-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, DyUzgzJwa/SwIz3waVCY2n4Pej9cUOqwUc5V+P1E72fPOlQ0SyPrPsi/XLx9Hwwm Bv16QbJwXYfOrjuhNSx1rA== 0000909518-03-000409.txt : 20030623 0000909518-03-000409.hdr.sgml : 20030623 20030623170828 ACCESSION NUMBER: 0000909518-03-000409 CONFORMED SUBMISSION TYPE: S-3 PUBLIC DOCUMENT COUNT: 8 FILED AS OF DATE: 20030623 FILER: COMPANY DATA: COMPANY CONFORMED NAME: COMVERSE TECHNOLOGY INC/NY/ CENTRAL INDEX KEY: 0000803014 STANDARD INDUSTRIAL CLASSIFICATION: TELEPHONE & TELEGRAPH APPARATUS [3661] IRS NUMBER: 133238402 STATE OF INCORPORATION: NY FISCAL YEAR END: 0131 FILING VALUES: FORM TYPE: S-3 SEC ACT: 1933 Act SEC FILE NUMBER: 333-106391 FILM NUMBER: 03753803 BUSINESS ADDRESS: STREET 1: 170 CROSSWAYS PARK DR CITY: WOODBURY STATE: NY ZIP: 11797 BUSINESS PHONE: 5166777200 MAIL ADDRESS: STREET 1: 170 CROSSWAYS PARK DRIVE CITY: WOODBURY STATE: NY ZIP: 11797 S-3 1 jd6-23_s3.txt As filed with the Securities and Exchange Commission on June 23, 2003 Registration No. 333-______ ================================================================================ SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM S-3 REGISTRATION STATEMENT Under the Securities Act of 1933 ----------------------- COMVERSE TECHNOLOGY, INC. (Exact name of registrant as specified in its charter) NEW YORK 13-3238402 ------------------------------------ ------------------ (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification Number) 170 CROSSWAYS PARK DRIVE WOODBURY, NEW YORK 11797 (516) 677-7200 (Address, including zip code, and telephone number, including area code, of registrant's principal executive offices) ------------------------------ KOBI ALEXANDER Chairman of the Board and Chief Executive Officer c/o Comverse Technology, Inc. 170 Crossways Park Drive Woodbury, New York 11797 (516) 677-7200 (Name, address, including zip code, and telephone number, including area code, of agent for service) -------------------------------------- Copies to: PAUL L. ROBINSON, ESQ. JEFFREY NADLER, ESQ. C/O COMVERSE TECHNOLOGY, INC. WEIL, GOTSHAL & MANGES LLP 170 CROSSWAYS PARK DRIVE 767 FIFTH AVENUE WOODBURY, NEW YORK 11797 NEW YORK, NEW YORK 10153 (516) 677-7200 (212) 310-8000 APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: At such time or times after the 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| If 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 prospectus is expected to be made pursuant to Rule 434, please check the following box. [ ]
CALCULATION OF REGISTRATION FEE ==================================================================================================================================== TITLE OF EACH CLASS OF AMOUNTS TO BE PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF SECURITIES TO BE REGISTERED REGISTERED OFFERING PRICE AGGREGATE OFFERING PRICE(1) REGISTRATION FEE(2) PER SECURITY(1) - ------------------------------------------------------------------------------------------------------------------------------------ Zero Yield Puttable Securities (ZYPS) $420,000,000 100% $420,000,000 $33,978(2) due May 15, 2023..................... - ------------------------------------------------------------------------------------------------------------------------------------ Common Stock, par value $.10 per share................................ 23,366,574 shares(3) -- -- (4) ====================================================================================================================================
(1) Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(i) under the Securities Act of 1933 and exclusive of accrued interest, if any. (2) The amount of registration fee, calculated in accordance with Section 6(b) of the Securities Act of 1933 and Rule 457(i) promulgated thereunder, is .0000809 of the maximum offering price at which the Zero Yield Puttable Securities (ZYPS) due May 15, 2023 registered pursuant to this Registration Statement are proposed to be offered. (3) Such number represents the number of shares of Common Stock as are initially issuable upon conversion of the Zero Yield Puttable Securities (ZYPS) due May 15, 2023 registered hereby. This Registration Statement also covers such indeterminate number of additional shares of Common Stock that may be issuable upon conversion of the Zero Yield Puttable Securities (ZYPS) due May 15, 2023 in accordance with the anti-dilution provision thereof. (4) Under Rule 457(i), no fee is payable with respect to the Common Stock issuable upon conversion of the Zero Yield Puttable Securities (ZYPS) due May 15, 2023. 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 OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE. The information contained in this prospectus is not complete and may be changed. The selling holders may not sell any securities until our registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities in any state where the offer or sale is not permitted. Subject to completion, dated June 23, 2003 PROSPECTUS $420,000,000 COMVERSE TECHNOLOGY, INC. Zero Yield Puttable Securities (ZYPSSM) due May 15, 2023 initially convertible into 23,366,574 shares of Common Stock, par value $.10 per share --------------------- This prospectus relates to our Zero Yield Puttable Securities due May 15, 2023, or ZYPS, and 23,366,574 shares of our common stock. We will not receive any of the proceeds from the sale of the ZYPS or the common stock issuable upon conversion on the ZYPS. The ZYPS were issued by us and sold on May 7, 2003 and May 28, 2003, by Lehman Brothers Inc. to Qualified Institutional Buyers (as defined under Rule 144A under the Securities Act of 1933, as amended). The ZYPS are convertible, at the option of the holder, into shares of our common stock at a conversion price of approximately $17.97 per share (equal to a conversion rate of 55.6347 shares per $1,000 principal amount of ZYPS), subject to adjustment as described in this prospectus, only in the following circumstances: o if the closing sale price per share of our common stock measured over a specified number of trading days is, during specified periods, above 120% of the conversion price per share; o on or before May 15, 2018, if the average trading price for the ZYPS, measured over a specified number of trading days, was less than 105% of the average conversion value (as described in this prospectus) for the ZYPS during that period; o during any period, following the date on which the credit rating assigned to the ZYPS by Standard & Poor's Rating Services (or any successors thereto) is lower than "B-" or upon the withdrawal or suspension by Standards & Poor's, at our request, of the rating assigned to the ZYPS; o if we have called the ZYPS for redemption; or o upon the occurrence of specified corporate transactions. The ZYPS do not bear interest. The ZYPS will mature on May 15, 2023. We may redeem some or all of the ZYPS on or after May 15, 2008. Holders may require us to purchase all or a portion of their ZYPS on each of May 15, 2008, 2013 and 2018 at a purchase price equal to 100% of the principal amount. In addition, upon the occurrence of certain designated events (as defined in this prospectus), holders may require us to repurchase all or a portion of their ZYPS. Shares of our common stock are quoted on the Nasdaq National Market under the symbol "CMVT." The last reported sale price of the shares on June 20, 2003 was $15.776 per share. The ZYPS are our unsecured senior obligations and rank equal in right of payment to all of our existing and future unsecured senior indebtedness, including our 1.50% Convertible Senior Debentures due 2005. The ZYPS rank senior in right of payment to our future subordinated indebtedness and are effectively subordinated to all indebtedness and all other liabilities of our subsidiaries. As of April 30, 2003, we had approximately $346.3 million of outstanding convertible senior indebtedness, no subordinated indebtedness and our consolidated subsidiaries had outstanding aggregate liabilities of approximately $313.5 million. YOU SHOULD CONSIDER CAREFULLY THE RISK FACTORS BEGINNING ON PAGE 6 BEFORE MAKING A DECISION TO PURCHASE OUR SECURITIES. --------------- NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS PROSPECTUS IS ACCURATE OR COMPLETE. IT IS ILLEGAL FOR ANY PERSON TO TELL YOU OTHERWISE. --------------- The date of this prospectus is ___________ , 2003. "Zero Yield Puttable Securities" and "ZYPS" are service marks of Lehman Brothers Inc. YOU SHOULD ONLY RELY ON THE INFORMATION INCORPORATED BY REFERENCE OR PROVIDED IN THIS PROSPECTUS OR ANY SUPPLEMENT. WE HAVE NOT AUTHORIZED ANYONE ELSE TO PROVIDE YOU WITH DIFFERENT INFORMATION. THE COMMON STOCK IS NOT BEING OFFERED IN ANY STATE WHERE THE OFFER IS NOT PERMITTED. YOU SHOULD NOT ASSUME THAT THE INFORMATION IN THIS PROSPECTUS OR ANY SUPPLEMENT IS ACCURATE AS OF ANY DATE OTHER THAN THE DATE ON THE FRONT OF SUCH DOCUMENT. ----------------- TABLE OF CONTENTS PAGE ABOUT THIS PROSPECTUS........................................................ii WHERE YOU CAN FIND MORE INFORMATION..........................................ii INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE..............................ii FORWARD-LOOKING STATEMENTS..................................................iii ABOUT US......................................................................1 RISK FACTORS..................................................................6 USE OF PROCEEDS..............................................................14 RATIO OF EARNINGS TO FIXED CHARGES...........................................14 PRICE RANGE OF COMMON STOCK..................................................14 DIVIDEND POLICY..............................................................15 DESCRIPTION OF THE ZYPS......................................................16 DESCRIPTION OF CAPITAL STOCK.................................................28 CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS......................30 SELLING HOLDERS..............................................................35 PLAN OF DISTRIBUTION.........................................................41 LEGAL MATTERS................................................................42 EXPERTS......................................................................42 Whenever we refer to "CTI" we are referring to Comverse Technology, Inc., a New York corporation. Whenever we refer to the "Company" or to "us," or use the terms "we" or "our" in this prospectus, we are referring to CTI, including its directly or indirectly owned subsidiaries. i ABOUT THIS PROSPECTUS This prospectus is a part of a registration statement that we have filed with the Securities and Exchange Commission, or the Commission, utilizing a "shelf registration" process. You should read this prospectus and any supplement together with additional information described under "Where You Can Find More Information" and the information we incorporate by reference in this prospectus described under the heading "Incorporation of Certain Documents by Reference." WHERE YOU CAN FIND MORE INFORMATION We file annual, quarterly and special reports, proxy statements and other information required by the Securities Exchange Act of 1934, as amended, or the Exchange Act, with the Commission. You may read and copy any document we file at the Commission's public reference room located at 450 Fifth Street, N.W., Washington, D.C. 20549. You may call the Commission at 1-800-SEC-0330 for further information on operation of the public reference room. Our filings are also available to the public from the Commission's web site at: http://www.sec.gov. Our Internet address is www.cmvt.com. The information contained on our website is not included as a part of, or incorporated by reference into, this prospectus. We make available, free of charge, on our Internet website, our annual report on Form 10-K, our quarterly reports on Form 10-Q, our current reports on Form 8-K and amendments to such reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act, as soon as reasonably practicable after we have electronically filed such material with, or furnished it to, the Commission. We have filed with the Commission a registration statement and related exhibits on Form S-3 under the Securities Act of 1933, as amended, or the Securities Act. This prospectus, which constitutes a part of the registration statement, does not include all the information contained in the registration statement and its exhibits. For further information with respect to us and our common stock, you should consult the registration statement and its exhibits. Statements contained in this prospectus concerning the provisions of any contract, agreement or other document are not necessarily complete. With respect to each contract, agreement or other document filed as an exhibit to the registration statement, we refer you to that exhibit for a more complete description of the matter involved, and each statement is deemed qualified in its entirety to that reference. The registration statement, including exhibits filed as a part of the registration statement or any amendment to the registration statement, are available for inspection and copying at the Commission's public reference facilities listed above. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE We incorporate by reference information that we have filed with the Commission. This means that we disclose important information to you by referring you to those documents. Any information we incorporate in this manner is considered part of this prospectus. Any information we file with the Commission after the date of this prospectus and until this offering is completed will automatically update and supersede the information contained in this prospectus. We incorporate by reference the following documents that we have filed with the Commission and any filings that we will make with the Commission in the future under Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act until this offering is terminated: o Annual Report on Form 10-K for the year ended January 31, 2003; o Amended Annual Report on Form 10-K/A for the year ended January 31, 2003; o Quarterly Report on Form 10-Q for the quarter ended April 30, 2003; and o Description of our common stock contained in our registration statement on Form 8-A filed with the Commission on March 17, 1987, as amended. ii We will provide without charge to each person to whom a copy of this prospectus is delivered, upon written or oral request, a copy of any or all of the documents which are incorporated by reference into this prospectus except the exhibits to such documents (unless such exhibits are specifically incorporated by reference in such documents). Requests for copies should be directed to: Comverse Technology, Inc., Attention: Vice President, Corporate and Marketing Communications, 170 Crossways Park Drive, Woodbury, NY 11797, telephone (516) 677-7200. FORWARD-LOOKING STATEMENTS This prospectus and the documents that we incorporate by reference, may contain certain statements that we believe are, or may be considered to be, forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. We generally indicate these statements by words or phrases such as "anticipate," "estimate," "plan," "expect," "believe," "intend," "foresee" and similar words or phrases. These statements discuss, among other things, expected growth, domestic and international development and expansion strategy, and future performance. All of these forward-looking statements are subject to risks, uncertainties and assumptions, which we describe under the caption "Risk Factors" or in the documents we incorporate by reference. Consequently, actual events and results may vary significantly from those included in or contemplated or implied by our forward-looking statements. The forward-looking statements included in this prospectus, the applicable prospectus supplement or the relevant incorporated document are made only as of the date of this prospectus, the applicable prospectus supplement or the relevant incorporated document, as the case may be, and, except as required by law, we undertake no obligation to publicly update these forward-looking statements to reflect subsequent events or circumstances. iii ABOUT US This summary highlights some of the information in this prospectus. Because this is only a summary, it does not contain all the information about us that may be important to you. You should read the more detailed information and the financial statements and related notes which are incorporated by reference in this prospectus. All references in this prospectus to CTI mean Comverse Technology, Inc. and references to the "Company," "we," "us," or "our" mean CTI, including its directly and indirectly owned subsidiaries. COMVERSE TECHNOLOGY, INC. We design, develop, manufacture, market and support systems and software for multimedia communications and information processing applications. Our products are used in a broad range of applications by wireless and wireline telecommunications network operators and service providers, call centers, financial institutions, and other government, public and commercial organizations worldwide. Through our subsidiary, Comverse, Inc., or Comverse, we provide enhanced services products that enable telecommunications service providers, or TSPs, to offer a variety of revenue and traffic generating services accessible to large numbers of simultaneous users. These services include a broad range of messaging, information distribution and personal communications services, such as call answering with one-touch call return, voicemail, unified messaging (voice, fax, text, multimedia content and email in a single mailbox, media conversion such as email to voice and visual mailbox presentation), prepaid wireless calling services, wireless data and Internet-based services such as short messaging services, or SMS, wireless information and entertainment services, multimedia messaging services, or MMS, wireless instant messaging, interactive voice response, or IVR, and voice portal services, which are part of a voice-controlled portfolio of services such as voice dialing, voice-controlled messaging, and other applications. Through our subsidiary, Verint Systems Inc., or Verint, we provide analytic software-based solutions for communications interception, digital video security and surveillance, and enterprise business intelligence. Verint's software generates actionable intelligence through the collection, retention and analysis of voice, fax, video, email, Internet and data transmissions from multiple types of communications networks. The digital security and surveillance market consists primarily of communications interception by law enforcement and other government agencies and digital video security utilized by government agencies and public and private organizations. The enterprise business intelligence market consists primarily of solutions targeting enterprises that rely on contact centers for voice, email and Internet interactions with their customers. Additionally, an emerging segment of enterprise business intelligence utilizes digital video information to allow enterprises and institutions to enhance their operations, processes and performance. Verint sells its enterprise business intelligence solutions to contact center service bureaus, financial institutions, retailers, utilities, communications service providers, manufacturers and other enterprises. Verint had an initial public offering of its common stock in May 2002, and its common stock is listed on the Nasdaq National Market System under the symbol "VRNT." CTI held approximately 78.1% of Verint's outstanding common stock as of April 30, 2003. Through our subsidiary, Ulticom, Inc., or Ulticom, we provide service enabling signaling software for wireline, wireless and Internet communications. Ulticom's Signalware call control products interconnect the complex circuit switching, database and messaging systems and manage vital number, routing and billing information that form the backbone of today's public telecommunications networks. Ulticom's products are used by equipment manufacturers, application developers and communications service providers to deploy revenue generating infrastructure, enhanced and mandated services such as global roaming, voice and text messaging, prepaid calling and location-based services. Signalware products also are embedded in a range of packet softswitching products to interoperate or converge voice and data networks and facilitate services such as voice-over-IP, or VoIP, and Internet offload. Ulticom had an initial public offering of its common stock in April 2000, and its common stock is listed on the Nasdaq National Market System under the symbol "ULCM." CTI held approximately 71.5% of Ulticom's outstanding common stock as of April 30, 2003. We market other telecommunications products and services, including products that are integrated with our systems and products that work in combination with other systems to provide advanced telecommunications services, such as automatic call distribution and messaging systems for telephone 1 answering service bureaus, and intelligent Internet Protocol, or IP, gateways for wireless roaming. We also engage in venture capital investment and capital market activities for our own account. CTI was incorporated in New York in October 1984. Our headquarters are located at 170 Crossways Park Drive, Woodbury, New York 11797, and our telephone number is (516) 677-7200. For additional information relating to our business, operations, properties, certain acquisitions and other matters, see the documents referred to under "Where You Can Find More Information" and "Incorporation of Certain Documents by Reference." 2 THE ZYPS Issuer .................................Comverse Technology, Inc. Securities Offered .....................$420 million in aggregate principal amount of ZYPS due May 15, 2023. This prospectus also relates to 23,366,574 shares of Common Stock issuable upon conversion of the ZYPS. Maturity ...............................May 15, 2023. Interest Rate ..........................0% Conversion Right........................The ZYPS are convertible, at the option of their holder, into shares of our common stock prior to the close of business on their stated maturity date under any of the following circumstances: o during any fiscal quarter, if the closing sale price per share of our common stock for a period of at least 20 consecutive trading days during the 30 consecutive trading-day period ending on the last trading day of the preceding fiscal quarter is more than 120% of the conversion price per share in effect on that thirtieth day; o on or before May 15, 2018, during the five business-day period following any 10 consecutive trading-day period in which the daily average trading price for the ZYPS for that 10 trading-day period was less than 105% of the average conversion value (as described in this prospectus) for the ZYPS during that period; o during any period, following the date on which the credit rating assigned to the ZYPS by Standard & Poor's Rating Services (or any successors thereto) is lower than "B-" (or its successive equivalent) or upon the withdrawal or suspension by Standard & Poor's, at our request, of the rating assigned to the ZYPS; o if we have called the ZYPS for redemption; or o upon the occurrence of specified corporate transactions described below under "Description of the ZYPS--Conversion Rights." The conversion rate initially equals 55.6347 shares of our common stock per $1,000 principal amount of ZYPS. This represents an initial conversion price of approximately $17.97 per share of common stock. The conversion rate (and the conversion price) may be adjusted under certain circumstances. ZYPS called for redemption may be surrendered for conversion prior to the close of business on the second business day preceding the redemption date. See "Description of the ZYPS--Conversion Rights." Optional Redemption by CTI .............We may not redeem the ZYPS prior to May 15, 2008. On or after May 15, 2008, we may redeem some or all of the ZYPS for a price equal to 100% of the principal amount of the ZYPS. Optional Repurchase Rights of Holders ..Holders may require us to repurchase for cash, all or a portion of their ZYPS on each of May 15 of 2008, 2013 and 2018 at 100% of their principal amount. See "Description of the ZYPS--Repurchase at Option of Holders--Optional Put." Designated Event Repurchase Right of Holders ................................If a Designated Event occurs, holders may require us to repurchase all or a portion of their ZYPS. Upon the occurrence of a Designated Event which is a change of control, instead of paying the repurchase price in cash, we may pay the repurchase price, in whole or in part, in common stock. In each such case, we will pay a repurchase price equal to 100% of the principal amount of the ZYPS. See "Description of the ZYPS--Repurchase at Option of Holders--Designated Event Put." 3 In the event of a repurchase of ZYPS in exchange for common stock, in whole or in part, the number of shares of common stock will equal the purchase price (or its portion to be repurchased in common stock), divided by 95% of the average of the closing sale prices for the five consecutive trading days ending on and including the third trading day prior to the repurchase date. Ranking ................................The ZYPS are our unsecured senior obligations, ranking equal in right of payment with all of our existing and future unsecured senior indebtedness, including our 1.50% Convertible Senior Debentures due 2005. The ZYPS are our exclusive obligations and are, in effect, subordinated to all existing and future obligations of our subsidiaries. The ZYPS are senior in right of payment to all of our future subordinated indebtedness. As of April 30, 2003, we had approximately $346.3 million of outstanding convertible senior indebtedness, no subordinated indebtedness and our consolidated subsidiaries had outstanding aggregate liabilities of approximately $313.5 million. Form, Denomination and Registration ....The ZYPS were issued in fully registered form. The ZYPS will initially be issued in minimum denominations of $1,000. The ZYPS are represented by one or more global ZYPS, in fully registered form, deposited with a custodian for and registered in the name of Cede & Co., a nominee of Depositary Trust Company ("DTC"). Beneficial interests in the global ZYPS are shown on, and transfers will be effected only through, records maintained by DTC and its participants. Registration Rights.....................We and Lehman Brothers Inc., the initial purchaser of the ZYPS, entered into a registration rights agreement, dated as of May 7, 2003, pursuant to which we filed with the Securities and Exchange Commission, a registration statement on Form S-3, of which this prospectus is a part, covering the resale of the ZYPS and the common stock issuable upon conversion of the ZYPS, and we agreed to use our reasonable efforts to cause to become effective, within 180 days after the initial issuance of the ZYPS. We also agreed to keep the shelf registration statement effective until the earlier of: o May 28, 2005; and o the date when the holders of the ZYPS and the common stock issuable upon conversion of the ZYPS are able to sell all such securities immediately pursuant to Rule 144(k) under the Securities Act. Nasdaq National Market Symbol for our Common Stock........................Our common stock is traded on the Nasdaq National Market under the symbol "CMVT." 4 RATIO OF EARNINGS TO FIXED CHARGES The following table sets forth the ratio of earnings to fixed charges for the fiscal years ended January 31, 1999, 2000, 2001, 2002 and 2003 and the three months ended April 30, 2003:
YEAR ENDED JANUARY 31, ------------------------------------------------------- THREE MONTHS ENDED 1999(1) 2000(1) 2001 2002 2003 APRIL 30,2003 ------- ------- ---- ---- ---- ------------- Ratio of earnings to fixed charges (2)......... 6.5x 7.7x 9.5x 2.8x n.a.(3) n.a.(4)
- ---------------- (1) Includes the results of Loronix Information Systems, Inc., or "Loronix," for its fiscal year ended December 31. Loronix was merged into our company in July 2000 and was accounted for pursuant to the pooling of interests method. (2) For purposes of computing the ratio of earnings to fixed charges (i) earnings consist of consolidated pre-tax income before adjustment for minority interests in consolidated subsidiaries and income or loss from equity investees plus fixed charges and (ii) fixed charges consist of interest expense, amortization of debt issuance cost and the portion of rent expense deemed by us to be representative of the interest component. (3) In 2003, our earnings were insufficient to cover fixed charges by approximately $123.8 million. (4) In the three months ended April 30, 2003, our earnings were insufficient to cover fixed charges by approximately $3.0 million. 5 RISK FACTORS Before purchasing any securities, you should carefully consider the following risk factors in addition to the other information contained and incorporated by reference in this prospectus. Certain statements in this prospectus and in documents incorporated by reference in this prospectus are forward-looking and are identified by the use of forward-looking words or phrases such as "plan," "planned," "intend," "intended," "will be positioned," "expect," is or are "expected," "anticipate" and "anticipated." These forward-looking statements reflect only our current expectations. To the extent any of the information contained or incorporated by reference in this prospectus constitutes a "forward-looking statement" as defined in Section 27A(i)(1) of the Securities Act, the following risk factors are cautionary statements identifying important factors that could cause actual results to differ materially from those in the forward-looking statement. CONTINUING ADVERSE CONDITIONS IN THE TELECOMMUNICATIONS INDUSTRY HAVE HARMED AND MAY CONTINUE TO HARM OUR BUSINESS, FINANCIAL CONDITION AND RESULTS OF OPERATIONS. We derive the majority of our revenue from the telecommunications industry, which continues to face an unprecedented recession. This has resulted in a significant reduction of capital expenditures made by telecommunications service providers, or TSPs. Our operating results and financial condition have been, and will continue to be, adversely affected by the severe decline in technology purchases and capital expenditures by TSPs worldwide. Consequently, our operating results have deteriorated significantly in recent periods and may continue to deteriorate in future periods if such conditions remain in effect. For these reasons and the risk factors outlined below, it has been and continues to be very difficult for us to accurately forecast future revenues and operating results. Our business is particularly dependent on the strength of the telecommunications industry. The telecommunications industry, including us, have been negatively affected by, among other factors, the high costs and large debt positions incurred by some TSPs to expand capacity and enable the provision of future services (and the corresponding risks associated with the development, marketing and adoption of these services as discussed below), including the cost of acquisitions of licenses to provide broadband services and reductions in TSPs' actual and projected revenues and deterioration in their actual and projected operating results. Accordingly, TSPs, including our customers, have significantly reduced their actual and planned expenditures to expand or replace equipment and delayed and reduced the deployment of services. A number of TSPs, including certain customers of ours, also have indicated the existence of conditions of excess capacity in certain markets. In addition, certain TSPs have delayed the planned introduction of new services, such as broadband mobile telephone services, that would be supported by certain of our products. Certain of our customers also have implemented changes in procurement practices and procedures, including limitations on purchases in anticipation of estimated future capacity requirements, and in the management and use of their networks, that have reduced our sales, which also has made it very difficult for us to project future sales. The continuation and/or exacerbation of these negative trends will have an adverse effect on our future results. In addition to loss of revenue, weakness in the telecommunications industry has affected and will continue to affect our business by increasing the risks of credit or business failures of suppliers, customers or distributors, by customer requirements for vendor financing and longer payment terms, by delays and defaults in customer or distributor payments, and by price reductions instituted by competitors to retain or acquire market share. Our current plan of operations is predicated in part on a recovery in capital expenditures by our customers. In the absence of such improvement, we would experience further deterioration in our operating results, and may determine to modify our plan for future operations accordingly, which may include, among other things, additional reductions in our workforce. 6 OUR BUSINESS IS VULNERABLE TO RISKS ASSOCIATED WITH THE SALE OF LARGE, COMPLEX, HIGH CAPACITY SYSTEMS. Our products involve sophisticated hardware and software technology that performs critical functions to highly demanding standards. We cannot assure you that our current or future products will not develop operational problems, which could have a material adverse effect on us. BECAUSE THE MARKET FOR OUR PRODUCTS IS CHARACTERIZED BY RAPIDLY CHANGING TECHNOLOGY, OUR CONTINUED SUCCESS DEPENDS ON OUR ABILITY TO ENHANCE OUR EXISTING PRODUCTS AND TO INTRODUCE NEW PRODUCTS ON A TIMELY AND COST-EFFECTIVE BASIS. The telecommunications industry is subject to rapid technological change. The introduction of new technologies in the telecommunications market, including the delay in the adoption of such new technologies, and new alternatives for the delivery of services are having, and can be expected to continue to have, a profound effect on competitive conditions in the market and the success of market participants, including us. In addition, some of our products, such as voicemail, may experience a decline in usage as a result of the introduction of new technologies and the adoption and increased use of existing technologies, which may include enhanced areas of coverage for mobile telephones and Caller ID type services. Our continued success will depend on our ability to correctly anticipate technological trends in our industries, to react quickly and effectively to such trends and to enhance our existing products and to introduce new products on a timely and cost-effective basis. As a result, the life cycle of our products is difficult to estimate. Our new product offerings may not properly integrate into existing platforms and the failure of new product offerings to be accepted by the market could have a material adverse effect on our business, results of operations, and financial condition. In addition, changing industry and market conditions may dictate strategic decisions to restructure some business units and discontinue others. Discontinuing a business unit or product line may result in us recording accrued liabilities for special charges, such as costs associated with a reduction in workforce. These strategic decisions could result in changes to determinations regarding a product's useful life and the recoverability of the carrying basis of certain assets. WE DEPEND ON A LIMITED NUMBER OF SUPPLIERS AND MANUFACTURERS FOR CERTAIN COMPONENTS AND ARE EXPOSED TO THE RISK THAT THESE SUPPLIERS AND MANUFACTURERS WILL NOT BE ABLE TO FILL OUR ORDERS ON A TIMELY BASIS AND AT THE SPECIFICATIONS WE REQUIRE. We rely on a limited number of suppliers and manufacturers for specific components and may not be able to find alternate manufacturers that meet our requirements and existing or alternative sources may not be available on favorable terms and conditions. Thus, if there is a shortage of supply for these components, we may experience an interruption in our product supply. In 7 addition, loss of third party software licensing could materially and adversely affect our business, financial condition and results of operations. OUR BUSINESS CAN BE SERIOUSLY AFFECTED BY CHANGES IN THE COMPETITIVE OR REGULATORY ENVIRONMENT IN THE TELECOMMUNICATIONS INDUSTRY WORLDWIDE. The telecommunications industry continues to undergo significant change as a result of deregulation and privatization worldwide, reducing restrictions on competition in the industry. Unforeseen changes in the regulatory environment also may have an impact on our revenues and/or costs in any given part of the world. The worldwide enhanced services solutions, or ESS, system industry is already highly competitive and we expect competition to intensify. We believe that existing competitors will continue to present substantial competition, and that other companies, many with considerably greater financial, marketing and sales resources than us, may enter the ESS system markets. Moreover, as we enter into new markets as a result of our own research and development efforts or acquisitions, we are likely to encounter new competitors. BECAUSE A SIGNIFICANT AMOUNT OF OUR SALES ARE MADE TO GOVERNMENT ENTITIES, WE ARE VULNERABLE TO RISKS ASSOCIATED WITH GOVERNMENT BUSINESS. The market for our digital security and surveillance and enterprise business intelligence products in the past has been affected by weakness in general economic conditions, delays or reductions in customers' purchases of capital equipment and uncertainties relating to government expenditure programs. Our business generated from government contracts may be adversely affected if: (i) our reputation or relationship with government agencies is impaired, (ii) we are suspended or otherwise prohibited from contracting with a domestic or foreign government or any significant law enforcement agency, (iii) levels of government expenditures and authorizations for law enforcement and security related programs decrease, remain constant or shift to programs in areas where we do not provide products and services, (iv) we are prevented from entering into new government contracts or extending existing government contracts based on violations or suspected violations of procurement laws or regulations, (v) we are not granted security clearances required to sell products to domestic or foreign governments or such security clearances are revoked, or (vi) there is a change in government procurement procedures. Competitive conditions in this sector also have been affected by the increasing use by certain potential customers of their own internal development resources rather than outside vendors to provide certain technical solutions. In addition, a number of established government contractors, particularly developers and integrators of technology products, have taken steps to redirect their marketing strategies and product plans in reaction to cut-backs in their traditional areas of focus, resulting in an increase in the number of competitors and the range of products offered in response to particular requests for proposals. WE ARE EXPOSED TO RISKS ASSOCIATED WITH THE SALE OF LARGE SYSTEMS AND LARGE INSTALLATIONS. We have historically derived a significant portion of our sales and operating profit from contracts for large system installations with major customers. We continue to emphasize large capacity systems in our product development and marketing strategies. Contracts for large installations typically involve a lengthy and complex bidding and selection process, and our ability to obtain particular contracts is inherently difficult to predict. The timing and scope of these opportunities and the pricing and margins associated with any eventual contract award are difficult to forecast, and may vary substantially from transaction to transaction. Our future operating results may accordingly exhibit a higher degree of volatility than the operating results of other companies in our industries that have adopted different strategies, and also may be more volatile than we have experienced in prior periods. The degree of our dependence on large system orders, and the investment required to enable us to perform such orders, without assurance of continuing order flow from the same customers and predictability of gross margins on any future orders, increase the risk associated with our business. Our gross margins also may be adversely affected by increases in material or labor costs, obsolescence charges, price competition and changes in channels of distribution or in the mix of products sold. GEOPOLITICAL, MILITARY, HEALTH AND ECONOMIC CONDITIONS IN COUNTRIES IN WHICH WE OPERATE MAY ADVERSELY AFFECT OUR BUSINESS AND OPERATING RESULTS. Geopolitical, military, health and economic conditions could directly affect our operations. The continued threat of terrorism and heightened security and military action in response to this threat, or any future acts of terrorism, may cause disruptions to our business. To the extent that such disruptions result in delays or cancellations of customer orders, or the manufacture or 8 shipment of our products, our business, operating results and financial condition could be materially and adversely affected. More recently, the U.S. military involvement in overseas operations could have a material adverse effect on our business, results of operations, and financial condition. The recent outbreak of severe acute respiratory syndrome, or SARS, has curtailed travel to and from certain countries (primarily in the Asia-Pacific region). Continued or additional restrictions on travel to and from these and other regions on account of SARS could have a material adverse effect on our business, results of operations and financial condition. A SIGNIFICANT PORTION OF OUR OPERATIONS IS LOCATED IN ISRAEL. Since the establishment of the State of Israel in 1948, a number of armed conflicts have taken place between Israel and its Arab neighbors, and the continued state of hostility, varying in degree and intensity, has led to security and economic problems for Israel. Since October 2000, there has been a significant increase in violence, primarily in the West Bank and Gaza Strip, and more recently Israel has experienced terrorist incidents within its borders. During this period, peace negotiations between Israel and representatives of the Palestinian Authority have been sporadic and currently are uncertain. We could be adversely affected by hostilities involving Israel, the interruption or curtailment of trade between Israel and its trading partners, or a significant downturn in the economic or financial condition of Israel. In addition, the sale of products manufactured in Israel may be adversely affected in certain countries by restrictive laws, policies or practices directed toward Israel or companies having operations in Israel. The continuation or exacerbation of violence in Israel or the outbreak of violent conflicts involving Israel may impede our ability to sell our products or otherwise adversely affect us. In addition, many of our employees in Israel are required to perform annual compulsory military service in Israel and are subject to being called to active duty at any time under emergency circumstances. The absence of these employees may have an adverse effect on our operations. Our costs of operations have at times been affected by changes in the cost of our operations in Israel, resulting from changes in the value of the Israeli shekel relative to the United States dollar, which for certain periods had a negative impact, and from difficulties in attracting and retaining qualified scientific, engineering and technical personnel in Israel, where the availability of such personnel has at times been severely limited. Changes in these cost factors have from time to time been significant and difficult to predict, and could in the future have a material adverse effect on our results of operations. THE ISRAELI GOVERNMENT PROGRAMS AND TAX BENEFITS THAT WE CURRENTLY RECEIVE REQUIRE US TO MEET SEVERAL CONDITIONS AND MAY BE TERMINATED OR REDUCED IN THE FUTURE. Our historical operating results reflect substantial benefits received from programs sponsored by the Israeli government for the support of research and development, as well as tax moratoriums and favorable tax rates associated with investments in approved projects ("Approved Enterprises") in Israel. Some of these programs and tax benefits have ceased and others may not be continued in the future and the availability of such benefits to us may be affected by a number of factors, including budgetary constraints resulting from adverse economic conditions, government policies and our ability to satisfy eligibility criteria. The Israeli government has reduced the benefits available under some of these programs in recent years, and Israeli government authorities have indicated that the government may further reduce or eliminate some of these benefits in the future. We have regularly participated in a conditional grant program administered by the Office of the Chief Scientist of the Ministry of Industry and Trade of the State of Israel, or OCS, under which it has received significant benefits through reimbursement of up to 50% of qualified research and development expenditures. Verint currently pays royalties, of between 3% and 5% (or 6% under certain circumstances) of associated product revenues (including service and other related revenues) to the Government of Israel for repayment of benefits received under this program. Such royalty payments by Verint are currently required to be made until the government has been reimbursed the amounts received by us plus, for amounts received under projects approved by the OCS after January 1, 1999, interest on such amount at a rate equal to the 12-month LIBOR rate in effect on January 1 of the year in which approval is obtained. During fiscal 2001, CTI entered into an arrangement with the OCS whereby CTI agreed to pay a lump sum royalty amount for all past amounts received from the OCS. In addition, CTI began to receive lower amounts from the OCS than it had historically received, but will not have to pay royalty amounts on such grants. The amount of reimbursement we received under this program has been reduced significantly, and we do not expect to receive significant reimbursement under this program in the future. In addition, permission from the Government of Israel is required for us to manufacture outside of Israel 9 products resulting from research and development activities funded under these programs, or to transfer outside of Israel related technology rights. In order to obtain such permission, we may be required to increase the royalties to the applicable funding agencies and/or repay certain amounts received as reimbursement of research and development costs. The continued reduction in the benefits received by us under the program, or the termination of our eligibility to receive these benefits at all in the future, could adversely affect our operating results. Our overall effective tax rate benefits from the tax moratorium provided by the Government of Israel for Approved Enterprises undertaken in that country. Our effective tax rate may increase in the future due to, among other factors, the increased proportion of our taxable income associated with activities in higher tax jurisdictions, and by the relative ages of our eligible investments in Israel. The tax moratorium on income from our Approved Enterprise investments made prior to 1997 is four years, whereas subsequent Approved Enterprise projects are eligible for a moratorium of only two years. Reduced tax rates apply in each case for certain periods thereafter. To be eligible for these tax benefits, we must continue to meet conditions, including making specified investments in fixed assets and financing a percentage of investments with share capital. If we fail to meet such conditions in the future, the tax benefits would be canceled and we could be required to refund the tax benefits already received. Israeli authorities have indicated that additional limitations on the tax benefits associated with Approved Enterprise projects may be imposed for certain categories of taxpayers, which would include us. If further changes in the law or government policies regarding those programs were to result in their termination or adverse modification, or if we were to become unable to participate in, or take advantage of, those programs, the cost of our operations in Israel would increase and there could be a material adverse effect on our results of operations and financial condition. OUR FUTURE SUCCESS DEPENDS ON OUR EXISTING KEY PERSONNEL, THE LOSS OF WHOM COULD ADVERSELY IMPACT OUR BUSINESS AND OPERATING RESULTS. Our success is dependent on recruiting and retaining key management and highly skilled technical, managerial, sales, and marketing personnel. The market for highly skilled personnel remains very competitive despite the current economic conditions. Our ability to attract and retain employees also may be affected by recent cost control actions, including reductions in our workforce and the associated reorganization of operations. THE OCCURRENCE OR PERCEPTION OF SECURITY BREACHES WITHIN OUR SECURITY SYSTEMS COULD HARM OUR BUSINESS, FINANCIAL CONDITION AND OPERATING RESULTS. While we implement sophisticated security measures, third parties may attempt to breach our security through computer viruses, electronic break-ins and other disruptions. If successful, confidential information, including passwords, financial information, or other personal information may be improperly obtained and we may be subject to lawsuits and other liability. Even if we are not held liable, a security breach could harm our reputation, and even the perception of security risks, whether or not valid, could inhibit market acceptance of our products. WE HAVE SIGNIFICANT INTERNATIONAL SALES, WHICH SUBJECTS US TO RISKS INHERENT TO FOREIGN OPERATIONS. We currently derive a significant portion of our total sales from customers outside of the United States. International transactions involve particular risks, including political decisions affecting tariffs and trade conditions, rapid and unforeseen changes in economic conditions in individual countries, turbulence in foreign currency and credit markets, and increased costs resulting from lack of proximity to the customer. We are required to obtain export licenses and other authorizations from applicable governmental authorities for certain countries within which we conduct business. The failure to receive any required license or authorization would hinder our ability to sell our products and could adversely affect our business, results of operations and financial condition. In addition, legal uncertainties regarding liability, compliance with local laws and regulations, labor laws, employee benefits, currency restrictions, difficulty in accounts receivable collection, longer collection periods and other requirements may have a negative impact on our operating results. Volatility in international currency exchange rates may have a significant impact on our operating results. We have, and anticipate that we will continue to receive, contracts denominated in foreign currencies, particularly the euro. As a result of the unpredictable timing of purchase orders and payments under such contracts and other factors, it is often not practicable for us to effectively hedge the risk of significant changes in currency rates during the contract period. We may experience risk associated with the failure to hedge the exchange rate risks associated with contracts 10 denominated in foreign currencies and our operating results have been negatively impacted for certain periods and recently have been positively impacted and may continue to be affected to a material extent by the impact of currency fluctuations. Operating results may also be affected by the cost of such hedging activities that we do undertake. THIRD PARTIES MAY INFRINGE UPON OUR PROPRIETARY TECHNOLOGY AND WE MAY INFRINGE ON THE INTELLECTUAL PROPERTY RIGHTS OF OTHERS. While we generally require employees, independent contractors and consultants to execute non-competition and confidentiality agreements, our intellectual property or proprietary rights could be infringed or misappropriated, which could result in expensive and protracted litigation. We rely on a combination of patent, copyright, trade secret and trademark law to protect our technology. Despite our efforts to protect our intellectual property and proprietary rights, unauthorized parties may attempt to copy or otherwise obtain and use our products or technology. Effectively policing the unauthorized use of our products is time-consuming and costly, and there can be no assurance that the steps we have taken will prevent misappropriation of our technology, particularly in foreign countries where in many instances the local laws or legal systems do not offer the same level of protection as in the United States. If others claim that our product infringes their intellectual property rights, we may be forced to seek expensive licenses, reengineer our products, engage in expensive and time-consuming litigation or stop marketing our products. We attempt to avoid infringing known proprietary rights of third parties in our product development efforts. We do not regularly conduct comprehensive patent searches to determine whether the technology used in our products infringes patents held by third parties, however. There are many issued patents as well as patent applications in the fields in which we are engaged. Because patent applications in the United States are not publicly disclosed until the patent is issued, applications may have been filed which relate to our software and products. If we were to discover that our products violated or potentially violated third-party proprietary rights, we might not be able to obtain licenses to continue offering those products without substantial reengineering. Any reengineering effort may not be successful, nor can we be certain that any licenses would be available on commercially reasonable terms. Substantial litigation regarding intellectual property rights exists in technology related industries, and we expect that our products may be increasingly subject to third-party infringement claims as the number of competitors in our industry segments grows and the functionality of software products in different industry segments overlaps. In addition, we have agreed to indemnify certain customers in certain situations should it be determined that our products infringe on the proprietary rights of third parties. Any third-party infringement claims could be time consuming to defend, result in costly litigation, divert management's attention and resources, cause product and service delays or require us to enter into royalty or licensing agreements. Any royalty or licensing arrangements, if required, may not be available on terms acceptable to us, if at all. A successful claim of infringement against us and our failure or inability to license the infringed or similar technology could have a material adverse effect on our business, financial condition and results of operations. We hold a large proportion of our net assets in cash equivalents and short-term investments, including a variety of public and private debt and equity instruments, and have made significant venture capital investments, both directly and through private investment funds. Such investments subject us to the risks inherent in the capital markets generally, and to the performance of other businesses over which we have no direct control. Given the relatively high proportion of our liquid assets relative to our overall size, the results of our operations are materially affected by the results of our capital management and investment activities and the risks associated with those activities. Declines in the public equity markets have caused, and may be expected to continue to cause, us to experience realized and unrealized investment losses. In addition, reduction in prevailing interest rates due to economic conditions or government policies has had and may continue to have an adverse impact on our results of operations. The severe decline in the public trading prices of equity securities, particularly in the technology and telecommunications sectors, and corresponding decline in values of privately-held companies and venture capital funds in which we have invested, have, and may continue to have, an adverse impact on our financial results. We have in the past benefited from the long-term rise in the public trading price for our shares in various ways, including our ability to use equity incentive arrangements as a means of attracting and retaining the highly qualified employees necessary for the growth of our business and our ability to raise capital on relatively attractive conditions. The decline in the price of our shares, and the overall decline in equity prices generally, and in 11 the shares of technology companies in particular, can be expected to make it more difficult for us to significantly rely on equity incentive arrangements as a means to recruit and retain talented employees. WE MAY PURSUE MERGERS AND ACQUISITIONS AND STRATEGIC INVESTMENTS THAT PRESENT RISKS AND MAY NOT BE SUCCESSFUL. We intend to continue to make significant investments in our business, and to examine opportunities for growth through acquisitions and strategic investments. These activities may involve significant expenditures and obligations that cannot readily be curtailed or reduced if anticipated demand for the associated products does not materialize or is delayed. The impact of these decisions on future financial results cannot be predicated with assurance, and our commitment to growth may increase our vulnerability to downturns in our markets, technology changes and shifts in competitive conditions. We also may not be able to identify future suitable merger or acquisition candidates, and even if we do identify suitable candidates, we may not be able to make these transactions on commercially acceptable terms, or at all. If we do make acquisitions, we may not be able to successfully incorporate the personnel, operations and customers of these companies into our business. In addition, we may fail to achieve the anticipated synergies from the combined businesses, including marketing, product integration, distribution, product development and other synergies. The integration process may further strain our existing financial and managerial controls and reporting systems and procedures. This may result in the diversion of management and financial resources from our core business objectives. In addition, an acquisition or merger may require us to utilize cash reserves, incur debt or issue equity securities, which may result in a dilution of existing shareholders, and we may be negatively impacted by the assumption of liabilities of the merged or acquired company. Due to rapidly changing market conditions, we may find the value of our acquired technologies and related intangible assets, such as goodwill as recorded in our financial statements, to be impaired, resulting in charges to operations. We may also fail to retain the acquired or merged companies' key employees and customers. We have made, and in the future, may continue to make strategic investments in other companies. These investments have been made in, and future investments will likely be made in, immature businesses with unproven track records and technologies. Such investments have a high degree of risk, with the possibility that we may lose the total amount of our investments. We may not be able to identify suitable investment candidates, and, even if we do, we may not be able to make those investments on acceptable terms, or at all. In addition, even if we make investments, we may not gain strategic benefits from those investments. THE TRADING PRICE FOR OUR COMMON STOCK MAY BE VOLATILE. The trading price of our shares has been affected by the factors disclosed herein as well as prevailing economic and financial trends and conditions in the public securities markets. Share prices of companies in technology-related industries, such as us, tend to exhibit a high degree of volatility. The announcement of financial results that fall short of the results anticipated by the public markets could have an immediate and significant negative effect on the trading price for our shares in any given period. Such shortfalls may result from events that are beyond our immediate control, can be unpredictable and, since a significant proportion of our sales during each fiscal quarter tend to occur in the latter stages of the quarter, may not be discernible until the end of a financial reporting period. These factors may contribute to the volatility of the trading value of our shares regardless of our long-term prospects. The trading price for our shares may also be affected by developments, including reported financial results and fluctuations in trading prices of the shares of other publicly-held companies in the telecommunications equipment industry in general, and our business segments in particular, which may not have any direct relationship with our business or prospects. THE ZYPS DO NOT CONTAIN CERTAIN RESTRICTIVE COVENANTS, AND THERE IS LIMITED PROTECTION IN THE EVENT OF A CHANGE OF CONTROL. The indenture under which the ZYPS were issued does not contain restrictive covenants that would protect holders from several kinds of transactions that may adversely affect you. In particular, the indenture does not contain covenants that limit our ability to pay dividends or make distributions on or redeem our capital stock or limit our ability to incur additional indebtedness and, therefore, protect you in the event of a highly leveraged transaction or other similar transactions. In addition, the requirement that we offer to repurchase the ZYPS upon a change of control is limited to the transaction specified in the definition of a "change of control" under "Description of the ZYPS--Repurchase at Option Holders--Designated Event Put." Accordingly, we could enter into certain transactions, such as acquisitions, refinancings or a recapitalization, that could affect our capital structure and the value of our common stock but would not constitute a change of control. BECAUSE CTI IS A HOLDING COMPANY, THE ZYPS ARE EFFECTIVELY SUBORDINATED TO INDEBTEDNESS OF ITS SUBSIDIARIES AND CTI'S ABILITY TO SERVICE INDEBTEDNESS MAY IN THE FUTURE BECOME DEPENDENT UPON THE OPERATING CASH FLOWS OF THESE SUBSIDIARIES. CTI is a holding company and substantially all of its operations are conducted through subsidiaries. Although CTI currently has sufficient cash to service or repay its indebtedness, should CTI utilize such cash for other purposes, such as making acquisitions, CTI's operating cash flow and ability to service indebtedness, including the ZYPS, may become dependent upon the operating cash flows of its subsidiaries and the payment of funds by these subsidiaries to CTI in the form of dividends, interest and/or principal payments on loans or otherwise. We have granted options to certain of our officers and employees to purchase equity in certain of CTI's subsidiaries. If these options are exercised, CTI's participation in any earnings and future distributions by such subsidiaries will be reduced. In addition, existing and future obligations (including trade payables) of CTI's subsidiaries are or will be effectively senior in right of payment to the ZYPS. The indenture does not restrict CTI's ability to utilize its cash, nor does it limit the amount of indebtedness or other obligations that CTI's subsidiaries may incur. Should CTI not retain sufficient cash to service indebtedness, including the ZYPS, CTI's ability to make required principal, repurchase or redemption payments on the ZYPS may become impaired as a result of the obligations of CTI's subsidiaries. Because our Israeli subsidiaries have received certain benefits under the laws relating to "Approved Enterprises" (described above), payment of dividends to us may subject those subsidiaries to certain Israeli taxes to which they would otherwise not be subject. In addition, our Israeli subsidiaries are required under Israeli law to withhold for tax purposes, at a rate of up to 25%, cash dividends paid to foreign residents. Under the United States-Israel Tax Treaty, a 12.5% Israeli dividend withholding tax would apply to dividends paid to a U.S. corporation (such as CTI) that owns 10% or more of an Israeli company's voting stock in the 12-month period preceding the payment of such dividend. However, under the treaty, dividends on income derived from an "Approved Enterprise" are subject to a 15% dividend withholding tax. 12 WE CANNOT ASSURE YOU THAT A PUBLIC MARKET FOR THE ZYPS WILL BE MAINTAINED. Prior to the offering of the ZYPS by Lehman Brothers Inc., there has been no trading market for the ZYPS. Although prior to this offering the ZYPS have been approved for trading in the PORTAL market, there can be no assurance that any market for the ZYPS will be maintained. If an active market for the ZYPS fails to be sustained, the trading price for the ZYPS could be adversely affected. OUR ABILITY TO REPURCHASE THE ZYPS WITH CASH MAY BE LIMITED. Under certain circumstances, each holder of ZYPS may require us to repurchase all or a portion of such holder's ZYPS. In such event, there can be no assurance that we will have sufficient financial resources or will be able to arrange financing to pay the repurchase price or any portion thereof. Our ability to repurchase the ZYPS in such event may be limited by law, the indenture and by the terms of the other agreements relating to our indebtedness, as such indebtedness or agreements may be entered into, replaced, supplemented or amended from time to time. We may not have the financial ability to repurchase the ZYPS in the event payment of other debt requiring payment is accelerated. See "Description of the ZYPS--Repurchase at Option of Holders." THE ZYPS ARE UNSECURED, AND THEREFORE ARE EFFECTIVELY SUBORDINATED TO ANY SECURED DEBT. The ZYPS are not secured by any of our assets or those of our subsidiaries. As a result, the ZYPS are effectively subordinated to any secured debt we may incur to the extent of the value of the assets securing such debt. In any liquidation, dissolution, bankruptcy or other similar proceeding, the holders of our secured debt may assert rights against the secured assets in order to receive full payment of their debt before the assets may be used to pay the holders of the ZYPS. INVESTORS SHOULD NOT LOOK TO DIVIDENDS AS A SOURCE OF INCOME. We have not declared or paid any cash dividends on our common stock and we currently do not expect to pay cash dividends in the near future. Consequently, any economic return to a shareholder may be derived, if at all, from appreciation in the price of our stock, and not as a result of dividend payments. WE MAY ISSUE ADDITIONAL EQUITY SECURITIES, WHICH WOULD LEAD TO DILUTION OF OUR ISSUED AND OUTSTANDING COMMON STOCK. We have used and may continue to use our common stock or securities convertible into common stock to acquire technology, products, product rights and businesses, reduce or retire existing indebtedness, among other purposes. The issuance of additional equity securities or securities convertible into equity securities for these or other purposes would result in dilution of existing shareholders' equity interests in us. In addition, we are authorized to issue, without shareholder approval, one or more preferred series of stock, which may give other shareholders dividend, conversion, voting and liquidation rights, among other rights, which may be superior to the rights of holders of our common stock. Our board of directors has the authority to issue, without vote or action of shareholders, shares of preferred stock in one or more series, and has the ability to fix the rights, preferences, privileges and restrictions of any such series. Any such series of preferred stock could contain dividend rights, conversion rights, voting rights, terms of redemption, redemption prices, liquidation preferences or other rights superior to the rights of holders of our common stock. Our board of directors has no present intention of issuing any such preferred series, but reserves the right to do so in the future. We are also authorized to issue, without shareholder approval, common stock under certain circumstances. 13 USE OF PROCEEDS The selling holders will receive all of the net proceeds from the ZYPS and the common stock sold pursuant to this prospectus and we will receive none of such net proceeds. RATIO OF EARNINGS TO FIXED CHARGES The following table sets forth the ratio of earnings to fixed charges for the fiscal years ended January 31, 1999, 2000, 2001, 2002 and 2003 and the three months ended April 30, 2003:
YEAR ENDED JANUARY 31, ------------------------------------------------------- THREE MONTHS ENDED 1999(1) 2000(1) 2001 2002 2003 APRIL 30,2003 ------- ------- ---- ---- ---- ------------- Ratio of earnings to fixed charges (2)......... 6.5x 7.7x 9.5x 2.8x n.a.(3) n.a.(4)
