As filed with the Securities and Exchange Commission on
February 10, 1999November 26, 2003Registration Statement No.
333-66937 ================================================================================333-108626SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
______________________AMENDMENT NO. 1
TO
FORM S-3
______________________REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
______________________KEANE, INC.
(Exact Name(Exact name of
Registrantregistrant asSpecifiedspecified in itsCharter) ______________________ MASSACHUSETTS 04-2437166 (State or Other Jurisdiction (I.R.S. Employer Identification No.) of Incorporation or Organization) TENcharter)
MASSACHUSETTS 04-2437166 (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.) 100 CITY SQUARE
BOSTON, MASSACHUSETTS 02129
(617) 241-9200 (Address,617-241-9200
(Address, including zip code, and telephone number, including area code, of
registrant'sregistrant’s principal executive offices)______________________ JOHN F.BRIAN T. KEANE
PRESIDENT AND CHIEF EXECUTIVE OFFICER
KEANE, INC.
TEN100 CITY SQUARE
BOSTON, MASSACHUSETTS 02129
(617) 241-9200 (Name,617-241-9200
(Name, address, including zip code, and telephone number, including area code, of agent for service)
COPY TO:Copy to:
HAL J. LEIBOWITZ, ESQ.
C/OHALE AND DORR LLP
60 STATE STREET
BOSTON, MASSACHUSETTS 02109
(617) 526-6000 APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC: As soon as practicable617-526-6000
Approximate date of commencement of proposed sale to public: From time to time after this Registration Statement becomes effective.
If the only securities being registered on this Form are being offered pursuant to dividend or interest reinvestment plans, please check the following box.
[ ]¨If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities offered only in connection with dividend or interest reinvestment plans, check the following box.
[x]xIf this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.
[ ] ________.¨If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.
[ ] __________.¨If delivery of the
Prospectusprospectus is expected to be made pursuant to Rule 434, please check the following box.[ ] _____________________________________________________________ THE COMPANY HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE COMPANY SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION¨The registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a)
OF THE SECURITIES ACT OFof the Securities Act of 1933OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTIONor until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a),SHALL DETERMINE. ================================================================================SUBJECT TO COMPLETION, DATED FEBRUARY 10, 1999 PROSPECTUSshall determine.The information in this
Prospectusprospectus is not complete and may be changed. TheSelling Shareholdersselling securityholders named in thisProspectus cannotprospectus may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. ThisProspectusprospectus is not an offer to sell these securities andisthe selling securityholders named in this prospectus are not solicitingan offeroffers to buy these securities in anystatejurisdiction where the offer or sale is not permitted.915,571Subject to completion, dated November 26, 2003
PROSPECTUS
$150,000,000
KEANE, INC.
2% Convertible Subordinated Debentures Due 2013
8,174,835 Shares
KEANE, INC.of Common Stock_____________________ This Prospectus relatesissuable upon conversion of the DebenturesKeane, Inc. issued an aggregate principal amount of $150,000,000 of its debentures in a private placement on June 18, 2003 and June 23, 2003 to the
public resale,initial purchasers. The initial purchasers resold the debentures to qualified institutional buyers in accordance with Rule 144A under the Securities Act of 1933, as amended. This prospectus will be used by the selling securityholders from time to timeof 915,571to resell their debentures and any shares of our common stock issuable upon conversion of the debentures. We will not receive any proceeds from the sale of the debentures or any shares of our common stock issuable upon conversion of the debentures offered by this prospectus.The debentures bear regular interest at 2% per annum on the principal amount from June 18, 2003. Regular interest is payable semi-annually in arrears in cash on June 15 and December 15 of each year, beginning December 15, 2003. The debentures are unsecured and subordinated obligations of Keane.
We will pay contingent interest to holders of the debentures in the amounts set forth in “Description of Debentures – Contingent Interest,” during any six-month period from and including an interest payment date to, but excluding, the next interest payment date, commencing with the six-month period beginning June 15, 2008, if the average trading price of the debentures for a five trading day measurement period immediately preceding the first day of the applicable six-month period equals 120% or more of the principal amount of the debentures.
Holders may convert each debenture for a number of shares of our common stock, which we refer to as the conversion rate, as follows:
in any fiscal quarter, commencing after September 30, 2003, if the closing sale price of our common stock for at least 20 trading days in the 30 consecutive trading days ending on the last trading day of the proceeding fiscal quarter is more than 120% of the then effective conversion price (initially 120% of $18.349, or $22.019),subject to certain exceptions, during the five business day period after any five consecutive trading day period in which the trading price per debenture for each day of the five trading day period was less than 98% of the product of the closing sale price of our common stock and the number of shares issuable upon conversion of such debentures,if the debentures have been called for redemption, orupon the occurrence of certain corporate transactions described in this prospectus under the caption “Description of Debentures – Conversion of Debentures.”The initial conversion rate for the debentures is 54.4989 shares of common stock per $1,000 principal amount of debentures, subject to adjustment as described in this prospectus, which represents an initial conversion price of approximately $18.349 per share.
Our common stock is listed on the New York Stock Exchange under the symbol “KEA”. On November 21, 2003, the last reported sale price of our common stock was $13.29.
If a designated event, as defined in this prospectus, occurs prior to maturity, holders of the debentures may require us to purchase for cash all or a portion of their debentures at a price equal to 100% of the principal amount of the debentures, plus accrued and unpaid interest and contingent interest, if any, to, but excluding, the date of repurchase, except in limited circumstances. In addition, holders may require us to purchase all or a portion of their debentures on June 15, 2008 at a price equal to 100% of the principal amount of the debentures, plus accrued and unpaid interest and contingent interest, if any, to, but excluding, the date of repurchase.
We may redeem for cash all or a portion of the debentures at any time on or after June 15, 2008 at a price equal to 100% of the principal amount of the debentures being redeemed, plus accrued and unpaid interest and contingent interest, if any, to, but excluding, the date of redemption.
For United States federal income tax purposes, the debentures constitute contingent payment debt instruments. You should read the discussion under “Material United States Federal Income Tax Considerations” beginning on page 42.
For a more detailed description of the debentures, see “Description of Debentures” beginning on page 19.
See “Risk Factors” beginning on page 6 to read about factors you should consider before investing in the debentures or our common stock.
Neither the Securities and Exchange Commission nor any other regulatory body has approved or disapproved of these securities or passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense.
Prospectus dated , 2003
1 1 2 6 13 13 14 15 19 36 38 42 46 48 48 Our executive offices are located at 100 City Square, Boston, Massachusetts 02129 and our telephone number is (617) 241-9200. Unless the context otherwise requires, references in this prospectus to “Keane, Inc.,” “Keane,” “we,” “us,” and “our” refers to Keane, Inc. and its consolidated subsidiaries. “Our common stock” refers to Keane’s common stock, $0.10 par value per share.
We have not, and the selling securityholders have not, authorized anyone to provide you with information different from that contained or incorporated by
certain shareholders identified belowreference in this prospectus. We are not, and the selling securityholders are not, offering to sell or seeking offers to buy the securities in any jurisdiction other than where an offer or sale is permitted. The information contained in this prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus or of any sale of the securities.WHERE YOU CAN FIND MORE INFORMATION
We file reports, proxy statements and other documents with the SEC. You may read and copy any document we file at the SEC’s public reference room at Judiciary Plaza Building, 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549. You should call 1-800-SEC-0330 for more information on the public reference room. Our SEC filings are also available to you on the SEC’s Internet site at http://www.sec.gov.
This prospectus is part of a registration statement that we filed with the SEC. The registration statement contains more information than this prospectus, including exhibits and schedules. You can obtain a copy of the registration statement from the SEC at the address listed above or from the SEC’s Internet site.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The SEC allows us to “incorporate” into this prospectus information that we file with the SEC in other documents. This means that we can disclose important information to you by referring to other documents that contain that information. The information incorporated by reference is considered to be part of this prospectus. Information contained in this prospectus and information that we file with the SEC in the
section entitled "Selling Shareholders". Keane issuedfuture and incorporate by reference in this prospectus automatically updates and supersedes previously filed information. We incorporate by reference thecommon stockdocuments listed below and any future filings we make with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934, prior to the sale of all the securities covered by thisProspectus (the "Shares")prospectus.
1. Our Annual Report on Form 10-K for the year ended December 31, 2002;
2. Our Quarterly Report on Form 10-Q for the quarter ended March 31, 2003;
3. Our Quarterly Report on Form 10-Q for the quarter ended June 30, 2003;
4. Our Quarterly Report on Form 10-Q for the quarter ended September 30, 2003;
5. Our Current Report on Form 8-K dated October 14, 2003;
6. All of our filings pursuant to the Exchange Act after the date of filing of this pre-effective amendment to the initial registration statement and prior to effectiveness of the registration statement; and
7. The description of our common stock contained in our Registration Statement on Form 8-A/A dated August 22, 2001 as amended by our Registration Statement on Form 8-A/A dated October 28, 2003. You may request a copy of these documents, which will be provided to you at no cost, by writing or telephoning us using the
Selling Shareholders on October 9, 1998following contact information:
Keane, Inc.
100 City Square
Boston, MA 02129
ATTN: Investor Relations
Telephone: (617) 241-9200
The following summary is qualified in
connectionits entirety by the more detailed information, including our consolidated financial statements and related notes that we have included or incorporated by reference into this prospectus. This summary does not contain all of the information that you should consider before investing in the debentures and our common stock issuable upon conversion of the debentures. You should read the entire prospectus carefully, especially the risks of investing in the debentures and our common stock issuable upon conversion of the debentures discussed under “Risk Factors.”Our Company
We are a leading provider of Information Technology (IT) and business consulting services. In business since 1965, our mission is to help clients optimize the performance of their IT organizations. We help clients improve business performance by planning, building, managing and rationalizing application software through our Business Consulting, Application Development and Integration (AD&I), and Application Development and Management Outsourcing (Applications Outsourcing) services.
We deliver our services through an integrated network of local branch offices in North America and the United Kingdom, and through Advanced Development Centers in the United States, Canada and India. This global delivery model enables us to provide our services to customers on-site, at our near-shore facilities in Canada, and through our offshore development centers in India. Our branch offices are supported by our centralized Strategic Practices and Quality Assurance Groups.
Our clients consist primarily of Global 2000 companies across major industries, healthcare organizations, and government agencies. We strive to build long-term relationships with
Keane's acquisitionour customers by providing a broad range ofFourth Tier, Inc. ("Fourth Tier"). Keane has agreedservice offerings that enable clients touse its best efforts to keepoptimize their portfolio of software applications throughout their useful life.We were incorporated under the laws of the Commonwealth of Massachusetts in 1965. Our principal executive offices are located at 100 City Square, Boston, Massachusetts 02129 and our telephone number is (617) 241-9200. We maintain a website with the address www.keane.com. We are not including the information contained in our website as part of, or incorporating it by reference into, the registration statement, of which this
Prospectus constitutesprospectus is apart effective untilpart. We make available, free of charge, through our website our annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K, and amendments to these reports, as soon as reasonably practical after we electronically file these materials with, or otherwise furnish them to, theSelling Shareholders have sold allSEC.Summary of the
Shares or October 9, 1999, whichever comes first. Keane intends to de-register any Shares which the Selling Shareholders have not sold by the end of such period. Keane will not receive any of the proceeds from the sale of Shares covered by this Prospectus. Keane common stock is traded on the American Stock Exchange under the symbol "KEA." On February 9, 1999 the closing sale price of Keane common stock on the American Stock Exchange was $30.25 per share. ______________________Debentures
Debentures
$150,000,000 principal amount of 2% Convertible Subordinated Debentures due 2013. The original principal amount per debenture is $1,000. Maturity Date
June 15, 2013. Interest
2% per annum on the principal amount, from June 18, 2003, payable semi-annually in arrears in cash on June 15 and December 15 of each year, beginning December 15, 2003. Subordination
The debentures are subordinated to all of our existing and future senior indebtedness and are effectively subordinated to all debt and other liabilities of our subsidiaries. As of October 31, 2003, we had approximately $3.2 million of senior indebtedness outstanding and our subsidiaries had no significant indebtedness outstanding. Neither the SECwe nor anystate securities Investingof our subsidiaries are prohibited from incurring debt, including senior indebtedness, under the indenture.Contingent Interest
Beginning with the six-month interest period commencing June 15, 2008, we will pay additional contingent interest during any six-month interest period if the trading price of the debentures for each of the five trading days immediately preceding the first day of the applicable six-month period equals or exceeds 120% of the principal amount of the debentures. During any interest period when contingent interest is payable, the contingent interest payable per $1,000 principal amount of debentures will equal 0.35% calculated on the average trading price of $1,000 principal amount of debentures during the five trading days immediately preceding the first day of the applicable six-month interest period and will be payable in these securities involves commission has approved or disapproved these certain risks.arrears.Conversion
You should consider securities or determined if this Prospectus is carefullymay convert therisk factors beginning on accurate or complete. Any representationdebentures into shares of our common stock at a conversion rate of 54.4989 shares per $1,000 principal amount of debentures (representing a conversion price of approximately $18.349 per share), subject to adjustment, prior to thepage 3close of business on the final maturity date only under the following circumstances:• during any fiscal quarter commencing after September 30, 2003, and only during such fiscal quarter, if the closing sale price of our common stock exceeds 120% of the conversion price for at least 20 trading days in the 30 consecutive trading day period ending on the last trading day of the preceding fiscal quarter; or • during the five business days after any five consecutive trading day period, known as the “measurement period,” in which the trading price per $1,000 principal amount of debentures for each day of that period was less than 98% of the product of the closing sale price of our common stock and the number of shares issuable upon conversion of $1,000 principal amount of the debentures; provided, however, you may not convert your debentures in reliance on this Prospectus before contrary is a criminal offense. purchasingprovision after
June 15, 2008 if on any day during such measurement period the closing sale price of our common stock was between 100% and 120% of the then current conversion price of the debentures; or • if the debentures have been called for redemption; or • upon the occurrence of specified corporate events described under “Description of Debentures—Conversion of Debentures—Conversion Upon Specified Corporate Transactions.” Sinking Fund
None. Optional Redemption
We may redeem any of the Shares.debentures beginning June 15, 2008, by giving you at least 30 days’ notice. We may redeem the debentures either in whole or in part at a redemption price equal to 100% of their principal amount, plus accrued and unpaid interest, contingent interest, if any, and liquidated damages, if any, to, but excluding, the redemption date.Designated Event
If a designated event, as described under “Description of Debentures—Repurchase at Option of the Holder Upon a Designated Event,” occurs prior to maturity, you may require us to purchase all or part of your debentures at a repurchase price equal to 100% of their principal amount, plus accrued and unpaid interest, contingent interest, if any, and liquidated damages, if any, to, but excluding, the repurchase date. Repurchase at the Option of the
Holder
You may require us to repurchase the debentures on June 15, 2008, at a repurchase price equal to 100% of their principal amount plus accrued and unpaid interest, contingent interest, if any, and liquidated damages, if any, to, but excluding, the repurchase date. See “Description of Debentures—Repurchase at Option of the Holder.” Use of Proceeds
We will not receive any proceeds from the sale by the selling securityholders of the debentures or shares of our common stock issuable upon conversion of the debentures. United States Federal Income
Taxation
Under the indenture governing the debentures, we agreed, and by acceptance of a beneficial interest in a debenture each holder of a debenture is deemed to have agreed, to treat the debentures as indebtedness for United States federal income tax purposes that is subject to the Treasury regulations governing contingent payment debt instruments. For United States federal income tax purposes, interest income on the debentures will accrue at the rate of 9.25% per year, compounded semi-annually, which represents the yield on our comparable noncontingent, nonconvertible, fixed rate debt instruments with terms and conditions otherwise similar to the debentures. A United States Holder of a debenture or shares of our common stock issued upon conversion of a debenture will be required to accrue interest income on a constant yield to maturity basis at this rate, subject to certain adjustments. As a result, a United States Holder generally will recognize taxable income significantly in excess of the regular interest payments and any _____________________
contingent interest payments received while the debentures are outstanding. A United States Holder will also recognize gain or loss on the sale, conversion, exchange or retirement of a debenture in an amount equal to the difference between the amount realized on the sale, conversion, exchange or retirement of a debenture, including the fair market value of our common stock received, and the United States Holder’s adjusted tax basis in the debenture. Any gain recognized on the sale, conversion, exchange or retirement of the debenture generally will be ordinary interest income; any loss will be ordinary loss to the extent of the interest previously included in income, and thereafter, capital loss. See “Material United States Federal Income Tax Considerations.” Trading
The debentures are new securities for which no market currently exists. While the initial purchasers have informed us that they intend to make a market in the debentures, they are under no obligation to do so and may discontinue such activities at any time without notice. The debentures are not listed on any securities exchange or included in any automated quotation system. While the debentures are designated for trading in The PORTAL Market, we cannot assure you that any active or liquid market will develop for the debentures. New York Stock Exchange Symbol for our Common Stock
KEA. Investing in the debentures and our common stock issuable upon conversion of the debentures involves certain risks. You should carefully consider the risks and uncertainties described below before purchasing the debentures or our common stock issuable upon conversion of the debentures. The
date of this Prospectus is __________, 1999.SPECIAL NOTE REGARDING FORWARD-LOOKING INFORMATION This Prospectusrisks andthe documents incorporated herein contain forward- looking statements. For this purpose, any statements contained herein or incorporated herein thatuncertainties described below are notstatementsthe only ones we face. Any ofhistorical fact may be forward- looking statements. For example,thewords "believes," "expects," "anticipates," "intends," "estimates," "should," "will likely"following risks as well as other risks andsimilar expressionsuncertainties that we do not know about now or that we do not think areintendedimportant, could seriously harm our business and financial results and cause the value of the debentures and our common stock toidentify forward-looking statements. There are a number of important factors thatdecline, which in turn could causeKeane'syou to lose all or part of your investment.Risks Related to Our Business
Our quarterly operating results have varied, and are likely to
differ materially from those indicated by such forward-looking statements. These factors include those set forth belowcontinue to vary significantly. This may result in volatility in thesection entitled "Risk Factors." KEANE, INC. Keane provides software consulting, development, integration, management and technical support services for corporations, government agencies and healthcare facilities. Keane's services and methodologies enable clients to take better advantagemarket price oftheir existing information systems and to develop and manage essential software applications more rapidly and cost-effectively. Keane provides services primarily to Fortune 1,000 companies, including AT&T Corporation, Eastman Kodak Company, General Electric Company, International Business Machines Corporation, McDonald's Corporation and Proctor & Gamble Company. Keane is a Massachusetts corporation. Keane's principal executive offices are located at Ten City Square, Boston, Massachusetts 02129, and Keane's telephone number is (617) 241-9200. In this Prospectus, the term "Keane" includes Keane, Inc. and its subsidiaries. -2-RISK FACTORS BEFORE PURCHASING ANY OF THE SHARES OFFERED BY THIS PROSPECTUS, YOU SHOULD CONSIDER CAREFULLY THE FOLLOWING RISK FACTORS, AS WELL AS THE OTHER INFORMATION CONTAINED IN THIS PROSPECTUS OR INCORPORATED BY REFERENCE INTO IT. FLUCTUATIONS IN OPERATING RESULTS. Keane hasour common stock.We have experienced and
expectsexpect to continue to experience fluctuations initsour quarterly results.Keane'sOur gross margins vary based on a variety of factors including employee utilization rates and the number and type of services performed byKeaneus during a particular period. A variety of factors influenceKeane'sour revenue in a particular quarter, including:.general economic conditions which may influence investment decisions or cause downsizing;.the number and requirements of client engagements;.employee utilization rates;.changes in the ratesKeanewe can charge clients for our services;.acquisitions; and.other factors, many of which are beyondKeane'sour control.A significant portion of
Keane'sour expenses do not vary relative to revenue. As a result, if revenue in a particular quarter does not meet expectations,Keane'sour operating results could be materially adversely affected, which in turn may have a material adverse impact on the market price ofKeaneour common stock. In addition, many ofKeane'sour engagements are terminable without client penalty. An unanticipated termination of a major project could result in an increase in underutilized employees and a decrease in our revenue and profits.RISKS RELATING TO ACQUISITIONS.We have pursued, and intend to continue to pursue, strategic acquisitions. Failure to successfully integrate acquired businesses or assets may adversely affect our financial performance.
