S-4/A

As filed with the Securities and Exchange Commission on December 21, 2004

Registration No. 333-120870

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Amendment No. 1 to

Form S-4

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

Comverse Technology, Inc.

(Exact name of registrant as specified in its charter)

New York	3661	13-3238402
(State or other jurisdiction of incorporation or organization)	(Primary Standard Industrial Classification Code Number)	(I.R.S. Employer Identification No.)

170 Crossways Park Drive

Woodbury, New York 11797

(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

Kobi Alexander

Comverse Technology, Inc.

Chairman and Chief Executive Officer

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:

Robert Evans III Shearman & Sterling LLP 599 Lexington Ave. New York, New York 10022 (212) 848-4000 David Lopez David I. Gottlieb Cleary, Gottlieb, Steen & Hamilton One Liberty Plaza New York, New York 10006 (212) 225-2000

Approximate date of commencement of proposed sale to the public:   The offer commenced, and the exchange offer prospectus and tender offer materials were sent to security holders, beginning on December 21, 2004, and the Registrant expects to commence the sale pursuant to the exchange offer as soon as practicable after this Registration Statement becomes effective and all other conditions to the exchange offer described herein have been satisfied or waived.

If the securities being registered on this form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, please check the following box.  ¨

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(d) 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.  ¨

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 Section 8(a), may determine.

The information in this prospectus is not complete and may change. We may not complete the exchange offer and issue these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities, and it is not soliciting an offer to buy these securities, in any state where the offer is not permitted.

Subject to Completion. Dated December 21, 2004.

Comverse Technology, Inc.

Offer to Exchange

Zero Yield Puttable Securities due 2023

The expiration time of the exchange offer is 12:01 a.m., New York City time on January 21, 2005, unless extended.

Terms of the exchange offer:

• We will issue up to $420,000,000 aggregate principal amount of Zero Yield Puttable Securities due 2023 (the “New ZYPS”) in exchange for any and all outstanding Zero Yield Puttable Securities due 2023 (the “Existing ZYPS”), that are validly tendered and not validly withdrawn prior to the consummation of the exchange offer.

• Upon completion of the exchange offer, each $1,000 principal amount of Existing ZYPS that is validly tendered and not validly withdrawn will be exchanged for $1,000 principal amount of New ZYPS.

• Tenders of Existing ZYPS may be withdrawn at any time before 12:01 a.m. on the expiration date of the exchange offer.

• As explained more fully in this prospectus, the exchange offer is subject to customary conditions, which we may waive.

The terms of the New ZYPS are identical to the Existing ZYPS, except for the following modifications:

• Net Share Settlement. The New ZYPS will require us to settle all conversions for a combination of cash and shares, if any, in lieu of shares only. Generally, cash paid will equal the lesser of the par amount of the New ZYPS and their conversion value.

• Additional Right of Holders to Require Repurchase. The New ZYPS will provide that holders of the New ZYPS may require us to repurchase their New ZYPS for cash on May 15, 2009 (in addition to the repurchase dates provided for in the Existing ZYPS).

• Extension of Date of First Optional Redemption by Issuer. The New ZYPS will provide that we may redeem some or all of the New ZYPS at any time on or after May 15, 2009 (rather than May 15, 2008 as in the Existing ZYPS).

• Cash Settlement Upon Change in Control. The New ZYPS do not permit us to pay the repurchase price, in whole or in part, in shares upon a Change in Control (as defined herein).

SEE “ RISK FACTORS” BEGINNING ON PAGE 10 FOR A DISCUSSION OF FACTORS YOU SHOULD CONSIDER IN EVALUATING THE OFFER.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

LEHMAN BROTHERS

Dealer Manager

Prospectus dated                     , 2004.

TABLE OF CONTENTS

	Page
FORWARD-LOOKING STATEMENTS	ii
PROSPECTUS SUMMARY	1
RISK FACTORS	10
RATIO OF EARNINGS TO FIXED CHARGES	24
THE EXCHANGE OFFER	25
DESCRIPTION OF THE NEW ZYPS	32
DESCRIPTION OF CAPITAL STOCK	46

	Page
MATERIAL U.S. FEDERAL INCOME TAX CONSIDERATIONS	47
LEGAL MATTERS	53
EXPERTS	53
WHERE YOU CAN FIND MORE INFORMATION	53

ABOUT THIS PROSPECTUS

You should rely only on the information contained in this prospectus. We have not authorized any other person to provide you with different information. If anyone provides you with different or inconsistent information, you should not rely on it.

This prospectus incorporates important business and financial information about Comverse Technology, Inc. (“CTI”) from other documents that are not included in or delivered with this prospectus. This information is available to you without charge upon your request. You can obtain the documents incorporated by reference in this prospectus by requesting them in writing or by telephone at the following address and telephone number:

Comverse Technology, Inc.

170 Crossways Park Drive

Woodbury, New York 11797

(516) 677-7200

Attention: Vice President, Corporate and Marketing Communications

Our website is www.cmvt.com. Information included on our website is not incorporated by reference in this prospectus.

IN ORDER FOR YOU TO RECEIVE TIMELY DELIVERY OF THE DOCUMENTS BEFORE THE EXPIRATION TIME OF THE EXCHANGE OFFER WE SHOULD RECEIVE YOUR REQUEST NO LATER THAN JANUARY 12, 2005.

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FORWARD-LOOKING STATEMENTS

This prospectus and the documents that we incorporate by reference may contain “forward-looking statements” that involve risks and uncertainties. The words “estimate,” “project,” “intend,” “expect,” “believe” and similar expressions are intended to identify forward-looking statements. These forward-looking statements involve known and unknown risks and some uncertainties. There can be no assurances that forward-looking statements will be achieved, and actual results could differ materially from forecasts and estimates. Important factors that could cause actual results to differ materially include: the factors described under “Risk Factors” beginning on page 9 of this prospectus; changes in the demand for our products; changes in capital spending among our current and prospective customers; the risks associated with the sale of large, complex, high capacity systems and with new product introductions as well as the uncertainty of customer acceptance of these new or enhanced products from either us or our competition; risks associated with rapidly changing technology and our ability to introduce new products on a timely and cost-effective basis; aggressive competition may force us to reduce prices; a failure to compensate any decrease in the sale of our traditional products with a corresponding increase in sales of new products; risks associated with changes in the competitive or regulatory environment in which we operate; risks associated with prosecuting or defending allegations or claims of infringement of intellectual property rights; risks associated with significant foreign operations and international sales and investment activities, including fluctuations in foreign currency exchange rates, interest rates, and valuations of public and private equity; the volatility of macroeconomic and industry conditions and the international marketplace; risks associated with our ability to retain existing personnel and recruit and retain qualified personnel; and other risks described in our filings with the Securities and Exchange Commission (the “SEC”). These risks and uncertainties are discussed in greater detail in our filings with the SEC, including our most recent Annual Report on Form 10-K for the year ended January 31, 2004 and subsequent Quarterly Reports on Form 10-Q. These documents are available through us, or our website, www.cmvt.com, or through the SEC’s Electronic Data Gathering Analysis and Retrieval system (EDGAR) at www.sec.gov. We make no commitment to revise or update any forward-looking statements in order to reflect events or circumstances after the date any such statement is made.

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PROSPECTUS SUMMARY

The following summary is qualified in its entirety by information contained elsewhere or incorporated by reference in this prospectus. The summary may not contain all the information that may be important to you. You should read this entire prospectus, including the financial data and related notes and the documents to which we have referred you, before making an investment decision. You should pay special attention to the “Risk Factors” beginning on page 9 of this prospectus to determine whether participation in the exchange offer and an investment in the New ZYPS, or the common stock, if any, into which the New ZYPS are convertible, is appropriate for you. Unless otherwise noted, all references in this prospectus to CTI mean Comverse Technology, Inc. and references to “we,” “us,” or “our” mean CTI, including its directly and indirectly owned subsidiaries and any other entities that it may acquire.

Our Company

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, and other government, public and commercial organizations worldwide.

Through our subsidiary, Comverse, Inc. (“Comverse”), we provide telecommunications software, systems, and related services to telecommunications service providers (“TSPs”) that enable voice and data value-added enhanced services and real-time billing of communication services. These products comprise Comverse’s Total Communication portfolio, and address four primary categories: call completion and call management solutions; advanced messaging solutions for groups, communities and person-to-person communication; solutions and enablers for the management and delivery of data and content-based services; and real-time billing and account management solutions for dynamic service environments. These products are designed to enhance the communication experience and generate TSP traffic and revenue. Comverse’s principal market for its systems consists of organizations that use the systems to provide services to the public, often on a subscription or pay-per-usage basis, and includes both wireless and wireline telecommunications network operators. Comverse markets its systems throughout the world, with its own direct sales force and in cooperation with a number of leading international vendors of telecommunications infrastructure equipment.

Through our subsidiary, Verint Systems Inc. (“Verint”), we provide analytic software-based solutions for communications interception, network video, and contact centers. Verint’s software generates actionable intelligence through the collection, retention and analysis of unstructured information contained in voice, fax, video, email, Internet and data transmissions from voice, video and IP networks. Verint’s analytic solutions are designed to extract critical intelligence and deliver this intelligence to decision makers for more effective action. The security market consists primarily of communication interception by law enforcement and other government agencies and networked video security utilized by government agencies and public and private organizations for use in airports, public buildings, correctional facilities and corporate sites. The business intelligence market consists primarily of solutions for enterprises that rely on contact centers for voice, email and Internet interactions with their customers. Additionally, an emerging segment of business intelligence utilizes digital video information to allow enterprises and institutions to enhance their operations, processes and performance. Verint sells its business intelligence solutions to contact center service bureaus, financial institutions, retailers, utilities, communication 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 59.2% of Verint’s outstanding common stock as of October 31, 2004.

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Through our subsidiary, Ulticom, Inc. (“Ulticom”), we provide service enabling signaling software for wireline, wireless and Internet communications. Ulticom’s Signalware family of products are used by equipment manufacturers, application developers and communication service providers to deploy revenue generating infrastructure and enhanced services within the mobility, messaging, payment and location segments. Signalware products are also embedded in a range of packet softswitching products to interoperate or converge voice and data networks and facilitate services such as voice-over-IP (“VoIP”), hosted IP telephony, and virtual private networks. 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 68.6% of Ulticom’s outstanding common stock as of October 31, 2004.

We market other telecommunications products and services, including enhanced wireless roaming services, and automatic call distribution and messaging systems for telephone answering service bureaus. 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.”

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The Exchange Offer

We have summarized the terms of the exchange offer in this section. Before you decide whether to tender your Existing ZYPS in this offer, you should read the detailed description of the offer under “The Exchange Offer” for further information.

Purpose of the exchange offer The purpose of this exchange offer is to change certain of the terms of the Existing ZYPS, including the contingent conversion provisions addressing the type of consideration we will pay holders upon conversion, due to a change in accounting treatment affecting the Existing ZYPS effective for periods ending after December 15, 2004. See “Prospectus Summary—Summary of Differences between the Existing ZYPS and the New ZYPS.”

Terms of the exchange offer We are offering to exchange $1,000 principal amount of New ZYPS for each $1,000 principal amount of Existing ZYPS accepted for exchange. You may tender all, some or none of your Existing ZYPS.

Deciding whether to participate in the exchange offer Neither we nor our officers or directors make any recommendation as to whether you should tender or refrain from tendering all or any portion of your Existing ZYPS in the exchange offer. Further, we have not authorized anyone to make any such recommendation. You must make your own decision whether to tender your Existing ZYPS in the exchange offer and, if so, the aggregate amount of Existing ZYPS to tender. You should read this prospectus and the letter of transmittal and consult with your advisers, if any, to make that decision based on your own financial position and requirements.

Expiration date; extension; termination The exchange offer and withdrawal rights will expire at 12:01 a.m., New York City time, on January 21, 2005, or any subsequent time or date to which the exchange offer is extended. We may extend the expiration date or amend any of the terms or conditions of the exchange offer for any reason. In the case of an extension, we will issue a press release or other public announcement no later than 9:00 a.m., New York City time, on the next business day after the previously scheduled expiration date. If we extend the expiration date, you must tender your Existing ZYPS prior to the date identified in the press release or public announcement if you wish to participate in the exchange offer. In the case of an amendment, we will issue a press release or other public announcement. We have the right to:

• extend the expiration date of the exchange offer and retain all tendered Existing ZYPS, subject to your right to withdraw your tendered Existing ZYPS; and

• waive any condition or otherwise amend any of the terms or conditions of the exchange offer in any respect, other than the condition that the registration statement be declared effective.

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Conditions for completion of the exchange offer The exchange offer is subject to certain customary conditions, including that the registration statement and any post-effective amendment to the registration statement covering the New ZYPS be effective under the Securities Act. See “The Exchange Offer—Conditions for Completion of the Exchange Offer.”

Withdrawal rights You may withdraw a tender of your Existing ZYPS at any time before the exchange offer expires by delivering a written notice of withdrawal to JPMorgan Chase Bank, N.A., the exchange agent,

before the expiration date. If you change your mind, you may retender your Existing ZYPS by again following the exchange offer procedures before the exchange offer expires. In addition, if we have not accepted your tendered Existing ZYPS for exchange, you may withdraw your Existing ZYPS at any time after January 21, 2005.

Procedures for tendering Existing ZYPS If you hold Existing ZYPS through a broker, dealer, commercial bank, trust company or other nominee, you should contact that person promptly if you wish to tender your Existing ZYPS. Tenders of your Existing ZYPS will be effected by book-entry transfers through The Depository Trust Company.

If you hold Existing ZYPS through a broker, dealer, commercial bank, trust company or other nominee, you may also utilize the procedures for guaranteed delivery.

Please do not send letters of transmittal to us. You should send letters of transmittal to JPMorgan Chase Bank, N.A., the exchange agent, at one of its offices as indicated under “The Exchange Offer” or in the letter of transmittal. The exchange agent can answer your questions regarding how to tender your Existing ZYPS.

Trading Our common stock is traded on the Nasdaq National Market under the symbol “CMVT.”

Information agent D.F. King & Co., Inc.

Exchange agent JPMorgan Chase Bank, N.A.

Dealer manager Lehman Brothers Inc.

Risk factors You should carefully consider the matters described under “Risk Factors,” as well as other information set forth in this prospectus and in the letter of transmittal.

Consequences of not exchanging Existing ZYPS The liquidity and trading market for Existing ZYPS not tendered in the exchange offer could be adversely affected to the extent a significant number of the Existing ZYPS are tendered and accepted in the exchange offer.

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Tax consequences See “Material U.S. Federal Income Tax Considerations” for a summary of certain U.S. federal income tax consequences or potential consequences that may result from the exchange of Existing ZYPS for New ZYPS and the conversion of the New ZYPS.

The U.S. federal income tax consequences of the exchange of Existing ZYPS for New ZYPS are unclear. We will take the position that the modifications to the Existing ZYPS resulting from the

exchange of Existing ZYPS for New ZYPS will not constitute a significant modification of the terms of the Existing ZYPS for U.S. federal income tax purposes. If, consistent with our position, the exchange of Existing ZYPS for New ZYPS does not constitute a significant modification of the terms of the Existing ZYPS for U.S. federal income tax purposes, the New ZYPS will be treated as a continuation of the Existing ZYPS, and there will be no U.S. federal income tax consequences to a holder who exchanges Existing ZYPS for New ZYPS pursuant to the exchange offer. By participating in the exchange offer, each holder will be deemed to have agreed pursuant to the indenture governing the New ZYPS to treat the exchange offer as not constituting a significant modification of the terms of the Existing ZYPS. If, contrary to our position, the exchange of the Existing ZYPS for the New ZYPS does constitute a significant modification to the terms of the Existing ZYPS, the U.S. federal income tax consequences to you could materially differ.

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Summary Consolidated Financial Data

The summary consolidated financial data presented below should be read in conjunction with our consolidated financial statements, and related notes, and with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our Annual Report on Form 10-K and our Quarterly Reports on Form 10-Q, in each case, incorporated herein by reference as described under “Where You Can Find More Information.” The summary statement of operations data for the years ended January 31, 2000 and 2001 have been derived from our audited consolidated financial statements not incorporated by reference herein.

	Year ended January 31,															Nine months ended October 31,
	2000(1)			2001			2002			2003			2004			2003			2004
	(In thousands, except per share amounts and ratios)
Statement of Operations Data:
Sales	$	909,667		$	1,225,058		$	1,270,218		$	735,889		$	765,892		$	562,863		$	700,301
Cost of sales		371,589			482,658			525,480			338,121			327,560			244,366			279,652
Research and development, net		169,816			232,198			293,296			232,593			216,457			162,102			172,851
Selling, general and administrative		193,996			259,607			323,036			281,202			254,376			188,956			213,769
Net income (loss)		173,147			249,136			54,619			(129,478	)		(5,386	)		(10,314	)		36,287
Earnings (loss) per share—basic	$	1.19		$	1.54		$	0.30		$	(0.69	)	$	(0.03	)	$	(0.05	)	$	0.19
Weighted average number of common and common equivalent shares outstanding—basic		145,889			161,496			179,311			187,212			190,351			189,397			195,452
Earnings (loss) per share—diluted	$	1.08		$	1.39		$	0.29		$	(0.69	)	$	(0.03	)	$	(0.05	)	$	0.18
Weighted average number of common and common equivalent shares outstanding—diluted		178,986			189,964			186,434			187,212			190,351			189,397			201,947
Ratio of earnings to fixed charges(2)		7.7	x		9.5	x		2.8	x		n.a.	(3)		1.4	x		n.a.	(3)		5.4	x

	October 31, 2004
	(In thousands except book value per share)
Balance Sheet Data:
Working capital	$	2,173,878
Current assets		2,570,293
Noncurrent assets		302,818
Total assets		2,873,111
Current liabilities		396,415
Noncurrent liabilities		528,774
Long-term debt, including current portion		518,654
Minority interest		190,434
Stockholders’ equity		1,757,488
Book value per share	$	8.91

(1) Includes the results of Loronix Information Systems, Inc., or “Loronix,” for its fiscal year ended December 31, 1999. 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) For the year ended January 31, 2003, and for the nine months ended October 31, 2003, our earnings were insufficient to cover fixed charges by approximately $123.8 million and $0.9 million, respectively.

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Summary of Differences between the Existing ZYPS and the New ZYPS

A summary of the differences between the Existing ZYPS and New ZYPS is set forth in the table below. The table below is qualified in its entirety by the information contained in this prospectus and the documents governing the Existing ZYPS and the New ZYPS, copies of which have been filed as exhibits to the registration statement of which this prospectus forms a part. For a more detailed description of the New ZYPS, see “Description of the New ZYPS.”

	Existing ZYPS	New ZYPS
Securities	$420,000,000 in aggregate principal amount of Existing ZYPS due 2023, which were issued on May 7, 2003.	Up to $420,000,000 in aggregate principal amount of New ZYPS due 2023 to be issued pursuant to this exchange offer.
Settlement upon conversion	Upon conversion of Existing ZYPS, we will deliver shares of our common stock.	We will satisfy in cash our conversion obligation with respect to the principal amount of the New ZYPS to be converted, with the remaining amount, if any, to be satisfied in shares of our common stock, in each case as described below. The settlement amount will be computed as follows: •     a cash amount equal to the lesser of (i) the aggregate principal amount of the New ZYPS to be converted and (ii) the applicable stock price (as defined under “ Description of the New ZYPS—Conversion Rights—Payment Upon Conversion”) multiplied by the conversion rate then in effect multiplied by the aggregate principal amount of the New ZYPS to be converted divided by 1,000; and •     if the amount described in (ii) immediately above exceeds the aggregate principal amount of the New ZYPS to be converted, a number of shares equal to (y) the aggregate principal amount of New ZYPS to be converted divided by 1,000 and multiplied by (z) (a) the conversion rate then in effect minus (b) $1,000 divided by the applicable stock price.

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		The settlement date for payment of cash and shares of our common stock, if any, will be on the second trading day following the final trading day of the cash settlement average period (as defined under “Description of the New ZYPS—Conversion Rights—Payment Upon Conversion”), which is the 22nd trading day following the conversion date (as such conversion date is determined as described in the final paragraph under “Description of the New ZYPS—Conversion Procedures”), unless the conversion is: •     in connection with a redemption, in which case the settlement date will be the redemption date; or •     during the period beginning twenty-five trading days preceding the maturity date and ending on the maturity date, in which case the settlement date will be the maturity date.
Repurchase at option of holders	On each of May 15, 2008, May 15, 2013 and May 15, 2018, holders of the Existing ZYPS may require us to repurchase their Existing ZYPS for cash.	On each of May 15, 2008, May 15, 2009, May 15, 2013 and May 15, 2018, holders of the New ZYPS may require us to repurchase their New ZYPS for cash.
Optional redemption by CTI	At any time on or after May 15, 2008, we may redeem for cash some or all of the Existing ZYPS on at least 20 but not more than 60 days’ notice, at a redemption price equal to 100% of their principal amount.	At any time on or after May 15, 2009, we may redeem for cash some or all of the New ZYPS on at least 20 but not more than 60 days’ notice, at a redemption price equal to 100% of their principal amount.
Settlement upon Change in Control	Upon the occurrence of a “Change in Control” (as defined herein), instead of paying the repurchase price of the Existing ZYPS in cash, we may pay the repurchase price, in whole or in part, by delivering shares of common stock upon satisfaction of certain conditions.	Upon the occurrence of a Change in Control, we will be required to pay the repurchase price of the New ZYPS in cash.

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Accounting treatment Once certain new accounting rules become effective, the “if converted” method, under which the full number of shares of our common stock underlying the Existing ZYPS will be deemed to be outstanding for the purpose of calculating diluted earnings per share (if dilutive), whether or not the Existing ZYPS may be converted pursuant to their terms. Treasury stock method, under which the number of shares of our common stock deemed to be outstanding for the purpose of calculating diluted earnings per share will not include shares of our common stock underlying the New ZYPS other than the shares, if any, that we would be required to deliver upon conversion to satisfy our conversion obligations as described herein. We will record the New ZYPS in our accounting records at the same carrying value as the Existing ZYPS. This carrying value is the aggregate principal amount of the Existing ZYPS, as reflected in our accounting records on the date of the exchange. Accordingly, we will not recognize any gain or loss for accounting purposes in connection with the exchange offer. The expenses of the exchange offer will be expensed as incurred.

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RISK FACTORS

Before you participate in the exchange offer, you should know that making an investment in the New ZYPS, the Existing ZYPS or the shares of our common stock, if any, issuable upon conversion thereof involves some risks, including the risks described below. You should carefully consider the factors described below in addition to the remainder of this prospectus and the factors discussed in the documents and other information incorporated by reference before tendering your Existing ZYPS. The risk factors set forth below, other than those that discuss the consequences of failing to exchange your Existing ZYPS in the exchange offer or as otherwise noted, are applicable to both the Existing ZYPS and the New ZYPS issued in the exchange offer (collectively, the “ZYPS”). The risks that we have highlighted here are not the only ones that we face and additional risks, including those presently unknown to us, could also impair our operations. If any of the risks actually occur, our business, financial condition or results of operations could be negatively affected.

Risks Related to the ZYPS

The Existing ZYPS are, and the New ZYPS will be, unsecured and our future secured indebtedness will rank effectively senior to the ZYPS.

The Existing ZYPS are, and the New ZYPS will be, unsecured and rank equal in right of payment with our existing and future unsecured and unsubordinated indebtedness. The Existing ZYPS are, and the New ZYPS will be, effectively subordinated to any secured debt we incur in the future to the extent of the value of the assets that secure that indebtedness. In the event of our bankruptcy, liquidation or reorganization or upon acceleration of the ZYPS, payment on the ZYPS could be less, ratably, than on any secured indebtedness. We may not have sufficient assets remaining to pay amounts due on any or all of the ZYPS then outstanding.

The indenture governing the Existing ZYPS does not, and the indenture governing the New ZYPS will not, prohibit or limit us or our subsidiaries from incurring additional indebtedness and other liabilities, or from pledging assets to secure such indebtedness and liabilities. The incurrence of additional indebtedness and, in particular, the granting of a security interest to secure the indebtedness, could adversely affect our ability to pay our obligations on the ZYPS.

We may not be able to repurchase the ZYPS when required or make the required cash payments upon conversion or at maturity of the ZYPS.

On each of May 15, 2008, May 15, 2013 and May 15, 2018 and upon the occurrence of a Change in Control (as defined herein), holders of the Existing ZYPS may require us to repurchase their Existing ZYPS for cash. On each of May 15, 2008, May 15, 2009, May 15, 2013 and May 15, 2018 and upon the occurrence of a Change in Control, holders of the New ZYPS may require us to purchase their New ZYPS for cash. We may not have sufficient funds at the time of any such event to make the required repurchases or to make any required payments on the ZYPS at maturity.

In addition, the New ZYPS require that we pay cash for the lesser of the par value of the New ZYPS and their conversion value upon their conversion by the holders. The events leading to convertibility of the ZYPS may be out of our control.

As of October 31, 2004, CTI had approximately $507.3 million of long-term indebtedness (including $420 million of Existing ZYPS) outstanding. In addition, the indenture governing the Existing ZYPS does not, and the indenture governing the New ZYPS will not, prohibit us or our subsidiaries from incurring additional indebtedness and other liabilities.

The source of funds for any cash payment required on the ZYPS, or for any payment with respect to our other liabilities, will be our available cash or cash generated from operating activities or other sources, including dividends from our subsidiaries, borrowings, sales of assets, sales of equity or funds provided by a new

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controlling entity. Upon conversion of the New ZYPS, we will be required to make cash payments to holders of up to $420 million, which payments would reduce our liquidity by the amount of such payments. Due to our current liquidity and capital resources, we do not expect that we would be required to arrange additional financing in order to meet our payment obligations upon conversion of the New ZYPS. We cannot assure you, however, that sufficient funds will be available at the time of payment required on the ZYPS, or that we will be able to arrange financing, to make any such required cash payments. Should we not retain sufficient cash to service indebtedness, including the ZYPS, our ability to make required principal, repurchase or redemption payments on the ZYPS or payments upon conversion of the New ZYPS may become impaired. Our ability to repurchase the ZYPS in such event may be limited by law, the relevant indenture and 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. Furthermore, the use of available cash to fund the required cash payments may impair our ability to obtain additional financing in the future.

We are subject to a new accounting rule that will result in lower earnings per share, on a diluted basis.

At its September 2004 meeting, the Emerging Issues Task Force (EITF) of the Financial Accounting Standards Board (FASB) reached a conclusion on EITF Issue No. 04-8, “The Effect of Contingently Convertible Debt on Diluted Earnings Per Share,” that will require the contingent shares issuable under our Existing ZYPS to be included in our diluted earnings per share calculation (if dilutive) retroactive to the date of issuance of the Existing ZYPS by applying the “if converted” method under FASB Statement No. 128, “Earnings per Share” (FAS 128). The Existing ZYPS (and the New ZYPS) may be converted by holders into shares of our common stock (or, in the case of the New ZYPS, into cash and shares of our common stock, if any) initially at the conversion price of approximately $17.97 per share, under certain circumstances. The initial conversion trigger price is approximately $21.56 (or 120% of $17.97), as the Existing ZYPS (and the New ZYPS) are convertible if, during any fiscal quarter, 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. In addition, the Existing ZYPS are convertible upon the occurrence of certain other events, which events are the same as those that trigger the convertibility of the New ZYPS into cash and shares of our common stock, if any, described under “Description of the New ZYPS—Conversion Rights.” Under the new rule, shares of common stock underlying securities, such as the Existing ZYPS, containing embedded conversion features that are contingent upon market price triggers must be included in diluted earnings per share computations (if dilutive) regardless of whether the contingency has been met. We have followed the existing interpretation of FAS 128, which requires inclusion of the impact of the conversion of our Existing ZYPS only when and if the conversion thresholds are reached. As the conversion thresholds had not been satisfied through October 31, 2004, we have not included the impact of the conversion of our Existing ZYPS in our computation for diluted earnings per share through the periods ended October 31, 2004.

The new rule has been approved by the FASB, which is effective for periods ending after December 15, 2004 (the “Effective Date”) and will require us to restate previously reported diluted earnings per share and will result in lower diluted earnings per share than previously reported for periods subsequent to the issuance of the Existing ZYPS. If the Exchange Offer is not completed prior to the Effective Date of the new rule, our restated diluted earnings per share after the Effective Date of the new rule will be calculated under the terms of the Existing ZYPS, which will result in lower diluted earnings per share. If less than all of the Existing ZYPS are tendered and accepted in the Exchange Offer, then the Existing ZYPS not exchanged will be accounted for under the “if converted” method after the Effective Date of the new rule, which will result in lower diluted earnings per share. However, even if the exchange offer is not completed prior to the Effective Date, the new rule will have no effect on our diluted earnings per share for the year ended January 31, 2004, due to the fact that we reported a loss during such period.

The U.S. federal income tax consequences of the conversion of the New ZYPS into cash and common stock are unclear.

The U.S. federal income tax consequences of the conversion of New ZYPS are unclear. The conversion of New ZYPS into common stock and cash may be treated as in part a conversion into stock and in part a payment

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in redemption of a portion of the New ZYPS. Alternatively, the conversion of New ZYPS may be treated in its entirety as a recapitalization. In either event, U.S. holders who convert their New ZYPS may be subject to tax on a portion of the converted ZYPS. See “Material U.S. Federal Income Tax Consequences—U.S. Holders —Conversion of the New ZYPS” for more information.

We expect that the trading value of the ZYPS will be significantly affected by the price of our common stock and other factors.

The market price of the ZYPS is expected to be significantly affected by the market price of our common stock. This may result in greater volatility in the trading value of the ZYPS than would be expected for nonconvertible debt securities. In addition, the ZYPS have a number of features, including conditions to conversion, that could result in a holder receiving less than the value of our common stock into which a ZYPS would otherwise be convertible. These features could adversely affect the value and the trading price for the ZYPS.

There is no current market for the New ZYPS and we cannot assure you that an active trading market will develop or that a significant amount of New ZYPS will be issued in connection with the exchange offer.

There is no established trading market for the New ZYPS. The Existing ZYPS are either currently traded on the over-the-counter markets or are available for trading on the PORTAL^SM Market. It is expected that the New ZYPS will be traded in the over-the-counter market, but there can be no assurance as to the liquidity of any market for the New ZYPS, the ability of the holders to sell their New ZYPS, or the prices at which holders of the New ZYPS would be able to sell their New ZYPS. The New ZYPS could trade at prices higher or lower than their initial purchase prices depending on many factors. Accordingly, there can be no assurance that an active trading market for the New ZYPS will develop. Furthermore, if an active trading market were to develop, the market price for the New ZYPS may be adversely affected by changes in our financial performance, changes in the overall market for similar securities and changes in performance or prospects for companies in our industry.

