Edgar Filing: VERINT SYSTEMS INC

SCHEDULE 14A
(RULE 14A-101)

INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION

PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE
SECURITIES EXCHANGE ACT OF 1934 (AMENDMENT NO. _____________)

Filed by the registrant [X]

Filed by a party other than the registrant [ ]

Check the appropriate box:

[ ] Preliminary proxy statement [ ] Confidential, for use of the
Commission only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-12

VERINT SYSTEMS INC.
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(Name of Registrant as Specified In Its Charter)

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(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)

Payment of filing fee (check the appropriate box):

[X] No fee required.

[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.

1. Title of each class of securities to which transaction applies:

2. Aggregate number of securities to which transaction applies:

3. Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):

4. Proposed maximum aggregate value of transaction:

5. Total fee paid:

[ ] Fee paid previously with preliminary materials:

[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.

1. Amount Previously Paid:

2. Form, Schedule or Registration Statement No.:

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4. Date Filed:

VERINT SYSTEMS INC.
330 SOUTH SERVICE ROAD
MELVILLE, NEW YORK 11747

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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON AUGUST 12, 2003

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NOTICE IS HEREBY GIVEN that the 2003 Annual Meeting of Stockholders
(the "Annual Meeting") of VERINT SYSTEMS INC. (the "Company") will be held at
Hilton Huntington, 598 Broadhollow Road, Melville, New York 11747, on Tuesday,
August 12, 2003, commencing at 11:00 A.M. (local time) for the following
purposes:

1. To elect thirteen directors who will serve as the Board of
Directors of the Company until the next annual meeting of stockholders and the
election of their qualified successors.

2. To consider and vote upon a proposal to adopt the Company's 2002
Employee Stock Purchase Plan under which up to 1,000,000 shares of Common Stock
may be available for purchase by participating employees.

3. To consider and act upon a proposal to ratify the engagement of
Deloitte & Touche LLP as independent auditors of the Company for the fiscal year
ending January 31, 2004.

4. To transact such other business as may properly come before the
meeting or any adjournment thereof.

Only those stockholders of record at the close of business on June
27, 2003 are entitled to receive notice of and to vote at the Annual Meeting or
any adjournment thereof.

A copy of the Company's Annual Report to Stockholders for the year
ended January 31, 2003 accompanies this Notice of Meeting.

By Order of the Board of Directors,

/s/Dan Bodner
---------------------------------------
Dan Bodner
Chief Executive Officer and President

May 28, 2003

ATTENDANCE AT THE ANNUAL MEETING BY HOLDERS OF AT LEAST A MAJORITY OF THE
OUTSTANDING SHARES OF COMMON STOCK, APPEARING IN PERSON OR REPRESENTED BY PROXY,
IS NECESSARY TO CONSTITUTE A QUORUM. YOUR ATTENDANCE IS IMPORTANT AND

APPRECIATED. WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE COMPLETE,
SIGN AND RETURN THE ACCOMPANYING PROXY CARD. YOUR PROXY MAY BE REVOKED IN YOUR
DISCRETION AT ANY TIME BEFORE THE SHARES ARE VOTED.

VERINT SYSTEMS INC.
330 SOUTH SERVICE ROAD
MELVILLE, NEW YORK 11747

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PROXY STATEMENT

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ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON AUGUST 12, 2003

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THIS PROXY STATEMENT AND THE ACCOMPANYING FORM OF PROXY ARE BEING
FURNISHED IN CONNECTION WITH THE SOLICITATION OF PROXIES BY THE BOARD OF
DIRECTORS OF VERINT SYSTEMS INC., A DELAWARE CORPORATION ("VERINT" OR THE
"COMPANY"), FOR USE AT THE ANNUAL MEETING OF THE STOCKHOLDERS OF THE COMPANY TO
BE HELD ON TUESDAY, AUGUST 12, 2003 OR ANY ADJOURNMENT THEREOF (THE "ANNUAL
MEETING"), AND ANY ADJOURNMENT OR POSTPONEMENT THEREOF. THE SHARES REPRESENTED
BY THE PROXIES RECEIVED, PROPERLY MARKED, DATED, EXECUTED AND NOT REVOKED WILL
BE VOTED AT THE ANNUAL MEETING. THESE PROXY SOLICITATION MATERIALS ARE FIRST
SENT OR GIVEN ON OR ABOUT JULY 7, 2003 TO STOCKHOLDERS ENTITLED TO VOTE AT THE
ANNUAL MEETING.

REVOCABILITY OF PROXY

Any proxy given pursuant to this solicitation may be revoked by the
person giving it at any time before it is exercised by: (1) delivering to the
Company (to the attention of the Company's General Counsel) a written notice of
revocation or a duly executed proxy bearing a later date; or (2) attending the
Annual Meeting and voting in person.

SOLICITATION AND VOTING PROCEDURES

The solicitation of proxies will be conducted primarily by mail, and
the Company will bear the cost of solicitation of proxies, including the charges
and expenses of brokerage firms and others who forward solicitation materials to
beneficial owners of the Company's Common Stock, par value $.001 per share (the
"Common Stock"). The Company has retained American Stock Transfer & Trust
Company to aid in the distribution of the proxy materials and the Company will
bear all attendant costs. In addition to the solicitation of proxies by mail,
the Company may solicit proxies by personal interview, telephone or by facsimile
through its officers, directors and regular employees, none of whom will receive
additional compensation for assisting with the solicitation.

The close of business on June 27, 2003 has been fixed as the record
date (the "Record Date") for determining the holders of shares of Common Stock
of the Company entitled to notice of and to vote at the Annual Meeting. As of
May 23, 2003 there were 24,002,944 shares of the Common Stock outstanding and

entitled to vote at the Annual Meeting. The presence at the Annual Meeting of a
majority, or 12,001,473, of these shares of Common Stock, either in person or by
proxy, will constitute a quorum for the transaction of business at the Annual
Meeting. Each holder of shares of Common Stock issued and outstanding on the
Record Date is entitled to one vote for each such share held on each matter of
business to be considered at the Annual Meeting.

If any stockholder is unable to attend the Annual Meeting, such
stockholder may vote by proxy. If a proxy is properly executed and returned to
the Company in time to be voted at the Annual Meeting, it will be voted as
specified in the proxy, unless it is properly revoked prior thereto. Votes cast
in person or by proxy at the Annual Meeting will be tabulated by the inspectors
of election appointed for the meeting and will determine whether or not a quorum
is present.

Verint believes that abstentions and broker non-votes should be
counted for purposes of determining if a quorum is present at the Annual Meeting
for the transaction of business.

With respect to Proposal No. 1 - Election of Directors, directors are
elected by plurality of the votes of the shares of common stock represented and
voted at the meeting. This means that the director nominee with the most
affirmative votes for a particular slot is elected for that slot. Consequently,
only the number of votes "for" and "against" affect the outcome, and abstentions
and broker non-votes will have no effect on the outcome of the election of
directors, except to the extent that failure to vote for an individual results
in another individual receiving a larger number of votes. A "broker non-vote"
occurs when a nominee holding shares for a beneficial owner does not vote on a
particular proposal because the nominee does not have discretionary power for
that particular item and has not received instructions from the beneficial
owner.

The affirmative vote of a majority of the issued and outstanding
shares of the Common Stock present in person or by proxy and entitled to vote at
the Annual Meeting is required for approval of Proposal No. 2 - the approval of
the 2002 Employee Stock Purchase Plan and Proposal No. 3 - Ratification of
Independent Auditors. Abstentions and broker non-votes effectively count as
votes against Proposals No. 2 and No. 3 since they are deemed to be present at
the meeting. With respect to Proposals No. 2 and No. 3, the Company believes
that brokers who are member firms of the New York Stock Exchange ("NYSE") and
who hold shares in street name for customers have the authority under the rules
of the NYSE to vote those shares.

If no specification is made on the proxy as to the proposal, the
shares represented by the proxy will be voted FOR the election of the nominees
for directors named herein, FOR adoption of the 2002 Employee Stock Purchase
Plan, FOR ratification of the engagement of Deloitte & Touche LLP as independent
auditors of the Company for the fiscal year ending January 31, 2004 and with
respect to any other matters that may come before the Annual Meeting, at the
discretion of the proxy holders.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth certain information regarding the
beneficial ownership of common stock as of January 31, 2003 by:

(1) each person (or group within the meaning of Section 13(d)(3) of
the Securities Exchange Act of 1934) known by Verint to own
beneficially 5% or more of the common stock;

(2) Verint's directors and executive officers; and

(3) all directors and executive officers of Verint as a group.

As used in this table, "beneficial ownership" means the sole or
shared power to vote or direct the voting or to dispose or direct the
disposition of any security. A person is deemed to be the beneficial owner of
securities that can be acquired within sixty days from January 31, 2003 through
the exercise of any option, warrant or right. Shares of Common Stock subject to
options, warrants or rights which are currently exercisable or exercisable
within sixty days are deemed outstanding for computing the ownership percentage
of the person holding such options, warrants or rights, but are not deemed
outstanding for computing the ownership percentage of any other person. The
amounts and percentages are based upon 23,665,717 shares of Common Stock
outstanding as of January 31, 2003.

NUMBER OF OPTIONS NOT
NUMBER OF PERCENTAGE OF TOTAL EXERCISABLE WITHIN 60 DAYS
NAME OF BENEFICIAL OWNERS SHARES BENEFICIALLY OWNED(1) SHARES OUTSTANDING AFTER JANUARY 31, 2003
------------------------- ---------------------------- ------------------ ----------------------

Principal Stockholders:
Comverse Technology, Inc.
170 Crossways Park Dr.
Woodbury, NY 11797 18,589,023 78.5% -

Directors and Executive Officers:
Kobi Alexander(2) 475,931(3) 2.0% -
Dan Bodner(4) 180,530(5) * 81,703
Igal Nissim(6) 85,373(5) * 23,237
David Kreinberg(7) 3,670(5) * 8,071
William F. Sorin(8) 3,669(5) * 2,202
David T. Ledwell 14,678(5) * 14,676
Paul D. Baker(9) 2,203(5) * 4,647
Paul Robinson 2,936(5) * 4,647
Harris T. Oliner 734(5) * 4,647
Victor De Marines 5,000(5) * 5,000
Kenneth A. Minihan 5,000(5) * 5,000
Howard Safir 5,000(5) * 5,000
Larry Myers - * -
All executive officers and 784,724(10) 3.2% 158,830
directors as a group (thirteen
persons)

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* Less than 1%

(1) Unless otherwise indicated and except pursuant to applicable community
property laws, to our knowledge, each person or entity listed in the table
above has sole voting and investment power with respect to all ordinary
shares listed as owned by such person or entity.

(2) Mr. Alexander beneficially owns 25,260 shares of Comverse Technology common
stock and options to purchase 3,074,738 shares of Comverse Technology
common stock exercisable within 60 days after January 31, 2003.

(3) Mr. Alexander beneficially owns 116,357 shares of our common stock and
options to purchase 359,574 shares of our common stock exercisable within
60 days after January 31, 2003.

(4) Mr. Bodner beneficially owns 35,774 shares of Comverse Technology common
stock and no options to purchase shares of Comverse Technology common stock
exercisable within 60 days after January 31, 2003.

(5) Consists of shares of our common stock issuable upon the exercise of
options exercisable within 60 days after January 31, 2003.