In
the past fiverecent years,Keane haswe have grown significantly through acquisitions.SinceFrom January 1,1998, Keane has1999 through September 30, 2003, we have completedtheeleven acquisitions. The aggregate merger and consideration costs of these acquisitionsof Quantum Associates, Inc. d/b/a Omega Systems ("Quantum") in Pittsburgh, Pennsylvania, GSE Erudite Systems in Salt Lake City, Utah, Bricker & Associates, Inc. ("Bricker") in Chicago, Illinois, ICOM Systems Limited ("Icom") in Birmingham, England, Fourth Tier in El Segundo, California and Emergent Corporation in San Mateo, California. Keane'stotaled approximately $359.8 million. Our future growth may be based in part on selected acquisitions. At any given time,Keanewe may be in various stages of consideringsuchacquisition opportunities.KeaneWe can provide no assurances thatitwe will be able to find and identify desirable acquisition targets or thatitwe will be successful in entering into a definitive agreement with any one target.Also,In addition, even if we reach a definitive agreementis reached,with a target, there is no assurance that we will complete any futureacquisition will be completed. Keaneacquisition.We typically
anticipatesanticipate that each acquisition will bringcertainbenefits, such as an increase in revenue. Prior to completing an acquisition, however, it is difficult to determine ifsuch benefitswe canactually be realized.realize these benefits. Accordingly, there is a risk that an acquired company may not achieve an increase in revenue or other benefits forKeane.us. In addition, an acquisition may result in unexpected costs, expenses andexpenses.liabilities. Any of these events could have a material adverse effect onKeane'sour business, financial condition and results of operations.The process of integrating acquired companies into
Keane'sour existing businessmaymight also result in unforeseen difficulties. Unforeseen operating difficulties may absorb significant management attention, whichKeane mightwe mayotherwise devote to
itsour existing business.Also,In addition, the process may require significant financial resources thatKeanewe might otherwise allocate to other activities, including the-3-ongoing development or expansion of Keane'sour existing operations.Finally, future acquisitions could result in
Keaneour having to incur additional debt and/or contingent liabilities.AllWe may also issue equity securities in connection with acquisitions which could have a dilutive effect on our earnings per share. Any of these possibilitiesmightcould have a material adverse effect onKeane's business, financial condition and result of operations. DEPENDENCE ON PERSONNEL. Keane believes that its future success will depend in large part on its ability to continue to attract and retain highly- skilled technical and management personnel. The competition for such personnel is intense. Keane may not succeed in attracting and retaining the personnel necessary to develop its business. If Keane does not, itsour business, financial condition and results ofoperationsoperations.We face significant competition for our services, and our failure to remain competitive could
be materially adversely affected. HIGHLY COMPETITIVE MARKET.limit our ability to maintain existing clients or attract new clients.The market for
Keane'sour services is highly competitive. The technology for custom software services can change rapidly. The market is fragmented, and no company holds a dominant position. Consequently,Keane'sour competition for client assignments and experienced personnel varies significantly from city to city and by the type of service provided. Some ofKeane'sour competitors are larger and have greater technical, financial and marketing resources and greater name recognition in the markets they serve thandoes Keane.we do. In addition, clients may elect to increase their internal information systems resources to satisfy their custom software development and integration needs.Keane believesIn the healthcare software systems market, we compete with some companies that
in order to compete successfullyare larger in the healthcare market and have greater financial resources than we do. We believe that significant competitive factors in the healthcare softwareservices industry it must be able to: . compete cost-effectively; . develop strong client relationships; . generate recurring revenues; . utilize comprehensive delivery methodologies;systems market include size and. achieve organizational learning by implementing standard operational processes. Keanedemonstrated ability to provide service to targeted healthcare markets.We may not be able to compete successfully against current or future competitors. In addition, competitive pressures
faced by Keanemay materially adversely affectitsour business, financial condition and results of operations.RISKS OF STOCK VOLATILITY AND ABSENCE OF DIVIDENDS. The market price for shares of Keane common stock has varied significantly and may be volatile depending on news announcements and changes in general market conditions. In particular, news announcements regarding quarterly or annual results of operations, or news announcements regarding competitive developments impacting Keane, may cause significant fluctuationsWe conduct business in the
market price for Keane common stock. ChangesUnited Kingdom, Canada and India, which exposes us to a number of difficulties inherent in international activities.As a result of our acquisition of SignalTree Solutions, Inc. in March 2002, we have two software development facilities in India. Moreover, between March 2002 and September 2003 we added approximately 794 technical professionals to our professional services organization in the
priceregion. India is currently experiencing conflicts with Pakistan over the disputed territory ofKeane common stockKashmir as well as clashes between different religious groups within the country. These conflicts, in addition to other unpredictable developments in the political, economic and social conditions in India, couldalso effect Keane'seliminate or reduce the availability of these development and professional services. If access to these services were to be unexpectedly eliminated or significantly reduced, our ability tosuccessfully attractmeet development objectives important to our strategy to add offshore delivery capabilities to the services we provide would be hindered, andretain qualified personnelour business could be harmed.If we fail to manage our geographically dispersed organization, we may fail to meet or
complete necessary business combinations or other transactionsexceed our financial objectives and our revenues may decline. We perform development activities in thefuture. Keane has paid no cash dividends on its capital stock sinceUnited States, Canada and India, and have offices throughout thefirst quarter of 1986,United States andKeane can give no assurances that it will ever do so againin thefuture. YEAR 2000 COMPLIANCE; RISKS ASSOCIATED WITH PROVISION OF YEAR 2000 SERVICES. Keane has reviewed its internal computer systemsUnited Kingdom, Canada andhas identified certain internal systemsIndia. This geographic dispersion requires us to devote substantial management resources thatarelocally based competitors do notyear 2000 -4-compatible (i.e., such systems use only two digitsneed torepresent the year in date data fields and, consequently, may not accurately distinguish between the 20th and 21st centuries or may not function properly at the turn of the century). Keane is in the process of correcting these systems or replacing them with year 2000 compliant systems. Keane expectsdevote toimplement successfully the systems and programming changes necessary to address year 2000 issues and does not believe that the cost of such actions will have a material effect on Keane's financial condition or results oftheir operations.There may, however, be a delay in, or increased costs associated with, the implementation of these changes. Keane's inability to implement these changes could have a material adverse effect on Keane's business, financial condition or results of operations. Among the services that Keane provides are assessment, planning, migration/remediation and testing services for year 2000 compliance. Keane has devoted significant resources to services that address the year 2000 problem and believes the market for these services will continue as the year 2000 approaches. However, the market for year 2000 services may not continue to develop, and if such market fails to continue, or continues more slowly than anticipated, it could have a material adverse effect on Keane's business, financial condition or results of operations. Although Keane believes that the demand for its services relating to the year 2000 problem will continue to exist after the year 2000, this demand will diminish significantly over time and will eventually disappear. Keane's services addressing the year 2000 problem involve key aspects of its clients' computer systems. A failure in a client's system could result in a claim for substantial damages against Keane, regardless of Keane's responsibility for the failure. Keane could incur substantial costs in connection with any resulting litigation, regardless of the outcome. International Operations. In August 1998, Keane commencedOur operations in the United Kingdom,
with its acquisition of Icom, now Keane, Ltd. Keane's planned international operations will beCanada and India are subject topolitical and economic uncertainties,currency exchange rate fluctuations, foreign exchange restrictions, changes in taxation and other difficulties in managing operations overseas.KeaneWe may not be successful initsmanaging our international operations.INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCEWe may be unable to re-deploy our professionals effectively if engagements are terminated unexpectedly, which would adversely affect our results of operations.
Our clients can typically cancel or reduce the scope of their engagements with us on short notice. If they do so, we may be unable to reassign our professionals to new engagements without delay. The
Securitiescancellation orreduction in scope of an engagement could, therefore, reduce the utilization rate of our professionals, which would have a negative impact on our business, financial condition and
Exchange Commission (the "SEC") allows Keaneresults of operations.As a result of these and other factors, our past financial performance should not be relied on as an indication of future performance. We believe that period-to-period comparisons of our financial results are not necessarily meaningful and we expect that our results of operations may fluctuate from period to
"incorporate by reference"period in the future.Our growth could be limited if we are unable to attract and retain personnel in the information
Keane files with them, which meanstechnology and business consulting industries.We believe that
Keane can disclose important informationour future success will depend in large part on our ability toyou by referring youcontinue tothose documents.attract and retain highly skilled technical and management personnel. Theinformation incorporated by referencecompetition for such personnel isan important partintense. We may not succeed in attracting and retaining the personnel necessary to develop our business. If we do not, our business, financial condition and result ofthis Prospectus, and information that Keane files lateroperations could be materially adversely affected.Risks Associated with the
SECDebenturesWe may be prohibited from repurchasing, and may not have the financial resources to repurchase, the debentures on the date for repurchase at the option of the holder or upon a designated event, as required by the indenture, which could cause defaults under our senior revolving credit facility and any other indebtedness we may incur in the future.
You have the right to require us to repurchase all or a portion of your debentures on June 15, 2008. You may also require us to repurchase all or a portion of your debentures upon a designated event, as defined in the indenture for the debentures. If you elect to require us to repurchase your debentures on any of the above dates or if a designated event were to occur, we may not have enough funds to pay the repurchase price for all tendered debentures. We are currently prohibited under our senior revolving credit facility from repurchasing any debentures if a designated event were to occur. We may also be prohibited under any indebtedness we may incur in the future from purchasing any debentures prior to their stated maturity. In these circumstances, we will
automatically updatebe required to repay all of the outstanding principal of, andsupersede this information. Keane incorporatespay any accrued and unpaid interest on, such indebtedness or to obtain the requisite consents from the holders of any such indebtedness to permit the repurchase of the debentures. If we are unable to repay all of such indebtedness or are unable to obtain the necessary consents, we will be unable to offer to repurchase the debentures, which would constitute an event of default under the indenture for the debentures, which itself could constitute a default under our senior revolving credit facility or under the terms of any future indebtedness that we may incur. In addition, the events that constitute a designated event under the indenture for the debentures are events of default under our senior revolving credit facility and may also be events of default under other indebtedness that we may incur in the future. Our obligation to offer to repurchase the debentures upon a designated event would not necessarily afford you protection in the event of a highly leveraged transaction, reorganization, merger or similar transaction because those transactions could be structured so that they would not be considered a “designated event” for purposes of the indenture.We incurred indebtedness when we sold the debentures. We may incur additional indebtedness in the future. The indebtedness created by
referencethedocuments listed belowsale of the debentures, and any futurefilings made by Keaneindebtedness, could adversely affect our business and our ability to make full payment on the debentures.Our aggregate level of indebtedness increased in connection with the
SECsale of the debentures. As of October 31, 2003, we had approximately $193.8 million of outstanding indebtedness and had the ability to incur additional debt underSections 13(a), 13(c), 14our revolving credit facility. We may also obtain additional long-term debt and working capital lines of credit to meet future financing needs, which would have the effect of increasing our total leverage.Any increase in our leverage could have significant negative consequences, including:
increasing our vulnerability to adverse economic and industry conditions,limiting our ability to obtain additional financing,limiting our ability to make acquisitions,requiring the dedication of a substantial portion of our cash flow from operations to service our indebtedness, thereby reducing the amount of our cash flow available for other purposes, including capital expenditures,limiting our flexibility in planning for, or15(d)reacting to, changes in our business and the industries in which we compete, andplacing us at a possible competitive disadvantage with less leveraged competitors and competitors that may have better access to capital resources.Our ability to satisfy our future obligations, including debt service on the debentures, depends on our future operating performance and on economic, financial, competitive and other factors beyond our control. Our business may not generate sufficient cash flow to meet these obligations or to successfully execute our business strategy. If we are unable to service our debt and fund our business, we may be forced to reduce or delay capital expenditures, seek additional financing or equity capital, restructure or refinance our debt or sell assets. We cannot assure you that we would be able to obtain additional financing or refinance existing debt or sell assets on terms acceptable to us or at all.
Because the debentures are subordinated to our senior debt and effectively subordinated to the debt and other liabilities of our subsidiaries, you may not receive full payment on your debentures.
The debentures are subordinated unsecured obligations of Keane and are junior to all of our existing and future indebtedness, other than any future indebtedness that expressly provides that it ranks equal with, or is subordinated in right of payment to, the debentures. As a result, upon any distribution to our creditors in a bankruptcy, liquidation, reorganization or similar proceeding, the holders of our senior debt will be entitled to be paid in full before any payment will be made on the debentures. In addition, upon a payment default with respect to senior indebtedness, a covenant default entitling designated senior indebtedness to accelerate or upon acceleration of the debentures, the holders of our senior debt will be entitled to be paid before any payment will be made on the debentures. Holders of the debentures may receive less ratably than holders of trade payables and holders of our other indebtedness in any such proceeding. In any of these cases, holders of the debentures may not be paid in full.
As of October 31, 2003, we had approximately $3.2 million of senior debt outstanding. We also currently have a senior revolving credit facility which provides us with the ability to incur up to an additional $50.0 million of senior indebtedness. The indenture governing the debentures does not restrict the amount of indebtedness, including senior debt, that we may borrow in the future. In addition, the debentures are effectively subordinated in right of payment to all debt and other liabilities, including trade payables and other accrued liabilities, of our subsidiaries. As of October 31, 2003, our subsidiaries had no significant indebtedness outstanding.
No public market for the debentures exists and the resale of the debentures is subject to uncertainties regarding the existence of a trading market for the debentures.
The debentures are a new issue of securities for which there is currently no public market. The debentures are not listed, and we do not intend to list the debentures, on any national securities exchange or automated quotation system. We cannot assure you that an active or sustained trading market for the debentures will develop or that you or any other holder will be able to sell the debentures.
Moreover, even if the holders are able to sell their debentures, we cannot assure you as to the price at which any sales will be made. Future trading prices of the debentures will depend on many factors, including, among other things, prevailing interest rates, our operating results, the price of our common stock and the market for similar securities. Historically, the market for convertible debt has been subject to disruptions that have caused volatility in the prices of securities similar to the debentures. It is possible that the market for the debentures will be subject to disruptions which may have a negative effect on the holders of debentures, regardless of our prospects or financial performance.
The initial purchasers have advised us that they currently intend to make a market in the debentures. The initial purchasers are not obligated, however, to make a market in the debentures, and they may discontinue any such market making at any time at their sole discretion. In addition, any market-making activity will be subject to the limits imposed by the Securities Act and the Securities Exchange Act of
1934 (the "Exchange Act") until this offering terminates: . Keane's Annual Report on Form 10-K1934. Furthermore, if a market were to develop, the market price for theyear ended December 31, 1997,debentures may be adversely affected by changes in our financial performance, changes in the price of our common stock, changes in the overall market for similar securities and prospects or financial performance of companies in our industry.The possible volatility of our common stock price could adversely affect your ability to resell our common stock issuable upon conversion of the debentures.
Securities markets worldwide have in the recent past experienced significant price and volume fluctuations and the market prices of the securities of information technology companies have been especially volatile. This market volatility, as
amendedwell as general economic, market or political conditions, could reduce the market price of our common stock in spite of our operating performance. In addition, our operating results could be below the expectations of public market analysts and investors, and in response, the market price of our common stock could decrease significantly. Investors may be unable to resell their shares of our common stock received upon conversion of the debentures at or above the conversion price. In the past, companies that have experienced volatility in the market price of their common stock have been the object of securities class action litigation. If we were to become the object of securities class action litigation, we may face substantial costs and our management’s attention and resources may be diverted, which could harm our business.The trading prices of the debentures could be significantly affected by the trading prices of our common stock.
We expect that the trading prices of the debentures in the secondary market will be significantly affected by the trading prices of our common stock, the general level of interest rates and our credit quality. This may result in greater volatility in the trading prices of the debentures than would be expected for nonconvertible debt securities.
It is impossible to predict whether the price of our common stock or interest rates will rise or fall. Trading prices of our common stock will be influenced by our operating results and prospects and by economic, financial, regulatory and other factors. In addition, general market conditions, including the level of, and fluctuations in, the trading prices of stocks generally, and sales of substantial amounts of common stock by us in the market after the sale of the debentures, or the perception that such sales may occur, could affect the price of our common stock.
The price of our common stock could be affected by possible sales of our common stock by investors who view the debentures as a
Form 10-K/A filed May 18, 1998; . Keane's Quarterly Reports on Form 10-Q formore attractive means of equity participation in our company and by hedging or arbitrage trading activity that may develop involving our common stock. This hedging or arbitrage could, in turn, affect thefiscal quarters ended March 31, 1998, June 30, 1998, as amended by a Form 10-Q/A filed August 28, 1998, and September 30, 1998; . Keane's Current Reports on Form 8-K filed April 21, 1998, April 29, 1998, May 4, 1998, May 12, 1998, June 3, 1998, August 4, 1998, August 10, 1998, October 1, 1998, October 6, 1998 and October 14, 1998; and . Keane's Registration Statement on Form 8-A registeringtrading prices of the debentures.The conditional conversion features of the debentures could result in you receiving less than the value of the common stock
under Section 12(b)into which your debentures are convertible.The debentures are convertible into common stock only if specified conditions are met. If the specific conditions for conversion are not met, you may not be able to receive the value of the
Exchange Act,common stock into whichwas declared effectiveyour debentures would otherwise be convertible.You should consider the United States federal income tax consequences of owning the debentures.
Under the indenture governing the debentures, we agreed, and by acceptance of a beneficial interest in a debenture each holder of a debenture is deemed to have agreed, to treat the debentures as indebtedness for United States federal income tax purposes that is subject to the Treasury regulations governing contingent payment debt instruments. For United States federal income tax purposes, interest income on
September 13, 1989. -5-the debentures will accrue at the rate of 9.25% per year, compounded semi-annually, which represents the yield on comparable noncontingent, nonconvertible, fixed rate debt instruments with terms and conditions otherwise similar to the debentures that we would issue (as of the date the debentures were issued). A United States Holder will be required to accrue interest income on a constant yield to maturity basis at this rate, subject to certain adjustments, with the result that a United States Holder generally will recognize taxable income significantly in excess of the regular interest payments and contingent interest payments received while the debentures are outstanding. A United States Holder will also recognize gain or loss on the sale, conversion, exchange or retirement of a debenture in an amount equal to the difference between the amount realized on the sale, conversion, exchange or retirement, including the fair market value of our common stock received, and the United States Holder’s adjusted tax basis in the debenture. Any gain recognized on the sale, conversion, exchange or retirement of a debenture generally will be ordinary interest income; any loss will be ordinary loss to the extent of the interest previously included in income, and thereafter, capital loss. See “Material United States Federal Income Tax Considerations.”
The IRS may challenge our ability to claim interest deductions with respect to the debentures.
