REGISTRATION RIGHTS AGREEMENT
-----------------------------
This Registration Rights Agreement is made and entered
into as of October 4, 1996, by and among Comverse Technology, Inc.,
a New York corporation (the "Company"), and Lehman Brothers Inc.,
(the "Initial Purchaser") who has purchased or has the right to
purchase up to $115,000,000 in aggregate principal amount of 5-3/4%
Convertible Subordinated Debentures due 2006 (the "Debentures") of
the Company pursuant to the Purchase Agreement (as such term is
defined below).
This Agreement is made pursuant to the Purchase
Agreement, dated October 1, 1996, between the Company and the
Initial Purchaser (the "Purchase Agreement"). In order to induce
the Initial Purchaser to enter into the Purchase Agreement, the
Company has agreed to provide the registration rights provided for
in this Agreement to the Initial Purchaser and its respective
direct and indirect transferees (i) for the benefit of the Initial
Purchaser, (ii) for the benefit of the holders from time to time of
the Debentures (including the Initial Purchaser) and the holders
from time to time of the Common Stock issuable or issued upon
conversion of the Debentures and (iii) for the benefit of the
securities constituting the Transfer Restricted Securities. The
execution of this Agreement is a condition to the closing of the
transactions contemplated by the Purchase Agreement.
The parties hereby agree as follows:
1. Definitions. As used in this Agreement, the following
terms shall have the following meanings:
Advice: As defined in Section 2(d) hereof.
Affiliate: An affiliate of any specified person shall
mean any other person directly or indirectly controlling or
controlled by or under direct or indirect common control with such
specified person. For the purposes of this definition, "control,"
when used with respect to any person, means the power to direct the
management and policies of such person, directly or indirectly,
whether through the ownership of voting securities, by contract or
otherwise and the terms "affiliated," "controlling" and
"controlled" have meanings correlative to the foregoing.
Agreement: This Registration Rights Agreement, as the
same may be amended, supplemented or modified from time to time in
accordance with the terms hereof.
Business Day: Each Monday, Tuesday, Wednesday, Thursday
and Friday that is not a day on which banking institutions in New
York, New York are authorized or obligated by law or executive
order to close.
Closing Date: October 4, 1996.
Common Stock: Common Stock, $.10 par value per share, of
the Company and any other shares of common stock as may constitute
"Common Stock" for purposes of the Indenture, in each case, as
issuable or issued upon conversion of the Debentures.
Company: Comverse Technology, Inc., a New York
corporation, and any successor corporation thereto.
controlling person: As defined in Section 6(a) hereof.
Debentures: The $100,000,000 aggregate principal amount
of 5-3/4% Convertible Subordinated Debentures due 2006 of the
Company being issued pursuant to the Indenture (together with the
up to $15,000,000 aggregate principal amount of such Debentures,
if, and to the extent the Initial Purchaser's over-allotment option
is exercised).
Effectiveness Period: As defined in Section 2(a) hereof.
Effectiveness Target Date: The 180th day following the
Closing Date.
Exchange Act: The Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated by the SEC
pursuant thereto.
Filing Date: The 90th day after the Closing Date.
Holder: Each owner of any Transfer Restricted Securities.
Indemnified Person: As defined in Section 6(a) hereof.
Indenture: The Indenture, dated as of the date hereof,
between the Company and the Trustee thereunder, pursuant to which
the Debentures are being issued, as amended, modified or
supplemented from time to time in accordance with the terms
thereof.
Initial Purchaser: As defined in the first paragraph
hereof.
Liquidated Damages: As defined in Section 3 hereof.
Proceeding: An action, claim, suit or proceeding
(including, without limitation, an investigation or partial
proceeding, such as disposition), whether commenced or threatened.
Prospectus: The prospectus included in any Registration
Statement (including, without limitation, a prospectus that
discloses information previously omitted from a prospectus filed as
part of an effective registration statement in reliance upon Rule
430A promulgated pursuant to the Securities Act), as amended or
supplemented by any prospectus supplement, with respect to the
resale of any of the Transfer Restricted Securities covered by such
Registration Statement, and all other amendments and supplements to
any such prospectus, including post-effective amendments, and all
materials incorporated by reference or deemed to be incorporated by
reference, if any, in such prospectus.
Purchase Agreement: As defined in the second paragraph
hereof.
Registration Statement: Any registration statement of the
Company filed with the SEC pursuant to the Securities Act that
covers the resale of any of the Transfer Restricted Securities
pursuant to the provisions of this Agreement, including the
Prospectus, amendments and supplements to such registration
statement or Prospectus, including pre- and post-effective
amendments, all exhibits thereto, and all material incorporated by
reference or deemed to be incorporated by reference, if any, in
such registration statement.
Rule 144: Rule 144 promulgated by the SEC pursuant to the
Securities Act, as such Rule may be amended from time to time, or
any successor rule or regulation.
Rule 144A: Rule 144A promulgated by the SEC pursuant to
the Securities Act, as such Rule may be amended from time to time,
or any successor rule or regulation.
Rule 158: Rule 158 promulgated by the SEC pursuant to the
Securities Act, as such Rule may be amended from time to time, or
any successor rule or regulation.
Rule 174: Rule 174 promulgated by the SEC pursuant to the
Securities Act, as such Rule may be amended from time to time, or
any successor rule or regulation.
Rule 415: Rule 415 promulgated by the SEC pursuant to the
Securities Act, as such Rule may be amended from time to time, or
any successor rule or regulation.
Rule 424: Rule 424 promulgated by the SEC pursuant to the
Securities Act, as such Rule may be amended from time to time, or
any successor rule or regulation.
Sale Notice: As defined in Section 2(d)(i) hereof.
SEC: The Securities and Exchange Commission.
Securities Act: The Securities Act of 1933, as amended,
and the rules and regulations promulgated by the SEC thereunder.
Shelf Registration Statement: As defined in Section 2(a)
hereof.
Special Counsel: Any special counsel to the holders of
Transfer Restricted Securities.
TIA: The Trust Indenture Act of 1939, as amended.
