Verint Systems Inc. $350,000,000 1.50% Senior Convertible Notes due 2021 UNDERWRITING AGREEMENT
Exhibit 1.2
EXECUTION VERSION
Verint Systems Inc.
$350,000,000 1.50% Senior Convertible Notes due 2021
UNDERWRITING AGREEMENT
June 12, 2014
DEUTSCHE BANK SECURITIES INC.
As a representative of the several Underwriters (the “Representative”),
c/o Deutsche Bank Securities Inc.
60 Wall Street
New York, New York 10005
Dear Ladies and Gentlemen:
1. Introductory. Verint Systems Inc., a Delaware corporation (the “Company”), agrees with Deutsche Bank Securities Inc. (the “Representative”) and the several Underwriters named in Schedule A hereto (the “Underwriters”) subject to the terms and conditions stated herein, to issue and sell to the several Underwriters, and the Underwriters agree to purchase from the Company, U.S.$350,000,000 principal amount of the Company’s 1.50% Senior Convertible Notes due 2021 (“Firm Securities”). In addition, the Company has granted to the Underwriters an option to purchase up to an additional $50,000,000 in aggregate principal amount of its 1.50% Senior Convertible Notes due 2021 (the “Optional Securities” and, together with the Firm Securities, the “Offered Securities”). The Offered Securities will be issued under an indenture, dated as of June 18, 2014 as supplemented by a first supplemental indenture dated as of June 18, 2014 (as so supplemented, the “Indenture”), in each case, between the Company and Wilmington Trust, National Association, as Trustee, and will be convertible on the terms, and subject to the conditions, set forth in the Indenture. The Offered Securities will be convertible into cash, shares of the Company’s common stock, par value $0.001 per share (the “Common Stock”), or a combination of cash and Conversion Shares at the option of the Company as set forth in the Indenture. As used herein, “Conversion Shares” means the shares of Common Stock, if any, to be received by the holders of the Offered Securities upon conversion of the Offered Securities pursuant to the terms of the Indenture. The Offered Securities and the Conversion Shares, if any, issuable upon conversion thereof will be offered and sold to the Underwriters without being registered under the Securities Act of 1933, as amended (the “Securities Act”), in reliance on exemptions therefrom. Concurrently with the issue and sale of the Offered Securities, the Company proposes to issue and sell up to 5,000,000 shares of its Common Stock, or 5,750,000 shares of its Common Stock if the underwriters under the related underwriting agreement exercise their greenshoe option (collectively, the “Shares”). The Company intends to use the net proceeds of the Offered Securities and the Shares, among other things, to repay outstanding debt under its revolving credit facility and senior secured term loan (the “Paydown”).
In connection with the offering of the Firm Securities, the Company is separately entering into convertible note hedge transactions and warrant transactions with one or more counterparties, which may include one or more of the Underwriters or their respective affiliates (each, a “Call Spread Counterparty”), in each case, pursuant to a convertible note hedge confirmation (each, a “Base Bond Hedge Confirmation”) and a warrant confirmation (each, a “Base Warrant Confirmation”), respectively, each dated the date hereof (the Base Bond Hedge Confirmations and the Base Warrant Confirmations, collectively, the “Base Call Spread Confirmations”), and in connection with the issuance of any Optional Securities, the Company and each Call Spread Counterparty may enter into an additional convertible note hedge transaction and an additional warrant transaction pursuant to an additional convertible note hedge confirmation (each, an “Additional Bond Hedge Confirmation”) and an additional warrant confirmation (each, an “Additional Warrant Confirmation”), respectively, each to be dated the
date on which the option granted to the Underwriters pursuant to Section 3 to purchase such Optional Securities is exercised (the Additional Bond Hedge Confirmations and the Additional Warrant Confirmations, collectively, the “Additional Call Spread Confirmations” and, together with the Base Call Spread Confirmations, the “Call Spread Confirmations”).
In connection with the offering of the Firm Securities, the Company also intends to amend its credit facility by increasing the commitment under the revolving loan (the “Credit Facility Amendment”). The issuance and sale of the Offered Securities and the Shares, the convertible note hedge transactions and warrant transactions described in the immediately preceding paragraph, the Paydown and the Credit Facility Amendment are collectively referred to herein as the “Concurrent Transactions.”
The Company hereby confirms its engagement of Goldman, Sachs & Co. as, and Goldman, Sachs & Co. hereby confirms its agreement with the Company to render services as, a “qualified independent underwriter” within the meaning of Rule 5121 of the Financial Industry Regulatory Authority (“FINRA”) with respect to the offering and sale of the Offered Securities. Goldman, Sachs & Co., in its capacity as qualified independent underwriter and not otherwise, is referred to herein as the “QIU”.
The Company hereby agrees with the several Underwriters as follows:
2. Representations and Warranties of the Company. The Company represents and warrants to, and agrees with, the several Underwriters that:
(a) Filing and Effectiveness of Registration Statement; Certain Defined Terms. The Company has filed with the Commission (as defined below) a registration statement on Form S-3 (No. 333-196612), including a related prospectus or prospectuses, covering the registration of the Offered Securities under the Securities Act (as defined below), which has become automatically effective pursuant to Rule 462(e) under the Securities Act. “Registration Statement” at any particular time means such registration statement in the form then filed with the Commission, including any amendment thereto, any document incorporated by reference therein and all 430B Information with respect to such registration statement, that in any case has not been superseded or modified. “Registration Statement” without reference to a time means the Registration Statement as of the Effective Time (as defined below). For purposes of this definition, 430B Information shall be considered to be included in the Registration Statement as of the time specified in Rule 430B.
For purposes of this Agreement:
“430B Information” means information included in a prospectus then deemed to be a part of the Registration Statement pursuant to Rule 430B(e) or retroactively deemed to be a part of the Registration Statement pursuant to Rule 430B(f).
“Applicable Time” means 5:30 p.m. (New York time) on the date of this Agreement.
“Closing Date” has the meaning set forth in Section 3 hereof.
“Commission” means the Securities and Exchange Commission.
“Effective Time” of the Registration Statement relating to the Offered Securities means the time of the first contract of sale for the Offered Securities.
“Exchange Act” means the United States Securities Exchange Act of 1934 as amended.
“Final Prospectus” means the Statutory Prospectus that discloses the public offering price, other 430B Information and other final terms of the Offered Securities and otherwise satisfies Section 10(a) of the Securities Act (such term, for the avoidance of doubt, includes the documents incorporated by reference therein).
“General Disclosure Package” has the meaning defined in Section 2(e) hereof.
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“General Use Issuer Free Writing Prospectus” means any Issuer Free Writing Prospectus that is intended for general distribution to prospective investors, as evidenced by its being so specified in Schedule B hereto.
“Issuer Free Writing Prospectus” means any “issuer free writing prospectus,” as defined in Rule 433, relating to the Offered Securities in the form filed or required to be filed with the Commission or, if not required to be filed, in the form retained in the Company’s records pursuant to Rule 433(g).
“Limited Use Issuer Free Writing Prospectus” means any Issuer Free Writing Prospectus that is not a General Use Issuer Free Writing Prospectus.
“Rules and Regulations” means the rules and regulations of the Commission.
“Securities Act” means the United States Securities Act of 1933, as amended.
“Securities Laws” means, collectively, the Sarbanes-Oxley Act of 2002 (“Sarbanes-Oxley”), the Securities Act, the Exchange Act, the Trust Indenture Act, the Rules and Regulations, the auditing principles, rules, standards and practices applicable to auditors of “issuers” (as defined in Sarbanes-Oxley) promulgated or approved by the Public Company Accounting Oversight Board and, as applicable, the rules of the New York Stock Exchange and the NASDAQ Global Select Market (“Exchange Rules”).
“Statutory Prospectus” with reference to any particular time means the prospectus relating to the Offered Securities that is included in the Registration Statement immediately prior to that time, including all 430B Information with respect to the Registration Statement. For purposes of the foregoing definition, 430B Information shall be considered to be included in the Statutory Prospectus only as of the actual time that form of prospectus (including a prospectus supplement) is filed with the Commission pursuant to Rule 424(b) and not retroactively.
“Subsequent Closing Date” means the time and date of delivery of Optional Securities by the Company to the Underwriters, if subsequent to the Closing Date.
“Trust Indenture Act” means the Trust Indenture Act of 1939.
Unless otherwise specified, a reference to a “rule” is to the indicated rule under the Securities Act.
(b) Compliance with Securities Act Requirements. (i) (A) At the time the Registration Statement initially became effective, (B) at the Effective Time relating to the Offered Securities and (C) on the Closing Date, the Registration Statement conformed and will conform in all respects to the requirements of the Securities Act, the Trust Indenture Act and the Rules and Regulations and did not and will not include any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading and (ii) (A) on its date, (B) at the time of filing the Final Prospectus pursuant to Rule 424(b) and (C) on the Closing Date, the Final Prospectus will conform in all respects to the requirements of the Securities Act, the Trust Indenture Act and the Rules and Regulations, and will not include any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading. The preceding sentence does not apply to statements in or omissions from any such document based upon written information furnished to the Company by any Underwriter specifically for use therein, it being understood and agreed that the only such information is that described as such in Section 8(b) hereof.
(c) Automatic Shelf Registration Statement. (i) Well-Known Seasoned Issuer Status. (A) At the time of initial filing of the Registration Statement and (B) at the time the Company or any person acting on its behalf (within the meaning, for this clause only, of Rule 163(c)) made any offer relating to the Offered Securities in reliance on the exemption of Rule 163, the Company was a “well known seasoned issuer” as defined in Rule 405, including not having been an “ineligible issuer” as defined in Rule 405.
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(ii) Effectiveness of Automatic Shelf Registration Statement. The Registration Statement is an “automatic shelf registration statement,” as defined in Rule 405, that initially became effective upon filing in accordance with Rule 462(e) under the Securities Act within three years of the date of this Agreement.
(iii) Eligibility to Use Automatic Shelf Registration Form. The Company has not received from the Commission any notice pursuant to Rule 401(g)(2) objecting to use of the automatic shelf registration statement form. If at any time when Offered Securities remain unsold by the Underwriters the Company receives from the Commission a notice pursuant to Rule 401(g)(2) or otherwise ceases to be eligible to use the automatic shelf registration statement form, the Company will (i) promptly notify the Representative, (ii) promptly file a new registration statement or post-effective amendment on the proper form relating to the Offered Securities, in a form satisfactory to the Representative, (iii) use its best efforts to cause such registration statement or post-effective amendment to be declared effective as soon as practicable, and (iv) promptly notify the Representative of such effectiveness. The Company will take all other action necessary or appropriate to permit the public offering and sale of the Offered Securities to continue as contemplated in the registration statement that was the subject of the Rule 401(g)(2) notice or for which the Company has otherwise become ineligible. References herein to the Registration Statement shall include such new registration statement or post-effective amendment, as the case may be.
(iv) Filing Fees. The Company has paid or shall pay the required Commission filing fees relating to the Offered Securities within the time required by Rule 456(b)(1) without regard to the proviso therein and otherwise in accordance with Rules 456(b) and 457(r).
(d) Ineligible Issuer Status. (i) At the earliest time after the filing of the Registration Statement that the Company made a bona fide offer (within the meaning of Rule 164(h)(2)) of the Offered Securities and (ii) at the date of this Agreement, the Company was not and is not an “ineligible issuer,” as defined in Rule 405.
(e) Disclosure. As of the date of this Agreement, the Final Prospectus does not, and as of any Closing Date, the Final Prospectus will not include any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. At the Applicable Time, neither (i) the General Use Issuer Free Writing Prospectus(es) issued at or prior to the Applicable Time, the preliminary prospectus supplement, dated June 9, 2014, including the base prospectus, dated June 9, 2014 (collectively, including the documents incorporated by reference therein, the “Preliminary Prospectus”), (which is the most recent Statutory Prospectus distributed to investors generally), and the other information, if any, stated in Schedule B to this Agreement to be included in the General Disclosure Package, all considered together (collectively, the “General Disclosure Package”), nor (ii) any individual Limited Use Issuer Free Writing Prospectus, when considered together with the General Disclosure Package, included, or will include, any untrue statement of a material fact or omitted, or will omit, to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. The preceding two sentences do not apply to statements in or omissions from any Statutory Prospectus, the General Disclosure Package, the Final Prospectus or any Issuer Free Writing Prospectus based upon written information furnished to the Company by any Underwriter specifically for use therein, it being understood and agreed that the only such information is that described as such in Section 8(b) hereof. Except as disclosed in the General Disclosure Package, on the date of this Agreement, the Company’s Annual Report on Form 10-K for the year ended
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January 31, 2014 and the Company’s Quarterly Report on Form 10-Q for the three months ended April 30, 2014 (collectively, the “Exchange Act Reports”) which have been filed by the Company with the Commission or sent to shareholders pursuant to the Exchange Act and incorporated by reference in the General Disclosure Package and the Final Prospectus, when they were filed with the Commission, conformed in all material respects to the requirements of the Exchange Act and the Rules and Regulations.