Section 279 of the Internal Revenue Code disallows the deduction of interest paid or accrued on certain convertible debt instruments if the convertible debt is used, directly or indirectly, to finance a corporate acquisition and certain other conditions are met. At the time the debentures were issued we did not, and we do not currently, anticipate using the proceeds of the sale of the debentures to finance any specific acquisition. Our ability to consummate strategic acquisitions is a component of our operating strategy, and there is a possibility that we may use a portion of the proceeds from the sale of the debentures to finance a strategic corporate acquisition in the future. Based upon current facts and circumstances, we do not believe that Section 279 would apply to disallow our interest deduction with respect to the debentures even if we were to consummate such a strategic acquisition. The application of Section 279 to the interest on the debentures in future periods, however, depends in part on the facts and circumstances then in existence. Accordingly, we cannot assure you that Section 279 will not apply at a future date to the interest on the debentures. In addition, the Internal Revenue Service could challenge our proposed application of the rules for computing the amount of interest deductions relating to the debentures. To the extent we were not entitled to deduct interest on the debentures, our after-tax operating results could be adversely affected.
If you hold debentures, you will not be entitled to any rights with respect to our common stock, but you will be subject to all changes made with respect to our common stock.
If you hold debentures, you will not be entitled to any rights with respect to our common stock, including without limitation voting rights and rights to receive any dividends or other distributions on our common stock, but you will be subject to all changes affecting the common stock. You will have rights with respect to our common stock only if and when we deliver shares of common stock to you upon conversion of your debentures
and, in limited cases, under the conversion rate adjustments applicable to the debentures. For example, in the event that an amendment is proposed to our articles of organization or by-laws requiring stockholder approval and the record date for determining the stockholders of record entitled to vote on the amendment occurs prior to delivery of common stock to you, you will not be entitled to vote on the amendment, although you will nevertheless be subject to any changes in the powers, preferences or special rights of our common stock.
We may
requestissue additional shares of common stock and thereby materially and adversely affect the price of our common stock.We are not restricted from issuing additional common stock during the life of the debentures. If we issue additional shares of common stock, the price of our common stock and, in turn, the price of the debentures may be materially and adversely affected.
We have various mechanisms in place to discourage takeover attempts, which may reduce or eliminate our stockholders’ ability to sell their shares for a
copypremium in a change of control transaction.Various provisions of our articles of organization and by-laws and of Massachusetts corporate law may discourage, delay or prevent a change in control or takeover attempt of our company by a third party that is opposed by our management and board of directors. Public stockholders who might desire to participate in such a transaction may not have the opportunity to do so. These anti-takeover provisions could substantially impede the ability of public stockholders to benefit from a change of control or change in our management and board of directors. These provisions include:
authority to issue “blank check” preferred stock that could be issued by our board of directors to increase the number of outstanding shares and thwart a takeover attempt;our class B common stock, each share of which is entitled to ten votes on all matters submitted to stockholders, which votes as a single class with our common stock on all actions submitted to a vote of the our stockholders, and which votes as a separate class with respect to amendments to our articles of organization that alter or change the powers, preferences or special rights of such class, and with respect to such other matters as may require class votes under Massachusetts law;non-cumulative voting for our directors;establishing a fixed size for our board of directors;a classified board of directors;a requirement that stockholder action by written consent must be unanimous; andadvance notice requirements for nominations of candidates for election to our board of directors or for proposing matters that can be acted upon by our stockholders at stockholder meetings.Conversion of the debentures will dilute the ownership interest of existing stockholders, including holders who had previously converted their debentures.
The conversion of some or all of the debentures will dilute the ownership interests of existing stockholders. Any sales in the public market of the common stock issuable upon conversion could adversely affect prevailing market prices of our common stock. In addition, the existence of the debentures may encourage short selling by market participants because the conversion of the debentures could depress the price of our common stock.
RATIO OF EARNINGS TO FIXED CHARGES
The following table presents our historical ratios of earnings to fixed charges for the periods indicated. Earnings consist of pretax income from our continuing operations plus fixed charges and capitalized interest. Fixed charges consist of interest, including capitalized interest, amortization of debt discount, premium and expense, preferred stock dividend requirements of a majority owned subsidiary, and the portion of our rental expense that can be demonstrated to be representative of the interest factor in the particular case.
Fiscal Year Ended December 31, Nine Months
Ended September 30,1998 1999 2000 2001 2002 2002 2003 Ratio of earnings to fixed charges:
167x 103x 21x 25x 12x 27x 12x SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus and the documents that we incorporate by reference into this prospectus contain forward-looking statements that are based on current expectations, estimates, forecasts and projections about our company, the industry in which we operate and other matters, as well as our management’s beliefs and assumptions and other statements regarding matters that are not historical facts. These statements include, in particular, statements about our plans, strategies and prospects under the heading “Risk Factors” in this prospectus and under the headings “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Business” in the documents that we have incorporated in this prospectus by reference. For example, when we use words such as “projects,” “expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “should,” “would,” “could” or “may,” variations of such words or other words that convey uncertainty of future events or outcome, we are making forward-looking statements. Our forward-looking statements are subject to risks and uncertainties. You should note that many important factors, some of which are discussed elsewhere in this prospectus or in the documents that we incorporate by reference into this prospectus, could affect us in the future and could cause our results to differ materially from those expressed in our forward-looking statements. For a discussion of some of these
filings at no cost by writing or telephoning Keane at the following address: Keane, Inc. Ten City Square Boston, Massachusetts 02129 Attention: Investor Relations Department Telephone: (617) 241-9200 You should rely only on the information incorporated by reference or provided in this Prospectus or any Prospectus Supplement. Keane has not authorized anyone else to provide you with different information. Keane is not making an offer of these securities in any state where the offer is not permitted. You should not assume thatfactors, please read carefully the information in the section of thisProspectusprospectus entitled “Risk Factors.” We do not undertake any obligation to update forward-looking statements made by us.The documents that we incorporate by reference into this prospectus may also contain estimates made by independent parties relating to market size and growth. These estimates involve a number of assumptions and limitations, and you are cautioned not to give undue weight to such estimates. We have not independently verified the accuracy of the estimates made by third parties. In addition, projections, assumptions and estimates of our future performance and the future performance of the industry in which we operate are necessarily subject to a high degree of uncertainty and risk due to a variety of factors, including those described in “Risk Factors” and elsewhere in this prospectus and the documents that we incorporate by reference into this prospectus. These and other factors could cause results to differ materially from those expressed in the estimates made by independent parties.
We will not receive any of the proceeds from the sale by the selling securityholders of the debentures or the shares of our common stock issuable upon conversion of the debentures.
The selling securityholders will pay any underwriting discounts and commissions and expenses incurred by the selling securityholders for brokerage, accounting, tax or legal services or any
Prospectus Supplementother expenses incurred by the selling securityholders in disposing of the debentures or the shares of common stock issuable upon conversion of the debentures. We will bear all other costs, fees and expenses incurred in effecting the registration of the debentures and the shares of our common stock issuable upon conversion of the debentures covered by this prospectus, including, without limitation, all registration and filing fees, New York Stock Exchange listing fees and the fees and expenses of our counsel and independent auditors.We issued the debentures covered by this prospectus in a private placement on June 18, 2003 and June 23, 2003. The debentures were resold by the initial purchasers to qualified institutional buyers under Rule 144A under the Securities Act. Selling securityholders, including their transferees, pledgees, donees or their successors, may offer and sell the debentures and shares of our common stock issuable upon conversion of the debentures pursuant to this prospectus.
The following tables set forth information with respect to the selling securityholders and the principal amount of debentures and shares of our common stock issuable upon conversion of the debentures beneficially owned by each selling securityholder that may be offered pursuant to this prospectus. The information is
accuratebased on information provided by or on behalf of the following selling securityholders to us in a questionnaire and related addendum and is as ofanythe date specified by the security holders in those questionnaires and addenda.
Name of Securityholder
Principal
Amount of
Debentures
Beneficially
Owned That
May Be SoldShares of Keane
Common Stock
Beneficially
Owned Upon
Conversion of the
Debentures(1)Debentures
Owned After
Completion of
Offering(2)Shares of Keane
Common Stock
Owned After
Completion of
the Offering(2)Clinton Riverside Convertible Portfolio Limited
$ 14,820,000 807,674 0 0 Wachovia Bank National Association
14,000,000 762,985 0 0 The Drake Offshore Master Fund, Ltd.
10,000,000 544,989 0 0 Highbridge International LLC
10,000,000 544,989 0 0 Teachers Insurance and Annuity Association of America
9,550,000 520,464 0 0 BBT Fund, L.P.
9,200,000 501,390 0 0 Arbitex Master Fund, L.P.
7,500,000 408,742 0 0 Waterstone Market Neutral Offshore Fund, Ltd.
5,275,000 287,482 0 0 Zazove Convertible Arbitrage Fund L.P.
4,750,000 258,870 0 0 Clinton Multistrategy Master Fund, Ltd.
4,680,000 255,055 0 0 Zazove Hedged Convertible Fund L.P.
4,150,000 226,170 0 0 Zazove Income Fund L.P.
3,500,000 190,746 0 0 Northern Income Equity Fund
3,000,000 163,497 0 0 The Dow Chemical Company Employees’ Retirement Plan
2,800,000 152,597 0 0 Salomon Brothers Asset Management, Inc.
2,750,000 149,872 0 0 Boilermaker – Blacksmith Pension Trust
2,350,000 128,072 0 0 Concentrated Alpha Partners, L.P.
2,300,000 125,347 0 0 Delta Airlines Master Trust
2,300,000 125,347 0 0 Quest Global Convertible Master Fund, Ltd.
2,000,000 108,998 0 0 Zurich Institutional Benchmarks Master Fund LTD
1,800,000 98,098 0 0 CNH CA Master Account, L.P.
1,750,000 95,373 0 0 San Diego County Employee Retirement Association
1,500,000 81,748 0 0 Union Carbide Retirement Account
1,350,000 73,574 0 0 Morgan Stanley & Co. Incorporated(3)
1,265,000 68,941 0 439,974 (4) Waterstone Market Neutral Fund, LP
1,225,000 66,761 0 0 DBAG London
1,000,000 54,499 0 0 Dorinco Reinsurance Company
840,000 45,779 0 0 Mellon HBV Master Convertible Arbitrage Fund LP
700,000 38,149 0 0 Port Authority of Alleghany County Retirement and Disability Allowance Plan for the Employees Represented by Local 85 of the Almagamated Transit Union
700,000 38,149 0 0 United Food and Commercial Workers Local 1262 and Employers Pension Fund
670,000 36,514 0 0 HFR CA Select Fund
600,000 32,699 0 0 Louisiana Workers’ Compensation Corporation
560,000 30,519 0 0
Name of Securityholder
Principal
Amount of
Debentures
Beneficially
Owned
That May
Be SoldShares of Keane
Common Stock
Beneficially
Owned Upon
Conversion of the
Debentures(1)Debentures
Owned After
Completion of
Offering(2)Shares of Keane
Common Stock
Owned After
Completion of
the Offering(2)Univar USA Inc. Retirement Plan
520,000 28,339 0 0 Nisswa Master Fund Ltd.
500,000 27,249 0 0 Onyx Fund Holdings, LDC
500,000 27,249 0 0 The California Wellness Foundation
450,000 24,525 0 0 Delta Pilots Disability and Survivorship Trust
450,000 24,525 0 0 City of Knoxville Pension System
330,000 17,985 0 0 Macomb County Employees’ Retirement System
320,000 17,440 0 0 Aventis Pension Master Trust
280,000 15,260 0 0 Knoxville Utilities Board Retirement System
225,000 12,262 0 0 SCI Endowment Care Common Trust Fund – National Fiduciary Services
210,000 11,445 0 0 Lyxor Master Fund
200,000 10,900 0 0 American AAdvantage Funds
200,000 10,900 0 0 The Fondren Foundation
160,000 8,720 0 0 Mellon HBV Master Multi-Strategy Fund LP
150,000 8,175 0 0 Mint Master Fund LP
150,000 8,175 0 0 CEMEX Pension Plan
140,000 7,630 0 0 SCI Endowment Care Common Trust Fund – Suntrust
125,000 6,812 0 0 Sturgeon Limited
95,000 5,177 0 0 Kettering Medical Center Funded Depreciation Account
90,000 4,905 0 0 Cockrell Foundation
75,000 4,087 0 0 SCI Endowment Care Common Trust Fund – First Union
40,000 2,180 0 0 Other (5)(6)
30,725,000 1,674,479 0 0
1. Assumes conversion of all of the selling securityholders’ debentures at the maximum conversion rate of 54.4989 shares per debenture. However, the maximum conversion rate is subject to adjustment as described under “Description of Debentures – Conversion Rate Adjustments.” As a result, the amount of common stock issuable upon conversion of the debentures may increase or decrease in the future.
2. We do not know when or in what amounts a selling securityholder may offer debentures or shares of our common stock issuable upon conversion of the debentures for sale. The selling securityholders might not sell any or all of the debentures or shares of our common stock issuable upon conversion of the debentures offered by this prospectus. Because the selling securityholders may offer all or some of the debentures or shares of our common stock issuable upon conversion of the debentures pursuant to this offering, and because there are currently no agreements, arrangements or understandings with respect to the sale of any of the debentures or shares of our common stock issuable upon conversion of the debentures, we cannot estimate the number of the debentures or shares of our common stock issuable upon conversion of the debentures that will be held by the selling securityholders after completion of the offering. However, for purposes of this table, we have assumed that, after completion of the offering, none of the debentures or shares of our common stock issuable upon conversion of the debentures covered by this prospectus will be held by the selling securityholders.
3. During the past three years, Morgan Stanley & Co. Incorporated and/or its affiliates have performed financial advisory and investment banking services for us, including acting as one of the initial purchasers of the debentures.
4. Represents shares of our common stock held by the selling securityholder prior to the date of the registration statement of which this prospectus is a part.
5. Information about other selling securityholders will be set forth in an amendment to the registration statement of which this prospectus is a part or in prospectus amendments, as required.
6. Assumes that any other holders of debentures, or any future transferees, pledges, donees or successors of or from any such other holders of debentures, do not beneficially own any shares of our common stock other than the shares of our common stock issuable upon conversion of the debentures. None of the selling securityholders, other than Morgan Stanley & Co. Incorporated as described in note 3 of this table, has held any position or office with, or has otherwise had a material relationship with, us or any of our subsidiaries within the
datepast three years.Voting/Investment Control Table
Name of Securityholder
Natural person or persons with voting or investment power
Clinton Riverside Convertible Portfolio Limited
Mike Vacca Wachovia Bank National Association
* The Drake Offshore Master Fund, Ltd.
* Highbridge International LLC
* Teachers Insurance and Annuity Association of America
* BBT Fund, L.P.
* Arbitex Master Fund, L.P.
Clark K. Hunt, Jonathan Bren, Ken Tananbaum Waterstone Market Neutral Offshore Fund, Ltd.
* Zazove Convertible Arbitrage Fund L.P.
Gene T. Pretti Clinton Multistrategy Master Fund, Ltd.
Mike Vacca Zazove Hedged Convertible Fund L.P.
Gene T. Pretti Zazove Income Fund L.P.
Gene T. Pretti Northern Income Equity Fund
* The Dow Chemical Company Employees’ Retirement Plan
Nick Calamos Salomon Brothers Asset Management, Inc.
* Boilermaker – Blacksmith Pension Trust
Nick Calamos Concentrated Alpha Partners, L.P.
* Delta Airlines Master Trust
Nick Calamos Quest Global Convertible Master Fund, Ltd.
Frank Campana Zurich Institutional Benchmarks Master Fund LTD
Gene T. Pretti CNH CA Master Account, L.P.
(1) San Diego County Employee Retirement Association
Gene T. Pretti Union Carbide Retirement Account
Nick Calamos Morgan Stanley & Co. Incorporated
* Waterstone Market Neutral Fund, LP
* DBAG London
* Dorinco Reinsurance Company
Nick Calamos Mellon HBV Master Convertible Arbitrage Fund LP
* Port Authority of Alleghany County Retirement and Disability Allowance Plan for the Employees Represented by Local 85 of the Almagamated Transit Union
Nick Calamos United Food and Commercial Workers Local 1262 and Employers Pension Fund
Nick Calamos HFR CA Select Fund
Gene T. Pretti Louisiana Workers’ Compensation Corporation
Nick Calamos Univar USA Inc. Retirement Plan
Nick Calamos Nisswa Master Fund Ltd.
* Onyx Fund Holdings, LDC
* The California Wellness Foundation
Nick Calamos Delta Pilots Disability and Survivorship Trust
Nick Calamos City of Knoxville Pension System
Nick Calamos Macomb County Employees’ Retirement System
Nick Calamos Aventis Pension Master Trust
Nick Calamos
Name of Securityholder
Natural person or persons with voting or investment power
Knoxville Utilities Board Retirement System
Nick Calamos SCI Endowment Care Common Trust Fund – National Fiduciary Services
Nick Calamos Lyxor Master Fund
Clark Hunt, Jonathan Bren, Ken Tananbaum American AAdvantage Funds
Nick Calamos The Fondren Foundation
Nick Calamos Mellon HBV Master Multi-Strategy Fund LP
* Mint Master Fund LP
Stuart Dubson CEMEX Pension Plan
Nick Calamos SCI Endowment Care Common Trust Fund – Suntrust
Nick Calamos Sturgeon Limited
(2) Kettering Medical Center Funded Depreciation Account
Nick Calamos Cockrell Foundation
Nick Calamos SCI Endowment Care Common Trust Fund – First Union
Nick Calamos
* The selling securityholder has informed us that there is no natural person or persons with voting or investment power over the respective debentures.
1. CNH CA Master Account, L.P. has informed us that CNH Partners, LLC, of which Robert Krail, Mark Mitchell and Todd Pulvino are the investment principals, is the investment advisor of the selling securityholder and has sole voting and dispositive power.
2. Sturgeon Limited has informed us that investment control is shared with CooperNeff Advisers Inc. and that CooperNeff Advisers Inc. has sole voting power. We issued the debentures under an indenture, dated as of June 18, 2003, between us, as issuer, and Wachovia Bank, National Association, as trustee.
The following description is a summary of the material provisions of the debentures and the indenture. It does not purport to be complete. This summary is subject to and is qualified by reference to all the provisions of the indenture, including the definitions of certain terms used in the indenture. Wherever particular provisions or defined terms of the indenture or form of debenture are referred to, these provisions or defined terms are incorporated in this prospectus by reference. We urge you to read the indenture because it, and not this description, defines your rights as a holder of the debentures.
As used in this “Description of Debentures” section, references to “Keane,” “we,” “our” or “us” refer solely to Keane, Inc. and not to our subsidiaries, unless the context otherwise requires.
General
The debentures are general unsecured obligations of Keane. Our payment obligations under the debentures are subordinated to our senior indebtedness and effectively subordinated to all debts and other liabilities of our subsidiaries as described under “—Subordination of Debentures.” The debentures are convertible into our common stock as described under “—Conversion of Debentures.”
The debentures are limited to $150,000,000 aggregate principal amount. The debentures were issued in registered form without coupons in denominations of $1,000 and multiples of $1,000. We use the term “debenture” in this prospectus to refer to each $1,000 principal amount of debentures. The debentures will mature on June 15, 2013 unless earlier converted, redeemed or repurchased.
The debentures are obligations of Keane. Our subsidiaries have no obligation to pay any amounts due on the
front of those documents. WHERE YOU CAN FIND MORE INFORMATION Keane files annual, quarterly and special reports, proxy statements and other information with the SEC. Keane's SEC filings aredebentures or to make any funds available to us for payment of thepublic overdebentures upon maturity or upon a redemption or repurchase of theInternetdebentures as described below.Neither we nor any of our subsidiaries are subject to any financial covenants under the indenture. In addition, neither we nor any of our subsidiaries are restricted under the indenture from paying dividends, incurring debt or issuing or repurchasing our securities.
You are not afforded protection under the indenture in the event of a highly leveraged transaction or a change in control of Keane except to the extent described below under “—Repurchase at Option of the Holder” and “—Repurchase at Option of the Holder Upon a Designated Event.”