- ---------------- (1) Includes the results of Loronix Information Systems, Inc., or "Loronix," for its fiscal year ended December 31. Loronix was merged into our company in July 2000 and was accounted for pursuant to the pooling of interests method. (2) For purposes of computing the ratio of earnings to fixed charges (i) earnings consist of consolidated pre-tax income before adjustment for minority interests in consolidated subsidiaries and income or loss from equity investees plus fixed charges and (ii) fixed charges consist of interest expense, amortization of debt issuance cost and the portion of rent expense deemed by us to be representative of the interest component. (3) In 2003, our earnings were insufficient to cover fixed charges by approximately $123.8 million. (4) In the three months ended April 30, 2003, our earnings were insufficient to cover fixed charges by approximately $3.0 million. PRICE RANGE OF COMMON STOCK The common stock of CTI is traded on the Nasdaq National Market System under the symbol "CMVT." The following table provides the range of closing prices of our common stock as reported on the Nasdaq National Market System for the quarterly periods in each of the past two fiscal years, for the first quarter of fiscal year 2003 and for the period from May 1 through June 20, 2003. HIGH LOW ---- --- Fiscal 2001 First Quarter............................... $113.13 $ 45.82 Second Quarter................................ 74.11 24.78 Third Quarter................................. 29.87 15.90 Fourth Quarter................................ 26.93 19.14 Fiscal 2002 First Quarter................................$ 20.74 $ 11.68 Second Quarter................................ 12.93 7.60 Third Quarter................................. 9.26 6.82 Fourth Quarter................................ 12.33 7.87 Fiscal 2003 First Quarter................................$ 13.33 $ 8.82 Second Quarter (through June 20, 2003) ....... 16.50 12.08 On June 20, 2003, the last reported sale price of our common stock on the Nasdaq National Market System was $15.776. As of June 20, 2003, there were approximately 1,778 holders of record of our common stock. 14 DIVIDEND POLICY We have not declared or paid any cash dividends on our common stock and currently do not expect to pay any cash dividends in the near future, but rather intend to retain our earnings to finance the development of our business. Any future determination as to the declaration and payment of dividends will be made by our board of directors in its discretion, and will depend upon our earnings, financial condition, capital requirements and other relevant factors. 15 DESCRIPTION OF THE ZYPS We issued the ZYPS under an indenture, dated May 7, 2003, between us and JPMorgan Chase Bank, as trustee. The terms of the ZYPS include those provided in the indenture and those provided in the registration rights agreement, which we entered into with Lehman Brothers Inc., the initial purchaser of the ZYPS. A copy of the indenture and the registration rights agreement have been filed with the commission. See "Where You Can Find More Information." The following description is only a summary of the material provisions of the ZYPS, the indenture and the registration rights agreement. We urge you to read these documents in their entirety because they, and not this description, define your rights as holders of these ZYPS. You may request copies of these documents at our address set forth under the caption "Incorporation of Certain Documents by Reference." When we refer to "we," "us," "our" or "the Company" in this section, we refer only to CTI and not its subsidiaries. BRIEF DESCRIPTION OF THE ZYPS The ZYPS are: o limited to $420 million aggregate principal amount; o our senior unsecured obligations; o senior in right of payment to any of our future subordinated indebtedness; o equal in right of payment to our existing and future unsecured indebtedness that is not by its terms expressly subordinated to the ZYPS, including our 1.50% Convertible Senior Debentures due 2005; o effectively junior in right of payment to our existing and future secured indebtedness to the extent of the value of the collateral securing that indebtedness; o effectively subordinated to all indebtedness and all other liabilities of our subsidiaries because we are a holding company; o convertible into our common stock at an initial conversion price of approximately $17.97 per share, subject to adjustment as described below under "--Conversion Rights," only in the following circumstances: - if the closing sale price per share of our common stock measured over a specified number of trading days is, during specified periods, above 120% of the conversion price per share; - on or before May 15, 2018, if the average trading price for the ZYPS, measured over a specified number of trading days, was less than 105% of the average conversion value for the ZYPS during that period; - during any period, following the date on which the credit rating assigned to the ZYPS by Standard & Poor's Rating Services, or Standard & Poor's (or any successors thereto) is lower than "B-" (or its successive equivalent) or upon the withdrawal or suspension by Standard & Poor's, at our request, of the rating assigned to the ZYPS; - if we have called the ZYPS for redemption; or - upon the occurrence of specified corporate transactions; o redeemable at our option, in whole or in part beginning on May 15, 2008 upon the terms and for a price equal to 100% of the principal amount of the ZYPS as set forth under "--Optional Redemption by CTI"; o subject to repurchase by us at the holder's option on each of May 15 of 2008, 2013 and 2018 or if a Designated Event (as defined below) occurs as set forth below under "--Repurchase at Option of Holders"; and 16 o due on May 15, 2023, unless earlier converted or redeemed by us at our option, or repurchased by us at the holder's option. We will not make periodic payments of interest on the ZYPS. Each ZYPS was issued at a price equal to $1,000 per ZYPS. Therefore, original issue discount will not accrue on the ZYPS. No sinking fund is provided for the ZYPS, and the ZYPS are not subject to defeasance. The indenture does not contain any financial covenants and does not restrict us from paying dividends, incurring indebtedness, which may be secured, or issuing or repurchasing our other securities. The indenture also does not protect holders in the event of a highly leveraged transaction or a change in control of CTI except to the extent described under "--Repurchase at Option of Holders" below. As of April 30, 2003, we had approximately $346.3 million of outstanding convertible senior indebtedness and no subordinated indebtedness. As of April 30, 2003, our consolidated subsidiaries had outstanding aggregate liabilities of approximately $313.5 million, which are effectively senior to the ZYPS. A holder may present definitive ZYPS for conversion, registration of transfer and exchange, without service charge, at our office or agency in New York City, which shall initially be the office or agency of the trustee in New York City. For information regarding conversion, registration of transfer and exchange of global ZYPS, see "--Form, Denomination and Registration." CONVERSION RIGHTS GENERAL A holder may convert any outstanding ZYPS (or portions of outstanding ZYPS) into our common stock, initially at the conversion price of approximately $17.97 per share, equal to a conversion rate of 55.6347 shares per $1,000 principal amount of ZYPS, under the circumstances summarized below. The conversion price in subject, however, to adjustment as described below under "--Conversion Price Adjustments." We will not issue fractional shares of common stock upon conversion of ZYPS. Instead, we will pay cash to holders in an amount equal to the market value of that fractional share based upon the closing sale price of our common stock on the trading day immediately preceding the conversion date. A holder may convert ZYPS only in denominations of $1,000 and whole multiples of $1,000. A holder may surrender ZYPS for conversion into our common stock prior to the close of business on their stated maturity date if any of the following conditions are satisfied: o during any fiscal quarter, if the closing sale price per share of our common stock for a period of at least 20 consecutive trading days in the 30 consecutive trading-day period ending on the last trading day of the preceding fiscal quarter was more than 120% of the conversion price in effect on that thirtieth trading day; o on or before May 15, 2018, during the five business-day period following any 10 consecutive trading-day period in which the daily average trading price for the ZYPS for that 10 trading-day period was less than 105% of the average conversion value, as described below, for the ZYPS during that period; o during any period, following the date on which the credit rating assigned to the ZYPS by Standard & Poor's (or any successors thereto) is lower than "B-" (or its successive equivalent) or upon the withdrawal or suspension by Standard & Poor's, at our request, of the rating assigned to the ZYPS; o if we have called the ZYPS for redemption; or o upon the occurrence of any of the corporate transactions summarized below. If a holder has exercised its right to require us to repurchase its ZYPS as described under "--Repurchase at Option of Holders," it may convert its ZYPS into our common stock only if the holder withdraws its notice of exercise of repurchase and converts its ZYPS prior to the close of business on the applicable repurchase date. 17 CONVERSION UPON SATISFACTION OF MARKET PRICE CONDITIONS A holder may convert any of its ZYPS into our common stock during a fiscal quarter if the closing sale price of our common stock for a period of at least 20 consecutive trading days in the 30 trading-day period ending on the last trading day of the preceding fiscal quarter exceeds 120% of the conversion price per share on that thirtieth trading day. On or before May 15, 2018, a holder also may convert any of its ZYPS into our common stock during the five business-day period following any 10 consecutive trading-day period in which the average of the trading prices for the ZYPS for that 10 trading-day period was less than 105% of the average conversion value for the ZYPS during that period. "Conversion price per share" of common stock as of any day is equal to the quotient of the principal amount of a ZYPS divided by the number of shares of common stock issuable upon conversion of such ZYPS on that day. "Conversion value" is equal to the product of the closing sale price for our common stock on a given day multiplied by the then current conversion rate, which is the number of shares of common stock into which each ZYPS is then convertible. CONVERSION UPON CREDIT RATING EVENT A holder may convert any of its ZYPS during any period, following the date on which the credit rating assigned to the ZYPS by Standard & Poor's (or any successors thereto) is lower than "B-" (or its successive equivalent) or upon the withdrawal or suspension by Standard & Poor's, at our request, of the rating assigned to the ZYPS. CONVERSION UPON NOTICE OF REDEMPTION A holder may surrender for conversion any ZYPS which we call for redemption at any time until the close of business on the day that is two business days prior to the redemption date, even if the ZYPS are not otherwise convertible at that time. If a holder already has delivered, however, a notice informing us of its exercise of its repurchase rights, as described below under "--Repurchase at Option of Holders," with respect to a ZYPS, the holder may not surrender that ZYPS for conversion until the holder has withdrawn the notice in accordance with the indenture. CONVERSION UPON SPECIFIED CORPORATE TRANSACTIONS If: o we distribute to all holders of our common stock certain rights entitling them to purchase, for a period expiring within 45 days of the date of distribution, our common stock at less than the closing sale price of the common stock on the date immediately preceding the announcement of that distribution; o we distribute at our election to all holders of our common stock cash or other assets, debt securities or certain rights to purchase our securities, which distribution has a per share value exceeding 10% of the closing sale price of the common stock on the day preceding the declaration date for the distribution; or o a change of control as described under "--Repurchase at Option of Holders--Designated Event Put" occurs but holders of ZYPS do not have the right to require us to repurchase their ZYPS as a result of such change of control because either (1) the closing sale price of our common stock for a specified period prior to that change of control exceeds a specified level or (2) because the consideration received in the change of control consists of capital stock that is freely traded and the ZYPS become or remain convertible into that capital stock, each as more fully described under "--Repurchase at Option of Holders--Designated Event Put," then we must notify the holders of ZYPS at least 20 days prior to the ex-dividend date for the distribution or within 20 business days of the occurrence of the change of control, as the case may be. Once we have given that notice, holders may convert their ZYPS at any time until either (a) the earlier of (x) close of business on the business day prior to the ex-dividend date and (y) our announcement that the distribution will not take place, in the case of a distribution, or (b) the earlier of (x) within 20 business days of the change of control notice and (y) our announcement that the change of control will not take place, in the case of a change of control. In the case of a distribution, no adjustment to the ability of a holder of ZYPS to convert will be made if the holder participates or will participate in the distribution without conversion. 18 In addition, if we are party to a consolidation, merger or binding share exchange pursuant to which our common stock will be converted into cash, securities or other property, and (a) such consolidation, merger or binding share exchange constitutes a transaction described in the preceding paragraph, then a holder may convert ZYPS in accordance with the provisions of the preceding paragraph or (b) in all other cases, a holder may convert ZYPS at any time from and after the date which is 15 days prior to the anticipated effective date of the transaction until 15 days after the effective date of the transaction. If we are a party to a consolidation, merger or binding share exchange pursuant to which our common stock is converted into cash, securities or other property, then at the effective time of the transaction, the right to convert a ZYPS into common stock will be changed into a right to convert the ZYPS into the kind and amount of cash, securities or other property which the holder would have received if the holder had converted such ZYPS immediately prior to the transaction. If the transaction also constitutes a "change of control" (as defined below) the holder can require us to repurchase all or a portion of its ZYPS as described under "--Repurchase at Option of Holders--Designated Event Put." CONVERSION PROCEDURES We will not issue fractional shares of common stock upon conversion of ZYPS. Instead, we will pay a cash adjustment based upon the closing sale price of our common stock on the business day immediately preceding the conversion date. A holder may convert ZYPS only in denominations of $1,000 and whole multiples of $1,000. A holder may exercise conversion rights in accordance with the provisions of the indenture prior to the close of business on the final maturity date of the ZYPS. However, a holder of ZYPS that have been called for redemption, must exercise its conversion rights prior to the close of business on the second business day preceding the redemption date, unless we default in payment of the redemption price. In addition, if a holder has exercised its right to require us to repurchase its ZYPS because a Designated Event (as defined below) has occurred, that holder may convert its ZYPS into our common stock only if it withdraws its notice and converts its ZYPS prior to the close of business on the business day immediately preceding the Designated Event repurchase date. By delivering to the holder the number of shares issuable upon conversion, determined by dividing the principal amount of the ZYPS being converted by the conversion price, together with a cash payment, if any, in lieu of fractional shares, we will satisfy our obligation with respect to the converted ZYPS. A holder will not be required to pay any taxes or duties relating to the issuance or delivery of our common stock if it exercises its conversion rights, but the holder will be required to pay any tax or duty which may be payable relating to any transfer involved in the issuance or delivery of the common stock in a name other than the name of the holder. Certificates representing shares of common stock will be issued or delivered only after all applicable taxes and duties, if any, payable by a holder have been paid. To convert interests in a global ZYPS, a holder must deliver to DTC the appropriate instruction form for conversion pursuant to DTC's conversion program. To convert a definitive ZYPS, a holder must: o complete the conversion notice on the back of the ZYPS (or a facsimile of it); o deliver the completed conversion notice and the ZYPS to be converted to the specified office of the conversion agent; and o pay all taxes or duties, if any, as described in the preceding paragraph. The conversion date will be the date on which all of the foregoing requirements have been satisfied. The ZYPS will be deemed to have been converted immediately prior to the close of business on the conversion date. A certificate for the number of shares of common stock into which the ZYPS are converted (and cash in lieu of any fractional shares) will be delivered as soon as practicable on or after the conversion date. CONVERSION PRICE ADJUSTMENTS We will adjust the initial conversion price for certain events, including: (1) issuances of our common stock as a dividend or distribution on our common stock; (2) certain subdivisions and combinations of our common stock; 19 (3) issuances to all holders of our common stock of certain rights to purchase, for a period expiring within 45 days of issuance, our common stock at less than the closing sale price of our common stock on the date immediately preceding the announcement of such issuance; (4) distributions to all holders of our common stock of shares of our capital stock (other than our common stock), evidences of our indebtedness or assets, including securities, but excluding: (A) the rights and warrants referred to in clause (3), (B) any dividends and distributions in connection with a reclassification, change, consolidation, merger, combination, sale or conveyance resulting in a change in the conversion consideration pursuant to the second succeeding paragraph, or (C) any dividends or distributions paid exclusively in cash; (5) distributions consisting exclusively of cash to all holders of our common stock to the extent that such distributions, combined together with: (A) all other such all-cash distributions made within the preceding 12 months for which no adjustment has been made, plus (B) any cash and the fair market value of other consideration paid for any tender offers by us or any of our subsidiaries for our common stock concluded within the preceding 12 months for which no adjustment has been made, exceed 10% of our market capitalization on the record date for such distribution; and (6) purchases of our common stock pursuant to a tender offer made by us or any of our subsidiaries to the extent that the same involves an aggregate consideration that, together with: (A) any cash and the fair market value of any other consideration paid in any other tender offer by us or any of our subsidiaries for our common stock concluded within the 12 months preceding such tender offer for which no adjustment has been made, plus (B) the aggregate amount of any all-cash distributions referred to in clause (5) above to all holders of our common stock within 12 months preceding the expiration of tender offer for which no adjustments have been made, exceed 10% of our market capitalization on the expiration of such tender offer. "Market capitalization" is equal to the product of the then current closing sale price of our common stock times the number of shares of our common stock then outstanding. We are entitled, in lieu of making certain adjustments under clause (3), (4) or (5) above, to provide that, subject to satisfying certain conditions, upon conversion of the ZYPS, the holders of the ZYPS will receive, in addition to the common stock issuable upon conversion of their ZYPS, the distribution referred to in clause (3), (4) or (5). We will not make an adjustment in the conversion price unless such adjustment would require a change of at least 1% in the conversion price then in effect at such time. We will carry forward and take into account in any subsequent adjustment any adjustment that would otherwise be required to be made. Except as stated above, we will not adjust the conversion price for the issuance of our common stock or any securities convertible into or exchangeable for our common stock or carrying the right to purchase any of the foregoing. If we: o reclassify or change our common stock (other than changes resulting from a subdivision or combination); or o consolidate or combine with or merge into any person or sell or convey to another person all or substantially all of our property and assets, 20 and the holders of our common stock receive stock, other securities or other property or assets (including cash or any combination thereof) with respect to or in exchange for their common stock, the holders of the ZYPS who elected not to convert their ZYPS pursuant to the procedures described above under the caption "--Conversion Upon Specified Corporate Transactions," may convert the ZYPS into the consideration they would have received if they had converted their ZYPS immediately prior to such reclassification, change, consolidation, combination, merger, sale or conveyance. If a taxable distribution to holders of our common stock or other transaction occurs which results in any adjustment of the conversion price, you may, in certain circumstances, be deemed to have received a distribution subject to U.S. federal income tax as a dividend. In certain other circumstances, the absence of an adjustment may result in a taxable dividend to the holders of our common stock. See "Certain United States Federal Income Tax Considerations." We may from time to time, to the extent permitted by law, reduce the conversion price of the ZYPS by any amount for any period of at least 20 days. In that case, we will give at least 15 days' notice of such decrease. We may make such reductions in the conversion price, in addition to those set forth above, as our board of directors deems advisable to avoid or diminish any income tax to holders of our common stock resulting from any dividend or distribution of stock (or rights to acquire stock) or from any event treated as such for income tax purposes. OPTIONAL REDEMPTION BY CTI At any time on or after May 15, 2008, we may redeem some or all of the ZYPS on at least 20 but not more than 60 days' notice, at a redemption price equal to 100% of their principal amount. If we do not redeem all of the ZYPS, the trustee will select the ZYPS to be redeemed in principal amounts of $1,000 or whole multiples of $1,000 by lot or on a pro rata basis. If any ZYPS are to be redeemed in part only, we will issue a new ZYPS in principal amount equal to the unredeemed principal portion thereof. If a portion of a holder's ZYPS is selected for partial redemption and the holder converts a portion of its ZYPS, the converted portion will be deemed to be taken from the portion selected for redemption. REPURCHASE AT OPTION OF HOLDERS OPTIONAL PUT On each of May 15 of 2008, 2013 and 2018, holders may require us to repurchase for cash all of their ZYPS not previously called for redemption, or any portion of those ZYPS that is equal to $1,000 or a whole multiple of $1,000, at a repurchase price equal to 100% of the principal amount of those ZYPS. Holders may submit their ZYPS for repurchase to the paying agent at any time from the opening of business on the date that is 20 business days prior to the applicable repurchase date until the close of business on the repurchase date. DESIGNATED EVENT PUT If a Designated Event occurs, a holder will have the right to require us to repurchase all of its ZYPS not previously called for redemption, or any portion of those ZYPS that is equal to $1,000 or a whole multiple of $1,000. The repurchase date will be a business day no earlier than 30 days nor later than 60 days after the date we give notice of a Designated Event and will be specified in that notice. The repurchase price is equal to 100% of the principal amount of the ZYPS to be repurchased. Upon the occurrence of a Designated Event which is a Change of Control, instead of paying the repurchase price in cash, we may pay the repurchase price, in whole or in part, in exchange for common stock. The number of shares of common stock a holder will receive will equal the repurchase price (or its portion to be repurchased in common stock) divided by 95% of the average of the closing sale prices of our common stock for the five trading days immediately preceding and including the third trading day prior to the repurchase date. However, we may not pay in common stock unless we satisfy certain conditions prior to the repurchase date as provided in the indenture. Within 30 days after the occurrence of a Designated Event, we are required to give holders notice of the occurrence of the Designated Event and of the holder's resulting repurchase right. To exercise the repurchase right, a holder must deliver, prior to the close of business on the repurchase date, written notice to the trustee of its exercise of its repurchase right, together with the ZYPS with respect to which its right is being exercised. A holder may withdraw this notice by delivering to the trustee a notice of withdrawal prior to the close of business on the business day immediately preceding the repurchase date. A "Designated Event" means a Change of Control or a Termination of Trading. 21 A "Change of Control" means any event or series of events as a result of which: o a "person" or "group" (within the meaning of Sections 13(d) and 14(d)(2) of the Exchange Act) becomes the ultimate "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act) of more than 50% of the total voting power of the then outstanding voting stock of CTI on a fully diluted basis; o at any time continuing directors, that is, members of the board of directors of CTI who were members of the board on May 2, 2003 or who were nominated or elected by at least a majority of the directors who were continuing directors at the time of such nomination or election or whose election to the board of directors was recommended or endorsed by at least a majority of the directors who were continuing directors at the time of such nomination or election, do not constitute a majority of the board of directors of CTI (or, if applicable, a successor corporation of CTI); o individuals who at the beginning of any period of two consecutive calendar years constituted the board of directors (together with any directors who are members of the board of directors on the date hereof and any new directors whose election by the board of directors or whose nomination for election by the shareholders of CTI was approved by a vote of at least a majority of the members of the board of directors then still in office who either were members of the board of directors at the beginning of such period or whose election or nomination for election was previously so approved) cease for any reason to constitute a majority of the members of the board of directors then in office; o CTI conveys, transfers, or leases, all or substantially all of its assets to any such "person" or "group"; or o CTI merges or consolidates with or into another corporation or another corporation merges with or into CTI, and the outstanding common stock of CTI is changed or exchanged into or for other assets or securities as a result of the transaction with the effect that immediately after such transaction any such "person" or "group" of persons or entities shall have become the beneficial owner of securities of the surviving corporation of such merger or consolidation representing a majority of the total voting power of the then outstanding voting stock of the surviving corporation. However, a change in control will be deemed not to have occurred if: o the closing sales price per share of our common stock for any five trading days within the period of 10 consecutive trading days ending immediately before the change in control equals or exceeds 105% of the conversion price in effect on each such trading day; or o at least 90% of the consideration (excluding cash payments for dissenting and fractional shares) in the transaction or transactions constituting the change of control consists of shares of common stock or securities convertible into common stock that are, or immediately upon issuance will be, listed on a national securities exchange or the Nasdaq Stock Market and after such transaction or transactions, such securities remain or become convertible solely into such common stock. A "Termination of Trading" will be deemed to have occurred if our common stock (or other common stock into which the ZYPS are convertible) is neither listed for trading on a United States national securities exchange nor approved for trading on an established automated over-the-counter trading market in the United States. No quantitative or other established meaning has been given to the phrase "all or substantially all," which appears in the definition of Change of Control, by courts that have interpreted this phrase in various contexts. In interpreting this phrase, courts, among other things, make a subjective determination as to the portion of assets conveyed, considering such factors as the value of assets conveyed, the proportion of an entity's income derived from the assets conveyed and the significance of those assets to the ongoing business of the entity. To the extent the meaning of such phrase is uncertain, uncertainty will exist as to whether or not a Change of Control may have occurred and, accordingly, as to whether or not the holders of ZYPS will have the right to require us to repurchase their ZYPS. Rule 13e-4 under the Exchange Act requires the dissemination of certain information to security holders if an issuer tender offer occurs and may apply if the repurchase option becomes available to holders of the ZYPS. We will comply with this rule to the extent applicable at that time. 22 We may, to the extent permitted by applicable law and other agreements relating to our indebtedness, at any time purchase the ZYPS in the open market or by tender at any price or by private agreement. Any ZYPS so purchased by us may, to the extent permitted by applicable law, be reissued or resold or may be surrendered to the trustee for cancellation. Any ZYPS surrendered to the trustee may not be reissued or resold and will be canceled promptly. The foregoing provisions would not necessarily protect holders of the ZYPS if highly leveraged or other transactions involving us occur that may adversely affect holders. Our ability to repurchase ZYPS upon the occurrence of a Designated Event is subject to important limitations. The occurrence of a Designated Event could cause an event of default under, or be prohibited or limited by, the terms of indebtedness that we may incur in the future. Further, we cannot assure holders that we would have the financial resources, or would be able to arrange financing, to pay the repurchase price for all the ZYPS that might be delivered by holders of ZYPS seeking to exercise the repurchase right. Any failure by us to repurchase the ZYPS when required following a Designated Event would result in an event of default under the indenture. Any such default may, in turn, cause a default under other existing indebtedness or indebtedness that we may incur in the future. EVENTS OF DEFAULT Each of the following constitutes an event of default under the indenture: (1) default in the payment of principal on any ZYPS at maturity, redemption or otherwise; (2) default in the performance of or breach of any other of our covenants or agreements in the indenture or under the ZYPS (other than a default specified in clause (1), (2) or (3) above) and such default or breach continues for a period of 60 consecutive days after written notice by the trustee or the holders of 25% or more in aggregate principal amount of the ZYPS; (3) there occurs with respect to any agreements, indentures or instruments under which we have indebtedness of $25.0 million or more in the aggregate, not including any amounts we may owe under reimbursement or similar obligations to banks, sureties or other entities which have issued letters of credit, surety bonds, performance bonds or other guarantees relating to the performance by us or our subsidiaries of contractual obligations to customers, to the extent any demands made under any such reimbursement or similar obligation relate to a draw under the related letter of credit or other instrument which draw is being contested in good faith through appropriate proceedings, whether such indebtedness now exists or shall hereafter be created, a default that has caused the holder thereof to declare such indebtedness to be due and payable prior to its stated maturity and such indebtedness has not been discharged in full or such acceleration has not been rescinded or annulled by the thirtieth day after notice of the default has been given to us by the trustee or to us and the trustee by holders of at least 25% in aggregate principal amount of the ZYPS; provided, that if the default under the indenture or instrument is remedied or cured by us or waived by the holders of such indebtedness before the entry of judgment in favor of the trustee, then the event of default under the indenture will be deemed likewise to have been remedied, cured or waived; or (4) there occurs certain events of bankruptcy, insolvency or reorganization with respect to us. The indenture provides that the trustee shall, within 90 days of the occurrence of a default, give to the registered holders of the ZYPS notice of all uncured defaults known to it, but the trustee shall be protected in withholding such notice if it, in good faith, determines that the withholding of such notice is in the best interest of such registered holders, except in the case of a default in the payment of the principal of, or premium on, any of the ZYPS when due or in the payment of any redemption or repurchase obligation. If an event of default shall occur and be continuing (the default not having been cured or waived as provided under "--Meetings, Modifications and Waiver" below), the trustee or the holders of at least 25% in aggregate principal amount of the ZYPS then outstanding may declare the ZYPS due and payable at their principal amount together with accrued liquidated damages, if any, and thereupon the trustee may, at its discretion, proceed to protect and enforce the rights of the holders of ZYPS by appropriate judicial proceedings. Such declaration may be rescinded or annulled either with the written consent of the holders of a majority in aggregate principal amount of the ZYPS then outstanding or a majority in aggregate principal amount of the ZYPS represented at a meeting at which a quorum (as specified under "--Meetings, Modifications and Waiver" below) is present, in each case upon the conditions provided in the indenture. 23 The indenture contains a provision entitling the trustee, subject to the duty of the trustee during the occurrence of a default to act with the required standard of care, to be indemnified by the holders of ZYPS before proceeding to exercise any right or power under the indenture at the request of such holders. The indenture provides that the holders of a majority in aggregate principal amount of the ZYPS then outstanding through their written consent, or the holders of a majority in aggregate principal amount of the ZYPS then outstanding represented at a meeting at which a quorum is present by a written resolution, may direct the time, method and place of conducting any proceeding for any remedy available to the trustee or exercising any trust or power conferred upon the trustee. We are required to furnish annually to the trustee a statement as to the fulfillment of our obligations under the indenture. CONSOLIDATION, MERGER OR ASSUMPTION We may, without the consent of the holders of ZYPS, consolidate with, merge into or transfer all or substantially all of our assets to any other entity organized under the laws of the United States or any of its political subdivisions provided that: o the surviving entity assumes all our obligations under the indenture and the ZYPS; o at the time of such transaction, no event of default, and no event which, after notice or lapse of time, would become an event of default, shall have happened and be continuing; and o certain other conditions are met. MEETINGS, MODIFICATIONS AND WAIVER The indenture contains provisions for convening meetings of the holders of ZYPS to consider matters affecting their interests. The indenture (including the terms and conditions of the ZYPS) may be modified or amended by us and the trustee, without the consent of the holder of any ZYPS, for the purposes of, among other things: o adding to our covenants for the benefit of the holders of ZYPS; o surrendering any right or power conferred upon us; o providing for conversion rights of holders of ZYPS if any consolidation, merger or sale of all or substantially all of our assets occurs; o providing for the assumption of our obligations to the holders of ZYPS in the case of a merger, consolidation, conveyance, transfer or lease; o reducing the conversion price, provided that the reduction will not adversely affect the interests of the holders of ZYPS in any material respect; o complying with the requirements of the SEC in order to effect or maintain the qualification of the indenture under the Trust Indenture Act of 1939, as amended; or o curing any ambiguity or correcting or supplementing any defective provision contained in the indenture; provided that such modification or amendment does not, in the good faith opinion of our board of directors and the trustee, adversely affect the interests of the holders of ZYPS in any material respect. Modifications and amendments to the indenture or to the terms and conditions of the ZYPS may also be made, and past default by us may be waived, either: o with the written consent of the holders of at least a majority in aggregate principal amount of the ZYPS at the time outstanding; or o by the adoption of a resolution at a meeting of holders by at least a majority in aggregate principal amount of the ZYPS represented at such meeting. 24 However, no such modification, amendment or waiver may, without the written consent or the affirmative vote of the holder of each ZYPS so affected: o change the maturity of the principal of any ZYPS; o reduce the principal amount of, or premium on any ZYPS; o change the currency of payment of such ZYPS; o impair the right to institute suit for the enforcement of any payment on or with respect to any ZYPS; o modify our obligations to maintain an office or agency in New York; o except as otherwise permitted or contemplated by provisions concerning corporate reorganizations, adversely affect the repurchase option or the conversion rights of holders of the ZYPS; o reduce the percentage in aggregate principal amount of ZYPS outstanding necessary to modify or amend the indenture or to waive any past default; or o reduce the percentage in aggregate principal amount of ZYPS outstanding required for the adoption of a resolution or the quorum required at any meeting of holders of ZYPS at which a resolution is adopted. The quorum at any meeting called to adopt a resolution will be persons holding or representing a majority in aggregate principal amount of the ZYPS at the time outstanding and, at any reconvened meeting adjourned for lack of a quorum, 25% of the aggregate principal amount. GOVERNING LAW The indenture and the ZYPS are governed by, and construed in accordance with, the laws of the State of New York but without giving effect to applicable principles of conflicts of law to the extent that the application of the laws of another jurisdiction would be required thereby. INFORMATION CONCERNING THE TRUSTEE AND TRANSFER AGENT JPMorgan Chase Bank, as trustee under the indenture, has been appointed by us as paying agent, conversion agent, registrar and custodian with regard to the ZYPS. American Stock Transfer & Trust Company is the transfer agent and registrar for our common stock. The trustee or its affiliates may from time to time in the future provide banking and other services to us in the ordinary course of their business. FORM, DENOMINATION AND REGISTRATION DENOMINATION AND REGISTRATION. The ZYPS were issued in fully registered form, without coupons, in denominations of $1,000 principal amount and whole multiples of $1,000. GLOBAL ZYPS, BOOK-ENTRY FORM. The ZYPS were sold only to "qualified institutional buyers," as defined in Rule 144A under the Securities Act ("QIBs") and are evidenced by one or more global ZYPS deposited with the trustee as custodian for DTC, and registered in the name of Cede & Co. as DTC's nominee. Record ownership of the global ZYPS may be transferred, in whole or in part, only to another nominee of DTC or to a successor of DTC or its nominee, except as set forth below. A QIB may hold its interests in the global ZYPS directly through DTC if such QIB is a participant in DTC, or indirectly through organizations which are direct DTC participants if such QIB is not a participant in DTC. Transfers between direct DTC participants will be effected in the ordinary way in accordance with DTC's rules and will be settled in same-day funds. QIBs may also beneficially own interests in the global ZYPS held by DTC through certain banks, brokers, dealers, trust companies and other parties that clear through or maintain a custodial relationship with a direct DTC participant, either directly or indirectly. 25 So long as Cede & Co., as nominee of DTC, is the registered owner of the global ZYPS, Cede & Co. for all purposes will be considered the sole holder of the global ZYPS. Except as provided below, owners of beneficial interests in the global ZYPS: o will not be entitled to have certificates registered in their names; o will not receive or be entitled to receive physical delivery of certificates in definitive form; and o will not be considered holders of the global ZYPS. The laws of some states require that certain persons take physical delivery of securities in definitive form. Consequently, the ability of an owner of a beneficial interest in a global ZYPS to transfer the beneficial interest in the global ZYPS to such persons may be limited. We will wire, through the facilities of the trustee, payments of principal, premium on the global ZYPS to Cede & Co., the nominee of DTC, as the registered owner of the global ZYPS. None of CTI, the trustee and any paying agent will have any responsibility or be liable for paying amounts due on the global ZYPS to owners of beneficial interests in the global ZYPS. It is DTC's current practice, upon receipt of any payment of principal of, and premium and liquidated damages, if any, on the global ZYPS, to credit participants' accounts on the payment date in amounts proportionate to their respective beneficial interests in the ZYPS represented by the global ZYPS, as shown on the records of DTC, unless DTC believes that it will not receive payment on the payment date. Payments by DTC participants to owners of beneficial interests in ZYPS represented by the global ZYPS held through DTC participants will be the responsibility of DTC participants, as is now the case with securities held for the accounts of customers registered in "street name." If a holder would like to convert its ZYPS into common stock pursuant to the terms of the ZYPS, it should contact its broker or other direct or indirect DTC participant to obtain information on procedures, including proper forms and cut-off times, for submitting those requests. Because DTC can only act on behalf of DTC participants, who in turn act on behalf of indirect DTC participants and other banks, a holder's ability to pledge its interest in the ZYPS represented by global ZYPS to persons or entities that do not participate in the DTC system, or otherwise take actions in respect of such interest, may be affected by the lack of a physical certificate. Neither CTI nor the trustee (nor any registrar, paying agent or conversion agent under the indenture) will have any responsibility for the performance by DTC or direct or indirect DTC participants of their 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 ZYPS, including, without limitation, the presentation of ZYPS for conversion as described below, only at the direction of one or more direct DTC participants to whose account with DTC interests in the global ZYPS are credited and only for the principal amount of the ZYPS for which directions have been given. DTC has advised us as follows: DTC is a limited purpose trust company organized under the laws of the State of New York, a member of the Federal Reserve System, a "clearing corporation" within the meaning of the Uniform Commercial Code and a "clearing agency" registered pursuant to the provisions of Section 17A of the Exchange Act. DTC was created to hold securities for DTC participants and to facilitate the clearance and settlement of securities transactions between DTC participants through electronic book-entry changes to the accounts of its participants, thereby eliminating the need for physical movement of certificates. Participants include securities brokers and dealers, banks, trust companies and clearing corporations and may include certain other organizations, such as the initial purchaser of the ZYPS. Certain DTC 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. Although DTC has agreed to the foregoing procedures in order to facilitate transfers of interests in the global ZYPS among DTC participants, it is under no obligation to perform or continue to perform such procedures, and such procedures may be discontinued at any time. If DTC is at any time unwilling or unable to continue as depositary and a successor depositary is not appointed by us within 90 days, we will cause ZYPS to be issued in definitive form in exchange for the global ZYPS. None of CTI, the trustee or any of their respective agents will have any responsibility for the performance by DTC, or direct or indirect DTC participants of their obligations under the rules and 26 procedures governing their operations, including maintaining, supervising or reviewing the records relating to, or payments made on account of, beneficial ownership interests in global ZYPS. According to DTC, the foregoing information with respect to DTC has been provided to its participants and other members of the financial community for informational purposes only and is not intended to serve as a representation, warranty or contract modification of any kind. REGISTRATION RIGHTS We entered into a registration right agreement with Lehman Brothers Inc., the initial purchaser, for the benefit of the holders of the ZYPS. Pursuant to the agreement, we filed with the SEC, at our expense, a registration statement on Form S-3, of which this prospectus is a part, covering resales by holders of all ZYPS and the common stock issuable upon conversion of the ZYPS. We will use our reasonable best efforts to cause such registration statement to become effective as promptly as practicable, but in no event later than 180 days after May 7, 2003 and to use our reasonable best efforts to keep the registration statement effective until the earlier of: o May 28, 2005; and o the date when the holders of the ZYPS and the common stock issuable upon conversion of the ZYPS are able to sell all such securities immediately pursuant to Rule 144(k) under the Securities Act. Pursuant to the registration rights agreement, we agreed to: o provide to each holder named herein under "Selling Holders," for whom the shelf registration statement was filed, copies of this prospectus; o notify each such holder when the shelf registration statement has become effective; and o take certain other actions as are required to permit unrestricted resales of the ZYPS and the common stock issuable upon conversion of the ZYPS. Each of the holders named herein under "Selling Holders" who sells securities pursuant to the shelf registration statement generally will be: o required to deliver a prospectus to purchasers; and o bound by the provisions of the registration rights agreement which are applicable to the holder (including certain indemnification rights and obligations). Each holder must notify us not later than three business days prior to any proposed sale by that holder pursuant to the shelf registration statement. This notice will be effective for five business days. We may, upon written notice to a holder, suspend the holder's use of this prospectus for a reasonable period not to exceed 60 days, if: o this prospectus would, in our reasonable judgment, contain a material misstatement or omission as a result of an event that has occurred and is continuing; and o we reasonably determine that the disclosure of this material non-public information would have a material adverse effect on us and our subsidiaries taken as a whole. Each holder, by its acceptance of a ZYPS, agrees to hold any communication by us in response to a notice of a proposed sale under the shelf registration statement in confidence. 27 DESCRIPTION OF CAPITAL STOCK GENERAL The authorized capital stock of CTI consists of 600,000,000 shares of common stock, par value $0.10 per share, and 2,500,000 shares of preferred stock, par value $0.01 per share. As of April 30, 2003, there were issued and outstanding 188,192,862 shares of common stock. No shares of preferred stock have been issued to date. COMMON STOCK All outstanding shares of common stock are fully paid and nonassessable. Holders of common stock have no preemptive, redemption or conversion rights, and are entitled to one vote for each share held on each matter submitted to a vote of shareholders. Cumulative voting for the election of directors is not permitted. Holders of the common stock are entitled to receive ratably such dividends as may be declared by the Board of Directors out of funds legally available therefor, subject to the rights and preferences of the holders of any preferred stock. On our liquidation, after payment of all indebtedness and the liquidation preference to holders of any preferred stock, our assets will be distributed pro-rata to the holders of the common stock. PREFERRED STOCK We may issue the preferred stock in one or more series. The Board of Directors is authorized, without approval of shareholders, to determine, with respect to each series of preferred stock which may be issued, the powers, designations, preferences, and rights of the shares of such series and the qualifications, limitations, or restrictions thereof, including any dividend rate, redemption rights, liquidation preferences, sinking fund terms, conversion rights, voting rights and any other preferences or special rights and qualifications. The effects of any issuance of the preferred stock upon the rights of holders of the common stock depends upon the respective powers, designations, preferences, rights, qualifications, limitations and restrictions of the shares of one or more series of preferred stock as determined by the Board of Directors. Such effects might include dilution of the voting power of the common stock, the subordination of the rights of holders of common stock to share in our assets upon liquidation, and reduction of the amount otherwise available for payment of dividends on common stock. TRANSFER AGENT AND REGISTRAR American Stock Transfer & Trust Company, New York, New York, serves as the transfer agent and registrar for the common stock. INDEMNIFICATION OF DIRECTORS AND OFFICERS. New York business corporation law provides that if a derivative action is brought against one of our directors or officers, we may indemnify him or her against amounts paid in settlement and reasonable expenses, including attorneys' fees incurred by him or her in connection with the defense or settlement of the action, if the director or officer acted in good faith for a purpose which he or she reasonably believed to be in our best interest. However, no indemnification will be made without court approval in respect of a threatened action, or a pending action settled or otherwise disposed of, or in respect of any matter as to which the director or officer has been found liable to us. In a nonderivative action or threatened action, New York business corporation law provides that the we may indemnify our directors or officers against judgments, fines, amounts paid in settlement and reasonable expenses, including attorneys' fees incurred by him or her in defending such action if the director or officer acted in good faith for a purpose which he or she reasonably believed to be in our best interest. Under New York business corporation law, a director or officer who is successful, either in a derivative or nonderivative action, is entitled to indemnification as outlined above. Under any other circumstances, the director or officer may be indemnified only if certain conditions specified in New York business corporation law are met. The New York business corporation law indemnification provisions are not exclusive of any other rights to which a director or officer seeking indemnification may be entitled pursuant to the provisions of the certificate of incorporation or the by-laws of a corporation 28 or, when authorized by the certificate of incorporation or by-laws, pursuant to a shareholders' resolution, a directors' resolution or an agreement providing for indemnification. The above is a general summary of certain indemnity provisions of the New York business corporation law and is subject, in all cases, to the specific and detailed provisions of Sections 721-725 of the New York business corporation law. Our certificate of incorporation provides that none of our directors will be personally liable to us or to our shareholders for damages for any breach of duty as a director, provided that the provision will not be construed to eliminate or limit the liability of any director if a judgment or other final adjudication adverse to him establishes that his acts or omissions were in bad faith or involved intentional misconduct or a knowing violation of law, that he personally gained in fact a financial profit or other advantage to which he was not legally entitled or that his acts violated New York business corporation law. Our bylaws further provide that we will indemnify our directors and officers, and will advance their expenses in the defense of any action for which indemnification is sought, to the full extent permitted by New York business corporation law and when authorized by resolution of our shareholders or directors or any agreement providing for indemnification or advancement of expenses, provided that no indemnification may be made to or on behalf of any director or officer if a judgment or other final adjudication adverse to him established that his acts were committed in bad faith or were the result of active and deliberate dishonesty material to the cause of action so adjudicated, or that he personally gained in fact a financial profit or other advantage to which he was not legally entitled. We have entered into indemnity agreements with each of our directors and officers pursuant to the above mentioned provisions of our bylaws. We maintain insurance policies insuring each of our directors and officers against certain civil liabilities, including liabilities under the Securities Act. Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers or persons controlling us pursuant to the foregoing provisions, we have been informed that in the opinion of the Commission such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable. 29 CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS The following is a general discussion of certain anticipated U.S. federal income tax consequences of the purchase, ownership and disposition of the ZYPS (or common stock acquired upon conversion or repurchase of a ZYPS ("conversion shares")) as of the date hereof. This summary deals only with ZYPS and conversion shares held as capital assets (in general, assets held for investment) within the meaning of Section 1221 of the Code (as defined below) by initial holders who are beneficial owners and does not deal with special situations. For example, this summary does not address: o tax consequences to holders who may be subject to special tax treatment, such as dealers in securities or currencies, financial institutions, insurance companies, regulated investment companies, tax-exempt entities, traders in securities that elect to use a mark-to-market method of accounting for their securities holdings or corporations that accumulate earnings to avoid U.S. federal income tax; o tax consequences to persons holding ZYPS or conversion shares as part of a hedging, integrated, constructive sale or conversion transaction or a straddle; o tax consequences to holders whose "functional currency" is not the U.S. dollar; o tax consequences to pass-through entities and investors in pass-through entities that hold ZYPS; o alternative minimum tax consequences, if any; or o any state, local or foreign tax consequences. The discussion below is based upon the provisions of the Internal Revenue Code of 1986, as amended (the "Code"), Treasury regulations promulgated thereunder, rulings and judicial decisions as of the date hereof. Those authorities may be changed, perhaps retroactively, so as to result in U.S. federal income tax consequences different from those discussed below. IF YOU ARE CONSIDERING THE PURCHASE OF ZYPS, YOU SHOULD CONSULT YOUR OWN TAX ADVISORS CONCERNING THE U.S. FEDERAL INCOME TAX CONSEQUENCES TO YOU AND ANY CONSEQUENCES ARISING UNDER THE LAWS OF ANY OTHER TAXING JURISDICTION. CONSEQUENCES TO UNITED STATES HOLDERS The following is a summary of the U.S. federal income tax consequences that will apply to you if you are a United States Holder of ZYPS or conversion shares. (Certain consequences to "Non-United States Holders" of ZYPS and conversion shares are described under "--Consequences to Non-United States Holders" below.) "United States Holder" means a beneficial owner of a ZYPS (or conversion share) that is: o a citizen or resident of the United States; o a corporation created or organized in or under the laws of the United States or any political subdivision of the United States; o an estate the income of which is subject to U.S. federal income taxation regardless of its source; or o a trust if, in general, a court within the United States is able to exercise primary jurisdiction over its administration and one or more U.S. persons have authority to control all of its substantial decisions. MARKET DISCOUNT If a ZYPS is acquired at a "market discount," some or all of any gain realized upon a sale or other disposition or payment at maturity of such ZYPS may be treated as ordinary income, as described below. For this purpose, "market discount" is the excess (if any) of the face amount over the purchase price, subject to a statutory de minimis exception. In general, any gain realized (or deemed realized) on any subsequent disposition of such ZYPS (other than in 30 connection with certain nonrecognition transactions, such as a conversion of the ZYPS into our common stock), including an otherwise non-taxable transaction, such as a gift, or payment at maturity will be treated as ordinary income to the extent of the accrued market discount. The amount of market discount treated as having accrued will be determined either (i) on a straight-line basis by multiplying the market discount times a fraction, the numerator of which is the number of days the ZYPS was held by the United States Holder and the denominator of which is the total number of days after the date the holder's acquisition of the ZYPS up to and including its maturity date, or (ii) if the United States Holder so elects, on a constant interest rate method. A United States Holder may make that election with respect to any ZYPS but, once made, such election is irrevocable. In lieu of recharacterizing gain upon disposition as ordinary income to the extent of accrued market discount, a United States Holder of a ZYPS acquired at a market discount may elect to include market discount in income currently, through the use of either the straight-line inclusion method or the elective constant interest method. Once made, the election to include market discount in income currently applies to all ZYPS and other obligations held by the United States Holder that are purchased at a market discount during the taxable year for which the election made, and all subsequent taxable years of the United States Holder, unless the Internal Revenue Service consents to a revocation of the election. If such election is made, the basis of the ZYPS in the hands of the United States Holder will be increased by the amount of market discount included in income. Unless a United States Holder who acquires a ZYPS at a market discount elects to include market discount in income currently, such United States Holder may be required to defer deductions for any interest paid on indebtedness allocable to such ZYPS in an amount not exceeding the deferred income until such income is realized. BOND PREMIUM A United States Holder who acquires a ZYPS at a premium will not be allowed to amortize such premium during the time such United States Holder holds such ZYPS. CONVERSION Other than possibly pursuant to its exercise of any repurchase right (as discussed below under "--Disposition"), a United States Holder will not recognize gain or loss upon the conversion of the ZYPS into our common stock (except with respect to cash received in lieu of a fractional share). The amount of gain or loss on the deemed sale of a fractional share will be equal to the difference between the amount of cash you receive in respect of such fractional share and the portion of your tax basis in the ZYPS that is allocable to such fractional share. The United States Holder's tax basis in the shares received upon a conversion, other than possibly pursuant to its exercise of any repurchase right, will equal the adjusted tax basis in the ZYPS at the time of conversion, increased by the amount of any gain recognized upon the conversion (including any gain recognized in respect of the deemed sale of a fractional share) and decreased by the amount of any cash received upon the conversion. The United States Holders' holding period for shares received upon conversion will include the holding period of the ZYPS that was converted. Any accrued market discount not previously included in income as of the date of the conversion of the ZYPS, will carry over to the common stock received on conversion (including fractional shares deemed received) and be treated as ordinary income upon the subsequent disposition of the common stock (including upon the deemed sale of fractional shares). You should contact your tax advisors concerning the tax consequences of ownership and disposition of shares received upon conversion. DISPOSITION A United States Holder will generally recognize gain or loss upon the sale, redemption (including a repurchase for cash or, although not free from doubt, common stock pursuant to any repurchase right) or other taxable disposition of a ZYPS in an amount equal to the difference between the United States Holder's adjusted tax basis in the ZYPS and the amount realized from such disposition. In the event that a repurchase of a ZYPS for common stock pursuant to any repurchase right results in a taxable disposition to a United States Holder, the amount realized by such holder with respect to the common stock received will equal its fair market value. The holder's adjusted tax basis in the common stock received will equal its fair market value, and the holder's holding period in the common stock will begin on the date it is received. A United States Holder's adjusted tax basis in a ZYPS will generally be equal to the amount such holder paid for the ZYPS increased by amounts includible in income as market discount (if the United States Holder elected to include market discount on a current basis). Any gain or loss recognized upon a disposition (except to the extent that the market discount market rules otherwise provide) generally will be capital gain or loss, and would be long-term capital gain or 31 loss if the ZYPS was held for more than one year at the time of the disposition. The deductibility of capital losses is subject to certain limitations. ADJUSTMENT OF CONVERSION PRICE The conversion price of the ZYPS is subject to adjustment in certain circumstances. Under Section 305 of the Code and the Treasury regulations promulgated thereunder, adjustments or the failure to make such adjustments to the conversion price of the ZYPS may result in a taxable constructive distribution to the United States Holders of ZYPS if, and to the extent that, certain adjustments (or the failure to make adjustments) in the conversion price that may occur in limited circumstances (particularly an adjustment to reflect a taxable dividend to holders of our common stock) increase the proportionate interest of a United States Holder of a ZYPS in our assets or earnings and profits. Such a constructive distribution will be treated as a dividend, resulting in ordinary income to the extent of our current and accumulated earnings and profits, with any excess treated first as a tax-free return of capital which reduces such United States Holder's tax basis in the ZYPS to the extent thereof and thereafter as gain from the sale or exchange of the ZYPS. Generally, a United States Holder's tax basis in a ZYPS will be increased to the extent of any such constructive distribution treated as a dividend. Moreover, if there is not a full adjustment to the conversion price of the ZYPS (or any other outstanding option, warrant, convertible debt or similar instrument) to reflect a stock dividend or other event increasing the proportionate interest of the holders of our outstanding common stock in our assets or earnings and profits, then such increase in the proportionate interest of the holders of our common stock generally will be treated as a constructive distribution to such holders, taxable as described above. BACKUP WITHHOLDING AND INFORMATION REPORTING We, or our designated paying agent, will, where required, report to holders of ZYPS (or conversion shares) and the Internal Revenue Service the amount of any dividends paid with respect to conversion shares or other reportable payments in each calendar year and the amount of tax, if any, withheld with respect to such payments. Under current U.S. federal income tax law, a backup withholding tax (up to 30%) is required with respect to certain interest, dividends and principal payments made to, and the proceeds of sales before maturity by, certain United States Holders if such persons fail to furnish their taxpayer identification numbers and other information. Backup withholding is not an additional tax. Certain persons, including corporations and financial institutions, are exempt from backup withholding. Holders of ZYPS should consult their tax advisors as to their qualification for an exemption from backup withholding and the procedure for obtaining such an exemption. Any amounts withheld under the backup withholding rules will be refunded or credited against the holder's U.S. federal income tax liability, provided that the required information is furnished to the Internal Revenue Service. CONSEQUENCES TO NON-UNITED STATES HOLDERS The following discussion is limited to certain anticipated U.S. federal income and estate tax consequences to a holder of a ZYPS or conversion share that is an individual, corporation, estate or trust that is not a United States Holder and who is not, by reason of being either a United States expatriate or a former long-term resident, taxable under Section 877 of the Code ( a "Non-United States Holder"). For purposes of the discussion below, liquidated damages, dividends and gain on the sale, exchange or other disposition of the ZYPS or conversion shares will be considered to be "U.S. trade or business income" if such income or gain is: o effectively connected with the conduct of a U.S. trade or business; or o in the case of a treaty resident, attributable to a U.S. permanent establishment (or, in the case of an individual, a fixed base) in the United States. DIVIDENDS Any dividends paid to you with respect to the conversion shares (and any deemed dividends resulting from certain adjustments, or failure to make adjustments, to the number of conversion shares to be issued on conversion of the ZYPS) generally will be subject to withholding tax at a 30% rate or such lower rate as may be specified by an applicable income tax treaty. However, dividends that are U.S. trade or business income are not subject to the 32 withholding tax. In order to be exempt from withholding tax under this exception, you must provide us with a properly executed IRS Form W-8ECI (or successor form) stating that dividends paid on the conversion shares are not subject to withholding tax because such dividends are U.S. trade or business income. In order to claim the benefit of an applicable treaty rate (and avoid backup withholding as discussed below), you are required to provide us with a properly executed IRS Form W-8BEN (or successor form) claiming an exemption from (or a reduced rate of) withholding under a tax treaty. Under Treasury regulations, a Non-United States Holder who is claiming the benefits of a tax treaty may be required, in certain instances, to obtain a U.S. taxpayer identification number, which may require providing certain documentary evidence issued by foreign governmental authorities to prove residence in the foreign country. Also, under these Treasury regulations, special procedures are provided for payments through qualified intermediaries. The Forms W-8ECI and W-8BEN must be periodically updated. A Non-United States Holder of conversion shares that is eligible for a reduced rate of U.S. withholding tax under an income tax treaty may obtain a refund or credit of any excess amounts withheld by filing an appropriate claim for a refund with the Internal Revenue Service. DISPOSITION OF THE ZYPS OR CONVERSION SHARES A Non-United States Holder generally will not be subject to U.S. federal income tax in respect of gain recognized on a disposition of the ZYPS or conversions shares unless: o the gain is U.S. trade or business income; o the Non-United States Holder is an individual who is present in the United States for 183 or more days in the taxable year of the disposition and meets other requirements; o the Non-United States Holder is subject to U.S. tax under provisions applicable to certain U.S. expatriates (including certain former citizens or residents of the United States); or o we are or have been a "U.S. real property holding corporation" for U.S. federal income tax purposes at any time during the shorter of the five-year period ending on the date of disposition of conversion shares and the Non-United States Holder's holding period for the conversion shares. The tax relating to stock in a "U.S. real property holding corporation" does not apply to a Non-United States Holder whose holdings, actual and constructive, at all times during the applicable period, amount to 5% or less of the common stock, provided that the common stock is regularly traded on an established securities market. Generally, a corporation is a "U.S. real property holding corporation" if the fair market value of its "U.S. real property interests" equals or exceeds 50% of the sum of the fair market value of its worldwide real property interests and its other assets used or held for use in a trade or business. We believe that we have not been, are not, and do not anticipate becoming, a "U.S. real property holding corporation" for U.S. federal income tax purposes. U.S. FEDERAL ESTATE TAX The U.S. federal estate tax will not apply to ZYPS owned by you at the time of your death, provided that (1) you do not own 10% or more of the total combined voting power of all classes of our voting stock (within the meaning of the Code and the Treasury regulations) and (2) liquidated damages on the ZYPS would not have been, if received at the time of your death, effectively connected with your conduct of a trade or business in the United States. However, conversion shares held by you at the time of your death will be included in your gross estate for U.S. federal estate tax purposes, unless an applicable estate tax treaty provides otherwise. U.S. TRADE OR BUSINESS INCOME If dividends on a conversion share or gains from the disposition of a ZYPS or conversion share are U.S. trade or business income, you (although exempt from the 30% withholding tax) will be subject to U.S. federal income tax on that interest, dividend or gain on a net income basis in the same manner as if you were a U.S. person as defined under the Code. In addition, if you are a foreign corporation, you may be subject to a branch profits tax equal to 30% (or lower 33 applicable treaty rate) of your earnings and profits for the taxable year, subject to adjustments, that are effectively connected with your conduct of a trade or business in the United States. BACKUP WITHHOLDING AND INFORMATION REPORTING In general, you will not be subject to backup withholding and information reporting with respect to payments that we make to you provided that we do not have actual knowledge that you are a United States person, as defined under the Code, and you have given us a Form W-8BEN. In addition, you will not be subject to backup withholding or information reporting with respect to the proceeds of the sale of a ZYPS or conversion share within the United States or conducted through certain U.S.-related persons, if the payor receives a Form W-8BEN and does not have actual knowledge that you are a United States person, or if you otherwise establish an exemption. Any amounts withheld under the backup withholding rules will be allowed as a refund or a credit against your U.S. federal income tax liability provided the required information is furnished to the Internal Revenue Service. THE PRECEDING DISCUSSION OF CERTAIN U.S. FEDERAL INCOME TAX CONSEQUENCES IS FOR GENERAL INFORMATION ONLY AND IS NOT TAX ADVICE. ACCORDINGLY, EACH INVESTOR SHOULD CONSULT ITS OWN TAX ADVISOR AS TO PARTICULAR TAX CONSEQUENCES TO IT OF PURCHASING, HOLDING AND DISPOSING OF THE ZYPS AND THE CONVERSION SHARES, INCLUDING THE APPLICABILITY AND EFFECT OF ANY STATE, LOCAL OR FOREIGN TAX LAWS, AND OF ANY PROPOSED CHANGES IN APPLICABLE LAWS. 34 SELLING HOLDERS The ZYPS were originally issued by CTI and sold by Lehman Brothers, in transactions exempt from the registration requirements of the Securities Act, to persons reasonably believed by Lehman Brothers to be "qualified institutional buyers" (as defined in Rule 144A under the Securities Act). The selling holders (which term includes their transferees, pledgees, donees or their successors) may from time to time offer and sell pursuant to this prospectus any or all of the ZYPS and common stock issued upon conversion of the ZYPS. The following table sets forth information with respect to the selling holders and the respective principal amounts of ZYPS and shares of common stock beneficially owned by each selling holder. Such information has been obtained from the selling holders. Except as otherwise disclosed herein, none of the selling holders has, or within the past three years has had, any position, office or other material relationship with the company or any of its predecessors or affiliates. Because the selling holders may offer all or some portion of the ZYPS or the common stock issuable upon conversion thereof pursuant to this prospectus, no estimate can be given as to the amount of the ZYPS or the common stock issuable upon conversion thereof that will be held by the selling holders upon termination of any such sales. In addition, the selling holders identified below may have sold, transferred or otherwise disposed of all or a portion of their ZYPS since the date on which they provided the information regarding their ZYPS in transactions exempt from the registration requirements of the Securities Act.