(f) Issuer Free Writing Prospectuses. Each Issuer Free Writing Prospectus, as of its issue date and at all subsequent times through the completion of the public offer and sale of the Offered Securities or until any earlier date that the Company notified or notifies the Representative as described in the next sentence, did not, does not and will not include any information that conflicted, conflicts or will conflict with the information then contained in the Registration Statement. If at any time following issuance of an Issuer Free Writing Prospectus and at a time when a prospectus relating to the Offered Securities is (or but for the exceptions in Rule 172 would be) required to be delivered under the Securities Act by any Underwriter or dealer, there occurred or occurs an event or development as a result of which such Issuer Free Writing Prospectus conflicted or would conflict with the information then contained in the Registration Statement or as a result of which such Issuer Free Writing Prospectus, if republished immediately following such event or development, would include an untrue statement of a material fact or omitted or would omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading, (i) the Company has promptly notified or will promptly notify the Representative and (ii) the Company has promptly amended or will promptly amend or supplement such Issuer Free Writing Prospectus to eliminate or correct such conflict, untrue statement or omission. The preceding sentence does not apply to statements in or omissions from any Statutory Prospectus or any Issuer Free Writing Prospectus in reliance upon and in conformity with written information furnished to the Company by any Underwriter specifically for use therein, it being understood and agreed that the only such information furnished by any Underwriter consists of the information described as such in Section 8(b) hereof.
(g) Good Standing of the Company. The Company has been duly incorporated, and is existing and in good standing under the laws of the state of Delaware, with power and authority (corporate and other) to own its properties and conduct its business as described in the General Disclosure Package; and the Company is duly qualified to do business as a foreign corporation in good standing in all other jurisdictions in which its ownership or lease of property or the conduct of its business requires such qualification, except where the failure to be so qualified or in good standing would not, individually or in the aggregate, reasonably be expected to have a material adverse effect on the financial condition, business, properties or results of operations of the Company and its subsidiaries, taken as a whole (“Material Adverse Effect”).
(h) Subsidiaries. Each “significant subsidiary” as such term is defined in Rule 405 under the Securities Act, (each, a “Significant Subsidiary” and collectively, the “Significant Subsidiaries”) of the Company has been duly incorporated or formed, as applicable, and is existing and, if applicable, in good standing under the laws of the jurisdiction of its incorporation or formation, as applicable, with power and authority (corporate and other) to own its properties and conduct its business as described in the General Disclosure Package; and each Significant Subsidiary of the Company is duly qualified to do business as a foreign corporation or limited liability company in good standing in all other jurisdictions in which its ownership or lease of property or the conduct of its business requires such qualification, except where the failure to be so qualified or in good standing would not, individually or in the aggregate, have a Material Adverse Effect; all of the issued and outstanding capital stock of each Significant Subsidiary has been duly authorized and validly issued and is fully paid and nonassessable; and the capital stock of each Significant Subsidiary is owned free from liens, encumbrances and defects, except (i) as otherwise described in the General Disclosure Package and the Final Prospectus or (ii) where, individually or in the aggregate, the failure to be fully paid and non-assessable and to be owned directly or indirectly by the Company free from liens, encumbrances and defects would not reasonably be expected to have a Material Adverse Effect or a material adverse effect on the ability of the Company to perform its obligations under the Indenture and the Offered Securities.
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(i) Corporate Structure. The subsidiaries of the Company listed on Exhibit 21.1 to the Company’s Annual Report on Form 10-K for year ended January 31, 2014 are all of the subsidiaries of the Company required to be so listed by Item 601(b)(21) of Regulation S-K as of January 31, 2014 and, except as specified on Schedule D hereto, as of the date hereof.
(j) Capitalization; Conversion Shares. The Common Stock has been duly authorized; the authorized equity capitalization of the Company is as set forth in the General Disclosure Package; all outstanding shares of capital stock of the Company are validly issued, fully paid and nonassessable, and conform to the information in the General Disclosure Package and to the description of the Common Stock contained in the Final Prospectus; the stockholders of the Company have no preemptive rights with respect to the Common Stock; and none of the outstanding shares of capital stock of the Company have been issued in violation of any preemptive or similar rights of any security holder. The maximum number of Conversion Shares (assuming physical settlement of all conversions and including any shares of Common Stock issuable in connection with a “make-whole adjustment event”, as such term is defined in the Indenture) have been duly authorized and reserved and, when issued upon exercise of the Offered Securities in accordance with the terms of the Indenture, will be validly issued, fully paid and non-assessable, and the issuance of such Conversion Shares will not be subject to any preemptive or similar rights. The Conversion Shares, when issued upon exercise of the Offered Securities in accordance with the terms of the Indenture, will conform to the information in the General Disclosure Package and to the description of the Common Stock contained in the Final Prospectus.
(k) Indenture; the Offered Securities. The Indenture has been duly authorized and, when executed and delivered by the Company (assuming due authorization, execution and delivery by the Trustee), will constitute a valid and legally binding agreement of the Company, enforceable in accordance with its terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors’ rights and to general equity principles. The Offered Securities have been duly authorized by the Company; and when the Firm Securities are delivered and paid for pursuant to this Agreement on the Closing Date and when the Optional Securities are delivered and paid for pursuant to this Agreement on the Closing Date or any Subsequent Closing Date, as applicable, such Firm Securities and Optional Securities, as the case may be, and when executed by the Company and authenticated by the Trustee in accordance with the provisions of the Indenture, and when delivered to and paid for by the Underwriters in accordance with the terms of this Agreement, will constitute valid and legally binding obligations of the Company enforceable in accordance with their terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors’ rights and to general equity principles and entitled to the benefits provided by the Indenture. The Indenture and the Offered Securities will conform in all material respects to the information in the General Disclosure Package and the descriptions contained in the Final Prospectus.
(l) Call Spread Confirmations. The Base Call Spread Confirmations have been duly authorized, executed and delivered by the Company and, assuming due authorization, execution and delivery by each of the Call Spread Counterparties, will constitute valid and legally binding agreements of the Company, enforceable against the Company in accordance with their terms, and any Additional Call Spread Confirmations will, on or prior to the date such Additional Call Spread Confirmations are entered into, have been duly authorized, executed and delivered by the Company and, assuming due authorization, execution and delivery by each of the Call Spread Counterparties, will constitute valid and legally binding agreements of the Company, enforceable against the Company in accordance with their terms, subject in each case to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors’ rights and to general equity principles.
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(m) Warrant Securities. The maximum number of shares of Common Stock of the Company issuable upon exercise and settlement or termination of the warrants issued pursuant to the Base Warrant Confirmations and any Additional Warrant Confirmations have been duly authorized and reserved and, when issued upon exercise of such warrants in accordance with the terms of such warrants, will be validly issued, fully paid and non-assessable, and the issuance of the Warrant Securities will not be subject to any preemptive or similar rights.
(n) No Finder’s Fee. Except as disclosed in the General Disclosure Package, there are no contracts, agreements or understandings between the Company and any person that would give rise to a valid claim against the Company or any Underwriter for a brokerage commission, finder’s fee or other like payment in connection with the offering of the Offered Securities (other than in connection with advisory fees payable to Centerview Capital).
(o) Registration Rights. Except as disclosed in the General Disclosure Package and, except as may be contemplated by the Call Spread Confirmations, there are no contracts, agreements or understandings between the Company and any person granting such person the right to require the Company to file a registration statement under the Securities Act with respect to any securities of the Company owned or to be owned by such person or to require the Company to include such securities in the securities registered pursuant to a Registration Statement or in any securities being registered pursuant to any other registration statement filed by the Company under the Securities Act (collectively, “registration rights”), and any person to whom the Company has granted registration rights has agreed not to exercise such rights until after the expiration of the Lock-Up Period referred to in Section 5 hereof.
(p) Absence of Further Requirements. No consent, approval, authorization, or order of, or filing or registration with, any person (including any governmental agency or body or any court) is required to be obtained or made by the Company for the consummation of the Concurrent Transactions, except for (i) such as have been obtained or made by the Company and are in full force and effect, (ii) such as may be required under state securities or “Blue Sky” laws in connection with the offer and sale of the Offered Securities, and (iii) the failure of which to obtain would not reasonably be expected to have a Material Adverse Effect or a material adverse effect on the ability of the Company to perform its obligations under the Indenture or the Offered Securities.
(q) Title to Property. Except as disclosed in the General Disclosure Package or as would not have a Material Adverse Effect, the Company and its subsidiaries have good and marketable title to all real properties and all other properties and assets owned by them, in each case free from liens, charges, encumbrances and defects that would materially affect the value thereof or materially interfere with the use made or to be made thereof by them; and except as disclosed in the General Disclosure Package or as would not have a Material Adverse Effect, the Company and its subsidiaries hold any leased real or personal property under valid and enforceable leases with no terms or provisions that would materially interfere with the use made or to be made thereof by them.
(r) Absence of Defaults and Conflicts Resulting from Transaction. The execution, delivery and performance of the Indenture, the Offered Securities, this Agreement, the Call Spread Confirmations, the Paydown and the Credit Facility Amendment (including, without limitation, the issuance and sale of the Offered Securities to the Underwriters and the issuance of any Conversion Shares upon conversion thereof) and compliance with the terms and provisions thereof will not result in a breach or violation of any of the terms and provisions of, or constitute a default or a Debt Repayment Triggering Event (as defined below) under, or result in the imposition of any lien, charge or encumbrance upon any property or assets of the Company or any of its subsidiaries pursuant to, (i) the charter, by-laws or similar organizational document of the Company or any of its subsidiaries, (ii) any statute, any rule, regulation or order of any governmental agency or body or any court, domestic or foreign, having jurisdiction over the Company or any of its subsidiaries or any of their properties, or (iii) any agreement or instrument to which the Company or any of its
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subsidiaries is a party or by which the Company or any of its subsidiaries is bound or to which any of the properties of the Company or any of its subsidiaries is subject, except, in the case of clauses (ii) and (iii) above, for such defaults or violations as would not have a Material Adverse Effect; a “Debt Repayment Triggering Event” means any event or condition that gives, or with the giving of notice or lapse of time would give, the holder of any note, debenture, or other evidence of indebtedness (or any person acting on such holder’s behalf) the right to require the repurchase, redemption or repayment of all or a portion of such indebtedness by the Company or any of its subsidiaries.
(s) Absence of Existing Defaults and Conflicts. The Company is not in violation of its charter or by-laws, or in default (or with the giving of notice or lapse of time would be in default) under any existing obligation agreement, covenant or condition contained in any indenture, loan agreement, mortgage, lease or other agreement or instrument to which it is a party or by which it is bound or to which any of its properties is subject, except such defaults that would not, individually or in the aggregate, have a Material Adverse Effect.
(t) Authorization of Agreement. This Agreement has been duly authorized, executed and delivered by the Company.
(u) Possession of Licenses and Permits. The Company and its subsidiaries possess, and are in compliance with the terms of, all adequate certificates, authorizations, franchises, licenses and permits (“Licenses”) necessary or material to the conduct of the business now conducted or proposed in the General Disclosure Package to be conducted by them and have not received any notice of proceedings relating to the revocation or modification of any Licenses that, if determined adversely to the Company or any of its subsidiaries, would individually or in the aggregate have a Material Adverse Effect.
(v) Absence of Labor Dispute. No labor dispute with the employees of the Company or any of its subsidiaries exists or, to the knowledge of the Company, is imminent that could reasonably be expected to have a Material Adverse Effect.
(w) Intellectual Property. The Company and its subsidiaries own, possess, have sufficient rights to use or can acquire on commercially reasonable terms, all trademarks, trade names, patent rights, copyrights, domain names, licenses, approvals, trade secrets, inventions, technology, know-how and other intellectual property rights (collectively, “Intellectual Property Rights”) necessary or material to the conduct of the business as now conducted by them, and the expected expiration of any such Intellectual Property Rights would not reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect. The conduct of the business of the Company and its subsidiaries has not conflicted with, infringed, misappropriated or otherwise violated, and the conduct of the business of the Company and its subsidiaries as proposed in the General Disclosure Package to be conducted by them is not reasonably expected to conflict with, infringe, misappropriate or otherwise violate, any Intellectual Property Rights of any third party except for such infringements, misappropriations or other violations that would not reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect. The Company and its subsidiaries have not received any notice of infringement of, or conflict with, asserted rights of others with respect to any Intellectual Property Rights that, if determined adversely to the Company or its subsidiaries, would reasonably be expected to have a Material Adverse Effect. Except in each case as disclosed in the General Disclosure Package or as would not, if determined adversely to the Company or any of its subsidiaries, individually or in the aggregate, be reasonably expected to have a Material Adverse Effect (i) there are no rights of third parties to any of the Intellectual Property Rights owned or purported to be owned by the Company or any of its subsidiaries; (ii) there is no infringement, misappropriation, breach, default or other violation, or the occurrence of any event that with notice or the passage of time would constitute any of the foregoing, by any third party of any of the Intellectual Property Rights of the Company or any of its subsidiaries; (iii) to the knowledge of the Company, all Intellectual Property Rights owned by the Company or any of its subsidiaries are valid and enforceable; (iv) none of the Intellectual
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Property Rights used by the Company or any of its subsidiaries in their respective businesses has been obtained or is being used by the Company or any of its subsidiaries in violation of any contractual obligation binding on the Company or any of its subsidiaries or in violation of the rights of any persons; and (v) the Company and its subsidiaries have taken commercially reasonable steps in accordance with normal industry practice to maintain the confidentiality of all Intellectual Property Rights the value of which to the Company or any of its subsidiaries is contingent on maintaining the confidentiality thereof.