(6) Mr. Nissim beneficially owns 1,825 shares of Comverse Technology common
stock and options to purchase 22,500 shares of Comverse Technology common
stock exercisable within 60 days after January 31, 2003.

(7) Mr. Kreinberg beneficially owns 17,728 shares of Comverse Technology common
stock and options to purchase 53,210 shares of Comverse Technology common
stock exercisable within 60 days after January 31, 2003.

(8) Mr. Sorin beneficially owns options to purchase 48,750 shares of Comverse
Technology common stock exercisable within 60 days after January 31, 2003.

(9) Mr. Baker beneficially owns options to purchase 3,750 shares of Comverse
Technology common stock exercisable within 60 days after January 31, 2003.

(10) Consists of 116,357 shares of our common stock and 668,367 shares of our
common stock issuable upon the exercise of options exercisable within 60
days after January 31, 2003.

EXECUTIVE OFFICERS AND DIRECTORS

The following table sets forth certain information concerning our
executive officers and directors:

NAME AGE POSITION
---- --- --------

Executive Officers and Directors:
Kobi Alexander(1)(3).......................... 51 Chairman of the Board of Directors
Dan Bodner(1)(3).............................. 44 President, Chief Executive Officer and Director
Igal Nissim................................... 47 Chief Financial Officer and Director
David T. Ledwell.............................. 56 Chief Strategic Officer and Director
William F. Sorin(1)(3)........................ 54 Secretary and Director
Paul D. Baker................................. 44 Director
Victor A. De Marines(2)....................... 66 Director
David Kreinberg(1)(3) 38 Director
Kenneth A. Minihan(2)......................... 59 Director
Harris T. Oliner.............................. 31 Director
Paul L. Robinson.............................. 36 Director
Howard Safir(2)............................... 61 Director
Larry Myers................................... 64 Nominee Director
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(1) Member of the executive committee.
(2) Member of the audit committee and stock option committee.
(3) Member of the compensation committee.

BACKGROUND OF NOMINEES AND EXECUTIVE OFFICERS

KOBI ALEXANDER has served as Chairman of our Board of Directors since
February 1994. Mr. Alexander, a founder of Comverse Technology, Inc., has been a
director and senior executive officer of Comverse Technology since its
formation, serving in the capacities of Chairman of the Board of Directors since
September 1986 and Chief Executive Officer since April 1987. Mr. Alexander also
serves as director and Chairman of the Board of various subsidiaries of Comverse
Technology, including its other principal operating subsidiaries, Comverse, Inc.
and Ulticom, Inc. Mr. Alexander received a B.A., magna cum laude, in Economics
from the Hebrew University of Jerusalem in 1977, and an M.B.A. in Finance from
New York University in 1980.

DAN BODNER is the President, Chief Executive Officer and a director
of our company. Mr. Bodner served as our President and/or Chief Executive
Officer and director since February 1994. From 1991 to 1998, Mr. Bodner also
served as President and Chief Executive Officer of Comverse Government Systems
Corp., a former affiliate of ours. Prior to such positions, from 1987 to 1991,
Mr. Bodner held various management positions at Comverse Technology. Prior to
joining Comverse Technology, Mr. Bodner was employed for two years as Director
of Software Development for Contahal Ltd. From 1981 through 1985, Mr. Bodner
served in the Israeli Defense Force in an engineering capacity. Mr. Bodner

received a B.Sc., cum laude, in Electrical Engineering from the Technion, Israel
Institute of Technology, in 1981 and a M.Sc., cum laude, in Telecommunications
and Computer Science from Tel Aviv University in 1987.

IGAL NISSIM has served as our Chief Financial Officer and has been a
director since January 1999. Prior to that time, Mr. Nissim was employed by
Comverse Technology since 1986, where he served as Chief Financial Officer from
1993 until 1998. Prior to this position, Mr. Nissim served as Chief Financial
Officer of Efrat Future Technology Ltd. From 1984 to 1986, Mr. Nissim was
employed by Gadot Industrial Enterprises Ltd. as deputy controller, responsible
for financial and cost accounting. Mr. Nissim is a Certified Public Accountant
in Israel and was employed for four years by Kesselman & Kesselman (now a member
of PriceWaterhouseCoopers). Mr. Nissim received a B.A. in Economics and
Accounting from the Tel Aviv University in 1981.

DAVID T. LEDWELL has been a director since May 2002. Since May 2003,
Mr. Ledwell has served as Chief Strategic Officer of the Company. From September
1999 until May 2003, Mr. Ledwell served as the President and Chief Executive
Officer of our subsidiary, Loronix. Mr. Ledwell also served as a director of
Loronix from September 1999 until July 2000. From 1986 to 1998, Mr. Ledwell
served in various senior executive capacities at DH Technology, Inc., a company
engaged in the development, marketing, sales and support of transaction and bar
code printers and credit card readers. From 1995 to 1998, Mr. Ledwell served as
Executive Vice President responsible for several of DH Technology's subsidiaries
and divisions. Prior to 1986, Mr. Ledwell held various management positions with
companies in the computer and electronics industries, including Texas
Instruments and Datapoint Corporation. Mr. Ledwell holds a B.S. in Electrical
Engineering from Colorado State University.

WILLIAM F. SORIN has served as Secretary of the Company and has been
a director since January 1999. Mr. Sorin has served as a director and the
Corporate Secretary of Comverse Technology since its formation in October 1984.
Mr. Sorin is also a director of Ulticom Inc. Mr. Sorin is an attorney engaged in
private practice and is Senior General Counsel to Comverse Technology. Mr. Sorin
received a B.A. from Trinity College in 1970 and a J.D., cum laude, from Harvard
Law School in 1973.

PAUL D. BAKER has been a director since May 2002. Mr. Baker also
serves as Vice President, Corporate Marketing and Corporate Communications of
Comverse Technology, a position he has held since joining Comverse Technology in
April 1991. Mr. Baker is also a director of Ulticom. Mr. Baker held various
positions in sales, marketing, and corporate communications with Robotic Vision
Systems, Inc. from 1984 to 1991. Mr. Baker received a B.S. in Management from
Babson College in 1980 and an M.B.A. in Marketing Management from St. John's
University in 1984.

VICTOR A. DE MARINES has been a director since May 2002. Mr. De
Marines recently retired from his position as President and Chief Executive
Officer of MITRE Corporation, a nonprofit organization, which provides security
solutions for the computer systems of the Department of Defense, the Federal
Aviation Administration, the Internal Revenue Service and several organizations
in the U.S. intelligence community. Mr. De Marines currently serves on the board

of trustees of MITRE. Mr. De Marines has recently served as an advisor to the
Department of Defense on matters concerning the transformation of the military.
Mr. De Marines is a member of an advisory group for the National Reconnaissance
Office and is a member of the Massachusetts Business Roundtable. Mr. De Marines
served as a Presidential Executive with the Department of Transportation and is
a Lieutenant (retired) of the U.S. Air Force. Mr. De Marines holds a B.S. from
Pennsylvania State University and a M.S. in Electrical Engineering from the
Northeastern University.

DAVID KREINBERG has been a director since January 1999. Mr. Kreinberg
has served as Executive Vice President and Chief Financial Officer of Comverse
Technology, Inc. since September 2002. Previously, Mr. Kreinberg served as
Comverse Technology's Vice President of Finance and Chief Financial Officer from
May 1999, as Vice President of Finance and Treasurer from April 1996 and as Vice
President of Financial Planning from April 1994. Mr. Kreinberg also served as
the Chief Financial Officer of Ulticom Inc. from December 1999 until September
2001. Mr. Kreinberg is also a director of Ulticom. Mr. Kreinberg is a Certified
Public Accountant, and prior to joining Comverse Technology he served as a
senior manager at Deloitte & Touche LLP. Mr. Kreinberg received a B.S., summa
cum laude, in Accounting from Yeshiva University in 1986 and an M.B.A. in
Finance and International Business from Columbia Business School in 1990.

KENNETH A. MINIHAN has been a director since May 2002. Lieutenant
General Minihan is a career U.S. Air Force officer who attained the rank of
Lieutenant General and retired from the Air Force on June 1, 1999. Lieutenant
General Minihan served as the 14th Director of the National Security
Agency/Central Security Services and was the senior uniformed intelligence
officer in the Department of Defense. Prior to this, Lieutenant General Minihan
served as the Director of the Defense Intelligence Agency. Lieutenant General
Minihan is currently the President of the Security Affairs Support Association,
is a member of several organizations, including the Air Force Association and
the National Military Intelligence Association and consults and works on
national security and intelligence committees and panels. Lieutenant General
Minihan served as Chief Executive Officer of TeleHub Network Services
Corporation from June 1999 to September 1999. In October 1999, after Lieutenant
General Minihan was no longer affiliated with that company, TeleHub Network
Services Corporation filed a voluntary petition for reorganization under the
federal bankruptcy laws. Lieutenant General Minihan holds a B.A. from Florida
State University, an M.A. from the Naval Postgraduate School, and has completed
executive development programs at the University of Illinois and Harvard
University. Lieutenant General Minihan was awarded the National Security Medal,
the Defense Distinguished Service Medal, the Bronze Star and the National
Intelligence Distinguished Service Medal, among other awards and decorations.

HARRIS T. OLINER has been a director since May 2002. Mr. Oliner has
served as a Senior Counsel of Comverse Technology since April 2001. Prior to
joining Comverse Technology, Mr. Oliner was a Director of Business Development
of VastVideo, Inc. from March 2000 to April 2001. From October 1997 to February

2000, Mr. Oliner served as an associate attorney at Simpson Thacher & Bartlett.
Mr. Oliner received a B.A., magna cum laude, in Political Science from Yale
University in 1994 and a J.D., cum laude, from Harvard Law School in 1997.

PAUL L. ROBINSON has been a director since May 2002. Mr. Robinson is
General Counsel of Comverse Technology. From January 1999 until January 2003,
Mr. Robinson served as Associate General Counsel of Comverse Technology. Prior
to joining Comverse Technology, Mr. Robinson was an associate attorney at
Kramer, Levin, Naftalis & Frankel, LLP from January 1998 to December 1998. From
January 1997 to December 1997, Mr. Robinson served as counsel to the United
States Senate Committee on Governmental Affairs with respect to its special
investigation into illegal and improper campaign fund-raising activities during
the 1996 federal election. From June 1994 through January 1997, Mr. Robinson was
an associate attorney at Skadden, Arps, Slate, Meagher & Flom LLP. Mr. Robinson
received a B.A. in Political Science and was Phi Beta Kappa from State
University of New York at Binghamton in 1989 and a J.D., cum laude, from Boston
University School of Law in 1992.

HOWARD SAFIR has been a director since May 2002. Mr. Safir is the
Chairman and Chief Executive Officer of SafirRosetti, Omnicom Group Inc., a
premier company providing security and investigation services. Mr. Safir also
serves as consultant to ChoicePoint, a leading provider of credential
verification and identification services. Prior to these positions, Mr. Safir
served as Vice Chairman of IPSA International, a company providing security and
investigation services, and prior to that as the 39th Police Commissioner of the
City of New York. Mr. Safir also served as Associate Director for Operations,
U.S. Marshals Service, as Assistant Director of the Drug Enforcement
Administration and as Chief of the Witness Security Division, U.S. Marshals
Service. Mr. Safir holds a B.A. in History and Political Science from Hofstra
University. Mr. Safir participated in several programs at Harvard University's
John F. Kennedy School of Government. Mr. Safir was awarded the Ellis Island
Medal of Honor among other citations and awards.

