirements of the Plan and may contain such other provisions as
the committee shall deem advisable. A SAR may be granted in tandem with all or a
portion of a related Option under the Plan ("Tandem SAR"), or may be granted
separately ("Freestanding SAR"). A Tandem SAR may be granted either at the time
of the grant of the Option or at any time thereafter during the term of the
Option and shall be exercisable only to the extent that the related Option is
exercisable. In no event shall any SAR be exercisable within the first six (6)
months of its grant.
B. The base price of a Tandem SAR shall be the option price under the
related Option. The base price of a Freestanding SAR shall be not less than 100%
of the Fair Market Value of the Common Stock, as determined by the Committee, on
the date of grant of the Freestanding SAR.
6
C. A SAR shall entitle the recipient to receive a payment equal to
the excess of the Fair Market Value of the shares of Common Stock covered by the
SAR on the date of exercise over the base price of the SAR. Such payment may be
in cash, shares of Common Stock, shares of Deferred Stock, shares of Restricted
Stock or any combination, as the Committee shall determine. Upon exercise of a
Tandem SAR as to some or all of the shares of Common Stock covered by the grant,
the related Option shall be canceled automatically to the extent of the number
of shares of Common Stock covered by such exercise, and such shares shall no
longer be available for purchase under the Option pursuant to Section 7.
Conversely, if the related Option is exercised as to some or all of the shares
of Common Stock covered by the Award, the related Tandem SAR, if any, shall be
canceled automatically to the extent of the number of shares of Common Stock
covered by the Option exercise.
D. SARs shall be subject to the same terms and conditions applicable
to Options as stated in Section 7 above.
11. Transferability of Awards.
Except as provided above, Awards may not be pledged, assigned or
transferred for any reason during the Participant's lifetime, and any attempt to
do so shall be void and the relevant Award shall be forfeited. The Committee may
grant Awards (except Incentive Stock Options) that are transferable by the
Participant during his or her lifetime, but such Awards shall be transferable
only to the extent specifically provided in the agreement entered into with the
Participant. The transferee of the Participant shall, in all cases, be subject
to the provisions of the agreement between the Company and the Participant.
12. Termination of Employment.
A. Except as otherwise determined by the Committee, in the event a
Participant leaves the employ or service of the Company or any Affiliate for any
reason other than death, retirement or disability (as such term is defined in
Section 22(e) of the Code), whether voluntarily or otherwise, each Award
theretofore granted to him which shall not have expired or otherwise been
canceled shall, to the extent it is exercisable on the date of such termination
of employment or service and to the extent it shall not have theretofore been
exercised or become unexercisable, terminate upon the earlier to occur of (i)
the expiration of a period of ninety (90) days after such termination of
employment or service or (ii) the date specified in said Award.
B. In the event a Participant's employment or service with the
Company or any Affiliate terminates by reason of his death, each Award
theretofore granted to him which shall not have expired or otherwise been
canceled shall, to the extent it is exercisable on the date of such
Participant's death and to the extent it shall not have theretofore been
exercised or become unexercisable, terminate upon the earlier to occur of (i)
the expiration of a period of one year after such Participant's death or (ii)
the date specified in said Award.
7
C. In the event a Participant's employment or service with the
Company or any Affiliate terminates by reason of his retirement, whether
voluntarily or as may be required by any pension plan, or by reason of his
disability (as such term is defined in Section 22(e) of the Code), each Award
theretofore granted to him which shall not have expired or otherwise been
canceled shall become immediately exercisable in full and shall, to the extent
it shall not have theretofore been exercised or become unexercisable, terminate
upon the earlier to occur of (i) the expiration of ninety (90) days after the
date of such Participant's retirement or disability or (ii) the date specified
in said Award.
D. The Committee or the Board may in its discretion extend the period
during which an Option held by any employee of or consultant to the Company or
any Affiliate may be exercised to such period, not to exceed three years
following the termination of a Participant's employment or service with the
Company or any Affiliate, as the Committee or the Board may determine to be
appropriate in any particular instance.