(x) Environmental Laws. Except as disclosed in the General Disclosure Package, none of the Company or its subsidiaries is in violation of any statute, any rule, regulation, decision or order of any governmental agency or body or any court, domestic or foreign, relating to the use, disposal or release of hazardous or toxic substances or relating to the protection or restoration of the environment or human exposure to hazardous or toxic substances (collectively, “environmental laws”), owns or operates any real property contaminated with any substance that is subject to any environmental laws, is liable for any off site disposal or contamination pursuant to any environmental laws, or is subject to any claim relating to any environmental laws, which violation, contamination, liability or claim would individually or in the aggregate have a Material Adverse Effect; and to the knowledge of the Company, there are no pending investigations which could reasonably be expected to lead to such a claim.
(y) Accurate Disclosure. The statements in the General Disclosure Package and the Final Prospectus under the headings “Description of Common Stock,” “Material U.S. Federal Income Tax Considerations,” “Description of Notes,” “Description of Convertible Note Hedge and Warrant Transactions,” “Description of Debt Securities,” insofar as such statements summarize the legal matters or agreements referred to therein, are accurate summaries of such legal matters or agreements in all material respects.
(z) Absence of Manipulation. None of the Company and its affiliates has, either alone or with one or more other persons, bid for or purchased for any account in which it or any of its affiliates had a beneficial interest any Offered Securities or attempt to induce any person to purchase any Offered Securities.
(aa) Statistical and Market-Related Data. Any third-party statistical and market-related data included in the General Disclosure Package, a Final Prospectus, or any Issuer Free Writing Prospectus are based on or derived from sources that the Company believes to be reliable and accurate in all material respects.
(bb) Internal Controls and Compliance with the Sarbanes-Oxley Act. Except as set forth in the General Disclosure Package, the Company and its Board of Directors (the “Board”) are in compliance in all material respects with Sarbanes-Oxley and all applicable Exchange Rules. The Company maintains a system of internal controls, including, but not limited to, disclosure controls and procedures, internal controls over accounting matters and financial reporting, an internal audit function, and legal and regulatory compliance controls (collectively, “Internal Controls”), that comply with the Securities Laws and are sufficient to provide reasonable assurances that (i) transactions are executed in accordance with management’s general or specific authorizations, (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with U.S. Generally Accepted Accounting Principles (“GAAP”) and to maintain accountability for assets, (iii) access to assets is permitted only in accordance with management’s general or specific authorization and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences. The Internal Controls are overseen by the Audit Committee (the “Audit Committee”) of the Board in accordance with Exchange Rules. Since the date of the Company’s latest audited financial statements included in the General Disclosure Package, the Company has not publicly disclosed or reported to the Audit Committee or the Board, and within the next 90 days the Company does not reasonably expect to publicly disclose or report to its Audit Committee or its Board, a significant deficiency, material weakness, change in Internal Controls or
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fraud involving management or other employees who have a significant role in Internal Controls (each, an “Internal Control Event”), any violation of, or failure to comply with, the Securities Laws, or any matter which, in each case, if determined adversely, would have a Material Adverse Effect.
(cc) Litigation. Except as disclosed in the General Disclosure Package, there are no pending actions, suits or proceedings (including any inquiries or investigations by any court or governmental agency or body, domestic or foreign) against or affecting the Company or any of its subsidiaries or any of their respective properties that, if determined adversely to the Company or any of its subsidiaries, would individually or in the aggregate be expected to have a Material Adverse Effect, or would be expected to materially and adversely affect the ability of the Company to perform their obligations under the Indenture or this Agreement, or that seeks to restrain, enjoin, prevent the consummation of or otherwise challenge the issuance of the Conversion Shares upon the conversion of the Offered Securities to be sold hereunder; and to the knowledge of the Company, no such actions, suits or proceedings (including any inquiries or investigations by any court or governmental agency or body, domestic or foreign) are currently threatened or contemplated.
(dd) Financial Statements. The financial statements of the Company and its consolidated subsidiaries included in the General Disclosure Package present fairly in all material respects the financial position of the Company and its consolidated subsidiaries as of the dates shown and their results of operations and cash flows for the periods shown, and except as otherwise disclosed in the General Disclosure Package and the Final Prospectus, such financial statements have been prepared in conformity with GAAP applied on a consistent basis; and the assumptions used in preparing the pro forma financial statements included in the General Disclosure Package provide a reasonable basis for presenting the significant effects directly attributable to the transactions or events described therein, the related pro forma adjustments give appropriate effect to those assumptions, and the pro forma columns therein reflect the proper application of those adjustments to the corresponding historical financial statement amounts, in each case, in all material respects. The financial statements of Kay Technology Holdings, Inc. included in the General Disclosure Package present fairly in all material respects the financial position of Kay Technology Holdings, Inc. and its consolidated subsidiaries as of the dates shown and its results of operations and cash flows for the periods shown, and such financial statements have been prepared in conformity with GAAP. The interactive data in eXtensible Business Reporting Language included or incorporated by reference in the General Disclosure Package fairly presents the information called for in all material respects and has been prepared in accordance with the Commission’s rules and guidelines applicable thereto.
(ee) Independent Accountants. Deloitte & Touche LLP, who have certified certain financial statements of the Company and its subsidiaries, is an independent registered public accounting firm with respect to the Company and its subsidiaries within the applicable rules and regulations adopted by the Commission and the Public Company Accounting Oversight Board (United States) and as required by the Securities Act.
(ff) No Material Adverse Change in Business. Except as disclosed or contemplated by in the General Disclosure Package, since the end of the period covered by the latest audited financial statements included in the General Disclosure Package (i) there has been no change, nor any development or event involving a prospective change, in the financial condition, results of operations, business or properties of the Company and its subsidiaries, taken as a whole, that is material and adverse; (ii) there has been no dividend or distribution of any kind declared, paid or made by the Company on any class of its capital stock and (iii) there has been no material adverse change in the capital stock, short-term indebtedness, long-term indebtedness, net current assets or net assets of the Company and its subsidiaries.
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(gg) Investment Company Act. The Company is not an open-end investment company, unit investment trust or face-amount certificate company that is or is required to be registered under Section 8 of the United States Investment Company Act of 1940 (the “Investment Company Act”); and after giving effect to the transactions contemplated by the Call Spread Confirmations and the offering and sale of the Offered Securities and the application of the proceeds of the offering as described in the General Disclosure Package, will not be an “investment company” as defined in the Investment Company Act.
(hh) Ratings. No “nationally recognized statistical rating organization” as such term is defined in Section 3(a)(62) of the Exchange Act has imposed (or has informed the Company that it is considering imposing) any condition (financial or otherwise) on the Company’s retaining any rating assigned to the Company or any securities of the Company or (ii) has indicated to the Company that it is considering any of the actions described in Section 7(b)(ii) hereof.
(ii) No Unlawful Payments. Neither the Company nor any of its subsidiaries, nor any director, officer, agent, employee, nor, to the knowledge of the Company, agent, affiliate or other person associated with or acting on behalf of the Company or any of its subsidiaries has: (i) used any funds for any unlawful contribution, gift, entertainment or other unlawful expense relating to political activity; (ii) made an offer, promise or authorization of any direct or indirect unlawful payment or benefit to any foreign or domestic government or regulatory official or employee, including of any government-owned or controlled entity or of a public international organization, or any person acting in an official capacity for or on behalf of any of the foregoing, or any political party or party official or candidate for political office; (iii) violated or is in violation of any provision of the Foreign Corrupt Practices Act of 1977, as amended (the “FCPA”) or any applicable law or regulation implementing the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions, or committed an offence under the Bribery Act 2010 of the United Kingdom, or any other applicable anti-bribery or anti-corruption laws; or (iv) made, offered, agreed or requested any bribe, rebate, payoff, influence payment, kickback or other unlawful payment. The Company and its subsidiaries have conducted their businesses on behalf of the Company and its subsidiaries, respectively, in compliance with the FCPA and instituted and maintain policies and procedures designed to ensure, and which are reasonably expected to continue to ensure, continued compliance with the FCPA and all other applicable anti-bribery and anti-corruption laws.
(jj) Compliance with Money Laundering Laws. The operations of the Company and its subsidiaries are and have been conducted at all times in compliance with applicable financial recordkeeping and reporting requirements of the Currency and Foreign Transactions Reporting Act of 1970, as amended, the money laundering statutes of all jurisdictions, the rules and regulations thereunder and any related or similar rules, regulations or guidelines, issued, administered or enforced by any governmental agency (collectively, the “Money Laundering Laws”) and no action, suit or proceeding by or before any court or governmental agency, authority or body or any arbitrator involving the Company or any of its subsidiaries with respect to the Money Laundering Laws is pending or, to the knowledge of the Company, threatened.
(kk) No Conflicts with Sanctions. Neither the Company, nor any of its subsidiaries nor, to the knowledge of the Company, any director, officer, agent, employee, affiliate or other person associated with or acting on behalf and at the direction of the Company or of its subsidiaries is currently the subject or the target of any U.S. sanctions administered by the Office of Foreign Assets Control of the U.S. Treasury Department, the U.S. Department of Commerce, the U.S. Department of State, the United Nations Security Council, the European Union, Her Majesty’s Treasury or other relevant sanctions authority (“Sanctions”), nor is the Company nor any of its subsidiaries located, organized or resident in a country or territory that is the subject or the target of Sanctions, including, without limitation, Cuba, Iran, North Korea, Sudan and Syria (each, a “Sanctioned Country”); and the Company will not directly or indirectly use the proceeds of the Concurrent Transactions, or (i) lend, contribute or otherwise make available such proceeds to any subsidiary, joint venture partner or other person or entity, for the purpose of financing the activities of any person at the time of such lending, contributing or making, subject or target of any Sanctions or (ii) in any other manner that will result in a violation by any person (including
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any person participating in the Concurrent Transactions, where as an Underwriter, advisor, investor or otherwise) of Sanctions. For the past 5 years, the Company and its subsidiaries have not knowingly engaged in and are not now knowingly engaged in any dealings or transactions with any person that at the time of the dealing or transaction is or was the subject or the target of Sanctions or with any Sanctioned Country.
(ll) Taxes. The Company and its subsidiaries have filed all federal, state, local and non-U.S. tax returns that are required to be filed or have requested extensions thereof (except in any case in which the failure so to file would not have a Material Adverse Effect); and, except as set forth in the General Disclosure Package, the Company and its subsidiaries have paid all taxes (including any assessments, fines or penalties) required to be paid by them, except for any such taxes, assessments, fines or penalties currently being contested in good faith and for which adequate reserves have been provided in accordance with GAAP, or as would not have a Material Adverse Effect.
3. Purchase, Sale and Delivery of Offered Securities. (a) On the basis of the representations, warranties and agreements and subject to the terms and conditions set forth herein, the Company agrees to sell to the several Underwriters, and each of the Underwriters agrees, severally and not jointly, to purchase from the Company, at a purchase price of 97.875% of the principal amount thereof plus accrued interest from June 18, 2014 to the Closing Date (as hereinafter defined), the respective principal amounts of Securities set forth opposite the names of the several Underwriters in Schedule A hereto.
The Company will deliver, against payment of the purchase price, the Offered Securities to be purchased by each Underwriter hereunder and to be offered and sold by each Underwriter in the form of one or more permanent global securities in definitive form without interest coupons (the “Global Securities”) deposited with the Trustee as custodian for DTC and registered in the name of Cede & Co., as nominee for DTC. Interests in any Global Securities will be held only in book-entry form through DTC, except in the limited circumstances described in the Final Prospectus.
Payment for the Offered Securities representing all of the Firm Securities and Optional Securities (if the option provided for in Section 3(b) hereof shall have been exercised on or before the first business day immediately preceding the Closing Date) shall be made by the Underwriters in Federal (same day) funds by wire transfer to an account at a bank acceptable to the Representative drawn to the order of the Company at the office of Davis Polk & Wardwell LLP, 450 Lexington Avenue, New York, New York 10017 at 10:00 A.M., (New York time), on June 18, 2014 or at such other time not later than seven full business days thereafter as the Representative and the Company determine, such time being herein referred to as the “Closing Date”, against delivery to the Trustee as custodian for DTC of the Global Securities representing all of the Firm Securities and Optional Securities (as applicable) (if the option provided for in Section 3(b) hereof shall have been exercised on or before the first business day immediately preceding the Closing Date). The applicable Global Securities will be made available for checking at the above office of Davis Polk & Wardwell LLP at least 24 hours prior to the Closing Date. For purposes of Rule 15c6-1 under the Securities Exchange Act of 1934, the Closing Date (if later than the otherwise applicable settlement date) shall be the settlement date for payment of funds and delivery of securities for all the Offered Securities sold pursuant to the offering. Delivery of the Firm Securities will be made through the facilities of the Depository Trust Company (“DTC”) unless the Representative instructs otherwise.