LARRY MYERS is a nominee for director. Since November 1999, Mr. Myers
has been retired from his position of Senior Vice President, Chief Financial
Officer and Treasurer of MITRE Corporation, a nonprofit organization which
provides security solutions for the computer systems of the Department of
Defense, the Federal Aviation Administration, the Internal Revenue Service and
several organizations in the U.S. intelligence community. Mr. Myers served in
this capacity with MITRE Corporation since 1991. Mr. Myers received a B.S. from
Saint Vincent College in 1960 and an M.B.A. from Ohio State University in 1962.
Mr. Myers served in the U.S. Army from 1962 to 1964.

COMMITTEES OF THE BOARD OF DIRECTORS

The Board of Directors has four standing committees. The Executive
Committee is empowered to exercise the full authority of the Board of Directors
to the extent permitted by law in circumstances when convening the full board is
not practicable. The Audit Committee is responsible for reviewing audit
procedures and supervising the relationship between the Company and its
independent auditors. The Compensation Committee is responsible for approving
compensation arrangements for executive officers of the Company and making
recommendations to the Stock Option Committee and the Board of Directors
regarding the Company's various incentive compensation and benefit plans. The
Stock Option Committee is responsible for administering the Company's 2002 Stock
Incentive Plan.

The Board of Directors does not have a nominating committee. The
functions customarily performed by a nominating committee are performed by the
Board of Directors as a whole. Any stockholder which wishes to make a nomination
at an annual or special meeting for the election of directors must do so in
compliance with the applicable procedures set forth in the Company's By-laws.
The Company will furnish copies of such By-Law provisions upon written request
to the Company's principal executive offices, 330 South Service Road, Melville,
NY 11747, Attention: Investor Relations.

During the year ended January 31, 2003, there were 3 meetings of the
Board of Directors of the Company, 3 meetings of the Audit Committee, 2 meetings
of the Compensation Committee, and 2 meetings of the Stock Option Committee. In
addition, there were 4 actions by the Board by unanimous written consent, as
well as 1 each by the Stock Option Committee and the Compensation Committee.
Each member of the Board of Directors attended at least 75% of the meetings of
the Board of Directors and of each Committee of which he was a member during the
year.

AUDIT COMMITTEE

The Audit Committee assists the Board of Directors in fulfilling its
responsibility to oversee management's conduct of the Company's financial
reporting process, including the selection of the Company's outside auditors and
the review of the financial reports and other financial information provided by
the Company to any governmental or regulatory body, the public or other users
thereof, the Company's systems of internal accounting and financial controls,
and the annual independent audit of the Company's financial statements.

The Board of Directors has adopted a charter for the audit committee.
The Audit Committee consists of Victor De Marines, Kenneth Minihan and Howard
Safir. All members of the Audit Committee are "independent", as independence is
defined in Rule 4200 (a)(15) of the National Association of Securities Dealers
listing standards.

The information contained in this proxy statement with respect to the Audit
Committee charter and the independence of the members of the Audit Committee
shall not be deemed to be "soliciting material" or to be "filed" with the
Securities and Exchange Commission, nor shall such information be incorporated
by reference into any future filing under the Securities Act of 1933, as
amended, or the Securities Exchange Act of 1934, as amended, except to the
extent that the Company specifically incorporates it by reference in such
filing.

SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Securities Exchange Act of 1934 requires our
executive officers and directors, and persons who own more than 10% of a
registered class of our equity securities, to file reports of ownership and
changes in ownership with the Securities and Exchange Commission, the NASD, and
the Company.

Based solely on our review of Section 16(a) forms received by us and
written representations that no other reports were required, we believe that,
during the last fiscal year, all Section 16(a) filing requirements applicable to
our executive officers, directors and 10% beneficial owners were complied with.

EQUITY COMPENSATION PLAN INFORMATION

The following table sets forth certain information regarding the
Company's equity compensation plans as of January 31, 2003.

(A) (B) (C)
-----------------------------
NUMBER OF SECURITIES REMAINING
NUMBER OF SECURITIES TO BE WEIGHTED-AVERAGE EXERCISE AVAILABLE FOR FUTURE ISSUANCE
ISSUED UPON EXERCISE OF PRICE OF OUTSTANDING UNDER EQUITY COMPENSATION
OUTSTANDING OPTIONS, OPTIONS, WARRANTS AND PLANS (EXCLUDING SECURITIES
PLAN CATEGORY WARRANTS AND RIGHTS RIGHTS REFLECTED IN COLUMN (A))
------------- ------------------- ----------------------- -----------------------------

Equity compensation plans approved by
security holders........................ 2,853,671 $8.75 2,598,990

Equity compensation plans not approved by
security holders........................ -- -- --

------------------- ----------------------- -----------------------------
Total 2,853,671 $8.75 2,598,990(1)

(1) Includes 1,000,000 shares available for issuance pursuant to the Company's
Employee Stock Purchase Plan as of January 31, 2003.

EXECUTIVE COMPENSATION

The following table presents summary information regarding the
compensation paid or accrued by the Company for services rendered during the
fiscal years ended January 31, 2001, 2002, and 2003 by its executive officers:

SUMMARY COMPENSATION TABLE

ANNUAL COMPENSATION
----------------------------------------
FISCAL OTHER ANNUAL
NAME AND PRINCIPAL POSITION YEAR SALARY(1) BONUS(2) COMPENSATION(3)
--------------------------- ---- --------- -------- ---------------

Dan Bodner,
President and Chief Executive Officer......................... 2002 $200,000 $ 200,000 $ 4,261
2001 $200,000 $ 50,000 $ 2,000
2000 $193,953 $ 70,000 $ 5,379
Igal Nissim,
Chief Financial Officer....................................... 2002 $120,813 $ 116,000 $ 22,736
2001 $135,837 $ 25,000 $ 25,407
2000 $121,701 $ 14,410 $ 23,289

-----------------

(1) Includes salary and payments in lieu of earned vacation.

(2) Includes bonuses accrued for services performed in the year indicated
regardless of the year of payment.

(3) Includes company car and social benefit program costs.

The following table sets forth information concerning options granted
during the year ended January 31, 2003 to the executive officers of the Company
identified above under its employee stock option plans:

POTENTIAL REALIZED VALUE AT
ASSUMED ANNUAL RATES OF STOCK
INDIVIDUAL GRANTS PRICE APPRECIATION FOR OPTION TERM
------------------------------------------------------------------------------------ ----------------------------------
PERCENT OF
TOTAL
NUMBER OF OPTIONS
SHARES GRANTED TO EXERCISE
SUBJECT TO EMPLOYEES IN PRICE PER EXPERATION
NAME OPTION PERIOD SHARE DATE 5% 10%
---- ------ ------ ----- ---- -- ---
Dan Bodner 66,537 11.4% $16.00 May 21, 2012 $669,516 $1,696,685
Igal Nissim 9,785 1.7% $16.00 May 21, 2012 $ 98,460 $ 249,516

The options have a term of ten years and become exercisable and vest
in increments over the period of four years from the year of grant. The exercise
price of the options is equal to the fair market value of the underlying shares
at the date of grant.

The following table sets forth, as to each executive officer
identified above, number of unexercised options held at January 31, 2003,
currently exercisable and subject to future vesting, and the value of such
options based on the closing price of the underlying shares on the NASDAQ
National Market System at that date, net of the associated exercise price:

OPTION EXERCISES AND YEAR-END VALUE TABLE

AGGREGATE OPTION EXERCISES IN THE YEAR ENDED JANUARY 31, 2003 AND
VALUE OF UNEXERCISED OPTIONS AT JANUARY 31, 2003

NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
OPTIONS AT JANUARY 31, 2003 AT JANUARY 31, 2003(1)
--------------------------- ----------------------
EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
----------- ------------- ----------- -------------

Dan Bodner.............................. 144,327 117,906 $1,789,852 $710,825
Igal Nissim............................. 58,464 50,146 $ 720,347 $480,916

(1) Calculated on the basis of the closing price of the Company's common stock
as reported on the Nasdaq National Market on January 31, 2003 of $18.619
per share minus the exercise price.

EMPLOYMENT AGREEMENTS

Neither Mr. Bodner nor Mr. Nissim have employment agreements with the
Company. However, both have signed agreements requiring them, among other
things, to maintain the confidentiality of the Company's information and not to
compete with the Company for a limited period of time in the event their
employment with the Company ceases.

COMPENSATION OF DIRECTORS

Non-Independent Directors

Verint's non-independent directors do not currently receive any cash
compensation for serving on the Board of Directors or any committee of the
Board. These directors are reimbursed for the expenses they incur in attending
meetings of the Board or Board committees. These directors have been granted
options to purchase shares of Verint's Common Stock.

Independent Directors

Independent directors are entitled to receive an annual cash
compensation of $15,000, payable in arrears at the end of each fiscal quarter
and an additional $1,000 for each board meeting attended and $500 for each Board
committee meeting attended. Messrs. De Marines, Minihan and Safir were granted
5,000 options to purchase Verint's Common Stock upon completion of the Company's
initial public offering at an exercise price equal to the initial public
offering price. Of the 5,000 options, 2,000 vested immediately upon grant and

the remaining 3,000 vested in increments of 750 shares for each board meeting
attended during the year. In addition, these directors will be granted 6,000
options on each anniversary of the completion date of the initial public
offering at the closing price of the Company's Common Stock on the date of grant
which will vest in increments of 1,500 shares for each board meeting attended
during the year after the grant.

If Mr. Myers is elected to the Board of Directors, he will receive
the same compensation as the other independent directors.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

During the fiscal year ended January 31, 2003, Messrs. Alexander,
Bodner, Kreinberg and Sorin served as members of the Company's Compensation
Committee. Mr. Sorin, who serves as our Secretary, also serves as the Corporate
Secretary of Comverse Technology. No interlocking relationship exists between
the Company's Board of Directors and the Board of Directors or compensation
committee of any other company, nor has any such interlocking relationship
existed in the past.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

RELATIONSHIP WITH COMVERSE TECHNOLOGY AND ITS SUBSIDIARIES

Verint is a subsidiary of Comverse Technology. Set forth below is a
brief description of the existing relationships and agreements between Verint
and Comverse Technology.

The Company believes that the terms of the corporate services
agreement, the enterprise resource planning ("ERP") software sharing agreement
and the satellite services agreement described below are fair to us and are no
less favorable to us from those we could have obtained from an unaffiliated
third party. Verint reached this conclusion based on, in the case of the
corporate services agreement, discussions with unaffiliated third party
providers of comparable services, and in the case of the ERP software sharing
agreement and the satellite services agreement, its affiliates' estimated costs
in providing such services.

Corporate Services Agreement

The Company has a corporate services agreement with Comverse
Technology. Under this agreement, Comverse Technology provides the Company with
the following services:

o maintaining in effect general liability and other insurance policies
providing coverage for the Company;

o maintaining in effect a policy of directors' and officers' insurance
covering the Company's directors and officers;

o administration of employee benefit plans;

o routine legal services; and

o consulting services with respect to the Company's public relations.