NUMBER OF SHARES PRINCIPAL AMOUNT OF NUMBER OF SHARES OF COMMON STOCK ZYPS BENEFICIALLY PERCENTAGE OF OF COMMON STOCK NUMBER OF SHARES BENEFICIALLY OWNED AND OFFERED ZYPS BENEFICIALLY OF COMMON STOCK OWNED AFTER SELLING HOLDER HEREBY OUTSTANDING OWNED(1)(2) TO BE SOLD(1) THE OFFERING(2) -------------- ------ ----------- ----------- ------------- --------------- AIG/National Union Fire Insurance........................... $785,000 * 43,673 43,673 -- Alexian Brothers Medical Center.............................. 240,000 * 13,352 13,352 -- Aloha Airlines Non-Pilots Pension Trust....................... 160,000 * 8,901 8,901 -- Aloha Pilots Retirement Trust....... 80,000 * 4,450 4,450 -- American Fidelity Assurance Company............................. 300,000 * 16,690 16,690 -- Argent Classic Convertible Arbitrage Fund L.P. ................ 2,300,000 * 127,959 127,959 -- Argent Classic Convertible Arbitrage Fund (Bermuda) Ltd.................. 4,500,000 1.07% 250,356 250,356 -- Argent LowLev Convertible Arbitrage Fund LLC............................ 300,000 * 16,690 16,690 -- Argent LowLev Convertible Arbitrage Fund Ltd............................ 1,800,000 * 100,142 100,142 -- Arkansas PERS....................... 1,755,000 * 97,638 97,638 -- Attorney's Title Insurance Fund..... 175,000 * 9,736 9,736 -- Aventis Pension Master Trust........ 250,000 * 13,908 13,908 --
35
NUMBER OF SHARES PRINCIPAL AMOUNT OF NUMBER OF SHARES OF COMMON STOCK ZYPS BENEFICIALLY PERCENTAGE OF OF COMMON STOCK NUMBER OF SHARES BENEFICIALLY OWNED AND OFFERED ZYPS BENEFICIALLY OF COMMON STOCK OWNED AFTER SELLING HOLDER HEREBY OUTSTANDING OWNED(1)(2) TO BE SOLD(1) THE OFFERING(2) -------------- ------ ----------- ----------- ------------- --------------- Bank Austria Cayman Islands LTD................................. 1,733,000 * 96,414 96,414 -- Bay County PERS..................... 215,000 * 11,961 11,961 -- Boilermaker - Blacksmith Pension Trust....................... 3,625,000 * 201,675 201,675 -- BTES - CONVERTIBLE ARB.............. 500,000 * 42,817 27,817 15,000 BTOP GROWTH VS. VALUE............... 2,000,000 * 137,769 111,269 26,500 C & H Sugar Company Inc............. 200,000 * 11,126 11,126 -- CALAMOS(R)Convertible Fund - CALAMOS(R) Investment Trust.................... 13,500,000 3.21% 751,068 751,068 -- CALAMOS(R)Convertible Growth and Income Fund - CALAMOS(R)Investment Trust.......... 14,000,000 3.33% 778,885 778,885 -- CALAMOS(R)Convertible Portfolio - CALAMOS(R)Advisors Trust............ 170,000 * 9,457 9,457 -- CALAMOS(R)Global Convertible Fund - CALAMOS(R)Investment Trust.......... 670,000 * 37,275 37,275 -- CEMEX Pension Plan.................. 130,000 * 7,232 7,232 -- City of Albany Pension Plan......... 140,000 * 7,788 7,788 -- City of Knoxville Pension System.... 300,000 * 16,690 16,690 -- Class C Trading Company Ltd......... 200,000 * 11,126 11,126 -- Context Convertible Arbitrage Fund, LP............................ 800,000 * 44,507 44,507 -- Context Convertible Arbitrage Offshore Ltd........................ 1,200,000 * 66,761 66,761 -- Delta Airlines Master Trust......... 2,475,000 * 137,695 137,695 -- Delta Pilots Disability and Survivorship Trust.................. 415,000 * 23,088 23,088 -- Dorinco Reinsurance Company......... 780,000 * 43,395 43,395 -- Drury University.................... 35,000 * 1,947 1,947 --
36
NUMBER OF SHARES PRINCIPAL AMOUNT OF NUMBER OF SHARES OF COMMON STOCK ZYPS BENEFICIALLY PERCENTAGE OF OF COMMON STOCK NUMBER OF SHARES BENEFICIALLY OWNED AND OFFERED ZYPS BENEFICIALLY OF COMMON STOCK OWNED AFTER SELLING HOLDER HEREBY OUTSTANDING OWNED(1)(2) TO BE SOLD(1) THE OFFERING(2) -------------- ------ ----------- ----------- ------------- --------------- Duke Endowment...................... 435,000 * 24,201 24,201 -- Froley Revy Investment Convertible Security Fund....................... 255,000 * 14,186 14,186 -- Genesee County Employees' Retirement System.............................. 340,000 * 18,915 18,915 -- Greek Catholic Union of the USA..... 55,000 * 3,059 3,059 -- Guggenheim Portfolio Co. XV, LLC.... 867,000 * 48,235 48,235 -- Hawaiian Airlines Employees Pension Plan-IAM............................ 60,000 * 3,338 3,338 -- Hawaiian Airlines Pension Plan for Salaried Employees.................. 10,000 * 556 556 -- Hawaiian Airlines Pilots Retirement Plan................................ 145,000 * 8,067 8,067 -- Hillbloom Foundation................ 65,000 * 3,616 3,616 -- Jackson County Employees' Retirement System.............................. 140,000 * 7,788 7,788 -- KBC Convertible Arbitrage Fund...... 4,627,000 1.10% 257,421 257,421 -- KBC Convertible MAC28 Ltd........... 642,000 * 35,717 35,717 -- KBC Multi-Strategy Fund............. 1,920,000 * 106,818 106,818 -- Kettering Medical Center Funded Depreciation Account................ 120,000 * 6,676 6,676 -- Knoxville Utilities Board Retirement System.............................. 135,000 * 7,510 7,510 -- Louisiana CCRF...................... 315,000 * 17,524 17,524 -- Louisiana Workers' Compensation Corporation......................... 350,000 * 19,472 19,472 -- Lyxor Master Fund................... 500,000 * 27,817 27,817 -- Macomb County Employees' Retirement System.............................. 300,000 * 16,690 16,690 -- MAN Convertible Bond Master Fund, Ltd.................... 8,693,000 2.07% 483,632 483,632 -- Melody IAM Ltd...................... 311,000 * 17,302 17,302 -- NORCAL Mutual Insurance Company..... 260,000 * 14,465 14,469 --
37
NUMBER OF SHARES PRINCIPAL AMOUNT OF NUMBER OF SHARES OF COMMON STOCK ZYPS BENEFICIALLY PERCENTAGE OF OF COMMON STOCK NUMBER OF SHARES BENEFICIALLY OWNED AND OFFERED ZYPS BENEFICIALLY OF COMMON STOCK OWNED AFTER SELLING HOLDER HEREBY OUTSTANDING OWNED(1)(2) TO BE SOLD(1) THE OFFERING(2) -------------- ------ ----------- ----------- ------------- --------------- Nuveen Preferred and Convertible Income Fund......................... 7,200,000 1.71% 400,569 400,565 -- Onyx Fund Holdings, LDC............. 1,000,000 * 55,634 55,634 -- Port Authority of Allegheny County Retirement and Disability Allowance Plan for the Employees Represented by Local 85 of the Amalgamated Transit Union....................... 660,000 * 36,718 36,718 -- Prisma Foundation................... 85,000 * 4,728 4,728 -- Prudential Insurance Co. of America............................. 150,000 * 8,345 8,345 -- Ramius LP........................... 130,000 * 7,232 7,232 -- Ramius Master Fund, LTD............. 4,225,000 1.01% 235,056 235,056 -- Ramius Partners II, LP.............. 217,000 * 12,072 12,072 -- RBC Alternative Assets, L.P. ....... 200,000 * 16,145(3) 11,126 5,019(3) RCG Baldwin, LP..................... 520,000 * 28,930 28,930 -- RCG Latitude Master Fund LTD........ 4,225,000 1.01% 235,056 235,056 -- RCG Multi-Strategy Master Fund, LTD........................... 433,000 * 24,089 24,089 -- Sage Capital........................ 3,900,000 * 216,975 216,975 -- SCI Endowment Care Common Trust Fund - First Union.................. 35,000 * 1,947 1,947 -- SCI Endowment Care Common Trust Fund - National Fiduciary Services.. 200,000 * 11,126 11,126 -- SCI Endowment Care Common Trust Fund - Suntrust..................... 80,000 * 4,450 4,450 -- Southern Farm Bureau Life Insurance Company............................. 2,030,000 * 112,938 112,938 -- SPT................................. 1,750,000 * 97,360 97,360 -- St. Thomas Trading, LTD............. 19,692,000 4.69% 1,095,558 1,095,558 -- State of Oregon/Equity.............. 7,875,000 1.88% 438,123 438,123 -- State of Oregon/SAIF Corporation.... 5,025,000 1.20% 279,564 279,564 --
38
NUMBER OF SHARES PRINCIPAL AMOUNT OF NUMBER OF SHARES OF COMMON STOCK ZYPS BENEFICIALLY PERCENTAGE OF OF COMMON STOCK NUMBER OF SHARES BENEFICIALLY OWNED AND OFFERED ZYPS BENEFICIALLY OF COMMON STOCK OWNED AFTER SELLING HOLDER HEREBY OUTSTANDING OWNED(1)(2) TO BE SOLD(1) THE OFFERING(2) -------------- ------ ----------- ----------- ------------- --------------- The California Wellness Foundation.......................... 400,000 * 22,253 22,253 -- The Cockrell Foundation............. 75,000 * 4,172 4,172 -- The Dow Chemical Company Employees' Retirement Plan..................... 2,750,000 * 152,995 152,995 -- The Fondren Foundation.............. 150,000 * 8,345 8,345 -- Union Carbide Retirement Account.... 1,200,000 * 66,761 66,761 -- United Food and Commercial Workers Local 1262 and Employers Pension Fund................................ 620,000 * 34,493 34,493 -- Univar USA Inc. Retirement Plan..... 310,000 * 17,246 17,246 -- US Bank FBO Benedictine Health Systems...................... .260,000 * 14,465 14,465 -- XAVEX - Convertible Arbitrage 2 Fund.................... 100,000 * 5,563 5,563 -- XAVEX - Convertible Arbitrage #5........................ 650,000 * 36,162 36,162 -- XAVEX - Convertible Arbitrage 10 Fund................... 200,000 * 11,126 11,126 -- Zurich Institutional Benchmark Master Fund Ltd. ................... 100,000 * 5,563 5,563 -- Any other holders of ZYPS or future transferees, pledges, donees of or from any such holder (4) (5)........ 277,275,000 66.02% 15,426,158 15,426,158 -- ------------------------------------ ------------ ------ ---------- ---------- ------- Total $420,000,000 100% 23,413,093 23,366,574 46,519
- -------------------------------- * Less than 1%. (1) Assumes conversion of the full amount of ZYPS held by such holder at the initial conversion rate of 55.6347 shares per $1,000 principal amount of ZYPS; such conversion rate is subject to adjustment as described under "Description of the ZYPS--Conversion Rights." Accordingly, the number of shares of common stock issuable upon conversion of the ZYPS may increase or decrease from time to time. Under the terms of the indenture, cash will be paid in lieu of issuing fractional shares, if any, upon conversion of the ZYPS. Furthermore, the rights of the holders of ZYPS to convert their ZYPS into shares of common stock are subject to certain conditions described under "Description of ZYPS - Conversion Rights." 39 (2) The number of shares of common stock beneficially owned by each holder named herein is less than 1% of CTI's outstanding common stock as of April 30, 2003. (3) Includes 519 shares of common stock and options to purchase 4,500 shares of common stock held by RBC Alternative Assets, L.P. (4) Information concerning other selling holders will be set forth in supplements to this prospectus from time to time, if required. (5) Assumes that any other holders of ZYPS, of any future transferees, pledgees, donees or successors of or from any such other holders of ZYPS, do not beneficially own any common stock other than the shares of common stock issuable upon conversion of the ZYPS at the initial conversion rate. The selling holders may gift or donate all or any portion of the ZYPS or the shares of common stock issuable upon conversion thereof set forth opposite their respective names. In addition, certain selling holders, may from time to time distribute to their limited partners, members, shareholders or other security holders, all or any portion of the ZYPS or the shares of common stock issuable upon conversion thereof set forth opposite their respective names. In the event of any such gift, donation, disposition or distribution, the recipients of such ZYPS or shares of common stock issuable upon conversion thereof shall, without having to be specifically named in this prospectus or any supplement hereto, be deemed to be selling holders under this prospectus and shall be entitled to sell, gift, donate, distribute or otherwise dispose of such ZYPS or shares of common stock issuable upon conversion thereof pursuant to the registration statement of which this prospectus forms a part. We may from time to time include additional selling holders in supplements or amendments to this prospectus. 40 PLAN OF DISTRIBUTION The ZYPS and the common stock offered hereby may be sold from time to time to purchasers directly by the selling holders, pursuant to this prospectus and an accompanying prospectus supplement, if required, or in transactions exempt from the registration requirements of the Securities Act. Alternatively, the selling holders may from time to time offer the ZYPS and common stock to or through underwriters, dealers or agents, who may receive compensation in the form of underwriting discounts, concessions or commissions from the selling holders or the purchasers of ZYPS and common stock for whom they may act as agents. The selling holders and any underwriters, dealers or agents which participant in the distribution of ZYPS and common stock may be deemed to be "underwriters" within the meaning of the Securities Act and any profit on the sale of ZYPS and common stock by them and any discounts, commissions, concessions or other compensation received by any such underwriter, dealer or agent may be deemed to be underwriting discounts and commissions under the Securities Act. The ZYPS and the common stock issuable upon conversion thereof may be sold from time to time in one or more transactions (including short sales) 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. The sale of the ZYPS an the common stock issuable upon conversion thereof may be effected in transactions (which may involve crosses of block transactions) o on any national securities exchange or quotation service on which the ZYPS or the common stock may be listed or quoted at the time of sale; o in the over-the-counter market; o in transactions otherwise than on such exchanges or in the over-the-counter market; or o through the writing of options. At the time a particular offering of the ZYPS or the common stock is made, a prospectus supplement, if required, will be distributed which will set forth the aggregate amount and type of ZYPS and common stock being offered and the terms of the offering, including the name or names of any underwriters, dealers or agents, any discounts, commissions and other terms constituting compensation from the selling holders and any discounts, commissions or concessions allowed or reallowed or paid to dealers. To comply with the securities laws of certain jurisdictions, if applicable, the ZYPS and the common stock will be offered or sold in such jurisdictions only through registered or licensed brokers or dealers. In addition, in certain jurisdictions the ZYPS and the common stock may not be offered or sold unless they have been registered or qualified for sale in such jurisdictions or an exemption from registration or qualification is available and is complied with. Under applicable rules and regulations under the Exchange Act, any person engaged in a distribution of the ZYPS or the common stock may not simultaneously engage in market-making activities with respect to such securities for a period of two or nine business days prior to the commencement of such distribution. In addition to and without limiting the foregoing, each selling holder and any other person participating in a distribution will be subject to applicable provisions of the Exchange Act and the rules and regulations thereunder, including without limitation Rules 102, 103 and 104, which provisions may limit the timing of purchases and sales of any of the securities by the selling holders or any such other person. All of the foregoing may affect the marketability of the ZYPS and the common stock and brokers' and dealers' ability to engage in market-making activities with respect to these securities. Pursuant to the registration rights agreement, all expenses of the registration of the ZYPS and common stock will be paid by us, including, without limitation, Commission filing fees and expenses of compliance with state securities or "blue sky" laws; provided, however, that the selling holders will pay all underwriting discounts and selling commissions, if any. The selling holders will be indemnified by us against certain civil liabilities, including certain liabilities under the Securities Act, or will be entitled to contribution in connection therewith. We will be indemnified by the selling holders against certain civil liabilities, including certain liabilities under the Securities Act, or will be entitled to contribution in connection therewith. 41 LEGAL MATTERS Certain legal matters with respect to the validity of the securities offered hereby will be passed upon for us by Paul L. Robinson, attorney-at-law, c/o Comverse Technology, Inc., 170 Crossways Park Drive, Woodbury, New York 11797. Mr. Robinson is the General Counsel and Assistant Secretary of CTI. EXPERTS The consolidated financial statements incorporated in this prospectus by reference from the Company's Annual Report on Form 10-K for the year ended January 31, 2003 have been audited by Deloitte & Touche LLP, independent auditors, as stated in their report, which is incorporated herein by reference, and has been so incorporated in reliance upon the report of such firm given upon their authority as experts in accounting and auditing. 42 --------------------------------------------------- --------------------------------------------------- $420,000,000 COMVERSE TECHNOLOGY, INC. Zero Yield Puttable Securities (ZYPSSM) due May 15, 2023 Initially Convertible into 23,366,574 shares of Common Stock ------------- PROSPECTUS , 2003 ------------- --------------------------------------------------- --------------------------------------------------- PART II INFORMATION NOT REQUIRED IN PROSPECTUS ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION. The estimated amounts of the expenses of and related to the offering are as follows: Registration Fee -- Securities and Exchange Commission............$33,978 Accounting fees and expenses...................................... 5,000 Legal fees and expenses........................................... 20,000 Miscellaneous..................................................... 2,000 ------- Total $60,978 ======= ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS. The Business Corporation Law of the State of New York ("BCL") provides that if a derivative action is brought against a director or officer, the Registrant may indemnify him or her against amounts paid in settlement and reasonable expenses, including attorneys' fees incurred by him or her in connection with the defense or settlement of such action, if such director or officer acted in good faith for a purpose which he or she reasonably believed to be in the best interests of the Registrant, except that no indemnification shall be made without court approval in respect of a threatened action, or a pending action settled or otherwise disposed of, or in respect of any matter as to which such director or officer has been found liable to the Registrant. In a nonderivative action or threatened action, the BCL provides that the Registrant may indemnify a director or officer against judgments, fines, amounts paid in settlement and reasonable expenses, including attorneys' fees incurred by him or her in defending such action if such director or officer acted in good faith for a purpose which he or she reasonably believed to be in the best interests of the Registrant. Under the BCL, a director or officer who is successful, either in a derivative or nonderivative action, is entitled to indemnification as outlined above. Under any other circumstances, such director or officer may be indemnified only if certain conditions specified in the BCL are met. The indemnification provisions of the BCL are not exclusive of any other rights to which a director or officer seeking indemnification may be entitled pursuant to the provisions of the certificate of incorporation or the by-laws of a corporation or, when authorized by such certificate of incorporation or by-laws, pursuant to a shareholders' resolution, a directors' resolution or an agreement providing for such indemnification. The above is a general summary of certain indemnity provisions of the BCL and is subject, in all cases, to the specific and detailed provisions of Sections 721-725 of the BCL. The Registrant has included in its Certificate of Incorporation, a provision that no director of the Registrant shall be personally liable to the Registrant or its shareholders for damages for any breach of duty as a director, provided that such provision shall not be construed to eliminate or limit the liability of any director if a judgment or other final adjudication adverse to him establishes that his acts or omissions were in bad faith or involved intentional misconduct or a knowing violation of law, that he personally gained in fact a financial profit or other advantage to which he was not legally entitled or that his acts violated Section 719 of the BCL. The By-Laws of the Registrant further provide that the Registrant shall indemnify its directors and officers, and shall advance their expenses in the defense of any action for which indemnification is sought, to the full extent permitted by the BCL and when authorized by resolution of the shareholders or directors of the Registrant or any agreement providing for such indemnification or advancement of expenses, provided that no indemnification may be made to or on behalf of any director or officer if a judgment or other final adjudication adverse to him established that his acts were committed in bad faith or were the result of active and deliberate dishonesty material to the cause of action so adjudicated, or that he personally gained in fact a financial II-1 profit or other advantage to which he was not legally entitled. The Registrant has entered into indemnity agreements with each of its directors and officers pursuant to the foregoing provisions of its By-Laws. The Registrant maintains insurance policies insuring each of its directors and officers against certain civil liabilities, including liabilities under the Securities Act. Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers or persons controlling the registrant pursuant to the foregoing provisions, the registrant has been informed that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable. ITEM 16. EXHIBITS. Exhibit No. Description of Exhibit ----------- ---------------------- 3.1 Certificate of Incorporation of the Registrant (incorporated by reference to the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1987). 3.2 Certificate of Amendment of Certificate of Incorporation of the Registrant effective February 26, 1993 (incorporated by reference to the Registrant's Annual Report on Form 10-K for the year ended December 31, 1992). 3.3 Certificate of Amendment of Certificate of Incorporation of the Registrant effective January 12, 1995 (incorporated by reference to the Registrant's Annual Report on Form 10-K for the year ended December 31, 1994). 3.4 Certificate of Amendment of Certificate of Incorporation of the Registrant dated October 18, 1999 (incorporated by reference to the Registrant's Annual Report on Form 10-K for the year ended January 31, 2000). 3.5 Certificate of Amendment of Certificate of Incorporation dated September 19, 2000 (incorporated by reference to the Registrant's Annual Report on Form 10-K for the year ended January 31, 2001) 3.6 By-laws of the Registrant, as amended (incorporated by reference to the Registrant's Annual Report on Form 10-K for the year ended January 31, 2003). 4.1 Specimen stock certificate (incorporated by reference to the Registrant's Annual Report on Form 10-K for the year ended December 31, 1992). 4.2* Indenture, dated as of May 7, 2003, between the Registrant and JPMorgan Chase Bank, as trustee. 4.3* Registration Rights Agreement, dated as of May 7, 2003, between the Registrant and Lehman Brothers Inc., as initial purchaser. 4.4* Form of ZYPS. 5.1* Opinion of Paul L. Robinson. 12.1* Statement regarding computation of ratio of earnings to fixed charges. 23.1* Consent of Paul L. Robinson (included as part of Exhibit 5.1 hereto). 23.2* Consent of Deloitte & Touche LLP. 24* Power of Attorney (included on signature pages). II-2 25.1* Statement of Eligibility and Qualification of JPMorgan Chase Bank on Form T-1. - --------------- * Filed herewith. ITEM 17. UNDERTAKINGS. (1) The undersigned registrant hereby undertakes: (a) to file, during any period in which offers or sales are being made hereunder, a post-effective amendment to this registration statement: (i) 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. (b) that, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered herein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (c) 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. (2) The undersigned registrant hereby undertakes that, for purposes of determining any liability under the Securities Act of 1933, each filing of the registrant's annual report pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing of an employee benefit plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of 1934) that is incorporated by reference in this registration statement shall be deemed to be a new registration statement relating to the securities offered herein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (3) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act of 1933 and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question of whether such indemnification by it is against public policy as expressed in the 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 registrant 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 registration statement or amendment hereto to be signed on its behalf by the undersigned, thereunto duly authorized in the City of New York, State of New York, on June 23, 2003. COMVERSE TECHNOLOGY, INC. By: /s/ Kobi Alexander ------------------------------------------ Kobi Alexander Chairman of the Board and Chief Executive Officer POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned constitutes and appoints each of KOBI ALEXANDER and DAVID KREINBERG or any of them, each acting alone, his true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution, for such person and in his or her name, place and stead, in any and all capacities, to sign this registration statement (including all pre-effective and post-effective amendments), and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Commission, granting unto said attorneys-in-fact and agents, each acting alone, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming that any such attorney-in-fact and agent, or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated. SIGNATURE CAPACITY DATE - --------- -------- ---- /s/ Kobi Alexander Chairman of the Board and Chief Executive Officer June 23, 2003 - -------------------------- and Director (Principal Executive Officer) Kobi Alexander /s/ David Kreinberg Executive Vice President and Chief Financial Officer - -------------------------- (Principal Financial and Accounting Officer) June 23, 2003 David Kreinberg /s/ Itsik Danziger Director June 23, 2003 - -------------------------- Itsik Danziger /s/ John H. Friedman Director June 23, 2003 - ---------------------------- John H. Friedman /s/ Francis E. Girard Director June 23, 2003 - -------------------------- Francis E. Girard
II-4 SIGNATURE CAPACITY DATE - --------- -------- ---- /s/ Ron Hiram Director June 23, 2003 - -------------------------- Ron Hiram /s/ Sam Oolie Director June 23, 2003 - -------------------------- Sam Oolie /s/ William F. Sorin Secretary and Director June 23, 2003 - -------------------------- William F. Sorin
II-5 EXHIBIT INDEX Exhibit No. Description of Exhibit ----------- ---------------------- 3.1 Certificate of Incorporation of the Registrant (incorporated by reference to the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1987). 3.2 Certificate of Amendment of Certificate of Incorporation of the Registrant effective February 26, 1993 (incorporated by reference to the Registrant's Annual Report on Form 10-K for the year ended December 31, 1992). 3.3 Certificate of Amendment of Certificate of Incorporation of the Registrant effective January 12, 1995 (incorporated by reference to the Registrant's Annual Report on Form 10-K for the year ended December 31, 1994). 3.4 Certificate of Amendment of Certificate of Incorporation of the Registrant dated October 18, 1999 (incorporated by reference to the Registrant's Annual Report on Form 10-K for the year ended January 31, 2000). 3.5 Certificate of Amendment of Certificate of Incorporation dated September 19, 2000 (incorporated by reference to the Registrant's Annual Report on Form 10-K for the year ended January 31, 2001) 3.6 By-laws of the Registrant, as amended (incorporated by reference to the Registrant's Annual Report on Form 10-K for the year ended January 31, 2003). 4.1 Specimen stock certificate (incorporated by reference to the Registrant's Annual Report on Form 10-K for the year ended December 31, 1992). 4.2* Indenture, dated as of May 7, 2003, between the Registrant and JPMorgan Chase Bank, as trustee. 4.3* Registration Rights Agreement, dated as of May 7, 2003, between the Registrant and Lehman Brothers Inc., as initial purchaser. 4.4* Form of ZYPS. 5.1* Opinion of Paul L. Robinson. 12.1* Statement regarding computation of ratio of earnings to fixed charges. 23.1* Consent of Paul L. Robinson (included as part of Exhibit 5.1 hereto). 23.2* Consent of Deloitte & Touche LLP. 24* Power of Attorney (included on signature pages). 25.1* Statement of Eligibility and Qualification of JPMorgan Chase Bank on Form T-1. - --------------- * Filed herewith. EX-4 3 mv6-18_ex42.txt 4.2 EXHIBIT 4.2 EXECUTION COPY COMVERSE TECHNOLOGY, INC., ISSUER TO JPMORGAN CHASE BANK, TRUSTEE ----------- INDENTURE DATED AS OF MAY 7, 2003 ----------- U.S. $350,000,000 ZERO YIELD PUTTABLE SECURITIES (ZYPSsm) DUE MAY 15, 2023 "Zero Yield Puttable Securities" and "ZYPS" are service marks of Lehman Brothers Inc. TABLE OF CONTENTS
Page ARTICLE 1 DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION.......................................................1 SECTION 1.1 Definitions.....................................................................................1 SECTION 1.2 Form of Documents Delivered to Trustee.........................................................10 SECTION 1.3 Acts of Holders of Securities..................................................................11 SECTION 1.4 Notices, Etc., to Trustee and Company..........................................................12 SECTION 1.5 Notice to Holders of Securities; Waiver........................................................13 SECTION 1.6 Effect of Headings and Table of Contents.......................................................13 SECTION 1.7 Successors and Assigns.........................................................................13 SECTION 1.8 Separability Clause............................................................................13 SECTION 1.9 Benefits of Indenture..........................................................................14 SECTION 1.10 GOVERNING LAW.................................................................................14 SECTION 1.11 Counterparts..................................................................................14 SECTION 1.12 Legal Holidays................................................................................14 SECTION 1.13 Recourse Against Others.......................................................................14 ARTICLE 2 THE SECURITIES...............................................................................................15 SECTION 2.1 Title and Terms................................................................................15 SECTION 2.2 Form of Securities.............................................................................15 SECTION 2.3 Denominations..................................................................................16 SECTION 2.4 Execution, Authentication, Delivery and Dating.................................................16 SECTION 2.5 Registration, Registration of Transfer and Exchange; Restrictions on Transfer..................17 SECTION 2.6 Mutilated, Destroyed, Lost or Stolen Securities................................................27 SECTION 2.7 Payment of Liquidated Damages..................................................................28 i SECTION 2.8 Persons Deemed Owners..........................................................................30 SECTION 2.9 Cancellation...................................................................................30 SECTION 2.10 Computation of Liquidated Damages.............................................................30 SECTION 2.11 Temporary Securities..........................................................................30 ARTICLE 3 SATISFACTION AND DISCHARGE...................................................................................31 SECTION 3.1 Satisfaction and Discharge of Indenture........................................................31 SECTION 3.2 Application of Trust Money.....................................................................32 ARTICLE 4 REMEDIES.....................................................................................................32 SECTION 4.1 Events of Default..............................................................................32 SECTION 4.2 Acceleration of Maturity; Rescission and Annulment.............................................34 SECTION 4.3 Collection of Indebtedness and Suits for Enforcement by the Trustee............................35 SECTION 4.4 Trustee May File Proofs of Claim...............................................................35 SECTION 4.5 Trustee May Enforce Claims Without Possession of Securities....................................36 SECTION 4.6 Application of Money Collected.................................................................36 SECTION 4.7 Limitation on Suit.............................................................................37 SECTION 4.8 Unconditional Right of Holders to Receive Principal, Premium and Liquidated Damages, if any, and To Convert.........................................................................37 SECTION 4.9 Restoration of Rights and Remedies.............................................................37 SECTION 4.10 Rights and Remedies Cumulative................................................................38 SECTION 4.11 Delay or Omission Not Waiver..................................................................38 SECTION 4.12 Control by Holders of Securities..............................................................38 SECTION 4.13 Waiver of Past Default........................................................................38 SECTION 4.14 Undertaking for Costs.........................................................................39 SECTION 4.15 Waiver of Stay or Extension Laws..............................................................39 ARTICLE 5 THE TRUSTEE..................................................................................................39 ii SECTION 5.1 Certain Duties and Responsibilities............................................................39 SECTION 5.2 Notice of Defaults.............................................................................40 SECTION 5.3 Certain Rights of Trustee......................................................................41 SECTION 5.4 Not Responsible for Recitals or Issuance of Securities.........................................42 SECTION 5.5 May Hold Securities, Act as Trustee Under Other Indentures.....................................42 SECTION 5.6 Money Held in Trust............................................................................42 SECTION 5.7 Compensation and Indemnification of Trustee and Its Prior Claims...............................43 SECTION 5.8 Corporate Trustee Required; Eligibility; Conflicting Interests.................................43 SECTION 5.9 Resignation and Removal; Appointment of Successor..............................................44 SECTION 5.10 Acceptance of Appointment by Successor........................................................45 SECTION 5.11 Merger, Conversion, Consolidation or Succession to Business...................................45 SECTION 5.12 Authenticating Agent..........................................................................46 ARTICLE 6 CONSOLIDATION, MERGER CONVEYANCE, TRANSFER OR LEASE..........................................................49 SECTION 6.1 Company May Consolidate, Etc., Only on Certain Terms...........................................48 SECTION 6.2 Successor Corporation Substituted..............................................................48 ARTICLE 7 SUPPLEMENTAL INDENTURES......................................................................................49 SECTION 7.1 Supplemental Indentures Without Consent of Holders of Securities...............................49 SECTION 7.2 Supplemental Indentures With Consent of Holders of Securities..................................49 SECTION 7.3 Execution of Supplemental Indentures...........................................................50 SECTION 7.4 Effect of Supplemental Indentures..............................................................51 SECTION 7.5 Reference in Securities to Supplemental Indentures.............................................51 SECTION 7.6 Notice of Supplemental Indentures..............................................................51 ARTICLE 8 MEETING OF HOLDERS OF SECURITIES.............................................................................51 SECTION 8.1 Purposes for Which Meetings May Be Called......................................................51 iii SECTION 8.2 Call Notice and Place of Meetings..............................................................51 SECTION 8.3 Persons Entitled to Vote at Meetings...........................................................52 SECTION 8.4 Quorum; Action.................................................................................52 SECTION 8.5 Determination of Voting Rights; Conduct and Adjournment of Meetings............................53 SECTION 8.6 Counting Votes and Recording Action of Meetings................................................53 ARTICLE 9 COVENANTS....................................................................................................54 SECTION 9.1 Payment of Principal, Premium and Liquidated Damages, if any...................................54 SECTION 9.2 Maintenance of Offices or Agencies.............................................................54 SECTION 9.3 Money for Security Payments To Be Held in Trust................................................54 SECTION 9.4 Existence......................................................................................56 SECTION 9.5 Maintenance of Properties......................................................................56 SECTION 9.6 Payment of Taxes and Other Claims..............................................................56 SECTION 9.7 Statement by Officers as to Default............................................................56 SECTION 9.8 Waiver of Certain Covenants....................................................................57 SECTION 9.9 Delivery of Certain Information................................................................57 SECTION 9.10 Resale of Certain Securities..................................................................57 SECTION 9.11 Lists of Holders; Reports by the Trustee and the Company......................................57 ARTICLE 10 REDEMPTION OF SECURITIES....................................................................................58 SECTION 10.1 Right of Redemption...........................................................................58 SECTION 10.2 Applicability of Article......................................................................59 SECTION 10.3 Election to Redeem; Notice to Trustee.........................................................59 SECTION 10.4 Selection by Trustee of Securities to Be Redeemed.............................................59 SECTION 10.5 Notice of Redemption..........................................................................59 SECTION 10.6 Deposit of Redemption Price...................................................................60 iv SECTION 10.7 Securities Payable on Redemption Date.........................................................61 SECTION 10.8 Securities Redeemed in Part...................................................................61 ARTICLE 11 REPURCHASE UPON A DESIGNATED EVENT..........................................................................62 SECTION 11.1 Repurchase Right..............................................................................62 SECTION 11.2 Conditions to the Company's Election to Pay the Designated Event Repurchase Price in Common Stock..................................................................................63 SECTION 11.3 Notices; Method of Exercising Repurchase Right, Etc...........................................64 ARTICLE 12 CONVERSION OF SECURITIES....................................................................................67 SECTION 12.1 Conversion Privilege and Conversion Price.....................................................67 SECTION 12.2 Exercise of Conversion Privilege..............................................................69 SECTION 12.3 Fractions of Shares...........................................................................70 SECTION 12.4 Adjustment of Conversion Price................................................................70 SECTION 12.5 Notice of Adjustments of Conversion Price.....................................................78 SECTION 12.6 Notice of Certain Corporate Action............................................................78 SECTION 12.7 Company to Reserve Common Stock...............................................................79 SECTION 12.8 Taxes on Conversions..........................................................................79 SECTION 12.9 Covenant as to Common Stock...................................................................79 SECTION 12.10 Cancellation of Converted Securities.........................................................79 SECTION 12.11 Effect of Reclassification, Consolidation, Merger or Sale....................................80 SECTION 12.12 Responsibility of Trustee for Conversion Provisions..........................................81
v EXHIBIT A - FORM OF SECURITY EXHIBIT B - FORM OF CERTIFICATE FOR EXCHANGE OR REGISTRATION OF TRANSFER TO REGULATION S GLOBAL SECURITY EXHIBIT C - FORM OF CERTIFICATE FOR EXCHANGE OR REGISTRATION OF TRANSFER TO GLOBAL SECURITY vi INDENTURE, dated as of May 7, 2003, between COMVERSE TECHNOLOGY, INC., a corporation duly organized and existing under the laws of the State of New York, having its principal office at 170 Crossways Park Drive, Woodbury, New York 11797 (herein called the "Company"), and JPMORGAN CHASE BANK, a New York banking corporation, as Trustee (herein called the "Trustee"), having its principal Corporate Trust offices at 4 New York Plaza, 15th Floor, New York, New York 10004. RECITALS OF THE COMPANY The Company has duly authorized the creation of an issue of its Zero Yield Puttable Securities due May 15, 2023 (herein called the "Securities") of substantially the tenor and amount hereinafter set forth, and to provide therefor the Company has duly authorized the execution and delivery of this Indenture. All things necessary to make the Securities, when the Securities are executed by the Company and authenticated and delivered hereunder and duly issued by the Company, the valid obligations of the Company, and to make this Indenture a valid agreement of the Company, in accordance with their and its terms, have been done. NOW, THEREFORE, THIS INDENTURE WITNESSETH: For and in consideration of the premises and the purchase of the Securities by the Holders thereof, it is mutually covenanted and agreed, for the equal and proportionate benefit of all Holders of the Securities, as follows: ARTICLE 1 DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION SECTION 1.1 Definitions. For all purposes of this Indenture, except as otherwise expressly provided or unless the context otherwise requires: (1) the terms defined in this Article have the meanings assigned to them in this Article and include the plural as well as the singular; (2) all accounting terms not otherwise defined herein have the meanings assigned to them in accordance with U.S. generally accepted accounting principles prevailing at the time of any relevant computation hereunder; and (3) the words "herein," "hereof" and "hereunder" and other words of similar import refer to this Indenture as a whole and not to any particular Article, Section or other subdivision. "Act", when used with respect to any Holder of a Security, has the meaning specified in Section 1.3(a). "Affiliate" of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For the purposes of this definition, "control", when used with respect to any specified Person, means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms "controlling" and "controlled" have meanings correlative to the foregoing. "Agent Members" has the meaning specified in Section 2.5(d)(5). "Applicable Procedures" has the meaning specified in Section 2.5(b)(2). "Authenticating Agent" means any Person named as Authenticating Agent pursuant to Section 5.12. "Board of Directors" means either the board of directors of the Company or any committee of that board empowered to act for it with respect to this Indenture. "Board Resolution" means a resolution duly adopted by the Board of Directors, a copy of which, certified by the Secretary or an Assistant Secretary of the Company to be in full force and effect on the date of such certification, shall have been delivered to the Trustee. "Business Day", when used with respect to any Place of Payment or Place of Conversion, means each Monday, Tuesday, Wednesday, Thursday and Friday which is not a day on which banking institutions in that Place of Payment or Place of Conversion, as the case may be, are authorized or obligated by law to close. "Calculation Agent" means any Person authorized by the Company to obtain market bid quotations on the Securities for purposes of calculating the Trading Price of the Securities. "Capitalized Lease Obligation" means, as applied to any Person, any lease of any property (whether real, personal or mixed) by that Person as lessee which, in conformity with U.S. generally accepted accounting principles prevailing at the time of any relevant determination hereunder, is required to be accounted for as a capital lease on the balance sheet of that Person. "Change in Control" means an event or series of events as a result of which (i) any "person" or "group" (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act) is or becomes the ultimate "beneficial owner" (as defined in Rule 13d-5 under the Exchange Act) of shares representing more than 50% of the combined voting power of the then outstanding securities entitled to vote generally in elections of directors of the Company on a fully diluted basis ("Voting Stock"); (ii) the Company consolidates with or merges into any other Person or conveys, transfers or leases all or substantially all of its assets to any Person, or any other Person merges into the Company, and in the case of any such transaction, the outstanding Common Stock of the Company is changed or exchanged into or for other assets or securities as a result, unless the stockholders of the Company immediately before such transaction own, directly or indirectly, immediately following such transaction, at least a majority of the combined voting power of the outstanding voting securities of the Person resulting from such transaction in substantially the same proportion as their ownership of the Voting Stock immediately before such transaction; (iii) at any 2 time individuals who at the beginning of any period of two consecutive calendar years constituted all of the members of the Board of Directors (together with any directors who were members of the Board of Directors on May 2, 2003 and any directors elected to the Board of Directors after May 2, 2003 whose nomination to the Board of Directors was approved by a vote of at least a majority of the directors then still in office who were members of the Board of Directors at the beginning of such two year period or whose election was so approved) cease for any reason to constitute a majority of the members of the Board of Directors; or (iv) at any time Continuing Directors do not constitute a majority of the Board of Directors of the Company (or, if applicable, a successor Person of the Company); provided, however, that a Change of Control shall not be deemed to have occurred if either (x) the Closing Price per share of the Common Stock for any five Trading Days within the period of ten consecutive Trading Days ending immediately before the Change of Control shall equal or exceed 105% of the conversion price of the Securities in effect on each such Trading Day, or (y) at least 90% of the consideration (excluding cash payments for dissenting and fractional shares) in the transaction or transactions constituting the Change of Control consists of shares of common stock or securities convertible into common stock that are, or immediately upon issuance will be, listed on a national securities exchange or the Nasdaq National Market and after the transaction or transactions such Securities remain or become convertible solely into such common stock. "Clearstream" means Clearstream Banking S.A. and any successor thereto. "Closing Date" means May 7, 2003 or such later date on which the Securities may be delivered pursuant to the Purchase Agreement. "Closing Price" with respect to any securities on any day shall mean the closing sale price regular way on such day or, in case no such sale takes place on such day, the average of the reported closing bid and asked prices, regular way, in each case on the Nasdaq National Market, or, if such security is not listed or admitted to trading on the Nasdaq National Market, on the principal national security exchange or quotation system on which such security is quoted or listed or admitted to trading, or, if not quoted or listed or admitted to trading on any national securities exchange or quotation system, the average of the closing bid and asked prices of such security on the over-the-counter market on the day in question as reported by the National Quotation Bureau Incorporated, or a similar generally accepted reporting service, or if not so available, in such manner as furnished by any New York Stock Exchange member firm selected from time to time by the Board of Directors for that purpose, or a price determined in good faith by the Board of Directors, whose determination shall be conclusive and described in a Board Resolution. "Common Stock" includes any stock of any class of the Company which has no preference in respect of dividends or of amounts payable in the event of any voluntary or involuntary liquidation, dissolution or winding up of the Company and which is not subject to redemption by the Company. However, subject to the provisions of Section 12.11, shares issuable on conversion of Securities shall include only shares of the class designated as Common Stock, par value $0.10 per share, of the Company at the date of this Indenture or shares of any class or classes resulting from any reclassification or reclassifications thereof and which have no preference in respect of dividends or of amounts payable in the event of any voluntary or involuntary liquidation, dissolution or 3 winding up of the Company and which are not subject to redemption by the Company, provided that if at any time there shall be more than one such resulting class, the shares of each such class then so issuable shall be substantially in the proportion which the total number of shares of such class resulting from all such reclassifications bears to the total number of shares of all such classes resulting from all such reclassifications. "Company" means the corporation named as the "Company" in the first paragraph of this Indenture until a successor Person shall have become such pursuant to the applicable provisions of this Indenture, and thereafter "Company" shall mean such successor Person. "Company Notice" has the meaning specified in Section 11.3. "Company Request" or "Company Order" means a written request or order signed in the name of the Company by the Chairman of the Board, the Chief Executive Officer, Chief Financial Officer, a Vice Chairman of the Board, the President or a Vice President, and by the Treasurer, an Assistant Treasurer, the Secretary or an Assistant Secretary of the Company, and delivered to the Trustee. "Continuing Director" means at any date a member of the Company's Board of Directors (i) who was a member of such board on May 2, 2003 or (ii) who, after May 2, 2003, was nominated or elected by at least a majority of the directors who were Continuing Directors at the time of such nomination or election or whose election to the Company's Board of Directors was recommended or endorsed by at least a majority of the directors who were Continuing Directors at the time of such nomination or election. "Conversion Agent" means any Person authorized by the Company pursuant to Section 9.2 to convert Securities in accordance with Article 12. "Conversion Price" has the meaning specified in Section 12.1(c). "Conversion Rate", at any time, shall equal $1,000 divided by the Conversion Price at such time, rounded to four decimal places (rounded up if the fifth decimal place thereof is 5 or more and otherwise rounded down). "Conversion Value" on any day, means the product of the Closing Price for the Common Stock multiplied by the then-current Conversion Rate. "Corporate Trust Office" means the office of the Trustee located in The City of New York at which at any particular time its corporate trust business shall be principally administered (which at the date of this Indenture is located at 4 New York Plaza, 15th Floor, New York, New York 10004). "Current Market Price" has the meaning specified in Section 12.4(g). "Custodian" shall mean JPMorgan Chase Bank, as custodian with respect to the Securities in global form, until a successor shall have been appointed and become such pursuant to the applicable provisions of this Indenture, and thereafter, "Custodian" shall mean or include such successor. 4 "Defaulted Interest" has the meaning specified in Section 2.7. "Depositary" shall mean, with respect to the Securities issuable or issued in whole or in part in global form, the person specified in Section 2.5(e) as the Depositary with respect to such Securities, until a successor shall have been appointed and become such pursuant to the applicable provisions of this Indenture, and thereafter, "Depositary" shall mean or include such successor. "Designated Event" means a Change in Control or a Termination of Trading. "Designated Event Repurchase Date" has the meaning specified in Section 11.1(b). "Designated Event Repurchase Price" has the meaning specified in Section 11.1(b). "Designated Event Repurchase Right" has the meaning specified in Section 11.1(b). "Dollar", "U.S. Dollar" or "U.S. $" means a dollar or other equivalent unit in such coin or currency of the United States as at the time shall be legal tender for the payment of public and private debts. "Euroclear" means the Euroclear Clearance System and any successor thereto. "Event of Default" has the meaning specified in Section 4.1. "Ex-Dividend Time" means, with respect to any issuance or distribution on shares of Common Stock, the first date on which the shares of Common Stock trade regular way on the principal securities market on which the shares of Common Stock are then traded without the right to receive such issuance or distribution. "Exchange Act" means the U.S. Securities Exchange Act of 1934, as amended. "Exchange Rate Contract" means, with respect to any Person, any currency swap agreements, forward exchange rate agreements, foreign currency futures or options, exchange rate collar agreements, exchange rate insurance and other agreements or arrangements, or combination thereof, designed to provide protection against fluctuations in currency exchange rates. "fair market value" has the meaning specified in Section 12.4(g). "Global Security" means any of the Restricted Global Security and the Regulation S Global Security. "Hedging Agreement" means any Interest Rate Protection Agreement or Exchange Rate Contract. "Holder", when used with respect to any Security, means the Person in whose name the Security is registered in the Security Register. 5 "Indebtedness", when used with respect to any Person, means (a) any liability of such Person for borrowed money, or evidenced by an instrument for the payment of money, or incurred in connection with the acquisition of any property, services or assets (including securities) or relating to a Capitalized Lease Obligation; (b) obligations under Hedging Agreements; (c) any obligation of such Person to reimburse the issuer of a letter of credit, surety bond, performance bond or other guarantee of contractual performance and (d) any liability of any other Person of the type referred to in clauses (a), (b) or (c) which has been assumed or guaranteed by such Person; provided, however, that Indebtedness shall not include accounts payable or other obligations of such Person to trade creditors created or assumed by such Person in the ordinary course of business in connection with the obtaining of materials or services. "Indenture" means this instrument as originally executed or as it may from time to time be supplemented or amended by one or more indentures supplemental hereto entered into pursuant to the applicable provisions hereof. "Interest Rate Protection Agreement" means, with respect to any Person, any interest rate swap agreement, interest rate cap or collar agreement or other financial agreement or arrangement designed to protect such Person against fluctuations in interest rates, as in effect from time to time. "Internal Revenue Code" means the U.S. Internal Revenue Code of 1986, as amended. "Liquidated Damages" means all liquidated damages, if any, payable pursuant to Section 3 of the Registration Rights Agreement. "Liquidated Damages Payment Date" means the date provided for payment of Liquidated Damages, if any, on the Securities under Section 3 of the Registration Rights Agreement. "Maturity" means the date on which the principal of such Security becomes due and payable as therein or herein provided, whether at the Stated Maturity or by acceleration, conversion, call for redemption, exercise of a Repurchase Right or otherwise. "Nasdaq National Market" means the Nasdaq National Market or any successor national securities exchange or automated over-the-counter trading market in the United States. "Non-Electing Share" has the meaning specified in Section 12.11. "Officers' Certificate" means a certificate signed by the Chairman of the Board, the Chief Executive Officer, the President or a Vice President and by the Chief Financial Officer, the Treasurer or the Secretary of the Company, and delivered to the Trustee. "Opinion of Counsel" means a written opinion of counsel, who may be counsel for the Company (and may include directors or employees of the Company) and which opinion is acceptable to the Trustee, which acceptance shall not be unreasonably withheld. "Outstanding", when used with respect to Securities, means, as of the date of determination, all Securities theretofore authenticated and delivered under this Indenture, except: 6 (i) Securities theretofore canceled by the Trustee or delivered to the Trustee for cancellation; (ii) Securities for the payment or redemption of which money in the necessary amount has been theretofore deposited with the Trustee or any Paying Agent (other than the Company) in trust or set aside and segregated in trust by the Company (if the Company shall act as its own Paying Agent) for the Holders of such Securities, provided that if such Securities are to be redeemed, notice of such redemption has been duly given pursuant to this Indenture; and (iii) Securities which have been paid pursuant to Section 2.6 or in exchange for or in lieu of which other Securities have been authenticated and delivered pursuant to this Indenture, other than any such Securities in respect of which there shall have been presented to the Trustee proof satisfactory to it that such Securities are held by a bona fide purchaser in whose hands such Securities are valid obligations of the Company; provided, however, that in determining whether the Holders of the requisite principal amount of Outstanding Securities are present at a meeting of Holders of Securities for quorum purposes or have given any request, demand, authorization, direction, notice, consent or waiver hereunder, Securities owned by the Company or any other obligor upon the Securities or any Affiliate of the Company or such other obligor shall be disregarded and deemed not to be Outstanding, except that, in determining whether the Trustee shall be protected in relying upon any such determination as to the presence of a quorum or upon any such request, demand, authorization, direction, notice, consent or waiver, only such Securities of which the Trustee has received written notice and are so owned shall be so disregarded. Securities so owned which have been pledged in good faith may be regarded as Outstanding if the pledgee establishes to the satisfaction of the Trustee the pledgee's right so to act with respect to such Securities and that the pledgee is not the Company or any other obligor upon the Securities or any Affiliate of the Company or such other obligor. "Paying Agent" means any Person authorized by the Company to pay the principal of, and premium, if any, or Liquidated Damages, if any, on any Securities on behalf of the Company. "Person" means any individual, corporation, limited liability company, partnership, joint venture, association, joint-stock company, trust, estate, unincorporated organization or government or any agency or political subdivision thereof. "Place of Conversion" has the meaning specified in Section 2.1. "Place of Payment" has the meaning specified in Section 2.1. "Predecessor Security" of any particular Security means every previous Security evidencing all or a portion of the same debt as that evidenced by such particular Security; and, for the purposes of this definition, any Security authenticated and delivered under Section 2.6 in exchange for or in lieu of a mutilated, destroyed, lost or stolen Security shall be deemed to evidence the same debt as the mutilated, destroyed, lost or stolen Security. 7 "Purchase Agreement" means the Purchase Agreement, dated May 2, 2003, between the Company and Lehman Brothers Inc. "QIB" shall mean a "qualified institutional buyer" as defined in Rule 144A. "Record Date" means either a Regular Record Date or a Special Record Date, as the case may be. "Redemption Date", when used with respect to any Security to be redeemed or repurchased, means the date fixed for such redemption or repurchase by or pursuant to this Indenture. "Redemption Price", when used with respect to any Security to be redeemed, means the price at which such Security is to be redeemed pursuant to this Indenture. "Registration Rights Agreement" means the Registration Rights Agreement dated as of May 7, 2003, between the Company and Lehman Brothers Inc. "Regular Record Date" for Liquidated Damages Payable means each May 1 (whether or not a Business Day) next preceding a May 15 Liquidated Damages Payment Date and each November 1 (whether or not a Business Day) next preceding a November 15 Liquidated Damages Payment Date. "Regulation S" shall mean Regulation S as promulgated under the Securities Act. "Regulation S Global Security" has the meaning specified in Section 2.2. "Repurchase Date" has the meaning specified in Section 11.1(b). "Repurchase Event Purchase Notice" has the meaning specified in Section 11.3(b). "Repurchase Price" has the meaning specified in Section 11.1(b). "Repurchase Right" has the meaning specified in Section 11.1(b). "Responsible Officer", when used with respect to the Trustee, means any officer within the Institutional Trust Services - Conventional Debt Unit (or any successor unit, department or division of the Trustee located at the Corporate Trust Office of the Trustee who has direct responsibility for the administration of this Indenture and, for the purposes of Sections 5.1(c)2 and 5.2, shall also include any other officer of the Trustee customarily performing functions similar to those performed by any of the above designated officers and also means, with respect to a particular corporate trust matter, any other officer to whom such matter is referred because of such officer's knowledge of and familiarity with the particular subject. "Restricted Global Security" has the meaning specified in Section 2.2. "Restricted Period" has the meaning specified in Section 2.2. "Restricted Securities" means the Securities defined as such in Section 2.5(e). 