13. Adjustments Upon a Change in Control
A. Except as otherwise provided in an applicable agreement, upon the
occurrence of a Change in Control (other than a Hostile Change of Control), the
Committee may elect to provide that all outstanding Options and Stock
Appreciation Rights shall immediately vest and become exercisable, each Deferral
Period and restriction period shall immediately lapse or all shares of Deferred
Stock subject to outstanding Awards shall be issued and delivered to the
Participant. In the event of a Hostile Change in Control, each of the foregoing
actions shall occur automatically upon the occurrence of such Hostile Change in
Control. At any time before a Change in Control, the Committee may, without the
consent of any Participant, (i) require the entity effecting the Change in
Control or a parent or subsidiary of such entity to assume each outstanding
Award or substitute an equivalent option therefor or (ii) terminate and cancel
all outstanding Awards upon the Change in Control and pay the Participant cash
equal to the product of (x) the difference between the Fair Market Value of
Common Stock on the date of the Change in Control and the exercise price of such
Option and (y) the number of shares of Common Stock subject to such Award. For
the purposes of this Section, an Award shall be considered assumed if, following
the merger, the award confers the right to purchase, for each share of Common
Stock subject to the Award immediately prior to the merger, the consideration
(whether stock, cash, or other securities or property) received in the merger by
holders of Common Stock for each share held on the effective date of the
transaction (and if holders were offered a choice of consideration, the type of
consideration chosen by the holders of a majority of the outstanding Shares);
provided, however, that if such consideration received in the merger was not
solely common stock of the successor corporation or its parent, the Committee
may, with the consent of the successor corporation, provide for the
consideration to be received upon the exercise of the Award, for each share of
Common Stock subject to the Award, to be solely common stock of the successor
corporation or its parent equal in fair market value to the per share
consideration received by holders of Common Stock in the merger.
8
B. "Change in Control" means (i) the Board (or, if approval of the
Board is not required as a matter of law, the shareholders of the Company) shall
approve (a) any consolidation or merger of the Company in which the Company is
not the continuing or surviving corporation or pursuant to which shares of
Common Stock would be converted into cash, securities or other property, other
than a merger of the Company in which the holders of Common Stock immediately
prior to the merger have the same proportionate ownership of common stock of the
surviving corporation immediately after the merger, or (b) any sale, lease,
exchange or other transfer (on one transaction or a series of related
transactions) of all, or substantially all, the assets of the Company or (c) the
adoption of any plan or proposal for the liquidation or dissolution of the
Company; (ii) any person (as such term is defined in Section 13(d) of the 1934
Act), corporation or other entity other than the Company shall make a tender
offer or exchange offer to acquire any Common Stock (or securities convertible
into Common Stock) for cash, securities or any other consideration, provided
that (a) at least a portion of such securities sought pursuant to the offer in
question is acquired and (b) after consummation of such offer, the person,
corporation or other entity in question is the "beneficial owner" (as such term
is defined in Rule 13d-3 under the 1934 Act), directly or indirectly, of 20% or
more of the outstanding shares of Common Stock (calculated as provided in
paragraph (d) of such Rule 13d-3 in the case of rights to acquire Common Stock);
(iii) during any period of two consecutive years, individuals who at the
beginning of such period constituted the entire Board ceased for any reason to
constitute a majority thereof unless the election, or the nomination for
election by the Company's stockholders, of each new director was approved by a
vote of at least two-thirds of the directors then still in office who were
directors at the beginning of the period; or (iv) the occurrence of any other
event the Committee determines shall constitute a "Change in Control" hereunder.
C. "Hostile Change in Control" means any Change in Control described
in Section 13(B) above that is not approved or recommended by the Board.
14. Adjustment of Number of Shares.
A. In the event that a dividend shall be declared upon the Common
Stock payable in shares of the Common Stock, the number of shares of the Common
Stock then subject to any Award and the number of shares of the Common Stock
reserved for issuance in accordance with the provisions of the Plan but not yet
covered by an Award shall be adjusted by adding to each share the number of
shares which would be distributable thereon if such share had been outstanding
on the date fixed for determining the shareholders entitled to receive such
stock dividend. In the event that the outstanding shares of the Common Stock
shall be changed into or exchanged for a different number or kind of shares of
stock or other securities of the Company or of another corporation, whether
through reorganization, recapitalization, stock split-up, combination of shares,
sale of assets, merger or consolidation, then, there shall be substituted for
each share of the Common Stock then subject to any Award and for each share of
the Common Stock reserved for issuance in accordance with the provisions of the
Plan but not yet covered by an Award, the number and kind of shares of stock or
other securities into which each outstanding share of the Common Stock shall be
9
so changed or for which each such share shall be exchanged; provided, however,
that, in the event of a merger or consolidation in which the Company is not the
surviving corporation or of a sale by the Company of all or substantially all of
its assets to a corporation not controlled by the Company (within the meaning of
Section 1563(a)(1) of the Code) immediately prior to such transaction, the Board
determines, in its discretion, that such change or exchange cannot be effected
or would be inappropriate, then, each Option theretofore granted to a
Participant which shall not have expired or otherwise been canceled shall become
immediately exercisable in full and shall terminate upon the later to occur of
(i) the expiration of thirty (30) days following notice to the Participant by
the Company of such merger, consolidation or sale, or (ii) the date of such
merger, consolidation or sale.