The closing of the exchange offer is not conditional upon a minimum aggregate principal amount of Existing ZYPS being tendered and accepted in the exchange offer. To the extent that Existing ZYPS are not tendered and accepted for exchange in the exchange offer, the trading market, if any, for New ZYPS could be significantly more limited than the trading market for the Existing ZYPS. A debt security with a smaller outstanding principal amount available for trading (a smaller “float”) may command a lower price than would a comparable debt security with a larger float. Therefore, the market price for the New ZYPS may be affected adversely. A limited float could also make the trading price of New ZYPS more volatile.

You may only convert the ZYPS if certain conditions are met.

The Existing ZYPS are convertible into shares of our common stock, and the New ZYPS will be convertible into a combination of cash and stock, if any, by you, only if specified conditions are met. If the specific conditions for conversion are not met, you will not be able to convert your ZYPS, and you may not be able to receive the value of the common stock into which the ZYPS would otherwise be convertible.

The ZYPS are not protected by restrictive covenants.

The indenture governing the Existing ZYPS does not, and the indenture governing the New ZYPS will not, contain any financial or operating covenants or restrictions on the payment of dividends, the incurrence of indebtedness or liens or the issuance or repurchase of securities by us or any of our subsidiaries. The indenture for the Existing ZYPS does not, and the indenture for the New ZYPS will not, contain covenants or other provisions to afford protection to holders of the ZYPS in the event of a fundamental change involving us, except to the extent provided in the relevant ZYPS.

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Because we are a holding company, the ZYPS are effectively subordinated to indebtedness of our subsidiaries and our ability to service indebtedness may in the future become dependent upon the operating cash flows of these subsidiaries.

We are a holding company and substantially all of our operations are conducted through subsidiaries. Although we currently have sufficient cash to service or repay our indebtedness, should we utilize such cash for other purposes, such as making acquisitions, our operating cash flow and ability to service indebtedness, including the ZYPS, may become dependent upon the operating cash flows of our subsidiaries and the payment of funds by these subsidiaries to us 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 our subsidiaries. If these options are exercised, our participation in any earnings and future distributions by such subsidiaries will be reduced. In addition, existing and future obligations (including trade payables) of our subsidiaries are or will be effectively senior in right of payment to the ZYPS.

The Existing ZYPS and the net share settlement feature of the New ZYPS may result in dilution to our common stockholders.

Dilution in the per share value of our common stock could result from the conversion of most or all of the Existing ZYPS or shares issued as a result of the new net share settlement feature of the New ZYPS. If none of the Existing ZYPS were tendered and accepted in the exchange offer, approximately 23.4 million shares of our common stock could be issued upon the conversion of the Existing ZYPS. Moreover, a significant number of shares of our common stock could be issued as a result of the new net share settlement feature of the New ZYPS. The issuance of such shares could cause holders of our common stock to experience substantial dilution. Furthermore, the trading price of our common stock could suffer from significant downward pressure as holders convert these ZYPS or these common shares are issued pursuant to the new feature and such holders sell such common shares, encouraging short sales by the holders of such ZYPS or other stockholders.

In the event of our bankruptcy, insolvency or certain similar proceedings during the cash settlement average period, there is a risk that a holder’s claim could be subordinated to claims of our creditors.

Holders of New ZYPS should be aware that once they have elected to convert their New ZYPS into cash and shares of our common stock, if any, in the event of our bankruptcy, insolvency or certain similar proceedings during the cash settlement average period (as defined under “Description of the New ZYPS—Conversion Rights—Payment Upon Conversion”), there is a risk that a bankruptcy court may decide that a holder’s claim to receive such cash and/or shares may not represent a senior unsecured claim and could be subordinated to the claims of our creditors as a result of such holder’s claim being treated as an equity claim in bankruptcy.

Risks Relating to the Exchange Offer

Holders of New ZYPS will be subject to certain risks that are different from the risks applicable to holders of the Existing ZYPS

In general, the risks associated with the Existing ZYPS and the New ZYPS are the same. However, holders of New ZYPS will be subject to certain risks that are different from the risks that are applicable to holders of the Existing ZYPS, as described under “Risk Factors—Risks Related to the ZYPS—We may not be able to repurchase the ZYPS when required or make the required cash payments upon conversion or at maturity of the ZYPS,” “—The U.S. federal income tax consequences of the conversion of the New ZYPS into cash and common stock are unclear,” “—There is no current market for the New ZYPS and we cannot assure you that an active trading market will develop or that a significant amount of New ZYPS will be issued in connection with the exchange offer,” “—In the event of our bankruptcy, insolvency or certain similar proceedings during the cash settlement average period, there is a risk that a holder’s claim could be subordinated to claims of our creditors” and “Risk Factors—Risks Relating to the Exchange Offer—The U.S. federal income tax consequences of the exchange of the Existing ZYPS for the New ZYPS are unclear.”

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After the consummation of the exchange offer there will likely be a limited trading market for the Existing ZYPS, which could affect the market price of the Existing ZYPS.

To the extent that Existing ZYPS are tendered and accepted for exchange pursuant to the exchange offer, the trading market, if any, for Existing ZYPS that are not tendered and remain outstanding after the exchange offer is likely to be significantly more limited than at present. A debt security with a smaller outstanding principal amount available for trading (a smaller “float”) may command a lower price than would a comparable debt security with a larger float. Therefore, the market price for Existing ZYPS that are not tendered and accepted for exchange pursuant to the exchange offer may be affected adversely. A reduced float may also make the trading price of Existing ZYPS that are not exchanged in the exchange offer more volatile.

The U.S. federal income tax consequences of the exchange of the Existing ZYPS for the New ZYPS are unclear.

The U.S. federal income tax consequences of the exchange offer are unclear. We will take the position that the exchange of Existing ZYPS for New ZYPS will not constitute a significant modification of the terms of the Existing ZYPS for U.S. federal income tax purposes. The indenture governing the New ZYPS will contain provisions stating that by acceptance of a beneficial interest in a New ZYPS each holder thereof will be deemed to have agreed that the exchange of Existing ZYPS for New ZYPS does not constitute a significant modification of the terms of the Existing ZYPS for U.S. federal income tax purposes. That position, however, could be challenged by the IRS. Assuming the exchange of the Existing ZYPS for the New ZYPS does not result in a significant modification of the terms of the Existing ZYPS, the New ZYPS will be treated as a continuation of the Existing ZYPS and there will be no U.S. federal income tax consequences to a holder who exchanges Existing ZYPS for New ZYPS pursuant to the exchange offer. If, contrary to our position, the exchange of the Existing ZYPS for the New ZYPS does constitute a significant modification of the terms of the Existing ZYPS, the U.S. federal income tax consequences to you could materially differ. See “Material U.S. Federal Income Tax Consequences—Consequences of the Exchange” for more information.

Our Board of Directors has not made a recommendation with regard to whether or not you should tender your Existing ZYPS in the exchange offer and we have not obtained a third-party determination that the exchange offer is fair to holders of the Existing ZYPS.

Neither we nor our officers or directors make any recommendation as to whether you should tender or refrain from tendering all or any portion of your Existing ZYPS in the exchange offer. Further, we have not authorized anyone to make any such recommendation. We have not retained and do not intend to retain any unaffiliated representative to act solely on behalf of the holders of the Existing ZYPS for purposes of negotiating the terms of the exchange offer or preparing a report concerning the fairness of the exchange offer. We cannot assure holders of the Existing ZYPS that the value of the New ZYPS received in the exchange offer will in the future equal or exceed the value of the Existing ZYPS tendered and we do not take a position as to whether you ought to participate in the exchange offer.

Risks Related to Our Business

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 is experiencing a challenging capital spending environment. Although the capital spending environment has improved recently and our revenues have increased in recent quarters, we experienced significant revenue declines from historical peak revenue levels, and if capital spending and technology purchasing by TSPs does not continue to improve or declines, revenue may stagnate or decrease, and our operating results may be adversely affected. For these reasons and the reasons described in the risk factors below, it has been and continues to be very difficult for us to accurately forecast future revenues and operating results.

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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.

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 may continue to affect our business due to: (i) increasing the risk of credit or business failure of suppliers, customers or distributors; (ii) customer requirements for vendor financing and longer payment terms; (iii) delays and defaults in customer or distributor payments; and (iv) price reductions instituted by competitors or by us to maintain 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 may experience deterioration in our operating results, and we may determine to modify our plan for future operations accordingly, which may include, among other things, reductions in our workforce.

Sales from our new products may not offset declines in revenue from our traditional products.

We have experienced declines in revenue from some of our traditional products sold to TSPs compared with prior years. We are executing a strategy to capitalize on growth opportunities in new and emerging products to offset such declines. While certain of these new products have met with initial success, it is unclear whether they will be widely adopted by our customers and TSPs in general. Increases in revenue from these new products also may not exceed declines we may experience in revenue from the sale of our traditional products. If revenue from sales of our traditional products declines faster than revenue from the new products increases, our revenue and operating results may be adversely affected.

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 enter into 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

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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 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 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.

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. If our current or future products develop operational problems, this could have a material adverse effect on us. We offer complex products that may contain undetected defects or errors, particularly when first introduced or as new versions are released. We may not discover such defects or errors until after a product has been released and used by the customer. Significant costs may be incurred to correct undetected defects or errors in our products and these defects or errors could result in future lost sales. Defects or errors in our products also may result in product liability claims, which could cause adverse publicity and impair their market acceptance. In addition, we may incur fees or penalties in connection with problems associated with our products and services.

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 call answering, have experienced declines in usage resulting from, among other factors, 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 enter the market in a timely manner for their acceptance. New product offerings may not properly integrate into existing platforms and the failure of these offerings to be accepted by the market could have a material adverse effect on our business, results of operations, and financial condition. Our sales and operating results may be adversely affected in the event customers delay purchases of existing products as they await our new product offerings. 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 have made and continue to make significant investments in the areas of sales and marketing, and research and development. Our research and development activities, which may be delayed and behind schedule,

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include ongoing significant investment in the development of additional features and functionality for our existing and new product offerings. The success of these initiatives will be dependent upon, among other things, the emergence of a market for these types of products and their acceptance by existing and new customers. Our business may be adversely affected by its failure to correctly anticipate the emergence of a market demand for certain products or services, and changes in the evolution of market opportunities. If a sufficient market does not emerge for new or enhanced product offerings developed by us, if we are late in introducing new product offerings, or if we are not successful in marketing such products, our continued growth could be adversely affected and our investment in those products may be lost.

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. 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 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. The worldwide enhanced services 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 enhanced services 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. Unforeseen changes in the regulatory environment also may have an impact on our revenues and/or costs in any given part of the world.

Increased competition could force us to lower our prices or take other actions to differentiate our products.

Our competitors may be able to develop more quickly or adapt faster to new or emerging technologies and changes in customer requirements, or devote greater resources to the development, promotion and sale of their products. Some of our competitors have, in relation to us, longer operating histories, larger customer bases, longer standing relationships with customers, greater name recognition and significantly greater financial, technical, marketing, customer service, public relations, distribution and other resources. New competitors continue to emerge and there continues to be consolidation among existing competitors, which may reduce our market share. In addition, some of our customers may in the future decide to develop their own solutions internally instead of purchasing them from us. Increased competition could force us to lower our prices or take other actions to differentiate our products.

Our recent growth has strained our managerial and operational resources.

Our recent growth has strained our managerial and operational resources. Our continued growth may further strain our resources, which could hurt our business and results of operations. There can be no assurance that our managers will be able to manage growth effectively. To manage future growth, our management must continue to improve our operational and financial systems, procedures and controls and expand, train, retain and manage our employee base. If our systems, procedures and controls are inadequate to support our operations, our expansion could slow or come to a halt, and we could lose the opportunity to gain significant market share. Any inability to manage growth effectively could materially harm our business, results of operations and financial condition.

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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 business intelligence products in the past has been affected by weakness in general economic conditions, delays or reductions in customers’ information technology spending 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 laws or regulations, including those related to procurement, (v) we are not granted security clearances required to sell products to domestic or foreign governments or such security clearances are revoked, (vi) there is a change in government procurement procedures or (vii) there is change in political climate that adversely affects our existing or prospective relationships. 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. Because a significant proportion of our sales of these large system installations occurs in the late stages of a quarter, a delay, cancellation or other factor resulting in the postponement or cancellation of such sales may cause us to miss our financial projections, which may not be discernible until the end of a financial reporting period. 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.

During the period between the evaluation and purchase of a system, customers may defer or scale down proposed orders of our products for, among other reasons: (i) changes in budgets and purchasing priorities; (ii) reduced need to upgrade existing systems; (iii) deferrals in anticipation of enhancements or new products; (iv) introduction of products by our competitors; and (v) lower prices offered by our competitors.

Geopolitical, economic and military conditions in countries in which we operate may adversely affect our business and operating results.

Geopolitical, economic and military conditions could directly affect our operations. The outbreak of diseases, such as severe acute respiratory syndrome (“SARS”), have curtailed and may in the future curtail travel to and from certain countries. Restrictions on travel to and from these regions on account of additional incidents of diseases, such as SARS, could have a material adverse effect on our business, results of operations, and

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financial condition. 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 shipment of our products, our business, operating results and financial condition could be materially and adversely affected. U.S. military involvement in overseas operations including the war with Iraq, 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 suspended. The recent death of the former President of the Palestinian Authority and the resultant political uncertainty raises concerns regarding the ability of the Palestinian Authority to maintain order in the Palestinian areas. Civil unrest in these areas could significantly increase violence between Palestinians and Israelis. We could be materially 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 materially 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 Israeli 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. Recently, the weakening of the United States dollar relative to the Israeli shekel has increased the costs of our Israeli operations, stated in the United States dollar. Our operations have at times also been affected by 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 that we participate in and tax benefits that we 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 negatively 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 we have received significant benefits through reimbursement of up to 50% of qualified research and development expenditures.

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Certain of our subsidiaries currently pay 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 are currently required to be made until the government has been reimbursed the amounts received by us, which is linked to the U.S. dollar, plus, for amounts received under projects approved by the OCS after January 1, 1999, interest on such amounts at a rate equal to the 12-month LIBOR rate in effect on January 1 of the year in which approval is obtained. As of October 31, 2004, such subsidiaries received approximately $56.9 million in cumulative grants from the OCS and recorded approximately $25.5 million in cumulative royalties to the OCS. During the year ended January 31, 2003, one of our subsidiaries finalized an arrangement with the OCS whereby the subsidiary agreed to pay a lump sum royalty amount for all past amounts received from the OCS. In addition, this subsidiary 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 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 this 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 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 that 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.

The ability of our Israeli subsidiaries to pay dividends is subject to Israeli law and the amount of cash dividends payable may be subject to devaluation in the Israeli currency.

The ability of our Israeli subsidiaries to pay dividends is governed by Israeli law, which provides that cash dividends may be paid by an Israeli corporation only out of retained earnings as determined for statutory purposes in Israeli currency. In the event of a devaluation of the Israeli currency against the dollar, the amount in dollars available for payment of cash dividends out of prior years’ earnings will decrease accordingly. Cash dividends paid by an Israeli corporation to United States resident corporate parents are subject to the Convention for the Avoidance of Double Taxation between Israel and the United States. Under the terms of the Convention, such dividends are subject to taxation by both Israel and the United States and, in the case of Israel, such dividends out of income derived in respect of a period for which an Israeli company is entitled to the reduced tax rate applicable to an Approved Enterprise are generally subject to withholding of Israeli income tax at source at a rate of 15%. Our Israeli subsidiaries are also subject to additional Israeli taxes in respect of such dividends, generally equal to the tax benefits previously granted in respect of the underlying income by virtue of the Approved Enterprise status.

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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 utilize sophisticated security measures, third parties may attempt to breach our security through computer viruses, electronic break-ins and other disruptions. If these attempts are 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 in 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 adverse consequences from the failure to hedge the exchange rate risks associated with contracts denominated in foreign currencies and our operating results have been negatively impacted for certain periods 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.

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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, however, regularly conduct comprehensive patent searches to determine whether the technology used in our products infringes patents held by third parties. 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 continue to offer these products without obtaining licenses for those products or without substantial reengineering of such products. Any reengineering effort may not be successful, and we are uncertain as to whether any such licenses would be available. Even if such licenses were available, we are not certain whether they would be offered to us on commercially reasonable terms.

While we occasionally file patent applications, it cannot be assured that patents will be issued on the basis of such applications or that, if such patents are issued, they will be sufficiently broad to protect our technology. In addition, we cannot be assured that any patents issued to us will not be challenged, invalidated or circumvented.

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.

Our investment activities and changes in interest rates could adversely affect our financial condition.

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 and public equity 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, the prevailing interest rates have had, and the continuance of or a reduction in such rates due to economic conditions or government policies may have, an adverse impact on our results of operations. The severe decline in the public trading prices of equity securities in the past, 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.

The trading price for our common stock may be volatile.

Our operating results have fluctuated in the past and may do so in the future. 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 ours, tend to exhibit a high degree of volatility, which at times is unrelated to the operating performance of a company. The announcement of financial results that fall short of the results anticipated by the public markets

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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.

New accounting requirements, if adopted, would cause us to record compensation expense for employee stock option grants.

We account for employee stock options in accordance with “Accounting Principles Board Opinion No. 25 and related Interpretations,” which provide that any compensation expense relative to employee stock options be measured based on the intrinsic value of the stock options. As a result, when options are priced at or above the fair market value of the underlying stock on the date of grant, as is our practice, we incur no compensation expense. However, FASB has proposed in its exposure draft entitled “Share-Based Payment, an amendment of FASB Statements No 123 and 95” new accounting requirements that, if adopted, would cause us to record compensation expense for employee stock option grants. Any such expense, although it would not affect our cash flows, will have a material negative impact on our results of operations.

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, or 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, our board of directors has the authority to cause us to issue, without vote or action of our shareholders, up to 2,500,000 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. The issuance of either preferred or common stock could have the effect of making it more difficult for a person to acquire, or could discourage a person from seeking to acquire, control of us. If this occurs, investors could lose the opportunity to receive a premium on the sale of their shares in a change of control transaction.

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RATIO OF EARNINGS TO FIXED CHARGES

We have computed the ratio of earnings to fixed charges for the fiscal years ended January 31, 2000, 2001, 2002, 2003 and 2004 and the nine months ended October 31, 2004:

	Fiscal Year Ended January 31,										Nine Months Ended October 31, 2004
	2000(1)		2001		2002		2003		2004
Ratio of earnings to fixed charges(2)	7.7	x	9.5	x	2.8	x	n.a.	(3)	1.4	x	5.4	x

⁽¹⁾ Includes the results of Loronix Information Systems, Inc. (“Loronix”), for its fiscal year ended December 31, 1999. 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.

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THE EXCHANGE OFFER

Terms of the Exchange Offer; Period for Tendering Existing ZYPS

We are offering, upon the terms and subject to the conditions set forth in this prospectus and the accompanying letter of transmittal, to exchange $1,000 principal amount of New ZYPS for each $1,000 principal amount of validly tendered and accepted Existing ZYPS. We are offering to exchange all of the Existing ZYPS. However, the exchange offer is subject to the conditions described in this prospectus.

You may tender all, some or none of your Existing ZYPS, subject to the terms and conditions of the exchange offer. Holders of Existing ZYPS must tender their Existing ZYPS in a minimum $1,000 principal amount and multiples thereof.

The exchange offer is not being made to, and we will not accept tenders for exchange from, holders of Existing ZYPS in any jurisdiction in which the exchange offer or the acceptance of the offers would not be in compliance with the securities or blue sky laws of that jurisdiction.

Our board of directors and officers do not make any recommendation to the holders of Existing ZYPS as to whether or not to exchange all or any portion of their Existing ZYPS. In addition, we have not authorized anyone to make any recommendation. You must make your own decision whether to tender your Existing ZYPS for exchange and, if so, the amount of Existing ZYPS to tender.

Expiration Date

The expiration date for the exchange offer is 12:01 a.m., New York City time, on January 21, 2005, unless we extend the exchange offer. We may extend this expiration date for any reason. The last date on which tenders will be accepted, whether on January 21, 2005 or any later date to which the exchange offer may be extended, is referred to as the expiration date.

Extensions; Amendments

We expressly reserve the right, in our discretion, for any reason to:

• delay the acceptance of Existing ZYPS tendered for exchange, for example, in order to allow for the rectification of any irregularity or defect in the tender of Existing ZYPS, provided that in any event we will promptly issue New ZYPS or return tendered Existing ZYPS after expiration or withdrawal of the exchange offer;

• extend the time period during which the exchange offer is open, by giving oral or written notice of an extension to the holders of Existing ZYPS in the manner described below; during any extension, all Existing ZYPS previously tendered and not withdrawn will remain subject to the exchange offer;

• waive any condition or amend any of the terms or conditions of the exchange offer, other than the condition that the registration statement or, if applicable, a post-effective amendment, becomes effective under the Securities Act, as amended; and

• terminate the exchange offer, as described under “—Conditions for Completion of the Exchange Offer” below.

If we consider an amendment to the exchange offer to be material, or if we waive a material condition of the exchange offer, we will promptly disclose the amendment or waiver in a prospectus supplement, and if required by law, we will extend the exchange offer for a period of five to twenty business days.

We will promptly give oral or written notice of any (1) extension, (2) amendment, (3) non-acceptance or (4) termination of the offer to the holders of the Existing ZYPS. In the case of any extension, we will issue a

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press release or other public announcement no later than 9:00 a.m., New York City time, on the next business day after the previously scheduled expiration date. In the case of an amendment, we will issue a press release or other public announcement.

Procedures for Tendering Existing ZYPS

Your tender to us of Existing ZYPS and our acceptance of your tender will constitute a binding agreement between you and us upon the terms and subject to the conditions set forth in this prospectus and in the accompanying letter of transmittal.

Tender of Existing ZYPS Held Through a Custodian. If you are a beneficial holder of the Existing ZYPS that are held of record by a custodian bank, depositary institution, broker, dealer, trust company or other nominee, you must instruct the custodian, or such other record holder, to tender the Existing ZYPS on your behalf. Your custodian will provide you with its instruction letter, which you must use to give these instructions.

Tender of Existing ZYPS Held Through DTC. Any beneficial owner of Existing ZYPS held of record by The Depository Trust Company, or DTC, or its nominee, through authority granted by DTC, may direct the DTC participant through which the beneficial owner’s Existing ZYPS are held in DTC, to tender on such beneficial owner’s behalf. To effectively tender Existing ZYPS that are held through DTC, DTC participants should transmit their acceptance through the Automated Tender Offer Program, or ATOP, for which the transaction will be eligible, and DTC will then edit and verify the acceptance and send an agent’s message (as described below) to the exchange agent for its acceptance. Delivery of tendered Existing ZYPS must be made to the exchange agent pursuant to the book-entry delivery procedures set forth below or the tendering DTC participant must comply with the guaranteed delivery procedures set forth below. No letters of transmittal will be required to tender Existing ZYPS through ATOP.

In addition:

• the exchange agent must receive a completed and signed letter of transmittal or an electronic confirmation pursuant to DTC’s ATOP system indicating the principal amount of Existing ZYPS to be tendered and any other documents required by the letter of transmittal; and

• prior to the expiration date,

• the exchange agent must receive a confirmation of book-entry transfer of such Existing ZYPS, into the exchange agent’s account at DTC, in accordance with the procedure for book-entry transfer described below; or

• the holder must comply with the guaranteed delivery procedures described below.

Your Existing ZYPS must be tendered by book-entry transfer. The exchange agent will establish an account with respect to the Existing ZYPS at DTC for purposes of the exchange offer within two business days after the date of this prospectus. Any financial institution that is a participant in DTC must make book-entry delivery of Existing ZYPS by having DTC transfer such Existing ZYPS into the exchange agent’s relevant account at DTC in accordance with DTC’s procedures for transfer. Although your Existing ZYPS will be tendered through the DTC facility, the letter of transmittal, or facsimile, or an electronic confirmation pursuant to DTC’s ATOP system, with any required signature guarantees and any other required documents must be transmitted to and received or confirmed by the exchange agent at its address set forth below under “—Exchange Agent,” prior to 12:01 a.m., New York City time, on the expiration date of the exchange offer. You or your broker must ensure that the exchange agent receives an agent’s message from DTC confirming the book-entry transfer of your Existing ZYPS. An agent’s message is a message transmitted by DTC and received by the exchange agent that forms a part of the book-entry confirmation which states that DTC has received an express acknowledgement from the participant in DTC tendering Existing ZYPS that such participant agrees to be bound by the terms of the letter of transmittal.

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If you are an institution that is a participant in DTC’s book-entry transfer facility, you should follow the same procedures that are applicable to persons holding Existing ZYPS through a financial institution.

Do not send letters of transmittal or other exchange offer documents to us or to Lehman Brothers Inc., the dealer manager.

It is your responsibility to ensure that all necessary materials are received by JPMorgan Chase Bank, N.A., the exchange agent, before the expiration date. If the exchange agent does not receive all of the required materials before the expiration date, your Existing ZYPS will not be validly tendered. Delivery of documents to DTC in accordance with its procedures does not constitute delivery to the exchange agent.

Any Existing ZYPS not accepted for exchange for any reason will be promptly returned, without expense, to the tendering holder after the expiration or termination of the exchange offer.

We will have accepted the validity of tendered Existing ZYPS if and when we give oral or written notice to the exchange agent. The exchange agent will act as the tendering holders’ agent for purposes of receiving the New ZYPS from us. If we do not accept any tendered Existing ZYPS for exchange because of an invalid tender or the occurrence of any other event, the exchange agent will return those Existing ZYPS to you without expense, promptly after the expiration date, via book-entry transfer through DTC.

Binding Interpretations

We will determine in our sole discretion all questions as to the validity, form, eligibility and acceptance of Existing ZYPS tendered for exchange. Our determination will be final and binding. We reserve the absolute right to reject any and all tenders of any particular Existing ZYPS not properly tendered or to not accept any particular Existing ZYPS which acceptance might, in our reasonable judgment or our counsel’s judgment, be unlawful. We also reserve the absolute right to waive any defects or irregularities in the tender of Existing ZYPS. Unless waived, any defects or irregularities in connection with tenders of Existing ZYPS for exchange must be cured within such reasonable period of time as we shall determine. Neither we, the exchange agent nor any other person shall be under any duty to give notification of any defect or irregularity with respect to any tender of Existing ZYPS for exchange, nor shall any of them incur any liability for failure to give such notification.

Acceptance of Existing ZYPS for Exchange; Delivery of New ZYPS

Once all of the conditions to the exchange offer are satisfied or waived, we will accept all Existing ZYPS properly tendered and will issue the New ZYPS promptly after the expiration date. The discussion under the heading “—Conditions for Completion of the Exchange Offer” provides further information regarding the conditions to the exchange offer. For purposes of the exchange offer, we will be deemed to have accepted properly tendered Existing ZYPS for exchange when, as and if we have given oral or written notice to the exchange agent, with written confirmation of any oral notice to be given promptly after giving such notice.

The New ZYPS will be issued in denominations of $1,000 and any integral multiples of $1,000.

In all cases, issuance of New ZYPS for Existing ZYPS that are accepted for exchange in the exchange offer will be made only after timely receipt by the exchange agent of:

• a timely book-entry confirmation of such Existing ZYPS into the exchange agent’s account at the DTC book-entry transfer facility;

• a properly completed and duly executed letter of transmittal or an electronic confirmation of the submitting holder’s acceptance through DTC’s ATOP system; and

• all other required documents, if any.

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Return of Existing ZYPS Accepted for Exchange

If we do not accept any tendered Existing ZYPS for any reason set forth in the terms and conditions of the exchange offer, or if Existing ZYPS are submitted for a greater principal amount than the holder desires to exchange, the unaccepted or non-exchanged Existing ZYPS tendered by book-entry transfer into the exchange agent’s account at the book-entry transfer facility will be returned in accordance with the book-entry procedures described above, and the Existing ZYPS that are not to be exchanged will be credited to an account maintained with DTC, promptly after the expiration or termination of the exchange offer.

Guaranteed Delivery Procedures

If you desire to tender your Existing ZYPS and you cannot complete the procedures for book-entry transfer set forth above on a timely basis, you may still tender your Existing ZYPS if:

• your tender is made through an eligible institution;

• prior to the expiration date, the exchange agent received from the eligible institution a properly completed and duly executed letter of transmittal, or a facsimile of such letter of transmittal or an electronic confirmation pursuant to DTC’s ATOP system and notice of guaranteed delivery, substantially in the form provided by us, by facsimile transmission, mail or hand delivery, that:

(1) sets forth the name and address of the holder of the Existing ZYPS tendered;

(2) states that the tender is being made thereby; and

(3) guarantees that within three trading days after the expiration date a book-entry confirmation and any other documents required by the letter of transmittal will be deposited by the eligible institution with the exchange agent; and

• book-entry confirmation and all other documents, if any, required by the letter of transmittal are received by the exchange agent within three trading days after the expiration date.

Withdrawal Rights

You may withdraw your tender of Existing ZYPS at any time prior to 12:01 a.m., New York City time, on the expiration date. In addition, if we have not accepted your tendered Existing ZYPS for exchange, you may withdraw your Existing ZYPS after January 21, 2005.

For a withdrawal to be effective, the exchange agent must receive a written notice of withdrawal at the address or, in the case of eligible institutions, at the facsimile number, set forth below under the heading “—Exchange Agent” prior to 12:01 a.m., New York City time, on the expiration date. Any notice of withdrawal must:

• specify the name of the person who tendered the Existing ZYPS to be withdrawn;

• contain a statement that you are withdrawing your election to have your Existing ZYPS exchanged;

• be signed by the holder in the same manner as the original signature on the letter of transmittal by which the Existing ZYPS were tendered, including any required signature guarantees; and

• if you have tendered your Existing ZYPS in accordance with the procedure for book-entry transfer described above, specify the name and number of the account at DTC to be credited with the withdrawn Existing ZYPS and otherwise comply with the procedures of such facility.

Any Existing ZYPS that have been tendered for exchange, but which are not exchanged for any reason, will be credited to an account maintained with the book-entry transfer facility for the Existing ZYPS, as soon as practicable after withdrawal, rejection of tender or termination of the exchange offer. Properly withdrawn Existing ZYPS may be retendered by following the procedures described under the heading “—Procedures for Tendering Existing ZYPS” above, at any time on or prior to 12:01 a.m., New York City time, on the expiration date.

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Conditions for Completion of the Exchange Offer

Notwithstanding any other provisions of this exchange offer, we will not be required to accept for exchange any Existing ZYPS tendered, and we may terminate or amend the offer, if any of the following conditions precedent to the exchange offer is not satisfied, or is reasonably determined by us not to be satisfied, and, in our reasonable judgment, the failure of the condition makes it inadvisable to proceed with the offer or with the acceptance for exchange of the Existing ZYPS or exchange and issuance of the New ZYPS:

• No action or event shall have occurred, failed to occur or been threatened, no action shall have been taken, and no statute, rule, regulation, judgment, order, stay, decree or injunction shall have been promulgated, enacted, entered, enforced or deemed applicable to the exchange offer, by or before any court or governmental, regulatory or administrative agency, authority or tribunal, which either:

• challenges the making of the exchange offer or the exchange of Existing ZYPS under the exchange offer or might, directly or indirectly, prohibit, prevent, restrict or delay consummation of, or might otherwise adversely affect in any material manner, the exchange offer or the exchange of Existing ZYPS under the exchange offer, or

• in our reasonable judgment, could materially adversely affect our business, condition (financial or otherwise), income, operations, properties, assets, liabilities or prospects, or would be material to holders of Existing ZYPS in deciding whether to accept the exchange offer.