For the years ended January 31, 2001, 2002 and 2003, the Company
recorded expenses of $500,000, $500,000, and $525,000, respectively, for the
services provided by Comverse Technology. As of February 1, 2003, the Company
will pay Comverse Technology a quarterly fee of $143,750, subject to adjustment
and annual increases, for services provided by Comverse Technology during each
fiscal quarter. In addition, the Company agreed to reimburse Comverse Technology
for any out-of-pocket expenses incurred by Comverse Technology in providing the
services. During the years ended January 31, 2001, 2002 and 2003, no amounts
were paid or accrued to Comverse Technology for reimbursement of out-of-pocket
expenses. The term of this agreement extends to January 31, 2005 and is
automatically extended for additional twelve-month periods unless terminated by
either Comverse Technology or the Company.

Enterprise Resource Planning Software Sharing Agreement

In January 2002, the Company entered into an ERP software sharing
agreement with Comverse, Ltd., a subsidiary of Comverse Technology. Under this
agreement, Comverse Ltd. agreed to continue to share the use of specific ERP
software with the Company and undertook to exert its reasonable commercial
efforts to arrange for the ongoing operation, maintenance and support of the
software for an annual fee of $100,000. The terms of the ERP Software Sharing
Agreement and the fee payable to Comverse Ltd. were determined by arm's length
negotiations between the Company and Comverse Ltd. The Company was charged
$200,000, $100,000, and $100,000 for the years ended January 31, 2001, 2002 and
2003, respectively, for ERP support services. This agreement expires February 1,
2004, and automatically renews for successive one year terms unless terminated
upon six months prior written notice. The first time notice of termination may
be given is on February 1, 2004.

Satellite Services Agreement

In January 2002, the Company entered into a services agreement with
Comverse Inc., a subsidiary of Comverse Technology, pursuant to which Comverse
Inc. and its subsidiaries provide the Company with the exclusive use of the
services of specified employees of Comverse Inc. and its facilities where such
employees are located. Under this agreement, the Company pays Comverse Inc. a
fee, which is equal to the expenses Comverse Inc. incurs in providing these
services plus ten percent. During the year ended January 31, 2001, 2002 and
2003, the Company recorded expenses of $1,193,000, $1,817,000, and $1,809,000,
respectively, for services rendered by Comverse Inc. under this agreement.

Other Transactions with Other Subsidiaries of Comverse Technology

The Company charges subsidiaries of Comverse Technology for services
relating to the use of the Company's facilities and employees. Charges to these
subsidiaries were approximately $1,006,000, $1,030,000, and $175,000 for the
years ended January 31, 2001, 2002 and 2003, respectively. In addition the
Company sold products to subsidiaries of Comverse Technology. Sales to these
subsidiaries were approximately $0, $0 and $8,000 for the years ended January
31, 2001, 2002 and 2003, respectively.

The Company also purchased products and services from other
subsidiaries of Comverse Technology in the ordinary course of business.
Purchases from these subsidiaries were approximately $0, $2,000, and $18,000 for
the years ended January 31, 2001, 2002 and 2003, respectively.

Federal Income Tax Sharing Agreement

The Company has a tax sharing agreement with Comverse Technology.
Comverse Technology is the parent company of a group of companies for which
Comverse Technology files a consolidated federal income tax return. Prior to the
Company's initial public offering, it was included in the Comverse Technology
consolidated group for federal income tax purposes and did not file its own
federal income tax return. Upon completion of the Company's initial public
offering, it ceased to be included in the Comverse Technology consolidated group
for federal income tax purposes and started filing federal tax returns on a
stand-alone basis. Under the terms of the tax sharing agreement, during years in
which Comverse Technology filed a consolidated federal income tax return which
includes the Company, the Company was required to pay Comverse Technology an
amount equal to its separate tax liability computed by Comverse Technology in
its reasonable discretion. The Company's separate tax liability generally is the
amount of federal income tax that it would owe if it had filed a tax return
independent of the Comverse Technology group. If the calculation of the
Company's tax liability for any year results in a net operating loss or capital
loss, it is not entitled to receive any payments from Comverse Technology with
respect to such loss in such year or as a result of carrying such loss back to
any prior year or forward to any future year, or otherwise to take such loss
into account in determining its liability to Comverse Technology, including in
the event that Comverse Technology utilizes such loss to reduce its own tax
liability so that such loss is not available to the Company in the event of
deconsolidation. The tax sharing agreement also provides for certain payments in
the event of adjustments to the tax liability. The tax sharing agreement
continues in effect until 60 days after the expiration of the applicable statute
of limitations with respect to the final year of the Comverse Technology
consolidated group which includes the Company.

Patent License Agreement

The Company's affiliate, Comverse Patent Holding, granted Lucent GRL
a non-exclusive license to those patents now owned by Comverse Patent Holding or

for which Comverse Patent Holding has a right to license and to those patents
granted to Comverse Patent Holding or for which Comverse Patent Holding obtains
the right to license during the term of that arrangement. In return, Comverse
Patent Holding was granted a non-exclusive license to certain patents now owned
by Lucent GRL or for which Lucent GRL has the right to license and to those
patents granted to Lucent GRL or for which Lucent GRL obtains the right to
license during the term of that arrangement. Under that arrangement, Comverse
Patent Holding has the right to grant a sublicense to the Company. In connection
with that arrangement, effective December 30, 1999, the Company entered into a
patent license agreement with Comverse Patent Holding under which the Company
has granted a non-exclusive royalty-free license to Comverse Patent Holding with
the right to sublicense to Lucent GRL the Company's patents and those patents
granted to the Company or for which the Company obtains the right to license
during the term of the agreement. In return, Comverse Patent Holding granted to
the Company a non-exclusive royalty-free sublicense to all patents that are
licensed by Lucent GRL to Comverse Patent Holding. The Company believes that the
value of the sublicense from Comverse Patent Holding is greater than the value
of the license to Comverse Patent Holding.

Registration Rights Agreement

The Company has entered into a registration rights agreement with
Comverse Technology. Under this agreement, Comverse Technology may require the
Company on one occasion to register the Company's common stock for sale on Form
S-1 under the Securities Act of 1933 (the "Act") if the Company is not eligible
to use Form S-3 under the Act. After the Company becomes eligible to use Form
S-3, Comverse Technology may require the Company on unlimited occasions to
register the Company's common stock for sale on this form. Comverse Technology
will also have an unlimited number of piggyback registration rights.

The Company has agreed to pay all expenses that result from
registration of its common stock under the registration rights agreement, other
than underwriting commissions for such shares and taxes. The Company has also
agreed to indemnify Comverse Technology, its directors, officers and employees
against liabilities that may result from its sale of the Company's common stock,
including Securities Act liabilities.

Business Opportunities Agreement

The Company has a business opportunities agreement with Comverse
Technology, which addresses potential conflicts of interest between Comverse
Technology and the Company. This agreement allocates between Comverse Technology
and the Company opportunities to pursue transactions or matters that, absent
such allocation, could constitute corporate opportunities of both companies. The
Company is precluded from pursuing an opportunity offered to any person who is a
director of the Company but not an officer or employee of the Company and who is
also an officer or employee of Comverse Technology, unless Comverse Technology
fails to pursue such opportunity diligently. Comverse Technology is precluded
from pursuing an opportunity offered to any person who is a director of Comverse
Technology but not an officer or employee of Comverse Technology and who is also

an officer or employee of the Company, unless the Company fails to pursue such
opportunity diligently. The Company is also precluded from pursuing an
opportunity offered to any person who is an employee or officer of both
companies or a director of both companies, unless Comverse Technology fails to
pursue such opportunity diligently. Accordingly, the Company may be precluded
from pursuing transactions or opportunities that the Company would otherwise be
able to pursue if the Company was not affiliated with Comverse Technology. The
Company has agreed to indemnify Comverse Technology and its directors, officers,
employees and agents against any liabilities arising out of any claim that any
provision of the agreement or the failure to offer any business opportunity to
the Company violates or breaches any duty that may be owed to the Company by
Comverse Technology or any such person.

Proxy Agreement with the Department of Defense

One of the Company's subsidiaries, Verint Technology Inc. ("Verint
Technology"), is engaged in the development, marketing and the sale of the
Company's communications interception solutions to various U.S. governmental
agencies. In order to conduct its business, Verint Technology is required to
maintain facility security clearances under the National Industrial Security
Program ("NISP"). The NISP requires companies maintaining facility security
clearances to be insulated from foreign ownership, control or influence. The
Company, Comverse Technology and the Department of Defense have entered into a
proxy agreement with respect to the ownership and operations of Verint
Technology. The proxy agreement has been approved by the Defense Security
Service, which has oversight responsibilities on behalf of the Department of
Defense.

Under the proxy agreement, the Company appointed three U.S. citizens
that have the requisite personal security clearance as directors of Verint
Technology and as holders of proxies to vote the stock of Verint Technology.
These individuals are responsible for the oversight of Verint Technology's
security arrangements, including the separation of Verint Technology from the
Company and the Company's affiliates. As proxy holders, these individuals have
the power to exercise all prerogatives of ownership of Verint Technology, except
that without obtaining the Company's express written approval they may not
authorize any individual sale or disposal of capital assets constituting a
material amount of Verint Technology's assets, the mortgaging of assets other
than for working capital or capital improvement purposes, any merger,
consolidation, reorganization or dissolution of Verint Technology and the filing
of a petition under the federal bankruptcy laws.

Under the proxy agreement, the Company has also established a
government security committee, which consists of the three proxy holders. The
government security committee is in charge of the development and implementation
of a technology control plan, which prescribes measures and establishes
procedures to prevent unauthorized disclosure or export of controlled
information to the Company, any of the Company's affiliates or others. In

addition, the proxy agreement establishes procedures regarding meetings, visits
and communications between Verint Technology, the Company and the Company's
other affiliates. The Department of Defense continually reviews the technology
control plan and receives an annual report from the proxy holders.

Contribution Agreement

In July 2000, Comverse Technology acquired all of the outstanding
shares of common stock of Loronix in exchange for the issuance of 1,994,806
shares of Comverse Technology common stock and assumption of options to purchase
the equivalent of 370,101 shares of common stock of Comverse Technology. In
addition, in July 2000, Comverse Technology acquired all of the outstanding
equity interests in Syborg in exchange for the issuance of 201,251 shares of
Comverse Technology common stock.

The Company and Comverse Technology entered into a contribution
agreement, dated as of February 1, 2001, pursuant to which the Company acquired
from Comverse Technology all of the outstanding shares of Loronix and all of the
outstanding shares of Comverse GmbH, which directly and through a wholly-owned
subsidiary holds all of the partnership interests in Syborg, in exchange for
6,759,277 shares of its common stock. Under this agreement, the Company received
all of the burdens, benefits and incidents of ownership in each of the companies
as of February 1, 2001. This transaction was designed to qualify as a tax-free
exchange pursuant to section 351(a) of the Internal Revenue Code of 1986, as
amended (the "Code").

This transaction was accounted for as a pooling of interests.

Sale of Comverse Media Holding Inc.

In February 2001, the Company sold 100% of the capital stock of
Comverse Media Holding Inc. to Comverse, Inc. The purchase price for the shares
of Comverse Media Holding Inc. was $100,000, which was paid by a reduction in
intercompany debt that the Company owed to Comverse, Inc.

Indemnification Agreement with Comverse Technology

On January 31, 2002, the Company entered into an indemnification
agreement with Comverse Technology pursuant to which Comverse Technology agreed
to indemnify the Company for any damages that may arise from two specified
disputes, which are not material to the Company. In return, the Company granted
to Comverse Technology the exclusive control of the settlement and defense of
these disputes, and the Company agreed to fully cooperate with Comverse
Technology in any such settlement or defense.