The debentures bear regular interest at a rate of 2% per annum. Regular interest is calculated on the basis of a 360-day year consisting of twelve 30-day months and accrues from June 18, 2003, or from the most recent date to which regular interest has been paid or duly provided for. We will pay contingent interest under certain circumstances as described under “—Contingent Interest.” We will pay interest on June 15 and December 15 of each year, beginning December 15, 2003, to record holders at the
SEC's web siteclose of business on the preceding June 1 and December 1, as the case may be. We will pay contingent interest, if any, on the same dates each year, beginning on December 15, 2008.We will pay the principal on the debentures, and you may present the debentures for conversion, registration of transfer or exchange for other denominations, at
http://www.sec.gov. Youan office maintained in the Borough of Manhattan, The City of New York, which is initially an office or agency of the trustee. We mayalso read and copy any document Keane filespay interest by check mailed to your address as it appears in the debenture register, provided that if you hold debentures with an aggregate principal amount in excess of $2.0 million, we will pay you, atthe SEC's public reference rooms in Washington, D.C.,your written election, by wire transfer of immediately available funds.However, payments to The Depository Trust Company, New York, New York, which we refer to as DTC, are made by wire transfer of immediately available funds to the account of DTC or its nominee.
Conversion of Debentures
You may convert any of your debentures, in whole or in part, into shares of our common stock prior to the close of business on the final maturity date of the debentures, subject to prior redemption or repurchase of the debentures, only under the following circumstances:
subject to certain exceptions, upon satisfaction of a market price condition;upon satisfaction of a trading price condition;upon notice of redemption; orupon specified corporate transactions.The initial conversion rate for the debentures is 54.4989 shares of our common stock per $1,000 principal amount of debentures, subject to adjustment as described below, which represents an initial conversion price of approximately $18.349 per share.
If we call debentures for redemption, you may convert the debentures only until the close of business on the business day prior to the redemption date unless we fail to pay the redemption price. If you have submitted your debentures for repurchase upon a designated event, you may convert your debentures only if you withdraw your repurchase election. Similarly, if you exercise your option to require us to repurchase your debentures other than upon a designated event, those debentures may be converted only if you withdraw your election to exercise your option in accordance with the terms of the indenture. You may convert your debentures in part so long as such part is $1,000 principal amount or an integral multiple of $1,000. We will not pay interest, including contingent interest, if any, and
Chicago, Illinois. Pleaseliquidated damages, if any, accrued on any debenture that has been converted, unless such conversion occurs between a regular record date and the interest payment date to which it relates. We will not issue fractional common shares upon conversion of debentures. Instead, we will pay cash in lieu of fractional shares based on the closing sale price of our common stock on the trading day prior to the conversion date. Our delivery to the holder of the full number of shares of our common stock into which a debenture is convertible, together with any cash payment for such holder’s fractional shares, will be deemed to satisfy our obligation to pay:the principal amount of the debenture; andaccrued but unpaid interest, including contingent interest, if any, and liquidated damages, if any, attributable to the period from the most recent interest payment date to the conversion date.As a result, accrued but unpaid interest, including contingent interest, if any, and liquidated damages, if any, to the conversion date is deemed to be paid in full rather than cancelled, extinguished or forfeited. For a discussion of your tax treatment upon receipt of our common stock upon conversion, see “Material United States Federal Income Tax Considerations.”
If debentures are converted after a record date but prior to the next interest payment date, holders of such debentures at the close of business on the record date will receive the interest, including contingent interest, if any, and liquidated damages, if any, payable on such debentures on the corresponding interest payment date notwithstanding the conversion. These debentures, upon surrender for conversion, must be accompanied by funds equal to the amount of interest, including contingent interest, if any, and liquidated damages, if any, payable on the debentures so converted; provided that no such payment need be made:
(1) if we have specified a redemption date that is after a record date but on or prior to the next interest payment date,
(2) if we have specified a repurchase date following a designated event that is after a record date but on or prior to the next interest payment date, or
(3) to the extent of any overdue interest or overdue contingent interest, if any overdue interest or overdue contingent interest exists at the time of conversion with respect to such debenture. Conversion Upon Satisfaction of Market Price Condition
You may surrender your debenture for conversion into our common stock prior to the close of business on the maturity date during any fiscal quarter, but only during such fiscal quarter, commencing after September 30, 2003 if the closing sale price of our common stock exceeds 120% of the then effective conversion price (initially 120% of $18.349, or $22.019) for at least 20 trading days in the 30 consecutive trading days ending on the last trading day of the preceding fiscal quarter.
The “closing sale price” of our common stock on any date means the closing per share sale price (or if no closing sale price is reported, the average of the bid and ask prices or, if more than one in either case, the average of the average closing bid and the average closing ask prices) on such date as reported in composite transactions for the principal United States securities exchange on which our common stock is traded or, if our common stock is not listed on a United States national or regional securities exchange, as reported by the NASDAQ System or by the National Quotation Bureau Incorporated. In the absence of such a quotation, we will determine the closing sale price on the basis we consider appropriate. The “conversion price” as of any day will equal $1,000 divided by the conversion rate as of that day.
Conversion Upon Satisfaction of Trading Price Condition
You may surrender your debenture for conversion into our common stock prior to maturity during the five business days immediately following any five consecutive trading day period, known as the “measurement period,” in which the trading price per $1,000 principal amount of debentures (as determined following a request by a holder of the debentures in accordance with the procedures described below) for each day of such measurement period was less than 98% of the product of the closing sale price of our common stock and the conversion rate, known as the “98% Trading Exception”; provided, however, you may not convert your debentures in reliance on this provision after June 15, 2008 if on any trading day during such measurement period the closing sale price of our common stock was between 100% and 120% of the then current conversion price of the debentures.
The “trading price” of the debentures on any date of determination means the average of the secondary market bid quotations per $1,000 principal amount of debentures obtained by the trustee for $5,000,000 principal amount of the debentures at approximately 3:30 p.m., New York City time, on such determination date from three independent nationally recognized securities dealers we select, provided that if three such bids cannot reasonably be obtained by the trustee, but two such bids are obtained, then the average of the two bids shall be used, and if only one such bid can reasonably be obtained by the trustee, this one bid shall be used. If the trustee cannot reasonably obtain at least one bid for $5,000,000 principal amount of the debentures from a nationally recognized securities dealer then the trading price per $1,000 principal amount of the debentures will be deemed to be less than 98% of the product of the closing sale price of our common stock and the conversion rate.
The trustee shall have no obligation to determine the trading price of the debentures unless we have requested such determination, and we shall have no obligation to make such request unless you provide us with reasonable evidence that the trading price per $1,000 principal amount of the debentures would be less than 98% of the product of the closing sale price of our common stock and the conversion rate. At such time, we shall instruct the trustee to determine the trading price of the debentures beginning on the next trading day and on each successive trading day until the trading price is greater than or equal to 98% of the product of the closing sale price of our common stock and the conversion rate.
Conversion Upon Notice of Redemption
If we call debentures for redemption, you may convert the
SECdebentures until the close of business on the business day immediately preceding the redemption date, after which time your right to convert will expire unless we default in the payment of the redemption price.Conversion Upon Specified Corporate Transactions
If we elect to:
distribute to all holders of our common stock certain rights or warrants to purchase our common stock for a period expiring within 45 days of the record date for such distribution at1-800-SEC-0330a price less than the average of the closing sale prices forfurtherthe 10 trading days preceding the declaration date for such distribution; ordistribute to all holders of our common stock, assets, debt securities or rights to purchase our securities, which distribution has a per share value exceeding 5% of the closing sale price of our common stock on the day preceding the declaration date for such distribution;we must notify you at least 20 days prior to the ex-dividend date for such distribution. Once we have given such notice, you may surrender your debentures for conversion at any time until the earlier of the close of business on the business day prior to the ex-dividend date or any announcement by us that such distribution will not take place. No adjustment to the conversion rate will be made if you will otherwise participate in the distribution without conversion, nor will you have an ability to convert pursuant to this provision.
In addition, if we are a party to a consolidation, merger, binding share exchange or sale of all or substantially all of our assets, in each case pursuant to which our common stock would be converted into cash, securities or other property, you may surrender your debentures for conversion at any time from and after the date that is 15 days prior to the anticipated effective date of the transaction until and including the date that is 15 days after the actual date of such transaction (or, if such merger, consolidation or share exchange also constitutes a fundamental change, until the corresponding designated event purchase date). If you do not surrender your debentures for conversion, then on the date that is 16 days after the actual date of the transaction, your right to convert a debenture into our common stock will be changed into a right to convert it into the kind and amount of cash, securities and other property that you would have received if you had converted your debentures immediately prior to the transaction. If the transaction also constitutes a fundamental change, you can require us to repurchase all or a portion of your debentures as described under “—Repurchase At Option of the Holder Upon a Designated Event.”
Conversion Procedures
To convert your debenture into common stock you must do the following:
complete and manually sign the conversion notice on the back of the debenture or facsimile of the conversion notice and deliver this notice to the conversion agent;surrender the debenture to the conversion agent;if required, furnish appropriate endorsements and transfer documents;if required, pay all transfer or similar taxes; andif required, pay funds equal to interest payable on the next interest payment date.The date you comply with these requirements is the conversion date under the indenture. If your interest is a beneficial interest in a global debenture, to convert you must comply with the last three requirements listed above and comply with the depositary’s procedures for converting a beneficial interest in a global debenture.
Conversion Rate Adjustments
We will adjust the conversion rate if any of the following events occurs:
we issue common stock as a dividend or distribution on our common stock;we issue to all holders of common stock certain rights or warrants to purchase our common stock for a period expiring within 45 days of the record date for such distribution at a price less than the average of the closing sale price for the 10 trading days preceding the declaration date for such distribution;we subdivide or combine our common stock;we distribute to all holders of our common stock, shares of our capital stock, evidences of indebtedness or assets, including securities but excluding:rights or warrants specified above;dividends or distributions specified above; andcash distributions.If we distribute capital stock of, or similar equity interests in, a subsidiary or other business unit of ours, then the conversion rate will be adjusted based on the market value of the securities so distributed relative to the market value of our common stock, in each case based on the average closing sales prices of those securities (where such closing prices are available) for the 10 trading days commencing on and including the fifth trading day after the date on which “ex-dividend trading” commences for such distribution on the American Stock Exchange or on the principal national or regional exchange or other market on which the securities are then listed or quoted, which currently is the New York Stock Exchange;
we distribute cash, excluding any dividend or distribution in connection with our liquidation, dissolution or winding up, or any quarterly cash dividend on our common stock to the extent that the aggregate cash dividends per share of common stock in any 12 month period do not exceed the greater of:the annualized amount of dividends per share of common stock based on the next preceding quarterly cash dividend on the common stock to the extent that the preceding quarterly dividend did not require an adjustment of the conversion rate pursuant to this clause, as adjusted to reflect subdivisions or combinations of the common stock; and5% of the average of the closing sale prices of the common stock during the ten trading days immediately prior to the declaration date of the dividend, calculated at the time of the declaration of each distribution.If any adjustment is required to be made under this clause as a result of a distribution that is a quarterly dividend, the adjustment would be based upon the amount by which the distribution exceeds the amount of the quarterly cash dividend permitted to be excluded pursuant to this clause. If the adjustment is required to be made under this clause as a result of a distribution that is not a quarterly dividend, the adjustment would be based upon the full amount of the distribution; and
we or one of our subsidiaries makes a payment in respect of a tender offer or exchange offer for our common stock to the extent that the cash and value of any other consideration included in the payment per share of common stock exceeds the closing sale price per share of common stock on the trading day next succeeding the last date on which tenders or exchanges may be made pursuant to such tender or exchange offer.To the extent that we have a rights plan in effect upon conversion of the debentures into common stock, you will receive, in addition to the common stock, the rights under the rights plan unless the rights have separated from the common stock at the time of conversion, in which case the conversion rate will be adjusted as if we distributed to all holders of our common stock, shares of our capital stock, evidences of indebtedness or assets as described above, subject to readjustment in the event of the expiration, termination or redemption of such rights.
In the event of:
any reclassification of our common stock;a consolidation, merger or combination involving us; ora sale or conveyance to another person or entity of all or substantially all of our property and assets;in which holders of our common stock would be entitled to receive stock, other securities, other property, assets or cash for their common stock, upon conversion of your debentures you will be entitled to receive the same type of consideration that you would have been entitled to receive if you had converted the debentures into our common stock immediately prior to any of these events.
You may in certain situations be deemed to have received a distribution subject to United States federal income tax as a dividend in the event of any taxable distribution to holders of our common stock or in certain other situations requiring a conversion rate adjustment. See “Material United States Federal Income Tax Considerations.”
We may, from time to time, increase the conversion rate if our board of directors has made a determination that this increase would be in our best interests. Any such determination by our board will be conclusive. In addition, we may increase the conversion rate if our board of directors deems it advisable to avoid or diminish any income tax to holders of common stock resulting from any stock or rights distribution. See “Material United States Federal Income Tax Considerations.”
We are not required to make an adjustment in the conversion rate unless the adjustment would require a change of at least 1% in the conversion rate. However, we will carry forward any adjustments that are less than 1% of the conversion rate. Except as described above in this section, we will not adjust the conversion rate for any issuance of our common stock or convertible or exchangeable securities or rights to purchase our common stock or convertible or exchangeable securities.
Contingent Interest
Beginning with the six-month interest period commencing June 15, 2008, we will pay contingent interest to the holders of debentures if the trading price of the debentures, as defined above, for each of the five trading days immediately preceding the first day of the applicable six-month period equals 120% or more of the principal amount of the debentures.
During any period when contingent interest shall be payable, the contingent interest payable per $1,000 principal amount of debentures will equal 0.35% calculated on the average trading price of $1,000 principal amount of debentures during the five trading days immediately preceding the first day of the applicable six-month interest period. “Trading price” is defined above under “—Conversion of Debentures—Conversion Upon Satisfaction of Trading Price Condition.” We will make contingent interest payments in the same manner as regular interest payments.
We will issue a press release and publish such information on our web site as soon as practicable upon determination that holders will be entitled to receive contingent interest during a six-month interest period.
Optional Redemption by Keane
Beginning June 15, 2008, we may redeem the
public reference rooms.debentures in whole or in part at a redemption price equal to 100% of the principal amount of debentures being redeemed and accrued and unpaid interest, contingent interest, if any, and liquidated damages, if any, to, but excluding, the redemption date, unless the redemption date falls after a record date and on or prior to the corresponding interest payment date, in which case we will instead pay the full amount of accrued and unpaid interest payment, contingent interest, if any, and liquidated damages, if any, on such interest payment date to the holder of record at the close of business on the corresponding record date. We are required to give notice of redemption by mail to holders not more than 60 but not less than 30 days prior to the redemption date.If less than all of the outstanding debentures are to be redeemed, the trustee will select the debentures to be redeemed in principal amounts of $1,000 or multiples of $1,000 by lot, pro rata or by another method the trustee
considers fair and appropriate. If a portion of your debentures is selected for partial redemption and you convert a portion of your debentures, the converted portion will be deemed to the extent practicable to be of the portion selected for redemption.
We may not redeem the debentures if we have failed to pay any interest on the debentures and such failure to pay is continuing. We will notify the holders if we redeem the debentures.
Repurchase at Option of the Holder
You have the right to require us to repurchase the debentures on June 15, 2008 for cash. We will be required to repurchase any outstanding debenture for which you deliver a written repurchase notice to the paying agent. The paying agent will initially be the trustee. This notice must be delivered during the period beginning at any time from the opening of business on the date that is 20 business days prior to the repurchase date until the close of business on the repurchase date. A holder may withdraw its repurchase notice at any time prior to the close of business on the repurchase date. If a repurchase notice is given and withdrawn during that period, we will not be obligated to repurchase the debentures listed in the notice. Our repurchase obligation will be subject to certain additional conditions.
The repurchase price payable for a debenture will be equal to the principal amount to be repurchased plus accrued and unpaid interest, contingent interest, if any, and liquidated damages, if any, to, but excluding, the repurchase date.
No debentures may be repurchased by us at the option of holders on June 15, 2008 if the principal amount of the debentures has been accelerated and such acceleration has not been rescinded on or prior to such date.
We must give notice of the June 15, 2008 repurchase date to all debenture holders not less than 20 business days prior to the repurchase date at their addresses shown in the register of the registrar unless we have elected to redeem all of the debentures on the June 15, 2008 repurchase date. We will also give notice to beneficial owners as required by applicable law. This notice will state, among other things, the repurchase price and the procedures that holders must follow to require us to repurchase their debentures.
The repurchase notice from the holder must state:
(1) if certificated debentures have been issued, the debenture certificate numbers (or, if your debentures are not certificated, your repurchase notice must comply with appropriate DTC procedures);
(2) the portion of the principal amount of debentures to be repurchased, which must be in $1,000 multiples; and
(3) that the debentures are to be repurchased by us pursuant to the applicable provisions of the indenture. You may withdraw any written repurchase notice by delivering a written notice of withdrawal to the paying agent prior to the close of business on the repurchase date. The withdrawal notice must state:
the principal amount of the withdrawn debentures;if certificated debentures have been issued, the certificate numbers of the withdrawn debentures (or, if your debentures are not certificated, your withdrawal notice must comply with appropriate DTC procedures); andthe principal amount, if any, which remains subject to the repurchase notice.Payment of the repurchase price for a debenture for which a repurchase notice has been delivered and not withdrawn is conditioned upon book-entry transfer or delivery of the debenture, together with necessary endorsements, to the paying agent at its corporate trust office in the Borough of Manhattan, The City of New
York, or any other office of the paying agent, at any time after delivery of the repurchase notice. Payment of the repurchase price for the debenture will be made promptly following the later of the repurchase date and the time of book-entry transfer or delivery of the debenture. If the paying agent holds money sufficient to pay the repurchase price of the debenture on the business day following the repurchase date, then, on and after such date:
the debenture will cease to be outstanding;interest will cease to accrue; andall other rights of the holder will terminate, other than the right to receive the repurchase price upon delivery of the debenture.This will be the case whether or not book-entry transfer of the debenture has been made or the debenture has been delivered to the paying agent. No debentures may be repurchased by us at the option of holders on June 15, 2008 if the principal amount of the debentures has been accelerated and such acceleration has not been rescinded on or prior to such date.
We may be unable to repurchase the debentures if you elect to require us to repurchase the debentures pursuant to this provision. If you elect to require us to repurchase the debentures on June 15, 2008, we may not have enough funds to pay the repurchase price for all tendered debentures. Any future credit agreements or other agreements relating to our indebtedness may contain provisions prohibiting repurchase of the debentures under certain circumstances. If you elect to require us to repurchase the debentures at a time when we are prohibited from repurchasing debentures, we could seek the consent of our lenders to repurchase the debentures or attempt to refinance this debt. If we do not obtain consent, we would not be permitted to repurchase the debentures. Our failure to repurchase tendered debentures would constitute an event of default under the indenture, which might constitute a default under the terms of our other indebtedness.
We will comply with the provisions of Rule 13e-4 and any other tender offer rules under the Exchange Act that may be applicable at the time of the tender offer. If required, we will file a Schedule TO or any other schedule required in connection with any offer by us to repurchase the debentures.
Repurchase at Option of the Holder Upon a Designated Event
If a designated event occurs at any time prior to the maturity of the debentures, you may require us to repurchase your debentures, in whole or in part, on a repurchase date specified by us that is not less than 20 nor more than 35 business days after the date of our notice of the designated event. The debentures will be repurchased only in integral multiples of $1,000 principal amount.