• (a) Trading generally shall not have been suspended or materially limited on or by, as the case may be, either of the New York Stock Exchange or the National Association of Securities Dealers, Inc.; (b) there shall not have been any suspension or limitation of trading of any of our securities on any exchange or in the over-the-counter market; (c) no general banking moratorium shall have been declared by federal or New York authorities; or (d) there shall not have occurred subsequent to the date of this prospectus any outbreak or escalation of major hostilities in which the United States is involved, any declaration of war by Congress or any other substantial national or international calamity or emergency if the effect of any such outbreak, escalation, declaration, calamity or emergency has a reasonable likelihood to make it impractical or inadvisable to proceed with completion of the exchange offer. Without limiting the generality of the foregoing, it would be impracticable or inadvisable to proceed with the completion of the exchange offer if the risk of liability to us exceeds the value to us of the exchange offer.

• The Trustee with respect to the Existing ZYPS shall not have objected in any respect to, or taken any action that could in our reasonable judgment adversely affect the consummation of the exchange offer or the exchange of Existing ZYPS under the exchange offer, nor shall the Trustee or any holder of Existing ZYPS have taken any action that challenges the validity or effectiveness of the procedures used by us in making the exchange offer or the exchange of the Existing ZYPS under the exchange offer.

All of the foregoing conditions are for the sole benefit of us and may be waived by us, in whole or in part, in our sole discretion. Any determination that we make concerning an event, development or circumstance described or referred to above shall be conclusive and binding.

In addition, the registration statement and any post-effective amendment to the registration statement covering the New ZYPS must be effective under the Securities Act. This condition is not waivable by us.

If any of the foregoing conditions is not satisfied, we may, at any time before the expiration of the exchange offer:

• terminate the exchange offer and return all tendered Existing ZYPS to the holders thereof;

• modify, extend or otherwise amend the exchange offer and retain all tendered Existing ZYPS until the expiration date, as may be extended, subject, however, to the withdrawal rights described in “Withdrawal Rights,” above; or

• waive the unsatisfied conditions (if waivable by us) and accept all Existing ZYPS tendered and not previously withdrawn.

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Except for the requirements of applicable U.S. federal and state securities laws, we know of no federal or state regulatory requirements to be complied with or approvals to be obtained by us in connection with the exchange offer which, if not complied with or obtained, would have a material adverse effect on us.

Fees and Expenses

Lehman Brothers Inc. is acting as the dealer manager in connection with the exchange offer. We will pay the dealer manager a fee for its services in connection with the exchange offer, which services will include assisting in the solicitation of tenders of the Existing ZYPS pursuant to the exchange offer and communicating with brokers, dealers, banks, trust companies, nominees and other persons with respect to the exchange offer. The obligations of the dealer manager are subject to certain conditions, including the truth of representations and warranties made by us to the dealer manager, the performance by us of our obligations in connection with the exchange offer and the receipt of legal opinions and certificates by the dealer manager. We have agreed to indemnify the dealer manager against certain liabilities, including liabilities under the federal securities laws, or to contribute to payments that the dealer manager may be required to make in respect thereof. Questions regarding the terms of the exchange offer may be directed to the dealer manager at the address set forth on the back cover page of this prospectus.

From time to time, the dealer manager and its affiliates have provided investment banking and other services to us for customary compensation. The dealer manager, in the ordinary course of business, also makes markets in our securities, including the Existing ZYPS. As a result, from time to time, the dealer manager may own certain of our securities, including the Existing ZYPS.

We have retained D.F. King & Co., Inc. to act as information agent and JPMorgan Chase Bank, N.A. to act as the exchange agent in connection with the exchange offer. The information agent may contact holders of Existing ZYPS by mail, telephone, facsimile transmission and personal interviews and may request brokers, dealers and other nominee existing holders to forward materials relating to the exchange offer to beneficial owners. The information agent and the exchange agent will receive a fee for their respective services, will be reimbursed for reasonable out-of-pocket expenses and will be indemnified against liabilities in connection with their services, including liabilities under the federal securities laws.

Neither the information agent nor the exchange agent has been retained to make solicitations or recommendations. The fees they receive will not be based on the principal amount of Existing ZYPS tendered under the exchange offer.

We will not pay any fees or commissions to any broker or dealer, or any other person, other than the dealer manager for soliciting tenders of Existing ZYPS under the exchange offer. Brokers, dealers, commercial banks and trust companies will, upon request, be reimbursed by us for reasonable and necessary costs and expenses incurred by them in forwarding materials to their customers.

Legal Limitation

The above conditions are for our sole benefit and may be asserted by us regardless of the circumstances giving rise to any such condition, or may be waived by us in whole or in part at any time and from time to time in our sole discretion (to the extent such condition is waivable by us). Our failure at any time to exercise any of the foregoing rights shall not be deemed a waiver of any such right and each such right shall be deemed an ongoing right which may be asserted at any time, and from time to time.

In addition, we will not accept for exchange any Existing ZYPS tendered, and no New ZYPS will be issued in exchange for any such Existing ZYPS, if at such time any stop order shall be threatened or in effect with respect to the registration statement of which this prospectus constitutes a part or the qualification of the indenture under the Trust Indenture Act of 1939, as amended.

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Exchange Agent

JPMorgan Chase Bank, N.A. has been appointed as the exchange agent for the exchange offer. All executed letters of transmittal should be directed to the exchange agent at one of its addresses as set forth below. Questions about the tender of Existing ZYPS, requests for assistance, and requests for notices of guaranteed delivery should be directed to the exchange agent addressed as follows:

By Hand: JPMorgan Chase Bank, N.A. Institutional Trust Services window 4 New York Plaza, 1st Floor New York, New York 10004	By Mail: JPMorgan Chase Bank, N.A. Institutional Trust Services P.O. Box 2320 Dallas, Texas 75221-2320 Attention: Frank Ivins
By Overnight Mail or Courier: JPMorgan Chase Bank, N.A. Institutional Trust Services 2001 Bryan Street, 9th Floor Dallas, Texas 75201 Attention: Frank Ivins	By Facsimile: (214) 468-6494 (For Eligible Institutions Only) Confirm by Telephone: (214) 468-6464

If you deliver the letter of transmittal to an address other than as set forth above or transmit instructions via facsimile other than as set forth above, then such delivery or transmission does not constitute a valid delivery of such letter of transmittal. If you need additional copies of this prospectus or the letter of transmittal, please contact the information agent at the address or telephone number set forth on the back cover of this prospectus.

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DESCRIPTION OF THE NEW ZYPS

We will issue the New ZYPS under an indenture between us and JPMorgan Chase Bank, N.A., as trustee. The terms of the New ZYPS are provided in the indenture. A copy of the indenture has been filed with the SEC. See “Where You Can Find More Information.”

The following description is only a summary of the material provisions of the New ZYPS and the indenture. We urge you to read the indenture in its entirety because it, and not this description, defines your rights as holders of the New ZYPS. You may request a copy of the indenture at our address set forth under the caption “Where You Can Find More Information.”

When we refer to “we,” “us,” “our” or “the Company” in this section, we refer only to CTI and not its subsidiaries. When we refer to the terms “designated event” and “termination of trading,” we refer to these terms as defined under the indenture. These definitions could be found in “—Repurchase at Option of Holders—Designated Event Put” below.

Brief Description of the New ZYPS

The New ZYPS will be:

• limited to $420 million aggregate principal amount;

• our senior unsecured obligations;

• senior in right of payment to any of our future subordinated indebtedness;

• equal in right of payment to our existing and future unsecured indebtedness that is not by its terms expressly subordinated to the Existing ZYPS outstanding and the New ZYPS, including our 1.50% Convertible Senior Debentures due 2005;

• 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;

• effectively subordinated to all indebtedness and all other liabilities of our subsidiaries because we are a holding company;

• convertible into cash and shares of our common stock, if any, 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 New ZYPS, measured over a specified number of trading days, was less than 105% of the average conversion value for the New ZYPS during that period;

• during any period, following the date on which the credit rating assigned to the New 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 New ZYPS;

• if we have called the New ZYPS for redemption; or

• upon the occurrence of specified corporate transactions;

• redeemable at our option for cash, in whole or in part, beginning on May 15, 2009 upon the terms and for a redemption price equal to 100% of the principal amount of the New ZYPS as set forth under “—Optional Redemption by CTI”;

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• subject to repurchase by us at the holder’s option on each of May 15, 2008, May 15, 2009, May 15, 2013 and May 15, 2018 or if a designated event occurs as set forth below under “—Repurchase at Option of Holders”; and

• 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 New ZYPS and original issue discount will not accrue on the New ZYPS.

No sinking fund is provided for the New ZYPS, and the New ZYPS are not subject to defeasance.

The indenture will not contain any financial covenants and will not restrict us from paying dividends, incurring indebtedness, which may be secured, or issuing or repurchasing our other securities. The indenture also will 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 October 31, 2004, we had approximately $507.3 million of outstanding convertible unsecured senior indebtedness and no subordinated indebtedness. As of October 31, 2004, our consolidated subsidiaries had outstanding aggregate liabilities of approximately $408.6 million, which are effectively senior to the New ZYPS.

A holder may present definitive New 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 New ZYPS, see “—Form, Denomination and Registration.”

The indenture governing the New ZYPS will contain provisions stating that by acceptance of a beneficial interest in a New ZYPS each holder thereof will be deemed to have agreed that the exchange of Existing ZYPS for New ZYPS does not constitute a significant modification of the terms of the Existing ZYPS for U.S. federal income tax purposes. For more information, see “Material U.S. Federal Income Tax Considerations.”

The aggregate principal amount of New ZYPS that may be issued under the indenture will be limited to $420 million. To the extent that a lesser amount of New ZYPS is issued pursuant to the exchange offer, the indenture will permit us to issue additional New ZYPS, following the exchange offer, equal in rank to the New ZYPS issued pursuant to the exchange offer in all respects so that such additional New ZYPS may be consolidated and form a single class with, and have the same terms as to status, redemption, conversion or otherwise as, the New ZYPS issued pursuant to the exchange offer.

Conversion Rights

General

A holder may convert any outstanding New ZYPS (or portions of outstanding New ZYPS) into cash and shares of our common stock, if any, 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 New ZYPS (such rate, as it may be adjusted from time to time as a result of adjustments to the conversion price as described herein, the “conversion rate”) under the circumstances summarized below. The conversion price is, however, subject to adjustment as described below under “—Conversion Price Adjustments.” We will not issue fractional shares of common stock upon conversion of the New ZYPS (see “—Conversion Procedures”). A holder may convert New ZYPS only in denominations of $1,000 and whole multiples of $1,000.

A holder may surrender New ZYPS for conversion into cash and shares of our common stock, if any, prior to the close of business on their stated maturity date if any of the following conditions are satisfied:

• 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;

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• 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 New ZYPS for that 10 trading-day period was less than 105% of the average conversion value, as described below, for the New ZYPS during that period;

• during any period, following the date on which the credit rating assigned to the New 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 New ZYPS;

• if we have called the New ZYPS for redemption; or

• upon the occurrence of any of the corporate transactions summarized below.

If a holder has exercised its right to require us to repurchase its New ZYPS as described under “—Repurchase at Option of Holders,” it may convert its New ZYPS into cash and shares of our common stock, if any, only if the holder withdraws its notice of exercise of repurchase and converts its New ZYPS prior to the close of business on the applicable repurchase date.

Conversion Upon Satisfaction of Market Price Conditions

A holder may convert any of its New ZYPS into cash and shares of our common stock, if any, 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 New ZYPS into cash and shares of our common stock, if any, during the five business-day period following any 10 consecutive trading-day period in which the average of the trading prices for the New ZYPS for that 10 trading-day period was less than 105% of the average conversion value for the New ZYPS during that period.

“Conversion price per share” of common stock as of any day is equal to the quotient of the $1,000 principal amount of a New ZYPS divided by the then current conversion rate (as defined above). “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.

Conversion Upon Credit Rating Event

A holder may convert any of its New ZYPS into cash and shares of our common stock, if any, during any period, following the date on which the credit rating assigned to the New 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 New ZYPS.

Conversion Upon Notice of Redemption

A holder may surrender for conversion any New 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 New 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 New ZYPS, the holder may not surrender that New ZYPS for conversion until the holder has withdrawn the notice in accordance with the indenture.

Conversion Upon Specified Corporate Transactions

If:

• 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;

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• 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

• a Change in Control occurs but holders of New ZYPS do not have the right to require us to repurchase their New ZYPS as a result of such Change in Control because either (1) the closing sale price of our common stock for a specified period prior to that Change in Control exceeds a specified level or (2) the consideration received in the Change in Control consists of capital stock that is freely traded and the New 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 New 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 in Control, as the case may be. Once we have given that notice, holders may convert their New 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 in Control notice and (y) our announcement that the Change in Control will not take place, in the case of a Change in Control. In the case of a distribution, no adjustment to the ability of a holder of New ZYPS to convert will be made if the holder participates or will participate in the distribution without conversion.

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 New ZYPS in accordance with the provisions of the preceding paragraph or (b) in all other cases, a holder may convert New 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 New ZYPS into cash and shares of our common stock, if any, will be changed into a right to convert the New ZYPS into the kind and amount of cash, securities or other property which the holder would have received if the holder had converted such New ZYPS immediately prior to the transaction. If the transaction also constitutes a Change in Control, the holder can require us to repurchase all or a portion of its New ZYPS as described under “—Repurchase at Option of Holders—Designated Event Put.”

Payment Upon Conversion

We will satisfy in cash our conversion obligation with respect to the principal amount of the New ZYPS to be converted, with the remaining amount, if any, to be satisfied in shares of our common stock, in each case as described below.

The settlement amount will be computed as follows:

• a cash amount equal to the lesser of (i) the aggregate principal amount of the New ZYPS to be converted and (ii) the applicable stock price (as defined below) multiplied by the conversion rate then in effect multiplied by the aggregate principal amount of the New ZYPS to be converted divided by 1,000; and

• if the amount described in (ii) immediately above exceeds the aggregate principal amount of the New ZYPS to be converted, a number of shares equal to (y) the aggregate principal amount of New ZYPS to be converted divided by 1,000 and multiplied by (z) (a) the conversion rate then in effect minus (b) $1,000 divided by the applicable stock price.

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We will settle our obligation to deliver cash and shares of our common stock, if any, arising from any conversion on the second trading day following the final trading day of the relevant cash settlement average period (as defined below), which is the 22nd trading day following the conversion date (as such conversion date is determined as described in the final paragraph under “—Conversion Procedures”), unless the conversion is:

• in connection with a redemption, in which case the settlement date will be the redemption date; or

• during the period beginning twenty-five trading days preceding the maturity date and ending on the maturity date, in which case the settlement date will be the maturity date.

The “applicable stock price” means, in respect of a conversion date, the average closing sale price of our common stock over the twenty trading-day period (the “cash settlement average period”) beginning on the trading day following the conversion date; provided, however, that:

• if the conversion date occurs during the period beginning on the date we call the New ZYPS for redemption and ending on the day that is two business days prior to the redemption date, the cash settlement average period will end on the second trading day preceding the redemption date; and

• if the conversion date occurs during the period beginning twenty-five trading days preceding the maturity date and ending on the maturity date, the cash settlement average period will end on the second trading day preceding the maturity date.

“Trading day” means a day on which our common stock (A) is not suspended from trading on any national or regional securities exchange or association or over-the-counter market at the close of business and (B) has traded at least once on the national or regional securities exchange or association or over-the-counter market that is the primary market for the trading of our common stock.

Our delivery to the holder of cash and shares of our common stock, if any, will be deemed to satisfy our obligation to pay the principal amount of the New ZYPS. For a discussion of the tax treatment of a holder receiving cash and shares of our common stock, if any, upon conversion, see “Material U.S. Federal Income Tax Considerations.”

Conversion Procedures

We will not issue fractional shares of common stock upon conversion of New 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 New 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 New ZYPS. However, a holder of New 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 New ZYPS because a designated event has occurred, that holder may convert its New ZYPS only if it withdraws its notice and converts its New ZYPS prior to the close of business on the business day immediately preceding the designated event repurchase date.

By delivering to the holder cash and shares of our common stock, if any, issuable upon conversion, we will satisfy our obligation with respect to the converted New ZYPS.

A holder will not be required to pay any taxes or duties relating to the issuance or delivery of cash or shares, if any, 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.

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To convert interests in a global New ZYPS, a holder must deliver to DTC the appropriate instruction form for conversion pursuant to DTC’s conversion program. To convert a definitive New ZYPS, a holder must:

• complete the conversion notice on the back of the New ZYPS (or a facsimile of it);

• deliver the completed conversion notice and the New ZYPS to be converted to the specified office of the conversion agent; and

• 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 New ZYPS will be deemed to have been converted immediately prior to the close of business on the conversion date. Cash and a certificate for the number of shares of common stock, if any, into which the New ZYPS are converted (and cash in lieu of any fractional shares) will be delivered as soon as practicable following the cash settlement average period.

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;

(3) issuances to all holders of our common stock of certain rights and warrants 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 fourth 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 the tender offer for which no adjustments have been made,

exceed 10% of our market capitalization on the expiration of such tender offer.

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“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 New ZYPS, the holders of the New ZYPS will receive, in addition to the cash and shares of our common stock, if any, issuable upon conversion of their New 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:

• reclassify or change our common stock (other than changes resulting from a subdivision or combination); or

• 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, 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 New ZYPS who elected not to convert their New ZYPS pursuant to the procedures described above under the caption “—Conversion Upon Specified Corporate Transactions,” may convert the New ZYPS into the consideration they would have received if they had converted their New 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 “Material U.S. Federal Income Tax Considerations—U.S. Holders—Adjustment of Conversion Price” for more information.

We may from time to time, to the extent permitted by law, reduce the conversion price of the New 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, 2009, we may redeem for cash some or all of the New 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 New ZYPS, the trustee will select the New 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 New ZYPS are to be redeemed in part only, we will issue a new New ZYPS in principal amount equal to the unredeemed principal portion thereof. If a portion of a holder’s New ZYPS is selected for partial redemption and the holder converts a portion of its New ZYPS, the converted portion will be deemed to be taken from the portion selected for redemption.

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Repurchase at Option of Holders

Optional Put

On each of May 15, 2008, May 15, 2009, May 15, 2013 and May 15, 2018, holders may require us to repurchase for cash all of their New ZYPS not previously called for redemption, or any portion of those New 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 New ZYPS. Holders may submit their New 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 for cash all of its New ZYPS not previously called for redemption, or any portion of those New ZYPS that is equal to $1,000 or a whole multiple of $1,000. A “designated event” is defined in the indenture to mean a Change in Control or a termination of trading. 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 New ZYPS to be repurchased.

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 New 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 “Change in Control” is defined in the indenture to mean any event or series of events as a result of which:

• 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;

• 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);

• 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;

• CTI conveys, transfers, or leases all or substantially all of its assets to any such “person” or “group”; or

• 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.

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However, a Change in Control will be deemed not to have occurred if:

• 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

• at least 90% of the consideration (excluding cash payments for dissenting and fractional shares) in the transaction or transactions constituting the change in 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” as defined in the indenture means such time as our common stock (or other common stock into which the New 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 in 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 in Control may have occurred and, accordingly, as to whether or not the holders of New ZYPS will have the right to require us to repurchase their New 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.

We may, to the extent permitted by applicable law and other agreements relating to our indebtedness, at any time purchase the New ZYPS in the open market or by tender at any price or by private agreement. Any New 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 New 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 New ZYPS if highly leveraged or other transactions involving us occur that may adversely affect holders.

Our ability to repurchase New 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 New ZYPS that might be delivered by holders of New ZYPS seeking to exercise the repurchase right. Any failure by us to repurchase the New 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 New ZYPS at maturity, redemption or upon repurchase;

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(2) default in the performance of or breach of any other of our covenants or agreements in the indenture or under the New ZYPS (other than a default specified in clause (1) 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 New 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 New 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 New 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 New 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 New ZYPS then outstanding may declare the New ZYPS due and payable at their principal amount and thereupon the trustee may, at its discretion, proceed to protect and enforce the rights of the holders of New 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 New ZYPS then outstanding or a majority in aggregate principal amount of the New 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.

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 New 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 New ZYPS then outstanding through their written consent, or the holders of a majority in aggregate principal amount of the New 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.

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Consolidation, Merger or Assumption

We may, without the consent of the holders of New 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:

• the surviving entity assumes all our obligations under the indenture and the New ZYPS;

• 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

• certain other conditions are met.

Meetings, Modifications and Waiver

The indenture contains provisions for convening meetings of the holders of New ZYPS to consider matters affecting their interests.

The indenture (including the terms and conditions of the New ZYPS) may be modified or amended by us and the trustee, without the consent of the holder of any New ZYPS, for the purposes of, among other things:

• adding to our covenants for the benefit of the holders of New ZYPS;

• surrendering any right or power conferred upon us;

• providing for conversion rights of holders of New ZYPS if any consolidation, merger or sale of all or substantially all of our assets occurs;

• providing for the assumption of our obligations to the holders of New ZYPS in the case of a merger, consolidation, conveyance, transfer or lease;

• reducing the conversion price, provided that the reduction will not adversely affect the interests of the holders of New ZYPS in any material respect;

• 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

• 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 New 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:

• with the written consent of the holders of at least a majority in aggregate principal amount of the New ZYPS at the time outstanding; or

• by the adoption of a resolution at a meeting of holders by at least a majority in aggregate principal amount of the New ZYPS represented at such meeting.

However, no such modification, amendment or waiver may, without the written consent or the affirmative vote of the holder of each New ZYPS so affected:

• change the maturity of the principal of any New ZYPS;

• reduce the principal amount of, or premium on, any New ZYPS;

• change the currency of payment of such New ZYPS;

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• impair the right to institute suit for the enforcement of any payment on or with respect to any New ZYPS;

• modify our obligations to maintain an office or agency in New York;

• except as otherwise permitted or contemplated by provisions concerning corporate reorganizations, adversely affect the repurchase option or the conversion rights of holders of the New ZYPS;

• reduce the percentage in aggregate principal amount of New ZYPS outstanding necessary to modify or amend the indenture or to waive any past default; or

• reduce the percentage in aggregate principal amount of New ZYPS outstanding required for the adoption of a resolution or the quorum required at any meeting of holders of New 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 New 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 New 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, N.A., as trustee under the indenture, has been appointed by us as paying agent, conversion agent, registrar and custodian with regard to the New 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. The trustee can be contacted at the address set forth below regarding transfer or conversion of the New ZYPS:

JPMorgan Chase Bank, N.A.

4 New York Plaza, 15^th Floor

New York, New York 10004

Attention: Institutional Trust Services

Facsimile Number: (212) 623-6167

Form, Denomination and Registration

Denomination and Registration

The New ZYPS will be issued in fully registered form, without coupons, in denominations of $1,000 principal amount and whole multiples of $1,000.

Global New ZYPS, Book-Entry Form

The New ZYPS will be evidenced by one or more global New 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 New 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. An investor may hold its interests in the global New ZYPS directly through DTC if such investor is a participant in DTC, or indirectly through

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organizations which are direct DTC participants if such investor 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. Investors may also beneficially own interests in the global New 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.

So long as Cede & Co., as nominee of DTC, is the registered owner of the global New ZYPS, Cede & Co. for all purposes will be considered the sole holder of the global New ZYPS. Except as provided below, owners of beneficial interests in the global New ZYPS:

• will not be entitled to have certificates registered in their names;

• will not receive or be entitled to receive physical delivery of certificates in definitive form; and

• will not be considered holders of the global New 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 New ZYPS to transfer the beneficial interest in the global New ZYPS to such persons may be limited.

We will wire, through the facilities of the trustee, payments of principal, premium on the global New ZYPS to Cede & Co., the nominee of DTC, as the registered owner of the global New ZYPS. None of CTI, the trustee and any paying agent will have any responsibility or be liable for paying amounts due on the global New ZYPS to owners of beneficial interests in the global New ZYPS.

It is DTC’s current practice, upon receipt of any payment of principal of, and premium, if any, on the global New ZYPS, to credit participants’ accounts on the payment date in amounts proportionate to their respective beneficial interests in the New ZYPS represented by the global New 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 New ZYPS represented by the global New 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 New ZYPS into cash and shares of our common stock, if any, pursuant to the terms of the New 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 New ZYPS represented by global New 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 New ZYPS, including, without limitation, the presentation of New 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 New ZYPS are credited and only for the principal amount of the New 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

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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 New 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 New 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 New ZYPS to be issued in definitive form in exchange for the global New 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 procedures governing their operations, including maintaining, supervising or reviewing the records relating to, or payments made on account of, beneficial ownership interests in global New 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.

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DESCRIPTION OF CAPITAL STOCK

This summary of the material features and rights of our capital stock does not purport to be exhaustive and is qualified in its entirety by reference to applicable New York law and our certificate of incorporation and by-laws. See “Where You Can Find More Information.”

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 October 31, 2004, there were issued and outstanding 197,254,609 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 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.

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MATERIAL U.S. FEDERAL INCOME TAX CONSIDERATIONS

The following is a discussion of certain U.S. federal income tax considerations relating to the exchange offer and to the ownership and disposition of the New ZYPS and common stock into which the New ZYPS are convertible. This discussion is based upon the provisions of the Internal Revenue Code of 1986, as amended (the “Code”), Treasury regulations promulgated thereunder, administrative rulings and judicial decisions, all as of the date hereof. These authorities may be changed, possibly with retroactive effect, so as to result in U.S. federal income tax consequences different from those set forth below. We have not sought any ruling from the Internal Revenue Service (the “IRS”) with respect to the statements made and the conclusions reached in the following discussion, and there can be no assurance that the IRS will agree with such statements and conclusions.

The discussion set forth below is limited to holders who receive the New ZYPS in exchange for Existing ZYPS pursuant to the exchange offer or, with respect to the discussion under “Consequences of the Exchange—Non-Exchanging Holders,” holders who do not exchange their Existing ZYPS pursuant to the exchange offer, and, in each case, who hold the Existing ZYPS, the New ZYPS and the common stock into which the New ZYPS are convertible as capital assets within the meaning of the Code. This discussion also does not address the tax considerations arising under the laws of any foreign, state or local jurisdiction. In addition, this summary does not address tax considerations applicable to a holder’s particular circumstances or to a holder that may be subject to special tax rules, including, without limitation, financial institutions, insurance companies, S corporations, regulated investment companies, tax exempt investors, dealers in securities and currencies, certain former U.S. citizens or residents, persons holding the Existing ZYPS or the New ZYPS as a position in a “straddle,” “hedge,” “conversion transaction,” “constructive sale” or other integrated transaction for tax purposes or persons that are U.S. persons for U.S. federal income tax purposes that have a functional currency other than the U.S. dollar. Further, this discussion does not address the consequences under U.S. alternative minimum tax rules, U.S. federal estate or gift tax laws, the laws of any U.S. state or locality, or any foreign tax laws.

If a holder is an entity treated as a partnership for U.S. federal income tax purposes, the tax treatment of each partner of such partnership generally will depend upon the status of the partner and upon the activities of the partnership. A partner in a partnership that holds Existing ZYPS, New ZYPS or common stock should consult its tax advisors.

EACH HOLDER IS URGED TO CONSULT ITS TAX ADVISORS WITH RESPECT TO THE APPLICATION OF THE U.S. FEDERAL INCOME TAX LAWS TO ITS PARTICULAR SITUATION AS WELL AS ANY TAX CONSEQUENCES OF THE EXCHANGE OFFER AND THE OWNERSHIP AND DISPOSITION OF THE NEW ZYPS AND THE COMMON STOCK ARISING UNDER THE U.S. FEDERAL ESTATE OR GIFT TAX RULES OR UNDER THE LAWS OF ANY STATE, LOCAL, FOREIGN OR OTHER TAXING JURISDICTION OR UNDER ANY APPLICABLE TAX TREATY.

Consequences of the Exchange

Exchanging Holders

Characterization of the exchange. Generally, the modification of a debt instrument, whether effected pursuant to an amendment of the terms of a debt instrument or an actual exchange of an existing debt instrument for a new debt instrument, will be treated as an exchange of the existing debt instrument for a new debt instrument for tax purposes if there is deemed to be a “significant modification” of the terms of the existing debt instrument as determined for U.S. federal income tax purposes. It is not entirely clear whether the exchange of the Existing ZYPS for the New ZYPS will be treated as a significant modification of the terms of the Existing ZYPS for U.S. federal income tax purposes. The exchange will be a significant modification of the terms of the Existing ZYPS if, based on all facts and circumstances, the legal rights or obligations that are altered and the degree to which they are altered are economically significant. We will take the position that the exchange of Existing ZYPS for New ZYPS will not constitute an exchange for U.S. federal income tax purposes because we

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believe that the differences between the terms of the Existing ZYPS and the New ZYPS are not economically significant and, as a result, do not constitute a significant modification of the terms of the Existing ZYPS. By participating in the exchange offer, each holder will be deemed to have agreed pursuant to the indenture governing the New ZYPS to treat the exchange as not constituting a significant modification of the terms of the Existing ZYPS. There can be no assurance, however, that the IRS will agree that the exchange of Existing ZYPS for New ZYPS does not constitute a significant modification of the terms of the Existing ZYPS.

Treatment if exchange does not constitute a significant modification. If, consistent with our position, the exchange of Existing ZYPS for New ZYPS does not constitute a significant modification of the terms of the Existing ZYPS, there will be no U.S. federal income tax consequences to a holder who exchanges Existing ZYPS for New ZYPS, and each holder will have the same tax basis and holding period in the New ZYPS as such holder had in the Existing ZYPS immediately prior to the exchange.

Treatment if exchange constitutes a significant modification. If, contrary to our position, the exchange of the Existing ZYPS for the New ZYPS were treated as a significant modification of the terms of the Existing ZYPS, the results for holders are not entirely clear. The exchange might be treated as a non-taxable recapitalization for U.S. federal income tax purposes. Whether the exchange would constitute a recapitalization would depend, in part, on whether the Existing ZYPS and the New ZYPS were treated as “securities” for U.S. federal income tax purposes. The rules for determining whether debt instruments such as the Existing ZYPS and the New ZYPS are securities are unclear. The term “security” is not defined in the Code or Treasury regulations and has not been clearly defined by judicial decisions. Although a debt instrument with a term of more than ten years is generally considered to be a security, no authority clearly addresses the impact of put features of the type included in the Existing ZYPS and the New ZYPS. Nevertheless, we believe that the Existing ZYPS and the New ZYPS constitute securities for U.S. federal income tax purposes. Accordingly, we would take the position that the exchange offer would constitute a recapitalization, in which case holders would not recognize any gain or loss as a result of the exchange, and would have the same tax basis and holding period in the New ZYPS as such holder had in the Existing ZYPS prior to the exchange.