Transfer Restricted Securities: The Debentures and the
shares of Common Stock into which the Debentures are converted or
convertible (including any shares of Common Stock issued or
issuable thereon upon any stock split, stock combinations, stock
dividend or the like), upon original issuance thereof, and at all
times subsequent thereto, and associated related rights, if any,
until, in the case of any such Debenture or share (and associated
rights) (i) the date on which the resale thereof has been
registered effectively pursuant to the Securities Act and disposed
of in accordance with the Registration Statement relating thereto,
(ii) the
date on which either such Debenture or the shares of Common Stock
issued upon conversion of such Debenture are distributed to the
public pursuant to Rule 144 (or any similar provisions then in
effect) or are saleable pursuant to Rule 144(k) promulgated by the
SEC pursuant to the Securities Act or (iii) the date on which it
ceases to be outstanding, whichever date is earliest.
Trustee: The Trustee under the Indenture.
Underwritten registration or underwritten offering: A
registration in connection with which securities of the Company are
sold to an underwriter for reoffering to the public pursuant to an
effective Registration Statement.
References herein to the term "Holders of a majority in
aggregate principal amount of Transfer Restricted Securities" or
words to a similar effect shall mean, with respect to any request,
notice, demand, objection or other action by the holders of
Transfer Restricted Securities hereunder or pursuant hereto (each,
an "Act"), registered holders of a number of shares of then
outstanding Common Stock constituting Transfer Restricted
Securities and an aggregate principal amount of then outstanding
Debentures constituting Transfer Restricted Securities, such that
the sum of such shares of Common Stock and the shares of Common
Stock issuable upon conversion of such Debentures constitute in
excess of 50% of the sum of all of the then outstanding shares of
Common Stock constituting Transfer Restricted Securities and the
number of shares of Common Stock issuable upon conversion of then
outstanding Debentures constituting Transfer Restricted Securities.
For purposes of the immediately preceding sentence, (i) any Holder
may elect to take any Act with respect to all or any portion of
Transfer Restricted Securities held by it and only the portion as
to which such Act is taken shall be included in the numerator of
the fraction described in the preceding sentence and (ii) Transfer
Restricted Securities owned, directly or indirectly, by the Company
or its Affiliates shall be deemed not to be outstanding.
2. Shelf Registration Statement. (a) The Company agrees
to file with the SEC as soon as practicable after the Closing Date,
but in no event later than the Filing Date, a Registration
Statement for an offering to be made on a continuous basis pursuant
to Rule 415 covering all of the Transfer Restricted Securities (the
"Shelf
Registration Statement"). The Shelf Registration Statement shall be
on Form S-3 under the Securities Act or another appropriate form
selected by the Company permitting registration of such Transfer
Restricted Securities for resale by the Holders in the manner or
manners reasonably designated by them (including, without
limitation, one or more underwritten offerings). The Company shall
not permit any securities other than the Transfer Restricted
Securities to be included in the Shelf Registration Statement. The
Company shall use all reasonable efforts to cause the Shelf
Registration Statement to be declared effective pursuant to the
Securities Act as promptly as practicable following the filing
thereof, but in no event later than the Effectiveness Target Date,
and to keep the Shelf Registration Statement continuously effective
under the Securities Act until the date that is 36 months after the
date on which all of the Debentures are sold (including those sold
pursuant to the over-allotment option granted to the Initial
Purchaser in the Purchase Agreement) to the Initial Purchaser (the
"Effectiveness Period"), or such shorter period ending when there
cease to be outstanding any Transfer Restricted Securities.
(b) Supplements and Amendments. Subject to Section 2(d)
hereof, the Company shall use its reasonable efforts to keep the
Shelf Registration Statement continuously effective by
supplementing and amending the Shelf Registration Statement if
required by the rules, regulations or instructions applicable to
the registration form used for such Shelf Registration Statement,
if required by the Securities Act, or if reasonably requested by
the Holders of a majority in aggregate principal amount of the
Transfer Restricted Securities or by any underwriter of such
Transfer Restricted Securities.
(c) Selling Securityholder Information. The Company may
require each Holder of Transfer Restricted Securities to be sold
pursuant to the Shelf Registration Statement to furnish to the
Company such information regarding the Holder and the distribution
of the Transfer Restricted Securities as the Company may from time
to time reasonably require for inclusion in the Shelf Registration
Statement, and the Company may exclude from such registration the
Transfer Restricted Securities of any Holder that fails to furnish
such information within a reasonable time after receiving such
request. Each Holder of Transfer Restricted Securities to be sold
pursuant to a Shelf Registration Statement agrees to furnish to the
Company all information required to be disclosed in order to make
the information previously furnished to the Company by such Holder
not misleading.
(d) Certain Notices; Suspension of Sales. Each Holder of
Transfer Restricted Securities agrees by its acquisition of such
Transfer Restricted Securities to notify the Company (a "Sale
Notice") not later than three (3) Business Days prior to any
proposed sale by such Holder of Transfer Restricted Securities
pursuant to the Shelf Registration Statement, which notice shall be
effective for five (5) Business Days. The Company may, upon written
notice to such Holder, suspend such Holder's use of the Prospectus
(which is a part of the Shelf Registration Statement) for a
reasonable period not to exceed sixty (60) days if the Company in
its reasonable judgment believes it may possess material non-public
information the disclosure of which in its reasonable judgment
would have a material adverse effect on the Company and its
subsidiaries taken as a whole. Each Holder of Transfer Restricted
Securities agrees by its acquisition of such Transfer Restricted
Securities to hold any communication by the Company in response to
a Sale Notice in confidence. Each Holder of Transfer Restricted
Securities further agrees by its acquisition of such Transfer
Restricted Securities that, upon receipt of any notice from the
Company of the happening of any event of the kind described in
Section 4(c)(ii), 4(c)(iii), 4(c)(v) or 4(c)(vi) hereof, such
Holder will forthwith discontinue disposition of such Transfer
Restricted Securities covered by such Registration Statement or
Prospectus (other than in lawful transactions exempt from the
registration requirements under the Securities Act) until such
Holder's receipt of the copies of the supplemented or amended
Prospectus contemplated by Section 4(j) hereof, or until it is
advised in writing (the "Advice") by the Company that the use of
the applicable Prospectus may be resumed, and, in either case, has
received copies of any additional or supplemental filings that are
incorporated or deemed to be incorporated by reference in such
Prospectus.