We will repurchase the debentures at a price equal to 100% of the principal amount to be repurchased, plus accrued and unpaid interest, contingent interest, if any, and liquidated damages, if any, to, but excluding, the repurchase date, unless the repurchase date falls after a record date and on or prior to the corresponding interest payment date, in which case we will instead pay the full amount of accrued and unpaid interest payment, contingent interest, if any, and liquidated damages, if any, on such interest payment date to the holder of record at the close of business on the corresponding record date.
We will mail to all record holders a notice of a designated event within 15 days after it has occurred. We are also required to deliver to the trustee a copy of the designated event notice. If you elect to require us to repurchase your debentures, you must deliver to us or our designated agent, on or before the repurchase date specified in our designated event notice, your repurchase notice and any debentures to be repurchased, duly endorsed for transfer.
The repurchase notice from the holder must state:
1. if certificated debentures have been issued, the debenture certificate numbers (or, if your debentures are not certificated, your repurchase notice must comply with appropriate DTC procedures);
2. the portion of the principal amount of debentures to be repurchased, which must be in $1,000 multiples; and
3. that the debentures are to be repurchased by us pursuant to the applicable provisions of the debentures and the indenture. You may withdraw any written repurchase notice by delivering a written notice of withdrawal to the paying agent prior to the close of business on the repurchase date. The withdrawal notice must state:
the principal amount of the withdrawn debentures;if certificated debentures have been issued, the certificate numbers of the withdrawn debentures (or, if your debentures are not certificated, your withdrawal notice must comply with appropriate DTC procedures); andthe principal amount, if any, which remains subject to the repurchase notice.Payment of the repurchase price for a debenture for which a repurchase notice has been delivered and not withdrawn is conditioned upon book-entry transfer or delivery of the debenture, together with necessary endorsements, to the paying agent at its corporate trust office in the Borough of Manhattan, The City of New York, or any other office of the paying agent, at any time after delivery of the repurchase notice. Payment of the repurchase price for the debenture will be made promptly following the later of the repurchase date and the time of book-entry transfer or delivery of the debenture. If the paying agent holds money sufficient to pay the repurchase price of the debenture on the business day following the repurchase date, then, on and after the date:
the debenture will cease to be outstanding;interest will cease to accrue; andall other rights of the holder will terminate, other than the right to receive the repurchase price upon delivery of the debenture.This will be the case whether or not book-entry transfer of the debenture has been made or the debenture has been delivered to the paying agent.
A “designated event” will be deemed to have occurred upon a fundamental change.
A “fundamental change” is any transaction or event (whether by means of an exchange offer, liquidation, tender offer, consolidation, merger, combination, reclassification, recapitalization or otherwise) in connection with which all or substantially all of our common stock is exchanged for, converted into, acquired for or constitutes solely the right to receive, consideration which is not all or substantially all common stock that:
is listed on, or immediately after the transaction or event will be listed on, a United States national securities exchange, oris approved, or immediately after the transaction or event will be approved, for quotation on The NASDAQ National Market or any similar United States system of automated dissemination of quotations of securities prices.We will comply with any applicable provisions of Rule 13e-4 and any other tender offer rules under the Exchange Act in the event of a designated event.
These designated event repurchase rights could discourage a potential acquirer of Keane. However, this designated event repurchase feature is not the result of management’s knowledge of any specific effort to obtain control of us by means of a merger, tender offer or solicitation, or part of a plan by management to adopt a series of anti-takeover provisions. The term “fundamental change” is limited to specified transactions and may not include other events that might adversely affect our financial condition or business operations. Our obligation to
offer to repurchase the debentures upon a fundamental change would not necessarily afford you protection in the event of a highly leveraged transaction, reorganization, merger or similar transaction involving us.
We may be unable to repurchase the debentures upon a designated event. If a designated event were to occur, we may not have enough funds to pay the repurchase price for all tendered debentures. Any future credit agreements or other agreements relating to our indebtedness may contain provisions prohibiting repurchase of the debentures under certain circumstances, or expressly prohibit our repurchase of the debentures upon a designated event or may provide that a designated event constitutes an event of default under that agreement. If a designated event occurs at a time when we are prohibited from repurchasing debentures, we could seek the consent of our lenders to repurchase the debentures or attempt to refinance this debt. If we do not obtain consent, we would not be permitted to repurchase the debentures. Our failure to repurchase tendered debentures would constitute an event of default under the indenture, which might constitute a default under the terms of our other indebtedness. In these circumstances, the subordination provisions of the indenture would restrict payments to the holders of debentures.
Subordination of Debentures
Payment on the debentures will, to the extent provided in the indenture, be subordinated in right of payment to the prior payment in full of all of our senior indebtedness. The debentures also are effectively subordinated to all debt and other liabilities, including trade payables and lease obligations, if any, of our subsidiaries.
Upon any distribution of our assets upon any dissolution, winding up, liquidation, reorganization, bankruptcy or similar proceeding, the payment of the principal of, interest, including contingent interest, if any, and liquidated damages, if any, on the debentures will be subordinated in right of payment to the prior payment in full in cash or other payment satisfactory to the holders of senior indebtedness of all senior indebtedness. In the event of any acceleration of the debentures because of an event of default, the holders of any outstanding senior indebtedness would be entitled to payment in full in cash or other payment satisfactory to the holders of senior indebtedness of all senior indebtedness before the holders of the debentures are entitled to receive any payment or distribution. We and the trustee are required under the indenture to promptly notify holders of senior indebtedness if payment of the debentures is accelerated because of an event of default.
We may not make any payment on the debentures if:
a default in the payment of senior indebtedness occurs and is continuing beyond any applicable period of grace or any other default on senior indebtedness occurs and the maturity of such senior indebtedness is accelerated in accordance with its terms, which is called a “payment default”; ora default, other than a payment default, on any designated senior indebtedness occurs and is continuing that permits holders of designated senior indebtedness to accelerate its maturity without further notice, except such notice as may be required to affect such acceleration, or in the case of a lease, a default occurs and is continuing that permits the lessor to either terminate the lease or require us to make an irrevocable offer to terminate the lease following an event of default under the lease, and the trustee receives a notice of such default, which is called “payment blockage notice,” from a holder of designated senior indebtedness or any other person permitted to give such notice under the indenture, which is called a “non-payment default”.We may resume payments and distributions on the debentures:
in case of a payment default, upon the date on which such default is cured or waived or ceases to exist; andin case of a non-payment default, the earlier of the date on which such nonpayment default is cured or waived or ceases to exist or 179 days after the date on which the payment blockage notice is received by the trustee, if the maturity of the designated senior indebtedness has not been accelerated and there is no
payment default, or in the case of any lease, 179 days after notice is received if we and the trustee have not received notice that the lessor under such lease has exercised its right to terminate the lease or require us to make an irrevocable offer to terminate the lease following an event of default under the lease and there is no payment default.
No new period of payment blockage may be commenced pursuant to a payment blockage notice unless 360 days have elapsed since the initial effectiveness of the immediately prior payment blockage notice. However, if any payment blockage notice within such 360-day period is given by or on behalf of holders of designated senior indebtedness, other than the agent under our then existing senior credit facility, the agent under such senior credit facility may give another payment blockage notice within such period. No non-payment default that existed or was continuing on the date of delivery of any payment blockage notice shall be the basis for any later payment blockage notice unless such default shall have been cured or waived for a period of not less than 90 consecutive days.
If the trustee or any holder of the debentures receives any payment or distribution of our assets in contravention of the subordination provisions on the debentures before all senior indebtedness is paid in full in cash or other payment satisfactory to holders of senior indebtedness, then such payment or distribution will be held in trust for the benefit of holders of senior indebtedness or their representatives and paid over to them to the extent necessary to make payment in full in cash or payment satisfactory to the holders of senior indebtedness of all unpaid senior indebtedness.
Because of the subordination provisions discussed above, in the event of our bankruptcy, dissolution or reorganization, holders of senior indebtedness may receive more, ratably, and holders of the debentures may receive less, ratably, than our other creditors. This subordination will not prevent the occurrence of any event of default under the indenture.
Our right to receive any assets of any of our subsidiaries upon their liquidation or reorganization, and therefore the right of the holders to participate in those assets, will be effectively subordinated to the claims of that subsidiary’s creditors, including trade creditors. In addition, even if we were a creditor to any of our subsidiaries, our rights as a creditor would be subordinate to any security interest in the assets of our subsidiaries and any indebtedness of our subsidiaries senior to that held by us.
The term “senior indebtedness” is defined in the indenture and includes principal, interest, including interest accruing on or after the filing of a petition in bankruptcy or for reorganization by or against us whether or not a claim for such interest is allowed in such proceeding, rent, fees, costs, expenses and other amounts accrued or due on our existing or future indebtedness, as defined below, or any existing or future indebtedness guaranteed or in effect guaranteed by us, subject to certain exceptions. The term does not include:
• any indebtedness that by its express terms ispari passu or junior to the debentures; or any indebtedness we owe to any of our majority-owned subsidiaries; orthe debentures.The term “indebtedness” is also defined in the indenture and includes, in general terms, our liabilities in respect of borrowed money, notes, bonds, debentures, letters of credit, bank guarantees, bankers’ acceptances, capital and certain other leases, the deferred purchase price of property, including conditional sale obligations and title retention agreements, interest rate, commodity and foreign currency derivative contracts or similar arrangements, guarantees and certain other obligations described in the indenture, subject to certain exceptions. The term does not include any account payable or other accrued current liability or obligation incurred in the ordinary course of business in connection with the obtaining of materials or services.
The term “designated senior indebtedness” is defined in the indenture and includes, in general terms, our senior credit facility, or any such future senior credit facility, and any other senior indebtedness that by its terms expressly provides that it is “designated senior indebtedness” for purposes of the indenture.
As of October 31, 2003 we had approximately $3.2 million of senior indebtedness outstanding and our subsidiaries had no significant indebtedness outstanding. Neither we nor our subsidiaries are prohibited from incurring debt, including senior indebtedness, under the indenture. We may from time to time incur additional debt, including senior indebtedness. Our subsidiaries may also from time to time incur additional debt and liabilities.
We are obligated to pay reasonable compensation to the trustee and to indemnify the trustee against certain losses, liabilities or expenses incurred by the trustee in connection with its duties relating to the debentures. The trustee’s claims for these payments will generally be senior to those of debenture holders in respect of all funds collected or held by the trustee.
Merger and Sale of Assets by Keane
The indenture provides that we may not consolidate with or merge with or into any other person or sell, convey, transfer or lease our properties and assets substantially as an entirety to another person, unless among other items:
we are the surviving person, or the resulting, surviving or transferee person, if other than us, is organized and existing under the laws of the United States, any state thereof or the District of Columbia;the successor person, other than any successor who is bound to our obligations under the debentures and the indenture by operation of law, assumes, by supplemental indenture satisfactory in form and substance to the trustee, all of our obligations under the debentures and the indenture;after giving effect to such transaction, there is no event of default, and no event which, after notice or passage of time or both, would become an event of default; andwe have delivered to the trustee an officers’ certificate and an opinion of counsel each stating that such consolidation, merger, sale, conveyance, transfer or lease complies with these requirements.When such a person assumes our obligations in such circumstances, subject to certain exceptions, we shall be discharged from all obligations under the debentures and the indenture.
Events of Default; Notice and Waiver
The following are events of default under the indenture:
we fail to pay principal when due at maturity, upon redemption, repurchase or otherwise on the debentures, whether or not the payment is prohibited by subordination provisions of the indenture;we fail to pay any interest, including contingent interest, if any, or liquidated damages, if any, on the debentures, when due and such failure continues for a period of 30 days, whether or not the payment is prohibited by subordination provisions of the indenture;we fail to provide notice of the occurrence of a designated event on a timely basis;we fail to perform or observe any of the covenants in the indenture for 60 days after written notice to us from the trustee, or to us and the trustee from the holders of at least 25% in principal amount of the outstanding debentures; orcertain events involving our bankruptcy, insolvency or reorganization.The trustee may withhold notice to the holders of the debentures of any default, except defaults in payment of principal, interest, including contingent interest, if any, or liquidated damages, if any, on the debentures. However, the trustee must consider it to be in the interest of the holders of the debentures to withhold this notice.
If an event of default occurs and continues, the trustee or the holders of at least 25% in principal amount of the outstanding debentures may declare the principal, accrued and unpaid interest, contingent interest, if any, and
liquidated damages, if any, on the outstanding debentures to be immediately due and payable. In case of certain events of bankruptcy or insolvency involving us, the principal, accrued and unpaid interest, contingent interest, if any, and liquidated damages, if any, on the debentures will automatically become due and payable. However, if we cure all defaults, except the nonpayment of principal, interest, contingent interest, if any, and liquidated damages, if any, that became due as a result of the acceleration, and meet certain other conditions, with certain exceptions, this declaration may be cancelled and the holders of a majority of the principal amount of outstanding debentures may waive these past defaults. Payments of principal, interest, contingent interest, if any, or liquidated damages, if any, on the debentures that are not made when due will accrue interest from the required payment date at the annual rate of 1% above the then applicable interest rate for the debentures.
The holders of a majority of outstanding debentures will have the right to direct the time, method and place of any proceedings for any remedy available to the trustee, subject to limitations specified in the indenture.
No holder of the debentures may pursue any remedy under the indenture, except in the case of a default in the payment of principal, or interest, including contingent interest, if any, or liquidated damages, if any, on the debentures, unless:
the holder has given the trustee written notice of an event of default;the holders of at least 25% in principal amount of outstanding debentures make a written request, and offer reasonable indemnity to the trustee to pursue the remedy;the trustee does not receive an inconsistent direction from the holders of a majority in principal amount of the debentures;the holder or holders have offered reasonable security or indemnity to the trustee against any costs, liability or expense of the trustee; andthe trustee fails to comply with the request within 60 days after receipt of the request and offer of indemnity.Modification and Waiver
The consent of the holders of a majority in principal amount of the outstanding debentures is required to modify or amend the indenture. However, a modification or amendment requires the consent of the holder of each outstanding debenture affected thereby if it would:
extend the fixed maturity of any debenture;reduce the rate or extend the time for payment of interest, contingent interest, if any, or liquidated damages, if any, of any debenture;reduce the principal amount of any debenture;reduce any amount payable upon redemption or repurchase of any debenture;adversely change our obligation to redeem any debentures on a redemption date;adversely change our obligation to repurchase any debenture at the option of the holder;adversely change our obligation to repurchase any debenture upon a designated event;impair the right of a holder to institute suit for payment on any debenture;change the currency in which any debenture is payable;impair the right of a holder to convert any debenture or reduce the number of common shares or any other property receivable upon conversion;adversely modify, in any material respect, the subordination provisions of the indenture;reduce the quorum or voting requirements under the indenture; orsubject to specified exceptions, modify certain of the provisions of the indenture relating to modification or waiver of provisions of the indenture.We are permitted to modify certain provisions of the indenture without the consent of the holders of the debentures.
Form, Denomination and Registration
The debentures were issued:
in fully registered form;without interest coupons; andin denominations of $1,000 principal amount and integral multiples of $1,000.Global Debenture, Book-Entry Form
Debentures are evidenced by one or more global debentures. We deposited the global debenture or debentures with DTC and registered the global debentures in the name of Cede & Co. as DTC’s nominee. Except as set forth below, a global debenture may be transferred, in whole or in part, only to another nominee of DTC or to a successor of DTC or its nominee.
Beneficial interests in a global debenture may be held through organizations that are participants in DTC, which are called “participants”. Transfers between participants will be effected in the ordinary way in accordance with DTC rules and will be settled in clearing house funds. The laws of some states require that certain persons take physical delivery of securities in definitive form. As a result, the ability to transfer beneficial interests in the global debenture to such persons may be limited.
Beneficial interests in a global debenture held by DTC may be held only through participants, or certain banks, brokers, dealers, trust companies and other parties that clear through or maintain a custodial relationship with a participant, either directly or indirectly, which are called “indirect participants.” So long as Cede & Co., as the nominee of DTC, is the registered owner of a global debenture, Cede & Co. for all purposes will be considered the sole holder of such global debenture. Except as provided below, owners of beneficial interests in a global debenture will:
not be entitled to have certificates registered in their names;not receive physical delivery of certificates in definitive registered form; andnot be considered holders of the global debenture.We will pay interest, including contingent interest, if any, and liquidated damages, if any, on and the redemption price and the repurchase price of a global debenture to Cede & Co., as the registered owner of the global debenture, by wire transfer of immediately available funds on each interest payment date or the redemption or repurchase date, as the case may be. Neither we, the trustee nor any paying agent will be responsible or liable:
for the records relating to, or payments made on account of, beneficial ownership interests in a global debenture; orfor maintaining, supervising or reviewing any records relating to the beneficial ownership interests.Neither we, the trustee, registrar, paying agent nor conversion agent will have any responsibility for the performance by DTC or its participants or indirect participants of their respective obligations under the rules and
procedures governing their operations. DTC has advised us that it will take any action permitted to be taken by a holder of debentures, including the presentation of debentures for conversion, only at the direction of one or more participants to whose account with DTC interests in the global debenture are credited, and only in respect of the principal amount of the debentures represented by the global debenture as to which the participant or participants has or have given such direction.
DTC has advised us that it is:
a limited purpose trust company organized under the laws of the State of New York, and a member of the Federal Reserve System;a “clearing corporation” within the meaning of the Uniform Commercial Code; anda “clearing agency” registered pursuant to the provisions of Section 17A of the Exchange Act.DTC was created to hold securities for its participants and to facilitate the clearance and settlement of securities transactions between participants through electronic book-entry changes to the accounts of its participants. Participants include securities brokers, dealers, banks, trust companies and clearing corporations and other organizations. Some of the participants or their representatives, together with other entities, own DTC. Indirect access to the DTC system is available to others such as banks, brokers, dealers and trust companies that clear through or maintain a custodial relationship with a participant, either directly or indirectly.
DTC has agreed to the foregoing procedures to facilitate transfers of interests in a global debenture among participants. However, DTC is under no obligation to perform or continue to perform these procedures, and may discontinue these procedures at any time.
We will issue debentures in definitive certificated form only if:
DTC notifies us that it is unwilling or unable to continue as depositary or DTC ceases to be a clearing agency registered under the Exchange Act and a successor depositary is not appointed by us within 90 days;an event of default shall have occurred and the maturity of the debentures shall have been accelerated in accordance with the terms of the debentures and any holder shall have requested in writing the issuance of definitive certificated debentures; orwe have determined in our sole discretion that debentures shall no longer be represented by global debentures.Registration Rights of the Debenture Holders
We entered into a registration rights agreement with the initial purchasers of the debentures pursuant to which we have, at our own expense, for the benefit of debenture holders, filed with the SEC
athe shelf registration statementon Form S-3of which this prospectus is a part, covering resale of the debentures and the shares of our common stock issuable upon conversion of the debentures. Our obligation to keep the shelf registration statement effective terminates upon the earlier of (1) the date there are no longer any registrable securities and (2) two years after the effective date of the registration statement of which this prospectus is a part.When we use the term “registrable securities” in this section, we are referring to the debentures and the common stock issuable upon conversion of the debentures until the earlier of (1) the sale pursuant to Rule 144 under the Securities Act or the registration statement of
1933 ("which this prospectus is a part of all registrable securities, and (2) the expiration of the holding period applicable to such securities held by persons that are not affiliates of Keane under Rule 144(k) under the SecuritiesAct")Act or any successor provision.We have the right to suspend the use of this prospectus under certain circumstances relating to pending corporate developments, public filings with the SEC and similar events. Any suspension period shall not exceed:
45 days in any three-month period; oran aggregate of 90 days for all periods in any 12-month period.Notwithstanding the foregoing, we are permitted to suspend the use of this prospectus for up to 60 days in any 3-month period under certain circumstances, relating to possible acquisitions, financings or other similar transactions.