Transactions with an Affiliate

The Company sells products and services to Verint Systems (Singapore)
PTE LTD ("Verint Singapore") an affiliated systems integrator in which the
Company holds 50% equity interest. Sales to Verint Singapore were approximately
$4,271,000, $4,024,000, and $2,286,000 for the years ended January 31, 2001,
2002 and 2003, respectively. The Company sells its products and services to
Verint Singapore on the same terms the Company sells similar products and
services to its non-affiliated customers. In addition, the Company was charged
marketing and office service fees by that affiliate. These fees were
approximately $270,000, $490,000, and $361,000 for the years ended January 31,
2001, 2002 and 2003, respectively. The Company believes that Verint Singapore
has determined these charges on the basis of its estimated costs in providing
such services.

Intercompany Loan

The Company was charged interest on balances owed to Comverse
Technology amounting to $2,142,000 and $1,458,000 for the years ended January
31, 2001 and 2002, respectively. The interest rate on the indebtedness to
Comverse Technology was the three-month LIBOR rate. The principal amount of the
indebtedness to Comverse Technology and related accrued and unpaid interest was
due on demand and was repaid on January 31, 2002 with the proceeds of a bank
loan. The Company does not expect to be dependent on Comverse Technology for its
financing needs for the foreseeable future.

Guarantees of Leases

Comverse Technology has guaranteed the payment of rent and the
performance of all other obligations under the leases for the Company's
facilities in Woodbury, New York which expired April 2003 and the lease for the
Company's vacated facility in the United Kingdom.

EMPLOYMENT AGREEMENT WITH DAVID LEDWELL

Loronix entered into an employment agreement with David Ledwell, one
of the Company's directors, pursuant to which Mr. Ledwell served as Loronix's
President and Chief Executive Officer. The term of Mr. Ledwell's employment
agreement was for two years from July 14, 2000. Pursuant to the employment
agreement, Mr. Ledwell received an annual base salary of $200,000 since July 14,
2000. In addition, Mr. Ledwell received a bonus of approximately $51,000 for
fiscal 2000, $40,000 for fiscal 2001 and $100,000 for fiscal 2002. In August
2000, Mr. Ledwell also received options to purchase 24,000 shares of Comverse
Technology common stock. On May 1, 2003, Mr. Ledwell ceased serving as Loronix's
President and Chief Executive Officer and became the Chief Strategic Officer of
the Company. In that capacity, Mr. Ledwell continues to receive the same base
salary as under his employment agreement, as well as a bonus to be determined at
the discretion of the Compensation Committee.

REPORT OF THE COMPENSATION COMMITTEE AND STOCK OPTION COMMITTEE
CONCERNING EXECUTIVE COMPENSATION

Generally

The Compensation Committee determines the salaries for executive
officers and other members of senior management, and makes recommendations to
the Board of Directors regarding the Company's incentive compensation and
benefit plans, except with respect to stock options, with respect to which the
Compensation Committee makes recommendations to the Stock Option Committee. The
Stock Option Committee administers the issuances of stock options under the
Company's 2002 Stock Incentive Compensation Plan.

The Company's overall compensation philosophy is to provide a total
compensation package that is competitive and enables Verint to attract,
motivate, reward and retain key executives and other senior management. The
principal components of the Company's executive compensation arrangements are
base salary, cash bonus awards and stock options. Compensation arrangements for
senior management personnel in certain instances include a performance-based
component as well as discretionary bonus awards.

Salary levels for executive officers and senior management are
reviewed annually, and are adjusted periodically when the Company believes that
adjustment is required, taking into account competitive factors in the
industries and locations of the Company's activities. In establishing
compensation levels throughout the organization, the Company relies to a
significant extent on its direct experience in the recruitment of personnel as
well as reported compensation levels of senior management of other, similarly
situated companies. Supplemental cash bonus awards are made periodically to
reflect superior performance, and in certain instances in accordance with
formulas based on the profitability of the Company or its individual business
units.

The Compensation Committee and the Stock Option Committee believe
that equity-based incentive arrangements, such as employee stock options and
employee stock purchase plans, are among the most effective means available to
the Company of aligning the interests of employees with the objectives of
stockholders generally, and of building their long-term commitment to the
organization. The Company emphasizes stock option awards as an essential element
of the remuneration package available to its executives and senior management.
Stock options typically vest in increments over a number of years to encourage
long-term commitment to the Company by the grantees.

The Company considers both available competitive data and subjective
performance evaluations in determining the number of options to grant to its
executive officers and key employees. During the year ended January 31, 2003,
the Company granted options to purchase an aggregate of 581,249 shares of Common
Stock, including options to purchase an aggregate of 76,322 shares awarded to
executive officers of the Company.

Section 162(m) of the Code, places a limit of $1,000,000 on the
amount of compensation that may be deducted by the Company in any year with
respect to each of the Company's five most highly paid executive officers.
Certain performance-based compensation that has been approved by stockholders is
not subject to the deduction limit. To maintain flexibility in compensating
executive officers in a manner designed to promote varying corporate goals, the
Compensation Committee has not adopted a policy that all compensation must be
deductible.

Compensation of the Chief Executive Officer

Mr. Bodner, President and Chief Executive Officer of the Company, has
served as the Company's President and/or Chief Executive Officer since 1994. Mr.
Bodner is employed as President and Chief Executive Officer of the Company under
an agreement providing for an annual salary of $200,000 and an annual bonus
which is based on the performance of Mr. Bodner and the Company. Mr. Bodner is
also entitled to receive the use of an automobile owned or leased by the
Company.

Mr. Bodner's compensation has been established by the Compensation
Committee and was discussed by the members of the Compensation Committee other
than Mr. Bodner, with the stock option component of Mr. Bodner's compensation
being approved by the Stock Option Committee upon the recommendation of the
Compensation Committee. In approving such terms, the Compensation Committee has
taken into account compensation levels of chief executive officers of other
publicly-held companies and the financial performance achieved by the Company
throughout the most current fiscal year, as well as during Mr. Bodner's tenure
as Chief Executive Officer.

THE COMPENSATION COMMITTEE

Kobi Alexander, Chairman
Dan Bodner
David Kreinberg
William Sorin

THE STOCK OPTION COMMITTEE
(SOLELY WITH RESPECT TO THE
ISSUANCE OF STOCK OPTIONS)

Howard Safir, Chairman
Victor De Marines
Kenneth Minihan

STOCK PERFORMANCE GRAPH

The following table compares the cumulative total stockholder return
on the Company's Common Stock with the cumulative total return on the Nasdaq
Composite Index and the Nasdaq Computer & Data Processing Services Index,
assuming an investment of $100 on May 16, 2002, the date of the Company's
initial public offering, and the reinvestment of any dividends. The comparisons
in the graph below are based upon historical data and are not indicative of, nor
intended to forecast, future performance of the Company's Common Stock.

May 16, 2002 January 31, 2003
------------ ----------------

Verint Systems Inc. $100 $128.50
Nasdaq Computer & Data Processing Services Index $100 $ 83.75
Nasdaq Composite Index $100 $ 76.83

REPORT OF THE AUDIT COMMITTEE
CONCERNING THE COMPANY'S AUDITED FINANCIAL STATEMENTS
FOR THE FISCAL YEAR ENDED JANUARY 31, 2003.

General: The primary purpose of the Audit Committee is to assist the
Board of Directors in its general oversight of the Company's financial reporting
process, and is more fully described in its charter which the Committee has
adopted and is included as Exhibit B to this Proxy Statement.

Review of Audited Financial Statements: Management is responsible for
the preparation, presentation and integrity of the financial statements. The
Audit Committee has reviewed and discussed the Company's audited financial
statements with management.

Review and Discussions with Independent Auditors: The Company's
independent auditors, Deloitte & Touche LLP, are responsible for performing an
independent audit of the consolidated financial statements of the Company, and
expressing an opinion on the conformity of those financial statements with
generally accepted accounting principles.

The Audit Committee has discussed with Deloitte & Touche LLP the
matters required to be discussed by SAS 61 (Communications with Audit
Committees) regarding the auditor's judgments about the quality of the Company's
accounting principles as applied in its financial reporting. The Committee has
also received written disclosures and the letter from Deloitte & Touche LLP
required by Independence Standards Board Standard No. 1 (Independence
Discussions with Audit Committees) and has discussed with Deloitte & Touche LLP
their independence.

Conclusion: Based on the review and discussions referred to above,
the Committee recommended to the Board of Directors that its audited financial
statements be included in the Company's Annual Report on Form 10-K for the
fiscal year ended January 31, 2003 for filing with the Securities and Exchange
Commission.

THE AUDIT COMMITTEE

Victor De Marines, Chairman
Kenneth Minihan
Howard Safir

The information contained in the foregoing report shall not be deemed
to be "soliciting material" or to be "filed" with the Securities and Exchange
Commission, nor shall such information be incorporated by reference into any
future filing under the Securities Act of 1933, as amended, or the Securities
Exchange Act of 1934, as amended, except to the extent that the Company
specifically incorporates it by reference in such filing.

PROPOSALS TO BE ACTED UPON AT THE ANNUAL MEETING

PROPOSAL NO. 1
ELECTION OF DIRECTORS

It is the intention of the Board of Directors to nominate at the
Annual Meeting each of the individuals named below for election as the Board of
Directors of the Company until the next Annual Meeting of Stockholders and the
election of their qualified successors, or their earlier resignation or removal.
In the event that any of such nominees should become unwilling or unable to
stand for election at the Annual Meeting for any reason, at present unknown, it
is intended that votes will be cast pursuant to the accompanying proxy for such
substitute nominee or nominees as the Board of Directors may designate.

Kobi Alexander David Ledwell Harris Oliner
Paul Baker Kenneth Minihan Paul Robinson
Dan Bodner Larry Myers Howard Safir
Victor De Marines Igal Nissim William Sorin
David Kreinberg

The election of directors will be made by plurality of votes cast at
the Annual Meeting, with the thirteen nominees receiving the greatest number of
votes being elected. THE BOARD OF DIRECTORS RECOMMENDS THE ELECTION AT THE
ANNUAL MEETING OF THE THIRTEEN INDIVIDUALS NAMED ABOVE.

PROPOSAL NO. 2
ADOPTION OF THE 2002 EMPLOYEE STOCK PURCHASE PLAN

INTRODUCTION

The Board of Directors has approved the 2002 Employee Stock Purchase
Plan (the "Stock Purchase Plan") and has recommended that the Stock Purchase
Plan be submitted to the stockholders for adoption at the Annual Meeting. The
Stock Purchase Plan is intended to motivate eligible employees to contribute to
the success of the Company. Adoption by the stockholders is required in order
for the Stock Purchase Plan to comply with Section 423 of the Code, as discussed
below.

Adoption of this proposal requires the affirmative vote of the
holders of a majority of the shares of Common Stock present or represented by
proxy, and entitled to vote, at the Annual Meeting. THE BOARD OF DIRECTORS
RECOMMENDS A VOTE FOR THE ADOPTION OF THE PROPOSAL.

SUMMARY OF THE STOCK PURCHASE PLAN

The following is a summary of the principal features of the Stock
Purchase Plan, but such summary is qualified in its entirety by reference to the
complete text of the Stock Purchase Plan, as amended, attached to this Proxy
Statement as Exhibit A. Capitalized terms not otherwise defined in this summary
have the meaning given to them in the text of the Stock Purchase Plan.