(e) Compliance. The Company shall cause the Shelf
Registration Statement and the Prospectus and any amendment or
supplement thereto, as of the effective date of the Shelf
Registration Statement, amendment or supplement, (i) to comply in
all material respects with the applicable requirements of the
Securities Act and the rules and regulations of the SEC and (ii)
not to contain any untrue
statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which
they were made, not misleading.
3. Liquidated Damages. If (a) the Shelf Registration
Statement is not filed with the Commission on or prior to the
Filing Date or (b) the Shelf Registration Statement has not been
declared effective by the Commission on or prior to the
Effectiveness Target Date (each such event referred to in clauses
(a) and (b), a "Registration Default"), then the Company will pay
to each Holder, for the first 90-day period immediately following
the occurrence of such Registration Default, liquidated damages
("Liquidated Damages") in an amount equal to one-quarter of one
percent (0.25%) per annum times the principal amount of the
Transfer Restricted Securities held by such Holder for so long as
the Registration Default continues. The amount of Liquidated
Damages payable to each Holder shall increase by an additional
one-quarter of one percent (0.25%) per annum times the principal
amount of Transfer Restricted Securities held by such Holder from
and after the 91st day following such Registration Default;
provided, however, that (1) upon filing of the Shelf Registration
Statement, in the case of (i) above, or (2) upon the effectiveness
of the Shelf Registration Statement, in the case of (ii) above, the
Liquidated Damages payable with respect to such Transfer Restricted
Securities as a result of such clause (i) or (ii), as applicable,
shall cease; and, provided, further, that the amount of Liquidated
Damages shall never exceed one-half of one percent (0.5%) per
annum.
Liquidated Damages shall be paid semi-annually in
arrears, with the first semi-annual payment due on the first
interest payment date, as applicable, following the date on which
such Liquidated Damages begin to accrue, and shall be paid to
holders of record of such Transfer Restricted Securities on such
interest payment date in the same manner as interest is paid under
the Indenture. The payment of any such Liquidated Damages shall in
all respects be subject to the terms and conditions set forth in
the Indenture, including, without limitation, the subordination
provisions thereof. All obligations of the Company set forth in the
preceding paragraph that are outstanding with respect to any
Transfer Restricted Security at the time such security ceases to be
a Transfer Restricted Security shall survive until such time as all
such obligations with respect to such security shall have been
satisfied in full.
4. Registration Procedures. In connection with the
Company's registration obligations hereunder, the Company shall
effect such registrations on the appropriate form selected by the
Company available for the sale of the Transfer Restricted
Securities to permit the sale of Transfer Restricted Securities in
accordance with the intended method or methods of disposition
thereof, and pursuant thereto the Company shall as expeditiously as
possible:
(a) No fewer than five Business Days prior to the initial
filing of a Registration Statement or Prospectus and no fewer than
two Business Days prior to the filing of any amendment or
supplement thereto (including any document that would be
incorporated or deemed to be incorporated therein by reference),
furnish to the registered (as of the most recent reasonably
practicable date which shall not be more than two Business Days
prior to the date such notice is personally delivered, delivered to
a next-day courier, deposited in the mail or telecopied, as the
case may be) Holders of the Transfer Restricted Securities, Special
Counsel and the managing underwriters, if any, copies of all such
documents proposed to be filed, which documents (including those
incorporated or deemed to be incorporated by reference) will be
subject to the review of such Holders, Special Counsel and such
underwriters, if any, and cause the officers and directors of the
Company, counsel to the Company and independent certified public
accountants to the Company to respond to such inquiries as shall be
necessary in connection with such Registration Statement, in the
opinion of respective counsel to such Holders and such
underwriters, to conduct a reasonable investigation within the
meaning of the Securities Act. The Company shall not file any such
Registration Statement or related Prospectus or any amendments or
supplements thereto to which the Holders of a majority in aggregate
principal amount of the Transfer Restricted Securities, Special
Counsel, or the managing underwriters, if any, shall reasonably
object on a timely basis;
(b) Subject to Section 2(d) hereof, prepare and file with
the SEC such amendments, including post-effective amendments, to
each Registration Statement as may be necessary to keep such
Registration Statement continuously effective for the applicable
time period set forth in Section 2(a) hereof; and cause the related
Prospectus to be supplemented by any required Prospectus
supplement, and as so supplemented to be filed pursuant to Rule 424
(or any
similar provisions then in force) under the Securities Act and the
Exchange Act with respect to the disposition of all securities
covered by such Registration Statement during such period in
accordance with the intended methods of disposition by the sellers
thereof set forth in such Registration Statement as so amended or
in such Prospectus as so supplemented;
(c) Notify the registered (as of the most recent
reasonably practicable date which shall not be more than two
Business Days prior to the date such notice is personally
delivered, delivered to a next-day courier, deposited in the mail
or telecopied, as the case may be) Holders of Transfer Restricted
Securities to be sold or Special Counsel and the managing
underwriters, if any, promptly (and in the case of an event
specified by clause (i)(A) of this paragraph in no event fewer than
two Business Days prior to such filing), and (if requested by any
such person), confirm such notice in writing, (i)(A) when a
Prospectus or any Prospectus supplement or post-effective amendment
is proposed to be filed, and, (B) with respect to a Registration
Statement or any post-effective amendment, when the same has become
effective, (ii) of any request of the SEC or any other Federal or
state governmental authority for amendments or supplements to a
Registration Statement or related Prospectus or for additional
information related thereto, (iii) of the issuance by the SEC, any
state securities commission, any other governmental agency or any
court of any stop order, order or injunction suspending or
enjoining the use or the effectiveness of a Registration Statement
or the initiation of any proceedings for that purpose, (iv) if at
any time any of the representations and warranties of the Company
contained in any agreement (including any underwriting agreement)
contemplated by Section 4(l) hereof are not true and correct in all
material respects, (v) of the receipt by the Company of any
notification with respect to the suspension of the qualification or
exemption from qualification of any of the Transfer Restricted
Securities for sale in any jurisdiction, or the initiation or
threatening of any proceeding for such purpose, and (vi) of the
existence of any fact and the happening of any event that makes any
statement made in such Registration Statement or related Prospectus
untrue in any material respect, or that requires the making of any
changes in such Registration Statement or Prospectus so that in the
case of the Registration Statement, it will not contain any untrue
statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the
statements therein not misleading and that, in the case of the
Prospectus, such Prospectus will not contain any untrue statement