(b) In addition, on the basis of the representations, warranties and agreements herein contained, and upon the terms but subject to the conditions herein set forth, the Company hereby grants an option to the several Underwriters to purchase, severally and not jointly, up to $50,000,000 aggregate principal amount of Optional Securities from the Company at the same price as the purchase price to be paid by the Underwriters for the Firm Securities. The option granted hereunder may be exercised at any time and from time to time upon notice by the Representative to the Company, which notice may be given at any time within 30 days from the date of this Agreement. Such notice shall set forth (i) the amount (which shall be an integral multiple of $1,000 in aggregate principal amount) of Optional Securities as to which the Underwriters are exercising the option, (ii) the names and denominations in which the Optional Securities are to be registered and (iii) the time, date and place at which such Securities will be delivered (which time
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and date may be simultaneous with, but not earlier than, the Closing Date; and in such case the term “Closing Date” herein shall refer to the time and date of delivery of the Firm Securities and the Optional Securities). Such time and date of delivery, if subsequent to the Closing Date, is called a “Subsequent Closing Date” and shall be determined by the Representative. Such date may be the same as the Closing Date but not earlier than the Closing Date nor later than 10 business days after the date of such notice. If any Optional Securities are to be purchased, each Underwriter agrees, severally and not jointly, to purchase the principal amount of Optional Securities (subject to such adjustments to eliminate fractional amount as the Representative may determine) that bears the same proportion to the total principal amount of Optional Securities to be purchased as the principal amount of Firm Securities set forth on Schedule A opposite the name of such Underwriter bears to the total principal amount of Firm Securities. If the option provided for in this Section 3(b) hereof is exercised after the first business day immediately preceding the Closing Date, the Company will deliver the Optional Securities (at the expense of the Company) to the Representative on the date specified by the Representative (which shall be within three business days after exercise of said option) for the respective accounts of the several Underwriters, against payment by the several Underwriters through the Representative of the purchase price thereof to or upon the order of the Company by wire transfer payable in same-day funds to the account specified by the Company. If settlement for the Optional Securities occurs after the Closing Date, the Company will deliver to the Representative on the settlement date for the Optional Securities, and the obligation of the Underwriters to purchase the Optional Securities shall be conditioned upon receipt of, supplemental opinions, certificates and letters confirming as of such date the opinions, certificates and letters delivered on the Closing Date pursuant to Section 7 hereof. Delivery of the Optional Securities will be made through the facilities of the DTC unless the Representative instructs otherwise.
4. Offering by Underwriters. (a) It is understood that the several Underwriters propose to offer the Offered Securities for sale to the public as set forth in the Final Prospectus.
(b) In relation to each Member State of the European Economic Area which has implemented the Prospectus Directive (each, a “Relevant Member State”), each of the Underwriters severally represents and agrees that with effect from and including the date on which the Prospectus Directive is implemented in that Relevant Member State (the “Relevant Implementation Date”) it has not made and will not make an offer of Offered Securities to the public in that Relevant Member State prior to the publication of a prospectus in relation to the Offered Securities which has been approved by the competent authority in that Relevant Member State or, where appropriate, approved in another Relevant Member State and notified to the competent authority in that Relevant Member State, all in accordance with the Prospectus Directive, except that it may, with effect from and including the Relevant Implementation Date, make an offer of Offered Securities to the public in that Relevant Member State at any time:
(i) to legal entities which are qualified investors as defined in the Prospectus Directive;
(ii) to fewer than 100 or, if the Relevant Member State has implemented the relevant provision of the 2010 PD Amending Directive, 150, natural or legal persons (other than qualified investors as defined in the Prospectus Directive), as permitted under the Prospectus Directive, subject to obtaining the prior consent of the Underwriters for any such offer; or
(iii) in any other circumstances falling within Article 3 of the Prospectus Directive which do not require the publication by the Company of a prospectus pursuant to Article 3 of the Prospectus Directive.
For the purposes of this provision, the expression an “offer of Offered Securities to the public” in relation to any Offered Securities in any Relevant Member State means the communication in any form and by any means of sufficient information on the terms of the offer and the Offered Securities to be offered so as to enable an investor to decide to purchase or subscribe the Offered Securities, as the same may be varied in that Member State by any measure
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implementing the Prospectus Directive in that Member State and the expression “Prospectus Directive” means Directive 2003/71/EC (and amendments thereto, including the 2010 PD Amending Directive, to the extent implemented in the Relevant Member State) and includes any relevant implementing measure in each Relevant Member State; and the expression “2010 PD Amending Directive” means Directive 2010/73/EU.
(c) Each of the Underwriters severally represents and agrees that:
(i) (A) it is a person whose ordinary activities involve it in acquiring, holding, managing or disposing of investments (as principal or agent) for the purposes of its business and (B) it has not offered or sold and will not offer or sell the Offered Securities other than to persons whose ordinary activities involve them in acquiring, holding, managing or disposing of investments (as principal or as agent) for the purposes of their businesses or who it is reasonable to expect will acquire, hold, manage or dispose of investments (as principal or agent) for the purposes of their businesses where the issue of the Offered Securities would otherwise constitute a contravention of Section 19 of the Financial Services and Markets Act 2000 (the “FSMA”) by the Company;
(ii) it has only communicated or caused to be communicated and will only communicate or cause to be communicated an invitation or inducement to engage in investment activity (within the meaning of Section 21 of the FSMA) received by it in connection with the issue or sale of the Offered Securities in circumstances in which Section 21(1) of the FSMA does not apply to the Company; and
(iii) it has complied and will comply with all applicable provisions of the FSMA with respect to anything done by it in relation to the Offered Securities in, from or otherwise involving the United Kingdom.
5. Certain Agreements of the Company. The Company agrees with the several Underwriters that:
(a) Filing of Prospectuses. The Company has filed or will file each Statutory Prospectus (including the Final Prospectus) pursuant to and in accordance with Rule 424(b)(2) (or, if applicable and consented to by the Representative, subparagraph (5)) not later than the second business day following the earlier of the date it is first used or the execution and delivery of this Agreement. The Company has complied and will comply with Rule 433.
(b) Filing of Amendments; Response to Commission Requests. The Company will promptly advise the Representative of any proposal to amend or supplement the Registration Statement or any Statutory Prospectus at any time and will offer the Representative a reasonable opportunity to comment on any such amendment or supplement; and the Company will also advise the Representative promptly of (i) the filing of any such amendment or supplement, (ii) any request by the Commission or its staff for any amendment to the Registration Statement, for any supplement to any Statutory Prospectus or for any additional information, (iii) the institution by the Commission of any stop order proceedings in respect of the Registration Statement or the threatening of any proceeding for that purpose, and (iv) the receipt by the Company of any notification with respect to the suspension of the qualification of the Offered Securities in any jurisdiction or the institution or threatening of any proceedings for such purpose. The Company will use its reasonable best efforts to prevent the issuance of any such stop order or the suspension of any such qualification and, if issued, to obtain as soon as possible the withdrawal thereof.
(c) Continued Compliance with Securities Laws. If, at any time when a prospectus relating to the Offered Securities is (or but for the exemption in Rule 172 would be) required to be delivered under the Securities Act by any Underwriter or dealer, any event occurs as a result of which the Final Prospectus as then amended or supplemented would include an untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, or if it is necessary at any
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time to amend the Registration Statement or supplement the Final Prospectus to comply with the Securities Act, the Company will promptly notify the Representative of such event and will promptly prepare and file with the Commission and furnish, at its own expense, to the Underwriters and the dealers and any other dealers upon request of the Representative, an amendment or supplement which will correct such statement or omission or an amendment which will effect such compliance. Neither the Representative’s consent to, nor the Underwriters’ delivery of, any such amendment or supplement shall constitute a waiver of any of the conditions set forth in Section 7 hereof.
(d) Rule 158. As soon as practicable, but not later than 16 months, after the date of this Agreement, the Company will make generally available to its securityholders an earnings statement covering a period of at least 12 months beginning after the date of this Agreement and satisfying the provisions of Section 11(a) of the Securities Act and Rule 158.
(e) Furnishing of Prospectuses. The Company will furnish to the Representative copies of the Registration Statement, including all exhibits, any Statutory Prospectus, and, so long as a prospectus relating to the Offered Securities is (or but for the exception in Rule 172 would be) required to be delivered under the Securities Act, the Final Prospectus and all amendments and supplements to such documents, in each case as soon as available and in such quantities as the Representative reasonably requests. The Company will pay the expenses of printing and distributing to the Underwriters all such documents.
(f) Blue Sky Qualifications. The Company will arrange for the qualification of the Offered Securities and the Conversion Shares for sale and the determination of their eligibility for investment under the laws of such jurisdictions in the United States and Canada as the Representative designates and will continue such qualifications in effect so long as required for the resale of the Offered Securities by the Underwriters, provided that the Company will not be required to qualify as a foreign corporation or to file a general consent to service of process in any such state.
(g) Reporting Requirements. During the period of three years hereafter, the Company will furnish, upon request, to the Representative and to each of the other Underwriters, as soon as practicable after the end of each fiscal year, a copy of its annual report to shareholders for such year; and the Company will furnish upon request, to the Representative and to each of the other Underwriters (i) as soon as available, a copy of each report and any definitive proxy statement of the Company filed with the Commission under the Exchange Act or mailed to shareholders, and (ii) from time to time, such other information concerning the Company as the Representative may reasonably request provided, that, if the Representative shall request nonpublic confidential information, the Company shall only be required to provide the Representative with such information if the Representative shall enter into a customary confidentiality agreement with the Company with respect thereto. However, so long as the Company is subject to the reporting requirements of either Section 13 or Section 15(d) of the Exchange Act and is timely filing reports with the Commission on its Electronic Data Gathering, Analysis and Retrieval system (“EDGAR”), it is not required to furnish such reports or statements to the Representative or the other Underwriters.
(h) Payment of Expenses. The Company will pay all expenses incidental to the performance of its obligations under this Agreement and the Indenture, including but not limited to (i) all expenses in connection with the execution, issue, authentication, packaging and initial delivery of the Offered Securities, the preparation and printing of this Agreement, the Offered Securities, the Preliminary Prospectus, any other documents comprising any part of the General Disclosure Package, the Final Prospectus, all amendments and supplements thereto, each Issuer Free Writing Prospectus and any other document relating to the issuance, offer, sale and delivery of the Offered Securities; (ii) the cost of any advertising approved by the Company in connection with the issue of the Offered Securities; (iii) any expenses (including reasonable fees and disbursements of counsel to the Underwriters) incurred in connection with qualification of the
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Offered Securities for sale under the laws of such jurisdictions in the United States and Canada as the Representative designates and the preparation and printing of memoranda relating thereto, any fees charged by investment rating agencies for the rating of the Securities, (iv) expenses incurred in distributing the Preliminary Prospectus, any other documents comprising any part of the General Disclosure Package, the Final Prospectus (including any amendments and supplements thereto) and any Issuer Free Writing Prospectus to the Underwriters, (v) expenses incurred from listing of the maximum number of shares of Common Stock issuable upon conversion of the Offered Securities (assuming physical settlement of all conversions and including any shares of Common Stock issuable in connection with a “make-whole adjustment event”, as such term is defined in the Indenture) and the maximum number of shares of Common Stock issuable upon exercise and settlement or termination of the warrants issued pursuant to the Base Warrant Confirmations and any Additional Warrant Confirmations on the NASDAQ Global Select Market, (vi) any fees related to a filing required by the rules of FINRA, (vii) all expenses and application fees incurred in connection with any filing with and clearance of the Offering by FINRA, in an amount not to exceed $25,000, (viii) any fees of legal counsel incurred in connection with Goldman, Sachs & Co.’s acting as the QIU for the Offering, and (ix) the Company’s costs and expenses relating to investor presentations on any “road show” in connection with the offering and sale of the Offered Securities including, without limitation, any travel expenses of the Company’s officers and employees and any other expenses of the Company including the cost of chartering of airplanes (if applicable) and the use of any private aircraft for purposes of the roadshow.
(i) Use of Proceeds. The Company will use the net proceeds received in connection with this offering in the manner described in the “Use of Proceeds” section of the General Disclosure Package and, except as disclosed in the General Disclosure Package, the Company does not intend to use any of the proceeds from the sale of the Offered Securities hereunder to repay any outstanding debt owed to any affiliate of any Underwriter.
(j) Absence of Manipulation. The Company will not take, directly or indirectly, any action designed to or that would constitute or that could reasonably be expected to cause or result in, stabilization or manipulation of the price of any securities of the Company to facilitate the sale or resale of the Offered Securities.