The Stock Purchase Plan is an employee stock purchase plan that is
intended to comply with the provisions of Section 423 of the Code. The Stock
Purchase Plan allows eligible employees who elect to participate
("Participants") to make purchases of Common Stock through payroll deductions at
a price of 85% of the fair market value of Common Stock on the first day or last
day of each Offering Period (as defined below), whichever is lower. Any employee
who, after purchasing Common Stock under the Stock Purchase Plan, would own 5%
or more of the total combined voting power or value of all classes of Common
Stock of the Company or any Subsidiary will not be eligible to participate.
Ownership of stock is determined in accordance with the provisions of Section
424(d) of the Code. In addition, an employee is not permitted in any calendar
year to purchase Common Stock under the Stock Purchase Plan with a fair market
value of more than $25,000.

Administration. The Stock Purchase Plan is administered by the
Compensation Committee, which is authorized to decide questions of eligibility
and to make rules and regulations for the administration and interpretation of
the Stock Purchase Plan, subject to final authority of the Board of Directors.
All determinations of the Board of Directors with respect to the Stock Purchase
Plan are binding. The expenses of administering the Stock Purchase Plan are
borne by the Company.

Shares Available Under the Stock Purchase Plan. Under the Stock
Purchase Plan, the Company will issue an aggregate of not more than 1,000,000
shares of Common Stock. The maximum number of shares issuable under the Stock
Purchase Plan will be subject to adjustment for any dividend, stock split or
other relevant change in the Company's capitalization.

Eligibility. With certain exceptions, all employees, including
officers and directors who are Company employees, who have been employed by the
Company or an eligible subsidiary for at least three months, are eligible to
participate in the Stock Purchase Plan. The purchase of shares under the Stock
Purchase Plan is voluntary, and the Company cannot now determine the number of
shares to be purchased under the Stock Purchase Plan in the future by any person
or group.

Operation of the Stock Purchase Plan. Common Stock will be purchased
under the Stock Purchase Plan through semi-annual offering periods. Offering
periods will begin on April 1 and October 1 of each year. Under the Stock
Purchase Plan, eligible Employees may elect to withhold up to 10% of their base
pay through payroll deductions for purchases of Common Stock. The price at which
an employee may purchase shares is the lower of (i) 85% of the last sale price

of a share of Common Stock on the Nasdaq National Market on the first day of the
offering period or (ii) 85% of such price on the last day of the offering
period.

Amendment. The Board of Directors may at any time, and from time to
time, modify, terminate or amend the Stock Purchase Plan in any respect without
obtaining stockholder approval, except where the approval of the stockholders of
the Company is required as to such modification or amendment under (i) Section
423 of the Code, (ii) Rule 16b-3 of the Exchange Act or any successor provisions
("Rule 16b-3") or (iii) under any applicable listing requirement of the NASDAQ
National Market System.

The termination, modification or amendment of the Stock Purchase Plan
shall not, without the consent of a Participant, affect his or her rights under
a purchase option previously granted to the Participant. With the consent of the
Participant affected, the Board of Directors may amend outstanding purchase
options in a manner not inconsistent with the terms of the Stock Purchase Plan.
The Board of Directors shall also have the right to amend or modify the terms
and provisions of the Stock Purchase Plan and of any purchase options previously
granted under the Stock Purchase Plan to the extent necessary to ensure the
continued qualification of the Stock Purchase Plan under Section 423 of the Code
and Rule 16b-3. The Stock Purchase Plan also contains provisions relating to the
disposition of purchase options in the event of certain mergers or other
significant transactions involving the Company.

CERTAIN FEDERAL INCOME TAX CONSEQUENCES

The Stock Purchase Plan, and the rights of Participants to make
purchases thereunder, is intended to qualify as an "employee stock purchase
plan" under Section 423 of the Code. No income (other than dividends) will be
taxable to a Participant until disposition of the shares purchased under the
Stock Purchase Plan. Upon the disposition of the shares of Common Stock, the
Participant will generally be subject to tax and the amount of the tax will
depend upon the holding period.

If the shares are disposed of more than two years from the first day
of the Offering Period, or if the Participant dies (at any time, regardless of
the holding period), the Participant will recognize ordinary income for the
taxable year of the disposition or death measured as the lesser of (a) the
excess of the fair market value of the shares at the time of such disposition
over the purchase price or (b) an amount equal to 15% of the purchase price of
the shares. The Company will not be entitled to a corresponding deduction.

If the shares are disposed of within two years of the first day of
the Offering Period (a "Disqualifying Disposition"), the Participant will
recognize ordinary income for the taxable year of the disposition generally
measured as the excess of the fair market value of the shares on the date the
shares are purchased over the purchase price. Any additional gain or loss will
be treated as short-term or long-term capital gain or loss depending on the
length of time the Participant held the Common Stock. Subject to the limitation
described in the next sentence, the Company will be entitled to a tax deduction
equal to the amount of ordinary income recognized as described in this
paragraph. Under Section 162(m), the Company's tax deduction for all
compensation paid to specified officers in any one year is limited to $1,000,000

unless the compensation qualifies for an exemption from this limitation. Amounts
recognized as ordinary income on a Disqualifying Disposition will not be exempt.

The Participant's tax basis in the shares will initially be his or
her purchase price for those particular shares, and that tax basis will be
increased at the time of disposition of the shares by the foregoing taxable
amount. In the case of a taxable disposition of the shares, the difference
between such adjusted tax basis and the amount realized will be capital gain or
loss, either long-term or short-term, depending upon how long the shares have
been held on the date of disposition.

PROPOSAL NO. 3
RATIFICATION OF ENGAGEMENT OF INDEPENDENT AUDITORS

Stockholders will be requested at the Annual Meeting to ratify the
engagement of Deloitte & Touche LLP to serve as independent auditors of the
Company for the year ending January 31, 2004. Deloitte & Touche LLP has served
as the Company's auditors since 1994. A representative of the firm is expected
to be present at the Annual Meeting, will have the opportunity to make a
statement and will be available to respond to appropriate questions. THE BOARD
OF DIRECTORS RECOMMENDS A VOTE FOR THE ADOPTION OF THE PROPOSAL.

The following table sets forth the approximate aggregate amount of
fees billed to the Company for the fiscal year ended January 31, 2003 by the
Company's principal accounting firm, Deloitte & Touche LLP:

Audit Fees: $293,000

All Other Fees: $631,000, which includes $535,000 in connection
with the Company's initial public offering.

All other fees include items such as due diligence and consultations
on services performed for capital raising activities, services performed in
connection with registration statements, mergers and acquisitions, preparation
and review of tax returns, consultations on accounting and tax related issues,
as well as other miscellaneous items.

The Audit Committee has considered whether the provision of the
services other than audit services referenced above is compatible with
maintenance of the principal accountant's independence.

AVAILABILITY OF FORM 10-K

The Company will provide to any stockholder, without charge, upon
written request of such stockholder, a copy of the Annual Report on Form 10-K
for the fiscal year ended January 31, 2003, as filed with the Securities and

Exchange Commission. Such requests should be addressed to Verint Systems Inc.,
330 South Service Road, Melville, New York 11747, Attention: Investor Relations.

STOCKHOLDER PROPOSALS FOR 2004 ANNUAL MEETING

The Company currently expects to hold its next Annual Meeting of
Stockholders on or about August 6, 2004. Any stockholder who wishes to make a
proposal for consideration at that meeting and wishes to have that proposal
included in the proxy statement for the meeting must submit the proposal to the
Secretary of the Company no later than January 31, 2004. Such a proposal will be
included in next year's proxy statement to the extent required by the
regulations of the Securities and Exchange Commission. A stockholder who wishes
to make a proposal at the 2004 Annual Meeting, but does not wish to have the
proposal included in the proxy statement for that meeting, must give notice of
the proposal to the Secretary of the Company no later than July 22, 2004 in
order for the notice to be considered timely under Rule 14a-4(c) of the
Securities and Exchange Commission.

OTHER BUSINESS

The Board of Directors does not know of any matter to be brought
before the Annual Meeting other than the matters specified in the Notice of
Annual Meeting accompanying this Proxy Statement. The persons named in the form
of proxy solicited by the Board of Directors will vote all proxies that have
been properly executed. If any matters not set forth in the Notice of Annual
Meeting are properly brought before the Annual Meeting, such persons will vote
thereon in accordance with their best judgment.

By Order of the Board of Directors,

/s/Dan Bodner
--------------------------------------
Dan Bodner
Chief Executive Officer and President

Melville, New York
May 28, 2003

EXHIBIT A
---------

VERINT SYSTEMS INC.

2002 EMPLOYEE STOCK PURCHASE PLAN

AMENDED AND RESTATED AS OF MAY 22, 2003

1. PURPOSES.
--------

The 2002 Employee Stock Purchase Plan of Verint Systems Inc. (the
"Plan") is intended to provide a method whereby employees of Verint Systems Inc.
and its subsidiary and predecessor corporations, if any (hereinafter
collectively referred to, unless the context otherwise requires, the "Company"),
will have an opportunity to acquire a proprietary interest in the Company
through the purchase of shares of Common Stock of the Company. It is the
intention of the Company to have the Plan qualify as an "employee stock purchase
plan" under Section 423 of the Internal Revenue Code of 1986, as amended (the
"Code"). The provisions of the Plan shall, accordingly, be construed so as to
extend and limit participation in a manner consistent with the requirements of
Section 423 of the Code.

2. DEFINITIONS.
-----------

(a) "Annualized Base Pay" means: (i) for any Employee who was
employed by the Company for an entire twelve-month period ending on the day
prior to an Offering Commencement Date, the Employee's total Base Pay for such
twelve-month period; or (ii) for any Employee not employed for the entire
twelve-month period ending on the day prior to an Offering Commencement Date,
the sum of the Base Pay earned in each of the full calendar months prior to the
Offering Commencement Date during which the Employee was employed by the
Company, divided by the number of full calendar months for which the Employee
was employed, multiplied by twelve.

(b) "Base Pay" means regular straight-time earnings (as the same may
be adjusted from time to time) but excluding payments for overtime, shift
differentials, incentive compensation, sales commissions, bonuses and other
special payments.

(c) "Common Stock" means the common stock of the Company, par value
$.001, or such other class or kind of shares or other securities resulting from
the application of Paragraphs 17 or 20.

(d) "Employee" means any person who is customarily employed for 20 or
more hours per week and more than five months in a calendar year by the Company
or by a Subsidiary Corporation.

(e) "Offering Commencement Date" means the applicable date on which
an Offering under the Plan commences pursuant to Paragraph 4(a).

(f) "Offering Termination Date" means the applicable date on which an
Offering under the Plan terminates pursuant to Paragraph 4(a).

(g) "Subsidiary Corporation" means any present or future corporation
which (i) is a "subsidiary corporation" as that term is defined in Section
424(f) of the Code and (ii) is designated as a participant in the Plan by the
Board of Directors or Committee described in Paragraph 13.

3. ELIGIBILITY.

(a) Any Employee who shall have completed three (3) months of
employment and shall be employed by the Company on the applicable Offering
Commencement Date shall be eligible to participate in the Plan.