8 "Rule 144" means Rule 144 under the Securities Act (including any successor rule thereof), as the same may be amended from time to time. "Rule 144A" means Rule 144A as promulgated under the Securities Act (including any successor rule thereof), as the same may be amended from time to time. "Rule 144A Information" has the meaning specified in Section 9.9. "Sale Notice" has the meaning specified in Section 2.5(i). "Securities" has the meaning ascribed to it in the first paragraph under the caption "Recitals of the Company." "Securities Act" means the U.S. Securities Act of 1933, as amended. "Security Registrar" has the meaning specified in Section 2.5(a). "Security Register" has the meaning specified in Section 2.5(a). "Shelf Registration Statement" has the meaning specified in Section 2(a) of the Registration Rights Agreement. "Significant Subsidiary" means any Subsidiary which is a "significant subsidiary" within the meaning of Rule 405 under the Securities Act. "Special Record Date" for the payment of any Defaulted Interest means a date fixed by the Trustee pursuant to Section 2.7. "Specific Date Repurchase Price" has the meaning specified in Section 11.1(a). "Specific Date Repurchase Right" has the meaning specified in Section 11.1(a). "Specific Repurchase Date" has the meaning specified in Section 11.1(a). "Standard & Poor's" has the meaning specified in Section 12.1(a)(iv). "Stated Maturity" means the date specified in any Security as the fixed date for the payment of principal on such Security. "Subsidiary" means a Person more than 50% of the outstanding voting stock of which is owned, directly or indirectly, by the Company or by one or more other Subsidiaries, or by the Company and one or more other Subsidiaries. For the purposes of this definition only, "voting stock" means stock which ordinarily has voting power for the election of directors, whether at all times or only so long as no senior class of stock has such voting power by reason of any contingency. "Termination of Trading" means such time as the Common Stock (or other common stock into which the Securities are then convertible) is neither listed for trading on a U.S. national securities exchange nor approved for 9 trading on an established automated over-the-counter trading market in the United States. "Trading Day" has the meaning specified in Section 12.4(g). "Trading Price" of the Securities on any date of determination means the average of the secondary market bid quotations per Security obtained by the Company or the Calculation Agent at approximately 4:00 p.m., New York City time, on such determination date from (i) three independent nationally recognized securities dealers selected by the Company, provided that, if at least three such bids cannot reasonably be obtained by the Company or the Calculation Agent, 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 Company or the Calculation Agent, the one bid shall be used, or (ii) a broker-dealer that makes a market in the Securities, including Lehman Brothers Inc. If either the Company or the Calculation Agent cannot reasonably obtain at least one bid quotation per Security from a nationally recognized securities dealer or, in the reasonable judgment of the Company, the bid quotations are not indicative of the secondary market value of the Securities, then the Trading Price of the Securities will equal (a) the then-applicable Conversion Rate of the Securities multiplied by (b) the Closing Price of the Common Stock on such determination date. "Transfer Agent" means any Person, which may be the Company, authorized by the Company to exchange or register the transfer of Securities. "Trust Indenture Act" means the Trust Indenture Act of 1939, as amended. "Trustee" means the Person named as the "Trustee" in the first paragraph of this instrument until a successor Trustee shall have become such pursuant to the applicable provisions of this Indenture, and thereafter "Trustee" shall mean such successor Trustee. "United States" has the meaning set forth in Regulation S. "U.S. person" has the meaning set forth in Regulation S. "Vice President", when used with respect to the Company, means any vice president, whether or not designated by a number or a word or words added before or after the title "vice president". SECTION 1.2 Form of Documents Delivered to Trustee. In any case where several matters are required to be certified by, or covered by an opinion of, any specified Person, it is not necessary that all such matters be certified by, or covered by the opinion of, only one such Person, or that they be so certified or covered by only one document, but one such Person may certify or give an opinion with respect to some matters and one or more other such Persons as to other matters, and any such Person may certify or give an opinion as to such matters in one or several documents. Any certificate or opinion of an officer of the Company may be based, insofar as it relates to legal matters, upon an Opinion of Counsel, unless such officer knows, or in the exercise of reasonable care should know, that the 10 Opinion of Counsel with respect to the matters upon which such certificate or opinion is based is erroneous. Any such Opinion of Counsel may be based, insofar as it relates to factual matters, upon a certificate or representations by, an officer or officers of the Company stating that the information with respect to such factual matters is in the possession of the Company, unless such counsel knows, or in the exercise of reasonable care should know, that the certificate or representations with respect to such matters are erroneous. Where any Person is required to make, give or execute two or more applications, requests, consents, certificates, statements, opinions or other instruments under this Indenture, they may, but need not, be consolidated and form one instrument. Upon any application or request by the Company to the Trustee to take any action under any provision of this Indenture, the Company shall furnish to the Trustee an Officers' Certificate stating that all conditions precedent, if any, provided for in this Indenture relating to the proposed action have been complied with and an Opinion of Counsel stating that in the opinion of such Counsel all such conditions precedent, if any, have been complied with, except that in the case of any such application or request as to which the furnishing of such documents is specifically required by any provision of this Indenture relating to such particular application or request, no additional certificate or opinion need be furnished. Every certificate or opinion with respect to compliance with a condition or covenant provided for in this Indenture shall include: (1) a statement that each individual signing such certificate or opinion on behalf of the Company has read such covenant or condition and the definitions herein relating thereto; (2) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based; (3) a statement that, in the opinion of each such individual, he has made such examination or investigation as is necessary to enable him to express an informed opinion as to whether or not such covenant or condition has been complied with; and (4) a statement as to whether, in the opinion of each such individual, such condition or covenant has been complied with, provided, however, that no such Opinion of Counsel shall be required in connection with the initial authentication and delivery of the Securities. SECTION 1.3 Acts of Holders of Securities. (a) Any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Indenture to be given or taken by Holders of Securities may be embodied in and evidenced by (1) one or more instruments of substantially similar tenor signed by such Holders in person or by agent or proxy duly appointed in writing, (2) the record of Holders of Securities voting in favor thereof, either in person or by proxies duly 11 appointed in writing, at any meeting of Holders of Securities duly called and held in accordance with the provisions of Article 8 or (3) a combination of such instruments and any such record. Except as herein otherwise expressly provided, such action shall become effective when such instrument or instruments or record or both are delivered to the Trustee and, where it is hereby expressly required, to the Company. Such instrument or instruments and record (and the action embodied therein and evidenced thereby) are herein sometimes referred to as the "Act" of the Holders of Securities signing such instrument or instruments and so voting at such meeting. Proof of execution of any such instrument or of a writing appointing any such agent or proxy, or of the holding by any Person of a Security, shall be sufficient for any purpose of this Indenture and (subject to Section 5.1) conclusive in favor of the Trustee and the Company if made in the manner provided in this Section. The record of any meeting of Holders of Securities shall be proved in the manner provided in Section 8.6. (b) The fact and date of the execution by any Person of any such instrument or writing may be provided in any manner which the Trustee reasonably deems sufficient. (c) The principal amount and serial numbers of Securities held by any Person, and the date on which such Person became Holder thereof, shall be proved by the Security Register. (d) Any request, demand, authorization, direction, notice, consent, election, waiver or other Act of the Holders of any Security shall bind every future Holder of the same Security and the Holder of every Security issued upon the registration of transfer thereof or in exchange therefor or in lieu thereof in respect of anything done, omitted or suffered to be done by the Trustee or the Company in reliance thereon, whether or not notation of such action is made upon such Security. SECTION 1.4 Notices, Etc., to Trustee and Company. Any request, demand, authorization, direction, notice, consent, election, waiver or Act of Holders of Securities or other document provided or permitted by this Indenture to be made upon, given or furnished to, or filed with, (1) the Trustee by any Holder of Securities or by the Company shall be sufficient for every purpose hereunder if in writing, mailed, first-class postage prepaid or telecopied at (212) 623-6167 and confirmed by mail, first-class postage prepaid, addressed to it at 4 New York Plaza, 15th Floor, New York, New York 10004, to the attention of Institutional Trust Services, or at any other address or telecopy number otherwise furnished in writing to the Company by the Trustee; or (2) the Company by the Trustee or by any Holder of Securities shall be sufficient for every purpose hereunder (unless otherwise herein expressly provided) if in writing, mailed, first-class postage prepaid or telecopied at (516) 677-7323 and confirmed by mail, first-class postage prepaid, addressed to it at 170 Crossways Park Drive, Woodbury, New York 11797, to the attention of its Chief Financial Officer, with a copy to its General Counsel, or at any other address or telecopy number otherwise furnished in writing to the Trustee by the Company. 12 Any request, demand, authorization, direction, notice, consent, election or waiver required or permitted under this Indenture shall be in the English language and, anything herein to the contrary notwithstanding, shall not be deemed effectively made upon, given or furnished to, or filed with the Trustee unless actually received at the Corporate Trust Office by a Responsible Offer of the Trustee. SECTION 1.5 Notice to Holders of Securities; Waiver. Except as otherwise expressly provided herein, where this Indenture provides for notice to Holders of Securities of any event, such notice shall be sufficiently given to Holders of Securities if mailed, first-class postage prepaid, to each Holder of a Security affected by such event, at the address of such Holder as it appears in the Security Register, not earlier than the earliest date and not later than the latest date prescribed for the giving of such notice. Neither the failure to mail such notice, nor any defect in any notice so mailed, to any particular Holder of a Security shall affect the sufficiency of such notice with respect to other Holders of Securities. In case by reason of the suspension of regular mail service or by reason of any other cause it shall be impracticable to give such notice by mail, then such notification to Holders of Securities as shall be made with the approval of the Trustee shall constitute a sufficient notification to such Holders for every purpose hereunder. Such notices shall be deemed to have been given on the date of such mailing. Where this Indenture provides for notice in any manner, such notice may be waived in writing by the Person entitled to receive such notice, either before or after the event, and such waiver shall be the equivalent of such notice. Waivers of notice by Holders shall be filed with the Trustee, but such filing shall not be a condition precedent to the validity of any action taken in reliance upon such waiver. SECTION 1.6 Effect of Headings and Table of Contents. The Article and Section headings herein and the Table of Contents are for convenience only and shall not affect the construction hereof. SECTION 1.7 Successors and Assigns. All covenants and agreements in this Indenture by the Company shall bind its successors and assigns, whether so expressed or not. SECTION 1.8 Separability Clause. In case any provision in this Indenture or the Securities shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. 13 SECTION 1.9 Benefits of Indenture. Nothing in this Indenture or in the Securities, express or implied, shall give to any Person, other than the parties hereto and their successors hereunder, and the Holders of Securities, any benefit or legal or equitable right, remedy or claim under this Indenture. SECTION 1.10 GOVERNING LAW. THIS INDENTURE AND THE SECURITIES SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK (INCLUDING WITHOUT LIMITATION SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW OR SUCCESSOR TO SUCH STATUTE). SECTION 1.11 Counterparts. This Indenture may be executed in any number of counterparts, each of which when so executed shall be deemed to be an original but all such counterparts shall together constitute but one and the same Indenture. SECTION 1.12 Legal Holidays. In any case where any Liquidated Damages Payment Date, Redemption Date or Stated Maturity of any Security or the last day on which a Holder of a Security has a right to convert such Security shall not be a Business Day at any Place of Payment or Place of Conversion, then (notwithstanding any other provision of this Indenture or of the Securities) payment of Liquidated Damages, if any, or principal or premium, if any, or conversion of the Securities, need not be made at such Place of Payment or Place of Conversion on such day, but may be made on the next succeeding Business Day at such Place of Payment or Place of Conversion with the same force and effect as if made on the Liquidated Damages Payment Date or Redemption Date or at the Stated Maturity or on such last day for conversion, provided, that in the event payment is made on such succeeding Business Day, no Liquidated Damages shall accrue on the amount so payable for the period from and after such Liquidated Damages Payment Date, Redemption Date or Stated Maturity, as the case may be. SECTION 1.13 Recourse Against Others. No recourse for the payment of the principal of or premium, if any, or Liquidated Damages, if any, on any Security, or for any claim based thereon or otherwise in respect thereof, shall be had against any incorporator, shareholder, officer or director, as such, past, present or future, of the Company or of any successor Person, whether by virtue of any constitution, statute or rule of law or by the enforcement of any assessment or penalty or otherwise, all such liability being, by the acceptance thereof and as part of the consideration for the issue thereof, expressly waived and released. 14 ARTICLE 2 THE SECURITIES SECTION 2.1 Title and Terms. The aggregate principal amount of Securities which may be authenticated and delivered under this Indenture is limited to U.S. $350,000,000 (or $420,000,000 if the over-allotment option set forth in Section 2(b) of the Purchase Agreement is exercised in full), except for securities authenticated and delivered upon registration of, transfer of, or in exchange for, or in lieu of other Securities pursuant to Section 2.5, 2.6, 7.5, 10.8, 11.3 or 12.2. The Securities shall be known and designated as the "Zero Yield Puttable Securities (ZYPSsm) due May 15, 2023" of the Company. Their Stated Maturity shall be May 15, 2023. The Securities shall bear no interest except that the Company shall be required to pay Liquidated Damages if the Company does not comply with certain obligations to register the Securities as set forth in the Registration Right Agreement. The principal of and premium, if any, and Liquidated Damages, if any, on the Securities shall be payable as provided in the form of Security set forth in Exhibit A hereto (any city in which any Paying Agent is located being herein called a "Place of Payment"). The Securities shall be redeemable at the option of the Company, and shall have a Repurchase Right exercisable at the option of Holders, as provided in the form of Security set forth in Exhibit A hereto and in Articles 10 and 11. The Securities shall be convertible as provided in Article 12 (any city in which any Conversion Agent is located being herein called a "Place of Conversion"). SECTION 2.2 Form of Securities. The Securities and the Trustee's certificate of authentication to be borne by such Securities shall be substantially in the form set forth in Exhibit A, which is incorporated in and made a part of this Indenture. Any of the Securities may have such letters, numbers or other marks of identification and such notations, legends and endorsements as the officers executing the same may approve (execution thereof to be conclusive evidence of such approval) and as are not inconsistent with the provisions of this Indenture, or as may be required to comply with any law or with any rule or regulation made pursuant thereto or with any rule or regulation of any securities exchange or automated quotation system on which the Securities may be listed or designated for issuance, or to conform to usage. Securities transferred after their initial distribution to non-U.S. persons outside the United States in reliance on Regulation S shall be issued in the form of one or more Global Securities (collectively, the "Regulation S Global Security") issued in fully registered form without interest coupons, substantially in the form of Security set forth in Exhibit A, with such applicable legends as are provided for in Exhibit A. Such Regulation S Global Security shall be registered in the name of the Depositary or its nominee and 15 deposited with the Custodian, duly executed by the Company and authenticated by the Trustee as hereinafter provided, for credit to the respective accounts at the Depositary of the depositories for Morgan Guaranty Trust Company of New York, Brussels office, as operator of Euroclear, or Clearstream. Until such time as the Restricted Period shall have terminated, investors may hold beneficial interests in such Regulation S Global Securities only through Euroclear and Clearstream, unless delivery of such beneficial interest shall be made through the Restricted Global Security in accordance with the certification requirements discussed below in Section 2.5(b)(3). After such time as the Restricted Period shall have terminated, such certification requirements shall no longer be required for such transfers. As used herein, the term "Restricted Period" means the period up to (but not including) the 365th day following the later of (i) the date of the commencement of the offering of Securities and (ii) the last original issuance date of the Securities. The Securities offered and sold in their initial distribution pursuant to the Purchase Agreement shall be sold only to QIBs in reliance on Rule 144A and shall be issued in the form of one or more Global Securities (collectively, the "Restricted Global Security") in fully registered form without interest coupons, substantially in the form of Security set forth in Exhibit A, with such applicable legends as are provided for in Exhibit A. Such Restricted Global Security shall be registered in the name of the Depositary or its nominee and deposited with the Custodian, duly executed by the Company and authenticated by the Trustee as hereinafter provided. The aggregate principal amount of the Restricted Global Security may be increased or decreased from time to time by adjustments made on the records of the Custodian in connection with a corresponding decrease or increase in the aggregate principal amount of the Regulation S Global Security, as hereinafter provided. The terms and provisions contained in the form of Security attached as Exhibit A hereto shall constitute, and are hereby expressly made, a part of this Indenture and to the extent applicable, the Company and the Trustee, by their execution and delivery of this Indenture, expressly agree to such terms and provisions and to be bound thereby. SECTION 2.3 Denominations. The definitive Securities shall be issuable in fully registered form, without coupons, in denominations of U.S. $1,000 or integral multiples of U.S. $1,000 in excess thereof. SECTION 2.4 Execution, Authentication, Delivery and Dating. The Securities shall be executed on behalf of the Company by its Chairman of the Board, its Chief Executive Officer, its President or one of its Vice Presidents, attested by its Secretary or one of its Assistant Secretaries. Any such signature may be manual or facsimile. Securities bearing the manual or facsimile signature of individuals who were at any time the proper officers of the Company shall bind the Company, notwithstanding that such individuals or any of them have ceased to hold such offices prior to the authentication and delivery of such Securities or did not hold such offices at the date of such Securities. At any time and from time to time after the execution and delivery of this Indenture, the Company may deliver Securities executed by the Company to the Trustee for authentication, together with a Company Order for the authentication and delivery of such Securities, and the Trustee in accordance 16 with such Company Order shall authenticate and deliver such Securities as in this Indenture provided and not otherwise. Each Security shall be dated the date of its authentication. No Security shall be entitled to any benefit under this Indenture, or be valid or obligatory for any purpose, unless there appears on such Security a certificate of authentication substantially in the form provided for herein executed by or on behalf of the Trustee by manual signature, and such certificate upon any Security shall be conclusive evidence, and the only evidence, that such Security has been duly authenticated and delivered hereunder. SECTION 2.5 Registration, Registration of Transfer and Exchange; Restrictions on Transfer. (a) The Company shall cause to be kept at the Corporate Trust Office of the Trustee a register (the "Security Register") in which, subject to such reasonable regulations as it may prescribe, the Company shall provide for the registration of Securities and of transfers of Securities. The Trustee is hereby appointed "Security Registrar" for the purpose of registering Securities and transfers of Securities as herein provided. Upon surrender for registration of transfer of any Security at any office or agency of the Company designated pursuant to Section 9.2 for such purpose, and satisfaction of the requirements for such transfer set forth in this Section 2.5, the Company shall execute, and the Trustee shall authenticate and deliver, in the name of the designated transferee or transferees, one or more new Securities of any authorized denominations and of a like aggregate principal amount and bearing such restrictive legends as may be required by this Indenture. Subject to the other provisions of this Section 2.5(a), Securities may be exchanged for other Securities of any authorized denominations and of a like aggregate principal amount, upon surrender of the Securities to be exchanged at any such office or agency. Whenever any Securities are so surrendered for exchange, the Company shall execute, and the Trustee shall authenticate and deliver, the Securities which the Holder making the exchange is entitled to receive, bearing registration numbers not contemporaneously outstanding. All Securities issued upon any registration of transfer or exchange of Securities shall be valid obligations of the Company, evidencing the same debt, and entitled to the same benefits under this Indenture, as the Securities surrendered upon such registration of transfer or exchange. None of the Company, the Trustee nor the Security Registrar shall be required to exchange or register a transfer of (i) any Securities for a period of fifteen (15) days next preceding any selection of Securities to be redeemed or (ii) any Securities called for redemption or, if a portion of any Security is selected or called for redemption, such portion thereof selected or called for redemption or (iii) any Securities surrendered for conversion or, if a portion of any Security is surrendered for conversion, such portion thereof surrendered for conversion. Every Security presented or surrendered for registration of transfer or for exchange shall (if so required by the Company or the Trustee) be duly endorsed by, or be accompanied by a written instrument of transfer in form satisfactory to the Company and the Security Registrar and duly executed by, the 17 Holder thereof or such Holder's attorney duly authorized in writing, together with any documentation required to be delivered pursuant to Section 2.5(b). No service charge shall be made to any Holder for any registration of transfer or exchange of Securities, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection therewith. (b) Notwithstanding any other provisions of this Indenture or the Securities (but subject to Section 2.2), transfers of a Global Security, in whole or in part, transfers and exchanges of interests therein of the kinds described in clauses (2) and (3) below and exchanges of interests in Global Securities, and transfers or exchanges of other Securities as described in clause (4) below, shall be made only in accordance with this Section 2.5(b). Transfers and exchanges subject to this Section 2.5 shall also be subject to the other provisions of this Indenture that are not inconsistent with this Section 2.5. (1) Limitation on Transfers of a Global Security. A Global Security may not be transferred, in whole or in part, to any Person other than the Depositary or a nominee thereof, and no such transfer to any such other Person may be registered; provided that this clause (1) shall not prohibit any transfer of a Security that is issued in exchange for a Global Security but is not itself a Global Security. No transfer of a Security to any Person shall be effective under this Indenture or the Securities unless and until such Security has been registered in the name of such Person. Nothing in this Section 2.5(b)(1) shall prohibit or render ineffective any transfer of a beneficial interest in a Global Security effected in accordance with the other provisions of this Section 2.5(b). (2) Restricted Global Security to Regulation S Global Security. If the holder of a beneficial interest in the Restricted Global Security wishes at any time to transfer such interest to a Person who wishes to take delivery thereof in the form of a beneficial interest in the Regulation S Global Security, such transfer may be effected, subject to the rules and procedures of the Depositary, Euroclear and Clearstream, in each case to the extent applicable (the "Applicable Procedures"), only in accordance with this Section 2.5(b)(2). Upon receipt by the Trustee, as Security Registrar, at its office in The City of New York of (A) written instructions given in accordance with the Applicable Procedures from an Agent Member directing the Trustee to credit or cause to be credited to a specified Agent Member's account a beneficial interest in the Regulation S Global Security in a principal amount equal to that of the beneficial interest in the Restricted Global Security to be so transferred, (B) a written order given in accordance with the Applicable Procedures containing information regarding the account of the Agent Member (and, if applicable, the Euroclear or Clearstream account, as the case may be) to be credited with, and the account of the Agent Member to be debited for, such beneficial interest and (C) a certificate in substantially the form set forth in Exhibit B given by the holder of such beneficial interest; the Trustee, as Security Registrar, shall instruct the Depositary to reduce the principal amount of the Restricted Global Security, and to increase the principal amount of the Regulation S Global Security, by the principal amount of the beneficial interest in the Restricted Global Security to be so transferred, and to credit or cause to be credited to the account of the Person specified in such instructions (which during the Restricted Period shall be the Agent Member for Euroclear 18 or Clearstream or both, as the case may be) a beneficial interest in the Regulation S Global Security having a principal amount equal to the amount by which the principal amount of the Restricted Global Security was reduced upon such transfer. (3) Regulation S Global Security to Restricted Global Security. If during the Restricted Period the holder of a beneficial interest in the Regulation S Global Security wishes to transfer such interest to a Person who wishes to take delivery thereof in the form of a beneficial interest in the Restricted Global Security, such transfer may be effected, subject to the Applicable Procedures, only in accordance with this Section 2.5(b)(3). Upon receipt by the Trustee, as Security Registrar, at its office in The City of New York of (A) written instructions given in accordance with the Applicable Procedures from an Agent Member directing the Trustee to credit or cause to be credited to a specified Agent Member's account a beneficial interest in the Restricted Global Security in a principal amount equal to that of the beneficial interest in the Regulation S Global Security to be so transferred, (B) a written order given in accordance with the Applicable Procedures containing information regarding the account of the Agent Member to be credited with, and the account of the Agent Member (and, if applicable, the Euroclear or Clearstream account, as the case may be) to be debited for, such beneficial interest and (C) a certificate in substantially the form set forth in Exhibit C given by the holder of such beneficial interest, the Trustee, as Security Registrar, shall instruct the Depositary to reduce the principal amount of the Regulation S Global Security and to increase the principal amount of the Restricted Global Security, by the principal amount of the beneficial interest in the Regulation S Global Security to be so transferred, and to credit or cause to be credited to the account of the Person specified in such instructions a beneficial interest in the Restricted Global Security having a principal amount equal to the amount by which the principal amount of the Regulation S Global Security, as the case may be, was reduced upon such transfer. (4) Exchanges. In the event that a Restricted Global Security or any portion thereof is exchanged for a Regulation S Global Security or Security other than Global Securities, such Security may in turn be exchanged (on transfer or otherwise) for Securities that are not Global Securities or for beneficial interests in a Global Security (if any is then outstanding) only in accordance with such procedures, which shall be substantially consistent with the provisions of clauses (1) through (3) above and (5) below (including the certification requirements intended to insure that the transfers and exchanges of beneficial interests in a Global Security comply with Rule 144A, Rule 144 or Regulation S, as the case may be) and any Applicable Procedures, as may be from time to time adopted by the Company and the Trustee. (5) Interests in Regulation S Global Security to be Held Through Euroclear or Clearstream. Until the termination of the Restricted Period, interests in the Regulation S Global Security may be held only through Agent Members acting for and on behalf of Euroclear and Clearstream, provided that this clause (5) shall not prohibit any transfer in accordance with Section 2.5(b)(3) hereof. (c) Each Restricted Security and Global Security issued hereunder shall, upon issuance, bear the legends required by Section 2.5(e) to be applied and such required legends shall not be removed except as provided in the next 19 sentence or paragraph (e) of this Section 2.5. The legend required for a Restricted Security may be removed if there is delivered to the Company such satisfactory evidence, which may include an opinion of independent counsel licensed to practice law in the State of New York, as may be reasonably required by the Company that neither such legend nor the restrictions on transfer set forth therein are required to ensure that transfers of such Security will not violate the registration requirements of the Securities Act. Upon provision of such satisfactory evidence, the Trustee, at the written direction of the Company, shall authenticate and deliver in exchange for such Securities another Security or Securities having an equal aggregate principal amount that does not bear such legend. If such a legend required for a Restricted Security has been removed from a Security as provided above, no other Security issued in exchange for all or any part of such Security shall bear such legend, unless the Company has reasonable cause to believe that such other Security is a "restricted security" within the meaning of Rule 144 and instructs the Trustee in writing to cause a legend to appear thereon. (d) The provisions of clauses (1), (2), (3) and (4) below shall apply only to Global Securities: (1) Each Global Security authenticated under this Indenture shall be registered in the name of the Depositary or a nominee thereof and delivered to such Depositary or a nominee thereof or custodian therefor, and each such Global Security shall constitute a single Security for all purposes of this Indenture. (2) Notwithstanding any other provision in this Indenture or the Securities, no Global Security may be exchanged in whole or in part for Securities registered, and no transfer of a Global Security in whole or in part may be registered, in the name of any Person other than the Depositary or a nominee thereof unless (A) the Depositary (i) has notified the Company that it is unwilling or unable to continue as Depositary for such Global Security or (ii) has ceased to be a clearing agency registered under the Exchange Act, (B) in the case of a Global Security held for an account of Euroclear or Clearstream, Euroclear or Clearstream, as the case may be, (i) is closed for business for a continuous period of 14 days (other than by reason of statutory or other holidays) or (ii) announces an intention permanently to cease business or does in fact do so, (C) there shall have occurred and be continuing an Event of Default with respect to such Global Security or (D) a request for certificates has been made upon the Trustee in accordance with the Depositary's customary procedures and a copy of such notice has been received by the Company from the Trustee. Any Global Security exchanged pursuant to clause (A) or (B) above shall be so exchanged in whole or in part and any Global Security exchanged pursuant to clause (C) or (D) above may be exchanged in whole or from time to time in part as directed by the Depositary. Any Security issued in exchange for a Global Security or any portion thereof shall be a Global Security, provided that any Security so issued that is registered in the name of a Person other than the Depositary or a nominee thereof shall not be a Global Security. (3) Securities issued in exchange for a Global Security or any portion thereof pursuant to clause (2) above shall be issued in definitive, fully registered form, without interest coupons, shall have an aggregate principal amount equal to that of such Global 20 Security or portion thereof to be so exchanged, shall be registered in such names and be in such authorized denominations as the Depositary shall designate and shall bear any legends required hereunder. Any Global Security to be exchanged in whole shall be surrendered by the Depositary to the Trustee, as Security Registrar. With regard to any Global Security to be exchanged in part, either such Global Security shall be so surrendered for exchange or, if the Trustee is acting as custodian for the Depositary or its nominee with respect to such Global Security, the principal amount thereof shall be reduced, by an amount equal to the portion thereof to be so exchanged, by means of an appropriate adjustment made on the records of the Trustee and the Security Registrar if the Trustee is not the Security Registrar. Upon any such surrender or adjustment, the Trustee shall authenticate and make available for delivery the Security issuable on such exchange to or upon the written order of the Depositary or an authorized representative thereof. (4) In the event of the occurrence of any of the events specified in clause (2) above, the Company will promptly make available to the Trustee a reasonable supply of certificated Securities in definitive, fully registered form, without interest coupons. (5) Neither any members of, or participants in, the Depositary ("Agent Members") nor any other Persons on whose behalf Agent Members may act (including Euroclear and Clearstream and account holders and participants therein) shall have any rights under this Indenture with respect to any Global Security, or under any Global Security, and the Depositary or such nominee, as the case may be, may be treated by the Company, the Trustee and any agent of the Company or the Trustee as the absolute owner and holder of such Global Security for all purposes whatsoever. Notwithstanding the foregoing, nothing herein shall prevent the Company, the Trustee or any agent of the Company or Trustee from giving effect to any written certification, proxy or other authorization furnished by the Depositary or such nominee, as the case may be, or impair, as between the Depositary, its Agent Members and any other Person on whose behalf an Agent Member may act, the operation of customary practices of such Persons governing the exercise of the rights of a holder of any Security. (e) Every Security that bears or is required under this Section 2.5(e) to bear the legend set forth in this Section 2.5(e) (together with any Common Stock issued upon conversion of the Securities and required to bear the legend set forth in Section 2.5(f), collectively, the "Restricted Securities") shall be subject to the restrictions on transfer set forth in this Section 2.5(e) (including the legend set forth below), unless such restrictions on transfer shall be waived by written consent of the Company, and the Holder of each such Restricted Security, by such Holder's acceptance thereof, agreed to be bound by all such restrictions on transfer. As used in Sections 2.5(e) and 2.5(f), the term "transfer" encompasses any sale, pledge, transfer or other disposition whatsoever of any Restricted Security. Until two (2) years after the original issuance date of any Security, any certificate evidencing such Security (and all securities issued in exchange therefor or substitution thereof, other than Common Stock, if any, issued upon conversion thereof which shall bear the legend set forth in Section 2.5(f), if applicable) shall bear a legend in substantially the following form (unless such Securities have been transferred pursuant to a registration statement that has 21 been declared effective under the Securities Act (and which continues to be effective at the time of such transfer) or unless otherwise agreed by the Company in writing, with notice thereof to the Trustee): THE SECURITY EVIDENCED BY THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS, AND MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY ACQUISITION HEREOF, THE HOLDER: (1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) OR (B) IT IS A NON-U.S. PERSON OUTSIDE THE UNITED STATES ACQUIRING THE SECURITY IN COMPLIANCE WITH REGULATION S UNDER THE SECURITIES ACT; (2) AGREES THAT IT WILL NOT WITHIN TWO YEARS AFTER THE ORIGINAL ISSUANCE OF THIS SECURITY RESELL OR OTHERWISE TRANSFER THE SECURITY EVIDENCED HEREBY OR THE COMMON STOCK ISSUABLE UPON CONVERSION OF SUCH SECURITY EXCEPT (A) TO THE COMPANY OR ANY SUBSIDIARY THEREOF, (B) TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT, (C) TO A NON-U.S. PERSON OUTSIDE THE UNITED STATES IN COMPLIANCE WITH REGULATION S UNDER THE SECURITIES ACT, (D) PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE), OR (E) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT AND WHICH CONTINUES TO BE EFFECTIVE AT THE TIME OF SUCH TRANSFER; AND (3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THE SECURITY EVIDENCED HEREBY IS TRANSFERRED (OTHER THAN A TRANSFER PURSUANT TO CLAUSE 2(E) ABOVE) A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY TRANSFER OF THE SECURITY EVIDENCED HEREBY WITHIN TWO YEARS AFTER THE ORIGINAL ISSUANCE OF SUCH SECURITY (OTHER THAN A TRANSFER PURSUANT TO CLAUSE 2(E) ABOVE), THE HOLDER MUST CHECK THE APPROPRIATE BOX SET FORTH ON THE REVERSE HEREOF RELATING TO THE MANNER OF SUCH TRANSFER AND SUBMIT THIS CERTIFICATE TO THE TRUSTEE (OR ANY SUCCESSOR TRUSTEE, AS APPLICABLE). IF THE PROPOSED TRANSFER IS PURSUANT TO CLAUSE 2(D) ABOVE, THE HOLDER MUST, PRIOR TO SUCH TRANSFER, FURNISH TO THE TRUSTEE (OR ANY SUCCESSOR TRUSTEE, AS 22 APPLICABLE), SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS THE COMPANY MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. THIS LEGEND WILL BE REMOVED UPON THE EARLIER OF THE TRANSFER OF THE SECURITY EVIDENCED HEREBY PURSUANT TO CLAUSE 2(E) ABOVE OR THE EXPIRATION OF TWO YEARS FROM THE ORIGINAL ISSUANCE OF THE SECURITY EVIDENCED HEREBY. AS USED HEREIN, THE TERMS "UNITED STATES" AND "U.S. PERSON" HAVE THE MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT. Any Security (or security issued in exchange or substitution thereof) as to which such restrictions on transfer shall have expired in accordance with their terms or as to which the conditions for removal of the foregoing legend as set forth therein have been satisfied may, upon surrender of such Security for exchange to the Security Registrar in accordance with the provisions of this Section 2.5, be exchanged for a new Security or Securities, of like tenor and aggregate principal amount, which shall not bear the restrictive legend required by this Section 2.5(e). The Depositary shall be a clearing agency registered under the Exchange Act. The Company initially appoints The Depository Trust Company to act as Depositary with respect to the Global Securities. Initially, the Global Securities shall be issued to the Depositary, registered in the name of Cede & Co., as the nominee of the Depositary, and deposited with the Trustee as Custodian for Cede & Co. If at any time the Depositary for a Global Security notifies the Company that it is unwilling or unable to continue as Depositary for a Global Security, the Company may appoint a successor Depositary with respect to such Global Security. If a successor Depositary for a Global Security is not appointed by the Company within ninety (90) days after the Company receives such notice, the Company will execute, and the Trustee, upon receipt of an Officers' Certificate for the authentication and delivery of Securities, will authenticate and deliver, Securities in certificated form, in an aggregate principal amount equal to the principal amount of the Global Security in exchange for such Global Security and upon delivery of such Global Security to the Trustee such Global Security shall be canceled. Securities in certificated form issued in exchange for all or a part of a Global Security pursuant to this Section 2.5 shall be registered in such names and in such authorized denominations as the Depositary, pursuant to instructions from its direct or indirect participants or otherwise, shall instruct the Trustee. Upon execution and authentication, the Trustee shall deliver such Securities in certificated form to the Persons in whose names such Securities in certificated form are so registered. 23 At such time as all interests in a Global Security have been redeemed, converted, canceled, repurchased or transferred, such Security in global form shall be, upon receipt thereof, canceled by the Trustee in accordance with standing procedures and instructions existing between the Depositary and the Custodian. At any time prior to such cancellation, if any interest in a Global Security is exchanged for Securities in certificated form, redeemed, converted, canceled, repurchased or transferred to a transferee who receives Securities in certificated form therefor or any Security in certificated form is exchanged or transferred for part of a Global Security, the principal amount of such Global Security shall, in accordance with the standing procedures and instructions existing between the Depositary and the Custodian, be appropriately reduced or increased, as the case may be, and a notation shall be made on the records of Trustee, by the Trustee or the Custodian, at the direction of the Trustee, to reflect such reduction or increase. (f) Until two (2) years after the original issuance date of any Security, any stock certificate representing Common Stock issued upon conversion of such Security shall bear a legend in substantially the following form (unless such Common Stock has been sold pursuant to a registration statement that has been declared effective under the Securities Act (and which continues to be effective at the time of such transfer) or such Common Stock has been issued upon conversion of Securities that have been transferred pursuant to a registration statement that has been declared effective under the Securities Act or unless otherwise agreed by the Company with written notice thereof to the Trustee and any transfer agent for the Common Stock): THE SECURITY EVIDENCED HEREBY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS, AND MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. THE HOLDER HEREOF AGREES THAT UNTIL THE EXPIRATION OF TWO YEARS AFTER THE ORIGINAL ISSUANCE OF THE SECURITY UPON THE CONVERSION OF WHICH THE COMMON STOCK EVIDENCED HEREBY WAS ISSUED: (1) IT WILL NOT RESELL OR OTHERWISE TRANSFER THE COMMON STOCK EVIDENCED HEREBY EXCEPT (A) TO THE COMPANY OR ANY SUBSIDIARY THEREOF, (B) TO A NON-U.S. PERSON OUTSIDE THE UNITED STATES IN COMPLIANCE WITH REGULATION S UNDER THE SECURITIES ACT, (C) PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE), OR (D) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT AND WHICH CONTINUES TO BE EFFECTIVE AT THE TIME OF SUCH TRANSFER; (2) PRIOR TO ANY SUCH TRANSFER OTHER THAN A TRANSFER PURSUANT TO CLAUSE 1(D) ABOVE, IT WILL FURNISH TO SUCH TRANSFER AGENT (OR ANY SUCCESSOR TRANSFER AGENT, AS APPLICABLE) SUCH 24 CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS THE COMPANY MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT; AND (3) IT WILL DELIVER TO EACH PERSON TO WHOM THE COMMON STOCK EVIDENCED HEREBY IS TRANSFERRED (OTHER THAN A TRANSFER PURSUANT TO A CLAUSE 1(D) ABOVE) A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. THIS LEGEND WILL BE REMOVED UPON THE EARLIER OF THE TRANSFER OF THE COMMON STOCK EVIDENCED HEREBY PURSUANT TO CLAUSE 1(D) ABOVE OR THE EXPIRATION OF TWO YEARS FROM THE ORIGINAL ISSUANCE OF THE SECURITY UPON THE CONVERSION OF WHICH THE COMMON STOCK EVIDENCED HEREBY WAS ISSUED. AS USED HEREIN, THE TERMS "UNITED STATES" AND "U.S. PERSON" HAVE THE MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT. Any such Common Stock as to which such restrictions on transfer shall have expired in accordance with their terms or as to which the conditions for removal of the foregoing legend as set forth therein have been satisfied may, upon surrender of the certificates representing such shares of Common Stock for exchange in accordance with the procedures of the transfer agent for the Common Stock, be exchanged for a new certificate or certificates for a like aggregate number of shares of Common Stock, which shall not bear the restrictive legend required by this Section 2.5(f). (g) Any certificate evidencing a Security that has been transferred to an Affiliate of the Company within two years after the original issuance date of the Security, as evidenced by a notation on the Assignment Form for such transfer or in the representation letter delivered in respect thereof, for so long as such Security is held by such Affiliate, shall, until two years after the last date on which the Company or any Affiliate of the Company was an owner of such Security, in each case, bear a legend in substantially the following form, unless otherwise agreed by the Company (with written notice thereof to the Trustee): THE SECURITY EVIDENCED THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES OR TO, OR THE ACCOUNT TO BENEFIT OF, U.S. PERSONS EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF, THE HOLDER AGREES: (1) THAT IT WILL NOT RESELL OR OTHERWISE TRANSFER THE SECURITY EVIDENCED HEREBY OR THE COMMON STOCK ISSUABLE UPON 25 CONVERSION OF SUCH SECURITY EXCEPT (A) TO THE COMPANY OR ANY SUBSIDIARY THEREOF, (B) IN A TRANSACTION REGISTERED UNDER THE SECURITIES ACT OR (C) PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE); AND (2) THAT IT WILL DELIVER TO EACH PERSON TO WHOM THE SECURITY EVIDENCED HEREBY IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. THIS LEGEND SHALL BE REMOVED UPON THE TRANSFER OF THE SECURITY EVIDENCED HEREBY OR THE COMMON STOCK ISSUABLE UPON CONVERSION OF SUCH SECURITY PURSUANT TO THE IMMEDIATELY PRECEDING SENTENCE. IF THE PROPOSED TRANSFER IS PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT, THE HOLDER MUST, PRIOR TO SUCH TRANSFER, FURNISH TO JPMORGAN CHASE BANK, AS TRUSTEE (OR ANY SUCCESSOR TRUSTEE, AS APPLICABLE), SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS THE COMPANY MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. AS USED HEREIN, THE TERMS "UNITED STATES" AND "U.S. PERSON" HAVE THE MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT. Any stock certificate representing Common Stock issued upon conversion of such Security shall also bear a legend in substantially the form indicated above, unless otherwise agreed by the Company (with written notice thereof to the Trustee). (h) Notwithstanding any provision of Section 2.5 to the contrary, in the event Rule 144(k) as promulgated under the Securities Act (or any successor rule) is amended to shorten the two-year period under Rule 144(k) (or the corresponding period under any successor rule), from and after receipt by the Trustee of the Officers' Certificate and Opinion of Counsel provided for in this Section 2.5(h), (i) the references in the first sentence of the second paragraph of Section 2.5(e) to "two (2) years" and in the restrictive legend set forth in such paragraph to "TWO YEARS" shall be deemed for all purposes hereof to be references to such shorter period, (ii) the references in the first paragraph of Section 2.5(f) to "two (2) years" and in the restrictive legend set forth in such paragraph to "TWO YEARS" shall be deemed for all purposes hereof to be references to such shorter period and (iii) all corresponding references in the Securities and the restrictive legends on the Restricted Securities shall be deemed for all purposes hereof to be references to such shorter period, provided that such changes shall not become effective if they are otherwise prohibited by, or would otherwise cause a violation of, the then-applicable federal securities laws. As soon as practicable after the Company has knowledge of the effectiveness of any such amendment to shorten the two-year period under Rule 144(k) (or the corresponding period under any successor rule), unless such changes would otherwise be prohibited by, or would otherwise cause a violation 26 of, the then-applicable securities law, the Company shall provide to the Trustee an Officers' Certificate and Opinion of Counsel informing the Trustee of the effectiveness of such amendment and the effectiveness of the foregoing changes to Sections 2.5(e) and 2.5(f) and the restrictive legends on the Restricted Securities. The provisions of this Section 2.5(h) will not be effective until such time as the Opinion of Counsel and Officers' Certificate have been received by the Trustee hereunder. This Section 2.5(h) shall apply to successive amendments to Rule 144(k) (or any successor rule) shortening the holding period thereunder. (i) Pursuant to the Registration Rights Agreement, upon the effectiveness of the Shelf Registration Statement, each Holder must notify the Company not later than three Business Days prior to any proposed sale by such Holder of Securities pursuant to the Shelf Registration Statement (a "Sale Notice"), which notice shall be effective for five Business Days. The Company may, upon written notice to such Holder, suspend such Holder's use of the prospectus (which is part of the Shelf Registration Statement) for a reasonable period not to exceed 60 days if the Company in its reasonable judgment believes it may possess material non-public information the disclosure of which would have a material adverse effect on the Company and its subsidiaries taken as a whole. Each Holder of this Security, by accepting the same, agrees to hold any communication by the Company in response to a Sale Notice in confidence. (j) The Trustee shall have no obligation or duty to monitor, determine or inquire as to compliance with any restrictions on transfer imposed under this Indenture or under applicable law with respect to any transfer of any interest in any Security (including any transfers between or among Agent Members or beneficial owners of interests in any Global Security) other than to require delivery of such certificates and other documentation or evidence as are expressly required by, and to do so if and when expressly required by the terms of, this Indenture, and to examine the same to determine substantial compliance as to form with the express requirements hereof. SECTION 2.6 Mutilated, Destroyed, Lost or Stolen Securities. If any mutilated Security is surrendered to the Trustee, the Company shall execute and the Trustee shall authenticate and deliver in exchange therefor a new Security of like tenor and principal amount and bearing a number not contemporaneously outstanding. If there be delivered to the Company and the Trustee (1) evidence to their satisfaction of the destruction, loss or theft of any Security, and (2) such security or indemnity as may be required by them to save each of them and any agent of either of them harmless, then, in the absence of notice to the Company or the Trustee that such Security has been acquired by a bona fide purchaser, the Company shall execute and upon request the Trustee shall authenticate and deliver, in lieu of any such destroyed, lost or stolen Security, a new Security of like tenor and principal amount and bearing a number not contemporaneously outstanding. 27 In case any such mutilated, destroyed, lost or stolen Security has become or is about to become due and payable, the Company in its discretion, but subject to any conversion rights, may, instead of issuing a new Security, pay such Security, upon satisfaction of the condition set forth in the preceding paragraph. Upon the issuance of any new Security under this Section, the Company may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other expenses (including the fees and expenses of the Trustee) connected therewith. Every new Security issued pursuant to this Section in lieu of any destroyed, lost or stolen Security shall constitute an original additional contractual obligation of the Company, whether or not the destroyed, lost or stolen Security shall be at any time enforceable by anyone, and such new Security shall be entitled to all the benefits of this Indenture equally and proportionately with any and all other Securities duly issued hereunder. The provisions of this Section are exclusive and shall preclude (to the extent lawful) all other rights and remedies with respect to the replacement or payment of mutilated, destroyed, lost or stolen Securities. SECTION 2.7 Payment of Liquidated Damages. Liquidated Damages, if any, on any Security which are payable, and is punctually paid or duly provided for, on any Liquidated Damages Payment Date shall be paid to the Person in whose name that Security (or one or more Predecessor Securities) is registered at the close of business on the Regular Record Date for such Liquidated Damages. Any Liquidated Damages on any Security which is payable, but is not punctually paid or duly provided for, on any Liquidated Damages Payment Date (herein called "Defaulted Interest") shall forthwith cease to be payable to the Holder on the relevant Regular Record Date by virtue of having been such Holder, and such Defaulted Interest may be paid by the Company, at its election in each case, as provided in clause (a) or (b) below: (a) The Company may elect to make payment of any Defaulted Interest to the Persons in whose names the Securities (or their respective Predecessor Securities) are registered at the close of business on a Special Record Date for the payment of such Defaulted Interest, which shall be fixed in the following manner. The Company shall notify the Trustee in writing of the amount of Defaulted Interest proposed to be paid on each Security and the date of the proposed payment, and at the same time the Company shall deposit with the Trustee an amount of money equal to the aggregate amount proposed to be paid in respect of such Defaulted Interest or shall make arrangements satisfactory to the Trustee for such deposit prior to the date of the proposed payment, such money when deposited to be held in trust for the benefit of the Persons entitled to such Defaulted Interest as in this clause provided. Thereupon the Trustee shall fix a Special Record Date of the payment of such Defaulted Interest which shall be not more than 15 days and not less than 10 days prior to the date of the proposed payment and not less than 10 days after the receipt by the Trustee of the notice of the proposed payment. The Trustee shall promptly notify the Company of such Special Record Date and, in the name and at the expense of the 28 Company, shall cause notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor to be mailed, first-class postage prepaid (by airmail in the case of any notice sent to an address outside the United States), to each Holder of Securities at the address of such Holder as it appears in the Security Register, not less than 10 days prior to such Special Record Date. Notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor having been so mailed, such Defaulted Interest shall be paid to the Persons in whose names the Securities (or their respective Predecessor Securities) are registered at the close of business on such Special Record Date and shall no longer be payable pursuant to the following clause (b). (b) The Company may make payment of any Defaulted Interest in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Securities may be listed, and upon such notice as may be required by such exchange, if, after written notice given by the Company to the Trustee of the proposed payment pursuant to this clause, such manner of payment shall be deemed reasonable and practicable by the Trustee. Subject to the foregoing provisions of this Section, each Security delivered under this Indenture upon registration of transfer of or in exchange for or in lieu of any other Security shall carry the rights to Liquidated Damages, if any, accrued and unpaid, and to accrue, which were carried by such other Security. The Person in whose name any Security (or its Predecessor Security) is registered at the close of business on any Record Date (including any Security that is converted after the Record Date and on or before the relevant Liquidated Damages Payment Date) shall be entitled to receive any Liquidated Damages payable on such Liquidated Damages Payment Date notwithstanding the cancellation of such Security upon any transfer, exchange or conversion subsequent to the Record Date and on or prior to such Liquidated Damages Payment Date; provided that in the case of any Security, or portion thereof, called for redemption pursuant to Article 10 on a Redemption Date or repurchased by the Company pursuant to Article 11 on a Repurchase Date during the period from the close of business on the Record Date to the close of business on the Business Day next preceding the following Liquidated Damages Payment Date, Liquidated Damages, if any, shall not be paid to the Person in whose name the Security, or portion thereof, is registered on the close of business of such Record Date, and the Company shall have no obligation to pay Liquidated Damages on such Security or portion thereof except to the extent required to be paid upon such redemption or repurchase in accordance with Article 10 or Article 11. In the case of any Security which is converted after any Regular Record Date and on or prior to the next succeeding Liquidated Damages Payment Date (other than any Security whose Maturity is prior to such Liquidated Damages Payment Date), the Holder of such Security shall be required to make a payment to the Company in an amount equal to any Liquidated Damages payable on such Liquidated Damages Payment Date on the principal amount of the Security so converted. Liquidated Damages, if any, on the principal amount of such Security shall be payable on such Liquidated Damages Payment Date notwithstanding such conversion, and such Liquidated Damages (whether or not punctually paid or duly provided for) shall be paid to the Person in whose name that Security (or one or more Predecessor Securities) is registered at the close of business on such Regular Record Date. 29 SECTION 2.8 Persons Deemed Owners. The Company, the Trustee and any agent of the Company or the Trustee may treat the registered Holder of the Global Security as the absolute owner of such Security for the purpose of receiving payment thereof or on account thereof and for all other purposes whatsoever, whether or not such Security be overdue, and notwithstanding any notice of ownership or writing thereon, or any notice of previous loss or theft or other interest therein. The Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name any Security is registered as the owner of such Security for the purpose of receiving payment of principal of and premium, if any, and (subject to Section 2.7) Liquidated Damages, if any, on such Security and for all other purposes whatsoever, whether or not such Security be overdue, and notwithstanding any notice of ownership or writing thereon, or any notice of previous loss or theft or other interest therein. SECTION 2.9 Cancellation. All securities surrendered for payment, redemption, repurchase, conversion, registration of transfer or exchange shall, if surrendered to any Person other than the Trustee, be delivered to the Trustee. All Securities so delivered shall be canceled promptly by the Trustee, and no Securities shall be issued in lieu thereof except as expressly permitted by any of the provisions of this Indenture. The Trustee shall dispose of canceled Securities in accordance with its then customary procedures and, after such disposal, if so requested by written instructions of the Company, shall deliver a certificate of such disposal to the Company. If the Company shall acquire any of the Securities, such acquisition shall not operate as a redemption or satisfaction of the indebtedness represented by such Securities unless and until the same are delivered to the Trustee for cancellation. SECTION 2.10 Computation of Liquidated Damages. Liquidated Damages shall be calculated on the basis of a 360-day year. Whenever it is necessary to compute an amount of Liquidated Damages in respect of any Security for a period of less than a full year, such Liquidated Damages shall be calculated on the basis of a 360-day year consisting of 12 months of 30 days each and, in the case of an incomplete month, the number of days elapsed out of 30 days. SECTION 2.11 Temporary Securities. Pending the preparation of Securities in certificated form, the Company may execute and the Trustee or an Authenticating Agent shall, upon written request of the Company, authenticate and deliver temporary Securities (printed or lithographed). Temporary Securities shall be issuable in any authorized denomination, and substantially in the form of the Securities in certified form but with such omissions, insertions and variations as may be appropriate for temporary Securities, all as may be determined by the Company. Every such temporary Security shall be executed by the Company and authenticated by the Trustee or the Authenticating Agent upon the same conditions and in substantially the same manner, and with the same effect, as the Securities in certificated form. Without unreasonable delay the Company will execute and deliver to the Trustee or the Authenticating Agent Securities in certified form (other than in the case of Securities in global form) and thereupon any or all temporary Securities (other than any such Securities in global form) may be 30 surrendered in exchange therefor, at each office or agency maintained by the Company pursuant to Section 9.2 and the Trustee or the Authenticating Agent shall authenticate and deliver in exchange for such temporary Securities an equal aggregate principal amount of Securities in certified form. Such exchange shall be made by the Company at its own expense and without any charge therefor. Until so exchanged, the temporary Securities shall in all respects be entitled to the same benefits and subject to the same limitations under this Indenture as Securities in certificated form authenticated and delivered hereunder. ARTICLE 3 SATISFACTION AND DISCHARGE SECTION 3.1 Satisfaction and Discharge of Indenture. This Indenture shall cease to be of further effect (except as to any surviving rights of conversion, registration of transfer or exchange or replacement of Securities herein expressly provided for), and the Trustee, on demand of and at the expense of the Company, shall execute proper instruments acknowledging satisfaction and discharge of this Indenture, when (a) either (1) all Securities theretofore authenticated and delivered (other than (i) Securities which have been destroyed, lost or stolen and which have been replaced or paid as provided in Section 2.6 and (ii) Securities for whose payment money has theretofore been deposited in trust or segregated and held in trust by the Company and thereafter repaid to the Company or discharged from such trust, as provided in Section 10.3), have been delivered to the Trustee for cancellation; or (2) all such Securities not theretofore delivered to the Trustee for cancellation (other than Securities referred to in clauses (i) and (ii) of clause (a)(1) above) (i) have become due and payable, or (ii) will have become due and payable at their Stated Maturity within one year, or (iii) are to be called for redemption within one year under arrangements satisfactory to the Trustee for the giving of notice of redemption by the Trustee in the name, and at the expense, of the Company; and the Company, in the case of clause (i), (ii) or (iii) above, has deposited or caused to be deposited with the Trustee as trust funds (immediately available to the Holders in the case of clause (i)) in trust for the purpose an amount sufficient to pay and discharge the entire indebtedness on such Securities not theretofore delivered to the Trustee for cancellation, for principal and premium, if any, and Liquidated Damages, if any, to the date of such deposit (in the case of Securities which have become due and payable) or to the Stated Maturity or Redemption Date, as the case may be; 31 (b) the Company has paid or caused to be paid all other sums payable hereunder by the Company; and (c) the Company has delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that all conditions precedent herein provided for relating to the satisfaction and discharge of this Indenture have been complied with. Notwithstanding the satisfaction and discharge of this Indenture, the obligations of the Company to the Trustee under Section 5.7 shall survive and, if money shall have been deposited with the Trustee pursuant to clause (a)(2) of this Section, the obligations of the Trustee under Section 3.2 and the last paragraph of Section 9.3 shall survive. SECTION 3.2 Application of Trust Money. Subject to the provisions of the last paragraph of Section 9.3, all money deposited with the Trustee pursuant to Section 3.1 shall be held in trust and applied by it, in accordance with the provisions of the Securities and this Indenture, to the payment, either directly or through any Paying Agent (including the Company acting as its own Paying Agent) as the Trustee may determine, to the Persons entitled thereto, of the principal and premium, if any, and Liquidated Damages, if any, for whose payment such money has been deposited with the Trustee. All moneys deposited with the Trustee pursuant to Section 3.1 (and held by it or any Paying Agent) for the payment of Securities subsequently converted shall be returned to the Company upon Company Request. ARTICLE 4 REMEDIES SECTION 4.1 Events of Default. "Event of Default", where used herein, means any one of the following events (whatever the reason for such Event of Default and whether it shall be voluntary or involuntary or be effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body): (1) there shall be a failure by the Company to pay when due the principal of or premium, if any, on any of the Securities at the Stated Maturity, upon redemption or otherwise; or (2) there shall be a failure by the Company to pay Liquidated Damages, if any, on any of the Securities for 30 days after the date when due; or (3) the Company shall fail to perform or observe any other term, covenant or agreement contained in the Securities or this Indenture (other than those pursuant to clauses (1) or (2) above) for a period of 60 days after written notice of such failure, requiring the Company to remedy the same, shall have been given to the Company by the Trustee or to the Company and the Trustee by the Holders of at least 25% in aggregate principal amount of the Outstanding Securities; or 32 (4) if any default shall have occurred under any agreements, indentures or instruments under which the Company has outstanding Indebtedness in excess of U.S. $25,000,000 in the aggregate (but excluding for purposes of this clause (4) any amounts owing under reimbursement or similar obligations to banks, sureties or other entities which have issued letters of credit, surety bonds, performance bonds or other guarantees relating to the performance by the Company or its subsidiaries of contractual obligations to customers, to the extent any demands made under any such reimbursement or similar obligation relates to a draw under the related letter of credit or other instrument which draw is being contested in good faith through appropriate proceedings) and, if not already matured in accordance with its terms, such Indebtedness (as set forth in this clause (4)) shall have been accelerated, and such acceleration shall not have been rescinded or annulled within 30 days after notice thereof shall have been given to the Company by the Trustee or to the Company and the Trustee by the holders of at least 25% in aggregate principal amount of Outstanding Securities, provided, that if, prior to the entry of judgment in favor of the Trustee, such default under such indenture or instrument shall be remedied or cured by the Company, or waived by the holders of such Indebtedness, then the Event of Default under this Indenture shall be deemed likewise to have been remedied, cured or waived; or (5) the entry by a court having jurisdiction in the premises of (A) a decree or order for relief in respect of the Company in an involuntary case or proceeding under any applicable United States federal or state bankruptcy, insolvency, reorganization or other similar law or (B) a decree or order adjudging the Company a bankrupt or insolvent, or approving as properly filed a petition seeking reorganization, arrangement, adjustment or composition of or in respect of the Company under any applicable United States federal or state law, or appointing a custodian, receiver, liquidator, assignee, trustee, sequestrator or other similar official of the Company or of any substantial part of its property, or ordering the winding up or liquidation of its affairs, and the continuance of any such decree or order for relief or any such other decree or order unstayed and in effect for a period of 60 consecutive days; or (6) the commencement by the Company of a voluntary case or proceeding under any applicable United States federal or state bankruptcy, insolvency, reorganization or other similar law or of any other case or proceeding to be adjudicated a bankrupt or insolvent, or the consent by the Company to the entry of a decree or order for relief in respect of the Company in an involuntary case or proceeding under any applicable United States federal or state bankruptcy, insolvency, reorganization or other similar law or to the commencement of any bankruptcy or insolvency case or proceeding against the Company, or the filing by the Company of a petition or answer or consent seeking reorganization or relief under any applicable United States federal or state law, or the consent by the Company to the filing of such petition or to the appointment of or the taking possession by a custodian, receiver, liquidator, assignee, trustee, sequestrator or other similar official of the Company or of any substantial part of its property, or the making by the Company of an assignment for the benefit of creditors, or the admission by the Company in writing of its inability to pay its debts generally as they become due, or the taking of corporate action by the Company expressly in furtherance of any such action. 