If either the Existing ZYPS or the New ZYPS were not treated as securities, the exchange would be a taxable transaction for U.S. federal income tax purposes. In such case, each holder would recognize gain or loss, treating the issue price of the New ZYPS (generally the fair market value of the New ZYPS if they are considered to be traded on an established market) as the amount realized in the exchange. Any gain or loss generally would be capital gain or loss, and would be long-term if the holder held the Existing ZYPS for more than one year at the time of the exchange. The holding period in the New ZYPS would begin the day after the exchange, and each holder’s tax basis in the New ZYPS generally would equal the issue price of the New ZYPS (as described above).

It is possible that the New ZYPS would constitute equity rather than indebtedness if the exchange constitutes a significant modification. In such case, the treatment of the exchange would not differ materially from that described above.

Holders are urged to consult their tax advisors with respect to the U.S. federal income tax consequences if the exchange of the Existing ZYPS for the New ZYPS is treated as a “significant modification” of the terms of the Existing ZYPS.

Non-Exchanging Holders

Holders of the Existing ZYPS who do not exchange Existing ZYPS for New ZYPS in the exchange offer will not recognize any gain or loss for U.S. federal income tax purposes as a result of the exchange offer. Such holders will continue to have the same tax basis and holding period in their Existing ZYPS as such holders had immediately prior to the exchange offer.

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U.S. Holders

The following is a discussion of the U.S. federal income tax consequences that will apply to a U.S. holder of New ZYPS or common stock into which the New ZYPS are convertible. A U.S. holder is a beneficial owner that is (i) a citizen or resident of the United States, (ii) a corporation (including any entity treated as a corporation for U.S. federal income tax purposes) created or organized in or under the laws of the United States or any state thereof or the District of Columbia, (iii) an estate the income of which is subject to U.S. federal income taxation regardless of its source, or (iv) a trust if (1) 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, or (2) it has a valid election in effect under applicable Treasury regulations to be treated as a U.S. person.

Conversion of the New ZYPS

The tax treatment of a U.S. holder’s conversion of a New ZYPS into our common stock and cash is uncertain. U.S. holders should consult their tax advisors to determine the correct treatment of such conversion. It is possible that the conversion may be treated as a partially taxable exchange as briefly discussed below.

Possible treatment as part conversion and part redemption. The conversion of a New ZYPS into our common stock and cash may be treated as in part a conversion into stock and in part a payment in redemption of a portion of the New ZYPS. In that event, a U.S. holder would not recognize any income, gain or loss with respect to the portion of the New ZYPS considered to be converted into stock, except with respect to any cash received in lieu of a fractional share of stock. If a U.S. holder receives cash in lieu of a fractional share of stock, such holder would be treated as if it received the fractional share and then redeemed it for cash. Accordingly, a holder generally will recognize capital gain or loss with respect to the receipt of cash in lieu of a fractional share measured by the difference between the cash received for the fractional share and the holder’s adjusted tax basis in the fractional share. A U.S. holder’s adjusted tax basis in the stock received upon conversion generally would be equal to the portion of its adjusted tax basis in the New ZYPS allocable to the portion of the New ZYPS deemed converted (less the basis allocable to any fractional share for which the holder receives cash). A U.S. holder’s holding period for such common stock generally would include the period during which the holder held the New ZYPS.

With respect to the part of the conversion that would be treated under this characterization as a payment in redemption of the remaining portion of the New ZYPS, a U.S. holder generally would recognize gain or loss equal to the difference between the amount of cash received and the holder’s adjusted tax basis allocable to such portion of the New ZYPS. Gain or loss recognized will be long-term capital gain or loss if the U.S. holder has held the New ZYPS for more than one year. In the case of individuals, long-term capital gains are generally eligible for a reduced rate of taxation. The deductibility of capital losses is subject to certain limitations.

Possible treatment as a recapitalization. The conversion of a New ZYPS into our common stock and cash may instead be treated in its entirety as a recapitalization for U.S. federal income tax purposes, in which case a U.S. holder would be required to recognize gain on the conversion but would not be allowed to recognize any loss. Accordingly, such tax treatment may be less favorable to a U.S. holder than if the conversion were treated as part conversion and part redemption, as described above. If the conversion constitutes a recapitalization, a U.S. holder generally: (a) would recognize gain (but not loss) in an amount equal to the lesser of

(i) the excess (if any) of (A) the amount of cash (not including cash received in lieu of fractional shares) and the fair market value of common stock received (treating fractional shares as received for this purpose) in the exchange over (B) the holder’s adjusted tax basis in the New ZYPS; and

(ii) the amount of cash received upon conversion (other than cash received in lieu of fractional shares);

(b) with respect to cash received in lieu of a fractional share of common stock, would be treated as if it received the fractional share and then redeemed it for cash (and would recognize capital gain or loss in an amount equal to

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the difference between (i) the amount of cash received in lieu of the fractional share and (ii) the portion of the U.S. holder’s adjusted tax basis in the New ZYPS that is allocated to the fractional share); (c) would have an aggregate tax basis in the common stock received in the conversion equal to the aggregate tax basis of the New ZYPS converted (less any basis allocable to any fractional shares deemed received in the conversion), decreased by the aggregate amount of cash (other than cash in lieu of fractional shares) received upon conversion and increased by the aggregate amount of gain (if any) recognized upon conversion (other than gain realized as a result of cash received in lieu of fractional shares); and (d) would have a holding period for such common stock received that includes the period during which the U.S. holder held the New ZYPS. Gain or loss recognized will be long-term capital gain or loss if the U.S. holder has held the New ZYPS for more than one year. In the case of individuals, long-term capital gains are generally eligible for a reduced rate of taxation. The deductibility of capital losses is subject to certain limitations.

Holders are urged to consult their tax advisors with respect to the U.S. federal income tax consequences resulting from the exchange of New ZYPS into a combination of cash and common stock.

Disposition of the New ZYPS

A U.S. holder will generally recognize gain or loss upon the sale, redemption or other taxable disposition of the New ZYPS in an amount equal to the difference between the U.S. holder’s adjusted tax basis in the New ZYPS and the amount realized from such disposition. A U.S. holder’s adjusted tax basis in New ZYPS will generally be equal to the amount such holder paid for the exchanged Existing ZYPS, increased by the amount of any market discount previously included in income by such U.S. holder and reduced by any amortizable bond premium allowable as a deduction with respect to the Existing ZYPS. Any gain or loss recognized upon a disposition generally will be capital gain or loss, and would be long-term capital gain or loss if the New ZYPS were held for more than one year at the time of disposition. The deductibility of capital losses is subject to certain limitations.

Adjustment of Conversion Price

The conversion price of the New ZYPS is subject to adjustment in certain circumstances. Under Section 305 of the Code and the Treasury regulations promulgated thereunder, adjustments to the conversion price of the New ZYPS may result in a taxable constructive distribution to the U.S. holders of New ZYPS if, and to the extent that, certain 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 U.S. holder of New 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 U.S. holder’s tax basis in the New ZYPS to the extent thereof and thereafter as gain from the sale or exchange of the New ZYPS. Generally, a U.S. holder’s tax basis in New 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 New 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.

Distributions on Common Stock

Distributions paid on our common stock, other than certain pro rata distributions of common shares, will be treated as a dividend to the extent paid out of current or accumulated earnings and profits (as determined under U.S. federal income tax principles) and will be includible in income by the U.S. holder and taxable as ordinary income when received. If a distribution exceeds our current and accumulated earnings and profits, the excess will be first treated as a tax-free return of the U.S. holder’s investment, up to the U.S. holder’s tax basis in the common stock. Any remaining excess will be treated as a capital gain. Dividends received by a corporate U.S.

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holder may be eligible for a dividends received deduction, and under current rules, dividends received by a non-corporate U.S. holder generally will be subject to U.S. federal income tax at rates generally applicable to long-term capital gains, provided certain holding period requirements are satisfied.

Sale or Other Disposition of Common Stock

Gain or loss realized by a U.S. holder on the sale or other disposition of our common stock will be capital gain or loss for U.S. federal income tax purposes, and will be long-term capital gain or loss if the U.S. holder held the common stock for more than one year. The amount of the U.S. holder’s gain or loss will be equal to the difference between the U.S. holder’s tax basis in the common stock disposed of and the amount realized on the disposition.

Non-U.S. Holders

The following is a discussion of the U.S. federal income tax consequences that will apply to a non-U.S. holder of New ZYPS or common stock into which the New ZYPS are convertible. A non-U.S. holder is a beneficial owner that is neither a U.S. holder nor any entity treated as a partnership for U.S. federal income tax purposes.

Payments on the New ZYPS

All payments on the New ZYPS made to a non-U.S. holder, including a payment made pursuant to a conversion, exchange, redemption or retirement (whether in cash or a combination of cash and our common stock) and any gain realized on a sale of the New ZYPS, will be exempt from U.S. federal income and withholding tax, provided that:

• such payments are not effectively connected with the conduct by such non-U.S. holder of a trade or business in the United States (or, if certain income tax treaties apply, are not attributable to a U.S. permanent establishment);

• in the case of a non-U.S. holder who is a nonresident alien individual, the individual is not present in the United States for 183 or more days in the taxable year of the sale or other disposition and certain other conditions are met; and

• in the case of gain realized on the sale, conversion or other disposition of the New ZYPS we are not, and have not been within the shorter of the five-year period preceding such disposition and the period the non-U.S. holder held the New ZYPS, a U.S. real property holding corporation. We believe that we are not, and do not anticipate becoming, a U.S. real property holding corporation for U.S. federal income tax purposes.

However, if a non-U.S. holder were deemed to have received a constructive dividend (see “—U.S. Holders—Adjustment of Conversion Price” above), the non-U.S. holder generally will be subject to U.S. withholding tax at a 30% rate, subject to reduction by an applicable treaty, on the taxable amount of the dividend. A non-U.S. holder who is subject to withholding tax under such circumstances should consult its own tax advisors as to whether it can obtain a refund for all or a portion of the withholding tax.

If a non-U.S. holder of New ZYPS is engaged in a trade or business in the United States, and if payments on the New ZYPS are effectively connected with the conduct of this trade or business (and, if certain income tax treaties apply, are attributable to a U.S. permanent establishment), the non-U.S. holder, although exempt from U.S. withholding tax, will generally be taxed in the same manner as a U.S. holder (see “—U.S. Holders” above), except that the non-U.S. holder will be required to provide a properly executed IRS Form W-8ECI (or suitable successor form) in order to claim an exemption from withholding tax. These non-U.S. holders should consult their own tax advisors with respect to other tax consequences of the ownership of the New ZYPS, including the possible imposition of a 30% branch profits tax.

Distributions on Common Stock

Dividends paid to a non-U.S. holder of our common stock generally will be subject to U.S. withholding tax at a 30% rate, subject to reduction under an applicable treaty. In order to obtain a reduced rate of withholding, a non-U.S. holder will be required to provide a properly executed IRS Form W-8BEN (or suitable successor form)

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certifying its entitlement to benefits under a treaty. A non-U.S. holder who is subject to withholding tax under such circumstances should consult its own tax advisors as to whether it can obtain a refund for all or a portion of the withholding tax.

If a non-U.S. holder of our common stock is engaged in a trade or business in the United States, and if the dividends are effectively connected with the conduct of this trade or business (and, if certain income tax treaties apply, are attributable to a U.S. permanent establishment), the non-U.S. holder, although exempt from U.S. withholding tax, will generally be taxed in the same manner as a U.S. holder (see “—U.S. Holders” above), except that the non-U.S. holder will be required to provide a properly executed IRS Form W-8ECI (or suitable successor form) in order to claim an exemption from U.S. withholding tax. These non-U.S. holders should consult their own tax advisors with respect to other U.S. federal income tax consequences of the ownership of our common stock, including the possible imposition of a 30% branch profits tax.

Sale or Other Disposition of Common Stock

A non-U.S. holder generally will not be subject to U.S. federal income and withholding tax on gain realized on a sale or other disposition of our common stock unless:

• the gain is effectively connected with the conduct by such non-U.S. holder of a trade or business in the United States (and, if certain income tax treaties apply, is attributable to a U.S. permanent establishment);

• in the case of a non-U.S. holder who is a nonresident alien individual, the individual is present in the United States for 183 or more days in the taxable year of the sale or other disposition and certain other conditions are met; or

• we are or have been a U.S. real property holding corporation at any time within the shorter of the five-year period preceding such sale or other disposition and the period the non-U.S. holder held the common stock. We believe that we are not, and do not anticipate becoming, a U.S. real property holding corporation for U.S. federal income tax purposes.

If a non-U.S. holder of our common stock is engaged in a trade or business in the United States, and if the gain on the common stock is effectively connected with the conduct of this trade or business (and, if certain income tax treaties apply, is attributable to a U.S. permanent establishment), the non-U.S. holder will generally be taxed in the same manner as a U.S. holder (see “—U.S. Holders” above). These non-U.S. holders should consult their own tax advisors with respect to other tax consequences of the disposition of the common stock, including the possible imposition of a 30% branch profits tax.

Backup Withholding and Information Reporting

Information returns may be filed with the IRS in connection with payments on the New ZYPS, the common stock and the proceeds from a sale or other disposition of the New ZYPS or the common stock. A U.S. holder may be subject to U.S. backup withholding tax on these payments if it fails to provide its taxpayer identification number to the paying agent and comply with certification procedures or otherwise establish an exemption from backup withholding. A non-U.S. holder may be subject to U.S. backup withholding tax on these payments unless the non-U.S. holder complies with certification procedures to establish that it is not a U.S. person. The amount of any backup withholding from a payment will be allowed as a credit against the holder’s U.S. federal income tax liability and may entitle the holder to a refund, provided that the required information is timely furnished to the IRS.

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 the ownership and disposition of the New ZYPS and our common stock, including the applicability and effect of any state, local or foreign tax laws, and of any proposed changes in applicable laws.

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LEGAL MATTERS

The validity of the ZYPS and the shares of common stock issuable upon conversion of the ZYPS will be passed upon for us by Shearman & Sterling LLP, New York, New York. Certain legal matters will be passed upon for the dealer manager by Cleary, Gottlieb, Steen & Hamilton.

EXPERTS

The consolidated financial statements of CTI and subsidiaries as of January 31, 2004 and 2003, and for each of the three years in the period ended January 31, 2004, incorporated in this prospectus by reference from CTI’s Annual Report on Form 10-K for the year ended January 31, 2004, have been audited by Deloitte & Touche LLP, an independent registered public accounting firm, as stated in their report which is incorporated herein by reference, and have been so incorporated in reliance upon the report of such firm given upon their authority as experts in accounting and auditing.

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 SEC. 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 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:

• Annual Report on Form 10-K for the year ended January 31, 2004;

• Quarterly Reports on Form 10-Q for the quarters ended April 30, 2004, July 31, 2004 and October 31, 2004; and

• Description of our common stock contained in our registration statement on Form 8-A filed with the Commission on March 17, 1987, as amended.

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.

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The exchange agent for the exchange offer is:

JPMORGAN CHASE BANK, N.A.

By Hand: JPMorgan Chase Bank, N.A. Institutional Trust Services window 4 New York Plaza, 1st Floor New York, New York 10004	By Mail: JPMorgan Chase Bank, N.A. Institutional Trust Services P.O. Box 2320 Dallas, Texas 75221-2320 Attention: Frank Ivins
By Overnight Mail or Courier: JPMorgan Chase Bank, N.A. Institutional Trust Services 2001 Bryan Street, 9th Floor Dallas, Texas 75201 Attention: Frank Ivins	By Facsimile: (214) 468-6494 (For Eligible Institutions Only) Confirm by Telephone: (214) 468-6464

Questions or requests for assistance or additional copies of our prospectus, the Letter of Transmittal and the Notice of Guaranteed Delivery may be directed to the Information Agent or the dealer manager at their respective addresses and telephone numbers set forth below.

The information agent for the exchange offer is:

D.F. KING & CO., INC.

48 Wall Street, 22^nd Floor

New York, NY 10005

Banks and Brokers call collect: (212) 269-5550

All others call toll-free: (800) 758-5378

The dealer manager for the exchange offer is:

LEHMAN BROTHERS

745 Seventh Avenue, 5^th Floor

New York, New York 10019

Attention: Convertible Origination Group

(800) 438-3242 (U.S. toll-free)

(212) 526-7343 (collect)

PART II

INFORMATION NOT REQUIRED IN THE PROSPECTUS

Item 20. Indemnification Of Officers And Directors.

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 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 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.

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Item 21. Exhibits

Exhibit No.	Description
1.1**	—Form of Dealer Manager Agreement.
3.1	—Certificate of Incorporation. (Incorporated by reference to the Registrant’s Annual Report on Form 10-K under the Securities Exchange Act of 1934 for the year ended December 31, 1987.)
3.2	—Certificate of Amendment of Certificate of Incorporation effective February 26, 1993. (Incorporated by reference to the Registrant’s Annual Report on Form 10-K under the Securities Exchange Act of 1934 for the year ended December 31, 1992.)
3.3	—Certificate of Amendment of Certificate of Incorporation effective January 12, 1995. (Incorporated by reference to the Registrant’s Annual Report on Form 10-K under the Securities Exchange Act of 1934 for the year ended December 31, 1994.)
3.4	—Certificate of Amendment of Certificate of Incorporation dated October 18, 1999. (Incorporated by reference to the Registrant’s Annual Report on Form 10-K under the Securities Exchange Act of 1934 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 under the Securities Exchange Act of 1934 for the year ended January 31, 2001.)
3.6	—By-Laws, as amended. (Incorporated by reference to the Registrant’s Annual Report on Form 10-K under the Securities Exchange Act of 1934 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 under the Securities Exchange Act of 1934 for the year ended December 31, 1992.)
4.2	—Indenture dated as of November 22, 2000 from Comverse Technology, Inc. to The Chase Manhattan Bank, Trustee. (Incorporated by reference to the Registrant’s Registration Statement on Form S-3 under the Securities Act of 1933, Registration No. 333-55526.)
4.3	—Specimen 1 1/2% Convertible Senior Debenture Due 2005. (Incorporated by reference to the Registrant’s Registration Statement on Form S-3 under the Securities Act of 1933, Registration No. 333-55526.)
4.4	—Indenture dated as of May 7, 2003 from Comverse Technology, Inc., to JPMorgan Chase Bank, Trustee. (Incorporated by reference to the Registrant’s Registration Statement on Form S-3 under the Securities Act of 1933, Registration No. 333-106391.)
4.5	—Specimen Zero Yield Puttable Securities Due May 15, 2023. (Incorporated by reference to the Registrant’s Registration Statement on Form S-3 under the Securities Act of 1933, Registration No. 333-106391.)
4.6**	—Form of Indenture (including form of New ZYPS) from Comverse Technology, Inc. to JPMorgan Chase Bank, N.A., Trustee, relating to the New ZYPS.
5.1**	—Opinion of Shearman & Sterling LLP regarding the legality of the securities to be offered hereby.
8.1**	—Opinion of Shearman & Sterling LLP regarding tax matters.
12.1**	—Statement of Computation of Ratios of Earnings to Fixed Charges.
21.1	—Subsidiaries of Comverse Technology, Inc. (incorporated herein by reference to Exhibit 21.1 to Comverse Technology, Inc.’s Annual Report on Form 10-K for the year ended January 31, 2004, Reg. No. 000-15502.)
23.1**	—Consent of Deloitte & Touche LLP.
23.2**	—Consent of Shearman & Sterling LLP (included in Exhibits 5.1 and 8.1).
24.1*	—Powers of Attorney (included on the signature pages of the Registrant’s Registration Statement on Form S-4 under the Securities Act of 1933, Registration No. 333-120870).

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Exhibit No.		Description
25.1	*	—Statement of Eligibility and Qualification of Trustee under the Trust Indenture Act of 1939, as amended, on Form T-1.
99.1	**	—Form of Letter of Transmittal.
99.2	**	—Form of Notice of Guaranteed Delivery.
99.3	**	—Form of Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees.
99.4	**	—Form of Letter to Clients.
99.5	**	—Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9.

* Filed previously.

** Filed herewith.

Item 22. Undertakings

(a) 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 the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

(b) The undersigned registrant hereby undertakes as follows: that prior to any public reoffering of the securities registered hereunder through use of a prospectus which is a part of this registration statement, by any person or party who is deemed to be an underwriter within the meaning of Rule 145(c), the issuer undertakes that such reoffering prospectus will contain the information called for by the applicable registration form with respect to reofferings by persons who may be deemed underwriters, in addition to the information called for by the other Items of the applicable form.

(c) The undersigned registrant undertakes that every prospectus (i) that is filed pursuant to the paragraph immediately preceding, or (ii) that purports to meet the requirements of section 10(a)(3) of the Securities Act of 1933 and is used in connection with an offering of securities subject to Rule 415, will be filed as a part of an amendment to the registration statement and will not be used until such amendment is effective, and that for purposes 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 therein and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

The undersigned registrant hereby undertakes to respond to requests for information that is incorporated by reference into the prospectus pursuant to Items 4, 10(b), 11 or 13 of this Form, within one business day of receipt of such request, and to send the incorporated documents by first class mail or other equally prompt means. This includes information contained in documents filed subsequent to the effective date of the registration statement through the date of responding to the request.

The undersigned registrant hereby undertakes to supply by means of a post-effective amendment all information concerning a transaction, and the company being acquired involved therein, that was not the subject of and included in the registration statement when it became effective.

Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers or controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been informed that in the opinion of the Securities and Exchange Commission, such

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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 whether such indemnification by it is against public policy as expressed in the Securities Act of 1933 and will be governed by the final adjudication of such issue.

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SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized in the City of Woodbury, State of New York, on the 21st day of December, 2004.

COMVERSE TECHNOLOGY, INC.
By:	/s/    KOBI ALEXANDER
	Kobi Alexander
	Chairman and Chief Executive Officer

Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities indicated on the 21st day of December, 2004.

Signature	Title
* Kobi Alexander	Chairman of the Board of Directors and Chief Executive Officer
/s/    DAVID KREINBERG David Kreinberg	Executive Vice President and Chief Financial Officer
* Raz Alon	Director
* Itsik Danziger	Director
* John H. Friedman	Director
* Ron Hiram	Director
* Sam Oolie	Director
* William F. Sorin	Director
*By: /S/    DAVID KREINBERG             David Kreinberg	Attorney-in-Fact

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EXHIBIT INDEX

Exhibit No.	Description
1.1**	—Form of Dealer Manager Agreement.
3.1	—Certificate of Incorporation. (Incorporated by reference to the Registrant’s Annual Report on Form 10-K under the Securities Exchange Act of 1934 for the year ended December 31, 1987.)
3.2	—Certificate of Amendment of Certificate of Incorporation effective February 26, 1993. (Incorporated by reference to the Registrant’s Annual Report on Form 10-K under the Securities Exchange Act of 1934 for the year ended December 31, 1992.)
3.3	—Certificate of Amendment of Certificate of Incorporation effective January 12, 1995. (Incorporated by reference to the Registrant’s Annual Report on Form 10-K under the Securities Exchange Act of 1934 for the year ended December 31, 1994.)
3.4	—Certificate of Amendment of Certificate of Incorporation dated October 18, 1999. (Incorporated by reference to the Registrant’s Annual Report on Form 10-K under the Securities Exchange Act of 1934 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 under the Securities Exchange Act of 1934 for the year ended January 31, 2001.)
3.6	—By-Laws, as amended. (Incorporated by reference to the Registrant’s Annual Report on Form 10-K under the Securities Exchange Act of 1934 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 under the Securities Exchange Act of 1934 for the year ended December 31, 1992.)
4.2	—Indenture dated as of November 22, 2000 from Comverse Technology, Inc. to The Chase Manhattan Bank, Trustee. (Incorporated by reference to the Registrant’s Registration Statement on Form S-3 under the Securities Act of 1933, Registration No. 333-55526.)
4.3	—Specimen 1 1/2% Convertible Senior Debenture Due 2005. (Incorporated by reference to the Registrant’s Registration Statement on Form S-3 under the Securities Act of 1933, Registration No. 333-55526.)
4.4	—Indenture dated as of May 7, 2003 from Comverse Technology, Inc., to JPMorgan Chase Bank, Trustee. (Incorporated by reference to the Registrant’s Registration Statement on Form S-3 under the Securities Act of 1933, Registration No. 333-106391.)
4.5	—Specimen Zero Yield Puttable Securities Due May 15, 2023. (Incorporated by reference to the Registrant’s Registration Statement on Form S-3 under the Securities Act of 1933, Registration No. 333-106391.)
4.6**	—Form of Indenture (including form of New ZYPS) from Comverse Technology, Inc. to JPMorgan Chase Bank, Trustee, relating to the New ZYPS.
5.1**	—Opinion of Shearman & Sterling LLP regarding the legality of the securities to be offered hereby.
8.1**	—Opinion of Shearman & Sterling LLP regarding tax matters.
12.1**	—Statement of Computation of Ratios of Earnings to Fixed Charges.
21.1	—Subsidiaries of Comverse Technology, Inc. (incorporated herein by reference to Exhibit 21.1 to Comverse Technology, Inc.’s Annual Report on Form 10-K for the year ended January 31, 2004, Reg. No. 000-15502.)
23.1**	—Consent of Deloitte & Touche LLP.
23.2**	—Consent of Shearman & Sterling LLP (included in Exhibits 5.1 and 8.1).
24.1*	—Powers of Attorney (included on the signature pages of the Registrant’s Registration Statement on Form S-4 under the Securities Act of 1933, Registration No. 333-120870).
25.1*	—Statement of Eligibility and Qualification of Trustee under the Trust Indenture Act of 1939, as amended, on Form T-1.

Exhibit No.	Description
99.1**	—Form of Letter of Transmittal.
99.2**	—Form of Notice of Guaranteed Delivery.
99.3**	—Form of Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees.
99.4**	—Form of Letter to Clients.
99.5**	—Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9.

* Filed previously.

** Filed herewith.

EX-1.1

Exhibit 1.1

DEALER-MANAGER AGREEMENT

COMVERSE TECHNOLOGY, INC.

December [    ], 2004

LEHMAN BROTHERS INC.

745 Seventh Avenue, 3^rd Floor

New York, New York 10019

Ladies and Gentlemen:

1. The Exchange Offer. Comverse Technology, Inc., a New York corporation (the “Company”), intends to offer to exchange (together with any amendments and extensions thereof, the “Exchange Offer”) its new Zero Yield Puttable Securities due 2023 (the “New Securities”) for any and all of its outstanding Zero Yield Puttable Securities due 2023 (the “Old Securities”), on the terms and subject to the conditions set forth in the Prospectus and related Letter of Transmittal (each as defined below) attached hereto as Exhibits A and B, respectively.

The New Securities will be issued pursuant to an indenture (the “New Indenture”) to be entered into by the Company and JP Morgan Chase Bank, N.A., as Trustee (the “New Trustee”). The New Securities will be convertible into cash and duly and validly issued, fully paid and nonassessable shares of common stock, par value $0.10 per share (the “Common Stock”), of the Company (such shares, the “Conversion Shares”) on the terms, and subject to the conditions, set forth in the New Indenture.

The Prospectus, the Letter of Transmittal, the Registration Statement, the Schedule TO (each as defined below), all statements and other documents filed or to be filed with any federal, state or local governmental or regulatory agency or authority, including any exhibits thereto (including the New Indenture), and such other documents (including, but not limited to, any advertisements, press releases or summaries relating to the Exchange Offer and any forms of letters to brokers, dealers, banks, trust companies and other nominees relating to the Exchange Offer), in each case in the form first authorized for use by the Company in connection with the Exchange Offer and approved by the Dealer-Manager, and thereafter in each case together with any amendments and supplements thereto made in accordance with the terms of this agreement (this “Agreement”), are collectively referred to as the “Exchange Offer Materials.”

2. Appointment as Dealer-Manager. The Company hereby appoints Lehman Brothers Inc. (“Lehman Brothers”) as sole dealer-manager in connection with the Exchange Offer (in such capacity, the “Dealer-Manager”), and the Company hereby authorizes Lehman Brothers to act as such in connection with the Exchange Offer. On the basis of the

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representations and warranties and agreements of the Company contained in this Agreement and subject to and in accordance with the terms and conditions hereof, Lehman Brothers agrees in accordance with its customary practice, and in accordance with all applicable United States laws and regulations, to use its commercially reasonable efforts to assist in the solicitation of tenders of the Old Securities pursuant to the Exchange Offer and to communicate with brokers, dealers, banks, trust companies, nominees and other persons with respect to the Exchange Offer.

3. No Liability for Acts of Brokers, Dealers, Banks, Trust Companies, Nominees and Others. In connection with the Exchange Offer, the Dealer-Manager shall not be subject to any loss, claim, damage, liability or expense owed to the Company or any of the Company’s affiliates or subsidiaries for any act or omission on the part of any broker or dealer in securities (other than itself), bank, trust company, nominee or any other person, and the Dealer-Manager shall not be liable for its own acts or omissions in performing its obligations as Dealer-Manager except for any losses, claims, damages, liabilities and expenses determined in a final judgment by a court of competent jurisdiction to have resulted from any such acts or omissions undertaken or omitted to be taken by it (including its employees and authorized agents) through its gross negligence or willful misconduct. In soliciting or obtaining tenders of Old Securities, the Company hereby acknowledges that Lehman Brothers, as Dealer-Manager, is and will be acting as an independent contractor and shall not be deemed to be acting as the agent of the Company or as the agent of any broker, dealer, bank, trust company, nominee or other person and no broker, dealer, bank, trust company, nominee or other person shall be deemed to be acting as the agent of the Dealer-Manager, the Company or any of the Company’s affiliates or subsidiaries.

4. The Exchange Offer Materials; Commencement; Withdrawal.

(a) The Company has prepared and filed with the Securities and Exchange Commission (the “Commission”), under the Securities Act of 1933, as amended (the “Securities Act”), and the applicable rules and regulations of the Commission under the Securities Act, the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the applicable rules and regulations of the Commission under the Exchange Act, a registration statement on Form S-4 (File No. 333-120870), including a Prospectus, covering the registration of the exchange of New Securities for Old Securities in the Exchange Offer. The term “Registration Statement” as used in this Agreement shall mean such registration statement, including financial statements, schedules and exhibits, and the documents incorporated by reference therein, in the form in which it became effective and, in the event of any further amendment or supplement thereto made in accordance with the terms of this Agreement, shall also mean (from and after the effectiveness of such amendment or supplement) such registration statement as so amended or supplemented. The term “Prospectus” as used in this Agreement shall mean the prospectus included in the Registration Statement and, in the event of any further amendment or supplement thereto made in accordance with the terms of this Agreement, shall also mean (from and after the time it is first provided by the Company for use in connection with the Exchange Offer) such prospectus as so amended or supplemented. Any reference herein to the Prospectus shall be deemed to refer to and include the documents incorporated by reference therein pursuant to Item 13 of Form S-4 under the Securities Act, as of the date of the Prospectus, and any reference to any amendment or supplement to the Prospectus shall be deemed to refer to and include any

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documents filed after the date of the Prospectus under the Exchange Act and incorporated by reference in the Prospectus. The term “Letter of Transmittal” as used in this Agreement shall mean the letter of transmittal to be used by holders of the Old Securities (the “Holders”) tendering outstanding Old Securities pursuant to the Exchange Offer, in the form included in the Registration Statement.