of a material fact or omit to state any material fact required to
be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not
misleading, except if the existence of such fact or the happening
of any such event results from a corporate development that is
being pursued by the Company (i) the disclosure of which in the
Company's reasonable judgment would have a material adverse effect
on the Company and its subsidiaries taken as a whole and (ii)
which, in the Company's reasonable judgment after consultation with
counsel would not, in the absence of an effective registration
statement, be required to be disclosed by the Company;
(d) Use all reasonable efforts to avoid the issuance of,
or, if issued, obtain the withdrawal of any order enjoining or
suspending the use or effectiveness of a Registration Statement or
the lifting of any suspension of the qualification (or exemption
from qualification) of any of the Transfer Restricted Securities
for sale in any jurisdiction, at the earliest practicable moment;
(e) Subject to Section 2(c) hereof, if reasonably
requested by the managing underwriters, if any, or the Holders of a
majority in aggregate principal amount of the Transfer Restricted
Securities being sold in connection with such offering, (i)
promptly incorporate in a Prospectus supplement or post-effective
amendment such information as the managing underwriters, if any,
and such Holders agree should be included therein, and (ii) make
all required filings of such Prospectus supplement or such
post-effective amendment as soon as practicable after the Company
has received notification of the matters to be incorporated in such
Prospectus supplement or post-effective amendment; provided,
however, that the Company shall not be required to take any action
pursuant to this Section 4(e) that would, in the opinion of counsel
for the Company, violate applicable law;
(f) Furnish to each Holder who so requests, Special
Counsel and each managing underwriter, if any, without charge, at
least one conformed copy of each Registration Statement and each
amendment thereto, including financial statements (but excluding
schedules, all documents incorporated or deemed to be incorporated
therein by
reference and all exhibits, unless requested in writing by such
Holder, counsel or managing underwriter);
(g) Deliver to each Holder, Special Counsel, and the
underwriters, if any, without charge, as many copies of the
Prospectus or Prospectuses (including each form of prospectus) and
each amendment or supplement thereto to such persons who reasonably
request; and, unless the Company shall have given notice to such
Holder pursuant to Section 4(c)(vi), the Company hereby consents to
the use of such Prospectus and each amendment or supplement thereto
by each of the selling Holders of Transfer Restricted Securities
and the underwriters, if any, in connection with the offering and
sale of the Transfer Restricted Securities covered by such
Prospectus and any amendment or supplement thereto;
(h) Prior to any public offering of Transfer Restricted
Securities, use all reasonable efforts to register or qualify, or
cooperate with the Holders of Transfer Restricted Securities to be
sold, the underwriters, if any, and their respective counsel in
connection with the registration or qualification (or exemption
from such registration or qualification) of, such Transfer
Restricted Securities for offer and sale under the securities or
Blue Sky laws of such jurisdictions within the United States as any
Holder or underwriter reasonably requests in writing, keep each
such registration or qualification (or exemption therefrom)
effective during the period such Registration Statement is required
to be kept effective and do any and all other acts or things
necessary legally to enable the disposition in such jurisdictions
of the Transfer Restricted Securities covered by the applicable
Registration Statement; provided, however, that the Company shall
not be required to qualify generally to do business in any
jurisdiction where it is not then so qualified or take any action
that would subject it to general service of process in any such
jurisdiction where it is not then so subject;
(i) In connection with any sale or transfer of Transfer
Restricted Securities that will result in such securities no longer
being Transfer Restricted Securities, and unless any Transfer
Restricted Securities shall be in only book-entry form, cooperate
with the Holders and the managing underwriters, if any, to (A)
facilitate the timely preparation and delivery of certificates
representing Transfer Restricted Securities to be sold, which
certificates shall not bear any restrictive legends, shall bear a
CUSIP number different from the CUSIP number for the
Transfer Restricted Securities and shall be in a form eligible for
deposit with The Depository Trust Company and (B) enable such
Transfer Restricted Securities to be in such denominations and
registered in such names as the managing underwriters, if any, or
Holders may request at least two Business Days prior to any sale of
Transfer Restricted Securities;
(j) Upon the occurrence of any event contemplated by
Section 4(c)(vi) hereof, as promptly as practicable, prepare a
supplement or amendment, including, if appropriate, a
post-effective amendment, to each Registration Statement or a
supplement to the related Prospectus or any document incorporated
or deemed to be incorporated therein by reference, and file any
other required document so that, as thereafter delivered, such
Prospectus will not contain an untrue statement of a material fact
or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading;
(k) Prior to the effective date of the first Registration
Statement relating to the Transfer Restricted Securities, to
provide a CUSIP number for the Transfer Restricted Securities to be
sold pursuant to the Registration Statement;
(l) Enter into such agreements (including an underwriting
agreement in form, scope and substance as is customary in
underwritten offerings) reasonably satisfactory to the Company and
take all such other reasonable actions in connection therewith
(including those reasonably requested by the managing underwriters,
if any, or the Holders of a majority in aggregate principal amount
of the Transfer Restricted Securities being sold) in order to
expedite or facilitate the disposition of such Transfer Restricted
Securities, and in such connection, whether or not an underwriting
agreement is entered into and whether or not the registration is an
underwritten registration, (i) make such representations and
warranties to the Holders of such Transfer Restricted Securities
and the underwriters, if any, with respect to the business of the
Company and its subsidiaries (including with respect to businesses
or assets acquired or to be acquired by any of them), and the
Registration Statement, Prospectus and documents, if any,
incorporated or deemed to be incorporated by reference therein, in
each case, in form, substance and scope as are
customarily made by issuers to underwriters in underwritten
offerings and reasonably acceptable to the Company, and confirm the
same if and when requested; (ii) seek to obtain opinions of counsel
to the Company and updates thereof (which counsel and opinions (in
form, scope and substance) shall be reasonably satisfactory to the
managing underwriters, if any, and Special Counsel to the Holders
of the Transfer Restricted Securities being sold, addressed to each
of the underwriters, if any, covering the matters customarily
covered in opinions requested in underwritten offerings (including
any such matters as may be reasonably requested by such Special
Counsel and underwriters); (iii) use all reasonable efforts to
obtain customary "cold comfort" letters and updates thereof from
the independent certified public accountants of the Company (and,
if necessary, any other independent certified public accountants of
any subsidiary of the Company or of any business acquired or to be
acquired by the Company for which financial statements and