B. In the event that there shall be any change, other than as
specified in this Section 14, in the number or kind of outstanding shares of the
Common Stock, or of any stock or other securities into which the Common Stock
shall have been changed, or for which it shall have been exchanged, then, if the
Committee shall, in its sole discretion, determine that such change equitably
requires an adjustment in the number or kind of shares then subject to any Award
and the number or kind of shares reserved for issuance in accordance with the
provisions of the Plan but not yet covered by an Award, such adjustment shall be
made by the Committee and shall be effective and binding for all purposes of the
Plan and of each Award agreement entered into in accordance with the provisions
of the Plan.
C. In the case of any substitution or adjustment in accordance with
the provisions of this Section 14, the option price in each stock option
agreement for each share covered thereby prior to such substitution or
adjustment shall be the option price for all shares of stock or other securities
which shall have been substituted for such share or to which such share shall
have been adjusted in accordance with the provisions of this Section 14. No
adjustment or substitution provided for in this Section 14 shall require the
Company to sell a fractional share under any stock option agreement.
15. Purchase for Investment and Waivers.
Unless the shares to be issued upon the exercise of an Option or
other Award by a Participant shall be registered prior to the issuance thereof
under the Securities Act of 1933, as amended, such Participant shall, as a
condition of the Company's obligation to issue such shares, be required to give
a representation in writing that he is acquiring such shares for his own account
as an investment and not with a view to, or for sale in connection with, the
distribution of any thereof.
16. Amendment of Plan.
The Board may at any time make such modifications of the Plan as it
shall deem advisable; provided, however, that (i) the provisions hereof relating
to the receipt of Options by directors of the Company who are not employees of
the Company or any Affiliate, the exercise price and terms and conditions of the
exercise thereof may not be amended more than once in any period of six (6)
months, except as may be required to comply with changes in the Code or other
10
applicable law, and (ii) the Board may not without further approval of
shareholders representing a majority of the voting power present in person or by
proxy at any special or annual meeting of shareholders increase the number of
shares of the Common Stock as to which Options may be granted under the Plan (as
adjusted in accordance with the provisions of Section 14 hereof), or change the
class of persons eligible to participate in the Plan or change the manner of
determining the option prices which would result in a decrease in the price of
Options or other Awards, or extend the period during which Awards may be granted
or exercised. Except as otherwise provided in Section 17 hereof, no termination
or amendment of the Plan may, without the consent of the Participant to whom any
Option shall theretofore have been granted, adversely affect the rights of such
Participant under such Option.
17. Expiration and Termination of the Plan.
The Plan shall terminate on March 10, 2012 or at such earlier time as
the Board may determine. Awards may be granted under the Plan at any time and
from time to time prior to its termination. Any Awards outstanding under the
Plan at the time of the termination of the Plan shall remain in effect until
such Awards shall have been exercised or shall have expired in accordance with
its terms.
18. Awards Granted in Connection with Acquisitions.
In the event that the Committee determines that, in connection with
the acquisition by the Company of another corporation which shall become an
Affiliate of the Company (such corporation being hereinafter referred to as an
"Acquired Affiliate"), Awards may be granted hereunder to key employees of an
Acquired Affiliate in exchange for then outstanding options to purchase
securities of the Acquired Affiliate, such Awards may be granted at such option
prices, may be exercisable immediately or at any time or times either in whole
or in part, may be granted without the requirement that the Participant enter
into an agreement with the Company that he will remain in the employ or service
of the Company or an Affiliate for any required period of time and may contain
such other provisions not inconsistent with the Plan, or the requirement set
forth in Section 16 hereof that certain amendments to the Plan must be approved
by the shareholders of the Company, as the Committee, in its discretion, shall
deem appropriate at the time of the granting of such Awards.
19. Withholding.
A. In connection with the transfer of shares of Common Stock as a
result of the exercise or vesting of an Award or upon any other event that would
subject the Participant to taxation, the Company shall have the right to require
the Participant to pay an amount in cash or to retain or sell without notice, or
to demand surrender of, shares of Common Stock in value sufficient to cover any
tax, including any Federal, state or local income tax, required by any
governmental entity to be withheld or otherwise deducted and paid with respect
to such transfer ("Withholding Tax"), and to make payment (or to reimburse
itself for payment made) to the appropriate taxing authority of an amount in
11
cash equal to the amount of such Withholding Tax, remitting any balance to the
employee. For purposes of this Section 19, the value of shares of Common Stock
so retained or surrendered shall be the Fair Market Value on the date that the
amount of the Withholding Tax is to be determined (the "Tax Date"), and the
value of shares of Common Stock so sold shall be the actual net sale price per
share (after deduction of commissions) received by the Company.