(b) The Company has filed with the Commission under the Exchange Act and the rules and regulations promulgated thereunder including Regulation M-A of the Commission a Tender Offer Statement on Schedule TO with respect to the Exchange Offer (including the exhibits thereto and any documents incorporated by reference therein and as such Tender Offer Statement may be amended or supplemented from time to time, the “Schedule TO”), a copy of which Schedule TO (including the documents required by Item 12 thereof to be filed as exhibits thereto) in the form in which it was filed, will be furnished to the Dealer-Manager as promptly as practicable upon the filing thereof.

(c) The Exchange Offer Materials have been or will be prepared and approved by, and are the sole responsibility of, the Company, except for information provided by the Dealer-Manager in writing expressly for use in the Exchange Offer Materials, it being understood that the only information so provided by the Dealer-Manager expressly for use in the Exchange Offer Materials is the name, address and telephone numbers of Lehman Brothers, as Dealer-Manager. The Company hereby represents and warrants that it will commence the Exchange Offer as soon as practicable by publicly announcing its commencement and by distributing, mailing, or causing to be mailed on its behalf, copies of, where necessary, the Exchange Offer Materials excluding the documents incorporated by reference in the Exchange Offer Materials (the “Incorporated Documents”), to the Holders for delivery to the beneficial Holders (the date of such announcement and of the commencement of such distribution, the “Commencement Date”).

(d) The Company hereby (i) agrees to furnish the Dealer-Manager with as many copies as it may reasonably request of the final forms of all Exchange Offer Materials filed with the Commission, mailed to Holders, or provided to any other governmental authority or agency and, upon its request, any other documents incorporated therein or otherwise filed or to be filed with any federal, state or local governmental or regulatory agency or authority, any stock exchange or any court and (ii) authorizes the Dealer-Manager to use copies of such Exchange Offer Materials in connection with the Exchange Offer. The Dealer-Manager hereby agrees that it will not disseminate any written materials in connection with the solicitation of tenders of Old Securities pursuant to the Exchange Offer other than such Exchange Offer Materials or any other written materials authorized by the Company.

(e) The Company hereby represents and agrees that no solicitation material in addition to the Exchange Offer Materials, which additional materials shall be in the form which has been approved by the Dealer-Manager, will be used in connection with the Exchange Offer or filed with any federal, state or local governmental or regulatory agency or authority, including the Commission, by or on behalf of the Company without the Dealer-Manager’s prior approval, which approval will not be unreasonably withheld. In the event that (i) the Company uses or permits the use of any solicitation material not so approved by the Dealer-Manager in connection with the Exchange Offer or files any such solicitation material with any such federal, state or

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local governmental or regulatory agency or authority without the Dealer-Manager’s prior approval, (ii) the Company withdraws, terminates, rescinds or cancels the Exchange Offer, (iii) at any time the Dealer-Manager shall determine that any condition set forth in Section 9 shall not be satisfied, (iv) the Registration Statement containing all of the required information, including pricing information, and a prospectus that meets the requirements of Section 10(a) of the Securities Act (including a letter of transmittal), shall not have become effective on or prior to the expiration date of the Exchange Offer (the “Expiration Date”) or (v) at any time during the Exchange Offer, a stop order suspending the effectiveness of the Registration Statement shall have been issued or a proceeding for that purpose shall have been instituted or shall be pending or threatened by the Commission, or a request for additional information on the part of the Commission shall not have been satisfied to the reasonable satisfaction of the Dealer-Manager or there shall have been issued, at any time during the Exchange Offer, any temporary restraining order or injunction restraining or enjoining Lehman Brothers from acting in its capacity as Dealer-Manager with respect to the Exchange Offer, then the Dealer-Manager (A) shall have a reasonable period of time after discovering or being informed of such event to elect whether to continue to act as Dealer-Manager and shall be entitled to withdraw as Dealer-Manager in connection with the Exchange Offer without any liability or penalty to it or any other person defined in Section 11 as an “Indemnified Person,” (B) shall be entitled promptly to receive the payment of all fees and expenses payable to it under this Agreement which have accrued to the date of such withdrawal or which otherwise thereafter become payable and (C) shall continue to be entitled to the indemnification and contribution provisions contained in Section 11.

5. Compensation. The Company hereby agrees to pay a fee of $300,000.00 within three business days after the Expiration Date to the Dealer-Manager as compensation for its services as Dealer-Manager, which sum shall include any and all expenses incurred by the Dealer-Manager.

6. Reimbursement of Expenses and Payment of Other Costs. The Company hereby agrees (a) to pay all fees and expenses of the Exchange Agent and Information Agent (each as defined below) in connection with the Exchange Offer, (b) to reimburse brokers, dealers, banks, trust companies and nominees for their customary mailing and handling expenses, if any, incurred in forwarding Exchange Offer Materials to their customers and (c) to pay any reasonable advertising and public relations charges pertaining to the Exchange Offer and the related transactions.

7. The Exchange Agent and Information Agent.

(a) The Company (i) has arranged for JP Morgan Chase Bank, N.A. to serve as exchange agent in connection with the Exchange Offer (the “Exchange Agent”), (ii) will arrange for the Exchange Agent to advise the Dealer-Manager daily as to such matters as the Dealer-Manager may reasonably request, including the aggregate principal amount of Old Securities that have been tendered pursuant to the Exchange Offer and (iii) will arrange for the Exchange Agent to be responsible for the payment of the consideration offered by the Company to the Holders in connection with the Exchange Offer pursuant and subject to the Prospectus.

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(b) The Company has arranged for D.F. King & Co., Inc. to serve as information agent in connection with the Exchange Offer (the “Information Agent”) and to perform services in connection with the Exchange Offer that are customary for an information agent.

(c) The Company will provide, or will cause the Exchange Agent and Information Agent, as applicable, to provide, the Dealer-Manager with the security listing position (or other cards or lists) containing the names and addresses of, and the aggregate principal amount of Old Securities held by, the Holders as of a recent date and will use its commercially reasonable efforts to cause the Dealer-Manager to be advised, from time to time as it may request, during the period of the Exchange Offer (i.e., the period commencing on the Commencement Date through and including the Expiration Date) as to any transfers of record of Old Securities. In addition, the Company hereby authorizes the Dealer-Manager to communicate with the New Trustee, the Exchange Agent and the Information Agent, as applicable, with respect to matters relating to the Exchange Offer and to cause the Exchange Agent and the Information Agent, as applicable, to advise the Dealer-Manager daily as to such matters as it may reasonably request, including the aggregate principal amount of Old Securities that have been tendered.

8. Representations and Warranties of the Company. In addition to the other representations and warranties made by the Company contained in this Agreement, the Company represents and warrants to the Dealer-Manager, and agrees with the Dealer-Manager, on each of the Commencement Date, the Expiration Date, the Exchange Date (as defined herein) and the date of any post-effective amendment to the Registration Statement (each, an “Amendment Date”) and during the period of the Exchange Offer, that:

(a) The Company has been duly organized and is validly existing as a corporation in good standing under the laws of its jurisdiction of incorporation and has corporate power and authority to own, lease and operate its properties and to conduct its business as described in the Prospectus; and the Company is duly licensed or qualified to do business and is in good standing as a foreign corporation in each other jurisdiction in which such licensing or qualification is required, whether by reason of the ownership or leasing of property or the conduct of business, except for such qualification and good standing the failure of which, individually or in the aggregate, would not be likely to result in (i) a material adverse effect on the business, financial condition or results of operations of the Company and its subsidiaries taken as a whole or (ii) the material impairment of the ability of the Company to consummate the Exchange Offer and the other transactions contemplated in the Exchange Offer Materials and to perform in any material respect its material obligations thereunder (each of (i) and (ii), a “Material Adverse Effect”).

(b) The Company has all necessary corporate power and authority (i) to execute, deliver and perform its obligations under this Agreement and (ii) to make and consummate the Exchange Offer in accordance with its terms; and all necessary corporate action has been duly taken by it to authorize the Exchange Offer, the execution, delivery and performance of this Agreement, and the consummation of the transactions contemplated hereby and in the Exchange Offer Materials. The Company has taken or will take all necessary corporate action to authorize any amendments or supplements to, or modifications of, the Exchange Offer and the Exchange Offer Materials.

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(c) This Agreement has been duly authorized, executed and delivered by the Company and constitutes a valid and binding obligation of the Company enforceable in accordance with its terms, subject to the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws relating to or affecting creditors’ rights generally, general equitable principles (whether considered in a proceeding in equity or at law) and an implied covenant of good faith and fair dealing.

(d) Each of Comverse, Inc. and Verint Systems Inc. (each a “Subsidiary” and, collectively, the “Subsidiaries”) has been duly organized and is validly existing in good standing under the laws of the jurisdiction of its organization, has all power and authority attendant to its form of organization to own, lease and operate its properties and to conduct its business as described in the Prospectus and is duly licensed or qualified to do business and in good standing as a foreign entity in each other jurisdiction in which such licensing or qualification is required, whether by reason of the ownership or leasing of property or the conduct of business, except where the failure so to qualify or to be in good standing or licensed would not result in a Material Adverse Effect; except as otherwise disclosed in the Registration Statement, all of the issued and outstanding capital stock of each such Subsidiary has been duly authorized and validly issued, is fully paid and non-assessable and is owned by the Company, directly or through subsidiaries, free and clear of any security interest, mortgage, pledge, lien, encumbrance, claim or equity, except as would not result in a Material Adverse Effect; none of the outstanding shares of capital stock of any Subsidiary was issued in violation of applicable preemptive or similar rights, except as would not result in a Material Adverse Effect.

(e) Neither the Company nor any of its subsidiaries is in violation of its charter or by-laws or in default in the performance or observance of any obligation, agreement, covenant or condition contained in any contract, indenture, mortgage, deed of trust, loan or credit agreement, note, lease or other agreement or instrument to which the Company or any of its subsidiaries is a party or by which it or any of them may be bound, or to which any of the property or assets of the Company or any of its subsidiaries is subject, except for such defaults that would not result in a Material Adverse Effect.

(f) (i) The execution, delivery and performance by the Company of this Agreement, (ii) the making and consummation of the Exchange Offer by the Company, (iii) the use of the Exchange Offer Materials and the filing of the Registration Statement, the Prospectus and the Schedule TO and any amendments or supplement thereto and (iv) the consummation by the Company of the transactions contemplated by this Agreement and in the Exchange Offer Materials and compliance with the terms herein or therein (all of the foregoing, collectively, the “Transactions”), in each case, (x) do not violate and will not result in a violation of any of the terms or provisions of the charter or by-laws or similar organizational documents of the Company or any of its Subsidiaries (y) do not and will not conflict with, or result in a breach or violation of any of the terms or provisions of, or constitute an event of default (or an event which with notice or lapse of time or both would become an event of default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, or result in the creation or imposition of any lien, charge or encumbrance upon any property or assets of the Company or any of its subsidiaries under, (A) the certificate of incorporation or by-laws of the Company, (B) any material loan or credit agreement, indenture, mortgage, note, deed of trust, lease or other

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material agreement or instrument to which the Company or any of its subsidiaries is a party or by which any of them may be bound or to which any of their properties or assets are bound or affected, or (C) any existing applicable law, rule, regulation, judgment, order or decree of any government, governmental or regulatory instrumentality or agency or court, domestic or foreign, having jurisdiction over the Company or any of its subsidiaries or any of their respective properties or assets and (z) comply and will comply in all material respects with all applicable laws, rules and regulations of any government or governmental or regulatory instrumentality or agency.

(g) None of the Exchange Offer or other Transactions require or will require any consent, qualification or decree of, approval of, waiver by, license or authorization from, or permit of, or other action by or filing or registration with or notification to, any court or governmental or regulatory authority or agency other than (i) such as have been already obtained or as may be required under the Securities Act or the Exchange Act or state securities laws and (ii) as described in the Prospectus.

(h) The Company meets the requirements for use of Form S-4 under the Securities Act. On the Exchange Date, the Registration Statement and any post-effective amendment thereto, each in the form delivered to the Dealer-Manager, and including all Incorporated Documents, has become effective under the Securities Act and no stop order suspending the effectiveness of the Registration Statement or any post-effective amendment thereto has been issued under the Securities Act and no proceedings for that purpose have been instituted or are pending or, to the best knowledge of the Company, are contemplated by the Commission, and any request on the part of the Commission for additional information has been complied with or otherwise satisfied. No other stop order and no injunction, restraining order or denial of any application for approval has been issued or proceedings, litigation or investigation initiated or, to the best knowledge of the Company, threatened with respect to the Exchange Offer by or before any governmental or regulatory agency, or any court.

(i) The Exchange Offer Materials, as then amended or supplemented (other than the Prospectus and the Registration Statement, and any amendments and supplements thereto, which are covered in subsection (j) below), (i) complied and will comply in all material respects with the requirements of the Securities Act and the Exchange Act; and (ii) did not and will not contain an 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 light of the circumstances under which they were made, not misleading.

(j) Neither the Prospectus nor any amendments or supplements thereto, at the time the Prospectus or any such amendment or supplement was issued and at the Exchange Date, included or will include an untrue statement of a material fact or omitted or will omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. At the respective times the Registration Statement and any post-effective amendments thereto became effective and at the Exchange Date, the Registration Statement and any amendments and supplements thereto complied and will comply in all material respects with the requirements of the Securities Act and did not and will not contain an untrue statement of a material fact or omit to state any material fact required to be

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stated therein or necessary to make the statements therein not misleading. The representations and warranties in this subsection (j) and in subsection (i) shall not apply to statements contained in the Exchange Offer Materials furnished in writing by or on behalf of Lehman Brothers expressly for inclusion in the Exchange Offer Materials.

(k) The Prospectus filed as part of the Registration Statement as originally filed or as part of any amendment thereto, or filed pursuant to Rule 424(b) under the Securities Act, complied when so filed in all material respects with the Securities Act and the Prospectus delivered to the Dealer-Manager for use in connection with the Exchange Offer was identical to the electronically transmitted copies thereof filed with the Commission pursuant to Regulation S-T promulgated by the Commission.

(l) The Incorporated Documents, when they became effective or were filed (or, if an amendment with respect to any such Incorporated Document was filed or became effective, when such amendment was filed or became effective) with the Commission, complied and will comply in all material respects with the requirements of the Securities Act and the Exchange Act, as applicable, and any documents so filed and incorporated by reference in the Registration Statement or the Prospectus subsequent to the effective date of the Registration Statement and until the Expiration Date will, when they are filed with the Commission, comply in all material respects with the requirements of the Securities Act and the Exchange Act, as applicable. When read together with the other information in the Prospectus at the time the Registration Statement became effective, at the time the Prospectus was issued and at the Exchange Date, no such Incorporated Document contained, and no document so filed and incorporated by reference in the Registration Statement or Prospectus subsequent to the effective date of the Registration Statement will contain, an untrue statement of a material fact or omitted, or will omit, to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading.

(m) Deloitte & Touche LLP are independent public accountants with respect to the Company as required by the Securities Act and the Exchange Act.

(n) The financial statements of the Company included in the Registration Statement and the Prospectus, together with the related schedules and notes, present fairly the consolidated financial position, the results of operations and changes in financial position of the Company and its consolidated subsidiaries for the dates indicated and the statement of operations, stockholders’ equity and cash flows of the Company and its consolidated subsidiaries; said financial statements (including the related notes and schedules) have been prepared in conformity with United States generally accepted accounting principles (“U.S. GAAP”) applied on a consistent basis throughout the periods involved except, in each case, as disclosed in the Prospectus. The summary financial information of the Company included in the Prospectus presents fairly the information shown therein and has been compiled on a basis consistent with that of the audited financial statements of the Company included in the Registration Statement.

(o) Since the respective dates as of which information is given in the Registration Statement and the Prospectus to and including the Expiration Date, except as otherwise stated in

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the Registration Statement and Prospectus, (i) there has been no Material Adverse Effect, (ii) there have been no transactions entered into or direct or contingent liabilities or obligations incurred by the Company or any of its Subsidiaries, other than those in the ordinary course of business, which are material with respect to the Company and its Subsidiaries considered as one enterprise, (iii) there has been no dividend or distribution of any kind declared, paid or made by the Company on any class of its capital stock, and (iv) there has not been and will not have been any material change in the capital stock or long-term indebtedness of the Company or any of its Subsidiaries (except as disclosed to the Dealer-Manager in writing).

(p) The authorized, issued and outstanding capital stock of the Company will be, as of the date at which information is given in the Prospectus, as set forth in the Prospectus under the caption “Capitalization” (except for subsequent issuances, if any, pursuant to this Agreement, pursuant to reservations, agreements or employee benefit plans referred to in the Prospectus or pursuant to the exercise of convertible securities or options referred to in the Prospectus). All of the Company’s shares of issued and outstanding capital stock have been duly authorized, validly issued, and fully paid and are non-assessable; none of the Company’s shares of issued and outstanding capital stock was issued in violation of applicable preemptive or other similar rights.

(q) To the best knowledge of the Company, there is no action, suit, proceeding, inquiry or investigation before or brought by any court or governmental agency or body, domestic or foreign, now pending, or threatened, against or affecting the Company or any of its subsidiaries which is required to be disclosed in the Registration Statement (other than as disclosed therein), which might reasonably be expected to result in a Material Adverse Effect, the aggregate of all pending legal or governmental proceedings to which the Company or any of its subsidiaries is a party or of which any of their respective property or assets is the subject which are not described in the Registration Statement, including ordinary routine litigation incidental to the business, could not reasonably be expected to result in a Material Adverse Effect.

(r) The Company is not, and, after giving effect to the Exchange Offer and the issuance of the New Securities as described in the Registration Statement and the Prospectus, will not be, an “investment company” or an entity “controlled” by an “investment company” as such terms are defined in the Investment Company Act of 1940, as amended.

(s) The Company has all necessary power and authority to execute and deliver the New Indenture and perform its obligations thereunder; the New Indenture has been duly authorized by the Company and is duly qualified under the Trust Indenture Act of 1939, as amended, and the rules and regulations of the Commission thereunder; when the New Indenture is duly executed and delivered by the Company, assuming due authorization, execution and delivery of the New Indenture by the New Trustee, it will constitute a legally valid and binding agreement of the Company, enforceable against the Company in accordance with its terms, subject to the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws relating to or affecting creditors’ rights generally, general equitable principles (whether considered in a proceeding in equity or at law) and an implied covenant of good faith and fair dealing; and the New Indenture will conform, when executed, in all material respects to the description thereof contained in the Registration Statement and the Prospectus.

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(t) The Company has all necessary power and authority to execute, issue and deliver the New Securities and perform its obligations thereunder; the New Securities have been duly authorized by the Company and when the New Securities are executed, authenticated and issued in accordance with the terms of the New Indenture and delivered to Holders pursuant to the Exchange Offer on the Exchange Date, assuming due authentication of the New Securities by the New Trustee, such New Securities will constitute legally valid and binding obligations of the Company, enforceable against the Company in accordance with their terms, subject to the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws relating to or affecting creditors’ rights generally, and general equitable principles (whether considered in a proceeding in equity or at law); and the New Securities will conform, when issued, in all material respects to the description thereof contained in the Registration Statement and the Prospectus.

(u) The Company has all necessary power and authority to issue and deliver the Conversion Shares; the Conversion Shares have been duly and validly authorized and reserved for issuance upon conversion of the New Securities and are free of preemptive rights; all Conversion Shares, when issued and delivered upon such conversion in accordance with the terms of the New Indenture, will be duly and validly authorized and issued, fully paid and non-assessable and will be free and clear of any liens; and the Conversion Shares, if issued, will conform in all material respects to the description thereof contained in the Registration Statement and the Prospectus.

(v) The Company (i) makes and keeps accurate books and records and (ii) maintains internal accounting controls which provide reasonable assurance that (A) transactions are executed in accordance with management’s authorization, (B) transactions are recorded and reported to management as necessary to permit preparation of financial statements in conformity with U.S. GAAP and to maintain accountability for assets, (C) access to assets is permitted only in accordance with management’s authorization and (D) the reported accountability for assets is compared with existing assets at reasonable intervals and appropriate action is taken with respect to any differences, all as required by the Sarbanes-Oxley Act of 2002, and the Commission’s rules and regulations thereunder.

(w) Since the respective dates as of which information is given in the Registration Statement and the Prospectus, the Company has not (i) issued or granted any equity securities or securities convertible into or exchangeable for equity securities (other than, in each case, securities issued or granted under the stock option and similar employee benefit plans of the Company and its affiliates and subsidiaries), (ii) incurred any liability or obligation, direct or contingent, other than liabilities and obligations which were incurred in the ordinary course of business that would be required to be disclosed on a current or periodic report prescribed by the Commission or that would be required to be reflected on a balance sheet in accordance with U.S. GAAP, (iii) entered into any transaction not in the ordinary course of business that would be required to be disclosed on a current or periodic report prescribed by the Commission, (iv) entered into any material transaction not in the ordinary course of business or that would be required to be reflected on a balance sheet in accordance with U.S. GAAP or (v) declared or paid any dividend on any of its capital stock.

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The representations and warranties set forth in this Agreement shall remain operative and in full force and effect regardless of (i) any investigation made by or on behalf of any Indemnified Person (as defined herein), (ii) any termination of this Agreement or (iii) any withdrawal by the Dealer-Manager pursuant to this Agreement.

Any certificate signed by any officer of the Company or any of its subsidiaries and delivered to the Dealer-Manager or its counsel shall be deemed a representation and warranty by the Company to the Dealer-Manager as to the matters covered thereby.

9. Conditions to the Dealer-Manager’s Obligations. Lehman Brothers’ obligation to act as Dealer-Manager shall at all times be subject to the performance by the Company of its obligations herein and to the following additional conditions:

(a) At all times from the Commencement Date to and including the date on which the Company exchanges New Securities for validly tendered Old Securities that it has accepted in accordance with the terms of the Exchange Offer (the “Exchange Date”), each of the Company’s representations and warranties contained herein shall be true and correct in all material respects and the Company shall have performed in all material respects all of the agreements contained in this Agreement and as set forth in the Exchange Offer Materials theretofore required by it to have been performed. The Company acknowledges that Lehman Brothers’ agreement to act, or to continue to act, as Dealer-Manager at a time when the Dealer-Manager knows or should know that any such representation, warranty and agreement is or may be untrue or incorrect or not performed, as the case may be, in a material respect shall be without prejudice to its right subsequently to cease so to act by reason of such untruth, incorrectness or nonperformance, as the case may be.

(b) No stop order suspending the effectiveness of the Registration Statement has been issued and no proceedings for that purpose are pending or, to the best knowledge of the Company, threatened by the Commission and no injunction suspending the offer, issuance, delivery or exchange of the New Securities pursuant to the Exchange Offer or the Transactions has been issued and no proceedings for that purpose are pending or, to the best knowledge of the Company, have been threatened and no action, lawsuit, claim or governmental or administrative proceeding shall have been commenced or, to the best knowledge of the Company, threatened with respect to the Exchange Offer or the other Transactions before any court, agency or other governmental or regulatory body of any jurisdiction that the Dealer-Manager, in good faith after consultation with counsel, believes renders it inadvisable for the Dealer-Manager to continue to act as Dealer-Manager.

(c) On the Commencement Date and the Exchange Date, the Company will furnish to the Dealer-Manager, (i) an opinion of Shearman & Sterling LLP, special counsel to the Company, substantially in the form attached hereto as Schedule I, and (ii) an opinion of the General Counsel of the Company, substantially in the form attached hereto as Schedule II.

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(d) On the Commencement Date and the Exchange Date, the Dealer-Manager shall have received an opinion of Cleary, Gottlieb, Steen & Hamilton, counsel to the Dealer-Manager, addressed to the Dealer-Manager, in form and substance satisfactory to the Dealer-Manager.

(e) On the Commencement Date, the Exchange Date, and any Amendment Date, the Company will furnish to the Dealer-Manager a certificate of the Chairman and Chief Executive Officer and the Chief Financial Officer of the Company in the form attached hereto as Schedule III addressed to the Dealer-Manager and dated the applicable date of delivery.

(f) Deloitte & Touche LLP will furnish to the Dealer-Manager a letter addressed to the Dealer-Manager (i) dated the Commencement Date in the form attached hereto as Schedule IV and (ii) dated the Exchange Date and any Amendment Date, in form and substance satisfactory to the Dealer-Manager.

(g) All opinions and certificates required to be delivered pursuant to the terms hereof shall be in a form and substance satisfactory to counsel for the Dealer-Manager.

10. Additional Agreements. In addition to the other agreements of the Company contained elsewhere in this Agreement, the Company hereby agrees and acknowledges that:

(a) The Company will advise the Dealer-Manager promptly of any of the following: (i) the time when the Registration Statement has become effective and when any post-effective amendment thereto has been filed or becomes effective, or any amendment or supplement to the Prospectus or any amendment to the Schedule TO or any amended or additional Exchange Offer Materials shall have been filed, (ii) the occurrence of any event which may cause the Company to withdraw, terminate or cancel the Exchange Offer, (iii) the occurrence of any event or the discovery of any fact, the occurrence or existence of which it believes would require the making of any material change in the Exchange Offer Materials then being used or would cause any representation or warranty contained in this Agreement to be untrue or inaccurate in any material respect, (iv) any proposal or requirement to make, amend or supplement the Registration Statement, the Prospectus, the Schedule TO or the other Exchange Offer Materials or other filing required by the Securities Act, the Exchange Act or “blue sky” or other state securities laws in connection with the Exchange Offer or to make any filing in connection with the Exchange Offer pursuant to any other applicable law, rule or regulation, (v) the issuance by the Commission or any other federal, state or local governmental or regulatory agency or authority of any comment or order specifically concerning the Registration Statement, Prospectus or any other Exchange Offer Materials, (vi) any material development in connection with the Exchange Offer or the Transactions (including any change of the expiration date of the Exchange Offer, of the occurrence of any event which could cause the Company to withdraw, rescind, modify or amend the Exchange Offer and of any consummation of the Exchange Offer), or (vii) any other information relating to the Exchange Offer or the Transactions which the Dealer-Manager may from time to time reasonably request. If at any time the Commission shall issue any order suspending the effectiveness of the Registration Statement, any state securities commission or other governmental or regulatory agency or

12

authority shall issue an order suspending the qualification of the New Securities under state securities or “blue sky” laws or any other governmental or regulatory agency or authority shall issue any order impeding the making or consummation of the Exchange Offer, the Company shall use reasonable efforts to obtain the lifting or removal thereof as soon as possible.

(b) Until the Exchange Offer is completed or terminated, the Company will deliver to the Dealer-Manager, promptly upon their becoming available, copies of all financial statements, reports, notices and proxy statements sent by the Company to its security holders, and of all current, regular and periodic reports filed by the Company with any securities exchange or with the Commission.

(c) In making and consummating the Exchange Offer, the Company will comply in a timely manner with the applicable requirements of the Securities Act, the Exchange Act and the rules and regulations of the Commission thereunder and any other applicable laws, regulations and requirements.

(d) The Company agrees to make generally available to its security holders as soon as practicable an earnings statement that will satisfy the provisions of Section 11(a) of the Securities Act covering a twelve-month period beginning not later than the first day of its fiscal quarter next following the effective date of the Registration Statement.

(e) In the event that the Company is required, or considers it advisable, to amend or supplement the Exchange Offer Materials or make any additional filings with any federal, state or local governmental or regulatory agency or authority in connection with the Exchange Offer, then it shall, at a reasonable time prior to making any such filing, furnish the Dealer-Manager with copies of such material and will give reasonable consideration to the comments, if any, of the Dealer-Manager and the Dealer-Manager’s counsel.

(f) The Company will file and disseminate, as required, any necessary amendments or supplements to the Exchange Offer Materials and other documents that are filed with any federal, state or local governmental or regulatory agency or authority relating to the Exchange Offer, and, if there is any such filing, it will promptly furnish to the Dealer-Manager an accurate and complete copy of each such amendment or supplement upon the filing thereof.

(g) The Company will use its commercially reasonable efforts to do and perform all things required to be done and performed by it under this Agreement that are within its control prior to or after the Exchange Date.

11. Indemnification and Contribution.

(a) The Company hereby agrees that it will hold harmless and indemnify the Dealer-Manager and its affiliates and any officer, representative, director, employee or agent of the Dealer-Manager or any such affiliates and any person controlling (within the meaning of Section 20(a) of the Exchange Act) the Dealer-Manager or any such affiliates (collectively, the “Indemnified Persons”) from and against any loss, claim, damage, liability and expense whatsoever (as incurred or suffered, and including, but not limited to, reasonable legal or other expenses reasonably incurred in connection with investigating, preparing to defend or defending

13

any lawsuit, claim or other proceeding, commenced or threatened, whether or not resulting in any liability, which reasonable legal or other expenses shall be reimbursed by the Company as promptly as practicable after receipt of any invoices therefor from the Dealer-Manager or such other Indemnified Persons), (i) arising out of or based upon (A) any untrue statement or alleged untrue statement of a material fact contained in the Exchange Offer Materials, or in any solicitation material used by the Company or authorized by it for use in connection with the Exchange Offer, or arising out of or based upon the omission or alleged omission to state in any such document a material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading, (B) any withdrawal, termination or cancellation by the Company of, or failure by the Company to make or consummate, the Exchange Offer, (C) any actions taken or omitted to be taken by an Indemnified Person pursuant to this Agreement or with the consent of the Company or in conformity with actions taken or omitted to be taken by the Company or (D) any breach by the Company of any representation or warranty, or any failure by the Company to comply with any agreement, contained in this Agreement or (ii) arising out of, relating to or in connection with or alleged to arise out of, relate to or be in connection with the Exchange Offer, any of the Transactions or the performance of Lehman Brothers’ services as Dealer-Manager with respect to the Exchange Offer. However, the Company will not be obligated to indemnify an Indemnified Person for any loss, claim, damage, liability or expense pursuant to (a) clause (i) of the preceding sentence to the extent that the untrue statement or alleged untrue statement or omission or alleged omission was made in reliance upon and in conformity with written information provided by the Dealer-Manager expressly for use in the Exchange Offer Materials, it being understood that the only information so provided by the Dealer-Manager expressly for use in the Exchange Offer Materials is the name, address and telephone numbers of Lehman Brothers, as Dealer-Manager, or (b) clause (ii) of the preceding sentence, which has been determined in a final judgment by a court of competent jurisdiction to have resulted from the willful misconduct or gross negligence on the part of such Indemnified Person. The foregoing indemnity agreement is in addition to any liability which the Company may otherwise have to the Indemnified Person or to any director, officer, and employee or controlling persons of the Indemnified Person.