financial data is, or is required to be, included in the
Registration Statement), addressed (where reasonably possible) to
each selling Holder of Transfer Restricted Securities and each of
the underwriters, if any, such letters to be in customary form and
covering matters of the type customarily covered in "cold comfort"
letters in connection with underwritten offerings; (iv) if an
underwriting agreement is entered into, the same shall contain
indemnification provisions and procedures no less favorable to the
selling Holders of Transfer Restricted Securities and the
underwriters, if any, than those set forth in Section 6 hereof (or
such other provisions and procedures acceptable to the Company and
Holders of a majority in aggregate principal amount of the Transfer
Restricted Securities covered by such Registration Statement and
the managing underwriters); and (v) deliver such documents and
certificates as may be reasonably requested by the Holders of a
majority in aggregate principal amount of the Transfer Restricted
Securities being sold, Special Counsel or the managing
underwriters, if any, to evidence the continued validity of the
representations and warranties made pursuant to clause (i) of this
Section 4(l) and to evidence compliance with any customary
conditions contained in the underwriting agreement or other
agreement entered into by the Company;
(m) Make available for inspection by a representative of
the Holders of Transfer Restricted Securities being sold, any
underwriter participating in any such disposition of Transfer
Restricted Securities, if any,
and any attorney, consultant or accountant retained by such selling
Holders or underwriter, at the offices where normally kept, during
reasonable business hours, all financial and other records,
pertinent corporate documents and properties of the Company and its
subsidiaries as they may reasonably request (including with respect
to business and assets acquired or to be acquired to the extent
that such information is available to the Company), and cause the
officers, directors, agents and employees of the Company and its
subsidiaries (including with respect to business assets acquired or
to be acquired to the extent that such information is available to
the Company) to supply all information in each case reasonably
requested by any such representative, underwriter, attorney,
consultant or accountant in connection with such Registration
Statement; provided, however, that any information that is
reasonably and in good faith designated by the Company in writing
as confidential at the time of delivery of such information shall
be kept confidential by such persons (and such persons shall so
agree in writing), unless (i) disclosure of such information is
required by court or administrative order or is necessary to
respond to inquiries of regulatory authorities, (ii) disclosure of
such information is required by law (including any disclosure
requirements pursuant to Federal securities laws in connection with
the filing of any Registration Statement or the use of any
prospectus referred to in this Agreement), (iii) such information
becomes generally available to the public other than as a result of
a disclosure or failure to safeguard by any such person or (iv)
such information becomes available to any such person from a source
other than the Company and such source is not bound by a
confidentiality agreement;
(n) Cause the Indenture to be qualified under the TIA not
later than the effective date of the first Registration Statement
relating to the Transfer Restricted Securities; and in connection
therewith, cooperate with the Trustee under the Indenture and the
Holders of the Transfer Restricted Securities to effect such
changes to the Indenture, if any, as may be required for such
Indenture to be so qualified in accordance with the terms of the
TIA; and execute, and use all reasonable efforts to cause the
Trustee to execute, all customary documents as may be required to
effect such changes, and all other forms and documents (including
the Form T-1) required to be filed with the SEC to enable the
Indenture to be so qualified under the TIA in a timely manner;
(o) Comply with applicable rules and regulations of the
SEC and make generally available to its security holders earning
statements satisfying the provisions of Section 11(a) of the
Securities Act and Rule 158 thereunder (or any similar rule
promulgated under the Securities Act), no later than 45 days after
the end of any 12-month period (or 90 days after the end of any
12-month period if such period is a fiscal year), commencing on the
first day of the first fiscal quarter after the effective date of a
Registration Statement, which statement shall cover said period,
consistent with the requirements of Rule 158; and
(p) (i) list all Common Stock covered by such
Registration Statement on any securities exchange on which the
Common Stock is then listed or (ii) authorize for quotation on The
Nasdaq Stock Market all Common Stock covered by such Registration
Statement if the Common Stock is then so authorized for quotation.
5. Registration Expenses.
(a) All fees and expenses incident to the performance of
or compliance with this Agreement by the Company shall be borne by
it whether or not any Registration Statement is filed or becomes
effective and whether or not any securities are issued or sold
pursuant to any Registration Statement. The fees and expenses
referred to in the foregoing sentence shall include, without
limitation, (i) all registration and filings fees (including
without limitation, fees and expenses (A) with respect to filings
required to be made with the National Association of Securities
Dealers, Inc. and (B) in compliance with securities or Blue Sky
laws (including, without limitation and in addition to that
provided for in (b) below, reasonable fees and disbursements of
counsel for the underwriters or Special Counsel for the Holders in
connection with Blue Sky qualifications of the Transfer Restricted
Securities and determination of the eligibility of the Transfer
Restricted Securities for investment under the laws of such
jurisdictions as the managing underwriters, if any, or Holders of a
majority in aggregate principal amount of Transfer Restricted
Securities, may reasonably designate)), (ii) printing expenses
(including, without limitation, expenses of printing certificates
for Transfer Restricted Securities in a form eligible for deposit
with The Depository Trust Company and of printing Prospectuses if
the printing of Prospectuses is required by the managing
underwriters, if any, or by the Holders of a majority in
aggregate principal amount of the Transfer Restricted Securities
included in any Registration Statement, (iii) messenger, telephone
and delivery expenses, (iv) fees and disbursements of counsel for
the Company and Special Counsel for the Holders (plus any local
counsel, deemed appropriate by the Holders of a majority in
aggregate principal amount of the Transfer Restricted Securities)
in accordance with the provisions of Section 5(b) hereof, (v) fees
and disbursements of all independent certified public accountants
referred to in Section 4(l)(iii) (including, without limitation,
the expenses of any special audit and "cold comfort" letters
required by or incident to such performance), (vi) Securities Act
liability insurance, if the Company so desires such insurance, and
(vii) fees and expenses of all other persons retained by the
Company. In addition, the Company shall pay its internal expenses
(including, without limitation, all salaries and expenses of its
officers and employees performing legal or accounting duties), the
expense of an annual audit, and the fees and expenses incurred in
connection with the listing of the securities to be registered on
any securities exchange. Notwithstanding the foregoing or anything
in this Agreement to the contrary, each Holder shall pay all
underwriting discounts and commissions of any underwriters with
respect to any Transfer Restricted Securities sold by it.