(b) Any provision of the Plan to the contrary notwithstanding, no
Employee shall be granted an option to participate in the Plan:

(i) if, immediately after the grant, such Employee would own
stock, and/or hold outstanding options to purchase stock, possessing 5% or more
of the total combined voting power or value of all classes of stock of the
Company or of any Subsidiary Corporation (for purposes of this Paragraph the
rules of Section 424(d) of the Code shall apply in determining stock ownership
of any employee); or

(ii) which permits his or her rights to purchase stock under all
employee stock purchase plans maintained by the Company and its subsidiaries to
accrue at a rate which exceeds $25,000 of the fair market value of the stock
(determined at the time such option is granted) for each calendar year in which
such option is outstanding at any time.

4. OFFERING DATES.
--------------

(a) The Plan will be implemented by semiannual offerings (referred to
herein collectively as "Offerings" and individually as an "Offering") of a
maximum aggregate of 1,000,000 shares (subject to adjustment as provided in
Paragraph 12(a) and 17) of Common Stock, subject to Paragraph 12, 17 and 22
below, as follows:

(i) Offering I shall commence on each April 1 and terminate on
each September 30.

(ii) Offering II shall commence on each October 1 and terminate
on each March 31.

Participation in any one Offering under the Plan shall neither limit, nor
require, participation in any other Offering.

(b) The first Offering shall commence on September 1, 2002.

5. PARTICIPATION.
-------------

All Employees will become participants in an Offering on the
applicable Offering Commencement Date. Payroll deductions, if any, for a
participant shall commence on the applicable Offering Commencement Date of the
Offering and shall end on the Offering Termination Date of such Offering, unless
sooner terminated pursuant to Paragraph 10.

6. PAYROLL DEDUCTIONS.
------------------

(a) Participants may elect to have amounts withheld from their Base
Pay by completing an authorization for a payroll deduction ("Authorization") on
the form provided by the Company and filing it with the Company's Payroll
department. At the time a participant files his or her Authorization for a
payroll deduction, the participant shall elect to have deductions made from his
or her pay on each payday during the time he or she is a participant in an
Offering at the rate of 0, 1, 2, 3, 4, 5, 6, 7, 8, 9 or 10% of his or her
Annualized Base Pay. If a participant has not filed an Authorization for a
previous Offering or for the applicable Offering at least seven (7) days prior
to the applicable Offering Commencement Date, he or she shall be deemed to have
filed an Authorization electing to withhold 0% of his or her Annualized Base
Pay.

(b) All payroll deductions made for the participant shall be credited
to his or her account maintained by the Company under the Plan. A participant
may not make any separate cash payment into such account.

(c) Except as provided in Paragraph 8(b) or 10, a participant may
only make changes to the rate of deduction from his or her Annualized Base Pay,
on not more than one occasion during an Offering, by completing a new
Authorization on the form provided by the Company and filing it with the
Company's Director of Treasury Operations as provided herein. Such new
Authorization shall be effective upon the commencement of the first pay period
subsequent to its filing. A participant may change his or her Authorization only
once during any Offering.

7. GRANTING OF OPTION.
------------------

(a) For each of the Offerings, a participating Employee shall be
deemed to have been granted an option (the "Option"), on the applicable Offering
Commencement Date, to purchase a maximum number of shares of Common Stock equal
to an amount determined as follows: 85% of the market value of a share of the
Company's Common Stock on the applicable Offering Commencement Date shall be
divided into an amount equal to the Authorization the Employee has filed with
the Company's payroll department. For all purposes of the Plan, the market value
of the Company's Common Stock shall be determined as provided in subparagraph
(b) below.

(b) The purchase price of a share of Common Stock purchased with
payroll deductions made during each Offering (the "Option Exercise Price") shall
be the lower of:

(i) 85% of the last sale price of the Common Stock on the Nasdaq
National Market (or on such other national securities exchange on which the
Common Stock is then traded) as reported in The Wall Street Journal on the
applicable Offering Commencement Date (or on the next regular business date on
which shares of Common Stock shall be traded if no shares of Common Stock shall
have been traded on such Offering Commencement Date); or

(ii) 85% of the last sale price of Common Stock on the Nasdaq
National Market (or on such other national securities exchange on which the
Common Stock is then traded) as reported in The Wall Street Journal on the
applicable Offering Termination Date (or on the next regular business date on
which shares of Common Stock shall be traded if no shares of Common Stock shall
have been traded on such Offering Termination Date).

8. EXERCISE OF OPTIONS.
-------------------

With respect to each Offering during the term of the Plan:

(a) Unless a participant gives written notice of withdrawal to the
Company as provided in Paragraphs 8(b) and 10, his or her Option will be deemed
to have been exercised automatically on the Offering Termination Date applicable
to such Offering, for the purchase of the number of full shares of Common Stock
which the accumulated payroll deductions (without interest) in his or her
account maintained by the Company under the Plan at that time will purchase at
the applicable Option Exercise Price (but not in excess of the number of shares
for which Options have been granted to the Employee pursuant to Paragraph 7(a)),
and any excess in his or her account at that time will be returned to him or
her, with interest as determined by the Committee prior to each Offering
Commencement Date, based on the assumption that such excess comprises funds most
recently deducted from the participant's pay; provided that any excess returned
on account of fractional shares will not be credited with any interest.

(b) By written notice to the Director of Treasury Operations of the
Company at any time prior to the Offering Termination Date applicable to any
such Offering, a participant may elect to withdraw all, but not less than all,
of the accumulated payroll deductions in his or her account at such time, with
interest as determined by the Committee prior to each Offering Commencement
Date.

(c) Fractional shares will not be issued under the Plan and any
accumulated payroll deductions which would have been used to purchase fractional
shares shall be returned to an employee without interest promptly following the
termination of an Offering.

9. DELIVERY.
--------

As promptly as practicable after the Offering Termination Date of
each Offering, the Company will deliver to each participant, as appropriate, the

certificate or certificates representing the shares of Common Stock purchased
upon the exercise of such participant's Option.

10. WITHDRAWAL.
----------

(a) As indicated in Paragraph 8(b), a participant may withdraw
payroll deductions credited to his or her account with the Company under any
Offering at any time prior to the applicable Offering Termination Date by giving
written notice of withdrawal to the Director of Treasury Operations. All of the
participant's payroll deductions credited to his or her account will be paid to
the participant promptly after receipt of such notice of withdrawal and no
further payroll deductions will be made from his or her pay during such
Offering. The Company may, at its option, treat any attempt by an employee to
borrow on the security of accumulated payroll deductions as an election, under
Paragraph 8(b), to withdraw such deductions.

(b) A participant's withdrawal from any Offering will not have any
effect upon his or her eligibility to participate in any succeeding Offering or
in any similar Plan which may hereafter be adopted by the Company.

(c) Upon termination of the participant's employment for any reason,
including retirement but excluding death or disability, while in the employ of
the Company, the payroll deductions credited to his or her account will be
returned to the participant, with interest as determined by the Committee prior
to each Offering Commencement Date, or, in the case of his or her death
subsequent to the termination of employment, to the person or persons entitled
thereto under Paragraph 14.

(d) Upon termination of the participant's employment because of
disability or death, the participant or his or her beneficiary (as defined in
Paragraph 14) shall have the right to elect, by written notice given to the
Company's Director of Treasury Operations prior to the expiration of the period
of 30 days commencing with the date of the disability or death of the
participant, either

(i) to withdraw all of the payroll deductions credited to the
participant's account under the Plan; or

(ii) to exercise the participant's Option on the Offering
Termination Date next following the date of the participant's disability or
death for the purchase of the number of full shares of Common Stock which the
accumulated payroll deductions in the participant's account at the date of the
participant's disability or death will purchase at the applicable Option
Exercise Price, and any excess in such account will be returned to the
participant or said beneficiary.

If no such written notice of election is received by the Director of
Treasury Operations, the participant or beneficiary shall automatically be
deemed to have elected to withdraw the payroll deductions credited to the
participant's account at the date of the participant's disability or death and

the same will be paid promptly to the participant or said beneficiary with
interest as determined by the Committee prior to each Offering Commencement
Date.

11. INTEREST.
--------

No interest will be paid or allowed on any money paid into the Plan
or credited to the account of any participant employee except under withdrawal
as provided under Paragraphs 8(b) and 10 or upon the return of payroll
deductions as provided under Paragraphs 8(a) and 12(a). In the event of the
return of excess payroll deductions under Paragraphs 8(a) and 12(a), interest
thereon, if any, shall be computed assuming that such excess comprises funds
most recently deducted from the participant's pay.

12. STOCK.
-----

(a) The maximum number of shares of Common Stock which shall be made
available for sale under the Plan shall be 1,000,000 shares, subject to
adjustment upon changes in capitalization of the Company as provided in
Paragraph 17. If the total number of shares for which Options are exercised in
accordance with Paragraph 8 exceeds 1,000,000, the Company shall make a pro rata
allocation of the shares available for delivery and distribution in as nearly a
uniform manner as shall be practicable and as it shall determine to be
equitable, and the balance of payroll deductions credited to the account of each
participant under the Plan shall be returned to him or her as promptly as
possible, with interest on such balance at the rate determined by the Committee
prior to each Offering Commencement Date, based on the assumption that such
excess comprises funds most recently deducted from the participant's pay.

(b) The participant will have no interest in Common Stock covered by
his or her Option until such Option has been exercised.

(c) Common Stock to be delivered to a participant under the Plan will
be issued in the name of the participant, or, if the participant so directs, by
written notice to the Company prior to the Offering Termination Date applicable
thereto, in the names of the participant and one such other person as may be
designated by the participant, as joint tenants with rights of survivorship, to
the extent permitted by applicable law.

13. ADMINISTRATION.
--------------

The Plan shall be administered by the committee appointed by the
Board of Directors of the Company to administer the Plan (the committee so
designated by the Board of Directors shall hereinafter be referred to as the
"Committee"). The officer of the Company charged with day-to-day administration
of the Plan shall, for matters involving the Plan, be an ex-officio member of
the Committee. The interpretation and construction of any provision of the Plan
and the adoption of rules and regulations for administering the Plan shall be
made by the Committee, subject, however, at all times to the final approval of
the Board of Directors of the Company. Such rules may include, without
limitation, restrictions on the frequency of changes in withholding rates.
Determinations made by the Committee and approved by the Board of Directors of

the Company with respect to any matter or provision contained in the Plan shall
be final, conclusive and binding upon the Company and upon all participants,
their heirs or legal representatives. Any rule or regulation adopted by the
Committee shall remain in full force and effect unless and until altered,
amended or repealed by the Committee or the Board of Directors of the Company.

14. DESIGNATION OF BENEFICIARY.
--------------------------

A participant may file a written designation of a beneficiary who is
to receive any shares of Common Stock and/or cash in the event of the death of
the participant prior to the delivery of such shares or cash to the participant.
Such designation of beneficiary may be changed by the participant at any time by
written notice to the Company's payroll department. Within 30 days after the
participant's death, the beneficiary may, as provided in Paragraph 10(d), elect
to exercise the participant's Option when it becomes exercisable on the Offering
Termination Date of the then current Offering. Upon the death of a participant
and upon receipt by the Company of proof of identity and existence at the
participant's death, (of a beneficiary validly designated by the participant
under the Plan) and upon and notice of election of the validly designated
beneficiary to exercise the participant's Option, the Company shall deliver such
stock and/or cash to such beneficiary. In the event of the death of a
participant and in the absence of a beneficiary validly designated under the
Plan who is living at the time of such participant's death, the Company shall
deliver such stock and/or cash to the executor or administrator of the estate of
the participant, or if no such executor or administrator has been appointed (to
the knowledge of the Company) the Company, in its discretion, may deliver such
stock and/or cash to the spouse or to any one or more dependents of the
participant as the Company may determine. No beneficiary shall prior to the
death of the participant by whom he or she has been designated acquire any
interest in the stock or cash credited to the participant's account maintained
by the Company under the Plan.