(b) If any lawsuit, claim or other proceeding is brought against any Indemnified Person in respect of which indemnification may be sought against the Company pursuant to this Section 11, such Indemnified Person shall promptly notify the Company of the commencement of such lawsuit, claim or proceeding after receipt by such Indemnified Person of notice of such lawsuit, claim or proceeding; provided, however, that the failure to so notify the Company shall not relieve the Company from any obligation or liability which it may have under this Section 11 except to the extent that it has been prejudiced in any material respect by such failure and in any event shall not relieve the Company from any other obligation or liability which it may have to such Indemnified Person otherwise than under this Section 11. In case any such lawsuit, claim or proceeding shall be brought against any Indemnified Person and such Indemnified Person shall notify the Company of the commencement of such lawsuit, claim or proceeding, the Company shall be entitled to participate in such lawsuit, claim or proceeding, and, after written notice from the Company to such Indemnified Person, to assume the defense of such lawsuit, claim or proceeding with counsel of its choice at its reasonable expense, in which case the Indemnified Person shall fully cooperate with the Company with respect to such lawsuit, claim or proceeding and, after notice from the Company to the Indemnified Person of its election to

14

assume the defense of such lawsuit, claim or proceeding, the Company shall not be liable to the Indemnified Person under this Section 11 for any legal or other expenses subsequently incurred by the Indemnified Person in connection with the defense thereof other than the reasonable costs of investigation; provided, however, that such counsel shall be satisfactory to the Indemnified Person in the exercise of its reasonable judgment. Notwithstanding the election of the Company to assume the defense of such lawsuit, claim or proceeding, such Indemnified Person shall have the right to employ separate counsel and to participate in the defense of such lawsuit, claim or proceeding, and the Company shall bear the reasonable fees, costs and expenses of such separate counsel (and shall pay such reasonable fees, costs and expenses as promptly as practicable after receipt of any invoice therefor from the Dealer-Manager) if (i) the Indemnified Person shall have been advised by counsel that the use of counsel chosen by the Company to represent such Indemnified Person would present such counsel with a conflict of interest; (ii) the defendants in, or targets of, any such lawsuit, claim or proceeding include both an Indemnified Person and the Company, and such Indemnified Person shall have been advised by counsel that there may be legal defenses available to it or to other Indemnified Persons which are different from or in addition to those available to the Company (in which case the Company shall not have the right to direct the defense of such action on behalf of the Indemnified Person); (iii) the Company shall not have employed counsel satisfactory to such Indemnified Person, in the exercise of such Indemnified Person’s reasonable judgment, to represent such Indemnified Person within a reasonable time after notice of the institution of any such lawsuit, claim or proceeding; or (iv) the Company shall authorize such Indemnified Person to employ separate counsel at the reasonable expense of the Company. The foregoing indemnification commitments shall apply whether or not the Indemnified Person is a formal party to any such lawsuit, claim or proceeding. The Company shall not be liable for any settlement of any lawsuit, claim or proceeding effected without its consent (which consent will not be unreasonably withheld), but if settled with such consent, or if there be a final judgment in favor of the plaintiff in any such action, the Company agrees, subject to the provisions of this Section 11, to indemnify the Indemnified Person from and against any loss, damage or liability by reason of such settlement or final judgment, as the case may be. The Company agrees to notify the Dealer-Manager promptly, or cause it to be notified promptly, of the assertion in writing of any lawsuit, claim or proceeding against the Company, any of its officers or directors or any person who controls any of the foregoing within the meaning of Section 20(a) of the Exchange Act, arising out of or relating to the Exchange Offer. The Company further agrees that, unless it has received prior written consent of the Indemnified Person (which consent shall not be unreasonably withheld), any settlement of a lawsuit, claim or proceeding against it arising out of or relating to the Exchange Offer or the consent to the entry of any judgment with respect to any pending or threatened lawsuit, claim or proceeding in respect of which indemnification or contribution may be sought under this Agreement (whether or not the Indemnified Person is an actual or potential party to such claim or action) shall include an explicit and unconditional release from the parties bringing such lawsuit, claim or proceeding of all Indemnified Persons who are or could have been a party to such lawsuit, claim or proceeding if such Indemnified Persons could have sought indemnification hereunder, which release shall be reasonably satisfactory to the Dealer-Manager.

(c) The Company and the Dealer-Manager agree that if any indemnification sought by any Indemnified Person pursuant to this Section 11 is unavailable or is insufficient for any reason, other than that specified in the second sentence of Section 11(a), then (whether or not

15

the Dealer-Manager is the Indemnified Person) the Company, on the one hand, and the Dealer-Manager, on the other hand, shall contribute to the losses, claims, damages, liabilities and expenses for which such indemnification is held unavailable or insufficient (i) in such proportion as is appropriate to reflect the relative benefits to the Company, on one hand, and the Dealer-Manager, on the other hand, in connection with the matter giving rise to such losses, claims, damages, liabilities and expenses, or (ii) if the allocation provided by the foregoing clause (i) is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in the foregoing clause (i) but also the relative faults of the Company, on the one hand, and the Dealer-Manager, on the other hand, in connection with the matter giving rise to such losses, claims, damages, liabilities and expenses, and other equitable considerations, subject to the limitation that in any event the Dealer-Manager’s aggregate contribution to all losses, claims, damages, liabilities and expenses with respect to which contribution is available hereunder shall not exceed the amount of fees actually received by the Dealer-Manager pursuant to this Agreement. It is hereby agreed by the parties hereto that the relative benefits to the Company, on the one hand, and the Dealer-Manager, on the other hand, with respect to the Exchange Offer shall be deemed to be in the same proportion as (i) the aggregate value of the consideration paid or proposed to be paid to the beneficial holders of the Old Securities of the Company pursuant to the Exchange Offer (whether or not the Exchange Offer is consummated) bears to (ii) the fees payable to the Dealer-Manager with respect to the Exchange Offer pursuant to Section 5 (whether or not the Exchange Offer is consummated). It is further agreed that the relative faults of the Company, on the one hand, and the Dealer-Manager, on the other hand, (i) in the case of an untrue or alleged untrue statement of a material fact or an omission or alleged omission to state a material fact, shall be determined by reference to, among other things, whether such statement or omission relates to information supplied by the Company or by the Dealer-Manager and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission and (ii) in the case of any other action or omission, shall be determined by reference to, among other things, whether such action or omission was taken or omitted to be taken by the Company or the Dealer-Manager and the parties’ relative intent, knowledge, access to information and opportunity to prevent such action or omission. The amount paid or payable by an Indemnified Person as a result of the losses, claims, damages, liabilities or expenses referred to in this Section shall be deemed to include, subject to the limitations set forth above, any legal or other expenses reasonably incurred by such Indemnified Person in connection with investigating, preparing to defend or defending any such action or claim.

(d) In the event an Indemnified Person appears as a witness on behalf of the Company in connection with the Exchange Offer (other than an action brought by the Company against any Indemnified Person or an action brought by an Indemnified Person against the Company) in which such Indemnified Person is not named as defendant, the Company agrees to reimburse such Indemnified Person for all reasonable expenses incurred by it in connection with such Indemnified Person’s appearing and preparing to appear as such a witness, including, without limitation, the reasonable fees and disbursements of its legal counsel.

(e) The Company also agrees that no Indemnified Person shall have any liability to the Company or any person asserting claims on behalf of or in right of the Company in connection with this Agreement or Lehman Brothers’ acting as Dealer-Manager hereunder,

16

except for liabilities determined in a final judgment by a court of competent jurisdiction to have resulted directly from any acts or omissions undertaken or omitted to be taken by any Indemnified Person through its or his, as the case may be, gross negligence or willful misconduct.

(f) The foregoing rights to indemnification and contribution shall be in addition to any other rights which the Dealer-Manager and the other Indemnified Persons may have against the Company under common law or otherwise.

12. Indemnification, Representations and Warranties to Remain Operative. The rights to indemnification, contribution and exculpation contained in Section 11 and the representations, warranties and agreements of the Company set forth in this Agreement shall survive and remain operative and in full force and effect regardless of (a) the failure to commence the Exchange Offer, the consummation of the Exchange Offer, any withdrawal, termination or cancellation of the Exchange Offer for any reason whatsoever, the exchange of Old Securities pursuant to the Exchange Offer or any withdrawal by the Dealer-Manager pursuant to Section 4, (b) any investigation made by or on behalf of any party hereto or any person controlling any party hereto within the meaning of Section 20(a) of the Exchange Act and (c) the completion of the Dealer-Manager’s services under this Agreement.

13. Termination. Except as set forth in Section 12, this Agreement shall terminate upon the earliest to occur of (a) the consummation or the termination, withdrawal or cancellation of the Exchange Offer by the Company, (b) the withdrawal by Lehman Brothers as the Dealer-Manager pursuant to Section 4 hereof and (c) the date that is one year from the date hereof; provided that, Sections 3, 5, 6, 8, and 11–21 hereof shall survive the termination of this Agreement.

14. Notices. All notices and other communications required or permitted to be provided under this Agreement shall be in writing and shall be deemed to have been duly given if (a) delivered personally, (b) sent by facsimile with immediate telephonic confirmation or (c) sent by registered or certified mail, return receipt requested, postage prepaid, to the parties hereto as follows:

(a) if to Lehman Brothers:

Lehman Brothers Inc.

745 Seventh Avenue, 3^rd Floor

New York, New York 10019

Attention: [Leonard G. Rosen]

Facsimile: (212) 526-[7596]

Telephone: (212) 526-7000

17

with a copy to:

Cleary, Gottlieb, Steen & Hamilton

One Liberty Plaza

New York, New York 10006

Attention: David Lopez and David I. Gottlieb

Facsimile: (212) 225-2000

Telephone: (212) 225-3999

(b) if to the Company:

Comverse Technology, Inc.

170 Crossways Park Drive

Woodbury, New York 11797

Attention: Paul L. Robinson

Facsimile: (516) 677-7355

Telephone: (516) 677-7200

with a copy to:

Shearman & Sterling LLP

599 Lexington Ave.

New York, NY 10022

Attention: Robert Evans III

Facsimile: (212) 848-7179

Telephone: (212) 848-4000

15. Modifications. This Agreement may not be amended or modified except in writing signed by each of the parties hereto.

16. Governing Law; Jurisdiction. The terms of this Agreement shall be governed by, and construed in accordance with, the laws of the State of New York. The Company agrees that any suit, action or proceeding against the Company brought by the Dealer-Manager or any Indemnified Person, arising out of or based upon this Agreement or the Transactions may be instituted in any State or U.S. federal court in The City of New York and County of New York, and waives any objection which it may now or hereafter have to the laying of venue of any such proceeding, and irrevocably submits to the non-exclusive jurisdiction of such courts in any suit, action or proceeding.

17. Counterparts. This Agreement may be executed in one or more counterparts, and by different parties hereto on separate counterparts, each of such counterparts, when so executed and delivered, shall be deemed to be an original, and all of such counterparts, taken together, shall constitute one and the same agreement.

18. Severability. If any term or provision of this Agreement is deemed or rendered invalid or unenforceable in any jurisdiction, then such term or provision shall, as to

18

such jurisdiction, be ineffective to the extent of such invalidity or unenforceability without rendering invalid or unenforceable the remaining terms and provisions of this Agreement or affecting the validity or enforceability of any of the terms or provisions of this Agreement in any other jurisdiction, which terms and provisions shall remain in full force and effect.

19. Successors. This Agreement is made solely for the benefit of the Dealer-Manager and the Company and, to the extent expressly set forth herein, the Indemnified Persons and their executors, administrators, successors and assigns, and no other person shall acquire or have any right under or by virtue of this Agreement.

20. Entire Agreement. This Agreement constitutes the entire agreement by and among the parties hereto with respect to the subject matter hereof and supersedes all prior agreements and undertakings, both written and oral, among the parties, or any of them, with respect to the subject matter hereof.

21. Headings. The headings to sections contained in this Agreement are included for ease of reference only, and the parties hereto agree that they are not to be given substantive meaning or otherwise affect each party’s rights and duties hereunder.

[The rest of this page has been left blank intentionally; the signature page follows.]

19

Please indicate your willingness to act as Dealer-Manager and your acceptance of the foregoing provisions by signing in the space provided below for that purpose and returning to us a copy of this letter so signed, whereupon this letter and your acceptance shall constitute a valid and legally binding agreement between us.

Very truly yours,

COMVERSE TECHNOLOGY, INC.

By:

Name:

Title:

Accepted and agreed as of the date first above written: LEHMAN BROTHERS INC.
By:
	Authorized Representative

20

EX-4.6

Exhibit 4.6

COMVERSE TECHNOLOGY, INC.,

ISSUER

TO

JPMORGAN CHASE BANK, N.A.,

TRUSTEE

INDENTURE

Dated as of ·, 2005

up to U.S. $420,000,000

NEW ZERO YIELD PUTTABLE SECURITIES (ZYPS^SM)

DUE MAY 15, 2023

“Zero Yield Puttable Securities” and “ZYPS” are service marks of Lehman Brothers Inc.

CROSS REFERENCE TABLE

Reconciliation and tie between Trust Indenture Act of 1933 and Indenture

Trust Indenture Act Section	Indenture Section
310(a)(1)	5.8
(a)(2)	5.8
(a)(3)	n/a
(a)(4)	n/a
(a)(5)	n/a
(b)	5.8, 5.9
(c)	n/a
311(a)	n/a
(b)	n/a
(c)	n/a
312(a)	9.11
(b)	n/a
(c)	n/a
313(a)	9.11
(b)(1)	n/a
(b)(2)	n/a
(c)	9.11, 1.5
(d)	9.11
314(a)	n/a
(b)	n/a
(c)(1)	1.2
(c)(2)	1.2
(c)(3)	n/a
(d)	n/a
(e)	1.2
(f)	n/a
315(a)	5.1(a)
(b)	5.2, 1.5
(c)	5.1(b)
(d)	5.1(c)
(e)	4.14
316(a)(last sentence)	1.1
(a)(1)(A)	4.12
(a)(1)(B)	4.13

Table of Contents

(Continued)

(a)(2)	n/a
(b)	4.8
(c)	n/a
317(a)(1)	4.3
(a)(2)	4.4
(b)	3.2
318(a)	n/a

Note: This cross reference table shall not, for any purpose, be deemed to be a part of the Indenture.

ii

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	12
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	13
SECTION 1.10 Governing Law	13
SECTION 1.11 Counterparts	14
SECTION 1.12 Legal Holidays	14
SECTION 1.13 Recourse Against Others	14
ARTICLE 2 THE SECURITIES	14
SECTION 2.1 Title and Terms	14
SECTION 2.2 Form of Securities	15
SECTION 2.3 Denominations	15
SECTION 2.4 Execution, Authentication, Delivery and Dating	16
SECTION 2.5 Registration, Registration of Transfer and Exchange; Restrictions on Transfer	16
SECTION 2.6 Mutilated, Destroyed, Lost or Stolen Securities	20
SECTION 2.7 [Reserved]	21
SECTION 2.8 Persons Deemed Owners	21
SECTION 2.9 Cancellation	21
SECTION 2.10 [Reserved]	22
SECTION 2.11 Temporary Securities	22
ARTICLE 3 SATISFACTION AND DISCHARGE	22
SECTION 3.1 Satisfaction and Discharge of Indenture	22
SECTION 3.2 Application of Trust Money	23
ARTICLE 4 REMEDIES	24
SECTION 4.1 Events of Default	24
SECTION 4.2 Acceleration of Maturity; Rescission and Annulment	25
SECTION 4.3 Collection of Indebtedness and Suits for Enforcement by the Trustee	26
SECTION 4.4 Trustee May File Proofs of Claim	27
SECTION 4.5 Trustee May Enforce Claims Without Possession of Securities	27
SECTION 4.6 Application of Money Collected	28
SECTION 4.7 Limitation on Suit	28
SECTION 4.8 Unconditional Right of Holders to Receive Principal or Premium, if any, and To Convert	29
SECTION 4.9 Restoration of Rights and Remedies	29
SECTION 4.10 Rights and Remedies Cumulative	29

Table of Contents

(Continued)

SECTION 4.11 Delay or Omission Not Waiver	29
SECTION 4.12 Control by Holders of Securities	30
SECTION 4.13 Waiver of Past Default	30
SECTION 4.14 Undertaking for Costs	30
SECTION 4.15 Waiver of Stay or Extension Laws	31
ARTICLE 5 THE TRUSTEE	31
SECTION 5.1 Certain Duties and Responsibilities	31
SECTION 5.2 Notice of Defaults	32
SECTION 5.3 Certain Rights of Trustee	32
SECTION 5.4 Not Responsible for Recitals or Issuance of Securities	34
SECTION 5.5 May Hold Securities, Act as Trustee Under Other Indentures	34
SECTION 5.6 Money Held in Trust	34
SECTION 5.7 Compensation and Indemnification of Trustee and Its Prior Claims	34
SECTION 5.8 Corporate Trustee Required; Eligibility; Conflicting Interests	35
SECTION 5.9 Resignation and Removal; Appointment of Successor	36
SECTION 5.10 Acceptance of Appointment by Successor	37
SECTION 5.11 Merger, Conversion, Consolidation or Succession to Business	37
SECTION 5.12 Authenticating Agent	38
ARTICLE 6 CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE	40
SECTION 6.1 Company May Consolidate, Etc., Only on Certain Terms	40
SECTION 6.2 Successor Corporation Substituted	40
ARTICLE 7 SUPPLEMENTAL INDENTURES	41
SECTION 7.1 Supplemental Indentures Without Consent of Holders of Securities	41
SECTION 7.2 Supplemental Indentures With Consent of Holders of Securities	42
SECTION 7.3 Execution of Supplemental Indentures	42
SECTION 7.4 Effect of Supplemental Indentures	43
SECTION 7.5 Reference in Securities to Supplemental Indentures	43
SECTION 7.6 Notice of Supplemental Indentures	43
ARTICLE 8 MEETING OF HOLDERS OF SECURITIES	43
SECTION 8.1 Purposes for Which Meetings May Be Called	43
SECTION 8.2 Call Notice and Place of Meetings	43
SECTION 8.3 Persons Entitled to Vote at Meetings	44
SECTION 8.4 Quorum; Action	44
SECTION 8.5 Determination of Voting Rights; Conduct and Adjournment of Meetings	45
SECTION 8.6 Counting Votes and Recording Action of Meetings	45
ARTICLE 9 COVENANTS	46
SECTION 9.1 Payment of Principal and Premium, if any	46
SECTION 9.2 Maintenance of Offices or Agencies	46
SECTION 9.3 Money for Security Payments To Be Held in Trust	47
SECTION 9.4 Existence	48
SECTION 9.5 Maintenance of Properties	48
SECTION 9.6 Payment of Taxes and Other Claims	48

ii

Table of Contents

(Continued)

SECTION 9.7 Statement by Officers as to Default	49
SECTION 9.8 Waiver of Certain Covenants	49
SECTION 9.9 [Reserved]	49
SECTION 9.10 [Reserved]	49
SECTION 9.11 Lists of Holders; Reports by the Trustee and the Company	49
SECTION 9.12 Tax Treatment of Exchange Offer	50
ARTICLE 10 REDEMPTION OF SECURITIES	51
SECTION 10.1 Right of Redemption	51
SECTION 10.2 Applicability of Article	51
SECTION 10.3 Election to Redeem; Notice to Trustee	51
SECTION 10.4 Selection by Trustee of Securities to Be Redeemed	51
SECTION 10.5 Notice of Redemption	52
SECTION 10.6 Deposit of Redemption Price	53
SECTION 10.7 Securities Payable on Redemption Date	53
SECTION 10.8 Securities Redeemed in Part	53
ARTICLE 11 REPURCHASE UPON A DESIGNATED EVENT	54
SECTION 11.1 Repurchase Right	54
SECTION 11.2 [Reserved]	54
SECTION 11.3 Notices; Method of Exercising Repurchase Right, Etc.	55
ARTICLE 12 CONVERSION OF SECURITIES	56
SECTION 12.1 Conversion Privilege and Conversion Price	56
SECTION 12.2 Exercise of Conversion Privilege	59
SECTION 12.3 Fractions of Shares	59
SECTION 12.4 Adjustment of Conversion Price	60
SECTION 12.5 Notice of Adjustments of Conversion Price	68
SECTION 12.6 Notice of Certain Corporate Action	68
SECTION 12.7 Company to Reserve Common Stock	69
SECTION 12.8 Taxes on Conversions	69
SECTION 12.9 Covenant as to Common Stock	70
SECTION 12.10 Cancellation of Converted Securities	70
SECTION 12.11 Effect of Reclassification, Consolidation, Merger or Sale	70
SECTION 12.12 Responsibility of Trustee for Conversion Provisions	71
SECTION 12.13 Payment Upon Conversion	72

iii

Table of Contents

(Continued)

EXHIBIT A – FORM OF SECURITY

iv

INDENTURE, dated as of ·, 2005, 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, N.A., a national banking association, 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 New 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).

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“Additional Securities” means Securities other than the Initial Securities issued under this Indenture in accordance with Section 2.1.

“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(c)(5).

“Applicable Stock Price” has the meaning specified in Section 12.13(d).

“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.

“Cash Settlement Average Period” has the meaning specified in Section 12.13(d).

“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

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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 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 in 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 in 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 in 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.

“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.

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“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, if any, 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 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 Date” has the meaning specified in Section 12.2.

“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.

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“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, N.A., 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.

“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(d) 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.

“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.

“Exchanged ZYPS” has the meaning specified in Section 9.12.

“Exchange Offer” has the meaning specified in Section 9.12.

“Exchange Rate Contract” means, with respect to any Person, any currency swap agreements, forward exchange rate agreements, foreign currency futures or options,

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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 Security in global form that is in the form of the Security attached hereto as Exhibit A.

“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.

“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.

“Initial Securities” means the U.S.$· aggregate principal amount of Securities issued under this Indenture on the date 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.

“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.

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“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 (including Additional Securities) theretofore authenticated and delivered under this Indenture, except:

(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

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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, 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.

“Record Date” has the meaning specified in Section 12.4(g).

“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.

“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.

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“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).

“Significant Subsidiary” means any Subsidiary which is a “significant subsidiary” within the meaning of Rule 405 under the Securities Act.

“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 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); provided, however, that for purposes of Section 12.13, “Trading Day” shall have the meaning specified in Section 12.13(e).

“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

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either the Company or the Calculation Agent cannot reasonably obtain at least one bid quotation for the Securities 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.

“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 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,

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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 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.

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(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.

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

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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.

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).

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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 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 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 Redemption Date or at the Stated Maturity or on such last day for conversion.

SECTION 1.13 Recourse Against Others.

No recourse for the payment of the principal of or premium, 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.

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.$420,000,000, 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 “New Zero Yield Puttable Securities (ZYPS^SM) due May 15, 2023” of the Company. Their Stated Maturity shall be May 15, 2023. The Securities shall bear no interest.

The principal of and premium, 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”).

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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”).

Additional Securities ranking pari passu with the Initial Securities may be created and issued from time to time by the Company without notice to or consent of the Holders so that such Additional Securities may be consolidated and form a single class with, and have the same terms as to status, redemption, conversion or otherwise as, the Initial Securities; provided that the aggregate principal amount of Securities that may be issued under this Indenture shall be limited to U.S.$420,000,000. Any Additional Securities shall be issued with the benefit of an indenture supplemental to this Indenture.

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.

The Securities shall be initially issued in the form of one or more Global Securities 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 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 Global Security may be increased or decreased from time to time by adjustments made on the records of the Custodian, 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.

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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 (including Additional 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 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 legends as may be required by this Indenture.

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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 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, and exchanges of interests in Global Securities, and transfers or exchanges of other Securities as described in clause (2) 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 Transfer of 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

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transfer of a beneficial interest in a Global Security effected in accordance with the other provisions of this Section 2.5(b).

(2) Exchanges. In the event that a Global Security or any portion thereof is exchanged for a 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 clause (1) above and any rules and procedures of the Depositary (the “Applicable Procedures”), as may be from time to time adopted by the Company and the Trustee.

(c) 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) there shall have occurred and be continuing an Event of Default with respect to such Global Security or (C) 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) above shall be so exchanged in whole or in part and any Global Security exchanged pursuant to clause (B) or (C) 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 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

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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 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.

(d) 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.

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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.

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.

(e) 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

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Security, a new Security of like tenor and principal amount and bearing a number not contemporaneously outstanding.

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 [Reserved].

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, 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

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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 [Reserved].

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 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

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(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, 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;

(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

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Agent) as the Trustee may determine, to the Persons entitled thereto, of the principal and premium, 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 upon repurchase; or

(2) 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 clause (1) above) for a period of 60 consecutive 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

(3) 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 (3) 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 (3)) 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

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of such Indebtedness, then the Event of Default under this Indenture shall be deemed likewise to have been remedied, cured or waived; or

(4) 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

(5) 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.

SECTION 4.2 Acceleration of Maturity; Rescission and Annulment.

If an Event of Default specified in Section 4.1(4) or 4.1(5) occurs and is continuing, then automatically the principal of all the Securities 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 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 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,

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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) the principal of and premium, if any, on any Securities which has become due otherwise than by such declaration of acceleration, and

(2) 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(3) and such Event of Default has, pursuant to the proviso to such Section 4.1(3), 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.

SECTION 4.3 Collection of Indebtedness and Suits for Enforcement by the Trustee.

The Company covenants that if 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, 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.

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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) 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, 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, 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

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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 obligations 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, 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, 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, respectively; and

THIRD: Any remaining amounts shall be repaid to the Company.

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

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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 or Premium, if any, and To Convert.

Notwithstanding any other provision in this Indenture, the Holder of any Security shall have the right, which is absolute and unconditional, to receive payment of the principal of and premium, 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 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.

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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, and

(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, on any Security or (2) in 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,

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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, on any Security on or after the Stated Maturity 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

(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;

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(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 principal of or premium, 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(2), 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

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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;

(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) 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;

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(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.

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,

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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.

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 or the Zero Yield Puttable

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Securities (ZYPS^SM) due May 15, 2023 issued under the indenture dated as of May 7, 2003 between the Company and JPMorgan Chase Bank, N.A., as trustee. 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 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

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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

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the 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, N.A., 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

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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 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, N.A., as Trustee
By		, as
	Authenticating Agent

By
	Authorized Signatory

[The rest of this page has intentionally been left blank.]

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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, 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,

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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.

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 form of certificate 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; or

(9) to make provision for the issuance of Additional Securities in accordance with Section 2.1.

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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 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, any Security, or reduce the principal amount thereof 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, 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, 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

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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.

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.

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(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 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

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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.

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

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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 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 and Premium, if any.

The Company will duly and punctually pay the principal of and premium, 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, 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, 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

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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, on any of the Securities, segregate and hold in trust for the benefit of the Persons entitled thereto a sum sufficient to pay the principal and premium, 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, 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, so becoming due, such sum to be held in trust for the benefit of the Persons entitled to such principal or premium, 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, 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; 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

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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, on any Security and remaining unclaimed for two years after such principal and premium, 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 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,

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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 chief executive officer, the chief financial officer or the chief 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 [Reserved].

SECTION 9.10 [Reserved].

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 July 1, 2005 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

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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 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 2005, 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).

SECTION 9.12 Tax Treatment of Exchange Offer.

The Company agrees, and each Holder and any beneficial owner of an Initial Security, by its participation in the Exchange Offer, shall be deemed to agree, to treat the exchange of the Exchanged ZYPS for Initial Securities as not constituting a significant modification of the terms of the Exchanged ZYPS and as not constituting an exchange for purposes of Section 1001 of the Internal Revenue Code of 1986, as amended.

For purposes of this Section 9.12, “Exchanged ZYPS” means the Company’s Zero Yield Puttable Securities due May 15, 2023 issued pursuant to the indenture dated as of May 7, 2003 between the Company and JPMorgan Chase Bank, N.A., as trustee, that were exchanged by the holders thereof for the Initial Securities pursuant to the Company’s exchange offer (the “Exchange Offer”) described in its Registration Statement on Form S-4, as amended (File No. 333-120870).

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ARTICLE 10

REDEMPTION OF SECURITIES

SECTION 10.1 Right of Redemption.

At any time on or after May 15, 2009, 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.

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.

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 on 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. 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

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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.

All notices of redemption shall state:

(1) the Redemption Date,

(2) the Redemption Price,

(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 will become due and payable upon each such Security to be redeemed,

(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

(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

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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 all the Securities which are to be 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 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. 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.

If any Security called for redemption shall not be so paid upon surrender thereof for redemption, and each Security shall remain convertible into cash and shares of Common Stock, if any, 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

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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.

ARTICLE 11

REPURCHASE UPON A DESIGNATED EVENT

SECTION 11.1 Repurchase Right.

(a) On each of May 15, 2008, May 15, 2009, 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”). 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 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 (the “Designated Event Repurchase Price” and together with the Specific Date Repurchase Price, the “Repurchase Price”). The Designated Event Repurchase Price shall be paid by the Company in cash. 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.

SECTION 11.2 [Reserved].

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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 that the Repurchase Price shall be paid by the Company in cash,

(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; 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 repurchase of such Securities shall not be affected by any defect in or omission of such number.

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.

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(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 (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.

(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 each such Security shall be convertible into cash and Common Stock, if any, in accordance with this Indenture 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.

(f) The Trustee shall not be responsible for any failure of the Company to make any cash payment 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.

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

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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 an amount of cash and, if applicable, duly authorized, fully paid and nonassessable shares of Common Stock determined in accordance with Section 12.13:

(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:

(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

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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 in Control occurs but the Holders do not have the right to require the Company to purchase their Securities as a result of such Change in 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 in 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 in 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 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 cash and Common Stock, if any, 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 in Control, the Holders may exercise the right, if any, to require the Company to repurchase their Securities that may be triggered by a Change in Control pursuant to Section 11.

(c) 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.

(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

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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, (i) the Holder of any Global Security must transfer such Security by book-entry transfer to the Conversion Agent through the facilities of the Depositary and (ii) 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 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, if any, issuable upon conversion shall be treated for all purposes as the record holder or holders of such Common Stock at such time. “Conversion Date” means the date on which all of the foregoing requirements for conversion have been satisfied. As promptly as practicable following the Cash Settlement Average Period, the Company shall cause to be issued, if applicable, and delivered to such Conversion Agent the cash deliverable and a certificate or certificates for the number of full shares of Common Stock, if any, issuable upon conversion in an amount or amounts determined pursuant to Section 12.13, together with payment in lieu of any fraction of a share as provided in Section 12.3.

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 Securities of authorized denominations in aggregate principal amount equal to the unconverted portion of the principal amount of such Securities.