(b) In connection with any registration hereunder, the
Company shall reimburse the Holders of the Transfer Restricted
Securities being registered or tendered for in such registration
for the fees and disbursements of not more than one firm of
attorneys representing the selling Holders (in addition to any
local counsel), in an amount not to exceed $25,000 in the aggregate
for all such registrations, which firm shall be chosen by the
Holders of a majority in aggregate principal amount of the Transfer
Restricted Securities. Weil, Gotshal & Manges LLP shall be Special
Counsel for all purposes hereof unless and until another Special
Counsel shall have been selected by a majority in aggregate
principal amount of the Transfer Restricted Securities and notice
hereof shall have been given to the Company.
6. Indemnification.
(a) The Company agrees to indemnify and hold harmless (i)
the Initial Purchaser, (ii) each Holder of Transfer Restricted
Securities, (iii) each person, if any, who controls (within the
meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act) any of the
foregoing (any of the persons referred to in this clause (iii)
being hereinafter referred to as a "controlling person"), and (iv)
the respective officers, directors, partners, employees,
representatives and agents of the Initial Purchaser, each Holder of
Transfer Restricted Securities, or any controlling person (any
person referred to in clause (i), (ii), (iii) or (iv) may
hereinafter be referred to as an "Indemnified Person"), from and
against any and all losses, claims, damages, liabilities, expenses
and judgments caused by any untrue statement or alleged untrue
statement of a material fact contained in any Registration
Statement, Prospectus or form of Prospectus or in any amendment or
supplement thereto or in any preliminary Prospectus, or caused by
any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements
therein (in the case of any Prospectus or form of Prospectus or
supplement thereto, in the light of the circumstances under which
they were made) not misleading, except insofar as such losses,
claims, damages, liabilities, expenses or judgments are caused by
any such untrue statement or omission or alleged untrue statement
or omission based upon information relating to any Indemnified
Person furnished in writing to the Company by or on behalf of such
Indemnified Person expressly for use therein; provided that the
foregoing indemnity with respect to any preliminary Prospectus
shall not inure to the benefit of any Indemnified Person from whom
the person asserting such losses, claims, damages, liabilities,
expenses and judgments purchased securities if such untrue
statement or omission or alleged untrue statement or omission made
in such preliminary Prospectus is eliminated or remedied in the
Prospectus and a copy of the Prospectus shall not have been
furnished to such person in a timely manner, unless such Prospectus
was not furnished because the Company failed to provide the
Indemnified Person with sufficient copies of such corrected
Prospectus within the time period required.
(b) In case any action shall be brought against any
Indemnified Person, based upon any Registration Statement or any
such Prospectus or any amendment or supplement thereto and with
respect to which indemnity may be sought against the Company, such
Indemnified Person shall promptly notify the Company in writing and
the Company shall assume the defense thereof, including the
employment of counsel reasonably satisfactory to such Indemnified
Person and payment of all fees and expenses. Any Indemnified Person
shall have the right to employ separate counsel in
any such action and participate in the defense thereof, but the
fees and expenses of such counsel shall be at the expense of such
Indemnified Person, unless (i) the employment of such counsel shall
have been specifically authorized in writing by the Company, (ii)
the Company shall have failed to assume the defense and employ
counsel or (iii) such Indemnified Person or Persons shall have been
advised by counsel that there may be a conflict between the
positions of the indemnifying party or parties and of the
indemnified party or parties in conducting the defense of such
action or proceeding or that there may be legal defenses available
to such Indemnified Person or Persons different from or in addition
to those available to the indemnifying party or parties (in which
case the Company shall not have the right to assume the defense of
such action on behalf of such Indemnified Person, it being
understood, however, that the Company shall not, in connection with
any one such action or separate but substantially similar or
related actions in the same jurisdiction arising out of the same
general allegations or circumstances, be liable for the fees and
expenses of more than one separate firm of attorneys (in addition
to any local counsel) for all such Indemnified Persons, which firm
shall be designated in writing by such Indemnified Persons, and
that all such fees and expenses shall be reimbursed as they are
incurred). The Company shall not be liable for any settlement of
any such action effected without its written consent but if settled
with the written consent of the Company, the Company agrees to
indemnify and hold harmless any Indemnified Person from and against
any loss or liability by reason of such settlement. No indemnifying
party shall, without the prior written consent of the indemnified
party (which consent shall not be unreasonably withheld), effect
any settlement of any pending or threatened proceeding in respect
of which any indemnified party is or could have been a party and
indemnity could have been sought hereunder by such indemnified
party, unless such settlement includes an unconditional release of
such indemnified party from all liability on claims that are the
subject matter of such proceeding.