15. TRANSFERABILITY.
---------------

Neither payroll deductions credited to a participant's account nor
any rights with regard to the exercise of an Option or to receive stock under
the Plan may be assigned, transferred, pledged or otherwise disposed of in any
way by the participant otherwise than by will or the laws of descent and
distribution. Any such attempted assignment, transfer, pledge or other
disposition shall be without effect, except that the Company may treat such act
as an election to withdraw funds in accordance with Paragraph 8(b).

16. USE OF FUNDS.
------------

All payroll deductions received or held by the Company under this
Plan may be used by the Company for any corporate purpose and the Company shall
not be obligated to segregate such payroll deductions.

17. EFFECTS OF CHANGES OF COMMON STOCK.
----------------------------------

In the event of any changes of outstanding shares of the Common Stock
by reason of stock dividends, subdivisions, combinations and exchanges of
shares, recapitalizations, mergers in which the Company is the surviving
corporation, consolidations, and the like, the aggregate number of and class of
shares available under the Plan and Option Exercise Price per share shall be
appropriately adjusted by the Board of Directors of the Company, whose
determination shall be conclusive. Any such adjustments may provide for the
elimination of any fractional shares which would otherwise become subject to any
Options.

18. AMENDMENT OR TERMINATION.
------------------------

(a) The Board of Directors of the Company may at any time, and from
time to time, modify, terminate or amend the Plan in any respect, except that if
at any time the approval of the stockholders of the Company is required as to
such modification or amendment under (i) Section 423 of the Code, or (ii) under
Rule 16b-3 of the Securities Exchange Act of 1934, as amended, or any successor
provisions ("Rule 16b-3"), or (iii) under any applicable listing requirements,
the Board of Directors may not effect such modification or amendment without
such approval.

(b) The termination or any modification or amendment of the Plan
shall not, without the consent of a participant, affect his or her rights under
an Option previously granted to him or her. With the consent of the participant
affected, the Board of Directors may amend outstanding Options in a manner not
inconsistent with the Plan. The Board of Directors shall have the right to amend
or modify the terms and provisions of the Plan and of any Options previously
granted under the Plan to the extent necessary to ensure the continued
qualification of the Plan under Section 423 of the Code and Rule 16b-3.

19. NOTICES.
-------

All notices or other communications by a participant to the Company
under or in connection with the Plan shall be deemed to have been duly given
when received by the Company's Director of Treasury Operations.

20. MERGER OR CONSOLIDATION.
-----------------------

If the Company shall at any time merge into or consolidate with
another corporation and the Company is the surviving entity, the holder of each
Option then outstanding will thereafter be entitled to receive at the next
Offering Termination Date upon the automatic exercise of such Option under
Paragraph 8(a) (unless previously withdrawn pursuant to Paragraph 10) for each
share as to which such Option shall be exercised the securities or property
which a holder of one share of the Common Stock was entitled to upon and at the
time of such merger or consolidation, and the Board of Directors of the Company
shall take such steps in connection with such merger or consolidation as the
Board of Directors shall deem necessary to assure that the provisions of

Paragraph 17 shall thereafter be applicable, as nearly as reasonably
practicable, to such securities or property. In the event of a merger or
consolidation in which the Company is not the surviving entity, or of a sale of
all or substantially all of the assets of the Company, the Plan shall terminate,
and all payroll deductions credited to participants' accounts shall be returned
to them, with interest as determined by the Committee prior to each Offering
Commencement Date; provided, however, that the Board of Directors may, in the
event of such merger, consolidation or sale, accelerate the Offering Termination
Date of the Offering then in effect and permit participants to purchase shares
under the Plan at such accelerated Offering Termination Date.

21. APPROVAL OF STOCKHOLDERS.
------------------------

The Plan has been adopted by the Board of Directors of the Company.
The Plan shall be approved by the stockholders of the Company in accordance with
Section 423(b)(2) of the Code.

22. REGISTRATION AND QUALIFICATION OF THE PLAN UNDER
------------------------------------------------
APPLICABLE SECURITIES LAWS.
--------------------------

Notwithstanding anything to the contrary herein (including Paragraphs
4 and 8 hereof), no Option shall be exercised (and no Offering Period shall
terminate) until such time as the Company has qualified or registered the shares
which are subject to the Options under all applicable state and federal
securities laws to the extent required by such laws. In the event the shares
shall not have been so qualified and registered prior the date an offering is
scheduled to terminate, the Offering Termination Date shall be the date upon
which the registration of the shares and such other qualification shall have
become effective; provided, however, that for purposes of Paragraph 6 of the
Plan, payroll deductions shall cease on the date the Offering Period was
originally scheduled to terminate for the applicable Offering.

EXHIBIT B
---------

VERINT SYSTEMS INC.
-------------------

AUDIT COMMITTEE CHARTER
-----------------------

PURPOSE

The primary purpose of the Audit Committee (the "Committee") of Verint
Systems Inc. (the "Company") is to assist the Board of Directors (the "Board")
in fulfilling its responsibility to oversee management's conduct of the
Company's financial reporting process, including by overviewing the financial
reports and other financial information provided by the Company to any
governmental or regulatory body, the public or other users thereof, the
Company's systems of internal accounting and financial controls, and the annual
independent audit of the Company's financial statements.

In discharging its oversight role, the Committee is empowered to
investigate any matter brought to its attention with full access to all books,
records, facilities and personnel of the Company and the power to retain outside
counsel, auditors or other experts for this purpose. The Board and the Committee
are in place to represent the Company's stockholders; accordingly, the outside
auditor is ultimately accountable to the Board and the Committee.

The Committee shall review the adequacy of this charter on an annual
basis.

MEMBERSHIP

The Committee shall be comprised of not less than three members of the
Board, and the Committee's composition will meet the requirements of the Audit
Committee Policy of the NASD.

Accordingly, all of the members will be directors:

1. Who have no relationship to the Company that may interfere with the
exercise of their independence from management and the Company; and

2. Who are financially literate or who become financially literate within a
reasonable period of time after appointment to the Committee.

In addition, at least one member of the Committee will have accounting or
related financial management expertise.

KEY RESPONSIBILITIES

The Committee's job is one of oversight and it recognizes that the
Company's management is responsible for preparing the Company's financial

statements and that the outside auditors are responsible for auditing those
financial statements. Additionally, the Committee recognizes that financial
management, as well as the outside auditors, have more time, knowledge and more
detailed information on the Company than do Committee members; consequently, in
carrying out its oversight responsibilities, the Committee is not providing any
expert or special assurance as to the Company's financial statements or any
professional certification as to the outside auditor's work.

The following functions shall be the common recurring activities of the
Committee in carrying out its oversight function. These functions are set forth
as a guide with the understanding that the Committee may diverge from this guide
as appropriate given the circumstances.

o The Committee shall review with management and the outside auditors
the audited financial statements to be included in the Company's
Annual Report on Form 10-K (or the Annual Report to stockholders if
distributed prior to the filing of Form 10-K) and review and consider
with the outside auditors the matters required to be discussed by
Statement of Auditing Standards ("SAS") No. 61.

o As a whole, or through the Committee chair, the Committee shall review
with the outside auditors the Company's interim financial results to
be included in the Company's quarterly reports to be filed with
Securities and Exchange Commission and the matters required to be
discussed by SAS No. 61; this review will occur prior to the Company's
filing of the Form 10-Q.

o The Committee shall discuss with management and the outside auditors
the quality and adequacy of the Company's internal controls.

o The Committee shall:

o request from the outside auditors annually, a formal written
statement delineating all relationships between the auditor and
the Company consistent with Independence Standards Board Standard
Number 1;

o discuss with the outside auditors any such disclosed
relationships and their impact on the outside auditor's
independence; and

o recommend that the Board take appropriate action to oversee the
independence of the outside auditor.

o The Committee, subject to any action that may be taken by the full
Board, shall have the ultimate authority and responsibility to select
(or nominate for shareholder approval), evaluate and, where
appropriate, replace the outside auditor.

THIS PROXY IS SOLICITED ON BEHALF OF
THE BOARD OF DIRECTORS OF VERINT SYSTEMS INC.
FOR THE 2003 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON AUGUST 12, 2003

The undersigned stockholder of VERINT SYSTEMS INC., a Delaware
corporation, hereby acknowledges receipt of the Notice of Annual Meeting of
Stockholders and Proxy Statement, each dated May 28, 2003, and Verint's Annual
Report on Form 10-K, and hereby appoints Dan Bodner, Igal Nissim and William
Sorin, or either of them, proxies, with full power to each of substitution, on
behalf and in the name of the undersigned, to represent the undersigned at the
2003 Annual Meeting of Stockholders of VERINT SYSTEMS INC. to be held on August
12, 2003 at 11:00 a.m., eastern time, at the Hilton Huntington, 598 Broadhollow
Road, Melville, New York 11747, and at any adjournment or postponement thereof,
and to vote all shares of Common Stock which the undersigned would be entitled
to vote if then and there personally present, on the matters set forth below.

(Continued and to be signed on the reverse side)

Please date, sign and mail your
proxy card back as soon as possible!

Annual Meeting of Stockholders
VERINT SYSTEMS INC.

August 12, 2003

PROXY VOTING INSTRUCTIONS

TO VOTE BY MAIL
Please date, sign and mail your proxy card in the envelope provided as soon as
possible.

YOUR CONTROL NUMBER IS [graphic of arrow] [ ]

This Proxy when properly executed will be voted in the manner directed herein by
the undersigned stockholder. If no direction is made, this Proxy will be voted
FOR the nominees in Proposal No. 1, FOR adoption of the 2002 Employee Stock
Purchase Plan in Proposal No. 2, and FOR ratification of the engagement of
Deloitte & Touche LLP as independent auditors of Verint Systems Inc. for the
fiscal year ending January 31, 2004 in Proposal No. 3, and as said proxies deem
advisable on such other matters as may properly come before the meeting.

1. PROPOSAL NO. 1: ELECTION OF DIRECTORS:

[ ] FOR all nominees listed below [ ] WITHHOLD AUTHORITY to vote for
(except as indicated) the nominee listed below
Kobi Alexander Larry Myers
Paul Baker Igal Nissim
Dan Bodner Harris Oliner
Victor De Marines Paul Robinson
David Kreinberg Howard Safir
David Ledwell William Sorin
Kenneth Minihan

If you wish to withhold authority to vote for any individual nominee, please
clearly strike a line through such nominee's name.

2. PROPOSAL NO. 2: ADOPTION OF THE 2002 EMPLOYEE STOCK PURCHASE PLAN:

[ ] FOR [ ] AGAINST [ ] ABSTAIN

3. PROPOSAL NO. 3: RATIFICATION OF ENGAGEMENT OF INDEPENDENT AUDITORS:

[ ] FOR [ ] AGAINST [ ] ABSTAIN

DATED: ____________________ , 2003

-----------------------------------
Signature

This Proxy should be marked, dated and signed by the stockholder(s) exactly as
his or her name appears hereon, and returned promptly in the enclosed envelope.
Persons signing in a fiduciary capacity should so indicate. If shares are held
by joint tenants or as community property, both should sign.