We will pay predetermined liquidated damages on any interest payment date if the shelf registration statement is not made effective as described above or if the prospectus included in the registration statement is unavailable for periods in excess of those permitted above. Those additional amounts will accrue until a failure to become effective or unavailability is cured:
in respect of any debentures required to bear a transfer restriction legend, at a rate per year equal to 0.25% of the outstanding principal amount thereof for the first 90 days after the occurrence of the event and 0.50% of the outstanding principal amount thereof after the first 90 days; andin respect of shares of our common stock into which the debentures have been converted and that are required to bear a transfer restriction legend, at a rate per year equal to 0.25% of the then-applicable conversion price for the first 90 days after the occurrence of the event and 0.50% of then-applicable conversion price after the first 90 days.The liquidated damages will accrue from and including the date on which the registration default occurs to but excluding the date on which all registration defaults have been cured. We have no other liabilities for monetary damages with respect to our registration obligations, except that if we breach, fail to comply with or violate some provisions of the registration rights agreement, the holders of the debentures may be entitled to equitable relief, including injunction and specific performance.
A holder who elects to sell registrable securities pursuant to this prospectus will be required to:
be named as a selling securityholder in this prospectus or prospectus supplement;deliver a prospectus to purchasers; andbe subject to the provisions of the registration rights agreement, including indemnification provisions.Under the registration rights agreement we will:
pay all customary expenses with respect to theShares offered hereby. This Prospectus,shelf registration statement;provide each registered holder copies of this prospectus;notify holders when the shelf registration statement has become effective; andtake other reasonable actions as are required to permit unrestricted resales of the registrable securities in accordance with the terms and conditions of the registration rights agreement.The plan of distribution of the shelf registration statement, of which
constitutesthis prospectus is a part, permits resales ofthat registration statement, does not contain allregistrable securities by selling securityholders through brokers and dealers. In no event may theinformation containedmethod of distribution of the debentures or shares of our common stock issuable upon conversion of the debentures take the form of an underwritten offering without our prior written consent. See “Plan of Distribution.”We agreed in the registration rights agreement to give notice to all holders of the filing and effectiveness of the shelf registration statement, of which this prospectus is a part, by issuing a press release to Reuters Economic Services and
its exhibits. For further information with respect to Keane and the Shares, you should consultBloomberg Business News or other reasonable means of distribution.The summary in this prospectus of provisions of the registration
statementrights agreement is not complete. This summary is subject to, andits exhibits. Statements contained in this Prospectus concerning the provisions of any documents are necessarily summaries of those documents, and each statementis qualified in its entirety by reference to, all the provisions of the registration rights agreement, a copy ofthe documentwhich has previously been filed with theSEC.SEC and is available from Keane upon request.Rule 144A Information Request
We will furnish to the holders or beneficial holders of the debentures or the underlying shares of our common stock and prospective purchasers, upon their request, the information, if any, required under Rule 144A(d)(4) under the Securities Act until such time as such securities are no longer “restricted securities” within the meaning of Rule 144 under the Securities Act, assuming these securities have not been owned by an affiliate of ours.
Information Concerning the Trustee
We have appointed Wachovia Bank, National Association, the trustee under the indenture, as paying agent, conversion agent, debenture registrar and custodian for the debentures. An affiliate of the trustee was one of the initial purchasers in the sale of the debentures.
The
registration statement andtrustee or its affiliates may also provide other services to us in the ordinary course of their business. The indenture contains certain limitations on the rights of the trustee, if it or any of itsamendments, including exhibits filedaffiliates is then our creditor, to obtain payment of claims in certain cases or to realize on certain property received on any claim as security or otherwise. The trustee and its affiliates will be permitted to engage in other transactions with us. However, if the trustee or any affiliate continues to have any conflicting interest and a default occurs with respect to the debentures, the trustee must eliminate such conflict within 90 days, apply to the SEC for permission to continue as trustee or resign.Governing Law
The debentures and the indenture are governed by, and construed in accordance with, the laws of the State of New York.
DESCRIPTION OF OTHER INDEBTEDNESS
We currently maintain a $50.0 million unsecured revolving credit facility. This facility expires on February 24, 2006. As of October 31, 2003, we had no revolving credit loans outstanding under the facility, but may draw upon the revolving credit facility in the future. Any amounts drawn upon the revolving credit facility will constitute senior indebtedness. Our availability under the senior revolving credit facility is limited by compliance with certain leverage ratios.
Interest Rate Calculations
Loans under the senior revolving credit facility will bear interest at a rate equal to either (1) the base rate or (2) the Eurodollar rate plus the applicable margin. Interest payments based upon the base rate will be payable quarterly. Interest payments based upon the Eurodollar rate will be payable on the last day of each relevant interest period and, in the case of any interest period longer than three months, on each successive date three months after the first day of such interest period.
The base rate will be a rate calculated on a daily basis as the higher of:
The prime rate of interest announced from time to time by Fleet National Bank, andThe federal funds effective rate from time to time plus 0.50% per annum.The eurodollar rate will be the rate for Eurodollar deposits for one, two, three or six months, at our option, appearing on page 3750 of the Dow Jones Market Service. The applicable margin for eurodollar loans under the revolving credit facility will be 1.75% if less than 33% of the total commitment is drawn and 2.0% if greater than 33% of the total commitment is drawn.
Upon any default in the payment of any amount of principal, interest or letter of credit reimbursement obligations due under the revolving credit facility, all outstanding loans will bear interest compounded monthly and payable on demand at a rate per annum equal to 2.0% above the then applicable interest rate. During any default or event of default, amounts not overdue shall bear interest at a rate equal to 2.0% of the then applicable rate until the default or event of default is either cured or waived.
Fees
We will pay a commitment fee quarterly in arrears at a per annum rate of 0.30% on the unused amount of the senior revolving credit facility.
Covenants and Conditions
The senior revolving credit facility includes covenants that, subject to certain specific exceptions and limitations, restrict our ability to:
merge, consolidate, liquidate or dissolve;make certain acquisitions or dispositions of assets;incur additional debt;create liens;enter into certain transactions with affiliates;enter into sale-leaseback transactions;permit to exist restrictions on subsidiary distributions or the incurrence of liens;pay dividends or make certain distributions in respect of our capital stock;make certain capital expenditures;make changes in lines of business; andmake investments.We are also required to comply with specific financial covenants, each as defined in the credit agreement, including:
a minimum level of earnings before interest, taxes, depreciation and amortization, or “EBITDA;”a maximum senior leverage ratio;a maximum total leverage ratio; anda minimum ratio of cash, cash equivalents and accounts receivable to current liabilities and amounts outstanding under the senior revolving credit facility.Events of Default
The senior revolving credit facility contains customary events of default, which include nonpayment of principal when due, nonpayment of interest, material inaccuracy of representations and warranties, violation of covenants, change of control and cross defaults.
As of the date of this prospectus, our articles of organization authorize us to issue 200,000,000 shares of common stock, par value $.10 per share, 503,797 shares of class B common stock, par value $.10 per share, and 2,000,000 shares of preferred stock, par value $.01 per share. As of October 31, 2003, 63,727,532 shares of common stock (excluding 11,817,859 shares held in treasury) and 284,599 shares of class B common stock were outstanding, and no shares of preferred stock were outstanding.
Common Stock and Class B Common Stock
Voting. Each share of our common stock is entitled to one vote on all matters submitted to stockholders and each share of our class B common stock is entitled to ten votes on all matters submitted to stockholders. The holders of common stock and class B common stock vote as a
partsingle class on all actions submitted to a vote of our stockholders, except that separate class votes of theregistration statementholders of common stock and class B common stock are required with respect to amendments to our articles of organization that alter oran amendmentchange the powers, preferences, or special rights of their respective classes or as to affect them adversely, and with respect to such other matters as may require class votes under Massachusetts law. Voting for directors is non-cumulative.As of October 31, 2003, the
registration statement,class B common stock represented less than 1.0% of the our outstanding equity, but had approximately 4.3% of the combined voting power of our outstanding common stock and class B common stock. The voting rights of the class B common stock may make us less attractive as the potential target of a hostile tender offer or other proposal to acquire our stock or our business and render merger proposals more difficult, even if such actions would be in the best interests of our stockholders.Dividends and Other Distributions. The holders of our common stock and class B common stock are entitled to receive ratably such dividends, if any, as may be declared by our board of directors, out of funds legally available
for inspectiontherefore, except that our board may not declare andcopying as described above. You may also inspect these documents along with reportspay a regular quarterly cash dividend on the shares of class B common stock unless a non-cumulative per share dividend which is $.05 per share greater than the per share dividend paid on the class B common stock is paid at the same time on the shares of our common stock. In the event of our liquidation, dissolution, or winding up, holders of common stock and class B common stock have the right to ratable portions of our net assets after the payment of all debts and otherinformation regarding Keane at the officesliabilities.Trading Markets. Shares of
the American Stock Exchange, 86 Trinity Place, New York, New York 10006. -6-RECENT EVENTS On October 9, 1998, Keane acquired all of the outstanding capital stock of Fourth Tier in exchange for 915,571 shares of Keaneour class B common stock(the "Fourth Tier Acquisition"). In addition, in connection with the Fourth Tier Acquisition, Keane, the representative of the former shareholders of Fourth Tier, the former shareholders of Fourth Tier and State Street Bank and Trust Company, as escrow agent, entered into an Escrow Agreement, dated October 9, 1998, providing, among other things, that 80,178 shares of the Keane common stock receivedare not transferable bysuch Fourth Tier shareholders pursuant to the Fourth Tier Acquisition will be held in escrow to indemnify Keanea stockholder except for transfers:by gift,in the event ofany breachesthe death ofrepresentations, warrantiesa stockholder, orcovenants madebyFourth Tier. Fourth Tier, nowawholly-owned subsidiarytrust to a person who is the grantor or a principal beneficiary ofKeane, provides enterprise relationship management consulting services. Fourth Tier is based in El Segundo, California. Keane is accounting for the Fourth Tier Acquisition as a pooling of interests. On August 4, 1998, Keane acquired the issued and outstanding capital stock of Icom and issuedthat trust.We refer to individuals or
reserved for issuance approximately 894,500entities receiving shares ofKeaneclass B common stock(the "Icom Acquisition"), 835,545 of which were issuedpursuant to these transfers as “permitted transferees.” The class B common stock is not listed or traded on any exchange or inexchangeany market, and no trading market exists for shares ofIcom capitalthe class B common stock. The class B common stockwhich Keane acquired inis, however, convertible at all times, and without cost to theIcom Acquisition, and up to approximately 58,955 of which will be issuable upon the exercise of options to acquirestockholder, into shares of common stockthat Keane issued in exchange for certain options to acquireon a share-for-share basis. Shares of class B common stock are automatically converted into an equal number of shares ofIcom capitalcommon stockheld by the Icom optionholders. In addition,in connection withthe Icom Acquisition, Keane, the former stockholdersany transfer ofIcom and State Street Bank and Trust Company, as escrow agent, entered into an Escrow Agreement, dated August 4, 1998, providing, amongthose shares otherthings, that 83,554 shares of the Keane common stock received by such stockholders pursuant to the Icom Acquisition will be held in escrow to indemnify Keane in the event of certain breaches of the representations and warranties made by former stockholders of Icom. Icom, now a subsidiary of Keane, is a financial services consulting, workflow and imaging, and application management firm based in Birmingham, England. Keane is accounting for the Icom Acquisition as a pooling of interests. On June 1, 1998, Keane acquired all of the outstanding capital stock of Bricker and all outstanding options to acquire capital stock of Bricker in exchange for 2,336,196 shares of Keane common stock (the "Bricker Acquisition"). In addition, in connection with the Bricker Acquisition, Keane, the representative of the former shareholders and optionholders of Bricker, the former shareholders and optionholders of Bricker and State Street Bank and Trust Company, as escrow agent, entered into an Escrow Agreement, dated June 1, 1998, providing, among other things, that 175,215 shares of the Keane common stock received by such Bricker shareholders and optionholders pursuant to the Bricker Acquisition will be held in escrow to indemnify Keane in the event of any breaches of representations, warranties or covenants made by Bricker. Bricker, now a wholly-owned subsidiary of Keane, provides operations improvement consulting. Bricker is based in Chicago, Illinois. Keane is accounting for the Bricker Acquisition as a pooling of interests. On January 30, 1998, Keane acquired all of the outstanding capital stock of Quantum in exchange for 180,339 shares of Keane common stock (the "Quantum Acquisition"). On March 3, 1998, Keane issued an additional 9,489 shares of Keane common stock to the former shareholders of Quantum pursuantthan to apost- closing purchase price adjustment.permitted transferee. In addition,in connection with the Quantum Acquisition, Keane, the representative of the former shareholders of Quantum and State Street Bank and Trust Company, as escrow agent, entered into an Escrow Agreement, dated January 30, 1998, providing, among other things, that 18,984 shares of the Keane common stock received by -7-such Quantum shareholders pursuant to the Quantum Acquisition will be held in escrow to indemnify Keane in the event of any breaches of representations, warranties or covenants made by Quantum. Quantum, now a wholly-owned subsidiary of Keane with the name "Keane Pittsburgh, Inc.", is an application development and software consulting company based in Pittsburgh, Pennsylvania. Keane is accounting for the Quantum Acquisition as a pooling of interests. USE OF PROCEEDS Keane will not receive any proceeds from the sale of the Shares covered by this Prospectus. -8-THE SELLING SHAREHOLDERS The individuals listed in the table below (the "Selling Shareholders") acquired the Shares from Keane in connection with Keane's acquisition of all of the outstanding stock of Fourth Tier. The Fourth Tier Acquisition closed on October 9, 1998. The Selling Shareholders received a total of 915,571 shares of common Stock from Keane in exchange forall of the outstanding shares ofFourth Tier.class B common stock are convertible into shares of common stock upon a majority vote of our board.Future Issuance of Class B Common Stock; Retirement of Class B Common Stock Upon Conversion into Common Stock. We may not issue any additional shares of class B common stock without stockholder approval. All shares of class B common stock converted into common stock are retired and may not be reissued.
Other Matters. The
following table sets forthholders of our common stock and class B common stock have no preemptive rights or, except as described above, rights to convert their stock into any other securities and are not subject to future calls or assessments by us. All outstanding shares of common stock and class B common stock are fully paid and non-assessable. The rights, preferences and privileges of holders of our common stock and class B common stock are subject to, and may be adversely affected by, thenamerights of the holders of shares of any series of preferred stock which we may designate and issue in the future.Preferred Stock
Our articles of organization authorize us to issue up to 2,000,000 shares of preferred stock. We may issue shares of preferred stock from time to time in one or more series, and our board is authorized to determine the rights, preferences, privileges and restrictions, including the dividend rights, conversion rights, voting rights, terms of redemption, redemption price or prices, and liquidation preferences, of any series of preferred stock, and to fix the number of shares of any such series of preferred stock without any further vote or action by our stockholders. The voting and other rights of the holders of our common stock
beneficially ownedand class B common stock will be subject to, and may be adversely affected by, theSelling Shareholders asrights of our holders of any preferred stock that we may issue in thedate of this Prospectus, the number of the shares to be offered by the Selling Shareholders and the number and percentagefuture. The issuance of sharesto be owned beneficiallyof preferred stock bythe Selling Shareholders if all of the shares offered hereby by the Selling Shareholders are sold as described herein.