33 SECTION 4.2 Acceleration of Maturity; Rescission and Annulment. If an Event of Default specified in Section 4.1(5) or 4.1(6) occurs and is continuing, then automatically the principal of all the Securities and any Liquidated Damages thereon shall become immediately due and payable. If any other Event of Default occurs and is continuing, then and in every such case the Trustee or the Holders of not less than 25% in aggregate principal amount of the Outstanding Securities may declare the Securities to be due and payable immediately at their principal amount together with accrued Liquidated Damages, if any, by a notice in writing to the Company (and to the Trustee if given by the Holders), and upon any such declaration such principal amount and accrued Liquidated Damages, if any, shall become immediately due and payable. At any time after an acceleration and before a judgment or decree for payment of the money due has been obtained by the Trustee as hereinafter in this Article provided, the Holders of a majority in principal amount of the Outstanding Securities (or such lesser amount as shall have acted at a meeting pursuant to the provisions of this Indenture), by written notice to the Company and the Trustee, may rescind and annul such acceleration and its consequences if: (a) the Company has paid or deposited with the Trustee a sum sufficient to pay (1) all overdue Liquidated Damages, if any, on all Securities, (2) the principal of and premium, if any, on any Securities which has become due otherwise than by such declaration of acceleration and any Liquidated Damages thereon, (3) to the extent that payment of such interest is lawful, interest upon overdue Liquidated Damages, if any, at the rate at which Liquidated Damages accrue pursuant to Section 3 of the Registration Rights Agreement, and (4) all sums paid or advanced by the Trustee hereunder and the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and (b) all Events of Default, other than the non-payment of the principal of Securities which have become due solely by such acceleration, have been cured or waived as provided in Section 4.13; provided, however, that in the event such declaration of acceleration has been made based on the existence of an Event of Default under Section 4.1(4) and such Event of Default has, pursuant to the proviso to such Section 4.1(4), been remedied, cured or waived, then without any further action by the Holders such declaration of acceleration shall be rescinded automatically and the consequences of such declaration shall be annulled. No such rescission or annulment shall affect any subsequent default or impair any right consequent thereon. 34 SECTION 4.3 Collection of Indebtedness and Suits for Enforcement by the Trustee. The Company covenants that if (1) default is made in the payment of Liquidated Damages, if any, on any Security when such Liquidated Damages become due and payable and such default continues for a period of 30 days, or (2) default is made in the payment of the principal of or premium, if any, on any Security at the Maturity thereof, the Company will, upon demand of the Trustee, pay to it, for the benefit of the Holders of such Securities, the whole amount then due and payable (as expressed therein or as a result of any acceleration effected pursuant to Section 4.2) on such Securities for principal and premium, if any, and Liquidated Damages, if any, and, to the extent that payment of such interest shall be legally enforceable, interest on any overdue Liquidated Damages, if any, at the rate at which Liquidated Damages accrue pursuant to Section 3 of the Registration Rights Agreement, and, in addition thereto, such further amount as shall be sufficient to cover the costs and expenses of collection, including the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel. If the Company fails to pay such amounts forthwith upon such demand, the Trustee, in its own name and as trustee of an express trust, may institute a judicial proceeding for the collection of the sums so due and unpaid, may prosecute such proceeding to judgment or final decree and may enforce the same against the Company and collect the moneys adjudged or decreed to be payable in the manner provided by law out of the property of the Company, wherever situated. If an Event of Default occurs and is continuing, the Trustee may in its discretion proceed to protect and enforce its rights and the rights of the Holders of Securities by such appropriate judicial proceedings as the Trustee shall deem most effectual to protect and enforce any such rights, whether for the specific enforcement of any covenant or agreement in this Indenture or in aid of the exercise of any power granted herein, or to enforce any other proper remedy. SECTION 4.4 Trustee May File Proofs of Claim. In case of the pendency of any receivership, insolvency, liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or other judicial proceeding relative to the Company or the property of the Company or its creditors, the Trustee (irrespective of whether the principal of the Securities shall then be due and payable as therein expressed or by declaration or otherwise and irrespective of whether the Trustee shall have made any demand on the Company for the payment of overdue principal or Liquidated Damages) shall be entitled and empowered, by intervention in such proceeding or otherwise, (1) to file and prove a claim for the whole amount of principal and premium, if any, and Liquidated Damages, if any, owing and unpaid in respect of the Securities and to file such other papers or documents as may be necessary or advisable in order to have the claims of the Trustee (including any claim for the reasonable compensation, expenses, disbursements and advances of the Trustee, 35 its agents and counsel) and of the Holders of Securities allowed in such judicial proceeding, and (2) to collect and receive any moneys or other property payable or deliverable on any such claim and to distribute the same; and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceedings is hereby authorized by each Holder of Securities to make such payments to the Trustee and, in the event that the Trustee shall consent to the making of such payments directly to the Holders of Securities, to pay to the Trustee any amount due to it for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel and any other amounts due the Trustee under Section 5.7. Nothing herein contained shall be deemed to authorize the Trustee to authorize or consent to or accept, or adopt on behalf of any Holder of a Security, any plan of reorganization, arrangement, adjustment or composition affecting the Securities or the rights of any Holder thereof or to authorize the Trustee to vote in respect of the claim of any Holder of a Security in any such proceeding. SECTION 4.5 Trustee May Enforce Claims Without Possession of Securities. All rights of action and claims under this Indenture or the Securities may be prosecuted and enforced by the Trustee without the possession of any of the Securities or the production thereof in any proceeding relating thereto, and any such proceeding instituted by the Trustee shall be brought in its own name as trustee of an express trust, and any recovery of judgment shall, after provision for the payment of the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, be for the ratable benefit of the Holders of the Securities in respect of which judgment has been recovered. SECTION 4.6 Application of Money Collected. Any money collected by the Trustee pursuant to this Article and, after an Event of Default, any money or other property distributable by the Trustee in respect of the Company's obligation under this Indenture shall be applied in the following order, at the date or dates fixed by the Trustee and, in case of the distribution of such money on account of principal or premium, if any, or Liquidated Damages, if any, upon presentation of the Securities and the notation thereon of the payment if only partially paid and upon surrender thereof if fully paid: FIRST: To the Trustee (including any predecessor Trustees) for all amounts due under Section 5.7; SECOND: To the payment of the amounts then due and unpaid for principal of and premium, if any, and Liquidated Damages, if any, on the Securities in respect of which or for the benefit of which such money has been collected, ratably, without preference or priority of any kind, according to the amounts due and payable on such Securities for principal and premium, if any, and Liquidated Damages, if any, respectively; and THIRD: Any remaining amounts shall be repaid to the Company. 36 SECTION 4.7 Limitation on Suit. No Holder of any Security shall have any right to institute any proceeding, judicial or otherwise, with respect to this Indenture, or for the appointment of a receiver or trustee, or for any other remedy hereunder, unless: (1) such Holder has previously given written notice to the Trustee of a continuing Event of Default; (2) the Holders of not less than 25% in aggregate principal amount of the Outstanding Securities shall have made written request to the Trustee to institute proceedings in respect of such Event of Default in its own name as Trustee hereunder; (3) such Holder or Holders have offered to the Trustee indemnity satisfactory to it against the costs, expenses and liabilities to be incurred in compliance with such request; (4) the Trustee for 60 days after its receipt of such notice, request and offer of indemnity has failed to institute any such proceeding; and (5) no direction inconsistent with such written request has been given to the Trustee during such 60-day period by the Holders of a majority in aggregate principal amount of the Outstanding Securities (or such amount as shall have acted at a meeting pursuant to the provisions of this Indenture); it being understood and intended that no one or more of such Holders shall have any right in any manner whatever by virtue of, or by availing of, any provision of this Indenture to affect, disturb or prejudice the rights of any other of such Holders, or to obtain or seek to obtain priority or preference over any other of such Holders or to enforce any right under this Indenture, except in the manner herein provided and for the equal and ratable benefit of all such Holders. SECTION 4.8 Unconditional Right of Holders to Receive Principal, Premium and Liquidated Damages, if any, and To Convert. Notwithstanding any other provision in this Indenture, the Holder of any Security (other than the Temporary Global Security) shall have the right, which is absolute and unconditional, to receive payment of the principal of and premium, if any, and (subject to Section 2.7) Liquidated Damages, if any, on such Security on the Stated Maturity expressed in such Security (or, in the case of redemption or exercise of a Repurchase Right, on the Redemption Date) and to convert such Security in accordance with Article 12, and to institute suit for the enforcement of any such payment and right to convert, and such rights shall not be impaired without the consent of such Holder. SECTION 4.9 Restoration of Rights and Remedies. If the Trustee or any Holder of a Security has instituted any proceeding to enforce any right or remedy under this Indenture and such proceeding has been discontinued or abandoned for any reason, or has been determined adversely to the Trustee or to such Holder, then and in every such 37 case, subject to any determination in such proceeding, the Company, the Trustee and the Holders of Securities shall be restored severally and respectively to their former positions hereunder and thereafter all rights and remedies of the Trustee and the Holders shall continue as though no such proceeding had been instituted. SECTION 4.10 Rights and Remedies Cumulative. Except as otherwise provided with respect to the replacement or payment of mutilated, destroyed, lost or stolen Securities in the last paragraph of Section 2.6, no right or remedy herein conferred upon or reserved to the Trustee or to the Holders of Securities is intended to be exclusive of any other right or remedy, and every right and remedy shall, to the extent permitted by law, be cumulative and in addition to every other right and remedy given hereunder or now hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other appropriate right or remedy. SECTION 4.11 Delay or Omission Not Waiver. No delay or omission of the Trustee or of any Holder of any Security to exercise any right or remedy accruing upon any Event of Default shall impair any such right or remedy or constitute a waiver of any such Event of Default or any acquiescence therein. Every right and remedy given by this Article or by law to the Trustee or to the Holders of Securities may be exercised from time to time, and as often as may be deemed expedient, by the Trustee or by the Holders of Securities, as the case may be. SECTION 4.12 Control by Holders of Securities. The Holders of a majority in aggregate principal amount of the Outstanding Securities (or such lesser amount as shall have acted as a meeting pursuant to the provisions of this Indenture) shall have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or exercising any trust or power conferred on the Trustee, provided that (1) such direction shall not conflict with any rule of law or with this Indenture or expose the Trustee to personal liability, or be unduly prejudicial to the Holders not joining therein, (2) the Trustee may take any other action deemed proper by the Trustee which is not inconsistent with such direction. SECTION 4.13 Waiver of Past Default. The Holders, either (a) through the written consent of not less than a majority in principal amount of the Outstanding Securities, or (b) by the adoption of a resolution, at a meeting of Holders of the Outstanding Securities at which a quorum is present, by the Holders of at least a majority in principal amount of the Outstanding Securities represented at such meeting, may on behalf of the Holders of all the Securities waive any past default hereunder and its consequences, except a default (1) in the payment of the principal of or premium, if any, or Liquidated Damages, if any, on any Security or (2) in 38 respect of a covenant or provision hereof which under Article 7 cannot be modified or amended without the consent of the Holders of each Outstanding Security affected. Upon any such waiver, such default shall cease to exist, and any Event of Default arising therefrom shall be deemed to have been cured, for every purpose of this Indenture; but no such waiver shall extend to any subsequent or other default or impair any right consequent thereon. SECTION 4.14 Undertaking for Costs. All parties to this Indenture agree, and each Holder of any Security by such Holder's acceptance thereof shall be deemed to have agreed, that any court may in its discretion require, in any suit for the enforcement of any right or remedy under this Indenture, or in any suit against the Trustee for any action taken, suffered or omitted by it as Trustee, the filing by any party litigant in such suit of an undertaking to pay the costs of such suit, and that such court may in its discretion assess reasonable costs, including reasonable attorneys' fees, against any party litigant in such suit, having due regard to the merits and good faith of the claims or defenses made by such party litigant; but the provisions of this Section shall not apply to any suit instituted by the Company, to any suit instituted by the Trustee, to any suit instituted by any Holder, or group of Holders, holding in the aggregate more than 10% in aggregate principal amount of the Outstanding Securities, or to any suit instituted by any Holder of any Security for the enforcement of the payment of the principal of or premium, if any, or Liquidated Damages, if any, on any Security on or after the Stated Maturity or Liquidated Damages Payment Date expressed in such Security (or, in the case of redemption or exercise of a Repurchase Right, on or after the Redemption Date) or for the enforcement of the right to convert any Security in accordance with Article 12. SECTION 4.15 Waiver of Stay or Extension Laws. The Company covenants (to the extent that it may lawfully do so) that it will not at any time insist upon, or plead, or in any manner whatsoever claim to take the benefit or advantage of, any stay or extension law wherever enacted, now or at any time hereafter in force, which may affect the covenants or the performance of this Indenture; and the Company (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such law and covenants that it will not hinder, delay or impede the execution of any power herein granted to the Trustee, but will suffer and permit the execution of every such power as though no such law had been enacted. ARTICLE 5 THE TRUSTEE SECTION 5.1 Certain Duties and Responsibilities. (a) Except during the continuance of an Event of Default, (1) the Trustee undertakes to perform such duties and only such duties as are specifically set forth in this Indenture, and no implied covenants or obligations shall be read into this Indenture against the Trustee; and 39 (2) in the absence of bad faith on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture; but in the case of any such certificates or opinions which by any provision hereof are specifically required to be furnished to the Trustee, the Trustee shall be under a duty to examine the same to determine whether or not they conform to the requirements to this Indenture. (b) In case an Event of Default actually known to a Responsible Officer of the Trustee has occurred and is continuing, the Trustee shall exercise such of the rights and powers vested in it by this Indenture, and use the same degree of care and skill in their exercise, as a prudent person would exercise or use under the circumstances in the conduct of such person's own affairs. (c) No provision of this Indenture shall be construed to relieve the Trustee from liability for its own negligent action, its own negligent failure to act, or its own willful misconduct, except that (1) this paragraph (c) shall not be construed to limit the effect of paragraph (a) of this Section; (2) the Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer, unless it shall be proved that the Trustee was negligent in ascertaining the pertinent facts; (3) the Trustee shall not be liable with respect to any action taken or omitted to be taken by it in good faith in accordance with the direction of the Holders of a majority in principal amount of the Outstanding Securities, determined as provided in Sections 1.1 and 1.3, relating to the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred upon the Trustee, under this Indenture; and (4) no provision of this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder, or in the exercise of any of its rights or powers, if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it. (d) Whether or not therein expressly so provided, every provision of this Indenture relating to the conduct or affecting the liability of or affording protection to the Trustee shall be subject to the provisions of this Section. SECTION 5.2 Notice of Defaults. Within 90 days after the occurrence of any default hereunder of which a Responsible Officer of the Trustee has received written notice pursuant to Section 5.3(8) hereof, the Trustee shall give notice to Holders pursuant to Section 1.5 hereof, unless such default shall have been cured or waived; provided, however, that, except in the case of a default in the payment of the 40 principal of or premium, if any, or Liquidated Damages, if any, or in the payment of any redemption or repurchase obligation on any Security, the Trustee shall be protected in withholding such notice if and so long as Responsible Officers of the Trustee in good faith determine that the withholding of such notice is in the interest of the Holders; and provided further, that in the case of any default of the character specified in Section 4.1(3), no such notice to Holders shall be given until at least 30 days after the occurrence thereof. For the purpose of this Section, the term "default" means any event which is, or after notice or lapse of time or both would become, an Event of Default. SECTION 5.3 Certain Rights of Trustee. Subject to the provisions of Section 5.1: (1) the Trustee may rely and shall be protected in acting or refraining from acting upon any resolution, Officers' Certificate, Company Request, Company Order, other certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, coupon, other evidence of indebtedness or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties; (2) any request or direction of the Company mentioned herein shall be sufficiently evidenced by a Company Request or Company Order and any resolution of the Board of Directors may be sufficiently evidenced by a Board Resolution; (3) whenever in the administration of this Indenture the Trustee shall deem it desirable that a matter be proved or established prior to taking, suffering or omitting any action hereunder, the Trustee (unless other evidence be herein specifically prescribed) may, in the absence of bad faith on its part, rely upon an Officers' Certificate; (4) the Trustee may consult with counsel and the advice of such counsel or any Opinion of Counsel shall be full and complete authorization and protection in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance hereon; (5) the Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request or direction of any of the Holders of Securities pursuant to this Indenture, unless such Holders shall have offered to the Trustee security or indemnity satisfactory to it against the costs, expenses and liabilities which might be incurred by it in compliance with such request or direction; (6) the Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, coupon, other evidence of indebtedness or other paper or document, but the Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit, and, if the Trustee shall determine to make such further inquiry or investigation, it shall be entitled to examine the books, records and premises of the Company, personally or by agent or attorney; 41 (7) the Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents or attorneys and the Trustee shall not be responsible for any misconduct or negligence on the part of any agent or attorney appointed with due care by it hereunder; (8) the Trustee shall not be deemed to have notice or knowledge of any default (as defined in Section 5.2) or Event of Default (other than an Event of Default described in Section 4.1(1) or (2) so long as the Trustee is the Paying Agent) unless written notice thereof is received by a Responsible Officer of the Trustee at its Corporate Trust Office, including, from Holders of not less than 25% in aggregate principal amount of the Outstanding Securities and such notice references the Securities and this Indenture; (9) the Trustee shall not be liable for any action taken or omitted to be taken by it in good faith and reasonably believed by it to be authorized or within the discretion or rights or powers conferred upon it by this Indenture; and (10) the rights, protections and immunities afforded to the Trustee hereunder (including, without limitation, its right to be indemnified) shall apply with equal force and effect to any Paying Agent, Authenticating Agent, Transfer Agent, Conversion Agent or Security Registrar acting hereunder. SECTION 5.4 Not Responsible for Recitals or Issuance of Securities. The recitals contained herein and in the Securities (except the Trustee's and Authenticating Agent's certificates of authentication) shall be taken as the statements of the Company, and the Trustee assumes no responsibility for their correctness. The Trustee makes no representations as to the validity or sufficiency of this Indenture or of the Securities. The Trustee shall not be accountable for the use or application by the Company of Securities or the proceeds thereof. SECTION 5.5 May Hold Securities, Act as Trustee Under Other Indentures. The Trustee, any Paying Agent, any Transfer Agent, any Conversion Agent, the Security Registrar or any other agent of the Company or the Trustee, in its individual or any other capacity, may become the owner or pledgee of Securities and may otherwise deal with the Company with the same rights it would have if it were not Trustee, Paying Agent, Transfer Agent, Conversion Agent, Security Registrar or such other agent. The Trustee may become and act as trustee under other indentures under which other securities, or certificates of interest or participation in other securities, of the Company are outstanding in the same manner as if it were not Trustee. SECTION 5.6 Money Held in Trust. Money held by the Trustee in trust hereunder need not be segregated from other funds except to the extent required by law. The Trustee shall be under no liability for interest on any money received by it hereunder except as otherwise expressly agreed with the Company. 42 SECTION 5.7 Compensation and Indemnification of Trustee and Its Prior Claims. The Company covenants and agrees to pay to the Trustee from time to time, and the Trustee shall be entitled to, reasonable compensation (which shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust) and the Company covenants and agrees to pay or reimburse the Trustee upon its request for all reasonable expenses, disbursements and advances incurred or made by or on behalf of it in accordance with any of the provisions of this Indenture (including the reasonable compensation and the expenses and disbursements of its counsel and of all agents and other Persons not regularly in its employ), except to the extent that any such expense, disbursement or advance is due to its negligence or willful misconduct. When the Trustee incurs expenses or renders services in connection with an Event of Default specified in Section 4.1, the expenses (including the reasonable charges and expenses of its counsel) and the compensation for the services are intended to constitute expenses of administration under any bankruptcy law. The Company also covenants to indemnify the Trustee and its officers, directors, employees and agents for, and to hold such Persons harmless against, any loss, liability or expense incurred by them, arising out of or in connection with the acceptance or administration of this Indenture or the trusts hereunder or the performance of the duties of the Trustee hereunder, including the costs and expenses of defending themselves against or investigating any claim of liability in the premises, except to the extent that any such loss, liability or expense was due to the negligence or willful misconduct of such Persons. The obligations of the Company under this Section 5.7 to compensate and indemnify the Trustee and its officers, directors, employees and agents and to pay or reimburse such Persons for expenses, disbursements and advances shall constitute additional indebtedness hereunder and shall survive the satisfaction and discharge of this Indenture, the earlier resignation or removal of the Trustee or the termination of this Indenture. Such additional indebtedness shall be a claim senior to that of the Securities and a lien prior to the Securities upon all property and funds held or collected by the Trustee as such, except funds held in trust for the benefit of the Holders of particular Securities, and the Securities are hereby subordinated to such senior claim and lien. "Trustee" for purposes of this Section 5.7 shall include any predecessor Trustee, but the negligence or willful misconduct of any Trustee shall not affect the indemnification of any other Trustee hereunder. SECTION 5.8 Corporate Trustee Required; Eligibility; Conflicting Interests. There shall at all times be a Trustee hereunder which shall be a Person organized and doing business under the laws of the United States of America, any State thereof or the District of Columbia, authorized under such laws to exercise corporate trust powers, having (together with any Person directly or indirectly controlling the Trustee) a combined capital and surplus of at least U.S. $50,000,000, subject to supervision or examination by federal or state authority. If such Person publishes reports of conditions at least annually, pursuant to law or to the requirements of said supervising or examining authority, then for the purposes of this Section, the combined capital and surplus of such Person shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. If at any time the Trustee shall cease to be eligible in accordance with the provisions of this Section, it shall resign immediately in the manner and with the effect hereinafter specified in this Article. 43 If the Trustee shall have or acquire any conflicting interest within the meaning of the Trust Indenture Act, it shall either eliminate such conflicting interest or resign to the extent, in the manner and with the effect, and subject to the conditions, provided in the Trust Indenture Act and this Indenture. For purposes of Section 310(b)(1) of the Trust Indenture Act and to the extent permitted thereby, the Trustee, in its capacity as trustee in respect of the Securities, shall not be deemed to have a conflicting interest arising from its capacity as trustee in respect of the 1.50% Convertible Senior Debentures due 2005 issued under the Indenture dated as of November 22, 2000. Nothing herein shall prevent the trustee from filing with the Securities and Exchange Commission the application referred to in the second to last paragraph of Section 310(b) of the Trust Indenture Act. SECTION 5.9 Resignation and Removal; Appointment of Successor. (a) No resignation or removal of the Trustee and no appointment of a successor Trustee pursuant to this Article shall become effective until the acceptance of appointment by the successor Trustee in accordance with the applicable requirements of Section 5.10. (b) The Trustee may resign at any time by giving written notice thereof to the Company. If the instrument of acceptance by a successor Trustee required by Section 5.10 shall not have been delivered to the Trustee within 30 days after the giving of such notice of resignation, the resigning Trustee may petition any court of competent jurisdiction for the appointment of a successor Trustee. (c) The Trustee may be removed at any time by Act of the Holders of a majority in principal amount of the Outstanding Securities (or such lesser amount as shall have acted at a meeting pursuant to the provisions of this Indenture), delivered to the Trustee and the Company. (d) If at any time: (1) the Trustee shall cease to be eligible under Section 5.8 and shall fail to resign after written request therefor by the Company or by any Holder of a Security who has been a bona fide Holder of a Security for at least six months, or (2) the Trustee shall become incapable of acting or shall be adjudged a bankrupt or insolvent or a receiver of the Trustee or of its property shall be appointed or any public officer shall take charge or control of the Trustee or of its property or affairs for the purpose of rehabilitation, conservation or liquidation, then, in any such case (i) the Company by a Board Resolution may remove the Trustee, or (ii) subject to Section 4.14, any Holder of a Security who has been a bona fide Holder of a Security for at least six months may, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor Trustee. (e) If the Trustee shall resign, be removed or become incapable of acting, or if a vacancy shall occur in the office of Trustee for any cause, the Company, by a Board Resolution, shall promptly appoint a successor Trustee and shall comply with the applicable requirements of Section 5.10. If, within one year after such resignation, removal or incapability, or the occurrence of such 44 vacancy, a successor Trustee shall be appointed by Act of the Holders of a majority in principal amount of the Outstanding Securities (or such lesser amount as shall have acted at a meeting pursuant to the provisions of this Indenture) delivered to the Company and the retiring Trustee, the successor Trustee so appointed shall, forthwith upon its acceptance of such appointment in accordance with the applicable requirements of Section 5.10, become the successor Trustee and supersede the successor Trustee appointed by the Company. If no successor Trustee shall have been so appointed by the Company or the Holders of Securities and accepted appointment in the manner required by Section 5.10, the retiring Trustee and any Holder of a Security who has been a bona fide Holder of a Security for at least six months may, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the appointment of a successor Trustee. (f) The Company shall give notice of each resignation and each removal of the Trustee and each appointment of a successor Trustee to the Holders of Securities in the manner provided in Section 1.5. Each notice shall include the name of the successor Trustee and the address of its Corporate Trust Office. SECTION 5.10 Acceptance of Appointment by Successor. Every successor Trustee appointed hereunder shall execute, acknowledge and deliver to the Company and the retiring Trustee an instrument accepting such appointment, and thereupon the resignation or removal of the retiring Trustee shall become effective and such successor Trustee, without any further act, deed or conveyance, shall become vested with all the rights, powers, trusts and duties of the retiring Trustee; but, on request of the Company or the successor Trustee, such retiring Trustee shall, upon payment of its charges, execute and deliver an instrument transferring to such successor Trustee all the rights, powers and trusts of the retiring Trustee and shall duly assign, transfer and deliver to such successor Trustee all property and money held by such retiring Trustee hereunder, subject nonetheless to the claim and lien provided for in Section 5.7. Upon request of any such successor Trustee, the Company shall execute any and all instruments for more fully and certainly vesting in and confirming to such successor Trustee all such rights, powers and trusts. No successor Trustee shall accept its appointment unless at the time of such acceptance such successor Trustee shall be eligible under this Article. The fees, charges and expenses of the retiring Trustee shall be paid upon the appointment of a successor Trustee hereunder. The retiring Trustee shall not be liable for any acts or omissions of a successor hereunder. SECTION 5.11 Merger, Conversion, Consolidation or Succession to Business. Any Person into which the Trustee may be merged or converted or with which it may be consolidated, or any Person resulting from any merger, conversion or consolidation to which the Trustee shall be a party, or any Person succeeding to all or substantially all of the Person trust business of the Trustee, shall be the successor of the Trustee hereunder, provided such Person shall be otherwise eligible under this Article, without the execution or filing of any paper or any further act on the part of any of the parties hereto. In case any Securities shall have been authenticated, but not delivered, by the 45 Trustee then in office, any successor by merger, conversion or consolidation to such authenticating Trustee may adopt such authentication and deliver the Securities so authenticated with the same effect as if such successor Trustee had itself authenticated such Securities. SECTION 5.12 Authenticating Agent. The Company may appoint an authenticating agent or agents reasonably acceptable to the Trustee with respect to the Securities which shall be authorized to act on behalf of the Trustee to authenticate Securities issued upon exchange, registration of transfer, partial redemption thereof or substitution pursuant to this Indenture. Securities so authenticated shall be entitled to the benefits of this Indenture and shall be valid and obligatory for all purposes as if authenticated by the Trustee hereunder and every reference herein to the authentication and delivery of Securities by the Trustee or the Trustee's certificate of authentication shall be deemed to include authentication and delivery on behalf of the Trustee by an authenticating agent and a certificate of authentication executed on behalf of the Trustee by an authenticating agent. Each authenticating agent shall at all times be a bank or trust company authorized by law to act as an authenticating agent, having a combined capital and surplus of not less than U.S. $50,000,000 and subject to supervision or examination by a duly constituted banking authority. If such authenticating agent publishes reports of condition at least annually, pursuant to law or to the requirements of said supervising or examining authority, then for the purposes of this Section 5.12, the combined capital and surplus of such authenticating agent shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. If at any time an authenticating agent shall cease to be eligible in accordance with the provisions of this Section 5.12, such authenticating agent shall resign immediately in the manner and with the effect specified in this Section 5.12. The Company hereby appoints JPMorgan Chase Bank as Authenticating Agent. Any Person into which an authenticating agent may be merged or converted or with which it may be consolidated, or any Person resulting from any merger, conversion or consolidation to which such authenticating agent shall be a party, or any Person succeeding to the corporate agency or corporate trust business of an authenticating agent, shall continue to be an authenticating agent, provided such Person shall be otherwise eligible under this Section 5.12, without the execution or filing of any paper or any further act on the part of the Trustee or the authenticating agent. An authenticating agent may resign at any time by giving written notice thereof to the Trustee and to the Company. The Company may at any time terminate the agency of an authenticating agent by giving written notice thereof to such authenticating agent and to the Trustee. Upon receiving such a notice of resignation or upon such a termination, or in case at any time such authenticating agent shall cease to be eligible in accordance with the provisions of this Section 5.12, the Company may appoint a successor authenticating agent which shall be acceptable to the Trustee. Any successor authenticating agent upon acceptance of its appointment hereunder shall become vested with all the rights, powers and duties of its predecessor hereunder, with like effect as if originally named as an authenticating agent. No successor 46 authenticating agent shall be appointed unless eligible under the provisions of this Section 5.12. The Company agrees to pay to each authenticating agent from time to time reasonable compensation for its services under this Section 5.12. If an authenticating agent is appointed with respect to the Securities pursuant to this Section 5.12, the Securities may have endorsed thereon, in addition to or in lieu of the Trustee's certification of authentication, an alternate certificate of authentication in the following form: This is one of the Securities referred to in the within-mentioned Indenture: JPMORGAN CHASE BANK, as Trustee By ___________________, as Authenticating Agent By ----------------------------------- Authorized Signatory [The rest of this page has intentionally been left blank.] 47 ARTICLE 6 CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE SECTION 6.1 Company May Consolidate, Etc., Only on Certain Terms. The Company shall not consolidate with or merge into any other Person or convey, transfer or lease its properties and assets substantially as an entirety to any Person, and the Company shall not permit any Person to consolidate with or merge into the Company or convey, transfer or lease its properties and assets substantially as an entirety to the Company, unless: (1) in the event that the Company shall consolidate with or merge into another Person or convey, transfer or lease its properties and assets substantially as an entirety to any Person, the Person formed by such consolidation or into which the Company is merged or the Person which acquires by conveyance or transfer, or which leases, the properties and assets of the Company substantially as an entirety shall be a Person organized and validly existing under the laws of the United States of America, any State thereof or the District of Columbia and, if the entity surviving such transaction or transferee entity is not the Company, then such surviving or transferee entity shall expressly assume, by an indenture supplemental hereto, executed and delivered to the Trustee, in form satisfactory to the Trustee, the due and punctual payment of the principal of and premium, if any and Liquidated Damages, if any, on all the Securities and the performance of every covenant of this Indenture on the party of the Company to be performed or observed and shall have provided for conversion rights in accordance with Section 12.11; (2) at the time of consummation of such transaction, no Event of Default, and no event which, after notice or lapse of time or both, would become an Event of Default, shall have happened and be continuing; and (3) the Company shall have delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that such consolidation, merger, conveyance, transfer or lease and, if a supplemental indenture is required in connection with such transaction, such supplemental indenture comply with this Article and that all conditions precedent herein provided for relating to such transaction have been complied with. SECTION 6.2 Successor Corporation Substituted. Upon any consolidation or merger by the Company with or into any other Person or any conveyance, transfer or lease of the properties and assets of the Company substantially as an entirety to any Person, in accordance with Section 6.1, the successor Person formed by such consolidation or into which the Company is merged or to which such conveyance, transfer or lease is made shall succeed to, and be substituted for, and may exercise every right and power of, the Company under this Indenture with the same effect as if such successor Person had been named as the Company herein, and thereafter, except in the case of a lease to another Person, the predecessor Person shall be relieved of all obligations and covenants under this Indenture and the Securities. 48 ARTICLE 7 SUPPLEMENTAL INDENTURES SECTION 7.1 Supplemental Indentures Without Consent of Holders of Securities. Without the consent of any Holders of Securities, the Company, when authorized by a Board Resolution, and the Trustee, at any time and from time to time, may enter into one or more indentures supplemental hereto, for any of the following purposes: (1) to evidence the succession of another Person to the Company and the assumption by any such successor of the covenants of the Company herein and in the Securities; or (2) to add to the covenants of the Company for the benefit of the Holders of Securities, or to surrender any right or power herein conferred upon the Company; or (3) to modify the restrictive legend set forth on the face of the form of Security set forth in Exhibit A hereto or modify the form of certificates set forth in Exhibit A hereto; provided, however, that any such modification shall not adversely affect the interest of the Holders of the Securities in any material respect; or (4) to make provision with respect to the conversion rights of Holders of Securities pursuant to Section 12.11; or (5) to make provision for the establishment of a book-entry system, in which Holders would have the option to participate, for the clearance and settlement of transactions in Securities originally issued in certificated form; or (6) to reduce the Conversion Price; provided, that such reduction in the Conversion Price shall not adversely affect the interest of the Holders of Securities (after taking into account tax and other consequences of such reduction) in any material respect; or (7) to qualify this Indenture under the Trust Indenture Act; or (8) to cure any ambiguity, to correct or supplement any provision herein which may be inconsistent with any other provision herein or which is otherwise defective, or to make any other provisions with respect to matters or questions arising under this Indenture which shall not be inconsistent with the provisions of this Indenture, provided, such action pursuant to this clause (8) shall not adversely affect the interest of the Holders of Securities in any material respect. SECTION 7.2 Supplemental Indentures With Consent of Holders of Securities. With either (a) the consent of the Holders of not less than a majority in principal amount of the Outstanding Securities, by the Act of said Holders delivered to the Company and the Trustee, or (b) by the adoption of a resolution, at a meeting of Holders of the Outstanding Securities at which a quorum is present, by the Holders of a majority in principal amount of the 49 Outstanding Securities represented at such meeting, the Company, when authorized by a Board Resolution, and the Trustee may enter into an indenture or indentures supplemental hereto for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Indenture or of modifying in any manner the rights of the Holders of the Securities under this Indenture; provided, however, that no such supplemental indenture shall, without the consent of the Holder of each Outstanding Security affected thereby, (1) change the Stated Maturity of the principal of, or Liquidated Damages Payment Date of any Liquidated Damages on, any Security, or reduce the principal amount thereof or the rate of Liquidated Damages thereon or any premium, if any, payable upon the redemption thereof or the amount payable upon the exercise of a Repurchase Right with respect thereto, or change the coin or currency in which any Security or premium, if any, or Liquidated Damages, if any, thereon is payable, or impair the right to institute suit for the enforcement of any such payment on or after the Stated Maturity thereof or Liquidated Damages Payment Date thereof or, except as permitted by Section 12.11, adversely affect the Repurchase Right or the right to convert any Security as provided in Article 12, or (2) reduce the requirements of Section 8.4 for quorum or voting, or reduce the percentage in principal amount of the Outstanding Securities the consent of whose Holders is required for any such supplemental indenture or the consent of whose Holders is required for any waiver provided for in this Indenture, or (3) change the obligation of the Company to maintain an office or agency in New York pursuant to Section 9.2, or (4) modify any of the provisions of this Section, Section 4.13 or Section 1.10, except to increase any percentage contained herein or therein or to provide that certain other provisions of this Indenture cannot be modified or waived without the consent of the Holder of each Outstanding Security affected thereby. It shall not be necessary for any Act of Holders of Securities under this Section to approve the particular form of any proposal supplemental indenture, but it shall be sufficient if such Act shall approve the substance thereof. SECTION 7.3 Execution of Supplemental Indentures. In executing or accepting the additional trusts created by any supplemental indenture permitted by this Article or the modifications thereby of the trusts created by this Indenture, the Trustee shall be entitled to receive, and (subject to Section 5.1) shall be fully protected in relying upon, an Opinion of Counsel stating that the execution of such supplemental indenture is authorized or permitted by this Indenture and an Officers' Certificate stating that all conditions precedent to the execution of such supplemental indenture have been fulfilled. The Trustee may, but shall not be obligated to, enter into any such supplemental indenture which affects the Trustee's own rights, duties or immunities under this Indenture or otherwise. 50 SECTION 7.4 Effect of Supplemental Indentures. Upon the execution of any supplemental indenture under this Article, this Indenture shall be modified in accordance therewith, and such supplemental indenture shall form a part of this Indenture for all purposes; and every Holder of Securities theretofore or thereafter authenticated and delivered hereunder shall be bound thereby. SECTION 7.5 Reference in Securities to Supplemental Indentures. Securities authenticated and delivered after the execution of any supplemental indenture pursuant to this Article may, and shall if required by the Trustee, bear a notation in form approved by the Trustee as to any matter provided for in such supplemental indenture. If the Company shall so determine, new Securities so modified as to conform, in the opinion of the Company and the Trustee, to any such supplemental indenture may be prepared and executed by the Company and authenticated and delivered by the Trustee in exchange for Outstanding Securities. SECTION 7.6 Notice of Supplemental Indentures. Promptly after the execution by the Company and the Trustee of any supplemental indenture pursuant to the provisions of Section 7.1 or 7.2, the Company shall give notice, setting forth in general terms the substance of such supplemental indenture, in the manner provided in Section 1.5. Any failure of the Company to give such notice, or any defect therein, shall not in any way impair or affect the validity of any such supplemental indenture. ARTICLE 8 MEETING OF HOLDERS OF SECURITIES SECTION 8.1 Purposes for Which Meetings May Be Called. A meeting of Holders of Securities may be called at any time and from time to time pursuant to this Article to make, give or take any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Indenture to be made, given or taken by Holders of Securities. SECTION 8.2 Call Notice and Place of Meetings. (a) The Trustee may at any time call a meeting of Holders of Securities for any purpose specified in Section 8.1, to be held at such time and at such place in The City of New York. Notice of every meeting of Holders of Securities, setting forth the time and the place of such meeting and in general terms the action proposed to be taken at such meeting, shall be given, in the manner provided in Section 1.5, not less than 21 nor more than 180 days prior to the date fixed for the meeting. (b) In case at any time the Company, pursuant to a Board Resolution, or the Holders of at least 10% in principal amount of the Outstanding Securities shall have requested the Trustee to call a meeting of the Holders of Securities for any purpose specified in Section 8.1, by written request setting forth in reasonable detail the action proposed to be taken at the meeting, and the 51 Trustee shall not have made the first publication of the notice of such meeting within 21 days after receipt of such request or shall not thereafter proceed to cause the meeting to be held as provided herein, then the Company or the Holders of Securities in the amount specified, as the case may be, may determine the time and the place in The City of New York for such meeting and may call such meeting for such purposes by giving notice thereof as provided in paragraph (a) of this Section. SECTION 8.3 Persons Entitled to Vote at Meetings. To be entitled to vote at any meeting of Holders of Securities, a Person shall be (a) a Holder of one or more Outstanding Securities, or (b) a Person appointed by an instrument in writing as proxy for a Holder or Holders of one or more Outstanding Securities by such Holder or Holders. The only Persons who shall be entitled to be present or to speak at any meeting of Holders shall be the Persons entitled to vote at such meeting and their counsel, any representatives of the Trustee and its counsel and any representatives of the Company and its counsel. SECTION 8.4 Quorum; Action. The Persons entitled to vote a majority in principal amount of the Outstanding Securities shall constitute a quorum. In the absence of a quorum within 30 minutes of the time appointed for any such meeting, the meeting shall, if convened at the request of Holders of Securities, be dissolved. In any other case the meeting may be adjourned for a period of not less than 10 days as determined by the chairman of the meeting prior to the adjournment of such meeting. In the absence of a quorum at any such adjourned meeting, such adjourned meeting may be further adjourned for a period of not less than 10 days as determined by the chairman of the meeting prior to the adjournment of such adjourned meeting. Notice of the reconvening of any adjourned meeting shall be given as provided in Section 8.2(a), except that such notice need be given only once and not less than five days prior to the date on which the meeting is scheduled to be reconvened. Notice of the reconvening of an adjourned meeting shall state expressly the percentage of the principal amount of the Outstanding Securities which shall constitute a quorum. Subject to the foregoing, at the reconvening of any meeting adjourned for a lack of a quorum, the Persons entitled to vote 25% in principal amount of the Outstanding Securities at the time shall constitute a quorum for the taking of any action set forth in the notice of the original meeting. At a meeting or an adjourned meeting duly reconvened and at which a quorum is present as aforesaid, any resolution and all matters (except as limited by the proviso to Section 7.2) shall be effectively passed and decided if passed or decided by the Persons entitled to vote not less than a majority in principal amount of Outstanding Securities represented and voting at such meeting. Any resolution passed or decisions taken at any meeting of Holders of Securities duly held in accordance with this Section shall be binding on all the Holders of Securities, whether or not present or represented at the meeting. 52 SECTION 8.5 Determination of Voting Rights; Conduct and Adjournment of Meetings. (a) Notwithstanding any other provisions of this Indenture, the Trustee may make such reasonable regulations as it may deem advisable for any meeting of Holders of Securities in regard to proof of the holding of Securities and of the appointment of proxies and in regard to the appointment and duties of inspectors of votes, the submission and examination of proxies, certificates and other evidence of the right to vote, and such other matters concerning the conduct of the meeting as it shall deem appropriate. Except as otherwise permitted or required by any such regulations, the holding of Securities shall be proved in the manner specified in Section 1.3 and the appointment of any proxy shall be proved in the manner specified in Section 1.3. Such regulations may provide that written instruments appointing proxies, regular on their face, may be presumed valid and genuine without the proof specified in Section 1.3 or other proof. (b) The Trustee shall, by an instrument in writing, appoint a temporary chairman (which may be the Trustee) of the meeting, unless the meeting shall have been called by the Company or by Holders of Securities as provided in Section 8.2(b), in which case the Company or the Holders of Securities calling the meeting, as the case may be, shall in like manner appoint a temporary chairman. A permanent chairman and a permanent secretary of the meeting shall be elected by vote of the Persons entitled to vote a majority in principal amount of the Outstanding Securities represented at the meeting. (c) At any meeting each Holder of a Security or proxy shall be entitled to one vote for each U.S. $1,000 principal amount of Securities held or represented by him; provided, however, that no vote shall be cast or counted at any meeting in respect of any Security challenged as not Outstanding and ruled by the chairman of the meeting to be not Outstanding. The chairman of the meeting shall have no right to vote, except as a Holder of a Security or proxy. (d) Any meeting of Holders of Securities duly called pursuant to Section 8.2 at which a quorum is present may be adjourned from time to time by Persons entitled to vote a majority in principal amount of the Outstanding Securities represented at the meeting, and the meeting may be held as so adjourned without further notice. SECTION 8.6 Counting Votes and Recording Action of Meetings. The vote upon any resolution submitted to any meeting of Holders of Securities shall be by written ballots on which shall be subscribed the signatures of the Holders of Securities or of their representatives by proxy and the principal amounts and serial numbers of the Outstanding Securities held or represented by them. The permanent chairman of the meeting shall appoint two inspectors of votes who shall count all votes cast at the meeting for or against any resolution and who shall make and file with the secretary of the meeting their verified written reports in duplicate of all votes cast at the meeting. A record, at least in duplicate, of the proceedings of each meeting of Holders of Securities shall be prepared by the secretary of the meeting and there shall be attached to said record the original reports of the inspectors of votes on any vote by ballot taken thereat and affidavits by one or more Persons having knowledge of the facts setting forth a copy of the notice of the meeting and showing that said notice was given as provided in Section 8.2 and, if applicable, Section 8.4. Each copy shall be signed and verified by the affidavits of the permanent chairman and secretary of the meeting and one such copy shall be delivered to the Company and another to the Trustee to be 53 preserved by the Trustee, the latter to have attached thereto the ballots voted at the meeting. Any record so signed and verified shall be conclusive evidence of the matters therein stated. ARTICLE 9 COVENANTS SECTION 9.1 Payment of Principal, Premium and Liquidated Damages, if any. The Company will duly and punctually pay the principal of and premium, if any, and Liquidated Damages, if any, in respect of the Securities in accordance with the terms of the Securities and this Indenture. The Company hereby initially appoints the Trustee as its Paying Agent for making the payments required hereunder. The Company will deposit or cause to be deposited with the Trustee as directed by the Trustee, on or before the day of the Stated Maturity of any Security or Liquidated Damages Payment Date of any Liquidated Damages, all payments so due. SECTION 9.2 Maintenance of Offices or Agencies. The Company hereby initially appoints the Corporate Trust Office of the Trustee as its Conversion Agent in New York, where Securities may be presented or surrendered for payment, where Securities may be surrendered for registration of transfer or exchange, where Securities may be surrendered for conversion, and where notices and demands to or upon the Company in respect of the Securities and this Indenture may be served. The Company may at any time and from time to time vary or terminate the appointment of any such agent or appoint any additional agents for any or all of such purposes; provided, however, that until all of the Securities have been delivered to the Trustee for cancellation, or moneys sufficient to pay the principal of and premium, if any, and Liquidated Damages, if any, on the Securities have been made available for payment and either paid or returned to the Company pursuant to the provisions of Section 9.3, the Company will maintain in New York, an office or agency where Securities may be presented or surrendered for payment, where Securities may be surrendered for registration of transfer or exchange, where Securities may be surrendered for conversion and where notices and demands to or upon the Company in respect of the Securities and this Indenture may be served. The Company will give prompt written notice to the Trustee, and notice to the Holders in accordance with Section 1.5, of the appointment or termination of any such agents and of the location and any change in the location of any such office or agency. If at any time the Company shall fail to maintain any such required office or agency in New York, or shall fail to furnish the Trustee with the address thereof, presentations and surrenders may be made and notices and demands may be served on and Securities may be surrendered for conversion to the Corporate Trust Office of the Trustee. SECTION 9.3 Money for Security Payments To Be Held in Trust. If the Company shall act as a Paying Agent, it will, on or before each due date of the principal of and premium, if any, or Liquidated Damages, if any, on any of the Securities, segregate and hold in trust for the benefit of 54 the Persons entitled thereto a sum sufficient to pay the principal and premium, if any, or Liquidated Damages, if any, so becoming due until such sums shall be paid to such Persons or otherwise disposed of as herein provided and the Company will promptly notify the Trustee of its action or failure so to act. Whenever the Company shall have one or more Paying Agents, it will, on or prior to each due date of the principal of and premium, if any, or Liquidated Damages, if any, on any Securities (or, if applicable, cash in lieu of conversion of any Security), deposit with a Paying Agent a sum sufficient to pay the principal and premium, if any, or Liquidated Damages, if any, so becoming due, such sum to be held in trust for the benefit of the Persons entitled to such principal, premium, if any, or Liquidated Damages, if any, and (unless such Paying Agent is the Trustee) the Company will promptly notify the Trustee of any failure so to act. The Company will cause each Paying Agent other than the Trustee to execute and deliver to the Trustee an instrument in which such Paying Agent shall agree with the Trustee, subject to the provisions of this Section, that such Paying Agent will: (1) hold all sums held by it for the payment of the principal of and premium, if any, or Liquidated Damages, if any, on the Securities in trust for the benefit of the Persons entitled thereto until such sums shall be paid to such Persons or otherwise disposed of as herein provided; (2) give the Trustee notice of any default by the Company in the making of any payment of principal and premium, if any, or Liquidated Damages, if any; and (3) at any time during the continuance of any such default, upon the written request of the Trustee, forthwith pay to the Trustee all sums so held in trust by such Paying Agent. The Company may at any time, for the purpose of obtaining the satisfaction and discharge of this Indenture or for any other purpose, pay, or by Company Order direct any Paying Agent to pay, to the Trustee all sums held in trust by the Company or such Paying Agent, such sums to be held by the Trustee upon the same trusts as those upon which such sums were held by the Company or such Paying Agent; and, upon such payment by any Paying Agent to the Trustee, such Paying Agent shall be released from all further liability with respect to such money. Any money deposited with the Trustee or any Paying Agent, or then held by the Company, in trust for the payment of the principal of and premium, if any, or Liquidated Damages, if any, on any Security and remaining unclaimed for two years after such principal and premium, if any, or Liquidated Damages, if any, and redemption or repurchase payments have become due and payable shall be paid to the Company on Company Request, subject to applicable abandoned property and escheat laws, or (if then held by the Company) shall be discharged from such trust; and the Holder of such Security shall thereafter, as an unsecured general creditor, look only to the Company for payment thereof, and all liability of the Trustee or such Paying Agent with respect to such trust money, and all liability of the Company as trustee thereof, shall thereupon cease; provided, however, that (i) the Trustee or such Paying Agent, before 55 being required to make any such repayment, may at the expense of the Company cause to be published or mailed notice as provided in Section 1.5, except that such notice need be given only once, (ii) such money remains unclaimed and (iii) after a date specified in such notice, which shall not be less than 30 days from the date of such publication, any unclaimed balance of such money then remaining will be repaid to the Company. SECTION 9.4 Existence. Subject to Article 6, the Company will do or cause to be done all things necessary to preserve and keep in full force and effect its existence, rights and franchises; provided, however, that the Company shall not be required to preserve any such right or franchise if the Company determines that the preservation thereof is no longer desirable in the conduct of the business of the Company and that the loss thereof is not disadvantageous in any material respect to the Holders. SECTION 9.5 Maintenance of Properties. The Company will, and will cause each Significant Subsidiary to, maintain and keep its properties and every part thereof in such repair, working order and condition, and make or cause to be made all such needful and proper repairs, renewals and replacements thereto, as in the judgment of the Company are necessary in the interests of the Company; provided, however, that nothing in this Section shall prevent the Company or any Significant Subsidiary from selling, abandoning or otherwise disposing of any of their respective properties or discontinuing a part of their respective businesses from time to time if, in the judgment of the Company, such sale, abandonment, disposition or discontinuance is advisable and does not materially adversely affect the interests or business of the Company or any of its Subsidiaries. SECTION 9.6 Payment of Taxes and Other Claims. The Company will, and will cause each Significant Subsidiary to, promptly pay and discharge or cause to be paid and discharged all taxes, assessments and governmental charges or levies lawfully imposed upon it or upon its income or profits or upon any of its property, real or personal, or upon any part thereof, as well as all claims for labor, materials and supplies which, if unpaid, might by law become a lien or charge upon its property; provided, however, that neither the Company nor any Significant Subsidiary shall be required to pay or discharge or cause to be paid or discharged any such tax, assessment, charge, levy, or claim if the amount, applicability or validity thereof shall currently be contested in good faith by appropriate proceedings and if the Company or such Significant Subsidiary, as the case may be, shall have set aside on its books reserves deemed by it adequate with respect thereto. SECTION 9.7 Statement by Officers as to Default. The Company will deliver to the Trustee, on or before October 1 in each year ending after the date hereof, an Officers' Certificate, stating whether or not to the best knowledge of the signers thereof the Company is in default in the performance and observance of any of the terms, provisions and conditions of this Indenture, without regard to any period of grace or requirement of notice provided hereunder and if the Company shall be in default, specifying all such defaults and the nature and status thereof of which they may have knowledge. In the event that the principal executive officer, the principal 56 financial officer or the principal accounting officer of the Company comes to actually know of such a default, regardless of the date, the Company will promptly deliver an Officers' Certificate to the Trustee specifying such default and the nature and status thereof, but in no event more than ten (10) days after such officer gains such knowledge. SECTION 9.8 Waiver of Certain Covenants. The Company may omit in any particular instance to comply with any term, provision or condition set forth in Sections 9.3 to 9.5, inclusive, if before the time for such compliance the Holders of at least a majority in aggregate principal