(k) Company Lockup. During the period beginning on the date hereof and continuing to the date that is 90 days after the date of this Agreement, without the prior written consent of the Representative, the Company will not directly or indirectly, sell, offer, contract to sell or otherwise dispose of, except as provided hereunder, any securities of the Company (or guaranteed by the Company) that are substantially similar to the Offered Securities, or any Offered Securities, or grant any option to sell, pledge, transfer or establish an open “put equivalent position” or liquidate or decrease a “call equivalent position” within the meaning of Rule 16a-1(h) under the Exchange Act, or otherwise dispose of or transfer (or enter into any transaction which is designed to, or might reasonably be expected to, result in the disposition of), or announce the offering of, or file any registration statement under the Securities Act in respect of, any shares of Common Stock, options or warrants to acquire shares of the Common Stock or securities exchangeable or exercisable for or convertible into the Offered Securities or shares of Common Stock; provided, however, that the Company may issue shares of its Common Stock or options to purchase its Common Stock, or Common Stock upon exercise of options, pursuant to any stock option, stock bonus or other stock plan or arrangement described in the General Disclosure Package and Final Prospectus, provided, further, that the foregoing shall not apply to (i) the sale of the Offered Securities under this Agreement, the issuance of any shares of Common Stock upon conversion of the Offered Securities or the sale of Common Stock under the Underwriting Agreement dated the date of this Agreement between the Company and Goldman, Sachs & Co. (acting as a representative of several underwriters named in Schedule A thereto) relating to the sale of the Shares and (ii) the entry into, or the issuance by the Company of any shares of Common Stock upon exercise and settlement or termination of, the warrant transactions evidenced by the Warrant Confirmations.
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(l) Listing. The Company will use its commercially reasonable best efforts to effect and maintain the listing of (x) the maximum number of shares of Common Stock issuable upon conversion of the Offered Securities (assuming physical settlement of all conversions and including any shares of Common Stock issuable in connection with a “make-whole adjustment event”, as such term is defined in the Indenture) and (y) the maximum number of shares of Common Stock issuable upon exercise and settlement or termination of the warrants issued pursuant to the Base Warrant Confirmations and any Additional Warrant Confirmations.
(m) Reservation of Conversion Shares. The Company will reserve and keep available at all times, free of preemptive rights, the maximum number of shares of Common Stock issuable upon conversion of the Offered Securities (assuming physical settlement of all conversions and including any shares of Common Stock issuable in connection with a “make-whole adjustment event”, as such term is defined in the Indenture) and the maximum number of shares of Common Stock issuable upon exercise and settlement or termination of the warrants issued pursuant to the Base Warrant Confirmations and any Additional Warrant Confirmations, in each case, on the NASDAQ Global Select Market.
(n) Conversion Rate Adjustments. Between the date hereof and the latest of the Closing Date and any Subsequent Closing Date, the Company will not do or authorize any act or thing that would result in an adjustment to the conversion rate of the Offered Securities.
6. Free Writing Prospectuses. (a) Issuer Free Writing Prospectuses. The Company represents and agrees that, unless it obtains the prior consent of the Representative, and each Underwriter represents and agrees that, unless it obtains the prior consent of the Company and the Representative, it has not made and will not make any offer relating to the Offered Securities that would constitute an Issuer Free Writing Prospectus, or that would otherwise constitute a “free writing prospectus,” as defined in Rule 405, required to be filed with the Commission. Any such free writing prospectus consented to by the Company and the Representative is hereinafter referred to as a “Permitted Free Writing Prospectus.” The Company represents that it has treated and agrees that it will treat each Permitted Free Writing Prospectus as an “issuer free writing prospectus,” as defined in Rule 433, and has complied and will comply with the requirements of Rules 164 and 433 applicable to any Permitted Free Writing Prospectus, including timely Commission filing where required, legending and record keeping.
(b) Term Sheets. The Company will prepare a final term sheet relating to the Offered Securities, containing only information that describes the final terms of the Offered Securities and otherwise in a form consented to by the Representative, and will file such final term sheet within the period required by Rule 433(d)(5)(ii) following the date such final terms have been established for all classes of the offering of the Offered Securities. Any such final term sheet is an Issuer Free Writing Prospectus and a Permitted Free Writing Prospectus for purposes of this Agreement. The Company also consents to the use by any Underwriter of a free writing prospectus that contains only (i)(x) information describing the preliminary terms of the Offered Securities or their offering or (y) information that describes the final terms of the Offered Securities or their offering and that is included in the final term sheet of the Company contemplated in the first sentence of this subsection or (ii) other information that is not “issuer information,” as defined in Rule 433, it being understood that any such free writing prospectus referred to in clause (i) or (ii) above shall not be an Issuer Free Writing Prospectus for purposes of this Agreement.
7. Conditions of the Obligations of the Underwriters. The obligations of the several Underwriters to purchase and pay for the Firm Securities and the Optional Securities, as the case may be, will be subject to the accuracy of the representations and warranties of the Company herein (as though made on the Closing Date), to the accuracy of the statements of officers of the Company made pursuant to the provisions hereof, to the performance by the Company of its obligations hereunder and to the following additional conditions precedent (references to the Closing Date in this Section 7 shall apply to the Subsequent Closing Date, if applicable):
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(a) Accountants’ Comfort Letters. The Representative shall have received letters, dated, respectively, the date hereof on the General Disclosure Package and the Closing Date on the Final Prospectus, of (i) Deloitte & Touche LLP confirming that they are a registered public accounting firm and independent public accountants with respect to the Company within the meaning of the Securities Laws and in form and substance reasonably satisfactory to the Representative (except that, in any letter dated on the Closing Date, the “cut-off” date shall be a date no more than three days prior to such Closing Date) and (ii) BDO USA, LLP confirming that they are independent accountants with respect to the Kay Technology Holdings, Inc. in form and substance reasonably satisfactory to the Representative (except that, in any letter dated on the Closing Date, the “cut-off” date shall be a date no more than three days prior to such Closing Date).
(b) Filing of Prospectus. The Final Prospectus shall have been filed with the Commission in accordance with the Rules and Regulations and Section 5(a) hereof. No stop order suspending the effectiveness of the Registration Statement or of any part thereof shall have been issued and no proceedings for that purpose shall have been instituted or, to the knowledge of the Company or any Underwriter, shall be contemplated by the Commission.
(c) No Material Adverse Change. Subsequent to the execution and delivery of this Agreement, there shall not have occurred (i) any change, or any development or event involving a prospective change, in the financial condition, results of operations, business or properties of the Company and its subsidiaries taken as a whole which, in the judgment of the Representative, is material and adverse and makes it impractical or inadvisable to market the Offered Securities; (ii) any downgrading in the rating of any debt securities or preferred stock of the Company by any “nationally recognized statistical rating organization” (as defined for purposes of Section 3(a)(62) of the Exchange Act), or any public announcement that any such organization has under surveillance or review its rating of any debt securities or preferred stock of the Company (other than an announcement with positive implications of a possible upgrading, and no implication of a possible downgrading, of such rating) or any announcement that the Company has been placed on negative outlook; (iii) any change in U.S. or international financial, political or economic conditions or currency exchange rates or exchange controls the effect of which is such as to make it, in the judgment of the Representative, impractical to market or to enforce contracts for the sale of the Offered Securities, whether in the primary market or in respect of dealings in the secondary market, (iv) any suspension or material limitation of trading in securities generally on the NASDAQ Global Select Market, or any setting of minimum or maximum prices for trading on such exchange; (v) or any suspension of trading of any securities of the Company on the NASDAQ Global Select Market or in the over-the-counter market; (vi) any banking moratorium declared by any U.S. federal or New York authorities; (vii) any major disruption of settlements of securities, payment, or clearance services in the United States or any other country where such securities are listed or (viii) any attack on, outbreak or escalation of hostilities or act of terrorism involving the United States, any declaration of war by Congress or any other national or international calamity or emergency if, in the judgment of the Representative, the effect of any such attack, outbreak, escalation, act, declaration, calamity or emergency is such as to make it in the judgment of the Representative impractical or inadvisable to market the Offered Securities or to enforce contracts for the sale of the Offered Securities.
(d) Opinion of Counsel for Company and General Counsel for Company. The Representative shall have received (i) an opinion, dated the Closing Date, of Jones Day, counsel for the Company, substantially in the form attached as Exhibit G-1 hereto, and (ii) an opinion, dated the Closing Date, of Peter Fante, Chief Legal Officer of the Company, substantially in the form attached as Exhibit G-2 hereto.
(e) Opinion of Counsel for Underwriters. The Representative shall have received from Davis Polk & Wardwell LLP, counsel for the Underwriters, such opinion or opinions, dated the Closing Date, with respect to such matters as the Representative may require, and the Company shall have furnished to such counsel such documents as they request for the purpose of enabling them to pass upon such matters.
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(f) Officers’ Certificate. The Representative shall have received certificates, dated the Closing Date, of an executive officer or president of the Company and a principal financial or accounting officer of the Company in which such officers shall state that the representations and warranties of the Company in this Agreement are true and correct as of such date, that the Company has complied with all agreements and satisfied all conditions on its part to be performed or satisfied hereunder at or prior to the Closing Date; that no stop order suspending the effectiveness of the Registration Statement has been issued and no proceedings for that purpose have been instituted or, to the best of their knowledge and after inquiry, are contemplated by the Commission; and that, subsequent to the dates of the most recent financial statements in the General Disclosure Package, there has been no material adverse change, nor any development or event involving a prospective material adverse change, in the financial condition, results of operations, business or properties of the Company and its subsidiaries taken as a whole except as set forth in the General Disclosure Package or as described in such certificate.
(g) Lockup Letters. On or prior to the date hereof, the Representative shall have received lockup letters in the form of Exhibit E from each of the executive officers and directors of the Company listed on Schedule F.
(h) Listing. An application for the listing of the maximum number of shares of Common Stock for issuance upon conversion of the Offered Securities (assuming physical settlement of all conversions and including any shares of Common Stock issuable in connection with a “make-whole adjustment event”, as such term is defined in the Indenture) and the maximum number of shares of Common Stock issuable upon exercise and settlement or termination of the Base Warrant Confirmations and any Additional Warrant Confirmations, as the case may be, shall have been approved by the NASDAQ Global Select Market, subject, in each case, to official notice of issuance.
Documents described as being “in the agreed form” are documents which are in the forms which have been initialed for the purpose of identification by Davis Polk & Wardwell LLP, copies of which are held by the Company and the Representative, with such changes as the Representative may approve.
The Company will furnish the Representative with such conformed copies of such opinions, certificates, letters and documents as the Underwriters reasonably request. The Representative may in its sole discretion waive on behalf of the Underwriters compliance with any conditions to the obligations of the Underwriters hereunder, whether in respect of a Subsequent Closing Date or otherwise.
8. Indemnification and Contribution. (a) Indemnification of Underwriters. The Company will indemnify and hold harmless each Underwriter, its officers, employees, agents, partners, members, directors and its affiliates and each person, if any, who controls such Underwriter within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act (each, an “Indemnified Party”), against any and all losses, claims, damages or liabilities, joint or several, to which such Indemnified Party may become subject, under the Securities Act, the Exchange Act, other Federal or state statutory law or regulation or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in any part of the Registration Statement at any time, any Statutory Prospectus as of any time, the Final Prospectus or any Issuer Free Writing Prospectus, or arise out of or are based upon the omission or alleged omission of a material fact required to be stated therein or necessary in order to make the statements therein, not misleading and will reimburse each Indemnified Party for any legal or other expenses reasonably incurred by such Indemnified Party in connection with investigating, preparing or defending against any such loss, claim, damage, liability, action, litigation, investigation or proceeding whatsoever (whether or not such Indemnified Party is a party thereto) whether threatened or commenced and in connection with the enforcement of this provision with respect to any of the above as such expenses are incurred; provided, however, that the Company will not be liable in any such case to the extent that any such loss, claim, damage or liability arises out of or is based upon an untrue statement or alleged untrue statement in or omission or alleged omission from any of such documents in reliance upon and in conformity with written information furnished to the Company by any Underwriter specifically for use therein, it being understood and agreed that the only such information consists of the information described as such in subsection (b) below.
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(b) Indemnification of Company. Each Underwriter will severally and not jointly indemnify and hold harmless the Company, each of its directors and officers, each of the Company’s affiliates and each person, if any, who controls the Company within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act (each, an “Underwriter Indemnified Party”), against any losses, claims, damages or liabilities to which such Underwriter Indemnified Party may become subject, under the Securities Act, the Exchange Act, other Federal or state statutory law or regulation or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in any part of the Registration Statement at any time, any Statutory Prospectus as of any time, the Final Prospectus or any Issuer Free Writing Prospectus, or arise out of or are based upon the omission or the alleged omission of a material fact required to be stated therein or necessary in order to make the statements therein not misleading, in each case to the extent, but only to the extent, that such untrue statement or alleged untrue statement or omission or alleged omission was made in reliance upon and in conformity with written information furnished to the Company by such Underwriter specifically for use therein, and will reimburse any legal or other expenses reasonably incurred by such Underwriter Indemnified Party in connection with investigating, preparing or defending against any such loss, claim, damage, liability, action, litigation, investigation or proceeding whatsoever (whether or not such Underwriter Indemnified Party is a party thereto) whether threatened or commenced based upon any such untrue statement or omission, or any such alleged untrue statement or omission as such expenses are incurred, it being understood and agreed that the only such information furnished by any Underwriter consists of the following information in the Preliminary and Final Prospectus furnished on behalf of each Underwriter under the caption “Underwriting (Conflicts of Interest)” in the third, twelfth, thirteenth, fourteenth and fifteenth paragraphs; provided, however, that the Underwriters shall not be liable for any losses, claims, damages or liabilities arising out of or based upon the Company’s failure to perform its obligations under Section 5(a) of this Agreement.