Number of Percentage of Number of Shares Shares of Shares of of Common Stock Number of Common Stock Common Beneficially Shares of Beneficially Stock Owned Name and Address of Owned Prior to Common Stock Owned After After Selling Shareholder Offering(1) Offered Hereby Offering(1) Offering - ------------------------ ----------------- ---------------- -------------- --------------Phil Hui-Bon-Hoa and 466,941 466,941 --- --- Jeamel Hui-Bon-Hoa as Trustees of the Hui-Bon-Hoa Family Trust, dated October 9, 1998 626 Camino de Encanto Redondo Beach, CA 90277 (2) John R. Lynch, III 448,630 448,630 --- --- 690 Harbor Street #6 Venice, CA 90291- ---------------------------- (1) The number of shares beneficially owned is determined under rules promulgated by the SEC, and the information is not necessarily indicative of beneficial ownership for any other purpose. Under such rules, beneficial ownership includes any shares as to which the individual has sole or shared voting power or investment power and also any shares which the individual has the right to acquire within 60 days after the date of this Prospectus through the exercise of any stock option or other right. The inclusion herein of such shares, however, does not constitute an admission that the Selling Shareholders are direct or indirect beneficial owners of such shares. The Selling Shareholders have sole voting power and investment power with respect to all shares of capital stock listed as owned by the Selling Shareholders. (2) The Hui-Bon-Hoa Family Trust acquired the Shares from Phil Hui-Bon-Hoa by gift, without consideration, effective January 26, 1999. -9-PLAN OF DISTRIBUTION The Selling Shareholders have advised Keane that they propose to sell, from time to time, all or part of the Shares covered by this Prospectus in any of the following manners: . on the American Stock Exchange (or through the facilities of any national securities exchange or U.S. inter-dealer quotation system of a registered national securities association, on which the Shares are then listed, admitted to unlisted trading privileges or included for quotation); . in public or privately negotiated transactions; . in transactions involving principals or brokers; . in a combination of such methods of sale; or . any other lawful methods. The Selling Shareholders have further advised Keane that although sales of the Shares are, in general, expected to be made at market prices prevailing at the time of sale, the Shares may also be sold at prices related to such prevailing market prices or at negotiated prices, which may differ considerably. In addition, the Shares may be offered and sold by the Selling Shareholders, or by permitted pledgees, donees, transferees or other permitted successors in interest. In offering the Shares covered by this Prospectus, each of the Selling Shareholders and any broker-dealers who sell the Shares for the Selling Shareholder may be "underwriters" within the meaning of the Securities Act, and any profits realized by such Selling Shareholder and the compensation of such broker-dealers may be underwriting discounts and commissions. Sales through brokers may be made by any method of trading authorized by any stock exchange or market on which the Shares may be listed, including block trading in negotiated transactions. Without limiting the foregoing, such brokers may act as dealers by purchasing any or all of the Shares covered by this Prospectus, either as agents for others or as principals for their own accounts, and reselling such Shares pursuant to this Prospectus. The Selling Shareholders may effect such transactions directly, or indirectly through underwriters, broker-dealers or agents acting on their behalf. In connection with such sales, such broker-dealers or agents may receive compensation in the form of commissions, concessions, allowances or discounts, any or all of which might be in excess of customary amounts. Each of the Selling Shareholders has advised Keane that he does not anticipate paying any consideration other than usual and customary broker's commissionsus, while providing desirable flexibility in connection withsalesacquisitions and other corporate purposes, could have the effect ofthe Shares. Eachmaking it more difficult for a third party to acquire, or ofthe Selling Shareholdersdiscouraging a third party from acquiring, a majority of our outstanding voting stock. We have no present plans to issue any shares of preferred stock.Limitation of Liability of Officers and Directors
Under Massachusetts law, a director is
acting independently of Keane in making decisions with respectgenerally not exculpated from liability relating tothe timing, mannerunauthorized distributions andsize of each sale. Keane has not been advised of any definitive selling arrangement at the date of this Prospectus between any Selling Shareholder and any broker-dealer or agent. To the extent required, the names of any agents, broker-dealers or underwriters and applicable commissions, concessions, allowances or discounts, and any other required informationloans to insiders. Massachusetts law provides that no indemnification may be provided with respect to anyparticular offermatter in which the director or officer shall have been adjudicated not to have acted in good faith in the reasonable belief that his action was:in the best interest of theShares by the Selling Shareholders, will be set forth in a Prospectus Supplement. In addition, a Prospectus Supplement will be filed upon Keane being notified by a Selling Shareholder that a permitted doneecorporation, orpledgee intends to sell more than 500 Shares. -10-Keane will bear all expenses incurred in effecting the registration of the Shares, including all registration and filing fees, "blue sky" fees, printing expenses and all accounting and legal fees of counsel to Keane, and the Selling Shareholders will bear all brokerage or underwriting expenses or commissions, if any, applicable to the sale of the Shares. Keane has agreed to indemnify in certain circumstances each of the Selling Shareholders and any underwriter and certain control and other persons related to the foregoing persons against certain liabilities, including liabilities under the Securities Act. Each of the Selling Shareholders has agreed to indemnify in certain circumstances Keane and certain related persons against certain liabilities, including liabilities under the Securities Act. Keane has agreed to use its best efforts to keep the registration statement of which this Prospectus constitutes a part effective until the Selling Shareholders have sold all of the Shares or October 9, 1999, whichever comes first. Keane intends to de-register any Shares which the Selling Shareholders have not sold by the end of such period. All of the Selling Shareholders have agreed with Keane not to sell, exchange, transfer, distribute, pledge or otherwise dispose of, or enter into any transaction to reduce his interest in or risk relating to (whether by short sale or otherwise) or any transaction which would result in a direct or indirect disposition of the Shares until such time as Keane has published (within the meaning of Accounting Series Release Nos. 130 and 135 published by the SEC) financial results covering at least 30 days of combined operations of Fourth Tier and Keane. LEGAL MATTERS The validity of the shares offered hereby will be passed upon for Keane by Hale and Dorr LLP, Boston, Massachusetts. EXPERTS The consolidated balance sheets as of December 31, 1997 and 1996 and the consolidated statements of income, stockholders' equity and cash flows for each of the three years in the period ended December 31, 1997, incorporated by reference in this Prospectus, have been incorporated by reference herein in reliance on the report of PricewaterhouseCoopers LLP, independent accountants, given on the authority of that firm as experts in accounting and auditing. -11-YOU SHOULD RELY ONLY ON THE INFORMATION INCORPORATED BY REFERENCE OR PROVIDED IN THIS PROSPECTUS OR ANY PROSPECTUS SUPPLEMENT. KEANE HAS NOT AUTHORIZED ANYONE ELSE TO PROVIDE YOU WITH DIFFERENT INFORMATION. KEANE IS NOT MAKING AN OFFER OF THESE SECURITIES IN ANY STATE WHERE THE OFFER IS NOT PERMITTED. YOU SHOULD NOT ASSUME THAT THE INFORMATION IN THIS PROSPECTUS OR ANY PROSPECTUS SUPPLEMENT IS ACCURATE AS OF ANY DATE OTHER THAN THE DATE ON THE FRONT OF THOSE DOCUMENTS. ----------------- TABLE OF CONTENTS PAGE ---- Special Note Regarding Forward-Looking Information........................... 2 Keane................................... 2 Risk Factors............................ 3 Incorporation of Certain Documents by Reference.......................... 5 Where You Can Find More Information........................... 6 Recent Events........................... 7 Use of Proceeds......................... 8 The Selling Shareholders................ 9 Plan of Distribution.................... 10 Legal Matters........................... 11 Experts................................. 11 ----------------- - -------------------------------------------- - -------------------------------------------- - -------------------------------------------- - -------------------------------------------- KEANE, INC. 915,571 SHARES COMMON STOCK -------------- PROSPECTUS -------------- - -------------------------------------------- - --------------------------------------------PART II INFORMATION NOT REQUIRED IN PROSPECTUS ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION. The following table sets forth the various expenses to be incurred in connection with the sale and distribution of the securities being registered hereby, all of which will be borne by Keane. All amounts shown are estimates except the Securities and Exchange Commission ("SEC") registration fee. Filing Fee - SEC $8,480.90 Legal fees and expenses of the 10,000 Company Accounting fees and expenses 2,000 Blue Sky fees and expenses -- Printing expenses -- Miscellaneous expenses $2,519.10 Total Expenses $23,000 II-1ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS. Section 67 of Chapter 156B of the Massachusetts General Laws ("Section 67") provides that a corporation may indemnify its directors and officersto the extentspecifiedthat such matter relates to service with respect to any employee benefit plan, inor authorized by (i)thearticles of organization, (ii) a by-law adopted by the stockholders, or (iii) a vote adopted by the holders of a majoritybest interest of thesharesparticipants or beneficiaries ofstock entitledsuch employee benefit plan.Massachusetts law does not explicitly address indemnifying persons against judgments in actions brought by or in the right of the corporation. The standard described above applies to
vote on the election of directors. In all instances, the extent to which a corporationthese cases.Our charter provides
indemnification to its directors and officers under Section 67 is optional. The Registrant's Articles of Organization providethatthe Registrant shall, to the fullest extent permitted by the Massachusetts Business Corporation Law,we will indemnify each person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, by reason ofthefact that heor sheis or was, or has agreed to become, a directorofor officer ofthe Registrant,us, or is or was serving, or has agreed to serve, attheour request,of the Registrant,as a director or officer of, or in a similar capacity, with another organization or in any capacity with respect to any employee benefit plan of ours.Actions by Stockholders
Under Massachusetts law, a special meeting of stockholders may be called by the
Registrant,president, a majority of directors, or, unless otherwise provided in the charter or by-laws, by the clerk upon written application of one or more stockholders entitled to vote and who hold at least 40% in interest of the capital stock entitled to vote at the meeting.Our by-laws provide that a special meeting of stockholders may be called by our president or board of directors. A special meeting must also be called by our clerk upon written application of one or more stockholders who are entitled to vote at the meeting and hold at least 50% of the capital stock entitled to vote at the meeting.
Our by-laws and Massachusetts law provide that any action to be taken by stockholders may be taken without a meeting only by unanimous written consent and a corporation may not provide otherwise in its charter or by-laws.
Advance Notice Provisions for Board Nomination and Other Stockholder Business
Our by-laws provide that nominations for election to our board of directors at an annual meeting of stockholders may be made by our board of directors or by
reasonany stockholder entitled to vote for the election of directors at an annual meeting and who complies with the following procedure: nominations for the election of directors made by a stockholder must be made by written notice to our clerk and received not less than 45 days nor more than 60 days prior to the anniversary of the date on which we first mailed our proxy materials for the prior year’s annual meeting of stockholders, provided, however, that if the date of the annual meeting is more than 30 days before or after the anniversary of the prior year’s annual meeting, the nomination must be mailed or delivered to our clerk not later than the close of business on the later of the date 60 days prior to the date of the meeting or the tenth day following the date on which the notice of the meeting was mailed or public disclosure was made, whichever occurs first.For any other business to be properly brought before an annual meeting by a stockholder, the stockholder must have given timely notice thereof in writing to our clerk. To be timely, a stockholder’s notice must be received at our principal executive offices not less than 45 days nor more than 60 days prior to the anniversary of the date on which we first mailed our proxy materials for the prior year’s annual meeting of stockholders, provided, however, that if the date of the annual meeting is more than 30 days before or after the anniversary of the prior year’s annual meeting, the notice shall have been mailed or delivered to our clerk not later than the close of business on the later of the date 60 days prior to the date of the meeting or the tenth day following the date on which the notice of the meeting was mailed or public disclosure was made, whichever occurs first.
Under Massachusetts law, seven days notice is required before any stockholders meeting. Under our by- laws, for business to be properly brought before a special meeting by a stockholder other than the election of directors, timely notice must be given by the stockholder to our clerk. To be timely with respect to a special meeting, a stockholder’s notice must be mailed and received at our principal executive offices not less than 60 days nor more than 90 days prior to the special meeting, provided, however, that if less than 70 days’ notice or prior public disclosure of the date of the special meeting is given or made to the stockholders, notice by the stockholder must be delivered or mailed to our clerk not later than the close of business on the tenth day following the date on which the notice of the special meeting was mailed or public disclosure was made, whichever occurs first.
Classified Board of Directors and Anti-Takeover Statutes
Under Massachusetts law, the board of directors of every publicly held Massachusetts corporation must be divided into three classes, only one of which is elected each year. However, either the board or the stockholders may vote that the corporation not be subject to this “classified board” requirement. In March 2002, we instituted a classified board, consisting of three Class I directors, three Class II directors and three Class III directors. At each annual meeting of stockholders, directors are elected for a full term of three years to succeed those whose terms are expiring.
Our classified board may discourage efforts to obtain control of us by making it more difficult for stockholders to change the composition of our board in a relatively short time period. At least two annual
meetings will be required to be held in order to effect a change in a majority of the members of our board. Our directors believe that the delay afforded by these arrangements will help ensure that the board, if confronted with a hostile tender offer, a proxy contest or other similar proposal, will have sufficient time to review and consider any proposal and appropriate alternatives, and to act in, what it believes to be, the best interest of our stockholders.
Massachusetts law contains a three-year moratorium on “business combinations” between a corporation and interested stockholders, unless certain conditions are met. In addition, the Massachusetts control share acquisition statute restricts the voting rights of shares acquired under specified circumstances.
Transfer Agent and Registrar
The transfer agent and registrar of our common stock is EquiServe LP.
Listing on the New York Stock Exchange
Our common stock is listed on the New York Stock Exchange under the symbol “KEA.”
MATERIAL UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
The following discussion describes the material United States federal income tax consequences of the ownership and disposition of the debentures and our common stock into which the debentures may be converted. This discussion applies only to holders that:
hold the debentures and our common stock as capital assets; andare United States Holders, as more fully described below.This discussion does not describe all of the tax consequences that may be relevant to a holder in light of its particular circumstances or to holders subject to special rules, such as:
certain financial institutions;insurance companies;dealers and certain traders in securities;persons holding the debentures or our common stock as part of a “straddle,” “hedge,” “conversion” or similar transaction;United States Holders whose functional currency is not the United States dollar;certain former citizens or residents of the United States;partnerships or other entities classified as partnerships for United States federal income tax purposes, the taxation of which will generally depend upon the status of each partner rather than the partnership; andpersons subject to the alternative minimum tax.This summary is based on the Internal Revenue Code of 1986, as amended, known as the “Code,” administrative pronouncements, judicial decisions and final, temporary and proposed Treasury regulations, all as in effect on the date of this prospectus. Subsequent changes to any of these authorities may affect the tax consequences described in this prospectus, possibly with retroactive effect. Persons considering the purchase of the debentures are urged to consult their tax advisors with regard to the application of the United States federal income tax laws to their particular situations as well as any tax consequences arising under the laws of any
action allegedstate, local or foreign taxing jurisdiction.Classification of the Debentures
The debentures will be treated as indebtedness for United States federal income tax purposes. Under the indenture governing the debentures, we agreed, and by acceptance of a beneficial interest in a debenture each holder of a debenture is deemed to have
beenagreed, to treat the debentures as indebtedness for United States federal income tax purposes that is subject to the Treasury regulations governing contingent payment debt instruments, referred to in this prospectus as the “contingent payment debt regulations.” Pursuant to the terms of the indenture, we agreed and every holder is deemed to have agreed, in the absence of an administrative determination or judicial ruling to the contrary, to be bound by our application of the contingent payment debt regulations to the debentures, including our determination of the projected payment schedule, as more fully described below, and the rate at which interest will be deemed to accrue on the debentures for United States federal income tax purposes. However, the proper application of the contingent payment debt regulations to the debentures is uncertain in a number of respects, and no assurance can be given that the Internal Revenue Service, or the “IRS,” will not assert that the debentures should be treated differently. A different treatment of the debentures could affect the amount, timing and character of income, gain or loss with respect to an investment in the debentures. Accordingly, you are urged to consult your tax advisor regarding the United States federal income tax consequences of an investment in the debentures and with respect to any tax consequences arising under the laws of any state, local or foreign taxing jurisdiction.The remainder of this discussion assumes that the debentures will be treated as indebtedness subject to the contingent payment debt regulations as described above.
Tax Consequences to United States Holders
As used in this prospectus, the term “United States Holder” means a beneficial owner of a debenture or shares of our common stock issued upon conversion of a debenture that is for United States federal income tax purposes:
a citizen or resident of the United States;a corporation, or other entity taxable as a corporation for United States federal income tax purposes, created or organized in or under the laws of the United States or of any political subdivision thereof; oran estate or trust, the income of which is subject to United States federal income taxation regardless of its source.Interest Accruals on the Debentures
Under the contingent payment debt regulations, a United States Holder, regardless of its method of accounting for United States federal income tax purposes, will be required to accrue interest income on the debentures on a constant yield basis at an assumed yield, also known as the “comparable yield,” determined at the time of issuance of the debentures. The comparable yield for the debentures is based on the yield at which we could issue a nonconvertible fixed rate debt instrument with no contingent payments, but with terms otherwise similar to those of the debentures. At the time the debentures were issued, we determined the comparable yield to be 9.25%, compounded semi-annually. Accordingly, United States Holders generally will be required to include interest in income, in each year prior to maturity, in excess of the regular interest and any contingent interest payments on the debentures.
Solely for purposes of determining the amount of interest income that a United States Holder will be required to accrue, at the time the debentures were issued, we were required to construct a “projected payment schedule” in respect of the debentures representing a series of payments the amount and timing of which must produce a yield to maturity on the debentures equal to the comparable yield. The projected payment schedule must include all fixed payments payable under the debentures as well as contingent payments the amount and timing of which are projected by us and are not determined to be unreasonable by the IRS. Holders that wish to obtain the projected payment schedule may do so by contacting Keane, Inc., 100 City Square, Boston, MA 02129, Attention: Treasurer.
Neither the comparable yield nor the projected payment schedule constitutes a representation by us regarding the actual amount that will be paid on the debentures, or the value at any time of the common stock into which the debentures may be converted. For United States federal income tax purposes, a United States Holder is required under the contingent payment debt regulations to use the comparable yield and the projected payment schedule established by us in determining interest accruals and adjustments in respect of a debenture, unless such United States Holder timely discloses and justifies the use of a different comparable yield and/or projected payment schedule to the IRS. Pursuant to the terms of the indenture, we agreed and every United States Holder is deemed to have agreed, in the absence of an administrative determination or judicial ruling to the contrary, to be bound by our determination of the comparable yield and projected payment schedule.
Based on the comparable yield and the issue price of the debentures, a United States Holder of a debenture, regardless of its accounting method, will be required to accrue as interest the sum of the daily portions of interest on the debentures for each day in the taxable year on which the United States Holder holds the debenture, adjusted upward or downward to reflect the difference, if any, between the actual and projected amount of any contingent payments on the debentures, as set forth below. The issue price of each debenture is $1,000, being the
first price at which a substantial amount of the debentures was sold to the public, excluding bond houses, brokers or similar persons or organizations acting in the capacity as underwriters, placement agents or wholesalers.
The daily portions of interest in respect of a debenture are determined by allocating to each day in an accrual period the ratable portion of interest on the debenture that accrues in the accrual period. The amount of interest on a debenture that accrues in an accrual period is the product of the comparable yield on the debenture, adjusted to reflect the length of the accrual period, and the adjusted issue price of the debenture. The adjusted issue price of a debenture at the beginning of the first accrual period will equal its issue price and for any accrual periods thereafter will be (1) the sum of the issue price of such debenture and any interest previously accrued thereon, disregarding any positive or negative adjustments as more fully described below, minus (2) the amount of any projected payments on the debentures for previous accrual periods.
In addition to the interest accrual discussed above, a United States Holder will be required to recognize interest income equal to the amount of the excess of actual payments over projected payments, known as a “positive adjustment,” in respect of a debenture for a taxable year. For this purpose, the payments in a taxable year include the fair market value of property, including shares of our common stock, received in that year. If a United States Holder receives actual payments that are less than the projected payments in respect of a debenture for a taxable year, the United States Holder will incur a “negative adjustment” equal to the amount of such difference. This negative adjustment will (1) first reduce the amount of interest in respect of the debenture that a United States Holder would otherwise be required to include in income in the taxable year and (2) to the extent of any excess, will give rise to an ordinary loss equal to that portion of such excess that does not exceed the excess of (A) the amount of all previous interest inclusions under the debenture over (B) the total amount of the United States Holder’s net negative adjustments treated as ordinary loss on the debenture in prior taxable years. A net negative adjustment is not subject to the two percent floor limitation imposed on miscellaneous deductions under Section 67 of the Code. Any negative adjustment in excess of the amounts described in (i) and (ii) will be carried forward to offset future interest income in respect of the debentures or to reduce the amount realized on a sale, conversion, exchange or retirement of the debentures.
If a United States Holder purchases a debenture at a discount or premium to the adjusted issue price, the premium or discount must be reasonably allocated by the holder to one or both of (1) the daily accruals of interest previously determined for the debenture using the constant yield method more fully described above or (2) the projected payments previously determined for the debenture. The amount of premium allocated to a daily accrual of interest or projected payment will be treated as a negative adjustment at the time of the accrual of the interest or the projected payment, as applicable, and the amount of discount so allocated will be treated as a positive adjustment at those times. In the case of a premium, the United States Holder’s adjusted tax basis in the debenture will be reduced by the amount of the negative adjustment when such adjustment is taken into account. In the case of a discount, the United States Holder’s adjusted tax basis in the debenture will be increased by the amount of the positive adjustment when such adjustment is taken into account. A United States Holder who purchases debentures at a discount or
omittedpremium to the adjusted issue price should consult its tax advisor regarding these adjustments.Sale, Conversion, Exchange or Retirement of the Debentures
Upon a sale, conversion, exchange or retirement of a debenture for cash or our common stock, a United States Holder will generally recognize gain or loss equal to the difference between the amount realized on the sale, conversion, exchange or retirement, including the fair market value of our common stock received, if any, and such United States Holder’s adjusted tax basis in the debenture. A United States Holder’s adjusted tax basis in a debenture will generally be equal to the United States Holder’s purchase price for the debenture, increased by any interest income previously accrued by the United Stated Holder, determined without regard to any positive or negative adjustments to interest accruals described above, and decreased by the amount of any prior- period projected payments attributable to the debentures of the United States Holder. A United States Holder generally will treat any gain as interest income and any loss as ordinary loss to the extent of the excess of
previous interest inclusions over the total negative adjustments previously taken into account as ordinary loss, and the balance as capital loss. The deductibility of capital losses is subject to limitations. A United States Holder who sells the debentures at a loss that meets certain thresholds may be required to file a disclosure statement with the IRS under recently promulgated Treasury regulations.
A United States Holder’s tax basis in our common stock received upon a conversion of a debenture will equal the then current fair market value of such
capacity,common stock. The United States Holder’s holding period for the common stock received will commence on the day immediately following the date of conversion.Constructive Dividends
If at any time we increase the conversion rate, either at our discretion or pursuant to the anti-dilution provisions, the increase may be deemed to be the payment of a taxable dividend to the United States Holders of the debentures.
Generally, a reasonable increase in the conversion rate in the event of stock dividends or distributions of rights to subscribe for our common stock will not be a taxable dividend.
Taxation of Distributions on Common Stock
Distributions paid on our common stock received upon conversion of a debenture, other than certain pro rata distributions of common shares, will be treated as a dividend to the extent paid out of current or accumulated earnings and profits, as determined under United States federal income tax principles, and will be includible in income by the United States Holder when received, in accordance with such United States Holder’s method of accounting. If a distribution exceeds our current and accumulated earnings and profits, the excess will be first treated as a tax-free return of the United States Holder’s investment, up to the United States Holder’s tax basis in the common stock. Any remaining excess will be treated as a capital gain. Under recently enacted legislation, dividends received by noncorporate United States Holders on common stock may be subject to United States federal income tax at lower rates than other types of ordinary income if certain conditions are met. United States Holders should consult their own tax advisors regarding the implications of this new legislation in their particular circumstances.