amount of the Outstanding Securities (or such lesser amount as shall have acted at a meeting pursuant to the provisions of this Indenture) shall, by Act of such Holders, either waive such compliance in such instance or generally waive compliance with such term, provision or condition, but no waiver shall extend to or affect such term, provision or condition except to the extent so expressly waived, and, until such waiver shall become effective, the obligations of the Company and the duties of the Trustee in respect of any such term, provision or condition shall remain in full force and effect. SECTION 9.9 Delivery of Certain Information. At any time when the Company is not subject to Section 13 or 15(d) of the Exchange Act, upon the request of a Holder of a Security, the Company will promptly furnish or cause to be furnished Rule 144A Information to such Holder or to a prospective purchaser of such Security designated by such Holder, as the case may be, in order to permit compliance by such Holder with Rule 144A under the Securities Act in connection with the resale of such Security by such Holder; provided, however, that the Company shall not be required to furnish such information in connection with any request made on or after the date which is two years from the date such Security (or any predecessor Security) was acquired from the Company. "Rule 144A Information" shall be such information as is specified pursuant to Rule 144A(d)(4) under the Securities Act (or any successor provision thereto). SECTION 9.10 Resale of Certain Securities. During the period of two years after the Closing Date, the Company shall not, and shall not permit any of its "affiliates" (as defined under Rule 144 under the Securities Act) to, resell any Securities, or shares of Common Stock issuable upon conversion of the Securities, which constitute "restricted securities" under Rule 144, that are acquired by any of them within the United States or to U.S. persons except pursuant to an effective registration statement under the Securities Act or an applicable exemption therefrom. The Trustee shall have no responsibility or liability in respect of the Company's performance of its agreement in the preceding sentence. SECTION 9.11 Lists of Holders; Reports by the Trustee and the Company. Semiannually, not later than January 1 and July 1 in each year, commencing January 1, 2003 and at such other times as the Trustee may request in writing, the Company shall furnish or cause to be furnished to the Trustee information as to the names and addresses of the Holders, and the Trustee shall preserve such information and similar information received by it in any other capacity and afford to the Holders access to information so preserved by it, all to such extent, if any, and in such manner as shall be required by the Trust 57 Indenture Act; provided, however, that no such list need be furnished so long as the Trustee shall be the Security Registrar. Not later than July 15 of each year commencing with the year 2003, the Trustee shall transmit to the Holders, the Securities and Exchange Commission and each securities exchange upon which any Securities are listed, if any, a report, dated as of the next preceding May 15, with respect to any events and other matters described in Section 313(a) of the Trust Indenture Act, in such manner and to the extent required by the Trust Indenture Act. The Trustee shall transmit to the Holders, the Securities and Exchange Commission and each securities exchange upon which any Securities are listed, if any, and the Company shall file with the Trustee (within 30 days after filing with the Securities and Exchange Commission in the case of reports pursuant to the Trust Indenture Act must be filed with the Securities and Exchange Commission and furnished to the Trustee) and transmit to the Holders, such other information, reports and other documents, if any, at such times and in such manner, as shall be required by the Trust Indenture Act. The Company shall notify the Trustee of the listing of any of Securities on any securities exchange. Delivery of such reports, information and documents filed with the Securities and Exchange Commission pursuant to the Securities Exchange Act of 1934, as amended, to the Trustee is for information purposes only, and the Trustee's receipt of such shall not constitute notice or constructive notice of any information contained therein or determinable from information contained therein, including the Company's compliance with any of its covenants hereunder (as to which the Trustee is entitled to rely exclusively on Officers' Certificates). ARTICLE 10 REDEMPTION OF SECURITIES SECTION 10.1 Right of Redemption. At any time on or after May 15, 2008, except for Securities that it is required to purchase pursuant to Section 11.1 or required to convert pursuant to Section 12.1, the Company may, at its option, redeem the Securities in whole at any time or in part from time to time, on any date prior to the Stated Maturity of such Securities, upon notice as set forth in Section 10.4, at the Redemption Price equal to 100% of the principal amount of the Securities. In addition, the Company will pay Liquidated Damages, if any, on the Securities being redeemed, including those Securities which are converted into Common Stock after the date the notice of the redemption is mailed and prior to the Redemption Date, including Liquidated Damages, if any, accrued and unpaid to, but excluding, the Redemption Date. If the Redemption Date is a Liquidated Damages Payment Date, the Company will pay the Liquidated Damages, if any, to the Holder of record on the corresponding Regular Record Date, which may or may not be the same Person to whom the Company will pay the Redemption Price. If the Company exercises its option to redeem the Securities pursuant to this Section 10.1, a Holder may nevertheless exercise its right to have its Securities purchased pursuant to Section 11.1, if applicable, or to convert such Securities pursuant to Article 12 even if such Securities are not otherwise convertible at such time, in each case, until the close of business on the day that is two Business Days immediately preceding the Redemption Date. 58 SECTION 10.2 Applicability of Article. Redemption of Securities at the election of the Company or otherwise as permitted or required by any provision of the Securities or this Indenture, shall be made in accordance with such provision and this Article. SECTION 10.3 Election to Redeem; Notice to Trustee. The election of the Company to redeem any Securities shall be evidenced by a Board Resolution. The Company shall, at least 20 days prior to the Redemption Date fixed by the Company (unless a shorter notice shall be satisfactory to the Trustee), notify the Trustee of such Redemption Date and of the principal amount and the CUSIP number of the Securities to be redeemed. SECTION 10.4 Selection by Trustee of Securities to Be Redeemed. If less than all the Securities are to be redeemed, the particular Securities to be redeemed shall be selected by the Trustee, from the Outstanding Securities not previously called for redemption, by a method that complies with the requirements of any exchange on which the Securities are listed, or if the Securities are not listed in any exchange, on a pro rata basis or by lot or in accordance with any other method as the Trustee may deem fair and appropriate. Such method of selection may provide for the selection for redemption of portions (equal to U.S. $1,000 or any integral multiple thereof) of the principal amount of Securities of a denomination larger than U.S. $1,000. If any Security selected for partial redemption is converted in part before termination of the conversion right with respect to the portion of the Security so selected, the converted portion of such Security shall be deemed to be the portion selected for redemption (provided, however, that the Holder of such Security so converted and deemed redeemed shall not be entitled to any additional Liquidated Damages payment as a result of such deemed redemption than such Holder would have otherwise been entitled to receive upon conversion of such Security). Securities which have been converted during a selection of Securities to be redeemed may be treated by the Trustee as Outstanding for the purpose of such selection. The Trustee shall promptly notify the Company and the Security Registrar in writing of the Securities selected for redemption and, in the case of any Securities in registered form selected for partial redemption, the principal amount thereof to be redeemed. For all purposes of this Indenture, unless the context otherwise requires, all provisions relating to the redemption of Securities shall relate, in the case of any Securities redeemed or to be redeemed only in part, to the portion of the principal amount of such Securities which has been or is to be redeemed. SECTION 10.5 Notice of Redemption. Notice of redemption shall be given in the manner provided in Section 1.5 to the Holders of Securities to be redeemed. Such notice shall be given not less than 20 nor more than 60 days prior to the Redemption Date. 59 All notices of redemption shall state: (1) the Redemption Date, (2) the Redemption Price, and Liquidated Damages, if any, accrued and unpaid to but excluding the Redemption Date, (3) if less than all the Outstanding Securities are to be redeemed, the aggregate principal amount of Securities to be redeemed and the aggregate principal amount of Securities which will be outstanding after such partial redemption, (4) that on the Redemption Date the Redemption Price, and Liquidated Damages, if any, accrued and unpaid to but excluding the Redemption Date, will become due and payable upon each such Security to be redeemed, and that Liquidated Damages thereon, if any, shall cease to accrue on and after said date, (5) the Conversion Price, the date on which the right to convert the principal of the Securities to be redeemed will terminate and the places where such Securities may be surrendered for conversion, (6) the place or places that the certificate required by Section 10.7 and Section 2.2 shall be delivered, and the form of such certificate, (7) the place or places where such Securities are to be surrendered for payment of the Redemption Price and accrued Liquidated Damages, if any, and (8) the CUSIP number assigned to the Securities, provided, however, that such notice may state that no representation is made as to the correctness of such number, in which case none of the Company, the Trustee or any agent of the Company or the Trustee shall have any liability in respect of the use of any such number on such notice, and the redemption of such Securities shall not be affected by any defect in or omission of such numbers. In case of a partial redemption, the notice given shall specify the last date on which exchanges or transfers of Securities may be made pursuant to Section 2.5, and shall specify the serial numbers of Securities and the portions thereof called for redemption. Notice of redemption of Securities to be redeemed at the election of the Company shall be given by the Company or, at the Company's request, by the Trustee in the name of and at the expense of the Company. SECTION 10.6 Deposit of Redemption Price. Prior to or on any Redemption Date, the Company shall deposit with the Trustee or with a Paying Agent (or, if the Company is acting as its own Paying Agent, segregate and hold in trust as provided in Section 9.3) an amount of money in immediately available funds sufficient to pay the Redemption Price of, and (except if the Redemption Date shall be a Liquidated Damages Payment Date) accrued Liquidated Damages, if any, on all the Securities which are to be 60 redeemed on that date other than any Securities called for redemption on that date which have been converted prior to the date of such deposit. If any Security called for redemption is converted, any money deposited with the Trustee or with a Paying Agent or so segregated and held in trust for the redemption of such Security shall (subject to any right of the Holder of such Security or any Predecessor Security to receive Liquidated Damages as provided in the last paragraph of Section 2.7) be paid to the Company on Company Request or, if then held by the Company, shall be discharged from such trust. SECTION 10.7 Securities Payable on Redemption Date. Notice of redemption having been given as aforesaid, the Securities so to be redeemed shall, on the Redemption Date, become due and payable at the Redemption Price therein specified and from and after such date (unless the Company shall default in the payment of the Redemption Price and accrued Liquidated Damages, if any) such Securities shall cease to accrue Liquidated Damages, if any. Upon surrender of any such Security for redemption in accordance with said notice, such Security shall be paid by the Company at the Redemption Price together with accrued Liquidated Damages, if any, to the Redemption Date; provided, however, the Liquidated Damages, if any, on Securities whose Stated Maturity is on or prior to the Redemption Date shall be payable to the Holders of such Securities, or one or more Predecessor Securities, registered as such on the relevant Record Date according to their terms and the provisions of Section 2.7. If any Security called for redemption shall not be so paid upon surrender thereof for redemption, the principal and premium, if any, shall, until paid, accrue Liquidated Damages, if any, from the Redemption Date at the rate prescribed therefor in the Registration Rights Agreement and each Security shall remain convertible into shares of Common Stock pursuant to Article 12 until such Security shall have been so redeemed. Upon presentation and surrender of any Security which is to be purchased in part only, upon its purchase, the Company shall execute and the Trustee shall authenticate and deliver to the Holder thereof, at the expense of the Company, a new Security or Securities in authorized denominations in aggregate principal amount equal to the portion of the Security not purchased. SECTION 10.8 Securities Redeemed in Part. Any Security which is to be redeemed only in part shall be surrendered at an office or agency of the Company designated for that purpose pursuant to Section 9.2 (with, if the Company or the Trustee so requires, due endorsement by, or a written instrument of transfer in form satisfactory to the Company and the Trustee duly executed by, the Holder thereof or the Holder's attorney duly authorized in writing), and the Company shall execute, and the Trustee shall authenticate and deliver to the Holder of such Security, at the expense of the Company, without service charge, a new Security or Securities of any authorized denomination as requested by such Holder in aggregate principal amount equal to and in exchange for the unredeemed portion of the principal of the Security so surrendered. 61 ARTICLE 11 REPURCHASE UPON A DESIGNATED EVENT SECTION 11.1 Repurchase Right. (a) On each of May 15, 2008, May 15, 2013 and May 15, 2018, (each, a "Specific Repurchase Date") each Holder shall have the right (the "Specific Date Repurchase Right"), at the Holder's option, to require the Company to repurchase for cash, and upon the exercise of such right the Company shall purchase, all of such Holder's Securities not theretofore called for redemption, or any portion thereof (in principal amounts of $1,000 or integral multiples thereof), at a purchase price equal to 100% of the principal amount of the Securities to be purchased (the "Specific Date Repurchase Price"), plus accrued and unpaid Liquidated Damages, if any, on those Securities to, but excluding the Specific Repurchase Date. Holders may submit their Securities for repurchase to the Paying Agent at any time from the opening of business on the date that is 20 Business Days prior to the applicable Specific Repurchase Date until the close of business on the Specific Repurchase Date. (b) If, at any time there shall occur a Designated Event, then each Holder shall have the right (the "Designated Event Repurchase Right" and together with the Specific Date Repurchase Right, the "Repurchase Right"), at such Holder's option, but subject to the provisions of Section 11.2, to require the Company to repurchase all of such Holder's Securities, or any portion thereof (in principal amounts of $1,000 or integral multiples thereof), on the repurchase date (the "Designated Event Purchase Date", and together with the Specific Repurchase Date, the "Repurchase Date") fixed by the Company that is not less than 30 days nor more than 60 days after the date of the Company Notice (as defined in Section 11.3 below) of such Designated Event (or, if such 60th day is not a Business Day, the next succeeding Business Day). The repurchase price shall be equal to 100% of the principal amount of Securities, together with accrued Liquidated Damages, if any, to, but excluding, the Repurchase Date (the "Designated Event Repurchase Price" and together with the Specific Date Repurchase Price, the "Repurchase Price"); provided that if such Repurchase Date is May 15 or November 15, then the Liquidated Damages, if any, payable on such date shall be paid to the holder of record of the Securities on the next preceding May 1 or November 1, respectively. At the option of the Company, the Designated Event Repurchase Price may be paid in cash or, subject to the fulfillment by the Company of the conditions set forth in Section 11.2, by delivery of shares of Common Stock having a fair market value equal to the Designated Event Repurchase Price as described in Section 11.2(a). Whenever in this Indenture there is a reference in any context, to the principal of any Security as of any time, such reference shall be deemed to include reference to the Repurchase Price payable in respect of such Security to the extent that such Repurchase Price is, was or would be so payable at such time, and express mention of the Repurchase Price in any provision of this Indenture shall not be construed as excluding the Repurchase Price in those provisions of this Indenture when such express mention is not made. 62 SECTION 11.2 Conditions to the Company's Election to Pay the Designated Event Repurchase Price in Common Stock. The Company may elect to pay all or a portion of the Designated Event Repurchase Price by delivery of shares of Common Stock pursuant to Section 11.1(b) if and only if the following conditions have been satisfied: (a) The shares of Common Stock deliverable in payment of the Designated Event Repurchase Price shall have a fair market value as of the Repurchase Date of not less than the Designated Event Repurchase Price. For purposes of this Section 11.2, the fair market value of shares of Common Stock shall be determined by the Company and shall be equal to 95% of the average of the Closing Prices of the Common Stock for the five consecutive Trading Days ending on and including the third Trading Day immediately preceding the Designated Event Repurchase Date; (b) In the event any shares of Common Stock to be issued upon repurchase of Securities hereunder require registration under any Federal securities law before such shares may be freely transferable without being subject to any transfer restrictions under the Securities Act upon repurchase, such registration shall have been completed and shall have become effective prior to the Designated Event Repurchase Date; (c) In the event any shares of Common Stock to be issued upon repurchase of Securities hereunder require registration with or approval of any governmental authority under any State law or any other Federal law before such shares may be validly issued or delivered upon repurchase, such registration shall have been completed, have become effective and such approval shall have been obtained, in each case, prior to the Designated Event Repurchase Date; (d) The shares of Common Stock deliverable in payment of the Designated Event Repurchase Price shall be listed for trading on a U.S. national securities exchange or approved for trading on an established automated over-the-counter trading market in the United States, in either case, immediately prior to the Designated Event Repurchase Date; and (e) All shares of Common Stock deliverable in payment of the Designated Event Repurchase Price shall be issued out of the Company's authorized but unissued Common Stock and will, upon issue, be duly and validly issued and fully paid and non-assessable and free of any preemptive rights. If all of the conditions set forth in this Section 11.2 are not satisfied in accordance with the terms thereof, the Designated Event Repurchase Price shall be paid by the Company only in cash. All calculations under this Article 11 shall be made by the Company and shall be made to the nearest cent or the nearest one hundredth of a share, as the case may be. No adjustments need to be made for a change in the par value of the Common Stock. The Company shall compute the Designated Event Repurchase Price in accordance with this Article 11 and shall prepare an Officers' Certificate signed by the Chief Financial Officer of the Company setting forth the Designated Event Repurchase Price and showing reasonable detail the facts upon such calculation is based, and such Officers' Certificate shall forthwith promptly be filed with the Trustee. 63 SECTION 11.3 Notices; Method of Exercising Repurchase Right, Etc. (a) Unless the Company shall have theretofore called for redemption all of the outstanding Securities, on or before the thirtieth (30th) calendar day after the Company becomes aware of the occurrence of a Designated Event and not later than the twentieth (20th) Business Day prior to a Specific Repurchase Date, the Company or, at the request and expense of the Company, the Trustee, shall mail to all Holders a notice (the "Company Notice") of the occurrence of the Designated Event or the Specific Repurchase Date and of the Repurchase Right set forth herein arising as a result thereof. The Company shall also deliver a copy of such notice of a Repurchase Right to the Trustee. The Company Notice shall contain the following information: (1) the Repurchase Date, (2) the date by which the Repurchase Right must be exercised, (3) the last date by which the election to require repurchase, if submitted, may be revoked, (4) the Repurchase Price, and whether the Repurchase Price shall be paid by the Company in cash or by delivery of shares of Common Stock or both, (5) a description of the procedure which a Holder must follow to exercise a Repurchase Right, (6) the Conversion Price then in effect, the date on which the right to convert the principal amount of the Securities to be repurchased will terminate and the place or places where Securities may be surrendered for conversion, (7) the Holder's right to withdraw a completed and delivered Repurchase Event Purchase Notice, the procedures for withdrawing a Repurchase Event Purchase Notice, pursuant to clause (b) below and that Securities as to which a completed and delivered Repurchase Event Purchase Notice may be converted, if they are convertible only in accordance with Article 12, if the applicable completed and delivered Repurchase Event Purchase Notice has been withdrawn; (8) that, unless the Company defaults in making payment on Securities for which a Repurchase Event Purchase Notice has been submitted, Liquidated Damages, if any, on such Securities will cease to accrue on the Repurchase Date; and (9) the CUSIP number assigned to the Securities, provided, however, that such notice may state that no representation is made as to the correctness of such number, in which case none of the Company, the Trustee or any agent of the Company or the Trustee shall have any liability in respect of the use of any such number on such notice, and the repurchase of such Securities shall not be affected by any defect in or omission of such number. 64 No failure of the Company to give the foregoing notices or defect therein shall limit any Holder's right to exercise a Repurchase Right or affect the validity of the proceedings for the repurchase of Securities. If any of the foregoing provisions are inconsistent with applicable law, such law shall govern. (b) To exercise a Repurchase Right, a Holder shall deliver to the Trustee on or before the close of business on the Repurchase Date (i) written notice (a "Repurchase Event Purchase Notice") to the Company (or agent designated by the Company for such purpose) of the Holder's exercise of such right, which notice shall set forth the name of the Holder, the principal amount of the Securities to be repurchased, a statement that an election to exercise the Repurchase Right is being made thereby, and, in the event that the Repurchase Price shall be paid in shares of Common Stock, the name or names (with addresses) in which the certificate or certificates for shares of Common Stock shall be issued, and (ii) the Securities with respect to which the Repurchase Right is being exercised, duly endorsed for transfer to the Company. A Repurchase Event Purchase Notice may be withdrawn at any time prior to, but excluding, the Repurchase Date, by delivering written notice to that effect to the Trustee prior to the close of business on the Business Day prior to the Repurchase Date. (c) In the event a Repurchase Right shall be exercised in accordance with the terms hereof, promptly after the Repurchase Date, the Company shall pay or cause to be deposited with the Trustee or a Paying Agent (or, if the Company is acting as its own Paying Agent, segregate and hold in trust as provided in Section 9.3) an amount of money sufficient to pay the Repurchase Price in cash or, if shares of Common Stock are to be issued in accordance with Section 11.2, promptly after the Repurchase Date, the Company shall deliver or cause the transfer agent for the Common Stock to deliver to the Trustee or a Paying Agent Common Stock issued in the name of the Holders exercising the Repurchase Right and in an amount sufficient to effect the repurchase of the Securities to be repurchased. (d) If the Company fails to repurchase on the Repurchase Date any Securities (or portions thereof) as to which the Repurchase Right has been properly exercised, then the principal of such Securities shall, until paid, accrue Liquidated Damages, if any, to the extent permitted by applicable law from the Repurchase Date at the rate specified in Section 3 of the Registration Rights Agreement and each such Security shall be convertible into Common Stock in accordance with this Indenture (without giving effect to Section 11.2(b)) until the principal of such Security shall have been paid or duly provided for. (e) Any Security which is to be repurchased only in part shall be surrendered to the Trustee (with, if the Company or the Trustee so requires, due endorsement by, or a written instrument of transfer in form satisfactory to the Company and the Trustee duly executed by, the Holder thereof or its attorney duly authorized in writing), and the Company shall execute, and the Trustee shall authenticate and deliver to the Holder of such Security without service charge a new Security or Securities, containing identical terms and conditions, of any authorized denomination as requested by such Holder in aggregate principal amount equal to and in exchange for the unrepurchased portion of the principal of the Security so surrendered. 65 (f) Any issuance of shares of Common Stock in respect of the Repurchase Price shall be deemed to have been effected immediately prior to the close of business on the Repurchase Date and the Person or Persons in whose name or names any certificate or certificates for shares of Common Stock shall be issuable upon such repurchase shall be deemed to have become on the Repurchase Date the holder or holders of record of the shares represented thereby; provided, however, that any surrender for repurchase on a date when the stock transfer books of the Company shall be closed shall constitute the Person or Persons in whose name or names the certificate or certificates for such shares are to be issued as the record holder or holders thereof for all purposes at the opening of business on the next succeeding day on which such stock transfer books are open. No payment or adjustment shall be made for dividends or distributions on any Common Stock issued upon repurchase of any Security declared prior to the Repurchase Date. (g) No fractional shares of Common Stock or scrip representing fractional shares shall be issued upon repurchase of Securities. If more than one Security shall be repurchased from the same holder and the Repurchase Price shall be payable in shares of Common Stock, the number of full shares which shall be issued upon repurchase shall be computed on the basis of the aggregate principal amount of the Securities (or specified portions thereof to the extent permitted hereby) so repurchased. If any fractional share of stock otherwise would be issuable upon repurchase of any Security or Securities, the Company shall make an adjustment therefor in cash at the current market value thereof to the Holder of Securities. For these purposes, the current market value of a share of Common Stock shall be the Closing Price on the first Trading Day immediately preceding the Repurchase Date. (h) The issue of stock certificates on repurchase of Securities shall be made without charge to the Holder of Securities being repurchased for any tax in respect of the issue thereof. The Company shall not, however, be required to pay any tax which may be payable in respect of any transfer involved in the issue and delivery of stock in any name other than that of the Holder of any Security repurchased, and the Company shall not be required to issue or deliver any such stock certificate unless and until the Person or Persons requesting the issue thereof shall have paid to the Company the amount of such tax or shall have established to the satisfaction of the Company that such tax has been paid. (i) The Trustee shall not be accountable with respect to the validity or value (of the kind or amount) of any Common Stock which may at any time be issued or delivered upon the repurchase of any Security; and it does not make any representations with respect thereto. The Trustee shall not be responsible for any failure of the Company to make any cash payment or to issue, transfer or deliver any shares of stock or share certificates upon the surrender of any Security for the purpose of repurchase; and the Trustee shall not be responsible or liable for any failure of the Company to comply with any of the covenants of the Company contained in this Article. 66 ARTICLE 12 CONVERSION OF SECURITIES SECTION 12.1 Conversion Privilege and Conversion Price. (a) Subject to and upon compliance with the provisions of this Article, at the option of the Holder thereof, at any time prior to the close of business on the Stated Maturity Date of a Security, any Security or any portion of the principal amount thereof which is U.S. $1,000 or an integral multiple of U.S. $1,000 may be converted at the principal amount thereof, or of such portion thereof, into duly authorized, fully paid and nonassessable shares of Common Stock, at the Conversion Price, determined as hereinafter provided, in effect at the time of conversion: (1) during any fiscal quarter, if the Closing Price of the Common Stock for at least 20 Trading Days in the 30 consecutive Trading Day period ending on the last day of the preceding fiscal quarter was more than 120% of the Conversion Price in effect on such thirtieth (30th) Trading Day (in the event that the Conversion Price on such thirtieth (30th) Trading Day is not the same as the Conversion Price in effect for each of such thirty Trading Days, the Company shall make such adjustments as it, in its discretion, deems appropriate in determining whether the foregoing condition has been met); (2) on or before May 15, 2018, during the five Business Day period following any 10 consecutive Trading Day period in which the average Trading Price of the Securities for such 10 Trading Day period was less than 105% of the average Conversion Value of the Securities during the same period; (3) at any time prior to the close of business on the day that is two Business Days immediately preceding the Redemption Date, if such Security has been called for redemption pursuant to Article 10 hereof; (4) during any period, following the date when the credit rating assigned to the Securities by Standard & Poor's Rating Services (or any successor thereto) ("Standard & Poor's") is lower than "B-" (or its successive equivalent) or upon the withdrawal or suspension of the rating assigned to the Securities by Standard & Poor's at the request of the Company; or (5) as provided in Section 12.1(b). The Company shall determine on a daily basis whether the Securities shall be convertible as a result of the occurrence of an event specified in clause (1) or clause (2) above and, if the Securities shall be so convertible, the Company shall promptly deliver to the Conversion Agent and the Trustee written notice thereof. Whenever the Securities shall become convertible pursuant to Section 12.1, the Company or, at the Company's request, the Trustee in the name and at the expense of the Company, shall notify the Holders of the event triggering such convertibility in the manner provided in Section 1.5. Any notice so given shall be conclusively presumed to have been duly given, whether or not the Holder receives such notice. (b) In addition, in the event that: 67 (1) (A) the Company distributes to all holders of shares of Common Stock rights or warrants entitling them (for a period expiring within 45 days of the record date for such distribution) to subscribe for or purchase shares of Common Stock, at a price per share less than the Closing Price of the Common Stock on the date preceding the date of the announcement of such distribution, (B) the Company distributes to all holders of shares of Common Stock cash or other assets, debt securities or rights or warrants to purchase the Company's securities, where the fair market value (as determined by the Board of Directors) of such distribution per share of Common Stock exceeds 10% of the Closing Price of a share of Common Stock on the Business Day immediately preceding the date of declaration of such distribution or (C) a Change of Control occurs but the Holders do not have the right to require the Company to purchase their Securities as a result of such Change of Control, because of the provisions set forth in Section 11, then, in each case, the Securities may be surrendered for conversion at any time on and after the date that the Company gives notice to the Holders of such right, which shall be not less than 20 days prior to the Ex-Dividend Time for such distribution, in the case of clause (A) or (B), or within 20 Business Days after the occurrence of the Change of Control, in the case of clause (C), until (1) the earlier of the close of business on the Business Day immediately preceding the Ex-Dividend Time or the date the Company announces that such distribution will not take place, in the case of clause (A) or (B), or (2) the earlier of 20 Business Days after the Company's delivery of the Repurchase Event Notice or the date the Company announces that the Change of Control will not take place, in the case of clause (C). (2) the Company consolidates with or merges into another Person, or is a party to a binding share exchange pursuant to which the shares of Common Stock would be converted into cash, securities or other property as set forth in Section 12.5 hereof and (A) such consolidation, merger or binding share exchange constitutes a transaction described in Section 12.1(b)(1), then a Holder may convert the Securities in accordance with the provisions of Section 12.1(b)(1) or (B) in all other cases, the Securities may be surrendered for conversion at any time from and after the date which is 15 days prior to the date announced by the Company as the anticipated effective time of such transaction until 15 days after the actual date of such transaction, provided, however, that at the effective time of a transaction described in the immediately preceding clause, the right to convert a Security into Common Stock will be changed into a right to convert a Security into the kind and amount of cash, securities or other property which a Holder would have received if such Holder had converted such Security immediately prior to such transaction. Notwithstanding the foregoing, if such transaction also constitutes a Change of Control, the Holders may exercise the right, if any, to require the Company to repurchase their Securities that may be triggered by a Change of Control pursuant to Section 11. (c) The price at which shares of Common Stock shall be delivered upon conversion (the "Conversion Price") shall be initially equal to $17.9744 per share of Common Stock, subject to adjustment, in certain instances, as provided in Section 12.4. (d) No payment or adjustment will be made for dividends on, or other distributions with respect to, any Common Stock except as provided in this Article 12. 68 (e) A Security in respect of which a Holder has delivered a Repurchase Event Purchase Notice exercising the option of such Holder to require the Company to purchase such Security may be converted only if such notice of exercise is withdrawn in accordance with Section 11.3(b). SECTION 12.2 Exercise of Conversion Privilege. In order to exercise the conversion privilege, the Holder of any definitive Security to be converted shall surrender such Security duly endorsed or assigned to the Company or in blank, at the office of any Conversion Agent (as specified and subject to the terms and limitations set forth in Section 9.2), accompanied by a duly signed conversion notice substantially in the form attached to the Security to the Company at such Conversion Agent stating that the Holder elects to convert such Security or, if less than the entire principal amount thereof is to be converted, the portion thereof to be converted. Securities surrendered for conversion during the period from the close of business on any Regular Record Date to the opening of business on the next succeeding Liquidated Damages Payment Date (except in the case of any Security whose Maturity is prior to such Liquidated Damages Payment Date) shall be accompanied by payment in New York Clearing House funds or other funds acceptable to the Company of an amount equal to the Liquidated Damages, if any, to be received on such Liquidated Damages Payment Date on the principal amount of Securities being surrendered for conversion. Securities shall be deemed to have been converted immediately prior to the close of business on the day of surrender of such Securities for conversion in accordance with the foregoing provisions, and at such time the rights of the Holders of such Securities as Holders shall cease, and the Person or Persons entitled to receive the Common Stock issuable upon conversion shall be treated for all purposes as the record holder or holders of such Common Stock at such time. As promptly as practicable on or after the conversion date, the Company shall cause to be issued and delivered to such Conversion Agent a certificate or certificates for the number of full shares of Common Stock issuable upon conversion, together with payment in lieu of any fraction of a share as provided in Section 12.3. In the event that the Company shall have failed to register the Common Stock into which the Restricted Securities may be converted pursuant to an effective registration statement under the Securities Act, all shares of Common Stock delivered upon such conversion shall bear a restrictive legend substantially in the form of the legend required to be set forth on the Restricted Securities pursuant to Sections 2.5 and as set forth in the form of Security in Exhibit A hereto and shall be subject to the restrictions on transfer provided in such legend. Neither the Trustee nor the Conversion Agent shall have any responsibility for the inclusion or content of any such restrictive legend on such Common Stock; provided, however, that the Trustee or such Conversion Agent, as the case may be, shall have provided, to the Company or to the Company's transfer agent for such Common Stock, prior to or concurrently with a request to the Company to deliver to the Conversion Agent certificates of such Common Stock, written notice that the Securities delivered for conversion are Restricted Securities. In the case of any Security which is converted in part only, upon such conversion the Company shall execute and the Trustee shall authenticate and deliver to the Holder thereof, at the expense of the Company, a new Security or 69 Securities of authorized denominations in aggregate principal amount equal to the unconverted portion of the principal amount of such Securities. If shares of Common Stock to be issued upon conversion of a Restricted Security, or Securities to be issued upon conversion of a Restricted Security in part only, are to be registered in a name other than that of the Holder of such Restricted Security, then such Holder must deliver to the Conversion Agent a certificate in substantially the form set forth in the form of Security set forth in Exhibit A hereto, dated the date of surrender of such Restricted Security and signed by such Holder, as to compliance with the restrictions on transfer applicable to such Restricted Security. Neither the Trustee nor any Conversion Agent, Security Registrar or Transfer Agent shall be required to register in a name other than that of the Holder shares of Common Stock or Securities issued upon conversion of any such Restricted Security not so accompanied by a properly completed certificate. SECTION 12.3 Fractions of Shares. No fractional shares of Common Stock shall be issued upon any conversion of any Security or Securities. If more than one Security shall be surrendered for conversion at one time by the same Holder, the number of full shares which shall be issuable upon conversion thereof shall be computed on the basis of the aggregate principal amount of the Securities (or specified portions thereof) so surrendered. Instead of any fractional share of Common Stock which would otherwise be issuable upon conversion of any Security or Securities (or specified portions thereof), the Company shall pay a cash adjustment in respect of such fraction (calculated to the nearest one-100th of a share) in an amount equal to the same fraction of the Closing Price of the Common Stock as of the Trading Day before the date of conversion. SECTION 12.4 Adjustment of Conversion Price. The Conversion Price shall be subject to adjustments, calculated by the Company, from time to time as follows: (a) In case the Company shall hereafter pay a dividend or make a distribution to all holders of the outstanding Common Stock in shares of Common Stock, the Conversion Price in effect at the opening of business on the date following the date fixed for the determination of stockholders entitled to receive such dividend or other distribution shall be reduced by multiplying such Conversion Price by a fraction of which the numerator shall be the number of shares of Common Stock outstanding at the close of business on the Record Date (as defined in Section 12.4(g)) fixed for such determination and the denominator shall be the sum of such number of shares and the total number of shares constituting such dividend or other distribution, such reduction to become effective immediately after the opening of business on the day following the Record Date. If any dividend or distribution of the type described in this Section 12.4(a) is declared but not so paid or made, the Conversion Price shall again be adjusted to the Conversion Price which would then be in effect if such dividend or distribution had not been declared. (b) In case the Company shall issue rights or warrants to all holders of its outstanding shares of Common Stock entitling them (for a period expiring within forty-five (45) days after the date fixed for the determination of 70 stockholders entitled to receive such rights or warrants) to subscribe for or purchase shares of Common Stock at a price per share less than the Closing Price on the date preceding the date of announcement of such distribution, the Conversion Price shall be adjusted so that the same shall equal the price determined by multiplying the Conversion Price in effect at the opening of business on the date after such Record Date by a fraction of which the numerator shall be the number of shares of Common Stock outstanding at the close of business on the Record Date plus the number of shares which the aggregate offering price of the total number of shares so offered would purchase at such Current Market Price (as defined in Section 12.4(g)), and of which the denominator shall be the number of shares of Common Stock outstanding on the close of business on the Record Date plus the total number of additional shares of Common Stock so offered for subscription or purchase. Such adjustment shall become effective immediately after the opening of business on the day following the Record Date fixed for determination of stockholders entitled to receive such rights or warrants. To the extent that shares of Common Stock are not delivered pursuant to such rights or warrants, upon the expiration or termination of such rights or warrants the Conversion Price shall be readjusted to the Conversion Price which would then be in effect had the adjustments made upon the issuance of such rights or warrants been made on the basis of the delivery of only the number of shares of Common Stock actually delivered. In the event that such rights or warrants are not so issued, the Conversion Price shall again be adjusted to be the Conversion Price which would then be in effect if such date fixed for the determination of stockholders entitled to receive such rights or warrants had not been fixed. In determining whether any rights or warrants entitle the holders to subscribe for or purchase shares of Common Stock at less than such Current Market Price, and in determining the aggregate offering price of such shares of Common Stock, there shall be taken into account any consideration received for such rights or warrants, the value of such consideration if other than cash, to be determined by the Board of Directors. (c) In case the outstanding shares of Common Stock shall be subdivided into a greater number of shares of Common Stock, the Conversion Price in effect at the opening of business on the day following the day upon which such subdivision becomes effective shall be proportionately reduced, and conversely, in case outstanding shares of Common Stock shall be combined into a smaller number of shares of Common Stock, the Conversion Price in effect at the opening of business on the day following the day upon which such combination becomes effective shall be proportionately increased, such reduction or increase, as the case may be, to become effective immediately after the opening of business on the day following the day upon which such subdivision or combination becomes effective. (d) In case the Company shall, by dividend or otherwise, distribute to all holders of its Common Stock shares of any class of capital stock of the Company (other than any dividends or distributions to which Section 12.4(a) applies) or evidences of its indebtedness, cash or other assets (including securities, but excluding (1) any rights or warrants referred to in Section 12.4(b), (2) dividends and distributions paid exclusively in cash and (3) any capital stock, evidences of indebtedness, cash or assets distributed upon a merger or consolidation to which Section 12.11 applies) (the foregoing hereinafter in this Section 12.4(d) called the "securities") (unless the Company elects to reserve, whether in trust, escrow or otherwise, such securities for distribution to the Holders upon conversion of the Securities so that any such Holder converting Securities will receive upon such conversion, in addition to the shares of Common Stock to which such Holder is entitled, the amount and kind of such securities which such Holder would have received if such Holder had 71 converted its Securities into Common Stock immediately prior to the Record Date (as defined in Section 12.4(g)) for such distribution of the securities; provided, however, that any such securities in reserve at maturity or redemption may be disposed of at the discretion of the Company), then, in each such case, the Conversion Price shall be reduced so that the same shall be equal to the price determined by multiplying the Conversion Price in effect immediately prior to the close of business on the Record Date (as defined in Section 12.4(g)) with respect to such distribution by a fraction of which the numerator shall be the Current Market Price (determined as provided in Section 12.4(g)) on such date less the fair market value (as determined by the Board of Directors, whose determination shall be conclusive and described in a Board Resolution) on such date of the portion of the securities so distributed applicable to one share of Common Stock and the denominator shall be such Current Market Price, such reduction to become effective immediately prior to the opening of business on the day following the Record Date; provided, however, that in the event the then fair market value (as so determined) of the portion of the securities so distributed applicable to one share of Common Stock is equal to or greater than the Current Market Price on the Record Date, in lieu of the foregoing adjustment, adequate provision shall be made so that each Holder shall have the right to receive upon conversion of a Security (or any portion thereof) the amount of securities such Holder would have received had such Holder converted such Security (or portion thereof) immediately prior to such Record Date. In the event that such dividend or distribution is not so paid or made, the Conversion Price shall again be adjusted to be the Conversion Price would then be in effect if such dividend or distribution had not been declared. If the Board of Directors determines the fair market value of any distribution for purposes of this Section 12.4(d) by reference to the actual or when issued trading market for any securities comprising all or part of such distribution, it must in doing so consider the prices in such market over the same period (the "Reference Period") used in computing the Current Market Price pursuant to Section 12.4(g) to the extent possible, unless the Board of Directors in a Board Resolution determines in good faith that determining the fair market value during the Reference Period would not be in the best interest of the Holder. Rights or warrants distributed by the Company to all holders of Common Stock entitling the holders thereof to subscribe for or purchase shares of the Company's capital stock (either initially or under certain circumstances), which rights or warrants, until the occurrence of a specified event or events ("Trigger Event"), (i) are deemed to be transferred with such shares of Common Stock, (ii) are not exercisable, and (iii) are also issued in respect of future issuances of Common Stock, shall be deemed not to have been distributed for purposes of this Section 12.4(d) (and no adjustment to the Conversion Price under this Section 12.4(d) will be required) until the occurrence of the earliest Trigger Event. If such right or warrant is subject to subsequent events, upon the occurrence of which such right or warrant shall become exercisable to purchase different securities, evidences of indebtedness or other assets or entitle the holder to purchase a different number or amount of the foregoing or to purchase any of the foregoing at a different purchase price, then the occurrence of each such event shall be deemed to be the date of issuance and record date with respect to a new right or warrant (and a termination or expiration of the existing right or warrant without exercise by the holder thereof). In addition, in the event of any distribution (or deemed distribution) of rights or warrants, or any Trigger Event or other event (of the type described in the preceding sentence) with respect thereto, that resulted in an adjustment to the Conversion Price under this Section 12.4(d), (1) in the case of any such rights or warrants which shall all have been redeemed or repurchased without exercise by any holders thereof, the Conversion Price shall 72 be readjusted upon such final redemption or repurchase to give effect to such distribution or Trigger Event, as the case may be, as though it were a cash distribution, equal to the per share redemption or repurchase price received by a holder of Common Stock with respect to such rights or warrant (assuming such holder had retained such rights or warrants), made to all holders of Common Stock as of the date of such redemption or repurchase, and (2) in the case of such rights or warrants all of which shall have expired or been terminated without exercise, the Conversion Price shall be readjusted as if such rights and warrants had never been issued. For purposes of this Section 12.4(d) and Sections 12.4(a) and (b), any dividend or distribution to which this Section 12.4(d) is applicable that also includes shares of Common Stock, or rights or warrants to subscribe for or purchase shares of Common Stock to which Section 12.4(b) applies (or both), shall be deemed instead to be (1) a dividend or distribution of the evidences of indebtedness, assets, shares of capital stock, rights or warrants other than such shares of Common Stock or rights or warrants to which Section 12.4(b) applies (and any Conversion Price reduction required by this Section 12.4(d) with respect to such dividend or distribution shall then be made) immediately followed by (2) a dividend or distribution of such shares of Common Stock or such rights or warrants (and any further Conversion Price reduction required by Sections 12.4(a) and (b) with respect to such dividend or distribution shall then be made), except (A) the Record Date of such dividend or distribution shall be substituted as "the date fixed for the determination of stockholders entitled to receive such dividend or other distribution", "Record Date fixed for such determinations" and "Record Date" within the meaning of Section 12.4(a) and as "the date fixed for the determination of stockholders entitled to receive such rights or warrants", "the Record Date fixed for the determination of the stockholders entitled to receive such rights or warrants" and such "Record Date" within the meaning of Section 12.4(b) and (B) any shares of Common Stock included in such dividend or distribution shall not be deemed "outstanding at the close of business on the date fixed for such determination" within the meaning of Section 12.4(a). (e) In case the Company shall, by dividend or otherwise, distribute to all holders of its Common Stock cash (excluding any cash that is distributed upon a merger or consolidation to which Section 12.11 applies or as part of a distribution referred to in Section 12.4(d)), in an aggregate amount that, combined together with (1) the aggregate amount of any other such distributions to all holders of Common Stock made exclusively in cash within the twelve (12) months preceding the date of payment of such distribution, and in respect of which no adjustment pursuant to this Section 12.4(e) has been made, and (2) the aggregate of any cash plus the fair market value (as determined by the Board of Directors, whose determination shall be conclusive and described in a Board Resolution) of consideration payable in respect of any tender offer by the Company or any of its Subsidiaries for all or any portion of the Common Stock concluded within the twelve (12) months preceding the date of such distribution, and in respect of which no adjustment pursuant to Section 12.4(f) has been made, exceeds 10% of the product of the Current Market Price (determined as provided in Section 12.4(g)) on the Record Date with respect to such distribution times the number of shares of Common Stock outstanding on such date, then and in each such case, immediately after the close of business on such date, the Conversion Price shall be reduced so that the same shall equal the price determined by multiplying the Conversion Price in effect immediately prior to the close of business on such Record Date by a fraction (i) the numerator of which shall be 73 equal to the Current Market Price on the Record Date less an amount equal to the quotient of (x) the excess of such combined amount over such 10% and (y) the number of shares of Common Stock outstanding on the Record Date and (ii) the denominator of which shall be equal to the Current Market Price on such date, provided, however, that in the event the portion of the cash so distributed applicable to one share of Common Stock is equal to or greater than the Current Market Price of the Common Stock on the Record Date, in lieu of the foregoing adjustment, adequate provision shall be made so that each Holder shall have the right to receive upon conversion of a Security (or any portion thereof) the amount of cash such Holder would have received had such Holder converted such Security (or portion thereof) immediately prior to such Record Date. In the event that such dividend or distribution is not so paid or made, the Conversion Price shall again be adjusted to be the Conversion Price which would then be in effect if such dividend or distribution had not been declared. Any cash distribution to all holders of Common Stock as to which the Company makes the election permitted by Section 12.4(l) and as to which the Company has complied with the requirements of such Section shall be treated as not having been made for all purposes of this Section 12.4(e). (f) In case a tender offer made by the Company or any of its Subsidiaries for all or any portion of the Common Stock shall expire and such tender offer (as amended upon the expiration thereof) shall require the payment to stockholders (based on the acceptance (up to any maximum specified in the terms of the tender offer) of Purchased Shares (as defined below)) of an aggregate consideration having a fair market value (as determined by the Board of Directors, whose determination shall be conclusive and described in a Board Resolution) that combined together with (1) the aggregate of the cash plus the fair market value (as determined by the Board of Directors, whose determination shall be conclusive and described in a Board Resolution), as of the expiration of such tender offer, of consideration payable in respect of any other tender offers, by the Company or any of its Subsidiaries for all or any portion of the Common Stock expiring within the twelve (12) months preceding the expiration of such tender offer and in respect of which no adjustment pursuant to this Section 12.4(f) has been made and (2) the aggregate amount of any distributions to all holders of the Company's Common Stock made exclusively in cash within twelve (12) months preceding the expiration of such tender offer and in respect of which no adjustment pursuant to Section 12.4(e) has been made, exceeds 10% of the product of the Current Market Price (determined as provided in Section 12.4(g)) as of the last time (the "Expiration Time") tenders could have been made pursuant to such tender offer (as it may be amended) times the number of shares of Common Stock outstanding (including any tendered shares) on the Expiration Time, then, and in each such case, immediately prior to the opening of business on the day after the date of the Expiration Time, the Conversion Price shall be adjusted so that the same shall equal the price determined by multiplying the Conversion Price in effect immediately prior to close of business on the date of the Expiration Time by a fraction of which the numerator shall be the number of shares of Common Stock outstanding (including any tendered shares) on the Expiration Time multiplied by the Current Market Price of the Common Stock on the Trading Day next succeeding the Expiration Time and the denominator shall be the sum of (x) the fair market value (determined as aforesaid) of the aggregate consideration payable to stockholders based on the acceptance (up to any maximum specified in the terms of the tender offer) of all shares validly tendered and not withdrawn as of the Expiration Time (the shares deemed so accepted, up to any such maximum, being referred to as the "Purchased Shares") and (y) the product of the number of shares of Common Stock outstanding (less any Purchased Shares) on the Expiration Time and the Current Market Price 74 of the Common Stock on the Trading Day next succeeding the Expiration Time, such reduction (if any) to become effective immediately prior to the opening of business on the day following the Expiration Time. In the event that the Company is obligated to purchase shares pursuant to any such tender offer, but the Company is permanently prevented by applicable law from effecting any such purchases or all such purchases are rescinded, the Conversion Price shall again be adjusted to be the Conversion Price which would then be in effect if such tender offer had not been made. If the application of this Section 12.4(f) to any tender offer would result in an increase in the Conversion Price, no adjustment shall be made for such tender offer under this Section 12.4(f). Any cash distribution to all holders of Common Stock as to which the Company has made the election permitted by Section 12.4(m) and as to which the Company has complied with the requirements of such Section shall be treated as not having been made for all purposes of this Section 12.4(f). (g) For purposes of this Section 12.4, the following terms shall have the meaning indicated: (1) "Current Market Price" shall mean the average of the daily Closing Prices per share of Common Stock for the ten (10) consecutive Trading Days immediately prior to the date in question; provided, however, that (A) if the "ex" date (as hereinafter defined) for any event (other than the issuance or distribution requiring such computation) that requires an adjustment to the Conversion Price pursuant to Section 12.4(a), (b), (c), (d), (e) or (f) occurs during such ten (10) consecutive Trading Days, the Closing Price for each Trading Day prior to the "ex" date for such other event shall be adjusted by multiplying such Closing Price by the same fraction by which the Conversion Price is so required to be adjusted as a result of such other event, (B) if the "ex" date for any event (other than the issuance or distribution requiring such computation) that requires an adjustment to the Conversion Price pursuant to Section 12.4(a), (b), (c), (d), (e) or (f) occurs on or after the "ex" date for the issuance or distribution requiring such computation and prior to the day in question, the Closing Price for each Trading Day on and after the "ex" date for such other event shall be adjusted by multiplying such Closing Price by the reciprocal of the fraction by which the Conversion Price is so required to be adjusted as a result of such other event, and (C) if the "ex" date for the issuance or distribution requiring such computation is prior to the day in question, after taking into account any adjustment required pursuant to clause (A) or (B) of this proviso, the Closing Price for each Trading Day on or after such "ex" date shall be adjusted by adding thereto the amount of any cash and the fair market value (as determined by the Board of Directors in a manner consistent with any determination of such value for purposes of Section 12.4(d) or (f), whose determination shall be conclusive and described in a Board Resolution) of the evidences of indebtedness, shares of capital stock or assets being distributed applicable to one share of Common Stock as of the close of business on the day before such "ex" date. For purposes of any computation under Section 12.4(f), the Current Market Price of the Common Stock on any date shall be deemed to be the average of the daily Closing Prices per share of Common Stock for such day and the next two succeeding Trading Days; provided, however, that if the "ex" date for any event (other than the tender offer requiring such computation) that requires an adjustment to the Conversion Price pursuant to Section 12.4(a), (b), (c), (d), (e) or (f) occurs on or after the Expiration Time for the tender or exchange 75 offer requiring such computation and prior to the day in question, the Closing Price for each Trading Day on and after the "ex" date for such other event shall be adjusted by multiplying such Closing Price by the reciprocal of the fraction by which the Conversion Price is so required to be adjusted as a result of such other event. For purposes of this paragraph, the term "ex" date, (A) when used with respect to any issuance or distribution, means the first date on which the Common Stock trades regular way on the relevant exchange or in the relevant market from which the Closing Price was obtained without the right to receive such issuance or distribution, (B) when used with respect to any subdivision or combination of shares of Common Stock, means the first date on which the Common Stock trades regular way on such exchange or in such market after the time at which such subdivision or combination becomes effective, and (C) when used with respect to any tender or exchange offer means the first date on which the Common Stock trades regular way on such exchange or in such market after the Expiration Time of such offer. Notwithstanding the foregoing, whenever successive adjustments to the Conversion Price are called for pursuant to this Section 12.4, such adjustments shall be made to the Current Market Price as may be necessary or appropriate to effectuate the intent of this Section 12.4 and to avoid unjust or inequitable results as determined in good faith by the Board of Directors. (2) "fair market value" shall mean the amount which a willing buyer would pay a willing seller in an arm's length transaction. (3) "Record Date" shall mean, with respect to any dividend, distribution or other transaction or event in which the holders of Common Stock have the right to receive any cash, securities or other property or in which the Common Stock (or other applicable security) is exchanged for or converted into any combination of cash, securities or other property, the date fixed for determination of stockholders entitled to receive such cash, securities or other property (whether such date is fixed by the Board of Directors or by statute, contract or otherwise). (4) "Trading Day" shall mean (x) if the applicable security is listed or admitted for trading on the New York Stock Exchange or another national security exchange, a day on which the New York Stock Exchange or another national security exchange is open for business or (y) if the applicable security is quoted on the Nasdaq National Market, a day on which trades may be made thereon or (z) if the applicable security is not so listed, admitted for trading or quoted, any day other than a Saturday or Sunday or a day on which banking institutions in the State of New York are authorized or obligated by law or executive order to close. (h) The Company may make such reductions in the Conversion Price, in addition to those required by Sections 12.4(a), (b), (c), (d), (e) or (f), as the Board of Directors considers to be advisable to avoid or diminish any income tax to holders of Common Stock or rights to purchase Common Stock resulting from any dividend or distribution of stock (or rights to acquire stock) or from any event treated as such for income tax purposes. To the extent permitted by applicable law, the Company from time to time may reduce the Conversion Price by any amount for any period of time if the period is at least twenty (20) days and the reduction is irrevocable during the period. Whenever the Conversion Price is reduced pursuant to the preceding 76 sentence, the Company shall mail to each Holder at the address of such Holder as it appears in the Security Register a notice of the reduction at least fifteen (15) days prior to the date the reduced Conversion Price takes effect, and such notice shall state the reduced Conversion Price and the period during which it will be in effect. (i) No adjustment in the Conversion Price shall be required unless such adjustment would require an increase or decrease of at least 1% in such price; provided, however, that any adjustments which by reason of this Section 12.4(i) are not required to be made shall be carried forward and taken into account in any subsequent adjustment. All calculations under this Article 12 shall be made by the Company and shall be made to the nearest cent or to the nearest one hundredth of a share, as the case may be. No adjustment need be made for a change in the par value or no par value of the Common Stock. (j) In any case in which this Section 12.4 provides that an adjustment shall become effective immediately after a Record Date for an event, the Company may defer until the occurrence of such event (i) issuing to the Holder of any Security converted after such Record Date and before the occurrence of such event the additional shares of Common Stock issuable upon such conversion by reason of the adjustment required by such event over and above the Common Stock issuable upon such conversion before giving effect to such adjustment and (ii) paying to such holder any amount in cash in lieu of any fraction pursuant to Section 12.3. (k) For purposes of this Section 12.4, the number of shares of Common Stock at any time outstanding shall not include shares held in the treasury of the Company but shall include shares issuable in respect of scrip certificates issued in lieu of fractions of shares of Common Stock. The Company will not pay any dividend or make any distribution on shares of Common Stock held in the treasury of the Company. (l) In lieu of making any adjustment to the Conversion Price pursuant to Section 12.4(d) or (e), the Company may elect to reserve an amount of cash, evidence of indebtedness or other assets, including securities, for distribution to the Holders of the Securities upon the conversion of the Securities so that any such Holder converting Securities will receive upon such conversion, in addition to the shares of Common Stock and other items to which such Holder is entitled, the full amount of cash, evidence of indebtedness or other assets which such holder would have received if such Holder had, immediately prior to the Record Date for such distribution of cash, evidence of indebtedness or other assets, converted its Securities into Common Stock, together with any interest accrued with respect to such amount, in accordance with this Section 12.4(l). The Company may make such election by providing an Officers' Certificate to the Trustee to such effect on or prior to the payment date for any such distribution and depositing with the Trustee on or prior to such date an amount of cash, evidence of indebtedness or other assets equal to the aggregate amount the Holders of the Securities would have received if such Holders had, immediately prior to the Record Date for such distribution, converted all of the Securities into Common Stock. Any such funds so deposited by the Company with the Trustee shall be invested by the Trustee, at the written request of the Company, in marketable obligations issued or fully guaranteed by the United States government with a maturity not more than three (3) months from the date of issuance. Upon conversion of Securities by a Holder, the Holder will be entitled to receive, in addition to the Common Stock issuable upon conversion, an amount of cash, evidence of indebtedness or other assets equal to the amount such 77 Holder would have received if such Holder had, immediately prior to the Record Date for such distribution, converted its Security into Common Stock, along with such Holder's pro rata share of any accrued interest earned as a consequence of the investment of such funds. Promptly after making an election pursuant to this Section 12.4(l), the Company shall give or shall cause to be given notice to all Holders of such election, which notice shall state the amount of cash, evidence of indebtedness or other assets per $1,000 principal amount of Securities such Holders shall be entitled to receive (excluding interest) upon conversion of the Securities as a consequence of the Company having made such election. SECTION 12.5 Notice of Adjustments of Conversion Price. Whenever the Conversion Price is adjusted as herein provided: (1) the Company shall compute the adjusted Conversion Price in accordance with Section 12.4 and shall prepare an Officers' Certificate signed by the Chief Financial Officer of the Company setting forth the adjusted Conversion Price and showing in reasonable detail the facts upon which such adjustment is based, and such Officers' Certificate shall forthwith promptly be filed with the Trustee and with each Conversion Agent; and (2) a notice stating that the Conversion Price has been adjusted and setting forth the adjusted Conversion Price and the date on which each adjustment becomes effective shall forthwith be required, and such notice shall be provided by the Company to all Holders in accordance with Section 1.5. Neither the Trustee nor any Conversion Agent shall be under any duty or responsibility with respect to the validity, accuracy or sufficiency of any such Officers' Certificate, except to exhibit the same to any Holder of Securities desiring inspection thereof at its office during normal business hours. SECTION 12.6 Notice of Certain Corporate Action. In case at any time after the date hereof: (1) the Company shall declare a dividend (or any other distribution) on its Common Stock payable otherwise than in cash out of its capital surplus or the consolidated retained earnings of the Company and its Subsidiaries; or (2) the Company shall authorize the granting to the holders of its Common Stock of rights or warrants to subscribe for or purchase any shares of capital stock of any class or of any other rights; or (3) there shall occur any reclassification of the Common Stock of the Company (other than a subdivision or combination of its outstanding shares of Common Stock), or any consolidation or merger to which the Company is a party and for which approval of any shareholders of the Company is required, or the conveyance, transfer or lease of all or substantially all of the assets of the Company; or 78 (4) there shall occur the voluntary or involuntary dissolution, liquidation or winding up of the Company. then the Company shall cause to be filed at each office or agency maintained for the purpose of conversion of securities pursuant to Section 9.2, and shall cause to be provided to all Holders in accordance with Section 1.5, at least 20 days (or 10 days in any case specified in clause (1) or (2) above) prior to the applicable record or effective date hereinafter specified, a notice stating (A) the date on which a record is to be taken for the purpose of such dividend, distribution, rights or warrants, or, if a record is not to be taken, the date as of which the holders of Common Stock of record to be entitled to such dividend, distribution, rights or warrants are to be determined, or (B) the date on which such reclassification, consolidation, merger, conveyance, transfer, lease, dissolution, liquidation or winding up is expected to become effective, and the date as of which it is expected that holders of Common Stock of record shall be entitled to exchange their shares of Common Stock for securities, cash or other property deliverable upon such reclassification, consolidation, merger, conveyance, transfer, lease, dissolution, liquidation or winding up. SECTION 12.7 Company to Reserve Common Stock. The Company shall at all times use its best efforts to reserve and keep available, free from preemptive rights, out of its authorized but unissued Common Stock, for the purpose of effecting the conversion of Securities, the full number of shares of fully paid and nonassessable Common Stock then issuable upon the conversion of all Outstanding Securities. SECTION 12.8 Taxes on Conversions. Except as provided in the next sentence, the Company will pay any and all taxes (other than taxes on income) and duties that may be payable in respect of the issue or delivery of shares of Common Stock on conversion of Securities pursuant hereto. A Holder delivering a Security for conversion shall be liable for and will be required to pay any tax or duty which may be payable in respect of any transfer involved in the issue and delivery of shares of Common Stock in a name other than that of the Holder of the Security or Securities to be converted, and no such issue or delivery shall be made unless and until the Person requesting such issue has paid to the Company the amount of any such tax or duty, or has established to the satisfaction of the Company that such tax or duty has been paid. SECTION 12.9 Covenant as to Common Stock. The Company covenants that all shares of Common Stock which may be issued upon conversion of Securities will upon issue be fully paid and nonassessable and, except as provided in Section 12.8, the Company will pay all taxes, liens and charges with respect to the issue thereof. SECTION 12.10 Cancellation of Converted Securities. All Securities delivered for conversion shall be delivered to the Trustee to be canceled by or at the direction of the Trustee, which shall dispose of the same as provided in Section 2.9. 