(c) Actions against Parties; Notification. Promptly after receipt by an indemnified party under this Section of notice of the commencement of any action, such indemnified party will, if a claim in respect thereof is to be made against the indemnifying party under subsection (a) or (b) above, notify the indemnifying party of the commencement thereof; but the failure to notify the indemnifying party shall not relieve it from any liability that it may have under subsection (a) or (b) above except to the extent that it has been materially prejudiced (through the forfeiture of substantive rights or defenses) by such failure; and provided further that the failure to notify the indemnifying party shall not relieve it from any liability that it may have to an indemnified party otherwise than under subsection (a) or (b) above. In case any such action is brought against any indemnified party and it notifies the indemnifying party of the commencement thereof, the indemnifying party will be entitled to participate therein and, to the extent that it may wish, jointly with any other indemnifying party similarly notified, to assume the defense thereof, with counsel reasonably satisfactory to such indemnified party (who shall not, except with the consent of the indemnified party, be counsel to the indemnifying party), and after notice from the indemnifying party to such indemnified party of its election so to assume the defense thereof, the indemnifying party will not be liable to such indemnified party under this Section for any legal or other expenses subsequently incurred by such indemnified party in connection with the defense thereof other than reasonable costs of investigation unless (i) the indemnifying person and the indemnified person shall have mutually agreed to the contrary; (ii) the indemnifying person has failed within a reasonable time to retain counsel reasonably satisfactory to the indemnified person; (iii) the indemnified person shall have reasonably concluded that there may be legal defenses available to it that are different from or in addition to those available to the indemnifying person; or (iv) the named parties in any such proceeding (including any impleaded parties) include both the indemnifying person and the indemnified person and representation of both parties by the same counsel would be inappropriate due to actual or potential differing interest between them. No indemnifying party shall, without the prior written consent of the indemnified party, effect any settlement of any pending or threatened action in respect of which any indemnified party is or could have been a party and indemnity could have been sought hereunder by such indemnified party unless such settlement (i) includes an unconditional release of such indemnified party from all liability on any claims that are the subject matter of such action and (ii) does not include a statement as to or an admission of fault, culpability or failure to act by or on behalf of any indemnified party.
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(d) Contribution. If the indemnification provided for in this Section is unavailable or insufficient to hold harmless an indemnified party under subsection (a) or (b) above, then each indemnifying party shall contribute to the amount paid or payable by such indemnified party as a result of the losses, claims, damages or liabilities referred to in subsection (a) or (b) above (i) in such proportion as is appropriate to reflect the relative benefits received by the Company on the one hand and the Underwriters on the other from the offering of the Offered Securities or (ii) if the allocation provided by clause (i) above is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above but also the relative fault of the Company on the one hand and the Underwriters on the other in connection with the statements or omissions which resulted in such losses, claims, damages or liabilities as well as any other relevant equitable considerations. The relative benefits received by the Company on the one hand and the Underwriters on the other shall be deemed to be in the same proportion as the total net proceeds from the offering (before deducting expenses) received by the Company bear to the total discounts and commissions received by the Underwriters from the Company under this Agreement. The relative fault shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company or the Underwriters and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such untrue statement or omission. The amount paid by an indemnified party as a result of the losses, claims, damages or liabilities referred to in the first sentence of this subsection (d) shall be deemed to include any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any action or claim which is the subject of this subsection (d). Notwithstanding the provisions of this subsection (d), no Underwriter shall be required to contribute any amount in excess of the amount by which the total price at which the Offered Securities underwritten by it and distributed to the public were offered to the public exceeds the amount of any damages which such Underwriter has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. The Underwriters’ obligations in this subsection (d) to contribute are several in proportion to their respective underwriting obligations and not joint. The Company and the Underwriters agree that it would not be just and equitable if contribution pursuant to this Section 8(d) were determined by pro rata allocation (even if the Underwriters were treated as one entity for such purpose) or by any other method of allocation which does not take account of the equitable considerations referred to in this Section 8(d). No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation.
9. Indemnification of QIU. (a) The Company will indemnify and hold harmless Goldman, Sachs & Co., in its capacity as QIU, against any and all losses, claims, damages or liabilities, joint or several, to which the QIU may become subject, under the Securities Act, the Exchange Act, other Federal or state statutory law or regulation or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon (i) any untrue statement or alleged untrue statement of any material fact contained in any part of Preliminary Prospectus, the Registration Statement at any time, any Statutory Prospectus, or any Issuer Free Writing Prospectus, or arise out of or are based upon the omission or alleged omission of a material fact required to be stated therein or necessary in order to make the statements therein not misleading, or (ii) any act or omission to act or any alleged act or omission to act by Goldman, Sachs & Co. as QIU in connection with any transaction contemplated by this Agreement or undertaken in preparing for the purchase, sale and delivery of the Offered Securities, and will reimburse the QIU for any legal or other expenses reasonably incurred by the QIU in connection with investigating or defending any such action or claim as such expenses are incurred, except as to this clause (ii) to the extent that any such loss, claim, damage, liability, or expense results from the gross negligence or bad faith of Goldman, Sachs & Co. in performing the services as QIU.
(b) Promptly after receipt by the QIU under subsection (a) above of notice of the commencement of any action, the QIU shall, if a claim in respect thereof is to be made against the Company under such subsection, notify the Company of the commencement thereof; but the failure to notify the Company shall not relieve it from any liability which it may have to the QIU under such
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subsection except to the extent that it has been materially prejudiced (through the forfeiture of substantive rights or defenses) by such failure; and provided further that the failure to notify the Company shall not relieve it from any liability that it may have to the QIU otherwise than under such subsection. In case any such action shall be brought against the QIU and it shall notify the Company of the commencement thereof, the Company shall be entitled to participate therein and, to the extent that it shall wish to assume the defense thereof, with counsel reasonably satisfactory to the QIU (who shall not, except with the consent of the QIU, be counsel to the Company), and, after notice from the Company to the QIU of its election so to assume the defense thereof, the Company will not be liable to the QIU under such subsection for any legal expenses of other counsel or any other expenses, in each case subsequently incurred by the QIU, in connection with the defense thereof other than reasonable costs of investigation unless (i) the Company and the QIU shall have mutually agreed to the contrary; (ii) the Company has failed within a reasonable time to retain counsel reasonably satisfactory to the QIU; (iii) the QIU shall have reasonably concluded that there may be legal defenses available to it that are different from or in addition to those available to the Company; or (iv) the named parties in any such proceeding (including any impleaded parties) include both the Company and the QIU and representation of both parties by the same counsel would be inappropriate due to actual or potential differing interest between them. The Company shall not, without the prior written consent of the QIU, effect any settlement of any pending or threatened action in respect of which indemnification or contribution could have been sought hereunder (whether or not the QIU is an actual or potential party to such action or claim) unless such settlement (i) includes an unconditional release of the QIU from all liability on any claims that are the subject matter of such action and (ii) does not include a statement as to or an admission of fault, culpability or failure to act, by or on behalf of QIU.
(c) If the indemnification provided for in this Section 9 is unavailable or insufficient to hold harmless Goldman, Sachs & Co., in its capacity as QIU, under subsection (a) above, then the Company shall contribute to the amount paid or payable by the QIU as a result of the losses, claims, damages or liabilities (or actions in respect thereof) in such proportion as is appropriate to reflect the relative benefits received by the Company on the one hand and the QIU on the other from the offering of the Offered Securities. If, however, the allocation provided by the immediately preceding sentence is not permitted by applicable law, then the Company shall contribute to such amount paid or payable by the QIU in such proportion as is appropriate to reflect not only such relative benefits but also the relative fault of the Company on the one hand and the QIU on the other in connection with the statements or omissions or actions which resulted in such losses, claims, damages or liabilities, as well as any other relevant equitable considerations. The relative benefits received by the Company on the one hand and the QIU on the other shall be deemed to be in the same proportion as the total net proceeds from the offering (before deducting expenses) received by the Company, bear to the fee payable to the QIU pursuant to this Agreement in its capacity as a QIU. The relative fault shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company on the one hand or the QIU on the other and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such untrue statement or omission. The Company and the QIU agree that it would not be just and equitable if contributions pursuant to this subsection (c) were determined by pro rata allocation or by any other method of allocation which does not take account of the equitable considerations referred to above in this subsection (c). The amount paid or payable by the QIU as a result of the losses, claims, damages or liabilities referred to above in this subsection (c) shall be deemed to include any legal or other expenses reasonably incurred by the QIU in connection with investigating or defending any such action or claim. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation.
(d) The obligations of the Company under this Section 9 shall be in addition to any liability which the Company may otherwise have and shall extend, upon the same terms and conditions, to each person, if any, who controls the QIU within the meaning of the Act.
10. Default of Underwriters. If any Underwriter or Underwriters default in their obligations to purchase Offered Securities hereunder on either the Closing Date or any Subsequent Closing Date and the aggregate principal amount of Offered Securities that such defaulting Underwriter or Underwriters agreed but failed to purchase does not exceed 10% of the total principal amount of Offered Securities that the
22
Underwriter or Underwriters are obligated to purchase on such Closing Date, the Representative may make arrangements satisfactory to the Company for the purchase of such Offered Securities by other persons, including any of the Underwriters, but if no such arrangements are made by the Closing Date or Subsequent Closing Date, as applicable, the non-defaulting Underwriters shall be obligated severally, in proportion to their respective commitments hereunder, to purchase the Offered Securities that such defaulting Underwriters agreed but failed to purchase. If any Underwriter or Underwriters so default and the aggregate principal amount of Offered Securities with respect to which such default or defaults occur exceeds 10% of the total principal amount of Offered Securities that the Underwriters are obligated to purchase on such Closing Date and arrangements satisfactory to the Representative and the Company for the purchase of such Offered Securities by other persons are not made within 36 hours after such default, this Agreement will terminate without liability on the part of any non-defaulting Underwriter or the Company, except as provided in Section 11 (provided that if such default occurs with respect to Optional Securities after the Closing Date, this Agreement will not terminate as to the Firm Securities or any Optional Securities purchased prior to such termination). As used in this Agreement, the term “Underwriter” includes any person substituted for an Underwriter under this Section. Nothing herein will relieve a defaulting Underwriter from liability for its default.
11. Survival of Certain Representations and Obligations. The respective indemnities, rights of contribution, agreements, representations, warranties and other statements of the Company or its officers and of the several Underwriters set forth in or made pursuant to this Agreement will remain in full force and effect, regardless of any investigation, or statement as to the results thereof, made by or on behalf of any Underwriter, the Company, or any of their respective representatives, officers or directors or any controlling person, and will survive delivery of and payment for the Offered Securities. If this Agreement is terminated pursuant to Section 9 or if for any reason the purchase of the Offered Securities by the Underwriters is not consummated, the Company shall remain responsible for the expenses to be paid or reimbursed by it pursuant to Section 5 and the respective obligations of the Company and the Underwriters pursuant to Section 8 shall remain in effect. If the purchase of the Offered Securities by the Underwriters is not consummated for any reason other than solely because of the termination of this Agreement pursuant to Section 10, the Company will reimburse the Underwriters for all out-of-pocket expenses (including reasonable fees and disbursements of counsel) reasonably incurred by them in connection with the offering of the Offered Securities, except as otherwise agreed by the Company and any of the Underwriters in writing.
12. Notices. All communications hereunder will be in writing and, if sent to the Underwriters will be mailed, delivered or telegraphed and confirmed to the Underwriters, c/o Deutsche Bank Securities Inc., 60 Wall Street, New York, New York 10005, Attention: Equity Capital Markets – Syndicate Desk, fax: (212) ###-###-####, with a copy to Deutsche Bank Securities Inc., 60 Wall Street, 36th Floor, New York, New York 10005, Attention: General Counsel, fax: (212) ###-###-####; or, if sent to the Company, will be mailed, delivered or e-mailed and confirmed to it at Verint Systems Inc., 330 South Service Road, Melville, New York 11747, Attention: Alan Roden, Corporate Treasurer, ***@***; provided, however, that any notice to an Underwriter pursuant to Section 8 will be mailed, delivered or telegraphed and confirmed to such Underwriter.
13. Successors. This Agreement will inure to the benefit of and be binding upon the parties hereto and their respective successors and the officers, employees, agents, partners, members, directors, affiliates and controlling persons referred to in Section 8, and no other person will have any right or obligation hereunder.