Sale or Other Disposition of Common Stock
Gain or loss recognized by a United States Holder on the sale or other disposition of our common stock received upon conversion of a debenture will be capital gain or loss for United States federal income tax purposes, and will be long-term capital gain or loss if the United States Holder held the common stock for more than one year. The amount of the United States Holder’s gain or loss will be equal to the difference between the United States Holder’s tax basis in the common stock disposed of and the amount realized on the disposition. A United States Holder who sells the stock at a loss that meets certain thresholds may be required to file a disclosure statement with the IRS under recently promulgated Treasury regulations.
Backup Withholding and Information Reporting
Information returns may be filed with the IRS in connection with payments on the debentures, the common stock and the proceeds from a sale or other disposition of the debentures or the common stock. A United States Holder may be subject to United States backup withholding tax on these payments if it fails to provide its taxpayer identification number to the paying agent and comply with certification procedures or otherwise establish an exemption from backup withholding. The amount of any backup withholding from a payment will be allowed as a credit against
all expenses (including attorneys' fees), judgmentsthe United States Holder’s United States federal income tax liability andfines incurredmay entitle the holder to a refund, provided that the required information is timely furnished to the IRS.We will not receive any of the proceeds from the sale of the debentures and the shares of our common stock issuable upon conversion of the debentures offered by this prospectus. The debentures and the shares of our common stock issuable upon conversion of the debentures may be offered and sold from time to time by the selling securityholders. The term “selling securityholders” includes transferees, pledges, donees or other successors selling debentures and shares of our common stock issuable upon conversion of the debentures received after the date of this prospectus from a selling securityholder as a gift, pledge, partnership distribution or other non-sale related transfer. The selling securityholders will act independently of us in making decisions with respect to the timing, manner and size of each sale. If the debentures and the shares of our common stock issuable upon conversion of the debentures are sold through underwriters, broker-dealers or agents, the selling securityholders will be responsible for underwriting discounts or commissions or agent’s commissions. Such debentures and shares may be sold in one or more transactions at fixed prices, at prevailing market prices at the time of sale, at varying prices determined at the time of sale or at negotiated prices. Such sales may be effected in one or more transactions, which may involve block transactions:
on any national securities exchange or quotation service on which the debentures and shares may be listed or quoted at the time of sale;in the over-the-counter market; orin transactions otherwise than on such exchanges or services or in the over-the-counter market.In addition, the selling securityholders may sell shares of our common stock issuable upon conversion of the debentures by one or more of, or a combination of, the following methods:
purchases by a broker-dealer as principal and resale by suchpersonbroker-dealer for its own account pursuant to this prospectus;ordinary brokerage transactions and transactions in which the broker solicits purchasers;block trades in which the broker-dealer so engaged will attempt to sell the shares as agent but may position and resell a portion of the block as principal to facilitate the transaction;in privately negotiated transactions; andin options transactions.In addition, any shares that qualify for sale pursuant to Rule 144 may be sold under Rule 144 rather than pursuant to this prospectus.
To the extent required, this prospectus may be amended or
on hissupplemented from time to time to describe a specific plan of distribution. In connection with distributions of the debentures and the shares of our common stock issuable upon conversion of the debentures, the selling securityholders may pledge the debentures and the shares of our common stock issuable upon conversion of the debentures to a broker-dealer orher behalfother financial institution, and, upon a default, such broker-dealer or other financial institution, may effect sales of the pledged debentures and the shares of our common stock issuable upon conversion of the debentures pursuant to this prospectus, as supplemented or amended to reflect such transaction. The selling securityholders may also loan the debentures and the shares of our common stock issuable upon conversion of the debentures to a broker-dealer that in turn may sell the securities.In effecting sales, broker-dealers or agents engaged by the selling securityholders may arrange for other broker-dealers to participate. Broker-dealers or agents may receive commissions, discounts or concessions from the selling securityholders in amounts to be negotiated immediately prior to the sale.
In offering the debentures and the shares of our common stock issuable upon conversion of the debentures covered by this prospectus, the selling securityholders and any broker-dealers who execute sales for the selling
securityholders may be deemed to be “underwriters” within the meaning of the Securities Act in connection with such sales. Any profits realized by the selling securityholders and the compensation of any broker-dealer may be deemed to be underwriting discounts and commissions. Neither we nor any selling securityholder can presently estimate the amount of such compensation.
Morgan Stanley & Co. Incorporated, one of the selling securityholders, is a registered broker-dealer. As a result, Morgan Stanley & Co. Incorporated may be deemed to be an underwriter in connection with the sale of the debentures or shares of our common stock issuable upon conversion of the debentures.
Arbitex Master Fund, L.P., Highbridge International LLC, Lyxor Master Fund, Mellon HBV Master Convertible Arbitrage Fund LP, Mellon HBV Master Multi-Strategy Fund LP, Mint Master Fund LP and Wachovia Bank National Association are affiliates of registered broker-dealers and each of these selling securityholders has informed us that (1) such selling securityholder purchased its debentures in the ordinary course of business and (2) at the time the debentures were purchased, the selling securityholder had no agreements, understandings or arrangements, directly or indirectly, with any person to distribute the debentures or the shares of our common stock issuable upon conversion of the debentures.
To our knowledge, there are currently no plans, arrangements or understandings between any selling securityholders and any underwriter, broker-dealer or agent regarding the sale of the debentures and shares of our common stock issuable upon conversion of the debentures by the selling securityholders. In no event may the method of distribution take the form of an underwritten offering without our prior written consent.
In order to comply with the securities laws of some states, if applicable, the debentures and the shares of our common stock issuable upon conversion of the debentures must be sold in such jurisdictions only through registered or licensed brokers or dealers. In addition, in some states the debentures and the shares of our common stock issuable upon conversion of the debentures may not be sold unless they have been registered or qualified for sale in the applicable state or an exemption from the registration or qualification requirement is available and is complied with.
We have advised the selling securityholders that the anti-manipulation rules of Regulation M under the Exchange Act may apply to sales of debentures and the shares of our common stock issuable upon conversion of the debentures in the market and to the activities of the selling securityholders and their affiliates. In addition, we will make copies of this prospectus available to the selling securityholders for the purpose of satisfying the prospectus delivery requirements of the Securities Act, which may include delivery through the facilities of the New York Stock Exchange pursuant to Rule 153 under the Securities Act with respect to shares of our common stock. The selling securityholders may indemnify any broker-dealer that participates in transactions involving the sale of the debentures or shares of our common stock issuable upon conversion of the debentures against certain liabilities, including liabilities arising under the Securities Act.
At the time a particular offer of debentures and the shares of our common stock issuable upon conversion of the debentures is made, if required, a prospectus supplement will be distributed that will set forth the number of debentures and the shares of our common stock issuable upon conversion of the debentures being offered and the terms of the offering, including the name of any underwriter, dealer or agent, the purchase price paid by any underwriter, any discount, commission and other item constituting compensation, any discount, commission or concession allowed or reallowed or paid to any dealer, and the proposed selling price to the public.
Pursuant to the registration rights agreement that has been filed as an exhibit to the registration statement of which this prospectus is a part, we have agreed to indemnify the selling securityholders against specified liabilities, including certain liabilities under the Securities Act.
We have agreed with the selling securityholders to keep the registration statement of which this prospectus is a part effective until the earlier of (1) the date there are no longer any registrable securities and (2) two years after the effective date of the registration statement of which this prospectus is a part.
The validity of the debentures and the shares of common stock issuable upon conversion of the debentures offered by this prospectus will be passed upon by Hale and Dorr LLP, Boston, Massachusetts.
Ernst & Young LLP, independent auditors, have audited our consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2002, as set forth in their report, which is incorporated by reference in this prospectus and elsewhere in the registration statement. Our consolidated financial statements are incorporated by reference in reliance on Ernst & Young LLP’s report, given on their authority as experts in accounting and auditing.
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution. The following table sets forth the various expenses to be incurred in connection with the registration of the securities being registered hereby, all of which will be borne by Keane, Inc., the registrant (except any underwriting discounts and commissions and expenses incurred by the selling securityholders for brokerage, accounting, tax or legal services or any other expenses incurred by the selling securityholders in disposing of the debentures or shares). All amounts shown are estimates except the Securities and Exchange Commission registration fee.
Filing Fee - Securities and Exchange Commission
$ 12,135 Legal fees and expenses
$ 50,000 Accounting fees and expenses
$ 20,000 Miscellaneous expenses
$ 20,000 Total Expenses
$ 102,135
Item 15. Indemnification of Directors and Officers. Section 67 of the Massachusetts Business Corporation Law permits a Massachusetts corporation to indemnify its directors, officers, employees and other agents to whatever extent specified in or authorized by the articles of organization, a by-law adopted by the stockholders or a vote adopted by the holders of a majority of the shares of stock entitled to vote on the election of directors. Except as otherwise provided in the articles of organization or the by-laws, any of these persons who are not directors may be indemnified to the extent authorized by the directors. Indemnification may include payment of expenses incurred in defending a civil or criminal action
suitor proceeding in advance of the final disposition of such action or proceeding andany appeal therefrom. However, the Registrant would not provide indemnification ifmay be provided although the personseekingis no longer affiliated with the corporation. No indemnificationhasshall be provided, however, for any person with respect to any matter as to which he shall have been adjudicated in any proceeding not to have acted in good faith in the reasonable belief that hisor heraction was in the best interests of theRegistrantcorporation. A corporation also has the power to purchase and maintain insurance on behalf of any person who is orif applicable, the best interestswas a director, officer, employee or other agent of theparticipantscorporation against any liability incurred by him in any such capacity, orbeneficiariesarising out of his status as such, whether or not the corporation would have the power to indemnify him against such liability.Section 13(b) of the
Registrant's employee benefit plans. Article 6Massachusetts Business Corporation Law permits a Massachusetts corporation to provide in its articles of organization that a director of theRegistrant's Articles of Organization, as amended, eliminates the personal liability of the Registrant's directorscorporation shall not personally be liable to theRegistrantcorporation or its stockholders for monetary damages for breach of fiduciary duty as adirector'sdirector, except for liability (i) for any breach of the directors duty of loyalty to the corporation or its stockholders, (ii) for acts or omissions not in good faith or which involved intentional misconduct or a knowing violation of law, (iii) under Sections 61 or 62 of the Massachusetts Business Corporation Law, or (iv) for any transaction from which the director derived an improper personal benefit.Article 6A of the registrant’s Articles of Organization provides that no director of the registrant shall be liable for monetary damages for any breach of fiduciary duty, except to the extent
Chapter 156B ofthat the MassachusettsGeneral LawsBusiness Corporation Law prohibits the elimination or limitation ofsuch liability. ITEM 16. LIST OF EXHIBITS. 5* Opinionliability ofHaledirectors for breach of fiduciary duty.Article 6B of the registrant’s Articles of Organization provides generally that the registrant will indemnify each person who is or was or has agreed to be a director or officer of the registrant against expenses (including attorneys’ fees), judgments, fines and
Dorr LLP. 23.1* Consentamounts paid in settlement to the maximum extent permitted from time to time under the Massachusetts Business Corporation Law.The registrant maintains officers’ and directors’ insurance in the amount of
Hale and Dorr LLP, included in Exhibit 5 filed herewith. 23.2$30,000,000.II-1
Item 16. Exhibits
Exhibit
NumberDescription
4.1 Articles of Organization of the Registrant, as amended, are incorporated herein by reference to Exhibit 4.1 to the Registrant’s Registration Statement on Form S-3 (File No. 33-85206) 4.2 Articles of Amendment to Articles of Organization of the Registrant, filed on May 29, 1998, are incorporated herein by reference to Exhibit 99.1 to the Registrant’s Current Report on Form 8-K, filed on June 3, 1998 4.3 Second Amended and Restated By-Laws of the Registrant are incorporated herein by reference to Exhibit 3 to Registrant’s Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2000 4.4 Amendment to Second Amended and Restated Bylaws of the Registrant are incorporated herein by reference to Exhibit 3.4 to Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2001 4.5 Indenture, dated as of June 18, 2003, between the Registrant and Wachovia Bank, National Association, as trustee, for 2% Convertible Debentures due 2013, is incorporated herein by reference to Exhibit 4.1 to Registrant’s Current Report on Form 8-K, filed on June 23, 2003 4.6 Registration Rights Agreement, dated as of June 18, 2003, by and among Keane, Inc., Morgan Stanley & Co. Incorporated, Wachovia Securities, LLC and Fleet Securities, Inc., is incorporated herein by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K, filed on June 20, 2003 5.1 * Opinion of Hale and Dorr LLP, counsel to the Registrant 12 Computation of Ratio of Earnings to Fixed Charges 23.1 * Consent of Hale and Dorr LLP
(included in Exhibit 5.1)
23.2 Consent of Ernst & Young LLP, independent auditors 24.1 * Power of attorney (included on the signature pages of this registration statement)
* Previously filed.
Item 17. Undertakings. Item 512(a) of
PricewaterhouseCoopers LLP. 24* Power of Attorney (See page II-5 of this Registration Statement). __________________ * Previously filed. ITEM 17. UNDERTAKINGS.Regulation S-K. The undersignedRegistrantco-registrants herebyundertakes:undertake:(1) To file, during any period in which offers or sales are being made, a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933, as amended (the "Securities Act"); (ii)
(i) To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933, as amended;
(ii) To reflect in the prospectus any facts or events arising after the effective date of this Registration Statement (or the most recent post-effective date of this Registration Statement (or the most recent post-effective amendment thereof) which,II-2individually or in the aggregate, represent a fundamental change in the information set forth in this Registration Statement. Notwithstanding the foregoing, any increase or decrease in the volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any derivation from the low or high and of the estimated maximum offering range may be reflected in the form of prospectus filed with the SEC pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than 20 percent change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the Registration Statement; and (iii) To include any material information with respect to the plan of distribution not previously disclosed in this Registration Statement or any material change to such informationin this Registration Statement; and
(iii) To include any material information with respect to the plan of distribution not previously disclosed in this Registration Statement or any material change to such information in this Registration Statement; provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if the information required to be included in a post-effective amendment by those paragraphs is contained in periodic reports filed with or furnished to the
II-2
Commission by
Keanethe co-registrants pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934, as amended (the"Exchange Act"“Exchange Act”), that are incorporated by reference in this Registration Statement.(2) That, for the purposes of determining any liability under the Securities Act, each post-effective amendment
that contains a form of prospectusshall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at the time shall be deemed to be the initialbona fide offering thereof.(3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.
Item 512(b) of Regulation S-K. The
Registrantco-registrants herebyundertakesundertake that, for purposes of determining any liability under the Securities Act, each filing of theRegistrant'sco-registrant’s annual report pursuant to Section 13(a) or 15(d) of the Exchange Act (and, where applicable, each filing of an employee benefitplan'splan’s annual report pursuant to Section 15(d) of the Exchange Act) that is incorporated by reference in this Registration Statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities atthethat time shall be deemed to be the initialbona fide offering thereof.Item 512(h) of Regulation S-K. Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the
Registrantco-registrants pursuant to the indemnification provisions described herein, or otherwise, theRegistrant hasco-registrants have been advised that in the opinion of theSECSecurities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by theRegistrantco-registrants of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, theRegistrantco-registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.II-3
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrantregistrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this Amendment No. 1 to the Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Boston,Commonwealth ofMassachusetts on thistenth25th day ofFebruary, 1999. KEANE, INC. By: /s/ Wallace A. Cataldo --------------------------- Wallace A. Cataldo Vice President, Finance II-4November, 2003.
KEANE, INC.
By:
/s/ BRIAN T. KEANE
Brian T. Keane President and Chief Executive Officer Pursuant to the requirements of the Securities Act of 1933, this Amendment No. 1 to the Registration Statement has been signed by the following persons in the capacities and on the
datedates indicated.
Signature
Title
Date
- --------------------- ------------------------------------- -----------------John F. Keane*/s/ BRIAN T. KEANE
Brian T. Keane
President, Chief Executive Officer and
Chairman February 10, 1999 - -------------------------- of the Board of DirectorsDirector (Principal executive officer)November 25, 2003 *
John J. Leahy
Senior Vice President – Finance and Chief Financial Officer (Principal financial and accounting officer)
November 25, 2003 *
John F. Keane,
Executive Officer) /s/ WallaceSr.Director
November 25, 2003 *
Maria A.
Cataldo Vice President-Finance (Principal February 10, 1999 - -------------------------- Financial and Accounting Officer) Wallace A. CataldoCirinoDirector
- --------------------------November 25, 2003 *
John H. Fain
Director
November 25, 2003 *
Philip J. Harkins
Director
November 25, 2003 *
Winston R. Hindle, Jr.
Director
November 25, 2003 *
Director February 10, 1999 - -------------------------- Winston R. Hindle, Jr. Brian T. Keane* Director February 10, 1999 - -------------------------- Brian T. KeaneJohn F. Keane, Jr.
Director
November 25, 2003 *
Director February 10, 1999 - -------------------------- John F. Keane, Jr. Director - --------------------------John F. Rockart
Director
- -------------------------- Robert ShaftoNovember 25, 2003 *
Stephen Steinour
Director
November 25, 2003 /s/ JAMES T. MCBRIDE
James T. McBride
Director
November 25, 2003 * By: /s/ Wallace A. Cataldo ---------------------- Wallace A. Cataldo Attorney-in-Fact II-5
* By the signature set forth below, the undersigned, pursuant to the duly authorized powers of attorney filed with the Securities and Exchange Commission, has signed this Amendment No. 1 to the Registration Statement on behalf of the persons indicated.
/s/ BRIAN T. KEANE
Brian T. Keane
(Attorney-in-Fact)
II-4
EXHIBIT INDEX
Exhibit No. Description - ----------- ----------- 5* Opinion of Hale and Dorr LLP 23.1* Consent of Hale and Dorr LLP (included in Exhibit 5) 23.2 Consent of PricewaterhouseCoopers LLP 24* Power of Attorney (included in page II-4 of the Registration Statement) * Previously filed.
Exhibit Number | Description | ||
| 4.1 | Articles of Organization of the Registrant, as amended, are incorporated herein by reference to Exhibit 4.1 to the Registrant’s Registration Statement on Form S-3 (File No. 33-85206) | ||
| 4.2 | Articles of Amendment to Articles of Organization of the Registrant, filed on May 29, 1998, are incorporated herein by reference to Exhibit 99.1 to the Registrant’s Current Report on Form 8-K, filed on June 3, 1998 | ||
| 4.3 | Second Amended and Restated By-Laws of the Registrant are incorporated herein by reference to Exhibit 3 to Registrant’s Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2000 | ||
| 4.4 | Amendment to Second Amended and Restated Bylaws of the Registrant are incorporated herein by reference to Exhibit 3.4 to Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2001 | ||
| 4.5 | Indenture, dated as of June 18, 2003, between the Registrant and Wachovia Bank, National Association, as trustee, for 2% Convertible Debentures due 2013, is incorporated herein by reference to Exhibit 4.1 to Registrant’s Current Report on Form 8-K, filed on June 23, 2003 | ||
| 4.6 | Registration Rights Agreement, dated as of June 18, 2003, by and among Keane, Inc., Morgan Stanley & Co. Incorporated, Wachovia Securities, LLC and Fleet Securities, Inc., is incorporated herein by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K, filed on June 20, 2003 | ||
| 5.1 | * | Opinion of Hale and Dorr LLP, counsel to the Registrant | |
| 12 | Computation of Ratio of Earnings to Fixed Charges | ||
| 23.1 | * | Consent of Hale and Dorr LLP (included in Exhibit 5.1) | |
| 23.2 | Consent of Ernst & Young LLP, independent auditors | ||
| 24.1 | * | Power of attorney (included on the signature pages of this registration statement) | |
| * | Previously filed. |