79 SECTION 12.11 Effect of Reclassification, Consolidation, Merger or Sale. If any of following events occur, namely (i) any reclassification or change of the outstanding shares of Common Stock (other than a change in par value, or from par value to no par value, or from no par value to par value, or as a result of a subdivision or combination), (ii) any consolidation, merger or combination of the Company with another Person as a result of which holders of Common Stock shall be entitled to receive stock, securities or other property or assets (including cash) with respect to or in exchange for such Common Stock or (iii) any sale or conveyance of the properties and assets of the Company as, or substantially as, an entirety to any other Person as a result of which holders of Common Stock shall be entitled to receive stock, securities or other property or assets (including cash) with respect to or in exchange for such Common Stock, then the Company or the successor or purchasing Person, as the case may be, shall execute with the Trustee a supplemental indenture (which shall comply with the Trust Indenture Act as in force at the date of execution of such supplemental indenture if such supplemental indenture is then required to so comply) providing that such Security shall be convertible into the kind and amount of shares of stock and other securities or property or assets (including cash) which such Holder would have been entitled to receive upon such reclassification, change, consolidation, merger, combination, sale or conveyance had such Securities been converted into Common Stock immediately prior to such reclassification, change, consolidation, merger, combination, sale or conveyance assuming such holder of Common Stock did not exercise its rights of election, if any, as to the kind or amount of securities, cash or other property receivable upon such consolidation, merger, statutory exchange, sale or conveyance (provided that, if the kind or amount of securities, cash or other property receivable upon such consolidation, merger, statutory exchange, sale or conveyance is not the same for each share of Common Stock in respect of which such rights of election shall not have been exercised ("Non-Electing Share"), then for the purposes of this Section 12.11 the kind and amount of securities, cash or other property receivable upon such consolidation, merger, statutory exchange, sale or conveyance for each Non-Electing Share shall be deemed to be the kind and amount so receivable per share by a plurality of the Non-Electing Shares). Such supplemental indenture shall provide for adjustments which shall be as nearly equivalent as may be practicable to the adjustments provided for in this Article. If, in the case of any such reclassification, change, consolidation, merger, combination, sale or conveyance, the stock or other securities and assets receivable thereupon by a holder of shares of Common Stock includes shares of stock or other securities and assets of a Person other than the successor or purchasing Person, as the case may be, in such reclassification, change, consolidation, merger, combination, sale or conveyance, then such supplemental indenture shall also be executed by such other Person and shall contain such additional provisions to protect the interests of the Holders of the Securities as the Board of Directors shall reasonably consider necessary by reason of the foregoing, including to the extent practicable the provisions providing for the Repurchase Rights set forth in Article 11 herein. The Company shall cause notice of the execution of such supplemental indenture to be mailed to each Holder, at the address of such Holder as it appears on the Security Register, within twenty (20) days after execution thereof. Failure to deliver such notice shall not affect the legality or validity of such supplemental indenture. 80 The above provisions of this Section shall similarly apply to successive reclassifications, changes, consolidations, mergers, combinations, sales and conveyances. If this Section 12.11 applies to any event or occurrence, Section 12.4 shall not apply. SECTION 12.12 Responsibility of Trustee for Conversion Provisions. The Trustee and any Conversion Agent shall not at any time be under any duty or responsibility to any Holder of Securities to either calculate the Conversion Price or determine whether any facts exist which may require any adjustment of the Conversion Price, or with respect to the nature or extent or calculation of any such adjustment when made, or with respect to the method employed herein, or in any supplemental indenture provided to be employed, in making the same and shall be protected in relying upon an Officers' Certificate with respect to the same. Neither the Trustee nor any Conversion Agent shall be accountable with respect to the validity or value (of the kind or amount) of any shares of Common Stock, or of any other securities or property, which may at any time be issued or delivered upon the conversion of any Security; and neither the Trustee nor any Conversion Agent makes any representation with respect thereto. Neither the Trustee nor any Conversion Agent shall be responsible for any failure of the Company to make any cash payment or to issue, transfer or deliver any shares of Common Stock or stock or share certificates or other securities or property upon the surrender of any Security for the purpose of conversion; and the Trustee and any Conversion Agent shall not be responsible or liable for any failure of the Company to comply with any of the covenants of the Company contained in this Article. Without limiting the generality of the foregoing, neither the Trustee nor any Conversion Agent shall be under any responsibility to determine the correctness of any provisions contained in any supplemental indenture entered into pursuant to Section 12.11 relating either to the kind or amount of shares of stock or securities or other property or assets (including cash) receivable for Holders upon the conversion of their Securities after an any event referred to in such Section 12.11 or to any adjustment to be made with respect thereto, but, subject to the provisions of Section 5.1, may accept as conclusive evidence of the correctness of any such provisions, and shall be protected in relying upon, the Officers' Certificate (which the Company shall be obligated to file with the Trustee prior to the execution of any such supplemental indenture) with respect thereto. Neither the Trustee nor any Conversion Agent shall be responsible for determining whether any event contemplated by Section 12.1 has occurred which makes the Securities eligible for conversion until the Company has delivered to the Trustee and any Conversion Agent an Officers' Certificate stating that such event has occurred, on which Certificate the Trustee and any such Conversion Agent may conclusively rely, and the Company agrees to deliver such Officers' Certificate to the Trustee and any such Conversion Agent immediately after the occurrence of any such event. [The rest of this page has intentionally been left blank.] 81 IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly executed all as of the day and year first above written. COMVERSE TECHNOLOGY, INC. By: /s/ David Kreinberg ------------------------------------ Name: David Kreinberg Title: Executive Vice President and Chief Financial Officer Attest: By: /s/ Paul Robinson --------------------------------- Name: Paul Robinson Title: Assistant Secretary JPMORGAN CHASE BANK, as Trustee By: /s/ Joanne Adamis ------------------------------------ Name: Joanne Adamis Title: Vice President Attest: By: /s/ Nicholas Sberlati --------------------------------- Name: Nicholas Sberlati Title: Trust Officer 82 EXHIBIT A - [FORM OF SECURITY] [FORM OF FACE OF SECURITY] [INCLUDE IF SECURITY IS A REGULATION S GLOBAL SECURITY - THIS SECURITY IS A REGULATION S GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE REFERRED TO HEREINAFTER. EXCEPT IN THE CIRCUMSTANCES DESCRIBED IN SECTION 2.5(b) OF THE INDENTURE, NO TRANSFER OR EXCHANGE OF AN INTEREST IN THIS REGULATION S GLOBAL SECURITY MAY BE MADE FOR AN INTEREST IN THE RESTRICTED GLOBAL SECURITY DURING THE RESTRICTED PERIOD.] UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. THE SECURITY EVIDENCED BY THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS, AND MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY ACQUISITION HEREOF, THE HOLDER: (1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) OR (B) IT IS A NON-U.S. PERSON OUTSIDE THE UNITED STATES ACQUIRING THE SECURITY IN COMPLIANCE WITH REGULATION S UNDER THE SECURITIES ACT; (2) AGREES THAT IT WILL NOT WITHIN TWO YEARS AFTER THE ORIGINAL ISSUANCE OF THIS SECURITY RESELL OR OTHERWISE TRANSFER THE SECURITY EVIDENCED HEREBY OR THE COMMON STOCK ISSUABLE UPON CONVERSION OF SUCH SECURITY EXCEPT (A) TO THE COMPANY OR ANY SUBSIDIARY THEREOF, (B) TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT, (C) TO A NON-U.S. PERSON OUTSIDE THE UNITED STATES IN COMPLIANCE WITH REGULATION S UNDER THE SECURITIES ACT, (D) 1 PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE), OR (E) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT AND WHICH CONTINUES TO BE EFFECTIVE AT THE TIME OF SUCH TRANSFER; AND (3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THE SECURITY EVIDENCED HEREBY IS TRANSFERRED (OTHER THAN A TRANSFER PURSUANT TO CLAUSE 2(E) ABOVE) A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY TRANSFER OF THE SECURITY EVIDENCED HEREBY WITHIN TWO YEARS AFTER THE ORIGINAL ISSUANCE OF SUCH SECURITY (OTHER THAN A TRANSFER PURSUANT TO CLAUSE 2(E) ABOVE), THE HOLDER MUST CHECK THE APPROPRIATE BOX SET FORTH ON THE REVERSE HEREOF RELATING TO THE MANNER OF SUCH TRANSFER AND SUBMIT THIS CERTIFICATE TO THE TRUSTEE (OR ANY SUCCESSOR TRUSTEE, AS APPLICABLE). IF THE PROPOSED TRANSFER IS PURSUANT TO CLAUSE 2(D) ABOVE, THE HOLDER MUST, PRIOR TO SUCH TRANSFER, FURNISH TO THE TRUSTEE (OR ANY SUCCESSOR TRUSTEE, AS APPLICABLE), SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS THE COMPANY MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. THIS LEGEND WILL BE REMOVED UPON THE EARLIER OF THE TRANSFER OF THE SECURITY EVIDENCED HEREBY PURSUANT TO CLAUSE 2(E) ABOVE OR THE EXPIRATION OF TWO YEARS FROM THE ORIGINAL ISSUANCE OF THE SECURITY EVIDENCED HEREBY. AS USED HEREIN, THE TERMS "UNITED STATES" AND "U.S. PERSON" HAVE THE MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT. 2 COMVERSE TECHNOLOGY, INC. ZERO YIELD PUTTABLE SECURITIES (ZYPSsm) DUE MAY 15, 2023 CUSIP No. ----------- No. $ -------- ---------------- Comverse Technology, Inc., a corporation duly organized and existing under the laws of the State of New York (herein called the "Company," which term includes any successor corporation under the Indenture referred to on the reverse hereof), for value received, hereby promises to pay to Cede & Co., or registered assigns, the principal sum of Three Hundred Fifty Million ($350,000,000) U.S. Dollars on May 15, 2023. This Security shall bear no interest except that the Company shall be required to pay Liquidated Damages if the Company does not comply with certain obligations to register the Securities as set forth in the Registration Right Agreement. Payments of principal and premium, if any, shall be made upon the surrender of this Security at the option of the Holder at the Corporate Trust Office of the Trustee, or at such other office or agency of the Company as may be designated by it for such purpose in New York, in such coin or currency of the United States of America as at the time of payment shall be legal tender for the payment of public and private debts. Payment of Liquidated Damages, if any, on this Security may be made by U.S. Dollar check drawn on a bank in The City of New York mailed to the address of the Person entitled thereto as such address shall appear in the Security Register, or upon application by the Holder to the Security Registrar not later than the relevant Record Date, by wire transfer to a U.S. Dollar account (to Holders of an aggregate principal amount in excess of U.S. $3,500,000). Reference is hereby made to the further provisions of this Security set forth on the reverse hereof, which further provisions shall for all purposes have the same effect as if set forth at this place. Unless the certificate of authentication hereon has been executed by or on behalf of the Trustee by the manual signature of an authorized signatory, this Security shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose. IN WITNESS WHEREOF, the Company has caused this Security to be duly executed. Dated: May 7, 2003 COMVERSE TECHNOLOGY, INC. By: ------------------------------ Name: Title: 3 Attest: By: ------------------------------- Name: Title: TRUSTEE'S CERTIFICATE OF AUTHENTICATION --------------------------------------- This is one of the Securities described in the within-named Indenture. JPMORGAN CHASE BANK, as Trustee By: -------------------------------- Authorized Signatory 4 [FORM OF REVERSE OF SECURITY] COMVERSE TECHNOLOGY, INC. ZERO YIELD PUTTABLE SECURITIES (ZYPSsm) DUE MAY 15, 2023 This Security is one of a duly authorized issue of Securities of the Company designated as its "Zero Yield Puttable Securities (ZYPSsm) due May 15, 2023" (herein called the "Securities"), limited in aggregate principal amount to U.S. $350,000,000 (subject to increase as provided in the Indenture (as hereinafter defined) of up to an additional $70,000,000 aggregate principal amount), issued and to be issued under an Indenture, dated as of May 7, 2003 (herein called the "Indenture"), between the Company and JPMorgan Chase Bank, as Trustee (herein called the "Trustee," which term includes any successor trustee under the Indenture), to which Indenture and all indentures supplemental thereto reference is hereby made for a statement of the respective rights, limitations of rights, duties and immunities there under of the Company, the Trustee, and the Holders of the Securities and of the terms upon which the Securities are, and are to be, authenticated and delivered. The Securities are issuable in registered form, without coupons, in denominations of U.S. $1,000 and integral multiples thereof. As provided in the Indenture and subject to certain limitations therein set forth, Securities are exchangeable for a like aggregate principal amount of Securities of any authorized denominations as requested by the Holder surrendering the same upon surrender of the Security or Securities to be exchanged, except as provided below, at the office or agency of the Company in The City of New York, or at such other offices or agencies as the Company may designate. The Securities shall bear no interest except that the Company shall be required to pay Liquidated Damages if the Company does not comply with certain obligations to register the Securities as set forth in the Registration Right Agreement. Liquidated Damages, if any, on the Securities, from May 7, 2003 or from the most recent Liquidated Damages Payment Date to which Liquidated Damages has been paid or duly provided for, semiannually in arrears on May 15 and November 15 in each year (each a "Liquidated Damages Payment Date"), commencing November 15, 2003, at the rate specified in Section 3 of the Registration Rights Agreement. The Liquidated Damages, if any, so payable, and punctually paid or duly provided for, on any Liquidated Damages Payment Date will, as provided in the Indenture, be paid to the Person in whose name a Security (or one or more Predecessor Securities) is registered at the close of business on the Regular Record Date for such Liquidated Damages, which shall be May 1, (whether or not a Business Day) next preceding a May 15 Liquidated Damages Payment Date and November 1, (whether or not a Business Day) next preceding a November 15 Liquidated Damages Payment Date. Except as otherwise provided in the Indenture, Liquidated Damages, if any, not so punctually paid or duly provided for will forthwith cease to be payable to the Holder on such Regular Record Date and may either be paid to the Person in whose name a Security (or one or more Predecessor Securities) is registered at the close of business on a Special Record Date for the payment of such Defaulted Interest to be fixed by the Trustee, notice whereof shall be given to Holders of Securities not less than 10 days prior to such Special Record Date, or be paid at any time in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Securities may be listed, and upon such notice as may be required by such exchange, all as more fully provided in the Indenture. 5 Reference is made to Article 10 of the Indenture regarding the Company's right to optionally redeem the Securities, which is incorporated into this Security by reference as if stated herein in its entirety. Reference is made to Article 11 of the Indenture regarding the Company's obligations to the Holders upon a Specific Repurchase Date or a Designated Event and the Holders' rights to require the Company to repurchase their Securities upon Specific Repurchase Date or a Designated Event, which is incorporated into this Security by reference as if stated herein in its entirety. Reference is made to Article 12 of the Indenture regarding the Holders' right to convert their Securities and related matters, which is incorporated into this Security by reference as if stated herein in its entirety. Subject to certain limitations in the Indenture, at any time when the Company is not subject to Section 13 or 15(d) of the U.S. Securities Exchange Act of 1934, upon the request of a Holder of a Security, the Company will promptly furnish or cause to be furnished Rule 144A Information (as defined below) to such Holder or to a purchaser of such Security designated by such Holder, as the case may be, in order to permit compliance by such Holder with Rule 144A under the U.S. Securities Act of 1933, as amended (the "Securities Act"). "Rule 144A Information" shall be such information as is specified pursuant to Rule 144A(d)(4) under the Securities Act (or any successor provision thereto). If an Event of Default shall occur and be continuing, the principal of all the Securities may be declared due and payable in the manner and with the effect provided in the Indenture. The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations of the Company and the rights of the Holders of the Securities under the Indenture at any time by the Company and the Trustee with the consent of the Holders of a majority in principal amount of the Securities at the time Outstanding (or such lesser amount as shall have acted at a meeting pursuant to the provisions of the Indenture). The Indenture also contains provisions permitting the Holders of specified percentages in principal amount of the Securities at the time Outstanding, on behalf of the Holders of all the Securities, to waive compliance by the Company with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences. Any such consent or waiver by the Holder of this Security shall be conclusive and binding upon such Holder and upon all future Holders of this Security and of any Security issued upon registration of transfer hereof or in exchange herefor or in lieu hereof, whether or not notation of such consent or waiver is made upon this Security or such other Security. No reference herein to the Indenture and no provision of this Security or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of and premium, if any, and Liquidated Damages, if any, on this Security at the times, places and rate, and in the coin or currency, herein prescribed or to convert this Security (or pay cash in lieu of conversion) as provided in the Indenture. 6 Pursuant to the Registration Rights Agreement, upon the effectiveness of the Shelf Registration Statement, each Holder must notify the Company not later than three Business Days prior to any proposed sale by such Holder of Securities pursuant to the Shelf Registration Statement (a "Sale Notice"), which notice shall be effective for five Business Days. The Company may, upon written notice to such Holder, suspend such Holder's use of the prospectus (which is part of the Shelf Registration Statement) for a reasonable period not to exceed 60 days if the Company in its reasonable judgment believes it may possess material non-public information the disclosure of which would have a material adverse effect on the Company and its subsidiaries taken as a whole. Each Holder of this Security, by accepting the same, agrees to hold any communication by the Company in response to a Sale Notice in confidence. As provided in the Indenture and subject to certain limitations therein set forth, the transfer of Securities is registrable on the Security Register upon surrender of a Security for registration of transfer at the office or agency of the Company in The City of New York or, subject to any laws or regulations applicable thereto and to the right of the Company to terminate the appointment of any such Transfer Agent, at the Corporate Trust Office of the Trustee in The City of New York or at the offices of the Transfer Agents described herein or at such other offices or agencies as the Company may designate, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Company and the Security Registrar duly executed by, the Holder thereof or the Holder's attorney duly authorized in writing, and thereupon one or more new Securities, of authorized denominations and for the same aggregate principal amount, will be issued to the designated transferee or transferees. No service charge shall be made for any such registration of transfer or exchange, but the Company may require payment of a sum sufficient to recover any tax or other governmental charge payable in connection therewith. The Company, the Trustee and any agent of the Company or the Trustee may treat the person in whose name this Security is registered as the owner hereof for all purposes, whether or not this Security may be overdue, and neither the Company, the Trustee nor any such agent shall be affected by notice to the contrary. THE INDENTURE AND THE SECURITIES SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO SUCH STATE'S CONFLICT OF LAWS PRINCIPLES. All terms used in this Security which are defined in the Indenture shall have the meanings assigned to them in the Indenture. 7 ASSIGNMENT For value received _____________ hereby sell(s), assign(s) and transfer(s) unto _______________ (Please insert social security or Taxpayer Identification Number of assignee) the within Security, and hereby irrevocably constitutes and appoints _____________________________ attorney to transfer the said Security on the books of the Company, with full power of substitution in the premises. In connection with any transfer of the within Security occurring within two years of the original issuance of such Security (unless such Security is being transferred pursuant to a registration statement that has been declared effective under the Securities Act), the undersigned confirms that such Security is being transferred: To the Company or a subsidiary thereof; or Pursuant to and in compliance with Rule 144A under the Securities Act of 1933, as amended; Pursuant to and in compliance with Regulation S under the Securities Act of 1933, as amended; or Pursuant to and in compliance with Rule 144 under the Securities Act of 1933, as amended; and unless the box below is checked, the undersigned confirms that such Security is not being transferred to an "affiliate" of the Company as defined in Rule 144 under the Securities Act of 1933, as amended (an "Affiliate"): The transferee is an Affiliate of the Company. 8 Dated: ----------------------------- ------------------------------------ Signature(s) Signature(s) must be guaranteed by an eligible Guarantor Institution (banks, stock brokers, savings and loan associations and credit unions) with membership in an approved signature guarantee medallion program pursuant to Securities and Exchange Commission Rule 17Ad-15 if shares of Common Stock are to be issued, or Securities to be delivered, other than to and in the name of the required holder. ------------------------------------ Signature Guarantee NOTICE: The signature must correspond with the name as written upon the face of the Security in every particular without alternation or enlargement or any change whatever. 9 [FORM OF CONVERSION NOTICE] CONVERSION NOTICE TO: Comverse Technology, Inc. The undersigned registered owner of this Security hereby irrevocably exercises the option to convert this Security, or the portion hereof (which is $1,000 principal amount or an integral multiple thereof) below designated, into shares of Common Stock in accordance with the terms of the Indenture referred to in this Security, and directs that the shares issuable and deliverable upon such conversion, together with any check in payment for fractional shares and any Securities representing any unconverted principal amount hereof, be issued and delivered to the registered holder hereof unless a different name has been indicated below. If shares or any portion of this Security not converted are to be issued in the name of a person other than the undersigned, the undersigned will pay all transfer taxes payable with respect thereto. Any amount required to be paid to the undersigned on account of Liquidated Damages, if any, accompanies this Security. Dated: ------------------------------------ ------------------------------------------- Signature(s) Signature(s) must be guaranteed by an eligible Guarantor Institution (banks, stock brokers, savings and loan associations and credit unions) with membership in an approved signature guarantee medallion program pursuant to Securities and Exchange Commission Rule 17Ad-15 if shares of Common Stock are to be issued, or Securities to be delivered, other than to and in the name of the required holder. ------------------------------------------- Signature Guarantee NOTICE: The signature must correspond with the name as written upon the face of the Security in every particular without alternation or enlargement or any change whatever. 10 Fill in for registration of shares if to be issued, and Securities if to be delivered, other than to and in the name of the registered holder: ------------------------------------------- (Name) ------------------------------------------- (Street Address) ------------------------------------------- (City, State and Zip Code) Please print name and address Principal amount to be converted (if less than all): $ ________,000 -------------------------------------------------------- Social Security or Other Taxpayer Identification Number: 11 [FORM OF OPTION TO ELECT REPURCHASE UPON A DESIGNATED EVENT OR SPECIFIC REPURCHASE DATE] REPURCHASE EVENT PURCHASE NOTICE TO: Comverse Technology, Inc. The undersigned registered owner of this Security hereby acknowledges receipt of a notice from Comverse Technology, Inc. (the "Company") as to the occurrence of a Designated Event with respect to the Company and requests and instructs the Company to repay the entire principal amount of this Security, or the portion thereof (which is $1,000 principal amount or an integral multiple thereof) below designated, in accordance with the terms of the Indenture referred to in this Security, together with accrued Liquidated Damages, if any, to, but excluding, such date, to the registered holder hereof, in cash or, at the Company's election upon a Designated Event and subject to certain conditions contained in the Indenture, in Common Stock. Dated: ------------------------------------- ------------------------------------------- Signature(s) ------------------------------------------------------- Social Security or Other Taxpayer Identification Number Principal amount to be repaid (if less than all): $ ,000 ------- NOTICE: The above signatures of the holder(s) hereof must correspond with the name as written upon the face of the Security in every particular without alternation or enlargement or any change whatever. 12 EXHIBIT B [FORM OF CERTIFICATE FOR EXCHANGE OR REGISTRATION OF TRANSFER TO REGULATION S GLOBAL SECURITY] (Pursuant to Section 2.5(b)(2) or (4) of the Indenture) JPMorgan Chase Bank 4 New York Plaza, 15th Floor New York, New York 10004 Attention: (Comverse Technology, Inc. Zero Yield Puttable Securities (ZYPSsm) due May 15, 2023) Dear Ladies and Gentlemen: Reference is hereby made to the Indenture, dated as of May 7, 2003 (the "Indenture"), between Comverse Technology, Inc., as issuer (the "Company") and JPMorgan Chase Bank, as trustee. Capitalized terms used but not defined herein shall have the meanings given to them in the Indenture. This letter relates to U.S. $350,000,000 principal amount of securities which are evidenced by one or more [Restricted Global Securities][Regulation S Global Securities] and held with the Depositary through [the Depository Trust Company][Euroclear] [Clearstream] (the "Securities") in the name of (the "Transferor"). The Transferor has requested a transfer of such beneficial interest in the Securities to a Person who will take delivery thereof in the form of an equal principal amount of Securities evidenced by one or more Regulation S Global Securities in, which amount, immediately after such transfer, is to be held with the Depositary though Euroclear or Clearstream or both. In connection with such request and in respect of such Securities, the Transferor hereby certifies that such transfer has been effected in compliance with the transfer restrictions applicable to the Securities and pursuant to and in accordance with Rule 903 or Rule 904 under the United States Securities Act of 1933, as amended (the "Securities Act"), and accordingly the Transferor hereby further certifies that: (1) The offer of the Securities was not made to a person in the United States; (2) either: (i) at the time the buy order was originated, the transferee was outside the United States or the Transferor and any person acting on its behalf reasonably believed and believes that the transferee was outside the United States; or (ii) the transaction was executed in, on or through the facilities of a designated offshore securities market and neither the Transferor nor any person acting on its behalf knows that the transaction was prearranged with a buyer in the United States; (3) no directed selling efforts have been made in contravention of the requirements of Rule 904(b) of Regulation S; (4) the transaction is not part of a plan or scheme to evade the registration requirements of the Securities Act; and (5) upon completion of the transaction and prior to the expiration of the Restricted Period, the beneficial interest being transferred as described above is to be held with the Depositary through Euroclear or Clearstream or both. (6) With respect to transfers made in reliance on Rule 144, the Securities are being transferred in a transaction permitted by Rule 144 under the Securities Act; and with respect to transfer made in reliance on Rule 144A, that such Securities are being transferred in accordance with Rule 144A under the Securities Act to a transferee that the Transferor reasonably believes is purchasing the Securities for its own account or an account with respect to which the transferee exercises sole investment discretion and the transferee and any such account is a "qualified institutional buyer" within the meaning of Rule 144A, in a transaction meeting the requirements of Rule 144A and in accordance with applicable securities laws of any state of the United States or any other jurisdiction. In addition, if the sale is made during a restricted period and the provisions of Rule 903(c)(2) or (3) or Rule 904(c)(1) of Regulation S are applicable thereto, we confirm that such sale has been made in accordance with the applicable provisions of Rule 903(c)(2) or (3) or Rule 904(c)(1), as the case may be. Upon giving effect to this request to exchange a beneficial interest in a Restricted Global Security for a beneficial interest in a Regulation S Global Security, the resulting beneficial interest shall be subject to the restrictions on transfer applicable to Regulation S Global Securities pursuant to the Indenture and the Securities Act. This certificate and the statements contained herein are made for your benefit and the benefit of the Company and the Initial Purchasers, and you and each of them is entitled to rely on the contents of this certificate. Terms used in this certificate and not otherwise defined in the Indenture have the meanings set forth in Regulation S under the Securities Act. - ----------------------------------- [Insert Name of Transferor] By: ------------------------------ Name: Title: Dated: --------------------------- 2 EXHIBIT C [FORM OF CERTIFICATE FOR EXCHANGE OR REGISTRATION OF TRANSFER TO GLOBAL SECURITY] (Pursuant to Section 2.5(b)(3) or (4) of the Indenture) JPMorgan Chase Bank 4 New York Plaza, 15th Floor New York, New York 10004 Attention: (Comverse Technology, Inc. Zero Yield Puttable Securities (ZYPSsm) due May 15, 2023) Dear Ladies and Gentlemen: Reference is hereby made to the Indenture, dated as of May 7, 2003 (the "Indenture"), between Comverse Technology, Inc., as issuer (the "Company") and JPMorgan Chase Bank, as trustee. Capitalized terms used but not defined herein shall have the meanings given to them in the Indenture. This letter relates to U.S. $350,000,000 principal amount of Securities which are evidenced by one or more [Restricted Global Securities][Regulation S Global Securities] and held with the Depositary through [the Depository Trust Company][Euroclear] [Clearstream] in the name of ____________ (the "Transferor"). The Transferor has requested a transfer of such beneficial interest in the Securities to a Person who will take delivery thereof in the form of an equal principal amount of Securities evidenced by one or more Restricted Global Securities, to be held with the Depositary. In connection with such request and in respect of such Securities, the Transferor hereby certifies that: [CHECK ONE] such transfer is being effected pursuant to and in accordance with Rule 144A under the United States Securities Act of 1933, as amended (the "Securities Act") and, accordingly, the Transferor hereby further certifies that the Securities are being transferred to a Person that the Transferor reasonably believes is purchasing the Securities for its own account, or for one or more accounts with respect to which such Person exercises sole investment discretion, and such Person and each such account is a "qualified institutional buyer" within the meaning of Rule 144A in a transaction meeting the requirements of Rule 144A; or such transfer is being effected pursuant to and in accordance with Rule 144 under the Securities Act; or such transfer is being effected pursuant to an effective registration statement under the Securities Act; or such transfer is being effected pursuant to an exemption from the registration requirements of the Securities Act other than Rule 144A or Rule 144, and the Transferor hereby further certifies that the Securities are being transferred in compliance with the transfer restrictions applicable to the Securities and in accordance with the requirements of the exemption claimed, which certification is supported by such legal opinions or other information provided by the Transferor or the transferee (a copy of which the Transferor has attached to this certification) in form reasonably acceptable to the Company, to the effect that such transfer is in compliance with the Securities Act; and such Securities are being transferred in compliance with any applicable blue sky securities laws of any state of the United States. Upon giving effect to this request (i) to exchange a beneficial interest in Regulation S Global Securities for a beneficial interest in Restricted Global Securities, (ii) to exchange a beneficial interest in Global Securities for a beneficial interest in Securities in certificated form or (iii) to exchange a beneficial interest in Securities in certificated form for a beneficial interest in Securities in certificated form, the resulting beneficial interest shall be subject to the restrictions on transfer applicable to Restricted Global Securities pursuant to the Indenture and the Securities Act. This certificate and the statements contained herein are made for your benefit and the benefit of the Company and the Initial Purchaser, and you and each of them is entitled to rely on the contents of this certificate. Terms used in this certificate and not otherwise defined in the Indenture have the meanings set forth in Regulation S under the Securities Act. - ------------------------------------- [Insert Name of Transferor] By: --------------------------------- Name: Title: Dated: ------------------------------ 2 EX-4 4 mv6-18_ex43.txt 4.3 EXHIBIT 4.3 REGISTRATION RIGHTS AGREEMENT ----------------------------- This Registration Rights Agreement is made and entered into as of May 7, 2003, by and between Comverse Technology, Inc., a New York corporation (the "Company"), and Lehman Brothers Inc. (the "Initial Purchaser") who has purchased or has the right to purchase up to $350,000,000 (up to $420,000,000 if the over-allotment option is exercised) in aggregate principal amount of Zero Yield Puttable Securities (ZYPSsm) due May 15, 2023 (the "Securities") of the Company pursuant to the Purchase Agreement (as such term is defined below). This Agreement is made pursuant to the Purchase Agreement, dated May 2, 2003, between the Company and the Initial Purchaser (the "Purchase Agreement"). In order to induce the Initial Purchaser to enter into the Purchase Agreement, the Company has agreed to provide the registration rights provided for in this Agreement to the Initial Purchaser and its direct and indirect transferees (i) for the benefit of the Initial Purchaser, (ii) for the benefit of the holders from time to time of the Securities (including the Initial Purchaser) and the holders from time to time of the Common Stock issuable or issued upon conversion of the Securities and (iii) for the benefit of the securities constituting Transfer Restricted Securities (as defined below). The execution of this Agreement is a condition to the closing of the transactions contemplated by the Purchase Agreement. The parties hereby agree as follows: 1. Definitions. As used in this Agreement, the following terms shall have the following meanings: Advice: As defined in Section 2(d) hereof. Affiliate: An affiliate of any specified person shall mean any other person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified person. For the purposes of this definition, "control," when used with respect to any person, means the power to direct the management and policies of such person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise and the terms "affiliated," "controlling" and "controlled" have meanings correlative to the foregoing. Agreement: This Registration Rights Agreement, as the same may be amended, supplemented or modified from time to time in accordance with the terms hereof. Business Day: Each Monday, Tuesday, Wednesday, Thursday and Friday that is not a day on which banking institutions in New York, New York are authorized or obligated by law or executive order to close. Closing Date: May 7, 2003. Common Stock: common stock, $0.10 par value per share, of the Company and any other shares of common stock as may constitute "Common Stock" for purposes of the Indenture, in each case, as issuable or issued upon conversion of the Securities. Company: Comverse Technology, Inc., a New York corporation, and any successor corporation thereto. controlling person: As defined in Section 6(a) hereof. Effectiveness Period: As defined in Section 2(a) hereof. Effectiveness Target Date: The 180th day following the Closing Date. Exchange Act: The Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated by the SEC pursuant thereto. Filing Date: The 90th day after the Closing Date. Holder: Each owner of any Transfer Restricted Securities. Indemnified Person: As defined in Section 6(a) hereof. Indenture: The Indenture, dated as of the date hereof, between the Company and the Trustee thereunder, pursuant to which the Securities are being issued, as amended, modified or supplemented from time to time in accordance with the terms thereof. Initial Purchaser: As defined in the first paragraph hereof. Liquidated Damages: As defined in Section 3 hereof. Proceeding: An action, claim, suit or proceeding (including, without limitation, an investigation or partial proceeding, such as disposition), whether commenced or threatened. Prospectus: The prospectus included in any Registration Statement (including, without limitation, a prospectus that discloses information previously omitted from a prospectus filed as part of an effective registration statement in reliance upon Rule 430A promulgated pursuant to the Securities Act), as amended or supplemented by any prospectus supplement, with respect to the resale of any Transfer Restricted Securities covered by such Registration Statement, and all other amendments and supplements to any such prospectus, including post-effective amendments, and all materials incorporated by reference or deemed to be incorporated by reference, if any, in such prospectus. Purchase Agreement: As defined in the second paragraph hereof. Registration Statement: Any registration statement of the Company filed with the SEC pursuant to the Securities Act that covers the resale of any Transfer Restricted Securities pursuant to the provisions of this Agreement, including the Prospectus, amendments and supplements to such registration 2 statement or Prospectus, including pre- and post-effective amendments, all exhibits thereto, and all material incorporated by reference or deemed to be incorporated by reference, if any, in such registration statement. Rule 144: Rule 144 promulgated by the SEC pursuant to the Securities Act, as such Rule may be amended from time to time, or any successor rule or regulation. Rule 144A: Rule 144A promulgated by the SEC pursuant to the Securities Act, as such Rule may be amended from time to time, or any successor rule or regulation. Rule 158: Rule 158 promulgated by the SEC pursuant to the Securities Act, as such Rule may be amended from time to time, or any successor rule or regulation. Rule 174: Rule 174 promulgated by the SEC pursuant to the Securities Act, as such Rule may be amended from time to time, or any successor rule or regulation. Rule 415: Rule 415 promulgated by the SEC pursuant to the Securities Act, as such Rule may be amended from time to time, or any successor rule or regulation. Rule 424: Rule 424 promulgated by the SEC pursuant to the Securities Act, as such Rule may be amended from time to time, or any successor rule or regulation. Sale Notice: As defined in Section 2(d) hereof. SEC: The Securities and Exchange Commission. Securities: As defined in the first paragraph hereof. Securities Act: The Securities Act of 1933, as amended, and the rules and regulations promulgated by the SEC thereunder. Shelf Registration Statement: As defined in Section 2(a) hereof. Special Counsel: Any special counsel to the holders of Transfer Restricted Securities. TIA: The Trust Indenture Act of 1939, as amended. Transfer Restricted Securities: The Securities and the shares of Common Stock into which the Securities are converted or convertible (including any shares of Common Stock issued or issuable thereon upon any stock split, stock combination, stock dividend or the like), upon original issuance thereof, and at all times subsequent thereto, and associated related rights, if any, until, in the case of any such Security or share (and associated rights) (i) the date on which the resale thereof has been registered effectively pursuant to the Securities Act and have been disposed of in accordance with the Registration Statement relating thereto, (ii) the date on which either such Security or the 3 shares of Common Stock issued upon conversion of such Security are distributed to the public pursuant to Rule 144 (or any similar provisions then in effect) or are saleable pursuant to Rule 144(k) promulgated by the SEC pursuant to the Securities Act or (iii) the date on which it ceases to be outstanding, whichever date is earliest. Trustee: The Trustee under the Indenture. Underwritten registration or underwritten offering: A registration in connection with which securities of the Company are sold to an underwriter for reoffering to the public pursuant to an effective Registration Statement. References herein to the term "Holders of a majority in aggregate principal amount of Transfer Restricted Securities" or words to a similar effect shall mean, with respect to any request, notice, demand, objection or other action by the holders of Transfer Restricted Securities hereunder or pursuant hereto (each, an "Act"), registered holders of a number of shares of the then outstanding Common Stock constituting Transfer Restricted Securities and an aggregate principal amount of then outstanding Securities constituting Transfer Restricted Securities, such that the sum of such shares of Common Stock and the shares of Common Stock issuable upon conversion of such Securities constitute in excess of 50% of the sum of all of the then outstanding shares of Common Stock constituting Transfer Restricted Securities and the number of shares of Common Stock issuable upon conversion of then outstanding Securities constituting Transfer Restricted Securities. For purposes of the immediately preceding sentence, (i) any Holder may elect to take any Act with respect to all or any portion of Transfer Restricted Securities held by it and only the portion as to which such Act is taken shall be included in the numerator of the fraction described in the preceding sentence and (ii) Transfer Restricted Securities owned, directly or indirectly, by the Company or its Affiliates shall be deemed not to be outstanding. 2. Shelf Registration Statement. (a) The Company agrees to file with the SEC as soon as practicable after the Closing Date, but in no event later than the Filing Date, a Registration Statement for an offering to be made on a continuous basis pursuant to Rule 415 covering all Transfer Restricted Securities (the "Shelf Registration Statement"). The Shelf Registration Statement shall be on Form S-3 under the Securities Act or another appropriate form selected by the Company permitting registration of such Transfer Restricted Securities for resale by the Holders in the manner or manners reasonably designated by them (including, without limitation, one or more underwritten offerings). The Company shall not permit any securities other than Transfer Restricted Securities to be included in the Shelf Registration Statement. The Company shall use all reasonable efforts to cause the Shelf Registration Statement to be declared effective pursuant to the Securities Act as promptly as practicable following the filing thereof, but in no event later than the Effectiveness Target Date, and to keep the Shelf Registration Statement continuously effective under the Securities Act until the date that is 24 months after the date on which all of the Securities are sold (including those sold 4 pursuant to the over-allotment option granted to the Initial Purchaser in the Purchase Agreement) to the Initial Purchaser (the "Effectiveness Period"), or such shorter period ending when there cease to be outstanding any Transfer Restricted Securities. (b) Supplements and Amendments. Subject to Section 2(d) hereof, the Company shall use its reasonable efforts to keep the Shelf Registration Statement continuously effective by supplementing and amending the Shelf Registration Statement if required by the rules, regulations or instructions applicable to the registration form used for such Shelf Registration Statement, if required by the Securities Act, or if reasonably requested by the Holders of a majority in aggregate principal amount of Transfer Restricted Securities or by any underwriter of such Transfer Restricted Securities. (c) Selling Securityholder Information. The Company may require each Holder of Transfer Restricted Securities to be sold pursuant to the Shelf Registration Statement to furnish to the Company such information regarding the Holder and the distribution of Transfer Restricted Securities as the Company may from time to time reasonably require for inclusion in the Shelf Registration Statement, and the Company may exclude from such registration Transfer Restricted Securities of any Holder that fails to furnish such information within a reasonable time after receiving such request. Each Holder of Transfer Restricted Securities to be sold pursuant to a Shelf Registration Statement agrees to furnish to the Company all information required to be disclosed in order to make the information previously furnished to the Company by such Holder not misleading. (d) Certain Notices; Suspension of Sales. Each Holder of Transfer Restricted Securities agrees by its acquisition of such Transfer Restricted Securities to notify the Company (a "Sale Notice") not later than three (3) Business Days prior to any proposed sale by such Holder of Transfer Restricted Securities pursuant to the Shelf Registration Statement, which notice shall be effective for five (5) Business Days. The Company may, upon written notice to such Holder, suspend such Holder's use of the Prospectus (which is a part of the Shelf Registration Statement) for a reasonable period not to exceed sixty (60) days if the Company in its reasonable judgment believes it may possess material non-public information the disclosure of which in its reasonable judgment would have a material adverse effect on the Company and its subsidiaries taken as a whole. Each Holder of Transfer Restricted Securities agrees by its acquisition of such Transfer Restricted Securities to hold any communication by the Company in response to a Sale Notice in confidence. Each Holder of Transfer Restricted Securities further agrees by its acquisition of such Transfer Restricted Securities that, upon receipt of any notice from the Company of the happening of any event of the kind described in Section 4(c)(ii), 4(c)(iii), 4(c)(v) or 4(c)(vi) hereof, such Holder will forthwith discontinue disposition of such Transfer Restricted Securities covered by such Registration Statement or Prospectus (other than in lawful transactions exempt from the registration requirements under the 5 Securities Act) until such Holder's receipt of the copies of the supplemented or amended Prospectus contemplated by Section 4(j) hereof, or until it is advised in writing (the "Advice") by the Company that the use of the applicable Prospectus may be resumed, and, in either case, has received copies of any additional or supplemental filings that are incorporated or deemed to be incorporated by reference in such Prospectus. (e) Compliance. The Company shall cause the Shelf Registration Statement and the Prospectus and any amendment or supplement thereto, as of the effective date of the Shelf Registration Statement, amendment or supplement, (i) to comply as to form in all material respects with the applicable requirements of the Securities Act and the rules and regulations of the SEC and (ii) not to contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. 