(c) In connection with any Registration Statement in
which the Holder of Transfer Restricted Securities is
participating, such Holder of Transfer Restricted Securities
agrees, severally and not jointly, to indemnify and hold harmless
the Company, its directors, its officers and any person controlling
the Company within the meaning of Section 15 of the Securities Act
or Section 20 of the Exchange Act,
to the same extent as the foregoing indemnity from the Company to
each Indemnified Person but only with reference to information
relating to such Indemnified Person furnished in writing by or on
behalf of such Indemnified Person expressly for use in such
Registration Statement. In case any action shall be brought against
the Company, any of its directors, any such officer or any person
controlling the Company based on such Registration Statement and in
respect of which indemnity may be sought against any Indemnified
Person, the Indemnified Person shall have the rights and duties
given to the Company (except that if the Company shall have assumed
the defense thereof, such Indemnified Person shall not be required
to do so, but may employ separate counsel therein and participate
in defense thereof but the fees and expenses of such counsel shall
be at the expense of such Indemnified Person), and the Company, its
directors, any such officers and any person controlling the Company
shall have the rights and duties given to the Indemnified Person,
by Section 6(b) hereof.
(d) If the indemnification provided for in this Section 6
is unavailable to an indemnified party in respect of any losses,
claims, damages, liabilities, expenses or judgments referred to
therein, then each indemnifying party, in lieu of indemnifying such
indemnified party, shall contribute to the amount paid or payable
by such indemnified party as a result of such losses, claims,
damages, liabilities, expenses and judgments (i) in such proportion
as is appropriate to reflect the relative benefits received by the
Company on the one hand and each Indemnified Person on the other
hand from the offering of the Transfer Restricted Securities or
(ii) if the allocation provided by clause (i) above is not
permitted by applicable law, in such proportion as is appropriate
to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of the Company and each such
Indemnified Person in connection with the statements or omissions
which resulted in such losses, claims, damages, liabilities,
expenses or judgments, as well as any other relevant equitable
considerations. The relative fault of the Company and each such
Indemnified Person shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a
material fact or the omission to state a material fact relates to
information supplied by the Company or such Indemnified Person and
the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.
The Company and the Initial Purchaser agree that it would
not be just and equitable if contribution pursuant to this Section
6(b) were determined by pro rata allocation (even if the
Indemnified Persons were treated as one entity for such purpose) or
by any other method of allocation which does not take account of
the equitable considerations referred to in the immediately
preceding paragraph. The amount paid or payable by an indemnified
party as a result of the losses, claims, damages, liabilities,
expenses or judgments referred to in the immediately preceding
paragraph shall be deemed to include, subject to the limitations
set forth above, any legal or other expenses reasonably incurred by
such indemnified party in connection with investigating or
defending any such action or claim. Notwithstanding the provisions
of this Section 6, no Indemnified Person shall be required to
contribute any amount in excess of the amount by which the total
proceeds received by it in connection with the sale of the Transfer
Restricted Securities pursuant to this Agreement exceeds the amount
of any damages which such Indemnified Person has otherwise been
required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f)
of the Securities Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation. The
Indemnified Persons' obligations to contribute pursuant to this
Section 6(d) are several in proportion to the respective amount of
Transfer Restricted Securities included in and sold pursuant to any
such Registration Statement by each Indemnified Person and not
joint.
(e) The agreements contained in this Section 6 shall
survive the sale of the Transfer Restated Securities pursuant to
any Registration Statement and shall remain in full force and
effect, regardless of any investigation made by or on behalf of any
Indemnified Person.
7. Rules 144 and 144A.
The Company shall use all reasonable efforts to file the
reports required to be filed by it under the Securities Act and the
Exchange Act in a timely manner and, if at any time it is not
required to file such reports but in the past had been required to
or did file such reports, it will, upon the request of any Holder,
make available other information as required by, and so long as
necessary to permit sales of, its Transfer Restricted Securities
pursuant to Rule 144 and Rule 144A. Notwithstanding the foregoing,
nothing in this Section 7 shall be deemed to require the Company to
register any of its securities pursuant to the Exchange Act.
8. Underwritten Registrations.
If any of the Transfer Restricted Securities covered by
the Shelf Registration Statement are to be sold in an underwritten
offering, the investment banker or investment bankers and manager
or managers that will administer the offering will be investment
bankers of recognized national standing selected by the Holders of
a majority in aggregate principal amount of such Transfer
Restricted Securities included in such offering, subject to the
consent of the Company (which will not be unreasonably withheld or
delayed).
No person may participate in any underwritten
registration hereunder unless such person (i) agrees to sell such
person's Transfer Restricted Securities on the basis reasonably
provided in any underwriting arrangements approved by the persons
entitled hereunder to approve such arrangements and (ii) completes
and executes all questionnaires, powers of attorney, indemnities,
underwriting agreements and other documents reasonably required
under the terms of such underwriting arrangements.
9. Miscellaneous.
(a) Remedies. In the event of a breach by the Company, or
by a Holder of Transfer Restricted Securities, of any of their
obligations under this Agreement, each Holder of Transfer
Restricted Securities or the Company, respectively, in addition to
being entitled to exercise all rights granted by law, including
recovery of damages, will be entitled to specific performance of
its rights under this Agreement. The Company and each Holder of
Transfer Restricted Securities agree that monetary damages would
not be adequate compensation for any loss incurred by reason of a
breach by it of any of the provisions of this Agreement and hereby
further agree that, in the event of any action for specific
performance in respect of such breach, they shall waive the defense
that a remedy at law would be adequate.
(b) No Inconsistent Agreements. The Company shall not
enter into any agreement with respect to its
securities that is inconsistent with the rights granted to the
holders of Transfer Restricted Securities in this Agreement or
otherwise conflicts with the provisions hereof. The Company is not
currently a party to any agreement granting any registration rights
with respect to any of its securities to any person which conflicts
with the Company's obligations hereunder or gives any other party
the right to include any securities in any Registration Statement
filed pursuant hereto, except for such rights and conflicts as have
been irrevocably waived. Without limiting the generality of the
foregoing, without the written consent of the Holders of a majority
in aggregate principal amount of the Transfer Restricted
Securities, the Company shall not grant to any person the right to
request it to register any of its securities under the Securities
Act unless the rights so granted are subject in all respect to the
prior rights of the holders of Transfer Restricted Securities set
forth herein, and are not otherwise in conflict or inconsistent
with the provisions of this Agreement.