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, if any, 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 cash 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 Conversion Date.

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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 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

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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 cash and shares of Common Stock, if any, to which such Holder is entitled, the amount and kind of such securities which such Holder would have received if such Holder had converted its Securities into cash and Common Stock, if any, 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)

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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 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

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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 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 from such cash dividend or distribution 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

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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 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

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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 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

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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 sentence, the Company shall mail

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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) paying or issuing to the Holder of any Security converted after such Record Date and before the occurrence of such event the additional cash and shares of Common Stock, if any, issuable upon such conversion by reason of the adjustment required by such event over and above the cash and Common Stock, if any, 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 cash and shares of Common Stock, if any, 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 cash and Common Stock, if any, 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 cash and Common Stock, if any. 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

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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 cash and Common Stock, if any, issuable upon conversion, an amount of cash, evidence of indebtedness or other assets equal to the amount such Holder would have received if such Holder had, immediately prior to the Record Date for such distribution, converted its Security into cash and Common Stock, if any, 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

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(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

(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, if any, 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, if any, 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.

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SECTION 12.9 Covenant as to Common Stock.

The Company covenants that all shares of Common Stock, if any, 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.

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 cash and Common Stock, if any, 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

70

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.

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

71

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.

SECTION 12.13 Payment Upon Conversion.

(a) The Company shall satisfy in cash its conversion obligation with respect to the principal amount of any Securities converted pursuant to this Article 12, and satisfy the remaining amount, if any, in shares of Common Stock, as set forth in this Section 12.13.

(b) The amount of cash and shares of Common Stock, if any, payable upon conversion will be computed as follows:

(1) a cash amount equal to the lesser of (A) the aggregate principal amount of the Securities to be converted and (B) the Applicable Stock Price multiplied by the Conversion Rate then in effect multiplied by the aggregate principal amount of the Securities to be converted divided by 1,000; and

(2) if the amount determined pursuant to Section 12.13(b)(1)(B) exceeds the aggregate principal amount of Securities to be converted, a number of shares of Common Stock equal to (C) the aggregate principal amount of Securities to be converted divided by 1,000 and multiplied by (D) (i) the Conversion Rate then in effect minus (ii) $1,000 divided by the Applicable Stock Price.

(c) The Company shall settle its obligation to deliver cash and shares of Common Stock, if any, arising from any conversion on the second Trading Day following the final Trading Day of the relevant Cash Settlement Average Period.

(d) “Applicable Stock Price” means, in respect of a Conversion Date, the average Closing Price of the Common Stock over the twenty Trading Day period (the “Cash Settlement Average Period”) beginning on the Trading Day following the Conversion Date; provided, however, that:

(1) if the Conversion Date occurs during the period beginning on the date the Company calls the Securities for redemption pursuant to Article 10 hereof and ending on the day that is two Business Days immediately preceding the Redemption Date, the Cash Settlement Average Period will end on the second Trading Day preceding the Redemption Date; and

(2) if the Conversion Date occurs during the period beginning twenty-five Trading Days preceding the Stated Maturity Date and ending on the Stated Maturity Date, the Cash Settlement Average Period will end on the second Trading Day preceding the Stated Maturity Date.

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(e) For purposes of this Section 12.13 only, “Trading Day” shall mean a day on which the Common Stock (A) is not suspended from trading on any national or regional securities exchange or association or over-the-counter market at the close of business and (B) has traded at least once on the national or regional securities exchange or association or over-the-counter market that is the primary market for the trading of the Common Stock.

(f) The delivery by the Company to the Holder of cash and shares of Common Stock, if any, will be deemed to satisfy the Company’s obligation to pay the principal amount of the Securities.

[The rest of this page has intentionally been left blank.]

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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:
	Name:
	Title:

Attest:
By:
	Name:
	Title:

JPMORGAN CHASE BANK, N.A.,
as Trustee
By:
	Name:	Joanne Adamis
	Title:	Vice President

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EXHIBIT A - [FORM OF SECURITY]

[FORM OF FACE OF SECURITY]

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.

1

COMVERSE TECHNOLOGY, INC.

NEW ZERO YIELD PUTTABLE SECURITIES (ZYPS^SM) 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 · Million ($·) U.S. Dollars on May 15, 2023. This Security shall bear no interest.

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.

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: ·, 2005

COMVERSE TECHNOLOGY, INC.
By:
	Name: Title:
Attest:
By:
	Name: Title:

2

TRUSTEE’S CERTIFICATE OF AUTHENTICATION

This is one of the Securities described in the within-named Indenture.

JPMORGAN CHASE BANK, N.A., as Trustee
By:
	Authorized Signatory

3

[FORM OF REVERSE OF SECURITY]

COMVERSE TECHNOLOGY, INC.

NEW ZERO YIELD PUTTABLE SECURITIES (ZYPS^SM) DUE MAY 15, 2023

This Security is one of a duly authorized issue of Securities of the Company designated as its “New Zero Yield Puttable Securities (ZYPS^SM) due May 15, 2023” (herein called the “Securities”), limited in aggregate principal amount to U.S. $420,000,000, issued and to be issued under an Indenture, dated as of ·, 2005 (herein called the “Indenture”), between the Company and JPMorgan Chase Bank, N.A., 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.

Reference is made to Section 2.1 of the Indenture regarding the issuance of Additional Securities.

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.

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.

4

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, on this Security at the times, places and rate, and in the coin or currency, herein prescribed or to convert this Security as provided in the Indenture.

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.

5

All terms used in this Security which are defined in the Indenture shall have the meanings assigned to them in the Indenture.

6

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.

7

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.

8

[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 cash and shares of Common Stock, if any, in accordance with the terms of the Indenture referred to in this Security, and directs that the shares, if any, 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.

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

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:

10

[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 in cash.

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.

11

EX-5.1

Exhibit 5.1

[LETTERHEAD OF SHEARMAN & STERLING LLP]

December 21, 2004

The Board of Directors

Comverse Technology, Inc.

170 Crossways Park Drive

Woodbury, New York 11797

Comverse Technology, Inc.

Offer to Exchange

Zero Yield Puttable Securities due 2023

Ladies and Gentlemen:

We have acted as counsel to Comverse Technology, Inc., a New York corporation (the “Company”), in connection with the preparation and filing by the Company with the Securities and Exchange Commission under the Securities Act of 1933, as amended (the “Securities Act”), of a registration statement (the “Registration Statement”) on Form S-4 (Registration No. 333-120870), including a prospectus (the “Prospectus”) relating to the Company’s offer to exchange up to $420,000,000 aggregate principal amount of Zero Yield Puttable Securities due 2023 (the “New ZYPS”) for any and all outstanding Zero Yield Puttable Securities due 2023 (the “Existing ZYPS”). The New ZYPS will be convertible under certain circumstances into cash and shares, if any, of the Company’s common stock, par value $0.10 per share (the “Shares”). The New ZYPS are to be issued pursuant to the terms of an Indenture (the “Indenture”), to be dated as of the date of the initial issuance of the New ZYPS, between the Company and JPMorgan Chase Bank, N.A., as trustee (the “Trustee”), a copy of which was filed as an exhibit to the Registration Statement.

In that connection, we have reviewed originals or copies of the following documents:

(a) The Registration Statement.

(b) The Prospectus.

(c) The form of Indenture, including the form of the New ZYPS.

The documents described in the foregoing clauses (a) and (b) are collectively referred to herein as the “Opinion Documents.”

We have also reviewed the following:

(a) The certificate of incorporation and by-laws of the Company, as amended through the date hereof.

(b) Originals or copies of such corporate or other records of the Company, certificates of public officials and of officers of the Company and agreements and other documents as we have deemed necessary as a basis for the opinions expressed below.

In our review, we have assumed:

(a) The genuineness of all signatures.

(b) The authenticity of the originals of the documents submitted to us.

(c) The conformity to authentic originals of any documents submitted to us as copies.

We have not independently established the validity of the foregoing assumptions.

Our opinion expressed herein is limited to the law of the State of New York and the federal laws of the United States, and we do not express any opinion herein concerning any other law.

Based upon the foregoing and upon such other investigation as we have deemed necessary and subject to the qualifications set forth below, we are of the opinion that:

1.     The New ZYPS have been duly authorized by the Company and, when duly executed by the Company and authenticated by the Trustee in accordance with the Indenture and delivered in exchange for the Existing ZYPS as contemplated in the Registration Statement, the New ZYPS will be the legal, valid and binding obligations of the Company, enforceable against the Company in accordance with their terms.

2.     The Shares issuable upon conversion of the New ZYPS have been duly authorized, and such Shares, when issued and delivered upon conversion of such New ZYPS in accordance with the terms of the Indenture, will be validly issued, fully paid and non-assessable.

Our opinions expressed above are subject to the following qualifications:

(a)     Our opinion in paragraph 1 above is subject to the effect of any applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors’ rights generally (including without limitation all laws relating to fraudulent transfers).

(b)     Our opinion in paragraph 1 is also subject to the effect of general principles of equity, including without limitation concepts of materiality, reasonableness, good faith and fair dealing (regardless of whether considered in a proceeding in equity or at law).

This opinion letter speaks only as of the date hereof. We expressly disclaim any responsibility to advise you of any development or circumstance of any kind, including any change of law or fact, that may occur after the date of this opinion letter and that might affect the opinions expressed herein.

We hereby consent to the use of this opinion as an exhibit to the Registration Statement and to the use of our name under the heading “Legal Matters” in the Prospectus constituting a part of the Registration Statement.

Very truly yours,

/s/    Shearman & Sterling LLP

RE/SCC/DS/YJS

SMB

EX-8.1

Exhibit 8.1

[LETTERHEAD OF SHEARMAN & STERLING LLP]

December 21, 2004

Comverse Technology, Inc.

170 Crossways Park Drive

Woodbury, New York 11797

Ladies and Gentlemen:

We have acted as U.S. federal income tax counsel to Comverse Technology, Inc., a New York corporation (the “Company”) in connection with the preparation and filing by the Company of a Registration Statement on Form S-4 (the “Registration Statement”) with the Securities and Exchange Commission (the “Commission”) under the Securities Act of 1933, as amended.

Pursuant to the Registration Statement, the Company is issuing and exchanging up to $420,000,000 principal amount of its new Zero Yield Puttable Securities (“New ZYPS”) due 2023, for its outstanding Zero Yield Puttable Securities (“Existing ZYPS”) due 2023 (the “Exchange Offer”).

In connection with the preparation of this opinion letter, we have examined and relied upon such documents as we have deemed appropriate, including the Company’s offering memorandum dated May 2, 2003, in respect of its Existing ZYPS and the Registration Statement, initially filed by the Company with the Commission on November 30, 2004, in respect of its New ZYPS. In addition, we have obtained such additional information as we have deemed relevant and necessary through consultation with various officers and representatives of the Company and financial advisors to the Company. Any capitalized terms used but not defined herein have the meaning given to such terms in the Registration Statement.

We hereby confirm that the discussion under the caption “Material U.S. Federal Income Tax Consequences,” insofar as such discussion represents legal conclusions or statements of U.S. federal income tax law, subject to the limitations and conditions set forth therein, constitutes our opinion as to the material U.S. federal income tax consequences relevant to the exchange of Existing ZYPS for New ZYPS, and the purchase, ownership and disposition of the New ZYPS and the common stock acquired upon the conversion of the New ZYPS.

No opinion is expressed as to any other matter, including any aspects of state, local or non-United States tax law. This opinion is based on current U.S. federal income tax law and administrative practice, and we do not undertake to advise you as to any future changes in such law or practice that may affect our opinion unless we are specifically retained to do so. We hereby consent to the use of this opinion as an exhibit to the Registration Statement and to the reference to us in the Registration Statement under the caption “Legal Matters.”

	Very truly yours,
FS/SM/KL RE	/s/    Shearman & Sterling LLP

1

EX-12.1

Exhibit 12.1

Statement of Computation of Ratio of Earnings to Fixed Charges

	Year ended January 31,											9 months ended October 31,
	2000		2001		2002		2003			2004		2004
	(in thousands, except ratios)
Pre-tax income (loss) before adjustment for minority interests in consolidated subsidiaries and income or loss from equity investees	$	188,845	$	245,700	$	58,343	$	(123,839	)	$	8,580	$	54,302
Fixed charges:
Portion of rent expense representative of interest factor		7,500		9,435		12,154		12,011			10,539		8,050
Amortization of debt issuance costs		1,271		1,489		2,771		1,760			1,655		1,343
Interest expense		19,423		18,031		18,344		11,552			6,980		2,837
Total fixed charges		28,194		28,955		33,269		25,323			19,174		12,230
Earnings before fixed charges	$	217,039	$	274,655	$	91,612	$	(98,516	)	$	27,754	$	66,532
Ratio of earnings to fixed charges		7.7		9.5		2.8		N/A			1.4		5.4
Earnings deficiency to cover fixed charges							$	123,839

EX-23.1

Exhibit 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the incorporation by reference in this Amendment No. 1 to Registration Statement (No. 333-120870) of Comverse Technology, Inc. on Form S-4 of our report dated March 31, 2004, appearing in the Annual Report on Form 10-K of Comverse Technology, Inc. for the year ended January 31, 2004, and to the reference to us under the heading “Experts” in the Prospectus, which is part of such Registration Statement.

DELOITTE & TOUCHE LLP

Jericho, New York

December 20, 2004

EX-99.1

EXHIBIT 99.1

LETTER OF TRANSMITTAL

Offer for Any and All of the Outstanding

Zero Yield Puttable Securities due 2023

(CUSIP Nos. 205862 AL9, 205862 AK1)

in Exchange for

Zero Yield Puttable Securities due 2023

which will be Registered under

the Securities Act of 1933, as Amended,

Prior to Closing

of

Comverse Technology, Inc.

THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:01 A.M., NEW YORK CITY TIME, ON JANUARY 21, 2005 UNLESS EXTENDED (THE “EXPIRATION DATE”). TENDERS MAY BE WITHDRAWN PRIOR TO 12:01 A.M., NEW YORK CITY TIME, ON THE EXPIRATION DATE.

Delivery To:

JPMorgan Chase Bank, N.A.

Zero Yield Puttable Securities due 2023

By Hand: JPMorgan Chase Bank, N.A. Institutional Trust Services window 4 New York Plaza, 1st Floor New York, New York 10004	By Mail: JPMorgan Chase Bank, N.A. Institutional Trust Services P.O. Box 2320 Dallas, Texas 75221-2320 Attention: Frank Ivins
By Overnight Mail or Courier: JPMorgan Chase Bank, N.A. Institutional Trust Services 2001 Bryan Street, 9th Floor Dallas, Texas 75201 Attention: Frank Ivins	By Facsimile: (214) 468-6494 (For Eligible Institutions Only) Confirm by Telephone: (214) 468-6464

For Information with respect to the Exchange Offer call:

D.F. King & Co., Inc.

48 Wall Street, 22^nd Floor

New York, New York 10005

Banks and Brokers call collect: (212) 269-5550

All Others call toll free: (800) 758-5378

The Dealer Manager for the Exchange Offer is:

Lehman Brothers

745 Seventh Avenue, 5^th Floor

New York, New York 10019

Attention: Convertible Origination Group

(800) 438-3242 (U.S. toll-free)

(212) 526-7343 (collect)

DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.

The undersigned acknowledges that he or she has received the Preliminary Prospectus, dated December 21, 2004 (the “Prospectus”), of Comverse Technology, Inc., a New York corporation (the “Company”), and this Letter of Transmittal (the “Letter”), which together constitute the Company’s offer to exchange up to $420,000,000 aggregate principal amount of the Company’s Zero Yield Puttable Securities due 2023 (the “New ZYPS”), for an aggregate principal amount of up to $420,000,000 of the Company’s issued and outstanding Zero Yield Puttable Securities due 2023 (the “Existing ZYPS”) from the registered holders thereof (the “Holders”) (the “Exchange Offer”).

For each Existing ZYPS in principal amount of $1,000 accepted for exchange, the Holder of such ZYPS will receive $1,000 in principal amount of New ZYPS.

This Letter is to be completed by a Holder and tender of Existing ZYPS is to be made by book-entry transfer to the account maintained by the Exchange Agent at The Depository Trust Company (the “Book-Entry Transfer Facility”) pursuant to the procedures set forth in “The Exchange Offer—Procedures for Tendering Existing ZYPS” section of the Prospectus. Holders who are unable to deliver confirmation of the book-entry tender of their Existing ZYPS into the Exchange Agent’s account at the Book-Entry Transfer Facility (a “Book-Entry Confirmation”) and all other documents required by this Letter to the Exchange Agent on or prior to the Expiration Date must tender their Existing ZYPS according to the guaranteed delivery procedures set forth in “The Exchange Offer—Guaranteed Delivery Procedures” section of the Prospectus. Delivery of documents to the Book-Entry Transfer Facility does not constitute delivery to the Exchange Agent.

The Company reserves the right, at any time, or from time to time, to extend the Exchange Offer and to amend any of the terms and conditions of the Exchange Offer, other than conditions required by applicable law, at its discretion. The Company shall notify the Holders of the Existing ZYPS of any extension promptly by oral or written notice thereof.

Please read this entire Letter of Transmittal and the Prospectus carefully before checking any box below. The instructions included in this Letter of Transmittal must be followed.

YOU MUST SIGN THIS LETTER OF TRANSMITTAL IN THE APPROPRIATE SPACE PROVIDED, WITH SIGNATURE GUARANTEE IF REQUIRED AND COMPLETE THE SUBSTITUTE FORM W-9 SET FORTH BELOW.

The undersigned has completed the appropriate boxes below and signed this Letter to indicate the action the undersigned desires to take with respect to the Exchange Offer.

List in the sections provided below each issue of Existing ZYPS to which this Letter relates. If the space provided below is inadequate, the certificate numbers and principal amount of Existing ZYPS should be listed and attached on a separate schedule.

DESCRIPTION OF REGISTERED EXISTING ZYPS (CUSIP NO. 205862 AL9)	1	2	3
Name(s) and Address(es) of Registered Holder(s) (Please fill in, if blank)	Certificate Number(s)*	Aggregate Principal Amount of Existing ZYPS	Principal Amount Tendered**
	Total
*       Need not be completed by holders tendering by book-entry transfer. **     Unless otherwise indicated in this column, a Holder will be deemed to have tendered ALL of the Existing ZYPS represented by the ZYPS indicated in column 2. See Instruction 2. Existing ZYPS tendered hereby must be in denominations of principal amount of $1,000 and any integral multiple thereof. See Instruction 1.

DESCRIPTION OF UNREGISTERED EXISTING ZYPS (CUSIP NO. 205862 AK1)	1	2	3
Name(s) and Address(es) of Registered Holder(s) (Please fill in, if blank)	Certificate Number(s)*	Aggregate Principal Amount of Existing ZYPS	Principal Amount Tendered**
	Total
*       Need not be completed by holders tendering by book-entry transfer. **     Unless otherwise indicated in this column, a Holder will be deemed to have tendered ALL of the Existing ZYPS represented by the ZYPS indicated in column 2. See Instruction 2. Existing ZYPS tendered hereby must be in denominations of principal amount of $1,000 and any integral multiple thereof. See Instruction 1.

The numbers and addresses of the holders should be printed exactly as they appear on the certificate representing Existing ZYPS tendered hereby.

¨ CHECK HERE IF TENDERED EXISTING ZYPS ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER MADE TO THE ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH THE BOOK-ENTRY TRANSFER FACILITY AND COMPLETE THE FOLLOWING:

Name of Tendering Institution                                                                                                                                                                  

Account Number                                                                    Transaction Code Number                                                                       

¨ CHECK HERE IF TENDERED EXISTING ZYPS ARE BEING DELIVERED PURSUANT TO A NOTICE OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE EXCHANGE AGENT AND COMPLETE THE FOLLOWING:

Name(s) of Registered Holder(s)                                                                                                                                                              

Window Ticket Number (if any)                                                                                                                                                                

Date of Execution of Notice of Guaranteed Delivery                                                                                                                             

Name of Institution which Guaranteed Delivery                                                                                                                                      

For Book-Entry Transfer, Complete the Following:

Account Number                     Transaction Code Number                                                                                                                       

PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY

Ladies and Gentlemen:

Upon the terms and subject to the conditions of the Exchange Offer (and if such Exchange Offer is extended or amended, the terms of any such extension or amendment), the undersigned hereby tenders to the Company the aggregate principal amount of Existing ZYPS indicated above. Subject to, and effective upon, the acceptance for exchange of the Existing ZYPS tendered hereby, the undersigned hereby sells, assigns and transfers to, or upon the order of, the Company, all right, title and interest in and to such Existing ZYPS as are being tendered hereby.

The undersigned understands that tenders of Existing ZYPS pursuant to any of the procedures described in the Prospectus and in the instructions hereto and acceptance thereof by purchaser will constitute a binding agreement between the undersigned and purchaser.

The undersigned hereby irrevocably constitutes and appoints the Exchange Agent as the undersigned’s true and lawful agent and attorney-in-fact with respect to such tendered Existing ZYPS, with full power of substitution, among other things, to cause the Existing ZYPS to be assigned, transferred and exchanged. The undersigned hereby represents and warrants that the undersigned has full power and authority to tender, sell, assign and transfer the Existing ZYPS and to acquire New ZYPS issuable upon the exchange of such tendered Existing ZYPS, and that, when the same are accepted for exchange, the Company will acquire good and unencumbered title thereto, free and clear of all liens, restrictions, charges and encumbrances and not subject to any adverse claim when the same are accepted by the Company.

The undersigned will, upon request, execute and deliver any additional documents deemed by the Company to be necessary or desirable to complete the sale, assignment and transfer of the Existing ZYPS tendered hereby. All authority conferred or agreed to be conferred in this Letter and every obligation of the undersigned hereunder shall be binding upon the successors, assigns, heirs, executors, administrators, trustees in bankruptcy and legal representatives of the undersigned and shall not be affected by, and shall survive, the death or incapacity of the undersigned. This tender may be withdrawn only in accordance with the procedures set forth in “The Exchange Offer—Withdrawal Rights” section of the Prospectus.

The undersigned hereby represents and warrants that it is not prohibited from selling to or otherwise doing business with “U.S. Persons” and “persons subject to the jurisdiction of the United States” by any of the regulations of the U.S. Department of Treasury Office of Foreign Assets Control, pursuant to 31 C.F.R. Chapter V, or any legislation or executive orders relating thereto.

THE UNDERSIGNED, BY COMPLETING ONE OR MORE OF THE SECTIONS ENTITLED “DESCRIPTION OF REGISTERED EXISTING ZYPS” AND “DESCRIPTION OF UNREGISTERED EXISTING ZYPS” ABOVE AND SIGNING THIS LETTER, WILL BE DEEMED TO HAVE TENDERED THE EXISTING ZYPS AS SET FORTH IN THE SECTIONS ABOVE.

Unless otherwise indicated herein in the box entitled “Special Issuance Instructions” below, please credit the account indicated above which is maintained at the Book-Entry Transfer Facility.

SPECIAL ISSUANCE INSTRUCTION

(See Instructions 3 and 4)

To be completed ONLY if Existing ZYPS not accepted for exchange or New ZYPS are to be returned by credit to an account maintained at the Book-Entry Transfer Facility other than the account indicated above.

Issue New ZYPS and/or unexchanged Existing ZYPS to:

Name(s)                                                                                                                                                                                                   

(Please Type or Print)

(Please Type or Print)

Address                                                                                                                                                                                                    

(Zip Code)

(Complete Substitute Form W-9)

¨        Credit New ZYPS and/or unexchanged Existing ZYPS delivered by book-entry transfer to the Book-Entry Transfer Facility account set forth below.

(Book-Entry Transfer Facility Account Number, if applicable)

IMPORTANT: THIS LETTER OR A FACSIMILE HEREOF (TOGETHER WITH A BOOK-ENTRY CONFIRMATION AND ALL OTHER REQUIRED DOCUMENTS OR THE NOTICE OF GUARANTEED DELIVERY) MUST BE RECEIVED BY THE EXCHANGE AGENT PRIOR TO 12:01 A.M., NEW YORK CITY TIME, ON THE EXPIRATION DATE.

PLEASE READ THIS ENTIRE LETTER OF TRANSMITTAL

CAREFULLY BEFORE COMPLETING ANY BOX ABOVE.

PLEASE SIGN HERE (TO BE COMPLETED BY ALL TENDERING HOLDERS) (Complete Accompanying Substitute Form W-9 below)
x	,
x	,
(Signatures(s) of Owner(s))	(Date)
Area Code and Telephone Number:                                                                                                                                                 If a Holder is tendering any Existing ZYPS, this Letter must be signed by the registered Holder(s) as the name(s) appear(s) on the certificate(s) for the Existing ZYPS or by any person(s) authorized to become registered Holder(s) by endorsements and documents transmitted herewith. If signature is by a trustee, executor, administrator, guardian, officer or other person acting in a fiduciary or representative capacity, please set forth full title. See Instruction 3. Name(s):                                                                                                                                                                                                   (Please Type or Print) Capacity:                                                                                                                                                                                                   Address:                                                                                                                                                                                                    (Including Zip Code) Tax Identification or Social Security Number:

SIGNATURE GUARANTEE

(If required by Instruction 3)

Signature(s) Guaranteed by
an Eligible Institution:                                                                                                                                                                              

(Authorized Signature)

(Title)

(Name and Firm)

Dated:                    ,                                                          

INSTRUCTIONS

Forming Part of the Terms and Conditions of the Exchange Offer for the

Outstanding Zero Yield Puttable Securities due 2023

(CUSIP Nos. 205862 AL9, 205862 AK1)

in Exchange for

Zero Yield Puttable Securities due 2023

Which Will be Registered Under

The Securities Act of 1933, as Amended,

Prior to Closing

of

Comverse Technology, Inc.

1. Delivery of this Letter; Guaranteed Delivery Procedures. This Letter, or an electronic confirmation pursuant to the Depository Trust Company’s ATOP system, is to be completed by Holders of Existing ZYPS for tenders that are made pursuant to the procedures for delivery by book-entry transfer set forth in “The Exchange Offer—Procedures for Tendering Existing ZYPS” section of the Prospectus. Book-Entry Confirmation, as well as a properly completed and duly executed Letter (or manually signed facsimile hereof), or an electronic confirmation pursuant to the Depository Trust Company’s ATOP system, and any other documents required by this Letter, must be received by the Exchange Agent at the address set forth herein on or prior to the Expiration Date, or the tendering Holder must comply with the guaranteed delivery procedures set forth below. Existing ZYPS tendered hereby must be in denominations of principal amount of $1,000 or any integral multiple thereof.

Holders who cannot complete the procedure for book-entry transfer on a timely basis or who cannot deliver all other required documents to the Exchange Agent on or prior to the Expiration Date may tender their Existing ZYPS pursuant to the guaranteed delivery procedures set forth in “The Exchange Offer—Guaranteed Delivery Procedures” section of the Prospectus. Pursuant to such procedures, (i) such tender must be made through a firm which is a financial institution (including most banks, savings and loan associations and brokerage houses) that is a participant in the Securities Transfer Agents Medallion Program, the NYSE Medallion Signature Program or the Stock Exchanges Medallion Program (each an “Eligible Institution”), (ii) prior to 12:01 a.m., New York City time, on the Expiration Date, the Exchange Agent must receive from such Eligible Institution (A) a properly completed and duly executed Letter (or a facsimile thereof), or an electronic confirmation pursuant to the Depository Trust Company’s ATOP system, and (B) Notice of Guaranteed Delivery, substantially in the form provided by the Company (by facsimile transmission, mail or hand delivery), setting forth the name and address of the Holder and the amount of Existing ZYPS tendered, stating that the tender is being made thereby and guaranteeing that within three Nasdaq trading days after the Expiration Date, a Book-Entry Confirmation and any other documents requested by this Letter will be deposited by the Eligible Institution with the Exchange Agent, and (iii) a Book-Entry Confirmation and all other documents required by this Letter, must be received by the Exchange Agent within three Nasdaq trading days after the Expiration Date.

The delivery of the Existing ZYPS and all other required documents will be deemed made only when confirmed by the Exchange Agent.

See “The Exchange Offer” section of the Prospectus.

2. Signatures on this Letter; Bond Powers and Endorsements; Guarantee of Signatures. If this Letter is signed by the registered Holder of the Existing ZYPS tendered hereby, the signature must correspond exactly with the name as it appears on a security position listing as the Holder of such Existing ZYPS in the Book-Entry Transfer Facility System without any change whatsoever.

If any tendered Existing ZYPS are owned of record by two or more joint owners, all of such owners must sign this Letter.

If any tendered Existing ZYPS are registered in different names, it will be necessary to complete, sign and submit as many separate copies of this Letter as there are different registrations.

When this Letter is signed by the registered Holder(s) of the Existing ZYPS specified herein and tendered hereby, no separate bond powers are required. If, however, the New ZYPS are to be issued to a person other than the registered Holder, then separate bond powers are required.

If this Letter or any bond powers are signed by trustees, executors, administrators, guardians, attorneys-in-fact, officers of corporations or others acting in a fiduciary or representative capacity, such persons should so indicate when signing, and, unless waived by the Company, proper evidence satisfactory to the Company of their authority to so act must be submitted.

Signatures on bond powers required by this Instruction 2 must be guaranteed by an Eligible Institution.

Signatures on this Letter need not be guaranteed by an Eligible Institution, provided the Existing ZYPS are tendered: (i) by a registered Holder of Existing ZYPS (including any participant in the Book-Entry Transfer Facility system whose name appears on a security position listing as the Holder of such Existing ZYPS) who has not completed the box entitled “Special Issuance Instructions” on this Letter, or (ii) for the account of an Eligible Institution.

3. Special Issuance Instructions. Holders tendering Existing ZYPS by book-entry transfer may request that Existing ZYPS not exchanged be credited to such account maintained at the Book-Entry Transfer Facility as such Holder may designate hereon. If no such instructions are given, such Existing ZYPS not exchanged will be credited to the proper account maintained at The Depository Trust Company. In the case of issuance in a different name, the employer identification or social security number of the person named must also be indicated.

4. Important Tax Information. Under current federal income tax law, a holder whose tendered Existing ZYPS are accepted for exchange may be subject to backup withholding unless the holder provides the Exchange Agent with either (i) such holder’s correct taxpayer identification number (“TIN”) on Substitute Form W-9 attached hereto, certifying that the TIN provided on Substitute Form W-9 is correct (or that such holder is awaiting a TIN) and that (A) the holder has not been notified by the Internal Revenue Service that he or she is subject to backup withholding as a result of a failure to report all interest or dividends or (B) the Internal Revenue Service has notified the holder that he or she is no longer subject to backup withholding; or (ii) an adequate basis for exemption from backup withholding. If such holder is an individual, the TIN is such holder’s social security number. If the Exchange Agent is not provided with the correct TIN, the holder may be subject to certain penalties imposed by the Internal Revenue Service.