3. Liquidated Damages. If (a) the Shelf Registration Statement is not filed with the SEC on or prior to the Filing Date or (b) the Shelf Registration Statement has not been declared effective by the SEC on or prior to the Effectiveness Target Date (each such event referred to in clauses (a) and (b), a "Registration Default"), then the Company will pay to each Holder, for the first 90-day period immediately following the occurrence of such Registration Default, liquidated damages ("Liquidated Damages") in an amount equal to one-quarter of one percent (0.25%) per annum times the principal amount of Transfer Restricted Securities held by such Holder for so long as the Registration Default continues. The amount of Liquidated Damages payable to each Holder shall increase by an additional one-quarter of one percent (0.25%) per annum times the principal amount of Transfer Restricted Securities held by such Holder from and after the 91st day following such Registration Default; provided, however, that (1) upon filing of the Shelf Registration Statement, in the case of (i) above, or (2) upon the effectiveness of the Shelf Registration Statement, in the case of (ii) above, the Liquidated Damages payable with respect to such Transfer Restricted Securities as a result of such clause (i) or (ii), as applicable, shall cease; and, provided, further, that the amount of Liquidated Damages shall never exceed one-half of one percent (0.5%) per annum. Liquidated Damages shall be paid semi-annually in arrears, with the first semi-annual payment due on May 15 or November 15, as applicable, following the date on which such Liquidated Damages begin to accrue, and shall be paid to holders of record of such Transfer Restricted Securities on such dates by U.S. Dollar check drawn on a bank in the City of New York mailed to such holders of record as of such payment date at such addresses as shall appear in the register of the holders of record of such Transfer Restricted Securities, or, in the case of those holders of record holding Transfer Restricted Securities in aggregate principal amounts in excess of $3,500,000, upon application by any such Holders to the registrar of such Transfer Restricted Securities not later than 14 days prior to such payment date, by wire transfer to a U.S. Dollar account. The payment of any such Liquidated Damages shall in all respects be subject to the terms and conditions set forth in the Indenture. All obligations of the Company set forth in the preceding paragraph that are outstanding with respect to any Transfer Restricted Security at the time such security ceases to be a Transfer 6 Restricted Security shall survive until such time as all such obligations with respect to such Security shall have been satisfied in full. 4. Registration Procedures. In connection with the Company's registration obligations hereunder, the Company shall effect such registrations on the appropriate form selected by the Company available for the sale of Transfer Restricted Securities to permit the sale of Transfer Restricted Securities in accordance with the intended method or methods of disposition thereof, and pursuant thereto the Company shall as expeditiously as possible: (a) No fewer than five Business Days prior to the initial filing of a Registration Statement or Prospectus and no fewer than two Business Days prior to the filing of any amendment or supplement thereto (including any document that would be incorporated or deemed to be incorporated therein by reference), furnish to the registered (as of the most recent reasonably practicable date which shall not be more than two Business Days prior to the date such notice is personally delivered, delivered to a next-day courier, deposited in the mail or telecopied, as the case may be) Holders of Transfer Restricted Securities, Special Counsel and the managing underwriters, if any, copies of all such documents proposed to be filed, which documents (including those incorporated or deemed to be incorporated by reference) will be subject to the review of such Holders, Special Counsel and such underwriters, if any, and cause the officers and directors of the Company, counsel to the Company and independent certified public accountants to the Company to respond to such inquiries as shall be necessary in connection with such Registration Statement, in the opinion of respective counsel to such Holders and such underwriters, to conduct a reasonable investigation within the meaning of the Securities Act. The Company shall not file any such Registration Statement or related Prospectus or any amendments or supplements thereto to which the Holders of a majority in aggregate principal amount of Transfer Restricted Securities, Special Counsel, or the managing underwriters, if any, shall reasonably object on a timely basis; (b) Subject to Section 2(d) hereof, prepare and file with the SEC such amendments, including post-effective amendments, to each Registration Statement as may be necessary to keep such Registration Statement continuously effective for the applicable time period set forth in Section 2(a) hereof; and cause the related Prospectus to be supplemented by any required Prospectus supplement, and as so supplemented to be filed pursuant to Rule 424 (or any similar provisions then in force) under the Securities Act and the Exchange Act with respect to the disposition of all securities covered by such Registration Statement during such period in accordance with the intended methods of disposition by the sellers thereof set forth in such Registration Statement as so amended or in such Prospectus as so supplemented; 7 (c) Notify the registered (as of the most recent reasonably practicable date which shall not be more than two Business Days prior to the date such notice is personally delivered, delivered to a next-day courier, deposited in the mail or telecopied, as the case may be) Holders of Transfer Restricted Securities to be sold or Special Counsel and the managing underwriters, if any, promptly (and in the case of an event specified by clause (i)(A) of this paragraph in no event fewer than two Business Days prior to such filing), and (if requested by any such person), confirm such notice in writing, (i)(A) when a Prospectus or any Prospectus supplement or post-effective amendment is proposed to be filed, and, (B) with respect to a Registration Statement or any post-effective amendment, when the same has become effective, (ii) of any request of the SEC or any other Federal or state governmental authority for amendments or supplements to a Registration Statement or related Prospectus or for additional information related thereto, (iii) of the issuance by the SEC, any state securities commission, any other governmental agency or any court of any stop order, order or injunction suspending or enjoining the use or the effectiveness of a Registration Statement or the initiation of any proceedings for that purpose, (iv) if at any time any of the representations and warranties of the Company contained in any agreement (including any underwriting agreement) contemplated by Section 4(l) hereof are not true and correct in all material respects, (v) of the receipt by the Company of any notification with respect to the suspension of the qualification or exemption from qualification of any Transfer Restricted Securities for sale in any jurisdiction, or the initiation or threatening of any proceeding for such purpose, and (vi) of the existence of any fact and the happening of any event that makes any statement made in such Registration Statement or related Prospectus untrue in any material respect, or that requires the making of any changes in such Registration Statement or Prospectus so that in the case of the Registration Statement, it will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading and that, in the case of the Prospectus, such Prospectus will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, except if the existence of such fact or the happening of any such event results from a corporate development that is being pursued by the Company (A) the disclosure of which in the Company's reasonable judgment would have a material adverse effect on the Company and its subsidiaries taken as a whole and (B) which, in the Company's reasonable judgment after consultation with counsel would not, in the absence of an effective Registration Statement, be required to be disclosed by the Company; (d) Use all reasonable efforts to avoid the issuance of, or, if issued, obtain the withdrawal of any order enjoining or suspending the use or effectiveness of a Registration Statement or the lifting of any suspension of the qualification (or exemption from qualification) of any Transfer Restricted Securities for sale in any jurisdiction, at the earliest practicable moment; 8 (e) Subject to Section 2(c) hereof, if reasonably requested by the managing underwriters, if any, or the Holders of a majority in aggregate principal amount of Transfer Restricted Securities being sold in connection with such offering, (i) promptly incorporate in a Prospectus supplement or post-effective amendment such information as the managing underwriters, if any, and such Holders agree should be included therein, and (ii) make all required filings of such Prospectus supplement or such post-effective amendment as soon as practicable after the Company has received notification of the matters to be incorporated in such Prospectus supplement or post-effective amendment; provided, however, that the Company shall not be required to take any action pursuant to this Section 4(e) that would, in the opinion of counsel for the Company, violate applicable law; (f) Furnish to each Holder who so requests, Special Counsel and each managing underwriter, if any, without charge, at least one conformed copy of each Registration Statement and each amendment thereto, including financial statements (but excluding schedules, all documents incorporated or deemed to be incorporated therein by reference and all exhibits, unless requested in writing by such Holder, counsel or managing underwriter); (g) Deliver to each Holder, Special Counsel and the underwriters, if any, without charge, as many copies of the Prospectus or Prospectuses (including each form of prospectus) and each amendment or supplement thereto to such persons who reasonably request; and, unless the Company shall have given notice to such Holder pursuant to Section 4(c)(vi), the Company hereby consents to the use of such Prospectus and each amendment or supplement thereto by each of the selling Holders of Transfer Restricted Securities and the underwriters, if any, in connection with the offering and sale of Transfer Restricted Securities covered by such Prospectus and any amendment or supplement thereto; (h) Prior to any public offering of Transfer Restricted Securities, use all reasonable efforts to register or qualify, or cooperate with the Holders of Transfer Restricted Securities to be sold, the underwriters, if any, and their respective counsel in connection with the registration or qualification (or exemption from such registration or qualification) of, such Transfer Restricted Securities for offer and sale under the securities or Blue Sky laws of such jurisdictions within the United States as any Holder or underwriter reasonably requests in writing, keep each such registration or qualification (or exemption therefrom) effective during the period such Registration Statement is required to be kept effective and do any and all other acts or things necessary legally to enable the disposition in such jurisdictions of Transfer Restricted Securities covered by the applicable Registration Statement; provided, however, that the Company shall not be required to qualify generally to do business in any jurisdiction where it is not then so qualified or take any action that would subject it to general service of process in any such jurisdiction where it is not then so subject; 9 (i) In connection with any sale or transfer of Transfer Restricted Securities that will result in such securities no longer being Transfer Restricted Securities, and unless any Transfer Restricted Securities shall be in only book-entry form, cooperate with the Holders and the managing underwriters, if any, to (A) facilitate the timely preparation and delivery of certificates representing Transfer Restricted Securities to be sold, which certificates shall not bear any restrictive legends, shall bear a CUSIP number different from the CUSIP number for Transfer Restricted Securities and shall be in a form eligible for deposit with The Depository Trust Company and (B) enable such Transfer Restricted Securities to be in such denominations and registered in such names as the managing underwriters, if any, or Holders may request at least two Business Days prior to any sale of Transfer Restricted Securities; (j) Upon the occurrence of any event contemplated by Section 4(c)(vi) hereof, as promptly as practicable, prepare a supplement or amendment, including, if appropriate, a post-effective amendment, to each Registration Statement or a supplement to the related Prospectus or any document incorporated or deemed to be incorporated therein by reference, and file any other required document so that, as thereafter delivered, such Prospectus will not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; (k) Prior to the effective date of the first Registration Statement relating to Transfer Restricted Securities, to provide a CUSIP number for Transfer Restricted Securities to be sold pursuant to the Registration Statement; (l) Enter into such agreements (including an underwriting agreement in form, scope and substance as is customary in underwritten offerings) reasonably satisfactory to the Company and take all such other reasonable actions in connection therewith (including those reasonably requested by the managing underwriters, if any, or the Holders of a majority in aggregate principal amount of Transfer Restricted Securities being sold) in order to expedite or facilitate the disposition of such Transfer Restricted Securities, and in such connection, whether or not an underwriting agreement is entered into and whether or not the registration is an underwritten registration, (i) make such representations and warranties to the Holders of such Transfer Restricted Securities and the underwriters, if any, with respect to the business of the Company and its subsidiaries (including with respect to businesses or assets acquired or to be acquired by any of them), and the Registration Statement, Prospectus and documents, if any, incorporated or deemed to be incorporated by reference therein, in each case, in form, substance and scope as are customarily made by issuers to underwriters in underwritten offerings and reasonably acceptable to the Company, and confirm the same if and when requested; (ii) seek to obtain opinions of counsel to the Company and updates thereof, which counsel and opinions (in form, scope and substance) shall be reasonably satisfactory to the managing underwriters, if any, and Special Counsel to the Holders of Transfer Restricted Securities being sold, addressed to each of the underwriters, if any, covering the matters 10 customarily covered in opinions requested in underwritten offerings (including any such matters as may be reasonably requested by such Special Counsel and underwriters); (iii) use all reasonable efforts to obtain customary "cold comfort" letters and updates thereof from the independent certified public accountants of the Company (and, if necessary, any other independent certified public accountants of any subsidiary of the Company or of any business acquired or to be acquired by the Company for which financial statements and financial data is, or is required to be, included in the Registration Statement), addressed (where reasonably possible) to each selling Holder of Transfer Restricted Securities and each of the underwriters, if any, such letters to be in customary form and covering matters of the type customarily covered in "cold comfort" letters in connection with underwritten offerings; (iv) if an underwriting agreement is entered into, the same shall contain indemnification provisions and procedures no less favorable to the selling Holders of Transfer Restricted Securities and the underwriters, if any, than those set forth in Section 6 hereof (or such other provisions and procedures acceptable to the Company and Holders of a majority in aggregate principal amount of Transfer Restricted Securities covered by such Registration Statement and the managing underwriters); and (v) deliver such documents and certificates as may be reasonably requested by the Holders of a majority in aggregate principal amount of Transfer Restricted Securities being sold, Special Counsel or the managing underwriters, if any, to evidence the continued validity of the representations and warranties made pursuant to clause (i) of this Section 4(l) and to evidence compliance with any customary conditions contained in the underwriting agreement or other agreement entered into by the Company; (m) Make available for inspection by a representative of the Holders of Transfer Restricted Securities being sold, any underwriter participating in any such disposition of Transfer Restricted Securities, if any, and any attorney, consultant or accountant retained by such selling Holders or underwriter, at the offices where normally kept, during reasonable business hours, all financial and other records, pertinent corporate documents and properties of the Company and its subsidiaries as they may reasonably request (including with respect to business and assets acquired or to be acquired to the extent that such information is available to the Company), and cause the officers, directors, agents and employees of the Company and its subsidiaries (including with respect to business assets acquired or to be acquired to the extent that such information is available to the Company) to supply all information in each case reasonably requested by any such representative, underwriter, attorney, consultant or accountant in connection with such Registration Statement; provided, however, that any information that is reasonably and in good faith designated by the Company in writing as confidential at the time of delivery of such information shall be kept confidential by such persons (and such persons shall so agree in writing), unless (i) disclosure of such information is required by court or administrative order or is necessary to respond to inquiries 11 of regulatory authorities, (ii) disclosure of such information is required by law (including any disclosure requirements pursuant to Federal securities laws in connection with the filing of any Registration Statement or the use of any prospectus referred to in this Agreement), (iii) such information becomes generally available to the public other than as a result of a disclosure or failure to safeguard by any such person or (iv) such information becomes available to any such person from a source other than the Company and such source is not bound by a confidentiality agreement; (n) Cause the Indenture to be qualified under the TIA not later than the effective date of the first Registration Statement relating to Transfer Restricted Securities; and in connection therewith, cooperate with the Trustee under the Indenture and the Holders of Transfer Restricted Securities to effect such changes to the Indenture, if any, as may be required for such Indenture to be so qualified in accordance with the terms of the TIA; and execute, and use all reasonable efforts to cause the Trustee to execute, all customary documents as may be required to effect such changes, and all other forms and documents (including the Form T-1) required to be filed with the SEC to enable the Indenture to be so qualified under the TIA in a timely manner; (o) Comply with applicable rules and regulations of the SEC and make generally available to its security holders earning statements satisfying the provisions of Section 11(a) of the Securities Act and Rule 158 thereunder (or any similar rule promulgated under the Securities Act), no later than 45 days after the end of any 12-month period (or 90 days after the end of any 12-month period if such period is a fiscal year), commencing on the first day of the first fiscal quarter after the effective date of a Registration Statement, which statement shall cover said period, consistent with the requirements of Rule 158; and (p) (i) list all Common Stock covered by such Registration Statement on any securities exchange on which the Common Stock is then listed or (ii) authorize for quotation on The Nasdaq Stock Market all Common Stock covered by such Registration Statement if the Common Stock is then so authorized for quotation. 5. Registration Expenses. (a) All fees and expenses incident to the performance of or compliance with this Agreement by the Company shall be borne by it whether or not any Registration Statement is filed or becomes effective and whether or not any securities are issued or sold pursuant to any Registration Statement. The fees and expenses referred to in the foregoing sentence shall include, without limitation, (i) all registration and filings fees (including without limitation, fees and expenses (A) with respect to filings required to be made with the National Association of Securities Dealers, Inc. and (B) in compliance with securities or Blue Sky laws (including, without limitation and in addition to that provided for in (b) below, reasonable fees and disbursements of counsel for the underwriters or 12 Special Counsel for the Holders in connection with Blue Sky qualifications of Transfer Restricted Securities and determination of the eligibility of Transfer Restricted Securities for investment under the laws of such jurisdictions as the managing underwriters, if any, or Holders of a majority in aggregate principal amount of Transfer Restricted Securities, may reasonably designate)), (ii) printing expenses (including, without limitation, expenses of printing certificates for Transfer Restricted Securities in a form eligible for deposit with The Depository Trust Company and of printing Prospectuses if the printing of Prospectuses is required by the managing underwriters, if any, or by the Holders of a majority in aggregate principal amount of Transfer Restricted Securities included in any Registration Statement, (iii) messenger, telephone and delivery expenses, (iv) fees and disbursements of counsel for the Company and Special Counsel for the Holders (plus any local counsel, deemed appropriate by the Holders of a majority in aggregate principal amount of Transfer Restricted Securities) in accordance with the provisions of Section 5(b) hereof, (v) fees and disbursements of all independent certified public accountants referred to in Section 4(l)(iii) (including, without limitation, the expenses of any special audit and "cold comfort" letters required by or incident to such performance), (vi) Securities Act liability insurance, if the Company so desires such insurance, and (vii) fees and expenses of all other persons retained by the Company. In addition, the Company shall pay its internal expenses (including, without limitation, all salaries and expenses of its officers and employees performing legal or accounting duties), the expense of an annual audit, and the fees and expenses incurred in connection with the listing of the securities to be registered on any securities exchange. Notwithstanding the foregoing or anything in this Agreement to the contrary, each Holder shall pay all underwriting discounts and commissions of any underwriters with respect to any Transfer Restricted Securities sold by it. (b) In connection with any registration hereunder, the Company shall reimburse the Holders of Transfer Restricted Securities being registered or tendered for in such registration for the fees and disbursements of not more than one firm of attorneys representing the selling Holders (in addition to any local counsel), in an amount not to exceed $25,000 in the aggregate for all such registrations, which firm shall be chosen by the Holders of a majority in aggregate principal amount of Transfer Restricted Securities. Gibson, Dunn & Crutcher LLP shall be Special Counsel for all purposes hereof unless and until another Special Counsel shall have been selected by Holders of a majority in aggregate principal amount of Transfer Restricted Securities and notice hereof shall have been given to the Company. 6. Indemnification. (a) The Company agrees to indemnify and hold harmless (i) the Initial Purchaser, (ii) each Holder of Transfer Restricted Securities, (iii) each person, if any, who controls (within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act) any of the foregoing (any of the persons referred to in 13 this clause (iii) being hereinafter referred to as a "controlling person"), and (iv) the respective officers, directors, partners, employees, representatives and agents of the Initial Purchaser, each Holder of Transfer Restricted Securities, or any controlling person (any person referred to in clause (i), (ii), (iii) or (iv) may hereinafter be referred to as an "Indemnified Person"), from and against any and all losses, claims, damages, liabilities, expenses and judgments caused by any untrue statement or alleged untrue statement of a material fact contained in any Registration Statement, Prospectus or form of Prospectus or in any amendment or supplement thereto or in any preliminary Prospectus, or caused by any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein (in the case of any Prospectus or form of Prospectus or supplement thereto, in the light of the circumstances under which they were made) not misleading, except insofar as such losses, claims, damages, liabilities, expenses or judgments are caused by any such untrue statement or omission or alleged untrue statement or omission based upon information relating to any Indemnified Person furnished in writing to the Company by or on behalf of such Indemnified Person expressly for use therein; provided that the foregoing indemnity with respect to any preliminary Prospectus shall not inure to the benefit of any Indemnified Person from whom the person asserting such losses, claims, damages, liabilities, expenses and judgments purchased securities if such untrue statement or omission or alleged untrue statement or omission made in such preliminary Prospectus is eliminated or remedied in the Prospectus and a copy of the Prospectus shall not have been furnished to such person in a timely manner, unless such Prospectus was not furnished because the Company failed to provide the Indemnified Person with sufficient copies of such corrected Prospectus within the time period required. (b) In case any action shall be brought against any Indemnified Person, based upon any Registration Statement or any such Prospectus or any amendment or supplement thereto and with respect to which indemnity may be sought against the Company, such Indemnified Person shall promptly notify the Company in writing and the Company shall assume the defense thereof, including the employment of counsel reasonably satisfactory to such Indemnified Person and payment of all fees and expenses. Any Indemnified Person shall have the right to employ separate counsel in any such action and participate in (but not control) the defense thereof, but the fees and expenses of such counsel shall be at the expense of such Indemnified Person, unless (i) the employment of such counsel shall have been specifically authorized in writing by the Company, (ii) the Company shall have failed to assume the defense and employ counsel or (iii) such Indemnified Person or Persons shall have been advised by counsel that there may be a conflict between the positions of the indemnifying party or parties and of the indemnified party or parties in conducting the defense of such action or that there may be legal defenses available to such Indemnified Person or Persons different from or in addition to those available to the indemnifying party or parties (in which case the Company shall not have the right to assume the defense of such action on behalf of such Indemnified Person, it being understood, however, that the Company shall not, in connection 14 with any one such action or separate but substantially similar or related actions in the same jurisdiction arising out of the same general allegations or circumstances, be liable for the fees and expenses of more than one separate firm of attorneys, (in addition to any local counsel) for all such Indemnified Persons, which firm shall be designated in writing by such Indemnified Persons and shall be reasonably satisfactory to the Company, and that all such fees and expenses shall be reimbursed as they are incurred). The Company shall not be liable for any settlement of any such action effected without its written consent but if settled with the written consent of the Company, the Company agrees to indemnify and hold harmless any Indemnified Person from and against any loss or liability by reason of such settlement. No indemnifying party shall, without the prior written consent of the indemnified party (which consent shall not be unreasonably withheld), effect any settlement of any pending or threatened action in respect of which any indemnified party is or could have been a party and indemnity could have been sought hereunder by such indemnified party, unless such settlement includes an unconditional release of such indemnified party from all liability on claims that are the subject matter of such action. (c) In connection with any Registration Statement in which the Holder of Transfer Restricted Securities is participating, such Holder of Transfer Restricted Securities agrees, severally and not jointly, to indemnify and hold harmless the Company, its directors, its officers and any person controlling the Company within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act, to the same extent as the foregoing indemnity from the Company to each Indemnified Person but only with reference to information relating to such Indemnified Person furnished in writing by or on behalf of such Indemnified Person expressly for use in such Registration Statement. In case any action shall be brought against the Company, any of its directors, any such officer or any person controlling the Company based on such Registration Statement and in respect of which indemnity may be sought against any Indemnified Person, the Indemnified Person shall have the rights and duties given to the Company (except that if the Company shall have assumed the defense thereof, such Indemnified Person shall not be required to do so, but may employ separate counsel therein and participate in (but not control) the defense thereof but the fees and expenses of such counsel shall be at the expense of such Indemnified Person), and the Company, its directors, any such officers and any person controlling the Company shall have the rights and duties given to the Indemnified Person, by Section 6(b) hereof. (d) If the indemnification provided for in this Section 6 is unavailable to an indemnified party in respect of any losses, claims, damages, liabilities, expenses or judgments referred to therein, then each indemnifying party, in lieu of indemnifying such indemnified party, shall contribute to the amount paid or payable by such indemnified party as a result of such losses, claims, damages, liabilities, expenses and judgments (i) in such proportion as is 15 appropriate to reflect the relative benefits received by the Company on the one hand and each Indemnified Person on the other hand from the offering of Transfer Restricted Securities or (ii) if the allocation provided by clause (i) above is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above but also the relative fault of the Company and each such Indemnified Person in connection with the statements or omissions which resulted in such losses, claims, damages, liabilities, expenses or judgments, as well as any other relevant equitable considerations. The relative fault of the Company and each such Indemnified Person shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission to state a material fact relates to information supplied by the Company or such Indemnified Person and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The Company and the Initial Purchaser agree that it would not be just and equitable if contribution pursuant to this Section 6(d) were determined by pro rata allocation (even if the Indemnified Persons were treated as one entity for such purpose) or by any other method of allocation which does not take account of the equitable considerations referred to in the immediately preceding paragraph. The amount paid or payable by an indemnified party as a result of the losses, claims, damages, liabilities, expenses or judgments referred to in the immediately preceding paragraph shall be deemed to include, subject to the limitations set forth above, any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any such action or claim. Notwithstanding the provisions of this Section 6, no Indemnified Person shall be required to contribute any amount in excess of the amount by which the total proceeds received by it in connection with the sale of Transfer Restricted Securities pursuant to this Agreement exceeds the amount of any damages which such Indemnified Person has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. The Indemnified Persons' obligations to contribute pursuant to this Section 6(d) are several in proportion to the respective amount of Transfer Restricted Securities included in and sold pursuant to any such Registration Statement by each Indemnified Person and not joint. (e) The agreements contained in this Section 6 shall survive the sale of Transfer Restated Securities pursuant to any Registration Statement and shall remain in full force and effect, regardless of any investigation made by or on behalf of any Indemnified Person. 7. Rules 144 and 144A. The Company shall use all reasonable efforts to file the reports required to be filed by it under the Securities Act and the Exchange Act in a timely manner and, if at any time it is not required to file such reports but in the past had been required to or did file such reports, it 16 will, upon the request of any Holder, make available other information as required by, and so long as necessary to permit sales of, its Transfer Restricted Securities pursuant to Rule 144 and Rule 144A. Notwithstanding the foregoing, nothing in this Section 7 shall be deemed to require the Company to register any of its securities pursuant to the Exchange Act. 8. Underwritten Registrations. If any Transfer Restricted Securities covered by the Shelf Registration Statement are to be sold in an underwritten offering, the investment banker or investment bankers and manager or managers that will administer the offering will be investment bankers of recognized national standing selected by the Holders of a majority in aggregate principal amount of such Transfer Restricted Securities included in such offering, subject to the consent of the Company (which will not be unreasonably withheld or delayed). No person may participate in any underwritten registration hereunder unless such person (i) agrees to sell such person's Transfer Restricted Securities on the basis reasonably provided in any underwriting arrangements approved by the persons entitled hereunder to approve such arrangements and (ii) completes and executes all questionnaires, powers of attorney, indemnities, underwriting agreements and other documents reasonably required under the terms of such underwriting arrangements. 9. Miscellaneous. (a) Remedies. In the event of a breach by the Company, or by a Holder of Transfer Restricted Securities, of any of their obligations under this Agreement, each Holder of Transfer Restricted Securities or the Company, respectively, in addition to being entitled to exercise all rights granted by law, including recovery of damages, will be entitled to specific performance of its rights under this Agreement. The Company and each Holder of Transfer Restricted Securities agree that monetary damages would not be adequate compensation for any loss incurred by reason of a breach by it of any of the provisions of this Agreement and hereby further agree that, in the event of any action for specific performance in respect of such breach, they shall waive the defense that a remedy at law would be adequate. (b) No Inconsistent Agreements. The Company shall not enter into any agreement with respect to its securities that is inconsistent with the rights granted to the holders of Transfer Restricted Securities in this Agreement or otherwise conflicts with the provisions hereof. Other than registration rights granted to holders of the 1 1/2% Convertible Senior Debentures due 2005, the Company is not currently a party to any agreement granting any registration rights with respect to any of its securities to any person which conflicts with the Company's obligations hereunder or gives any other party the right to include any securities in any Registration Statement filed pursuant hereto, except for such rights and conflicts as have been irrevocably waived. Without limiting the generality of the foregoing, without the written consent of the 17 Holders of a majority in aggregate principal amount in the case of the Securities of Transfer Restricted Securities, the Company shall not grant to any person the right to request it to register any of its securities under the Securities Act unless the rights so granted are subject in all respect to the prior rights of the holders of Transfer Restricted Securities set forth herein, and are not otherwise in conflict or inconsistent with the provisions of this Agreement. (c) No Adverse Action Affecting Transfer Restricted Securities. Subject to the Company's right to suspend use of the Prospectus pursuant to Section 2(d) hereof, or give a notice pursuant to Section 4(c)(vi) hereof, the Company will not take any action with respect to Transfer Restricted Securities which would adversely affect the ability of any of the Holders of Transfer Restricted Securities to include such Transfer Restricted Securities in a registration undertaken pursuant to this Agreement. (d) No Piggyback on Registrations. The Company shall not grant to any of its security holders (other than the Holders of Transfer Restricted Securities in such capacity) the right to include any of its securities in any Shelf Registration Statement other than Transfer Restricted Securities. (e) Amendments and Waivers. The provisions of this Agreement, including the provisions of this sentence, may not be amended, modified or supplemented, and waivers or consents to departures from the provisions hereof may not be given, without the written consent of the Holders of a majority in aggregate principal amount of Transfer Restricted Securities. Notwithstanding the foregoing, a waiver or consent to depart from the provisions hereof with respect to a matter that relates exclusively to the rights of Holders of Transfer Restricted Securities whose securities are being sold pursuant to a Registration Statement and that does not directly or indirectly affect the rights of other Holders of Transfer Restricted Securities may be given by Holders of a majority in aggregate principal amount of Transfer Restricted Securities being sold by such Holders pursuant to such Registration Statement; provided, however, that the provisions of this sentence may not be amended, modified, or supplemented except in accordance with the provisions of the immediately preceding sentence. (f) Notices. All notices and other communications provided for herein shall be made in writing by hand-delivery, next-day air courier, certified first-class mail, return receipt requested or telecopy: (i) if to a Holder of Transfer Restricted Securities, to the address of such Holder as it appears in the Security or Common Stock register of the Company, as applicable; and (ii) if to the Company, to: 18 Comverse Technology, Inc. 170 Crossways Park Drive Woodbury, New York 11797 Telecopy: (516) 677-7323 Attention: David Kreinberg with a copy to: Weil, Gotshal & Manges LLP 767 Fifth Avenue New York, NY 10153-0119 Telecopy: (212) 310-8007 Attention: Jeffrey Nadler (iii) if to Special Counsel, to: Gibson, Dunn & Crutcher LLP 200 Park Avenue New York, NY 10166 Telecopy: (212) 351-4035 Attention: Barbara L. Becker or such other Special Counsel at such other address and telecopy number as a majority in aggregate principal amount of Transfer Restricted Securities shall have given notice to the Company as contemplated by Section 5(b) hereof. Except as otherwise provided in this Agreement, all such communications shall be deemed to have been duly given, when delivered by hand, if personally delivered; one Business Day after being timely delivered to a next-day air courier, five Business Days after being deposited in the mail, postage prepaid, if mailed; and when receipt is acknowledged by the recipient's telecopier machine, if telecopied. (g) Successors and Assigns. This Agreement shall inure to the benefit of and be binding upon the successors and permitted assigns of each of the parties and shall inure to the benefit of each existing and future Holder of Transfer Restricted Securities. The Company may not assign its rights or obligations hereunder without the prior written consent of each Holder of Transfer Restricted Securities, other than by operation of law pursuant to a merger or consolidation to which the Company is a party. In the event the Securities become convertible into common stock of another person pursuant to Section 12.11 of the Indenture, the Company shall cause such person to assume the Company's obligations hereunder. (h) Counterparts. This Agreement may be executed in any number of counterparts and by the parties hereto in separate 19 counterparts each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same Agreement. (i) Governing Law; Submission to Jurisdiction. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO CONTRACTS MADE AND PERFORMED WITHIN THE STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW. THE COMPANY HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY NEW YORK STATE COURT SITTING IN THE BOROUGH OF MANHATTAN IN THE CITY OF NEW YORK OR ANY FEDERAL COURT SITTING IN THE BOROUGH OF MANHATTAN IN THE CITY OF NEW YORK IN RESPECT OF ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, AND IRREVOCABLY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, JURISDICTION OF THE AFORESAID COURTS. THE COMPANY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO UNDER APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT AND ANY CLAIM THAT ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. (j) Severability. The remedies provided herein are cumulative and not exclusive of any remedies provided by law. If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to be invalid, illegal, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions set forth herein shall remain in full force and effect and shall in no way be affected, impaired or invalidated, and the parties hereto shall use their best efforts to find and employ an alternative means to achieve the same or substantially the same result as that contemplated by such term, provision, covenant or restriction. It is hereby stipulated and declared to be the intention of the parties that they would have executed the remaining terms, provisions, covenants and restrictions without including any of such that may be hereafter declared invalid, illegal, void or unenforceable. (k) Headings. The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof. All references made in this Agreement to "Section" and "paragraph" refer to such Section or paragraph of this Agreement, unless expressly stated otherwise. 20 (l) Attorneys' Fees. In any action or proceeding brought to enforce any provision of this Agreement, or where any provision hereof is validly asserted as a defense, the prevailing party, as determined by the court, shall be entitled to recover its reasonable attorneys' fees in addition to any other available remedy. 21 IN WITNESS WHEREOF, the parties have caused this Registration Rights Agreement to be duly executed as of the date first written above. COMVERSE TECHNOLOGY, INC. By: /s/ David Kreinberg ------------------------------------- David Kreinberg Executive Vice President and Chief Financial Officer LEHMAN BROTHERS INC. By: /s/ Leonard G. Rosen ------------------------------------- Leonard G. Rosen Managing Director 22 EX-4 5 mv6-18_ex44.txt 4.4 EXHIBIT 4.4 ZERO YIELD PUTTABLE SECURITIES (ZYPSsm) DUE MAY 15, 2023 UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. THE SECURITY EVIDENCED BY THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS, AND MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY ACQUISITION HEREOF, THE HOLDER: (1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) OR (B) IT IS A NON-U.S. PERSON OUTSIDE THE UNITED STATES ACQUIRING THE SECURITY IN COMPLIANCE WITH REGULATION S UNDER THE SECURITIES ACT; (2) AGREES THAT IT WILL NOT WITHIN TWO YEARS AFTER THE ORIGINAL ISSUANCE OF THIS SECURITY RESELL OR OTHERWISE TRANSFER THE SECURITY EVIDENCED HEREBY OR THE COMMON STOCK ISSUABLE UPON CONVERSION OF SUCH SECURITY EXCEPT (A) TO THE COMPANY OR ANY SUBSIDIARY THEREOF, (B) TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT, (C) TO A NON-U.S. PERSON OUTSIDE THE UNITED STATES IN COMPLIANCE WITH REGULATION S UNDER THE SECURITIES ACT, (D) PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE), OR (E) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT AND WHICH CONTINUES TO BE EFFECTIVE AT THE TIME OF SUCH TRANSFER; AND (3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THE SECURITY EVIDENCED HEREBY IS TRANSFERRED (OTHER THAN A TRANSFER PURSUANT TO CLAUSE 2(E) ABOVE) A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. 1 IN CONNECTION WITH ANY TRANSFER OF THE SECURITY EVIDENCED HEREBY WITHIN TWO YEARS AFTER THE ORIGINAL ISSUANCE OF SUCH SECURITY (OTHER THAN A TRANSFER PURSUANT TO CLAUSE 2(E) ABOVE), THE HOLDER MUST CHECK THE APPROPRIATE BOX SET FORTH ON THE REVERSE HEREOF RELATING TO THE MANNER OF SUCH TRANSFER AND SUBMIT THIS CERTIFICATE TO THE TRUSTEE (OR ANY SUCCESSOR TRUSTEE, AS APPLICABLE). IF THE PROPOSED TRANSFER IS PURSUANT TO CLAUSE 2(D) ABOVE, THE HOLDER MUST, PRIOR TO SUCH TRANSFER, FURNISH TO THE TRUSTEE (OR ANY SUCCESSOR TRUSTEE, AS APPLICABLE), SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS THE COMPANY MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. THIS LEGEND WILL BE REMOVED UPON THE EARLIER OF THE TRANSFER OF THE SECURITY EVIDENCED HEREBY PURSUANT TO CLAUSE 2(E) ABOVE OR THE EXPIRATION OF TWO YEARS FROM THE ORIGINAL ISSUANCE OF THE SECURITY EVIDENCED HEREBY. AS USED HEREIN, THE TERMS "UNITED STATES" AND "U.S. PERSON" HAVE THE MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT. 2 COMVERSE TECHNOLOGY, INC. ZERO YIELD PUTTABLE SECURITIES (ZYPSsm) DUE MAY 15, 2023 CUSIP No. ----------- No. $ -------- ---------------- Comverse Technology, Inc., a corporation duly organized and existing under the laws of the State of New York (herein called the "Company," which term includes any successor corporation under the Indenture referred to on the reverse hereof), for value received, hereby promises to pay to Cede & Co., or registered assigns, the principal sum of ________________ ($____________) U.S. Dollars on May 15, 2023. This Security shall bear no interest except that the Company shall be required to pay Liquidated Damages if the Company does not comply with certain obligations to register the Securities as set forth in the Registration Right Agreement. Payments of principal and premium, if any, shall be made upon the surrender of this Security at the option of the Holder at the Corporate Trust Office of the Trustee, or at such other office or agency of the Company as may be designated by it for such purpose in New York, in such coin or currency of the United States of America as at the time of payment shall be legal tender for the payment of public and private debts. Payment of Liquidated Damages, if any, on this Security may be made by U.S. Dollar check drawn on a bank in The City of New York mailed to the address of the Person entitled thereto as such address shall appear in the Security Register, or upon application by the Holder to the Security Registrar not later than the relevant Record Date, by wire transfer to a U.S. Dollar account (to Holders of an aggregate principal amount in excess of U.S. $3,500,000). Reference is hereby made to the further provisions of this Security set forth on the reverse hereof, which further provisions shall for all purposes have the same effect as if set forth at this place. Unless the certificate of authentication hereon has been executed by or on behalf of the Trustee by the manual signature of an authorized signatory, this Security shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose. 3 IN WITNESS WHEREOF, the Company has caused this Security to be duly executed. Dated: COMVERSE TECHNOLOGY, INC. By: ------------------------------------------- Name: David Kreinberg Title: Executive Vice President and Chief Financial Officer Attest: By: ------------------------------------------- Name: Title: TRUSTEE'S CERTIFICATE OF AUTHENTICATION --------------------------------------- This is one of the Securities described in the within-named Indenture. JPMORGAN CHASE BANK, as Trustee By: ------------------------------------------- Authorized Signatory 4 [FORM OF REVERSE OF SECURITY] COMVERSE TECHNOLOGY, INC. ZERO YIELD PUTTABLE SECURITIES (ZYPSsm) DUE MAY 15, 2023 This Security is one of a duly authorized issue of Securities of the Company designated as its "Zero Yield Puttable Securities (ZYPSsm) due May 15, 2023" (herein called the "Securities"), limited in aggregate principal amount to U.S. $350,000,000 (subject to increase as provided in the Indenture (as hereinafter defined) of up to an additional $70,000,000 aggregate principal amount), issued and to be issued under an Indenture, dated as of May 7, 2003 (herein called the "Indenture"), between the Company and JPMorgan Chase Bank, as Trustee (herein called the "Trustee," which term includes any successor trustee under the Indenture), to which Indenture and all indentures supplemental thereto reference is hereby made for a statement of the respective rights, limitations of rights, duties and immunities there under of the Company, the Trustee, and the Holders of the Securities and of the terms upon which the Securities are, and are to be, authenticated and delivered. The Securities are issuable in registered form, without coupons, in denominations of U.S. $1,000 and integral multiples thereof. As provided in the Indenture and subject to certain limitations therein set forth, Securities are exchangeable for a like aggregate principal amount of Securities of any authorized denominations as requested by the Holder surrendering the same upon surrender of the Security or Securities to be exchanged, except as provided below, at the office or agency of the Company in The City of New York, or at such other offices or agencies as the Company may designate. The Securities shall bear no interest except that the Company shall be required to pay Liquidated Damages if the Company does not comply with certain obligations to register the Securities as set forth in the Registration Right Agreement. Liquidated Damages, if any, on the Securities, from May 7, 2003 or from the most recent Liquidated Damages Payment Date to which Liquidated Damages has been paid or duly provided for, semiannually in arrears on May 15 and November 15 in each year (each a "Liquidated Damages Payment Date"), commencing November 15, 2003, at the rate specified in Section 3 of the Registration Rights Agreement. The Liquidated Damages, if any, so payable, and punctually paid or duly provided for, on any Liquidated Damages Payment Date will, as provided in the Indenture, be paid to the Person in whose name a Security (or one or more Predecessor Securities) is registered at the close of business on the Regular Record Date for such Liquidated Damages, which shall be May 1, (whether or not a Business Day) next preceding a May 15 Liquidated Damages Payment Date and November 1, (whether or not a Business Day) next preceding a November 15 Liquidated Damages Payment Date. Except as otherwise provided in the Indenture, Liquidated Damages, if any, not so punctually paid or duly provided for will forthwith cease to be payable to the Holder on such Regular Record Date and may either be paid to the Person in whose name a Security (or one or more Predecessor Securities) is registered at the close of business on a Special Record Date for the payment of such Defaulted Interest to 5 be fixed by the Trustee, notice whereof shall be given to Holders of Securities not less than 10 days prior to such Special Record Date, or be paid at any time in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Securities may be listed, and upon such notice as may be required by such exchange, all as more fully provided in the Indenture. Reference is made to Article 10 of the Indenture regarding the Company's right to optionally redeem the Securities, which is incorporated into this Security by reference as if stated herein in its entirety. Reference is made to Article 11 of the Indenture regarding the Company's obligations to the Holders upon a Specific Repurchase Date or a Designated Event and the Holders' rights to require the Company to repurchase their Securities upon Specific Repurchase Date or a Designated Event, which is incorporated into this Security by reference as if stated herein in its entirety. Reference is made to Article 12 of the Indenture regarding the Holders' right to convert their Securities and related matters, which is incorporated into this Security by reference as if stated herein in its entirety. Subject to certain limitations in the Indenture, at any time when the Company is not subject to Section 13 or 15(d) of the U.S. Securities Exchange Act of 1934, upon the request of a Holder of a Security, the Company will promptly furnish or cause to be furnished Rule 144A Information (as defined below) to such Holder or to a purchaser of such Security designated by such Holder, as the case may be, in order to permit compliance by such Holder with Rule 144A under the U.S. Securities Act of 1933, as amended (the "Securities Act"). "Rule 144A Information" shall be such information as is specified pursuant to Rule 144A(d)(4) under the Securities Act (or any successor provision thereto). If an Event of Default shall occur and be continuing, the principal of all the Securities may be declared due and payable in the manner and with the effect provided in the Indenture. The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations of the Company and the rights of the Holders of the Securities under the Indenture at any time by the Company and the Trustee with the consent of the Holders of a majority in principal amount of the Securities at the time Outstanding (or such lesser amount as shall have acted at a meeting pursuant to the provisions of the Indenture). The Indenture also contains provisions permitting the Holders of specified percentages in principal amount of the Securities at the time Outstanding, on behalf of the Holders of all the Securities, to waive compliance by the Company with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences. Any such consent or waiver by the Holder of this Security shall be conclusive and binding upon such Holder and upon all future Holders of this Security and of any Security issued upon registration of transfer hereof or in exchange herefor or in lieu hereof, 6 whether or not notation of such consent or waiver is made upon this Security or such other Security. No reference herein to the Indenture and no provision of this Security or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of and premium, if any, and Liquidated Damages, if any, on this Security at the times, places and rate, and in the coin or currency, herein prescribed or to convert this Security (or pay cash in lieu of conversion) as provided in the Indenture. Pursuant to the Registration Rights Agreement, upon the effectiveness of the Shelf Registration Statement, each Holder must notify the Company not later than three Business Days prior to any proposed sale by such Holder of Securities pursuant to the Shelf Registration Statement (a "Sale Notice"), which notice shall be effective for five Business Days. The Company may, upon written notice to such Holder, suspend such Holder's use of the prospectus (which is part of the Shelf Registration Statement) for a reasonable period not to exceed 60 days if the Company in its reasonable judgment believes it may possess material non-public information the disclosure of which would have a material adverse effect on the Company and its subsidiaries taken as a whole. Each Holder of this Security, by accepting the same, agrees to hold any communication by the Company in response to a Sale Notice in confidence. As provided in the Indenture and subject to certain limitations therein set forth, the transfer of Securities is registrable on the Security Register upon surrender of a Security for registration of transfer at the office or agency of the Company in The City of New York or, subject to any laws or regulations applicable thereto and to the right of the Company to terminate the appointment of any such Transfer Agent, at the Corporate Trust Office of the Trustee in The City of New York or at the offices of the Transfer Agents described herein or at such other offices or agencies as the Company may designate, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Company and the Security Registrar duly executed by, the Holder thereof or the Holder's attorney duly authorized in writing, and thereupon one or more new Securities, of authorized denominations and for the same aggregate principal amount, will be issued to the designated transferee or transferees. No service charge shall be made for any such registration of transfer or exchange, but the Company may require payment of a sum sufficient to recover any tax or other governmental charge payable in connection therewith. The Company, the Trustee and any agent of the Company or the Trustee may treat the person in whose name this Security is registered as the owner hereof for all purposes, whether or not this Security may be overdue, and neither the Company, the Trustee nor any such agent shall be affected by notice to the contrary. THE INDENTURE AND THE SECURITIES SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO SUCH STATE'S CONFLICT OF LAWS PRINCIPLES. 7 All terms used in this Security which are defined in the Indenture shall have the meanings assigned to them in the Indenture. 8 ASSIGNMENT For value received hereby sell(s), assign(s) and transfer(s) unto (Please insert social security or Taxpayer Identification Number of assignee) the within Security, and hereby irrevocably constitutes and appoints attorney to transfer the said Security on the books of the Company, with full power of substitution in the premises. In connection with any transfer of the within Security occurring within two years of the original issuance of such Security (unless such Security is being transferred pursuant to a registration statement that has been declared effective under the Securities Act), the undersigned confirms that such Security is being transferred: To the Company or a subsidiary thereof; or Pursuant to and in compliance with Rule 144A under the Securities Act of 1933, as amended; Pursuant to and in compliance with Regulation S under the Securities Act of 1933, as amended; or Pursuant to and in compliance with Rule 144 under the Securities Act of 1933, as amended; and unless the box below is checked, the undersigned confirms that such Security is not being transferred to an "affiliate" of the Company as defined in Rule 144 under the Securities Act of 1933, as amended (an "Affiliate"): The transferee is an Affiliate of the Company. 9 Dated: ---------------------------------- ----------------------------------------- Signature(s) Signature(s) must be guaranteed by an eligible Guarantor Institution (banks, stock brokers, savings and loan associations and credit unions) with membership in an approved signature guarantee medallion program pursuant to Securities and Exchange Commission Rule 17Ad-15 if shares of Common Stock are to be issued, or Securities to be delivered, other than to and in the name of the required holder. ----------------------------------------- Signature Guarantee NOTICE: The signature must correspond with the name as written upon the face of the Security in every particular without alternation or enlargement or any change whatever. 10 [FORM OF CONVERSION NOTICE] CONVERSION NOTICE ----------------- TO: Comverse Technology, Inc. The undersigned registered owner of this Security hereby irrevocably exercises the option to convert this Security, or the portion hereof (which is $1,000 principal amount or an integral multiple thereof) below designated, into shares of Common Stock in accordance with the terms of the Indenture referred to in this Security, and directs that the shares issuable and deliverable upon such conversion, together with any check in payment for fractional shares and any Securities representing any unconverted principal amount hereof, be issued and delivered to the registered holder hereof unless a different name has been indicated below. If shares or any portion of this Security not converted are to be issued in the name of a person other than the undersigned, the undersigned will pay all transfer taxes payable with respect thereto. Any amount required to be paid to the undersigned on account of Liquidated Damages, if any, accompanies this Security. Dated: ---------------------------------- -------------------------------------------- Signature(s) Signature(s) must be guaranteed by an eligible Guarantor Institution (banks, stock brokers, savings and loan associations and credit unions) with membership in an approved signature guarantee medallion program pursuant to Securities and Exchange Commission Rule 17Ad-15 if shares of Common Stock are to be issued, or Securities to be delivered, other than to and in the name of the required holder. -------------------------------------------- Signature Guarantee NOTICE: The signature must correspond with the name as written upon the face of the Security in every particular without alternation or enlargement or any change whatever. 11 Fill in for registration of shares if to be issued, and Securities if to be delivered, other than to and in the name of the registered holder: ----------------------------------------------- (Name) ----------------------------------------------- (Street Address) ----------------------------------------------- (City, State and Zip Code) Please print name and address Principal amount to be converted (if less than all): $ ________,000 -------------------------------------------------------- Social Security or Other Taxpayer Identification Number: 12 [FORM OF OPTION TO ELECT REPURCHASE UPON A DESIGNATED EVENT OR SPECIFIC REPURCHASE DATE] REPURCHASE EVENT PURCHASE NOTICE -------------------------------- TO: Comverse Technology, Inc. The undersigned registered owner of this Security hereby acknowledges receipt of a notice from Comverse Technology, Inc. (the "Company") as to the occurrence of a Designated Event with respect to the Company and requests and instructs the Company to repay the entire principal amount of this Security, or the portion thereof (which is $1,000 principal amount or an integral multiple thereof) below designated, in accordance with the terms of the Indenture referred to in this Security, together with accrued Liquidated Damages, if any, to, but excluding, such date, to the registered holder hereof, in cash or, at the Company's election upon a Designated Event and subject to certain conditions contained in the Indenture, in Common Stock. Dated: ----------------------------- --------------------------------------- Signature(s) ------------------------------------------------------- Social Security or Other Taxpayer Identification Number Principal amount to be repaid (if less than all): $ ,000 ------- NOTICE: The above signatures of the holder(s) hereof must correspond with the name as written upon the face of the Security in every particular without alternation or enlargement or any change whatever. 13 EX-5 6 jd6-23ex5_1.txt 5.1 EXHIBIT 5.1 [LETTERHEAD OF COMVERSE TECHNOLOGY, INC.] June 20, 2003 Ladies and Gentlemen: The undersigned has acted as legal counsel to Comverse Technology, Inc., a New York corporation (the "Company"), in connection with the Registration Statement on Form S-3 (the "Registration Statement") filed by the Company with the Securities and Exchange Commission on the date hereof and relating to an aggregate of $420,000,000 aggregate principal amount of the Company's Zero Yield Puttable Securities (ZYPSSM) due May 15, 2023 (the "Securities"), initially convertible into 23,366,574 shares (the "Subject Shares") of the Company's common stock, par value $.10 per share, to be offered for resale by the Selling Holders identified therein. In the capacity of legal counsel to the Company, the undersigned has examined originals or copies, certified or otherwise identified to the satisfaction of the undersigned, of such documents, corporate records and other instruments as the undersigned has deemed necessary for the purpose of rendering this opinion. In the course of such examinations, the undersigned has assumed the genuineness of all documents submitted as originals and the conformity to originals and certified documents of all copies submitted as conformed copies. Based upon and subject to the foregoing, the undersigned is of the opinion that (i) the Securities are legally issued and constitute valid and binding obligations of the Company, enforceable against the Company in accordance with their terms, except as such enforcement is subject to any applicable bankruptcy, insolvency, reorganization or other law relating to or affecting creditors' rights generally and general principles of equity and (ii) the Subject Shares, when such Subject Shares have been duly issued and delivered by the Company upon conversion of the Securities in accordance with the Indenture will be validly issued, fully paid and nonassessable. The undersigned hereby consents to the filing of this opinion as Exhibit 5.1 to the Registration Statement and the reference to the undersigned under the caption "Legal Matters" in the Prospectus contained therein. In giving the foregoing consent, the undersigned does not thereby admit that the undersigned is within the category of persons whose consent is required under Section 7 of the Securities Act of 1933, as amended, or the rules and regulation of the Securities and Exchange Commission thereunder. Very truly yours, /s/ Paul L. Robinson General Counsel EX-12 7 mv6-18_ex121.txt 12.1 EXHIBIT 12.1 RATIO OF EARNINGS TO FIXED CHARGES
Year ended January 31, Three months ---------------------------------------------------------------------- ended 1999 (1) 2000 (1) 2001 2002 2003 April 30, 2003 ---------- ------------ ------------- ------------ --------------- -------------- (In thousands, except ratios) Earnings - pre-tax income (loss) $121,148 $188,845 $267,963 $59,055 ($126,184) ($3,839) Minority interests in consolidated subsidiaries - - (1,945) (667) (1,570) (1,037) Income (loss) from equity investees - - 24,208 1,379 (775) 243 ---------- ------------ ------------- ------------ --------------- -------------- Pre-tax income (loss) before adjustment for minority interests in consolidated subsidiaries and income or loss from equity investees 121,148 188,845 245,700 58,343 (123,839) (3,045) Fixed charges: Rent 15,168 22,500 28,304 36,461 36,032 8,563 Assumed interest at 33.33% 5,056 7,500 9,435 12,154 12,011 2,854 Amortization of debt issuance costs 663 1,271 1,489 2,771 1,760 295 Interest expense 16,141 19,423 18,031 18,344 11,552 2,206 ---------- ------------ ------------- ------------ --------------- -------------- Total fixed charges 21,860 28,194 28,955 33,269 25,323 5,355 ========== ============ ============= ============ =============== ============== Earnings before fixed charges 143,008 217,039 274,655 91,612 (98,516) 2,310 ========== ============ ============= ============ =============== ============== Ratio of earnings to fixed charges 6.5 7.7 9.5 2.8 N/A N/A ========== ============ ============= ============ =============== ============== Earnings deficiency to cover fixed charges N/A N/A N/A N/A 123,839 3,045
(1) Includes the results of Loronix Information Systems, Inc. ("Loronix") for its fiscal year ended December 31. Loronix merged into our company in July 2000 and was accounted for pursuant to the pooling of interests method. EX-23 8 jd6-23ex23_2.txt 23.2 EXHIBIT 23.2 INDEPENDENT AUDITORS' CONSENT We consent to the incorporation by reference in this Registration Statement of Comverse Technology, Inc. on Form S-3 of our report dated March 11, 2003 (April 22, 2003 as to Note 24), appearing in the Annual Report on Form 10-K of Comverse Technology, Inc. for the year ended January 31, 2003 and to the reference to us under the heading "Experts" in the Prospectus, which is part of this Registration Statement. /s/ Deloitte & Touche LLP June 20, 2003 EX-25 9 mv6-18_ex251.txt 25.1 Exhibit 25.1 - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 ------------------------- FORM T-1 STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939 OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE ------------------------------------------- CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO SECTION 305(b)(2) ---------------------------------------- JPMORGAN CHASE BANK (Exact name of trustee as specified in its charter) NEW YORK 13-4994650 (State of incorporation (I.R.S. employer if not a national bank) identification No.) 270 PARK AVENUE NEW YORK, NEW YORK 10017 (Address of principal executive offices) (Zip Code) William H. McDavid General Counsel 270 Park Avenue New York, New York 10017 Tel: (212) 270-2611 (Name, address and telephone number of agent for service) -------------------------------------------- COMVERSE TECHNOLOGY, INC. (Exact name of obligor as specified in its charter) NEW YORK 13-3238402 (State or other jurisdiction of (I.R.S. employer incorporation or organization) identification No.) 170 CROSSWAYS PARK DRIVE WOODBURY, NEW YORK 11797 (Address of principal executive offices) (Zip Code) ------------------------------------------------------ ZERO YIELD PUTTABLE SECURITIES (ZYPS) DUE MAY 15, 2023 (Title of the indenture securities) - -------------------------------------------------------------------------------- GENERAL Item 1. General Information. Furnish the following information as to the trustee: (a) Name and address of each examining or supervising authority to which it is subject. New York State Banking Department, State House, Albany, New York 12110. Board of Governors of the Federal Reserve System, Washington, D.C., 20551 Federal Reserve Bank of New York, District No. 2, 33 Liberty Street, New York, N.Y. Federal Deposit Insurance Corporation, Washington, D.C., 20429. (b) Whether it is authorized to exercise corporate trust powers. Yes. Item 2. Affiliations with the Obligor and Guarantors. If the obligor or any Guarantor is an affiliate of the trustee, describe each such affiliation. None. Item 16. List of Exhibits List below all exhibits filed as a part of this Statement of Eligibility. 1. A copy of the Restated Organization Certificate of the Trustee dated March 25, 1997 and the Certificate of Amendment dated October 22, 2001 (see Exhibit 1 to Form T-1 filed in connections with Registration Statement No. 333-76894, which is incorporated by reference.) 2. A copy of the Certificate of Authority of the Trustee to Commence Business (see Exhibit 2 to Form T-1 filed in connection with Registration Statement No. 33-50010, which is incorporated by reference). On November 11, 2001, in connection with the merger of The Chase Manhattan Bank and Morgan Guaranty Trust Company of New York, the surviving corporation was renamed JPMorgan Chase Bank. 3. None, authorization to exercise corporate trust powers being contained in the documents identified above as Exhibits 1 and 2. 2 4. A copy of the existing By-Laws of the Trustee (see Exhibit 4 to Form T-1 filed in connection with Registration Statement 333-76894, which is incorporated by reference.) 5. Not applicable. 6. The consent of the Trustee required by Section 321(b) of the Act (see Exhibit 6 to Form T-1 filed in connection with Registration Statement No. 33-50010, which is incorporated by reference). On November 11, 2001, in connection with the merger of The Chase Manhattan Bank and Morgan Guaranty Trust Company of New York, the surviving corporation was renamed JPMorgan Chase Bank. 7. A copy of the latest report of condition of the Trustee, published pursuant to law or the requirements of its supervising or examining authority. 8. Not applicable. 9. Not applicable. SIGNATURE Pursuant to the requirements of the Trust Indenture Act of 1939 the Trustee, JPMorgan Chase Bank, a corporation organized and existing under the laws of the State of New York, has duly caused this statement of eligibility to be signed on its behalf by the undersigned, thereunto duly authorized, all in the City of New York and State of New York, on the 20th day of June, 2003. JPMORGAN CHASE BANK By /s/ Nicholas Sberlati ------------------------------ /s/ Nicholas Sberlati Trust Officer 3 Exhibit 7 to Form T-1 Bank Call Notice RESERVE DISTRICT NO. 2 CONSOLIDATED REPORT OF CONDITION OF JPMorgan Chase Bank of 270 Park Avenue, New York, New York 10017 and Foreign and Domestic Subsidiaries, a member of the Federal Reserve System, at the close of business March 31, 2003, in accordance with a call made by the Federal Reserve Bank of this District pursuant to the provisions of the Federal Reserve Act.
DOLLAR AMOUNTS ASSETS IN MILLIONS Cash and balances due from depository institutions: Noninterest-bearing balances and currency and coin ................................................. $ 21,415 Interest-bearing balances ......................................... 6,882 Securities: Held to maturity securities.............................................. 334 Available for sale securities............................................ 80,076 Federal funds sold and securities purchased under agreements to resell .............................................. Federal funds sold in domestic offices 14,044 Securities purchased under agreements to resell 73,060 Loans and lease financing receivables: Loans and leases held for sale..................................... 25,832 Loans and leases, net of unearned income........................... $ 161,345 Less: Allowance for loan and lease losses.......................... 3,823 Loans and leases, net of unearned income and allowance ......................................................... 157,522 Trading Assets .......................................................... 189,427 Premises and fixed assets (including capitalized leases)................. 6,186 Other real estate owned ................................................. 131 Investments in unconsolidated subsidiaries and associated companies............................................... 691 Customers' liability to this bank on acceptances outstanding ....................................................... 225 Intangible assets Goodwill......................................................... 2,180 Other Intangible assets.......................................... 3,314 Other assets ............................................................ 40,377 TOTAL ASSETS ............................................................ $ 621,696 ========== 4 LIABILITIES Deposits In domestic offices ............................................... $ 174,351 Noninterest-bearing ............................................... $ 70,991 Interest-bearing .................................................. 103,360 In foreign offices, Edge and Agreement subsidiaries and IBF's ............................................ 125,789 Noninterest-bearing................................................. $ 7,531 Interest-bearing .................................................. 118,258 Federal funds purchased and securities sold under agree- ments to repurchase: Federal funds purchased in domestic offices........................ 5,929 Securities sold under agreements to repurchase..................... 113,903 Trading liabilities ..................................................... 116,329 Other borrowed money (includes mortgage indebtedness and obligations under capitalized leases).......................... 10,758 Bank's liability on acceptances executed and outstanding................. 225 Subordinated notes and debentures ....................................... 8,306 Other liabilities ....................................................... 29,735 TOTAL LIABILITIES ....................................................... 585,325 Minority Interest in consolidated subsidiaries........................... 97 EQUITY CAPITAL Perpetual preferred stock and related surplus............................ 0 Common stock ............................................................ 1,785 Surplus (exclude all surplus related to preferred stock)................ 16,304 Retained earnings........................................................ 17,228 Accumulated other comprehensive income................................... 957 Other equity capital components.......................................... 0 TOTAL EQUITY CAPITAL .................................................... 36,274 ---------- TOTAL LIABILITIES, MINORITY INTEREST, AND EQUITY CAPITAL $ 621,696 ==========
I, Joseph L. Sclafani, E.V.P. & Controller of the above-named bank, do hereby declare that this Report of Condition has been prepared in conformance with the instructions issued by the appropriate Federal regulatory authority and is true to the best of my knowledge and belief. JOSEPH L. SCLAFANI We, the undersigned directors, attest to the correctness of this Report of Condition and declare that it has been examined by us, and to the best of our knowledge and belief has been prepared in conformance with the instructions issued by the appropriate Federal regulatory authority and is true and correct. WILLIAM B. HARRISON, JR. ) HELENE L. KAPLAN ) DIRECTORS WILLIAM H. GRAY, III ) 5 -----END PRIVACY-ENHANCED MESSAGE-----