14. Representation of Underwriters. The Representative will act for the several Underwriters in connection with this offering, and, except as otherwise specified in another section of this Agreement, any action under this Agreement taken by the Representative will be binding upon all the Underwriters.
15. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original, but all such counterparts shall together constitute one and the same Agreement.
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16. Absence of Fiduciary Relationship. The Company acknowledges and agrees that:
(a) No Other Relationship. The Representative has been retained solely to act as an underwriter in connection with the sale of the Offered Securities and that no fiduciary, advisory or agency relationship between the Company and the Representative has been created in respect of any of the transactions contemplated by this Agreement or the Preliminary Prospectus or Final Prospectus, irrespective of whether the Representative has advised or is advising the Company on other matters;
(b) Arms’-Length Negotiations. The price of the Offered Securities set forth in this Agreement was established by the Company following discussions and arms’-length negotiations with the Representative and the Company is capable of evaluating and understanding and understands and accepts the terms, risks and conditions of the transactions contemplated by this Agreement;
(c) Absence of Obligation to Disclose. The Company has been advised that the Representative and its affiliates are engaged in a broad range of transactions which may involve interests that differ from those of the Company and that the Representative has no obligation to disclose such interests and transactions to the Company by virtue of any fiduciary, advisory or agency relationship; and
(d) Waiver. The Company waives, to the fullest extent permitted by law, any claims it may have against the Representative for breach of fiduciary duty or alleged breach of fiduciary duty and agrees that the Representative shall have no liability (whether direct or indirect) to the Company in respect of such a fiduciary duty claim or to any person asserting a fiduciary duty claim on behalf of or in right of the Company, including stockholders, employees or creditors of the Company.
17. Applicable Law. This Agreement and any claim, controversy or dispute arising under or relating to this Agreement shall be governed by, and construed in accordance with, the laws of the State of New York.
The Company hereby submits to the non-exclusive jurisdiction of the Federal and state courts in the Borough of Manhattan in The City of New York in any suit or proceeding arising out of or relating to this Agreement or the transactions contemplated hereby. The Company irrevocably and unconditionally waives any objection to the laying of venue of any suit or proceeding arising out of or relating to this Agreement or the transactions contemplated hereby in Federal and state courts in the Borough of Manhattan in The City of New York and irrevocably and unconditionally waives and agrees not to plead or claim in any such court that any such suit or proceeding in any such court has been brought in an inconvenient forum.
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If the foregoing is in accordance with the Representative’s understanding of our agreement, kindly sign and return to us one of the counterparts hereof, whereupon it will become a binding agreement between the Company and the several Underwriters in accordance with its terms.
| Very truly yours, | ||
| Verint Systems Inc. | ||
| By: | /s/ Peter Fante | |
| Name: Peter Fante | ||
| Title: Chief Legal Officer | ||
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| The foregoing Underwriting Agreement | ||||
| is hereby confirmed and accepted as of the date first above written. | ||||
| DEUTSCHE BANK SECURITIES INC. | ||||
| By: | /s/ Andrew Yaeger | |||
| Name: Andrew Yaeger | ||||
| Title: Managing Director | ||||
| By: | /s/ Faiz Khan | |||
| Name: Faiz Khan | ||||
| Title: Director | ||||
| Acting on behalf of itself and as the Representative of the several Underwriters | ||||
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SCHEDULE A
| Underwriter | Principal Amount of Firm Securities | |||
| Deutsche Bank Securities Inc. | $ | 133,529,000 | ||
| Credit Suisse Securities (USA) LLC | 47,059,000 | |||
| Goldman, Sachs & Co | 47,059,000 | |||
| RBC Capital Markets, LLC | 47,059,000 | |||
| Barclays Capital Inc. | 37,647,000 | |||
| HSBC Securities (USA) Inc | 37,647,000 | |||
|
|
| |||
| Total | $ | 350,000,000 | ||
|
|
| |||
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SCHEDULE B
1. General Use Free Writing Prospectuses (included in the General Disclosure Package)
“General Use Issuer Free Writing Prospectus” includes each of the following documents:
1. Free writing prospectus dated June 9, 2014 (launch press release)
2. Free writing prospectus, dated June 12, 2014 (final term sheet), a copy of which is attached hereto as Exhibit C
3. Free writing prospectus, dated June 12, 2014 (pricing press release)
2. Other Information Included in the General Disclosure Package
The following information is also included in the General Disclosure Package:
None
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EXHIBIT C
Pricing Term Sheet
29
Free Writing Prospectus
Filed Pursuant to Rule 433
Registration Statement No. 333-196612
Supplementing the
Preliminary Prospectus Supplements dated June 9, 2014
(to Prospectus dated June 9, 2014)
PRICING TERM SHEET
Dated as of June 12, 2014
Verint Systems Inc.
5,000,000 Common Shares
and
$350,000,000 1.50% Convertible Senior Notes due 2021
The information in this pricing term sheet relates to offerings by Verint Systems Inc. of 5,000,000 shares of its common stock (the “Shares”) and its 1.50% Convertible Senior Notes due 2021(the “Notes”) and should be read together with the applicable preliminary prospectus supplement dated June 9, 2014 (including the documents incorporated by reference therein and the base prospectus dated June 9, 2014 in respect thereof) relating to such offerings. The information in this pricing term sheet supersedes the information in the preliminary prospectus supplements to the extent that it is inconsistent therewith. Terms used but not defined herein have the meanings ascribed to them in the applicable preliminary prospectus supplement.
The offering of the Shares and the offering of the Notes are separate offerings that are being made pursuant to separate prospectus supplements. The closing of the offering of the Shares is not conditioned upon the closing of the offering of the Notes, and the closing of the offering of the Notes is not conditioned upon the closing of the offering of the Shares.
5,000,000 Common Shares
| Issuer: | Verint Systems Inc. | |||
| NASDAQ Symbol: | VRNT | |||
| Shares Offered: | 5,000,000 shares of common stock (excluding option to purchase 750,000 additional shares) | |||
| Price to Public: | $47.75 per share | |||
| Net Proceeds: | Approximately $230.69 million (or approximately $265.29 million if the underwriters exercise their option to purchase additional shares in full) after deducting underwriting discounts and commissions, but without giving effect to the cost of the convertible note hedge transactions, the proceeds from the warrant transactions or other offering expenses. | |||
| Closing Date: | June 18, 2014 | |||
| Use of Proceeds: | The Issuer intends to use the net proceeds from the sale of the Shares, together with proceeds from the Notes offering, to repay a portion of the outstanding indebtedness under the Issuer’s existing credit facilities and to pay the net cost of the convertible note hedge transactions related to the offering of Notes. | |||
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| Joint Book-Running Managers: | Goldman, Sachs & Co. Deutsche Bank Securities Inc. Credit Suisse Securities (USA) LLC J.P. Morgan Securities LLC RBC Capital Markets, LLC Barclays Capital Inc. Jefferies LLC | |||
| Co-Managers: | FBR Capital Markets & Co. Oppenheimer & Co. Inc. Imperial Capital, LLC | |||
| $350,000,000 1.50% Convertible Senior Notes due 2021 | ||||
| Issuer: | Verint Systems Inc. | |||
| NASDAQ Symbol: | VRNT | |||
| Securities Offered: | 1.50% Convertible Senior Notes due 2021 | |||
| Offering Size: | $350,000,000 aggregate principal amount (or $400,000,000 aggregate principal amount if the underwriters exercise their option to purchase additional Notes in full) | |||
| Public Offering Price: | 100% of the principal amount, plus accrued interest, if any, from the Settlement Date | |||
| Underwriting Discount: | 2.125% of the principal amount | |||
| Net Proceeds: | Approximately $342.56 million (or $391.50 million if the underwriters exercise their option to purchase additional Notes in full) after deducting underwriting discounts and commissions, but without giving effect to the cost of the convertible note hedge transactions, the proceeds from the warrant transactions or other offering expenses. | |||
| Use of Proceeds: | The Issuer also intends to use approximately $13.7 million of the net proceeds from the Notes offering to pay the cost of the convertible note hedge transactions described below (after such cost is partially offset by the proceeds to the Issuer from the sale of the warrant transactions described below). The Issuer intends to use the remainder of the net proceeds from the Notes offering, together with the proceeds from the offering of Shares, to repay a portion of the outstanding indebtedness under its existing credit facilities. If the underwriters exercise their option to purchase additional Notes, the Issuer may sell additional warrants and use a portion of the proceeds from the sale of the additional Notes, together with the proceeds from the sale of the additional warrants, to enter into additional convertible note hedge transactions. See “Use of Proceeds” in the preliminary prospectus supplement for the Notes. | |||
| Maturity: | June 1, 2021, unless earlier purchased, redeemed or converted | |||
| Interest Rate: | 1.50% per annum payable semiannually in arrears in cash | |||
| Interest Payment Dates: | June 1 and December 1, beginning December 1, 2014 | |||
| No Redemption: | The Issuer may not redeem the Notes prior to the maturity date. No sinking fund is provided for the Notes. | |||
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| Convertible Note Hedge and Warrant | ||||
| Transactions: | In connection with the pricing of the Notes, the Issuer is entering into convertible note hedge transactions with one or more financial institutions, including certain of the underwriters or their affiliates (the “Option Counterparties”). The Issuer is also entering into warrant transactions with the Option Counterparties. The convertible note hedge transactions are expected to reduce potential dilution to the Issuer’s common stock and/or offset potential cash payments in excess of the principal amount of converted Notes upon any conversion of Notes. However, the warrant transactions could separately have a dilutive effect to the extent that the market value per share of the Issuer’s common stock exceeds the applicable strike price of the warrants. If the underwriters exercise their option to purchase additional Notes, the Issuer may enter into additional convertible note hedge transactions and additional warrant transactions. | |||
| NASDAQ Last Reported Sale Price on June 12, 2014: | $48.28 per share of the common stock | |||
| Initial Conversion Rate: | 15.5129 shares of common stock per $1,000 principal amount of Notes | |||
| Initial Conversion Price: | Approximately $64.46 per share of common stock | |||
| Conversion Premium: | Approximately 35% above the Price to Public of the Shares | |||
| Make-Whole Premium Upon Conversion Upon a Make-Whole | ||||
| Adjustment Event: | If certain corporate events as described in the preliminary prospectus supplement for the Notes occur at any time prior to the maturity date, each of which is referred to as a “make-whole adjustment event,” the conversion rate for any Notes converted following such make-whole adjustment event will, in certain circumstances and for a limited period of time, be increased by a number of additional shares of common stock. The number of additional shares will be determined by reference to the following table and is based on the effective date of such make-whole adjustment event and the applicable “stock price” (as defined in the preliminary prospectus supplement for the Notes) per share of common stock for the make-whole adjustment event: | |||
| Stock Price | ||||||||||||||||||||||||||||||||||||||||||||||||
| Effective Date | $ | 47.75 | $ | 54.00 | $ | 60.00 | $ | 64.46 | $ | 70.00 | $ | 75.00 | $ | 85.00 | $ | 105.00 | $ | 130.00 | $ | 165.00 | $ | 205.00 | $ | 250.00 | ||||||||||||||||||||||||
| June 18, 2014 | 5.4295 | 4.2375 | 3.3793 | 2.8822 | 2.3881 | 2.0311 | 1.4972 | 0.8613 | 0.4616 | 0.2023 | 0.0748 | 0.0159 | ||||||||||||||||||||||||||||||||||||
| June 1, 2015 | 5.4295 | 4.3054 | 3.3975 | 2.8749 | 2.3590 | 1.9888 | 1.4413 | 0.8032 | 0.4154 | 0.1735 | 0.0595 | 0.0096 | ||||||||||||||||||||||||||||||||||||
| June 1, 2016 | 5.4295 | 4.3431 | 3.3809 | 2.8314 | 2.2933 | 1.9111 | 1.3535 | 0.7225 | 0.3560 | 0.1392 | 0.0429 | 0.0038 | ||||||||||||||||||||||||||||||||||||
| June 1, 2017 | 5.4295 | 4.3432 | 3.3211 | 2.7432 | 2.1834 | 1.7908 | 1.2291 | 0.6188 | 0.2863 | 0.1034 | 0.0277 | 0.0004 | ||||||||||||||||||||||||||||||||||||
| June 1, 2018 | 5.4295 | 4.2633 | 3.1747 | 2.5677 | 1.9890 | 1.5910 | 1.0383 | 0.4752 | 0.1988 | 0.0633 | 0.0126 | 0.0000 | ||||||||||||||||||||||||||||||||||||
| June 1, 2019 | 5.4295 | 4.0035 | 2.8499 | 2.2213 | 1.6385 | 1.2515 | 0.7431 | 0.2849 | 0.1011 | 0.0273 | 0.0021 | 0.0000 | ||||||||||||||||||||||||||||||||||||
| June 1, 2020 | 5.4295 | 3.5567 | 2.2995 | 1.6447 | 1.0744 | 0.7266 | 0.3310 | 0.0772 | 0.0216 | 0.0055 | 0.0000 | 0.0000 | ||||||||||||||||||||||||||||||||||||
| June 1, 2021 | 5.4295 | 3.0056 | 1.1538 | 0.0000 | 0.0000 | 0.0000 | 0.0000 | 0.0000 | 0.0000 | 0.0000 | 0.0000 | 0.0000 | ||||||||||||||||||||||||||||||||||||
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| The exact stock prices and effective dates may not be set forth in the table above, in which case if the stock price is:
• between two stock prices in the table or the effective date is between two effective dates in the table, the number of additional shares will be determined by a straight-line interpolation between the number of additional shares set forth for the higher and lower stock prices and the earlier and later effective dates, as applicable, based on a 365-day year;
• in excess of $250.00 per share (subject to adjustment), no additional shares will be added to the conversion rate; and
• less than $47.75 per share (subject to adjustment), no additional shares will be added to the conversion rate.