Certain holders (including, among others, all corporations and certain foreign individuals) are not subject to these backup withholding and reporting requirements. Exempt holders should indicate their exempt status on Substitute Form W-9. A foreign individual may qualify as an exempt recipient by submitting to the Exchange Agent a properly completed Internal Revenue Service Form W-8 BEN, W-8ECI, W-8IMY or W-8EXP, as applicable, (which the Exchange Agent will provide upon request) signed under penalty of perjury, attesting to the holder’s exempt status. See the enclosed Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9 (the “Guidelines”) for additional instructions.

If backup withholding applies, the Company is required to withhold a portion of certain payments made to the holder or other payee. Backup withholding is not an additional federal income tax. Rather, the federal income tax liability of persons subject to backup withholding will be reduced by the amount of tax withheld. If withholding results in an overpayment of taxes, a refund may be obtained from the Internal Revenue Service.

NOTE: FAILURE TO COMPLETE AND RETURN THE SUBSTITUTE FORM W-9 MAY RESULT IN BACKUP WITHHOLDING OF A PORTION OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE EXCHANGE OFFER. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.

5. Transfer Taxes. The Company will pay all transfer taxes, if any, applicable to the transfer of Existing ZYPS to it or its order pursuant to the Exchange Offer, provided that such transfer taxes will not be considered to include income taxes, franchise taxes, or any other taxes that are not occasioned solely by the transfer of the Existing ZYPS. If, however, New ZYPS and/or substitute Existing ZYPS not exchanged are to be registered or issued in the name of any person other than the registered Holder of the Existing ZYPS tendered hereby, or if tendered Existing ZYPS are registered in the name of any person other than the person signing this Letter, or if a transfer tax is imposed for any reason other than the transfer of Existing ZYPS to the Company or its order pursuant to the Exchange Offer, the amount of any such transfer taxes (whether imposed on the registered Holder or any other persons) will be payable by the tendering Holder. If satisfactory evidence of payment of such taxes or exemption therefrom is not submitted herewith, the amount of such transfer taxes will be billed directly to such tendering Holder.

6. Waiver of Conditions. The Company reserves the absolute right to waive satisfaction of any or all conditions enumerated in the Prospectus in accordance with applicable law.

7. No Conditional Tenders. No alternative, conditional, irregular or contingent tenders will be accepted. All tendering Holders of Existing ZYPS, by execution of this Letter, shall waive any right to receive notice of the acceptance of their Existing ZYPS for exchange.

Neither the Company, the Exchange Agent nor any other person is obligated to give notice of any defect or irregularity with respect to any tender of Existing ZYPS nor shall any of them incur any liability for failure to give any such notice.

8. Withdrawal Rights. Tenders of Existing ZYPS may be withdrawn (i) at any time prior to 12:01 a.m., New York City time, on the Expiration Date or (ii) at any time after January 21, 2005 if the Company has not accepted the tendered Existing ZYPS for exchange by that date.

For a withdrawal of a tender of Existing ZYPS to be effective, a written notice of withdrawal must be received by the Exchange Agent at the address set forth above prior to 12:01 a.m., New York City time, on the Expiration Date or at any time after January 21, 2005 if the Company has not accepted the tendered Existing ZYPS for exchange by that date. Any such notice of withdrawal must (i) specify the name of the person having tendered the Existing ZYPS to be withdrawn (the “Depositor”), (ii) specify the name and number of the account at the Book-Entry Transfer Facility to be credited with the withdrawn Existing ZYPS and otherwise comply with the procedures of such facility, (iii) contain a statement that such Holder is withdrawing his election to have such Existing ZYPS exchanged, (iv) be signed by the Holder in the same manner as the original signature on the Letter by which such Existing ZYPS were tendered (including any required signature guarantees) or be accompanied by documents of transfer to have the Trustee, with respect to the Existing ZYPS, register the transfer of such Existing ZYPS in the name of the person withdrawing the tender and (v) specify the name in which such Existing ZYPS are registered, if different from that of the Depositor. All questions as to the validity, form and eligibility (including time of receipt) of such notices will be determined by the Company, whose determination shall be final and binding on all parties. Any Existing ZYPS so withdrawn will be deemed not to have been validly tendered for exchange for purposes of the applicable Exchange Offer and no New ZYPS will be issued with respect thereto unless the Existing ZYPS so withdrawn are validly retendered. Any Existing ZYPS that have been tendered for exchange but which are not exchanged for any reason will be credited into the Exchange Agent’s account at the Book-Entry Transfer Facility pursuant to the book-entry transfer procedures set forth in “The Exchange Offer – Procedures for Tendering Existing ZYPS” section of the Prospectus. Such Existing ZYPS will be credited to an account maintained with the Book-Entry Transfer Facility for the Existing ZYPS as soon as practicable after withdrawal, rejection of tender or termination of the applicable Exchange Offer. Properly withdrawn Existing ZYPS may be retendered by following the procedures described above at any time on or prior to 12:01 a.m., New York City time, on the Expiration Date.

9. Requests for Assistance or Additional Copies. Questions relating to the procedure for tendering and requests for Notices of Guaranteed Delivery may be directed to the Exchange Agent, at the address and telephone number indicated above. The Dealer Manager for the Exchange Offer is Lehman Brothers, 745 Seventh Avenue, 5th Floor, New York, New York 10019 Attention: Convertible Origination Group, (800) 438-3242 (U.S. toll-free), (212) 526-7343 (collect). Requests for additional copies of the Prospectus, this Letter and other related documents may be directed to the information agent, D.F. King & Co., Inc. (the “Information Agent”), at the following address and telephone numbers:

48 Wall Street, 22^nd Floor

New York, New York 10005

Banks and Brokers call collect: (212) 269-5550

All Others call toll free: (800) 758-5378

To Be Completed by all Tendering Holders

(see Instruction 4)

Name:
Business Name, if different from above:
Check appropriate box:	¨  Individual/Sole Proprietor ¨  Partnership	¨  Corporation ¨  Other:
Address:
SUBSTITUTE Form W-9 Department of the Treasury Internal Revenue Service Payor’s Request for Taxpayer Identification Number (“TIN”)	PARTI – please provide your TIN in the box at right and certify by signing and dating below.	TIN:                             Social Security Number or Employer Identification Number (if awaiting TIN write “Applied For”)
	Part  II – For payees exempt from backup withholding, see the attached Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9 and complete as instructed therein.
	Part  III – Certification: Under penalties of perjury, I certify that: (1)    The Number shown on this form is my correct Taxpayer Identification Number (or I am waiting for Taxpayer Identification Number to issued to me);
	(2)    I am not subject to backup withholding because (a) I am exempt from backup withholding, or (b) I have not been notified by the Internal Revenue Service (IRS) that I am subject to backup withholding as a result of a failure to report all interest or dividends, or (c) the IRS has notified me that I am no longer subject to backup withholding; and
	(3)    I am a U.S. person (including a U.S. resident alien).
	CERTIFICATION INSTRUCTIONS – You must cross out item (2) above if you have been notified by the IRS that you are subject to backup withholding because you have failed to report all interest or dividends on your tax return. However, if after being notified by the IRS that you were subject to backup withholding you received another notification from the IRS that you are no longer subject to backup withholding, do not cross out item (2). (Also see instructions in the enclosed Guidelines.)
	The Internal Revenue Service does not require your consent to any provision of this document other than the certifications required to avoid backup withholding. Signature:                                                   Date

NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN A $50 PENALTY IMPOSED BY THE IRS AND BACKUP WITHHOLDING OF 28% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.

YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU ARE AWAITING YOUR TIN

CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER

I certify under penalties of perjury that a taxpayer identification number has not been issued to me, and either (a) I have mailed or delivered an application to receive a taxpayer identification number to the appropriate Internal Revenue Service Center of Social Security Administration Office, or (b) I intend to mail or deliver an application in the near future. I understand that if I do not provide a taxpayer identification number by the time of the exchange, 28 percent of all reportable payments made to me thereafter will be withheld until I provide a taxpayer identification number to the Payor. If I do not provide a taxpayer identification number within 60 days, any amounts withheld shall be remitted to the IRS as backup withholding.

Signature                                                                                                                       Date                             

The Exchange Agent for the Exchange Offer is:

JPMorgan Chase Bank, N.A.

By Hand: JPMorgan Chase Bank, N.A. Institutional Trust Services window 4 New York Plaza, 1st Floor New York, New York 10004	By Mail: JPMorgan Chase Bank, N.A. Institutional Trust Services P.O. Box 2320 Dallas, Texas 75221-2320 Attention: Frank Ivins
By Overnight Mail or Courier: JPMorgan Chase Bank, N.A. Institutional Trust Services 2001 Bryan Street, 9th Floor Dallas, Texas 75201 Attention: Frank Ivins	By Facsimile: (214) 468-6494 (For Eligible Institutions Only) Confirm by Telephone: (214) 468-6464

The Information Agent for the Exchange Offer is:

D.F. King & Co., Inc.

48 Wall Street, 22^nd Floor

New York, New York 10005

Banks and Brokers call collect: (212) 269-5550

All Others call toll free: (800) 758-5378

The Dealer Manager for the Exchange Offer is:

Lehman Brothers

745 Seventh Avenue, 5^th Floor

New York, New York 10019

Attention: Convertible Origination Group

(800) 438-3242 (U.S. toll-free)

(212) 526-7343 (collect)

EX-99.2

EXHIBIT 99.2

Notice of Guaranteed Delivery

for

Comverse Technology, Inc.

Offer for Any and All of the Outstanding

Zero Yield Puttable Securities due 2023

(CUSIP Nos. 205862 AL9, 205862 AK1)

in Exchange for

Zero Yield Puttable Securities due 2023

which will be Registered under the Securities Act of 1933, as Amended,

Prior to Closing

You must use this form, or a form substantially equivalent to this form, to accept the Exchange Offer of Comverse Technology, Inc. (the “Company”) made pursuant to the preliminary prospectus, dated December 21, 2004 (together with any subsequent preliminary or final prospectus, the “Prospectus”), if the procedure for book-entry transfer cannot be completed on a timely basis or time will not permit all required documents to reach JPMorgan Chase Bank, N.A., as exchange agent (the “Exchange Agent”), prior to 12:01 a.m., New York City time, on the Expiration Date of the Exchange Offer. This form may be delivered or transmitted by facsimile transmission, mail or hand delivery to the Exchange Agent as set forth below. In addition, in order to utilize the guaranteed delivery procedure to tender outstanding Zero Yield Puttable Securities due 2023 (the “Existing ZYPS”) pursuant to the Exchange Offer, a Letter of Transmittal (or facsimile thereof) or an electronic confirmation pursuant to The Depository Trust Company’s ATOP system, with any required signature guarantees and any other required documents must also be received by the Exchange Agent prior to 12:01 a.m., New York City time, on the Expiration Date. Capitalized terms not defined herein are defined in the Prospectus.

Delivery To:

JPMorgan Chase Bank, N.A.

For Zero Yield Puttable Securities due 2023

By Hand: JPMorgan Chase Bank, N.A. Institutional Trust Services window 4 New York Plaza, 1st Floor New York, New York 10004	By Mail: JPMorgan Chase Bank, N.A. Institutional Trust Services P.O. Box 2320 Dallas, Texas 75221-2320 Attention: Frank Ivins
By Overnight Mail or Courier: JPMorgan Chase Bank, N.A. Institutional Trust Services 2001 Bryan Street, 9th Floor Dallas, Texas 75201 Attention: Frank Ivins	By Facsimile: (214) 468-6494 (For Eligible Institutions Only) Confirm by Telephone: (214) 468-6464

For Information with respect to the Exchange Offer call:

D.F. King & Co., Inc.

48 Wall Street, 22^nd Floor

New York, New York 10005

Banks and Brokers call collect: (212) 269-5550

All Others call toll free: (800) 758-5378

The Dealer Manager is:

Lehman Brothers

745 Seventh Avenue, 5^th Floor

New York, New York 10019

Attention: Convertible Origination Group

(800) 438-3242 (U.S. toll-free)

(212) 526-7343 (collect)

DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE, OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE OTHER THAN AS SET FORTH ABOVE, WILL NOT CONSTITUTE A VALID DELIVERY.

THIS FORM IS NOT TO BE USED TO GUARANTEE SIGNATURES. IF A SIGNATURE ON THE LETTER OF TRANSMITTAL IS REQUIRED TO BE GUARANTEED, SUCH SIGNATURE GUARANTEE MUST APPEAR IN THE APPLICABLE SPACE PROVIDED IN THE SIGNATURE BOX ON THE LETTER OF TRANSMITTAL.

Ladies and Gentlemen:

Upon the terms and conditions set forth in the Prospectus and the accompanying Letter of Transmittal, the undersigned hereby tenders to the Company the principal amount of Existing ZYPS set forth below pursuant to the guaranteed delivery procedure described in “The Exchange Offer – Guaranteed Delivery Procedures” section of the Prospectus.

The undersigned understands that tenders of Existing ZYPS will be accepted only in authorized denominations. The undersigned understands that tenders of Existing ZYPS pursuant to the Exchange Offer may not be withdrawn after 12:01 a.m., New York City time, on the Expiration Date. Tenders of Existing ZYPS may be withdrawn as provided in the Prospectus.

DESCRIPTION OF REGISTERED EXISTING ZYPS (CUSIP NO. 205862 AL9)	1	2	3
Name(s) and Address(es) of Registered Holder(s) (Please fill in, if blank)	Certificate Number(s) /Account Number(s)*	Aggregate Principal Amount of Existing ZYPS	Principal Amount Tendered**
	Total
*       For book-entry to The Depositary Trust Company, please provide account number. **     Unless otherwise indicated in this column, a Holder will be deemed to have tendered ALL of the Existing ZYPS represented by the ZYPS indicated in column 2. See Instruction 2. Existing ZYPS tendered hereby must be in denominations of principal amount of $1,000 and any integral multiple thereof. See Instruction 1.

DESCRIPTION OF UNREGISTERED EXISTING ZYPS (CUSIP NO. 205862 AK1)	1	2	3
Name(s) and Address(es) of Registered Holder(s) (Please fill in, if blank)	Certificate Number(s) /Account Number(s)*	Aggregate Principal Amount of Existing ZYPS	Principal Amount Tendered**
	Total
*       For book-entry to The Depositary Trust Company, please provide account number. **     Unless otherwise indicated in this column, a Holder will be deemed to have tendered ALL of the Existing ZYPS represented by the ZYPS indicated in column 2. See Instruction 2. Existing ZYPS tendered hereby must be in denominations of principal amount of $1,000 and any integral multiple thereof. See Instruction 1.

All authority herein conferred or agreed to be conferred shall survive the death or incapacity of the undersigned and every obligation of the undersigned hereunder shall be binding upon the heirs, executors, personal representatives, administrators, trustees in bankruptcy, successors and assigns of the undersigned.

PLEASE SIGN HERE
x                                                                                                                                                                       x                                                                                                                                                                           Signature(s) of Owner(s) or Authorized Signatory	Date
Area Code and Telephone Number:
Must be signed by the Holder(s) of Existing ZYPS as their name(s) appear(s) on a security position listing, or by person(s) authorized to become registered Holder(s) by endorsement and documents transmitted with this Notice of Guaranteed Delivery. If signature is by a trustee, executor, administrator, guardian, attorney-in-fact, officer or other person acting in a fiduciary or representative capacity, such person must set forth his or her full title below:

	Please print name(s) and address(es)
Name(s):
Capacity
Address(es):

DO NOT SEND ZYPS WITH THE FORM. ZYPS SHOULD BE SENT TO THE EXCHANGE AGENT TOGETHER WITH A PROPERLY COMPLETED AND DULY EXECUTED LETTER OF TRANSMITTAL.

EX-99.3

EXHIBIT 99.3

Exchange Offer for

Any and All of the Outstanding

Zero Yield Puttable Securities due 2023

(CUSIP Nos. 205862 AL9, 205862 AK1)

in Exchange for

Zero Yield Puttable Securities due 2023

which will be Registered Under

the Securities Act of 1933, as Amended,

Prior to Closing

of

Comverse Technology, Inc.

To: Brokers, Dealers, Commercial Banks,

Trust Companies and Other Nominees

Comverse Technology, Inc. (the “Company”) is offering, upon and subject to the terms and conditions set forth in the preliminary prospectus, dated December 21, 2004 (together with any subsequent preliminary or final prospectus, the “Prospectus”), and the enclosed Letter of Transmittal (the “Letter of Transmittal”), to exchange its Zero Yield Puttable Securities due 2023 for its outstanding Zero Yield Puttable Securities due 2023 (the “Existing ZYPS”), as described in the Prospectus (collectively, the “Exchange Offer”).

We are requesting that you contact your clients for whom you hold Existing ZYPS regarding the Exchange Offer. For your information and for forwarding to your clients for whom you hold Existing ZYPS registered in your name or in the name of your nominee, or who hold Existing ZYPS registered in their own names, we are enclosing the following documents:

1. The Prospectus;

2. The Letter of Transmittal for your use and for the information of your clients;

3. A Notice of Guaranteed Delivery to be used to accept either Exchange Offer if time will not permit all required documents to reach the Exchange Agent prior to the Expiration Date (as defined below) or if the procedure for book-entry transfer cannot be completed on a timely basis;

4. A form of letter which may be sent to your clients for whose account you hold Existing ZYPS registered in your name or the name of your nominee, with space provided for obtaining such clients’ instruction with regard to the Exchange Offer;

5. Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9; and

6. Return envelopes addressed to JPMorgan Chase Bank, N.A., the Exchange Agent for the Exchange Offer.

Your prompt action is requested. The Exchange Offer will expire at 12:01 a.m., New York City time, on January 21, 2005, unless extended by the Company (the “Expiration Date”). Existing ZYPS tendered pursuant to the Exchange Offer may be withdrawn at any time before the Expiration Date or at any time after January 21, 2005 if we have not accepted the tendered Existing ZYPS for exchange by that date.

To participate in the Exchange Offer, a duly executed and properly completed Letter of Transmittal (or facsimile thereof), or an electronic confirmation pursuant to the Depository Trust Company’s ATOP system, with any required signature guarantees and any other required documents, should be sent to the Exchange Agent in accordance with the instructions set forth in the Letter of Transmittal and the Prospectus.

If a registered holder of Existing ZYPS desires to tender, but the procedure for book-entry transfer cannot be completed on a timely basis, a tender may be effected by following the guaranteed delivery procedures described in the Prospectus under “The Exchange Offer—Guaranteed Delivery Procedures.”

The Company will, upon request, reimburse brokers, dealers, commercial banks and trust companies for reasonable and necessary costs and expenses incurred by them in forwarding the Prospectus and the related documents to the beneficial owners of Existing ZYPS held by them as a nominee or in a fiduciary capacity. The Company will pay or cause to be paid all stock transfer taxes applicable to the exchange of Existing ZYPS pursuant to the Exchange Offer, except as set forth in Instruction 5 of the Letter of Transmittal.

The Company has not authorized anyone to make any recommendation to holders as to whether to tender or refrain from tendering in the Exchange Offer.

Any questions related to the procedure for tendering you may have with respect to the Exchange Offer should be directed to JPMorgan Chase Bank, N.A., the Exchange Agent for the Exchange Offer, at its address and telephone number set forth on the front of the Letter of Transmittal. Any other questions you may have with respect to the Exchange Offer, or requests for additional copies of the enclosed materials, should be directed to D.F. King & Co., Inc., the Information Agent for the Exchange Offer, at its address and telephone numbers set forth in the instructions to the Letter of Transmittal. The Dealer Manager is Lehman Brothers, 745 Seventh Avenue, 5^th Floor, New York, New York, 10019. Attention: Convertible Origination Group, (800) 438-3242 (U.S. toll-free), (212) 526-7343 (collect).

Very truly yours,

Comverse Technology, Inc.

NOTHING HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU OR ANY PERSON AS AN AGENT OF THE COMPANY OR THE EXCHANGE AGENT, OR AUTHORIZE YOU OR ANY OTHER PERSON TO USE ANY DOCUMENT OR MAKE ANY STATEMENTS ON BEHALF OF EITHER OF THEM WITH RESPECT TO THE EXCHANGE OFFER, EXCEPT FOR STATEMENTS EXPRESSLY MADE IN THE PROSPECTUS OR THE LETTER OF TRANSMITTAL.

EX-99.4

EXHIBIT 99.4

Exchange Offer for

Any and All of the Outstanding

Zero Yield Puttable Securities due 2023

(CUSIP Nos. 205862 AL9, 205862 AK1)

in Exchange for

Zero Yield Puttable Securities due 2023

which will be Registered under

the Securities Act of 1933, as Amended,

Prior to Closing

of

Comverse Technology, Inc.

To Our Clients:

Enclosed for your consideration is a preliminary prospectus, dated December 21, 2004 (together with any subsequent preliminary or final prospectus, the “Prospectus”), and the related Letter of Transmittal (the “Letter of Transmittal”), relating to the offer of Comverse Technology, Inc. (the “Company”) to exchange its Zero Yield Puttable Securities due 2023 (the “New ZYPS”) for its outstanding Zero Yield Puttable Securities due 2023 (the “Existing ZYPS”), upon the terms and subject to the conditions described in the Prospectus and the Letter of Transmittal (the “Exchange Offer”). Capitalized terms not defined herein are defined in the Prospectus.

This material is being forwarded to you as the beneficial owner of the Existing ZYPS held by us for your account but not registered in your name. A tender of such Existing ZYPS may only be made by us as the holder of record and pursuant to your instructions.

Accordingly, we request instructions as to whether you wish us to tender on your behalf the Existing ZYPS held by us for your account, pursuant to the terms and conditions set forth in the enclosed Prospectus and Letter of Transmittal.

Your instructions should be promptly forwarded to us in order to permit us to tender the Existing ZYPS on your behalf in accordance with the provisions of the Exchange Offer. The Exchange Offer will expire at 12:01 a.m., New York City time, on January 21, 2005, unless extended by the Company (the “Expiration Date”). Any Existing ZYPS tendered pursuant to the Exchange Offer may be withdrawn at any time before the Expiration Date.

Your attention is directed to the following:

• The Exchange Offer is for any and all Existing ZYPS.

• The Exchange Offer is subject to certain conditions set forth in the Prospectus in the section captioned “The Exchange Offer—Conditions for Completion of the Exchange Offer.”

• Any transfer taxes incident to the transfer of Existing ZYPS from the holder to the Company will be paid by the Company, except as otherwise provided in the Instructions in the Letter of Transmittal.

• The Exchange Offer expires at 12:01 a.m., New York City time, on January 21, 2005, unless extended by the Company.

If you wish to have us tender your Existing ZYPS, please so instruct us by completing, executing and returning to us the instruction form on the back of this letter. Please DO NOT complete the Letter of Transmittal. It is furnished to you for information only and may not be used directly by you to tender Existing ZYPS.

INSTRUCTIONS WITH RESPECT TO

THE EXCHANGE OFFER

The undersigned acknowledge(s) receipt of your letter and the enclosed material referred to therein relating to the Exchange Offer made by Comverse Technology, Inc. with respect to its Existing ZYPS.

This will instruct you to tender the Existing ZYPS indicated below (or, if no number is indicated below, all Existing ZYPS) held by you for the account of the undersigned, upon and subject to the terms and conditions set forth in the Prospectus and the related Letter of Transmittal.

Please tender the Existing ZYPS held by you for my account in the principal amounts as indicated below:

Zero Yield Puttable Securities due 2023

CUSIP No. 205862 AL9

Tender $                     (principal amount)*

CUSIP No. 205862 AK1

Tender $                     (principal amount)*

¨  Please do not tender any Existing ZYPS held by you for any account.

Dated:                     , 2004

Signature(s):                                                                                                                                                                                             

Print Name(s) here:                                                                                                                                                                                

(Print Address(es)):                                                                                                                                                                                

(Area Code and Telephone Number(s)):                                                                                                                                        

(Tax Identification or Social Security Number(s)):                                                                                                                    

*Must be in denominations of $1,000 or any integral multiple thereof.

None of the Existing ZYPS held by us for your account will be tendered unless we receive written instructions from you to do so. After receipt of instructions to tender, unless we receive specific contrary instructions we will tender all the Existing ZYPS held by us for your account.

EX-99.5

EXHIBIT 99.5

GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION

NUMBER ON SUBSTITUTE FORM W-9

Guidelines for Determining the Proper Identification Number to Give the Payer—Social Security numbers have nine digits separated by two hyphens: i.e., 000-00-0000. Employer identification numbers have nine digits separated by only one hyphen: i.e., 00-00000000. The table below will help determine the proper identification number to give:

For this type of account:		Give the name and SOCIAL SECURITY number of—	For this type of account:		Give the name and EMPLOYER IDENTIFICATION number of—
1.	Individual account	The individual	6.	A valid trust, estate, or pension trust	Legal entity (do not furnish the identification number of the personal representative or trustee unless the legal entity itself is not designated in the account title) (4)
2.	Two or more individuals (joint account)	The actual owner of the account or, if combined funds, the first individual on the account (1)	7.	Corporate account or LLC electing corporate status on Form 8832	The corporation
3.	Custodian account of a minor (Uniform Gift to Minors Act)	The minor (2)	8.	Association, club, religious, charitable, educational, or other tax-exempt organization	The organization
4.	a. The usual revocable savings trust account (grantor is also trustee)	The grantor-trustee (1)	9.	Partnership account or multi-member LLC	The partnership
	b. The so-called trust account that is not a legal or valid trust under state law	The actual owner (1)	10.	A broker or registered nominee	The broker or nominee
5.	Sole proprietorship account or single-owner LLC	The owner (3)	11.	Account with the Department of Agriculture in the name of a public entity (such as a State or local government, school district, or prison) that receives agricultural program payments	The public entity

(1) List first and circle the name of the person whose number you furnish. If only one person on a joint account has a Social Security Number, that person’s number must be furnished.

(2) Circle the minor’s name and furnish the minor’s social security number.

(3) You must show your individual name, but you may also enter your business or “doing business as” name. You may use either your social security number or employment identification number (if you have one). Do not furnish the taxpayer identification number of the personal representative or trustee unless the legal entity itself is not designated in the account title.

(4) List first and circle the name of the legal trust, estate or pension trust.

NOTE: If no name is circled when more than one name is listed, the number will be considered to be that of the first name listed.

Obtaining a Number

If you do not have a taxpayer identification number or you do not know your number, obtain Form SS-5, Application for a Social Security Number Card (for individuals), Form SS-4, Application for Employer Identification Number, at the local office of the Social Security Administration or the Internal Revenue Service (the “IRS”) and apply for a number. U.S. resident aliens who cannot obtain a Social Security number must apply for an ITIN (Individual Taxpayer Identification Number) on Form W-7.

Payees Exempt from Backup Withholding

Payees specifically exempted from backup withholding on ALL payments include the following:

• An organization exempt from tax under Section 501(a) of the Internal Revenue Code of 1986, as amended (the “Code”), or an individual retirement plan or a custodial account under Section 403(b)(7) of the Code, if the account satisfies the requirements of Section 401(f)(2) of the Code.

• The United States or any agency or instrumentality thereof.

• A State, the District of Columbia, a possession of the United States, or any subdivision or instrumentality thereof.

• A foreign government, a political subdivision of a foreign government, or any agency or instrumentality thereof.

• An international organization or any agency or instrumentality thereof.

Other payees that MAY BE EXEMPT from backup withholding include the following:

• A corporation.

• A financial institution.

• A dealer in securities or commodities required to register in the United States, the District of Columbia or a possession of the United States.

• A real estate investment trust.

• A common trust fund operated by a bank under Section 584(a) of the Code.

• A trust exempt from tax under Section 664 of the Code or a trust described in Section 4947 of the Code.

• An entity registered at all times during the tax year under the Investment Company Act of 1940.

• A foreign central bank of issue.

• A futures commission merchant registered with the Commodity Futures Trading Commission.

• A middleman known in the investment community as a nominee or custodian.

Payments Exempt from Backup Withholding

Payment of dividends and patronage dividends not generally subject to backup withholding include the following:

• Payments to nonresident aliens subject to withholding under Section 1441 of the Code.

• Payments to partnerships not engaged in a trade or business in the U.S. and which have at least one nonresident alien partner.

• Payments of patronage dividends where the amount received is not paid in money.

• Payments made by certain foreign organizations.

• Section 404(k) payments made by an ESOP.

Payments of interest not generally subject to backup withholding include the following:

• Payments of interest on obligations issued by individuals. Note: You may be subject to backup withholding if this interest is $600 or more and is paid in the course of the payer’s trade or business and you have not provided your correct taxpayer identification number to the payer.

• Payments of tax-exempt interest (including exempt interest dividends under Section 852 of the Code).

• Payments described in Section 6049(b)(5) to nonresident aliens.

• Payments on tax-free covenant bonds under Section 1451 of the Code.

• Payments made by certain foreign organizations.

• Mortgage or student loan interest paid to you.

Certain payments other than interest, dividends, and patronage dividends that are not subject to information reporting are also not subject to backup withholding. For details, see Sections 6041, 6041A, 6042, 6044, 6045, 6049, 6050A and 6050N of the Code and the regulations promulgated thereunder.

Exempt payees described above that are U.S. persons (including a U.S. resident alien individual) should file Form W-9 to avoid possible erroneous backup withholding. ENTER YOUR NAME, ADDRESS, STATUS AND TAXPAYER IDENTIFICATION NUMBER, WRITE “EXEMPT” ON THE FACE OF PART II OF THE FORM, SIGN AND DATE THE FORM AND RETURN IT TO THE PAYER. IF YOU ARE A NONRESIDENT ALIEN OR A FOREIGN ENTITY NOT SUBJECT TO BACKUP WITHHOLDING, FILE WITH THE PAYER A COMPLETED INTERNAL REVENUE FORM W-8BEN, W-8ECI, W-8IMY or W-8EXP, AS APPLICABLE.

Privacy Act Notice. Section 6109 requires most recipients of dividends, interest, or other payments to give taxpayer identification numbers to payers who must report the payments to the IRS. The IRS uses the numbers for identification purposes and to help verify the accuracy of your tax return. Payers must be given the numbers whether or not recipients are required to file tax returns. Payers must generally withhold 28% of taxable interest, dividends, and certain other payments to a payee who does not furnish a taxpayer identification number to a payer. Certain penalties may also apply.

Penalties

(1) Penalty for Failure to Furnish Taxpayer Identification Number. If you fail to furnish your taxpayer identification number to a payer, you are subject to a penalty of $50 for each such failure unless your failure is due to reasonable cause and not to willful neglect.

(2) Civil Penalty for False Information With Respect to Withholding. If you make a false statement with no reasonable basis which results in no imposition of backup withholding, you are subject to a penalty of $500.

(3) Criminal Penalty for Falsifying Information. Willfully falsifying certifications or affirmations may subject you to criminal penalties including fines and/or imprisonment.

(4) Misuse of TINs. If the requester discloses or uses TINs in violation of Federal law, the requester may be subject to civil and criminal penalties.

FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE SERVICE.

2