(c) No Adverse Action Affecting the Transfer Restricted
Securities. Subject to the Company's right to suspend use of the
Prospectus pursuant to Section 2(d)(i) hereof, the Company will not
take any action with respect to the Transfer Restricted Securities
which would adversely affect the ability of any of the Holders of
Transfer Restricted Securities to include such Transfer Restricted
Securities in a registration undertaken pursuant to this Agreement.
(d) No Piggyback on Registrations. The Company shall not
grant to any of its security holders (other than the Holders of
Transfer Restricted Securities in such capacity) the right to
include any of its securities in any Shelf Registration Statement
other than Transfer Restricted Securities.
(e) Amendments and Waivers. The provisions of this
Agreement, including the provisions of this sentence, may not be
amended, modified or supplemented, and waivers or consents to
departures from the provisions hereof, may not be given, without
the written consent of the Holders of a majority in aggregate
principal amount of the Transfer Restricted Securities.
Notwithstanding the foregoing, a waiver or consent to depart from
the provisions hereof with respect to a matter that relates
exclusively to the rights of Holders of Transfer Restricted
Securities whose securities are being sold pursuant to a
Registration
Statement and that does not directly or indirectly affect the
rights of other Holders of Transfer Restricted Securities may be
given by Holders of a majority in aggregate principal amount of the
Transfer Restricted Securities being sold by such Holders pursuant
to such Registration Statement; provided, however, that the
provisions of this sentence may not be amended, modified, or
supplemented except in accordance with the provisions of the
immediately preceding sentence.
(f) Notices. All notices and other communications
provided for herein shall be made in writing by hand-delivery,
next-day air courier, certified first- class mail, return receipt
requested or telecopy:
(i) if to a Holder of Transfer Restricted Securities, to
the address of such Holder as it appears in the Debenture or Common
Stock register of the Company, as applicable; and
(ii) if to the Company, to:
Comverse Technology, Inc.
170 Crossways Park Drive
Woodbury, NY 11797
Telecopy: (516) 677-7323
Attention: William F. Sorin, Esq.
with a copy to:
Cravath, Swaine & Moore
Worldwide Plaza 825 Eighth
Avenue New York, NY 10019
Attention: Marc S. Rosenberg, Esq.
(iii) if to the Special Counsel, to:
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, NY 10153-0119
telecopy: (212)310-8007
Attention: Stephen M. Besen, Esq.
or such other Special Counsel at such other address and telecopy
number as a majority in aggregate principal amount of the Transfer
Restricted Securities shall have given
notice to the Company as contemplated by Section 5(b) hereof.
Except as otherwise provided in this Agreement, all such
communications shall be deemed to have been duly given, when
delivered by hand, if personally delivered; one Business Day after
being timely delivered to a next-day air courier, five Business
Days after being deposited in the mail, postage prepaid, if mailed;
and when receipt is acknowledged by the recipient's telecopier
machine, if telecopied.
(g) Successors and Assigns. This Agreement shall inure to
the benefit of and be binding upon the successors and permitted
assigns of each of the parties and shall inure to the benefit of
each existing and future Holder of Transfer Restricted Securities.
The Company may not assign its rights or obligations hereunder
without the prior written consent of each Holder of Transfer
Restricted Securities, other than by operation of law pursuant to a
merger or consolidation to which the Company is a party. In the
event the Debentures become convertible into common stock of
another person pursuant to Section 12.11 of the Indenture, the
Company shall cause such person to assume the Company's obligations
hereunder.
(h) Counterparts. This Agreement may be executed in any
number of counterparts and by the parties hereto in separate
counterparts each of which when so executed shall be deemed to be
an original and all of which taken together shall constitute one
and the same Agreement.
(i) Governing Law; Submission to Jurisdiction.
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO
CONTRACTS MADE AND PERFORMED WITHIN THE STATE OF NEW YORK WITHOUT
REGARD TO PRINCIPLES OF CONFLICTS OF LAW. THE COMPANY HEREBY
IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY NEW YORK STATE COURT
SITTING IN THE BOROUGH OF MANHATTAN IN THE CITY OF NEW YORK OR ANY
FEDERAL COURT SITTING IN THE BOROUGH OF MANHATTAN IN THE CITY OF
NEW YORK IN RESPECT OF ANY SUIT, ACTION OR PROCEEDING ARISING OUT
OF OR RELATING TO THIS AGREEMENT, AND IRREVOCABLY ACCEPTS FOR
ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND
UNCONDITIONALLY, JURISDICTION OF THE AFORESAID COURTS. THE COMPANY
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO
UNDER APPLICABLE LAW, ANY OBJECTION THAT
IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH
SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT AND ANY CLAIM
THAT ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT
HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
(j) Severability. The remedies provided herein are
cumulative and not exclusive of any remedies provided by law. If
any term, provision, covenant or restriction of this Agreement is
held by a court of competent jurisdiction to be invalid, illegal,
void or unenforceable, the remainder of the terms, provision,
covenants and restrictions set forth herein shall remain in full
force and effect and shall in no way be affected, impaired or
invalidated, and the parties hereto shall use their best efforts to
find and employ an alternative means to achieve the same or
substantially the same result as that contemplated by such term,
provision, covenant or restriction. It is hereby stipulated and
declared to be the intention of the parties that they would have
executed the remaining terms, provisions, covenants and
restrictions without including any of such that may be hereafter
declared invalid, illegal, void or unenforceable.
(k) Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise
affect the meaning hereof. All references made in this Agreement to
"Section" and "paragraph" refer to such Section or paragraph of
this Agreement, unless expressly stated otherwise.
(l) Attorneys' Fees. In any action or proceeding brought
to enforce any provision of this Agreement, or where any provision
hereof is validly asserted as a defense, the prevailing party, as
determined by the court, shall be entitled to recover its
reasonable attorneys' fees in addition to any other available
remedy.
IN WITNESS WHEREOF, the parties have caused this
Registration Rights Agreement to be duly executed as of the date
first written above.
COMVERSE TECHNOLOGY, INC.
By:
--------------------------
LEHMAN BROTHERS INC.
By:
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Authorized Signatory