Notwithstanding the foregoing, the Issuer may not increase the conversion rate to more than 20.9424 shares per $1,000 principal amount of Notes, though the Issuer will adjust such number of shares for the same events for which the Issuer must adjust the conversion rate as described under “Description of Notes—Conversion of Notes—Conversion Rate Adjustments” in the preliminary prospectus supplement for the Notes. | ||||
| Trade Date: | June 13, 2014 | |||
| Settlement Date: | June 18, 2014 | |||
| CUSIP/ISIN: | 92343X AA8 / US92343XAA81 | |||
| Joint Book-Running Managers: | Deutsche Bank Securities Inc. Goldman, Sachs & Co. Credit Suisse Securities (USA) LLC RBC Capital Markets, LLC Barclays Capital Inc. HSBC Securities (USA) Inc. | |||
Pro Forma Ratio of Earnings to Fixed Charges
Because the proceeds of the Notes offering will be used to repay indebtedness and the Issuer’s ratio of earnings to fixed charges would change by ten percent or more, the Issuer’s pro forma ratios of earnings to fixed charges and earnings to fixed charges and preference security dividends for the periods indicated are presented below. The disclosure in the Preliminary Prospectus Supplement is supplemented by the following:
| Three Months Ended April 30, 2014 | Fiscal Year Ended January 31, 2014 | |||||
| Pro forma ratio of earnings to fixed charges (1) | (A) | 3.5x | ||||
| Pro forma ratio of earnings to fixed charges and preference security dividends (1) | (A) | 3.5x | ||||
| (1) | The pro forma ratios of earnings to fixed charges and earnings to fixed charges and preference security dividends reflect the assumed issuance of the Notes offered hereby on the first day of the applicable period and the use of proceeds therefrom to repay a portion of the outstanding indebtedness under the Issuer’s existing credit facilities, as described in “Use of Proceeds.” The pro forma ratios also reflect amortization of deferred financing costs and cash interest payments that the Issuer would have paid on the Notes. Accordingly, these pro forma ratios do not reflect the additional interest expense the Issuer would have incurred for accounting purposes as a result of separating the Notes into liability and equity components and amortizing the deemed debt discount into interest expense over the term of the notes in accordance with ASC 470-20. |
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| (A) | Pro forma earnings were insufficient to cover pro forma fixed charges for this period. The amount of the coverage deficiency was $11.2 million. The Issuer had no outstanding preferred stock during the three months ended April 30, 2014, so the pro forma fixed charges and preference security dividends coverage deficiency for that period is identical to the coverage deficiency for pro forma fixed charges. |
The Issuer has filed a registration statement, including a prospectus, and preliminary prospectus supplements with the Securities and Exchange Commission, or SEC, for the offerings to which this communication relates. Before you invest, you should read the prospectus and preliminary prospectus supplements in that registration statement and other documents the Issuer has filed with the SEC for more complete information about the Issuer and these offerings. You may obtain these documents for free by visiting EDGAR on the SEC Web site at www.sec.gov. Alternatively, the prospectus, the preliminary prospectus supplements, and the final prospectus supplements when available, may be obtained by contacting, in respect of the Shares offering, Goldman, Sachs & Co., Prospectus Department, 200 West Street, New York, NY 10282, by calling ###-###-####, or by emailing ***@***, or, in respect of the Notes offering, by contacting Deutsche Bank Securities Inc., Attn: Prospectus Group, 60 Wall Street, New York, New York 10005-2836, by calling toll-free (800) ###-###-####, or by emailing ***@***.
ANY DISCLAIMERS OR OTHER NOTICES THAT MAY APPEAR BELOW ARE NOT APPLICABLE TO THIS COMMUNICATION AND SHOULD BE DISREGARDED. SUCH DISCLAIMERS OR OTHER NOTICES WERE AUTOMATICALLY GENERATED AS A RESULT OF THIS COMMUNICATION BEING SENT VIA BLOOMBERG OR ANOTHER EMAIL SYSTEM.
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SCHEDULE D
Changes in the Company’s subsidiaries since January 31, 2014
New Subsidiaries of the Company
| Name | Jurisdiction of Incorporation | |
| Broadbase Software, Inc. | Delaware | |
| Ciboodle Customer Interaction Solutions South Africa (PTY) Ltd. | South Africa | |
| Ciboodle Inc. | Delaware | |
| Ciboodle Ireland Ltd. | Ireland | |
| Ciboodle (Land and Estates) Ltd. | United Kingdom | |
| Ciboodle Ltd. | United Kingdom | |
| Ciboodle PTY Ltd. | Australia | |
| Edgar Acquisition Company Limited | United Kingdom | |
| Graham Technology BV | Netherlands | |
| Graham Technology Ltd | United Kingdom | |
| KANA Benelux BV | Netherlands | |
| KANA Software BV | Netherlands | |
| KANA Software Canada, Ltd | Canada | |
| KANA Software, Inc. | Delaware | |
| KANA Software Ireland Limited | Ireland | |
| KANA Software Ireland No. 2 Limited | Ireland | |
| KANA Software KK | Japan | |
| KANA Software Limited | United Kingdom | |
| KANA Solutions Limited | United Kingdom | |
| KAY Technology Holdings, Inc. | Delaware | |
| Lagan Technologies (Canada) Inc. | Canada | |
| Lagan Technologies, Inc. | Delaware | |
| Lagan Technologies Limited | United Kingdom | |
| Overtone, Inc. | Delaware | |
| Permadeal Limited | Cyprus | |
| PT Ciboodle Indonesia | Indonesia | |
| Sword Soft, Inc. | Delaware | |
| Teletrain Verint B.V. | Netherlands | |
| Triniventures BV | Netherlands | |
| Trinicom Belgie NV | Belgium | |
| Trinicom Duetschland Gmbh | Germany | |
| Trinicom UK Ltd | United Kingdom | |
| UTX Technologies Limited | Cyprus | |
| Verint Acquisition LLC | Delaware | |
| Verint Systems Holdings B.V. | Netherlands | |
| Verint Systems Taiwan Ltd. | Taiwan, ROC |
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Entities that have ceased to be the Company’s subsidiaries
| Name | Jurisdiction of Incorporation or Organization | |
| Global Management Technologies Europe Limited | United Kingdom | |
| Iontas Inc. | Delaware | |
| Rontal USA Inc. | Delaware | |
| Verint Blue Pumpkin Software LLC | Delaware |
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EXHIBIT E
Form of Lockup Letter
June , 2014
Deutsche Bank Securities Inc.
60 Wall Street
New York, New York 10005
as the Representative as the term is defined in the Underwriting Agreement relating to the Offering
| Re: | Verint Systems Inc. (the “Company”) |
Ladies and Gentlemen:
The undersigned is an owner of record or beneficially of certain shares of common stock of the Company, $0.001 par value (“Common Stock”) or securities convertible into or exchangeable or exercisable for Common Stock. The Company proposes to carry out an offering of Convertible Notes, which will be convertible into Common Stock (the “Offering”), for which you will act as the representative of the underwriters (in such capacity, the “Representative”). The undersigned recognizes that the Offering will be of benefit to the undersigned and will benefit the Company. The undersigned acknowledges that you and the other underwriters are relying on the representations and agreements of the undersigned contained in this letter in carrying out the Offering and in entering into purchase arrangements with the Company with respect to the Offering.
In consideration of the foregoing, the undersigned hereby agrees that the undersigned will not, (and will cause any spouse or immediate family member of the spouse or the undersigned living in the undersigned’s household not to), without the prior written consent of Deutsche Bank Securities Inc. (which consent may be withheld in its sole discretion), directly or indirectly, sell, offer, contract or grant any option to sell (including without limitation any short sale), pledge, transfer, establish an open “put equivalent position” or liquidate or decrease a “call equivalent position” within the meaning of Rule 16a-1(h) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise dispose of or transfer (or enter into any transaction which is designed to, or might reasonably be expected to, result in the disposition of) including the filing (or participation in the filing of) of a registration statement with the Securities and Exchange Commission in respect of, any shares of Common Stock, options or warrants to acquire shares of Common Stock, or securities exchangeable or exercisable for or convertible into shares of Common Stock (collectively, the “Lock-Up Securities”) currently or hereafter owned either of record or beneficially (as defined in Rule 13d-3 under the Exchange Act) by the undersigned (or such spouse or family member), or publicly announce an intention to do any of the foregoing, for a period commencing on the date hereof and continuing through the close of trading on the date 60 days after the date of the final prospectus supplement for the Offering (the “Lock-Up Period”), except (A) any transfer of Lock-Up Securities pursuant to a sale of 100% of the outstanding shares of Common Stock (including, without limitation, a tender offer or by way of merger of the Company with another person) to a third party or group of third parties that are not affiliates of the Company, provided that the opportunity to participate in such sale, tender offer, merger or other such transaction is offered to all holders of shares of Common Stock or, with respect to any statutory merger of consolidation in which the Company is a constituent company, the participation of holders of shares of Common Stock is not voluntary (or is otherwise pursuant to an exercise of dissenters’ rights applicable to any such statutory merger or consolidation); (B) any sale or transfer of Lock-Up Securities up to, in the aggregate, the lesser of (i) 10,000 shares of Common Stock or (ii) 10% of the shares of Common Stock beneficially owned by the undersigned as of the date hereof (as determined in accordance with Rule 13d-3 of the Exchange Act); (C) any transfer of Lock-Up Securities as a bona fide gift, (D) any transfer of Lock-Up Securities to a trust for the benefit of the undersigned and/or any “immediate family member” (as defined in Rule 16a-1 under the Exchange Act) of the undersigned,
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(E) the exercise of any option to purchase Lock-Up Securities that was granted under and in accordance with any Company employee benefit plan, qualified stock option plan or other director or employee compensation plan, or any agreement existing pursuant to such a plan, including the transfer to the Company of Lock-Up Securities underlying such options solely to pay the exercise price or any withholding taxes in connection with the exercise thereof on a “cashless” or net settlement basis (it being understood that such purchased Lock-Up Securities, after giving effect to the “cashless” or net settlement exercise of options, shall remain subject to this agreement), (F) any transfer to the Company of Lock-Up Securities underlying restricted stock and restricted stock unit grants solely to pay any withholding taxes in connection with the scheduled vesting thereof on a “cashless” or net settlement basis and (G) the sale of any Lock-Up Securities acquired by the undersigned in the open market; provided that, in the case of any transfer pursuant to clause (C) or (D), (x) the transferee agrees in writing to be bound by the terms of this agreement, (y) such transfer does not require any filing by the undersigned under the Exchange Act and (z) no voluntary filing relating to such transfer may be made by the undersigned other than a filing on a Form 5 made after the expiration of the Lock-Up Period. The foregoing shall not apply to transfers or sales of Common Stock pursuant to any contract, instruction or plan, including a contract, instruction or plan complying with Rule 10b5-1 of the Exchange Act, that has been entered into by the undersigned prior to the date of this agreement.
The undersigned also agrees and consents to the entry of stop transfer instructions with the Company’s transfer agent and registrar against the transfer of shares of Common Stock or securities convertible into or exchangeable or exercisable for Common Stock held by the undersigned except in compliance with the foregoing restrictions.
This agreement is irrevocable and will be binding on the undersigned and the respective successors, heirs, personal representatives, and assigns of the undersigned.
| Very truly yours, |
| Name: |
| Title: |
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SCHEDULE F
The Officers and Directors of the Company subject to a Lockup Agreement
| Name | Position | |
| Dan Bodner | President, Chief Executive Officer, Corporate Officer, and Director | |
| Victor DeMarines | Chairman of the Board | |
| John Egan | Director | |
| Larry Myers | Director | |
| Richard Nottenburg | Director | |
| Howard Safir | Director | |
| Earl Shanks | Director | |
| Douglas Robinson | Chief Financial Officer and Corporate Officer | |
| Elan Moriah | President, Enterprise Intelligence Solutions and Video and Situation Intelligence Solutions and Corporate Officer | |
| Meir Sperling | Chief Strategy Officer and Corporate Officer | |
| Peter Fante | Chief Legal Officer, Chief Compliance Officer, and Corporate Officer | |
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