B. Notwithstanding the foregoing, the Participant shall be entitled
to satisfy the obligation to pay any Withholding Tax, in whole or in part, by
providing the Company with funds sufficient to enable the Company to pay such
Withholding Tax or by requiring the Company to retain or to accept upon delivery
thereof shares of Common Stock (other than unvested Restricted Stock) sufficient
in value (determined in accordance with the last sentence of the preceding
paragraph) to cover the amount of such Withholding Tax. Each election by a
Participant to have shares retained or to deliver shares for this purpose shall
be subject to the following restrictions: (i) the election must be in writing
and made on or prior to the Tax Date; and (ii) the election shall be subject to
the disapproval of the Committee.
C. In the event of the death of a Participant, an additional
condition of exercising any Option or other Award shall be the delivery to the
Company of such tax waivers and other documents as the Committee shall
determine.
20. General.
A. For purposes of this Plan, transfer of employment between the
Company and its Affiliates shall not be deemed termination of employment.
B. With respect to Holders subject to Section 16 of the 1934 Act,
transactions under the Plan are intended to comply with all applicable
conditions of Rule 16b-3 or its successors under the 1934 Act. To the extent any
provision of the Plan or action by the Committee fails to so comply, it shall be
deemed null and void, to the extent permitted by law and deemed advisable by the
Committee.
C. Without amending the Plan, Awards may be granted to Participants
who are foreign nationals or employed outside the United States or both, on such
terms and conditions different from those specified in the Plan as may, in the
judgment of the Committee, be necessary or desirable to further the purpose of
the Plan.
D. To the extent that Federal laws (such as the 1934 Act, or the
Code) do not otherwise control, the Plan and all determinations made and actions
taken pursuant hereto shall be governed by the corporate law of the State of
Delaware and construed accordingly. The Plan is not intended to be an "employee
benefit plan" within the meaning of Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA").
12
Exhibit 5.1
[Weil, Gotshal & Manges LLP letterhead]
August 30, 2002
Verint Systems Inc.
234 Crossways Park Drive
Woodbury, New York 11797
Ladies and Gentlemen:
We have acted as counsel to Verint Systems Inc. (the "Company") in
connection with the preparation and filing with the Securities and Exchange
Commission of the registration statement of the Company on Form S-8 under the
Securities Act of 1933, as amended (the "Registration Statement"), with respect
to 5,000,000 shares of common stock, par value $.001 per share, of the Company
(the "Shares") issuable upon the exercise of options granted or to be granted
pursuant to the Verint Systems Inc. Stock Incentive Compensation Plan (the
"Plan"). Capitalized terms defined in the Registration Statement and used (but
not otherwise defined) herein are used herein as so defined.
In so acting, we have examined originals or copies (certified or
otherwise identified to our satisfaction) of the Registration Statement, the
Plan and such corporate records, agreements, documents and other instruments,
and such certificates or comparable documents of public officials and of
officers and representatives of the Company, and have made such inquiries of
such officers and representatives, as we have deemed relevant and necessary as a
basis for the opinions hereinafter set forth.
In such examination, we have assumed the genuineness of all
signatures, the legal capacity of all natural persons, the authenticity of all
documents submitted to us as originals, the conformity to original documents of
all documents submitted to us as certified, conformed or photostatic copies and
the authenticity of the originals of such latter documents. As to all questions
of fact material to these opinions that have not been independently established,
we have relied upon certificates or comparable documents of officers and
representatives of the Company.
August 30, 2002
Page 2
Based on the foregoing, and subject to the qualifications stated
herein, we are of the opinion that the Shares to be issued pursuant to the terms
of the Plan have been duly authorized and, when issued as contemplated by the
Plan, will be validly issued, fully paid and nonassessable.
We hereby consent to the use of this letter as an exhibit to the
Registration Statement.
Very truly yours,
/s/ Weil, Gotshal & Manges LLP
Exhibit 23.1 INDEPENDENT AUDITORS' CONSENT We consent to the incorporation by reference in this Registration Statement on Form S-8 of Verint Systems Inc. of our report dated March 8, 2002, appearing in a 424(b) Prospectus of Verint Systems Inc. filed with the Securities and Exchange Commission on May 16, 2002. /s/ Deloitte & Touche LLP Jericho, New York August 27, 2002
Exhibit 23.2
KPMG
750 B Street
San Diego, CA 92101
INDEPENDENT AUDITORS' CONSENT
The Board of Directors
Loronix Information Systems, Inc.:
We consent to the use of our report included herein.
/s/ KPMG LLP
San Diego, California
August 29, 2002